SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
THE UNIMARK GROUP, INC.
---------------------------
(Name of Issuer)
Common Stock, Par Value $0.01 Per Share
---------------------------------------------
(Title of Class of Securities)
904789104
-------------------
(CUSIP Number)
Stephen M. Vine, Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
(212) 872-1000
-----------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 17, 1998
-------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Note:
Six copies of this statement, including all exhibits, should be filed with the
Commission. See Rule 13d- 1(a) for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter disclosure
provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Continued on following page(s)
Page 1 of 87 Pages
Exhibit Index: Page 9
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Page 2 of 87 Pages
SCHEDULE 13D
CUSIP No. 904789104
1 Name of Reporting Person
I.R.S. Identification No. of Above Persons (Entities Only)
MEXICO STRATEGIC ADVISORS LLC
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [ ]
3 SEC Use Only
4 Source of Funds*
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 5,305,500\1\
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 5,305,500\1\
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
5,305,500\1\
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain
Shares* [ ]
13 Percent of Class Represented By Amount in Row (11)
38.06%
14 Type of Reporting Person*
OO; IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
\1\ See Item 6.
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Page 3 of 87 Pages
This Amendment No. 1 to Schedule 13D relates to Common Shares, par value
$0.01 per share (the "Shares"), of The UniMark Group, Inc. (the "Issuer"). This
Amendment No. 1 supplementally amends the initial statement on Schedule 13D
dated July 7, 1998 (the "Initial Statement"), filed by the Reporting Person (as
defined below). This Amendment No. 1 is being filed by the Reporting Person to
report that as a result of an adjustment to the original arrangement as set
forth in the Letter Agreement between the Issuer and MSIF, as described in the
Initial Statement, the number of Shares of which the Reporting Person currently
may be deemed to be the beneficial owner has changed from that previously
reported and that the underlying transaction set forth in the Initial Statement
has been consummated. Capitalized terms used but not defined herein shall have
the meanings ascribed to them in the Initial Statement. The Initial Statement is
supplementally amended as follows.
Item 2. Identity and Background.
This statement is being filed on behalf of Mexico Strategic Advisors
LLC (the "Reporting Person") and relates to Shares and the options to acquire
certain Shares (the "Options") held for the account of M&M Nominee LLC, a
Delaware limited liability company ("M&M").
Updated information concerning the members of the Board of Advisors of
the Reporting Person is set forth in Annex A hereto and incorporated herein by
reference.
Item 3. Source and Amount of Funds or Other Consideration.
M&M expended approximately $14,998,706 of its working capital to
purchase the Shares reported herein as being acquired since July 7, 1998 (the
date of filing of the last statement on Schedule 13D).
The securities which will be held for the account of M&M may be held
through margin accounts maintained with brokers, which extend margin credit as
and when required to open or carry positions in its margin accounts, subject to
applicable federal margin regulations, stock exchange rules and such firm's
credit policies. The positions which may be held in the margin accounts,
including the Shares, are pledged as collateral security for the repayment of
debit balances in the respective accounts.
Item 4. Purpose of Transaction.
All of the Shares reported herein acquired for the account of M&M were
acquired or disposed of for investment purposes. Neither the Reporting Person
nor, to the best of its knowledge, any of the other persons identified in
response to Item 2, has any plans or proposals that relate to or would result in
any of the transactions described in subparagraphs (a) through (j) of Item 4 of
Schedule 13D. The Reporting Person reserves the right to acquire, or cause to be
acquired, additional securities of the Issuer, to dispose of, or cause to be
disposed, such securities at any time or to formulate other purposes, plans or
proposals regarding the Issuer or any of its securities, to the extent deemed
advisable in light of general investment and trading policies of the Reporting
Person, MSIF, Madera and/or M&M, market conditions or other factors.
Item 5. Interest in Securities of the Issuer.
(a) The Reporting Person may be deemed the beneficial owner of the
5,305,500 Shares held for the account of M&M (approximately 38.06% of the total
number of Shares outstanding assuming exercise of the Options held for the
<PAGE>
Page 4 of 87 Pages
account of M&M). This number consists of (i) 3,305,500 Shares held for the
account of M&M and (ii) 2,000,000 Shares issuable upon exercise of the Options
held for the account of M&M.
(b) The Reporting Person (by virtue of the Advisory Contract) has the
sole power to direct the voting and disposition of the Shares held for the
account of M&M.
(c) Except for the transaction described in Item 3 and Item 6 hereto,
there have been no transactions effected with respect to the Shares since July
7, 1998 (the date of filing of the last statement on Schedule 13D) by the
Reporting Person and/or M&M.
(d) M&M and its members have the right to participate in the receipt
of dividends from, or proceeds from the sale of, securities, including the
Shares and Options, held for the account of M&M in accordance with their
membership interests in M&M.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings in Relationship with Respect
to Securities of the Issuer.
The terms of the arrangement contemplated in the Letter Agreement
previously described in the Initial Statement on Schedule 13D were adjusted due
to certain business factors and as such, the final arrangement set forth in the
Purchase Agreement (as defined herein) includes the grant of an additional
option for 1,000,000 Shares pursuant to the Second Option Agreement as described
below. There was no additional consideration paid for this additional option and
such option was granted pursuant to the final terms of the original transaction.
On July 17, 1998, M&M entered into a purchase agreement (the "Purchase
Agreement") with the Issuer, a copy of which is attached hereto as Exhibit B and
incorporated by reference in response to this Item 6. Pursuant to the terms of
the Purchase Agreement, M&M purchased 3,305,500 Shares at $4.5375 per Share and
was granted Options to purchase 2,000,000 Shares at an exercise price of $4.5375
per Share. The description of the terms of the Purchase Agreement below is
qualified in its entirety by reference to the specific provisions of the
Purchase Agreement. The terms for the exercise of the Options are set forth in
the Option Agreements (as defined below).
In accordance with Section 4.2 of the Purchase Agreement, M&M is
entitled to designate that percentage of the Issuer's Board of Directors that is
at least equal to M&M's and its affiliates' percentage ownership of the
outstanding common stock of the Issuer.
Pursuant to Section 5 of the Purchase Agreement, M&M shall not sell,
transfer, pledge, encumber or otherwise dispose of any of the Shares for one
year from July 17, 1998, the time of acquisition of the Shares, other than to
affiliates, each of which shall be bound by the foregoing transfer restriction.
On July 17, 1998, M&M and the Issuer entered into (i) a one year
option agreement (the "First Option Agreement") a copy of which is attached
hereto as Exhibit C and (ii) a three year option agreement (the "Second Option
Agreement"), a copy of which is attached hereto as Exhibit D (collectively, the
<PAGE>
Page 5 of 87 Pages
"Option Agreements"). Exhibits C and D are incorporated by reference in response
to this Item 6. Pursuant to these Option Agreements, M&M is entitled to acquire
up to 1,000,000 Shares under each Option Agreement, subject to certain terms and
conditions.
On July 17, 1998, the Issuer executed a Registration Rights Agreement
for the benefit of M&M (the "Registration Rights Agreement"), a copy of which is
attached hereto as Exhibit E and incorporated herein by reference in response to
this Item 6, in connection with the acquisition of certain Registrable
Securities (as defined in the Registration Rights Agreement), which term
includes the Shares and the Options to acquire Shares. The Registration Rights
Agreement provides that the Issuer will use its best efforts to qualify for
registration on Form S-3 or any successor form, and that holders of Registrable
Securities have certain rights, subject to restrictions, pertaining to their
ability to demand that the Issuer register the Restricted Shares under the
Securities Act.
The Registration Rights Agreement contains other provisions relating
to registration procedures, indemnification and contribution and other matters,
all of which are incorporated herein by reference.
On July 17, 1998, M&M entered into and executed a Shareholders
Agreement (the "Shareholders Agreement") with Messrs. Rafael Vaquero Bazan and
Fernando Camacho Casas (collectively, "the Executives") a copy of which is
attached hereto as Exhibit F and incorporated by reference in response to this
Item 6. Pursuant to Section 1 of the Shareholders Agreement, for a period of one
year from execution, M&M agrees not to sell, transfer, assign, exchange, pledge,
encumber or dispose of any Shares except to an Affiliate, each of which shall be
bound by the foregoing transfer restriction.
Pursuant to Section 2 of the Shareholders Agreement, M&M and the
Executives have agreed to provide a buy-sell option to each other, exercisable
at any time after one year from the date of execution subject to certain
conditions as provided in the Shareholders Agreement.
From time to time, each of the Reporting Person, MSIF, Madera and/or
M&M may lend portfolio securities to brokers, banks or other financial
institutions. These loans typically obligate the borrower to return the
securities, or an equal amount of securities of the same class, to the lender
and typically provide that the borrower is entitled to exercise voting rights
and to retain dividends during the term of the loan. From time to time, to the
extent permitted by applicable laws, each of the Reporting Person, MSIF, Madera
and/or M&M may borrow securities, including the Shares, for the purpose of
effecting, and may effect, short sale transactions, and may purchase securities
for the purpose of closing out short positions in such securities.
Except as described above, the Reporting Person, MSIF, Madera and/or
M&M do not have any contracts, arrangements, understandings or relationships
with respect to any securities of the Issuer.
Item 7. Material to be Filed as Exhibits.
B. Purchase Agreement executed July 17, 1998 between the Issuer and M&M.
C. First Option Agreement executed July 17, 1998 between the Issuer and
M&M.
D. Second Option Agreement executed July 17, 1998 between the Issuer and
M&M.
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Page 6 of 87 Pages
E. Registration Rights Agreement executed July 17, 1998 between the
Issuer and M&M.
F. Shareholders Agreement executed July 17, 1998 between the Issuer and
M&M.
<PAGE>
Page 7 of 87 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Date: July 23, 1998
MEXICO STRATEGIC ADVISORS LLC
By:/s/ Miriam Rebling
---------------------------
Miriam Rebling
Manager
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Page 8 of 87 Pages
<TABLE>
<CAPTION>
ANNEX A
Board of Advisors of Mexico Strategic Advisors LLC
Name/Citizenship Principal Occupation Business (or Residence) Address
<S> <C> <C>
Mr. Fernando Chico Pardo Manager of Mexico Strategic Bosque de Alisos, No. 47A, 3rd Floor
Mexico) Advisors LLC and Partner of Colonia Bosques de las Lomas
Promecap, S.C. 05120 Mexico, Distrito Federal
Mr. Jose Ignacio de Associate of Promecap, S.C. Bosque de Alisos, No. 47A, 3rd Floor
Abeiga Pons Colonia Bosques de las Lomas
(Mexico) 05120 Mexico, Distrito Federal
Mr. Juan Marco Gutierrez Associate of Promecap, S.C. Bosque de Alisos, No. 47A, 3rd Floor
Wanless Colonia Bosques de las Lomas
(Mexico) 05120 Mexico, Distrito Federal
Mr. Gary Gladstein Managing Director of Soros 888 Seventh Avenue, 33rd Floor,
(United States) Fund Management LLC New York, New York 10106
Mr. Richard Katz Private Investor Villa La Sirena, Vico dell'
(England) Olivetta 12, 18039 Mortola
Inferiore, Ventimiglia, Italy
</TABLE> (Residence)
<PAGE>
Page 9 of 87 Pages
EXHIBIT INDEX
B. Purchase Agreement executed July 17, 1998 between The UniMark Group, Inc.
and M&M Nominee LLC.
C. First Option Agreement executed July 17, 1998 between The UniMark Group,
Inc. and M&M Nominee LLC.
D. Second Option Agreement executed July 17, 1998 between The UniMark Group,
Inc. and M&M Nominee LLC.
E. Registration Rights Agreement executed July 17, 1998 between The UniMark
Group, Inc. and M&M Nominee LLC.
F. Shareholders Agreement executed July 17, 1998 between The UniMark Group,
Inc. and M&M Nominee LLC.
Page 10 of 87 Pages
EXHIBIT B
PURCHASE AGREEMENT
BY AND BETWEEN
THE UNIMARK GROUP, INC.
AND
M & M NOMINEE L.L.C.
Dated as of July 17, 1998
<PAGE>
Page 11 of 87 Pages
1. ISSUANCE AND SALE OF PRIMARY SHARES........................................2
1.1. Definitions..............................................................2
1.2. Issuance, Purchase and Sale of the Shares................................2
1.3. Closing..................................................................2
1.4. Deliveries at Closing....................................................2
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................3
2.1. Organization and Qualification...........................................3
2.2. Subsidiaries.............................................................4
2.3. Capitalization...........................................................4
2.4. Due Authorization........................................................5
2.5. Non-contravention; Consents and Approvals................................5
2.6. SEC Reports..............................................................6
2.7. Undisclosed Liabilities..................................................6
2.8. Taxes....................................................................7
2.9. Certain Changes..........................................................8
2.10. Litigation; Compliance with Laws........................................8
2.11. Title to Properties; Insurance..........................................8
2.12. ERISA...................................................................9
2.13. Possession of Franchises, Licenses, Etc.................................9
2.14. Environmental and Other Regulations....................................10
2.15. Patents and Trademarks.................................................10
2.16. Material Contracts and Obligations.....................................11
2.17. Brokers................................................................12
2.18. Accuracy of Information................................................12
2.19. Offering of Primary Shares.............................................12
2.20. Costs of "Year 2000" Modifications.....................................12
3. REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER..........................12
3.1. Organization and Qualification..........................................12
3.2. Due Authorization.......................................................12
3.3. Acquisition for Investment..............................................13
3.4. Brokers.................................................................13
3.5. Non-contravention; Consents and Approvals...............................13
3.6. Accredited Investor.....................................................13
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Page 12 of 87 Pages
4. COVENANTS OF THE COMPANY..................................................14
4.1. Negative Covenants......................................................14
4.2. Board Representation....................................................16
4.3. Compliance with Laws....................................................17
4.4. Insurance...............................................................17
4.5. Preservation of Existence, Franchises...................................17
4.6. Payment of Taxes and Other Charges......................................17
4.7. Reports; Access.........................................................17
4.8. Dividends...............................................................18
4.9. Limitation on Agreements................................................18
4.10. Merger.................................................................19
4.11. Notice of Breach.......................................................19
4.12. Real Property Holding Company..........................................19
5. RESTRICTIONS ON TRANSFER..................................................19
6. INDEMNIFICATION...........................................................19
6.1. Survival................................................................19
6.2. Indemnification.........................................................20
6.3 Procedures for Claims...................................................21
6.4. Certain Provisions Regarding Indemnification............................22
7. INTERPRETATION............................................................23
7.1. Definitions.............................................................23
7.2. Index to Defined Terms..................................................26
7.3. Headings; Other Interpretation..........................................28
8. MISCELLANEOUS.............................................................28
8.1. Severability............................................................28
8.2. Specific Enforcement....................................................28
8.3. Entire Agreement........................................................28
8.4. Counterparts............................................................29
8.5. Notices and Other Communications........................................29
8.6. Amendments; Termination; Waivers........................................30
8.7. Cooperation.............................................................30
8.8. Successors and Assigns; Parties in Interest.............................30
8.9. Expenses................................................................31
8.10. Transfer of Shares.....................................................31
8.11. Governing Law; Consent to Jurisdiction.................................31
8.12. Publicity..............................................................32
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THIS PURCHASE AGREEMENT, dated as of July 17, 1998 (this "Agreement"),
by and between UNIMARK GROUP, INC., a Texas corporation (the "Company") and M &
M Nominee L.L.C., a Delaware limited liability company ("Purchaser").
WHEREAS, the Company's business consists primarily of (i) vertically
integrated citrus and tropical fruit growing, processing, marketing and
distribution operations and related activities (the "Fruit Processing
Operations"), and (ii) the production of citrus concentrate, oils and juices and
related activities (the "Juice and Oils Operations");
WHEREAS, the Company is authorized to issue 20,000,000 shares of
common stock, par value $0.01 per share, of the Company (the "Common Stock");
WHEREAS, Purchaser desires to purchase from the Company, and the
Company desires to issue to Purchaser, 3,305,500 newly issued shares of Common
Stock (the "Primary Shares") for a purchase price of U.S.$4.5375 per share, or
an aggregate purchase price of U.S.$14,998,706.25 in cash;
WHEREAS, in furtherance of such desires, the Company and Mexico
Strategic Investment Fund, Ltd. entered into a letter agreement, dated June 22,
1998 (the "Letter Agreement") providing for the transactions contemplated
hereby;
WHEREAS, to induce Purchaser to purchase the Primary Shares, the
Company is contemporaneously herewith, and conditioned hereon, granting to
Purchaser (i) an option pursuant to which Purchaser shall have the right, for a
period of one year from the date hereof, to acquire up to 1,000,000 shares of
Common Stock (the "First Option") on terms specified in the First Stock Option
Agreement, dated as of the date hereof, between the Company and Purchaser (the
"First Option Agreement"), (ii) an option pursuant to which Purchaser shall have
the right, for a period of three years from the date hereof, to acquire up to
1,000,000 shares of Common Stock (the "Second Option" and, together with the
First Option, the "Options") on terms specified in the Second Stock Option
Agreement, dated as of the date hereof, between the Company and Purchaser (the
"Second Option Agreement" and, together with the First Option Agreement, the
"Option Agreements"), and (iii) registration rights as set forth in a
Registration Rights Agreement, dated as of the date hereof, between the Company
and Purchaser (the "Registration Rights Agreement");
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Page 14 of 87 Pages
WHEREAS, in connection herewith, and conditioned hereon, the Board of
Directors of the Company has amended the bylaws of the Company to incorporate
therein the provisions of Sections 4.1, 4.8 and 4.10; and
WHEREAS, contemporaneously herewith, certain shareholders of the
Company are entering into agreements with Purchaser to provide for certain
rights and obligations in connection with the purchase and sale of the Primary
Shares and with respect to restrictions on sale by such shareholders of their
shares of Common Stock.
1. Issuance and Sale of Primary Shares.
1.1. Definitions. Certain capitalized terms used in this Agreement are
defined in Article 7. An index of defined terms is set forth in Section 7.2.
1.2. Issuance, Purchase and Sale of the Shares. Upon the terms set
forth herein and subject to the contemporaneous deliveries set forth in Section
1.4, the Company is issuing to Purchaser, and Purchaser is buying from the
Company, the Primary Shares for a purchase price (the "Purchase Price") equal to
U.S.$14,998,706.25.
1.3. Closing. The closing of the transactions contemplated hereby (the
"Closing") is taking place at the offices of Fried, Frank, Harris, Shriver &
Jacobson, New York, New York, contemporaneously herewith.
1.4. Deliveries at Closing. (a) Contemporaneously herewith, the
Company is delivering the following:
(i) a certificate or certificates representing the Primary
Shares;
(ii) the First Option Agreement, executed by the Company;
(iii) the Second Option Agreement, executed by the Company;
(iv) the Registration Rights Agreement, executed by the
Company;
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Page 15 of 87 Pages
(v) a certificate, dated as of the date hereof, of the chief
executive officer or chief financial officer of the Company
certifying that (x) the representations and warranties made by
the Company herein are true and correct, and (y) that the
conditions set forth in clauses (i) through (iv) of Paragraph 12
of the Letter Agreement are true;
(vi) a certificate, dated as of the date hereof, of the
secretary or other appropriate officer of the Company certifying
the names of the officer or officers of the Company authorized to
sign this Agreement and any other documents provided for in this
Agreement, together with a sample of the true signature of each
such officer, and certifying as to the truth and completeness of
the following attachments to such certificate: (x) a certified
copy of the Company's current articles of incorporation and any
amendments thereto, (y) a copy of the Company's current bylaws
and any amendments thereto, and (z) resolutions of the Board of
Directors of the Company authorizing the execution and delivery
of this Agreement and any other documents provided for herein and
the performance hereof and thereof; and
(vii) the opinion, dated as of the date hereof, of Jordaan &
Pennington, counsel to the Company, in the form set forth in
Exhibit A hereto.
(b) Contemporaneously herewith, Purchaser is delivering the following:
(i) the Purchase Price, payable in cash, in U.S. dollars, by
wire transfer of immediately available funds;
(ii) a certificate, dated as of the date hereof, of the
chief executive officer or chief financial officer of Purchaser
certifying that the representations and warranties made by
Purchaser herein are true and correct; and
(iii) a certificate, dated as of the date hereof, of the
secretary or other appropriate officer of Purchaser certifying
the names of the officer or officers of Purchaser authorized to
sign this Agreement and any other documents provided for in this
Agreement, together with a sample of the true signature of each
such officer, and certifying as to the truth and completeness of
following attachments to such certificate: (x) a certified copy
of Purchaser's current certificate of formation and any
amendments thereto, (y) a copy of Purchaser's current bylaws (or
equivalent document) and any amendments thereto, and (z)
resolutions of the governing or managing board of Purchaser
authorizing the execution and delivery of this Agreement and any
other documents provided for herein and the performance hereof
and thereof.
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Page 16 of 87 Pages
(iii) 2. Representations and Warranties of the Company(iii).
The Company represents and warrants as of the date hereof as follows:
2.1. Organization and Qualification. Each of the Company and its
Subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated and has the power to
own its respective property and to carry on its respective business as now being
conducted. Each of the Company and its Subsidiaries is duly qualified as a
foreign corporation to do business and in good standing in every jurisdiction in
which the nature of the respective business conducted or property owned by it
makes such qualification necessary except where the failure so to qualify would
not, individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect.
2.2. Subsidiaries. Schedule 2.2 sets forth a list of the Subsidiaries.
Except as set forth in Schedule 2.2, the Company is not subject to any
obligation or requirement to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any entity or enterprise
that is not wholly owned by a Subsidiary. Except as set forth in Schedule 2.2,
the Company owns directly or indirectly each of the outstanding shares of
capital stock (or other ownership interests having by their terms ordinary
voting power to elect a majority of directors or others performing similar
functions with respect to such subsidiary) of each Subsidiary, free and clear of
all liens, pledges, security interests, claims or other encumbrances. Each of
the outstanding shares of capital stock of each Subsidiary is duly authorized,
validly issued, fully paid and nonassessable. All of the capital stock of each
Subsidiary is owned by the Company and/or one or more wholly-owned subsidiaries
of the Company.
2.3. Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 20,000,000 shares of Common Stock, of which (i)
8,632,826 shares are validly issued and outstanding, (ii) no shares are issued
and held in treasury, and (iii) 915,190 shares are reserved for issuance upon
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Page 17 of 87 Pages
exercise of existing Company Options (as defined below). No shares of Common
Stock are held by any Subsidiary. Each outstanding share of Common Stock is duly
authorized, validly issued, fully paid and nonassessable, and has not been
issued in violation of any preemptive or similar rights. Other than as set forth
in Schedule 2.3 and as contemplated by the Option Agreements: (i) there are no
outstanding subscriptions, options, warrants, puts, calls, agreements,
understandings, claims or other commitments of any type relating to the
issuance, sale, repurchase or transfer by the Company of any Common Stock or
other securities of the Company (the "Company Options"), or by the Company or
any Subsidiary of any securities of a Subsidiary, (ii) there are no outstanding
securities which are convertible into or exchangeable for any shares of capital
stock or other securities of the Company or any Subsidiary, and (iii) neither
the Company nor any Subsidiary has any obligation of any kind to issue any
additional shares of capital stock or other securities to pay for or repurchase
any shares of capital stock or other securities of any Subsidiary or any
predecessor thereof. The Primary Shares being delivered herewith have been duly
authorized, validly issued, fully paid and nonassessable, are being delivered
free and clear of all claims, liens, encumbrances and security interests, and
are eligible for NASDAQ NMS trading without further consents or actions other
than registration with the Securities and Exchange Commission (the "Commission")
thereof pursuant to the Registration Rights Agreement. The shares of Common
Stock which will be issued upon exercise of the Options have been authorized and
reserved for issuance, and when issued and delivered in accordance with the
terms of the applicable Option Agreement, will be validly issued, fully paid and
nonassessable and will be eligible for NASDAQ NMS trading without further
consents or actions other than registration thereof pursuant to the Registration
Rights Agreement.
2.4. Due Authorization. The execution and delivery of this Agreement,
the Option Agreements and the Registration Rights Agreement and the issuance and
sale of the Primary Shares by the Company, and compliance by the Company with
all the provisions of the foregoing agreements applicable to it: (i) are within
the corporate power and authority of the Company; (ii) do not or will not
require any approval or consent of the stockholders of the Company, other than
approvals and consents which have been duly obtained; and (iii) have been
authorized by all requisite corporate proceedings on the part of the Company.
This Agreement, the Option Agreements and the Registration Rights Agreement have
been duly executed and delivered by the Company and constitute valid and binding
agreements of the Company, enforceable in accordance with their respective
terms. The Company has furnished to Purchaser true and correct copies of the
Company's Articles of Incorporation and bylaws as in effect on the date hereof.
2.5. Non-contravention; Consents and Approvals. None of (i) the
execution and delivery by the Company of this Agreement, the Registration Rights
Agreement and the Option Agreements, (ii) the issuance of the Primary Shares and
(iii) the fulfillment of and compliance with the terms and provisions hereof, of
the Registration Rights Agreement and of the Option Agreements applicable to the
Company, will:
(a) conflict with, or result in a breach of any provision of, the
Articles of Incorporation or bylaws of the Company;
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Page 18 of 87 Pages
(b) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the giving of
notice, the passage of time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage of time or otherwise)
to terminate, accelerate, modify or call a default under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
contract, undertaking, agreement, lease or other instrument or obligation to
which the Company or any Subsidiary is a party;
(c) violate any Law applicable to the Company or any Subsidiary
or any of their respective properties or assets; or
(d) require any action or consent or approval of, or review by,
or registration or filing by the Company or any of its Affiliates with, any
third party (including, without limitation, securities authority or exchange) or
any local, domestic, foreign or multinational court, arbitral tribunal,
administrative agency or commission or other governmental or regulatory body,
agency, instrumentality or authority (a "Governmental Authority"), other than
registrations or other actions required under federal and state securities laws
as are contemplated by the Registration Rights Agreement;
except in the case of (b), (c) and (d), for any of the foregoing that would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect.
2.6. SEC Reports. The Company has timely filed with the Commission all
forms, reports, schedules, statements and other documents required to be filed
by it (other than the Company's proxy statement in respect of its annual
shareholders meeting to be held in 1998) since January 1, 1996 under the
Exchange Act or the Securities Act (such documents, as supplemented and amended
since the time of filing, collectively, the "SEC Documents"). The SEC Documents,
including any financial statements or schedules included therein, at the time
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filed (and, in the case of registration statements and proxy statements, on the
dates of effectiveness and the dates of mailing, respectively) (a) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be. The
financial statements of the Company included in the SEC Documents at the time
filed (and, in the case of registration statements and proxy statements, on the
dates of effectiveness and the dates of mailing, respectively) complied as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the Commission with respect thereto, were
prepared in accordance with U.S. generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q of the Commission), and fairly present (subject, in the
case of the unaudited interim financial statements, to normal, recurring
year-end audit adjustments consistent with past practice), in all material
respects, the consolidated financial position of the Company and the
Subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended. No Subsidiary is subject
to the periodic reporting requirements of the Exchange Act or required to file
any form, report or other document with the Commission, any stock exchange or
any other comparable Governmental Authority (domestic or foreign).
2.7. Undisclosed Liabilities. The Company and its Subsidiaries have no
liabilities, contingent or otherwise, not reflected in the Company's balance
sheet as of March 31, 1998 included in the SEC Documents or otherwise referred
to in the SEC Documents, or otherwise disclosed to the Purchaser in writing
prior to the date hereof, other than any such liabilities incurred in the
ordinary course of business since March 31, 1998 or incurred in connection
herewith.
2.8. Taxes. Except as set forth in Schedule 2.8 and except for such
matters that would not, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect:
(a) The Company and the Subsidiaries (i) have timely filed all
Tax Returns (as defined in Section 2.8(c)) (including, but not limited to, those
filed on a consolidated, combined or unitary basis) required to have been filed
by the Company or the Subsidiaries, all of which Tax Returns are true, correct
and complete; (ii) have within the time and manner prescribed by Law paid all
Taxes (as defined in Section 2.8(c)), required to be paid in respect of the
periods covered by such Tax Returns or otherwise due to any Governmental
Authority; (iii) have established and maintained on their respective books an
records, in accordance with their normal accounting practices and procedures,
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accruals and reserves that are adequate for the payment of all Taxes not yet due
and payable and attributable to any period preceding the date hereof; (iv) are
not delinquent in the payment of any Tax; and (v) have not received written
notice of any deficiencies for any Tax from any Governmental Authority against
the Company or any Subsidiary, which deficiency has not been satisfied. Neither
the Company nor any Subsidiary is the subject of any currently ongoing audit or
judicial or administrative proceeding relating to Taxes. With respect to any
taxable period ended prior to December 31, 1993, all federal income Tax Returns
including the Company or any Subsidiary have been audited by the Internal
Revenue Service or are closed by the applicable statute of limitations. There
are no liens with respect to Taxes upon any of the properties or assets, real or
personal, tangible or intangible, of the Company or any Subsidiary (other than
liens for Taxes not yet due). No claim has ever been made in writing by a
Governmental Authority in a jurisdiction where the Company and the Subsidiaries
do not file Tax Returns that the Company or any Subsidiary is or may be subject
to taxation by that jurisdiction. Neither the Company nor any Subsidiary has
filed an election under Section 341(f) of the Code to be treated as a consenting
corporation.
(b) The Company and its Subsidiaries have withheld or collected
all Taxes required to have been withheld or collected in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder or
other third party and any such amounts required to be remitted to a Governmental
Authority have been timely remitted, other than Taxes for amounts less than
$100,000 in the aggregate.
(c) For purposes of this Agreement, (i) "Tax" (and, with
correlative meaning, "Taxes") means any federal, state, local or foreign income,
gross receipts, property, sales, use, value added, license, excise, franchise,
capital, net worth, estimated, withholding, employment, payroll, premium,
withholding, alternative or added minimum, ad valorem, inventory, asset, gains,
transfer or excise tax, or any other tax, levy, custom, duty, impost,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty or additions to tax, imposed by any
Governmental Authority, and (ii) "Tax Return" means any return, report or
similar statement required to be filed with respect to any Tax (including any
attached schedules), including, without limitation, any information return,
claim for refund, amended return or declaration of estimated Tax.
2.9. Certain Changes. Since March 30, 1998 the Company and its
Subsidiaries have operated their respective businesses only in the ordinary
course and no events have occurred which, individually or in the aggregate, have
or would reasonably be expected to have a Material Adverse Effect, other than
changes disclosed or referred to in the SEC Documents or otherwise disclosed to
the Purchaser in writing prior to the date of this Agreement.
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2.10. Litigation; Compliance with Laws.
(a) There is no suit, claim, action, proceeding, audit or
investigation (each, an "Action") pending or, to the knowledge of the Company,
threatened, against the Company or any of its Subsidiaries or any of their
respective properties or assets, which, individually or in the aggregate
(i) questions the validity or enforceability of, or seeks to enjoin or
invalidate this Agreement, the Option Agreements, the Registration Rights
Agreement, the Primary Shares or the Options or any action taken or to be taken
pursuant hereto or thereto, or (ii) has or would reasonably be expected to have
a Material Adverse Effect (other than as set forth in the SEC Documents or in
Schedule 2.10(a)). Neither the Company nor any Subsidiary is subject to any
outstanding judgment, order, writ, injunction, decree or award which,
individually or in the aggregate, has or would reasonably be expected to have a
Material Adverse Effect.
(b) Except as set forth in the SEC Documents or in Schedule
2.10(b), and except for environmental matters covered by Section 2.14, the
Company has been and is in compliance with all applicable Laws.
(c) Neither the Company nor any Subsidiary is: (i) a "public
utility company" or a "holding company," or an "affiliate" or a "subsidiary
company" of a "holding company," or an "affiliate" of such a "subsidiary
company," as such terms are defined in the Public Utility Holding Company Act of
1935, as amended, or (ii) a "public utility," as defined in the Federal Power
Act, as amended, or (iii) an "investment company" or an "affiliated person"
thereof or an "affiliated person" of any such "affiliated person," as such terms
are defined in the Investment Company Act of 1940, as amended, or (iv) a "United
States real property holding corporation" as defined in section 897(c)(2) of the
Code. Stock ownership in the Company is not a "United States real property
interest" as defined in Code section 897(c)(1)(A)(ii).
2.11. Title to Properties; Insurance. The Company and each of its
Subsidiaries have good and valid title to, or, in the case of property leased by
any of them as lessee, a valid and subsisting leasehold interest in, their
respective properties and assets, free of all liens and encumbrances other than
those referred to in the financial statements of the Company (or the notes
thereto) for the year ended December 31, 1997, included in the SEC Documents,
except in each case for such defects in title and such other liens and
encumbrances which are disclosed in the SEC Documents or which would not have or
reasonably be expected to have a Material Adverse Effect. The Company and its
Subsidiaries maintain insurance in such amounts, including self-insurance,
retainage and deductible arrangements, and of such a character as is reasonable
for companies engaged in the same or similar business. Without limiting the
generality of the foregoing, the Company maintains directors' and officers'
insurance in amounts at least comparable to public companies of its size. All
insurance policies of the Company and its Subsidiaries are disclosed in Schedule
2.11.
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2.12. ERISA. No accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, exists
with respect to any Pension Plan (other than a Multiemployer Plan (as defined
below)). No liability to the PBGC has been, or is reasonably likely to be,
incurred with respect to any Pension Plan (other than a Multiemployer Plan) by
the Company, any of its Subsidiaries or any ERISA Affiliate (as defined below)
which is or would be materially adverse to the Company, its Subsidiaries and any
ERISA Affiliate. Neither the Company nor any of its Subsidiaries and any ERISA
Affiliate has incurred, or is reasonably likely to incur, any withdrawal
liability under Title IV of ERISA with respect to any Multiemployer Plan which
is or would be materially adverse to the Company, its Subsidiaries and its ERISA
Affiliates and if the Company, its Subsidiaries and ERISA Affiliates, were to
completely withdraw as of the date hereof from each Multiemployer Plan in which
they participate, the Company, its Subsidiaries and its ERISA Affiliates would
not incur any material withdrawal liability under Title IV of ERISA. Neither the
Company nor any of its Subsidiaries has any obligation to provide
post-retirement health benefits to any employee or former employee. No fiduciary
of any employee benefit plan (as defined in Section 3(3) of ERISA) maintained or
contributed to by the Company or any Subsidiary, for the benefit of their
respective employees (each an "Employee Plan") has engaged or caused any
Employee Plan to engage in any transaction prohibited by Section 4975 of the
Code or Section 406 of ERISA which is reasonably likely to subject the Company
or any Subsidiary, or any entity the Company or any Subsidiary has an obligation
to indemnify, to any tax or penalty imposed under Section 4975 of the Code or
Section 502 of ERISA. Each Employee Plan has been maintained and administered in
compliance with all applicable law including ERISA and the Code in all material
respects. An "ERISA Affiliate" for purposes of this Section is any trade or
business, whether or not incorporated, which, together with the Company, is
under common control, as described in Section 414(b) or (c) of the Code, and the
term "Multiemployer Plan" shall mean any Pension Plan which is a "multiemployer
plan" (as such term is defined in Section 4001(a)(3) of ERISA).
2.13. Possession of Franchises, Licenses, Etc. The Company and its
Subsidiaries possess all franchises, certificates, licenses, permits and other
authorizations from governmental or political subdivisions or regulatory
authorities, free from burdensome restrictions, that are necessary in any
material respect to the Company or any of its Subsidiaries for the ownership,
maintenance and operation of their respective properties and assets, and neither
the Company nor any of its Subsidiaries is in violation of any thereof, except
as would not have or reasonably be expected to have a Material Adverse Effect.
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2.14. Environmental and Other Regulations. Except for matters
disclosed in Schedule 2.14 and except for matters that would not, individually
or in the aggregate, have or reasonably be expected to have a Material Adverse
Effect, (a) the properties, operations and activities of the Company and the
Subsidiaries have at all times been for all applicable periods of limitation,
and are, in compliance with all applicable Environmental Laws and Environmental
Permits (each as defined below); (b) the Company and the Subsidiaries and the
properties and operations of the Company and the Subsidiaries are not subject to
any pending or, to the Company's knowledge, threatened Action under any
Environmental Law, including without limitation with respect to any present or
former operations, facilities or subsidiaries; (c) there has been no release of
any Hazardous Materials (as defined below) into the environment by the Company
or any Subsidiary, and there are no Hazardous Materials present at, on, under,
within or which have migrated from, any properties of the Company or any
Subsidiary; (d) there has been no exposure of any person or property to any
Hazardous Materials in connection with the properties, operations and activities
of the Company or any Subsidiary; and (e) neither the Company nor any Subsidiary
(x) has received any written notice that the Company, any Subsidiary or any of
their respective present or former operations, facilities or subsidiaries is or
may be a potentially responsible party or otherwise liable in connection with
any site used for the disposal of or otherwise containing Hazardous Materials,
or (y) has disposed of, arranged for the disposal of, or transported any
Hazardous Materials to any site which is listed on the U.S. Environmental
Protection Agency's National Priorities List or which is otherwise subject to
remediation or investigation. The Company and the Subsidiaries have made
available to Purchaser all material internal and external environmental audits
and reports (in each case relevant to the Company or any Subsidiary) prepared
since January 1, 1993 and in the possession of the Company or any Subsidiary.
The term "Environmental Laws" means all federal, state, local or foreign laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation, laws relating to
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, or industrial, toxic or hazardous substances or wastes
(collectively, "Hazardous Materials") into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder, as in effect on
the date hereof. "Environmental Permit" means any permit, approval,
identification number, license or other authorization required under or issued
pursuant to any applicable Environmental Law.
2.15. Patents and Trademarks. Set forth in Schedule 2.15 is a true and
complete list of all patents, patent applications, trademarks, service marks,
trademark and service mark applications, trade names, copyrights and licenses of
any of the foregoing presently used by the Company or any Subsidiary or
necessary for the conduct of the business of the Company and its Subsidiaries as
conducted and as proposed to be conducted (the "Intellectual Property Rights").
The Company owns, or has the right to use under the agreements or upon the terms
described in Schedule 2.15, all of the Intellectual Property Rights. To the
Company's knowledge, the business conducted or proposed to be conducted by the
Company and its Subsidiaries does not infringe or violate any of the patents,
trademarks, service marks, trade names, copyrights, licenses of any of the
foregoing, trade secrets or other proprietary rights of any other person or
entity. Except as set forth in Schedule 2.15, to the Company's knowledge, no
other Person has any right to or interest in any inventions, improvements,
discoveries or other confidential information utilized by the Company or any
Subsidiary in its business.
2.16. Material Contracts and Obligations Schedule 2.16 lists all
contracts, agreements, guarantees, leases and executory commitments (each a
"Contract"), other than any Contracts heretofore filed as an exhibit to any SEC
Document, that exist as of the date hereof to which the Company or any
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Subsidiary is a party or by which it is bound and which fall within any of the
following categories: (a) Contracts not entered into in the ordinary course of
business other than those that individually or in the aggregate are not material
to the Company's business, (b) joint venture and partnership agreements,
(c) Contracts containing covenants purporting to limit the freedom of the
Company to compete in any line of business in any geographic area, (d) Contracts
relating to any outstanding commitment for capital expenditures in excess of
$500,000, (e) indentures, mortgages, promissory notes, loan agreements or other
Indebtedness in excess of $100,000 in the aggregate, agreements or instruments
or commitments for the borrowing or the lending by the Company or any Subsidiary
of amounts in excess of $100,000 in the aggregate or providing for the creation
of any charge, security interest, encumbrance or lien upon any of the assets of
the Company and its Subsidiaries with an aggregate value in excess of $100,000,
(f) stock purchase agreements, asset purchase agreements or other acquisition or
divestiture agreements relating to material transactions since January 1, 1995,
(g) Contracts between the Company or any Subsidiary and any Affiliate, employee,
director, officer or Significant Shareholder, or (h) any agreement which is
material to the Company, irrespective of amount. All Contracts to which the
Company or any Subsidiary is a party or by which it is bound are valid and
binding obligations of the Company or the Subsidiary (as the case may be) and,
to the Company's knowledge, the valid and binding obligation of each other party
thereto except such Contracts which if not so valid and binding would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any Subsidiary nor, to the
Company's knowledge, any other party thereto is in violation of or in default in
respect of, nor has there occurred an event or condition which with the passage
of time or giving of notice (or both) would constitute a default under or permit
the termination of, any such Contract except such violations or defaults under
or terminations which, individually or in the aggregate, would not have or
reasonably be expected to have a Material Adverse Effect.
2.17. Brokers. Except as set forth in Schedule 2.17, no agent, broker,
investment banker or other Person is or will be entitled to any broker's fee or
any other commission or similar fee from the Company or any Subsidiary in
connection with any of the transactions contemplated by this Agreement.
2.18. Accuracy of Information. None of the representations and
warranties of the Company contained herein or the information, documents or
other materials (other than projections) which have been furnished in writing by
the Company or any of its representatives to the Purchaser in connection with
the transactions contemplated by this Agreement contains any material
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misstatement of fact, or omits any material fact required to be stated herein or
therein or necessary to make the statements herein and therein not misleading.
All projections furnished in writing by the Company in connection with the
transactions contemplated by this Agreement (i) are bona fide projections of the
Company, (ii) have been prepared by management of the Company after a careful
analysis of all material data, (iii) are based on reasonable assumptions by
management of the Company and (iv) represent the best estimate by management of
the Company, based upon current reasonable assumptions, as to the financial
performance of the Company and the Subsidiaries for the periods indicated, but
do not represent any guarantee or assurance of the future financial results of
the Company and its Subsidiaries.
2.19. Offering of Primary Shares. Neither the Company nor any Person
acting on its behalf has offered any of the Primary Shares to any Persons in a
manner that could reasonably be expected to subject the offering, issuance or
sale of any of the Primary Shares to the registration requirements of Section 5
of the Securities Act.
2.20. Costs of "Year 2000" Modifications. The estimated costs to the
Company and its Subsidiaries of "Year 2000" modifications to their computer
systems and software do not exceed $100,000.
3. Representations and Warranties of each Purchaser. Purchaser represents and
warrants as of the date hereof as follows:
3.1. Organization and Qualification. Purchaser is a limited liability
company duly organized and existing in good standing under the laws of Delaware
and has the power to own its respective property and to carry on its respective
business as now being conducted. Purchaser is duly qualified as a foreign
corporation to do business and in good standing in every jurisdiction in which
the nature of the respective business conducted or property owned by it makes
such qualification necessary, except where the failure to so qualify would not
prevent consummation of the transactions contemplated hereby or have a material
adverse effect on Purchaser's ability to perform its obligations hereunder.
3.2. Due Authorization. The execution and delivery of this Agreement,
the Option Agreements and the Registration Rights Agreement, and compliance by
Purchaser with all the provisions of the foregoing agreements applicable to it:
(i) are within the corporate power and authority of Purchaser; and (ii) have
been authorized by all requisite corporate proceedings on the part of Purchaser.
This Agreement, the Option Agreements and the Registration Rights Agreement have
been duly executed and delivered by Purchaser and constitutes valid and binding
agreements of Purchaser, enforceable in accordance with their respective terms.
3.3. Acquisition for Investment. Purchaser is acquiring the Primary
Shares and the Options for its own account for the purpose of investment and not
with a view to or for sale in connection with any distribution thereof, and
Purchaser has no present intention or plan to effect any distribution thereof.
Purchaser acknowledges that the Primary Shares and the Options (and the shares
underlying the Options) have not been registered under the Securities Act and
may be sold or disposed of in the absence of such registration only pursuant to
an exemption from such registration.
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3.4. Brokers. No agent, broker, investment banker or other Person is
or will be entitled to any broker's fee or any other commission or similar fee
from Purchaser in connection with any of the transactions contemplated by this
Agreement.
3.5. Non-contravention; Consents and Approvals. None of (i) the
execution and delivery by Purchaser of this Agreement, the Registration Rights
Agreement and the Option Agreements, and (ii) the fulfillment of and compliance
by Purchaser with the terms and provisions hereof, of the Registration Rights
Agreement and of the Option Agreements applicable to Purchaser, will:
(a) conflict with, or result in a breach of any provision of, the
Certificate of Formation or other organizational documents of Purchaser; or
(b) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the giving of
notice, the passage of time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage of time or otherwise)
to terminate, accelerate, modify or call a default under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of Purchaser under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
contract, undertaking, agreement, lease or other instrument or obligation to
which Purchaser is a party, except in the case of this clause (b), for any of
the foregoing that would not, individually or in the aggregate, have or
reasonably be expected to have a material adverse effect on Purchaser's ability
to perform its obligations hereunder.
3.6. Accredited Investor. Purchaser is an "accredited investor" within
the meaning of Rule 501 of the Securities Act.
4. Covenants of the Company.
4.1. Negative Covenants. From the date hereof and as long as Purchaser
and its Affiliates either (i) Beneficially Own 10% or more of the outstanding
Common Stock of the Company, or (ii) have not transferred to Third Parties 50%
or more of the Primary Shares, the Company shall not, and shall cause its
Subsidiaries not to do any of the following things without the prior written
consent of Purchaser:
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(a) incur or, from and after the fifth day following the date
hereof, maintain any Indebtedness other than (i) bank lines of credit for
working capital not in excess of U.S.$27 million (in the aggregate for the
Company and its Subsidiaries), (ii) Capital Leases not in amounts in excess of
U.S.$2 million (in the aggregate for the Company and its Subsidiaries), and
(iii) other items of Indebtedness not in excess of $1,000,000 (provided,
however, that the Company shall be permitted to maintain other items of
Indebtedness existing on the date hereof in amounts not in excess of U.S.$16
million); and, at any time, allow the aggregate amount of the Indebtedness to be
greater than U.S.$42 million;
(b) incur liens or encumbrances other than liens to secure the
indebtedness permitted by Section 4.1(a) and other than Permitted Liens;
(c) incur contingent obligations or guaranties other than in the
ordinary course of business;
(d) enter into a line of business that is different (in a
material respect) from the businesses currently conducted by the Company or its
Subsidiaries or conduct any material business activities that are not either
currently conducted or directly related to those currently conducted by the
Company or its Subsidiaries;
(e) enter into any Contract or amend any existing Contract with a
value in excess of 5% of total assets (as set forth on the immediately preceding
year's audited financial statements) or enter any Contract or transaction or
amend any existing Contract or transaction with any Affiliate or Significant
Shareholder;
(f) incur amounts for any capital expenditure in excess of 110%
of the amount budgeted for such capital expenditure on the budgets previously
delivered to Purchaser, provided, however, that the Company may reallocate up to
20% of the aggregate amount of the capital expenditure budget per year among
capital expenditure items listed in such budget or to other capital expenditure
items;
(g) approve increases in any item in each year's annual budget in
excess of 5% over the amount budgeted for such item during the preceding year;
(h) appoint or remove any executive officer of the Company;
(i) amend the Articles of Incorporation or the bylaws of the
Company or any Subsidiary, or adopt any rights agreement, plan or other
instrument (e.g. a so-called "poison pill");
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(j) acquire assets (other than in the ordinary course of
business) or common stock, debt or other securities of any Third Party in excess
of $100,000 in the aggregate;
(k) in any year, sell or dispose of assets of the Company or any
Subsidiary having a value in excess of 10% of the value of the total fixed
assets of the Company and its Subsidiaries (as set forth in the Company's
consolidated audited balance sheet at the end of the prior fiscal year) other
than the proposed sale of the Company's Hidalgo warehouse facility;
(l) in any year, sell or dispose of assets of any facility of the
Company having a value in excess of 5% of the value of such facility's total
fixed assets (as set forth in the Company's consolidated audited balance sheet
at the end of the prior fiscal year);
(m) make or maintain any investment in or capital contribution or
advance to any other Person, other than investments in wholly-owned
subsidiaries; or enter into joint ventures or partnerships or establish
non-wholly owned subsidiaries, except, in each case, for investments,
contributions or arrangements described in Schedule 4.1;
(n) in any transaction or series of transactions, acquire
(including pursuant to a merger or consolidation) all or any substantial portion
of the business or assets of any Person, except for transactions not in excess
(in the aggregate) of $100,000;
(o) dissolve or liquidate the Company;
(p) issue any securities of the Company or any Subsidiary
(including, without limitation, common stock, convertible securities, rights,
warrants or options to one or more Persons (including through a public
offering)), other than pursuant to an employee benefit plan or director stock
option plan consistent with past practice and other than the exercise of Company
Options;
(q) register Common Stock or other securities of the Company or
any Subsidiary under the Securities Act (except as provided in registration
rights agreements existing on the date hereof and disclosed to Purchaser or
subsequently entered into with the consent of Purchaser or pursuant to a
registration statement on Form S-8 in connection with the employee stock option
plan or the director stock option plan) or grant any registration rights;
(r) effect any debt or equity repurchase or redemption or other
restricted payment, other than payment of debt in the ordinary course of
business;
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(s) change the Company's independent certified public
accountants;
(t) adopt or amend, in any material respect, any employee benefit
plan; and
(u) settle any material Action.
4.2. Board Representation.
(a) Within 10 days of the date hereof, the Company shall take all
necessary action to cause the Purchaser Designees (as defined below) to be
elected to the Board of Directors of the Company. In connection with the 1998
Annual Meeting of Shareholders, the Company shall take all necessary action to
cause the Purchaser Designees to be nominated and shall use its best efforts to
cause such Purchaser Designees to be elected to the Board of Directors of the
Company. Thereafter, in connection with any annual meeting of shareholders at
which the term of a Purchaser Designee is to expire, the Company will take all
necessary action to cause a Purchaser Designee to be nominated and use its best
efforts to cause such Purchaser Designee to be elected to the Board of Directors
of the Company. In the event of any vacancy arising by reason of the
resignation, death, removal, or inability to serve of any of the Purchaser
Designees, Purchaser shall be entitled to designate a successor to fill such
vacancy for the unexpired term. If any Purchaser Designee is not elected at an
annual meeting of shareholders, Purchaser shall be entitled to designate an
alternative Person and the Company shall, within 10 days of such designation,
take all necessary action to cause such alternative Person to be elected to the
Board of Directors of the Company. "Purchaser Designees" shall mean those
individuals designated from time to time by Purchaser to serve on the Company's
Board of Directors. The number of Purchaser Designees shall be the smallest
number possible such that the ratio of Purchaser Designees to total number of
directors (after election of the Purchaser Designees) is at any time greater
than or equal to the ratio of the number of Primary Shares held by Purchaser and
its Affiliates to total number of shares of Common Stock outstanding (e.g. if
there are 7 directors without the Purchaser Designees and Purchaser and its
Affiliates own 27% of the Common Stock outstanding, then the number of Purchaser
Designees will be three, resulting in a total of 10 directors).
(b) The Company shall maintain directors' and officers' insurance
in at least the amount currently maintained by the Company. The Company shall
indemnify Purchaser and the current and former Purchaser Designees (in
connection with serving on the Company's Board of Directors) to the fullest
extent permitted by Law and, upon request, the Company shall enter into an
indemnification agreement with any such Purchaser Designee reasonably acceptable
to such Purchaser Designee. The Purchaser Designees shall be entitled to
reimbursement of expenses to the same extent that other non- employee directors
of the Company are entitled to such reimbursement.
4.3. Compliance with Laws. From the date hereof and as long as
Purchaser and its Affiliates own any Primary Shares, the Company shall, and
shall cause the Subsidiaries to, comply with all applicable Laws, including
without limitation, financial and other reporting requirements pursuant to the
Exchange Act.
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4.4. Insurance. From the date hereof and as long as Purchaser and its
Affiliates own any Primary Shares, the Company shall, and shall cause the
Subsidiaries to, maintain insurance in such amounts, including self-insurance,
retainage and deductible arrangements, and of such a character as is reasonable
for companies engaged in the same or similar business.
4.5. Preservation of Existence, Franchises. From the date hereof and
as long as Purchaser and its Affiliates own any Primary Shares, the Company
shall, and shall cause the Subsidiaries to, maintain their respective corporate
existence, rights and franchises in full force and effect, provided that nothing
in this Section 4.5 shall prevent the Company or any Subsidiary from
discontinuing its operations in any particular state or at any particular
location or locations within the state, or prevent the corporate existence,
rights and franchises of any Subsidiary from being terminated if, in the opinion
of the Board of Directors of the Company, the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries
taken as a whole.
4.6. Payment of Taxes and Other Charges. The Company shall pay or
discharge, and shall cause each of the Subsidiaries to pay or discharge, before
the same become delinquent, (i) all Taxes, assessments and other governmental
charges or levies imposed upon it or any of its properties or income (including,
without limitation, such as may arise under Section 4062, 4063, or 4064 of ERISA
or any similar provision of law), and (ii) all claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons which, in
the case of either clause (i) or clause (ii), if unpaid, might result in the
creation of a material lien upon any of its properties, provided, however, that
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such Tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith pursuant to appropriate proceedings
and for which adequate accruals and reserves for the payment thereof have been
established and maintained on the books and records of the Company or such
Subsidiary.
4.7. Reports; Access. From the date hereof and as long as Purchaser
and its Affiliates either (i) Beneficially Own 5% or more of the outstanding
Common Stock of the Company, or (ii) have not transferred to Third Parties 75%
or more of the Primary Shares, the Company shall:
(a) as soon as practicable and in any event within 45 days after
the end of each quarterly period (other than the last quarterly period) in each
fiscal year, furnish to Purchaser statements of consolidated net income and cash
flows and a statement of changes in consolidated stockholders' equity of the
Company and its Subsidiaries for the period from the beginning of the then
current fiscal year to the end of such quarterly period, and a consolidated
balance sheet of the Company and its Subsidiaries as of the end of such
quarterly period, setting forth in each case in comparative form figures for the
corresponding period or date in the preceding fiscal year, all in reasonable
detail and certified by an authorized financial officer of the Company, subject
to changes resulting from year-end adjustments; provided, however, that delivery
pursuant to Section 4.7(c) of a copy of the Quarterly Report on Form 10-Q of the
Company for such quarterly period filed with the Commission shall be deemed to
satisfy the requirements of this clause;
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(b) as soon as practicable and in any event within 90 days after
the end of each fiscal year, furnish to Purchaser statements of consolidated net
income and cash flows and a statement of changes in consolidated stockholders'
equity of the Company and its Subsidiaries for such year, and a consolidated
balance sheet of the Company and its Subsidiaries as of the end of such year,
setting forth in each case in comparative form the corresponding figures from
the preceding fiscal year, all in reasonable detail and examined and reported on
by independent public accountants of recognized national standing selected by
the Company; provided, however, that delivery pursuant to Section 4.7(c) below
of a copy of the Annual Report on Form 10-K of the Company for such fiscal year
filed with the Commission shall be deemed to satisfy the requirements of this
Section 4.7(b);
(c) promptly upon transmission thereof, furnish to Purchaser
copies of all registration statements and all other filings or reports the
Company files with the Commission; and
(d) upon the good faith request by Purchaser for such information
from, or access to, the Company and its properties, books, records and personnel
as is reasonable, the Company shall cooperate in promptly providing such
information or access to Purchaser.
4.8. Dividends. From the date hereof and as long as Purchaser and its
Affiliates either (i) Beneficially Own 5% or more of the outstanding Common
Stock of the Company, or (ii) have not transferred to Third Parties 75% or more
of the Primary Shares, the Company shall not, without the prior written consent
of Purchaser, effect any stock repurchases, pay dividends or make other
distributions in respect of the Common Stock.
4.9. Limitation on Agreements. From the date hereof and as long as
Purchaser and its Affiliates own any Primary Shares, the Company will not, and
will not permit any Subsidiary to, enter into any Contract, or any amendment,
modification, extension or supplement to any existing Contract, which
contractually conflicts with any provision contained herein.
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4.10. Merger. From the date hereof and as long as Purchaser and its
Affiliates either (i) Beneficially Own 10% or more of the outstanding Common
Stock of the Company, or (ii) have not transferred to Third Parties 50% or more
of the Primary Shares, the Company shall not, and shall cause its Subsidiaries
not to, without the prior written consent of Purchaser, merge with or into or
consolidate with any other Person (unless the Company is the continuing or
surviving entity, such transaction would not violate the provisions of Section
4.1, and immediately after the consummation of such transaction the surviving
corporation would not be in violation of the provisions of Section 4.1) or
otherwise effect a Change in Control.
4.11. Notice of Breach. As promptly as practicable, and in any event
not later than ten days after senior management of the Company becomes aware of
any breach by the Company of any provision of this Agreement, including, without
limitation, this Article 4, the Company shall provide Purchaser with written
notice specifying the nature of such breach and any actions proposed to be taken
by the Company to cure such breach.
4.12. Real Property Holding Company.
(a) From the date hereof and as long as Purchaser and its
Affiliates own any Primary Shares or shares of Common Stock acquired by exercise
of one or both of the Options, the Company shall not become a "United States
real property holding corporation" as defined in Code section 897(c)(2).
(b) The Company shall, at Purchaser's request, (i) provide
promptly a letter in the form set forth in Exhibit B (with any modifications
thereto as requested by Purchaser to comply with then existing requirements of
the Code and Treasury Regulations thereunder), and comply promptly with the
notice requirements of Treasury Regulations section 1.897-2(h)(2) or (h)(4) (and
any successors thereto), and (ii) provide the voluntary notice to the U.S.
Internal Revenue Service described in Treasury Regulations section
1.897-2(h)(4)(i).
5. Restrictions on Transfer. Neither Purchaser nor any of its Affiliates will,
directly or indirectly, sell, transfer, pledge, encumber or otherwise
dispose of (collectively, a "Transfer") any of the Primary Shares for one
year from the date hereof, except for Transfers to or between Affiliates
who agree to be bound by the provisions of this Agreement. Neither
Purchaser nor any of its Affiliates will at any time Transfer any of the
Primary Shares in violation of the Securities Act or any applicable state
securities laws.
6. Indemnification.
6.1. Survival. The representations and warranties made in this
Agreement or in documents delivered in connection herewith shall survive the
Closing for 18 months from the date hereof (such 18- month period being the
"Indemnification Period") and on the 18 month anniversary of the date hereof
shall expire, together with any right to indemnification for breach thereof
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except to the extent a Valid Third Party Claim Notice (as defined in Section
6.3(a)) or Valid Other Claim Notice (as defined in Section 6.3(b)) (each, a
"Valid Claim Notice") shall have been given with respect to such representation
or warranty prior to the expiration of the applicable Indemnification Period in
accordance with Section 6.3 by the party seeking indemnification (the
"Indemnitee") to the party from which indemnification is being sought (the
"Indemnitor"), in which case the representation or warranty alleged in the Valid
Claim Notice to have been breached shall survive, to the extent of the claim set
forth in the Valid Claim Notice only, until such claim is resolved.
Notwithstanding the preceding sentence, the representations and warranties
contained in Section 2.3 shall not expire and the corresponding Indemnification
Period shall be perpetual, without expiration. The covenants and agreements
contained herein (other than the covenant and agreement to indemnify against
breaches of representations and warranties, which shall expire as set forth in
the first and second sentences of this Section 6.1) shall survive the Closing
until the covenants and agreements are complied with in accordance with their
terms.
6.2. Indemnification. (a) Subject to the provisions of this Article 6,
the Company shall defend and indemnify Purchaser, its Affiliates, their
directors and officers and the Purchaser Designees and hold each of them
harmless from and against all damages, claims, losses, Taxes, charges, actions,
suits, proceedings, deficiencies, interest, penalties, fines, liabilities,
obligations, amounts paid in settlements, costs and expenses (including
reasonable attorneys' fees) (collectively, "Losses") which are sustained,
incurred or suffered by any of them (i) by reason of the breach of any of the
representations or warranties made by the Company herein or in any document
delivered in connection herewith, (ii) by reason of the breach of any of the
Company's covenants and agreements contained herein or in any document delivered
in connection herewith, or (iii) for Losses in connection with any Action
arising out of the transactions contemplated hereby (other than Actions arising
out of a breach by Purchaser or its Affiliates of the this Agreement or the
documents delivered in connection herewith); provided, however, that Purchaser,
its Affiliates, their directors and officer and the Purchaser Designees shall
not be entitled to any recovery unless a claim for indemnification is made in
accordance with Section 6.3, so as to constitute a Valid Claim Notice, and
within the time period of survival set forth in Section 6.1.
(b) Subject to the provisions of this Article 6, Purchaser shall
defend and indemnify the Company and its Affiliates and hold each of them
harmless from and against all Losses which are incurred or suffered by any of
them (i) by reason of the breach by Purchaser of any of the representations or
warranties made by it herein or in any document delivered in connection
herewith, or (ii) by reason of the breach of any of its covenants and agreements
contained herein or in any document delivered in connection herewith; provided,
however, that the Company and its Affiliates shall not be entitled to any
recovery unless a claim for indemnification is made in accordance with
Section 6.3, so as to constitute a Valid Claim Notice, and within the time
period of survival set forth in Section 6.1.
6.3 Procedures for Claims. (a) (i) In order for an Indemnitee to be
entitled to any remedy provided for under this Article 6 in respect of, arising
out of or involving a claim made by any Third Party against the Indemnitee or an
Affiliate (a "Third Party Claim"), the Indemnitee must notify the Indemnitor in
writing of the Third Party Claim (a "Third Party Claim Notice") promptly
following receipt by such Indemnitee of written or oral notice of the Third
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Party Claim, which notification, to be a valid Third Party Claim Notice (a
"Valid Third Party Claim Notice"), must be accompanied by a copy of the written
notice, if any, of the Third Party claimant to the Indemnitee asserting the
Third Party Claim, or, if such Third Party Claim shall not have been made in
writing, the written notice of Indemnitee certifying as to the receipt by
Indemnitee of the oral Third Party Claim, and, in each case, setting forth in
reasonable detail, the facts then known by Indemnitee with respect to such Third
Party Claim; provided, however, that the failure to provide such Notice promptly
(so long as a Valid Third Party Claim Notice is given before the expiration of
the Indemnification Period and any extensions thereof, as applicable) shall not
affect the obligations of the Indemnitor hereunder except to the extent the
Indemnitor is actually prejudiced thereby. The Indemnitee shall deliver to the
Indemnitor copies of all other notices and documents (including court papers)
received by the Indemnitee relating to the Third Party Claim.
(ii) The Indemnitor shall have the right to defend against any
such Third Party Claim (including the conduct of any proceedings or settlement
negotiations, provided that the Indemnitor shall not settle any Third Party
Claim without the Indemnitee's consent, which consent shall not be unreasonably
withheld or delayed) with counsel of the Indemnitor's own choosing. The
Indemnitee shall have the right to participate in the defense of any Third Party
Claim and to employ its own counsel (it being understood that the Indemnitor
shall control such defense), at the Indemnitee's own expense. Prior to the time
the Indemnitee is notified by the Indemnitor as to whether the Indemnitor will
assume the defense of a Third Party Claim, the Indemnitee shall take all actions
reasonably necessary to timely preserve the collective rights of the parties
with respect to such Third Party Claim, including responding timely to legal
process. If the Indemnitor shall decline to assume the defense of a Third Party
Claim (or shall fail to notify the Indemnitee of its election to defend such
Third Party Claim) within 30 days after the giving by the Indemnitee to the
Indemnitor of a Valid Third Party Claim Notice with respect to the Third Party
Claim, the Indemnitee shall defend against the Third Party Claim and the
Indemnitor shall be liable to the Indemnitee for all reasonable fees and
expenses incurred by the Indemnitee in the defense of the Third Party Claim,
including the reasonable fees and expenses of counsel employed by the
Indemnitee, if and to the extent that the Indemnitor is responsible to indemnify
for such Third Party Claim. Regardless of which party assumes the defense of a
Third Party Claim, the parties agree to cooperate with one another in connection
therewith. Such cooperation shall include providing records and information
which are relevant to such Third Party Claim, and which are not required by law
to be kept confidential and making employees and officers available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder and to act as a witness or respond to legal
process. Whether or not the Indemnitor assumes the defense of a Third Party
Claim, the Indemnitee shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the Indemnitor's prior
written consent (which consent will not be unreasonably withheld or delayed).
(b) In order for an Indemnitee to be entitled to any
indemnification provided for under this Article 6 in respect of a claim as to
which a Third Party Claim has not been asserted against such Indemnitee (an
"Other Claim"), the Indemnitee must promptly notify the Indemnitor in writing of
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such Other Claim (the "Other Claim Notice"), which notification, to be a valid
Other Claim Notice (a "Valid Other Claim Notice"), must certify that the
Indemnitee has in good faith already sustained some (though not necessarily all)
Losses, or has a good faith basis to believe Losses may be sustained, with
respect to such claim. The failure by any Indemnitee to notify the Indemnitor
promptly (so long as a Valid Other Claim Notice is given before the expiration
of the Indemnification Period) shall not relieve the Indemnitor from any
liability that it may have to such Indemnitee under Section 6.2, except to the
extent that the Indemnitor has been actually prejudiced by such failure.
6.4. Certain Provisions Regarding Indemnification. (a) The
indemnification provided in this Article 6 shall be the sole and exclusive
remedy for any inaccuracy or breach of any representation or warranty made by
the Company or Purchaser in this Agreement.
(b) Upon making any payment to an Indemnitee for any
indemnification claim pursuant to this Article 6, the Indemnitor shall be
subrogated, to the extent of such payment, to any rights which the Indemnitee
may have against any other parties with respect to the subject matter underlying
such indemnification claim.
(c) The amount of any Losses shall be computed net of any
insurance proceeds received by the Indemnitee or its Affiliates in connection
therewith.
(d) The amount of any indemnification payment made by the Company
to Purchaser pursuant hereto shall be increased by dividing (x) the amount that
would be payable (but for this Section 6.4(d)), by (y) one minus the Ownership
Fraction. The "Ownership Fraction" means the number of Primary Shares held by
Purchaser and its Affiliates at the time of such payment, divided by the total
number of shares of Common Stock outstanding at the time of such payment.
(e) For purposes of this Article 6, Promecap, S.C. shall be
deemed to be an Affiliate of Purchaser (irrespective of whether or not Promecap,
S.C. is from time to time determined to be an Affiliate pursuant to the
definition of Affiliate contained in Section 7.1).
(f) Notwithstanding any provision of this Article 6 to the
contrary, (A) the Company shall not be obliged to make any payments in respect
of indemnification for a breach described in clause (i) of Section 6.2(a) until
the aggregate amount of payments that the Company is obliged to pay in respect
of such breaches (without reference to this Section 6.4(f)) is at least
$250,000, at which point all payments that the Company is obliged to pay in
respect of such breaches shall be payable, and (B) the Company shall not be
obliged to make any payments in respect of indemnification for breaches of
representations and warranties described in clause (i) of Section 6.2(a) in
excess of $16,500,000.
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7. Interpretation.
7.1. Definitions.
"Affiliate" shall mean, with respect to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person.
"Beneficially Own", with respect to any securities, shall mean having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing.
"Capitalized Lease" shall mean, with respect to any Person, any lease
or any other agreement for the use of property which, in accordance with
generally accepted accounting principles, should be capitalized on the lessee's
or user's balance sheet.
"Change in Control" shall mean:
(a) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of Beneficial
Ownership of more than 25% of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors, but excluding, for this purpose, any such acquisition by (i) the
Company or any of its Subsidiaries, (ii) any employee benefit plan (or related
trust) of the Company or its Subsidiaries, or (iii) any corporation with respect
to which, following such acquisition, a majority of the combined voting power of
the then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then Beneficially Owned, directly or
indirectly, by individuals and entities who were the Beneficial Owners of voting
securities of the Company immediately prior to such acquisition in substantially
the same proportion as their ownership, immediately prior to such acquisition,
of the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors; or
(b) a reorganization, merger or consolidation, in each case, with
respect to which all or substantially all the individuals and entities who were
the respective Beneficial Owners of the voting securities of the Company
immediately prior to such reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation Beneficially Own,
directly or indirectly, more than 75% of the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors of the corporation resulting from such reorganization, merger or
consolidation; or
(c) the sale or other disposition of a majority or more of the
consolidated assets or property of the Company and its Subsidiaries in one
transaction or series of related transactions.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Exchange Act shall include reference to the
comparable section, if any, of any such successor federal statute.
"Guarantee" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of any Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, (iii) to lease property or to purchase securities or other
property or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make payment
of such Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of any computations made under this Agreement, a
Guarantee in respect of any Indebtedness for borrowed money shall be deemed to
be Indebtedness equal to the outstanding amount of the Indebtedness for borrowed
money which has been guaranteed, and a Guarantee in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits or
advances of any kind, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iii) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person, (iv) all obligations of such Person issued or assumed
as the deferred purchase price of property or services (other than accounts
payable to suppliers and similar accrued liabilities incurred in the ordinary
course of business and paid in a manner consistent with industry practice),
(v) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any lien or security interest on property owned or acquired by such Person
whether or not the obligations secured thereby have been assumed, (vi) all
Capitalized Lease obligations of such Person, (vii) all Guarantees of such
Person, (viii) all obligations (including but not limited to reimbursement
obligations) relating to the issuance of letters of credit for the account of
such Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap agreements,
cap, floor and collar agreements, interest rate insurance, currency spot and
forward contracts and other agreements or arrangements designed to provide
protection against fluctuations in interest or currency exchange rates.
"Law" shall mean any law, statute, rule, regulation, judgment,
injunction, order, decree, license, permit, certificate, or other restriction of
any Governmental Authority or securities authority or exchange applicable to the
Company.
"Material Adverse Effect" shall mean a material adverse effect on the
business, operations, results of operations, assets, prospects or condition
(financial or otherwise) of the Company or the Fruit Processing Operations or
the Juice and Oil Operations.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Pension Plan" shall mean any multiemployer plan or single employer
plan, as defined in Section 4001 of ERISA, that is subject to Title IV of ERISA,
that the Company, any Subsidiary or any ERISA Affiliate maintains or is or ever
has been obligated to contribute to for the benefit of employees or former
employees of the Company, any Subsidiary or any ERISA Affiliate.
"Permitted Liens" shall mean liens or other encumbrances for current
Taxes not yet due and payable, or for mechanics', carriers', workers' and other
similar liens or encumbrances arising in the ordinary course of business
consistent with past practice, except for such liens or encumbrances that,
individually or in the aggregate, have or would reasonably be expected to have a
Material Adverse Effect.
"Person" shall mean any individual, firm, corporation, partnership or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include reference to the
comparable section, if any, of any such successor federal statute.
"Significant Shareholder" shall mean any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) that
Beneficially Owns 5% or more of the Common Stock).
"Subsidiary" shall mean any corporation or other entity of which 25%
or more of the voting power or equity interest is owned, directly or indirectly,
by the Company.
"Third Party" shall mean, with respect to any Person, any other Person
which is not an Affiliate of such Person.
"Treasury Regulations" shall mean the regulations promulgated under
the Code from time to time.
7.2. Index to Defined Terms. The terms listed below are defined
elsewhere in this Agreement and, for ease of reference, the Section containing
the definition of each such term is set forth opposite such term:
Action.................................................................2.10(a)
Affiliate..............................................................7.1
Agreement..............................................................Preamble
Beneficially Own.......................................................7.1
Capital Lease..........................................................7.1
Change in Control......................................................7.1
Closing................................................................1.3
Code...................................................................7.1
Commission.............................................................2.3
Common Stock...........................................................Recitals
Company................................................................Preamble
Company Options........................................................2.3
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Contract...............................................................2.16
Employee Plan..........................................................2.12
Environmental Law......................................................2.14
Environmental Permit...................................................2.14
ERISA..................................................................7.1
ERISA Affiliate........................................................2.12
Exchange Act...........................................................7.1
Governmental Authority.................................................2.5(d)
Guarantee..............................................................7.1
Hazardous Materials....................................................2.14
Indebtedness...........................................................7.1
Indemnification Period.................................................6.1
Indemnitee.............................................................6.1
Indemnitor.............................................................6.1
Intellectual Property Rights...........................................2.15
Law....................................................................7.1
Letter Agreement.......................................................Recitals
Litigation.............................................................8.11
Losses.................................................................6.2(a)
Material Adverse Effect................................................7.1
Multiemployer Plan.....................................................2.12
Options................................................................Recitals
Option Agreements......................................................Recitals
Other Claim............................................................6.3(b)
Other Claim Notice.....................................................6.3(b)
Ownership Fraction.....................................................6.4(d)
PBGC...................................................................7.1
Pension Plan...........................................................7.1
Person.................................................................7.1
Primary Shares.........................................................Recitals
Purchase Price.........................................................1.2
Purchaser..............................................................Preamble
Purchaser Designee.....................................................4.2(a)
Registration Rights Agreement..........................................Recitals
SEC Documents..........................................................2.6
Securities Act.........................................................7.1
Significant Shareholder ...............................................7.1
Subsidiary.............................................................7.1
Tax....................................................................2.8(c)
Tax Returns............................................................2.8(c)
Third Party............................................................7.1
Third Party Claim......................................................6.3(a)
Third Party Claim Notice...............................................6.3(a)
Transfer...............................................................5
Treasury Regulations ..................................................7.1
Valid Claim Notice.....................................................6.1
Valid Other Claim Notice...............................................6.3(b)
Valid Third Party Claim Notice.........................................6.3(a)
7.3. Headings; Other Interpretation. The heading references herein and
the table of contents hereto are for convenience purposes only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. "Hereby," "hereof," "hereunder" and similar terms
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Page 40 of 87 Pages
shall be references to this Agreement, including the Schedules hereto. In this
Agreement, unless the context otherwise requires, words in the singular number
or in the plural number shall each include the singular number and the plural
number. As used herein, to a party's "knowledge" means actual knowledge of the
senior management and board of directors of the Company and the knowledge that
any of the foregoing persons would have after due and reasonable inquiry. Unless
the context otherwise indicates, references to a Section, Article or Schedule
shall refer (respectively) to a Section of, Article of or Schedule to this
Agreement. The term "dollars" or "$" shall refer to the currency of the United
States.
8. Miscellaneous.
8.1. Severability. If any term, provision, covenant or restriction of
this Agreement or any exhibit hereto is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement and such exhibits shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such which may be hereafter declared
invalid, void or unenforceable. Should a court of competent jurisdiction
determine that any provision hereof is unenforceable because it is excessive in
scope, the parties hereto agree that the provision shall be interpreted and
enforced to the maximum extent which such court deems enforceable.
8.2. Specific Enforcement. Purchaser, on the one hand, and the
Company, on the other, acknowledge and agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction to
prevent breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
thereof having jurisdiction, this being in addition to any other remedy to which
they may be entitled at law or equity.
8.3. Entire Agreement. This Agreement (including the schedules
hereto), the Option Agreements, the Registration Rights Agreement and the other
documents delivered in connection herewith or contemplated herein constitute the
entire agreement between the parties and supersede all prior agreements and
understandings, agreements or representations by or between the parties, written
and oral, with respect to the subject matter hereof and thereof. Purchaser and
the Company hereby terminate the Letter Agreement.
8.4. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
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8.5. Notices and Other Communications. All notices, consents,
requests, instructions, approvals, financial statements, proxy statements,
reports and other communications provided for herein shall be in writing and
shall be delivered personally, by telecopy (and confirmed by telephone) or sent
by prepaid overnight courier service, to the applicable address set forth below.
If to the Company, to:
The UniMark Group, Inc.
The UniMark House
P.O. Box 229
Argyle, TX 76226
Attention: President
Telecopier:
with a copy to:
Jakes Jordaan, Esq.
Jordaan & Pennington
300 Crescent Court, Suite 1605
Dallas, TX 75201
Telecopier: (214) 871-6560
If to Purchaser, to:
M & M Nominee L.L.C.
c/o Soros Fund Management
888 Seventh Avenue
New York, NY 10106
Attention: Chief Financial Officer
Telecopier: (212) 974-8399
with a copy to:
Promecap, S.C.
Bosque de Alisos No. 47A, 3er piso
Colonia Bosques de las Lomas
C.P. 05120 Mexico, D.F.
Mexico
Attention: Federico Chavez Peon
Telecopier: 011-525-259-6269
with a copy to:
Joseph Stern, Esq.
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Telecopier: (214) 859-4000
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner.
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Page 42 of 87 Pages
8.6. Amendments; Termination; Waivers. This Agreement may not be
amended or terminated except by written agreement of the Company and Purchaser.
This Agreement may not be waived, changed, modified, or discharged orally, but
only by an agreement in writing signed by the party or parties against whom
enforcement of any waiver, change, modification or discharge is sought.
Notwithstanding anything in this Agreement to the contrary, no provision of this
Section 8.6 may be waived, changed or modified.
8.7. Cooperation. Purchaser and the Company agree to take, or cause to
be taken, all such further or other actions as shall reasonably be necessary to
make effective and consummate the transactions contemplated by this Agreement.
8.8. Successors and Assigns; Parties in Interest. This Agreement may
be assigned by Purchaser to any Affiliate of Purchaser who agrees in writing to
be bound by the provisions hereof. This Agreement may not be assigned by the
Company. All covenants and agreements contained herein shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns.
In addition, each Purchaser Designee shall be a third party beneficiary of this
Agreement and shall be entitled to enforce this Agreement. Except as provided in
the preceding two sentences and as explicitly provided in Article 6, nothing in
this Agreement, express or implied, is intended to confer upon any Person any
rights or remedies under or by reason of this Agreement.
8.9. Expenses. The Company shall pay all costs and expenses of
Purchaser and its Affiliates (including fees and expenses of counsel and
accountants) in connection with their due diligence review of the Company, the
negotiation, execution and delivery of the Letter Agreement, this Agreement and
all other documents in connection herewith, and the closing of the transactions
contemplated hereby, up to a maximum of $100,000, and shall pay costs and
expenses of Purchaser and its Affiliates (including fees and expenses of counsel
and accountants) of their enforcement of the foregoing.
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Page 43 of 87 Pages
8.10. Transfer of Shares. (a) Purchaser understands and agrees that
the Primary Shares have not been registered under the Securities Act or the
securities laws of any state and that they may be sold or otherwise disposed of
only in one or more transactions registered under the Securities Act and, where
applicable, such laws or transactions as to which an exemption from the
registration requirements of the Securities Act and, where applicable, such laws
are available. Purchaser acknowledges that, except as provided in the
Registration Rights Agreement, Purchaser has no right to require the Company to
register the Primary Shares. Purchaser understands and agrees that each
certificate representing the Primary Shares shall bear legends substantially in
the form as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH
ACT OR SUCH LAWS."
8.11. Governing Law; Consent to Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE AND OF THE UNITED
STATES OF AMERICA, IN EACH CASE LOCATED IN WILMINGTON, DELAWARE, FOR ANY ACTION
IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY ("LITIGATION") ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY (AND
AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN SUCH COURTS).
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE COURTS OF THE STATE OF DELAWARE
OR THE UNITED STATES OF AMERICA, IN EACH CASE LOCATED IN WILMINGTON, DELAWARE,
AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH LITIGATION BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE PARTIES IRREVOCABLY
AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHTS TO TRIAL BY JURY IN CONNECTION WITH ANY LITIGATION ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
8.12. Publicity
Each of the parties hereto agrees that it will make no statement
regarding the transactions contemplated hereby which is inconsistent with the
press release agreed to by the parties hereto. Notwithstanding the foregoing,
each of the parties hereto may, in documents required to be filed by it with the
Commission or other regulatory bodies, make such statements with respect to the
transactions contemplated hereby as each may be advised is legally necessary
upon advice of its counsel.
[Remainder of page left intentionally blank.]
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Page 44 of 87 Pages
IN WITNESS WHEREOF, the Company and Purchaser have caused this
Agreement to be executed and delivered by their respective officers as of the
date first above written.
THE UNIMARK GROUP, INC.
By:/s/ Rafael Vaquero Bazan
----------------------------------------
Name: Rafael Vaquero Bazan
Title: President, Chief Executive Officer
and Chief Operating Officer
M & M NOMINEE L.L.C.
By:/s/ Peter Streinger
----------------------------------------
Name: Peter Streinger
Title: Manager
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Page 45 of 87 Pages
EXHIBIT C
FIRST STOCK OPTION AGREEMENT
FIRST STOCK OPTION AGREEMENT (this "First Option Agreement") dated as
of July 17, 1998, by and between M & M NOMINEE L.L.C., a Delaware limited
liability company ("Purchaser"), and THE UNIMARK GROUP, INC., a Texas
corporation (the "Company").
W I T N E S S E T H
WHEREAS, the Board of Directors of Purchaser and the Board of
Directors of the Company have approved a Purchase Agreement dated as of even
date herewith (the "Purchase Agreement") providing for the issuance by the
Company and the purchase by Purchaser of shares of common stock, par value $0.01
per share, of the Company (the "Common Stock");
WHEREAS, to induce Purchaser to enter into the Purchase Agreement, the
Company has agreed to (i) grant to Purchaser an option pursuant to the Second
Option Agreement, by and between Purchaser and the Company, dated as of the date
hereof (the "Second Option Agreement"), and (ii) grant to Purchaser the option
set forth herein to purchase authorized but unissued shares of Common Stock.
NOW, THEREFORE, to induce Purchaser to enter into the Purchase
Agreement and in consideration of the premises herein contained, the parties
agree as follows:
1. Definitions. Capitalized terms used but not defined herein shall have the
same meanings as in the Purchase Agreement.
Grant of Option. Subject to the terms and conditions set forth herein, the
Company hereby grants to Purchaser an option (the "Option") to purchase up to
1,000,000 authorized and unissued shares of Common Stock (the "Option Shares"),
at a price per share equal to $4.5375 (the "Exercise Price") payable in cash as
provided in Section 4 hereof.
3. Exercise of Option. (a) Purchaser may exercise the Option, in whole or in
part, at any time or from time to time during the Exercise Period. The "Exercise
Period" shall be the period from the date hereof until and including the first
anniversary of the date hereof. Except as provided by the last sentence of this
Section 3(a), at 11:59 p.m. (Dallas, TX time) on the last day of the Exercise
Period the Option, to the extent it shall not have been exercised, shall
terminate and be of no further force and effect. If the Option cannot be
exercised prior to the first anniversary of the date hereof as a result of any
injunction, order or other legal restraint (each, a "Restraint"), the Exercise
Period shall terminate on the later of (i) the first anniversary of the date
hereof and (ii) the 10th business day after such Restraint shall have been
dissolved or shall have become permanent and no longer subject to appeal, as the
case may be, but in no event later than 18 months after the date hereof. If, at
the end of the Exercise Period, such Restraint shall not have been dissolved or
otherwise resolved (to the reasonable satisfaction of Purchaser) to allow the
exercise of the Option, then, upon written request made by Purchaser within 14
days of the end of the Exercise Period, the Company shall redeem the Option for
a redemption price equal to (x) the excess of the Current Market Price (as
defined in Section 6) of the Common Stock as of the first anniversary of the
date hereof over the Exercise Price, multiplied by (y) the number of shares that
would be issued upon exercise of the Option but for the Restraint.
<PAGE>
Page 46 of 87 Pages
(b) Whenever Purchaser wishes to exercise the Option, it shall deliver to
the Company a written notice (the 'Notice", the date of receipt of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares it intends to purchase pursuant to such exercise, and (ii) a place and
date not earlier than two business days nor later than 60 calendar days from the
Notice Date for the closing of such purchase (a "Closing Date"); provided that
if any closing of the purchase and sale pursuant to the Option (a "Closing")
cannot be consummated by reason of any applicable Law, the period of time that
otherwise would run from the Notice Date pursuant to this sentence shall run
instead from the date on which such restriction on consummation has expired or
been terminated; and provided further that, without limiting the foregoing, if
prior notification to or approval of any Governmental Authority is required in
connection with such purchase, Purchaser and, if applicable, the Company shall
promptly file the required notice or application for approval and shall
expeditiously process the same (and the Company shall cooperate with Purchaser
in the filing of any such notice or application and the obtaining of any such
approval), and the period of time that otherwise would run from the Notice Date
pursuant to this sentence shall run instead from the date on which, as the case
may be, (i) any required notification period has expired or been terminated or
(ii) such approval has been obtained, and in either event, any requisite waiting
period has passed. If such notification period has not expired or been
terminated or such approval has not been obtained, or such waiting period has
not passed, in any case the effect of which is to prevent or delay the Closing
for 90 days beyond the Notice Date, then, upon written request made by Purchaser
within 14 days of the end of such 90 day period, the Company shall redeem the
Option for a redemption price equal to (x) the excess of the Current Market
Price of the Common Stock as of the first anniversary of the date hereof over
the Exercise Price, multiplied by (y) the number of shares specified in the
Notice.
(c) In connection with any Closing, the Company may request that Purchaser
represent that, as of the Closing Date applicable to such Closing, (i) Purchaser
is an "accredited investor" within the meaning of Rule 501 of the Securities
Act, and (ii) Purchaser is acquiring the Option Shares being purchased at such
Closing for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof. If the Company makes such a request
and Purchaser fails to make such representations, then (except as provided in
the following sentence) the Company shall have no obligation to effect such
Closing. Purchaser may, in lieu of making the representation set forth in clause
(i), furnish the Company with an opinion of counsel reasonably acceptable to the
Company, to the effect that the acquisition of the Option Shares at such Closing
is exempt from registration under the Securities Act and applicable state
securities laws. Notwithstanding the foregoing purchaser shall not be required
to make the representation set forth in clause (i) or furnish such a legal
opinion if purchaser is exercising the Option and immediately thereafter selling
the Option Shares pursuant to the Registration Rights Agreement.
4. Payment and Delivery of Certificates. (a) At each Closing, Purchaser shall
pay to the Company the aggregate Exercise Price for the Option Shares purchased
at such Closing pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated not later than one business
day prior to the Closing Date for such Closing by the Company.
(b) At such Closing, simultaneously with the delivery of the aggregate
Exercise Price as provided in Section 4(a) hereof, the Company shall deliver to
Purchaser a certificate or certificates representing the number of Option Shares
then being purchased by Purchaser, registered in the name of Purchaser or as
designated in writing by Purchaser, which Option Shares shall be fully paid and
nonassessable and free and clear of all liens, claims, charges and encumbrances
of any kind whatsoever.
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Page 47 of 87 Pages
(c) If at the time of issuance of any Option Shares pursuant to any
exercise of the Option, the Company shall have issued any share purchase rights
or similar securities ("Rights") to holders of any class of the Common Stock,
then each such Option Share shall also represent Rights with terms substantially
the same as and at least as favorable to Purchaser as those issued to other
holders of the Common Stock.
(d) Certificates for Option Shares delivered at any Closing hereunder shall
be endorsed with a restrictive legend, which shall read substantially as
follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 or the securities laws of
any state and may not be sold or otherwise disposed of except pursuant
to an effective registration statement under such act and applicable
state securities laws or an applicable exemption to the registration
requirements of such act or such laws."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend in connection with a transfer
or sale if (i) the Company has been furnished with an opinion of counsel,
reasonably satisfactory to counsel for the Company, that such transfer or sale
will not violate the Securities Act or applicable securities laws of any state
or (ii) such transfer or sale shall have been registered and qualified pursuant
to the Securities Act and any applicable state securities laws.
5. Representations and Warranties; Covenants. (a) The Company hereby represents
and warrants to Purchaser that: (i) the Company has full corporate right, power
and authority to execute and deliver this First Option Agreement and to perform
all of its obligations hereunder; (ii) such execution, delivery and performance
have been duly authorized by the Board of Directors of the Company, and no other
corporate proceedings are necessary therefor; (iii) this First Option Agreement
has been duly and validly executed and delivered by the Company and represents a
valid and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms; and (iv) the Company has taken all
necessary corporate action to authorize and reserve and permit it to issue, and
at all times from the date hereof through the date of the exercise in full or
the expiration or termination of the Option, shall have reserved for issuance
upon exercise of the Option, 1,000,000 shares of Common Stock (subject to
adjustment as provided herein), all of which, upon issuance in accordance with
the terms of this First Option Agreement, shall be duly authorized, validly
issued, fully paid and nonassessable, shall be delivered free and clear of all
claims, liens, encumbrances and security interests and not subject to any
preemptive rights of any stockholder of the Company, and will be eligible for
NASDAQ NMS trading without further consents or actions (other than registration
thereof pursuant to the Registration Rights Agreement).
(b) Purchaser hereby represents and warrants to the Company that (i)
Purchaser has full corporate right, power and authority to execute and deliver
this First Option Agreement and to perform all of its obligations hereunder;
(ii) such execution, delivery and performance have been duly authorized by all
requisite corporate action by Purchaser, and no other corporate proceedings are
necessary therefor; (iii) this First Option Agreement has been duly and validly
executed and delivered by Purchaser and represents a valid and legally binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms; and (iv) any Common Stock acquired by Purchaser upon exercise of the
Option will not be transferred or otherwise disposed of for one year from the
date hereof and then only in compliance with the Securities Act.
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Page 48 of 87 Pages
6. Adjustment upon Changes in Capitalization. (a) In the event of any change in
the Common Stock by reason of stock dividends, stock splits, recapitalizations
or the like, the type and number of shares subject to the Option and the
Exercise Price shall be adjusted appropriately.
(b) If at any time following the date hereof, the Company shall issue
shares of Common Stock (or rights, warrants or other securities convertible into
or exchangeable for shares of Common Stock (collectively "Convertible
Securities")) at a price per share (or having a conversion price per share) less
than the Current Market Price (as defined below) per share of Common Stock as of
the date of issuance of such shares (or, in the case of Convertible Securities,
less than the Current Market Price as of the date of issuance of the Convertible
Securities in respect of which shares of Common Stock were issued), then the
Exercise Price shall be adjusted by multiplying (A) the Exercise Price in effect
on the day immediately prior to such date by (B) a fraction, the numerator of
which shall be the sum of (1) the number of shares of Common Stock outstanding
on such date and (2) the number of shares of Common Stock purchasable at the
then Current Market Price per share with the aggregate consideration receivable
by the Company for the total number of shares of Common Stock so issued (or into
which the Convertible Securities may convert), and the denominator of which
shall be the sum of (x) the number of shares of Common Stock outstanding on such
date and (y) the number of additional shares of Common Stock issued (or into
which the Convertible Securities may convert).
An adjustment made pursuant to this Section 6(b) shall be made on the next
business day following the date on which any such issuance is made and shall be
effective retroactively to the close of business on the date of such issuance.
For purposes of this Section 6(b), the aggregate consideration receivable by the
Company in connection with the issuance of shares of Common Stock or of
Convertible Securities shall be deemed to be equal to the sum of the aggregate
offering price (before deduction of underwriting discounts or commissions and
expenses payable to third parties) of all such Common Stock and Convertible
Securities plus the minimum aggregate amount, if any, payable upon exercise or
conversion of any such Convertible Securities. The issuance or reissuance of any
shares of Common Stock (whether treasury shares or newly issued shares) pursuant
to (i) a dividend or distribution on, or subdivision, combination or
reclassification of, the outstanding shares of Common Stock requiring an
adjustment in the Exercise Price pursuant to Section 6(a), or (ii) any stock
option plan, stock purchase plan or other benefit program of the Company or
executive compensation package approved by the Company's Board of Directors
involving the grant of options to employees or directors of the Company shall
not be deemed to constitute an issuance of Common Stock or Convertible
Securities by the Company to which this Section 6(b) applies. Upon the
expiration unexercised of any Convertible Securities for which an adjustment has
been made pursuant to this Section 6(b), the adjustments shall forthwith be
reversed to effect such rate of conversion as would have been in effect at the
time of such expiration or termination had such Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued.
"Current Market Price", when used with reference to shares of the Common
Stock or another security on any date, shall mean the average of the daily
closing prices per share of such Common Stock or other security for the 20
preceding trading days. If the Common Stock or such other securities are listed
or admitted to trading on a national securities exchange, the closing price
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Common Stock or such other securities are not listed
or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
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Page 49 of 87 Pages
listed on the principal national securities exchange on which the Common Stock
or such other securities are listed or admitted to trading or, if the Common
Stock or such other securities are not so listed on any national securities
exchange, as reported in the transaction reporting system applicable to
securities designated as a "national market system security" or NASDAQ. If the
Common Stock or such other securities are not publicly held or so listed or
designated, "Current Market Price" shall mean the Fair Market Value (as defined
below) per share of Common Stock or of such other securities as determined in
good faith by the Board of Directors of the Company based on an opinion of an
independent investment banking firm with an established national reputation with
respect to the valuation of securities.
"Fair Market Value" shall mean, as to shares of Common Stock or any other
securities of the Company or any other issuer which are publicly traded, the
Current Market Prices of such shares or securities. The "Fair Market Value" of
any security which is not publicly traded or of any other property shall mean
the fair value thereof as determined by an independent investment banking or
appraisal firm experienced in the valuation of such securities or property
selected in good faith by the Board of Directors of the Company.
(c) In case the Company shall at any time or from time to time after the
date hereof declare, order, pay or make a dividend or other distribution
(including, without limitation, any distribution of stock or other securities or
property or Convertible Securities of the Company or any of its Subsidiaries by
way of dividend or spinoff), on its Common Stock, then, and in each such case,
the Exercise Price shall be adjusted by multiplying (1) the applicable Exercise
Price on the day immediately prior to the record date fixed for the
determination of stockholders entitled to receive such dividend or distribution
by (2) a fraction, the numerator of which shall be the Current Market Price of
the Common Stock less the Fair Market Value of such dividend or distribution
(per share of Common Stock), and the denominator of which shall be such average
Current Market Price of the Common Stock. If any dividend or distribution is
declared or ordered and a Closing Date is before the record date for such
dividend or distribution, then no adjustment in respect thereof shall be made to
the Exercise Price with respect to the Option Shares acquired on such Closing
Date.
(d) For purposes of this Section 6, the number of shares of Common Stock at
any time outstanding shall not include any shares of Common Stock then owned or
held by or for the account of the Company.
(e) The term "dividend," as used in this Section 6, shall mean a dividend
or other distribution in respect of shares of Common Stock of the Company.
(f) Anything in this Section 6 to the contrary notwithstanding, the Company
shall not be required to give effect to any adjustment in the Exercise Price
unless and until the net effect of one or more adjustments (each of which shall
be carried forward), determined as above provided, shall have resulted in a
change of the Exercise Price by at least one percent, and when the cumulative
net effect of more than one adjustment so determined shall be to change the
Exercise Price by at least one percent, such change in Exercise Price shall
thereupon be given effect.
(g) The certificate of any firm of independent public accountants of
recognized national standing selected by the Board of Directors of the Company
(which may be the firm of independent public accountants regularly employed by
the Company) shall be presumptively correct for any computation made under this
Section 6.
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Page 50 of 87 Pages
7. Registration Rights. Contemporaneously herewith, Purchaser and the Company
are entering into a Registration Rights Agreement providing for registration of
the Option Shares.
8. Listing. If the Common Stock or any other securities to be acquired upon
exercise of the Option are then listed on any national securities exchange, the
Company, upon the request of Purchaser, will promptly file an application to
list the Option Shares or other securities to be acquired upon exercise of the
Option on all such exchanges and will use its best efforts to obtain approval of
such listings as soon as practicable.
9. Survival. The representations, warranties, covenants and agreements of the
parties hereto shall survive any Closing.
10. Severability. Any term, provision, covenant or restriction contained in this
First Option Agreement held by a court or other Governmental Authority of
competent jurisdiction to be invalid, void or unenforceable shall be ineffective
to the extent of such invalidity, voidness or unenforceability, but neither the
remaining terms, provisions, covenants or restrictions contained in this First
Option Agreement nor the validity or enforceability thereof in any other
jurisdiction shall be affected or impaired thereby. Any term, provision,
covenant or restriction contained in this First Option Agreement that is so
found to be so broad as to be unenforceable shall be interpreted to be as broad
as is enforceable.
11. Entire Agreement. This First Option Agreement, the Second Option Agreement,
the Purchase Agreement (including the documents and the instruments referred to
therein or delivered in connection therewith) and the Registration Rights
Agreement constitute the entire agreement between the parties and supersede all
prior agreements and understandings, agreements or representations by or between
the parties, written and oral, with respect to the subject matter hereof and
thereof.
12. Successors; No Third Party Beneficiaries. The terms and conditions of this
First Option Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. Nothing in this
First Option Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations, or liabilities under or by reason of
this First Option Agreement, except as expressly provided herein.
13. Notices. All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered in accordance with
Section 8.5 of the Purchase Agreement (which is incorporated herein by
reference).
14. Further Assurances. In the event of any exercise of the Option by Purchaser,
the Company and Purchaser shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
15. Specific Performance. The parties hereto agree that if for any reason
Purchaser or the Company shall have failed to perform its obligations under this
First Option Agreement, then either party hereto seeking to enforce this First
Option Agreement against such non-performing party shall be entitled to specific
performance and injunctive and other equitable relief, and the parties hereto
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that either
party hereto may have against the other party hereto for any failure to perform
its obligations under this First Option Agreement.
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16. Governing Law. This First Option Agreement shall be governed by the laws of
the State of Delaware, without giving effect to the conflict of laws principles
thereof. Each party hereby irrevocably and unconditionally consents to submit to
the exclusive jurisdiction of the courts of the State of Delaware and of the
United States of America located in Wilmington, Delaware, for any Litigation
(and agrees not to commence any Litigation except in any such court). Each party
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any Action in the courts of the State of Delaware or of the United
States of America located in Wilmington, Delaware, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any Action brought in any such court has been brought in an
inconvenient forum.
17. Regulatory Approvals; Section 16(b). If, in connection with the exercise of
the Option under Section 3, prior notification to or approval of any
Governmental Authority is required, then the required notice or application for
approval shall be promptly filed and/or expeditiously processed by the Company
and periods of time that otherwise would run pursuant hereto (if any) shall run
instead from the date on which any such required notification period has expired
or been terminated or such approval has been obtained, and in either event, any
requisite waiting period shall have passed. Periods of time that otherwise would
run pursuant to this First Option Agreement shall also be extended to the extent
necessary in order to avoid liability under Section 16(b) of the Exchange Act.
18. Waiver and Amendment. Any provision of this First Option Agreement may be
waived in writing at any time by the party that is entitled to the benefits of
such provision. This First Option Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
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IN WITNESS WHEREOF, each of the parties hereto has executed this First
Option Agreement as of the date first written above.
PURCHASER:
M & M NOMINEE L.L.C.
By:/s/ Peter Streinger
--------------------------------------
Name: Peter Streinger
Title: Manager
THE COMPANY:
THE UNIMARK GROUP, INC.
By:/s/ Rafael Vaquero Bazan
---------------------------------------
Name: Rafael Vaquero Bazan
Title: President, Chief Executive Officer
and Chief Operating Officer
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EXHIBIT D
SECOND STOCK OPTION AGREEMENT
SECOND STOCK OPTION AGREEMENT (this "Second Option Agreement") dated
as of July 17, 1998, by and between M & M NOMINEE L.L.C., a Delaware limited
liability company ("Purchaser"), and THE UNIMARK GROUP, INC., a Texas
corporation (the "Company").
W I T N E S S E T H
WHEREAS, the Board of Directors of Purchaser and the Board of
Directors of the Company have approved a Purchase Agreement dated as of even
date herewith (the "Purchase Agreement") providing for the issuance by the
Company and the purchase by Purchaser of shares of common stock, par value $0.01
per share, of the Company (the "Common Stock");
WHEREAS, to induce Purchaser to enter into the Purchase Agreement, the
Company has agreed to (i) grant to Purchaser an option pursuant to the First
Option Agreement, by and between Purchaser and the Company, dated as of the date
hereof (the "First Option Agreement"), and (ii) grant to Purchaser the option
set forth herein to purchase authorized but unissued shares of Common Stock;
NOW, THEREFORE, to induce Purchaser to enter into the Purchase
Agreement and in consideration of the premises herein contained, the parties
agree as follows:
1. Definitions. Capitalized terms used but not defined herein shall have the
same meanings as in the Purchase Agreement.
Grant of Option. Subject to the terms and conditions set forth herein, the
Company hereby grants to Purchaser an option (the "Option") to purchase up to
1,000,000 authorized and unissued shares of Common Stock (the "Option Shares"),
at a price per share equal to $4.5375 (the "Exercise Price") payable in cash as
provided in Section 4 hereof.
3. Exercise of Option. (a) Purchaser may exercise the Option, in whole or in
part, at any time or from time to time during the Exercise Period. The "Exercise
Period" shall be the period from the date hereof until and including the third
anniversary of the date hereof. Except as provided by the last sentence of this
Section 3(a), at 11:59 p.m. (Dallas, TX time) on the last day of the Exercise
Period the Option, to the extent it shall not have been exercised, shall
terminate and be of no further force and effect. If the Option cannot be
exercised prior to the third anniversary of the date hereof as a result of any
injunction, order or other legal restraint (each, a "Restraint"), the Exercise
Period shall terminate on the later of (i) the third anniversary of the date
hereof and (ii) the 10th business day after such Restraint shall have been
dissolved or shall have become permanent and no longer subject to appeal, as the
case may be, but in no event later than three years and six months after the
date hereof. If, at the end of the Exercise Period, such Restraint shall not
have been dissolved or otherwise resolved (to the reasonable satisfaction of
Purchaser) to allow the exercise of the Option, then, upon written request made
by Purchaser within 14 days of the end of the Exercise Period, the Company shall
redeem the Option for a redemption price equal to (x) the excess of the Current
Market Price (as defined in Section 6) of the Common Stock as of the third
anniversary of the date hereof over the Exercise Price, multiplied by (y) the
number of shares that would be issued upon exercise of the Option but for the
Restraint.
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(b) Whenever Purchaser wishes to exercise the Option, it shall deliver to
the Company a written notice (the "Notice", the date of receipt of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares it intends to purchase pursuant to such exercise, and (ii) a place and
date not earlier than two business days nor later than 60 calendar days from the
Notice Date for the closing of such purchase (a "Closing Date"); provided that
if any closing of the purchase and sale pursuant to the Option (a "Closing")
cannot be consummated by reason of any applicable Law, the period of time that
otherwise would run from the Notice Date pursuant to this sentence shall run
instead from the date on which such restriction on consummation has expired or
been terminated; and provided further that, without limiting the foregoing, if
prior notification to or approval of any Governmental Authority is required in
connection with such purchase, Purchaser and, if applicable, the Company shall
promptly file the required notice or application for approval and shall
expeditiously process the same (and the Company shall cooperate with Purchaser
in the filing of any such notice or application and the obtaining of any such
approval), and the period of time that otherwise would run from the Notice Date
pursuant to this sentence shall run instead from the date on which, as the case
may be, (i) any required notification period has expired or been terminated or
(ii) such approval has been obtained, and in either event, any requisite waiting
period has passed. If such notification period has not expired or been
terminated or such approval has not been obtained, or such waiting period has
not passed, in any case the effect of which is to prevent or delay the Closing
for 90 days beyond the Notice Date, then, upon written request made by Purchaser
within 14 days of the end of such 90 day period, the Company shall redeem the
Option for a redemption price equal to (x) the excess of the Current Market
Price of the Common Stock as of the third anniversary of the date hereof over
the Exercise Price, multiplied by (y) the number of shares specified in the
Notice.
(c) In connection with any Closing, the Company may request that Purchaser
represent that, as of the Closing Date applicable to such Closing, (i) Purchaser
is an "accredited investor" within the meaning of Rule 501 of the Securities
Act, and (ii) Purchaser is acquiring the Option Shares being purchased at such
Closing for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof. If the Company makes such a request
and Purchaser fails to make such representations, then (except as provided in
the following sentence) the Company shall have no obligation to effect such
Closing. Purchaser may, in lieu of making the representation set forth in clause
(i), furnish the Company with an opinion of counsel reasonably acceptable to the
Company, to the effect that the acquisition of the Option Shares at such Closing
is exempt from registration under the Securities Act and applicable state
securities laws. Notwithstanding the foregoing purchaser shall not be required
to make the representation set forth in clause (i) or furnish such a legal
opinion if purchaser is exercising the Option and immediately thereafter selling
the Option Shares pursuant to the Registration Rights Agreement.
(d) Notwithstanding the foregoing, if, on any date subsequent to 180 days
from the date hereof, the Current Market Price of the Common Stock exceeds $6
(each such date, a "Threshold Date"), then the Company may require Purchaser to
either exercise or forfeit the Option as follows: (i) within 14 calendar days of
any Threshold Date, the Company may deliver a written notice (a "Notice") to
Purchaser specifying that it is exercising its right under this Section 3(d) and
specifying the number of shares to be purchased (which number may be all or a
portion of the shares then subject to the Option), and (ii) Purchaser shall have
60 calendar days to respond to such Notice either electing to (x) exercise the
Option to the extent set forth in such Notice or (y) forfeit the Option (but
only in respect of the number of shares set forth in such Notice). If Purchaser
fails to respond within such 60 calendar day period, Purchaser shall be deemed
to have forfeited the Option (but only in respect of the number of shares set
forth in such Notice).
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4. Payment and Delivery of Certificates. (a) At each Closing, Purchaser shall
pay to the Company the aggregate Exercise Price for the Option Shares purchased
at such Closing pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated not later than one business
day prior to the Closing Date for such Closing by the Company.
(b) At such Closing, simultaneously with the delivery of the aggregate
Exercise Price as provided in Section 4(a) hereof, the Company shall deliver to
Purchaser a certificate or certificates representing the number of Option Shares
then being purchased by Purchaser, registered in the name of Purchaser or as
designated in writing by Purchaser, which Option Shares shall be fully paid and
nonassessable and free and clear of all liens, claims, charges and encumbrances
of any kind whatsoever.
(c) If at the time of issuance of any Option Shares pursuant to any
exercise of the Option, the Company shall have issued any share purchase rights
or similar securities ("Rights") to holders of any class of the Common Stock,
then each such Option Share shall also represent Rights with terms substantially
the same as and at least as favorable to Purchaser as those issued to other
holders of the Common Stock.
(d) Certificates for Option Shares delivered at any Closing hereunder shall
be endorsed with a restrictive legend, which shall read substantially as
follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 or the securities laws of
any state and may not be sold or otherwise disposed of except pursuant
to an effective registration statement under such act and applicable
state securities laws or an applicable exemption to the registration
requirements of such act or such laws."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend in connection with a transfer
or sale if (i) the Company has been furnished with an opinion of counsel,
reasonably satisfactory to counsel for the Company, that such transfer or sale
will not violate the Securities Act or applicable securities laws of any state
or (ii) such transfer or sale shall have been registered and qualified pursuant
to the Securities Act and any applicable state securities laws.
5. Representations and Warranties; Covenants. (a) The Company hereby represents
and warrants to Purchaser that: (i) the Company has full corporate right, power
and authority to execute and deliver this Second Option Agreement and to perform
all of its obligations hereunder; (ii) such execution, delivery and performance
have been duly authorized by the Board of Directors of the Company, and no other
corporate proceedings are necessary therefor; (iii) this Second Option Agreement
has been duly and validly executed and delivered by the Company and represents a
valid and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms; and (iv) the Company has taken all
necessary corporate action to authorize and reserve and permit it to issue, and
at all times from the date hereof through the date of the exercise in full or
the expiration or termination of the Option, shall have reserved for issuance
upon exercise of the Option, 1,000,000 shares of Common Stock (subject to
adjustment as provided herein), all of which, upon issuance in accordance with
the terms of this Second Option Agreement, shall be duly authorized, validly
issued, fully paid and nonassessable, shall be delivered free and clear of all
claims, liens, encumbrances and security interests and not subject to any
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<PAGE>
Page 56 of 87 Pages
preemptive rights of any stockholder of the Company, and will be eligible for
NASDAQ NMS trading without further consents or actions (other than registration
thereof pursuant to the Registration Rights Agreement). Notwithstanding anything
contained in the Purchase Agreement to the contrary, the representations,
warranties and covenants contained in this Section 5 shall survive for three
years from the date hereof.
(b) Purchaser hereby represents and warrants to the Company that (i)
Purchaser has full corporate right, power and authority to execute and deliver
this Second Option Agreement and to perform all of its obligations hereunder;
(ii) such execution, delivery and performance have been duly authorized by all
requisite corporate action by Purchaser, and no other corporate proceedings are
necessary therefor; (iii) this Second Option Agreement has been duly and validly
executed and delivered by Purchaser and represents a valid and legally binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms; and (iv) any Common Stock acquired by Purchaser upon exercise of the
Option will not be transferred or otherwise disposed of for 180 days from the
date hereof and then only in compliance with the Securities Act.
6. Adjustment upon Changes in Capitalization. (a) In the event of any change in
the Common Stock by reason of stock dividends, stock splits, recapitalizations
or the like, the type and number of shares subject to the Option and the
Exercise Price shall be adjusted appropriately.
(b) If at any time following the date hereof, the Company shall issue
shares of Common Stock (or rights, warrants or other securities convertible into
or exchangeable for shares of Common Stock (collectively "Convertible
Securities")) at a price per share (or having a conversion price per share) less
than the Current Market Price (as defined below) per share of Common Stock as of
the date of issuance of such shares (or, in the case of Convertible Securities,
less than the Current Market Price as of the date of issuance of the Convertible
Securities in respect of which shares of Common Stock were issued), then the
Exercise Price shall be adjusted by multiplying (A) the Exercise Price in effect
on the day immediately prior to such date by (B) a fraction, the numerator of
which shall be the sum of (1) the number of shares of Common Stock outstanding
on such date and (2) the number of shares of Common Stock purchasable at the
then Current Market Price per share with the aggregate consideration receivable
by the Company for the total number of shares of Common Stock so issued (or into
which the Convertible Securities may convert), and the denominator of which
shall be the sum of (x) the number of shares of Common Stock outstanding on such
date and (y) the number of additional shares of Common Stock issued (or into
which the Convertible Securities may convert).
An adjustment made pursuant to this Section 6(b) shall be made on the next
business day following the date on which any such issuance is made and shall be
effective retroactively to the close of business on the date of such issuance.
For purposes of this Section 6(b), the aggregate consideration receivable by the
Company in connection with the issuance of shares of Common Stock or of
Convertible Securities shall be deemed to be equal to the sum of the aggregate
offering price (before deduction of underwriting discounts or commissions and
expenses payable to third parties) of all such Common Stock and Convertible
Securities plus the minimum aggregate amount, if any, payable upon exercise or
conversion of any such Convertible Securities. The issuance or reissuance of any
shares of Common Stock (whether treasury shares or newly issued shares) pursuant
to (i) a dividend or distribution on, or subdivision, combination or
reclassification of, the outstanding shares of Common Stock requiring an
adjustment in the Exercise Price pursuant to Section 6(a), or (ii) any stock
option plan, stock purchase plan or other benefit program of the Company or
executive compensation package approved by the Company's Board of Directors
involving the grant of options to employees or directors of the Company shall
not be deemed to constitute an issuance of Common Stock or Convertible
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Securities by the Company to which this Section 6(b) applies. Upon the
expiration unexercised of any Convertible Securities for which an adjustment has
been made pursuant to this Section 6(b), the adjustments shall forthwith be
reversed to effect such rate of conversion as would have been in effect at the
time of such expiration or termination had such Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued.
"Current Market Price", when used with reference to shares of the Common
Stock or another security on any date, shall mean the average of the daily
closing prices per share of such Common Stock or other security for the 20
preceding trading days. If the Common Stock or such other securities are listed
or admitted to trading on a national securities exchange, the closing price
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Common Stock or such other securities are not listed
or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Common Stock
or such other securities are listed or admitted to trading or, if the Common
Stock or such other securities are not so listed on any national securities
exchange, as reported in the transaction reporting system applicable to
securities designated as a "national market system security" or NASDAQ. If the
Common Stock or such other securities are not publicly held or so listed or
designated, "Current Market Price" shall mean the Fair Market Value (as defined
below) per share of Common Stock or of such other securities as determined in
good faith by the Board of Directors of the Company based on an opinion of an
independent investment banking firm with an established national reputation with
respect to the valuation of securities.
"Fair Market Value" shall mean, as to shares of Common Stock or any other
securities of the Company or any other issuer which are publicly traded, the
Current Market Prices of such shares or securities. The "Fair Market Value" of
any security which is not publicly traded or of any other property shall mean
the fair value thereof as determined by an independent investment banking or
appraisal firm experienced in the valuation of such securities or property
selected in good faith by the Board of Directors of the Company.
(c) In case the Company shall at any time or from time to time after the
date hereof declare, order, pay or make a dividend or other distribution
(including, without limitation, any distribution of stock or other securities or
property or Convertible Securities of the Company or any of its Subsidiaries by
way of dividend or spinoff), on its Common Stock, then, and in each such case,
the Exercise Price shall be adjusted by multiplying (1) the applicable Exercise
Price on the day immediately prior to the record date fixed for the
determination of stockholders entitled to receive such dividend or distribution
by (2) a fraction, the numerator of which shall be the Current Market Price of
the Common Stock less the Fair Market Value of such dividend or distribution
(per share of Common Stock), and the denominator of which shall be such average
Current Market Price of the Common Stock. If any dividend or distribution is
declared or ordered and a Closing Date is before the record date for such
dividend or distribution, then no adjustment in respect thereof shall be made to
the Exercise Price with respect to the Option Shares acquired on such Closing
Date.
(d) For purposes of this Section 6, the number of shares of Common Stock at
any time outstanding shall not include any shares of Common Stock then owned or
held by or for the account of the Company.
- 5 -
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(e) The term "dividend," as used in this Section 6, shall mean a dividend
or other distribution in respect of shares of Common Stock of the Company.
(f) Anything in this Section 6 to the contrary notwithstanding, the Company
shall not be required to give effect to any adjustment in the Exercise Price
unless and until the net effect of one or more adjustments (each of which shall
be carried forward), determined as above provided, shall have resulted in a
change of the Exercise Price by at least one percent, and when the cumulative
net effect of more than one adjustment so determined shall be to change the
Exercise Price by at least one percent, such change in Exercise Price shall
thereupon be given effect.
(g) The certificate of any firm of independent public accountants of
recognized national standing selected by the Board of Directors of the Company
(which may be the firm of independent public accountants regularly employed by
the Company) shall be presumptively correct for any computation made under this
Section 6.
7. Registration Rights. Contemporaneously herewith, Purchaser and the Company
are entering into a Registration Rights Agreement providing for registration of
the Option Shares.
8. Listing. If the Common Stock or any other securities to be acquired upon
exercise of the Option are then listed on any national securities exchange, the
Company, upon the request of Purchaser, will promptly file an application to
list the Option Shares or other securities to be acquired upon exercise of the
Option on all such exchanges and will use its best efforts to obtain approval of
such listings as soon as practicable.
9. Survival. The representations, warranties, covenants and agreements of the
parties hereto shall survive any Closing.
10. Severability. Any term, provision, covenant or restriction contained in this
Second Option Agreement held by a court or other Governmental Authority of
competent jurisdiction to be invalid, void or unenforceable shall be ineffective
to the extent of such invalidity, voidness or unenforceability, but neither the
remaining terms, provisions, covenants or restrictions contained in this Second
Option Agreement nor the validity or enforceability thereof in any other
jurisdiction shall be affected or impaired thereby. Any term, provision,
covenant or restriction contained in this Second Option Agreement that is so
found to be so broad as to be unenforceable shall be interpreted to be as broad
as is enforceable.
11. Entire Agreement. This Second Option Agreement, the First Option Agreement,
the Purchase Agreement (including the documents and the instruments referred to
therein or delivered in connection therewith) and the Registration Rights
Agreement constitute the entire agreement between the parties and supersede all
prior agreements and understandings, agreements or representations by or between
the parties, written and oral, with respect to the subject matter hereof and
thereof.
12. Successors; No Third Party Beneficiaries. The terms and conditions of this
Second Option Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. Nothing in this
Second Option Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations, or liabilities under or by reason of
this Second Option Agreement, except as expressly provided herein.
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13. Notices. All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered in accordance with
Section 8.5 of the Purchase Agreement (which is incorporated herein by
reference).
14. Further Assurances. In the event of any exercise of the Option by Purchaser,
the Company and Purchaser shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
15. Specific Performance. The parties hereto agree that if for any reason
Purchaser or the Company shall have failed to perform its obligations under this
Second Option Agreement, then either party hereto seeking to enforce this Second
Option Agreement against such non-performing party shall be entitled to specific
performance and injunctive and other equitable relief, and the parties hereto
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that either
party hereto may have against the other party hereto for any failure to perform
its obligations under this Second Option Agreement.
16. Governing Law. This Second Option Agreement shall be governed by the laws of
the State of Delaware, without giving effect to the conflict of laws principles
thereof. Each party hereby irrevocably and unconditionally consents to submit to
the exclusive jurisdiction of the courts of the State of Delaware and of the
United States of America located in Wilmington, Delaware, for any Litigation
(and agrees not to commence any Litigation except in any such court). Each party
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any Action in the courts of the State of Delaware or of the United
States of America located in Wilmington, Delaware, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any Action brought in any such court has been brought in an
inconvenient forum.
17. Regulatory Approvals; Section 16(b). If, in connection with the exercise of
the Option under Section 3, prior notification to or approval of any
Governmental Authority is required, then the required notice or application for
approval shall be promptly filed and/or expeditiously processed by the Company
and periods of time that otherwise would run pursuant hereto (if any) shall run
instead from the date on which any such required notification period has expired
or been terminated or such approval has been obtained, and in either event, any
requisite waiting period shall have passed. Periods of time that otherwise would
run pursuant to this Second Option Agreement shall also be extended to the
extent necessary in order to avoid liability under Section 16(b) of the Exchange
Act.
18. Waiver and Amendment. Any provision of this Second Option Agreement may be
waived in writing at any time by the party that is entitled to the benefits of
such provision. This Second Option Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Second
Option Agreement as of the date first written above.
PURCHASER:
M & M NOMINEE L.L.C.
By:/s/ Peter Streinger
-----------------------------------
Name: Peter Streinger
Title: Manager
THE COMPANY:
THE UNIMARK GROUP, INC.
By:/s/ Rafael Vaquero Bazan
------------------------------------
Name: Rafael Vaquero Bazan
Title: President, Chief Executive Officer
and Chief Operating Officer
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Page 61 of 87 Pages
EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of July 17, 1998 (this
"Agreement"), by and between THE UNIMARK GROUP, INC., a Texas corporation (the
"Company"), and M & M Nominee L.L.C., a Delaware limited liability company (the
"Investor").
1. Background. The Company and the Investor have entered into a Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"). In order to
induce the Investor to enter into and consummate the transactions contemplated
by the Purchase Agreement, the Company has agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this
Registration Rights Agreement is a condition to the execution and delivery of,
and Closing under, the Purchase Agreement.
2. Definitions. Capitalized terms used but not defined herein shall have
the respective meanings given to them in the Purchase Agreement. As used herein,
unless the context otherwise requires, the following terms have the following
respective meanings:
"Option Shares" means the shares of Common Stock or other equity
securities issued or issuable upon exercise of either the First Option or the
Second Option.
"Incidental Registration" is defined in Section 3.2.
"Participating Holders" means the holders of Registrable Securities
participating in the particular registration.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with Section 3, including, without limitation, all
registration, filing and applicable fees of the Commission, stock exchange or
NASD registration and filing fees and all listing fees and fees with respect to
the inclusion of securities in NASDAQ (as defined in Section 3.3(j)), all fees
and expenses of complying with state securities or blue sky laws (including fees
and disbursements of counsel to the underwriters or the Participating Holders in
connection with "blue sky" qualification of the Registrable Securities and
<PAGE>
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determination of their eligibility for investment under the laws of the various
jurisdictions), all word processing, duplicating and printing expenses, all
messenger and delivery expenses, the fees and disbursements of counsel for the
Company and of its independent public accountants including the expenses of
"cold comfort" letters required by or incident to such registration, all fees
and disbursements of underwriters customarily paid by issuers or sellers of
securities, all transfer taxes, and the fees and expenses of one counsel to the
Participating Holders (selected by the Requisite Percentage of Participating
Holders); provided, however, that Registration Expenses shall exclude and the
Participating Holders shall pay underwriters' fees and underwriting discounts
and commissions in respect of the Registrable Securities being registered.
"Registrable Securities" means (i) any Primary Shares, (ii) any Option
Shares and (iii) any shares purchased from certain executives of the Company
pursuant to the Shareholders Agreement, dated as of the date hereof, by and
among the Investor, Rafael Vaquero Bazan and Fernando Camacho Casas. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities (a) when a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (b) when such securities shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer under
the Securities Act shall have been delivered by the Company and subsequent
public distribution of them shall not require registration of them under the
Securities Act, (c) when such securities are sold pursuant to Rule 144 (or
similar rule adopted by the Commission) under the Securities Act, or (d) when
such securities cease to be outstanding.
"Requested Registration" is defined in Section 3.1(a).
"Requisite Percentage of Outstanding Holders" mean the holders of
Registrable Securities who hold 33% or more of the total Option Shares and
Primary Shares (counted as a single group) that are then outstanding (assuming
that the then exercisable portion of the First Option (if any) and the then
exercisable portion of the Second Option (if any) had been exercised for Option
Shares).
"Requisite Percentage of Participating Holders" means Participating
Holders of Registrable Securities who hold a majority of the total Option Shares
and Primary Shares (counted as a single group) that are then be held by all
Participating Holders (assuming that the then exercisable portion of the First
Option (if any) and the then exercisable portion of the Second Option (if any)
had been exercised for Option Shares).
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3. Registration Under Securities Act, etc.
3.1 Requested Registrations.
(a) Request for Registration. Subject to the limitations imposed
by Sections 3.1(c), at any time and from time to time, one or more holders of
Registrable Securities representing the Requisite Percentage of Outstanding
Holders shall have the right to require the Company to file a registration
statement under the Securities Act covering all or any part of their respective
Registrable Securities, by delivering a written request therefor to the Company
specifying the number and amount of Registrable Securities and the intended
method of distribution thereof. Any such request pursuant to this Section 3.1(a)
is referred to herein as a "Requested Registration." The Company shall give
prompt written notice of each Requested Registration to all other holders of
record of Registrable Securities, and thereupon the Company shall use its best
efforts to effect the registration under the Securities Act so as to permit
promptly the sale, in accordance with the intended method of distribution, of
the Registrable Securities which the Company has been so requested to register
in the Requested Registration and all other Registrable Securities which the
Company has been requested to register by the holders thereof by written request
given to the Company within 30 days after the giving of such written notice by
the Company.
(b) Registration of Other Securities. Whenever the Company shall
effect a registration pursuant to this Section 3.1 in connection with an
underwritten offering by one or more Participating Holders of Registrable
Securities, no securities other than Registrable Securities shall be included
among the securities covered by such registration unless (i) Participating
Holders representing the Requisite Percentage of Participating Holders shall
have consented in writing to the inclusion therein of such other securities and
(ii) such inclusion shall be permitted only to the extent that it is pursuant to
and subject to the terms of the underwriting agreement or arrangements and the
inclusion of such securities will not have a material adverse effect on the
offering (including, without limitation, on the pricing of the offering).
(c) Limitations on Requested Registrations; Expenses. The rights
of holders of Registrable Securities to request Requested Registrations pursuant
to Section 3.1(a) are subject to the following limitations: (i) the Company
shall not be obligated to effect a Requested Registration having an aggregate
anticipated offering price of less than U.S.$2,000,000 unless such offering
shall cover all remaining Registrable Securities; (ii) the offering of
Registrable Securities requested to be registered pursuant to Section 3.1(a)
shall be pursuant to a firm commitment underwritten offering; (iii) the Company
shall not be obligated to effect a Requested Registration within six months
after the effective date of any other registration of securities (other than
pursuant to a registration on Form S-8 or any successor or similar form which is
then in effect); and (iv) the Company will pay all Registration Expenses only in
connection with the first three Requested Registrations of Registrable
Securities pursuant to this Section 3.1 that have become effective under the
Securities Act.
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(d) Registration Statement Form. Registrations under this Section
3.1 shall be on Form S-3 or any successor form, if permitted, or such
appropriate registration form of the Commission as shall be selected by the
Company and as shall be reasonably acceptable to the Requisite Percentage of
Participating Holders. The Company agrees to include in any such registration
statement all information which, in the opinion of counsel to the Participating
Holders and counsel to the Company, is required to be included.
(e) Effective Registration Statement. A registration requested
pursuant to this Section 3.1 shall not be deemed to have been effected
(including for purposes of paragraph (c) of this Section 3.1) (i) unless a
registration statement with respect thereto has become effective and has been
kept continuously effective for a period of at least 90 days (or such shorter
period which shall terminate when all the Registrable Securities covered by such
registration statement have been sold pursuant thereto), (ii) if, after it has
become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other Governmental
Authority or court for any reason not attributable to the Participating Holders
and has not thereafter become effective, or (iii) if the conditions to closing
specified in the underwriting agreement, if any, entered into in connection with
such registration are not satisfied or waived, other than by reason of a failure
on the part of the Participating Holders.
(f) Selection of Underwriters. The managing underwriter or
underwriters of each underwritten offering of the Registrable Securities so to
be registered shall be selected by the Requisite Percentage of Participating
Holders (and shall be reasonably acceptable to the Company).
(g) Cutbacks in Requested Registration. If the managing
underwriter of any underwritten offering shall advise the Participating Holders
in such offering that the Registrable Securities covered by the registration
statement cannot be sold in such offering within a price range acceptable to the
Requisite Percentage of Participating Holders, then the Participating Holders
representing the Requisite Percentage of Participating Holders shall have the
right to notify the Company in writing that they have determined that the
registration statement be abandoned or withdrawn, in which event the Company
shall abandon or withdraw such registration statement (and, at the option of the
Requisite Percentage of Participating Holders, the Participating Holders shall
either (i) reimburse the Company for its expenses incurred in connection with
such abandoned or withdrawn registration statement or (ii) allow the Company to
count such abandoned or withdrawn registration statement as one of the three
Requested Registrations under Section 3.1(c)(iv)). If the managing underwriter
of any underwritten offering shall advise the Company in writing (with a copy to
each Participating Holder) that, in its opinion, the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering within a price range acceptable to the Requisite
Percentage of Participating Holders, the Company will include in such
registration, to the extent of the number which the Company is so advised can be
sold in such offering, Registrable Securities requested to be included in such
registration, pro rata among the Participating Holders requesting such
registration in accordance with the number of Primary Shares and Option Shares
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held by (or issuable to) each such Participating Holder so requested to be
registered, and any securities of the Company included in such registration
pursuant to Section 3.1(b) shall be reduced proportionately.
(h) Postponement. The Company shall be entitled once in any
six-month period to postpone for a reasonable period of time (but not exceeding
90 days) the filing of any registration statement required to be prepared and
filed by it pursuant to this Section 3.1 if the Company determines, in its
reasonable judgment, that such registration and offering would interfere with
any financing, corporate reorganization or other material transaction or
development involving the Company or any subsidiary or would require premature
disclosure thereof, and promptly gives the holders of Registrable Securities
requesting registration thereof pursuant to this Section 3.1 written notice of
such determination, containing a statement of the reasons for such postponement
and an approximation of the anticipated delay. If the Company shall so postpone
the filing of a registration statement, the Participating Holders representing
the Requisite Percentage of Participating Holders shall have the right to
withdraw the request for registration by giving written notice to the Company
within 20 days after receipt of the notice of postponement and, in the event of
such withdrawal, such request shall not be counted toward the number of
Requested Registrations (including for purposes of paragraph (c) of this Section
3.1).
3.2 Incidental Registration.
(a) Incidental Registration. If, at any time, the Company
proposes or is required to register any of its equity securities or securities
convertible into or exchangeable for equity securities under the Securities Act
(other than pursuant to registrations on such form or similar form(s) solely for
registration of securities in connection with an employee benefit plan or
dividend reinvestment plan) (an "Incidental Registration"), the Company will
give prompt written notice to all holders of record of Registrable Securities of
its intention to so register its securities and of such holders' rights under
this Section 3.2. Upon the written request of any holder of Registrable
Securities made within 20 days following the receipt of any such written notice
(which request shall specify the maximum number of Registrable Securities
intended to be disposed of by such holder and the intended method of
distribution thereof), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the holders thereof together with
any other securities the Company is obligated to register pursuant to incidental
registration rights of other security holders of the Company. No registration
effected under this Section 3.2 shall relieve the Company of its obligation to
effect any Requested Registration under Section 3.1.
(b) Abandonment or Delay. If, at any time after the Company has
giving written notice of its intention to register any securities and prior to
the effective date of the registration statement filed in connection with such
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registration, the Company shall determine not to register or to delay
registration of such securities, the Company may, at its election, give written
notice of such determination and its reasons therefor to all holders of record
of Registrable Securities and (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from any obligation of
the Company to pay the Registration Expenses in connection therewith) , without
prejudice, however, to the rights of any holder or holders of Registrable
Securities entitled to do so to request that such registration be effected as a
registration under Section 3.1, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities
for the same period as the delay in registering such other securities.
(c) Holder's Right to Withdraw. Each holder of Registrable
Securities shall have the right to withdraw its request for inclusion of its
Registrable Securities in any registration statement pursuant to this Section
3.2 at any time by giving written notice to the Company of its request to
withdraw.
(d) Unlimited Number of Registrations; Expenses. There is no
limitation on the number of Incidental Registrations which the Company is
obligated to effect pursuant to this Section 3.2. The Company will pay all
Registration Expenses in connection with any registration of Registrable
Securities requested pursuant to this Section 3.2.
(e) Underwriters' Cutback in Incidental Registrations. If the
managing underwriter of any underwritten offering shall inform the Company by
letter of its belief that the number of Registrable Securities requested to be
included in such registration would materially adversely affect such offering,
then the Company will include in such registration, first, the securities
proposed by the Company to be sold for its own account and, second, the
Registrable Securities and all other securities of the Company to be included in
such registration to the extent of the number and type which the Company is so
advised can be sold in (or during the time of) such offering, pro rata among the
Participating Holders and such other holders requesting such registration in
accordance with the number of Primary Shares and Option Shares held by (or
issuable to) each Participating Holder and each such other holder so requested
to be registered.
(f) Plan of Distribution. Any participation by holders of
Registrable Securities in a registration by the Company shall be in accordance
with the Company's plan of distribution.
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3.3 Registration Procedures. If and whenever the Company is required
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 3.1 or 3.2 hereof, the Company
will as expeditiously as possible:
(a) prepare and file with the Commission as soon as practicable
the requisite registration statement to effect such registration (and
shall include all financial statements required by the Commission to
be filed therewith) and thereafter use its best efforts to cause such
registration statement to become effective; provided, however, that
before filing such registration statement (including all exhibits) or
any amendment or supplement thereto or comparable statements under
securities or blue sky laws of any jurisdiction, the Company shall
furnish such documents to the Participating Holders, their counsel,
and each underwriter, if any, participating in the offering of the
Registrable Securities and its counsel; and provided, further,
however, that the Company may discontinue any registration of its
securities which are not Registrable Securities at any time prior to
the effective date of the registration statement relating thereto;
(b) notify each Participating Holder of the Commission's requests
for amending or supplementing the registration statement and the
prospectus, and prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities covered by such registration statement for such period as
shall be required for the disposition of all of such Registrable
Securities, provided, that such period need not exceed 90 days;
(c) furnish, without charge, to each Participating Holder such
number of conformed copies of such registration statement and of each
such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424
under the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, as such Participating Holder
may reasonably request;
(d) use its best efforts (i) to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such securities or blue sky laws of such
States of the United States of America where an exemption is not
available and as the Participating Holders shall reasonably request,
(ii) to keep such registration or qualification in effect for so long
as such registration statement remains in effect, and (iii) to take
any other action which may be reasonably necessary or advisable to
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enable such Participating Holders to consummate the disposition in
such jurisdictions of the securities to be sold by such Participating
Holders, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it would not but for the requirements of
this subsection (d) be obligated to be so qualified or to consent to
general service of process in any such jurisdiction;
(e) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other federal or state or foreign governmental
agencies or authorities as may be necessary in the opinion of counsel
to the Company and counsel to the Participating Holders to consummate
the disposition of such Registrable Securities;
(f) furnish to each Participating Holder and each underwriter, if
any, participating in the offering of the securities covered by such
registration statement, a signed counterpart of
(i) an opinion of outside counsel (or inside counsel if
satisfactory to each underwriter) for the Company, and
(ii) a "comfort" letter signed by the independent public
accountants who have certified the Company's financial statements
included or incorporated by reference in such registration
statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and,
in the case of the accountants' comfort letter, with respect to
events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in
accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities (and dated the dates
such opinions and comfort letters are customarily dated) and, in
the case of the legal opinion, such other legal matters, and, in
the case of the accountants' comfort letter, such other financial
matters, as the Requisite Percentage of Participating Holders, or
the underwriters, may reasonably request;
(g) promptly notify each Participating Holder and each managing
underwriter, if any, participating in the offering of the securities
covered by such registration statement (i) when such registration
statement, any pre-effective amendment, the prospectus or any
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prospectus supplement related thereto or post- effective amendment to
such registration statement has been filed, and, with respect to such
registration statement or any post-effective amendment, when the same
has become effective; (ii) of any request by the Commission for
amendments or supplements to such registration statement or the
prospectus related thereto or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation of any
proceedings for that purpose; (iv) of the receipt by the Company of
any notification with respect to the suspension of the qualification
of any of the Registrable Securities for sale under the securities or
blue sky laws of any jurisdiction or the initiation of any proceeding
for such purpose; (v) at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, in the light of the circumstances
under which they were made, and in the case of this clause (v), at the
request of any Participating Holder, promptly prepare and furnish to
it and each managing underwriter, if any, participating in the
offering of the Registrable Securities a reasonable number of copies
of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made; and (vi) at
any time when the representations and warranties of the Company
contemplated by Section 3.4(a) hereof cease to be true and correct;
(h) otherwise comply with all applicable rules and regulations of
the Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of
at least twelve months beginning with the first full calendar month
after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 promulgated thereunder, and promptly
furnish to each such Participating Holder a copy of any amendment or
supplement to such registration statement or prospectus;
(i) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all
Registrable Securities covered by such registration statement from and
after a date not later than the effective date of such registration;
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(j) use its best efforts to cause all Registrable Securities
covered by such registration statement to be listed on a national
securities exchange or to secure designation of all such Registrable
Securities as a National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") "national market system
security" within the meaning of Rule 11Aa2-1 of the Commission, in
each case to the extent the shares of the Company's Common Stock are
so listed or designated;
(k) deliver promptly to counsel to the Participating Holders and
each underwriter, if any, participating in the offering of the
Registrable Securities, copies of all correspondence between the
Commission and the Company, its counsel or auditors and all memoranda
relating to discussions with the Commission or its staff with respect
to such registration statement;
(1) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the registration statement;
(m) provide a CUSIP number for all Registrable Securities, no
later than the effective date of the registration statement; and
(n) make available its employees and personnel and otherwise
provide reasonable assistance to the underwriters (taking into account
the needs of the Company's businesses) in their marketing of
Registrable Securities.
The Company may require each Participating Holder as to the Registrable
Securities of whom any registration is being effected to furnish the Company
such information regarding such holder and the distribution of such securities
as the Company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees that upon receipt of any
notice from the Company of the happening of any event of the kind described in
subsection (g) (iii) or (v) of this Section 3.3, the Participating Holder will
forthwith discontinue such holder's disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable Securities
until, in the case of subsection (g)(iii) of this Section 3.3, such stop order
is removed or proceedings therefor terminated, and, in the case of subsection
(g)(v) of this Section 3.3, such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subsection (g)(v) of this
Section 3.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
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such holder's possession, of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
3.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by Participating Holders pursuant to
a registration requested under Section 3.1, the Company will use its best
efforts to enter into an underwriting agreement with such underwriters for such
offering, such agreement to be reasonably satisfactory in substance and form to
the Company, each such holder and the underwriters and to contain such
representations and warranties by the Company and such other terms as are
generally prevailing in agreements of that type, including, without limitation,
indemnities to the effect and to the extent provided in Section 3.6 hereof. The
Participating Holders will cooperate with the Company in the negotiation of the
underwriting agreement and will give consideration to the reasonable suggestions
of the Company regarding the form thereof. The Participating Holders shall be
parties to such underwriting agreement and may, at their option, require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of the Participating Holders and that any or all
of the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of the
Participating Holders. No Participating Holder shall be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
holder, such holder's ownership of and title to the Registrable Securities, such
holder's intended method of distribution and any other representations required
by law, and any liability of the Participating Holder to any underwriter or
other person under such underwriting agreement shall be limited to liability
arising from misstatements in or omissions from its representations and
warranties and shall be limited to an amount equal to the net proceeds that the
Participating Holder derives from such registration.
(b) Incidental Underwritten Offerings. If the Company proposes to
register any of its securities under the Securities Act as contemplated by
Section 3.2 hereof and such securities are to be distributed by or through one
or more underwriters, the Company will, if requested by any Participating
Holder, use its best efforts to arrange for such underwriters to include all the
Registrable Securities to be offered and sold by such Participating Holder among
the securities of the Company to be distributed by such underwriters. The
Participating Holders shall be parties to the underwriting agreement between the
Company and such underwriters and may, at their option, require that any or all
of the representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such Participating Holders and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
Participating Holders. No Participating Holder shall be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
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holder, such holder's ownership of and title to the Registrable Securities, such
holder's intended method of distribution and any other representations required
by law, and any liability of the Participating Holder to any underwriter or
other person under such underwriting agreement shall be limited to liability
arising from misstatements in or omissions from its representations and
warranties and shall be limited to an amount equal to the net proceeds that the
Participating Holder derives from such registration.
3.5 Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the Participating Holders,
their underwriters, if any, and their respective counsel and accountants the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and, to the
extent practicable, each amendment thereof or supplement thereto, and give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and employees and the independent
public accountants who have certified its financial statements as shall be
necessary, in the opinion of such holders' and such underwriters' respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
3.6 Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act, the
Company will, and hereby does, indemnify and hold harmless, to the fullest
extent permitting by law, each Participating Holder, its directors, officers,
partners, agents and affiliates or general and limited partners (and the
directors, officers, employees, stockholders and affiliates thereof), and each
other Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such Participating Holder
or any such underwriter within the meaning of the Securities Act, against any
losses, claims, damages, or liabilities, joint or several (or actions or
proceedings, whether commenced or threatened) to which such Participating Holder
or any such director, officer, partner, agent or affiliate or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities, joint or several (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, together with the documents incorporated by reference
therein, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances in which they were made not misleading, and the
Company will reimburse such Participating Holder and each such director,
officer, partner, agent or affiliate, or general or limited partner, underwriter
and controlling Person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
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liability, action or proceeding; provided, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by or on behalf of such Participating Holder or
underwriter, as the case may be, specifically stating that it is for use in the
preparation thereof; and provided, further, that the Company shall not be liable
to any Person who participates as an underwriter in the offering or sale of
Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or give
a copy of the final prospectus, as the same may be then supplemented or amended,
to the Person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale
of Registrable Securities to such Person if such statement or omission was
corrected in such final prospectus. Such indemnity shall remain in full force
regardless of any investigation made by or on behalf of such Participating
Holder or any such director, officer, partner, agent or affiliate or controlling
Person and shall survive the transfer of such securities by such Participating
Holder.
(b) Indemnification by the Participating Holders. As a condition
to including any Registrable Securities in any registration statement, the
Company shall have received an undertaking satisfactory to it from the
Participating Holders to indemnify and hold harmless (in the same manner and to
the same extent as set forth in subsection (a) of this Section 3.6) the Company,
each director and officer of the Company, and each other Person, if any, who
controls the Company within the meaning of the Securities Act, with respect to
any statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, but only
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such Participating Holder
specifically stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement; provided, however, that the liability of such
indemnifying party under this Section 3.6(b) shall be limited to the amount of
net proceeds received by such indemnifying party in the offering giving rise to
such liability. Such indemnity shall remain in full force and effect, regardless
of any investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of such securities
by the Participating Holder.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subsections of this Section 3.6,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action or proceeding; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
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indemnifying party of its obligations under the preceding subsections of this
Section 3.6, except to the extent that the indemnifying party is materially
prejudiced by such failure to give notice, and shall not relieve the
indemnifying party from any liability which it may have to the indemnified party
otherwise than under this Section 3.6. In case any such action or proceeding is
brought against an indemnified party, the indemnifying party shall be entitled
to participate therein and, unless in the opinion of outside counsel to the
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
or proceeding include both the indemnified party and the indemnifying party and
if in the opinion of outside counsel to the indemnified party there may be legal
defenses available to such indemnified party and/or other indemnified parties
which are different from or in addition to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to defend such action or proceeding on behalf of such indemnified party
or parties, provided, further, that the indemnifying party shall be obligated to
pay for only one counsel for all indemnified parties. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified party for any legal
expenses subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation (unless the first proviso
in the preceding sentence shall be applicable). No indemnifying party shall be
liable for any settlement of any action or proceeding effected without its
written consent. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for in this
Section 3.6 shall for any reason be held by a court to be unavailable to an
indemnified party under subsection (a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under subsection (a) or (b) hereof, the indemnified
party and the indemnifying party under subsection (a) or (b) hereof shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the relative fault of
the Company and the Participating Holders which resulted in such loss, claim,
damage or liability, or action in respect thereof, with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect not only the relative fault but also the relative benefits received by
the Company and the Participating Holders from the offering of the securities
covered by such registration statement as well as any other relevant equitable
considerations. The parties hereto agree that it would not be just and equitable
if contributions pursuant to this Section 3.6(d) were to be determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
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guilty of such fraudulent misrepresentation. The Participating Holders'
obligations to contribute as provided in this subsection (d) are several and not
joint in proportion to the relative value of their respective Registrable
Securities covered by such registration statement. In addition, no Person shall
be obligated to contribute hereunder any amounts in payment for any settlement
of any action or claim effected without such Person's consent, which consent
shall not be unreasonably withheld. Notwithstanding anything in this subsection
(d) to the contrary, no indemnifying party (other than the Company) shall be
required to contribute any amount in excess of the net proceeds received by such
party from the sale of the Registrable Securities in the offering to which the
losses, claims, damages or liabilities of the indemnified parties relate.
(e) Other Indemnification. Indemnification and contribution
similar to that specified in the preceding subsections of this Section 3.6 (with
appropriate modifications) shall be given by the Company and each Participating
Holder with respect to any required registration or other qualification of
securities under any federal or state law or regulation of any governmental
authority other than the Securities Act. The indemnification agreements
contained in this Section 3.6 shall be in addition to any other rights to
indemnification or contribution which any indemnified party may have pursuant to
law or contract and shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any indemnified party
and shall survive the transfer of any of the Registrable Securities by any of
the Participating Holders.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 3.6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
3.7 Certain Rights of the Investor If Named in a Registration
Statement. If any statement contained in a registration statement under the
Securities Act or in any filing under the state securities laws of any
jurisdiction refers to the Investor by name or otherwise as the holder of any
securities of the Company, then the Investor shall have the right to require (i)
the insertion therein of language, in form and substance satisfactory to the
Investor, to the effect that the holding by the Investor of such securities does
not necessarily make the Investor a "controlling person" of the Company within
the meaning of the Securities Act and is not to be construed as a recommendation
by the Investor of the investment quality of the Company's debt or equity
securities covered thereby and that such holding does not imply that the
Investor will assist in meeting any future financial requirements of the Company
or (ii) in the event that such reference to the Investor by name or otherwise is
not, in the reasonable judgment of the Investor as advised by its counsel,
required by the Securities Act or any of the rules and regulations promulgated
thereunder, or any state securities laws of any jurisdiction, the deletion of
the reference to such Investor.
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3.8 Unlegended Certificates. In connection with the offering of any
Registrable Securities registered pursuant to this Article 3, the Company shall
(i) facilitate the timely preparation and delivery to Participating Holders and
the underwriters, if any, participating in such offering, of unlegended
certificates representing ownership of such Registrable Securities being sold in
such denominations and registered in such names as requested by such
Participating Holders or such underwriters and (ii) instruct any transfer agent
and registrar of such Registrable Securities to release any stop transfer orders
with respect to any such Registrable Securities.
3.9 Limitation on Sale or Distribution of Other Securities. The
Company hereby agrees that, if it shall previously have received a request for
registration pursuant to Section 3.1 or 3.2 hereof, and if such previous
registration shall not have been withdrawn or abandoned, (i) the Company shall
not effect any public or private offer, sale or other distribution of its
securities or effect any registration of any of its equity securities under the
Securities Act (subject to the provisions of Section 3.2 hereof) (other than a
registration on Form S-8 or any successor or similar form which is then in
effect), whether or not for sale for its own account, until a period of 90 days
(or such shorter period as the Requisite Majority of Participating Holders shall
agree) shall have elapsed from the effective date of such previous registration
(and the Company shall so provide in any registration rights agreements
hereafter entered into with respect to any of its securities); and (ii) the
Company shall use its best efforts to cause each holder of its equity securities
purchased from the Company at any time after the date of this Agreement other
than in a public offering to agree not to effect any public sale or distribution
of any such securities during such period, including a sale pursuant to Rule 144
under the Securities Act.
3.10 No Required Sale. Nothing in this Agreement shall be deemed to
create an independent obligation on the part of any Participating Holder to sell
any Registrable Securities pursuant to any effective registration statement.
4. Rule 144. The Company shall take all actions reasonably necessary to
enable holders of Registrable Securities to sell such securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144, or (b) any similar rule or regulation hereafter
adopted by the Commission including, without limiting the generality of the
foregoing, filing on a timely basis all reports required to be filed by the
Exchange Act. Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement as to whether it has
complied with such requirements.
5. Amendments and Waivers. This Agreement may be amended with the consent
of (i) the Company and (ii) the holders of at least 51% of the outstanding
Primary Shares and Option Shares, as a group (assuming that the exercisable
portion (if any) of the First Option and the exercisable portion (if any) of the
Second Option are converted into Option Shares but excluding any Primary Shares
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or Option Shares that are no longer Registerable Securities). The Company may
take any action herein prohibited, or omit to perform any act herein required to
be performed by it, in each case only if the Company shall have obtained the
written consent to such action or omission to act, of holders of at least 51% of
the outstanding Primary Shares and Option Shares, as a group (assuming that the
exercisable portion (if any) of the First Option and the exercisable portion (if
any) of the Second Option are converted into Option Shares but excluding any
Primary Shares or Option Shares that are no longer Registerable Securities).
Each holder of any Registrable Securities at the time or thereafter outstanding
shall be bound by any consent authorized by this Section 5, whether or not such
Registrable Securities shall have been marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company (accompanied by a written acknowledgment of, and consent to, such
election by such nominee), be treated as the holder of such Registrable
Securities for purposes of any request or other action by any holder or holders
of Registrable Securities pursuant to this Agreement or any determination of any
number or percentage of shares of Registrable Securities held by any holder or
holders of Registrable Securities contemplated by this Agreement. If the
beneficial owner of any Registrable Securities so elects to be treated as the
holder of such Registrable Securities, the Company may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of such
Registrable Securities.
7. Notices. All communications provided for hereunder shall be personally
delivered or sent by telecopier (and confirmed by telephone) or by a reputable
overnight courier, and shall be addressed as follows:
(a) if to the Investor, addressed to it in the manner set forth in the
Purchase Agreement, or at such other address as it shall have furnished to the
Company in writing;
(b) if to any other holder of Registrable Securities, at the address
that such holder shall have furnished to the Company in writing, or, until any
such other holder so furnishes to the Company an address, then to and at the
address of the last holder of such Registrable Securities who has furnished an
address to the Company; or
(c) if to the Company, addressed to it in the manner set forth in the
Purchase Agreement, or at such other address as the Company shall have furnished
to each holder of Registrable Securities at the time outstanding.
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8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by the
Company. This Agreement and/or the registration and other rights contained
herein (including these assignment rights) may be assigned by the Investor to
any one or more transferees or distributees of all or part of such Investor's
Registrable Securities. A holder of Registrable Securities shall be permitted,
in connection with a transfer or disposition of Registrable Securities, to
impose conditions or constraints on the ability of the transferee, as a holder
of Registrable Securities, to request a registration pursuant to Section 3.1 and
shall provide the Company with copies of such conditions or constraints and the
identity of such transferees. Notwithstanding the foregoing, this Agreement
and/or the registration and other rights contained herein may not be assigned to
a transferee or distributee who, immediately following such transfer or
distribution, owns less than one percent of the Company's outstanding Common
Stock.
9. Remedies. Each holder of Registrable Securities, in addition to being
entitled to exercise all rights provided herein or granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate. In any
action or proceeding brought to enforce any provision of this Agreement
(including the indemnification provisions thereof), the successful party shall
be entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
10. No Inconsistent Agreements. The Company will not, on or after the date
of this Agreement, enter into any agreement with respect to its securities which
is inconsistent with the rights granted to the holders of Registrable Securities
in this Agreement or otherwise conflicts with the provisions hereof. The Company
has not previously entered into any agreement with respect to its securities
granting any registration rights to any Person other than the registration
rights granted pursuant to this Agreement. The rights granted to the holders of
Registrable Securities hereunder do not in any way conflict with and are not
inconsistent with any other agreements to which the Company is a party or by
which it is bound. The Company further agrees that if any other registration
rights agreement entered into after the date of this Agreement with respect to
any of its securities contains terms which are more favorable to, or less
restrictive on, the other party thereto than the terms and conditions contained
in this Agreement are (insofar as they are applicable) to the Investor, then the
terms and conditions of this Agreement shall immediately be deemed to have been
amended without further action by the Company or any of the holders of
Registrable Securities so that such holders shall be entitled to the benefit of
any such more favorable or less restrictive terms or conditions.
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11. Descriptive Headings. The descriptive headings of the several sections
and paragraphs of this Agreement are inserted for reference only and shall not
limit or otherwise affect the meaning hereof.
12. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the laws of the State of Delaware, without
regard to the conflicts of laws principles thereof. Each of the parties hereto
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of Delaware and the United States of
America located in Wilmington, Delaware for any action or proceeding arising out
of or relating to this Agreement and the transactions contemplated hereby (and
agrees not to commence any action or proceeding relating thereto except in such
courts). Each of the parties hereto hereby irrevocably and unconditionally
waives any objection to the laying of venue of any action or proceeding arising
out of this Agreement or the transactions contemplated hereby in the courts of
the State of Delaware or the United States of America located in Wilmington,
Delaware, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum. The Company
hereby waives any right it may have to a trial by jury in respect of any action,
proceeding or litigation directly or indirectly arising out of, under or in
connection with, this Agreement.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their respective officers thereunto duly authorized as of the
date first above written.
THE UNIMARK GROUP, INC.
By:/s/ Rafael Vaquero Bazan
---------------------------------------
Name: Rafael Vaquero Bazan
Title: President, Chief Executive Officer
and Chief Operating Officer
M & M NOMINEE L.L.C.
By:/s/ Peter Streinger
----------------------------------------
Name: Peter Streinger
Title: Manager
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EXHIBIT F
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT (this "Shareholders Agreement") dated as of July 17,
1998, by and among M & M NOMINEE L.L.C., a Delaware limited liability company
("Purchaser"), Rafael Vaquero Bazan and Fernando Camacho Casas (collectively,
the "Executives"). Certain terms used herein are defined in Section 10.
W I T N E S S E T H
WHEREAS, contemporaneously herewith and conditioned hereon, Purchaser and
The UniMark Group, Inc. (the "Company") are entering into a Purchase Agreement
(the "Purchase Agreement") providing for the issuance by the Company and the
purchase by Purchaser of shares of common stock, par value $0.01 per share, of
the Company (the "Common Stock"); and
WHEREAS, the Executives and Purchaser desire to provide for certain rights
and restrictions with regard to their respective ownership of Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties agree as follows:
1. Restriction of Sale. (a) From the date hereof until the 18 month anniversary
hereof, the Executives shall not sell, transfer, assign, exchange, pledge,
encumber or otherwise dispose of (each, a "Transfer") any shares of Common Stock
that they now own or hereafter acquire or grant any option or right to purchase
such shares or any legal or beneficial interest therein, except in accordance
with the provisions of this Shareholders Agreement. Notwithstanding the
foregoing, nothing herein shall prevent either Executive from effecting a
transfer of Common Stock if he is required to do so pursuant to either the
Margin Agreement between Rafael Vaquero Bazan and Everen Securities, Inc. or the
Margin Agreement between Fernando Camacho Casas and First London Securities
Corporation.
(b) Notwithstanding the provisions of Section 1(a), the Executives may
Transfer shares of Common Stock as follows:
(i) each Executive may sell up to 25% of his shares of Common Stock in
a broadly distributed bona fide public offering of Common Stock pursuant to
the Securities Act of 1933, as amended or in regular broker transactions
pursuant to Rule 144A promulgated thereunder;
(ii) each Executive may Transfer his shares of Common Stock with the
prior written consent of Purchaser; and
(iii) each Executive may Transfer his shares to a member of his
immediate family;
provided, however, that in the case of clauses (ii) and (iii) the transferee in
such Transfer agrees in writing to be bound by all the terms of this
Shareholders Agreement (such transferee being herein referred to as the
"Permitted Transferee") applicable to the Executive as if the Permitted
Transferee originally had been a party hereto.
<PAGE>
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(c) From the date hereof until the first anniversary of the date hereof,
Purchaser may not Transfer any shares of Common Stock except to an Affiliate of
Purchaser who agrees to be bound by the provisions hereof as if such Affiliate
transferee were originally a party hereto. At any time before, on or after the
first anniversary hereof, Purchaser shall not transfer any shares of Common
Stock to an Affiliate without causing such Affiliate to agree in writing to be
bound by the provisions hereof as if such Affiliate were originally a party
hereto.
2. Buy - Sell Arrangement. (a) At any time after the first anniversary of the
date hereof, but only for so long as both a Governance Termination Event and a
Principal Termination Event have not occurred, if either group believes, in its
good faith judgment that a bona fide dispute exists between the Groups, then
such Group (the "Initiating Group"), by written notice (the "Notice") to the
other Group (the "Other Group"), may initiate a buy-sell option (the "Option")
subject to the terms and conditions set forth below.
(b) The Initiating Group may initiate the Option only if the holders of at
least 75% of its Specified Shares approve such initiation. All other actions
taken with respect to the Option by a Group shall require the approval of the
holders of at least a majority of its Specified Shares.
(c) The Notice shall specify a price per share (or other security) for all
of the Specified Shares owned by the Other Group. The Other Group shall have the
irrevocable Option to elect either (i) to sell (the "Sale Option") to the
Initiating Group (or its designee) all of the Specified Shares owned by the
Other Group at the date of receipt of the Notice (the "Receipt Date") at the
price per share (or other security) set forth in the Notice or (ii) to purchase
(the "Purchase Option") all of the Specified Shares owned by the Initiating
Group on the Receipt Date at the price per share (or other security) set forth
in the Notice. Such election, which shall be irrevocable, shall be made by
written notice from the Other Group to the Initiating Group within 15 days of
the Receipt Date, provided however if the Other Group fails to duly make an
election in this time period, it shall conclusively be deemed to have elected
the Sale Option.
(d) The closing (the "Closing") of the purchase and sale under the Sale
Option or the Purchase Option shall take place at the offices of the Company on
a date specified in writing on at least 5 business days' notice by the Group
purchasing the Specified Shares (the "Buying Group") to the Group selling its
Specified Shares (the "Selling Group"), but in any event within 45 days of the
Receipt Date (subject to adjournment if and to the extent necessary to obtain
any necessary governmental approvals or to satisfy any legal waiting periods).
The purchase price shall be payable by the Buying Group (or its designee) to the
Selling Group in U.S. dollars in cash or immediately available funds at the
Closing. At the Closing, the Selling Group shall transfer its Specified Shares
to the Buying Group (or its designee) and shall deliver such Specified Shares to
the Buying Group (or its designee), with appropriate instruments of transfer,
free and clear of any lien, claim or encumbrance. Pending the Closing, the
Specified Shares of the Selling Group shall be voted by the Buying Group, and
appropriate proxies shall be promptly delivered to effectuate this agreement.
(e) Each Group shall execute and deliver such instruments and agreements,
and shall take such actions, as may be reasonably requested by the other Group
to carry out the purposes of this Section 2.
3. Agreement Not to Compete. (a) Each of the Executives agrees that for so long
as he is employed by, or a director of, the Company or a subsidiary of the
Company, and for 18 months thereafter, he will not (i) engage in any
"Competitive Activity," as defined below, within the world (including, without
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limitation, anywhere in the United States of America) or (ii) directly or
indirectly solicit for employment, including, without limitation, recommending
to any subsequent employer the solicitation for employment of, any employee of
the Company.
(b) Each of the Executives represents and agrees that he has not and, for
so long as he is employed by or a director of the Company or a subsidiary of the
Company, and for three years thereafter, he will not, appropriate for his own
use, disclose to any third party, or authorize anyone else to disclose, unless
authorized by the Company, any secret, confidential, proprietary or financial
information concerning the operations, future plans, methods of doing business,
or financial condition of the Company or any subsidiary or Affiliate thereof, or
any customer lists, customer files or other information relating to the
customers of the Company, or any Subsidiary or affiliate thereof that he
obtained as a result of which his employment with the Company and which is not
otherwise publicly available (unless it became publicly available in violation
of this Section 3(c)).
(c) Should a court of competent jurisdiction determine that any provision
of this Section 3 is unenforceable, in period of time, geographical area, or
otherwise, the parties hereto agree that the provision shall be interpreted and
enforced to the maximum extent which such court deems enforceable.
4. Severability. Any term, provision, covenant or restriction contained in this
Shareholders Agreement held by a court or other governmental authority of
competent jurisdiction to be invalid, void or unenforceable shall be ineffective
to the extent of such invalidity, voidness or unenforceability, but neither the
remaining terms, provisions, covenants or restrictions contained in this
Shareholders Agreement nor the validity or enforceability thereof in any other
jurisdiction shall be affected or impaired thereby. Any term, provision,
covenant or restriction contained in this Shareholders Agreement that is so
found to be so broad as to be unenforceable shall be interpreted to be as broad
as is enforceable.
5. Successors; No Third Party Beneficiaries. The terms and conditions of this
Shareholders Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. Nothing in this
Shareholders Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations, or liabilities under or by reason of
this Shareholders Agreement, except as expressly provided herein.
6. Notices. All notices or other communications which are required or permitted
hereunder shall be in writing and delivered personally, or sent by telecopier or
reputable overnight courier and delivered to the applicable address as follows:
If to Rafael Vaquero Bazan, to him at:
Industrias Citricolas de Montemorelos, S.A. de C.V.
Carretera General Teran Kilometro 1
Apartado 87
Montemorelos, N.L., Mexico C.P 67500
Telecopier: (826) 3-44-17
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with a copy to:
Jakes Jordaan, Esq.
Jordaan & Pennington
300 Crescent Court, Suite 1605
Dallas, TX 75201
Telecopier: (214) 871-6560
If to Fernando Camacho Casas, to him at:
Operadora Agros, S.A. de C.V.
Rio Neva 17
Col. Cuauthemoc
06500 - Mexico, D.F.
Telecopier: 566-7026
with a copy to:
Jakes Jordaan, Esq.
Jordaan & Pennington
300 Crescent Court, Suite 1605
Dallas, TX 75201
Telecopier: (214) 871-6560
If to Purchaser, to:
M & M Nominee L.L.C.
c/o Soros Fund Management
888 Seventh Avenue
New York, NY 10106
Attention: Chief Financial Officer
Telecopier: (212) 974-8399
with a copy to:
Promecap, S.C.
Bosque de Alisos No. 47A, 3er piso
Colonia Bosques de las Lomas
C.P. 05120 Mexico, D.F.
Mexico
Attention: Federico Chavez Peon
Telecopier: 011-525-259-6269
with a copy to:
Joseph Stern, Esq.
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Telecopier: (214) 859-4000
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7. Specific Performance. The parties hereto agree that if for any reason
Purchaser or the Company shall have failed to perform its obligations under this
Shareholders Agreement, then either party hereto seeking to enforce this
Shareholders Agreement against such non-performing party shall be entitled to
specific performance and injunctive and other equitable relief, and the parties
hereto further agree to waive any requirement for the securing or posting of any
bond in connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that either
party hereto may have against the other party hereto for any failure to perform
its obligations under this Shareholders Agreement.
8. Governing Law. This Shareholders Agreement shall be governed by the laws of
the State of Delaware, without giving effect to the conflict of laws principles
thereof. Each party hereby irrevocably and unconditionally consents to submit to
the exclusive jurisdiction of the courts of the State of Delaware and of the
United States of America located in Wilmington, Delaware, for any Litigation
(and agrees not to commence any Litigation except in any such court). Each party
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any Action in the courts of the State of Delaware or of the United
States of America located in Wilmington, Delaware, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any Action brought in any such court has been brought in an
inconvenient forum.
9. Waiver and Amendment. Any provision of this Shareholders Agreement may be
waived in writing at any time by the party that is entitled to the benefits of
such provision. This Shareholders Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by the Purchaser and the Executives.
10. Defined Terms. As used herein, the following terms shall be defined as
follows:
"Affiliate" shall mean, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with such Person.
"Competitive Activity" shall mean engaging in any of the following
activities: (i) serving as a director of any Competitor; (ii) directly or
indirectly (x) controlling any Competitor or (y) owning any equity or debt
interests in any Competitor (other than equity or debt interests which are
publicly traded and do not exceed 2% of the particular class of interests then
outstanding) (it being understood that, if any such interests in any Competitor
are owned by an investment vehicle or other entity in which the Employee owns an
equity interest, a portion of the interests in such Competitor owned by such
entity shall be attributed to the Employee, such portion determined by applying
the percentage of the equity interest in such entity owned by the Employee to
the interests in such Competitor owned by such entity); (iii) directly or
indirectly soliciting, diverting, taking away, appropriating or otherwise
interfering with any of the customers or suppliers of the Company or any
Affiliate controlled by the Company; or (iv) employment by (including serving as
an officer of), or providing consulting services to, any Competitor.
"Competitor" shall mean any Person that is engaged in a business similar to
any of the businesses currently or hereafter conducted by the Company or its
subsidiaries (but not including businesses the Company enters into after the
Executive is no longer an employee or director of the Company or any of its
subsidiaries).
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<PAGE>
Page 85 of 87 Pages
"Control" (and the correlative term "controlling") shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of any Person, whether through the
ownership of equity interests, by contract or otherwise.
"Governance Termination Event" shall be deemed to have occurred when either
(i) the Purchase Agreement has been amended or Purchaser has waived compliance
therewith, or (ii) Purchaser's ownership of Common Stock has fallen, in either
event such that the Company is not obliged to observe the covenants set forth in
Section 4.1 and 4.10 of the Purchase Agreement.
"Group" shall mean the Purchaser Group or the Principal Group.
"Person" shall mean an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a governmental entity.
"Principal Group" shall mean the Executives and any Permitted Transferees
who own any Principal Shares.
"Principal Shares" shall mean the 927,801 shares of Common Stock owned by
the Executives as of the date hereof, including any securities issued in respect
thereof as a dividend or stock-split or in a reorganization, merger,
reclassification or otherwise, but excluding any shares of Common Stock
Transferred other than to a Permitted Transferee.
A "Principal Termination Event" shall be deemed to have occurred when
(i) the Principal Group Transfers (other than to Permitted Transferees) more
than 50% of the Principal Shares owned by the Principals as of the date hereof
(adjusted for any stock splits, stock dividends, recapitalizations and similar
transactions), or (ii) neither Executive is a senior executive or director of
the Company.
"Purchaser Group" shall mean Purchaser and any Affiliates of Purchaser who
own any Purchaser Shares.
"Purchaser Shares" shall mean the shares of Common Stock acquired pursuant
to the Purchase Agreement or the Option Agreement, dated as of the date hereof,
between Purchaser and the Company, including any securities issued in respect
thereof as a dividend or stock-split or in a reorganization, merger,
reclassification or otherwise, but excluding any shares Transferred by Purchaser
other than to Affiliates of Purchaser who agree to be bound by the terms hereof.
"Specified Shares" shall, at any time, mean with respect to (i) the
Purchaser Group, the Purchaser Shares then owned by the Purchaser Group, and
(ii) the Principal Group, the Principal Shares then owned by the Principal
Group.
"Subsidiary" shall mean, with respect to any Person, any other Person more
than 10% of whose outstanding capital stock or equity interests is owned
directly or indirectly by such Person.
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<PAGE>
Page 86 of 87 Pages
IN WITNESS WHEREOF, each of the parties hereto has executed this
Shareholders Agreement as of the date first written above.
PURCHASER:
M & M NOMINEE L.LC.
By:/s/ Peter Streinger
----------------------------------
Name: Peter Streinger
Title: Manager
THE EXECUTIVES:
/s/ Rafael Vaquero Bazan
-------------------------------------
Rafael Vaquero Bazan
/s/ Fernando Camacho Casas
-------------------------------------
Fernando Camacho Casas
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<PAGE>
Page 87 of 87 Pages
The undersigned partnership agrees to be bound, as if it were an Executive,
by the provisions of the foregoing agreement with respect to the shares of the
Company that it owns.
GARZA JASSO Y ASOCIADOS
By:/s/ Rafael Vaquero Bazan
-----------------------------------
Name: Rafael Vaquero Bazan
Title: General Partner
The undersigned company agrees to be bound, as if it were an Executive, by
the provisions of the foregoing agreement with respect to the shares of the
Company that it owns.
AGROS S.A. DE CV SOCIEDAD DE
INVESATOR DE CAPITALES
By:/s/ Fernando Camacho Casas
-----------------------------------
Name: Fernando Camacho Casas
Title: General Director
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