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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
June 28, 1996
AIRGAS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-9344 56-0732648
- --------------- ------------------------ ----------------
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification
incorporation) No.)
100 Matsonford Road, Suite 550
Radnor, PA 19087
----------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (610) 687-5253
--------------
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Item 2. Acquisition or Disposition of Assets.
On June 28, 1996, based on the terms of a joint venture agreement (the
"Agreement") by and among Airgas, Inc. (the "Company"), National Welders Supply
Company, Inc. ("NWS"), J.A. Turner, Jr., Judith Carpenter, J.A. Turner, III and
Linerieux B. Turner (the "Turner Shareholders") and certain other parties, the
Company acquired 45% of the voting capital stock of NWS for a payment in cash
and notes totalling approximately $47.6 million. The purpose of the joint
venture is to carry on the business of NWS, enhanced by its association with the
Company and its financial, purchasing and national marketing strengths, and to
pursue acquisition opportunities in the area currently served by NWS and such
other activities as the NWS board of directors may determine. The remaining 55%
of the capital stock of NWS continues to be held by the Turner Shareholders and
certain other minority shareholders. The term of the Agreement is thirteen
years.
In connection with the Agreement and pursuant to a plan of recapitalization, the
Turner Shareholders exchanged their NWS common stock for approximately 3,038,000
shares of NWS cumulative Series A 5% Voting Preferred Stock, par value $.10 per
share. The NWS preferred stock has a liquidation preference of $17.78 per
share. Dividends on the NWS preferred stock are payable quarterly by NWS.
During the three year period beginning on July 1, 2006, the Turner Shareholders
have the right to cause NWS to either (1) redeem all of the NWS preferred stock
for approximately $58.1 million in cash, (2) exchange all of the outstanding NWS
preferred stock for approximately 2.38 million shares of Airgas common stock, or
(3) retain the NWS preferred stock. The NWS preferred stock provides for
antidilution protection against Airgas common stock splits, stock dividends and
certain issuances of additional securities by the Company.
As a result of the Company's investment, Airgas has become a party to a Right of
First Refusal Agreement between the Turner Shareholders, National and Praxair,
Inc. The Agreement requires the Turner Shareholders to retain no less than 50%
of National's voting capital stock. The Turner Shareholders currently own
approximately 51.1% of National's voting capital stock. The shares of NWS
preferred stock and the common stock owned by Airgas will remain subject to the
Right of First Refusal Agreement until its expiration in the year 2006.
Additional terms of the Agreement provide for the Company to elect three of the
six members of the board of directors of NWS. Erroll Sult, a director of the
Company, remains the President and a minority shareholder of NWS. The
Agreement also provides for the Company to indemnify the NWS shareholders
against certain costs and expenses which may arise as a result of the
Agreement. Management is of the opinion that no amounts will be paid under the
indemnification provisions. However, such payments, if any, are not expected
to have a material adverse effect on the Company's consolidated financial
position, results of operations or liquidity.
The assets of NWS include cash and marketable securities (including 974,000
shares of the Company's common stock), accounts receivable, inventories,
cylinders, transportation equipment, air separation plants and related
equipment, land and buildings and certain other plant and equipment.
The Company's investment in NWS was financed using an interim $100 million
credit facility with NationsBank of North Carolina, N.A. and other available
sources.
<PAGE> 3
NWS is engaged in the manufacture, distribution and marketing of industrial
gases and related welding equipment and supplies in the states of North
Carolina, South Carolina, Virginia, Tennessee and Georgia. The Company and its
joint venture partners intend to continue to operate NWS as an industrial gas
and welding supply business.
The statements in this report relating to matters that are not historical are
forward-looking statements that involve important factors that could cause
actual results to differ materially from those anticipated. Cautionary
statements identifying such important factors are described in reports,
including the Form 8-K, dated May 7, 1996, filed by Airgas with the Securities
and Exchange Commission.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements
It is impracticable to provide the required financial statements of National
Welders Supply, Inc. and Subsidiary for the years ended September 30, 1995 and
September 24, 1994 and as of September 30, 1995 and September 24, 1994 and pro
forma information at the time this report on Form 8-K is being filed. The
Company will file such required financial statements and pro forma information
as an amendment to this Form 8-K as soon as practicable, but no later than 60
days after this Form 8-K is required to be filed.
(c) Exhibits
2. Joint Venture Agreement by and among Airgas, Inc., National Welders
Supply Company, Inc., J.A. Turner, Jr., Judith Carpenter, J.A. Turner,
III, and Linerieux B. Turner and Molo Limited Partnership, Turner
(1996) Limited Partnership, Charitable Remainder Unitrust of James A.
Turner, Jr. and Foundation for the Carolinas
2.1 Articles of Amendment of National Welders Supply Company, Inc.
(Exhibit 2.4.2(B) to the Joint Venture Agreement)
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Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AIRGAS, INC.
--------------------------
(Registrant)
BY: /s/ Gordon L. Keen, Jr.
--------------------------
Gordon L. Keen, Jr.
Vice President-Corporate Development
DATED: June 28, 1996
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================================================================================
JOINT VENTURE AGREEMENT
BY AND AMONG
AIRGAS, INC.
NATIONAL WELDERS SUPPLY COMPANY, INC.
AND
J.A. TURNER, JR., JUDITH CARPENTER,
J.A. TURNER, III, AND LINERIEUX B. TURNER
AND
MOLO LIMITED PARTNERSHIP, TURNER (1996) LIMITED PARTNERSHIP,
CHARITABLE REMAINDER UNITRUST OF JAMES A. TURNER, JR.
AND
FOUNDATION FOR THE CAROLINAS
================================================================================
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Financial terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 2 FORMATION OF JOINT VENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1 Formation; Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Name and Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.4 Stock Transactions to Effectuate the Joint Venture . . . . . . . . . . . . . . . . . . . . 11
2.4.1 Purchase and Sale of Certain Shares held by the
Turner Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.4.2 Retention and Exchange of Remaining Turner Shares. . . . . . . . . . . . . . . . . 12
2.4.3 Consideration for Turner Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 3 COVENANTS AND AGREEMENTS REGARDING ACTION TO BE TAKEN AND CONDUCT OF BUSINESSES PRIOR TO CLOSING . . 13
3.1 Conduct in Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Necessary Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.3 Amended Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.4 Amended Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.5 NWS Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.6 NWS Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.7 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.8 Termination Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.9 Merger of National Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 4 COVENANTS AND AGREEMENTS REGARDING CONDUCT
OF NWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1. Contributions to Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2 Shareholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.2.1 Quorum and Required Vote for Action by
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.2.2 Dissolution of NWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3 Director Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3.1 Numbers; Quorum; Meetings; Removal;
Vacancies; Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3.2 Deadlock of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3.3 Exercise and Retention of Board Authority . . . . . . . . . . . . . . . . . . . . 19
4.4 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.4.1 Payment of Dividends on Preferred Stock . . . . . . . . . . . . . . . . . . . . . 22
4.4.2 Payment of Dividends on Common Stock . . . . . . . . . . . . . . . . . . . . . . . 22
4.5 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.6 NWS Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.7 Operational and Administrative Services . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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4.7.1 Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.7.2 Standard of Care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.7.3 Cooperation By NWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.7.4 Service Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 5 ADDITIONAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.1 First Refusal Agreement Covenant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.2 Airgas Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.3 Corporate Reorganization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.4 Airgas Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.5 No Impairment of Exchange Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.6 Notices of Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.7 Common Stock Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.8 Compliance with Amended Articles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.9 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.10 Waiver of Non-Compliance and Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.11 Required Co-Sale after Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 6 COVENANTS AND AGREEMENTS REGARDING TRANSFERS
OF COMMON AND SERIES A PREFERRED STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.1 Restrictions on Disposition of Common Stock and
Series A Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.2 Transfers of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.3 Transfers of Series A Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.3.1 Transfers to Immediate Family . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.3.2 Transfers Upon Death of a Turner Shareholder. . . . . . . . . . . . . . . . . . . . 37
6.4 Transfers to NWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.5 Stock Legend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 7 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.1 Representations and Warranties of Turner Shareholders
and the Turners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.1.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.1.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.1.3 Subsidiaries and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.1.4 No Consents; Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.1.5 Title to Shares of NWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.1.6 Corporate Records of NWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.1.7 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.1.8 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.1.9 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.1.10 Leases, Contracts, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.1.11 Patents, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.1.12 Labor Contracts, Employment Contracts
and Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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7.1.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.1.14 Franchises, Permits and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.1.15 Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.1.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.1.17 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.1.18 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.1.19 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.1.20 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.1.21 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.1.22 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.1.23 Disclosure Schedule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.2 Representations and Warranties of Airgas. . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.2.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.2.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.2.3 No Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.2.4 Exchange Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.2.5 Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.2.6 Corporate Records of Airgas Companies . . . . . . . . . . . . . . . . . . . . . . . 51
7.2.7 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.2.8 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.2.9 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.2.10 Acquisition of Stock for Investment . . . . . . . . . . . . . . . . . . . . . . . . 54
7.2.11 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.2.12 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.2.13 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.3 Airgas' Investigation and Disclaimer of Other Representations
and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.4 Turner Shareholders' Investigation and Disclaimer
of Other Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.5 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 8 REDEMPTION AND EXCHANGE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.1 Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.2 Exchange for Airgas Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 9 EVENTS OF NON-COMPLIANCE AND EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 10 INDEMNITY; ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.1. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.2. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.3. Right of Set Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
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ARTICLE 11 CONDITIONS PRECEDENT TO THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.1 Conditions Precedent to Airgas' Obligations . . . . . . . . . . . . . . . . . . . . . . . . 72
11.2 Conditions Precedent to Turner Shareholders' Obligations . . . . . . . . . . . . . . . . . 75
ARTICLE 12 THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
12.1 Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
12.2 Turner Shareholders' Deliveries at Closing. . . . . . . . . . . . . . . . . . . . . . . . 77
12.3 Airgas' Deliveries at Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE 13 POST CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
13.1 Purchase of Common Stock from Non-Family Shareholders. . . . . . . . . . . . . . . . . . . 79
13.2 Retention and Exchange of Remaining Minority Shares. . . . . . . . . . . . . . . . . . . . 80
13.3 Consideration for Minority Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
13.4 Action by Turner Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE 14 BROKERAGE & EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
14.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
14.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE 15 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
15.1 Choice of Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
15.2 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
15.3 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
15.4 Construction of Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE 16 ASSIGNABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
16.1 Binding Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
16.2 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE 17 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
17.1 Written Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
17.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE 18 FURTHER ASSURANCES AND MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
18.1 Further Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
18.2 Entire Agreement, No Oral Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
18.3 No Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
18.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
18.5 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
18.6 No Consequential Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
</TABLE>
iv
<PAGE> 6
JOINT VENTURE AGREEMENT
THIS AGREEMENT, dated as of the 28th day of June, 1996, is by and
among AIRGAS, INC. ("Airgas"), a Delaware corporation; NATIONAL WELDERS SUPPLY
COMPANY, INC. ("NWS"), a North Carolina corporation; and J.A. TURNER, JR., an
individual residing at 8919 Park Road, #5, Charlotte, NC 28210, JUDITH
CARPENTER, an individual residing at 3440 Sharon View Road, Charlotte, NC
28210, J.A. TURNER, III, an individual residing at 6312 Glynmoor Lakes Drive,
Charlotte, NC 28277, LINERIEUX B. TURNER, an individual residing at 8919 Park
Road, #5, Charlotte, NC 28210 and MOLO LIMITED PARTNERSHIP, a Delaware limited
partnership, TURNER (1996) LIMITED PARTNERSHIP, a Delaware limited partnership,
CHARITABLE REMAINDER UNITRUST OF JAMES A. TURNER, JR., a North Carolina trust
and FOUNDATION FOR THE CAROLINAS, a North Carolina non-profit corporation., the
owners of a majority of the issued and outstanding capital stock of NWS.
BACKGROUND
A. NWS is presently engaged in the manufacture, distribution and
marketing of industrial gases and welding supplies in North Carolina, South
Carolina, Virginia, Tennessee and Georgia.
B. Airgas, through its operating subsidiaries, is a nationwide
distributor of industrial gases and welding supplies.
C. J.A. Turner, Jr. was a co-founder and the first president of
Werco, Inc., a North Carolina corporation that acquired US Airgas in 1986, and
which subsequently became
<PAGE> 7
Airgas after changing its name and domicile at the time of its initial
public offering of common stock.
D. A representative of NWS has served continuously on the Board
of Directors of Airgas since its inception.
E. Based on the long standing relationship among the Turners, NWS
and Airgas, the Turner Shareholders and Airgas have agreed to form a joint
venture for the ownership and operation of NWS so that Airgas and the
shareholders of NWS can capitalize on economic opportunities and synergies
available to the joint venture.
In consideration of the representations, warranties, covenants and
agreements hereinafter contained, the parties hereto, intending to be legally
bound hereby, represent, warrant and agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions. The following terms
used in this Agreement shall have the meanings set forth below:
"AAA" shall have the meaning given to such term in Section
4.3.2 hereof.
"Acceptance Letter" shall have the meaning given to such term
in Section 13.1 hereof.
"Additions to Tax" shall have the meaning given to such term
in Section 10.1.4 hereof.
"Adjustment" shall have the meaning given to such term in
Section 10.1.4 hereof.
2
<PAGE> 8
"Affiliate" means any Person controlling, controlled by, or
under common control with another Person. For purposes of this definition of
"Affiliate", a Person shall be deemed to control another Person if it
possesses, directly or indirectly, the power to direct or cause the direction
of the management and policies of such other Person, whether through ownership
of voting securities, by contract or otherwise.
"Agreement of Sale for Minority Shares" shall have the meaning
given to such term in Section 13.1 hereof.
"Airgas" shall have the meaning given to such term in the
preamble of this Agreement.
"Airgas Common Stock" shall mean the $0.01 par value common
stock of Airgas.
"Airgas Consolidated Group" shall mean Airgas and all members
of the affiliated group (within the
meaning of Code Section 1504) which includes Airgas.
"Airgas Management" shall mean Peter McCausland, Gordon Keen,
Britt Murdoch, Andy Cichocki, Hermann Knieling, and Carey Verger.
"Airgas Transaction Documents" shall mean the Loan Agreement,
the Registration Rights Agreement, the Turner Notes and the irrevocable proxy
identified in Section 5.11.6 hereof.
"Amended Articles" shall have the meaning given to such term
in Section 2.4.2 hereof.
"Amended Bylaws" shall have the meaning given to such term in
Section 3.4 hereof.
"Basket" shall have the meaning given to such term in Section
10.1.4 hereof.
3
<PAGE> 9
"Basic Tax Indemnity Obligation" shall have the meaning given
to such term in Section 10.1.4 hereof.
"Business" shall mean any one, and "Businesses" shall mean
all, of the following businesses of NWS and any of its subsidiaries: (i) the
distribution of industrial, medical, and specialty gases and related welding
equipment and related supplies and the sale, lease or rental of related storage
equipment for such gases from fixed retail locations located within or outside
the Restricted Territory; (ii) the installation, repair and service of storage
equipment, containers, and facilities for such gases; (iii) the operation of
air separation plants and bulk gas filling facilities; and (iv) any other
business engaged in by NWS or any of its subsidiaries during the Term with the
approval of the NWS Board of Directors.
"Cap" shall have the meaning given to such term in Section
10.1.4 hereof.
"Change of Control" shall have the meaning given to such term
in the Amended Articles.
"Closing" shall have the meaning given to such term in
Section 12.1 hereof.
"Closing Date" shall have the meaning given to such term in
Section 12.1 hereof. hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Common Stock" shall mean the $.10 par value common stock of
NWS.
"Contamination" shall have the meaning given to such term in
Section 7.1.8 hereof.
"Corporate Event" shall have the meaning given to such term in
Section 5.11.6 hereof.
"Default" shall have the meaning given to such term in the
Amended Articles.
4
<PAGE> 10
"Disclosure Schedule" shall mean the disclosure schedule being
executed and delivered by the parties hereto concurrently herewith.
"Employee Plans" shall have the meaning given to such term in
Section 7.1.12 hereof.
"Environmental Laws" shall mean all Legal Requirements
relating to the generation, storage, handling, release, discharge, emission,
transportation, treatment or disposal of Hazardous Substances or Wastes
including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act, the Superfund Amendments and Reauthorization
Act of 1986, the Resource Conservation and Recovery Act, the Clean Air Act (as
amended), the Federal Water Pollution Control Act, the Safe Drinking Water Act,
the Toxic Substances Control Act, and the Hazardous Materials Transportation
Act, in each case as in effect and applied or interpreted on the Closing Date.
"Environmental Obligations" shall have the meaning given to
such term in Section 10.1.1 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Event of Noncompliance" shall have the meaning given to such
term in Article 9 hereof.
"Exchange" shall have the meaning given to such term in
Section 8.2 hereof.
"Exchange Consideration" shall have the meaning given to such
term in the Amended Articles.
"Exchange Notice" shall have the meaning given to such term in
Section 8.2 hereof.
5
<PAGE> 11
"Exchange Obligation" shall have the meaning given to such
term in Section 8.2 hereof.
"Exchange Right" shall have the meaning given to such term in
Section 8.2 hereof.
"Exchange Shares" shall mean the shares of Airgas Common Stock
delivered to the holders of the Preferred Stock of NWS in connection with the
Exchange.
"Financial Statements" shall have the meaning given to such
term in Section 7.1.18 hereof.
"First Refusal Agreement" shall mean the Right of First
Refusal Agreement dated March 25, 1991 among NWS, the Turner Shareholders and
Praxair.
"GAAP" shall mean generally accepted accounting principles
applied on a consistent basis from period to period.
"Gross Amount" shall have the meaning given to such term in
Section 10.1.4 hereof.
"Hazardous Substances" shall have the meaning given to such
term in Section 7.1.8 hereof.
"Identified Environmental Matter" shall mean each of the
matters identified in Section 10.1.1(d) of the Disclosure Schedule.
"Immediate Family" shall mean with respect to any person, the
class that includes a spouse, natural or adoptive parents, natural or adopted
children, stepchildren, natural or adopted grandchildren, and brothers and
sisters of such person, and the spouse of each such parent, child, stepchild,
brother or sister and any trust for the sole benefit of any one or more members
of such class.
6
<PAGE> 12
"Inclusion" shall have the meaning given to such term in
Section 10.1.4 hereof.
"Indemnity Claims" shall mean any claims for indemnification
under Section 10.1.1 or 10.1.2, as the case may be, of Article 10 hereof.
"Interim Statements" shall have the meaning given to such term
in Section 7.1.18.
"Joint Venture" shall have the meaning given to such term in
Section 2.1 hereof.
"Legal Requirements" shall mean all applicable judgments,
decrees, injunctions, orders, writs, rulings, laws, ordinances, statutes,
rules, regulations, codes and other requirements of all federal, state and
local governmental, administrative and judicial bodies and authorities.
"Loan Agreement" shall mean the loan agreement substantially
in the form attached hereto as Exhibit 12.3.3.
"Majority in Interest of Turner Shareholders" shall mean,
prior to the Closing, those Turner Shareholders holding a majority of the
issued and outstanding shares of Common Stock, and, after the Closing, those
Turner Shareholders holding a majority of the issued and outstanding shares of
Series A Preferred Stock.
"Material Adverse Effect" shall mean a material adverse effect
on the Businesses, taken as a whole.
"Minority Shares" shall have the meaning given to such term in
Section 13.1 hereof.
7
<PAGE> 13
"National Leasing" shall mean National Capital Leasing
Company, a North Carolina corporation.
"National Realty" shall mean National Realty Sales Company, a
North Carolina corporation.
"NCBCA" shall mean the North Carolina Business Corporation
Act, as the same may be amended from time to time.
"Non-Family Shareholders" shall mean all shareholders of NWS
(including the holders of any NWS Options) immediately prior to Closing except
the Turner Shareholders.
"NWS" shall have the meaning given to such term in the
preamble of this Agreement.
"NWS Options" shall mean any options or rights to acquire any
shares of the capital stock of NWS by exercise, conversion or exchange, which
are outstanding immediately prior to Closing.
"NWS Recapitalization" shall mean the exchange of Remaining
Turner Shares and Remaining Minority Shares for Preferred Stock of NWS as
provided for in Sections 2.4.2 and 13.2 hereof and under the Plan of
Recapitalization.
"Obligations" shall have the meaning given to such term in
Section 10.1.1 hereof.
"Open Matter" shall have the meaning given to such term in
Section 4.3.2 hereof.
"Pension Plan" shall have the meaning given to such term in
Section 7.1.12 hereof.
8
<PAGE> 14
"Permitted Encumbrances" shall mean each of the following: (i)
liens for property taxes and special assessments with respect to 1996 and
subsequent years; (ii) mechanic's and materialmen's liens arising in the
ordinary course of business; (iii) restrictions, easements, covenants,
reservations and rights of way of record with respect to the Real Property so
long as they do not significantly impair the use of the Real Property as it is
currently being used by NWS; (iv) matters which would be revealed by an
accurate, current survey of the real property; (v) zoning ordinances,
restrictions, prohibitions and other requirements imposed by governmental
authorities so long as they do not significantly impair the use of the property
as it is currently being used by NWS; and (vi) liens and encumbrances reflected
in the Financial Statements or the Interim Statements.
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, sole proprietorship, trust or any
other entity.
"Plan of Recapitalization" shall have the meaning given to
such term in Section 2.4.2 hereof.
"Praxair" shall mean Praxair, Inc., a Delaware corporation
formerly known as Union Carbide Industrial Gases, Inc.
"Preferred Stock" shall mean the Series A Preferred Stock and
Series B Preferred Stock.
"Real Property" shall have the meaning given to such term in
Section 7.1.8 hereof.
"Redemption" shall have the meaning given to such term in
Section 8.1 hereof.
9
<PAGE> 15
"Redemption Obligation" shall have the meaning given to such
term in Section 8.1 hereof.
"Redemption Right" shall have the meaning given to such term
in Section 8.1 hereof.
"Registration Rights Agreement" shall mean the registration
rights agreement substantially in the form of Exhibit 1.1A attached hereto.
"Remaining Minority Shares" shall have the meaning given to
such term in Section 13.2 hereof.
"Remaining Turner Shares" shall have the meaning given to such
term in Section 2.4.2 hereof.
"Remedial Action Costs" shall mean any and all reasonable
amounts incurred by Airgas and/or NWS related to (1) technical or field
assessments or testing of any medium, including laboratory or other assessment
services; (2) soil, groundwater and surface water remediation; (3) the removal,
closure or upgrade of an underground storage tank and related equipment; (4)
the removal or closure of any lime pond listed as an Identified Environmental
Matter (5) environmental engineers or consultants engaged to address an
Identified Environmental Matter, including their subcontractors, agents or
employees; and (6) the preparation and submission of reports, plans, or similar
documents. The term "Remedial Action Costs" does not include any attorneys'
fees or costs, or costs associated with Airgas or NWS management or employee
time.
"Restricted Territory" shall mean the territory identified on
Exhibit 1.1B attached hereto.
"Rules" shall have the meaning given to such term in Section
4.3.2 hereof.
10
<PAGE> 16
"Sale Notice" shall have the meaning given to such term in
Section 5.11.2 hereof.
"Scheduled Contracts" shall have the meaning given to such
term in Section 7.1.10 hereof.
"Senior Management" shall mean Erroll Sult, Alan DeMart, Bill
Boone, Gerald Carver, Mike Molinini, Dick Lake, Tom Sheridan and Howard Hill.
"Series A Preferred Stock" shall mean the Series A 5% Voting
Preferred Stock of NWS.
"Series B Preferred Stock" shall mean the Series B 5%
Non-Voting Preferred Stock of NWS.
"Service Fee" shall have the meaning given to such term in
Section 4.7.4 hereof.
"Services" shall have the meaning given to such term in
Section 4.7.1 hereof.
"Tax or Taxes" shall have the meaning given to such term in
Section 7.1.16 hereof.
"Term" shall mean the term of the Joint Venture.
"Threshold Amount" shall have the meaning given to such term
in Section 10.1.1 hereof.
"Third Party" shall have the meaning given to such term in
Section 5.11.5 hereof.
"Transfer" shall have the meaning given to such term in
Section 6.1 hereof.
"Turner Letters of Credit" shall have the meaning given to
such term in Section 2.4.3 hereof.
11
<PAGE> 17
"Turner Notes" shall have the meaning given to such term in
Section 2.4.3 hereof.
"Turner Shares" shall have the meaning given to such term in
Section 2.4.1 hereof.
"Turner Shareholders" shall mean (i) the Turners; (ii) the
Turner Transferees; (iii) members of the Immediate Family of any of the Turners
to whom Turner Shares are transferred in accordance with the terms of this
Agreement and, to the extent applicable, the First Refusal Agreement, and (iv)
any legal representative of any of the foregoing acting on behalf of the estate
of a deceased Turner Shareholder.
"Turners" shall mean J.A. Turner, Jr., Judith Carpenter, J.A.
Turner, III and Linerieux B. Turner.
"Turner Transferees" shall mean Charitable Remainder Unitrust
of James A. Turner, Jr., a North Carolina trust, Foundation for the Carolinas,
a North Carolina non-profit corporation, Molo Limited Partnership, a Delaware
limited partnership, and Turner (1996) Limited Partnership, a Delaware limited
partnership.
"Wastes" shall have the meaning given to such term in Section
7.1.8 hereof.
1.2 Financial terms. Financial terms not defined in this
Agreement shall have the meanings of such terms under generally accepted
accounting principles.
12
<PAGE> 18
ARTICLE 2
FORMATION OF JOINT VENTURE
2.1 Formation; Purpose. This Agreement sets forth the terms and
conditions governing the ownership and operation of NWS as a joint venture of
the Turner Shareholders, Airgas and the Non-Family Shareholders (NWS, as so
owned and operated, is sometimes referred to herein as the "Joint Venture").
The purpose of the Joint Venture is to carry on the business of NWS, enhanced
by the association with Airgas and Airgas' financial, purchasing and national
marketing strengths, and to pursue acquisition opportunities in the area
currently served by NWS and such other activities as the Board of Directors
from time to time determines.
2.2 Name and Address. The name of the Joint Venture shall
continue to be "National Welders Supply Company, Inc." The address of the
Joint Venture's principal place of business shall be 810 Gesco Street,
Charlotte, North Carolina 28208.
2.3 Term. The Term shall commence on the Closing Date and shall
continue until the thirteenth (13th) anniversary of the Closing Date, unless
earlier terminated pursuant to the terms of this Agreement. In addition, the
Term shall automatically expire if none of the Turner Shareholders or none of
Airgas and its Affiliates own capital stock of NWS. The expiration of the Term
shall not affect (i) those certain other provisions of this Agreement which
expressly provide that they survive the expiration of the Term; or (ii) the
Amended Articles.
2.4 Stock Transactions to Effectuate the Joint Venture. In order
to effectuate the formation and operation of the Joint Venture, the parties
hereto agree to the following capital transactions:
13
<PAGE> 19
2.4.1 Purchase and Sale of Certain Shares held by the
Turner Shareholders. Airgas hereby agrees to purchase from each of the Turner
Shareholders and each of the Turner Shareholders hereby agrees to sell to
Airgas, free and clear of all liabilities, security interests, pledges, liens
and encumbrances whatsoever, the number of shares of Common Stock set forth
opposite such Turner Shareholder's name on Exhibit 2.4.1 attached hereto (the
Common Stock to be acquired from the Turner Shareholders hereinafter the
"Turner Shares") representing, together with the maximum number of shares that
could be acquired from the Non-Family Shareholders pursuant to Section 13.1
hereof, less than 50% of the voting capital stock of NWS. The price for the
Turner Shares is $17.7814 per share, payable in the manner set forth in Section
2.4.3 hereof. At the Closing, each of the Turner Shareholders shall deliver to
NWS certificates, duly endorsed for transfer, representing that number of
Turner Shares set forth beside such Turner Shareholder's name on Exhibit 2.4.1
hereto, duly endorsed for transfer. NWS shall thereupon deliver a new
certificate to Airgas representing the aggregate number of Turner Shares being
sold by all Turner Shareholders.
2.4.2 Retention and Exchange of Remaining Turner Shares.
At the Closing, all shares of Common Stock owned by the Turner Shareholders
that are not part of the Turner Shares acquired under Section 2.4.1 above (the
"Remaining Turner Shares"), shall be exchanged by the Turner Shareholders, on a
one-for-one basis, for shares of Series A Preferred Stock, having the rights
and preferences set forth in the Amended and Restated Articles of Incorporation
of NWS in the form attached hereto as Exhibit 2.4.2(A), as amended by the
Articles of Amendment attached hereto as Exhibit 2.4.2(B) (such Amended and
Restated Articles, as so amended, being hereinafter collectively referred to
as, the "Amended Articles"), and otherwise in accordance with the Plan of
Recapitalization ("Plan of Recapitalization") attached hereto as Exhibit
2.4.2(C). The aggregate number of shares of
14
<PAGE> 20
Series A Preferred Stock delivered to the Turner Shareholders shall exceed
fifty percent (50%) of the voting capital stock of NWS that will be actually
outstanding, and that will be outstanding on a fully diluted basis, on the
Closing Date.
2.4.3 Consideration for Turner Shares. The consideration
for the Turner Shares shall be paid as follows:
1. Cash. At the Closing, Airgas shall pay to
the Turner Shareholders by wire transfer or other immediately available funds
the amounts of cash set forth opposite their respective names on Exhibit 2.4.1
hereto.
2. Notes. At the Closing, Airgas shall issue
promissory notes to the Turners (the "Turner Notes") substantially in the form
attached hereto as Exhibit 2.4.3(A) in the principal amounts set forth opposite
their respective names on Exhibit 2.4.1 hereto. The Turner Notes shall be
secured by letters of credit issued by NationsBank (the "Turner Letters of
Credit") substantially in the form attached hereto as Exhibit 2.4.3(B).
ARTICLE 3
COVENANTS AND AGREEMENTS REGARDING
ACTION TO BE TAKEN AND CONDUCT OF BUSINESSES PRIOR TO CLOSING
3.1 Conduct in Ordinary Course. From and after the date hereof
and pending the Closing, NWS and Airgas agree that they shall in all material
respects conduct their respective businesses only in the ordinary and usual
course and in a manner consistent with past practice.
3.2 Necessary Approvals. Prior to the Closing, NWS, the Turner
Shareholders and Airgas shall use their reasonable best efforts to obtain all
required consents and approvals in writing, including but not limited to any
necessary board of director and
15
<PAGE> 21
shareholder approvals, of all persons whose consent or approval is necessary
for the parties to consummate this Agreement and the transactions described
herein.
3.3 Amended Articles. On or before the Closing Date, NWS and the
Turner Shareholders shall cause the Plan of Recapitalization to be properly
adopted and shall cause the Amended Articles to be properly adopted and filed
in accordance with the laws of the State of North Carolina.
3.4 Amended Bylaws. On or before the Closing Date, NWS and the
Turner Shareholders shall cause NWS to properly adopt amended by-laws
substantially in the form attached hereto as Exhibit 3.4 (the "Amended
Bylaws").
3.5 NWS Board of Directors. On or before the Closing Date, NWS
and the Turner Shareholders shall cause the shareholders of NWS to elect a
Board of Directors composed of the following six individuals who shall serve as
directors of NWS effective immediately upon the consummation of the Closing:
J.A. Turner, Jr., Judy Carpenter, Mark R. Bernstein, Peter McCausland, Gordon
L. Keen, Jr. and Hermann Knieling. The parties hereto agree that Peter
McCausland, Gordon L. Keen, Jr. and Hermann Knieling shall be deemed for all
purposes to have been elected by the holders of a majority of the Common Stock
of NWS and J.A. Turner, Jr., Judy Carpenter and Mark R. Bernstein shall be
deemed for all purposes to have been elected by the holders of a majority of
the Series A Preferred Stock of NWS. The parties agree that J.A. Turner, Jr.
shall be the Chairman of the Board of NWS for the first two (2) years after the
Closing. Each director elected in accordance with this Section 3.5 shall serve
until his or her replacement is elected, subject to removal as provided herein,
in the Amended Bylaws and in the NCBCA.
3.6 NWS Officers. On or before the Closing Date, the following
individuals shall be elected officers of NWS, effective immediately upon the
consummation of the Closing:
16
<PAGE> 22
President - Erroll Sult
Chief Financial Officer
and Vice President - Alan DeMart
3.7 Access and Information. After the date hereof and prior to
Closing, each of the parties hereto shall give to each other party reasonable
access to its books and records all in order that the parties may have a full
opportunity to make such legal, financial, tax, technical, accounting and other
reviews and investigations of each other's businesses as the investigating
party shall desire to make; provided, however, that Airgas shall not be
required to disclose any information inconsistent with Airgas' status as a
public company or that would trigger a requirement to disclose such information
to the general public.
3.8 Termination Period.
(a) This Agreement may be terminated at any time prior to the
Closing: (i) by mutual written agreement executed by the Turner Shareholders,
NWS and Airgas; (ii) by the Turner Shareholders or Airgas at any time after
September 15, 1996, if, through no fault of the party seeking termination, the
Closing shall not have occurred; (iii) by Airgas, if there has been a material
violation or breach by the Turner Shareholders of any agreement, representation
or warranty contained in this Agreement which is not curable or which has
rendered the satisfaction of any condition to the obligations of Airgas
impossible and which has not been waived by Airgas; or (iv) by the Turner
Shareholders, if there has been a material violation or breach by Airgas of any
agreement, representation or warranty contained in this Agreement which is not
curable or which has rendered the satisfaction of any condition to the
obligation of the Turner Shareholders impossible and which has not been waived
by the Turner Shareholders.
(b) In the event of termination of this Agreement pursuant
this Section 3.8, written notice thereof shall be forthwith given to the other
parties hereto and this Agreement (other than Sections 10.1.3 and 14.2 hereof
and as provided in subparagraph (i) and (ii) below,
17
<PAGE> 23
each of which shall survive any such termination) shall terminate and the
transactions contemplated hereby shall be abandoned without further action of
the parties hereto. If this Agreement is terminated as provided herein: (i)
all information received by Airgas with respect to the Businesses, NWS and the
Turner Shareholders shall be held by Airgas as confidential information and not
disclosed; and (ii) any termination pursuant to subparagraph (ii), (iii) or
(iv) of paragraph (a) of Section 3.8 shall not be deemed a waiver of any rights
or remedies otherwise available under this Agreement, by operation of law or
otherwise.
3.9 Merger of National Leasing. On or prior to the Closing Date,
National Leasing shall merge with and into NWS pursuant to a plan of merger
substantially in the form of Exhibit 3.9 hereto. In connection with and as a
result of the merger of National Leasing into NWS, the Turner Shareholders
shall acquire additional shares of Common Stock as provided in the plan of
merger and in Section 7.1.5 of the Disclosure Schedule.
ARTICLE 4
COVENANTS AND AGREEMENTS REGARDING
CONDUCT OF NWS
The provisions of this Article 4 shall apply throughout the Term, and,
to the extent provided herein, thereafter.
4.1. Contributions to Capital.
Airgas and the Turner Shareholders shall each have the right,
at any time and from time to time during the Term and thereafter, to make
contributions to the capital of NWS. No party hereto shall be required to make
a capital contribution and a capital contribution by one party shall not place
any requirement on any other party to make a capital contribution. A capital
contribution by one or more parties under this Section 4.1 shall not otherwise
affect the rights and obligations of the parties under this Agreement.
18
<PAGE> 24
NWS agrees to accept all capital contributions made hereunder and to deem each
such capital contribution to have been made on the date of its receipt by wire
transfer or other immediately available funds. Each party hereto shall give
the other parties written notice of the making of a capital contribution prior
to or within ten (10) days after the making of such capital contribution
provided, however, that the failure to give such notice shall not affect the
validity of such capital contribution, or NWS' obligation to accept such
capital contribution.
4.2 Shareholder Matters.
4.2.1 Quorum and Required Vote for Action by Shareholders.
During the Term and thereafter, the quorum requirements for meetings of
shareholders of NWS and the requirements for voting by shareholders of NWS
shall be as set forth in the Amended Articles.
4.2.2 Dissolution of NWS. The Turner Shareholders and
Airgas agree that, during the Term and thereafter, any proposal to dissolve NWS
pursuant to Section 55-14-02 of the North Carolina Business Corporation Act
must be approved by a majority of votes entitled to be cast by the holders of
each class of NWS' capital stock, namely the Common Stock and the Preferred
Stock.
4.3 Director Matters.
4.3.1 Numbers; Quorum; Meetings; Removal; Vacancies; Vote.
During the Term and thereafter, except as provided in Sections 4.3.2 and 4.3.3
hereof, all matters with respect to the number of directors, the quorum
requirements for meetings of directors, the times and places for meetings of
directors, the removal of directors, the filling of vacancies in directorships,
and the required vote at meetings of directors shall be as set forth in the
Amended Articles.
4.3.2 Deadlock of Directors.
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(a) In the event that, from time to time during the Term
or thereafter, the Board of Directors of NWS shall be unable to reach agreement
upon any particular matter submitted to it (an "Open Matter"), the parties
shall hold one or more informal meetings promptly in an effort to discuss and
resolve such Open Matter.
(b) If the procedure specified in paragraph (a) has not
led to a satisfactory resolution regarding an Open Matter within twenty (20)
days of any party seeking such an informal meeting with respect to such Open
Matter, then, upon a good faith determination by any two directors that failure
to resolve the Open Matter threatens the continued existence of, or will result
in material injury to, NWS, the Open Matter shall be submitted for
determination in the following manner. The directors of NWS in favor of the
Open Matter as a group and the directors of NWS opposed to the Open Matter as a
group shall, within ten (10) days of such request, each appoint an independent
person as arbitrator to resolve the Open Matter. The two arbitrators so chosen
shall agree promptly upon and appoint an independent person as a third
arbitrator. The arbitrators shall determine promptly whether the Open Matter
meets the standard set forth in this paragraph as to matters which are to be
submitted to arbitration by the parties and, if so, shall seek promptly to
resolve the Open Matter. The decision of such arbitrators shall be final and
binding upon NWS and the parties hereto; provided that the arbitrators shall
not resolve the Open Matter in a manner whereby compliance with the decision of
the arbitrators will result in the violation by any party to this Agreement of
any obligations of such party hereunder. The Board of Directors of NWS or, if
such Board of Directors shall not have done so within five (5) days of such
arbitrators' decision, the stockholders of NWS, shall take any and all action
necessary to implement such decision.
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(c) If the arbitrators chosen by the Board of Directors
of NWS are unable to agree upon and appoint a third arbitrator, the Open Matter
shall be resolved by three arbitrators appointed by the American Arbitration
Association (the "AAA") in accordance with the then prevailing Commercial
Arbitration Rules thereof (the "Rules"). The AAA shall be required to endeavor
to appoint experts in a discipline relevant to the Open Matter and, if the same
issue or an issue similar to the Open Matter has been submitted to arbitration
by the parties before, to appoint one or more of the same arbitrators to
determine the Open Matter and each such same (or similar) issue, but the
failure to do any of the foregoing shall not be a basis for avoiding, setting
aside or altering the arbitral award.
(d) Any arbitration referred to in this Agreement shall
be conducted under the Rules in the City of Richmond unless the parties
mutually agree to have the arbitration held elsewhere, and the award made
therein shall be entered in the applicable State Courts of Virginia or, as the
case may be, the United States District Court for Virginia. Solely for the
purposes of applying for an order confirming, modifying, correcting or vacating
the award, the parties hereby consent and submit themselves to the personal
jurisdiction of State Courts of Virginia or, as the case may be, the United
States District Court for Virginia. Each party hereto shall bear the expense
of its own representatives, and any other expenses of the arbitration
proceeding shall be borne by the parties as may be determined by the Rules or
as may be assessed by the arbitrators. Except to the extent required by law,
no party, arbitrator, representative, counsel or witness shall disclose or
confirm to any person not present at the arbitration hearings, any information
about the hearings, including the names of the parties and the arbitrators, the
nature and amount of the claims, the financial condition of any party, the
expected date of hearing, or the arbitral award made.
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4.3.3 Exercise and Retention of Board Authority.
(a) During the term and thereafter, the scope of the authority reserved to the
Board of Directors shall include all such matters as required by applicable law
and shall further include, without limitation, the following matters, the
approval of which may not be delegated to any officer of NWS or any committee
of the Board of Directors (except that the Board may from time to time alter
any of the dollar amounts set forth in this Section 4.3.3):
(i) any agreement or contract (x) not in the ordinary course
of business, (y) obligating NWS to pay in excess of $500,000 or provide
property or services having a value in excess of $500,000 or (z) obligating NWS
to pay in excess of $250,000 or provide property or services having a value in
excess of $250,000 and having a term in excess of two (2) years which is not
cancelable without penalty to NWS at the discretion of NWS;
(ii) any material change in the nature of the business of
NWS;
(iii) any sale, lease, exchange or other disposal of assets
of NWS having a value in excess of $250,000 other than sales of inventory in
the ordinary course of business;
(iv) any capital expenditures (i) individually exceeding
$500,000 in value or (ii) which is not expressly contemplated by the annual
budget and operating plan of NWS and would exceed $250,000 in value;
(v) any acquisitions of assets of another corporation or
business if the value of the transaction, including liabilities to be assumed,
exceeds $250,000;
(vi) any acquisition of any class of securities of or
investments in any Person other than investments made in connection with the
ordinary cash management of the Corporation;
(vii) any indebtedness for borrowed money;
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(viii) approval of the annual budget and operating
plan;
(ix) any decision regarding the appointment or termination
of external auditors and approval of the annual audit;
(x) any covenant restricting dividends;
(xi) any compensation to any member of the management of
NWS or any other compensation in excess of $100,000;
(xii) any change in the fiscal year;
(xiii) any merger, consolidation or other reorganization;
(xiv) the creation of any subsidiary;
(xv) any increase or decrease in capital other than
capital contributions contemplated by Section 4.1 hereof;
(xvi) any appointment, transfer or removal of the chief
executive officer or president;
(xvii) any adoption, material modification or termination of
any 401(k) plan, profit sharing plan or other material Employee Plan;
(xviii) any guaranty of the obligations of any other Person;
and
(xix) any decision with respect to any subsidiary of NWS
which would require the approval of the Board of Directors of NWS pursuant to
this Section if such decision were to be made with respect to NWS.
(b) Approval of the following matters shall require the approval
of, and may be approved by, a majority of the disinterested directors then
serving on the Board of Directors:
(i) any material transaction or agreement between NWS or any
of its subsidiaries, on the one hand, and any shareholder, director or officer
of NWS or any
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member of their respective families or any Affiliate of any shareholder,
director or officer of NWS or any officer, director or family member of such
Affiliate, on the other hand;
(ii) any grant of a material right, consent or waiver by NWS
or any of its subsidiaries in favor of any shareholder, director or officer of
NWS or any member of their respective families or any Affiliate of any
shareholder, director or officer of NWS or any officer, director or family
member of such Affiliate; and
(iii) any loan by NWS or any of its subsidiaries to any
shareholder, director or officer of NWS or to any member of their respective
families or to any Affiliate of any shareholder, director or officer of NWS or
any director, officer or family member of any such Affiliate.
4.4 Dividends.
4.4.1 Payment of Dividends on Preferred Stock. During the
term and thereafter, the holders of the Preferred Stock shall be entitled to
receive dividends as provided in the Amended Articles. Airgas and the Turner
Shareholders agree to cause dividends to be declared and paid with respect to
the Preferred Stock in the amount provided for in the Amended Articles, to the
maximum extent permitted by law and to the maximum extent that will not result
in a default by NWS of its other contractual obligations.
4.4.2 Payment of Dividends on Common Stock. Provided no
event has occurred which, with the giving of notice or the passage of time or
both would constitute an Event of Non-Compliance or a Default, the parties
hereto intend that NWS periodically shall pay cash dividends to the holders of
the Common Stock when, as and if declared by the Board of Directors.
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4.5 Covenant Not to Compete. (a) Each of the Turner Shareholders
and Airgas covenants and agrees with and for the benefit of NWS that, during
the Term it shall not, directly or indirectly:
(i) engage in, be retained by, own any interest in
(other than as a beneficial owner of not more than five percent (5%) of the
outstanding shares of a class of equity securities of a corporation or other
entity, which class of equity securities is registered pursuant to the
Securities Act of 1934, as amended), manage, operate, control, loan money to,
render consulting or advisory services to, represent, or participate in or be
connected in the management or control of, any Person that is then engaged in
competition with NWS or any of its subsidiaries in the Restricted Territory in
any business which is identical or substantially similar to any of the
Businesses; provided that nothing contained in this Section 4.5 shall prohibit
(i) the passive investment of the Turners in Holston Gases, Inc. or its
successors, and/or Arc Safety Accessory Products, Inc. or its successors;
and/or (ii) the membership of J. A. Turner, Jr. and/or Judy Carpenter on the
Board of Directors of Holston Gases, Inc. or its successors;
(ii) without the prior written consent of NWS,
solicit or hire any of the existing or former management or supervisory
personnel or sales representatives of NWS, either during the term of such
person's employment by NWS or within three (3) months after such person's
employment has ceased for any reason (whether terminated before or after the
Closing Date) to work for any Person in competition with NWS; or
(iii) wrongfully interfere with, disrupt or attempt
to disrupt any relationship, contractual or otherwise, between NWS and any
other party.
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(b) Each of the Turner Shareholders and Airgas
acknowledges and agrees that the covenants contained in this Section are
reasonable and appropriate in light of the joint venture relationship
established under this Agreement with respect to NWS and that the scope of the
covenant not to compete, the territorial and time limitations, and the other
restrictions in paragraph (a) above are reasonable and necessary to protect
legitimate business interests of such joint venture relationship and are not
unreasonable or unduly burdensome or harsh in their effect on the parties
hereto.
(c) It is the desire and intent of the parties that all
of the provisions of this Section shall be enforced to the fullest extent
permitted under applicable law and public policy. Further, it is the intent of
the parties hereto to be subject to an agreement for the necessary protection
of the legitimate interests of NWS which is not unduly harsh in curtailing the
legitimate interests of the other parties hereto. Therefore, the parties
hereto agree that in the event a court shall determine that any of the
provisions contained in this Section is unreasonable, void or invalid for any
reason whatsoever, then the duration, geographical and other limitations
imposed herein shall be modified automatically to the extent necessary to make
such provisions enforceable and in such modified form, such provision and the
remainder of this Agreement shall be enforceable. If, however, in spite of the
operation of the preceding sentence, any particular provisions of this Section
or any other provision of this Agreement shall be adjudicated to be invalid or
unenforceable in any jurisdiction in which enforcement is sought, such
adjudication shall apply only with respect to the operation of such provision
in the particular jurisdiction in which such adjudication is made, and all
other provisions shall continue in full force and effect in such jurisdiction.
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(d) The parties hereto acknowledge and agree that any
remedy at law for any breach of the provisions of this Section 4.5 would be
inadequate and each of the Turner Shareholders and Airgas hereby consents to
the granting by any court of competent jurisdiction of an injunction or other
suitable relief, without the posting of any bond or the necessity of actual
monetary loss being proved, in order that such breach may be effectively
restrained. Nothing contained herein shall be construed, however, to prohibit
any of the parties hereto from pursuing any other remedies at law or in equity
which such party may have for any such breach or threatened breach of any of
the provisions of this Section.
(e) Airgas hereby agrees not to engage in any corporate
restructuring or recapitalization, including but not limited to, creating a
corporate parent or sister corporation of Airgas, in a manner which has the
effect of directly or indirectly violating any of the restrictions set forth in
this Section.
4.6 NWS Financial Statements. During the Term and thereafter, NWS
shall have prepared and delivered to the Turner Shareholders and Airgas, not
less frequently than monthly, consolidated and consolidating financial
statements of NWS, consisting of a balance sheet, income statement, and
statement of cash flows, prepared in accordance with GAAP, subject in the case
of interim statements to normal year end adjustments, in each case certified by
the chief financial officer of NWS.
4.7 Operational and Administrative Services.
4.7.1 Services. As part of the goals of the Joint Venture
created by this Agreement, the parties believe NWS will benefit from the many
capabilities of Airgas and its Affiliates in operational and administrative
areas. Consequently, Airgas hereby agrees to provide to NWS during the Term,
directly or through one or more of its Affiliates, the
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operational and administrative services as more fully described in Exhibit
4.7.1 attached hereto and made a part hereof (the "Services").
4.7.2 Standard of Care. Airgas agrees to perform the
Services directly or through one or more of its Affiliates in good faith and
with commercially reasonable diligence and care. Should any dispute arise as
to whether Airgas is meeting the standard provided for herein, such dispute
shall be submitted to arbitration in accordance with Section 10.2 hereof.
4.7.3 Cooperation By NWS. The Services will be of value to
NWS only with the cooperation of NWS and its employees. Accordingly, NWS
agrees to provide Airgas and its Affiliates with such assistance and with such
access to its facilities, books and records as is reasonably necessary for
Airgas to perform the Services.
4.7.4 Service Fee. With respect to the period during which
Airgas, or its designated Affiliate, provides Services, NWS shall pay Airgas or
its designated Affiliate a services fee (the "Service Fee") determined in
accordance with Exhibit 4.7.4 attached hereto. On or about July 1, 1997 and on
or about July 1 of each year thereafter during the Term, the Board of Directors
of NWS shall evaluate the Services being provided by Airgas. Should the Board
determine in good faith that it would be in the best interest of NWS to amend
the scope of the Services by amending the particulars of any Service or
terminating any Service, NWS shall so advise Airgas in writing. Promptly
following its receipt of such notice, Airgas shall meet with NWS and the
parties shall negotiate in good faith with respect to (a) the possible
amendment of particular Services; (b) the possible termination of particular
Services; and (c) an equitable adjustment to the Service Fee to reflect any
such amendment or termination. Should the parties be unable to agree on any of
the above, either party may
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submit such dispute to arbitration in accordance with Section 10.2 hereof. NWS
agrees that it currently expects to benefit from all of the Services and that
NWS believes the Service Fee represents fair consideration for the Services
Airgas has agreed to provide. The Service Fee shall be paid in arrears on a
quarterly basis on the 30th day of each calendar quarter commencing on the 30th
day of the first full calendar quarter following the Closing Date.
ARTICLE 5
ADDITIONAL COVENANTS AND AGREEMENTS
5.1 First Refusal Agreement Covenant. Subject to the provisions
of Article 9 hereof, each of the Turner Shareholders covenants and agrees not
to take any action which will violate the provisions of the First Refusal
Agreement or result in a Change in Control as defined in the First Refusal
Agreement. Airgas covenants and agrees to execute and deliver to Praxair and
NWS prior to the Closing, the Assumption Agreement in the form of Exhibit 5.1
hereto. Airgas covenants and agrees not to take any action, and shall not
allow any of its Affiliates to take any action, which will violate the
provisions of the First Refusal Agreement or result in a Change in Control as
defined in the First Refusal Agreement. The parties acknowledge and agree that
none of the transactions contemplated by this Agreement will violate the
provisions of the First Refusal Agreement or, absent a Default, will result in
a Change in Control as defined in the First Refusal Agreement and that the
performance of this Agreement shall in no event be construed to violate this
Section 5.1.
5.2 Airgas Common Stock.
Upon notice by NWS to Airgas that a Majority in Interest of Turner
Shareholders has exercised the Exchange Right provided for in the Amended
Articles, Airgas, subject to the provisions of the Amended Articles, shall
provide the necessary shares of Airgas Common
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Stock or other Exchange Consideration to NWS, by capital contribution or any
other means Airgas reasonably deems appropriate, so that NWS can and will
perform its obligations in respect of the Exchange.
5.3 Corporate Reorganization.
If NWS requests that Airgas participate in a reorganization with NWS
and/or its shareholders, Airgas, subject to the provisions of the Amended
Articles, will agree to such a transaction provided such a transaction would
not have a material adverse tax consequence to NWS or Airgas. For purposes of
the preceding sentence only, a material adverse tax consequence is understood
to mean any tax consequence to NWS and/or Airgas that exceeds $100,000 in the
aggregate. Likewise, if NWS, pursuant to Section 5.2 hereof, requests that
Airgas provide shares of Airgas Common Stock or other Exchange Consideration
for delivery to the holders of the Preferred Stock in connection with
consummation of the Exchange, NWS and the Turner Shareholders agree to approve
of and to engage in a tax free reorganization instead provided such a
transaction would not result in any taxes being incurred by any holder of
Preferred Stock and would not impose upon the holders of the Preferred Stock
any ongoing obligations, restrictions or limitations which are substantially
greater than those that are currently applicable to a tax free exchange under
Section 368 of the Code.
5.4 Airgas Loans. Any holder of Preferred Stock who participates
in the Exchange, or in the restructured transaction contemplated by Section 5.3
hereof, may request that Airgas loan to the holder all or any portion of the
funds that may be required to pay the tax liability, if any, incurred by the
holder as a result of the Exchange or restructured transaction. Airgas
covenants and agrees to comply with each such request and to make such
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loan to any such holder of Preferred Stock on reasonable terms and on a
nonrecourse basis provided that the holder receiving loan proceeds pledges to
Airgas the stock received in the Exchange or restructured transaction to secure
repayment of the loan.
5.5 No Impairment of Exchange Rights. Airgas shall not, by
amendment of its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed by Airgas with
respect to the Exchange hereunder (including, without limitation, Sections 5.2
and 5.3 hereof) and under the Amended Articles, but shall at all times in good
faith assist in the carrying out of all the provisions of this Agreement with
respect to the Exchange (including, without limitation, Sections 5.2 and 5.3
hereof) and in the taking of all such action as may be necessary or appropriate
in order to protect the holders of the Preferred Stock against impairment of
their rights with respect to the Exchange.
5.6 Notices of Record Date. In the event of any taking by Airgas
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, Airgas shall mail to NWS a copy at
least ten (10) days prior to such record date a notice specifying the date on
which any such record is to be taken for the purpose of such dividend or
distribution and NWS shall promptly deliver a copy of such notice to each
holder of Preferred Stock.
5.7 Common Stock Reserved. Airgas shall specifically reserve such
number of shares of Airgas Common Stock, or, to the extent applicable, shares
of other Exchange Consideration, as shall from time to time be sufficient to
effect the Exchange.
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5.8 Compliance with Amended Articles. Each of the Turner
Shareholders, NWS and Airgas hereby agrees to be bound by all of the provisions
of the Amended Articles.
5.9 Employment Agreements. The parties hereto anticipate and
intend that, on or before the Closing Date, NWS has or will enter into
employment agreements with the employees of NWS identified on Exhibit 5.9
attached hereto, with such agreement to be substantially in the form of Exhibit
5.9 hereto.
5.10 Waiver of Non-Compliance and Default. The Turner Shareholders
agree to waive any Event of Non- Compliance and any Default to the extent
caused by the payment by NWS of an amount which the Turners would be required
to indemnify Airgas pursuant to Section 10.1.1 hereof but for the applicability
of the Basket or the applicable time limits for bringing indemnity claims under
Section 10.1.1.
5.11 Required Co-Sale after Default. After the occurrence of a
Default, the holders of the Series A Preferred Stock shall have the right to
sell all their shares of Series A Preferred Stock, free of the restrictions
contained in Article 6 hereof and free of the covenant contained in Section 5.1
hereof, and to compel Airgas to participate in such sale as more fully provided
in this Section 5.11.
5.11.1 In the event that the holders of a majority of the
Series A Preferred Stock propose to sell or otherwise dispose of for value all
of the shares of Series A Preferred Stock owned by such holders to a Third
Party (as defined in subparagraph 5.11.5 below), such holders may, at their
option, require Airgas to sell all of the shares of Common Stock owned by it to
the Third Party on the same terms and conditions upon which the holders of a
majority of the Preferred Stock shall sell their shares; provided, however, the
aggregate net proceeds of such sale shall be allocated first to the Preferred
Stock as if such sale were a liquidation under Section
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1 of Article II of the Amended Articles, with the balance of such net proceeds
payable to the holders of the Common Stock.
5.11.2 The holders of a majority of the Series A Preferred
Stock, or their representative, shall provide to Airgas a written and dated
notice (the "Sale Notice") of such proposed sale not later than ten (10) days
prior to the consummation of such sale. The Sale Notice shall contain written
notice of the exercise by the holders of a majority of the Series A Preferred
Stock of their rights pursuant to this Section 5.11 setting forth the
consideration to be paid by the Third Party and the other material terms and
conditions of the proposed sale. Within five (5) days following the day the
Sale Notice is given, Airgas shall deliver to the holders of a majority of the
Series A Preferred Stock, or their representative (i) the certificate or
certificates evidencing all the shares of Common Stock held by Airgas, duly
endorsed in blank or accompanied by written instruments of transfer in form
satisfactory to the holders of a majority of the Series A Preferred Stock or
their representative, executed by Airgas, and (ii) a special irrevocable
power-of-attorney authorizing the holders of a majority of the Series A
Preferred Stock, or their representative, to sell such shares on the terms and
conditions upon which the holders of a majority of the Series A Preferred Stock
are selling their shares and to take all such actions as shall be necessary or
appropriate in order to consummate such sale.
5.11.3 Promptly upon the consummation of the sale of shares
of the Series A Preferred Stock and the Common Stock to the Third Party, the
holders of a majority of the Series A Preferred Stock, or their representative,
shall remit, first, to the holders of the Preferred Stock participating in such
sale an amount per share equal to the net proceeds of such sale up to the
Liquidation Amount (as defined in the Amended Articles), calculated as if the
liquidation took place as of the date of the consummation of such sale and,
second, to the holders of the Common
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Stock the net proceeds of such sale, less the aggregate amount paid to the
holders of the Preferred Stock.
5.11.4 Anything herein to the contrary notwithstanding, the
holders of a majority of the Series A Preferred Stock and their representative
shall have no obligation to Airgas to sell or otherwise dispose of any shares
of Common Stock pursuant to this Section 5.11 as a result of any decision by
the holders of a majority of the Series A Preferred Stock, or their
representative, not to accept or consummate any offer or sale of all of the
shares owned by such holders of the Series A Preferred Stock (it being
understood that any and all such decisions shall be made by the holders of a
majority of the Series A Preferred Stock, or their representative, in their
sole discretion). In addition, anything to the contrary notwithstanding, the
holders of a majority of the Series A Preferred Stock and their representative
shall have no obligation to include any shares of Common Stock in any sale of
Series A Preferred Stock by such holders of the Series A Preferred Stock.
5.11.5 As used in this Section 5.11, the term "Third Party"
means any Person other than any holder of Series A Preferred Stock or Airgas or
any Person which is an Affiliate of any holder of Series A Preferred Stock or
Airgas.
5.11.6 In the event that the proposed sale of shares of
Series A Preferred Stock and Common Stock contemplated by this Section 5.11
shall be in the form of (1) a consolidation or merger of NWS with or into
another entity or the sale of all or substantially all of the assets of NWS to
another Person, or (2) a reorganization or a recapitalization of NWS, or (3)
any other business reorganization or combination similar in effect to any of
the foregoing and requiring a vote of the shareholders of NWS (any of the
foregoing being called a "Corporate Event"), Airgas hereby agrees to vote its
shares of Common Stock with respect to such Corporate Event in the
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same manner as are voted the shares of Series A Preferred Stock by the holders
of a majority of such shares of Series A Preferred Stock, or their
representative. In furtherance of (but not by way of limitation of) the
foregoing voting agreement, Airgas will, at the Closing, execute and deliver to
the holders of a majority of the Series A Preferred Stock, or their
representative, an irrevocable proxy in the form of Exhibit 5.11 hereto.
Airgas acknowledges and agrees that it shall be a Default under the Amended
Articles if Airgas shall fail to execute and deliver to the holders of a
majority of the Series A Preferred Stock, or their representative, a new
irrevocable proxy in the form of Exhibit 5.11 hereto within one hundred twenty
(120) days after the request therefor is made by any holder of Series A
Preferred Stock after July 1, 1999. The Turner Shareholders covenant and agree
not to exercise any irrevocable proxy provided by Airgas pursuant to this
Section 5.11 prior to the occurrence of a Default or other than in respect of a
Corporate Event.
5.11.7 The parties acknowledge that any sale contemplated by
this Section 5.11 shall be subject to the First Refusal Agreement to the extent
the First Refusal Agreement remains in effect on the date of such sale.
5.11.8 The obligations of Airgas under this Section 5.11
shall be binding upon any Person who shall acquire the Common Stock held by
Airgas including, without limitation, any successor by way of merger or
consolidation or any Affiliate of Airgas.
5.12 Form of Escrow. The parties agree that, for purposes of the
escrow arrangements contemplated in Subsections 7(b) and 7(c) of the Article II
of the Amended Articles, the form of Escrow Agreement attached hereto as
Exhibit 5.12 contains escrow terms that are mutually acceptable, subject to any
additions or modifications that may be required by, or necessitated by the
requirements of , the escrow agent. The parties further agree that any bank or
trust company
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of nationally recognized stature which does not have any significant account
relationships with the Turners, NWS, Airgas or any successor to Airgas
(including any successor in the Change of Control contemplated by said
Subsections) will be a mutually satisfactory escrow agent. NWS hereby agrees
that, in each case without the prior written consent of the holders of a
majority of the Series A Preferred Stock, it will not execute any draw requests
under such Escrow Agreement and will not amend, modify, assign or waive any
rights or obligations under such Escrow Agreement.
5.13 Events of Non-Compliance and Default.
(a) Airgas hereby stipulates and agrees that
either of the following, unless waived in writing by a Majority in Interest of
Turner Shareholders shall constitute an Event of Non-Compliance (as defined in
the Amended Articles) and, upon the occurrence of such an Event of
Non-Compliance, any holder of Series A Preferred Stock may give written notice
thereof to NWS with a copy to Airgas and, provided such notice shall have been
given, the holders of the Series A Preferred Stock shall be entitled to elect a
fourth director as more fully provided in Section 3(b) of Article II of the
Amended Articles:
(i) Airgas shall fail to pay any
indemnification obligation that it is required to pay under Article 10 hereof
and such failure shall continue unremedied for a period of sixty (60) days
after the due date therefor; and
(ii) Airgas shall fail to deliver to the
Turner Shareholders, or their representative, a duly executed new irrevocable
proxy in the form attached hereto as Exhibit 5.11 within sixty (60) days after
the request therefor is made by any of the Turner Shareholders after July 1,
1999.
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(b) Airgas hereby stipulates and agrees that any
of the following, unless waived in writing by a Majority in Interest of Turner
Shareholders, shall constitute a Default (as defined in the Amended Articles)
and shall entitle the Turner Shareholders to exercise any and all remedies
available to the holders of Series A Preferred Stock in respect of a Default as
provided in Article II of the Amended Articles:
(i) Airgas shall fail to pay any
indemnification obligation that it is required to pay under Article 10 hereof
and such failure shall continue unremedied for a period of one hundred twenty
(120) days after the due date therefor; and
(ii) Airgas shall fail to deliver to a
Majority in Interest of Turner Shareholders, or their representative, a duly
executed new irrevocable proxy in the form attached as Exhibit 5.11 hereto
within one hundred twenty (120) days after request therefor is made in writing
by any of the Turner Shareholders after July 1, 1999; and
5.14 Change of Control Notice. Airgas shall promptly provide to
the Turner Shareholders a Change of Control Notice (as defined in Section 7 of
Article II of the Amended Articles.
ARTICLE 6
COVENANTS AND AGREEMENTS
REGARDING TRANSFERS OF COMMON AND SERIES A PREFERRED STOCK
6.1 Restrictions on Disposition of Common Stock and Series A
Preferred Stock. Subject to Article 9 hereof and to the Amended Articles,
Airgas and the Turner Shareholders hereby agree that, during the Term, they
will not transfer, encumber, pledge or otherwise dispose of, or cause or permit
the transfer, encumbrance, pledge or disposition of (each of the foregoing
"Transfer"), any Common Stock or Series A Preferred Stock held by them,
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whether voluntarily or involuntarily, by operation of law or otherwise, except
as provided in this Article 6. Any Transfer in violation of the terms of this
Article 6 shall be null and void and shall not operate to transfer any right,
title, or interest in any Common Stock or Series A Preferred Stock to the
purported transferee. NWS shall not cause or permit the Transfer of any
certificate representing any Common Shares or Voting Preferred Shares to be
made on its books unless the Transfer is permitted by this Article 6 and has
been made in accordance with its terms. After the expiration of the Term,
shares of Common Stock and shares of Series A Preferred Stock may be
transferred without reference to the restrictions set forth in this Article 6;
provided that if and to the extent the First Refusal Agreement is still in
effect after the expiration of the Term, no such Transfer shall be made if such
Transfer would violate the First Refusal Agreement, or would result in a Change
in Control as defined in the First Refusal Agreement, and any transferee shall
agree to be bound by the First Refusal Agreement as provided therein.
6.2 Transfers of Common Stock. Except as contemplated by Article
9 hereof or the Amended Articles and except for Transfers by Non-Family
Shareholders, shares of Common Stock may not be Transferred during the Term
except to an Affiliate of Airgas and such Affiliate, as a condition to such
Transfer, must agree to be bound by this Agreement and sign a counterpart
hereof. No such Transfer shall operate as a release of Airgas from any of its
obligations under this Agreement. Furthermore, no such Transfer shall be made
in violation of Airgas' obligations under the First Refusal Agreement, and any
such Affiliate shall agree to be bound by the First Refusal Agreement as
provided therein if the First Refusal Agreement is still in effect on the date
of such Transfer.
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6.3 Transfers of Series A Preferred Stock. Except as contemplated
by Article 9 hereof or the Amended Articles, during the Term, no shares of
Series A Preferred Stock may be Transferred by any Turner Shareholder except as
provided in subsections 6.3.1 and 6.3.2 below.
6.3.1 Transfers to Immediate Family. Each of the Turners
shall have the right to Transfer Series A Preferred Stock to one or more
members of his or her Immediate Family by gift, sale or other inter vivos
Transfer; provided that the Series A Preferred Shares shall be subject to the
terms and conditions of this Agreement and such transferee shall be a party to
and legally bound as a Turner Shareholder under this Agreement and shall sign a
counterpart hereof; and provided further that such transferee agrees to be
bound by the First Refusal Agreement as provided therein if the First Refusal
Agreement is still in effect on the date of such Transfer.
6.3.2 Transfers Upon Death of a Turner Shareholder. Upon
the death of a Turner Shareholder, the Series A Preferred Shares owned by the
deceased Turner Shareholder at the time of his or her death may be Transferred
by testamentary or intestate disposition only to one or more members of the
deceased Turner Shareholder's Immediate Family, but the Series A Preferred
Shares Transferred to the transferee or his or her legal representative or
guardian shall be subject to the terms and conditions of this Agreement and the
First Refusal Agreement and the transferee or his legal guardian shall be
legally bound as a Turner Shareholder under this Agreement and as a
"Shareholder" under the First Refusal Agreement.
6.4 Transfers to NWS. Preferred Stock may be redeemed by NWS or
exchanged for shares of Airgas Common Stock or other Exchange Consideration,
all in accordance with the terms of the Amended Articles.
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6.5 Stock Legend. All certificates evidencing shares of Common
Stock and shares of Series A Preferred Stock shall bear a legend on the face
thereof in substantially the following form:
"The shares of stock represented by this certificate are
subject to and transferable only in accordance with the terms
of an Agreement dated June 28, 1996 by and among the Company
and certain of its shareholders (which Agreement is on file
with the Company) and upon proof of compliance therewith."
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties of Turner Shareholders and the
Turners. The Turner Shareholders represent and warrant severally with respect
to subsection 7.1.5, and the Turners represent and warrant jointly and
severally with respect to the other representations and warranties contained in
this Section 7.1, as of the date hereof, that:
7.1.1 Organization and Good Standing. NWS is a corporation
duly organized, validly existing and in good standing under the laws of the
State of North Carolina, has full corporate power and authority to conduct its
business as such business is now being conducted, and is qualified to do
business in all other states where the nature of its business requires
qualification, except where the failure to be so qualified is not reasonably
likely to have a Material Adverse Effect.
7.1.2 Capitalization. NWS' authorized capital stock (prior
to the filing of the Amended Articles) consists solely of 12,500,000 shares of
voting common stock, $.10 par value per share, of which, after giving effect to
the merger of National Leasing into NWS as contemplated in Section 3.9 hereof,
5,943,266.5 shares shall be issued and outstanding and
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no shares shall be treasury stock. To the best knowledge of the Turner
Shareholders, the record and beneficial owners of all of the outstanding shares
of NWS, and their shareholdings, are correctly set forth in Section 7.1.2 of
the Disclosure Schedule. All of NWS' issued shares have been validly issued
and are fully paid and non-assessable. Except for the outstanding shares
described above and except as set forth in Section 7.1.2 of the Disclosure
Schedule, to the best knowledge of the Turner Shareholders, no Person has, or
has any right or interest in or claim to, any equity securities of NWS. Except
as set forth in Section 7.1.2 of the Disclosure Schedule, NWS has not issued or
agreed to issue any options, warrants, agreements, subscriptions or other
rights of any kind obligating NWS to issue any equity securities or any
securities or debt obligations convertible into or exchangeable for any equity
securities of NWS. To the best knowledge of the Turner Shareholders, except as
described in Section 7.1.2 of the Disclosure Schedule, there is no agreement
restricting the transfer or voting of shares of NWS.
7.1.3 Subsidiaries and Investments. Except as disclosed in
Section 7.1.3 of the Disclosure Schedule, NWS does not own or control, directly
or indirectly, any stock or other securities of any corporation, association or
business organization. Except as disclosed in Section 7.1.3 of the Disclosure
Schedule and except for investments in Airgas Common Stock, none of the Turner
Shareholders owns or has any equity interest in any Person which engages in any
business, nor do any of the Turner Shareholders directly or indirectly engage
in any business, which is competitive with the business of NWS.
7.1.4 No Consents; Validity. To the best knowledge of the
Turner Shareholders, except as disclosed in Section 7.1.4 of the Disclosure
Schedule, the execution
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and performance of this Agreement, and the consummation of the transactions
contemplated hereby, will not result in the breach of or constitute a default
or accelerate maturities under any loan or any other similar agreement,
instrument, indenture, mortgage, deed of trust, right of first refusal, or
other agreement to which any of the Turner Shareholders or NWS is a party or by
which any of them or their properties is bound. The Turner Shareholders have
obtained all consents, registrations, approvals, permits and authorizations
required to be obtained by the Turner Shareholders or NWS from any governmental
or regulatory authorities of any state in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, the failure to obtain any or all of which would have a
Material Adverse Effect, or would void, restrain, prevent or delay this
Agreement and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Turner Shareholders and is the legal, valid
and binding obligation of the Turner Shareholders enforceable against each of
them in accordance with its terms.
7.1.5 Title to Shares of NWS. Each Turner Shareholder
represents and warrants severally that except as set forth in Section 7.1.5 of
the Disclosure Schedule, such Turner Shareholder has valid title to its, his or
her Turner Shares and to his or her Remaining Turner Shares, free and clear of
all claims, liens, charges, pledges, encumbrances and equities whatsoever, has
complete and unrestricted right, power and authority to enter into and execute
this Agreement and to sell, transfer and deliver its, his or her Turner Shares,
and, upon delivery of the certificates therefor, will transfer to Airgas valid
title thereto, free and clear of all claims, liens, charges, pledges,
encumbrances and equities whatsoever.
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7.1.6 Corporate Records of NWS. Attached to the Disclosure
Schedule are true, complete and correct copies of NWS' Articles of
Incorporation, and all amendments thereto effected prior to the date hereof,
and NWS' bylaws, as amended to the date hereof. To the best knowledge of the
Turner Shareholders, NWS' minute books contain records of all meetings, which
records are complete in all material respects, and accurately reflect corporate
actions of its stockholders and Board of Directors passed upon by them. To the
best knowledge of the Turner Shareholders, the stock certificate book and stock
ledger of NWS are complete and correct.
7.1.7 Personal Property. To the best knowledge of the
Turner Shareholders, NWS has good title to or a valid leasehold interest in all
material machinery, equipment, vehicles, furniture, fixtures, cylinders, tanks,
and other tangible personal property owned or used by NWS in its business, free
and clear of all liens, leases or encumbrances whatsoever, subject only to such
security interests, leases or other encumbrances as are described in Section
7.1.7 of the Disclosure Schedule and subject to Permitted Encumbrances. To the
best knowledge of the Turner Shareholders, such personal property is in the
possession of NWS or its bailees, agents or customers and, if in the possession
of customers, is held pursuant to binding agreements obligating the customer to
return or reimburse NWS for such property.
7.1.8 Real Property. All real property (the "Real
Property") currently owned by or leased to NWS is listed in Section 7.1.8(A) of
the Disclosure Schedule. To the best knowledge of the Turner Shareholders, all
real property previously owned by or leased to NWS during the ten (10) year
period immediately preceding the Closing is listed in Section 7.1.8(B) of the
Disclosure Schedule. To the best knowledge of the Turner Shareholders, the
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present use of each parcel of Real Property is in compliance with all
applicable zoning ordinances (or variances therefrom) and other governmental
regulations, and there does not exist any notice of any uncorrected violation
of housing, building, safety or fire ordinances, except for any noncompliance
that is not reasonably likely to have a Material Adverse Effect. With respect
to all Real Property owned by NWS, other than Permitted Encumbrances and as
described in Section 7.1.8(C) of the Disclosure Schedule, such property is
owned free and clear of all liens, leases or encumbrances which are reasonably
likely to have a Material Adverse Effect. All leases for Real Property are
listed in Section 7.1.10 of the Disclosure Schedule. Except as set forth in
Section 7.1.8(D) of the Disclosure Schedule: (i) to the best knowledge of the
Turner Shareholders, neither the Turner Shareholders nor any previous lessee of
any part of the Real Property or any third parties, have installed asbestos in
any buildings, structures or appurtenances at the Real Property; (ii) during
the period of NWS' ownership or occupancy of the Real Property or the Previous
Locations, as the case may be, to the best knowledge of the Turner Shareholders
and except to the extent any of the following are not reasonably likely to have
a Material Adverse Effect: (A) the Real Property has not been used and the
Previous Locations were not used for the disposal of any Hazardous Substances
or Wastes at the Real Property or the Previous Locations; (B) there has not
been transported to or from the Real Property or the Previous Locations any
Hazardous Substances or Wastes to a location about which NWS has received a
written notice of potential liability for environmental conditions at such
location; (C) there has been no Contamination at the Real Property or the
Previous Locations which has not been remediated; and (D) there has been no use
of the Real Property or the Previous Locations that will, under any federal,
state or local law or regulation, require any closure or cessation
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of the use of the Real Property; (iii) to the best knowledge of the Turner
Shareholders, neither the Turner Shareholders nor NWS have been notified in
writing by any governmental agency or individual in any currently pending or
threatened action, litigation, proceeding or investigation that they are a
responsible party or potentially responsible party for any liability for
disposal or release of any Hazardous Substances or Wastes; (iv) to the best
knowledge of the Turner Shareholders, no lien or superlien has been recorded
against the Real Property for any material liability in connection with any
environmental contamination; and (v) to the best knowledge of the Turner
Shareholders, the Real Property and NWS are in compliance with all
Environmental Laws, except to the extent any noncompliance is not reasonably
likely to have a Material Adverse Effect. For the purposes of this Agreement:
(i) the term "Contamination" shall mean the uncontained or illegal presence of
Hazardous Substances at the Real Property or the Previous Locations, at levels
which require remediation under any applicable Environmental Law, provided,
however, that Contamination does not include any Hazardous Substances at
naturally occurring levels; (ii) the term "Hazardous Substances" shall mean any
radioactive materials, asbestos, ureaformaldehyde, hazardous wastes, toxic
substances, petroleum related substances, or any other substance designated as
a "hazardous substance," "pollutant" or "contaminant" in the Environmental
Laws; and (iii)"Wastes" shall mean any hazardous or toxic wastes as those terms
are defined in the Environmental Laws.
7.1.9 Insurance Policies. To the best knowledge of the
Turner Shareholders, all policies of insurance listed in Section 7.1.9 of the
Disclosure Schedule are in full force and effect with premiums paid for the
policy periods indicated. To the best knowledge of the Turner Shareholders,
the insurance coverage represented by such policies is in compliance in all
material respects with all leases, contracts and other obligations and
arrangements of
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NWS. To the best knowledge of the Turner Shareholders, no claim in excess of
$25,000 has been made on any such policies except as noted in Section 7.1.9 of
the Disclosure Schedule.
7.1.10 Leases, Contracts, Etc. To the best knowledge of the
Turner Shareholders, Section 7.1.10 of the Disclosure Schedule sets forth a
complete list of (i) all leases for real property, mortgages, notes, loan
agreements, pipeline contracts, and contracts of any kind where the expected
amount of the consideration expected to be paid or received exceeds $750,000;
and (ii) all bulk contracts where the expected amount of the consideration
expected to be paid or received exceeds $150,000, of NWS or of any of the
Turner Shareholders pertaining to NWS (the "Scheduled Contracts"). Complete
copies of all the Scheduled Contracts have been made available to Airgas. To
the best knowledge of the Turner Shareholders, each of the Scheduled Contracts
is in full force and effect and is valid and enforceable in accordance with its
terms. To the best knowledge of the Turner Shareholders, no party is in
default under any of the Scheduled Contracts nor has any event occurred which,
after the giving of notice or the passage of time, or both, would constitute a
default thereunder.
7.1.11 Patents, Etc. To the best knowledge of the Turner
Shareholders, NWS has no patents, trademarks, trade names, copyrights, or
applications therefor, nor any licenses, assignments or agreements with others
relating thereto, except as set forth in Section 7.1.11 of the Disclosure
Schedule. To the best knowledge of the Turner Shareholders, NWS is not
infringing on a patent, trademark, trade name or copyright in the conduct of
the Businesses as such Businesses are currently being conducted. To the best
knowledge of the Turner Shareholders, NWS has the full right to use its
corporate name and all trade names in all places where it now does business.
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7.1.12 Labor Contracts, Employment Contracts and Employee
Benefit Plans. To the best knowledge of the Turner Shareholders, Section
7.1.12 of the Disclosure Schedule lists all bonus, pension, profit sharing,
retirement income, stock purchase, stock option, hospitalization insurance and
similar agreements, plans and practices, formal and informal, covering any of
the employees of NWS, or under which NWS has any present or future obligation
or liability or under which any current or former employee of NWS has any
present or future rights or benefits ("Employee Plans"). With respect to each
Employee Plan provided by NWS which is an Employee Pension Benefit Plan, as
defined in Section 3.2 of ERISA which is intended to be qualified within the
meaning of Section 401(a) of the Code ("Pension Plan"), a copy of the latest
available summary plan description, determination letter, and Form 5500 for the
most recent year have been delivered to Airgas. To the best knowledge of the
Turner Shareholders, each Pension Plan has been determined by the Internal
Revenue Service to be qualified. To the best knowledge of the Turner
Shareholders, except as disclosed in Section 7.1.12 of the Disclosure Schedule,
each Employee Plan has been operated and administered in accordance with the
requirements of ERISA and the Code. To the best knowledge of the Turner
Shareholders, no Employee Plan provided by NWS nor any trustee or administrator
thereof has engaged in a "prohibited transaction" (as defined in Section 406 of
ERISA or in Section 4975 of the Code) which would subject such Employee Plan,
any trust created thereunder, any trustee or administrator thereof, or any
party dealing with any Employee Plan to the liability set forth in Section
409(a) of ERISA or to the tax or penalty on prohibited transactions imposed by
Section 502 of ERISA or Section 4975 of the Code. To the best knowledge of the
Turner Shareholders, NWS is not and has never been a party to a Multi-Employer
Plan and NWS has no current or due "withdrawal liability" with respect to any
such Multi-Employer Plan. Except as disclosed in Section 7.1.12 of the
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Disclosure Schedule, NWS is not a party to any collective bargaining agreement
or other labor union or similar agreement. To the best knowledge of the Turner
Shareholders, NWS is not the subject of or threatened by any strike or other
labor disturbance by any group of employees, and no attempt or plan to organize
NWS' employees is threatened or contemplated. To the best knowledge of the
Turner Shareholders, except as disclosed in Section 7.1.12 of the Disclosure
Schedule, there are no pending claims against NWS under workmen's compensation,
occupational safety and health, ERISA or similar laws and regulations.
7.1.13 Litigation. Except as set forth in Section 7.1.13 of
the Disclosure Schedule and except for the matters addressed in Section 7.1.8,
(i) there is no litigation pending or, to the best knowledge of the Turner
Shareholders, threatened against NWS or NWS' properties that is reasonably
likely to have a Material Adverse Effect; (ii) to the best knowledge of the
Turner Shareholders, there is no governmental investigation pending or
threatened against NWS or NWS' properties that is reasonably likely to have a
Material Adverse Effect; and (iii) NWS is not a party to or subject to the
provisions of any decree or judgment of any court or governmental agency. To
the best knowledge of the Turner Shareholders, no complaints or charges of
unlawful conduct have been made within the immediately preceding five (5) years
against NWS or any employees or officers of NWS arising out of the Business.
7.1.14 Franchises, Permits and Licenses. To the best
knowledge of the Turner Shareholders, NWS has all material franchises, permits,
licenses, approvals and other authorizations from federal, state and local
governmental authorities required to be held by NWS in connection with NWS'
business as presently conducted.
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7.1.15 Customers and Suppliers. None of NWS' customers
accounted for more than 5% of NWS' revenues during such period or during the
12-month period ended September 30, 1995. To the best knowledge of the Turner
Shareholders, no material customer or supplier of NWS has indicated in writing
to NWS that such customer or supplier, as the case may be, intends to terminate
or modify in any material respect its relationship with NWS, and the Turner
Shareholders agree to promptly notify Airgas of any material change in any such
relationship occurring prior to the Closing Date of which the Turner
Shareholders become aware. To the best knowledge of the Turner Shareholders,
NWS has not engaged in any forward selling or granted any usual sales or terms
of sale to any customer. To the best knowledge of the Turner Shareholders,
there are no customer prepayments or deposits, except to the extent disclosed
in the Financial Statements or incurred in the ordinary course of business
since the date of the Financial Statements.
7.1.16 Taxes. NWS made a valid election to be treated as an
S corporation as defined in Section 1361 of the Code commencing September 25,
1988 and, as of June 1, 1996, such election had not been terminated or revoked
and remained in effect on June 1, 1996. To the best knowledge of the Turner
Shareholders, NWS and the Turner Shareholders have filed all federal, state,
county and local income, excise, withholding, property, sales, use, franchise
and other tax returns required to be filed by them on or before the date hereof
and have prepared and filed all such tax returns in accordance with applicable
law in all material respects. Except to the extent contested in good faith,
NWS has paid in full, or established an adequate reserve for, all taxes,
interest, penalties, assessments or deficiencies ("Tax" or "Taxes") required
under applicable law to be paid by NWS on or prior to the date hereof, subject
to any extension granted or available for the payment of any tax, interest,
penalty, assessment or deficiency, where the failure to pay or reserve is
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reasonably likely to have a Material Adverse Effect. To the best knowledge of
the Turner Shareholders, all such returns are true and correct in all material
respects. To the best knowledge of the Turner Shareholders, all monies
required to be withheld by NWS for income taxes, social security and other
payroll taxes have been collected or withheld, and either paid to the
respective governmental agencies, set aside in accounts for such purpose, or
accrued, reserved against and entered upon its books. NWS has not received any
written notice that any material deficiencies for Taxes have been claimed or
assessed against NWS within the last ten (10) years, and, except as described
in Section 7.1.16 of the Disclosure Schedule, to the best knowledge of the
Turner Shareholders, no federal, state or local return for Taxes has been
audited or examined by any taxing or other governmental authority within the
last ten (10) years. To the best knowledge of the Turner Shareholders, there
is no audit, investigation, claim or assessment pending or threatened against
NWS for any alleged deficiency in any Tax. To the best knowledge of the Turner
Shareholders, there are no waivers or extensions of statutory periods of
limitation in effect with respect to any Taxes of NWS.
7.1.17 Employees. Section 7.1.17 of the Disclosure Schedule
is a list of the names of NWS' present directors, officers and all employees
with aggregate cash compensation from NWS during calendar year 1995 in excess
of $50,000. The Turner Shareholders have made available to Airgas the records
of NWS relating to current compensation of the employees of NWS. Except in the
ordinary course of business and as described in Section 7.1.17 of the
Disclosure Schedule, since January 1, 1996, NWS has not granted or committed to
grant any increase in the salary, bonus or other compensation payable to any of
the employees of NWS. Except as described in Section 7.1.17 of the Disclosure
Schedule, there are no written employment contracts with any of the employees
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that require NWS to employ an employee for a fixed term or restrict the right
of NWS to terminate such employee.
7.1.18 Financial Information. Attached hereto as Schedule
7.1.18, are NWS' balance sheets and income statements for the fiscal years
ending September 30, 1994 and 1995 (the "Financial Statements") and interim
statements for the period ending March 25, 1996 (the "Interim Statements").
The Financial Statements have been prepared in accordance with GAAP and fairly
present the financial position of NWS as of the dates indicated and the results
of its operations for the periods specified. To the best knowledge of the
Turner Shareholders and subject to normal, year-end adjustments, the Interim
Statements have been prepared in accordance with GAAP and present fairly the
financial position of NWS as of March 25, 1996 and the results of its
operations for the six month period ending March 25, 1996.
7.1.19 Absence of Certain Changes. Since September 30, 1995
and except as set forth in Section 7.1.19 of the Disclosure Schedule,
1. there has been no material adverse change in
the Businesses,
2. to the best knowledge of the Turner
Shareholders, there have been no material transactions entered into by NWS,
other than those in the ordinary course of business, and
3. there has been no dividend or distribution of
any kind declared, paid or made by NWS on any class of its capital stock.
7.1.20 Compliance with Laws. Other than matters covered by
Section 7.1.8 hereof, to the best knowledge of the Turner Shareholders, the
Businesses are in compliance with all laws, licenses and orders applicable to
the Businesses, except where the failure to be in such compliance is not
reasonably likely have a Material Adverse Effect. To the best knowledge of
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the Turner Shareholders, NWS has not received written notice of any violation
of any such law, ordinance or governmental regulation, which violation is
uncorrected as of the date hereof.
7.1.21 Disclosure. To the best knowledge of the Turner
Shareholders, no representation or warranty by the Turner Shareholders herein
contains any untrue statement of a material fact, or omits to state a material
fact necessary to make the statements contained herein not misleading.
7.1.22 Knowledge. Whenever a representation or warranty
made by the Turner Shareholders herein refers to the knowledge of the Turner
Shareholders, such knowledge shall be deemed to consist only of the actual
knowledge of any one or more of the Turner Shareholders or any one or more of
the Senior Management.
7.1.23 Disclosure Schedule. Notwithstanding anything to the
contrary contained in this Agreement or any of the Disclosure Schedule, any
information disclosed in one Section of the Disclosure Schedule shall be deemed
to be disclosed in all other Sections of the Disclosure Schedule. Certain
information set forth in Disclosure Schedule is included solely for
informational purposes and may not be required to be disclosed pursuant to this
Agreement. The disclosure of any information shall not be deemed to constitute
an acknowledgment that such information is required to be disclosed in
connection with the representations and warranties made by the Turner
Shareholders in this Agreement or that it is material, nor shall such
information be deemed to establish a standard of materiality.
7.2 Representations and Warranties of Airgas. Airgas represents
and warrants, as of the date hereof, that:
7.2.1 Organization. Airgas is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has full corporate power and authority to conduct its business as
such business is now being conducted and is qualified
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to do business in all other states where the nature of its business requires
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business of Airgas and its subsidiaries, taken
as a whole.
7.2.2 Capitalization. As of June 1, 1996, Airgas'
authorized capital stock consisted solely of 200,000,000 shares of voting
Common Stock, $.01 par value per share, of which 64,298,000 shares were issued
and outstanding and 2,355,000 shares were held as Treasury Stock.
7.2.3 No Consents. Airgas has the full right and power to
perform its obligations under this Agreement and each of the Airgas Transaction
Documents; and to the best knowledge of Airgas, the execution and performance
of this Agreement and each of the Airgas Transaction Documents, and the
consummation of the transactions contemplated hereby and thereby, will not
result in the breach of or constitute a default or accelerate maturities under
any loan or any other similar agreement, instrument, indenture, mortgage, deed
of trust, right of first refusal, or other agreement to which Airgas is a party
or by which it or its properties is bound. To the best knowledge of Airgas,
Airgas has obtained all consents, registrations, approvals, permits and
authorizations required to be obtained by Airgas from any governmental or
regulatory authorities of any state in connection with the execution and
delivery of this Agreement and each of the Airgas Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, the failure
to obtain any or all of which would have a material adverse affect on the
business or the financial condition or results of operations of Airgas, or
would void, restrain, prevent or delay this Agreement and the transactions
contemplated hereby.
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7.2.4 Exchange Shares. The Exchange Shares have been duly
authorized and, when issued and delivered by Airgas will be validly issued and
fully paid and non-assessable. There is no contract, provision in the
Certificate of Incorporation or Bylaws of Airgas, or other restriction of any
kind (other than provisions of federal and state securities laws applicable
generally to all issuers of securities), which may reasonably be expected to
prevent or impair the ability of Airgas to register the Exchange Shares in
accordance with the Registration Rights Agreement.
7.2.5 Validity of Agreement. This Agreement and each of
the Airgas Transaction Documents has been duly authorized by Airgas. This
Agreement has been duly executed and delivered by Airgas and is the legal,
valid and binding obligation of Airgas enforceable against it in accordance
with its terms. Upon execution and delivery of the Airgas Transaction
Documents at the Closing, each of the Airgas Transaction Documents will have
been duly executed and delivered by Airgas and will be the legal, valid and
binding obligation of Airgas enforceable against it in accordance with its
terms.
7.2.6 Corporate Records of Airgas Companies. Attached to
the Disclosure Schedule are true, complete and correct copies of the
Certificate of Incorporation of Airgas, and all amendments thereto effected
prior to the date hereof, and the bylaws of Airgas, as amended to the date
hereof. To the best knowledge of Airgas, Airgas' minute books contain records
of all meetings, which records are complete in all material respects, and
accurately reflect corporate actions of its stockholders and Board of Directors
passed upon by them.
7.2.7 SEC Filings.
(a) Airgas has furnished to the Turner
Shareholders its (i) Annual Report on Form 10-K for the fiscal years ended
March 31, 1996, and March 31, 1995, and (ii) Quarterly Reports on Form 10-Q for
the quarters ended June 30, 1995, September 30,
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1995 and December 31, 1995 (collectively, the "SEC Reports"). As of their
respective dates, such SEC Reports complied in all material respects with the
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act") and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations thereunder, and did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(b) The accountants who certified the financial
statements and supporting schedules included in the SEC Reports are independent
public accountants as required by the Securities Act and the regulations issued
thereunder.
(c) The financial statements included in the SEC
Reports comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared from and are in accordance with the books
and records of Airgas and present fairly the financial position of Airgas and
its consolidated subsidiaries as at the dates indicated and the results of
their operations for the periods specified; except as otherwise stated in the
SEC Reports, said financial statements have been prepared in conformity with
GAAP; and the supporting schedules included in the SEC Reports present fairly
in all material respects the information required to be stated therein.
(d) Since the respective dates as of which
information is given in the Annual Report on Form 10-K for the year ended March
31, 1996, except as otherwise stated therein, (i) there has been no material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of Airgas and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
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business, (ii) there have been no transactions entered into by Airgas or any of
its subsidiaries, other than those in the ordinary course of business, which
are material with respect to Airgas and its subsidiaries considered as one
enterprise, and (iii) there has been no dividend or distribution of any kind
declared, paid or made by Airgas on any class of its capital stock.
7.2.8 Taxes. To the best knowledge of Airgas, the Airgas
Consolidated Group has filed all federal, state, county and local income,
excise, withholding, property, sales, use and franchise tax returns required to
be filed by any member of the Airgas Consolidated Group on or before the date
hereof and has prepared and filed all such tax returns in accordance with
applicable law in all material respects. Except to the extent contested in
good faith, the Airgas Consolidated Group has paid in full, or accrued, all
Taxes required under applicable law to be paid by any member of the Airgas
Consolidated Group on or prior to the date hereof, subject to any extension
granted or available for the payment of any Tax where the failure to pay or
accrue is reasonably likely to have a material adverse effect on Airgas and its
Affiliates, taken as a single enterprise. To the best knowledge of Airgas, all
such returns are true and correct in all material respects. To the best
knowledge of Airgas, all monies required to be withheld by any member of the
Airgas Consolidated Group for income taxes, social security and federal payroll
taxes have been collected or withheld, and either paid to the respective
governmental agencies, set aside in accounts for such purpose or accrued, and
entered upon its books. To the best knowledge of Airgas, no member of the
Airgas Consolidated Group has received any written notice that any material
deficiencies for Taxes have been claimed or assessed. To the best knowledge of
Airgas, there are no waivers or extensions of any statutory periods of
limitation in effect with respect to any Taxes of any
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member of the Airgas Consolidated Group that are material to the Airgas
Consolidated Group.
7.2.9 Litigation. There is no litigation pending, or to
the best knowledge of Airgas threatened, against Airgas or the properties of
Airgas that is reasonably likely to have a material adverse effect on Airgas
and its subsidiaries considered as one enterprise. To the best knowledge of
Airgas, there is no governmental investigation pending or threatened against
Airgas or the properties of Airgas that is reasonably likely to have a material
adverse effect on Airgas and its subsidiaries considered as one enterprise.
7.2.10 Acquisition of Stock for Investment. Airgas is
acquiring the Turner Shares for investment and not with a view toward, or for
sale in connection with, any distribution thereof, nor with any present
intention of distributing or selling such Turner Shares. Airgas agrees that
the Turner Shares may not be sold, transferred, offered for sale, pledged,
hypothecated, or otherwise disposed of without registration under the
Securities Act of 1933, as amended and or any applicable state securities laws,
except pursuant to an exemption from such registration under such act and such
laws.
7.2.11 Financing. Airgas has sufficient funds available to
it to purchase the Turner Shares pursuant to this Agreement and otherwise
satisfy all of its obligations under this Agreement.
7.2.12 Disclosure. To the best knowledge of Airgas, no
representation or warranty by Airgas herein contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements contained herein not misleading.
7.2.13 Knowledge. Whenever a representation or warranty made
by Airgas herein refers to the knowledge of Airgas, such knowledge shall be
deemed to consist only of the actual knowledge of any one or more of the Airgas
Management.
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7.3 Airgas' Investigation and Disclaimer of Other Representations
and Warranties. Airgas has undertaken such investigation as it has deemed
necessary to enable it to make an informed and intelligent decision with
respect to this Agreement and the transactions contemplated hereby and Airgas
acknowledges that the Turner Shareholders and NWS have allowed Airgas such
access as has been requested by Airgas to the personnel, properties, premises
and records of NWS for this purpose. Airgas acknowledges and agrees that (i)
the Turner Shareholders do not make, and have not made, any representations or
warranties relating to NWS, the Turner Shareholders, the Businesses or
otherwise in connection with the transactions contemplated hereby other than
those representations and warranties expressly set forth in Section 7.1 of this
Agreement; (ii) no Person has been authorized by the Turner Shareholders, NWS
to make any representation or warranty relating to NWS, the Turner Shareholders
or the Businesses or otherwise in connection with the transactions contemplated
hereby for or on behalf of the Turner Shareholders and, if made, such
representation or warranty may not be relied upon by Airgas as having been
authorized by the Turner Shareholders or NWS; and (iii) notwithstanding any
provision in this Agreement to the contrary, the Turner Shareholders make no
representations or warranties whatsoever regarding the First Refusal Agreement.
7.4 Turner Shareholders' Investigation and Disclaimer of Other
Representations and Warranties. The Turner Shareholders have undertaken such
investigation as they have deemed necessary to enable them to make an informed
and intelligent decision with respect to this Agreement and the transactions
contemplated hereby and the Turner Shareholders acknowledge that Airgas has
allowed the Turner Shareholders such access as has been requested by the Turner
Shareholders to the personnel, properties, premises and records of Airgas for
this purpose. The Turner Shareholders acknowledge and agree that (i) Airgas
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does not make, and has not made, any representations or warranties relating to
Airgas, its businesses, or otherwise in connection with the transactions
contemplated hereby other than those representations and warranties expressly
set forth in Section 7.2 of this Agreement; and (ii) no Person has been
authorized by Airgas to make any representation or warranty relating to Airgas,
its businesses or otherwise in connection with the transactions contemplated
hereby for or on behalf of Airgas and, if made, such representation or warranty
may not be relied upon by the Turner Shareholders as having been authorized by
Airgas.
7.5 Survival of Representations and Warranties. The
representations and warranties of the parties contained in this Agreement shall
survive the Closing for a period of one (1) year, except for the
representations and warranties of the Turner Shareholders in Section 7.1.5
hereof which shall survive for the applicable statute of limitations. The
foregoing notwithstanding, nothing contained in this Section 7.5 shall be
deemed to affect the continuing obligations of the parties hereunder,
including, without limiting the generality of the foregoing, the provisions of
Article 10 hereof relating to each party's indemnification of the other for
indemnification claims brought before the expiration of the survival periods
described above.
ARTICLE 8
REDEMPTION AND EXCHANGE RIGHTS
8.1 Redemption. As more fully provided in the Amended Articles,
at the written election of the holders of a majority of the outstanding shares
of Series A Preferred Stock, NWS shall redeem all shares of Preferred Stock
(such transaction is referred to herein as the "Redemption"; the right of the
holders of the Series A Preferred Stock to cause the Redemption to occur is
referred to herein as the "Redemption Right"; and the obligation of NWS to
redeem
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all shares of Preferred Stock in connection with the Redemption is referred to
as the "Redemption Obligation").
8.2 Exchange for Airgas Stock. Under the terms of the Amended
Articles, the holders of a majority of the Series A Preferred Stock shall have
the right, to cause NWS and all holders of Preferred Stock to exchange each and
every share of Preferred Stock outstanding for shares of Airgas Common Stock,
as more fully provided in the Amended Articles (such transaction is referred to
herein as the "Exchange"; the right of the holders of the Series A Preferred
Stock to cause the Exchange to occur is referred to herein as the "Exchange
Right"; and the obligation of NWS to deliver Airgas Common Stock to the holders
of NWS Preferred Stock is referred to herein as the "Exchange Obligation").
ARTICLE 9
EVENTS OF NON-COMPLIANCE AND EVENTS OF DEFAULT
Reference is hereby made to the definitions of "Events of
Non-Compliance", "Default" and "Change of Control" set forth in the Amended
Articles. The occurrence of each of (i) an Event of Non-Compliance; (ii) a
Default; or (iii) a Change of Control shall have the effects set forth in the
Amended Articles. NWS shall promptly provide written notice to all record
stockholders of NWS of each and any Event of Non-Compliance and of each and any
Default. After the occurrence of a Default, the holders of a majority of the
issued and outstanding shares of Series A Preferred Stock shall be entitled to
exercise the Redemption Right and/or the Exchange Right, as more fully provided
in the Amended Articles. In such event, the exercise of the Redemption Right
and/or the Exchange Right shall not be subject to the transfer restrictions
contained in Article 6 hereof or the covenant contained in Section 5.1 hereof;
and any such
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Redemption and/or such Exchange shall be subject to the First Refusal Agreement
to the extent the First Refusal Agreement shall not have expired or otherwise
terminated.
ARTICLE 10
INDEMNITY; ARBITRATION
10.1 Indemnification. The parties agree to indemnify
each other as follows:
10.1.1 Turner Indemnification. (a)
The Turners jointly and severally agree to indemnify and defend Airgas and
its successors and permitted assigns, and to hold them harmless from and
against any and all damages, claims, deficiencies, losses, liabilities,
obligations, and expenses (including reasonable attorneys' fees) of every kind
and description (collectively, "Obligations") arising from any
misrepresentation or breach of warranty hereunder by any of the Turner
Shareholders, as to which notice has been given to the Turners within any
applicable time period in Section 7.5 hereof;
(b) The Turners agree to indemnify
and defend Airgas and its successors and permitted assigns, and to hold them
harmless from and against any and all Obligations arising from any
misrepresentation or breach of warranty by the Turner Transferees reflected in
Section 7.1.5 hereof as to which notice has been given to the Turners within
the applicable time period in Section 7.5 hereof.
(c) Each of the Turner Shareholders
agree to indemnify and defend Airgas and its successors and permitted assigns,
and to hold them harmless from and against any and all Obligations arising from
any nonfulfillment by such Turner Shareholder of any of the obligations of such
Turner Shareholder under this Agreement.
(d) The Turners jointly and
severally agree to indemnify and defend Airgas and its successors and permitted
assigns, and to hold them harmless from and against:
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(1) any Remedial Action Costs
required by Environmental Law to correct a violation of Environmental Law (A)
required to be corrected under Environmental Law, (B) related directly to any
Identified Environmental Matter and (C) arising on or prior to the Closing
Date; and
(2) any and all damages, claims,
deficiencies, losses, liabilities, obligations and expenses other than and
expressly excluding attorneys' fees and costs and costs associated with Airgas
or NWS management or employee time (collectively, "Environmental Obligations")
arising from any claim or demand by any governmental agency or third party (not
including any Airgas representative, employee or agent or any Affiliate of
Airgas) arising from a violation of Environmental Law or the presence of
Hazardous Substances in the soil, surface water or groundwater (A) related
directly to any Identified Environmental Matter; and (B) arising on or prior to
the Closing Date. The indemnity obligations of the Turners under this
paragraph (d) shall survive until the tenth (10th) anniversary of the Closing
Date. With respect to any environmental matter or condition, including any
violation of Environmental Law, existing on the Closing Date, Airgas
understands and agrees that its indemnity rights under this Section 10.1.1 are
its sole and exclusive remedy against the Turner Shareholders or National
Realty. Except as specifically provided in this Section 10.1.1, Airgas hereby
waives and releases the Turner Shareholders and National Realty from all
Environmental Obligations (including without limitation any claim or obligation
for Remedial Action Costs) of any kind or nature whatsoever, known or unknown,
suspected or unsuspected, whether arising now or in the future, to the extent
any of the Environmental Obligations arise out of or relate to any
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environmental matter or condition, including any violation of Environmental
Law, existing on the Closing Date.
(e) Airgas shall notify the Turner Shareholders
in writing within a reasonable period of any claim or liability asserted against
Airgas which would give rise to an Indemnity Claim against the Turner
Shareholders under this Section 10.1.1. For purposes of this Section 10.1.1,
in determining whether any of the representations and warranties reflected in
Section 7.1 hereof (other than those reflected in Section 7.1.19 hereof) have
been breached or are inaccurate, any reference in any such representation or
warranty to the term "material" or "Material Adverse Effect" shall be construed
as though such qualification were omitted therefrom. Notwithstanding anything
contained in this Agreement to the contrary, the Turner Shareholders shall have
no liability under this Section 10.1.1, (i) with respect to any Obligation or
Environmental Obligation unless such Obligation or Environmental Obligation, as
the case may be, exceeds Twenty-five Thousand Dollars ($25,000) (the "Threshold
Amount"); provided, however, that Obligations or Environmental Obligations
arising out of a single or related state of facts, circumstances or events
shall be aggregated for purposes of determining whether the Obligations or
Environmental Obligations exceed the Threshold Amount; (ii) other than as a
result of any breach of Section 7.1.5 hereof, unless and until the aggregate
amount of all established claims for indemnification under this Section 10.1.1
exceeds Three Million Dollars ($3,000,000) (the "Basket"), in which case the
Turner Shareholders shall be liable for indemnification under this Section
10.1.1 only to the extent such Obligations and Environmental Obligations, in
the aggregate, exceed the amount of the Basket; provided, however, that,
notwithstanding the Basket, the Turners shall be liable for established claims
for indemnification under paragraph (d) of this Section 10.1.1 to
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the extent such established claims under such paragraph (d) exceed, in the
aggregate, Two Million Dollars ($2,000,000); further provided, however, that to
the extent the Turners provide indemnification under paragraph (d) of this
Section 10.1.1, the amount of such indemnification shall not apply against or
otherwise reduce the Basket; and (iii) under no circumstances shall the Turner
Shareholders have any indemnification obligations under this Section 10.1.1 in
any aggregate amount in excess of Fifty Million Dollars ($50,000,000). In
addition, the Turners shall have no liability under this Section with respect
to Obligations or Environmental Obligations arising out of any breach of any
representation or warranty of which Airgas had knowledge, as defined below, at
the time of the Closing and no such Obligations or Environmental Obligations
shall apply against or otherwise reduce the Basket. For purposes of this
Section 10.1.1, Airgas shall be deemed to have "knowledge" if, but only if, the
Turners shall have proved by a preponderance of the evidence that any one or
more of Airgas Management had actual knowledge of the untruth of such
representation or warranty. In the determination of whether Airgas had such
knowledge, each of the Airgas Management shall be deemed to have read this
Agreement and the Schedules and Exhibits hereto.
10.1.2 General Airgas Indemnification. Airgas
agrees to indemnify and defend the Turner Shareholders and their heirs, legal
representatives and permitted assigns and to hold them harmless from and
against any and all damages, claims, deficiencies, losses, liabilities,
obligations, and expenses (including reasonable attorneys' fees) of every kind
and description arising from (a) any misrepresentation or breach of warranty
hereunder by Airgas as to which notice has been given to Airgas within any
applicable survival period in Section 7.5 hereof, or (b) any nonfulfillment of
any obligations of Airgas' under this
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Agreement; provided, however, that this general indemnity obligation shall not
apply to those matters specifically addressed in Sections 10.1.3 and 10.1.4
hereof for which there is separate and additional indemnification from Airgas.
The Turner Shareholders shall notify Airgas in writing within a reasonable
period of any claim or liability asserted against the Turner Shareholders or
any of them which would give rise to an Indemnity Claim by any of them against
Airgas.
10.1.3 Special Indemnification. (a) Airgas
hereby agrees to indemnify and hold harmless each First Refusal Indemnified
Party (as defined in paragraph (c) below) from and against any First Refusal
Claim (as defined in paragraph (c) below) in accordance with this Section
10.1.3; provided, however, that Airgas shall not indemnify or hold harmless
any First Refusal Indemnified Party from, and Airgas shall have no
responsibility or liability for, any loss, damage of every kind and nature
(including punitive damages), or liability (other than legal and other
out-of-pocket expenses otherwise payable pursuant to this Section 10.1.3),
including any consequential or indirect loss, damage, or liability, to the
extent that such loss, damage, or liability results from the granting or
ordering of any specific performance or equitable relief not requiring the
First Refusal Indemnified Party or Airgas to pay any amounts to the claimant
with respect to the First Refusal Agreement or any settlement or compromise
that results in any similar relief or action (other than the payment of
monetary damages directly to a claimant).
(i) Procedure for Indemnification.
In case any judicial proceeding shall be instituted involving a First Refusal
Claim against any First Refusal Indemnified Party in respect of which indemnity
may be sought pursuant to this Section 10.1.3, such First Refusal Indemnified
Party shall promptly notify Airgas in writing
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of the existence of such First Refusal Claim. Airgas shall assume and control
the defense of such First Refusal Claim and shall retain counsel reasonably
acceptable to the Turners to represent the First Refusal Indemnified Party
(which counsel may also represent Airgas) and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any First Refusal Indemnified Party shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such First Refusal Indemnified Party unless (i) Airgas and the First
Refusal Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both Airgas and the First Refusal Indemnified Party
and representation of both parties by the same counsel may be inappropriate due
to actual or potential differing interests between them, in which cases the
reasonable fees and expenses of such counsel shall be paid by Airgas. It is
understood that Airgas shall not, in respect of the legal expenses of any First
Refusal Indemnified Party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm for all First Refusal Indemnified Parties and that
all such reasonable fees and expenses shall be reimbursed as they are incurred.
In the case of any such separate firm for the Turner Shareholders, such firm
shall be designated in writing by a Majority in Interest of Turner
Shareholders. In the case of any such separate firm for NWS, such firm shall
be designated in writing by a majority of the directors of NWS (other than the
directors who have been appointed or elected by the holders of Common Stock).
In the case of any such separate firm for both the Turner Shareholders and NWS,
such firm shall be designated in writing by a Majority in Interest of Turner
Shareholders. Airgas shall not be liable for any settlement of any proceeding
effected
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without its written consent, but, if settled with such consent or if there be a
final judgment for the plaintiff, Airgas agrees to indemnify the First Refusal
Indemnified Party from and against any loss or liability by reason of such
settlement or judgment.
(ii) In the event of any proceeding
described in Paragraph (i) hereinabove, each party shall provide such
cooperation and access to its books, records, properties, and personnel as the
other party shall reasonably request with respect to such matters and the
parties hereto agree to render each other such assistance as may reasonably be
required of each other in order to ensure the proper and adequate defense of
any such proceeding. Airgas shall not make any settlement of any First Refusal
Claim, other than a First Refusal Claim for monetary damages in which Airgas
assumes fully responsibility of the claim and the First Refusal Indemnified
Parties are unconditionally released from any liability to the claimant,
without the written consent of the First Refusal Indemnified Party. No First
Refusal Indemnified Party shall make or enter into any settlement of any First
Refusal Claim for injunctive or other equitable relief, without the written
consent of Airgas.
(b) Subject to the limitations set
forth in subparagraph (a)(i), the indemnity provisions contained in Section
10.1.3 hereof shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement and (ii) any investigation made by or on
behalf of any First Refusal Indemnified Party. Any breach by Airgas of its
indemnification obligations pursuant to Section 10.1.3 shall constitute a
Default under this Agreement.
(c) For purposes of this Section 10.1.3,
First Refusal Indemnified Party means any one or more of the Turner
Shareholders and NWS and their
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respective successors, heirs, legal representatives and permitted assigns. For
purposes of this Section 10.1.3, First Refusal Claim means any loss, damage of
any kind, nature or character, claim (including any claim for specific
enforcement or other equitable relief), action (including any action that seeks
specific enforcement or other equitable relief), or liability, including any
legal and other out-of-pocket expenses reasonably incurred by any First Refusal
Indemnified Party in connection with defending or settling any such claim or
action to the extent that such loss, damage, claim, action, liability, or
expense arises out of a breach or alleged breach by a First Refusal Indemnified
Party of the First Refusal Agreement as the result of, or related to, the
execution, delivery, or performance by Airgas or any First Refusal Indemnified
Party of this Agreement.
10.1.4 Structure Indemnification. (a) If for
any reason any holder of Preferred Stock shall be required to include in gross
income for Federal and/or state tax purposes, any amount (hereinafter called
an "Inclusion") with respect to any one or more of the transactions provided
for in this Agreement which occur at Closing (other than (i) the receipt of
the amount of the cash and/or the Turner Shareholder Notes with respect to the
shares of NWS Common Stock sold pursuant to Section 2.4.3 of this Agreement;
and (ii) the merger of National Leasing contemplated by Section 3.9 hereof)
or occur pursuant to Article 13 hereof (other than the sale by the Non-Family
Shareholders of any Minority Shares for cash pursuant to Section 13.1 hereof.),
and to the extent there is no offsetting deduction by reason of such Inclusion
available to such holder of Preferred Stock, Airgas shall promptly pay to
such holder of Preferred Stock with respect to such Inclusion an amount (the
"Gross Amount") equal to (i) the amount of any additional Federal and/or state
tax liability resulting from such Inclusion; plus (ii) the amount of any
Additions to Tax payable by such holder of Preferred Stock as a result of such
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Inclusion to the extent such Additions to Tax do not reduce such holder's
Federal and/or state income tax payments; plus (iii) the Federal and/or state
tax incurred by such holder of Preferred Stock as a result of the payment of
the Gross Amount. Notwithstanding the foregoing, Airgas shall not be obligated
under this Section 10.1.4 to pay any holder of Preferred Stock to the extent
such payment, when aggregated with all other amounts paid pursuant to this
Section 10.1.4 to holders of Preferred Stock, would be in excess of Twenty-Five
Million Dollars ("$25,000,000") (the "Cap"). As used herein, the term "Basic
Tax Indemnity Obligation" means the obligation of Airgas to pay the holders of
Preferred Stock as set forth in the two immediately preceding sentences. With
respect to each Inclusion, Airgas shall use its best efforts to pay the
appropriate Gross Amount on or before the first day the holder of Preferred
Stock is required to pay any Federal and/or state tax as a result of the
Inclusion. As used herein the term "Additions to Tax" means any and all
applicable interest and penalties imposed under all present and future Federal
and/or state income tax laws.
(b) Upon receipt by any holder of
Preferred Stock of notification from any taxing authority of any audit or
proceeding with respect to taxes for which Airgas would be liable for under the
Basic Tax Indemnity Obligation of Section 10.1.4 hereof, such holder of
Preferred Stock shall promptly, but in all events within thirty (30) days after
such notification, notify Airgas in writing. Airgas and such holder of
Preferred Stock shall jointly participate in and defend against any such audit
or proceeding. The expenses of such audit or proceeding reasonably
attributable to the resolution of issues with respect to taxes for which Airgas
would be liable under the Tax Indemnity Obligation if such issues were
determined adversely to such holder shall be borne by Airgas. If any such
audit or proceeding results in the receipt by any holder of Preferred Stock of
a proposed adjustment and/or settlement pertaining
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to taxes which might result in any payment under the Basic Tax Indemnity
Obligation by Airgas (an "Adjustment"), such holder of Preferred Stock shall
notify Airgas in writing within ten (10) days of receipt of notice of such
Adjustment and whether the holder is willing to agree to such Adjustment.
Airgas shall notify such holder of Preferred Stock in writing within ten (10)
days of receiving notice of the Adjustment whether it is willing to agree to
such Adjustment. If both the holder of Preferred Stock and Airgas are willing
to agree to the Adjustment, then Airgas shall promptly pay to the holder of
Preferred Stock the Gross Amount relating to such Adjustment. If neither the
holder of Preferred Stock nor Airgas is willing to agree to the Adjustment,
then both parties shall continue to participate in and defend against the audit
or proceeding until either party agrees to an Adjustment with the taxing
authority in accordance with the notice procedures outlined herein or a final
settlement or non-appealable determination has been rendered, whichever occurs
first. If only the holder of Preferred Stock is willing to agree to the
Adjustment, then, notwithstanding the Cap, with respect to such tax matter
Airgas will be liable to the holder of Preferred Stock for the full Gross
Amount relating to the tax matter; provided that, notwithstanding the
foregoing, Airgas shall not be liable for the portion of the full Gross Amount,
attributable to the portion, if any, of the Adjustment against which Airgas
would not, as a result of the applicability of the Cap, have been required to
indemnify the holder of Preferred Stock under this Section 10.1.4 had Airgas
and the holder of the Preferred Stock both agreed to the Adjustment. If only
the holder of Preferred Stock is willing to agree to the Adjustment, only the
Gross Amount based upon the Adjustment and not the Gross Amount based on the
actual tax liability for the particular tax matter shall be applied against the
Cap as a deemed payment pursuant to this Section 10.1.4. If only Airgas is
willing to agree to the Adjustment, then Airgas shall promptly pay to the
holder of Preferred Stock the Gross Amount
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based upon the Adjustment and the remaining amount of the Cap shall be reduced
by the amount of the payment made by Airgas to such holder of Preferred Stock.
Thereafter, the holder of Preferred Stock shall be liable for the actual tax
liability and Additions to Tax, if any, that are imposed with respect to the
particular tax matter contained in the Adjustment.
(c) Airgas's indemnification obligations
hereunder shall remain in effect until such time as the applicable statutes of
limitations for assessment of tax have expired with respect to each holder
of Preferred Stock as such statute of limitations period may be validly
extended pursuant to applicable tax laws.
10.1.5 Notice and Defense of
Indemnity Claims. A party hereto agreeing to be responsible for or to
indemnify against any matter pursuant to Section 10.1.1 or 10.1.2, as the case
may be, of this Agreement is referred to herein as the "Indemnifying Party" and
a party entitled to indemnification hereunder is referred to as the
"Indemnified Party". An Indemnified Party under this Agreement shall give
written notice to the Indemnifying Party hereunder with respect to any
assertion by the Indemnified Party or by a third party of any liability which
the Indemnified Party has reason to believe might give rise to an Indemnity
Claim under this Agreement. Such notice shall set forth in reasonable detail
the nature of such action or claim, and include copies of any written
complaint, summons, correspondence or other communication from the party
asserting the claim or initiating the action. Within thirty (30) days of the
Indemnifying Party's receipt of such notice, the Indemnifying Party must
deliver to the Indemnified Party written notice stating whether or not it
contests such Indemnity Claim. Any contested Indemnity Claim arising under
Section 10.1.1 or 10.1.2 of this Agreement shall be submitted to arbitration as
set forth in Section 10.2 below. If the Indemnifying Party does not deliver
written notice of its intent to contest
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during that time, the Indemnifying Party shall be deemed to have accepted and
agreed to the Indemnity Claim.
As to any such Indemnity Claim which involves a third party, the
Indemnifying Party shall assume and thereafter control the defense of such
Indemnity Claim with counsel reasonably satisfactory to the Indemnified Party.
The Indemnified Party shall be entitled, together with the Indemnifying Party,
to participate in the defense, compromise or settlement of any such matter
through the Indemnified Party's own attorneys and at its own expense, but the
Indemnifying Party shall have control thereof. The Indemnified Party shall
provide such cooperation and such access to its books, records, properties and
personnel as the Indemnifying Party shall reasonably request with respect to
such matters and the parties hereto agree to render each other such assistance
as they may reasonably require of each other in order to ensure the proper and
adequate defense thereof. An Indemnifying Party shall not make any settlement
of any Indemnity Claims, other than Indemnity Claims strictly for monetary
damages which are paid by the Indemnifying Party at the time of the settlement
without the written consent of the Indemnified Party, which consent shall not
be unreasonably withheld. Without limiting the generality of the foregoing, it
shall not be deemed unreasonable to withhold consent to a settlement involving
injunctive or other equitable relief against the Indemnified Party or its
assets, employees or business. With respect to each specific claim by an
Indemnified Party for indemnification from an Indemnifying Party hereunder, the
indemnification of the Indemnified Party by the Indemnifying Party shall be net
of any recovery of the Indemnified Party with respect to such specific claim
under any third party insurance policy, except recoveries to the extent the
insured has any reimbursement or comparable obligation relating to the
recoveries.
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10.1.6 Procedures Relating to
Environmental Indemnity. With respect to any claim for indemnification under
Section 10.1.1(d)(2), related to a claim or demand by a governmental agency or
third party, the procedures of Section 10.1.5 shall be followed. With respect
to a claim for Remedial Action Costs arising under Section 10.1.1(d)(1), prior
to NWS or Airgas incurring any material costs, Airgas shall make an Indemnity
Claim in writing, setting forth in reasonable detail the nature of the claim,
the basis for indemnification and the currently planned remediation, including
any copies of relevant documents or other materials. Within thirty (30) days
of receipt of the Indemnity Claim, the Turners must deliver to Airgas written
notice stating whether or not they contest such Indemnity Claim. Any contested
Indemnity Claim shall be submitted to arbitration as set forth in Section 10.2
below. The Turners may also elect, within thirty (30) day of receipt of the
Indemnity Claim, in their sole discretion, to undertake such remedial action
necessary to address the Indemnity Claim. If the Turners do not elect to
undertake such remedial action, and in the absence of a contest as described
above, Airgas may proceed with remedial action related to the Indemnity Claim;
provided that unless Airgas proceeds with the remedial action within ninety
(90) days of the Turners' failure to elect such remedial action and continues
such remedial action with reasonable diligence, Airgas shall notify the Turners
not less than thirty (30) days prior to NWS or Airgas incurring any additional
costs so that the Turners may again elect whether or not to undertake the
remedial action. The party undertaking the remediation (i) shall have control
over any and all matters related to the Indemnity Claim, including without
limitation negotiation with governmental agencies and the selection of remedial
goals and actions; (ii) shall keep the other party(ies) informed of the
progress of any such remedial action, including without limitation the
provision of copies of all related
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correspondence; (iii) prior to the submission of reports to any governmental
agency or the selection of any corrective action, shall provide any such
reports or corrective action plans or recommendations to the other party(ies)
for review and comment; and (iv) upon completion of the remedial action, shall
provide a certification to the other party(ies) that the Identified
Environmental Matter has been corrected to the extent required to bring the
matter into compliance with Environmental Law.
10.2 Arbitration. Any contested Indemnity Claims
arising under Section 10.1.1 or 10.1.2 of this Agreement and any disputes
relating to Section 4.7.2 or 4.7.4 hereof shall be submitted to arbitration in
accordance with this Section 10.2. The arbitration shall be conducted by a
panel of three arbitrators in Richmond, Virginia in accordance with the rules
of the American Arbitration Association. The arbitrators' decision shall be
final and binding on the parties, and notice of the award, if any, shall be
given to the parties not later than thirty (30) days after the date set for the
hearing. In the event that there shall be more than one dispute to be
arbitrated, the parties agree that all pending disputes shall be consolidated
to the extent reasonable and efficient. The amount of the dollar award, if
any, shall be paid in cash by the prevailing party to the non-prevailing party
within thirty (30) days following the date of such award. Attorneys' fees and
other costs of the arbitration procedure shall be borne and paid in accordance
with the decision of the arbitrators. Where the award involves performance of
an obligation other than the payment of money, the non-prevailing party shall
render such performance within the time period specified in the award or, if
no time period is specified, then as expeditiously as possible. In the event
that payment or performance is not made within the time period provided, the
prevailing party shall have the right to commence an action, at law or in
equity, in any state or federal court in the Commonwealth
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of Pennsylvania and/or the State of North Carolina to have the decision of the
arbitrators enforced. In the event such an action is filed, the costs of such
action (including reasonable attorneys' fees) shall be borne by the party
against whom such enforcement is sought.
10.3 Right of Set Off. Any Person entitled to
indemnification under this Article 10 shall have the right to set off the
amount of such indemnification against any then remaining obligation of such
Person and/or any of its Affiliates to any Person obligated to provide such
indemnification pursuant to this Article 10. Any Person obligated to provide
indemnification under this Article 10 shall have the right to set off against
such indemnification obligation the amount of any obligation which the Person
entitled to such indemnification, or any of its Affiliates, may have to the
Person obligated to provide such indemnification.
ARTICLE 11
CONDITIONS PRECEDENT TO THE CLOSING
11.1. Conditions Precedent to Airgas' Obligations. Except for
Airgas' obligations under Section 10.1.3 hereof, Airgas' obligations pursuant
to this Agreement are subject to the following express conditions:
11.1.1 Except for representations and warranties expressly
made as of a date other than the date hereof, the representations and
warranties of the Turner Shareholders contained in this Agreement shall be true
and correct in all material respects on and as of the Closing Date (as if made
on the Closing Date) with only such modifications and amendments to the
Disclosure Schedule as are necessary and appropriate to reflect developments
occurring in the ordinary course of the Businesses between the date of this
Agreement and the Closing.
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11.1.2 All of the agreements and covenants of the Turner
Shareholders set forth herein and which were to be performed at or prior to the
Closing Date shall have been duly performed in all material respects.
11.1.3 No injunction or order of any court or administrative
agency of competent jurisdiction shall be in effect as of the Closing which
restrains or prohibits the acquisition by Airgas of the Turner Shares or the
Minority Shares as contemplated hereby or restricts or prohibits any of the
other transactions contemplated hereby or referred to herein.
11.1.4 The Turner Shareholders and NWS shall have permitted
Airgas to make such audits and inspections of NWS, its business, books and
records, and properties, as Airgas shall have reasonably requested in
accordance with Article 3.7 hereof.
11.1.5 Airgas shall have received from the Turner
Shareholders on the Closing Date, a certificate, signed by the Turner
Shareholders, dated the Closing Date, to the effect that to the best knowledge
of the Turner Shareholders and except for representations and warranties
expressly made as of a date other than the date hereof, the representations and
warranties of the Turner Shareholders contained in this Agreement are true and
correct in all material respects as of the Closing Date as if made on the
Closing Date, with only such modifications and amendments to the Disclosure
Schedule as are necessary and appropriate to reflect developments occurring in
the ordinary course of the Business between the date of this Agreement and the
Closing and that the Turner Shareholders have performed in all material
respects all covenants and satisfied all conditions on their part to be
performed or satisfied at or prior to the Closing Date.
11.1.6 The Turner Shareholders shall have obtained valid
and binding consents of all Persons whose consent or approval is required
to be obtained by the Turner
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Shareholders in order for their representations and warranties in Section 7.1.4
hereof to be true and correct in all material respects.
11.1.7 The Plan of Recapitalization shall have been duly
adopted and the Amended Articles shall have been duly adopted and filed in
accordance with the laws of the State of North Carolina.
11.1.8 All documents contemplated to be executed
concurrently with the Closing by the Turner Shareholders and NWS pursuant to
this Agreement shall have been executed.
11.1.9 The applicable waiting period under the
Hart-Scott-Rodino Anti-Trust Improvements Act of 1976 shall have expired and no
party hereto shall have received any formal protest from the Department of
Justice or the Federal Trade Commission with respect to the transactions
contemplated by this Agreement.
11.1.10 Airgas shall have received on the Closing Date the
opinion of counsel for the Turner Shareholders in form reasonably satisfactory
to Airgas.
11.1.11 NWS shall have terminated that certain stock option
arrangement identified in Section II of Schedule 7.1.12 of the Disclosure
Schedule.
11.1.12 National Leasing shall have merged with and into NWS
as contemplated by Section 3.9 hereof.
11.1.13 National Realty and NWS shall have executed and
delivered leases with respect to the Real Property currently used by NWS in the
operation of the Businesses which is owned by National Realty substantially in
the form of and containing terms and conditions consistent with those set forth
on Exhibit 11.1.13 hereto.
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11.1.14 NWS and Judith T. Carpenter shall have terminated the
Agreement dated December 28, 1989 identified as No. 2 of Section II of Schedule
7.1.2 of the Disclosure Schedule.
11.1.15 NWS and James A. Turner, II shall have terminated the
Agreement dated December 28, 1989 identified as No. 3 of Section III of
Schedule 7.1.2 of the Disclosure Schedule.
11.1.16 From the date hereof to Closing, except as otherwise
permitted or required by this Agreement, there shall have been no material
adverse change in the Businesses.
11.2 Conditions Precedent to Turner Shareholders' Obligations. The
Turner Shareholders' obligations pursuant to this Agreement are subject to the
following express conditions:
11.2.1 Except for representations and warranties expressly
made as of a date other than the date hereof, the representations and
warranties of Airgas contained in this Agreement shall be true and correct in
all material respects on and as of the Closing Date (as if made on the Closing
Date).
11.2.2 All of the agreements and covenants of Airgas set
forth herein and which were to be performed at or prior to the Closing Date
shall have been duly performed in all material respects.
11.2.3 No injunction or order of any court or administrative
agency of competent jurisdiction shall be in effect as of the Closing which
restrains or prohibits the acquisition by Airgas of the Turner Shares or the
Minority Shares as contemplated hereby or restricts or prohibits any of the
other transactions contemplated hereby or referred to herein.
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11.2.4 The Turner Shareholders shall have received from
Airgas on the Closing Date, a certificate, signed by the President or any Vice
President of Airgas, dated the Closing Date, to the effect that, to the best
knowledge of Airgas and except for representations and warranties expressly
made as of a date other than the date hereof, the representations and
warranties of Airgas contained in this Agreement are true and correct in all
material respects as of the Closing Date as if made on the Closing Date, and
that Airgas has performed all covenants and satisfied all conditions on its
part to be performed or satisfied at or prior to the Closing Date in all
material respects.
11.2.5 Airgas shall have obtained all required consents or
approvals in writing of all Persons whose consent or approval is necessary for
Airgas to acquire the Turner Shares and the Minority Shares and for Airgas to
complete the transactions contemplated hereby.
11.2.6 The Plan of Recapitalization shall have been duly
adopted and the Amended Articles shall have been duly adopted and filed in
accordance with the laws of the State of North Carolina.
11.2.7 All documents contemplated to be executed
concurrently with the Closing by Airgas and any of its Affiliates pursuant to
this Agreement shall have occurred or been executed.
11.2.8 The applicable waiting period under the
Hart-Scott-Rodino Anti-Trust Improvements Act of 1976 shall have expired and no
party hereto shall have received any formal protest from the Department of
Justice or the Federal Trade Commission with respect to the transactions
contemplated by this Agreement.
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11.2.9 The Turner Shareholders shall have received on the
Closing Date the opinion of counsel for Airgas in form reasonably satisfactory
to the Turner Shareholders.
11.2.10 Airgas shall have sent a notice to Praxair of its
agreement to be bound by the First Refusal Agreement.
ARTICLE 12
THE CLOSING
12.1 Closing Date. Subject to the terms and conditions herein
contained, the parties agree to close this transaction (the "Closing") in
Charlotte, North Carolina on June 28, 1996 at a place and time mutually
agreeable to the parties, or on such other date and at such other place as the
parties may agree in writing.
12.2 Turner Shareholders' Deliveries at Closing. The Turner
Shareholders shall deliver or cause to be delivered to Airgas or NWS, as
appropriate, at the Closing the following:
12.2.1 Certificates for the Turner Shares, duly endorsed for
transfer to Airgas;
12.2.2 Certificates for the Remaining Turner Shares, duly
endorsed for transfer, in exchange for Preferred Stock in accordance with the
Plan of Recapitalization;
12.2.3 A Certificate of Existence of NWS from the Secretary
of State of North Carolina and a Certificate of Foreign Qualification from the
Secretary of State of each of South Carolina and Virginia;
12.2.4 The following agreements, instruments and documents
duly executed by the Turner Shareholders or NWS, as appropriate:
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(a) the leases contemplated in Section 11.1.13
hereof executed by National Realty;
(b) terminations of the agreements identified in
Sections 11.1.14 and 11.1.15 hereof;
(c) evidence of termination of a stock option
arrangement as contemplated by Section 11.1.11 hereof;
(d) the Registration Rights Amendment; and
(e) the Loan Agreement.
12.2.5 A certified copy of resolutions of the Board of
Directors of NWS authorizing the making, execution, and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
12.2.6 The certificate of the Turner Shareholders referred
to in Section 11.1.5; and
12.2.7 The opinion of counsel for NWS and the Turner
Shareholders referred to Section 11.1.10.
12.3 Airgas' Deliveries at Closing. Airgas shall deliver or cause
to be delivered to the Turner Shareholders or NWS, as appropriate, at the
Closing the following:
12.3.1 Immediately available funds, the Turner Shareholder
Notes and the Turner Shareholder Letters of Credit in the amounts and manner
provided for in Section 2.4.3 and in accordance with the written wire
instructions provided to Airgas by the Turner Shareholders prior to Closing;
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12.3.2 A certified copy of resolutions of the Board of
Directors of Airgas authorizing the making, execution, and delivery of this
Agreement and the consummation of the transactions contemplated hereby;
12.3.3 The following agreements, instruments and documents
duly executed by Airgas or an Airgas Affiliate, as appropriate:
(a) the Assumption Agreement identified in
Section 5.1 hereof;
(b) the irrevocable proxy contemplated by Section
5.11 hereof;
(c) the Loan Agreement; and
(d) the Registration Rights Agreement.
12.3.4 A Certificate of Good Standing from the Secretary of
State of Delaware for Airgas;
12.3.5 The certificate of Airgas referred to in Section
11.2.4; and
12.3.6 The opinion of counsel for Airgas referred to in
Section 11.2.9.
ARTICLE 13
POST CLOSING MATTERS
13.1 Purchase of Common Stock from Non-Family Shareholders. Within
ten (10) days after the Closing Date, Airgas shall offer to purchase from the
Non-Family Shareholders all of the Common Stock held by the Non-Family
Shareholders (including shares of Common Stock issuable upon the exercise of
NWS Options provided such NWS Options are exercised and the consideration
therefor paid prior to Airgas' purchase of such shares) (the "Minority Shares")
at the same purchase price per share as is to be paid to the Turner
Shareholders for the Turner Shares. The Minority Shares together with the
Turner
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Shares shall not exceed fifty percent (50%) of the voting capital stock of NWS
that is actually outstanding or that is outstanding on a fully diluted basis.
Any Non-Family Shareholder wishing to sell all or part of the Minority Shares
held by such Non-Family Shareholder must accept Airgas' offer within 60 days
after the Closing Date by delivering to NWS (a) the Minority Shares to be
purchased and sold, duly endorsed for transfer; (b) a duly executed copy of an
agreement of sale substantially in the form attached hereto as Exhibit 13.1(A)
(each such agreement an "Agreement of Sale for Minority Shares"); and (c) a
signed transmittal letter ("Acceptance Letter") substantially in the form
attached hereto as Exhibit 13.1(B) stating the number of Minority Shares being
sold by the Non-Family Shareholder. NWS shall thereupon deliver to Airgas the
items referred to in (b) and (c) above and a new certificate representing the
aggregate number of Minority Shares being sold by the Non-Family Shareholders.
If any Non-Family Shareholder is selling less than all of his or her Minority
Shares, NWS shall deliver to the Non-Family Shareholder either (i) a
replacement certificate representing the number of Minority Shares not being
sold to Airgas; or (ii) if such Minority Shares are being exchanged into Series
B Preferred Stock under Section 13.2 hereof, a certificate for such Series B
Preferred Stock.
13.2 Retention and Exchange of Remaining Minority Shares. If a
Non-Family Shareholder elects not to sell all of the Minority Shares held by
such Non-Family Shareholder as provided in Section 13.1 hereof (such unsold
Minority Shares hereinafter the "Remaining Minority Shares"), such Non-Family
Shareholder, in accordance with the Plan of Recapitalization, shall have the
right to exchange all, but not less than all, of his or her Remaining Minority
Shares on a one-for-one basis, for shares of Series B Preferred Stock by
delivering to NWS, within 60 days after the Closing Date, (a) the Remaining
Minority
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Shares duly endorsed for transfer; and (b) a signed transmittal letter
substantially in the form attached hereto as Exhibit 13.1(B) stating that the
Non-Family Shareholder wishes to exchange all of his or her Remaining Minority
Shares on a one-for-one basis for shares of Series B Preferred Stock. Any NWS
Options held by a Non-Family Shareholder must be exercised and the
consideration therefor paid prior to the underlying Common Stock being
exchanged for Series B Preferred Stock. Any Non-Family Shareholder who does
not timely elect to exchange all of his or her Remaining Minority Shares shall
be deemed to have elected to retain all such Remaining Minority Shares as
shares of Common Stock and shall thereafter be precluded from participating in
such exchange.
13.3 Consideration for Minority Shares. The consideration for the
Minority Shares shall be paid, by wire transfer or other immediately available
funds on or before that date which is five (5) days after Airgas' receipt of
the items referred to in Sections 13.1(a), (b) and (c).
13.4 Action by Turner Shareholders. Whenever this Agreement calls
for action, approval or consents by the Turner Shareholders either by specific
reference to the Turner Shareholders or by reference to them individually or
collectively as a party, the Turner Shareholders, NWS and Airgas agree that a
Majority in Interest of Turner Shareholders shall have the right to act on
behalf of all Turner Shareholders, that all Turner Shareholders shall be bound
for all purposes hereof by the actions taken or the approvals or consents given
by a Majority in Interest of Turner Shareholders, and that Airgas may rely on
the actions, approvals and consents of the holders of a Majority in Interest of
Turner Shareholders as constituting the actions, approvals and consents of all
Turner Shareholders.
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ARTICLE 14
BROKERAGE & EXPENSES
14.1 Indemnification. Except as otherwise expressly provided in
Section 14.2 below, each party hereto agrees to indemnify the other and agrees
to hold the others harmless against any claim or claims for brokerage or other
commission relative to the transactions contemplated hereby due to any acts or
things done by its employees, agents or consultants.
14.2 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, NWS, Airgas and the Turner Shareholders shall pay
the fees and expenses of their respective counsel, accountants, advisors and
other experts and any other expenses incurred by them incident to the
negotiation, preparation and execution of this Agreement.
ARTICLE 15
CONSTRUCTION
15.1 Choice of Laws. This Agreement and the agreements appended
hereto and delivered herewith shall be construed according to the laws of the
State of North Carolina.
15.2 Headings. All headings contained in this Agreement are for
reference only and shall not affect the meaning or interpretation of this
Agreement in any manner.
15.3 Invalid Provisions. Should any part of this Agreement for any
reason be declared invalid, such decision shall not affect the validity of any
other portion, which remaining portion shall remain in force and effect as if
this Agreement had been executed with the invalid provisions thereof
eliminated, and it is the declared intention of the parties hereto that they
would have executed the remaining portion of the Agreement without including
therein any such part or portion which may be declared invalid.
15.4 Construction of Terms. Any reference herein to the masculine
or neuter shall include the masculine, the feminine and the neuter, and any
reference herein to the singular
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or plural shall include the opposite thereof. The parties to this Agreement
acknowledge that each party hereto and counsel to each party hereto has
participated in the drafting of this Agreement and agree that this Agreement
shall not be interpreted against one party or the other based upon who drafted
it.
ARTICLE 16
ASSIGNABILITY
16.1 Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of each of the parties hereto, their heirs, legal
representatives, successors and permitted assigns.
16.2 Assignability. This Agreement shall not be assignable in
whole or in part by any party hereto except with the consent in writing of the
other party, and no such assignment shall relieve the assignor of any liability
hereunder. Notwithstanding the foregoing, (i) Airgas may assign this Agreement
to an Affiliate without the necessity of obtaining the consent of NWS or the
Turner Shareholders but no such assignment shall release Airgas from any
liability or obligation hereunder; and (ii) any of the Turner Shareholders may
assign this Agreement to any other Turner Shareholder without the necessity of
obtaining the consent of Airgas or NWS but no such assignment shall release the
assigning Turner Shareholder from any liability or obligation hereunder.
ARTICLE 17
NOTICES
17.1 Written Notices. All notices pursuant to this Agreement shall
be in writing.
17.2 Notices. All notices, requests, demands and other
communications (collectively "Notices") that are required or may be given under
this Agreement shall be in writing. All
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Notices shall be deemed to have been duly given or made, if by hand,
immediately upon delivery; if by telecopier or similar device, immediately upon
sending, provided notice is sent on a business day during the hours of 9:00
a.m. to 6:00 p.m. Eastern Standard Time, but if not, then immediately upon the
beginning of the first business day after being sent; if by Federal Express,
Express Mail or other reputable overnight delivery service, one (1) business
day after being placed in the exclusive custody and control of said courier;
and if mailed by certified mail, return receipt requested, five (5) business
days after mailing. Notwithstanding the foregoing, with respect to any notice
given or made by telecopier or device or similar device, such notice shall not
be effective unless and until (i) the telecopier or similar device being used
prints a written confirmation of successful completion of such communication by
the party sending the notice, and (ii) a copy of such notice is deposited in
first class mail to the appropriate address for the party to whom notice is
sent. In addition, notwithstanding the foregoing, a notice of a change of
address by a party hereto shall not be effective until received by the party to
whom such notice of a change of address is sent. All notices are to be given
or made to the parties at the following addresses (or to such other address as
either party may designate by notice in accordance with the provisions of this
Section):
If to Airgas: Airgas, Inc.
Five Radnor Corporate Center, Suite 550
100 Matsonford Road
Radnor, Pennsylvania 19087
Attention: Chief Executive Officer
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with a copy thereof to its Counsel:
McCausland, Keen & Buckman
Five Radnor Corporate Center, Suite 500
100 Matsonford Road
Radnor, Pennsylvania 19087
Attention: Robert H. Young, Jr.
If to National Welders:
National Welders Supply Company, Inc.
810 Gesco Street
Charlotte, North Carolina 28208
Attention: J.A. Turner, Jr. or Judith
Carpenter
If to the Turner Shareholders:
J.A. Turner, Jr.
8919 Park Road, #5
Charlotte, North Carolina 28210
and
Judith Carpenter
3440 Sharon View Road
Charlotte, North Carolina 28210
and
J.A. Turner, III
6312 Glynmoor Lakes Drive
Charlotte, North Carolina 28277
and
Linerieux B. Turner
8919 Park Road, #5
Charlotte, North Carolina 28210
and with a copy thereof to their Counsel:
Parker, Poe, Adams & Bernstein
2600 Charlotte Plaza
3rd and College Streets
Charlotte, North Carolina 98244
Attention: Mark R. Bernstein
If to the Turner Transferees:
Molo Limited Partnership
c/o Judith Carpenter, General Partner
3440 Sharon View Road
Charlotte, North Carolina 28210
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and
Turner (1996) Limited Partnership
c/o J. A. Turner, III and Linda P. Turner
General Partners
6312 Glynmoor Lakes Drive
Charlotte, North Carolina 28277
and
Charitable Remainder Unitrust for James
A. Turner, Jr. c/o Parker Poe Adams &
Bernstein, L.L.P.
2500 Charlotte Plaza
Charlotte, NC 28244
Attention: Mark R. Bernstein, Esq.,
Trustee
and
Foundation for the Carolinas
1043 E. Morehead Street, Suite 100
Charlotte, North Carolina 28204
Attention: Mr. William Spencer
ARTICLE 18
FURTHER ASSURANCES AND MISCELLANEOUS
18.1 Further Agreements. Each party hereto agrees to execute such
further papers or agreements as may be necessary to effect the purposes of this
Agreement and carry out its provisions.
18.2 Entire Agreement, No Oral Change. This Agreement, the
Disclosure Schedule, and the Exhibits hereto embody the entire agreement
between the parties hereto and supersede any and all prior agreements and
understandings between the parties hereto. This Agreement may not be changed,
modified, waived or altered except by an agreement in writing signed by each of
the parties to be charged. A waiver by any party of any of the terms or
conditions of this Agreement, or of any breach thereof, shall not be deemed a
waiver of a subsequent of such term or condition for the future, or of any
other term or condition hereof, or any subsequent breach thereof.
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18.3 No Third Party Beneficiaries. Nothing in this Agreement,
express or implied, shall confer upon any person, other than the parties hereto
(and, to the extent expressly provided herein, the Non-Family Shareholders)
and their respective heirs, legal representatives, successors and permitted
assigns, any rights or remedies under or by reason of this Agreement.
18.4 Counterparts. This Agreement may be executed by the parties
in counterparts, each of which shall be deemed an original and all of which
shall be deemed to constitute one agreement.
18.5 Specific Performance. Each of the parties hereby acknowledge
and agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties to this Agreement shall be entitled to preliminary relief to prevent or
cure breaches of the provisions of this Agreement and to enforce specifically
the terms and provision hereof, this being in addition to any other remedy to
which they may be entitled by law or equity.
18.6 No Consequential Damage. Except with respect to the
indemnification obligations of Airgas under Section 10.1.3 hereof, no party to
this Agreement shall be liable for or obligated to pay incidental, indirect,
special, punitive or consequential damages in connection with the performance
or nonperformance of this Agreement, regardless of any legal theory, including,
without limitation, tort, negligence, contract, warranty or strict liability.
Unless otherwise expressly provided in this Agreement, where payments, charges,
credits, damages,
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remedies or amendments are specified in this Agreement for the failure of any
party to perform its obligations hereunder, such payment, charges, credits,
damages, remedies or amendments shall be the exclusive remedy regardless of any
theory, including, without limitation, tort, negligence, contract, warranty or
strict liability.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
______________________________________
J.A. Turner, Jr.
______________________________________
Judith Carpenter
______________________________________
J.A. Turner, III
______________________________________
Linerieux B. Turner
MOLO LIMITED PARTNERSHIP
By:___________________________________
Judith Carpenter, General Partner
TURNER (1996) LIMITED PARTNERSHIP
By:___________________________________
J.A. Turner, III, General Partner
By:___________________________________
Linda P. Turner, General Partner
CHARITABLE REMAINDER UNITRUST
OF JAMES A. TURNER, JR.
By: ___________________________________
Mark R. Bernstein, Trustee
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FOUNDATION FOR THE CAROLINAS
By: ___________________________________
William L. Spencer, President
NATIONAL WELDERS SUPPLY
COMPANY, INC.
By: ___________________________________
AIRGAS, INC.
By:____________________________________
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ARTICLES OF AMENDMENT
OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
NATIONAL WELDERS SUPPLY COMPANY, INC.
The undersigned Corporation hereby submits these Articles of Amendment
for the purpose of amending its Amended and Restated Articles of Incorporation:
1. The name of the Corporation is National Welders Supply
Company, Inc.
2. The Amended and Restated Articles of Incorporation of the
Corporation are hereby amended as described in Exhibit A
attached hereto.
3. The foregoing amendment to the Amended and Restated Articles
of Incorporation of the Corporation was adopted by its
directors on the 28th day of June, 1996 without shareholder
action which was not required because the Amended and Restated
Articles of Incorporation authorize the directors to set the
powers, preferences, and rights of each series of Preferred
Stock
4. These Articles of Amendment will become effective upon filing
with the Secretary of State of the State of North Carolina.
This the ____ day of June, 1996.
NATIONAL WELDERS SUPPLY COMPANY, INC.
By:_____________________________________
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EXHIBIT A
RESOLVED, that the Corporation's Amended and Restated Articles of
Incorporation be amended by inserting the following at the end of Article II:
Pursuant to the authority expressly granted to and vested in the Board
of Directors of the Corporation by Article II of the Amended and Restated
Articles of Incorporation of the Corporation, there is hereby created a class
of 3,350,000 shares of preferred stock, designated as 5% Preferred Stock, par
value $.10 per share, which shall be divided into 3,100,000 shares of Series A
5% Voting Preferred Stock (the "Series A Preferred Stock") and 250,000 shares
of Series B 5% Non Voting Preferred Stock (the "Series B Preferred Stock" and,
together with the Series A Preferred Stock, collectively, the "Preferred
Stock").
The powers, preferences and rights, and the qualifications,
limitations or restrictions, of each such Series of Preferred Stock, in
relation to the other such Series of Preferred Stock and in relation to the
Common Stock, shall be as follows:
Section 1. Liquidation Rights.
(a) Treatment at Liquidation, Dissolution or Winding Up.
In the event of any liquidation, dissolution or winding up of the affairs of
the Corporation, whether voluntary or involuntary, the holders of each share of
the Preferred Stock shall be entitled to be paid first out of the assets of the
Corporation available for distribution to holders of the Corporation's capital
stock of all classes an amount (the "Liquidation Amount"), and no other amount,
equal to the sum of (i) $17.7814 per share of Preferred Stock, which amount
shall be subject to proportionate adjustment whenever there shall occur a stock
dividend, stock distribution, combination of shares, reclassification or other
similar event with respect to the Preferred Stock (such amount,
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as the same may be so adjusted, the "Liquidation Price"), plus (ii) all unpaid
Accruing Dividends (as defined in Section 4 below) thereon, whether or not
declared, to and including the date full payment shall be tendered to the
holders of the Preferred Stock with respect to such liquidation, dissolution or
winding up, plus (iii) all interest, if any, on such Accruing Dividends (as
provided in said Section 4).
If the assets of the Corporation shall be insufficient to permit the
payment in full to the holders of the Preferred Stock of all amounts
distributable to them under this Subsection 1(a), then the entire assets of the
Corporation available for such distribution shall be distributed ratably among
the holders of the Preferred Stock in proportion to the full preferential
amount each such holder is otherwise entitled to receive.
After such payments shall have been made in full to the holders of the
Preferred Stock or funds necessary for such payments shall have been set aside
by the Corporation in trust for the account of holders of the Preferred Stock
so as to be available for such payments, the remaining assets available for
distribution shall be distributed among the holders of the Common Stock ratably
in proportion to the number of shares of Common Stock held by them.
Notwithstanding any other provision of this Section 1 to the contrary,
if any liquidation, dissolution or winding up contemplated by this Section 1
shall take place after the occurrence of a Default (as defined in Section 6
below), the Liquidation Price with respect to such liquidation, dissolution or
winding up shall be increased by twenty percent (20%).
(b) Distributions other than Cash. Whenever the
distribution provided for in this Section 1 shall be payable in property other
than cash, the value of such distribution shall be the Fair Market Value (as
defined below) of such property. In the case of any security, the term
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"Fair Market Value" shall mean, with respect to one unit of such security, the
average of the daily closing prices for the thirty (30) consecutive business
days ending one (1) business day before such security is distributed to the
holders of Preferred Stock. The closing price for each day shall be the last
regularly reported sales price, or in case no such reported sales took place on
such day, the average of the last regularly reported bid and asked prices, in
either case on the principal national securities exchange on which the security
is listed or admitted for trading (or if the security is not listed or admitted
for trading on any such exchange on any day in question, then such price as
shall be equal to the average of the last bid and asked prices, as reported by
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") on such day, or if, on any day in question, the security shall not
be quoted on the NASDAQ, then such price shall be equal to the last reported
bid and asked prices on such day as reported by the National Quotation Bureau,
Inc. or any similar reputable quotation and reporting service, if such
quotation is not reported by the National Quotation Bureau Inc.). In the case
of any security which is not traded in such manner that the quotations referred
to in this Section 1(b) are available for the period required hereunder, and in
the case of any other property, Fair Market Value shall mean the fair market
value of such security or property as determined in good faith by the Board of
Directors of the Corporation.
Section 2. Exchange. The holders of the Preferred Stock shall have
exchange rights as follows (the "Exchange Rights"):
(a) Right to Exchange; Exchange Price. During either of
(i) the period beginning on July 1, 2006 and ending on June 30, 2009, or (ii)
the period beginning with the occurrence of a Default (as defined in Section 6
hereof) and ending one year after the giving by
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the Corporation of written notice of such Default to the holders of the Series
A Preferred Stock, the holders of a majority of the issued and outstanding
shares of Series A Preferred Stock may, by written notice to the Corporation,
with a copy to the holder(s) of a majority of the outstanding Common Stock,
require the Corporation and all holders of Preferred Stock to exchange, without
the payment of any additional consideration by the holder thereof, at the
office of the Corporation or any transfer agent for the Preferred Stock, all
shares of Preferred Stock outstanding into such number of fully paid and
nonassessable shares of common stock, par value $.01 per share (the "Airgas
Common Stock"), of Airgas, Inc., a Delaware Corporation ("Airgas"), as is
determined, with respect to each holder of Preferred Stock, by dividing the
Liquidation Price by the Exchange Price (defined and determined as hereinafter
provided) in effect at the time of the exchange, and multiplying the quotient
obtained thereby (rounded to four decimal places) times the number of shares of
Preferred Stock held by such holder. As used herein, the "Exchange Price"
shall initially be $24.4531. Such initial Exchange Price shall be subject to
adjustment as hereinafter provided. As used herein, the term "Exchange
Consideration" shall mean the shares of Airgas Common Stock and/or the
additional or other stock, securities, cash or property into which the
Preferred Stock shall be exchanged or which shall otherwise be delivered to the
holders of the Preferred Stock in connection with the exchange of Preferred
Stock contemplated by this Section 2 and/or by Section 7 below. Subject to the
approval of the holders of a majority of the issued and outstanding shares of
Series A Preferred Stock and the holders of a majority of the issued and
outstanding shares of Common Stock, the Corporation may, in lieu of such
exchange, engage in a merger, consolidation, recapitalization or
reorganization, or other form of transaction, involving one or more of the
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Corporation, Airgas or a subsidiary of Airgas (including any successor of
Airgas or a subsidiary of any such successor) pursuant to which the holders of
the Preferred Stock shall receive the same kind and amount of consideration
(the "Reorganization Consideration") for their shares of Preferred Stock that
they would have received in the exchange provided for pursuant to this Section
2.
(b) Mechanics of Exchange. In order for a holder of
Preferred Stock to exchange the same into shares of Airgas Common Stock or
other Exchange Consideration pursuant to Subsection 2(a), such holder shall
surrender the certificate or certificates therefor, duly endorsed, at the
office of the Corporation or of any transfer agent for the Preferred Stock, and
shall give written notice to the Corporation at such office stating that such
holder is exchanging the same and stating therein such holder's name or the
name or names of such holder's nominees in which such holder wishes the
certificate or certificates for shares of Airgas Common Stock to be issued. No
fractional shares of Airgas Common Stock shall be issued upon exchange of the
Preferred Stock. In lieu of any fractional shares to which the holder would
otherwise be entitled, the Corporation shall pay cash equal to such fraction
multiplied by the then effective Exchange Price. The Corporation shall,
promptly thereafter, but in no event later than thirty (30) days after receipt
of the written notice by the holder referred to above, deliver at such office
to such holder of Preferred Stock, or to such holder's nominee or nominees, a
certificate or certificates for the number of shares of Airgas Common Stock to
which such holder shall be entitled as aforesaid, together with cash in lieu of
any fraction of a share. Such exchange shall be deemed to have been made
immediately prior to the close of business on the date of such delivery of the
shares of Airgas Common Stock, and the person or persons entitled to receive
the
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shares of Airgas Common Stock issuable upon such exchange shall be treated for
all purposes as the record holder or holders of such shares of Airgas Common
Stock on such date. Until the Exchange Consideration deliverable to a holder
of Preferred Stock who shall have surrendered such holder's certificate or
certificates therefor shall be delivered as provided above, such holder shall
for all purposes hereunder continue to be a holder of the number of shares of
Preferred Stock surrendered.
(c) Adjustments For Dividends, Distributions,
Subdivisions, Combinations or Consolidations of Airgas Common Stock.
(1) Stock Dividends, Stock Distributions
or Subdivisions. In the event at any time or from time to
time on or after July 1, 1996, Airgas shall declare or pay any
dividend or make any other distribution on the Airgas Common
Stock payable in shares of Airgas Common Stock or effect a
subdivision of the outstanding shares of Airgas Common Stock
(by reclassification or otherwise), then and in any such
event, the Exchange Price in effect at the time of the record
date for such dividend or distribution or of the effectiveness
of such subdivision shall be proportionately decreased so that
the holder of shares of Preferred Stock surrendered for
exchange after such time shall be entitled to receive the
number of shares of Airgas Common Stock which such holder
would have been entitled to receive had such shares of
Preferred Stock been exchanged for shares of Airgas Common
Stock immediately prior to such time (irrespective of the time
limitations for such exchange set forth in Subsection 2(a)
hereof).
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(2) Combinations or Consolidations. In the
event at any time or from time to time on or after July 1,
1996, the outstanding shares of Airgas Common Stock shall be
combined or consolidated, by reclassification or otherwise,
into a lesser number of shares of Airgas Common Stock, the
Exchange Price in effect at the time of the effectiveness of
such combination or consolidation shall be proportionately
increased so that the holder of shares of Preferred Stock
surrendered for exchange after such time shall be entitled to
receive the number of shares of Airgas Common Stock which such
holder would have been entitled to receive had such shares of
Preferred Stock been exchanged for shares of Airgas Common
Stock immediately prior to such time (irrespective of the time
limitations for such exchange set forth in Subsection 2(a)
hereof).
(d) Adjustments for Certain other Dividends and
Distributions. In the event at any time or from time to time on or after July
1, 1996, Airgas shall make or issue, or fix a record date for the determination
of holders of Airgas Common Stock entitled to receive, a dividend or other
distribution payable in equity securities of Airgas other than shares of Airgas
Common Stock, or in securities convertible into or exchangeable for Airgas
Common Stock or such other equity securities of Airgas, then and in each such
event provision shall be made so that the holders of Preferred Stock shall
receive upon exchange thereof in addition to the number of shares of Airgas
Common Stock receivable thereupon, the amount of securities of Airgas that they
would have received (including any subsequent dividends and distributions with
respect to such securities) had their Preferred Stock been exchanged
(irrespective of the time limitations for such exchange set forth in Subsection
2(a) hereof) into Airgas Common Stock on the date of
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such event and had they thereafter, during the period from the date of such
event to and including the exchange date, retained such securities receivable
by them as aforesaid during such period, giving application during such period
to all adjustments called for herein.
(e) Adjustment for Reclassification, Exchange, or
Substitution. In the event at any time or from time to time on or after the
July 1, 1996, the Airgas Common Stock issuable upon the exchange of the
Preferred Stock shall be changed into a different number of shares of Airgas
Common Stock or into the same or a different number of shares of any other
class or classes of stock, securities or other property, whether by capital
reorganization, reclassification, or otherwise (other than a subdivision or
combination of shares or stock dividend provided for above, or a transaction
constituting a Change of Control (as defined in Section 7 below)), then and in
each such event the holder of each such share of Preferred Stock shall have the
right thereafter to receive in exchange the kind and amount of shares of stock
and other securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of shares of Airgas
Common Stock into which such shares of Preferred Stock might have been
exchanged immediately prior to such reorganization, reclassification, or
change, all subject to further adjustment as provided herein.
(f) Adjustment in Connection with a Change of Control.
In the event that there shall be a Change of Control (as defined in Section 7
below), the exchange of Preferred Stock pursuant to this Section 2 shall be
subject to adjustment as provided in, and shall also be governed by the
provisions of, said Section 7.
(g) Certificate as to Adjustments. Upon the occurrence
of any of the events specified in this Section 2, the Corporation at its
expense shall promptly compute the appropriate
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adjustment in accordance with the terms hereof and furnish to each affected
holder of Preferred Stock a certificate setting forth such adjustment and
showing in detail the facts upon which such adjustment is based. The
Corporation shall, upon the written request at any time of any affected holder
of Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) a summary of all such adjustments to date, (ii)
the Exchange Price at the time in effect, and (iii) the number of shares of
Airgas Common Stock and/or the amount, if any, of other Exchange Consideration
which at the time would be received upon the exchange of each share of
Preferred Stock.
(h) Certain Taxes. The Corporation shall pay any issue
or transfer taxes payable in connection with the exchange of the Preferred
Stock, provided, however, that the Corporation shall not be required to pay any
tax which may be payable in respect of any transfer to a name other than that
of the holder of the Preferred Stock, or if the payment by the Corporation of
such tax is waived by the holders of a majority of the issued and outstanding
shares of Series A Preferred Stock.
(i) No Closing of Books. The Corporation shall not at
any time close its transfer books against the transfer of any Preferred Stock
in any manner which interferes with the timely exchange or transfer of such
Preferred Stock contemplated by this Section 2.
Section 3. Voting Rights; Directors.
(a) Voting of Capital Stock. Except as otherwise
required by law or as hereinafter set forth, the holders of the Preferred Stock
and the holders of the Common Stock shall have the following rights with
respect to the voting of the Corporation's capital stock:
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(i) Votes. The holders of the Common Stock shall
have one vote per share and the holders of the Series A Preferred
Stock shall have one vote per share. The holders of the Series B
Preferred Stock shall have no voting rights.
(ii) Notices of Meetings. Except as provided in
Subsection 3(b) below, the holders of the Preferred Stock and the
holders of the Common Stock shall be entitled to notice of any meeting
of the stockholders of the Corporation.
(iii) Calling Meetings. In addition to any rights
which may be available under the Corporation's By-laws or otherwise
under law, meetings of the stockholders of the Corporation may be
called by either the holders of not less than a majority of the
outstanding Preferred Stock or the holders of not less than a majority
of the outstanding Common Stock. Within three (3) business days after
written application by the holders of not less than a majority of the
outstanding Preferred Stock or the holders of not less than a majority
of the outstanding Common Stock, as the case may be, the President or
Secretary, or such other officer of the Corporation as may be
authorized in the By-laws of the Corporation to give notice of
meetings of stockholders of the Corporation, shall notify each
stockholder of the Corporation entitled to such notice of the date,
time, place and purpose of such meeting.
(iv) Quorum and Voting. Except as provided in
Subsections 3(a)(v) and 3(b) below, the holders of a majority of the
issued and outstanding shares of Common Stock, represented in person
or by proxy, and the holders of a majority of the issued and
outstanding shares of Series A Preferred Stock, represented in person
or by proxy, shall, together, constitute a quorum at meetings of
stockholders. Except as
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provided in said Subsections 3(a)(v) and 3(b) below, at any such
meeting duly called and at which a quorum is present, the affirmative
vote of a majority of the shares of Common Stock represented at such
meeting and of a majority of the shares of Series A Preferred Stock
represented at such meeting, voting as separate classes, shall be the
act of the stockholders.
(v) Quorum and Voting After Default For Purposes
of a Corporate Event. With respect to stockholder approval regarding
any Corporate Event (as defined in Subsection 6(c)(iv)(F) of this
Article II) after the occurrence of a Default (as defined in Section
6(b) hereof), the holders of a majority of the issued and outstanding
shares of voting capital stock of the Corporation (i.e., the Common
Stock and the Series A Preferred Stock together as a single class),
represented in person or by proxy, shall constitute a quorum at
meetings of stockholders. At any such meeting duly called and at
which a quorum is present, the affirmative vote of a majority of the
shares of Common Stock represented at such meeting and the shares of
Series A Preferred Stock represented at such meeting, voting together
as a single class, shall be the act of the stockholders with respect
to such Corporate Event.
(b) Directors. The provisions of this Section 3(b) shall
prevail over any inconsistent provisions in these Articles of Incorporation or
the Corporation's By-laws, but shall be subject to any provisions of applicable
law.
(i) Number Generally. Except as provided in
Subsection 3(b)(iii) below, the Corporation's Board of Directors shall
consist of six directors. The holders of the Series A Preferred Stock
shall be entitled to elect three directors to the Corporation's
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Board of Directors, and the holders of the Common Stock shall be
entitled to elect three directors to the Corporation's Board of
Directors.
(ii) Election Generally. At any meeting held for
the purpose of electing directors, the presence in person or by proxy
of the holders of a majority of the shares of Series A Preferred Stock
then outstanding shall constitute a quorum of the Series A Preferred
Stock for the election of directors to be elected solely by the
holders of the Series A Preferred Stock, and the presence in person or
by proxy of the holders of a majority of the shares of Common Stock
then outstanding shall constitute a quorum of the Common Stock for the
election of directors to be elected solely by the holders of the
Common Stock. At any such meeting (including, without limitation, a
meeting contemplated by Subsection 3(b)(iii) below), a quorum of the
Common Stock shall not be necessary for the election of directors by
the holders of the Series A Preferred Stock, and a quorum of the
Series A Preferred Stock shall not be necessary for the election of
directors by the holders of the Common Stock. At any such meeting at
which a quorum of the Series A Preferred Stock is present, the
directors to be elected solely by the holders of the Series A
Preferred Stock shall be elected by a plurality of the votes cast by
the shares of Series A Preferred Stock present in person or by proxy
at such meeting, and at any such meeting at which a quorum of the
Common Stock is present, the directors to be elected solely by the
holders of the Common Stock shall be elected by a plurality of the
votes cast by the shares of Common Stock present in person or by proxy
at such meeting. Directors may also be elected by the written consent
of the holders of the Series A Preferred Stock (in the case of
directors to be elected by the Series A Preferred Stock) or
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the holders of the Common Stock (in the case of directors to be
elected by the holders of the Common Stock). Any or all of the
directors elected by the holders of the Series A Preferred Stock may
be removed from office, with or without cause, only by vote or written
consent of the holders of the Series A Preferred Stock, and any or all
of the directors elected by the holders of the Common Stock may be
removed from office, with or without cause, only by vote or written
consent of the holders of the Common Stock. Any vacancy in any
directorship elected by the holders of the Series A Preferred Stock
shall be filled only by (A) the vote of a majority of the remaining
directors elected by the holders of the Series A Preferred Stock or
(B) the vote or written consent of the holders of the Series A
Preferred Stock, and any vacancy in any directorship elected by the
holders of the Common Stock shall be filled only by (C) the vote of a
majority of the remaining directors elected by the holders of the
Common Stock or (D) the vote or written consent of the holders of the
Common Stock.
(iii) Increase in Number. Upon (A) the occurrence
of an Event of Non-Compliance (as defined in Subsection 6(a) of this
Article IV) and thereafter until such Event of Non-Compliance has been
cured, or (B) the occurrence of a Default and thereafter (regardless
of whether such Default shall have been cured) until the holders of a
majority of the Series A Preferred Stock shall consent in writing
otherwise, the Corporation's Board of Directors shall be increased to,
and shall consist of, seven directors; the holders of the Series A
Preferred Stock shall be entitled to elect four directors to the
Corporation's Board of Directors, and the holders of the Common Stock
shall be entitled to elect three directors to the Corporation's Board
of Directors. Any
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meeting of stockholders for the election of directors to fill the
vacancy created by such increase in the number of directors to be
elected by the holders of the Series A Preferred Stock shall be held
not more than fifteen (15) days after notice thereof. Notwithstanding
the foregoing, the holders of the Series A Preferred Stock may fill
any such vacancy by written consent.
(iv) Calling Meetings. In addition to any rights
which may be available under the Corporation's By-laws or otherwise
under law, meetings of the Corporation's Board of Directors may be
called by any two directors.
(v) Quorum and Voting by Directors. A majority
of the number of directors fixed by Subsections 3(b)(i) and 3(b)(iii)
above shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors. For so long as the provisions of
Subsection 3(b)(iii) shall not be in effect, any action taken by the
Corporation's Board of Directors shall be taken by a majority of the
directors present at a duly called meeting at which a quorum is
present; provided, however, that such majority shall include a
majority of the directors elected by the holders of the Series A
Preferred Stock and a majority of the directors elected by the holders
of the Common Stock. For so long as the provisions of Subsection
3(b)(iii) above shall be in effect, any action taken by the
Corporation's Board of Directors shall be taken by a majority of the
directors present at a duly called meeting at which a quorum is
present; provided, however, that such majority shall include a
majority of the directors elected by the holders of the Series A
Preferred Stock.
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Section 4. Dividend Rights.
(a) Dividends shall accrue on the Preferred Stock at the
rate of $0.8891 per share per annum, payable quarterly in four equal
installments, appropriately adjusted to take account of any stock dividend,
stock split, combination of shares, reclassification or other similar event
with respect to the Preferred Stock (the "Accruing Dividends"). Accruing
Dividends shall accrue from day to day, whether or not declared, on each share
of Preferred Stock, from July 1, 1996 to and including the Redemption Date
applicable to such share or the date of the consummation of the exchange
contemplated by Section 2 above, or until such share shall no longer be
outstanding, and shall be cumulative. The Corporation shall declare, and shall
pay to the holders of Preferred Stock on the first business day of each
October, January, April and July (a "Divided Payment Date"), the Accruing
Dividends that have accrued and remain unpaid on the Preferred Stock. If the
funds of the Corporation legally available for payment of Accruing Dividends on
a Dividend Payment Date are insufficient to pay such Accruing Dividends on all
shares of Preferred Stock on such Date, those funds which are legally available
will be used to pay, pro rata among all shares of Preferred Stock, such portion
of the Accruing Dividends then due as to which funds are legally available.
The portion of such Accruing Dividends not so paid shall continue to accrue.
At any time thereafter when additional funds of the Corporation are legally
available for payment of the unpaid portion of such Accruing Dividends, such
funds will be used for such purpose not later than the next succeeding Dividend
Payment Date. Notwithstanding the foregoing, if the Corporation shall for any
reason (including as a result of funds not being legally available therefor)
fail to pay the entire amount of Accruing Dividends on any Dividend Payment
Date, then the unpaid portion of such Accruing Dividends shall bear
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interest at the rate of 50% per annum until the earlier of (i) such time as the
Corporation shall have paid in full all such unpaid portion of such Accruing
Dividends, (ii) the applicable Redemption Date, or (iii) the date of the
consummation of the exchange contemplated by Section 2 above. Any payment by
the Corporation with respect to Accruing Dividends shall be allocated, first,
to any interest on any due and unpaid Accruing Dividends and, second, to any
due and unpaid Accruing Dividends in the order of their respective Dividend
Payment Dates.
(b) Provided that all Accruing Dividends then payable
shall have been paid in full to the holders of the Preferred Stock in
accordance with Subsection 4(a) above, each share of Common Stock shall entitle
the holder thereof of record to receive, out of the funds of the Corporation
legally available therefor, such dividends, if any, as may be declared from
time to time by the Board of Directors; provided, however, upon the occurrence
of a Default and thereafter, no dividends shall be declared or paid on the
Common Stock without the consent in writing of the holders of a majority of the
shares of the Preferred Stock.
Section 5. Redemption.
(a) At the written election of any holder of outstanding
shares of Series B Preferred Stock made at any time during the period beginning
July 1, 1999 and ending June 30, 2009, the Corporation shall call for
redemption and shall redeem on the Redemption Date specified below, such amount
of the outstanding shares of Series B Preferred Stock held by such holder as
shall be specified in such written election, at the redemption price per share
(the "Redemption Price") equal to (i) the Liquidation Price, plus (ii) an
amount equal to all unpaid Accruing Dividends thereon, whether or not declared,
plus (iii) all interest on such Accruing Dividends (as provided in Section 4
above), to and including Redemption Date. As used herein,
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the term "Redemption Date" shall mean the date for any redemption under this
Subsection 5(a) or the date for the redemption under Subsection 5(b) below, as
applicable. The Redemption Date for a redemption pursuant to this Subsection
5(a) shall be the first business day of the second calendar month after the
month in which such notice of election has been given to the Corporation.
Notwithstanding the forgoing, no redemption shall take place under this
Subsection 5(a) if, prior to the applicable Redemption Date, the holders of a
majority of the outstanding shares of Series A Preferred Stock shall have given
the notice of exchange to the Corporation contemplated by Subsection 2(a)
above.
(b) At the written election of the holders of a majority
of the outstanding shares of Series A Preferred Stock made at any time during
the period beginning on the earlier of (i) July 1, 2006, or (ii) the occurrence
of a Default and ending on June 30, 2009, the Corporation shall call for
redemption and shall redeem on the Redemption Date specified in the next
sentence each and every outstanding share of Preferred Stock at the Redemption
Price. The Redemption Date for such redemption shall be the first business day
of the fourth calendar month after the month in which such notice of election
has been given to the Corporation, with a copy to the holder(s) of a majority
of the outstanding Common Stock.
(c) Notice of redemption under Subsection 5(b) above
shall be sent by first class mail, postage prepaid, to each holder of record of
the Preferred Stock to be redeemed at its address as it appears on the books of
the Corporation. Such notice shall be sent not less than 30 nor more than 60
days prior to the Redemption Date set forth therein. Such notice shall set
forth (i) the Redemption Date and place of redemption; and (ii) the number of
shares to be redeemed and the redemption price, including all unpaid Accruing
Dividends thereon, whether or not
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declared, to and including the Redemption Date. In the event that an election
of redemption is given under Subsections 5(a) or 5(b), the Corporation shall be
obligated to redeem the Preferred Stock on the dates and in the amounts set
forth in the notice under such Subsections 5(a) or 5(b), as applicable.
(d) If, on or before a Redemption Date, the funds
necessary and sufficient for such redemption in full on such Redemption Date
shall have been set aside by the Corporation and deposited with a bank or trust
company, in trust for the pro rata benefit of the holders of the Preferred
Stock that has been called for redemption, then, notwithstanding that any
certificates for shares that have been called for redemption shall not have
been surrendered for cancellation, the shares represented thereby shall no
longer be deemed outstanding from and after such Redemption Date, and all
rights of holders of such shares so called for redemption shall forthwith,
after such Redemption Date, cease and terminate with respect to such shares,
excepting only the right to receive the redemption funds therefor to which they
are entitled. Any interest accrued on funds so deposited and unclaimed by
stockholders entitled thereto shall be paid to such stockholders at the time
their respective shares are redeemed or to the Corporation at the time
unclaimed amounts are paid to it. In case any holder of Preferred Stock which
shall have been called for redemption shall not, within six years after the
Redemption Date, claim the amounts so deposited with respect to the redemption
thereof, any such bank or trust company shall, upon demand, pay over to the
Corporation such unclaimed amounts and thereupon such bank or trust company
shall be relieved of all responsibility in respect thereof to such holder and
such holder shall look only to the Corporation for the payment thereof.
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(e) If the Corporation for any reason fails to pay in
full the Redemption Price for any of the shares of Preferred Stock in
accordance with Subsections 5(a) or (b) on or prior to the applicable
Redemption Date specified therein, then, the unpaid Redemption Price shall bear
interest at the rate of ten percent (10%) per annum from the applicable
Redemption Date to and including the date of payment in full of such Redemption
Price.
(f) If the funds of the Corporation legally available for
redemption of shares of Preferred Stock on a Redemption Date are insufficient
to redeem the total number of shares of Preferred Stock submitted for
redemption, those funds which are legally available will be used to redeem the
maximum possible number of whole shares ratably among the holders of such
shares. The shares of Preferred Stock not redeemed shall remain outstanding and
entitled to all rights and preferences provided herein. At any time thereafter
when additional funds of the Corporation are legally available for the
redemption of such shares of Preferred Stock, such funds will be used, at the
end of the next succeeding calendar quarter, to redeem the balance of such
shares, or such portion thereof for which funds are then legally available.
Section 6. Events of Non-Compliance; Default.
(a) For purposes of this Article IV, the term "Event of
Non-Compliance" shall mean any of the following, unless waived in writing by
the holders of a majority of the outstanding Series A Preferred Stock:
(i) the Corporation shall fail for any reason
(including as a result of there being no funds legally available
therefor) to pay the entire amount of Accruing Dividends due and
payable on any Dividend Payment Date and such failure shall continue
unremedied until the later of (A) forty-five (45) days after the
giving to the
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Corporation, with a copy to the holder(s) of a majority of the
outstanding Common Stock, of written notice by any holder of Preferred
Stock as to such failure or (B) the day after the next succeeding
Dividend Payment Date (provided, however, no further written notices
shall be required for any failure to pay any portion of any Accruing
Dividends due and payable on such next succeeding Dividend Payment
Date or on any subsequent Dividend Payment Date unless and until all
Accruing Dividends, plus interest, then due and payable shall have
been paid in full as of the most recent Dividend Payment Date);
(ii) the Corporation shall breach either the
following Net Worth covenant or the following Dividend Coverage Ratio
covenant, in either case as of the end of any two consecutive quarters
and any and all breaches of both such covenants as of the end of the
second of such quarters shall not have been cured (in the manner
hereinafter specified) by the end of the quarter next following such
second quarter:
(A) Net Worth. The Corporation shall
maintain a Net Worth of not less than the following amount as of the
end of each quarter during the twelve month period ending on the date
indicated:
September 30, 1996 - $31 million
September 30, 1997 - $31 million
September 30, 1998 - $33 million
September 30, 1999 - $35 million
September 30, 2000 - $37 million
September 30, 2001 - $39 million
September 30, 2002 - $41 million
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September 30, 2003 - $43.5 million
September 30, 2004 - $46 million
September 30, 2005 - $48.5 million
September 30, 2006,- $51 million
and thereafter
The Corporation's compliance with this covenant shall be determined
for the quarter ended as of September 30, 1996 and each December 31,
March 31, June 30 and September 30 thereafter.
(B) Dividend Coverage Ratio. The
Corporation shall maintain a Dividend Coverage Ratio of not less than
0.85:1. The Corporation's compliance with this covenant shall be
determined as of September 30, 1996 and as of each December 31, March
31, June 30, and September 30 thereafter, in each case for the
12-month period then ended.
Any breach of either of the above covenants as of the end of
any particular quarter shall be deemed cured if one or more of the stockholders
of the Corporation shall make a capital contribution of cash or cash
equivalents to the Corporation in an amount which, had such contribution been
made as of the end of the quarter in question and had such cash or cash
equivalents been taken into account in the calculation of such covenant as of
the end of such quarter, would have been sufficient to prevent the breach by
the Corporation of such covenant as of the end of such quarter.
(C) Definitions. For purposes of the
above financial covenants:
"Available Cash Flow" shall mean, for
the measurement period in question, net earnings after taxes (but
before dividends) PLUS: (1)
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depreciation; (2) amortization; (3) deferred tax expense; (4)
extraordinary losses (as defined by generally accepted accounting
principles); (5) expenses (including accrued expenses) arising
directly from the formation of the joint venture pursuant to the Joint
Venture Agreement (as defined in clause (vii) below); (6) expenses
(including accrued expenses) resulting directly from the required
adoption of newly promulgated authoritative accounting pronouncements;
(7) expenses (including accrued expenses) arising directly from the
sale or liquidation of Production Automation, Inc.; and (8) capital
contributions to the Corporation in cash or cash equivalents, in each
case during the measurement period in question, MINUS: (9) current
maturities of long- term debt, notes payable and capital lease
obligations as of the end of the measurement period in question; and
(10) extraordinary gains (as defined by generally accepted accounting
principles) during the measurement period in question.
"Dividend Coverage Ratio" shall mean
the ratio of (1) Available Cash Flow for the measurement period in
question to (2) Accruing Dividends (whether or not declared or paid)
during the measurement period in question.
"Net Worth" shall mean total assets
less total liabilities as determined in accordance with generally
accepted accounting principles consistently applied.
(iii) the Corporation shall fail for any reason
(including as a result of there being no funds legally available
therefor) to pay in full the Redemption Price with respect to each
share of Preferred Stock as required by Section 5(b) hereof and such
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<PAGE> 24
failure shall continue for a period of sixty (60) days beyond the
applicable Redemption Date; or
(iv) the Corporation shall fail to deliver, or
cause to be delivered, the full amount of Exchange Consideration or
Reorganization Consideration required to be delivered pursuant to
Section 2 or Section 7 hereof (including, in the case of Section 7
hereof, the delivery of cash into escrow and the maintenance of such
escrow, as contemplated thereby) and such failure shall continue for a
period of sixty (60) days beyond the date of surrender of the shares
of Preferred Stock as provided in Section 2(b) or Section 7 hereof or,
in the case of the obligation to make delivery of cash into escrow and
to maintain such escrow, for a period of sixty (60) days after notice
by any holder of Preferred Stock to the Corporation, with a copy to
the holder(s) of a majority of the outstanding Common Stock.
Upon the occurrence of an Event of Non-Compliance,
any holder of Series A Preferred Stock may give written notice thereof
to the Corporation, with a copy to the holder(s) of a majority of the
outstanding Common Stock, and, provided such notice shall have been
given, the holders of the Series A Preferred Stock shall be entitled
to elect a fourth director, as more fully provided in Section 3(b) of
this Article IV.
(b) For purposes of this Article IV, the term "Default"
shall mean any of the following, unless waived in writing by the
holders of a majority of the outstanding Series A Preferred Stock:
(i) the Corporation shall fail for any reason
(including as a result of there being no funds legally available
therefor) to pay the entire amount of Accruing
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Dividends due and payable on any two consecutive Dividend Payment
Dates and such failure shall continue unremedied until the later of
(A) forty-five (45) days after the giving to the Corporation, with a
copy to the holder(s) of a majority of the outstanding Common Stock,
of written notice by any holder of Preferred Stock as to such failure
(which notice shall not be required if, pursuant to the proviso clause
in Subsection 6(a)(i) above, no further written notices are required),
or (B) the day after the next succeeding Dividend Payment Date;
(ii) the Corporation shall breach either the Net
Worth covenant or the Dividend Coverage Ratio covenant in Subsection
6(a)(ii) above, in either case as of the end of any three consecutive
quarters and any and all breaches of both such covenants as of the end
of the third of such quarters shall not have been cured (in the manner
specified above) by the end of the quarter next following such third
quarter;
(iii) the Corporation shall fail for any reason
(including as a result of there being no funds legally available
therefor) to pay in full the Redemption Price with respect to each
share of Preferred Stock as required by Section 5(b) hereof and such
failure shall continue for a period of one hundred twenty (120) days
beyond the applicable Redemption Date;
(iv) the Corporation shall fail to deliver, or
cause to be delivered, the full amount of Exchange Consideration or
Reorganization Consideration required to be delivered pursuant to
Section 2 or Section 7 hereof (including, in the case of Section 7
hereof, the delivery of cash into escrow, and the maintenance of such
escrow, as contemplated thereby and such failure shall continue for a
period of one hundred twenty
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<PAGE> 26
(120) days beyond the date of surrender of the shares of Preferred
Stock as provided in Section 2(b) or Section 7 hereof or, in the case
of the obligations to make delivery of cash into escrow and to
maintain such escrow, for a period of one hundred twenty (120) days
after notice by any holder of Preferred Stock to the Corporation, with
a copy to the holder(s) of a majority of the outstanding Common Stock;
or
(v) either the Corporation or the issuer of the
Exchange Consideration (the "Exchange Issuer") shall generally not pay
its debts as such debts become due, or shall make a general assignment
for the benefit of creditors; or an executive officer of the
Corporation or the Exchange Issuer shall admit in writing its
inability to pay its debts generally; or any proceeding shall be
instituted by the Corporation or the Exchange Issuer or against the
Corporation or the Exchange Issuer, in any such case seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted
against the Corporation or the Exchange Issuer (but not instituted by
it), either such proceeding shall remain undismissed or unstayed for a
period of 90 days, or in the case of any such proceeding instituted
against the Corporation or the Exchange Issuer (but not instituted by
it) any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the
appointment
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of a receiver, trustee, custodian or other similar official for, it or
for any substantial part of its property) shall occur.
(c) Upon the occurrence of a Default, the holders of the
Series A Preferred Stock may exercise any one or more of the following remedies
without any further notice or action, other than as provided below, and in any
order or combination:
(i) The holders of the Series A Preferred Stock
shall be entitled to elect a fourth director, as more fully provided
in Section 3(b) of this Article IV.
(ii) The holders of a majority of the outstanding
shares of the Series A Preferred Stock shall be entitled to require
the Corporation to exchange all shares of Preferred Stock for shares
of Airgas Common Stock or other Exchange Consideration, to the extent
permitted and as more fully provided in Section 2 of this Article II.
(iii) The holders of a majority of the outstanding
shares of the Series A Preferred Stock shall be entitled to require
the Corporation to redeem all shares of Preferred Stock, to the extent
permitted and as more fully provided in Section 5 of this Article II.
(iv) The holders of a majority of the outstanding
shares of Series A Preferred Stock may sell their shares of Series A
Preferred Stock and may require all other holders of Preferred Stock
to sell their shares of Preferred Stock as follows:
(A) in the event that the holders of a
majority of the Series A Preferred Stock propose to sell or otherwise
dispose of for value all of the shares of Series A Preferred Stock
owned by such holders to a Third Party (as defined in subparagraph (E)
below), such holders may, at their option, require all other holders
of
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Preferred Stock to sell all of the shares of Preferred Stock owned by
them to the Third Party on the same terms and conditions upon which
the holders of a majority of the Series A Preferred Stock shall sell
their shares;
(B) the holders of a majority of the
Series A Preferred Stock, or their representative, shall provide to
all other holders of Preferred Stock a written and dated notice (the "
Sale Notice") of such proposed sale not later than ten (10) days prior
to the consummation of such sale. The Sale Notice shall contain
written notice of the exercise by the holders of a majority of the
Series A Preferred Stock of their rights pursuant to this Subsection
6(c)(iv) setting forth the consideration to be paid by the Third Party
and the other material terms and conditions of the proposed sale.
Within five (5) days following the day the Sale Notice is given, all
other holders of Preferred Stock shall deliver to the holders of a
majority of the Series A Preferred Stock, or their representative (i)
the certificate or certificates evidencing all the shares of Preferred
Stock held by all other holders of Preferred Stock, duly endorsed in
blank or accompanied by written instruments of transfer in form
satisfactory to the holders of a majority of the Series A Preferred
Stock or their representative executed by the respective holders, and
(ii) a special irrevocable power-of-attorney authorizing the holders
of the Series A Preferred Stock, or their representative, to sell such
shares on the terms and conditions upon which the holders of a
majority of the Series A Preferred Stock are selling their shares and
to take all such actions as shall be necessary or appropriate in order
to consummate such sale;
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(C) promptly upon the consummation of
the sale of shares of the Preferred Stock to the Third Party, the
holders of a majority of the Preferred Stock, or their representative,
shall remit to the holders of the Preferred Stock their pro rata
shares of the net proceeds of such sale up to the Liquidation Amount
(calculated as if the liquidation took place as of the date of the
consummation of such sale) per share of Preferred Stock;
(D) anything herein to the contrary
notwithstanding, the holders of a majority of the Series A Preferred
Stock and their representative shall have no obligation to any other
holder of Preferred Stock to sell or otherwise dispose of any shares
of Preferred Stock pursuant to this Subsection 6(c)(iv) as a result of
any decision by the holders of a majority of the Series A Preferred
Stock, or their representative, not to accept or consummate any offer
or sale of all of the shares owned by such holders of the Series A
Preferred Stock (it being understood that any and all such decisions
shall be made by the holders of a majority of the Series A Preferred
Stock, or their representative, in their sole discretion). In
addition, anything to the contrary notwithstanding, the holders of a
majority of the Series A Preferred Stock and their representative
shall have no obligation to include any other shares of Preferred
Stock in any sale of Series A Preferred Stock by such holders of the
Preferred Stock;
(E) as used in this Subsection 6(c), the
term "Third Party" means any person or entity other than any holder of
Series A Preferred Stock or any entity which is an affiliate of any
holder of Series A Preferred Stock;
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(F) in the event that the proposed sale
of shares of Series A Preferred Stock contemplated by this Subsection
6(c)(iv) shall be in the form of (1) a consolidation or merger of the
Corporation with or into another entity or the sale of all or
substantially all of the assets of the Corporation to another person
or entity, or (2) a reorganization or a recapitalization of the
Corporation, or (3) any other business reorganization or combination
similar in effect to any of the foregoing and requiring a vote of the
shareholders of the Corporation (any of the foregoing being called a "
Corporate Event"), the vote of stockholders with respect to the
Corporate Event shall be by the holders of the Series A Preferred
Stock and the holders of the Common Stock, voting together as single
class.
(d) Not later than thirty (30) days after the close of
each quarter of the Corporation for which quarterly financial
statements are prepared, the Corporation shall prepare and send to
each stockholder of the Corporation at such stockholder's last known
address reflected in the Corporation's stockholder records, a
certificate (the " Compliance Certificate") signed by the
Corporation's Chief Financial Officer (i) setting forth a calculation
of the Net Worth covenant and the Dividend Coverage Ratio covenant of
the Corporation (as described in Subsection 6(a) above), and (ii)
stating whether, to such officer's best knowledge and belief, any
Event of Non-Compliance or any Default has occurred and is continuing
and, if there be such an Event of Non-Compliance or Default in
existence, setting forth the details thereof.
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Section 7. Change of Control of Airgas.
(a) For purposes of this Article II, the term " Change of Control"
shall mean (i) any sale of all or substantially all of the assets of Airgas, or
(ii) any transaction, including without limitation a merger, consolidation,
recapitalization or reclassification of Airgas Common Stock, or any compulsory
share exchange, as a result of which not less than eighty-five percent (85%) of
the issued and outstanding voting stock of Airgas shall be converted into the
right to receive securities, cash, or other property. Prior to the occurrence
of a Change of Control, the Corporation shall furnish, or cause to be
furnished, to the holders of the Preferred Stock a notice of the proposed
transaction constituting the Change of Control, which notice (the "Change of
Control Notice") shall include (i) all the information regarding such
transaction furnished to the stockholders of Airgas and (ii) particulars as to
the manner in which the Exchange Consideration relative to such transaction
shall be calculated and otherwise provided for (the Change of Control Notice
may consist of the proxy materials furnished to the stockholders of Airgas so
long as they contain information which satisfies the foregoing requirements).
In the event that there shall be a Change of Control, each share of Preferred
Stock shall be exchangeable, in accordance with the provisions of Section 2 of
this Article II, into the kind and amount of securities, cash, and other
property receivable upon consummation of the transaction constituting the
Change of Control by a holder of that number of shares of Airgas Common Stock
for which such shares of Preferred Stock would have been exchangeable
immediately prior to such transaction; provided, however, the provisions of
Subsections 7(b) and 7(c) below shall also be applicable to any such exchange
after a Change of Control. After the consummation of the transaction
constituting the Change of Control and until the exchange of the Preferred
Stock in accordance with the
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provisions of Section 2 of this Article II, the holders of the Preferred Stock
shall be entitled to appropriate adjustments with respect to their exchange
rights to the end that the provisions (including provisions with respect to
changes in and other adjustments to the Exchange Price) of Section 2 of this
Article II and of this Section 7 shall correspondingly be made applicable, as
nearly as may reasonably be, in relation to any securities, cash or other
property thereafter deliverable upon the exchange of the Preferred Stock.
(b) If the Change of Control is pursuant to a transaction in which
the consideration paid for the capital stock of Airgas is all cash, the holders
of a majority of the issued and outstanding shares of Series A Preferred Stock
may, by written notice to the Corporation during the ninety (90) day period
beginning on a date which shall be ninety (90) days after the consummation of
the transaction which constitutes the Change of Control, require the
Corporation and all holders of Preferred Stock to exchange all shares of
Preferred Stock for the applicable Exchange Consideration, whereupon the
holders of the Preferred Stock shall be entitled immediately to surrender their
shares of Preferred Stock for such Exchange Consideration and the provisions of
Section 2 of this Article II (including, without limitation, Section 2(b)
thereof) shall immediately become applicable. Notwithstanding the foregoing,
the holders of a majority of the issued and outstanding shares of Series A
Preferred Stock shall not have the right to effectuate the immediate exchange
contemplated by the preceding sentence if, prior to the expiration of the
ninety (90) day period after the consummation of the transaction which
constitutes the Change of Control, the Corporation or Airgas (or Airgas'
successor) shall deposit, or cause to be deposited, into escrow with an escrow
agent and upon escrow terms mutually satisfactory to Airgas (or its successor)
and the holders of the majority of the Series A
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Preferred Stock (or their representative) an amount of cash equal to the
aggregate cash consideration which all holders of the Preferred Stock would
have received for all their shares of Airgas Common Stock had they exchanged
all their shares of Preferred Stock for shares of Airgas Common Stock
immediately prior to the consummation of such transaction. Such cash, together
with all earnings thereon, shall remain in escrow pending the exchange provided
for in Section 2 of this Article II; and, if and when the holders of the Series
A Preferred Stock shall elect to effect the exchange contemplated by said
Section 2, the Corporation shall promptly make a draw under such escrow and
shall promptly deliver to each holder of Preferred Stock such holder's pro rata
share of such escrow; such delivery shall be in full satisfaction of the
Corporation's obligation to deliver the Exchange Consideration in connection
with such exchange.
(c) If the Change of Control is pursuant to a transaction in which
the consideration paid for the capital stock of Airgas is other than all cash,
then the holders of a majority of the issued and outstanding shares of Series A
Preferred Stock may, by written notice to the Corporation, with a copy to
Airgas, during the period ending on the later of (i) forty-five (45) days after
receipt of the Change of Control Notice or (ii) if applicable to the
transaction constituting the Change of Control, such longer period of time as
may be given to the stockholders of Airgas to return their proxies pursuant to
the related proxy materials, elect on behalf of all holders of the Preferred
Stock not to wait for the applicable Exchange Consideration which would
otherwise be deliverable on exchange in accordance with the provisions of
Section 2 of this Article II. Failure by such majority to make such election
within such period shall constitute the assent by the holders of all shares of
Preferred Stock to wait for the applicable
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Exchange Consideration if, as and when the exchange of the Preferred Stock is
made in accordance with the provisions of Section 2 of this Article II. In the
event that the holders of a majority of the issued and outstanding shares of
Series A Preferred Stock shall elect, in the manner hereinabove specified, not
to wait for the applicable Exchange Consideration, then the holders of a
majority of the issued and outstanding shares of Series A Preferred Stock may,
by written notice to the Corporation during the ninety (90) day period
beginning on a date which shall be ninety (90) days after the consummation of
the transaction which constitutes the Change of Control, require the
Corporation and all holders of Preferred Stock to exchange all shares of
Preferred Stock for the applicable Exchange Consideration, whereupon the
holders of the Preferred Stock shall be entitled immediately to surrender their
shares of Preferred Stock for such Exchange Consideration and the provisions of
Section 2 of this Article II (including, without limitation, Section 2(b)
thereof) shall immediately become applicable. Notwithstanding the foregoing,
the holders of a majority of the issued and outstanding shares of Series A
Preferred Stock shall not have the right to effectuate the immediate exchange
contemplated by the preceding sentence if, prior to the expiration of the
ninety (90) day period after the consummation of the transaction which
constitutes the Change of Control, the Corporation or Airgas (or Airgas'
successor) shall deposit, or cause to be deposited, into escrow with an escrow
agent and upon escrow terms mutually satisfactory to Airgas (or its successor)
and the holders of the majority of the Series A Preferred Stock (or their
representative) an amount of cash equal to the fair market value (as
hereinafter defined) of the aggregate consideration which all holders of the
Preferred Stock would have received for all their shares of Airgas Common
Stock had they exchanged all their shares of Preferred Stock for shares of
Airgas Common Stock immediately
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prior to the consummation of such transaction. Such cash, together with all
earnings thereon, shall remain in escrow pending the exchange provided for in
Section 2 of this Article II; and, if and when the holders of the Series A
Preferred Stock shall elect to effect the exchange contemplated by said Section
2, the Corporation shall promptly make a draw under said escrow and shall
promptly deliver to each holder of Preferred Stock such holder's pro rata share
of such escrow; such delivery shall be in full satisfaction of the
Corporation's obligation to deliver the Exchange Consideration in connection
with such exchange. For purposes of this Subsection 7(c), the term "fair
market value" shall be defined in the manner set forth in Subsection 1(b) of
this Article II; provided, however, reference in said Subsection to the "Board
of Directors of the Corporation" shall mean the Board of Directors of Airgas.
Section 8. Notices. All notices, requests, demands and other
communications (collectively "Notices") that are required or may be given under
this Article II shall be in writing. All Notices shall be deemed to have been
duly given or made: if by hand, immediately upon delivery; if by telecopier or
similar device, immediately upon sending, provided notice is sent on a business
day during the hours of 9:00 a.m. to 6:00 p.m. Eastern Standard Time, but if
not, then immediately upon the beginning of the first business day after being
sent; if by Federal Express, Express Mail or other reputable overnight delivery
service, one (1) business day after being placed in the exclusive custody and
control of said courier; and if mailed by certified mail, return receipt
requested, five (5) business days after mailing. Notwithstanding the
foregoing, with respect to any notice given or made by telecopier or similar
device, such notice shall not be effective unless and until (i) the telecopier
or similar device being used prints a written confirmation of successful
completion of such communication by the party sending the notice,
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and (ii) a copy of such notice is deposited in first class mail to the
appropriate address for the party to whom notice is sent. In addition,
notwithstanding the foregoing, a notice of a change of address by a party
hereto shall not be effective until received by the party to whom such notice
of a change of address is sent. All notices are to be given or made to the
parties at the following addresses (or to such other address as either party
may designate by notice in accordance with the provisions of this Section):
If to the Corporation:
National Welders Supply Company, Inc.
810 Gesco Street
Charlotte, North Carolina 28208
Tel: (704) 333-5475
Fax: (704) 344-1711
Attention: J.A. Turner, Jr. or Judith Carpenter
If to Airgas or the holders of the Common Stock:
Airgas, Inc.
Five Radnor Corporate Center
Suite 550
100 Matsonford Road
Radnor, Pennsylvania 19087
Tel: (610) 687-5253
Fax: (610) 687-1052
Attention: Chief Executive Officer
If to any other Stockholder of the Corporation:
At such stockholder's last known address as reflected in the
shareholder records of the Corporation.
The Corporation will promptly make available to any stockholder, upon written
request, the address of any other stockholder(s) as last shown in the
Corporation's shareholder records.
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Section 9. No Reissuance of Preferred Stock. No share or shares of
Preferred Stock acquired by the Corporation by reason of redemption, purchase,
exchange or otherwise shall be reissued, and all such shares shall be
cancelled, retired and eliminated from the shares which the Corporation shall
be authorized to issue.
37
