<PAGE> 1
As filed with the Securities and Exchange Commission on December 9, 1998
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------------
NATCO INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
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Delaware 6790 13-2721761
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
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1800 Moler Road
Columbus, Ohio 43207
(614) 221-9200
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
---------------------------
Thomas R. Ketteler
Vice President and Treasurer
Natco Industries, Inc.
1800 Moler Road
Columbus, Ohio 43207
(614) 221-9200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------------
Copies of Correspondence to:
Neil Bulman, Jr., Esq. Irwin A. Bain
Porter, Wright, Morris & Arthur Schottenstein Stores Corporation
41 South High Street 1800 Moler Road
Columbus, Ohio 43215 Columbus, Ohio 43207
(614) 227-2219 (614) 221-9200
---------------------------
Approximate date of commencement of proposed sale of the
securities to the public: As soon as practicable after this Registration
Statement becomes effective and all other conditions to the proposed merger (the
"Merger") of American Eagle Outfitters, Inc. ("American Eagle") with and into
the Natco Acquisition Corporation, a wholly owned subsidiary of the Registrant,
pursuant to the Plan of Reorganization and Agreement and Plan of Merger, dated
as of November 30, 1998, attached as Appendix A to the enclosed Prospectus/Proxy
Statement have been satisfied or waived.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box. [ ]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Amount to be Offering Price Aggregate Offering Registration
Securities to be Registered Registered Per Share* Price* Fee*
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Common stock, without par
value.................... 16,279,300 $56.75 $923,850,275 $256,830
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* Estimated solely for the purpose of calculating the registration fee based
on the fair market value as reported on the Nasdaq National Market on
December 2, 1998, of the 16,279,300 shares of common stock of American
Eagle Outfitters, Inc. to be exchanged in the Merger, in accordance with
Rule 457(f)(2).
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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 3
AMERICAN EAGLE OUTFITTERS, INC.
150 Thorn Hill Drive
Warrendale, Pennsylvania 15086-7528
December ___, 1998
Dear Fellow Shareholders:
You are cordially invited to attend the Special Meeting of Shareholders (the
"American Eagle Special Meeting") of American Eagle Outfitters, Inc. ("American
Eagle"), which will be held on _________, January __, 1999, at 10:00 a.m. local
time. The American Eagle Special Meeting will be held at 1800 Moler Road,
Columbus, Ohio.
On November 30, 1998, American Eagle entered into a Plan of Reorganization and
Agreement and Plan of Merger (the "Merger Agreement") with Natco Industries,
Inc. ("Natco") and Thorn Hill Acquisition Corp. ("Newco"), a wholly owned
subsidiary of Natco, pursuant to which Newco will merge with and into American
Eagle (the "Merger") with American Eagle surviving the Merger and becoming a
wholly owned subsidiary of Natco (the "Reorganization"). Immediately after the
Reorganization is consummated, Natco will change its name to American Eagle
Outfitters, Inc. At the American Eagle Special Meeting, shareholders of American
Eagle will be asked to consider and approve the Reorganization and the Merger
Agreement and the transactions contemplated thereby. A copy of the Merger
Agreement is attached as Appendix A to the Prospectus/Proxy Statement enclosed
herewith.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE REORGANIZATION AS BEING IN
THE BEST INTEREST OF AMERICAN EAGLE'S SHAREHOLDERS AND RECOMMENDS THAT YOU VOTE
IN FAVOR OF THE REORGANIZATION AND THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY.
Please read carefully the accompanying Notice of Special Meeting of Shareholders
and the Prospectus/Proxy Statement and consider the information contained in
them.
In accordance with American Eagle's Certificate of Incorporation and the General
Corporation Law of the State of Delaware, the affirmative vote of the holders of
a majority of the outstanding shares of American Eagle common stock is required
to approve the Reorganization and Merger Agreement. Accordingly, your vote is
important no matter how large or how small your holdings may be. Whether or not
you plan to attend the American Eagle Special Meeting, you are urged to
complete, sign, and promptly return the enclosed proxy card to assure that your
shares will be voted at the American Eagle Special Meeting. If you attend the
American Eagle Special Meeting, you may vote in person if you wish and your
proxy will not be used.
Very truly yours,
Jay L. Schottenstein
Chairman of the Board
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AMERICAN EAGLE OUTFITTERS, INC.
150 Thorn Hill Drive
Warrendale, Pennsylvania 15086-7528
-------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
January __, 1998
-------------------------------------
Notice is hereby given that a Special Meeting of Shareholders (the "American
Eagle Special Meeting") of American Eagle Outfitters, Inc. ("American Eagle")
has been called by the Board of Directors and will be held at 1800 Moler Road,
Columbus, Ohio, on January __, 1999, at 10:00 a.m. local time, for the following
purposes:
1. To consider and approve the merger of Thorn Hill Acquisition
Corp. ("Newco"), a wholly owned subsidiary of Natco Industries, Inc.
("Natco") with and into American Eagle pursuant to the Plan of
Reorganization and Agreement and Plan of Merger, dated as of
November 30, 1998 between American Eagle, Natco, and Newco (the "Merger
Agreement"), as more fully described in the accompanying
Prospectus/Proxy Statement.
2. To transact any other business which may properly come before the
meeting or any adjournment or adjournments thereof. (The Board of
Directors is not currently aware of any other business to come before
the American Eagle Special Meeting.)
Only holders of American Eagle Common Stock of record at the close of business
on December 11, 1998, the record date for the American Eagle Special Meeting,
are entitled to notice of and to vote at the American Eagle Special Meeting and
any adjournments thereof.
We urge you to execute and return the enclosed proxy as soon as possible in
order to ensure that your shares will be represented at the American Eagle
Special Meeting. Your proxy may be revoked in the manner described in the
accompanying Prospectus/Proxy Statement at any time before it has been voted at
the American Eagle Special Meeting. If you attend the American Eagle Special
Meeting, you may vote in person, and your proxy will not be used.
Dated: December __, 1998 By Order of the Board of Directors
Jay L. Schottenstein
Chairman of the Board
<PAGE> 5
No person is authorized in connection with the offering made hereby to
give any information or to make any representation other than as contained in
this Prospectus and any information or representation not contained herein must
not be relied upon as having been authorized by Natco or American Eagle. This
Prospectus does not constitute an offer to sell, or a solicitation of an offer
to buy, any of the securities offered by this Prospectus in any jurisdiction or
to any person to whom it would be unlawful to make such an offer or
solicitation. The delivery of this Prospectus at any time does not imply that
the information herein is correct as of any time subsequent to the date hereof.
PROSPECTUS
- -------------------------------------------------------------------------------
NATCO INDUSTRIES, INC.
- -------------------------------------------------------------------------------
16,279,300 SHARES OF COMMON STOCK
We are Natco Industries, Inc. ("Natco") a private company and owner of
30.1% of American Eagle Outfitters, Inc. ("American Eagle"). This Prospectus is
being provided to you because your American Eagle shares will become Natco
shares in a corporate reorganization (the "Reorganization"). The Reorganization
is intended, in part, to align the interests of the owners of Natco with your
interests as American Eagle stockholders and to implement a holding company
structure. Natco will change its name to American Eagle in the Reorganization.
The term "New American Eagle" is used in this document to refer to us after the
Reorganization. The shares of New American Eagle Common Stock you will receive
in the Reorganization will continue to be traded on the Nasdaq National Market
under the symbol "AEOS."
This Prospectus also serves as a Proxy Statement (the "Prospectus/Proxy
Statement") to stockholders of American Eagle for the Special Meeting of
Stockholders to be held on January __, 1999 (the "Special Meeting"). This
Prospectus/Proxy Statement and the accompanying forms of proxy are first being
mailed to stockholders of American Eagle on or about December __, 1998. A
stockholder who has given his proxy may revoke it at any time prior to its use
at the meeting.
INVESTING IN NEW AMERICAN EAGLE COMMON STOCK INVOLVES CERTAIN RISKS.
SEE "RISK FACTORS" AT PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The information in this Prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
The date of this Prospectus is December __, 1998.
<PAGE> 6
TABLE OF CONTENTS
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TABLE OF CONTENTS ...................................................................................... 2
SUMMARY ................................................................................................ 3
RISK FACTORS ........................................................................................... 5
AVAILABLE INFORMATION .................................................................................. 9
INFORMATION INCORPORATED BY REFERENCE .................................................................. 10
RISKS ASSOCIATED WITH FORWARD LOOKING STATEMENT ........................................................ 11
COMPARATIVE PER SHARE INFORMATION ...................................................................... 11
MARKET PRICE DATA; DIVIDEND POLICY ..................................................................... 12
SELECTED FINANCIAL DATA ................................................................................ 13
THE REORGANIZATION ..................................................................................... 16
Background of the Reorganization ................................................................... 16
Record Date; Shares Entitled to Vote ............................................................... 17
Required Vote ...................................................................................... 17
The Merger Agreement ............................................................................... 17
Exchange of Certificates ........................................................................... 19
Nasdaq Listing ..................................................................................... 20
Regulatory Approvals ............................................................................... 20
Dissenters' Rights ................................................................................. 20
Description of Natco's Securities .................................................................. 21
Accounting Treatment ............................................................................... 21
Certain U.S. Federal Income Tax Consequences of the Merger ......................................... 21
Resales by Affiliates .............................................................................. 22
American Eagle's Reasons for the Merger; Recommendation of
American Eagle's Board of Directors .............................................................. 22
Natco's Reasons for the Merger; Recommendation of Natco's Board of Directors ...................... 23
NATCO INDUSTRIES, INC. ................................................................................. 23
General ............................................................................................ 23
Historical Background and Business ................................................................. 23
Natco LLC Reorganization ........................................................................... 23
Natco Directors and Executive Officers ............................................................. 24
Management's Discussion and Analysis of Financial Condition and
Results of Operations ............................................................................ 25
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
OF NEW AMERICAN EAGLE .............................................................................. 25
Ownership of Common Stock .......................................................................... 25
Ownership of RVI and Natco ......................................................................... 27
AMERICAN EAGLE OUTFITTERS, INC. ........................................................................ 27
General ............................................................................................ 27
Other Information .................................................................................. 27
STOCKHOLDER RIGHTS ..................................................................................... 28
EXPERTS ................................................................................................ 29
LEGAL MATTERS .......................................................................................... 29
INDEX TO FINANCIAL STATEMENTS .......................................................................... F-1
APPENDIX A - Plan of Reorganization and Agreement and Plan of Merger
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2
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NATCO INDUSTRIES, INC.
AND
AMERICAN EAGLE OUTFITTERS, INC.
---------------------------------
PROSPECTUS/PROXY STATEMENT
---------------------------------
SUMMARY
The following is a brief summary of certain information contained
elsewhere in this Prospectus/Proxy Statement. This summary is not intended to be
complete and is qualified in its entirety by reference to, and should be read in
conjunction with, the detailed information and financial statements contained
herein and in the exhibits hereto. The stockholders of Natco and American Eagle
are urged to review this entire Prospectus/Proxy Statement carefully, including
the appendices hereto and such other documents.
NATCO INDUSTRIES, INC.
1800 Moler Road
Columbus, Ohio 43207-1698
(614) 221-9200
We are a holding company owned by members of the family of Jerome M.
Schottenstein and trusts established for their benefit (the "Schottenstein
Family"). Our principal asset is 6,991,174 shares of American Eagle common stock
("American Eagle Common Stock"), representing 30.1% of the outstanding shares.
Our only other material assets consist of a portfolio of receivables and notes
held for investment. We have no employees and rely on management services
provided by companies owned by the Schottenstein Family.
AMERICAN EAGLE OUTFITTERS, INC.
150 Thorn Hill Drive
Warrendale, Pennsylvania 15086-7528
(724) 776-4857
American Eagle is a specialty retailer of all-American casual apparel,
accessories, and footwear for men and women between the ages of 16 and 34.
American Eagle designs, markets, and sells its own brand of versatile, relaxed,
and timeless classics like AE dungarees, khakis, and T-shirts, providing high
quality merchandise at affordable prices. As of November 30, 1998, American
Eagle operated 386 mall-based stores in 41 states principally in the Midwest,
Northeast and Southeast.
THE REORGANIZATION
We are providing this Prospectus/Proxy Statement to you as a stockholders
of American Eagle in connection with the plan of reorganization (the
"Reorganization") of American Eagle and Natco. The Reorganization will proceed
as follows:
- - STEP 1: We will spin off all of our assets, primarily a portfolio of
receivables and notes held for investment, and liabilities to a limited
liability company ("Natco LLC") except for our ownership of American Eagle
stock. Then all of the membership interests in Natco LLC will be
distributed to our Schottenstein Family stockholders. We will declare a
stock split so that our Schottenstein Family stockholders will own
6,991,174 shares of Natco common stock ("Natco Common Stock"), which is the
same number of American Eagle shares that we own. Immediately prior to the
Reorganization, we will have no material liabilities and our only asset
will be our American Eagle Common Stock.
- - STEP 2: Our subsidiary will merge with and into American Eagle (the
"Merger"). A copy of
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the Plan of Reorganization and Agreement and Plan of Merger, dated as of
November 30, 1998 (the "Merger Agreement") is attached as Appendix A.
American Eagle will be the surviving corporation and will become our wholly
owned operating subsidiary. We will serve as a holding company. All of your
shares of American Eagle Common Stock will be converted into the same
number of shares of New American Eagle common stock ("New American Eagle
Common Stock"). You will be required to exchange your stock certificates,
and we will send you a Letter of Transmittal to do so after the
Reorganization. The shares of American Eagle Common Stock that we now own
will be cancelled, but the Schottenstein Family stockholders will continue
to own the same number of our shares as we own in American Eagle before the
Reorganization. Our total number of outstanding shares will be the same as
American Eagle's prior to the Reorganization.
- - STEP 3: Immediately following the Merger, American Eagle will change its
name to AE Stores Company. We will change our name to American Eagle
Outfitters, Inc. The term "New American Eagle" is used in this document to
refer to us after the Reorganization.
Principally all of the transaction expenses of the Reorganization are being
borne by Natco stockholders. Even though New American Eagle will not bear any
cash expense related to transaction fees paid by Natco, for financial statement
reporting purposes, New American Eagle will be required to book the expenses on
its income statement in the financial quarter in which the Reorganization is
consummated. Currently, on a diluted earnings per share basis, these expenses
would total approximately $0.04 per share.
It is currently anticipated that, assuming all conditions to the
Reorganization have been satisfied or waived, it will be completed on January
__, 1999 (the"Effective Time").
Although technically, you will become a stockholder of New American Eagle,
after the Reorganization, New American Eagle will have the same characteristics
as American Eagle, including:
- - the same business operations and substantially identical assets and
liabilities as American Eagle;
- - the same directors, officers and employees as American Eagle;
- - the same number of shares outstanding as American Eagle; and
- - the same Certificate of Incorporation and By-Laws as American Eagle, except
for an increase in the number of authorized shares, a classified Board of
Directors, and the adoption of the provisions of Section 203 of the
Delaware General Corporation Law. The additional authorized shares will be
available for stock splits and other corporate purposes determined by the
Board of Directors of New American Eagle.
The shares of New American Eagle Common Stock you will receive in the
Merger will continue to trade on the Nasdaq National Market under the symbol
"AEOS" without any interruption resulting from the Reorganization.
The Merger will be accounted for by New American Eagle as an acquisition of
minority interest without a substantial change in net assets, operations, or
company ownership.
We and American Eagle each have received private letter rulings (the
"Original Rulings") from the Internal Revenue Service holding, among other
things, that the Merger will be a reorganization under Section 368(a) of the
Internal Revenue Code. In addition, we and American Eagle each have requested
supplemental private letter rulings (the "Supplemental Rulings" and, together
with the Original Rulings, the "Tax Rulings") from the Internal Revenue Service
to the effect that the reincorporation of American Eagle will not affect the
holdings set forth in the Original Rulings. Based on the Tax Rulings, for U.S.
federal income tax purposes, no gain or loss will be recognized by you as a
holder of American Eagle Common Stock on your exchange of American Eagle Common
Stock solely for New American Eagle Common Stock in the Merger. Consummation of
the Merger is conditioned upon receipt of the Supplemental Rulings (the "Tax
Condition"). The
4
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American Eagle Board of Directors has determined that if the Tax Condition is
not satisfied, American Eagle will not proceed with the Merger.
THE SPECIAL MEETING
The Special Meeting will be held at 10:00 a.m., local time, on January __,
1999, at 1800 Moler Road, Columbus, Ohio. The close of business on December 11,
1998 is the record date for determining the stockholders of record of American
Eagle entitled to notice of and to vote at the Special Meeting. At the Special
Meeting, you will be asked to approve the Reorganization, pursuant to which you
will become a stockholder of New American Eagle. This Prospectus/Proxy Statement
is being first sent or given to the stockholders of American Eagle on or about
December __, 1998.
The American Eagle Board of Directors is soliciting proxies for the Special
Meeting. The shares represented by the accompanying proxy will be voted as
directed if the proxy is properly signed, dated and received prior to the
Special Meeting. The proxy grants discretionary authority to vote on other
matters which may arise at the Special Meeting. Management is presently unaware
of any such matters. The persons designated to vote the shares will cast votes
according to their best judgment if any other matters properly come before the
Special Meeting. If you sign, date and return the enclosed proxy, you still have
the power to revoke it at any time prior to the Special Meeting by filing with
the Secretary of American Eagle a written notice of revocation or a subsequent
proxy relating to the same shares, or by attending the Special Meeting and
voting in person.
Approval of the Reorganization requires the affirmative vote of the holders
of a majority of the voting power of American Eagle. The Schottenstein Family,
through their ownership of Retail Ventures, Inc. ("RVI") and Natco, control
approximately 53.2% of the outstanding shares of American Eagle Common Stock and
it is anticipated that they will vote such shares in favor of the
Reorganization. As long as they do so, approval of the Reorganization is
assured.
RECOMMENDATION OF AMERICAN EAGLE'S AND NATCO'S BOARD OF DIRECTORS; REASONS FOR
THE REORGANIZATION
In order to consider and to negotiate the terms of the proposed Merger on
American Eagle's behalf, American Eagle's Board of Directors appointed certain
members to a special committee ("Special Committee"). The American Eagle Board
of Directors, after receiving the report of its Special Committee, has
determined that the Reorganization is fair and in your best interests as a
stockholder of American Eagle. The decision to approve the Reorganization and to
recommend approval to American Eagle stockholders was based on a number of
factors, including: (i) the opportunity to limit the potential for stockholder
conflicts that may arise with respect to operating and other plans of American
Eagle; (ii) the creation of a holding company ownership structure to facilitate
any future plans to restructure the operations of American Eagle; (iii) the
reduction in the concentration of ownership of American Eagle, which may enhance
its long term ability to raise debt or equity capital; and (iv) to provide
certain administrative efficiencies.
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should consider the following factors carefully in
evaluating an investment in the New American Eagle Common Stock offered hereby.
RISKS RELATED TO THE MERGER
In the Reorganization, Natco LLC will indemnify New American Eagle from and
against any of Natco's liabilities or obligations existing immediately before
the Merger or resulting from events in existence before the Merger. The
indemnification will apply if the liabilities or obligations are larger than the
value, if any, of pre-existing tax benefits of Natco that are realized after the
Reorganization. We anticipate that Natco LLC will have a net worth of
approximately $15 million
5
<PAGE> 10
after it receives the assets and assumes the liabilities of Natco. Neither we
nor American Eagle are aware of any liabilities or obligations of Natco that
have not been properly recorded on our books and records or that are likely to
be asserted by a third party in the future.
Natco LLC's owners will agree to contribute back to Natco LLC any net
amount after tax distributions they receive from Natco LLC, if necessary, to
allow Natco LLC to meet its indemnification obligations to New American Eagle.
Even so, we cannot assure you that Natco LLC will have liquid assets sufficient
to indemnify New American Eagle if a third party successfully asserts a
currently unknown claim against New American Eagle. If any such unknown claim
were material in amount, New American Eagle's failure to collect such
indemnified amount from Natco LLC could have a material adverse effect on New
American Eagle. See "THE REORGANIZATION - The Merger Agreement-Indemnification."
CHANGES IN CONSUMER DEMAND
The retail industry is subject to rapid changes in consumer preferences.
Changing fashion trends may adversely affect demand for New American Eagle's
merchandise. New American Eagle's future success will depend upon its ability to
anticipate and respond to changing consumer preferences and fashion trends in a
timely manner. New American Eagle's failure to adequately anticipate or respond
to such changes could result in:
- lower sales
- excess inventories; and
- higher markdowns
These events would have a material adverse effect on New American Eagle's
business, financial condition and results of operations. In addition, sales of
New American Eagle's products may be adversely affected by weak consumer
spending caused by adverse economic trends or uncertainties regarding the
economy.
EXPANSION STRATEGY
New American Eagle's continued growth and success will depend in part on
its ability to open and operate new stores on a timely and profitable basis.
American Eagle opened 29 new stores during Fiscal 1997, and has opened 54 new
stores in Fiscal 1998, in each case net of closed stores. It currently plans to:
- - open approximately 75 stores in Fiscal 1999; and
- - increase the store base thereafter by 15-20% in both existing and new
markets.
Accomplishing these expansion goals will depend upon a number of factors,
including:
- - the identification of new market areas in which New American Eagle can
successfully compete;
- - the ability to obtain suitable sites for new stores at acceptable costs;
- - the hiring and training of qualified personnel, particularly at the store
management level;
- - the integration of new stores into existing operations;
- - the expansion of New American Eagle's buying, information systems and
inventory capabilities; and
- - the availability of capital.
We cannot assure you that New American Eagle will be able to achieve its
store expansion goals, manage its growth effectively, successfully implement new
information systems or integrate the planned new stores into New American
Eagle's operations or operate its new stores profitably.
COMPETITION
American Eagle's business is highly competitive and many of its competitors
have significantly greater resources than American Eagle. As New American Eagle
expands into new geographic regions, its success will depend in part on its
ability to gain market share from established competitors. We cannot assure you
that New American Eagle will be able to successfully compete in the future.
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DEPENDENCE ON MALL TRAFFIC
American Eagle's stores are located primarily in enclosed regional shopping
malls. Accordingly, American Eagle's sales depend, in large part, on the volume
of traffic in these malls. American Eagle relies on the ability of mall "anchor"
tenants and other mall attractions to generate consumer traffic in the vicinity
of American Eagle's stores, as well as the continuing popularity of malls as
shopping destinations. Mall traffic may be adversely affected by the following
factors, which in turn would impair New American Eagle's net sales and
profitability:
- - regional economic downturns;
- - competition from non-mall retailers and other malls;
- - the closing of "anchor" tenants; or
- - declines in the desirability of the shopping environment in a particular
mall.
As with other speciality apparel retailers, New American Eagle's business
is also subject to general economic conditions, including the possibility of a
nationwide recession, consumer confidence and the level of consumer spending.
SEASONALITY AND OTHER BUSINESS FACTORS
American Eagle experiences seasonal fluctuations in its net sales and net
income, with a disproportionate amount of net sales and a majority of its net
income typically realized during the fourth quarter. American Eagle's quarterly
results of operations may also fluctuate significantly as a result of a variety
of other factors, including the timing of certain holiday seasons and new store
openings, the net sales contributed by new stores, merchandise mix, and the
timing and level of markdowns.
New American Eagle's results of operations may also fluctuate from quarter
to quarter in the future as a result of the amount and timing of sales
contributed by new stores and the integration of new stores into the operations
of New American Eagle, as well as other factors. The addition of stores, as is
anticipated with New American Eagle's store expansion program, can therefore
significantly affect results of operations on a quarter-to-quarter basis.
UNCERTAINTIES ASSOCIATED WITH PRIVATE LABEL MERCHANDISE
Private label merchandise accounted for approximately 99% of American
Eagle's merchandise purchases in Fiscal 1997. American Eagle has no long-term
contracts with its private label manufacturing sources and competes with other
companies for production facilities. In addition, New American Eagle's private
label products may experience higher markdowns than name brand products, because
(1) such products generally require long lead times and must be ordered in
larger volumes; and (2) because New American Eagle is typically unable to return
private label products to its manufacturers. Due to the seasonal nature of New
American Eagle's business, the impact of such markdowns would be particularly
significant in the fourth quarter. We cannot assure you that these risks
associated with New American Eagle's strategy to develop its own brands and sell
almost exclusively private label merchandise will not adversely affect New
American Eagle's operations in the future.
RELATIONSHIP WITH SUPPLIERS
American Eagle purchases merchandise from approximately 120 suppliers
located domestically and overseas. American Eagle's business is dependent on its
ability to source, on a timely basis, private label merchandise in large
quantities at competitive prices. For Fiscal 1997, approximately 25% of American
Eagle's merchandise was purchased from North American Suppliers and the
remaining 75% overseas. American Eagle believes that, consistent with the retail
apparel industry as a whole, most of its domestic vendors import a large portion
of their merchandise from abroad. Most of American Eagle's foreign dollar
purchases are from the Far East. American Eagle has in the past and New American
Eagle will in the future rely on a small number of Far East sources for a large
portion of its purchases. Any event causing a disruption of imports from the Far
East, including the insolvency of a significant supplier or the imposition of
additional import restrictions, could have a materially adverse effect on New
American Eagle's operations. Substantially all of American Eagle's foreign
purchases are negotiated and paid for in U.S. dollars.
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<PAGE> 12
Trade restrictions in the form of increased tariffs or quotas, or both,
against apparel items could affect the importation of apparel generally, and, in
that event, could increase the cost and reduce the supply of apparel available
to New American Eagle and adversely affect New American Eagle's results of
operations and financial condition. In addition, New American Eagle's import
operations may be adversely affected by political instability resulting in the
disruption of trade from exporting countries, significant fluctuation in the
value of the U.S. dollar against foreign currencies and restrictions on the
transfer of funds.
RISKS RELATED TO NEW BUSINESS ACTIVITIES
During Fiscal 1998, American Eagle began selling its merchandise through a
lifestyle-oriented catalog issued on a quarterly basis and through its site,
ae-outfitters.com, on the World Wide Web. There can be no assurance that such
non-store activities will achieve profitability on a quarterly or annual basis
in the future. Revenues to date in this area have not been significant.
DEPENDENCE ON KEY OFFICERS AND EMPLOYEES
New American Eagle's success will depend to a great extent on its senior
management, including its Chairman and Chief Executive Officer, Jay L.
Schottenstein, its Vice Chairman and Chief Operating Officer, George Kolber, its
President and Chief Merchandising Officer, Roger A. Markfield, and its Executive
Vice President and Chief Financial Officer, Laura A. Weil. In addition, New
American Eagle's future performance depends on its ability to attract and retain
key personnel and skilled employees, particularly at the senior management
level. New American Eagle's operations could be adversely affected if, for any
reason, one or more key executive officers ceased to be active in New American
Eagle's management. American Eagle does not own or currently plan to acquire
"key man" life insurance on the lives of any of its key employees. New American
Eagle's success in the future will also be dependent upon its ability to attract
and retain other qualified personnel, including store managers and sales
associates.
CONTROL BY THE SCHOTTENSTEIN FAMILY
After the Reorganization, the Schottenstein Family will continue to
beneficially own approximately 53.2% of the outstanding Common Stock of New
American Eagle. As a result, the Schottenstein Family will be able to exert
significant influence over all matters requiring stockholder approval, including
the election of directors and approval of significant corporate transactions.
Such concentration of ownership may also have the effect of delaying or
preventing a change in control of New American Eagle. New American Eagle may
also in the future adopt certain corporate governance measures which,
individually or collectively, could delay or frustrate the removal of incumbent
directors and could make more difficult a merger, tender offer or proxy contest
involving New American Eagle even if such events might be deemed by certain
stockholders to be beneficial to the interest of the stockholders. In addition,
Jay L. Schottenstein serves as Chairman and Chief Executive Officer of American
Eagle, RVI, Natco and other affiliated entities.
American Eagle has certain relationships and transactions with other
entities controlled by the Schottenstein Family. It is anticipated that such
relationships will continue after the Reorganization. While American Eagle
expects that any future arrangements and transactions will be determined through
negotiations between New American Eagle and the Schottenstein Family and will be
approved by New American Eagle's independent directors, there can be no
assurance that conflicts of interests will not occur with respect to future
business dealings and similar corporate matters. There can be no assurance that
such conflicts will be resolved in a manner as favorable to New American Eagle
or its other stockholders if such conflicts did not exist.
SHARES ELIGIBLE FOR FUTURE SALE
After the Reorganization, the Schottenstein Family will continue to own
beneficially 12,233,147 shares of New American Eagle Common Stock. All of such
shares could be sold in open market transactions, subject to the volume
limitations of Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"). As of November 30, 1998, members of the Schottenstein Family
have sold 1,270,250 shares of American Eagle Common Stock in 1998, and may sell
additional shares in the future depending on the market conditions and other
circumstances. Sales of substantial amounts of New American Eagle Common Stock
could adversely affect prevailing market prices of the New American Eagle Common
Stock.
8
<PAGE> 13
LIMITATION OF LIABILITY OF DIRECTORS AND OFFICERS
American Eagle has entered into indemnification agreements with each of its
directors and officers which provide, among other things, that the director or
officer shall be indemnified to the fullest possible extent permitted by law
against all expenses (including attorneys' fees), judgments, fines and
settlement amounts, paid or incurred by them in any action or proceeding,
including any action by or in the right of American Eagle, on account of their
service as a director or officer of American Eagle or as a director, officer or
agent of any other company or enterprise when serving in such capacity at the
request of American Eagle. To the extent the indemnification agreements are
legally enforceable, they expand the scope of the circumstances under which New
American Eagle will be required to indemnify its officers and directors.
VOLATILITY OF MARKET PRICE
From time to time, there may be significant volatility in the market price
of the New American Eagle Common Stock. American Eagle believes that the current
market price of its Common Stock reflects expectations that New American Eagle
will be able to continue to market its products profitably and develop new
products with market appeal. If New American Eagle is unable to market its
products profitably and develop new products at a pace that reflects the
expectations of the market, investors could sell shares of New American Eagle
Common Stock at or after the time that it becomes apparent that such
expectations may not be realized, resulting in a decrease in the market price of
New American Eagle Common Stock.
In addition to the operating results of New American Eagle, changes in
earnings estimates by analysts, changes in general conditions in the economy or
the financial markets or other developments affecting New American Eagle or its
industry could cause the market price of the New American Eagle Common Stock to
fluctuate substantially. In recent years, the stock market has experienced
extreme price and volume fluctuations. This volatility has had a significant
effect on the market prices of securities issued by many companies, including
American Eagle, for reasons unrelated to their operating performance.
AVAILABLE INFORMATION
While Natco is not now subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), it does anticipate that it will be subject to
these rules and regulations after the Reorganization, and in accordance
therewith, will file reports, proxy statements, and other information with the
Securities and Exchange Commission (the "SEC"). Pursuant to Rule 414 of the
Securities Act, it is anticipated that New American Eagle will become a
successor issuer to American Eagle for all Securities Act filings made by
American Eagle. In addition, pursuant to Rule 12g-3 of the Exchange Act, it is
anticipated that New American Eagle will become a successor issuer to American
Eagle for all Exchange Act filings made by American Eagle. Copies of such
reports, proxy statements, and other information filed by American Eagle and New
American Eagle can be inspected and copied at the Public Reference Section of
the SEC at:
450 Fifth Street, N.W.
Washington, D.C. 20549-0001
or at the public reference facilities of the regional offices of the SEC at:
500 West Madison Street
Suite 1400
Chicago, Illinois 60661-2511
7 World Trade Center
Suite 1300
New York, New York 10048-1102
9
<PAGE> 14
Copies of such material also can be obtained by mail from the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549-0001, upon
payment of the fees prescribed by the rules and regulations of the SEC. Such
materials may also be accessed electronically by means of the SEC's home page on
the Internet at http:\\www.sec.gov.
New American Eagle Common Stock will be listed on the Nasdaq National
Market after the Reorganization, and accordingly such reports and other
information concerning New American Eagle also will be available for inspection
and copying at the offices of the Nasdaq Stock Market, 1735 K. Street, N.W.,
Washington, D.C.
20006-1504.
Natco has filed with the SEC under the Securities Act, and the rules
and regulations thereunder, a registration statement on Form S-4 (as it may be
amended, the "Registration Statement") with respect to the shares of New
American Eagle Common Stock issuable in connection with the Merger. This
Prospectus/Proxy Statement does not contain all of the information contained in
the Registration Statement, certain portions of which have been omitted pursuant
to the rules and regulations of the SEC and to which reference is hereby made.
Any statements contained herein or in any document incorporated by reference
herein concerning the provisions of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement or
other document, each such statement being qualified in its entirety by such
reference. The Registration Statement (and exhibits thereto) should be available
for inspection at the offices of the SEC at 450 Fifth Street, N.W., Washington
D.C. 20549-0001, and copies thereof may be obtained from the SEC at prescribed
rates. Such materials may also be accessed electronically by means of the SEC's
home page on the Internet at http:\\www.sec.gov.
All information contained herein or incorporated herein by reference
with respect to Natco, was supplied by Natco and all information contained
herein with respect to American Eagle was supplied by American Eagle. Neither
Natco nor American Eagle can warrant the accuracy or completeness of information
relating to the other party.
INFORMATION INCORPORATED BY REFERENCE
American Eagle and Natco hereby incorporate by reference into this
Prospectus/Proxy Statement the following documents previously filed with the SEC
pursuant to the Exchange Act:
(1) American Eagle's Annual Report on Form 10-K for the year ended
January 31, 1998, filed with the SEC on April 24, 1998;
(2) American Eagle's Definitive Proxy Statement for the Annual
Meeting of Stockholders, filed with the SEC on May 5, 1998;
(3) American Eagle's Quarterly Reports on Form 10-Q for the quarters
ended May 2, 1998, filed with the SEC on June 12, 1998, the
quarter ended August 1, 1998, filed with the SEC on September 15,
1998, and the Quarter ended October 31, 1998, filed with the SEC
on November 24, 1998;
(4) American Eagle's Definitive Proxy Statement for the Special
Meeting of the Stockholders, filed with the SEC on September 28,
1998; and
(5) American Eagle's Current Report on Form 8-K, filed with the SEC
on November 9, 1998.
All documents filed by the Registrant and American Eagle pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus/Proxy Statement and prior to the approval of Natco's stockholders and
the Special Meeting shall be deemed to be incorporated by reference in this
Prospectus/Proxy Statement and to be a part hereof from the date of filing of
such documents. Any statement incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus/Proxy Statement to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus/Proxy Statement.
10
<PAGE> 15
RISKS ASSOCIATED WITH FORWARD LOOKING STATEMENTS
This Prospectus/Proxy Statement contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act, and Section
21E of the Exchange Act, which are intended to be covered by the safe harbor
benefits of such laws. The forward-looking statements include, but may not be
limited to, all statements regarding the intent, belief and expectations of
Natco, American Eagle and their respective management, such as statements
concerning New American Eagle's future financial results and condition and its
operating or growth strategy. Investors are cautioned that all forward-looking
statements involve risks and uncertainties including, without limitation, the
factors set forth under the caption "Risk Factors" in this Prospectus/Proxy
Statement and other factors detailed from time to time in American Eagle's
filings with the SEC. Although Natco and American Eagle believe that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could ultimately prove to be inaccurate.
Therefore, there can be no assurance that any of the forward-looking statements
included in this Prospectus/Proxy Statement will prove to be accurate. In light
of the significant uncertainties inherent in the forward-looking statements
included herein, the inclusion of such information should not be regarded as a
representation by Natco or American Eagle or any other person that the
objectives and plans of New American Eagle will be achieved.
COMPARATIVE PER SHARE INFORMATION
The following table presents certain historical per share data for
Natco and American Eagle and combined pro forma per share data for New American
Eagle. The information should be read in conjunction with and is qualified in
its entirety by the financial statements and accompanying notes of Natco and
American Eagle included herein or incorporated herein by reference. Natco
Historical relates to the historical financial statements of Natco exclusive of
all transactions and related amounts associated with the receivable liquidation
business, which will be contributed to Natco LLC and distributed to Natco
stockholders immediately before the Merger of Natco and American Eagle. American
Eagle's fiscal year ends on the Saturday closest to January 31st. Natco's fiscal
year end is December 31st. The nine month period for American Eagle ended on
October 31, 1998 while Natco's nine month period ended September 30, 1998. The
respective year ends for 1997 were January 31, 1998 for American Eagle and
December 31, 1997 for Natco.
<TABLE>
<CAPTION>
Nine Months Year Ended January
Ended 31, 1998
October 31,1998
<S> <C> <C>
NATCO HISTORICAL (based upon 6,991,174 shares
outstanding)
Net income - basic and diluted $0.50
$0.81
Book value $2.61
$3.42
AMERICAN EAGLE HISTORICAL
Net income - diluted $0.85
$1.22
Book value $4.06
$5.39
NEW AMERICAN EAGLE PRO FORMA COMBINED
Net income - diluted $0.80
$1.22
Book value N/A
$5.42
</TABLE>
11
<PAGE> 16
MARKET PRICE DATA; DIVIDEND POLICY
There is no public market for Natco Common Stock. However, the shares
of New American Eagle Common Stock to be issued in the Merger will be
substituted for the American Eagle Common Stock currently listed on the Nasdaq
National Market under the symbol "AEOS." New American Eagle Common Stock will
continue to trade on the Nasdaq National Market under the same "AEOS" symbol
without any interruption resulting from the Reorganization. The following table
sets forth the range of high and low sales prices for American Eagle Common
Stock for the periods indicated, as reported by the Nasdaq National Market. The
prices have been adjusted to reflect applicable stock splits.
<TABLE>
<CAPTION>
For the Quarters Ended High Low
- ---------------------- ---- ---
<S> <C> <C>
April 1996 $14.37 $6.50
July 1996 $19.50 $13.00
October 1996 $29.13 $15.00
January 1997 $23.88 $7.50
April 1997 $12.50 $8.13
July 1997 $16.76 $10.07
October 1997 $29.00 $15.50
January 1998 $40.41 $29.51
April 1998 $41.58 $15.50
July 1998 $53.50 $33.13
October 1998 $54.63 $28.25
January 1999 (through
December __, 1998) $_____ $_____
</TABLE>
On December __, 1998, the last reported sales price of the American
Eagle Common Stock on the Nasdaq National Market was $____ per share. As of
December __, 1998, there were approximately ___ stockholders of record of
American Eagle Common Stock.
Stockholders of Natco and the stockholders of American Eagle are
advised to obtain current market quotations for shares of American Eagle Common
Stock. No assurance can be given concerning the market price of shares of
American Eagle Common Stock before or after the Effective Time. The market price
of the American Eagle Common Stock will fluctuate between the date of this
Prospectus/Proxy Statement and the Effective Time and thereafter.
American Eagle has never paid cash dividends and New American Eagle
presently anticipates that all of its future earnings will be retained for the
development of its business and does not anticipate paying cash dividends in the
foreseeable future. The payment of any future dividends will be at the
discretion of New American Eagle's Board of Directors and will be based on
future earnings, financial condition, capital requirements and other relevant
factors.
12
<PAGE> 17
SELECTED FINANCIAL DATA
The following tables present selected historical financial data of
Natco and American Eagle. Historical financial data of Natco for each of the
three annual periods has been extracted from the audited financial statements of
Natco, a portion of which is presented elsewhere herein, and of American Eagle,
which is incorporated herein by reference. Historical financial data for the
interim periods presented has been extracted from the unaudited historical
financial statements of Natco and American Eagle. The information should be read
in conjunction with the historical financial statements of American Eagle
incorporated by reference in this Prospectus/Proxy Statement and in conjunction
with the historical financial statements of Natco included herein.
SELECTED FINANCIAL DATA OF NATCO
(dollars in thousands, except share and per share data)
The following selected financial data is derived from and should be
read in conjunction with the audited financial statements of Natco for the three
years ended December 31, 1997, 1996 and 1995 included elsewhere in this
Prospectus/Proxy Statement.
<TABLE>
<CAPTION>
October December December December December December
31, 1998 31, 1997 31, 1996 31, 1995 31, 1994 31, 1993
-------- -------- -------- -------- -------- --------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
Operating income (loss) $9,620 $5,955 $2,273 $(471) $12,033 $6,392
Net income (loss) $5,676 $3,513 $1,341 $(278) $7,100 $3,771
Basic and diluted net income (loss) $0.81 $0.50 $0.19 $(0.04) $1.02 $0.54
per share
Basic and diluted weighted average 6,991 6,991 6,991 6,991 6,991 6,991
shares outstanding(1)
Total assets $37,816 $28,196 $22,241 $19,968 $20,438 $8,405
Stockholders' equity $23,903 $18,227 $14,714 $13,373 $13,651 $6,551
</TABLE>
(1) Adjusted to give effect to the Reorganization.
13
<PAGE> 18
SELECTED FINANCIAL DATA OF AMERICAN EAGLE
(dollars in thousands, except share and per share amounts)
The following selected financial data is derived from and should
be read in conjunction with the audited financial statements of American Eagle
for the year ended January 31, 1998 incorporated herein by reference.
<TABLE>
<CAPTION>
Nine Months
Ended Fiscal Years Ended
October 31, January 31, February 1, February 3, July 29, July 30,
1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net sales (1)(3) $374,493 $405,713 $326,404 $340,323 $296,563 $199,688
Operating income (loss) (1) $46,308 $31,120 $8,859 $(1,073) $12,043 $11,952
Net income (loss) (2) $29,229 $19,537 $5,925 $(1,334) $6,765 $6,629
Basic earnings (loss) per $1.30 $0.88 $0.27 $(0.06) $0.31 $0.35
share (2)(4)
Diluted earnings (loss) per $1.22 $0.86 $0.26 $(0.06) $0.30 $0.35
share (2)(4)
Basic weighted average 22,698 22,091 21,950 21,945 21,969 18,693
shares outstanding:
Diluted weighted average 24,000 22,816 22,694 21,945 22,430 18,705
shares outstanding:
Total assets $194,999 $144,795 $110,438 $95,363 $134,484 $82,863
Working capital $67,541 $48,486 $34,378 $24,775 $19,264 $27,173
Stockholders' equity $123,500 $90,808 $71,056 $63,796 $57,932 $50,125
Current ratio 1.94 1.90 1.87 1.78 1.25 1.83
Long term debt - - - - - -
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fiscal years 1996 through 1994 amounts have been reclassified to
conform to the Fiscal 1997 classifications.
(2) Fiscal 1994 includes a pro forma provision for income taxes due to the
Company's prior S-corporation status.
(3) The 53-weeks ended February 3, 1996 includes 9 months of sales, or $21.5
million from outlet stores sold in October 1995.
(4) Earnings (loss) per share has been restated for the effect of Financial
Accounting Standards Board Statement No. 128, Earnings per Share. See Notes
1 and 2 to the Consolidated Financial Statements of American Eagle
incorporated herein by reference.
14
<PAGE> 19
UNAUDITED PRO FORMA SELECTED FINANCIAL DATA
(dollars in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
October 31, January 31,
1998 1998
---- ----
(Unaudited)
<S> <C> <C>
Net sales $374,493 $405,713
Operating income (loss) $ 46,308 $ 29,920
Net income (loss) $ 29,229 $ 18,337
Basic earnings (loss) per $ 1.30 $ 0.83
share (1)
Diluted earnings (loss) per $ 1.22 $ 0.80
share (1)
Basic weighted average 22,580 22,091
shares outstanding:
Diluted weighted average 23,920 22,836
shares outstanding:
Total assets $195,749 N/A
Working capital $ 68,141 N/A
Stockholders' equity $124,100 N/A
Current ratio 1.95 N/A
Long term debt -- --
</TABLE>
(1) Earnings (loss) per share has been restated for the effect of Financial
Accounting Standards Board Statement No. 128, Earnings per Share. See Notes
1 and 2 to the Consolidated Financial Statements of American Eagle
incorporated herein by reference.
15
<PAGE> 20
THE REORGANIZATION
BACKGROUND OF THE REORGANIZATION
On October 9, 1997, at a special meeting of the Board of Directors of
American Eagle, Jay L. Schottenstein, Chairman of American Eagle and Natco,
suggested a proposed combination of American Eagle and Natco. He indicated that
such combination would eliminate potential conflicts of interest between Natco
and the other stockholders of American Eagle. The conflicts of interest result
from Natco's status as a corporation subject to taxation under Subchapter C of
the Internal Revenue Code (the "Code"). This status prevents Natco from
receiving the full benefit of capital gains preferential rates treatment on any
sale of its American Eagle stock. This status also entitles Natco to the benefit
of a dividend received deduction in the amount of 80% of any dividend paid by
American Eagle. Mr. Schottenstein acknowledged that payment of dividends would
be in conflict with the reinvestment of earnings and growth strategy
historically pursued by American Eagle. In response, the Board formed a special
committee consisting of Gilbert W. Harrison, George Kolber and John L. Marakas
(the "Interim Committee"). On October 10, 1997, the Interim Committee met and
hired independent counsel. Thereafter, management of American Eagle determined
that it would be in the best interest of American Eagle to have the committee
considering the proposed combination of American Eagle and Natco to consist
entirely of outside directors.
On November 20, 1997, at a special meeting the Board of Directors, the
size of the Board was expanded from eight directors to twelve and Ari Deshe, Jon
P. Diamond, Michael G. Jesselson and Gerald E. Wedren were elected to the Board.
The Board then appointed Messrs. Jesselson, Marakas and Wedren as a
reconstituted special committee (the "Special Committee") to consider, and to
negotiate on behalf of American Eagle, the terms of the proposed combination of
American Eagle and Natco. At a meeting on November 21, 1997, the Special
Committee retained its own independent counsel.
In February, 1998, after considering a number of possible methods for
structuring the proposed combination, management of American Eagle and Natco
determined to pursue a possible combination in the form of the Reorganization.
Natco hired special tax counsel to obtain from the Internal Revenue Service the
private letter rulings on the Reorganization.
On June 19, 1998, the Special Committee met with its independent
counsel to review the proposed terms of the Merger Agreement and the
Indemnification Agreement. Thereafter, the Special Committee and its counsel
began negotiating the terms of the Merger Agreement and Indemnification
Agreement with representatives of Natco and its stockholders. The Special
Committee had several telephonic meetings with its independent counsel to
consider a number of revised proposals, principally with respect to the terms of
the Indemnification Agreement, including meetings on June 29, July 23, and
August 4, 1998.
On August 11, 1998, the Special Committee met with its independent
counsel and determined that the terms of the Merger Agreement and the
Indemnification Agreement were fair to American Eagle and in the best interests
of American Eagle and its unaffiliated stockholders. The Special Committee
unanimously determined to recommend approval of the Merger Agreement and the
Indemnification Agreement to the full Board of Directors.
On August 14, 1998, at a special meeting of the full Board of
Directors, based on the recommendation of the Special Committee, the Board of
Directors approved the Reorganization and authorized the execution of the Merger
Agreement and Indemnification Agreement and recommended that the stockholders of
American Eagle approve the Reorganization. All directors voted in favor with Jay
L. Schottenstein, Saul Schottenstein, Ari Deshe and Jon P. Diamond abstaining
from the vote.
On September 17, 1998, at a meeting of the full Board of Directors, the
Board approved a proposal to change American Eagle's state of incorporation from
Ohio to Delaware. The reincorporation was approved by the American Eagle
stockholders at a meeting held on October 22, 1998. American Eagle changed its
state of incorporation by merging into its wholly owned Delaware subsidiary on
November 2, 1998. The reincorporation
16
<PAGE> 21
was undertaken to allow American Eagle to benefit from Delaware's comprehensive,
modern and flexible corporation law. It was also undertaken to facilitate the
Reorganization by eliminating dissenting stockholder appraisal rights in the
Reorganization.
On November 19, 1998, the Special Committee met with their counsel and
reaffirmed their approval of the Merger Agreement and the Reorganization. The
Merger Agreement was executed effective as of November 30, 1998.
RECORD DATE; SHARES ENTITLED TO VOTE
American Eagle stockholders of record at the close of business on
December 11, 1998 will be entitled to vote at the Special Meeting. At that date,
American Eagle had [_______] shares of American Eagle Common Stock outstanding
and entitled to vote on all matters requiring a vote of the stockholders. These
shares were held by approximately ___ holders of record. Each share of American
Eagle Common Stock entitles the holder to one vote, exercisable in person or by
proxy on each matter that comes before the stockholders at the Special Meeting.
REQUIRED VOTE
A majority of the outstanding shares of American Eagle Common Stock
represented in person will constitute a quorum at the Special Meeting. Approval
of the Reorganization and Merger Agreement and the transactions contemplated
thereby requires the affirmative vote of the holders of a majority of the voting
power of American Eagle. As of the record date, the Schottenstein Family,
through their ownership of RVI and Natco, controlled approximately 53.2% of the
outstanding shares of American Eagle Common Stock and it is anticipated that
they will vote such shares in favor of the Reorganization. As long as they do
so, approval of the Reorganization is assured.
The affirmative vote of all the outstanding shares of Natco Common
Stock is necessary to approve the Merger Agreement. As of the date of this
Prospectus, the Schottenstein Family beneficially owned all of the outstanding
shares of Natco Common Stock and it is anticipated that they will vote such
shares in favor of the Reorganization. As long as they do so, approval of the
Merger is assured. It is anticipated that the stockholders of Natco will approve
the Merger and the Reorganization in an action by unanimous written consent
prior to the Special Meeting.
THE MERGER AGREEMENT
The following is a brief summary of certain provisions of the Merger
Agreement, a copy of which is attached as Appendix A to this Prospectus/Proxy
Statement and is incorporated herein by reference. This summary is qualified in
its entirety by reference to the Merger Agreement. Stockholders are urged to
read the Merger Agreement carefully.
The Merger Agreement provides that following the approval of the Merger
by the stockholders of Natco and American Eagle, and the satisfaction or waiver
of the other conditions to the Merger, Thorn Hill Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of Natco ("Newco") will be merged with
and into American Eagle, with American Eagle continuing as the surviving
corporation and Natco changing its name to "American Eagle Outfitters, Inc."
Upon the satisfaction or waiver of all conditions to the Merger, the
Merger will become effective upon the filing of a certificate of merger by Newco
and American Eagle with the Delaware Secretary of State in accordance with the
Delaware General Corporation Law ("Delaware GCL"). The Effective Time of the
Merger is expected to occur on or about January __, 1999.
MERGER CONSIDERATION GENERALLY. In the Merger, each outstanding share
of American Eagle Common Stock, except American Eagle stock owned by Natco, will
be automatically converted into one fully paid and nonassessable share of New
American Eagle Common Stock. American Eagle stock owned by Natco will be
cancelled, the outstanding shares of Natco Common Stock will remain outstanding
as shares of New American Eagle,
17
<PAGE> 22
and the Newco Common Stock held by Natco will be converted into all the
outstanding common stock of American Eagle.
CONDITIONS TO CONSUMMATION OF THE MERGER. The respective obligations of
Natco and American Eagle to consummate the Merger are subject to the fulfillment
or waiver by the parties of certain conditions, including: (i) the Merger
Agreement shall have been approved and adopted by the requisite vote of the
stockholders of American Eagle; (ii) the Merger Agreement shall have been
approved and adopted by the unanimous vote or consent of the stockholders of
Natco; (iii) no preliminary or permanent injunction or other order, decree or
ruling issued by any court of competent jurisdiction nor any statute, rule,
regulation or order entered, promulgated or enacted by any governmental,
regulatory or administrative agency or authority shall be in effect that would
prevent the consummation of the Merger; (iv) the waiting period under the
Hart-Scott-Rodino Antitrust Improvement Act ("HSR Act") shall have expired or
been terminated; (v) the shares of Common Stock of New American Eagle to be
issued in the Merger shall have been approved for listing on the Nasdaq National
Market; (vi) Natco and American Eagle shall have received the Supplemental
Rulings from the IRS, in form and substance satisfactory to each of them,
substantially to the effect that the Original Rulings from the IRS remain in
full force and effect; and (vii) there shall have been no material adverse
change in the Tax Rulings issued by the IRS relating to the Reorganization.
The obligations of American Eagle to consummate the Merger are further
subject to the satisfaction or waiver of certain additional conditions,
including the following: (i) Natco, Newco and Natco LLC shall have performed and
complied in all material respects with all obligations and agreements required
to be performed and complied with by them under the Merger Agreement at or prior
to the Effective Time; (ii) the representations and warranties of Natco, Newco
and Natco LLC contained in the Merger Agreement that are qualified as to
materiality shall be true and correct and all such representations and
warranties that are not so qualified shall be true and correct in all material
respects, in each case, as of the date of the Merger Agreement and at and as of
the Effective Time as if made at and as of such date; (iii) American Eagle shall
have received a certificate from the Chief Executive Officer of Natco, Newco and
Natco LLC, dated as of the Effective Time, to the effect that the conditions and
obligations of Natco, Newco and Natco LLC under the Merger Agreement have been
satisfied; (iv) prior to the Effective Time, Natco shall have amended and
restated its Certificate of Incorporation and Bylaws as provided in the Merger
Agreement; (v) the directors and officers of Natco shall be the directors and
officers of American Eagle immediately prior to the Effective Time, to serve
until their successors are duly elected and qualified and, in the case of
officers, to serve at the pleasure of the Board of Directors of Natco; and (vi)
Natco LLC and its members shall have duly executed and delivered the
Indemnification Agreement.
The obligations of Natco and Newco to consummate the Merger are further
subject to the satisfaction or waiver of certain additional conditions,
including the following: (i) American Eagle shall have performed and complied in
all material respects with all obligations and agreements required to be
performed and complied with by it under the Merger Agreement at or prior to the
Effective Time; (ii) the representations and warranties of American Eagle
contained in the Merger Agreement that are qualified as to materiality shall be
true and correct and all such representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case, as
of the date of the Merger Agreement and at and as of the Effective Time as if
made at and as of such date; and (iii) Natco and Newco shall have received a
certificate from the Chief Operating Officer of American Eagle to the effect
that the conditions contained in subparagraph (i) and (ii) above have been
satisfied.
REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, American Eagle
has made certain representations and warranties relating to: (i) the
organization and qualification of American Eagle; (ii) the capitalization of
American Eagle; (iii) the requisite corporate power and authority of American
Eagle to enter into the Merger Agreement; (iv) the non-contravention of the
Merger Agreement with the Certificate of Incorporation and the Bylaws of
American Eagle and certain agreements to which American Eagle is a party and
laws to which it is subject; and (v) the fact that American Eagle shall have
obtained all necessary approvals and consents. Also in the Merger Agreement,
Natco, Newco and Natco LLC have made certain representations and warranties
relating to, among other things: (i) the organization and qualification of each
entity; (ii) the capitalization of each entity; (iii) the requisite corporate
power and authority of each entity to enter into the Merger Agreement; (iv) the
non-contravention of the Merger Agreement with the Certificate of Incorporation,
Bylaws, or Certificate of Formation and Operating Agreement of each entity and
certain agreements to which the entity is a party and laws to which it is
subject; (v) the fact that each entity has obtained all necessary approvals and
consents; (vi) the absence of litigation or governmental
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<PAGE> 23
proceedings; (vii) compliance with laws and permits; (viii) the absence of any
broker or finder; (ix) material contracts; (x) the accuracy of schedules and
other information furnished in connection with the Merger Agreement; (xi)
financial statements and information; (xii) the absence of liabilities,
obligations or indebtedness of any nature on the part of Natco other than those
set forth in the financial information provided to American Eagle; and (xiii)
compliance with environmental laws.
CERTAIN AGREEMENTS AND COVENANTS. Pursuant to the Merger Agreement,
Natco, Newco, Natco LLC, and American Eagle make the following covenants: (i)
each party will use all reasonable efforts to cause the Merger to qualify as a
tax free reorganization under the Code, as contemplated by the Tax Rulings
issued by the IRS; and (ii) none of the parties or any of their affiliates will
before or after the Effective Time file any tax or informational return, make
any disclosure or otherwise take any position or any action, including but not
limited to any action described below, that (a) is inconsistent with the
representations made to the IRS in connection with the issuance of the Tax
Rulings; or (b) is inconsistent with the Merger qualifying as a reorganization
under Section 368(a) of the Code; or (c) would alone or in conjunction with any
other action cause the Merger not to qualify as a reorganization under said
section of the Code. The parties also agree that they will file all returns,
reports or statements and take such other actions as may be required to have the
Merger qualify as a reorganization under Section 368 of the Code and to comply
with regulations under Section 368 of the Code as they apply to the Merger.
INDEMNIFICATION. Pursuant to the Indemnification Agreement, Natco LLC
will indemnify each of American Eagle, New American Eagle and their officers,
directors, employees and agents against any claims arising from (i) liabilities
or obligations of Natco existing immediately prior to the Merger or resulting
from events or occurrences in existence prior to the Merger; (ii) any breach or
inaccuracy of any representation or warranty made by Natco, Newco or Natco LLC
in the Merger Agreement; or (iii) any breach or failure by Natco, Newco or Natco
LLC to perform any of their respective obligations under the Merger Agreement,
provided that the indemnity only applies to losses that exceed the actual cash
value of any benefit received after the Reorganization by American Eagle or New
American Eagle relating to any tax credits or the net operating loss carryover
of Natco immediately prior to the Reorganization, and any other tax benefits,
but only if and to the extent such losses do not result from a willful breach of
a representation, warranty or covenant in the Merger Agreement by Natco, Newco
or Natco LLC. Natco LLC will not indemnify New American Eagle for claims
resulting from the Merger, including any claim as to whether or not the Merger
is a tax-free transaction or the amount and value to New American Eagle of the
Natco net operating loss carry-forward. The indemnification obligation of Natco
LLC will extend for any claims made within the earlier of four years from the
Effective Time of the Merger or expiration of the applicable statute of
limitations, except for (i) claims relating to tax matters, which can be
asserted by American Eagle or New American Eagle through the applicable federal
income tax statute of limitations; or (ii) claims relating to environmental
matters, which can be asserted until the earlier of the tenth anniversary of the
Effective Time or expiration of the applicable statute of limitations. The
members of Natco LLC will agree, severally and not jointly, to refrain from
taking any distribution that would result in the net worth of Natco LLC to be
less than $10,000,000, computed in accordance with generally accepted accounting
principles, as applied on a consistent basis at the end of each fiscal quarter
for a period of four years from the Effective Time. The members of Natco LLC
also will agree, severally and not jointly, to contribute back to Natco LLC the
net value, after giving effect to the income taxes payable thereon, of any
distributions received from Natco LLC, other than distributions to pay tax
generated by Natco LLC or taxes payable by the members as a result of the
initial receipt of their membership interests in Natco LLC, if necessary to
enable Natco LLC, to meet its obligations under the Indemnification Agreement.
TERMINATION. The Merger Agreement may be terminated by: (i) the mutual
action of the Board of Directors of Natco and American Eagle; (ii) by American
Eagle, if Natco has not satisfied certain closing conditions; (iii) by Natco, if
American Eagle has not satisfied certain closing conditions; and (iv) by Natco
or American Eagle if there has been a material breach of a representation or
warranty made by the other party, the effect of which is an American Eagle
Material Adverse Effect or a Natco Material Adverse Effect, as defined in the
Merger Agreement, or if there has been a breach by the other party in any
material respect of the covenants set forth in the Merger Agreement.
EXCHANGE OF CERTIFICATES
The American Eagle Common Stock held by stockholders of American
Eagle, other than Natco, will be converted into New American Eagle Common Stock
upon consummation of the Merger. Therefore, stockholders of
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<PAGE> 24
American Eagle will be required to exchange their old certificates of American
Eagle Common Stock for new stock certificates representing New American Eagle
Common Stock as a result of the Merger.
National City Bank (the "Exchange Agent") will deliver to the
stockholders of record of American Eagle a letter of transmittal ("Letter of
Transmittal") and instructions for its use in effecting the surrender of
certificates representing shares of American Eagle Common Stock in exchange for
certificates representing the identical number of shares of New American Eagle
Common Stock.
Upon surrender of a certificate to the Exchange Agent, together with a
duly executed Letter of Transmittal and any other required documents, the
stockholders of American Eagle will be entitled to receive, in exchange
therefor, a certificate representing the identical number of shares of New
American Eagle Common Stock.
If a certificate representing shares of American Eagle Common Stock has
been lost, stolen or destroyed, the stockholder will be required to submit an
affidavit describing the lost, stolen or destroyed certificate, the number of
shares evidenced thereby and affirming the status of that certificate in lieu of
surrendering such certificate to the Exchange Agent, which shall deem such
certificate canceled; provided that New American Eagle may require the holder of
such certificate to provide New American Eagle with a bond in such amount as New
American Eagle may direct as a condition to issuing a new stock certificate.
If any certificate representing New American Eagle Common Stock is to be
issued in a name other than that in which the certificate previously
representing American Eagle Common Stock which is surrendered in exchange
therefor is registered, the certificate so surrendered must be properly endorsed
or otherwise be in proper form for transfer, and the person requesting such
exchange must pay to American Eagle, in advance, any transfer or other taxes due
by reason of the issuance of a certificate representing shares of New American
Eagle Common Stock or the making of a cash payment in any name other than that
of the registered holder of the certificate surrendered or must establish to the
satisfaction of New American Eagle that such tax has been paid or is not
payable.
American Eagle stockholders should not submit any stock certificates now
but rather should only submit stock certificates upon receipt of, and together
with, the Letter of Transmittal and instructions enclosed therewith.
NASDAQ LISTING
The shares of New American Eagle Common Stock to be issued in the
Reorganization will be substituted for the American Eagle Common Stock currently
listed on the Nasdaq National Market under the symbol "AEOS." The shares of New
American Eagle Common Stock will continue to trade on the Nasdaq National Market
without any interruption resulting from the Reorganization.
REGULATORY APPROVALS
Pursuant to the requirements of the HSR Act, Natco and American Eagle
each filed a pre-merger notification report with the Federal Trade Commission
and the Antitrust Division of the United States Department of Justice, in
connection with the Reorganization. It is a condition to the obligations of
Natco and American Eagle to consummate the Reorganization that the waiting
period under the HSR Act shall have expired or terminated.
DISSENTERS' RIGHTS
Under the DGCL, a stockholder is entitled, under certain circumstances,
to receive payment of the fair market value of the stockholder's common stock if
the stockholder dissents from a proposed merger or consolidation. Dissenters'
rights are unavailable in the case of a sale of all or substantially all of the
assets of a corporation. Dissenters' rights are also unavailable if the shares
of the Delaware corporation which is a party to a merger or consolidation are
listed on a national securities exchange or interdealer quotation system, or are
held of record by more than 2,000 persons, and in the merger or consolidation,
stockholders receive shares of stock of the surviving or resulting corporation
and/or shares of stock of any other corporation which are listed on a national
securities exchange or interdealer quotation system or held of record by more
than 2,000 persons. Since American Eagle Common Stock is currently listed on the
Nasdaq National Market and the shares of New American Eagle to be
20
<PAGE> 25
received in the Merger will be listed on the Nasdaq National Market, dissenters'
rights will not be available to stockholders of American Eagle in connection
with the Merger.
DESCRIPTION OF NATCO'S SECURITIES
General. The authorized capital stock of Natco consists of 70,000,000
shares of Natco Common Stock and 5,000,000 shares of Natco preferred stock. As
of the date of this Prospectus/Proxy Statement, no shares of Natco preferred
stock were issued and outstanding and 18,250 shares of Natco Common Stock were
issued and outstanding. Immediately prior to the Effective Time, Natco will have
6,991,174 shares outstanding.
The following summary of terms of Natco's capital stock does not purport
to be complete and is qualified in its entirety by reference to the applicable
provisions of the Delaware law and by Natco's Amended and Restated Certificate
of Incorporation, which has been filed with the SEC as an exhibit to the
Registration Statement for this Prospectus/Proxy Statement.
Common Stock. Holders of Natco Common Stock are entitled to receive
dividends out of funds legally available therefor as and if declared by the
Natco Board of Directors, provided that, so long as any shares of Natco
preferred stock are outstanding, no dividends (other than dividends payable in
Natco Common Stock) or other distributions (including redemptions and purchases)
may be made with respect to the Natco Common Stock unless full cumulative
dividends on the shares of Natco preferred stock have been paid.
Holders of shares of Natco Common Stock are entitled to one vote for
each share for the election of directors and on all other matters. The issued
and outstanding shares of Natco Common Stock are fully paid and non-assessable.
The holders of Natco Common Stock are not entitled to preemptive rights or
conversion or redemption rights. The holders of Natco Common Stock do not have
cumulative voting rights in the election of directors.
Natco's Board of Directors is divided into three classes (Class I, II,
and III). Directors are elected to hold office for a three-year term. A
plurality vote is required to elect the directors, while in all other matters,
the vote required to take action is an affirmative vote of a majority of the
shares present (in person or by proxy) and entitled to vote where a quorum is
present.
In the event of the voluntary or involuntary dissolution, liquidation,
or winding up of Natco, holders of Natco Common Stock will be entitled to
receive, pro rata, after satisfaction in full of the prior rights of creditors
(including holders of Natco's indebtedness) and holders of Natco preferred
stock, all the remaining assets of Natco available for distribution.
Preferred Stock. The Natco Board of Directors has the authority to issue
shares of preferred stock in one or more series and to fix the designations,
number of shares, dividends, redemption rights, sinking fund requirements,
liquidation prices, conversion rights, and other rights, qualifications,
limitations or restrictions as the Natco Board of Directors may from time to
time be permitted by law to fix or change.
ACCOUNTING TREATMENT
The Merger will be accounted for by New American Eagle as an acquisition
of minority interests without a substantial change in net assets, operations,
management, or Company ownership. As a result, there will be no change in assets
and liabilities of the merger companies which will be recorded based on historic
carrying amounts.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
In the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special tax
counsel to Natco and American Eagle, subject to the qualifications set forth
below and contained herein and subject to the receipt of the Supplemental
Rulings, the following is a summary of the material U.S. federal income tax
consequences of the Merger to holders of American Eagle Common Stock who
exchange such stock for New American Eagle Common Stock pursuant to the Merger.
The following summary addresses only such stockholders who hold their American
Eagle Common Stock as a capital asset and does not address all of the U.S.
federal income tax consequences
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<PAGE> 26
that may be relevant to particular stockholders in light of their individual
circumstances or to stockholders who are subject to special rules (including,
without limitation, financial institutions, tax-exempt organizations, insurance
companies, dealers in securities or foreign currencies, foreign holders, persons
who hold such shares as a hedge against currency risk, or a constructive sale or
conversion transaction, or holders who acquired their shares pursuant to the
exercise of employee stock options or otherwise as compensation). The following
summary is not binding on the Internal Revenue Service. It is based upon the
Code, laws, regulations, rulings and decisions in effect as of the date hereof,
all of which are subject to change, possibly with retroactive effect. Tax
consequences under state, local, and other foreign laws are not addressed
herein. Holders of American Eagle common stock are strongly urged to consult
their tax advisors as to the specific tax consequences to them of the Merger,
including the applicability and effect of federal, state, local and foreign
income and other tax laws in their particular circumstances.
Natco and American Eagle have received the Original Rulings, and have
requested the Supplemental Rulings from the Internal Revenue Service, based upon
representations and information submitted to the Internal Revenue Service,
holding, among other things, that the Merger will be a reorganization under
Section 368(a) of the Code. The American Eagle Board of Directors has determined
that if the Tax Condition is not satisfied, the American Eagle Board of
Directors will not proceed with the Merger. Based on the Original Rulings, for
U.S. federal income tax purposes:
(i) no gain or loss will be recognized by holders of American Eagle
Common Stock on their exchange of American Eagle Common Stock solely for
New American Eagle Common Stock in the Merger;
(ii) the basis of the New American Eagle Common Stock received by each
such holder of American Eagle Common Stock in the Merger will be the
same as the basis of the American Eagle Common Stock surrendered in
exchange therefor; and
(iii) the holding period of the New American Eagle Common Stock received
by each such holder of American Eagle Common Stock in the Merger will
include the period during which that stockholder held the American Eagle
Common Stock surrendered in exchange therefor, provided such American
Eagle Common Stock is held as a capital asset on the date of the Merger.
RESALES BY AFFILIATES
Certain stockholders of American Eagle may be deemed an "affiliate" of
American Eagle for purposes of Rule 145 under the Securities Act ("Rule 145")
and will not be permitted to transfer their shares of New American Eagle Common
Stock issued in the Merger except (i) pursuant to an effective registration
statement; (ii) in compliance with Rule 145; or (iii) pursuant to an exemption
from the registration requirements of the Securities Act. New American Eagle
shall be entitled to place appropriate legends on the certificates evidencing
New American Eagle Common Stock to be received by such affiliates pursuant to
the terms of the Merger, and to issue appropriate stock transfer instructions to
the transfer agent for New American Eagle Common Stock, to the effect that the
shares received or to be received by such an affiliate pursuant to the Merger
may only be sold, transferred or otherwise conveyed, and the holder thereof may
only reduce his interest in or risks related to such shares, pursuant to an
effective registration statement under the Securities Act or in accordance with
the provisions of paragraph (d) of Rule 145 or pursuant to an exemption from
registration provided under the Securities Act. The foregoing restrictions on
the transferability of New American Eagle Common Stock shall apply to all
purported sales, transfers and other conveyances of the shares received or to be
received by any such affiliate pursuant to the Merger and to all purported
reductions in the interest in or risks relating to such shares, whether or not
such affiliate has exchanged the certificates previously evidencing shares of
American Eagle Common Stock. This Prospectus/Proxy Statement does not cover any
resales of New American Eagle Common Stock.
AMERICAN EAGLE'S REASONS FOR THE MERGER; RECOMMENDATION OF AMERICAN EAGLES'S
BOARD OF DIRECTORS
At a meeting on August 14, 1998, the American Eagle Board of Directors
determined that the Merger is advisable and fair to and in the best interests of
American Eagle and its unaffiliated stockholders. The Board approved the Merger
Agreement, the Merger and the other transactions contemplated by the
Reorganization and resolved to recommend that the stockholders of American Eagle
vote in favor of the Reorganization. In reaching
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<PAGE> 27
these conclusions, the American Eagle Board of Directors, with the assistance of
management, the Special Committee and its independent legal advisors, considered
a number of factors, including the following: (i) the unanimous recommendation
of the Special Committee; (ii) the benefits to American Eagle of eliminating
Natco's potential conflicts of interest as to the financial objectives of
American Eagle relating to the payment of dividends instead of reinvesting
earnings; (iii) the benefits to American Eagle of the holding company structure
arising from the Reorganization and the resulting flexibility to implement any
future plans with respect to the corporate organization and operating structure
of New American Eagle; and (iv) the reduction in the concentration of ownership
of New American Eagle providing the opportunity to increase liquidity in the
market for New American Eagle's Common Stock and enhancing its long term ability
to raise capital. This list of factors considered by the American Eagle Board of
Directors is not intended to be exhaustive. The American Eagle Board of
Directors did not find it practicable to and did not quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. In addition, individual members of the American Eagle Board may
have given different weights to different factors. Jay L. Schottenstein, Saul
Schottenstein, Ari Deshe and Jon P. Diamond, whose families have an economic
interest in Natco, abstained from voting on the Reorganization.
Based on the foregoing, the American Eagle Board of Directors recommends
that the stockholders of American Eagle vote FOR the proposal to approve the
Merger Agreement and the related transactions in the Reorganization.
NATCO'S REASONS FOR THE MERGER; RECOMMENDATION OF NATCO'S BOARD OF DIRECTORS
In an action by written consent effective on November 25, 1998, the
Board of Directors of Natco unanimously approved the Reorganization and the
Merger Agreement and recommended that all Natco stockholders vote in favor of
the Reorganization. In approving the Reorganization, the Natco Board took into
consideration (a) the benefits to the stockholders of Natco of eliminating any
potential conflict of interest with respect to the financial objectives of
American Eagle as they relate to the payment of dividends instead of reinvesting
earnings; and (b) the efficiencies and cost savings to the stockholders of Natco
resulting from no longer being required to maintain Natco as a separate
corporate entity.
NATCO INDUSTRIES, INC.
GENERAL
Natco is a holding company owned by members of the Schottenstein Family.
Natco's principal asset is 6,991,174 shares of American Eagle Common Stock,
representing approximately 30.1% of the outstanding shares of American Eagle.
Natco's only other material assets consist of a portfolio of receivables and
notes held for investment. Natco has no employees and relies on management
services provided by companies owned by the Schottenstein Family.
HISTORICAL BACKGROUND AND BUSINESS
The first American Eagle store was opened in 1977 by RVI. In 1985, the
stockholders of RVI acquired Natco. Natco had operated a chain of mall-based
specialty retail stores, which were converted after the acquisition to American
Eagle stores. Thereafter, until 1994, American Eagle stores were operated as one
business by two corporations, RVI and Natco. In 1994, in connection with the
initial public offering by American Eagle, the American Eagle business was
transferred to American Eagle in exchange for the issuance of American Eagle
stock to RVI and Natco. Thereafter, Natco continued to own its American Eagle
stock and to conduct a business of investing in receivables and notes for
collection.
NATCO LLC REORGANIZATION
Prior to the Merger, Natco will transfer all of its assets and
liabilities, other than its American Eagle Common Stock, to Natco LLC, a wholly
owned subsidiary of Natco. Thereafter, all of the membership interests in Natco
LLC will be distributed to the Schottenstein Family stockholders of Natco in
redemption of a portion of their shares of
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<PAGE> 28
Natco Common Stock. Natco will declare a stock split so that after the
redemption and prior to the Effective Time, the stockholders of Natco will own
6,991,174 shares of Natco Common Stock, which will represent approximately 30.1%
of the total ownership of New American Eagle at the Effective Time. Immediately
prior to the Effective Time, Natco is expected to have no liabilities and
Natco's only asset will be its American Eagle stock.
NATCO DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding each of the
current executive officers and directors of Natco. As a condition of the Merger,
Natco is required to elect the same officers and directors as American Eagle.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
---- --- ---------------------
<S> <C> <C>
Jay L. Schottenstein 44 Chairman of Board and President
Saul Schottenstein 76 Director
Thomas R. Ketteler 55 Vice President-Finance, Treasurer and Director
Irwin A. Bain 45 Secretary and Director
</TABLE>
Jay L. Schottenstein has served as President of Natco since 1985 and as
Chairman since 1991. Mr. Schottenstein has served as Chairman and Chief
Executive Officer of American Eagle and its predecessors since March 1992 and
prior to that time he served as a Vice President and Director of American
Eagle's predecessors since 1980. He has also served since March 1992 as Chairman
and Chief Executive Officer of Schottenstein Stores Corporation ("SSC"), a
privately-held company with interests in retailing, real estate and
manufacturing. He has also served as Chairman since March 1992 and as Chief
Executive Officer since April 1991 of Value City Department Stores, Inc., a
publicly-held company which is subject to the reporting requirements of Section
13 of the Exchange Act, which operates a chain of off-price department stores
and is 56.3% owned by SSC, with the remaining shares publicly-held and traded on
the New York Stock Exchange. Mr. Schottenstein has served as Vice Chairman of
SSC since 1986 and as a director of SSC since 1982. He has also served as an
officer and director of various other corporations owned or controlled by
members of the Schottenstein Family since 1976. Jay L. Schottenstein is the
nephew of Saul Schottenstein.
Saul Schottenstein has served as a Director of Natco since 1985. Mr.
Schottenstein has been a director of American Eagle and its predecessors since
1980. He has served as President of SSC since 1984, and as a director of SSC
since 1982. He served as Executive Vice President of SSC from 1982 to 1984.
Prior to that time he served in various executive capacities with SSC since
1946. He is also an officer and director of various other corporations owned or
controlled by the Schottenstein Family, including Value City Department Stores,
Inc., a publicly-held company which is subject to the reporting requirements of
Section 13 of the Exchange Act.
Thomas R. Ketteler has served as Vice President-Finance, Treasurer and a
Director of Natco since 1985. Mr. Ketteler has been a director of American Eagle
since January 1994. Mr. Ketteler has served SSC as Chief Operating Officer since
April 1995, as a director since 1985 and Vice President of Finance since 1981.
Prior to that time, he was a partner in the firm of Alexander Grant and Company,
Certified Public Accountants. Mr. Ketteler is an officer and director of various
other corporations owned or controlled by the Schottenstein Family. Since May
1997, Mr. Ketteler has also served as a director of the Crowley Milner & Co., a
publicly-held company which is subject to the reporting requirements of Section
13 of the Exchange Act.
Irwin A. Bain has served as General Counsel and Secretary of Natco since
October 1991. Mr. Bain has served as General Counsel and Secretary of SSC since
June 1991.
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<PAGE> 29
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
EQUITY IN EARNINGS (LOSSES) OF ASSOCIATED COMPANY
Natco's equity in the earnings (losses) of American Eagle is the most
significant element in Natco's net income. Such amounts, which are recorded
based upon American Eagle's quarter end or year end closest to Natco's financial
statement presented, fluctuate significantly from period to period based upon
American Eagle's reported earnings and Natco's ownership of American Eagle.
Natco's ownership in American Eagle is affected by any sales or purchases of
American Eagle stock by Natco and stock issuances and reacquisitions by American
Eagle. Although Natco has not purchased or sold any American Eagle stock since
American Eagle's initial public offering in 1994, Natco's ownership of American
Eagle has decreased from approximately 31.5% as of January 1, 1995 to 30.6% as
of October 31, 1998. Natco's equity in the earnings (losses) of American Eagle
are also affected by other changes in the stockholders' equity of American
Eagle. Such amounts are not considered significant by management and Natco's
equity in the earnings (losses) of American Eagle have been increased or
decreased by those amounts in the year they are incurred.
FINANCIAL CONDITION
Natco's stockholders' equity at October 31, 1998 was approximately $24
million, compared to $18.2 million at December 31, 1997, $14.7 million at
December 31, 1996 and $13.4 million at December 31, 1995. Natco's financial
condition is dependent upon the results of American Eagle's operations.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND
MANAGEMENT OF NEW AMERICAN EAGLE
OWNERSHIP OF COMMON STOCK
The following table sets forth certain information with regard to the
beneficial ownership of American Eagle's Common Stock on November 30, 1998, and
the beneficial ownership of New American Eagle Common Stock at such date on a
pro forma basis following the Merger, by: (i) each person known by American
Eagle and Natco who will own beneficially more than 5% of the outstanding shares
of New American Eagle's Common Stock; (ii) each of New American Eagle's
directors; (iii) the executive officers of New American Eagle named in the
summary compensation table included in the Proxy Statement of American Eagle,
dated May 1, 1998 and incorporated herein by reference; and (iv) all directors
and executive officers of New American Eagle as a group.
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<PAGE> 30
All share amounts and per share data included in this proxy statement
have been restated to reflect the January 1998 stock split and the May 1998
stock split.
<TABLE>
<CAPTION>
Stockholder Shares Owned at November 30, 1998 Shares Owned after Merger (1)
- ----------- --------------------------------- -----------------------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C>
Natco Industries, Inc. 6,991,174 30.1% --- *
Retail Ventures, Inc. (2) 5,230,125 22.5% 5,230,125 22.5%
S.H.D. Investments LLC (3) 1,534,375 6.6% 1,534,375 6.6%
Jay L. Schottenstein (4) 5,366,409 23.1% 8,190,566 35.3%
Geraldine Schottenstein (5) 6,991,174 30.1% 5,371,437 23.4%
Saul Schottenstein (6) 22,500 * 160,939 *
George Kolber (7) 167,125 * 167,125 *
Ari Deshe (8) --- * 2,685,718 11.6%
Jon P. Diamond (9) 563 * 1,343,421 5.8%
Martin P. Doolan (7) 19,125 * 19,125 *
Gilbert W. Harrison (7) 4,725 * 4,725 *
Michael G. Jesselson 4,500 * 4,500 *
Thomas R. Ketteler (7) 10,215 * 10,215 *
John L. Marakas (7) 16,875 * 16,875 *
David W. Thompson (7) 58,500 * 58,500 *
Gerald E. Wedren --- * --- *
Joseph E. Kerin 17,960 * 17,960 *
Roger S. Markfield 300,154 * 300,154 *
Laura A. Weil (7) 21,875 * 21,875 *
All directors and executive officers 6,010,526 25.9% 11,658,842 50.2%
</TABLE>
* Represents less than 1% of the outstanding Common Stock.
(1) Unless otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the shares of Common Stock beneficially
owned. The percent is based upon the 23,229,065 shares assumed to be
outstanding immediately following the Merger and the number of shares, if
any, as to which the named person has the right to acquire beneficial
ownership upon the exercise of stock options exercisable within 60 days of
November 30, 1999.
(2) The address for Retail Ventures, Inc. ("RVI") is 1800 Moler Road, Columbus,
Ohio 43207-1698.
(3) The address for S.H.D. Investments, LLC is 5804 E. Slauson, City of
Commerce, California, 90040-3018.
(4) Includes 5,230,125 shares of Common Stock owned by RVI and 33 shares of
Common Stock held as custodian for a family member and 136,250 shares
subject to exercisable options. Jay L. Schottenstein serves as Chairman and
Chief Executive Officer of RVI. Jay L. Schottenstein is the beneficial
owner of 69.9% of the outstanding voting securities of RVI. Accordingly, he
may be deemed to be the beneficial owner of the Common Stock of New
American Eagle held by RVI.
(5) Geraldine Schottenstein is the mother of Jay L. Schottenstein, Ann
Schottenstein Deshe and Susan Schottenstein Diamond. Geraldine
Schottenstein is the beneficial owner of 76.8% of the outstanding
securities of Natco. Accordingly, she may be deemed to be the beneficial
owner of the shares of common stock of the Company held by Natco. The
shares owned after the Merger represent 1,342,859 shares to which Mrs.
Schottenstein has sole voting and investment power and 4,028,578 shares to
which Mrs. Schottenstein shares voting and investment power. The shares are
held in trust for family members as to which Mrs. Schottenstein is either
Trustee or Trust Advisor.
(6) Includes 11,250 shares subject to exercisable options held by Saul
Schottenstein. Saul Schottenstein is a director of RVI and the uncle of Jay
L. Schottenstein, Ann Schottenstein Deshe and Susan Schottenstein Diamond.
For a description of Saul Schottenstein's beneficial ownership of the
outstanding voting securities of RVI, see "Ownership of RVI."
(7) Includes the following number of shares subject to exercisable options: Mr.
Kolber, 22,500 shares; Mr. Doolan, 19,125 shares; Mr. Harrison, 4,500
shares; Mr. Ketteler, 4,590 shares; Mr. Marakas, 10,125 shares; Mr.
Thompson, 22,500 shares; and Ms. Weil, 8,750 shares.
(8) Shares owned after the Merger represent 2,685,718 shares to which Mr.
Deshe's spouse shares voting and investment power over shares held in trust
for family members as to which Mrs. Deshe is either Trustee or Trust
Advisor.
(9) Shares owned after the Merger represent 1,342,859 shares to which Mr.
Diamond's spouse shares voting and investment power over shares held in
trust for family members as to which Mrs. Diamond is either Trustee or
Trust Advisor.
26
<PAGE> 31
OWNERSHIP OF RVI AND NATCO
The following table shows the shares of RVI and Natco Common Stock owned
beneficially by each person owning more than 5% of the shares, each director or
executive officer owning any shares, and by all directors and executive officers
of the Company as a group, as of November 30, 1998.
<TABLE>
<CAPTION>
Shares of
Shares of Natco
RVI Common Percent of Common Percent of
Stockholder Stock Class Stock Class
----------- ----------- ----- ----- -----
<S> <C> <C> <C> <C>
Jay L. Schottenstein (1) 349.5 69.9% 7,372.3 40.4%
Saul Schottenstein (2) 51.0 10.2% 361.4 2.0%
Geraldine Schottenstein (3) 153.0 30.6% 14,383.2 78.8%
Ann Schottenstein Deshe (4) 97.0 19.4% 7,010.9 38.4%
Susan Schottenstein Diamond (5) 48.5 9.7% 3,505.5 19.2%
All directors and executive officers as a group 354.5 70.9% 7,733.7 42.4%
</TABLE>
(1) Represents sole and/or shared voting and investment power over shares
held in trust for family members as to which Jay L. Schottenstein is
either Trustee or a Trust Advisor.
(2) Represents sole and or shared voting and investment power over 46 RVI
shares held in trust for family members as to which Saul Schottenstein
is Trustee and 5 RVI shares owned directly.
(3) Represents sole and/or shared voting and investment power over shares
held in trust for family members as to which Geraldine Schottenstein is
Trustee.
(4) Ann Schottenstein Deshe is the spouse of Ari Deshe and the sister of Jay
L. Schottenstein. Represents sole and/or shared voting and investment
power over shares held in trust for family members as to which Ann
Schottenstein Deshe is either Trustee or a Trust Advisor.
(5) Susan Schottenstein Diamond is the spouse of Jon P. Diamond and the
sister of Jay L. Schottenstein. Represents sole and/or shared voting and
investment power over shares held in trust for family members as to
which Susan Schottenstein Diamond is either Trustee or a Trust Advisor.
AMERICAN EAGLE OUTFITTERS, INC.
GENERAL
American Eagle is a specialty retailer of all-American casual apparel,
accessories, and footwear for men and women between the ages of 16 and 34.
American Eagle designs, markets, and sells its own brand of versatile, relaxed,
and timeless classics like AE dungarees, khakis, and T-shirts, providing high
quality merchandise at affordable prices. At November 30, 1998, American Eagle
operated 386 mall-based stores in 41 states principally in the Midwest,
Northeast and Southeast. American Eagle's principal offices are located at 150
Thorn Hill Drive, Warrendale, Pennsylvania 15086-7528 and its telephone number
is (724) 776-4857.
OTHER INFORMATION
American Eagle's Common Stock is actively traded on the Nasdaq National
Market under the trading symbol "AEOS." See "Market Price Data; Dividend
Policy." Because information regarding American Eagle is readily available to
investors, the law permits this document to be abbreviated by incorporating
certain information regarding American Eagle by reference to certain reports and
other documents filed with the SEC. See "Information Incorporated By Reference."
Other than as described herein, there have been no material changes in the
affairs of American Eagle since the filing of its Quarterly Report on Form 10-Q
for the quarter ended October 31, 1998 through the date of this Prospectus/Proxy
Statement.
27
<PAGE> 32
STOCKHOLDER RIGHTS
Upon consummation of the Reorganization, there will be no material
differences between the rights of security holders of American Eagle and the
rights of the security holders of New American Eagle. The Certificate of
Incorporation of American Eagle and New American Eagle will be the same except
for an increase in the number of authorized shares, the authorization of
preferred stock, the classification of the Board of Directors, and the election
to be governed by Section 203 of the DGCL.
AUTHORIZED SHARES
American Eagle's Certificate of Incorporation currently authorizes
30,000,000 shares of common stock. New American Eagle's Certificate of
Incorporation will authorize 70,000,000 shares of common stock and 5,000,000
shares of preferred stock. The issuance and the terms of any shares of preferred
stock by New American Eagle is in the discretion of the Board of Directors.
CLASSIFICATION OF BOARD OF DIRECTORS
The DGCL permits, but does not require, the adoption of a classified
Board of Directors with staggered terms, with each class having a term of
officer longer than one year but not longer than three years. American Eagle's
Certificate of Incorporation does not currently provide for this. New American
Eagle's Certificate of Incorporation provides for a classified Board of
Directors consisting of three classes, Class I, Class II, and Class III. Each
director will be elected for a term expiring at the third successive annual
meeting of the stockholders after his or her election.
SECTION 203 OF DGCL
American Eagle has opted out of the provisions of Section 203 of the
DGCL. New American Eagle will not opt out of Section 203 of the DGCL. Section
203 of the DGCL provides that a corporation shall not engage in any "business
combination" with any "interested stockholder" for a period of three years
following the time that such stockholder became an interested stockholder,
unless (i) prior to such time, the board of directors of the corporation
approved either the business combination or the transaction which resulted in
the stockholder becoming an interested stockholder; (ii) upon consummation of
the transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced, excluding
for purposes of determining the number of shares outstanding those shares owned
(a) by persons who are directors and officers and (b) employee stock plans in
which employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender offer or
exchange offer; or (iii) at or subsequent to such time, the business combination
is approved by the board of directors and authorized at an annual or special
meeting of the stockholders, and not by written consent, by the affirmative vote
of at least two-thirds (2/3) of the outstanding voting stock which is not owned
by the interested stockholder. A "business combination" under the DGCL is
generally defined as any of the following transactions involving the corporation
and an interested stockholder thereof: (i) a merger or consolidation; (ii) a
sale, lease, exchange, mortgage, pledge, transfer or other disposition of 10% or
more of the corporation's assets; (iii) an issuance or transfer of the
corporation's stock; (iv) a transaction having the effect of directly or
indirectly increasing the proportionate share of the corporation's stock held by
such interested stockholder; or (v) any receipt by such interested stockholder
of the benefit of any loans, guarantees, pledges or other financial benefits. An
"interested stockholder" under the DGCL is generally defined as any person
owning 15% or more of the corporation's outstanding stock.
28
<PAGE> 33
EXPERTS
The financial statements of Natco as of December 31, 1997 and 1996, and
for the years ended December 31, 1997, 1996 and 1995 included in this
Prospectus/Proxy Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein, in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of American Eagle Outfitters, Inc.
as of January 31, 1998, February 1, 1997, and February 3, 1996, and for the
fiscal years ended January 31, 1998, February 1, 1997, the six month period
ended February 3, 1996, and the fiscal year ended July 29, 1995, incorporated by
reference in this Prospectus/Proxy Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon in reliance
upon such reports given upon the authority of such firm as experts in accounting
and auditing.
With respect to the unaudited consolidated interim financial information
of American Eagle for the quarters ended May 2, 1998, August 1, 1998, and
October 31, 1998, incorporated by reference in this Prospectus/Proxy Statement,
Ernst & Young LLP have reported that they have applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate reports included in American Eagle's Quarterly Reports
on Form 10-Q for the quarters ended May 2, 1998, August 1, 1998, and October 31,
1998, and incorporated herein by reference, state that they did not audit and
they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted considering the limited nature of the review procedures applied.
The independent auditors are not subject to the liability provisions of Section
11 of the Securities Act for their reports on the unaudited interim financial
information because that report is not a "report" or a "part" of the
Registration Statement prepared or certified by the auditors within the meaning
of Sections 7 and 11 of the Securities Act.
LEGAL MATTERS
The validity of New American Eagle Common Stock to be issued to the
stockholders of American Eagle pursuant to the Merger and certain other legal
matters in connection with the Merger will be passed upon for Natco by Porter,
Wright, Morris & Arthur, Columbus, Ohio. Certain U.S. federal income tax matters
relating to the Merger will be passed upon for Natco and American Eagle by
Skadden, Arps, Slate, Meagher & Flom LLP.
29
<PAGE> 34
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
FINANCIAL STATEMENTS OF NATCO
<S> <C>
Independent Auditors' Report.............................................................................. F- 2
Balance Sheets as of December 31, 1996 and 1997 and October 31, 1998 (unaudited) ........................ F- 3
Statements of Income (Loss) for the years ended December 31, 1995, 1996, and 1997 and
for the ten months ended October 31, 1998 (unaudited)............................................ F-4
Statements of Changes in Stockholders' Equity for the years ended December 31, 1995, 1996, and 1997
and for the ten months ended October 31, 1998 (unaudited) ..................................... F-5
Statements of Cash Flows for the years ended December 31, 1995, 1996, and 1997 and
for the ten months ended October 31, 1998 (unaudited) ........................................... F-6
Notes to Financial Statements ............................................................................ F-7
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS .......................................... F-10
Unaudited Pro Forma Balance Sheet as of October 31, 1998 ................................................. F-11
Unaudited Pro Forma Statement of Operations for the nine months ended October 31, 1998 ................... F-12
Unaudited Pro Forma Statement of Operations for the year ended January 31, 1998 .......................... F-13
Notes the to Unaudited Pro Forma Condensed Consolidated Financial Statements ............................. F-14
</TABLE>
F - 1
<PAGE> 35
Report of Independent Auditors
The Board of Directors and Stockholders
Natco Industries, Inc.
We have audited the accompanying balance sheets of Natco Industries, Inc.
(Natco), as described in Note 1, as of December 31, 1996 and 1997, and the
related statements of income (loss), changes in stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of Natco's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Natco Industries, Inc., as
described in Note 1, as of December 31, 1996 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
December 4, 1998
F - 2
<PAGE> 36
Natco Industries, Inc.
Balance Sheets
(In thousands, except per share information)
<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 31,
1996 1997 1998
--------------------------------
(unaudited)
<S> <C> <C> <C>
ASSETS
Investment in associated company $22,241 $28,196 $37,816
=============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deferred tax liability $ 7,527 $ 9,969 $13,913
STOCKHOLDERS' EQUITY
Common stock, $.01 par value;
25,000 shares authorized; 18,250
shares issued and outstanding -- -- --
Paid-in capital 244 244 244
Retained earnings 14,470 17,983 23,659
-----------------------------
Total stockholders' equity 14,714 18,227 23,903
-----------------------------
Total liabilities and stockholders' equity $22,241 $28,196 $37,816
=============================
</TABLE>
See accompanying notes.
F - 3
<PAGE> 37
Natco Industries, Inc.
Statements of Income (Loss)
(In thousands, except per share information)
<TABLE>
<CAPTION>
Ten months
ended October,
YEARS ENDED DECEMBER 31, 31
1995 1996 1997 1998
-------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
Equity in net income (loss) of
associated company (American
Eagle Outfitters, Inc.) $ (471) $ 2,273 $ 5,955 $ 9,620
Income tax expense (benefit) (193) 932 2,442 3,944
---------------------------------------------------
Net income (loss) $ (278) $ 1,341 $ 3,513 $ 5,676
====================================================
Basic and diluted income (loss) per common
share $ (15.23) $ 73.48 $192.49 $ 311.01
Weighted average common shares
outstanding 18,250 18,250 18,250 18,250
</TABLE>
See accompanying notes.
F - 4
<PAGE> 38
Natco Industries, Inc.
Statements of Changes in Stockholders' Equity
Years Ended December 31, 1995, 1996, and 1997 and
Ten Months Ended October 31, 1998
(In thousands, except share information)
<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED TREASURY
SHARES STOCK CAPITAL EARNINGS STOCK TOTAL
========================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1994 18,250 $- $489 $14,162 $(1,000) $13,651
Net loss - - - (278) - (278)
Retirement of treasury stock - - (245) (755) 1,000 -
----------------------------------------------------------------------------------------
Balance December 31, 1995 18,250 - 244 13,129 - 13,373
Net income - - - 1,341 - 1,341
----------------------------------------------------------------------------------------
Balance December 31, 1996 18,250 - 244 14,470 - 14,714
Net income - - - 3,513 - 3,513
----------------------------------------------------------------------------------------
Balance December 31, 1997 18,250 - 244 17,983 - 18,227
Net income (unaudited) - - - 5,676 - 5,676
----------------------------------------------------------------------------------------
Balance October 31, 1998 (unaudited) 18,250 $- $244 $23,659 $ - $23,903
========================================================================================
</TABLE>
See accompanying notes.
F - 5
<PAGE> 39
Natco Industries, Inc.
Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
TEN MONTHS
ENDED
YEARS ENDED DECEMBER 31, OCTOBER 31,
1995 1996 1997 1998
-------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (278) $ 1,341 $ 3,513 $ 5,676
Adjustments to net income (loss) to net cash
provided (used) by operating activities:
increase (decrease) in deferred income
taxes (193) 932 2,442 3,944
Equity in losses (earnings) of associated
company 471 (2,273) (5,955) (9,620)
-------------------------------------------------
Net cash from operating activities -- -- -- --
Net change in cash and equivalents -- -- -- --
Cash and equivalents
Beginning of year -- -- --
-------------------------------------------------
End of year $ -- $ -- $ -- $ --
=================================================
</TABLE>
See accompanying notes.
F - 6
<PAGE> 40
Natco Industries, Inc.
Notes to Financial Statements
1. ORGANIZATION AND NATURE OF BUSINESS
The accompanying financial statements are prepared for inclusion in a
registration statement relating to the merger of American Eagle Outfitters, Inc.
(American Eagle) with and into a wholly owned subsidiary of Natco (Natco). Prior
to the proposed reorganization, Natco will transfer all of its assets and
liabilities, other than its American Eagle shares, to a newly formed limited
liability company in exchange for all of the interest in the limited liability
company. The principal components of these transferred assets are Natco's
investment in purchased receivable and notes and mortgages receivable from
affiliates. The purchased receivables are primarily unsecured consumer
receivables that are purchased at a discount to their face value from various
businesses located throughout the United States. A company that is affiliated
through common control, services and collects the purchased receivables for
Natco. Natco will distribute these limited liability company interests to
Natco's shareholders in connection with the merger by American Eagle with and
into a wholly-owned Natco subsidiary. These statements retroactively reflect the
spin-off of the interests in the limited liability company to Natco's
shareholders immediately prior to the merger with American Eagle, and therefore,
all aspects of Natco's purchased receivables business have been eliminated from
the accompanying financial presentation.
Prior to the merger, Natco will declare a stock split so that current
shareholders will own 6,991,174 shares of Natco Common Stock.
These financial statements retroactively reflect the reorganization of the
business as a change in the reporting entity in accordance with Staff Accounting
Bulletin No. 93 and present the investment in American Eagle and related net
deferred tax liabilities which will be merged with American Eagle.
2. SIGNIFICANT ACCOUNTING POLICIES
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
FEDERAL INCOME TAXES
Natco follows the liability method for accounting for income taxes. Accordingly,
a deferred tax liability/asset is recorded for all transactions that are
reported in different years for financial reporting versus tax purposes. Under
this liability method, the amount of deferred taxes on the balance sheet is
adjusted annually for changes in tax rates or other provisions of the income tax
law.
F - 7
<PAGE> 41
3. INVESTMENT IN ASSOCIATED COMPANY
The financial information presented for American Eagle is as of and for the
52/53 week year that ends on the Saturday nearest to January 31. Consolidated
financial information for American Eagle is summarized as follows:
<TABLE>
<CAPTION>
(In Thousands)
NINE MONTHS
FEBRUARY 1, JANUARY 31, ENDED OCTOBER 31,
1997 1998 1998
--------------------------------------
(unaudited)
<S> <C> <C> <C>
Current assets $ 73,760 $102,473 $139,040
Long term assets 36,678 42,322 55,959
--------------------------------------
Total assets $110,438 $144,795 $194,999
Current liabilities $ 39,382 $ 53,987 $ 71,499
Stockholders' equity $ 71,056 $ 90,808 $123,500
Net sales $326,404 $405,713 $374,493
Net income $ 5,925 $ 19,537 $ 29,229
Net income and other changes
in stockholders' equity $ 7,260 $ 19,752 $ 32,692
</TABLE>
Other changes in stockholders' equity, which management considers insignificant,
are the result of stock issuances and certain acquisitions subsequent to Natco's
initial investment in American Eagle and have been included in equity earnings.
As of October 31, 1998, Natco owned approximately 30.6% of the common stock of
American Eagle, an entity under common control of the Schottenstein family.
American Eagle operates a chain of mall-based retail specialty stores. The
investment in American Eagle is accounted for using the equity method of
accounting.
4. INCOME TAXES
The significant items giving rise to the deferred income tax assets
(liabilities), as of December 31, 1996, 1997 and October 31, 1998 are as follows
(in thousands):
<TABLE>
<CAPTION>
OCTOBER 31,
1996 1997 1998
---------------------------------------
(unaudited)
<S> <C> <C> <C>
Deferred income tax assets (liabilities):
Equity in earnings of American Eagle $ (8,294) $(10,736) $(14,680)
Net operating loss carryforwards and alternative
minimum tax credits 767 767 767
--------------------------------------
Total deferred income tax liabilities, net $ (7,527) $ (9,969) $(13,913)
======================================
</TABLE>
F - 8
<PAGE> 42
4. INCOME TAXES (CONTINUED)
The components of income tax expense (benefit) for the years ended December 31,
1995, 1996, and 1997 and the ten months ended October 31, 1998 are as follows
(in thousands):
<TABLE>
<CAPTION>
OCTOBER 31,
1995 1996 1997 1998
---------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
Current:
Federal $ -- $ -- $ -- $ --
Deferred:
Net increase (decrease) in deferred
income tax liabilities
(193) 932 2,442 3,944
-------------------------------------------
Total income tax expense
(benefit) $ (193) $ 932 $2,442 $3,944
===========================================
</TABLE>
The difference between the U.S. federal statutory income tax rate and Natco's
effective rate are:
<TABLE>
<CAPTION>
OCTOBER 31,
1995 1996 1997 1998
---------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
U.S. federal statutory income tax rate
(35.0)% 35.0% 35.0% 35.0%
State income taxes, net of federal effect
(6.0) 6.0 6.0 6.0
--------------------------------------------
(41.0)% 41.0% 41.0% 41.0%
===========================================
</TABLE>
Natco has generated net operating losses (NOLs) that may be used to offset
future taxable income. Each year's NOL has a maximum 15-year carryforward
period. Natco's ability to fully use its NOL carryforwards is dependent upon
future taxable income. As of December 31, 1997, Natco has NOL carryforwards of
approximately $300,000, subject to various expiration dates beginning in 2000
and ending 2008, and alternative minimum tax credit carryforwards of
approximately $650,000 available to reduce future taxes payable. The potential
tax benefit of these NOL carryforwards of $300,000 using a 35% effective tax
rate represents a deferred tax asset. No valuation allowance has been recorded
for the realization of the asset as management expects future income to be
sufficient to fully recognize the carryforwards.
5. STOCKHOLDERS' EQUITY
In October 1995, Natco retired the 18,250 shares that it held in treasury and
reduced the number of authorized shares from 1,000,000 shares to 25,000 shares.
This resulted in charges of $182 to common stock, $244,500 to paid-in capital,
and $755,318 to retained earnings.
F - 9
<PAGE> 43
Unaudited Pro Forma Condensed Consolidated Financial Statements
The Unaudited Pro Forma Statements of Operations of New American Eagle for the
fiscal year ended January 31, 1998 and the nine months ended October 31, 1998
(the "Pro Forma Statements of Operations"), and the Unaudited Pro Forma Balance
Sheet of New American Eagle as of October 31, 1998 (the "Pro Forma Balance
Sheet" and together with the Pro Forma Statement of Operations, the "Pro Forma
Condensed Consolidated Financial Statements"), have been prepared to illustrate
the effect of the Reorganization of Natco and the Merger of Natco and American
Eagle which has been accounted for as an acquisition of minority interest
without a substantial change in net assets, operations or company ownership. The
Pro Forma Statements of Operations give pro forma effect to the Reorganization
and the Merger as if they had occurred on February 2, 1997. The Pro Forma
Balance Sheet gives effect to the Reorganization and the Merger as if they
occurred on October 31, 1998. The Pro Forma Condensed Consolidated Financial
Statements do not purport to be indicative of the results of operations or the
financial position of New American Eagle that would have actually been obtained
had such transactions been completed as of the assumed dates and for the periods
presented, or which may be obtained in the future. The pro forma adjustments are
described in the accompanying notes and are based upon available information and
certain assumptions that New American Eagle believes to be reasonable.
The Pro Forma Condensed Consolidated Financial Statements including the notes
thereto are qualified in their entirety by reference to, and should be read in
conjunction with, the historical consolidated financial statements of American
Eagle which are incorporated by reference and the historical financial
statements of Natco which are included elsewhere in this Prospectus/Proxy
Statement.
An estimate of the total cost of the Reorganization and the Merger has been made
and charged to the Pro Forma Statement of Operations based on available
information. The actual costs may differ from those included herein. Any such
difference, however, is not believed to be material.
F - 10
<PAGE> 44
Unaudited Pro Forma Balance Sheet
October 31, 1998
<TABLE>
<CAPTION>
American Pro Forma Pro Forma
Eagle Natco Adjustments Consolidated
(1)October (1)October
31, 1998 31, 1998
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $44,045 - - $44,045
Merchandise inventory 74,934 - - 74,934
Accounts and note receivable, including 6,086 - - 6,086
related party
Prepaid expenses and other 6,560 - - 6,560
Deferred income taxes 7,415 - 750 (3) 8,165
-----------------------------------------------------------------
Total current assets $139,040 $0 $750 $139,790
Net property, plant and equipment 52,534 - - 52,534
Investment in American Eagle Outfitters, Inc. - 37,816 (37,816) (2) 0
Other assets 3,425 - - 3,425
-----------------------------------------------------------------
Total assets $194,999 $37,816 $(37,066) $195,749
-----------------------------------------------------------------
Current liabilities:
Accounts payable $35,766 - - $35,766
Accrued compensation and payroll taxes 12,918 - - 12,918
Accrued rent 12,092 - - 12,092
Accrued income and other taxes 6,009 - - 6,009
Deferred tax liability - 13,913 (13,913) (2),(3) 0
Other liabilities and accrued expenses 4,714 - 150 (5) 4,864
-----------------------------------------------------------------
Total current liabilities $71,499 $13,913 $(13,763) 71,649
-----------------------------------------------------------------
Stockholders' equity $123,500 $23,903 $(23,303)(2),(5) $124,100
-----------------------------------------------------------------
Total liabilities and stockholders' equity $194,999 $37,816 $(37,066) $195,749
-----------------------------------------------------------------
</TABLE>
See Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
F - 11
<PAGE> 45
Unaudited Pro Forma Statement of Operations
For the nine months ended October 31, 1998
<TABLE>
<CAPTION>
American Natco (1) Pro Forma Pro Forma
Eagle (1) October Adjustments Consolidated
October 31, 31, 1998
1998
<S> <C> <C> <C> <C>
Net sales $374,493 $374,493
Cost of sales, including certain buying, 227,793 227,793
occupancy and warehousing expenses
---------------------------------------------------------------
Gross profit 146,700 0 0 146,700
Selling, general and administrative expenses 94,191 94,191
Depreciation and amortization 6,201 6,201
----------------------------------------------------------------
Operating income 46,308 0 0 46,308
Equity in earnings of associated company - 9,620 (9,620) (4) 0
Interest income, net 1,676 1,676
-------------------------------------------------------------
Income before income taxes 47,984 $9,620 $(9,620) 47,984
Provision for income taxes 18,755 3,944 (3,944) (4) 18,755
-------------------------------------------------------------
Net income $29,229 $5,676 $(5,676) $29,229
--------------------------------------------------------------
Basic income per common share $1.30 $1.30
---------------------------------------------------------------
Diluted income per common share $1.22 $1.22
---------------------------------------------------------------
Weighted average common shares outstanding 22,580 22,580
- - basic
Weighted average common shares outstanding 23,920 23,920
- - diluted
</TABLE>
See Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
F - 12
<PAGE> 46
Unaudited Pro Forma Statement of Operations
For the year ended
January 31, 1998
<TABLE>
<CAPTION>
American Natco(1) Pro Forma Pro Forma
Eagle(1) December Adjustments Consolidated
January 31, 31, 1997
1998
<S> <C> <C> <C> <C>
Net sales $405,713 $405,713
Cost of sales, including certain buying, 268,746 268,746
occupancy and warehousing expenses
--------------------------------------------------------------
Gross profit 136,967 0 0 136,967
Selling, general and administrative expenses 98,529 0 1,200 (5) 99,729
Depreciation and amortization 7,318 7,318
--------------------------------------------------------------
Operating income $31,120 0 (1,200) $29,920
Equity in earnings of associated company - 5,955 (5,955) (4) -
Interest income, net 1,158 1,158
--------------------------------------------------------------
Income before income taxes $32,278 5,955 (7,155) $31,078
Provision for income taxes 12,741 2,442 (2,442) (4) 12,741
--------------------------------------------------------------
Net income $19,537 3,513 (4,713) $18,337
---------------------------------------------------------------
Basic income per common share $0.89 $0.83
Diluted income per common share $0.85 $0.80
Weighted average common shares outstanding 22,091 22,091
- - basic
Weighted average common shares outstanding 22,836 22,836
- - diluted
</TABLE>
See Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
F - 13
<PAGE> 47
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
1. American Eagle has adopted a fiscal year that ends on the Saturday
closest to January 31st. Natco has a calendar year end. The respective
year ends and interim periods have been combined for the accompanying
pro forma presentation.
2. Natco reports earnings in American Eagle based upon the most recent
publicly released financial information of American Eagle which
generally is within one month of Natco's reporting period. Adjustment
to eliminate Natco's equity investment in American Eagle and the
related deferred tax liability.
3. Adjustments to reclassify deferred tax assets in the accounts of Natco
from net liabilities to assets. The underlying deferred tax assets
relate to the alternative minimum tax credits and net operating tax
loss carryforwards of Natco as included in the financial statements of
Natco included elsewhere herein.
4. Adjustment to eliminate the results of American Eagle which are
recorded on an equity basis in the financial statements of Natco.
5. Adjustment to recognize costs related to the Reorganization and the
Merger.
F - 14
<PAGE> 48
APPENDIX A
- ------------------------------------------------------------------------------
PLAN OF REORGANIZATION AND MERGER AGREEMENT
Among
NATCO INDUSTRIES, INC.
THORN HILL ACQUISITION CORP.
NATCO LIMITED LIABILITY COMPANY
and
AMERICAN EAGLE OUTFITTERS, INC.
- -------------------------------------------------------------------------------
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<PAGE> 49
Dated as of November 30, 1998
This Plan of Reorganization and Merger Agreement ("Agreement") is
entered into effective as of November 30, 1998, by and among NATCO INDUSTRIES,
INC., a Delaware corporation ("Natco"), THORN HILL ACQUISITION CORP., a Delaware
corporation and wholly owned subsidiary of Natco ("Acquisition"), AMERICAN EAGLE
OUTFITTERS, INC., a Delaware corporation ("AEO"), and NATCO LIMITED LIABILITY
COMPANY, a Delaware Limited Liability Company ("Natco LLC"). AEO is hereinafter
sometimes referred to as the "Surviving Corporation."
WHEREAS, Natco, Acquisition and AEO desire that Acquisition merge with
and into AEO (the "Merger"), upon the terms and conditions set forth herein and
in accordance with the Delaware General Corporation Law (the "Delaware Law")
with the result that AEO shall continue as the surviving corporation and thereby
become a wholly owned subsidiary of Natco as provided herein and the separate
existence of Acquisition (except as it may be continued by operation of law)
shall cease; and
WHEREAS, the parties are effecting the Merger in order to (i) avoid
potential shareholder conflicts that may arise with respect to operating and
other plans of AEO, (ii) facilitate any future plans to restructure AEO, (iii)
enhance AEO's long-term ability to raise debt and/or equity capital and (iv)
achieve certain administrative efficiencies; and
WHEREAS, on the date of this Agreement, Natco is authorized to issue
70,000,000 shares of common stock, par value $0.01per share ("Natco Common
Stock"), and 5,000,000 shares of Preferred Stock, par value $0.01 per share
("Natco Preferred Stock), and has issued and outstanding 18,250 shares of Natco
Common Stock and no shares of Natco Preferred Stock; Acquisition is authorized
to issue 1,000 shares of common stock, par value $0.01 per share ("Acquisition
Common Stock") and has issued and outstanding 100 shares of Acquisition Common
Stock; and AEO is authorized to issue 30,000,000 shares of common stock, par
value $0.01 per share ("AEO Common Stock"), of which 22,989,475 shares were
outstanding as of November 30, 1998, with an additional 1,830,806 shares being
subject to outstanding stock options (the "AEO Stock Options") previously
granted under AEO's 1994 Stock Option Plan (the "AEO Option Plan"); and
WHEREAS, Natco desires that, immediately prior to the Merger, (i) the
membership interests (the "LLC Interests") that it holds in Natco LLC, a
wholly-owned subsidiary of Natco, be distributed to the Natco Shareholders in
redemption for a proportional portion of the outstanding 18,250 shares of Natco
Common Stock, and (ii) each of the remaining shares of Natco Common Stock
outstanding after the redemption shall be increased to a total of 6,991,174
shares as the result of a stock split, all as hereinafter provided; and
WHEREAS, Natco, Acquisition and AEO desire that, at the Effective Time
(as hereinafter defined), each of the shares of AEO Common Stock outstanding
immediately prior to the Effective Time, excluding the 6,991,174 shares of AEO
Common Stock owned by Natco (the "Natco AEO Shares"), shall be automatically
converted into the right to receive an identical
A-2
<PAGE> 50
number of fully paid and nonassessable shares of Natco Common Stock, and that
each of the Natco AEO Shares shall be cancelled, all as hereinafter provided;
and
WHEREAS, Natco, Acquisition and AEO desire that, at the Effective Time,
each of the 100 shares of Acquisition Common Stock shall be changed and
converted into an equal number of shares of AEO Common Stock; and
WHEREAS, Natco desires, immediately after the Merger, to amend its
Certificate of Incorporation to change its name to "American Eagle Outfitters,
Inc."; and
WHEREAS, for Federal income tax purposes, it is intended that the
Merger qualify as a tax free reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the respective Boards of Directors of Natco, Acquisition and
AEO have approved the Merger and the other transaction contemplated by this
Agreement;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the Merger and the mode of carrying the
same into effect, the parties hereto hereby agree as follows:
ARTICLE I
ACTIONS PRIOR TO THE MERGER
SECTION 1.01 NATCO REDEMPTION. Immediately prior to the Effective Time,
Natco shall cause the LLC Interests to be distributed to Natco shareholders in
proportion to their ownership interests in Natco and in redemption a
proportionate portion of the outstanding 18,250 shares of Natco Common Stock.
SECTION 1.02 AMENDMENT OF NATCO CERTIFICATE AND STOCK SPLIT. The
Directors and Shareholders of Natco, in approving this Agreement, hereby approve
amendment of Article First of Natco's Certificate of Incorporation to read in
its entirety as follows:
FIRST: The name of the Corporation shall be American
Eagle Outfitters, Inc.
The officers of Natco are authorized to file a Certificate of Amendment with the
Delaware Secretary of State setting forth the above amendment after the
Effective Time.
SECTION 1.03 NATCO STOCK SPLIT. The Directors of Natco hereby declare a
stock dividend (stock split) payable to shareholders of record immediately prior
to the Effective Time, in the amount of whole shares of Natco Common Stock equal
to the number of new shares of
A-3
<PAGE> 51
Natco Common Stock for each one share of Natco Common Stock outstanding
immediately prior to the Effective Time necessary so that there will be
outstanding 6,991,174 shares of Natco Common Stock immediately prior to the
Effective Time.
ARTICLE II
THE MERGER
SECTION 2.01 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, in accordance with this Agreement and Delaware
Law, AEO shall be merged with and into Acquisition, the separate existence of
Acquisition (except as it may be continued by operation of law) shall cease, and
AEO shall continue as the Surviving Corporation under the corporate name "AE
Stores Company."
SECTION 2.02 EFFECT OF THE MERGER. Upon the effectiveness of the
Merger, the Surviving Corporation shall succeed to, and assume all the rights
and obligations of Acquisition in accordance with Delaware Law.
SECTION 2.03 CONSUMMATION OF THE MERGER. As soon as practicable after
the satisfaction or waiver of the conditions to the obligations of the parties
to effect the Merger set forth herein, provided that this Agreement has not been
terminated previously, the parties hereto will cause the Merger to be
consummated by filing with the Secretary of State of Delaware, a properly
executed certificate of merger in accordance with Delaware Law (the close of
business on the date of such filing or the time or date so specified in the
filing as the effective date of the Merger being the "Effective Time").
SECTION 2.04 CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND
OFFICERS OF THE SURVIVING CORPORATION. The Certificate of Incorporation of the
Surviving Corporation from and after the Effective Time shall be the Certificate
of Incorporation of Acquisition as in effect immediately prior to the Effective
Time, until thereafter amended in accordance with the provisions thereof and as
provided by Delaware Law. The By-Laws of the Surviving Corporation from and
after the Effective Time shall be the By-Laws of Acquisition as in effect
immediately prior to the Effective Time, continuing until thereafter amended in
accordance with the provisions thereof and the Certificate of Incorporation of
the Surviving Corporation and as provided by Delaware Law. The initial directors
and officers of the Surviving Corporation shall be the directors and officers,
respectively, of Acquisition immediately prior to the Effective Time, in each
case until their removal or until their respective successors are duly elected
and qualified.
SECTION 2.05 FURTHER ASSURANCES. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either AEO or
A-4
<PAGE> 52
Acquisition, or otherwise to carry out the purposes of this Agreement, the
Surviving Corporation and its officers and directors or their designees shall be
authorized to execute and deliver, in the name and on behalf of either AEO or
Acquisition, all such deeds, bills of sale, assignments and assurances and do,
in the name and on behalf of such corporation, all such other acts and things
necessary, desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such corporation and otherwise to carry out the purposes
of this Agreement.
ARTICLE III
CONVERSION OF SECURITIES
SECTION 3.01 CONVERSION OF AEO COMMON STOCK. At the Effective Time,
each share of Common Stock, without par value, of AEO issued and outstanding
immediately prior to the Effective Time, excluding the Natco AEO Shares, shall
be converted, by virtue of the Merger, into the right to receive one share of
Natco Common Stock.
SECTION 3.02 CANCELLATION OF AEO COMMON STOCK OWNED BY NATCO. At the
Effective Time, by virtue of the Merger and without further action on the part
of Natco, each Natco AEO Share shall be cancelled.
SECTION 3.03 RETENTION OF NATCO COMMON STOCK. At the Effective Time,
each of the 6,991,174 shares of Natco Common Stock outstanding immediately prior
to the Effective Time, shall remain outstanding and unchanged by virtue of the
Merger.
SECTION 3.04 CONVERSION OF ACQUISITION COMMON STOCK. At the Effective
Time, each share of common stock of Acquisition, without par value, issued and
outstanding immediately prior to the Effective Time, shall remain outstanding
and, by virtue of the Merger, automatically and without any action on the holder
thereof, be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock of the Surviving Corporation.
SECTION 3.05 EXCHANGE OF AEO STOCK CERTIFICATES. Promptly after the
Effective Time, each former AEO shareholder, other than Natco, shall receive a
letter of transmittal (the "Transmittal Letter") and instructions for its use in
effecting the surrender of their stock certificates previously representing AEO
Common Stock in exchange for stock certificates representing their shares of
Natco Common Stock. Upon delivery to National City Bank (the "Transfer Agent")
of certificates for the AEO Common Stock and the Transmittal Letter completed in
due form, each such shareholder will be entitled to receive a certificate
representing that number of the shares of Natco Common Stock being issued
pursuant to SECTION 3.01 herein.
SECTION 3.06 CONVERSION OF AEO STOCK OPTIONS. At the Effective Time,
Natco shall adopt the AEO Option Plan and each unexercised AEO Stock Option that
is outstanding
A-5
<PAGE> 53
immediately prior to the Effective Time shall be converted automatically at the
Effective Time into an option to purchase the exact same number of shares of
Natco Common Stock, without any change in the option exercise price or the other
terms and conditions of such options.
ARTICLE IV
CLOSING
SECTION 4.01 CLOSING. The closing of the Merger (the "Closing") shall
be scheduled to occur at the offices of Porter, Wright, Morris & Arthur,
Columbus, Ohio, at 10:00 a.m. local time, on a date as soon as practicable after
the satisfaction or waiver of the conditions to the obligations of the parties
to effect the Merger set forth herein (the "Closing Date"). The Closing, and all
transactions to occur at the Closing, shall be deemed to have taken place at,
and shall be effective as of the Effective Time.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01 REPRESENTATIONS AND WARRANTIES OF AEO. AEO represents and
warrants to Natco and Natco LLC as follows:
(a) ORGANIZATION AND QUALIFICATION. AEO is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own or lease and
operate its properties and assets and to carry on its business as it is now
being conducted. AEO is duly qualified as a foreign corporation to do business,
and is in good standing, in each jurisdiction in which the character of its
properties owned or leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on the properties, assets, financial condition,
operating results or business of AEO (an "AEO Material Adverse Effect").
(b) CAPITALIZATION. The authorized capital stock of AEO consists of
30,000,000 shares of AEO Common Stock. As of the date of this Agreement,
22,989,475 shares of AEO Common Stock are issued and outstanding, all of which
are duly authorized, validly issued, fully paid and nonassessable, and an
additional 1,830,806 shares of AEO Common Stock are reserved for issuance
pursuant to outstanding AEO Stock Options.
(c) AUTHORITY RELATIVE TO AGREEMENT. AEO has all requisite corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance of this Agreement
by AEO and the consummation by it of the transactions contemplated hereby have
been duly authorized by AEO's Board of Directors and no other corporate
approvals or proceedings on the part of AEO are necessary to authorize this
Agreement and the transactions contemplated hereby, other than approval by the
AEO shareholders. This Agreement has been duly executed and delivered by AEO and
constitutes the
A-6
<PAGE> 54
legal, valid and binding obligation of AEO, enforceable against AEO in
accordance with its terms.
(d) NON-CONTRAVENTION. The execution and delivery of this Agreement by
AEO and the consummation by AEO of the transactions contemplated hereby will not
(i) violate or conflict with any provision of the Certificate of Incorporation
or Code of Regulations of AEO, (ii) result in any material violation of,
conflict with, or default (or an event which with notice or lapse of time or
both would constitute a default) or loss of a benefit under, or permit the
termination of or the acceleration of any obligation under, any mortgage,
indenture, permit, concession, grant, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to AEO or any of
its respective properties, or (iii) result in the creation or imposition of any
claim in favor of any third person or entity upon the assets of AEO, other than
any such violation, conflict, default, loss, termination or acceleration that
would not have an AEO Material Adverse Effect or materially and adversely affect
the ability of AEO to consummate the transactions contemplated hereby.
(e) CONSENTS. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Federal, state, local or foreign
governmental or regulatory authority is required to be made or obtained by AEO
in connection with the execution and delivery of this Agreement by AEO or the
consummation by AEO of the transactions contemplated hereby, except for (i) any
necessary filings pursuant to the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the Securities and Exchange
Commission (the "SEC") thereunder, (ii) the filing of a certificate of merger
with the Secretary of State of Delaware in accordance with the Delaware Law,
(iii) the filing of a form of notice with the Federal Trade Commission under the
Hart-Scott-Rodino Antitrust Improvement Act (the "HSR Act"), and (iv) such
consents, approvals, orders or authorizations which if not obtained, or
registrations, declarations or filings which if not made, would not have an AEO
Material Adverse Effect or materially and adversely affect the ability of AEO to
consummate the transactions contemplated hereby.
SECTION 5.02 REPRESENTATIONS AND WARRANTIES OF NATCO, ACQUISITION AND
NATCO LLC. Each of Natco, Acquisition and Natco LLC, jointly and severally,
represents and warrants to AEO as follows:
(a) ORGANIZATION AND QUALIFICATION.
(i) NATCO. Natco is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own or lease and operate its properties and
assets and to carry on its business as it is now being conducted. Natco is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction in which the character of its properties owned or leased or
the nature of its activities makes such qualification necessary, except where
the failure to be so
A-7
<PAGE> 55
qualified would not have a material adverse effect on the financial condition,
operating results or business of Natco and its subsidiaries, taken as a whole (a
"Natco Material Adverse Effect").
(ii) NATCO LLC. Natco LLC is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own or lease and
operate its properties and assets and to carry on its business as it is now
being conducted. Natco LLC is duly qualified as a foreign limited liability
company to do business, and is in good standing, in each jurisdiction in which
the character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not have a material adverse effect on the financial condition, operating
results or business of Natco LLC and its subsidiaries, taken as a whole (a
"Natco LLC Material Adverse Effect").
(iii) ACQUISITION. Acquisition is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Acquisition was incorporated on November 25, 1998 for the purpose of effecting
the Merger and has no business operations, no material properties or assets and
has no liabilities or obligations.
(b) CAPITALIZATION.
(i) NATCO. The authorized capital stock of Natco consists of 70,000,000
shares of Natco Common Stock and 5,000,000 shares of Preferred Stock. As of the
date of this Agreement, 18,250 shares of Natco Common Stock are issued and
outstanding, all of which are duly authorized, validly issued, fully paid and
nonassessable and no shares of Natco Preferred Stock are issued or outstanding.
No subscription, warrant, option, convertible security, stock appreciation or
other right (contingent or other) to purchase or acquire any shares of any class
of capital stock of Natco is authorized or outstanding and there is not any
commitment of Natco to issue any shares, warrants, options or other such rights
or to distribute to holders of any class of its capital stock any evidences of
indebtedness or assets. Natco does not have any obligation (contingent or other)
to purchase, redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or make any other distribution in
respect thereof.
(ii) NATCO LLC. The authorized membership interests of Natco LLC are
owned 100% by Natco, all of which are duly authorized, validly issued, fully
paid and nonassessable. No subscription, warrant, option, convertible security,
security appreciation or other right (contingent or other) to purchase or
acquire any membership interest of any class of Natco LLC is authorized or
outstanding and there is not any commitment of Natco LLC to issue any membership
interest, warrants, options or other such rights or to distribute to holders of
any class of its membership interests any evidences of indebtedness or assets.
Natco LLC does not have any obligation (contingent or other) to purchase, redeem
or otherwise acquire any of its membership interests or to pay any dividend or
make any other distribution in respect thereof.
A-8
<PAGE> 56
(iii) ACQUISITION. The authorized capital stock of Acquisition consists
of 1,000 shares of Acquisition Common Stock. As of the date of this Agreement,
100 shares of Acquisition Common Stock are issued and outstanding, all of which
are duly authorized, validly issued, fully paid and nonassessable. No
subscription, warrant, option, convertible security, stock appreciation or other
right (contingent or other) to purchase or acquire any shares of any class of
capital stock of Acquisition is authorized or outstanding and there is not any
commitment of Acquisition to issue any shares, warrants, options or other such
rights or to distribute to holders of any class of its capital stock any
evidences of indebtedness or assets. Acquisition does not have any obligation
(contingent or other) to purchase, redeem or otherwise acquire any shares of its
capital stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof.
(c) AUTHORITY RELATIVE TO AGREEMENTS.
(i) NATCO. Natco has all requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by Natco and the consummation by Natco
of the transactions contemplated hereby have been duly authorized by the Board
of Directors and approved by the shareholders of Natco, no other corporate
approvals or proceedings on the part of Natco are necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Natco and constitutes the legal, valid and binding
obligation of Natco, enforceable against Natco in accordance with its terms.
(ii) NATCO LLC. Natco LLC has all requisite corporate power and
authority to enter into this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement by Natco LLC and the consummation
by Natco LLC of the transactions contemplated hereby have been duly authorized
and approved by all of the members of Natco LLC, no other corporate approvals or
proceedings on the part of Natco LLC are necessary to authorize this Agreement
and the transactions contemplated hereby. This Agreement has been duly executed
and delivered by Natco LLC and constitutes the legal, valid and binding
obligation of Natco LLC, enforceable against Natco LLC in accordance with its
terms.
(iii) ACQUISITION. Acquisition has all requisite corporate power and
authority to enter into this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement by Acquisition and the consummation
by Acquisition of the transactions contemplated hereby have been duly authorized
by the Board of Directors and approved by the shareholders of Acquisition, no
other corporate approvals or proceedings on the part of Acquisition are
necessary to authorize this Agreement and the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Acquisition and
constitutes the legal, valid and binding obligation of Acquisition, enforceable
against Acquisition in accordance with its terms.
A-9
<PAGE> 57
(d) NON-CONTRAVENTION.
(i) NATCO. The execution and delivery of this Agreement by Natco and
the consummation by Natco of the transactions contemplated hereby will not (i)
violate or conflict with any provision of the Certificate of Incorporation or
By-Laws of Natco, (ii) result in any violation of, conflict with, or default (or
an event which with notice or lapse of time or both would constitute a default)
or loss of a benefit under, or permit the termination of or the acceleration of
any obligation under, any mortgage, indenture, lease, agreement or other
instrument, permit, concession, grant, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Natco or any
of its respective properties, or (iii) result in the creation or imposition of
any claim in favor of any third person or entity upon the assets of Natco, other
than any such violation, conflict, default, loss, termination or acceleration
that would not have a Natco Material Adverse Effect or materially and adversely
affect the ability of Natco to consummate the transactions contemplated hereby.
(ii) NATCO LLC. The execution and delivery of this Agreement by Natco
LLC and the consummation by Natco LLC of the transactions contemplated hereby
will not (i) violate or conflict with any provision of the Certificate of
Formation or Operating Agreement of Natco LLC, (ii) result in any violation of,
conflict with, or default (or an event which with notice or lapse of time or
both would constitute a default) or loss of a benefit under, or permit the
termination of or the acceleration of any obligation under, any mortgage,
indenture, lease, agreement or other instrument, permit, concession, grant,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Natco LLC or any of its respective properties, or (iii)
result in the creation or imposition of any claim in favor of any third person
or entity upon the assets of Natco LLC, other than any such violation, conflict,
default, loss, termination or acceleration that would not have a Natco LLC
Material Adverse Effect or materially and adversely affect the ability of Natco
LLC to consummate the transactions contemplated hereby.
(iii) ACQUISITION. The execution and delivery of this Agreement by
Acquisition and the consummation by Acquisition of the transactions contemplated
hereby will not (i) violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of Acquisition, (ii) result in any violation of,
conflict with, or default (or an event which with notice or lapse of time or
both would constitute a default) or loss of a benefit under, or permit the
termination of or the acceleration of any obligation under, any mortgage,
indenture, lease, agreement or other instrument, permit, concession, grant,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Acquisition or any of its respective properties, or
(iii) result in the creation or imposition of any claim in favor of any third
person or entity upon the assets of Acquisition.
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<PAGE> 58
(e) CONSENTS.
(i) NATCO. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Federal, state, local or foreign
governmental or regulatory authority is required to be made or obtained by Natco
in connection with the execution and delivery of this Agreement by Natco or the
consummation by Natco of the transactions contemplated hereby, except for (i)
the filing of a certificate of merger with the Secretary of State of the State
of Delaware in accordance with the Delaware Law, (ii) the filing of a form of
notice with the Federal Trade Commission under the HSR Act, and (iii) such
consents, approvals, orders or authorizations which if not obtained, or
registrations, declarations or filings which if not made, would not have a Natco
Material Adverse Effect or materially and adversely affect the ability of Natco
to consummate the transactions contemplated hereby.
(ii) NATCO LLC. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Federal, state, local or foreign
governmental or regulatory authority is required to be made or obtained by Natco
LLC in connection with the execution and delivery of this Agreement by Natco LLC
or the consummation by Natco LLC of the transactions contemplated hereby, except
for such consents, approvals, orders or authorizations which if not obtained, or
registrations, declarations or filings which if not made, would have a Natco LLC
Material Adverse Effect or materially and adversely affect the ability of Natco
LLC to consummate the transactions contemplated hereby or to conduct it's
business after the Effective Time.
(iii) ACQUISITION. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Federal, state, local or foreign
governmental or regulatory authority is required to be made or obtained by
Acquisition in connection with the execution and delivery of this Agreement by
Acquisition or the consummation by Acquisition of the transactions contemplated
hereby, except for (i) the filing of a certificate of merger with the Secretary
of State of Delaware in accordance with the Delaware Law, (ii) the filing of a
form of notice with the Federal Trade Commission under the HSR Act, and (iii)
such consents, approvals, orders or authorizations which if not obtained, or
registrations, declarations or filings which if not made, would not materially
and adversely affect the ability of Acquisition to consummate the transactions
contemplated hereby.
(f) ACTIONS PENDING.
(i) NATCO. Except as set forth on schedule 5.02(f) attached hereto,
there is no action, suit, dispute, investigation, proceeding or claim pending
or, to the best knowledge of Natco, threatened against or affecting Natco, or
its respective properties or rights, before any court, administrative agency,
governmental body, arbitrator, mediator or other dispute resolution body that
would have a Natco Material Adverse Effect or would materially adversely affect
the ability of Natco to consummate the transactions contemplated hereby, or the
ability of Natco or the Surviving Corporation to conduct the business of the
Surviving Corporation after the Effective
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Time, and Natco is not aware of any facts or circumstances which may give rise
to any of the foregoing. Natco is not subject to any order, judgment, decree,
injunction, stipulation, or consent order of or with any court or other
governmental agency. Natco has not entered into any agreement to settle or
compromise any proceeding pending or threatened against it which has involved
any obligation other than the payment of money or for which Natco has any
continuing obligation.
(ii) NATCO LLC. Except as set forth on schedule 5.02(f) attached
hereto, there is no action, suit, dispute, investigation, proceeding or claim
pending or, to the best knowledge of Natco LLC, threatened against or affecting
Natco LLC, or its respective properties or rights, before any court,
administrative agency, governmental body, arbitrator, mediator or other dispute
resolution body that would have a Natco LLC Material Adverse Effect or would
materially and adversely affect the ability of Natco LLC to consummate the
transactions contemplated hereby, or the ability of the Surviving Corporation to
conduct the business of the Surviving Corporation after the Effective Time, and
Natco LLC is not aware of any facts or circumstances which may give rise to any
of the foregoing. Natco LLC is not subject to any order, judgment, decree,
injunction, stipulation, or consent order of or with any court or other
governmental agency. Natco LLC has not entered into any agreement to settle or
compromise any proceeding pending or threatened against it which has involved
any obligation other than the payment of money or for which Natco LLC has any
continuing obligation.
(iii) ACQUISITION. There is no action, suit, dispute, investigation,
proceeding or claim pending or, to the best knowledge of Acquisition, threatened
against or affecting Acquisition, or its respective properties or rights, before
any court, administrative agency, governmental body, arbitrator, mediator or
other dispute resolution body that would materially adversely affect the ability
of Acquisition to consummate the transactions contemplated hereby, or the
ability of Acquisition or the Surviving Corporation to conduct the business of
the Surviving Corporation after the Effective Time, and Acquisition is not aware
of any facts or circumstances which may give rise to any of the foregoing.
Acquisition is not subject to any order, judgment, decree, injunction,
stipulation, or consent order of or with any court or other governmental agency.
Acquisition has not entered into any agreement to settle or compromise any
proceeding pending or threatened against it which has involved any obligation
other than the payment of money or for which Acquisition has any continuing
obligation.
(g) COMPLIANCE WITH LAW; PERMITS.
(i) NATCO. Natco is not in default in any material respect under any
order or decree of any court, governmental authority, arbitrator or arbitration
board or tribunal or under any laws, ordinances, governmental rules or
regulations to which Natco or its respective properties or assets is subject.
Natco possesses all material permits necessary for Natco to own, use and
maintain its properties and assets or required for the conduct of its business
in substantially the same manner as it is currently conducted. Each of such
permits is in full force and effect and no proceeding is pending, or, to the
best knowledge of Natco, threatened, to modify, suspend,
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revoke or otherwise limit any of such permits and no administrative or
governmental actions have been taken or, to the best knowledge of Natco,
threatened, in connection with the expiration or renewal of any of such permits.
(ii) NATCO LLC. Natco LLC is not in default in any material respect
under any order or decree of any court, governmental authority, arbitrator or
arbitration board or tribunal or under any laws, ordinances, governmental rules
or regulations to which Natco LLC or its respective properties or assets is
subject. Natco LLC possesses all material permits necessary for Natco LLC to
own, use and maintain its properties and assets or required for the conduct of
its business in substantially the same manner as it is currently conducted. Each
of such permits is in full force and effect and no proceeding is pending, or, to
the best knowledge of Natco LLC, threatened, to modify, suspend, revoke or
otherwise limit any of such permits and no administrative or governmental
actions have been taken or, to the best knowledge of Natco LLC, threatened, in
connection with the expiration or renewal of any of such permits.
(iii) ACQUISITION. Acquisition is not in default in any material
respect under any order or decree of any court, governmental authority,
arbitrator or arbitration board or tribunal or under any laws, ordinances,
governmental rules or regulations to which Acquisition or its respective
properties or assets is subject.
(h) BROKERS.
(i) NATCO. Natco has not used any broker or finder in connection with
the transactions contemplated hereby, and Natco does not or shall not have any
liability or otherwise suffer or incur any loss as a result of or in connection
with any brokerage or finder's fee or other commission of any person retained by
Natco in connection with any of the transactions contemplated by this Agreement.
(ii) NATCO LLC. Natco LLC has not used any broker or finder in
connection with the transactions contemplated hereby, and Natco LLC does not or
shall not have any liability or otherwise suffer or incur any loss as a result
of or in connection with any brokerage or finder's fee or other commission of
any person retained by Natco LLC in connection with any of the transactions
contemplated by this Agreement.
(iii) ACQUISITION. Acquisition has not used any broker or finder in
connection with the transactions contemplated hereby, and Acquisition does not
or shall not have any liability or otherwise suffer or incur any loss as a
result of or in connection with any brokerage or finder's fee or other
commission of any person retained by Acquisition in connection with any of the
transactions contemplated by this Agreement.
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(i) MATERIAL CONTRACTS.
(i) NATCO. Natco has not received notice of any cancellation or
termination of, or of any threat to cancel or terminate, any material contracts
or agreements where such cancellation or termination would have a Natco Material
Adverse Effect.
(ii) NATCO LLC. Natco LLC has not received notice of any cancellation
or termination of, or of any threat to cancel or terminate, any material
contracts or agreements where such cancellation or termination would have a
Natco LLC Material Adverse Effect.
(iii) ACQUISITION. Acquisition is not a party to any material contracts
or agreements other than this Agreement.
(j) ACCURACY OF STATEMENTS.
(i) NATCO. To the best of Natco's knowledge, neither this Agreement nor
any schedule, exhibit, statement, list, document, certificate or other
information furnished or to be furnished by or on behalf of Natco to AEO in
connection with this Agreement or any of the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
misleading.
(ii) NATCO LLC. To the best of Natco's knowledge, neither this
Agreement nor any schedule, exhibit, statement, list, document, certificate or
other information furnished or to be furnished by or on behalf of Natco LLC to
AEO in connection with this Agreement or any of the transactions contemplated
hereby contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
misleading.
(iii) ACQUISITION. To the best of Natco's knowledge, neither this
Agreement nor any schedule, exhibit, statement, list, document, certificate or
other information furnished or to be furnished by or on behalf of Acquisition to
AEO in connection with this Agreement or any of the transactions contemplated
hereby contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
misleading.
(k) FINANCIAL INFORMATION; BOOKS AND RECORDS OF NATCO. Natco has
delivered to AEO copies of its audited financial statements for the years ended
December 31, 1996 and 1997, and its unaudited financial statements for the ten
months ended October 31, 1998 (collectively, the "Natco Financial Information").
The Natco Financial Information fairly presents in all material respects the
financial condition and the results of operations of Natco as at the respective
dates of and for the periods referred to therein, all in accordance with
generally accepted accounting principles applied on a consistent basis
throughout all periods, subject, in the case of unaudited
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interim financial statements, to normal year-end and audit adjustments (the
effect of which are not or will not, individually or in the aggregate, be
materially adverse). The books of account, minute books and other records of
Natco, all of which have been made available to AEO: (i) are complete and
correct in all material respects; (ii) have been maintained consistent with past
practice; (iii) have recorded therein all material properties and assets and
liabilities of Natco; and (iv) reflect all material transactions entered into by
Natco or to which Natco is a party.
(l) LIABILITIES.
(i) NATCO. Natco does not have any material liabilities, obligations or
indebtedness of any nature (whether known or unknown and whether absolute,
accrued, contingent or otherwise), other than as set forth in the Natco
Financial Information or as specifically identified in a schedule hereto or as
incurred in the ordinary course of business since October 31, 1998. At the
Effective Time, Natco will have no liabilities, obligations or indebtedness of
any nature (whether known or unknown and whether absolute, accrued, contingent
or otherwise).
(ii) NATCO LLC. Natco LLC does not have any material liabilities,
obligations or indebtedness of any nature (whether known or unknown and whether
absolute, accrued, contingent or otherwise), other than as set forth in the
Natco Financial Information or as specifically identified in a schedule hereto
or as incurred in the ordinary course of business since October 31, 1998.
(iii) ACQUISITION. Acquisition does not have any material liabilities,
obligations or indebtedness of any nature (whether known or unknown and whether
absolute, accrued, contingent or otherwise). At the Effective Time, Acquisition
will have no liabilities, obligations or indebtedness of any nature (whether
known or unknown and whether absolute, accrued, contingent or otherwise).
(m) ENVIRONMENTAL LAWS. Natco complies and has complied with all
Environmental Laws except where any noncompliance has not resulted in, or could
not reasonably be expected to result in, individually or in the aggregate, any
material liability under Environmental Laws; and there are no past or present
events, conditions, circumstances, practices, plans or legal requirements that
could reasonably be expected to result in material liability to Natco under
Environmental Laws. For purposes of this Agreement, "Environmental Laws" means
all applicable federal, state and local statutes, rules, regulations,
ordinances, orders, decrees and common law, as they exist at the date hereof,
relating in any manner to contamination, pollution or protection of human health
or the environment, including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act, the Solid Waste Disposal Act, the
Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act,
the Toxic Substances Control Act, the Occupational Safety and Health Act, the
Emergency Planning and Community-Right-to-Know Act, the Safe Drinking Water Act,
all as amended, and similar state laws.
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ARTICLE VII
COVENANTS
SECTION 6.01 TAX MATTERS.
(a) Each of the parties to this Agreement will use all reasonable
efforts to cause the Merger to qualify as a tax free reorganization under the
Code as contemplated by the private letter rulings referred to in Section
7.01(f).
(b) None of AEO, Acquisition, Natco, Natco LLC or any of their
affiliates will before or after the Closing Date file any tax or informational
return, make any disclosure or otherwise take any position or any action,
including but not limited to any action described below, that (i) is
inconsistent with the representations made to the Internal Revenue Service (the
"IRS") in the private letter rulings referred to in Section 7.01(f) and (g), as
subsequently amended or updated, or (ii) is inconsistent with the Merger
qualifying as a reorganization under Section 368(a) of the Code, or (iii) would
alone or in conjunction with any other action cause the Merger not to qualify as
a reorganization under said section of the Code. AEO, Acquisition, Natco and
Natco LLC will file all returns, reports or statements and take such other
actions as may be required to have the Merger qualify as a reorganization under
said section of the Code and to comply with regulations under Section 368 of the
Code as they apply to the Merger.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) this Agreement and the Merger shall have been approved and adopted
by the requisite vote of the shareholders of AEO;
(b) this Agreement and the Merger shall have been approved and adopted
by the requisite vote or consent of the shareholders of Natco and by the consent
of Acquisition's sole shareholder;
(c) the expiration or earlier termination of any waiting period under
the HSR Act shall have occurred;
(d) no preliminary or permanent injunction or other order, decree or
ruling issued by any court of competent jurisdiction nor any statute, rule,
regulation or order entered, promulgated or enacted by any governmental,
regulatory or administrative agency or authority shall be in effect that would
prevent the consummation of the Merger as contemplated hereby;
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(e) the shares of Common Stock of Natco to be issued in the Merger
shall have been approved for listing on the Nasdaq National Market, subject to
official notice of issuance;
(f) Natco and AEO shall have received supplemental private letter
rulings from the IRS, in form and substance satisfactory to each of them,
substantially to the effect that the private letter rulings from the IRS
relating to the Merger remain in full force and effect;
(g) there shall be no material adverse change to the private letter
rulings from the IRS relating to the Merger; and
(h) the SEC shall not object to Natco's accounting for the Merger on a
historical cost basis.
SECTION 7.02 CONDITIONS TO THE OBLIGATION OF AEO TO EFFECT THE MERGER.
The obligation of AEO to effect the Merger shall be subject to the fulfillment
at or prior to the Effective Time of the following additional conditions:
(a) Natco, Acquisition and Natco LLC shall have performed and complied
in all material respects with all obligations and agreements required to be
performed and complied with by it under this Agreement at or prior to the
Effective Time;
(b) the representations and warranties of Natco, Acquisition and Natco
LLC contained in this Agreement that are qualified as to materiality shall be
true and correct and all such representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case, as
of the date hereof and at and as of the Effective Time as if made at and as of
such date;
(c) AEO shall have received a certificate from the Chief Executive
Officer of Natco, Acquisition and Natco LLC, dated as of the Effective Time, to
the effect that the conditions set forth in paragraphs (a) and (b) above have
been satisfied;
(d) Prior to the Effective Time, Natco shall have amended and restated
its Certificate of Incorporation and By-Laws so that they are in substantially
the same form as those of AEO, except for the number of authorized shares of
Natco Common Stock, the Natco Preferred Stock and the classification of Natco's
Board of Directors;
(e) At the Effective Time, the directors and officers of AEO
immediately prior to the Effective Time shall be the officers and directors of
Natco and, in the case of officers, to serve at the pleasure of the Board of
Directors of Natco and, in the case of the directors to serve in the following
classes until their successors are duly elected and qualified: Class I directors
- - Ari Deshe, Martin P. Doolan, Michael G. Jesselson and Jay L. Schottenstein;
Class II directors - John L. Marakas, David W. Thompson, Gerald E. Wedren and
Saul Schottenstein; and Class III directors - Jon P. Diamond, Gilbert W.
Harrison, Thomas R. Ketteler and George Kolber; and
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(f) Natco LLC and its members shall have duly executed and delivered an
Indemnification Agreement substantially in the form attached hereto as Exhibit
A, and otherwise in form and substance satisfactory to AEO.
SECTION 7.03 CONDITIONS TO THE OBLIGATION OF NATCO AND ACQUISITION TO
EFFECT THE MERGER. The obligations of Natco and Acquisition to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
following additional conditions:
(a) AEO shall have performed and complied in all material respects with
all obligations and agreements required to be performed and complied with by it
under this Agreement at or prior to the Effective Time;
(b) the representations and warranties of AEO contained in this
Agreement that are qualified as to materiality shall be true and correct and all
such representations and warranties that are not so qualified shall be true and
correct in all material respects, in each case, as of the date hereof and at and
as of the Effective Time as if made at and as of such date;
(c) Natco and Acquisition shall have received a certificate from the
Chief Operating Officer of AEO, dated as of the Effective Time, to the effect
that the conditions set forth in paragraphs (a) and (b) above have been
satisfied.
ARTICLE VIII
TERMINATION AND ABANDONMENT
SECTION 8.01 TERMINATION AND ABANDONMENT. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after approval by the shareholders of Natco and AEO:
(a) by mutual action of the Boards of Directors of Natco and AEO;
(b) by AEO, if the conditions set forth in Sections 7.01 and 7.02 shall
not have been complied with or performed and such noncompliance or
nonperformance shall not have been cured or eliminated (or by its nature cannot
be cured or eliminated) by Natco, Acquisition or Natco LLC on or before the
Effective Time or expressly waived in writing by AEO; or
(c) by Natco, if the conditions set forth in Sections 7.01 and 7.03
shall not have been complied with or performed and such noncompliance or
nonperformance shall not have been cured or eliminated (or by its nature cannot
be cured or eliminated) by AEO on or before the Effective Time or expressly
waived in writing by Natco; or
(d) by Natco or AEO (i) if there has been a material breach of a
representation or warranty made by the other party the effect of which is an AEO
Material Adverse Effect or a
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Natco Material Adverse Effect, as the case may be, or (ii) if there has been a
breach by the other party in any material respect of the covenants set forth in
this Agreement.
SECTION 8.02 EFFECT OF TERMINATION. In the event of the termination of
this Agreement and the abandonment of the Merger pursuant to Section 8.01, this
Agreement shall thereafter become void and have no effect, and no party hereto
shall have any liability to any other party hereto or its shareholders or
directors or officers in respect thereof, except as set forth in Section 9.02.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as
otherwise specified, the representations and warranties of Natco, Acquisition
and Natco LLC contained herein shall survive the Closing for a period expiring
at the close of business on the earlier of the fourth anniversary of the Closing
Date or the applicable statute of limitations (the "Survival Date"), except that
(a) the representations and warranties set forth in Article V relating to taxes
shall survive until expiration of the applicable statute of limitations, and (b)
the representations and warranties set forth in Section 5.02(m) shall survive
until the tenth anniversary of the Closing Date. The representations and
warranties of AEO contained herein shall survive the Closing for a period
expiring at the close of business on the Survival Date.
SECTION 9.02 EXPENSES, ETC. Whether or not the transactions
contemplated by this Agreement are consummated, Natco agrees that it shall have
the sole obligation to pay both its own and AEO's fees and expenses solely and
directly related to the reorganization contemplated hereunder, including the
fees and expenses of counsel, accountants, and other experts, and Natco LLC
agrees to assume such obligation of Natco to the extent such payments have not
been made by the Effective Time, in each case Natco or Natco LLC shall pays such
fees and expenses of AEO only to the maximum extent and in the manner permitted
under Section 368(a)(1)(B) of the Code.
SECTION 9.03 PUBLICITY; CONFIDENTIALITY. AEO, Natco and Natco LLC agree
that this Agreement and the exchange of information pursuant thereto is
confidential and they will not disclose or issue any press release or make any
other public announcement concerning this Agreement or the transactions
contemplated hereby without the prior consent of the other party, except that
AEO or Natco and Natco LLC may make such public disclosure that it believes in
good faith to be required by law or any applicable rules and regulations of a
national securities exchange or the NASD (in which event such party shall
consult with the other prior to making such disclosure).
SECTION 9.04 EXECUTION IN COUNTERPARTS. For the convenience of the
parties, this Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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SECTION 9.05 NOTICES. All notices that are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered by hand or national
overnight courier service, transmitted by fax or mailed by registered or
certified mail, postage prepaid, and shall be deemed given upon receipt, as
follows:
If to Natco (prior to the Effective Time), Acquisition or Natco LLC to:
NATCO INDUSTRIES, INC.
1800 Moler Road
Columbus, Ohio 43207
Phone: 614-449-4332
Fax: 614-443-0972
Attention: Irwin A. Bain, Esq., General Counsel
If to AEO or Natco (after the Effective Time), to:
AMERICAN EAGLE OUTFITTERS, INC.
150 Thorn Hill Drive
Warrendale, Pennsylvania 15086-7528
Phone: 412-779-5221
Fax: 412-779-5535
Attention: George Kolber, COO
<TABLE>
<CAPTION>
with copies to:
<S> <C>
Benesch, Friedlander, Coplan & Aronoff Porter, Wright, Morris & Arthur
2300 BP America Building 41 South High Street
200 Public Square Columbus, Ohio 43215
Cleveland, OH 44114-2378 Phone: 614-227-2219
Phone: 216-363-4686 Fax: 614-227-4492
Fax: 216-363-4588 Attention: Neil Bulman, Jr., Esq.
Attention: Michael K.L. Wager, Esq
</TABLE>
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto.
SECTION 9.06 WAIVERS. AEO, on the one hand, and Natco, Acquisition and
Natco LLC, on the other hand, may, by written notice to the other, (i) extend
the time for the performance of any of the obligations or other actions of the
other under this Agreement; (ii) waive any inaccuracies in the representations
or warranties of the other contained in this Agreement or in any document
delivered pursuant to this Agreement; (iii) waive compliance with any of the
conditions of the other contained in this Agreement; or (iv) waive performance
of any of the obligations of the other under this Agreement. Except as provided
in the preceding sentence, no action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party
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taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
SECTION 9.07 AMENDMENTS, SUPPLEMENTS, ETC. At any time, this Agreement
may be amended or supplemented by such additional agreements, articles or
certificates, as may be determined by the parties hereto to be necessary,
desirable or expedient to further the purposes of this Agreement, or to clarify
the intention of the parties hereto, or to add to or modify the covenants, terms
or conditions hereof or to effect or facilitate any governmental approval or
acceptance of this Agreement or to effect or facilitate the filing or recording
of this Agreement or the consummation of any of the transactions contemplated
hereby. Any such instrument must be in writing and signed by all of the parties
hereto.
SECTION 9.08 ENTIRE AGREEMENT. This Agreement and its schedules and
exhibits, and the documents to be executed or delivered at the Effective Time in
connection herewith, constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral and written, among the parties hereto with respect to the
subject matter hereof. No representation, warranty, promise, inducement or
statement of intention has been made by any party that is not embodied in this
Agreement or such other documents, and none of the parties shall be bound by, or
be liable for, any alleged representation, warranty, promise, inducement or
statement of intention not embodied herein or therein.
SECTION 9.09 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to conflict of laws principles.
SECTION 9.10 BINDING EFFECT, BENEFITS. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.
SECTION 9.11 ASSIGNABILITY. Neither this Agreement nor any of the
parties' rights hereunder shall be assignable by any party hereto without the
prior written consent of the other parties hereto.
SECTION 9.12 SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
SECTION 9.13 VARIATION AND AMENDMENT. This Agreement may be varied or
amended at any time before or after the approval and adoption of this Agreement
by the shareholders of AEO by action of the respective Boards of Directors of
AEO and Natco, without action by the shareholders thereof, provided that after
approval and adoption of this Agreement by AEO's
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shareholders no such variance or amendment shall, without consent of such
shareholders, increase the consideration that the holders of the capital stock
of Natco shall be entitled to receive upon the Effective Time pursuant to
Article III hereof.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
NATCO INDUSTRIES, INC.
By: /s/ JAY L. SCHOTTENSTEIN
------------------------------------------
Jay L. Schottenstein, Chief Executive Officer
THORN HILL ACQUISITION CORP.
By: /s/ JAY L. SCHOTTENSTEIN
------------------------------------------
Jay L. Schottenstein, President
NATCO LIMITED LIABILITY COMPANY
By: Natco Industries, Inc., its sole Member
By: /s/ JAY L. SCHOTTENSTEIN
------------------------------------------
Jay L. Schottenstein, President
AMERICAN EAGLE OUTFITTERS, INC.
By: /s/ GEORGE KOLBER
------------------------------------------
George Kolber, Chief Operating Officer
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Article SEVENTH of New American Eagle's Certificate of
Incorporation provides that New American Eagle shall, to the fullest extent
permitted by applicable law as then in effect, indemnify any person who was or
is a party, or is threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that he was a director, officer, or employee
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise. The Corporation shall indemnify against all
expenses (including attorneys' fees), judgements, fines and amounts paid in
settlement actually and reasonably incurred by him in connection therewith.
Without limiting the generality of the foregoing, the Corporation may enter into
one or more agreements with any person that provide for indemnification greater
or different than that provided in Article SEVENTH.
In determining the right to indemnification, New American
Eagle has the burden of proof that the indemnitee has not met the applicable
standard of conduct. If successful in whole or in part in such a proceeding, the
indemnitee is entitled to be indemnified for expenses incurred in connection
with such proceeding. All reasonable expenses incurred by an indemnitee in
connection with any proceeding shall be paid by New American Eagle in advance of
the final disposition after receipt of a statement from the indemnitee
requesting such advance.
Article SEVENTH expressly states that neither the amendment
nor repeal of the Bylaws or the Certificate of Incorporation shall adversely
affect any right to indemnification for acts occurring prior to such amendment
or repeal. The right of indemnification and advancement of expenses provided by
Article SEVENTH is not exclusive of any other rights of indemnification or
advancement of expenses that may be available.
All indemnification rights in Article IX of New American
Eagle's Bylaws are contract rights. If any provision of Article IX is held
invalid, illegal or unenforceable, the remaining provisions of Article IX shall
not be affected. An indemnitee also may elect, as an alternative to the Article
IX procedures, to follow procedures authorized by applicable corporate law or
statute. Article IX sets forth specific procedures for the advancement of
expenses and for the determination of entitlement to indemnification.
Advancement of expenses are to be paid by the Corporation
within 20 days after the receipt by the Corporation of a statement or statements
from the claimant requesting such advance or advances provided that the claimant
delivers an undertaking to repay all amounts so advanced unless it shall
ultimately be determined that such person is entitled to be indemnified. To
obtain indemnification, a claimant shall submit to the Corporation a written
request, including therein or therewith such documentation and information as is
reasonably available to the claimant and is reasonably necessary to determine
and to what extent the claimant is entitled to indemnification. In the event the
determination of entitlement is to be made by Independent Counsel as set forth
in the Certificate of Incorporation, the Independent Counsel shall be selected
by the Board of Directors. If it is so determined that the claimant is entitled
to indemnification, payment to the claimant shall be made within 10 days after
such determination. If a claim has not been paid in full by the Corporation
within thirty days after a written claim has been received by the Corporation,
the claimant may at any time bring suit against the Corporation to recover the
unpaid amount and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim.
If a determination shall be made that the claimant is entitled
to indemnification, the Corporation shall be bound by such determination in any
judicial proceeding. The Corporation shall be precluded from asserting in any
judicial proceeding commenced pursuant to Article IX that the procedures and
presumptions of the Bylaw are
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<PAGE> 71
not valid, binding, and enforceable and shall stipulate in such proceeding that
the Corporation is bound by all the provisions of the By-Law. An indemnitee who
is determined not to be entitled to indemnification may appeal such
determination either through the courts or by arbitration.
(b) Under Section 145 of the Delaware Law, indemnification of any
person who is or was a party or threatened to be made so in any action by reason
of the fact that he is or was a director, officer, employee or agent of the
corporation or was serving as such of another corporation of other enterprise at
the request of the corporation is permitted against expenses, fines and amounts
paid in settlement actually and reasonably incurred by him in such proceeding
where the indemnified person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation and in
criminal actions where he had no reasonable cause to believe his conduct was
unlawful. Indemnification is also permitted in lawsuits brought by or on behalf
of the corporation if the standards of conduct described above are met, except
that no indemnification is permitted in respect to any matter in which the
person is adjudged to be liable to the corporation unless a court shall
determine that indemnification is fair and reasonable in view of all the
circumstances of the case. Indemnification against expenses (including
attorneys' fees) actually and reasonably incurred by directors, officers,
employees and agents is required under Section 145 of the Delaware Law in those
cases where the person to be indemnified has been successful on the merits or
otherwise in defense of a lawsuit of the type described above. In cases where
indemnification is permissive, a determination as to whether the person met the
applicable standard of conduct must be made (unless ordered by a court) by
majority vote of the disinterested directors, by independent legal counsel, or
by the stockholders. Such indemnification rights are specifically not deemed to
be exclusive of other rights of indemnification by agreement or otherwise and
the corporation is authorized to advance expenses incurred prior to the final
disposition of a matter upon receipt of an undertaking to repay such amounts on
a determination that indemnification was not permitted in the circumstances of
the case.
(c) Under Section 145 of the Delaware Law and Article IX of the Bylaws,
New American Eagle may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee, or agent of New American Eagle, or
who, while serving in such capacity, is or was at the request of New American
Eagle, a director, officer, employee or agent of another corporation or other
enterprise, against liability asserted against or incurred by such person in any
such capacity whether or not New American Eagle would have the power to provide
indemnity under Section 145 or the Bylaws. New American Eagle has obtained
insurance which, subject to certain exceptions, insures the directors and
officers of New American Eagle and its subsidiary.
(d) New American Eagle has succeeded to indemnification contracts with
its directors and certain officers which provide that such directors and
officers will be indemnified to the fullest extent provided by Section 145 of
the Delaware Law (or such other future statutory provision authorizing or
permitting indemnification) against all expenses (including attorneys' fees),
judgments, fines and settlement amounts, actually and reasonably paid or
incurred by them in any action or proceeding, including any action by or in the
right of New American Eagle, by reason of the fact that they were a director,
officer, employee or agent of New American Eagle, or were serving at the request
of New American Eagle as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise.
No indemnity will be provided under such indemnification
contracts (i) except to the extent that the aggregate losses to be indemnified
pursuant thereto exceed the amount for which the indemnitee is indemnified
pursuant to any directors and officers liability insurance purchased and
maintained by New American Eagle; (ii) in respect to remuneration paid to an
indemnitee if it shall be determined by a final judgment that such remuneration
was in violation of law; (iii) on account of any suit in which judgment is
rendered against an indemnitee for an accounting of profits made from the
purchase or sale by indemnitee of securities of New American Eagle pursuant to
the provisions of Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereto or similar provisions of any federal, state or local
statutory law; (iv) on account of the indemnitee's act or omission being finally
adjudged to have been not in good faith or involving intentional misconduct or a
knowing violation of law; or (v) if a final decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful.
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<PAGE> 72
(e) Article SEVENTH of New American Eagle's Certificate of
Incorporation provides that a director of New American Eagle shall not be
personally liable to New American Eagle or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to New American Eagle or its
stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) under Section 174 of
the General Corporation Law of the State of Delaware; or (iv) for any
transaction from which the director derived any improper personal benefit.
The above discussion of New American Eagle's By-Laws, Certificate of
Incorporation, indemnification agreements, and of Section 145 of the Delaware
Law is not intended to be exhaustive and is respectively qualified in its
entirety by such By-Laws, Certificate of Incorporation and statutes.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS
(a) EXHIBITS
Exhibit
Number Description
- ------ -----------
2.1 Plan of Reorganization and Agreement and Plan of Merger, dated as
of November 30, 1998 among Natco Industries, Inc., American Eagle
Outfitters, Inc., and Thorn Hill Acquisition Corp. (See Appendix A)
*3.1 Amended and Restated Certificate of Incorporation of Natco
Industries, Inc.
*3.2 Amended and Restated Bylaws of Natco Industries, Inc.
4.1 Articles Fourth, Fifth, Sixth and Seventh of Natco's Amended and
Restated Certificate of Incorporation. (See Exhibit 3.1)
4.2 Articles II, V and VI of Natco's Bylaws. (See Exhibit 3.2)
*5.1 Opinion of Porter, Wright, Morris & Arthur.
*8.1 Form of opinion of Skadden, Arps, Slate, Meagher & Flom LLP re Tax
Matters.
*10.1 Form of Indemnification Agreement, dated as of January __,
1998, among American Eagle Outfitters, Inc., Natco Industries,
Inc., and Natco Limited Liability Company.
*21.1 Subsidiaries of Natco Industries, Inc.
*23.1 Consent of Ernst & Young LLP.
23.2 Consent of Porter, Wright, Morris & Arthur (included in Exhibit
5.1).
*24.1 Powers of Attorney (included on signature page hereto).
*27.1 Financial Data Schedule.
*99.1 Form of Proxy Card.
- ---------------------------
* Filed herewith
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<PAGE> 73
(b) FINANCIAL STATEMENT SCHEDULES
Schedules not listed above are omitted because of the absence of the
conditions under which they are required or because the required information is
included in the financial statements or the notes thereto.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes: (1) to file during any
period in which offers or sales are being made, a post effective amendment to
this registration statement: (i) to include any prospectus required by section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume or securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; (2) that for
the purpose of determining any liability under the Securities Act of 1933, each
such post-effective amendment 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; (3)
to remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement 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.
The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of the Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed
pursuant to the immediately preceding paragraph, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the Registration Statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is
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<PAGE> 74
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant 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 Registrant 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 of 1933 and will be governed by the
final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Registration Statement, within one business
day of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
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<PAGE> 75
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Columbus, State of Ohio, on this 7th day of December,
1998.
NATCO INDUSTRIES, INC.
By: /s/Thomas R. Ketteler
-----------------------------------
Thomas R. Ketteler, Vice President,
Treasurer and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
*Jay L. Schottenstein Chairman and President December 7, 1998
- --------------------- (Principal Executive Officer)
Jay L. Schottenstein
/s/Thomas R. Ketteler Vice President, Treasurer and December 7, 1998
- --------------------- Director
Thomas R. Ketteler (Principal Financial Officer)
*Jon P. Diamond Director December 7, 1998
- ---------------------
Jon P. Diamond
*Ari Deshe Director December 7, 1998
- ---------------------
Ari Deshe
*By: /s/Thomas R. Ketteler
- -----------------------------------------
Thomas R. Ketteler, attorney-in-fact
for each of the persons indicated
II-6
<PAGE> 1
Exhibit 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
NATCO INDUSTRIES, INC.
* * * * * * * * * * * * * * * * * * * * * * * * *
The above corporation, NATCO Industries, Inc. (the "Corporation"),
existing pursuant to the General Corporation Law of the State of Delaware,
desiring to give notice of corporate action effectuating the restatement and
amendment of its Certificate of Incorporation, sets forth the following facts:
(i) The date of filing of the Corporation's original Certificate
of Incorporation was January 26, 1972;
(ii) The Corporation's present name is NATCO Industries, Inc.;
(iii) The Corporation was originally incorporated under the name
National Apparel Industries, Inc.;
(iv) This Amended and Restated Certificate of Incorporation was duly
adopted in accordance with the provisions of Section 242 and 245 of the General
Corporation Law of the State of Delaware; and
(v) The exact text of the Amended and Restated Certificate of
Incorporation is amended to read as follows:
FIRST. The name of the Corporation is: Natco Industries, Inc.
SECOND. The address of its registered office in the State of Delaware
is 1209 Orange Street, County of New Castle, Wilmington, Delaware 19801. The
name of its registered agent at such address is The Corporation Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH. (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is Seventy Five Million
(75,000,000) shares, consisting of 70,000,000 shares of common stock, $0.01 par
value per share (the "Common Stock"), and 5,000,000 shares of Preferred Stock,
$.01 par value per share (the "Preferred Stock").
(b) Each holder of Common Stock shall be entitled to one vote for each
share of Common Stock held of record on all matters presented for vote of the
stockholders. Subject to the provisions of the General Corporation Law of the
State of Delaware, dividends may be paid on the Common Stock at such times and
in such amounts as the Board of Directors shall determine. Upon the dissolution,
liquidation, or winding up of the Corporation, after any preferential amounts to
be distributed to the holders of the Preferred Stock then outstanding have been
paid or declared set apart for payment, the holders of Common Stock shall be
entitled to receive all remaining assets of the Corporation available for
distribution to its stockholders ratably and proportioned to the number of
shares held by them.
(c) The Board of Directors is hereby authorized, by resolution or
resolutions, to establish, out of the unissued shares of Preferred Stock not
then allocated to any series of Preferred Stock, additional series of Preferred
Stock. Before any shares of any such additional series are issued, the Board of
Directors shall fix and determine, and is hereby expressly empowered to fix and
determine, by resolution or resolutions, the number of shares constituting such
series and the distinguishing characteristics and the relative rights,
preferences, privileges and immunities, if any, and any qualifications,
limitations or restrictions thereof, of the shares thereof, so far as not
inconsistent with the provisions of this Article FOURTH. Without limiting the
generality of the foregoing, the
<PAGE> 2
Board of Directors may fix and determine: (i) the designation of such series and
the number of shares which shall constitute such series of such shares; (ii) the
rate of dividend, if any, payable on the shares of such series; (iii) whether
the shares of such series shall be cumulative, non-cumulative or partially
cumulative as to dividends, and the dates from which any cumulative dividends
are to accumulate; (iv) whether the shares of such series may be redeemed, and,
if so, the price or prices at which and the terms and conditions on which shares
of such series may be redeemed; (v) the amount payable upon shares of such
series in the event of the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Corporation; (vi) the sinking fund provisions,
if any, for the redemption of the shares of such series; (vii) the voting
rights, if any, of the shares of such series; (viii) the terms and conditions,
if any on which shares of such series may be converted into shares of the Common
Stock of the Corporation or any other class or series; (ix) whether the shares
of such series are to be preferred over shares of Common Stock of the
Corporation or any other class or series as to dividends, or upon voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Corporation, or otherwise; and (x) any other characteristics, preferences,
limitations, rights, privileges, immunities or terms not inconsistent with the
provisions of this Article FOURTH.
Any shares of Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock, without designation as
to series, and may be reissued as part of any series of Preferred Stock created
by resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
FIFTH. In addition to all of the powers conferred by statute, the
Board of Directors is expressly authorized to make, alter or repeal the Bylaws
of the Corporation.
SIXTH. No contract or transaction between the Corporation and one or
more of its directors or officers, or between the Corporation and any other
corporation, partnership, association, or other organization in which one or
more of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
Board of Directors or committee thereof which authorizes the contract or
transaction, or solely because his or their votes are counted for such purpose,
if:
(a) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board of Directors or committee in good faith authorizes
the contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or
(b) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by the Board of Directors, a
committee thereof, or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
SEVENTH. (a) The Corporation shall indemnify any person who was or is a
party, or is threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that he is or was a director, officer or
employee of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment) or any other
<PAGE> 3
applicable laws as presently or hereinafter in effect against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection therewith. Without
limiting the generality of the foregoing, the Corporation may enter into one or
more agreements with any person that provide for indemnification greater or
different than that provided in this Article Seventh.
(b) Expenses incurred by a director, officer or employee in defending a
civil or criminal action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director, officer or employee to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation.
(c) The indemnification and advancement of expenses provided by this
Article shall not be deemed exclusive of any other rights to which a person
seeking indemnification and advancement of expenses may be entitled under any
statute, by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefits of the
heirs, executors and administrators of such a person.
(d) For the purposes of this Article Seventh, references to "the
Corporation" include, in addition to the resulting or surviving corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article Seventh
with respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had continued.
(e) Neither the Corporation nor its directors or officers nor any
person acting on its behalf shall be liable to any person for any determination
as to the existence or absence of conduct that would provide a basis for making
or refusing to make any payment under this Article Seventh, in reliance upon the
advice of counsel.
(f) A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholder, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
any improper personal benefit. If the General Corporation Law of the State of
Delaware is hereafter amended to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
(g) Neither the amendment nor repeal of this Article Seventh, nor the
adoption of any provision of this Amended and Restated Certificate of
Incorporation inconsistent with this Article Seventh, shall eliminate or reduce
the effect of this Article Seventh in respect of any matter occurring, or any
cause of action, suit or claim that would accrue or arise, prior to such
amendment, repeal or adoption of an inconsistent provision.
EIGHTH. The Corporation shall have perpetual existence.
NINTH. Amendments.
<PAGE> 4
(a) The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by the laws of
Delaware, and all rights conferred herein upon stockholders, directors and
others are granted subject to this reservation and subject to paragraph (b)
below.
(b) The provisions set forth in this Article NINTH and in Articles
TENTH and ELEVENTH of this Amended and Restated Certificate of Incorporation may
not be altered, amended or repealed in any respect, and new provisions
inconsistent therewith may not be adopted unless such action is approved by the
affirmative vote of the holders of at least eighty (80%) of all of the
outstanding shares of capital stock of the Corporation entitled to vote on such
matter at a meeting of stockholders called for that purpose, except that if the
Board of Directors, by an affirmative vote of at least three-fourths (75%) of
the entire Board of Directors, recommends approval of such amendment to this
Amended and Restated Certificate of Incorporation to the stockholders, such
approval may be effected by the affirmative vote of the holders of a majority of
the outstanding shares of capital stock of the Corporation present in person or
represented by proxy and entitled to vote on such matter at a meeting of
stockholders called for that purpose.
TENTH. Board of Directors.
(a) Number, Election and Terms of Directors. The business and affairs
of the Corporation shall be managed by or under the direction of a Board of
Directors. The number of the directors of the Corporation shall be fixed from
time to time by resolution adopted by the affirmative vote of a majority of the
entire Board of Directors of the Corporation, except that the minimum number of
directors shall be fixed at no less than three (3) and the maximum number of
directors shall be fixed at no more than fifteen (15). The directors shall be
divided into three classes, Class I, Class II, and Class III. Each such class
shall consist, as nearly as possible, of one-third of the total number of
directors and remaining directors shall be included within each such class or
classes as the Board of Directors shall designate. Class I directors shall hold
office initially for a term expiring at the 1999 annual meeting of stockholders;
Class II directors shall hold office initially for a term expiring at the 2000
annual meeting of stockholders; and Class III directors shall hold office
initially for a term expiring at the 2001 annual meeting of stockholders. At
each annual meeting of stockholders, successors to the class of directors whose
term expires at that annual meeting shall be elected to hold office for a
three-year term. If the number of directors is changed, any increase or decrease
shall be apportioned among the classes so as to maintain the number of directors
in each class as nearly equal as possible. A director shall hold office, subject
to any removal, death, resignation, or retirement, until the annual meeting for
the year in which his term expires and until his successor shall be elected and
qualified. Election of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.
(b) Stockholder Nomination of Director Candidates. Nominations for
election to the Board of Directors of the Corporation at a meeting of
stockholders may be made by the Board of Directors, on behalf of the Board of
Directors by any nominating committee appointed by the Board of Directors, or by
any stockholder of the Corporation entitled to vote for the election of
directors at the meeting. Nominations, other than those made by or on behalf of
the Board of Directors, shall be made by notice in writing delivered to or
mailed, postage prepaid, and received by the Secretary of the Corporation at
least 60 days but no more than 90 days prior to the anniversary date of the
immediately preceding Annual Meeting of Stockholders. The notice shall set
forth: (i) the name and address of the stockholder who intends to make the
nomination; (ii) the name, age, business address and, if known, residence
address of each nominee; (iii) the principal occupation or employment of each
nominee; (iv) the number of shares of stock of the Corporation which are
beneficially owned by each nominee and by the nominating stockholder; (v) any
other information concerning the nominee that must be disclosed of nominees in
proxy solicitation pursuant to Regulation 14A of the Securities Exchange Act of
1934 (or any subsequent provisions replacing such Regulation); and (vi) the
executed consent of each nominee to serve as a director of the Corporation, if
elected. The chairman of the meeting of stockholders may, if the facts warrant,
determine that a nomination was not made in accordance with the foregoing
procedures, and if the chairman should so determine, the chairman shall so
declare to the meeting and the defective nomination shall be disregarded.
(c) Newly Created Directorships and Vacancies. Newly created
directorships resulting from any increase in the number of directors and any
vacancies on the Board of Directors resulting from death, resignation,
<PAGE> 5
disqualification, removal or other cause shall be filled by the affirmative vote
of a majority of the remaining directors then in office, even though less than a
quorum, or by a sole remaining director. A director, including any director
chosen to fill a newly created directorship or any vacancy, shall hold office
until the next annual meeting following his election or appointment to the Board
of Directors for the class of director to which he is appointed, as applicable,
and until such director's successor shall have been elected and qualified. In no
case will a decrease in the number of directors shorten the term of any
incumbent director.
(d) Removal. Notwithstanding any other provision of this Amended and
Restated Certificate of Incorporation or the Bylaws of the Corporation (and
notwithstanding the fact that some lesser percentage may be specified by the
General Corporation Law of the State of Delaware, this Amended and Restated
Certificate of Incorporation or the Bylaws of the Corporation), any director or
the entire board of directors of the Corporation may be removed from office at
any time, but only for cause and only by the affirmative vote of the holders of
at least eighty percent (80%) of all of the outstanding shares of capital stock
of the Corporation entitled to vote on the election of directors at a meeting of
stockholders called for that purpose, except that if the Board of Directors, by
an affirmative vote of at least three-fourths (75%) of the entire Board of
Directors, recommends removal of a director to the stockholders, such removal
may be effected by the affirmative vote of the holders of a majority of the
outstanding shares of capital stock of the Corporation present in person or
represented by proxy and entitled to vote on the election of directors at a
meeting of stockholders called for that purpose.
(e) Directors Elected by Holders of Preferred Stock. Notwithstanding
the classification provisions set forth in paragraph (a) above, whenever the
holders of any one or more classes or series of Preferred Stock issued by this
Corporation shall have the right, voting separately by class or series, to elect
directors at an annual or special meeting of stockholders, the election, term of
office, filling of vacancies, terms of removal, and other features of such
directorships shall be governed by the terms of Article FOURTH and the
resolution or resolutions establishing such class or series adopted pursuant
thereto and such directors so elected shall not be divided into classes pursuant
to this Article TENTH unless expressly provided by such terms.
(f) Committees. Wherever the term "Board of Directors" is used in this
Amended and Restated Certificate of Incorporation, such term shall mean the
Board of Directors of the Corporation; provided, however, that, to the extent
any committee of directors of the Corporation is lawfully entitled to exercise
the powers of the Board of Directors, such committee may exercise any right or
authority of the Board of Directors under this Amended and Restated Certificate
of Incorporation.
ELEVENTH. Stockholder Action. Any action required or permitted to be
taken by any stockholders of the Corporation must be effected at a duly called
annual or special meeting of such stockholders and may not be effected by any
consent in writing by such stockholders, unless such consent is the unanimous
consent of all stockholders. Except as may be otherwise required by law, special
meetings of stockholders of the Corporation may be called only by the Board of
Directors pursuant to a resolution approved by a majority of the Board of
Directors.
IN WITNESS WHEREOF, Natco Industries, Inc. has caused this Amended and
Restated Certification of Incorporation to be signed by Jay L. Schottenstein,
its President, and attested by Irwin A. Bain, its Secretary, this 30th day of
November, 1998.
Attest: /s/Jay L. Schottenstein
-------------------------------
Jay L. Schottenstein, President
/s/Irwin A. Bain
- ------------------------
Irwin A. Bain, Secretary
<PAGE> 1
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
NATCO INDUSTRIES, INC.
(A Delaware corporation)
(As Adopted November 25, 1998)
ARTICLE I
Offices
Section 1. Registered Office. The registered office of the Corporation is
located at 1209 Orange Street, Wilmington, Delaware 19801. The Corporation may,
by resolution of the Board of Directors, change the location to any other place
in Delaware.
Section 2. Other Offices. The Corporation may have such other offices, within or
without the State of Delaware, as the Board of Directors may from time to time
establish.
ARTICLE II
Meetings of Stockholders
Section 1. Annual Meetings. The annual meeting of the stockholders for the
election of directors and for the transaction of any other business as may
properly come before the meeting shall be held on such date as from time to time
may be designated by the Board of Directors.
Section 2. Special Meetings. A special meeting of the stockholders may be called
at any time only by the Board of Directors pursuant to a resolution approved by
a majority of the Board of Directors.
Section 3. Place of Meetings. The Board of Directors may designate any place,
either within or without the State of Delaware, as the place of meeting for any
annual meeting or for any special meeting of stockholders.
Section 4. Notice of Meetings. Written notice stating the place, date and hour
of the meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, shall be given by or under the direction of the
Secretary, to each stockholder of record entitled to vote at such meeting.
Except as otherwise required by statute, the written notice shall be given not
less than ten nor more than sixty days before the date of the meeting. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail, postage prepaid, directed to the stockholder at his address as it
appears on the records of the Corporation. Only such business shall be conducted
at a special meeting of stockholders as shall have been brought before the
meeting pursuant to the Corporation's notice of meeting. Attendance of a person
at a meeting of stockholders shall constitute a waiver of notice of such
meeting, except when the stockholder attends for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Any previously scheduled
meeting of the stockholders may be postponed, and unless the Corporation's
Amended and Restated Certificate of Incorporation, as the same may be further
amended from time to time (the "Certificate of Incorporation") otherwise
provides, any special meeting of the stockholders may he cancelled, by
resolution of the Board of Directors upon public notice given prior to the time
previously scheduled for such meeting of stockholders.
Section 5. Quorum. Except as otherwise required by statute, the presence at any
meeting, in person or by proxy, of a majority of the shares then issued and
outstanding and entitled to vote shall be necessary and sufficient to constitute
a quorum for the transaction of business. The Chairman of the meeting or a
majority of the shares so represented may adjourn the meeting from time to time,
whether or not there is such a quorum. The stockholders present at a duly called
meeting at which a quorum is present may continue to transact business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum.
<PAGE> 2
Section 6. Voting Lists. The officer who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders of record entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
If and to the extent required by statute, such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder of record who is present.
Section 7. Adjourned Meetings. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting the Corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 8. Proxies. Each stockholder of record entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him by written
proxy, but no such proxy shall be voted or acted upon other than at the meeting
specified in the proxy or any adjournment of such meeting.
Section 9. Voting Rights. Except as otherwise provided by statute or by the
Certificate of Incorporation, and subject to the provisions of Article VI of
these Bylaws, each stockholder of record shall at every meeting of the
stockholders be entitled to one vote for each share of the capital stock having
voting power held by such stockholder.
Section 10. Notice of Stockholder Business and Nominations.
A. Annual Meetings of Stockholders.
(1) Nominations of persons for election to the Board of
Directors of the Corporation may be made at an annual meeting of stockholders
pursuant to the procedures set forth in the Certificate of Incorporation.
Proposals of other business to be considered by the stockholders may be made at
an annual meeting of stockholders (a) pursuant to the Corporation's notice of
meeting, (b) by or at the direction of the Board of Directors or (c) by any
stockholder of the Corporation who was a stockholder of record at the time of
giving of notice provided for in this Bylaw, who is entitled to vote at the
meeting and who complies with the notice procedures set forth in this Bylaw.
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of paragraph
(A)(1) of this Bylaw, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation and such business must otherwise be
a proper matter for stockholder action. To be timely, a stockholder's notice
shall be delivered to or mailed, postage prepaid, and received by the Secretary
at the principal executive offices of the Corporation at least 60 days but no
more than 90 days prior to the anniversary date of the immediately preceding
annual meeting of stockholders; provided, however, that in the event that the
date of the annual meeting is more than 30 days before or more than 60 days
after such anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the close of business on the 90th day prior to such
annual meeting and not later than the close of business on the later of the 60th
day prior to such annual meeting or the 10th day following the day on which
public announcement of the date of such meeting is first made by the
Corporation. In no event shall the public announcement of an adjournment of an
annual meeting commence a new time period for the giving of a stockholder's
notice as described above. Such stockholder's notice shall set forth (a) as to
director nominations, that information which is required by the Certificate of
Incorporation; (b) as to any business, other than the nomination of director
candidates, that the stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the stockholder
<PAGE> 3
giving the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made (i) the name and address of such stockholder, as
they appear on the Corporation's books, and of such beneficial owner and (ii)
the class and number of shares of the Corporation which are owned beneficially
and of record by such stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of
paragraph (A)(2) of this Bylaw to the contrary, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement by the Corporation naming all of
the nominees for director or specifying the size of the increased Board of
Directors at least 70 days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this Bylaw shall also
be considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the Corporation.
B. Special Meetings of Stockholders.
Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
Board of Directors of the Corporation may be made at a special meeting of
stockholders (a) by the Board of Directors, on behalf of the Board of Directors
by any nominating committee appointed by the Board of Directors, or (b) provided
that the Board of Directors has determined that directors shall be elected at
such meeting, by any stockholder of the Corporation entitled to vote for the
election of directors at the meeting. In the event the corporation calls a
special meeting of stockholders for the purpose of electing one or more
directors to the Board of Directors, any such stockholder may nominate a person
or persons (as the case may be), for election to such position(s) as specified
in the Corporation's notice of meeting, if the stockholder's notice required by
paragraph (A)(2) of this Bylaw shall be delivered to the Secretary at the
principal executive offices of the Corporation at least 60 days but no more than
90 days prior to such special meeting or the 10th day following the day on which
public announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting. In no
event shall the public announcement of an adjournment of a special meeting
commence a new time period for the giving of a stockholder's notice as described
above.
C. General.
(1) Only such persons who are nominated in accordance with the
procedures set forth in the Certificate of Incorporation and this Bylaw shall be
eligible to serve as directors and only such business shall be conducted at a
meeting of stockholders as shall have been brought before the meeting in
accordance with the procedures set forth in this Bylaw. Whenever the language of
a proposed resolution is included in a written notice of a meeting of
stockholders the resolution may be adopted at such meeting with only such
clarifying or other amendments as do not enlarge its original purpose without
further notice to stockholders not present in person or by proxy. Except as
otherwise provided by law, the Certificate of Incorporation or these Bylaws, the
Chairman of the meeting shall have the power and duty to determine whether any
business proposed to be brought before the meeting was made or proposed, as the
case may be, in accordance with the procedures set forth in this Bylaw and, if
any proposed nomination or business is not in compliance with the Certificate of
Incorporation or this Bylaw, to declare that such defective proposal or
nomination shall be disregarded.
(2) For purposes of this Bylaw, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(3) Notwithstanding the foregoing provisions of this Bylaw, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect any rights
of stockholders to request
<PAGE> 4
inclusion of proposals in the Corporation's proxy statement pursuant to Rule
14a-8 under the Exchange Act or rights of the holders of any series of Preferred
Stock to elect directors under specified circumstances.
Section 11. Required Vote. Except as otherwise required by statute or by the
Certificate of Incorporation or these Bylaws, in all matters other than the
election of directors, the affirmative vote of the majority of shares present in
person or represented by proxy at the meeting and entitled to vote on the
subject matter shall decide any question brought before a meeting of the
stockholders at which a quorum is present.
Section 12. Elections of Directors. Elections of directors shall be by a
plurality of the votes cast.
Section 13. Inspectors of Elections; Opening and Closing the Polls. The Board of
Directors by resolution shall appoint one or more inspectors, which inspector or
inspectors may include individuals who serve the Corporation in other
capacities, including, without limitation, as officers, employees, agents or
representatives, to act at the meetings of stockholders and make a written
report thereof. One or more persons may be designated as alternate inspectors to
replace any inspector who fails to act. If no inspector or alternate has been
appointed to act or is able to act at a meeting of stockholders, the Chairman of
the meeting shall appoint one or more inspectors to act at the meeting. The
inspectors shall have the duties prescribed by law.
The Chairman of the meeting may fix and announce at the meeting the date and
time of the opening and the closing of the polls for each matter upon which the
stockholders will vote at a meeting.
ARTICLE III
Board of Directors
Section 1. General Powers. The business of the Corporation shall be managed by
the Board of Directors, except as otherwise provided by statute or by the
Certificate of Incorporation.
Section 2. Number. The number of the Directors of the Corporation shall be fixed
as specified in the Certificate of Incorporation.
Section 3. Election and Term of Office. Directors shall be elected at the annual
meeting of stockholders as specified in the Certificate of Incorporation. Newly
created directorships resulting from any increase in the number of directors and
any vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other cause shall be filled by the affirmative vote
of a majority of the remaining directors then in office, even though less than a
quorum, or by a sole remaining director, all as specified in the Certificate of
Incorporation.
Section 4. First Meetings. The first meeting of each newly elected Board of
Directors shall be held without notice immediately after the annual meeting of
the stockholders for the purpose of the organization of the Board, the election
of officers, and the transaction of such other business as may properly come
before the meeting.
Section 5. Regular Meetings. Regular meetings of the Board of Directors may be
held without notice at such times and at such places, within or without the
State of Delaware, as shall from time to time be determined by the Board.
Section 6. Special Meetings. Special meetings of the Board of Directors may be
called by the Chairman of the Board. Such meetings shall be held at such times
and at such places, within or without the State of Delaware, as shall be
determined by the officer calling the meeting. Notice of any special meeting of
directors shall be given to each director at his business or residence in
writing by hand delivery, first-class or overnight mail or courier service,
telegram or facsimile transmission, or orally by telephone. If mailed by
first-class mail, such notice shall be deemed adequately delivered when
deposited in the United States mails so addressed, with postage thereon prepaid,
at least two (2) days before such meeting. If by telegram, overnight mail or
courier service, such notice shall be deemed adequately delivered when the
telegram is delivered to the telegraph company or the notice is delivered to the
overnight mail or courier service company at least the day prior to such
meeting. If by facsimile transmission, such notice shall be deemed adequately
delivered when the notice is transmitted at least twelve (12) hours before such
meeting. Such notice need not state the purposes of the meeting. Any or all
directors may waive notice of any
<PAGE> 5
meeting, either before or after the meeting. Attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except when the
director attends for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened.
Section 7. Quorum, Required Vote, and Adjournment. The presence, at any meeting,
of a majority of the whole Board shall be necessary and sufficient to constitute
a quorum for the transaction of business. Except as otherwise required by
statute or by the Certificate of Incorporation, the vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. In the absence of a quorum, a majority of the directors
present at the time and place of any meeting may adjourn such meeting from time
to time until a quorum be present.
Section 8. Consent of Directors in Lieu of Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all the members of the
Board or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board or
committee.
Section 9. Participation in Meetings by Telephone. A member of the Board or any
committee thereof may participate in a meeting of such Board or committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this section shall constitute presence in
person at such meeting.
Section 10. Compensation. The Board of Directors may authorize the payment to
directors of a fixed fee and expenses for attendance at meetings of the Board or
any committee thereof, and other compensation for service as directors. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 11. Intercompany Transactions. Transactions between the Corporation and
any of its affiliates will be subject to approval by a majority of the
disinterested directors of the Corporation and will be on such terms, which, in
the judgment of such directors, will be no less favorable to the Corporation
than could be obtained from unaffiliated parties.
ARTICLE IV
Board Committees
The Board of Directors may designate one or more regular and special committees,
consisting of directors, officers or other persons, which shall have and may
exercise such powers and functions as the Board may prescribe in the management
of the business and affairs of the Corporation; provided, however, that no
committee shall have power or authority in reference to the following matters:
(a) approving or adopting, or recommending to the stockholders, any action or
matter expressly required by the Delaware General Corporation Law to be
submitted to stockholders for approval, or (b) adopting, amending or repealing
any Bylaw of the Corporation. Such committees shall keep regular minutes of
their proceedings and report the same to the Board of Directors when required.
The Board of Directors may from time to time suspend, alter, continue or
terminate any such committee or the powers and functions thereof. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitutes a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
<PAGE> 6
ARTICLE V
Officers
Section 1. Number, Election, Term of Office and Qualification. The number,
titles and duties of the officers shall be determined by the Board of Directors
from time to time, subject to the provisions of applicable law, the Certificate
of Incorporation, and these Bylaws. Each officer shall be elected in the manner
prescribed by the Board of Directors and shall hold office until such officer's
successor is elected and qualified or until such officer's death, resignation or
removal. The election of officers shall be held annually at the first meeting of
the Board of Directors held after each annual meeting of stockholders, subject
to the power of the Board of Directors to designate any office at any time and
elect any person thereto. The officers shall include a Chairman of the Board and
a President, and may include one or more Vice Chairmen of the Board, one or more
Vice Presidents, a Secretary, a Treasurer, and such other officers as the Board
of Directors may determine. The same person may hold any two or more offices,
and in any such case, these Bylaws shall be construed and understood
accordingly; provided that the same person may not hold the offices of Chairman
of the Board and Secretary or President and Secretary. No officer other than the
Chairman of the Board or Vice Chairman of the Board need be a director of the
Corporation.
Section 2. Removal. Any officer or agent may he removed at any time, with or
without cause, by the Board of Directors.
Section 3. Vacancies. Any vacancy occurring in any office of the Corporation may
be filled for the unexpired term in the manner prescribed by these Bylaws for
the regular election to such office.
Section 4. Chief Executive Officer. The Board of Directors shall designate one
of the officers to be the Chief Executive Officer. Subject to the direction and
under the supervision of the Board of Directors, the Chief Executive Officer
shall have general charge of the business, affairs and property of the
Corporation, and control over its officers, agents and employees.
Section 5. The Secretary. The Secretary shall keep the minutes of the
proceedings of the stockholders and of the Board of Directors in one or more
books to be kept for that purpose. The Secretary shall have custody of the seal
of the Corporation, and the Secretary, and any Assistant Secretary, shall have
authority to cause such seal to be affixed to any instrument requiring it and
when so affixed, it may be attested by the signature of the Secretary or
Assistant Secretary. The Secretary shall, in general, perform all duties and
have all powers incident to the office of Secretary and shall perform such other
duties and have such other powers as may from time to time be assigned to the
Secretary by these Bylaws, by the Board of Directors or by the Chief Executive
Officer.
Section 6. Treasurer. The Treasurer shall have custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation. The Treasurer shall cause
all moneys and other valuable effects to be deposited in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors. The Treasurer shall cause the funds of the Corporation to be
disbursed when such disbursements have been duly authorized, taking proper
vouchers for such disbursements, and shall render to the Chief Executive Officer
and the Board of Directors, whenever requested, an account of all transactions
conducted by the Treasurer for the Corporation and of the financial condition of
the Corporation. The Treasurer shall, in general, perform all duties and have
all powers incident to the office of Treasurer and shall perform such other
duties and have such other powers as may from time to time be assigned to the
Treasurer by these Bylaws, by the Board of Directors or by the Chief Executive
Officer.
ARTICLE VI
Fixing Record Date
In order that the Corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty days nor less than ten days before the date of such meeting, nor
more than sixty days prior to
<PAGE> 7
any other action. If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held and the record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
ARTICLE VII
Execution of Documents and Instruments
Section 1. Execution of Documents and Instruments Generally. Any officer of the
Corporation and such other persons as may be authorized by the Chairman of the
Board or any Vice Chairman of the Board from time to time are severally and
respectively authorized to execute documents and to take actions in the
Corporation's name in connection with transactions conducted in the ordinary
course of the Corporation's business. With respect to all other transactions,
all documents, instruments or writings of any nature shall be signed, executed,
verified, acknowledged and delivered by such officer or officers or such agent
or agents of the Corporation and in such manner as the Board of Directors from
time to time may determine.
Section 2. Checks, Drafts, Etc. All notes, drafts, acceptances, checks,
endorsements, and all evidence of indebtedness of the Corporation whatsoever,
shall be signed by such officer or officers or such agent or agents of the
Corporation and in such manner as the Board of Directors from time to time may
determine. Endorsements for deposit to the credit of the Corporation in any of
its duly authorized depositories shall be made in such manner as the Board of
Directors from time to time may determine.
Section 3. Proxies and Consents. Proxies to vote and written consent with
respect to shares of stock of other corporations owned by or standing in the
name of the Corporation may be executed and delivered from time to time on
behalf of the Corporation by the Chairman, the President, any Vice Chairman, any
Vice President, the Secretary or the Treasurer of the Corporation, or by any
other person or persons duly authorized by the Board of Directors.
ARTICLE VIII
Capital Stock
Section 1. Stock Certificates. The interest of every holder of stock in the
Corporation shall be evidenced by a certificate or certificates signed in the
name of the Corporation by the Chairman, President, Vice Chairman or a Vice
President, and by the Secretary or an Assistant Secretary of the Corporation
certifying the number of shares owned by him in the Corporation and in such form
not inconsistent with the Certificate of Incorporation or applicable law as the
Board of Directors may from time to time prescribe. If such certificate is
countersigned (1) by a transfer agent, whether or not a subsidiary of the
Corporation, other than the Corporation or its employee, or (2) by a registrar,
whether or not a subsidiary of the Corporation, other than the Corporation or
its employee, the signatures of the officers of the Corporation may be
facsimiles. In case any officer who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer at the date of issue.
Section 2. Transfer of Stock. Shares of stock of the Corporation shall be
transferred on the books of the Corporation only by the holder of record thereof
or by his attorney duly authorized in writing, upon surrender to the Corporation
of the certificates for such shares endorsed by the appropriate person or
persons, with such evidence of the authenticity of such endorsement, transfer,
authorization and other matters as the Corporation may reasonably require, and
accompanied by all necessary stock transfer tax stamps. In that event, it shall
be the duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction on its books.
<PAGE> 8
Section 3. Rights of Corporation with Respect to Registered Owners. Prior to the
surrender to the Corporation of the certificates for shares of stock with a
proper request to record the transfer of such shares, the Corporation may treat
the registered owner as the person entitled to receive dividends, to vote, to
receive notifications, and otherwise to exercise all the rights and powers of an
owner.
Section 4. Transfer Agents and Registrars. The Board of Directors may make such
rules and regulations as it may deem expedient concerning the issuance and
transfer of certificates for shares of the stock of the Corporation and may
appoint transfer agents or registrars or both, and may require all certificates
of stock to bear the signature of either or both. Nothing herein shall be
construed to prohibit the Corporation or any subsidiary of it from acting as its
own transfer agent or registrar at any of its offices.
Section 5. Lost, Destroyed and Stolen Certificates. Where the owner of a
certificate for shares claims that such certificate has been lost, destroyed or
wrongfully taken, the Corporation shall issue a new certificate in place of the
original certificate if the owner satisfies such reasonable requirements,
including evidence of such loss, destruction, or wrongful taking, as may be
imposed by the Corporation, including but without limitation, the delivery to
the Corporation of an indemnity bond satisfactory to it.
ARTICLE IX
Indemnification
Section 1. Contract Right. The right to indemnification conferred in the
Certificate of Incorporation and this Bylaw shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition, such advances
to be paid by the Corporation within 20 days after the receipt by the
Corporation of a statement or statements from the claimant requesting such
advance or advances from time to time; provided, however, that the payment of
such expenses incurred by a person in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Corporation of an
undertaking by or on behalf of such person, to repay all amounts so advanced
unless it shall ultimately be determined that such person is entitled to be
indemnified under this Bylaw or otherwise.
Section 2. Submission of Claim. To obtain indemnification under this Bylaw, a
claimant shall submit to the Corporation a written request, including therein or
therewith such documentation and information as is reasonably available to the
claimant and is reasonably necessary to determine whether and to what extent the
claimant is entitled to indemnification. In the event the determination of
entitlement to indemnification is to be made by Independent Counsel (as
hereinafter defined) as set forth in the Certificate of Incorporation, the
Independent Counsel shall be selected by the Board of Directors. If it is so
determined that the claimant is entitled to indemnification, payment to the
claimant shall be made within 10 days after such determination.
Section 3. Unpaid Claim. If a claim under Section 1 of this Bylaw is not paid in
full by the Corporation within thirty days after a written claim pursuant to
Section 2 of this Bylaw has been received by the Corporation, the claimant may
at any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the claimant shall
be entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standard of
conduct which makes it permissible under the General Corporation Law of the
State of Delaware for the Corporation to indemnify the claimant for the amount
claimed. The burden of proving any such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors,
Independent Counsel or stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board of Directors, Independent
Counsel or stockholders) that the claimant has not met such applicable standard
of conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
<PAGE> 9
Section 4. Binding Determination. If a determination shall have been made
pursuant to Section 2 of this Bylaw that the claimant is entitled to
indemnification, the Corporation shall be bound by such determination in any
judicial proceeding commenced pursuant to Section 3 of this Bylaw.
Section 5. Binding Effect on Corporation. The Corporation shall be precluded
from asserting in any judicial proceeding commenced pursuant to Section 3 of
this Bylaw that the procedures and presumptions of this Bylaw are not valid,
binding and enforceable and shall stipulate in such proceeding that the
Corporation is bound by all the provisions of this Bylaw.
Section 6. Non-exclusivity. The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final disposition
conferred in this Bylaw shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
Disinterested Directors or otherwise. No repeal or modification of this Bylaw
shall in any way diminish or adversely affect the rights of any director,
officer, employee or agent of the Corporation hereunder in respect of any
occurrence or matter arising prior to any such repeal or modification.
Section 7. Validity. If any provision or provisions of this Bylaw shall be held
to be invalid, illegal or unenforceable for any reason whatsoever: (1) the
validity, legality and enforceability of the remaining provisions of this Bylaw
(including, without limitation, each portion of any Section of this Bylaw
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself held to be invalid, illegal or unenforceable) shall not in any way
be affected or impaired thereby; and (2) to the fullest extent possible, the
provisions of this Bylaw(including, without limitation, each such portion of any
Section of this Bylaw containing any such provision held to be invalid, illegal
or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable.
Section 8. Definitions. For purposes of this Bylaw:
A. "Disinterested Director" means a director of the Corporation who is
not and was not a party to the matter in respect of which indemnification is
sought by the claimant.
B. "Independent Counsel" means a law firm, a member of a law firm, or
an independent practitioner, that is experienced in matters of corporation law
and shall include any person who, under the applicable standards of professional
conduct then prevailing, would not have a conflict of interest in representing
either the Corporation or the claimant in an action to determine the claimant's
rights under this Bylaw.
Section 9. Notice. Any notice, request or other communication required or
permitted to be given to the Corporation under this Bylaw shall be in writing
and either delivered in person or sent by fax, telex, telegram, overnight mail
or courier service, or certified or registered mail, postage prepaid, return
receipt requested, to the Secretary of the Corporation and shall be effective
only upon receipt by the Secretary.
ARTICLE X
Seal
The corporate seal, subject to alteration by the Board of Directors, shall be in
the form of a circle and shall bear the name of the Corporation and the year of
its incorporation and shall indicate its formation under the laws of the State
of Delaware. Such seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced.
ARTICLE XI
Fiscal Year
The fiscal year of the Corporation shall be as determined by the Board of
Directors.
<PAGE> 10
ARTICLE XII
Amendments
The Bylaws of the Corporation may be amended or repealed, or new Bylaws not
inconsistent with law or any provision of the Certificate of Incorporation, may
be made and adopted by a majority vote of the whole Board of Directors at any
regular or special meeting of the Board.
<PAGE> 1
Exhibit 5.1
December 9, 1998
Natco Industries, Inc.
1800 Moler Road
Columbus, Ohio 43207-1678
Re: Acquisition of American Eagle Outfitters, Inc.
Gentlemen:
This opinion is furnished with respect to the Registration Statement on
Form S-4 (the "Registration Statement") being filed by Natco Industries, Inc.
("Natco") with the Securities and Exchange Commission related to the
registration of up to 16,279,300 shares of Natco common stock, $.01 par value
(the "Stock"), to be issued in connection with the proposed merger (the
"Merger") of Thorn Hill Acquisition Corp., a wholly owned subsidiary of Natco
("Acquisition"), with and into American Eagle Outfitters, Inc. ("American
Eagle"), which will, at the time of the consummation of the Merger, be a wholly
owned subsidiary of Natco.
We are counsel for Natco and have participated in the preparation of
the Registration Statement. We have reviewed the Agreement and Plan of Merger,
dated as of November 30, 1998, among Natco, Acquisition, and American Eagle (the
"Merger Agreement"), Natco's Amend and Restated Certificate of Incorporation and
Amend and Restated Bylaws, the corporate action taken to date in connection with
the Registration Statement and the issuance and sale of the Stock, and such
other documents and authorities as we deem relevant for the purpose of this
opinion.
Based upon the foregoing, we are of the opinion that:
(a) upon the proper approval of the Merger Agreement by the
stockholders of American Eagle and Natco;
(b) upon compliance with the Securities Act of 1933, as amended,
and with the Securities or "blue sky" laws of the states in
which the Stock is to be offered for sale; and
(c) at the "Effective Time," as defined in the Merger Agreement;
the Stock, when issued and delivered as provided in the Merger Agreement in
accordance with the resolutions heretofore adopted by the Board of Directors of
Natco, will be legally issued, fully paid, and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Opinions" in the Prospectus/Proxy Statement included in the Registration
Statement.
Very truly yours,
/s/ Porter, Wright, Morris & Arthur
-----------------------------------
PORTER, WRIGHT, MORRIS & ARTHUR
<PAGE> 1
Exhibit 8.1
[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]
December __, 1998
Natco Industries, Inc.
1800 Moler Road
Columbus, Ohio 43207
American Eagle Outfitters, Inc.
150 Thorn Hill Drive
Warrendale, Pennsylvania 15086
Re: Certain U.S. Federal Income Tax Consequences of the Merger
----------------------------------------------------------
Gentlemen:
We are acting as special tax counsel to Natco Industries, Inc.
("Natco") and American Eagle Outfitters, Inc. ("American Eagle"), in connection
with the Merger pursuant to which Newco, a wholly-owned subsidiary of Natco,
will merge with and into American Eagle with American Eagle surviving the
Merger, as described in the Registration Statement on Form S-4 filed with the
United States Securities and Exchange Commission (the "Commission") on December
__, 1998 (the "Registration Statement"). Natco and American Eagle each have
received a private letter ruling regarding the Merger from the Internal Revenue
Service (the "Original Rulings") pursuant to their joint request (the "Original
Ruling Request"). In addition, Natco and American Eagle each have requested
supplemental rulings (the "Supplemental Rulings" and, together with the Original
Rulings, the "Tax Rulings") pursuant to their joint request (the "Supplemental
Ruling Request" and, together with the Original Ruling Request, the "Ruling
Requests"). The receipt of the Supplemental Rulings is a non-waivable condition
to the consummation of the Merger. You have requested our opinion concerning
certain United States federal income tax consequences of the Merger as set forth
in the Tax Rulings. Capitalized terms not defined herein shall have the meanings
ascribed to them in the Registration Statement.
In rendering our opinion, we have examined and relied upon the
accuracy and completeness of the facts, information, representations, and
covenants contained in originals or copies, certified or otherwise identified to
our satisfaction, of the Ruling Requests, the Original Rulings, the Registration
Statement and such other documents as we have deemed necessary or appropriate as
a basis for the opinion set forth below. Our opinion is conditioned upon, among
other things, the receipt of the Supplemental Rulings and the initial and
continuing accuracy and completeness of such facts, information,
representations, and covenants.
In our examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents
<PAGE> 2
Natco Industries, Inc.
American Eagle Outfitters, Inc.
December __, 1998
Page 2
of all documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such documents. We have assumed that all of the
transactions related to the Merger will be consummated in the manner described
in the Tax Rulings, the Ruling Requests and the Registration Statement.
In rendering our opinion, we have considered the Original
Rulings and the applicable provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury regulations promulgated thereunder, pertinent
judicial authorities, interpretive rulings of the Internal Revenue Service, and
such other authorities as we have considered relevant, all of which are
potentially subject to change, possibly with retroactive effect. A change in any
of the authorities upon which our opinion is based could affect our conclusions.
Based solely on the foregoing, and subject to the discussion
set forth under the caption "Certain U.S. Federal Income Tax Consequences" in
the Proxy Statement/Prospectus included within the Registration Statement (the
"Proxy Statement/Prospectus"), we are of the opinion that, under current law,
for United States federal income tax purposes, the Merger will be a
reorganization under Section 368(a) of the Code.
Except as set forth above, we express no opinion to any party
as to any tax consequences, whether federal, state, local or foreign, of any
transactions or events contemplated by or referred to in the Original Rulings,
the Ruling Requests or the Registration Statement. This opinion is expressed as
of the date hereof, unless otherwise expressly stated, and we disclaim any
undertaking to advise you of any subsequent changes of the facts stated,
referenced, or assumed herein or any subsequent changes in applicable law.
This opinion is solely for your benefit in connection with the
filing of the Registration Statement and, except as set forth below, is not to
be used, circulated, quoted, or otherwise referred to for any purpose without
our prior written consent. We consent to the use of our name in the Proxy
Statement/Prospectus under the heading "Certain U.S. Federal Income Tax
Consequences of the Merger" and to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. In giving this consent,
we do not thereby admit that we are within the category of persons whose consent
is required under Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations of the Commission promulgated thereunder.
Sincerely yours,
Skadden, Arps, Slate, Meagher & Flom LLP
<PAGE> 1
Exhibit 10.1
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made this ____ day
of ________, 1999 by and among AMERICAN EAGLE OUTFITTERS, INC., a Delaware
corporation ("AEO"), NATCO INDUSTRIES, INC., a Delaware corporation ("Natco"),
NATCO LIMITED LIABILITY COMPANY, a Delaware limited liability company ("Natco
LLC"), and the undersigned members of Natco LLC (the "Members").
RECITALS
A. Natco, Thorn Hill Acquisition Corp., a Delaware corporation
("Acquisition"), Natco LLC and AEO entered into a Plan of Reorganization and
Merger Agreement, dated as of November 30, 1998, (the "Merger Agreement")
providing for the merger of Acquisition with and into AEO (the "Merger").
B. Natco LLC was formed by Natco prior to the Merger as a part of the
plan of reorganization of Natco, to hold all assets and liabilities of Natco
other than its stock in AEO, and to facilitate the merger of Acquisition with
and into AEO. All of the assets of Natco, other than its 6,991,174 shares of AEO
common stock, were contributed by Natco to Natco LLC and all of Natco's
liabilities were assumed by Natco LLC, effective on __________, 1999.
C. The execution of this Agreement is a condition to AEO's obligation
to consummate the Merger under Section 7.02(f) of the Merger Agreement.
D. Except as otherwise defined herein, the capitalized terms in this
Agreement shall have the meanings ascribed to them in the Merger Agreement.
NOW THEREFORE, in consideration of the foregoing Recitals and the
mutual covenants set forth herein, the undersigned parties agree as follows:
AGREEMENT
1. Indemnification by Natco LLC. Natco LLC agrees to indemnify each of
Natco, AEO and their officers, directors, employees and agents, and agrees to
hold each of them harmless from and against, any and all losses, liabilities,
obligations, costs, claims, damages (including consequential and punitive
damages), penalties and expenses (including attorneys' fees) (collectively,
"Losses") incurred or suffered by any of them relating to or arising out of or
in connection with: (a) any obligations or liabilities of Natco existing prior
to the Merger or resulting from events or occurrences prior to the Merger, (b)
any breach of or any inaccuracy in any representation or warranty made by Natco,
Acquiring or Natco LLC in the Merger Agreement or any document delivered by
Natco, Acquisition or Natco LLC at the Closing; or (c) any breach of or failure
by Natco, Acquisition or Natco LLC to perform any covenant or obligation of
Natco, Acquisition or Natco LLC set out or contemplated in the Merger Agreement
or any document delivered at the Closing; provided, however, that the foregoing
indemnity does not include Losses resulting from the Merger, including any claim
relating to whether or not the Merger is a tax-free reorganization or the amount
and value to Natco or AEO of any Natco net operating loss carry-forward, and,
provided further, that the foregoing indemnity shall only apply to Losses, that
exceed the actual cash value of any benefit received after the Merger by Natco
or AEO relating to any tax credits or the net operating loss carryover of Natco
immediately prior to the Merger, and any other tax benefits, but only if and to
the extent such Losses do not result from a willful breach of a representation,
warranty or covenant in the Merger Agreement by Natco, Acquisition or Natco LLC.
2. Term of Indemnity. All agreements and obligations of Natco LLC
contained herein shall terminate on the earlier of the fourth anniversary date
of the Effective Time of the Merger or the applicable statute of limitations,
except for (a) claims relating to tax matters, which can be asserted by Natco or
AEO through the applicable federal income tax statute of limitations, or (b)
claims relating to any breach of the representation and
<PAGE> 2
warranty made in Section 5.02(m) of the Merger Agreement, which can be asserted
by Natco or AEO through the earlier of the tenth anniversary date of the
Effective Time of the Merger or the applicable statute of limitations.
3. Maintenance of Minimum Net Worth and Recontribution of Non-tax
Distributions to Natco LLC. Each of the Members hereby agrees, severally and not
jointly, that, during the term ending on the fourth anniversary date of the
Effective Time of the Merger, there will be no distributions taken by it from
Natco LLC that would cause the net worth of Natco LLC, computed in accordance
with generally accepted accounting principles, applied on a consistent basis and
measured at the time of the distribution, to fall below $10,000,000. In addition
to the foregoing, each of the Members, severally and not jointly, hereby agrees
that during the term of this indemnity the Member will contribute back to Natco
LLC in cash its pro rata share of the net value (after giving effect to the
income taxes payable thereon by such Member) of any distributions received by
such Member from Natco LLC, other than distributions to pay tax on income
generated by Natco LLC or taxes payable by the Members as a result of the
initial receipt of their membership interest in Natco LLC, in the event that
such contributions are needed to allow Natco LLC to meet its indemnity
obligations under this Agreement.
4. Claims. As soon as is reasonably practicable after becoming aware of
a claim for indemnification under this Agreement and provided the claim for
indemnification falls within the limitations set forth above, the indemnified
person ("Indemnified Person") shall promptly give notice to Natco LLC of such
claim and the amount the Indemnified Person will be entitled to receive
hereunder from Natco LLC; provided that the failure of the Indemnified Person to
promptly give notice shall not relieve Natco LLC of its obligations except to
the extent (if any) that Natco LLC shall have been prejudiced thereby.
5. Notice of Third-Party Claims; Assumption of Defense. The Indemnified
Person shall give notice as promptly as is reasonably practicable to Natco LLC
of the assertion of any claim, or the commencement of any suit, action or
proceeding, by any person not a party hereto in respect of which indemnity may
be sought under this Agreement; provided that the failure of the Indemnified
Person to promptly give notice shall not relieve Natco LLC of its obligations
except to the extent (if any) that Natco LLC shall have been prejudiced thereby.
Natco LLC may, at its own expense, (a) participate in the defense of any claim,
suit, action or proceeding, and (b) upon notice to the Indemnified Person and
Natco LLC delivering to the Indemnified Person a written agreement that the
Indemnified Person is entitled to indemnification for all losses arising out of
such claim, suit, action or proceeding and that Natco LLC shall be liable for
the entire amount of any loss, at any time during the course of any such claim,
suit, action or proceeding, assume the defense thereof; provided, however, that
(i) Natco LLC's counsel is reasonably satisfactory to the Indemnified Person,
and (ii) Natco LLC shall thereafter consult with the Indemnified Person upon the
Indemnified Person's reasonable request for such consultation from time to time
with respect to such claim, suit, action or proceeding. If Natco LLC assumes
such defense, the Indemnified Person shall have the right (but not the duty) to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by Natco LLC. If, however, counsel for the
Indemnified Person reasonably determines in its judgment that representation by
Natco LLC's counsel of Natco LLC and the Indemnified Person would present such
counsel with a conflict of interest, then such Indemnified Person may employ
separate counsel to represent or defend it in any such claim, action, suit or
proceeding and Natco LLC shall pay the fees and disbursements of such separate
counsel. Whether or not Natco LLC chooses to defend or prosecute any such claim,
suit, action or proceeding, all of the parties hereto shall cooperate in the
defense or prosecution thereof.
6. Failure of Natco LLC to Act. In the event that Natco LLC does not
elect to assume the defense of any claim, suit, action or proceeding, then any
failure of the Indemnified Person to defend or to participate in the defense of
any such claim, suit, action or proceeding or to cause the same to be done,
shall not relieve Natco LLC of its obligations hereunder.
7. Satisfaction of Indemnification Obligation. Natco LLC shall satisfy
any obligation to indemnify Natco, AEO and their officers and directors against
Losses as required by this Agreement in cash.
8. Separability. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the validity or enforceability
of the other provisions hereof.
<PAGE> 3
9. Notice. All notices that are required or may be given pursuant to
the terms of this Agreement shall be in writing and delivered by hand or
national overnight courier service, transmitted by fax or mailed by registered
or certified mail, postage prepaid, and shall be deemed given upon receipt, as
follows:
If to NATCO LLC to:
NATCO LIMITED LIABILITY COMPANY
1800 Moler Road
Columbus, Ohio 43207
Phone: 614-449-4332
Fax: 614-443-0972
Attention: Irwin A. Bain, Esq., General Counsel
If to NATCO or AEO, to:
AMERICAN EAGLE OUTFITTERS, INC.
150 Thorn Hill Drive
Warrendale, Pennsylvania 15086-7528
Phone: 412-779-5221
Fax: 412-779-5535
Attention: George Kolber, COO
with copies to:
Benesch, Friedlander, Coplan & Aronoff Porter, Wright, Morris & Arthur
2300 BP America Building 41 South High Street
200 Public Square Columbus, Ohio 43215
Cleveland, OH 44114-2378 Phone: 614-227-2219
Phone: 216-363-4686 Fax: 614-227-4492
Fax: 216-363-4588 Attention: Neil Bulman, Jr., Esq.
Attention: Michael K.L. Wager, Esq
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto.
10. Governing Law; Binding Effect; Amendment and Termination.
(a) This Agreement shall be interpreted and enforced in accordance with
the laws of the State of Ohio applicable to contracts made and to be wholly
performed in such state.
(b) This Agreement shall be binding upon Natco LLC, and its successors
and assigns, and shall inure to the benefit of the Indemnified Persons, their
successors and assigns, and their personal representatives and heirs.
(c) No amendment, modification, termination or cancellation of this
Agreement shall be effective unless agreed upon in writing and signed by Natco
LLC and by action of the Audit Committee of the Board of Directors of Natco
confirmed by the Chairman of the Committee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
NATCO LIMITED LIABILITY COMPANY AMERICAN EAGLE OUTFITTERS, INC.
By: By:
----------------------- -----------------------
Jay L. Schottenstein George Kolber
Chief Executive Officer Chief Operating Officer
<PAGE> 4
NATCO INDUSTRIES, INC.:
By:
-----------------------
Jay L. Schottenstein
Chief Executive Officer
NATCO LIMITED LIABILITY COMPANY MEMBERS:
JEROME SCHOTTENSTEIN FUND A SUSAN SCHOTTENSTEIN 1983 SUB S TRUST
1983 REVOCABLE TRUST
By: By:
----------------------------- ---------------------------------
Jay Schottenstein, Trustee Susan Diamond, Co-Trustee
SUSAN SCHOTTENSTEIN 1983 SUB S TRUST
By:
---------------------------------
SAUL SCHOTTENSTEIN, INDIVIDUALLY Ann Deshe, Co-Trustee
JAY L. SCHOTTENSTEIN SUB S TRUST #1 SUSAN DIAMOND 1987 IRREVOCABLE TRUST
JAY L. SCHOTTENSTEIN SUB S TRUST #2
JAY L. SCHOTTENSTEIN SUB S TRUST #3
ELLIE MICHAEL DESHE 1983 SUB S TRUST By:
DAVID SCOTT DESHE 1983 SUB S TRUST ---------------------------------
DARA LAUREN DESHE 1985 SUB S TRUST Ann Deshe,Trustee
LORI SCHOTTENSTEIN 1984 SUB S TRUST
By:
------------------------------------
Geraldine Schottenstein, Trustee for
each of the above Trusts
<PAGE> 1
Exhibit 21.1
SUBSIDIARIES OF NATCO INDUSTRIES, INC.
Thorn Hill Acquisition Corp., a Delaware corporation
Natco Limited Liability Company, a Delaware limited liability company
<PAGE> 1
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Joint Prospectus/Proxy Statement
of Natco Industries, Inc. and American Eagle Outfitters, Inc. for the
registration of 16,279,300 shares of Natco Industries, Inc.'s common stock to
be issued in connection with the Reorganization and Merger of Natco Industries,
Inc. and American Eagle Outfitters, Inc. and to the incorporation by reference
therein of our report dated March 3, 1998 (except for Note 13, as to which the
date is April 14, 1998) with respect to the consolidated financial statements of
American Eagle Outfitters, Inc. included in its Annual Report (Form 10-K) for
the year ended January 31, 1998 filed with the Securities and Exchange
Commission and our report dated December 4, 1998 with respect to the financial
statements of Natco for the year ended December 31, 1997 included herein.
We are also aware of the incorporation by reference in the Registration
Statement (Form S-4) and related Joint Proxy Statement/Prospectus of Natco
Industries, Inc and American Eagle Outfitters, Inc. of our reports dated May 20,
1998, August 19, 1998, and November 17, 1998 related to the unaudited condensed
consolidated interim financial statements of American Eagle Outfitters, Inc.
which are included in the Forms 10-Q for the quarters ended May 2, 1998, August
1, 1998 and October 31, 1998.
Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a part
of the registration statement prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.
/s/Ernst & Young LLP
Pittsburgh, Pennsylvania
December 4, 1998
<PAGE> 1
Exhibit 24.1
POWER OF ATTORNEY
Each of the undersigned officers and/or directors of Natco
Industries, Inc., a Delaware corporation (the "Company"), hereby appoints Thomas
R. Ketteler and Irwin A. Bain as his true and lawful attorneys-in-fact, or
either one of them with power to act without the others, as his true and lawful
attorney-in-fact, in his name and on his behalf, and in any and all capacities
stated below, to sign and to cause to be filed with the Securities and Exchange
Commission the Company's Registration Statement on Form S-4 (the "Registration
Statement") to register under the Securities Act of 1933, as amended, a maximum
of 30,000,000 shares of Common Stock, without par value, of the Company, in
connection with the Plan of Reorganization and Merger Agreement between the
Company, its wholly owned subsidiary Natco Acquisition Corporation, and American
Eagle Outfitters, Inc. and any and all amendments, including post-effective
amendments, to the Registration Statement, hereby granting unto such
attorneys-in-fact, and to each of them, full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all such
capacities, every act and thing whatsoever necessary to be done in and about the
premises as fully as the undersigned could or might do in person, hereby
granting to each such attorney-in-fact full power of substitution and
revocation, and hereby ratifying all that any such attorney-in-fact or his
substitute may do by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 25th day of
November, 1998.
SIGNATURE TITLE
/s/Jay L. Schottenstein Chairman of the Board and President
- ------------------------- (Principal Executive Officer)
Jay L. Schottenstein
/s/Thomas R. Ketteler Vice President - Finance, Treasurer, Director
- ------------------------- (Principal Financial and Accounting Officer)
Thomas R. Ketteler
/s/Ari Deshe Director
- -------------------------
Ari Deshe
/s/Jon P. Diamond Director
- -------------------------
Jon P. Diamond
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NATCO
INDUSTRIES, INC. FOR THE TEN MONTHS ENDED OCTOBER 31, 1998 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 10-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> OCT-31-1998
<CASH> 0
<SECURITIES> 37,816
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 37,816
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 23,903
<TOTAL-LIABILITY-AND-EQUITY> 37,816
<SALES> 0
<TOTAL-REVENUES> 9,620
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,620
<INCOME-TAX> 3,944
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,676
<EPS-PRIMARY> 311.01
<EPS-DILUTED> 311.01
</TABLE>
<PAGE> 1
PROXY -- AMERICAN EAGLE OUTFITTERS, INC.
The undersigned stockholder of American Eagle Outfitters, Inc. hereby
appoints Laura A. Weil, William P. Tait and Dale E. Clifton, or any
one of them, as attorneys and proxies with full power of substitution
to vote all of the shares of Common Stock of American Eagle
Outfitters, Inc. which the undersigned is entitled to vote at the
Special Meeting of Shareholders of American Eagle Outfitters, Inc. to
be held at 1800 Moler Road on , January , 1999, and
at any adjournment or adjournments thereof as follows:
1. Approval of the merger of Thorn Hill Acquisition Corp. with and
into American Eagle Outfitters, Inc. as described in the
accompanying Prospectus/Proxy Statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion to vote upon such other matters as may properly
come before the meeting.
(Continued on Other Side)
(Continued from Other Side)
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR APPROVAL OF THE
MERGER.
Please sign and date this Proxy below and return in the
enclosed envelope.
Date: , 1998
-------------------------------
----------------------------------
(Signature)
----------------------------------
(Signature)
Signature(s) must agree with the
name(s) printed on this Proxy. If
shares are registered in two
names, both shareholders should
sign this Proxy. If signing as
attorney, executor, administrator,
trustee or guardian, please give
your full title as such.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Proxy Card
