<PAGE>
As filed with the Securities and Exchange Commission on October 11, 1996
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MET-PRO CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 23-1683282
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
160 Cassell Road
Harleysville, PA 19438
(215) 723-6751
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
William Kacin, President
160 Cassell Road
Harleysville, PA 19438
(215) 723-6751
(Name, address, zip code and telephone number,
including area code, of agent for service)
Copy to:
Earl J. Wofsey, Esquire
929 Riverbank Road
Stamford, CT 06903
Approximate date of commencement of proposed sale to the public: From time to
time after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.[ ]
If the only securities being registered on this Form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]__________
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]___________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
Calculation of Registration Fee
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Proposed
Title of each class Proposed Proposed maximum
of securities to be Amount to be maximum offering aggregate offering Amount of
registered registered price per unit (1) price(1) registration fee
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 195,920(2) $12.69 $2,486,225 $857.32
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933 based upon the
average of the high and low prices reported on the American Stock Exchange on
October 8, 1996.
(2) There are also being registered such additional shares of Common Stock as
may be issuable with respect to such shares pursuant to any stock split or stock
dividend undertaken by the Registrant after the date hereof.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED ________, 1996
PROSPECTUS
195,920 Shares
Met-Pro Corporation
Common Stock
This Prospectus relates to 195,920 shares of Common Stock, par value $.10 per
share, of Met-Pro Corporation (the "Company") held by the Selling Shareholders
(as defined herein), which may be offered for sale from time to time by the
Selling Shareholders, or by their permitted pledgees, donees, transferees or
other successors in interest, to or through underwriters or directly to other
purchasers or through agents in one or more transactions at varying prices
determined at the time of sale or at negotiated prices. See "Plan of
Distribution". The Company will not receive any proceeds from the sale of shares
of Common Stock by the Selling Shareholders.
The Common Stock is quoted on the American Stock Exchange under the symbol
"MPR". On October __, 1996, the closing price of the Common Stock, as reported
by the American Stock Exchange, was $________.
------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is October ________, 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information concerning the Company filed with the Commission may be
inspected and copied at the public reference facilities maintained by the
Commission at its office at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, as well as at the Regional Offices of the Commission at 7 World Trade
Center, 13th Floor, New York, NY 10048. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Common Stock is quoted on the
American Stock Exchange. Such reports, proxy and information statements and
other information can also be inspected and copied at the offices of the
American Stock Exchange, 86 Trinity Place, New York, NY 10006.
The Company has filed a registration statement on Form S-3 (herein, together
with all amendments and exhibits thereto, referred to as the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the securities offered pursuant to this Prospectus. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is made to the
Registration Statement and the exhibits filed as a part thereof. Statements
contained herein concerning any document filed as an exhibit are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF INFORMATION BY REFERENCE
The following documents, filed with the Commission (File No. 001-07763) pursuant
to the Exchange Act, are hereby incorporated by reference in this Prospectus:
(i) Annual Report on Form 10-K of the Company for the fiscal year ended January
31, 1996; (ii) Quarterly Reports on Form 10-Q for the quarters ended April 30,
1996 and July 31, 1996; and (iii) Proxy Statement of the Company relating to the
annual meeting of shareholders held on June 5, 1996.
All other documents filed by the Company pursuant to Section 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Common Stock pursuant to this
Prospectus shall be deemed to be incorporated by reference and to be a part of
this Prospectus from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon oral or written request of any such person, a copy
of any or all of the documents incorporated herein by reference, other than the
exhibits to such documents (unless such exhibits are specifically incorporated
by reference in such documents). Requests should be directed to Met-Pro
Corporation, 160 Cassell Road, P.O. Box 144, Harleysville, PA 19438; Attn:
William Moffitt, Secretary, telephone (215) 723-6751.
2
<PAGE>
THE COMPANY
Met-Pro Corporation (the "Company") was organized in 1967 and has grown both
internally and through acquisitions. It designs, manufactures and distributes
products sold for pollution control and fluid handling. The Company operates
through seven divisions and three wholly-owned subsidiaries.
The Stiles-Kem Division is a leading manufacturer of specialty chemicals for the
control of lead and copper leaching, scale, and the discoloration of drinking
water caused by the presence of iron and manganese in the source water.
Stiles-Kem Division's products for drinking water treatment are food grade and
are certified to meet existing state, federal and ANSI/NSF standards for health
effects in drinking water. The products are manufactured in the Company's plant
in Waukegan, Illinois and are distributed through a network of dealers and
distributors located in the United States, Mexico and Canada.
The Sethco Division, located on Long Island, New York, designs, manufactures and
sells corrosion resistant pumps, filter chambers and filter systems with flow
rates to about 200 gallons per minute. These products are used in waste water
treatment systems and fume scrubbers for pollution control. They are also widely
used in the metal finishing industry, electronics industry and chemical
processing industry. Sethco products are sold through a network of non-exclusive
distributors, as well as to original equipment manufacturers and catalog houses.
The Mefiag Division, operating through two wholly-owned subsidiaries, designs
and manufactures filter systems utilizing horizontal disc technology for
superior performance, particularly in high efficiency and high-flow applications
in the plating and metal finishing industries and elsewhere. Worldwide sales are
accomplished through qualified, market-based distributors and original equipment
manufacturers located throughout Europe, the United States, South America and
other major markets.
The Systems Division, located at the Company's principal executive offices in
Harleysville, PA, and the original foundation on which Met-Pro was built,
designs, manufactures and installs major air and water pollution control
systems. Systems Division's air pollution control capabilities include: carbon
adsorption systems for the concentration and recovery of volatile solvents,
thermal and catalytic oxidation systems and the supply of abatement catalysts.
These systems are custom engineered for clients in the automotive, aerospace and
furniture industries. These products also have a variety of applications in the
painting, pharmaceutical, chemical, electronics, food processing and printing
industries. Systems Division also manufactures a full range of catalytic
converters for stationary engines and cogeneration plants to greatly reduce smog
producing and toxic gases, such as NOx, CO and residual hydrocarbons, which are
emitted from these sources.
The Duall Division is a leading manufacturer of industrial and municipal air
pollution control equipment. Its major products include odor control systems,
fume and emergency gas scrubbers, stripping towers and exhaust fans and plating
3
<PAGE>
and process tanks. All equipment is fabricated from corrosion resistant
materials in the Company's Owosso, Michigan manufacturing facilities. Services
include pilot studies, engineering, installation and performance testing. Duall
products are sold both domestically and internationally to the metal finishing,
waste water treatment, composting, food processing, chemical, printed circuit,
semiconductor, pharmaceutical, battery manufacturing and groundwater remediation
markets. Over ninety factory trained manufacturer's representatives sell Duall's
systems to industrial and municipal clients.
The Keystone Filter Division is an established custom pleater and cartridge
manufacturer in the United States. It provides custom designed and engineered
products which are currently used in such diverse applications as the nuclear
power industry, as components in medical equipment and in indoor air quality
equipment. It also provides standard filters for water purification and
industrial applications.
The Fybroc Division is a world leader in the manufacture of fiberglass
reinforced pumps. These pumps provide excellent corrosion resistance for tough
applications including pumping of acids, brines, caustics, bleaches and a wide
range of waste liquids. Fybroc pumps are sold to many markets including the
chemical, steel, pulp and paper, electric utility, aquaculture, aquarium, and
industrial and municipal waste treatment industries. Sales, engineering, and
customer service are provided through a worldwide distributor network.
The Dean Pump Division designs and manufactures high quality pumps that handle a
broad range of industrial applications. Users such as the chemical,
petrochemical, refinery, pharmaceutical, plastics, pulp and paper, and food
processing industries choose Dean Pump products particularly for their high
temperature applications. The Company's manufacturing facility in Indianapolis,
Indiana produces pumps which are sold through an extensive network of
distributors.
The Strobic Division, acquired on September 12, 1996, is presently operating as
a wholly-owned subsidiary corporation. See "The Company - Recent Events."
The Company's principal executive offices are located at 160 Cassell Road, P.O.
Box 144, Harleysville, PA 19438, and its telephone number is (215) 723-6751.
Recent Events
On June 5, 1996, the Company announced a 3-for-2 stock split, which was paid on
July 8, 1996 to holders of record on June 18, 1996.
On September 12, 1996, Met-Pro Corporation and Met-Pro Acquisition Corporation,
a wholly-owned subsidiary of Met-Pro Corporation (collectively, "Met-Pro"),
executed an Agreement and Plan of Merger (the "Agreement") with Strobic Air
4
<PAGE>
Corporation ("Strobic"), pursuant to which Strobic was merged with and into
Met-Pro Acquisition Corporation, which then changed its name to Strobic Air
Corporation.
The consideration paid by Met-Pro under the Agreement consisted of 195,920
shares of Met-Pro common stock, cash in the amount of approximately $2.15
million, and a promissory note for $250,000. Met-Pro also granted the former
Strobic shareholders certain registration rights under the Securities Act. Lynn
T. Secrest, one of Strobic's principal former shareholders and its former
president, deposited 40,816 shares of Common Stock of Met-Pro and the $250,000
note into escrow to fund indemnification obligations under the Agreement.
Met-Pro also entered into a three (3) year employment agreement with Mr. Lynn T.
Secrest to serve as vice president and the general manager of Strobic, and
obtained Mr. Secrest's covenant not to compete with Met-Pro for a four (4) year
period.
Met-Pro financed part of the purchase price and obligations of Strobic that were
paid at closing with a loan from Mellon Bank, N.A,. in the amount of $3.5
million.
Strobic designs, manufactures and holds patents on specialty blowers and
industrial fans for applications including laboratories, hospitals,
semi-conductor manufacturing clean rooms, pharmaceutical manufacturing and
chemical and petrol-chemical plants. Strobic conducts its operations in an
approximately 20,000 square foot manufacturing facility on a 2.3 acre parcel
that it owns in Bensalem, Pennsylvania, as well as in a contiguous approximately
16,000 square foot facility that it leases.
Met-Pro also entered into certain agreements with certain former Strobic
stockholders governing the disposition of their Shares (see "Plan of
Distribution").
USE OF PROCEEDS
The net proceeds from the sale of the Shares offered hereby will be received by
the Selling Shareholders. The Company will not receive any proceeds from any
sale of the Shares by the Selling Shareholders.
SELLING SHAREHOLDERS
The persons listed below received the Shares listed after their names in
connection with Met-Pro's acquisition of Strobic and propose to sell them from
time to time as set forth under the caption "Plan of Distribution" and subject
to the restrictions described in that section.
5
<PAGE>
The following individuals are the Selling Shareholders:
Name and Address Shares Owned Shares Offered
- ---------------- ------------ --------------
Eugene L. Dell 792 792
Shanta Kaushik Custodian for
Nashina Kaushik 792 792
Madlynne M. Pastor 396 396
Lynn T. Secrest 74,014(1)(2)(3) 74,014(1)(3)
Richard P. Secrest 55,411(2)(3) 55,411(3)
Ronald H. Secrest 24,539(2)(3) 24,539(3)
Frank J. Sobon, Jr. and
Anna B. Sobon, JT TEN 396 396
John W. Stone, III 39,580(3) 39,580(3)
- ---------------------------
(1) Includes Shares held in escrow under the terms of the Agreement. The
escrowed Shares may be replaced with the cash value equivalent of such
replaced Shares, valued at the average of the closing prices per share
as listed on the American Stock Exchange for the ten (10) trading days
prior to such replacement. Absent any such replacement, the escrowed
Shares may not be offered prior to September 11, 1998.
(2) The three Secrests are brothers; however, each of them disclaims
ownership of the Shares owned by the others.
(3) The sale of these Shares is subject to certain restrictions as set
forth in "Plan of Distribution."
In addition to their role as shareholders of Strobic, Messrs. Lynn Secrest,
Richard Secrest, Ronald Secrest and John Stone were formerly officers and
directors of Strobic. Mr. Lynn Secrest is currently employed by Met-Pro as the
Vice President and General Manager of the wholly-owned subsidiary of the Company
into which Strobic was merged. Except for the foregoing, none of the Selling
Shareholders listed above has held any position, office or other material
relationship within the past three years with the Company or any of its
predecessors or affiliates.
DESCRIPTION OF COMMON STOCK
The Company's certificate of incorporation authorizes the issuance of up to
10,000,000 shares of Common Stock, par value $.10 per share. The holders of
Common Stock (i) have equal rights to dividends from funds legally available
therefor, when, as and if declared by the Board of Directors of the Company;
(ii) are entitled to share ratably in all of the assets of the Company available
for distribution to holders of Common Stock upon liquidation, dissolution or
winding up of the affairs of the Company; (iii) do not have preemptive,
subscription or conversion rights, and there are no redemption or sinking fund
provisions applicable thereto; and (iv) are entitled to one vote per share on
all matters upon which shareholders may vote at all meetings of shareholders.
All shares of Common Stock now outstanding are fully paid and non-assessable.
The holders of shares of Common Stock do not have cumulative voting rights,
6
<PAGE>
which means that the holders of more than 50% of such outstanding shares, voting
for the election of directors, can elect all of the directors to be elected, if
they so choose. Directors are divided into three classes. Each year, one class
is elected to hold office for the next three years.
The transfer agent for the Company's Common Stock is Chemical Mellon Shareholder
Services, L.L.C., Overpark Center, 85 Challenger Road, Ridgefield Park, NJ
07660.
PLAN OF DISTRIBUTION
Any distribution of the Shares by the Selling Shareholders, or by permitted
pledgees, donee, transferees or other successors in interest, may be effected
from time to time in one or more of the following transactions: (a) to
underwriters who will acquire Shares for their own account and resell them in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale (any public
offering price and any discount or concessions allowed or re-allowed or paid to
dealers may be changed from time to time); (b) through brokers, acting as
principal or agent, in transactions (which may involve block transactions) on
the American Stock Exchange, or on one or more exchanges on which the Common
Stock is then listed, in special offerings, exchange distributions pursuant to
the rules of the applicable exchanges or in the over-the-counter market, or
otherwise, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, at negotiated prices or at fixed prices; or (c)
directly or through brokers or agents in private sales at negotiated prices, or
by any other legally available means.
The Selling Shareholders and such underwriters, brokers, dealers or agents, upon
effecting a sale of Shares, may be considered "underwriters" as that term is
defined by the Securities Act.
Underwriters participating in any offering made pursuant to this Prospectus (as
amended or supplemented from time to time) may receive underwriting discounts
and commissions, and discounts or concessions may be allowed or re-allowed or
paid to dealers, and brokers or agents participating in such transaction may
receive brokerage or agent's commissions or fees.
At the time a particular offering of Shares is made, to the extent required, a
Prospectus Supplement will be distributed which will set forth the amount of
Shares, the offering price paid by an underwriter for Shares purchased from the
Selling Shareholders, any discounts, commissions and other items constituting
compensation from the Selling Shareholders and any discounts, commissions or
concessions allowed or re-allowed or paid to dealers.
Messrs. Lynn Secrest, Richard Secrest, Ronald Secrest and John Stone as a group
and on behalf of their permitted transferees have agreed to the following
restrictions on open market resale of the Shares through December 11, 1997: (i)
no more than 2,000 Shares may be offered and sold on any trading day, and (ii)
no more than a total of 15,000 Shares may be sold in any calendar month. They
may make unlimited private sales to persons who agree to abide by the above
restrictions. These restrictions do not apply to any sale of Shares in an
underwritten public offering of Shares.
7
<PAGE>
The Company has agreed to process to effectiveness a registration statement
under the Securities Act covering the resale of the Shares and to amend it from
time to time as required to incorporate current significant information until
all the Shares have been sold, but not later than September 11, 1999.
All costs, expenses and fees in connection with the registration statement and
amendments to it will be borne by the Company. Commissions and discounts, if
any, attributable to the sale of the Shares will be borne by the Selling
Shareholders. The Selling Shareholders may agree to indemnify any agent, dealer
or broker-dealer that participates in transactions involving sales of the Shares
against certain liabilities, including liabilities arising under the Securities
Act. The Company and the Selling Shareholders have agreed to indemnify each
other and certain other persons against certain liabilities in connection with
the offering of the Shares, including liabilities arising under the Securities
Act.
Whenever the Company proposes to file a registration statement under the
Securities Act at any time or from time to time prior to September 11, 1999
involving an underwritten public offering, the Company has agreed to include in
any such registration statement any of the Shares that are so requested by the
Selling Shareholders; provided however, that if in the written opinion of the
underwriter or managing underwriter the inclusion of any of such Shares would
materially and adversely affect such public offering, then the number of such
Shares to be included shall be proportionately reduced.
The Company has granted an option to the Selling Shareholders and their
permitted transferees to "put" all, or at the sole option of the Selling
Shareholders, less than all, unsold Shares to the Company on September 12, 1999
at a price of $12.25 per Share.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the Company by
Earl J. Wofsey, Esquire, corporate counsel of the Company. Earl J. Wofsey is the
beneficial owner of 195,714 shares of the Company's Common Stock and options to
purchase an additional 13,500 shares. Prior to June 5, 1996, he was a Director
of the Company.
EXPERTS
The financial statements and the related supplemental schedules of the Company
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended January 31, 1996 have been audited by Margolis & Company
P.C., independent accountants, as stated in its report, which is incorporated
herein by reference, and has been so incorporated in reliance upon the report of
such firm, given upon its authority as experts in accounting and auditing. The
financial statements of Strobic Air Corporation for the year ended October 31,
1995 and the nine months ended July 31, 1996 have been audited by Margolis &
Company P.C., and are included herein in reliance upon the report of such firm,
given upon its authority as experts in accounting and auditing.
8
<PAGE>
STROBIC AIR CORPORATION
FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JULY 31, 1996
F-1
<PAGE>
STROBIC AIR CORPORATION
TABLE OF CONTENTS
FOR THE NINE MONTHS ENDED JULY 31, 1996
- -------------------------------------------------------------------------------
PAGE
NUMBER
------
Independent Auditor's Report 2
Financial Statements:
Balance sheet 3
Operations 4
Stockholders' equity 5
Cash flows 6
Notes to financial statements 7 to 11
F-2
<PAGE>
[LETTERHEAD OF MARGOLIS & COMPANY P.C.]
INDEPENDENT AUDITOR'S REPORT
September 4, 1996, except for Note 9
as to which the date is September 12,
1996
Officers and Directors
Strobic Air Corporation
Bensalem, Pennsylvania
We have audited the accompanying balance sheet of Strobic Air Corporation as of
July 31, 1996, and the related statements of operations, stockholders' equity
and cash flows for the nine months then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Strobic Air Corporation as of
July 31, 1996, and the results of its operations and its cash flows for the nine
months then ended in conformity with generally accepted accounting principles.
/s/ Margolis & Company P.C.
Certified Public Accountants
F-3
<PAGE>
STROBIC AIR CORPORATION
BALANCE SHEET
JULY 31, 1996
- --------------------------------------------------------------------------------
ASSETS
Current assets:
Cash $ 75,012
Accounts receivable, net of allowance of $5,000 1,126,499
Inventories 860,210
Deferred tax asset 18,600
Prepaid expenses and other current assets 18,256
----------
Total current assets 2,098,577
Property, plant and equipment, net 610,462
Other assets 95,037
----------
$2,804,076
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable, bank line-of-credit $ 540,000
Demand note payable, individual 100,000
Current portion of long-term debt 75,167
Accounts payable 437,647
Accrued expenses 325,539
Accrued income taxes 179,336
----------
Total current liabilities 1,657,689
Long-term debt 101,858
Deferred tax liability 37,200
----------
Total liabilities 1,796,747
----------
Commitments
Stockholders' equity:
Common stock, no par value; 5,000 shares
authorized, 2,505 shares issued 75,614
Retained earnings 937,715
----------
1,013,329
Less treasury stock, at cost, 30 shares 6,000
----------
Net stockholders' equity 1,007,329
----------
$2,804,076
==========
The notes to financial statements are an integral part of the above statement.
F-4
<PAGE>
STROBIC AIR CORPORATION
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
Gross sales, net of discounts and
allowances of $37,000 $5,143,874
Less commissions 505,597
----------
Net sales 4,638,277
Cost of goods sold 3,355,345
----------
Gross profit 1,282,932
----------
Operating expenses:
Selling 241,891
General and administrative 515,905
Research and development 53,924
----------
811,720
----------
Income from operations 471,212
Interest expense 52,641
----------
Income before taxes on income 418,571
Provision for taxes on income 199,800
----------
Net income $ 218,771
==========
The notes to financial statements are an integral part of the above statement.
F-5
<PAGE>
STROBIC AIR CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
COMMON RETAINED TREASURY
STOCK EARNINGS STOCK TOTAL
------- --------- ------- ----------
Balance, October 31, 1995 $75,614 $ 723,894 ($6,000) $ 793,508
Net income 218,771 218,771
Dividends paid ( 4,950) ( 4,950)
------- --------- ------- ----------
Balance, July 31, 1996 $75,614 $ 937,715 ($6,000) $1,007,329
======= ========= ======= ==========
The notes to financial statements are an integral part of the above statement.
F-6
<PAGE>
STROBIC AIR CORPORATION
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net income $218,771
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 80,231
Deferred income taxes ( 15,200)
Allowance for doubtful accounts ( 4,250)
(Increase) decrease in operating assets:
Accounts receivable 94,977
Inventories ( 61,882)
Prepaid expenses and other current assets 17,298
Increase (decrease) in operating liabilities:
Accounts payable 107,966
Accrued expenses (322,307)
Accrued income taxes 150,063
--------
Net cash provided by operating activities 265,667
--------
Cash flows from investing activities:
Acquisitions of property and equipment ( 117,983)
Increase in other assets ( 19,441)
--------
Net cash (used in) investing activities ( 137,424)
--------
Cash flows from financing activities:
Net borrowings under line-of-credit 20,000
Reduction of long-term debt ( 68,756)
Payment of dividends ( 4,950)
--------
Net cash (used in) financing activities ( 53,706)
--------
Net increase in cash 74,537
Cash at beginning of period 475
--------
Cash at end of period $ 75,012
========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 46,532
--------
Income taxes $ 63,359
--------
The notes to financial statements are an integral part of the above statement.
F-7
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
1. Nature of Business and Summary of Significant Accounting Policies
Nature of business - Strobic Air Corporation (the "Company") develops,
engineers and assembles air moving equipment and specializes in corrosive,
toxic and high temperature exhaust systems and clean room recirculation
systems. The Company's products are sold throughout the United States.
Inventories - Inventories are stated at the lower of cost (first-in,
first-out) or market.
Patents and trademarks - Patents and trademarks are amortized on a
straight-line basis over five years.
Property, plant and equipment - Property, plant and equipment is recorded
at cost. Depreciation is computed using straight-line and accelerated
methods over estimated useful lives. Expenditures for maintenance and
repairs are charged to expense as incurred. Renewals and betterments are
capitalized.
Revenue recognition - Revenues are recognized when products are shipped.
Advertising - Advertising costs are charged to operations in the period
incurred and amounted to $82,710 for the nine months ended July 31, 1996.
Use of estimates - The presentation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
2. Inventories
Inventories consisted of the following:
Finished goods $ 11,430
Work in process 106,116
Raw materials 742,664
-------
$860,210
========
F-8
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
3. Property, Plant and Equipment
Property, plant and equipment consisted of the following:
Land $ 100,000
Building 350,000
Building improvements 113,358
Leasehold improvements 21,998
Machinery and equipment 869,663
Tooling 163,533
Automotive and delivery equipment 58,812
---------
1,677,364
Less accumulated depreciation 1,066,902
---------
$ 610,462
==========
Depreciation charged to operations amounted to $79,441.
4. Debt
Short-Term Debt
The Company has a $1,000,000 line-of-credit with CoreStates Bank, N.A.
pursuant to which $540,000 was outstanding at July 31, 1996. The rate of
interest on borrowings under the revolving credit loan is the bank's prime
lending rate which was at 8.25% on July 31, 1996. Total aggregate
borrowings under the revolving credit loan are limited to 80% of eligible
accounts receivable plus 40% of eligible inventory. The revolving credit
loan is payable upon demand and is collateralized by accounts receivable,
inventories and equipment.
On October 31, 1995, the Company executed a demand note in the amount of
$100,000 for consulting and other services rendered prior to that date. The
note accrues interest at the prime rate.
Long-Term Debt
Mortgage payable, CoreStates Bank, N.A. due in
monthly installments of $3,000 including interest at
9%, maturing in August, 1999, collateralized by real
estate located in Bensalem, PA $ 95,475
Note payable, CoreStates Bank, N.A., due in monthly
installments of $3,883, plus interest at 7.5%,
maturing in April, 1998, collateralized by equipment,
inventories, accounts receivable and real estate 81,550
--------
177,025
Less current portion 75,167
--------
$101,858
========
F-9
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
4. Debt - Continued
Long-Term Debt - Continued
Maturities of long-term debt are as follows:
NINE MONTHS ENDED JULY 31,
1997 $ 75,167
1998 66,196
1999 34,177
2000 1,485
--------
$177,025
========
Interest expense was $52,641 for the nine months ended July 31, 1996.
5. Related Party Transactions
The Company's related party transactions with S.A.C. Sales Corp., which is
affiliated to common ownership by a shareholder of Strobic Air Corporation,
for the nine months ended July 31, 1996, were as follows:
Commissions earned by affiliate $136,907
========
Administrative fees charged to affiliate $ 5,400
========
Product sales to affiliate $297,632
========
Purchases from affiliate $113,910
========
Amounts due from or to this affiliate were as follows:
Accounts receivable $ 21,558
========
Commissions payable $ 11,875
========
6. Income Taxes
The provision for income taxes consisted of the following:
Current:
Federal $161,000
State 54,000
--------
215,000
Deferred ( 15,200)
--------
$199,800
========
F-10
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
6. Income Taxes - Continued
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The
Company's net deferred tax liability consisted of the following:
Deferred tax asset:
Inventory cost capitalization $14,900
Other 3,700
--------
18,600
Deferred tax liability:
Accelerated depreciation ( 37,200)
--------
($18,600)
========
7. Commitments and Contingencies
Leases
The Company has a monthly lease for a production facility in Bensalem,
Pennsylvania requiring monthly payments of $4,000, plus real estate taxes,
through October, 1997.
The Company has various equipment and automobile leases. The future
minimum rental payments under these noncancellable leases are as follows:
TWELVE MONTHS ENDED
JULY 31,
-------------------
1997 $53,403
1998 12,394
Rental expense under all operating leases was $32,470.
Purchases
As of July 31, 1996, the Company had outstanding purchase commitments
totaling $50,000.
F-11
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
8. Financial Instruments
Concentrations of credit risk:
Financial instruments which subject the Company to concentrations of credit
risk consist of cash and accounts receivable. The Company's cash is
maintained in a high quality financial institution. Concentrations of
credit risk related to accounts receivable are limited due to the large
number of customers and their dispersion among different industries and
geographic regions.
Fair value of financial instruments:
The carrying amounts and related fair value of the Company's financial
instruments are as follows:
CARRYING FAIR
AMOUNT VALUE
-------- --------
Assets:
Cash $ 75,012 $ 75,012
Liabilities:
Note payable, bank 540,000 540,000
Note payable, individual 100,000 100,000
Long-term debt 177,025 177,025
The following methods and assumptions were used to estimate the fair value
of each financial instrument:
Cash - The carrying amount approximates fair value because of the short
maturity of this instrument.
Note payable, bank line-of-credit; note payable, individual; and long-term
debt - The fair value is based on the present value of expected future
payments discounted at rates available to the Company under similiar
borrowing arrangements.
9. Subsequent Event
On September 12, 1996, the Company entered into an agreement and plan of
merger whereby it agreed to be merged with and into Met-Pro Acquisition
Corporation, a wholly-owned subsidiary of Met-Pro Corporation, as part of a
tax-free reorganization.
F-12
<PAGE>
STROBIC AIR CORPORATION
FINANCIAL STATEMENTS
FOR THE YEAR ENDED OCTOBER 31, 1995
F-13
<PAGE>
STROBIC AIR CORPORATION
TABLE OF CONTENTS
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
PAGE
NUMBER
------
Independent Auditor's Report 2
Financial Statements:
Balance sheet 3
Operations 4
Stockholders' equity 5
Cash flows 6
Notes to financial statements 7 to 11
F-14
<PAGE>
[LETTERHEAD OF MARGOLIS & COMPANY P.C.]
INDEPENDENT AUDITOR'S REPORT
September 4, 1996, except for Note 9
as to which the date is September 12,
1996
Officers and Directors
Strobic Air Corporation
Bensalem, Pennsylvania
We have audited the accompanying balance sheet of Strobic Air Corporation as of
October 31, 1995, and the related statements of operations, stockholders'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Strobic Air Corporation as of
October 31, 1995, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ Margolis & Company P.C.
Certified Public Accountants
F-15
<PAGE>
STROBIC AIR CORPORATION
BALANCE SHEET
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
ASSETS
Current assets:
Cash $ 475
Accounts receivable, net of allowance for
doubtful accounts of $5,000 1,217,226
Inventories 798,328
Deferred tax asset 16,000
Prepaid expenses and other current assets 35,554
----------
Total current assets 2,067,583
Property, plant and equipment, net 571,920
Other assets 76,386
----------
$2,715,889
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable, bank line-of-credit $ 520,000
Demand note payable, individual 100,000
Current portion of long-term debt 87,309
Accounts payable 329,681
Accrued expenses 647,846
Accrued income taxes 29,273
----------
Total current liabilities 1,714,109
Long-term debt 158,472
Deferred tax liability 49,800
----------
Total liabilities 1,922,381
----------
Commitments
Stockholders' equity:
Common stock, no par value; 5,000 shares
authorized, 2,505 shares issued 75,614
Retained earnings 723,894
----------
799,508
Less treasury stock, at cost, 30 shares 6,000
----------
Net stockholders' equity 793,508
----------
$2,715,889
==========
The notes to financial statements are an integral part of the above statement.
F-16
<PAGE>
STROBIC AIR CORPORATION
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
Gross sales, net of discounts and
allowances of $30,000 $6,225,488
Less commissions 671,568
----------
Net sales 5,553,920
Cost of goods sold 3,893,099
----------
Gross profit 1,660,821
----------
Operating expenses:
Selling 395,868
General and administrative 748,081
Research and development 150,486
----------
1,294,435
----------
Income from operations 366,386
Other expense 214,009
----------
Income before taxes on income 152,377
Provision for taxes on income 59,000
----------
Net income $ 93,377
==========
The notes to financial statements are an integral part of the above statement.
F-17
<PAGE>
STROBIC AIR CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
COMMON RETAINED TREASURY
STOCK EARNINGS STOCK TOTAL
------ -------- -------- -----
Balance, October 31, 1994 $75,614 $632,992 ($6,000) $702,606
Net income 93,377 93,377
Dividends paid (2,475) (2,475)
------- -------- ------- --------
Balance, October 31, 1995 $75,614 $723,894 ($6,000) $793,508
======= ======== ======= ========
The notes to financial statements are an integral part of the above statement.
F-18
<PAGE>
STROBIC AIR CORPORATION
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net income $ 93,377
Adjustments to reconcile net income to net cash
(used in) operating activities:
Depreciation and amortization 111,981
Deferred income taxes 3,000
Loss on sale of equipment 33,669
(Increase) decrease in operating assets:
Accounts receivable ( 161,159)
Inventories 113,198
Prepaid expenses and other current assets ( 3,668)
Increase (decrease) in operating liabilities:
Accounts payable ( 251,044)
Accrued expenses 43,745
Accrued income taxes 29,168
--------
Net cash (used in) operating activities ( 12,267)
--------
Cash flows from investing activities:
Proceeds from sale of property and equipment 13,300
Acquisitions of property and equipment ( 61,473)
Increase in other assets ( 14,387)
--------
Net cash (used in) investing activities ( 62,560)
--------
Cash flows from financing activities:
Net borrowings under line-of-credit 45,000
Reduction of long-term debt ( 99,018)
Payment of dividends ( 2,475)
--------
Net cash (used in) financing activities ( 56,493)
--------
Net (decrease) in cash ( 106,786)
Cash at beginning of year 107,261
--------
Cash at end of year $ 475
========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 77,624
--------
Income taxes $ 24,336
--------
The notes to financial statements are an integral part of the above statement.
F-19
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
1. Nature of Business and Summary of Significant Accounting Policies
Nature of business - Strobic Air Corporation (the "Company") develops,
engineers and assembles air moving equipment and specializes in corrosive,
toxic and high temperature exhaust systems and clean room recirculation
systems. The Company's products are sold throughout the United States.
Inventories - Inventories are stated at the lower of cost (first-in,
first-out) or market.
Patents and trademarks - Patents and trademarks are amortized on a
straight-line basis over five years.
Property, plant and equipment - Property, plant and equipment is recorded
at cost. Depreciation is computed using straight-line and accelerated
methods over estimated useful lives. Expenditures for maintenance and
repairs are charged to expense as incurred. Renewals and betterments are
capitalized.
Revenue recognition - Revenues are recognized when products are shipped.
Advertising - Advertising costs are charged to operations in the year
incurred and amounted to $165,888 for the year ended October 31, 1995.
Use of estimates - The presentation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
2. Inventories
Inventories consisted of the following:
Work in process $ 86,415
Raw materials 711,913
-------
$798,328
========
F-20
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
3. Property, Plant and Equipment
Property, plant and equipment consisted of the following:
Land $ 100,000
Building 350,000
Building improvements 113,358
Machinery and equipment 801,686
Tooling 135,525
Automotive and delivery equipment 58,812
----------
1,559,381
Less accumulated depreciation 987,461
----------
$ 571,920
==========
Depreciation charged to operations amounted to $111,251.
4. Debt
Short-Term Debt
The Company has a $1,000,000 line-of-credit with CoreStates Bank, N.A.
pursuant to which $520,000 was outstanding at October 31, 1995. The rate of
interest on borrowings under the revolving credit loan is the bank's prime
lending rate which was 8.75% on October 31, 1995. Total aggregate
borrowings under the revolving credit loan are limited to 80% of eligible
accounts receivable plus 40% of eligible inventory. The revolving credit
loan is payable upon demand and is collateralized by accounts receivable,
inventories and equipment. The revolving credit loan is subject to certain
covenants, including maintenance of prescribed amounts of net worth ratios.
On October 31, 1995, the Company executed a demand note in the amount of
$100,000 for consulting and other services rendered prior to that date. The
note accrues interest at the prime rate.
Long-Term Debt
Mortgage payable, CoreStates Bank, N.A. due in
monthly installments of $3,000 including interest at
9%, maturing in August, 1999, collateralized by
real estate located in Bensalem, PA $115,281
Note payable, CoreStates Bank, N.A., due in monthly
installments of $3,883, plus interest at 7.5%,
maturing in April, 1998, collateralized by furniture
and fixtures, equipment, inventories, accounts
receivable and real estate
116,500
Note payable, CoreStates Bank, N.A., due in monthly
installments of $2,333, plus interest at 7.95%,
maturing in April, 1996, collateralized by,
equipment, inventories,
accounts receivable and real estate 14,000
--------
245,781
Less current portion 87,309
--------
$158,472
========
F-21
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
4. Debt - Continued
Long-Term Debt - Continued
Maturities of long-term debt are as follows:
YEAR ENDED OCTOBER 31,
1996 $ 87,309
1997 75,814
1998 55,255
1999 27,403
--------
$245,781
========
5. Related Party Transactions
The Company's related party transactions with S.A.C. Sales Corp., which is
affiliated to common ownership by a shareholder of Strobic Air Corporation,
for the year ended October 31, 1995, were as follows:
Commissions earned by affiliate $157,329
========
Warranty fees earned by affiliate $ 3,200
========
Administrative fees charged to affiliate $ 7,200
========
Product sales to affiliate $527,545
========
Purchases from affiliate $ 48,326
========
Amounts due from or to this affiliate were as follows:
Accounts receivable $ 97,176
========
Commissions payable $ 2,540
========
F-22
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
6. Income Taxes
The provision for income taxes consisted of the following:
Current:
Federal $36,000
State 20,000
-------
56,000
Deferred 3,000
-------
$59,000
=======
The Company utilized approximately $4,000 of research and development
credits to reduce its current federal income tax expense.
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The
Company's net deferred tax liability consisted of the following:
Deferred tax asset:
Inventory cost capitalization $16,000
Deferred tax liability:
Accelerated depreciation ( 49,800)
--------
($33,800)
========
7. Commitments and Contingencies
Leases
The Company has various equipment and automobile leases. The future minimum
rental payments under these noncancellable leases are as follows:
1996 $9,272
1997 4,294
Rental expense under all operating leases was $32,727.
8. Other Expense
Other expense consisted of the following:
Interest expense $ 77,215
Loss on sale of equipment 33,669
Litigation settlements (see Note 9) 103,125
-------
$214,009
========
F-23
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
9. Litigation Settlements
Included in other expenses (see Note 8) are the settlements in 1995 of two
disputes. The first involved a former customer and was settled with the
assistance of the American Arbitration Association. The total cost of this
settlement was $23,125. The second suit involved a sales agent who had been
terminated by the Company. The total cost of this settlement as $80,000.
10. Financial Instruments
Concentrations of credit risk:
Financial instruments which subject the Company to concentrations of
credit risk consist of cash and accounts receivable. The Company's cash is
maintained in a high quality financial institution. Concentrations of
credit risk related to accounts receivable are limited due to the large
number of customers and their dispersion among different industries and
geographic regions.
Fair value of financial instruments:
The carrying amounts and related fair value of the Company's financial
instruments are as follows:
CARRYING FAIR
AMOUNT VALUE
-------- -----
Assets:
Cash $ 475 $ 475
Liabilities:
Note payable, bank 520,000 520,000
Note payable, individual 100,000 100,000
Long-term debt 245,781 245,781
The following methods and assumptions were used to estimate the fair value
of each financial instrument:
Cash and note payable, individual - The carrying amount approximates fair
value because of the short maturity of these instruments.
Note payable, bank and long-term debt - The fair value is based on the
present value of expected future payments discounted at rates available to
the Company under similar borrowing arrangements.
11. Subsequent Event
On September 12, 1996, the Company entered into an agreement and plan of
merger whereby it agreed to be merged with and into Met-Pro Acquisition
Corporation, a wholly-owned subsidiary of Met-Pro Corporation, as part of
a tax-free reorganization.
F-24
<PAGE>
MET-PRO CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION (UNAUDITED)
JANUARY 31, 1996
(NOTE 1)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
PRO FORMA
MET-PRO STROBIC AIR -------------------------------
CORPORATION CORPORATION TOTAL ADJUSTMENTS CONSOLIDATED
------------ ------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $7,415,375 $113,726 $7,529,101 ($208,730)(H) $6,479,695
(840,676)(L)
Accounts receivable, net of
allowance for doubtful accounts 8,941,157 1,178,783 10,119,940 10,119,940
Notes receivable, ESOT 400,000 400,000 400,000
Inventories 10,302,844 850,938 11,153,782 11,153,782
Prepaid expenses, deposits and
other current assets 559,238 14,867 574,105 574,105
Deferred income taxes 649,947 649,947 649,947
------------ ----------- ------------ ----------- -------------
Total current assets 28,268,561 2,158,314 30,426,875 (1,049,406) 29,377,469
Property, plant and equipment, at
cost, net 14,433,565 556,421 14,989,986 150,000 (I) 15,139,986
Costs in excess of net assets of
businesses acquired 3,725,118 3,725,118 3,973,537 (K) 7,758,655
60,000 (J)
Other assets 1,199,343 76,165 1,275,508 1,000,000 (D) 2,284,258
8,750 (G)
------------ ----------- ------------ ----------- -------------
Total assets $47,626,587 $2,790,900 $50,417,487 $4,142,881 $54,560,368
============ =========== ============ =========== =============
</TABLE>
See accompanying explanatory notes to pro forma consolidated
condensed financial statements.
F-25
<PAGE>
MET-PRO CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION
(UNAUDITED) - CONTINUED
JANUARY 31, 1996
(NOTE 1)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRO FORMA
MET-PRO STROBIC AIR -------------------------------
CORPORATION CORPORATION TOTAL ADJUSTMENTS CONSOLIDATED
------------ ------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $620,000 $620,000 ($620,000)(L) $0
Notes payable - stockholders 140,000 140,000 140,000
Current portion of long-term debt $1,178,177 80,914 1,259,091 700,000 (F) 1,878,177
(80,914)(L)
Accounts payable 2,307,034 403,384 2,710,418 2,710,418
Accrued salaries, wages and expenses 6,353,886 427,812 6,781,698 6,781,698
Customers' advances 411,409 411,409 411,409
Accrued income taxes 68,765 68,765 68,765
------------ ----------- ------------ ----------- ------------
Total current liabilities 10,250,506 1,740,875 11,991,381 (914) 11,990,467
Long-term debt 1,692,962 139,762 1,832,724 2,800,000 (F) 4,742,962
250,000 (A)
(139,762)(L)
Other non-current liabilities 101,345 101,345 101,345
Deferred income taxes 569,196 33,800 602,996 60,000 (J) 662,996
------------ ----------- ------------ ----------- ------------
Total liabilities 12,614,009 1,914,437 14,528,446 2,969,324 17,497,770
------------ ----------- ------------ ----------- ------------
Stockholders' equity:
Common stock, Met-Pro Corporation 475,922 475,922 19,592 (C) 495,514
Common stock, Strobic Air Corporation 75,614 75,614 (75,614) 0
Additional paid-in capital 7,442,810 7,442,810 2,380,428 (C) 9,823,238
Retained earnings 28,142,539 806,849 28,949,388 (806,849) 27,792,539
(350,000)(E)
Foreign currency adjustment 209,333 209,333 209,333
------------ ----------- ------------ ----------- ------------
36,270,604 882,463 37,153,067 1,167,557 38,320,624
Less: treasury stock, at cost 1,258,026 6,000 1,264,026 (6,000) 1,258,026
------------ ----------- ------------ ----------- ------------
Net stockholders' equity 35,012,578 876,463 35,889,041 1,173,557 37,062,598
------------ ----------- ------------ ----------- ------------
Total liabilities and stockholders'
equity $47,626,587 $2,790,900 $50,417,487 $4,142,881 $54,560,368
=========== =========== ============ ========== ===========
</TABLE>
See accompanying explanatory notes to pro forma consolidated
condensed financial statements.
F-26
<PAGE>
MET-PRO CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED JANUARY 31, 1996
(NOTE 2)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PRO FORMA
MET-PRO STROBIC AIR -------------------------------
CORPORATION CORPORATION TOTAL ADJUSTMENTS CONSOLIDATED
----------- ----------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net sales $54,067,320 $5,553,920 $59,621,240 $59,621,240
Cost of goods sold 35,625,610 3,893,099 39,518,709 ($288,000)(M) 39,230,709
------------- ------------ ------------ ------------ ------------
Gross profit 18,441,710 1,660,821 20,102,531 288,000 20,390,531
------------- ------------ ------------ ------------ ------------
Operating expenses:
Selling 4,489,905 395,868 4,885,773 64,000 (N) 4,949,773
General and administrative 6,287,848 975,782 7,263,630 7,500 (O) 7,240,607
250,000 (P)
263,863 (R)
99,338 (S)
(100,000)(T)
(58,000)(V)
(222,000)(W)
(127,840)(X)
(33,669)(Y)
(25,000)(Z)
(77,215)(AA)
------------- ------------ ------------ ------------ ------------
10,777,753 1,371,650 12,149,403 40,977 12,190,380
------------- ------------ ------------ ------------ ------------
Income from operations 7,663,957 289,171 7,953,128 247,023 8,200,151
Other income (expenses), net 561,060 (136,794) 424,266 (41,000)(Q) 486,391
103,125 (U)
------------- ------------ ------------ ------------ ------------
Income before taxes on income 8,225,017 152,377 8,377,394 309,148 8,686,542
Provision for taxes on income 3,331,132 59,000 3,390,132 123,659 (AB) 3,513,791
------------- ------------ ------------ ------------ ------------
Net income $4,893,885 $93,377 $4,987,262 $185,489 $5,172,751
============= ============ ============ ============ ============
Net income per share, fully diluted $0.69 $0.71
============= ============
Weighted average number of common
shares outstanding after giving
effect to 3-for-2 stock split
on July 8, 1996 7,051,527 195,920 (B) 7,247,447
============= ============ ============
</TABLE>
See accompanying explanatory notes to pro forma consolidated
condensed financial statements.
F-27
<PAGE>
MET-PRO CORPORATION
Explanatory Notes to Pro Forma Consolidated Condensed Financial Statements
For the Year Ended January 31, 1996
1. The pro forma consolidated condensed balance sheet is based on the
individual balance sheets of Met-Pro Corporation and Strobic Air
Corporation to reflect the acquisition of Strobic Air Corporation by
Met-Pro Corporation (which took place on September 12, 1996) as if it
had taken place on January 31, 1996, after giving effect to pro forma
adjustments to reflect the following:
Met-Pro Corporation paid $2,399,980 for 100% of the common stock of
Strobic Air Corporation of which $2,149,980 was paid on the date of the
transaction and $250,000 (A) was in the form of a promissory note
payable on April 2, 1998. Interest is payable on the promissory note at
the rate of 5.9% per annum. In addition, Met-Pro Corporation exchanged
195,920 (B) shares of its common stock having an aggregate value of
$2,400,020 (C).
As part of the transaction, Met-Pro Corporation entered into a
non-compete transaction with one of the stockholders of Strobic Air
Corporation for which he was paid $1,000,000 (D). In addition, a
sign-on bonus of $350,000 (E) was paid to this stockholder.
Total cash required at settlement amounted to $3,499,980. Met-Pro
Corporation financed this transaction with a bank on an unsecured
basis. The bank financing, in the aggregate amount of $3,500,000 (F),
is comprised of two notes, one with a floating interest rate and one
with a fixed interest rate, in the amount of $1,750,000 each. Each loan
is payable in equal quarterly installments aggregating $175,000,
commencing on December 31, 1996. Met-Pro Corporation incurred financing
fees of $8,750 (G) related to this financing.
Met-Pro Corporation incurred approximately $200,000 (H) in costs
associated with the transaction, which was funded internally.
For purposes of the pro forma financial statements, Strobic Air
Corporation's building was written up by $150,000 (I) to estimated fair
value.
The increase in deferred taxes of $60,000 (J) included on the pro forma
balance sheet is the result of differences between the book basis and
tax basis of the assets acquired, in compliance with Financial
Accounting Standards Board Statement No. 109, Accounting for Income
Taxes.
As a result of this acquisition, Met-Pro Corporation has increased the
costs in excess of net assets of businesses acquired by $3,973,537 (K)
as of January 31, 1996.
In connection with the acquisition, Met-Pro Corporation repaid all of
the outstanding debt of Strobic Air Corporation, which at January 31,
1996 amounted to $840,676 (L).
F-28
<PAGE>
MET-PRO CORPORATION
Explanatory Notes to Pro Forma Consolidated Condensed Financial Statements
For the Year Ended January 31, 1996
2. The pro forma consolidated condensed statement of operations is based
on the individual statements of Met-Pro Corporation for the year ended
January 31, 1996 and Strobic Air Corporation for the year ended October
31, 1995, after giving effect to the pro forma adjustments necessary to
reflect the acquisition described in Note 1, as if it had taken place
on February 1, 1995.
The pro forma adjustments are as follows:
(M) Increase of $288,000 in gross margins for sales of inventory
to affiliate owned by stockholder of Strobic Air Corporation.
(N) Increase in commissions of $64,000 related to gross margins
described in (M) above.
(O) Additional depreciation on the write-up of Strobic Air
Corporation's building amounting to $7,500.
(P) Amortization of covenant not to compete of $250,000.
(Q) Reduction in interest income by $41,000 due to the cash outlay
by Met-Pro Corporation to acquire Strobic Air Corporation and
repay its debt.
(R) Interest expense increase of $263,863 as a result of bank
financing of $3,500,000 and $250,000 note payable to Strobic
Air Corporation stockholder.
(S) Amortization of costs in excess of net assets of businesses
acquired over 40 years amounting to $99,338.
(T) Reduction in salary of Strobic Air Corporation stockholder of
$100,000.
(U) During the year ended October 31, 1995, Strobic Air
Corporation settled two litigation matters totaling $103,125,
which for purposes of this pro forma are considered to be
non-recurring.
(V) Legal fees relating to litigation described in (U) above and
other non-recurring professional fees amounting to $58,000 in
the aggregate.
F-29
<PAGE>
MET-PRO CORPORATION
Explanatory Notes to Pro Forma Consolidated Condensed Financial Statements
For the Year Ended January 31, 1996
(W) Non-recurring expenses of Strobic Air Corporation stockholders
amounting to $222,000.
(X) Non-recurring royalty payments amounting to $127,840.
(Y) Reduction in general and administrative expenses for loss on
sale of equipment amounting to $33,669 not considered to be a
recurring charge.
(Z) Reduction in insurance expense of $25,000 based on estimated
savings from duplicate coverages between the two companies.
(AA) Reduction in interest expense of $77,215 resulting from
repayment of Strobic Air Corporation's debt by Met-Pro
Corporation.
(AB) Tax effect of the above adjustments to result in an assumed
effective consolidated income tax rate of 40%.
F-30
<PAGE>
MET-PRO CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION (UNAUDITED)
JULY 31, 1996
(NOTE 1)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
PRO FORMA
MET-PRO STROBIC AIR -------------------------------
CORPORATION CORPORATION TOTAL ADJUSTMENTS CONSOLIDATED
------------ ------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $5,678,113 $ 75,012 $5,753,125 ($208,730)(H) $4,727,370
(817,025)(L)
Accounts receivable, net of
allowance for doubtful accounts 11,549,755 1,126,499 12,676,254 12,676,254
Notes receivable, ESOT 400,000 400,000 400,000
Inventories 11,348,811 860,210 12,209,021 12,209,021
Prepaid expenses, deposits and
other current assets 417,139 18,256 435,395 435,395
Deferred income taxes 649,947 18,600 668,547 668,547
------------ ----------- ------------ ----------- -------------
Total current assets 30,043,765 2,098,577 32,142,342 (1,025,755) 31,116,587
Property, plant and equipment, at
cost, net 15,106,290 610,462 15,716,752 150,000 (I) 15,866,752
Costs in excess of net assets of
businesses acquired 3,680,953 3,680,953 3,842,671 (K) 7,583,624
60,000 (J)
Other assets 947,671 95,037 1,042,708 1,000,000 (D) 2,051,458
8,750 (G)
------------ ----------- ------------ ----------- -------------
Total assets $49,778,679 $2,804,076 $52,582,755 $4,035,666 $56,618,421
============ =========== ============ =========== =============
</TABLE>
See accompanying explanatory notes to pro forma consolidated
condensed financial statements.
F-31
<PAGE>
MET-PRO CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION
(UNAUDITED) - CONTINUED
JULY 31, 1996
(NOTE 1)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRO FORMA
MET-PRO STROBIC AIR -------------------------------
CORPORATION CORPORATION TOTAL ADJUSTMENTS CONSOLIDATED
------------ ------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $640,000 $640,000 ($640,000)(L) $0
Current portion of long-term debt $1,031,559 75,167 1,106,726 700,000 (F) 1,731,559
(75,167)(L)
Accounts payable 3,020,498 437,647 3,458,145 3,458,145
Accrued salaries, wages and expenses 7,603,303 325,539 7,928,842 7,928,842
Customers' advances 673,084 673,084 673,084
Accrued income taxes 179,336 179,336 179,336
------------ ----------- ------------ ----------- ------------
Total current liabilities 12,328,444 1,657,689 13,986,133 (15,167) 13,970,966
Long-term debt 1,251,589 101,858 1,353,447 2,800,000 (F) 4,301,589
250,000 (A)
(101,858)(L)
Other non-current liabilities 137,140 37,200 174,340 174,340
Deferred income taxes 552,552 552,552 60,000 (J) 612,552
------------ ----------- ------------ ----------- ------------
Total liabilities 14,269,725 1,796,747 16,066,472 2,992,975 19,059,447
------------ ----------- ------------ ----------- ------------
Stockholders' equity:
Common stock, Met-Pro Corporation 713,863 713,863 19,592 (C) 733,455
Common stock, Strobic Air Corporation 75,614 75,614 (75,614) 0
Additional paid-in capital 7,397,662 7,397,662 2,380,428 (C) 9,778,090
Retained earnings 29,249,679 937,715 30,187,394 (937,715) 28,899,679
(350,000)(E)
Foreign currency adjustment 229,053 229,053 229,053
------------ ----------- ------------ ----------- ------------
37,590,257 1,013,329 38,603,586 1,036,691 39,640,277
Less: treasury stock, at cost 2,081,303 6,000 2,087,303 (6,000) 2,081,303
------------ ----------- ------------ ----------- ------------
Net stockholders' equity 35,508,954 1,007,329 36,516,283 1,042,691 37,558,974
------------ ----------- ------------ ----------- ------------
Total liabilities and stockholders'
equity $49,778,679 $2,804,076 $52,582,755 $4,035,666 $56,618,421
=========== =========== ============ ========== ===========
</TABLE>
See accompanying explanatory notes to pro forma consolidated
condensed financial statements.
F-32
<PAGE>
MET-PRO CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JULY 31, 1996
(NOTE 1)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRO FORMA
MET-PRO STROBIC AIR -------------------------------
CORPORATION CORPORATION TOTAL ADJUSTMENTS CONSOLIDATED
------------ ------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales $28,491,576 $3,207,137 $31,698,713 $31,698,713
Cost of goods sold 18,515,559 2,304,363 20,819,922 ($175,000)(M) 20,644,922
------------- ------------ ------------ ------------ ------------
Gross profit 9,976,017 902,774 10,878,791 175,000 11,053,791
------------- ------------ ------------ ------------ ------------
Operating expenses:
Selling 2,506,250 157,440 2,663,690 74,000 (N) 2,737,690
General and administrative 2,951,178 473,268 3,424,446 3,750 (O) 3,525,588
125,000 (P)
131,500 (R)
48,033 (S)
13,000 (T)
(90,000)(U)
(65,000)(V)
(12,500)(W)
(52,641)(X)
------------- ------------ ------------ ------------ ------------
5,457,428 630,708 6,088,136 175,142 6,263,278
------------- ------------ ------------ ------------ ------------
Income from operations 4,518,589 272,066 4,790,655 (142) 4,790,513
Other income (expenses), net 239,193 0 239,193 (20,500)(Q) 218,693
------------- ------------ ------------ ------------ ------------
Income before taxes on income 4,757,782 272,066 5,029,848 (20,642) 5,009,206
Provision for taxes on income 1,879,324 141,200 2,020,524 (8,257)(Y) 2,012,267
------------- ------------ ------------ ------------ ------------
Net income $2,878,458 $130,866 $3,009,324 $(12,385) $2,996,939
============= ============ ============ ============ ============
Net income per share, fully diluted $0.41 $0.41
============= ============
Weighted average number of common
shares outstanding 7,036,522 195,920 (B) 7,232,442
============= ============ ============
</TABLE>
See accompanying explanatory notes to pro forma consolidated
condensed financial statements.
F-33
<PAGE>
MET-PRO CORPORATION
Explanatory Notes to Pro Forma Consolidated Condensed Financial Statements
For the Six Months Ended July 31, 1996
1. The pro forma consolidated condensed balance sheet is based on the
individual balance sheets of Met-Pro Corporation and Strobic Air
Corporation to reflect the acquisition of Strobic Air Corporation by
Met-Pro Corporation (which took place on September 12, 1996) as if it
had taken place on July 31, 1996, after giving effect to pro forma
adjustments to reflect the following:
Met-Pro Corporation paid $2,399,980 for 100% of the common stock of
Strobic Air Corporation of which $2,149,980 was paid on the date of the
transaction and $250,000 (A) was in the form of a promissory note
payable on April 2, 1998. Interest is payable on the promissory note at
the rate of 5.9% per annum. In addition, Met-Pro Corporation exchanged
195,920 (B) shares of its common stock having an aggregate value of
$2,400,020 (C).
As part of the transaction, Met-Pro Corporation entered into a
non-compete transaction with one of the stockholders of Strobic Air
Corporation for which he was paid $1,000,000 (D). In addition, a
sign-on bonus of $350,000 (E) was paid to this stockholder.
Total cash required at settlement amounted to $3,499,980. Met-Pro
Corporation financed this transaction with a bank on an unsecured
basis. The bank financing, in the aggregate amount of $3,500,000 (F),
is comprised of two notes, one with a floating interest rate and one
with a fixed interest rate, in the amount of $1,750,000 each. Each loan
is payable in equal quarterly installments aggregating $175,000,
commencing on December 31, 1996. Met-Pro Corporation incurred financing
fees of $8,750 (G) related to this financing.
Met-Pro Corporation incurred approximately $200,000 (H) in costs
associated with the transaction which was funded internally.
For purposes of the pro forma financial statements, Strobic Air
Corporation's building was written up by $150,000 (I) to estimated fair
value.
The increase in deferred taxes of $60,000 (J) included on the pro forma
balance sheet is the result of differences between the book basis and
tax basis of the assets acquired, in compliance with Financial
Accounting Standards Board Statement No. 109, Accounting for Income
Taxes.
As a result of this acquisition, Met-Pro Corporation has increased the
costs in excess of net assets of businesses acquired by $3,842,671 (K)
as of July 31, 1996.
In connection with the acquisition, Met-Pro Corporation repaid all of
the outstanding debt of Strobic Air Corporation, which amounted to
$817,025 (L) at July 31, 1996.
F-34
<PAGE>
MET-PRO CORPORATION
Explanatory Notes to Pro Forma Consolidated Condensed Financial Statements
For the Six Months Ended July 31, 1996
2. The pro forma consolidated condensed statement of operations is based
on the individual statements of Met-Pro Corporation and Strobic Air
Corporation for the six months ended July 31, 1996, after giving effect
to the pro forma adjustments necessary to reflect the acquisition
described in Note 1, as if had taken place on February 1, 1996.
The pro forma adjustments are as follows:
(M) Increase of $175,000 in gross margins for sales of inventory
to affiliate owned by stockholder of Strobic Air Corporation.
(N) Increase in commissions of $74,000 related to gross margins
described in (M) above.
(O) Additional depreciation on the write-up of Strobic Air
Corporation's building amounting to $3,750.
(P) Amortization of covenant not to compete of $125,000.
(Q) Reduction in interest income by $20,500 due to the cash outlay
by Met-Pro Corporation to acquire Strobic Air Corporation and
repay its debt.
(R) Interest expense increase of $131,500 as a result of bank
financing of $3,500,000 and $250,000 note payable to Strobic
Air Corporation stockholder.
(S) Amortization of costs in excess of net assets of businesses
acquired over 40 years amounting to $48,033.
(T) Increase in salary of Strobic Air Corporation stockholder of
$13,000.
(U) Non-recurring professional fees relating to sale of Strobic
Air Corporation amounting to $90,000.
(V) Non-recurring expenses of Strobic Air Corporation stockholders
amounting to $65,000.
(W) Reduction in insurance expense of $12,500 based on estimated
savings from duplicate coverages between the two companies.
F-35
<PAGE>
MET-PRO CORPORATION
Explanatory Notes to Pro Forma Consolidated Condensed Financial Statements
For the Six Months Ended July 31, 1996
(X) Reduction in interest expense of $52,641 resulting from
repayment of Strobic Air Corporation's debt by Met-Pro
Corporation.
(Y) Tax effect of the above adjustments to result in an assumed
effective consolidated income tax rate of 40%.
F-36
<PAGE>
No dealer, salesman or other person has been authorized to give any information
or to make any representation not contained in or incorporated by reference in
this Prospectus and, if given or made, such information or representation must
not be relied upon as having been authorized by the Company, the Selling
Shareholders or any underwriter. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any of the securities offered hereby
in any jurisdiction to any person to whom it is unlawful to make such an offer
in such jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information herein is correct as of any time subsequent to the date hereof or
that there has been no change in the affairs of the Company since such date.
Until __________, 1996 (___ days after the date of this Prospectus) all dealers
effecting transactions in the registered securities, whether or not
participating in the distribution, may be required to deliver a Prospectus. This
is in addition to the obligation of dealers to deliver a Prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.
__________, 1996
MET-PRO CORPORATION
195,920 shares
Common Stock
($.10 par value)
PROSPECTUS
-----------------
TABLE OF CONTENTS
Page
Available Information
Incorporation of Certain Documents by Reference
The Company
Use of Proceeds
Selling Shareholders
Description of Common Stock
Plan of Distribution
Legal Matters
Experts
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is a list of the estimated expenses to be incurred by the
Registrant in connection with the issuance and distribution of the shares of
Common Stock being registered hereby.
SEC Registration Fee $ 857.32
Legal Fees $ 5,000.00*
Accountants' Fees and Expenses $ 5,000.00*
Miscellaneous $ 2,500.00*
----------
Total $13,357.32*
* Estimated, subject to change
Item 15. Indemnification of Directors and Officers.
The Company has adopted the provisions of Section 102(b)(7) of the Delaware
General Corporation Act (the "Delaware Act") which eliminate or limit the
personal liability of a director to the Company or its shareholders for monetary
damages for breach of fiduciary duty under certain circumstances. Furthermore,
under Section 145 of the Delaware Act, the Company may, and in certain
circumstances shall, indemnify each of its directors and officers against
expenses (including reasonable costs, disbursements and counsel fees) in
connection with any proceeding involving such person by reason of having been an
officer or director, to the extent such person acted in good faith and in a
manner reasonably believed to be in, or not opposed to, the best interest of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's conduct was unlawful. The
determination of whether indemnification is proper under the circumstances,
unless made by a court, shall be made by a majority of a quorum of disinterested
members of the Board of Directors, independent legal counsel or the shareholders
of the Company. The Company has purchased directors and officers liability
insurance providing for up to $2,000,000 of coverage, subject to certain
deductibles.
Item 16. Exhibits.
Exhibit
Number Description Filing
2 Agreement and Plan of Merger
dated September 12, 1996 by and
between Met-Pro Corporation,
II-1
<PAGE>
Met-Pro Acquisition Corporation,
Strobic Air Corporation, Lynn T.
Secrest, Ronald H. Secrest,
Richard P. Secrest and
John W. Stone III
5 Opinion and consent of Earl J. Wofsey, Esquire
23(a) Consent of Margolis & Company P.C.
The following exhibits listed in Rule 601 of Regulation S-K have been omitted
because they are not required, or inapplicable or they do not exist: Exhibits 1,
3, 4, 6 through 14, 16 through 22, 24 through 29.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement.
(i) To include any Prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraph is contained in
periodic reports filed by the registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
II-2
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes that for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefits
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be delivered
with the Prospectus, to each person to whom the Prospectus is sent or given, the
latest annual report to securityholders that is incorporated by reference in the
Prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3
or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3 of Regulation S-X is
not set forth in the Prospectus, to deliver, or cause to be delivered to each
person to whom the Prospectus is sent or given, the latest quarterly report that
is specifically incorporated by reference in the Prospectus to provide such
interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
The undersigned registrant undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of Prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
II-3
<PAGE>
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of Prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the Town of Harleysville, Commonwealth of Pennsylvania.
MET-PRO CORPORATION
By: /s/ William L. Kacin
--------------------------------------------
October 10, 1996 William L. Kacin
President and Chief Executive Officer and
Director
Know all men by these presents, that each person whose signature appears below
constitutes and appoints William L. Kacin and William F. Moffitt, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and any state securities commission or
bureau, granting unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that each said attorneys-in-fact and agents or any of them or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933 as amended, this
Registration Statement or amendment thereto has been signed by the following
persons in the capacities and on the dates indicated:
/s/ William L. Kacin
--------------------------------------------
October 10, 1996 William L. Kacin
President and Chief Executive Officer and
Director
/s/ William F. Moffitt
--------------------------------------------
October 10, 1996 William F. Moffitt
Vice President-Finance, Secretary and
Treasurer; Chief Financial Officer; Chief
Accounting Officer; and Director
II-5
<PAGE>
/s/ Walter A. Everett
--------------------------------------------
October 10, 1996 Walter A. Everett
Director; Chairman of the Board
/s/ Thomas F. Hayes
--------------------------------------------
October 10, 1996 Thomas F. Hayes
Director
/s/ Richard P. Klopp
--------------------------------------------
October 10, 1996 Richard P. Klopp
Director
/s/ Alan Lawley
--------------------------------------------
October 10, 1996 Alan Lawley
Director
II-6
<PAGE>
Exhibit Index
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- -------------
2 Agreement and Plan of Merger
dated September 12, 1996 by and
between Met-Pro Corporation,
Met-Pro Acquisition Corporation,
Strobic Air Corporation, Lynn T.
Secrest, Ronald H. Secrest,
Richard P. Secrest and
John W. Stone III
5 Opinion and consent of Earl J.
Wolfsey, Esquire
23(a) Consent of Margolis & Company P.C.
<PAGE>
Exhibit 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MET-PRO CORPORATION
(as Met-Pro),
MET-PRO ACQUISITION CORPORATION
(as Buyer)
AND
STROBIC AIR CORPORATION
(as Strobic)
AND
LYNN T. SECREST,
RONALD H. SECREST,
RICHARD P. SECREST
and
JOHN W. STONE, III
(as Named Shareholders of Strobic)
dated September 12, 1996
<PAGE>
TABLE OF CONTENTS
1. Definitions
2. Basic Transaction
(a) The Merger
(b) The Closing
(c) Actions at the Closing
(d) Effect of Merger
3. Disposition of Strobic Shares
(a) Conversion of Strobic Shares
(b) Met-Pro Exchange Shares
(c) Escrow
(d) Procedure for Payment
(e) Restrictions on Sale of Met-Pro Exchange Shares
4. Representations, Warranties, Covenants and Agreements of Strobic and
Lynn T. Secrest
(a) Organization, Qualification and Corporate Power
(b) Capitalization
(c) Authorization of Transaction
(d) Non-contravention
(e) Brokers' Fees
(f) Tangible Assets
(g) Financial Statements
(h) Events Subsequent to Most Recent Strobic Fiscal Year End
(i) Undisclosed Liabilities
(j) Permits, Licenses and Legal Compliance
(k) Tax Matters
(l) Real Property
(m) Intellectual Property
(n) Bank Accounts
(o) Inventory
(p) Contracts
(q) Notes and Accounts Receivable
(r) Powers of Attorney
(s) Insurance
(t) Litigation
(u) Product Warranty
(v) Product Liability
(w) Employees
(x) Employee Benefits
(y) Guaranties
(z) Environment, Health, and Safety
(aa) Certain Business Relationships with Affiliates
(ab) Disclosure
(ac) Investment Representation
5. Representations, Warranties, Covenants and Agreements of the Buyer
and Met-Pro
(a) Organization
(i)
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(b) Buyer's Status
(c) Authorization of Transaction
(d) Non-contravention
(e) Due Qualification of Met-Pro Shares
(f) Brokers' Fees
(g) Regulatory Matters and Met-Pro Exchange Shares
(h) Disclosure
(i) Tax Matters
6. Conditions Precedent to Obligation to Close
(a) Conditions to Obligation of the Buyer and Met-Pro
(b) Conditions to Obligation of Strobic and Named Shareholders
(c) Audited October 31, 1995 and July 31, 1996 Financial
Statements
7. Indemnification
(a) Indemnification by Named Shareholders with Respect to Strobic
(b) Indemnification by Buyer and Met-Pro
(c) Escrow Account
(d) Definition of Damages
(e) Indemnification Procedures
(f) Exclusive Remedy
8. Miscellaneous
(a) Survival and Materiality
(b) Press Releases and Public Announcements
(c) No Third Party Beneficiaries
(d) Entire Agreement
(e) Succession and Assignment
(f) Counterparts
(g) Headings
(h) Notices
(i) Governing Law
(j) Amendments and Waivers
(k) Severability
(l) Expenses
(m) Construction
(n) Incorporation of Exhibits and Schedules
(o) Specific Performance
(p) Arbitration
(q) Employee Matters
(r) Future Assurances
Exhibit A--Certificate of Merger
Exhibit B--Escrow Agreement
Exhibit C--Promissory Note
Exhibit D--Secrest Restrictive Covenant Agreement
Exhibit E--Secrest Employment Agreement
Exhibit F--Financial Statements
Disclosure Schedules--Exceptions to Representations and Warranties
Exhibit 4(f)--Certain Tangible Assets
(ii)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is entered into this 12th day of
September, 1996 by and among MET-PRO ACQUISITION CORPORATION, a Delaware
corporation (the "Buyer"), MET-PRO CORPORATION, a Delaware corporation and
corporate parent of Buyer ("Met-Pro") and STROBIC AIR CORPORATION, a New Jersey
corporation ("Strobic"), and LYNN (LEE) T. SECREST, RONALD H. SECREST, RICHARD
P. SECREST and JOHN W. STONE, III, who are certain stockholders of Strobic
(each, individually, a "Named Shareholder", and collectively, "Named
Shareholders"). Buyer, Met-Pro, Strobic and the Named Stockholders are sometimes
hereinafter referred to collectively as "Parties."
The Board of Directors of Buyer, Met-Pro and Strobic have each approved
the merger of Strobic with and into Buyer (the "Merger") in a transaction
intended to qualify, as a tax-free reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code") under
the terms and conditions set forth herein. Named Shareholders have voted their
2,445 shares of Strobic Common Stock without par value, representing
approximately 98.8% percent of the outstanding shares of Strobic, in favor of
the Merger.
NOW, THEREFORE, intending to be legally bound hereby, and in
consideration of the representations, warranties, and mutual covenants herein
contained, the Parties agree as follows.
1. Definitions.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses and fees, including court costs and reasonable attorneys' fees and
expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Audited Stub Financial Statements" has the meaning set forth
in Section 6(c) below.
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that forms or could form the
basis for any specified consequence.
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"Buyer Share" means any share of the Common Stock, no par
value, of Buyer.
"Certificate of Merger" has the meaning set forth in Section
2(c) below.
"Closing" has the meaning set forth in Section 2(b) below.
"Closing Date" has the meaning set forth in Section 2(b)
below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning
the businesses and affairs of Strobic and its Affiliates, if any, that is not
already generally available to the public.
"Net Book Value" means the excess of Strobic assets over
liabilities as shown on the Audited Stub Financial Statements.
"Delaware General Corporation Law" means the General
Corporation Law of the State of Delaware, as amended.
"Disclosure Schedule" has the meaning set forth in Section 4
below.
"Dissenting Share" means any Strobic Share held of record by
any stockholder of Strobic who or which has exercised his or its appraisal
rights under the New Jersey General Corporation Law and has not effectively
withdrawn or lost such rights.
"Effective Time" has the meaning set forth in Section 2(d)(i)
below.
"Employee Benefit Plan" means any (a) non-qualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan; (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan; (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multi-employer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Sec. 3(1).
"Environmental, Health and Safety Laws" means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Resource Conservation and Recovery Act of 1976, and the Occupational Safety
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and Health Act of 1970, each as amended, together with all other laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings and charges thereunder) of federal, state, local and foreign governments
(and all agencies thereof) concerning pollution or protection of the
environment, public health and safety, or employee health and safety, including
laws relating to emissions, discharges, releases, or threatened releases, of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes into ambient air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or waste.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended.
"Extremely Hazardous Substance" has the meaning set forth in
Sec. 302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"GAAP" means United States generally accepted accounting
principles as in effect from time to time, consistently applied.
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuance, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, (b) all trademarks, service
marks, logos, and trade names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, (c) all copyrightable works, all copyrights and all applications,
registrations, and renewals in connection therewith, (d) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, bills of
materials, customer and supplier lists, pricing and cost information and
business and marketing plans and proposals, (e) all computer software (including
data and related documentation), (f) all other proprietary rights, and (g) all
copies and tangible embodiments thereof, in whatsoever form or medium.
"IRS" means the Internal Revenue Service.
"Knowledge" means actual knowledge after reasonable
investigation.
"Liability" means any liability of Strobic arising from the
conduct of Strobic's business on or prior to the Closing Date, (whether known or
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unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or to
become due), including any liability for Taxes and reasonable costs incurred in
securing attorney, accounting or other professional services.
"Merger" has the meaning set forth in Section 2(a) below.
"Met-Pro Exchange Shares" have the meaning set forth in
Section 3(b) below.
"Met-Pro Share" means any share of the Common Stock, $.10 par
value per share of Met-Pro.
"Most Recent Strobic Fiscal Year End" has the meaning set
forth in Section 4(g).
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Transferee" shall mean each Stockholder's lineal
descendants, parents, spouse, trusts solely for the benefit of any of the
foregoing and charitable trusts.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA
Sec. 406 and Code Sec. 4975.
"Prospectus" means the final prospectus relating to the
registration of Met-Pro Exchange Shares under the Securities Act.
"Reportable Event" has the meaning set forth in ERISA Sec.
4043.
"Requisite Buyer Stockholder Approval" means the affirmative
vote of Met-Pro as sole holder of Buyer Shares in favor of this Agreement and
the Merger.
"Requisite Stockholder Approval" means the affirmative vote of
the Named Shareholders as holders of a majority of the Strobic Shares in favor
of this Agreement and the Merger.
"SEC" means the Securities and Exchange Commission.
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"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and payable or
for Taxes that the taxpayer is contesting in good faith through appropriate
proceedings, (c) purchase money liens and liens securing rental payments under
capital lease arrangements, and (d) other liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of money.
"Stockholder" means any Person who or which holds any Strobic
Share(s).
"Strobic Share" means any share of the Common Stock, without
par value, of Strobic.
"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.
"Surviving Corporation" has the meaning set forth in Section
2(a) below.
"Tax" means any federal, state, local, or foreign income,
gross receipts, mercantile license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental (including taxes
under Code Sec. 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or any other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
amendment thereof and any schedule or attachment thereto.
2. Basic Transaction.
(a) The Merger. On and subject to the terms and conditions of
this Agreement, Strobic will merge with and into Buyer (the "Merger") at the
Effective Time. Buyer shall be the only corporation surviving the Merger (the
"Surviving Corporation").
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<PAGE>
(b) The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of ANTHEIL
NICHOLAS MASLOW & MACMINN, 95 North Broad Street, Doylestown, PA 18901,
commencing at 10:00 a.m. local time on September 12, 1996 (the "Closing Date").
(c) Actions at the Closing. At the Closing the following shall
occur: (i) Strobic will deliver to Buyer and Met-Pro the various certificates,
instruments, and documents referred to in Section 6(a) below; (ii) Buyer and
Met-Pro will deliver to Named Shareholders the various certificates,
instruments, and documents referred to in Section 6(b) below; (iii) each of the
Named Shareholders will deliver to Buyer stock certificates representing all
Strobic Shares endorsed in blank or accompanied by duly executed assignment
forms; (iv) Buyer and Strobic will file with the Secretaries of State of the
State of Delaware and the State of New Jersey a Certificate of Merger in the
form attached hereto as Exhibit A (the "Certificate of Merger"); (v) Buyer will
deliver to Named Shareholders the consideration in the manner provided below in
Section 3; and (vi) the Parties shall take any and all other actions consistent
with this Agreement so as to effectuate the Closing.
(d) Effect of Merger.
(i) General. The Merger shall become effective at the
time (the "Effective Time") Buyer and Strobic file the Certificate of Merger
with the Secretary of State of the State of Delaware. The Merger shall have the
effect set forth in the Delaware General Corporation Law. Upon the consummation
of the Merger, the franchises and all the property, real, personal and mixed,
causes of action and every other asset of Strobic shall vest in the Surviving
Corporation without further act or deed. The Surviving Corporation may, at any
time after the Effective Time, take any action (including executing and
delivering any document) in the name and on behalf of Strobic in order to carry
out and effectuate the transactions contemplated by this Agreement.
(ii) Certificate of Incorporation. The Certificate of
Incorporation of Buyer in effect at and as of the Effective Time will remain the
Certificate of Incorporation of the Surviving Corporation without any
modification or amendment in the Merger except as provided for by the
Certificate of Merger.
(iii) Bylaws. The Bylaws of Buyer in effect at and as
of the Effective Time will remain the Bylaws of the Surviving Corporation
without any modification or amendment in the Merger.
(iv) Directors and Officers. The directors and
officers of Buyer in office at and as of the Effective Time will remain the
directors and officers of the Surviving Corporation, to serve in accordance with
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<PAGE>
the Bylaws of the Surviving Corporation. Lynn T. Secrest will serve as a Vice
President of Met-Pro and a Vice-President and General Manager of the Surviving
Corporation, as directed by the President of Met-Pro.
(v) Final Tax Returns. Buyer shall prepare final tax
returns for Strobic (including amended returns and any claims for refunds) and
information reports in accordance with GAAP and shall pay any Taxes due as
reflected on such tax returns provided, however, that such payment shall not be
deemed a waiver of any right by Buyer or Met-Pro to assert any indemnification
claim under Section 7 hereof..
3. Disposition of Strobic Shares
(a) Conversion of Strobic Shares. At and as of the Effective
Time, by virtue of the Merger and without any action on the part of the holders
thereof:
(i) All outstanding Strobic Shares (other than any
Dissenting Shares) shall be converted into the right to receive an aggregate
amount (the "Strobic Merger Consideration") equal to (A) $2,399,980 of which
$2,149,980 shall be payable by wire transfer of immediately available funds at
Closing, and $250,000 shall be represented by Buyer's unsecured Promissory Note
in the form attached hereto and made a part hereof as Exhibit B (the "Note")
payable to Lynn T. Secrest, plus (B) 195,920 Met-Pro Exchange Shares delivered
at Closing having an aggregate Exchange Share Value, pursuant to subparagraph
3(b), in the principal amount of $2,400,020, subject to escrow as provided in
Sections 3(c) and 7 hereof.
(ii) All Strobic Shares held by Strobic as treasury
shares, if any, shall be cancelled.
(iii) Dissenting Shares, if any, shall not be
converted into or represent a right to receive cash or Met-Pro Exchange Shares
hereunder, but the holders thereof shall be entitled only to such rights as are
granted by the New Jersey General Corporation Law. Strobic shall give Buyer
prompt notice upon receipt by Strobic of any such written demands for appraisal,
withdrawals of demands for appraisal and any other instruments served pursuant
to the New Jersey General Corporation Law (any shareholder duly making such
demand being hereinafter called a "Dissenting Stockholder"). Strobic agrees that
it will not, except with the prior written consent of Buyer, voluntarily make
any payment with respect to , or settle or offer to settle, any such demands.
Each Dissenting Stockholder who, pursuant to the provisions of the New Jersey
General Corporation Law, becomes entitled to payment for his, her or its Strobic
Shares shall receive payment therefor from the Surviving Corporation (but only
after the amount thereof shall have been agreed upon or finally determined
pursuant to such provisions) and such Strobic Shares shall thereafter be
cancelled.
(iv) At the Closing, the stock transfer books of
Strobic shall be closed and no transfer of Strobic Shares shall thereafter be
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made. If, after the Effective Date, certificates representing Strobic Shares are
presented to the Surviving Corporation, they shall be cancelled and exchanged
for the pro rata amount of Met-Pro Exchange Shares and cash in accordance with
this Agreement.
(b) Met-Pro Exchange Shares. At and as of the Effective Time,
each Met-Pro Exchange Share shall be deemed equal to $12.25 (the "Exchange Share
Value"). The aggregate number of the Met-Pro Shares receivable upon conversion
shall be One Hundred Ninety Five Thousand Nine Hundred and Twenty (195,920) (the
"Met-Pro Exchange Shares"), subject to escrow as provided in Sections 3(c) and 7
hereof. The manner and basis of converting the Strobic Shares, and the number of
Met-Pro Shares receivable upon conversion (the "Met-Pro Exchange Shares") on and
after the Effective Time, shall be calculated as follows: each Strobic Share,
with the exception only of the Dissenting Shares, and treasury shares shall be
converted into 79.1596 Met-Pro Exchange Shares.
(c) Escrow. Anything contained hereinabove to the contrary
notwithstanding, of the Two Million Three Hundred Ninety Nine Thousand Nine
Hundred Eighty Dollars ($2,399,980) in cash and by the Note and the Two Million
Four Hundred Thousand Twenty Dollars ($2,400,020) payable in Met-Pro Exchange
Shares to the Strobic shareholders, Two Hundred Fifty Thousand Dollars
($250,000) represented by the Note and Forty Thousand Eight Hundred Sixteen
(40,816) Met-Pro Exchange Shares (valued at $12.25 per share for purposes of
this Agreement) shall be withheld from Lynn T. Secrest and shall be deposited in
escrow with the Escrow Agent as security for the Named Shareholders'
indemnification obligations under Section 7(a) pursuant to a certain Escrow
Agreement to be executed at Closing, in the form set forth on Exhibit C attached
hereto and made part hereof (the "Escrow Agreement").
(d) Procedure for Payment.
(i) Immediately after the Effective Time, each holder
of Strobic Shares other than Lynn T. Secrest, upon surrender of properly
endorsed certificates of Strobic Shares, shall be entitled to receive the cash
distribution and a certificate representing the number of Met-Pro Exchange
Shares to which such holder is entitled. Lynn T. Secrest shall be entitled to
receive the cash distribution and a certificate representing the number of
Met-Pro Exchange Shares to which he is entitled minus the Notes and Met-Pro
Exchange Shares withheld for deposit in escrow pursuant to Section 3(c) hereof.
(ii) Met-Pro will not pay any dividend or make any
distribution on Met-Pro Exchange Shares to any record holder of outstanding
Strobic Shares until the holder surrenders for exchange the certificate(s) which
represented Strobic Shares.
(e) Restrictions on Sale of Met-Pro Exchange Shares. The Named
Shareholders agree, notwithstanding the registration of the Met-Pro Exchange
Shares pursuant to Section 5(g) hereof, that for a period of fifteen (15) months
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after the Closing (the "Lock Up Period"), the aggregate of the Met-Pro Exchange
Shares sold by them as a group, inclusive of sales by any Permitted Transferee,
shall not exceed (i) 15,000 Met-Pro Exchange Shares in any calendar month, and
(ii) 2,000 Met-Pro Exchange Shares in any trading day. The numbers of Met-Pro
Exchange Shares aforementioned shall not be increased for any stock dividend or
upon Met-Pro's first stock split after the Closing but shall be increased in the
identical ratio of a stock split in the event of any stock splits subsequent to
such first stock split. During the Lock Up Period, the Named Shareholders agree
to deliver to Met-Pro no later than the tenth (10th) day of each month a written
report stating the number of Met-Pro Exchange Shares sold each day of the
preceding month by the Named Shareholders and their Permitted Transferees. No
entry will be required for days on which there were no sales, however, for any
month in which no sales were made, a written report so stating shall be
submitted. Met-Pro agrees to use its best efforts to advise the Named
Shareholders of any written expressions of interest by any institutional or
other potentially significant private buyers of Met-Pro stock during the Lock Up
Period. The trading restrictions set forth in this Section 3(e) shall not apply
to the following:
(i) private sales to any Person, or sales, gifts or
other transfers to Permitted Transferees not occurring through the facilities of
the American Stock Exchange that the Stockholders may arrange; provided,
however, that as a condition of giving effect to any such purported transfer,
the purchaser or Permitted Transferee thereof shall execute and deliver unto
Met-Pro a written agreement agreeing to be bound by the provisions of this
Section 3(e ); and
(ii) Any sale of Met-Pro Exchange Shares sold by the
Named Stockholders in an underwritten public offering of the Met-Pro Exchange
Shares; provided, however, that the Named Stockholders agree to be bound by any
restrictions imposed by Met-Pro or any underwriter upon any other participant in
such underwritten distribution, upon the same terms and conditions.
4. Representations, Warranties, Covenants and Agreements of Strobic and
Lynn T. Secrest ("Secrest"). Strobic and Secrest, jointly and severally,
represent and warrant to Buyer and Met-Pro that the statements contained in this
Section 4 are correct and complete as of the date hereof, except as set forth in
the disclosure schedule accompanying this Agreement and initialed by the Parties
(the "Disclosure Schedule"). The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 4.
(a) Organization, Qualification and Corporate Power. Strobic
is a corporation duly organized, validly existing, and subsisting under the laws
of the State of New Jersey. Strobic is duly authorized to conduct business and
subsisting under the laws of each jurisdiction where such qualification is
required. Strobic has full corporate power and authority to carry on the
business in which it is engaged and to own and use the properties owned and used
by it. Strobic's Certificate of Incorporation and all amendments thereto to
date, By-laws as amended to date and Minutes and Stock Books, have been
delivered to Buyer for review prior to execution of this Agreement, and are
full, complete and correct to the date of this Agreement. Strobic is not
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in violation of any of the provisions of its Certificate of Incorporation, as
amended, or By-laws, as amended. The said Minutes accurately and fully reflect
all meetings, actions, proceedings and other matters properly includable
therein. Except as reflected in said Minutes, there are no minutes of meetings
or consents in lieu of meetings of the Board of Directors or Named Shareholders
of Strobic.
(b) Capitalization. The entire authorized capital stock of
Strobic consists of 5,000 Strobic Shares, of which 2,475 Strobic Shares are
issued and outstanding and 30 Strobic Shares are held in treasury. All of the
issued and outstanding Strobic Shares have been duly authorized and are validly
issued, fully paid, and nonassessable. There are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require Strobic to
issue, sell, or otherwise cause to become outstanding any capital stock. There
are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Strobic. The Named Shareholders
have valid title to and are each the registered and beneficial owner of their
respective Strobic Shares, with full and lawful right and power to vote, sell,
assign, transfer and deliver the same pursuant to the terms of this Agreement.
Each Named Shareholder owns his respective Strobic Shares free of all liens,
claims, liabilities, security interests, charges, restrictions or encumbrances
of any nature whatsoever.
(c) Authorization of Transaction. Strobic has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations and has received the Requisite
Stockholder Approval. Without limiting the generality of the foregoing, the
Board of Directors of Strobic has duly authorized the execution, delivery, and
performance of this Agreement by Strobic and the Named Shareholders have each
voted their respective Strobic Shares in favor of the Merger. This Agreement
constitutes the valid and legally binding obligation of Strobic, enforceable in
accordance with its terms and conditions.
(d) Non-contravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any statute, regulation, rule, injunction, judgment, order,
decree, ruling, or other restriction of any government, governmental agency, or
court to which Strobic, or a Named Shareholder is subject or any provision of
the charter or Bylaws of Strobic or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which Strobic, or a Named Shareholder is a party or by which any of them are
bound or to which any of their respective assets is subject (or result in the
imposition of any Security Interest upon any of their respective assets). Other
than in connection with the provisions of the New Jersey General Corporation
Law, neither Strobic nor any Named Shareholder need to give any notice to, make
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any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
(e) Brokers' Fees. Except as set forth in Section 4(e) of the
Disclosure Schedule, Strobic and Named Shareholders have no Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which Buyer or
Met-Pro could become liable or obligated other than to Howard, Lawson & Company
(which will be paid by Named Shareholders).
(f) Tangible Assets. Except as set forth in Section 4(f) of
the Disclosure Schedule, Strobic has good and marketable title to, or a valid
leasehold interest in, the buildings, machinery, equipment and other tangible
assets used by it, located on or off its premises, or shown on the Audited Stub
Financial Statements or acquired after the date thereof, free and clear of all
Security Interests, except for properties and assets disposed of in the Ordinary
Course of Business since the date of the Audited Stub Financial Statements .
Without limiting the generality of the foregoing, Strobic has good and
marketable title to all of the tangible assets necessary for the conduct of its
businesses as presently conducted and has set forth on Exhibit 4(f) depreciable
assets and tooling and the location thereof. Each such tangible asset is free
from defects of which any director or officer of Strobic has Knowledge, has been
maintained in accordance with normal industry practice, is in good operating
condition and repair (subject to normal wear and tear) and is suitable for the
purposes for which it presently is used and presently is proposed to be used.
(g) Financial Statements. Strobic has delivered to Buyer prior
to the execution of this Agreement true and complete copies of: (i) unaudited
balance sheets and statements of income, changes in stockholders' equity, and
statements of cash flow as of and for the fiscal years ended October 31, 1991,
October 31, 1992, October 31, 1993, October 31, 1994, and October 31, 1995 (with
such October 31, 1995 information hereinafter referred to as the "Most Recent
Strobic Fiscal Year End"); and (ii) a balance sheet and statement of income,
changes in stockholders' equity, and statement of cash flow as of and for the
nine (9) months ended July 31, 1996 (the "Most Recent Strobic Fiscal Month End")
(collectively, the "Financial Statements"). Except as set forth in Section 4(g)
of the Disclosure Schedule, the Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of Strobic, as of the
respective dates thereof, and the results of operations of Strobic for such
periods, are correct and complete, and are consistent with the books and records
of Strobic (which books and records are correct and complete) provided, however,
that (i) the Financial Statements for each year other than the Most Recent
Strobic Fiscal Year End and the Most Recent Strobic Fiscal Month End lack
footnotes and other presentation items found in audited materials; (ii) the Most
Recent Strobic Fiscal Month End are subject to normal year-end adjustments which
will not be material individually or in the aggregate; and (iii) the Financial
Statements make no reserve for bad debts or warranty claims and expense.
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(h) Events Subsequent to Most Recent Strobic Fiscal Year End.
Since the Most Recent Strobic Fiscal Year End, there has not been any material
adverse change in the business, financial condition, operations, results of
operations, or future prospects of Strobic. Without limiting the generality of
the foregoing, since that date:
(i) Strobic has not sold, leased, transferred, or
assigned any of their respective assets, tangible or intangible, other than for
a fair consideration in the Ordinary Course of Business;
(ii) Strobic has not entered into any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses) outside the Ordinary Course of Business;
(iii) no party (including Strobic) has accelerated,
terminated, modified, or cancelled any material agreement, contract, lease, or
license (or series of related material agreements, contracts, leases, and
licenses) to which Strobic is a party or by which it is bound;
(iv) Strobic has not imposed any Security Interest
upon any of its assets, tangible or intangible;
(v) Strobic has not made any capital expenditure (or
series of related capital expenditures) outside the Ordinary Course of Business;
(vi) Strobic has not made any capital investment in,
any loan to, or any acquisition of the securities or assets of, any other Person
(or series of related capital investments, loans, and acquisitions) outside the
Ordinary Course of Business;
(vii) Strobic has not issued any note, bond, or other
debt security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation outside the Ordinary Course of
Business;
(viii) Strobic has not delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary Course of
Business;
(ix) Strobic has not cancelled, compromised, waived,
or released any right or claim (or series of related rights and claims) outside
the Ordinary Course of Business;
(x) Strobic has not granted any license or sublicense
of any rights under or with respect to any Intellectual Property;
(xi) except as set forth in the Audited Stub
Financial Statements, Strobic has not declared, set aside, or paid any dividend
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or made any distribution with respect to its capital stock (whether in cash or
in kind) or redeemed, purchased, or otherwise acquired any of its capital stock.
(xii) Strobic has not experienced any material
damage, destruction, or loss (whether or not covered by insurance) to its
property;
(xiii) Strobic has not made any loan to, or entered
into any other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xiv) Strobic has not entered into any employment
contract or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
(xv) Strobic has not granted any increase in the base
compensation of any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xvi) Strobic has not adopted, amended, modified or
terminated any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other Employee Benefit
Plan);
(xvii) Strobic has not made any other change in
employment terms for any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xviii) Strobic has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(xix) there has not been any other material
occurrence, event, incident, action, failure to act, or transaction outside the
Ordinary Course of Business involving Strobic and Strobic has not altered the
terms and conditions of firm purchase orders and commitments for its services
and products (the "Backlog") as of October 31, 1995 and, except as set forth in
Section 4(h)(xix) of the Disclosure Schedule, the dollar amount of orders in the
Backlog is not materially less than it was as of such date, except in the
Ordinary Course of Business, and the Backlog which is outstanding and as of the
date hereof contains terms and conditions that are consistent with Strobic's
practices over the past year; and
(xx) Strobic has not committed to any of the
foregoing.
(i) Undisclosed Liabilities. Except as set forth in Section
4(i) of the Disclosure Schedule, Strobic has no Liability (and there is no Basis
for any present or future action, suit, proceeding, hearing, investigation,
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charge, complaint, claim, or demand against either of them giving rise to any
Liability), except for (i) Liabilities set forth in the Audited Stub Financial
Statements and (ii) Liabilities which have arisen after the Audited Stub
Financial Statements in the Ordinary Course of Business (none of which results
from, arises out of, relates to, is in the nature of, or was caused by any
breach of contract, breach of warranty, tort, infringement, or violation of
law).
(j) Permits, Licenses and Legal Compliance. Section 4(j) of
the Disclosure Schedule sets forth all material permits, licenses, franchises
and approvals from all Federal, state, local and foreign governmental and
regulatory bodies held by Strobic. Strobic has, to the Knowledge of any of the
directors or officers of Strobic, all material permits, licenses, franchises and
approvals of all Federal, state, local and foreign governmental or regulatory
bodies required to carry on their businesses as presently conducted; all such
permits, licenses, franchises and approvals are in full force and effect, and
Strobic and Secrest have no Knowledge of any threatened suspension or
cancellation of any of them. Strobic and its Affiliates have complied with all
applicable laws (including rules, regulations, codes, injunctions, judgments,
orders, decrees and rulings, thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply.
(k) Tax Matters.
(i) Strobic has filed all Tax Returns that it was
required to file on or prior to the date hereof except the final tax returns
referred to in Section 2(d)(v) above. All such Tax Returns were correct and
complete in all material respects. All Taxes owed by Strobic (whether or not
shown on any Tax Return) have been paid. Strobic currently is not the
beneficiary of any extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction where Strobic does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the assets of Strobic
that arose in connection with any failure (or alleged failure) to pay any Tax.
(ii) Strobic has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.
(iii) No director or officer of Strobic expects any
authority to assess any additional Taxes for any period for which Tax Returns
have been filed. There is no dispute or claim concerning any Tax Liability of
Strobic either (A) claimed or raised by any authority in writing or (B) as to
which any of the directors and officers of Strobic has Knowledge based upon
personal contact with any agent of such authority. Section 4(k) of the
Disclosure Schedule lists all federal, state, local, and foreign income Tax
Returns filed with respect Strobic for taxable periods ended on or after October
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31, 1989. No Tax Returns have been audited or are currently the subject of
audit. Strobic has delivered to Buyer correct and complete copies of all federal
and state income Tax Returns.
(iv) Strobic has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(v) The unpaid Taxes of Strobic did not, as of the
Audited Stub Financial Statement, exceed the reserve for Tax Liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth in the Audited Stub Financial Statements.
(vi) None of the Liabilities is an obligation to make
a payment that will not be deductible under Code Section 280G. Strobic has
disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Code Section 6662. Strobic is not a party to any Tax allocation or
sharing agreement. Strobic (A) has not been a member of an Affiliated Group
filing a consolidated federal income Tax Return (other than a group the common
parent of which was Strobic), and (B) has no Liability for the Taxes of any
Person (other than Strobic) under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(vii) It is the intent of the Parties hereto that the
transactions hereunder qualify as a tax-free reorganization within the meaning
of Section 368(a)(1)(A) of the Code ("Tax-Free Status"). The Named Shareholders
will take all such action as is required in order to give effect to the intent
of the Parties for Federal, state and local Tax purposes to the greatest extent
permitted by law. The Named Shareholders shall promptly satisfy in accordance
with Section 7 outside of the Escrow Fund, all Taxes arising out of the transfer
of the Strobic Stock and Merger pursuant to this Agreement in the event the
Tax-Free Status of the transaction is examined and ultimately overturned by the
IRS. Buyer or Met-Pro may elect, at its sole discretion, to waive any statute of
limitations in respect of Taxes or agree to any extension of time with respect
to a Tax assessment or deficiency relating to or arising out of any IRS
examination.
(l) Real Property.
(i) Section 4(l)(i) of the Disclosure Schedule lists
and describes briefly all real property that Strobic owns. With respect to the
parcel of owned real property:
(A) the identified owner has good and
marketable equitable title to the parcel of real property, free and clear of any
Security Interest, easement, covenant, or other restriction, except for (1)
installments of special assessments not yet delinquent; (2) recorded easements,
covenants, and other restrictions which do not unreasonably impair the current
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use and occupancy, of the property subject thereto; and (3) the items described
in Section 4(l)(i) of the Disclosure Schedule;
(B) there are no pending or to the Knowledge
of any directors or officers of Strobic, threatened condemnation proceedings,
lawsuits, or administrative actions relating to the property ;
(C) except as set forth in Section
4(l)(i)(C) of the Disclosure Schedule, the legal description for the parcel
contained in the deed thereof describes such parcel fully and adequately, the
buildings and improvements are located within the boundary lines of the
described parcels of land, are not in violation of applicable setback
requirements, zoning laws, and ordinances (and none of the properties or
buildings or improvements thereon are subject to "permitted non-conforming use"
or "permitted non-conforming structure" classifications), and do not encroach on
any easement which may burden the land, and the land does not serve any
adjoining property for any purpose inconsistent with the use of the land, is not
located within an area designated by HUD as having a special flood hazard or
subject to any similar type restriction for which any permits or licenses
necessary to the use thereof have not been obtained;
(D) all approvals of governmental
authorities (including licenses and permits) required in connection with the
current ownership and operation of the parcel have been obtained and the parcel
has been operated and maintained by Strobic in accordance with applicable laws,
rules, and regulations;
(E) there are no leases, subleases,
licenses, concessions, or other agreements, written or oral, granting to any
party or parties the right to use or occupy any portion of the parcel of real
property other than as may be disclosed in Section 4(l)(i) of the Disclosure
Schedule;
(F) there are no outstanding options or
rights of first refusal to purchase the parcel of real property, or any portion
thereof or interest therein;
(G) there are no parties (other than
Strobic) in possession of the parcel of real property, other than tenants under
any leases disclosed in Section 4(l)(i) of the Disclosure Schedule who are in
possession of space to which they are entitled;
(H) each building located on the parcel of
real property has access to water, sewer, electric, gas and telephone utilities
necessary for the current operation of such building, all of which utilities
are, to the Knowledge of any of the directors or officers of Strobic, available
in accordance with all applicable laws, ordinances, rules, and regulations and
are provided via public roads or via permanent, irrevocable, appurtenant
easements benefitting the parcel of real property; and
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(I) the parcel of real property abuts on and
has direct vehicular access to a public road, or has access to a public road via
a permanent, irrevocable, appurtenant easement benefitting the parcel of real
property, and access to the property is provided by paved public right-of-way
with adequate curb cuts available.
(ii) Section 4(l)(ii) of the Disclosure Schedule
lists and describes briefly all real property leased by Strobic. There are no
subleases with respect to such real property. Strobic has delivered to Buyer
correct and complete copies of the lease listed in Section 4(l)(ii) of the
Disclosure Schedule (as amended to date). With respect to the lease listed in
Section 4(l)(ii) of the Disclosure Schedule:
(A) the lease is legal, valid, binding and
enforceable in accordance with its terms, and in full force and effect, against
Strobic, and to the Knowledge of any directors or officers of Strobic, the
landlord thereunder;
(B) subject to the consent of the landlord
thereunder, the lease will continue to be legal, valid, binding and enforceable
in accordance with its terms, and in full force and effect, against Strobic, and
to the Knowledge of any directors or officers of Strobic, the landlord
thereunder, following the consummation of the transactions contemplated hereby;
(C) Strobic is not in breach or default,
under the lease, and no event has occurred which, with notice or lapse of time,
would constitute a breach or default thereunder by Strobic or permit
termination, modification, or acceleration thereunder by the landlord
thereunder, and to the Knowledge of any of the directors or officers of Strobic,
the landlord thereunder is not in breach or default under the lease, and no
event has occurred which, with notice or lapse of time, would constitute a
breach or default by the landlord or permit termination, modification, or
acceleration thereunder by Strobic;
(D) neither Strobic nor, to the Knowledge of
any of the directors or officers of Strobic, the landlord thereunder has
repudiated any provision thereof;
(E) there are no disputes, oral agreements,
or forbearance programs in effect as to the lease;
(F) Strobic has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold;
(G) except as set forth in Section
4(l)(i)(G) of the Disclosure Schedule, Strobic has received all approvals of
governmental authorities (including licenses and permits) required in connection
with the current operation of each building under any lease and each such
building has been operated and maintained by Strobic in accordance with the
lease and applicable laws, rules, and regulations; and
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(H) all leased buildings have access to
water, sewer, electric, gas and telephone utilities necessary for the current
operation of such buildings.
(m) Intellectual Property.
(i) To the Knowledge of any of the directors or
officers of Strobic, Strobic owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property used in the
operation of the business of Strobic as presently conducted and identified on
Schedule 4(m) of the Disclosure Schedule . Each such item of Intellectual
Property owned or used by Strobic or any Affiliate immediately prior to the
Closing hereunder will be owned or available for use by Buyer or Met-Pro on
identical terms and conditions immediately subsequent to the Closing hereunder.
Strobic has taken all necessary and desirable action to maintain and protect
each such item of Intellectual Property that it owns or uses, respectively.
(ii) To the Knowledge of any of the directors and
officers of Strobic, Strobic has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of third parties, and none of the directors and officers of Strobic has
ever received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that Strobic or any Affiliate must license or refrain from using any
Intellectual Property rights of any third party).
(iii) Section 4(m) of the Disclosure Schedule
identifies each patent or registration which has been issued to Strobic or any
Affiliate or acquired by any one of them with respect to any Intellectual
Property, identifies each pending patent application or application for
registration which Strobic or any Affiliate has made with respect to any
Intellectual Property, and identifies each license, agreement, or other
permission which Strobic or any Affiliate has granted to any third party with
respect to any Intellectual Property (together with any exceptions). Strobic has
delivered to Buyer correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as amended
to date) and has made available to Buyer correct and complete copies of all
other written documentation evidencing ownership and prosecution (if applicable)
of each such item. Section 4 (m) of the Disclosure Schedule also identifies each
trade name or unregistered trademark used by Strobic or any Affiliate in
connection with any of its or their businesses. With respect to each item of
Intellectual Property identified in Section 4(m) of the Disclosure Schedule:
(A) Strobic and any Affiliate, as the case
may be, possess all right, title, and interest in and to the item, free and
clear of any Security Interest, license, or other restriction;
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(B) the item is not subject to any
outstanding injunction, judgment, order, decree or ruling;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
Knowledge of any of the directors and officers of Strobic, is threatened which
challenges the legality, validity, enforceability, use, or ownership of the item
by Strobic or any Affiliate; and
(D) Strobic has never agreed to indemnify
any Person for or against any interference, infringement, misappropriation, or
other conflict with respect to the item.
(iv) Section 4(m)(iv) of the Disclosure Schedule
identifies each item of Intellectual Property that any third party owns and that
either Strobic or any Affiliate uses pursuant to license, sublicense, agreement,
or permission. Strobic has delivered to Buyer correct and complete copies of all
such licenses, sublicenses, agreements, and permissions (as amended to date).
With respect to each item of Intellectual Property required to be identified in
Section 4(m)(iv) of the Disclosure Schedule:
(A) to the Knowledge of any of the directors
and officers of Strobic, the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and in full force and
effect;
(B) to the Knowledge of any of the directors
and officers of Strobic, the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby;
(C) no party to the license, sublicense,
agreement, or permission is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(D) no party to the license, sublicense,
agreement, or permission has repudiated any provision thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in subsections (A) through (D) above
are true and correct with respect to the underlying license;
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(F) to the Knowledge of any of the directors
and officers of Strobic, the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree, ruling, or
charge;
(G) to the Knowledge of any of the directors
and officers of Strobic, no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge of any of
the directors and officers of Strobic is threatened which challenges the
legality, validity, or enforceability of the underlying item of Intellectual
Property; and
(H) Strobic has not granted any sublicense
or similar right with respect to the license, sublicense, agreement, or
permission.
(v) To the Knowledge of any of the directors and
officers of Strobic, Strobic will interfere with, infringe upon, misappropriate,
or otherwise come into conflict with, any Intellectual Property rights of third
parties as a result of the continued operation of its businesses as presently
conducted. None of the directors and officers of Strobic has any Knowledge of
any new products, inventions, procedures, or methods of manufacturing or
processing that any competitors or other third parties have developed which
reasonably could be expected to supersede or make obsolete any product or
process of Strobic. To the Knowledge of any of the directors and officers of
Strobic, no third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of Strobic or
any Affiliate.
(n) Bank Accounts. Section 4(n) of the Disclosure Schedule
sets forth all the banks in which Strobic has an account, credit line or safety
deposit box and a brief description of each such account, credit line or safety
deposit box, including the names of all persons currently authorized to draw
thereon or having access thereto.
(o) Inventory. The inventory of Strobic consists of raw
materials and supplies, manufactured and purchased parts, goods in process, and
finished goods, all of which is merchantable and fit for the purpose for which
it was procured or manufactured, and none of which is slow-moving, obsolete,
damaged, or defective, subject only to the reserve for inventory write-down set
forth in the Audited Stub Financial Statements in accordance with GAAP,
consistently applied.
(p) Contracts. Section 4(p) of the Disclosure Schedule lists
the following contracts and other agreements to which Strobic is a party:
(i) any agreement (or group of related agreements)
for the lease of personal property to or from any Person;
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(ii) any agreement (or group of related agreements)
for the purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year or result
in a loss to Strobic;
(iii) any agreement concerning a partnership or joint
venture;
(iv) any agreement (or group of related agreements)
under which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation, or under which it has
imposed a Security Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or
non-competition;
(vi) any agreement involving Stockholders of Strobic
or its Affiliates;
(vii) any profit sharing, stock option, stock
purchase, stock appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any
individual on a full-time, part-time, consulting, or other basis or providing
severance benefits;
(x) any agreement under which it has advanced or
loaned any amount to any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xi) any agreement under which the consequences of a
default or termination could have a material adverse effect on the business,
financial condition, operations, results of operations, or future prospects of
Strobic; or
(xii) any other agreement (or group of related
agreements) the performance of which involves consideration in excess of $5,000.
Strobic has delivered to Buyer a correct and complete copy of each written
agreement listed in Section 4(p) of the Disclosure Schedule (as amended to date)
and a written summary setting forth the terms and conditions of each oral
agreement referred to in Section 4(p) of the Disclosure Schedule. With respect
to each such agreement, to the Knowledge of the officers and directors of
Strobic: (A) the agreement is legal, valid, binding, enforceable, and in full
force and effect; (B) with the exception of a certain Salary Continuation
Benefits Agreement between Lynn T. Secrest and Strobic dated April 1, 1984,
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which is hereby terminated, the agreement will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (C) no party is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (D) no party has repudiated any provision
of the agreement.
(q) Notes and Accounts Receivable. All notes and accounts
receivable of Strobic reflected in the Audited Stub Financial Statements are
valid receivables subject to no set-offs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth in the
Audited Stub Financial Statements, in accordance with GAAP, consistently
applied.
(r) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of Strobic.
(s) Insurance. Section 4(s) of the Disclosure Schedule sets
forth the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which Strobic has been a party, a
named insured, or otherwise the beneficiary of coverage at any time within the
past three (3) years:
(i) the name, address, and telephone number of the
agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether
the coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are calculated and
operate) of coverage; and
(v) a description of any retroactive premium
adjustments or other loss-sharing arrangements.
With respect to each such insurance policy that has not, by its terms, lapsed,
to the Knowledge of the officers and directors of Strobic: (A) the policy is
legal, valid, binding, enforceable, and in full force and effect; (B) except the
life insurance policy(ies) on the life of Secrest which will be distributed to
Secrest as of July 31, 1996, the policy will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (C) neither Strobic
nor any other party to the policy is in breach or default (including with
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respect to the payment of premiums or the giving of notices), and no event has
occurred which, with notice or the lapse of time, would constitute such a breach
or default, or permit termination, modification, or acceleration, under the
policy; and (D) no party to the policy has repudiated any provision thereof.
Strobic has been covered during the past three (3) years by insurance in scope
and amount customary and reasonable for the businesses in which it has engaged
during the aforementioned period. Section 4(s) of the Disclosure Schedule
describes any self-insurance arrangements affecting Strobic and any Affiliate.
(t) Litigation. Section 4(t) of the Disclosure Schedule sets
forth each instance in which Strobic (i) is subject to any outstanding
injunction, judgment, order, decree or ruling or (ii) is a party or, to the
Knowledge of the directors and officers of Strobic, is threatened to be made a
party to any action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator. None of the
actions, suits, proceedings, hearings, and investigations set forth in Section
4(t) of the Disclosure Schedule could result in any material adverse change in
the business, financial condition, operations, results of operations, or future
prospects of Strobic or any Affiliate. Secrest has no reason to believe that any
such action, suit, proceeding, hearing, or investigation may be brought or
threatened against Strobic or any Affiliate.
(u) Product Warranty. Each product manufactured, sold, leased,
or delivered by Strobic has been in conformity with all applicable contractual
commitments and all express and implied warranties, and Strobic has no Liability
(and there is no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any of them
giving rise to any Liability) for replacement or repair thereof or other damages
in connection therewith, subject only to the reserve for product warranty claims
set forth on the face of the Audited Stub Financial Statement as adjusted for
the passage of time through the Closing Date in accordance with the past custom
and practice of Strobic. No product manufactured, sold, leased, or delivered by
Strobic or any Affiliate is subject to any guaranty, warranty, or other
indemnity beyond the applicable standard terms and conditions of sale or lease.
Section 4(u) of the Disclosure Schedule includes copies of the standard terms
and conditions of sale or lease for each of Strobic and any Affiliate
(containing applicable guaranty, warranty, and indemnity provisions).
(v) Product Liability. To the Knowledge of Secrest, neither
Strobic nor any Affiliate has any Liability (and there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against any of them giving rise to any Liability)
arising out of any injury to individuals or property as a result of the
ownership, possession, or use of any product manufactured, sold, leased, or
delivered by Strobic or any Affiliate.
(w) Employees. Section 4(w) of the Disclosure Schedule lists
the names, titles, date of hire, last salary increase and current salary rates
of and bonus commitments to all present employees of Strobic. To the Knowledge
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of any of the directors and officers of Strobic, no executive, key employee, or
group of employees has any plans to terminate employment with Strobic. Except as
set forth in Section 4(w) of the Disclosure Schedule, Strobic is not a party to
or bound by any collective bargaining agreement, nor has it experienced any
strikes, grievances, claims of unfair labor practices, or other collective
bargaining disputes. Strobic has not committed any unfair labor practice. None
of the directors and officers of Strobic has any Knowledge of any organizational
effort presently being made or threatened by or on behalf of any labor union
with respect to employees of Strobic.
(x) Employee Benefits. Except as disclosed in Section 4(x) of
the Disclosure Schedule, Strobic does not currently and has never in the past
maintained, and has never contributed to, any Employee Benefit Plan or Employee
Welfare Benefit Plan.
(y) Guaranties. Strobic is not a guarantor or otherwise liable
for any Liability or obligation (including indebtedness) of any other Person.
(z) Environment, Health, and Safety. To the Knowledge of any
of the directors and officers of Strobic, except as set forth or identified on
the Phase I Environmental Report required by Section 6(a)(x) of this Agreement
and as set forth in Section 4(z) of the Disclosure Schedule:
(i) Strobic has materially complied with all
Environmental, Health, and Safety Laws, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or written notice has
been filed or commenced against any of them alleging any failure so to comply.
Without limiting the generality of the preceding sentence, Strobic has obtained
and been in material compliance with all of the terms and conditions of all
permits, licenses, and other authorizations which are required under, and has
materially complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and timetables
which are contained in, all Environmental, Health, and Safety Laws.
(ii) Strobic has no Liability (and Strobic has not
handled or disposed of any substance, arranged for the disposal of any
substance, exposed any employee or other individual to any substance or
condition, or owned or operated any property or facility in any manner that
could form the Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against Strobic
giving rise to any Liability) for damage to any site, location, or body of water
(surface or subsurface), for any illness of or personal injury to any employee
or other individual, or for any reason under any Environmental, Health, and
Safety Law.
(iii) All properties and equipment used in the
business of Strobic are free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1, 2-trans-dichloroethylene, dioxins, dibenzofurans, and
Extremely Hazardous Substances, except to the extent reasonable amounts of such
substances are used in compliance with applicable environmental law.
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(aa) Certain Business Relationships With Affiliates. Except
for the business arrangements and relationships between Strobic and any
Affiliate which are set forth in Section 4(aa) of the Disclosure Schedule, none
of the Stockholders or their Affiliates has been involved in any business
arrangement or relationship with Strobic within the past 12 months, and none of
the Stockholders or their Affiliates owns any asset, tangible or intangible,
which is used in the business of Strobic.
(ab) Disclosure. The representations and warranties contained
in this Section 4 do not contain any untrue statement of a fact or omit to state
any fact necessary in order to make the statements and information contained in
this Section 4 not misleading.
(ac) Investment Representation. Each of the Named Shareholders
represents to Buyer and Met-Pro that he will acquire the Met-Pro Exchange Shares
for investment, without any view to the distribution thereof. Each of the Named
Shareholders agrees that the Met-Pro Exchange Shares may only be transferred in
compliance with the registration requirements of the Securities Act or pursuant
to an exemption from such registration requirements, and further agrees not to
offer, sell, contract to sell or otherwise dispose of any Met-Pro Exchange
Shares other than as set forth in Section 3(e) of this Agreement.
5. Representations, Warranties, Covenants and Agreements of Buyer and
Met-Pro. Buyer and Met-Pro represent and warrant, jointly and severally, to
Strobic and Named Shareholders that the statements contained in this Section 5
are correct and complete as of the date of this Agreement, except as set forth
in the Disclosure Schedule, and agree that they will perform the obligations set
forth in Sections 5(g) and 5(h). The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 5.
(a) Organization. Buyer and Met-Pro are corporations duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of their respective incorporation. Buyer and Met-Pro are each duly
authorized to conduct business and in good standing under the laws of each
jurisdiction where such qualification is required. Buyer and Met-Pro each has
full corporate power and authority to carry on the business in which it is
engaged and to own and use the properties owned and used by it. Neither Buyer
nor Met-Pro is in violation of any of the provisions of their respective
Certificate of Incorporation, as amended, nor respective Bylaws, as amended.
(b) Buyer's Status. Buyer was incorporated on August 14, 1996
and is and will be at the Closing Date a wholly-owned subsidiary of Met-Pro. It
has, and will at the Effective Time have, no existing business operations and no
commitments, obligations, debts or liabilities of any kind or nature whatsoever
except its obligations arising under this Agreement, the Exhibits hereto and
other obligations existing under documents relating to the transactions
contemplated hereby.
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(c) Authorization of Transaction. Buyer and Met-Pro each have
full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform their respective obligations
hereunder. Without limiting the generality of the foregoing, the Boards of
Directors of Buyer and Met-Pro have duly authorized the execution, delivery and
performance of this Agreement by Buyer and Met-Pro, respectively. This Agreement
constitutes the valid and legally binding obligation of Buyer and Met-Pro,
enforceable in accordance with its terms and conditions.
(d) Non-contravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Buyer or Met-Pro is subject or any
provision of their respective charter or bylaws, or (ii) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument, or
other arrangement to which Buyer or Met-Pro is a party or by which either is
bound or to which any of their respective assets is subject. Other than in
connection with the provisions of the Delaware General Corporation Law, the
Securities Exchange Act, the Securities Act and the state securities laws,
neither Buyer nor Met-Pro need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement.
(e) Due Qualification of Met-Pro Shares. When delivered in
exchange for the Strobic Shares, the Met-Pro Exchange Shares will have been duly
authorized and issued, fully paid and nonassessable and duly qualified for
issuance under the Listing Rules of the American Stock Exchange.
(f) Brokers' Fees. Neither Buyer nor Met-Pro has any Liability
or obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement for which
Strobic could become liable or obligated.
(g) Regulatory Matters and Met-Pro Exchange Shares. Met-Pro
will prepare and file with the SEC a registration statement, including a
prospectus, under the Securities Act relating to the offering and sale of the
Met-Pro Exchange Shares (the "Registration Statement") within thirty (30) days
following the Closing. Met-Pro will use its reasonable best efforts to respond
to the comments of the SEC thereon and to make any further filings (including
amendments and supplements) in connection therewith that may be necessary and
will take all actions that may be necessary, proper, or advisable under state
securities laws in connection with the offering and sale of Met-Pro Shares so as
to obtain the effectiveness of the Registration Statement no later than ninety
(90) days after the Closing Date. Met-Pro will provide Strobic, and Strobic will
provide Met-Pro, with whatever information and assistance in connection with the
foregoing filings that the Parties may request. In the event that despite
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Met-Pro's best efforts, the SEC shall not have declared the Registration
Statement effective within ninety (90) days after the Closing Date, Met-Pro
shall continue to utilize its best efforts to obtain the effectiveness of the
Registration Statement until such time as the Registration Statement shall be
declared effective by the SEC.
(h) Disclosure. At all times after the Registration Statement
is filed and during the period the Registration Statement is required to be
effective: (i) the Registration Statement and any Prospectus will comply with
the Securities Act and the rules and regulations thereunder in all material
respects; and (ii) the Registration Statement and the Prospectus will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they will be made, not misleading; provided, however,
that neither Buyer nor Met-Pro makes any representation or warranty with respect
to any information that Strobic will supply specifically for use in the
Registration Statement and the Prospectus.
(i) Buyer and Met-Pro will each give any notices to,
make all filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in this Section 5(h), Section 3(b),
Section 4(ac) and Section 5(g) above. Without limiting the generality of the
foregoing, Met-Pro shall diligently pursue and obtain effectiveness of the
Registration Statement with respect to the Met-Pro Exchange Shares and shall
maintain the effectiveness of such Registration Statement for a period of three
(3) years following the effective date with the SEC or such shorter period as
the Named Shareholders and their Permitted Transferees shall hold Met-Pro
Exchange Shares.
(ii) Met-Pro agrees to furnish to the Stockholders
and their Permitted Transferees from time to time such number of copies of a
Prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as the
Stockholders and their Permitted Transferees may reasonably request in order to
facilitate the public sale or other disposition of such Met-Pro Exchange Shares.
(iii) Whenever Met-Pro proposes to file a
registration statement at any time or from time to time after the Closing prior
to the third anniversary of the Closing wherein the Met-Pro Shares being
registered thereunder are proposed to be distributed in a public offering by or
through an underwriter or underwriters, Met-Pro will, prior to such filing, give
written notice to the Stockholders, through Lynn T. Secrest, (the "Stockholder
Representative"), of its intention to do so (which notice shall include a
statement of the terms and conditions of the proposed underwritten
distribution). Upon the written request of Stockholders or any of them, given
through the Stockholder Representative within 20 days after receipt of any such
notice, Met-Pro will include in such registration (and any related qualification
under Blue Sky or other compliance filings) all Met-Pro Exchange Shares which
Met-Pro has been requested by the Stockholders to so include; provided, however,
that if, in the written opinion of the underwriter or managing underwriter the
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inclusion of all or part of the Met-Pro Exchange Shares which the Stockholders
have requested to be included, together with the shares of any other selling
shareholder proposed to be included in such offering ("Other Shares"), would
materially and adversely affect such public offering, then the number of Met-Pro
Exchange Shares and Other Shares to be included in such offering shall be
proportionally reduced so that Met-Pro shall be required to include only that
number of Met-Pro Exchange Shares and Other Shares, if any, which the
underwriter or managing underwriter reasonably believes may be sold without
causing such adverse effect. In connection therewith, the Stockholders shall
enter into an underwriting agreement with the underwriter or underwriters
selected for underwriting by Met-Pro.
(iv) If Met-Pro has delivered preliminary or final
prospectuses to the Stockholders pursuant to Sections 5(h)(i) or 5(h)(iii)
hereof, and after having done so the prospectus should be amended to comply with
the requirements of the Securities Act, Met-Pro shall promptly notify the
Stockholders, and if requested, the Stockholders shall immediately cease making
offers of Met-Pro Exchange Shares and return all prospectuses relating to such
registration to Met-Pro. Met-Pro shall promptly amend its registration statement
and provide the Stockholders with revised prospectuses, and following receipt of
the revised prospectuses, the Stockholders shall be free to resume making offers
of the Met-Pro Exchange Shares in accordance with the terms thereof.
(v) "Registration Expenses" shall mean all expenses
pertaining to the registration of the Met-Pro Exchange Shares incurred by
Met-Pro in complying with Sections 5(g) and this Section 5(h), including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel and accountants for Met-Pro, and the expense of any
special audits incident to or required by any such registration, but excluding
underwriting discounts and selling commissions and selling expenses.
Registration Expenses incurred as a result of the registration made pursuant to
Sections 5(g) and 5(h)(i) hereof, whether or not Met-Pro Exchange Shares are
sold pursuant thereto, and all Registration Expenses incurred as a result of any
registration made pursuant to Section 5(h)(iii) hereof, shall be borne by
Met-Pro.
(vi) Upon receipt of written notice no less than
thirty (30) days prior to the third anniversary of the Closing, Met-Pro agrees
to repurchase on the third anniversary of the Closing, at the Exchange Share
Value of $12.25 set forth in Section 3(c) above, all or, at the sole option of
the Stockholder(s), less than all, of the Met-Pro Exchange Shares, if any, held
by the Stockholders or their Permitted Transferees (the "Put Right"). The Put
Right, together with the Met-Pro Exchange Shares, shall be assignable to
Permitted Transferees; provided, however, that such Permitted Transferees shall
not have the further right to reassign the Put Right to a non-Permitted
Transferee.
(i) Tax Matters. It is the intent of the Parties that the
transactions hereunder qualify as a tax-free reorganization within the meaning
of Section 368(a)(1)(A) of the Code ("Tax Free Status"). Met-Pro and Buyer will
take all such action as is required in order to give effect to the intent of the
Parties for Federal, state and local Tax purposes to the extent permitted by
law; provided, however, that compliance with any request by the Named
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Shareholders or their Permitted Transferees relating to disposition of the
Met-Pro Exchange Shares shall not be deemed a waiver of any right by Buyer or
Met-Pro to assert any indemnification claim under Section 7 hereof. Met-Pro will
not merge Buyer into Met-Pro for a period of three years following Closing and
it is the present intention of Buyer to continue at least one significant
historic business line of Strobic, or to use at least one significant portion of
Strobic's historic business assets in a business, in each case within the
meaning of Treas. Reg. Section 1.368-1(d). Buyer or Met-Pro may elect, at its
sole discretion to waive any statute of limitations in respect to Taxes or agree
to any extension of time with respect to a Tax assessment or deficiency relating
to or arising out of any IRS examination.
6. Conditions Precedent to Obligation to Close.
(a) Conditions to Obligation of Buyer and Met-Pro. The
obligation of Buyer and Met-Pro to consummate the transactions to be performed
by Buyer and Met-Pro, as the case may be, in connection with the Closing is
subject to satisfaction of the following conditions unless otherwise waived in
writing by Buyer and Met-Pro at or prior to the Closing:
(i) all the representations and warranties of Strobic
and Named Shareholders set forth in this Agreement and in any written statement
(including Financial Statements), exhibit, certificate, schedule or other
document delivered pursuant hereto or in connection with the transactions
contemplated hereby shall be true and correct in all material respects at and as
of the Closing Date, as if made at the Closing and as of the Closing Date.
(ii) Strobic shall have performed and complied with
all of their respective covenants hereunder in all material respects through the
Closing;
(iii) Strobic shall have procured all of necessary
third party consents;
(iv) no action, suit, or proceeding shall be pending
or threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement,
(B) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the right of Buyer to acquire the
Strobic Shares, or to operate the businesses of Strobic, or (D) affect adversely
the right of Strobic to own their respective assets and to operate their
respective businesses (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(v) Strobic shall have delivered to Buyer a
certificate to the effect that each of the conditions specified above in Section
6(a)(i)-(iv) is satisfied in all respects;
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(vi) Strobic, Buyer and Met-Pro shall have received
all authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 4(c) and Section 5(c) above;
(vii) the relevant parties shall have entered into
certain side agreements in form and substance as set forth in Exhibits B (Escrow
Agreement), C (Promissory Note), D (Secrest Restrictive Covenant Agreement) and
E (Secrest Employment Agreement) and the same shall be in full force and effect;
(viii) Buyer and Met-Pro shall have received from
Blank, Rome, Comisky & McCauley, counsel to Strobic and Named Shareholders, an
opinion dated the Closing Date, addressed to Buyer and Met-Pro in form and
substance satisfactory to Buyer, Met-Pro and counsel;
(ix) Buyer and Met-Pro shall, have received from
Sperry, Zoda & Kane, patent and trademark counsel to Strobic, an opinion dated
the Closing Date, addressed to Buyer and Met-Pro in form and substance
satisfactory to Buyer, Met-Pro and counsel;
(x) Strobic shall, at its sole expense, obtain and
deliver to Buyer prior to Closing, a Phase I Environmental Report for all real
property owned or leased by Strobic, prepared by a reputable environmental
service provider acceptable to Buyer evaluating the real property's
environmental status and confirming the absence of contamination. If the scope
or results of the Phase I Environmental Report are unsatisfactory in any respect
to Buyer, Buyer, at its sole and absolute discretion, may require the delivery,
after the Closing, of a Phase II Environmental Report to be obtained at the
Named Shareholder's sole cost and expense; and
(xi) all actions to be taken by Strobic or Named
Shareholders in connection with consummation of the transactions contemplated
hereby and all proceedings, certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby, or incidental
thereto, and all other related legal matters shall have been approved as to form
and substance by Earl J. Wofsey, Esquire, counsel for Buyer and Met-Pro, which
approval shall not be unreasonably withheld or delayed.
(b) Conditions to Obligation of Strobic and Named
Shareholders. The obligation of Strobic, and Named Shareholders to consummate
the transactions to be performed by each in connection with the Closing is
subject to satisfaction of the following conditions unless otherwise waived in
writing by Strobic and Named Shareholders at or prior to the Closing:
(i) the representations and warranties set forth in
Section 5 above shall be true and correct in all material respects at and as of
the Closing Date;
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(ii) Buyer and Met-Pro shall have performed and
complied with all of its covenants hereunder in all material respects through
the Closing including, without limitation, authorizing the filing and pursuit of
the Registration Statement;
(iii) no action, suit, or proceeding shall be pending
or threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement
or (B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(iv) Buyer shall have delivered to Strobic a
certificate to the effect that each of the conditions specified above in Section
6(b)(i)-(iii) is satisfied in all respects;
(v) Buyer and Met-Pro shall have received all other
authorizations, consents, and approvals of governments and governmental agencies
referred to in Section 4(c) and Section 5(c) above;
(vi) the relevant parties shall have entered into
certain side agreements in form and substance as set forth in Exhibits B (Escrow
Agreement), C (Promissory Note), D (Secrest Restrictive Covenant Agreement) and
E (Secrest Employment Agreement) and the same shall be in full force and effect;
(vii) Strobic shall have received from Antheil
Nicholas Maslow & MacMinn, counsel to Buyer and Met-Pro, an opinion dated as of
the Closing Date, addressed to Strobic and Named Shareholders in form and
substance satisfactory to Strobic and Named Shareholders and their counsel;
(viii) all actions to be taken by Buyer and Met-Pro
in connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to Strobic, Named Shareholders and their counsel.
(c) Audited October 31, 1995 and July 31, 1996 Financial
Statements. Strobic has provided to certified independent accountants of Buyer's
choice whatever information and assistance was reasonably necessary, proper or
desirable in connection with the preparation of audited financial statements for
the fiscal year ended October 31, 1995 (the "Most Recent Fiscal Year End
Financial Statements") and for a stub period through July 31, 1996 (the "Audited
Stub Financial Statements"). Buyer shall pay all costs and expenses for such
audit, including, without limitation, reasonable accountant(s) fees of deGrouchy
Sifer & Company to the extent the services of such accountants are utilized by
Met-Pro and the accounting firm selected by Met-Pro to audit the financial
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records of Strobic. Notwithstanding the actual Closing Date, the Closing shall
be effective as of the close of (i) business on July 31, 1996 (the "Assumed
Closing Date"). For the period from the Assumed Closing Date until the actual
Closing Date, Strobic shall have operated Strobic for the benefit of Buyer, as
if the actual Closing had taken place on such Assumed Closing Date. Strobic
shall not apply any management or overhead charges against Buyer other than
regular compensation to employees and routine expenses after the Assumed Closing
Date. Buyer shall be entitled to any earnings accruing during such period.
7. Indemnification
(a) Indemnification by Named Shareholders with Respect to
Strobic.
(i) subject to the provisions of 7(a)(ii) below, the
Named Shareholders, jointly and severally, agree to indemnify and hold harmless
Buyer and Met-Pro from and against all Damages with respect to Strobic suffered
by either of them as a direct or indirect result of:
(A) the inaccuracy of any representation or
warranty made by Strobic or Secrest with respect to Strobic in or pursuant to
this Agreement, including, without limitation, Section 4; provided, however,
that solely for purposes of an indemnification claim hereunder (excepting only
(1) fraud and/or intentional misrepresentation actions or claims and (2) an
indemnification claim under Sections 4(m)(v), 4(p)(C) or 4(p)(D), in either of
which case the representation or warranty shall be read as written), all such
representations and warranties shall be read as if they contained no "Knowledge"
or "materiality" condition;
(B) any Liability not reflected or reserved
against on the Audited Stub Financial Statements, (1) including, without
limitation: (a) any Liability associated with any item set forth on the
Disclosure Schedule; (b) the uncollectibility, after using Buyer's reasonable
best efforts, of accounts receivable reflected in the Audited Stub Financial
Statements in excess of amounts reserved on the Audited Stub Financial
Statements (provided, however, that Buyer assumes the risk of uncollectibility
of accounts receivable arising from Strobic's sales or services provided after
July 31, 1996); and (c) any Liability of Strobic for its or any other Person's
unpaid Taxes arising from the conduct of Strobic business prior to July 31, 1996
and Taxes referred to in Section 4(k)(vii), if any, and any interest and
penalties thereon; but (2) excluding any Liability incurred in the Ordinary
Course of Business after July 31, 1996 other than warranty Damages (hereinafter
defined) set forth in Section 7(d)(ii);
(C) any failure by Strobic or by any of the
Named Shareholders to perform any obligation or comply with any covenant or
agreement specified herein (including without limitation the covenants set forth
in Section 3(e)) or in any other document executed at the Closing with respect
to Strobic or the Named Shareholders;
(D) any other claims of a third party
(including, without limitation, claims alleging death or injury to persons or
damage to property caused by, or resulting from, any defect or claimed defect in
or with respect to products or services of Strobic (whether based in equity,
tort or contract), any tort, default in the performance or breach of any
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contract or commitment, or for consequential, special or punitive damages) for
all conditions, acts or failures to act of Strobic prior to or on the Closing
Date or resulting from or caused by any product purchased for resale,
manufactured or sold, or service provided, by Strobic prior to the Closing Date
which are not reflected or reserved against on the Audited Financial Stub
Financials or incurred in the Ordinary Course of Business; and
(E) any untrue statement or alleged untrue
statement of any material fact with respect to Strobic or the Named Shareholders
contained in any registration statement under which the Met-Pro Exchange Shares
were registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the registration statement, or any amendment or
supplement to the registration statement, or an omission or alleged omission to
state such a material fact required to be stated therein or necessary to make
the statements therein not misleading, but only if such statement or omission
was based upon information furnished or resulting from the omission of
information which should have been furnished in order to make such statements
not misleading by or on behalf of Strobic or the Named Shareholders, or arising
out of or based upon any other violation by the Named Shareholders of any
federal or state securities law or rule or regulation thereunder.
(ii) the obligations and liabilities of the Named
Shareholders under Section 7(a) shall be subject to the following terms and
conditions:
(A) the right of Buyer and Met-Pro to be
indemnified for Damages pursuant to Section 7(a)(i) shall apply only if asserted
by Buyer or Met-Pro before the third anniversary of the Closing Date, except
indemnification claims based on representations and warranties in (1) Section
4(k) which shall apply only if asserted by Buyer or Met-Pro before any
applicable statute of limitations or extension thereof for unpaid Taxes shall
expire, or (2) Section 4(z) which shall survive indefinitely.
(B) notwithstanding the foregoing, (1) the
Named Shareholders shall not be responsible for any Damages under Section 7(a)
until such Damages, on a cumulative basis, exceed Forty Thousand Dollars
($40,000) in which event the Named Shareholders shall jointly and severally be
liable for all Damages, without regard to the $40,000 limitations herein, and
(2) the aggregate indemnity obligations of the Named Shareholders under 7(a)(i)
shall not exceed Two Million Dollars ($2,000,000) excluding, however, Damages
relating to claims based on representations and warranties in Sections 4(k) and
exclusive of interest due on any Damages pursuant to Section 7(d)(B) hereof.
(C) Notwithstanding the foregoing, the
limitation on indemnification set forth in this Section 7(a)(ii) shall not apply
to Named Shareholders in the event Strobic or Secrest has Knowledge of a breach
of a representation or warranty by Strobic or Secrest on or prior to the Closing
Date.
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(b) Indemnification by Buyer and Met-Pro.
(i) Subject to the provisions of 7(b)(ii) below,
Buyer and Met-Pro agree to indemnify and hold harmless Named Shareholders from
and against all Damages with respect to Buyer or Met-Pro suffered by Named
Shareholders as a direct or indirect result of:
(A) the inaccuracy of any representation or
warranty made by Buyer or Met-Pro with respect to Buyer or Met-Pro in or
pursuant to this Agreement (including, without limitation, Section 5, provided,
however that solely for purposes of calculating Damages arising from an
indemnification claim for such inaccuracy hereunder, all such representations
and warranties shall be read as if they contained no "knowledge" or
"materiality" condition);
(B) any failure by Buyer or Met-Pro to
perform any obligation or comply with any covenant or agreement specified herein
(including without limitation the covenants set forth in any other document
executed simultaneously herewith);
(C) any other claims of a third party
(including, without limitation, claims alleging death or injury to persons or
damage to property caused by, or resulting from, any defect or claimed defect
in or with respect to products or services of Strobic (whether based in equity,
tort or contract), any tort, default in the performance or breach of any
contract or commitment, or for consequential, special or punitive damages) for
all conditions, acts or failures to act of Buyer or Met-Pro or other occurrences
subsequent to the Closing Date or resulting from or caused by any product
purchased for resale, manufactured or sold, or service provided, by Buyer or
Met-Pro after the Closing Date; and
(D) any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which the Met-Pro Exchange Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the registration
statement, or any amendment or supplement to the registration statement, or an
omission or alleged omission to state such a material fact required to be stated
therein or necessary to make the statements therein not misleading, unless such
statement or omission was based upon information furnished or resulting from the
omission of information which should have been furnished in order to make such
statements not misleading by or on behalf of Strobic or the Named Shareholders,
or arising out of or based upon any other violation by the Named Shareholders of
any Federal or state securities law or rule or regulation thereunder.
(ii) The obligations and liabilities of Buyer and
Met-Pro under Section 7(b)(i) shall be subject to the following terms and
conditions:
(A) the right of Named Shareholders to be
indemnified for Damages pursuant to Section 7(a)(i) shall apply only if asserted
by Named Shareholders before the third anniversary of the date hereof;
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<PAGE>
(B) Notwithstanding the foregoing, the
limitation on indemnification set forth in this Section 7(a)(ii) shall not apply
to Buyer or Met-Pro in the event Buyer or Met-Pro has Knowledge of a breach of a
representation or warranty with respect to such claim on or prior to the date
hereof.
(c) Escrow Account. For the purposes of providing assets for
any indemnification by the Named Shareholders which may be required under
Section 7 hereof, the Note in the principal amount of $250,000 and Forty
Thousand Eight Hundred Sixteen (40,816) Met-Pro Exchange Shares shall be
withheld from payment of the Strobic Merger Consideration to Secrest and shall
be set aside in an escrow account (the "Escrow Account") pursuant to the terms
of the Escrow Agreement. In the event Buyer or Met-Pro asserts any claim for
indemnification against the Escrow Account, it is hereby agreed that amounts due
under the Note shall first be applied in satisfaction of Damages and,
thereafter, Met-Pro Exchange Shares shall be applied, valued at the average of
the closing prices per share of the Met-Pro Shares as listed on the American
Stock Exchange over a period of ten (10) trading days after notification of such
claim. Pursuant to the terms of the Escrow Agreement, any deliverance of the
Note or Met-Pro Exchange Shares to Secrest from the Escrow Account shall be made
net of any reduction required by resolved claim(s) and any reserve for pending
indemnification claims. In the event that the Escrow Account is insufficient to
pay all Damages to Buyer and Met-Pro, including by virtue of the expiration of
the escrow period, the Named Shareholders shall be liable for the difference,
subject to the limitations on liability in Sections 7(a)(ii). During the term of
the Escrow Agreement, Secrest shall have the right to replace any or all of the
Met-Pro Exchange Shares held in the Escrow Account with the cash value
equivalent of such replaced shares, valued at the average of the closing prices
per share of such shares as listed on the American Stock Exchange for the ten
(10) trading day prior to such replacement.
(d) Definition of "Damages".
(i) For the purpose of this Section 7, the term
"Damages" shall be determined and computed by reference to the effect of the
compensable event on the party or parties entitled thereto, and shall be deemed
to include (A) all damages, losses, liabilities, claims, deficiencies, expenses
or costs incurred by such party or parties, including reasonable attorney's and
accounting fees, and reasonable amounts paid in investigation, defense and/or
settlement of any of the foregoing, excluding only punitive and exemplary
damages, and (B) interest at a rate per annum equal to that announced from time
to time by Mellon Bank, N.A. as its highest "prime rate" from the date 30 days
after notice of any such claim for indemnification under this Section 7 is
given, or if an unliquidated claim, from such later date as the claim is
liquidated, to the date full indemnification is made therefor. Damages shall not
include any amounts for which an indemnified party actually receives payment
under an insurance policy, excluding self-insured amounts and deductible
amounts, and shall reflect any federal, state, local or foreign income tax net
benefit ("Tax Benefit") which Met-Pro or Buyer can actually realize as a result
of such Damages; provided that, the Tax Benefit shall be determined by an
independent certified public accounting firm satisfactory to both Buyer and
35
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Seller at the Named Shareholders' sole expense. The Tax Benefit shall be based
upon a reasonable estimate of future tax savings attributable to the deductions
resulting from any increases in the tax basis of assets associated with the Tax
Liability. The value of any such future savings shall be determined using tax
concepts, including any appropriate valuation allowances that account for the
possibility that certain Tax Benefits will never be realized, and for the
determination of appropriate tax rates. The calculation will also take into
account Strobic Merger Consideration allocations determined by Buyer and the use
of present value concepts using the above referenced interest rate. If Buyer and
Seller are unable to agree on such a firm, Buyer and Seller shall each select an
independent certified public accounting firm and these two together shall select
a third independent certified public accounting firm, whose determination as to
the Tax Benefit, if any, shall be binding and conclusive on the Parties.
(ii) If a claim for indemnification under Section
4(u) is made by Buyer or Met-Pro, the following terms and conditions shall
apply:
(A) warranty Damages will be deemed to
include the costs of all direct materials, direct labor and overhead, plus
out-of-pocket expenses and third party costs (subcontract), if applicable, for
the replacement or repair of Strobic products that occur within the warranty
period based on the date of sale. The standard warranty period is twelve (12)
months from start-up or eighteen (18) months from the date of shipment,
whichever occurs first, unless an extended warranty was offered in writing in
which case the extended warranty will take precedence. The cost of warranty will
be the most recent cost of direct materials, plus the cost of direct labor at
the wage rate of the employee assigned to the warranty project, plus an overhead
rate consistent with Buyer's most recent Operating Plan at the time the warranty
work occurs. The cost of warranty for materials returned to vendors will be the
cost of replacement less any credit received from the vendor.
(B) Back charges by customers, clients or
subcontractors for work performed by others to complete a contract or sales
credits issued as a result of disputes are not considered warranty expense for
the purposes of Damages upon a breach of Section 4(u). Out-of-pocket costs for
the initial visit to a customer's site to inspect a product or installation to
determine if a warranty situation exists shall not be considered warranty
expense chargeable against the Escrow Account as Damages but subsequent service
visits to the same customer's site to reassess the defective product or
installation shall be considered warranty expense chargeable against the Escrow
Account as Damages.
(e) Indemnification Procedures. If a claim for indemnification
is made by any Party (the "Indemnitee") hereunder against another party (the
"Indemnifying Party"), the Indemnitee shall give written notice to the
Indemnifying Party as soon as practical after the Indemnitee becomes aware of
any fact, condition or event which may give rise to a claim for which
indemnification may be sought under this Section 7.
(i) In the event that any lawsuit or enforcement
action is filed against Indemnitee and Indemnitee seeks indemnification
hereunder, written notice thereof shall be given to the Indemnifying Party as
promptly as practicable (and in any event within fifteen (15) days after the
service of the citation or summons). After such notice, if the Indemnifying
Party shall acknowledge in writing to the Indemnitee that the Indemnifying Party
36
<PAGE>
shall be obligated under the terms of its indemnity hereunder in connection with
such lawsuit or action, then the Indemnifying Party shall be entitled, if it so
elects, to take control of the defense and investigation of such lawsuit or
action and to employ and engage attorneys of its own choice to handle and defend
the same, at the Indemnifying Party's cost, risk and expense, provided that the
Indemnifying Party and its counsel shall proceed with diligence and in good
faith with respect thereto. The Indemnitee shall cooperate in all reasonable
respects with the Indemnifying Party and such attorney in the investigation,
trial and defense of such lawsuit or action and any appeal arising therefrom. If
the Indemnifying Party has acknowledged to the Indemnitee its obligation to
indemnify hereunder, the Indemnifying Party shall not settle such lawsuit or
enforcement action without the prior written consent of the Indemnitee. If the
Indemnifying Party has not so acknowledged its obligation, the Indemnitee shall
not settle such lawsuit or enforcement action without twenty (20) days' prior
notice to the Indemnifying Party. The provisions of this Section 7(e) shall be
applicable with respect to any claim, audit, examination, or assessment for
Taxes referenced in Section 4(k)(vii) and Section 7(a)(i)(B) above.
(ii) The Indemnitee shall not pay or satisfy any
obligation for an indemnified claim if it is advised in writing that such amount
is being contested in good faith by the Indemnifying Party who in fact actively
contests or defends the same. The Parties shall use their best efforts to
resolve equitably and expeditiously any dispute between them as to a Liability.
(f) Exclusive Remedy. The indemnification rights and remedies
set forth in this Section 7 shall be the sole and exclusive rights and remedies
of the parties hereto with respect to the matters referred to in this Section 7.
8. Miscellaneous.
(a) Survival and Materiality. Each of the representations,
warranties and agreements of the Parties contained in this Agreement shall be
deemed material and shall survive the Closing and the consummation of the
transactions contemplated hereby regardless of any due diligence investigations
by the Parties prior to the Closing. All statements contained in any Exhibits,
Schedules or other agreements delivered by or on behalf of the Parties pursuant
hereto or in connection with the transactions contemplated hereby shall be
deemed material and shall constitute representations and, except to the extent
otherwise provided herein, warranties by the person making such statement.
(b) No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement. This Agreement, together with the
Exhibits and Schedules to be delivered pursuant hereto, constitute the entire
agreement between the Parties and supersedes any prior understandings,
37
<PAGE>
agreements, or representations by or between the Parties, written or oral,
(including without limitation any confidentiality agreement between the Parties
and that certain Letter of Intent executed by the Parties and SAC Sales Corp.
dated July 3, 1996).
(d) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its or his rights, interests, or obligations hereunder without the prior
written approval of the other Parties; provided, however, that Buyer may (i)
assign any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which case Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
(e) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Strobic:
Lynn T. Secrest
16 Carriage House Drive
Holland, PA 18966
With a copy to:
Henry Kuller, Esquire
Blank Rome Comisky & McCauley
Four Penn Center Plaza
Philadelphia, PA 19103
Phone: (215) 569-5560
Fax: (215) 569-5555
38
<PAGE>
If to Buyer or Met-Pro:
Met-Pro Corporation
160 Cassell Road
Harleysville, PA 19438
Attention: William L. Kacin, President
Phone: (215) 723-6751
Fax: (215) 723-6558
With a copy to:
Earl J. Wofsey, Esquire
929 Riverbank Road
Stamford, Connecticut 06903
Phone: (203) 968-1772
Fax: (203) 968-0767
and
Jeffrey H. Nicholas, Esquire
Antheil Nicholas Maslow &
MacMinn
95 North Broad Street
P.O. Box 50
Doylestown, PA 18901
Phone: (215) 230-7500
Fax: (215) 230-7796
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered to such Party by giving the
other Parties notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by,
construed and interpreted in accordance with the domestic laws of the
Commonwealth of Pennsylvania and the Federal law of the United States of
America, where applicable, without giving effect to any choice or conflict of
law provision or rule (whether of the Commonwealth of Pennsylvania or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the Commonwealth of Pennsylvania.
39
<PAGE>
(i) Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
all the Parties. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(k) Expenses. Each of the Parties will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby. Strobic agrees that it has
not paid any amount to any third party, and will not pay any amount to any third
party, with respect to any of the costs and expenses of Strobic and the Named
Stockholders (including any of their legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule identifies
the exception with reasonable particularity and describes the relevant facts in
reasonable detail. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the existence of the
document or other item itself). The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
(m) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
(n) Specific Performance. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of
40
<PAGE>
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in Section 11(p)
below), in addition to any other remedy to which it may be entitled, at law or
in equity.
(o) Arbitration. Except for the calculation of Damages
relating to or resulting from any Tax Liability or Tax Benefit as set forth in
Section 7(d), all claims, demands, disputes, controversies, differences or
misunderstandings between or among the Parties hereto shall be settled by
arbitration at Doylestown, Pennsylvania, in accordance with the American
Arbitration Association Rules then obtaining. Any determination rendered in such
proceeding shall be binding and conclusive upon the Parties hereto and judgment
thereon may be entered in any court having jurisdiction thereof. The Parties
hereto agree that arbitration shall be the sole and exclusive remedy of the
Parties with respect to any such matter for which arbitration is required
hereunder.
(p) Employee Matters. Buyer will, effective at the Closing,
hire all Strobic employees conditioned, as Buyer determines, to certain persons
executing a form of non-disclosure and/or non-compete agreement(s), initially at
the same rate of compensation (excepting Secrest, whose employment shall be
pursuant to a certain Employment Agreement with Buyer and Met-Pro), but subject
to adjustment as Buyer determines in its sole discretion subsequent to the
Closing. Nothing in this Section 11(q) or elsewhere in this Agreement is
intended to confer upon any Strobic employee any right to continued employment,
except as may be specified in any other separate agreement entered into between
Buyer and such employee. If in Met-Pro's sole discretion, any former Strobic
employee is subsequently hired by Met-Pro, any such person will be given credit
for service with Strobic for purposes of eligibility, vesting or length of
service requirements only, when such person becomes eligible for participation
under Met-Pro's Employee Benefit Plans as provided by the terms of such plans.
(q) Future Assurances. At any time and from time to time from
and after Closing, upon the request of any Party, Buyer, Met-Pro, and/or Named
Shareholders, as appropriate, will do, execute, acknowledge and deliver, or
41
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cause to be delivered, all such further acts, deeds, bills of sale, assignments,
conveyances, powers of attorney and other documents as may be required to carry
out the provisions of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed, or caused their
duly authorized officers to execute, this Agreement on the date first above
written.
ATTEST: MET-PRO CORPORATION
By: /s/ William F. Moffitt By: /s/ William L. Kacin
------------------------------------ ---------------------------------
William F. Moffitt, Secretary William L. Kacin
Title: President
------------------------------
[Corporate Seal]
ATTEST: MET-PRO ACQUISITION CORPORATION
By: /s/ William F. Moffitt By: /s/ William L. Kacin
------------------------------------ ---------------------------------
William F. Moffitt, Secretary William L. Kacin
Title: President
------------------------------
[Corporate Seal]
ATTEST: STROBIC AIR CORPORATION
By: /s/ Richard P. Secrest By: /s/ Lynn T. Secrest
------------------------------------ ---------------------------------
, Secretary Lynn T. Secrest
Title: President
------------------------------
[Corporate Seal]
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<PAGE>
WITNESSES: SHAREHOLDERS:
/s/ XXXXXX /s/ Lynn T. Secrest (SEAL)
- ----------------------------------- ---------------------------------
Lynn T. Secrest
/s/ Ronald H. Secrest
By Richard P. Secrest Attorney in
/s/ XXXXXX Fact (SEAL)
- ----------------------------------- ---------------------------------
Ronald H. Secrest
/s/ XXXXXX /s/ Richard P. Secrest (SEAL)
- ----------------------------------- ---------------------------------
Richard P. Secrest
/s/ John W. Stone, III
By Richard P. Secrest Attorney in
/s/ XXXXXX Fact (SEAL)
- ----------------------------------- ---------------------------------
John W. Stone, III
43
<PAGE>
Exhibit 5
EARL J. WOFSEY
COUNSELOR AT LAW
929 RIVERBANK ROAD
STAMFORD, CONNECTICUT 06903
---------
TELEPHONE (203) 668-1772
TELECOPIER (203) 968-0767
October 1, 1996
Met-Pro Corporation
160 Cassell Road
Harleysville, PA 19438 Re: Registration Statement on Form S-3
Under the Securities Act of 1933, as amended
--------------------------------------------
Gentlemen:
In my capacity as counsel to Met-Pro corporation, a Delaware corporation, (the
"Company"), I have been asked to render this opinion in connection with a
Registration Statement on Form S-3 being filed contemporaneously herewith by the
Company with the Securities & Exchange Commission under the Securities Act of
1933, as amended (the "Registration Statement"), covering 195,920 shares of
Common Stock, par value $.10 per share, of the Company (the "Shares") delivered
on September 12, 1996, in connection with the acquisition of Strobic Air
Corporation ("Strobic").
In that connection, I have examined the Certificate of Incorporation, as
amended, the By-Laws, as amended, the Registration Statement, the Agreement and
Plan of Merger dated September 12, 1996, (the "Merger Agreement") pursuant to
which the Shares were delivered, corporate proceedings relating to the Shares
delivered and such other instruments and documents as I deemed relevant under
the circumstances.
In making these examinations, I have assumed the genuineness of all signatures
and the conformity of all copies furnished to me as original or photostatic
copies. I have also assumed that the corporate records furnished to me by the
Company include all corporate proceedings of the Company to date.
My investigations revealed the following facts:
The Shares were originally issued either for sufficient consideration or in
connection with various stock splits approved by the Board of Directors of the
Company. They were subsequently repurchased from time to time on the open market
by the Company pursuant to Stock Repurchase Plans and held in treasury. The
Shares were transferred on September 12, 1996 to the holders named in the
Registration Statement as Selling Stockholders in exchange for their Strobic
shares.
Based upon and subject to the foregoing, I am of the opinion that:
1. The Company has been duly organized under the Delaware Corporation
Law and is a
<PAGE>
validly subsisting corporation under the laws of the State of Delaware; and
2. The Shares have been duly and validly authorized and issued and are
fully paid and nonassessable.
I consent to the use of this opinion as an exhibit to the Registration Statement
and to the use of my name under the caption "Legal Opinion" in the Prospectus
forming a part of the Registration Statement. I am the beneficial owner of
195,714 shares of Common Stock of the Company.
Very truly yours,
/s/Earl J. Wofsey
<PAGE>
Exhibit 23(a)
[LETTERHEAD OF MARGOLIS & COMPANY P.C.]
INDEPENDENT AUDITOR'S CONSENT
To The Board of Directors
Met-Pro Corporation
Harleysville, Pennsylvania
We hereby consent to the use in this Form S-3 Registration Statement and the
Prospectus forming a part thereof of Met-Pro Corporation relating to the
offering of 195,920 shares of Common Stock of Met-Pro Corporation offered by the
Selling Shareholders identified herein of our reports dated September 4, 1996
with respect to the financial statements of Strobic Air Corporation, and
February 19, 1996 with respect to the financial statements of Met-Pro
Corporation. We also consent to the reference to us as "Experts" in such
Registration Statement.
/s/ MARGOLIS & COMPANY P.C.
MARGOLIS & COMPANY P.C.
Bala Cynwyd, Pennsylvania
September 30, 1996
