Agreement and Plan of Merger
Among
CompX International Inc.
CompX Group, Inc.
and
CompX KDL LLC
Dated as of October 16, 2007
TABLE OF CONTENTS
Page
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Section 1.2.
Effective Time
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Section 1.3.
Succession of Surviving Company
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Section 1.4.
Certificate of Formation and Limited Liability Company
Agreement
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Section 1.6.
Continuation, Cancellation or Issuance of Membership
Interests, Stock or Note
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Section 1.7.
Taking of Necessary Action
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ARTICLE II.
REPRESENTATIONS AND WARRANTIES
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Section 2.1.
Representations and Warranties of CompX
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Section 2.1.
Representations and Warranties of KDL
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Section 2.2.
Representations and Warranties of CGI
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ARTICLE III.
CONDITION TO THE MERGER
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ARTICLE IV.
TERMINATION, WAIVER AND AMENDMENT
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Section 4.1.
Right of Termination
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Section 4.2.
Effect of Termination
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Section 5.2.
Sole Agreement of Parties
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Section 5.3.
Waiver; Modification or Amendment
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Section 5.4.
Further Assurances
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Section 5.5.
Exhibit; Cross-References; Headings
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Section 5.6.
Severability
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Section 5.7.
Counterparts
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Section 5.8.
Applicable Law
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EXHIBIT A
SUBORDINATED TERM LOAN PROMISSORY NOTE A
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AGREEMENT AND PLAN OF MERGER
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, decr
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