Page 53 of 87 Pages
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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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.
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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/ Xxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Manager
THE COMPANY:
THE UNIMARK GROUP, INC.
By:/s/ Xxxxxx Xxxxxxx Xxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx Xxxxx
Title: President, Chief Executive Officer
and Chief Operating Officer
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