EXHIBIT 4.2
This FIRST AMENDMENT TO RIGHTS AGREEMENT (the "Amendment"), dated as of
March 25, 2003 is between NATCO Group Inc., a Delaware corporation (the
"Company"), and Mellon Investor Services LLC (as successor to ChaseMellon
Shareholder Services, L.L.C.), a New Jersey limited liability company, as Rights
Agent (the "Rights Agent").
RECITALS:
The Company and the Rights Agent are parties to a Rights Agreement dated
as of May 15, 1998 (the "Rights Agreement"), pursuant to which the Company has
distributed to holders of the Company's Common Stock preferred share purchase
rights, each of which initially represents the right of the registered holder
thereof to purchase one one-hundredth (1/100) of a share of the Company's Series
A Junior Participating Preferred Stock, par value $0.01 per share, upon the
terms and subject to the conditions set forth in the Rights Agreement.
The Company and Lime Rock Partners II, L.P., a Cayman Islands exempted
limited partnership ("Purchaser"), have entered into a Securities Purchase
Agreement dated as of March 13, 2003 pursuant to which, inter alia, in
connection with Purchaser's purchase of the Company's Series B Convertible
Preferred Stock and a warrant to purchase the Company's Common Stock, the
Company has agreed to amend the Rights Agreement to increase to 20% the
percentage beneficial ownership interest in the Company's voting securities that
would cause Purchaser (but only Purchaser) to become an "Acquiring Person," as
defined in the Rights Agreement.
The Rights Agreement permits the Company and the Rights Agent to amend the
Rights Agreement in any respect without the approval of holders of the Rights
Certificates at any time prior to occurrence of the Distribution Date, and the
Company and the Rights Agent deem the amendments set forth herein to be
necessary and desirable.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
1. AMENDMENT OF DEFINITION OF "ACQUIRING PERSON". The definition of
"Acquiring Person" set forth in Section 1(a) of the Rights Agreement is hereby
amended to read as follows:
"Acquiring Person" shall mean (i) any Person, other than Lime Rock,
who or which, together with all Affiliates and Associates of such Person,
shall be the Beneficial Owner of 15% or more of the Voting Shares of the
Company then outstanding, and (ii) Lime Rock, if Lime Rock, together with
all Affiliates and Associates of Lime Rock, shall be the Beneficial Owner
of 20% or more of the Voting Shares of the Company then outstanding.
Notwithstanding the foregoing:
(i) Acquiring Person shall not include the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or any Subsidiary
of the Company or any entity holding Voting Shares for or pursuant to any
such plan;
(ii) No Person shall become an "Acquiring Person" as the result of
an acquisition of Voting Shares by the Company which, by reducing the
number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more (or, in the case of Lime
Rock, 20% or more) of the Voting Shares of the Company then outstanding;
provided, however, that, if a Person shall become the Beneficial Owner of
15% or more (or, in the case of Lime Rock, 20% or more) of the Voting
Shares of the Company then outstanding by reason of share purchases by the
Company and shall, after such share purchases by the Company and at a time
when such Person is the Beneficial Owner of 15% or more (or, in the case
of Lime Rock, 20% or more ) of the Voting Shares of the Company then
outstanding, become the Beneficial Owner of any additional Voting Shares
of the Company (other than by an antidilution adjustment described in
paragraph (iii) below), then such Person shall be deemed to be an
"Acquiring Person";
(iii) No Person shall become an "Acquiring Person" as the result of
an antidilution adjustment under the Certificate of Designations for
Series B Convertible Preferred Stock of the Company, or under any warrant
granted by the Company pursuant to the Securities Purchase Agreement by
and between Lime Rock Partners II, L.P. and the Company dated as of March
13, 2003, which adjustment increases the
percentage of Voting Shares of the Company beneficially owned by such
Person; provided, however, that, if a Person shall become the Beneficial
Owner of 15% or more (or, in the case of Lime Rock, 20% or more) of the
Voting Shares of the Company then outstanding by reason of such an
antidilution adjustment and shall, after such antidilution adjustment and
at a time when such Person is the Beneficial Owner of 15% or more (or, in
the case of Lime Rock, 20% or more) of the Voting Shares of the Company
then outstanding, become the Beneficial Owner of any additional Voting
Shares of the Company (other than by one or more additional antidilution
adjustments described in this paragraph (iii)), then such Person shall be
deemed to be an "Acquiring Person";
(iv) Any Person who has reported or is required to report such
ownership (but who is the Beneficial Owner of less than 20% of the
outstanding Common Shares of the Company) on Schedule 13G under the
Exchange Act (or any comparable or successor reporting form) or on
Schedule 13D under the Exchange Act (or any comparable or successor
reporting form) which Schedule 13D does not state any intention or reserve
the right to control or influence the management or policies of the
Company or engage in any of the actions specified in Item 4 of such
Schedule (other than the disposition of the Common Shares) and, within ten
Business Days of being requested by the Company to advise it regarding the
same, certifies to the Company that such Person acquired Common Shares in
excess of 14.9% of the outstanding Common Shares of the Company
inadvertently or without knowledge of the terms of the Rights and who,
together with all such Person's Affiliates and Associates, thereafter does
not acquire additional Common Shares while being the Beneficial Owner of
15% or more of the outstanding Common Shares of the Company shall not be
deemed to be an "Acquiring Person"; provided, however, that, if the Person
requested so to certify fails to do so within ten Business Days, then such
Person shall become an Acquiring Person immediately after such ten
Business Day period; and
(v) none of Lime Rock's Affiliates or Associates will be considered
to be an Acquiring Person if (a) the aggregate amount of Voting Shares
Beneficially Owned by Lime Rock and such Affiliates and Associates is less
than 20% of the then outstanding Voting Shares and (b) the aggregate
amount of Voting Shares that would be Beneficially Owned by such
Affiliates or Associates if Lime Rock were not an Affiliate or Associate
of any Person is less than 15% of the then outstanding Voting Shares. For
the avoidance of doubt, this paragraph (v) shall be read in conjunction
with the provisions of paragraphs (ii) and (iii) above.
2. AMENDMENT OF DEFINITION OF "ASSOCIATE". The definitions of "Affiliate"
and "Associate" set forth in Section 1(a) of the Rights Agreement are hereby
amended by inserting the following proviso at the end of those definitions:
"; provided, however, that Lime Rock shall be deemed not to be an
Associate of any of its limited partners."
3. AMENDMENT OF DEFINITION OF "DISTRIBUTION DATE". The definition of
"Distribution Date" set forth in Section 1(a) of the Rights Agreement is hereby
amended by deleting the words "the Beneficial Owner of 15% or more of the then
outstanding Voting Shares of the Company" and substituting in their place the
words "an Acquiring Person."
4. DEFINITION OF "LIME ROCK". The following definition is hereby added to
Section 1(a) of the Rights Agreement by inserting it in its correct alphabetical
position:
"Lime Rock" shall mean Lime Rock Partners II, L.P., a Cayman Islands
exempted limited partnership. Anything in this Agreement to the contrary
notwithstanding, "Lime Rock" shall not include (i) any Person into or with
which Lime Rock shall be merged or consolidated, (ii) any Person to which
Lime Rock shall sell, transfer, assign or otherwise dispose of either (A)
any Voting Shares of the Company or (B) all or substantially all of the
assets or properties of Lime Rock, or (iii) any successor or assign of
Lime Rock.
5. MISCELLANEOUS.
(a) Section 29 of the Rights Agreement. This Amendment is an amendment
pursuant to Section 29 of
2
the Rights Agreement. Upon execution and delivery of this Amendment, the terms
and conditions of this Amendment shall be part of the terms and conditions of
the Rights Agreement for any and all purposes, and all the terms and conditions
of both shall be read together as though they constitute one and the same
instrument, except that in case of conflict, the provisions of this Amendment
will control.
(b) Full Force and Effect. Except as they have been modified in this
Amendment, each and every term and provision of the Rights Agreement shall
continue in full force and effect, and all references to the Rights Agreement in
the Rights Agreement shall be deemed to mean the Rights Agreement as
supplemented and amended pursuant hereto.
(c) Counterparts. This Amendment may be executed in any number of
counterparts and in separate counterparts, and each of such counterparts shall,
for all purposes be deemed to be an original, and all of such counterparts shall
together constitute but one and the same instrument.
(d) Governing Law. This Amendment shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.
(e) Descriptive Headings. Descriptive headings of the several Sections of
this Amendment are inserted for convenience only, and shall not control or
affect the meaning of any of the provisions hereof.
[The remainder of this page has been intentionally left blank.]
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
NATCO GROUP INC.
By: /s/ Xxxxxxxxx Xxxxxxx
-------------------------------------------
Name: Xxxxxxxxx Xxxxxxx
Title: Chief Executive Officer
Attest:
/s/Xxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxx
MELLON INVESTOR SERVICES LLC, as Rights Agent
By: /s/ Deodatt Lakerman
-------------------------------------------
Name: Deodatt Lakerman
Title: Assistant Vice President & Client
Service Manager
Attest:
/s/ Xxxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Client Service Manager
S-1
