<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
MARK (ONE)
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 1999
OR
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from
_________________ to ___________________
Commission file number 0-26096
THE UNIMARK GROUP, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-2436543
(State of incorporation or organization) (I.R.S. Employer Identification No.)
UNIMARK HOUSE
124 MCMAKIN ROAD
BARTONVILLE, TEXAS 76226
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 491-2992
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The approximate aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold as
of April 10, 2000 was $6,992,143. The number of shares of common stock
outstanding as of April 10, 2000 was 13,938,326.
Documents Incorporated by Reference - None
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information regarding the executive
officers, directors, and key employees of the Company as of April 10, 2000.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Soren Bjorn (4)(5) 32 President, Chief Executive Officer, Secretary and Director
Charles Horne 55 Chief Financial Officer
Soren Borre 56 Senior Vice President - Sales of UniMark Foods, Inc.
Roman Shumny 43 Senior Vice President - Marketing of UniMark Foods. Inc.
Jakes Jordaan (1)(3)(6) 38 Director (Chairman of the Board)
Jose Martinez Brohez 56 President and Chief Executive Officer of GISE
Rafael Vaquero Bazan (5) 45 Director, President and Chief Executive Officer of ICMOSA
Eduardo Vaquero Bazan 41 Director,Vice President - Finance and Administration of ICMOSA
Fernando Camacho Casas (1)(2)(3)(6) 45 Director
Federico Chavez Peon (1)(2)(3)(4)(5)(6) 33 Director
Luis A. Chico Pardo 60 Director
Jose I. De Abiega Pons 38 Director
Jerry W. Johnson (3) 60 Director
</TABLE>
(1) Members of the Audit Committee
(2) Members of the Stock Option Plan Committee
(3) Members of the Compensation Committee
(4) Members of the Director Option Plan Committee
(5) Members of the Executive Committee
(6) Members of the Nominating Committee
Soren Bjorn has served as a Director of the Company since September
1998 and as the President and Chief Executive Officer of the Company and of
UniMark Foods, Inc. since August 1998. Mr. Bjorn has served as Secretary of the
Company since December 1998. In addition, he serves as Vice President of
Flavorfresh Limited and as President of UniMark International. From May 1996 to
August 1998, Mr. Bjorn served as Vice President of Operations of the Company.
From January 1997 to August of 1998, Mr. Bjorn served as Executive Vice
President and Chief Operating Officer of UniMark Foods, Inc. From January 1995
to May 1996, Mr. Bjorn served as Director of Operations for UniMark Foods, Inc.,
and from January 1993 to January 1995 he served as Product Manager for UniMark
Foods, Inc.'s Sunfresh(R) brand product line. Mr. Bjorn received a master's
degree in Business Administration from Texas Christian University in 1997, and a
Business Administration degree in Marketing from Baylor University in 1992.
Charles Horne joined the Company in March 1999 as Chief Financial
Officer. From 1994 to 1999, Mr. Horne was a Partner in Horne-Alexander, a
consulting firm providing financial and operational services to clients. From
1986 to 1994, Mr. Horne served as a consulting Partner with Ernst & Young LLP,
and served in a variety of capacities including Regional Director of Quality
Assurance for the Southern Region of the United States. From 1991 to 1993, Mr.
Horne was Ernst & Young LLP's Country Managing Partner of Consulting for Spain.
From 1968 to 1986, Mr. Horne was with Arthur Andersen & Co. where he was a
Partner. Mr. Horne has a bachelor's of science degree in Industrial
Administration from the University of Kentucky.
Soren Borre joined UniMark Foods, Inc. in 1992 as Vice President -
Sales. From 1989 until 1992, Mr. Borre served as Director of Sales and Marketing
for Katrin Systems, Inc., an international paper products company.
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Roman Shumny joined the Company in November 1998 as Senior Vice
President - Marketing of UniMark Foods, Inc. From 1996 to 1998, Mr. Shumny
served as Senior Director of Marketing for the RadioShack division of Tandy
Corporation, a publicly-held consumer electronics company. From 1992 to 1996, he
served as Senior Marketing Manager for Timex Corporation, a privately-held
watch, clock and wrist instrument company. From 1989 to 1992, Mr. Shumny served
as Senior Product Manager for Bushnell, a division of Bausch and Lomb, Inc., a
publicly-held healthcare and optics company. From 1985 to 1989, Mr. Shumny held
the positions of Business Manager, Marketing Manager and Product Manager with
Beatrice/Hunt-Wesson, Inc., a privately-held packaged food company. From 1978 to
1985, Mr. Shumny served as Product Manager, Associate Product Manager, National
Account Sales Manager, District Sales Manager and Sales Representative with
Union Carbide Corporation, a publicly-held chemical and consumer products
company. Mr. Shumny has a bachelor's degree in Psychology from the University of
Southern California.
Jakes Jordaan has served as a Director of the Company since 1994.
Presently, Mr. Jordaan is a member of Jakes Jordaan, PLLC, Dallas, Texas,
(formerly known as Jordaan & Pennington, PLLC) a law firm specializing in
corporate finance, securities and complex business litigation. From February
1991 until March 1994, Mr. Jordaan was a member of the law firm of Munsch,
Hardt, Kopf, Harr & Dinan, P.C., Dallas, Texas, most recently as a shareholder.
Mr. Jordaan is the past Chairman of the Securities Section of the Dallas Bar
Association and is a member of the Texas Bar Association and the American Bar
Association.
Jose Martinez Brohez has served as Chief Executive Officer of Grupo
Industrial Santa Engracia S.A. de C.V. ("GISE") since the GISE acquisition.
Since 1989, he has also served as President and Chairman of the Board of
Directors of GISE. Mr. Martinez is a co-founder and has been a director of the
Asociacion Nacional De Procesadores De Citricos, the Mexican national
association of citrus processors since 1991. He also serves on the Board of
Directors of the following financial institutions: Banco Nacional De Mexico
(Banamex); Bancomer, S.A. at Cd. Victoria, Tamps.; and Casa De Bolsa Arka at
Monterrey, N.L. Mr. Martinez obtained his Bachelor of Science degree from
Monterrey Tech and his Masters of Science and Ph.D. in Agriculture, Range
Management and Animal Science from Texas A&M University.
Rafael Vaquero Bazan is a co-founder of the Company and has served as a
Director since its inception in 1992. From February 1998 to August of 1998, Mr.
Vaquero served as President and Chief Executive Officer of the Company. Mr.
Vaquero served as Vice-President of the Company from 1992 to 1996, and served as
the Company's Executive Vice-President and Chief Operating Officer from 1996 to
1998. He has also served as general manager and has been in charge of operating
the packing plants Industrias Citricolas de Montemorelos, S.A. de C.V.
("ICMOSA") and Empacadora de Narajas Azteca S.A. ("Azteca") since 1978 and 1986,
respectively. Mr. Vaquero served as President of Amafac, the Mexican National
Fruit Section Packers Association from 1989 until 1991. Mr. Vaquero is the
former President of the National Citrus Growers Association in Mexico and a
former President of the National Citrus Packers Association in Mexico. He is
also a former member of the Board of Directors of EMIT, a government sponsored
entity involved in developing technology for the Mexican citrus industry. Mr.
Vaquero has a Masters Degree in Business Administration from the University of
Monterrey, Mexico. Mr. Rafael Vaquero Bazan is the brother of Mr. Eduardo
Vaquero Bazan.
Eduardo Vaquero Bazan has served as a Director of the Company since
April 1994 and as Vice President - Finance and Administration of ICMOSA since
January 1995. From 1988 until 1995, Mr. Vaquero was employed by Industrias
Horticolas de Montemorelos, S.A. de C.V., a frozen fruit and vegetable
processing plant, most recently as General Manager and Director. From 1982 to
1988, Mr. Vaquero served as a Divisional Director of Banca Serfin, a regional
Mexican bank. Mr. Eduardo Vaquero Bazan is the brother of Mr. Rafael Vaquero
Bazan.
Fernando Camacho Casas has served as a Director of the Company since
December 1994. Since September 1992, Mr. Camacho has served as General Director
and co-founder of Operadora Agros, S.A. de
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C.V. ("Agros"), a Mexican venture capital fund that invests primarily in the
Mexican agricultural, horticultural and food industries. During 1991 and 1992 he
served as a representative of the Mexican Ministry of Commerce in the North
American Free Trade Agreement negotiations. From 1985 to 1990, Mr. Camacho
served as an economist for Probursa, S.A. a large Mexican investment and
securities brokerage firm. Mr. Camacho Casas received his degree in economics
from the Autonomous Technological Institute of Mexico.
Federico Chavez Peon has served as a Director of the Company since
October 1998. Mr. Chavez Peon is a Director of Promecap, S.C., a financial
advisory services firm for Mexico Strategic Investment Fund Ltd. From 1996 until
1997, Mr. Chavez Peon served as Risk Chief Director of Banco Santander Mexicano,
S.A., an affiliate of Banco Santander, S.A., one of the most important financial
institutions worldwide. From 1991 until 1996, Mr. Chavez Peon served as
Corporate Banking Director of Banco Mexicano, S.A. an affiliate of Grupo
Financiero InverMexico, S.A. de C.V., a leading financial institution in Mexico
at that time. From 1987 until 1991, Mr. Chavez Peon served in various positions
in the Corporate Banking Area of Casa de Bolsa Inverlat, one of the leading
brokerage firms in Mexico at that time. Mr. Chavez Peon obtained a degree in
Industrial Engineering at the National University of Mexico. Mr. Chavez Peon has
been appointed and elected as a Director of the Company pursuant to the Mexico
Strategic Advisors Transaction.
Luis A. Chico Pardo has served as a Director of the Company since
October 1998. Mr. Chico Pardo is a Director of Promecap, S.C., a financial
advisory services firm for Mexico Strategic Investment Fund Ltd. Mr. Chico
served as Vice President of the Mexican Banking Association and as a member of
the National Securities Commission. From 1982 until 1988, Mr. Chico served as
Chief Executive Officer of Banco BCH, a Mexican credit corporation. From 1977
until 1978, Mr. Chico served as Director of Public Sector Credit at Mexico's
Secretariat of Finance and Public Credit. From 1964 until 1977, Mr. Chico acted
as Deputy Manager of the International Division of Banco de Mexico (the nation's
central bank) and was a member of the Technical Committee of FOMEX, which was a
public institution responsible for promoting exports of manufactured products.
Mr. Chico obtained a degree in Law and Economics at the National University of
Mexico, from which he graduated with honors in 1963. Mr. Chico obtained a
master's degree in Economics from the London School of Economics and Political
Science. Mr. Chico Pardo has been appointed and elected as a Director of the
Company pursuant to the Mexico Strategic Advisors Transaction.
Jose I. De Abiga Pons has served as a Director of the Company since
October 1998. Mr. Abegia Pons is a Director of Promecap, S.C., a financial
advisory services firm for Mexico Strategic Investment Fund Ltd. From 1992 to
1997, Mr. Abiega Pons served as Deputy Managing Director, responsible for
international and trading affairs, for Banco Santander Mexicano, one of Mexico's
largest financial institutions. From 1989 to 1991, Mr. Abiega Pons served as
financial advisor for Santander Management, Inc., a subsidiary of Grupo
Santander, responsible for the investment decisions of its Emerging Mexico Fund.
From 1987 to 1989, Mr. Abiega Pons served as Chief Executive Officer of
Ingenieria Cambiaria Casa de Cambio, a foreign exchange operator in Mexico. From
1984 to 1987, Mr. Abiega Pons served as Chief Operating Officer of Inverworld,
Inc., a licensed broker dealer in San Antonio, Texas. Mr. Abiega Pons obtained a
degree in Industrial Engineering at the Anahuac University of Mexico. Mr. Abiega
Pons has been appointed and elected as a Director of the Company pursuant to the
Mexico Strategic Advisors Transaction.
Jerry W. Johnson has served as a Director of the Company since October
1998. Mr. Johnson is a Professor in the Marketing Department of the Hankamer
School of Business, Baylor University, Waco, Texas, from 1974 to the present.
Mr. Johnson also has served as Chairperson of the Department of Marketing of the
Hankamer School of Business from 1992 to the present. Mr. Johnson is a partner
at Johnson, Moore, Kelly and Associates, a consulting firm primarily focused on
economic revitalization of downtown areas, bank marketing programs and business
location feasibility studies. From 1970 to 1974, Mr. Johnson served as Associate
Vice President for Business Affairs for the University of Arkansas System. From
1969 to 1970, Mr. Johnson served as Director of Economic Analysis for the
Planning Consultants firm James A. Vizzier in Fayetteville, Arkansas. Mr.
Johnson has authored a number of publications focused on business, marketing and
management, and has presented similar topics at various seminars.
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Each director serves until the next annual meeting of shareholders and until his
successor is duly elected and qualified. Officers serve at the discretion of the
Board of Directors.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and certain of its officers, and persons who own more than
10% of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission") and the NASDAQ Stock Market. Officers, directors and greater
than 10% stockholders are required by the Commission's regulations to furnish
the Company with copies of all Section 16(a) forms they file. Based solely upon
a review of the representations made by the reporting persons to the Company,
the Company believes that during the year ended December 31, 1999, its
directors, officers and 10% stockholders complied with all filing requirements
under Section 16(a) of the Exchange Act.
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth the compensation for the years ended
December 31, 1997, 1998 and 1999 paid by the Company to its chief executive
officers and to one other executive officer of the Company who received
compensation in excess of $100,000 for the year ended December 31, 1999 (the
"named executive officers"). No other executive officers received compensation
exceeding $100,000 during the last fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
------------------- -----------------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
YEAR SALARY BONUS COMPENSATION AWARD(S) OPTIONS COMPENSATION
---- -------- ----- ------------ -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jorn Budde...................
Former President and 1997 $120,000 -0- (1) -0- -0- -0-
Chief Executive 1998 $120,000 -0- (1) -0- -0- -0-
Officer (2)
Rafael Vaquero Bazan......... 1998 $ 78,000 -0- (1) -0- -0- -0-
President,
Chief Operating
Officer (3)
Soren Bjorn.................. 1998 $ 77,083 $13,864 (1) -0- 100,000(6) -0-
President, Chief 1999 $132,940 $26,957
Executive Officer
and Secretary (4)
Charles Horne................ 1999 $134,465 $35,213 (1) -0- 70,000(7) -0-
Chief Financial Officer (5)
</TABLE>
(1) The compensation described in this table does not include medical
insurance and other benefits received by the executive officers which are
available generally to all employees of the Company and perquisites and
other personal benefits received by these executive officers of the
Company, the value of which does not exceed the lesser of $50,000 or 10% of
the executive officer's cash compensation in the table.
(2) Resigned from the Company in February 1998.
(3) From February 1998 to August 1998, Mr. Vaquero served as President and
Chief Executive Officer of the Company. From 1998 to August 1998, Mr.
Vaquero resigned as President and Chief Executive Officer and was elected
as Chief Operating Officer of the Company.
(4) From May 1996 to August 1998, Mr. Bjorn served as Vice President of
Operations and Chief Operating Officer of the Company. In August 1998, Mr.
Bjorn was elected to serve as President, Chief Executive Officer and, in
September 1998, he was elected to serve as a Director of the Company. Mr.
Bjorn was elected to serve as Secretary of the Company in December 1998.
(5) Mr. Horne became Chief Financial Officer in March 1999.
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(6) The options consist of 30,000 shares granted in prior years at an exercise
price of $7.50 per share with a four year expiration and vesting one-fourth
each year and two separate grants in 1999 to purchase 70,000 shares of
common stock with exercise prices of $2.50 per share, a four year
expiration and vesting one-fourth each year.
(7) The options were granted in two separate grants of options to purchase
70,000 shares of common stock. The first grant was for 50,000 shares with
an exercise price of $2.63, a four year expiration and immediate vesting.
The second was for 20,000 shares with an exercise price of $2.50, a four
year expiration and vesting one-fourth each year.
STOCK OPTION GRANTS AND EXERCISES IN 1999
The following table sets forth the grants of stock options to the named
executive officers during 1999.
Option Grants During 1999
<TABLE>
<CAPTION>
Number Percentage
of of Total Potential Realizable Value at Assumed
Securities Options Annual Rates of Stock Price
Underlying Granted to Exercise Appreciation for Option Term (3)
Name Options Employees Price Per Expiration --------------------------------------
Granted During 1999 Share Date 0% 5% 10%
- ----------------- ---------- ------------- ------------ ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Soren Bjorn (1) 70,000 23.3% $2.50 12/31/04 $ -0- $ -0- $ -0-
Charles Horne (2) 50,000 16.7% $2.63 03/31/04 -0- -0- -0-
20,000 6.6% $2.50 12/31/04 -0- -0- -0-
</TABLE>
(1) The options were granted in two separate grants of options to purchase
70,000 shares of common stock. The first grant was made on December 14,
1999 and the second on December 22, 1999, both at exercise prices of $2.50
per share, with four year expirations and vesting one-fourth each year.
(2) The options were granted in two separate grants of options to purchase
70,000 shares of common stock. The first grant was made on March 31, 1999
for 50,000 shares with an exercise price of $2.63, a four year expiration
and immediate vesting, The second grant was for 20,000 shares with an
exercise price of $2.50, a four year expiration and vesting one-fourth each
year.
(3) Potential realizable values are computed by multiplying the number of
shares of common stock subject to a given option by closing market price on
the date of grant for a share of common stock, assuming that the aggregate
stock value derived from that calculation compounds at the annual 5% or 10%
rate shown in the table for the entire term of the option and subtracting
from that result the aggregate option exercise price. The 5% and 10%
assumed annual rates of stock price appreciation are mandated by the rules
of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of future common stock prices.
There were no stock options exercised by Messrs. Bjorn or Horne during
1999.
The following table sets forth information with respect to the value of
unexercised options granted during the last completed fiscal year and in prior
years to the named Executive Officers with respect to option exercises by those
persons during the last completed fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS
OPTIONS AT FY-END AT FY-END (2)
------------------------- -------------------------
Shares Acquired
on Exercise Value Realized (1) Exercisable/Unexercisable Exercisable/Unexercisable
------------------ ------------------ -------------------------- -------------------------
<S> <C> <C> <C> <C>
Jorn Budde -0- -0- -0- -0-
Rafael Vaquero Bazan -0- -0- -0- -0-
Soren Bjorn -0- -0- 40,000/60,000 -0-
Charles Horne -0- -0- 55,000/15,000 -0-
</TABLE>
(1) Based on the difference between the market price of the securities
underlying the options on the date of exercise and the exercise price of
the options.
(2) Based on the difference between the market price of the securities
underlying the options at fiscal year-end and the exercise price of the
options.
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DIRECTOR COMPENSATION
Directors do not currently receive any cash compensation for serving on
the Board of Directors. Independent directors automatically receive an initial
grant of stock options to purchase 20,000 shares of common stock upon their
appointment to the Board of Directors. Independent directors automatically
receive annual grants of options to purchase 5,000 shares of common stock as of
the date following each annual meeting. The Company granted Fernando Camacho
Casas, Jakes Jordaan and Jerry Johnson each options to purchase 5,000 shares of
common stock with an exercise price of $2.938 in 1999.
EMPLOYMENT AGREEMENTS
The Company entered into an Employment Agreement with Roman Shumny
dated November 30, 1998 for his services as Senior Vice President - Marketing of
UniMark Foods, Inc. The Employment Agreement provides that for the period of
November 30, 1998 through November 30, 1999, which has been extended to November
30, 2000 pursuant to the Employment Agreement, he will be paid annual base
compensation of not less than $105,000 through the end of the Company's fiscal
year ending December 31, 1999; he will be eligible to receive an annual bonus
payment in accordance with the Corporation's incentive plan to be established by
the Company; and he received options to acquire 20,000 shares of Common Stock
under the Corporation's 1994 Employee Stock Option. He may terminate his
employment with the Company, within 60 days after the occurrence of a Change in
Control (as defined in the Employment Agreement) for any reason or without
reason, with the right to a lump sum severance payment equal to his base
compensation as determined pursuant to the Employment Agreement for six months.
If his employment is terminated by the Corporation without cause, he will
receive severance in one payment equal to his base compensation as determined
pursuant to the Employment Agreement for six months. In addition, he may receive
payment for reasonable executive level outplacement costs.
The Company entered into an Employment Agreement with Charles Horne
dated March 31, 1999 for his services as Chief Financial Officer of the Company.
The Employment Agreement provides that for the period of March 31, 1999 through
March 31, 2003, unless extended to March 31, 2004 pursuant to the Employment
Agreement, he will be paid base compensation at the annualized rate as follows,
less taxes and other usual deductions: $180,000 for the 12 month period ending
March 31, 2000; $189,000 for the 12 month period ending March 31, 2001; $198,450
for the 12 month period ending March 31, 2002; and $208,372 for the 12 month
period ending March 31, 2003; he will be eligible to receive bonus performance
compensation, composed of subjective review and financial performance
components, not to exceed 50 percent of his applicable base compensation amount;
and he received options to acquire 50,000 shares of Common Stock and will
receive, on an annualized basis, options to acquire 10,000 shares of Common
Stock under the Corporation's 1994 Employee Stock Option. He may terminate his
employment with the Company, within 60 days after the occurrence of a Change in
Control (as defined in the Employment Agreement) for any reason or without
reason, with the right to a lump sum severance payment within 15 days after such
termination equal to his then applicable base compensation as determined
pursuant to the Employment Agreement for 12 months. If his employment is
terminated by the Corporation without cause, he will receive a lump sum
severance payment within 15 days after such termination equal to his then
applicable base compensation as determined pursuant to the Employment Agreement
for 12 months within 15 days after such termination. In addition, he may receive
payment for reasonable executive level outplacement costs.
STOCK OPTION PLANS
In 1994, the Company adopted the 1994 Employee Stock Option Plan and an
Outside Director Stock Option Plan (the "1994 Plans"). Under the 1994 Plans, the
Company's Board of Directors were authorized to grant options to employees and
consultants and to its outside directors to purchase up to 820,000 and 100,000
shares respectively, of the Company's common stock which were reserved for such
purposes. The terms and vesting period for options granted under the 1994 Plans
were fixed by the Board of Directors at the time of grant, provided that the
exercise period was not greater than 10 years from the date of grant. The
exercise price for any options granted under the 1994 Plans for employees and
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consultants could not be less than 100% and 85% of the fair market value of the
Company's common stock on the date of the grant for Incentive and Non-statutory
Stock Options, as defined, respectively. The exercise price for options granted
under the 1994 Plans for outside directors could not be less than 100% of the
fair market value of the Company's common stock on the date of grant.
During 1999, the Company adopted the 1999 Stock Option Plan (the "1999
Plan") under which stock options could be granted to employees, outside
directors and consultants to purchase common stock of the Company. The 1999
Plan, which is similar to the 1994 Plan for employees, is for a period of ten
years and has reserved 500,000 shares of the Company's common stock for stock
option grants. Effective with the adoption of the 1999 Plan, the Company
discontinued granting options under the 1994 Plans.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Board of Directors has established a Compensation Committee to
review and approve the compensation levels of executive officers of the Company,
evaluate the performance of the executive officers, consider senior management
succession issues and any related matters for the Company. The Compensation
Committee is charged with reviewing with the Board of Directors in detail all
aspects of cash compensation for the executive officers of the Company. Stock
option compensation for the executive officers is also considered by the
Compensation Committee.
The philosophy of the Company's compensation program is to employ,
retain and reward executives capable of leading the Company in achieving its
business objectives. These objectives include preserving a strong financial
posture, increasing the assets of the Company, positioning the Company's assets
and business operations in geographic markets and industry segments offering
long term growth opportunities, enhancing shareholder value and ensuring the
survival of the Company. The accomplishment of these objectives is measured
against conditions in the industries within which the Company operated. In
recent years these conditions reflect a highly competitive market environment
and rapidly changing regional, geographic and overall industry market
conditions.
The available forms of executive compensation include base salary, cash
bonus awards and incentive stock options. Performance of the Company is a key
consideration (to the extent that such performance can fairly by attributed or
related to such executive's performance), as well as the nature of each
executive's responsibilities and capabilities. The Company's compensation policy
recognizes, however, that stock price performance is only one measure of
performance and, given industry business conditions and the long term strategic
direction and goals of the Company, it may not necessarily be the best current
measure of executive performance. Therefore, the Company's compensation policy
also gives consideration to the Company's achievement of specified business
objectives when determining executive officer compensation. Compensation paid to
executive officers is based upon a Company-wide salary structure consistent for
each position relative to its authority and responsibility compared to industry
peers.
Based on comparative industry data, and after due consideration to the
factors mentioned above, the Compensation Committee set Soren Bjorn's salary at
$133,000 for 1999 and Charles Horne's salary for 1999 was established in
accordance with his employment agreement. The Committee awarded cash bonuses in
1999 of $26,957 to Soren Bjorn and $35,213 to Charles Horne. In addition, both
Soren Bjorn and Charles Horne were each granted options to purchase 70,000
shares of common stock.
Respectfully submitted
COMPENSATION COMMITTEE
Jakes Jordaan
Federico Chavez Peon
Fernando Camacho Casas
Jerry Johnson
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1999, no member of the
Compensation Committee was an officer or employee of the Company or any of its
subsidiaries or had any relationship requiring disclosure pursuant to ITEM 404
of Commission Regulation S-K. No executive officer of the Company served as a
member of a compensation committee of another corporation (or other board
committee of such company performing similar functions or, in the absence of any
such committee, the entire board of directors of such corporation), one of whose
executive officers served on the Compensation Committee. No executive officer of
the Company served as a director of another corporation, one of whose executive
officers served on the Compensation Committee. No executive officer of the
Company served as a member of a compensation committee of another corporation
(or other board committee of such corporation performing similar functions or,
in the absence of any such committee, the entire board of directors), one of
whose executive officers served as a director of the Company.
PERFORMANCE GRAPH
The chart below sets forth a line graph comparing cumulative total
return of the Company's common stock to the S&P 500 Index and the S&P Foods
Index for the five year period commencing December 31, 1994 and ending December
31, 1999. Each indices assumes $100 invested in the Company's common stock at
December 31, 1994, and that dividends, if any, were reinvested.
[GRAPHIC OMITTED]
Comparative Five-Year Total Returns
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
The UniMark Group, Inc. $ 100 $ 359 $ 230 $ 111 $ 65 $ 37
S&P 500 Index $ 100 $ 144 $ 177 $ 236 $ 303 $ 367
S&P Foods Index $ 100 $ 146 $ 173 $ 248 $ 268 $ 211
</TABLE>
Note: The UniMark Group, Inc. management consistently cautions that the stock
price performance shown in the table should not be considered indicative of
potential future stock price performance.
9
<PAGE> 10
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership, to the Company's knowledge, of the Company's common stock
as of April 10, 2000, by (i) each person who is known by the Company to own
beneficially more than 5% of the Company's outstanding common stock; (ii) each
named officer; (iii) each of the Company's directors; and (iv) all executive
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial
Names Ownership (1) Percent of Class (1)
- ---------------------------------------- ------------------------------- --------------------
<S> <C> <C>
Executive Officers and Directors:
Soren Bjorn(2) ..................... 47,800 **
Rafael Vaquero Bazan ............... 5,000 **
Eduardo Vaquero Bazan .............. -0- --
Fernando Camacho Casas (4).......... 219,065 1.48
Jakes Jordaan (5) .................. 58,500 **
Jose Martinez Brohez (3)(8) ........ 336,000 2.20
Federico Chavez Peon (6)(9) ........ 6,299,959 45.20
Luis A. Chico Pardo (6)(9) ......... 6,299,959 45.20
Jose I. De Abiega Pons (6)(9) ...... 6,299,959 45.20
Jerry Johnson (10) ................. 25,000 **
Executive Officers and Directors as
a group (13 persons) (7) ............... 7,135,874 51.20
Other Five Percent Holders:
M&M Nominee L.L.C. (9) ............ 6,299,959 45.20
</TABLE>
- ------------------------------
**Less than 1%
(1) In calculating the percentage of total class ownership, the number of
outstanding shares used was 13,938,326. This number does not include: (i)
243,000 shares of Common Stock issuable upon exercise of currently
outstanding options granted under the 1994 Employee Stock Option Plan; (ii)
35,000 shares of Common Stock issuable upon exercise of currently
outstanding options granted under the Company's 1994 Stock Option Plan for
Directors; and 250,000 shares of Common Stock issuable upon exercise of
currently outstanding options granted under the 1999 Stock Option Plan.
(2) Includes 40,000 shares of Common Stock underlying presently exercisable
stock options.
(3) Includes 240,000 shares of Common Stock held by Asesoria Garza Jasso, S.C.,
a Mexican entity of which he is a general partner. He shares voting and
investing power with all other general partner's of such entity.
(4) Includes 206,565 shares of Common Stock held by Agros, a Mexican entity of
which Mr. Camancho Casas is a managing director, and includes 12,500 shares
of Common Stock underlying exercisable stock options. Mr. Camacho Casas
disclaims beneficial ownership of the Agros shares.
(5) Includes 12,500 shares of Common Stock underlying presently exercisable
stock options.
(6) Includes 6,299,959 shares of Common Stock owned by M & M Nomiee L.L.C. He
disclaims beneficial ownership of such securities.
(7) Includes 193,750 shares of Common Stock underlying presently exercisable
stock options.
10
<PAGE> 11
(8) Includes 30,000 shares of Common Stock underlying presently exercisable
stock options.
(9) On March 29, 1999, the Company sold 2,000,000 newly issued shares of Common
Stock to M & M Nominee L.L.C. In connection with the March 29, 1999
transaction, M & M Nominee L.L.C. ("M & M") surrendered options to acquire
an additional 2,000,000 shares of common stock at a purchase price of
$4.5375 per share issued to M & M in the July 17, 1998 transaction. M & M
is owned 80% by Mexico Strategic Investment Fund Ltd. ("MISF"), and 20% by
Madera L.L.C. ("Madera"). M & M' s principal business is investment in
securities.
Pursuant to regulations promulgated under Section 13(d) of the Securities
Exchange Act of 1934, Mexico Strategic Advisors L.L.C. (by virtue of the
Advisory Contract) may be deemed a beneficial owner of securities held for
the account of M & M (as a result of the contractual authority of Mexico
Strategic Advisor L.L.C. with MSIF and Madera to exercise voting and
dispositive power with respect to such securities).
Except to the extent that information is believed to be otherwise known by
the Company, the information given is as of September 15, 1999, as reported
by Mexico Strategic Advisors L.L.C. in its Amendment No. 5 to the initial
statement on Schedule 13D dated July 7, 1998 and all amendments thereto
filed with the Securities and Exchange Commission.
(10) Includes 25,000 shares of Common Stock underlying presently exercisable
stock options.
11
<PAGE> 12
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective January 1, 1995, the Company entered into a five year
operating agreement with Industrias Horticolas de Montemorales, S.A. de C.V.
("IHMSA") to operate a freezing plant located in Montemorelos, Nuevo Leon,
Mexico. Pursuant to the terms of the operating agreement, the Company is
obligated to pay IHMSA an operating fee sufficient to cover the interest
payments on IHMSA's $3.4 million of outstanding debt. The Company is responsible
for all raw material and operating costs and the sale of finished goods produced
at the IHMSA plant. Payments made pursuant to the operating agreement were
$495,924 for the year ended December 31, 1999. The Vaquero family owns
collectively an approximate 24% interest in IHMSA. Certain members of the
Vaquero family are officers, shareholders and directors of the Company. Under
the agreement, which has been extended to January 1, 2001, the Company has the
option to buy the IHSMA facility for $4.5 million. The Company believes that
said arrangement is no less favorable to the Company than would be available
from unrelated third parties.
The Company has elected to advance funds to IHMSA to retire certain of
its outstanding debt since, under the terms of the operating agreement, the
Company would benefit from the IHMSA debt reduction. At December 31, 1999
amounts due from IHMSA of $1,602,000 includes $1,481,000 that was a cash advance
used to reduce IHMSA's outstanding debt. This amount will be applied to the
purchase price when the Company purchases the facility pursuant to its purchase
option, which is expected to occur during 2000.
Effective July 1, 1995, the Company entered into a ten-year operating
agreement with Empacadora de Naranjas Azteca, S.A. de C.V. ("Azteca"), to
operate a processing plant in Montemorelos, Nuevo Leon, Mexico. The operating
agreement provides for payments in the amount of (i) interest on existing debt
of approximately $220,000 with credit institutions, (ii) asset tax and (iii)
annual property tax. Prior to this time, Azteca "co-packed" chilled grapefruit
sections and mango slices for the Company. The Vaquero family owns collectively
an approximate 14.3% interest in Azteca. During the term of the operating
agreement, the Company has the right of first refusal to buy the Azteca facility
at its then fair market value. The Company believes that said arrangement is no
less favorable to the Company than would be available from unrelated third
parties.
In November 1995, the Company entered into a lease agreement with Loma
Bonita Partners, a Texas general partnership, for approximately 260 hectares
(642 acres) of land located in Loma Bonita, Oaxaca, Mexico for the development
of citrus groves. The lease commenced in December 1995 and expires after ten
years. Loma Bonita Partners is 50% owned by Rafael Vaquero, who is also a
director and shareholder of the Company. The Company believes that said lease
agreement is on terms no less favorable to the Company than would be available
from unrelated third parties. Rent expense on the lease was $78,000, for the
year ended December 31, 1999.
The Company operates a 144 acre grapefruit grove located close to the
ICMOSA plant in Montemorelos pursuant to a ten-year operating agreement that
expires in 2000. Per the agreement, the Company operates the grove and purchases
all the grapefruit produced at a formula price tied to purchases from unrelated
third parties. The grove is owned by a partnership that consists primarily of
shareholders of Aztea. The Vaquero family owns a 14.3% interest in the
partnership. The Company believes that said arrangement is on terms no less
favorable to the Company than would be available from unrelated third parties.
Fruit purchases from the grove were $146,000 for the year ended December 31,
1999.
During 1999, the Company paid Jakes Jordaan, PLLC $170,379 for legal
services rendered. Mr. Jordaan, a director and, commencing in February 1998,
chairman of the Company, is a member of Jakes Jordaan, PLLC. The Company
believes that said arrangement is no less favorable to the Company than would be
available from unrelated third parties.
At December 31, 1999, the Company has a promissory note receivable from
a certain director in the amount of $186,000. This promissory note is unsecured
and bears interest at the rate of 10% per annum and is due on demand.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
The UniMark Group, Inc.
(Registrant)
By: /s/ Soren Bjorn
--------------------------------------
Soren Bjorn
President and Chief Executive Officer
Dated: May 1, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report was signed below by the following persons on behalf of the registrant and
in the capacities and on the dates stated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- -------------------------------------- ------------
<S> <C> <C>
/s/ Jakes Jordaan Director, Chairman May 1, 2000
--------------------------------------
Jakes Jordaan
/s/ Soren Bjorn President, Chief Executive Officer and May 1, 2000
-------------------------------------- Director (Principal Executive Officer)
Soren Bjorn
/s/ Charles A. Horne Chief Financial Officer (Principal May 1, 2000
-------------------------------------- Financial and Accounting Officer)
Charles A. Horne
/s/ Rafael Vaquero Bazan Director May 1, 2000
--------------------------------------
Rafael Vaquero Bazan
/s/ Eduardo Vaquero Bazan Director May 1, 2000
--------------------------------------
Eduardo Vaquero Bazan
/s/ Federico Chavez Peon Director May 1, 2000
--------------------------------------
Federico Chavez Peon
/s/ Luis A. Chico Pardo Director May 1, 2000
--------------------------------------
Luis A. Chico Pardo
/s/ Jose I. De Abiega Pons Director May 1, 2000
--------------------------------------
Jose I. De Abiega Pons
/s/ Fernando Camacho Casas Director May 1, 2000
--------------------------------------
Fernando Camacho Casas
/s/ Jerry W. Johnson Director May 1, 2000
--------------------------------------
Jerry W. Johnson
</TABLE>
13
