<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 21, 2000
REGISTRATION NO. 333-48851
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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NATCO GROUP INC.
(Exact Name of Registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 3533 22-2906892
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
<TABLE>
<S> <C>
J. MICHAEL MAYER
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
NATCO GROUP INC.
BROOKHOLLOW CENTRAL III BROOKHOLLOW CENTRAL III
2950 NORTH LOOP WEST, SUITE 750 2950 NORTH LOOP WEST, SUITE 750
HOUSTON, TEXAS 77092 HOUSTON, TEXAS 77092
(713) 683-9292 (713) 683-9292
(Address, including zip code, and telephone (Name, address, including zip code, and telephone
number, number, including area code,
including area code, of agent for service)
of Registrant's principal executive offices)
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Copies To:
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<S> <C>
VINSON & ELKINS L.L.P. AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
1001 FANNIN STREET, SUITE 2300 1700 PACIFIC AVENUE, SUITE 4100
HOUSTON, TEXAS 77002-6760 DALLAS, TEXAS 75201-4618
(713) 758-2222 (214) 969-4780
ATTN.: WILLIAM E. JOOR III ATTN.: SETH R. MOLAY, P.C.
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities registered on this Form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Section 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses of the offering are estimated to be as follows:
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<S> <C>
Securities and Exchange Commission registration fee......... $ 30,858
NASD filing fee............................................. 11,600
NYSE listing fee............................................ 116,100
Legal fees and expenses..................................... 250,000
Accounting fees and expenses................................ 260,000
Blue Sky fees and expenses (including legal fees)........... 10,000
Printing expenses........................................... 100,000
Transfer Agent fees......................................... 15,000
Miscellaneous............................................... 6,442
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TOTAL............................................. $ 800,000
=========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, a Delaware
corporation has the power, under specified circumstances, to indemnify its
directors, officers, employees and agents in connection with threatened, pending
or completed actions, suits or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in right of the
corporation), brought against them by reason of the fact that they were or are
such directors, officers, employees or agents, against expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred in any
such action, suit or proceeding. Article Eleventh of the Restated Certificate of
Incorporation of NATCO Group Inc. (the "Company") provides that the Company may
indemnify any director, officer, employee or agent of the Company to the fullest
extent permitted by the Delaware General Corporation Law as the same exists or
may be hereafter amended. Article VI of the Company's Bylaws provides that the
Company shall indemnify each person who is or was made a party to any actual or
threatened civil, criminal, administrative or investigative action, suit or
proceeding because such person is or was an officer or director of the Company
or is a person who is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service relating to employee
benefit plans, to the fullest extent permitted by the Delaware General
Corporation Law as it existed at the time the indemnification provisions of the
Company's Bylaws were adopted or as may be thereafter amended.
Article VI of the Company's Bylaws also provides that the Company may
maintain insurance, at its own expense, to protect itself and any director,
officer, employee or agent of the Company or of another entity against any
expense, liability, or loss, regardless of whether the Company would have the
power to indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
Section 102(b)(7) of the Delaware General Corporation Law provides that a
certificate of incorporation may contain a provision eliminating or limiting the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for its or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law (relating to liability for unauthorized
acquisitions or redemptions of, or dividends on, capital stock) or (iv) for any
transaction from which the director derived an improper personal benefit.
Article Tenth of the Company's Certificate of Incorporation contains such a
provision.
II-1
<PAGE> 3
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On March 5, 1998, the Company effected a four for three split of its common
stock, par value $.01 per share (the "Common Stock"). All references to shares
of Common Stock herein are on a post-split basis. On November 17, 1998, the
Company amended its charter to divide its common stock into two classes, Class A
common stock and Class B common stock.
On June 30, 1997, the Company issued $2,359,864 in principal amount of its
13% Subordinated Promissory Notes due 2000 and 2,113,334 shares of Common Stock
to Capricorn Investors II, L.P. in consideration of the payment to the Company
of $13,000,000. In so doing, the Company relied on the private placement
provisions of Section 4(2) of the Securities Act in claiming exemption for the
offering, sale and delivery of such securities from the registration provisions
of the Securities Act. Capricorn Investors II, L.P. was not organized solely to
acquire the Company's securities. All of the limited partners of Capricorn
Investors II, L.P. are accredited investors within the meaning of Rule 501 of
Regulation D under the Securities Act.
As of June 30, 1998, Capricorn Investors, L.P. and Capricorn Investors II,
L.P. delivered to the Company $5,084,501 and $2,359,864, respectively, in
principal amount of the Company's 13% Subordinated Notes due 2000 in exchange
for the issuance by the Company to such limited partnerships out of authorized
but unissued Common Stock 1,010,333 shares and 468,925 shares, respectively. In
so doing, the Company relied on the exchange of existing securities provisions
of Section 3(a)(9) of the Securities Act in claiming exemption from the
registration provisions of the Securities Act. No commission or other
remuneration was paid or given, directly or indirectly, for soliciting such
exchange.
On November 18, 1998, in connection with the merger of The Cynara Company
("Cynara") with and into the Company, the Company issued 500,000 shares of Class
B common stock to the former stockholders of Cynara in partial consideration of
the receipt of all of the outstanding shares of the common stock, par value $.01
per share, of Cynara. As of September 30, 1999, the Company issued an additional
325,836 shares of Class B common stock to the former stockholders of Cynara as
contingent consideration for such shares of Cynara common stock, pursuant to
certain earn-out provisions contained in the merger agreement. In so doing, the
Company relied in each case on the private placement provisions of Section 4(2)
of the Securities Act in claiming exemption for the offering, sale and delivery
of such securities from the registration provisions of the Securities Act. In
connection with the execution of the Cynara merger agreement, all of the former
stockholders of Cynara executed letters acknowledging that they are accredited
investors within the meaning of Rule 501 of Regulation D under the Securities
Act.
On November 18, 1998, the Company issued $5,300,000 in principal amount of
its Convertible Promissory Note due 1999 to Capricorn Investors II, L.P. in
consideration of the payment to the Company of $5,300,000. In so doing, the
Company relied on the private placement provisions of Section 4(2) of the
Securities Act in claiming exemption for the offering, sale and delivery of such
securities from the registration provisions of the Securities Act. Capricorn
Investors II, L.P. was not organized solely to acquire the Company's securities.
All of the limited partners of Capricorn Investors II, L.P. are accredited
investors within the meaning of Rule 501 of Regulation D under the Securities
Act.
On December 17, 1998, Capricorn Investors II, L.P. delivered to the Company
$5,300,000 in principal amount of the Company's Convertible Promissory Note due
1999 in exchange for the issuance by the Company to such limited partnership out
of authorized but unissued Class A common stock 504,762 shares. In so doing, the
Company relied on the exchange of existing securities provisions of Section
3(a)(9) of the Securities Act in claiming exemption from the registration
provisions of the Securities Act. No commission or other remuneration was paid
or given, directly or indirectly, for soliciting such exchange.
As of July 12, 1999, the Company issued 136,832 shares of Class A common
stock to Nathaniel A. Gregory in consideration of the payment to the Company of
$1,205,489.92. In so doing, the Company relied on the private placement
provisions of Section 4(2) of the Securities Act in claiming exemption for the
offering, sale and delivery of such securities from the registration provisions
of the Securities Act. Mr. Gregory, the Chairman and Chief Executive Officer of
the Company, is an accredited investor within the meaning of Rule 501 of
Regulation D under the Securities Act.
II-2
<PAGE> 4
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS:
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EXHIBIT
NUMBER DESCRIPTION
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1.1* -- Form of Underwriting Agreement.
2.1 -- Amended and Restated Agreement and Plan of Merger dated
November 17, 1998 but effective March 26, 1998 among the
Company, NATCO Acquisition Company, National Tank Company
and The Cynara Company.
2.2 -- Stock Purchase Agreement dated as of May 7, 1997 among
Enterra Petroleum Equipment Group, Inc., National Tank
Company and Weatherford Enterra, Inc.
2.3 -- Letter of Intent dated July 22, 1999 between NATCO Group
Inc. and Porta-Test International Inc.
2.4 -- Letter of Intent dated September 28, 1999 between NATCO
Group Inc. and Engineering Specialties, Inc.
2.5 -- Letter of Intent dated October 28, 1999 between NATCO
Group Inc. and Modular Production Equipment, Inc.
3.1* -- Restated Certificate of Incorporation of the Company, as
amended by Certificate of Amendment dated November 18,
1998 and Certificate of Amendment dated November 29, 1999
and Certificate of Amendment dated January 21, 2000.
3.2 -- Certificate of Designations of Series A Junior
Participating Preferred Stock.
3.3 -- Amended and Restated Bylaws of the Company, as amended.
4.1 -- Specimen Common Stock certificate.
4.2 -- Rights Agreement dated as of May 15, 1998 by and among
the Company and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent.
4.3 -- Registration Rights Agreement dated as of November 18,
1998 among the Company and Capricorn Investors, L.P. and
Capricorn Investors II, L.P.
4.4 -- Registration Rights Agreement dated as of November 18,
1998 among the Company and the former stockholders of The
Cynara Company.
4.5 -- Form of lock-up letter to the Underwriters from certain
directors and officers of the Company.
5.1 -- Opinion of Vinson & Elkins L.L.P.
10.1 -- Directors Compensation Plan.
10.2 -- Form of Nonemployee Director's Option Agreement.
10.3 -- Employee Stock Incentive Plan.
10.4 -- International Revolving Loan Agreement dated as of June
30, 1997 between National Tank Company and Chase Bank of
Texas, N.A.
10.5 -- Commitment Letter dated November 24, 1994 from The Bank
of Nova Scotia to NATCO Canada, Ltd.
10.6 -- Service and Reimbursement Agreement dated as of July 1,
1997 between the Company and Capricorn Management, G.P.
10.7 -- Term Loan Facility and Revolving Loan Facility dated June
30, 1997 among National Tank Company and Chase Bank of
Texas, N.A.
10.8 -- Loan Agreement dated as of October 8, 1997 between The
Cynara Company and Bank One Texas, N.A.
10.9 -- Form of Indemnification Agreement between the Company and
its officers and directors.
10.10 -- Securities Exchange Agreement dated as of March 5, 1998
by and among the Company, Capricorn Investors, L.P. and
Capricorn Investors II, L.P.
</TABLE>
II-3
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
10.11 -- Stockholders' Agreement by and among the Company,
Capricorn Investors, L.P. and Capricorn Investors II,
L.P.
10.12 -- Employment Agreement dated as of July 31, 1997 between
the Company and Nathaniel A. Gregory, as amended as of
July 12, 1999.
10.13 -- Stock Option Agreement dated as of July 31, 1997 between
the Company and Nathaniel A. Gregory, as amended as of
July 12, 1999.
10.14 -- Stock Option Agreement dated as of July 31, 1997 between
the Company and Patrick M. McCarthy.
10.15 -- Stock Option Agreement dated as of July 31, 1997 between
the Company and William B. Wiener III.
10.16 -- Stock Option Agreement dated as of July 31, 1997 between
the Company and Frank Smith.
10.17 -- Stock Option Agreement dated as of July 31, 1997 between
the Company and Frank Smith.
10.18 -- Stock Option Agreement dated as of July 31, 1997 between
the Company and David Volz.
10.19 -- Stockholder's Agreement dated as of November 18, 1998
among the Company, Capricorn Investors, L.P., Capricorn
Investors II, L.P. and the former stockholders of The
Cynara Company.
10.20 -- Change of Control Policy dated as of September 28, 1999.
10.21 -- Severance Pay Summary Plan Description.
10.22 -- Loan Agreement ($22,000,000 U.S. Revolving Loan Facility,
$10,000,000 Canadian Revolving Loan Facility and
$32,500,000 Term Loan Facility) dated as of November 20,
1998 among National Tank Company, NATCO Canada, Ltd.,
Chase Bank of Texas, National Association, The Bank of
Nova Scotia and the other lenders parties thereto and
joined in by NATCO Group Inc., as amended.
10.23 -- International Revolving Loan Agreement dated as of June
30, 1997 between National Tank Company and Texas Commerce
Bank, National Association, as amended.
10.24 -- Form of Nonstatutory Stock Option Agreement.
21.1 -- List of subsidiaries of the Company.
23.1 -- Consent of KPMG LLP regarding NATCO Group Inc.
23.2 -- Consent of KPMG LLP regarding Engineering Specialties,
Inc. and Engineering Specialties FSC, Inc.
23.3 -- Consent of KPMG LLP regarding Porta-Test International
Inc.
23.4 -- Consent of Ernst &Young LLP regarding The Cynara Company.
23.5 -- Consent of Vinson & Elkins L.L.P. (contained in Exhibit
5.1 hereto).
24.1 -- Powers of Attorney (included on the signature page
hereto).
27.1 -- Financial Data Schedule.
99.1 -- Consent of George K. Hickox, Jr. to serve as director.
99.2 -- Audited Financial Statement of Total Engineering Services
Team, Inc.
</TABLE>
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* Filed herewith.
II-4
<PAGE> 6
All other schedules are omitted because the required information is
inapplicable or the information is presented in the Consolidated Financial
Statements or related notes.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Company hereby undertakes to provide to the underwriters at
the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
The undersigned Company hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment to Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Houston, State of Texas, on the 21st day of January, 2000.
NATCO GROUP INC.
By: /s/ NATHANIEL A. GREGORY
----------------------------------
Nathaniel A. Gregory
Chief Executive Officer and
Chairman
of the Board of Directors
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to Registration Statement has been signed below by the following
persons in the capacities indicated on the 21st day of January, 2000.
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SIGNATURE TITLE
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/s/ NATHANIEL A. GREGORY Chairman of the Board and Chief Executive
- --------------------------------------------- Officer (Principal Executive Officer)
Nathaniel A. Gregory
/s/ J. MICHAEL MAYER Senior Vice President and Chief Financial
- --------------------------------------------- Officer (Principal Financial Officer)
J. Michael Mayer
/s/ STEPHEN J. GOODLAND Vice President -- Finance and Accounting
- --------------------------------------------- (Principal Accounting Officer)
Stephen J. Goodland
HERBERT S. WINOKUR, JR.* Director
- ---------------------------------------------
Herbert S. Winokur, Jr.
E. HALE STALEY* Director
- ---------------------------------------------
E. Hale Staley
PATRICK M. MCCARTHY* Director
- ---------------------------------------------
Patrick M. McCarthy
HOWARD I. BULL* Director
- ---------------------------------------------
Howard I. Bull
KEITH K. ALLAN* Director
- ---------------------------------------------
Keith K. Allan
GEORGE K. HICKOX, JR.* Director
- ---------------------------------------------
George K. Hickox, Jr.
*By: /s/ DANIEL R. CARTER
----------------------------------------
Daniel R. Carter, pursuant to a power of
attorney filed with Amendment No. 2 to
this Registration Statement No.
333-48851, filed with the Securities and
Exchange Commission on October 1, 1999.
</TABLE>
II-6
<PAGE> 8
INDEX TO EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION
<C> <S>
1.1* -- Form of Underwriting Agreement.
2.1 -- Amended and Restated Agreement and Plan of Merger dated
November 17, 1998 but effective March 26, 1998 among the
Company, NATCO Acquisition Company, National Tank Company
and The Cynara Company.
2.2 -- Stock Purchase Agreement dated as of May 7, 1997 among
Enterra Petroleum Equipment Group, Inc., National Tank
Company and Weatherford Enterra, Inc.
2.3 -- Letter of Intent dated July 22, 1999 between NATCO Group
Inc. and Porta-Test International Inc.
2.4 -- Letter of Intent dated September 28, 1999 between NATCO
Group Inc. and Engineering Specialties, Inc.
2.5 -- Letter of Intent dated October 28, 1999 between NATCO
Group Inc. and Modular Production Equipment, Inc.
3.1* -- Restated Certificate of Incorporation of the Company, as
amended by Certificate of Amendment dated November 18,
1998 and Certificate of Amendment dated November 29, 1999
and Certificate of Amendment dated January 21, 2000.
3.2 -- Certificate of Designations of Series A Junior
Participating Preferred Stock.
3.3 -- Amended and Restated Bylaws of the Company, as amended.
4.1 -- Specimen Common Stock certificate.
4.2 -- Rights Agreement dated as of May 15, 1998 by and among
the Company and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent.
4.3 -- Registration Rights Agreement dated as of November 18,
1998 among the Company and Capricorn Investors, L.P. and
Capricorn Investors II, L.P.
4.4 -- Registration Rights Agreement dated as of November 18,
1998 among the Company and the former stockholders of The
Cynara Company.
4.5 -- Form of lock-up letter to the Underwriters from certain
directors and officers of the Company.
5.1 -- Opinion of Vinson & Elkins L.L.P.
10.1 -- Directors Compensation Plan.
10.2 -- Form of Nonemployee Director's Option Agreement.
10.3 -- Employee Stock Incentive Plan.
10.4 -- International Revolving Loan Agreement dated as of June
30, 1997 between National Tank Company and Chase Bank of
Texas, N.A.
10.5 -- Commitment Letter dated November 24, 1994 from The Bank
of Nova Scotia to NATCO Canada, Ltd.
10.6 -- Service and Reimbursement Agreement dated as of July 1,
1997 between the Company and Capricorn Management, G.P.
10.7 -- Term Loan Facility and Revolving Loan Facility dated June
30, 1997 among National Tank Company and Chase Bank of
Texas, N.A.
10.8 -- Loan Agreement dated as of October 8, 1997 between The
Cynara Company and Bank One Texas, N.A.
10.9 -- Form of Indemnification Agreement between the Company and
its officers and directors.
10.10 -- Securities Exchange Agreement dated as of March 5, 1998
by and among the Company, Capricorn Investors, L.P. and
Capricorn Investors II, L.P.
10.11 -- Stockholders' Agreement by and among the Company,
Capricorn Investors, L.P. and Capricorn Investors II,
L.P.
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
10.12 -- Employment Agreement dated as of July 31, 1997 between
the Company and Nathaniel A. Gregory, as amended as of
July 12, 1999.
10.13 -- Stock Option Agreement dated as of July 31, 1997 between
the Company and Nathaniel A. Gregory, as amended as of
July 12, 1999.
10.14 -- Stock Option Agreement dated as of July 31, 1997 between
the Company and Patrick M. McCarthy.
10.15 -- Stock Option Agreement dated as of July 31, 1997 between
the Company and William B. Wiener III.
10.16 -- Stock Option Agreement dated as of July 31, 1997 between
the Company and Frank Smith.
10.17 -- Stock Option Agreement dated as of July 31, 1997 between
the Company and Frank Smith.
10.18 -- Stock Option Agreement dated as of July 31, 1997 between
the Company and David Volz.
10.19 -- Stockholder's Agreement dated as of November 18, 1998
among the Company, Capricorn Investors, L.P., Capricorn
Investors II, L.P. and the former stockholders of The
Cynara Company.
10.20 -- Change of Control Policy dated as of September 28, 1999.
10.21 -- Severance Pay Summary Plan Description.
10.22 -- Loan Agreement ($22,000,000 U.S. Revolving Loan Facility,
$10,000,000 Canadian Revolving Loan Facility and
$32,500,000 Term Loan Facility) dated as of November 20,
1998 among National Tank Company, NATCO Canada, Ltd.,
Chase Bank of Texas, National Association, The Bank of
Nova Scotia and the other lenders parties thereto and
joined in by NATCO Group Inc., as amended.
10.23 -- International Revolving Loan Agreement dated as of June
30, 1997 between National Tank Company and Texas Commerce
Bank, National Association, as amended.
10.24 -- Form of Nonstatutory Stock Option Agreement.
21.1 -- List of subsidiaries of the Company.
23.1 -- Consent of KPMG LLP regarding NATCO Group Inc.
23.2 -- Consent of KPMG LLP regarding Engineering Specialties,
Inc. and Engineering Specialties FSC, Inc.
23.3 -- Consent of KPMG LLP regarding Porta-Test International
Inc.
23.4 -- Consent of Ernst &Young LLP regarding The Cynara Company.
23.5 -- Consent of Vinson & Elkins L.L.P. (contained in Exhibit
5.1 hereto).
24.1 -- Powers of Attorney (included on the signature page
hereto).
27.1 -- Financial Data Schedule.
99.1 -- Consent of George K. Hickox, Jr. to serve as director.
99.2 -- Audited Financial Statement of Total Engineering Services
Team, Inc.
</TABLE>
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* Filed herewith.
<PAGE> 1
EXHIBIT 1.1
7,500,000 Shares
NATCO Group Inc.
Class A Common Stock
UNDERWRITING AGREEMENT
January 27, 2000
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON SMITH BARNEY INC.
SIMMONS & COMPANY INTERNATIONAL
DLJdirect Inc.
As representatives of the several Underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
NATCO Group Inc., a Delaware corporation (the "COMPANY"), proposes to
issue and sell to the several underwriters named in Schedule I hereto (the
"UNDERWRITERS"), and certain stockholders of the Company named in Schedule II
hereto (the "SELLING STOCKHOLDERS"), severally propose to sell to the several
Underwriters, an aggregate of 7,500,000 shares of the Class A common stock, par
value $0.01 per share, of the Company (the "FIRM SHARES"), of which 4,000,000
shares are to be issued and sold by the Company and 3,500,000 shares are to be
sold by the Selling Stockholders. The Company also proposes to issue and sell to
the several Underwriters not more than an additional 1,125,000 shares of its
Class A common stock, par value $0.01 per share, (the "ADDITIONAL SHARES") if
requested by the Underwriters as provided in Section 2 hereof. The Firm Shares
and the Additional Shares are hereinafter referred to collectively as the
"SHARES." The Class A common stock, par value $0.01 per share, together with the
Class B common stock, par value $0.01 per share, is hereinafter referred to as
the "COMMON STOCK." The Company and the Selling Stockholders are hereinafter
sometimes referred to collectively as the "SELLERS."
Section 1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"COMMISSION") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-1, including a
prospectus, relating to the Shares. The registration statement, as amended at
the time it became effective, including the information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to Rule
<PAGE> 2
430A under the Act, is hereinafter referred to as the "REGISTRATION STATEMENT;"
and the prospectus in the form first used to confirm sales of Shares is
hereinafter referred to as the "PROSPECTUS." If the Company has filed or is
required pursuant to the terms hereof to file a registration statement pursuant
to Rule 462(b) under the Act registering the offering, sale and delivery of
additional shares of Common Stock (a "RULE 462(B) REGISTRATION STATEMENT"),
then, unless otherwise specified, any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462(b) Registration Statement.
Section 2. Agreements to Sell and Purchase and Lock-Up Agreements. On
the basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, (i) the Company agrees to issue and sell
4,000,000 Firm Shares, (ii) each Selling Stockholder agrees, severally and not
jointly, to sell the number of Firm Shares set forth opposite such Selling
Stockholder's name in Schedule II hereto and (iii) each Underwriter agrees,
severally and not jointly, to purchase from each Seller at a price per Share of
$______ (the "PURCHASE PRICE") the number of Firm Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Firm Shares to be sold by such Seller as
the number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell the Additional Shares, and the Underwriters shall have the right to
purchase, severally and not jointly, up to 1,125,000 Additional Shares from the
Company at the Purchase Price. Additional Shares may be purchased solely for the
purpose of covering over-allotments made in connection with the offering of the
Firm Shares. The Underwriters may exercise their right to purchase Additional
Shares in whole or in part from time to time by giving written notice thereof to
the Company within 30 days after the date of this Agreement. You shall give any
such notice on behalf of the Underwriters and such notice shall specify the
aggregate number of Additional Shares to be purchased pursuant to such exercise
and the date for payment and delivery thereof, which date shall be a business
day (i) no earlier than two business days after such notice has been given (and,
in any event, no earlier than the Closing Date (as hereinafter defined)) and
(ii) no later than ten business days after such notice has been given. If any
Additional Shares are to be purchased, each Underwriter, severally and not
jointly, agrees to purchase from the Company the number of Additional Shares
(subject to such adjustments to eliminate fractional shares as you may
determine) which bears the same proportion to the total number of Additional
Shares to be purchased from the Company as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I bears to the total number of
Firm Shares.
The Company hereby agrees not to (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
(ii) enter into any swap or other arrangement that transfers all or a portion of
the economic consequences associated with the ownership of any Common Stock
(regardless of whether any of the transactions described in clause (i) or (ii)
is to be settled by the delivery of Common Stock, or
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such other securities, in cash or otherwise), except to the Underwriters
pursuant to this Agreement, for a period of 180 days after the date of the
Prospectus without the prior written consent of Donaldson, Lufkin & Jenrette
Securities Corporation. Notwithstanding the foregoing, during such period the
Company may (i) grant stock options and restricted stock pursuant to the
Company's existing stock option and incentive plans described in the Prospectus,
(ii) issue shares of Common Stock upon the exercise of any option or warrant or
the conversion of any security outstanding on the date hereof, (iii) grant
25,000 stock options in connection with the pending acquisition of Engineering
Specialties, Inc. ("ESI") as described in the Prospectus and (iv) issue up to
950,000 shares of Common Stock to former shareholders of The Cynara Company in
connection with an earnout as described in the Prospectus. The Company also
agrees not to file any registration statement with respect to any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock for a period of 180 days after the date of the Prospectus
without the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation; provided, however, that the Company may file and cause to become
effective under the Act one or more registration statements on Form S-8 relating
to the offering, sale and delivery of shares of Common Stock pursuant to
outstanding stock options or other employee benefit plans or interests in such
employee benefit plans. In addition, each Selling Stockholder agrees that, for a
period of 180 days after the date of the Prospectus without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation, it will not make
any demand for, or exercise any right with respect to, the registration of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock. The Company shall, prior to or concurrently with
the execution of this Agreement, deliver an agreement executed by (i) each of
the directors and executive officers of the Company and (ii) each stockholder
listed on Annex I hereto to the effect that such person will not, during the
period commencing on the date such person signs such agreement and ending 180
days after the date of the Prospectus, without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, (A) engage in any of the
transactions described in the first sentence of this paragraph or (B) make any
demand for, or exercise any right with respect to, the registration of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock.
Section 3. Terms of Public Offering. The Sellers are advised by you that
the Underwriters propose (i) to make a public offering of their respective
portions of the Shares as soon after the execution and delivery of this
Agreement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
Section 4. Delivery and Payment. The Shares shall be evidenced by
definitive certificates and shall be issued in such authorized denominations and
registered in such names as Donaldson, Lufkin & Jenrette Securities Corporation
shall request no later than two business days prior to the Closing Date or the
applicable Option Closing Date (as defined below), as the case may be. The
Shares shall be delivered by or on behalf of the Sellers, with any transfer
taxes thereon duly paid by the respective Sellers, to Donaldson, Lufkin &
Jenrette Securities Corporation through the facilities of The Depository Trust
Company ("DTC"), for the respective accounts of the several Underwriters,
against payment to the Sellers of the Purchase Price therefor by wire transfer
of Federal or other funds immediately available in New York City. The
certificates
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representing the Shares shall be made available for inspection not later than
9:30 a.m., New York City time, on the business day prior to the Closing Date or
the applicable Option Closing Date (as defined below), as the case may be, at
the office of DTC or its designated custodian (the "DESIGNATED Office"). The
time and date of delivery and payment for the Firm Shares shall be 9:00 a.m.,
New York City time, on February 2, 2000 or such other time on the same or such
other date as Donaldson, Lufkin & Jenrette Securities Corporation and the
Company shall agree in writing. The time and date of delivery and payment for
the Firm Shares are hereinafter referred to as the "CLOSING DATE." The time and
date of delivery and payment for any Additional Shares to be purchased by the
Underwriters shall be 9:00 a.m., New York City time, on the date specified in
the applicable exercise notice given by you pursuant to Section 2 or such other
time on the same or such other date as Donaldson, Lufkin & Jenrette Securities
Corporation and the Company shall agree in writing. The time and date of each
delivery and payment for any Additional Shares are hereinafter referred to as an
"OPTION CLOSING DATE."
The documents to be delivered on the Closing Date or any Option Closing
Date on behalf of the parties hereto pursuant to Section 9 of this Agreement
shall be delivered at the offices of Vinson & Elkins L.L.P., 1001 Fannin Street,
Suite 2300, Houston, Texas 77002 and the shares shall be delivered at the
Designated Office, all on the Closing Date or such Option Closing Date, as the
case may be.
Section 5. Agreements of the Company. The Company agrees with you:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information, (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement, of the suspension of
qualification of the Shares for offering or sale in any jurisdiction, or of the
initiation of any proceeding for either of such purposes, (iii) when the
Registration Statement or any post-effective amendment to the Registration
Statement becomes effective, (iv) if the Company is required to file a Rule
462(b) Registration Statement after the effectiveness of this Agreement, when
the Rule 462(b) Registration Statement has become effective and (v) of the
happening of any event during the period referred to in Section 5(d) below that
makes any statement of a material fact made in the Registration Statement or the
Prospectus untrue or that requires any additions to or changes in the
Registration Statement or the Prospectus in order to make the statements therein
not misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company will use
its best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish to you four (4) signed copies of the Registration
Statement as first filed with the Commission and of each amendment to it,
including all exhibits, and to furnish to you and each Underwriter designated by
you such number of conformed copies of the Registration Statement as so filed
and of each amendment to it, without exhibits, as you may reasonably request.
(c) To prepare the Prospectus, the form and substance of which shall be
satisfactory to you, and to file the Prospectus in such form with the Commission
within the applicable period
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<PAGE> 5
specified in Rule 424(b) under the Act; during the period specified in Section
5(d) below, not to file any further amendment to the Registration Statement and
not to make any amendment or supplement to the Prospectus of which you shall not
previously have been advised or to which you shall reasonably and promptly
object after being so advised; and, during such period, to prepare and file with
the Commission, promptly upon your reasonable request, any amendment to the
Registration Statement or amendment or supplement to the Prospectus that may be
necessary or advisable in connection with the distribution of the Shares by you,
and to use its best efforts to cause any such amendment to the Registration
Statement to become promptly effective.
(d) Promptly after the Registration Statement becomes effective and from
time to time thereafter for such period as in the opinion of counsel for the
Underwriters a prospectus is required by law to be delivered in connection with
sales by an Underwriter or a dealer, to furnish in New York City to each
Underwriter and any dealer as many copies of the Prospectus (and of any
amendment or supplement to the Prospectus) as such Underwriter or dealer may
reasonably request.
(e) If, during the period specified in Section 5(d), any event shall
occur or condition shall exist as a result of which, in the reasonable opinion
of counsel for the Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if, in the reasonable opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Prospectus to comply with applicable law,
forthwith to prepare and file with the Commission an appropriate amendment or
supplement to the Prospectus so that the statements in the Prospectus, as so
amended or supplemented, will not in the light of the circumstances when it is
so delivered, be misleading, or so that the Prospectus will comply with
applicable law, and to furnish to each Underwriter and to any dealer as many
copies thereof as such Underwriter or dealer may reasonably request.
(f) Prior to any public offering of the Shares, to cooperate with you
and counsel for the Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the several Underwriters and
by dealers under the state securities or Blue Sky laws of such jurisdictions as
you may request, to continue such registration or qualification in effect so
long as required for distribution of the Shares and to file such consents to
service of process or other documents as may be necessary in order to effect
such registration or qualification; provided, however, that the Company shall
not be required in connection therewith to qualify as a foreign corporation in
any jurisdiction in which it is not now so qualified or to take any action that
would subject it to general consent to service of process or to taxation as to
matters and transactions other than those relating to the Prospectus, the
Registration Statement, any preliminary prospectus or the offering or sale of
the Shares, in any jurisdiction in which it is not now so subject.
(g) To mail and make generally available to its stockholders as soon as
practicable an earnings statement covering the twelve-month period beginning
after the effective date of the Registration Statement that shall satisfy the
provisions of Section 11(a) of the Act, and to advise you in writing when such
statement has been so made available.
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(h) During the period of three years after the date of this Agreement,
to furnish to you as soon as available copies of all reports or other
communications furnished to the record holders of Common Stock or furnished to
or filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed and such other publicly available
information concerning the Company and its subsidiaries (as set forth on
Schedule III attached hereto) as you may reasonably request.
(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the Sellers' obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the Company's
counsel, the Company's accountants and the Selling Stockholder's counsel (in
addition to the Company's counsel) in connection with the registration and
delivery of the Shares under the Act and all other fees and expenses in
connection with the preparation, printing, filing and distribution of the
Registration Statement (including financial statements and exhibits), any
preliminary prospectus, the Prospectus and all amendments and supplements to any
of the foregoing, including the mailing and delivering of copies thereof to the
Underwriters and dealers in the quantities specified herein, (ii) all costs and
expenses related to the transfer and delivery of the Shares to the Underwriters,
including any transfer or other taxes payable thereon, (iii) all costs of
printing or producing this Agreement and any other agreements or documents in
connection with the offering, purchase, sale or delivery of the Shares, (iv) all
expenses in connection with the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of the several states and
all costs of printing or producing any Preliminary and Supplemental Blue Sky
Memoranda in connection therewith (including the filing fees and reasonable fees
and disbursements of counsel for the Underwriters in connection with such
registration or qualification and memoranda relating thereto), (v) the filing
fees and disbursements of counsel for the Underwriters in connection with the
review and clearance of the offering of the Shares by the National Association
of Securities Dealers, Inc. (vi) all fees and expenses in connection with the
preparation and filing of the registration statement on Form 8-A relating to the
Common Stock and all costs and expenses incident to the listing of the Shares on
the NYSE, (vii) the cost of printing certificates representing the Shares,
(viii) the costs and charges of any transfer agent, registrar and/or depositary,
and (ix) all other costs and expenses incident to the performance of the
obligations of the Company and the Selling Stockholder hereunder for which
provision is not otherwise made in this Section. The provisions of this Section
shall not supersede or otherwise affect any agreement that the Company and the
Selling Stockholder may otherwise have for allocation of such expenses among
themselves. Except as expressly otherwise provided in this Section 5 or in
Section 9 or 13 herein, the Underwriters shall pay all of their own costs,
expenses, fees and taxes incurred in connection with the offering, sale and
delivery of the Shares, including the fees and expenses of their counsel, stock
transfer fees on resale of any of the Shares by them and any advertising
expenses incurred in connection therewith.
(j) To use its best efforts to list, subject to notice of issuance, the
Shares on the NYSE and to maintain the listing of the Shares on the NYSE for a
period of three years after the date of this Agreement.
(k) To use its best efforts to do and perform all things required or
necessary to be
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done and performed under this Agreement by the Company prior to the Closing Date
or any Option Closing Date, as the case may be, and to satisfy all conditions
precedent to the delivery of the Shares.
(l) If the Registration Statement at the time of the effectiveness of
this Agreement does not cover all of the Shares, to file a Rule 462(b)
Registration Statement with the Commission registering the Shares not so covered
in compliance with Rule 462(b) by 10:00 p.m., New York City time, on the date of
this Agreement and to pay to the Commission the filing fee for such Rule 462(b)
Registration Statement at the time of the filing thereof or to give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act.
Section 6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective (other than any Rule
462(b) Registration Statement to be filed by the Company after the effectiveness
of this Agreement); any Rule 462(b) Registration Statement filed after the
effectiveness of this Agreement will become effective no later than 10:00 p.m.,
New York City time, on the date of this Agreement; and no stop order suspending
the effectiveness of the Registration Statement is in effect, and no proceedings
for such purpose are pending before or, to the knowledge of the Company,
threatened by the Commission.
(b) (i) The Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the effectiveness of
this Agreement), when it became effective, did not contain and, as amended, if
applicable, will not, as of the effective date of such amendment, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) the Registration Statement (other than any Rule 462(b) Registration
Statement to be filed by the Company after the effectiveness of this Agreement)
and the Prospectus comply as to form and, as amended or supplemented, if
applicable, will, as so amended or supplemented, comply as to form in all
material respects with the Act, (iii) if the Company is required to file a Rule
462(b) Registration Statement after the effectiveness of this Agreement, such
Rule 462(b) Registration Statement and any amendments thereto, when they become
effective, (A) will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (B) will comply as to form in all material
respects with the Act and (iv) the Prospectus, at the date first delivered to
investors, does not contain and, as amended or supplemented, if applicable, will
not as of such date of amendment or supplement contain, any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this paragraph do not apply to statements or omissions in the Registration
Statement or the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein.
(c) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Act,
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complied when so filed in all material respects with the Act, and did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in any preliminary prospectus based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(d) Each of the Company and its subsidiaries (as set forth on Schedule
III attached hereto) has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction of incorporation
and has the corporate power and authority to carry on its business as described
in the Prospectus and to own, lease and operate its properties, and each is duly
qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified could not have a material adverse effect on the
business, prospects, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole.
(e) There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens granted or issued by
the Company or any of its subsidiaries relating to or entitling any person to
purchase or otherwise to acquire any shares of the capital stock of the Company
or any of its subsidiaries, except as otherwise disclosed in the Registration
Statement.
(f) All the outstanding shares of capital stock of the Company
(including the Shares to be sold by the Selling Stockholder) have been duly
authorized and validly issued and are fully paid, non-assessable and not subject
to any preemptive or similar rights; and the Shares to be issued and sold by the
Company have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor as provided by this Agreement, will be
validly issued, fully paid and nonassessable, and the issuance of such Shares
will not be subject to any preemptive or similar rights.
(g) All the outstanding shares of capital stock of each of the Company's
Significant Subsidiaries (as defined in Rule 405 of the Act and as further set
forth on Schedule IV attached hereto) have been duly authorized and validly
issued and are fully paid and nonassessable, and are owned by the Company,
directly or indirectly through one or more subsidiaries, free and clear of any
security interest, claim, lien, encumbrance or adverse interest of any nature,
except as otherwise disclosed in the Registration Statement.
(h) The authorized capital stock of the Company conforms in all material
respects as to legal matters to the description thereof contained in the
Prospectus.
(i) Neither the Company nor any of its subsidiaries is in violation of
its respective charter or by-laws or is in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Company and its subsidiaries, taken as a whole, to which the
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Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective property is bound except where the
violation or default could not have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(j) The execution, delivery and performance of this Agreement by the
Company, the compliance by the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby will not (i) require any
consent, approval, authorization or other order of, or qualification with, any
court or governmental body or agency (except an order declaring the Registration
Statement effective by the Commission and such as may be required under the
securities or Blue Sky laws of the various states), (ii) conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or by-laws of the Company or any of its subsidiaries or any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to the Company and its subsidiaries, taken as a whole, to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective property is bound, (iii) violate or
conflict with any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having jurisdiction over
the Company, any of its subsidiaries or their respective property except for
such violations or conflicts that could not have a material adverse effect on
the business, prospects, financial condition or results of operations of the
Company or its subsidiaries, taken as a whole, or (iv) result in the suspension,
termination or revocation of any material Authorization (as defined below) of
the Company or any of its subsidiaries or any other impairment of the rights of
the holder of any such Authorization.
(k) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened to which the Company or any of its
subsidiaries is or could be a party or to which any of their respective property
is or could be subject that are required to be described in the Registration
Statement or the Prospectus and are not so described; nor are there any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not so described or filed as
required.
(l) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), the protection of human health and safety, any
provisions of the Employee Retirement Income Security Act of 1974, as amended,
or any provisions of the Foreign Corrupt Practices Act or the rules and
regulations promulgated thereunder, except for such violations that, singly or
in the aggregate, could not have a material adverse effect on the business,
prospects, financial condition or results of operation of the Company and its
subsidiaries, taken as a whole.
(m) Each of the Company and its subsidiaries has such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals (each, an
"AUTHORIZATION") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including, without limitation, those required under
any applicable Environmental Laws, as are necessary to own, lease, license and
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<PAGE> 10
operate its properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice could not,
singly or in the aggregate, have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole. Each such Authorization is valid and in full
force and effect and each of the Company and its subsidiaries is in compliance
with all the terms and conditions thereof and with the rules and regulations of
the authorities and governing bodies having jurisdiction with respect thereto;
and no event has occurred (including, without limitation, the receipt of any
notice from any authority or governing body) that allows or, after notice or
lapse of time or both, would allow, revocation, suspension or termination of any
such Authorization or results or, after notice or lapse of time or both, would
result in any other impairment of the rights of the holder of any such
Authorization; and such Authorizations contain no restrictions that are
burdensome to the Company or any of its subsidiaries; except, in each instance,
where such failure to be valid and in full force and effect or to be in
compliance, the occurrence of any such event or the presence of any such
restriction could not, singly or in the aggregate, have a material adverse
effect on the business, prospects, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole.
(n) Except for any costs or liabilities accrued or disclosed in the
consolidated financial statements of the Company included in the Registration
Statement, there are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or any
Authorization, any related constraints on operating activities and any
liabilities to third parties under Environmental Laws) that could, singly or in
the aggregate, have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(o) This Agreement has been duly authorized, executed and delivered by
the Company.
(p) KPMG LLP are independent public accountants with respect to (i) the
Company and its subsidiaries, (ii) Porta-Test International Inc. ("Porta-Test")
and (iii) ESI as required by the Act. Ernst & Young LLP are independent public
accountants with respect to The Cynara Company as required by the Act.
(q) The consolidated financial statements included in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), together
with related schedules and notes, present fairly the consolidated financial
position, results of operations and changes in financial position of the Company
and its subsidiaries on the basis stated therein at the respective dates or for
the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as disclosed therein; the supporting schedules, if any, included in the
Registration Statement present fairly in accordance with generally accepted
accounting principles the information required to be stated therein; and the
other financial information and data set forth in the Registration Statement and
the Prospectus (and any amendment or supplement thereto) are, in all material
respects, accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the
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Company.
(r) The Company is not and, after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in the
Prospectus, will not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(s) Except as set forth in the Registration Statement, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company or to
require the Company to include such securities with the Shares registered
pursuant to the Registration Statement.
(t) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there has not occurred any material adverse change or any development involving
a prospective material adverse change in the condition, financial or otherwise,
results of operations, business, management, capital stock, long-term debt or
prospects of the Company and its subsidiaries, taken as a whole and (ii) neither
the Company nor any of its subsidiaries has incurred any material liability or
obligation, absolute or contingent, other than in the ordinary course of
business.
(u) The certificate signed by an officer of the Company and delivered to
the Underwriters or counsel for the Underwriters pursuant to Section 10(c) shall
be deemed to be a representation and warranty by the Company to the Underwriters
as to the matters covered thereby.
(v) The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned by them that, in either case, is material to the business of the
Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or such
as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries that are material to the business of the Company
and its subsidiaries are held by them under valid and enforceable leases with
such exceptions as do not materially interfere with the use made and proposed to
be made of such property and buildings by the Company and its subsidiaries, in
each case except as described in the Prospectus.
(w) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, all patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks and trade names ("INTELLECTUAL PROPERTY") currently employed by
them in connection with the business now operated by them except where the
failure to own or possess or otherwise be able to acquire such intellectual
property could not, singly or in the aggregate, have a material adverse effect
on the business, prospects, financial
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<PAGE> 12
condition or results of operations of the Company and its subsidiaries, taken as
a whole; neither the Company nor any of its subsidiaries has received any
written notice of infringement of, or conflict with, rights of others with
respect to any of such intellectual property which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
(x) The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; and neither the Company nor any of its subsidiaries (i) has received
notice from any insurer or agent of such insurer that material capital
improvements or other material expenditures will have to be made in order to
continue such insurance or (ii) has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers at a cost that would not
have a material adverse effect on the business, prospects, financial conditions
or results of operations of the Company and its subsidiaries, taken as a whole.
(y) No relationship, direct or indirect, exists between or among the
Company or any of its subsidiaries, on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company or any of its
subsidiaries, on the other hand, that is required by the Act to be described in
the Registration Statement or the Prospectus but is not so described.
(z) The pro forma financial statements of the Company and its
subsidiaries, Porta-Test and ESI and the related notes thereto set forth in the
Registration Statement and the Prospectus (and any supplement or amendment
thereto) have been prepared on a basis consistent with the historical financial
statements of the Company and its subsidiaries, Porta-Test and ESI, and the
assumptions used in the preparation thereof are reasonable and present fairly
the historical financial data and proposed transactions contemplated by the
Registration Statement and the Prospectus. Such pro forma financial statements
have been prepared in accordance with the applicable requirements of Rule 11-02
of Regulation S-X promulgated by the Commission. The other pro forma financial
information and data set forth in the Registration Statement and the Prospectus
(and any supplement or amendment thereto) are accurately presented and prepared
on a basis consistent with the pro forma financial statements except in each
case where such pro forma financial information and data could not have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
(aa) There is no (i) significant unfair labor practice complaint,
grievance or arbitration proceeding pending or, to the Company's knowledge,
threatened against the Company or any of its subsidiaries before the National
Labor Relations Board or any state or local labor relations board or (ii)
strike, labor dispute, slowdown or stoppage pending or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries, except for
such actions specified in clause (i) or (ii) above, that, singly or in the
aggregate, could not have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole. To the best of the Company's knowledge, no
collective bargaining organizing activities are taking place with respect to the
Company or any of
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<PAGE> 13
its subsidiaries.
(bb) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(cc) All material tax returns required to be filed by the Company and
its subsidiaries in any jurisdiction have been filed, other than those filings
being contested in good faith, and all material taxes, including withholding
taxes, penalties and interest, assessments, fees and other charges due pursuant
to such returns or pursuant to any assessment received by the Company or any of
its subsidiaries have been paid, other than those being contested in good faith
and for which adequate reserves have been provided.
Section 7. Representations and Warranties of the Selling Stockholders.
Each Selling Stockholder, severally and not jointly, represents and warrants to
each Underwriter that:
(a) Such Selling Stockholder is the lawful owner of the Shares to be
sold by such Selling Stockholder pursuant to this Agreement and has, and on the
Closing Date will have, good title to such Shares, free of all restrictions on
transfer, liens, encumbrances, security interests, equities and claims
whatsoever. Upon delivery of and payment for the Shares to be sold by such
Selling Stockholder pursuant to this Agreement, good title to such Shares will
pass to the Underwriters, free and clear of all restrictions on transfer, liens,
encumbrances, security interests, equities and adverse claims whatsoever.
(b) Such Selling Stockholder has, and on the Closing Date will have,
full legal right, power and authority, and all authorization and approval
required by law, to enter into this Agreement, and to sell, assign, transfer and
deliver the Shares to be sold by such Selling Stockholder in the manner provided
herein.
(c) This Agreement has been duly authorized, executed and delivered by
or on behalf of such Selling Stockholder.
(d) The execution, delivery and performance of this Agreement by or on
behalf of such Selling Stockholder, the compliance by such Selling Stockholder
with all the provisions hereof and the consummation of the transactions
contemplated hereby will not (i) require any consent, approval, authorization or
other order of, or qualification with, any court or governmental body or agency
(except such as may be required under the securities or Blue Sky laws of the
various states), (ii) conflict with or constitute a breach of any of the terms
or provisions of, or a default under, the organizational documents of such
Selling Stockholder or any indenture, loan agreement, mortgage, lease or other
agreement or instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder or any property of such
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<PAGE> 14
Selling Stockholder is bound or (iii) violate or conflict with any applicable
law or any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over such Selling Stockholder or
any property of such Selling Stockholder.
(e) The information in the Registration Statement under the caption
"Principal and Selling Stockholders" and "Shares Eligible For Future Sale" which
specifically relates to such Selling Stockholder does not, and will not on the
Closing Date, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(f) At any time during the period described in Section 5(d), if there is
any change in the information referred to in Section 7(e), such Selling
Stockholder will immediately notify you of such change.
(g) The certificate signed by or on behalf of such Selling Stockholder
and delivered to the Underwriters or counsel for the Underwriters pursuant to
Section 10(e) herein shall be deemed to be a representation and warranty by such
Selling Stockholder to the Underwriters as to the matters covered thereby.
Section 8. Indemnification of QIU.
(a) The Sellers agree, jointly and severally, to indemnify and hold
harmless the QIU, its directors, its officers and each person, if any, who
controls the QIU within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments (including, without limitation, any legal or other
expenses incurred in connection with investigating or defending any matter,
including any action, that could give rise to any such losses, claims, damages,
liabilities or judgments) related to, based upon or arising out of (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus, or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading or (ii) the
QIU's activities as QIU under its engagement pursuant to Section 2 hereof,
except in the case of this clause (ii) insofar as any such losses, claims,
damages, liabilities or judgments are found in a final judgment by a court of
competent jurisdiction, not subject to further appeal, to have resulted solely
from the willful misconduct or gross negligence of the QIU. Notwithstanding the
foregoing, the liability of any Selling Stochholder pursuant to this Section
8(a) shall be limited to an amount equal to the total proceeds (before deducting
underwriting discounts and commissions and expenses) received by such Selling
Stockholder from the Underwriters in exchange for the Shares sold by such
Selling Stockholder pursuant to this Agreement.
(b) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) (the "QIU
INDEMNIFIED PARTY"), the QIU Indemnified Party shall promptly notify the Sellers
in writing and the Sellers shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the QIU
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<PAGE> 15
Indemnified Party and the payment of all fees and expenses of such counsel,
as incurred. Any QIU Indemnified Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the QIU Indemnified
Party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the Sellers, (ii) the Sellers shall have failed to
assume the defense of such action or employ counsel reasonably satisfactory to
the QIU Indemnified Party or (iii) the named parties to any such action
(including any impleaded parties) include both the QIU Indemnified Party and the
Sellers, and the QIU Indemnified Party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the Sellers (in which case the Sellers
shall not have the right to assume the defense of such action on behalf of the
QIU Indemnified Party). In any such case, the Sellers shall not, in connection
with any one action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all QIU Indemnified
Parties, which firm shall be designated by the QIU, and all such fees and
expenses shall be reimbursed as they are incurred. The Sellers shall indemnify
and hold harmless the QIU Indemnified Party from and against any and all losses,
claims, damages, liabilities and judgments by reason of any settlement of any
action (i) effected with its written consent or (ii) effected without its
written consent if the settlement is entered into more than twenty business days
after the Sellers shall have received a request from the QIU Indemnified Party
for reimbursement for the fees and expenses of counsel (in any case where such
fees and expenses are at the expense of the Sellers) and, prior to the date of
such settlement, the Sellers shall have failed to comply with such reimbursement
request. The Sellers shall not, without the prior written consent of the QIU
Indemnified Party, effect any settlement or compromise of, or consent to the
entry of judgment with respect to, any pending or threatened action in respect
of which the QIU Indemnified Party is or could have been a party and indemnity
or contribution may be or could have been sought hereunder by the QIU
Indemnified Party, unless such settlement, compromise or judgment (i) includes
an unconditional release of the QIU Indemnified Party from all liability on
claims that are or could have been the subject matter of such action and (ii)
does not include a statement as to or an admission of fault, culpability or a
failure to act, by or on behalf of the QIU Indemnified Party.
(c) To the extent the indemnification provided for in this Section 8 is
unavailable to a QIU Indemnified Party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then the Sellers,
in lieu of indemnifying such QIU Indemnified Party, shall contribute to the
amount paid or payable by such QIU Indemnified Party as a result of such losses,
claims, damages, liabilities and judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Sellers on the one
hand and the QIU on the other hand from the offering of the Shares or (ii) if
the allocation provided by clause 8(c)(i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause 8(c)(i) above but also the relative fault of the
Sellers on the one hand and the QIU on the other hand in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Sellers on the one hand
and the QIU on the other hand shall be deemed to be in the same proportion as
the total net proceeds
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<PAGE> 16
from the offering (before deducting expenses) received by the Sellers as set
forth in the table on the cover page of the Prospectus, and the fee received by
the QIU pursuant to Section 2 hereof, bear to the sum of such total net proceeds
and such fee. The relative fault of the Sellers on the one hand and the QIU on
the other hand 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
Sellers or the QIU and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission and
whether the QIU's activities as QIU under its engagement pursuant to Section 2
hereof involved any willful misconduct or gross negligence on the part of the
QIU.
(d) The Sellers and the QIU agree that it would not be just and
equitable if contribution pursuant to this Section 8(c) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by a QIU Indemnified Party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such QIU
Indemnified Party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. 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.
(e) The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
QIU Indemnified Party at law or in equity.
Section 9. Indemnification.
(a) The Sellers, jointly and severally, agree to indemnify and hold
harmless each Underwriter, its directors, its officers and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), from and against any and all losses, claims, damages, liabilities and
judgments (including, without limitation, any legal or other expenses incurred
in connection with investigating or defending any matter, including any action,
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment
thereto), the Prospectus (or any amendment or supplement thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements in the Registration Statement (or any amendment thereto), the
Prospectus (or any amendment or supplement thereto) or an preliminary prospectus
not misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to any Underwriter
furnished in writing to the Company by such Underwriter through you expressly
for use therein; provided, however, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to
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<PAGE> 17
the benefit of any Underwriter who failed to deliver a Prospectus (as then
amended or supplemented, provided by the Company to the several Underwriters in
the requisite quantity and on a timely basis to permit proper delivery on or
prior to the Closing Date) to the person asserting any losses, claims, damages
and liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
such material misstatement or omission or alleged material misstatement or
omission was cured in such Prospectus and such Prospectus was required by law to
be delivered at or prior to the written confirmation of sale to such person.
Notwithstanding the foregoing, the aggregate liability of any Selling
Stockholder pursuant to this Section 9(a) shall be limited to an amount equal to
the total proceeds (before deducting underwriting discounts and commissions and
expenses) received by such Selling Stockholder from the Underwriters for the
sale of the Shares sold by such Selling Stockholder hereunder.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement, each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, the Selling Stockholder
and each person, if any, who controls any Selling Stockholder within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Sellers to such Underwriter but only with
reference to information relating to such Underwriter furnished in writing to
the Company by such Underwriter through you expressly for use in the
Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 9(a) or 9(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 9(a) and 9(b), the Underwriters shall not be required to assume
the defense of such action pursuant to this Section 9(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided in clauses (i), (ii) and (iii) of
the next sentence, shall be at the expense of the Underwriters). Any indemnified
party shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the indemnified party unless (i) the employment of
such counsel shall have been specifically authorized in writing by the
indemnifying party, (ii) the indemnifying party shall have failed to assume the
defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it that are different from
or additional to
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those available to the indemnifying party. In any such case, the indemnifying
party shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for (i) in the case of the
Sellers, the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all Underwriters, their officers and
directors and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Act or Section 20 of the Exchange Act, (ii)
in the case of the Underwriters, the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for the Company, its
directors, its officers who sign the Registration Statement and all persons, if
any, who control the Company within the meaning of either such Section and (iii)
in the case of the Underwriters, the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all Selling
Stockholders and all persons, if any, who control any of the Selling
Stockholders within the meaning of either such Section, and all such fees and
expenses shall be reimbursed as they are incurred. If any of the following
become an indemnified party and chooses to exercise its right as provided herein
to employ separate counsel, that right shall, (i) in the case of the
Underwriters, their officers and directors and such control persons of any
Underwriters, be exercised in writing by Donaldson, Lufkin & Jenrette Securities
Corporation, (ii) in the case of the Company and such directors, officers and
control persons of the Company, be exercised in writing by the Company and (iii)
in the case of the Selling Stockholder and such control persons of the Selling
Stockholder, be exercised in writing by the Selling Stockholder. The
indemnifying party shall indemnify and hold harmless any indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into more
than twenty business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and prior to the date of such settlement, the indemnifying
party shall have failed to reimburse the indemnified party in accordance with
such request for reimbursement (other than the payment of amounts being disputed
in good faith) prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent the indemnification provided for in this Section 9 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Sellers on the one hand and the Underwriters on the other hand from the offering
of the Shares or (ii) if the allocation provided
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by clause 9(d)(i) above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause 9(d)(i) above but also the relative fault of the Sellers on the one hand
and the Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
benefits received by the Sellers on the one hand and the Underwriters on the
other hand shall be deemed to be in the same proportion as the total net
proceeds from the offering (after deducting underwriting discounts and
commissions, but before deducting expenses) received by the Sellers, and the
total underwriting discounts and commissions received by the Underwriters, bear
to the total price to the public of the Shares, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Sellers on
the one hand and the Underwriters on the other hand 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 the Selling Stockholder on the
one hand or the Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Sellers and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any matter, including any
action, that could have given rise to such losses, claims, damages, liabilities
or judgments. Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter 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. The Underwriters' obligations to contribute
pursuant to this Section 9(d) are several in proportion to the respective number
of Shares purchased by each of the Underwriters hereunder and not joint.
(e) The remedies provided for in this Section 9 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
(f) Each Selling Stockholder hereby designates NATCO Group Inc.,
Brookhollow Central III, 2950 North Loop West, Suite 700, Houston, Texas 77092,
as its authorized agent, upon which process may be served in any action that may
be instituted in any state or federal court in the State of New York by any
Underwriter, any director or officer of any Underwriter or any person
controlling any Underwriter asserting a claim for indemnification or
contribution
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under or pursuant to this Section 9, and each Selling Stockholder will accept
the jurisdiction of such court in such action, and waives, to the fullest extent
permitted by applicable law, any defense based upon lack of personal
jurisdiction or venue. A copy of any such process shall be sent or given to each
Selling Stockholder, at the address for notices specified in Section 13 hereof.
Section 10. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company contained in
this Agreement that are qualified as to materiality shall be true and correct on
the Closing Date and all such representations and warranties of the Company that
are not so qualified shall be true and correct in all material respects on the
Closing Date, in each case with the same force and effect as if made on and as
of the Closing Date.
(b) If the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, such Rule 462(b)
Registration Statement shall have become effective by 10:00 p.m., New York City
time, on the date of this Agreement; and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending
before or contemplated by the Commission.
(c) The Company shall have complied with all of the agreements and
satisfied all of the conditions herein contained and you shall have received on
the Closing Date a certificate dated the Closing Date, signed by Nathaniel A.
Gregory and J. Michael Mayer, in their capacities as the Chairman and Chief
Executive Officer and Chief Financial Officer, respectively, of the Company,
confirming (i) the matters set forth in Sections 6(t), 10(a) and 10(b) and (ii)
that the Company has complied with all of the agreements and satisfied all of
the conditions herein contained and required to be complied with or satisfied by
the Company on or prior to the Closing Date.
(d) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there shall not have occurred any change or any development involving a
prospective change in the condition, financial or otherwise, results of
operations, business, management, capital stock, long-term debt or prospects of
the Company and its subsidiaries, taken as a whole and (ii) neither the Company
nor any of its subsidiaries shall have incurred any material liability or
obligation, absolute or contingent, the effect of which, in any such case
described in clause 10(d)(i) or 10(d)(ii) is material and adverse and, in your
judgment, makes it impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(e) All the representations and warranties of the Selling Stockholder
contained in this Agreement shall be true and correct in all material respects
on the Closing Date with the same force and effect as if made on and as of the
Closing Date and the Selling Stockholder shall have
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complied with all of the agreements and satisfied all of the
conditions herein contained and you shall have received on the Closing Date a
certificate dated the Closing Date from the Selling Stockholder to such effect
and to the effect that the Selling Stockholder has complied with all of the
agreements and satisfied all of the conditions herein contained and required to
be complied with or satisfied by the Selling Stockholder on or prior to the
Closing Date.
(f) You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the Underwriters), dated the Closing Date, of Vinson &
Elkins L.L.P., counsel for the Company, to the effect that:
(i) each of the Company and its Significant Subsidiaries has been
duly incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority to carry on its business as described in
the Prospectus and to own, lease and operate its properties;
(ii) all the outstanding shares of capital stock of the Company
(including the Shares to be sold by the Selling Stockholder) have been
duly authorized and validly issued and are fully paid, nonassessable and
not subject to any preemptive or similar rights;
(iii) the Shares to be issued and sold by the Company hereunder have
been duly authorized and, when issued and delivered to the Underwriters
against payment therefor as provided by this Agreement, will be validly
issued, fully paid and nonassessable, and the issuance of such Shares
will not be subject to any preemptive or similar rights;
(iv) all of the outstanding shares of capital stock of each of the
Company's Significant Subsidiaries have been duly authorized and validly
issued and are fully paid and nonassessable, and are owned by the
Company, directly or indirectly through one or more subsidiaries, free
and clear (to such counsel's knowledge) of any security interest, claim,
lien, encumbrance or adverse interest of any nature;
(v) this Agreement has been duly authorized, executed and delivered
by the Company;
(vi) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;
(vii) the Registration Statement has become effective under the Act,
no stop order suspending its effectiveness has been issued and no
proceedings for that purpose are, to the best of such counsel's
knowledge after due inquiry, pending before or contemplated by the
Commission;
(viii) the statements under the captions "Management," "Shares
Eligible for Future Sale," "Related Party Transactions," and
"Description of Capital Stock" in the Prospectus and Items 14 and 15 of
Part II of the Registration Statement, insofar as such statements
constitute a summary of the legal matters, documents or proceedings
referred
21
<PAGE> 22
to therein, fairly present the information called for with respect to
such legal matters, documents and proceedings;
(ix) the execution, delivery and performance of this Agreement by
the Company, the compliance by the Company with all the provisions
hereof and the consummation of the transactions contemplated hereby will
not (A) require any consent, approval, authorization or other order of,
or qualification with, any court or governmental body or agency (except
such as may be required under the securities or Blue Sky laws of the
various states), (B) conflict with or constitute a breach of any of the
terms or provisions of, or a default under, the charter or by-laws of
the Company or any of its Significant Subsidiaries or any indenture,
loan agreement, mortgage, lease or other agreement or instrument,
attached as an exhibit to the Registration Statement, that is listed as
an exhibit to the Registration Statement, to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound, (C) violate or
conflict with any federal, Delaware or Texas law or any rule,
regulation, judgment, order or decree of any court or governmental body
or agency having jurisdiction over the Company, any of its Significant
Subsidiaries or their respective property or (D) to such counsel's
knowledge, result in the suspension, termination or revocation of any
Authorization of the Company or any of its Significant Subsidiaries or
any other impairment of the rights of the holder of any such
Authorization;
(x) after due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or
any of its Significant Subsidiaries is or could be a party or to which
any of their respective property is or could be subject that are
required to be described in the Registration Statement or the Prospectus
and are not so described, or of any statutes, regulations, contracts or
other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not so described or filed as required;
(xi) the Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be, an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended;
(xii) to the best of such counsel's knowledge after due inquiry,
there are, except as disclosed in the Registration Statement, no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company or to require the Company to include such securities with
the Shares registered pursuant to the Registration Statement; and
(xiii) (A) the Registration Statement and the Prospectus and any
supplement or amendment thereto (except for the financial statements and
other financial data included therein as to which no opinion need be
expressed) comply as to form with the Act, (B) no
22
<PAGE> 23
facts have come to the attention of such counsel that lead them to
believe that at the time the Registration Statement became effective the
Registration Statement and the prospectus included therein (except for
the financial statements and other financial data as to which such
counsel need not express any belief) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and
(C) such counsel has no reason to believe that the Prospectus, as
amended or supplemented, if applicable (except for the financial
statements and other financial data, as aforesaid) contains any untrue
statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
The opinion of Vinson & Elkins L.L.P. described in Section 10(f) above
shall be rendered to you at the request of the Company and shall so state
therein.
(g) You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the Underwriters), dated the Closing Date, of Daniel R.
Carter, Chief Legal Officer of the Company, to the effect that:
(i) each of the Company and its Significant Subsidiaries is duly
qualified and is in good standing as a foreign corporation authorized to
do business in each jurisdiction in which the nature of its business or
its ownership or leasing of property requires such qualification, except
where the failure to be so qualified would not have a material adverse
effect on the business, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole; and
(ii) neither the Company nor any of its Significant Subsidiaries is
in violation of its respective charter or by-laws and, to the best of
such counsel's knowledge after due inquiry, neither the Company nor any
of its subsidiaries is in default in the performance of any obligation,
agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is
listed as an exhibit to the Registration Statement, to which the Company
or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective property is bound.
The opinion of Daniel R. Carter described in Section 10(g) above shall
be rendered to you at the request of the Company and shall so state therein.
(h) You shall have received on the Closing Date an opinion (satisfactory
to your and counsel for the Underwriters), dated the Closing Date, of (i)
Skadden, Arps, Slate, Meagher & Flom LLP, counsel for Capricorn Investors, L.P.,
(ii) Reed Smith Shaw & McClay LLP, counsel for Messrs. Heller, Dimeling,
Schrieber and Park, and (iii) Shelly McBride, counsel for BOCP II, L.L.C., in
each case to the effect that:
(i) Such Selling Stockholder is the lawful owner of the Shares to be
sold by such Selling Stockholder pursuant to this Agreement and has good
and clear title to such
23
<PAGE> 24
Shares, free of all restrictions on transfer, liens, encumbrances,
security interests, equities and claims whatsoever;
(ii) Such Selling Stockholder has full legal right, power and
authority, and all authorization and approval required by law, to enter
into this Agreement and the Custody Agreement and the Power of Attorney
of such Selling Stockholder and to sell, assign, transfer and deliver
the Shares to be sold by such Selling Stockholder in the manner provided
herein and therein;
(iii) upon delivery of and payment for the Shares to be sold by such
Selling Stockholder pursuant to this Agreement, good and clear title to
such Shares will pass to the Underwriters, free of all restrictions on
transfer, liens, encumbrances, security interests, equities and claims
whatsoever; and
(iv) the execution, delivery and performance of this Agreement by
such Selling Stockholder, the compliance by such Selling Stockholder
with all the provisions hereof and the consummation of the transactions
contemplated hereby will not (A) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the
securities or Blue Sky laws of the various states), (B) conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, the organizational documents of the Selling Stockholder or any
indenture, loan agreement, mortgage, lease or other agreement or
instrument to which the Selling Stockholder is a party or by which any
property of the Selling Stockholder is bound or (C) violate or conflict
with any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having
jurisdiction over the Selling Stockholder or any property of such
Selling Stockholder.
The opinions of Skadden, Arps, Slate, Meagher & Flom LLP, Reed Smith
Shaw & McClay LLP and Shelly McBride described in Section 10(h) above shall be
rendered to you at the request of the Selling Stockholders and shall so state
therein.
(i) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for the
Underwriters, as to certain matters agreed to between you and such firm.
In giving such opinions with respect to the matters covered by Section
10(f)(xiii), counsel for the Company and counsel for the Underwriters may state
that their opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any amendments or
supplements thereto and review and discussion of the contents thereof, but are
without independent check or verification except as specified.
(j) You shall have received, on each of the date hereof and the Closing
Date, a letter dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to you, from KPMG LLP, independent public
accountants, containing the information and statements of the type ordinarily
included in accountants' "comfort letters" to Underwriters with
24
<PAGE> 25
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(k) The Company shall have delivered to you the agreements specified in
Section 2 hereof which agreements shall be in full force and effect on the
Closing Date.
(l) The Shares shall have been duly listed, subject to notice of
issuance, on the NYSE.
The several obligations of the Underwriters to purchase any Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of such
Additional Shares and other matters related to the issuance of such Additional
Shares.
Section 11. Effectiveness of Agreement and Termination. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by written notice to the Sellers if any of the following has
occurred since the effectiveness of the Agreement: (i) any outbreak or
escalation of hostilities or other national or international calamity or crisis
or change in economic conditions or in the financial markets of the United
States or elsewhere that, in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus, (ii) the suspension or material
limitation of trading in securities or other instruments on the New York Stock
Exchange, the American Stock Exchange, the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange, the Chicago Board of Trade or the Nasdaq
National Market or limitation on prices for securities or other instruments on
any such exchange or the Nasdaq National Market, (iii) the suspension of trading
of any securities of the Company on any exchange or in the over-the-counter
market, (iv) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any court or other
governmental authority which in your opinion materially and adversely affects,
or will materially and adversely affect, the business, prospects, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole, (v) the declaration of a banking moratorium by either federal or New
York State authorities or (vi) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs that in
your opinion has a material adverse effect on the financial markets in the
United States.
If on the Closing Date or on an Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase the Firm
Shares or Additional Shares, as the case may be, which it has or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the total number of Firm Shares or Additional Shares, as the
case may be, to be purchased on such date by all Underwriters, each
non-defaulting Underwriter shall be obligated severally, in the proportion which
the number of Firm Shares set forth opposite its name in
25
<PAGE> 26
Schedule I bears to the total number of Firm Shares which all the non-defaulting
Underwriters have agreed to purchase, or in such other proportion as you may
specify, to purchase the Firm Shares or Additional Shares, as the case may be,
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase on such date; provided that in no event shall the number of Firm
Shares or Additional Shares, as the case may be, which any Underwriter has
agreed to purchase pursuant to Section 2 hereof be increased pursuant to this
Section 11 by an amount in excess of one-ninth of such number of Firm Shares or
Additional Shares, as the case may be, without the written consent of such
Underwriter. If on the Closing Date any Underwriter or Underwriters shall fail
or refuse to purchase Firm Shares and the aggregate number of Firm Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Firm Shares to be purchased by all Underwriters and arrangements
satisfactory to you, the Company and the Selling Stockholder for purchase of
such Firm Shares are not made within 48 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Underwriter,
the Company or the Selling Stockholder. In any such case which does not result
in termination of this Agreement, either you or the Sellers shall have the right
to postpone the Closing Date, but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and the
Prospectus or any other documents or arrangements may be effected. If, on an
Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased on such date, the non-defaulting
Underwriters shall have the option (i) to terminate their obligation hereunder
to purchase such Additional Shares or (ii) to purchase not less than the number
of Additional Shares that such non-defaulting Underwriters would have been
obligated to purchase on such date in the absence of such default. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of any such Underwriter under this
Agreement.
Section 12. Agreements of the Selling Stockholders. The Selling
Stockholder agrees with you and the Company:
(a) To pay or to cause to be paid all transfer taxes payable in
connection with the transfer of the Shares to be sold by the Selling Stockholder
to the Underwriters.
(b) To do and perform all things to be done and performed by the Selling
Stockholder under this Agreement prior to the Closing Date and to satisfy all
conditions precedent to the delivery of the Shares to be sold by such Selling
Stockholder pursuant to this Agreement.
Section 13. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company, to NATCO
Group Inc., Brookhollow Central III, 2950 North Loop West, Suite 700, Houston,
Texas 77092, Attention: Mr. Daniel R. Carter, (ii) if to Capricorn Investors
L.P., to 30 East Elm Street, Greenwich, Connecticut 06830, Attention: Mr.
Herbert Winokur, (iii) if to any of the other Selling Stockholders, to Heller
Hickox Dimeling Schreiber & Park, 1629 Locust Street, Philadelphia, Pennsylvania
19103 and (iv) if to any Underwriter or to you, to you c/o Donaldson, Lufkin &
Jenrette Securities Corporation, 277 Park Avenue, New York, New York 10172,
Attention: Syndicate Department,
26
<PAGE> 27
or in any case to such other address as the person to be notified may have
requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Selling Stockholder and the
several Underwriters set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the Shares, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of any Underwriter, the officers or
directors of any Underwriter, any person controlling any Underwriter, the
Company, the officers or directors of the Company, any person controlling the
Company, the Selling Stockholder or any person controlling the Selling
Stockholder, (ii) acceptance of the Shares and payment for them hereunder and
(iii) termination of this Agreement.
If for any reason the Shares are not delivered by or on behalf of any
Seller as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 11), the Sellers agree, jointly and severally, to
reimburse the several Underwriters for all out-of-pocket expenses (including the
reasonable fees and disbursements of counsel) incurred by them; provided,
however, that the amount payable by any Selling Stockholder pursuant to this
sentence will be limited to a pro rata proportion of such liability based on the
number of Shares such Selling Stockholder is offering for sale as a percentage
of the number of Firm Shares. Notwithstanding any termination of this Agreement,
the Company shall be liable for all expenses which it has agreed to pay pursuant
to Section 5(i) hereof. The Sellers also agree, jointly and severally, to
reimburse the several Underwriters, their directors and officers and any persons
controlling any of the Underwriters for any and all fees and expenses
(including, without limitation, the reasonable fees and disbursements of
counsel) incurred by them in connection with enforcing their rights hereunder
(including, without limitation, pursuant to Section 9 hereof); provided,
however, that the amount payable by any Selling Stockholder pursuant to this
sentence will be limited to a pro rata proportion of such liability based on the
number of Shares such Selling Stockholder is offering for sale as a percentage
of the number of Firm Shares.
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Selling
Stockholder, the Underwriters, the Underwriters' directors and officers, any
controlling persons referred to herein, the Company's directors and the
Company's officers who sign the Registration Statement and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
27
<PAGE> 28
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Stockholder and the several Underwriters.
Very truly yours,
NATCO GROUP INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE SELLING STOCKHOLDERS
NAMED IN SCHEDULED II HERETO, ACTING
SEVERALLY
By:
------------------------------------
Attorney-in-fact for BOCP II, L.L.C.,
Douglas P. Heller, Richard R. Schreiber
and Steven G. Park
CAPRICORN INVESTORS, L.P.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON SMITH BARNEY INC.
SIMMONS & COMPANY INTERNATIONAL
DLJdirect Inc.
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
-----------------------------
Title:
--------------------------
<PAGE> 29
SCHEDULE I
Number of Firm Shares
Underwriters to be Purchased
- ------------ ---------------
Donaldson, Lufkin & Jenrette Securities
Corporation.............................
Salomon Smith Barney Inc..................
Simmons & Company International...........
DLJdirect Inc.............................
---------
Total 7,500,000
=========
i
<PAGE> 30
SCHEDULE II
Selling Stockholders
Number of Firm
Name Shares Being Sold
---- -----------------
Capricorn Investors, L.P................. 3,145,903
Douglas Heller........................... 45,000
William R. Dimeling...................... 92,171
Richard R. Schreiber..................... 92,171
Steven G. Park........................... 92,171
BOCP II, L.L.C........................... 32,584
---------
Total 3,500,000
=========
ii
<PAGE> 31
SCHEDULE III
Subsidiaries
As of the date hereof, the list of the Company's subsidiaries includes:
National Tank Company (1)
NTC Technical Services, Inc. (1)
NATCO (U.K.) Ltd. (2)
The Cynara Company (3)
NATCO Oilfield Construction, Inc. (3)
Oilfield Construction Company, Inc. (4)
NATCO Japan Company, Ltd. (5)
National Tank Company S.A. (3)
NATCO Canada, Ltd. (3)
NATCO London, Inc. (3)
Total Engineering Services Team, Inc. (3)
TEST, Inc. (6)
TEST International (6)
TPS Nigeria Ltd. (7)
TEST Saudi Arabia Ltd. (7)
(1) Wholly-owned subsidiary of the Company
(2) 99%-owned subsidiary of the Company
(3) Wholly-owned subsidiary of National Tank Company
(4) Wholly-owned subsidiary of NATCO Oilfield Construction, Inc.
(5) 85%-owned subsidiary of National Tank Company
(6) Wholly-owned subsidiary of Total Engineering Services Team, Inc.
(7) 50%-owned subsidiary of Total Engineering Services Team, Inc.
iii
<PAGE> 32
SCHEDULE IV
Significant Subsidiaries
National Tank Company
NATCO Canada, Ltd.
Total Engineering Services Team, Inc.
iv
<PAGE> 33
Annex I
Capricorn Investors, L.P.
Capricorn Investors II, L.P.
William R. Dimeling
Robert J. Hamaker
The 1998 Trust for Jody Smith Hamaker
Douglas Heller
Ralph M. Kelly
Steven G. Park
Richard R. Schreiber
John C. Tuten, Jr.
v
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF
INCORPORATION
OF
NATCO GROUP INC.
THE UNDERSIGNED PRESIDENT OF NATCO GROUP INC., A DELAWARE CORPORATION
("CORPORATION"), DOES HEREBY CERTIFY:
I. That the Board of Directors of the Corporation adopted by unanimous
consent resolutions setting forth a proposed amendment to the Certificate of
Incorporation of the Corporation, approving such amendment, declaring such
amendment advisable, and recommending such amendment to the stockholders of the
Corporation for approval thereof. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, that the Board of Directors of the Corporation hereby approves
an amendment to the Certificate of Incorporation of the Corporation, as
amended to date, which amendment would preclude any further amendment to
Article EIGHTH of the Certificate of Incorporation unless the amendment
shall receive the affirmative vote of at least two-thirds of the
outstanding shares of all classes of capital stock of the Corporation
normally entitled to vote in the election of directors, such amendment to
be effected by adding a new last sentence to Article EIGHTH of the
Corporation's Certificate of Incorporation which shall be and read in its
entirety as follows:
No amendment to this Certificate of Incorporation shall be effective to
amend, alter, change or repeal any of the provisions of this Article
EIGHTH unless the amendment purporting to effect such amendment,
alteration, change or repeal of Article EIGHTH shall have received the
affirmative vote of not less than two-thirds (2/3) of the outstanding
shares of all classes of capital stock of the Corporation normally
entitled to vote in elections of directors, considered for purposes of
this Article EIGHTH as one class.
II. That in lieu of a special meeting and vote of the stockholders, the
stockholders of the Corporation, by written consent setting forth the action so
taken and signed by the holders of a majority of all the outstanding shares of
all classes of capital stock entitled to vote with respect thereto, approved,
adopted and consented to such amendment in accordance with the provisions of
Section 228 of the General Corporation Law of the State of Delaware and Article
EIGHTH of the Certificate of Incorporation of the Corporation.
III. That such amendment was duly adopted in accordance with the
provisions of Sections 242 and 228 of the General Corporation Law of the State
of Delaware.
<PAGE> 2
The undersigned, being the duly elected and currently acting President of
NATCO Group Inc., the Corporation to which reference is made in this
Certificate, does make this Certificate 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.
/s/ PATRICK M. MCCARTHY
-----------------------------
Patrick M. McCarthy
President
NATCO Group Inc.
