Exhibit 2
STOCK PURCHASE AGREEMENT
BETWEEN
MESTEK, INC.
AND
ALPHA TECHNOLOGIES GROUP, INC.
September 18, 2000
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS AND USE OF TERMS........................................... 1
1.1 Construction........................................................... 1
1.2 Definitions............................................................ 2
ARTICLE 2 SALE AND TRANSFER OF THE SHARES; CLOSING............................... 6
2.1 Shares................................................................. 6
2.2 Purchase Price and Initial Payment..................................... 6
2.3 Closing................................................................ 7
2.4 Closing Deliveries..................................................... 8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF MESTEK............................... 9
3.1 Organization and Good Standing......................................... 9
3.2 Enforceability; No Conflict............................................ 9
3.3 Capitalization......................................................... 10
3.4 Ownership; Waiver of Rights; Title..................................... 10
3.5 Litigation............................................................. 10
3.6 Non-Disclosure: Non-Competition....................................... 10
3.7 Compliance with the Law................................................ 11
3.8 Company Contracts; Instruments......................................... 11
3.9 Financial Statements; Working Capital.................................. 12
3.10 Liabilities and Other Obligations...................................... 12
3.11 Related Party Transactions............................................. 12
3.12 Books and Records...................................................... 13
3.13 No Material Adverse Change............................................. 13
3.14 Properties and Assets; Encumbrances.................................... 14
3.15 Proprietary Rights..................................................... 15
3.16 Taxes.................................................................. 15
3.17 Labor Relations; Employee Benefits..................................... 17
3.18 Environmental, Health and Safety Matters............................... 18
3.19 Brokers or Finders..................................................... 19
3.20 Customers.............................................................. 19
3.21 Suppliers.............................................................. 20
3.22 Inventory.............................................................. 20
3.23 Product Liability and Recalls.......................................... 20
3.24 Insurance.............................................................. 20
3.25 Bank Accounts; Safe Deposit Boxes; Tax Identification Number........... 21
3.26 Guaranties............................................................. 21
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER................................ 21
4.1 Organization........................................................... 21
4.2 Enforceability; No Conflict............................................ 21
4.3 Brokers or Finders..................................................... 22
4.4 Financing.............................................................. 22
ARTICLE 5 COVENANTS.............................................................. 22
5.1 Updated Schedules...................................................... 22
5.2 Conditions to Closing.................................................. 22
5.3 Regulatory Consents.................................................... 22
5.4 HSR Filing............................................................. 23
5.5 Access................................................................. 23
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5.6 Conduct of Business.................................................... 23
5.7 Changes to Capital Stock............................................... 24
5.8 Dividends.............................................................. 24
5.9 Tax Matters............................................................ 24
5.10 Financing.............................................................. 25
5.11 Mortgages; Debt........................................................ 25
5.12 Withdrawal............................................................. 25
5.13 Elimination of Encroachment............................................ 25
5.14 Assignment of Insurance and Deposit Regarding Florida Press............ 26
ARTICLE 6 CONDITIONS TO CLOSINGS................................................. 26
6.1 Conditions Precedent to Buyer's Obligations............................ 26
6.2 Conditions Precedent to Mestek's Obligations........................... 27
ARTICLE 7 INDEMNIFICATION; SURVIVAL; LIMITATIONS OF LIABILITY.................... 28
7.1 Indemnification by Mestek.............................................. 28
7.2 Indemnification by the Buyer........................................... 28
7.3 Survival of Representations, and Warranties; Deductible................ 28
7.4 Notice and Opportunity to Defend....................................... 29
ARTICLE 8 FURTHER COVENANTS OF THE PARTIES....................................... 30
8.1 Employees.............................................................. 30
8.2 Expenses............................................................... 31
8.3 Public Announcements................................................... 31
8.4 Further Assurances..................................................... 31
8.5 Noncompetition......................................................... 31
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8.6 Confidentiality........................................................ 32
8.7 Blank Check Stock...................................................... 33
8.8 Accounts............................................................... 33
8.9 Taxes.................................................................. 33
8.10 Supply of Products..................................................... 35
8.11 Books and Records Delivery and Access.................................. 35
ARTICLE 9 GENERAL PROVISIONS..................................................... 36
9.1 Notices................................................................ 37
9.2 Incorporation of Schedules............................................. 37
9.3 Entire Agreement and Modification...................................... 37
9.4 Disclosure Schedule.................................................... 37
9.5 Time of Essence........................................................ 38
9.6 Severability........................................................... 38
9.7 Assignments, Successors, and no Third Party Rights..................... 38
9.8 Waiver................................................................. 38
9.9 Governing Law; Exclusive Jurisdiction; Service of Process Attorney Fees 38
9.10 Counterparts........................................................... 39
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EXHIBITS
--------
Exhibit 2.2(b)....................... Escrow Agreement
Exhibit 2.4(a)(iii).................. Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Exhibit 2.4(c)(ii)................... Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
SCHEDULES
---------
Schedule 3.1......................... Organization and Good Standing
Schedule 3.2......................... Enforceability; No Conflict
Schedule 3.3......................... Capitalization
Schedule 3.4......................... Ownership; Waiver of Rights; Title
Schedule 3.5......................... Litigation
Schedule 3.7......................... Compliance With Law
Schedule 3.8......................... Company Contracts; Instruments
Schedule 3.9......................... Financial Statements; Working Capital
Schedule 3.10........................ Liabilities and Other Obligations
Schedule 3.11........................ Related Party Transactions
Schedule 3.12........................ Books and Records
Schedule 3.13........................ No Material Adverse Change
Schedule 3.14........................ Properties and Assets; Encumbrances
Schedule 3.15........................ Proprietary Rights
Schedule 3.16........................ Taxes
Schedule 3.17........................ Labor Relations; Employee Benefits
Schedule 3.18........................ Environmental, Health, and Safety Matters
Schedule 3.19........................ Brokers or Finders
Schedule 3.20........................ Customers
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Schedule 3.21........................ Suppliers
Schedule 3.22........................ Inventory
Schedule 3.24........................ Insurance
Schedule 3.25........................ Bank Accounts
vi
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of September 18,
2000 (the "Effective Date") by and between Alpha Technologies, Group, Inc., a
corporation organized under the laws of Delaware ("Buyer") and Mestek, Inc., a
corporation organized under the laws of Pennsylvania ("Mestek") (all parties to
the Agreement are hereinafter referred to collectively as the "Parties").
RECITALS
WHEREAS, Mestek owns 820 shares of the issued and outstanding stock of
National Northeast Corporation (the "Company"), and has entered into or plans to
enter into an agreement to purchase the remaining 100 shares of the issued and
outstanding stock of the Company; and
WHEREAS, Mestek desires to sell, and the Buyer desires to purchase, the
issued and outstanding stock of the Company owned by Mestek as of the date
hereof plus those acquired at or prior to Closing (collectively, the "Shares")
on the terms set forth in this Agreement.
AGREEMENT
The Parties, intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS AND USE OF TERMS
1.1 CONSTRUCTION
Any reference in this Agreement to an "Article" or "Section" refers to the
corresponding Article or Section of this Agreement or Mestek's or Buyer's
Disclosure Schedules, unless the context indicates otherwise. The headings of
Articles and Sections are provided for convenience only and shall not affect the
construction or interpretation of this Agreement. All words used in this
Agreement shall be construed to be of such gender or number as the circumstances
require. The terms "include" or "including" indicate examples of a foregoing
general statement and not a limitation on that general statement. Any reference
to a statute refers to the statute, any amendments or successor legislation, and
all regulations promulgated under or implementing the statute, as in effect at
the relevant time. Any reference to a Contract or other document as of a given
date means the Contract or other document as amended, supplemented and modified
from time to time through such date. Capitalized terms contained in the
Schedules hereto and not defined therein shall have the meaning ascribed to them
in this Agreement.
1.2 DEFINITIONS
For the purposes of this Agreement, the following terms and variations on
them have the meanings specified in this Section:
"Audited Financial Statements" is defined in Section 3.9.
"Affiliated Group" means any affiliated group within the meaning of Code
Section 1504(a) or any similar group under any provision of state, local or
foreign law.
"Best Efforts" means the commercially reasonable efforts that a prudent
Person desirous of achieving a result would use in similar circumstances to
achieve that result as expeditiously as possible.
"Buyer" is defined in the first paragraph of this Agreement.
"Closing" means the consummation and completion of the transactions
described in Section 2.4.
"Closing Date" means the date on which the Closing actually takes place.
"Code" refers to the Internal Revenue Code of 1986, as amended.
"Common Share" is defined in Section 3.3.
"Company" is defined in the Recitals of this Agreement.
"Company Contract" means any Contract or group of related Contracts (a)
under which the Company has or may acquire rights, (b) under which the Company
is or may become subject to Liability, or (c) by which the Company or any of its
assets is or may become bound.
"Consent" means any approval, consent, ratification, waiver, or other
authorization.
"Contemplated Transactions" means all of the transactions to be carried out
in accordance with this Agreement, including the purchase and sale of the Shares
and the performance by the Parties of their other obligations under this
Agreement.
"Contract" means any contract, agreement, commitment, understanding, lease,
license, franchise, warranty, guaranty, mortgage, note, bond, or other
instrument or consensual obligation (whether written or oral and whether express
or implied) that is legally binding.
"Contravene" - an act or omission would "Contravene" something if, as the
context requires:
(a) the act or omission would conflict with it, violate it, result in a
breach or violation of or failure to comply with it, or constitute a default
under it;
(b) the act or omission would give any Governmental Body or other Person
the right to challenge, revoke, withdraw, suspend, cancel, terminate, or modify
it, to exercise any remedy or obtain any relief under it, or to declare a
default or accelerate the maturity of any obligation under it; or
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(c) the act or omission would result in the creation of an Encumbrance on
the Shares or assets of the Company.
"Debt" means all obligations for borrowed money, whether short term or long
term, and unpaid interest thereon. For the avoidance of doubt, Debt shall not
include obligations under operating leases, trade accounts payable or accrued
expenses (as that term is defined under GAAP).
"Effective Date" is defined in the first paragraph.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA(3)(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA(3)(1).
"Encumbrance" means any charge, claim, mortgage, servitude, easement, right
of way, community or other marital property interest, covenant, equitable
interest, lien, option, pledge, security interest, preference, priority, right
of first refusal, or similar restriction.
"ERISA" means the Employee Retirement Income Security Act of 1974 as
amended.
"Escrow Agreement" is defined in Section 2.2(b)
"Expenses" is defined in Section 2.4(a)(xi).
"Financial Statements" is defined in Section 3.9.
"GAAP" means generally accepted accounting principles for financial
reporting in the United States.
"Governmental Authorization" means any Consent, license, permit or
registration issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal Requirement.
"Governmental Body" means any:
(a) nation, region, state, county, city, town, village, district, or other
jurisdiction;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, or other entity and any court or
other tribunal);
(d) multinational organization;
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, policy, regulatory, or taxing authority or
power of any nature; and
(f) official of any of the foregoing.
"Initial Payment" is defined in Section 2.2(b).
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"Knowledge" means, except as otherwise specified, actual knowledge without
independent investigation. With respect to Mestek, Knowledge means (i) actual
knowledge without independent investigation of ▇▇▇▇ ▇. ▇▇▇▇, R. ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., and (ii) the knowledge of ▇▇▇▇▇
▇▇▇▇▇▇▇▇ or ▇▇▇ ▇▇▇▇▇▇▇ after such investigation that a reasonably prudent
person would conduct.
"Legal Requirement" means any published and publicly available
constitution, law, statute, treaty, rule, regulation, ordinance, binding case
law or principle of common law, notice, approval or Order of any Governmental
Body.
"Liabilities" means material liabilities or obligations of any nature,
whether known or unknown, whether absolute, accrued, contingent, ▇▇▇▇▇▇,
inchoate, or otherwise, whether due or to become due, and whether or not
required to be reflected on a financial statement.
"Material Adverse Change" and "Material Adverse Effect" - means any change,
effect or circumstance with respect to the Company if it individually or
together with any other changes, effects or conditions (i) materially adversely
affects the financial or other condition, results of operations, assets
(considered in the aggregate), Liabilities, equity, prospects or business of the
Company, (ii) materially impedes the ongoing operations of the Company, or (iii)
significantly adversely affects a material asset of the Company, but shall not
include matters arising from the execution, delivery or performance of this
Agreement or involving conditions that are generally applicable in the economy,
the aluminum extrusion business or the manufacture and sale of heat sinks or
other metal fabrications.
"Material Company Contract" means a Company Contract involving payments, in
the aggregate, by or to the Company in excess of $50,000.
"Mestek Affiliated Group" means Mestek and the affiliated group of
companies of which Mestek is the common parent.
"Order" means any published and publicly available order, injunction,
judgment, decree, ruling, assessment or arbitration award of any Governmental
Body or arbitrator.
"Ordinary Course of Business" refers to actions taken in the Company's
normal operation, consistent with its past practice.
"Organizational Document" means any charter, articles, bylaws, certificate,
statement, statutes, or similar document adopted, filed or registered in
connection with the creation, formation, or organization of an entity, and any
Contract among all equityholders, partners or members of an entity.
"Parties" is defined in the first paragraph.
"Plan" means employee benefit plans as such term is defined in Section
3.3 of ERISA, as currently interpreted by the IRS and the Department of Labor,
including but not limited to, medical, disability, unemployment and retirement
benefits, that is maintained by the Company or Mestek for employees of the
Company.
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"Person" refers to an individual or an entity, including a corporation,
share company, limited liability company, partnership, trust, association,
Governmental Body or any other body with legal personality separate from its
equityholders or members.
"Proceeding" means any action, arbitration, audit, examination,
investigation, hearing, litigation, or suit (whether civil, criminal,
administrative, judicial or investigative, whether formal or informal, and
whether public or private) commenced, brought, conducted, or heard by or before,
or otherwise involving, any Governmental Body or arbitrator.
"Purchase Price" is defined in Section 2.2.
"Representative" means, with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, legal counsel, accountant, or
other representative of that Person.
"Shares" is defined in the Recitals.
"Tax" means any of the Taxes and "Taxes" means all federal, state, local,
foreign and other taxes, charges, fees, duties (including customs duties),
levies or other assessments, including income, capital gains, profits, gross
receipts, net proceeds, alternative or add-on minimum, ad valorem, turnover,
real and personal property (tangible and intangible), sales, use, franchise,
excise, value added, documentary, stamp, leasing, lease, user, transfer,
conveyance, fuel, excess profits, occupational, interest equalization, windfall
profits, severance, license, payroll, environmental, capital stock, disability,
employee's income withholding, other withholding, unemployment and social
security taxes, that are imposed by any Governmental Body, and including any
interest, penalties or additions to tax attributable thereto.
"Threatened" -- an action or matter would be considered to have been
"Threatened" if a demand or statement has been made (whether orally or in
writing) or a notice has been given (whether orally or in writing), or any other
event has occurred or any other circumstances exist, that would lead a prudent
Person to conclude that such action or matter is likely to be asserted,
commenced, taken or otherwise pursued in the future.
"Unaudited Financial Statements" is defined in Section 3.9.
"Working Capital" shall mean the difference between (x) the Company's trade
accounts receivable, inventory and prepaid expenses and (y) the sum of the
Company's trade account payables (other than those to members of the Mestek
Affiliated Group) and accrued liabilities other than with respect to Debt and
Taxes. For purposes of this calculation, trade account payables includes checks
outstanding.
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ARTICLE 2
SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at the Closing,
Mestek will sell and transfer the Shares to the Buyer, and the Buyer will
purchase the Shares from Mestek.
2.2 PURCHASE PRICE AND INITIAL PAYMENT
(a) The purchase price for the Shares, assuming the Company has no Debt,
payable at Closing will be (i) fifty two million dollars ($52,000,000) if the
Shares constitute all of the issued and outstanding stock of the Company, or
(ii) forty six million three hundred forty seven thousand eight hundred twenty
three dollars ($46,347,823) if the Shares constitute eight hundred twenty of the
nine hundred twenty issued and outstanding stock of the Company ("Purchase
Price"). The Purchase Price shall be subject to adjustment as set forth in
Section 2.2(c).
(b) On the Effective Date, Buyer shall pay five hundred thousand dollars
($500,000.00) (the "Initial Payment"), by wire transfer of immediately available
funds, to United States Trust Company of New York (the "Escrow Agent"), subject
to the terms and conditions set forth in the Escrow Agreement attached hereto as
Exhibit 2.2(b) (the "Escrow Agreement"). The Initial Payment shall be held by
the Escrow Agent until such time as the Escrow Agent is required under the terms
of the Escrow Agreement to pay such deposit to Mestek or the Buyer, as the case
may be.
(i) In the event that the Closing Date does not occur within 90 days of the
Effective Date as a result of (A) a breach of this Agreement by Mestek or (B)
the failure of a condition to closing under Article 6 of this Agreement (other
than Buyer's failure to secure financing) other than because of a failure by
Buyer to perform its obligations hereunder, the Initial Payment (plus interest
accrued thereon) shall be paid to Buyer.
(ii) In the event that the Closing Date does not occur within 90 days of
the Effective Date as a result of any reason other than a reason specified in
Section 2.2(b)(i), the Initial Payment (plus interest accrued thereon) shall be
paid to Mestek. In the event that the reason for the failure of the Closing
Date to occur is Buyer's failure to secure financing despite its Best Efforts to
do so, such payment shall be Mestek's sole remedy for Buyer's failure to
consummate the Contemplated Transaction.
(iii) In the event that the Closing Date occurs within 90 days of the
Effective Date, the Initial Payment shall be paid to Mestek as a credit against
the Purchase Price.
(c) As soon as reasonably practicable after the Closing Date (but in no
event later than 75 days following the Closing Date), the Buyer, at Buyer's
expense, shall cause to be prepared and delivered to Mestek a balance sheet of
the Company as at 11:59:00 PM on the day immediately preceding the Closing Date
(the "Closing Date Balance Sheet"), which shall be certified by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
LLP and shall be prepared in accordance with generally accepted accounting
principles on a basis consistent with the 1999 Audited Financial Statements and
the 1999 and 2000
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Unaudited Financial Statements. Based upon the Closing Date Balance Sheet, the
Purchase Price shall be adjusted (the "Purchase Price Adjustment") as follows:
(i) If the Working Capital of the Company as shown on the Closing Date
Balance Sheet is less than $5,885,662, the amount as of June 30, 2000, then the
Purchase Price shall be decreased by an amount equal to the deficit.
(ii) If the Working Capital of the Company as shown on the Closing
Date Balance Sheet is greater than $5,885,662, the amount as of June 30, 2000,
then the Purchase Price shall be increased by an amount equal to the excess.
Working Capital at Closing will include the following assumptions:
1. All payroll and payroll tax liabilities of the Company related directly to
payroll checks dated before the Closing Date will be paid by Mestek in the
Ordinary Course of Business and will be excluded from the computation of
Working Capital.
2. All payroll and payroll tax liabilities of the Company relating to payroll
checks dated on or after the Closing will be paid by the Buyer and accrued
on the Closing Date Balance Sheet and such liabilities shall be included in
the computation of Working Capital.
(d) Mestek shall notify the Buyer in writing within 45 days after it
receives the Closing Date Balance Sheet of any disagreements it may have with
the Closing Date Balance Sheet or the computation of any Purchase Price
Adjustment, setting forward in reasonable detail the basis for and (if
computable by Mestek) the amount of such disagreements. If at the end of such
45-day period no resolution is reached, such disagreements shall be resolved by
a "big five" accounting firm (the "Arbiter"), chosen by the Parties, which
determination shall be limited solely to the disagreements identified by Mestek
and which shall be final and binding on the Parties. The fees and disbursements
of such firm shall be borne by the Party whose position is not substantially
upheld. In the event of an adjustment to the Purchase Price which requires an
additional payment by the Buyer to Mestek, such amount shall be payable within
ten days of the delivery of the Closing Date Balance Sheet to the extent
undisputed by the Buyer and to the extent an additional payment is determined by
the Arbiter to be due by the Buyer to Mestek such amount shall be payable within
ten days of the delivery of the Arbiter's determination to the Buyer. If the
Closing Date Balance Sheet should disclose that any amount is payable by Mestek
to the Buyer, such amount shall be payable within ten (10) days following
delivery of the Closing Date Balance Sheet to the extent not disputed by Mestek
and to the extent additional payment is determined by the Arbiter to be due by
Mestek to the Buyer such amount shall be payable within ten days of the delivery
of the Arbiter's determination to Mestek. Any payments not paid when due under
this Section shall accrue interest at the rate of 9% per annum from Closing
through the date of payment.
2.3 CLOSING
The Closing shall take place at the offices of the Buyer's counsel or
counsel to Buyer's principal lender no later than five (5) days after the
satisfaction or waiver of the last condition precedent set forth in Article 6 at
10 a.m. (Eastern time) or by telephone and fax as the Parties shall agree. The
Parties estimate that the Closing Date shall be on or about November 15, 2000.
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2.4 CLOSING DELIVERIES
At the Closing:
(a) Mestek will deliver to Buyer:
(i) Certificates representing the eight hundred twenty (820) or
nine hundred twenty (920), as the case shall be, Shares of the
Company, duly endorsed in blank (or accompanied by duly
executed stock powers in blank);
(ii) An opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for Mestek, in the form
attached hereto as Exhibit 2.4(a)(iii);
(iii) The Company's corporate minute book, seals and stock ledgers;
(iv) Resignations of all officers and directors of the Company other
than those designated in writing by Buyer;
(v) Compliance certificate of an officer of Mestek as to the
fulfillment of the conditions set forth in Section 6.1;
(vi) Resolutions of Mestek certified by its Secretary authorizing
the execution, delivery and performance of this Agreement and
the transactions contemplated hereby;
(vii) Copies of the Company's certificate of incorporation and all
amendments thereto and by-laws, as certified by the Secretary
of the Company;
(viii) Release of the Company's obligations with regard to all Debt as
of the Closing Date and all payables to members of the Mestek
Affiliated Group; and
(ix) Satisfaction of all mortgages on the Company's Real Property
and a release of all liens, pledges and security interests on
the Company's assets except with respect to operating leases.
(b) [Intentionally Omitted].
(c) Buyer will deliver:
(i) the Purchase Price (less any amount paid to Mestek by the Escrow
Agent) by wire transfer of immediately available funds or
similar means, to the account(s) specified by Mestek;
(ii) The opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for Buyer, in
the form attached hereto as Exhibit 2.4(c)(ii);
(iii) Compliance certificate of an officer of Buyer as to the
fulfillment of the conditions set forth in Section 6.2; and
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(iv) Resolutions of Buyer certified by its Secretary authorizing the
execution, delivery and performance of this Agreement and the
transactions contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF MESTEK
Mestek represents and warrants to the Buyer as follows that, as of the date
hereof and on the Closing Date:
3.1 ORGANIZATION AND GOOD STANDING
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, with full corporate power
and authority to conduct its business as it is now being conducted, to own or
use the properties and assets that it owns or uses, and to perform all its
obligations under the Company Contracts. The Company is duly qualified to do
business as a foreign entity and is in good standing in each jurisdiction in
which the failure to so qualify would have a Material Adverse Effect on its
business or properties. The jurisdictions in which the Company is qualified to
do business are set forth in Schedule 3.1.
(b) The Company has no subsidiaries nor any interest in or similar
obligation with regard to any other corporation, company, partnership, joint
venture, association or other business entity.
3.2 ENFORCEABILITY; NO CONFLICT
(a) Assuming due authorization, execution and delivery of this Agreement by
the Buyer, this Agreement constitutes the legal, valid, and binding obligation
of Mestek, enforceable against Mestek in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws relating to or affecting the
rights of creditors generally and except that the remedy of specific performance
and injunctive relief and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. Mestek has the absolute and unrestricted
right, power, authority, and capacity to execute and deliver this Agreement and
to perform its obligations under this Agreement, which actions have been duly
authorized and approved by all necessary corporate action of Mestek.
(b) Except as set forth in Schedule 3.2, neither Mestek nor the Company are
required to give any notice to any Person or obtain any Consent or Governmental
Authorization in connection with the execution and delivery of this Agreement by
Mestek or the consummation or performance of any of the Contemplated
Transactions by Mestek.
(c) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will
directly or indirectly (with or without notice or lapse of time):
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(i) Contravene any Material Company Contract, Governmental
Authorization, Legal Requirement or Order to which the Company or Mestek, or any
of the assets owned or used by the Company is party or by which they may be
bound or subject, any provision of the Company's or Mestek's Organizational
Documents, or any resolution adopted by the board of directors or stockholders
of the Company or Mestek.
(ii) result in the imposition or creation of any material Encumbrance
upon or with respect to any of the assets owned or used by the Company.
3.3 CAPITALIZATION
The Company is a corporation having authorized capital stock consisting of
two thousand (2,000) no par value Common Shares (each a "Common Share") of which
nine hundred twenty (920) Common Shares are issued and outstanding. Except as
set forth in Schedule 3.3, all of the Shares are validly issued, fully paid and
non-assessable and no pledge, claim or any encumbrances or restrictions of any
nature exist with respect to them. No options, warrants, conversion or other
rights, agreements or commitments of any kind obligating the Company,
contingently or otherwise, to issue or sell any shares of its capital stock of
any class or any securities convertible into or exchangeable for any such
shares, are outstanding.
3.4 OWNERSHIP; WAIVER OF RIGHTS; TITLE
Mestek beneficially and of record owns eight hundred twenty (820) Common
Shares and has good and marketable title thereto free and clear of any
Encumbrance, except as set forth on Schedule 3.4. Mestek hereby irrevocably
waives any and all pre-emptive rights, rights of first refusal or any other
similar rights to purchase or sell Shares now or in the future with respect to
the consummation of transactions set out hereunder. Mestek has not granted any
power of attorney enabling any Person to enter into an agreement to dispose of
in any way the Mestek Shares. Mestek has not granted any Person any option,
warrant or similar right to purchase any of the Mestek Shares, except as set
forth on Schedule 3.4.
3.5 LITIGATION
Except as set forth on Schedule 3.5, there is no claim, action, proceeding
or investigation pending or, to the Knowledge of Mestek, Threatened against the
Company before any court or governmental agency. There are no orders, writs,
injunctions or decrees currently in force against the Company or the directors,
officers, agents or employees of the Company with respect to the conduct of the
Company's business.
3.6 NON-DISCLOSURE; NON-COMPETITION
The Company is not bound by any Contract or Order restraining or materially
limiting it from engaging or competing in the aluminum extrusion business, or
the manufacture or sale of heat sinks or other metal fabrications. To the
Knowledge of Mestek, no third party has claimed that any Person representing or
employed by the Company has:
(a) violated or may be violating any of the terms or conditions of his or
her employment, non-competition or non-disclosure agreement with such third
party;
10
(b) disclosed or may be disclosing or utilized or may be utilizing any
trade secret, proprietary information or documentation of such third party; or
(c) interfered or may be interfering in the employment relationship between
such third party and any of its present or former employees.
Neither the execution nor delivery of this Agreement, nor the conduct of the
business of the Company, conflicts with or results in a material breach of the
terms, conditions, or provisions of or constitute a default under any Material
Company Contract or other material legal instrument under which the Company is
obligated.
3.7 COMPLIANCE WITH LAW
The Company is in material compliance with applicable laws. Neither Mestek
nor the Company have received any notice of any material violation of any
applicable laws which has not been remedied. The Company owns, holds or
possesses in its own name, all governmental licenses, franchises, permits,
approvals and other governmental authorizations (federal, state and local)
(collectively, "Licenses and Permits") necessary to entitle it to use its
corporate name, to own or lease, operate and use its assets and properties and
to carry on and conduct its businesses and operations as presently conducted,
except where the failure to so own, hold or possess would have no Material
Adverse Effect. The Company is not in violation of or default under any
Licenses or Permits or any judgment, order, writ, injunction or decree of any
court or administrative agency issued against it or any law, ordinance, rule or
regulation applicable to it, which could reasonably be expected individually or
in the aggregate to have a Material Adverse Effect or which could reasonably be
expected to interfere materially with the consummation of the transactions
contemplated herein. Schedule 3.7 hereto sets forth a complete and correct list
of all Licenses and Permits related to the conduct of the Company's business,
all of which are in full force and effect as of the date hereof.
3.8 COMPANY CONTRACTS; INSTRUMENTS
A true and complete list of the Material Company Contracts is attached
hereto as Schedule 3.8. Mestek has delivered true and complete copies of all
Material Company Contracts to Buyer. Each Material Company Contract is a valid
and binding obligation of the Company and, to the Knowledge of Mestek, the other
parties thereto, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to or affecting the rights of
creditors generally and except that the remedy of specific performance and
injunctive relief and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought and no Material Company Contract shall be
breached or rendered invalid or unenforceable by the consummation of the
transactions contemplated by this Agreement. The Company has not breached, nor
does Mestek have Knowledge of any claim or threat that the Company has breached,
any of the terms or conditions of any Material Company Contract. None of the
Company Contracts is individually expected to cause a loss to the Company in
excess of $50,000, and the Company Contracts in the aggregate are not expected
to cause a loss to the Company in excess of $100,000, provided that such
expectation assumes no change in the Company's business practices or processes
or increase in labor rates and raw materials or other
11
costs. No Material Company Contract with customers is priced in a manner that is
inconsistent with the Company's past practices.
3.9 FINANCIAL STATEMENTS; WORKING CAPITAL
(a) Attached hereto as Schedule 3.9 are unaudited balance sheets as of
December 31, 1998, December 31, 1999, and June 30, 2000 and profit and loss
statements and statements of cash flows for the calendar years ended December
31, 1997, December 31, 1998 and December 31, 1999 and for the period ended June
30, 2000 for the Company (collectively, the "Unaudited Financial Statements").
Except as stated in Schedule 3.9, the Unaudited Financial Statements have been
prepared from the books and records of the Company, are true and correct in all
material respects and accurately set out and describe the financial condition
and operating results of the Company as of the dates and for the periods
indicated therein and have been prepared in accordance with GAAP. The Company
shall provide audited balance sheets as of December 31, 1998 and December 31,
1999 and profit and loss statements and statements of cash flows for the
calendar years ended December 31, 1997, December 31, 1998, and December 31, 1999
for the Company (collectively, the "Audited Financial Statements") within thirty
five (35) days of the Effective Date. The Audited Financial Statements shall be
prepared from the books and records of the Company, will be true and correct in
all material respects and will accurately set out and describe the financial
condition and operating results of the Company as of the dates and for the
periods indicated therein and will be prepared in accordance with GAAP. The
Audited Financial Statements for 1999 will not be materially adversely different
(taken as a whole) from the Unaudited Financial Statements for the same period.
(b) The accounts receivable of the Company reflected on the unaudited
balance sheet dated June 30, 2000, or arising since the date thereof are, to the
extent not already collected, true and valid receivables, created in the
Ordinary Course of Business of the Company and have arisen solely out of bona
fide sales of goods, performance of services, and other business transactions in
the Ordinary Course of Business. Such accounts receivable are collectible in
accordance with their terms at their recorded amounts, subject to the reserves
set forth in the Unaudited Financial Statements as adjusted in the Ordinary
Course of Business through the Closing Date.
3.10 LIABILITIES AND OTHER OBLIGATIONS
The Company has no Liabilities except (i) to the extent reflected or
reserved for on the Unaudited Financial Statements, (ii) for liabilities
incurred in the Ordinary Course of Business since June 30, 2000, (iii) for
liabilities disclosed in Schedule 3.10 attached hereto, and (iv) for obligations
to perform wholly or partially executory contracts.
3.11 RELATED PARTY TRANSACTIONS
Except as set forth in Schedule 3.11, neither Mestek, nor any present
executive, director nor, to the Knowledge of Mestek, any significant employee of
the Company or an affiliate thereof: (a) owns, directly or indirectly, in whole
or in part, any of the properties used in the business of the Company; (b) has
received a loan or advance from the Company which is currently outstanding; (c)
has any obligation to make any loan to the Company; or (d) has any other
business relationship with the Company other than in his or its capacity as a
shareholder, executive, director or significant employee. Neither Mestek nor
any present executive director, or, to the Knowledge of Mestek, any significant
employee of the Company or any affiliate thereof:
12
owns, directly or indirectly, in whole or in part, any interest in, or controls
or is an employee, officer, director, partner of, participant in or consultant
to any corporation, association, partnership, limited partnership, joint venture
or other entity which is a competitor of the Company.
3.12 BOOKS AND RECORDS
The Company keeps its accounts regularly and in conformity with GAAP.
Except as set forth in Schedule 3.12, copies of all financial and operational
books and other materials related to the operation of the Company since its
inception are located at the business premises of the Company.
3.13 NO MATERIAL ADVERSE CHANGE
(a) Since June 30, 2000, no event has occurred or circumstance existed
that has had, or is reasonably expected to cause, a Material Adverse Effect on
the Company.
(b) In addition, since June 30, 2000, except as set forth in Schedule
3.13, the Company has conducted its business in the ordinary course and there
has not occurred with respect to the Company:
(i) any payment, discharge or satisfaction of any liabilities or
obligations (whether accrued, absolute, contingent or otherwise) in excess of
$100,000, other than the payment, discharge or satisfaction, in the Ordinary
Course of Business, of liabilities or obligations incurred in the Ordinary
Course of Business;
(ii) except in the Ordinary Course of Business, any assets (whether
real, personal or mixed, tangible or intangible) becoming subject to any
mortgage, pledge, lien, security interest, encumbrance, restriction or charge of
any kind, any one of which is more than $50,000;
(iii) any cancellation or waiver of any claims with a value in excess
of $50,000 or rights with a value in excess of $50,000, or any sale, lease,
transfer, assignment, distribution or other disposition of any assets with a
value in excess of $50,000, except for sales of finished goods inventory in the
Ordinary Course of Business, or any disposal of any material assets for any
amount to members of the Mestek Affiliated Group;
(iv) any disposal or lapse of any rights in, to or for the use of any
patent, trademark, trade name or copyright, or any disclosure to any person not
an employee or agent (except for disclosures in the Ordinary Course of Business
or in connection with the process of selling the Company), or disposition of,
any customer lists;
(v) any increase in the base compensation or other payment to any
officer or employee, whether now or hereafter payable or granted (other than
increases in base compensation in the Ordinary Course of Business), or material
entry into or variation of the terms of any employment or incentive agreement
with any such person;
(vi) any capital expenditure or commitment for additions to property,
plant or equipment, or lease agreement, which exceeds $100,000 and which, if
purchased, would be reflected in the property, plant or equipment accounts;
13
(vii) any change in any method of accounting;
(viii) any damage, destruction or loss of any asset, whether or not
covered by insurance, which exceeds $50,000;
(ix) except liabilities incurred in the Ordinary Course of Business,
any obligation or liability in excess of $50,000, including, without limitation,
any liability for nonperformance or termination of any contract;
(x) any sale or other disposition of any of the assets of the Company
worth in excess of $50,000 other than sales and dispositions in the Ordinary
Course of Business;
(xi) any elimination of any reserves established on the Company's
books or any changing of the method of accrual unless there is any change of
significant facts or circumstances pertaining to any reserves which would
justify their elimination, or such elimination or change is required under GAAP.
3.14 PROPERTIES AND ASSETS; ENCUMBRANCES
(a) Except as set forth in Schedule 3.14, the Company has good and
marketable title to, or a valid leasehold interest in, all real properties and
assets used in its business and all real properties and assets owned by the
Company are free and clear of all mortgages, liens, pledges, and security
interests on the assets of the Company, other than with respect to operating
leases. The properties and assets of the Company are sufficient to carry on the
business of Company in the manner in which such business was being conducted
immediately prior to the Closing Date.
(b) The only real property that the Company owns is located at ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ (the "Real Property"). The present use of the
Real Property does not violate any local zoning or similar land use laws or
governmental regulations where such violation would cause the Company to incur
more than $10,000 to cure such violation. The Company is not in material
violation of, or in noncompliance with, any covenant, condition, restriction,
order or easement affecting the Real Property. There is no condemnation pending
or, to the best knowledge of Mestek, Threatened affecting the Real Property
owned by the Company. The Company does not lease any real property and owns the
Real Property.
(c) Schedule 3.14 attached hereto and made a part hereof sets forth each
item of personal property owned by the Company as of August 31, 2000 having a
value in excess of five thousand dollars ($5,000), excluding inventory and
supplies, and sets forth any lease pursuant to which the Company leases any such
item of personal property as a lessee or lessor as of the date hereof (the
"Material Personal Property Leases"). The Company enjoys peaceful and
undisturbed possession under all Material Personal Property Leases. The personal
property set forth on Schedule 3.14 hereto constitutes all material personal
property used in the operation of the Company's business as currently conducted,
except for inventory and supplies. Except as set forth on Schedule 3.14 hereto,
the personal property of the Company is maintained in good operating condition,
reasonable wear and tear excepted, for the purposes for which they are currently
being used. Mestek has previously delivered to Buyer true and correct copies of
all Material Personal Property Leases.
14
(d) Except as set forth on Schedule 3.14, all assets of the Company are
located at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇.
3.15 PROPRIETARY RIGHTS
The Company owns and has good and marketable title to, or has in effect
licenses to, all material patents, trade secrets, trademarks, service marks,
trade names, copyrights and all applications therefor and other proprietary
rights used or necessary in the conduct of the Company's business, as now
conducted (the "Intellectual Property") provided, however, that Mestek makes no
representations or warranties with respect to the name "Mestek" or any variation
thereof, which Mestek shall continue to hold all rights to use after the Closing
Date and in which Buyer shall acquire no interest. Schedule 3.15 sets forth a
complete and correct list of all patents, registered trademarks, registered
trade names, registered service marks, registered service names and registered
brand names and all applications for the foregoing, if any, applicable to or
used in the business of the Company. The Company has not granted third parties
(including Mestek) the right to use the Intellectual Property. To the Knowledge
of Mestek, the Company is not infringing upon or otherwise acting adversely to
the right or claimed right of any Person under or with respect to the
Intellectual Property and there is no basis for any claim by any third party
that the Company is so infringing or acting. To the Knowledge of Mestek, no
employee or contractor of the Company is infringing upon or otherwise acting
adversely to the right or claimed right of any Persons under or with respect to
any of the Intellectual Property.
3.16 TAXES
Except as set forth in Schedule 3.16:
(a) The Company has duly and timely filed all reports and returns,
statements and forms required to be filed in respect of any Taxes as are
required to be filed by it or which are required to be filed with respect to its
assets, income, capital stock, or operations ("Tax Returns"), or a timely
request for extension of such Tax Returns has been filed and remains effective.
All such Tax Returns were correct and complete in all material respects. All
Taxes due, or claimed to be due, from the Company or which are imposed with
respect to their assets, income, capital stock, or operations, including without
limitation, Taxes due to any United States taxing authority, have been paid or
appropriate deposits made with respect thereto. There are no liens with respect
to Taxes upon any of the Company's assets, other than with respect to Taxes not
yet due and payable. The Company has made adequate provision in the June 30,
2000 Unaudited Financial Statements for the payment of all accrued Taxes not yet
payable as of the date of the June 30, 2000 Unaudited Financial Statements
attributable to its assets, income or operations.
(b) There are no audits, inquiries, investigations or examinations pending
or, to the Knowledge of Mestek, threatened relating to the Tax Returns of the
Company or which include its assets, income, capital stock, or operations, and
to the Knowledge of Mestek, there are no claims which have been or may be
asserted relating to any such Tax Returns for any year which, if determined
adversely, would result in the assertion by any Governmental Body of a material
Tax deficiency against the Company. There have been no waivers or extensions of
statutes of limitations which are in effect as of the date of this Agreement.
(c) The Company is not a party to any tax-sharing agreement or similar
arrangement with any other party. The Company has no liabilities for the
Taxes of any other entity or party,
15
whether by joint and several liability, as a transferee or successor, by
contract, or otherwise.
(d) Through the tax year ended December 31, 1999, the Company has been
included in Mestek's consolidated federal returns as a member of the Mestek
Affiliated Group. Mestek has duly and properly filed all Tax Returns, reported
all income, and paid all Taxes relating to the assets, income and operations of
the Company, to the extent required to be filed, reported and paid by Mestek.
(e) The federal income tax returns of the Company have not been audited by
the IRS for any taxable year of the past four taxable years. The statute of
limitations period for assessment of federal income taxes has expired for all
taxable years through the taxable year ending 1996.
(f) There are no outstanding powers of attorney enabling any party to
represent the Company with respect to Tax matters.
(g) The Company has withheld prior to Closing, proper and accurate amounts
from employees of the Company, in compliance in all material respects with all
withholding and similar provisions of any and all applicable federal, state, and
local laws, statutes, codes, ordinances, rules, and regulations. All such
amounts have been timely remitted to the proper governmental authority as
prescribed by law. All other Taxes required to have been withheld or collected
by the Company have been duly withheld and collected and have been duly paid
over to the proper governmental authority, or, with respect to Taxes not yet
required to be paid, adequately reserved for on the Closing Date Balance Sheet,
all as and to the extent prescribed by law. All Taxes due from the Company with
respect to employee income tax withholding, social security taxes, unemployment,
and any similar Taxes for all periods ending on or prior to the Closing Date
have been either paid in full on or prior to the Closing Date or, with respect
to Taxes not yet required to be paid, accrued as a liability on the Closing Date
Balance Sheet. The accrued sales taxes included in the Closing Date Balance
Sheet shall not exceed the sum of any uncollected sales taxes included in
uncollected accounts receivable as of the Closing Date Balance Sheet.
(h) The Company is not subject to an agreement or consent under Section
341(f) of the Code.
(i) The Company will not be required to include any adjustment in taxable
income for any period ending after the Closing under Section 481 of the Code (or
under any similar provision of the Tax laws of any jurisdiction) as a result of
a change in the method of accounting for a period ending on or before the
Closing or pursuant to an agreement with a Tax authority with regard to the Tax
liability of the Company for any period ending on or before the Closing.
(j) None of the Company's property is "tax exempt use property" within the
meaning of Section 168(h) of the Code.
(k) None of the assets owned by the Company is required to be treated as
owned any other person for federal income tax purposes.
(l) The Company is not a party to any joint venture, partnership or other
arrangement or contract which could be properly treated as a partnership for
federal income tax purposes.
(m) The Company has not entered into any sale-leaseback or any leveraged
lease transaction that fails to satisfy the requirements of Revenue Procedure
75-21.
16
(n) Mestek has filed a consolidated federal income tax return with the
Company for the taxable year immediately preceding the current taxable year and
is eligible to make an election under Section 338(h)(10) of the Code (and any
comparable election under state or local law) (a "Section 338(h)(10) Election")
with respect to the Company and the purchase and sale of the stock of the
Company hereunder.
3.17 LABOR RELATIONS; EMPLOYEE BENEFITS
(a) The names and titles of all employees of the Company, together with
their rate of compensation, and length of service are listed on Schedule 3.17.
All employees and contractors of the Company have performed services for their
compensation paid by the Company.
(b) The Company is in material compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours the noncompliance with which is reasonably likely
to have an Material Adverse Effect, and is not engaged in any unfair labor
practice.
(c) Except as set forth on Schedule 3.17, the Company has not received any
Citations and Notifications of Penalty with respect to findings of violations
under OSHA which have not been closed by payment of fines or administrative
action.
(d) The Company has no collective bargaining agreement covering any of its
employees. There is no current union representation or, to the Knowledge of
Mestek, request for union representation of the employees of the Company. There
are no unfair labor practice complaints pending or, to the Knowledge of Mestek,
Threatened against the Company.
(e) Each Plan is listed on Schedule 3.17, and Mestek has furnished to Buyer
true and complete copies of each such Plan or a written description of Plan
benefits if there is no written Plan document. The Plans have been administered
in material compliance with their terms and with the applicable requirements of
ERISA and the Code. With respect to each Plan, neither the Company nor, to the
Knowledge of Mestek, any of its employees or directors, nor any plan fiduciary
of any of the Plans, has engaged in any transaction in violation of Section
406(a) or (b) of ERISA or any "prohibited transaction" (as defined in Section
4975(c)(1) of the Code) for which no exemption exists under Section 4975(d) of
the Code, and no "reportable event" (as defined in Section 4043 of ERISA and the
regulations promulgated thereunder), other than such as may arise out of the
consummation of the transactions contemplated by this Agreement, has occurred in
connection with any Plan.
(f) None of the Plans applicable to the Company is a multiemployer plan
within the meaning of Section 3(37) of ERISA, and the Company has not maintained
or sponsored, has not been required to contribute to, has not terminated or
withdrawn from (either completely or partially), and no withdrawal liability (as
defined in Section 4201, 4063 or 4064 of ERISA) has been incurred by the Company
with respect to, any defined benefit plan or multiemployer plan, whether or not
maintained by the Company. None of the Plans is an Employee Pension Benefit
Plan.
17
(g) None of the Plans which is an Employee Welfare Benefit Plan provides
benefits to retirees or other former employees of the Company, regardless of
whether such benefits are vested, except to the extent required under ERISA
Section 601 et seq. and Code Section 49808, and the Company has not terminated
any Employee Welfare Benefit Plan providing benefits to retirees. All premiums
or other payments required to be paid for all periods ending on or before the
Closing Date will have been paid on or before the Closing Date with respect to
each such Plan which is an Employee Welfare Benefit Plan.
(h) Other than routine claims for benefits made in the Ordinary Course of
Business, there are no pending claims, investigations or causes of action
("Claims") and to the Knowledge of Mestek, no such Claims are Threatened against
any Plan or fiduciary of any such Plan by any participant, beneficiary or
governmental agency with respect to the qualification or administration of any
such Plan. The Company has complied in all material respects with the applicable
notification and other applicable requirements of the Consolidated Omnibus
Budget Reconciliation Act of 1985, Health Insurance Portability and
Accountability Act of 1996, the Newborns' and Mothers' Health Protection Act of
1996, the Mental Health Parity Act of 1996, and the Women's Health and Cancer
Rights Act of 1998.
(i) The Company has contributed or accrued on its books the amount of any
employer matching contributions or employer discretionary contributions (in an
amount determined in accordance with the Company's past practices) to any tax
qualified defined contribution plan maintained or sponsored by the Company, or
to which the Company has any obligation to contribute and which in the Ordinary
Course of Business would be contributed for or attributable to the period prior
to the Closing Date.
3.18 ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS
(a) For purposes of this Agreement, the capitalized terms defined below
shall have the meanings ascribed to them below.
(i) "Environmental Law(s)" means all federal, state or local law
(including common law), statute, ordinance, rule, regulation, code, or other
requirement relating to the environment, natural resources, or public or
employee health and safety and includes, but is not limited to the Comprehensive
Environmental Response Compensation and Liability Act ("CERCLA"), 42 U.S.C. (S)
9601 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. (S) 1801 et
seq., the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. (S) 6901 et
seq., the Clean Water Act, 33 U.S.C. Section (S) 1251 et seq., the Clean Air
Act, 42 U.S.C. (S) 7401 et seq., the Toxic Substance Control Act, 15 U.S.C. (S)
2601 et seq., the Oil Pollution Act of 1990, 33 U.S.C. (S) 2701 et seq., and the
Occupational Safety and Health Act, 29 U.S.C. (S) 651 et seq., as such laws have
been amended or supplemented, and the regulations promulgated pursuant thereto,
and all analogous state or local statutes and any applicable transfer statutes.
(ii) "Environmental Permits" means all approvals, authorizations,
consents, permits, licenses, registrations and certificates required by any
applicable Environmental Law.
(iii) "Hazardous Substance(s)" means, without limitation, any
flammable explosives, radioactive materials, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products (including but not
limited to waste petroleum and petroleum products), methane, hazardous
materials, hazardous wastes, pollutants, contaminants and
18
hazardous or toxic substances, as defined in or regulated under any applicable
Environmental Law.
(iv) "Release" means any past spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing of a Hazardous Substance into the environment.
(b) Except as disclosed in Schedule 3.18, the Company has obtained and is
in material compliance with all Environmental Permits that are required for the
lawful operation of its business. The Company (i) is in compliance in all
material respects with all terms and conditions of their Environmental Permits
and with any applicable Environmental Law, and (ii) have not received written
notice of any material violation by or material claim against the Company under
any Environmental Law.
(c) Except as disclosed in Schedule 3.18 there have been no Releases, or
threatened Releases, of any Hazardous Substances into, on or under the Real
Property.
(d) Except as disclosed in Schedule 3.18 hereof, the Company has not been
identified as a potentially responsible party at any federal or state National
Priority List ("Superfund") site.
(e) The Real Property contains no friable and non-encapsulated asbestos or
asbestos related materials and contains no Underground Storage Tanks (as that
term is defined in the Environmental Laws).
3.19 BROKERS OR FINDERS
Except as set forth in Schedule 3.19, neither Mestek nor any of its
Representatives has incurred any Liability for brokerage or finders' fees or
agents' commissions or other similar payment in connection with the Contemplated
Transactions.
3.20 CUSTOMERS
(a) Attached hereto as Schedule 3.20 is a true and correct list of the top
ten (10) customers (by dollar amount) of the Company for the calendar year ended
December 31, 1999 and the six (6) months ended June 30, 2000 and the total
dollar amounts billed to such customers. Except as set forth on Schedule 3.20,
the Company has no reason to believe that the volume of business done with any
such customer should decrease materially from the levels set forth on Schedule
3.20 in the twelve months following Closing other than in the Ordinary Course of
Business; however, the customers of the Company typically vary materially from
year to year.
(b) All sale orders and other commitments for sales made by the Company
with its customers have been made in the Ordinary Course of Business. The
Company does not have any obligation to accept returns of products in excess of
the reserve for returns set forth in the June 30, 2000 Unaudited Financial
Statements.
(c) Each product manufactured, sold, leased or delivered by the Company has
been in conformity with all applicable contractual commitments and all material
express and implied warranties, and the Company does not have any material
liability (and to the Knowledge of Mestek there is no reasonable basis for any
present or future claim, action, proceeding or investigation giving rise to a
material liability) for replacement or repair thereof of other damages
19
in connection therewith (not covered by insurance), subject only to the reserves
set forth on the June 30, 2000 Unaudited Financial Statements.
3.21 SUPPLIERS
(a) Attached hereto as Schedule 3.21 is a true and correct list of the top
ten (10) suppliers of the Company (by dollar amount) for the calendar year ended
December 31, 1999 and the six (6) months ended June 30, 2000 and the total
dollar amounts paid to such suppliers.
(b) All purchase orders and other commitments for purchases made by the
Company with its suppliers have been in the Ordinary Course of Business, and no
payments have been made to any supplier or its representatives other than
payments to such suppliers for the invoiced price of products and services
purchased in the Ordinary Course of Business.
3.22 INVENTORY
Except as set forth on Schedule 3.22, all inventory of the Company consists
substantially of a quality, quantity, and condition usable, salable, or leasable
in the Ordinary Course of the Business of the Company, subject to inventory
reserves consistent with those contained in the Financial Statements. All such
inventory has been valued on the Financial Statements at the lower of its cost
or net realizable value, and, except as set forth on Schedule 3.22, all such
inventory is located at the Company's facility in Pelham, New Hampshire.
3.23 PRODUCT LIABILITY AND RECALLS
(a) There is no claim, action, suit, inquiry, proceeding or investigation
in any case by or before any court or governmental body pending or, to the
Knowledge of Mestek, Threatened, against or involving the Company relating to
any product alleged to have been manufactured or sold by the Company and alleged
to have been defective or not manufactured in accordance with applicable
specifications.
(b) There is no pending, or to the Knowledge of Mestek, Threatened recall
or investigation of any product sold by the Company.
3.24 INSURANCE
Schedule 3.24 sets forth a complete and correct list and description of the
policies of insurance in effect on the date hereof covering the assets and
operations of the Company. All such policies are with insurance carriers with
a commercial rating from Best of at least A. Since January 5, 1996, the Company
has not been denied insurance or suffered the cancellation of any insurance.
3.25 BANK ACCOUNTS; SAFE DEPOSIT BOXES; TAX IDENTIFICATION NUMBER
Schedule 3.25 attached hereto and made a part hereof sets forth a complete
and correct list of each account with any bank, trust company, securities broker
or other financial institution with which the Company has any account and all
safe deposit boxes maintained by the Company, the identifying numbers or symbols
thereof, and the name of each person authorized to draw thereon or to have
access thereto. The Company's Federal Tax Identification Number is ▇▇-▇▇▇▇▇▇▇.
20
3.26 GUARANTIES
The Company is not a guarantor for any liability or obligation (including
indebtedness) of any third party.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to Mestek as follows that, as of the date
hereof and on the Closing Date:
4.1 ORGANIZATION
The Buyer is a corporation duly organized, validly existing and in good
standing under the laws of Delaware.
4.2 ENFORCEABILITY; NO CONFLICT
(a) The Buyer has the absolute and unrestricted right, power, and authority
to execute and deliver this Agreement and to perform its obligations under this
Agreement, which actions have been duly authorized and approved by all necessary
corporate actions of the Buyer. Assuming due authorization, execution, and
delivery of this Agreement by Mestek, this Agreement constitutes the legal,
valid, and binding obligation of the Buyer, enforceable against the Buyer in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium, or other similar laws
relating to or affecting the rights of creditors generally and except that the
remedy of specific performance and injunctive relief and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(b) Other than any filing required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, the Buyer is not and will not be required to give any
notice to any Person or obtain any Governmental Authorization or Consent in
connection with the execution and delivery of this Agreement by the Buyer or the
consummation or performance by the Buyer of any of the Contemplated
Transactions.
(c) Neither the execution nor the delivery of this Agreement by the Buyer
nor the consummation or performance of any of the Contemplated Transactions by
the Buyer will directly or indirectly (with or without notice or lapse of time),
Contravene any Contract to which the Buyer is a party or by which the Buyer may
be bound, Governmental Authorization, Legal Requirement, Order to which the
Buyer may be subject, any provision of the Buyer's Organizational Documents, or
any resolution adopted by the board of directors or the stockholders of the
Buyer.
4.3 BROKERS OR FINDERS
Neither the Buyer nor any of its Representatives have incurred any
Liability for brokerage or finders' fees or agents' commissions or other similar
payment in connection with the Contemplated Transactions.
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4.4 FINANCING
Buyer has provided Mestek with a true, accurate and complete copy of the
proposal letter dated August 28, 2000 (the "Proposal Letter") which is the only
third-party document of Buyer related to the source of funds currently
contemplated to be used by Buyer to pay at least ninety-five percent (95%) of
the Purchase Price.
ARTICLE 5
COVENANTS
Mestek and Buyer covenant and agree that, pending the Closing and except as
otherwise agreed to herein or otherwise in writing:
5.1 UPDATE SCHEDULES
Mestek and Buyer shall promptly disclose to each other any information
contained in their respective representations, warranties or Schedules hereto
which, because of an event occurring after the date hereof, is incomplete or is
no longer correct as of all times after the date hereof until the Closing Date.
5.2 CONDITIONS TO CLOSING
Mestek and Buyer shall cooperate with each other and use their Best Efforts
to cause the conditions to Closing contained in Article 6 to be satisfied,
including the curing of the failure of any such condition, and neither will take
any action that causes any of its representations or warranties to become untrue
or inaccurate in any material respect, except that Mestek may take or cause the
Company to take such action if it is required to do so by Legal Requirement.
5.3 REGULATORY CONSENTS
Mestek and Buyer, promptly after execution of this Agreement, shall file
with the applicable Governmental Body all requisite applications for consent to
the Contemplated Transactions. Mestek and Buyer shall promptly and diligently
prosecute all necessary amendments to such applications, briefs, pleadings,
documents, and supporting data, and take all such actions as may be required or
requested by any Governmental Body, or as may be appropriate in an effort to
expedite the grant of such consent.
5.4 HSR FILING
Mestek and Buyer shall cooperate with one another in:
(a) determining whether any filing of Notification and Report Forms under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act ("HSR") is required in connection with the
consummation of the Contemplated Transactions, and
(b) preparing and making such filing and furnishing information required in
connection therewith. If such a filing is required, each Party shall be
responsible for preparing and making its
22
own required filing and each Party shall pay its own filing fees, cost and
expenses associated with making any filing.
5.5 ACCESS
Mestek will, and will cause the Company to, during normal business hours,
afford Buyer and its Representatives and Buyer's Lender and its Representatives
such access to the Company's personnel, properties, books and records, and other
documents and data as Buyer may reasonably request in writing a reasonable
period in advance of the time for which such access is requested.
5.6 CONDUCT OF BUSINESS
Mestek will cause the Company to conduct its business only in the Ordinary
Course of Business, and, will not, except with Buyer's written consent (unless
required to do so by Legal Requirement):
(i) incur or permit to be incurred any obligation or other liabilities
(exclusive of health and property insurance premiums) in excess of $50,000
except for inventory purchases in the Ordinary Course of Business;
(ii) increase the compensation payable or to become payable to any of the
employees of the Company, except for increases in the Ordinary Course of
Business, or otherwise enter into or alter any employment, consulting, or
service agreement with a value in excess of fifty thousand dollars ($50,000);
(iii) commence, enter into, or alter any profit sharing, deferred
compensation, bonus, stock option, stock purchase, pension, retirement, or
incentive plan or any fringe benefit plan for employees of the Company;
(iv) sever or terminate any employees of the Company except for cause or in
the Ordinary Course of Business;
(v) make or commit to any capital expenditure in excess of $50,000 or make
or commit to such expenditures which would, in the aggregate, exceed $100,000;
or
(vi) make any Tax election, execute any waiver of restrictions on
assessment or collection of any Tax, or settle or compromise any tax liability
which may reasonably be expected to have an adverse effect on Buyer or the
Company following Closing in which case Buyer will not unreasonably withhold its
consent.
5.7 CHANGES TO CAPITAL STOCK.
No issuance, sale, pledge, disposition or encumbrance of, or authorization
of the issuance, sale, pledge, disposition or encumbrance of, any shares of
capital stock of any class, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of capital stock of, or any other
ownership interest in the Company will be made, except that Mestek may purchase
the stock in the Company held by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇. If ▇▇▇▇▇▇ does so purchase the
stock in the Company held by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, it will sell that stock to Buyer
pursuant to this Agreement.
23
5.8 DIVIDENDS.
No dividends or other distributions or payments will be declared, set
aside, made or paid in respect of the capital stock of the Company. For the
avoidance of doubt, the Company may repay monies owed to members of the Mestek
Affiliated Group.
5.9 TAX MATTERS.
(a) Mestek shall indemnify and hold harmless Buyer and the Company (i) for
any and all Taxes of the Company with respect to all taxable periods of the
Company ending on or prior to the Closing Date, (ii) all Taxes allocated to
Mestek pursuant to Section 5.9(b) hereof, (iii) the Taxes and other amounts
described in Section 8.9.(a) as being the obligation of Mestek, (iv) for any and
all Taxes imposed on the Company as a result of being included in the Mestek
Affiliated Group, other than as a result of the Company's income and (v) any
losses, damages, assessments, settlements, judgments or reasonable costs and
expenses, arising out of or incident to the imposition, assessment or assertion
of any such Taxes described in clauses (i), (ii), (iii) and (iv) above,
including those incurred in connection with the assertion or defense of any
claim or assessment for such Taxes and penalties and interest thereon
(collectively, "Other Amounts").
(b) It is understood that any taxable income or gain resulting from any
cancellation of Debt and trade payables provided for in this Agreement, if any,
shall be included in the taxable period ending on or prior to the Closing Date
and any Taxes thereon shall be Mestek's responsibility. If, with respect to any
Tax, the taxable period of the Company does not terminate on the Closing Date,
the Tax (whether based on income, capital, ownership of property or otherwise)
attributable to the taxable period of the Company that includes the Closing Date
shall be allocated to (i) Mestek for the period up to and including the Closing
Date; and (ii) the Buyer for the period subsequent to the Closing Date. For
purposes of this section, Taxes for the period up to and including the Closing
Date shall be determined on the basis of a closing of the books as of the
Closing Date, except that any Tax imposed annually based on ownership of assets
on a particular date, or any similar tax, shall be prorated to the period prior
to and including the Closing Date and the period thereafter.
(c) Mestek shall prepare or cause to be prepared in a manner consistent
with past practice, and timely file or cause to be timely filed, all Tax Returns
of the Company with respect to periods ending on or before or including the
Closing Date. In the case of Tax Returns of the Company for periods beginning
on or before and ending after the Closing Date, or any other Tax Returns which
are required to be signed after the Closing Date by an officer of the Company or
which are required to be signed by the Buyer, such Tax Returns shall be provided
to the Buyer, at least twenty (20) days before such Tax Returns are required to
be filed, together with all workpapers utilized in allocating Taxes reported
thereon between the period up to and including the Closing Date and the period
subsequent to the Closing Date.
(d) Any and all Tax sharing agreements or practices among or between the
Company on the one hand and the Mestek or any other Person on the other hand
shall be terminated at or prior to the Closing Date.
(e) All powers of attorney authorizing any party to represent the Company
with respect to Taxes shall be terminated on or before the Closing Date.
(f) Except as otherwise expressly permitted by the terms of this Agreement,
the
24
Company shall not, without the prior written consent of the Buyer, make any
election regarding Taxes that applies to or affects periods after the Closing
Date, execute any waiver of restrictions on assessment or collection of any Tax,
or settle or compromise any claim regarding any Tax liability that applies to or
affect periods after the Closing Date.
5.10 FINANCING
Buyer shall use its Best Efforts to obtain a fully executed (by both Lender
and Buyer) commitment letter and financing in accordance with the terms and
conditions of the Proposal Letter, including but not limited to satisfying all
terms and conditions specified therein. Buyer shall promptly provide a copy of
the fully executed commitment letter to Mestek. Buyer shall promptly notify
Mestek of any change in the identity of the Lender it intends to use and of any
change in the material facts relevant to its ability to obtain financing. Buyer
will use its Best Effort to obtain an extension of such Commitment Letter to
permit the curing of any failure to meet the conditions to Closing. Any
additional fees required by the lender for this extension shall be paid 70% by
Mestek and 30% by Buyer.
5.11 MORTGAGES; DEBT
At or prior to Closing, Mestek will cause all mortgages, liens, pledges,
and security interests on the assets of the Company, other than those with
respect to operating leases, to be released and all of the Company's Debt to be
satisfied.
5.12 WITHDRAWAL
At or prior to Closing, Mestek shall use its Best Efforts to cause the
Company to withdraw its registrations to do business in Florida and
Massachusetts.
5.13 ELIMINATION OF ENCROACHMENT
In the event that Buyer's Lender so requires as a condition of providing
financing, Mestek shall eliminate the encroachment referred to in Schedule 3.10.
5.14 ASSIGNMENT OF INSURANCE AND DEPOSIT REGARDING FLORIDA PRESS
At the Closing Date, Mestek shall assign, waive and relinquish to and in
favor of the Company any and all of its rights (whether as lender, insured or
otherwise) under insurance policy no. 06020540 with Arkwright Mutual Insurance
Company (now known as Factory Mutual Insurance Company) for that certain
property loss claim no. 01341-99-28-02 dated June 15, 1999 with regard to that
certain aluminum extrusion press formerly used by the Company at its now closed
Winter Haven, Florida facility, and shall transfer to the Company the sum of
$350,000 already received from the insurance company on such claim. By virtue
of the foregoing, Buyer will make no claim whatsoever with respect to the value
of the press and related equipment on the books and records of the Company as a
result of the condition of the press giving rise to the Claim.
25
ARTICLE 6
CONDITIONS TO CLOSING
6.1 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
(a) Buyer shall not be required to proceed to Closing of the Contemplated
Transactions unless the following conditions precedent shall have been fulfilled
and satisfied, or waived in writing by Buyer:
(i) Mestek and Buyer shall have received all consents of any Governmental
Body or any other Person necessary to permit the Parties to consummate the
Contemplated Transactions and such consents shall be in full force and effect.
(ii) No temporary restraining order, preliminary or permanent injunction or
other order shall have been issued by any court of competent jurisdiction that
prohibits the consummation of the Contemplated Transactions.
(iii) Any applicable waiting period under HSR relating to the Contemplated
Transactions shall have expired or early termination thereof shall have been
granted.
(iv) There shall have been no Material Adverse Change or Material Adverse
Effect since the date hereof with respect to the Company.
(v) Mestek shall have fully performed in all material respects all
obligations, agreements, conditions and commitments required to be fulfilled by
Mestek pursuant to the terms hereof on or prior to the Closing Date and Mestek
shall have tendered to the Buyer the Shares and other documents, instruments and
certificates required by Article 2 hereof.
(vi) Mestek shall have delivered to Buyer, not more than 35 days after the
Effective Date, the Audited Financial Statements together with the unqualified
opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP with respect to the Audited Financial Statements.
(vii) The 1999 Audited Financial Statements shall not be materially
adversely different (taken as a whole) from the Unaudited Financial Statements
for the same period.
(viii) There shall have been a cancellation all Debt as of the Closing Date
and release of all mortgages, liens, pledges, and security interests, except
with respect to operating leases.
(ix) All representations and warranties of Mestek contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date.
26
(b) In the event the Buyer shall seek not to proceed to Closing wholly or
in part on the basis of noncompliance with this Section 6.1, the Buyer shall
give Mestek notice of such noncompliance and opportunity to cure such
noncompliance (if such noncompliance is susceptible of being cured by Mestek)
within thirty (30) days of such notice, provided that if Buyer's Lender does not
agree to extend its Commitment Letter for such period, Buyer shall be entitled
to return of the Initial Deposit and Mestek shall have no further liability as a
result of Mestek's failure to satisfy such condition.
6.2 CONDITIONS PRECEDENT TO MESTEK'S OBLIGATIONS
(a) Mestek shall not be required to proceed to Closing of the Contemplated
Transactions unless the following conditions precedent shall have been fulfilled
and satisfied, or waived in writing by Mestek:
(i) Mestek and Buyer shall have received all consents of any
Governmental Body necessary to permit the Parties to consummate the Contemplated
Transactions.
(ii) No temporary restraining order, preliminary or permanent
injunction or other order shall have been issued by any court of competent
jurisdiction that prohibits the consummation of the Contemplated Transactions.
(iii) Any applicable waiting period under HSR relating to the
Contemplated Transactions shall have expired or early termination thereof shall
have been granted.
(iv) The Buyer shall have fully performed in all material respects all
obligations, agreements, conditions and commitments required to be fulfilled by
the Buyer pursuant to the terms hereof on or prior to the Closing Date and the
Buyer shall have tendered to Mestek the documents, instruments and certificates
required by Article 2 hereof.
(b) In the event Mestek shall seek not to proceed to Closing wholly or in
part on the basis of noncompliance with this Section 6.2, Mestek shall give
Buyer notice of such noncompliance and opportunity to cure such noncompliance
(if such noncompliance is susceptible of being cured by Buyer) within thirty
(30) days of such notice.
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ARTICLE 7
INDEMNIFICATION; SURVIVAL; LIMITATION OF LIABILITY
7.1 INDEMNIFICATION BY MESTEK.
Subject to the limits set forth in this Article 7, Mestek agrees to
indemnify, defend and hold harmless the Buyer and its affiliates, officers,
directors, employees, agents, successors and assigns (the Buyer and such persons
are collectively hereinafter referred to as the "Buyer's Indemnified Persons"),
from and against any and all loss, liability, damage or deficiency (including
interest, penalties, costs of preparation and investigation, and reasonable
attorneys' and expert witness fees) (collectively, "Losses") that the Buyer's
Indemnified Persons may suffer, sustain, incur or become subject to arising out
of or due to: (a) any breach of any representation or warranty of Mestek in
this Agreement, any schedule, or any certificate delivered pursuant hereto; (b)
the breach of any covenant, undertaking, agreement or other obligation of Mestek
under this Agreement, any schedule, or any certificate delivered pursuant hereto
not otherwise waived in writing by the Buyer; (c) the Company or its
predecessor's ownership, tenancy or occupancy of, or operation of any business
from, any real property other than the Company's current facility in Pelham, New
Hampshire, including, without limitation, any claim related to the presence of
any and all environmental conditions, environmental liabilities or Hazardous
Substances at, in, by, from, or related to any such facilities, or the Release,
recycling, reclamation, incineration, or the arrangement of transportation or
disposal by the Company of any Hazardous Substances that occurs on or before the
Closing Date; (d) litigation against the Company existing on, or relating to the
conduct of the business of the Company prior to, the Closing Date (except for
litigation relating to products manufactured, sold, leased or delivered within
the sixty (60) day period preceding the Closing Date); and (e) any OSHA claims
existing at or prior to Closing, provided that if not installed prior to the
Closing, Buyer causes the Company to install the dust collector being purchased
by the Company to complete the abatement process.
7.2 INDEMNIFICATION BY THE BUYER.
Subject to the limits set forth in this Article 7, the Buyer agrees to
indemnify, defend and hold Mestek and its successors and assigns (Mestek and
such persons are hereinafter collectively referred to as the "Mestek's
Indemnified Persons"), harmless from and against any and all Losses that
Mestek's Indemnified Persons may suffer, sustain, incur or become subject to
arising out of or due to: (a) any breach of any representation or warranty of
the Buyers in this Agreement, any schedule or exhibit hereto, or any certificate
delivered pursuant hereto; (b) the breach of any covenant, undertaking,
agreement or other obligation of the Buyers under this Agreement, any schedule
or exhibit hereto, or any certificate or other document delivered pursuant
hereto not otherwise waived in writing by Mestek; or (c) any litigation relating
principally to the conduct of the business of the Company after the Closing
Date.
7.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; DEDUCTIBLE.
The representations and warranties of the parties contained in this
Agreement shall survive the Closing Date and shall remain in full force and
effect thereafter until December 31, 2001 (except that the representations and
warranties contained in Sections 3.3, 3.4, and 3.16 shall
28
survive until the expiration of the applicable statutes of limitations and the
representations and warranties contained in Section 3.18 shall survive until
December 31, 2003), and shall be effective with respect to any breach thereof,
notice of which shall have been duly given within such periods in accordance
with Section 7.4 hereof, after which periods they shall terminate and be of no
further force or effect. Anything to the contrary contained herein
notwithstanding, Buyer shall not be entitled to any recovery from Mestek for the
breach of any representation or warranty or any covenant contained in Sections
5.1 through 5.5, until the amount of damages suffered by Buyer, or to which
Buyer becomes subject, calculated on a cumulative basis and not a per item basis
(the "Basket Amount"), shall exceed $375,000, at which time all claims in excess
of the Basket Amount may be claimed, but in no event shall Mestek be liable to
Buyer, in an aggregate amount in excess of $20,000,000 (the "Cap Amount") for
such claims. Notwithstanding the foregoing, the Basket Amount for claims under
Sections 5.9 and 8.9 shall be ten thousand dollars ($10,000). For purposes of
determining whether a Basket Amount has been met and for calculating Buyer's
damages, the representations and warranties of Mestek shall be interpreted as if
the word "material" was not included. The Basket Amount and Cap Amount shall not
be applicable to claims arising from any willful misconduct or fraud by Mestek.
7.4 NOTICE AND OPPORTUNITY TO DEFEND.
If there occurs an event which either party asserts is an indemnifiable
event pursuant to Sections 7.1 or 7.2 hereof, the party seeking indemnification
(the "Indemnitee") shall notify the party obligated to provide indemnification
(the "Indemnitor") promptly. If such event involves (a) any claim, or (b) the
commencement of any action or proceeding by a third person, the Indemnitee shall
give the Indemnitor written notice of such claim or the commencement of such
action or proceeding. Delay or failure to so notify the Indemnitor shall only
relieve the Indemnitor of its obligations to the extent, if at all, that it is
prejudiced by reasons of such delay or failure. The Indemnitor shall have a
period of 30 days within which to respond thereto. If the Indemnitor accepts
responsibility, then the Indemnitor shall be obligated to compromise or defend,
at its own expense and by counsel chosen by the Indemnitor and reasonably
satisfactory to the Indemnitee, such matter, and the Indemnitor shall provide
the Indemnitee with such assurances as may be reasonably required by the
Indemnitee to assure that the Indemnitor will assume and be responsible for the
entire liability at issue, subject to the limitations set forth in this Article
7. If the Indemnitor does not respond within such 30-day period or rejects
responsibility for such matter in whole or in part, the Indemnitee shall be free
to pursue, without prejudice to any of its rights hereunder, such remedies as
may be available to the Indemnitee under applicable law. The Indemnitee agrees
to cooperate fully with the Indemnitor and its counsel in the defense against
any such asserted liability. In any event, the Indemnitee shall have the right
to participate at its own expense in the defense of such asserted liability.
Any compromise of such asserted liability by the Indemnitor shall require the
prior written consent of the Indemnitee (such consent not to be unreasonably
withheld or delayed), and until such consent is obtained the Indemnitor shall
continue the defense of such asserted liability. If, however, the Indemnitee
refuses its consent to a bona fide offer of settlement which involves the
payment of money only which the Indemnitor wishes to accept, the Indemnitee may
continue to pursue such matter, free of any participation by the Indemnitor, at
the sole expense of the Indemnitee. In such event, the obligation of the
Indemnitor to the Indemnitee shall be equal to the lesser of (i) the amount of
the offer of settlement which the Indemnitee refused to accept, and (ii) the
actual out-of-pocket amount the Indemnitee is obligated to pay as a result of
the Indemnitee's continuing to pursue such matter. The Indemnitor shall be
entitled to recover from the Indemnitee any additional expenses incurred by the
Indemnitor as a result of the decision of the Indemnitee to pursue such matter.
29
ARTICLE 8
FURTHER COVENANTS OF THE PARTIES
8.1 EMPLOYEES
(a) Other than those employees of the Company terminated for a "cause" (as
defined below) or who voluntarily resign, Buyer shall continue the employment of
all employees of the Company effective as of the Closing (including without
limitation employees on approved leave of absence or short-term disability
leave) (the "Business Employees") at compensation levels and under terms and
conditions that are comparable to their compensation levels and terms and
conditions of employment immediately prior to the Closing Date and shall
continue the employment of all Business Employees for at least four weeks from
the Closing Date. For purposes of the preceding sentence, "cause" shall mean any
conduct which disqualifies such person from receiving unemployment benefits.
Business Employees who choose to continue their employment with the Company are
referred to herein as "Transferred Employees". It is understood that Buyer shall
have no obligation to continue the employment of any Transferred Employee for
any definite period beyond four weeks from Closing except to the extent provided
in an employment agreement (all of which Mestek has set forth on Schedule
8.1(a)) between such Transferred Employee and the Company. Except to the extent
prohibited by applicable law, Buyer shall cause Transferred Employees to be
credited with their years of service with the Company for purposes of
eligibility and vesting under any employee benefit or fringe benefit plan,
program or arrangement maintained or contributed to by Buyer (including, but not
limited to, pension or retirement benefits, vacation, profit sharing, 401(k), or
other benefits), and for purposes of determining the amount of benefits under
any sick leave, vacation or severance plan, program or arrangement. Buyer will
cover Transferred Employees as of the Closing under a group health plan to the
same extent and at comparable premiums as provided by the Company immediately
prior to the Closing and will waive any waiting period and preexisting condition
limitations applicable to Transferred Employees under such group health plan to
the extent that a Transferred Employee's condition would not have operated as a
preexisting condition limitation under any applicable group health plan of or
sponsored by the Company prior to the Closing, and Buyer will take all action
necessary to ensure that Transferred Employees are given full credit for all co-
payments and deductibles incurred under any group health Plan for the plan year
that includes the Closing Date.
(b) Effective as of the Closing Date, Mestek agrees that it will cause the
account balance, if any, of each Business Employee under the Mestek, Inc.
Savings & Retirement Plan (the "Mestek 401(k) Plan") to be fully vested. Buyer
agrees to cause the Transferred Employees to be eligible to participate as of
the Closing Date under a qualified defined contribution plan that includes a
qualified cash or deferred arrangement that is maintained by Buyer or its
Affiliated Group ("Buyer's 401(k) Plan"). Buyer further agrees to cause Buyer's
401(k) Plan to accept a direct rollover of the vested account balances under the
Mestek 401(k) Plan, if any, of the Transferred Employees, including promissory
notes evidencing participant loans that may be held as assets of such account
balances, and to cause the trustee of the Buyer's 401(k) Plan to accept an
assignment of such promissory notes, provided that no employee shall be
permitted to have more than one such loan outstanding. As of the Closing Date,
the Company shall cease to be an adopting employer under the Mestek 401(k) Plan.
Mestek, the Company and Buyer agree to take
30
all action necessary to terminate the participation of the Company in the Mestek
401(k) Plan as of the Closing Date. Mestek will be responsible for any
contributions required to be made under the Mestek 401(k) plan for all eligible
employees for the periods prior to Closing.
(c) Buyer agrees to cause the Transferred Employees to be eligible to
participate as of the Closing Date under a cafeteria plan described in Code
Section 125 that is maintained by Buyer or its Affiliated Group.
(d) To the extent not in the Company's possession or control, Mestek shall
cause Union Savings Bank Account number 690022601 related to the Company's
medical benefit plan for salaried employees to be transferred to the possession
or control of the Company.
8.2 EXPENSES
Except as otherwise expressly provided in this Agreement, each Party will
bear its respective expenses incurred in connection with the preparation,
execution, and performance of this Agreement and the Contemplated Transactions,
including all fees and expenses of its Representatives.
8.3 PUBLIC ANNOUNCEMENTS
Until consummation of the Closing, any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, (i) in the form attached hereto as Schedule 8.3, if any, or (ii) at
such time and in such manner as Mestek and the Buyer otherwise mutually
determine. Until consummation of the Closing, Mestek and the Buyer will not and
will not permit the Company to make any disclosure of the Purchase Price or
other terms of the Contemplated Transactions to any Person, except with the
prior written consent of the other Parties or as required by Legal Requirements.
Until the consummation of the Closing, Mestek and the Buyer will consult with
each other concerning the means by which the Company's employees, customers,
suppliers and others having dealings with the Company will be informed of the
Contemplated Transactions, and Mestek and the Buyer will have the right to be
present for any such communication. Nothing contained herein shall prohibit
either party from disclosing the terms and conditions of this Agreement to the
extent required by Legal Requirement or stock exchange or NASDAQ rules.
8.4 FURTHER ASSURANCES
The Parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, (c)
to provide access to personnel, books, and records, and (d) to do such other
acts and things, as the other Parties may reasonably request for the purpose of
carrying out the intent of this Agreement and the Contemplated Transactions.
8.5 NONCOMPETITION
(a) Covenant. Mestek agrees that for a period of four years and six
months (4.5 years) from the Closing Date, neither it nor any of its Affiliates
shall do any of the following:
(i) without the prior written consent of the Buyer, engage in,
directly or indirectly, as an owner, partner, or consultant, any Competing
Business (as defined below);
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(ii) employ any employee of the Company, or any person who was such an
employee at any time during the preceding one (1) year, other than persons
terminated by the Company or persons not employed by the Company as of the
Closing Date, nor directly seek to persuade any such employee or former employee
to become employed by any Competing Business.
(b) Definition of "Competing Business". For purposes of this Section 8.5,
"Competing Business" shall refer to the manufacture and sale of aluminum
extrusions and aluminum heat sinks. Nothing contained herein shall prohibit
Mestek from selling HVAC products and metal forming machinery that utilize
aluminum extrusions or aluminum heat sinks as parts or components of such HVAC
products or metal forming machinery.
(c) Definition of "Affiliate". For purposes of this Section 8.5,
"Affiliate" shall mean any person who controls, is controlled by, or is under
common control with Mestek.
(d) Mestek acknowledges that its failure to comply with the provisions of
Section 8.5(a) will result in irreparable and continuing damage for which there
will be no adequate remedy at law.
8.6 CONFIDENTIALITY
(a) For the purpose of this Agreement, confidential or proprietary
information ("Proprietary Information") shall mean the information created,
transferred, recorded or employed as part of, or otherwise resulting from the
activities undertaken pursuant to this Agreement or the Schedules and Exhibits
hereto which constitutes the confidential, proprietary or trade secret
information of the disclosing Party. Such information may be of, but not limited
to, a business, organizational, technical, financial, marketing, operational,
regulatory or sales nature and shall include, without limitation, any and all
source codes and information relating to services, methods of operation, price
lists, customer lists, technology, designs, specifications or other proprietary
information of the business or affairs of a Party, its parent, or its affiliated
and subsidiary companies. Proprietary Information may either be in a written
form, with notices of its proprietary nature affixed, or in an oral form,
reduced to writing and affixed with appropriate notice of proprietary nature
within seven days of oral presentation, and distributed to both Parties for the
matter of record, but indicated as such at the time of presentation in an oral
fashion.
(b) The Parties understand and agree that all Proprietary Information shall
be treated as confidential. The receiving Party shall use the same degree of
care as it uses with regard to its own Proprietary Information to prevent
disclosure, use or publication of the disclosing Party's Proprietary
Information.
(c) Proprietary Information of the originating Party shall be held by the
receiving Party as described in Section 8.6(b) above unless it is or has been:
(i) obtained legally and freely from a third party without restriction;
(ii) independently developed by the receiving Party at a prior time or
in a separate and distinct manner without benefit of any of the Proprietary
Information of the disclosing Party, and documented to be as such;
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(iii) made available by the disclosing Party for general release
independent of the receiving Party;
(iv) made public as required by law, applicable regulations or court
proceedings or stock exchange requirements;
(v) within the public domain or later becomes part of the public domain
as a result of acts by someone other than the receiving Party and through no
fault or wrongful act of the receiving Party.
(d) Limited Disclosure: A receiving Party may disclose Proprietary
Information of a disclosing Party to directors, officers, and employees of the
receiving Party or agents of the receiving Party including their respective
brokers, lenders, insurance carriers or prospective purchasers who have
specifically agreed in writing to nondisclosure of the terms and conditions
hereof. Any disclosure hereof required by legal process pursuant to Section
8.6(c)(iv) above shall only be made after providing the disclosing Party with
notice thereof in order to permit the disclosing Party to seek an appropriate
protective order or exemption. Violation by a Party or its agents of the
foregoing provisions shall entitle the disclosing Party, at its option, to
obtain injunctive relief without a showing of irreparable harm or injury and
without bond.
(e) Nothing contained herein shall prohibit Buyer from disclosing any
information regarding the Company solely, following Closing. For avoidance of
doubt, the right to disclose in the preceding sentence shall not include
disclosure of information relating to Mestek, including but not limited to Forms
5500, Forms 1120, and experience of the Company under lease and occupancy of
properties in Florida and Massachusetts prior to Closing.
(f) Survival: The provisions of this Section 8.6 will be effective for a
period of two (2) years after the Closing Date.
8.7 BLANK CHECK STOCK
Immediately upon Closing, the Buyer shall cause the company to cease using
all Mestek checks, and shall promptly thereafter return all Mestek blank check
stock to Mestek.
8.8 ACCOUNTS
Mestek hereby agrees that effective at 11:59:00 PM on the day immediately
preceding the Closing Date it will have no further rights with respect to the
following commercial banking accounts at Fleet Bank (#▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
38103040) and further agrees that it will instruct Fleet Bank to sever such
accounts from its cash management system such that cash receipt and cash
disbursement activity occurring subsequent to 11:59:00 PM on such date is for
the account of the Company and will not affect the account of Mestek, Inc.
Mestek agrees however that all of such outstanding checks which shall exist at
the Closing Date, generated in the Ordinary Course of Business, are obligations
of Mestek and Mestek hereby agrees to fund such clearing checks on a daily basis
beginning on the day after the Closing Date until all such outstanding checks
shall have cleared.
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8.9 TAXES
(a) If and to the extent requested by Buyer, Mestek and Buyer shall join in
an election to have the provisions of Section 338(h)(10) of the Code and similar
provisions of state or local or foreign law ("Section 338 Elections") apply to
the acquisition of the shares of the company. Buyer shall be responsible for,
and control, the preparation and filing of such election. The allocation of
purchase price among the assets of Company shall be made in accordance with Code
Sections 338 and 1060 and any comparable provisions of state, local or foreign
law, as appropriate. Mestek shall accept Buyer's determination of such purchase
price allocations if the allocations are based upon substantial legal authority
and reasonably in accordance with Code Section 338 and any comparable provisions
of state, local, or foreign law, and Mestek and Buyer shall report, act, and
file in all respects and for all purposes consistent with such determination.
Mestek shall execute and deliver to Buyer such documents or forms (including
Section 338 forms, as defined below) as Buyer shall request or as are required
by applicable law for an effective 338(h)(10) Election. "Section 338 Forms"
shall mean all returns, documents, statements, and other forms that are required
to be submitted to any federal, state, county or other local taxing authority in
connection with a 338(h)(10) Election, including, without limitation, any
"Statement of Section 338 Election" and IRS Form 8023 (together with any
schedules or attachments thereto) that are required pursuant to Treasury
Regulations.
(b) Mestek also shall pay any tax attributable to the making of the
Section 338(h)(10) Election with respect to the purchase and sale of the Shares
of the Company, including, but not limited to, (a) any Tax imposed under Treas.
Reg. (S) 1.338(h)(10)-1T(d)(2), Treas. Reg. (S) 1.1502-6, or (b) any state or
local Tax imposed on the Company as a result of the Section 338(h)(10) Election,
and shall be responsible for any transfer, sales, or use Taxes or notarial or
similar fees arising as a result of the sale of the Shares of the Company.
(c) Mestek 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 of the Company (a "Tax Claim") or assert and prosecute
any claim for refund of Taxes for taxable periods ending on or before the
Closing Date. In addition, Mestek shall be entitled to participate at its own
expense in the defense of any Tax Claim relating to any year or period that
includes the Closing Date for which Mestek may be required to pay amounts to
Buyer pursuant to this Section 8.9, and Mestek may, at his sole expense, assume
the entire defense of such Tax Claim. If Mestek has assumed the defense of a
Tax Claim, it shall have the sole and unfettered right to direct such defense
and neither Buyer nor the Company may agree 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 Mestek (which shall not be unreasonably withheld or
delayed) if, with respect to such claim, Mestek would be required to pay amounts
to Buyer pursuant to this Section 8.9. Buyer agrees to ▇▇▇▇▇ ▇▇▇▇▇▇ a power of
attorney to the extent necessary to effectuate Mestek's rights under this
Section 8.9. Notwithstanding the foregoing, Mestek will not settle any Tax
Claim without Buyer's consent, which shall not be unreasonably withheld or
delayed.
34
(d) Buyer and the Company each agree to give prompt notice to Mestek 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. Mestek,
Buyer and the Company shall 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 combined or separate Tax Return for
such periods.
8.10 SUPPLY OF PRODUCTS
During the four months following the Closing Date, Buyer shall cause the
Company to supply Mestek at comparable delivery time with products of comparable
quality in quantities and on terms and conditions (which give effect to
fluctuations in aluminum prices based on the published standard used by the
Company) at which the Company currently supplies such products to Mestek, less a
discount of 20%. For the 32 months thereafter, Buyer shall cause the Company to
continue supplying such products to Mestek at prices equal to 20% less than the
lowest price the Company charges for similar products in similar quantities at
such time ("MFN Price"). In the event that the aggregate discounts actually
taken by Mestek under this Section in either of the first two twelve month
periods following Closing under this Section shall not exceed $400,000, Buyer
shall cause the Company to pay to Mestek on or before the end of the 14th and
26th month following Closing, respectively, such difference. If the aggregate
discounts actually taken by Mestek under this Section in the third year
following Closing do not exceed $400,000 because of the Company's failure to
offer a discount of at least 20% of MFN Prices or failure to timely deliver
products of at least equal quality currently supplied by the Company, or any
other material failure of the Company's contractual obligations with respect to
such products, Buyer shall cause the Company to pay Mestek on or before the end
of the 38th month following Closing, the differential. In no event shall Mestek
be entitled to discounts under this Section in excess of $400,000 in any one
twelve month period, or in excess of $1,200,000 in the 36 months, following
Closing. In order to avail itself of, and be entitled to, the discounts
provided herein with respect to any particular order, Mestek shall pay for such
orders within 45 days of shipment unless it has a bona fide dispute with respect
to such shipment.
8.11 BOOKS AND RECORDS DELIVERY AND ACCESS
(a) Mestek shall deliver to Buyer originals or copies of all books and
records related to the Company in its possession (other than books and records
relating to the Contemplated Transactions).
(b) Buyer and Mestek agree that so long as (i) any books, records and files
retained by Mestek relating to the business of Company, or (ii) the books,
records and files delivered to the control of Buyer pursuant to this Agreement
to the extent they relate to the operations of Company prior to the Closing
Date, or (iii) with respect to verification of the MFN Price under Section 8.10,
any books, records, and files of the Company relating to the operations of the
Company after the Closing Date, remain in existence and available, each Party
(at its expense) shall have the right upon prior notice to inspect and to make
copies of the same at any time during business hours for any proper purpose.
Buyer and Mestek shall use reasonable efforts not to destroy or allow the
destruction of any such books, records and files without first offering in
writing to deliver them to the other.
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ARTICLE 9
GENERAL PROVISIONS
9.1 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed given to a Party when (a)
delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid); (b) sent by facsimile with
confirmation of transmission by the transmitting equipment; or (c) received or
rejected by the addressee, if sent by certified mail, return receipt requested;
in each case to the following addresses, facsimile numbers and marked to the
attention of the individual (by name or title) designated below (or to such
other address, facsimile number, or individual as a Party may designate by
notice to the other Parties):
Mestek:
Mestek, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
Attention: R. ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Buyer:
Alpha Technologies Group, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Alpha Technologies Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
36
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
9.2 INCORPORATION OF SCHEDULES
The Schedules identified in this Agreement are incorporated herein by
reference and made a part of this Agreement.
9.3 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements among the Parties with
respect to its subject matter and constitutes (along with the documents
delivered pursuant to this Agreement) a complete and exclusive statement of the
terms of the agreement between the Parties with respect to its subject matter.
This Agreement may not be amended, supplemented or otherwise modified except by
a written agreement executed by the Party to be charged with the amendment.
9.4 DISCLOSURE SCHEDULE
(a) In the event of any inconsistency between the statements in the
body of this Agreement and those in any Mestek disclosure Schedule (other than
an exception expressly set forth as such in a Mestek disclosure Schedule with
respect to a specifically identified representation or warranty), the statements
in the body of this Agreement will control.
(b) Disclosure on any particular Mestek disclosure Schedule which is an
exception to a representation and warranty in the Agreement (or disclosure in
any representation in the Agreement) shall be deemed to be disclosure for
purposes of any other Schedule, representation or warranty, and vice-versa, to
the extent the subject matters of the Schedule(s), representation(s), or
warranty(ies) are related in such a manner that a reasonable person would
recognize a relationship.
9.5 TERMINATION
(a) If the Closing Date has not occurred within one hundred twenty
(120) days of the Effective Date, Mestek may terminate this Agreement without
liability, provided that Mestek is not in material breach of this Agreement and
has fulfilled all of its obligations which are a condition to closing this
Agreement at least 30 days prior to such termination. Time is of the essence
with respect to this Section 9.5(a).
(b) Either Party may terminate the Agreement immediately upon written
notice to the other Party in the event that proceedings in bankruptcy or
insolvency are instituted by or against the other Party, or a receiver of the
other Party is appointed, or if any substantial part of the assets of the other
Party is the subject of attachment, sequestration or other type of comparable
proceeding, and such proceeding is not vacated or terminated within sixty (60)
days after its commencement or institution or such other Party provides adequate
security to assure the performance of its obligations under this Agreement.
37
9.6 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
9.7 ASSIGNMENTS, SUCCESSORS, AND NO THIRD PARTY RIGHTS
No Party may assign any of its rights or delegate any of its obligations
under this Agreement without the prior written consent of the other Parties,
which will not be unreasonably withheld. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon, and inure to the
benefit of each of Mestek's successors and permitted assigns (whether by merger,
consolidation, purchase of all or substantially all of its assets or otherwise)
and the Buyer's successors and permitted assigns (whether by merger,
consolidation, purchase of all or substantially all of its assets or otherwise).
Nothing expressed or referred to in this Agreement will be construed to give any
Person, other than the Parties, any legal or equitable right, remedy, or claim
under or with respect to this Agreement or any provision of this Agreement
except such rights as shall inure to a successor or permitted assignee pursuant
to this Section.
9.8 WAIVER
The rights and remedies of the Parties are cumulative and not alternative.
Neither any failure nor any delay by any Party in exercising any right, power,
or privilege under this Agreement or any of the documents referred to in this
Agreement will operate as a waiver of such right, power, or privilege, and no
single or partial exercise of any such right, power, or privilege will preclude
any other or further exercise of such right, power, or privilege or the exercise
of any other right, power, or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right arising out of this Agreement or any of
the documents referred to in this Agreement can be discharged by one Party, in
whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other Party; (b) no waiver that may be given by a Party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one Party will be deemed to be a waiver of any
obligation of that Party or of the right of the Party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
9.9 GOVERNING LAW; EXCLUSIVE JURISDICTION; SERVICE OF PROCESS ATTORNEYS FEES
This Agreement has been negotiated in, and will be governed by and
construed under the laws of the State of New York, USA without regard to
conflicts of laws principles that would require the application of any other
law. Any action or proceeding seeking to enforce any provision of, based on any
right arising out of, or directly or indirectly relating to this Agreement may
be brought against any of the Parties solely in the Federal District Court for
the Southern District of New York or the Commercial Division of the Supreme
Court, New York County, State of New York, and each of the Parties consents to
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any such proceeding may be served on any Party by notice given to the
Party in
38
accordance with Section 9.1. In the event of any dispute hereunder, as part of
any judgement, the substantially prevailing party shall be entitled to recover
its reasonable attorneys' fees and expert witness fees. Prior to bringing any
action, the complaining Party will give written notice of the dispute to the
other Party, providing reasonable detail thereof. For a period of thirty (30)
days after receipt of such notice by the other Party, each Party shall devote
its Best Efforts to resolving the dispute in an amicable fashion. In the event
that the dispute remains unresolved at the end of such thirty (30) day period,
the complaining Party shall be entitled to commence its action or proceeding.
Notwithstanding the foregoing, either Party may commence an action for
preliminary injunctive relief without regard for the thirty (30) day period
described in the preceding two sentences.
9.10 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.
The Parties have executed and delivered this Agreement as of the date
indicated in the first sentence of this Agreement.
ALPHA TECHNOLOGIES GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
[Name] ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
[Title] Chairman and CEO
MESTEK, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
------------------------------
[Name] ▇▇▇▇ ▇. ▇▇▇▇
[Title] President & CEO
39