EXHIBIT 2.4
STOCK PURCHASE AGREEMENT
DATED AS OF JULY 15, 1997
BY AND AMONG
INNOVATIVE VALVE TECHNOLOGIES, INC.,
AND
INDUSTRIAL CONTROLS & EQUIPMENT, INC.,
VALVE ACTUATION & REPAIR CO.,
RICKCO ACQUISITION, INC.,
BAS TECHNICAL EMPLOYMENT PLACEMENT COMPANY
AND
SYNERGISTIC PARTNERS, INC.
AND
THE STOCKHOLDERS NAMED HEREIN
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into
effective the 15th day of July, 1997, by and among INNOVATIVE VALVE
TECHNOLOGIES, INC. ("INVATEC"), a Delaware corporation, SYNERGISTIC PARTNERS,
INC., a Pennsylvania corporation, ("Synergistic Partners"), SYNERGISTIC
ENTERPRISES, INC., a Delaware corporation ("Synergistic Enterprises"), ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, an individual ("▇▇. ▇▇▇▇▇▇▇▇▇▇"), (Synergistic Enterprises and ▇▇.
▇▇▇▇▇▇▇▇▇▇ being sometimes hereinafter referred to collectively as the
"Stockholders" and individually as a "Stockholder"), INDUSTRIAL CONTROLS &
EQUIPMENT, INC., a Pennsylvania corporation ("ICE"), VALVE ACTUATION & REPAIR
CO., a West Virginia corporation ("VARCO"), RICKCO ACQUISITION, INC., a West
Virginia corporation d/b/a BAS Technical Services ("BTS"), and BAS TECHNICAL
EMPLOYMENT PLACEMENT COMPANY, a West Virginia corporation ("BTEP") (ICE, VARCO,
BTS and BTEP being hereinafter referred to individually and collectively as the
"Company"). INVATEC, Synergistic Partners, Stockholders and the Company are
sometimes hereinafter referred to collectively as the "Parties" or individually
as a "Party."
PRELIMINARY STATEMENT
WHEREAS, (a) Synergistic Enterprises is the legal and beneficial owner
and holder of (i) two thousand (2,000) shares of the Common Stock of ICE, (ii)
one hundred (100) shares of the Common Stock of VARCO, (iii) five hundred (500)
shares of the Common Stock of BTS, and (iv) seventy-five (75) shares of the
Common Stock of BTEP, and (b) ▇▇. ▇▇▇▇▇▇▇▇▇▇ is the legal and beneficial owner
and holder of twenty-five (25) shares of the Common Stock of BTEP (collectively,
the "Subject Shares"), the Subject Shares constituting all of the issued and
outstanding common stock of the Company; and
WHEREAS, INVATEC desires to acquire from Stockholders, and Stockholders
desire to sell to INVATEC, all of the Subject Shares, on the terms and
conditions and for the consideration set forth in this Agreement (the
"Acquisition"), which Acquisition will be consummated substantially concurrently
with a public offering of shares of common stock of INVATEC; and
WHEREAS, the Parties understand that INVATEC may enter into other
agreements similar to this Agreement (the "Other Agreements") for the
acquisition by INVATEC of other entities (collectively, the "Other Acquired
Businesses," and each of those entities, individually, an "Other Acquired
Business"), which Other Agreements will be among those entities and their equity
owners, INVATEC and subsidiaries of INVATEC; and
WHEREAS, the respective boards of directors of INVATEC, Synergistic
Partners, Synergistic Enterprises and the Company, and the sole shareholder of
Synergistic Enterprises, have approved and adopted this Agreement;
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NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations and undertakings contained herein, the Parties
hereby agree as follows:
Paragraph 1. CERTAIN DEFINED TERMS. As used in this Agreement,
the following terms have the meanings assigned to them below in this Paragraph
1. Capitalized terms used in this Agreement and not defined below in this
Paragraph 1 have the meanings assigned to them in the Preliminary Statement or
Article IX of the Standard Provisions, as the case may be.
"ACCOUNTING FIRM" means KPMG Peat Marwick LLP, in Pittsburgh,
Pennsylvania.
"ACQUIRED BUSINESS" means the business conducted by the Company.
"ACQUISITION CONSIDERATION" has the meaning specified in
Paragraph 2.
"CANON CONSULTING AGREEMENT" means the Consulting and
Noncompetition Agreement to be entered into as of the IPO Closing Date
between INVATEC and Mr. Canon in the form attached hereto as Exhibit A.
"CEILING AMOUNT" means, (i) for Synergistic Enterprises, an
amount equal to the aggregate of (a) the amount of the Acquisition
Consideration, as same may be adjusted after Closing pursuant to
Paragraph 5, plus (b) the net Intercompany Indebtedness as of the IPO
Pricing Date paid by the Company under Paragraph 2D, or minus (c) the
Net Stockholder Indebtedness paid to the Company under Paragraph 2D, and
(ii) for ▇▇. ▇▇▇▇▇▇▇▇▇▇, an amount equal to the amount of the
Acquisition Consideration, as same may be adjusted after Closing
pursuant to Paragraph 5.
"CHARLESTON FACILITY LEASE AMENDMENT" means the lease amendment
contemplated by Paragraph 6(E).
"CLOSING" has the meaning specified in Paragraph 3.
"CLOSING DATE" means the IPO Pricing Date or such other date as
to which INVATEC and the Stockholders may agree.
"CLOSING MEMORANDUM" means the form of closing memorandum to be
prepared by INVATEC for the Closing under this Agreement in which are
included the forms of ▇▇▇▇▇▇▇▇▇▇ Employment Agreement, Canon Consulting
Agreement, Computer System Lease, ▇▇▇▇▇▇▇▇ Facility Sublease, Charleston
Facility Lease Amendment, Confidentiality and Non-Competition
Agreements, Guaranty of Performance, certificates of officers, opinions
of counsel and certain other documents to be delivered at the Closing as
provided in Article V, each of which shall be in the form attached
hereto as an Exhibit or, if not so attached, in the form mutually agreed
upon by the parties thereto.
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"COMPANY" has the meaning specified in the preamble of this
Agreement.
"COMPANY CAPITAL STOCK" means (i) the Common Stock, par value
$1.00 per share, of ICE, (ii) the Common Stock, par value $1.00 per
share, of VARCO, (iii) the Common Stock, par value $100.00 per share, of
BTS, and (iv) the Common Stock, par value $10.00 per share, of BTEP.
"COMPUTER SYSTEM LEASE" means the lease contemplated by
Paragraph 6(F).
"CONFIDENTIALITY AND NON-COMPETITION AGREEMENTS" means the
Confidentiality and Non-Competition Agreements to be entered into as of
the IPO Closing Date between (a) the Company and Synergistic Partners,
in the form thereof attached hereto as Exhibit B-1, (b) the Company and
Synergistic Enterprises, in the form thereof attached hereto as Exhibit
B-2, and (c) the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, in the form thereof
attached hereto as Exhibit B- 3.
"COUNSEL FOR THE COMPANY AND THE STOCKHOLDERS" means Houston
▇▇▇▇▇▇▇▇, a Professional Corporation of Pittsburgh, Pennsylvania.
"COUNSEL FOR INVATEC" means ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇ Incorporated
of Houston, Texas.
"CURRENT BALANCE SHEET" means the combined balance sheet of the
Company as of March 31, 1997.
"CURRENT BALANCE SHEET DATE" means March 31, 1997.
"DISCLOSURE STATEMENT" means the written statement executed by
the Company and each of the Stockholders and delivered to INVATEC prior
to the execution and delivery of this Agreement by INVATEC in which
either (a) exceptions are taken to any of certain of the representations
and warranties made by the Company, Synergistic Partners and the
Stockholders herein or (b) it is confirmed that no exception is taken to
that representation and warranty.
"EBITDA" means the Company's combined earnings before interest,
income taxes, depreciation, amortization and extraordinary items, as
determined in accordance with GAAP at the time EBITDA is to be
determined; provided, however, that EBITDA is to be calculated only with
respect to the business lines engaged in by the Company immediately
prior to the IPO Closing Date to the extent it is generated by the
Acquired Business, as it exists as of the Effective Time,
notwithstanding the fact that the Company may, after the Acquisition,
from time to time in the future, be modified or changed through the
addition of other businesses through merger, reorganization,
restructuring or otherwise.
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"EFFECTIVE DATE" means the IPO Closing Date.
"EFFECTIVE TIME" has the meaning specified in Paragraph 2.
"GUARANTY OF PERFORMANCE" means the Guaranty of Performance to be
executed and delivered as of the IPO Closing Date by Synergistic
Partners, in the form thereof attached hereto as Exhibit C.
"INDEBTEDNESS" means all items, except for items of capital
stock, surplus, general contingency, Intercompany Indebtedness or
deferred tax liabilities, which in accordance with GAAP would be
included on the liability side of the balance sheet of the Company at
such time other than accounts payable, accrued expenses and other trade
payables. The Indebtedness of the Company at the Current Balance Sheet
Date is $1,950,987, determined as provided in Schedule I hereto.
"INITIAL FINANCIAL STATEMENTS" means (a) the combined balance
sheets of the Company as of September 30, 1995 and 1996 and the related
combined statements of operations and retained earnings for each of the
Company's fiscal years in the three-year period ended September 30,
1996, and (b) the Current Balance Sheet and the related combined
statements of operations for the six (6) months ended on the Current
Balance Sheet Date, which the Company has delivered to INVATEC. The
Company's financial statements for the six-month period ended March 31,
1997, and the one-year periods ended September 30, 1995 and September
30, 1996, are attached hereto as Exhibit D.
"INTERCOMPANY INDEBTEDNESS" means indebtedness of the Company to
Synergistic Partners or any of its partially or wholly-owned
subsidiaries (other than any Entity comprising the Company), which is to
be paid contemporaneously with the Acquisition Consideration pursuant to
Paragraph 2(D). As of the Current Balance Sheet Date, the net
Intercompany Indebtedness is $1,987,594, determined as provided in
Schedule II hereto.
"▇▇▇▇▇▇▇▇ FACILITY SUBLEASE" means the sublease contemplated by
Paragraph 6(G).
"NET STOCKHOLDER INDEBTEDNESS" has the meaning specified in
Paragraph 2.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of the
Company's business consistent with past customs and practice (including
with respect to quantity and frequency).
"PRO RATA SHARE" of a Stockholder means: 99.968% in the case of
Synergistic Enterprises, and .032% in the case of ▇▇. ▇▇▇▇▇▇▇▇▇▇.
"RESPONSIBLE OFFICER" means (i) Mr. Canon for ICE, (ii) Mr.
Canon for VARCO, (iii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ for BTS, (iv) ▇▇. ▇▇▇▇▇▇▇▇▇▇
for BTEP, (v) Mr. Canon for Synergistic Enterprises, and (vi) Mr. Canon
for Synergistic Partners.
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"▇▇▇▇▇▇▇▇▇▇ EMPLOYMENT AGREEMENT" means the Employment Agreement
to be entered into as of the IPO Closing Date between INVATEC and ▇▇.
▇▇▇▇▇▇▇▇▇▇, in the form thereof attached hereto as Exhibit E.
"THRESHOLD AMOUNT" means two percent (2%) of the Ceiling Amount
as same may be adjusted after Closing pursuant to Paragraph 5.
"UNIFORM PROVISIONS" has the meaning specified in Paragraph 4.
"WORKING CAPITAL" means the current assets minus the current
liabilities of the Company, determined in accordance with GAAP,
excluding outstanding Indebtedness and Intercompany Indebtedness
(calculated as provided in Schedule III attached hereto). The Working
Capital of the Company at the Current Balance Sheet Date is $2,469,291,
determined as provided in Schedule III attached hereto.
Paragraph 2. STOCK PURCHASE. (A) Subject to the terms and
conditions hereof, on the IPO Closing Date, the Stockholders collectively will
sell, assign and transfer to INVATEC, and INVATEC will purchase and acquire from
the Stockholders collectively, all the outstanding Company Capital Stock.
(B) DELIVERY, EXCHANGE AND PAYMENT. On the IPO Closing Date, each
Stockholder, as the holder of certificates representing all the outstanding
Company Capital Stock he or it owns, will, on surrender of those certificates to
INVATEC (or any agent that may be appointed by INVATEC for purposes of this
Paragraph 2(B)), receive, subject to the provisions of this Paragraph 2, as
payment for that Company Capital Stock, his or its Pro Rata Share of an amount
of cash or other immediately available funds (the "Acquisition Consideration")
equal to (i) Five Million Two Hundred Fifty Thousand and No/100 Dollars
($5,250,000.00), minus (ii) the aggregate amount of (a) the Company's
outstanding Indebtedness as of the IPO Pricing Date, plus (b) the outstanding
net Intercompany Indebtedness as of the IPO Pricing Date. The time of such
surrender and receipt is the "Effective Time." Schedule IV attached hereto sets
forth the Acquisition Consideration which would have been paid if the Effective
Time had occurred on the Current Balance Sheet Date.
(C) DELIVERY OF STOCK CERTIFICATES, ETC. Each Stockholder will
deliver, and Synergistic Partners will cause Synergistic Enterprises to deliver,
to INVATEC (or any agent that may be appointed by INVATEC for purposes of this
Paragraph 2(C)), on or before the IPO Closing Date, the certificates
representing all the Company Capital Stock owned by that Stockholder, duly
endorsed in blank, or accompanied by stock powers in blank duly executed by that
Stockholder, and with all necessary transfer tax and other revenue stamps,
acquired at that Person's expense, affixed and canceled. Each Stockholder shall
cure, and Synergistic Partners will cause Synergistic Enterprises to cure, any
deficiencies in the endorsement of the certificates or other documents of
conveyance respecting, or in the stock powers accompanying, the certificates
representing Company Capital Stock delivered by such Stockholder.
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(D) INTERCOMPANY INDEBTEDNESS; DEBTS OF STOCKHOLDERS.
Contemporaneously with the payment of the Acquisition Consideration, but subject
to the limitation set forth below, INVATEC shall cause the Company to pay all
Intercompany Indebtedness, and each Stockholder shall repay, and Synergistic
Partners and Synergistic Enterprises shall cause each of their Affiliates (other
than any Entity comprising the Company) to repay, to the Company any
indebtedness owed by such Stockholder or any such Affiliate to the Company.
Synergistic Partners shall act as agent for all holders of Intercompany
Indebtedness and for each Stockholder and Affiliate of a Stockholder in
connection with the payments to be made under this Paragraph 2(D), and shall, as
applicable, receive in trust from the Company an amount equal to the net
Intercompany Indebtedness, or pay to the Company the amount by which the
indebtedness to the Company exceeds the Intercompany Indebtedness (the "Net
Stockholder Indebtedness"), provided that the net Intercompany Indebtedness
payable by the Company shall not exceed $5,250,000 minus the outstanding
Indebtedness. Synergistic Partners hereby indemnifies, defends and holds
harmless INVATEC and the Company, without regard to the Threshold Amount, with
respect to any claims by any Affiliate of Synergistic Partners relating to or
arising out of payments received by Synergistic Partners under this Paragraph
2(D).
Paragraph 3. THE CLOSING AND CERTAIN IPO CLOSING DATE ACTIONS.
(A) On or before the IPO Pricing Date, the Parties will take all actions
necessary, and Synergistic Partners will take all actions necessary to cause
Synergistic Enterprises, to (i) effect the Stock Purchase, (ii) verify the
existence and ownership of the certificates evidencing Company Capital Stock to
be transferred to INVATEC at the Effective Time, and (iii) satisfy the document
delivery requirements on which the obligations of the Parties to effect the
Stock Purchase and the other transactions contemplated hereby are conditioned by
the provisions of Article V (except for those actions which are not required to
be completed until the IPO Closing Date) (all those actions collectively being
the "Closing"). The Closing will take place at the offices of ▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇▇ Incorporated, Nine ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ at
10:00 a.m., local time, or at such later time on the Closing Date as INVATEC
shall specify by written notice to Stockholders. The actions taken at the
Closing will not include the delivery of the Subject Shares to INVATEC or the
payment of the Acquisition Consideration to the Stockholders. Instead, on the
IPO Closing Date, the Subject Shares will be surrendered in exchange for the
Acquisition Consideration (which shall be paid by wire transfer pursuant to
instructions delivered to INVATEC by the Stockholders prior to Closing or, in
the absence of such instructions, an INVATEC company check), and all
transactions contemplated by this Agreement to be closed or completed on or
before the IPO Closing Date, including execution of the ▇▇▇▇▇▇▇▇▇▇ Employment
Agreement, the Canon Consulting Agreement, the Computer System Lease, the
▇▇▇▇▇▇▇▇ Facility Sublease, the Charleston Facility Lease Amendment, the
Confidentiality and Non-Competition Agreements, and the Guaranty of Performance
shall be completed.
Paragraph 4. INCORPORATION OF UNIFORM PROVISIONS. The Uniform
Provisions for Business Combinations attached hereto as Annex 1 (the "Uniform
Provisions"), hereby are incorporated in this Agreement by this reference and
constitute a part of this Agreement with the same force and effect as if set
forth at length herein, subject to the following revisions:
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(A) The Table of Contents of the Uniform Provisions is hereby
amended by deleting therefrom all references to "and Newco".
(B) The first sentence of Section 1.03 is hereby amended by
inserting at the beginning thereof the phrase "Except as set forth in
Section 1.03 of the Disclosure Statement,".
(C) Subsection 2.03(c)(ii) is hereby amended by inserting at the
beginning thereof the phrase "Except as set forth in Section 2.03 of the
Disclosure Statement,".
(D) Subsection 2.14(a)(ii) is hereby amended by inserting at the
beginning thereof the phrase "Except as set forth in Section 2.14 of the
Disclosure Statement,".
(E) Article III, Article IV, Article V, Section 7.03 and Section
10.04 are hereby amended by deleting therefrom the phrases "each of
INVATEC and Newco", "Either of INVATEC or Newco", "INVATEC and Newco"
and "INVATEC or Newco", and substituting therefor the word "INVATEC".
(F) The first paragraph of Article III is hereby amended by
deleting therefrom the phrase "jointly and severally."
(G) Subsections 3.04(b) and 3.04(c) are hereby deleted in their
entirety.
(H) Section 4.10 is hereby amended by deleting the words "prior
to" from the last line thereof, and substituting therefor the words "as
of".
(I) Section 5.02 is hereby amended by adding a subsection (b)
thereto as follows:
(b) The obligations of the Company and the Stockholders with
respect to the actions to be taken on the IPO Closing Date are
subject to the satisfaction on that date of (i) all the
conditions set forth in Section 5.01(b), if any, and (ii) the
condition that all the representations and warranties of INVATEC
in Article III shall be true and correct as of the IPO Closing
Date as though made on that date.
(J) Section 5.03(a)(B)(1) of the Uniform Provisions is hereby
amended to read in its entirety as follows:
(1) Officer's Certificates for the Company, Synergistic Partners
and Synergistic Enterprises, signed by a Responsible Officer,
respecting (i) the truth, completeness and accuracy as of the IPO
Pricing Date of the representations and warranties of the
Stockholders, Synergistic Partners and the Company in Articles I
and II, (ii) compliance with the covenants of the Stockholders,
Synergistic
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Partners and the Company in Article IV, and (iii) aggregate
revenues for the period beginning May 1, 1997, and ending on the
IPO Pricing Date, in material conformity with the budgets and
projections for such period attached hereto as Schedule V
(provided that the Officer's Certificates for Synergistic
Partners and Synergistic Enterprises shall be limited, with
respect to clauses (i) and (ii) above, to the representations,
warranties and covenants of Synergistic Partners, the Company and
Synergistic Enterprises);
(K) Section 5.02(B)(4) of the Uniform Provisions is hereby
amended to read in its entirety as follows:
(4) (i) the ▇▇▇▇▇▇▇▇▇▇ Employment Agreement duly executed and
delivered by INVATEC, (ii) the Canon Consulting Agreement duly
executed and delivered by INVATEC, (iii) Computer System Lease,
duly executed and delivered by the Company, (iv) ▇▇▇▇▇▇▇▇
Facility Sublease, duly executed and delivered by ICE, (v)
Charleston Facility Lease Amendment, duly executed and delivered
by BAS, and (vi) the Confidentiality and Non-Competition
Agreements, duly executed and delivered by INVATEC, all of which
shall be substantially in the forms thereof attached as exhibits
to this Agreement or as exhibits to the Closing Memorandum.
(L) Section 5.03(a)(B)(3) is hereby amended by deleting therefrom
all references to "of the Company," and substituting therefor "of each
Company, of Synergistic Enterprises and of Synergistic Partners".
(M) Section 5.03(a)(B)(5) of the Uniform Provisions is hereby
amended to read in its entirety as follows:
(5) From (i) each officer and director of each Company a notice
of resignation, (ii) ▇▇. ▇▇▇▇▇▇▇▇▇▇, the ▇▇▇▇▇▇▇▇▇▇ Employment
Agreement, duly executed and delivered by ▇▇. ▇▇▇▇▇▇▇▇▇▇, (iii)
Mr. Canon, the Canon Consulting Agreement, duly executed and
delivered by Mr. Canon, (iv) Synergistic Partners, the Computer
System Lease, duly executed and delivered by Synergistic
Partners, (v) Synergistic Partners, the ▇▇▇▇▇▇▇▇ Facility
Sublease, duly executed and delivered by Synergistic Partners and
Buckanon Enterprises, (vi) BAS Enterprises, LLC, the Charleston
Facility Lease Amendment, duly executed and delivered by BAS
Enterprises, LLC, (vii) Synergistic Partners, the Confidentiality
and Non-Competition Agreements, duly executed and delivered by
Synergistic Partners, Synergistic Enterprises and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, as applicable, and (vii)
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Synergistic Partners, the Guaranty of Performance duly executed
and delivered by Synergistic Partners, all of which shall be in
the forms attached as exhibits to this Agreement or to the
Closing Memorandum; and
(N) Section 6.04 of the Uniform Provisions is hereby deleted in
its entirety, and substituted therefor is the following:
Section 6.04. TERMINATION OF GUARANTEES; PAYMENTS TO CERTAIN
THIRD PARTIES. As of the date of execution hereof:
A. CITY NATIONAL BANK OF CHARLESTON. BTS is indebted to The City
National Bank of Charleston pursuant to the terms of a $200,000
revolving line of credit note and a $34,000 term promissory note
secured by the assets of BTS, repayment of which has been
guarantied by Synergistic Partners. Through the Effective Time,
Synergistic Partners, Synergistic Enterprises and BTS will (i)
administer these loans in the Ordinary Course of Business, (ii)
cause same to be renewed, extended or refinanced, as necessary,
and (iii) use and allow BTS to use the proceeds of these loans
solely in the Ordinary Course of Business of BTS. INVATEC will
cause Synergistic Partners to be released from its guaranty of
this Indebtedness as of the Effective Time. There is no penalty
or finance charge associated with prepayment of the line of
credit; however, any finance charge or prepayment penalty payable
in connection with the term loan shall be paid by Synergistic
Partners.
B. WEST ▇▇▇▇▇▇▇▇ ECONOMIC DEVELOPMENT AUTHORITY. VARCO is
indebted to West Virginia Economic Development Authority
("WVEDA") pursuant to the terms of a negotiable promissory note
secured by (i) certain fixtures and equipment of VARCO, and (ii)
a letter of credit issued at the request of Synergistic Partners
by Integra Bank/South or any other lender in favor of WVEDA.
INVATEC will cause WVEDA to release the letter of credit of
Synergistic Partners securing the Indebtedness to WVEDA as of the
Effective Time. There is no penalty or finance charge associated
with prepayment of the Indebtedness to WVEDA.
C. INTEGRA BANK/SOUTH. Synergistic Partners, Equipment &
Controls, Inc. ("ECI"), Electronic Instruments & Controls, Inc.
("EIC"), ICE, VARCO and Field Foam Incorporated are indebted to
Integra Bank/South ("Integra") pursuant to the terms of the
existing revolving credit facility note, secured in part by
assets of the Company (such
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facility, and any successor or replacement facility, being
hereinafter referred to as the "SPI Affiliate Revolving Credit
Facility"). In addition, ECI and EIC are indebted to Integra
pursuant to the terms of a $300,000 term loan secured by a pledge
of their assets, repayment of which has been guarantied by, among
others, ICE and VARCO (such term loan, and any additional,
successor or replacement term loans, being hereinafter referred
to collectively as the "Integra Term Loan"). Through the
Effective Time, Synergistic Partners and Synergistic Enterprises
will (i) administer these loans in the Ordinary Course of
Business, (ii) cause same to be renewed, extended or refinanced,
as necessary, and (iii) use and allow the borrowers under the SPI
Affiliate Revolving Credit Facility to use the proceeds thereof
solely in the Ordinary Course of Business. As of the Current
Balance Sheet Date, there is Indebtedness under the SPI Affiliate
Revolving Credit Facility attributable to the operations of (i)
ICE in the amount of $1,046,643, and (ii) VARCO in the amount of
$177,936 (such amounts, together with any amounts incurred by ICE
or VARCO in the Ordinary Course of Business, either as additional
term debt or under the SPI Affiliate Revolving Credit Facility,
through the Effective Time being hereinafter referred to
collectively as the "Integra-Company Debt"). As of the Effective
Time, (i) the Company will pay the Integra-Company Debt, and (ii)
Synergistic Partners and Synergistic Enterprises will cause the
Company to be released from any and all guaranties, and the
assets of the Company to be released from any security interest
or encumbrance securing payment of, (a) the Integra-Company Debt,
and (b) the SPI Affiliate Revolving Credit Facility. Any finance
charge or prepayment penalty payable in connection with the SPI
Affiliate Revolving Credit Facility or the Integra-Company Debt
shall be paid by Synergistic Partners. In addition, to the extent
that any letters of credit have been issued or are issued prior
to the Effective Time in the Ordinary Course of Business, solely
for the benefit of operations of the Company, the Company will
replace such letters of credit, provided that such letters of
credit are designated by Synergistic Partners or Synergistic
Enterprises in writing as promptly as practicable, and at least
ten (10) business days prior to the Effective Time.
D. BAS LEASE; ▇▇▇▇▇ PROMISSORY NOTE AND CONSULTANT AGREEMENT.
Synergistic Partners has guaranteed the performance of BAS under
a Lease Agreement dated August 7, 1996, executed by BAS
Enterprises, L.L.C., as landlord, and BAS, as Tenant, covering
the premises located at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇. _Synergistic Partners has guaranteed the
performance of BAS
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under (i) a Promissory Note dated August 27, 1996, payable to
▇▇▇▇▇ ▇▇▇▇▇ in the original principal amount of $75,000, and (ii)
a Consultant Agreement dated August 27, 1996, executed by BAS, as
Employer, and ▇▇▇▇▇ ▇▇▇▇▇, as Consultant. INVATEC will use its
reasonable efforts (including substitution of its own guaranty)
to ensure that as of the Effective Time, or within 90 days after
the Effective Time, these three guaranties are terminated;
provided, however, that (i) if Synergistic Partners arranges for
the termination of such guaranties as of the Effective Time,
solely by INVATEC substituting its own guaranties, on
substantially the same terms as the existing guaranties, then
INVATEC will execute and deliver such substitute guaranties as of
the Effective Time, and (ii) if INVATEC is unable to effect the
termination of any of these guaranties, INVATEC will indemnify
and hold harmless Synergistic Partners from and against any
liabilities, claims, demands, judgments, losses, costs, damages
or expenses whatsoever (including reasonable attorneys' fees)
that Synergistic Partners may sustain, suffer or incur, that
result from or arise out of these guaranties, or the obligations
of BAS under the Lease Agreement, the Promissory Note or the
Consultant Agreement.
E. John Canon. As of the Effective Time, the Company will pay to
▇▇▇▇ Canon the then unpaid balance of the indebtedness owing to
him and reflected in the "Long-Term Debt" on the Current Balance
Sheet as a "Note to Stockholder," provided that all payments due
and owing to Mr. Canon through the Effective Time are made prior
to the Effective Time.
(F) Synergistic Partners and Synergistic Enterprises hereby
covenant, represent and warrant that except as described above in
this Section 6.04, as of the Effective Time the Company will not
be liable for, nor will the assets of the Company be pledged to
secure payment of, any Indebtedness for borrowed money, nor any
obligations or Indebtedness of SPI or any of its Affiliates.
(O) Article VI of the Uniform Provisions is hereby amended by
adding thereto the following Section, which will be and read in its
entirety as follows:
Section 6.07. STOCK OPTIONS BASED ON EBITDA. Subject to the
consummation of the Acquisition, in the event that the Company
achieves combined EBITDA of One Million Dollars ($1,000,000) for
the twelve (12) month period beginning on the first day of the
first full calendar month following the IPO Closing Date, then
INVATEC
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will grant an option to Synergistic Enterprises or its designees
to purchase forty thousand (40,000) unregistered shares of
INVATEC Common Stock at the IPO Price (as the number of shares
and price per share may be adjusted after the IPO Closing Date to
reflect stock splits, stock dividends, share exchanges upon
merger and similar capital changes), pursuant to the terms of a
Stock Option Agreement in a form to be mutually agreed upon by
Synergistic Enterprises and INVATEC prior to the Closing Date and
attached to the Closing Memorandum. Such options will expire if
they are not exercised on or before the expiration of seven (7)
years after the IPO Closing Date. INVATEC will provide to
officers of Synergistic Enterprises and to the attorneys and
certified public accountants of Synergistic Enterprises
reasonable access to the books and records of the Company in
order to allow them to verify the calculation of EBITDA for this
twelve (12) month period.
(P) Section 7.05 of the Uniform Provisions is hereby deleted in
its entirety.
(Q) Article VIII of the Uniform Provisions is hereby deleted in
its entirety. In lieu thereof, the Stockholders, Synergistic Partners,
▇▇▇▇ Canon and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ have agreed to execute as of the
Effective Time the ▇▇▇▇▇▇▇▇▇▇ Employment Agreement, the Confidentiality
and Noncompetition Agreements and the Canon Consulting Agreement, which
the parties agree are a material and substantial part of the
transactions contemplated hereby.
(R) The second sentence of Section 10.01(a) of the Uniform
Provisions is hereby amended by adding to the end thereof the following
", or (iv) is Confidential Information as of the Effective Time with
respect to both the Company and one of the wholly-owned or partially
owned subsidiaries of Synergistic Partners."
(S) The penultimate sentence of Section 10.01(a) of the Uniform
Provisions is hereby amended by deleting therefrom the reference to
"this Section 11.01," and substituting therefor a reference to "this
Section 10.01".
(T) Section 10.01(c) of the Uniform Provisions is hereby amended
by adding to the end thereof a sentence which reads as follows:
"Notwithstanding any provision hereof to the contrary, the restrictions
of this Article 10.01 shall terminate and be of no further force or
effect with respect to the Confidential Information of the Company and
the Company Subsidiaries if this Agreement is terminated without
consummation of the Acquisition."
(U) Section 10.03 of the Uniform Provisions is hereby amended by
deleting therefrom the phrase "of the Stockholders" and substituting
therefor the phrase "and successors of the Stockholders and Synergistic
Partners".
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(V) Section 10.11 of the Uniform Provisions is hereby amended by
inserting at the beginning thereof the phrase "Subject to the
limitations on Damage Claims and Indemnification set forth in Sections
6.06 and 7.06 hereof, and in Paragraph 9,"
(W) Section 10.13 is hereby amended by deleting therefrom the
date "December 31, 1997," and substituting therefor the date "November
15, 1997."
(X) Section 11.01(b)(i) of the Uniform Provisions is hereby
amended by adding to the end thereof "(INVATEC hereby agrees to give
prompt notice to Company of any such termination of the Underwriting
Agreement)"
(Y) Section 11.02 of the Uniform Provisions is hereby amended by
adding to the end thereof "Notwithstanding the foregoing or any
provision of the Agreement or these Uniform Provisions to the contrary,
INVATEC shall reimburse the Stockholders for one-half of their
out-of-pocket costs and expenses reasonably incurred by them in pursuing
the Acquisition, up to an aggregate maximum of Twenty-Five Thousand
Dollars ($25,000), in the event of (i) a termination by Stockholders
under Section 11.01(a)(ii), or (ii) a termination under Section
11.01(b).
Paragraph 5. POST-CLOSING ADJUSTMENT TO PURCHASE PRICE. Within
forty-five (45) days after the Closing Date, Synergistic Enterprises and
Synergistic Partners shall deliver to INVATEC an unaudited balance sheet and
income statement of the Acquired Business, prepared as of the Closing Date (the
"Post-Closing Financial Statements"), which shall be true, complete and correct
in all respects and prepared in accordance with generally accepted accounting
principles, consistently applied, and certified as true, complete and correct by
Synergistic Enterprises and Synergistic Partners. These Post-Closing Financial
Statements shall become final and binding on the Parties on the 15th day
following receipt thereof by INVATEC unless INVATEC furnishes written notice of
INVATEC's disagreement ("Notice of Disagreement") to Synergistic Enterprises
prior to such date. Any Notice of Disagreement shall specify in detail the
nature of any disagreement so asserted. If a Notice of Disagreement is sent by
INVATEC to Synergistic Enterprises in accordance with this Paragraph 5, then the
Post-Closing Financial Statements shall become final and binding upon the
Parties on the earlier to occur of: (i) the date the Parties resolve in writing
any differences they have with respect to any matter specified in the Notice of
Disagreement, or (ii) the date any disputed matters are finally resolved in
writing by the Accounting Firm. During the 10-day period following the delivery
of a Notice of Disagreement, the Parties shall seek in good faith to resolve in
writing any differences which they may have with respect to any matter specified
in the Notice of Disagreement. If, at the end of such 10-day period (or such
longer period of time as the Parties may agree upon in writing), the Parties
have not reached agreement on such matters, the matters which remain in dispute,
together with copies of this Agreement, the Post-Closing Financial Statements,
and the Notice of Disagreement, shall be submitted, within five (5) days
following the expiration of such 10-day period (or any agreed upon extension
thereof), to the Accounting Firm for review and resolution. All proceedings
conducted by the Accounting Firm shall be conducted at the offices of the
Accounting Firm in Pittsburgh, Pennsylvania. The Accounting Firm shall render a
decision
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resolving the matters in dispute as soon as practicable following the date of
the submission to the Accounting Firm. The cost of any proceeding (including the
fees of the Accounting Firm but excluding the fees and disbursements of each
Party's independent auditors and counsel) pursuant to this Paragraph 5 shall be
borne one-half by INVATEC and one-half, jointly and severally, by Synergistic
Enterprises and Synergistic Partners. The fees and disbursements of
Stockholders' and Synergistic Partners' independent auditors and counsel
incurred in connection with this Paragraph 5 shall be borne by Stockholders and
Synergistic Partners, and the fees and disbursements of INVATEC's independent
auditors and counsel incurred in connection with this Paragraph 5 shall be borne
by INVATEC. The final determination as described in the procedures set forth
hereinabove shall constitute the "Final Post-Closing Financial Statements."
Synergistic Enterprises and Synergistic Partners hereby agree, jointly and
severally, to pay to INVATEC within five business days of delivery of the Final
Post-Closing Financial Statements to INVATEC and to Stockholders, an aggregate
amount equal to the amount, if any, by which Two Million Four Hundred Sixty-Nine
Thousand Two Hundred Ninety-One Dollars ($2,469,291) exceeds the Working Capital
of the Company, as set forth in the Final Post-Closing Financial Statements.
Conversely, INVATEC hereby agrees to pay to each Stockholder, within five
business days of delivery of the Final Post-Closing Financial Statements to
INVATEC and to Stockholders, an amount equal to his or its Pro Rata Share of the
amount, if any, by which the Working Capital of the Company exceeds Two Million
Four Hundred Sixty-Nine Thousand Two Hundred Ninety-One Dollars ($2,469,291), as
set forth in the Final Post-Closing Financial Statements. Determinations
hereunder shall be consistent with the methodology reflected in Schedules I, II,
III and IV.
Paragraph 6. COOPERATION DURING TRANSITION. The Parties (other
than ▇▇▇▇▇▇▇▇▇▇) hereby agree as follows, and further agree to incorporate the
following terms, and such other terms as the Parties find mutually agreeable,
into such agreements as the Parties may agree upon:
(A) CONSOLIDATED SUPPLY AGREEMENTS. The Parties acknowledge and
agree that historically the Company and/or certain Affiliates of Synergistic
Partners have acted as "consolidated suppliers" of various products and services
relating to the Acquired Business. Certain of these agreements have been
executed by the Company on behalf of the "consolidated group," and certain other
agreements have been executed by Affiliates on behalf of the "consolidated
group." In the past, each Entity providing a product or service under a
consolidated supply arrangement has received all revenues attributable to the
products or services provided by it, the amount of such revenues being equal to
the price charged to the customer for such products or services. If such Entity
was not a party to the consolidated supply agreement, it nevertheless received
these revenues on a "pass-through" basis, without deduction or charge by the
Entity executing the agreement with the customer. In the event of receipt of
only partial payment under a consolidated supply arrangement, the payment shall
be divided pro rata (based on allocable gross revenues billed) among the members
of the consolidated group, if none of them is at fault; however, if the partial
payment is due or allegedly due to the fault of any member of the consolidated
group, such member shall bear the consequences of any failure to pay in full, as
well as the responsibility to cure any related customer complaints. The Parties
acknowledge and agree that it is in their best interests, and they hereby agree,
to continue to perform the existing contracts in the manner in which same have
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historically been performed, and to distribute revenue among the consolidated
supply Entities as it has historically been distributed. In addition, the
Parties agree that where feasible, they will proceed promptly and in good faith
after the Effective Time in executing new agreements with the parties to the
existing supply agreements in order to clarify the rights and responsibilities
of the Company and the Affiliates with respect thereto, and to otherwise
continue the existing arrangement for so long as delivery of products and
services under the existing "consolidated group" supply agreements continues.
As of the Effective Time, the three (3) employees currently working in
the consolidated supply department will be transferred to the payroll of VARCO.
VARCO will operate the consolidated supply department, and the Parties will
cooperate, and cause their Affiliates to cooperate, with one another in good
faith, to support all consolidated supply agreements for the mutual benefit of
the Parties and their Affiliates. Synergistic Partners will pay VARCO $7,000 per
month for its services in operating the consolidated supply department.
(B) VARCO FIELD SERVICES GROUP. There are currently three (3)
technicians on the Company's payroll who perform the vast majority of their
services on behalf of VARCO. As of the Effective Time, these three (3)
technicians will be transferred to the payroll of an Affiliate of Synergistic
Partners; however, Synergistic Partners and Synergistic Enterprises hereby
jointly and severally covenant and agree that for the two (2) year period
following the Effective Time, (i) they will cause this Affiliate to lease these
three (3) technicians, or their successors (provided such successors are fully
trained, similarly experienced field service technicians), and cause them to be
available as needed to the Company as needed at a rate equal to the pro rata
portion of the salaries and other direct out-of-pocket costs of such technicians
allocable to the work performed for the Company (which pro rata portion shall be
based on the gross revenues generated by such technicians for the Company versus
those generated for Synergistic Partners and its Affiliates), and (ii) they
will, and they will cause their Affiliates to, direct to the Company all work of
the types previously directed to these employees by Synergistic Partners and its
Affiliates, which the Company shall perform and ▇▇▇▇ on its own behalf,
retaining all revenues and profits generated thereby, and (iii) they will, and
they will cause their Affiliates to, use reasonable efforts to cause these three
(3) technicians to assist as reasonably required in the training of the
replacements of these three (3) technicians prior to the end of this two (2)
year period.
(C) PERSONNEL. The Parties acknowledge and agree that the Company
will need to hire certain administrative and accounting personnel who are
currently employed by Synergistic Partners or its Affiliates, and who the
Parties shall mutually identify in the Closing Memorandum, in order to service
the operations of the Company. Synergistic Partners hereby agrees to provide
reasonable assistance to the Company with respect to this process, and further
agrees, that it will not, and that it will not permit any of its Affiliates,
without the prior written consent of the INVATEC, for a period of at least
eighteen (18) months after the Effective Time, to call on any employee of the
Company with a purpose or intent of attracting that person from the employ of
the Company .
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(D) ONGOING COOPERATIOn. The Parties hereby acknowledge and agree
that the Company has previously been operated as an integrated part of the
ongoing business of Synergistic Partners and its Affiliates. Synergistic
Partners and Synergistic Enterprises hereby agree that they will, and that they
will cause their Affiliates to, cooperate with the Company after the Effective
Time in converting accounting, employee benefit plan, administrative, human
resources and other service systems, to independent service systems operated by
and for the benefit of the Company. Further, Synergistic Partners and
Synergistic Enterprises agree that they will, and they will cause their
Affiliates to, provide to the Company and its agents, accountants, attorneys and
employees, access to the properties, books and records. financial, tax,
operating data and other information relating to the business and properties of
the Company and the Acquired Business as INVATEC or the Company may from time to
time reasonably request for a period of at least three (3) years following the
Effective Time, or until the applicable statute of limitations has run with
respect to any income tax issues which may arise. Similarly, INVATEC agrees that
it will, and it will cause its Affiliates to, provide to Synergistic Partners
and its agents, accountants, attorneys and employees, access to the properties,
books and records, financial, tax, operating data and other information relating
to the business and properties of the Company and the Acquired Business for the
period ending at the Effective Time as Synergistic Partners may from time to
time reasonably request for a period of at least three (3) years following the
Effective Time, or until the applicable statute of limitations has run with
respect to any income tax issues which may arise.
(E) CHARLESTON FACILITY LEASE AMENDMENT. On the Closing Date but
effective as of the Effective Time, Synergistic Partners will cause the lease
for the Company's Charleston facility to be amended to (i) lease (for a period
coterminous with the rest of the lease and the renewal options hereinafter
described) certain additional parking space for $650 per month through the end
of the original lease, commencing upon completion of construction of that space,
and (ii) provide the Company with two (2) renewal options of five (5) years each
with respect to the Charleston facility and the additional parking space
contemplated above at fair market rates (with a methodology for determining same
if the parties thereto are unable to agree) and on such other terms and
conditions as the parties to the lease may agree .
(F) COMPUTER SYSTEM LEASE. Synergistic Partners now owns the
software and hardware (exclusive of the terminals owned by the Company) used in
the operation of the Company's integrated accounting and reporting system. On
the Closing Date but effective as of the Effective Time, Synergistic Partners
and the Company will enter into a computer lease whereby Synergistic Partners
makes available to the Company, on a nonexclusive basis, the continued use of
such system by providing access to and use of all system hardware and software
and by providing all maintenance, service and support, and upgrades incident to
such hardware and software, Synergistic Partners shall also provide assistance
to INVATEC in converting its data to the system, training to Company personnel
in the use of the system, and assistance to the Company in converting its data
to another system upon termination of the lease. The lease will provide for a
payment to Synergistic Partners of $5,000 per month and will continue for a
period of three (3) years after the Effective Time unless sooner terminated upon
thirty (30) days notice by the Company. The Parties recognize that use of the
system will provide each of them with access to the other's confidential
-16-
information. With respect to the confidential information of INVATEC and the
Company, the provisions of Section 10.01 of the Uniform Provisions shall apply,
and with respect to the confidential information of Synergistic Partners and its
Affiliates, INVATEC and the Company shall keep confidential all such information
and not disclose such information, subject to the same provisions contained in
Section 10.01, substituting "INVATEC and the Company" for "Stockholder," and
"Synergistic Partners and its Affiliates" for "INVATEC," and with such other
changes as may be necessary to give effect to the intent of this provision.
(G) ▇▇▇▇▇▇▇▇ FACILITY SUBLEASE. On the Closing Date but effective
as of the Effective Time, Synergistic Partners shall enter into a sublease of
its ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ office space for a term coterminous with the
Company's lease of the balance of that building. Under the sublease, the Company
will lease one-half of the space currently occupied by Synergistic Partners
(Suite E3) for one year for $1550 per month and shall have the option to lease
the entire space thereafter for $3083 per month, in each case plus taxes,
utilities, insurance and other costs imposed on the lessee under the lease.
Synergistic Partners will provide the landlord's consent to the sublease upon
execution thereof.
The payments among the Parties and their Affiliates as contemplated in
this Paragraph 6 are outlined on Schedule VI attached hereto.
Paragraph 7. NOTICES. For purposes of Section 10.06, notices shall be
addressed to the Stockholders and the Company, as follows:
(A) if to a Stockholder, addressed to it or him as follows:
Synergistic Enterprises
c/o Synergistic Partners, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Synergistic Partners, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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with copies (which shall not constitute notice for purposes of this
Agreement) to:
Houston ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Paragraph 8. REPRESENTATIONS, WARRANTIES, COVENANTS, RELEASE AND
GUARANTY OF SYNERGISTIC PARTNERS. In order to induce INVATEC to enter into the
Transaction Documents and consummate the Acquisition, Synergistic Partners
hereby represents and warrants to INVATEC that (i) all of the representations
and warranties of Synergistic Enterprises in Articles I and II of the Uniform
Provisions are true, complete and correct, and (ii) all of the representations
and warranties in Articles I and II of the Uniform Provisions are true, complete
and correct, as to Synergistic Partners, as if Synergistic Partners were a
"Stockholder" thereunder (except to the extent the context makes them
inapplicable, if any). Synergistic Partners further hereby agrees to comply with
and be bound as a Stockholder under, and to cause Synergistic Enterprises to
comply with, the terms of Articles IV, VI, VIII, IX and X of the Uniform
Provisions. Synergistic Partners also hereby unconditionally releases and
forever discharges, effective as of and forever after the Effective Time, to the
fullest extent permitted by applicable law, the Released Parties from any and
all Pre-Acquisition Claims (INCLUDING ANY ACT OR FAILURE TO ACT THAT CONSTITUTES
ORDINARY OR GROSS NEGLIGENCE OR RECKLESS OR WILLFUL, WANTON MISCONDUCT) against
the Company, or any of them, that arises out of or is based on any
Pre-Acquisition Matters, as contemplated in Section 10.12 of the Uniform
Provisions. Synergistic Enterprises and Synergistic Partners hereby agree that
they shall be jointly and severally liable for each and every respective
obligation incurred by either or both of them hereunder; provided, however, that
in no event shall their aggregate liability hereunder, and under the Guaranty of
Performance executed in connection herewith, exceed an amount equal to the
amount to which the liability of Synergistic Enterprises for Damage Claims and
Indemnification is limited in Sections 6.06 and 7.06 of the Uniform Provisions.
Paragraph 9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ▇▇.
▇▇▇▇▇▇▇▇▇▇. Notwithstanding the foregoing or any provision of this Agreement or
the Uniform Provisions to the contrary, it is hereby acknowledged and agreed
that (i) except for the representations and warranties of ▇▇. ▇▇▇▇▇▇▇▇▇▇ made by
him in Article I of the Uniform Provisions, the representations, warranties,
covenants and agreements of ▇▇. ▇▇▇▇▇▇▇▇▇▇, as a Stockholder, in the Uniform
Provisions are made only with respect to BTEP, and (ii) ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall not
be liable for any Damage Claims or any INVATEC Indemnified Losses other than
those relating to BTEP. The provisions of this Paragraph 9 however, shall in no
manner diminish or negate any liability Synergistic Partners or Synergistic
Enterprises may have under this Agreement for actions taken by ▇▇. ▇▇▇▇▇▇▇▇▇▇ as
an officer, director or shareholder of either of them.
Paragraph 10. MULTIPLE COUNTERPARTS; FACSIMILE SIGNATURES. This
Agreement may be executed in multiple counterparts, each of which will be an
original, but all of which together will
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constitute one and the same instrument. For purposes of the Agreement and all
documents, instruments and agreements executed in connection herewith, facsimile
signatures shall be deemed to be original signatures. In addition, if any Party
executes facsimile copies of this Agreement or any documents , instruments of
agreements executed in connection, such copies shall be deemed originals.
Paragraph 11. THIRD PARTY CONSENTS. Except for consents of
lenders necessary to implement the provisions of Section 6.04 of the Uniform
Provisions, as amended above, INVATEC agrees that the Company and the
Stockholders need not obtain the consent of any party to the contracts described
in Section 2.03 of Disclosure Statement prior to the Closing or as a condition
of the consummation of the transaction on the IPO Closing Date. However,
Synergistic Enterprises and Synergistic Partners shall cooperate with INVATEC in
obtaining such consents after the Effective Time, or, to the extent the Company
agrees that such consents are necessary and can be solicited prior to the
Effective Time without adversely affecting its ongoing business relationships,
prior to the Effective Time.
Paragraph 12. SHORT PERIOD TAX RETURN._The Parties hereby agree
that the short period tax returns for the Company through the Effective Time
shall be prepared at the sole cost and expense of the Stockholders and
Synergistic Partners, and shall be subject to review and comment by INVATEC and
its certified public accountants for at least ten (10) days prior to filing.
Paragraph 13. CANON FEE ON CERTAIN FUTURE ACQUISITIONS. INVATEC
hereby agrees to pay ▇▇▇▇ Canon, or his designees or assigns, a success fee upon
the Closing of the acquisition of any of the following companies: (i) ▇▇▇▇▇
Cascade (or affiliated ▇▇▇▇▇ company) of Syracuse, New York, (ii) ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Controls, Inc. of Syracuse, New York, (iii) VARCO New York, of Syracuse, New
York, (iv) A. ▇▇▇▇▇ ▇▇▇▇▇▇ Company of Pittsburgh, Pennsylvania, or (v) ▇▇▇▇▇▇
Process Technologies of Pittsburgh, Pennsylvania. The success fee shall be in an
amount equal to one quarter of one percent (0.25%) of the purchase price of each
such company, as reported on INVATEC's financial statements as of the closing of
each such acquisition. Such success fee shall be paid in cash within ten (10)
days after the closing of each such acquisition, and shall not be due or payable
in the event that any such acquisition is not closed, regardless of how far such
acquisition has progressed or the reason closing does not occur. Notwithstanding
any provision hereof to the contrary, this compensation arrangement shall
terminate and this Paragraph 13 shall be void and of no force and effect, thirty
(30) days after the date that the Canon Consulting Agreement expires or is
terminated for any reason; provided, however, that termination of this
arrangement shall not affect any fee earned by Mr. Canon through the date of
termination.
Paragraph 14. PARTIAL TERMINATION PLAN. Synergistic Partners
acknowledges that the sale of the Subject Shares may result in a partial
termination of the Synergistic Partners, Inc. Employee Stock Savings Plan (the
"Plan"). For purposes of this Agreement, a partial termination shall be deemed
to have occurred if the termination percentage of the Plan is equal to or
greater than 20%. The termination percentage of the Plan shall be determined by
dividing (a) the number of participants in the Plan whose employment with
Synergistic Partners' controlled group of
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corporations is terminated as a result of the sale of the Subject Shares (the
"Sale Terminees"), by (b) the total number of participants in the Plan as of the
Effective Time, or as otherwise required by applicable law. If a partial
termination occurs, Synergistic Partners agrees to take, and to cause the
Trustees of the Plan to take, whatever action may be required under the terms of
the Plan and under applicable law by reason of such partial termination
(including the full vesting of the account balances of all the Sale Terminees
under the Plan).
IN WITNESS WHEREOF, the Parties have executed this Agreement as
of the date first above written.
INVATEC:
INNOVATIVE VALVE TECHNOLOGIES, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
SYNERGISTIC PARTNERS:
SYNERGISTIC PARTNERS, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
STOCKHOLDERS:
SYNERGISTIC ENTERPRISES, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
____________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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THE COMPANY:
INDUSTRIAL CONTROLS & EQUIPMENT, INC
By:_________________________________
Name:_______________________________
Title:______________________________
VALVE ACTUATION & REPAIR CO.
By:_________________________________
Name:_______________________________
Title:______________________________
RICKCO ACQUISITION INC.
By:_________________________________
Name:_______________________________
Title:______________________________
BAS TECHNICAL EMPLOYMENT PLACEMENT
COMPANY
By:_________________________________
Name:_______________________________
Title:______________________________
The undersigned, the spouse of ▇▇. ▇▇▇▇▇▇▇▇▇▇, joins in the
execution hereof for the sole purposes of (i) confirming that she has no right,
title or interest, legal or beneficial, in the shares of BTEP standing in the
name of ▇▇. ▇▇▇▇▇▇▇▇▇▇, and (ii) consenting to the transfer of such shares to
INVATEC pursuant to the Stock Purchase Agreement.
By:_________________________________
Name:_______________________________
SPOUSE OF ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Schedule I - Indebtedness
Schedule II - Intercompany Indebtedness
Schedule III - Working Capital Formula
Schedule IV - Acquisition Consideration at March 31, 1997
Schedule V - Budgets & Projections
Schedule VI - Payments Under Paragraph 6
Exhibit A - Canon Consulting Agreement
Exhibit B-1 - SPI Confidentiality and Noncompetition Agreement
Exhibit B-2 - SEI Confidentiality and Noncompetition Agreement
Exhibit B-3 - Petronko Confidentiality and Noncompetition Agreement
Exhibit C - SPI Guaranty of Performance
Exhibit D - Financial Statements
Exhibit E - ▇▇▇▇▇▇▇▇▇▇ Employment Agreement
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SCHEDULE I
CALCULATION OF INDEBTEDNESS AT MARCH 31, 1997
Short-Term Debt (Line of Credit) $ 1,399,517
Current Portion of Long-Term Debt 162,349
Long-Term Debt 389,121
$ 1,950,987
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SCHEDULE II
SCHEDULE OF NET INTERCOMPANY INDEBTEDNESS AS OF MARCH 31, 1997
Due to Equipment & Controls, Inc. $ 3,226,938
Due from EIC (1,207,240)
Due from ▇▇▇▇▇▇▇▇ - ▇▇▇▇▇ Controls, Inc. (56,967)
Due to Synergistic Partners, Inc. 25,464
Due from Varco - New York (601)
$ 1,987,594
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SCHEDULE III
CALCULATION OF WORKING CAPITAL AT MARCH 31, 1997
Current Assets $ 3,671,833
Less: Current Liabilities (2,764,408)
Outstanding Current Indebtedness (1) 1,561,866
WORKING CAPITAL $ 2,469,291
(1) Short-Term Debt (Line of Credit) $ 1,399,517
Current Portion of Long-Term Debt 162,349
TOTAL CURRENT INDEBTEDNESS $ 1,561,866
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SCHEDULE IV
ACQUISITION CONSIDERATION AT MARCH 31, 1997
Total Consideration $ 5,250,000
Less: Indebtedness (a) (1,950,987)
Less: Net Intercompany Indebtedness (b) (1,987,594)
---------------
Cash payable to Synergistic Enterprises $ 1,310,999.35
Cash payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 419.65
(a) Indebtedness to be assumed or repaid by INVATEC at Closing.
(b) Pursuant to Paragraph 2(D) of this Stock Purchase Agreement, the Company
will pay this amount in cash to Synergistic Partners, as agent for all
holders of Intercompany Indebtedness.
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SCHEDULE V
BUDGETS AND PROJECTIONS OF COMPANY REVENUES
(IN THOUSANDS)
May June July August September October November
(Actual)
Revenues 1,193 1,203 1,208 1,239 1,268 1,151 1,151
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SCHEDULE VI
PAYMENTS UNDER PARAGRAPH 6
Payments to the Company relative to consolidated supply $ 7,000
Payments by the Company for the expansion of the ▇▇▇▇▇▇▇▇ facility (a) (1,550)
Payments by the Company for the computer lease (5,000)
Payments by the Company for the parking lot rent (BAS) (b) (650)
---------
$ (200)
(a) Pursuant to Section 6(G), such payment may increase to $3,083 per month
(b) Pursuant to Section 6(E), such payment will be payable upon the
commencement of use of the new parking lot.
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EXHIBIT A
CONSULTING AND NONCOMPETITION AGREEMENT
This Consulting and Noncompetition Agreement dated as of ______________,
1997, is entered into by and between Innovative Valve Technologies, Inc., a
Delaware corporation ("Invatec") and J. John Canon, an individual residing in
the State of Pennsylvania ("Consultant").
WITNESSETH:
WHEREAS, Consultant is an officer, director and/or employee of Synergistic
Partners, Inc. ("SPI"), and one or more of its subsidiaries Industrial Controls
and Equipment, Inc. ("ICE"), Valve Actuation & Repair Co. ("VARC"), RICKCO
Acquisition, Inc. ("BTS"), and BAS Technical Employment Placement Company
("BTEP")(ICE, VARC, BTS and BETP are hereinafter collectively referred to as the
"Companies");
WHEREAS, as a result of such positions, Consultant has substantial knowledge
and experience and valuable contacts in the businesses operated by the
Companies; and
WHEREAS, Invatec has entered into a Stock Purchase Agreement (the "Stock
Purchase Agreement") providing for the purchase of all the outstanding stock of
the Companies and has requested Consultant, and Consultant has agreed, to
provide Invatec with the benefit of his substantial knowledge and experience, to
use his contacts to advance the successful development of the businesses of the
Companies and Invatec and not to engage in certain competitive activities during
and for a period of time after the term of this Agreement;
NOW, THEREFORE, for and in consideration of the mutual promises, covenants
and obligations contained herein, Invatec and Consultant hereby agree as
follows:
1. TERM. Invatec hereby engages the Consultant for a period beginning on the
date of execution of this Agreement and ending two years thereafter. The
Consultant accepts such engagement and agrees to perform the services specified
herein, all upon the terms and conditions hereinafter stated.
2. DUTIES. During the term of this Agreement, Consultant agrees to make
himself available to Invatec to perform such reasonable duties, consistent with
the knowledge and experience of Consultant, as are from time to time assigned to
the Consultant by the President of Invatec or any designee of the President
(collectively the "Management"). Such duties shall include, but not be limited
to, advising Management regarding the successful operation of the businesses of
Invatec and making all suggestions and recommendations which he feels will be of
benefit to Invatec; strategic planning for the development of the businesses of
Invatec; identifying potential acquisitions and
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introducing Management to representatives of such entities; attending meetings
between Management and present or prospective dealers, manufacturers, customers
and suppliers; assisting with employee relations and personnel decisions at
Invatec; and such other acts which Consultant, with the prior approval of
Management, may determine to pursue to further the business interests and
enhance the reputation and goodwill of the Companies and Invatec. Invatec shall
give reasonable notice to Consultant of the need for his services, and, in the
event that travel is required in the performance of those services, such notice
shall be in writing. Consultant shall serve as an independent contractor and not
as an employee of Invatec, and therefore will not be eligible for or entitled to
receive any benefits such as medical or life insurance, unemployment
compensation or retirement benefits. In the performance of his duties hereunder
Consultant shall obey all laws, governmental rules and regulations and the
Companies' reasonable rules, regulations and special instructions applicable to
him, and will be loyal and faithful to Invatec at all times, constantly
endeavoring to increase the value of the Companies and the business to Invatec.
Invatec agrees, however, that Consultant will not be required to engage in any
activities that conflict with his fiduciary and other obligations to SPI and its
affiliates and that, subject to compliance with Section 5 and 6, actions taken
by him consistent with such obligations shall not be considered a breach of this
Agreement.
3. EXTENT OF SERVICE. The consulting services to be rendered by Consultant
shall be initiated by Invatec and shall not, without his consent, exceed forty
(40) days per year in each of the two years of this Agreement, exclusive,
however, of occasional and reasonably brief incidental telephone or in person
consultation at Consultant's office at SPI or at the Companies' offices at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ("incidental services"). When more
than incidental services are rendered by Consultant at his office or at the
Companies' Lawrence, Pennsylvania office, Consultant shall maintain time
records, with each eight (8) hours of service constituting a day. When services
are rendered at other locations, each day in which services are rendered
(including travel time) shall be counted as a day or, if less than four hours
are expended, as a half day. Throughout the term of this Agreement, Consultant
shall be permitted to engage in any other business activity, except as
restricted by the further provisions of this Agreement.
4. COMPENSATION. Consultant has agreed to render the services and make the
covenants described herein for the consideration hereinafter described. If
Consultant is requested and consents to render more than forty (40) days of
service in any year of this Agreement, he shall be compensated at the rate of
One Thousand Five Hundred Dollars ($1,500) per day. In addition, Invatec agrees
to reimburse Consultant for all out-of-pocket expenses reasonably incurred for
travel, meals, entertainment and similar items in performing his duties
authorized by Management hereunder, upon submission by him to Invatec within
thirty (30) days of the expenditures, of an appropriate statement documenting
such expenses together with appropriate supporting documentation as required by
the Internal Revenue Code, as amended from time to time. Such expenses shall be
customary and reasonable in accordance with the policies of Invatec, except that
first class air travel shall be permissible for trips in excess of an hour and a
half duration.
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5. CONFIDENTIAL INFORMATION. The Consultant acknowledges that in the course
of his consulting for Invatec he will receive certain trade secrets and other
confidential, nonpublic and/or proprietary information, including information
derived from reports, investigations, research, work in progress, codes,
marketing and sales programs, capital expenditure projects, cost summaries,
pricing formulae, contract analyses, financial information, projections,
confidential filings with governmental entities and other confidential,
nonpublic concepts, methods of doing business, ideas, materials or information
prepared or performed for, by or on behalf of Invatec (collectively the
"Confidential Information"), and which has great value to Invatec and is a
substantial basis and foundation upon which the business of Invatec is
predicated. Consultant acknowledges that but for the consulting arrangement with
Invatec he would not have access to such information. Consultant agrees that any
and all Confidential Information which may be obtained by or disclosed to him
during the term of this Agreement will be held inviolate by him, that he will
conceal the same from any and all other persons, including but not limited to
any Competing Business (as hereinafter defined), he will not use the
Confidential Information in competing with any of the Companies or in any other
manner to his benefit or to the detriment of the Companies or Invatec, and he
will not impart the Confidential Information to anyone for a period of one year
following the expiration of the term of this Agreement and all renewals thereof,
but in no event for less than three years from the date hereof. This obligation
shall not apply to Confidential Information which, at the time of disclosure, is
in the public domain by virtue of publication or disclosure by third parties.
6. COVENANT NOT TO COMPETE. The Consultant recognizes that Invatec, the
Companies and subsidiaries of Invatec (for purposes of this Section 6
collectively referred to as "Invatec") have business good will and other
legitimate business interests which must be protected in addition to the
Confidential Information, and therefore, in exchange for the payment of One
Hundred Twenty Thousand Dollars ($120,000) to Consultant, payable in equal
monthly amounts in arrears over the two year term of this agreement, Consultant
agrees that, for a period of one year following the expiration of the term of
this Consulting Agreement but in no event for less than three years from the
date hereof, Consultant will not, without the prior written consent of Invatec,
directly or indirectly, engage in, continue in or carry on any Competing
Business, including:
(i) owning, controlling, participating in, joining, operating, or managing
or being an employee, officer, director, partner, stockholder or other
equity interest owner of any Competing Business; provided, however, that
Consultant may own securities of corporations listed on a national
securities exchange or traded in the national over-the-counter market in an
amount which shall not exceed 1.0% of the outstanding shares of any such
corporation;
(ii) consulting with, advising or assisting in any way, whether or not for
consideration, any corporation, partnership, firm or other business
organization which at the time of such consultation, advice or assistance is
or to Consultant's knowledge proposes to become a Competing Business (other
than one of the Permitted Businesses, as hereinafter defined), including
advertising or otherwise endorsing the products or services of any such
competitor;
-3-
(iii) soliciting clients or customers of Invatec (or persons or entities
from which Invatec has solicited orders for the sale of any business
products or services within the twenty-four months immediately preceding
such expiration date) for the purpose of selling products or services of a
Competing Business or otherwise serving as an intermediary for any such
Competing Business;
(iv) loaning money or rendering any other form of financial assistance to
any such Competing Business; or
(v) inducing or attempting to induce any director, officer, employee, agent,
customer, client, vendor, supplier, or lessor of any of the Companies to
terminate such position or relationship with, or to take action adverse to,
the Companies;
provided that any actions taken in furtherance of the interest of SPI or any of
its affiliates to terminate or modify any relationship they or any of them may
have with the Company or enforce any rights or otherwise act in their own best
interest with respect thereto, shall not be deemed to violate the provisions of
this clause. As used herein, "Competing Business" means a business that is
engaged in the sale and/or repair of industrial valves and related services.
Invatec consents, however, to Consultant's involvement with and participation in
the businesses of SPI and the following affiliates of SPI as those businesses
exist in the geographic trade areas on the date hereof: Equipment & Controls,
Inc., Electronic Instruments & Controls, Inc., Advanced Integration Group, Inc.,
RTOLA, Inc., ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Controls, Inc., the Process Protection Group, Inc.
subsidiary Varco New York, Inc., and, if sales and/or service of safety relief
valves are included in the ▇▇▇▇▇▇-Rosemount representative contract after the
date hereof, then the products and services included in the ▇▇▇▇▇▇-Rosemount
contract with SPI or its affiliates (collectively, the "Permitted Businesses").
Invatec acknowledges that Consultant lacks complete control over the
businesses of SPI and its affiliates, and that such businesses may, through
acquisition or merger of existing vendor lines, or by a vendor's addition of
products to its representative contracts or otherwise, extend into lines of
business or geographic trade areas that would constitute a Competing Business in
which Consultant's participation would be disallowed by this Agreement, but over
which Consultant would not have control. Consultant covenants and agrees (i) not
to use his position with SPI to promote or encourage (but in his capacity as an
officer or director may approve) the development of the businesses of SPI or any
of its affiliates into a Competing Business (other than one of the Permitted
Businesses), whether by acquisition or merger of existing vendor lines or any
other means, and (ii) that if the businesses of SPI or any of its affiliates
develop, by a means other than acquisition or merger of existing vendor lines or
a vendor's addition of products to its representative contracts, into lines of
business or geographical trade areas that would constitute a Competing Business
(other than one of the Permitted Businesses), Consultant will not participate on
a day-to-day basis in such developed businesses.
It is expressly understood and agreed that Invatec and the Consultant
consider the restrictions contained in Section 5 and this Section 6 to be
reasonable and necessary for the purposes of
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preserving and protecting the business and goodwill of the Companies and other
legitimate business interests of the Companies and Invatec. Nevertheless, if any
of the aforesaid restrictions are found by a court having jurisdiction to be
unreasonable, or overly broad as to the scope of activity to be restrained,
geographic area or time, or otherwise unenforceable, the parties intend for the
restrictions therein set forth to be modified by such court in the minimal
amount necessary so as to be reasonable and enforceable and, as so modified by
the court, to be fully enforced.
The parties acknowledge that the remedies at law for breach of Consultant's
covenants contained in Section 5 and this Section 6 are inadequate, and they
agree that Invatec shall be entitled, at its election, to injunctive relief
(without the necessity of posting bond against such breach or attempted breach),
and to specific performance of said covenants, in addition to any other remedies
at law or equity that may be available to Invatec.
7. BUSINESS OPPORTUNITIES. For the term of this Agreement, Consultant agrees
that with respect to any future business opportunity or other proposal which is
offered to or comes to the attention of Consultant and which is similar or
complementary to the products or services provided by the Companies or Invatec,
Invatec shall have the right to take advantage of such business opportunity or
proposal for its own benefit. Consultant agrees to promptly deliver notice to
Management in writing of the existence of such opportunity or proposal, and
Consultant may take advantage of such opportunity only if Invatec notifies
Consultant in writing that it does not elect to exercise its prior right and if
the pursuit thereof does not otherwise violate any provision of this Agreement.
Invatec agrees, however, that Consultant will not be required to notify
Management of such business opportunity if it conflicts with his fiduciary and
other obligations to SPI and its affiliates.
8. ASSIGNABILITY. The obligations of Consultant hereunder are personal and
may not be assigned or delegated by Consultant or transferred in any manner
whatsoever, nor are such obligations subject to involuntary alienation,
assignment or transfer. Invatec shall have the right to assign this Agreement
and to delegate all rights, duties and obligations hereunder, either in whole or
in part, to any parent, affiliate, successor or subsidiary of Invatec, provided
that Invatec shall remain liable for all amounts due Consultant hereunder. This
Agreement shall be binding upon all successors and assigns.
9. AMENDMENT AND WAIVER. This instrument contains the entire agreement of
the parties and may not be changed orally but only by written documents signed
by the party against whom enforcement of any waiver, change, modification,
extension or discharge is sought. The waiver by any party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any subsequent breach thereof, nor of any breach of any other term or
provision of this Agreement.
10. NOTICE. Any notice required or permitted to be given hereunder shall be
sent by certified or registered mail; in the case of Invatec, to its principal
office address, and in the case of
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Consultant, to Consultant's residence address as shown below or may be given by
personal delivery thereof.
11. SEVERABILITY. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be valid and enforceable under applicable
law, but if any provision of this Agreement shall be invalid, unenforceable or
prohibited by applicable law, but if any provision of this Agreement shall be
invalid, unenforceable, to the extent permitted by law (a) the parties agree
that they will amend such provision to the minimal extent necessary to bring
such provision within the ambit of enforceability, and (b) any court of
competent jurisdiction may, at the request of either party, revise, reconstruct
or reform such provision in a manner sufficient to cause it to be valid and
enforceable.
12. AUTHORITY TO CONTRACT. Invatec represents and warrants that it has full
authority to enter into this Agreement and that this Agreement is not in
conflict with any other Agreement to which Invatec is a party or by which it is
bound. Upon the execution hereof by its duly authorized officer, this Agreement
will be the binding obligation of Invatec enforceable against it in accordance
with its terms. Consultant represents and warrants to Invatec that, except as
disclosed to Invatec in writing, he is not a party to or bound by any employment
agreement, order, decree or other document which would conflict with, render
unenforceable or otherwise impair the benefits intended by, any provision of
this Agreement.
13. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Texas.
14. ARBITRATION. Any and all disputes or controversies whether of law or
fact and of any nature whatsoever arising from or respecting this Agreement
shall be decided by arbitration by the American Arbitration Association in
accordance with its Commercial Rules except as modified herein.
(a) The arbitrator shall be elected as follows: in the event Invatec and the
Consultant agree on one arbitrator, the arbitration shall be conducted by
such arbitrator. In the event Invatec and the Consultant do not so agree,
Invatec and the Consultant shall each select one independent, qualified
arbitrator and the two arbitrators so selected shall select the third
arbitrator (the arbitrator(s) are herein referred to as the "Panel").
Invatec reserves the right to object to any individual arbitrator who shall
be employed by or affiliated with a competing organization.
(b) Arbitration shall take place at Pittsburgh, Pennsylvania, or any other
location mutually agreeable to the parties. At the request of either party,
arbitration proceedings will be conducted in the utmost secrecy; in such
case all documents, testimony and records shall be received, heard and
maintained by the Panel in secrecy, available for inspection only by Invatec
or the Consultant and their respective attorneys and their respective
experts who shall agree in advance and in writing to receive all such
information in secrecy until such information shall become generally known.
The Panel shall be able to award any and all relief, including relief
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of an equitable nature, provided that punitive damages shall not be awarded.
The award rendered by the Panel may be enforceable in any court having
jurisdiction thereof.
(c) Reasonable notice of the time and place of arbitration shall be given to
all parties and any interested persons as shall be required by law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
INNOVATIVE VALVE TECHNOLOGIES,
INC.
By:_______________________
Name:____________________
Title:_____________________
CONSULTANT:
__________________________
J. John Canon
Address:________________________
_______________________
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EXHIBIT C
GUARANTY OF PERFORMANCE
THIS GUARANTY OF PERFORMANCE ("the Guaranty") is executed effective the ___
day of __________, 1997, by SYNERGISTIC PARTNERS, INC., a Pennsylvania
corporation ("the Guarantor"), pursuant to the terms of that certain Stock
Purchase Agreement (the "Agreement") entered into effective as of the ___ day of
__________, 1997, by and among Innovative Valve Technologies, Inc., a Delaware
corporation ("Purchaser"), Synergistic Enterprises, Inc., a Delaware corporation
and a wholly-owned subsidiary of Guarantor ("Seller"), Industrial Controls &
Equipment, Inc. ("ICE"), Valve Actuation & Repair Co.("VARCO"), Rickco
Acquisition, Inc. ("BAS") (each of ICE, VARCO and BAS being a wholly-owned
subsidiary of Seller, and therefore an indirectly wholly-owned subsidiary of
Guarantor) BAS Technical Employment Placement Company ("BTEP") (BTEP being
primarily owned by Seller, and therefore indirectly primarily owned by
Guarantor), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and Guarantor. All defined terms contained herein
shall have the meanings ascribed thereto in the Agreement.
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Agreement, Purchaser has agreed to
purchase from Seller, and Seller has agreed to sell to Purchaser, the
outstanding capital stock of ICE, VARCO and BAS;
WHEREAS, also pursuant to the terms of the Agreement, Purchaser has agreed
to purchase from Seller and ▇▇. ▇▇▇▇▇▇▇▇▇▇, and Seller and ▇▇. ▇▇▇▇▇▇▇▇▇▇ have
agreed to sell to Purchaser, the outstanding capital stock of BTEP;
WHEREAS, Guarantor acknowledges that it is receiving numerous and
substantial benefits from the consummation of the transactions contemplated in
the Agreement, and that it is willing to execute this Guaranty for and in
consideration of such benefits, and in order to induce Purchaser to enter into
the Agreement and consummate the transactions contemplated therein; and
WHEREAS, Purchaser would not have executed and consummated the transactions
described in the Agreement but for the agreement of Guarantor to execute and
deliver to Purchaser this Guaranty;
NOW, THEREFORE, for and in consideration of the terms and conditions
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Guarantor, and in order to
induce Purchaser to enter into the Agreement and consummate the transactions
contemplated therein, the Guarantor hereby covenants and agrees as follows:
1. Guarantor hereby absolutely, unconditionally and irrevocably guarantees
the full and punctual payment and performance by Seller of all of the
obligations, duties, covenants, agreements and conditions provided in the
Agreement to be paid or performed by Seller thereunder, including without
limitation all indemnification obligations of Seller set forth in Article 7 of
the Uniform Provisions.
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2. This Guaranty is unconditional and the liability of Guarantor shall be
primary and absolute, in the same manner as if Guarantor were named in and had
signed the Agreement individually as the Seller thereunder. Guarantor agrees
that neither bankruptcy, insolvency, lack of capacity nor any other disability
or impediment against enforcement of the liability of Seller shall in any manner
impair or affect Guarantor's liabilities and obligations hereunder.
3. It shall not be necessary or required in order to maintain and enforce
Guarantor's liability hereunder that demand be made upon Seller or that action
be commenced or prosecuted against Seller or that any effort be made to enforce
the liability or responsibility of Seller for performance of Seller's
obligations or duties under or in connection with the Agreement, and it shall
not be required that Seller or any other party liable on the Agreement be joined
in any action brought against Guarantor for enforcement of Guarantor's liability
and responsibility under this Guaranty, or that judgment have theretofore been
obtained against Seller or any other party liable therefor or in connection with
any such claim.
4. Guarantor agrees that no waiver by Purchaser or forbearance or delay by
Purchaser in asserting or enforcing any rights or remedies of Purchaser or with
respect to Seller or any other party who may be or become responsible for
performance of any of Seller's obligations or duties shall in any wise affect,
impair, or release Guarantor's liability hereunder.
5. Guarantor expressly waives and agrees that no notice of default by Seller
or other notice or demand need be given by Purchaser to Guarantor as a condition
of maintaining or enforcing Guarantor's liabilities and obligations under this
Guaranty. Likewise, Guarantor agrees that Purchaser's release or subordination
of, or failure or delay to enforce or seek to realize upon, any security now or
hereafter held or acquired by Purchaser for performance of any of the
obligations or duties of the Seller under or in connection with the Agreement,
or any other action which Purchaser may take or fail to take with respect to or
against the Seller, shall not impair, affect, or release Guarantor's liability
hereunder.
6. In the event default is made in the prompt payment of amounts due, or
performance of obligations due, under this Guaranty, and the same is placed in
the hands of an attorney for collection or enforcement, or suit is brought on
same, and the same is collected or enforced through any judicial proceeding
whatsoever, then Guarantor agrees and promises to pay all of the attorneys' and
collection fees, costs and expenses incurred by Purchaser in enforcing its
rights hereunder.
7. The obligations of Guarantor shall continue in full force and effect
against Guarantor until all of the obligations guaranteed hereunder have been
paid in full, and fully and finally performed. This Guaranty covers any and all
of such obligations, whether presently outstanding or arising subsequent to the
date hereof. This Guaranty is valid and binding upon and enforceable against
Guarantor and the successors and assigns of Guarantor.
8. All rights of Purchaser hereunder or otherwise arising under any
documents executed in connection with or as security for the obligations
guaranteed hereby, are separate and cumulative and may be pursued separately,
successively, or concurrently.
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9. Notwithstanding any provision of this Guaranty to the contrary, the
liability of Guarantor hereunder shall not exceed the liability which Guarantor
would have under the Agreement if it had signed the Agreement as the Seller
thereunder.
10. This instrument may be amended or modified only by written instrument
signed by Guarantor and Purchaser.
11. This instrument sets forth the entire agreement and understanding
between Guarantor and Purchaser with respect to the subject matter hereof, and
may be executed in multiple counterparts, each of which shall have the force and
effect of an original, and all of which together shall constitute one and the
same agreement.
THE UNDERSIGNED ACKNOWLEDGES THAT THE EXECUTION OF THIS GUARANTY RESULTS IN
LIABILITY ON THE PART OF THE UNDERSIGNED FOR THE REPAYMENT OF THE DEBTS AND
THE PERFORMANCE OF THE OBLIGATIONS HEREIN DESCRIBED, AND COULD RESULT IN THE
ATTACHMENT OF THE UNDERSIGNED'S ASSETS. THE UNDERSIGNED ACKNOWLEDGES HAVING
RECEIVED THE ADVICE OF LEGAL COUNSEL PRIOR TO EXECUTION OF THIS DOCUMENT.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty of
Performance effective as of ______________, 1997.
SYNERGISTIC PARTNERS, INC.
By:_____________________________
Name:___________________________
Title:__________________________
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EXHIBIT E
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") between INNOVATIVE VALVE
TECHNOLOGIES, INC., a Delaware corporation ("Invatec"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
("Executive"), effective as of and contingent upon the closing of the initial
public offering of Invatec (the "IPO"). Invatec and the Executive are
hereinafter sometimes referred to collectively as the "Parties" and individually
as a "Party."
W I T N E S S E T H:
WHEREAS, Executive is an officer of Industrial Controls and Equipment,
Inc. ("ICE") and a shareholder of BAS Technical Employment Placement Company
("BTEP")(ICE and BTEP, together with Valve Actuation & Repair Co., Inc.
("VARC"), and RICKCO Acquisition, Inc. ("BTS"), are hereinafter collectively
referred to as the "Companies");
WHEREAS, Executive has entered into a Stock Purchase Agreement (the
"Stock Purchase Agreement") providing for the sale of all of his interest in the
outstanding stock in BTEP to Invatec;
WHEREAS, as an essential condition to Invatec's obligations to enter
into and pay the consideration provided for under the Stock Purchase Agreement,
Invatec desires to employ Executive, and Executive has agreed to accept such
employment, on the terms hereinafter set forth; and
WHEREAS, in the course of such employment, Invatec will disclose to the
Executive confidential and proprietary information regarding the business of
Invatec, and the trade secrets and other confidential business or professional
information relating thereto, and the Executive will be encouraged to expand his
relationships with, among others, the clients, customers, subcontractors
vendors, suppliers, employees and other agents of Invatec, and Executive and
Invatec recognize and acknowledge (i) the detrimental effect on the business of
Invatec and its legitimate business interests which would result if Executive
were to disclose or use any of Invatec's trade secrets or confidential
information other than in connection with the Executive's employment with
Invatec, (ii) the detrimental effect on the business of Invatec and its
legitimate business interests which would result if Executive were to enter into
competition with Invatec within an unreasonably brief period of time after the
termination of Executive's employment with Invatec, (iii) that the agreements
and covenants in this Agreement are essential to protect the business and
goodwill to be acquired by Invatec, and other legitimate business interests of
Invatec, and (iv) that Invatec would not have entered into the Stock Purchase
Agreement but for the covenants and agreements contained in this Agreement and
the protection afforded to Invatec hereby;
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein and in the Stock Purchase Agreement,
and as an inducement to Invatec
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to consummate the purchase of the Companies pursuant to the Stock Purchase
Agreement, Invatec and Executive hereby agree as follows:
i. EMPLOYMENT. Invatec hereby employs Executive, and Executive hereby
accepts employment by Invatec, on the terms and conditions hereinafter set
forth.
ii. EXECUTIVE'S DUTIES. Executive will serve as President of each of the
Companies which, upon consummation of the acquisitions pursuant to the Stock
Purchase Agreement, will become subsidiaries of Invatec (the "Subsidiaries").
Executive's duties shall include those which are designated or assigned to him
by the President of Invatec, provided those duties are of the type customarily
discharged by a person holding the same or similar offices in a company similar
in size and operation to the Subsidiaries. Executive shall devote his entire
time, attention and energy to the business of Invatec and the Subsidiaries and
shall diligently pursue their best interests. Nothing in this Section 2,
however, will prevent the Executive from engaging in additional activities in
connection with personal investments and community affairs not inconsistent with
this Agreement.
iii. TERM OF EMPLOYMENT. Subject to the provisions for termination
hereof, the original term of this Agreement shall commence as of the date hereof
and shall continue for a term of two years. Section 6(d), (g) - (i), and 7
through 12 of this Agreement shall survive termination of this Agreement for any
reason whatsoever.
iv. COMPENSATION. For all services rendered by Executive hereunder on
behalf of Invatec, and the covenants and agreements of the Executive set forth
herein, Invatec agrees to pay to Executive, and Executive agrees to accept, the
following compensation:
(a) salary in the aggregate amount of One Hundred Fifty-five
Thousand Dollars ($155,000) per annum, payable in accordance with the
standard payroll policies of Invatec;
(b) for any year other than 1997, a bonus in the amount of
$50,000 per year for any year in which the Companies' combined EBITDA
(as defined in the Stock Purchase Agreement) equals or exceeds the
amount of EBITDA set forth in the Business Plan for the Companies for
that fiscal year, such bonus to be payable within 75 days after fiscal
year end; for 1997, a bonus in the amount of $12,500, if the Companies'
Combined EBITDA (as defined in the Stock Purchase Agreement) equals or
exceeds the amount of EBITDA set forth in the Business Plan for the
Companies for the last six (6) months of 1997. Except for 1997, any
bonus covering a period of less than twelve months shall be computed
based on the pro rata portion of the year represented by that period,
and shall be payable within 50 days after the end of such period. The
bonus described in this subsection (b) shall be in lieu of an annual
incentive award payable in accordance with the Annual Incentive Plan of
Invatec to be established by the Compensation Committee of the Board of
Directors, or other plan that may be substituted for that plan;
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(c) an incentive stock option to purchase 20,000 shares of Invatec's
common stock (i) at the price at which shares are offered to the public in the
IPO, (ii) 25% of which shall be exercisable at the closing of the IPO, with the
remainder exercisable in three equal annual installments on each anniversary of
the closing of the IPO, (iii) which option will expire seven years from the
closing of the IPO, and (iv) which will otherwise be subject to the terms and
conditions of the Company's 1997 Incentive Plan; and
(d) prompt reimbursement of all reasonable expenses incurred by
him in the performance of his duties during the term of this Agreement,
subject to the presenting of appropriate vouchers and receipts in
accordance with Invatec's policies.
v. ADDITIONAL BENEFITS; RELOCATION Executive shall be entitled to
participate in or receive benefits under all benefit plans or programs,
including life insurance, generally available to executives of Invatec to the
extent that his position, tenure, salary, age, health and other qualifications
make him eligible to participate, subject to the rules and regulations
applicable thereto. Specifically, Executive shall receive an automobile expense
allowance equal to $800 per month; $3,000 per year for the payment of country
club dues, but payable in equal monthly payments; and three weeks of vacation
per year and one additional day of vacation per year for each year in which the
Executive is employed by Invatec. Invatec shall not require Executive to
relocate more than 50 miles from Pittsburgh, Pennsylvania without his consent.
6. COVENANTS OF EXECUTIVE. For and in consideration of the employment
herein contemplated and the consideration paid or promised to be paid by
Invatec, Executive does hereby covenant, agree and promise that during the term
hereof, and thereafter to the extent specifically provided in Section 10 of this
Agreement:
(a) Executive will not actively engage, directly or indirectly,
in any other business except at the direction or approval of Invatec;
(b) Executive will not engage, directly or indirectly, in the
ownership, management, operation or control of, or employment by, any
business of the type and character engaged in by Invatec.
Notwithstanding the foregoing, Executive may make or maintain an
investment not to exceed one percent of the capital stock of any
publicly traded company;
(c) Executive will truthfully and accurately make, maintain and
preserve all records and reports that Invatec may from time to time
request or require;
(d) Executive will fully account for all money, records, goods,
wares and merchandise or other property belonging to Invatec of which
Executive has custody, and will pay over and deliver same promptly
whenever and however he may be reasonably directed to do so;
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(e) Executive will obey all rules, regulations and special
instructions applicable to him, and will be loyal and faithful to
Invatec at all times, constantly endeavoring to improve his ability and
knowledge of the business in an effort to increase the value of his
services to the mutual benefit of the Parties;
(f) Executive will make available to Invatec any and all of the
information of which he has knowledge relating to the business of
Invatec, and will make all suggestions and recommendations which he
feels will be of benefit to Invatec;
(g) Executive recognizes that during the course of his
employment, Executive has and will have access to, and that there has
been and will be disclosed to him, information of a proprietary nature
owned by Invatec, including but not limited to records, customer and
supplier lists and information, pricing information, data, formulae,
design information and specifications, inventions, processes and
methods, which is of a confidential or trade secret nature, and which
has great value to Invatec and is a substantial basis and foundation
upon which Invatec's business is predicated. Executive acknowledges that
except for his employment and the fulfillment of the duties assigned to
him, he would not have access to such information, and Executive agrees
that any and all confidential knowledge or information which may be
obtained by or disclosed to him in the course of his employment,
including but not limited to the information hereinabove set forth
(collectively, the "Information"), will be held inviolate by him, that
he will conceal the same from any and all other persons, including but
not limited to competitors of Invatec, and that he will not impart the
Information or any such knowledge acquired by him as an officer,
director or employee of Invatec to anyone, either during his employment
by Invatec or thereafter. Executive further agrees that during the term
of this Agreement and thereafter, he will not use the Information in
competing with Invatec, or in any other manner to his benefit or to the
detriment of Invatec;
(h) Executive agrees that upon termination of his employment
hereunder he will immediately surrender and turn over to Invatec all
books, records, forms, specifications, formulae, data, processes, papers
and writings related to the business of Invatec and all other property
belonging to Invatec, together with all copies of the foregoing, it
being understood and agreed that the same are the sole property of
Invatec; and
(i) Executive agrees that all ideas, concepts, processes,
discoveries, devices, machines, tools, materials, designs, improvements,
inventions and other things of value (hereinafter collectively referred
to as "intangible rights"), whether patentable or not, which are
conceived, made, invented or suggested either by him alone or in
collaboration with others during the term of his employment, and whether
or not during regular working hours, shall be promptly disclosed in
writing to Invatec and shall be the sole and exclusive property of
Invatec. Executive hereby assigns all of his right, title and interest
in and to all such intangible rights to Invatec, and its successors or
assigns. In the event that any of said intangible rights shall be deemed
by Invatec to be patentable or otherwise registerable under
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any federal, state or foreign law, Executive further agrees that at the
expense of Invatec, he will execute all documents and do all things
necessary, advisable or proper to obtain patents therefor or
registration thereof, and to vest in Invatec full title thereto.
7. TERMINATION OF EMPLOYMENT FOR CAUSE. Invatec may terminate the
employment of Executive if the President and Chief Executive Officer determines,
in his reasonable discretion, that the Executive has:
(a) materially breached or habitually neglected the duties which
he was required to perform under any provision of this Agreement after
notice and a reasonable opportunity to cure such breach or neglect;
(b) misappropriated funds or property of Invatec or otherwise
engaged in acts of dishonesty, fraud, misrepresentation or other acts of
moral turpitude, even if not in connection with the performance of his
duties hereunder, which would result in serious prejudice to the
interests of Invatec if he were retained as an employee;
(c) secured any personal profit not thoroughly disclosed to and
approved by Invatec in connection with any transaction entered into on
behalf of or with Invatec or any affiliate of Invatec; or
(d) died, or become and remained incapacitated (either
physically, mentally or otherwise) for a period of ninety consecutive
days.
In the event of termination of his employment for cause, Executive shall be
entitled to receive his salary due or accrued on a pro rata basis to the date of
termination, any bonus earned for fiscal periods ending before his termination
date but unpaid, and reimbursement of expenses properly incurred but not yet
reimbursed.
8. TERMINATION WITHOUT CAUSE. Invatec may terminate the employment of
Executive with fourteen days' written notice for any reason other than those
enumerated in Section 7 hereof, in which event such termination shall be deemed
a termination without cause. In the event of a termination without cause,
Invatec shall, in exchange for a general release by the Executive of claims in
form and content acceptable to Invatec, make a lump sum cash payment to
Executive in an amount equal to the salary of Executive for six months, which
payment shall constitute the full and total amount of compensation that
Executive shall be entitled to receive. In the event that Executive contests his
termination by filing or threatening to file a lawsuit or pursuing any other
remedy or proceeding against Invatec or any of its officers, directors,
shareholders, employees, agents or affiliates, Executive shall forfeit his right
to such payment, and shall immediately return to Invatec all or any portion of
such payment made to him. Upon the full return of such payment, the general
release of Executive shall, at the option of Executive, be null and void.
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9. TERMINATION OF EMPLOYMENT BY EXECUTIVE. In the event Invatec
materially breaches this Agreement and fails to cure within 15 days after
receiving the Executive's notice of Invatec's breach or assigns Executive
without his consent to a position of materially lesser status or degree of
responsibility than is provided for herein, then Executive may terminate this
agreement and receive, on the date of termination, the same payment as that
provided under Section 8 above. The Executive may also terminate this Agreement
for any other reason upon thirty days' prior written notice to Invatec, in which
event Invatec shall be relieved of all of its obligations under this Agreement,
except that Invatec shall pay to the Executive his standard compensation through
the date upon which the thirty day severance period ends. The Executive agrees,
in the event of termination pursuant to this Section 9, and if so requested by
Invatec, to assist Invatec in training Executive's replacement during the thirty
day severance period.
10. COVENANT NOT TO COMPETE. The Executive recognizes that Invatec and
the Companies and subsidiaries of Invatec (for purposes of this Section 10
collectively referred to as "Invatec") have business good will and other
legitimate business interests which must be protected in connection with and in
addition to the Information. In consideration for access to the Information, the
acquisition by Invatec of the Companies and the performance of its covenants
under the Stock Purchase Agreement, the specialized training and instruction
which Invatec will provide, Invatec's agreement to employ the Executive on the
terms and conditions set forth herein, and the promotion and advertisement by
Invatec of Executive's skill, ability and value in Invatec's business, the
Executive agrees that, upon the receipt of notice from Invatec of the exercise
of its option to enforce this Section 10 covenant and agreement to pay to the
Executive Sixty-five Thousand Dollars ($65,000.00), in equal monthly amounts in
arrears over the eighteen month term of this covenant, the Executive will not,
during the term ending eighteen (18) months after the date Executive's
employment is terminated, without the prior written consent of Invatec, engage,
directly or indirectly, in any business that is engaged in the sale and/or
repair of industrial valves and related services within a 100 mile radius of any
office in which Invatec does business (determined as of such termination).
Invatec's notice of the exercise of its option to enforce this Section 10
covenant and agreement to pay Executive the amount specified above shall be
given no less than thirty (30) days after the effective date of termination of
Executive's employment.
It is mutually understood and agreed that if any of the provisions
relating to the scope, time or territory in this Section 10 are more extensive
than is enforceable under applicable laws or are broader than necessary to
protect the good will and legitimate business interests of Invatec, then the
Parties agree that they will reduce the degree and extent of such provisions by
whatever minimal amount is necessary to bring such provisions within the ambit
of enforceability under applicable law.
The Parties acknowledge that the remedies at law for breach of
Executive's covenants contained in Sections 6 and 12 of the Agreement are
inadequate, and they agree that Invatec shall be entitled, at its election, to
injunctive relief (without the necessity of posting bond against such breach or
attempted breach), and to specific performance of said covenants in addition to
any other remedies at law or equity that may be available to Invatec.
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11. BUSINESS OPPORTUNITIES. For as long as the Executive shall be
employed by Invatec and thereafter with respect to any business opportunities
learned about during the time of Executive's employment by Invatec, the
Executive agrees that with respect to any future business opportunity or other
new and future business proposal which is offered to, or comes to the attention
of, the Executive and which is in any way related to or connected with, the
business of Invatec or its affiliates, Invatec shall have the right to take
advantage of such business opportunity or other business proposal for its own
benefit. The Executive agrees to promptly deliver notice to the Chief Executive
Officer or Chairman of the Board of Directors in writing of the existence of
such opportunity or proposal, and the Executive may take advantage of such
opportunity only if Invatec does not elect to exercise its right to take
advantage of such opportunity and if the pursuit thereof would not otherwise
violate any provision of this Agreement.
12. RIGHT OF OFFSET. To the extent permitted by applicable law, all
amounts due and owing to Executive hereunder shall be subject to offset by
Invatec to the extent of any damages incurred by Executive's breach of this
Agreement. Executive acknowledges and agrees that but for the right of offset
contained in this Agreement, Invatec would not have hired Executive nor entered
into this Employment Agreement.
13. ASSIGNABILITY. The obligations of Executive hereunder are personal
and may not be assigned or delegated by Executive or transferred in any manner
whatsoever, nor are such obligations subject to involuntary alienation,
assignment or transfer. Invatec shall have the right to assign this Agreement
and to delegate all rights, duties and obligations hereunder, either in whole or
in part, to any parent, affiliate, successor or subsidiary of Invatec. This
Agreement shall be binding upon all successors and assigns.
14. AMENDMENT AND WAIVER. This instrument and the Stock Purchase
Agreement contain the entire agreement of the Parties and supersede and replace
any prior employment agreements between Invatec or any affiliate and Executive,
which prior employment agreements (if any) are hereby terminated, effective as
of the commencement date of this Agreement, by mutual agreement of the Parties.
This Agreement may not be changed orally but only by written documents signed by
the Party against whom enforcement of any waiver, change, modification,
extension or discharge is sought; however, the amount of compensation to be paid
to Executive for services to be performed for Invatec hereunder may be changed
from time to time by the Parties by written agreement without in any other way
modifying, changing or affecting this Agreement or the performance by Executive
of any of the duties of his employment with Invatec. Any such written agreement
shall be, and shall be conclusively deemed to be, a ratification and
confirmation of this Agreement, except as expressly set forth in such written
amendment. The waiver by any Party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any subsequent
breach thereof, nor of any breach of any other term or provision of this
Agreement.
15. NOTICE. Any notice required or permitted to be given hereunder shall
be sent by certified or registered mail; in the case of Invatec, to its
principal office address, and in the case of
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Executive, to Executive's residence address as shown on the records of Invatec,
or may be given by personal delivery thereof.
16. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be valid and enforceable under
applicable law, but if any provision of this Agreement shall be invalid,
unenforceable or prohibited by applicable law, then in lieu of declaring such
provision invalid or unenforceable, to the extent permitted by law (a) the
Parties agree that they will amend such provision to the minimal extent
necessary to bring such provision within the ambit of enforceability, and (b)
any court of competent jurisdiction may, at the request of either party, revise,
reconstruct or reform such provision in a manner sufficient to cause it to be
valid and enforceable.
17. FORCE MAJEURE. Neither of the Parties shall be liable to the other
for any delay or failure to perform hereunder, which delay or failure is due to
causes beyond the control of said Party, including, but not limited to: acts of
God; acts of the public enemy; acts of the United States of America or any
state, territory or political subdivision thereof or of the District of
Columbia; fires; floods; epidemics, quarantine restrictions; strike or freight
embargoes. Notwithstanding the foregoing provisions of this Section 17, in every
case the delay or failure to perform must be beyond the control and without the
fault or negligence of the Party claiming excusable delay.
18. AUTHORITY TO CONTRACT. Invatec warrants and represents that it has
full authority to enter into this Agreement and to consummate the transactions
contemplated hereby and that this Agreement is not in conflict with any other
agreement to which Invatec is a party or by which it may be bound. Invatec
hereto further warrants and represents that the individuals executing this
Agreement on behalf of Invatec have the full power and authority to bind Invatec
to the terms hereof and have been authorized to do so in accordance with
Invatec's corporate organization.
19. ARBITRATION. Any and all disputes or controversies whether of law or
fact and of any nature whatsoever arising from or respecting this Agreement
shall be decided by arbitration by the American Arbitration Association in
accordance with its Commercial Rules except as modified herein.
(a) The arbitrator shall be elected as follows: in the event
Invatec and the Executive agree on one arbitrator, the arbitration shall
be conducted by such arbitrator. In the event Invatec and the Executive
do not so agree, Invatec and the Executive shall each select one
independent, qualified arbitrator and the two arbitrators so selected
shall select the third arbitrator (the arbitrator(s) are herein referred
to as the "Panel"). Invatec reserves the right to object to any
individual arbitrator who shall be employed by or affiliated with a
competing organization.
(b) Arbitration shall take place at Pittsburgh, Pennsylvania or
any other location mutually agreeable to the Parties. At the request of
either Party, arbitration proceedings will be conducted in the utmost
secrecy; in such case all documents, testimony and records shall
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be received, heard and maintained by the arbitrators in secrecy,
available for inspection only by Invatec or the Executive and their
respective attorneys and their respective experts who shall agree in
advance and in writing to receive all such information in secrecy until
such information shall become generally known. The Panel shall be able
to award any and all relief, including relief of an equitable nature,
provided that punitive damages shall not be awarded. The award rendered
by the Panel may be enforceable in any court having jurisdiction
thereof.
(c) Reasonable notice of the time and place of arbitration shall
be given to all Parties and any interested persons as shall be required
by law.
20. GOVERNING LAW. This Agreement and the rights and obligations of the
Parties shall be governed by and construed and enforced in accordance with the
substantive laws (but not the rules governing conflicts of laws) of the
Commonwealth of Pennsylvania.
21. MULTIPLE COUNTERPARTS. This Agreement may be executed in multiple
counterparts each of which shall be deemed to be an original but all of which
together shall constitute but one instrument.
22. PRIOR EMPLOYMENT AGREEMENTS. The Executive represents and warrants
to Invatec that he has fulfilled all of the terms and conditions of all prior
employment agreements to which he may be or have been a party, and at the time
of execution of this Agreement is not a party to any other employment agreement
except as disclosed in the Stock Purchase Agreement.
EXECUTED as of the day and year first above set forth.
INVATEC:
INNOVATIVE VALVE TECHNOLOGIES, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
EXECUTIVE:
____________________________________
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