EXECUTION COPY
EXHIBIT 4.1
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REGISTRATION RIGHTS AGREEMENT
by and among
LIME ROCK PARTNERS II, LP
and
NATCO GROUP INC.
Dated as of March 25, 2003
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Table of Contents
Page
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1. Registration on Request.............................................................................. 1
1.1. Requests....................................................................................... 1
1.2. Obligation to Effect Registration.............................................................. 1
1.3. Exceptions to Registration Requirements........................................................ 2
1.4. Suspending Registration........................................................................ 2
1.5. Registration Statement Form.................................................................... 3
1.6. Expenses....................................................................................... 3
1.7. Effective Registration Statement............................................................... 4
1.8. Pro Rata Allocation............................................................................ 4
1.9. Selecting Underwriters......................................................................... 4
1.10. Securities in Registration Must be Distributed by Underwriters................................. 5
1.11. Underwriting Agreement......................................................................... 5
1.12. Failure of Condition under Underwriting Agreement.............................................. 6
1.13. Underwriting Agreement......................................................................... 6
2. Piggyback Registration............................................................................... 6
2.1. NATCO's Notice of Registration................................................................. 6
2.2. Holder's Piggyback Registration Request........................................................ 6
2.3. NATCO Decides Not to Effect Registration....................................................... 6
2.4. Registration Priority in a Registration Initiated by NATCO..................................... 7
2.5. Registration Priority in a Registration Requested by Holders of Existing
Registrable Securities....................................................................... 8
2.6. Registration Priority in a Registration Requested by Other Holders............................. 9
2.7. Registration Expenses.......................................................................... 10
2.8. Underwriting Agreement......................................................................... 10
3. Registration Procedures.............................................................................. 10
3.1. Best Efforts................................................................................... 10
3.2. Holders to Give NATCO Information.............................................................. 15
3.3. Documents Identifying the Seller............................................................... 15
3.4. Misleading Registration Statement or Prospectus................................................ 15
4. Hold Back Agreements................................................................................. 16
4.1. When Restrictions Apply........................................................................ 16
4.2. Restrictions................................................................................... 16
4.3. Others to Enter into Similar Agreements........................................................ 17
5. Preparation; Reasonable Investigation................................................................ 17
6. Other Registrations.................................................................................. 17
7. Indemnification...................................................................................... 17
7.1. Indemnification by NATCO....................................................................... 17
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Table of Contents
(continued)
7.2. Exceptions to NATCO's Liability................................................................ 18
7.3. Indemnification by the Sellers................................................................. 19
7.4. Exceptions to Holder's Liability............................................................... 20
7.5. Limitations on Holder's Liability.............................................................. 20
7.6. Notices of Claims, etc......................................................................... 20
7.7. Other Indemnification.......................................................................... 21
7.8. Contribution................................................................................... 21
7.9. Survival of Indemnities........................................................................ 23
7.10. Officers and Directors......................................................................... 23
8. Other Provisions Relating to Registrable Securities.................................................. 23
8.1. Registration Requests for Convertible Preferred Shares or Warrant.............................. 23
8.2. Best Registration Rights....................................................................... 23
8.3. Rule 144; Legended Securities; etc............................................................. 23
8.4. Nominees for Beneficial Owners................................................................. 24
9. Miscellaneous........................................................................................ 24
9.1. Notices........................................................................................ 24
9.2. Amendments and Waivers......................................................................... 26
9.3. Specific Performance........................................................................... 26
9.4. Severability................................................................................... 27
9.5. Governing Law.................................................................................. 27
9.6. Jurisdiction................................................................................... 27
9.7. Waiver of Jury Trial........................................................................... 27
9.8. Successors, Assigns and Transferees............................................................ 28
9.9. No Third Party Beneficiaries................................................................... 28
9.10. Term........................................................................................... 28
9.11. Further Assurances............................................................................. 28
9.12. No Inconsistent Agreements..................................................................... 28
9.13. Counterparts................................................................................... 28
10. Definitions and Interpretation....................................................................... 29
10.1. Definitions.................................................................................... 29
10.2. Interpretation................................................................................. 34
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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT ("Agreement"), dated as of March 25, 2003,
entered into by and between Lime Rock Partners II, LP, a Cayman Islands exempted
limited partnership ("Purchaser"), and NATCO Group Inc., a Delaware corporation
("NATCO").
R E C I T A L S
WHEREAS, under a Securities Purchase Agreement, dated as of March 13,
2003, by and between NATCO and Purchaser ("Securities Purchase Agreement"),
Purchaser agreed to buy from NATCO, and NATCO agreed to sell to Purchaser, at
the Closing (as defined in the Securities Purchase Agreement): (i) shares of
NATCO's Series B convertible preferred stock, par value $0.01 ("Convertible
Preferred Shares"), which are convertible into shares of NATCO's common stock,
par value $0.01 ("Common Stock"), under the Certificate of Designations with
respect to the Convertible Preferred Shares filed with the Secretary of State of
the State of Delaware ("Certificate of Designations"); and (ii) a warrant to buy
shares of Common Stock ("Warrant").
WHEREAS, Purchaser, or entities wholly owned by Purchaser, may in the
future buy or otherwise obtain other shares of Common Stock ("Additional
Shares") from NATCO or from other shareholders of NATCO.
NOW, THEREFORE, the Parties agree as follows:
1. Registration on Request.
1.1. Requests. The Holder or Holders of Registrable Securities
constituting at least 50% of the Registrable Securities outstanding at any date
(exclusive of Additional Securities) have the right to make requests to NATCO to
effect registrations under the Securities Act relating to a Public Offering of
some or all of the Registrable Securities of the Holder or Holders making the
request. Requests shall specify the jurisdictions in which the registration is
to be effected. However, NATCO is not obligated to effect registrations under
Section 1.2 in respect of more than three registration requests under this
Section 1.1.
1.2. Obligation to Effect Registration. Subject to Section 1.3 and Section
1.4, on receiving a registration request under Section 1.1, NATCO will promptly
give notice of the requested registration to all Holders of Registrable
Securities, and use its best efforts to effect the registration under the
Securities Act in a Public Offering of:
(i) the Registrable Securities which NATCO has been requested to
register under Section 1.1; and
(ii) the other Registrable Securities which Holders of Registrable
Securities request NATCO to register, by request given to
NATCO within 15 Business Days after NATCO gives its notice
under Section 1.2.
1.3. Exceptions to Registration Requirements. NATCO does not have to
effect a registration under Section 1.2 if the number of Registrable Securities
to be included in the registration is less than 750,000 shares (subject to
appropriate adjustments for stock dividends, stock subdivisions, stock splits,
stock combinations, stock reclassifications changing the number of stock, and
similar events). If NATCO decides not to effect a registration on this ground,
it shall promptly give the Holders of Registrable Securities notice of this
fact. The Holders of Registrable Securities who requested registration will then
be deemed to have withdrawn their request and not to have made their request
when determining whether NATCO is obligated to effect a registration under
Section 1.2.
1.4. Suspending Registration.
(a) NATCO may suspend its obligation to effect the registration of
Registrable Securities under Section 1.2:
(i) Other Registration Statement: if, promptly after receipt of
the request referred to in Section 1.1, it gives the Holders
who made the request notice that it has filed or was at the
time of receipt of that request preparing to file a
registration statement ("Other Registration Statement") with
respect to shares of Common Stock, until 90 days after the
effective date of the Other Registration Statement under the
Securities Act (or until 45 days after NATCO gives that
notice, if NATCO has not filed the Other Registration
Statement within that 45 day period) provided that NATCO uses
its best efforts to cause the Other Registration Statement to
be declared effective as promptly as practicable and, during
the suspension period, does not file, or take any steps to
prepare to file, any registration statement except the Other
Registration Statement or a Special Registration;
(ii) Material Nonpublic Information: if, after receiving a
registration request, NATCO gives the Holders who made the
request notice that NATCO has material nonpublic information
as to which it reasonably believes it has a valid business
purpose in not disclosing publicly for the time being, for a
period from the date NATCO receives the registration request
and ending on the earliest of:
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(A) 60 days after NATCO receives the registration
request;
(B) the public announcement of the material nonpublic
information; and
(C) the date on which NATCO reasonably believes that
it no longer needs to suspend its obligation on
this basis.
NATCO shall not, under this Section 1.4(a)(ii), suspend
its obligation to effect the registration of Registrable
Securities under Section 1.2 based on the same or
substantially related material nonpublic information for
which it has already suspended such obligation under
this Section 1.4(a)(ii).
(b) In giving a Holder of Registrable Securities who made a registration
request notice of a suspension under Section 1.4(a), NATCO shall not disclose
material nonpublic information to that Holder unless, before disclosing this
information, NATCO gives the Holder notice that the information is material and
nonpublic and gives the Holder the opportunity to accept or refuse to accept the
material nonpublic information for review. As a condition to disclosing material
nonpublic information, NATCO may require a Holder to whom it proposes to
disclose the information to enter into a confidentiality agreement on customary
terms.
(c) Within two Business Days of the end of a suspension period, NATCO will
notify the Holder or Holders of Registrable Securities who made the registration
request that the suspension period has ended. Within 10 days after receiving
this notice, those Holders shall advise NATCO whether or not they wish to
proceed with or to withdraw the registration request. Holders who do not timely
notify NATCO will be treated as having withdrawn their registration request. If
the registration does not proceed because Holders withdraw registration
requests, no registration request in respect of that registration will be
treated as having been made when determining whether NATCO is obligated to
effect a registration under Section 1.2.
1.5. Registration Statement Form. Each registration requested under
Section 1 shall be effected by filing a registration statement on Form S-1, Form
S-2 or Form S-3 (or any other form which includes substantially the same
information required to be included in a registration statement on these forms
as presently constituted).
1.6. Expenses. Each Holder will pay the underwriting discounts and
commissions attributable to the sale of its Registrable Securities. NATCO will
pay all other Registration Expenses in connection with registrations effected
under a request under Section 1.
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1.7. Effective Registration Statement. A registration requested under
Section 1 will not be treated as having been effected unless it has become
effective for the period specified in Section 3.1(ii). However, a registration
requested under Section 1 that does not become effective after NATCO files a
registration statement with respect to it solely because the Holders of
Registrable Securities requesting the registration fail to proceed will be
treated as having been effected by NATCO at the request of those Holders (unless
the Holders' failure to proceed resulted from material adverse information
concerning NATCO of which they were unaware when they made their registration
request or from a reasonable objection to a registration statement or prospectus
(or amendment or supplement to it) which NATCO does not address to the Holders'
reasonable satisfaction).
1.8. Pro Rata Allocation. If the managing underwriter for a Public
Offering of Registrable Securities under a registration requested under Section
1.1 advises NATCO that, in its view, the number of securities requested or
proposed to be included in the registration exceeds the largest number that can
be included in the registration without materially adversely affecting the
distribution of Registrable Securities on behalf of the Holders requesting the
registration, NATCO shall include in the registration:
(i) first, Registrable Securities that the Holders of Registrable
Securities requested to be included in the registration (or,
if not all of these Registrable Securities can be included,
those Holders shall share pro rata in the number of shares of
Registrable Securities included in the Public Offering based
on the number of Registrable Securities they requested to be
included); and
(ii) second, to the extent that the number of securities to be
registered under Section 1.8(i) is less than the largest
number that can be included in the registration without
materially adversely affecting the distribution of Registrable
Securities on behalf of the Holders requesting the
registration, such number of the securities that NATCO and
other securityholders propose to register as would not cause
the total number of securities to be registered to exceed such
largest number.
NATCO will ensure that any registration rights agreement it enters into after
the date of this Agreement is consistent with this Section 1.8.
1.9. Selecting Underwriters. Whenever a registration is requested under
Section 1, the Holders of a majority of the Registrable Securities requested to
be included in the registration may select one or more underwriters to
administer the offering subject to NATCO's prior approval, not to be
unreasonably withheld.
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1.10. Securities in Registration Must be Distributed by Underwriters. Only
securities to be distributed by the underwriters may be included in the
registration requested under Section 1.
1.11. Underwriting Agreement. NATCO shall enter into an underwriting
agreement with the underwriters for a Public Offering by Holders of Registrable
Securities under a registration requested under Section 1. The underwriting
agreement shall:
(i) Parties: include as parties the underwriters, NATCO and the
Holders of Registrable Securities to be distributed by the
underwriters;
(ii) Satisfactory to Holders: in substance and form, be reasonably
satisfactory to the Holders of a majority of the Registrable
Securities to be included in the registration and to the
underwriters;
(iii) NATCO's Obligations: contain representations and warranties by
NATCO and other terms and provisions as are customarily
contained in agreements of this type (including indemnities to
the effect and to the extent provided in Section 7 (except
that the indemnities in the indemnity agreement will also be
for the benefit of persons who participate as underwriters,
brokers or dealers in the Public Offering and persons who
control any of those participating Persons), provisions for
the delivery of officers' certificates, opinions of counsel
and accountants' "comfort" letters and hold-back
arrangements);
(iv) Benefit Holders: to the extent the Holders of the Registrable
Securities to be included in the registration so request,
provide that some or all of NATCO's representations,
warranties and covenants to and for the benefit of the
underwriters also be made to and for the benefit of those
Holders;
(v) Conditions Precedent: to the extent the Holders of Registrable
Securities to be included in the registration so request,
provide that some or all of the conditions precedent to the
obligations of the underwriters also be conditions precedent
to those Holders' obligations; and
(vi) Holders' Obligations: not require a Holder of Registrable
Securities to be included in the registration to make
representations or warranties to, or agreements with, NATCO or
the underwriters,
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except those specified in Section 4 and representations,
warranties or agreements about the Holder, the Holder's
ownership of the Registrable Securities to be included in the
registration and the Holder's intended method of distribution.
1.12. Failure of Condition under Underwriting Agreement. If a condition to
the obligations under the underwriting agreement is not met or waived, and this
is not due solely to the fault of the Holders of Registrable Securities
requesting registration under Section 1.1, no registration request in respect of
that registration will be treated as having been made when determining whether
NATCO is obligated to effect a registration under Section 1.2.
1.13. Underwriting Agreement. Any obligation of NATCO to include
Registrable Securities of a Holder in a registration statement prepared and
filed under this Section 1 is conditioned on the Holder agreeing to enter into
an underwriting agreement between NATCO and the underwriters, which shall comply
with Section 1.11 and otherwise be on no less favorable terms to the Holders of
Registrable Securities than those applying to NATCO, or to any securityholders
of NATCO, whose securities are included in the registration.
2. Piggyback Registration.
2.1. NATCO's Notice of Registration. If NATCO proposes to file a
registration statement under the Securities Act with respect to a Primary
Distribution or a Secondary Distribution under which Registrable Securities
could be distributed in accordance with the method of distribution contemplated
by that registration statement, NATCO shall give prompt notice to the Holders of
Registrable Securities that it intends to do so, together with details of the
intended method of distribution and the jurisdictions in which NATCO proposes to
register the securities to be distributed.
2.2. Holder's Piggyback Registration Request. Within 20 days of NATCO
giving notice under Section 2.1, any Holder of Registrable Securities may give
NATCO a registration request, specifying the Registrable Securities it wishes to
dispose of and the jurisdictions in which registration is to be effected.
Subject to Section 2.3, Section 2.4, Section 2.5 and Section 2.6, NATCO will use
its best efforts to include in the applicable registration statement the
Registrable Securities that those Holders request NATCO to register, to the
extent required to permit the disposition of those Registrable Securities, and
to effect the registration of those Registrable Securities.
2.3. NATCO Decides Not to Effect Registration. If, after giving notice
under Section 2.1 that it intends to register securities and before the
effective date of the corresponding registration statement, the Board decides
for any reason not to proceed with the registration, NATCO shall give notice of
this decision to the Holders of
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Registrable Securities that gave NATCO a registration request under Section 2.2,
and NATCO shall have no obligation to proceed with the registration of those
Registrable Securities. NATCO shall pay the Registration Expenses in connection
with those Registrable Securities.
2.4. Registration Priority in a Registration Initiated by NATCO. If, in a
registration within Section 2.1 initiated by NATCO (rather than by a
securityholder) to offer securities for its own account, NATCO is advised in
writing by the managing underwriter that in its opinion the aggregate number of
securities requested to be included in the registration (whether by NATCO, under
this Section 2 or under any other rights granted by NATCO to holders of its
securities to include securities in the registration) exceeds the largest number
that can be included in the registration without materially adversely affecting
the distribution of those securities, NATCO shall include in the registration:
(i) first, securities to be sold for NATCO's account;
(ii) second, to the extent that the number of securities to be
registered under Section 2.4(i) is less than the largest
number that can be included in the registration without
materially adversely affecting the distribution of those
securities, the Existing Registrable Securities requested to
be included and the Registrable Securities requested to be
included (or, if the managing underwriter of the proposed
Primary Distribution advises NATCO in writing that, in the
managing underwriter's reasonable opinion, the inclusion in
the registration statement of the aggregate number of Existing
Registrable Securities requested to be included and
Registrable Securities requested to be included would
materially adversely affect that distribution of securities,
then NATCO shall so advise the Holders who requested
registration under Section 2.2 and the number of Registrable
Securities included in the registration statement shall be
reduced (ratably with Existing Registrable Securities) to the
number acceptable to the managing underwriter and this reduced
number of Registrable Securities shall be allocated pro rata
among the Holders requesting registration under Section 2.2
based on the number of Registrable Securities in respect of
which each such Holder requested registration); and
(iii) third, to the extent that the number of securities to be
registered under Section 2.4(i) and Section 2.4(ii) is less
than the largest number that can be included in the
registration without materially adversely affecting the
distribution of those securities, other
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securities to be registered under other rights granted by
NATCO to holders of its securities to include securities in
the registration.
NATCO will ensure that any registration agreement it enters into after the date
of this Agreement is consistent with this Section 2.4.
2.5. Registration Priority in a Registration Requested by Holders of
Existing Registrable Securities. If, in a registration within Section 2.1
resulting from a holder of Existing Registrable Securities exercising a demand
right in respect of those Existing Registrable Securities (but not a "special
registration right" under the agreement referred to in paragraph (i) of the
definition of "Existing Registration Rights Agreements"), NATCO is advised in
writing by the managing underwriter that in its opinion the aggregate number of
securities requested to be included in the registration (whether by the holders
of Existing Registrable Securities demanding registration, by NATCO, under this
Section 2 or under any other rights granted by NATCO to holders of its
securities to include securities in the registration) exceeds the largest number
that can be included in the registration without materially adversely affecting
the distribution of those securities, NATCO shall include in the registration:
(i) first, Existing Registrable Securities in respect of which the
demand right was exercised and other Existing Registrable
Securities to be registered in the same registration under the
applicable Existing Registration Rights Agreement;
(ii) second, to the extent that the number of securities to be
registered under Section 2.5(i) is less than the largest
number that can be included in the registration without
materially adversely affecting the distribution of those
securities, securities to be sold for NATCO's account;
(iii) third, to the extent that the number of securities to be
registered under Section 2.5(i) and Section 2.5(ii) is less
than the largest number that can be included in the
registration without materially adversely affecting the
distribution of those securities, the Registrable Securities
and Existing Registrable Securities (other than those
described in Section 2.5(i)) that holders of those securities
requested to be included (or, if the managing underwriter of
the proposed Secondary Distribution advises NATCO in writing
that, in the managing underwriter's reasonable opinion, the
inclusion in the registration statement of the aggregate
number of Existing Registrable Securities requested to be
included (other than those described in Section 2.5(i)) and
Registrable Securities requested to be included would
materially adversely affect that
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distribution of securities, then NATCO shall so advise the
Holders who requested registration under Section 2.2 and the
number of Registrable Securities included in the registration
statement shall be reduced (ratably with Existing Registrable
Securities (other than those described in Section 2.5(i))) to
the number acceptable to the managing underwriter and this
reduced number of Registrable Securities shall be allocated
pro rata among the Holders requesting registration under
Section 2.2 based on the number of Registrable Securities in
respect of which each such Holder requested registration); and
(iv) fourth, to the extent that the number of securities to be
registered under Section 2.5(i), Section 2.5(ii) and Section
2.5(iii), is less than the largest number that can be included
in the registration without materially adversely affecting the
distribution of those securities, other securities to be
registered under other rights granted by NATCO to holders of
its securities to include securities in the registration.
NATCO will ensure that any registration agreement it enters into after the date
of this Agreement is consistent with this Section 2.5.
2.6. Registration Priority in a Registration Requested by Other Holders.
If, in a registration within Section 2.1 resulting from a holder of securities
(other than Registrable Securities or Existing Registrable Securities)
exercising a demand right in respect of those securities, NATCO is advised in
writing by the managing underwriter that in its opinion the number of securities
requested to be included in the registration (whether by the holder demanding
registration, by NATCO, under this Section 2 or under any other rights granted
by NATCO to holders of its securities to include securities in the registration)
exceeds the largest number that can be included in the registration without
materially adversely affecting the distribution of those securities, NATCO shall
include in the registration:
(i) first, the securities to be sold for the account of the holder
requesting registration, securities to be sold for NATCO's
account, Existing Registrable Securities requested to be
included and Registrable Securities requested to be included
(or, if the managing underwriter of the proposed Secondary
Distribution advises NATCO in writing that, in the managing
underwriter's reasonable opinion, the inclusion in the
registration statement of the aggregate number of Existing
Registrable Securities requested to be included and
Registrable Securities requested to be included would
materially adversely affect that distribution of securities,
then
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NATCO shall so advise the Holders who requested registration
under Section 2.2 and the number of Registrable Securities
included in that registration statement shall be reduced
(ratably with Existing Registrable Securities) to the number
acceptable to the managing underwriter and this reduced number
of Registrable Securities shall be allocated pro rata among
the Holders requesting registration under Section 2.2 based on
the number of Registrable Securities in respect of which each
such Holder requested registration); and
(ii) second, to the extent that the number of securities to be
registered under Section 2.6(i) is less than the largest
number that can be included in the registration without
materially adversely affecting the distribution of those
securities, other securities to be registered under other
rights granted by NATCO to holders of its securities to
include securities in the registration.
NATCO will ensure that any registration agreement it enters into after the date
of this Agreement is consistent with this Section 2.6.
2.7. Registration Expenses. The Holders requesting registration will pay
the underwriting discounts and commissions attributable to the sale of their
Registrable Securities. NATCO will pay the Registration Expenses in connection
with each registration of Registrable Securities requested under this Section 2.
No registration effected under this Section 2 relieves NATCO from its obligation
to effect registrations on request under Section 1.
2.8. Underwriting Agreement. Any obligation of NATCO to include
Registrable Securities of a Holder in a registration statement prepared and
filed under this Section 2 is conditioned on the Holder agreeing to enter into
an underwriting agreement between NATCO and the underwriters, which shall comply
with Section 1.11 and otherwise be on no less favorable terms to the Holders of
Registrable Securities than those applying to NATCO, or to any securityholders
of NATCO, whose securities are included in the registration.
3. Registration Procedures.
3.1. Best Efforts. When NATCO is required to use its best efforts to
effect the registration of Registrable Securities under the Securities Act under
Section 1 or Section 2, NATCO will promptly:
(i) File Registration Statement: prepare and file with the SEC as
soon as practicable (and in any event within 120 days) after
receiving a
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request under Section 1 or Section 2 a registration statement
with respect to those securities, make any required filings
with the NASD and use best efforts to cause the registration
statement to become effective on the earliest practicable
date;
(ii) Keep Registration Statement Effective: prepare and file with
the SEC the amendments and supplements to the registration
statement and the corresponding prospectus, and the other
documents, needed to keep the registration statement
effective and to comply with the Securities Act with respect
to the disposition of the securities covered by the
registration statement until the earlier of the sellers
having disposed of these securities in accordance with their
intended methods of disposition stated in the registration
statement and the date that is six months after the
registration statement becomes effective;
(iii) Documents to Holders' Counsel: give counsel (if any) selected
by the Holders of a majority of the Registrable Securities
covered by the registration statement copies of the documents
NATCO proposes to file with the SEC (including documents to
be filed on a confidential basis) in connection with the
registration, at least five Business Days before NATCO files
these with the SEC. These documents are subject to such
counsel's review. NATCO shall not file a registration
statement or prospectus (or amendments or supplements to
them) under a registration under Section 1.1 if the Holders
of a majority of the Registrable Securities covered by the
registration statement, their counsel, or any underwriters
reasonably object in writing;
(iv) Provide Copies of Documents to Holders: give each Holder of
Registrable Securities covered by the registration statement,
without charge, the number of conformed copies of the
registration statement (and each amendment and supplement to
it), the prospectus included in the registration statement
(including preliminary prospectuses and summary prospectuses)
and other documents as the Holder reasonably requests to help
it or the underwriter dispose of the securities covered by
the registration statement, and give the Holder copies of
each other document filed with, and correspondence sent to or
received from (and memorandums summarizing oral
communications with), the SEC relating to or affecting the
registration;
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(v) Blue Sky Registration: use its best efforts to register or
qualify the securities covered by the registration statement
under the securities or blue sky laws of the jurisdictions
that the managing underwriter reasonably requests, and do the
other things necessary or advisable to enable each Holder of
Registrable Securities covered by the registration statement
to dispose of those Registrable Securities in those
jurisdictions (except that NATCO is not required to qualify
generally to do business as a foreign corporation in a
jurisdiction in which it is not already qualified, subject
itself to tax in a jurisdiction in which it is not otherwise
subject to tax, or take any action which would subject it to
general service of process in a jurisdiction in which it is
not otherwise subject to process);
(vi) Other Governmental Approvals: use its best efforts to cause
the Registrable Securities covered by the registration
statement to be registered with or approved by such other
governmental agencies or authorities in the United States
(including the registration of the securities under the
Exchange Act) as may be needed to enable the Holders of
Registrable Securities covered by the registration statement
or the underwriters to dispose of those securities;
(vii) Opinions and Comfort Letters: give each Holder of Registrable
Securities covered by the registration statement a signed
counterpart, addressed to the Holder, of:
(A) an opinion of counsel for NATCO experienced in
securities law matters, dated the effective date of the
registration statement; and
(B) a "comfort" letter signed by the independent public
accountants who have issued an audit report on NATCO's
financial statements included in the registration
statement,
covering substantially the same matters with respect to the
registration statement (and the prospectus used in connection
with it), and, in the case of the accountants' letter, with
respect to events after the date of the financial statements,
as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to the underwriters in
underwritten Public Offerings of securities. NATCO's
obligation to deliver an accountant's letter addressed to the
Holders shall be subject to such Holders' furnishing of such
opinions, representations and other information
12
as may be required by applicable accounting and auditing
standards;
(viii) Remedy Misleading Registration Statement: notify each Holder
of Registrable Securities covered by the registration
statement if the registration statement, at the time it or
any amendment to it became effective, contained an untrue
statement of a material fact or omitted to state a material
fact required to be stated in it or necessary to make the
statements in it not misleading and, as promptly as
practicable, prepare and file with the SEC a post-effective
amendment to the registration statement and use best efforts
to cause the post-effective amendment to become effective so
that the registration statement, as amended, does not contain
an untrue statement of a material fact or omit to state a
material fact required to be stated in it or necessary to
make the statements in it not misleading;
(ix) Remedy Misleading Prospectus: notify each Holder of
Registrable Securities covered by the registration statement,
at any time when a prospectus relating to it is required to
be delivered under the Securities Act, if the prospectus
included in the registration statement, as then in effect,
includes an untrue statement of a material fact or omits to
state a material fact required to be stated in it or
necessary to make the statements in it, in light of the
circumstances under which they were made, not misleading. As
promptly as practicable, NATCO shall prepare and furnish to
each such Holder the number of copies of an amendment of or
supplement to the prospectus as is needed so that, as
delivered to the purchasers of those securities after that
time, the prospectus does not include an untrue statement of
a material fact or omit to state a material fact required to
be stated in it or necessary to make the statements in it, in
light of the circumstances under which they were made, not
misleading;
(x) Comply with SEC Rules: otherwise use its best efforts to
comply with the SEC's rules and regulations, and make
available to its securityholders, as soon as reasonably
practicable, an earnings statement of NATCO complying with
section 11(a) of the Securities Act and Rule 158 under the
Securities Act;
(xi) Notice of Certain Events: notify each Holder of Registrable
Securities covered by the registration statement:
13
(A) when the registration statement, or any post-effective
amendment to the registration statement, becomes
effective, or any amendment of or supplement to the
prospectus used in connection with it is filed;
(B) if the SEC requests NATCO to amend the registration
statement or to amend or supplement the prospectus, or
requests additional information;
(C) if the SEC makes a stop order suspending the
effectiveness of the registration statement or makes an
order preventing or suspending the use of a preliminary
prospectus;
(D) if the qualification of the Registrable Securities for
offering or sale in a jurisdiction is suspended; and
(E) if a Person threatens or institutes proceedings for any
of these purposes;
(xii) Lift Stop Orders: use its best effort to prevent, or to
obtain the lifting of, as the case may be, any stop order
issued suspending the effectiveness of the registration
statement or any order preventing or suspending the use of a
preliminary prospectus;
(xiii) Share Certificates: cooperate with the Holders of Registrable
Securities included in the registration statement, and the
managing underwriter to facilitate the timely preparation and
delivery of certificates (without restrictive legends)
representing the Registrable Securities to be sold under the
registration statement, and to enable those securities to be
in the denominations and registered in the names that those
Holders or managing underwriter request; and
(xiv) CUSIP Number: use its best efforts to obtain a CUSIP number
for the Registrable Securities covered by the registration
statement if none exists.
If NATCO does not fulfill its obligations under this Section 3.1 in respect of a
registration request made under Section 1 or if, notwithstanding NATCO's use of
its best efforts when required under this Section 3.1, it is not successful in
causing any action described in this Section 3.1 to be taken, and in whole or in
its part as a result of this breach or failure the registration statement does
not become effective or the Holders of Registrable Securities who requested
registration are otherwise prevented from disposing of Registrable Securities on
the terms contemplated by this Agreement, no registration
14
request in respect of that registration will be treated as having been made when
determining whether NATCO is obligated to effect a registration under Section
1.2.
3.2. Holders to Give NATCO Information. NATCO may require each Holder of
Registrable Securities to be covered by a registration statement to give NATCO
such information about the Holder and the distribution of those securities as
NATCO reasonably requests or as is required by law in connection with the
registration. Each Holder shall promptly give NATCO the information that NATCO
must disclose in order to make the information that the Holder previously gave
NATCO not materially misleading.
3.3. Documents Identifying the Seller. NATCO shall not file or amend a
registration statement for Registrable Securities, or an amendment of or
supplement to the prospectus used in connection with it, which refers to a
seller of Registrable Securities covered by it by name, or otherwise identifies
the seller as the holder of NATCO securities, without that seller's consent (not
to be unreasonably withheld). However, the seller's consent is not required for
disclosures required by and in conformity with law.
3.4. Misleading Registration Statement or Prospectus. On receiving a
notice from NATCO under Section 3.1(viii) or Section 3.1(ix):
(i) each Holder of Registrable Securities covered by the
registration statement will promptly stop disposing of those
Registrable Securities under the registration statement until
it receives notice from NATCO that the registration statement
has been amended, as contemplated by Section 3.1(viii) or, in
the case of Section 3.1(ix), it receives copies of the amended
or supplemented prospectus contemplated by Section 3.1(ix);
(ii) if so directed by NATCO, each Holder of Registrable Securities
will, promptly after it receives the notice, deliver to NATCO
(at NATCO's expense) all copies, other than permanent file
copies, in the Holder's possession of the prospectus covering
the Registrable Securities; and
(iii) the period mentioned in Section 3.1(ii) will be extended by
the greater of (x) five Business Days and (y) the number of
days during the period from and including the date NATCO gave
the notice through and including the date when each Holder of
Registrable Securities covered by the registration statement
receives notice from NATCO that the registration statement has
been amended, in the case of Section 3.1(viii), or receives
the
15
copies of the amended or supplemented prospectus, in the case
of Section 3.1(ix).
4. Hold Back Agreements.
4.1. When Restrictions Apply. The restrictions in Section 4.2 apply
whenever:
(i) NATCO proposes to register any of its equity securities under
the Securities Act, whether or not for sale for its own
account (other than under a Special Registration), or is
required to use its best efforts to effect the registration of
Registrable Securities under the Securities Act under Section
1 or Section 2;
(ii) if that registration relates to an underwritten offering, the
managing underwriter requests that the Holders of Registrable
Securities be subject to the restriction in Section 4.2;
(iii) before the periods specified in Section 4.2, NATCO notifies
the Holders of Registrable Securities that the restrictions in
Section 4.2 apply; and
(iv) before the proposed registration, NATCO in good faith uses all
reasonable efforts to cause the proposed registration to
become effective.
4.2. Restrictions. Whenever the restrictions in this Section 4.2 apply, no
Holder of Registrable Securities who was offered the right to register
Registrable Securities in the proposed registration shall:
(i) effect (other than under that registration) a public sale,
transfer or distribution (including a sale under Rule 144 or
Rule 144A) of Registrable Securities, any other equity
security of NATCO or any security convertible into or
exchangeable or exercisable for any equity security of NATCO
during the 20 day period before or the 90 day period following
the effective date of that registration (or any shorter period
agreed with the managing underwriter, if any, and any other
securityholder of NATCO with a similar agreement); or
(ii) effect such a public sale, transfer or distribution during the
180 day period following the effective date of the
registration, or during such lesser period (x) applying to
securities held by NATCO's officers and directors or to
Existing Registrable Securities, or
16
(y) agreed with the managing underwriter, if any, and any
other securityholder of NATCO with a similar agreement.
4.3. Others to Enter into Similar Agreements. NATCO shall cause each
holder of any equity security, or of any security convertible into or
exchangeable or exercisable for any equity security, of NATCO acquired from
NATCO after the date of this Agreement (other than in a Public Offering or under
a stock incentive or other equity compensation plan) to enter into a similar
agreement with NATCO.
5. Preparation; Reasonable Investigation. In connection with preparing and
filing each registration statement registering Registrable Securities under the
Securities Act, NATCO will give the Holders of those Registrable Securities to
be registered, their underwriters (if any), and their respective counsel and
accountants the opportunity to participate in preparing the registration
statement, each prospectus included in it or filed with the SEC, and each
amendment of or supplement to them. NATCO will also give these Persons such
access to NATCO's books and records and such opportunities to discuss NATCO's
business with its officers and the independent public accountants who have
issued audit reports on NATCO's financial statements as is reasonably necessary
to conduct a reasonable investigation within the meaning of the Securities Act.
However, NATCO shall not disclose material nonpublic information to any such
Person unless, before disclosing this information, NATCO gives that Person, and
the Holders on whose behalf it is acting, notice that the information is
material nonpublic information and gives that Person, and those Holders, the
opportunity to accept or refuse to accept the material nonpublic information for
review. As a condition to disclosing material nonpublic information, NATCO may
require the Person to whom it proposes to disclose the information to enter into
a confidentiality agreement on customary terms.
6. Other Registrations.
Whenever NATCO is required to use its best efforts to effect the
registration of Registrable Securities under the Securities Act under Section 1
or Section 2, and if that registration has not been withdrawn or abandoned,
NATCO shall not file a registration statement with respect to any of its
securities (including Registrable Securities) under the Securities Act (other
than a Special Registration), whether of its own accord or at the request or
demand of a holder or holders of its securities, for 90 days after the effective
date of the previous registration, unless the holder or holders of at least 50%
of the Registrable Securities then outstanding consent.
7. Indemnification.
7.1. Indemnification by NATCO. Subject to Section 7.2, if NATCO registers
Registrable Securities under the Securities Act under Section 1 or Section 2,
NATCO will indemnify and hold harmless the Holder of those Registrable
Securities, the Holder's
17
directors, officers, and employees and Persons who control the Holder (within
the meaning of either section 15 of the Securities Act or section 20 of the
Exchange Act) against the losses, claims, damages or liabilities, joint or
several, to which they become subject under the Securities Act or otherwise, to
the extent that those losses, claims, damages or liabilities (or actions or
proceedings in respect of them) arise out of or are based on:
(i) an untrue statement or alleged untrue statement of a material
fact in a registration statement under which those Registrable
Securities were registered under the Securities Act, or a
preliminary prospectus, final prospectus or summary prospectus
contained in it or related to it (or any amendment or
supplement to any of these documents);
(ii) an omission or alleged omission to state a material fact
required to be stated in the registration statement,
preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement or necessary to make the statements in
it not misleading; or
(iii) any violation by NATCO of a federal, state or common law rule
or regulation relating to an action or omission required by
NATCO in connection with the registration.
NATCO will reimburse the Holder and its directors, officers, employees and
controlling Persons for legal or other expenses they reasonably incur in
connection with investigating or defending such losses, claims, damages,
liabilities, actions or proceedings.
7.2. Exceptions to NATCO's Liability. NATCO shall not be liable under
Section 7.1 to the extent that the loss, claim, damage, liability or expense
arises out of, or is based on an untrue statement, alleged untrue statement,
omission or alleged omission:
(i) made in the registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement
in reliance on and in conformity with written information that
the Holder gave NATCO expressly to use in preparing that
document; or
(ii) in any prospectus if and to the extent:
(A) the untrue statement, alleged untrue statement, omission
or alleged omission is completely corrected in an
amendment or supplement to the prospectus and, after
NATCO has given the Holder or managing underwriter a
sufficient number of copies of the amendment or
supplement, the
18
Holder or managing underwriter does not deliver the
prospectus as amended or supplemented before or
concurrently with the sale of Registrable Securities to
the Person asserting the loss, claim, damage, liability
or expense; or
(B) NATCO gave the Holder or managing underwriter notice of
the existence of the untrue statement, alleged untrue
statement, omission or alleged omission and the Holder
or managing underwriter continued to dispose of
Registrable Securities before it received either (A) an
amended or supplemented prospectus which, as advised by
NATCO, completely corrected the untrue statement or
omission or (B) a notice from NATCO, that it could use
the existing prospectus.
7.3. Indemnification by the Sellers. Subject to Section 7.4 and Section
7.5, if NATCO registers Registrable Securities under the Securities Act under
Section 1 or Section 2, each Holder of those Registrable Securities will
indemnify and hold harmless NATCO, NATCO's directors, NATCO's officers who sign
the registration statement and Persons who control NATCO (within the meaning of
either section 15 of the Securities Act or section 20 of the Exchange Act),
against the losses, claims, damages or liabilities, joint or several, to which
they become subject under the Securities Act or otherwise, to the extent that
those losses, claims, damages or liabilities (or actions or proceedings in
respect of them) arise out of or are based on:
(i) an untrue statement or alleged untrue statement of a material
fact in a registration statement under which those Registrable
Securities were registered under the Securities Act, or a
preliminary prospectus, summary prospectus or final prospectus
contained in it or related to it (or any amendment or
supplement to any of these documents) if the statement was
made in reliance on and in conformity with written information
that the Holder gave to NATCO expressly to use in preparing
that document; or
(ii) an omission or alleged omission to state a material fact with
respect to the Holder required to be stated in the
registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement or
necessary to make the statements in it not misleading if the
omission was made in reliance on and in conformity with
written information that the Holder gave to NATCO expressly to
use in preparing that document.
19
The Holder will reimburse NATCO and those directors, officers and controlling
Persons for legal or other expenses they reasonably incur in connection with
investigating or defending such losses, claims, damages, liabilities, actions or
proceedings.
7.4. Exceptions to Holder's Liability. No Holder will be liable if the
untrue statement, alleged untrue statement, omission or alleged omission was
contained in a preliminary prospectus and corrected in a final or amended
prospectus, and NATCO did not deliver a copy of the final or amended prospectus
at or before the confirmation of the sale to the Person asserting the loss,
claim, damage or liability in any case in which delivery is required by the
Securities Act.
7.5. Limitations on Holder's Liability. The liability of each Holder under
Section 7.3 is limited to the net amount that the Holder receives from selling
Registrable Securities under the registration statement (after deducting the
cost of the Registrable Securities, the underwriting discount, commissions and
other expenses of the sale paid or payable by that Holder and the amount of
damages that that Holder has otherwise had to pay as a result of its breach).
7.6. Notices of Claims, etc. If an indemnified party under this Section 7
receives notice of the commencement of an action or proceeding involving a claim
subject to this Section 7:
(i) Notice of Claim: The indemnified party will promptly give
notice to the indemnifying party of the action or proceeding.
If the indemnified party does not do so, the indemnifying
party must still fulfill its obligations except to the extent
that this failure actually and materially prejudices the
indemnifying party's rights.
(ii) Participate or Assume Defense: If the action or proceeding is
brought against an indemnified party, the indemnifying party
may participate in defending the action or proceeding and may
assume the defense of the claim or proceeding, jointly with
any other indemnifying party similarly notified to the extent
that the other indemnifying party wishes to do so, with
counsel reasonably satisfactory to the indemnified party. Once
the indemnifying party gives notice to the indemnified party
that it has assumed the defense, the indemnified party may
participate in the defense at its own expense and the
indemnifying party will not be liable to the indemnified party
for any legal or other expenses that the indemnified party
subsequently incurs in connection with the defense.
20
(iii) Conflict of Interest: If the indemnified party reasonably
determines, based on advice of its independent counsel, that a
conflict of interest may exist between the indemnified party
and the indemnifying party with respect to the action or
proceeding and that it is advisable for the indemnified party
to be represented by separate counsel, the indemnified party
may retain other counsel, reasonably satisfactory to the
indemnifying party, to represent the indemnified party, and
the indemnifying party shall pay the reasonable fees and
expenses of that counsel.
(iv) Settlements: The indemnifying party shall not consent to entry
of a judgment, or enter into a settlement, without the
indemnified party's prior written consent, unless:
(A) the judgment or settlement is only for monetary damages,
which the indemnifying party pays in full;
(B) the indemnifying party does not admit responsibility on
the indemnified party's behalf; and
(C) each claimant or plaintiff unconditionally releases the
indemnified party from all liability to it arising from
the matter which is the subject of the claim.
The indemnifying party shall not be liable for any settlement
of any proceeding effected without its prior written consent
(not to be unreasonably withheld).
(v) No Multiple Counsel: The indemnifying party shall not, in any
proceeding or related proceedings, be liable for the fees and
expenses of more than one separate counsel for all indemnified
parties.
7.7. Other Indemnification. The indemnification in this Section 7 (with
appropriate modifications) also applies with respect to any required
registration or other qualification of Registrable Securities under any federal
or state law or regulation of a governmental authority other than the Securities
Act.
7.8. Contribution.
(a) If an indemnity under Section 7.1 or Section 7.3 is unavailable, or is
insufficient to hold harmless an indemnified party (other than by reason of the
exceptions to those indemnities), then the indemnifying party shall in lieu of
the indemnification
21
contribute to the amount paid or payable by the indemnified party as a result of
such losses, claims, damages, liabilities or expenses:
(i) in the proportion appropriate to reflect the relative benefits
that the indemnifying party and the indemnified party received
from the other from the offering of Registrable Securities
(taking into account the portion of the offering proceeds
realized by each of them); or
(ii) if the allocation in Section 7.8(a)(i) is not permitted by
law, or provides a lesser sum to the indemnified party than
the amount calculated in this Section 7.8(a)(ii), in the
proportion appropriate to reflect not only the relative
benefits received by the indemnifying party and the
indemnified party but also the relative fault of the
indemnifying party and the indemnified party as well as any
other relevant equitable considerations. Relative fault shall
be determined by reference to, among other things, whether any
action, statement or omission in question has been taken or
made by, or relates to information supplied by, the
indemnified party and the indemnifying party, and their
relative intent, knowledge, access to information and
opportunity to correct or prevent the action, statement or
omission. The Parties acknowledge that it would not be
equitable if contribution under this Section 7.8(a)(ii) were
determined by pro rata allocation or another method of
allocation that does not take into account the equitable
considerations specified in this Section 7.8(a)(ii).
(b) No Person guilty of fraudulent misrepresentation (within the meaning
of section 11(f) of the Securities Act) is entitled to contribution under this
Section 7.8 from a Person who was not guilty of such fraudulent
misrepresentation.
(c) The amounts payable under this Section 7.8 include amounts payable for
legal and other expenses reasonably incurred by the indemnified party in
connection with investigating or defending the loss, claim, damage, liability,
action or proceeding (except as provided in Section 7.6 if the indemnifying
party has assumed the defense of any such action or proceeding in accordance
with those provisions).
(d) Each Party is liable for contribution under this Section 7.8 only to
the extent to which and under the circumstances in which that Party would have
been liable to indemnify under this Section 7 if that indemnification were
enforceable under law.
22
7.9. Survival of Indemnities. The indemnities in this Section 7 are not
affected by any investigation made by or on behalf of an indemnified Person and
survive the transfer of the securities by the seller.
7.10. Officers and Directors. In this Section 7, "officers" and
"directors" include the partners of the Holders of Registrable Securities which
are partnerships and the trustees and beneficiaries of the Holders of
Registrable Securities which are trusts.
8. Other Provisions Relating to Registrable Securities.
8.1. Registration Requests for Convertible Preferred Shares or Warrant. A
holder of Convertible Preferred Shares, the Warrant (or an interest in the
Warrant) or other securities in respect of which Registrable Securities are
issuable shall be treated as holding the Conversion Shares into which those
Convertible Preferred Shares convert, the Warrant Shares for which the Warrant
(or its interest in the Warrant) is exercisable, or the Registrable Securities
issuable in respect of those securities respectively, and hence as a holder of
Registrable Securities, for all purposes under this Agreement. Except where
stated otherwise, references in this Agreement to numbers, percentages or
proportions of Registrable Securities mean the numbers, percentages or
proportions of shares of Common Stock (or securities equivalent to Common Stock)
treating Convertible Preferred Shares as if they had been converted, the Warrant
as if it had been exercised and Registrable Securities issuable in respect of
other securities as if they had been issued.
8.2. Best Registration Rights. If NATCO grants any other Person, with
respect to any security issued by NATCO or any of its Affiliates, registration
rights with terms that are in any manner more favorable (other than in respect
of the number of demand rights) to the holder of those rights than the terms
granted to the holders of Registrable Securities under this Agreement (or if
NATCO amends or waives a term of an agreement or arrangement providing
registration rights to any other Person or takes other action to provide for
terms that are more favorable (other than in respect of the number of demand
rights) to other holders than those in this Agreement), then this Agreement is
deemed to be amended to provide the holders of Registrable Securities with any
of these more favorable terms as the holders of a majority of the Registrable
Securities elect to include in this Agreement. NATCO shall promptly give notice
to the holders of Registrable Securities on granting registration rights to
other Persons (or amending or waiving terms of an agreement or arrangement
providing registration rights to any other Person or taking any other action to
provide for more favorable terms).
8.3. Rule 144; Legended Securities; etc.
(a) NATCO shall continue to file reports under section 15 of the
Securities Act and section 13 of the Exchange Act to the extent necessary to
enable the Holders to
23
sell Registrable Securities in reliance on Rule 144 or Rule 145 without
registration under the Securities Act. As of their respective dates, those
reports shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated in them or necessary in order to
make the statements in them, in light of the circumstances under which they were
made, not misleading and must comply as to form in all material respects with
the Exchange Act and the Securities Act and the SEC's rules and regulations
under those statutes. If a Holder of Registrable Securities requests, NATCO
shall give that Holder a written statement as to whether it has complied with
these requirements.
(b) On the request of a Holder of Registrable Securities, NATCO shall
issue new certificates for those Registrable Securities without a legend
restricting further transfer if:
(i) those Registrable Securities have been sold to the public
under an effective registration statement under the Securities
Act or Rule 144;
(ii) the issuance is otherwise permitted under the Securities Act,
the Holder of those Registrable Securities has given NATCO an
opinion of counsel to this effect and that Holder requests
such a certificate from NATCO; or
(iii) those Registrable Securities have been beneficially owned, by
a Person who has not been an affiliate of NATCO for at least
three months, for a period of at least two years (or such
shorter period applying under Rule 144(k) under the Securities
Act or any successor to it), all as determined under Rule 144.
8.4. Nominees for Beneficial Owners. A beneficial owner whose Registrable
Securities are held by a nominee may, on notice to NATCO, and unless the record
owner gives NATCO notice to the contrary, be treated as the Holder of those
Registrable Securities for purposes of any request or other action by Holders of
Registrable Securities under this Agreement or any determination of a number or
percentage of shares of Registrable Securities held by a Holder of Registrable
Securities under this Agreement. If the beneficial owner gives NATCO such a
notice, NATCO may require reasonable evidence of the owner's beneficial
ownership of the Registrable Securities.
9. Miscellaneous.
9.1. Notices.
(a) Notices, requests, consents and other communications provided for in
this Agreement, and legal process relating to this Agreement, will be validly
given, made or
24
served, if in writing and (w) delivered personally, (x) sent by next day or
overnight mail using a reputable national courier (such as Federal Express), (y)
send by first-class registered or certified mail, return receipt requested,
postage prepaid or (z) sent by fax, as follow:
(i) if to NATCO:
NATCO Group Inc.
0000 Xxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
with a copy to:
O'Melveney & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxxx, Esq.
Fax: (000) 000-0000
(ii) if to Purchaser:
Lime Rock Partners II, L.P.
c/o Lime Rock Management LP
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx XX 00000
Attention: Xxxx X. XxXxxx
Fax (000) 000-0000
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
or to such other address or fax number as a Party specifies in a written notice
given in accordance with this Section 9.1.
(b) Such notices, requests, consents and other communications shall be
deemed to have been received:
25
(i) if delivered personally: on the next Business Day after
delivery;
(ii) if sent by next day or overnight mail using a reputable
national courier (such as Federal Express): on the next
Business Day after sending;
(iii) if sent by first-class registered or certified mail, return
receipt requested, postage prepaid: on the fifth Business Day
after mailing; or
(iv) if sent by fax and the transmitting Party receives a
transmission receipt dated the day of transmission in the
recipient's jurisdiction: on the next Business Day after
transmission.
9.2. Amendments and Waivers.
(a) This Agreement may be amended, and NATCO may take action prohibited
under it, or omit to perform an act that it is required to perform under it,
only if NATCO obtains the written consent to the amendment, action or omission
to act of the Holder or Holders of more than 50% of the shares then constituting
Registrable Securities. Each holder of Registrable Securities at the time or
outstanding at a later time is bound by consents authorized by this Section 9.2,
whether or not the Registrable Securities are marked to indicate the consent.
(b) No amendment or termination of this Agreement, and no waiver under it,
shall be binding unless made in writing.
(c) A waiver waives only the specific matter described in the writing and
does not impair the rights of the Party granting the waiver in other respects or
at other times. A Party's waiver of a breach of or a default under this
Agreement does not constitute a waiver of a similar breach or default.
(d) A Party's failure, on one or more occasions, to enforce a provision of
this Agreement, or to exercise a right or privilege under this Agreement, does
not constitute a waiver of that provision, right or privilege.
9.3. Specific Performance. Each Party, in addition to being entitled to
exercise its rights in this Agreement or granted by law (including recovery of
damages) is entitled to an injunction to prevent breaches of this Agreement and
to specifically enforce its provisions. Each Party agrees that monetary damages
would not be adequate compensation for loss incurred as a result of another
Party breaching any provision of this Agreement and waives the defense in an
action for specific performance that a remedy at law would be adequate.
26
9.4. Severability. If any provision of this Agreement is inoperative or
unenforceable for any reason, this shall not make the provision inoperative or
unenforceable in any other case, circumstance or jurisdiction, or make any other
provision invalid, inoperative, or unenforceable. The Parties intend that they
would have entered into the remaining provisions.
9.5. Governing Law. This Agreement is governed in all respects (including
as to validity, interpretation and effect) by the internal laws of the state of
New York without giving effect to its conflict of laws rules to the extent those
rules do not mandatorily apply by statute and would require or permit the
application of another jurisdiction's law.
9.6. Jurisdiction. Each Party:
(i) irrevocably submits to the exclusive jurisdiction of the
courts of the state of New York and the United States District
Court for the Southern District of New York in respect of
proceedings directly or indirectly arising out of or relating
to this Agreement (including as to validity, interpretation
and effect);
(ii) waives and agrees not to assert, as a defense in any such
proceedings, that the proceedings may not be brought or are
not maintainable in those courts, that the venue is not
appropriate or that those courts cannot enforce this
Agreement; and
(iii) consents to and grants any such court jurisdiction over that
Party and over the subject matter of any such dispute and
agrees, to the maximum extent permitted by law, that the
mailing of process or other papers in connection with the
proceeding in the manner provided in Section 9.1, or in such
other manner as may be permitted by law, shall be valid and
sufficient service of that process or paper.
9.7. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES THAT ANY DISPUTE WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES. THEREFORE EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT
HAS TO A TRIAL BY JURY IN RESPECT OF PROCEEDINGS DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT (INCLUDING AS TO VALIDITY, INTERPRETATION
AND EFFECT). EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT:
(i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS
WAIVER;
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(ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER;
(iii) IT MAKES THIS WAIVER VOLUNTARILY; AND
(iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 9.7.
9.8. Successors, Assigns and Transferees. This Agreement binds and inures
to the benefit of the Parties and their respective successors and permitted
assigns. If Purchaser transfers and assigns any Convertible Preferred Shares,
the Warrant (or any interest in the Warrant), Conversion Shares or Warrant
Shares to any Person (except in a Public Offering), Purchaser (or any Person who
is a transferee or assignee under this Section 9.8) may assign a portion of its
rights and benefits under this Agreement needed to enable that Person to act as
a Holder under this Agreement, if that Person agrees in writing to be bound by
the duties and obligations of a Holder under this Agreement.
9.9. No Third Party Beneficiaries. Except as provided in Section 7,
nothing in this Agreement confers on any Person, other than the Parties and
their respective successors and permitted assigns, any benefit, right or remedy
under or by reason of this Agreement.
9.10. Term. This Agreement is effective as of the date first written above
and continues in effect until the earliest of (w) its termination by the consent
of the Parties or their respective successors in interest, (x) the date on which
no Registrable Securities remain outstanding, (y) NATCO's dissolution,
liquidation or winding up and (z) the tenth anniversary of the date of this
Agreement. Section 7 and (insofar as they relate to rights and obligations under
Section 7) Section 9 and Section 10 survive the termination of this Agreement.
9.11. Further Assurances. Each Party shall sign and deliver the additional
documents, and take the other actions needed, or otherwise reasonably requested
by the other Party, to confirm and assure the rights and obligations in this
Agreement, and to make the transactions contemplated by this Agreement
effective.
9.12. No Inconsistent Agreements. NATCO will not enter into any agreement
with respect to its securities which is inconsistent with the rights granted to
the Holders of Registrable Securities under this Agreement.
9.13. Counterparts. The Parties may sign this Agreement in one or more
counterparts, all of which will be the same agreement, and become effective when
each Party has signed and delivered a counterpart to the other Party.
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10. Definitions and Interpretation.
10.1. Definitions. In this Agreement, the following terms when capitalized
have the following meanings:
ADDITIONAL SHARES defined in the recitals to this Agreement.
AGREEMENT defined in the introductory paragraph to this Agreement.
BOARD NATCO's board of directors.
BUSINESS DAY a day, other than:
(i) a Saturday or Sunday; or
(ii) a day on which commercial banks
in Houston Texas are authorized
or required by Law to close or
are otherwise
generally closed.
CERTIFICATE OF DESIGNATIONS defined in the recitals to this Agreement.
COMMON STOCK defined in the recitals to this Agreement.
CONVERSION SHARES the shares of Common Stock issuable on the conversion of the
Convertible Preferred Shares.
CONVERTIBLE PREFERRED SHARES defined in the recitals to this Agreement.
EXCHANGE ACT the Securities Exchange Act of 1934, as
amended, or any successor federal
statute, and the rules and regulations
under it, in effect at the time. A
reference to a particular section of it
includes the corresponding section, if
any, of its successor federal
statute, and the rules and regulations under it.
EXISTING REGISTRABLE SECURITIES shares of Common Stock subject to a contractual
registration obligation arising under an Existing
Registration Rights Agreement.
EXISTING REGISTRATION (i) Registration Rights Agreement dated as of November 18, 1998
RIGHTS AGREEMENTS by and between NATCO, Capricorn Investors, L.P. and
Capricorn Investors II, L.P. (but disregarding amendments to
those
29
agreements after the date of this Agreement to the extent
that they adversely affect the Holders).
(ii) Registration Rights Agreement dated as of November
18, 1998 by and between NATCO, Xxxxxxx X.
Xxxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxx,
Xxxxxx X. Xxxxxx, Xx., Xxxxx X. Xxxxx, Xxxxxx X.
Xxxx, Xxxxxxx X. Xxxxxxxxx, Xxxx X. Xxxxx, Xx.,
The 1998 Trust for Xxxx Xxxxx Xxxxxxx and Banc One
Capital Partners II, Ltd. (but disregarding
amendments to those agreements after the date of
this Agreement to the extent that they adversely
affect the Holders).
HOLDER Purchaser and any Person to whom Purchaser assigns
Convertible Preferred Shares, the Warrant (or an
interest in the Warrant) or Registrable Securities and
who has agreed in writing to be bound by the provisions
of this Agreement in accordance with Section 9.8.
NASD National Association of Securities Dealers, Inc.
NASDAQ the NASD Automated Quotation System.
NATCO defined in the introductory paragraph to this Agreement.
OTHER REGISTRATION STATEMENT defined in Section 1.4(a)(i).
PARTY a party to this Agreement.
PERSON an individual, partnership, joint venture, corporation, limited
liability company, trust, unincorporated organization, governmental
entity or other entity.
PRIMARY DISTRIBUTION a Public Offering of shares of Common Stock in which
first priority is to be given to shares offered, sold
and delivered by NATCO.
PUBLIC OFFERING a firm commitment underwritten public
offering for cash of shares of Common
Stock led by at least one underwriter of
nationally recognized standing pursuant
to a registration statement filed and
declared effective under
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the Securities Act.
PURCHASER defined in the introductory paragraph to this Agreement.
REGISTRABLE SECURITIES (i) the Conversion Shares;
(ii) the Warrant Shares;
(iii) the Additional Shares; and
(iv) any securities issued or
issuable with respect to any
securities that are Registrable
Securities, or in respect of
Convertible Preferred Shares or
the Warrant, including
securities issued or issuable:
(A) on conversion or exercise of
any such securities;
(B) in exchange or as a
replacement for any such
securities;
(C) by way of distribution or
stock dividend on any such
securities; or
(D) in connection with a
stock split, combination
of shares,
recapitalization,
merger, consolidation or
other reorganization
relating to any such
securities.
but not including any preferred
shares or other convertible
securities issued or issuable
with respect to the Convertible
Preferred Shares, or any warrant
issued or issuable with respect
to the Warrant, in a manner
described in (B) or (D) (except
that those preferred shares,
convertible securities or
warrants will be treated as
"Registrable Securities" solely
for the purposes of determining
whether any securities issued or
issuable with respect to those
preferred shares, convertible
securities or warrants are
themselves "Registrable
Securities").
A Registrable Security ceases to be a
Registrable Security when issued
pursuant to a registration statement in
exchange for a Registrable Security or,
once otherwise
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issued, when:
(a) a registration statement with
respect to the sale of that
security has become effective
under the Securities Act and
that security has been disposed
of in accordance with that
registration statement;
(b) the security has been
distributed to the public in
reliance on Rule 144;
(c) the security has been otherwise
transferred, NATCO has delivered
a new certificate covering the
security without a legend
restricting further transfer,
and further disposition of the
security does not require
registration or qualification of
the security under the
Securities Act or any similar
state law then in force; or
(d) the security ceases to be outstanding.
REGISTRATION EXPENSES the expenses incident to NATCO
performing its obligations to effect
registration of Registrable Securities
under this Agreement including
registration and filing fees, fees and
expenses of complying with securities or
blue sky laws, fees and expenses
associated with listing securities on
exchanges or NASDAQ, fees and other
expenses associated with filings with
the NASD (including, if required, fees
and expenses of any "qualified
independent underwriter" and its
counsel), printing expenses, fees and
disbursements of counsel for NATCO and
of its independent public accountants,
fees and disbursements of one counsel
retained by the Holders of Registrable
Securities and the expenses of any
special audits made by accountants
required by or incidental to the
registration (but not including
underwriting discounts or commissions or
transfer taxes payable in respect of the
sale of Registrable Securities by the Holders).
For purposes of this Agreement, NATCO is
obligated to pay the fees and
disbursements of only one counsel
representing the Holders. If more than
one counsel represents the Holders in
connection with a registration under
this Agreement, those Holders shall
notify NATCO
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as to which counsel represents the Holders for the purposes
of this Agreement.
RULE 144 Rule 144 (or any successor provision) under the Securities Act.
RULE 144(k) Rule 144(k) (or any successor provision) under the Securities Act.
RULE 144A Rule 144A (or any successor provision) under the Securities Act.
RULE 145 Rule 145 (or any successor provision) under the Securities Act.
SEC the Securities Exchange Commission or any other federal agency at
the time administering the Securities Act or the Exchange Act.
SECONDARY DISTRIBUTION a Public Offering of shares of Common Stock in which
first priority is to be given to shares offered, sold
and delivered by shareholders of NATCO other than the
Holders (including the holders of shares of Common Stock
subject to the Existing Registration Rights Agreements).
SECURITIES ACT
the Securities Act of 1933, as amended, or any successor
federal statute, and the rules and regulations under it,
in effect at the time. A reference to a particular
section of it includes the corresponding section, if
any, of its successor federal statute, and the rules and
regulations under it.
SECURITIES PURCHASE AGREEMENT defined in the recitals to this Agreement.
SPECIAL REGISTRATION (i) the registration of shares of equity securities,
or options or other rights in respect of equity
securities, to be offered to directors, members of
management, employees or consultants of NATCO or
its subsidiaries under stock incentive or other
equity compensation plans; or
(ii) the registration of equity securities, or options
or
33
other rights in respect of equity securities, solely on Form
S-4 or S-8 (or any successor form).
WARRANT defined in the recitals to this Agreement.
WARRANT SHARES the shares of Common Stock issuable on the exercise of the Warrants.
10.2. Interpretation. References to "include", "includes" or "including"
are deemed to be followed by "without limitation." The plural includes the
singular, and vice versa. References to one gender include the other genders.
Unless stated otherwise, a reference to a Section means a Section of this
Agreement. Headings in this Agreement are for convenience only and do not affect
its interpretation.
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THE PARTIES have executed this Agreement as of the date first written above.
LIME ROCK PARTNERS II, L.P.
By: Lime Rock Partners XX XX, L.P., its
General Partner
By: LRP XX XX, Inc., its General Partner
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Xxxx X. Xxxxxxxx
Director
NATCO GROUP INC.
By: /s/ Xxxxxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
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