Agreement and Plan of Merger Among CompX International Inc. CompX Group, Inc. and CompX KDL LLC Dated as of October 16, 2007
Among
CompX
Group, Inc.
and
CompX
KDL LLC
Dated
as of October 16, 2007
TABLE
OF CONTENTS
Page
|
|
TABLE
OF CONTENTS
|
|
|
ARTICLE I. THE
MERGER
|
|
|
Section 1.1. The
Merger
|
|
|
Section 1.2. Effective
Time
|
|
|
Section 1.3. Succession
of Surviving Company
|
|
|
Section 1.4. Certificate
of Formation and Limited Liability Company
Agreement
|
|
|
Section 1.5. Officers
|
|
|
Section 1.6. Continuation,Cancellation
or Issuance of Membership Interests, Stock or
Note
|
|
|
Section 1.7. Taking
of Necessary Action
|
|
|
ARTICLE II. REPRESENTATIONS
AND WARRANTIES
|
|
|
Section 2.1. Representations
and Warranties of CompX
|
|
|
Section 2.1. Representations
and Warranties of KDL
|
|
|
Section 2.2. Representations
and Warranties of CGI
|
|
|
ARTICLE III. CONDITION
TO THE MERGER
|
|
|
ARTICLE IV. TERMINATION,
WAIVER AND AMENDMENT
|
|
|
Section 4.1. Right
of Termination
|
|
|
Section 4.2. Effect
of Termination
|
|
|
ARTICLE V. MISCELLANEOUS
|
|
|
Section 5.1. Survival
|
|
|
Section 5.2. Sole
Agreement of Parties
|
|
|
Section 5.3. Waiver;
Modification or Amendment
|
|
|
Section 5.4. Further
Assurances
|
|
|
Section 5.5. Exhibit;
Cross-References; Headings
|
|
|
Section 5.6. Severability
|
|
|
Section 5.7. Counterparts
|
|
|
Section 5.8. Applicable
Law
|
|
|
SIGNATURE
PAGE
|
|
|
EXHIBIT A SUBORDINATED
TERM LOAN PROMISSORY NOTEA
|
This
Agreement and Plan of Merger (this “Agreement”) is made as of October
16, 2007 among CompX International Inc., a Delaware corporation
(“CompX”), CompX KDL LLC, a Delaware limited liability company of which
CompX is the sole member (“KDL”), and CompX Group, Inc., a Delaware
corporation (“CGI”).
Recitals
A. On
the date of this Agreement:
(1) the
authorized capital stock of CGI consists of 13,000 shares of common stock,
par
value $0.01 per share (the “CGI Common Stock”), of which 12,586.82
shares are outstanding;
(2) CGI
is
the record holder of 2,586,820 shares (the “CGI CompX Class A Common Stock
Shares”) of class A common stock, par value $0.01 per share (the “CompX
Class A Common Stock”), of CompX and 10.0 million shares (collectively with
the CGI CompX Class A Common Stock Shares, the “CGI CompX Common Stock
Shares”) of the class B common stock, par value $0.01 per share, of CompX
(the “CompX Class B Common Stock” and collectively with the CompX Class
A Common Stock, the “CompX Common Stock”);
(3) NL
Industries, Inc., a New Jersey corporation that is a parent of CompX
(“NL”), is the record holder of 10,374 shares of CGI Common
Stock;
(4) Titanium
Metals Corporation, a Delaware corporation that is related to CompX, is the
sole
stockholder of TIMET Finance Management Company, a Delaware corporation
(“TFMC”);
(5) TFMC
is
the record holder of 2,212.82 shares of CGI Common Stock; and
(6) NL
and
TFMC are the only stockholders of CGI.
B. CGI
and KDL desire to merge upon the terms set forth in this Agreement.
C. NL
and TFMC, as the only stockholders of CGI, and CompX, as
the sole member of KDL, have each approved and adopted this
Agreement.
D. The
parties to this Agreement desire to consummate the merger in accordance with
the
provisions of section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended.
Agreement
In
consideration of the premises and the covenants and agreements herein contained,
and for other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, and intending to be legally bound hereby, the
parties to this Agreement hereby agree as follows.
ARTICLE I.
THE
MERGER
Section 1.1. The
Merger. Upon the terms and subject to the conditions of
this Agreement and in accordance with the relevant provisions of the Delaware
General Corporation Law and the Delaware Limited Liability Act, each as amended
(each, as applicable, the “Applicable Delaware Entity Law”), CGI shall
merge with and into KDL (the “Merger”) at the Effective Time (as
defined below).
Section 1.2. Effective
Time. The Merger requires the filing of documents with
the Secretary of State of the state of Delaware. The Merger shall be
effective as of the filing of a certificate of merger with the Secretary of
State of the state of Delaware or such later time as the certificate of merger
states the effective time of the Merger shall be (the “Effective
Time”).
Section 1.3. Effects
of the Merger. As of the Effective Time, the separate
corporate existence of CGI shall cease and it shall merge with and into KDL
as
the surviving company (the “Surviving Company”). The Merger
shall have the effects set forth in this Agreement and in the Applicable
Delaware Entity Law.
Section 1.4. Certificate
of Formation and Limited Liability Company
Agreement. Upon the Effective Time, the certificate of
formation and limited liability company agreement of KDL shall be the
certificate of formation and limited liability company agreement of the
Surviving Company.
Section 1.5. Officers. At
the Effective Time, the officers of KDL immediately prior to the Effective
Time
shall be the officers of the Surviving Company. Subject to the
limited liability company agreement of the Surviving Company and the Delaware
Limited Liability Act, as amended, each of the Surviving Company’s officers
shall serve until his or her successor is elected or appointed and qualified
or
until his or her earlier death, incapacity, resignation or removal.
Section 1.6. Continuation, Cancellation
or Issuance of Membership Interests, Stock or Note. At
the Effective Time, by virtue of the Merger and without any action on the part
of any party to this Agreement, the following shall occur:
(a) each
limited liability company interest in KDL outstanding prior to the Effective
Time shall upon the Effective Time remain unchanged and continue to remain
outstanding as a limited liability company interest in the Surviving
Company;
(b) each
share of the CGI Common Stock outstanding immediately prior to the Effective
Time shall upon the Effective Time automatically be canceled and retired and
shall cease to exist.
(c) each
CGI CompX Common Stock Share outstanding immediately prior to the Effective
Time
shall upon the Effective Time automatically be canceled;
(d) CompX
shall issue to NL upon the Effective Time 374,000 new shares of CompX Class
A
Common Stock and 10,000,000 new shares of CompX Class B Common Stock
(collectively, the “New NL CompX Common Stock Shares”);
and
(e) CompX
shall execute and deliver to TFMC a subordinated term loan promissory note
substantially on the terms set forth on Exhibit A attached to
this Agreement (the “Promissory Note”).
The
other
parties agree that CompX has joined this Agreement to accommodate the structure
of the Transaction as expressed by the other parties and all the parties agree
that the cancellation of the CGI CompX Common Stock Shares shall not be deemed
an “acquisition” by CompX under paragraph B(v)(g) of Article Four of CompX’s
restated certificate of incorporation.
Section 1.7. Taking
of Necessary Action. In case at any time after the
Effective Time any further action is necessary to carry out the purposes of
this
Agreement or to vest the Surviving Company with full title to all assets,
rights, approvals, immunities and franchises of CGI, the officers and directors,
or the former officers and directors, as the case may be, of CGI and the
Surviving Company shall take all such action, at the expense of the Surviving
Company.
ARTICLE II.
REPRESENTATIONS
AND WARRANTIES
Section 2.1. Representations
and Warranties of CompX. CompX hereby represents and
warrants to each other party to this Agreement as of the date of this Agreement,
and as of the Effective Time as if made at such time, as follows:
(a) Authority. It
is a corporation validly existing and in good standing under the laws of the
state of its incorporation. It has full corporate power and
authority, without the consent or approval of any other person, to execute
and
deliver this Agreement and the Promissory Note and to consummate the
transactions contemplated by this Agreement (collectively, the
“Transactions”). All corporate action required to be taken
by or on behalf of it to authorize the execution, delivery and performance
of
this Agreement has been duly and properly taken.
(b) Validity. This
Agreement is duly executed and delivered by it and constitutes its lawful,
valid
and binding obligation, enforceable in accordance with its terms. The
Promissory Note when executed will be duly executed and delivered by it and
shall constitute its lawful, valid and binding obligation, enforceable in
accordance with its terms. The execution and delivery of this
Agreement and the Promissory Note and the consummation of the Transactions
by it
are not prohibited by, do not violate or conflict with any provision of, and
do
not result in a default under (a) its charter or bylaws; (b) any material
contract, agreement or other instrument to which it is a party or by which
it is
bound; (c) any order, writ, injunction, decree or judgment of any court or
governmental agency applicable to it; or (d) any law, rule or regulation
applicable to it, except in each case for such prohibitions, violations,
conflicts or defaults that would not have a material adverse consequence to
the
Transactions.
(c) Title
to New NL CompX Common Stock Shares. At the Effective Time, the
New NL CompX Common Stock Shares shall be validly issued and non-assessable
and
NL will acquire good and marketable title to the New NL CompX Common Stock
Shares, free and clear of any liens, encumbrances, security interests,
restrictive agreements, claims or imperfections of any nature whatsoever, other
than restrictions on transfer imposed by applicable securities
laws.
Section 2.1. Representations
and Warranties of KDL. KDL hereby represents and
warrants to each other party to this Agreement as of the date of this Agreement,
and as of the Effective Time as if made at such time, as follows:
(a) Authority. It
is a limited liability company validly existing and in good standing under
the
laws of the state of its formation. It has full power and authority,
without the consent or approval of any other person, to execute and deliver
this
Agreement and to consummate the Transactions. All action required to
be taken by or on behalf of it to authorize the execution, delivery and
performance of this Agreement has been duly and properly taken.
(b) Validity. This
Agreement is duly executed and delivered by it and constitutes its lawful,
valid
and binding obligation, enforceable in accordance with its terms. The
execution and delivery of this Agreement and the consummation of the
Transactions by it are not prohibited by, do not violate or conflict with any
provision of, and do not result in a default under (a) its certificate of
formation or limited liability company agreement; (b) any material contract,
agreement or other instrument to which it is a party or by which it is bound;
(c) any order, writ, injunction, decree or judgment of any court or governmental
agency applicable to it; or (d) any law, rule or regulation applicable to it,
except in each case for such prohibitions, violations, conflicts or defaults
that would not have a material adverse consequence to the
Transactions.
Section 2.2. Representations
and Warranties of CGI. CGI hereby represents and
warrants to each other party to this Agreement as of the date of this Agreement,
and as of the Effective Time as if made at such time, as follows:
(a) Authority. It
is a corporation validly existing and in good standing under the laws of the
state of its incorporation. It has full corporate power and
authority, without the consent or approval of any other person, to execute
and
deliver this Agreement and to consummate the Transactions. All
corporate action required to be taken by or on behalf of it to authorize the
execution, delivery and performance of this Agreement has been duly and properly
taken.
(b) Validity. This
Agreement is duly executed and delivered by it and constitutes its lawful,
valid
and binding obligation, enforceable in accordance with its terms. The
execution and delivery of this Agreement and the consummation of the
Transactions by it are not prohibited by, do not violate or conflict with any
provision of, and do not result in a default under (a) its charter or bylaws;
(b) any material contract, agreement or other instrument to which it is a party
or by which it is bound; (c) any order, writ, injunction, decree or judgment
of
any court or governmental agency applicable to it; or (d) any law, rule or
regulation applicable to it, except in each case for such prohibitions,
violations, conflicts or defaults that would not have a material adverse
consequence to the Transactions.
(c) Title
to CGI CompX Common Stock Shares. It has, and at all times
immediately prior to the Effective Time will have, good and marketable title
to
the CGI CompX Common Stock Shares free and clear of any liens, encumbrances,
security interests, restrictive agreements, claims or imperfections of any
nature whatsoever, other than restrictions on transfer imposed by applicable
securities laws.
ARTICLE III.
CONDITION
TO THE MERGER
The
obligation of each party to consummate the transactions to be performed by
it
pursuant to this Agreement is subject to the satisfaction of all applicable
material regulatory approvals.
ARTICLE IV.
TERMINATION,
WAIVER AND AMENDMENT
Section 4.1. Right
of Termination. This Agreement and the transactions
contemplated herein may be terminated and abandoned at any time prior to the
Effective Time by the mutual consent of all of the parties to this
Agreement.
Section 4.2. Effect
of Termination In the event of the termination and
abandonment hereof, pursuant to the provisions of
Section 4.1, this Agreement shall become void and have no
effect, without any liability on the part of any party to this Agreement, or
its
respective directors, officers, stockholders or members, as applicable, with
respect to this Agreement, except for liability of the party for its respective
expenses.
ARTICLE V.
MISCELLANEOUS
Section 5.1.
Survival. The representations and warranties set forth
in this Agreement shall survive the execution of this Agreement and the
consummation of the transactions contemplated herein.
Section 5.2. Sole
Agreement of Parties. This Agreement and the documents
referred to herein constitute the full understanding of the parties and a
complete and exclusive statement of the terms and conditions of their agreement
relating to the subject matter hereof and supersede any and all prior
agreements, whether written or oral, that may exist between the parties with
respect thereto.
Section 5.3. Waiver;
Modification or Amendment. Any of the terms or
conditions of this Agreement may be waived at any time by the party that is
entitled to the benefits thereof. This Agreement may not be modified
or amended except in a writing signed by all of the parties.
Section 5.4. Further
Assurances. Each party hereto agrees to execute any and
all documents, and to perform such other acts, whether before or after the
Effective Time, that may be reasonably necessary or expedient to further the
purposes of this Agreement or to further assure the benefits intended to be
conferred hereby.
Section 5.5. Exhibit;
Cross-References; Headings. The exhibit to this
Agreement is incorporated herein and made a part hereof for all
purposes. All sections and articles referred to herein are sections
and articles of this Agreement and the exhibit referred to herein is the exhibit
attached to this Agreement. Descriptive headings as to the contents
of particular articles and sections are for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.
Section 5.6. Severability. In
the event that any provision of this Agreement is held to be illegal, invalid
or
unenforceable under present or future laws, then (i) such provision shall be
fully severable and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision were not a part hereof; (ii) the
remaining provisions of this Agreement shall remain in full force and effect
and
shall not be affected by such illegal, invalid or unenforceable provision or
by
its severance from this Agreement; and (iii) there shall be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and still be legal, valid
and enforceable.
Section 5.7. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute on and the same
instrument.
Section 5.8. Applicable
Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the state of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the
state of Delaware or any other jurisdiction) that would cause the application
of
the laws of any jurisdiction other than the state of Delaware.
SIGNATURE
PAGE
The
parties hereto have executed this Agreement as of the date first above
written.
|
By: /s/
Xxxxxx X. Xxxxxxx
Xxxxxx
X. Xxxxxxx, Vice President
|
|
|
CompX
Group, Inc.
By: /s/
Xxxxxxx X. Xxxxxxxx
Xxxxxxx
X. Xxxxxxxx, Vice President
|
|
|
CompX
KDL LLC
By: /s/
Xxxxx X. Xxxxxxx
Xxxxx
X. Xxxxxxx, Vice President
|
EXHIBIT A
SUBORDINATED
TERM LOAN PROMISSORY
NOTE
$43,149,990.00 October
[__],
2007
For
and
in consideration of value received, the undersigned, COMPX INTERNATIONAL
INC., a corporation duly organized under the laws of Delaware
(“Maker”), promises to pay to the order of TIMET FINANCE MANAGEMENT
COMPANY, a corporation duly organized under the laws of Delaware
(“Payee”), at its address 0000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx
00000, in lawful money of the United States of America, the principal sum of
Forty Three Million One Hundred Forty Nine Thousand Nine Hundred and Ninety
United States Dollars ($43,149,990.00) together with interest from the date
hereof on the amount of principal from time to time outstanding at a rate equal
to the three month United States LIBOR rate as quoted from time to time by
The
Wall Street Journal or other reliable source, plus one percent (1.00%) per
annum. Interest shall be calculated on the basis of a year of 365/366 days
and
for the actual number of days (including the first, but excluding the last
day)
elapsed and shall be paid in arrears quarterly on the last day of each March,
June, September and December, commencing December 31, 2007.
Principal
payments of $205,200 will be due and payable quarterly on the last day of each
March, June, September and December commencing September 30, 2008, with any
and
all remaining outstanding principal and any accrued unpaid interest due on
September 30, 2014 (the “Maturity Date”). All payments on this Note shall be
applied first to accrued and unpaid interest, next to accrued interest not
yet
payable, and then to principal against the scheduled principal payments from
earliest to latest. Maker may prepay principal at any time without penalty.
In
the event that principal or interest is not paid within five days of when due
or
declared due, interest shall thereafter accrue on the full amount of such
payment at the rate of United States LIBOR plus three percent (3%) per
annum.
Notice
of
written demand for payment shall be made by Payee to Maker by certified mail,
postage prepaid and return receipt requested to Maker’s address as set forth
under its signature below. The demand for payment or any other communication
shall be deemed given and effective as of the date of delivery or upon receipt
as set forth on the return receipt.
Upon
the
occurrence and during the continuation of an Event of Default (as defined
below), Payee shall have all of the rights and remedies provided in the
applicable Uniform Commercial Code, this Note or any other agreement between
Maker and in favor of Payee, as well as those rights and remedies provided
by
any other applicable law, rule or regulation. In conjunction with and in
addition to the foregoing rights and remedies of Payee, Payee may declare all
indebtedness due under this Note, although otherwise unmatured, to be due and
payable immediately without notice or demand whatsoever. All rights and remedies
of the holder are cumulative and may be exercised singly or concurrently. The
exercise of any right or remedy will not be a waiver of any other right or
remedy.
For
purposes of this Note, an Event of Default shall mean any one of the following
events:
(a) Maker
fails to pay quarterly principal payments when due or interest payments within
30 days of becoming due;
SUBORDINATED
TERM LOAN PROMISSORY
NOTE
$43,149,990.00 October
[__],
2007
(b) Maker
otherwise fails to perform or observe any other provision contained in this
Note
and such breach or failure to perform shall continue for a period of thirty
days
after notice thereof shall have been given to Makers by the holder
hereof;
(c) Maker
defaults under any loan, extension of credit, security agreement, or any other
agreement, in favor of any other creditor or person that may materially affect
Maker’s ability to repay this Note or perform Maker’s obligations under this
Note; or
(d) Maker
becomes insolvent, a receiver is appointed for any part of Maker’s property,
Maker makes an assignment for the benefit of creditors, or any proceeding is
commenced either by Maker or against Maker under any bankruptcy or insolvency
laws.
In
the
event Payee incurs costs in collecting on this Note, this Note is placed in
the
hands of any attorney for collection, suit is filed on this Note or if
proceedings are had in bankruptcy, receivership, reorganization, or other legal
or judicial proceedings for the collection of this Note, Maker agrees to pay
on
demand to Payee all expenses and costs of collection, including, but not limited
to, reasonable attorneys’ fees incurred in connection with any such collection,
suit, or proceeding, in addition to the principal and interest then
due.
It
is
agreed that time is of the essence on this Note. The failure of the holder
of
this Note to exercise any remedy shall not constitute a waiver on the part
of
the holder of the right to exercise any remedy at any other time. It is the
intention of Maker and Payee to conform strictly to applicable usury laws,
if
any. Accordingly, notwithstanding anything to the contrary in this Note or
any
other agreement entered into in connection herewith, it is agreed as follows:
(i) the aggregate of all interest and any other charges constituting interest
under applicable law and contracted for, chargeable or receivable under this
Note or otherwise in connection with the obligation evidenced hereby shall
under
no circumstances exceed the maximum amount of interest permitted by applicable
law, if any, and any excess shall be deemed a mistake and canceled automatically
and, if theretofore paid, shall, at the option of Payee, be refunded to Maker
or
credited on the principal amount of this Note; and (ii) in the event that the
entire unpaid balance of this Note is declared due and payable by Payee, then
earned interest may never include more than the maximum amount permitted by
applicable law, if any, and any unearned interest shall be canceled
automatically and, if theretofore paid, shall at the option of Payee, either
be
refunded to Maker or credited on the principal amount of this Note.
Maker
expressly waives demand and presentment for payment, notice of nonpayment,
protest, notice of protest, notice of dishonor, notice of intention to
accelerate, notice of acceleration, bringing of suit and diligence in taking
any
action to collect amounts called for hereunder and is and shall be liable for
the payment of all sums owing and to be owing hereon, regardless of and without
any notice, diligence, act or omission as or with respect to the collection
of
any amount called for hereunder or in connection with any right, lien, interest
or property at any and all times had or existing as security for any amount
called for hereunder.
SUBORDINATED
TERM LOAN PROMISSORY
NOTE
$43,149,990.00 October
[__],
2007
If
any
payment of principal on this Note shall become due on a Saturday, Sunday or
public holiday under the laws of Delaware, United States of America, on which
banks are not open for business, such payment shall be made on the next
succeeding business day in which banks are open for business.
Pursuant
to the terms of that certain Subordination Agreement dated October [__], 2007, executed
by
the Payee, the Maker and certain subsidiaries of the Maker, the indebtedness
evidenced by this Note is subordinate and junior in right of payment, to all
principal, interest, charges, expenses and attorneys’ fees arising out of or
relating to all indebtedness, liabilities and obligations of Maker arising
under
that certain Credit Agreement dated December 23, 2005, as amended by that
certain First Amendment to Credit Agreement dated October [__], 2007, by
and
between Maker and the Administrative Agent and Lenders set forth therein and
all
other amendments and modifications thereto, and the Loan Documents (as defined
in such Credit Agreement), whether outstanding on the date of this Note or
subsequently incurred to renew, extend, modify, or otherwise amend such superior
indebtedness (the “Superior Debt”). Superior Debt shall continue to be Superior
Debt and entitled to the benefits of these subordination provisions irrespective
of any amendment, modification, or waiver of any term of the Superior Debt
or
extension or renewal of the Superior Debt.
This
Note
shall be governed by and construed in accordance with the domestic laws of
the
state of Delaware, without giving effect to any choice of law or conflict of
law
provision or rule (whether of the state of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than
the
state of Delaware..
MAKER:
By:
Name:
Title:
Address:
CERTIFICATE
OF SECRETARY
OF
CompX
Group, Inc.
The
undersigned, being the secretary of CompX Group, Inc., a Delaware corporation
(“CompX Group”), does hereby certify pursuant to Section 251 of the
General Corporation Law of the state of Delaware that the stockholders of CompX
Group duly adopted this Agreement and Plan of Merger by a written consent to
action without a meeting pursuant to and in accordance with Section 228 of
the
General Corporation Law of the state of Delaware.
/s/
A.
Xxxxxx X.
Xxxxx
X.
Xxxxxx X. Xxxxx, Secretary
Date: October
16, 2007
