STOCK PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of this 2nd day of February,
1996, by and between Mestek, Inc., a Pennsylvania corporation ("Purchaser"); and
▇▇▇▇ ▇▇▇▇▇▇▇ ("Seller"), who owns all of the shares of the issued and
outstanding capital stock of Omega Flex, Inc., a Pennsylvania corporation
("Omega"). The Purchaser and Seller are sometimes collectively referred to
herein as the "Parties," and either one of the Parties is sometimes referred to
as a "Party."
WITNESSETH
WHEREAS, Seller is the sole beneficial and record owner of all the issued
and outstanding capital stock of Omega (the "Shares");
WHEREAS, Omega is engaged in the business of designing, manufacturing,
fabricating, assembling, buying and selling flexible metal hose products
(hereinafter the "Omega Business");
WHEREAS, Omega retains and owns all such assets, goodwill, properties and
contractual and other rights necessary to conduct the Omega Business (the "Omega
Assets");
WHEREAS, Seller is domiciled in Pennsylvania; and
WHEREAS, Purchaser desires to purchase the Shares, and Seller desires to
sell the Shares, upon the terms herein specified.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
hereinafter set forth, and of other good and valuable consideration, the Parties
hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
PURCHASE OF THE SHARES
Seller hereby agrees to sell, assign, transfer, and convey to Purchaser at
the Closing hereinafter identified, for the consideration set forth and payable
in accordance with the provisions of Article II, all of Seller's rights, title,
and interest in and to the Shares, free and clear of all liens, encumbrances and
adverse charges of any nature. At the Closing, the Seller shall deliver to
Purchaser certificates representing all the Shares owned by the Seller, validly
endorsed in blank or accompanied by stock powers with respect to such Shares
validly endorsed in blank.
ARTICLE II
PAYMENT FOR THE SHARES
2.1. Consideration. Subject to the terms and conditions set forth herein,
Purchaser hereby agrees to pay to the Seller at the Closing, as consideration
for the purchase of the Shares and for Seller's covenants contained herein, the
amount of $9,000,000 (Nine Million U.S. Dollars) in current funds, by wire
transfer, subject to adjustment in accordance with Section 2.2.
2.2. Adjustment of Purchase Price.
(a) On the Closing Date, Purchaser shall pay $8,500,000 (Eight Million Five
Hundred Thousand Dollars) of the Purchase Price to Seller.
(b) The Purchase Price shall be adjusted dollar-for-dollar for any
reduction in, or increase in, the net worth of the Company (as defined
hereinafter) between (i) the net worth of $1,996,000 (One Million, Nine Hundred
Ninety-Six Thousand Dollars) stated on the Recast Balance Sheet (as hereinafter
defined) and (ii) the net worth of the Company as at the Closing Date as
determined in accordance with the principles set forth in Section 2.3 (the
"Final Net Worth").
(c) Within 90 days after the Closing Date, financial statements as at the
Closing Date (the "Closing Date Financial Statement") shall be prepared by the
Purchaser (or the Purchaser shall cause the Company to prepare such Closing Date
Financial Statement in accordance with this Section) pursuant to the principles
set forth in Section 2.3. On the basis of the Closing Date Financial Statement,
Purchaser shall make a determination of the Final Net Worth of the Company (the
"Purchaser's Net Worth Determination") and shall communicate it and the Closing
Date Financial Statement to Seller in writing; the Closing Date Financial
Statement, the Purchaser's Net Worth Determination, and Purchaser's
communication thereof to Seller shall be accomplished within 90 days after
Closing. If Seller disagrees with Purchaser's Net Worth Determination, Seller
may so advise Purchaser within thirty days of receiving the Purchaser's Net
Worth Determination, failing which the Purchaser's Net Worth Determination shall
become the conclusive determination of the Final Net Worth of the Company as at
the Closing Date. If Seller does advise Purchaser that he disagrees with
Purchaser's Net Worth Determination, the Parties shall endeavor to reach
agreement on the Final Net Worth of the Company; in such a case the Seller may
hire a certified public accountant of his own choosing to conduct an additional
audit. If the Parties cannot agree on the Final Net Worth of the Company, an
independent certified public accountant shall be selected by the Parties, and
such independent certified public accountant's determination of the Final Net
Worth of the Company shall be conclusive, final and binding on both Parties. Any
such independent certified public accountant's costs and fees shall be shared
equally by the Parties.
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(d) Subject to Section 16.3, if the Final Net Worth of the Company is in
excess of $1,996,000, Purchaser shall pay Seller the difference within 10 days
after the conclusive determination pursuant to the provisions of Section 2.2(c)
of the Final Net Worth of the Company; provided, however, that if such
conclusive determination indicates the net worth of the Company to be less than
1,996,000 (One Million Nine Hundred Ninety-Six Thousand Dollars), then Seller
shall pay the difference to Purchaser within 10 days.
(e) When Purchaser shall have (i) made the payment called for by Section
2.2(a), (ii) made any payment required by Section 2.2(d), and (iii) made any
payment required by the last sentence of Section 16.4, Purchaser's entire
obligation under this Agreement with respect to the Purchase Price shall have
been satisfied.
(f) For the purposes of this Agreement, the term "Recast Balance Sheet"
means the recast balance sheet of the Company as at September 30, 1995, as
prepared by Geneva Capital Markets, Inc., which is attached hereto as Schedule
3.9(B).
2.3 Principles for Determining Final Net Worth.
(a) The actual assets and liabilities of the Company (including without
limitation those assets and liabilities as to which there are footnotes on the
Recast Balance Sheet) shall be calculated in accordance with generally accepted
accounting principles, except to the extent that other provisions of this
Section 2.3 provide otherwise.
(b) Inventory of the Company shall be valued as follows:
(i) Raw materials and purchased components shall be valued individually at
the lower of acquisition costs or market value. Acquisition costs shall be
determined on an item-by-item, FIFO basis.
(b) Work-in-process and finished goods consisting of manufactured flexible
hose and flexible hose products in the process of being assembled shall be
valued at the sum of the value of the raw materials and purchased components,
direct labor and factory burden applicable to said items of work-in-process and
finished goods as further set forth herein: (i) raw materials and purchased
components shall be valued at the lower of acquisition costs or market value,
(ii) direct labor shall be valued at the Company's labor standards and rates
which are based on standard direct labor minutes multiplied by the average
direct labor rate in effect at December 31, 1995, and (iii) standard factory
burden shall be expressed as a percentage of standard direct labor costs, for
the respective products, which percentage shall be those used by the Company as
of December 31, 1995, adjusted to eliminate the cost of the (x) wages, fringe
costs and expenses of any engineering activities that are not directly related
to application engineering or product maintenance, (y) the wages, fringe costs
and expenses of any sales, marketing and service activities, and (z) any other
costs,
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including general and administrative costs, inconsistent with generally
accepted accounting principles in the calculation of burden.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The term "the Company" as used in this Agreement includes Omega and all
corporations, partnerships and other entities owned by it entirely or in part,
all of which are listed on Schedule 3 attached hereto. All representations and
warranties contained herein shall survive the Closing, and none shall merge into
any Closing document, and breaches of representations and warranties may be set
off against any amounts due from Purchaser to the Seller, but only to the extent
specifically set forth in the Lease Agreement (as hereinafter defined). Each of
the representations and warranties set forth in Sections 3.3, 3.8, 3.17 and 3.31
shall expire on the expiration of the statute of limitations applicable with
respect to the subject matter of such representation and warranty. Each of the
remaining representations and warranties in this Article III shall expire on the
date that is fourteen months after the Closing Date.
Where the expression "to the Knowledge of the Company" is used in this
Agreement, it shall mean what any of the individuals in the following list knew
or should have known based on their respective areas of responsibility at the
Company: the Seller, ▇▇▇. ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
The Seller represents and warrants the following as of the date hereof and
as of the Closing Date:
3.1. Corporate Standing. The Company is duly organized, validly existing,
and in good standing under the laws of its jurisdiction of incorporation. The
Company has full corporate authority to own, lease and operate its properties
and businesses, and is in good standing and is qualified to transact business as
a foreign corporation in all states in which the nature of its business or the
properties owned by it require it to qualify to transact business, except for
failures to be so qualified or in good standing that would not, in the
aggregate, have a material adverse effect on the Company or on the transactions
contemplated hereby.
3.2. Authority. The Seller has the full power and authority to enter into,
execute, deliver, and perform this Agreement and all Exhibits to which they are
a party. The execution, delivery and performance of this Agreement and such
Exhibits, and the consummation of all transactions contemplated herein and
therein, have been duly authorized by all necessary action of the Seller. This
Agreement and such Exhibits, when executed and delivered by the Seller, shall be
valid and binding obligations of the Seller, enforceable
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against him in accordance with their terms, subject to bankruptcy, insolvency
and other similar laws affecting the rights of creditors generally and except
that the remedies of specific performance, injunction and other forms of
mandatory equitable relief may not be available. Except for approvals of
governmental authorities described in Section 7.6 and except as set forth in
Schedule 3.2 attached hereto, neither the execution and delivery of this
Agreement nor the execution and delivery of the certificates and documents set
forth as Exhibits hereto nor the consummation of the transactions contemplated
hereby or thereby will (i) conflict with or violate any provision of the
Articles or Certificate of Incorporation or By- Laws of the Company, (ii)
conflict with or violate any law, rule, regulation, ordinance, order, writ,
injunction, judgment or decree applicable to the Seller or the Company or their
businesses or by which any of their assets is affected, or (iii) conflict with
or result in any material breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination or cancellation of, or accelerate the
performance required by or maturity of, or result in the creation of any
security interest, lien, charge or encumbrance on any of the Seller's or the
Company's assets pursuant to any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, permit, license, franchise, lease, contract, or
other instrument or obligation to which the Seller or the Company is a party or
by which any of their assets is affected. Except as set forth in Schedule 3.2
attached hereto, neither the Seller nor the Company are required to submit any
notice, declaration, report or other filing or registration with any
governmental or regulatory authority or instrumentality, and no approvals or
non- objections are required to be obtained or made by the Seller or the Company
in connection with the execution, delivery or performance by the Seller of this
Agreement or any Exhibit or the consummation of the transactions contemplated
hereby or thereby, except where the failure to obtain such consent would not
have a material adverse effect on the Omega Business as operated on the date
hereof or on the Omega Assets.
3.3. Capitalization. The Company is a Pennsylvania corporation having
authorized capital stock consisting only of 1000 shares of common stock, $60 par
value per share, of which 1000 are issued and outstanding. Schedule 3.3(A) lists
all persons or entities owning shares of any class of the Company's stock, as
well as the amount and nature of stock held by each such person or entity.
Schedule 3.3(B) lists all persons or entities holding options or warrants to
acquire any of the Company's capital stock, as well the amount of stock covered
by each such option or warrant and the exercise price therefor. The Shares
constitute one hundred percent (100%) of the issued and outstanding capital
stock of the Company. All of the Shares are validly issued, fully paid and
nonassessable and are owned of record and beneficially by the Seller, free and
clear of any liens, claims, options, encumbrances or restrictions of any nature
whatsoever. Except as described in Schedule 3.3(C), there are no agreements,
arrangements, warrants, calls, options, convertible rights or other rights
(vested or contingent) to acquire any capital stock of the Company, and no such
agreements, arrangements, warrants, calls, options, convertible rights or other
rights (vested or contingent) to acquire any capital stock of the Company will
be issued, entered into, or granted prior to the Closing Date without the prior
written approval of the Purchaser. The Seller has the absolute right, power and
capacity to sell, assign and deliver the Shares to
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Purchaser, and has good and marketable title to the Shares, free and clear
of all liens, claims, options, encumbrances or restrictions of any nature
whatsoever.
3.4. Operation of the Company's Business. The Company owns and retains all
such assets, tangible or intangible, contractual, license and leasehold rights
necessary for the Purchaser (i) to operate the business of the Company as the
Company operates it on the date hereof, and (ii) to utilize the assets and
contractual, license and leasehold rights in the same manner as they were used
on the date of this Agreement. With the exception of those assets used in the
business of the Company pursuant to license and leasehold rights in favor of the
Company, all of the assets used in the business of the Company are owned by the
Company, and none are owned by any other party.
3.5. No Material Change. Except as set forth in Schedule 3.5A attached
hereto, there has been no materially adverse change since the September 30, 1995
(the "Balance Sheet Date") in the nature or, to the Knowledge of the Company,
the prospects of the Company and its business or condition (financial or
otherwise), or properties, assets, liabilities (actual or contingent),
operations, or the manner of conducting its business, other than changes in the
ordinary course of business which in the aggregate are not material and adverse.
Since the Balance Sheet Date, there has been no event or condition of any
character which, either individually or in the aggregate, might reasonably be
expected to affect in a materially adverse manner the business prospects,
operations, properties, assets, liabilities, earnings or financial condition of
the Company. Except as set forth in Schedule 3.5B attached hereto, since the
Balance Sheet Date the Company has not (i) declared or, directly or indirectly,
paid any dividends or made any other distributions or payments of any kind to
its shareholders or partners, (ii) incurred any indebtedness for borrowed money,
(iii) created or permitted to be created any liens, encumbrances, or adverse
charges of any nature on any of the assets of the Company, (iv) discharged,
satisfied or paid, in whole or in part, or permitted to be discharged, satisfied
or paid, in whole or in part, any obligation or liability (contingent or
absolute) relating to the business or the properties of the Company, other than
in the ordinary course of business, or (v) waived or permitted to be waived any
material right or claim of the Company.
3.6. Assets. The Company has good and marketable title to all of its assets
(except for Third Party Software, for which the Company has valid and
enforceable licenses), free and clear of all mortgages, options, leases,
covenants, conditions, agreements, liens, security interests, adverse claims,
restrictions, charges, encumbrances or rights of others, except for liens set
out on Schedule 3.6A. There exists no restriction on the use or transfer of any
of the Company's assets. Schedule 3.6A sets forth a list of (i) all furniture,
office equipment, machinery, and equipment, including without limitation,
computer hardware, used to conduct the business of the Company with an original
market value in excess of $1,000 (the "Equipment") and the location of each
piece of Equipment and (ii) all "Company Software," which shall include all of
the Company's software and computer programs used in its business, including any
software or computer programs not wholly-owned by the Company ("Third Party
Software") embedded therein, in machine readable source code forms and in
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machine executable object code forms and all related specifications
(including, without limitation, all logic architectures, algorithms and logic
flows and all physical, functional, operating and design parameters), operating
systems and procedures (including development methodology), designs, design
revisions, related applications software in any language, concepts, ideas,
processes, techniques, software design and test tools, third party software
interfaces, methods of implementation and packaging, all associated know-how and
show- how and all related programmer and user manuals, which are used by the
Company to install, operate, maintain, correct, test, repair, enhance, extend,
modify, prepare derivative works based upon, design, develop, reproduce and
package such software and computer programs. Except as set forth in Schedule
3.6B attached hereto, the tangible assets of the Company are in satisfactory
operating condition and repair, ordinary wear and tear excepted, and are
satisfactory for the purposes for which such assets are being used in the
Company's business. The Company does not, and has not since the date of its
formation, own or have any interest in real estate except as described in
Schedule 3.6C.
3.7. Compliance with Laws. Except as listed on Schedule 3.7, the operation
of the Company's business and the use of its assets are in material compliance
with all applicable laws, ordinances, rules and regulations, including but not
limited to Federal, state, local and foreign environmental, work place safety
and employee benefits laws and rules (collectively the "Laws"). The Company has
all requisite licenses, permits and certificates from federal, state and local
governmental authorities as may be necessary to conduct its business and own and
operate its assets, and such permits are valid and in full force and effect and
will not be terminated or adversely affected by the consummation of the
transactions contemplated hereby. Except as disclosed on Schedule 3.7 attached
hereto, the Company has not received any notice alleging any violations by the
Company of any Laws, or of investigations of the Company initiated by
administrative agencies, and, to the knowledge of the Company, no allegations or
investigations are pending or have been threatened.
3.8. Employee Benefit Plans.
3.8.1. Except as set forth on Schedule 3.8.1(A) attached hereto, with
respect to all employees and former employees of the Company, neither the
Company nor any ERISA Affiliate of the Company presently maintains, contributes
to or has any liability under:
(a) any bonus, incentive compensation, profit sharing, retirement, pension,
group insurance, death benefit, group health, medical expense reimbursement,
cafeteria, dependent care, stock option, stock purchase, stock appreciation
rights, savings, deferred compensation, consulting, severance pay or termination
pay, vacation pay, life insurance, welfare or other employee benefit or fringe
benefit plan, program or arrangement;
(b) any plan, program or arrangement which is an "employee pension benefit
plan" as such term is defined in Section 3(2) of the Employee Retirement
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Income Security Act of 1974, as amended ("ERISA"), or an "employee welfare
benefit plan" as defined in Section 3(1) or ERISA.
For purposes of this Agreement, "ERISA Affiliate" shall mean each person
(as defined in section 3(9) of ERISA) that, together with the Company (or any
person whose liabilities the Company has assumed or is otherwise subject to),
currently or in the past would be treated as a single employer under section
4001(b) of ERISA or that would be deemed to be a member of the same "controlled
group" within the meaning of section 414(b), (c), (m) and (o) of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code"). The plans,
programs and arrangements set forth on Schedule 3.8.1(A) are herein referred to
as the "Employee Benefit Plans."
3.8.2. With respect to all employees and former employees of the Company,
neither the Company nor any ERISA Affiliate of the Company presently maintains,
contributes to or has any liability under any funded or unfunded medical, health
or life insur- ance plan or arrangement for present or future retirees or
present or future terminated employees except as required by the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") or as required
by any state law providing for the continuation of such benefits for present or
future retirees or present or future terminated employees. Neither the Company
nor any ERISA Affiliate of the Company maintains or contributes to a trust,
organization or association described in any of Sections 501(c)(9), 501(c)(17)
or 501(c)(20) of the Internal Revenue Code.
3.8.3. Favorable determination letters have been received from the Internal
Revenue Service with respect to each Employee Benefit Plan which is intended to
comply with the provisions of Section 401(a) of the Internal Revenue Code,
evidencing compliance with the relevant provisions of the Tax Equity and Fiscal
Responsibility Act of 1982, the Tax Reform Act of 1984 and the Retirement Equity
Act of 1984. Each such Employee Benefit Plan complies in form and in operation
with the requirements of the Internal Revenue Code and meets the requirements of
a "qualified plan" under Section 401(a) of the Internal Revenue Code.
Additionally, amendments have been made to each such Employee Benefit Plan for
the Tax Reform Act of 1986 and subsequent legislation and regulations to the
extent they are required. A proper and timely application for a favorable
determination letter with respect to each such Employee Benefit Plan, as
amended, has been made with the Internal Revenue Service, and no unfavorable
responses have been received with respect to any such application from the
Internal Revenue Service.
3.8.4. With respect to each Employee Benefit Plan which is subject to Title
1 of ERISA, neither the Company nor any ERISA Affiliate of the Company has
failed to comply with any of the applicable reporting, disclosure or other
requirements of ERISA and the Internal Revenue Code, and there has been no
"prohibited transaction" as described in Section 4975 of the Internal Revenue
Code or Section 406 of ERISA.
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3.8.5. Neither the Company nor any ERISA Affiliate of the Company, nor any
of their respective directors, officers, employees or any other "fiduciary," as
such term is defined in Section 3(21) of ERISA, has any liability for failure to
comply with ERISA or the Internal Revenue Code for any action or failure to act
in connection with the administration or investment of the Employee Benefit
Plans.
3.8.6. With respect to any Employee Benefit Plan which is subject to
Section 412 of the Internal Revenue Code or Section 302 of ERISA, there has been
no "accumulated funding deficiency" within the meaning of Section 302 of ERISA
or Section 412 of the Internal Revenue Code (whether or not waived). With
respect to the Employee Benefit Plans, all applicable contributions and premium
payments for all periods ending prior to the Closing Date (including periods
from the first day of the then current plan year to the Closing Date) have been
made, and shall be made prior to the Closing Date in accordance with past
practice and, with respect to each Employee Benefit Plan subject to Title IV of
ERISA, the recommended contribution in the applicable actuarial report. No
Employee Benefit Plan has any unfunded liability.
3.8.7. The actuarially determined present value of all accrued benefits
under each Employee Benefit Plan subject to Title IV of ERISA (computed on a
plan termination basis) does not exceed the fair market value of the assets of
each such Employee Benefit Plan.
3.8.8. Neither the Company nor any ERISA Affiliate of the Company presently
maintains, contributes to or has any liability (including current or potential
withdrawal liability) with respect to any "multiemployer plan" as such term is
defined in Section 3(37) of ERISA.
3.8.9. Neither the Company nor any ERISA Affiliate of the Company has
maintained an employee pension benefit plan that has been the subject of a
"reportable event," as that term is defined in Section 4043 of ERISA, as to
which notices would be required to be filed with the Pension Benefit Guaranty
Corporation ("PBGC"), or of any event requiring disclosure under Section 4063(a)
of ERISA. Neither the Company nor any ERISA Affiliate of the Company has
incurred any outstanding liability under Section 4062 of ERISA to the PBGC. All
premiums or other amounts due and payable to the PBGC have been paid. Neither
the Company nor any ERISA Affiliate of the Company has terminated any employee
pension benefit plan subject to Title IV of ERISA, and no proceeding by the PBGC
to terminate any employee pension benefit plan pursuant to Title IV of ERISA has
ever been instituted or (to the Seller's knowledge) threatened, no notice of any
such termination has been received and no condition exists which presents a
material risk of termination of an Employee Benefit Plan.
3.8.10. There is no pending or (to the Seller's knowledge) threatened legal
action, proceeding or investigation against or involving any Employee Benefit
Plan maintained by the Company or any ERISA Affiliate of the Company (other than
routine
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claims for benefits) and, to the Seller's knowledge, there is no basis for
or fact which could give rise to any such legal action, proceeding or
investigation. Any bonding required with respect to the Employee Benefit Plans
in accordance with applicable provisions of ERISA has been obtained and is in
full force and effect.
3.8.11. Except as set forth on Schedule 3.8.11,
(a) The Company is not a party to any employment agreement, whether written
or oral, or agreement with change in control or similar provisions, or
collective bargaining agreement or contract with any labor union relating to any
employees or former employees of the Company;
(b) The Company does not have outstanding any loan or loans to any current
or former employees of the Company, nor has the Company guaranteed such loans;
(c) No amount payable to an employee or former employee of the Company will
be an "excess parachute payment" which is non-deductible under Section 280G of
the Internal Revenue Code.
3.8.12. There has been no act or acts which would result in a disallowance
of a deduction or the imposition of a tax pursuant to Section 4980B, or with
regard to plan years beginning before December 31, 1988, Section 162(i) of the
Internal Revenue Code as in effect immediately prior to the enactment of the
Technical and Miscellaneous Revenue Act of 1988, or any regulations promulgated
thereunder, whether final, temporary or proposed. No event has occurred with
respect to which the Company or any ERISA Affiliate of the Company could be
liable for a tax imposed by any of Sections 4972, 4976, 4977, 4979, 4980 or
4980B of the Internal Revenue Code, or for a civil penalty under Section 502(c)
of ERISA.
3.8.13. With respect to each of the Employee Benefit Plans, the Seller and
the Company have delivered to Purchaser true and complete copies of: (i) the
plan documents, including any related trust agreements, insurance contracts or
other funding arrangements, or a written summary of the terms and conditions of
the plan if there is no written plan document; (ii) the most recent
determination letter received from the Internal Revenue Service; (iii) the most
recent IRS Form 5500; (iv) the most recent actuarial valuation; (v) the most
recent financial statement; (vi) all correspondence with the Internal Revenue
Service, the Department of Labor and the Pension Benefit Guaranty Corporation
with respect to the past three plan years other than IRS Form 5500 filings and
PBGC premium payments; and (vii) the most recent summary plan description.
3.9. Financial Statements. Attached hereto as Schedule 3.9(A) is the
balance sheet(the "Balance Sheet") of the Company at the Balance Sheet Date, and
the income statement of the Company for the nine months then ended. Attached
hereto as Schedule 3.9(B) is the
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Recast Balance Sheet. The financial statement data on the Balance Sheet is
true and complete and fairly presents the financial condition of the Company as
of the Balance Sheet Date and the income and expenses of the Company for the
nine months then ended, other than the absence of year-end adjustments to be
made in the ordinary course of business and consistent with such adjustments, if
any, as have been made in prior years. The financial statement data on the
Recast Balance Sheet is true and complete and fairly presents the consolidated
financial condition of the Company as of September 30, 1995. There are no assets
or liabilities with respect to the Omega Business or the Omega Assets, whether
known or unknown, whether mature or inchoate, that are not accurately reflected
on the Balance Sheet and the Recast Balance Sheet.
3.10. Disposition of Assets. No fixed tangible asset of the Company having
a value in excess of $500 per item, and no intangible asset which is part of the
assets of the Company, has been disposed of since the Balance Sheet Date, except
as set forth on Schedule 3.10 attached hereto.
3.11. Litigation. Other than as listed in Schedule 3.11 attached hereto,
there is no claim, counterclaim, suit, order, proceeding, action, or
investigation pending, notice of which has been received, or, to the knowledge
of the Seller, threatened against the Company, including but not limited to
product liability claims. Neither the Company nor any other the Company is a
plaintiff or petitioner in any litigation or proceeding other than as listed in
Schedule 3.11.
3.12. Agreements, Leases and Licenses. Schedule 3.12 lists accurately and
completely all leases, licenses, contracts and agreements of the Company with
both a value in excess of $5,000 per year and a term of one year or more,
including all amendments or modifications thereto (collectively the
"Contracts"). Each of the Contracts is valid and effective in accordance with
its terms. The Company is not in default under any of the Contracts and, to the
knowledge of the Seller, no other party to any of the Contracts is in default
thereunder. No event has occurred which with the passage of time or the giving
of notice or both would constitute a default under any of the Contracts. Each of
the Contracts is appropriate in nature and scope to the operation of the
business of the Company as it exists at the date hereof. Other than the
Contracts, there are no leases, licenses, contracts or agreements necessary (i)
to operate the business of the Company as it was operated as at the date hereof,
or (ii) to utilize the assets and contractual, license and leasehold rights in
the same manner as the Company utilizes such assets and contractual, license and
leasehold rights as at the date hereof. Except as set forth on Schedule 3.12,
each of the Contracts is valid, binding and enforceable against the Company and,
to the Knowledge of the Company, each other party thereto in accordance with its
terms without any defenses, setoffs, counterclaims or disputes of any nature and
is in full force and effect. No purchase commitment for materials, supplies,
component parts or other items of inventory of the business to which the Company
is a party is in excess of the ordinary, normal, usual and current requirements
of the business or at a price in excess of the current reasonable market price.
The Company has not waived any right under any Contract. The Company is not a
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party to, nor are any of the Company's assets bound by, any agreement that is
adverse to its business. The Company has not received notice that any party to
any of the Contracts intends to cancel or terminate any contract or to exercise
or not exercise any option under any Contract.
3.13. Environmental and Health and Safety Matters.
3.13.1. Set forth on Schedule 3.13.1 attached hereto is a true, accurate
and complete list of all real property, owned, leased and/or otherwise currently
or previously used or occupied by the Company or for the business of the
Company, or at which the Company has carried on its business at any time since
its incorporation, or at which any other person or entity has carried on the
business of the Company since the incorporation of Omega (including but not
limited to Lots 36, 37, and 48 at the Oaklands Corporate Center, Exton,
Pennsylvania, and at West Conshohocken, Pennsylvania) (the "Property").
3.13.2. Except as set forth in Schedule 3.13.2, to the Knowledge of the
Company, the Company and the Property have been at all times and are in
compliance with the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Superfund
Amendments and Reauthorization Act, the Federal Water Control Act, the
Occupational Safety and Health Act, and all other federal, state and local laws,
regulations and ordinances, and common-law principles, relating to pollution,
safety, health or protection of the environment, including, without limitation,
those relating to containment, emissions, discharges, releases or threatened
releases of industrial, toxic or hazardous substances, materials or wastes or
other pollutants, contaminates, petroleum products, asbestos, polychlorinated
biphenyls ("PCBs"), or chemicals (collectively, "Hazardous Substances") into the
environment (including without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) or otherwise relating to the
manufacturing, processing, distribution, use, treatment, labeling, storage,
disposal, abatement, transport or handling of Hazardous Substances (the
"Environmental Laws").
3.13.3. To the Knowledge of the Company, the Company has obtained and is in
full compliance with all permits, licenses and other consents or authorizations
which are required with respect to the operation of its business under the
Environmental Laws, including without limitation those that are required to (a)
operate or install any equipment or facilities and (b) generate, manufacture,
formulate, store, treat, handle, transport, discharge, emit or dispose of
Hazardous Substances generated by its business, a true and complete list of
which is included in Schedule 3.13.3.
3.13.4. To the Knowledge of the Company, except as listed in Schedule
3.13.4(a), there are no PCBs, TCE, PCE, or asbestos containing materials
generated, used, treated, stored, maintained, disposed of, or otherwise
deposited in, located on, or related to the Property, the business of the
Company at any time since the incorporation of the Company, or any premises at
which the business of the Company were or are located. Additionally, except as
described in Schedule 3.13.4(b), to the Knowledge of the Company,
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there are and were no underground storage tanks used, stored, maintained,
located on or otherwise related to the Property, the business of the Company at
any time since its incorporation, or any premises at which the business of the
Company were or are located. To the Knowledge of the Company, the Company has
removed and properly disposed of all used or other obsolete materials regulated
by environmental, health and safety laws, including chemical or other hazardous
substances or wastes, that are not used by the Company's business. With respect
to underground storage tanks, to the Knowledge of the Company, Schedule
3.13.4(b) sets forth the size, location, construction, installation date, use
and testing history of all such underground storage tanks (whether or not
excluded from regulation under Environmental Laws), including all underground
storage tanks in use, out of service, closed, abandoned or decommissioned.
3.13.5. To the Knowledge of the Company, there has been no "release" as
defined in 42 U.S.C. section 9601(22) or, to the knowledge of the Seller, threat
of a "release" of any Hazardous Substance on, from or under any premises from
which the operations of the Company or its predecessors have been or are being
conducted.
3.13.6. To the Knowledge of the Company, the Company has not received
notice that any of them have any potential liability with respect to the
contamination, investigation, or cleanup of any site at which Hazardous
Substances have been or have alleged to have been generated, treated,
stored, released, discharged, emitted or disposed of, and there are no past or
present (or, to the knowledge of the Seller, future) events, facts, conditions
or circumstances which may interfere with or prevent compliance by the business
of the Company in accordance with Environmental Laws, or with any order, decree,
judgment, injunction, notice or demand issued, entered, promulgated or approved
thereunder, or which may give rise to any common-law or other legal liability,
including, without limitation, liability under any Environmental Laws, or
otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, notice of violation, study or investigation, based on or related to the
manufacture, process, distribution, use, treatment, storage, disposal, transport
or handling, or the emission, discharge, release or threatened release into the
environment of Hazardous Substances by the Company or a predecessor, as a result
of any act or omission of the Company or a predecessor.
3.13.7. To the Knowledge of the Company, Schedule 3.13.7 contains a true,
correct and complete listing of all Hazardous Substances used by the business of
the Company in the conduct of its operations since January 1, 1980, and a list
of the methods used by the Company and any other entity or person carrying out
the business of the Company (including, but not limited to, a list of past and
present disposal or recycling sites, waste haulers, and manifest numbers) since
January 1, 1980 to dispose of or recycle Hazardous Substances generated by the
Company's operations and by the activities of the Company and any other person
or entity carrying on the business of the Company.
- 13 -
3.13.8. To the Knowledge of the Company, except as disclosed in Schedule
3.13.8, all of the Company's disposal and recycling practices relating to
Hazardous Substances have been accomplished in accordance with all applicable
Environmental Laws.
3.13.9. Purchaser acknowledges that Seller has caused the Company to
provide Purchaser access to (i) view the Property at which the Company currently
operates and to (ii) conduct due diligence with respect to the Company's
business operations and records in order to allow the Purchaser to form its own
opinion whether the Property at which the Company currently operates and the
operations of the Company's business are in compliance with the Environmental
Laws. The Seller acknowledges that Purchaser's access to the Property and the
Company's business operations and records, including the Phase I audit report
dated on or about October 20, 1993, shall have no effect on Seller's
representations, warranties, obligations or liabilities under this Agreement.
The Purchaser acknowledges that except as stated in this Agreement the Company
makes no representations about the condition of the Property or the operation of
the Company's business.
3.14. Intellectual Property. All of the patents, trademarks, service marks,
trade names, copyrights, processes of every kind and description, designs,
know-how, formulae, shop rights, trade secrets, and similar properties, as well
as the registrations and applications therefor, and the renewals thereof, that
are used in the business of the Company (collectively, the "Intellectual
Property") are owned or lawfully used by the Company. None of the Intellectual
Property has been held or stipulated to be invalid in any litigation or
proceeding. Schedule 3.14A attached hereto lists all the registered Intellectual
Property. Except as disclosed on Schedule 3.14B attached hereto, the validity of
the Intellectual Property, and of the Company's rights to the Intellectual
Property, has not been questioned in any litigation or proceeding currently
pending or which, to the knowledge of the Seller, has been threatened, and, to
the Knowledge of the Company, there exists no basis for a claim against the
Company for infringement of any third party's intellectual property. The Company
has not received any notice to the effect that any product it makes or sells, or
the distribution or use by it or another of any such product, or any services it
performs in the course of its business, may infringe any trademark, service
▇▇▇▇, trade name, copyright, patent, trade secret, or similar legally
protectable right of another. All patentable inventions utilized or first
reduced to practice in connection with the business or activities of the Company
or the employment by same of individuals are the property of the Company and no
other party. Except as set forth in Schedule 3.14A or Schedule 3.14B, the
Company has not entered into and is not a party to any development, work for
hire, license or other agreement pursuant to which the Company has secured the
right or obligation to use, or granted others the right or obligation to use,
any trademarks, service marks, trade names, copyrights, patents or know-how.
3.15. Related Party Transactions. No officer or director of the Company or
any affiliate thereof has, directly or indirectly, entered into any transaction
with the Company, except for any arrangements which are either (i) specifically
disclosed on the Balance Sheet or (ii) listed on Schedule 3.15 attached hereto.
For purposes of this Section 3.15 only, the
- 14 -
term "affiliate" of the Company shall mean and include any officer or director
or shareholder of the Company or any person related to any officer, director or
shareholder of the Company by blood or by marriage, or any corporation,
partnership, proprietorship, trust or other entity in which such officer or
director or shareholder of the Company (or any spouse, ancestor or descendant of
the same) has more than a five percent (5%) legal or beneficial interest, or any
corporation, partnership, proprietorship, trust or other entity which controls,
is controlled by or is under common control with the Company.
3.16. Increases in Salaries and Wages. Except as listed in Schedule 3.16
attached hereto, none of the Company has, since the Balance Sheet Date, paid any
salary, wage, bonus payments or any other benefits to its employees at rates
exceeding the respective rates paid to such employees which were in effect at
the Balance Sheet Date, except for bonuses to Company employees paid in the
ordinary course of business.
3.17. Taxes. As to any tax imposed by the Federal government, or any state
government or any subdivision or municipality thereof, or the government of any
other country or political subdivision thereof, including, without limitation,
(i) taxes imposed on or measured by income, (ii) taxes based on employment
(including amounts withheld from employees' compensation), and (iii) any
property, franchise or sales tax, which, in each case, relates to or could cause
a lien or encumbrance upon any of the assets or the business of the Company, the
Company has timely, properly and lawfully filed all returns and elections
necessary to be filed and has paid in full the applicable taxes (including any
penalties, assessment and deficiencies in respect of such taxes) due on such
returns; no claims for any unpaid taxes, interest or penalties are being
asserted by any governmental authority, for any period, against the Company or
any assets of the Company. The Company has not paid and is not required to pay
any income taxes to any country other than those listed on Schedule 3.17A
attached hereto, or to any state other than those listed on Schedule 3.17B
attached hereto. The Company pays personal property and/or franchise taxes with
respect to its business and properties only in those countries, states or
political subdivisions listed on Schedule 3.17C attached hereto. The Company has
timely filed and paid all estimated taxes due on or prior to the Closing Date,
and has made accruals on the Balance Sheet for all taxes due with respect to the
[nine] months ended at the Balance Sheet Date. The Company has furnished
Purchaser with true and complete copies of each of the Federal, state, local and
foreign income and excise tax returns, and franchise tax returns, and any
amendments thereto, of the Company, as they relate to taxable periods for 1992,
1993, and 1994, and the Company has made available to Purchaser all reports of
and communications from Internal Revenue Service agents and the corresponding
agents of other state, local and foreign governmental agencies who have examined
the books and records of the Company at any time including and since the last
IRS audit. Except as disclosed on Schedule 3.17D attached hereto, no audit or
examination of the Company by any taxing authority or agency is now pending or
currently in progress, nor has the Company received from any taxing authority or
agency any notice of such an audit or examination. The Company has paid all
deficiencies proposed as a result of the audits and examinations listed on
Schedule 3.17D. No waiver of
- 15 -
any statute of limitations has been given and is in effect in respect to the
assessment of any taxes against the Company.
3.18. Employee Salaries and Benefits. The Company has provided Purchaser
with an accurate list of all salaried employees of the Company, and the current
rate of compensation for each such employee (including a separate statement of
bonuses and fringe benefits). Except as listed on Schedule 3.18, there is no
liability for unpaid salary or wages, bonuses, vacation time, or other employee
benefits due or accrued, nor liability for withheld or deducted amounts from
employees' earnings, for the period ending on or immediately prior to the
Closing Date, including without limitation commission payments to agents,
representatives or employees. There are no labor disputes, strikes, work
stoppages or other interruptions in service or performance, and all
relationships between the Company and its employees are generally stable and
satisfactory.
3.19. Insurance. The Company maintains in effect, and at all times has
maintained in effect, product liability insurance, motor vehicle and
comprehensive general liability insurance and workers' compensation insurance
covering the business of the Company and fire and extended coverage insurance
with respect to the properties and assets of the Company. Schedule 3.19 attached
hereto is a complete list of all insurance policies (including the amount of
coverage thereunder) in effect at present. All such insurance policies are owned
solely and exclusively by the Company.
3.20. Customer and Supplier Relationships; Warranty Claims. The Company has
not received any notice that any customer or supplier of the Company intends to
discontinue or alter the prices or terms of, or substantially diminish, its
relationship with the Company. Other than as set forth on Schedule 3.20, to the
Knowledge of the Company, there are no outstanding warranty claims against the
Company by any of its customers with respect to products sold or services
rendered by the Company.
3.21. Accounts Receivable and Notes Receivable. The accounts receivable and
notes receivable of the Company, other than those listed on Schedule 3.21,
represent bona fide claims which the Company has against debtors for sales or
services arising on or before the Closing Date, to the Knowledge of the Company,
are not subject to counterclaims, setoffs or deductions of any kind, and are not
subject to additional requirements of performance by the Company. The aggregate
amount of customer advance payments (i.e., payments in excess of actual work
performed or materials supplied as of the date of such payment) received by the
Company at or prior to the Closing Date with respect to such accounts receivable
are set forth on the Balance Sheet and Recast Balance Sheet as such. All of the
accounts receivable and notes receivable have been created since September 1,
1995, pursuant to shipments of goods or services conforming to the terms of
purchase orders executed by and received from unrelated third parties in the
normal course of business. Such receivables have been recorded in accordance
with the Company's historical revenue recognition policy and have been collected
or are collectable in accordance with their terms at the full recorded amount
- 16 -
thereof within such period of time as conforms to the Company's historic norms
for collection of receivables.
3.22. Accounts Payable. The accounts payable of the Company represent bona
fide claims which creditors have against the Company for sales or services, are
not subject to counterclaims, setoffs or deductions by the Company, and are not
subject to additional requirements of performance due to the Company. All of the
accounts payable have been created pursuant to receipt of goods or services
conforming to the terms of purchase orders executed in favor of unrelated third
parties in the normal course of business.
3.23. Bonds; Guarantees. Other than as listed on Schedule 3.23, there are
no bonds, guarantees, notes, sureties, letters of credit, or other similar
credit agreements or debt obligations that exist with respect to the Company,
its business or any of its assets. The Company is not in default on the payment
of any principal or interest on any indebtedness for borrowed money, nor is the
Company otherwise in default under any indemnity, fidelity or contract bond or
letter of credit, note, guarantee or other credit agreement or debt obligation
or instrument.
3.24. Absence of Undisclosed Liabilities. Except as specifically reserved
against or reflected in the Balance Sheet, or described in Schedule 3.24, the
Company is not subject to any liability or financial obligation (known or
unknown, direct or indirect, absolute, contingent, accrued or otherwise), other
than liabilities or financial obligations arising in the ordinary course of
business since the date of the Balance Sheet. The Company is not in default with
respect to any term or condition of any indebtedness or liability (including any
current or deferred trade payable). The Seller does not know of any facts or
circumstances which might reasonably serve as the basis for any liabilities or
financial obligations with respect to the Company which are not disclosed in the
Schedules.
3.25. Inventories. The inventories of Seller reflected in the Balance
Sheet, plus any replacements for such items acquired on or before the Closing
Date, and minus any such items sold or otherwise disposed of by the Company in
the ordinary course before the Closing Date (whether raw materials, purchased
components, manufactured parts, work-in- process, finished goods or other) (the
"Inventories"), do not contain any damaged, defective, slow-moving (defined as
more than a one year's supply under normal conditions of sale) or obsolete items
which are not currently usable or saleable in the ordinary course of the Omega
Business, and are properly valued in accordance with generally accepted
accounting principles consistently maintained and applied and as follows:
With respect to inventory in the hands of suppliers for which the Company
is committed as of the date hereof or as of the Closing Date, such inventory is
described in Schedule 3.25 and is reasonably expected to be usable in the
ordinary course of business as the business is presently being conducted. All
items included in the Inventories are the property of the Company, except for
those items sold in the ordinary course of business. No items included in the
Inventories have been pledged as collateral or are held by the Company
- 17 -
on consignment from others. The Inventories are free of defects and, to the
extent that they consist of finished or semi-finished goods, also comply with
the specifications submitted by the purchasers thereof.
3.26. Equipment and Manufacturing. In Seller's opinion, the equipment,
patterns, tools, dies, jigs, fixtures and other assets owned, retained, used or
held for use by the Company are complete and adequate for the purpose of
manufacturing the items made by the Company and for the purpose of providing the
services rendered by the Company in connection with its business. In Seller's
opinion, the engineering drawings, specifications and manufacturing data
possessed or owned by the Company are all of such items that are necessary to
manufacture the products presently being manufactured by the Company and to
provide the services rendered by the Company in connection with its business.
3.27. Charter Documents. The Company has delivered or made available to
Purchaser certified copies of its Articles or Certificate of Incorporation and
By-laws, each as amended to date, as well as copies of its minute books covering
the period from the Company's incorporation to the date hereof. Such Articles or
Certificate of Incorporation and By-laws are complete, correct and current. The
minute books of the Company contain a complete, correct and current record of
all meetings and other corporate actions of the stockholders and Board of
Directors of the Company since the incorporation of the Company.
3.28. Subsidiaries and Affiliates. Schedule 3.28 lists all subsidiaries and
Affiliates of the Company. For the purposes of this Agreement (except for
Section 3.15), the term "Affiliate" of a person shall mean any person or entity
that, directly or indirectly, controls, is controlled by or is under common
control with such person.
3.29. Location of Assets. Schedule 3.29 is a complete list of all
facilities, together with the locations of such facilities, at which any of the
Company's assets are situated, together with a description of the nature of such
assets at each such location.
3.30. Certain Equipment Leases. Schedule 3.30 is a complete list of all
equipment leases entered into by Omega for which the Seller has signed a
personal guaranty.
3.31. Product Liability. To the Knowledge of the Company, no person who is
or was the owner or user of any product designed, manufactured or sold by the
Company has a claim, or, in the Seller's opinion, the basis for a claim, against
the Company for product liability. No product designed, manufactured or sold by
the Company contains PVCs.
3.32. No Misrepresentations or Nondisclosures. Neither this Agreement nor
any Exhibit or Schedule attached hereto contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading. There is no fact not
disclosed to Purchaser by the Seller which adversely affects the Company or its
business or assets, or which in the future, as a result of existing
- 18 -
material facts whose impact has not yet been experienced, may (so far as the
Seller can now reasonably foresee) adversely affect the Company or its business
or assets.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
All representations and warranties contained herein shall survive the Closing,
and none shall merge into any Closing documents, and breaches of representations
and warranties may be set off against any amounts due from the Seller to
Purchaser. As of the date of this Agreement and as of the Closing Date,
Purchaser represents and warrants to the Seller as follows:
4.1. Corporate Standing. Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of state of incorporation.
Purchaser has full corporate authority to own, lease and operate its properties
and businesses, and is in good standing and is qualified to transact business as
a foreign corporation in all states in which the nature of its business or the
properties owned by it require it to qualify to transact business, except for
failures to be so qualified or in good standing that would not, in the
aggregate, have a material adverse effect on Purchaser or on the transactions
contemplated hereby.
4.2. Authority. Purchaser has the full corporate power and authority to
enter into, execute, deliver, and perform this Agreement and all Exhibits to
which it is a party. The execution, delivery and performance of this Agreement
and such Exhibits, and the consummation of all transactions contemplated herein
and therein, have been duly authorized by all necessary corporate action of
Purchaser. This Agreement and such Exhibits, when executed and delivered by
Purchaser, shall be valid and binding obligations of Purchaser, enforceable
against it in accordance with the terms hereof and thereof, subject to
bankruptcy, insolvency and other similar laws affecting the rights of creditors
generally and except that the remedies of specific performance, injunction and
other forms of mandatory equitable relief may not be available. Except for
approvals of governmental authorities described in Section 7.6, neither the
execution and delivery of this Agreement nor the execution and delivery of the
certificates and documents set forth as Exhibits hereto nor the consummation of
the transactions contemplated hereby or thereby will (i) conflict with or
violate any provision of the Articles or Certificate of Incorporation or By-Laws
of Purchaser, (ii) conflict with or violate any law, rule, regulation,
ordinance, order, writ, injunction, judgment or decree applicable to Purchaser,
or by which any of Purchaser's assets are bound or affected, or (iii) conflict
with or result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination or cancellation of, or accelerate the performance
required by or maturity of, or
- 19 -
result in the creation of any security interest, lien, charge or encumbrance on
any of Purchaser's assets pursuant to any of the terms, conditions or provisions
of, any note, bond, mortgage, indenture, permit, license, franchise, lease,
contract, or other instrument or obligation to which Purchaser is a party or by
which any of its assets are bound or affected. Except as set forth in Schedule
4.2 attached hereto, Purchaser is not required to submit any notice,
declaration, report or other filing or registration with any governmental or
regulatory authority or instrumentality and no approvals or non-objections are
required to be obtained or made by Purchaser in connection with the execution,
delivery or performance by Purchaser of this Agreement or the Exhibits or the
consummation of the transactions contemplated hereby or thereby.
4.3. Investment Intent. Purchaser is acquiring the Shares for the purpose
of investment and not with a view to or for sale in connection with any
distribution thereof.
4.4. No litigation. There is no claim, counterclaim, suit, order,
proceeding, action, or investigation pending, notice of which has been received,
or, to Purchaser's best knowledge, threatened against Purchaser with respect to
the transactions contemplated by this Agreement. ARTICLE V COVENANTS OF THE
SELLER Between the date of this Agreement and the Closing Date, the Seller
shall, and shall cause the Company to:
5.1. Management of the Company. Operate the business of the Company in a
prudent manner consistent with past practices, and in the usual and ordinary
course, and use its best efforts to preserve the goodwill of suppliers,
distributors, sales representatives, customers, creditors and others having
business relationships with the Company, and shall safeguard and preserve the
confidentiality of all books, records and information relating to the Company in
a prudent manner consistent with past practices.
5.2. Accounting Practices. Refrain from making any change in the accounting
practices or procedures governing the Company.
5.3. No Distribution of Dividends. Refrain from redeeming, purchasing or
otherwise acquiring any of the Shares, or issuing any shares of capital stock of
the Company, or granting, issuing, selling or disposing of any option, warrant
or right to acquire any shares of capital stock of the Company; and refrain from
paying, declaring or setting aside any dividend, or making any distribution on
account of any of the Shares that causes Omega to have less than $100,000 in
cash.
- 20 -
5.4. No New Stock Rights. Not enter into, issue, or grant any agreements,
arrangements, warrants, calls, options, convertible rights or other rights
(vested or contingent) to acquire any capital stock of the Company.
5.5. Purchases and Sales. Except as approved in advance by Purchaser,
maintain the fixed assets of the Company in at least as good a condition as at
the date of this Agreement, repair and working order, normal wear and tear
excepted; and refrain from (a) making or permitting any sales, transfers or
dispositions of any asset of the business of the Company (other than inventory
in the ordinary course of business); (b) entering into any contracts, leases, or
commitments, or any amendments or modifications to contracts, leases or
commitments existing at the date of the execution of this Agreement, involving
the business or assets of the Company, other than those in the ordinary course
of business involving consideration or other expenditure of less than $2,000,
and other than those that can be terminated without obligation or penalty at the
Closing; and (c) taking or permitting any action or entering into or permitting
any contract or agreement prohibited by Section 3.5.
5.6. Compensation of the Company's Employees. Refrain from making or
permitting any change in the compensation or benefits payable or to become
payable to any of the employees or agents of the business of the Company, or
making any new bonus payment or arrangement or benefit to or with any of them,
or hiring any additional employees.
5.7. Insurance. Have in effect and maintain at all times all insurance now
in force relating to the Company and the business and assets of the Company.
5.8. Preserve Organization. Use its best efforts to preserve the business
organization of the Company intact, to keep available the services of the
present officers and employees of the Company.
5.9. Access to the Records of the Company. Allow Purchaser, its
representatives, attorneys and accountants to continue to have reasonable access
to the records and files, audits and properties of the Company relating to the
Company, the business and assets of the Company, as well as all information
relating to taxes, commitments, contracts, titles and financial condition of, or
otherwise pertaining to, the Company. The Company agrees to cause its
accountants to cooperate with Purchaser and its accountants in making available
all financial information concerning the Company as is requested, and Purchaser
and its accountants shall have the right to examine all working papers
pertaining to examinations of the Company relating to the Company and its
business and assets, provided that such examinations shall be designed to cause
minimal disruption to the Company and its business and work force, and in any
event, shall be undertaken with reasonable prior notice and during normal
business hours of the Company.
5.10. Consents and Authorizations. Use its best efforts to obtain all
government authorizations and contractual and leasehold consents and permits
necessary to enable the
- 21 -
consummation of all transactions contemplated hereby without causing the
discontinuation or termination of any permits or of any contractual
relationships maintained by the Company.
5.11. Fulfill Closing Conditions. Use its best efforts to take, or to cause
to be taken, all action reasonably necessary or appropriate to cause each of the
conditions set forth in Articles VII and VIII to be fulfilled on or prior to the
Closing Date.
5.12. Taxes. Pay when due all federal, state, local and foreign income,
franchise and other taxes of the Company, including any taxes on or arising out
of this transaction.
5.13. Financial Reports. Provide Purchaser with (i) copies of any financial
statements prepared by the Company in the course of its business, to be provided
promptly after they become available, and (ii) written notice immediately upon
any significant change in the Company's business prospects, deviations from the
ordinary course of business, or any other event that represents a material
adverse change in the prospects of the Company's business, financial position or
operations.
5.14. Certificate of Incorporation and By-Laws. Refrain from amending the
Articles or Certificate of Incorporation or By-Laws of the Company.
5.15. Damage or Destruction of Assets. Notify Purchaser immediately in the
event of any damage to or destruction of any of the material assets of the
Company.
5.16. No Shop. Refrain, and cause the Company's officers, directors,
employees, agents and Affiliates to refrain, from initiating or entering into
any negotiations or soliciting or discussing or encouraging (including by way of
furnishing non-public information) any offer or proposal regarding the sale,
direct or indirect, of any of the Shares; the sale, direct or indirect, of any
of the assets of the Company (other than inventory in the ordinary course of
business); the issuance of any capital stock of the Company or any options,
warrants, or rights to acquire capital stock of the Company; or any merger,
consolidation or similar transaction involving the Shares or any of the assets
of the Company; with any party other than Purchaser or an Affiliate of
Purchaser. The Seller shall promptly notify Purchaser of any such proposal or
offer, or any inquiry or contact with any person with respect thereto, and the
terms thereof.
5.17. Confidentiality.
1. Not disclose, and use reasonable efforts to cause the Company's
officers, directors, employees, agents and Affiliates not to disclose, any terms
of the transactions which are the subject of this Agreement (the "Proposed
Transactions"), or to make any public statement regarding the Proposed
Transactions prior to the Closing, without the prior consent of Purchaser;
provided, however, that the Parties understand and agree that certain
disclosures regarding the Proposed Transactions may be to be made to third
parties whose consent or approval may be required in connection with the
Proposed Transactions or
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may be required by applicable law, and that in each case such disclosures may be
made by the Company, without Purchaser's prior written consent, but only to the
extent such disclosures are so required.
2. Continue, and cause the Company's officers, directors, employees, agents
and Affiliates to continue, to observe, perform, and comply with that certain
confidentiality agreement dated December 7, 1995, between the Company and
Purchaser.
ARTICLE VI
COVENANTS OF PURCHASER
Between the date of this Agreement and the Closing Date, Purchaser shall:
6.1. Fulfill Closing Conditions. Use its best efforts to take, or cause to
be taken, all action reasonably necessary or appropriate to cause each of the
conditions set forth in Articles VII and VIII to be fulfilled on or prior to the
Closing Date.
6.2. Third Parties and Government Approvals. Use its best efforts to file
and obtain approval of all necessary documentation, and to obtain all necessary
approvals of third parties and of appropriate regulatory authorities, with
respect to the transactions contemplated by this Agreement.
6.3. Confidentiality.
1. Not disclose, and cause Purchaser's officers, directors, employees,
agents and Affiliates not to disclose, any terms of the Proposed Transactions),
or to make any public statement regarding the Proposed Transactions prior to the
Closing, without the prior written consent of the Seller; provided, however,
that the Parties understand and agree that certain disclosures regarding the
Proposed Transactions may be to be made to third parties whose consent or
approval may be required in connection with the Proposed Transactions, or may be
required by applicable law or by applicable stock exchange requirements, and
that in each case such disclosures may be made by Purchaser, without the
Seller's prior written consent, but only to the extent such disclosures are so
required.
2. Continue, and cause Purchaser's officers, directors, employees, agents
and Affiliates to continue, to observe, perform, and comply with that certain
confidentiality agreement dated December 7, 1995, between the Company and
Purchaser.
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ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING BY PURCHASER
Purchaser shall not be required to proceed on the Closing Date with the
transactions contemplated by this Agreement unless the following conditions
precedent shall have been fulfilled and satisfied, or shall have been waived in
writing by Purchaser:
7.1. Representations and Warranties. Each of the warranties and
representations of the Seller contained herein shall be true and correct as of
the date of this Agreement, and shall also be true and correct as of the Closing
Date as if then originally made.
7.2. Covenants. The Seller shall have complied with each of the covenants
required of him on or prior to Closing;
7.3. Officers Certificate. The Seller shall have delivered to Purchaser a
certificate of Seller, and a certificate of the President and Chief Financial
Officer of the Company, dated the Closing Date, certifying to the best of the
knowledge and belief of such persons and in such detail as Purchaser reasonably
requests to the accuracy of the Seller's representations and warranties
contained herein, and to the fulfillment of the Seller's covenants and to the
conditions precedent to Purchaser's obligations to consummate the transactions
contemplated by this Agreement;
7.4. Good Standing. The Seller shall have delivered to Purchaser
certificates of good standing in the state or country of incorporation for the
Company and each of its Affiliates;
7.5. Legal Opinion. The Seller shall have delivered to Purchaser a legal
opinion, in substantially the form attached hereto as Exhibit A, from Greenbaum,
Rowe, ▇▇▇▇▇, ▇▇▇▇▇, & ▇▇▇▇▇, counsel to the Seller;
7.6. Governmental Approvals. The Seller, the Company, or Purchaser shall
have received all governmental and regulatory consents, non-objections or
permits from all Federal, state, local and foreign governmental authorities
necessary to permit Seller, Purchaser, and the Company to consummate the
transactions contemplated by this Agreement, and to enable the Company to
conduct its business after the Closing Date in all material respects as the
Company conducted such business on the date of this Agreement;
7.7. Material Adverse Change. There shall have been no material adverse
change (or changes which in the aggregate are materially adverse) since the date
hereof in the financial condition, results of operations, properties, business,
prospects or products and services provided by the Company, whether by reason of
change in government regulation or action or otherwise;
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7.8. Bankruptcy. Neither the Company nor Seller shall be the subject of a
petition for reorganization or liquidation under the Federal bankruptcy laws, or
under state or foreign insolvency laws, nor shall an assignment for the benefit
of creditors or any similar protective proceeding or act or event of bankruptcy
have occurred;
7.9. Due Conveyance; Consents. The Shares shall have been conveyed and
assigned to Purchaser free and clear of all liens, charges, encumbrances and
third party adverse claims, and all necessary consents of other parties to the
contracts, agreements and licenses forming a part of the Omega Business, shall
have been obtained without burdensome limitations or conditions;
7.10. Employment Agreement and Consulting Agreement. Seller, Omega and
Purchaser shall have executed and delivered the employment agreement
substantially in the form of Exhibit B (the "Employment Agreement") and the
consulting agreement substantially in the form of Exhibit F (the "Consulting
Agreement"), effective as of the Closing Date;
7.11. Lawsuits. No action, suit or proceeding shall have been instituted or
threatened before a court, arbitration panel or governmental body with respect
to the transactions contemplated hereby, and no regulatory enforcement
proceeding shall be pending before any governmental agency or body with respect
to the transactions contemplated hereby;
7.12. Debt. At the Closing Date the Company shall have no debt burden,
other than trade debt, other accounts payable incurred in the ordinary course of
business, and the debt listed on Schedule 3.2;
7.13. Directors. The members of the Board of Directors of the Company shall
have resigned in writing from the Board of Directors effective upon the Closing;
7.14. Lease Agreement. Seller, Omega, and Purchaser shall have executed and
delivered the lease agreement substantially in the form of Exhibit C (the "Lease
Agreement"), effective as of the Closing Date;
7.15. Escrow Agreement. Seller, Purchaser, and ▇▇▇▇ ▇. ▇▇▇▇, Esq., shall
have executed and delivered the escrow agreement substantially in the form of
Exhibit E (the "Escrow Agreement"), effective as of the Closing Date.
7.16. Non-Fulfillment Date. In the event that one or more of the foregoing
conditions in this Article VII is not fulfilled as of February 29, 1996 (the
"Non-Fulfillment Date"), Purchaser may, upon notice to the Company and on or
prior to the Closing Date, elect either (i) to waive the condition and proceed
to Closing; or (ii) not to consummate the transactions provided for herein and
terminate this Agreement without any further liability on the part of either of
the Parties, except that the foregoing shall not relieve either of the Parties
from liability for damages actually incurred as a result of breach of this
Agreement.
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ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING BY THE SELLER
The Seller shall not be required to proceed on the Closing Date with the
transactions contemplated by this Agreement unless the following conditions
precedent shall have been fulfilled and satisfied, or shall have been waived in
writing by the Seller:
8.1. Representations and Warranties. Each of the representations and
warranties of Purchaser contained herein shall be true and correct as of the
date of this Agreement and shall be true and correct as of the Closing Date as
if then originally made;
8.2. Covenants. Purchaser shall have complied with each of the covenants
required of it on or prior to Closing;
8.3. Officers Certificate. Purchaser shall have delivered to the Seller a
certificate of its President and Chief Financial Officer, dated the Closing
Date, certifying to the best of the knowledge and belief of such officers and in
such detail as the Seller reasonably request to the accuracy of Purchaser's
representations and warranties, and to the fulfillment of Purchaser's covenants
and of the conditions precedent to the Seller's obligations to consummate the
transactions contemplated by this Agreement;
8.4. Bankruptcy. Purchaser shall not be the subject of a petition for
reorganization or liquidation under the Federal bankruptcy laws, or under state
insolvency laws, nor shall an assignment for the benefit of creditors or any
similar protective proceeding or act or event of bankruptcy have occurred;
8.5. Lawsuits. No action, suit or proceeding shall have been instituted or
threatened before a court, arbitration panel or governmental body with respect
to the transactions contemplated hereby, and no regulatory enforcement
proceeding shall be pending before any governmental agency or body with respect
to the transactions contemplated hereby;
8.6. Legal Opinion. Purchaser shall have delivered to the Seller a legal
opinion, in substantially the form attached hereto as Exhibit D, from ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel to Purchaser.
8.7. Corporate Authorizations. There shall have been obtained, by means in
conformity with all applicable provisions of federal and Pennsylvania law, the
approval of Purchaser's Board of Directors to the transactions contemplated by
this Agreement;
8.8. Good Standing. Purchaser shall have delivered to the Seller a
certificate of good standing in its state of incorporation.
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8.9 Lease Agreement. Seller, Omega, and Purchaser shall have executed and
delivered the Lease Agreement;
8.10. Employment Agreement and Consulting Agreement. Seller, Omega and
Purchaser shall have executed and delivered the Employment Agreement and the
Consulting Agreement;
8.11. Escrow Agreement. Seller, Purchaser, and ▇▇▇▇ ▇. ▇▇▇▇, Esq., shall
have executed and delivered the Escrow Agreement.
8.12. Non-Fulfillment Date. In the event that one or more of the foregoing
conditions in this Article VIII is not fulfilled as of the Non-Fulfillment Date,
the Seller may, upon notice to Purchaser and on or prior to the Closing Date,
elect either (i) to waive the condition and proceed to Closing; or (ii) not to
consummate the transactions provided for herein and terminate this Agreement
without any further liability on the part of either of the Parties, except that
the foregoing shall not relieve either of the Parties from liability for damages
actually incurred as a result of breach of this Agreement.
ARTICLE IX
CLOSING
The actual consummation of the transactions contemplated by this Agreement (the
"Closing") shall take place on the later of: (i) February 2, 1996, and (ii) the
fifth business day following the last to occur of the conditions set forth in
Articles VII and VIII (the "Closing Date") at the offices of Greenbaum, Rowe,
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇ in Woodbridge, New Jersey. The Closing Date may be set at
such other date or at such other place as shall be fixed by agreement of the
Parties hereto.
ARTICLE X
OBLIGATIONS AT THE CLOSING
10.1. Seller's Obligations. At the Closing, the Seller shall deliver to
Purchaser:
10.1.1. Certificates signed by the Seller to the effect that, to the actual
knowledge of such persons, each of the representations and warranties made by
the Seller hereunder is true and correct as of the Closing Date (or, if any such
representation or warranty is untrue or incorrect, specifying the respect in
which it is untrue or incorrect), and that the Seller has fulfilled his
covenants hereunder as of the Closing Date (or, if any such
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covenant is unfulfilled, specifying the respect in which it is unfulfilled), and
that the Seller has fulfilled the conditions precedent to Purchaser's
obligations to consummate the purchase contemplated by this Agreement (or, if
any such condition is unfulfilled, specifying the respect in which it is
unfulfilled);
10.1.2. An opinion of Greenbaum, Rowe, ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, counsel for
the Seller, addressed to Purchaser, in substantially the form attached hereto as
Exhibit A;
10.1.3. The Employment Agreement, executed by Seller;
10.1.4. The certificates representing all of the Shares, together with
appropriate stock powers in a form satisfactory to Purchaser and executed by the
Seller with signature guaranteed by a bank, assigning such certificates to
Purchaser, free and clear of any liens, claims, options, encumbrances or
restrictions of any nature whatsoever;
10.1.5. The Lease Agreement, executed by Seller;
10.1.6. The Consulting Agreement, executed by Seller; and
10.1.7 The Escrow Agreement, executed by Seller.
10.2. Purchaser's Obligations. At the Closing Purchaser shall make the
payment called for by Section 16.4, and Purchaser shall deliver to the Seller:
10.2.1. Certificates signed by the President and Chief Financial Officer of
Purchaser to the effect that, to the best of the knowledge of such officers,
each of the representations and warranties made by Purchaser hereunder are true
and correct as of the Closing Date (or, if any such representation or warranty
is untrue or incorrect, specifying the respect in which it is untrue or
incorrect), and that Purchaser has fulfilled its covenants hereunder as of the
Closing Date (or, if any such covenant is unfulfilled, specifying the respect in
which it is unfulfilled), and that Purchaser has fulfilled the conditions
precedent to the Seller's obligations to consummate the purchase contemplated by
this Agreement (or, if any such condition is unfulfilled, specifying the respect
in which it is unfulfilled);
10.2.2. A copy of resolutions adopted by the Board of Directors of
Purchaser, certified by its Secretary, authorizing or ratifying the execution
and delivery of this Agreement and the performance by Purchaser of its
respective obligations hereunder;
10.2.3. An opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for Purchaser, addressed to
the Seller, in substantially the form attached hereto as Exhibit D;
10.2.4. The Employment Agreement, substantially in the form of Exhibit B,
executed by Purchaser;
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10.2.5. The Lease Agreement, executed by Purchaser;
10.2.6. The Escrow Agreement, executed by Purchaser;
10.2.7. The Consulting Agreement, executed by Purchaser; and
10.2.8. Current funds in the amount specified in Section 2.2(a).
ARTICLE XI
FURTHER COVENANTS OF
THE SELLER AND PURCHASER
The Seller and Purchaser shall, as described below, each perform the
indicated tasks designated to be performed by them:
11.1. Joint Notice. After the Closing, the Seller and Purchaser shall
cooperate, to the extent practicable and reasonable, in giving joint notice of
the consummated transactions to each customer, creditor, distributor, sales
representative and supplier of the business of the Company.
11.2. Further Assurances. Each Party agrees that, from time to time and
without further consideration, he or it will execute and deliver such further
documents and take such other action as the other Party may require in order
more effectively to transfer to and vest in Purchaser and put Purchaser in
possession of the Shares and all right and interest in the Shares and to ensure
the carrying out of such Party's obligations under this Agreement.
11.3. Contracts. If any of the Contracts require the consent of a third
party in order not to be discontinued or terminated due to the transfer of
Shares consummated hereunder, and such consent cannot be obtained prior to
Closing despite the Parties' best efforts, the Parties shall continue to use
their best efforts to obtain the third party's consent after the Closing Date.
11.4. ▇▇▇. ▇▇▇▇▇▇▇. Purchaser agrees that after the Closing, for as long as
Seller shall be active on a day-to-day basis either as an employee with the
Omega Business or as a consultant with Purchaser, Purchaser or its designee
shall employ ▇▇▇. ▇▇▇ ▇▇▇▇▇▇▇ substantially in the role that she serves Omega on
the date hereof, at her present salary of $36,000 per annum, increased each year
on the anniversary date of the Closing Date by the percentage increase in the
Consumer Price Index since the previous anniversary of the Closing Date, plus a
typical benefits package for the Company as set forth by the Company's board of
directors from time to time, plus a car lease allowance and related car
expenses.
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11.5 No Gap in Insurance. After the Closing, Purchaser will maintain, or
cause the Company to maintain, products liability insurance for the Company with
coverage at least as great as, and with a deductible no greater than $500,000 in
the aggregate, the products liability insurance coverage listed on Schedule
3.19.
ARTICLE XII
TAX MATTERS
12.1. Certain Definitions.
12.1.1. Taxes: means all federal, foreign, state or local net or gross
income, gross receipts, sales, use, ad valorem, value-added, franchise,
withholding, "tollgate", payroll, employment, excise, property or similar taxes,
assessments, duties, fees, levies or other governmental charges (including,
without limitation, any liability for taxes arising from a consolidated return
and imposed by Treasury Regulations section 1.1502-6) together with any interest
thereon, penalties, additions to tax or additional amounts with respect thereto
and any interest in respect of such penalties, additions or additional amounts.
12.1.2. Carryforwards: means any federal or state tax loss carryforwards,
investment tax credits, and foreign tax credits of the Company arising from
taxable years or periods prior to the Closing Date.
12.2. [Intentionally Omitted.]
12.3. Tax Indemnification.
12.3.1. Notwithstanding any other provision of this Agreement, the Seller
hereby agrees to indemnify Purchaser against and hold it harmless from (i) all
liability for Taxes of the Company attributable to taxable years or periods
ending on or before the Closing Date and, in the case of taxable years or
periods beginning before and ending after the Closing Date, the portion of such
years or periods ending at the close of business on the Closing Date (the
"Pre-Closing Tax Period"), (ii) all liability whenever incurred for Taxes of the
Seller, and (iii) any liability resulting from a failure of the Seller to
fulfill his obligations under this Article XII.
12.3.2. Notwithstanding any other provision of this Agreement, Purchaser
hereby agrees to indemnify the Seller and hold him harmless from (i) any
liability for Taxes of the Company attributable to any taxable periods or
portions thereof commencing after the Pre-Closing Tax Period, and (ii) any
liability resulting from a failure of Purchaser to fulfill its obligations under
this Article XII.
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12.4. Closing of Taxable Period. Each of Purchaser and the Seller agrees to
cause Company to file all appropriate federal, state, local and foreign tax
returns (the "Tax Returns") on the basis that the relevant taxable period ended
as of the close of business on the Closing Date, unless the relevant taxing
authority will not accept a Tax Return filed on that basis.
12.5. Preparation and Filing of Tax Returns by the Seller. The Seller shall
prepare and timely file or shall cause the preparation and timely filing of all
appropriate Tax Returns that include, on a consolidated or any other basis, the
income of Company for all periods ending on or before the Closing Date for those
jurisdictions which permit or require a short period tax return ending as of the
close of business on the Closing Date. Purchaser will cooperate with the Seller
in making available to him any records necessary to enable him to comply with
this Section 12.5. At the request of the Seller, the Purchaser shall cause the
Company to grant a Power of Attorney to such persons as the Seller may designate
to file such Tax Returns in the name of the Company.
12.6. Preparation and Filing of Tax Returns by the Company. Purchaser
and/or the Company shall prepare and timely file or shall cause the preparation
and timely filing of (i) all Tax Returns with those jurisdictions not allowing a
short period Tax Return ending as of the close of business on the Closing Date
and (ii) all other Tax Returns of any kind with respect to Company that are due
after the Closing Date (other than Tax Returns to be filed by the Seller
pursuant to Section 12.5). The Seller will cooperate with Purchaser and the
Company in making available to Purchaser any records necessary to enable
Purchaser and the Company to comply with this Section 12.6. For all tax periods
commencing after the Closing Date, Purchaser and the Company shall have
responsibility for the preparation and filing of all Tax Returns relating to the
assets, operations and income of the Company.
12.7. Payment of Taxes by the Seller Directly to Taxing Authorities. Except
as provided in Section 12.8, the Seller shall pay or cause to be paid all Taxes
due with respect to Tax Returns which it is required to file pursuant to Section
12.5.
12.8. Payment of Taxes by the Seller to Purchaser. With respect to any
jurisdiction which does not permit or require a short period Tax Return ending
as of the close of business on the Closing Date, the Seller shall compute or
cause to be computed the Tax liability which would be reflected on an Tax Return
for the Company for that jurisdiction for the period through and including the
Closing Date (as if such a short taxable period existed and a return was
permitted or requested in respect thereof), and the Seller shall pay such amount
(less any estimated tax payments paid prior to the Closing Date) to Purchaser or
the Company on or before the due date, including extensions for the payment of
taxes to such jurisdiction with respect to the Tax Return to be filed by
Purchaser and/or Company. In the event that the estimated tax payment paid prior
to the Closing Date exceeds the amount of tax to be paid by the Company on a tax
return required under this Section 12.8, Purchaser shall pay or cause to be paid
such excess to the Seller. Any tax credits and any exemptions,
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allowances or deductions that are calculated on an annual basis, such as the
deduction for depreciation, shall be apportioned on a time basis.
12.9. Consolidated and Unitary Tax Returns. The Seller agrees to permit
Purchaser to cause the Company to elect, where permitted by law, to carry
forward any net operating loss, net capital loss, charitable contribution or
other item arising after the Closing Date that would, absent such election, be
carried back to a taxable period of the Company ending on or before the Closing
Date.
12.10. Cooperation in Preparing and Filing Returns. The Seller and
Purchaser shall, and Seller and Purchaser shall cause the Company to, cooperate
fully with each other in connection with the preparation and filing of the Tax
Returns or other tax returns, including but not limited to the furnishing or
making available of records, books of account and any other information
necessary for the preparation of any tax returns. Purchaser shall, and Purchaser
shall cause the Company to, provide the Seller with completed Tax Returns or tax
return information packages for the Company including, but not limited to, all
supporting documentation as required in prior years within 90 days after the
Closing Date, for taxable periods ending on or prior to or including but not
ending on the Closing Date. The Seller shall furnish Purchaser with completed
federal and state Tax Returns or with pro-forma returns for the Company by the
earlier of 90 days after receipt of all information required for the proper
completion of such returns or on or before 30 days prior to the due date of such
returns.
12.11. Adjustments.
12.11.1. Pre-Closing Tax Period Adjustments. If any Adjustment is made to
any Tax Return of the Company attributable to periods up to and including the
Pre-Closing Tax Period, and if such Adjustment results in an increase in any Tax
liability borne by the Seller hereunder, and results in a Tax benefit (including
without limitation any benefit attributable to a decrease in income, increase in
deduction or credit or increase in basis) to the Company or Purchaser with
respect to any taxable period or portion thereof after the Pre- Closing Tax
Period, then Purchaser shall pay to the Seller the amount of such Tax benefit
(calculated on a present value basis and after taking into account any loss or
credit carryover from a prior year); provided that the amount payable by
Purchaser shall not exceed the detriment to the Seller arising from such
Adjustment.
12.11.2. Post-Closing Tax Period Adjustments. If any Adjustment is made to
any Tax Return of the Company attributable to any taxable period or portion
thereof commencing after the Pre-Closing Tax Period, and if such Adjustment
results in an increase in any Tax liability borne by Purchaser or the Company,
and results in a Tax benefit (including without limitation any benefits
attributable to a decrease in income, increase in deduction or credit or
increase in basis) to the Seller with respect to a Pre-Closing Tax Period, which
benefit is used by Seller, then the Seller shall pay to Purchaser the amount of
such Tax benefit (calculated on a present value basis and taking into account
any loss or
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credit carryover from a prior year); provided that the amount payable by the
Seller shall not exceed the detriment to Purchaser arising from such Adjustment.
12.11.3. Adjustment. For purposes of this Section 12.11, "Adjustment" shall
mean an adjustment to any Tax Return as a result of or in settlement of any
audit, other administrative proceeding or judicial proceeding or as a result of
the filing of an amended Tax Return to reflect the consequences of any
determination made in connection with any such audit or proceeding.
12.12. Transfer Taxes. The Seller shall be liable for any taxes arising
from the sale of the Shares.
12.13. Negotiation, Settlement, or Contest of Tax Disputes. The Seller and
his duly appointed representatives shall have the sole right to supervise or
otherwise coordinate any tax examination process and to negotiate, resolve,
settle or contest any asserted Tax deficiencies or assert and prosecute any
claim for refund of Taxes (a "Tax Claim") for taxable periods ending on or
before the Closing Date. In addition, the Seller shall be entitled to
participate at his expense in the defense of any Tax Claim relating to any year
or period that includes the Closing Date for which the Seller may be required to
pay amounts to Purchaser and/or the Company pursuant to this Article XII, and
with the written consent of Purchaser and/or the Company, and at the Seller's
sole expense, may assume the entire defense of such Tax Claim. Purchaser shall
not, and shall not allow the Company to, settle any Tax Claim for a year or
period ending on or before the Closing Date or including the Closing Date
without the consent of the Seller (which shall not be unreasonably withheld) if,
with respect to such claim, the Seller would be required to pay amounts to
Purchaser and/or the Company pursuant to this Article XII.
12.14. Cooperation in Connection with Examinations. Purchaser shall, and
shall cause the Company to, give prompt notice to the Seller of the assertion of
any claim, or the commencement of any suit, action, proceeding, investigation or
audit with respect to any Tax Return for any period or portion thereof ending on
or before the Closing Date that includes the operations of the Company,
describing in reasonable detail the facts pertaining thereto and the amount or
an estimate of the amount of the liability arising therefrom. The Seller and
Purchaser shall, and the Purchaser shall cause the Company to, cooperate fully
in any such action by furnishing or making available records, books of account
or other materials or taking such other actions as may be necessary or helpful
for the defense against the assertions of any taxing authority as to any
consolidated, combined or separate Tax Return for such periods.
12.15. Assignment of Tax Refunds. Purchaser shall, and shall cause the
Company to, assign to the Seller all Tax refunds, including interest, relating
to the Company with respect to any taxable year or period ended as of or prior
to the close of business on the Closing Date, and, with respect to any taxable
year or period that includes the Closing Date, the portion of such year or
period ending on and including the Closing Date. Purchaser
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shall, and shall cause the Company to, pay over to the Seller promptly upon
receipt all such refunds received directly by any of them.
12.16. Record Retention. The Seller and Purchaser shall retain, and cause
the Company to retain, for six years from the closing date full and complete
records for all tax periods which remain subject to audit by action of statute
or waiver for all periods or portions thereof through and including the Closing
Date. To the extent that such records are currently maintained in both a hard
copy and an electronic media format, the Parties agree to cause both such types
of records that pertain to the income or operations of the Company prior to the
close of business on the Closing Date to be retained by Company and not to be
destroyed without prior written approval of the Seller or Purchaser, as the case
may be. The Parties agree to cause the Company to enter into such record
retention agreements as may be requested by the Internal Revenue Service with
respect to all tax periods ending on or prior to the Closing Date.
12.17. Termination of Tax Allocation Agreement. Any tax allocation
agreement or arrangement with respect to the Company that may have been entered
into by the Seller or its affiliates on the one hand and the Company on the
other hand shall be terminated as of the Closing Date, and no payments that are
owed by or to the Company pursuant thereto shall be of effect or enforceable,
except that any provision in such tax allocation agreement to provide
information regarding attributes or characteristics of the Company relevant to
the determination of any Taxes to the Company upon departure from the
consolidated group of which the Seller was a member shall be carried out by, and
enforceable against, the Seller or as provided for in such tax allocation
agreement.
12.18. Section 338(h)(10) Election.
(a) Seller and Purchaser agree to execute Internal Revenue Service Form
8023-A and to jointly and timely file an election under Section 338(h)(10) of
the Internal Revenue Code (the "Code"), and any comparable election, under
applicable state or local tax laws that provide for an election comparable to a
Code Section 338(h)(10) election, with respect to the purchase of the Shares.
Seller and Purchaser shall cooperate fully with each other to take all necessary
and appropriate actions to accomplish the completion and filing of such election
in accordance with the provisions of Treasury Regulations Section 1.338(h)(10)-1
and the provision of applicable state or local tax laws and regulations. Seller
agrees to pay any federal, state and local income taxes imposed on or measured
by income imposed pursuant to applicable law resulting solely from such
election, whether such taxes are levied on Seller, on Omega, or otherwise.
(b) With respect to the joint election to be made under Section 338(h)(10)
of the Code with respect to the purchase of the Shares, Purchaser and Seller
agree that the Purchase Price reflects the fair market value of the assets of
the Company deemed sold pursuant to such election and the Purchase Price shall
be allocated among the assets according to the method set forth in Treasury
Regulations Section 1.338(b)-2T (the "Purchase Price
- 34 -
Allocation"), and that a memorandum of such allocation (the "Allocation
Memorandum") shall be entered into between the Parties upon the execution of
this Agreement. Purchaser agrees to report or cause the Company to report, and
the Seller agrees to report, the deemed sale of the Company's assets in a manner
consistent with the Purchase Price Allocation issued pursuant to this Section
12.18.
(c) Seller and Purchaser each acknowledge that each has independently
consulted with its own respective tax advisors concerning the tax consequences
of an election under Section 338(h)(10) of the Code, and neither Party shall
have any recourse against the other with respect to the actual tax effects
thereof.
(d) Seller and Purchaser agree that the obligations specified in this
Section 12.18 shall be modified as necessary to reflect adjustments to the
Purchase Price as required by Article II of this Agreement, and such adjustments
shall be made pursuant to the provisions of Treasury Regulations section
1.338(b)-3T, as well as other relevant provisions of section 338 of the Code and
the regulations thereunder. Moreover, Purchaser shall prepare revisions to the
Allocation Memorandum hereto to reflect such adjustments and shall timely
forward such revised schedule to Seller. Purchaser and Seller further agree to
timely make all filings as may be required by any or all of them by any relevant
taxing jurisdictions to reflect such adjustments and to file all tax returns in
a manner consistent with such adjustments.
(e) In addition to their obligations under the foregoing subsections,
Seller and Purchaser shall, and Seller and Purchaser shall cause Omega and their
Affiliates to, cooperate fully with each other in connection with the
preparation and filing of all tax returns relating to Omega, including but not
limited to the furnishing or making available of records, books of account and
any other information necessary for the preparation of such tax returns.
12.19. Survival. All rights and obligations provided for in this Article
XII shall remain in force notwithstanding any other provision of this Agreement,
except in the event of termination of this Agreement pursuant to Section 7.16 or
Section 8.12.
12.20. Priority of Article. In the event of a conflict between the
provisions of this Article XII and any other provision of this Agreement, the
provisions of this Article XII shall control.
ARTICLE XIII
COVENANTS AGAINST COMPETITION
In partial consideration of the purchase price paid for the Shares by
Purchaser and for other good and sufficient consideration:
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13.1. Seller, on behalf of himself and his Affiliates, agrees not to
engage, directly or indirectly, as a proprietor, stockholder, partner, employee,
independent contractor or otherwise in competition with the Omega Business
during the Noncompetition Period (as hereinafter defined) in any place where the
Company is then conducting the Omega Business
13.2. Seller, on behalf of himself and his Affiliates, agrees not to do any
of the following during the Noncompetition Period in any place where the Company
is then doing business: (i) directly or indirectly solicit or otherwise contact
any present or past customers of the Company, for itself or any other person,
firm or corporation, for the purpose of obtaining business in competition with
the Omega Business; (ii) directly or indirectly solicit, interfere with or
endeavor to entice away from the Company any employees (other than ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇), sales representatives, or distributors; or (iii)
directly or indirectly solicit, interfere with or endeavor to entice away from
the Company any person, firm or corporation dealing or doing business with the
Company. Seller, on behalf of himself and his Affiliates, agrees not to do any
of the following at any time after the Closing Date: (a) directly or indirectly
make use of any know-how relating to the Omega Business's technology or any
intellectual property rights of the Company; or (b) take any actions that in any
manner are detrimental to the Company or its business. Nothing in this Article
XIII shall prohibit Seller or any of his Affiliates from ownership of an equity
interest not greater than 5% of any class of securities in a publicly held
company engaged in a business in competition with Purchaser or with the Company.
13.3. For purposes of this Agreement, the "Noncompetition Period" shall
mean the period beginning at Closing and ending on the second anniversary of the
termination of the employment agreement delivered pursuant to Section 10.1.3 of
this Agreement.
13.4. Without waiving the Purchaser's rights to monetary damages, all
Parties to this Agreement acknowledge that the breach of the obligations
contained in this Article XIII would result in substantial but indeterminable
harm, that the restraints imposed are reasonable, that there is no adequate
remedy at law for a breach of such obligations, and therefore, that injunctive
relief, specific performance or other equitable remedies are appropriate to
enforce the obligations undertaken in this Article XIII. In the event that a
court finds that the terms of this covenant not to compete are so broad as to be
unlawful and unenforceable, the Parties further agree that a reformation of the
terms of this Article XIII may be appropriate in order to protect the value of
the Company as a going concern, the value of the Shares being conveyed pursuant
to this Agreement, and the value of the non- competition covenant, and to
provide for the enforceability of the obligations contained in this Article XIII
to the fullest extent permitted by law.
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ARTICLE XIV
EXPENSES WITH RESPECT TO TRANSACTION
The Seller agrees that he will pay all fees, costs and expenses incurred by
him in connection with this transaction, including, without limitation, the fees
and expenses of his attorneys, accountants and other persons, and no portion
thereof shall be paid by Purchaser. Purchaser agrees that it will pay all fees,
costs and expenses incurred by it in connection with this transaction,
including, without limitation, the fees and expenses of its attorneys,
accountants and other persons, and no portion thereof shall be paid by the
Seller. Notwithstanding the foregoing, the Seller and Purchaser shall share
equally any fees accompanying filings required to be made to governmental
agencies in connection with the transactions contemplated by this Agreement.
ARTICLE XV
BROKERS
Each of the Parties hereby agrees to indemnify and save and hold harmless
the other Party, its shareholders, directors and officers from and against any
and all claims, losses, damages, costs or expenses of any kind or character
(including attorneys' fees) arising out of or resulting from any agreement,
arrangement or understanding alleged to have been made by such party with any
broker or finder in connection with this Agreement or the transactions
contemplated hereby, and to supply at Closing a letter releasing the other Party
to this Agreement from the claims of any such broker and finder. In furtherance
and not in limitation of the foregoing, Seller shall indemnify and hold
Purchaser harmless from any claims made by Seller's broker, Geneva Capital.
ARTICLE XVI
INDEMNIFICATION
16.1. Mutual Indemnification.
(a) Notwithstanding any other provisions of this Agreement, from and after
the Closing, Seller, jointly and severally on behalf of himself and his
Affiliates, and the successors and assigns of any of them, hereby indemnifies
Purchaser, its Affiliates, successors and assigns, and agrees to hold Purchaser,
its Affiliates, successors and assigns, harmless from all Losses (as hereinafter
defined) resulting from (i) a breach by the Seller of
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any representation, warranty, covenant or agreement under this Agreement, (ii)
any liabilities arising at or prior to the Closing, or any events occurring at
or prior to the Closing giving rise to liability (whether such liabilities or
events were known, unknown or could not be known by the Seller at or prior to
the Closing), relating to the Company or the Omega Business or the Omega Assets,
or (iii) any liabilities arising at, prior to or subsequent to the Closing
(whether such liabilities or events were known, unknown or could not be known by
the Seller at or prior to the Closing), relating to any products manufactured by
or any services rendered by the Company at or prior to the Closing.
(b) From and after the Closing Date, Purchaser, on behalf of its Affiliates
and its successors and assigns, hereby indemnifies Seller, his heirs, executors,
successors and permitted assigns, and agrees to hold Seller, his heirs,
executors, successors and permitted assigns, harmless from all Losses resulting
from (i) a breach by Purchaser of any representation, warranty, covenant or
agreement under this Agreement, or (ii) any liabilities arising after the
Closing Date relating to Omega, the Omega Business or the Omega Assets, except
for those liabilities described in Section 16.1(a), or (iii) any liabilities
arising following the Closing under any equipment leases listed on Schedule
3.30, except for those liabilities described in Section 16.1(a).
(c) As used in this Agreement, the term "Indemnifying Party" shall mean the
person or persons against whom a party (the "Indemnified Party") makes a claim
for indemnification hereunder.
(d) The Indemnified Party shall give written notice to the Indemnifying
Party of any claim or event known to it which does or may give rise to a claim
by the Indemnified Party against the Indemnifying Party based on this Agreement,
stating the nature and basis of said claims or events and the amounts thereof,
to the extent known. Such notice shall be given in accordance with Article XVIII
hereof. The giving of such notice shall be a condition precedent to any
liability of the Indemnifying Party hereunder. Such notice shall be given
reasonably promptly, but the fact that the Indemnified Party failed to give
notice with reasonable promptness shall not defeat a claim made pursuant hereto
except to the extent that the Indemnifying Party can establish that it has been
injured by such delay.
(e) In the event of any claim, action, suit or proceeding made or brought
by third parties against the Indemnified Party, the Indemnified Party shall give
written notice of such claim, action, suit or proceeding as described in (d)
above, with a copy of the claim, process and all legal pleadings with respect
thereto. After notification, the Indemnifying Party shall participate in, and
jointly with any other Indemnifying Party similarly notified, assume the defense
thereof, with counsel reasonably satisfactory to such Indemnified Party at the
time of such assumption. The Indemnified Party shall have the right to employ
its own counsel and such counsel may participate in such action, but the fees
and expenses of such counsel shall be at the expense of the Indemnified Party,
when and as incurred, unless (1) the employment of counsel by such Indemnified
Party has been authorized by the Indemnifying Party, or (2) the Indemnifying
Party shall not in fact have employed counsel to assume the defense of such
- 38 -
action reasonably satisfactory to the Indemnified Party at the time of the
Indemnifying Party's assumption of the defense. If clause (2) of the preceding
sentence shall be applicable, then counsel for the Indemnified Party shall have
the right to direct the defense of such claim, action, suit or proceeding on
behalf of the Indemnified Party. The Indemnified Party and the Indemnifying
Party, as the case may be, shall be kept fully informed of such claim, action,
suit or proceeding at all stages thereof whether or not such party is
represented by its own counsel.
(f) As used in this Agreement, "Losses" means any and all claims, demands,
costs, losses, damages and liabilities. The term "Losses" includes reasonable
attorneys' fees and costs incurred in the investigation and defense of a claim,
demand, cost, loss or liability, provided however that the term "Losses" does
not include remuneration to the Indemnified Party's employees for time spent
investigating or litigating any claim or demand. With respect to environmental
matters, the term Losses also includes hazardous substances removal, remedial
activity or response action required by any Environmental Law, required by
judicial order or by order of or agreement with any governmental authority, or
requested by or for Seller, or its Affiliates.
16.2 Certain Limitations. The liability of Seller or Purchaser, as
applicable, for claims under this Agreement shall be limited by the following:
(a) after the date that is fourteen months after the Closing Date, Seller
shall have no further obligations under this Article XVI of this Agreement or
otherwise, except for (i) Losses with respect to which the Purchaser has given
Seller written notice prior to such date, and (ii) Losses with respect to
Sections 3.3, 3.8, 3.17, and 3.31.
(b) the amount of Losses otherwise recoverable by an Indemnified Party
under this Article XVI shall be reduced by the amount of insurance proceeds
actually received and self-insured retentions applied by such Indemnified Party
with respect to such Losses.
(c) no claim for indemnification shall be asserted by an Indemnified Party
under this Article XVI until the aggregate amount of all Losses of that Party
relating to this Agreement exceeds $75,000, and then only to the extent that
such Losses exceed $75,000.
(d) the aggregate amount of all Losses recoverable by Purchaser pursuant to
the provisions of this Article XVI shall be limited to the Purchase Price;
provided, however, nothing in this Article XVI shall be deemed to limit any
right or remedy of Purchaser for fraud; and further provided that nothing in
this Article XVI shall be construed as limiting Purchaser's rights, if any, to
seek any appropriate non-monetary relief.
16.3. Set-offs. Without limiting Purchaser's rights or remedies under this
Agreement, from the date that is fourteen months after the Closing Date through
the date that is thirty-eight months after the Closing Date Purchaser may set
off amounts that Purchaser owes to Seller under the Lease Agreement against
amounts due to Purchaser by reason of a
- 39 -
failure or breach of Seller'srepresentations, warranties, covenants or
obligations or by reason of an increase in liabilities or obligations incurred
by Purchaser in connection with the transactions contemplated by this Agreement.
16.4. Escrow.
(a) Notwithstanding any provision in this Agreement to the contrary,
Purchaser shall on the Closing Date deliver $500,000 (Five Hundred Thousand
Dollars) of the Purchase Price to the Escrow Agent named in the Escrow
Agreement, who shall place the funds in an interest-bearing account (the "Escrow
Account").
(b) At any time or from time to time prior to the date that is fourteen
months after the Closing Date, Purchaser may obtain from the Escrow Account, in
accordance with the procedures provided in the Escrow Agreement, amounts equal
to the amounts of any Losses for which it is entitled to indemnification under
this Article XVI. If at any time Purchaser obtains an amount from the Escrow
Account in accordance with the previous sentence, Seller shall forthwith pay to
Escrow Agent such amount in order to replenish the Escrow Account.
(c) At its option, and in addition to any other rights or remedies that
Purchaser may have hereunder, Purchaser may obtain from the Escrow Account, in
accordance with the procedures provided in the Escrow Agreement, any amount that
Seller is required to pay pursuant to Section 2.2, provided that Seller shall
immediately thereafter replenish such amount. For the avoidance of doubt, and
notwithstanding any provision in this Agreement to the contrary, the provisions
of Section 16.2(c) shall not be applicable to Purchaser's rights under this
Section 16.4(c).
16.5. Remedies Cumulative. All rights and remedies existing under this
Agreement are cumulative with, and not exclusive of, (i) each other, and (ii)
any rights or remedies otherwise available.
ARTICLE XVII
NOTICES
17.1. Notice. All notices and other communications required to be given
under the terms of this Agreement or which any of the Parties may desire to give
hereunder shall be in writing and delivered personally or sent by express
delivery, or by facsimile, or by registered or certified mail, with proof of
receipt, postage and expenses prepaid, return receipt requested, addressed as
follows:
- 40 -
(a) As to Purchaser, addressed to:
Mestek, Inc,
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇, President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇,
with a copy to:
R. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Mestek, Inc,
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇;
or to such other address or addresses and to the attention of such other person
or persons as Purchaser may from time to time designate in writing to Seller;
(b) As to Seller, addressed to:
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇,
with a copy to:
▇▇▇▇ ▇▇▇▇▇, Esq.
Greenbaum, Rowe, ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇,
or to such other address or addresses and to the attention of such other person
or persons as Seller may from time to time designate in writing to Purchaser.
17.2. Receipt of Notice. Any notice given in accordance with this Article
XVII shall be deemed to have been given when delivered personally, or when
received if sent via express delivery, facsimile, or registered or certified
mail, return receipt requested.
- 41 -
ARTICLE XVIII
EFFECTIVENESS AND ASSIGNABILITY OF AGREEMENT
This Agreement shall become effective when executed and delivered by
Purchaser and Seller, and shall be binding in all respects upon the respective
successors and permitted assigns of each of the Parties hereto. No Party hereto
may assign this Agreement in whole or in part without first obtaining the
written consent of the other Party, except that Purchaser may assign its rights
and obligations under this Agreement to one or more Affiliates so long as
Purchaser remains responsible for its performance hereunder.
ARTICLE XIX
ANNOUNCEMENT OF TRANSACTION
Subject to the provisions of Section 11.1, no party hereto shall make a
public announcement of any of the transactions contemplated by this Agreement
without approval of the other Party, unless required by law or by applicable
stock exchange requirements, and in any event such person shall provide notice
accompanied by a copy of all proposed announcements to the other Party. Nothing
in this Agreement shall be construed to inhibit Seller or Purchaser from
communicating with their employees regarding this Agreement, so long as Seller
or Purchaser, as the case may be, use their best efforts to make such employees
comply with the confidentiality obligations contained in this Article XIX.
ARTICLE XX
COMPLETENESS OF AGREEMENT
This Agreement and the Schedules and Exhibits hereto and Closing documents
represent the entire contract between the Parties with respect to the subject
matter hereof and supersede all offers, proposals, statements, representations
and agreements with respect to the subject matter hereof, including but not
limited to that certain letter of intent dated December 7, 1995. The Exhibits
and Schedules hereto and Closing documents are incorporated herein by reference,
and shall be deemed to be included in any reference to this Agreement. This
Agreement may not be amended except by action of each of the Parties hereto set
forth in an instrument in writing signed on behalf of each of the Parties
hereto.
- 42 -
ARTICLE XXI
CAPTIONS
The captions to the Articles and Sections contained in this Agreement are
for reference only, do not form a substantive part of this Agreement and shall
not restrict nor enlarge any substantive provision of this Agreement.
ARTICLE XXII
APPLICABLE LAW
This Agreement, the Schedules and Exhibits, and all other documents given
in connection herewith, shall be construed in accordance with the laws of the
State of Pennsylvania, without regard to the principles of conflicts of laws.
ARTICLE XXIII
CHOICE OF FORUM; VENUE; SERVICE OF PROCESS
Any claim, suit, action, or proceeding between Purchaser and Seller
relating to this Agreement; or relating to any document, instrument, or
agreement delivered pursuant hereto, referred to herein, or contemplated hereby;
or in any other manner arising out of or relating to the transactions
contemplated by or referenced in this Agreement, shall be commenced and
maintained exclusively in the United States District Court for the Eastern
District of Pennsylvania, or, if that Court lacks jurisdiction over the subject
matter, in a state court of competent subject-matter jurisdiction sitting in
▇▇▇▇▇▇▇ County, Pennsylvania. Purchaser and the Seller hereby submit themselves
unconditionally and irrevocably to the personal jurisdiction of such courts.
Purchaser and the Seller further agree that venue shall be in ▇▇▇▇▇▇▇ County,
Pennsylvania. Purchaser and the Seller irrevocably waive any objection to such
personal jurisdiction or venue including, but not limited to, the objection that
any claim, suit, action, or proceeding brought in ▇▇▇▇▇▇▇ County, Pennsylvania,
has been brought in an inconvenient forum. Purchaser and the Seller irrevocably
agree that process issuing from such courts may be served on them, either
personally or by certified mail, return receipt requested, at the addresses
given in Article XVII hereof; and Purchaser and the Seller further irrevocably
waive any objection to service of process made in such manner and at such
- 43 -
addresses, including without limitation any objection that service in such
manner and at such addresses is not authorized by the local or procedural laws
of Pennsylvania.
ARTICLE XXIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be considered an original but all of which shall constitute but one and
the same Agreement by and among the Parties.
ARTICLE XXV
NO THIRD PARTY BENEFICIARY
This Agreement is intended to inure to the benefit of Purchaser and the
Seller only; and no third party shall have any rights, express or implied, by
reason of this Agreement.
ARTICLE XXVI
UNILATERAL RIGHT TO WAIVE FAILURES OF OTHER PARTIES
26.1. Waiver. Any of the Parties may:
26.1.1. Extend in writing the time for the performance of any of the
obligations herein contained to be performed for the benefit of such party;
26.1.2. Waive in writing any inaccuracies in the representations and
warranties made to it contained in this Agreement or any Exhibit or Schedule
hereto or any certificate or certificates delivered by another party to this
Agreement;
26.1.3. Waive in writing the failure in performance of any of the
conditions herein expressed for its benefit; and
26.1.4. Waive in writing compliance with any of the covenants herein
contained for its benefit.
- 44 -
26.2. Effect of Waiver. No such waiver or extension shall be valid unless
in writing and signed by the party granting the waiver or extension, and no such
waiver or extension shall be construed to excuse or mitigate any subsequent
breach or violation of this Agreement not specifically covered by such waiver.
ARTICLE XXVII
SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement shall
not affect the other provisions hereof, and the Agreement shall be construed in
all respects as if such invalid or unenforceable provisions were omitted.
Furthermore, upon the request of any party hereto, the Parties to this Agreement
shall add, in lieu of such invalid or unenforceable provisions, provisions as
similar in terms to such invalid or unenforceable provisions as may be possible
and legal, valid and enforceable.
[Next page is signature page.]
- 45 -
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
as of the day and year first above written.
Purchaser: MESTEK, INC., a Pennsylvania corporation
By: _/s/________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Senior Vice
President -Finance
Seller: _/s/_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇