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EXHIBIT 10.11
DRAFT: 5/20/98
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement (this "Agreement") is made on the _____
day of May, 1998 by and among Capricorn Investors, L.P., a Delaware limited
partnership ("Cap I"), Capricorn Investors II, L.P., a Delaware limited
partnership ("Cap II"), and NATCO Group Inc., a Delaware corporation (the
"Company") and shall become effective on the Effective Date (as defined herein).
R E C I T A L S:
Cap I and Cap II own 5,563,667 shares (68.3%) and 2,582,259 shares
(31.7%), respectively, of the Company's outstanding Common Stock, par value
$0.01 per share (the "Common Stock").
Cap I, Cap II and the Company entered into a Stockholders' Agreement
dated as of June 30, 1997 (the "Original Stockholders' Agreement").
Cap I, Cap II and the Company desire to terminate the Original
Shareholders' Agreement and to enter into this Agreement to provide for the
nomination of certain directors of the Company.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
hereinafter expressed and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
"Agreement", "hereof", "hereunder", and words of similar
import shall refer to this Stockholders' Agreement, as it may be amended from
time to time.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Certificate of Incorporation" shall mean the Certificate of
Incorporation of the Company, as amended and restated from time to time.
"Class II Director" means a director of the Company who has
been elected to the Board of Directors as a member of the second class of
directors pursuant to Article Thirteenth of the Certificate of Incorporation.
"Class III Director" means a director of the Company who has
been elected to the Board of Directors as a member of the third class of
directors pursuant to Article Thirteenth of the Certificate of Incorporation.
"Class III Election Date" shall mean the date on which members
of the third class of the Board of Directors stand for election in accordance
with the Certificate of Incorporation.
"Company" shall mean NATCO Group Inc., a Delaware
corporation.
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"Effective Date" shall mean the date on which the Registration
Statement of the Company on Form S-1 (File No. 333-48851) filed in connection
with the initial public offering of the Common Stock shall have been declared
effective by the Securities and Exchange Commission.
"Qualification Date" shall mean the date that is one hundred
twenty (120) days prior to the first anniversary of the date that the proxy
statement was first delivered to the stockholders of the Company in connection
with the annual meeting of the stockholders of the Company for the year prior to
the year in which the annual meeting is being held, except that if no proxy
statement was released to the stockholders of the Company in connection with the
annual meeting of the stockholders of the Company for the prior year, the date
that is one hundred fifty (150) days prior to the date of the annual meeting of
the stockholders of the Company.
"Qualified Nominee" shall mean any individual who has not, in
the five years preceding the date of the annual meeting of the stockholders at
which such individual is running for a position on the Board of Directors, been:
(i) convicted in a criminal proceeding or is a named subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses),
(ii) the subject of any order, judgment or decree not subsequently reversed,
suspended or vacated of any court of competent jurisdiction permanently or
temporarily enjoining such individual from engaging in any type of business
practice or engaging in any activity in connection with the purchase or sale of
any security, or (iii) found by a court of competent jurisdiction in a civil
action or by the Securities and Exchange Commission to have violated any federal
or state securities law and such judgment or finding has not been subsequently
reversed or vacated.
2. Termination of Original Stockholders' Agreement.
The parties hereby terminate the Original Stockholders' Agreement
effective as of the Effective Date and agree that the force and effect of each
provision of the Original Stockholders' Agreement and all rights and obligations
arising thereunder are hereby terminated and revoked as of the date hereof and
that none of the parties hereto shall have any liabilities or obligations to the
other parties hereto or any other parties as a result of such termination of the
Original Stockholders' Agreement.
3. Nomination of Directors.
(a) For so long as Cap I and Cap II own an aggregate of twenty percent
(20%) or more of the outstanding Common Stock as of the relevant Qualification
Date, the Company, acting through its Board of Directors, shall, subject to the
other provisions of this Agreement, be obligated to nominate for election to the
Board of Directors, as members of the slate of nominees for election to the
Board of Directors proposed by the management of the Company in its proxy
statement at each annual meeting of stockholders of the Company (or special
meeting in lieu thereof) at which Class III Directors are to be elected, one
Qualified Nominee designated by Cap I and one Qualified Nominee designated by
Cap II, each as a Class III Director.
(b) If the number of Class III Directors is increased to more than two
(2), the Company shall only be obligated to nominate the two Qualified Nominees
so designated by Cap I and Cap II for such class.
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(c) Upon the occurrence of a vacancy in the Board of Directors that
results from the removal or resignation of a designee of either Cap I or Cap II,
the Company, acting through its Board of Directors, shall be obligated to elect
a Qualified Nominee designated by Cap I or Cap II, as the case may be, to fill
such vacancy.
(d) If Cap I or Cap II shall not continue to own of record at least
five percent (5%) of the outstanding Common Stock on any Qualification Date, the
rights of such limited partnership under Section 3(a) shall be exercised by the
limited partnership that continues to own more than five percent (5%) of the
outstanding Common Stock.
(e) Cap I and Cap II shall notify the Company in writing of their
designees to the Board of Directors no later than thirty (30) days after the
Qualification Date in the case of Section 3(a) above and no later than ten (10)
days after the occurrence of a vacancy in the case of Section 3(c) above.
(f) The Company, upon receipt of the notice of the designees of Cap I
and Cap II pursuant to Section 3(a), shall use all reasonable efforts to solicit
proxies from its stockholders in favor of the election of such designees.
(g) The Company shall not be obligated to nominate, or solicit proxies
from its stockholders in favor of the election of, any individual that is not a
Qualified Nominee.
4. Covenant Regarding Class III Directors.
The Company covenants and agrees that it shall not reduce the number of
Class III Directors to less than two (2) by amendment of the Certificate of
Incorporation or bylaws of the Company or otherwise during the term of this
Agreement.
5. Specific Performance.
The parties hereto each acknowledge and agree that, in the event of any
breach of this Agreement, each non-breaching party would be irreparably harmed
and could not be made whole by monetary damages. It is accordingly agreed that
such parties, in addition to any other remedy to which they may be entitled at
law or in equity, shall be entitled to compel specific performance of this
Agreement in any action instituted in the United States District Court for the
Southern District of New York, or, if such court would not have jurisdiction for
such action, in any court of the United States or any state having subject
matter jurisdiction. The parties hereto each consent to personal jurisdiction in
any such action brought in the United States District Court for the Southern
District of New York. In no event shall the Company be obligated to violate the
federal securities laws of the United States, the Certificate of Incorporation
or the Bylaws of the Company in order to perform any of its obligations under
this Agreement.
6. Entire Agreement; Amendments.
This Agreement contains the entire understanding of the parties with
respect to the subject matter of this Agreement. There are no restrictions,
agreements, promises, warranties, covenants,
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or undertakings other than those expressly set forth herein or therein. This
Agreement supersedes all prior agreements and understandings among the parties
with respect to its subject matter. This Agreement may not be amended except by
an instrument in writing signed on behalf of all of the parties hereto. Any
agreement on the part of a party hereto to any extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
7. Interpretation.
The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
8. Notice.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered by hand or transmitted by telex, telegram or
facsimile transmission to the other party or mailed by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
To the Company: NATCO Group Inc.
Brookhollow Central III
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxxxx X. Xxxxxxx
Chairman of the Board
and Chief Executive Officer
Telecopy No.: (000) 000-0000
To Cap I: Capricorn Holdings, L.L.C.
00 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Manager
Telecopy No.: (000) 000-0000
To Cap II: Capricorn Holdings, L.L.C.
00 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Manager
Telecopy No.: (000) 000-0000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications hereunder shall be
effective when actually received by the addressee.
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9. Termination.
This Agreement shall terminate in its entirety on the earlier to occur
of (i) the tenth anniversary hereof, and (ii) the date on which Cap I and Cap II
own, in the aggregate, less than twenty percent (20%) of the outstanding Common
Stock.
10. Governing Law.
This Agreement shall be governed by and construed in all respects in
accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of laws thereof which might refer such interpretation to
the laws of a different state or jurisdiction.
11. Counterparts.
This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
as of the date first above written.
NATCO GROUP INC.
By:
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Xxxxxxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
CAPRICORN INVESTORS, L.P.
By: Capricorn Holdings, G.P.,
its general partner
By: Xxxxxxx Holdings, Inc.,
its general partner
By:
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Xxxxxxx X. Xxxxxxx, Xx.
President
CAPRICORN INVESTORS II, L.P.
By: Capricorn Holdings, LLC,
its general partner
By:
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Xxxxxxx X. Xxxxxxx, Xx.
Manager
