1
EXHIBIT 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NATCO GROUP INC.,
NATCO ACQUISITION COMPANY,
NATIONAL TANK COMPANY
AND
THE CYNARA COMPANY
DATED NOVEMBER 17, 1998
BUT EFFECTIVE AS OF MARCH 26, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions............................................................................2
SECTION 1.02 Rules of Construction..................................................................2
ARTICLE II
TERMS OF MERGER
SECTION 2.01 Statutory Merger.......................................................................2
SECTION 2.02 Effective Time.........................................................................2
SECTION 2.03 Effect of the Merger...................................................................2
SECTION 2.04 Certificate of Incorporation; Bylaws...................................................2
SECTION 2.05 Directors and Officers.................................................................3
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Merger Consideration; Conversion and Cancellation of Securities........................3
SECTION 3.02 Exchange of Certificates...............................................................7
SECTION 3.04 Stock Transfer Books...................................................................9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01 Organization and Qualification; Subsidiaries..........................................10
SECTION 4.02 Certificate of Incorporation and Bylaws...............................................10
SECTION 4.03 Capitalization........................................................................10
SECTION 4.04 Authorization of Agreement............................................................11
SECTION 4.05 Approvals.............................................................................11
SECTION 4.06 No Violation..........................................................................11
SECTION 4.07 Financial Statements..................................................................12
SECTION 4.08 No Material Adverse Effect; Conduct...................................................12
SECTION 4.09 Title to Properties...................................................................13
SECTION 4.10 Certain Obligations...................................................................13
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SECTION 4.11 Permits; Compliance...................................................................13
SECTION 4.12 Litigation; Compliance with Laws......................................................13
SECTION 4.13 Employee Benefit Plans................................................................14
SECTION 4.14 Taxes.................................................................................17
SECTION 4.15 Environmental Matters.................................................................17
SECTION 4.16 Intellectual Property.................................................................18
SECTION 4.17 Insurance.............................................................................18
SECTION 4.18 Tax Matters...........................................................................18
SECTION 4.19 Stockholders..........................................................................19
SECTION 4.20 Certain Business Practices............................................................19
SECTION 4.21 Brokers...............................................................................19
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
SECTION 5.01 Organization and Qualification; Subsidiaries..........................................20
SECTION 5.02 Certificate of Incorporation and Bylaws...............................................20
SECTION 5.03 Capitalization........................................................................20
SECTION 5.05 Approvals.............................................................................22
SECTION 5.06 No Violation..........................................................................22
SECTION 5.07 Financial Statements..................................................................23
SECTION 5.08 No Material Adverse Effect; Conduct...................................................23
SECTION 5.09 Title to Properties...................................................................23
SECTION 5.10 Certain Obligations...................................................................24
SECTION 5.11 Permits; Compliance...................................................................24
SECTION 5.12 Litigation; Compliance with Laws......................................................24
SECTION 5.13 Employee Benefit Plans................................................................25
SECTION 5.14 Taxes.................................................................................28
SECTION 5.15 Environmental Matters.................................................................28
SECTION 5.16 Tax Matters...........................................................................29
SECTION 5.17 Brokers...............................................................................30
SECTION 5.18 Intellectual Property.................................................................30
SECTION 5.19 Certain Business Practices............................................................30
ARTICLE VI
COVENANTS
SECTION 6.01 Affirmative Covenants.................................................................31
SECTION 6.02 Negative Covenants....................................................................31
SECTION 6.03 Access and Information................................................................35
SECTION 6.04 Confidentiality Agreement.............................................................35
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SECTION 6.05 Stockholders' Letter..................................................................35
ARTICLE VII ADDITIONAL AGREEMENTS
SECTION 7.01 Meeting of Stockholders...............................................................36
SECTION 7.02 Appropriate Action; Consents; Filings.................................................36
SECTION 7.03 Tax Treatment.........................................................................37
SECTION 7.04 Public Announcements..................................................................37
SECTION 7.06 Employee Benefit Plans................................................................38
SECTION 7.07 Indemnification of Directors and Officers.............................................38
SECTION 7.08 Event Notices.........................................................................39
SECTION 7.11 The Cynara Name.......................................................................40
SECTION 7.12 Natco.................................................................................40
SECTION 7.13 Avoidance of Diminution of Put........................................................41
ARTICLE VIII
CLOSING CONDITIONS
SECTION 8.01 Conditions to Obligations of Each Party Under This Agreement..........................41
SECTION 8.02 Additional Conditions to Obligations of the Acquiror Companies........................42
SECTION 8.03 Additional Conditions to Obligations of the Company...................................43
ARTICLE IX
INDEMNIFICATION
SECTION 9.02 General Indemnification...............................................................44
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01 Termination...........................................................................47
SECTION 10.02 Effect of Termination.................................................................48
SECTION 10.03 Amendment.............................................................................48
SECTION 10.04 Waiver................................................................................48
SECTION 10.05 Fees, Expenses and Other Payments.....................................................49
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ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01 Notices...............................................................................49
SECTION 11.02 Headings..............................................................................50
SECTION 11.03 Severability..........................................................................50
SECTION 11.04 Entire Agreement......................................................................51
SECTION 11.05 Assignment............................................................................51
SECTION 11.06 Parties in Interest...................................................................51
SECTION 11.07 Failure or Indulgence Not Waiver; Remedies Cumulative.................................51
SECTION 11.08 Governing Law.........................................................................51
SECTION 11.09 Arbitration...........................................................................51
SECTION 11.10 Counterparts..........................................................................52
ANNEXES
Annex A Schedule of Defined Terms
Annex B Form of Stockholder's Letter
Annex C Form of Escrow Agreement
Annex D Form of Charter Amendment
Annex E-1 Form of Registration Rights Agreement - Capricorn
Annex E-2 Form of Registration Rights Agreement - Cynara
Annex F Form of Stockholders' Agreement
Exhibit I Calculation Examples
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated
November 17, 1998 but effective as of March 26, 1998 (this "Agreement"), is by
and among NATCO Group Inc., a Delaware corporation ("Acquiror"), National Tank
Company, a Delaware corporation and a direct, wholly-owned subsidiary of
Acquiror ("Natco"), Natco Acquisition Company, a Delaware corporation and a
wholly owned subsidiary of the Acquiror ("Newco"), and The Cynara Company, a
Delaware corporation (the "Company"). The Acquiror and Natco are sometimes
referred to herein as the "Acquiror Companies."
RECITALS:
The Acquiror, the Company and Newco executed and delivered an
Agreement and Plan of Merger dated March 26, 1998 providing for the merger of
Newco with and into the Company as a result of which the Company would become a
wholly owned subsidiary of the Acquiror.
The parties to that agreement have determined to amend the agreement
to provide for the merger (the "Merger") of Cynara with and into Natco in lieu
of Newco and to provide for certain other changes therein and, after effecting
such amendments, to restate the agreement.
The Board of Directors of the Company has determined that the business
combination to be effected by means of the Merger is consistent with and in
furtherance of the long-term business strategy of the Company and is in the
best interests of the Company and its stockholders and has approved and adopted
this Agreement and recommended approval and adoption of this Agreement by the
stockholders of the Company.
The Board of Directors of the Acquiror has determined that the
business combination to be effected by means of the Merger is consistent with
and in furtherance of the long-term business strategy of the Acquiror and is
fair to, and in the best interests of, the Acquiror and its stockholders and
has approved and adopted this Agreement.
Upon the terms and subject to the conditions of this Agreement and in
accordance with the Corporate Statute, the Company will merge with and into
Natco and Natco will be the Surviving Corporation.
For federal income tax purposes, it is intended that the Merger will
qualify as a reorganization within the meaning of the provisions of Section
368(a) of the Code.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Certain capitalized and other terms used in
this Agreement are defined in Annex A hereto and are used herein with the
meanings ascribed to them therein.
SECTION 1.02 Rules of Construction. Unless the context otherwise
requires, as used in this Agreement: (a) a term has the meaning ascribed to it;
(b) an accounting term not otherwise defined has the meaning ascribed to it in
accordance with GAAP; (c) "including" means "including without limitation;" (d)
words in the singular include the plural; (e) words in the plural include the
singular; (f) words applicable to one gender shall be construed to apply to
each gender; (g) the terms "hereof," "herein," "hereby," "hereto" and
derivative or similar words refer to this entire Agreement; and (h) the terms
"Article" or "Section" shall refer to the specified Article or Section of this
Agreement.
ARTICLE II
TERMS OF MERGER
SECTION 2.01 Statutory Merger. Subject to the terms and conditions and
in reliance upon the representations, warranties, covenants and agreements
contained herein, the Company shall merge with and into Natco at the Effective
Time. The terms and conditions of the Merger and the mode of carrying the same
into effect shall be as set forth in this Agreement. As a result of the Merger,
the separate corporate existence of the Company shall cease and Natco shall
continue as the Surviving Corporation.
SECTION 2.02 Effective Time. At the conclusion of the Closing on the
Closing Date, the parties hereto shall cause the Merger to be consummated by
filing a Certificate of Merger with the Secretary of State of the State of
Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the Corporate Statute.
SECTION 2.03 Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of the
Corporate Statute. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, except as otherwise provided herein,
all the property, rights, privileges, powers and franchises of Natco and the
Company shall vest in the Surviving Corporation, and all debts, liabilities and
duties of Natco and the Company shall become the debts, liabilities and duties
of the Surviving Corporation.
SECTION 2.04 Certificate of Incorporation; Bylaws. At the Effective
Time, the certificate of incorporation and the bylaws of Natco, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation and the bylaws of the Surviving Corporation, except that the
certificate of incorporation and bylaws of Natco shall contain provisions
substantially similar
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in form and substance to the indemnification provisions contained in Article
Ten of the certificate of incorporation and Article VI of the bylaws of the
Company, respectively.
SECTION 2.05 Directors and Officers. The directors of Natco
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, each to hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Merger Consideration; Conversion and Cancellation of
Securities. On the date on which the Effective Time occurs, by virtue of the
Merger and without any action on the part of the Acquiror Companies, the
Company or the holders of any of the following securities:
(a) Conversion Ratio. Subject to the other provisions of this
Article III and to the provisions of Section 7.10, each share of
Company Common Stock issued and outstanding immediately prior to the
Effective Time (excluding any Company Common Stock described in
Subsection 3.01(e)) shall be converted into 18.525 shares of Acquiror
Class B Common Stock, the right to receive $102.38 in cash, the right
to receive the CTOC Earnout Shares, if any (which right shall in no
event entitle the holder and any permitted assignees to more than
2.730 shares of Acquiror Class B Common Stock per share of Company
Common Stock) and the right to receive the Initial Earnout Shares and
the Supplemental Earnout Shares, if any (which right shall in no event
entitle the holder and any permitted assignees to more than 15.795
shares of Acquiror Class B Common Stock per share of Company Common
Stock plus such portion of the 2.730 shares of Acquiror Class B Common
Stock per share of Company Common Stock as were not received as CTOC
Earnout Shares). The right to receive the CTOC Earnout Shares and the
right to receive the Initial Earnout Shares and the Supplemental
Earnout Shares shall not be assignable except by operation of Law, by
death pursuant to a will or the Laws of descent and distribution, by
transfer to a member of the immediate family of the Designated Company
Stockholder or a trust for the benefit of any such family member, by
transfer to another Designated Company Stockholder, by transfer to a
commercial bank or other lending institution in accordance with the
terms of a bona fide pledge or, in the case of a Designated Company
Stockholder that is a legal entity, by such entity to an affiliate or
successor of such entity or to the purchaser of all or substantially
all of that entities assets, all of which exceptions shall be
permitted if the transferor or transferee shall give notice of such
assignment, together with such information as may be reasonably
necessary to evidence qualification of the transferee to be an
assignee thereof, to the Acquiror and the transferee shall have
executed the Stockholders' Agreement. The Acquiror shall issue any
CTOC Earnout Shares on the CTOC Payout Date, any Initial Earnout
Shares on the Initial Payout Date and any Supplemental Earnout Shares
on the
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Supplemental Payout Date. Notwithstanding the foregoing, (i) if
between the date of this Agreement and the Effective Time the
outstanding shares of common stock, par value $0.001 per share, of the
Acquiror as constituted prior to the effectuation of the Charter
Amendment or the Acquiror Class A Common Stock shall have been changed
into a different number of shares or a different class by reason of
any stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares (a "Share Adjustment"), the
Merger Consideration Per Share of Company Common Stock shall be
correspondingly adjusted to reflect such Share Adjustment and (ii), if
between the Effective Time and the Supplemental Payout Date the
outstanding shares of Acquiror Class B Common Stock shall be subject
to a Share Adjustment, the numbers of CTOC Earnout Shares, Initial
Earnout Shares and Supplemental Earnout Shares payable with respect to
a share of Company Common Stock outstanding immediately prior to the
Effective Time shall, to the extent the record date for such Share
Adjustment shall have occurred, or the Share Adjustment shall
otherwise have become effective, prior to the CTOC Payout Date, the
Initial Payout Date or the Supplemental Payout Date, as appropriate,
be correspondingly adjusted to reflect such Share Adjustment. Upon
exercise of the Warrants issued by the Company from and after the
Effective Time in accordance with their terms, the Acquiror will issue
the Merger Consideration Per Share of Company Common Stock for each
share of Company Common Stock as to which the Warrants are exercised.
(b) Earnout Determinations. With respect to determinations
relating to CTOC Earnout Shares, the aggregate amount of revenues, if
any, billed in the ordinary course of business by the Surviving
Corporation to the CTOC Project through September 30, 1999 ("Billed
Revenues") shall be determined by the Acquiror as of September 30,
1999 no later than October 31, 1999. With respect to determinations
relating to Initial Earnout Shares, the Sales Revenue derived or to be
derived from all Awarded Project Contracts that shall have an award
date on or prior to March 31, 2000 shall be determined by the Acquiror
as of March 31, 2000 no later than April 30, 2000. With respect to
determinations relating to Supplemental Earnout Shares, the Sales
Revenue derived or to be derived from all Awarded Project Contracts
that shall have an award date after March 31, 2000 but on or prior to
December 31, 2000 shall be determined by the Acquiror as of December
31, 2000 no later than January 31, 2001.
(c) No Return Obligation. Notwithstanding the provisions of
subsections (a) and (b) of this Section 3.01, no Designated Company
Stockholder shall have any obligation to return any shares of Acquiror
Class B Common Stock by reason of the fact that the calculation of the
number of Initial Earnout Shares or Supplemental Earnout Shares shall
result in a negative number.
(d) Cancellation of Converted Shares. All shares of Company
Common Stock shall at the Effective Time, upon conversion thereof into
shares of Acquiror Class B Common Stock and the right to receive cash,
cease to be outstanding and shall without further action be canceled
and retired, and each certificate previously evidencing Company Common
Stock outstanding immediately prior to the Effective Time (other than
Company
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Common Stock described in Subsection 3.01(e)) shall thereafter be
deemed, for all purposes other than the payment of dividends or
distributions, to represent that number of shares of Acquiror Class B
Common Stock and the right to receive cash determined pursuant to
Section 3.01(a) and, if applicable, the right to receive cash pursuant
to Subsection 3.02(e). The holders of certificates previously
evidencing Company Common Stock shall cease to have any rights with
respect to such Company Common Stock except as otherwise provided
herein or by law.
(e) Treasury Stock. Notwithstanding any provision of this
Agreement to the contrary, each share of Company Common Stock held in
the treasury of the Company and each share of Company Common Stock, if
any, owned by the Acquiror or any direct or indirect wholly owned
Subsidiary of the Acquiror or of the Company immediately prior to the
Effective Time shall be canceled and extinguished without conversion
thereof.
(f) Natco Stock. Each share of common stock, par value $1.00
per share, of Natco issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock, par
value $1.00 per share, of the Surviving Corporation.
(g) Review of Earnout Determinations. The Acquiror shall
deliver its determinations of Billed Revenues to the first sentence of
subsection (b) of this Section and of Sales Revenue pursuant to the
second and third sentences of subsection (b) of this Section at least
twenty (20) days prior to the CTOC Payout Date, the Initial Payout
Date and the Supplemental Payout Date, respectively, to the
Representative (as hereinafter defined) and shall provide the
Representative with a reasonably detailed calculation of Billed
Revenues or Sales Revenue together with any supporting backup
reasonably requested by the Representative. If the Representative
shall have any objections to the determination of such Billed Revenues
or either determination of Sales Revenue, the Representative shall so
notify the Acquiror and the Acquiror and the Representative shall
endeavor in good faith to resolve their differences (the
"Differences") prior to the related payout date. Any Differences not
so resolved shall be deferred until the Supplemental Payout Date. If
the parties are unable to resolve their Differences, the
Representative shall have until the Supplemental Payout Date to notify
the Acquiror that the Representative intends to apply for arbitration
of the Differences pursuant to Section 11.09. If Differences exist as
to the determination of Billed Revenues for the CTOC Earnout Shares or
the Sales Revenue for the Initial Earnout Shares or the Supplemental
Earnout Shares, the Acquiror shall deliver the CTOC Earnout Shares,
the Initial Earnout Shares and the Supplemental Earnout Shares on the
CTOC Payout Date, the Initial Payout Date and the Supplemental Payout
Date, respectively, less in each case the numbers of shares of
Acquiror Class B Common Stock attributable to the Differences. Any
additional shares of Acquiror Class B Common Stock attributable to the
Differences shall be delivered by the Acquiror upon resolution of all
such Differences, whether by arbitration or otherwise.
(h) Acquiror's Successor. If (i) the Acquiror shall merge
with one or more other corporations or legal entities (whether or not
the Acquiror shall be the corporation surviving
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such merger) and the outstanding Acquiror Class B Common Stock shall
be converted into another class of capital stock or into other
securities of the surviving corporation or into cash or other
property, (ii) the Acquiror shall consolidate with one or more other
corporations or legal entities, (iii) the Acquiror shall sell all or
substantially all its assets in a single transaction or a series of
related transactions and distribute the proceeds thereof to its
stockholders, the rights under this Section 3.01 of the former holders
of Company Common Stock to receive CTOC Earnout Shares, Initial
Earnout Share and Supplemental Earnout Shares shall become, at the
effective time of any such transaction, rights to receive, in lieu of
shares of Acquiror Class B Common Stock, the number and class of
shares of capital stock or other securities or cash or other property
to which such holders would have been entitled pursuant to the terms
of such transaction if, immediately prior thereto, such holders had
been the holders of record of the number of shares of Acquiror Class B
Common Stock to which such holders would have been entitled as CTOC
Earnout Shares, Initial Earnout Shares and Supplemental Earnout Shares
pursuant to this Section 3.01 but for such transaction. If the
consideration to be received by the former holders of Company Common
Stock is converted into a right to receive shares of capital stock of
any other issuer and if between the Effective Time and the
Supplemental Payout Date the outstanding shares of such capital stock
shall become subject to a Share Adjustment, the numbers of shares of
such capital stock or other securities payable hereunder in lieu of
CTOC Earnout Shares, Initial Earnout Shares and Supplemental Earnout
Shares shall, to the extent the record date for such Share Adjustment
shall have occurred, or the Share Adjustment shall otherwise have
become effective, prior to the CTOC Payout Date, the Initial Payout
Date or the Supplemental Payout Date, as appropriate, be
correspondingly adjusted to reflect such Share Adjustment. The parties
hereto intend, through this subsection 3.01(h) and the last sentence
of subsection 3.01(a), to provide a mechanism by which the Designated
Company Stockholders, to the extent that they are entitled to any CTOC
Earnout Shares, Initial Earnout Shares or Supplemental Earnout Shares
pursuant to the provisions of this Agreement, will receive on the
applicable payout dates the correct numbers of shares of Acquiror
Class B Common Stock or shares of any other capital stock of Acquiror
or any other issuer of the type and amount that would have been
received by a Designated Company Stockholder (or its assignee) if such
stockholder (or its assignee) had been issued such CTOC Earnout
Shares, Initial Earnout Shares or Supplemental Earnout Shares at the
Effective Time. The Acquiror, on behalf of itself, its successors and
assigns, hereby agrees to reserve for issuance all shares of capital
stock in any way required to be issued to the Designated Company
Stockholders pursuant to the provisions of this Agreement and agrees
to adjust equitably the consideration to be received by the Designated
Company Stockholders as CTOC Earnout Shares, Initial Earnout Shares
and Supplemental Earnout Shares if necessary to give effect to the
intent of the parties hereto expressed in the preceeding sentence.
(i) Examples. Attached hereto as Exhibit I are examples
prepared to demonstrate the application of this Section 3.01, Section
7.10 and the applicable definitions, to reflect the distribution of
the Escrow Shares, the CTOC Earnout Shares, the Initial Earnout Shares
and the Supplemental Earnout Shares to the Designated Company
Stockholders.
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SECTION 3.02 Exchange of Certificates.
(a) Exchange Fund. At or immediately prior to the Effective
Time, the Acquiror shall segregate, and hold separate and apart from
its general funds, for the benefit of the former holders of Company
Common Stock as of the Effective Time and for exchange in accordance
with this Article III, certificates evidencing a number of shares of
Acquiror Class B Common Stock and an amount of cash equal to the
product of the Merger Consideration Per Share of Company Common Stock
(other than the right to receive the Earnout Shares) and the number of
shares of Company Common Stock outstanding immediately prior to the
Effective Time (exclusive of any such shares to be canceled pursuant
to Subsection 3.01(e)), together with any cash to be paid pursuant to
Section 3.02(e). The Acquiror shall deliver Acquiror Class B Common
Stock, together with any cash to be paid in lieu of fractional
interests in shares of Acquiror Class B Common Stock pursuant to
Subsection 3.02(e) and any dividends or distributions to be paid
pursuant to Subsection 3.02(d), in exchange for certificates
theretofore evidencing Company Common Stock surrendered to the
Acquiror pursuant to Subsection 3.02(c). Except as contemplated by
Subsection 3.02(e), the Exchange Fund shall not be used for any other
purpose.
(b) Letter of Transmittal. The Acquiror will at the request
of any Designated Company Stockholder provide to the Designated
Company Stockholder within 10 days of such request a letter of
transmittal and other appropriate materials for use in surrendering to
the Acquiror certificates that prior to the Effective Time evidenced
shares of Company Common Stock. To the extent that the Designated
Company Stockholders do not make any such request prior to the
Effective Time, the Acquiror will send, within two Business Days after
the Effective Time, to each record holder of Company Common Stock
immediately prior to the Effective Time a letter of transmittal and
other appropriate materials for use in surrendering to the Acquiror
certificates that prior to the Effective Time evidenced shares of
Company Common Stock. Such letter of transmittal shall include a Form
W-9 prescribed by the Regulations under the Code.
(c) Exchange Procedures. Promptly after the Effective Time,
the Acquiror shall distribute to each former holder of Company Common
Stock, upon surrender to the Acquiror for cancellation of one or more
certificates that theretofore evidenced shares of Company Common
Stock, certificates evidencing the appropriate number of shares of
Acquiror Class B Common Stock and cash into which such shares of
Company Common Stock were converted pursuant to the Merger, together
with any cash to be paid in lieu of fractional interests in shares of
Acquiror Class B Common Stock pursuant to Subsection 3.02(e) and any
dividends or distributions to be paid pursuant to Subsection 3.02(d).
If shares of Acquiror Class B Common Stock are to be issued to a
Person other than the Person in whose name the surrendered certificate
or certificates are registered, it shall be a condition of issuance of
the Acquiror Class B Common Stock that (i) the surrendered certificate
or certificates shall be properly endorsed, with signatures guaranteed
or otherwise in proper form for transfer, and that the Person
requesting such payment shall pay any transfer or other taxes required
by reason of the issuance of Acquiror Class B Common Stock to a Person
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other than the registered holder of the surrendered certificate or
certificates or (ii) such Person shall establish to the satisfaction
of the Acquiror that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Acquiror nor any other
party hereto shall be liable to any former holder of Company Common
Stock for any Acquiror Class B Common Stock or cash into which such
Company Common Stock shall have been converted pursuant to the Merger,
cash in lieu of fractional share interests or dividends or
distributions thereon required to be delivered to a public official
pursuant to any applicable escheat law in accordance with an opinion
of counsel to such effect.
(d) Distributions with Respect to Unexchanged Shares of
Company Common Stock. No dividends or other distributions declared or
made with respect to Acquiror Class B Common Stock with a record date
after the Effective Time shall be paid to the holder of any
certificate that theretofore evidenced shares of Company Common Stock
until the holder of such certificate shall surrender such certificate.
Subject to the effect of any applicable escheat laws, following
surrender of any such certificate, there shall be paid (i) to the
holder of the certificates evidencing whole shares of Acquiror Class B
Common Stock issued in exchange therefor, without interest, (A)
promptly, the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such
whole shares of Acquiror Class B Common Stock and (B), at the
appropriate payment date, the amount of dividends or other
distributions, with a record date after the Effective Time but prior
to surrender and a payment date occurring after surrender, payable
with respect to such whole shares of Acquiror Class B Common Stock and
(ii) to the holder of any certificate that theretofore evidenced
shares of Company Common Stock, without interest, promptly the amount
of any cash payable with respect to a fractional share of Acquiror
Class B Common Stock to which such holder is entitled pursuant to
Subsection 3.02(e).
(e) No Fractional Shares. Notwithstanding anything herein to
the contrary, no certificates or scrip evidencing fractional shares of
Acquiror Class B Common Stock shall be issued in connection with the
Merger, and any such fractional share interests to which a holder of
record of Company Common Stock at the Effective Time would otherwise
be entitled will not entitle such holder to vote or to any rights of a
stockholder of the Acquiror. In lieu of any such fractional shares,
each holder of record of Company Common Stock at the Effective Time
who but for the provisions of this Subsection 3.02(e) would be
entitled to receive a fractional interest of a share of Acquiror Class
B Common Stock pursuant to the Merger shall be paid cash, without any
interest thereon, in an amount equal to $13.00 multiplied by such
fraction. The Acquiror shall promptly deposit the aggregate amount of
cash so required as part of the Exchange Fund. Thereafter, the
Acquiror shall, in accordance with Subsection 3.02(d), pay to the
Persons who would otherwise be entitled to receive a fractional
interest of a share of Acquiror Class B Common Stock an amount in cash
determined as provided above.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains unclaimed by the former holders of Company Common
Stock for twelve months after the Effective Time may be returned to
the general funds of the Acquiror, and any former
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14
holders of Company Common Stock who shall not have theretofore
complied with this Article III shall thereafter look only to the
Acquiror for the Acquiror Class B Common Stock and any cash to which
they are entitled.
(g) Withholding of Tax. The Acquiror shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant
to this Agreement to any former holder of Company Common Stock such
amounts as the Acquiror (or any affiliate thereof) is required to
deduct and withhold with respect to the making of such payment under
the Code or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by the Acquiror, such withheld
amounts shall be treated for all purposes of this Agreement as having
been paid to the former holder of Company Common Stock in respect of
which such deduction and withholding was made by the Acquiror. To the
extent that any former holder of Company Common Stock shall execute
and return the Form W-9 included in the letter of transmittal, no such
withholding shall be required or made.
(h) Lost Certificates. If any certificate evidencing Company
Common Stock shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such
certificate to be lost, stolen or destroyed and, if required by
Acquiror, the posting by such Person of a bond, in such reasonable
amount as Acquiror may direct, as indemnity against claims that may be
made against it with respect to such certificate, the Acquiror shall
issue in exchange for such lost, stolen or destroyed certificate the
Acquiror Class B Common Stock and cash into which such Company Common
Stock shall have been converted pursuant to the Merger, any cash in
lieu of fractional shares of Acquiror Class B Common Stock to which
the holder thereof may be entitled pursuant to Section 3.02(e) and any
dividends or other distributions to which the holder thereof may be
entitled pursuant to Subsection 3.02(d).
SECTION 3.03 Closing. The Closing shall take place at the offices of
Xxxxxx & Xxxxxx L.L.P., 1001 Xxxxxx, 0000 Xxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxx
00000-0000, at 10:00 a.m. on November 18, 1998 or at such other place and time
as the parties hereto may agree.
SECTION 3.04 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
If and to the extent any information required to be furnished in any
Section of the Company's Disclosure Letter is contained in another Section of
the Company's Disclosure Letter, such information will be deemed to be included
in all Sections of the Company's Disclosure Letter if such disclosure is
reasonably apparent on its face. Subject to the provisions of Section 9.01, the
Company hereby represents and warrants to the Acquiror Companies that:
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SECTION 4.01 Organization and Qualification; Subsidiaries. The Company
is a legal entity duly organized, validly existing and in good standing under
the Laws of its jurisdiction of incorporation, has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of the business conducted by
it or the ownership or leasing of its properties makes such qualification
necessary, other than any matters, including the failure to be so duly
qualified and in good standing, that could not reasonably be expected to have a
Material Adverse Effect on the Company. The Company does not have any
Subsidiaries. Except as disclosed in Section 4.01 of the Company's Disclosure
Letter, the Company does not own an equity interest in any partnership, joint
venture arrangement or other business entity that is Material to the Company.
SECTION 4.02 Certificate of Incorporation and Bylaws. The Company has
heretofore marked for identification and furnished to the Acquiror complete and
correct copies of its certificate of incorporation and bylaws, in each case as
amended or restated to the date hereof. The Company is not in violation of any
of the provisions of its certificate of incorporation or bylaws.
SECTION 4.03 Capitalization.
(a) Company Common Stock. The authorized capital stock of the
Company consists solely of (i) 100,000 shares of Company Common Stock
consisting of 90,000 shares of Class A Common Stock and 10,000 shares
of Class B Common Stock, of which as of December 31, 1997: (A)
49,999.99 shares of Class A Common Stock were issued and outstanding,
(B) no shares of Class B Common Stock were issued and outstanding. All
the outstanding shares of Class A Common Stock are duly authorized,
validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, the Company's certificate of
incorporation or bylaws or any agreement to which the Company is a
party or is bound other than the Stockholders Agreement dated July 1,
1996 by and among the Company, BOCP and the stockholders of the
Company (the "Company Stockholders Agreement"). Except as set forth in
Subsection 4.03(a) of the Company's Disclosure Letter, between
December 31, 1997 and the date of this Agreement, no shares of Company
Common Stock have been issued by the Company and the Company has not
granted any options for, or other rights to purchase, shares of
Company Common Stock.
(b) Reserved Shares. Except as set forth in Subsection
4.03(a), no shares of Common Stock are reserved for issuance, and,
except for the Warrants listed in Subsection 4.03(b) of the Company's
Disclosure Letter, there are no contracts, agreements, commitments or
arrangements obligating the Company (i) to offer, sell, issue or grant
any Equity Securities of the Company, (ii) to redeem, purchase or
acquire, or to offer to purchase or acquire, any outstanding Equity
Securities of the Company or (iii) to grant any Lien on any shares of
capital stock of the Company.
(c) Adverse Claims. Except for the Warrants and the Company
Stockholders Agreement, there are no voting trusts, proxies or other
agreements, commitments or
AGREEMENT AND PLAN OF MERGER
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understandings of any character to which the Company is a party or by
which the Company is bound with respect to the voting of any shares of
capital stock of the Company or with respect to the registration of
the offering, sale or delivery of any shares of capital stock of the
Company under the Securities Act.
SECTION 4.04 Authorization of Agreement. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and each
instrument required hereby to be executed and delivered by it at the Closing,
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby. The execution and delivery by the Company of
this Agreement and each instrument required hereby to be executed and delivered
by it at the Closing and the performance of its obligations hereunder and
thereunder have been duly and validly authorized by all requisite corporate
action on the part of the Company (other than, with respect to this Agreement,
the approval and adoption of this Agreement by the holders of a majority of the
outstanding shares of Company Common Stock in accordance with the Corporate
Statute). This Agreement has been duly executed and delivered by the Company
and (assuming due authorization, execution and delivery hereof by the other
parties hereto) constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
as the same may be limited by legal principles of general applicability
governing the application and availability of equitable remedies.
SECTION 4.05 Approvals. Except as set forth in Section 4.05 of the
Company's Disclosure Letter and for the applicable requirements, if any, of (a)
the Securities Act, (b) the Exchange Act, (c) state securities or blue sky
laws, (b) the HSR Act, (c) the filing and recordation of appropriate merger
documents as required by the Corporate Statute and (d) those Laws, Regulations
and Orders noncompliance with which could not reasonably be expected to have a
material adverse effect on the ability of the Company to perform its
obligations under this Agreement or to have a Material Adverse Effect on the
Company, no filing or registration with, no waiting period imposed by and no
Permit or Order of, any Governmental Authority is required under any Law,
Regulation or Order applicable to the Company to permit the Company to execute,
deliver or perform this Agreement or any instrument required hereby to be
executed and delivered by it at the Closing.
SECTION 4.06 No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by and receipt of all Permits and Orders of, Governmental Authorities
indicated as required in Section 4.05 and receipt of the approval of this
Agreement by the stockholders of the Company as required by the Corporate
Statute and the approvals or consents required to be obtained from the other
parties disclosed in Section 4.06 of the Company's Disclosure Letter, neither
the execution and delivery by the Company of this Agreement or any instrument
required hereby to be executed and delivered by it at the Closing nor the
performance by the Company of its obligations hereunder or thereunder will (a)
violate or breach the terms of or cause a default under, or result in the
termination of, or accelerate the performance required by, or result in a right
of termination, cancellation or acceleration of any obligation under, or result
in the creation of any lien, security interest, charge or encumbrance upon any
of the properties or assets of the Company or any of its Subsidiaries under (i)
any Law,
AGREEMENT AND PLAN OF MERGER
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Regulation or Order applicable to the Company, (ii) the certificate of
incorporation or bylaws of the Company or (iii) any contract or agreement to
which the Company or any of its Subsidiaries is a party or by which it or any
of its properties or assets is bound, or (b) with the passage of time, the
giving of notice or the taking of any action by a third Person, have any of the
effects set forth in clause (a) of this Section, except in any such case for
any matters described in this Section that could not reasonably be expected to
have a material adverse effect upon the ability of the Company to perform its
obligations under this Agreement or a Material Adverse Effect on the Company.
SECTION 4.07 Financial Statements.
(a) The Company Financial Statements (i) have been prepared
in accordance with GAAP and (ii) fairly present the consolidated
financial position of the Company and its Subsidiaries as of the
respective dates thereof and the consolidated results of their
operations and cash flows for the periods indicated.
(b) Except as set forth in Subsection 4.07(b) of the
Company's Disclosure Letter, there exist no liabilities or obligations
of the Company that are Material to the Company, whether accrued,
absolute, contingent or threatened, that would be required to be
reflected, reserved for or disclosed under GAAP in financial
statements of the Company (including the notes thereto) as of and for
the period ended on the date of this representation and warranty,
other than (i) liabilities or obligations that are adequately
reflected, reserved for or disclosed in the Company's Financial
Statements, (ii) liabilities or obligations incurred in the ordinary
course of business of the Company since December 31, 1997, (iii)
liabilities or obligations the incurrence of which is not prohibited
by Subsection 6.02(a) and (iv) liabilities and obligations that are
not Material to the Company.
SECTION 4.08 No Material Adverse Effect; Conduct.
(a) Since December 31, 1997, no event (other than any event
that is of general application to all or a substantial portion of the
Company's industry and other than any event that is expressly subject
to any other representation or warranty contained in Article IV) has,
to the Knowledge of the Company, occurred that, individually or
together with other similar events, could reasonably be expected to
constitute or cause a Material Adverse Effect on the Company.
(b) Except as disclosed in Subsection 4.08(b) of the
Company's Disclosure Letter, during the period from December 31, 1997
to the date of this Agreement, the Company has not engaged in any
conduct that is proscribed during the period from the date of this
Agreement to the Effective Time by subsections (i) through (xii) of
Subsection 6.02(a) or agreed in writing or otherwise during such
period prior to the date of this Agreement to engage in any such
conduct.
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SECTION 4.09 Title to Properties. The Company has indefeasible title
to all of the properties reflected in the Company's Balance Sheet, other than
any properties reflected in the Company's Balance Sheet that (i) have been sold
or otherwise disposed of since the date of the Company's Balance Sheet in the
ordinary course of business consistent with past practice or (ii) are not,
individually or in the aggregate, Material to the Company, free and clear of
Liens, other than (x) Liens the existence of which is reflected in the
Company's Financial Statements, (y) Permitted Encumbrances and (z) Liens that,
individually or in the aggregate, are not Material to the Company. The Company
holds under valid lease agreements all real and personal properties reflected
in the Company's Balance Sheet as being held under capitalized leases, and all
real and personal property that is subject to the operating leases to which
reference is made in the notes to the Company's Audited Financial Statements,
and enjoy peaceful and undisturbed possession of such properties under such
leases, other than (i) any properties as to which such leases have terminated
in the ordinary course of business without any Material liability of any party
thereto since the date of the Company's Balance Sheet and (ii) any properties
that, individually or in the aggregate, are not Material to the Company. The
Company has not received any written notice of any adverse claim to the title
to any properties owned by it or with respect to any lease under which any
properties are held by it, other than any claims that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect
on the Company.
SECTION 4.10 Certain Obligations. Except as set forth in Section 4.10
of the Company's Disclosure Letter, the Company is not a party to or bound by
any Material Contract. Except as set forth in Section 4.10 of the Company's
Disclosure Letter, all Material Contracts to which the Company is a party are
in full force and effect, the Company has performed its obligations thereunder
to date and, to the Knowledge of the Company, each other party thereto has
performed its obligations thereunder to date, other than any failure of a
Material Contract to be in full force and effect or any nonperformance thereof
that could not reasonably be expected to have a Material Adverse Effect on the
Company.
SECTION 4.11 Permits; Compliance. To the Knowledge of the Company, the
Company has obtained all Permits that are necessary to carry on its business as
currently conducted, except for any such Permits that its failure to possess,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company. Such Permits are in full force and
effect, have not been violated in any respect that could reasonably be expected
to have a Material Adverse Effect on the Company and, to the Knowledge of the
Company, no suspension, revocation or cancellation thereof has been threatened
and there is no action, proceeding or investigation pending or threatened
regarding suspension, revocation or cancellation of any of such Permits, except
where the suspension, revocation or cancellation of such Permits could not
reasonably be expected to have a Material Adverse Effect on the Company.
SECTION 4.12 Litigation; Compliance with Laws. There are no actions,
suits, investigations or proceedings (including any proceedings in arbitration)
pending or, to the Knowledge of the Company, threatened against the Company, at
law or in equity, in any Court or before or by any Governmental Authority,
except actions, suits or proceedings that (a) are set forth in Section 4.12 or
Section 4.15 of the Company's Disclosure Letter or (b), individually or, with
AGREEMENT AND PLAN OF MERGER
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19
respect to multiple actions, suits or proceedings that allege similar theories
of recovery based on similar facts, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company. There are no claims
pending or, to the Knowledge of the Company, threatened by any Persons against
the Company for indemnification pursuant to any statute, organizational
document, contract or otherwise with respect to any action, suit, investigation
or proceeding pending or previously determined in any Court or before or by any
Governmental Authority. Except as set forth in Section 4.12 of the Company's
Disclosure Letter, the Company is in substantial compliance with all applicable
Laws and Regulations and is not in default with respect to any Order applicable
to the Company, except such events of noncompliance or defaults that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company.
SECTION 4.13 Employee Benefit Plans.
(a) Listing. Each Benefit Plan of the Company is listed in
Subsection 4.13(a) of the Company's Disclosure Letter, including, with
respect to Terminated Benefit Plans, the date of termination. True and
correct copies of each of the following have been made available to
the Acquiror: (i) the most recent annual report (Form 5500) relating
to each such Current Benefit Plan filed with the IRS, (ii) the plan
document for each such Current Benefit Plan, (iii) the trust
agreement, if any, relating to each such Current Benefit Plan, (iv)
the most recent summary plan description for each such Current Benefit
Plan for which a summary plan description is required by ERISA, (v)
the most recent actuarial report or valuation relating to each such
Current Benefit Plan subject to Title IV of ERISA and (vi) the most
recent determination letter, if any, issued by the IRS with respect to
any such Current Benefit Plan intended to be qualified under Section
401 of the Code.
(b) Liability Related to Plans. No event has occurred and, to
the Knowledge of the Company, there exists no condition or set of
circumstances in connection with which the Company could be subject to
any liability under the terms of such Benefit Plans, or with respect
to any such Benefit Plans, under ERISA, the Code or any other
applicable Law, other than any event, condition or set of
circumstances that could not reasonably be expected to have a Material
Adverse Effect on the Company.
(c) Qualified Status. Each Current Benefit Plan intended to
be qualified under Code Section 401 (i) satisfies in form the
requirements of such Section, (ii) is a standardized prototype which
does not require an individual favorable determination letter from the
IRS, (iii) has not, since adoption of the prototype, been amended and
(iv) has not been operated in a way that would adversely affect its
qualified status.
(d) No Termination of Current Plans. There has been no
termination or partial termination of any such Current Benefit Plan
within the meaning of Section 411(d)(3) of the Code. The Company
intends to terminate its Management Incentive Plan (the "MIP") as of
or immediately prior to the Closing and to pay any accrued amounts to
employees of the Company entitled to participate in the MIP as of the
termination date.
AGREEMENT AND PLAN OF MERGER
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(e) Terminated Plans. Any such Terminated Benefit Plan
intended to have been qualified under Section 401 of the Code received
a favorable determination letter from the IRS with respect to its
termination.
(f) No Claims. There are no actions, suits or claims pending
(other than routine claims for benefits) or, to the Knowledge of the
Company, threatened against, or with respect to, any of such Benefit
Plans or their assets that could reasonably be expected to have a
Material Adverse Effect on the Company.
(g) Pending Matters. To the Knowledge of the Company, there
is no matter pending (other than routine qualification determination
filings) with respect to any of such Benefit Plans before the IRS, the
Department of Labor, the PBGC or any other Governmental Authority.
(h) Required Contributions. All contributions required to be
made by the Company or the Company's Subsidiaries to such Benefit
Plans pursuant to their terms and provisions have been made timely.
(i) No ERISA Violations. As to any such Current Benefit Plan
subject to Title IV of ERISA, (i) there has been no event or condition
that presents a material risk of plan termination, (ii) no accumulated
funding deficiency, whether or not waived, within the meaning of
Section 302 of ERISA or Section 412 of the Code has been incurred
within six years prior to date of this Agreement, (iii) no reportable
event within the meaning of Section 4043 of ERISA (for which the
disclosure requirements of Regulation section 2615.3 promulgated by
the PBGC have not been waived) has occurred within six years prior to
the date of this Agreement, (iv) no notice of intent to terminate such
Benefit Plan has been given under Section 4041 of ERISA, (v) no
proceeding has been instituted under Section 4042 of ERISA to
terminate such Benefit Plan, (vi) no liability to the PBGC has been
incurred (other than with respect to required premium payments) and
(vii) the assets of the Benefit Plan equal or exceed the actuarial
present value of the benefit liabilities, within the meaning of
Section 4041 of ERISA, under the Benefit Plan, based upon reasonable
actuarial assumptions and the asset valuation principles established
by the PBGC.
(j) Nondeductible Payments. Except as set forth in Subsection
4.13(j) of the Company's Disclosure Letter, in connection with the
consummation of the transactions contemplated by this Agreement, no
payment of money or other property, acceleration of benefits or
provision of other rights has been or will be made under any such
Current Benefit Plans or any of the programs, agreements, policies or
other arrangements described in Subsection 4.13(l) of the Company's
Disclosure Letter that would be reasonably likely to be nondeductible
under Section 280G of the Code, whether or not some other subsequent
action or event would be required to cause such payment, acceleration
or provision to be triggered.
(k) No Required Increases. Except as set forth in Subsection
4.13(k) of the Company's Disclosure Letter, the execution and delivery
of this Agreement and the
AGREEMENT AND PLAN OF MERGER
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consummation of the transactions contemplated hereby will not (i)
require the Company to make a larger contribution to, or pay greater
benefits or provide other rights under, any Current Benefit Plan or
any of the programs, agreements, policies or other arrangements
described in Subsection 4.13(l) of the Company's Disclosure Letter
than it otherwise would, whether or not some other subsequent action
or event would be required to cause such payment or provision to be
triggered or (ii) create or give rise to any additional vested rights
or service credits under any Current Benefit Plan or any of such
programs, agreements, policies or other arrangements, whether or not
some other subsequent action or event would be required to cause such
creation or acceleration to be triggered.
(l) Severance and Employment Agreements. Except as set forth
in Subsection 4.13(l) of the Company's Disclosure Letter, the Company
is not a party to nor is it bound by any severance agreement
(involving $50,000 or more), program or policy. True and correct
copies of all employment agreements with officers of the Company and
all vacation, overtime and other compensation policies of the Company
relating to its employees have been made available to the Acquiror.
(m) Retiree Benefits. Except as set forth in Subsection
4.13(m) of the Company's Disclosure Letter, no Benefit Plan provides
retiree medical or retiree life insurance benefits to any Person and
the Company is not contractually or otherwise obligated (whether or
not in writing) to provide any Person with life insurance or medical
benefits upon retirement or termination of employment, other than as
required by the provisions of Sections 601 through 608 of ERISA and
Section 4980B of the Code. Each Benefit Plan or other arrangement
described in Subsection 4.13(m) of the Company's Disclosure Letter may
be unilaterally amended or terminated in its entirety without
liability except as to benefits accrued thereunder prior to such
amendment or termination.
(n) Multiemployer Plans. The Company does not contribute or
have any obligation to contribute, and has not within six years prior
to the date of this Agreement contributed or had an obligation to
contribute, to a multiemployer plan within the meaning of Section
3(37) of ERISA.
(o) Vacation Policies. Except as set forth in Subsection
4.13(o) of the Company's Disclosure Letter, the vacation policies of
the Company do not provide for carryover vacation from one calendar
year to the next.
(p) Collective Bargaining Agreements. No collective
bargaining agreement to which the Company is a party is currently in
effect or is being negotiated by the Company. There is no pending or,
to the Knowledge of the Company, threatened labor dispute, strike or
work stoppage against the Company that could reasonably be expected to
have a Material Adverse Effect on the Company. To the Knowledge of the
Company, neither the Company nor any representative or employee of the
Company has in the United States committed any unfair labor practices
in connection with the operation of the business of the Company, and
there is no pending or, to the Knowledge of the Company, threatened
charge or complaint
AGREEMENT AND PLAN OF MERGER
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against the Company by the National Labor Relations Board or any
comparable agency of any state of the United States.
SECTION 4.14 Taxes.
(a) Tax Returns and Taxes. Except for such matters as could
not reasonably be expected to have a Material Adverse Effect on the
Company, (i) all Tax Returns that are required to be filed by or with
respect to the Company on or before the Effective Time have been or
will be timely filed, (ii) all Taxes payable by the Company with
respect to the income, operations, business or capital of the Company
on or before the Effective Time have been or will be timely paid in
full, (iii) all withholding Tax requirements imposed on or with
respect to the Company have been or will be satisfied in full in all
respects and (iv) no penalty, interest or other charge is or will
become due with respect to the late filing of any such Tax Return or
late payment of any such Tax.
(b) Audits. Except as set forth in Subsection 4.14(b) of the
Company's Disclosure Letter, all Tax Returns have been audited by the
applicable Governmental Authority or the applicable statute of
limitations has expired for the period covered by such Tax Returns.
(c) Extensions of Times. Except as set forth in Subsection
4.14(c) of the Company's Disclosure Letter, there is not in force any
extension of time with respect to the due date for the filing of any
Tax Return or any waiver or agreement for any extension of time for
the assessment or payment of any Tax due with respect to the period
covered by any Tax Return.
(d) Claims. There is no claim against or with respect to the
income, operations, business or capital of the Company for any Taxes,
and no assessment, deficiency or adjustment has been asserted or
proposed with respect to any Tax Return, that, in either case, could
reasonably be expected to have a Material Adverse Effect on the
Company.
(e) Affiliated Group. Except as set forth in Subsection
4.14(e) of the Company's Disclosure Letter, the Company has not,
during the last ten years, been a member of an affiliated group filing
a consolidated federal income Tax Return.
SECTION 4.15 Environmental Matters. Except for matters disclosed in
Section 4.15 of the Company's Disclosure Letter and except for matters that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company, (a) the properties, operations and
activities of the Company are in compliance with all applicable Environmental
Laws; (b) the Company and the properties and operations of the Company are not
subject to any existing, pending or, to the Knowledge of the Company,
threatened action, suit, investigation, inquiry or proceeding by or before any
Court or Governmental Authority under any Environmental Law; (c) all Permits,
if any, required to be obtained or filed by the Company under any Environmental
Law in connection with the business of the Company have been obtained or filed
AGREEMENT AND PLAN OF MERGER
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and are valid and currently in full force and effect; (d) there has been no
release of any hazardous substance, pollutant or contaminant into the
environment by the Company or in connection with its properties or operations;
(e) there has been no exposure (attributable to the action of the Company) of
any Person or property to any hazardous substance, pollutant or contaminant in
connection with the properties, operations and activities of the Company; and
(f) the Company has made available to the Acquiror all internal and external
environmental audits and studies and all correspondence on substantial
environmental matters (in each case relevant to the Company) in the possession
of the Company.
SECTION 4.16 Intellectual Property. Other than as disclosed in Section
4.16 of the Company's Disclosure Letter, the Company owns or holds licenses
under or otherwise has the right to use or sublicense, all foreign and domestic
patents, trademarks (common law and registered), trademark registration
applications, service marks (common law and registered), service xxxx
registration applications, trade names and copyrights, copyright applications,
trade secrets, know-how and other proprietary information as are necessary for
the conduct of the business of the Company as currently conducted except for
any such intellectual property as to which the failure to own or hold licenses
could not reasonably be expected to have a Material Adverse Effect on the
Company. Other than as disclosed in Section 4.16 of the Company's Disclosure
Letter, the Company is not currently in receipt of any notice of infringement
or notice of conflict with the asserted rights of others in any patents,
trademarks, service marks, trade names, trade secrets and copyrights owned or
held by other Persons, except, in each case, for matters that could not
reasonably be expected to have a Material Adverse Effect on the Company.
Neither the execution and delivery of this Agreement nor consummation of the
transactions contemplated hereby will violate or breach the terms or cause any
cancellation of any Material license held by the Company under any patent,
trademark, service xxxx, trade name, trade secret or copyright.
SECTION 4.17 Insurance. Section 4.17 of the Company's Disclosure
Letter sets forth a list, including the name of the underwriter, the risks
insured, coverage and related limits and deductibles, expiration dates and
significant riders, of the principal insurance policies currently maintained by
the Company. To the Knowledge of the Company, all such policies are in full
force and effect and all premiums due thereon have been paid.
SECTION 4.18 Tax Matters. The Company has not taken or agreed to take
any action that would prevent the Merger from constituting a reorganization
within the meaning of section 368(a) of the Code. Specifically:
(a) Preservation of Proprietary Interest. Prior to and in
connection with the Merger, (x) none of the Company Common Stock will
be redeemed, (y) no extraordinary distribution will be made with
respect to the Company Common Stock and (z) none of the Company Common
Stock will be acquired by any Person related (as the term "related" is
defined in Treas. Reg. Section 1.368-1(e)(3) without regard to Section
1.368-1(e)(3)(i)(A)) to the Company.
AGREEMENT AND PLAN OF MERGER
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(b) Expenses. The Company and the stockholders of the Company
will each pay their respective expenses, if any, incurred in
connection with the Merger.
(c) Intercorporate Indebtedness. There is no intercorporate
indebtedness existing between the Company and the Acquiror or between
the Company and Natco that was issued, acquired, or will be settled at
a discount.
(d) Investment Company. The Company is not an investment
company as defined in section 368(a)(2)(F)(iii) and (iv) of the Code.
(e) Bankruptcy. The Company is not under the jurisdiction of
a court in a title 11 or similar case within the meaning of section
368(a)(3)(A) of the Code.
SECTION 4.19 Stockholders. Section 4.19 of the Company's Disclosure
Letter contains a true and complete list of all Persons who as of the date
hereof own shares of Company Common Stock of record or, to the Knowledge of the
Company, beneficially.
SECTION 4.20 Certain Business Practices. To the Company's Knowledge,
as of the date of this Agreement, neither the Company nor any director,
officer, employee or agent of the Company has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful payments relating to
political activity, (ii) made any unlawful payment to any foreign or domestic
government official or employee or to any foreign or domestic political party
or campaign or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, (iii) consummated any transaction, made any payment, entered
into any agreement or arrangement or taken any other action in violation of
Section 1128B(b) of the Social Security Act, as amended, or (iv) made any other
unlawful payment, except for any such matters that could not reasonably be
expected to have a Material Adverse Effect on the Company.
SECTION 4.21 Brokers. Except as set forth in Section 4.21 of the
Company's Disclosure Letter, no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
If and to the extent any information required to be furnished in any
Section of the Acquiror's Disclosure Letter is contained in another Section of
the Acquiror's Disclosure Letter, such information will be deemed to be
included in all Sections of the Acquiror's Disclosure Letter if such disclosure
is reasonably apparent on its face. Subject to the provisions of Section 9.01,
the Acquiror Companies hereby represent and warrant to the Company that:
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SECTION 5.01 Organization and Qualification; Subsidiaries. The
Acquiror, Natco and each other Subsidiary of the Acquiror are legal entities
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization, have all requisite
power and authority to own, lease and operate their respective properties and
to carry on their business as it is now being conducted and are duly qualified
and in good standing to do business in each jurisdiction in which the nature of
the business conducted by them or the ownership or leasing of their respective
properties makes such qualification necessary, other than any matters,
including the failure to be so duly qualified and in good standing, that could
not reasonably be expected to have a Material Adverse Effect on the Acquiror.
Section 5.01 of the Acquiror's Disclosure Letter sets forth, as of the date of
this Agreement, a true and complete list of all Significant Subsidiaries of the
Acquiror, together with the jurisdiction of incorporation of each such
Subsidiary and the percentage of each such Subsidiary's outstanding capital
stock or other equity interests owned by the Acquiror or another Subsidiary of
the Acquiror. Except for investments in Subsidiaries, neither the Acquiror,
Natco nor any of the Acquiror's other Subsidiaries owns an equity interest in
any partnership or joint venture arrangement or other business entity that is
Material to the Acquiror.
SECTION 5.02 Certificate of Incorporation and Bylaws. The Acquiror has
heretofore marked for identification and furnished to the Company complete and
correct copies of the certificate of incorporation and the bylaws or the
equivalent organizational documents, in each case as amended or restated to the
date hereof, of the Acquiror and each of its Significant Subsidiaries. None of
the Acquiror, Natco or any of the Acquiror's Significant Subsidiaries is in
violation of any of the provisions of its certificate of incorporation or
bylaws (or equivalent organizational documents).
SECTION 5.03 Capitalization.
(a) As of the date of this Agreement, the authorized capital
stock of the Acquiror consists of 50,000,000 shares of Common Stock,
of which 8,145,925 shares are, as of such date, issued and outstanding
and owned beneficially and of record by the Stockholders, free and
clear of all Liens, and 5,000,000 shares of Preferred Stock, without
par value, of which 200,000 shares have been designated as the Series
A Junior Participating Preferred Stock and of which none is issued or
outstanding. As of the date hereof, no other shares of capital stock
of the Acquiror are issued or outstanding. Section 5.03(a) of the
Acquiror's Disclosure Letter sets forth the Persons who own the
Acquiror Common Stock of record and beneficially as of the date
hereof, including the number of shares owned by each, and the pro
forma ownership of the Acquiror Common Stock after giving effect to
the consummation of the Investment Agreement and the Merger. The
Acquiror has heretofore delivered to the Company a true and correct
copy of the Investment Agreement.
(b) Each outstanding share of Common Stock has been duly
authorized, validly issued and is fully paid and nonassessable. No
shares of Common Stock were issued in violation of any preemptive
rights created by statute, the Acquiror's certificate of incorporation
or bylaws or any agreement as to which the Acquiror is a party or
bound. Except for 504,762 shares of Class A Common Stock to be issued
pursuant to the Investment
AGREEMENT AND PLAN OF MERGER
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Agreement, the shares of Class B Common Stock to be issued pursuant to
this Agreement and the shares of Common Stock to be issued (as Class A
Common Stock) pursuant to the Acquiror Stock Options listed in
Subsection 5.03(b) of the Acquiror's Disclosure Letter and except as
otherwise set forth in Subsection 5.03(b) of the Disclosure Letter, no
shares of Common Stock or other capital stock of the Acquiror were
reserved for issuance and, except for the Investment Agreement, this
Agreement, and the Acquiror Stock Options listed in Subsection 5.03(b)
of the Acquiror's Disclosure Letter and the other agreements listed in
Subsection 5.03(b) of the Acquiror's Disclosure Letter, there are no
contracts, agreements, commitments or arrangements obligating the
Acquiror (i) to offer, sell, issue or grant any Equity Securities of
the Acquiror, (ii) to redeem, purchase or acquire, or offer to
purchase or acquire, any outstanding Equity Securities of the Acquiror
or (iii) to grant any Lien on any shares of capital stock of the
Acquiror.
(c) The authorized capital stock of each Significant
Subsidiary of the Acquiror is as set forth in Subsection 5.03(c) of
the Acquiror's Disclosure Letter. Except as set forth in Subsection
5.03(c) of the Acquiror's Disclosure Letter, (i) all the issued and
outstanding shares of capital stock of, or other equity interests in,
each Significant Subsidiary of the Acquiror are owned by the Acquiror
or one of its Subsidiaries, have been duly authorized and are validly
issued, and, with respect to capital stock, are fully paid and
nonassessable, and were not issued in violation of any preemptive or
similar rights of any Person; (ii) all such issued and outstanding
shares, or other equity interests, that are owned by the Acquiror or
one of its Subsidiaries are owned free and clear of all Liens; (iii)
no shares of capital stock of, or other equity interests in, any
Significant Subsidiary of the Acquiror are reserved for issuance, and
there are no contracts, agreements, commitments or arrangements
obligating the Acquiror or any of its Subsidiaries (A) to offer, sell,
issue, grant, pledge, dispose of or encumber any Equity Securities of
any of the Significant Subsidiaries of the Acquiror or (B) to redeem,
purchase or acquire, or offer to purchase or acquire, any outstanding
Equity Securities of any of the Significant Subsidiaries of the
Acquiror or (C) to grant any Lien on any outstanding Equity Securities
of any of the Significant Subsidiaries of the Acquiror; and (iv) all
the outstanding shares of capital stock of Natco are owned directly by
the Acquiror; except for any matter under clause (i), (ii) or (iii) of
this Subsection 5.03(c) that could not reasonably be expected to have
a Material Adverse Effect on the Acquiror.
(d) Except as set forth in Section 5.03(d) of the Acquiror's
Disclosure Letter, there are no voting trusts, proxies or other
agreements, commitments or understandings of any character to which
the Acquiror or any of its Subsidiaries is a party or by which the
Acquiror or any of its Subsidiaries is bound with respect to the
voting of any shares of capital stock of the Acquiror or any of its
Subsidiaries or with respect to the registration of the offering, sale
or delivery of any shares of capital stock of the Acquiror or any of
its Subsidiaries, except in the case of any Subsidiaries of the
Acquiror that are not Significant Subsidiaries for any matters that
could not reasonably be expected to have a Material Adverse Effect on
the Acquiror.
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SECTION 5.04 Authorization of Agreement. Each of the Acquiror and
Natco has all requisite corporate power and authority to execute and deliver
this Agreement and each instrument required hereby to be executed and delivered
by it at the Closing, to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby. The execution and delivery
by the Acquiror and Natco of this Agreement and each instrument required hereby
to be executed and delivered by the Acquiror or Natco at the Closing and the
performance of their respective obligations hereunder and thereunder have been
duly and validly authorized by all requisite corporate action (including
stockholder action) on the part of the Acquiror and Natco, respectively. This
Agreement has been duly executed and delivered by the Acquiror and Natco and
(assuming due authorization, execution and delivery hereof by the other party
hereto) constitutes a legal, valid and binding obligation of the Acquiror and
Natco, enforceable against the Acquiror and Natco in accordance with its terms,
except as the same may be limited by legal principles of general applicability
governing the application and availability of equitable remedies.
SECTION 5.05 Approvals. Except for the applicable requirements, if
any, of (a) the Securities Act, (b) the Exchange Act, (c) state securities or
blue sky laws, (d) the HSR Act, (e) the filing and recordation of appropriate
merger documents as required by the Corporate Statute and (f) those Laws,
Regulations and Orders noncompliance with which could not reasonably be
expected to have a material adverse effect on the ability of the Acquiror or
Natco to perform its obligations under this Agreement or to have a Material
Adverse Effect on the Acquiror, no filing or registration with, no waiting
period imposed by and no Permit or Order of, any Governmental Authority is
required under any Law, Regulation or Order applicable to the Acquiror or Natco
to permit the Acquiror or Natco to execute, deliver or perform this Agreement
or any instrument required hereby to be executed and delivered by it at the
Closing.
SECTION 5.06 No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by and receipt of all Permits and Orders of, Governmental Authorities
indicated as required in Section 5.05, neither the execution and delivery by
the Acquiror or Natco of this Agreement or any instrument required hereby to be
executed and delivered by the Acquiror or Natco at the Closing nor the
performance by the Acquiror or Natco of its respective obligations hereunder or
thereunder will (a) violate or breach the terms of or cause a default under or
result in the termination, cancellation or acceleration of any obligation
under, or result in the creation of any Lien upon any of the properties or
assets of the Acquiror or any of its Subsidiaries under (i) any Law, Regulation
or Order applicable to the Acquiror or Natco, (ii) the certificate of
incorporation or bylaws of the Acquiror or Natco or (iii) any contract or
agreement to which the Acquiror or any of its Subsidiaries is a party or by
which it or any of its properties or assets is bound, or (b) with the passage
of time, the giving of notice or the taking of any action by a third Person,
have any of the effects set forth in clause (a) of this Section, except in any
such case for any matters described in this Section that could not reasonably
be expected to have a material adverse effect upon the ability of the Acquiror
or Natco to perform its obligations under this Agreement or a Material Adverse
Effect on the Acquiror.
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SECTION 5.07 Financial Statements.
(a) The Acquiror's Consolidated Financial Statements (i) have
been prepared in accordance with GAAP and (ii) fairly present the
consolidated financial position of the Acquiror and its Subsidiaries
as of the respective dates thereof and the consolidated results of
their operations and cash flows for the periods indicated (including,
in the case of any unaudited interim financial statements, reasonable
estimates of normal and recurring year-end adjustments).
(b) Except as set forth in Subsection 5.07(b) of the
Acquiror's Disclosure Letter, there exist no liabilities or
obligations of the Acquiror and its Subsidiaries that are Material to
the Acquiror, whether accrued, absolute, contingent or threatened,
that would be required to be reflected, reserved for or disclosed
under GAAP in consolidated financial statements of the Acquiror as of
and for the period ended on the date of this representation and
warranty, other than (i) liabilities or obligations that are
adequately reflected, reserved for or disclosed in the Acquiror's
Consolidated Financial Statements, (ii) liabilities or obligations
incurred in the ordinary course of business of the Acquiror and its
Subsidiaries since December 31, 1997, (iii) liabilities or obligations
the incurrence of which is not prohibited by Subsection 6.02(b) and
(iv) liabilities or obligations that are not Material to the Acquiror.
SECTION 5.08 No Material Adverse Effect; Conduct.
(a) Since December 31, 1997, no event (other than any event
that is of general application to all or a substantial portion of the
Acquiror's industry and other than any event that is expressly subject
to any other representation or warranty contained in Article V) has,
to the Knowledge of the Acquiror, occurred that, individually or
together with other similar events, could reasonably be expected to
constitute or cause a Material Adverse Effect on the Acquiror.
(b) Except as disclosed in the Acquiror's Disclosure Letter,
during the period from September 30, 1997 to the date of this
Agreement, neither the Acquiror nor any of its Subsidiaries has
engaged in any conduct that is proscribed during the period from the
date of this Agreement to the Effective Time by clauses (i) through
(viii) of Subsection 6.02(b) or agreed in writing or otherwise during
such period prior to the date of this Agreement to engage in any such
conduct.
SECTION 5.09 Title to Properties. The Acquiror or its Subsidiaries,
individually or together, have indefeasible title to all of the properties
reflected in the Acquiror's Consolidated Balance Sheet, other than any
properties reflected in the Acquiror's Consolidated Balance Sheet that (a) have
been sold or otherwise disposed of since the date of the Acquiror's
Consolidated Balance Sheet in the ordinary course of business consistent with
past practice or (b) are not, individually or in the aggregate, Material to the
Acquiror, free and clear of Liens, other than (i) Liens the existence of which
is reflected in the Acquiror's Consolidated Financial Statements, (ii)
Permitted Encumbrances and (iii) Liens that, individually or in the aggregate,
are not Material to the Acquiror.
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The Acquiror or its Subsidiaries, individually or together, hold under valid
lease agreements all real and personal properties reflected in the Acquiror's
Consolidated Balance Sheet as being held under capitalized leases, and all real
and personal property that is subject to the operating leases to which
reference is made in the notes to the Acquiror's Audited Consolidated Financial
Statements, and enjoy peaceful and undisturbed possession of such properties
under such leases, other than (x) any properties as to which such leases have
terminated in the ordinary course of business without any Material liability of
any party thereto since the date of the Acquiror's Consolidated Balance Sheet
and (y) any properties that, individually or in the aggregate, are not Material
to the Acquiror. Neither the Acquiror nor any of its Subsidiaries has received
any written notice of any adverse claim to the title to any properties owned by
them or with respect to any lease under which any properties are held by them,
other than any claims that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Acquiror.
SECTION 5.10 Certain Obligations. Except as set forth in Section 5.10
of the Acquiror's Disclosure Letter, neither the Acquiror nor any of its
Subsidiaries is a party to or bound by any Material Contract. Except as set
forth in Section 5.10 of the Acquiror's Disclosure Letter, all Material
Contracts to which the Acquiror or any of its Subsidiaries is a party are in
full force and effect, the Acquiror or the Subsidiary of the Acquiror that is a
party to or bound by each such Material Contract has performed its obligations
thereunder to date and, to the Knowledge of the Acquiror, each other party
thereto has performed its obligations thereunder to date, other than any
failure of any such Material Contract to be in full force and effect or any
nonperformance thereof that could not reasonably be expected to have a Material
Adverse Effect on the Acquiror.
SECTION 5.11 Permits; Compliance. To the Knowledge of the Acquiror,
the Acquiror and its Subsidiaries have obtained all Permits that are necessary
to carry on their businesses as currently conducted, except for any such
Permits that the failure to possess, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on the Acquiror.
Such Permits are in full force and effect, have not been violated in any
respect that could reasonably be expected to have a Material Adverse Effect on
the Acquiror and, to the Knowledge of the Acquiror, no suspension, revocation
or cancellation thereof has been threatened and there is no action, proceeding
or investigation pending or threatened regarding suspension, revocation or
cancellation of any of such Permits, except where the suspension, revocation or
cancellation of such Permits could not reasonably be expected to have a
Material Adverse Effect on the Acquiror.
SECTION 5.12 Litigation; Compliance with Laws. There are no actions,
suits, investigations or proceedings (including any proceedings in arbitration)
pending or, to the Knowledge of the Acquiror, threatened against the Acquiror
or any of its Subsidiaries, at law or in equity, in any Court or before or by
any Governmental Authority, except actions, suits or proceedings that (a) are
set forth in Section 5.12 or Section 5.15 of the Acquiror's Disclosure Letter
or (b), individually or, with respect to multiple actions, suits or proceedings
that allege similar theories of recovery based on similar facts, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect
on the Acquiror. There are no claims pending or, to the Knowledge of the
Acquiror, threatened by any Persons against the Acquiror or any of its
Subsidiaries for indemnification pursuant to any statute, organizational
document, contract or otherwise with respect to any action,
AGREEMENT AND PLAN OF MERGER
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suit, investigation or proceeding pending or previously determined in any Court
or before or by any Governmental Authority. The Acquiror and its Subsidiaries
are in substantial compliance with all applicable Laws and Regulations and are
not in default with respect to any Order applicable to the Acquiror or any of
its Subsidiaries, except such events of noncompliance or defaults that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Acquiror.
SECTION 5.13 Employee Benefit Plans.
(a) Listing. Each Benefit Plan of the Acquiror and its
Subsidiaries is listed in Subsection 5.13(a) of the Acquiror's
Disclosure Letter, including, with respect to Terminated Benefit
Plans, the date of termination. True and correct copies of each of the
following have been made available to the Company: (i) the most recent
annual report (Form 5500) relating to each such Current Benefit Plan
filed with the IRS, (ii) the plan document for each such Current
Benefit Plan, (iii) the trust agreement, if any, relating to each such
Current Benefit Plan, (iv) the most recent summary plan description
for each such Current Benefit Plan for which a summary plan
description is required by ERISA, (v) the most recent actuarial report
or valuation relating to each such Current Benefit Plan subject to
Title IV of ERISA and (vi) the most recent determination letter, if
any, issued by the IRS with respect to any such Current Benefit Plan
intended to be qualified under Section 401 of the Code.
(b) Liability Related to Plans. No event has occurred and, to
the Knowledge of the Acquiror, there exists no condition or set of
circumstances in connection with which the Acquiror or any of its
Subsidiaries could be subject to any liability under the terms of any
Benefit Plans of the Acquiror or any of its Subsidiaries or, with
respect to any such Benefit Plan, under ERISA, the Code or any other
applicable Law, other than any condition or set of circumstances that
could not reasonably be expected to have a Material Adverse Effect on
the Acquiror.
(c) Qualified Status. Each Current Benefit Plan intended to
be qualified under Code Section 401 (i) satisfies in form the
requirements of such Section, (ii) has received a favorable
determination letter from the IRS regarding such qualified status,
(iii) except as set forth in Section 5.13(c)(iii) of the Acquiror's
Disclosure Letter, has not, since receipt of the most recent favorable
determination letter, been amended and (iv) has not been operated in a
way that would adversely affect its qualified status.
(d) No Termination of Current Plans. There has been no
termination or partial termination of any such Current Benefit Plan
within the meaning of Section 411(d)(3) of the Code.
(e) Terminated Plans. Any such Terminated Benefit Plan
intended to have been qualified under Section 401 of the Code received
a favorable determination letter from the IRS with respect to its
termination.
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(f) No Claims. There are no actions, suits or claims pending
(other than routine claims for benefits) or, to the Knowledge of the
Acquiror, threatened against, or with respect to, any of such Benefit
Plans or their assets that could reasonably be expected to have a
Material Adverse Effect on the Acquiror.
(g) Pending Matters. To the Knowledge of the Acquiror, there
is no matter pending (other than routine qualification determination
filings) with respect to any of such Benefit Plans before the IRS, the
Department of Labor, the PBGC or any other Governmental Authority.
(h) Required Contributions. All contributions required to be
made by the Acquiror or the Acquiror's Subsidiaries to such Benefit
Plans pursuant to their terms and provisions have been made timely.
(i) No ERISA Violations. As to any such Current Benefit Plan
subject to Title IV of ERISA, (i) there has been no event or condition
that presents the material risk of plan termination, (ii) no
accumulated funding deficiency, whether or not waived, within the
meaning of Section 302 of ERISA or Section 412 of the Code has been
incurred, (iii), except as set forth in Subsection 5.13(i)(iii) of the
Acquiror's Disclosure Letter, no reportable event within the meaning
of Section 4043 of ERISA (for which the disclosure requirements of
Regulation section 2615.3 promulgated by the PBGC have not been
waived) has occurred within six years prior to the date of this
Agreement, (iv) no notice of intent to terminate such Benefit Plan has
been given under Section 4041 of ERISA, (v) no proceeding has been
instituted under Section 4042 of ERISA to terminate such Benefit Plan,
(vi) no liability to the Pension Benefit Guaranty Corporation has been
incurred (other than with respect to required premium payments) and
(vii) the assets of the Benefit Plan equal or exceed the actuarial
present value of the benefit liabilities, within the meaning of
Section 4041 of ERISA, under the Benefit Plan, based upon reasonable
actuarial assumptions and the asset valuation principles established
by the PBGC.
(j) Nondeductible Payments. Except as set forth in Subsection
5.13(j) of the Acquiror's Disclosure Letter, in connection with the
consummation of the transactions contemplated by this Agreement, no
payment of money or other property, acceleration of benefits or
provision of other rights has been or will be made under any such
Current Benefit Plans or any of the programs, agreements, policies or
other arrangements described in Subsection 5.13(l) of the Acquiror's
Disclosure Letter that would be reasonably likely to be nondeductible
under Section 280G of the Code, whether or not some other subsequent
action or event would be required to cause such payment, acceleration
or provision to be triggered.
(k) No Required Increases. Except as set forth in Subsection
5.13(k) of the Acquiror's Disclosure Letter, the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby will not (i) require the Acquiror or any of its
Subsidiaries to make a larger contribution to, or pay greater benefits
or provide other rights under, any Current Benefit Plan or any of the
programs, agreements, policies or
AGREEMENT AND PLAN OF MERGER
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other arrangements described in Subsection 5.13(l) of the Acquiror's
Disclosure Letter than it otherwise would, whether or not some other
subsequent action or event would be required to cause such payment or
provision to be triggered or (ii) create or give rise to any
additional vested rights or service credits under any Current Benefit
Plan or any of such programs, agreements, policies or other
arrangements, whether or not some other subsequent action or event
would be required to cause such creation or acceleration to be
triggered.
(l) Severance and Employment Agreements. Except as set forth
in Subsection 5.13(l) of the Acquiror's Disclosure Letter, neither the
Acquiror nor any of its Subsidiaries is a party to or is bound by any
severance agreement (involving $50,000 or more), program or policy.
True and correct copies of all employment agreements with officers of
the Acquiror and its Subsidiaries, and all vacation, overtime and
other compensation policies of the Acquiror and its Subsidiaries
relating to their employees have been made available to the Acquiror.
(m) Retiree Benefits. Except as set forth in Subsection
5.13(m) of the Acquiror's Disclosure Letter, no Benefit Plan provides
retiree medical or retiree life insurance benefits to any Person and
neither the Acquiror nor any of its Subsidiaries is contractually or
otherwise obligated (whether or not in writing) to provide any Person
with life insurance or medical benefits upon retirement or termination
of employment, other than as required by the provisions of Sections
601 through 608 of ERISA and Section 4980B of the Code. Each Benefit
Plan or other arrangement described in Subsection 5.13(m) of the
Acquiror's Disclosure Letter may, except as described therein, be
unilaterally amended or terminated in its entirety without liability
except as to benefits accrued thereunder prior to such amendment or
termination.
(n) Multiemployer Plans. Neither the Acquiror nor any of its
Subsidiaries contributes or has an obligation to contribute, and has
not within six years prior to the date of this Agreement contributed
or had an obligation to contribute, to a multiemployer plan within the
meaning of Section 3(37) of ERISA.
(o) Vacation Policies. Except as set forth in Subsection
5.13(o) of the Acquiror's Disclosure Letter, the vacation policies of
the Acquiror and its Subsidiaries do not provide for carryover
vacation from one calendar year to the next.
(p) Collective Bargaining Agreements. Except as set forth in
Section 5.13(p) of the Acquiror's Disclosure Letter, no collective
bargaining agreement to which the Acquiror or any of its Subsidiaries
is a party is currently in effect or is being negotiated by the
Acquiror or any of its Subsidiaries. There is no pending or, to the
Knowledge of the Acquiror, threatened labor dispute, strike or work
stoppage against the Acquiror or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect on the
Acquiror. To the Knowledge of the Acquiror, neither the Acquiror or
any of its Subsidiaries nor any representative or employee of the
Acquiror or any of its Subsidiaries has in the United States committed
any unfair labor practices in connection with the operation of the
AGREEMENT AND PLAN OF MERGER
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business of the Acquiror and its Subsidiaries, and there is no pending
or, to the Knowledge of the Acquiror, threatened charge or complaint
against the Acquiror or any of its Subsidiaries by the National Labor
Relations Board or any comparable agency of any state of the United
States.
SECTION 5.14 Taxes.
(a) Tax Returns and Taxes. Except for such matters as could
not reasonably be expected to have a Material Adverse Effect on the
Acquiror, (i) all Tax Returns that are required to be filed by or with
respect to the Acquiror or any of its Subsidiaries on or before the
Effective Time have been or will be timely filed, (ii) all Taxes that
are due on or before the Effective Time have been or will be timely
paid in full, (iii) all withholding Tax requirements imposed on or
with respect to the Acquiror or any of its Subsidiaries have been or
will be satisfied in full in all respects and (iv) no penalty,
interest or other charge is or will become due with respect to the
late filing of any such Tax Return or late payment of any such Tax.
(b) Audits. Except as set forth in Subsection 5.14(b) of the
Acquiror's Disclosure Letter, all Tax Returns have been audited by the
applicable Governmental Authority or the applicable statute of
limitations has expired for the period covered by such Tax Returns.
(c) Extensions of Times. Except as set forth in Subsection
5.14(c) of the Acquiror's Disclosure Letter, there is not in force any
extension of time with respect to the due date for the filing of any
Tax Return or any waiver or agreement for any extension of time for
the assessment or payment of any Tax due with respect to the period
covered by any Tax Return.
(d) Claims. There is no claim against or with respect to the
income, operations, business or capital of the Acquiror or any of its
Subsidiaries for any Taxes, and no assessment, deficiency or
adjustment has been asserted or proposed with respect to any Tax
Return, that, in either case, could reasonably be expected to have a
Material Adverse Effect on the Acquiror.
(e) Consolidated Tax Returns. Except as set forth in
Subsection 5.14(e) of the Acquiror's Disclosure Letter, none of the
Acquiror and its Subsidiaries has, during the last ten years, been a
member of an affiliated group filing a consolidated federal income Tax
Return.
(f) Final Company Return. The Acquiror represents that it
will cause the timely filing of any required Tax Return relating to
the federal income Taxes of the Company for the one day period ended
at the Effective Time.
SECTION 5.15 Environmental Matters. Except for matters disclosed in
Section 5.15 of the Acquiror's Disclosure Letter and except for matters that,
individually or in the aggregate,
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could not reasonably be expected to have a Material Adverse Effect on the
Acquiror, (a) the properties, operations and activities of the Acquiror and its
Subsidiaries are in compliance with all applicable Environmental Laws; (b) the
Acquiror and its Subsidiaries and the properties and operations of the Acquiror
and its Subsidiaries are not subject to any existing, pending or, to the
Knowledge of the Acquiror, threatened action, suit, investigation, inquiry or
proceeding by or before any Court or Governmental Authority under any
Environmental Law; (c) all Permits, if any, required to be obtained or filed by
the Acquiror or any of its Subsidiaries under any Environmental Law in
connection with the business of the Acquiror and its Subsidiaries have been
obtained or filed and are valid and currently in full force and effect; (d)
there has been no release of any hazardous substance, pollutant or contaminant
into the environment by the Acquiror or its Subsidiaries or in connection with
their properties or operations; and (e) there has been no exposure of any
Person or property to any hazardous substance, pollutant or contaminant in
connection with the properties, operations and activities of the Acquiror and
its Subsidiaries; and (f) the Acquiror has made available to the Company all
internal and external audits and studies and all correspondence in the
possession of the Acquiror or any of its Subsidiaries relating to any
environmental matter involving to the Acquiror or any of its Subsidiaries that
is Material to the Acquiror.
SECTION 5.16 Tax Matters. To the Knowledge of the Acquiror, neither
the Acquiror nor any of its Affiliates has taken or agreed to take any action
that would prevent the Merger from constituting a reorganization within the
meaning of section 368(a) of the Code. Specifically:
(a) Preservation of Proprietary Interest. In connection with
the Merger, none of the Company Common Stock will be acquired by the
Acquiror or a Person related (as defined in Treas. Reg. Section
1.368-1(e)(3)) to the Acquiror for consideration other than Acquiror
Class B Common Stock except for the cash received pursuant to Section
3.01(a) and any cash paid in lieu of fractional share interests in
Acquiror Class B Common Stock pursuant to Section 3.02(e).
(b) Assets. The Surviving Corporation will acquire at least
90 percent of the fair market value of the Company's net assets and at
least 70 percent of the fair market value of the Company's gross
assets held by the Company immediately prior to the Merger, taking
into account amounts used to pay Merger expenses, any dissenting
holders of Company Common Stock and any distributions other than
regular dividends.
(c) Acquiror's Plans. The Acquiror has no plan or intention
to (i) liquidate the Surviving Corporation, (ii) merge the Surviving
Corporation with or into another corporation, (iii) sell or otherwise
dispose of the stock of the Surviving Corporation, (iv) cause the
Surviving Corporation to issue additional shares of its capital stock
that would result in the Acquiror's losing control (within the meaning
of section 368(c) of the Code) of the Surviving Corporation, (v) cause
or permit the Surviving Corporation to sell or otherwise dispose of
any of the assets acquired from the Company except for dispositions
made in the ordinary course of business or successive transfers of
assets to one or more corporations controlled in each transfer by the
transferor corporation or (vi) reacquire or cause any of its
AGREEMENT AND PLAN OF MERGER
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Subsidiaries to acquire any of the Acquiror Class B Common Stock
issued to the holders of Company Common Stock in the Merger.
(d) No Natco Liabilities. The liabilities of the Company that
will be assumed by the Surviving Corporation in the Merger and the
liabilities to which the Company's assets are subject were incurred by
the Company in the ordinary course of its business.
(e) Business Continuity. Following the Merger, the Surviving
Corporation will continue the historic business of the Company or use
a significant portion of its historic business assets in a business
(within the meaning of Treas. Reg. Section 1.368-1(d)).
(f) Intercorporate Indebtedness. There is no intercorporate
indebtedness existing between the Company and the Acquiror or between
the Company and Natco that was issued, acquired, or will be settled at
a discount.
SECTION 5.17 Brokers. Except as set forth in Section 5.17 of the
Acquiror's Disclosure Letter, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Acquiror.
SECTION 5.18 Intellectual Property. Other than as disclosed in Section
5.19 of the Acquiror's Disclosure Letter, the Acquiror and its Subsidiaries own
or hold licenses under or otherwise have the right to use or sublicense, all
foreign and domestic patents, trademarks (common law and registered), trademark
registration applications, service marks (common law and registered), service
xxxx registration applications, trade names and copyrights, copyright
applications, trade secrets, know-how and other proprietary information as are
necessary for the conduct of the businesses of the Acquiror and its
Subsidiaries as currently conducted except for any such intellectual property
as to which the failure to own or hold licenses could not reasonably be
expected to have a Material Adverse Effect on the Acquiror. Other than as
disclosed in Section 5.19 of the Acquiror's Disclosure Letter, neither the
Acquiror nor any of its Subsidiaries is currently in receipt of any notice of
infringement or notice of conflict with the asserted rights of others in any
patents, trademarks, service marks, trade names, trade secrets and copyrights
owned or held by other Persons, except, in each case, for matters that could
not reasonably be expected to have a Material Adverse Effect on the Acquiror.
Neither the execution and delivery of this Agreement nor consummation of the
transactions contemplated hereby will violate or breach the terms or cause any
cancellation of any Material license held by the Acquiror or any of its
Subsidiaries under any patent, trademark, service xxxx, trade name, trade
secret or copyright.
SECTION 5.19 Certain Business Practices. To the Acquiror's Knowledge,
as of the date of this Agreement, neither the Acquiror or any of its
Subsidiaries nor any director, officer, employee or agent of the Acquiror or
any of its Subsidiaries has (i) used any funds for unlawful contributions,
gifts, entertainment or other unlawful payments relating to political activity,
(ii) made any unlawful payment to any foreign or domestic government official
or employee or to any foreign or domestic political party or campaign or
violated any provision of the Foreign Corrupt Practices
AGREEMENT AND PLAN OF MERGER
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Act of 1977, as amended, (iii) consummated any transaction, made any payment,
entered into any agreement or arrangement or taken any other action in
violation of Section 1128B(b) of the Social Security Act, as amended, or (iv)
made any other unlawful payment, except for any such matters that could not
reasonably be expected to have a Material Adverse Effect on the Acquiror.
ARTICLE VI
COVENANTS
SECTION 6.01 Affirmative Covenants. Each of the Company and the
Acquiror hereby covenants and agrees that, prior to the Effective Time, unless
otherwise expressly contemplated by this Agreement or consented to in writing
by the other, it will and will cause its Subsidiaries:
(a) Ordinary Course. To operate its business in the usual and
ordinary course consistent with past practices;
(b) Maintenance of Organization. to use all reasonable
efforts to preserve substantially intact its business organization,
maintain its rights and franchises, retain the services of its
respective key employees and maintain its relationships with its
respective customers and suppliers;
(c) Maintenance of Assets. to maintain and keep its
properties and assets in as good repair and condition as at present,
ordinary wear and tear excepted, and maintain supplies and inventories
in quantities consistent with its customary business practice; and
(d) Maintenance of Insurance. to use all reasonable efforts
to keep in full force and effect insurance and bonds comparable in
amount and scope of coverage to that currently maintained;
except for any matters that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on such party.
SECTION 6.02 Negative Covenants.
(a) Except as set forth in Subsection 6.02(a) of the
Company's Disclosure Letter, the Company covenants and agrees that,
except as expressly contemplated by this Agreement or otherwise
consented to in writing by the Acquiror, from the date of this
Agreement until the Effective Time, it will not do, and will not
permit any of its Subsidiaries to do, any of the following:
(i) Issuance of Securities. Offer, sell, issue or
grant, or authorize the offering, sale, issuance or grant, of
any Equity Securities of the Company, other than issuances of
Company Common Stock upon the exercise of Warrants
outstanding at the date of this Agreement in accordance with
the terms thereof (as in effect on the date of this
Agreement).
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(ii) Redemptions and Purchases of Securities. (A)
Redeem, purchase or acquire, or offer to purchase or acquire,
any outstanding Equity Securities of the Company, (B) effect
any reorganization or recapitalization; or (C) split, combine
or reclassify any of the outstanding Equity Securities of the
Company or issue or authorize or propose the issuance of any
other Equity Securities in respect of, in lieu of or in
substitution for, outstanding Equity Securities of the
Company.
(iii) Dividends. Declare or pay any dividend on, or
make any other distribution in respect of, outstanding shares
of capital stock, except for cash dividends payable at the
end of each calendar quarter and for any period ending on or
before the Effective Time that, in the aggregate, approximate
the estimated liability of the holders of Company Common
Stock for federal and state income taxes relating to
operations of the Company for such calendar quarter or other
period immediately prior to the Effective Time and except
that the Company may pay a cash dividend on the Company
Common Stock in the aggregate amount of $37,000 on or before
the Closing Date.
(iv) Business Combinations. Acquire, by merging or
consolidating with, by purchasing an equity interest in or a
portion of the assets of, or in any other manner acquiring,
any business or any corporation, partnership, association or
other business organization or division thereof or otherwise
acquire any assets of any other Person (other than (x) the
purchase of assets from suppliers or vendors in the ordinary
course of business and consistent with past practice and (y)
other acquisitions of equity interests, assets and businesses
in an amount not to exceed $250,000 in the aggregate).
(v) Sale of Material Assets. Sell, lease, exchange
or otherwise dispose of, or to grant any Lien (other than a
Permitted Encumbrance) with respect to, any of the assets of
the Company or any of its Subsidiaries that are Material to
the Company, except for (x) dispositions of assets and
inventories in the ordinary course of business and consistent
with past practice and (y) dispositions of assets and
purchase money Liens incurred in connection with the original
acquisition of assets and secured by the assets acquired in
an amount not to exceed $250,000 in the aggregate.
(vi) Debt Incurrence. Incur any obligations for
borrowed money or purchase money indebtedness that are
Material to the Company, whether or not evidenced by a note,
bond, debenture or similar instrument, except (A) drawings
under credit lines existing at the date of this Agreement,
(B) purchase money indebtedness as to which Liens may be
granted as permitted by Subsection 6.02(a)(v), and (C) other
indebtedness incurred in the ordinary course of business
consistent with past practice and in no event (including
purchase money indebtedness incurred pursuant to clause (B))
in excess of $250,000.
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(vii) Material Contracts. Enter into any Material
Contract with any third Person (other than customers and
vendors in the ordinary course of business) which provides
for an exclusive arrangement with that third Person or is
substantially more restrictive on the Company or
substantially less advantageous to the Company than Material
Contracts existing on the date hereof.
(viii) Charter Amendments. Adopt any amendments to
its charter or bylaws or other organizational documents that
would alter the terms of its capital stock or other equity
interests or would have a material adverse effect on the
ability of the Company to perform its obligations under this
Agreement.
(ix) Compensation Increases. (A) increase the
compensation payable to or to become payable to any director,
executive officer or employee, (B) grant any severance or
termination pay; (C) amend or otherwise modify the terms of
any outstanding options, warrants or rights the effect of
which shall be to make such terms more favorable to the
holders thereof; (D) take any action to accelerate the
vesting of any outstanding Company Stock Options; (E) amend
or take any other actions to increase the amount or
accelerate the payment or vesting of any benefit under any
Benefit Plan (including the acceleration of vesting, waiving
of performance criteria or the adjustment of awards or any
other actions permitted upon a change in control of such
party); except (i) pursuant to any contract, agreement or
other legal obligation of the Company existing at the date of
this Agreement, (ii) increases in salary payable or to become
payable upon promotion to an office having greater
operational responsibilities, (iii), in the case of severance
or termination payments, grants made pursuant to the
severance policy of the Company existing at the date of this
Agreement and (iv) in the case of options, warrants, rights
or Benefit Plans, amendments required by ERISA or other
applicable law.
(x) Employment and Other Agreements. (A) enter into
any employment or severance agreement with, any director,
officer or employee, either individually or as part of a
class of similarly situated persons or (B) establish, adopt
or enter into any new Benefit Plan; except employment and
severance agreements and Benefit Plans for the benefit of any
newly employed or promoted officers or employees, in which
case, the terms of such agreements and Benefit Plans shall be
reasonably consistent with those existing at the date of this
Agreement.
(xi) Tax and Accounting Changes. (A) Change any of
its methods of accounting in effect at December 31, 1997,
except as may be required to comply with GAAP, (B) make or
rescind any election relating to Taxes (other than any
election which must be made periodically which is made
consistent with past practice), (C) settle or compromise any
claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes (except
where the cost to the Company and its Subsidiaries of such
settlements or compromises, individually or
AGREEMENT AND PLAN OF MERGER
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in the aggregate, does not exceed $250,000) or (D) change any
of its methods of reporting income or deductions for federal
income tax purposes from those employed in the preparation of
the federal income tax returns for the taxable year ending
December 31, 1996, except, in each case, as may be required
by Law and for matters that could not reasonably be expected
to have a Material Adverse Effect on the Company.
(xii) Agreements. Agree in writing or otherwise to
do any of the foregoing.
(b) The Acquiror covenants and agrees that, except as
expressly contemplated by this Agreement or otherwise consented to in
writing by the Company, from the date of this Agreement until the
Effective Time, it will not do, and will not permit any of its
Subsidiaries to do, any of the following:
(i) Issuance of Securities. Offer, sell, issue or
grant, or authorize the offering, sale, issuance or grant, of
any Equity Securities of the Acquiror or any of its
Subsidiaries, other than issuances of (A) Acquiror Common
Stock or Acquiror Class A Common Stock upon the exercise of
Acquiror Stock Options outstanding at the date of this
Agreement in accordance with the terms thereof (as in effect
on the date of this Agreement), (B) Acquiror Class A Common
Stock pursuant to the Investment Agreement, (C) upon the
expiration of any restrictions upon issuance of any grant
existing at the date of this Agreement of restricted stock or
stock bonus pursuant to the terms (as in effect on the date
of this Agreement) of any Benefit Plans of the Acquiror or
any of its Subsidiaries or (D), periodically, pursuant to the
terms (as in effect on the date of this Agreement) of any
Benefit Plan of the Acquiror or any of its Subsidiaries.
(ii) Redemptions of Securities. Redeem, purchase or
acquire, or offer to purchase or acquire, any outstanding
Equity Securities of the Acquiror or any of its Subsidiaries
(other than (1) any such acquisition by the Acquiror or any
of its wholly-owned Subsidiaries directly from any
wholly-owned Subsidiary of the Acquiror in exchange for
capital contributions or loans to such Subsidiary, (2) any
repurchase, forfeiture or retirement of shares of Acquiror
Common Stock (or Acquiror Class A Common Stock) or Acquiror
Stock Options occurring pursuant to the terms (as in effect
on the date of this Agreement) of any existing Benefit Plan
of the Acquiror or any of its Subsidiaries, (3) any periodic
purchase of Acquiror Common Stock (or Acquiror Class A Common
Stock) for allocation to employee's accounts occurring
pursuant to the terms (as in effect on the date of this
Agreement) of any existing Benefit Plan of the Acquiror or
any of its Subsidiaries and (4) any redemption, purchase or
acquisition by a Subsidiary that could not reasonably be
expected to have a Material Adverse Effect on the Acquiror).
(iii) Dividends. Declare or to pay any dividend on,
or to make any other distribution in respect of, outstanding
shares of capital stock, except for dividends by
AGREEMENT AND PLAN OF MERGER
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a wholly-owned Subsidiary of the Acquiror to the Acquiror or
another wholly-owned Subsidiary of the Acquiror.
(iv) Charter Amendments. Adopt any amendments to its
charter or bylaws or other organizational documents that
would alter the terms of the Acquiror's Common Stock other
than the Charter Amendment or could reasonably be expected
to have a material adverse effect on the ability of the
Acquiror to perform its obligations under this Agreement.
(v) Agreements. Agree in writing or otherwise to do
any of the foregoing.
SECTION 6.03 Access and Information.
(a) Each of the parties shall, and shall cause its
Subsidiaries to, (i) afford to the other party and its officers,
directors, employees, accountants, consultants, legal counsel, agents
and other representatives (collectively, the "Representatives" of such
party) reasonable access at reasonable times upon reasonable prior
notice to the officers, employees, agents, properties, offices and
other facilities of such party and its Subsidiaries and to their books
and records and (ii) furnish promptly to the other party and its
Representatives such information concerning the business, properties,
contracts, records and personnel of such party and its Subsidiaries
(including financial, operating and other data and information) as may
be reasonably requested, from time to time, by or on behalf of the
other party.
(b) If this Agreement is terminated for any reason pursuant
to Article IX hereof, a party that has received information in
accordance with Section 6.03(a), within ten days after request
therefor from the other party, shall return or destroy (and provide
the other party within such ten-day time period with a certificate of
an executive officer certifying such destruction) all of the
information furnished to it and its Representatives pursuant to the
provisions of Section 6.03(a) and all internal memoranda, analyses,
evaluations and other similar material containing or reflecting any
such information, in each case other than information available to the
general public without restriction.
SECTION 6.04 Confidentiality Agreement. The parties shall comply with,
and shall cause their respective Representatives to comply with, all of their
respective obligations under the Confidentiality Agreement.
SECTION 6.05 Stockholders' Letter. The Company agrees to use all
reasonable efforts to obtain from each owner of shares of Company Common Stock
of record or, to the Knowledge of the Company, beneficially as of the date of
the Company Stockholders' Meeting a Stockholder's Letter dated the date of the
Company Stockholders' Meeting and from any Person who shall thereafter but
prior to the Closing Date become an owner of Company Common Stock of record or,
to the Knowledge of the Company, beneficially a Stockholder's Letter dated the
Closing Date.
AGREEMENT AND PLAN OF MERGER
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ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Meeting of Stockholders. The Company shall, promptly
after the date of this Agreement, take all actions necessary in accordance with
the Corporate Statute and its certificate of incorporation and bylaws to
convene a special meeting of the Company's stockholders to consider approval
and adoption of this Agreement (the "Company Stockholders' Meeting"), and the
Company shall consult with the Acquiror in connection therewith. The Company
shall use all reasonable efforts to secure the vote or consent of stockholders
required by the Corporate Statute and its certificate of incorporation and
bylaws to approve and adopt this Agreement.
SECTION 7.02 Appropriate Action; Consents; Filings.
(a) The Company and the Acquiror shall each use all
reasonable efforts (i) to take, or to cause to be taken, all
appropriate action, and to do, or to cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the transactions contemplated by this
Agreement, (ii) to obtain from any Governmental Entities any Permits
or Orders required to be obtained or made by the Acquiror or the
Company or any of their Subsidiaries in connection with the
authorization, execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby,
including the Merger, (iii) to make all necessary filings, and
thereafter make any other required submissions, with respect to this
Agreement and the Merger required under (A) the Securities Act (in the
case of Acquiror) and the Exchange Act and the Regulations thereunder,
and any other applicable federal or state securities Laws, (B) the HSR
Act and (C) any other applicable Law. The Acquiror and the Company
shall cooperate with each other in connection with the making of all
such filings, including providing copies of all such documents to the
nonfiling party and its advisors prior to filings and, if requested,
shall accept all reasonable additions, deletions or changes suggested
in connection therewith. The Company and the Acquiror shall furnish
all information required for any application or other filing to be
made pursuant to any applicable Law or any applicable Regulations of
any Governmental Authority in connection with the transactions
contemplated by this Agreement.
(b) Each of the Company and the Acquiror shall give prompt
notice to the other of (i) any notice or other communication from any
Person alleging that the consent of such Person is or may be required
in connection with the Merger, (ii) any notice or other communication
from any Governmental Authority in connection with the Merger, (iii)
any actions, suits, claims, investigations or proceedings commenced or
threatened in writing against, relating to or involving or otherwise
affecting the Company, the Acquiror or their Subsidiaries that relate
to the consummation of the Merger, (iv) the occurrence of a default or
event that, with notice or lapse of time or both, will become a
default under any Material Contract of the Acquiror or of the Company,
and (v) any change that is reasonably likely to have a Material
Adverse Effect on the Company or the Acquiror or is likely to delay or
impede the ability of either the Acquiror or the Company to consummate
the transactions contemplated by this Agreement or to fulfill their
respective obligations set forth herein.
AGREEMENT AND PLAN OF MERGER
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(c) The Acquiror and the Company agree to cooperate and use
all reasonable efforts vigorously to contest and resist any action,
including legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any Order (whether temporary,
preliminary or permanent) of any Court or Governmental Authority that
is in effect and that restricts, prevents or prohibits the
consummation of the Merger or any other transactions contemplated by
this Agreement, including the vigorous pursuit of all available
avenues of administrative and judicial appeal and all available
legislative action. The Acquiror and the Company also agree to take
any and all actions, including the disposition of assets or the
withdrawal from doing business in particular jurisdictions, required
by any Court or Governmental Authority as a condition to the granting
of any Permit or Order necessary for the consummation of the Merger or
as may be required to avoid, lift, vacate or reverse any
administrative or judicial action that would otherwise cause any
condition to Closing not to be satisfied; provided, however, that in
no event shall either party take, or be required to take, any action
that could reasonably be expected to have an Material Adverse Effect
on the Acquiror or the Company.
(d) (i) Each of the Company and Acquiror shall give (or
shall cause their respective Subsidiaries to give) any
notices to third Persons, and use, and cause their respective
Subsidiaries to use, all reasonable efforts to obtain any
consents from third Persons (A) necessary, proper or
advisable to consummate the transactions contemplated by this
Agreement, (B) otherwise required under any contracts,
licenses, leases or other agreements in connection with the
consummation of the transactions contemplated hereby or (C)
required to prevent a Material Adverse Effect on the Company
from occurring prior to or after the Effective Time or a
Material Adverse Effect on the Acquiror from occurring after
the Effective Time.
(ii) If any party shall fail to obtain any consent
from a third Person described in Subsection (d)(i) above,
such party shall use all reasonable efforts, and shall take
any such actions reasonably requested by the other parties,
to limit the adverse effect upon the Company and Acquiror,
their respective Subsidiaries, and their respective
businesses resulting, or that could reasonably be expected to
result after the Effective Time, from the failure to obtain
such consent.
SECTION 7.03 Tax Treatment. Each party hereto shall use all reasonable
efforts to cause the Merger to qualify, and shall not take, and shall use all
reasonable efforts to prevent any Affiliate of such party from taking, any
actions which could prevent the Merger from qualifying as a reorganization
under the provisions of Section 368(a) of the Code.
SECTION 7.04 Public Announcements. The Acquiror and the Company shall
consult with each other before issuing any press release or otherwise making
any public statements with respect to the Merger and shall not issue any such
press release or make any such public statement prior to such consultation.
AGREEMENT AND PLAN OF MERGER
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SECTION 7.05 Exercise or Assumption of Warrants. BOCP joins in this
Agreement for the limited purpose of agreeing to exercise the Warrants
immediately after the Closing by providing, in the case of the Warrants issued
by the Company, to the Acquiror and, in the case of the Warrants granted by
stockholders of the Company, to such stockholders the exercise consideration,
and by executing and delivering all such documents and instruments, required by
the terms of the Warrants to be provided upon the exercise thereof. In
connection therewith, the Acquiror agrees to issue the Merger Consideration Per
Share of Company Common Stock for each share of Company Common Stock as to which
the Warrants issued by the Company are exercised in accordance with the terms
and provisions thereof, and agrees to make available at the Closing certificates
evidencing the Acquiror Class B Common Stock issuable upon exercise of all the
Warrants, such certificates to be registered in the name of BOCP in such
denominations as shall be requested by BOCP at least two Business Days prior to
the Closing. All such shares of Acquiror Class B Common Stock shall be deemed,
for purposes of subsection B of Section II of Article Fourth of the Certificate
of Incorporation of the Acquiror, as amended by the Charter Amendment, to have
been "received pursuant to the Merger Agreement" by BOCP.
SECTION 7.06 Employee Benefit Plans. Until the first anniversary of the
Effective Time, the Acquiror shall and shall cause the Surviving Corporation to
provide each employee of the Company at the Effective Time ("Company
Participants") with employee benefits after the Effective Time that are
substantially comparable to similarly situated employees of the Acquiror;
provided, however, that for a period of time beginning at the Effective Time and
ending no later than December 31, 1998, the Acquiror may satisfy the
requirements of the preceding clause by continuing to maintain the Benefit Plans
of the Company existing at the Effective Time without change, except for changes
required by applicable law and changes not adverse to the Company Participants.
The Benefit Plans of the Acquiror and the Surviving Corporation in which Company
Participants are eligible to participate shall provide Company Participants with
credit for service prior to the Effective Time with the Company and its
predecessors, including The Dow Chemical Company.
SECTION 7.07 Indemnification of Directors and Officers.
(a) Until six years from the Effective Time, the certificate
of incorporation and bylaws of the Surviving Corporation as in effect
immediately after the Effective Time shall not be amended to reduce or
limit the rights of indemnity afforded to the present and former
directors and officers of the Company thereunder or as to the ability
of the Company to indemnify such persons or to hinder, delay or make
more difficult the exercise of such rights of indemnity or the ability
to indemnify. The Surviving Corporation will at all times exercise the
powers granted to it by its certificate of incorporation, its bylaws
and applicable law to indemnify to the fullest extent possible the
present and former directors, officers, employees and agents of the
Company against claims made against them arising from their service in
such capacities prior to the Effective Time.
(b) If any claim or claims shall, subsequent to the Effective
Time and within six years thereafter, be made against any present or
former director, officer, employee or agent of the Company based on or
arising out of the services of such Person prior to the Effective
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Time in the capacity of such Person as a director, officer, employee
or agent of the Company, the provisions of subsection (a) of this
Section respecting the certificate of incorporation and bylaws of the
Surviving Corporation shall continue in effect until the final
disposition of all such claims.
(c) The Acquiror hereby agrees after the Effective Time to
guarantee the payment of the Surviving Corporation's indemnification
obligations described in Subsection 7.07(a) up to an amount determined
as of the Effective Time equal to (i) the fair market value of any
assets of the Surviving Corporation or any of its Subsidiaries
distributed to the Acquiror or any of its Subsidiaries (other than the
Surviving Corporation and its Subsidiaries), minus (ii) any
liabilities of the Surviving Corporation or any of its Subsidiaries
assumed by the Acquiror or any of its Subsidiaries (other than the
Surviving Corporation and its Subsidiaries), minus (iii) the fair
market value of any assets of the Acquiror or any of its Subsidiaries
(other than the Surviving Corporation and its Subsidiaries)
contributed to the Surviving Corporation or any of its Subsidiaries
and (iv) plus any liabilities of the Acquiror or any of its
Subsidiaries (other than the Surviving Corporation and its
Subsidiaries) assumed by the Surviving Corporation or any of its
Subsidiaries. If any other entity is merged with or into the Surviving
Corporation or the Surviving Corporation acquires any other Material
business or Material portion of the assets of another entity, the
Acquiror shall assume all obligations to indemnify the former
directors and officers of the Company hereunder.
(d) Notwithstanding Subsection (a), (b) or (c) of this
Section 7.07, the Acquiror and the Surviving Corporation shall be
released from the obligations imposed by such subsection if the
Acquiror shall assume the obligations of the Surviving Corporation
thereunder by operation of Law or otherwise. Notwithstanding anything
to the contrary in this Section 7.07, neither the Acquiror nor the
Surviving Corporation shall be liable for any settlement effected
without its written consent, which shall not be unreasonably withheld.
(e) The provisions of this Section 7.07 are intended to be
for the benefit of, and shall be enforceable by, each Person entitled
to indemnification hereunder and the heirs and representatives of such
Person.
SECTION 7.08 Event Notices. From and after the date of this Agreement
until the Effective Time, each party hereto shall promptly notify the other
party hereto of (i) the occurrence or nonoccurrence of any event the occurrence
or nonoccurrence of which would be likely to cause any condition to the
obligations of such party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied and (ii) the failure of such
party to comply with any covenant or agreement to be complied with by it
pursuant to this Agreement which would be likely to result in any condition to
the obligations of such party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied. No delivery of any notice
pursuant to this Section 7.08 shall cure any breach of any representation or
warranty or any failure to comply with any covenant or agreement of such party
contained in this Agreement or otherwise limit or affect the remedies available
hereunder to the party receiving such notice.
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SECTION 7.09 Company Tax Audit. The Designated Company Stockholders
shall have the right to defend, at their sole cost, any audit of the Company
for any taxable year ending on or prior to the Closing Date and shall have the
right to defend all tax issues arising in any such year. The Designated Company
Stockholders shall be entitled to make all decisions relating to any such
audit, including the right to settle any issue. The Acquiror and Natco agree to
cooperate in any manner reasonably requested by the Designated Company
Stockholders, including providing all requested information in Acquiror's or
Natco's possession and signing any documents or forms, relating to any such
audit. To the extent necessary to implement the foregoing, the Acquiror and
Natco agree to execute, at the Closing, a power of attorney in favor of Xxxxxxx
X. Xxxxxx to conduct all and any of the foregoing activities on behalf of the
Company, and the Acquiror agrees that it will not revoke such power of attorney
during the pendency of any audit contemplated by this Section 7.09.
SECTION 7.10 Escrow Arrangement. At the Closing, the certificates
evidencing 450,000 shares of Class B Common Stock (the "Escrow Shares")
issuable to the Designated Company Stockholders but for the provisions of this
Section 7.10 shall be deposited in escrow pursuant to an escrow agreement with
Chase Bank of Texas, N.A., as escrow agent (the "Escrow Agent"), in form and
substance substantially similar to the form thereof attached hereto as Annex C
(the "Escrow Agreement"). The Escrow Shares shall be withheld from the shares
of Class B Common Stock otherwise to be issued to the Designated Company
Stockholders pursuant to Section 3.01 promptly after the Effective Time pro
rata in accordance with the number of shares of Class B Common Stock to be
issued to each (except that no fractional shares shall be allocated to any
stockholder). On September 30, 1999 or as soon thereafter as reasonably
practicable, the Acquiror and the Representative (the "Escrow Parties") shall
give written instructions to the Esrow Agent with respect to the disposition of
the Escrow Shares in accordance with the provisions of this Section 7.10 and
the Escrow Agreement. The Escrow Parties shall instruct the Escrow Agent to
release from escrow and deliver to the Designated Company Stockholders that
number of Escrow Shares that shall equal the number obtained by: (i) dividing
(A) the aggregate amount of revenues, if any, billed in the ordinary course of
business by the Surviving Corporation to the CTOC Project through September 30,
1999 by (B) $1,000; and (ii) multiplying the quotient by 22. The Escrow Parties
shall concurrently instruct the Escrow Agent to release from escrow and deliver
to the Designated Company Stockholders any other capital stock or securities,
cash or other property theretofore delivered to the Escrow Agent and held in
escrow to the extent that such capital stock, securities, cash or other
property has been distributed or paid with respect to the Escrow Shares then
being released from escrow. The Escrow Shares released from escrow (and such
capital stock, securities, cash or other property) shall be delivered to the
Designated Company Stockholders pro rata in accordance with the number of
shares of Class B Common Stock issued to each pursuant to Section 3.01 promptly
after the Effective Time (except that no fractional shares shall be allocated
to any stockholder). Any remaining Escrow Shares shall be delivered to the
Acquiror for cancellation and restoration to the status of authorized but
unissued Class B Common Stock.
SECTION 7.11 The Cynara Name. The Acquiror and the Company shall take
all reasonable actions necessary or desirable in order to preserve the
availability of the name "The
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Cynara Company" and all variations thereof under the Corporate Statute and
under applicable tradename Laws.
SECTION 7.12 Natco. The Acquiror shall take all action necessary to
cause Natco to perform its obligations under this Agreement and to consummate
the Merger on the terms and conditions set forth in this Agreement.
SECTION 7.13 Avoidance of Diminution of Put. The Acquiror hereby
agrees, for the benefit of the Designated Company Stockholders, that it will
use all reasonable efforts, in amending the Bank Credit Agreement after the
Effective Time or in negotiating any other credit agreement in lieu of or in
addition to the Bank Credit Agreement, to avoid undertaking covenants that
limit or restrict the ability of the Acquiror to perform its obligations with
respect to any Put (as defined therein) exercised pursuant to the terms of
Section II (B) of the Certificate of Incorporation, as amended, of the
Acquiror.
ARTICLE VIII
CLOSING CONDITIONS
SECTION 8.01 Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger and
the other transactions contemplated hereby shall be subject to the satisfaction
at or prior to the Effective Time of the following conditions, any or all of
which may be waived by the parties hereto, in whole or in part, to the extent
permitted by applicable Law:
(a) Stockholder Approval. This Agreement shall have been
approved and adopted by the requisite vote of the stockholders of the
Company as required by the Corporate Statute.
(b) No Order. No Governmental Authority or Court shall have
enacted, issued, promulgated, enforced or entered any Law, Regulation
or Order (whether temporary, preliminary or permanent) that is in
effect and that has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger.
(c) HSR Act. The applicable waiting period under the HSR Act
shall have expired or been terminated.
(d) Foreign Governmental Authorities. The applicable waiting
period under any competition Laws, Regulations and Orders of foreign
Governmental Authorities, as set forth in the Acquiror's Disclosure
Letter and the Company's Disclosure Letter, shall have expired or been
terminated and any Permits or Orders required thereunder in order to
consummate the Merger shall have been received by the parties hereto.
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(e) Dissenting Stockholders. No holders of Company Common
Stock shall have dissented from the Merger under conditions such that
the aggregate amount of the Merger Consideration otherwise payable
with respect to shares of Company Common Stock held by such holders,
together with the Merger Expenses payable by the Company, shall equal
or exceed nine percent (9%) of the total Merger Consideration payable
with respect to all shares of Company Common Stock assuming no such
holders dissented from the Merger.
(f) Registration Rights Agreement. The Registration Rights
Agreement among the Acquiror and the Designated Company Stockholders
shall have been executed and delivered by such parties.
(g) Charter Amendment. The Charter Amendment shall have been
approved by the Stockholders, shall have been filed with the Secretary
of State of the State of Delaware and shall have become effective in
accordance with the Charter Amendment.
SECTION 8.02 Additional Conditions to Obligations of the Acquiror
Companies. The obligations of the Acquiror Companies to effect the Merger and
the other transactions contemplated hereby shall be subject to the satisfaction
at or prior to the Effective Time of the following conditions, any or all of
which may be waived by the Acquiror Companies, in whole or in part, to the
extent permitted by applicable Law:
(a) Representations and Warranties. Each of the
representations and warranties of the Company contained in this
Agreement that is qualified as to materiality shall be true and
correct in all respects and each of such representations and
warranties that is not so qualified shall be true and correct in all
material respects as of the date of this Agreement and as of the
Closing Date as though made again on and as of the Closing Date. The
Acquiror Companies shall have received a certificate of the President
and the Chief Financial Officer of the Company, dated the Closing
Date, to such effect.
(b) Agreements and Covenants. The Company shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with
by it on or prior to the Closing Date. The Acquiror Companies shall
have received a certificate of the President and the Chief Financial
Officer of the Company, dated the date of the Closing Date, to such
effect.
(c) Tax Opinion. The Acquiror shall have received the opinion
dated on or prior to the Closing Date of Xxxxxx & Xxxxxx LLP to the
effect that (i) the Merger will constitute a reorganization under
section 368(a) of the Code, (ii) the Acquiror, the Company and Natco
will each be a party to that reorganization, and (iii) no gain or loss
will be recognized by the Acquiror, the Company or Natco by reason of
the Merger.
(d) Stockholders' Letters. The Acquiror shall have received
from each owner of shares of Company Common Stock of record or, to the
Knowledge of the Company, beneficially as of the date of the Company
Stockholders' Meeting a Stockholder's Letter
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dated the date of the Company Stockholders' Meeting and from any
Person who shall thereafter but prior to the Closing Date become an
owner of Company Common Stock of record or, to the Knowledge of the
Company, beneficially a Stockholder's Letter dated the Closing Date.
(e) Financing. The lenders under the Bank Credit Agreement
shall have made available funds to National Tank Company for the
purpose of funding, and in an amount sufficient to fund, the cash
portion of the Merger Consideration.
SECTION 8.03 Additional Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger and the other transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions, any or all of which may be waived
by the Company, in whole or in part, to the extent permitted by applicable Law:
(a) Representations and Warranties. Each of the
representations and warranties of the Acquiror Companies contained in
this Agreement that is qualified as to materiality shall be true and
correct in all respects and each of such representations and
warranties that is not so qualified shall be true and correct in all
material respects as of the date of this Agreement and as of the
Closing Date as though made again on and as of the Closing Date. The
Company shall have received a certificate of the President and the
Chief Financial Officer of each of the Acquiror Companies, dated the
Closing Date, to such effect.
(b) Agreements and Covenants. The Acquiror Companies shall
have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or
complied with by them on or prior to the Closing Date. The Company
shall have received a certificate of the President and the Chief
Financial Officer of each of the Acquiror Companies, dated the Closing
Date, to such effect.
(c) Tax Opinion. The Company shall have received the opinion
dated on or prior to the Closing Date of Xxxx Xxxxx Xxxx & XxXxxx, LLP
to the effect that (i) the Merger will constitute a reorganization
under section 368(a) of the Code, (ii) the Acquiror, the Company and
Natco will each be a party to that reorganization, and (iii) no gain
or loss will be recognized by the stockholders of the Company upon the
receipt of shares of Acquiror Class B Common Stock in exchange for
shares of Company Common Stock pursuant to the Merger except with
respect to the cash portion of the Merger Consideration Per Share of
Company Common Stock, any cash received in lieu fractional share
interests, and any of the Conditional Earned Shares, the Accelerated
Earned Shares and Earned Shares treated as imputed interest.
(d) Bank Debt. The Acquiror Companies shall have either paid
in full the outstanding indebtedness under the Company's credit
facility at Banc One, Texas, N.A. or agreed with such bank to cause
the Surviving Corporation to assume the indebtedness under such credit
facility.
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(e) Stockholders' Agreement. The Stockholders' Agreement
shall have been executed and delivered by Cap I, Cap II and the
Designated Company Stockholders.
(f) Investment Agreement. The transactions contemplated by
the Investment Agreement shall have been consummated.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01 Survival of Representations, Warranties, Covenants and
Agreements. The representations and warranties of the parties contained in
Articles IV and V (other than those contained in Sections 4.14 and 5.14) shall
survive both the Closing and any investigation by the parties with respect
thereto but shall terminate and be of no further force or effect on the first
anniversary of the Closing Date. The representations and warranties contained
in Section 4.14 and 5.14 shall survive the Closing and any investigation by the
parties with respect thereto but shall terminate and be of no further force or
effect on the earlier of the fourth anniversary of the Closing Date or, in the
case of Section 4.14 or Section 5.14, respectively, the date that is thirty
(30) days after the results of an audit by the Internal Revenue Service of the
federal income tax returns of the Company or the Acquiror through the Closing
have been reported to the Company or the Representative, respectively.
Notwithstanding the foregoing, any such representation or warranty as to which
a bona fide claim relating thereto is asserted in writing in accordance with
Section 9.02 during such survival period shall, with respect only to such
claim, survive such survival period pending resolution thereof. The covenants
and agreements in this Article IX shall survive the Closing and shall remain in
full force and effect for such period as is necessary to resolve any bona fide
claim made with respect to any representation or warranty contained in this
Agreement during the survival period thereof. The remaining covenants and
agreements of the parties hereto contained in this Agreement shall survive the
Closing without any contractual limitation on the period of survival.
SECTION 9.02 General Indemnification.
(a) If the transactions contemplated hereby to occur at the
Closing are effected, the Acquiror, on the one hand, hereby agrees,
and the Designated Company Stockholders, on the other, hereby
severally agree (the Acquiror and such holders together each being an
"Indemnifying Party"), from and after the Closing, to indemnify and
hold harmless all those persons who hold Company Common Stock
immediately prior to the Effective Time, on the one hand, and the
Acquiror, on the other (each such group or person being the
"Indemnified Party") against any losses, claims, damages or
liabilities ("Losses") that such Indemnified Party shall actually
incur, to the extent that such Losses (or actions, suits or
proceedings in respect thereof and any appeals therefrom
("Proceedings")):
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(i) arise out of or are based upon any allegation
that any representation or warranty made herein in Article IV
or V for the benefit of the Acquiror or the Company,
respectively, is untrue or has been breached in any respect;
or
(ii) arise out of or are based upon any allegation
that any covenant or agreement made herein for the benefit of
the Indemnified Party by the Indemnifying Party has not been
performed in accordance with its terms;
and will reimburse the Indemnified Party for any legal or other
expenses reasonably incurred by it in connection with investigating or
defending against any such Losses or Proceedings. Notwithstanding the
foregoing, the Indemnifying Party shall be severally liable to the
Indemnified Party under this Section only for the amount of individual
Losses incurred by the Indemnified Party that exceed $250,000 in the
aggregate; provided, however, that the amount of such Losses that are
subject to indemnification hereunder shall not exceed $2,500,000 in
the aggregate for all Designated Company Stockholders on the one hand
and the Acquiror on the other; and provided, further, that the Losses
incurred by an Indemnified Party shall, for purposes of determining
the threshold level thereof in accordance with this sentence and
otherwise, be offset by (i) the proceeds of any insurance received by
the Indemnified Party with respect thereto and (ii) the amount of any
federal income tax benefit actually realized by the Indemnified Party
with respect thereto. No Designated Company Stockholder shall be
liable hereunder for more than his pro rata share of Losses (based on
the number of shares of Company Common Stock owned immediately prior
to the Effective Time, including for this purpose the shares of
Company Common Stock issuable upon exercise of all the Warrants) and
may elect, in his sole discretion, to pay such Losses in cash or in
Acquiror Class B Common Stock or both. If the Designated Company
Stockholder shall elect to pay all or any portion of such Losses in
Acquiror Class B Common Stock, the value of such Acquiror Class B
Common Stock shall be deemed to be $13.00 per share, subject to
adjustment pursuant to the last sentence of Section 3.01(a) or Section
3.01(h), or both, as the case may be.
(b) Promptly after receipt by the Indemnified Party under
subsection (a) of this Section of notice of a Loss or the commencement
of any Proceeding against which it believes it is indemnified under
this Section, the Indemnified Party shall, if a claim in respect
thereto is to be made against the Indemnifying Party under this
Section, notify the Indemnifying Party in writing of the commencement
thereof; provided, however, that the omission so to notify the
Indemnifying Party shall not relieve it from any liability which it
may have to the Indemnified Party to the extent that the Indemnifying
Party is not prejudiced by such omission.
(c) The Indemnifying Party shall, within thirty (30) days
after receipt of a notice of Loss or Proceeding given pursuant to
subsection (b) of this Section, either (i) acknowledge liability, as
between the Indemnifying Party and the Indemnified Party, for such
Loss or the amount in controversy in such Proceeding and pay the
Indemnified Party the amount of such Loss or the amount in controversy
in such Proceeding in cash in immediately available funds
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(or establish by agreement with the Indemnified Party an alternative
payment schedule), (ii) acknowledge liability, as between the
Indemnifying Party and the Indemnified Party, for such Loss or the
amount in controversy in such Proceeding, disavow the validity of the
Loss or Proceeding or the amount thereof and, in the case of a
proceeding to the extent that it shall so desire in accordance with
subsection (d) of this Section, assume the legal defense thereof, or
(iii) object (or reserve the right to object until additional
information is obtained) to the claim for indemnification or the
amount thereof, setting forth the grounds therefor in reasonable
detail. If the Indemnifying Party does not respond to the Indemnified
Party as provided in this subsection within such 30-day period, the
Indemnifying Party shall be deemed to have acknowledged its liability
for such indemnification claim in accordance with clause (i) of this
subsection and the Indemnified Party may exercise any and all of its
rights under applicable law to collect such amount.
(d) In the case of a Loss as to which the Indemnifying Party
shall have responded pursuant to clause (ii) or (iii) of subsection
(c) above, the parties shall attempt in good faith to resolve their
differences for a period of 60 days following receipt by the
Indemnified Party or Parties of the response of the Indemnifying Party
pursuant to subsection (c) above and, if the parties are unable to
resolve their differences within such period, the Indemnified Party or
Parties may submit the matter to arbitration in accordance with the
provisions of Section 11.09.
(e) If a Proceeding shall be brought against an Indemnified
Party and it shall notify the Indemnifying Party thereof in accordance
with subsection (b) of this Section, the Indemnifying Party shall, if
it shall have responded to such notice in accordance with clause (ii)
of subsection (c) of this Section, be entitled to assume the legal
defense thereof with counsel reasonably satisfactory to the
Indemnified Party. After notice from the Indemnifying Party to the
Indemnified Party of its election to assume the defense of such claim
or such action, the Indemnifying Party shall not be liable to the
Indemnified Party under this Section for any attorney's fees or other
expenses (except reasonable costs of investigation) subsequently
incurred by the Indemnified Party in connection with the defense
thereof. If the Indemnifying Party does not assume the defense of a
Proceeding as to which it has acknowledged liability, as between
itself and the Indemnified Party, pursuant to clause (ii) of
subsection (c) of this Section, the Indemnified Party may require the
Indemnifying Party to reimburse it on a current basis for its
reasonable expenses of investigation, reasonable attorney's fees and
expenses and reasonable out-of-pocket expenses incurred in the defense
thereof and, subject to the provisions of subsection (f) of this
Section, the Indemnifying Party shall be bound by the result obtained
with respect thereto by the Indemnified Party.
(f) An Indemnifying Party will not, without the prior written
consent of the Indemnified Party (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened Proceeding
in respect of which indemnification or contribution may be sought
hereunder (whether or not the Indemnified
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Party is an actual or potential party to such Proceeding) unless such
settlement, compromise or consent includes an unconditional release of
the Indemnified Party from all liability arising out of such
Proceeding. If the Indemnifying Party has responded to the Indemnified
Party pursuant to clause (i) of subsection (c) of this Section, the
Indemnified Party may settle or compromise or consent to the entry of
any judgment with respect to the Proceeding that was the subject of
notice to the Indemnifying Party pursuant to subsection (c) of this
Section without the consent of the Indemnifying Party (but no such
settlement, compromise or consent shall increase the indemnification
obligation of the Indemnifying Party to which it has consented
pursuant to clause (i) of subsection (c) of this Section). An
Indemnified Party will not otherwise, without the prior written
consent of the Indemnifying Party (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened Proceeding,
but, if such Proceeding is settled or compromised or if there is
entered any judgment with respect to any such Proceeding, in either
case with the consent of the Indemnifying Party, or if there be a
final judgment of the plaintiff in any such Proceeding, the
Indemnifying Party agrees to indemnify and hold harmless any
Indemnified Party from and against any loss or liability by reason of
such settlement, compromise or judgment.
(g) From and after the Closing, the provisions of this
Section shall be the sole and exclusive remedy of each party hereto
for (i) any breach of the other party's representations or warranties
contained in this Agreement or (ii) any breach of the other party's
covenants or agreements contained in this Agreement.
(h) From and after the Closing, all representations,
warranties, covenants and agreements herein to or for the benefit of
the Company by the Acquiror shall be deemed to be representations,
warranties, covenants and agreements directly to, with and for the
benefit of the Designated Company Stockholders and the Designated
Company Stockholders shall have the right to indemnification in
accordance with Article IX from the Acquiror in connection therewith.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of this
Agreement by the stockholders of the Company:
(a) by mutual consent of the Acquiror and the Company;
(b) by the Acquiror, upon a breach of any covenant or
agreement on the part of the Company set forth in this Agreement, or
if any representation or warranty of the Company shall have become
untrue, in either case such that the conditions set forth in
Subsection 8.02(a) or Subsection 8.02(b) would not be satisfied (a
"Terminating Company Breach"); provided that, if (i) such Terminating
Company Breach is curable by the Company through the exercise of
reasonable efforts and (ii) the Company is exercising reasonable
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efforts to cure the Terminating Company Breach, the Acquiror may not,
for such period not exceeding 30 days as the Company continues to
exert such efforts, terminate this Agreement under this Subsection
9.01(b);
(c) by the Company, upon breach of any covenant or agreement
on the part of the Acquiror Companies set forth in this Agreement, or
if any representation or warranty of the Acquiror Companies shall have
become untrue, in either case such that the conditions set forth in
Subsection 8.03(a) or Subsection 8.03(b) would not be satisfied (a
"Terminating Acquiror Breach"); provided that, if (i) such Terminating
Acquiror Breach is curable by the Company through the exercise of
reasonable efforts and (ii) the Acquiror is exercising reasonable
efforts to cure the Terminating Acquiror Breach, the Company may not
terminate, for such period not exceeding 30 days as the Acquiror
continues to exert such efforts, this Agreement under this Subsection
9.01(c);
(d) by either Acquiror or the Company, if there shall be any
Order which is final and nonappealable preventing the consummation of
the Merger, unless the party relying on such Order has not complied
with its obligations under Section 7.03;
(e) by either Acquiror or the Company, if the Merger shall
not have been consummated before November 30, 1998; or
(f) by either Acquiror or the Company, if this Agreement
shall fail to receive the requisite vote for approval and adoption by
the stockholders of the Company at the Stockholders' Meeting.
The right of any party hereto to terminate this Agreement pursuant to
this Section 9.01 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
Person controlling any such party or any of their respective officers,
directors, representatives or agents, whether prior to or after the execution
of this Agreement.
SECTION 10.02 Effect of Termination. Except as provided in Section
10.05 or Section 10.01 of this Agreement, in the event of the termination of
this Agreement pursuant to Section 10.01, this Agreement shall forthwith become
void, there shall be no liability on the part of the Acquiror Companies or the
Company or any of their respective officers or directors to the other and all
rights and obligations of any party hereto shall cease, except that nothing
herein shall relieve any party from liability for any breach of this Agreement.
SECTION 10.03 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after
approval of the Merger by the stockholders of the Company, no amendment may be
made which would reduce the amount or change the type of consideration into
which each share of Company Common Stock shall be converted pursuant to this
Agreement upon consummation of the Merger. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
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SECTION 10.04 Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties of the other party contained herein or in
any document delivered pursuant hereto and (c) waive compliance by the other
party with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby. For purposes of
this Section 10.04, the Acquiror Companies shall be deemed to be one party.
SECTION 10.05 Fees, Expenses and Other Payments. All Expenses incurred
by the parties hereto shall be borne solely and entirely by the party which has
incurred such Expenses; provided, however, that the Acquiror may, at its
option, pay any Expenses of the Company and, provided further, that the Company
shall bear all expenses of Xxxx Xxxxx Xxxx & XxXxxx LLP in connection with this
Agreement and the transactions contemplated herein.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given upon receipt, if delivered personally, mailed by registered or certified
mail (postage prepaid, return receipt requested) to the parties at the
following addresses or sent by electronic transmission to the telecopier number
specified below:
(a) If to any of the Acquiror Companies, to:
NATCO Group Inc.
0000 Xxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx III
Senior Vice President and
Chief Financial Officer
Telecopier No.: 713/683-7841
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
First City Tower
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx III
Telecopier No.: (000) 000-0000
AGREEMENT AND PLAN OF MERGER
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55
(b) If to the Company, to:
The Cynara Company
0000 Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
with copies to:
Xxxxxx X. Xxxxxx, Xx.
Xxxxxx Xxxxxx Dimeling Xxxxxxxxx & Park
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
and
Xxxx X. Xxxxxx, Esquire
Xxxx Xxxxx Xxxx & XxXxxx, LLP
2500 One Liberty Place
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
or to such other address or telecopier number as any party may, from time to
time, designate in a written notice given in a like manner. Notice given by
telecopier shall be deemed delivered on the day the sender receives telecopier
confirmation that such notice was received at the telecopier number of the
addressee. Notice given by mail as set out above shall be deemed delivered
three days after the date the same is postmarked.
SECTION 11.02 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 11.03 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
AGREEMENT AND PLAN OF MERGER
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56
SECTION 11.04 Entire Agreement. This Agreement (together with the
Annexes, the Company's Disclosure Letter, the Acquiror's Disclosure Letter and
the Confidentiality Agreement) constitutes the entire agreement of the parties,
and supersedes all prior agreements and undertakings, both written and oral,
among the parties, with respect to the subject matter hereof.
SECTION 11.05 Assignment. This Agreement shall not be assigned by
operation of Law or otherwise.
SECTION 11.06 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and, other than
pursuant to Sections 7.08 and 7.09 hereof, nothing in this Agreement, express
or implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 11.07 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any party hereto in the exercise of any
right hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement
herein, nor shall any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive to,
and not exclusive of, any rights or remedies otherwise available.
SECTION 11.08 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Texas, regardless of the
Laws that might otherwise govern under applicable principles of conflicts of
law; provided, however, that any matter involving the internal corporate
affairs of any corporate party hereto shall be governed by the provisions of
the Corporate Statute.
SECTION 11.09 Arbitration. Any dispute referenced in subsection (g) of
Section 3.01 or subsection (d) of Section 9.02 shall be resolved by binding
arbitration under the Commercial Arbitration Rules (the "AAA Rules") of the
American Arbitration Association (the "AAA"). This arbitration provision is
expressly made pursuant to and shall be governed by the Federal Arbitration
Act, 9 U.S.C. Sections 1-14. The parties hereto agree that, pursuant to Section
9 of the Federal Arbitration Act, a judgment of a United States District Court
of competent jurisdiction shall be entered upon the award made pursuant to the
arbitration. Three arbitrators, who shall have the authority to allocate the
costs of any arbitration initiated under this paragraph, shall be selected
according to the AAA Rules or, if such AAA Rules do not so provide, then in
accordance with the following sentence within ten (10) days of the submission
to the AAA of the response to the statement of claim or the date on which any
such response is due, whichever is earlier. The alternative selection shall be
made as follows: one by a majority in interest of the Designated Company
Stockholders, one by the Acquiror and one by the two so selected. The
arbitrators shall conduct the arbitration in accordance with the Federal Rules
of Evidence. The arbitrators shall decide the amount and extent of pre-hearing
discovery which is appropriate. The arbitrators shall have the power to enter
any award of monetary or injunctive relief (including the power to issue
permanent injunctive relief and also the power to reconsider any prior request
for immediate injunctive relief by either of the parties and any order as to
immediate injunctive relief previously
AGREEMENT AND PLAN OF MERGER
-51-
57
granted or denied by a court in response to a request therefor by either of the
parties), including the power to render an award as provided in Rule 43 of the
AAA Rules; provided, however, that the arbitrators shall not have the power to
award punitive damages under any circumstances (whether styled as punitive,
exemplary, or treble damages, or any penalty or punitive type of damages)
regardless of whether such damages may be available under applicable law, the
parties hereby waiving their rights, if any, to recover any such damages,
whether in arbitration or litigation. The arbitrators shall award the
prevailing party its costs and reasonable attorney's fees, and the losing party
shall bear the entire cost of the arbitration, including the arbitrators' fees.
The arbitration award may be enforced in any court having jurisdiction over the
parties and the subject matter of the arbitration. The arbitration shall be
held in Houston, Texas.
SECTION 11.10 Counterparts. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
AGREEMENT AND PLAN OF MERGER
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58
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
NATCO GROUP INC.
By: /s/ XXXXXXXXX X. XXXXXXX
------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Chairman and Chief Executive
Officer
NATIONAL TANK COMPANY
By: /s/ XXXXXXX X. XXXXXX III
------------------------------------
Name: Xxxxxxx X. Xxxxxx III
Title: Senior Vice President and
Treasurer
NATCO ACQUISITION COMPANY
By: /s/ XXXXXXXXX X. XXXXXXX
------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Chairman and Chief Executive
Officer
THE CYNARA COMPANY
By: /s/ XXXXXXX X. XXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
THE DESIGNATED COMPANY STOCKHOLDERS
/s/ XXXXXXX X. XXXXXXXX
-------------------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ XXXXXX X. XXXXXXX
-------------------------------------------
Xxxxxx X. Xxxxxxx
/s/ XXXXXXX X. XXXXXX
-------------------------------------------
Xxxxxxx X. Xxxxxx
/s/ XXXXXX X. XXXXXX, XX.
-------------------------------------------
Xxxxxx X. Xxxxxx, Xx.
AGREEMENT AND PLAN OF MERGER
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59
/s/ XXXXX X. XXXXX
-------------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXX
-------------------------------------------
Xxxxxx X. Xxxx
/s/ XXXXXXX X. XXXXXXXXX
-------------------------------------------
Xxxxxxx X. Xxxxxxxxx
/s/ XXXX X. XXXXX, XX.
-------------------------------------------
Xxxx X. Xxxxx, Xx.
THE 1998 TRUST FOR XXXX XXXXX XXXXXXX
By: /s/ XXXX XXXXX XXXXXXX
--------------------------------------
Name: Xxxx Xxxxx Xxxxxxx
------------------------------------
Title: Trustee
-----------------------------------
BOCP II, L.L.C.
By: /s/ XXXXX X. XXXXXXX
--------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Authorized Signer
AGREEMENT AND PLAN OF MERGER
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60
ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Agreement shall have the meanings
set forth below unless the context shall otherwise require:
"Acquiror" shall mean NATCO Group Inc., a Delaware corporation, and
its successors from time to time.
"Acquiror Class A Common Stock" shall mean the Class A Common Stock,
par value $0.01 per share, of the Acquiror, as constituted after the filing of
the Charter Amendment and having the rights, powers and preferences, and
limitations and restrictions thereof attributable to the Class A Common Stock
set forth in the Charter Amendment.
"Acquiror Class B Common Stock" shall mean the Class B Common Stock,
par value $0.01 per share, of the Acquiror, as constituted after the filing of
the Charter Amendment and having the rights, powers and preferences, and
limitations and restrictions thereof attributable to the Class B Common Stock
set forth in the Charter Amendment.
"Acquiror Common Stock" shall mean the common stock, par value $0.01
per share, of the Acquiror, as constituted as of the date of this Agreement.
Upon the filing of the Charter Amendment, each share of Acquiror Common Stock
outstanding or reserved for issuance will become a share of Class A Common
Stock.
"Acquiror Companies" shall have the meaning ascribed to such term in
the first paragraph of this Agreement.
"Acquiror's Audited Consolidated Financial Statements" shall mean the
consolidated balance sheets of the Acquiror and its Subsidiaries as of March
31, 1996 and the related consolidated statements of operations and cash flows
for the fiscal years ended March 31, 1995 and 1996, together with the notes
thereto, all as audited by KPMG Peat Marwick LLP, independent accountants,
under their report with respect thereto dated June 27, 1997.
"Acquiror's Consolidated Balance Sheet" shall mean the consolidated
balance sheet of the Acquiror as of December 31, 1997 included in the
Acquiror's Unaudited Consolidated Financial Statements.
"Acquiror's Consolidated Financial Statements" shall mean the
Acquiror's Audited Consolidated Financial Statements and the Acquiror's
Unaudited Consolidated Financial Statements.
AGREEMENT AND PLAN OF MERGER
ANNEX A-1
61
"Acquiror's Disclosure Letter" shall mean a letter of even date
herewith amending the Acquiror's disclosure letter dated March 26, 1998
delivered by the Acquiror to the Company with the execution of the Agreement,
which, among other things, shall identify exceptions to the Acquiror's
representations and warranties contained in Article V by specific section and
subsection references.
"Acquiror's Unaudited Consolidated Financial Statements" shall mean
the unaudited consolidated balance sheet of the Acquiror and its Subsidiaries
as of December 31, 1997 and the related consolidated statements of operations
and cash flows for the fiscal quarters ended December 31, 1996 and December 31,
1997, together with the notes thereto.
"Acquiror Option Plan" shall mean the Acquiror's Non-Employee
Directors Stock Option Plan and the Acquiror's Employee Stock Incentive Plan.
"Acquiror Stock Options" shall mean stock options granted pursuant to
the Acquiror Option Plans, as well as the individual employee issued otherwise
than pursuant to a plan but that are set forth in Section 5.03(b) of the
Acquiror's Disclosure Letter.
"Additional Shares" shall mean that number of shares of Acquiror Class
B Common Stock (not less than zero) that is equal to the Sales Revenue
expressed in dollars derived or to be derived from all Awarded Project
Contracts that shall have an Award Date on or prior to March 31, 2000 divided
by $176.06.
"Affiliate" shall, with respect to any Person, mean any other Person
that controls, is controlled by or is under common control with the former.
"Agreement" shall mean the Amended and Restated Agreement and Plan of
Merger dated November 17, 1998 but effective as of March 26, 1998 among the
Acquiror, Natco, Newco and the Company, including any amendments thereto and
each Annex (including this Annex A) and Schedule thereto (including the
Acquiror's Disclosure Letter and the Company's Disclosure Letter).
"Award Date" shall mean the date of receipt of the purchase order or
commitment that, with respect to the definition of Awarded Project Contract,
constitutes an Awarded Project Contract.
"Awarded Project Contract" shall mean the receipt of (i) a purchase
order related to a Project Contract, (ii) a commitment related to a Project
Contract, e.g., a letter of intent, and work is commenced on the project
substantially in accordance with the schedule contemplated by the commitment;
provided, that a purchase order is subsequently received and accepted or (iii)
a commitment with respect to the design engineering phase of a Project Contract
and work is commenced on the project substantially in accordance with the
schedule contemplated by the commitment; provided, that, in the case of clause
(iii), a purchase order on the remaining phase is received within six months
thereafter.
AGREEMENT AND PLAN OF MERGER
ANNEX A-2
62
"Bank Credit Agreement" shall mean that certain Loan Agreement to be
dated as of November 18, 1998 among, inter alia, the Corporation, as U.S.
Borrower, NATCO Canada, Ltd., as Canadian Borrower, and Chase Bank of Texas,
National Association, as U.S. Agent for the lenders thereunder, Bank of Nova
Scotia, as Canadian Agent for the lenders thereunder, and such lenders, as
amended from time to time.
"Benefit Plans" shall mean, with respect to a specified Person, any
employee pension benefit plan (whether or not insured), as defined in Section
3(2) of ERISA, any employee welfare benefit plan (whether or not insured) as
defined in Section 3(1) of ERISA, any plans that would be employee pension
benefit plans or employee welfare benefit plans if they were subject to ERISA,
such as foreign plans and plans for directors, any stock bonus, stock
ownership, stock option, stock purchase, stock appreciation rights, phantom
stock or other stock plan (whether qualified or nonqualified), and any bonus or
incentive compensation plan sponsored, maintained, or contributed to by the
specified Person or any of its Subsidiaries for the benefit of any of the
present or former directors, officers, employees, agents, consultants or other
similar representatives providing services to or for the specified Person or
any of its Subsidiaries in connection with such services or any such plans
which have been so sponsored, maintained, or contributed to within six years
prior to the date of this Agreement; provided, however, that such term shall
not include (a) routine employment policies and procedures developed and
applied in the ordinary course of business and consistent with past practice,
including wage, vacation, holiday and sick or other leave policies, (b) workers
compensation insurance and (c) directors and officers liability insurance.
"Billed Revenues" shall have the meaning ascribed to such term in
Section 3.01(b).
"BOCP" shall mean Banc One Capital Partners II, LTD as the holder of
the Warrants.
"Business Day" means any day other than a day on which banks in the
State of Texas are authorized or obligated to be closed;
"Cap I" shall mean Capricorn Investors, L.P., a Delaware limited
partnership.
"Cap II" shall mean Capricorn Investors II, L.P., a Delaware limited
partnership.
"Certificate of Merger" shall have the meaning ascribed to such term
in Section 2.04.
"Charter Amendment" shall mean an amendment to the Certificate of
Incorporation of the Acquiror substantially similar in form and substance to
the form thereof attached to this Agreement as Annex D, pursuant to which each
share of Acquiror Common Stock outstanding or reserved for issuance will be
converted into a share of Acquiror Class A Common Stock or the right to receive
such a share.
"Closing" shall mean a meeting, which shall be held in accordance with
Section 3.03, of all Persons interested in the transactions contemplated by the
Agreement at which all documents deemed necessary by the parties to the
Agreement to evidence the fulfillment or waiver of all
AGREEMENT AND PLAN OF MERGER
ANNEX A-3
63
conditions precedent to the consummation of the transactions contemplated by
the Agreement are executed and delivered.
"Closing Date" shall mean the date of the Closing as determined
pursuant to Section 3.03.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and Regulations promulgated thereunder.
"Commission" shall mean the Securities and Exchange Commission.
"Company" shall mean The Cynara Company, a Delaware corporation, and
its successors from time to time.
"Company Common Stock" shall mean both the Class A common stock, par
value $0.001 per share, and the Class B common stock, par value $0.001 per
share, of the Company.
"Company Participants" shall have the meaning ascribed to such term in
Section 7.08 herein.
"Company Stockholders Agreement" shall mean that certain Stockholders
Agreement dated July 1, 1996 by and among the Company, BOCP and the
stockholders of the Company.
"Company's Audited Consolidated Financial Statements" shall mean the
consolidated balance sheets of the Company and its Subsidiaries as of December
31, 1997 and the related consolidated and combined statements of operations and
cash flows for the fiscal years ended December 31 1996 and December 31, 1997,
together with the notes thereto, all as audited by Ernst & Young LLP,
independent accountants, under their report with respect thereto dated March
11, 1998.
"Company's Consolidated Balance Sheet" shall mean the consolidated
balance sheet of the Company as of September 30, 1997 included in the Company's
Unaudited Consolidated Financial Statements.
"Company's Consolidated Financial Statements" shall mean the Company's
Audited Consolidated Financial Statements and the Company's Unaudited
Consolidated Financial Statements.
"Company's Disclosure Letter" shall mean a letter of even date
herewith amending the Company's disclosure letter dated March 26, 1998 and
delivered by the Company to the Acquiror Companies concurrently with the
execution of the Agreement, which, among other things, shall identify
exceptions to the Company's representations and warranties contained in Article
IV by specific section and subsection references.
"Company's Unaudited Consolidated Financial Statements" shall mean the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
September 30, 1997 and the
AGREEMENT AND PLAN OF MERGER
ANNEX A-4
64
related consolidated statements of operations and cash flows for the three
months periods ended September 30, 1996 and September 30, 1997, together with
the notes thereto.
"Confidentiality Agreement" shall mean that certain confidentiality
agreement between the Acquiror and the Company dated December 11, 1997.
"Constituent Corporations" shall mean the Company and Natco.
"control" (including the terms "controlled," "controlled by" and
"under common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of stock or
as trustee or executor, by contract or credit arrangement or otherwise.
"Corporate Statute" shall mean the General Corporation Law of the
State of Delaware.
"Court" shall mean any court or arbitration tribunal of the United
States, any foreign country or any domestic or foreign state, and any political
subdivision thereof.
"CTOC Earnout Shares" shall mean that number of shares of Class B
Common Stock that shall equal the number obtained by: (i) dividing (A) the
aggregate amount of Billed Revenues, if any, in excess of $20,454,545 by (B)
$1,000; (ii) multiplying the quotient by 22; and (iii) dividing the result by
the number of shares of Company Common Stock outstanding at the Effective Time
(after giving effect to the exercise of the Warrants).
"CTOC Payout Date" shall mean November 30, 1999.
"CTOC Project" shall mean any project let to the Company by the
Carigali-Triton Operating Company or any general contractor appointed by the
Carigali-Triton Operating Company.
"Current Benefit Plans" shall mean Benefit Plans that are sponsored,
maintained, or contributed to by a specified Person or any of its Subsidiaries
as of the date of this Agreement.
"Designated Company Stockholders" shall mean those holders of Company
Common Stock (including BOCP) who have executed and delivered this Agreement
for the limited purpose of joining in the mutual covenants contained in Article
IX herein and, in the case of BOCP, Section 7.05 and to enforce provisions of
Article IX as contemplated therein and who shall have the right to become a
party to the Registration Rights Agreement pursuant to Sections 6.05 and
8.01(f) herein.
"Effective Time" shall mean the date and time of the completion of the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with Section 2.02.
"Environmental Law or Laws" shall mean any and all laws, statutes,
ordinances, rules, regulations, or orders of any Governmental Authority
pertaining to health or the environment
AGREEMENT AND PLAN OF MERGER
ANNEX A-5
65
currently in effect and applicable to a specified Person and its Subsidiaries,
including the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Hazardous & Solid Waste Amendments Act
of 1984, as amended, the Superfund Amendments and Reauthorization Act of 1986,
as amended, the Hazardous Materials Transportation Act, as amended, the Oil
Pollution Act of 1990, as amended ("OPA"), any state or local Laws implementing
the foregoing federal Laws, and all other environmental conservation or
protection Laws. For purposes of the Agreement, the terms "hazardous substance"
and "release" have the meanings specified in CERCLA; provided, however, that to
the extent the Laws of the state or locality in which the property is located
establish a meaning for "hazardous substance" or "release" that is broader than
that specified in CERCLA, such broader meaning shall apply within the
jurisdiction of such state or locality, and the term "hazardous substance"
shall include all dehydration and treating wastes, waste (or spilled) oil, and
waste (or spilled) petroleum products, and (to the extent in excess of
background levels) radioactive material, even if such are specifically exempt
from classification as hazardous substances pursuant to CERCLA or RCRA or the
analogous statutes of any jurisdiction applicable to the specified Person or
its Subsidiaries or any of their respective properties or assets.
"Equity Securities" shall mean, with respect to a specified Person,
any shares of capital stock of, or other equity interests in, or any securities
that are convertible into or exchangeable for any shares of capital stock of,
or other equity interests in, or any outstanding options, warrants or rights of
any kind to acquire any shares of capital stock of, or other equity interests
in, such Person.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the Regulations promulgated thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the Regulations promulgated thereunder.
"Exchange Fund" shall mean the fund of Acquiror Class B Common Stock
and cash comprising the Merger Consideration Per Share of Company Common Stock
in the aggregate, cash in lieu of fractional share interests and dividends and
distributions, if any, with respect to such shares of Acquiror Class B Common
Stock segregated by the Acquiror pursuant to Section 3.02.
"Expenses" shall mean all reasonable out-of-pocket expenses (including
all fees and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement and the Registration
Rights Agreement, the solicitation of stockholder approvals and all other
matters related to the consummation of the transactions contemplated hereby.
AGREEMENT AND PLAN OF MERGER
ANNEX A-6
66
"GAAP" shall mean accounting principles generally accepted in the
United States consistently applied by a specified Person.
"Governmental Authority" shall mean any governmental agency or
authority (other than a Court) of the United States, any foreign country, or
any domestic or foreign state, and any political subdivision or agency thereof,
and shall include any multinational authority having governmental or
quasi-governmental powers.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the Regulations promulgated thereunder.
"Initial Earnout Shares" shall mean the number of Additional Shares
divided by the number of shares of Company Common Stock outstanding at the
Effective Time (after giving effect to the exercise of the Warrants).
"Initial Payout Date" shall mean May 31, 2000.
"Initial Shares" shall mean the shares of Acquiror Class B Common
Stock received by the Designated Company Stockholders pursuant to the Merger as
part of the Merger Consideration payable as of the Effective Date.
"Investment Agreement" shall mean that certain Investment Agreement
dated as of November 17, 1998 between the Acquiror and Cap II relating to the
purchase by Cap II of a non-negotiable promissory note in the principal amount
of $5,300,000 convertible into 504,762 shares of Class A Common Stock upon the
occurrence of the events therein described.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" shall mean, with respect to either the Company or the
Acquiror, the knowledge (obtained after reasonable inquiry) of any executive
officer of such party.
"Law" shall mean all laws, statutes, ordinances and Regulations of the
United States, any foreign country, or any domestic or foreign state, and any
political subdivision or agency thereof, including all decisions of Courts
having the effect of law in each such jurisdiction.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing), any conditional sale or other title retention agreement, any
lease in the nature thereof or the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction.
AGREEMENT AND PLAN OF MERGER
ANNEX A-7
67
"Material" shall mean material to the condition (financial and other),
results of operations or business of a specified Person and its Subsidiaries,
if any, taken as a whole; provided, however, that, as used in this definition
the word "material" shall have the meaning accorded thereto in Section 11 of
the Securities Act.
"Material Adverse Effect" shall mean any change or effect that would
be material and adverse to the consolidated business, condition (financial or
otherwise), operations, performance or properties (but excluding any
outstanding capital stock or other securities) of a specified Person and its
Subsidiaries, if any, taken as a whole; provided, however, that, as used in
this definition the word "material" shall have the meaning accorded thereto in
Section 11 of the Securities Act. Notwithstanding anything herein to the
contrary, if the Company is not awarded any Project Contract in Southeast Asia,
such circumstance shall not constitute a Material Adverse Effect on the
Company.
"Material Contract" shall mean each contract, lease, indenture,
agreement, arrangement or understanding to which a specified Person or any of
its Subsidiaries is a party or to which any of the assets or operations of such
specified Person or any of its Subsidiaries is subject that is of a type that
would be required to be included as an exhibit to a registration statement on
Form S-1 pursuant to Paragraph (2), (4), (10) or (14) of Item 601(b) of
Regulation S-K under the Securities Act if such a registration statement were
to be filed by such Person under the Securities Act on the date of
determination. Notwithstanding the foregoing, such term shall, in the case of
the Company, include any of the following contracts, agreements or commitments,
whether oral or written:
(1) Any collective bargaining agreement or other agreement
with any labor union;
(2) any agreement, contract or commitment with any other
Person, other than any agency or representation entered in the
ordinary course of business, containing any covenant limiting the
freedom of such specified Person or any of its Subsidiaries to engage
in any line of business or to compete with any other Person;
(3) any partnership, joint venture or profit sharing
agreement with any Person, which partnership, joint venture or profit
sharing agreement generated revenues during its most recently
completed fiscal year of $100,000 or more;
(4) any employment or consulting agreement, contract or
commitment between the Company or any of its Subsidiaries and any
employee, officer or director thereof (i) having more than one year to
run from the date hereof, (ii) providing for an obligation to pay or
accrue compensation of $100,000 or more per annum or (iii) providing
for the payment or accrual of any additional compensation upon a
change in control of such Person or any of its Subsidiaries or upon
any termination of such employment or consulting relationship
following a change in control of such Person or any of its
Subsidiaries; and
AGREEMENT AND PLAN OF MERGER
ANNEX A-8
68
(5) any agency or representation agreement with any Person
which is not terminable by the Company or one of its Subsidiaries
without penalty upon not more than one year's notice;
"Merger" shall mean the merger of the Company with and into Natco as
provided in Article II of this Agreement.
"Merger Consideration" shall mean the aggregate Merger Consideration
Per Share of Company Common Stock payable pursuant to Section 3.01 herein with
respect to a specific number of shares of Company Common Stock.
"Merger Consideration Per Share of Company Common Stock" shall mean
the number of shares of Acquiror Class B Common Stock, the right to receive an
amount of cash, the right to receive the CTOC Earnout Shares and the right to
receive the Initial Earnout Shares and the Supplemental Earnout Shares into
which each share of Company Common Stock is to be converted pursuant to the
Merger as provided in Section 3.01(a).
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Natco" shall mean National Tank Company, a Delaware corporation and a
wholly-owned Subsidiary of the Acquiror.
"Newco" shall mean Natco Acquisition Company, a Delaware corporation
and a wholly-owned Subsidiary of the Acquiror.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Order" shall mean any judgment, order or decree of any Court or
Governmental Authority, federal, foreign, state or local.
"Payout Date" shall mean May 31, 2001.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permit" shall mean any and all permits, licenses, authorizations,
orders, certificates, registrations or other approvals granted by any
Governmental Authority.
"Permitted Encumbrances" shall mean the following:
(1) liens for taxes, assessments and other governmental
charges not delinquent or which are currently being contested in good
faith by appropriate proceedings; provided that, in the latter case,
the specified Person or one of its Subsidiaries shall have set aside
on its books adequate reserves with respect thereto;
AGREEMENT AND PLAN OF MERGER
ANNEX A-9
69
(2) mechanics' and materialmen's liens not filed of record
and similar charges not delinquent or which are filed of record but
are being contested in good faith by appropriate proceedings; provided
that, in the latter case, the specified Person or one of its
Subsidiaries shall have set aside on its books adequate reserves with
respect thereto;
(3) liens in respect of judgments or awards with respect to
which the specified Person or one of its Subsidiaries shall in good
faith currently be prosecuting an appeal or other proceeding for
review and with respect to which such Person or such Subsidiary shall
have secured a stay of execution pending such appeal or such
proceeding for review; provided that, such Person or such Subsidiary
shall have set aside on its books adequate reserves with respect
thereto;
(4) easements, leases, reservations or other rights of others
in, or minor defects and irregularities in title to, property or
assets of a specified Person or any of its Subsidiaries; provided
that, such easements, leases, reservations, rights, defects or
irregularities do not materially impair the use of such property or
assets for the purposes for which they are held; and
(5) any lien or privilege vested in any lessor, licensor or
permittor for rent or other obligations of a specified Person or any
of its Subsidiaries thereunder so long as the payment of such rent or
the performance of such obligations is not delinquent.
(6) the Lien of Banc One, Texas, N.A. on all assets of the
Company.
"Person" shall mean an individual, partnership, limited liability
company, corporation, joint stock company, trust, estate, joint venture,
association or unincorporated organization, or any other form of business or
professional entity, but shall not include a Governmental Authority.
"Project Contract" shall mean a contract to supply a new membrane
system, including all or part of the responsibilities for design, manufacture,
delivery and startup of membranes and related equipment, where the destination
of such membrane system is Southeast Asia; provided, however, that the long
term service and parts contracts awarded with respect to any project contract
included within this definition shall be limited to a duration of the first
three years of the contract term, i.e., the revenues attributable to such a
long term service and parts contract for purposes of the Agreement shall be
limited to the revenues earned or to be earned during the first three years of
such contract.
"Registration Rights Agreement" shall mean an agreement among the
Acquiror and the Designated Company Stockholders pursuant to which the Acquiror
agrees to provide rights of registration of the offering, sale and delivery of
shares of Acquiror Common Stock under the registration provisions of the
Securities Act which shall be in form and substance substantially similar to
the form thereof attached hereto as Annex E.
AGREEMENT AND PLAN OF MERGER
ANNEX A-10
70
"Regulation" shall mean any rule or regulation of any Governmental
Authority having the effect of law.
"Reports" shall mean, with respect to a specified Person, all reports,
registrations, filings and other documents and instruments required to be filed
by the specified Person or any of its Subsidiaries with any Governmental
Authority.
"Representative" shall mean, initially, Xxxxxxx X. Xxxxxx, or any
successor individual designated at any time by notice to the Acquiror signed by
a majority in interest of the Designated Company Stockholders (determined at
the time by reference to the holdings of Company Common Stock of each of the
Designated Company Stockholders immediately prior to the Effective Time after
giving effect to the exercise of the Warrants).
"Sales Revenue" shall mean the gross sales revenue attributable to an
Awarded Project Contract in accordance with the provisions of the Project
Contract, whether earned or to be earned in accordance therewith. Except as
heretofore provided in this definition, Sales Revenue shall be determined in
accordance with GAAP and the sales revenue for any component of the Project
Contract for which the sales revenue was not expressly provided in the Project
Contract shall be estimated on a reasonable basis taking into account
experience regarding similar Project Contracts.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the Regulations promulgated thereunder.
"Share Adjustment" shall have the meaning ascribed to such term in
subsection (a) of Section 3.01.
"Significant Subsidiary" means any Subsidiary of the Company or
Acquiror, as the case may be, that would constitute a Significant Subsidiary of
such party within the meaning of Rule 1-02 of Regulation S-X of the Commission.
"Southeast Asia" shall mean the countries and territorial waters
included in the area bounded by and including Australia to the south, the
Philippines to the east, China to the north and Pakistan to the west.
"Stockholders" shall mean Capricorn Investors, Ltd., a Delaware
limited partnership, and Capricorn Investors II, Ltd., a Delaware limited
partnership.
"Stockholders' Agreement" shall mean an agreement among the Acquiror,
Cap I, Cap II and the Designated Company Stockholders in form and substance
substantially similar to the form thereof attached hereto as Annex F.
A "Subsidiary" of a specified Person shall be any corporation,
partnership, limited liability company, joint venture or other legal entity of
which the specified Person (either alone or through or together with any other
Subsidiary) owns, directly or indirectly, 50 percent or more of the stock
AGREEMENT AND PLAN OF MERGER
ANNEX A-11
71
or other equity or partnership interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
"Stockholder's Letter" shall mean a letter in form and substance
substantially similar to the form thereof attached hereto as Annex B.
"Stockholders' Meeting" shall have the meaning ascribed to such term
in Subsection 7.01(a).
"Supplemental Earnout Shares" shall mean the number of Supplemental
Shares divided by the number of shares of Company Common Stock outstanding at
the Effective Time (after giving effect to the exercise of the Warrants).
"Supplemental Payout Date" shall mean February 28, 2001.
"Supplemental Shares" shall mean that number of shares of Acquiror
Class B Common Stock (not less than zero) that is equal to the Sales Revenue
expressed in dollars derived or to be derived from all Awarded Project
Contracts that shall have an Award Date after March 31, 2000 and on or prior to
December 31, 2000 (less any unearned Sales Revenue attributed to Awarded
Project Contracts included in the determination of Initial Earnout Shares but
subsequently cancelled) divided by $352.11.
"Surviving Corporation" shall mean Natco as the corporation surviving
the Merger.
"Tax Returns" shall mean all returns and reports of or with respect to
any Tax which are required to be filed by or with respect to the Company or any
of its Subsidiaries.
"Taxes" shall mean all taxes, charges, imposts, tariffs, fees, levies
or other similar assessments or liabilities, including income taxes, ad valorem
taxes, excise taxes, withholding taxes, stamp taxes or other taxes of or with
respect to gross receipts, premiums, real property, personal property, windfall
profits, sales, use, transfers, licensing, employment, payroll and franchises
imposed by or under any Law; and such terms shall include any interest, fines,
penalties, assessments or additions to tax resulting from, attributable to or
incurred in connection with any such tax or any contest or dispute thereof.
"Terminated Benefit Plans" shall mean Benefit Plans that were
sponsored, maintained, or contributed to by a specified Person or any of its
Subsidiaries within six years prior to the date of this Agreement but which
have been terminated prior to the date of this Agreement.
"Warrants" shall mean those certain warrants to purchase Company
Common Stock issued by the Company and those options granted by stockholders of
the Company, in each case held by BOCP as described in Section 4.03(b) of the
Company's Disclosure Letter.
AGREEMENT AND PLAN OF MERGER
ANNEX A-12
72
ANNEX B
STOCKHOLDER'S LETTER
[Date]
NATCO Group Inc.
Brookhollow Central III
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
The undersigned is a holder of Class A Common Stock of The Cynara
Company, a Delaware corporation (the "Company"). Pursuant to the terms and
subject to the conditions of that certain Agreement and Plan of Merger by and
among NATCO Group Inc., a Delaware corporation (the "Acquiror"), Natco
Acquisition Company, a newly formed Delaware corporation and a wholly owned
Subsidiary of the Acquiror ("Natco"), and the Company dated as of March __,
1998 (the "Merger Agreement"), providing for, among other things, the merger of
the Company with and into Natco (the "Merger"), the undersigned will be
entitled to receive shares of Acquiror Class B Common Stock in exchange for
shares of Company Common Stock owned by the undersigned at the Effective Time
of the Merger as determined pursuant to the Merger Agreement. Capitalized terms
used but not defined herein are defined in Annex A to the Merger Agreement and
are used herein with the same meanings as ascribed to them therein.
The undersigned hereby represents that the undersigned is the
beneficial owner of the shares of Company Common Stock of which it is the
record owner on the stock record books of the Company as of the date hereof and
is an "accredited investor" within the meaning of such term as defined in Rule
501 of the General Rules and Regulations under the Securities Act. The
undersigned acknowledges receipt of a draft dated March ___, 1998 of a
Registration Statement on Form S-1 of NATCO Group Inc. to be filed with the
Commission under the Securities Act.
The undersigned has been advised that the offering, sale and delivery
of the shares of Acquiror Class B Common Stock to be received by the
undersigned pursuant to the Merger will not have been registered with the
Commission under the Securities Act and that, therefore, such shares of
Acquiror Class B Common Stock may not be resold by the undersigned unless the
offering, sale and delivery of such shares are so registered under the
Securities Act or an exemption from such registration is available. In that
regard, the undersigned represents that the undersigned is acquiring the shares
of Acquiror Class B Common Stock to be received by the undersigned pursuant to
the Merger without a view to the distribution thereof within the meaning of
such term as used in the Securities Act and Rule 144 of the General Rules and
Regulations thereunder.
The undersigned understands that instructions will be given to the
transfer agent for the Acquiror Class B Common Stock with respect to the
Acquiror Class B Common Stock to be received by the undersigned pursuant to the
Merger and that there will be placed on the certificates
AGREEMENT AND PLAN OF MERGER
ANNEX B-1
73
representing such shares of Acquiror Class B Common Stock, or any substitutions
therefor, a legend stating in substance as follows:
"These shares were issued in a transaction in which the offering, sale
and delivery thereof were not registered under the Securities Act of
1933, as amended, in reliance on an exemption from such registration
requirement. These shares may only be sold or otherwise transferred in
a transaction in which the offering, sale and delivery thereof are
registered under such Act or for which an exemption from such
registration requirement is provided by such Act.
It is understood and agreed that the legend set forth above shall be removed
upon surrender of certificates bearing such legend by delivery of substitute
certificates without such legend if the undersigned shall have delivered to the
Acquiror an opinion of counsel, in form and substance reasonably satisfactory
to the Acquiror, to the effect that (i) the sale or disposition of the shares
represented by the surrendered certificates may be effected without
registration of the offering, sale and delivery of such shares under the
Securities Act and (ii) the shares to be so transferred may be publicly
offered, sold and delivered by the transferee thereof without compliance with
the registration provisions of the Securities Act.
By its execution hereof, the Acquiror agrees that it will, from and
after the Effective Time of the Merger and for so long as the undersigned owns
any shares of Acquiror Class B Common Stock to be received by the undersigned
pursuant to the Merger that are subject to the restrictions on sale, transfer
or other disposition herein set forth, take all reasonable efforts to make
timely filings with the Commission of all reports required to be filed by it
pursuant to the Exchange Act and will promptly furnish upon written request of
the undersigned a written statement confirming that such reports have been so
timely filed.
If you are in agreement with the foregoing, please so indicate by
signing below and returning a copy of this letter to the undersigned, at which
time this letter shall become a binding agreement between us.
Very truly yours,
By:
------------------------------------------
Name:
Title:
Date:
Address:
ACCEPTED this ___ day
of __________, 1998
NATCO Group Inc.
By:
Name:
Title:
AGREEMENT AND PLAN OF MERGER
ANNEX B-2
74
ANNEX C
ESCROW AGREEMENT
This Escrow Agreement, dated as of November 18, 1998, between NATCO
Group, Inc., a Delaware corporation (the "Acquiror") the Designated Company
Stockholders named on the signature page hereto and, Xxxxxxx X. Xxxxxx or any
successor as Representative (the "Representative", sometimes referred to
collectively as "Escrow Parties"), and Chase Bank of Texas, National
Association, a national banking association ("Escrow Agent");
W I T N E S S E T H :
WHEREAS, the Acquiror, National Tank Company, a Delaware company and a
direct, wholly-owned subsidiary of the Acquiror ("Natco"), Natco Acquisition
Company, a Delaware corporation and a wholly owned subsidiary of the Acquiror,
and The Cynara Company, a Delaware corporation (the "Company") have entered
into an Amended and Restated Agreement and Plan of Merger dated November 17,
1998 but effective as of March 26, 1998, (the "Merger Agreement"), which
provides, among other things, for the merger (the "Merger") of the Company with
and into Natco, with the result that the separate corporate existence of the
Company shall cease and Natco shall continue as the Surviving Corporation; and
WHEREAS, the parties hereto desire, pursuant to Section 7.10 of the
Merger Agreement, to set aside a portion of the consideration to be paid to the
Designated Company Stockholders in connection with the Merger for the purpose
of establishing a reserve of Escrow Shares (as defined in Section 7.10 of the
Merger Agreement) for disposition in accordance with the provisions of that
Section of the Merger Agreement;
WHEREAS, Escrow Agent has agreed to hold the Escrow Shares in
accordance with the terms and provisions contained herein;
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, the parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used but not defined herein shall
have the meanings assigned to such terms in the Merger Agreement.
2. Appointment of Escrow Agent. The Acquiror and the Designated
Company Stockholders hereby designate and appoint Chase Bank of Texas, National
Association, as Escrow Agent for the purposes set forth herein, and the Escrow
Agent hereby accepts such appointment on the terms herein provided. In
addition, the Acquiror and the Representative hereby deliver to the Escrow
Agent a fully executed copy of the Merger Agreement.
3. Deposit of Escrow Shares. In conjunction with the Closing and
promptly after the Effective Time, the Acquiror shall deliver to the Escrow
Agent one or more certificates totaling 450,000 shares of Natco registered in
the names of the various Designated Company Stockholders representing the
Escrow Shares, together with stock powers duly executed in blank. Any and all
AGREEMENT AND PLAN OF MERGER
ANNEX C-1
75
dividends and distributions declared and paid or made with respect to the
Escrow Shares shall be delivered to the Designated Company Stockholders. Any
and all shares of capital stock, other securities, cash or other property into
which the Escrow Shares may from time to time in whole or in part be converted
or for which they may in whole or in part be exchanged shall be delivered to
the Escrow Agent and deposited into escrow. The aggregate of all such Escrow
Shares, shares of capital stock, other securities, cash and other property is
herein referred to as the "Escrow Fund". The Escrow Agent will invest and
reinvest any cash portion of the Escrow Fund and any interest or other amounts
earned thereon, in the Fidelity Treasury Money Market Fund #77 unless otherwise
instructed in writing by the Escrow Parties. Unless Escrow Agent is otherwise
directed in such written instructions, Escrow Agent may use a broker-dealer of
its own selection, including a broker-dealer owned by or affiliated with Escrow
Agent or any of its affiliates. It is expressly agreed and understood by the
parties hereto that Escrow Agent shall not in any way whatsoever be liable for
losses on any investments, including, but not limited to, losses from market
risks due to premature liquidation or resulting from other action taken
pursuant to this Escrow Agreement.
4. Maintenance and Distribution of Escrow. The Escrow Agent shall hold
the Escrow Shares in escrow and shall maintain and distribute the Escrow Shares
solely in accordance with written instructions signed on behalf of the Acquiror
by a duly authorized officer and on behalf of the Designated Company
Stockholders by the Representative.
5. Performance and Reliance by Escrow Agent; Liability of Escrow
Agent. The Escrow Agent undertakes to perform such duties as are set forth in
this Escrow Agreement and shall be protected in acting upon any written notice,
request, waiver, consent, certificate, receipt, authorization or other paper or
document that the Escrow Agent believes to be genuine. The Escrow Agent may
confer with its own corporate or outside legal counsel in the event of any
dispute or question as to the construction of any of the provisions hereof, or
its duties hereunder, and shall incur no liability and shall be fully protected
in acting in accordance with the written opinions of such counsel. The duties
of the Escrow Agent hereunder will be limited to the observance of the express
provisions of this Escrow Agreement. The Escrow Agent will not be subject to,
or be obliged to recognize, any other agreement between the parties hereto or
directions or instructions not specifically set forth as provided for herein,
except for such directions as appear in this Escrow Agreement. The Escrow Agent
will not make any payment or disbursement from or out of the Escrow Fund that
is not expressly authorized pursuant to this Escrow Agreement.
6. Liability of Escrow Agent. The Escrow Agent may rely upon and act
upon any instrument received by it pursuant to the provisions of this Escrow
Agreement that it reasonably believes to be genuine and in conformity with the
requirements of this Escrow Agreement. The Escrow Agent undertakes to use the
same degree of care and skill in performing its services hereunder as an
ordinary prudent person would do or use under the circumstances in the conduct
of his or her own affairs. The Escrow Agent will not be liable for any action
taken or not taken by it under the terms hereof in the absence of breach of its
obligations hereunder or gross negligence, willful misconduct or willful breach
of this Escrow Agreement on its part. In no event shall Escrow Agent be liable
for any lost profits, lost savings or other special, exemplary, consequential
or incidental damages in excess of Escrow Agent's fee hereunder and provided,
further, that Escrow Agent shall have no liability for any loss arising from
any cause beyond its control, including without limitation the following: (a)
acts of God, force majeure, including, without limitation, war (whether
AGREEMENT AND PLAN OF MERGER
ANNEX C-2
76
or not declared or existing), revolution, insurrection, riot, civil commotion,
accident, fire, explosion, stoppage of labor, strikes and other differences
with employees; (b) the act, failure or neglect of any other party or any agent
or correspondent or any other person selected by Escrow Agent; (c) any delay,
error, omission or default of any mail, courier, telegraph, cable or wireless
agency or operator; or (d) the acts or edicts of any government or governmental
agency or other group or entity exercising governmental powers.
7. Termination of Escrow. This Escrow Agreement shall terminate upon
release of all of the Escrow Shares and Escrow Fund in accordance with the
provisions of this Escrow Agreement; provided, however that in the event all
fees, expenses, costs and other amounts required to be paid to Escrow Agent
hereunder are not fully paid prior to termination, the Escrow Agent shall be
entitled to pay and set off from the Escrow Fund prior to the release of the
Escrow Shares and Escrow Fund. Upon release by the Escrow Agent of all of the
Escrow Shares and Escrow Fund as provided therein, the duties of the Escrow
Agent shall be completed, and the Escrow Agent shall have no further
obligations under this Escrow Agreement to any other party. Section 8 shall
survive termination hereof.
8. Indemnification of Escrow Agent. The Acquiror and the Designated
Company Stockholders shall, jointly and severally, indemnify and hold the
Escrow Agent harmless from and against any and all losses, costs, damages or
expenses (including without limitation reasonable attorneys' fees) it may
sustain by reason of its service as Escrow Agent hereunder, except such losses,
costs, damages or expenses (including without limitation reasonable attorneys'
fees) incurred by reason of such acts or omissions for which the Escrow Agent
is liable or responsible under the last sentence of Section 6 hereof. As
between the Acquiror and the Designated Company Stockholders, however, all such
losses, costs, damages and expenses (including attorneys' fees) shall be borne
by the Acquiror and the Designated Company Stockholders on the basis of 50%
each.
9. Release of Representative; Successor Representative. In
consideration of Xxxxxxx X. Xxxxxx (and any successor) acting as the
Representative hereunder on behalf of all Designated Company Stockholders, each
such Designated Company Stockholder, by accepting shares of Class B Common
Stock pursuant to Section 3.01 and Section 7.10 of the Merger Agreement and by
becoming a beneficiary of this Escrow Agreement, releases the Representative
from liability for any action taken or not taken by the Representative under
the terms hereof in the absence of the Representative's gross negligence or
willful misconduct. If Xxxxxxx X. Xxxxxx ceases to act as the Representative
for any reason or Xxxxxxx X. Xxxxxx or his representative shall notify the
Acquiror and the Escrow Agent of the Representative's intent to resign as
Representative, then a majority in interest of the Designated Company
Stockholders (as determined at the time by reference to the holdings of Company
Common Stock of each of the Designated Company Stockholders immediately prior
to the Effective Time after giving effect to the exercise of the Warrants) may
designate by notice to the Acquiror a successor Representative. If no such
successor is appointed within 30 days, then Acquiror shall appoint an
independent third party as successor.
10. Fees and Expenses of the Escrow Agent. All fees of the Escrow
Agent for its services hereunder, together with any expenses reasonably
incurred by the Escrow Agent in connection with this Escrow Agreement, shall be
paid by Acquiror in accordance with the Escrow Agent's fee
AGREEMENT AND PLAN OF MERGER
ANNEX C-3
77
schedule in effect. The Acquiror shall promptly pay to the Designated Company
Stockholders any amounts set off against the Escrow Fund pursuant to Section 7
hereof.
11. Resignation of Escrow Agent. The Escrow Agent may resign from its
duties hereunder by giving each of the parties hereto not less than 60 days
prior written notice of the effective date of such resignation. The parties
hereto intend that a substitute Escrow Agent will be appointed by the Acquiror
to fulfill the duties of the Escrow Agent hereunder for the remaining term of
this Escrow Agreement in the event of the Escrow Agent's resignation. If on or
before the effective date of such resignation, a substitute Escrow Agent has
not been appointed, the Escrow Agent will thereupon deposit the Escrow Shares
into the registry of a court of competent jurisdiction.
12. Designees for Instructions. The Escrow Parties are hereby
designated as the persons who will execute notices and from whom the Escrow
Agent may take instructions hereunder. Such designation may be changed from
time to time upon notice to the Escrow Agent from the Acquiror in the case of
the Acquiror and from the Representative in the case of the Designated Company
Stockholders. The Escrow Agent will be entitled to rely conclusively on any
notices or instructions from the Escrow Parties that the Escrow Agent believes
to be genuine. If the Acquiror or the Representative changes its designees
hereunder and notifies the Escrow Agent of such change, the Escrow Agent will
be entitled to rely conclusively on any notice or instructions from any such
successor designees so designated.
13. Notices. Any notices, consents, demands, requests, approvals and
other communications to be given under this Escrow Agreement by any party to
any other party shall be in writing and shall be either (a) personally
delivered, (b) mailed by registered or certified mail, postage prepaid with
return receipt requested, (c) delivered by overnight express delivery service
or same-day local courier service, or (d) delivered by facsimile transmission,
to the address set forth below, or to such other address as may be designated
by such party from time to time in accordance with this Section. Notices
delivered personally, by overnight express delivery service or by local courier
service shall be deemed given as of actual receipt. Mailed notices shall be
deemed given three business days after mailing. Notices delivered by facsimile
transmission shall be deemed given upon receipt by the sender of the
transmission confirmation.
(a) If to the Acquiror: NATCO Group Inc.
Brookhollow Central III, Suite 750
0000 X. Xxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx III
Telecopy No.: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxx III
Telecopy No.: (000) 000-0000
AGREEMENT AND PLAN OF MERGER
ANNEX C-4
78
(b) If to the Escrow Agent: Chase Bank of Texas, National
Association
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx
Attn: Xxx Xx
Telecopy No.: (000)000-0000
(c) If to the Representative: Xxxxxxx X. Xxxxxx
Heller, Hickox, Dimeling, Xxxxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
with a copy to: Reed, Smith, Xxxx & XxXxxx
0000 Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
14. Binding Effect. This Escrow Agreement will be binding upon and
inure to the benefit of the parties hereto and their permitted assigns. The
rights of any person or entity to receive Escrow Shares hereunder shall not be
transferable except by operation of law.
15. Amendment and Termination. This Escrow Agreement or any provision
hereof may be amended, modified, waived or terminated only by written
instrument duly signed by the parties hereto.
16. Applicable Law. This Escrow Agreement will be governed by and
construed in accordance with the laws of the State of Texas, without giving
effect to conflicts of law principles.
17. Counterparts. This Escrow Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute but one and the same instrument.
18. Captions and Paragraph Headings. Captions and paragraph headings
used herein are for convenience only and are not part of this Escrow Agreement
and will not be used in construing it.
19. Arbitration. Any and all claims, demands, causes of action,
disputes, controversies and other matters in question arising out of or
relating to this Escrow Agreement, the alleged breach thereof, or in any way
relating to the subject matter of this Agreement ("Disputes"), even though some
or all of such Disputes allegedly are extra contractual in nature, whether such
Disputes sound in contract, tort or otherwise, at law or in equity, under state
or federal law, whether provided by statute or the common law, for damages or
any other relief, shall be resolved and decided exclusively by binding
arbitration pursuant to the Federal Arbitration Act in accordance with the
Commercial Arbitration Rules then in effect with the American Arbitration
Association. The arbitration proceeding shall be conducted in Houston, Texas.
The arbitration shall be before a panel of three
AGREEMENT AND PLAN OF MERGER
ANNEX C-5
79
arbitrators. The Acquiror and the Representative shall each select one
arbitrator and the two arbitrators so selected shall select the third
arbitrator. The arbitrators are authorized to issue subpoenas for depositions
and other discovery mechanisms, as well as trial subpoenas, in accordance with
the Federal Rules of Civil Procedure. Any party may initiate a proceeding in
the appropriate United States District Court to enforce this provision. This
agreement to arbitrate shall be enforceable in either federal or state court.
Judgment upon any award rendered in any such arbitration proceeding may be
entered by any federal or state court having jurisdiction. The enforcement of
this agreement to arbitrate and all procedural aspects of this agreement to
arbitrate, including the construction and interpretation of this agreement to
arbitrate, the scope of the arbitrable issues, allegations of waiver, delay or
defenses to arbitrability, and the rules governing the conduct of the
arbitration, shall be governed by and construed pursuant to the Federal
Arbitration Act. The arbitrators shall have no authority to award punitive
damages (including, without limitation, any exemplary damages, treble damages
or any other penalty or punitive type of damages), under any circumstances
regardless of whether such damages in excess of such amount may be available
under applicable law or otherwise, the parties hereto hereby waiving their
right, if any, to recover such damages in excess of such amount in connection
with any Disputes. The costs of the arbitration shall be allocated to the
Acquiror and to the Designated Company Stockholders in the amount of 50% each.
All other costs and expenses incurred by a party to any arbitration proceeding
hereunder shall be borne by such party. The Escrow Parties shall jointly
instruct the Escrow Agent with respect to all actions to be taken as a result
of any arbitration award.
20. Action by the Acquiror. As between the Acquiror and the Designated
Company Stockholders, all actions to be taken by the Acquiror hereunder shall
be taken by, or pursuant to authority granted by, a committee of the Board of
Directors of the Acquiror comprised of one or more members who were not prior
to the Effective Time affiliated with the Company or affiliates of the Company
and who are not Designated Company Stockholders.
21. Tax Reporting. Unless otherwise required by Treasury Regulations
issued in the future, the parties will treat the Escrow Shares for purposes of
Section 468B(g) of the Internal Revenue Code of 1986, as amended, and for all
other income tax and general corporate purposes as being owned by the
Designated Company Stockholders during the period such shares are held in
Escrow, and therefore any income earned on such shares during such period will
be allocated and reported to the Designated Company Stockholders as such income
is earned. The parties will make any elections or filings required to
characterize such shares in a manner consistent with the preceding sentence.
23. Accounting Provisions. The Escrow Shares subject to this Escrow
Agreement shall appear as issued and outstanding on the balance sheet of
Acquiror and such Escrow Shares shall be legally outstanding under applicable
state law.
24. Dividends. All dividends payable on the Escrow Shares during the
period such shares are held in escrow shall be distributed currently to the
Designated Company Stockholders.
25. Voting Rights. All voting rights of the Escrow Shares shall be
exercisable by or on behalf of the Designated Company Stockholders or their
authorized Agent.
AGREEMENT AND PLAN OF MERGER
ANNEX C-6
80
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed by their respective officers hereunto duly authorized,
as of the day and year first above written.
NATCO GROUP INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
REPRESENTATIVE
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
THE DESIGNATED COMPANY STOCKHOLDERS
---------------------------------------------
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.
AGREEMENT AND PLAN OF MERGER
ANNEX C-7
81
THE 1998 TRUST FOR XXXX XXXXX XXXXXXX
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
BOCP II, L.L.C.
By:
------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Authorized Signer
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
AGREEMENT AND PLAN OF XXXXXX
XXXXX X-0
00
XXXXX X
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
NATCO GROUP INC.
THE UNDERSIGNED SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
OF NATCO GROUP INC., A DELAWARE CORPORATION (THE "CORPORATION"), DOES
HEREBY CERTIFY:
I. That the Board of Directors of the Corporation adopted at a meeting
duly called and held resolutions setting forth proposed amendments of the
Certificate of Incorporation of the Corporation, approving such amendments,
declaring such amendments advisable and recommending such amendments to the
stockholders of the Corporation for approval thereof. The resolutions setting
forth the proposed amendments are as follows:
RESOLVED, that the first paragraph of Article Fourth of the
Certificate of Incorporation of the Corporation be amended so as to be and read
in its entirety as follows:
FOURTH: The aggregate number of shares of capital stock that
the Corporation shall have authority to issue is 55,000,000 shares, of
which 5,000,000 shall be shares of Preferred Stock, par value $.01 per
share ("Preferred Stock"), and 50,000,000 shall be shares of Common
Stock, par value of $.01 per share ("Common Stock"), divided into
45,000,000 shares of Class A Common Stock ("Class A Common Stock") and
5,000,000 shares of Class B Common Stock ("Class B Common Stock").
and further
RESOLVED, that Section II of Article Fourth of the Certificate of
Incorporation of the Corporation be amended so as to be and read in its
entirety as follows:
II. Common Stock
The Common Stock of the Corporation shall consist of
two classes: Class A Common Stock and Class B Common Stock. Each such
class of Common Stock shall have the relative rights, powers,
preferences, limitations and restrictions set forth in this Section
II:
A. Class A Common Stock and Class B Common Stock.
1. Dividends. Subject to the provisions of any
Preferred Stock Series Resolution, the Board of Directors
may, in its discretion, out of funds legally available for
the payment of dividends and at such times and in such manner
as determined by the Board of Directors, declare and pay
dividends on the Class A
AGREEMENT AND PLAN OF MERGER
ANNEX D-1
83
Common Stock and the Class B Common Stock, equally and
ratably as if such classes were but a single class.
2. Liquidation. In the event of any liquidation,
dissolution or winding up of the Corporation, whether
voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities of the Corporation
and payment or setting aside for payment of any preferential
amount due to the holders of any other class or series of
stock, the holders of the Class A Common Stock and Class B
Common Stock shall be entitled to receive any or all assets
remaining to be paid or distributed, equally and ratably as
if such classes were but a single class; provided, however,
that, if any obligation of the Corporation to purchase shares
of Class B Common Stock pursuant to the exercise of a Put is
then pending, then upon any voluntary or involuntary
liquidation, dissolution, or winding-up of the Corporation,
the holders of Class B Common Stock at the time outstanding
will be entitled to receive out of the net assets of the
Corporation legally available for distribution to
shareholders after satisfaction of liabilities to creditors
as required by the Texas Business Corporation Act, subject to
the rights of the holders of any stock of the Corporation
ranking senior to the Class B Common Stock in respect of
distributions of assets upon liquidation, dissolution, or
winding-up of the Corporation but before any distribution of
assets is made with respect to any shares of Class A Common
Stock, an amount equal to the aggregate of the liquidation
preference specified in paragraph 6 of this subsection B.
3. Voting Rights. Except as may otherwise be
required by law, this Certificate of Incorporation or the
provisions of any Preferred Stock Series Resolution, the
holders of Class A Common Stock and Class B Common Stock,
voting together as a single class, shall have one vote for
each share of such stock held by such holder on each matter
voted upon by the stockholders.
4. Other Rights. Neither class of Common Stock shall
be subject to mandatory redemption or to redemption at the
option of the Corporation. Except as hereinafter provided,
neither class of Common Stock shall have any rights of
conversion or exchange. The registered owner of any shares of
Class B Common Stock may at any time and from time to time
convert any or all such shares into Class A Common Stock on
the basis of one share of Class A Common Stock for each share
of Class B Common Stock. Such conversion rate shall be
subject to equitable adjustment in the event the outstanding
shares of Class A Common Stock or Class B Common Stock are
changed into a different number of shares or a different
class by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or
exchange of shares. In addition, any shares of Class B Common
Stock outstanding on January 1, 2002 shall automatically and
without any action on the part of the holder thereof be
converted into shares of Class A Common Stock on the basis of
one share of Class A Common Stock for each share of Class B
Common Stock and thereupon the Common Stock of the
Corporation shall consist of a single class consisting of
50,000,000 authorized shares, designated as Common Stock;
AGREEMENT AND PLAN OF MERGER
ANNEX D-2
84
provided, however, that, if any Exercise Notice (as defined
below) shall have been given and be outstanding on January 1,
2002, such conversion shall be deferred until such time as
the Put transaction contemplated hereby to occur as the
result of the giving of such Exercise Notice has been
consummated.
B. Additional Rights of Class B Common Stock.
1. Definitions. The following additional terms have
the respective meanings specified below:
"Bank Credit Agreement" shall mean that certain Loan
Agreement to be dated as of November 18, 1998 among,
inter alia, the Corporation, as U.S. Borrower, NATCO
Canada, Ltd., as Canadian Borrower, and Chase Bank
of Texas, National Association, as U.S. Agent for
the lenders thereunder, Bank of Nova Scotia, as
Canadian Agent for the lenders thereunder, and such
lenders, as amended from time to time.
"Business Day" means any day other than a day on
which banks in the State of Texas are authorized or
obligated to be closed.
"Corporate Statute" shall mean the General
Corporation Law of the State of Delaware.
"Effective Time" shall have the meaning ascribed to
such term in paragraph (1) of subsection D of this
Section II.
"Exercise Notice" shall have the meaning ascribed to
such term contained in paragraph 4 of this
subsection B.
"Holder" shall mean the registered owner of shares
of Class B Common Stock as indicated by the stock
transfer records for the Class B Common Stock of the
Corporation.
"Put" shall have the meaning ascribed to such term
contained in paragraph 2 of this subsection B.
"Put Period" shall have the meaning ascribed to such
term contained in paragraph 2 of this subsection B.
2. Put. Each Holder of Class B Common Stock shall
have the option (the "Put"), commencing on June 30, 2000 and
ending on December 31, 2001 (the "Put Period"), of causing
the Corporation to purchase from time to time any or all the
shares of Class B Common Stock then held by such Holder at a
cash purchase price per share of $13.00 per share.
AGREEMENT AND PLAN OF MERGER
ANNEX D-3
85
3. Applicable Covenant. The rights of each Holder of
Class B Common Stock under this Section II are subject to the
covenants of the Corporation contained in Section 8.5 of the
Bank Credit Agreement.
4. Method of Exercise. Any Holder of Class B Common
Stock may exercise a Put by giving, during the Put Period,
written notice (an "Exercise Notice") to the Corporation
specifying in such Exercise Notice the number of shares of
Class B Common Stock to be sold to the Corporation, the
certificate numbers of the stock certificates that evidence
such shares of Class B Common Stock and the aggregate
purchase price specified herein to be received by such Holder
of Class B Common Stock therefor.
5. Consummation. Subject to fulfillment or waiver of
the conditions thereto, the closing of such sale shall be
effected on the 20th Business Day following receipt of the
Exercise Notice by the Corporation. At the closing, the
Holder of Class B Common Stock shall deliver to the
Corporation one or more stock certificates registered in the
name of such Holder and evidencing the number of shares of
Class B Common Stock to be sold by the Holder thereof
pursuant to the Put, and the Corporation shall deliver to or
for the account of such Holder the aggregate purchase price
for such shares in immediately available funds.
6. Conditions. The obligation of the Corporation to
consummate a transaction pursuant to the exercise of a Put
shall be subject to the fulfillment or waiver of the
following conditions:
(a) Compliance with Corporate Statute. The
consummation of the purchase by the Corporation of
the shares of Class B Common Stock tendered for
purchase by a Holder thereof pursuant to the
exercise of a Put shall then comply with the
applicable provisions of the Corporate Statute and
the Bank Credit Agreement, as amended from time to
time.
(b) Reporting Company Status. Neither the
Corporation nor any issuer of any class or series of
security or securities into which the Class B Common
shall have been converted or for which the Class B
Common Stock shall have been exchanged, in either
case pursuant to any merger, consolidation, share
exchange, sale of all or substantially all of the
Corporation's assets or liquidation or dissolution
of the Corporation, shall then be or have previously
been subject to the reporting obligations imposed by
Section 15(d) or Section 13 of the Securities
Exchange Act of 1934, as amended.
If a transaction pursuant to the exercise of a Put is not
consummated as a result of the nonfulfillment of the
condition contained in subparagraph (a) of this paragraph 6,
then the obligation of the Corporation to purchase shares of
Class B Common Stock pursuant to such Put shall continue in
full force and effect, regardless of any expiration of the
time periods provided herein for the exercise of any such
Put, until
AGREEMENT AND PLAN OF MERGER
ANNEX D-4
86
the Corporation shall have complied with the terms of the Put
so exercised; provided, however, that the price per share of
Class B Common Stock of the Corporation payable pursuant to
paragraph 2 of this subsection B shall increase by a factor
equivalent to interest thereon at a rate per annum equal to
the prime rate of interest in effect from time to time at The
Chase Manhattan Bank for its most creditworthy corporate
customers from the date on which such price would otherwise
have been paid in accordance with the other provisions of
this subsection B until the date on which actually paid;
provided, however, that, commencing on the first anniversary
of the related Exercise Notice, such rate shall increase to
such prime rate plus 250 basis points. The aggregate amount
of the Corporation's obligation to purchase shares of Class B
Common Stock pursuant to such Put pending at any given time
shall constitute a liquidation preference of the Class B
Common Stock. At such time as the condition contained in
subparagraph (b) of this paragraph 6 shall occur (regardless
of whether a Put shall then have been exercised), the
obligation of the Corporation to purchase shares of Class B
Common Stock pursuant to any Put shall terminate.
7. Representations and Warranties. At the closing of
the sale of any shares of Class B Common Stock pursuant to
the exercise of a Put, the Holder of such shares of Class B
Common Stock shall represent and warrant in writing to the
Corporation that: (i) such Holder of Class B Common Stock has
full right, power and authority to sell and deliver such
shares of Class B Common Stock to the Corporation, (ii) such
Holder of Class B Common Stock owns such shares of Class B
Common Stock of record and beneficially, free and clear of
any liens, encumbrances and adverse claims and (iii), upon
delivery thereof to the Corporation pursuant to the exercise
of a Put by the Holder of Class B Common Stock, the
Corporation will acquire good title to such shares of Class B
Common Stock free and clear of any liens, encumbrances and
adverse claims (other than any that may have been created by
the Corporation).
8. Nonassignability. The rights of the Holder of
Class B Common Stock pursuant to this subsection B are
personal to the Holder of Class B Common Stock and may not be
assigned by any Holder of Class B Common Stock other than
proportionally in connection with an assignment of such
shares of Class B Common Stock by operation of law, by death
pursuant to a will or the laws of descent and distribution,
by transfer to a member of the immediate family of the Holder
of Class B Common Stock or a trust for the benefit of any
such family member, by transfer to a commercial bank or other
lending institution in accordance with the terms of a bona
fide pledge or, in the case of a Holder of Class B Common
Stock that is a legal entity at the Effective Time, by such
entity to an affiliate (no further assignment being
permitted) or successor of such entity or to the purchaser of
all or substantially all of that entity's assets, any or all
of which exceptions shall be permitted if the transferor or
transferee shall give notice of such assignment, together
with such information as may be reasonably necessary to
evidence qualification of the transferee to be an assignee
thereof, to the Corporation. Any assignment or transfer
AGREEMENT AND PLAN OF MERGER
ANNEX D-5
87
of shares of Class B Common Stock that is not in compliance
with the provisions of this paragraph 8 shall cause the
relinquishment and termination of the rights contained in
this subsection B as they would otherwise apply to such
shares of Class B Common Stock.
C. Limited Rights to Class Vote.
1. So long as any shares of Class B Common Stock are
outstanding, the consent of the holders of not less than a
majority of the number of shares of Class B Common Stock then
outstanding, given in person or by proxy either at a regular
meeting or at a special meeting called for that purpose or
pursuant to written consents, at which or pursuant to which,
as the case may be, the holders of Class B Common Stock shall
vote separately as a class, shall be necessary (i) to approve
the issuance by the Corporation of any additional shares of
Class B Common Stock and (ii) for effecting, validating or
authorizing any amendment, alteration or repeal of any of the
provisions of this Section II of Article Fourth of this
Certificate of Incorporation, or any amendment thereto, or
any other certificate filed pursuant to law (excluding,
however, any such amendment, alteration or repeal effected by
any merger or consolidation to which the Corporation is a
party to the extent provided in paragraph 2 of this
subsection C) that would adversely affect any of the
designations, preferences, limitations or relative rights of
the shares of Class B Common Stock then outstanding;
provided, however, that any amendment or amendments to the
provisions of the Certificate of Incorporation, as amended,
so as to authorize or create, or to increase the authorized
amount of, any capital stock of the Corporation ranking pari
passu with or senior or junior to the Class B Common Stock as
to the payment of dividends or as to the distribution of
assets upon any liquidation, dissolution or winding-up of the
Corporation shall not be deemed to affect adversely the
designations, preferences, limitations or relative rights of
the Class B Common Stock.
2. The class vote accorded to the Class B Common
Stock by paragraph 1 of this subsection B shall not apply to
any amendment, alteration or repeal of any of the provisions
of this Section II effected by a merger to which the
Corporation is a party:
(a) if the Class B Common Stock would in
such merger be converted into
(i) a right to receive cash;
(ii) any equity security if that equity
security is registered pursuant to Section
12 of the Securities Exchange Act of 1934,
as amended, or was issued by a corporation
that is then subject to the reporting
obligations imposed by Section 15(d) of the
Securities Exchange Act of 1934, as
amended, as a result of registration of an
offering of that
AGREEMENT AND PLAN OF MERGER
ANNEX D-6
88
equity security under the registration
provisions of the Securities Act of 1933,
as amended ("Equity Security");
(iii) any security immediately convertible
into or exchangeable for an Equity
Security;
(iv) any option or warrant immediately
exercisable with respect to an Equity
Security; or
(v) any combination of any of the
foregoing; or
(b) if the Class B Common Stock would in
such merger be converted, in whole or in part, into
any security not contemplated by subparagraph (a) of
this paragraph 2 ("Other Security") if the relevant
documents provide that the Put shall continue after
the effective date of such merger as a right to
cause the Corporation or any successor thereto,
subject to the other provisions of this Section II,
to purchase, at the per share price specified in
paragraph 2 of subsection B less the amount of any
cash consideration per share of Class B Common Stock
paid in the merger, the number of shares or other
units of such Other Security into which each share
of Class B Common Stock was converted in the merger.
3. So long as any shares of the Class B Common Stock
remain outstanding, the holders of shares of the Class B
Common Stock, voting separately as a class, shall have the
right to nominate and to elect, by a majority vote of such
shares, one director to the Board of Directors of the
Corporation and to fill such position at any regular meeting
of stockholders or special meeting called for that purpose or
pursuant to written consents. Any director who shall have
been elected by holders of shares of Class B Common Stock may
be removed at any time, either for or without cause, by, and
only by, the affirmative vote of the holders of a majority of
the number of shares of Class B Common Stock then
outstanding, voting separately as a class, given at any
regular meeting of stockholders or a special meeting of such
stockholders called for that purpose or pursuant to written
consents, and any vacancy thereby created may be filled only
by the holders of shares of Class B Common Stock. Such
director shall be a member of the Class II Directors. Any
director so nominated and elected shall serve until the next
annual meeting of stockholders at which members of Class II
Directors are elected and until his successor shall have been
duly elected or until his earlier resignation, removal or
death. The first individual designated by the holders of the
Class B Common Stock to serve as a director of the
Corporation shall be Xxxxxx X. Xxxxxx, Xx., the term of such
director to commence at the effective time of the first
issuance of any shares of Class B Common Stock.
D. Exchange of Common Stock for Class A Common Stock.
AGREEMENT AND PLAN OF MERGER
ANNEX D-7
89
1. Issued Shares. Upon the filing of a Certificate
of Amendment reflecting these amendments to the Certificate
of Incorporation of the Corporation with the Secretary of
State of the State of Delaware (the "Effective Time"), each
then issued share of common stock, par value $0.01 per share,
of the Corporation (the "Prior Common Stock"), including any
such shares held in the treasury of the Corporation, shall be
converted, without any action on the part of the holder
thereof, into one share of Class A Common Stock.
2. Reserved Shares. From and after the Effective
Time, each unissued share of the Prior Common Stock reserved
for issuance shall be converted, without any action on the
part of any Person, into one share of Class A Common Stock
and any obligation of the Corporation, whether contractual or
otherwise, to issue any shares of the Prior Common Stock
shall be deemed to be an obligation to issue an identical
number of shares of Class A Common Stock upon the same terms
and conditions.
3. Certificates. From and after the Effective Time,
each holder of a certificate theretofore evidencing shares of
the Prior Common Stock may be surrendered by the holder
thereof in exchange for a certificate or certificates
evidencing an equivalent number of shares of Class A Common
Stock.
II. That in lieu of a special meeting and vote of the stockholders,
the stockholders of the Corporation, by written consent, approved, adopted and
consented to such amendments in accordance with the provisions of Section 228
of the General Corporation Law of the State of Delaware.
III. That such amendments were duly adopted in accordance with the
provisions of Sections 242 and 228 of the General Corporation Law of the State
of Delaware.
The undersigned, being the duly elected and currently acting Senior
Vice President and Chief Financial Officer of NATCO Group Inc., the Corporation
to which reference is made in this Certificate, does make this Certificate as
of the 18th day of November, 1998, and affirms and acknowledges, under
penalties of perjury, that this Certificate is the act and deed of the
Corporation and that the facts stated herein are true.
------------------------------------
Xxxxxxx X. Xxxxxx III
Senior Vice President and Chief
Financial Officer
NATCO Group Inc.
AGREEMENT AND PLAN OF MERGER
ANNEX D-8
90
ANNEX E-1
Cap I and Cap II
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of November 18, 1998 by and between
NATCO Group Inc., a Delaware corporation (the "Company"), and Capricorn
Investors, L.P., a Delaware limited partnership ("Cap I"), and Capricorn
Investors II, L.P., a Delaware limited partnership ("Cap II").
R E C I T A L S:
On November 18, 1998, the Certificate of Incorporation of the Company was
amended to authorize two classes of common stock, par value $0.01 per share
("Common Stock"), to wit: 45,000,000 shares of Class A Common Stock ("Class A
Common Stock") and 5,000,000 shares of Class B Common Stock ("Class B Common
Stock"), and to convert each of the then outstanding shares of common stock of
the Company into one share of Class A Common Stock (the "Charter Amendments").
After giving effect to the Charter Amendments, Cap I owns of record and
beneficially 5,563,667 shares (68.3%) of the outstanding Class A Common Stock.
After giving effect to the Charter Amendments, Cap II owns of record and
beneficially 2,582,259 shares (31.7%) of the outstanding Class A Common Stock.
Together, Cap I and Cap II own of record and beneficially, as of the date
of this Agreement, all the outstanding Class A Common Stock, being all the
outstanding Common Stock.
The Company, National Tank Company, a Delaware corporation and a wholly
owned subsidiary of the Company ("Natco"), Natco Acquisition Company, a Delaware
corporation and a wholly owned subsidiary of the Company ("Newco") and The
Cynara Company, a Delaware corporation ("Cynara"), are parties to an Amended and
Restated Agreement and Plan of Merger dated November 17, 1998 but effective as
of March 26, 1998 (the "Merger Agreement"), pursuant to which Cynara will be
merged with and into Natco (the "Merger") and the Designated Stockholders will
receive shares of Class B Common Stock through conversion of the outstanding
shares of Cynara common stock.
The Company and Cap II have executed and delivered an Investment Agreement
dated November 17, 1998 pursuant to which the Company has agreed to issue and
sell, and Cap II has agreed to purchase, a non-negotiable promissory note
convertible upon the occurrence of the events therein specified into 504,762
shares of Class A Common Stock.
The stockholders of Cynara have entered into a Registration Rights
Agreement of even date herewith between the Company and such stockholders which
contains terms and provisions substantially similar to those herein (the "Cynara
Registration Rights Agreement").
AGREEMENT AND PLAN OF MERGER
ANNEX E-1-1
91
NOW, THEREFORE, for and in consideration of the foregoing, the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Definitions and Usage.
A. Definitions. The terms defined in this Section, wherever used in
this Agreement, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified.
"Affected Stockholders" shall mean each Stockholder all or a portion of
whose shares of Common Stock have been included in a Registration Statement
filed with the Commission pursuant to the provisions of this Agreement.
"Agreement" shall mean this Registration Rights Agreement.
"Cap I" shall have the meaning ascribed to such term in the first paragraph
of this Agreement.
"Cap II" shall have the meaning ascribed to such term in the first
paragraph of this Agreement.
"Class A Common Stock" shall have the meaning ascribed to such term in the
recitals to this Agreement.
"Class B Common Stock" shall have the meaning ascribed to such term in the
recitals to this Agreement.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall have the meaning ascribed to such term in the recitals
to this Agreement.
"Company" shall mean NATCO Group Inc., a Delaware corporation, and any
successor corporation by merger, consolidation or otherwise and any parent
corporation resulting from the merger or consolidation of the Company with or
into a subsidiary of another corporation.
"Cynara" shall mean The Cynara Corporation, a Delaware corporation.
"Cynara Registration Rights Agreement" shall have the meaning ascribed to
such term in the recitals to this Agreement.
"Distribution Public Offering" shall mean a distribution (as such term is
used in the Securities Act and the Securities Act Rules) of Common Stock by Cap
I or Cap II to its general and
AGREEMENT AND PLAN OF MERGER
ANNEX E-1-2
92
limited partners pursuant to a Registration Statement filed and declared
effective under the Securities Act and the Securities Act Rules.
"Effective Period" shall mean such period as shall be required under the
provisions of the Securities Act and the Securities Act Rules for delivery of a
prospectus meeting the requirements of Section 10(a) of the Securities Act to
any Person purchasing Common Stock in connection with an Underwritten Public
Offering, a Distribution Public Offering or a Market Public Offering, as the
case may be; provided, however, that such period shall not include any delivery
requirement with respect to the distribution by an underwriter of its unsold
allotment relating to an Underwritten Public Offering.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
as the same shall be in effect at the date of any determination to be made
hereunder.
"Exchange Act Rules" shall mean the rules and regulations promulgated by
the Commission under the Exchange Act, as the same shall be in effect at the
date of any determination to be made hereunder.
"Initial Public Offering" shall mean a public offering of Common Stock by
the Company as a result of which the Company first becomes subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act.
"Market Public Offering" shall mean a public offering for cash of shares of
Common Stock into an existing trading market for outstanding shares of Common
Stock at other than a fixed price on or through the facilities of a national
securities exchange or to or through a market maker otherwise than on an
exchange, but in any case pursuant to a Registration Statement filed and
declared effective under the Securities Act and the Securities Act Rules.
"Merger" shall have the meaning ascribed to such term in the recitals to
this Agreement.
"Merger Agreement" shall have the meaning ascribed to such term in the
recitals to this Agreement.
"Notice of Intent to File" shall mean a written notice given by the Company
pursuant to Section 2.D or Section 3.A that the Company is preparing to file a
Primary Distribution Registration Statement or a Secondary Distribution
Registration Statement under the Securities Act relating to an Underwritten
Public Offering of Common Stock.
"Notice of Registration Request" shall mean a written notice given by the
Company pursuant to Section 2.A to the Stockholder that did not send the
applicable Registration Request or pursuant to Section 2.B to all Stockholders
(other than the Stockholder who sent the applicable Registration Request), in
each case notifying such Stockholders that the applicable Registration Request
has been received by the Company and briefly advising such Stockholders that
they have the right to request
AGREEMENT AND PLAN OF MERGER
ANNEX E-1-3
93
Registration for the distribution of their holdings of Common Stock, subject to
the terms and provisions of this Agreement.
"Person" shall mean an individual, a corporation, a partnership, a trust,
an unincorporated organization or a government or any agency or political
subdivision thereof.
"Primary Distribution" shall mean an Underwritten Public Offering of Common
Stock offered, sold and delivered by the Company.
"Primary Distribution Registration Statement" shall mean a Registration
Statement filed by the Company and declared effective under the Securities Act
and the Securities Act Rules relating to a Primary Distribution.
"Public Offering" shall mean either a Distribution Public Offering, a
Market Public Offering or an Underwritten Public Offering
"Registrable Shares" shall mean shares of Common Stock owned of record by
any Stockholder as to which such Stockholder has requested Registration pursuant
to the provisions of Section 2.A, 2.B, 3.B or 4.A.
"Registration" shall mean the registration under the registration
provisions of the Securities Act of the offering, sale and delivery of shares of
Common Stock.
"Registration Expenses" shall mean the expenses associated with the
preparation and filing of any registration statement pursuant to Section 2.C,
3.C or 4.A herein and any sale covered thereby (including the reasonable fees
and expenses of legal counsel to the Affected Stockholders, fees related to blue
sky qualifications and filing fees in respect of the National Association of
Securities Dealers, Inc.), but excluding underwriting discounts or commissions
in respect of shares of Common Stock to be sold by the Affected Stockholders.
"Registration Request" shall mean a written notice from a Stockholder
requesting that the Company file a Registration Statement with respect to a
Distribution Public Offering pursuant to Section 2.A herein, an Underwritten
Public Offering pursuant to Section 2.B herein or a Public Offering pursuant to
Section 4.A herein, in which the Stockholder advises the Company as to the
number of shares of Common Stock that the Stockholder wishes to include in the
applicable Registration and in which the Stockholder agrees to (i) the specified
method of distribution, (ii), in the case of an Underwritten Public Offering,
the designated managing underwriter and (iii) agrees to provide to the Company
all such information as may be required by the Company pursuant to Section 6
herein.
"Registration Period" shall mean the period of time from the decision of
the Company to prepare and file a Registration Statement to and including the
effective date of such Registration Statement.
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"Registration Statement" shall mean a registration statement filed on Form
X-0, X-0 or S-3 (or any successor form) under the registration provisions of the
Securities Act and the Securities Act Rules.
"Request Period" shall mean a period of ten business days after receipt
pursuant to Section 2.A by the Stockholder that did not send the applicable
Registration Request or after receipt pursuant to Section 2.B by all
Stockholders (other than the Stockholder who sent the applicable Registration
Request) of the Notice of Registration Request.
"Secondary Distribution" shall mean an Underwritten Public Offering of
Common Stock offered, sold and delivered by shareholders of the Company other
than the Stockholders, but including the holders of Common Stock acquired
pursuant to the Merger and subject to the Cynara Registration Rights Agreement.
"Secondary Distribution Registration Statement" shall mean a Registration
Statement filed by the Company and declared effective under the Securities Act
and the Securities Act Rules relating to a Secondary Distribution, including a
distribution requested by the shareholders subject to the Cynara Registration
Rights Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended, as the
same shall be in effect at the date of any determination to be made hereunder.
"Securities Act Rules" shall mean the rules and regulations promulgated by
the Commission pursuant to the Securities Act, as the same shall be in effect at
the date of any determination to be made hereunder.
"Stockholders" shall mean Cap I and Cap II and, upon registration of record
ownership of shares of Common Stock by them, Xxxxxxxxx X. Xxxxxxx, Xxxxxxx and
the general and limited partners of Cap I and Cap II and any assignee of any of
them; provided, however, that, in the case of any such record owner, the
offering, sale and delivery of shares of such Common Stock are not exempt from
the registration provisions of the Securities Act pursuant to Section 4(1)
thereof (without regard to the exemption provided by Rule 144 under the
Securities Act unless paragraph (k) of Rule 144 is applicable thereto); and
provided, further, that, in the case of any assignee other than Xxxxxxxxx X.
Xxxxxxx, Xxxxxxx and such general and limited partners, such assignee has agreed
to be bound by the provisions of this Agreement in accordance with Section 15
herein.
"Supplemental Registration Request" shall mean a written notice given by
any Stockholder pursuant to the provisions of Section 2.A, 2.B or 3.B herein, in
which the Stockholder advises the Company as to the number of shares of Common
Stock that the Stockholder wishes to include in the applicable Registration and
in which the Stockholder agrees to (i) the specified method of distribution,
(ii), in the case of an Underwritten Public Offering, the designated managing
underwriter and (iii) agrees to provide to the Company all such information as
may be required by the Company pursuant to Section 7 herein.
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"Underwritten Public Offering" shall mean a firm commitment underwritten
public offering for cash of shares of Common Stock pursuant to a Registration
Statement filed and declared effective under the Securities Act and the
Securities Act Rules.
"Xxxxxxx" shall mean Xxxxxxx X. Xxxxxxx, Xx. or any legal entity (other
than Cap I or Cap II) of which Xx. Xxxxxxx is the predominant beneficial owner.
B. Rules of Construction. Unless the context otherwise requires, as
used in this Agreement: (a) a term has the meaning ascribed to it; (b) "or" is
not exclusive; (c) "including" means "including without limitation;" (d) words
in the singular include the plural; (e) words in the plural include the
singular; (f) words applicable to one gender shall be construed to apply to each
gender; (g) the terms "hereof," "herein," "hereby," "hereto" and derivative or
similar words refer to this entire Agreement; and (h) the term "Section" shall
refer to the specified Section of this Agreement.
Section 2. Registration Rights.
A. Distribution Registration Request. If the Company shall receive a
Registration Request from Cap I or Cap II requesting that the Company file a
Registration Statement relating to a Distribution Public Offering of shares of
Common Stock owned by such Stockholder, the Company shall, if the other
Stockholder (Cap I or Cap II) has not theretofore distributed its holdings of
Common Stock to its partners in complete or partial liquidation, give promptly
(and in any event within ten business days) a Notice of Registration Request to
the Stockholder that did not send the Registration Request of the receipt of the
Registration Request, enclosing a copy of the Registration Request. During the
Request Period, the other Stockholder shall be entitled to give a Supplemental
Registration Request to the Company in which such Stockholder requests that the
Company register pursuant to the Securities Act and the Securities Act Rules the
shares of Common Stock owned by such Stockholder to be distributed in a
Distribution Public Offering.
B. Registration Request. If the Company shall receive a Registration
Request from a Stockholder requesting that the Company file a Registration
Statement relating to an Underwritten Public Offering of shares of Common Stock
owned by such Stockholder, the Company shall give promptly (and in any event
within ten business days) a Notice of Registration Request to each other
Stockholder of the receipt of the Registration Request, enclosing a copy of the
Registration Request. During the Request Period, the other Stockholders shall be
entitled to give a Supplemental Registration Request to the Company in which any
or all such Stockholders request that the Company register pursuant to the
Securities Act and the Securities Act Rules all or any portion of the shares of
Common Stock owned by such Stockholders to be distributed in an Underwritten
Public Offering.
C. Required Registration. At the end of the Request Period in the case of a
Registration Request made pursuant to Section 2.A or 2.B herein, the Company
shall, subject to the provisions of Section 2.D herein, prepare as promptly as
practicable and file a Registration Statement with
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respect to the distribution in accordance with the applicable method of
distribution of the Registrable Shares to be included therein and use its best
efforts to cause the Registration Statement to become effective under the
Securities Act in accordance with the Securities Act Rules,.
D. Suspension of Obligations. The Company's obligations under Section 2.C
and Section 4.A herein to prepare and file a Registration Statement and to seek
its effectiveness shall be subject to the following provisions:
i. The Company shall be required to file no more than an aggregate of
five (5) Registration Statements pursuant to Section 2.A and Section 2.B
and one (1) Registration Statement pursuant to Section 4.A herein.
ii. The Company's obligations to prepare, file and seek effectiveness of
a requested Registration Statement shall be suspended:
(a) in the case of an Underwritten Public Offering, if the aggregate
number of Registrable Shares to be included in such requested
Registration Statement is less than 750,000 shares of the then issued
and outstanding Common Stock;
(b) in any case, during the period from the time that it gives a
Notice of Intent to File to Stockholders that it is preparing to file a
Primary Distribution Registration Statement until 90 days (or such
shorter period as to which the managing underwriter of the Primary
Distribution to which the Primary Distribution Registration Statement
relates shall consent in writing) have lapsed following the effective
date of a Primary Distribution Registration Statement under the
Securities Act; provided, however, that (A) such Notice of Intent to
File is given prior to the time of receipt by the Company of a
Registration Request by any Stockholder and (B) that the Company shall
use its best efforts to cause such Primary Distribution Registration
Statement to be declared effective as promptly as practicable; and
provided further that the obligation to file a Registration Statement on
behalf of any Stockholder shall be reinstated if the Company does not
file a Primary Distribution Registration Statement within 30 days after
giving the Notice of Intent to File;
(c) in any case, during the period from the time that it gives a
Notice of Intent to File to Stockholders that it is preparing to file a
Secondary Distribution Registration Statement until 90 days (or such
shorter period as to which the managing underwriter of a Secondary
Distribution effected by means of a Secondary Distribution Registration
Statement shall consent in writing) have lapsed following the effective
date of the Secondary Distribution Registration Statement under the
Securities Act; provided, however, that (A) such Notice of Intent to
File is given prior to time of receipt by the Company of a Registration
Request by any Stockholder and (B) that the Company shall use its best
efforts to cause such Secondary Distribution Registration Statement to
be declared effective as promptly as practicable; and
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provided further that the obligation to file a Registration Statement on
behalf of any Stockholder shall be reinstated if the Company does not
file a Secondary Distribution Registration Statement within 30 days
after giving the Notice of Intent to File; or
(d) in any case, if at the time of receipt by the Company of a
Registration Request the Company has material inside information as to
which it believes it has a valid business purpose in refraining from
disclosing publicly for the time being and that current public
disclosure of such information would have a material adverse effect on
the Company, for a period commencing with the date of receipt of the
Registration Request and ending on the earlier of (a) 60 days after such
receipt of the Registration Request; (b) the public announcement of such
material inside information; or (c) the date on which the Company gives
the Stockholder who issued the Registration Request a notice that
suspension of its obligation is no longer required; provided, however,
that the same material inside information shall not constitute a basis
for continuation of this suspension period.
iii. A Registration Statement filed pursuant to a Registration Request
made under Section 2.B herein shall first include all Registrable Shares
requested to be included by any and all Stockholders and, only after such
inclusion, may include Common Stock being sold for the account of the
Company or any other security holders. Any Common Stock to be offered on
behalf of the Company or such other security holders will be included in
such Registration Statement only to the extent that, in the reasonable
opinion of the managing underwriter for the Underwritten Public Offering of
Registrable Shares on behalf of Stockholders, such inclusion will not
materially adversely affect the distribution of Registrable Shares on
behalf of such Stockholders.
E. Underwriter. The selection of an underwriter for an Underwritten Public
Offering of Registrable Shares by Stockholders shall be subject to the approval
of the Company, which shall not be unreasonably withheld.
F. Withdrawn Registration Statement. For purposes of Section 2.D(i) herein,
if a requested Registration Statement is filed and the Company otherwise
complies with its obligations hereunder, and
i. the Registration Statement is withdrawn with the consent of the
Affected Stockholders as a result of a delay in the offering requested by
the Company, then no requested Registration Statement shall be deemed to
have been filed; or
ii. the Affected Stockholders cease to prosecute the Public Offering
subject thereto actively and in good faith, the Company shall have the
right to withdraw the Registration Statement without the consent of the
Affected Stockholders and the requested Registration Statement shall be
deemed to have been filed.
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Section 3. Incidental/"Piggy-back" Registration.
A. Notice of Intent to File. If the Company at any time proposes to file a
Primary Distribution Registration Statement or a Secondary Distribution
Registration Statement under the Securities Act relating to an Underwritten
Public Offering of Common Stock that would permit the inclusion therein of
shares of Common Stock to be distributed in accordance with the method of
distribution contemplated by such Registration Statement, the Company shall give
to each Stockholder a Notice of Intent to File promptly after a determination
has been made by the Company to prepare and file such Registration Statement,
but in any event not less than ten days before the filing with the Commission of
such Registration Statement, which notice shall set forth the intended method of
distribution (including the name of the managing underwriter) of the securities
proposed to be registered. The Notice of Intent to File shall include an offer
to include in such filing, subject to the other provisions of this Agreement,
such amount of Registrable Shares as each Stockholder may request.
B. Supplemental Registration Request. If any Stockholder wishes to have
Registrable Shares registered pursuant to this Section 3, it shall advise the
Company by giving a Supplemental Registration Request within 20 days after the
date of receipt of the Notice of Intent to File (or such shorter period, but in
any event not less than ten days, as the Company shall specify in its Notice of
Intent to File), setting forth the amount of Registrable Shares for which
Registration is requested.
C. Registration Obligation. Subject to the provisions of the next sentence,
the Company shall include all Registrable Shares specified in the Supplemental
Registration Requests received by it in accordance with subsection B of this
Section 3. If, however, the managing underwriter of the proposed Primary
Distribution or Secondary Distribution shall advise the Company in writing that,
in the reasonable opinion of such managing underwriter, the inclusion in the
Registration Statement of the aggregate number of shares of Common Stock
requested by the Stockholders to be included in the Primary Distribution or
Secondary Distribution would materially adversely affect such distribution of
securities, then the Company shall so advise the Affected Stockholders and the
number of such shares of Common Stock included in the Registration Statement
shall be reduced to the number acceptable to such managing underwriter and such
reduced number of shares shall be allocated pro rata among the Affected
Stockholders based on the Registrable Shares held by each. If any Stockholder
does not agree to the terms of underwriting of such Primary Distribution or
Secondary Distribution, the shares of Common Stock owned by such Stockholder
shall be excluded therefrom by written notice from the Company or such managing
underwriter.
D. Underwriting Agreement. Any obligation of the Company to include shares
of Common Stock of any Stockholder in a Registration Statement prepared and
filed pursuant to this Section 3 shall be conditioned upon the agreement of such
Stockholder to enter into an underwriting agreement with the Company, other
security holders, if any, and the managing underwriter of the Primary
Distribution or the Secondary Distribution of the type described in subsection
(H) of Section 5.
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Section 4. Special Registration Right.
A. Preparation and Filing. If at any time during the term hereof, (i)
Xxxxxxx acquires the record and beneficial ownership of any Common Stock from
Cap I or Cap II, (ii) in the opinion of counsel, reasonably satisfactory to the
Company, all or part of such shares may not be sold by Xxxxxxx without
registration under the Securities Act or reliance on an exemption from the
registration provisions thereof (other than Section 4(1) of the Securities Act)
and (iii) Xxxxxxx desires in good faith to pledge all or a portion of such
shares as collateral for borrowings by Xxxxxxx from one or more lenders
("Lenders"), then, upon receipt by the Company of a Registration Request from
Xxxxxxx or the Lenders, the Company shall, subject to the provisions of Section
2.D herein, prepare as promptly as practicable and file a Registration Statement
with respect to the offering, sale and delivery by the Lenders of all or any
part of the shares of Common Stock pledged by Xxxxxxx to the Lenders in
accordance with the applicable method of distribution of the Registrable Shares
to be included therein and use its best efforts to cause the Registration
Statement to become effective under the Securities Act in accordance with the
Securities Act Rules. If so requested by Xxxxxxx or the Lenders, the
Registration Statement shall be filed pursuant to Rule 415 (relating to "shelf
registration statements") of the Securities Act Rules.
B. Distribution. The applicable method of distribution of the Registrable
Shares shall be as requested by the Lenders (or Xxxxxxx on behalf of the
Lenders) and the methods of distribution may include a distribution by one or
more broker-dealers named in the Registration Statement "at the market" pursuant
to a Market Public Offering. The Company agrees that it will amend the
Registration Statement or supplement the prospectus to include any material
information with respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such information in the
Registration Statement.
C. Limitations. The preparation and filing of a Registration Statement
pursuant to this Section 4 and the offering, sale and delivery of Registrable
Shares pursuant thereto shall be subject to the following limitations:
i. The Company shall be obligated to prepare, file and cause to become
effective only one Registration Statement pursuant to this Section 4.
ii. The only offering, sale and delivery of Registrable Shares under
such Registration Statement shall be for the account of the Lenders after a
foreclosure of the lien against such shares following a default in payment
of the borrowings made against such collateral, and no sales of such shares
shall be effected by the Lenders under such Registration Statement prior to
the delivery to the Company of a certificate of the Lenders to such effect.
iii. The proposed and actual filing by the Company of a Registration
Statement pursuant to this Section 4 shall not entitle any Stockholder to
registration rights pursuant to Section 3 herein.
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100
iv. The offering, sale and delivery of Registrable Shares pursuant to
any Registration Statement filed pursuant to Rule 415 (relating to "shelf
registration statements") of the Securities Act Rules under this Section 4
shall be suspended if, at the time of any offering, sale and delivery
pursuant to a shelf registration statement, the Company has material inside
information as to which it believes it has a valid business purpose in
refraining from disclosing publicly for the time being and that current
public disclosure of such information would have a material adverse effect
on the Company. Such suspension period shall commence upon notice by the
Company to Xxxxxxx and the Lenders and shall continue until the earlier of
(a) the expiration of 60 days thereafter; (b) the public announcement of
such material inside information; or (c) the date on which the Company
gives Xxxxxxx and the Lenders notice that such suspension is no longer
required; provided, however, that the same material inside information
shall not constitute a basis for continuation of this suspension period.
v. The Company shall be obligated to maintain the effectiveness of a
Registration Statement filed pursuant to Rule 415 (relating to "shelf
registration statements") of the Securities Act Rules under this Section 4
until the third anniversary of the effective date thereof and no longer.
D. Benefits. Upon receipt by the Company of a Registration Request under
this Section 4, the Lenders shall have the benefits and obligations of an
Affected Stockholder under Sections 5, 6, 7 and 8 of this Agreement and of a
Stockholder under Sections 9, 10, 11, 12, 13, 16 and 17 of this Agreement.
Section 5. Registration Procedures. If the Company is required by the
provisions of Section 2, 3 or 4 to effect the Registration of any of the
Registrable Shares, the Company shall, as expeditiously as possible:
A. Filing. Prepare and file with the Commission a Registration Statement
with respect to such shares of Common Stock and use its best efforts to cause
such Registration Statement to become and, subject to subsection C of this
Section 5, remain effective.
B. Amendments. Prepare and file with the Commission during the Registration
Period such amendments and supplements to such Registration Statement and the
prospectus used in connection therewith as may be necessary to permit such
Registration Statement to become effective in accordance with the Securities Act
and the Securities Act Rules and to ensure that such Registration Statement and
the prospectus used in connection therewith comply with the disclosure standards
of Section 11 of the Securities Act and Section 10(b) of the Exchange Act and
that such prospectus complies with Section 10 of the Securities Act, in each
case during the Effective Period.
C. Maintenance of Effectiveness. Subject to the provisions of Section 4.C
herein, use its best efforts to maintain the effectiveness of such Registration
Statement and to ensure compliance of the prospectus contained therein with
Section 10(a) of the Securities Act for the Effective Period.
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D. Copies. Furnish to each Affected Stockholder (i) such number of copies
of such Registration Statement and of each amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
included in such Registration Statement (including each preliminary prospectus,
summary prospectus and prospectus supplement), in conformity with the
requirements of the Securities Act, and such other documents, as such Affected
Stockholder may reasonably require in order to facilitate the offering, sale and
delivery or other disposition of the Registrable Shares owned by such Affected
Stockholder and (ii), during the Registration Period and the Effective Period,
copies of any written correspondence or memoranda relating to oral
communications in each case with the Commission and copies of any request by the
Commission for any amendment of or supplement to the Registration Statement or
the prospectus included therein or for additional information.
E. Blue Sky Laws. Use its best efforts to register or qualify the Common
Stock covered by such Registration Statement under the securities or blue sky
laws of such jurisdictions as the managing underwriter of such Distribution may
reasonably request (excluding, however, any jurisdiction in which the filing
would subject the Company to additional tax liability and any jurisdiction in
which the Company would thereby be required to execute a general consent to
service of process) and use all reasonable efforts to do such other acts and
things as may be required to enable the Affected Stockholders to consummate the
public sale or other disposition in such jurisdictions of the Registrable Shares
owned by such Affected Stockholders.
F. Earnings Statement. Make available to its holders of Common Stock, as
soon as reasonably practicable, an earnings statement covering the period of at
least 12 months, but not more than 18 months, beginning with the first month
after the effective date of the Registration Statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act.
G. Amended Prospectuses. Notify each Affected Stockholder immediately if
the Company shall become aware at any time during the Effective Period that the
prospectus included in the Registration Statement, as such prospectus may be
amended or supplemented, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading in light of the
circumstances then existing, and at the request of any Affected Stockholder to
prepare promptly and to furnish to each Affected Stockholder such number of
copies of an amended or supplemental prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Shares, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading in the light of the circumstances
then existing.
H. Underwriting Agreements. Enter into such agreements (including an
underwriting agreement in customary form and containing customary provisions
relating to legal opinions and accountants' letters, representations and
warranties and mutual indemnification and contribution between the Company and
the underwriters for the Affected Stockholders) and use all reasonable
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efforts to take such other actions as the Affected Stockholders may reasonably
request in order to expedite or facilitate the disposition of such Registrable
Shares.
I. Inspection. Make available for inspection by the Affected Stockholders,
by any underwriter participating in any distribution to be effected pursuant to
such Registration Statement and by any attorney, accountant or other agent
retained by Affected Stockholders or any such underwriter all pertinent
financial and other records, pertinent corporate documents and properties of the
Company and cause all of the Company's officers, directors and employees to
supply all such information requested by the Affected Stockholders, such
underwriter, attorney, accountant or agent, as is reasonably needed in
connection with such Registration.
6. Classes of Stock. The parties hereto intend that any capital stock sold
by a Stockholder pursuant to the provisions of this Agreement shall be Class A
Common Stock if sold prior to January 1, 2002 or Common Stock if sold
thereafter. Accordingly, any reference herein to the inclusion of Common Stock
in a Registration Statement for offering, sale and delivery by a Stockholder
hereunder shall, subject to the proviso to Article Fourth, II-A-4, of the
Certificate of Incorporation of the Company, prior to January 1, 2002 be deemed
to refer to Class A Common Stock and thereafter to Common Stock.
7. Expenses; Limitations on Registration. The Registration Expenses
relating to any Registration effected by the Company pursuant to this Agreement
shall be for the account of the Company; provided, however, that any and all
underwriting discounts and commissions attributable to the sale of the shares of
Common Stock of the Affected Stockholders shall be for the account of the
Affected Stockholders.
For purposes of this Section 7, the Company shall be obligated to pay the
fees and expenses of only one law firm representing the Affected Stockholders.
If more than one such firm shall represent the Affected Stockholders in
connection with a Registration under this Agreement, the Affected Stockholders
shall notify the Company as to which firm shall be deemed to represent the
Affected Stockholders for purposes of this Section 7.
Section 8. Stockholders' Information. The Affected Stockholders shall
provide all information reasonably requested by the Company for inclusion in any
Registration Statement to be filed hereunder. The actual provision of such
information shall be a condition precedent to the obligation of the Company to
take any action pursuant to this Agreement in respect of the Registration of
Registrable Shares of any Affected Stockholder.
Section 9. Indemnification.
A. In connection with the Registration of any Registrable Shares under the
Securities Act pursuant to this Agreement, the Company agrees to indemnify and
hold harmless each Affected Stockholder, its partners, directors, officers and
employees, and each other Person, if any, who controls such Affected Stockholder
within the meaning of Section 15 of the Securities Act, against
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any losses, claims, damages or liabilities, joint or several, to which such
Affected Stockholder or any such partner, director, officer, employee or
controlling Person may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any untrue
statement or any alleged untrue statement of a material fact contained in the
Registration Statement or the prospectus included therein at the time the
Registration Statement is declared effective or any omission or alleged omission
of a material fact required to be stated therein or necessary in order to make
the statements therein not misleading or (ii) any untrue statement of a material
fact or alleged untrue statement of a material fact contained in the
Registration Statement, any preliminary prospectus, the prospectus included
therein or any amendment or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or necessary in order
to make the statements concerning the Company therein, in the light of the
circumstances under which they were made, not misleading and shall reimburse
each Affected Stockholder and each such partner, director, officer, employee and
controlling Person for any legal or other expenses reasonably incurred by such
Affected Stockholder or such partner, director, officer employee or controlling
Person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement,
preliminary prospectus, prospectus, or amendment or supplement in reliance upon
and in conformity with written information furnished by or on behalf of an
Affected Stockholder to the Company expressly for use therein; and provided,
further, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission in any preliminary prospectus if such untrue statement or
alleged untrue statement or omission or alleged omission was corrected in the
final prospectus included in the Registration Statement at the time it became
effective and the Affected Stockholder, in the case of a Distribution Public
Offering or a Market Public Offering, or the managing underwriter, in the case
of an Underwritten Public Offering, failed to provide the final prospectus as
required by the Securities Act and the Securities Act Rules. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of any Affected Stockholder or any such partner, director, officer,
employee or controlling Person, and shall survive the transfer of such
securities by any Affected Stockholder.
B. Each Affected Stockholder agrees to indemnify and hold harmless the
Company, its directors, officers and employees, each other Person, if any, who
controls the Company and each other Affected Stockholder against any losses,
claims, damages or liabilities, joint or several, to which the Company, any such
director, officer or employee, any such controlling Person or such other
Affected Stockholder may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any untrue
statement or any alleged untrue statement of a material fact contained in the
Registration Statement or the prospectus included therein at the time the
Registration Statement is declared effective or any omission or alleged omission
of a material fact required to be stated therein or necessary in order to make
the statements therein not misleading or
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(ii) any untrue statement of a material fact or alleged untrue statement of a
material fact contained in the Registration Statement, any preliminary
prospectus, the prospectus included therein or any amendment or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary in order to make the statements concerning the
Company therein, in the light of the circumstances under which they were made,
not misleading, in each case to the extent, but only to the extent, that such
alleged untrue statement or alleged omission was made in such Registration
Statement, preliminary prospectus, prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished by or on
behalf of an Affected Stockholder to the Company expressly for use therein, and
shall reimburse the Company or such director, officer, employee or other Person
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such loss, claim, damage, liability or action.
C. Promptly after receipt by an indemnified party hereunder of written
notice of the commencement of any action or proceeding involving a claim
referred to in subsection (A) or (B) of this Section 9, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party,
give written notice to the latter of the commencement of such action; provided,
that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligation under this subsection
C to the extent the indemnifying party is not materially prejudiced by such
failure. In case any such action is brought against an indemnified party, the
indemnified party shall permit the indemnifying party to assume the defense of
such action or proceeding, provided that counsel for the indemnifying party, who
shall conduct the defense of such action or proceeding, shall be approved by the
indemnified party (whose approval shall not be unreasonably withheld) and the
indemnified party may participate in such defense (in which case, such
participation shall be at such indemnified party's expense, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified party and the indemnifying party shall exist in respect of such
claim, in which event the indemnifying party shall pay the reasonable fees and
expense of separate counsel for the indemnified party). No indemnifying party
shall consent to entry of any judgment or enter into any settlement that does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation. The indemnifying party shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm for all indemnified
parties. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent.
D. Indemnification similar to that specified in the preceding subsections
of this Section 9 shall be given by the Company and each Affected Stockholder
(with such modifications as shall be appropriate) with respect to liability
related to any required registration or other qualification of Registrable
Shares under any Federal or state law or regulation of governmental authority
other than the Securities Act.
E. If the indemnification provided for in this Section 9 is unavailable or
insufficient to hold harmless an indemnified party under subsection (A) or (B)
above, then the indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims,
AGREEMENT AND PLAN OF MERGER
ANNEX E-1-15
105
damages or liabilities referred to in subsection (A) or (B) above, in such
proportion as is appropriate to reflect the relative fault of the Company, on
the one hand, and each Affected Stockholder, on the other, in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or such Affected Stockholder and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Affected Stockholders agree
that it would not be just and equitable if contributions pursuant to this
subsection (E) were to be determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable considerations
referred to in the first sentence of this subsection (E). The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (E) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim (which
shall be limited as provided in subsection (C) above if the indemnifying party
has assumed the defense of any such action in accordance with the provisions
thereof) that is the subject of this subsection (E). Notwithstanding the
provisions of this subsection (E), in respect of any loss, claim, damage or
liability based upon any untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact that relates to
information other than information supplied by any Affected Stockholder, no
Affected Stockholder shall be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Shares offered by it
and distributed to the public exceeds the amount of any damages that such
Affected Stockholder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. Promptly after receipt by an indemnified party
under this subsection (E) of notice of the commencement of any action against
such party in respect of which a claim for contribution may be made against an
indemnifying party under this subsection (E), such indemnified party shall
notify the indemnifying party in writing of the commencement thereof if the
notice specified in subsection (C) above has not been given with respect to such
action; but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party under this
subsection (E) to the extent such omission is not prejudicial.
Section 10. Public Availability of Information. The Company shall comply
with all applicable public information reporting requirements of the Commission,
to the extent required from time to time to enable each Stockholder to sell
Registrable Shares without Registration under the Securities Act within the
limitation of the exemptions provided by (i) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any
Stockholder, the Company will deliver to such Stockholder a written statement as
to whether it has complied with such requirements.
AGREEMENT AND PLAN OF MERGER
ANNEX E-1-16
106
Section 11. Supplying Information. The Company shall cooperate with each
Stockholder in supplying such information as may be necessary for such
Stockholder to complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the availability of an
exemption from the Securities Act for the sale of any Registrable Shares.
Section 12. Specific Performance. Each party hereto acknowledges and agrees
that each other party hereto would be irreparably harmed and would have no
adequate remedy of law if any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
Accordingly, it is agreed that, in addition to any other remedies by law or in
equity which may be available, the parties hereto shall be entitled to obtain
preliminary and permanent injunctive relief with respect to any breach or
threatened breach of, or otherwise obtain specific performance of, the covenants
and other agreements contained in this Agreement.
Section 13. Representations and Warranties of the Company. The Company
represents and warrants to each Stockholder that, as of the date of this
Agreement, (a) the Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder, (b) the execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or any of the transactions contemplated
hereby and (c) this Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company, and,
assuming that this Agreement constitutes a valid and binding obligation of each
of Cap I and Cap II, is enforceable against the Company in accordance with its
terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium,
fraudulent conveyance and similar laws affecting creditors' rights generally
from time to time and to general principles of equity and except as the
enforceability thereof may be limited by considerations of public policy.
Section 14. Representations and Warranties of Cap I and Cap II. Each of Cap
I and Cap II represents and warrants to the Company that, as of the date of this
Agreement, (a) it is a limited partnership duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the
organizational power and authority to enter into this Agreement and to carry out
its obligations hereunder, (b) the execution and delivery of this Agreement by
such Stockholder and the consummation by such Stockholder of the transactions
contemplated hereby have been duly authorized by all necessary organizational
action on the part of such Stockholder and no other organizational proceedings
on the part of such Stockholder are necessary to authorize this Agreement or any
of the transactions contemplated hereby and (c) this Agreement has been duly
executed and delivered by such Stockholder and constitutes a valid and binding
obligation of such Stockholder and, assuming that this Agreement constitutes a
valid and binding obligation of the Company, is enforceable against such
Stockholder in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium, fraudulent conveyance and similar laws
affecting creditors'
AGREEMENT AND PLAN OF MERGER
ANNEX E-1-17
107
rights generally from time to time and to general principles of equity and
except as the enforceability thereof may be limited by considerations of public
policy.
Section 15. Expiration. This Agreement and the rights, benefits, duties and
obligations hereunder of the parties hereto and their successors and permitted
assigns shall expire and be of no further force or effect on the 180th day after
the later to occur of (i) May 31, 2004 and (ii) the first date on which each and
all of Cap I, Cap II, Xxxxxxxxx X. Xxxxxxx and, to the extent that Xxxxxxx has
acquired the record and beneficial ownership of shares of Common Stock from Cap
I or Cap II, Xxxxxxx is able to sell shares of Common Stock subject hereto in
reliance upon the exemption from the registration provisions of the Securities
Act contained in Rule 144(k) or any successor Securities Act Rule.
Section 16. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or transmitted
by telex, telegram or facsimile transmission or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Cap I, to:
Capricorn Investors, L.P.
c/o Winokur Holdings, Inc.
00 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Xx.
President
Telecopy No.: (000) 000-0000
with a copy to:
O'Melveny & Xxxxx LLP
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn.: Xx. Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
(b) if to Cap II, to:
Capricorn Investors II, L.P.
c/o Capricorn Holdings, LLC
00 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Manager
Telecopy No.: (000) 000-0000
AGREEMENT AND PLAN OF MERGER
ANNEX E-1-18
108
with a copy to:
O'Melveny & Xxxxx LLP
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn.: Xx. Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
(c) if to the Company, to:
NATCO Group, Inc.
Brookhollow Central III
0000 Xxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn.: Xx. Xxxxxxxxx X. Xxxxxxx, Chairman and Chief
Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
First City Tower
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attn.: Xx. Xxxxxxx X. Xxxx III
Facsimile No.: (000) 000-0000
Section 17. Benefit and Assignment.
(a) The terms and conditions of this Agreement shall inure to the
benefit of and be binding on the parties hereto and their respective
successors and permitted assigns; provided, however, that, except as
otherwise provided in this Section, this Agreement shall not be assignable
by any party hereto except by operation of law or with the prior express
written consent of the other parties hereto. Upon registration of record
ownership of shares of Common Stock by Xxxxxxxxx X. Xxxxxxx, Xxxxxxx or any
general or limited partner of Cap I or Cap II, such person shall become a
Stockholder and a third party beneficiary of all the rights of a
Stockholder hereunder. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto, their
respective successors and permitted assigns and such third party
beneficiaries, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
(b) If Cap I or Cap II shall transfer and assign shares of Common
Stock to any Person otherwise than in a Distribution Public Offering or an
Underwritten Public Offering, Cap I or Cap II (or any Person who shall be a
transferee or assignee pursuant to this subsection (b)), as the case may
be, may assign such portion of its rights and benefits under
AGREEMENT AND PLAN OF MERGER
ANNEX E-1-19
109
this Agreement as is necessary to permit such Person to act as a
Stockholder hereunder; provided, however, that such Person shall agree in
writing to be bound by the duties and obligations of a Stockholder
hereunder.
Section 18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
the application of doctrines of conflicts of law.
Section 19. Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, any of which may have been transmitted and received by
facsimile transmission and each of which shall be deemed to be an original but
all of which together shall constitute one and the same instrument.
(The remainder of this page left blank intentionally.)
AGREEMENT AND PLAN OF MERGER
ANNEX E-1-20
110
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their officers thereunto duly authorized.
NATCO GROUP INC.
BY:
-------------------------------------
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:
-------------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
President.
CAPRICORN INVESTORS II, L.P.
By: Capricorn Holdings, LLC,
its general partner
By:
-------------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
Manager
AGREEMENT AND PLAN OF MERGER
ANNEX E-1-21
111
ANNEX E-2
Cynara
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of November 18, 1998 by and
between NATCO Group Inc., a Delaware corporation (the "Company"), and the
undersigned holders of Common Stock of the Company (the "Designated
Stockholders").
R E C I T A L S:
On November 18, 1998, the Certificate of Incorporation of the Company
was amended to authorize two classes of common stock, par value $0.01 per share
("Common Stock"), to wit: 45,000,000 shares of Class A Common Stock ("Class A
Common Stock") and 5,000,000 shares of Class B Common Stock ("Class B Common
Stock"), and to convert each of the then outstanding shares of common stock of
the Company into one share of Class A Common Stock (the "Charter Amendments").
After giving effect to the Charter Amendments, Cap I owns of record
and beneficially 5,563,667 shares (68.3%) of the outstanding Class A Common
Stock.
After giving effect to the Charter Amendments, Cap II owns of record
and beneficially 2,582,259 shares (31.7%) of the outstanding Class A Common
Stock.
Together, Cap I and Cap II own of record and beneficially, as of the
date of this Agreement, all the outstanding Class A Common Stock, being all the
outstanding Common Stock.
The Company, National Tank Company, a Delaware corporation and a
wholly owned subsidiary of the Company ("Natco"), Natco Acquisition Company, a
Delaware corporation and a wholly owned subsidiary of the Company ("Newco") and
The Cynara Company, a Delaware corporation ("Cynara"), are parties to an
Amended and Restated Agreement and Plan of Merger dated November 17 1998 but
effective as of March 26, 1998 (the "Merger Agreement"), pursuant to which
Cynara will be merged with and into Natco (the "Merger") and the Designated
Stockholders will receive shares of Class B Common Stock through conversion of
the outstanding shares of Cynara common stock.
The Company and Cap II have executed and delivered an Investment
Agreement dated November 17, 1998 pursuant to which the Company has agreed to
issue and sell, and Cap II has agreed to purchase, a non-negotiable promissory
note convertible upon occurrence of the events therein specified into 504,762
shares of Class A Common Stock.
Cap I and Cap II have entered into a Registration Rights Agreement of
even date herewith between the Company and such stockholders which contains
terms and provisions substantially similar to those herein (the "Capricorn
Registration Rights Agreement").
AGREEMENT AND PLAN OF MERGER
ANNEX E-2-1
112
It is a condition to consummation of the Merger that the stockholders
of Cynara who will become stockholders of the Company upon consummation of the
Merger shall have entered into a registration rights agreement as contemplated
by the Merger Agreement.
NOW, THEREFORE, for and in consideration of the foregoing, the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Definitions and Usage.
A. Definitions. The terms defined in this Section, wherever
used in this Agreement, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified.
"Affected Stockholders" shall mean each Stockholder all or a portion
of whose shares of Common Stock have been included in a Registration Statement
filed with the Commission pursuant to the provisions of this Agreement.
"Agreement" shall mean this Registration Rights Agreement.
"Cap I" shall mean Capricorn Partners, L.P., a Delaware limited
partnership.
"Cap II" shall mean Capricorn Partners II, L.P., a Delaware limited
partnership.
"Capricorn Registration Rights Agreement" shall have the meaning
ascribed to such term in the recitals to this Agreement.
"Class A Common Stock" shall have the meaning ascribed to such term in
the recitals to this Agreement.
"Class B Common Stock" shall have the meaning ascribed to such term in
the recitals to this Agreement.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall have the meaning ascribed to such term in the
recitals to this Agreement.
"Company" shall mean NATCO Group Inc., a Delaware corporation, and any
successor corporation by merger, consolidation or otherwise and any parent
corporation resulting from the merger or consolidation of the Company with or
into a subsidiary of another corporation.
"Cynara" shall mean The Cynara Corporation, a Delaware corporation.
AGREEMENT AND PLAN OF MERGER
ANNEX E-2-2
113
"Designated Stockholders" shall have the meaning ascribed to such term
in the first paragraph of this Agreement.
"Earnout Shares" shall mean the CTOC Earnout Shares, the Initial
Earnout Shares and the Supplemental Earnout Shares as those terms are defined
in the Merger Agreement.
"Effective Period" shall mean such period as shall be required under
the provisions of the Securities Act and the Securities Act Rules for delivery
of a prospectus meeting the requirements of Section 10(a) of the Securities Act
to any Person purchasing Common Stock in connection with an Underwritten Public
Offering or a Market Public Offering; provided, however, that such period shall
not include any delivery requirement with respect to the distribution by an
underwriter of its unsold allotment relating to an Underwritten Public
Offering.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, as the same shall be in effect at the date of any determination to be
made hereunder.
"Exchange Act Rules" shall mean the rules and regulations promulgated
by the Commission under the Exchange Act, as the same shall be in effect at the
date of any determination to be made hereunder.
"Market Public Offering" shall mean a public offering for cash of
shares of Common Stock into an existing trading market for outstanding shares
of Common Stock at other than a fixed price on or through the facilities of a
national securities exchange or to or through a market maker otherwise than on
an exchange, but in any case pursuant to a Registration Statement filed and
declared effective under the Securities Act and the Securities Act Rules.
"Merger" shall have the meaning ascribed to such term in the recitals
to this Agreement.
"Merger Agreement" shall have the meaning ascribed to such term in the
recitals to this Agreement.
"Notice of Intent to File" shall mean a written notice given by the
Company pursuant to Section 2.C or Section 3.A that the Company is preparing to
file a Primary Distribution Registration Statement or a Secondary Distribution
Registration Statement under the Securities Act relating to an Underwritten
Public Offering of Common Stock.
"Notice of Registration Request" shall mean a written notice given by
the Company pursuant to Section 2.A or 4.A to each Stockholder that did not
send the applicable Registration Request, notifying such Stockholders that the
applicable Registration Request has been received by the Company and briefly
advising such Stockholders that they have the right to request Registration for
the distribution of their holdings of Common Stock, subject to the terms and
provisions of this Agreement.
AGREEMENT AND PLAN OF MERGER
ANNEX E-2-3
114
"Person" shall mean an individual, a corporation, a partnership, a
trust, an unincorporated organization or a government or any agency or
political subdivision thereof.
"Primary Distribution" shall mean an Underwritten Public Offering of
Common Stock offered, sold and delivered by the Company.
"Primary Distribution Registration Statement" shall mean a
Registration Statement filed by the Company and declared effective under the
Securities Act and the Securities Act Rules relating to a Primary Distribution.
"Public Offering" shall mean either an Underwritten Public Offering or
a Market Public Offering.
"Registrable Shares" shall mean shares of Common Stock owned of record
by any Stockholder as to which such Stockholder has requested Registration
pursuant to the provisions of Section 2.A, 3.B or 4.A.
"Registration" shall mean the registration under the registration
provisions of the Securities Act of the offering, sale and delivery of shares
of Common Stock.
"Registration Expenses" shall mean the expenses associated with the
preparation and filing of any registration statement pursuant to Section 2.B,
3.C or 4.B herein and any sale covered thereby (including the reasonable fees
and expenses of legal counsel to the Affected Stockholders, fees related to
blue sky qualifications and filing fees in respect of the National Association
of Securities Dealers, Inc.), but excluding underwriting discounts or
commissions in respect of shares of Common Stock to be sold by the Affected
Stockholders.
"Registration Request" shall mean a written notice from a Stockholder
requesting that the Company file a Registration Statement with respect to an
Underwritten Public Offering pursuant to Section 2.A herein or with respect to
a Public Offering pursuant to Section 4.A herein.
"Registration Period" shall mean the period of time from the decision
of the Company to prepare and file a Registration Statement to and including
the effective date of such Registration Statement.
"Registration Statement" shall mean a registration statement filed on
Form X-0, X-0 or S-3 (or any successor form) under the registration provisions
of the Securities Act and the Securities Act Rules.
"Request Period" shall mean a period of fifteen (15) business days
after receipt of a Notice of Registration Request from the Company pursuant to
Section 2.A or 4.A by each Stockholder that did not send the applicable
Registration Request.
AGREEMENT AND PLAN OF MERGER
ANNEX E-2-4
115
"Secondary Distribution" shall mean an Underwritten Public Offering of
Common Stock offered, sold and delivered by shareholders of the Company other
than the Stockholders, but including the holders of Common Stock subject to the
Capricorn Registration Rights Agreement.
"Secondary Distribution Registration Statement" shall mean a
Registration Statement filed by the Company and declared effective under the
Securities Act and the Securities Act Rules relating to a Secondary
Distribution, including a distribution requested by the shareholders subject to
the Capricorn Registration Rights Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended, as
the same shall be in effect at the date of any determination to be made
hereunder.
"Securities Act Rules" shall mean the rules and regulations
promulgated by the Commission pursuant to the Securities Act, as the same shall
be in effect at the date of any determination to be made hereunder.
"Stockholders" shall mean any or all of the Designated Stockholders
and any assignee of shares of Common Stock theretofore held by any of them;
provided, however, that, in the case of any such assignee, the offering, sale
and delivery of shares of such Common Stock by such assignee are not exempt
from the registration provisions of the Securities Act pursuant to Section 4(1)
thereof (without regard to the exemption provided by Rule 144 under the
Securities Act unless paragraph (k) of Rule 144 is applicable thereto); and
provided, further, that, in the case of any assignee, such assignee has agreed
to be bound by the provisions of this Agreement in accordance with Section 15
herein.
"Supplemental Registration Request" shall mean a written notice given
by any Stockholder pursuant to the provisions of Section 2.A, 3.B or 4.A
herein, in which the Stockholder advises the Company as to the number of shares
of Common Stock that the Stockholder wishes to include in the applicable
Registration and in which the Stockholder agrees to (i) the specified method of
distribution, (ii) if applicable, the designated managing underwriter and (iii)
provide to the Company all such information as may be required by the Company
pursuant to Section 7 herein.
"Underwritten Public Offering" shall mean a firm commitment
underwritten public offering for cash of shares of Common Stock pursuant to a
Registration Statement filed and declared effective under the Securities Act
and the Securities Act Rules.
B. Rules of Construction. Unless the context otherwise
requires, as used in this Agreement: (a) a term has the meaning ascribed to it;
(b)"including" means "including without limitation;" (c) words in the singular
include the plural; (d) words in the plural include the singular; (e) words
applicable to one gender shall be construed to apply to each gender; (f) the
terms "hereof," "herein," "hereby," "hereto" and derivative or similar words
refer to this entire Agreement; and (g) the term "Section" shall refer to the
specified Section of this Agreement.
AGREEMENT AND PLAN OF MERGER
ANNEX E-2-5
116
Section 2. Registration Rights.
A. Registration Request. If the Company shall receive a Registration
Request from a Stockholder requesting that the Company file a Registration
Statement relating to an Underwritten Public Offering of shares of Common Stock
owned by such Stockholder, the Company shall give promptly (and in any event
within ten business days) a Notice of Registration Request to each other
Stockholder of the receipt of the Registration Request, enclosing a copy of the
Registration Request. During the Request Period, the other Stockholders shall
be entitled to give a Supplemental Registration Request to the Company in which
any or all such Stockholders request that the Company register pursuant to the
Securities Act and the Securities Act Rules all or any portion of the shares of
Common Stock owned by such Stockholders to be distributed in an Underwritten
Public Offering.
B. Required Registration. At the end of the Request Period, the
Company shall, subject to the provisions of Section 2.C herein, prepare as
promptly as practicable and file a Registration Statement with respect to the
distribution in accordance with the applicable method of distribution of the
Registrable Shares to be included therein and use its best efforts to cause the
Registration Statement to become effective under the Securities Act in
accordance with the Securities Act Rules,.
C. Suspension of Obligations. The Company's obligations under Section
2.B herein to prepare and file a Registration Statement and to seek its
effectiveness shall be subject to the following provisions:
i. The Company shall be required to file no more than two (2)
Registration Statements pursuant to Section 2.A herein and one (1)
Registration Statement pursuant to Section 4.B herein.
ii. The Company's obligations to prepare, file and seek
effectiveness of a requested Registration Statement shall be
suspended:
(a) if the aggregate number of Registrable Shares to
be included in such requested Registration Statement is less
than 500,000 shares of the then issued and outstanding Common
Stock;
(b) in any case, during the period from the time
that it gives a Notice of Intent to File to Stockholders that
it is preparing to file a Primary Distribution Registration
Statement until 90 days (or such shorter period as to which
the managing underwriter of the Primary Distribution to which
the Primary Distribution Registration Statement relates shall
consent in writing) have lapsed following the effective date
of a Primary Distribution Registration Statement under the
Securities Act; provided, however, that (A) such Notice of
Intent to File is given prior to the time of receipt by the
Company of a Registration Request by any Stockholder and (B)
that the Company shall use its best efforts to cause such
Primary Distribution
AGREEMENT AND PLAN OF MERGER
ANNEX E-2-6
117
Registration Statement to be declared effective as promptly
as practicable; and provided, further, that the obligation to
file a Registration Statement on behalf of any Stockholder
shall be reinstated if the Company does not file a Primary
Distribution Registration Statement within 30 days after
giving the Notice of Intent to File;
(c) in any case, during the period from the time
that it gives a Notice of Intent to File to Stockholders that
it is preparing to file a Secondary Distribution Registration
Statement until 90 days (or such shorter period as to which
the managing underwriter of a Secondary Distribution effected
by means of a Secondary Distribution Registration Statement
shall consent in writing) have lapsed following the effective
date of the Secondary Distribution Registration Statement
under the Securities Act; provided, however, that (A) such
Notice of Intent to File is given prior to time of receipt by
the Company of a Registration Request by any Stockholder and
(B) that the Company shall use its best efforts to cause such
Secondary Distribution Registration Statement to be declared
effective as promptly as practicable; and provided, further,
that the obligation to file a Registration Statement on
behalf of any Stockholder shall be reinstated if the Company
does not file a Secondary Distribution Registration Statement
within 30 days after giving the Notice of Intent to File;
(d) if at the time of receipt by the Company of a
Registration Request the Company has material inside
information as to which it believes it has a valid business
purpose in refraining from disclosing publicly for the time
being and that current public disclosure of such information
would have a material adverse effect on the Company, for a
period commencing with the date of receipt of the
Registration Request and ending on the earlier of (a) 60 days
after such receipt of the Registration Request; (b) the
public announcement of such material inside information; or
(c) the date on which the Company gives the Stockholder who
issued the Registration Request a notice that suspension of
its obligation is no longer required; provided, however, that
the same material inside information shall not constitute a
basis for continuation of this suspension period; or
(e) if at the time of receipt by the Company of a
Registration Request the Company is not required to file
reports with the Commission pursuant to Section 15(d) of the
Securities Act or Section 13 of the Exchange Act.
iii. A Registration Statement filed pursuant to a
Registration Request made under Section 2.B herein shall first include
all Registrable Shares requested to be included by any and all
Stockholders and, only after such inclusion, may include Common Stock
being sold for the account of the Company or any other security
holders. Any Common Stock to be offered on behalf of the Company or
such other security holders will be included in such Registration
Statement only to the extent that, in the reasonable opinion of the
managing underwriter for the Underwritten Public Offering of
Registrable Shares on behalf of
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Stockholders, such inclusion will not materially adversely affect the
distribution of Registrable Shares on behalf of such Stockholders.
D. Underwriter. The selection of an underwriter for an Underwritten
Public Offering of Registrable Shares by Stockholders shall be subject to the
approval of the Company, which shall not be unreasonably withheld.
E. Withdrawn Registration Statement. For purposes of Section 2.C(i)
herein, if a requested Registration Statement is filed and the Company
otherwise complies with its obligations hereunder, and
i. the Registration Statement is withdrawn with the consent
of the Affected Stockholders as a result of a delay in the offering
requested by the Company, then no requested Registration Statement
shall be deemed to have been filed; or
ii. the Affected Stockholders cease to prosecute the Public
Offering subject thereto actively and in good faith, the Company shall
have the right to withdraw the Registration Statement without the
consent of the Affected Stockholders and the requested Registration
Statement shall be deemed to have been filed.
Section 3. Incidental/"Piggy-back" Registration.
A. Notice of Intent to File. If the Company at any time proposes to
file a Primary Distribution Registration Statement or a Secondary Distribution
Registration Statement under the Securities Act relating to an Underwritten
Public Offering of Common Stock that would permit the inclusion therein of
shares of Common Stock to be distributed in accordance with the method of
distribution contemplated by such Registration Statement, the Company shall
give to each Stockholder a Notice of Intent to File promptly after a
determination has been made by the Company to prepare and file such
Registration Statement, but in any event not less than ten days before the
filing with the Commission of such Registration Statement, which notice shall
set forth the intended method of distribution (including the name of the
managing underwriter) of the securities proposed to be registered. The Notice
of Intent to File shall include an offer to include in such filing, subject to
the other provisions of this Agreement, such amount of Registrable Shares as
each Stockholder may request.
B. Supplemental Registration Request. If any Stockholder wishes to
have Registrable Shares (including Earnout Shares) registered pursuant to this
Section 3, it shall advise the Company by giving a Supplemental Registration
Request within 20 days after the date of receipt of the Notice of Intent to
File (or such shorter period, but in any event not less than ten days, as the
Company shall specify in its Notice of Intent to File), setting forth the
amount of Registrable Shares for which Registration is requested.
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119
C. Registration Obligation. Subject to the provisions of the next
sentence, the Company shall include all Registrable Shares specified in the
Supplemental Registration Requests received by it in accordance with Subsection
B of this Section 3. If, however, the managing underwriter of the proposed
Primary Distribution or Secondary Distribution shall advise the Company in
writing that, in the reasonable opinion of such managing underwriter, the
inclusion in the Registration Statement of the aggregate number of shares of
Common Stock requested by the Stockholders to be included in the Primary
Distribution or Secondary Distribution would materially adversely affect such
distribution of securities, then the Company shall so advise the Affected
Stockholders and the number of such shares of Common Stock included in the
Registration Statement shall be reduced to the number acceptable to such
managing underwriter and such reduced number of shares shall be allocated pro
rata among the Affected Stockholders based on the Registrable Shares held by
each. If any Stockholder does not agree to the terms of underwriting of such
Primary Distribution or Secondary Distribution, the shares of Common Stock
owned by such Stockholder shall be excluded therefrom by written notice from
the Company or such managing underwriter.
D. Underwriting Agreement. Any obligation of the Company to include
shares of Common Stock of any Stockholder in a Registration Statement prepared
and filed pursuant to this Section 3 shall be conditioned upon the agreement of
such Stockholder to enter into an underwriting agreement with the Company,
other security holders, if any, and the managing underwriter of the Primary
Distribution or the Secondary Distribution of the type described in subsection
(H) of Section 5.
Section 4. Special Registration Right. Pursuant to the terms of
the Merger Agreement, the Designated Stockholders may in the future receive
Earnout Shares and, in order to provide liquidity to the Designated
Stockholders who receive such Earnout Shares, the Company has agreed to provide
a special right of Registration with respect to such Earnout Shares as in this
Section 4 provided.
A. Notices. If, at any time during the term hereof, (i) some or all of
the Stockholders receive the record and beneficial ownership of Earnout Shares,
whether from the Company upon original issue pursuant to the Merger Agreement
or from one or more Designated Stockholders upon assignment not involving a
Public Offering, (ii), in the opinion of counsel reasonably satisfactory to the
Company, all or part of such Earnout Shares may not be sold by such
Stockholders without registration under the Securities Act or reliance on an
exemption from the registration provisions thereof (other than Section 4(1) of
the Securities Act) and (iii) the Company shall receive a Registration Request
from one or more such Stockholders requesting that the Company file a
Registration Statement relating to a Public Offering of shares of Common Stock
owned by such Stockholder or Stockholders, then the Company shall give promptly
(and in any event within ten business days) a Notice of Registration Request to
each other Stockholder who, to the knowledge of the Company, holds Earnout
Shares of the receipt of the Registration Request, enclosing a copy of the
Registration Request. During the Request Period, such other Stockholders shall
be entitled to give a Supplemental Registration Request to the Company in which
any or all such Stockholders request that the Company register pursuant to the
Securities Act and the Securities Act Rules all or
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any portion of the shares of Common Stock constituting Earnout Shares owned by
such Stockholders.
B. Preparation and Filing. After the Request Period, the Company
shall, subject to the provisions of Section 2.C herein, prepare as promptly as
practicable and file a Registration Statement with respect to the offering,
sale and delivery by the Stockholders of all or any part of the shares of
Common Stock constituting Earnout Shares in accordance with the applicable
method of distribution of the Registrable Shares to be included therein
specified in the Registration Request and use its best efforts to cause the
Registration Statement to become effective under the Securities Act in
accordance with the Securities Act Rules. If so requested by such Affected
Stockholders, the Registration Statement shall be filed pursuant to Rule 415
(relating to "shelf registration statements") of the Securities Act Rules.
C. Distribution. The applicable method of distribution of the
Registrable Shares shall be as requested by the Affected Stockholders and the
methods of distribution may include a distribution by one or more
broker-dealers named in the Registration Statement "at the market" pursuant to
a Market Public Offering. The Company agrees that it will amend the
Registration Statement or supplement the prospectus to include any material
information with respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such information in the
Registration Statement.
D. Limitations. The preparation and filing of a Registration Statement
pursuant to this Section 4 and the offering, sale and delivery of Registrable
Shares pursuant thereto shall be subject to the following limitations:
i. The Company shall be obligated to prepare, file and cause
to become effective only one Registration Statement pursuant to this
Section 4.
ii. Only Earnout Shares, whether received by a Designated
Stockholder from the Company upon original issue pursuant to the
Merger Agreement or received by another Stockholder from a Designated
Stockholder upon an assignment not involving a Public Offering, may be
included in a Registration Statement filed pursuant to this Section 4,
and no sales of such shares shall be effected by the Affected
Stockholders under such Registration Statement prior to the delivery
to the Company of a certificate of the Affected Stockholders to such
effect.
iii. The proposed and actual filing by the Company of a
Registration Statement pursuant to this Section 4 shall not entitle
any Stockholder to registration rights pursuant to Section 3 herein.
iv. The offering, sale and delivery of Registrable Shares
pursuant to any Registration Statement filed pursuant to Rule 415
(relating to "shelf registration statements") of the Securities Act
Rules under this Section 4 shall be suspended if, at the time of any
offering,
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sale and delivery pursuant to a shelf registration statement, the
Company has material inside information as to which it believes it has
a valid business purpose in refraining from disclosing publicly for
the time being and that current public disclosure of such information
would have a material adverse effect on the Company. Such suspension
period shall commence upon notice by the Company to the Affected
Stockholders and shall continue until the earlier of (a) the
expiration of 60 days thereafter; (b) the public announcement of such
material inside information; or (c) the date on which the Company
gives the Affected Stockholders notice that such suspension is no
longer required; provided, however, that the same material inside
information shall not constitute a basis for continuation of this
suspension period.
v. The Company shall be obligated to maintain the
effectiveness of a Registration Statement filed pursuant to Rule 415
(relating to "shelf registration statements") of the Securities Act
Rules under this Section 4 until the third anniversary of the
effective date thereof and no longer.
Section 5. Registration Procedures. If the Company is required by
the provisions of Section 2, 3 or 4 to effect the Registration of any of the
Registrable Shares, the Company shall, as expeditiously as possible:
A. Filing. Prepare and file with the Commission a Registration
Statement with respect to such shares of Common Stock and use its best efforts
to cause such Registration Statement to become and, subject to Subsection C of
this Section 5, remain effective.
B. Amendments. Prepare and file with the Commission during the
Registration Period such amendments and supplements to such Registration
Statement and the prospectus used in connection therewith as may be necessary
to permit such Registration Statement to become effective in accordance with
the Securities Act and the Securities Act Rules and to ensure that such
Registration Statement and the prospectus used in connection therewith comply
with the disclosure standards of Section 11 of the Securities Act and Section
10(b) of the Exchange Act and that such prospectus complies with Section 10 of
the Securities Act, in each case during the Effective Period.
C. Maintenance of Effectiveness. Subject to the provisions of Section
4.D herein, use its best efforts to maintain the effectiveness of such
Registration Statement and to ensure compliance of the prospectus contained
therein with Section 10(a) of the Securities Act for the Effective Period.
D. Copies. Furnish to each Affected Stockholder (i) such number of
copies of such Registration Statement and of each amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus included in such Registration Statement (including each preliminary
prospectus, summary prospectus and prospectus supplement), in conformity with
the requirements of the Securities Act, and such other documents as such
Affected Stockholder may reasonably require in order to facilitate the
offering, sale and delivery or other disposition of the Registrable Shares
owned by such Affected Stockholder and (ii), during the
AGREEMENT AND PLAN OF MERGER
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Registration Period and the Effective Period, copies of any written
correspondence or memoranda relating to oral communications in each case with
the Commission and copies of any request by the Commission for any amendment of
or supplement to the Registration Statement or the prospectus included therein
or for additional information.
E. Blue Sky Laws. Use its best efforts to register or qualify the
Common Stock covered by such Registration Statement under the securities or
blue sky laws of such jurisdictions as the managing underwriter of such
Distribution may reasonably request (excluding, however, any jurisdiction in
which the filing would subject the Company to additional tax liability and any
jurisdiction in which the Company would thereby be required to execute a
general consent to service of process) and use all reasonable efforts to do
such other acts and things as may be required to enable the Affected
Stockholders to consummate the public sale or other disposition in such
jurisdictions of the Registrable Shares owned by such Affected Stockholders.
F. Earnings Statement. Make available to its holders of Common Stock,
as soon as reasonably practicable, an earnings statement covering the period of
at least 12 months, but not more than 18 months, beginning with the first month
after the effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act.
G. Amended Prospectuses. Notify each Affected Stockholder immediately
if the Company shall become aware at any time during the Effective Period that
the prospectus included in the Registration Statement, as such prospectus may
be amended or supplemented, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading in light of the
circumstances then existing, and at the request of any Affected Stockholder to
prepare promptly and to furnish to each Affected Stockholder such number of
copies of an amended or supplemental prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Shares, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading in the light of the circumstances
then existing.
H. Underwriting Agreements. Enter into such agreements (including an
underwriting agreement in customary form and containing customary provisions
relating to legal opinions and accountants' letters, representations and
warranties and mutual indemnification and contribution between the Company and
the underwriters for the Affected Stockholders) and use all reasonable efforts
to take such other actions as the Affected Stockholders may reasonably request
in order to expedite or facilitate the disposition of such Registrable Shares.
I. Inspection. Make available for inspection by the Affected
Stockholders, by any underwriter participating in any distribution to be
effected pursuant to such Registration Statement and by any attorney,
accountant or other agent retained by the Affected Stockholders or any such
underwriter all pertinent financial and other records, pertinent corporate
documents and properties of the Company and cause all of the Company's
officers, directors and employees to supply all such
AGREEMENT AND PLAN OF MERGER
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information requested by the Affected Stockholders, such underwriter, attorney,
accountant or agent, as is reasonably needed in connection with such
Registration.
6. Classes of Stock. The parties hereto intend that any capital stock
sold by a Stockholder pursuant to the provisions of this Agreement shall be
Class A Common Stock if sold prior to January 1, 2002 or Common Stock if sold
thereafter. Accordingly, subject to the proviso to Article Fourth, II-A-4, of
the Certificate of Incorporation of the Company, each Stockholder agrees to
convert any Class B Common Stock that is included as Registrable Shares in a
Registration Statement filed pursuant to any provision of this Agreement into
Class A Common Stock prior to the effective date of such Registration Statement
under the Securities Act.
7. Expenses; Limitations on Registration. The Registration Expenses
relating to any Registration effected by the Company pursuant to this Agreement
shall be for the account of the Company; provided, however, that any and all
underwriting discounts and commissions attributable to the sale of the shares
of Common Stock of the Affected Stockholders shall be for the account of the
Affected Stockholders.
For purposes of this Section 7, the Company shall be obligated to pay
the fees and expenses of only one law firm representing the Affected
Stockholders. If more than one such firm shall represent the Affected
Stockholders in connection with a Registration under this Agreement, the
Affected Stockholders shall notify the Company as to which firm shall be deemed
to represent the Affected Stockholders for purposes of this Section 7.
Section 8. Stockholders' Information. The Affected Stockholders
shall provide all information reasonably requested by the Company for inclusion
in any Registration Statement to be filed hereunder. The actual provision of
such information shall be a condition precedent to the obligation of the
Company to take any action pursuant to this Agreement in respect of the
Registration of Registrable Shares of any Affected Stockholder.
Section 9. Indemnification.
A. In connection with the Registration of any Registrable Shares under
the Securities Act pursuant to this Agreement, the Company agrees to indemnify
and hold harmless each Affected Stockholder, its partners, directors, officers
and employees, and each other Person, if any, who controls such Affected
Stockholder within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such
Affected Stockholder or any such partner, director, officer, employee or
controlling Person may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or any alleged untrue statement of a material fact
contained in the Registration Statement or the prospectus included therein at
the time the Registration Statement is declared effective or any omission or
alleged omission of a material fact required to be stated therein or necessary
in order to make the statements therein not misleading or (ii) any untrue
statement of a material fact or alleged untrue
AGREEMENT AND PLAN OF MERGER
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statement of a material fact contained in the Registration Statement, any
preliminary prospectus, the prospectus included therein or any amendment or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary in order to make the statements
concerning the Company therein, in the light of the circumstances under which
they were made, not misleading and shall reimburse each Affected Stockholder
and each such partner, director, officer, employee and controlling Person for
any legal or other expenses reasonably incurred by such Affected Stockholder or
such partner, director, officer employee or controlling Person in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in such Registration Statement, preliminary
prospectus, prospectus, or amendment or supplement in reliance upon and in
conformity with written information furnished by or on behalf of an Affected
Stockholder to the Company expressly for use therein; and provided, further,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or expense arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
in any preliminary prospectus if such untrue statement or alleged untrue
statement or omission or alleged omission was corrected in the final prospectus
included in the Registration Statement at the time it became effective and the
Affected Stockholder, in the case of a Market Public Offering, or the managing
underwriter, in the case of an Underwritten Public Offering, failed to provide
the final prospectus as required by the Securities Act and the Securities Act
Rules. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any Affected Stockholder or any such
partner, director, officer, employee or controlling Person, and shall survive
the transfer of such securities by any Affected Stockholder.
B. Each Affected Stockholder agrees to indemnify and hold harmless the
Company, its directors, officers and employees, each other Person, if any, who
controls the Company and each other Affected Stockholder against any losses,
claims, damages or liabilities, joint or several, to which the Company, any
such director, officer or employee, any such controlling Person or such other
Affected Stockholder may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or any alleged untrue statement of a material fact
contained in the Registration Statement or the prospectus included therein at
the time the Registration Statement is declared effective or any omission or
alleged omission of a material fact required to be stated therein or necessary
in order to make the statements therein not misleading or (ii) any untrue
statement of a material fact or alleged untrue statement of a material fact
contained in the Registration Statement, any preliminary prospectus, the
prospectus included therein or any amendment or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein
or necessary in order to make the statements concerning the Company therein, in
the light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that such alleged untrue
statement or alleged omission was made in such Registration Statement,
preliminary prospectus, prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished by or on behalf of an
Affected
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125
Stockholder to the Company expressly for use therein, and shall reimburse the
Company or such director, officer, employee or other Person for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such loss, claim, damage, liability or action.
C. Promptly after receipt by an indemnified party hereunder of written
notice of the commencement of any action or proceeding involving a claim
referred to in subsection (A) or (B) of this Section 9, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action;
provided, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligation under this
subsection C to the extent the indemnifying party is not materially prejudiced
by such failure. In case any such action is brought against an indemnified
party, the indemnified party shall permit the indemnifying party to assume the
defense of such action or proceeding, provided that counsel for the
indemnifying party, who shall conduct the defense of such action or proceeding,
shall be approved by the indemnified party (whose approval shall not be
unreasonably withheld) and the indemnified party may participate in such
defense (in which case, such participation shall be at such indemnified party's
expense, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified party and the indemnifying party shall exist
in respect of such claim, in which event the indemnifying party shall pay the
reasonable fees and expense of separate counsel for the indemnified party). No
indemnifying party shall consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation. The indemnifying party shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm for all indemnified parties. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent.
D. Indemnification similar to that specified in the preceding
subsections of this Section 9 shall be given by the Company and each Affected
Stockholder (with such modifications as shall be appropriate) with respect to
liability related to any required registration or other qualification of
Registrable Shares under any Federal or state law or regulation of governmental
authority other than the Securities Act.
E. If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (A) or (B) above, then the indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (A) or (B) above, in
such proportion as is appropriate to reflect the relative fault of the Company,
on the one hand, and each Affected Stockholder, on the other, in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or such Affected Stockholder and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission.
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126
The Company and the Affected Stockholders agree that it would not be just and
equitable if contributions pursuant to this subsection (E) were to be determined
by pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the first sentence of
this subsection (E). The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of
this subsection (E) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim (which shall be limited as provided in
subsection (C) above if the indemnifying party has assumed the defense of any
such action in accordance with the provisions thereof) that is the subject of
this subsection (E). Notwithstanding the provisions of this subsection (E), in
respect of any loss, claim, damage or liability based upon any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact that relates to information other than information
supplied by any Affected Stockholder, no Affected Stockholder shall be required
to contribute any amount in excess of the amount by which the total price at
which the Registrable Shares offered by it and distributed to the public
exceeds the amount of any damages that such Affected Stockholder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. Promptly after receipt by an indemnified party under this
subsection (E) of notice of the commencement of any action against such party
in respect of which a claim for contribution may be made against an
indemnifying party under this subsection (E), such indemnified party shall
notify the indemnifying party in writing of the commencement thereof if the
notice specified in subsection (C) above has not been given with respect to
such action; but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to any indemnified party under
this subsection (E) to the extent such omission is not prejudicial.
Section 10. Public Availability of Information. The Company shall
comply with all applicable public information reporting requirements of the
Commission, to the extent required from time to time to enable each Stockholder
to sell Registrable Shares without Registration under the Securities Act within
the limitation of the exemptions provided by (i) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any
Stockholder, the Company will deliver to such Stockholder a written statement
as to whether it has complied with such requirements.
Section 11. Supplying Information. The Company shall cooperate with
each Stockholder in supplying such information as may be necessary for such
Stockholder to complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the availability of an
exemption from the Securities Act for the sale of any Registrable Shares.
Section 12. Specific Performance. Each party hereto acknowledges
and agrees that each other party hereto would be irreparably harmed and would
have no adequate remedy of law if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. Accordingly, it is agreed that, in addition to any other remedies by
law
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or in equity which may be available, the parties hereto shall be entitled to
obtain preliminary and permanent injunctive relief with respect to any breach
or threatened breach of, or otherwise obtain specific performance of, the
covenants and other agreements contained in this Agreement.
Section 13. Representations and Warranties of the Company. The
Company represents and warrants to each Stockholder that, as of the date of
this Agreement, (a) the Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder, (b) the execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or any of the
transactions contemplated hereby, and (c) this Agreement has been duly executed
and delivered by the Company and constitutes a valid and binding obligation of
the Company, and, assuming that this Agreement constitutes a valid and binding
obligation of each of the Designated Stockholders, is enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium, fraudulent conveyance and similar laws
affecting creditors' rights generally from time to time and to general
principles of equity and except as the enforceability thereof may be limited by
considerations of public policy.
Section 14. Representations and Warranties. Each of the Designated
Stockholders represents and warrants to the Company that, as of the date of
this Agreement, (a) to the extent it is a legal entity, it is an organization
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the organizational power and authority
to enter into this Agreement and to carry out its obligations hereunder, (b) to
the extent it is a legal entity, the execution and delivery of this Agreement
by such Stockholder and the consummation by such Stockholder of the
transactions contemplated hereby have been duly authorized by all necessary
organizational action on the part of such Stockholder and no other
organizational proceedings on the part of such Stockholder are necessary to
authorize this Agreement or any of the transactions contemplated hereby and (c)
this Agreement has been duly executed and delivered by such Stockholder and
constitutes a valid and binding obligation of such Stockholder and, assuming
that this Agreement constitutes a valid and binding obligation of the Company,
is enforceable against such Stockholder in accordance with its terms, subject
to applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance and similar laws affecting creditors' rights generally from time to
time and to general principles of equity and except as the enforceability
thereof may be limited by considerations of public policy.
Section 15. Expiration. This Agreement and the rights, benefits,
duties and obligations hereunder of the parties hereto and their successors and
permitted assigns shall expire and be of no further force or effect on May 31,
2004.
Section 16. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or
transmitted by telex, telegram or facsimile
AGREEMENT AND PLAN OF MERGER
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transmission or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to any Designated Stockholder, to such Designated
Stockholder at the address of such Designated Stockholder set
forth on Annex A hereto
with a copy to:
Xxxx Xxxxx Xxxx & XxXxxx XX
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn.: Xx. Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
(b) if to the Company, to:
NATCO Group, Inc.
Brookhollow Central III
0000 Xxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn.: Xx. Xxxxxxxxx X. Xxxxxxx, Chairman and Chief
Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
First City Tower
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attn.: Xx. Xxxxxxx X. Xxxx III
Facsimile No.: (000) 000-0000
Section 17. Benefit and Assignment.
(a) The terms and conditions of this Agreement shall inure to
the benefit of and be binding on the parties hereto and their
respective successors and permitted assigns; provided, however, that,
except as otherwise provided in this Section, this Agreement shall not
be assignable by any party hereto except by operation of law or with
the prior express written consent of the other parties hereto. Nothing
in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto and their respective successors
and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
AGREEMENT AND PLAN OF MERGER
ANNEX E-2-18
129
(b) If any Designated Stockholder shall transfer and assign
shares of Common Stock to any Person otherwise than in an Underwritten
Public Offering (including any transfer on foreclosure of indebtedness
secured by the grant of a security interest in such shares of Common
Stock), such Designated Stockholder (or any Person who shall be a
transferee or assignee pursuant to this subsection (b)), as the case
may be, may assign such portion of its rights and benefits under this
Agreement as is necessary to permit such Person to act as a
Stockholder hereunder; provided, however, that such Person shall agree
in writing to be bound by the duties and obligations of a Stockholder
hereunder.
Section 18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard
to the application of doctrines of conflicts of law.
Section 19. Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, any of which may have been
transmitted and received by facsimile transmission and each of which shall be
deemed to be an original but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their officers thereunto duly authorized.
NATCO GROUP, INC.
BY:
-------------------------------------------
Xxxxxxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
THE DESIGNATED STOCKHOLDERS
----------------------------------------------------
Xxxxxxx X. Xxxxxxxx
----------------------------------------------------
Xxxxxx X. Xxxxxxx
----------------------------------------------------
Xxxxxxx X. Xxxxxx
----------------------------------------------------
Xxxxxx X. Xxxxxx, Xx.
AGREEMENT AND PLAN OF MERGER
ANNEX E-2-19
130
----------------------------------------------------
Xxxxx X. Xxxxx
----------------------------------------------------
Xxxxxx X. Xxxx
----------------------------------------------------
Xxxxxxx X. Xxxxxxxxx
----------------------------------------------------
Xxxx X. Xxxxx, Xx.
THE 1998 TRUST FOR XXXX XXXXX XXXXXXX
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
BANC ONE CAPITAL PARTNERS II, LTD.
By:
-----------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Authorized Signer
AGREEMENT AND PLAN OF MERGER
ANNEX E-2-20
131
ANNEX F
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement (this "Agreement") is made as of the 18th day
of November, 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"), NATCO Group Inc., a Delaware corporation ("Natco") and
each of the Designated Stockholders (as hereinafter defined).
R E C I T A L S:
Natco is the owner of all the outstanding capital stock of National Tank
Company, a Delaware corporation ("National Tank"), and Natco, through National
Tank, is engaged in the business of designing, fabricating and servicing oil and
gas process equipment and systems.
On November 18, 1998, the Certificate of Incorporation of Natco was amended
to authorize two classes of common stock, par value $0.01 per share ("Common
Stock"), to wit: 45,000,000 shares of Class A Common Stock ("Class A Common
Stock") and 5,000,000 shares of Class B Common Stock ("Class B Common Stock"),
and to convert each of the then outstanding shares of common stock of Natco into
one share of Class A Common Stock (the "Charter Amendment").
As a result of the Charter Amendment, Cap I and Cap II, as the owners of
record and beneficially of all then outstanding Common Stock, acquired and now
own 5,563,667 shares and 2,582,259 shares of Class A Common Stock, respectively.
Natco, National Tank, The Cynara Company, a Delaware corporation
("Cynara"), and Natco Acquisition Company, a Delaware corporation and a wholly
owned subsidiary of Natco ("Newco") are parties to an Amended and Restated
Agreement and Plan of Merger dated November 17, 1998 but effective as of March
26, 1998 (the "Merger Agreement") that, among other things, provides that Cynara
will merge, upon the terms and subject to the conditions of the Merger Agreement
and in accordance with the General Corporation Law of Delaware, with and into
National Tank and National Tank will be the Surviving Corporation (the
"Merger").
On November 18, 1998, Natco and Cap II consummated the transaction
contemplated by that certain Investment Agreement dated November 17, 1998,
pursuant to which Natco issued and sold, and Cap II purchased, a non-negotiable
promissory note in the principal amount of $5,300,000 for a like amount of cash,
such note being automatically convertible into 504,762 shares of Class A Common
Stock of Natco upon expiration or termination of the waiting period under the
Xxxx-Xxxxx- Xxxxxx Antitrust Improvements Act of 1976, as amended.
It is a condition to the obligations of Cynara under the Merger Agreement
that Cap I and Cap II and each of the Designated Stockholders shall have entered
into a Stockholders' Agreement substantially similar in form and substance to
this Agreement.
AGREEMENT AND PLAN OF MERGER
ANNEX F-1
132
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.
"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
under the Exchange Act.
"Agreement", "hereof", "hereunder", and words of similar import shall
refer to this Stockholders' Agreement, as it may be amended from time to time.
"Associate" shall have the meaning ascribed thereto in Rule 405 of the
General Rules and Regulations under the Securities Act of 1933, as amended.
"Cap I" shall mean Capricorn Investors, L.P., a Delaware limited
partnership.
"Cap II" shall mean Capricorn Investors II, L.P., a Delaware limited
partnership.
"Capricorn Registration Rights Agreement" shall mean that certain
Registration Rights Agreement dated as of November 18, 1998 among Natco, Cap I
and Cap II.
"Charter Amendment" shall have the meaning ascribed to such term in the
second recital to this Agreement.
"Class A Common Stock" shall have the meaning ascribed to such term in
the second recital to this Agreement.
"Class B Common Stock" shall have the meaning ascribed to such term in
the second recital to this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall have the meaning ascribed to such term in the
second recital to this Agreement.
"Cynara" shall mean The Cynara Company, a Delaware corporation.
"Designated Stockholder" shall mean each of the holders of record and
beneficially of common stock of Cynara immediately prior to the effective date
of the Merger (assuming the exercise of all outstanding Cynara warrants).
"Drag-Along Notice" shall have the meaning ascribed to such term in
Section 2(f)(i) herein.
AGREEMENT AND PLAN OF MERGER
ANNEX F-2
133
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Merger" shall have the meaning ascribed to such term in the fourth
recital to this Agreement.
"Merger Agreement" shall have the meaning ascribed to such term in the
fourth recital to this Agreement.
"Natco" shall mean NATCO Group Inc., a Delaware corporation.
"National Tank" shall mean National Tank Company, a Delaware corporation
and a wholly owned subsidiary of Natco.
"Overallotment Shares" shall have the meaning ascribed to such term in
Section 2(e)(ii) herein.
"Person" means and includes natural persons, corporations, limited
partnerships, joint stock companies, joint ventures, associations, companies,
trusts, banks and other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
"Principal Stockholder" shall mean either Cap I or Cap II so long as it
owns of record and beneficially 1% or more of the outstanding Common Stock.
"Public Sale" shall mean a Sale of Common Stock pursuant to an effective
registration statement under the Securities Act.
"Purchase Offer" shall have the meaning ascribed to such term in Section
2(f) herein.
"Purchaser" shall have the meaning ascribed to such term in Section 2(f)
herein.
"Remaining Stockholders" shall have the meaning ascribed to such term in
Section 2(f)(i) herein.
"Sale" shall mean any offer, offer to sell, offer for sale, sale,
assignment, contract of sale, disposition of an interest in or transfer, grant
of a participation in, pledge or other disposal of any Common Stock (or any
solicitation of any offers to buy or otherwise acquire, or take a pledge of, any
Common Stock).
"Sale Notice" shall have the meaning ascribed to such term in Section
2(e)(i) herein.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Selling Principal Stockholder" shall have the meaning ascribed to such
term in Section 2(f) herein.
AGREEMENT AND PLAN OF MERGER
ANNEX F-3
134
"Stockholder" shall mean, for so long as such Person owns of record any
shares of Common Stock, Cap I, Cap II, each Designated Stockholder and any
assignee thereof (or any other Person who shall acquire and hold of record
shares of Common Stock) who shall have agreed to be bound by the terms of this
Agreement.
2. Restrictions on Certain Sales.
(a) General Restrictions. The provisions of this Agreement, including
this Section 2, apply to all the holdings of Common Stock of each Stockholder,
whether held on the date of this Agreement or hereafter acquired, including
without limitation the shares of Class A Common Stock to be acquired by Cap II
upon conversion of the promissory note issued by Natco pursuant to the
Investment Agreement. Each Stockholder agrees that it will not, directly or
indirectly, effect a Sale of any Common Stock, except in compliance with the
Securities Act and this Agreement. No Stockholder shall effect a Sale other than
a Sale to Natco or another Stockholder, or a Public Sale, unless the Stockholder
first obtains a written opinion of counsel (which opinion and counsel, who may
be counsel for Natco, shall be reasonably satisfactory to Natco), to the effect
that the proposed Sale is exempt from registration under the Securities Act and
all applicable state securities laws.
(b) Legend. Each certificate evidencing outstanding Common Stock issued
to any Stockholder shall bear a legend in substantially the following form:
THE OFFERING, SALE AND DELIVERY OF THE SHARES REPRESENTED BY THIS
CERTIFICATE WERE NOT REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND THUS NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY
BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS SUCH TRANSACTION IS REGISTERED UNDER THAT ACT OR
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS PROVIDED TO THE
COMPANY PRIOR TO THE PROPOSED TRANSACTION THAT REGISTRATION UNDER
SUCH ACT IS NOT REQUIRED. THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO THE PROVISIONS OF A STOCKHOLDERS AGREEMENT DATED AS
OF NOVEMBER 18, 1998, AS THE SAME MAY BE AMENDED (A COPY OF WHICH IS
ON FILE WITH THE SECRETARY OF THE COMPANY), AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS SUCH
TRANSFER, SALE OR HYPOTHECATION COMPLIES WITH THE TERMS OF SUCH
AGREEMENT.
(c) Distributions of Common Stock. Each of Cap I and Cap II may
distribute, whether in liquidation or otherwise, all or part of the Common Stock
owned by it to any of its general or limited partners if each such general or
limited partner agrees in writing in connection
AGREEMENT AND PLAN OF MERGER
ANNEX F-4
135
with such distribution to be bound by all of the provisions of this Agreement
applicable by their terms to a Stockholder (other than a Principal Stockholder).
(d) Specific Restrictions. Each Stockholder further agrees that it will
not effect any Sale, other than a Sale to Natco or another Stockholder, a Public
Sale or a Sale to a Purchaser pursuant to Section 2(f) herein, unless the Person
to whom such Sale is made shall have agreed in writing to be bound by all of the
provisions of this Agreement applicable by their terms to a Stockholder (other
than a Principal Stockholder). Any such transferee shall have all the rights and
benefits, and be subject to all the obligations, of this Agreement applicable by
its terms to a Stockholder. Any purported Sale that would contravene the
provisions of this Section 2(d) shall be null and void.
(e) Right of First Refusal. Each Stockholder, other than either
Principal Stockholder, agrees not to effect a Sale, other than a Sale permitted
by clause (iv) of this subsection 2(e), unless, in any such case, prior to such
Sale:
(i) Such Stockholder shall have given to Natco and to each Principal
Stockholder that then holds Common Stock written notice (a "Sale Notice")
of such Stockholder's intention to effect the Sale. The Sale Notice shall
include (x) the number of shares of Common Stock that the Stockholder
proposing the Sale desires to sell, (y) the principal terms of the Sale,
including the price at which such shares of Common Stock are intended to be
sold and such other information with respect to such Sale as Natco or
either Principal Stockholder shall reasonably request in writing and (z) an
offer to sell to Natco or either Principal Stockholder, on terms and
conditions substantially identical to those contained in the Sale Notice, a
number of shares of Common Stock determined in accordance with Section
2(e)(ii) hereof.
(ii) (A) Natco shall first have the right to purchase any number of
shares of Common Stock up to the aggregate number of such shares of Common
Stock that the selling Stockholder intends to sell in the Sale, and Natco
shall promptly, but in any event within 10 days after receipt of the Sale
Notice, advise the Selling Stockholder and each Principal Stockholder in
writing of its determination in that regard.
(B) Each Principal Stockholder shall then have the right to
purchase a number of shares of Common Stock included in the Sale equal to
(x) the total number of shares of Common Stock included in the Sale less
(y) the number of shares of Common Stock purchased by Natco pursuant to
clause (A) above which result shall be (z) multiplied by a fraction, the
numerator of which is the aggregate number of shares of Common Stock then
held by such Principal Stockholder and the denominator of which is the
aggregate number of shares of Common Stock then held by the Principal
Stockholders who accept the offer made in the Sale Notice. If either
Principal Stockholder under this clause (B) elects to purchase fewer than
the maximum number of shares of Common Stock to which such Principal
Stockholder is entitled pursuant to the preceding sentence, the other
Principal Stockholder shall then be entitled to purchase the remaining
number of shares of Common Stock (the "Overallotment Shares") to be
included in the Sale. Each Principal Stockholder
AGREEMENT AND PLAN OF MERGER
ANNEX F-5
136
shall advise the other, if any, in writing promptly, but in any event
within 15 days after receipt of the Sale Notice, as to any Overallotment
Shares available to the other for purchase.
(iii) Within 20 days after receiving the Sale Notice, each Principal
Stockholder desiring to accept the offer made therein shall so notify the
selling Stockholder in writing, specifying the maximum number of shares of
Common Stock that such Principal Stockholder wishes to purchase. If Natco
or either Principal Stockholder does not, within the appropriate time
period specified in subsection (e)(ii) or (e)(iii), so signify its
intention to participate in the Sale, Natco or such Principal Stockholder
as the case may be shall be deemed to have waived all of its rights under
this Section 2(e) with respect to such Sale. If the aggregate of the number
of shares of Common Stock that Natco and the Principal Stockholders have
agreed to purchase pursuant to the allocation provisions of paragraph (ii)
of this Section 2(e) shall be less than the number of shares of Common
Stock included in the Sale Notice, Natco and the Principal Stockholders
shall be deemed to have waived their rights under this Section 2(e) with
respect to such Sale. If Natco and each Principal Stockholder waive their
rights with respect to such Sale, the selling Stockholder shall thereafter
be free, for a period of 90 days, to consummate such Sale for the number of
shares of Common Stock set forth in the Sale Notice at a price not less
than the price set forth in the Sale Notice and on terms otherwise no more
favorable to the purchasers than as set forth therein.
(iv) Anything to the contrary herein notwithstanding, the provisions
of this subsection (e) shall not apply to a Sale to Natco or another
Stockholder, a Public Sale or a Sale to a Purchaser pursuant to subsection
2(f) herein. In addition, the provisions of this subsection (e) shall not
apply to (A), subject to compliance with the provisions of subsection 2(d)
herein, a Sale by any Stockholder to any Affiliate of such Stockholder or
(B), subject to compliance with the provisions of subsection 2(c) herein,
to a distribution, whether in liquidation or otherwise, by Cap I or Cap II
to the limited and general partners thereof or (C), subject to compliance
with the provisions of subsection 2(d) herein, in the case of a Stockholder
who is an individual, to any transfer by operation of law, by death
pursuant to a will or the laws of descent and distribution, by transfer to
a member of the immediate family of such Stockholder or a trust for the
benefit of any such family member or by transfer to a commercial bank or
other lending institution in accordance with the terms of a bona fide
pledge (including without limitation a pledge of Common Stock by Xxxxxxx
(as such term is defined in the Capricorn Registration Rights Agreement)
contemplated by Section 4 of the Capricorn Registration Rights Agreement)
or (D), subject to compliance with the provisions of subsection 2(d)
herein, in the case of a Stockholder that is a legal entity, by such entity
to a successor of such entity or to the purchaser of all or substantially
all of that entity's assets, each of which exceptions described in clauses
(C) and (D) shall be permitted if the transferor or transferee shall give
notice of such assignment, together with such information as may be
reasonably necessary to evidence qualification of the transferee to be an
assignee thereof, to Natco.
(f) Rights to Compel Sale or to Offer Opportunity to Sell; Drag-Along
Rights; Tag-Along Rights. If a Principal Stockholder owning at least 10% of the
outstanding Common
AGREEMENT AND PLAN OF MERGER
ANNEX F-6
137
Stock (the "Selling Principal Stockholder") proposes to effect a Sale of all
shares of Common Stock held by it to a third party that is not an Affiliate or
Associate of Natco or either Principal Stockholder (the "Purchaser") for cash,
cash equivalents or readily marketable securities (the "Purchase Offer"), such
Selling Principal Stockholder shall consult with the other Principal
Stockholder, if any, and, after any such consultation, either (x), if the other
Principal Stockholder, if any, has agreed to sell all its shares of Common Stock
to the Purchaser on the same terms and conditions, require each and every other
Stockholder to sell or (y), if the other Principal Stockholder, if any, has not
agreed to sell all its shares of Common Stock to the Purchaser on the same terms
and conditions, offer each and every other Stockholder, including the other
Principal Stockholder, if any, the opportunity to sell, any and all shares of
Common Stock held by such Stockholders to the Purchaser, in each case, for the
same consideration per share and otherwise on the same terms and conditions upon
which the Selling Principal Stockholder proposes to sell its shares. If, at the
time a Selling Principal Stockholder proposes to effect a Sale pursuant to this
subsection (f), there is no other Principal Stockholder, the Selling Principal
Stockholder may, at its option, proceed in accordance with clause (x) or (y) of
this subsection (f).
(i) Exercise of Right. The Selling Principal Stockholder shall cause
the Purchase Offer to be reduced to writing and shall provide a written
notice (the "Drag-Along Notice") in which it complies with the provisions
of clauses (x) or (y) of this subsection (f) to each other Stockholder,
including the other Principal Stockholder, if any (the other Stockholders,
excluding the other Principal Stockholder, if any, being herein called the
"Remaining Stockholders"). The Drag-Along Notice shall include information
concerning the nature and amount of the consideration per share to be paid
by the Purchaser and the other terms and conditions of the Purchase Offer.
Any Sale pursuant to clause (x) of this subsection 2(f) shall entail all
the outstanding shares of Common Stock owned by the Selling Principal
Stockholder and the other Principal Stockholder, if any, and the Remaining
Stockholders, but any Sale pursuant to clause (y) of this subsection 2(f)
shall entail only those shares of Common Stock owned by the Selling
Principal Stockholder and those owned by the Remaining Stockholders and the
other Principal Stockholder, if any, to the extent that such Remaining
Stockholders and the other Principal Stockholder, if any, have elected to
participate in such Sale. No later than five business days before the
closing date of the Sale set forth in either the Drag-Along Notice or in a
subsequent notice from the Selling Principal Stockholder, each other
Stockholder participating in the Sale pursuant to the provisions of clause
(x) or (y) of this subsection (f) (a "Participating Stockholder") shall
deliver to a representative of the Selling Principal Stockholder designated
in the Drag-Along Notice or such subsequent notice certificates
representing all the shares of Common Stock held by such Participating
Stockholder to be sold in such Sale, duly endorsed in blank for transfer,
with signatures guaranteed, together with all other documents required to
be executed in connection with such Purchase Offer or, if such delivery is
not permitted by applicable law, an unconditional agreement to deliver such
shares of Common Stock pursuant to this subsection (f) at the closing of
such Sale against delivery to such Participating Stockholder of the
consideration therefor. If any Participating Stockholder shall fail to
deliver such certificates to the Selling Principal Stockholder, Natco shall
cause its books and records to show that such shares of Common Stock are
bound by the provisions of this subsection (f)
AGREEMENT AND PLAN OF MERGER
ANNEX F-7
138
and that such shares of Common Stock shall be transferred only to the
Purchaser upon surrender thereof for transfer by the Participating
Stockholder.
(ii) Return of Stock. If, for any reason the Selling Principal
Stockholder determines that it cannot complete the sale of all the shares
of Common Stock, the Selling Principal Stockholder shall return to each
Participating Stockholder all certificates representing shares of Common
Stock that such Participating Stockholder delivered for sale pursuant
hereto, together with all other documents delivered pursuant hereto by such
Participating Stockholder, and all the restrictions on sale or other
disposition contained in this Agreement with respect to such shares of
Common Stock shall continue in effect.
(iii) Remittance of Consideration. At the closing of the sale of all
shares of Common Stock pursuant to this subsection 2(f), the consideration
with respect to the shares of Common Stock of any Participating
Stockholders sold pursuant hereto shall be paid directly to each such
Participating Stockholder pursuant to written instructions of such
Participating Stockholder. The Selling Principal Stockholder shall furnish
such other evidence of the completion and time of completion of such Sale
and the terms thereof as may be reasonably requested by such Participating
Stockholders.
(iv) No Liability. Notwithstanding anything contained in this
subsection 2(f), there shall be no liability on the part of the Selling
Principal Stockholder to any Participating Stockholder if the Sale of
shares of Common Stock pursuant to this subsection 2(f) is not consummated
for whatever reason and, in such circumstances, the Selling Principal
Stockholder's only obligation shall be to return the shares of Common Stock
and other documents to the Participating Stockholders as contemplated by
clause (ii) of this subsection 2(f). Whether to effect a sale of shares of
Common Stock pursuant to this subsection 2(f) shall be in the sole and
absolute discretion of the Selling Principal Stockholder.
(v) Costs. All costs and expenses incurred by any seller in
connection with a Sale pursuant to this subsection 2(f), including without
limitation all attorneys' fees, costs and disbursements and any finders'
fees or brokerage commissions, shall be allocated pro rata among the
sellers, with each bearing that portion of such costs and expenses equal to
a fraction, the numerator of which shall be the amount of the gross
proceeds received by such seller from such Sale, and the denominator of
which shall be the total amount of the gross proceeds received by all
sellers from such Sale.
(g) Inapplicability and Termination of Certain Provisions. The
provisions contained in subsections (c), (d), (e) and (f) of this Section 2,
including without limitation all restrictions on the ability of any Stockholder
to effect a Sale as set forth in subsection (d) or (e) of this Section 2, shall
be inapplicable to the sale of Class A Common Stock or Common Stock by Natco and
any Stockholder in the initial public offering thereof and shall terminate and
be of no further force or effect at such time as Natco is required to file
reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
AGREEMENT AND PLAN OF MERGER
ANNEX F-8
139
3. Related Party Transactions. So long as either Principal Stockholder
continues to own more than 10% of the outstanding Common Stock and except as
contemplated hereby or as the other Stockholders shall consent thereto in
writing, such Principal Stockholder shall not engage in any financial
transaction with Natco unless each other Stockholder has been offered the right
to participate in such transaction proportionately in accordance with such
Stockholder's ownership of Common Stock; provided, however, that this Section 3
shall not apply to the conversion of the Promissory Note (as such term is
defined in that certain Investment Agreement dated as of November 17, 1998
between Natco and Capricorn Investors II, L.P.).
4. 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, in the event 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.
5. Entire Agreement; Amendments.
This Agreement supercedes all prior agreements and understandings among
the parties with respect to its subject matter, including without limitation
that certain Stockholders' Agreement dated as of June 30, 1997 among Xxxxxxxx
Point Industries, Inc., a Delaware corporation (now NATCO Group, Inc.), Cap I
and Cap II which is hereby terminated and rendered of no further force or
effect. 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, or undertakings other than those
expressly set forth herein or therein. 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.
6. 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. Whenever reference is made herein to specific
numbers of shares of stock (as opposed to percentages, proportions and like
ratable computations) such numbers shall, in the event of any stock split, stock
dividend, reclassification or similar event, be appropriately adjusted to
reflect the impact of such event upon such number of shares.
AGREEMENT AND PLAN OF MERGER
ANNEX F-9
140
7. Notice.
All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, or by facsimile copy, receipt
of which has been acknowledged, addressed as follows:
To Natco: NATCO Group Inc.
Brookhollow Central III
0000 Xxxxx Xxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxx
Chairman of the Board and
Chief Executive Officer
Telecopy No.: 713/683-7841
To Cap I: Capricorn Investors, L.P.
c/o Winokur Holdings, Inc.
00 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Xx.
President
Telecopy No.: 203/861-6671
To Cap II: Capricorn Investors II, L.P.
c/o Capricorn Holdings, LLC
00 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Xx.
Manager
Telecopy No.: 203/861-6671
To the Designated c/o Xxxxxx X. Xxxxxx, Xx.
Stockholders: Heller, Hickox, Dimeling, Xxxxxxxxx & Park
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopier No.: 215/546-1041
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.
8. Termination.
This Agreement shall terminate in its entirety on the earlier of the
tenth anniversary of the date hereof and the date on which less than fifty
percent (50%) of the outstanding Common Stock shall be held of record, in the
aggregate, by Cap I, Cap II, each Person who is as of the date of this Agreement
or prior to the liquidation and dissolution, if any, of Cap I or Cap II, was a
general
AGREEMENT AND PLAN OF MERGER
ANNEX F-10
141
or limited partner of Cap I and Cap II, the Designated Stockholders, Xxxxxxxxx
X. Xxxxxxx and their affiliates.
9. Governing Law.
This Agreement shall be governed by and construed in all respects in
accordance with the laws of the State of New York, without regard to the
principles of conflicts of laws thereof which might refer such interpretation to
the laws of a different state or jurisdiction.
10. Counterparts.
This Agreement may be executed simultaneously in one or more
counterparts, any of which may have been transmitted and received by facsimile
transmission and each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
(The remainder of this page intentionally left blank.)
AGREEMENT AND PLAN OF MERGER
ANNEX F-11
142
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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Title:
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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
DESIGNATED STOCKHOLDERS
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Xxxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxx
AGREEMENT AND PLAN OF MERGER
ANNEX F-12
143
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Xxxxxx X. Xxxxxx, Xx.
-----------------------------------------
Xxxxx X. Xxxxx
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Xxxxxx X. Xxxx
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Xxxxxxx X. Xxxxxxxxx
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Xxxx X. Xxxxx, Xx.
THE 1998 TRUST FOR XXXX XXXXX XXXXXXX
By:
-------------------------------------
Name:
Title:
BOCP II, L.L.C.
By:
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Name: Xxxxx X. Xxxxxxx
Title: Authorized Signer
AGREEMENT AND PLAN OF MERGER
ANNEX F-13
144
EXHIBIT I
EXAMPLE #1
CTOC project is awarded to Cynara 12/98
Billed revenues by quarter as follows:
Quarter ending 3/31/99 $3,000,000
Quarter ending 6/30/99 $8,000,000
Quarter ending 9/30/99 $11,000,000
Total contract sales revenue $67,000,000. No other SE Asia contracts awarded.
CYNARA GROUP
NATCO CLASS B
SHAREHOLDINGS
A. Shares conveyed at closing not subject to escrow,
(Section 3.01 (a) in the Amended and Restated
Plan of Merger "ARPM") 500,000
B. Shares released from escrow on 9/30/99 or as soon
thereafter as reasonably practicable equal to the
lesser of 450,000 or ($3,000,000 + $8,000,000 +
$11,000,000)/1,000 = 22 shares/$ = 484,000) 450,000
(Section 7.10 in the ARPM)
C. Shares earned under the "CTOC Earnout Shares"
provision equal to the lesser of 140,000 shares
(2.73 shares per fully diluted Cynara share) or
($3,000,000 + $8,000,000 + $11,000,000 -
$20,454,545)/1000 * 22 shares/$ (Annex A,
definition, in the ARPM) issued on "CTOC Payout
Date" 11/30/99 (Section 3.01(a) in the ARPM) 34,000
D. Shares earned under the "Additional Shares"
provision and issued on the "Initial Payment Date",
5/31/00 (Annex A and Section 3.01(a) of the ARPM)
$67,000,000 / 176.06 shares/$ 380,552
E. Shares earned under the "Supplemental Shares"
provision and issued on the Supplemental Payout
Date 2/28/01 (Annex A and Section 3.01(a) of the ARPM) 0
TOTAL 1,364,552
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Exhibit I
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145
EXAMPLE #2
CTOC project is awarded to Cynara 12/98
Billed revenues by quarter as follows:
Quarter ending 3/31/99 $5,000,000
Quarter ending 6/30/99 $10,000,000
Quarter ending 9/30/99 $15,000,000
Total contract sales revenue $67,000,000. No other SE Asia contracts awarded.
CYNARA GROUP
NATCO CLASS B
SHAREHOLDINGS
A. Shares conveyed at closing not subject to escrow.
(Section 3.01 (a) in the Amended and Restated Plan of
Merger ("ARPM") 500,000
B. Shares released from escrow on 9/30/99 or as soon
thereafter as reasonably practicable equal to the
lesser of 450,000 or ($5,000,000 + $10,000,000 +
$15,000,000) divided by 1000 * 22 shares/$ = 660,000)
(Section 7.10 in the ARPM) 450,000
C. Shares earned under the "CTOC Earnout Shares" provision
equal to the lesser of 140,000 shares (2.73 shares per
fully diluted Cynara share) or ($5,000,000 + $10,000,000 +
$15,000,000) - $20,454,545) divided by 1000 * 22 shares/$
= 210,000) shares (Annex A, definition, in the ARPM) issued
on "CTOC Payout Date" 11/30/99 (Section 3.01(a) in the
ARPM) 140,000
D. Shares earned under the "Additional Shares" provision
and issued on the "Initial Payment Date", 5/31/00 (Annex
A and Section 3.01(a) of the ARPM) $67,000,000 divided by
176.06 shares/$ 380,552
E. Shares earned under the "Supplemental Shares" provision
and issued on the Supplemental Payout Date 2/28/01
(Annex A and Section 3.01(a) of the ARPM) 0
TOTAL 1,470,552
=========
Exhibit I
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146
EXAMPLE #3
CTOC project is awarded to Cynara 12/98
Billed revenues by quarter as follows:
Quarter ending 3/31/99 $ 5,000,000
Quarter ending 6/30/99 $10,000,000
Quarter ending 9/30/99 $15,000,000
Total contract sales revenue $67,000,000. Three other SE Asia contracts awarded
between 4/1/00 and 12/31/00 with sales revenue of $200,000,000.
CYNARA GROUP
NATCO CLASS B
SHAREHOLDINGS
A. Shares conveyed at closing not subject to escrow.
(Section 3.01(a) in the Amended and Restated Plan of
Merger "ARPM") 500,000
B. Shares released from escrow on 9/30/99 or as soon thereafter
as reasonably practicable equal to the lesser of 450,000 or
($5,000,000 + $10,000,000 + $15,000,000) / 1000 * 22 shares/$
= 660,000) 450,000
(Section 7.10 in the ARPM)
C. Shares earned under the "CTOC Earnout Shares" provision equal
to the lesser of 140,000 shares (2.73 shares per fully diluted
Cynara Share) or ($5,000,000 + $10,000,000 + $15,000,000 -
$20,454,545) / 1000 * 22 shares/$ = 210,000 shares (Annex A,
definition, in the ARPM) issued on "CTOC Payout Date" 11/30/99
(Section 3.01(a) in the ARPM) 140,000
D. Shares earned under the "Additional Shares" provision and issued
on the "Initial Payment Date", 5/31/00 (Annex A and Section 3.01(a)
of the ARPM)
$67,000,000 / 176.06 shares/$ 380,552
E. Shares earned under the "Supplemental Shares" provision and issued
on the Supplemental Payout Date 2/28/01 (Annex A and Section 3.01(a)
of the ARPM) $200,000,000 / 352.11 shares/$ = 568,004 shares; however,
this earnout is subject to an overall limitation on total C + D + E
shares of 18.525 shares of Acquiror Class B stock per fully diluted
Cynara share = 950,000 shares 429,448
TOTAL 1,900,000
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Exhibit I
-3-
147
EXAMPLE #4
CTOC project is awarded to Cynara 12/98
Billed revenues by quarter as follows:
Quarter ending 3/31/99 $2,000,000
Quarter ending 6/30/99 $3,000,000
Quarter ending 9/30/99 $3,000,000
Total contract sales revenue $67,000,000. Three other SE Asia contracts awarded
between 4/1/00 and 12/31/00 with sales revenue of $200,000,000.
CYNARA GROUP
NATCO CLASS B
SHAREHOLDINGS
A. Shares conveyed at closing not subject to escrow. (Section 3.01 (a) in the
Amended and Restated Plan of Merger "ARPM") 500,000
B. Shares released from escrow on 9/30/99 or as soon as thereafter
as reasonably practicable equal to the lesser of 450,000 or
($2,000,000+$3,000,000+$3,000,000) divided by 1000*22 shares/$=176,000) 176,000
(Section 7.10 in the ARPM)
C. Shares earned under the "CTOC Earnout Shares" provision equal
to the lesser of 140,000 shares (2.73 shares per fully diluted Cynara share)
or ($2,000,000+$3,000,000+$3,000,000-$20,454,545)
/1000 * 22 shares/$=0 shares (Annex A, definition, in the ARPM)
issued on "CTOC Payout Date" 11/30/99 (Section 3.01(a) in the ARPM) 0
D. Shares earned under the "Additional Shares" provision and issued
on the "Initial Payment Date", 5/31/00 (Annex A and Section 3.01(a)
of the ARPM)
$67,000,000 divided by 176.06 shares/$ 380,552
E. Shares earned under the "Supplemental Shares" provision and issued on the
Supplemental Payout Date 2/28/01 (Annex A and Section 3.01(a) of the ARPM)
$200,000,000/352.11 shares/$ = 568,004 shares; however, this earnout is
subject to an overall limitation on total C+D+E shares of 18.525 shares
of Acquiror Class B stock per fully diluted Cynara share = 950,000 shares 568,004
TOTAL 1,624,556
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This example illustrates a.) No negative shares can be calculated in C. above;
and b.) C + D + E is not limited by cancellation of escrow shares due to not
reaching ceiling in calculation B. above.
Exhibit I
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