November 8, 1996
Mr. W. Xxxxx Xxxxx
Riviana Foods Inc.
P. O. Xxx 0000
Xxxxxxx, XX 00000
Re: Amendment of Stock Purchase Agreement
Dated December 15, 1994
Dear Xxxx:
You are either (1) a party to an agreement with Riviana Foods Inc. (the
"Company") entitled Amendment and Restatement of Executive Officer's Stock
Purchase Agreement, dated December 15, 1994 (the "Agreement"), or (2) the donee
of a party to the Agreement who has agreed in writing to be bound by its terms.
The Agreement imposes restrictions on certain shares of the $1 (formerly $.01)
par value Common Stock of the Company owned by you (the "Shares") that were
purchased from the Company by you (or by your donor) more than three years ago
at a discounted price.
The Agreement is one of several substantially identical agreements entered
into by the Company with a number of its executive employees and those of its
subsidiaries prior to the initial public offering of Company stock in 1995.
The Agreement in effect prohibits you from selling any of the Shares at a
time when you (or, in case you are a donee, your donor) are employed by the
Company. For that reason, the Company believes the Agreement is unduly
restrictive in view of the Company's initial public offering last year.
Accordingly, the Company believes it is in both your and its best interests that
the Agreement be amended to permit you to sell at your option from time to time
some or all of the Shares under certain circumstances during the term of your
(or your donor's) employment by the Company.
The purpose of this letter is to set forth the terms (1) of an amendment
(the "Amendment") to the Agreement (and, if you are a donee of the Shares, a
corresponding amendment of your separate agreement with the Company to hold the
Shares subject to the Company's Agreement with your donor), and (2) under which
you may at your option elect to sell part or all of the Shares pursuant to the
Amendment.
Amendment of Stock Purchase Agreement
Page 2
1. AMENDMENT OF AGREEMENT. Subject to your acceptance of this letter, the
Agreement shall be and it is hereby amended so as to add thereto a new Section
16 reading as follows:
16. Anything to the contrary in Sections 2 and 7 of this Agreement
notwithstanding, Employee (or the Donee, as to Shares owned by a
donee) shall have the right, at any time while Employee is employed
by Riviana, to (a) sell all or a portion of the Shares (i) pursuant
to and in compliance with Rule 144 of the General Rules and
Regulations under the 1933 Act, (ii) pursuant to an effective
registration statement under the 1933 Act in which the Shares have,
at the option of Riviana and under conditions specified by it, been
included, or (iii) in any other manner as to which Riviana has
received the written opinion of counsel reasonably satisfactory to
it that such sale is exempt from registration under the Act and
under any applicable state securities laws, or (b) donate all or a
portion of the Shares to one or more nonprofit organizations,
provided Employee makes arrangements reasonably satisfactory to
Riviana to remit to it, at the time of such sale or donation, the
amount in cash referred to above in Section 4.
2. SALE UNDER RULE 144. If circumstances had been such that you (or your
donor, as the case may be) were not obligated by the terms of the Agreement to
repay the discount allowed with respect to the purchase of the Shares from the
Company (as described in Sections 2, 3, and 4 of the Agreement and referred to
below as the "Discount"), then you would be eligible under the Amendment to sell
any or all of the Shares from time to time in brokers' transactions pursuant to
Rule 144 under the Securities Act of 1933, as amended (the "Act"), without the
necessity of registration of such sales under the Act (subject to existing
Company policies of general application to all sales of Company stock by
employees).
The Company has been advised by counsel that so long as the Discount
remains unpaid, however, a question might be raised as to the availability of
Rule 144 for brokerage sales by you of the Shares because of the requirement in
paragraph (d)(1) of
Amendment of Stock Purchase Agreement
Page 3
Rule 144 that the full purchase price of securities sold in reliance on the rule
must have been paid at least two years before the sale. Although counsel is of
the opinion, based on so-called "no action" letters that have been issued in the
past by the staff of the Securities and Exchange Commission ("SEC") in similar
cases, that Rule 144 is available for sales of the Shares by you pursuant to the
Amendment notwithstanding Rule 144(d)(1), counsel has recommended that the
Company seek a confirmatory "no action" letter from the staff of the SEC before
facilitating sales of Shares by you under Rule 144. The process of obtaining
such confirmation could require several months.
Because of the delay in the availability to you of Rule 144 for making
sales of Shares, the Company is prepared to file a so-called shelf registration
statement on Form S-3 under the Act with the SEC (the "Registration Statement")
at its expense covering such brokerage sales of the Shares as you and other
employee-stockholders who have purchased Company stock under similar agreements
may wish to make from time to time. (The Registration Statement will be filed,
however, only if a sufficient number of employee-stockholders to justify the
expense wish to avail themselves of the opportunity to have their shares
registered for potential sale.) If the SEC staff issues a favorable no-action
letter in response to the Company's request, then the Shares, and similarly
restricted stock owned by others covered by the Registration Statement, will be
deregistered and you may rely thereafter on Rule 144 as a means of selling
Shares from time to time.
If the SEC staff does NOT issue a favorable determination letter with
respect to the availability of Rule 144, the Company presently anticipates that
it will file and continue to maintain the effectiveness of the Registration
Statement in order to permit you to sell Shares from time to time. No assurance
can be given in that regard, however, and if the Registration Statement is filed
with the SEC, the Company reserves the right to withdraw it at any time, after
appropriate notice to you.
3. THE REGISTRATION STATEMENT. You are not required to authorize the
Company to include your Shares in the Registration Statement. A blank is
provided at the end of this letter where you may indicate whether you wish your
Shares to be so included or not. If you check the "No" box below, then neither
this Section 3 nor Section 4 will apply to you. If on the other hand you check
the "Yes" box below and sign your name beneath it, that will constitute an
authorization by you to the Company:
Amendment of Stock Purchase Agreement
Page 4
(a) to include your Shares in the Registration Statement until the
earliest of (i) the disposition by you of all your Shares, (ii) the withdrawal
by the Company of the Registration Statement, (iii) written instruction to the
Company by you or your legal representative to withdraw your Shares from the
Registration Statement, or (iv) your death,
(b) to name you as a selling shareholder in the Registration Statement and
to provide therein such information concerning you as is required from time to
time by applicable SEC rules, as supplied by you, and
(c) to file such amendments of the Registration Statement with the SEC
from time to time as the Company considers appropriate.
In addition, if you check the "Yes" box below and sign your name beneath
it, you thereby agree:
(i) to complete accurately the enclosed questionnaire; to return
it to W. Xxxxx Xxxxx at the Company no later than November 18,
1996; and to notify the Company immediately in writing of any
change in the information supplied in the questionnaire for so
long as the Shares are covered by the Registration Statement,
(ii) to indemnify the Company, to the extent provided in Section 4
below, against certain liabilities under the securities laws
with respect to information supplied by you for inclusion in
the Registration Statement, as described below,
(iii) to notify the Company immediately of all sales of Shares
pursuant to the Registration Statement,
(iv) to pay out of the proceeds of any sale of Shares pursuant to
the Registration Statement: (A) to the Company, the Discount
allocable to the Shares sold, (B) any underwriting discount or
commission due with respect to such sale, and (C) your pro
rata share of the fee for filing the Registration Statement
with the SEC, and
Amendment of Stock Purchase Agreement
Page 5
(v) to continue to comply with Company policies relating generally
to transactions by employees in Company securities, as they
presently exist and may be amended from time to time, to the
extent such policies are applicable to Shares covered by the
Registration Statement.
YOU ARE NOT REQUIRED TO SELL ANY SHARES BY REASON OF YOUR
ELECTION TO INCLUDE THEM IN THE REGISTRATION STATEMENT. The
Registration Statement merely affords an optional means by which you may, if you
wish, sell any or all of the Shares from time to time, one or more times, when
and as determined by you. You may include the Shares in the Registration
Statement and still elect not to sell them.
If you elect to sell Shares under the Registration Statement, you may be
deemed to be a statutory underwriter for purposes of the Act, which means you
could under certain circumstances be liable to purchasers of the Shares for any
decline in their value during a period of not less than one year following your
sale, if the Registration Statement is found to contain an untrue statement of a
material fact or to have omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Because the Company believes it is in its best interests as well as yours
that you have an opportunity to sell the Shares while you (or your donor) are
employed by the Company, and in consideration of your agreement to indemnify the
Company against liability under the Act to the extent provided in Section 4
below with respect to information supplied by you, the Company agrees to
indemnify you against liability under the Act to the extent provided in Section
4 below with respect to information supplied by it for inclusion in the
Registration Statement. In the opinion of the SEC, however, the Company's
foregoing agreement to indemnify (other than for expenses or attorneys fees
incurred in the successful defense of a lawsuit) against liability under the Act
incurred by a DIRECTOR, OFFICER, OR CONTROLLING PERSON OF THE COMPANY who sells
stock under the Registration Statement is unenforceable. Accordingly, the
Company will not indemnify a director, officer, or controlling person of the
Company against liability under the Act unless in the opinion of its counsel the
matter has been settled by controlling precedent, absent an adjudication by a
court of appropriate jurisdiction that such indemnification is not against
public policy as expressed in the Act.
Amendment of Stock Purchase Agreement
Page 6
As indicated previously, the Company will not file the Registration
Statement unless a sufficient number of employee-stockholders check the "Yes"
box below, and timely return the enclosed questionnaire properly completed, to
justify the expense and administrative burden associated with the filing. In the
event you check the "Yes" box and timely return the questionnaire, but the
Company elects for any reason not to file the Registration Statement, or to
withdraw it after it is filed, then you will be notified promptly.
4. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless you and each person, if any, who controls you within the meaning
of Section 15 of the Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to which you or such controlling
person may become subject under the Act or otherwise (A) that
arises out of or is based upon any untrue statement or alleged
untrue statement of a material fact contained in the
Registration Statement or any amendment thereto, or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, or (B) that arises out of
or is based upon any untrue statement or alleged untrue
statement of a material fact contained in any prospectus
included in the Registration Statement or any amendment or
supplement thereto ("Prospectus"), or the omission or alleged
omission to state therein a material fact necessary in order
to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such
untrue statement or alleged
Amendment of Stock Purchase Agreement
Page 7
untrue statement or any omission or alleged omission, if such
settlement is effected with the written consent of the
Company; and
(iii) subject to the limitations set forth in Section 4(c), against
any and all expense whatsoever, as incurred (including
reasonable fees and disbursements of counsel), reasonably
incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, in each case whether
or not a party, or any claim whatsoever based upon any such
untrue statement or alleged untrue statement or omission or
alleged omission, to the extent that any such expense is not
paid under subparagraph (i) or (ii) above;
PROVIDED, HOWEVER, that the indemnity provided pursuant to this Section 4(a)
shall not apply (x) with respect to any loss, liability, claim, damage or
expense that arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by you expressly
for use in the Registration Statement or any amendment thereto or the Prospectus
or any amendment or supplement thereto, or (y) to the extent expressly limited
by Section 3 in the case of directors, officers, and controlling persons of the
Company.
(b) INDEMNIFICATION BY YOU. You agree to indemnify and hold harmless the
Company and each of its directors and officers (including each director and
officer of the Company who signed the Registration Statement), and each person,
if any, who controls the Company within the meaning of Section 15 of the Act, to
the same extent as the indemnity contained in Section 4(a) hereof, but only
insofar as such loss, liability, claim, damage or expense arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or any amendment thereto,
the Prospectus or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by you expressly
for use therein.
(c). CONDUCT OF INDEMNIFICATION PROCEEDINGS. Each indemnified party shall
give reasonably prompt notice to each indemnifying party of any action or
proceeding commenced against it in respect of which indemnity may be sought
hereunder, but failure
Amendment of Stock Purchase Agreement
Page 8
to so notify an indemnifying party (i) shall not relieve it from any liability
which it may have under the indemnity agreement provided in Section 4(a) or (b)
above, unless and then only to the extent it did not otherwise learn of such
action and the lack of notice by the indemnified party materially prejudices the
indemnifying party or results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) shall not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided under Section 4(a) or (b) above. After
receipt of such notice, the indemnifying party shall be entitled to participate
in and, to the extent it shall wish, jointly with any other indemnifying party
so notified, to assume the defense of such action or proceeding at such
indemnifying party's own expense with counsel chosen by such indemnifying party
and approved by the indemnified party, which approval shall not be unreasonably
withheld; PROVIDED, HOWEVER, that, if the defendants in any such action or
proceeding include both the indemnified party and the indemnifying party and the
indemnified party reasonably determines, upon advice of counsel, that a conflict
of interest exists or that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those available to
the indemnifying party, then the indemnified party shall be entitled to one
separate counsel, the reasonable fees and expenses of which shall be paid by the
indemnifying party. If the indemnifying party does not assume the defense of any
such action or proceeding, after having received the notice referred to in the
first sentence of this paragraph, the indemnifying party will pay the reasonable
fees and expenses of counsel (which shall be limited to a single law firm) for
the indemnified party. In such event, however, the indemnifying party will not
be liable for any settlement effected without the written consent of such
indemnifying party. If the indemnifying party assumes the defense of any such
action or proceeding in accordance with this paragraph, such indemnifying party
shall not be liable for any fees and expenses of counsel for the indemnified
party incurred thereafter in connection with such action or proceeding, except
as set forth in the proviso in the second sentence of this Section 4(c).
(d) CONTRIBUTION. In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in this Section 4
is for any reason held to be unenforceable although applicable in accordance
with its terms, the Company and you shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company and you, in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and you
on the other (in such proportions that you and other
Amendment of Stock Purchase Agreement
Page 9
sellers under the Registration Statement are severally, not jointly, responsible
for the balance), in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of the indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether the action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
the indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action.
The parties hereto agree that it would not be just or equitable if
contributions pursuant to this Section 4(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 4(d), you shall not be required
to contribute any amount in excess of the amount, if any, by which the total
price at which Shares were sold to the public exceeds the amount of any damages
that you would otherwise have been required to pay by reason of such untrue
statement or omission.
Notwithstanding the foregoing, no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 4(d), each person, if any, who
controls you within the meaning of Section 15 of the Act shall have the same
rights to contribution as you, and any director of the Company, each officer of
the Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the Act shall have the
same rights to contribution as the Company.
(e) In the event any sale pursuant to the Registration Statement is
effected as an underwritten offering, then the Company agrees to indemnify and
hold harmless each underwriter of Shares to the same extent and on substantially
similar terms as the Company's indemnification of you as set forth in Section
4(a) above.
Amendment of Stock Purchase Agreement
Page 10
5. PROCEDURES FOR SALE.
(a) ALL SALES. In the event you elect to sell any Shares pursuant to
Section 16 of the Agreement, the following procedures must be followed:
(i) The stock certificates representing the Shares bear a
restrictive legend referring to the Agreement. For that
reason, the certificates are not negotiable until the legend
has been removed. Accordingly, you should not initiate any
steps to sell Shares without first reporting your intentions
to the General Counsel at the Company. Upon receipt of your
notification, the Company will advise you promptly: (A) if ,
under Company policy of general application to employee
transactions in Company securities, a sale of Shares would be
inappropriate at that time, and (B) if so, the earliest
probable time when such a sale would not be inappropriate.
(ii) Assuming a sale would not be inappropriate under Section
5(a)(i), the Company will make suitable arrangements to
facilitate your surrender to the Company's transfer agent of
stock certificates representing the Shares you intend to sell
in exchange for new unlegended certificates in deliverable
form, which the Company's transfer agent will make available
to you, subject to your repayment to the Company of the
Discount out of the proceeds of the sale of the Shares. In
that connection, the Company may at its option require payment
of the Discount as a condition of its releasing stock
certificates in deliverable form covering the Shares to be
sold.
(iii) In the event you expect to sell any Shares pursuant to Section
16 of the Agreement OTHERWISE THAN PURSUANT TO RULE 144 OR THE
REGISTRATION STATEMENT, you should make suitable arrangements
for the Company to receive and approve a legal opinion of the
kind referred to in Section 16 before proceeding with the
sale.
(iv) You must notify the Company in writing immediately after your
completion of any such sale.
Amendment of Stock Purchase Agreement
Page 11
(b) SALES UNDER THE REGISTRATION STATEMENT ONLY. In addition to the
procedures set forth above in Section 5(a), the following procedures must be
followed with respect to all sales of Shares under the Registration Statement:
(i) The manner in which sales of Shares are made shall be limited
to (A) "brokers' transactions" (within the meaning of Section
4(4) of the Act), or (B) transactions directly with a "market
maker" (as defined in Section 3(a)(38) of the Securities
Exchange Act of 1934).
(ii) No sale shall be made until you shall have notified the
Company in writing of the jurisdictions in the United States
in which you expect to sell the Shares, and the Company shall
have thereafter advised you that your proposed sale has been
appropriately qualified or registered under the state
securities or blue sky laws applicable thereto or is exempt
therefrom.
(iii) No sale shall be made until you have received copies from the
Company (which the Company will use reasonable efforts to
provide to you on a timely basis) of the Prospectus included
in the Registration Statement, as then supplemented or
amended, and until you have delivered at least one copy to the
broker or market maker through whom you sell the Shares.
* * * * * * * *
If the terms set forth above are satisfactory to you, please sign one copy
of this letter at the place indicated below and return it as soon as possible.
Amendment of Stock Purchase Agreement
Page 12
Please also check the appropriate box below to indicate whether you wish
to have the Shares included in the Registration Statement and, if you wish them
included, sign your name again below the "Yes" box.
Sincerely,
RIVIANA FOODS INC.
By: /s/ XXXXXX X. XXXXXX, XX.
Xxxxxx X. Xxxxxx, Xx.
Accepted and agreed to
this 18th day of
November, 1996.
/s/ W. XXXXX XXXXX
W. Xxxxx Xxxxx
Please include my shares in the Registration Statement.
Yes [X] No [ ]
/s/ W. XXXXX XXXXX
W. Xxxxx Xxxxx
