<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): MAY 9, 1996
THE UNIMARK GROUP, INC.
(Exact name of registrant as specified in its charter)
TEXAS 0-26096 75-2436543
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) (Identification No.)
UNIMARK HOUSE
BARTONVILLE
ARGYLE, TEXAS 76226
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (817) 491-2992
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
THE GISE ACQUISITION
(a) On May 9, 1996, The UniMark Group, Inc. (the "Company" or
"UniMark"), acquired all of the outstanding shares of capital stock of Grupo
Industrial Santa Engracia, S.A. De C.V., a Mexican company ("GISE"), pursuant to
that certain Stock Purchase Agreement (the "Agreement") dated as of April 30,
1996 among the Company and the shareholders of GISE. All of GISE's shareholders
are Mexican nationals and prior to this transaction, there was no material
relationship between (i) GISE or its shareholders and (ii) the Company or any of
its affiliates, any director or officer of the Company, or any associate of such
director or officer. Pursuant to the Agreement, UniMark issued and delivered to
the GISE shareholders 782,614 shares of its authorized but unissued Common Stock
(the "Common Stock") previously.
In addition, UniMark agreed to pay to the GISE shareholders up to an
additional $8 million of contingent consideration if certain future financial
targets are achieved. The Agreement provides that if for any of 1996, 1997,
1998 or 1999 (a) GISE's income before interest, depreciation, amortization,
taxes and translation gain/loss ("EBITDA") less Cost of Capital (as defined
below) exceeds (b) the Target Base EBITDA Amounts (as set forth in the table
below) for the corresponding year (as set forth in the table below), then,
UniMark shall pay to the GISE shareholders an amount equal to 3.5 times such
excess amount (the "Additional Consideration") up to a cumulative aggregate
amount of $8 million:
<TABLE>
<CAPTION>
Fiscal Year Target Base
ended December 31, EBITDA Amounts
------------------ --------------
<S> <C>
1996 $ 3,540,000
1997 5,023,000
1998 7,517,000
1999 9,542,000
</TABLE>
The GISE Agreement provides that "Cost of Capital" for any fiscal year
shall mean an amount equal to 10 percent of Outstanding Cumulative Capital
Expenditures. "Outstanding Cumulative Capital Expenditures" for a particular
fiscal year is defined as (a) the weighted average amount of all expenditures
made by GISE during the particular fiscal year for assets with an expected life
in excess of one year plus (b) the amount of all expenditures for assets with
an expected life in excess of one year made by GISE after the closing but prior
to the beginning of that particular fiscal year. Additional Consideration, if
any, that may be due with respect to any year shall be due and payable on April
1 of the following year, at UniMark's option in either shares of Common Stock
or cash. The purchase price was arrived at through arms-length negotiations.
(b) GISE is a major Mexican producer of citrus concentrates, citrus
oils and citrus juices. GISE's two juice plants are located in Cd. Victoria,
Tamaulipas, Mexico and Poza Rica, Veracruz, Mexico in the heart of major citrus
growing regions. The Company currently intends to continue the business of
GISE as presently conducted. UniMark believes that the GISE acquisition will
confer operational benefits on both companies resulting from combining fruit
procurement functions. In addition, UniMark believes that GISE should benefit
from UniMark's international distribution and marketing expertise.
THE SIMPLY FRESH ACQUISITION
(a) On May 9, 1996, the Company acquired all of the outstanding shares
of capital stock of Simply Fresh Fruit, Inc., a California corporation ("Simply
Fresh"), a fruit processing and distribution company located in Los Angeles,
California, in exchange for
2
<PAGE> 3
$2.5 million in cash, 90,909 shares of Common Stock and $1.0 million in
cash payable in consideration for a five-year covenant by Simply Fresh's
principals and their affiliates not to compete in the United States. In
addition, the Company has agreed to pay Simply Fresh's two stockholders an
amount equal to $0.0025 per pound of fruit processed using certain proprietary
technology developed by Simply Fresh with the amount payable pursuant to this
agreement not to exceed $2.0 million. Prior to this transaction, there was no
material relationship between (i) Simply Fresh or its shareholders and (ii) the
Company or any of its affiliates, any director or officer of the Company, or any
associate of such director or officer. The purchase price was arrived at through
arms-length negotiations.
(b) Substantially all of Simply Fresh's sales are to the foodservice
industry in the western United States. UniMark believes that the Simply Fresh
Acquisition will afford it with (i) operating synergies resulting from
processing some of the fruit used in Simply Fresh's products at UniMark's
Mexican plants and (ii) expanded distribution into the foodservice market. In
addition, the Simply Fresh plant is strategically located to process fruit
grown in California and Arizona, two major citrus growing regions.
3
<PAGE> 4
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
The historical financial statements of Grupo Industrial Santa Engracia,
S.A. De C.V. and Simply Fresh Fruit, Inc., are included in this Form 8-K. See
"Index to Financial Statements."
(B) PRO FORMA FINANCIAL INFORMATION
The pro forma financial information of Grupo Industrial Santa Engracia,
S.A. De C.V. and Simply Fresh Fruit, Inc., are included in this Form 8-K. The
pro forma financial information also includes the pro forma effect on 1995 of
the January 3, 1996 acquisition of Les Produits Deli-Bon, Inc previously
reported on Form 8-K dated January 3, 1996.
(C) EXHIBITS
10.27 Stock Purchase Agreement among The UniMark Group, Inc. and the
shareholders of Grupo Industrial Santa Engracia, S.A. De C.V.
dated as of April 30, 1996.
10.28 Stock Purchase Agreement among The UniMark Group, Inc., UniMark
Foods, Inc., Sam Perricone and the shareholders of Simply Fresh
Fruit, Inc. dated as of May 9, 1996.
23.1 Consent of Ernst & Young, LLP.
23.2 Consent of Mancera S.C. Ernst & Young.
23.3 Consent of Garza, Jasso y Asociados
99.1 Press Release of the Registrant dated May 1, 1996.
99.2 Press Release of the Registrant dated May 9, 1996.
99.3 Press Release of the Registrant dated May 10, 1996.
4
<PAGE> 5
SIGNATURE
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, hereunto duly authorized.
Date: May 9, 1996 THE UNIMARK GROUP, INC.
(A Texas Corporation)
By: /s/ Keith Ford
------------------------------
Vice President and Chief
Accounting Officer
5
<PAGE> 6
THE UNIMARK GROUP, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
THE UNIMARK GROUP, INC.; LES PRODUITS DELI-BON INC.; GRUPO INDUSTRIAL SANTA ENGRACIA,
S.A. DE
C.V. AND SIMPLY FRESH FRUIT, INC.
Introduction to Pro Forma Condensed Consolidated Financial Information.............. F-2
Pro Forma Condensed Consolidated Balance Sheet as of December 31, 1995
(Unaudited)...................................................................... F-3
Pro Forma Condensed Consolidated Statement of Income for the Year Ended December 31,
1995 (Unaudited)................................................................. F-4
Notes to Pro Forma Condensed Consolidated Financial Information (Unaudited)......... F-5
HISTORICAL FINANCIAL INFORMATION
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
Reports of Independent Auditors..................................................... F-7
Balance Sheets as of December 31, 1994 and 1995..................................... F-9
Statements of Operations for the Years Ended December 31, 1993, 1994 and 1995....... F-10
Statements of Stockholders' Equity for the Years Ended December 31, 1993, 1994 and
1995............................................................................. F-11
Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and 1995....... F-12
Notes to Financial Statements....................................................... F-13
SIMPLY FRESH FRUIT, INC.
Report of Independent Auditors...................................................... F-20
Balance Sheet as of December 31, 1995............................................... F-21
Statement of Income and Retained Earnings for the Year Ended December 31, 1995...... F-22
Statement of Cash Flows for the Year Ended December 31, 1995........................ F-23
Notes to Financial Statements....................................................... F-24
</TABLE>
F-1
<PAGE> 7
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
On January 3, 1996, the Company acquired all the outstanding shares of
capital stock of Les Produits Deli-Bon Inc. ("Deli-Bon"), a Quebec corporation,
which is a processor of fruit and primarily targets the foodservice industry.
Total consideration for the purchase of the shares included approximately: (i)
$787,000 in cash; (ii) a $49,000 six-month promissory note and (iii) 28,510
shares of Common Stock.
On May 9, 1996, the Company acquired all the outstanding shares of capital
stock of Grupo Industrial Santa Engracia, S.A. de C.V., a Mexican company
("GISE"), which is a processor of citrus concentrate, oils and juices. Total
consideration for the purchase of the shares included 782,614 shares of Common
Stock and contingent consideration of up to an additional $8.0 million of Common
Stock or cash if certain future earnings targets are achieved.
Also on May 9, 1996, the Company acquired all the outstanding shares of
capital stock of Simply Fresh Fruit, Inc., a California corporation ("Simply
Fresh"), which is a processor of fruit and primarily targets the foodservice
industry. Total consideration for the purchase of the shares included
approximately: (i) $2,500,000 in cash; (ii) 90,909 shares of Common Stock and
(iii) $1 million in cash payable in consideration for a five-year covenant not
to compete.
The unaudited pro forma condensed consolidated balance sheet of the
Company, GISE, Simply Fresh and Deli-Bon, as of December 31, 1995, reflects
these acquisitions as if they had occurred on December 31, 1995.
The unaudited pro forma condensed consolidated statement of income for the
year ended December 31, 1995 reflects these acquisitions as if they had occurred
on January 1, 1995.
Historically, Simply Fresh has purchased fresh fruit on the open market for
processing at their facility in Los Angeles, California. UniMark intends to
provide Simply Fresh with fresh fruit processed at its facilities in Mexico at a
significant cost savings to Simply Fresh. UniMark is exercising its plan to
initially provide pineapple and melons to Simply Fresh this season. Accordingly,
a reduction in Simply Fresh's cost of products sold equal to the estimated cost
savings (Simply Fresh's actual cost minus UniMark's cost delivered to Los
Angeles) of UniMark providing 50% of the pineapple and melons processed by
Simply Fresh during 1995 has been reflected as an adjustment in the unaudited
pro forma condensed consolidated statement of income.
The unaudited pro forma condensed consolidated balance sheet and statement
of income should be read in conjunction with the separate historical financial
statements of the Company, GISE and Simply Fresh and related notes
appearing elsewhere in this filing and with the separate historical financial
statements of Deli-Bon and related notes appearing in the Company's filing on
Form 8-K/A on March 17, 1996. The pro forma financial information is
not necessarily indicative of the results that would have been reported had such
events actually occurred on the dates specified, nor is it necessarily
indicative of the future results of the combined Company.
F-2
<PAGE> 8
THE UNIMARK GROUP, INC.; GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.;
SIMPLY FRESH FRUIT, INC. AND LES PRODUITS DELI-BON INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
DECEMBER 31, 1995
ASSETS
<TABLE>
<CAPTION>
PRO FORMA
SIMPLY ADJUSTMENTS PRO FORMA
UNIMARK GISE FRESH DELI-BON (NOTE 2) BALANCE
------- ------ ------ -------- ----------- ---------
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.......... $ 6,286 $ 320 $ 4 $ 150 $(3,287)(a) $ 6,473
3,000(b)
Receivables........................ 4,574 1,474 786 257 -- 7,091
Inventories........................ 6,182 2,252 159 86 -- 8,679
Taxes receivable................... 824 402 -- -- -- 1,226
Deferred income taxes.............. 81 -- 11 -- -- 92
Prepaid expenses................... 300 68 30 11 -- 409
------- ------ ------ ------ ------- -------
Total current assets................. 18,247 4,516 990 504 (287) 23,970
Marketable securities................ -- -- 87 -- -- 87
Property, plant and equipment........ 7,689 3,761 422 526 4,676(c) 17,074
Deferred income taxes................ 338 573 14 -- -- 925
Goodwill............................. -- -- -- -- 5,901(d) 5,901
Covenant not to compete.............. -- -- -- -- 1,002(e) 1,002
Other assets......................... 224 -- 154 -- (19)(f) 359
------- ------ ------ ------ ------- -------
$26,498 $8,850 $1,667 $1,030 $11,273 $49,318
======= ====== ====== ====== ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings.............. $ 3,545 $1,953 $ -- $ -- $ 49(g) $ 8,547
3,000(b)
Current portion of long-term
debt............................ 183 222 127 56 163(h) 751
Accounts payable................... 4,356 1,497 839 329 -- 7,021
Accrued expenses................... 943 314 108 -- -- 1,365
Income taxes payable............... 13 -- -- 3 -- 16
Deferred income taxes.............. 1,726 926 -- -- 15(i) 2,667
------- ------ ------ ------ ------- -------
Total current liabilities............ 10,766 4,912 1,074 388 3,227 20,367
Long-term debt, less current
portion............................ 699 2,263 226 91 839(j) 4,118
Deferred income taxes................ 55 -- -- 19 -- 74
Shareholders' equity:
Common stock....................... 59 1,779 22 375 (2,167)(k) 68
Additional paid-in capital......... 13,035 -- -- -- 9,772(1) 22,807
Retained earnings.................. 1,884 (104) 345 157 (398)(m) 1,884
------- ------ ------ ------ ------- -------
Total shareholders' equity........... 14,978 1,675 367 532 7,207 24,759
------- ------ ------ ------ ------- -------
$26,498 $8,850 $1,667 $1,030 $11,273 $49,318
======= ====== ====== ====== ======= =======
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
information.
F-3
<PAGE> 9
THE UNIMARK GROUP, INC.; GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.;
SIMPLY FRESH FRUIT, INC. AND LES PRODUITS DELI-BON INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRO FORMA
SIMPLY ADJUSTMENTS PRO FORMA
UNIMARK GISE FRESH DELI-BON (NOTE 3) BALANCE
------- ------- ------ -------- ----------- ---------
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Net sales........................ $36,866 $13,915 $8,918 $2,675 $ -- $62,374
Cost of products sold............ 24,192 7,776 6,990 2,019 (547)(a) 40,762
332(b)
------- ------- ------ ------ ----- -------
12,674 6,139 1,928 656 215 21,612
Selling, general and
administrative expenses........ 8,423 1,987 1,813 587 (327)(c) 12,916
355(d)
78(b)
------- ------- ------ ------ ----- -------
Income from operations........... 4,251 4,152 115 69 109 8,696
Other income (expense):
Interest expense............... (318) (922) (33) (12) (198)(e) (1,483)
Interest income................ 470 201 9 -- -- 680
Foreign currency transaction
gain (loss)................. 124 (868) -- -- -- (744)
Other.......................... 98 -- 8 -- -- 106
------- ------- ------ ------ ----- -------
374 (1,589) (16) (12) (198) (1,441)
------- ------- ------ ------ ----- -------
Income before income taxes....... 4,625 2,563 99 57 (89) 7,255
Income tax expense............... 1,678 1,009 29 13 24(f) 2,753
------- ------- ------ ------ ----- -------
Net income....................... $ 2,947 $ 1,554 $ 70 $ 44 $(113) $ 4,502
======= ======= ====== ====== ===== =======
Earnings per share:
Primary........................ $ 0.53 $ 0.69
======= =======
Fully diluted.................. $ 0.51 $ 0.67
======= =======
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
information.
F-4
<PAGE> 10
THE UNIMARK GROUP, INC.; GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.;
SIMPLY FRESH FRUIT, INC. AND LES PRODUITS DELI-BON INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Deli-Bon
The accompanying historical financial statements of Deli-Bon were prepared in
accordance with the accounting principles generally accepted in Canada and are
presented in Canadian dollars. No material variations exist between these
principles and those generally accepted in the United States.
Deli-Bon amounts presented in the pro forma condensed consolidated balance sheet
consist of the historical balance sheet of Deli-Bon as of January 2, 1996, which
were converted into U.S. dollars at the exchange rate at the date of cash
transfers of $.7493. Deferred grants appearing in the Deli-Bon balance sheet
have been reclassified into property, plant and equipment.
Deli-Bon amounts presented in the pro forma condensed consolidated
statement of income consist of the historical statement of earnings of Deli-Bon
for the eleven months ended January 2, 1996, plus results of operations for the
one month ended January 31, 1995, to reflect a comparative twelve months of
operations. This result was converted into U.S. dollars at the average exchange
rate for the year of $.7285.
GISE
The accompanying historical financial statements of GISE were prepared in
accordance with U.S. generally accepted accounting principles and are presented
in pesos. GISE amounts presented in the pro forma condensed consolidated balance
sheet consist of the GISE historical balance sheet amounts which were converted
into U.S. dollars at the year end exchange rate of 7.7396 pesos. GISE amounts
presented in the pro forma condensed consolidated statement of income consist of
the GISE historical statement of income amounts, which were converted into U.S.
dollars at the average exchange rate for the year of 6.4647 pesos.
NOTE 2 -- PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET ADJUSTMENTS
(a) To record the aggregate cash portion of the consideration paid in
connection with the Simply Fresh Acquisition of $2,500,000 and the Deli-Bon
Acquisition of $787,000.
(b) To record a $3,000,000, 120-day bank loan bearing interest at 11.37%
per annum, $2,500,000 of which was used to fund the cash portion of the
consideration paid in connection with the Simply Fresh Acquisition.
(c) To increase property, plant and equipment to their fair values at the
dates of acquisition, the GISE Acquisition, $4,275,000, and the Deli-Bon
Acquisition, $401,000.
(d) To record aggregate goodwill resulting from the GISE Acquisition of
$2,450,000, the Simply Fresh Acquisition of $3,183,000, and the Deli-Bon
Acquisition of $268,000.
(e) To record the aggregate present value discounted at 9% of the
consideration to be paid in connection with non-compete agreements executed in
connection with the Simply Fresh Acquisition, $803,000, and the Deli-Bon
Acquisition, $199,000.
(f) To record the aggregate reduction in other assets resulting from
acquisition costs incurred prior to December 31, 1995.
(g) To record a $49,000 short-term note payable bearing interest at 9%
issued to a former shareholder of Deli-Bon in connection with the Deli-Bon
Acquisition.
F-5
<PAGE> 11
(h) To record the current portion of amounts payable under non-compete
agreements executed in connection with the Simply Fresh Acquisition, $133,000,
and the Deli-Bon Acquisition, $30,000. (See Note (e) above).
(i) To record deferred income taxes resulting from the Deli-Bon
Acquisition.
(j) To record the non-current portion of amounts payable under non-compete
agreements executed in connection with the Simply Fresh Acquisition, $670,000,
and the Deli-Bon Acquisition, $169,000. (See Note (e) above).
(k) To eliminate the capital accounts of GISE, $1,779,000, Simply Fresh,
$22,000, and Deli-Bon, $375,000, offset by the recording of the par value of
$.01 per share in connection with shares issued to GISE, 782,614 shares, Simply
Fresh, 90,909 shares and Deli-Bon, 28,510 shares.
(l) To record the additional paid-in capital resulting from the excess of
the value of Common Stock issued in connection with the Acquisitions over the
par value of such shares.
(m) To eliminate the retained earnings of GISE, Simply Fresh and Deli-Bon
resulting from their acquisitions.
NOTE 3 -- PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME ADJUSTMENTS
(a) To record the reduction in Simply Fresh's cost of products sold equal
to the estimated cost savings (Simply Fresh's actual cost minus UniMark's cost
delivered to Los Angeles) of UniMark providing 50% of the pineapple and melons
processed by Simply Fresh during 1995.
(b) To record increased depreciation expense over estimated useful lives
ranging from 3-25 years as a result of the increased carrying value of fixed
assets of GISE and Deli-Bon. (See Note 2(c)).
(c) To reflect the elimination of excess compensation in the amount of
$108,000 attributable to the reduction in salary of a former shareholder of
Simply Fresh and the elimination of $219,000 in fees paid to a company owned by
the former Chairman of the Board of Simply Fresh in connection with procurement
of fruit, which fees will no longer be paid following the Simply Fresh
Acquisition.
(d) To record the amortization of goodwill over 40 years for GISE and
Simply Fresh, and 20 years for Deli-Bon amounting to an aggregate of $154,000,
and the amortization of non-compete agreements over their five-year terms
amounting to an aggregate of $201,000.
(e) To record (i) interest expense amounting to $2,000 on a $49,000
short-term note payable issued to a former shareholder of Deli-Bon in connection
with the Deli-Bon Acquisition; (ii) interest expense amounting to $114,000 on a
$3,000,000, 120-day bank loan, $2.5 million of which was used to fund the cash
portion of the consideration paid in connection with the Simply Fresh
Acquisition; and (iii) accretion amounting to $201,000 on non-compete agreements
executed in connection with the Simply Fresh Acquisition and the Deli-Bon
Acquisition. (See Notes 2(g) and (b) above).
(f) To record the increase in income tax expense incurred as a result of
the pro forma adjustments after consideration of non-deductible goodwill
amounting to $154,000.
F-6
<PAGE> 12
REPORT OF INDEPENDENT AUDITORS
To the Stockholders of
Grupo Industrial Santa Engracia, S.A. de C.V.
We have audited the accompanying balance sheet of Grupo Industrial Santa
Engracia, S.A. de C.V., as of December 31, 1995, and the related statements of
operations, stockholders' equity and cash flow for the year then ended. The
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Grupo Industrial Santa
Engracia, S.A. de C.V. at December 31, 1995, and the results of its operations
and its cash flow for the year then ended in accordance with accounting
principles generally accepted in the United States of America.
MANCERA, S. C.
ERNST & YOUNG
San Pedro Garza Garcia, N. L., Mexico
April 23, 1996, except for Note 8,
as to which the date is
May 9, 1996
F-7
<PAGE> 13
REPORT OF INDEPENDENT AUDITORS
To the Stockholders of
Grupo Industrial Santa Engracia, S.A. de C.V.
We have audited the accompanying balance sheet of Grupo Industrial Santa
Engracia, S.A. de C.V., as of December 31, 1994, and the related statements of
operations, stockholders' equity and cash flow for each of the two years in the
period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Grupo Industrial Santa
Engracia, S.A. de C.V. at December 31, 1994, and the results of its operations
and its cash flow for each of the two years in the period ended December 31,
1994 in accordance with accounting principles generally accepted in the United
States of America.
GARZA, JASSO Y ASOCIADOS
Leon, Gto., Mexico
June 24, 1995
F-8
<PAGE> 14
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1994 1995
--------- ---------
(THOUSANDS OF PESOS)
<S> <C> <C>
ASSETS
Current assets:
Cash................................................................ Ps 1,682 Ps 2,473
---------- ---------
Accounts receivable:
Clients (Note 3)................................................. 9,309 11,259
Sundry accounts receivable....................................... 160 150
Taxes to be recovered............................................ 358 3,111
---------- ---------
9,827 14,520
---------- ---------
Inventories (Note 1):
Finished goods................................................... 4,290 13,045
Raw materials and supplies....................................... 408 36
Packing.......................................................... -- 445
Tools............................................................ 439 803
Advances to suppliers............................................ 747 3,099
---------- ---------
5,884 17,428
---------- ---------
Prepaid expenses.................................................... 184 529
---------- ---------
Total current assets.................................................. 17,577 34,950
Property, plant and equipment (Note 2)................................ 13,740 29,107
Deferred income tax (Note 6).......................................... 4,567 4,436
Other assets.......................................................... 96 --
---------- ---------
Total assets.......................................................... Ps 35,980 Ps 68,493
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (Note 4).......................... Ps 465 Ps 1,721
Short-term bank loans (Note 4)...................................... 12,988 15,115
Accounts payable:
Suppliers (Note 3)............................................... 881 11,577
Accrued taxes and expenses....................................... 839 1,715
Asset tax........................................................... 48 43
Employees' profit sharing........................................... -- 571
Deferred income tax (Note 6)........................................ 1,343 7,168
---------- ---------
Total current liabilities............................................. 16,564 37,910
Long-term debt less current portion (Note 4).......................... 16,494 17,518
Seniority premiums (Note 1)........................................... -- 100
---------- ---------
Total liabilities..................................................... 33,058 55,528
---------- ---------
Stockholders' equity (Note 7):
Capital stock; 1 Ps par value; 13,770,000 shares authorized, issued
and outstanding.................................................. 13,770 13,770
Accumulated deficit................................................. (10,848) (805)
---------- ---------
Total stockholders' equity.......................................... 2,922 12,965
---------- ---------
Total liabilities and stockholders' equity............................ Ps 35,980 Ps 68,493
========== =========
</TABLE>
See accompanying notes.
F-9
<PAGE> 15
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1993 1994 1995
--------- --------- ---------
(THOUSANDS OF PESOS)
<S> <C> <C> <C>
Net sales............................................... Ps 21,944 Ps 31,940 Ps 89,959
Cost of products sold................................... 15,595 21,761 50,268
--------- --------- ---------
Gross profit............................................ 6,349 10,179 39,691
--------- --------- ---------
Administrative expenses................................. 1,810 2,845 4,088
Selling expenses........................................ 1,189 2,881 8,757
--------- --------- ---------
2,999 5,726 12,845
--------- --------- ---------
Operating profit........................................ 3,350 4,453 26,846
--------- --------- ---------
Financing cost:
Exchange loss (Note 1)................................ (81) (5,293) (5,610)
Interest earned....................................... 86 136 1,297
Interest paid......................................... (2,748) (3,578) (5,963)
--------- --------- ---------
(2,743) (8,735) (10,276)
--------- --------- ---------
Income (loss) before income tax, profit sharing and
asset tax provision................................... 607 (4,282) 16,570
--------- --------- ---------
Income tax (benefit) (Note 6)
Deferred.............................................. 367 (1,462) 4,346
Employees' profit sharing
For the year.......................................... -- -- 571
Deferred.............................................. -- (398) 1,610
Asset tax (Note 5)...................................... 239 421 --
--------- --------- ---------
606 (1,439) 6,527
--------- --------- ---------
Net income (loss)....................................... Ps 1 Ps (2,843) Ps 10,043
========= ========= =========
</TABLE>
See accompanying notes.
F-10
<PAGE> 16
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CAPITAL ACCUMULATED
CAPITAL STOCK STOCK DEFICIT
------------------ ---------- -----------
(NUMBER OF SHARES) (THOUSANDS OF PESOS)
<S> <C> <C> <C>
Balance at December 31, 1992......................... 13,770,000 Ps 13,770 Ps (8,006)
Net loss for 1993.................................... -- -- 1
---------- -------- ---------
Balance at December 31, 1993......................... 13,770,000 13,770 (8,005)
Net loss for 1994.................................... -- -- (2,843)
---------- -------- ---------
Balance at December 31, 1994......................... 13,770,000 13,770 (10,848)
Net income for 1995.................................. -- -- 10,043
---------- -------- ---------
Balance at December 31, 1995......................... 13,770,000 Ps 13,770 Ps (805)
========== ======== =========
</TABLE>
See accompanying notes.
F-11
<PAGE> 17
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1993 1994 1995
-------- --------- ---------
(THOUSANDS OF PESOS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)............................................ Ps 1 Ps (2,843) Ps 10,043
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation............................................... 652 701 821
Amortization............................................... 89 89 89
Seniority premiums......................................... -- -- 100
Deferred income tax........................................ (110) (1,860) 5,956
Changes in operating assets and liabilities:
Receivables............................................. (636) (7,988) (4,693)
Inventories............................................. (3,018) (359) (11,544)
Prepaid expenses........................................ 4 49 (345)
Other assets............................................ (96) -- 96
Accounts payable........................................ (138) 435 12,138
-------- --------- ---------
Net cash generated by (used in) operating activities......... (3,252) (11,776) 12,661
-------- --------- ---------
INVESTING ACTIVITIES
Purchases of property, plant and equipment................... (1,201) (88) (16,277)
-------- --------- ---------
FINANCING ACTIVITIES
Increase in short-term bank loans............................ 622 415 3,383
Increase in long-term debt................................... 3,942 12,680 1,024
-------- --------- ---------
Net cash provided by financing activities.................... 4,564 13,095 4,407
-------- --------- ---------
Net increase in cash and cash equivalents.................... 111 1,231 791
Cash and cash equivalents at beginning of
the year................................................... 340 451 1,682
-------- --------- ---------
Cash and cash equivalents at the end of the year............. Ps 451 Ps 1,682 Ps 2,473
======== ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest....................................... Ps 2,636 Ps 3,620 Ps 5,868
Cash paid for income taxes................................... Ps 504 Ps 558 Ps 515
</TABLE>
See accompanying notes.
F-12
<PAGE> 18
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(THOUSANDS OF PESOS)
1. ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Grupo Industrial Santa Engracia, S.A. de C.V. is a Mexican company based in
Cd. Victoria, Tamaulipas. The Company is engaged in the processing of fruit,
mainly citrus, to make natural juice, concentrated juice and citrus oils.
Since the raw materials are of natural origin, their price and availability
depend on circumstances that are out of the Company's control, so that the cycle
and volume of operations is variable.
The Company was constituted on August 2, 1988, and began operations in
December 1989.
BASIS OF FINANCIAL STATEMENTS
The Company's accounting records are maintained in Mexican pesos and in
accordance with accounting principles generally accepted in Mexico. The
accompanying financial statements were prepared in conformity with accounting
principles generally accepted in the United States of America and were obtained
from the accounting records after giving effect to the following:
-- Canceling the effects of inflation on fixed assets.
-- Recording deferred income taxes.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with original
maturities of 90 days or less when purchased to be cash equivalents.
CONCENTRATION OF CREDIT RISK
The Company provides credit to its customers in the normal course of
business. The Company performs ongoing credit evaluations of its customers and
maintains allowances for possible credit losses, which, when realized, have been
within the range of management's expectations. A significant portion of sales is
made to two customers. One customer accounted for 34.8% and another customer
accounted for 10.1% of the Company's net sales during the year ended December
31, 1995.
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is calculated
at average historical cost.
F-13
<PAGE> 19
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. Depreciation is calculated
by the straight-line method, at the rates indicated below:
<TABLE>
<S> <C>
Buildings................................................................... 4.00%
Machinery and equipment..................................................... 4.25%
Transportation equipment.................................................... 12.00%
Computer equipment.......................................................... 7.00%
Office equipment............................................................ 7.00%
Installation expenses....................................................... 10.00%
</TABLE>
TERMINATION PAYMENTS
Termination payments due to workers under the terms of Mexican Labor Law
are charged to the results of operations in the year in which the decision to
dismiss the employee is made.
SENIORITY PREMIUMS
Seniority premiums are recognized as a cost during the years of service of
the personnel. This cost should be determined using independent actuarial
computations and applying the projected unitary credit method; however, at
December 31, 1995 the Company's Management estimated this liability on a
different base, determining and recording an amount of Ps 100. This figure was
considered to be sufficient at that date to meet the requirement, and Management
intends to obtain an actuarial study in 1996.
No actuarial study was performed in 1994, and no accrual recorded. It is
the Company's opinion that, had such a study been performed, the amount which
would have been recorded would not have materially affected the accompanying
financial statements for 1994.
TRANSACTIONS IN FOREIGN CURRENCY
Transactions in foreign currency are recorded at the prevailing exchange
rate on the day of the related transaction. Assets and liabilities denominated
in foreign currency are translated into Mexican pesos at the prevailing exchange
rate as of the balance sheet date. Exchange rate differences are reflected in
the current year's operations.
F-14
<PAGE> 20
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. PROPERTY, PLANT AND EQUIPMENT
This heading included the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1994 1995
-------- --------
(THOUSANDS OF PESOS)
<S> <C> <C>
Land........................................................... Ps 79 Ps 679
Buildings...................................................... 2,980 12,497
Machinery and equipment........................................ 11,915 16,404
Computer equipment............................................. 219 323
Office equipment............................................... 338 1,330
Transportation equipment....................................... 613 1,133
Installation expenses.......................................... 1,181 1,181
-------- --------
17,325 33,547
Less:
Accumulated depreciation....................................... 3,585 4,440
-------- --------
Ps13,740 Ps29,107
======== ========
</TABLE>
Depreciation expensed during the years ended December 31, 1993, 1994 and
1995 totaled Ps 652, Ps 701 and Ps 821, respectively.
3. BALANCES AND TRANSACTIONS WITH RELATED PARTIES
Transactions with related parties were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1993 1994 1995
----- ------- -------
(THOUSANDS OF PESOS)
<S> <C> <C> <C>
Sales..................................................... Ps112 Ps 193 Ps 135
===== ======= =======
Purchases................................................. Ps843 Ps1,383 Ps6,122
===== ======= =======
</TABLE>
The following balances with related parties were recorded under clients and
suppliers:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1994 1995
---- ----
(THOUSANDS OF
PESOS)
<S> <C> <C>
Accounts Receivable:
Clients
Empacadora Santa Engracia, S.A. de C.V.......................... Ps26 Ps36
Jugos y Bedidas de Victoria, S.A. de C.V........................ 65 --
---- ----
Ps91 Ps36
==== ====
Accounts Payable:
Suppliers
Gertrudis Collado Martinez...................................... Ps-- Ps 1
Jorge Martinez Brohez........................................... (10) (14)
Jose Maria Martinez Brohez...................................... -- (5)
Citrocel, S.A. de C.V........................................... 30 65
---- ----
Ps20 Ps47
==== ====
</TABLE>
F-15
<PAGE> 21
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. BANK LOANS
At December 31, 1994 and 1995, the Company had the following outstanding
bank loans:
<TABLE>
<CAPTION>
1994 1995
-------- -----------------------
SHORT-TERM LONG-TERM
---------- ---------
(THOUSANDS OF PESOS)
<S> <C> <C> <C>
BANAMEX, S.A.
Plant and equipment loan of Ps 7,740, due December
31, 2001, accruing interest at an annual rate of
LIBOR
plus 8%............................................ Ps 4,995 Ps1,161 Ps 6,579
Plant and equipment loan of Ps 11,499, due November
25, 2004, accruing interest at an annual rate of
18.5% secured by a mortgage........................ 11,499 560 10,939
-------- -------- --------
Ps16,494 Ps1,721 Ps17,518
======== ======== ========
</TABLE>
The Company also has short-term loans with certain banks, at interest rates
of between Libor plus 3.5%, and 18.5%. The loans mature between February and
October 1996.
The exchange rates used to translate amounts in U.S. dollars into Mexican
pesos at December 31, 1993, 1994 and 1995 were Ps 3.1099, Ps 4.9950 and Ps
7.7396, respectively.
Aggregate maturities of long-term debt for the next five years (in
thousands) are as follows:
<TABLE>
<S> <C>
1996............................................ Ps --
1997............................................ 1,833
1998............................................ 1,969
1999............................................ 2,132
2000............................................ 2,715
Thereafter...................................... 8,869
-------
Ps17,518
=======
</TABLE>
Based upon interest rates and current market conditions, management
believes the fair value of notes payable approximates their carrying value at
December 31, 1995.
5. INCOME TAX AND ASSET TAX
For the year ended December 31, 1995 the Company had a tax loss for income
tax purposes.
Tax loss carry forwards (in thousands) are as follows:
<TABLE>
<CAPTION>
AMOUNT YEAR OF
TAX LOSS YEAR (RESTATED VALUED) EXPIRATION
- ------------- ----------------- ----------
<S> <C> <C> <C>
1991.................................................. Ps 1,196 2001
1992.................................................. 7,040 2002
1993.................................................. 2,421 2003
1994.................................................. 4,015 2004
-------------
Ps14,672
=============
</TABLE>
A 1.8% asset tax is levied on the average value of most assets net of
certain liabilities. The asset tax represents a minimum tax and is paid only to
the extent that it exceeds income tax for the year. Any asset tax
F-16
<PAGE> 22
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
paid can be credited against the total amount of income tax payable in excess of
the asset tax in the succeeding ten years.
During 1995, for tax purposes, the Company depreciated the investments in
fixed assets made in that year on an accelerated basis at rates of 74% and 85%
of their original cost in accordance with the terms of Mexican Income Tax Law.
As a consequence of this accelerated depreciation, the Company obtained an
additional benefit in accordance with Asset Tax Law in regard to the Company's
right to off-set the asset tax for the year against 34% of the difference
between the accelerated depreciation of new investments in 1995 and the tax
depreciation in accordance with normal tax rates.
The balance between the asset tax for the year and the total of the benefit
mentioned in the prior paragraph amounts to Ps 3,319, and it can be off-set
against asset tax for subsequent years.
Both the tax loss carry forwards and the benefit amortizable against asset
tax were included as deferred asset tax, as described in Note 6.
6. DEFERRED TAXES
In the preparation of these financial statements, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 109 (SFAS No.
109), "Accounting for Income Taxes." Under SFAS No. 109, the liability method is
used in accounting for income taxes. Accordingly, deferred tax assets and
liabilities are determined based on differences between financial reporting and
tax bases of assets and liabilities, and are determined using the enacted tax
laws and rates that will be in effect when the differences are expected to
reverse.
The Company also has permanent differences between its accounting and
taxable income, mainly related to the inflationary component and nondeductible
expenses, as well as differences between book and inflation-adjusted tax
depreciation.
F-17
<PAGE> 23
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The temporary differences between the tax bases of assets and liabilities
and their financial reporting amounts that give rise to the deferred tax asset
and liability are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1994 1995
-------- ---------
(THOUSANDS OF PESOS)
<S> <C> <C>
Income Tax
Assets:
Short-term
Tax loss carryforwards................................................ Ps 489 Ps --
Accrued taxes and expenses............................................ -- 157
-------- ---------
489 157
-------- ---------
Long-term
Tax loss carryforwards................................................ 4,708 4,989
Asset tax............................................................. 1,242 1,710
Benefit to apply to asset tax......................................... -- 3,319
-------- ---------
5,950 10,018
-------- ---------
Total assets.................................................. Ps6,439 Ps10,175
======= ========
Liabilities
Short term
Inventories........................................................... Ps1,746 Ps 5,687
-------- ---------
Long-term
Fixed assets.......................................................... 1,143 5,284
-------- ---------
Total liabilities............................................. Ps2,889 Ps10,971
======= ========
Employees' Profit
Sharing
Assets:
Short-term
Suppliers............................................................. Ps 6 Ps 25
Bank loans............................................................ 557 40
Accrued taxes and expenses............................................ -- 46
-------- ---------
Total assets.................................................. Ps 563 Ps 111
======= ========
Liabilities
Short-term
Inventories........................................................... Ps 514 Ps 1,673
Clients............................................................... 135 76
-------- ---------
649 1,749
-------- ---------
Long-term
Fixed assets.......................................................... 240 298
-------- ---------
Total liabilities............................................. Ps 889 Ps 2,047
======= ========
</TABLE>
F-18
<PAGE> 24
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The components of the provision for income taxes include the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1993 1994 1995
----- -------- -------
(THOUSANDS OF PESOS)
<S> <C> <C> <C>
Current
Federal................................................ Ps239 Ps421 Ps571
Deferred:
Federal................................................ 367 (1,860) 5,956
----- -------- -------
Total.......................................... Ps606 Ps(1,439) Ps6,527
===== ======== =======
</TABLE>
The Company's provision for income taxes reconciles to the amount computed
by applying the statutory Mexican rate of 34% to income before income taxes as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1993 1994 1995
-------- -------- --------
(THOUSANDS OF PESOS)
<S> <C> <C> <C>
Expense computed at statutory rate................... Ps 206 Ps(1,456) Ps 5,634
Employees' profit sharing............................ -- (398) 2,181
Asset tax............................................ 239 421 --
Utilization of loss or credit carryforwards.......... (1,173) (1,612) (3,578)
Non deductible items and permanent differences....... 1,334 1,606 2,290
-------- -------- --------
Ps 606 Ps(1,439) Ps 6,527
======== ======== ========
</TABLE>
7. RESTRICTIONS ON RETAINED EARNINGS
Under Mexican Commercial Law, 5% of each year's income must be allocated to
a legal reserve until such reserve reaches 20% of the capital stock (Ps2,754).
This reserve can only be distributed to the shareholders in the form of stock
dividends.
8. SUBSEQUENT EVENTS
During the period of January 1 to April 30, 1996, the Company contracted
loans with Rabobank Curacao and Arka Securities Inc. for Ps13,909 to use as
working capital.
On May 9, 1996, all of the outstanding shares of the Company's common stock
were acquired by The UniMark Group, Inc.
F-19
<PAGE> 25
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Simply Fresh Fruit, Inc.
We have audited the accompanying balance sheet of Simply Fresh Fruit, Inc.,
as of December 31, 1995, and the related statements of income and retained
earnings and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Simply Fresh Fruit, Inc., at
December 31, 1995 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Dallas, Texas
April 29, 1996, except for Note 9,
as to which the date is
May 9, 1996
F-20
<PAGE> 26
SIMPLY FRESH FRUIT, INC.
BALANCE SHEET
DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<S> <C>
Current assets:
Cash......................................................................... $ 4
Accounts receivable, net of allowance for doubtful accounts of $21........... 773
Accounts receivable -- employees............................................. 13
Inventory.................................................................... 159
Prepaid expenses............................................................. 15
Income taxes recoverable..................................................... 15
Deferred income tax.......................................................... 11
-------
Total current assets........................................................... 990
Marketable securities, at cost, which approximates fair value.................. 87
Property, plant and equipment, net............................................. 422
Patent license, net of amortization of $79..................................... 85
Deferred income tax............................................................ 14
Other assets................................................................... 68
-------
Total assets................................................................... $1,666
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................. $ 530
Accounts payable -- related parties.......................................... 256
Accrued expenses............................................................. 108
Accrued expenses -- related parties.......................................... 54
Notes payable, current portion............................................... 126
-------
Total current liabilities...................................................... 1,074
Notes payable, less current portion............................................ 225
Commitments
Shareholders' equity:
Capital stock, $1.00 par value:
Authorized shares -- 200,000
Issued and outstanding shares -- 10,000................................... 22
Retained earnings............................................................ 345
-------
Total shareholders' equity..................................................... 367
-------
Total liabilities and shareholders' equity..................................... $1,666
======
</TABLE>
See accompanying notes
F-21
<PAGE> 27
SIMPLY FRESH FRUIT, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Net sales...................................................................... $8,918
Cost of products sold.......................................................... 6,990
------
Gross profit................................................................... 1,928
Selling, general and administrative expenses................................... 1,813
------
Income from operations......................................................... 115
Other income (expense):
Gain on sale of assets....................................................... 8
Interest income.............................................................. 9
Interest expense............................................................. (33)
------
Income before income taxes..................................................... 99
Income tax expense (benefit):
Current...................................................................... 31
Deferred..................................................................... (2)
------
29
------
Net income..................................................................... 70
Retained earnings, beginning of year........................................... 275
------
Retained earnings, end of year................................................. $ 345
======
</TABLE>
See accompanying notes.
F-22
<PAGE> 28
SIMPLY FRESH FRUIT, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
OPERATING ACTIVITIES
Net income..................................................................... $ 70
Adjustments to reconcile net income to net cash used in operating activities:
Gain on sales of assets...................................................... (8)
Amortization................................................................. 33
Depreciation................................................................. 119
Deferred income taxes........................................................ (2)
Changes in operating assets and liabilities:
Increase in accounts receivable........................................... (101)
Increase in accounts receivable -- employees.............................. (11)
Increase in inventory..................................................... (5)
Increase in income taxes recoverable...................................... (29)
Decrease in prepaid expenses.............................................. 9
Decrease in other assets.................................................. 9
Decrease in accounts payable.............................................. (75)
Decrease in accrued expenses.............................................. (25)
-----
Net cash used in operating activities.......................................... (16)
INVESTING ACTIVITIES
Decrease in deposits........................................................... 5
Purchases of property, plant, and equipment.................................... (13)
Proceeds from sales of fixed assets............................................ 11
Increase in other assets....................................................... (45)
Net purchases of marketable securities......................................... (30)
-----
Net cash used in investing activities.......................................... (72)
-----
FINANCING ACTIVITIES
Net borrowings -- notes payable................................................ 86
-----
Net decrease in cash and cash equivalents...................................... (2)
Cash and cash equivalents at beginning of year................................. 6
-----
Cash and cash equivalents at end of year....................................... $ 4
=====
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid.................................................................. $ 33
=====
Income taxes paid.............................................................. $ 43
=====
</TABLE>
See accompanying notes.
F-23
<PAGE> 29
SIMPLY FRESH FRUIT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. ORGANIZATION
The Company was incorporated in the state of California in January 1983.
The Company is located in Los Angeles, and is a wholesale processor, packager
and seller of fresh fruit and a fresh fruit mix.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original
maturities of 90 days or less when purchased to be cash equivalents.
Concentration of Credit Risk
The Company manufactures and sells citrus products and certain food
products to customers in the foodservice and retail industries in the United
States. The Company performs periodic credit evaluations of its customers'
financial condition and generally does not require collateral. Trade receivables
generally are due within 30 days. Credit losses have been within management's
expectations. A significant portion of sales is made to two customers. One
customer accounted for 10.4% and another customer accounted for 19.2% of the
Company's net sales during the year ended December 31, 1995.
Inventory
Inventory is stated at the lower of cost or market determined on a
first-in, first-out basis.
Property, Plant and Equipment
Property, plant, and equipment are stated at cost. Depreciation expense is
calculated using straight-line and declining balance methods over lives ranging
from five to ten years and includes depreciation on assets under capital lease.
Patent License
The patent license is being amortized over its expected useful life of five
years using the straight-line method.
Income Taxes
The Company utilizes the liability method of accounting for income taxes as
set forth in Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." Under this method, deferred tax assets and liabilities are
determined based on differences between the financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.
F-24
<PAGE> 30
SIMPLY FRESH FRUIT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Fair Value of Financial Instruments
Management estimates the fair value of notes payable to approximate their
carrying value at December 31, 1995 based upon current market interest rates in
relation to the stated and imputed interest rates and the relative liquidity of
each instrument.
3. INVENTORY
A summary of inventory at December 31, 1995 is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Bulk fruit...................................................... $ 46
Packaging....................................................... 76
Labels.......................................................... 26
Finished goods.................................................. 11
--------
$159
========
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
The major classes of property, plant and equipment at December 31, 1995 are
as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Factory and processing equipment............................... $235
Delivery equipment............................................. 54
Automobiles.................................................... 93
Office equipment............................................... 32
Leasehold improvements......................................... 309
Property under capital lease................................... 51
--------
774
Less: Accumulated depreciation................................. 352
--------
$422
========
</TABLE>
5. NOTES PAYABLE
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Note payable in sixty equal monthly installments of $3,333 beginning August 1,
1993. Amounts recorded in the financial statements have been discounted at
8%. ......................................................................... $ 92
Notes payable to a bank; secured by receivables, inventory, equipment, and
improvements and guaranteed by the Company's Chairman of the Board and its
President. Principal payments of $6,250 are due monthly plus interest at
1 1/2% over the lender's premium rate........................................ 220
Capital lease on industrial equipment, payable in 60 equal payments of $1,031
including interest at 8% per annum........................................... 36
Other.......................................................................... 3
--------
351
Less current portion........................................................... 126
--------
$225
========
</TABLE>
F-25
<PAGE> 31
SIMPLY FRESH FRUIT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Aggregate maturities of notes payable for the next four years are as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996........................................................... $127
1997........................................................... 121
1998........................................................... 101
1999........................................................... 2
----
$351
====
</TABLE>
6. COMMITMENTS
The Company leases its building under an operating lease. The lease is for
a period of ten years, expiring in 2004, and contains a purchase option between
August 15, 1996 and August 14, 1997 for $4,500,000 or between August 15, 1997
and August 14, 1998 for $4,750,000.
Future minimum payments under this noncancelable operating lease at
December 31, 1995 were:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996........................................................... $101
1997........................................................... 108
1998........................................................... 110
1999........................................................... 110
2000........................................................... 117
Thereafter..................................................... 400
----
$946
====
</TABLE>
Rent expense was $100,800 for the year ended December 31, 1995.
7. INCOME TAXES
For the year ended December 31, 1995, the components of the provision
(benefit) for income taxes include the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Current:
Federal...................................................... $ 21
State........................................................ 10
---
31
Deferred:
Federal...................................................... (2)
---
Total.......................................................... $ 29
===
</TABLE>
The Company's provision for income taxes reconciles to the amount computed
by applying the applicable statutory U.S. federal rate of 26% to income before
income taxes as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Expense computed at statutory rate............................. $ 26
State taxes, net of federal benefit............................ 7
Other.......................................................... (4)
---
Provision for income taxes..................................... $ 29
===
</TABLE>
F-26
<PAGE> 32
SIMPLY FRESH FRUIT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Deferred tax assets and liabilities at December 31, 1995 are comprised of
the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Deferred tax assets:
Reserve for bad debts........................................ $ 7
Franchise taxes.............................................. 4
Deferred wages............................................... 26
---
Total deferred tax assets...................................... 37
Deferred tax liability -- depreciation......................... 12
---
Net deferred tax asset......................................... $ 25
===
</TABLE>
8. RELATED PARTY TRANSACTIONS
During 1995, the Company paid approximately $85,000 for raw material
(fruit) purchases to entities in which the Chairman of the Board had an
interest.
During 1995, the Company paid approximately $1.7 million in labor costs to
P&C Services, an entity which provides all of the hourly skilled labor to the
Company. This entity is owned by the President, General Manager, Production
Manager and Fruit Procurement Manager of the Company, each of whom own a 25%
interest. At December 31, 1995, $10,186 was owed to this entity by the Company
and was included in accounts payable-related parties.
Selling, general and administrative expenses includes commissions and
brokerage fees of $203,526 due to an entity owned by the Company's Chairman of
the Board for assistance in procuring raw fruit for the Company's use. At
December 31, 1995, approximately $246,000 related to these current year and
prior year activities was included in accounts payable -- related parties.
During 1995, the Company paid approximately $52,000 in health insurance
premiums to a company owned by the Chairman of the Board, for the costs of
providing health insurance benefits to the Company's salaried employees. At
December 31, 1995, approximately $54,000 in health insurance premiums payable to
this related entity was included in accrued expenses -- related parties.
9. SUBSEQUENT EVENT
On May 9, 1996 all of the shares of the Company's outstanding common stock
were acquired by the UniMark Group, Inc.
F-27
<PAGE> 33
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Pagination by
- -------------- Sequential
Numbering System
----------------
<S> <C> <C>
10.27 Stock Purchase Agreement among The UniMark Group, Inc. and the
shareholders of Grupo Industrial Santa Engracia, S.A. De C.V.
dated as of April 30, 1996.
10.28 Stock Purchase Agreement among The UniMark Group, Inc., UniMark
Foods, Inc., Sam Perricone and the shareholders of Simply Fresh
Fruit, Inc. dated as of May 9, 1996.
23.1 Consent of Ernst & Young, LLP.
23.2 Consent of Mancera S.C. Ernst & Young.
23.3 Consent of Garza, Jasso y Asociados
99.1 Press Release of the Registrant dated May 1, 1996.
99.2 Press Release of the Registrant dated May 9, 1996.
99.3 Press Release of the Registrant dated May 10, 1996.
</TABLE>
<PAGE> 1
STOCK PURCHASE AGREEMENT
AMONG
THE UNIMARK GROUP, INC. ,
AND
THE INDIVIDUALS NAMED IN THE ANNEXED EXHIBIT 1 HERETO
BEING ALL THE SHAREHOLDERS OF
GRUPO INDUSTRIAL SANTA ENGRACIA S.A. DE C.V.
____________________
APRIL 30, 1996
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I.
REPRESENTATIONS OF THE SHAREHOLDERS
1.0 Representation of the Shareholders
1.1 Ownership of GISE Shares
1.2 Validity of Transaction
1.3 Existence and Good Standing
1.4 Capital Stock
1.5 Subsidiaries and Investments
1.6 Financial Statements and No Material Changes
1.7 Books and Records
1.8 Title to Properties; Encumbrances
1.9 Real Property
1.10 Leases
1.11 Material Contracts
1.12 Restrictive Documents
1.13 Litigation
1.14 Taxes
1.15 Liabilities
1.16 Insurance
1.17 Intellectual Properties
1.18 Compliance with Laws; Permits
1.19 Accounts Receivable
1.20 Employment Relations
1.21 Employee Benefit Plans
1.22 Interests in Clients, Suppliers, Etc.
1.23 Bank Accounts, Powers of Attorney and Compensation of Employees
1.24 No Changes Prior to Closing Date
1.25 Disclosure
1.26 Broker's or Finder's Fees
1.27 Agreements, Judgments and Decrees Affecting Shareholders
1.28 Copies of Documents
1.29 Purchase for Investment
1.30 Investor Qualifications
1.31 Regulation "S": Shareholders are Non-U.S. Persons
1.32 Environmental Matters
<PAGE> 3
ARTICLE II.
REPRESENTATIONS OF UNIMARK
2.0 Representations of UniMark
2.1 Existence and Good Standing
2.2 Restrictive Documents
2.3 Broker's or Finder's Fees
2.4 Issuance of the UniMark Shares
2.5 Financial Situation
2.6 No Changes Prior to Closing
2.7 Disclosure
2.8 Litigation
ARTICLE III.
SALE OF GISE SHARES
3.1 Sale of GISE Shares
3.2 UniMark Common Stock
3.3 Closing
3.4 Post Closing Adjustment to Purchase Price
ARTICLE IV.
CONDUCT OF BUSINESS; REVIEW
4.1 Conduct of Business of GISE
4.2 Exclusive Dealing
4.3 Nondisclosure
4.4 Access to Information
ARTICLE V.
CONDITIONS TO UNIMARK'S OBLIGATIONS
5.0 Conditions to UniMark's Obligations
5.1 Opinion of GISE's Counsel
5.2 Good Standing Certificates
5.3 No Material Adverse Change
5.4 Truth of Representations and Warranties
5.5 Performance of Agreements
5.6 No Litigation Threatened
5.7 Audited Financial Statements Certified by Mancera, S.C.
<PAGE> 4
5.8 Consulting and Non-Competition Agreements
5.9 Governmental Approvals
5.10 Intra-Company Debt
5.11 Proceedings
ARTICLE VI.
CONDITIONS TO THE SHAREHOLDERS' OBLIGATIONS
6.0 Conditions to the Shareholders' Obligations
6.1 Opinion of UniMark's Counsel
6.2 Truth of Representations and Warranties
6.3 Governmental Approvals; Contractual Approvals
6.4 Proceedings
6.5 Right of First Refusal
ARTICLE VII
SURVIVAL OF REPRESENTATIONS; INDEMNITY; SET-OFF
7.1 Survival of Representations
7.2 Indemnification
ARTICLE VIII
MISCELLANEOUS
8.1 Knowledge of Shareholders
8.2 Expenses
8.3 "Person" Defined
8.4 Captions
8.5 Publicity
8.6 Notices
8.7 Parties in Interest
8.8 Counterparts
8.9 Entire Agreement
8.10 Amendments
8.11 Severability
8.12 Third Party Beneficiaries
8.13 Currency
8.14 Termination of Agreement
8.15 Time of Essence
8.16 Negotiation
8.17 Binding Arbitration
<PAGE> 5
Exhibit 1. Shareholders
Exhibit 2. Opinion Letter of Shareholders' Counsel
<PAGE> 6
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") dated as of April 30,
1996, by and among The UniMark Group, Inc., a Texas corporation ("UniMark"),
and the individuals named in the annexed Exhibit 1 (collectively, the
"Shareholders"), being all the shareholders of Grupo Industrial Santa Engracia
S.A. DE C.V. ("GISE").
W I T N E S S E T H:
WHEREAS, the Shareholders own the shares of GISE listed in Exhibit 1
hereto (the "GISE Shares"), being all of the issued and outstanding shares of
the shares of capital stock of GISE.
WHEREAS, the Shareholders desire to sell, and UniMark desire to purchase,
the GISE Shares pursuant to this Agreement; and
WHEREAS, it is the intention of the parties hereto that, upon consummation
of the purchase and sale of the GISE Shares pursuant to this Agreement, UniMark
shall own all of the outstanding shares of share capital of GISE;
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
REPRESENTATIONS OF THE SHAREHOLDERS
Section 1. Representations of the Shareholders. Each of the Shareholders,
jointly and severally, represents, warrants and agrees as follows:
Section 1.1 Ownership of GISE Shares. The Shareholders are the lawful
owner of the number of shares of GISE Shares listed opposite the name of such
Shareholder in EXHIBIT 1 hereto, free and clear of all hypothecs, liens,
encumbrances restrictions and claims of every kind; the shares of GISE Shares
listed in EXHIBIT 1 are all of the outstanding shares of share capital of GISE;
each of the Shareholders has full legal right, power and authority to enter
into this Agreement and to sell, assign, transfer and convey the shares of GISE
Shares so owned by such Shareholder pursuant to this Agreement; and the
delivery to UniMark of the GISE Shares pursuant to the provisions of this
Agreement will transfer to UniMark valid title thereto, free and clear of all
hypothecs, liens, encumbrances, restrictions and claims of every kind.
Section 1.2 Validity of Transaction. This Agreement is a valid and
legally binding obligation, enforceable in accordance with its terms, except as
limited by bankruptcy, insolvency and similar laws affecting creditors
generally. When sold, assigned, transferred and conveyed to
1
<PAGE> 7
UniMark pursuant to this Agreement, the GISE Shares will be duly authorized,
validly issued, fully paid, nonassessable, and free of any preemptive rights or
rights of first refusal of the Shareholders or any other Person. The
execution, delivery and performance of this Agreement has been duly authorized
by and will not violate any applicable federal or state law, any order of any
court of government agency or the articles of incorporation of GISE. The
execution, delivery and performance of this Agreement will not result in any
breach of or default under, or result in the creation of any encumbrance upon
any of the assets of GISE pursuant to, the terms of any agreement by which GISE
or any of its respective assets may be bound. Except as set forth in SCHEDULE
1.2 heretofore, no consent, approval or authorization of, or registration or
filing with any governmental authority or other regulatory agency, is required
for the validity of the execution and delivery by GISE of this Agreement or any
documents related thereto.
Section 1.3 Existence and Good Standing. GISE is a corporation duly
organized, validly existing and in good standing under the laws of Mexico.
GISE has the power to own its property and to carry on its business as now
being conducted. GISE is duly qualified to do business and is in good standing
in Mexico, which is the only jurisdiction in which the character or location of
the properties owned or leased by GISE or the nature of the business conducted
by GISE makes such qualification necessary. GISE has all necessary power and
authority to conduct the business it proposes to conduct and enter into and
perform its obligations under this Agreement. GISE will deliver to UniMark a
Certificate of Officer dated as of the Closing Date certifying to GISE's
existence and good standing, the accuracy and completeness of its certificate
of incorporation, as amended, and its bylaws, as amended, and the names and
signatures of its officers and agents authorized to execute documents on behalf
of Company.
Section 1.4 Capital Stock. GISE has an authorized capitalization as set
forth on SCHEDULE 1.4 hereto. All such outstanding shares have been duly
authorized and validly issued and are fully paid and nonassessable. There are
no outstanding options, warrants, rights, calls, commitments, conversion
rights, rights of exchange, plans or other agreements of any character
providing for the purchase, issuance or sale of any shares of the capital stock
of GISE, other than as contemplated by this Agreement and as listed in SCHEDULE
1.4 hereto. As of the Closing Date, GISE will not be subject to any obligation,
contingent or otherwise, to repurchase or otherwise acquire or redeem any
shares of its capital stock.
Section 1.5 Subsidiaries and Investments. Set forth in SCHEDULE 1.5
heretofore delivered by the Shareholders to UniMark is a list of each of GISE's
subsidiaries, if any. Each subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, as set forth in such schedule, and has all requisite power to
own its property and to carry on its business as now being conducted. Set
forth in SCHEDULE 1.5 is a list of jurisdictions in which each subsidiary is
qualified as a foreign corporation. Such jurisdictions are the only
jurisdictions in which the character or location of the properties owned or
leased by each subsidiary, or the nature of the business conducted by each
subsidiary, make such qualification necessary. All
2
<PAGE> 8
of the outstanding shares of capital stock of each subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable, and, except as
set forth in SCHEDULE 1.5, are owned, of record and beneficially, by GISE, free
and clear of all hypothecs, liens, encumbrances, equities, options or claims
whatsoever. No shares of capital stock of any subsidiary are reserved for
issuance, and there are no outstanding options, warrants, rights,
subscriptions, claims of any character, agreements, obligations, convertible or
exchangeable securities, or other commitments, contingent or otherwise,
relating to the capital stock of such subsidiary, pursuant to which such
subsidiary is or may become obligated to issue or exchange any shares of
capital stock of such subsidiary. Neither GISE nor any subsidiary owns,
directly or indirectly, any capital stock or other equity or ownership or
proprietary interest in any other corporation, partnership, association, trust,
joint venture or other entity.
Section 1.6 Financial Statements and No Material Changes. The Shareholders
have heretofore furnished UniMark with the consolidated balance sheets of GISE
and its subsidiaries as of December 31, 1995, December 31, 1994, December 31,
1993 and December 31, 1992, and the related consolidated statements of income,
Shareholders' equity and changes in financial position for the years then
ended, all prepared in accordance with United States Generally Accepted
Accounting Principles and certified and verified by Garza Jasso & Co., S.C.
(the consolidated balance sheet of GISE and its subsidiaries as at December 31,
1995 is hereinafter referred to as the "Balance Sheet"). Such financial
statements, including the footnotes thereto, except as indicated therein, have
been prepared in accordance with United States generally accepted accounting
principles consistently followed throughout the periods indicated. The Balance
Sheet fairly presents the financial condition of GISE and its subsidiaries at
the date thereof and, except as indicated therein, reflects all claims against
and all debts and liabilities of GISE and its subsidiaries, fixed or
contingent, as at the date thereof and the related statements of income,
Shareholder' equity and changes in financial position fairly present the
results of the operations of GISE and its subsidiaries and the changes in their
financial position for the period indicated. Such other balance sheets fairly
present the financial condition of GISE and its subsidiaries at the respective
dates thereof and, except as indicated therein, reflect all claims against and
all debts and liabilities of GISE and its subsidiaries, fixed or contingent, as
at the respective dates thereof, and the related statements of income,
Shareholders' equity and changes in financial position fairly present the
results of the operations of GISE and its subsidiaries and the changes in their
financial position for the periods indicated. Since December 31, 1995 (the
"Balance Sheet Date"), there has been (x) no material adverse change in the
assets or liabilities, or in the business or condition, financial or otherwise,
or in the results of operations, of GISE and its subsidiaries, whether as a
result of any legislative or regulatory change, revocation of any license or
rights to do business, fire, explosion, accident, casualty, labor trouble,
flood, drought, riot, storm, condemnation or act of God or other public force
or otherwise, and (y) no change in the assets or liabilities, or in the
business or condition, financial or otherwise, or in the results of operations,
or prospects, of GISE and its subsidiaries except in the ordinary course of
business; and to the best knowledge, information and belief of the
Shareholders, no fact or condition exists or is contemplated or threatened
which might cause such a change in the
3
<PAGE> 9
future. In addition, GISE represents and warrants that the inventory of GISE
and its subsidiaries shown on the financial statements (a) is accurately stated
therein, (b) is usable and saleable in the normal course of business of GISE
and its subsidiaries, (c) is carried at valuations consistent with Mexican
accounting principles.
Section 1.7 Books and Records. The respective minute books of GISE and its
subsidiaries, as previously made available to UniMark and its representatives,
contain accurate records of all meetings of and corporate actions or written
consents by the respective Shareholders and Boards of Directors of GISE and its
subsidiaries. Except as set forth in SCHEDULE 1.7 heretofore delivered by the
Shareholders to UniMark, GISE and its subsidiaries do not have any of their
respective records, systems, controls, data or information recorded, stored,
maintained, operated or otherwise wholly or partly dependent upon or held by
any means (including any electronic, mechanical or photographic process,
whether computerized or not) that (including all means of access thereto and
therefrom) are not under the exclusive ownership and direct control of GISE and
its subsidiaries. GISE will make and keep books, records and accounts that in
reasonable detail accurately and fairly reflect the transactions and
dispositions of its assets. GISE will devise and maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles or any other criteria applicable to such statements and
to maintain accountability for such assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals, and appropriate action is taken with respect to any
differences.
Section 1.8 Title to Properties; Encumbrances. GISE has good and marketable
title to its real properties and good and merchantable title to each of its
other properties. Except as set forth is SCHEDULE 1.8 hereto and as needed in
GISE's ordinary course of business, all properties of GISE are free and clear
of all hypothecs and other encumbrances.
Section 1.9 Real Property. SCHEDULE 1.9 heretofore delivered by the
Shareholders to UniMark contains an accurate and complete list of all real
property owned in whole or in part by GISE or any of its subsidiaries and
includes the name of the record title holder thereof and a list of all
indebtedness or other obligations secured by an hypothec, lien, mortgage or
deed of trust thereon. Each of GISE and its subsidiaries has good and
marketable title to all the real property specified as owned by it in SCHEDULE
1.9 (or required to be set forth in SCHEDULE 1.9), free and clear of all
hypothecs, encumbrances, liens, charges or other restrictions of any kind or
character, except for those of the nature referred to in Section 1.8 or as set
forth in SCHEDULE 1.9. All of the buildings, structures and appurtenances
situated on the real property listed in SCHEDULE 1.9 (or required to be set
forth in SCHEDULE 1.9) are in good operating condition and in a state of good
maintenance and repair, (except those certain buildings, structures and
appurtances actually assigned to the Tourism
4
<PAGE> 10
Division, which are considered as is), are adequate and suitable for the
purposes for which they are presently being used and, with respect to each,
GISE or such subsidiary has adequate rights of way for operation of the
business of GISE or such subsidiary in the ordinary course. None of such
buildings, structures or appurtenances (or any equipment therein), nor the
operation or maintenance thereof, violates any restrictive covenant or any
provision of any federal, state or municipal law, by-law, ordinance, rule or
regulation, or encroaches on any property owned by others. Except as set
forth in SCHEDULE 1.9, no condemnation proceeding is pending or, to the best
knowledge, information and belief of the Shareholders, threatened that would
preclude or impair the use of any such property by GISE or such subsidiary for
the purposes for which it is currently used. GISE will maintain and keep its
material properties in good repair, working order and condition and, from time
to time, make all necessary or desirable repairs, renewals and replacement, so
that its business may be properly and advantageously conducted at all times.
All taxes whatsoever relating to the real property listed in SCHEDULE 1.9
which are due have been paid without subrogation and all transfer duties
required to be paid by GISE or any of its subsidiaries have been paid.
Section 1.10 Leases. SCHEDULE 1.10 heretofore delivered by the
Shareholders to UniMark contains an accurate and complete list and description
of the terms of all leases to which GISE or any subsidiary is a party as lessee
or lessor. Each lease set forth in SCHEDULE 1.10 (or required to be set forth
in SCHEDULE 1.10) is in full force and effect; all rents and additional rents
due to date on each such lease have been paid; in each case, the lessee has
been in peaceable possession since the commencement of the original term of
such lease and is not in default thereunder and no waiver, indulgence or
postponement of the lessee's obligations thereunder has been granted by the
lessor (except as, but not construed to, as actual commercial practice
registered in the books of GISE); and there exists no event of default or
event, occurrence, condition or act (including the purchase of the GISE Shares
hereunder) that, with the giving of notice, the lapse of time or the happening
of any further event or condition, would become a default under such lease.
Neither GISE nor any subsidiary has violated any of the terms or conditions
under any such lease in any material respect, and, to the best knowledge,
information and belief of the Shareholders, all of the covenants to be
performed by any other party under any such lease have been fully performed.
The property leased by GISE or any such subsidiary is in a state of good
maintenance and repair and is adequate and suitable for the purposes for which
it is presently being used.
Section 1.11 Material Contracts. Except as set forth in SCHEDULE 1.11
heretofore delivered by the Shareholders to UniMark, neither GISE nor any of
its subsidiaries has or is bound by (a) any agreement, contract or commitment
relating to the employment of any person by GISE or any subsidiary, or any
bonus, deferred compensation, pension, profit sharing, stock option, employee
stock purchase, retirement or other employee benefit plan, (b) any agreement,
indenture or other instrument that contains restrictions with respect to
payment of dividends or any other distribution in respect of its capital stock,
(c) any agreement, contract or commitment relating to capital
5
<PAGE> 11
expenditures, (d) any loan or advance to, or investment in, any other Person or
any agreement, contract or commitment relating to the making of any such loan,
advance or investment, (e) any guarantee or other contingent liability in
respect of any indebtedness or obligation of any other Person (other than the
endorsement of negotiable instruments for collection in the ordinary course of
business), (f) any management service, consulting or any other similar type
contract, (g) any agreement, contract or commitment limiting the freedom of
GISE or any subsidiary to engage in any line of business or to compete with any
other Person, (h) any agreement, contract or commitment not entered into in the
ordinary course of business that involves $25,000 or more and is not cancelable
without penalty within 30 days or (i) any agreement, contract or commitment
that might reasonably be expected to have a potential adverse impact on the
business or operations of GISE or any of its subsidiaries. Each contract or
agreement set forth in SCHEDULE 1.11 (or required to be set forth in SCHEDULE
1.11) is in full force and effect, and there exists no default or event of
default or event, occurrence, condition or act (including the purchase of the
GISE Shares hereunder) that, with the giving of notice, the lapse of time or
the happening of any other event or condition, would become a default or event
of default thereunder. Neither GISE or any such subsidiary has violated any of
the terms or conditions of any contract or agreement set forth in SCHEDULE 1.11
(or required to be set forth in SCHEDULE 1.11) in any material respect, and, to
the best knowledge, information and belief of the Shareholders, all of the
covenants to be performed by any other party thereto have been fully performed.
Contracts made in the ordinary course of business involving less than $25,000
shall be deemed not to be material for purposes of this SECTION 1.11.
Section 1.12 Restrictive Documents. Except as set forth in SCHEDULE 1.12
heretofore delivered by the Shareholders to UniMark, none of GISE, any of its
subsidiaries or any Shareholders are subject to, or a party to, any charter,
bylaw, hypothec, mortgage, lien, lease, license, permit, agreement, contract,
instrument, law, rule, ordinance, regulation, order, judgment or decree, or any
other restriction of any kind or character, that materially adversely affects
the business practices, operations or condition of GISE or any of its
subsidiaries or any of their assets or property, or that would prevent
consummation of the transactions contemplated by this Agreement, compliance by
any Shareholders with the terms, conditions and provisions hereof or the
continued operation of GISE's or any subsidiary's business after the date
hereof or the Closing Date (as hereinafter defined) on substantially the same
basis as heretofore operated or that would restrict the ability or GISE or any
subsidiary to acquire any property or conduct business in any area.
Section 1.13 Litigation. Except as set forth in SCHEDULE 1.13 heretofore
delivered by the Shareholders to UniMark, there is no action, suit or
proceeding by any person or entity, or any arbitration or any administrative or
other proceeding by or before (or to the best knowledge, information and belief
of the Shareholders any investigation by) any governmental or other
instrumentality or agency, pending, or, to the best knowledge, information and
belief of the Shareholders, threatened, against or affecting GISE or any of its
subsidiaries, or any of their properties or rights that could materially and
adversely affect the right or ability of GISE or any of its subsidiaries to
carry on its business as now conducted, or that could materially and adversely
affect the condition,
6
<PAGE> 12
whether financial or otherwise, or properties of GISE or any of its
subsidiaries; and the Shareholders do not know of any valid basis for any such
action, proceeding or investigation. Neither GISE nor any of its subsidiaries
is subject to any judgment, order or decree entered in any lawsuit or
proceeding that may have a material adverse effect on any of its operations,
business practices or on its ability to acquire any property or conduct
business in any area.
Section 1.14 Taxes. GISE has filed or caused to be filed, within the
times and within the manner prescribed by law, all federal, state,
municipal and foreign tax returns and tax reports that are required to be filed
by, or with respect to, GISE or any of its subsidiaries, including, but not
limited to, all items related to Social Security, Housing Contribution
(INFONAVIT) and Retirement Pension Funds (SAR). Such returns and reports
reflect accurately all liability for taxes of GISE and all of its subsidiaries
for the periods covered thereby. All federal, provincial, municipal and foreign
income, profits, sales, use, occupancy, excise and other taxes and assessments
(including interest and penalties) payable by, or due from, GISE or any of its
subsidiaries, including, but not limited to, all items related to Social
Security, Housing Contribution (INFONAVIT) and Retirement Pension Funds (SAR),
have been fully paid or adequately disclosed and fully provided for in the
books and financial statements of GISE and its subsidiaries. The federal and
state income tax liability of GISE and its subsidiaries has been finally
determined for all fiscal years to and including the fiscal year ended December
31, 1995. No examination of any tax return of GISE or any of its subsidiaries
is currently in progress. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any tax return of
GISE or any of its subsidiaries. GISE will pay and discharge, when due, (i)
all material taxes, assessments and governmental priority claims, hypothecs and
charges imposed upon its properties or upon the income or profits therefrom (in
ease case before the same becomes delinquent and before penalties accrue
thereon), and (ii) all claims for labor, materials or supplies that, if unpaid,
might by law became an hypothec or lien upon any of its properties, unless and
to the extent that the same are being contested in good faith and by
appropriate proceedings, and adequate reserves have been set aside on its books
with respect thereto, in accordance with generally accepted accounting
principles.
Section 1.15 Liabilities. Neither GISE nor any of its subsidiaries has any
outstanding claims, liabilities or indebtedness, contingent or otherwise,
except as set forth in the Balance Sheet or referred to in the footnotes
thereto or set forth in GISE's interim balance sheet for as of March 31, 1995,
other than liabilities incurred subsequent to the Balance Sheet Date in the
ordinary course of business not involving borrowings by GISE or any subsidiary.
Neither GISE nor any of its subsidiaries is in default in respect of the terms
or conditions of any indebtedness.
Section 1.16 Insurance. Set forth in SCHEDULE 1.16 heretofore delivered
by the Shareholders to UniMark is a complete list of insurance policies
that GISE and its subsidiaries maintain with respect to their businesses,
properties or employees. Such policies are in full force and effect free from
any right of termination on the part of the insurance carriers. Such
policies, with respect to their amounts and types of coverage, are adequate to
insure fully against risks to
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<PAGE> 13
which GISE, its subsidiaries and their property and assets are normally
exposed in the operation of their respective businesses. Since January 1,
1995, there has not been any material adverse change in GISE's or any
subsidiary's relationship with its insurers or in the premiums payable
pursuant to such policies, except for general changes the insurance industry.
Section 1.17 Intellectual Properties. SCHEDULE 1.17 heretofore delivered
by the Shareholders to UniMark contains an accurate and complete list of
all domestic and foreign letters patent, patents, patent applications, patent
licenses, software licenses and know-how licenses, trade names, trademarks,
copyrights, unpatented inventions, service marks, trademark registrations and
applications, service mark registrations and applications and copyright
registrations and applications owned or used by GISE and its subsidiaries in
the operation of their respective businesses (collectively, the "Intellectual
Property"). Unless otherwise indicated in such SCHEDULE 1.17, GISE or such
subsidiary owns the entire right, title and interest in and to the Intellectual
Property, trade secrets and technology used in the operation of its business
(including, without limitation, the exclusive right to use and license the
same) and each item constituting part of the Intellectual Property and trade
secrets and technology that is owned by GISE or such subsidiary has been, to
the extent indicated in SCHEDULE 1.17, duly registered with, filed in or issued
by, as the case may be, the Patent Office (Mexico), the Office of the Registrar
of Trade-marks (Mexico), the United States Patent and Trademark Office or such
other government entities, domestic or foreign, as are indicated in SCHEDULE
1.17; and such registrations, filings and issuances remain in full force and
effect. To the best knowledge, information and belief of the Shareholders,
except as stated in such SCHEDULE 1.17, there are no pending or threatened
proceedings or litigation or other adverse claims affecting or with respect to
the Intellectual Property. SCHEDULE 1.17 lists all notices or claims currently
pending or received by GISE or any of its subsidiaries during the past two (2)
years that claim infringement by GISE or such subsidiary of any domestic or
foreign letters patent, patent applications, patent licenses and know-how
licenses, trade names, trademark registrations and applications, service marks,
copyrights, copyright registrations or applications, trade secrets or other
confidential proprietary information. Except as set forth in any Schedule
hereto, there is, to the best knowledge, information and belief of the
Shareholders, no reasonable basis upon which a claim may be asserted against
GISE or any of its subsidiaries for infringement of any domestic or foreign
letters patent, patents, patent applications, patent licenses and know-how
licenses, trade names, trademark registrations and applications, common law
trademarks, service marks, copyrights, copyright registrations or applications,
trade secrets or other confidential proprietary information. To the best
knowledge, information and belief of the Shareholders, except as indicated on
SCHEDULE 1.17, no Person is infringing the Intellectual Property. GISE owns,
possesses, or otherwise has the legal right to use all the trademarks, service
marks, trade names, copyrights, franchises, consents, authorizations, licenses
and rights with respect to the foregoing necessary for the conduct of its
business as now conducted.
Section 1.18 Compliance with Laws; Permits. To the best knowledge of the
Shareholders, GISE and its subsidiaries, are, and always were, in compliance in
all material respects with all
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<PAGE> 14
applicable laws, regulations, orders, judgments and decrees. All water, gas,
electric, telephone and other utility equipment required by all applicable laws
and now utilized by GISE and its subsidiaries in their facilities, are
installed and connected pursuant to valid permits and are reasonably adequate
for the present use.
Section 1.19 Accounts Receivable. The amount of all accounts receivable,
unbilled invoices and other debts due or recorded in the respective records and
books of account of GISE and its subsidiaries as being due to GISE and its
subsidiaries as at the Closing Date (less the amount of any provision or
reserve therefor made in the respective records and books of account of GISE
and its subsidiaries) will be good and collectible in full in the ordinary
course of business and, in any event, not later than sixty (60) days after the
Closing Date except as stated in such SCHEDULE 1.17, and none of such accounts
receivable or other debts is or will at the Closing Date be subject to any
counterclaim or set-off except to the extent of any such provision or reserve.
There has been no material adverse change since the Balance Sheet Date in the
amount of accounts receivable or other debts due GISE or its subsidiaries or
the allowances with respect thereto, or accounts payable of GISE and its
subsidiaries, from that reflected in the Balance Sheet.
Section 1.20 Employment Relations. (a) Each of GISE and its subsidiaries
is in substantial compliance with all federal, state or other applicable
laws, domestic or foreign, respecting employment and employment practices,
terms and conditions of employment and wages and hours, and has not and is not
engaged in any unfair labor practice; (b) no unfair labor practice complaint
against GISE or any of its subsidiaries is pending before a labor commissioner
or other competent authority; (c) there is no labor strike, dispute, slowdown
or stoppage actually pending or threatened against or involving GISE or any of
its subsidiaries; (d) no representation question exists respecting the
employees of GISE or any of its subsidiaries; (e) no grievance that might have
an adverse effect upon GISE or any of its subsidiaries or the conduct of their
respective businesses exists, no arbitration proceeding arising out of or under
any collective bargaining agreement is pending, and no claim therefor has been
asserted; (f) no collective bargaining agreement exist or is currently being
negotiated by GISE or any of its subsidiaries; and (g) neither GISE nor any of
its subsidiaries has experienced any material labor difficulty during the last
three (3) years. There has not been, and to the best knowledge, information
and belief of the Shareholders, there will not be, any material adverse change
in relations with employees of GISE or any of its subsidiaries as a result of
any announcement of the transactions contemplated by this Agreement. To the
best knowledge, information and belief of the Shareholders, no key employee, or
group of employees has any plans to terminate employment with GISE. There is
no employment agreement that cannot be terminated without penalty by GISE
within 30 days notice.
Section 1.21 Employee Benefit Plans. SCHEDULE 1.21 of the Disclosure
Schedule lists each Employee Benefit Plan that any of GISE and its
Subsidiaries maintains or to which any of GISE and its Subsidiaries
contributes. Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all respects
with all applicable laws and no
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<PAGE> 15
leave of contribution to such Employee Benefit Plan has been taken by GISE or
any of its Subsidiaries.
Section 1.22 Interests in Clients, Suppliers. Etc. Except as set forth in
SCHEDULE 1.22, neither any Shareholders nor any officer or director of GISE or
any of its subsidiaries possesses, directly or indirectly, any financial
interest in, or is a director, officer or employee of, any corporation, firm,
association or business organization that is a client, supplier, customer,
lessor, lessee, or competitor or potential competitor of GISE or any of its
subsidiaries. Ownership of securities of a company whose securities are
registered under the Securities Exchange Act of 1934 or are listed on a
recognized Stock Exchange not in excess of one percent (1%) of any class of
such securities shall not be deemed to be a financial interest for purposes of
this Section 1.22.
Section 1.23 Bank Accounts, Powers of Attorney and Compensation of
Employees. Set forth in SCHEDULE 1.23 heretofore delivered by the
Shareholders to UniMark is an accurate and complete list showing (a) the name
and address of each bank in which GISE or any of its subsidiaries (in which
GISE owns, directly or indirectly, a majority of the voting stock) has an
account or safe deposit box, the number of any such account or any such box and
the names of all persons authorized to draw thereon or to have access thereto,
(b) the names of all persons, if any, holding powers of attorney from GISE or
any of its subsidiaries and a summary statement of the terms thereof and (c)
the names of all persons whose compensation from GISE or any of its
subsidiaries for the fiscal year ended on the Balance Sheet Date exceeded an
annualized rate of $25,000, together with a statement of the full amount paid
or payable to each such person for services rendered during such fiscal year.
Section 1.24 No Changes Prior to Closing Date. Except as indicated in
SCHEDULE 1.24, during the period from the Balance Sheet Date to and
including the Closing Date, except as expressly contemplated hereby, neither
GISE nor any of its subsidiaries will have (i) incurred any liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise),
except in the ordinary course of business, (ii) permitted any of its assets to
be subjected to any hypothec, mortgage, pledge, lien, security interest,
encumbrance, restriction or charge of any kind, (iii) sold, transferred or
otherwise disposed of any assets except in the ordinary course of business,
(iv) made any capital expenditure or commitment therefor, except in the
ordinary course of business, (v) declared or paid any dividend or made any
distribution on any shares of its capital stock, or redeemed, purchased or
otherwise acquired any shares of its capital stock or any option, warrant or
other right to purchase or acquire any such shares, (vi) made any bonus or
profit sharing distribution or payment of any kind, (vii) increased its
indebtedness for borrowed money, except current borrowings from banks in the
ordinary course of business, or made any loan to any Person, (viii) written off
as uncollectible any notes or accounts receivable, except write-offs in the
ordinary course of business charged to applicable reserves, none of which
individually or in the aggregate is material to GISE and its subsidiaries, (ix)
granted any increase in the rate of wages, salaries, bonuses or other
remuneration of any executive employee or other employees, except in the
ordinary course of business, (x) canceled or waived any claims or rights of
substantial value, (xi) made any change in any method
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<PAGE> 16
of accounting or auditing practice, (xii) otherwise conducted its business or
entered into any transaction, except in the usual and ordinary manner and in
the ordinary course of its business, or (xiii) agreed, whether or not in
writing, to do any of the foregoing. There shall have been no material adverse
change in the financial position, results of operations, business or prospects
of Company since December 31, 1995. GISE has not consolidated or merged with,
nor sold, leased or otherwise disposed to its properties as an entirety or
substantially as an entirety, to any Person.
Section 1.25 Disclosure. None of this Agreement, the financial statements
referred to in Section 1.6 above (including the footnotes thereto), or any
Schedule, Exhibit or certificate delivered in accordance with the terms hereof
or any document or statement in writing that has been supplied by or on behalf
of the Shareholders, or by any of GISE's or any of its subsidiaries' directors
or officers, in connection with the transactions contemplated hereby, contains
to their best knowledge any untrue statement of a material fact, or omits any
statement of a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact known to the
Shareholders that materially and adversely affects the business, prospects or
financial condition of GISE or any of its subsidiaries or their respective
properties or assets, that has not been set forth in this Agreement or in the
Schedules, Exhibits or certificates or statements in writing furnished in
connection with the transactions contemplated by this Agreement. There has not
come to the attention of GISE any facts that reasonably cause Company or its
Shareholders to believe that any document connected with the transactions
contemplated hereby contain any untrue statement or a material fact, or omit to
state a material fact required to be stated herein or necessary in order to
make the statements herein, the light of the circumstances existing on the
Closing Date, not misleading.
Section 1.26 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of the Shareholders or GISE is, or will be, entitled to any
commission or broker's or finder's fees from any of the parties hereto, or from
any Person controlling, controlled by or under common control with any of the
parties hereto, in connection with any of the transactions contemplated herein.
Section 1.27 Agreements, Judgments and Decrees Affecting Shareholders.
Each of the Shareholders represents and warrants that such Shareholders is not
subject to any agreement, judgment or decree adversely affecting such
Shareholder's ability to act as an employee of GISE or any of its subsidiaries,
as the case may be.
Section 1.28 Copies of Documents. The Shareholders have caused to be made
available for inspection and copying by UniMark and their advisers, true,
complete and correct copies of all documents referred to in this Article I or
in any Schedule furnished by the Shareholders to UniMark. All documents and
instruments delivered to UniMark on the Closing Date in connection with this
transaction shall be reasonably satisfactory to UniMark.
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Section 1.29 Purchase for Investment. Each Shareholder will acquire the
UniMark Shares (as defined in Section 3.2) for investment and not with a view
to resale or for distributing all or any part thereof in any transaction which
would constitute a "distribution" within the meaning of the Securities Act.
The offering of the UniMark Shares to the Shareholders were made only through
direct, personal communication between the undersigned and a duly authorized
representative of UniMark and not through public solicitation or advertising.
Shareholders acknowledge that the UniMark Shares have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), and UniMark is
under no obligation to file a registration statement with the United States
Securities and Exchange Commission with respect to the UniMark Shares.
Section 1.30 Investor Qualifications. Shareholders (a) has such
knowledge and experience in financial and business matters that it is capable
of evaluating the merits and risks of its investment in the UniMark Shares and
has the financial ability to assume the monetary risk associated therewith; (b)
is able to bear the complete loss of its investment in the UniMark Shares; and
(c) has received such other documents and information as it has requested and
has had the opportunity to ask questions of, and receive answers from, UniMark
and its management concerning UniMark and the terms and conditions of the
offering of the UniMark Shares and to obtain additional information.
Section 1.31 Regulation "S"; Shareholders are Non-U.S. Persons. Each
Shareholder (i) is a resident of Mexico and not a resident of the United States
or an partnership or corporation organized or incorporated under the laws of
the United States, or otherwise meets the definition of a "U.S. person" as
defined in Regulation S under the Securities Act, (ii) will resell the UniMark
Shares only in accordance with Regulation S, pursuant to a registration
statement under the Securities Act or pursuant to an available exemption from
registration under the Securities Act, (iii) the certificates representing the
UniMark Shares will contain a legend that transfer is prohibited except in
accordance with the provisions of Regulation S, (iv) UniMark is required to
refuse the transfer of any of the UniMark Shares not made in accordance with
Regulation S and (v) agrees not to sell any of the UniMark Shares in the United
States for a period of one year from the effective date of this Agreement
without the prior written consent of UniMark.
Section 1.32 Environmental matters . There are currently no violations by
GISE of, and, there previously have been no violations of, and GISE and its
subsidiaries have given all notices required under, any Mexican or other
applicable Federal, State or Municipal law, regulation, rule, standard, decree,
order or ordinances relating to safety, health, environmental protection,
hazardous waste or hazardous materials ("Environmental and Zoning Laws") in
connection with the use and occupancy of the Real property. Except as set
forth in SCHEDULE 1.32, GISE and its subsidiaries have obtained all
Authorizations which are required under the Environmental and Zoning Laws with
respect to the conduct of its Business and the use and occupancy of the Real
Property and are in material compliance with the Environmental and Zoning Laws.
Except as set forth in Schedule SCHEDULE 1.32, no complaint, claim, action,
suit, proceeding, investigation, order, citation, letter, inquiry, notice or
other communication, whether written or oral, has been made or filed which
relates
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<PAGE> 18
to the Real Property or any activity or operation at any time conducted by GISE
and its subsidiaries regarding the occurrence or presence of, or exposure to,
or possible or threatened occurrence of, any toxic or hazardous substances,
waste, effluents, pollutants or contaminants, petroleum products, medical
waste, infectious waste, paint containing lead or other hazardous materials
("Hazardous Materials"), or any discharge of Hazardous Materials. Except as
set forth in SCHEDULE 1.32, there have been no discharges or releases of
Hazardous Materials of any kind that have occurred at, upon, under, within, or
from the Real Property or been removed from the Real Property. There are
underground or above-ground containers for the storage of fuel, oil, gasoline,
or other petroleum products or by-products or any other Hazardous Materials
located on, in or under the Real Property.
ARTICLE II
REPRESENTATIONS OF UNIMARK
Section 2. Representations of UniMark. UniMark represents, warrants and
agrees as follows:
Section 2.1 Existence and Good Standing. UniMark is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. UniMark has corporate power and authority to make, execute, deliver and
perform this Agreement, and this Agreement has been duly authorized and
approved by all required corporate action of UniMark.
Section 2.2 Restrictive Documents. UniMark is not subject to any
charter, by-law, mortgage, lien, lease, agreement, instrument, order,
law, rule, regulation, judgment or decree, or any other restriction of any kind
or character, that would prevent consummation of the transactions contemplated
by this Agreement.
Section 2.3 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of UniMark is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated herein.
Section 2.4 Issuance of the UniMark Shares. The delivery to
Shareholders of the UniMark Shares pursuant to the provisions of this Agreement
will transfer to Shareholders valid title thereto, free and clear of all liens,
encumbrances, restrictions and claims of every kind, except as acknowledged by
Shareholders in Section 1.31.
Section 2.5 Financial Situation. The consolidated financial statement of
The UniMark Group, Inc. is set forth in The UniMark Group, Inc. Annual Report
on Form 10-KSB for the Year Ended December 31, 1995 fairly represent the
financial condition of UniMark as of the respective date.
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<PAGE> 19
Section 2.6 No Changes Prior To Closing. Since December 31, 1995, there
has been no material adverse change in the financial condition of UniMark.
Section 2.7 Disclosure. None of this Agreement, the financial statements
referred to in Section 2.6 above (including the footnotes thereto), or any
Schedule, Exhibit or certificate delivered in accordance with the terms hereof
or any document or statement in writing that has been supplied by or on behalf
of UniMark or any of its subsidiaries' directors or officers, in connection
with the transactions contemplated hereby, contains to their best knowledge any
untrue statement of a material fact, or omits any statement of a material fact
necessary in order to make the statements contained herein or therein not
misleading. There is no fact known to UniMark that materially and adversely
affects the business, prospects or financial condition of UniMark or any of its
subsidiaries or their respective properties or assets, that has not been set
forth in this Agreement or in the Schedules, Exhibits or certificates or
statements in writing furnished in connection with the transactions
contemplated by this Agreement. There has not come to the attention of UniMark
any facts that reasonably cause UniMark to believe that any document connected
with the transactions contemplated hereby contain any untrue statement or a
material fact, or omit to state a material fact required to be stated herein or
necessary in order to make the statements herein, the light of the
circumstances existing on the Closing Date, not misleading.
Section 2.8 Litigation. There is no action, suit or proceeding by any
person or entity, or any arbitration or any administrative or other proceeding
by or before (or to the best knowledge, information and belief of UniMark any
investigation by) any governmental or other instrumentality or agency, pending,
or, to the best knowledge, information and belief of UniMark, threatened, that
could reasonably be expected to interfere with the consummation of the
transactions contemplated hereby.
ARTICLE III
SALE OF GISE SHARES
Section 3.1 Sale of GISE Shares. Subject to the terms and conditions
herein stated, the Shareholders agree to sell, assign, transfer and deliver to
UniMark on the Closing Date, and UniMark agrees to purchase from Shareholders
on the Closing Date, the number of shares of GISE Shares set forth opposite the
names of Shareholders on Exhibit 1 hereto. The certificates representing the
GISE Shares shall be duly endorsed to UniMark by the Shareholders transferring
the same. Shareholders agree to cure any deficiencies with respect to the
endorsement of the certificates representing the GISE Shares owned by
Shareholders or with respect to the stock power and rights accompanying any
such certificates.
Section 3.2 UniMark Common Stock. At the Closing, UniMark shall issue and
deliver to the Shareholders such number of shares of its authorized but
unissued Common Stock (the
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<PAGE> 20
"UniMark Shares") that have a Public Market Value of $12 million. As used
herein, the term "Public Market Value" means the closing sales price of the
UniMark Common Stock as quoted on the NASDAQ National Market System for the
seven (7) consecutive trading days ending April 30, 1996 (the "Calculation
Date"). The UniMark Shares shall be delivered to the Shareholders listed on
Exhibit 1 hereto, pro-rata in accordance with the ownership percentage set
forth opposite that Shareholders' name in Exhibit 1 hereto.
Section 3.3 Closing. The sale referred to in Section 3.1 shall take
place at the offices of Jordaan, Howard & Pennington, PLLC within 15
business days after delivery of the Mancera Audited Financials (as defined in
Section 5.12) or at such earlier time and date as UniMark shall by written
instrument designate. Such time and date are herein referred to as the
"Closing Date."
Section 3.4 Post Closing Adjustment to Purchase Price. If for any of
fiscal years 1996, 1997, 1998 or 1999 (a) GISE's income before interest,
depreciation, amortization, taxes and translation gain/loss ("EBITDA") less
Cost of Capital (as defined below) exceeds (b) the Projected Base EBITDA
Amounts (as set forth in the table below) for the corresponding year (as set
forth in the table below), then, UniMark shall pay to the Shareholders, an
amount equal to 3.5 times such excess amount (the "Additional Consideration")
up to a cumulative aggregate amount of $8 million:
<TABLE>
<CAPTION>
Fiscal Year Projected Base
ended December 31 EBITDA Amounts
- --------------------------------------------
<S> <C>
1996 $3,540,000
1997 5,023,000
1998 7,517,000
1999 9,542,000
</TABLE>
Notwithstanding anything herein to the contrary, the cumulative amount of the
Additional Consideration payable pursuant to this Section 3.5 shall not exceed
$8 million in the aggregate for all years. As used herein "Cost of Capital" for
any fiscal year shall mean an amount equal to the 10 percent of Outstanding
Cumulative Capital Expenditures (as defined below). As used herein
"Outstanding Cumulative Capital Expenditures" for a particular fiscal year
shall mean (a) the weighted average amount of all expenditures made by GISE
during the particular fiscal year for assets with an expected life in excess of
one year plus (b) the amount of all expenditures for assets with an expected
life in excess of one year made by GISE after the Closing Date but prior to the
particular fiscal year.
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<PAGE> 21
Additional Consideration, if any, that may be due in respect of any fiscal year
shall be due and payable on April 1 of the following year (the "Subsequent
Calculation Date") , at UniMark's option in either (a) shares of UniMark Common
Stock that has a Subsequent Public Market Value (as defined below) equal to the
amount of the Additional Consideration (the "Additional UniMark Shares") or
(b) cash in amount of the Additional Consideration. As used herein,
Subsequent Public Market Value means the average closing bid prices of the
UniMark Common Stock as quoted on the NASDAQ National Market System for the
seven (7) consecutive trading days immediately preceding the Subsequent
Valuation Date. The Additional Consideration shall be paid to the Shareholders
listed on Exhibit 1 hereto, pro-rata in accordance with the ownership
percentage set forth opposite that Shareholders' name in Exhibit 1 hereto. The
all amounts included in the calculation of EBITDA shall be in accordance with
United States Generally Accepted Accounting Principles ("U.S. GAAP")
consistently applied and derived from GISE's audited financial statements. If
a dispute shall arise regarding the calculation of the Additional
Consideration, the accounting firms of Mancera, S.C. and Ernst & Young LLP (or
any mutually acceptable national independent Mexican and United States
accounting firms) shall collectively determine the amount of the Additional
Consideration and the determination of these independent accounting firms shall
be final and binding upon the parties hereto.
Prior to the issuance of any Addition Consideration that consist of additional
UniMark Shares, each Shareholder shall represent and warrant to UniMark that:
(a) Purchase for Investment. Each Shareholder will acquire the
Additional UniMark Shares for investment and not with a view to resale or
for distributing all or any part thereof in any transaction which would
constitute a "distribution" within the meaning of the Securities Act.
The offering of the Additional UniMark Shares to the Shareholders were
made only through direct, personal communication between the undersigned
and a duly authorized representative of UniMark and not through public
solicitation or advertising. Shareholders acknowledge that the
Additional UniMark Shares have not been registered under the Securities
Act and UniMark is under no obligation to file a registration statement
with the United States Securities and Exchange Commission with respect to
the Additional UniMark Shares.
(b) Investor Qualifications. Each Shareholder (a) has such
knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of its investment in the
Additional UniMark Shares and has the financial ability to assume the
monetary risk associated therewith; (b) is able to bear the complete loss
of its investment in the Additional UniMark Shares; and (c) has received
such other documents and information as it has requested and has had the
opportunity to ask questions of, and receive answers from, UniMark and
its management concerning UniMark and the terms and conditions of the
offering of the Shares and to obtain additional information.
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<PAGE> 22
(c) Shareholders are Non-U.S. Persons. Each Shareholder (i) is a
resident of Mexico and not a resident of the United States or an
partnership or corporation organized or incorporated under the laws of
the United States, or otherwise meets the definition of a "U.S. person"
as defined in Regulation S under the Securities Act and (ii) agrees not
to sell any of the Additional UniMark Shares in the United States for a
period of one year from the date of issuance.
ARTICLE IV
CONDUCT OF BUSINESS; REVIEW
Section 4.1 Conduct of Business of GISE. Since December 31, 1995, the
Shareholders have caused GISE and each of its subsidiaries to conduct their
respective operations only according to their ordinary and usual course of
business and to use their best efforts to preserve intact their respective
business organizations, keep available the services of their officers and
employees and maintain satisfactory relationships with licensors, suppliers,
distributors, clients and others having business relationships with them.
Notwithstanding the immediately preceding sentence, pending the Closing Date
and except as it has been first approved by UniMark or as is otherwise
permitted or required by this Agreement, the Shareholders have caused (a)
GISE's and each of its subsidiaries' respective articles or certificate of
incorporation and Bylaws to be maintained in their form on the date of this
Agreement, (b) the compensation payable or to become payable by GISE and each
of its subsidiaries to any officer, employee or agent being paid $40,000 per
year or more on the Balance Sheet Date to be maintained at their levels on the
date of this Agreement, (c) GISE and each of its subsidiaries to refrain from
making any bonus, pension, retirement or insurance payment or arrangement to or
with any such persons except those that may have already been accrued, (d) GISE
and each of its subsidiaries to refrain from entering into any contract or
commitment except contracts in the ordinary course of business and (e) GISE and
each of its subsidiaries to refrain from making any change affecting any bank,
safe deposit or power of attorney arrangements of GISE or any such subsidiary.
Since December 31, 1995, the Shareholders have caused GISE to confer on a
regular and frequent basis with one (1) or more designated representatives of
UniMark to report material operational matters and to report the general status
of ongoing operations. The Shareholders shall cause GISE and each of its
subsidiaries to notify UniMark of any unexpected emergency or other change in
the normal course of its business or in the operation of its properties and of
any governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), adjudicatory proceedings, budget
meetings or submissions involving any material property of GISE and each of its
subsidiaries, and to keep UniMark fully informed of such events and permit its
representatives prompt access to all materials prepared in connection
therewith.
Section 4.2 Exclusive Dealing. During the period from the date of this
Agreement to the Closing Date, the Shareholders shall not, and shall cause GISE
to refrain from taking any action to, directly or indirectly, encourage,
initiate or engage in discussions or negotiations with, or provide
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<PAGE> 23
any information to, any corporation, partnership, Person, or other entity or
group, other than UniMark, concerning any purchase of the GISE Shares or
any merger, sale of substantial assets or similar transaction involving GISE.
Section 4.3 Nondisclosure. Each Shareholder agrees not to disclose any
information regarding the transactions contemplated hereby or their intention
to conduct such a sale to any third parties (other than the shareholders'
respective legal counsel, bankers and accountants) and to limit availability to
such information to only those officers of GISE as are necessary to negotiate
the terms and provisions of the transaction contemplated hereby.
Section 4.4 Access to Information. The Shareholders shall cause GISE,
its subsidiaries and its officer, directors and employees to permit UniMark and
its counsel, accountants, agents and other representatives, full access, at
reasonable times during normal business hours, throughout the period beginning
on the date hereof and ending on the Closing Date, to all of the facilities,
properties, books, records, contracts, commitments and personnel of GISE and
its subsidiaries and shall furnish to UniMark during such period all such
information concerning the business, operations and affairs of GISE and its
subsidiaries and the financial conditions thereof as UniMark or its counsel,
accountants, agents and other representatives may reasonably requires. No
investigation or findings of UniMark shall however, affect the representations
and warranties of the Shareholders hereunder.
ARTICLE V
CONDITIONS TO UNIMARK's OBLIGATIONS
Section 5. Conditions to UniMark's Obligations. The purchase of the GISE
Shares by UniMark on the Closing Date is conditioned upon receipt by UniMark of
the legal opinion and other documents listed in Sections 5.1, 5.2, 5.3, 5.4,
5.5, 5.6, 5.7, 5.8, 5.9, 5.10 and 5.11 and compliance with Sections 5.10 and
5.11.
Section 5.1 Opinion of GISE's Counsel. The Shareholders shall have
furnished UniMark with a favorable opinion, dated the Closing Date, of GISE's
counsel, in form and substance satisfactory to UniMark and its counsel, to the
effect set forth in Exhibit 2 hereto.
Section 5.2 Good Standing Certificates. The Shareholders shall have
delivered to UniMark (a) copies of GISE's and such subsidiaries' respective
deed of incorporation, including all amendments thereto, certified by the other
appropriate official of its jurisdiction of incorporation, (b) certificates
appropriate official or other appropriate official of the respective
jurisdictions of incorporation to the effect that each of GISE and its
designated subsidiaries is in good standing or subsisting in such jurisdiction,
and (c) a certificate from the appropriate official in each jurisdiction in
which GISE or any designated subsidiary is qualified to do business to the
effect that GISE or the applicable subsidiary is in good standing in such
jurisdiction.
18
<PAGE> 24
Section 5.3 No Material Adverse Change. Prior to the Closing Date, there
shall be no material adverse change in the assets or liabilities, the business
or condition, financial or otherwise, the results of operations, or prospects
of GISE and its subsidiaries, whether as a result of any legislative or
regulatory change, revocation of any license or rights to do business, fire,
explosion, accident, casualty, labor trouble, flood, drought, riot, storm,
condemnation or act of God or other public force or otherwise, and the
Shareholders shall have delivered to UniMark a certificate, dated the Closing
Date, to such effect.
Section 5.4 Truth of Representations and Warranties. The representations
and warranties of the Shareholders contained in this Agreement or in any
Schedule delivered pursuant hereto shall be true and correct on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date, and the Shareholders shall have delivered
to UniMark on the Closing Date a certificate, dated the Closing Date, to such
effect.
Section 5.5 Performance of Agreements. Each and all of the agreements of
the Shareholders to be performed on or before the Closing Date pursuant to the
terms hereof shall have been duly performed, and the Shareholders shall have
delivered to UniMark a certificate, dated the Closing Date, to such effect.
Section 5.6 No Litigation Threatened. No action or proceedings shall have
been instituted or, to the best knowledge, information and belief of the
Shareholders, shall have been threatened before a court or other government
body or by any public authority to restrain or prohibit any of the transactions
contemplated hereby, and the Shareholders shall have delivered to UniMark a
certificate, dated the Closing Date, to such effect.
Section 5.7 Audited Financial Statements certified by Mancera, S.C.. The
Shareholders shall have furnished UniMark with the consolidated balance sheets
of GISE and its subsidiaries as of December 31, 1995 and the related
consolidated statements of income, Shareholders' equity and changes in
financial position for the years then ended, all prepared in accordance with
U.S. GAAP, upon which Mancera S.C. has reached an unqualified audit opinion
based upon U.S. generally accepted auditing standards (the "Mancera Audited
Financials"). The audited balance sheet of GISE and its subsidiaries and the
related statements of income, Shareholder' equity and changes in financial
position set forth in the Mancera Audited Financials, shall be substantially
similar to the balance sheet of GISE and its subsidiaries and the related
statements of income, Shareholder' equity and changes in financial position
that have been provided to UniMark by GISE and the Shareholders.
Section 5.8 Employment and Non-Competition Agreements. GISE shall have
entered into a four year employment and non-competition agreement (the
"Employment Agreement") with Mr. Ing. Jose Ma. Martinez Brohez in form and
substance satisfactory to UniMark. The Employment Agreement shall provide that
for a period of at least four (4) years from the effective date of this
Agreement, (a) exclusive authority regarding the hiring and firing of any GISE
officers or employees
19
<PAGE> 25
shall vest in Mr. Ing. Jose Ma. Martinez Brohez and (b) Mr. Ing. Jose Ma.
Martinez Brohez's position as president and chief executive officer of GISE
can only be terminated by GISE for "Cause."
The Employment Agreement shall be define "Cause" as:
"Cause" means (a) any act by Mr. Ing. Jose Ma. Martinez
Brohez that is materially injurious to GISE and which if the
subject of a criminal proceeding could result in a criminal
conviction or (b) the failure by Mr. Ing. Jose Ma. Martinez Brohez
to substantially perform his duties hereunder, which duties are
within the control of Mr. Ing. Jose Ma. Martinez Brohez and after
notification Mr. Ing. Jose Ma. Martinez Brohez fails to reasonably
and prospectively cure such violation.
In addition, the Employment Agreement shall provide for 24 months
severance pay upon the termination of the Employment Agreement by UniMark for
any reason other than Cause.
Section 5.9 Governmental Approvals. All governmental and other consents
and approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received. In addition, GISE
shall have received necessary governmental consents and approvals with respect
to the matters referenced in Schedule 1.2.
Section 5.10 Intra-Company Debt. All indebtedness, other than travel and
similar advances, of the Shareholders, directors, officers and employees of
GISE and any of its subsidiaries to GISE or any of its subsidiaries shall have
been repaid in full.
Section 5.11 Proceedings. All proceedings to be taken in connection with
the transactions contemplated by this Agreement and all documents incident
thereto shall be satisfactory in form and substance to UniMark and their
counsel, and UniMark shall have received copies of all such documents and other
evidences as they or their counsel may reasonably request in order to establish
the consummation or such transactions and the taking of all proceedings in
connection therewith.
ARTICLE VI
CONDITIONS TO THE SHAREHOLDERS' OBLIGATIONS
Section 6. Conditions to the Shareholders' Obligations. The sale of the
GISE Shares by the Shareholders on the Closing Date is conditioned upon receipt
by the Shareholders of the legal opinion and other documents listed in Sections
6.1, 6.2, 6.3 and 6.5. and compliance with Section 6.4.
20
<PAGE> 26
Section 6.1 Opinions of UniMark's Counsel. UniMark shall have furnished
the Shareholders with an opinion, dated the Closing Date, of Jordaan, Howard &
Pennington, PLLC regarding the validity of the UniMark Shares.
Section 6.2 Truth of Representations and Warranties. The representations
and warranties of UniMark contained in this Agreement shall be true and correct
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date; and
UniMark shall have delivered to the Shareholders on the Closing Date a
certificate, dated the Closing Date, to such effect.
Section 6.3 Governmental Approvals; Contractual Approvals. All federal,
provincial, municipal or local governmental and contractual consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received, including all
licenses, certifications, authorizations or approvals.
Section 6.4 Proceedings. All proceedings to be taken in connection with
the transactions contemplated by this Agreement and all documents incident
thereto shall be reasonably satisfactory in form and substance to the
Shareholders and their counsel.
Section 6.5 Right of First Refusal. GISE and Mr. Ing. Jose Ma. Martinez
Brohez shall entered into an agreement pursuant to which (a) Mr. Ing. Jose Ma.
Martinez Brohez and his heirs and legal representatives shall be granted a
right of first refusal to purchase the assets of "The Hacienda" (included into
the Tourism Division) (the "Hacienda") and (b) UniMark shall maintain the
Hacienda in the normal operations and preserve the traditional "Martinez Family
atmosphere."
ARTICLE VII
SURVIVAL OF REPRESENTATIONS: INDEMNITY; SET-OFF
Section 7.1 Survival of Representations. The respective representations
and warranties of the Shareholders and UniMark contained in this Agreement or
in any Schedule delivered pursuant hereto shall survive the purchase and sale
of the GISE Shares contemplated hereby for a period of three (3) years from the
Closing Date, except for any representations and warranties pertaining to tax
matters which will survive the Closing Date.
Section 7.2 Indemnification. (a) The Shareholders agree, jointly and
severally, to indemnify and hold UniMark and its officers, directors and agents
harmless from damages, losses or expenses in excess of $25,000 in the
aggregate, suffered or paid, directly or indirectly, through application of
GISE's or UniMark's assets, as a result of any and all claims, demands, suits,
causes of action, proceedings, judgments and liabilities, including reasonable
counsel fees incurred in litigation or otherwise, assessed, incurred or
sustained by or against any of them with respect to or arising out of the
failure of any representation or warranty made by the Shareholders in this
Agreement or
21
<PAGE> 27
in any Schedule delivered pursuant hereto to be true and correct in all
respects as of the date of this Agreement and as of the Closing Date.
(b) UniMark agrees to indemnify and hold the Shareholders harmless from
damages, losses or expenses in excess of $25,000, in the aggregate, suffered or
paid, directly or indirectly, as a result of any and all claims, demands,
suits, causes of action, proceedings, judgments and liabilities, including
reasonable counsel fees incurred in litigation or otherwise, assessed, incurred
or sustained by or against any of them with respect to or arising out of the
failure of any representation or warranty made by UniMark in this Agreement to
be true and correct in all respects as of the date of this Agreement and as of
the Closing Date.
(c) Any party claiming indemnification hereunder, shall give the other
party (an "indemnitee") written notice of the basis of indemnification, and if
possible, shall allow the indemnitee a reasonable opportunity to retroactive,
prospectively and permanently cure the problem.
(d) The obligations to indemnify and hold harmless pursuant to this
Section 7.2 shall survive the consummation of the transactions contemplated by
this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Knowledge of Shareholders. Where any representation or
warranty contained in this Agreement is expressly qualified by reference to the
knowledge, information and belief of the Shareholders, the Shareholders confirm
that they have made due and diligent inquiry as to the matters that are the
subject of such representations and warranties.
Section 8.2 Expenses. The parties hereto shall pay all of their own
expenses relating to the transactions contemplated by this Agreement,
including, without limitation, the fees and expenses of their respective
counsel and financial advisers.
Section 8.3 "Person" Defined. "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or other department or agency
thereof.
Section 8.4 Captions. The Article and Section captions used herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 8.5 Publicity. Except as otherwise required by law, none of the
parties hereto shall issue any press release or make any other public
statement, in each case relating to or connected with or arising out of this
Agreement or the matters contained herein, without obtaining the prior approval
of UniMark and GISE to the contents and the manner of presentation and
publication thereof.
22
<PAGE> 28
Section 8.6 Notices. Any notice or other communications required or
permitted hereunder shall be sufficiently given if delivered in person or sent
by telex or by registered or certified mail, postage prepaid, addressed as
follows: If to UniMark, to UniMark Group, Inc., Attention: Jorn Budde, with a
copy to its counsel, Jordaan, Howard & Pennington, 300 Crescent Court, Suite
1670, Dallas, Texas 75201, Telephone: (214)871-6550, Fax: (214)871-6560; and if
to Shareholders, to
Grupo Industrial Santa Engracia, S.A. De C.V.
Carrera Torres TE. 226. C.P.
CD. Victoria, TAM. 8700
Mexico
such other address as shall be furnished in writing by any such party, and
such notice or communication shall be deemed to have been given as of the date
so delivered, sent by fax or mailed.
Section 8.7 Parties in Interest. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by operation
of law. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
Section 8.8 Counterparts. This Agreement may be executed in two (2) or
more counterparts, all of which taken together shall constitute one instrument.
Section 8.9 Entire Agreement. This Agreement, including the other
documents referred to herein that form a part hereof, contains the entire
understanding of the parties hereto with respect to the subject matter
contained herein and therein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
Section 8.10 Amendments. This Agreement may not be changed orally, but
only by an agreement in writing signed by UniMark and the Shareholders.
Section 8.11 Severability. In case any provision in this Agreement shall
be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
Section 8.12 Third Party Beneficiaries. Each party hereto intends that
this Agreement shall not benefit or create any right or cause of action in or
on behalf of any Person other than the parties hereto.
Section 8.13 Currency. Except where otherwise expressly provided, all
amounts in this Agreement are stated and shall be paid in United States of
America dollars.
23
<PAGE> 29
Section 8.14 Termination of Agreement. All parties hereto agree to use
their best efforts to fulfill the requirements of Articles V and VI as soon as
practicable. If any precondition to the completion of the transactions
contemplated hereby is not fulfilled on or prior to June 1, 1996, this
Agreement shall be null and void and have no further effect.
Section 8.15 Time of Essence. The mere lapse of time shall have the
effect to constitute of the parties hereto in default to perform any of its
obligations under this Agreement.
Section 8.16 Negotiation. Each party hereto declares that the provisions
of this Agreement and of all documents annexed thereto or referred to therein,
have been freely negotiated and declares having read this Agreement and those
documents and having understood their scope and nature.
Section 8.17 Binding Arbitration. The validity, meaning and effect of
this Agreement shall be determined in accordance with the laws of the State of
Texas applicable to contracts made and to be performed in that state. The
parties hereto agree that any dispute pertaining to this Agreement and the
transactions contemplated hereby must be submitted to the International Chamber
of Commerce's International Court of Arbitration in Paris, France for binding
arbitration, to the exclusion of courts of law.
Section 8.18 Effective Time. Each party hereto agrees that the
transactions contemplated by this Agreement shall be effective as of April 1,
1996.
IN WITNESS WHEREOF, UniMark has caused its corporate name to be hereunto
subscribed by its officer thereunto duly authorized, and the Shareholders have
executed this Agreement, all as of the date first above written.
UNIMARK GROUP, INC.
Jorn Budde
By: -----------------------------
Name:Jorn Budde
Title: President
24
<PAGE> 30
SHAREHOLDERS:
David Madero Gonz
------------------------------------
Name: Dr. David Madero Gonz.
Jose Ma. Martinez Brohez
------------------------------
Name: Ing. Jose Ma. Martinez Brohez
Federico Martinez Brohez
-----------------------------------
Name: Ing. Federico Martinez Brohez
------------------------------
Lorenzo Zambraso Trevino
----------------------------------
Name:Ing. Lorenzo Zambraso Trevino
------------------------------
Manuel Martinez Arteaga
------------------------------
Name: M.V.Z. Manuel Marinez Arteaga
------------------------------
Virginia Togno Murguia
------------------------------
Name:Sra. Virginia Togno Murguia
-------------------------
Jorge Martinez Brohez
------------------------------
Name: Ing. Jorge Martinez Brohez
---------------------------
Miguel Rivera Arias
------------------------------
Name: Sr. Miguel Riveral Arias
-------------------------
25
<PAGE> 31
Rafael J. Fco. Hernandez Martinez
-------------------------------------------
Name:Ing. Rafael J. Fco. Hernandez Martinez
--------------------------------------
Javier E. Cervera Herrera
-----------------------------------
Name: Lic. Javier E. Cervera Herrera
-------------------------------
Ma. del Carment Velez Gonzalez
----------------------------------------
Name: Sra. Ma. del Carmen Velez Gonzalez
-----------------------------------
Rodrigo Canales Perez
---------------------------------------
Name: Ing. Rodrigo Canales Perez
----------------------------------
Lydia Madero Garcia
---------------------------------------
Name: Lic. Lydia Madero Garcia
----------------------------------
Leticia Sagastegui Coutino
---------------------------------------
Name: Sra. Leticia Sagastegui Coutino
----------------------------------
Rosa Eugenia Trevino Sada
---------------------------------------
Name: Sra. Rosa Eugenia Trevino Sada
----------------------------------
Ma. del Pilar Navarro Rodriguez
---------------------------------------
Name: Sra. Ma. del Pilar Navarro Rodrigues
------------------------------------
26
<PAGE> 32
Alfonso Sagastequi Coutino
--------------------------------------------
Name: Sr. Alfonso Sagastequi Coutino
---------------------------------------
Aurora Pena Zorrila
--------------------------------------------
Name: Sra. Ma. Aurora Pena Zorrila
---------------------------------------
Nora Garza Orozco
--------------------------------------------
Name:C.P. Ma. Nora Garza Orozco
---------------------------------------
Ramiro R. Salazar Alanis
--------------------------------------------
Name: Sr. Ramiro R. Salazar Alanis
---------------------------------------
Rodrigo Salazar Alanis
--------------------------------------------
Name: Sr. Rodrigo Salazar Alanis
---------------------------------------
Alicia Brohez de Martinez
--------------------------------------------
Name: Sra Alicia Brohez de Martinez
---------------------------------------
Anastacio Salazar Martinez
--------------------------------------------
Name: Sr. Anastacio Salazar Martinez
---------------------------------------
Estanisloa Sepulveda Martinez
--------------------------------------------
Name: Sr. Estanislao Sepulveda Martinez
--------------------------------------------
y/o Sra. Eloisa Cantu Leal.
Ruben Salazar Alanis
--------------------------------------------
Name: Sr. Ruben Salazar Alanis
---------------------------------------
27
<PAGE> 33
Manuel Barba Alonso
-------------------------------------
Name:Sr. Manuel Barba Alonso
--------------------------------
Raymundo Garza Barba
-------------------------------------
Name:Ing. Raymundo Garza Barba
--------------------------------
Edgar Eilas Rodriguez Rdz.
-------------------------------------
Name: Ing. Edgar Eilas Rodriguez Rdz.
--------------------------------
Pedro J. Arzola Quintero
-------------------------------------
Name: Ing. Pedro J. Arzola Quintero
--------------------------------
Cesar Fco. Martinez Torres
-------------------------------------
Name: Lic. Cesar Fco. Martinez Torres
--------------------------------
Laura Elizabeth Velez Glz.
-------------------------------------
Name: Lic. Laura Elizabeth Velez Glz.
--------------------------------
Carlos Salilnas Espinoza
-------------------------------------
Name: Carlos Salinas Espinoza
--------------------------------
Ana Ma. Gonzalez Sada
-------------------------------------
Name: Sra. Ana Ma. Gonzalez Sada
--------------------------------
28
<PAGE> 34
Nazario Assad Assad
---------------------------------------
Name: Sr. Nazario Assad Assad
----------------------------------
Angelica Escobar Bazaldua
---------------------------------------
Name: Ing. Angelica Escobar Bazaldua
----------------------------------
Jaime Gonzalez Cepeda
---------------------------------------
Name: C.P. Jaime Gonzalez Cepeda
----------------------------------
Roberto Salinas Salinas
---------------------------------------
Name: Ing. Roberto Salinas Salinas
----------------------------------
Arturo Valdez Rodriguez
---------------------------------------
Name: Ing. Arturo Valdez Rodriguez
----------------------------------
Alfonso J. Saldivar Salazar
---------------------------------------
Name: Sr. Alfonso J. Saldivar Salazar
----------------------------------
David Cardozo Tamez
---------------------------------------
Name: Sr. David Cardozo Tamez
----------------------------------
Manuel A. Campo Haces
---------------------------------------
Name: Sr. Manuel A. Campo Haces
----------------------------------
Jose Gerardo De la Gza. Q.
---------------------------------------
Name: Sr. Jose Gerardo De la Gza. Q.
----------------------------------
29
<PAGE> 35
Ruben G. Cavazos Cardozo
-----------------------------------------
Name: Sr. Ruben G. Cavazos Cardozo
------------------------------------
Vicente Muela Morales
-----------------------------------------
Name:C.P. Vicente Muela Morales
-----------------------------------
Miguel Victor salman Alvarez
-----------------------------------------
Name: C.P. Miguel Victor Salman Alvarez
------------------------------------
Alvaro Silva Olivares
-----------------------------------------
Name: Ing. Alvaro Silva Olivares
------------------------------------
Jorge Fco. Togno Murguia
-----------------------------------------
Name: Ing. Jorge Fco. Togno Murguia
------------------------------------
Maria Teresa Rodriguez Gomez
-----------------------------------------
Name: Maria Teresa Rodriguez Gomez
------------------------------------
30
<PAGE> 36
Carmen Zambrano Sada
-------------------------------------------
Name: Sra. Carmen Zambrano Sada
--------------------------------------
Lydia Garcia Gonzalez
-------------------------------------------
Name: Sra. Lydia Garcia Gonzalez
--------------------------------------
Federico Martinez Zambrano
-------------------------------------------
Name: Ing. Federico Martinez Zambrano
--------------------------------------
Karla Martinez Zambrano
-------------------------------------------
Name: Karla Martinez Zambrano
--------------------------------------
Pedro Pieter Villarreal Martinez
-------------------------------------------
Name: Sr. Pedro Pieter Villarreal Martinez
--------------------------------------
30b
<PAGE> 37
EXHIBIT 1
GISE SHAREHOLDERS
<TABLE>
<CAPTION>
NUMBER AND
CATEGORY OF OWNERSHIP
NAME ADDRESS SHARES %
---- ------- ------- --------
<S> <C> <C> <C> <C> <C>
A B TOTAL 13770000
Calle Cristal um 22
Penthous Fracc.
Valle del Campestre
Dr. David Madero Gonzalez Monterrey N.L. 191 8,193,603 8,193,794 59.504677
Cristobal Colon Nte.
Num 2007 Fracc. San
Ing. Jose Martinez Brohez Jose 357 610,817 611,174 4.4384459
Privada Jose
Villarreal
Tello Num 1058,
Ing. Federico Martinez Brohez Fracc. Los Arcos 309 607,150 607,459 4.411467
M.V.Z. Manuel Martinez 11 Aldama num 649
Arteaga Cd. Victoria, Tamps 179 458,944 459,123 3.3342266
Calle Crista num 22
Fracc. Valle del
Campestre, Garza
Ing. Lorenzo Zambrano Trevino Garcia N:L: 74 454,448 454,522 3.3008134
Sonora Pte. num 627
Lic. Jorge Martinez Brohez Fracc. San Jose 283 297,937 298,220 2.1657226
Av. Circunvalacion
num. 109 Jardines
Ma. Del Pilar Navarro del Moral, Leon
Rodriguez Gto. 8 265,729 265,737 1.92982
10 Chihuahua y
Coahula Fracc. San
Jose Cd. Victoria,
Sra. Virginia Togno Murguia Tamp 265 250,722 250,987 1.822708787
Zacatecas Ote. num
725 entre 10 y 11
Fracc. Valle de
Aguayo Cd. Victoria
Sr. Miguel Rivera Arias Tam 267 249,107 249,374 1.810994916
Ave Santa Cruz num
103 Col. Res. Santa
Ing. Rafael J. Foo. Hdz Cruz Monterrey,
Mariinez N.L. 227 240,089 240,316 1.745214234
</TABLE>
<PAGE> 38
<TABLE>
<S> <C> <C> <C> <C> <C>
1a. Diagnoal norte
Lic. Javier E. Cervera num 1420 Cd.
Herrera Victoria, Tamps. 200 186,831 187,031 1.358249818
1a. Diagnoal norte
num. 1420 Cd.
Ma. del Carmen Velez Gonzalez Victoria, Tamp 200 186,831 187,031 1.358249818
Zacatecas ote. num
725 entre 10 y 12
Fracc. Valle de
Sra. Leticia Sagastegui Aguayo Cd.
Coutino Victoria, Tamps 133 124,554 124,687 0.905497458
Sonora ote. jum 627
Sra. Rosa Eugenia Trevino Fracc. San Jose Cd.
Sada Victoria, Tamps 133 124,554 124,687 0.905497458
Cristobal Colon
Nte. Num 2007
Sra. Lydia Madero Garcia Fracc. San Jose 111 115,735 115,846 0.841292665
1a Diagnoal horte
num 1330 Cd.
Ing. Rodrigo Canales Perez Victoria, Tamps 80 109,408 109,488 0.7951198
Privada Jose
Villarreal Tello
Num 1058, Fracc.
Sra. Carmen Zambrano Sada Los Arcos 112 104,253 104,365 0.7579158
11 Aldama num 649
Sra. Ma. Aurora Pena Zorrilla Cd. Victoria, Tamps 0 92,049 92,049 0.6684749
Domicilio Conocido
Estacion de Santa
Engracia, Municipio
Lic. Alfonso Sagastegui de Hidalgo,
Couitino Tamaulipas 93 87,188 87,281 0.6338489
calle 20 de
Noviembre num 513
C.p. Ma. Nora Garza Orozco cd Victoria Tamps 69 79,999 80,068 0.581467
Alvarez esquina con
Emilio Carranza Cp
Sr. Ramiro Roberto Salazar 67350 Allende Nuevo
Alanis Leon 80 74,733 74,813 0.5433043
Sra. Alicia Brohez de 8 Veracruz num 1502
Martinez Cd. Victoria, Tamps 80 74,733 74,813 0.5433043
Calle cristal Jo.
22 Penthouse Frac.
Valle del Campestre
Pedro Pierter Villarreal Mtz. Monterrey, N.L. 68,855 68,855 0.5000363
</TABLE>
<PAGE> 39
<TABLE>
<S> <C> <C> <C> <C> <C>
Callo Cristal num
22 Penthouse Fracc.
Valle de Campestre
Sra. Lydia Garcia Gonzalez Monterrey N.L. 0 62,944 62,944 0.4571097
1a Diagonal norte
num 4 Cd. Victoria,
Sra. Eloisa Cantu Leal Tamps 59 54,804 54,863 0.3984241
13 Sinaloa num 485
Lic. Anastacio Javier ote. Fracc San Jose
Salazar Martinez Cd. Victoria, Tamps 53 49,822 49,875 0.3622004
21 y 22 Zaragoza
Sr. Manuel Barba Alonso num 530 CD. 44 41,103 41,147 0.2988163
Begonia num 1234
Fracc. Campestre
Ing. Edgar Elias Rodriguez Cd. Victoria,
Rodriguez Tamps. 0 40,941 40,941 0.2973203
Ing. Pedro Javier Arzola 17 y 18 Zaragoza
Quintero num 296 pte. 40 37,367 37,407 0.2716558
3 y 4 Anaya num
Lic. Cesar Fco. Martinez 1445 Cd. Victoria,
Torres Tams 40 37,367 37,407 0.2716558
3 y 4 Anaya num
Lic. Laura Elizabeth Velez 1445 Cd. Victoria,
Gonzalez Tams 40 37,367 37,407 0.2716558
Boulevard
Tamaulipas num 1332
C.P. Carlos Salinas Espinosa Cd. Victoria 40 37,367 37,407 0.2716558
Mirador del Valle
num 102 Col. Lomas
del Valle Garza
Sra. Ana Maria Gonzalez Sada Garcia N.L. 33 31,140 31,173 0.2263834
Domicillo Conocid
Sr. Ruben Salazar Alanis Allende, N.L. 106 30,737 30,843 0.2239869
11 y 12 Conrado
Castillo num 656
Sr. Nazario Assad Assad Cd. Victoria, Tamp 0 30,463 30,463 0.2212273
15 Pte. num. 901
Ing. Angelica Escobar Col. Puebla,
Bazaldua Puebla. 0 29,138 29,138 0.2116049
16 Guerrero num 149
C.P. Jaime Gonzalez Cepeda Cd. Victoria, Tamp. 0 25,386 25,386 0.1843573
</TABLE>
<PAGE> 40
<TABLE>
<S> <C> <C> <C> <C> <C>
Pico de Orizaba num
136 Fracc. Sierra
Madre Cd. Victoria,
Ing. Roberto Salinas Salinas Tamps 27 24,911 24,938 0.1811038
Ave. Michoacan num
807 Fracc. Valle de
Aguayo Cd.
Sr. Arturo Valdez Rodriquez Victoria, Tamps. 27 24,911 24,938 0.1811038
9 y 10 Veracruz
num. 702 Ote.
Fracc. Sierra
Gorda, Cd.
Ing. Alvaro Silva Olivares Victoria, Tam. 0 20,000 20,000 0.1452433
9 y 10 San Luis
Potosi num. 876
Dpto. 5 Fracc.
Lic. Maria Teresa Rodriguez Valle de Aguayo,
Gomez Victoria, Tam. 0 20,000 20,000 0.1452433
Gaspar de la Garza
num. 3551 Villa
Jardin, Cd.
Ing. Jorge Foo. Togno Murguia Victoria, Tam. 0 15,000 15,000 0.1089325
Privada Jose
Villarreal Tello
No. 1058 Fracc. Los
Arcos. Cd.
Karla Martinez Zambrano Victoria, Tam 13,859 13,859 0.1006463
Pino Suarez num 549
9 y 10 Michoacah
num 814 Fracc.
Sr. Jose Gerardo Dela Garza Valle de Aguayo Cd.
Quintanilla Victoria, Tamps 13 12,456 12,469 0.0905519
Priv. Jose
Villarreal Tello
num. 1024 Fracc.
Los Arcos Cd.
C.P. Vicente Muela Morales Victoria, Tamps 7 6,227 6,234 0.04527623
Sinaloa num 837
Ote. Fracc. San
C:P: Miguel Victor Salman Jose Cd. Victoria,
Alvarez Tamps 7 6,227 6,234 0.0452723
Priv. Jose
Villarreal Tello
num 1024 Fracc. Los
Ing. Federico Martinez Arcos Cd. Victoria,
Zambrano Tamps 5,738 5,738 0.0416703
4,000 13,766,000 13,770,000
</TABLE>
<PAGE> 41
EXHIBIT 2
[Letterhead of Shareholders' Counsel]]
[Closing Date]
UniMark Group, Inc.
P.O. Box 229
Argyle, Texas 76226
Attention: Jorn Budde
Ladies and Gentlemen:
We have acted as counsel for the Shareholders annexed to the Stock
Purchase Agreement dated as of April __, 1996 (the "Stock Purchase Agreement"),
by and among The UniMark Group, Inc., a Texas corporation ("UniMark"), and the
Shareholders in connection with the acquisition by UniMark of all the
outstanding shares of capital stock (the "Common Stock") of Grupo Industrial
Santa Engracia S.A. DE C.V., a Mexican corporation (the "Company"). Any term
used herein without a definition shall have the meaning assigned to such term
in the Stock Purchase Agreement.
In so acting, we have examined such certificates of public officials, such
certificates of officers of the Company, and originals or copies certified to
our satisfaction of all such corporate documents and records of the Company and
of all such other documents as we have deemed relevant and necessary as a basis
for our opinion hereinafter set forth. We have relied upon such certificates
of public officials and such certificates of officers of the Company and
statements and information furnished by officers of the Company with respect to
the accuracy of material factual matters contained therein.
Based upon the foregoing, it is our opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of Mexico. The Company has the power to own its
property and to carry on its business as now being conducted. The Company is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the character or location of the properties owned
or leased by the Company or the nature of the business conducted by the Company
makes such qualification necessary, except where the failure to be so qualified
would not have a material adverse effect on the business or properties of the
company.
2. The Company has an authorized capitalization consisting of ___ (___)
shares of common stock, ___ ($____) par value, of which ___ (___) shares are
issued and outstanding and ___ (___) shares are held in the Company's treasury.
All such outstanding shares have been duly authorized and validly issued and
are fully paid and nonassessable. There are no outstanding options, warrants,
rights, calls, commitments,
<PAGE> 42
conversion rights, rights of exchange, plans or other agreements of any
character providing for the purchase, issuance or sale of any shares of the
capital stock of the Company.
3. To the best of our knowledge, after having made due inquiry with
respect thereto, the list of direct and indirect subsidiaries of the Company
set forth in Schedule 1.5 to the Stock Purchase Agreement is complete and
accurate. Each such subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation (as set forth in such schedule) and has all requisite powers and
authority to own its property and carry on its business as presently conducted.
Each such subsidiary is qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the character or location of
the properties owned or leased by such subsidiary or the nature of the business
conducted by such subsidiary makes such qualification necessary, except where
the failure to be so qualified would not have a material adverse effect on the
business or properties of such subsidiary. All of the outstanding capital
stock of each such subsidiary has been duly authorized and validly issued, is
fully paid and nonassessable, and is owned free and clear of all liens,
encumbrances, restrictions and claims of any kind. No shares of capital stock
of any such subsidiary are reserved for issuance, and, to the best of our
knowledge after having made due inquiry with respect thereto, there are no
outstanding options, warrants, rights, calls, commitments, conversion rights,
rights of exchange, plans or other agreements of any character providing for
the purchase, issuance or sale of any shares of the capital stock of such
subsidiary.
4. To the best of our knowledge after having made due inquiry with respect
thereto, each of the Shareholders has full legal right, power and authority to
enter into the Stock Purchase Agreement and to sell, assign, transfer and
convey the Common Stock.
5. The Stock Purchase Agreement has been duly executed and delivered by
each of the Shareholders and is the valid and legally binding obligation of
each such Shareholder, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy and other laws of general
application relating to creditors' rights or general principles of equity.
6. The delivery to UniMark of the Common Stock pursuant to the provisions
of the Stock Purchase Agreement by the Shareholders on the date hereof passed
good and marketable title to the Common Stock to UniMark, free and clear of all
liens, encumbrances, restrictions and claims of every kind. The consummation
of the purchase of the Common Stock pursuant to the Purchase Agreement vested
in UniMark all of the outstanding shares of capital stock of the Company.
7. There are no stock transfer taxes due and unpaid upon transfer of the
Common Stock by the Shareholder to UniMark.
8. Neither the execution and delivery by any Shareholder of the Stock
Purchase Agreement, nor compliance with the terms and provisions thereof, will
conflict with or result in a breach by any Shareholder, the Company or any of
its subsidiaries of any of the terms, conditions or provisions of (i) any law,
rule, ordinance, regulation, order, judgment or decree of any court, arbitrator
or governmental instrumentality, (ii) the charter or By-Laws of the Company or
any of its subsidiaries or (iii) any mortgage, lien, lease, agreement, contract
or instrument of which we have knowledge and to which any Shareholder, the
Company or any such subsidiary is now a party or by which it is bound.
<PAGE> 43
9. Neither the Company nor any of its subsidiaries is engaged in or a
party to, or to the best of our knowledge after having made due inquiry with
respect thereto, threatened with, any legal action or other proceeding before
any court, arbitration or other tribunal or administrative agency, and to the
best of our knowledge after having made due inquiry with respect thereto,
neither the Company nor any of its subsidiaries has been charged with, or is
under investigation with respect to any charge concerning, any violation of any
federal, state, local or foreign law or administrative regulation in respect of
its business. To the best of our knowledge after having made due inquiry with
respect thereto, no action or proceeding against the Shareholder, the Company
or any of its subsidiaries has been instituted or threatened before a court or
other government body or by any public authority to restrain or prohibit any of
the transactions contemplated by the Stock Purchase Agreement.
10. No authorizations, consents or approvals of or filings with any
governmental agencies or authorities are required in connection with the
execution, delivery and performance of the Stock Purchase Agreement by any of
the Shareholder.
11. The offering and sale of the UniMark Sharespursuant to the Stock
Purchase Agreement do not require previous registration under the Mexican
Foreign Investment Law.
Very truly yours,
[This opinion shall also address such other matters as UniMark shall request.]
<PAGE> 44
SCHEDULE 1.2
Enclosed.
SCHEDULE 1.4
GISE'S OUTSTANDING SHARES
Those are set in two groups:
Class "A" shares, 4,000 outstanding shares
Class "B" shares, 13,766,000 outstanding shares.
Giving a total of 13,770,000 outstanding shares of capital stock that are under
no obligation as defined into annex 13, IRID, and the list that is being sent
as of 3 May 1996 (Friday).
SCHEDULE 1.5
Not applicable.
SCHEDULE 1.7
Not applicable.
SCHEDULE 1.8
All actual encumbrance to properties is as defined into Schedule 1.2
SCHEDULE 1.9
All title to properties is as defined into annex VII, SDDMR and into annex 05
of Suplemento de Material Legal (SMLR) sent to Mexican lawyers.
All encumbrances are as defined into Schedule 1.2.
All possible inconveniences are those originating from the political and
national application of laws from the Mexican government in a future.
SCHEDULE 1.10
<PAGE> 45
All leases are as described into annex 20 IRID, as of 30 April 1996, and the
terms implied into that documents apply as rights and obligations for the acts
described into that document.
SCHEDULE 1.11
Not applicable. All option stock rights and purchase agreements are less than
$25,000 USD.
SCHEDULE 1.12
Not applicable.
SCHEDULE 1.13
Not applicable.
SCHEDULE 1.16
All insurance policies for GISE are as described into annex X, SDDMR.
SCHEDULE 1.17
The trademark rights for GISE are as described into annex 23 IRID, there exist
another limitation set forth into IBROWN extraction and essence recovery
contracts as included into annex 20 IRID.
SCHEDULE 1.21
All company officers as described into annex 4, IRID, and as well as the
following company officers:
C.P. Guillermo Aladino Ventura
and as well as the accountant Pedro Garza, as part of his fees and compensation
for services are entitled to receive the benefits of a:
(a) Stock purchase from GISE,
(b) Stock options from GISE, which are being negotiated in those days.
All those transactions are fully authorized by the Stockholders.
<PAGE> 46
SCHEDULE 1.22
Not applicable.
SCHEDULE 1.24
Not applicable.
SCHEDULE 1.32
The actual permits granted to GISE are as described into annex II, SDDMR and as
would require the Mexican laws into the future.
<PAGE> 1
STOCK PURCHASE AGREEMENT
AMONG
THE UNIMARK GROUP, INC. ,
UNIMARK FOODS, INC.,
SAM PERRICONE CHILDREN'S TRUST - 1972,
SAM PERRICONE,
AND
MARK STRONGIN
_______________________
May 9, 1996
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I.
REPRESENTATIONS OF THE SHAREHOLDERS
1.1 Ownership of Simply Fresh Shares
1.2 Validity of Transaction
1.3 Existence and Good Standing
1.4 Capital Stock
1.5 Subsidiaries and Investments
1.6 Financial Statements and No Material Changes
1.7 Books and Records
1.8 Title to Properties; Encumbrances
1.9 Real Property
1.10 Leases
1.11 Material Contracts
1.12 Restrictive Documents
1.13 Litigation
1.14 Taxes
1.15 Liabilities
1.16 Insurance
1.17 Intellectual Properties
1.18 Compliance with Laws
1.19 Accounts Receivable
1.20 Employment Relations
1.21 Employee Benefit Plans
1.22 Interests in Clients, Suppliers, Etc.
1.23 Bank Accounts, Powers of Attorney, and Compensation of Employees
1.24 No Changes Prior to Closing Date
1.25 Disclosure
1.26 Broker's or Finder's Fees
1.27 Agreements, Judgments and Decrees Affecting Shareholders
1.28 Copies of Documents
1.29 Purchase for Investment
1.30 Investor Qualifications
1.31 Environmental Matters
<PAGE> 3
ARTICLE II.
REPRESENTATIONS OF THE ACQUIRING COMPANIES
2.1 Existence and Good Standing
2.2 Restrictive Documents
2.3 Purchase for Investment
2.4 Broker's or Finder's Fees
2.5 Issuance of the Shares
2.6 Financial Situation
2.7 No Changes Prior to Closing
2.8 Disclosure
2.9 Litigation
ARTICLE III.
SALE OF SIMPLY FRESH SHARES
3.1 Sale of Simply Fresh Shares
3.2 Cash Payment
3.3 UniMark Common Stock
3.4 Non-competition Agreement
3.5 Closing
ARTICLE IV.
CONDUCT OF BUSINESS; REVIEW
4.1 Conduct of Business of the Company
4.2 Exclusive Dealing
4.3 Review of the Company
ARTICLE V.
CONDITIONS TO THE ACQUIRING COMPANIES' OBLIGATIONS
5.1 Opinion of the Company's Counsel
5.2 Good Standing Certificates
5.3 No Material Adverse Change
5.4 Truth of Representations and Warranties
5.5 Performance of Agreements
5.6 No Litigation Threatened
5.7 Non-Competition Agreements
5.8 Governmental Approvals
5.9 Intra-Company Debt
5.10 Proceedings
5.11 Audited Financial Statements Certified by Ernst & Young, LLP
<PAGE> 4
ARTICLE VI.
CONDITIONS TO THE SHAREHOLDERS' OBLIGATIONS
6.0 Conditions to the Shareholders' Obligations
6.1 Opinion of UniMark's Counsel
6.2 Truth of Representations and Warranties
6.3 Governmental Approvals; Contractual Approvals
6.4 Proceedings
6.5 Royalty Agreement
ARTICLE VII
SURVIVAL OF REPRESENTATIONS; INDEMNITY; SET-OFF
7.1 Survival of Representations
7.2 Indemnification
ARTICLE VIII
MISCELLANEOUS
8.1 Knowledge of Shareholders
8.2 Expenses
8.3 "Person" Defined
8.4 Captions
8.5 Publicity
8.6 Notices
8.7 Parties in Interest
8.8 Counterparts
8.9 Entire Agreement
8.10 Amendments
8.11 Severability
8.12 Third Party Beneficiaries
8.13 Termination of Agreement
8.14 Time of Essence
8.15 Negotiation
8.16 Governing Law
8.17 Arbitration
8.18 Attorney's Fees
Exhibit 1. Shareholders
Exhibit 2. Form of Registration Rights Agreement
Exhibit 3. Form of Non-Competition Agreement
Exhibit 4. Opinion Letter of Shareholders' Counsel
Exhibit 5. Agreement regarding royalty payments
<PAGE> 5
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") dated as of May 9, 1996,
by and among The UniMark Group, Inc. a Texas corporation ("UniMark"), UniMark
Foods, Inc. a Texas corporation and wholly-owned subsidiary of UniMark
("UniMark Foods") (UniMark and UniMark Foods are sometimes referred to herein
as the "Acquiring Companies"), Sam Perricone Children's Trust - 1972 and Mark
Strongin (collectively, the "Shareholders"), being the sole shareholders of
Simply Fresh Fruit, Inc., a California corporation (the "Company"). For good
and valuable consideration and to induce the Acquiring Companies to enter into
this Agreement, Sam Perricone joins this Agreement for purposes of making the
representations and warranties set forth in Article 1 of this Agreement and
entering into the Non-Competition Agreement contemplated by Section 3.4 of this
Agreement.
W I T N E S S E T H:
WHEREAS, the Shareholders own the shares of the Company listed in Exhibit
1 hereto (the "Simply Fresh Shares"), being all of the issued and outstanding
shares of capital stock of the Company;.
WHEREAS, the Shareholders desire to sell, and the Acquiring Companies
desire to purchase, the Simply Fresh Shares pursuant to this Agreement; and
WHEREAS, it is the intention of the parties hereto that, upon consummation
of the purchase and sale of the Simply Fresh Shares pursuant to this Agreement,
UniMark shall beneficially own all of the outstanding shares of capital stock
of the Company;
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
REPRESENTATIONS OF THE SHAREHOLDERS
Section 1. Representations of the Shareholders. Mr. Sam Perricone and
the Shareholders, jointly and severally, represent, warrant and agree
as follows:
Section 1.1 Ownership of Simply Fresh Shares. The Shareholders are the
lawful owner of the number of shares of Simply Fresh Shares listed
opposite the name of such Shareholder in Exhibit 1 hereto, free and clear of
all liens, encumbrances restrictions and claims of every kind; the shares of
Simply Fresh Shares listed in Exhibit 1 are all of the outstanding shares of
capital stock of the Company; each of the Shareholders has full legal right,
power and authority to enter into this Agreement and to sell, assign, transfer
and convey the shares of Simply Fresh Shares so owned by such Shareholder
pursuant to this Agreement; and the delivery to the UniMark Foods of the Simply
1
<PAGE> 6
Fresh Shares pursuant to the provisions of this Agreement will transfer to the
UniMark Foods valid title thereto, free and clear of all liens, encumbrances,
restrictions and claims of every kind.
Section 1.2 Validity of Transaction. This Agreement is a valid and
legally binding obligation, enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency and similar laws affecting
creditors generally. When sold, assigned, transferred and conveyed to the
UniMark Foods pursuant to this Agreement, the Simply Fresh Shares will be duly
authorized, validly issued, fully paid, nonassessable, and free of any
preemptive rights or rights of first refusal of the Shareholders or any other
Person. The execution, delivery and performance of this Agreement has been
duly authorized by and will not violate any applicable federal or state law,
any order of any court of government agency or the certificate of incorporation
of the Company. The execution, delivery and performance of this Agreement will
not result in any breach of or default under, or result in the creation of any
encumbrance upon any of the assets of the Company pursuant to, the terms of any
agreement by which the Company or any of its respective assets may be bound.
Except as set forth in SCHEDULE 1.2 heretofore, no consent, approval or
authorization of, or registration or filing with governmental authority or
other regulatory agency, is required for the validity of the execution and
delivery by the Company of this Agreement or any documents related thereto.
Section 1.3 Existence and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of
the State of California. The Company has the power to own its property and to
carry on its business as now being conducted. The Company is duly qualified to
do business and is in good standing in each of the jurisdictions set forth in
SCHEDULE 1.3 hereto, which are the only jurisdiction in which the character or
location of the properties owned or leased by the Company or the nature of the
business conducted by the Company makes such qualification necessary. The
Company has all necessary power and authority to conduct the business it
proposes to conduct and enter into and perform its obligations under this
Agreement. The Company will deliver to UniMark and the UniMark Foods a
Certificate of Officer dated as of the Closing Date certifying to the Company's
existence and good standing, the accuracy and complete ness of its certificate
of incorporation, as amended, and its bylaws, as amended, and the names and
signatures of its officers and agents authorized to execute documents on behalf
of Company.
Section 1.4 Capital Stock. The Company has an authorized capitalization
as set forth on SCHEDULE 1.4 hereto. All such outstanding shares of capital
stock have been duly authorized and validly issued and are fully paid and
nonassessable. There are no outstanding options, warrants, rights, calls,
commitments, conversion rights, rights of exchange, plans or other agreements
of any character providing for the purchase, issuance or sale of any shares of
the share capital of the Company, other than as contemplated by this Agreement
and as listed in SCHEDULE 1.4 hereto. As of the Closing Date, the Company will
not be subject to any obligation, contingent or otherwise, to repurchase or
otherwise acquire or redeem any shares of its capital stock.
Section 1.5 Subsidiaries and Investments. Set forth in SCHEDULE 1.5
hereto is a list of each of the Company's subsidiaries, if any. Each
subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, as set forth
in
2
<PAGE> 7
such schedule, and has all requisite power to own its property and to carry on
its business as now being conducted. Set forth in SCHEDULE 1.5 is a list of
jurisdictions in which each subsidiary is qualified as a foreign corporation.
Such jurisdictions are the only jurisdictions in which the character or
location of the properties owned or leased by each subsidiary, or the nature of
the business conducted by each subsidiary, make such qualification necessary.
All of the outstanding shares of capital stock of each subsidiary have been
duly authorized and validly issued, are fully paid and nonassessable, and,
except as set forth in SCHEDULE 1.5, are owned, of record and beneficially, by
the Company, free and clear of all liens, encumbrances, equities, options or
claims whatsoever. No shares of capital stock of any subsidiary are reserved
for issuance, and there are no outstanding options, warrants, rights,
subscriptions, claims of any character, agreements, obligations, convertible or
exchangeable securities, or other commitments, contingent or otherwise,
relating to the capital stock of such subsidiary, pursuant to which such
subsidiary is or may become obligated to issue or exchange any shares of
capital stock of such subsidiary. Neither the Company nor any subsidiary owns,
directly or indirectly, any capital stock or other equity or ownership or
proprietary interest in any other corporation, partnership, association, trust,
joint venture or other entity.
Section 1.6 Financial Statements and No Material Changes. The
Shareholders have heretofore furnished UniMark with compiled
consolidated balance sheets of the Company and its subsidiaries as of December
31, 1995 and December 31, 1994 and the related consolidated statements of
income, Shareholders' equity and changes in financial position for the years
then ended, (the consolidated balance sheet of the Company and its subsidiaries
as at December 31, 1995 is hereinafter referred to as the "Balance Sheet").
Such financial statements, including the footnotes thereto, except as indicated
therein, have been prepared in accordance with generally accepted accounting
principles consistently followed throughout the periods indicated. The Balance
Sheet fairly presents the financial condition of the Company and its
subsidiaries at the date thereof and, except as indicated therein, reflects all
claims against and all debts and liabilities of the Company and its
subsidiaries, fixed or contingent, as at the date thereof and the related
statements of income, Shareholder' equity and changes in financial position
fairly present the results of the operations of the Company and its
subsidiaries and the changes in their financial position for the period
indicated. Such other balance sheets fairly present the financial condition of
the Company and its subsidiaries at the respective dates thereof and, except as
indicated therein, reflect all claims against and all debts and liabilities of
the Company and its subsidiaries, fixed or contingent, as at the respective
dates thereof, and the related statements of income, Shareholders' equity and
changes in financial position fairly present the results of the operations of
the Company and its subsidiaries and the changes in their financial position
for the periods indicated. Since December 31, 1995 (the "Balance Sheet Date"),
there has been (x) no material adverse change in the assets or liabilities, or
in the business or condition, financial or otherwise, or in the results of
operations, of the Company and its subsidiaries, whether as a result of any
legislative or regulatory change, revocation of any license or rights to do
business, fire, explosion, accident, casualty, labor trouble, flood, drought,
riot, storm, condemnation or act of God or other public force or otherwise, and
(y) no change in the assets or liabilities, or in the business or condition,
financial or otherwise, or in the results of operations, or prospects, of the
Company and its subsidiaries except in the ordinary course of business; and to
the
3
<PAGE> 8
best knowledge, information and belief of the Shareholders, no fact or
condition exists or is contemplated or threatened which might cause such a
change in the future.
Section 1.7 Books and Records. The respective minute books of the
Company and its subsidiaries, as made available to UniMark and its
representatives, contain accurate records of all meetings of and corporate
actions or written consents by the respective Shareholders and Boards of
Directors of the Company and its subsidiaries. Except as set forth in SCHEDULE
1.7 hereto, the Company and its subsidiaries do not have any of their
respective records, systems, controls, data or information recorded, stored,
maintained, operated or otherwise wholly or partly dependent upon or held by
any means (including any electronic, mechanical or photographic process,
whether computerized or not) that (including all means of access thereto and
therefrom) are not under the exclusive ownership and direct control of the
Company and its subsidiaries. The Company will make and keep books, records and
accounts that in reasonable detail accurately and fairly reflect the
transactions and dispositions of its assets. The Company will devise and
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles or any other criteria applicable to
such statements and to maintain accountability for such assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals, and appropriate action is taken
with respect to any differences.
Section 1.8 Title to Properties; Encumbrances. The Company has good and
marketable title to its real properties and good and merchantable title to each
of its other properties. Except as set forth is SCHEDULE 1.8 hereto, all
properties of the Company are free and clear of all hypothecs and other
encumbrances.
Section 1.9 Real Property. SCHEDULE 1.9 hereto contains an accurate and
complete list of all real property owned in whole or in part by the Company or
any of its subsidiaries and includes the name of the record title holder
thereof and a list of all indebtedness or other obligations secured by an
hypothec, lien, mortgage or deed of trust thereon. Each of the Company and its
subsidiaries has good and marketable title to all the real property specified
as owned by it in SCHEDULE 1.9 (or required to be set forth in SCHEDULE 1.9),
free and clear of all hypothecs, encumbrances, liens, charges or other
restrictions of any kind or character, except for those of the nature referred
to in Section 1.8 or as set forth in SCHEDULE 1.9. All of the buildings,
structures and appurtenances situated on the real property listed in SCHEDULE
1.9 (or required to be set forth in SCHEDULE 1.9) are in good operating
condition and in a state of good maintenance and repair, are adequate and
suitable for the purposes for which they are presently being used and, with
respect to each, the Company or such subsidiary has adequate rights of way for
operation of the business of the Company or such subsidiary in the ordinary
course. None of such buildings, structures or appurtenances (or any equipment
therein), nor the operation or maintenance thereof, violates any restrictive
covenant or any provision of any federal, state or municipal law, by-law,
ordinance, rule or regulation, or
4
<PAGE> 9
encroaches on any property owned by others. Except as set forth in SCHEDULE
1.9, no condemnation proceeding is pending or, to the best knowledge,
information and belief of the Shareholders, threatened that would preclude or
impair the use of any such property by the Company or such subsidiary for the
purposes for which it is currently used. The Company will maintain and keep
its material properties in good repair, working order and condition and, from
time to time, make all necessary or desirable repairs, renewals and
replacement, so that its business may be properly and advantageously conducted
at all times. All taxes whatsoever relating to the real property listed in
SCHEDULE 1.9 which are due have been paid.
Section 1.10 Leases. SCHEDULE 1.10 hereto contains an accurate and
complete list and description of the terms of all leases to which the Company
or any subsidiary is a party as lessee or lessor. Each lease set forth in
SCHEDULE 1.10 (or required to be set forth in SCHEDULE 1.10) is in full force
and effect; all rents and additional rents due to date on each such lease have
been paid; in each case, the lessee has been in peaceable possession since the
commencement of the original term of such lease and is not in default
thereunder and no waiver, indulgence or postponement of the lessee's
obligations thereunder has been granted by the lessor; and there exists no
event of default or event, occurrence, condition or act (including the purchase
of the Simply Fresh Shares hereunder) that, with the giving of notice, the
lapse of time or the happening of any further event or condition, would become
a default under such lease. Neither the Company nor any subsidiary has
violated any of the terms or conditions under any such lease in any material
respect, and, to the best knowledge, information and belief of the
Shareholders, all of the covenants to be performed by any other party under any
such lease have been fully performed. The property leased by the Company or
any such subsidiary is in a state of good maintenance and repair and is
adequate and suitable for the purposes for which it is presently being used.
Section 1.11 Material Contracts. Except as set forth in SCHEDULE 1.11
hereto, neither the Company nor any of its subsidiaries has or is bound by (a)
any agreement, contract or commitment relating to the employment of any person
by the Company or any subsidiary, or any bonus, deferred compensation, pension,
profit sharing, stock option, employee stock purchase, retirement or other
employee benefit plan, (b) any agreement, indenture or other instrument that
contains restrictions with respect to payment of dividends or any other
distribution in respect of its capital stock, (c) any agreement, contract or
commitment relating to capital expenditures, (d) any loan or advance to, or
investment in, any other Person or any agreement, contract or commitment
relating to the making of any such loan, advance or investment, (e) any
guarantee or other contingent liability in respect of any indebtedness or
obligation of any other Person (other than the endorsement of negotiable
instruments for collection in the ordinary course of business), (f) any
management service, consulting or any other similar type contract, (g) any
agreement, contract or commitment limiting the freedom of the Company or any
subsidiary to engage in any line of business or to compete with any other
Person, (h) any agreement, contract or commitment not entered into in the
ordinary course of business that involves $25,000 or more and is not cancelable
without penalty within 30 days or (I) any agreement, contract or commitment
that might reasonably be expected to have a potential adverse impact on the
business or operations of the Company or any of its subsidiaries. Each
contract or agreement set forth in SCHEDULE 1.11 (or required to be set forth
in SCHEDULE 1.11) is in
5
<PAGE> 10
full force and effect, and there exists no default or event of default or
event, occurrence, condition or act (including the purchase of the Simply Fresh
Shares hereunder) that, with the giving of notice, the lapse of time or the
happening of any other event or condition, would become a default or event of
default thereunder. Neither the Company or any such subsidiary has violated
any of the terms or conditions of any contract or agreement set forth in
SCHEDULE 1.11 (or required to be set forth in SCHEDULE 1.11) in any material
respect, and, to the best knowledge, information and belief of the
Shareholders, all of the covenants to be performed by any other party thereto
have been fully performed. Contracts made in the ordinary course of business
involving less than $25,000 shall be deemed not to be material for purposes of
this Section 1.11.
Section 1.12 Restrictive Documents. Except as set forth in SCHEDULE 1.12
hereto, none of the Company, any of its subsidiaries or any Shareholders are
subject to, or a party to, any charter, bylaw, hypothec, mortgage, lien, lease,
license, permit, agreement, contract, instrument, law, rule, ordinance,
regulation, order, judgment or decree, or any other restriction of any kind or
character, that materially adversely affects the business practices, operations
or condition of the Company or any of its subsidiaries or any of their assets
or property, or that would prevent consummation of the transactions
contemplated by this Agreement, compliance by any Shareholders with the terms,
conditions and provisions hereof or the continued operation of the Company's or
any subsidiary's business after the date hereof or the Closing Date (as
hereinafter defined) on substantially the same basis as heretofore operated or
that would restrict the ability or the Company or any subsidiary to acquire any
property or conduct business in any area.
Section 1.13 Litigation. Except as set forth in SCHEDULE 1.13 hereto,
there is no action, suit or proceeding by any person or entity, or any
arbitration or any administrative or other proceeding by or before (or to the
best knowledge, information and belief of the Shareholders any investigation
by) any governmental or other instrumentality or agency, pending, or, to the
best knowledge, information and belief of the Shareholders, threatened, against
or affecting the Company or any of its subsidiaries, or any of their properties
or rights that could materially and adversely affect the right or ability of
the Company or any of its subsidiaries to carry on its business as now
conducted, or that could materially and adversely affect the condition, whether
financial or otherwise, or properties of the Company or any of its
subsidiaries; and the Shareholders do not know of any valid basis for any such
action, proceeding or investigation. Neither the Company nor any of its
subsidiaries is subject to any judgment, order or decree entered in any lawsuit
or proceeding that may have a material adverse effect on any of its operations,
business practices or on its ability to acquire any property or conduct
business in any area.
Section 1.14 Taxes. The Company has filed or caused to be filed, within
the times and within the manner prescribed by law, all federal, state, municipal
and foreign tax returns and tax reports that are required to be filed by, or
with respect to, the Company or any of its subsidiaries. Such returns and
reports reflect accurately all liability for taxes of the Company and all of
its subsidiaries for the periods covered thereby. All federal, state,
municipal and foreign income, profits, sales, use, occupancy, excise and other
taxes and assessments (including interest and penalties) payable by, or due
from, the Company or any of its subsidiaries have been fully paid or adequately
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disclosed and fully provided for in the books and financial statements of the
Company and its subsidiaries. The federal and state income tax liability of
the Company and its subsidiaries has been finally determined for all fiscal
years to and including the fiscal year ended December 31, 1995. No examination
of any tax return of the Company or any of its subsidiaries is currently in
progress. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any tax return of the Company or
any of its subsidiaries. The Company will pay and discharge, when due, (i) all
material taxes, assessments and governmental priority claims, and charges
imposed upon its properties or upon the income or profits therefrom (in ease
case before the same becomes delinquent and before penalties accrue thereon),
and (ii) all claims for labor, materials or supplies that, if unpaid, might by
law became an lien upon any of its properties, unless and to the extent that
the same are being contested in good faith and by appropriate proceedings, and
adequate reserves have been set aside on its books with respect thereto, in
accordance with generally accepted accounting principles.
Section 1.15 Liabilities. Neither the Company nor any of its
subsidiaries has any outstanding claims, liabilities or indebtedness,
contingent or otherwise, except as set forth in the Balance Sheet or referred
to in the footnotes thereto or set forth in the Company's interim balance sheet
for as of March 31, 1996, other than liabilities incurred subsequent to the
Balance Sheet Date in the ordinary course of business not involving borrowings
by the Company or any subsidiary. Neither the Company nor any of its
subsidiaries is in default in respect of the terms or conditions of any
indebtedness.
Section 1.16 Insurance. Set forth in SCHEDULE 1.16 hereto is a
complete list of insurance policies that the Company and its
subsidiaries maintain with respect to their businesses, properties or
employees. Such policies are in full force and effect free from any right of
termination on the part of the insurance carriers. Such policies, with
respect to their amounts and types of coverage, are adequate to insure fully
against risks to which the Company, its subsidiaries and their property and
assets are normally exposed in the operation of their respective businesses.
Except as set forth in SCHEDULE 1.16, since January 1, 1995, there has not been
any material adverse change in the Company's or any subsidiary's relationship
with its insurers or in the premiums payable pursuant to such policies, except
for general changes the insurance industry.
Section 1.17 Intellectual Properties. SCHEDULE 1.17 hereto contains an
accurate and complete list of all domestic and foreign letters patent, patents,
patent applications, patent licenses, software licenses and know-how licenses,
trade names, trademarks, copyrights, unpatented inventions, service marks,
trademark registrations and applications, service mark registrations and
applications and copyright registrations and applications owned or used by the
Company and its subsidiaries in the operation of their respective businesses
(collectively, the "Intellectual Property"). Unless otherwise indicated in
such SCHEDULE 1.17, the Company or such subsidiary owns the entire right, title
and interest in and to the Intellectual Property, trade secrets and technology
used in the operation of its business (including, without limitation, the
exclusive right to use and license the same) and each item constituting part of
the Intellectual Property and trade secrets and technology that is owned by the
Company or such subsidiary has been, to the extent indicated in SCHEDULE 1.17,
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duly registered with, filed in or issued by, as the case may be, with the
United States Patent and Trademark Office or such other government entities,
domestic or foreign, as are indicated in SCHEDULE 1.17; and such registrations,
filings and issuances remain in full force and effect. To the best knowledge,
information and belief of the Shareholders, except as stated in such SCHEDULE
1.17, there are no pending or threatened proceedings or litigation or other
adverse claims affecting or with respect to the Intellectual Property.
SCHEDULE 1.17 lists all notices or claims currently pending or received by the
Company or any of its subsidiaries during the past two (2) years that claim
infringement by the Company or such subsidiary of any domestic or foreign
letters patent, patent applications, patent licenses and know-how licenses,
trade names, trademark registrations and applications, service marks,
copyrights, copyright registrations or applications, trade secrets or other
confidential proprietary information. Except as set forth in any Schedule
hereto, there is, to the best knowledge, information and belief of the
Shareholders, no reasonable basis upon which a claim may be asserted against
the Company or any of its subsidiaries for infringement of any domestic or
foreign letters patent, patents, patent applications, patent licenses and
know-how licenses, trade names, trademark registrations and applications,
common law trademarks, service marks, copyrights, copyright registrations or
applications, trade secrets or other confidential proprietary information. To
the best knowledge, information and belief of the Shareholders, except as
indicated on SCHEDULE 1.17, no Person is infringing the Intellectual Property.
The Company owns, possesses, or otherwise has the legal right to use all the
trademarks, service marks, trade names, copyrights, franchises, consents,
authorizations, licenses and rights with respect to the foregoing necessary for
the conduct of its business as now conducted.
Section 1.18 Compliance with Laws. To the best knowledge of the
Shareholders, the Company and its subsidiaries, are, and always were,
in compliance in all material respects with all applicable laws, regulations,
orders, judgments and decrees.
Section 1.19 Accounts Receivable. The amount of all accounts receivable,
unbilled invoices and other debts due or recorded in the respective records and
books of account of the Company and its subsidiaries as being due to the
Company and its subsidiaries as at the Closing Date (less the amount of any
provision or reserve therefor made in the respective records and books of
account of the Company and its subsidiaries) will be good and collectible in
full in the ordinary course of business and, in any event, not later than
ninety (90) days after the Closing Date; and none of such accounts receivable
or other debts is or will at the Closing Date be subject to any counterclaim or
set-off except to the extent of any such provision or reserve or as otherwise
disclosed to the Acquiring Companies prior to the Closing. There has been no
material adverse change since the Balance Sheet Date in the amount of accounts
receivable or other debts due the Company or its subsidiaries or the allowances
with respect thereto, or accounts payable of the Company and its subsidiaries,
from that reflected in the Balance Sheet or as otherwise disclosed to the
Acquiring Companies prior to the Closing.
Section 1.20 Employment Relations. (a) Each of the Company and its
subsidiaries is, to the best knowledge and belief of Sam Perricone and each of
the Shareholders after reasonable inquiry, in substantial compliance with all
federal, state or other applicable laws, domestic or
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foreign, respecting employment and employment practices, terms and conditions
of employment and wages and hours, and has not and is not engaged in any unfair
labor practice; (b) no unfair labor practice complaint against the Company or
any of its subsidiaries is pending before a labor commissioner or other
competent authority; (c) there is no labor strike, dispute, slowdown or
stoppage actually pending or threatened against or involving the Company or any
of its subsidiaries; (d) no representation question exists respecting the
employees of the Company or any of its subsidiaries; (e) no grievance that
might have an adverse effect upon the Company or any of its subsidiaries or the
conduct of their respective businesses exists, no arbitration proceeding
arising out of or under any collective bargaining agreement is pending, and no
claim therefor has been asserted; (f) no collective bargaining agreement exist
or is currently being negotiated by the Company or any of its subsidiaries; and
(g) neither the Company nor any of its subsidiaries has experienced any
material labor difficulty during the last three (3) years. There has not been,
and to the best knowledge, information and belief of the Shareholders, there
will not be, any material adverse change in relations with employees of the
Company or any of its subsidiaries as a result of any announcement of the
transactions contemplated by this Agreement. To the best knowledge,
information and belief of the Shareholders, no key employee, or group of
employees has any plans to terminate employment with the Company. Except as
set forth in SECTION 1.11, there is no employment agreement that cannot be
terminated without penalty by the Company within 30 days notice.
Section 1.21 Employee Benefit Plans.
(a) List of Plans. Set forth in SCHEDULE 1.21 hereto is an
accurate and complete list of all employee benefit plans (the "Employee
Benefit Plans") within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), whether or not any such
Employee Benefit Plans are otherwise exempt from the provisions of ERISA,
established, maintained or contributed to by the Company or any of its
subsidiaries (including, for this purpose and for the purpose of all of the
representations in this Section 1.21, all employers (whether or not
incorporated) that by reason of common control are treated together with the
Company and/or the Shareholders as a single employer within the meaning of
Section 414 of the Internal Revenue Code of 1986, as amended (the "Code"))
since September 2, 1974.
(b) Status of Plans. Neither the Company nor any of
its subsidiaries maintains or contributes to any such Employee Benefit
Plan subject to ERISA that is not in substantial compliance with ERISA, or that
has incurred any accumulated funding deficiency within the meaning of Section
412 or 418B of ERISA, or that has applied for or obtained a waiver from the
Internal Revenue Service of any minimum funding requirement under Section 412
of the Code. Neither the Company nor any of its subsidiaries has incurred any
liability to the Pension Benefit Guaranty Corporation ("PBGC") in connection
with any Employee Benefit Plan covering any employees of the Company or any of
its subsidiaries or ceased operations at any facility or withdrawn from any
such Plan in a manner that could subject it to liability under Section 4062(f),
4063 or 4064 of ERISA, and knows of no facts or circumstances that might give
rise to any liability of the Company or any of its subsidiaries to the PBGC
under Title IV of ERISA that could
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reasonably be anticipated to result in any claims being made against Purchaser
by the PBGC. Neither the Company nor any of its subsidiaries has incurred any
withdrawal liability (including any contingent or secondary withdrawal
liability) within the meaning of Sections 4201 and 4204 of ERISA, to any
Employee Benefit Plan that is a Multiemployer Plan (as defined in Section 4001
of ERISA), and no event has occurred, and there exists no condition or set of
circumstances, that presents a material risk of the occurrence of any
withdrawal from or the partition, termination, reorganization or insolvency of
any Multiemployer Plan that could result in any liability to a Multiemployer
Plan.
(c) Contributions. Full payment has been made of all
amounts that the Company or any of its subsidiaries is required, under
applicable law or under any Employee Benefit Plan or any agreement relating to
any Employee Benefit Plan to which the Company or any of its subsidiaries is a
party, to have paid as contributions thereto as of the last day of the most
recent fiscal year of such Employee Benefit Plan ended prior to the date
hereof. The Company has made adequate provision for reserves to meet
contributions that have not been made because they are not yet due under the
terms of any Employee Benefit Plan or related agreements. Benefits under all
Employee Benefit Plans are as represented and have not been increased
subsequent to the date as of which documents have been provided.
(d) Relationship of Vested Benefits to Pension Plan Assets.
As of December 31, 1995, (i) the aggregate current value of all vested accrued
benefits (based upon actuarial assumptions that have been furnished to and
relied upon by the Acquiring Companies) under all Employee Benefit Plans that
are subject to Title IV of ERISA and that are Single Employer Plans did not
exceed the aggregate current value of all assets of such Single Employer Plans
allocable to such vested accrued benefits by more than $25,000, and since
December 31, 1995, there has been (x) no material adverse change in the
financial condition of any Single Employer Plan, (y) no change in the actuarial
assumptions with respect to any Single Employer Plan and (z) no increase in
benefits under any Single Employer Plan as a result of plan amendments, change
in applicable law or otherwise, that individually or in the aggregate, would
increase the amount of such excess; and (ii) using actuarial assumptions and
computation methods consistent with subpart 1 of subtitle E of Title IV of
ERISA, the aggregate liabilities of the Company and its subsidiaries to all
such Employee Benefit Plans that are Multiemployer Plans in the event of a
complete withdrawal therefrom, as of the close of the most recent fiscal year
of each Multiemployer Plan ended prior to the date hereof, would not
exceed $25,000. To the best knowledge, information and belief of the
Shareholders, there has been no material change in the financial condition of
any Multiemployer Plan or in any such actuarial assumption or computation
method or in benefits under any Multiemployer Plan as a result of collective
bargaining or otherwise since the close of each such fiscal year which,
individually or in the aggregate, would materially increase such liability.
(e) Tax Qualification. To the best knowledge and belief
of Sam Perricone and each of the Shareholders after reasonable inquiry,
each Employee Benefit Plan intended to be qualified under Section 401(a) of the
Code has been determined to be so qualified by the Internal
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Revenue Service and nothing has occurred since the date of the last such
determination that resulted or is likely to result in the revocation of such
determination.
(f) Transactions. To the best knowledge and belief of
Sam Perricone and each of the Shareholders after reasonable inquiry, No
Reportable Event (as defined in Section 4043 of ERISA) for which the thirty-day
(30-day) notice requirement has not been waived by the PBGC has occurred with
respect to any Employee Benefit Plan, and neither the Company nor any of its
subsidiaries has engaged in any transaction with respect to the Employee
Benefit Plans that would subject it to a tax, penalty or liability for
prohibited transactions under ERISA or the Code, nor has any of their
respective directors, officers or employees to the extent they or any of them
are fiduciaries with respect to such plans, breached any of their
responsibilities or obligations imposed upon fiduciaries under Title I of ERISA
or would result in any claim being made under or by or on behalf of any such
plans by any party with standing to make such claim.
(g) Other Plans. Neither the Company nor any of its
subsidiaries presently maintains any employee benefit plans or any other
foreign pension, welfare or retirement benefit plans other than those listed in
SCHEDULE 1.21.
(h) Documents. The Shareholders have delivered or caused
to be delivered to the Acquiring Companies and their counsel true and complete
copies of (i) all Employee Benefit Plans as in effect, together with all
amendments thereto that will become effective at a later date, as well as the
latest Internal Revenue Service determination letter obtained with respect to
any such Employee Benefit Plan qualified under Section 401 or 501 of the Code
and (ii) Form 5500 for the most recent completed fiscal year for each Employee
Benefit Plan required to file such form.
Section 1.22 Interests in Clients, Suppliers. Etc. Except as set forth in
SCHEDULE 1.22 hereto, neither any Shareholders nor any officer or director of
the Company or any of its subsidiaries possesses, directly or indirectly, any
financial interest in, or is a director, officer or employee of, any
corporation, firm, association or business organization that is a client,
supplier, customer, lessor, lessee, or competitor or potential competitor of
the Company or any of its subsidiaries. Ownership of securities of a company
whose securities are registered under the Securities Exchange Act of 1934 or
are listed on a recognized Stock Exchange not in excess of one percent (1%) of
any class of such securities shall not be deemed to be a financial interest for
purposes of this Section 1.22.
Section 1.23 Bank Accounts, Powers of Attorney and Compensation of
Employees. Set forth in SCHEDULE 1.23 hereto is an accurate and complete
list showing (a) the name and address of each bank in which the Company or any
of its subsidiaries (in which the Company owns, directly or indirectly, a
majority of the voting stock) has an account or safe deposit box, the number of
any such account or any such box and the names of all persons authorized to
draw thereon or to have access thereto, (b) the names of all persons, if any,
holding powers of attorney from the Company or any of its subsidiaries and a
summary statement of the terms thereof and (c) the names of all persons whose
compensation from the Company or any of its subsidiaries for the fiscal year
ended
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on the Balance Sheet Date exceeded an annualized rate of $25,000, together with
a statement of the full amount paid or payable to each such person for services
rendered during such fiscal year.
Section 1.24 No Changes Prior to Closing Date. Except as indicated in
SCHEDULE 1.24 hereto, during the period from the Balance Sheet Date to
and including the Closing Date, except as expressly contemplated hereby,
neither the Company nor any of its subsidiaries will have (i) incurred any
liability or obligation of any nature (whether accrued, absolute, contingent or
otherwise), except in the ordinary course of business, (ii) permitted any of
its assets to be subjected to any mortgage, pledge, lien, security interest,
encumbrance, restriction or charge of any kind, (iii) sold, transferred or
otherwise disposed of any assets except in the ordinary course of business,
(iv) made any capital expenditure or commitment therefor, except in the
ordinary course of business, (v) declared or paid any dividend or made any
distribution on any shares of its capital stock, or redeemed, purchased or
otherwise acquired any shares of its capital stock or any option, warrant or
other right to purchase or acquire any such shares, (vi) made any bonus or
profit sharing distribution or payment of any kind, (vii) increased its
indebtedness for borrowed money, except current borrowings from banks in the
ordinary course of business, or made any loan to any Person, (viii) written off
as uncollectible any notes or accounts receivable, except write-offs in the
ordinary course of business charged to applicable reserves, none of which
individually or in the aggregate is material to the Company and its
subsidiaries, (ix) granted any increase in the rate of wages, salaries, bonuses
or other remuneration of any executive employee or other employees, except in
the ordinary course of business, (x) canceled or waived any claims or rights of
substantial value, (xi) made any change in any method of accounting or auditing
practice, (xii) otherwise conducted its business or entered into any
transaction, except in the usual and ordinary manner and in the ordinary course
of its business, or (xiii) agreed, whether or not in writing, to do any of the
foregoing. There shall have been no material adverse change in the financial
position, results of operations, business or prospects of Company since
December 31, 1995. The Company has not consolidated or merged with, nor sold,
leased or otherwise disposed to its properties as an entirety or substantially
as an entirety, to any Person.
Section 1.25 Disclosure. None of this Agreement, the financial statements
referred to in Section 1.6 above (including the footnotes thereto), or any
Schedule, Exhibit or certificate delivered in accordance with the terms hereof
or any document or statement in writing that has been supplied by or on behalf
of the Shareholders, or by any of the Company's or any of its subsidiaries'
directors or officers, in connection with the transactions contemplated hereby,
contains to their best knowledge any untrue statement of a material fact, or
omits any statement of a material fact necessary in order to make the
statements contained herein or therein not misleading. There is no fact known
to the Shareholders that materially and adversely affects the business,
prospects or financial condition of the Company or any of its subsidiaries or
their respective properties or assets, that has not been set forth in this
Agreement or in the Schedules, Exhibits or certificates or statements in
writing furnished in connection with the transactions contemplated by this
Agreement. There has not come to the attention of the Company any facts that
reasonably cause Company or its Shareholders to believe that any document
connected with the transactions contemplated hereby contain any untrue
statement or a material fact, or omit to state a material fact required to be
stated
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herein or necessary in order to make the statements herein, the light of the
circumstances existing on the Closing Date, not misleading.
Section 1.26 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of the Shareholders or the Company is, or will be, entitled to
any commission or broker's or finder's fees from any of the parties hereto, or
from any Person controlling, controlled by or under common control with any of
the parties hereto, in connection with any of the transactions contemplated
herein.
Section 1.27 Agreements, Judgments and Decrees Affecting Shareholders.
Each of the Shareholders represents and warrants that such Shareholders is not
subject to any agreement, judgment or decree adversely affecting such
Shareholder's ability to act as an employee of the Company or any of its
subsidiaries, as the case may be.
Section 1.28 Copies of Documents. The Shareholders have caused to be made
available for inspection and copying by UniMark and their advisers, true,
complete and correct copies of all documents referred to in this Article I or
in any Schedule furnished by the Shareholders to UniMark. All documents and
instruments delivered to UniMark on the Closing Date in connection with this
transaction shall be reasonably satisfactory to UniMark.
Section 1.29 Purchase for Investment. The Shareholders will acquire the
UniMark Shares (as defined in Section 3.4) for investment and not with a view
to resale or for distributing all or any part thereof in any transaction which
would constitute a "distribution" within the meaning of the Securities Act.
The offering of the UniMark Shares to the Shareholders were made only through
direct, personal communication between the undersigned and a duly authorized
representative of UniMark and not through public solicitation or advertising.
Shareholders acknowledge that the UniMark Shares have not been registered under
the Securities Act of 1933, as amended (the "Securities Act") and, except as
provided in the Registration Rights Agreement, the UniMark is under no
obligation to file a registration statement with the United States Securities
and Exchange Commission with respect to the UniMark Shares.
Section 1.30 Investor Qualifications. Each of the Shareholders (a) has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of its investment in the UniMark
Shares and has the financial ability to assume the monetary risk associated
therewith; (b) is able to bear the complete loss of its investment in the
UniMark Shares (as defined below); (c) has received such other documents and
information as it has requested and has had the opportunity to ask questions
of, and receive answers from, UniMark and its management concerning UniMark and
the terms and conditions of the offering of the UniMark Shares and to obtain
additional information; (d) is an "accredited investor" as defined in Rule
501(a) of the Regulation D promulgated under the Securities Act; (e) is not an
entity formed solely to make this investment; and (f) is not relying upon any
statements or instruments made or issued by any person other than UniMark and
its officers in making its decision to invest in the UniMark Shares.
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Section 1.31 Environmental matters . To the best knowledge and belief of
Sam Perricone and each of the Shareholders after reasonable inquiry, each of
the Company and its Subsidiaries has complied with all Environmental, Health,
and Safety Laws (as defined below), and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply. Without
limiting the generality of the preceding sentence, each of the Company and its
Subsidiaries has obtained and been in compliance with all of the terms and
conditions of all permits, licenses, and other authorizations which are
required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, al Environmental, Health, and Safety Laws.
To the best knowledge and belief of Sam Perricone and each of the Shareholders
after reasonable inquiry, none of the Company and its Subsidiaries has any
liability (and none of the Company and its Subsidiaries, and their respective
predecessors and affiliates has handled or disposed of any substance, arranged
for the disposal of any substance, exposed any employee or their individual to
any substance or condition, or owned or operated any property of facility in
any manner that could form the basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of the Company and its subsidiaries giving rise to any liability (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due)) for damage to any site, location, or body of
water (surface or subsurface), for any illness of or personal injury to any
employee or other individual, or for any reason under any Environmental,
Health, and Safety Law. To the best knowledge and belief of Sam Perricone and
each of the Shareholders, all properties and equipment used in the business of
the Company have been free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2-transdichloroethylene, dioxins, dibenzofurans, and
Extremely Hazardous Substances (as defined below) As used herein,.
"Environmental, Health, and Safety Laws" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Resource Conservation and
Recovery Act of 1976, and the Occupational Safety and Health Act of 1970, each
as amended, together with all other laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof) concerning pollution or protection of the environment, public health
and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes. As used herein,
"Extremely Hazardous Substance" has the meaning set forth in Sec. 302 of the
Emergency Planning and Community Right-to-Know Act of 1986, as amended.
ARTICLE II
REPRESENTATIONS OF THE ACQUIRING COMPANIES
Section 2. Representations of the Acquiring Companies. The Acquiring
Companies, jointly and severally, represent, warrant and agree as follows:
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Section 2.1 Existence and Good Standing. Each of the Acquiring
Companies is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas. Each of the Acquiring Companies
has corporate power and authority to make, execute, deliver and perform this
Agreement, and this Agreement has been duly authorized and approved by all
required corporate action of each of the Acquiring Companies.
Section 2.2 Restrictive Documents. Neither of the Acquiring Companies is
subject to any charter, by-law, mortgage, lien, lease, agreement, instrument,
order, law, rule, regulation, judgment or decree, or any other restriction of
any kind or character, that would prevent consummation of the transactions
contemplated by this Agreement.
Section 2.3 Purchase for Investment. The Acquiring Companies will
acquire the Simply Fresh Shares for their own account for investment and
not with a view toward any resale or distribution thereof.
Section 2.4 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of the Acquiring Companies is, or will be, entitled to any
commission or broker's or finder's fees from any of the parties hereto, or from
any person controlling, controlled by or under common control with any of the
parties hereto, in connection with any of the transactions contemplated herein.
Section 2.5 Issuance of the Shares. The delivery to Shareholders of the
UniMark Shares pursuant to the provisions of this Agreement will transfer to
Shareholders valid title thereto, free and clear of all liens, encumbrances,
restrictions and claims of every kind, except as acknowledged by Shareholders
in Section 1.29.
Section 2.6 Financial Situation. The consolidated financial statement of
The UniMark Group, Inc. is set forth in The UniMark Group, Inc. Annual Report
on Form 10-K for the Year Ended December 31, 1995 and the Quarterly Report on
Form 10Q for the Quarter Ended March 31, 1996 fairly represent the financial
condition of UniMark as of the respective dates.
Section 2.7 No Changes Prior To Closing. Since March 31, 1996, there has
been no material adverse change in the financial condition of UniMark.
Section 2.8 Disclosure. None of this Agreement, the draft Prospectus
previously delivered by UniMark to the Shareholders, the financial statements
referred to in Section 2.6 above (including the footnotes thereto), or any
Schedule, Exhibit or certificate delivered in accordance with the terms hereof
or any document or statement in writing that has been supplied by or on behalf
of UniMark or any of its subsidiaries' directors or officers, in connection
with the transactions contemplated hereby, contains to their best knowledge any
untrue statement of a material fact, or omits any statement of a material fact
necessary in order to make the statements contained herein or therein not
misleading. There is no fact known to UniMark that materially and adversely
affects the business, prospects or financial condition of UniMark or any of its
subsidiaries or their respective properties
15
<PAGE> 20
or assets, that has not been set forth in this Agreement, the draft Prospectus
or in the Schedules, Exhibits or certificates or statements in writing
furnished in connection with the transactions contemplated by this Agreement.
There has not come to the attention of UniMark any facts that reasonably cause
UniMark to believe that any document connected with the transactions
contemplated hereby contain any untrue statement or a material fact, or omit to
state a material fact required to be stated herein or necessary in order to
make the statements herein, the light of the circumstances existing on the
Closing Date, not misleading.
Section 2.9 Litigation. There is no action, suit or proceeding by any
person or entity, or any arbitration or any administrative or other proceeding
by or before (or to the best knowledge, information and belief of UniMark any
investigation by) any governmental or other instrumentality or agency, pending,
or, to the best knowledge, information and belief of UniMark, threatened, that
could reasonably be expected to interfere with the consummation of the
transactions contemplated hereby.
ARTICLE III
SALE OF SIMPLY FRESH SHARES
Section 3.1 Sale of Simply Fresh Shares. Subject to the terms and
conditions herein stated, the Shareholders agree to sell, assign, transfer
and deliver to the UniMark Foods on the Closing Date, and the Acquiring
Companies agree to purchase from Shareholders on the Closing Date, the number
of shares of Simply Fresh Shares set forth opposite the names of Shareholders
on Exhibit 1 hereto. The certificates representing the Simply Fresh Shares
shall be duly endorsed in blank by the Shareholders transferring the same.
Shareholders agree to cure any deficiencies with respect to the endorsement of
the certificates representing the Simply Fresh Shares owned by Shareholders or
with respect to the stock power and rights accompanying any such certificates.
Section 3.2 Cash Payment. In consideration for the purchase by the
UniMark Foods of the Simply Fresh Shares, the UniMark Foods shall pay to the
Shareholders on the Closing Date an aggregate of $2.5 million payable by wire
transfer or certified bank check payable to the Shareholders, in amounts set
forth opposite each Shareholders' name in Exhibit 1 hereto..
Section 3.3 UniMark Common Stock. At the Closing, UniMark shall
deliver to the Shareholders such number of shares of its authorized but
unissued Common Stock (the "UniMark Shares") that have a Public Market Value of
$1.5 million. The term "Public Market Value" means the average closing bid
prices of the UniMark Common Stock as quoted on the NASDAQ National Market
System for the three consecutive trading days immediately preceding the trading
day before the Closing Date (the "Calculation Date"). At the Closing, UniMark
will grant Shareholders piggyback registration rights with respect to the
UniMark Shares (the "Registration Rights"), pursuant to a Registration Rights
Agreement in substantially the same form as Exhibit 2 hereto. In addition, in
the event that after the Closing Date, the Public Market Value of the UniMark
Shares shall decline by more than ten percent (10%) from the value of the
UniMark Shares on the Calculation Date, then UniMark will issue additional
shares of its Common Stock in amount
16
<PAGE> 21
sufficient to restore the original per share value of the UniMark Shares (the"
Price Protection"). The foregoing notwithstanding, UniMark shall have the
option at any time to deliver cash to Shareholders in lieu of additional shares
in order to pay any remaining portion of the purchase price. Shareholders'
Price Protection rights will terminate upon the earlier of (a) Shareholders
notified of their ability to exercise their Registration Rights or (b)
Shareholders becoming eligible to sell any of the UniMark Shares pursuant to
Rule 144 under the Securities Act.
Section 3.4 Non-competition Agreement. In consideration for an
aggregate payments of One Million Dollars ($1,000,000.00) by UniMark, at
the Closing, UniMark and Mr. Sam Perricone and the Shareholders will enter into
a Non-competition Agreement in substantially the same form as Exhibit 3 hereto.
Section 3.5 Closing. The sale referred to in Section 3.1 shall take
place at 9 a.m. at the offices of Jordaan, Howard & Pennington, PLLC
within 15 business days after delivery of the Ernst & Young Audited Financials
(as defined in Section 5.12) or at such earlier time and date as UniMark shall
by written instrument designate. Such time and date are herein referred to as
the "Closing Date."
ARTICLE IV
CONDUCT OF BUSINESS; REVIEW
Section 4.1 Conduct of Business of the Company. Since December 31, 1995,
the Shareholders have caused the Company and each of its subsidiaries to
conduct their respective operations only according to their ordinary and usual
course of business and to use their best efforts to preserve intact their
respective business organizations, keep available the services of their
officers and employees and maintain satisfactory relationships with licensors,
suppliers, distributors, clients and others having business relationships with
them. Notwithstanding the immediately preceding sentence, pending the Closing
Date and except as it has been first approved by UniMark or as is otherwise
permitted or required by this Agreement, the Shareholders have caused (a) the
Company's and each of its subsidiaries' respective articles or certificate of
incorporation and Bylaws to be maintained in their form on the date of this
Agreement, (b) the compensation payable or to become payable by the Company and
each of its subsidiaries to any officer, employee or agent being paid $40,000
per year or more on the Balance Sheet Date to be maintained at their levels on
the date of this Agreement, (c) the Company and each of its subsidiaries to
refrain from making any bonus, pension, retirement or insurance payment or
arrangement to or with any such persons except those that may have already been
accrued, (d) the Company and each of its subsidiaries to refrain from entering
into any contract or commitment except contracts in the ordinary course of
business and (e) the Company and each of its subsidiaries to refrain from
making any change affecting any bank, safe deposit or power of attorney
arrangements of the Company or any such subsidiary. Since December 31, 1995,
the Shareholders have caused the Company to confer on a regular and frequent
basis with one (1) or more designated representatives of UniMark to report
material operational matters and to report the general status of ongoing
operations. The Shareholders shall cause the Company and each of its
subsidiaries to notify UniMark of any unexpected emergency or other change in
the
17
<PAGE> 22
normal course of its business or in the operation of its properties and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), adjudicatory proceedings, budget
meetings or submissions involving any material property of the Company and each
of its subsidiaries, and to keep UniMark fully informed of such events and
permit its representatives prompt access to all materials prepared in
connection therewith.
Section 4.2 Exclusive Dealing. During the period from the date of this
Agreement to the Closing Date, the Shareholders shall not, and shall cause the
Company to refrain from taking any action to, directly or indirectly,
encourage, initiate or engage in discussions or negotiations with, or provide
any information to, any corporation, partnership, Person, or other entity or
group, other than UniMark, concerning any purchase of the Simply Fresh Shares
or any merger, sale of substantial assets or similar transaction involving the
Company.
Section 4.3 Review of the Company. The Acquiring Companies may, prior to
the Closing Date, through their representatives, review the properties, books
and records of the Company and each of its subsidiaries and its financial and
legal condition as they deem necessary or advisable to familiarize themselves
with such properties and other matters; such review shall not, however, affect
the representations and warranties made by the Shareholders hereunder. The
Shareholders shall cause the Company and each of its subsidiaries to permit the
Acquiring Companies and their representatives to have, after the date of
execution hereof, full access to the premises and to all the books and records
of the Company and its subsidiaries and to cause the officers of the Company
and each of its subsidiaries to furnish the Acquiring Companies with such
financial and operating data and other information with respect to the business
and properties of the Company and its subsidiaries as the Acquiring Companies
shall from time to time reasonably request. In the event of termination of
this Agreement, the Acquiring Companies shall keep confidential any material
information obtained from the Shareholders or the Company or any subsidiary
concerning the Company's and its subsidiaries' respective properties or
operations and business (unless readily ascertainable from public or published
information or trade sources) until the same ceases to be material (or becomes
so ascertainable) and shall return to the Company and its subsidiaries all
copies of any schedules, statements, documents or other written information
obtained in connection therewith. The Shareholders shall deliver or cause to
be delivered on the Closing Date, and at such other times and places as shall
be reasonably agreed upon, such additional instruments as the Acquiring
Companies may reasonably request for the purpose of carrying out this
Agreement.
ARTICLE V
CONDITIONS TO ACQUIRING COMPANIES' OBLIGATIONS
Section 5. Conditions to the Acquiring Companies' Obligations. The
purchase of the Simply Fresh Shares by the Acquiring Companies on the Closing
Date is conditioned upon receipt by the Acquiring Companies of the legal
opinion and other documents listed in Sections 5.1, 5.2, 5.3, 5.4, 5.5, 5.6,
5.7, 5.8, 5.9 and 5.10 and compliance with Sections 5.10 and 5.11.
18
<PAGE> 23
Section 5.1 Opinion of the Company's Counsel. The Shareholders shall
have furnished the Acquiring Companies with a favorable opinion, dated the
Closing Date, of Don M. Drysdale, Esq., in form and substance satisfactory to
the Acquiring Companies and their counsel, to the effect set forth in Exhibit 4
hereto.
Section 5.2 Good Standing Certificates. The Shareholders shall have
delivered to the Acquiring Companies (a) copies of the Company's and such
subsidiaries' respective certificate of incorporation, including all amendments
thereto, certified by the Secretary of State or other appropriate official of
its jurisdiction of incorporation, (b) certificates from the Secretary of State
or other appropriate official or other appropriate official of the respective
jurisdictions of incorporation to the effect that each of the Company and its
designated subsidiaries is in good standing or subsisting in such jurisdiction,
and (c) a certificate from the appropriate official in each jurisdiction in
which the Company or any designated subsidiary is qualified to do business to
the effect that the Company or the applicable subsidiary is in good standing in
such jurisdiction.
Section 5.3 No Material Adverse Change. Prior to the Closing Date, there
shall be no material adverse change in the assets or liabilities, the business
or condition, financial or otherwise, the results of operations, or prospects
of the Company and its subsidiaries, whether as a result of any legislative or
regulatory change, revocation of any license or rights to do business, fire,
explosion, accident, casualty, labor trouble, flood, drought, riot, storm,
condemnation or act of God or other public force or otherwise, and the
Shareholders shall have delivered to UniMark a certificate, dated the Closing
Date, to such effect.
Section 5.4 Truth of Representations and Warranties. The representations
and warranties of the Shareholders contained in this Agreement or in any
Schedule delivered pursuant hereto shall be true and correct on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date, and the Shareholders shall have delivered
to the Acquiring Companies on the Closing Date a certificate, dated the Closing
Date, to such effect.
Section 5.5 Performance of Agreements. Each and all of the agreements of
the Shareholders to be performed on or before the Closing Date pursuant to the
terms hereof shall have been duly performed, and the Shareholders shall have
delivered to the Acquiring Companies a certificate, dated the Closing Date, to
such effect.
Section 5.6 No Litigation Threatened. No action or proceedings shall
have been instituted or, to the best knowledge, information and belief of
the Shareholders, shall have been threatened before a court or other government
body or by any public authority to restrain or prohibit any of the transactions
contemplated hereby, and the Shareholders shall have delivered to the Acquiring
Companies a certificate, dated the Closing Date, to such effect.
Section 5.7 Non-Competition Agreements. UniMark shall have entered
into a consulting and non-competition agreement with Shareholders
substantially in the form of Exhibit 3 hereto.
<PAGE> 24
Section 5.8 Governmental Approvals. All governmental and other consents
and approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received. In addition, the
Company shall have received necessary governmental consents and approvals with
respect to the matters referenced in Schedule 1.2.
Section 5.9 Intra-Company Debt. All indebtedness, other than travel and
similar advances, of the Shareholders, directors, officers and employees of the
Company and any of its subsidiaries to the Company or any of its subsidiaries
shall have been repaid in full.
Section 5.10 Proceedings. All proceedings to be taken in connection with
the transactions contemplated by this Agreement and all documents incident
thereto shall be satisfactory in form and substance to the Acquiring Companies
and their counsel, and the Acquiring Companies shall have received copies of
all such documents and other evidences as they or their counsel may reasonably
request in order to establish the consummation or such transactions and the
taking of all proceedings in connection therewith.
Section 5.11 Audited Financial Statements certified by Ernst & Young LLP.
The Shareholders shall have furnished UniMark with the consolidated balance
sheets of Simply Fresh and its subsidiaries as of December 31, 1995 and the
related consolidated statements of income, Shareholders' equity and changes in
financial position for the years then ended, all prepared in accordance with
Generally Accepted Accounting Principles, upon which Ernst & Young LLP has
reached an unqualified audit opinion based upon generally accepted auditing
standards (the "Ernst & Young Audited Financials"). The audited balance sheet
of Simply Fresh and the related statements of income, Shareholder' equity and
changes in financial position set forth in the Ernst & Young Financials, shall
be substantially similar to the balance sheet of Simply Fresh and the related
statements of income, Shareholder' equity and changes in financial position
that have been provided to UniMark by the Shareholders.
ARTICLE VI
CONDITIONS TO THE SHAREHOLDERS' OBLIGATIONS
Section 6. Conditions to the Shareholders' Obligations. The sale of the
Simply Fresh Shares by the Shareholders on the Closing Date is conditioned upon
receipt by the Shareholders of the legal opinion and other documents listed in
Sections 6.1, 6.2 and 6.5, and compliance with Sections 6.3 and 6.4.
Section 6.1 Opinions of UniMark's Counsel. UniMark shall have furnished
the Shareholders with an opinion, dated the Closing Date, of Jordaan, Howard &
Pennington, PLLC regarding the validity of the UniMark Shares.
Section 6.2 Truth of Representations and Warranties. The
representations and warranties of the Acquiring Companies contained in this
Agreement shall be true and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made on
20
<PAGE> 25
and as of such date; and the Acquiring Companies shall have delivered to the
Shareholders on the Closing Date a certificate, dated the Closing Date, to such
effect.
Section 6.3 Governmental Approvals; Contractual Approvals. All
federal, state, municipal or local governmental and contractual consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received, including all
licenses, certifications, authorizations or approvals.
Section 6.4 Proceedings. All proceedings to be taken in connection
with the transactions contemplated by this Agreement and all documents incident
thereto shall be reasonably satisfactory in form and substance to the
Shareholders and their counsel.
Section 6.5 Royalty Agreement. At the Closing, the Company and the
Shareholders shall have executed an agreement pursuant to which UniMark will
agree to pay to the Shareholders an amount equal to $.0025 per pound of fruit
processed by UniMark that utilizes Simply Fresh's "high volume apparatus" for
removing peel and sectioning fruit as set forth on Exhibit 5 hereto.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS: INDEMNITY; SET-OFF
Section 7.1 Survival of Representations. The respective
representations and warranties of the Shareholders and the Acquiring Companies
contained in this Agreement or in any Schedule delivered pursuant hereto shall
survive the purchase and sale of the Simply Fresh Shares contemplated hereby
for a period of three (3) years from the Closing Date, except for any
representations and warranties pertaining to tax matters which will survive the
Closing Date.
Section 7.2 Indemnification. (a) The Shareholders agree, jointly and
severally, to indemnify and hold the Acquiring Companies and their officers,
directors and agents harmless from damages, losses or expenses in excess of
$25,000 in the aggregate, suffered or paid, directly or indirectly, through
application of the Company's or UniMark' assets, as a result of any and all
claims, demands, suits, causes of action, proceedings, judgments and
liabilities, including reasonable counsel fees incurred in litigation or
otherwise, assessed, incurred or sustained by or against any of them with
respect to or arising out of the failure of any representation or warranty made
by the Shareholders in this Agreement or in any Schedule delivered pursuant
hereto to be true and correct in all respects as of the date of this Agreement
and as of the Closing Date.
(b) the Acquiring Companies agree to indemnify and hold Sam
Perricone and each of the Shareholders harmless from (i) those
certain personal guaranties made by any of them in respect of Company
obligations as set forth in Schedule 7.2(b) and (ii) damages, losses or
expenses in excess of $25,000, in the aggregate, suffered or paid, directly or
indirectly, as a result of any and all claims, demands, suits, causes of
action, proceedings, judgments and liabilities, including reasonable counsel
fees incurred in litigation or otherwise, assessed, incurred or sustained by or
against any of them with respect to or arising out of the failure of any
representation or warranty
21
<PAGE> 26
made by UniMark in this Agreement to be true and correct in all respects as of
the date of this Agreement and as of the Closing Date.
(c) Any party claiming indemnification hereunder, shall give
the other party (an "indemnitee") written notice of the basis of
indemnification, and if possible, shall allow the indemnitee a reasonable
opportunity to retroactive, prospectively and permanently cure the problem.
(d) The obligations to indemnify and hold harmless pursuant to
this Section 7.2 shall survive the consummation of the transactions
contemplated by this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Knowledge of Shareholders. Where any representation or
warranty contained in this Agreement is expressly qualified by reference to the
knowledge, information and belief of the Shareholders, the Shareholders confirm
that they have made due and diligent inquiry as to the matters that are the
subject of such representations and warranties.
Section 8.2 Expenses. The parties hereto shall pay all of their own
expenses relating to the transactions contemplated by this Agreement,
including, without limitation, the fees and expenses of their respective
counsel and financial advisers.
Section 8.3 "Person" Defined. "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or other department or agency
thereof.
Section 8.4 Captions. The Article and Section captions used herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 8.5 Publicity. Except as otherwise required by law, none of the
parties hereto shall issue any press release or make any other public
statement, in each case relating to or connected with or arising out of this
Agreement or the matters contained herein, without obtaining the prior approval
of UniMark and the Company to the contents and the manner of presentation and
publication thereof.
Section 8.6 Notices. Any notice or other communications required or
permitted hereunder shall be sufficiently given if delivered in person or sent
by telex or by registered or certified mail, postage prepaid, addressed as
follows: If to UniMark, to UniMark Group, Inc., Attention: Jorn Budde, with a
copy to its counsel, Jordaan, Howard & Pennington, 300 Crescent Court, Suite
1670, Dallas, Texas 75201, Telephone: (214)871-6550, Fax: (214)871-6560; and if
to Shareholders, to
22
<PAGE> 27
Sam Perricone Citrus Co., Inc
1601 E. Olympic Blvd., Building 100, Suite 111
Los Angeles, California 90021
or such other address as shall be furnished in writing by any such party,
and such notice or communication shall be deemed to have been given as of the
date so delivered, sent by fax or mailed.
Section 8.7 Parties in Interest. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by operation
of law. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
Section 8.8 Counterparts. This Agreement may be executed in two (2) or
more counterparts, all of which taken together shall constitute one instrument.
Section 8.9 Entire Agreement. This Agreement, including the other
documents referred to herein that form a part hereof, contains the entire
understanding of the parties hereto with respect to the subject matter
contained herein and therein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
Section 8.10 Amendments. This Agreement may not be changed orally, but
only by an agreement in writing signed by the Acquiring Companies and the
Shareholders.
Section 8.11 Severability. In case any provision in this Agreement shall
be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
Section 8.12 Third Party Beneficiaries. Each party hereto intends that
this Agreement shall not benefit or create any right or cause of action in or
on behalf of any Person other than the parties hereto.
Section 8.13 Termination of Agreement. All parties hereto agree to use
their best efforts to fulfill the requirements of Articles V and VI as soon as
practicable. If any precondition to the completion of the transactions
contemplated hereby is not fulfilled on or prior to May 15, 1996, this
Agreement shall be null and void and have no further effect.
Section 8.14 Time of Essence. The mere lapse of time shall have the
effect to constitute of the parties hereto in default to perform any of its
obligations under this Agreement.
Section 8.15 Negotiation. Each party hereto declares that the provisions
of this Agreement and of all documents annexed thereto or referred to therein,
have been freely negotiated and declares having read this Agreement and those
documents and having understood their scope and nature.
23
<PAGE> 28
Section 8.16 Governing Law. This Agreement shall be governed by and
construed in accordance with domestic laws of the State of Texas without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Texas or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Texas.
Section 8.17 Arbitration. Any dispute arising under this Agreement shall
be resolved by submission before the American Arbitration Association in
Dallas, Texas, in accordance with its Commercial Arbitration Rules.
Section 8.18 Attorney's Fees. If any legal action or other proceeding is
brought under this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
24
<PAGE> 29
IN WITNESS WHEREOF, UniMark has caused its corporate name to be hereunto
subscribed by its officer thereunto duly authorized, and the Shareholders have
executed this Agreement, all as of the date first above written.
UNIMARK FOODS, INC
By: Jorn Budde
-----------------------------
Name: Jorn Budde
Title: President
THE UNIMARK GROUP, INC.
By: Jorn Budde
-----------------------------
Name: Jorn Budde
Title: President
SAM PERRICONE:
Sam Perricone
-----------------------------
Sam Perricone
SHAREHOLDERS:
Sam Perricone Children's Trust - 1972
By: Paul Golub
-----------------------------
Name: Paul Golub
Title: Trustee
Mark Strongin
-----------------------------
Mark Strongin
25
<PAGE> 30
EXHIBIT 1
Simply Fresh Shareholders
<TABLE>
<CAPTION>
Number and Ownership
Name and Address Category of Shares Percentage
- ---------------- -------------------- ----------
<S> <C> <C>
Sam Perricone Children's Trust - 1972
1601 E. Olympic Blvd., Suite 111
Los Angeles, California 90021
Mark Strongin
1110 3rd Street 7,500 Common 75%
Hermosa Beach, California 90254 2,500 Common 25%
</TABLE>
26
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the 1994 Employee Stock Option Plan and the
1994 Stock Option Plan for Directors of The UniMark Group, Inc. of our report
dated April 29, 1996, except for Note 9, as to which the date is May 9, 1996
with respect to the financial statements of Simply Fresh Fruit, Inc. included in
this Report on Form 8-K.
ERNST & YOUNG LLP
Dallas, Texas
May 9, 1996
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the 1994 Employee Stock Option Plan and the 1994 Stock
Option Plan for Directors of The UniMark Group, Inc. of our report dated
April 23, 1996, except for Note 8, as to which the date is May 9, 1996 with
respect to the financial statements of Grupo Industrial Santa Engracia, S.A. de
C.V. as of December 31, 1995 and for the year then ended included in this
Report on Form 8-K.
MANCERA, S.C.
ERNST & YOUNG
San Pedro Garza Garcia, N.L., Mexico
May 9, 1996
<PAGE> 1
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the 1994 Employee Stock Option Plan and the 1994 Stock
Option Plan for Directors of The UniMark Group, Inc. of our report dated June
24, 1995, with respect to the financial statements of Grupo Industrial Santa
Engracia, S.A. de C.V. as of December 31, 1994 and for each of the two years in
the period then ended included in this Report on Form 8-K.
GARZA, JASSO, Y ASOCIADOS
Leon, Gto., Mexico
May 9, 1996
<PAGE> 1
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION CONTACT:
May 1, 1996 Jorn Budde
817-491-2992
THE UNIMARK GROUP, INC. ANNOUNCES AGREEMENT TO ACQUIRE
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
Argyle, Texas May 1, 1996 -- The UniMark Group, Inc. announces that it has
entered into an agreement to acquire all of the outstanding shares of capital
stock of Grupo Industrial Santa Engracia ("GISE"), a major Mexican producer of
citrus concentrates, citrus oils and citrus juices in exchange for shares of
UniMark Common Stock, having a public market value of $12 million. In
addition, UniMark agreed to pay an additional $8 million during the next four
years if GISE achieves certain financial targets.
For fiscal 1995, GISE's financial results were as follows:
<TABLE>
<S> <C>
Net sales $13,915,000
Income from operations 4,153,000
Net Income 1,554,000
</TABLE>
Said Mr. Jorn Budde, UniMark's President and Chief Executive Officer: "We
believe that this transaction will confer operational benefits on both
companies resulting from combining fruit procurement functions and that GISE
should benefit from UniMark's international distribution and marketing
expertise. Also, we are particularly excited about the prospect of a long-term
agreement with The Coca Cola Company, Mexico, for the growing of Italian lemons
and the extraction of lemon oil."
GISE operates juice plants located in Victoria, Tarmaulipas Mexico and Poza
Rica, Veracruz Mexico in the heart of major citrus growing regions. The
UniMark Group, Inc. is a vertically integrated citrus and tropical fruit
growing, processing, marketing and distribution company with operations in
Mexico, the United States and Canada.
<PAGE> 1
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION CONTACT:
May 9, 1996 Jorn Budde, Chief Executive Officer
Keith Ford, Vice President Finance
Jim Drewitz, Investor Relations
817/491-2992
THE UNIMARK GROUP, INC. ANNOUNCES
AGREEMENT TO ACQUIRE SIMPLY FRESH FRUIT, INC.
Argyle, Texas May 9, 1996 -- The UniMark Group, Inc. (Nasdaq NMS symbol "UNMG")
announces that it has entered into an agreement to acquire all of the
outstanding shares of capital stock of Simply Fresh Fruit, Inc., a fruit
processing and distribution company located in Los Angeles, California in a
transaction valued at approximately $5 million.
Simply Fresh's sales are primarily to the foodservice industry in the Western
United States. For 1995, Simply Fresh reported net sales of approximately $8.9
million. Said Mr. Jorn Budde, UniMark's Chief Executive Officer, "We believe
that this acquisition will afford us with operational synergies and expanded
distribution into the foodservice market."
The UniMark Group, Inc. is a vertically integrated citrus and tropical fruit
growing, processing, marketing and distribution company with operations in
Mexico, the United States and Canada.
<PAGE> 1
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION CONTACT:
May 10, 1996 Jorn Budde, Chief Executive Officer
Keith Ford, Vice President Finance
Jim Drewitz, Investor Relations
817/491-2992
THE UNIMARK GROUP, INC. ANNOUNCES CLOSING
OF TWO MAJOR ACQUISITIONS
Argyle, Texas May 10, 1996 -- The UniMark Group, Inc. (Nasdaq NMS symbol:
"UNMG") announces that it has acquired all of the outstanding shares of capital
stock of Grupo Industrial Santa Engracia ("GISE") in exchange for 782,614
shares of UniMark Common Stock. In addition, UniMark agreed to pay an
additional $8 million during the next four years if GISE achieves certain
financial targets. GISE operates juice plants located in Victoria, Tarmaulipas
Mexico and Poza Rica, Veracruz Mexico in the heart of major citrus growing
regions. For fiscal 1995, GISE reported net sales of approximately $13,915,000.
Also, UniMark acquired all of the outstanding shares of capital stock of Simply
Fresh Fruit, Inc., a fruit processing and distribution company located in Los
Angeles, California in a transaction valued at approximately $5 million. Simply
Fresh's sales are primarily to the foodservice industry in the Western United
States. For 1995, Simply Fresh reported net sales of approximately $8.9 million.
The UniMark Group, Inc. is a vertically integrated citrus and tropical fruit
growing, processing, marketing and distribution company with operations in
Mexico, the United States and Canada.
