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Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
This agreement is made as of January 31, 1996, by and between
Waterlink, Inc., a Delaware corporation (the "Company"), and Mass Transfer
Systems, Inc. a Massachusetts corporation (the "Investor").
BACKGROUND INFORMATION
A. Pursuant to the terms of an Asset Purchase Agreement of even date
herewith by and among the Company, Waterlink Acquisition Corp., a Delaware
corporation ("Waterlink), the Investor, and Xxxx X. Xxxxxxx and Xxxxxxxxx X.
Xxxxx, shareholders of the Investor (the "Purchase Agreement"), the Investor is
selling to the Company the "Subject Assets" (as defined in the Purchase
Agreement);
B. As part of the purchase price for the Subject Assets, Waterlink has
executed, each in favor of the Investor, a Convertible Subordinated Note in the
aggregate principal amount of Two Million Dollars ($2,000,000) (the "Convertible
Note"), a Subordinated Promissory Note in the aggregate principal amount of One
Million Three Hundred Thousand Dollars ($1,300,000) (the "First Subordinated
Note") and a Subordinated Promissory Note in the aggregate principal amount of
Eight Hundred Thousand Dollars ($800,000) (the "Second Subordinated Note", and,
together with the Convertible Note and the First Subordinated Note, the
"Notes");
C. The Notes are, or under certain circumstances may be, convertible
into shares of common stock, par value $.001 per share of the Company (the
"Common Stock"), as provided in each of the Notes;
D. As a condition of the Purchase Agreement, and in order to induce the
Investor to sell the Subject Assets in consideration, in part, for the Notes,
the Company desires to grant registration rights to the Investor for shares of
Company Common Stock which the Investor will have the right. to acquire upon
conversion of the Notes.
STATEMENT OF AGREEMENT
The parties acknowledge the accuracy of the foregoing Background
Information and hereby agree as follows:
Section 1 DEFINITIONS.
(a) As used herein the following defined terms shall have the
following meanings:
(i) The term "Commission" means the Securities and Exchange
Commission or any other federal agency at the time administering
the Securities Act.
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(ii) The term "Holders" means any registered holder or
holders of shares of Common stock issued upon conversion of the
Notes or upon transfer of the shares after conversion of the Note
and to whom the rights hereunder are granted or may be assigned
pursuant to Section No. 9 of this agreement.
(iii) Unless the context otherwise requires, the terms
"register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration
statement in compliance with the Securities Act (as defined
below) and the declaration or ordering of the effectiveness of
such registration statement.
(iv) The term "Registrable Shares" means (i) all shares of
Common Stock of the Company that may be version of the Notes;
acquired by the Holders upon con and (ii) any Common stock of the
Company issued as a dividend or other distribution with respect
to, or in exchange or replacement of, such Shares.
(v) The term "Securities Act" means the Securities Act of
1933, as amended, or any similar federal statute, and the rules
and regulations of the Commission.
(vi) The term "Shares" means shares of Common Stock of the
Company.
(b) All other capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Purchase Agreement.
Section 2. PIGGYBACK REGISTRATION.
(a) If at any time or from time to time, the Company shall
determine to register any of its securities for its own account in a
registration statement covering the sale of Common Stock to the
general public pursuant to an underwritten public offering (except
with respect to any registration filed on Form X-0, Xxxx X-0 or any
successor forms thereto) the Company shall promptly: (i) give to the
Investor written notice thereof at least thirty (30) days before the
initial filing of such registration (which shall include a list of the
jurisdictions in which the Company intends to attempt to qualify such
securities under the applicable blue sky or other state securities
laws); PROVIDED, HOWEVER, in the case of a registration statement on
Form S-3, the Company shall give the Investor written notice of the
proposed filing thereof promptly after a decision to make such filing
has been made and in no event less than ten (10) business days prior
to filing; and (ii) use its best efforts to include in such
registration (and any related qualification under blue sky laws) and
in any underwriting involved therein, all the Registrable Shares
specified in a written request or requests on the same terms and
conditions as the other Shares being offered thereby, made within ten
(10) days after receipt of such written notice from the Company, by
any Holder or Holders, except as set forth in Section No. 2(b) below.
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(b) The right of any Holder to registration pursuant to this
Section No. 2 shall be conditioned upon such Holder's participation
in the underwriting to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting
shall (together with the Company) enter into an underwriting
agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any
other provision of this Section No. 2, if the underwriter determines
that marketing factors require a limitation of the number of shares
to be underwritten, the underwriter may limit the number of
Registrable Shares to be included in the registration and
underwriting. The Company shall so advise all Holders, and the number
of shares that may be included in the registration and underwriting
shall be allocated (i) first, among the securities the Company
proposes to sell; (ii) second, among the Preferred Securities (as
defined in that certain Registration Rights Agreement dated August
30, 1995 by and among the Company, Xxxxxxxx Venture Partners III,
L.P., Xxxxxxxx X. Xxxxxxxxx, and River Cities Capital Fund Limited
Partnership and the Addendum to Registration Rights Agreement dated
September 15, 1995 by and among the Company, Xxxxxxxx Venture
Partners III, L.P., Xxxxxxxx X. Xxxxxxxxx, River Cities Capital Fund
Limited Partnership and IPP95, L.P. (such Registration Rights
Agreement and Addendum thereto are collectively referred to as the
"First Registration Rights Agreement")) in accordance with the terms
set forth in the First Registration Rights Agreement; (iii) third,
among the Other Investor Shares, the Xxxxxxxxx Shares (each as
defined in the First Registration Rights Agreement) and among all
Holders of Registrable Shares in proportion, as nearly as
practicable, to tile respective amounts of Registrable Shares held by
the Investors, Xxxxxxxxx and such Holders at the time of filing the
registration statement; and (iv) among other securities requested to
be included in such registration. The registration rights of the
Holders pursuant to this agreement are fully subordinated to the
rights of the holders under the First Registration Rights Agreement.
if any Holder disapproves of the terms of any such underwriting, such
Holder may elect to withdraw therefrom by written notice to the
Company and the underwriter. In the event of any such withdrawal, the
Company will include, on a proportionate basis (determined in
accordance with the preceding sentence), in any such registration in
lieu thereof any additional Registrable Shares which were requested
to be included by a Holder and which were excluded pursuant to the
above-described underwriter limitation up to the maximum set by such
underwriter.
Section 3. EXPENSES OF REGISTRATION. All expenses incurred in
connection with any registration or qualification pursuant to this agreement
including, without limitation, all registration filing and qualification fees,
fees and expenses associated with registration or qualification under state
securities or "Blue Sky" laws, printing expenses, fees and disbursements of
counsel for the Company and the Holders, and expenses and fees of any special
audits incidental to or required by such registration, shall be borne by the
Company; provided, however, that the Company in any event shall not be required
to pay the underwriters, discounts or commissions relating to Registrable Shares
(such underwriters, discounts or commissions are to be borne by the Holders, on
a pro rata basis, based on the number of Registrable Shares sold by each of
them).
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Section 4. REGISTRATION PROCEDURES.
(a) In the case of each registration effected by the Company
pursuant to this agreement, the Company, as promptly as possible, will
keep each Holder participating therein advised in writing as to the
initiation of such registration (and any state qualifications) and as
to the completion thereof.
(b) Also in the case of each registration effected by the Company
pursuant to this agreement, the Company will:
(i) keep such registration or qualification pursuant to
Section No. 2 effective for A period of 180 days or until all
the Holders have completed the distribution described in the
registration statement relating thereto, whichever occurs
first;
(ii) furnish such number of copies of such registration
statement, including all exhibits thereto, and each amendment and
supplement thereto including all exhibits thereto, the prospectus
included in such registration statement (including each
preliminary prospectus) and such other documents incident thereto
as a Holder from time to time may reasonably request in order to
facilitate the disposition of the Registrable Shares owned by
such Holder, including, prior to filing, drafts thereof;
(iii) use its best efforts to register or qualify such
Registrable Shares under such other securities or blue sky laws
of such jurisdictions as may be reasonably necessary and do any
and all other acts and things which may be reasonably necessary
or advisable to enable such Holder to consummate the disposition
in such jurisdictions of the Registrable Shares owned by such
Holder;
(iv) notify each Holder of Registrable Shares, at any time
when a prospectus relating thereto is required to be delivered
under the Securities Act, of the occurrence of any event as a
result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or
omits any fact necessary to make the statements therein not
misleading, and, at the request of any such Holder, the Company
will prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such
Registrable Shares, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary
to make the statements therein not misleading;
(v) promptly notify the Holders of Registrable Shares and
the underwriters of the following events and (if requested by any
such person) confirm such notification in writing: (a) the filing
of the prospectus or any prospectus supplement and the
registration statement and any amendment or post-effective
amendment thereto and, with respect to the registration statement
or any post-effective amendment thereto, the declaration of the
effectiveness of such documents, (b) any requests by the
Commission for amendments or supplements to
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the registration statement or the prospectus or for additional
information, (c) the issuance or threat of issuance by the
Exchange Commission or any state securities commission or agency
of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for
that purposes and use its Reasonable efforts to prevent the
issuance of any stop order or obtain the withdrawal of such stop
order, and (d) the receipt by the Company of any notification
with respect to the suspension of the qualification of the
Registrable Shares for sale in any jurisdiction or the initiation
or threat of initiation of any proceeding for such purpose;
(vi) cause all such Registrable Shares to be listed on each
securities exchange on which similar securities issued by the
Company are then listed;
(vii) make available for inspection by any Holder of
Registrable Shares, any underwriter participating in any
disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such Holder
or underwriter, all financial and other records, pertinent
corporate documents anc properties of the Company, and cause the
Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any
such Holder, underwriter, attorney, accountant or agent in
connection with such registration statement;
(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
available to the Holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months
beginning with the first day of the Company's first full
calendar quarter after the effective date of the registration
statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder.
Section 5. Each Holder of Registrable Shares agrees if requested by
the Company and the underwriter not to effect any public sale or distribution
(including sales pursuant to Rule 144 promulgated pursuant to the Securities
Act) of equity securities of the Company or any securities convertible into or
exchangeable or exercisable for such equity securities, during the seven days
prior to and during the ninety (90) day period beginning on the effective date
of the underwritten registration pursuant to Section 2 hereof in which
Registrable Shares are included (except for sales of such securities as part of
such underwritten registered offering), unless the underwriters managing the
registered public offering otherwise agree.
Section 6. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No holder may
participate in any registration hereunder which is underwritten unless such
Holder completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting agreement referred to in Section 2 hereof; provided,
that no holder of Registrable Shares included in any underwritten registration
shall be required to make any representations or warranties to the Company or
the underwriters other than
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representations and warranties regarding such Holder and such Holder's intended
method of distribution.
Section 7. INDEMNIFICATION.
(a) The Company shall indemnify each Holder, each of the Holder's
officers, directors, partners and employees, and each person
controlling such Holder, with respect to such registration or
qualification effected pursuant to this agreement and in which Shares
are included, against all claims, losses, damages, and liabilities (or
actions in respect thereto) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained
in any prospectus, registration statement or other document incident
to any such registration or qualification, or based on any omission
(or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of any rule or regulation
promulgated pursuant to any Federal, state or common law rule or
regulation including, without limitation, the Securities Act,
applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification
or compliance and will reimburse each such Holder, each of such
Holder's officers, directors, heirs and employees, and each person
controlling such Holder, for any legal and any other expenses incurred
in connection with investigating or defending any such claim, loss,
damage, liability or action, including reasonable attorneys fees;
PROVIDED, HOWEVER, that the Company will not be liable in any such
case to the extent that any such claim, loss, damage or liability
arises out of or is based on any untrue statement or omission based
upon and in conformity with written information furnished to the
Company by such Holder, in a signed document stating that such
information is specifically for use in the registration statement.
Such indemnity shall be effective notwithstanding any investigation
made by or on behalf of any Holder, or any such officer, director,
partner, employee or controlling person, and shall survive any
transfer by the same of any of the Shares.
(b) Each Holder shall, if Registrable Shares held by or issuable
to such Holder are included in the securities as to which such
registration or qualification is being effected, severally indemnify
the Company, each of its directors, officers and employees, against
all claims, losses, damages and liabilities (or actions in respect
thereto) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such
registration statement, prospectus or other document, or any omission
(or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company, such Holders, such
directors, officers, partners, employees, persons or underwriters for
any legal or any other expenses incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action, including reasonable attorneys fees, in each case to the
extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus or other document in reliance upon
and in conformity with written information furnished to the Company by
such Holder in a signed document
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stating that such information is specifically for use therein.
Notwithstanding the foregoing, the liability of any such Holder shall
not exceed an amount equal to the net proceeds realized by each such
Holder of Registrable Shares sold as contemplated herein. Such
indemnity shall be effective notwithstanding any investigation made by
or on behalf of the Company, any such director, officer, partner,
employee, or controlling person and shall survive the transfer of such
securities by such seller.
(c) Each party entitled to indemnification under this section
(the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought. Unless in the reasonable judgment of the
Indemnified Party a conflict of interest may exist between the
Indemnifying Party and the Indemnified Party, the Indemnifying Party
shall be permitted to assume the defense of any such claim or any
litigation resulting therefrom; PROVIDED, HOWEVER, that in any event
counsel for the Indemnifying Party or Indemnified Party who shall
conduct the defense of such claim or litigation as provided above
shall be approved by the other Party (whose approval shall not be
unreasonably withheld), and such other Party may participate in such
defense at such Party's expense; PROVIDED, FURTHER, that the failure
of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this section.
(d) The Indemnified Party shall make no settlement of any claim
or litigation which would give rise to liability on the part of the
Indemnifying Party under an indemnity contained in this section
without the written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed, and no Indemnifying
Party shall make any settlement of any such claim or litigation
without the consent of the Indemnified Party. If a firm offer is made
to settle a claim or litigation defended by the Indemnified Party and
the Indemnified Party notifies the Indemnifying Party in writing that
the Indemnified Party desires to accept and agree to such offer, but
the Indemnifying Party elects not to accept or agree to such offer
within ten days after receipt of written notice from the Indemnified
Party of the terms of such offer, then, in such event, the Indemnified
Party shall continue to contest or defend such claim or litigation
and, if such claim or litigation is within the scope of the
Indemnifying Party's indemnity contained in this section, the
Indemnified Party shall be indemnified pursuant to the terms hereof.
If a firm offer is made to settle a claim or litigation defended by
the Indemnifying Party and the Indemnifying Party notifies the
Indemnified Party in writing that the Indemnifying Party desires to
accept and agree to such offer, but the Indemnified Party elects not
to accept or agree to such offer within ten days after receipt of
written notice from the Indemnifying Party of the terms of such offer,
then, in such event, the Indemnified Party may continue to contest or
defend such claim or litigation and, in such event, the total maximum
liability of the Indemnifying Party to indemnify or otherwise
reimburse the Indemnified Party in accordance with this agreement with
respect to such claim or litigation shall be limited to and shall not
exceed the amount of such settlement offer, plus reasonable
out-of-pocket costs and expenses (including reasonable fees and
disbursements of counsel) to the date of notice that the Indemnifying
Party desired to accept such settlement offer.
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(e) The indemnification payments required pursuant to this
section for expenses of the investigation or defense of a claim or
lawsuit shall be made from time to time during the course of the
investigation or defense, as the case may be, upon submission of
reasonably sufficient documentation that any such expenses have been
incurred.
Section 8. REPORTS UNDER THE SECURITIES LAWS. With a view to making
available to the Holders of Registrable Shares the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the
Commission that may at any time permit such Holder to sell securities of the
Company to the public without registration, the Company agrees to use its best
efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144, at all times subsequent to one
hundred eighty (180) days after the effective date of any registration
statement covering an underwritten public offering filed under the
Securities Act by the Company;
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and
the 1934 Act at any time after it is subject to such registration
requirements; and
(c) Furnish to any Holder so long as such Holder owns any of the
Registrable Shares forthwith upon request a written statement by the
Company that it has complied with the reporting requirements of Rule
144 (at any time after one hundred eighty (180) days after the
effective date of such registration statement filed by the Company),
and of the Securities Act and the 1934 Act (at any time after it has
become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other
reports and documents so filed by the Company as may be reasonably
requested by any such Holder in availing any such Holder of any rule
or regulation of the Commission permitting the selling of any such
securities without registration.
Section 9. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Shares that are granted by the Company under
Section 2 may be assigned by a Holder to a Permitted Transferee (as defined in
that certain Stock Restriction Agreement dated as of January 31, 1996 between
the Company and the Shareholders signatory thereto) of any of its Registrable
Shares, provided that the Company is given written notice by the Holder at the
time of or within a reasonable time after said transfer, stating the name and
address of said transferee and identifying the securities with respect to which
such registration rights are being assigned. Such rights may not be assigned
other than to a Permitted Transferee. Subject to the foregoing provision, this
agreement shall be binding upon, and inure to the benefit of, the parties hereto
and their respective successors and assigns.
Section 10. CONSENT; CHANGES. For purposes of this agreement, unless
otherwise specifically provided for in this agreement, all approvals and
consents of the Holders required or permitted
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under this agreement shall be deemed granted by the affirmative vote of the
holders of a majority of the Registrable Shares outstanding determined on a
fully diluted basis with respect to the Holders of the Notes which have not
already been registered. The terms and provisions of this agreement may not be
modified or amended, except that they may be modified or amended with the
written consent of (a) the Company, and (b) all of the Holders of the Notes or
Shares outstanding. None of the terms and provisions of this agreement may be
waived except in writing by the person so waiving.
Section 11. GRANTING OF REGISTRATION RIGHTS. Notwithstanding anything
herein to the contrary, the Company may grant any rights to any persons to
register any shares of capital stock or other securities of the Company
notwithstanding the fact that such rights could reasonably be expected to
conflict with, or be on a parity with or greater than (in terms of priority),
the rights of the Holders provided hereunder. Provided, however, that in no
event shall such rights be on a parity with or be greater than (in terms of
priority) the rights of the Holders provided hereunder unless such rights are
also on a parity with or greater than the rights of holders of the Other
Investor Shares and the Xxxxxxxxx Shares.
Section 12. GOVERNING LAW. All questions concerning the validity or
meaning of this agreement or relating to the rights and obligations of the
parties with respect to performance under this agreement shall be construed and
resolved under the, laws of Ohio.
Section 13. NOTICE. Any notice or other communication required or
desired to be given to any party under this agreement shall be in writing and
shall be deemed given: (a) when delivered personally to that party; (b) upon
receipt of a telephone facsimile transmission answer back, (c) three (3) days
after having been deposited in the United States mail, certified or registered,
return receipt requested, postage prepaid, or (d) one (1) business day after
having been dispatched by a nationally recognized overnight courier service,
addressed to the parties or their permitted assigns at the following addresses
(or at such other address or number as is given in writing by either party to
the other) as follows:
Investor:
Mass Transfer Systems, Inc.
000 Xxxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxx
with copies to:
Xxxxxxx, Xxxxx & Xxxxxx
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx Xxxxxxx Xxxx
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Company:
Waterlink, Inc.
000 Xxxxxx Xxxxxx, X.X.
Xxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxxx X. Xxxxxxxxx, Chairman
with copies to:
Benesch, Friedlander, Xxxxxx & Aronoff
0000 XX Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
` Attn: Xxx X. Xxxxxx, Esq.
Section 14. TERMINATION. The registration right granted under this
agreement shall terminate with respect to any Holder one hundred eighty (180)
days after the effective date of a Registration Statement registering all of
such Holder's Registrable Shares under the Securities Act; provided, however,
that the indemnification provisions in Section 6 shall survive the termination
of such registration rights. Notwithstanding anything to the contrary in this
agreement, the Company shall not be required to register any Registerable Shares
pursuant to a request under Section 2 hereof, if within twenty-five (25) days
after its receipt of a request therefore, counsel for the Company delivers an
opinion to the requesting Holder, in form and substance satisfactory to counsel
to such Holder, that the proposed sale of Registerable Shares requested to be so
registered may be affected in its entirety within any ninety (90) day period
following Registration and without regard to any holding period or volume
limitation pursuant to Rule 144 of the Securities Act.
Section 15. COUNTERPARTS. This agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute a single agreement.
Section 16. CAPTIONS. The captions of the various sections of this
agreement are not part of the context of this agreement, but are only labels to
assist in locating those sections, and shall be ignored in construing this
agreement.
Section 17. SEVERABILITY. The intention of the parties to this
agreement is to comply fully with all laws and public policies, and this
agreement shall be construed consistently with all laws and public policies to
the extent possible. If and to the extent that any court of competent
jurisdiction determines it is impossible to construe any provision of this
agreement consistently with any law or public policy and consequently holds that
provision to be invalid, such holding shall in no way affect the validity of the
other provisions of this agreement, which shall remain in full force and effect.
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Section 18. JURISDICTION AND VENUE. All parties to this agreement
hereby designate the Court of Common Pleas of Cuyahoga County, Ohio, as a court
of proper jurisdiction and venue for any actions or proceedings relating to this
agreement; hereby irrevocably consent to such designation, jurisdiction and
venue; and hereby waive any objections or defenses relating to jurisdiction or
venue with respect to any action or proceeding initiated in the Court of Common
Pleas of Cuyahoga County, Ohio.
WATERLINK, INC.
By:/S/ Xxxxx Xxxxxxx
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Its:Vice President and Chief Financial Officer
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MASS TRANSFER SYSTEMS, INC.
By:/S/ Xxxx X. Xxxxxxx
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Its:President
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