EXHIBIT 10.1
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is entered into as of May 13,
1998, by and between Watermarc Food Management Co., a Texas corporation (the
"Company"), and GTI Partners, LLC, a California limited liability company
("Consultant").
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. SERVICES. Consultant shall provide the following services (the "Services")
to Company:
a. Consultant shall introduce Company to various sources of capital with
the aim of raising a minimum of two million five hundred thousand dollars
($2,500,000) and a maximum of five million dollars ($5,000,000) on a best
efforts basis (the "Initial Financing").
b. Consultant shall prepare (or cause to be prepared) the documentation
for, and conduct (or cause to be conducted), an offering or series of offerings
(collectively, the "Offerings") of Company's securities in an effort to raise
capital including the Initial Financing for the Company upon terms and
conditions acceptable to the Company. Company shall have final approval of all
documentation and the terms of the Initial Financing.
c. Upon completion of the Initial Financing, and during the term of this
Agreement, Consultant may introduce Company to other sources of financing all to
be conducted on a best efforts basis.
d. Consultant shall provide such other consulting services in connection
with the foregoing Services as reasonably requested by the Company, including,
advice and consultation in (i) developing the corporate and capital structure of
the Company, (ii) completing the transactions contemplated by the Services, and
(iii) assisting in creating an orderly market for the Company's securities.
e. Consultant shall be considered an agent of the Company and shall at
all times act in the best interests of the Company without regard to
Consultant's own interests or those of third parties.
2. COMPENSATION. In consideration for the performance of the Services by
Consultant, Company shall provide Consultant with the following compensation:
a. Company shall issue to Consultant (or to such persons or entities as
directed by Consultant) warrants to purchase, at $.90 per share, up to 950,000
shares of post 10 to 1 reverse split common stock of Company (the "Warrants").
Warrants to purchase one hundred thousand (100,000) shares of common stock of
the Company (or the pre-split equivalent) shall be issued to Consultant
immediately upon execution of this Agreement pursuant to the Warrant Agreement
in the form attached hereto as SCHEDULE A. Warrants for the remaining shares, in
the form attached hereto as Schedule A, shall be issued to Consultant upon the
completion of at least two million five hundred thousand dollars ($2,500,000) of
Initial Financing. A registration statement to register the shares underlying
the warrants (the "Warrant Shares") shall be filed by the Company within ninety
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(90) days from the date hereof. The Warrant Shares shall be subject to a lock-up
agreement prohibiting resale thereof for a period of two (2) years from the date
of the issuance of the respective Warrants subject to (i) the Company's consent
to any proposed public or private resales, or (ii) the expiration of the lock-up
agreement upon Consultant arranging the full $5,000,000 Initial Financing on
terms acceptable to the Company in one or more installments. The Warrant Shares
shall be subject to a voting agreement and proxy in favor of Xxxxxx Xxxxxxxxxx,
which shall expire as to 250,000 shares every ninety (90) days from the date of
exercise of the Warrants. The Warrants may be exercised in whole but not in
part. The Warrants are not transferable except to (i) entities or persons
affiliated with Consultant, or (ii) with the consent of the Company. The lock-up
and voting agreements shall be attached as exhibits to the Warrant Agreement and
incorporated therein by reference.
b. Company shall reimburse Consultant for all reasonable and necessary
out of pocket costs and expenses incurred by Consultant in the performance of
the Services under this Agreement, provided such expenses have been preapproved
by the Company.
3. Retention of Consultant by the Company to assist in raising the Initial
Financing (or any other capital) is on a nonexclusive basis and may be
terminated by the Company at any time subject to its obligations (i) to issue
100,000 warrants on the execution of this Agreement (or the pre-split equivalent
thereof), (ii) to issue warrants for 850,000 additional shares (or the pre-split
equivalent thereof) if $2,500,000 is raised through financing sources of
Consultant prior to the termination of this Agreement by the Company, and (iii)
to reimburse Consultant for its reasonable expenses incurred pursuant to Section
2b hereof.
4. It is the intention of the Consultant to assist the Company in raising the
initial $2,500,000 within the next sixty (60) days. If the initial $2,500,000 of
financing is obtained and received in more than one installment, said
installments shall be paid into an escrow account until the entire $2,500,000 of
financing shall have been received into escrow, at which time the entire
$2,500,000 shall be released to the Company.
5. Within ninety (90) days from the date hereof, the Company will file the
registration statement referred to above with the SEC and will file a proxy
statement or information statement with respect to the 10 to 1 reverse stock
split. To provide Consultant assurance that the 10 to 1 reverse stock split will
be effectuated, Xxxxxx X. Xxxxxxxxxx will execute the Letter Agreement in the
form attached hereto as SCHEDULE B agreeing to vote all of his shares in favor
of the reverse stock split.
6. CONFIDENTIALITY. In connection with this Agreement, Company will be
furnishing Consultant with certain information which is either non-public,
confidential or proprietary in nature. All such information furnished to
Consultant, its partners, principals, officers, employees, agents, and
representatives (collectively, "representatives"), by Company, including
information furnished prior to the execution of this Agreement, and all
analyses, compilations, data, studies or other documents prepared by Consultant
or its representatives containing or based in whole or in part on any such
furnished information or reflecting Consultant's review of Company is
hereinafter referred to as the "Information". In consideration of Consultant
being furnished with the Information, Consultant agrees that:
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a. The Information will be kept confidential and will not, without the
prior written consent of Company, be disclosed by Consultant or its
representatives, in any manner whatsoever, in whole or in part, and will not be
used by Consultant or its representatives directly or indirectly for any purpose
other than in performing the Services referred to above. Moreover, Consultant
agrees to transmit the Information only to those third parties (hereafter
referred to as the "Third Parties") who need to know the Information for the
purpose of evaluating whether to provide financing to Company, who are informed
by Consultant of the confidential nature of the Information and who agree to be
bound by the terms of this Agreement. Consultant agrees to notify Company prior
to the delivery or disclosure of any Information to its representatives or to
the Third Parties, as to the identity of such representatives or the Third
Parties. Consultant will be responsible for any actions by its representatives
or the Third Parties which are not in accordance with this Agreement.
b. Should any person seek to legally compel Consultant or anyone to whom
Consultant transmits the Information to disclose any of the Information,
Consultant will provide Company with prompt written notice so that Company may
seek a protective order or other appropriate remedy and/or waive compliance with
the confidentiality provisions of this Agreement, provided that nothing herein
will prevent, limit or delay Consultant in disclosing any Information which it
is legally compelled to disclose. In any event, Consultant will furnish only
that portion of the Information which it is advised by its counsel is legally
required and will exercise its best efforts to obtain reliable assurance that
confidential treatment will be accorded the Information.
c. Consultant (i) acknowledges that neither Company nor any of its
directors, officers, employees, or attorneys have made any representation or
warranty (express or implied) as to the accuracy or completeness of the
Information and (ii) agrees, to the full extent permitted by law, that neither
Company nor any of its directors, officers, employees, or attorneys shall have
any liability whatsoever to Consultant on any basis (including, without
limitation, in contract, tort, under federal or state securities laws, or
otherwise) as a result of the use of the Information by Consultant, its
representatives or the Third Parties.
d. Consultant acknowledges the ownership by Company of all Information
furnished and agrees not to disclose or use any part of it except in accordance
with this Agreement. All Information and any copies thereof, including those
given to the Third Parties, will be returned to Company upon completion of the
Services.
7. PROHIBITED ACTIVITIES. Consultant covenants and agrees that for a period of
two (2) years from the date hereof, unless specifically invited in writing by
Company (it being understood that execution of this Agreement does not
constitute such invitation), neither Consultant nor any of its Representatives
and affiliates (including any person or entity directly or indirectly, through
one or more intermediaries, controlling Consultant or controlled by or under
common control with Consultant) will, directly or indirectly, (a) solicit, seek
or offer to effect, negotiate with or provide any Information to any party with
respect to, or make any statement, proposal or inquiry, whether written or oral,
whether alone or in concert with others, to Company or to any shareholder of
Company, or otherwise make any public announcement or proposal or offer
whatsoever, with respect to (i) any form of business combination or transaction
relating to Company or any of its subsidiaries or affiliates, including without
limitation, a merger, consolidation, tender or exchange offer, sale or purchase
of assets or securities, or dissolution or liquidation of Company or any of its
subsidiaries or affiliates, (ii) any form of restructuring, recapitalization or
similar transaction with respect to Company or any of its subsidiaries or
affiliates, (iii) any demand, request or proposal to
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amend, waive or terminate any provision of this Agreement, (iv) any proposal or
other statement inconsistent with the terms of this Agreement or (v) seeking or
offering to control or influence in any manner the management, Board of
Directors or policies of Company or any of its subsidiaries or affiliates; or
(b) instigate, encourage or assist any party to do any of the foregoing.
8. PROHIBITION OF SECURITIES TRANSACTIONS. Consultant covenants and agrees that
for a period of two (2) years after the date hereof, without the express prior
written consent of Company, it will not and will cause each of its
Representatives not to, singly or in concert with others, including without
limitation as a part of a Partnership, Limited Partnership, Syndicate or other
group, directly or indirectly, through one or more intermediaries or otherwise:
a. make, or in any way participate in, any solicitation of proxies with
respect to Company's securities (including by the execution of action by written
consent), become a participant in any election contest with respect to Company,
seek to advise, encourage or influence any party with respect to the voting of
Company's securities or demand a copy of the stock ledger, list of stockholders,
or other books and records of Company;
b. participate in or encourage the formation of any group which seeks or
offers to affect control of Company or any of its subsidiaries or affiliates or
for the purpose of circumventing any provision of this Agreement; or
c. otherwise act, alone or in concert with others to seek or offer to
control or influence, in any manner, the management, Board of Directors or
policies of Company or any of its subsidiaries or affiliates.
9. INDEMNIFICATION.
a. In contacting various sources of financing, Consultant shall limit
the representations and statements made to those representations and statements
contained in non-confidential written documents prepared or approved in writing
by Company. Consultant shall defend, indemnify and hold Company, its directors,
officers, employees, and attorneys, harmless from any and all claims, actions,
and liabilities arising out of or in any way connected with representations
and/or statements made by Consultant outside the scope of said written
documents.
b. Company shall defend, indemnify and hold Consultant, its partners,
principals and employees, harmless from any and all claims, actions, and
liabilities arising out of or in any way connected with representations and/or
statements made in written documents prepared or approved in writing by Company.
10. DAMAGES. Consultant agrees that Company would be irreparably injured by a
breach of this Agreement by Consultant or any of its Representatives or the
Third Parties and Company shall be entitled to equitable relief, including
injunctive relief and specific performance, in the event of any breach of the
provisions of this Agreement. Such remedies shall not be deemed to be the
exclusive remedies for a breach of this Agreement by Consultant or its
Representatives or the Third Parties, but shall be in addition to all other
remedies available at law or in equity.
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11. SURVIVAL OF TERMS; NON-WAIVER. Consultant understands and agrees that
paragraphs 6, 7, 8 and 9 of this Agreement shall survive the termination of this
Agreement notwithstanding that some or all of the Information shall have become
publicly disclosed or outdated or that any portion of this Agreement shall
become inoperative as to any portion of the Information. It is further
understood and agreed that no failure or delay by Company in exercising any
right, power or privilege under this Agreement shall operate as waiver thereof
nor shall any single or partial exercise thereof preclude any other or further
exercise of any right, power or privilege hereunder.
12. SEVERABILITY. In the event that any one or more of the provisions of this
Agreement shall be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
contained herein.
13. AMENDMENT; MODIFICATION. This Agreement constitutes the entire Agreement
between Company and Consultant with respect to the matters set forth herein, and
no amendment or modification hereof shall be valid unless made by supplemental
written agreement, executed and approved by Company and Consultant.
14. SCHEDULES. All schedules referred to herein will be prepared and delivered,
in form and substance satisfactory to each party, within ten (10) days from the
date hereof. Warrants for the initial 100,000 shares referred to above will not
be issued until such Schedules are finalized and agreed to.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regard to applicable
choice of law principles.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
"COMPANY": "CONSULTANT":
WATERMARC FOOD MANAGEMENT CO. GTI PARTNERS, LLC.
a Texas corporation a California limited liability
company
ADDRESS: ADDRESS:
00000 Xxxxxxxx Xxxxx, Xxxxx 000 000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000 Xxxxx Xxxxxx, XX 00000
By: s/____________________________ By: s/_________________________
Xxxxxx X. Xxxxxxxxxx, CEO Name: Xxxxxxx Xxxxxxxx
Title: Partner
SCHEDULE A
WARRANT AGREEMENT AND CERTIFICATE
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ARE SUBJECT TO
CERTAIN RESTRICTIONS, CONTAINED HEREIN, WITH RESPECT TO THEIR TRANSFER.
WARRANT TO PURCHASE SHARES OF COMMON STOCK OF
WATERMARC FOOD MANAGEMENT CO.
__________ Warrants
This Warrant Certificate certifies that GTI PARTNERS, LLC (together with
its successors and assigns as herein provided, the "Holder") is the owner of
__________ Warrants (subject to adjustment as provided herein), each of which
represents the right to subscribe for and purchase from WATERMARC FOOD
MANAGEMENT CO., a Texas corporation (the "Company"), one share of the common
stock, par value $0.05 per share, of the Company (the common stock, including
any stock into which it may be changed, reclassified or converted, is herein
referred to as the "Common Stock") at the purchase price (the "Exercise Price")
of $_______ per share.
The Warrants represented by this Warrant Certificate are subject to the
following provisions, terms and conditions:
ARTICLE I
EXERCISE OF WARRANTS
EXERCISE. The Warrants may only be exercised by the Holder as a whole by
surrender of this Warrant Certificate at the office of the Company (or such
other office or agency of the Company as may be designated by notice in writing
to the Holder at the address of such Holder appearing on the books of the
Company) with the appropriate form attached hereto duly completed, at any time
within the period beginning on the date hereof and expiring at 5:00 p.m.
Houston, Texas time, on May _____, 2000 (the "Exercise Period") and by payment
to the Company by certified check or bank draft of the Exercise Price for such
shares. The Company agrees that the shares of Common Stock so purchased shall be
and are deemed to be issued to the Holder as the record owner of such shares of
Common Stock as of the close of business on the date on which the Warrant
Certificate shall have been surrendered and payment made for such shares of
Common Stock. Certificates representing the shares of Common Stock so purchased
shall be delivered to the Holder promptly.
ARTICLE II.
WARRANT OFFICE: TRANSFER
2.1 WARRANT OFFICE. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's office at
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00000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000 and may subsequently be
such other office of the Company or of any transfer agent of the Common Stock in
the continental United States as to which written notice has previously been
given to the holder of this Warrant. The Company shall maintain, at the Warrant
Office, a register for the Warrant, in which the Company shall record the name
and address of the person in whose name the Warrants have been issued, as well
as the name and address of each permitted assignee of the rights of the
registered owner hereof.
2.2 OWNERSHIP OF WARRANT. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in this Article II.
2.3 RESTRICTIONS ON EXERCISE AND TRANSFER OF WARRANTS. The Company
agrees to maintain at the Warrant Office books for the registration and transfer
of this Warrant. Subject to the restrictions on transfer of Warrants in this
Section 2.3, the Company, from time to time, shall register the transfer of this
Warrant in such books upon surrender of this Warrant at the Warrant Office
properly endorsed or accompanied by appropriate instruments of transfer and
written instructions for transfer satisfactory to the Company. Upon any such
transfer, a new Warrant shall be issued to the transferee and the surrendered
Warrant shall be canceled by the Company. The Company shall pay all taxes,
(other than securities transfer taxes) and all other expenses and charges
payable in connection with the transfer of Warrants pursuant to this Section
2.3.
a. RESTRICTIONS IN GENERAL. Notwithstanding any provisions
contained in this Warrant to the contrary, this Warrant shall not be exercisable
or transferable except to (i) entities or persons under common control with, or
who are controlled by, Holder or persons who control Holder, or (ii) with the
prior written consent of the Company, which may be withheld in the Company's
sole discretion. The related shares of Common Stock issuable upon exercise of
this Warrant (the "Warrant Shares") shall not be transferable except upon the
conditions specified in the Lock-up Agreement and Voting Agreement attached
hereto as Exhibits A and B respectively, and incorporated herein by reference,
and as specified in this Article 2.3, which conditions are intended, among other
things, to insure compliance with the provisions of the Securities Act of 1933
as amended (the "Securities Act") in respect of the exercise or transfer of this
Warrant or transfer of such Warrant Shares. The registered holder of this
Warrant agrees that it will neither (i) transfer this Warrant prior to delivery
to the Company of the opinion of counsel referred to in, and to the effect
described in, Article 2.3(b), (ii) exercise this Warrant prior to delivery to
the Company of the opinion of counsel referred to in, and to the effect
described in, Article 2.3(b), or until registration of the related Warrant
Shares under the Securities Act and any applicable state securities or blue sky
laws have become effective, nor (iii) transfer such Warrant Shares prior to
delivery to the Company of the opinion of counsel referred to in, and to the
effect described in, Article 2.3.(b), or until registration of such Warrant
Shares under the Securities Act and any applicable state securities or blue sky
laws have become effective.
(b) STATEMENT OF INTENTION TO EXERCISE; OPINION OF COUNSEL. The
registered holder of this Warrant, by its acceptance hereof, agrees that prior
to any exercise or transfer of this Warrant or any transfer of the related
Warrant Shares, said holder will deliver to the Company a statement setting
forth either said holder's intention with respect to the retention or
disposition of any Warrant Shares, or the intention of said holder's prospective
transferee with respect to its retention
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or disposition of this Warrant or of said Warrant Shares (whichever is involved
in such transfer), in either such case, together with a signed copy of the
opinion of said holder's counsel, or such other counsel as shall be acceptable
to the Company, as to the necessity or non-necessity for registration under the
Securities Act and any applicable state securities or blue sky laws in
connection with such exercise or such transfer.
2.4 EXPENSES OF DELIVERY OF WARRANTS. The Company shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of Warrants and related
Warrant Shares hereunder.
ARTICLE III
WARRANT ADJUSTMENT PROVISIONS
3.1 ADJUSTMENT OF WARRANT SHARES. The Number of Warrant Shares
purchasable upon exercise of this Warrant may be adjusted from time to time as
set forth below.
a. If the Company at any time pays to the holders of its Common Stock a
dividend in Common Stock, the number of Warrant Shares issuable upon the
exercise of this Warrant shall be proportionally increased, effective at
the close of business on the record date for determination of the
holders of the Common Stock entitled to the dividend.
b. If the Company at any time subdivides or combines in a larger or
smaller number of shares its outstanding shares of Common Stock, then
the number of shares of Common Stock issuable upon the exercise of this
Warrant shall be proportionally increased in the case of a subdivision
and decreased in the case of combination, effective in either case at
the close of business on the date that the subdivision or combination
becomes effective.
c. In case of any reclassification of the Common Stock, any
consolidation of the Company with, or merger of the Company into, any
other entity, any merger of any entity into the Company (other than a
merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock), any
sales or transfer of all or substantially all of the assets of the
Company, or any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or other property, then provisions
shall be made such that the holders of this Warrant shall have the right
thereafter, during the period that this Warrant shall be exercisable, to
exercise this Warrant and receive the kind and amount of securities,
cash and other property receivable upon such reclassification,
consolidation, merger, sale, transfer or share exchange by holders of
the Company's Common Stock. In addition to the adjustments provided for
above to the number of Warrant Shares purchasable hereunder upon
exercise of the Warrant in certain circumstances, the Company may, in
its sole discretion, provide for further adjustments to the number of
Warrant Shares purchasable hereunder and/or the Exercise Price thereof
based on additional or other facts and circumstances where the Company
determines that such an adjustment would be fair and equitable to the
holders of the Warrants.
3.2 COSTS. The Company shall pay all documentary, stamp, transfer or
other transactional taxes attributable to the issuance or delivery of shares of
Common Stock of the Company upon exercise of this Warrant; PROVIDED, HOWEVER,
that the Company shall not be
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required to pay any taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificate for such shares in a
name other than that of the holder of this Warrant in respect of which such
shares are being issued.
3.3 RESERVATIONS OF SHARES. The Company shall reserve at all times so
long as this Warrant remains outstanding, free from preemptive rights, out of
its treasury Common Stock or its authorized but unissued shares of Common Stock,
or both, solely for the purpose of effecting the exercise of this Warrant,
sufficient shares of Common Stock to provide for the exercise hereof.
3.4 VALID ISSUANCE. All shares of Common Stock which may be issued upon
exercise of this Warrant will upon issuance by the Company be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof attributable to any act or omission by the
Company, and the Company shall take no action which will cause a contrary result
(including without limitation, any action which would cause the Exercise Price
to be less than the par value, if any, of the Common Stock).
3.5 APPROVALS. If any shares of Common Stock to be reserved for the
purpose of exercise of this Warrant require registration with or approval of any
governmental authority under any Federal or state law before such shares may be
validly issued or delivered upon exercise, then the Company and the holders of
this Warrant will in good faith and as expeditiously as possible endeavor to
secure such registration or approval, as the case may be.
ARTICLE IV
RESTRICTIVE LEGENDS
4.1 Each Warrant shall (unless otherwise permitted by the provisions
hereof) be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant has not been registered under the Securities Act of 1933,
as amended, and is transferable only upon the conditions specified in
the Warrant Agreement referred to herein."
4.2 Each certificate for Common Stock issued upon exercise of a Warrant
and each certificate for Common Stock issued to a subsequent transferee shall
(unless otherwise permitted by the provisions hereof) be stamped or otherwise
imprinted with legends in substantially the following forms:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 or any state securities act. The shares
have been acquired for investment and may not be sold, transferred,
pledged or hypothecated unless (i) they shall have been registered under
the Securities Act of 1933 and any applicable state securities act, or
(ii) the corporation shall have been furnished with an opinion of
counsel, satisfactory to counsel for the corporation, that registration
is not required under any such acts."
"The shares represented by this certificate are subject to the
provisions of a Voting Agreement dated as of ___________, 1998 ("Voting
Agreement"), which restrict the rights of the holder of the shares
represented by this certificate to vote such
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shares as provided for therein, by which such holder, by acceptance of
this certificate, agrees to be bound. A counterpart of the Voting
Agreement has been deposited with Watermarc Food Management Co. at its
principal office and will be provided to any holder or transferee upon
request."
"The shares represented by this certificate are subject to the
provisions of a Lock-up Agreement dated as of ___________, 1998
("Lock-up Agreement"), which restrict the transfer of such shares, and
the rights of the holder of the shares represented by this certificate
are subject to all the terms and provisions of the Lock-up Agreement, by
which such holder, by acceptance of this certificate, agrees to be
bound. A counterpart of the Lock-up Agreement has been deposited with
Watermarc Food Management Co. at its principal office and will be
provided to any holder or transferee upon request."
ARTICLE V
REGISTRATION RIGHTS
5.1 REQUIRED REGISTRATION. The Company shall use its best efforts to
effect the registration under the Securities Act of the shares of Common Stock
issued pursuant to this Warrant Certificate upon exercise of the Warrants and
evidenced by a certificate bearing the restrictive legends set forth in Article
IV hereof (the "Restricted Stock") on a form appropriate for the registration of
the Restricted Stock in order to permit the Holder to dispose of the Restricted
Stock in accordance with its intended method of disposition and the terms of the
Lock-up Agreement.
5.2 INCIDENTAL REGISTRATION. Notwithstanding the provisions of Article
5.1 of this Agreement, if the Company at any time during the Exercise Period
proposes to register any of its Common Stock under the Securities Act (on a form
appropriate for the registration of the Restricted Stock for public offering by
the holders thereof other than a registration on Form S-8, or any successor or
similar forms or a shelf registration under Rule 415 for the sole purpose of
registering shares to be issued in connection with the acquisition of stock or
assets of another person) and there is then not an effective registration
statement covering the shares of Common Stock to be issued upon exercise of the
Warrants, it will each such time give written notice to the holder of this
Warrant and any holders of Restricted Stock (the holders of Restricted Stock are
sometimes referred to herein as the "Eligible Holders") of its intention so to
do and, upon written request from Eligible Holders given within 30 days after
receipt of any such notice (which request shall state the intended method of
disposition of such securities by such Eligible Holder), the Company will use
its best efforts to cause all or any (but not less than 1,000 shares if less
than all) Restricted Stock held by such Eligible Holder or which such Eligible
Holder is then entitled to acquire pursuant to a Warrant to be registered under
the Securities Act, all to the extent requisite to permit the sale or other
disposition (in accordance with the intended methods thereof, as aforesaid by
such Eligible Holder); provided, however, that the Company may at any time
withdraw or cease proceeding with any such registration if it shall at the same
time withdraw or cease proceeding with the registration of such other securities
originally proposed to be registered. If an offering pursuant to this Article is
to be made through underwriters, the managing underwriter may, if in its
reasonable opinion marketing factors so require, limit (pro rata according to
the market value of securities proposed to be registered by each) the number of
(or eliminate entirely from the offering all of the) securities which eligible
Holders may register pursuant to this Article.
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5.3 EXPENSES: CONDITIONS PRECEDENT. Except as provided below, all
expenses incurred by the Company in connection with action taken by the Company
to comply with this Article V, including, without limitation, all registration
and filing fees, printing expenses, accounting fees, fees and disbursements of
counsel and other experts, premiums for liability insurance obtained in
connection with a registration statement filed to effect such compliance, shall
be paid by the Company; PROVIDED, HOWEVER, that all such expenses in connection
with any amendment or supplement to any registration statement filed by the
Company hereunder or the related prospectus which is required to be filed more
than nine months after the effective date of such registration statement because
any seller or sellers of securities of the Company covered thereby or any
underwriter of such securities has not effected the disposition of the
securities required to be registered shall be paid by such seller or sellers pro
rata, in the case of two or more such sellers, in accordance with the respective
market values of such securities. The Company shall not be obligated in any way
in connection with any registration pursuant to this Article V for any
underwriting discounts or commissions payable by any Eligible Holder to any
underwriter of securities to be sold by such Eligible Holder. It shall be a
condition precedent to the obligation of the Company to take any action under
Article 5.2 that the Company shall receive an undertaking satisfactory to it
from each Eligible Holder of securities registered or to be registered as herein
provided to pay all expenses required to be borne by such Eligible Holder and to
furnish or cause to be furnished to the Company specifically for use in the
preparation of the registration statement and prospectus written information
concerning the securities held by such Eligible Holder and also concerning any
underwriter of such securities and the intended method of disposition thereof as
the Company shall reasonably request and as may be required in connection with
the action to be taken by the Company hereunder.
ARTICLE VI
COVENANT OF THE COMPANY
The Company covenants and agrees that this Warrant shall be binding upon
any corporation succeeding to the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets.
ARTICLE VII
MISCELLANEOUS
7.1 ENTIRE AGREEMENT. This Warrant, contains and describes the entire
agreement between the holder hereof and the Company with respect to the shares
which can be purchased upon exercise hereof and supersedes all prior
arrangements or understanding with respect thereto.
7.2 GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of Texas without regard to applicable
choice of law principles.
7.3 WAIVER AND AMENDMENT. Any term or provision of this Warrant may be
waived at any time by the party which is entitled to the benefits thereof and
any term or provision of this Warrant may be amended or supplemented at any time
by agreement of the holder hereof and the Company, except that any waiver of any
term or condition, or any amendment or supplementation, of this Warrant must be
in writing. A waiver of any breach or failure to enforce any of the terms
6
or conditions of this Warrant shall not in any way affect, limit or waive a
party's rights hereunder at any time to enforce strict compliance thereafter
with every term or condition of this Warrant.
7.4 ILLEGALITY. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provisions exists, be in any way impaired.
7.5 COPY OF WARRANT. A copy of this Warrant shall be filed among the
records of the Company.
7.6 NOTICE. Any notice or other document required or permitted to be
given or delivered to the holder hereof shall be delivered at, or sent by
certified or registered mail to such holder at, the last address shown on the
books of the Company maintained at the Warrant Office for the registration of
this Warrant or at any more recent address of which the holder hereof shall have
notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to the Company, other than such notice or
documents required to be delivered to the Warrant Office, shall be delivered at,
or sent by certified or registered mail to, the office of the Company at 00000
Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000 or such other address within the
continental United States of America as shall have been furnished by the Company
to the holder of this Warrant.
7.7 LIMITATION OF LIABILITY; NOT STOCKHOLDERS. No provision of this
Warrant shall be construed as conferring upon the holder hereof the right to
vote, consent, receive dividends or receive notices (other than as herein
expressly provided) in respect of meetings of stockholders for the election of
directors of the Company or any other right whatsoever as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by the holder
hereof to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
such holder for the purchase price of any shares of Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
7.8 EXCHANGE, LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of
evidence satisfactory to the Company of the loss, theft, mutilation or
destruction of this Warrant, and in the case of any such loss, theft or
destruction upon delivery of a bond of indemnity in such form and amount as
shall be reasonably satisfactory to the Company, or in the event of such
mutilation upon surrender and cancellation of this Warrant, the Company will
make and deliver a new Warrant of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Article 7.8 in lieu of any Warrant alleged to be lost, destroyed or stolen, or
in lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company. This Warrant shall be promptly canceled
by the Company upon the surrender hereof in connection with any exchange or
replacement.
7
7.9 HEADINGS. The Article and other headings herein are for convenience
only and are not a part of this Warrant and shall not affect the interpretation
thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name.
Dated: ___________________, 1998
WATERMARC FOOD MANAGEMENT CO.
By: ________________________________
Xxxxxx X. Xxxxxxxxxx
Chairman of the Board and CEO
Attest:
-------------------------
Secretary
8
[FORM OF ELECTION TO PURCHASE]
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate to purchase _______ shares of Common
Stock and herewith, in accordance with the terms hereof, tenders in payment for
such shares a certified check or bank draft payable to the order of Watermarc
Food Management Co. in the amount of $_________________.
The undersigned requests that a certificate for such shares be issued in
the name of __________________________ and that such certificate be delivered to
____________________
---------------------------.
Dated: ________________ ______________________________________________
(Signature must conform in all respects to name
of holder as specified on the face of the Warrant.)
9
EXHIBIT A
LOCK-UP AGREEMENT
This agreement is entered into on this ____ day of _____________, 1998
by and between GTI Partners, LLC ("GTI") and Watermarc Food Management Co. ("the
Company").
WHEREAS, on May _____, 1998 GTI and the Company entered into a
Consulting Agreement whereby in consideration for GTI providing certain Services
to the Company, the Company agreed to issue to GTI Warrants to purchase up to
nine hundred fifty thousand shares of post 10 to 1 reverse split Common Stock of
the Company (the "Warrant Shares").
It is hereby agreed to by the parties that:
1. The Warrant Shares shall not be resold, disposed of, or transferred,
directly or indirectly, by GTI for a period of two (2) years from the date of
the issuance of the respective Warrants except with the prior written consent of
the Company, which may be withheld in the Company's sole discretion.
2. All certificates representing the Warrant Shares shall be imprinted
on the face or back thereof with the following statement:
"The shares represented by this certificate are subject to the
provisions of a Lock-up Agreement dated as of ________________, 1998
("Lockup Agreement"), which restrict the transfer of such shares, and
the rights of the holder of the shares represented by this certificate
are subject to all the terms and provisions of the Lock-up Agreement, by
which such holder, by acceptance of this certificate, agrees to be
bound. A counterpart of the Lock-up Agreement has been deposited with
Watermarc Food Management Co. at its principal office and will be
provided to any holder or transferee upon request."
3. This Lock-up Agreement shall terminate upon the earliest of the
following occurrences: (i) the expiration of two (2) years from the date of the
issuance of the last Warrant; or (ii) GTI arranging the full five million
dollars ($5,000,000) Initial Financing on terms acceptable to the Company in the
Company's sole discretion, pursuant to the Consulting Agreement.
1
4. This Lock-up Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regard to applicable
choice of law principles.
IN WITNESS WHEREOF, the parties hereto have executed this Lock-up
Agreement as of the date first set forth above.
WATERMARC FOOD MANAGEMENT CO.,
a Texas Corporation
ADDRESS:
00000 Xxxxxxxx Xxxxx, Xxx. 000
Xxxxxxx, Xxxxx 00000
By: ______________________________
Xxxxxx Xxxxxxxxxx
President and CEO
GTI PARTNERS, LLC,
a California liability company
ADDRESS:
----------------------------------
----------------------------------
By: _____________________________
Name: ___________________________
Title: ___________________________
2
EXHIBIT B
VOTING AGREEMENT
This Voting Agreement ("Agreement") established as of the ____ day of
______________, 1998, between GTI Partners, LLC (the "Shareholders"), who are
the owners of Warrants to purchase an aggregate of 950,000 shares of post 10 to
1 reverse split Common Stock, $.05 par value (together with any shares of such
stock which may heretofore or hereafter be owned by the Shareholders or any of
their transferees or assigns, by operation of law or otherwise, the "Shares"),
of Watermarc Food Management Co., a Texas corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company and the Shareholders are parties to that certain
Consulting Agreement dated as of _______________, 1998 (the "Consulting
Agreement"), pursuant to which the Company issued to the Shareholders Warrants
to purchase 950,000 shares of post 10 to 1 reverse split Common Stock, par value
$.05 per share, of the Company; and
WHEREAS, the Shareholders deem it to be in the best interests of the
Company and of themselves to establish this Agreement in order to secure
continuity and stability of policy in the management of the Company, and to this
end, to unite the voting power represented by the Shares and held by the
Shareholders as hereinafter provided.
NOW, THEREFORE, it is mutually agreed as follows:
Article 1.
Appointment and Rights of Shareholders' Representative
1.1 APPOINTMENT OF SHAREHOLDERS' REPRESENTATIVE. The Shareholders hereby
agree that, until the termination of this Agreement, Xxxxxx Xxxxxxxxxx as
representative and proxy ("Shareholders' Representative"), shall have the
exclusive right, without the consent of the Shareholders, to exercise, in person
or by his nominee or proxy, all the rights and powers of the Shareholders with
respect to the Shares, including the right to vote and to take part in or
consent to any corporate or shareholder action of any kind whatsoever. In
support and not in limitation thereof, the Shareholders hereby irrevocably name,
constitute and appoint the Shareholders' Representative, with full powers of
substitution and resubstitution, as its true and lawful agent, attorney-in-fact
and proxy, in its name, place and stead, during the term of this Agreement to
vote the Shares (whether
in a meeting, by a consent of shareholders in lieu of a meeting or otherwise)
and take any related actions, including without limitation signing any waiver of
notice, all in such manner as the Shareholders' Representative determines in his
sole discretion. Other than in those instances in which the Shareholders'
Representative acts for his own account in connection with the exercise of
preemptive or similar rights, in exercising such discretion, the Shareholders'
Representative is specifically authorized to consider his own best interests,
and the Shareholders' Representative will not be acting hereunder as a fiduciary
to the Shareholders.
1.2 POWERS OF SHAREHOLDERS' REPRESENTATIVE. Without limiting the
generality of the foregoing provisions of this Article 1, the Shareholders'
Representative shall have the power to vote, or direct the voting of, the Shares
with respect to (i) any removal of any director, (ii) any election of any
director, (iii) any amendment of bylaws, articles or certificates of
incorporation or other instruments, (iv) any removal or relocation of offices or
records and any change of registered address or registered agent, and (v) any
merger, sale of assets or dissolution and liquidation, in each case to (but only
to) the fullest extent permitted by applicable law. If in any particular
instance (whether or not enumerated in the proceeding sentence), the rights
granted under this Agreement are determined by a court of competent jurisdiction
to be invalid with respect to any particular issue or instance, the Shareholders
desire that such rights nevertheless continue with respect to all other issues
and instances.
1.3 IRREVOCABLE PROXY. The Shareholders further agree that the proxy
granted by this Article 1 is coupled with an interest and is therefore
irrevocable and will survive any attempt at revocation (other than any
termination of the Agreement pursuant to the provisions of Article 3 hereof) and
the death or incapacity of any Shareholder (other than the Shareholders'
Representative as set forth in Article 3 hereof).
Article 2.
Liability of Shareholders' Representative
The Shareholders' Representative shall not be personally liable with
respect to any action taken or omitted to be taken under this Agreement,
provided such commission or omission does not amount to willful misconduct on
his part.
Article 3.
Term
This Agreement shall become effective on the date hereof and shall
continue in effect for a period of one year after the date of the exercise of
all of the Warrants, provided, however, that the proxy shall expire as to
250,000 shares every ninety (90) days from the date of the exercise of the
Warrants, until the proxy is completely expired at the end of the one year
period. This Agreement may not be sooner revoked except as provided above.
Article 4.
Stock Certificate Legends
All certificates representing the Shares shall be imprinted on the face
or back thereof with the following statement:
"The shares represented by this certificate are subject to the
provisions of a Voting Agreement dated as of _______________, 1998
("Voting Agreement"), which restrict the rights of the holder of the
shares represented by this certificate to vote such shares as provided
for therein, by which such holder, by acceptance of this certificate,
agrees to be bound. A counterpart of the Voting Agreement has been
deposited with Watermarc Food Management Co. at its principal office and
will be provided to any holder or transferee upon request".
Such certificates shall be endorsed conspicuously on the front thereof as
follows:
"See restrictions on transfer hereof on reverse side."
The Shareholders agree to surrender all certificates representing the
Shares subject to this Agreement to the Shareholders' Representative for
endorsement by the Company in accordance with this Article 4. As soon as the
certificates have been endorsed, they shall be returned to the Shareholders, or
deposited with the Company if and as instructed by the Shareholders'
Representative.
Article 5.
Compensation, Reimbursement and Expenses of
Shareholders' Representative
The Shareholders' Representative shall serve hereunder without
compensation. The Shareholders' Representative shall have the right to incur and
pay such reasonable expenses and charges, to employ and pay such agents,
attorneys and other persons as he may deem necessary and proper for carrying out
the terms of this Agreement. Monies to pay any such expenses or charges incurred
by the Shareholders' Representative shall be reimbursed by the Shareholders.
Nothing contained in this Agreement shall disqualify the Shareholders'
Representative or incapacitate him from serving the Company as an officer or
director, or in any other capacity, or from receiving compensation in any such
capacity.
Article 6.
Dividends or Subscriptions
If any dividends with respect to the Shares are declared in stock of the
Company having voting power, or if any such stock is issued in connection with
any stock split or other distribution with respect to the Shares, or if the
Shareholders or any of its partners or principals should acquire stock by
subscription, purchase or otherwise, or acquire any
voting rights with respect to any shares of the Company, such stock shall be
deemed to be subject to the terms of this Agreement. The Shareholders agree to
surrender such certificates promptly to the Shareholders' Representative for
endorsement by the Company in accordance with Article 4 of this Agreement. As
soon as the certificates have been endorsed, they shall be returned to the
Shareholders, or deposited with the Company if and as instructed by the
Shareholders' Representative.
Article 7.
Miscellaneous Provisions
7.1 GOVERNING LAWS. This Agreement shall be subject to and governed by
the laws of the State of Texas without regard to applicable choice of law
principles.
7.2 GENDER. Whenever the context requires, the gender of all words used
herein shall include the masculine, feminine and neuter, and the number of all
words shall include the singular and plural.
7.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Shareholders and their respective heirs, executors, administrators, successors
and assigns.
7.4 NO PARTNERSHIP OR JOINT VENTURE. Nothing in this Agreement shall be
deemed to constitute the formation of a partnership or joint venture between the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
multiple counterparts, each of which shall be deemed an original, on the date
and year first above written.
GTI Partners, LLC
By: ______________________
Name: ______________________
Title: ______________________
By: ______________________
Name: ______________________
Title: ______________________
April 22, 1998 SCHEDULE B
Xx. Xxxxx Xxxxxxxxxx
0 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Mr. Xxxxx Xxxx
Manhattan West, Inc.
000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Gentlemen:
This letter will serve as my agreement as a shareholder of Watermarc Food
Management Co. (the "Company") to vote all shares owned by me, both of record
and beneficially, in favor of a ten to one reverse stock split of the Company's
Common Stock.
Sincerely,
Ghualam X. Xxxxxxxxxx
President and CEO
GMB/lw
