Exhibit 2.1
EXECUTION VERSION
STOCK PURCHASE AGREEMENT
By and Among
Ranor Acquisition LLC
as Purchaser
and
Green Mountain Partners III, LP
Phoenix Life Insurance Company
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▇▇▇▇▇▇▇ ▇▇▇▇ and
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as Sellers
and
Ranor, Inc.
1. DEFINITIONS...............................................................1
2. PURCHASE AND SALE OF SHARES AND PREFERRED SHARES..........................3
2.1. Purchase and Sale of Common Securities and Preferred Shares;
Consideration....................................................3
2.2. Deliveries at Closing............................................4
3. NET CASH ADJUSTMENT; ACCOUNT RECEIVABLES AND PAYABLE TARGETS..............5
4. CLOSING...................................................................7
4.1. Closing and Closing Date.........................................7
4.2. Actions at Closing...............................................7
5. REPRESENTATIONS AND WARRANTIES OF SELLER..................................7
5.1. Organization.....................................................8
5.2. Authorization of Agreement.......................................8
5.3. Effect of Agreement..............................................8
5.4. Litigation.......................................................8
5.5. Title to Shares, Liens, etc......................................8
5.6. No Interest in Competitors.......................................8
6. REPRESENTATIONS AND WARRANTIES IN RESPECT OF THE COMPANY..................8
6.1. Organization, Good Standing, Power, Etc..........................9
6.2. Capital Stock....................................................9
6.3. Articles of Incorporation and By-laws............................9
6.4. Subsidiaries, Divisions and Affiliates...........................9
6.5. Equity Investments...............................................9
6.6. Effect of Agreement.............................................10
6.7. Restrictions....................................................10
6.8. Governmental and Other Consents.................................10
6.9. Financial Statements............................................10
6.10. Absence of Certain Changes or Events............................10
6.11. Title to Assets, Absence of Liens and Encumbrances..............11
6.12. Insurance.......................................................11
6.13. Agreements, Arrangements, Etc...................................11
6.14. Patents, Trademarks, Copyrights, Etc............................14
6.15. Permits, Licenses, Etc..........................................14
6.16. Compliance with Applicable Laws.................................14
6.17. Litigation......................................................15
6.18. Customers, Suppliers, Distributors and Agents...................15
6.19. Books and Records...............................................16
6.20. Employee Benefit Plans..........................................16
6.21. Powers of Attorney..............................................16
6.22. Labor Disputes, Unfair Labor Practices..........................16
6.23. Environmental Matters...........................................17
6.24. Tax and Other Returns and Reports...............................18
6.25. Recent Dividends and Other Distributions........................18
6.26. Debt............................................................19
6.27. Purchase and Sale Obligations...................................19
6.28. Other Information...............................................19
6.29. Accounts Receivable and Accounts Payable........................19
6.30. Foreign Corrupt Practices Act, Etc..............................19
7. REPRESENTATIONS AND WARRANTIES OF PURCHASER..............................19
7.1. Organization....................................................19
7.2. Authorization of Agreement......................................19
7.3. Effect of Agreement.............................................20
7.4. Litigation......................................................20
8. PRE-CLOSING COVENANTS OF RANOR AND THE SHAREHOLDERS......................20
8.1. Conduct of Business Until Closing Date..........................20
8.2. Approvals, Consents and Further Assurances......................21
8.3. Access to Properties, Records, Suppliers, Agents, Etc...........21
8.4. Advice of Changes...............................................22
8.5. Conduct.........................................................22
8.6. Employee Benefit Plans..........................................22
8.7. Satisfaction of Conditions by the Company and Sellers...........22
8.8. Non-Competition.................................................22
8.9. Notices and Consents............................................23
8.10. Transfer Taxes..................................................23
8.11. Developments....................................................23
9. PRE-CLOSING COVENANTS OF PURCHASER.......................................23
10. POST-CLOSING COVENANTS...................................................23
11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER.....................23
11.1. Accuracy of Representations and Warranties......................24
11.2. Performance of Agreements.......................................24
11.3. Litigation, Etc.................................................24
11.4. Approvals and Consents..........................................24
11.5. Seller's Certificate............................................25
11.6. Officer's Certificate...........................................25
11.7. Good Standing Certificates......................................25
11.8. No Material Adverse Change......................................25
11.9. Actions, Proceedings, Etc.......................................25
11.10. Licenses, Permits, Consents, Etc................................25
11.11. Employment Agreement............................................25
11.12. Opinion.........................................................25
11.13. Management Fees.................................................25
12. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF RANOR AND THE SELLERS.........26
12.1. Accuracy of Representations and Warranties......................26
12.2. Performance of Agreements.......................................26
12.3. No Injunction...................................................26
12.4. Stockholder Agreement...........................................26
13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION..............26
13.1. Survival........................................................26
13.2. Indemnification by the Sellers..................................26
13.3. Indemnification by Purchaser....................................27
13.4. Limitations on Indemnification..................................27
13.5. Right to Defend.................................................28
13.6. Subrogation.....................................................28
13.7. Exclusive Remedy................................................28
13.8. Effect of Insurance; Taxes; Etc.................................28
14. POST-CLOSING TAX MATTERS.................................................30
14.1. Tax Periods Beginning Before the Closing Date...................30
14.2. Cooperation on Tax Matters......................................30
15. SELLERS' REPRESENTATIVE..................................................31
16. MISCELLANEOUS............................................................31
16.1. Expenses........................................................31
16.2. Termination of Agreement........................................32
16.3. Waivers.........................................................32
16.4. Binding Effect; Benefits........................................32
16.5. Assignment......................................................32
16.6. Notices.........................................................32
16.7. Entire Agreement................................................33
16.8. Headings; Certain Terms.........................................34
16.9. Counterparts....................................................34
16.10. Governing Law...................................................34
16.11. Severability....................................................34
16.12. Amendments......................................................34
16.13. Section References..............................................34
16.14. Brokers and Finders.............................................34
EXHIBIT INDEX
Exhibit 2.2(b) Form of Escrow Agreement
Exhibit 5.6 No Interest in Competitors
Exhibit 6.1 Good Standing Certificates
Exhibit 6.2(a) Capitalization
Exhibit 6.8 Governmental and Other Consents
Exhibit 6.10 Material Adverse Changes
Exhibit 6.11 Title to Assets, Absence of Liens and Encumbrances
Exhibit 6.12 Insurance
Exhibit 6.13.1 Commitments
Exhibit 6.13.3 Fulfillment of Commitments, No Default
Exhibit 6.14 Patents, Trademarks, Copyrights
Exhibit 6.15 Permits, Licenses, Etc.
Exhibit 6.17 Litigation
Exhibit 6.18(a) Customers, Suppliers, Distributors and Agents
Exhibit 6.18(b) 10 Largest Purchasers and Providers
Exhibit 6.20 Employee Benefit Plans
Exhibit 6.21 Powers of Attorney
Exhibit 6.22 Labor Disputes, Unfair Labor Practices
Exhibit 6.23 Environmental Matters
Exhibit 6.25 Recent Dividends and Other Distributions
Exhibit 11.11 Form of Employment Agreement
Exhibit 11.12 Seller Counsel Opinions
Exhibit I Real Property Description
STOCK PURCHASE AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of this
17th day of August, 2005(1), by and among Ranor Acquisition LLC, a Delaware
limited liability company (the "Purchaser"), Green Mountain Partners III, LP
("GMP"), Phoenix Life Insurance Company ("Phoenix"; and together with GMP, the
"Institutional Sellers"), ▇▇▇ ▇▇▇▇ ("▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ("Lipincott"), ▇▇▇▇▇▇▇ ▇▇▇▇ ("Rose") and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇"; and
together with Gray, Justicz, Lippincott and Rose, the "Individual Sellers" and
together with the Institutional Sellers, the "Sellers"), and Ranor, Inc, a
Delaware corporation of ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company").
Unless otherwise defined herein, capitalized terms have the meaning specified in
Section 1.
RECITALS:
WHEREAS, the Individual Sellers own (and will own as of the Closing
Date) all of the issued and outstanding shares (the "Common Shares") of the
common stock, $.001 par value, of the Company (the "Common Stock"), as more
particularly described on Exhibit 6.2(a) attached hereto;
WHEREAS the Institutional Sellers own (and will own as of the Closing
Date) all of the issued and outstanding Warrants ("Warrants"; the Common Shares
and the Warrants are collectively referred to herein as the "Common Securities")
to purchase Common Stock, as more particularly described on Exhibit 6.2(a)
attached hereto;
WHEREAS, the Institutional Sellers own (and will own as of the Closing
Date) all of the issued and outstanding shares (the "Preferred Shares") of the
Series A Preferred Stock, $.001 par value, of the Company (the "Preferred
Stock"), as more particularly described on Exhibit 6.2(a) attached hereto;
WHEREAS, the Purchaser desires to purchase the Common Securities from
the Sellers and the Preferred Shares from the Institutional Sellers, and the
Sellers desire to sell the Common Securities and Preferred Shares to Purchaser,
all on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements of the parties hereinafter set forth, and for other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following
terms shall have the following meanings:
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(1) To be dated the date of the last signatory.
"Adjusted Redemption Value" shall mean the lesser of (i) the Redemption
Value or (ii) the amount which will cause the Closing Date Purchase Price to
equal $10,000.
"Affiliate". As used in this Agreement, the term "Affiliate" shall
mean, as applied to any person, any other person directly or indirectly
controlling, controlled by, or under common control with, that person. For
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling", "controlled by", and "under common control with") as
applied to any person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of that
person or entity, whether through the ownership of voting securities, by
contract, or otherwise.
"Ancillary Documents" shall have the meaning set forth in Section 9
hereof.
"Closing Date" shall have the meaning set forth in Section 4.1 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and/or
superseded.
"Commitments" shall mean all agreements, indentures, mortgages, plans,
policies, arrangements, and other instruments, including all amendments thereto
(or where they are verbal, written summaries of the materials terms thereof),
fixed or contingent, required to be disclosed on Exhibit 6.13.
"Company Debt" shall mean the aggregate principal and interest due the
Institutional Investors pursuant to those certain 14% Senior Notes due August 7,
2002 as set forth on the Payoff Letter.
"Indemnifiable Claim" shall mean any claim or other proceeding with
respect to which an Indemnitee may be entitled to indemnity under this
Agreement.
"Indemnitee" shall mean the person seeking indemnification pursuant to
this Agreement.
"Indemnitor" shall mean the party which is required or requested to
provide indemnification pursuant to this Agreement.
"Net Cash Amount" shall mean either the Estimated Net Cash Amount or
the Final Net Cash Amount, as applicable.
"Payoff Letter" shall have the meaning set forth in Section 2.4(b).
"Preferred Shares Percentage" shall mean, with respect to any
Institutional Seller, the percentage obtained by dividing the number of
Preferred Shares held by such Institutional Seller divided by 2,000.
"Ratable Portion" means, with respect to any Seller, the percentage set
forth on Exhibit 6.2(a) opposite such Seller's name.
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"Real Estate" shall mean all of the real property and factory buildings
owned by the Company located in Westminster, Massachusetts as more specifically
described in Exhibit I hereof.
"Redemption Value" shall mean Two Million Dollars ($2,000,000).
"Redemption Value Per Share" shall mean the amount equal to the
Adjusted Redemption Value divided by 2,000.
"Seller Expenses" shall mean the fees and expenses of the Sellers
incurred in connection with this Agreement.
"Seller Expenses Certificate" shall mean a certificate of the Seller
Representative with respect to Seller Expenses.
"Seller Representative" shall mean GMP.
"2005 Balance Sheet" shall mean the audited balance sheet of the
Company as of the fiscal year ended March 31, 2005.
2. PURCHASE AND SALE OF SHARES AND PREFERRED SHARES
2.1. Purchase and Sale of Common Securities and Preferred Shares;
Consideration.
(a) In exchange for the consideration specified herein, and
upon and subject to the terms and conditions of this Agreement,
Purchaser agrees to purchase and acquire from the Sellers, and each
Seller agrees to, sell, convey and deliver to Purchaser, at the
Closing, all rights, title and interest in and to the Common Securities
free of any and all encumbrances of any nature or description in
exchange for cash having an aggregate value, determined as set forth
herein, equal to $9,250,000, minus the aggregate amount of the Company
Debt outstanding on the Closing Date, minus the Adjusted Redemption
Value of the Preferred Shares, minus the Sellers' Expenses, plus (or
minus, if the Net Cash Amount is a negative number) the Net Cash Amount
on the Closing Date as determined in accordance with Section 3, minus,
if any, the Account Payable Adjustment Amount (such aggregate value
being referred to herein as the "Closing Date Purchase Price"). The
Closing Date Purchase Price shall be subject to further adjustment
after the Closing pursuant to Section 3.4.
(b) In exchange for the consideration specified herein, and
upon and subject to the terms and conditions of this Agreement,
Purchaser agrees to purchase and acquire from the Institutional
Sellers, and the Institutional Sellers agree to, sell, convey and
deliver to Purchaser, at the Closing, all rights, title and interest in
and to the Preferred Shares free of any and all encumbrances of any
nature or description in exchange for cash having an aggregate value
equal to the Adjusted Redemption Value adjusted in adjusted in
accordance with Section 3.4 after the Closing Date. In the event of any
adjustment pursuant to Section 3.4 payable to the Sellers such amount
shall first be paid to the Institutional Sellers until they have
received the Redemption Value in full.
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2.2. Deliveries at Closing.
(a) Subject to the terms and conditions set forth in this
Agreement, the Sellers agree to sell to Purchaser, and Purchaser agrees
to purchase from the Sellers, at the Closing referred to in Section 4
of this Agreement, all of the Common Securities in exchange for the
payment by Purchaser at the Closing of its Ratable Portion of the
Closing Date Purchase Price (provided that at the election of the
Institutional Sellers, any amount due in respect of the Warrants may be
allocated to the Adjusted Redemption Value payable pursuant to Section
2.2(b). At the Closing, each Seller shall deliver to Purchaser
certificates representing such Seller's Common Securities to be
purchased by Purchaser, free and clear of any lien, encumbrance,
security agreement, equity, option, claim, charge or restriction, other
than restrictions imposed by federal or applicable state securities
laws.
(b) Subject to the terms and conditions set forth in this
Agreement, the Institutional Sellers agree to sell to Purchaser, and
Purchaser agrees to purchase from the Institutional Sellers, at the
Closing referred to in Section 4 of this Agreement, all of the
Preferred Shares in exchange for the payment by Purchaser at the
Closing of the Redemption Value. At Closing, (i) $925,000 of the
Adjusted Redemption Value (the "Escrowed Funds") shall be placed in
escrow with a bank or trust company approved by the Purchaser and the
Sellers' Representative (the "Escrow Agent") pursuant to an escrow
agreement in the form of Exhibit 2.2(b) attached hereto, with such
changes as may be reasonably required by the Escrow Agent (the "Escrow
Agreement") and (ii) an amount equal to the Adjusted Redemption Value
minus the Escrowed Funds shall be distributed to the Institutional
Sellers so that each Institutional Seller will receive by wire transfer
of immediately available funds (x) an amount of the Adjusted Redemption
Value equal to the product of (i) the number of Preferred Shares owned
by such Institutional Seller, multiplied by (ii) the Redemption Value
Per Share, minus (y) such Seller's Preferred Shares Percentage of the
Escrowed Funds. The Escrowed Funds shall be held in escrow pursuant to
the terms of the Escrow Agreement to secure the obligations of the
Sellers with respect to any payment obligations of the Sellers under
Section 3.4 and to secure the indemnification obligations of the
Sellers under Section 13. At the Closing, each Institutional Seller
shall deliver to Purchaser certificates representing such Institutional
Seller's Preferred Shares to be purchased by Purchaser, free and clear
of any lien, encumbrance, security agreement, equity, option, claim,
charge or restriction, other than restrictions imposed by federal or
applicable state securities laws.
(c) Other Settlements at Closing. At the Closing, Purchaser
shall (i) on behalf of the Company, cause the Company Debt to be repaid
in full to the party or parties entitled thereto pursuant to the Payoff
Letter, (ii) pay the Escrow Funds into escrow account to be held by the
Escrow Agent in accordance with the terms of this Agreement and the
Escrow Agreement and (iii) pay the Sellers Expenses as provided on the
Seller Expenses Certificate. The estimated amount of the Company Debt
as of September 30, 2005 will be approximately $8,728,000.
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3. NET CASH ADJUSTMENT; ACCOUNT RECEIVABLES AND PAYABLE TARGETS
3.1 At the Closing, the Company shall have prepared and delivered to
the Purchaser (i) an unaudited balance sheet (the "Estimated Closing Balance
Sheet") of the Company as of the close of business on the day immediately
preceding the Closing Date (referred to herein as the "Calculation Date"),
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with the 2005 Balance Sheet, (ii) a list of the Company's
accounts receivables as of the Calculation Date setting forth with respect to
each account receivable (x) the amount outstanding and (y) the date such account
receivable was created, (iii) a list of each of the Company's accounts payable
as of the Calculation Date setting forth with respect to each account payable
(x) the amount outstanding and (y) the date such account payable was created,
and specifically identifying each account payable outstanding in excess of 45
days as of the Calculation Date, and (iv) a certificate signed by the president
or chief financial officer of the Company, certifying (A) that the Estimated
Closing Balance Sheet was prepared on the basis described in clause (i) above,
(B) that each of the lists in clauses (ii) and (iii) above is true, correct and
complete as of the Calculation Date and (C) the cash balance (including any cash
equivalents) of the Company as of the Calculation Date (the "Estimated
Calculation Date Net Cash Amount"). In calculating the cash balance advance
customer deposits in excess of inventory value identified therewith shall not be
counted toward the Calculation Date Cash Balance.
3.2 If the Estimated Calculation Date Net Cash Amount is less than
$250,000, the Closing Date Purchase Price shall be reduced by an amount equal to
such deficiency, or if the Calculation Date Cash Balance is greater than
$250,000 the Closing Date Purchase Price shall be increased by an amount equal
to such excess (such excess or deficiency, the "Estimated Net Cash Amount").
3.3 If the accounts receivable or accounts payable of the Company shall
not be substantially at the aging levels averaged over the previous twelve (12)
months with payables averaging no more than thirty (30) days and no payables
over sixty (60) days Purchaser may, in its sole discretion, elect either to
terminate this Agreement and not purchase the Common Securities and Preferred
Shares or otherwise proceed to consummate these transactions without any
adjustment except as provided in the immediately succeeding sentence. If any
accounts payable set forth on the list provided by Section 3.1 are outstanding
for more than 45 days as of the Calculation Date, the Closing Date Purchase
Price will be reduced by the aggregate amount of such accounts payable (the
"Account Payable Adjustment Amount").
3.4 Within 45 days after the Closing, the Purchaser shall prepare and
submit to the Seller Representative an unaudited balance sheet of the Company as
of the close of business on the Calculation Date, prepared in accordance with
generally accepted accounting principles applied on a basis consistent with the
2005 Balance Sheet (the "Final Closing Statement"). The Purchaser and its
accountant shall permit the Sellers' accountants at the earliest practicable
date to review and make copies of all work papers, schedules and calculations
used in the preparation of the Final Closing Statement.
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When the Purchaser delivers the Final Closing Statement, the Purchaser
shall also deliver to the Sellers' Representative a certificate (i) certifying
that the Final Closing Statement was prepared on the basis and in accordance
with the procedures set forth in Section 3.1 above, and (ii) containing the
Purchaser's calculations based on the Final Closing Statement (the "Purchaser's
Proposed Calculations") of the Net Cash Amount of the Company as of the
Calculation Date (the "Proposed Final Net Cash Amount"). Within 15 days after
receipt of the Final Closing Statement and the accompanying certificate, the
Sellers' Representative shall notify the Purchasers of its agreement or
disagreement, as the case may be, with the Final Closing Statement and the
accuracy of any of the Purchaser's Proposed Calculations. If the Sellers'
Representative disputes any aspect of the Final Closing Statement or the amount
of any of the Purchaser's Proposed Calculations, then the Sellers'
Representative shall have the right to direct the Sellers' independent
accountants, at the Sellers' expense, to review and test the Final Closing
Statement. The Sellers' accountants shall complete their review and test within
fifteen (15) days after the date the Sellers' Representative disputes the
Purchaser's Proposed Calculations. If the Sellers' Representative, after such
review and test, still disagrees with the Purchaser's Proposed Calculations, and
the Purchaser does not accept the Sellers' Representative's proposed alternative
calculations (the "Sellers' Proposed Calculations"), then the Sellers'
Representative and the Purchaser shall select a nationally recognized
independent accounting firm (the "Independent Accounting Firm") to resolve the
remaining disputed items (the "Remaining Disputed Items") within fifteen (15)
days after the date of the Purchaser's rejection of the Sellers' Proposed
Calculations of the Remaining Disputed Items by conducting its own review and
test of the Final Closing Statement and thereafter selecting either the
Purchaser's Proposed Calculations of the Remaining Disputed Items or the
Sellers' Proposed Calculations of the Remaining Disputed Items or an amount in
between the two. Each of the Purchaser and the Sellers' Representative agree
that they shall be bound by the determination of the Remaining Disputed Items by
the Independent Accounting Firm. The fees and expenses of the Independent
Accounting Firm shall be paid jointly, one-half by the Purchaser and one-half by
the Sellers. The amount determined pursuant to this paragraph shall be the Final
Net Cash Amount.
Upon the determination pursuant to this Section 3.4 of the Final
Closing Statement and the final Net Cash Amount, the Closing Date Purchase Price
shall be recalculated in accordance with Section 2.1, using the amounts of the
Net Cash Amount so determined pursuant to this Section 3.4 in lieu of the amount
of the Net Cash Amount as used on the Closing Date. If the Closing Date Purchase
Price as so adjusted (the "Final Adjustment") is greater than the Closing Date
Purchase Price as adjusted pursuant to the Initial Adjustment, then Purchaser
shall pay to the Sellers' Representative (to be disbursed first to the
Institutional Sellers until they have received the Redemption Value and then to
the Sellers prorata in accordance with number of shares issued or issuable
pursuant to the Common Securities). If the Closing Date Purchase Price as
adjusted pursuant to the Final Adjustment is lower than the Closing Date
Purchase Price as adjusted pursuant to the Initial Adjustment, then the
difference shall be paid promptly in cash by the Escrow Agent to the Purchaser
from the Escrowed Funds. Any such payment and adjustment shall be made within
ten (10) days after the determination of the Final Adjustment pursuant to this
Section 3.4.
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4. CLOSING
4.1. Closing and Closing Date. Subject to the provisions of this
Agreement, the consummation of the transactions contemplated by this Agreement
(the "Closing") shall be held at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ at 10:00 A.M. (local time) within sixty (60) days of
the date hereof (the date of the Closing being referred to herein as the
"Closing Date"). All Closing transactions shall be deemed to take place
simultaneously, and no Closing transaction shall be deemed consummated until all
transactions to take place at the Closing have been consummated.
4.2. Actions at Closing. At the Closing, in addition to any other
instruments or documents referred to herein:
(a) (i) Each Individual Seller shall deliver to Purchaser,
free and clear of any lien certificates representing its Common Shares
duly endorsed in blank or with duly executed stock powers attached,
(ii) each Institutional Seller shall deliver to Purchaser free and
clear of any lien certificates representing the Warrants, duly endorsed
in blank or with duly executed transfer documents attached and (iii)
each Institutional Seller shall deliver to Purchaser, free and clear of
any lien certificates representing its Preferred Shares duly endorsed
in blank or with duly executed stock powers attached.
(b) The Institutional Sellers shall deliver to the Purchaser
pay-off letters and lien discharges (or agreements therefor)
satisfactory to the Purchaser from each creditor with respect to the
Company Debt (the "Payoff Letter").
(c) Purchaser, on behalf of the Company, shall pay and
discharge all outstanding Company Debt.
(d) The Institutional Sellers shall deliver the Sellers
Expense Certificate.
(e) Purchaser shall pay, on behalf of the Sellers to the
parties identified on the Sellers Expense Certificate, all Sellers
Expenses set forth thereon.
(f) Purchaser shall deliver the Escrowed Funds to the Escrow
Agent.
(g) Purchaser shall pay via wire transfer the Closing Date
Purchase Price, if any, to the Sellers in accordance with Section
2.1(a) hereof.
(h) Purchaser shall pay with wire transfer the Adjusted
Redemption Value, minus the Escrowed Funds to the Institutional Sellers
in accordance with Section 2.1(b) hereof.
5. REPRESENTATIONS AND WARRANTIES OF SELLER
Each Seller hereby, individually and not severally, represents and
warrants to Purchaser as follows, each of which representations and warranties
shall be true as of the Closing Date:
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5.1. Organization. If an Institutional Seller, such Seller is duly
organized, validly existing and in good standing under the laws of its state of
organization. Such Seller has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.
5.2. Authorization of Agreement. The execution, delivery and
performance of this Agreement by such Seller, and the consummation of the
transactions contemplated hereby have been duly and effectively authorized by
such Seller. This Agreement has been duly and validly authorized, executed and
delivered on behalf of such Seller. This Agreement constitutes a valid and
binding obligation of such Seller, enforceable in accordance with its terms,
except that such enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors, rights generally.
5.3. Effect of Agreement. The execution, delivery and performance of
this Agreement by such Seller and consummation by such Seller of the
transactions contemplated hereby will not, with or without the giving or notice
and the lapse of time, or both, (a) violate any provision of law, statute, rule,
regulation or executive order to which such Seller is subject; (b) violate any
judgment, order, writ or decree of any court applicable to such Seller; or (c)
result in the breach of or conflict with any term, covenant, condition or
provision of the organizational documents of such Seller or any commitment,
contract or other agreement on instrument to which such Seller is a party.
5.4. Litigation. To the best knowledge of such Seller, there are no
actions, suits, proceedings or governmental investigations or inquiries pending
or threatened against it which, in its reasonable judgment, would prevent the
consummation of the transactions contemplated hereby.
5.5. Title to Shares, Liens, etc. Such Seller has, and as of the
consummation of the Closing, the Purchaser will have, sole record and beneficial
ownership of such Seller's Common Securities and Preferred Shares as set forth
on Exhibit 6.2(a) hereto, free and clear of any liens other than any such lien
incurred by the Purchaser.
5.6. No Interest in Competitors. Set forth on Exhibit 5.6 is a list
describing the extent to which such Seller or any Affiliate of such Seller,
directly or indirectly, owns more than a five percent (5%) interest in or
controls or is an employee, officer, director, or partner of or participant in
(but only to the extent such a participation exceeds one percent (1%)), or
consultant to any corporation, partnership, limited partnership, joint venture,
association or other entity which is a competitor, supplier or customer of the
Company or has any type of business or professional relationship with the
Company.
6. REPRESENTATIONS AND WARRANTIES IN RESPECT OF THE COMPANY
As an inducement to Purchaser to enter into this Agreement and perform
its obligations hereunder, the Sellers hereby represent and warrant to Purchaser
as follows, each of which representation and warranty is material and is being
relied upon by Purchaser, and each of which is true as of the date hereof and
shall be true as of the Closing, with the same effect as if said representations
and warranties had been made at and as of the Closing Date:
8
6.1. Organization, Good Standing, Power, Etc. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Except as set forth on Exhibit 6.1, the Company is
authorized or licensed to do business as a foreign corporation and is in good
standing in the Commonwealth of Massachusetts and each other jurisdiction in
which the character and location of its assets or the nature of the business
transacted by the Company makes such qualification necessary except where the
lack of such qualification would not have a material adverse effect on the
business, financial condition, operations, results of operations or future
prospects of the Company. The Company has all requisite corporate power and
authority to own or lease and operate its properties and assets, and carry on
its business as it is presently being conducted.
6.2. Capital Stock.
(a) The entire authorized capital stock of the Company
consists of (i) 1,000,000 shares of Common Stock, of which three
hundred fifty thousand (350,000) shares are issued and outstanding and
six hundred and fifty thousand (650,000) shares are reserved for
issuance under the Warrants and (ii) 2,000 shares of Preferred Stock of
which 2,000 shares are issued and outstanding, all of which are duly
authorized, validly issued, fully paid, non-assessable, free of
preemptive rights (other than the Stockholders Agreement which is being
terminated on the Closing Date), and were issued in compliance with all
federal and applicable state securities laws. All of the issued and
outstanding Common Stock, Preferred Stock and Warrants are held of
record by the respective Sellers on Exhibit 6.2(a).
(b) Except for the Warrants there are no outstanding offers,
options, warrants, rights, puts, calls, commitments, obligations
(verbal or written), conversion rights, plans or other agreements
(conditional or unconditional) of any character providing for,
requiring or permitting the offer, sale, purchase or issuance of any
shares of capital stock of the Company or any other securities of the
Company (as such term is defined in the Securities Act of 1933, as
amended). There are no equity securities of the Company that are
reserved for issuance (except in connection with the Warrants).
6.3. Articles of Incorporation and By-laws. Correct and complete copies
of the Articles of Incorporation of the Company, as amended to date, and the
By-laws of the Company, as amended to date, have been delivered to the
Purchaser. Such Articles of Incorporation and By-laws are in full force and
effect.
6.4. Subsidiaries, Divisions and Affiliates. There are no subsidiaries
or divisions of the Company. The business of the Company has been conducted
solely by the Company and not through any Affiliate, joint venture or other
entity, person or under any other name.
6.5. Equity Investments. The Company does not own or have any rights to
or any contractual right or duty to buy or sell, any equity interest, directly
or indirectly, in any corporation, partnership, joint venture, firm or other
entity.
9
6.6. Effect of Agreement. The execution, delivery and performance of
this Agreement by the Sellers and the consummation by the Sellers of the
transactions contemplated hereby, will not, with or without the giving of notice
and the lapse of time, or both, (a) violate any provision of law, statute, rule,
regulation or administrative order to which the Company is subject; (b) violate
any judgment, order, writ or decree of any court applicable to the Company; or
(c) result in the breach of or conflict with any term, covenant, condition or
provision of, result in the modification or termination of, constitute a default
under, or result in the creation or imposition of any lien, security interest,
charge or encumbrance upon any of the assets of the Company pursuant to, any
corporate charter, by-law, commitment, contract or other agreement or
instrument, including any of the Commitments, to which the Company is a party or
by which any of the assets is or may be bound or affected or from which the
Company derive benefit, which breach, conflict, modification, termination,
default or encumbrance described in this clause (c) would be material to the
business of the Company or any of its assets.
6.7. Restrictions. The Company is not a party to any contract,
commitment or agreement nor are any of its assets subject to, or bound or
affected by, any provision of the Articles of Incorporation, By laws or other
corporate restriction, or any order, judgment, decree, law, statute, ordinance,
rule, regulation or other restriction of any kind or character, which would,
individually or in the aggregate, materially adversely affect the business,
financial condition, operations, results of operations or future prospects of
the Company.
6.8. Governmental and Other Consents. No consent, authorization or
approval of, or exemption by, any governmental or public body or authority is
required by the Company in connection with the transactions contemplated by this
Agreement.
6.9. Financial Statements. The Company has delivered to Purchasers
correct and complete copies of audited financial statements of the Company for
the fiscal years ended March 31, 2003 (this was for a "stub year" commencing on
August 7, 2002), 2004 and 2005 together with such other financial documents
requested by Purchaser covering the period through May 31, 2005 (collectively,
the "Financial Statements"). The Financial Statements are in accordance with the
books and records of the Company, have been prepared in accordance with
generally accepted accounting principles and practices consistently applied and
accurately present the financial position of the Company at their respective
dates and the results of operations and cash flows for the respective periods
covered thereby; provided, however, that any interim unaudited financial
statements are subject to normal year end adjustments and lack footnotes and
other presentation items.
6.10. Absence of Certain Changes or Events. Except as set forth on
Exhibit 6.10, since March 31, 2005, the Company has not:
(a) suffered any adverse change in, or the occurrence of any
events which, individually or in the aggregate, has or have had, or
might reasonably be expected to have, a material adverse effect on, the
Company's the business, financial condition, operations, results of
operations or future prospects of the Company;
10
(b) incurred damage to or destruction of any material asset or
material portion of the Company's assets, whether or not covered by
insurance;
(c) made or entered into any material agreement, contract,
lease or license outside the ordinary course of business;
(d) made any capital expenditures in excess of Ten Thousand
Dollars ($10,000.00);
(e) mortgaged, pledged or subjected to lien or any other
encumbrance any of its assets;
(f) sold, transferred or leased any material asset or material
portion of its assets, or canceled or compromised any debt or material
claims, except in each case, in the ordinary course of business;
(g) sold, assigned, transferred or granted any rights under or
with respect to any licenses, agreements, patents, inventions,
trademarks, trade names, copyrights or formulae or with respect to
know-how or any other intangible asset; or
(h) amended or terminated any of the contracts, agreements,
leases or arrangements which otherwise would have been set forth on
Exhibit 6.13 hereto.
6.11. Title to Assets, Absence of Liens and Encumbrances. The Company
owns all the assets (whether real personal or mixed and whether tangible or
intangible) that they purport to own or which are reflected as owned in the
books and records of the Company, including all of the assets reflected in the
2005 Balance Sheet (except for assets held under capitalized leases and personal
property sold or disposed of since the date of the 2005 Balance Sheet in the
ordinary course of business of the Company), and all of the assets purchased or
otherwise acquired by the Company since the date of the 2005 Balance Sheet
(except for personal property acquired and sold or disposed of since the date of
the 2005 Balance Sheet in the ordinary course of business of the Company).
Except as set forth on Exhibit 6.11 or the title report, delivered to Purchaser,
all assets owned by the Company are free and clear of all mortgages, claims,
liens, charges, encumbrances, security interests, restrictions on use or
transfer or other defects as to title.
6.12. Insurance. Exhibit 6.12 contains a list of all material insurance
policies that are held by the Company, and that name the Company as an insured,
including self-insurance programs and those that pertain to the assets, business
or employees of the Company, including the policy limits thereof. All such
insurance policies are in full force and effect and the Company has not received
notice of cancellation of any such insurance policies.
6.13. Agreements, Arrangements, Etc.
6.13.1 Exhibit 6.13.1 contains a complete and accurate list, and
Sellers have made available to Purchaser, true and complete copies of each of
the following agreements (herein the "Commitments"):
11
(a) lease agreement (whether as lessor or lessee);
(b) license agreement, assignment or contract (whether as
licensor or licensee, assignor or assignee) relating to
trademarks, trade names, patents, or copyrights (or applications
therefore), unpatented designs or processes, formulae, know-how
or technical assistance, or other proprietary rights;
(c) employment or other contract or agreement with an
employee or independent contractor which (i) may not be
terminated without liability to the Company upon notice to the
employee or independent contractor of not more than thirty (30)
days, or (ii) provides payments (contingent or otherwise) of more
than Thirty Thousand Dollars ($30,000.00) per year (including all
salary, bonuses and commissions);
(d) agreement, contract or order with any buying agent,
supplier or other individual or entity who assists, provides or
is otherwise involved in the acquisition, supplying or providing
goods to the Company;
(e) non-competition, secrecy or confidentiality
agreements;
(f) agreement or other arrangement for the sale of goods
or services by the Company to any third party in the ordinary
course of business (including the government or any other
governmental authority) in excess of $100,000.00;
(g) agreement with any labor union;
(h) agreement, contract or order with any distributor,
dealer, leasing company, sales agent or representative, other
than contracts or orders for the purchase, sale or license of
goods made in the usual and ordinary course of business at an
aggregate price per contract of more than Ten Thousand Dollars
($10,000.00) and a term of more than six (6) months under any
such contract or order;
(i) agreement, contract or order with any manufacturer or
supplier at an aggregate price of more than Ten Thousand Dollars
($10,000.00) (including those agreements which allow discounts or
allowances or extended payment terms);
(j) agreement with any distributor or brokerage company,
leasing company, management company or any other individual or
entity who assists, places, brokers or otherwise is involved with
the marketing or distribution of the Company's products to its
customers;
(k) joint venture or partnership agreement with any other
person or entity;
12
(l) agreement guaranteeing, indemnifying or otherwise
becoming liable for the obligations or liabilities of another;
(m) agreement with any banks or other persons, other than
its employees, for the borrowing or lending of money or payment
or repayment of draws on letters of credit or currency swap or
exchange agreements (other than purchase money security interests
which may, under the terms of invoices from its suppliers, be
granted to suppliers with respect to goods so purchased);
(n) agreement with any bank, finance company or similar
organization which acquires from the Company receivables or
contracts for sales on credit;
(o) agreement granting any person a lien, security
interest or mortgage on any of the Assets, including, without
limitation, any factoring or agreement for the assignment of
receivables or inventory;
(p) agreement for the incurrence of any capital
expenditure in excess of Ten Thousand Dollars ($10,000.00);
(q) advertising, publication or printing agreement;
(r) agreement which restricts the Company from doing
business anywhere in the world;
(s) agreement giving any party the right to renegotiate or
require a reduction in prices or the repayment of any amount
previously paid.
6.13.2 Each of the Commitments is valid, in full force and effect
and enforceable by the Company in accordance with its terms.
6.13.3 Except as set forth on Exhibit 6.13.3, the Company has
fulfilled, or has taken all action reasonably necessary to enable it to fulfill
when due, all of its obligations under the Commitments, except where the failure
to do so would not, individually or in the aggregate, have a material adverse
affect on the business of the Company. Furthermore, there has not occurred any
default by the Company or any event which, with the lapse of time or the
election of any person other than the Company, will become a default, nor has
there occurred any default by others or any event which, with the lapse of time
or the election of the Company, will become a default under any of the
Commitments, except for such defaults, if any, which (a) have not resulted and
will not result in any material loss to or liability of the Company or any of
its successors or assigns or (b) have been indicated on Exhibit 6.13. The
Company is not in arrears in any material respect with respect to the
performance of satisfaction of the material terms or conditions to be performed
or satisfied by it under any of the Commitments and no waiver or variance has
been granted by any of the parties hereto.
6.13.4 After the Closing, except as set forth on Exhibit 6.13,
each of the Commitments does not require the consent of the other parties
thereto and, with respect to any of the Commitments which do require the consent
of the other parties thereto, the Company has obtained such consent and has
provided or will provide Purchaser with copies thereof.
13
6.14. Patents, Trademarks, Copyrights, Etc. Exhibit 6.14 sets forth (i)
the registered and beneficial owner and the expiration date, to the extent
applicable, for each of the federally registered patents, trademarks and
copyrights ("Rights") set forth on such Exhibit and (ii) the product, service,
or products or services of the Company which make use of, or are sold, licensed
or made under, each such Right. All of the Rights constitute all Rights
necessary for the conduct of the business of the Company, as such business is
currently being conducted. Except as set forth on Exhibit 6.14, the Company has
not sold, assigned, transferred, licensed, sub-licensed or conveyed the Rights,
or any of them, or any interest in the Rights, or any of them, to any person,
and has the entire right, title and interest (free and clear of all security
interests, liens and encumbrances of every nature) in and to the Rights
necessary to the conduct of the business of the Company as currently being
conducted; neither has the validity of such items been, nor is the validity of
such items, nor the use thereof by the Company, the subject of any pending or
threatened opposition, interference, cancellation, nullification, conflict,
concurrent use, litigation or other proceeding. The conduct of the business of
the Company as currently operated does not and will not conflict with, or
infringe, legally enforceable rights of third parties. Except as set forth on
Exhibit 6.14, the Rights owned by or licensed to the Company have not been used,
and no use is now being made, by any entity except the Company and other
entities duly licensed to use the same. Except as set forth on Exhibit 6.14,
there is no infringement of any proprietary right owned or licensed by the
Company.
6.15. Permits, Licenses, Etc. There are no permits, licenses,
registrations, memberships, certifications, orders or approvals of governmental
or administrative authorities or required to permit the Company to carry on its
business as currently conducted (other than (i) permits, licenses,
registrations, certifications trade memberships, orders or approvals which are
set forth on Exhibit 6.15, all of which are in full force and effect, and (ii)
other permits, licenses, orders or approvals, the failure to obtain which would
not, individually or in the aggregate, have a material adverse affect on the
business, financial condition, operations, results of operations or future
prospects of the Company).
6.16. Compliance with Applicable Laws. The conduct by the Company of
its business does not violate or infringe, and there is no basis for any claims
of violation or infringement of, any material law, statute, ordinance,
regulation or executive order (including, without limitation, Occupational
Safety and Health Act, the National Environmental Policy Act, the Foreign
Corrupt Practices Act, the Procurement Integrity Act and the respective
regulations thereunder and similar applicable state laws and regulations and any
laws, rules and regulations relating to equipment or services to be provided to
various agencies of the United States Department of Defense) currently in
effect, except in each case for violations or infringements which do not and
will not, individually or in the aggregate, have a material adverse affect on
the business, financial condition, operations, results of operations or future
prospects of the Company. The Company is not in default under any governmental
or administrative registration, membership or license issued to it, under any
governmental or administrative order or demand directed to it, or with respect
to any order, writ, injunction or decree of any court which, in any case,
materially adversely affects the business, financial condition, operations,
results of operations or future prospects of the Company. The Company has
contacted the Massachusetts Department of Labor & Workforce Development Division
of Occupational Safety for a voluntary inspection.
14
6.17. Litigation. Except as set forth on Exhibit 6.17, there is no
claim, action, suit, proceeding, arbitration, reparation, investigation or
hearing or notice of hearing, pending or, to the knowledge of the Institutional
Sellers, threatened, before any court or governmental, administrative or other
competent authority or private arbitration tribunal against or relating to or
affecting (directly or indirectly, including by way of indemnification) the
business of the Company, or the transactions contemplated by this Agreement; nor
are any facts known to the Institutional Sellers, which they reasonably believe
could reasonably give rise to any such claim, action, suit, proceeding,
arbitration, investigation or hearing, which may have any adverse affect,
individually or in the aggregate in excess of Twenty Five Thousand Dollars
($25,000.00) upon the business of the Company or the transactions contemplated
by this Agreement. There is no continuing order, injunction or decree of any
court, arbitrator or governmental, administrative or other competent authority
to which the Company is a party, or to which the Company is subject. The Company
is not permanently or temporarily enjoined or barred by order, judgment or
decree of any court or other tribunal or any agency or other body from engaging
in or continuing any conduct or practice in connection with the business engaged
in by the Company.
6.18. Customers, Suppliers, Distributors and Agents. Except as set
forth on Exhibit 6.18(a), the Company has no knowledge or reason to believe that
any customer, client, distributor, supplier or any other person or entity with
material business dealings with the Company, will or may cease to continue such
relationship with the Company, or will or may substantially reduce the extent of
such relationship, at any time prior to or after the Closing Date. Except for
such common public information, the Company has no knowledge of (1) any other
existing or contemplated modification or change in the business relationship of
the Company with, or (2) any existing condition or state of facts which has
affected adversely, will adversely affect (in more than a minimal manner), or
has a reasonable likelihood of adversely affecting the business of the Company
with its customers, clients, suppliers or other persons or entities with
material business dealings with the Company or which has prevented or will
prevent such business from being carried on by the Company under its new
ownership after the Closing in essentially the same manner as it is currently
carried on. Exhibit 6.18(b) sets forth as to the Company (a) the ten largest (in
dollar value) purchasers of its goods and/or services and (b) the ten largest
(in dollar value) providers of goods and/or services to the Company, in each
case with respect to each of the fiscal years ended March, 31 2004 and March 31,
2005.
6.19. Books and Records. The books of account and other financial and
corporate records of the Company are in all material respects complete, correct
and up to date, with all necessary signatures, and are in all material respects
accurately reflected in the Financial Statements.
15
6.20. Employee Benefit Plans. Except as described in Exhibit 6.20, the
Company does not have any hospitalization, health insurance, pension,
retirement, profit sharing, stock option or similar plans. Exhibit 6.20 sets
forth a correct and complete list of each and every employee benefit plan,
including each pension, profit sharing, stock bonus, bonus, deferred
compensation, severance, stock option or purchase plan, or other retirement plan
or arrangement, covering employees of the Company (the "Employee Benefit
Plans"). For each such Employee Benefit Plan, multi-employer plan or welfare
plan as those terms are defined in Section 3 of the Employee Retirement Income
Security Act of 1974, as amended, ("ERISA") and for each Employee Benefit Plan
with respect to which the Company is a "party in interest" as defined in Section
3 of ERISA, or a "disqualified person" as defined in Section 4975 of the Code,
the Company has delivered to Purchaser complete and accurate copies of (i) all
Employee Benefit Plans and all amendments thereto; (ii) the trust instrument or
insurance contract, if any, forming a part of the plans, and all amendments
thereto; (iii) the most recent and preceding year's Internal Revenue Service
Form 5500 and all schedules thereto; (iv) the most recent Internal Revenue
Service determination letter, or if no letter has been issued, any pending
application to the Internal Revenue Service for a determination letter regarding
qualified status; (v) any bond required by Section 412 of ERISA; and (vi) the
summary plan description. The Company has complied with all material rules and
regulations governing each of the Employee Benefit Plans maintained for the
benefit of the Company's employees, including, without limitation, rules and
regulations promulgated pursuant to ERISA and the Code, by the Department of
Treasury, Department of Labor, and the Pension Benefit Plans Guaranty
Corporation, and each of the Employee Benefit Plans now operated has since its
inception been operated in all material respects in accordance with its
provisions and is in compliance with such rules and regulations. Neither the
Company nor any Employee Benefit Plans maintained by the Company or any
fiduciaries thereof have engaged in any prohibited transaction, as that term is
defined in Section 406 of ERISA or Section 4975 of the Code, nor have any of
them committed any breach of fiduciary responsibility with respect to any of the
Employee Benefit Plans, and the Company does not have any knowledge that any
other person has not complied with these rules and regulations.
6.21. Powers of Attorney. Except as set forth on Exhibit 6.21, no
person has any power of attorney to act on behalf of the Company in connection
with any of the Company's properties or business affairs other than such powers
to so act as normally pertain to the officers of the Company.
6.22. Labor Disputes, Unfair Labor Practices. Except as set forth on
Exhibit 6.22, the Company is not engaged in any labor practice which would have
a material adverse affect on the business, financial condition, operations,
results of operations or future prospects of the Company. There is no pending or
affirmatively threatened (i) unfair labor practice complaint, charge, labor
dispute, strike, slowdown, walkout or work stoppage before the National Labor
Relations Board or any other authority or (ii) grievance or arbitration
proceeding arising out of or under a collective bargaining agreement involving
employees of the Company. There have been no strikes, labor disputes,
slow-downs, walkouts, or work stoppages involving employees of the Company since
August 2003. Union representation of employees exists as set forth on Exhibit
6.22. The Company has not received notice from any of its employees of such
employee's intent to terminate his or her employment or bring any action against
the Company for any reason related to the transactions contemplated by this
Agreement or for any other reason, including but not limited to age
discrimination, racial or sex discrimination or sexual harassment.
16
6.23. Environmental Matters.
(a) Except as set forth on Exhibit 6.23, (i) the Company is in
compliance with all material environmental laws, regulations, permits
and orders applicable to it, and with all laws, regulations, permits
and orders governing or relating to asbestos removal and abatement;
(ii) the Company has not transported, stored, treated or disposed, or
allowed or arranged for any third parties to transport, store, treat or
dispose, of any Hazardous Substances or other waste to or at any
location other than a site lawfully permitted to receive such Hazardous
Substances or other waste for such purposes, or had performed, arranged
for or allowed by any method or procedure such transportation, storage,
treatment or disposal in contravention of any laws or regulations nor
has the Company disposed of, or allowed or arranged for any third
parties to dispose of, Hazardous Substances or other waste upon
property owned or leased by it in contravention of any applicable laws
or regulations; (iii) there has not occurred since August 2003, nor is
there presently occurring, a Release of any Hazardous Substance on,
into or beneath the surface of any parcel of real property in which the
Company has (or will have after giving effect to the transactions
contemplated hereby) an ownership interest or any leasehold interest in
contravention of any applicable laws or regulations; (iv) the Company
has not since August 2003 transported or disposed of, or allowed or
arranged for any third parties to transport or dispose of, any
Hazardous Substance or other waste to or at a site which, pursuant to
the U.S. comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), has been placed on the
National Priorities List or its Washington equivalent; (v) since August
2003 the Company has not received notice and the Company has no
knowledge of any facts which could give rise to any substantive notice,
that the Company is a potentially responsible party for a federal or
state environmental cleanup site or for corrective action under CERCLA
or notice of any other Environmental Claim whether on site or off site;
(vi) since August 2003 the Company has not undertaken (or been
requested to undertake) any response or remedial actions or cleanup
actions of any kind at the request of any federal, state or local
governmental entity, or at the request of any other person or entity;
and (vii) since August 2003 there are no laws, regulations, ordinances,
licenses, permits or orders relating to environmental matters requiring
any material work, repairs, construction or capital expenditures with
respect to the assets or properties of the Company.
(b) For the purposes of this Agreement: (i) "Environmental
Claim" shall mean any written demand, claim, governmental notice or
threat of litigation or the actual institution of any action, suit or
proceeding which asserts that an Environmental Condition constitutes a
violation of any statute, ordinance, regulation, or other governmental
requirement relating to the emission, discharge, or Release of any
Hazardous Substance into the environment or the generation, treatment,
storage, transportation, or disposal of any Hazardous Substance, prior
to Closing Date in each case in contravention of any applicable laws or
regulations; (ii) "Environmental Condition" shall mean the presence on
any real property during the period from the date such real property
was first owned, leased or used by the Company as to which material
originating at the Company was transported, to the Closing Date, in
surface water, ground water, drinking water supply, land surface,
subsurface strata or ambient air of any Hazardous Substance arising out
of or otherwise related to the operations or other activities of the
Company or of any predecessor of the Company, conducted or undertaken
prior to the Closing Date, and in each case in contravention of any
applicable laws or regulations; (iii) "Hazardous Substance" shall mean
any substance defined in the manner set forth in Section 101(14) of the
U.S. Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, as applicable on the Closing Date, and shall
include any additional substances designated under Section 102(a)
thereof prior to the Closing Date; and (iv) "Release" shall mean
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing into
the environment in each case in contravention of any applicable laws or
regulations.
17
6.24. Tax and Other Returns and Reports. The Company has timely filed
or will file all Tax Returns and information returns required to be filed by the
Company and has paid all Taxes due for all periods commencing on or after August
2, 2003 and ending on or before March 31, 2004. The Tax Returns for March 31,
2005 are the subject of extensions. Adequate provision has been made in the
books and records of the Company and in the Financial Statements referred to in
Section 5.10 above, for all Taxes whether or not due and payable and whether or
not disputed. All Tax Returns of the Company since 2002 remain open. All
required Tax Returns, including amendments to date, have been prepared in good
faith without negligence or willful misrepresentation and are complete and
accurate and in all material respects. No governmental entity has, since August
2003, examined or is in the process of examining any Tax Returns of the Company.
No governmental entity has proposed (tentatively or definitively), asserted or
assessed or threatened to propose or assert, any deficiency, assessment, lien,
or other claim for Taxes and there would be no basis for any such delinquency,
assessment, lien or claim. Except as disclosed above, there are no agreements,
waivers or other arrangements providing for an extension of time with respect to
the assessment of any Taxes or deficiency against the Company or with respect to
any Tax Return filed or to be filed by the Company. For purposes of this
Agreement, the term "Taxes" means all taxes, including without limitation all
Federal, state, local, foreign and other income, franchise, sales, use,
property, payroll, withholding, environmental, alternative or add-on minimum and
other taxes, assessments, charges, duties, fees, levies or other governmental
charges of my kind whatsoever, and all estimated taxes, deficiency assessments,
additions to tax, penalties, and interest, and any contractual or other
obligation to indemnify or reimburse any person with respect to any such
assessment. For purposes of this Agreement, the term "Tax Return" shall mean any
report, statement, return, declaration of estimated tax or other information
required to be supplied by or on behalf of the Company to a taxing authority in
connection with Taxes, or with respect to grants of tax exemption, including any
consolidated, combined, unitary, joint or other return filed by any person that
properly includes the income, deductions or other tax information concerning the
Company. The copies of the Tax Returns for the tax years ended March 31, 2003
and 2004 provided by the Company to Purchaser are complete and correct.
6.25. Recent Dividends and Other Distributions. There has been no
dividend or other distribution of assets or securities whether consisting of
money, property or any other thing of value, declared, issued or paid to or for
the benefit of the Sellers subsequent to the date of the most recent Financial
Statements described in Section 5.10 by the Company, except as set forth on
Exhibit 6.25 or except as permitted by paragraph 8.1.8.
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6.26. Debt. As of the Closing after giving effect to the payments of
the Company Debt the Company will have no outstanding debt owing to any of the
Sellers or affiliated persons or entities of the Sellers nor will the Company
have any debt to financial institutions or to other persons or entities not
incurred in the ordinary course of business.
6.27. Purchase and Sale Obligations. All purchase, sales and orders and
all other commitments for purchases, sales and orders made by or on behalf of
the Company have been made in the usual and ordinary course of its business in
accordance with normal practices. On the Closing Date, the Sellers shall deliver
to Purchasers a schedule of all such uncompleted purchase and sale orders and
other commitments with respect to any of the Company's obligations as of a date
not earlier than ten (10) days prior to the Closing.
6.28. Other Information. None of the information which has been or may
be furnished by or on behalf of the Sellers or any of their representatives to
Purchaser or any of its representatives in connection with the transactions
contemplated hereby, which is contained in this Agreement (including the
Exhibits hereto) or any Ancillary Document or any certificate or instrument
delivered or to be delivered by or on behalf of Sellers in connection with the
transactions contemplated hereby, does or will contain any untrue statement of a
material fact or omit a material fact necessary to make the information
contained herein or therein not misleading.
6.29. Accounts Receivable and Accounts Payable. All of the accounts
receivable of the Company are actual and bona fide accounts receivable
representing obligations for the total dollar amount thereof showing on the
books of the Company, and the accounts receivable are not and will not be
subject to any recoupments, set-offs or counter-claims. The list of Accounts
Payable delivered pursuant to Section 3.1 is true, current, and complete as of
Calculation Date.
6.30. Foreign Corrupt Practices Act, Etc. The Company has not violated,
and is not in violation of, the United States Foreign Corrupt Practices Act or
any other United States Executive Order, law, rule or regulation regulating the
export of defense related or dual use equipment or services.
7. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Sellers as follows,
each of which representations and warranties shall be true as of the Closing
Date and each of which is made separately as to the Purchaser:
7.1. Organization. The Purchaser is an entity is duly organized,
validly existing and in good standing under the laws of its state of
organization. The Purchaser has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.
7.2. Authorization of Agreement. The execution, delivery and
performance of this Agreement by the Purchaser, and the consummation of the
transactions contemplated hereby have been duly and effectively authorized by
the Purchaser. This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Purchaser. This Agreement constitutes a valid and
binding obligation of the Purchaser, enforceable in accordance with its terms,
except that such enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors, rights generally.
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7.3. Effect of Agreement. The execution, delivery and performance of
this Agreement by the Purchaser and consummation by the Purchaser of the
transactions contemplated hereby will not, with or without the giving or notice
and the lapse of time, or both, (a) violate any provision of law, statute, rule,
regulation or executive order to which the Purchaser is subject; (b) violate any
judgment, order, writ or decree of any court applicable to the Purchaser; or (c)
result in the breach of or conflict with any term, covenant, condition or
provision of the organizational documents of the Purchaser or any commitment,
contract or other agreement on instrument to which the Purchaser is a party.
7.4. Litigation. There are no actions, suits, proceedings or
governmental investigations or inquiries pending or, to the knowledge of the
Purchaser, threatened against it which, in its reasonable judgment, would
prevent the consummation of the transactions contemplated hereby.
8. PRE-CLOSING COVENANTS OF RANOR AND THE SHAREHOLDERS
The Sellers and the Company hereby covenant and agree with Purchaser
that the Sellers and the Company shall do, or cause to be done, the following,
between the date of this Agreement and the Closing Date or date of termination
of this Agreement, as the case may be:
8.1. Conduct of Business Until Closing Date. Except as permitted or
required hereby or as Purchaser may otherwise consent in writing, the Sellers
shall cause the Company to and the Company shall:
8.1.1 operate the business of the Company only in the usual,
regular and ordinary manner, and use their best efforts to (a) preserve
the present business organization of the Company intact, (b) keep
available the services of the present employees of the Company, and (c)
preserve the current business relationships of the Company with
customers, clients, suppliers, distributors and others having business
dealings with it;
8.1.2 maintain all properties necessary for the conduct of the
business of the Company, whether owned or leased;
8.1.3 maintain the books, records and accounts of the Company
in the usual, regular and ordinary manner, on the basis consistent with
prior periods;
8.1.4 duly comply, in all material respects, with all laws,
rules and regulations applicable to the Company and to the conduct of
its business;
8.1.5 perform all of the obligations of the Company without
default, unless such default is of no significance to the Company and
could have no adverse impact on the Company or its business;
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8.1.6 neither (a) amend the Company's Articles of
Incorporation or By-laws; (b) merge with or into, consolidate,
amalgamate or otherwise combine with, any other entity; nor (c) change
the character of the business of the Company;
8.1.7 neither (a) encumber, mortgage, or voluntarily subject
to lien any of the existing assets of the Company; (b) transfer, sell,
lease, license or otherwise dispose of any of, or any part of, the
assets of the Company (other than in the ordinary course of business);
(c) convey, transfer or acquire any material asset or property of the
Company to, for or on behalf of the Company other than in the ordinary
course of business; (d) enter into any arrangement, agreement or
undertaking, with respect to any of the employees relating to the
payment of bonus, severance, profit-sharing or special compensation or
any increase in the compensation payable or to become payable to any
such employee; nor (e) incur any material fixed or contingent
obligation or enter into any agreement, commitment, contract or other
transaction or arrangement relating to the business of the Company;
8.1.8 not make any distributions or dividends of assets or
securities, nor any changes to the capital structure of the Company;
not agree to make or make any sales of its securities including the
issuance of any additional capital stock or rights or options or
contracts to acquire, or instruments convertible into, Common Stock or
Preferred Stock; however, the Company shall be entitled to make cash
distributions to any of the Sellers and pay the Company Debt;
8.1.9 neither modify, change or terminate any of its material
obligations other than in the ordinary course of business, nor grant
any power of attorney with respect to the business of the Company to
any party except the Purchaser; and
8.1.10 anything in this Section 8.1 notwithstanding, Sellers
shall have the right in their discretion to make all decisions and
expenditures regarding new services and equipment required to keep the
Company on its business plan for 2005 delivered to the Purchaser.
8.2. Approvals, Consents and Further Assurances. The Sellers shall use
and shall cause the Company to use its reasonable best efforts to obtain in
writing as promptly as possible all approvals, consents and waivers required in
order to effectuate the transactions contemplated hereby, and shall deliver to
the Purchaser copies, reasonably satisfactory in form and substance to counsel
to the Purchaser, of such approvals and consents. The Sellers shall also use
their reasonable best efforts to assure that the other conditions set forth in
Article 11 hereof are satisfied by the Closing Date.
8.3. Access to Properties, Records, Suppliers, Agents, Etc. The Sellers
shall cause the Company to and the Company shall give to the Purchaser and to
the Purchaser's counsel, financiers, accountants and other representatives
access to and copies of such of the Company's properties, personnel, books, tax
returns, contracts, commitments and records as relate to the assets, suppliers,
agents, distributors, etc. or other aspects of the business of the Company; and
shall furnish to the Purchaser and such representatives all such additional
instruments, contracts, documents or other written obligations (certified by
officers of the Company, if so requested) and financial and other information
concerning such business, assets, suppliers, agents, etc. as the Purchaser or
its representatives may from time to time request.
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8.4. Advice of Changes. If any Seller becomes aware of any fact or
facts which, if known at the date hereof, would have been required to be set
forth or disclosed in or pursuant to this Agreement or which, individually or in
the aggregate, could materially adversely affect the business of the Company,
such Seller shall promptly advise the Purchaser in writing thereof.
8.5. Conduct. Except as permitted or required hereby or as the
Purchaser may otherwise consent in writing, neither the Company nor the Sellers
shall enter into any transaction or take any action which would result in any of
the representations and warranties of the Sellers contained in this Agreement or
in any Ancillary Document not being true and correct as of the time immediately
after such transaction has been entered into or such event has occurred and on
the Closing Date.
8.6. Employee Benefit Plans. Except for payment of the Company's
current obligations, the Company shall not incur any additional obligations or
liabilities, including (i) all liabilities for all claims incurred, whether or
not reported, on or before the Closing Date under all "employee welfare benefit
plans," within the meaning of Section 3(1) of ERISA, (ii) all liabilities or
obligations for vacations or sick leave or retiree, medical or life benefits to
employees or former employees of the Company, and (iii) all liabilities of the
Company for all benefits accrued under any "employee pension benefit plan,"
within the meaning of Section 3(2) of ERISA under each Employee Benefit Plan.
8.7. Satisfaction of Conditions by the Company and Sellers. The Company
and each Seller hereby covenant and agree with the Purchaser that, between the
date of this Agreement and the Closing Date or date of termination of this
Agreement, as the case may be, they shall use their best efforts to assure that
the conditions set forth in Article 11 hereof are satisfied by the Closing Date.
8.8. Non-Competition. Until (i) one year after the Closing Date with
respect to the Individual Sellers and (ii) three years after the Closing Date
with respect to the GMP, such Sellers will not compete with the Company or
realize any benefits from a competitive business (other than any business to
which GMP has an interest prior to the Closing Date) or solicit customers of the
Company for products and services competitive with products and services of the
Company or appropriate any of the Company's intellectual property, customer
lists or corporate opportunities for their own benefit or communicate or
negotiate with any Person other than the Purchaser with respect to the sale of
the Company, its business (including any of its assets or properties) or the
Common Stock or Preferred Stock and they will not, and will not permit any of
their officers, directors, employees, agents or representatives (including
investment bankers, attorneys and accountants) to (a) initiate contact with, (b)
make, solicit or encourage any inquiries or proposals from, (c) enter into, or
participate in, any discussions or negotiations with, (d) disclose, directly or
indirectly, any information not customarily disclosed concerning the business of
the Company to or (e) afford any access to the Company's assets, properties,
books and records to, any Person in connection with the sale or other
disposition of the Company, the Stock or Preferred Stock, its business
(including any of its assets or properties). The Sellers shall promptly notify
Purchaser if they receive any such offer, inquiry or proposal and the required
details thereof, and keep the Purchaser informed with respect to each such
offer, inquiry or proposal.
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8.9. Notices and Consents. The Sellers shall cause the Company to give
any notices to third parties, and shall cause the Company to use its best
efforts to obtain any third party consents that the Purchaser may reasonably
request in connection with the transactions contemplated by this Agreement. Each
of the parties shall give any notices to, make any filings with, and use its
reasonable best efforts to obtain any necessary or appropriate authorizations,
consents and approvals of governments and governmental agencies. The Company and
the Purchaser shall cooperate with each other in obtaining any waiver, consent
or any other approval, if any, in connection with such filings, including in
connection with responses to requests for additional information.
8.10. Transfer Taxes. Any Transfer Taxes payable as a result of the
sale or purchase of the Common Securities or Preferred Stock by the Sellers
shall be paid by the applicable Seller.
8.11. Developments. Each party hereto shall give prompt written notice
to the others of any development causing a breach or potential breach of any of
its representations and warranties contained in this Agreement. No disclosure by
any party pursuant to this Section 8.11, however, shall be deemed to amend or
supplement the Exhibits hereto or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
9. PRE-CLOSING COVENANTS OF PURCHASER
Purchaser hereby covenants and agrees with the Sellers and the Company
that, between the date of this Agreement and the Closing Date or date of
termination of this Agreement, as the case may be, the Purchaser shall use its
commercially reasonable best efforts to cause the conditions set forth in
Article 12 hereof to be satisfied by the Closing Date.
10. POST-CLOSING COVENANTS
After the Closing hereunder, each Seller, at the request of the
Purchaser, shall execute, acknowledge and deliver to the Company and Purchaser,
without further consideration, all such further assignments, conveyances,
endorsements, deeds, powers of attorney, consents and other documents (together
with the instruments referred to in Section 1.3, referred to herein collectively
as the "Ancillary Documents") and take such other action as Purchaser may
reasonably request to transfer to and fully vest in Purchaser, and protect
Purchaser's right, title and interest in and to such Seller's Common Securities
and Preferred Stock, as applicable.
11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER
The obligations of Purchaser pursuant to this Agreement are subject to
the satisfaction at the Closing of each of the following conditions, any or all
of which conditions may be waived in writing by Purchaser in its sole
discretion:
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11.1. Accuracy of Representations and Warranties. All representations
and warranties made by the Sellers contained in this Agreement, any Exhibit or
Schedule hereto, or any certificate or instrument delivered to the Purchaser or
their representatives by the Sellers or their representatives shall be true on
and as of the Closing Date with the same force and effect as though made on and
as of the Closing Date (i.e., with respect to representations that a state of
facts exists on or as of the date hereof, it is a condition that such state of
facts exists on or as of the Closing Date; and with respect to a representation
that a state of facts has or has not changed between a date prior to the date
hereof and the date hereof, it is a condition that such state of facts has or
has not changed between such prior date and the Closing Date), except as
affected by transactions contemplated hereby.
11.2. Performance of Agreements. The Sellers and the Company shall have
performed and complied with all covenants, obligations and agreements to be
performed or complied with by them on or before the Closing Date pursuant to
this Agreement.
11.3. Litigation, Etc.
11.3.1 Except as set forth on Exhibit 6.17, no claim, action,
suit, proceeding, arbitration, investigation or hearing or note of
hearing shall be pending or threatened against or affecting the Sellers
or the Company, which (a) might result either in an action or enjoin or
prevent the consummation of the transactions contemplated by this
Agreement; (b) would materially adversely affect the business of the
Company or the ability of Purchasers to consummate the transactions
contemplated by this Agreement or to own the Common Shares or Preferred
Shares or to operate the business of the Company.
11.3.2 The Company shall not be in violation of any law,
statute, ordinance, rule, regulation or executive order, the
enforcement of which would, individually or in the aggregate,
materially adversely affect the business of the Company; or which would
individually or in the aggregate, materially adversely affect the
ability of Purchaser to consummate the transactions contemplated by
this Agreement or to own the Common Shares or Preferred Shares or to
operate the business of the Company.
11.3.3 No law, regulation or decree shall have been proposed,
adopted or promulgated, or have become effective, the enforcement of
which would materially adversely affect the ability of the Purchaser to
consummate the transactions contemplated by this Agreement or to own
the Common Shares or Preferred Shares or to operate any such business.
11.4. Approvals and Consents. The Company shall have obtained, and
Purchaser shall have received copies of, all of the approvals and consents
referred to in Section 8.2, each of which approvals and consents shall be in
full force and effect and reasonably satisfactory in form and substance to
Purchaser and its counsel.
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11.5. Seller's Certificate. Purchaser shall have received an accurate
certificate of the Sellers, dated the Closing Date, satisfactory in form and
substance to Purchaser and its counsel, certifying (a) as to the fulfillment of
the matters specified in Sections 11.1 through 11.3, and (b) any changes that
Purchaser is required to be notified of pursuant to Section 8.4, or that
previously had not been disclosed to Purchaser.
11.6. Officer's Certificate. Purchaser shall have received an accurate
certificate, of ▇▇▇▇ ▇▇▇▇▇, CEO of the Company, dated as of the Closing Date,
stating, among other things, that he is not aware of any material omissions or
facts that would materially alter any of the Financial Statements, nor is he
aware of any facts or factors that are reasonably likely to occur, or if known
to other parties, that could have a material adverse effect on the financial
condition, business, operations, Assets, liabilities, management or prospects of
the Company.
11.7. Good Standing Certificates. Purchaser shall have received a
certificate of the office of the Secretary of State of Delaware, dated within
three (3) days before the Closing Date, certifying that the records of such
state regarding the Company incorporated in such state reflect neither a
certificate of dissolution, a court order declaring dissolution, a merger or
consolidation which terminated its existence, nor suspension of its corporate
powers, rights and privileges, and that in accordance with the records of such
state, such corporation is authorized to exercise all of its corporate powers,
rights and privileges in such state.
11.8. No Material Adverse Change. There shall have been no material
adverse changes in the financial condition, business, operations, assets,
liabilities, management or prospects of the Company since the execution hereof.
11.9. Actions, Proceedings, Etc. All actions, proceedings, instruments
and documents required to carry out the transactions contemplated by this
Agreement shall have been completed.
11.10. Licenses, Permits, Consents, Etc. Purchaser shall have received
evidence, in form and substance reasonably satisfactory to counsel for
Purchaser, that such licenses, permits, consents, approvals, authorizations or
orders of governmental authorities as are necessary to the consummation of the
transactions contemplated by this Agreement and the continued operation of the
business of the Company have been obtained.
11.11. Employment Agreement. ▇▇. ▇▇▇▇ ▇▇▇▇▇ as CEO of the Company shall
have entered into an employment agreement with the Company in the form of
Exhibit 11.11 hereto.
11.12 Opinion. Purchaser shall have received an opinion covering the
matters set forth on Exhibit 11.12 attached hereto.
11.13 Management Fees. Purchaser shall have received evidence that any
accrued management fees due any Person, including any Individual Seller, have
been discharged and released.
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12. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF RANOR AND THE SELLERS
The obligations of the Sellers and the Company under this Agreement are
subject to the satisfaction at the Closing of each of the following conditions.
12.1. Accuracy of Representations and Warranties. All representations
and warranties by Purchasers in this Agreement shall be true as of the Closing
Date with the same force and effect as though made on and as of the Closing
Date.
12.2. Performance of Agreements. Purchaser shall have performed and
complied in all material respects with all covenants, obligations and agreements
to be performed or complied with by their on or before the Closing Date pursuant
to this Agreement, including the payments required by Sections 2 and 4.1.
12.3. No Injunction. No third party injunction, stay or restraining
order shall be in effect prohibiting the consummation of the transactions
contemplated hereby.
12.4. Stockholder Agreement. Each of the Sellers shall have executed an
agreement terminating the Stockholders' Agreement dated August 2, 2002.
13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
13.1. Survival. The representations and warranties set forth in this
Agreement, in any Exhibit or Schedule hereto and in any certificate or
instrument delivered in connection herewith shall survive for a period of one
(1) year after the Closing Date and shall thereupon terminate and expire and
shall be of no force or effect thereafter, except (i) with respect to any claim,
written notice of which shall have been delivered to Purchaser or the Sellers,
as the case may be, such claim shall survive the termination of such period and
shall survive for as long as such claim is unsettled, and (ii) with respect to
any litigation which shall have been commenced to resolve such claim on or prior
to such date. Notwithstanding the foregoing, with respect to matters of title to
any of the Common Shares or Preferred Shares, the period shall have no
limitation and with respect to taxes, the survival period shall be the
applicable statute of limitations plus 30 days.
13.2. Indemnification by the Sellers. (a) Subject to the limitations
set forth in this Section 13, each Seller hereby covenants and agrees with
Purchaser that such Seller shall severally (and not jointly) indemnify the
Purchaser and its respective directors, officers, employees and Affiliates of
Purchaser, and each of their successors and assigns (individually, an
"Indemnified Party"), and hold them harmless from, against and in respect of its
Ratable Portion of any and all costs, losses, claims, liabilities, fines,
penalties, losses and expenses (including interest which may be imposed in
connection therewith, court costs and reasonable fees and disbursements of
counsel) (herein "Losses") incurred by any of them actually resulting from:
26
(i) any breach of any representation or warranty made by the
Sellers in Section 6 of this Agreement (including without limitation
any Exhibit hereto and any certificate or instrument delivered in
connection with Section 6); or
(ii) any breach by Sellers of any covenant or obligation of the
Sellers in this Agreement.
(b) Subject to the limitations set forth in this Section 13, in the
event of a breach by any Seller any of such Seller's representations or
warranties in Section 5, then such Seller agrees to indemnify each Indemnified
Party from and against any Losses such Indemnified Party may suffer arising,
directly or indirectly, from or in connection with such breach.
13.3. Indemnification by Purchaser. Subject to the limitations set
forth in Section 13, Purchaser hereby covenants and agrees with the Sellers that
such Purchaser shall indemnify the Sellers and hold them harmless from, against
and in respect of any and all costs, losses, claims, liabilities, fines,
penalties, Losses and expenses (including interest which may be imposed in
connection therewith and court costs and reasonable fees and disbursements of
counsel) incurred by any of them resulting from any misrepresentation, breach of
warranty or the nonfulfillment of any agreement, covenant or obligation by such
Purchaser made in this Agreement (including without limitation any Exhibit
hereto and any certificate or instrument delivered in connection herewith).
13.4. Limitations on Indemnification.
(a) The obligations of Sellers in the aggregate, on the one hand, and
the Purchaser, on the other, with respect to any Indemnifiable Claim hereunder
shall be subject to the limitations that (i) the Indemnitees may not make or
bring any claim against the Indemnitors in respect of any Indemnifiable Claims
unless the aggregate amount of all Losses therefrom from time to time incurred
or suffered (and/or threatened to be incurred or suffered) by all Indemnitees
collectively exceeds Fifty Thousand Dollars ($50,000.00) (the "Threshold"). All
Losses of Purchaser's Indemnified Parties, and all Losses of all Seller
Indemnified Parties, shall be aggregated in determining whether the Threshold
has been reached. Once the Threshold has been reached Indemnitees shall be
entitled to collect the entire Losses.
(b) The aggregate amount for which a Seller shall be liable for
indemnification under this Section 13 shall in no event exceed such Seller's
Ratable Portion of $925,000.
(c) Any amount payable by any Seller pursuant to this Section 13 shall
be first paid from the Escrowed Funds pursuant to the Escrow Agreement.
(d) No Individual Seller shall have any liability under Section
13.2(a)(i) for any amount in excess of the cash consideration received by such
Individual Seller pursuant to this Agreement except to the extent such amounts
are paid from the Escrowed Funds.
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13.5. Right to Defend. If the facts giving rise to any such
indemnification shall involve any actual claim or demand by any third party
against a Purchaser Indemnified Party or Sellers (referred to hereinafter as an
"Indemnified Party"), the indemnifying parties shall be entitled to notice of
and entitled (without prejudice to the right of any Indemnified Party to
participate at its own expense through counsel of its own choosing) to defend or
prosecute such claim at their expense and through counsel of their own choosing
if they give written notice of their intention to do so no later than the time
by which the interest of the Indemnified Party would be materially prejudiced as
a result of its failure to have received such notice; provided, however, that if
the defendants in any action shall include both the indemnifying parties and an
Indemnified Party, and the Indemnified Party shall have reasonably concluded
that counsel selected by the indemnifying parties has a conflict of interest
because of the availability of different or additional defenses to the
Indemnified Party, the Indemnified Party shall cooperate fully in the defense of
such claim and shall make available to the indemnifying parties pertinent
information under its control relating thereto, but shall be entitled to be
reimbursed, as provided in this Article 13, for all costs and expense incurred
by it in connection therewith.
13.6. Subrogation. If the Indemnified Party receives payment or other
indemnification from the indemnifying party hereunder, the indemnifying party
shall be subrogated to the extent of such payment or indemnification to all
rights in respect of the subject matter of such claim to which the Indemnified
Party may be entitled, to institute appropriate action for the recovery thereof,
and the Indemnified Party agrees reasonably to assist and cooperate with the
indemnifying party at no expense to the Indemnified Party in enforcing such
rights.
13.7. Exclusive Remedy. The indemnification provided in this Section 13
shall be the sole and exclusive remedy of the parties following the Closing. For
purposes of further clarification of the preceding sentence, the parties
acknowledge and agree that except as provided in this Section 13 no party shall
have any liability: (a) for any misstatement or alleged misstatement made within
or outside of this Agreement and the schedules hereto, or for any omission or
alleged omission of a fact necessary to make any statement made by or on behalf
of any party within or outside of this Agreement not misleading; or (b) for any
cause of action based upon any alleged duty to disclose (whether arising under
statute or common law), or for any cause of action based upon a theory of
negligent misrepresentation. The parties further acknowledge and agree that the
purpose of this Section 13.7 is to make it clear that a party is to have no
liability whatsoever to another party in connection with the sale of the Common
Securities or Preferred Shares except as set forth in this Section 13, and
accordingly agree that this Section 13.7 is to be construed broadly. The fact
that the Purchaser has conducted due diligence and may have, or could have, with
the exercise of reasonable diligence, discovered facts underlying the breach of
a representation shall be no defense to the breach of any such representation or
damages accruing therefrom. The parties acknowledge that this Section 13.7 has
been negotiated fully and that the Sellers would not have entered into this
Agreement but for the inclusion of this Section 13.7.
13.8. Effect of Insurance; Taxes; Etc.
Notwithstanding anything in this Section 13 to the contrary, the right
of the Purchaser to indemnification is limited as follows:
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(a) The Purchaser's right to indemnification pursuant to
Section 13 on account of any Losses will be reduced by all insurance
proceeds or other third party indemnification proceeds actually
received by the Purchaser with respect to such Losses. Purchaser shall
use reasonable efforts to claim and recover any Losses suffered by the
Purchaser under any such insurance policies or other third party
indemnities with respect to such Losses. The Purchaser shall remit to
the Sellers any such insurance or other third party proceeds which are
paid to the Purchaser with respect to Losses for which the Purchaser
has been previously compensated pursuant to this Section 13. Purchaser
shall cause the Company to maintain insurance with coverages and
limitations at least as protective as those in effect immediately prior
to the Closing for a period of at least three years after the Closing
Date.
(b) (i) The Purchaser's right to indemnification pursuant to
Section 13 on account of any Loss will be reduced by the amount of any
actual net reduction in cash payments for Taxes realized by Purchaser
or the Company in any taxable year beginning with the taxable year of
the Losses and ending with the taxable year in which the indemnity
amount is paid as a result of the Losses giving rise to such indemnity
claim (the "Indemnity Tax Period"). If an indemnity amount is paid
prior to the Company realizing any actual reduction in cash payments
for Taxes in connection with the Losses giving rise to such payment,
and Purchaser, the Company subsequently realizes an actual reduction in
cash payments for Taxes within the Indemnity Tax Period, then Purchaser
shall pay or cause to be paid the amount of such actual reduction in
cash payments for Taxes (but not in excess of the cumulative
indemnification payments actually already received with respect to such
Losses) to the Sellers. On the other hand, if, in any taxable year
during the Indemnity Tax Period, there is an actual net increase in
cash payments for Taxes realized by Purchaser, the Company, the Sellers
shall pay such amount to the Company (but not in excess of the
cumulative actual net reduction in Taxes for all prior taxable years
during the Tax Indemnity Period). Likewise, if the payment by the
Sellers to the Company is limited by reason of the parenthetical in the
immediately preceding sentence, but subsequently there is an actual net
reduction in Taxes for any taxable year during the Indemnity Tax Period
that reduces the amount of any indemnity payment for the Losses (a
"Subsequent Reduction"), such indemnity payment shall be increased by
the amount of such prior limitation (but not in excess of the
Subsequent Reduction). For the avoidance of doubt, in no event will the
liability of the Sellers to Purchaser, the Company for any actual net
increase in cash payments for Taxes pursuant to the previous two
sentences exceed the cumulative amount by which the Sellers
indemnification obligation for Losses was reduced pursuant to the first
sentence of this clause (i).
29
(ii) For purposes of this clause (b), Purchaser, the
Company shall be deemed to have realized any actual net
reduction or actual net increase in cash payments for Taxes
with respect to a taxable year during the Indemnity Tax Period
to the extent of the difference between (x) Purchaser's or the
Company's net liability for Taxes for such taxable year,
calculated by excluding any Tax items (including the receipt
of any indemnification payments) for such taxable year that
are attributable to the Losses and (y) Purchaser's or the
Company's actual net liability for Taxes for such taxable
year, calculated by taking into account any Tax items
(including the receipt of any indemnification payments) for
such taxable year that are attributable to the Losses. If (x)
exceeds (y) for any taxable year during the Indemnity Tax
Period, then, to the extent thereof, there shall have been an
actual net reduction in cash payments for Taxes realized by
Purchaser or the Company for such taxable year; if, on the
other hand, (y) exceeds (x) for any taxable year during the
Indemnity Tax Period, then, to the extent thereof, there shall
have been an actual net increase in cash payments for Taxes
realized by Purchaser or the Company for such taxable year.
(c) The Purchaser will not be entitled to indemnification
pursuant to Section 13 for punitive Losses, or for consequential,
exemplary or special Losses.
(d) The Purchaser's right to indemnification pursuant to
Section 13 on account of any Losses will be reduced by the amount of
any reserve reflected on the books, records and accounts of the
Company, on a consolidated basis, as of immediately prior to the
Closing Date established for the general category of items or matters
similar in nature to the specific items or matters giving rise to such
Losses.
14. POST-CLOSING TAX MATTERS
The following provisions shall govern the allocation of responsibility
as between the Purchaser and the Sellers for certain tax matters following the
Closing Date:
14.1. Tax Periods Beginning Before the Closing Date. The Sellers and
the Company shall prepare or cause to be prepared and file or cause to be filed
any tax returns of the Company for tax periods which begin before the Closing
Date and end immediately prior to the Closing Date. The Sellers shall be
responsible to pay all taxes due on the income of the Company prior to the
Closing Date.
14.2. Cooperation on Tax Matters.
(a) The Purchaser, the Company and the Sellers shall cooperate
fully, as and to the extent reasonably requested by the other party, in
connection with the filing of tax returns and any audit, litigation or
other proceeding with respect to taxes. Such cooperation shall include
the retention and (upon the other party's request) the provision of
records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on
a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Company and the
Sellers shall each (i) retain all books and records with respect to tax
matters pertinent to the Company relating to any taxable period
beginning before the Closing Date until the expiration of the statute
of limitations (and, to the extent notified by the Purchaser or the
Sellers, any extensions thereof) of the respective taxable periods, and
to abide by all record retention agreements entered into with any
taxing authority, and (ii) give the other party reasonable written
notice prior to transferring, destroying or discarding any such books
and records and, if the other party so requests, the Company or the
Sellers, as the case may be, shall allow the other party to take
possession of such books and records. The Purchaser and the Sellers
shall, upon request, use their reasonable best efforts to obtain any
certificate or other document from any government authority or any
other Person as may be necessary to mitigate, reduce or eliminate any
tax that could be imposed (including, but not limited to, with respect
to the transactions contemplate hereby.)
30
(b) At the Purchaser's request, so long as there is no adverse
effect on any Seller, the Sellers shall join with the Purchaser in
making an election under Section 338(h)(10) of the Code (and any
corresponding elections under state, or local law) (a "Section
338(h)(10) Election") with respect to the purchase of the Common
Shares. If so requested and required, the Sellers shall deliver at
closing two originals of Form 8023 properly executed. If Purchaser
decides to make the Section 338(h)(10) Election, and the Sellers are so
required, it shall deliver to the Sellers a completed, executed Form
8023, with attachments, no later than ten days before the due date of
such election. If Purchaser delivers the forms to the Sellers and the
Sellers are so required, the Sellers will take all actions necessary on
their part to make the Section 338(h)(10) Election.
15. SELLERS' REPRESENTATIVE
The Sellers' Representative is hereby constituted and appointed as
agent and attorney in fact for and on behalf of the other Sellers. Without
limiting the generality of the foregoing, the Sellers' Representative has full
power and authority, on behalf of each Seller and his or her successors and
assigns, to (a) interpret the terms and provisions of this Agreement and the
documents to be executed and delivered by the Sellers in connection herewith,
(b) execute and deliver and receive deliveries of all agreements, certificates,
statements, notices, approvals, extensions, waivers, undertakings, amendments,
and other documents required or permitted to be given in connection with the
consummation of the transactions contemplated by this Agreement, (c) receive
service of process in connection with any claims under this Agreement, (d) agree
to, negotiate, enter into settlements and compromises of, assume the defense of
claims, and demand arbitration and comply with orders of courts and awards of
arbitrators with respect to such claims, and to take all actions necessary or
appropriate in the judgment of the Sellers' Representative for the
accomplishment of the foregoing, (e) give and receive notices and communications
and (f) take all actions necessary or appropriate in the judgment of the
Sellers' Representative on behalf of the Sellers in connection with this
Agreement
The Sellers' Representative will not be liable for any act done or omitted under
this Agreement as Sellers' Representative while acting in good faith, and any
act taken or omitted to be taken pursuant to the advice of counsel will be
conclusive evidence of such good faith.
Purchaser shall be able to rely conclusively on the instructions and decisions
of the Sellers' Representative as to any actions required or permitted to be
taken by the Sellers' Representative hereunder, and no party hereunder shall
have any cause of action against Purchaser to the extent Purchaser has relied
upon the instructions or decisions of the Sellers' Representative.
16. MISCELLANEOUS
16.1. Expenses. Except as and to the extent otherwise provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, the Sellers and Purchaser shall each pay their own respective
expenses and the fees and expenses of their respective counsel and other
experts.
31
16.2. Termination of Agreement.
(a) This Agreement may be terminated at any time prior to the
Closing:
(i) by either the Sellers or the Purchaser if the Closing
shall not have occurred by October 17, 2005; provided, however,
that the right to terminate this Agreement under this Section
16.2(a)(i) shall not be available to any party whose failure to
fulfill any obligation under this Agreement shall have been the
cause of, or shall have resulted in, the failure of the Closing
to occur on or prior to such date;
(ii) by the Sellers if the Purchaser shall have breached
any of its representations, warranties, covenants or agreements
contained in this Agreement, which breach cannot be or has not
been cured within ten (10) days after the giving of written
notice by the Sellers to the Purchaser specifying such breach;
(iii) by the Purchaser if the Sellers shall have breached
any of their representations, warranties, covenants or agreements
contained in this Agreement, which breach cannot be or has not
been cured within ten (10) days after the giving of written
notice by the Purchaser to the Sellers' Representative specifying
such breach; or
(iv) by the mutual written consent of the Sellers and the
Purchaser.
(b) In the event of termination of this Agreement as provided in
Section 16.2, this Agreement shall forthwith become void and there
shall be no liability on the part of any party hereto except (a) as set
forth in Section 16 and (b) that nothing herein shall relieve either
party from liability for any breach of this Agreement occurring prior
to such termination.
16.3. Waivers. No action taken pursuant to this Agreement, including
any investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein or in any other documents. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach. Any party
hereto may, at or before the Closing, waive any conditions to its obligations
hereunder which are not fulfilled.
16.4. Binding Effect; Benefits. This Agreement shall inure to the
benefit of the parties hereto and shall be binding upon the parties hereto and
their respective successors and assigns. Except as otherwise set forth herein,
nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement.
16.5. Assignment. Without limitation, and without the consent, prior,
written or otherwise, of the Company, this Agreement and all of the rights and
obligations hereunder may be assigned by Purchaser to any entity owned or
controlled by, or affiliated with any of them. Immediately upon such assignment,
Purchaser shall be released from any obligation, of any kind or nature, under
this Agreement.
16.6. Notices. All notices, requests, demands and other communications
which are required to be or may be given under this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in person or
upon receipt when transmitted by facsimile or telex or after dispatch by
certified or registered first class mail, postage prepaid, return receipt
requested, to the party to whom the same is so given or made:
32
If to Purchaser, to: c/o ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇
The Ranor Acquisition LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
-and-
Tannenbaum, Helpern, Syracuse & Hirschtritt LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
If to the Sellers, to the Sellers' Representative:
Green Mountain Partners
Strong House
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
16.7. Entire Agreement. This Agreement (including the Exhibits hereto)
and the Ancillary Documents constitute the entire agreement and supersede all
prior agreements and understandings, oral and written, among the parties hereto
with respect to the subject matter hereof and supersede all prior agreements,
representations, warranties, statements, promises and understandings, whether
written or oral, with respect to the subject matter hereof. No party hereto
shall be bound by or charged with any written or oral arguments,
representations, warranties, statements, promises or understandings no
specifically set forth in this Agreement or in any Exhibit hereto or any
Ancillary Documents, or in certificates and instruments to be delivered pursuant
hereto on or before the Closing.
33
16.8. Headings; Certain Terms. The section and other headings contained
in this Agreement are for reference purposes only and shall not be deemed to be
a part of this Agreement or to affect the meaning or interpretation of this
Agreement. As used in this Agreement, the term "including" means "including, but
not limited to" unless otherwise specified; the word "or" means "and/or," and
the word "person" means and refers to any individual, corporation, trust,
partnership, joint venture, government or governmental authority, or any other
entity; and the plural and singular forms are used interchangeably.
16.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed, shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument.
16.10. Governing Law. This Agreement shall be construed in accordance
with the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of law principles thereof.
16.11. Severability. If any term or provision of this Agreement shall
to any extent be invalid or unenforceable, the remainder of this Agreement shall
not be affected thereby, and each term and provision of the agreement shall be
valid and enforced to the fullest extent permitted by law.
16.12. Amendments. This Agreement may not be modified or changed except
by an instrument or instruments in writing signed by the party or parties
against whom enforcement of any such modification or amendment is sought.
16.13. Section References. All references contained in this Agreement
to any section number are references to sections of this Agreement unless
otherwise specifically stated.
16.14. Brokers and Finders. Each party represents and warrants there
are no brokers, finders or similar persons to whom compensation will be due or
owing as a result of consummation of the transactions contemplated by this
Agreement and each other party hereby agrees to indemnify and hold the other
party harmless against any such claims.
[Remainder of page left intentionally blank. Signature page follows.]
34
IN WITNESS WHEREOF, the parties hereto have signed this Stock Purchase
Agreement, or have caused this Stock Purchase Agreement to be signed in their
respective names by an officer hereunder duly authorized, on the date first
above written.
Ranor, Inc.
By:
------------------------------------ --------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, CEO ▇▇▇ ▇▇▇▇, Individually
Seller:
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Individually
Green Mountain Partners III, LP
By: Green Mountain Investments III, LLC
By:
------------------------------------ --------------------------------
▇▇▇ ▇▇▇▇▇▇▇, President ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Individually
Phoenix Life Insurance Company
By:
------------------------------------ --------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Vice President ▇▇▇▇▇▇▇ ▇▇▇▇, Individually
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, Individually
Purchaser:
Ranor Acquistion LLC
By:
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
35
EXHIBIT 2.2(b)
Form of Escrow Agreement
To be provided, subject to mutual agreement of Buyer and Sellers.
EXHIBIT 5.6
No Interest in Competitors
None
EXHIBIT 6.1
Good Standing Certificates
See attached.
EXHIBIT 6.2(a)
Capitalization
Common Stock
--------------------------------------------------------------------------------
Holder Shares
--------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇ 70,000
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 70,000
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 70,000
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇ 70,000
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ 70,000
--------------------------------------------------------------------------------
Warrants
--------------------------------------------------------------------------------
Holder Warrants
--------------------------------------------------------------------------------
Green Mountain Partners III, LP 520,000
--------------------------------------------------------------------------------
Phoenix Life Insurance Company 130,000
--------------------------------------------------------------------------------
Preferred Stock
--------------------------------------------------------------------------------
Holder Shares
--------------------------------------------------------------------------------
Green Mountain Partners III, LP 1600
--------------------------------------------------------------------------------
Phoenix Life Insurance Company 400
--------------------------------------------------------------------------------
Ratable Portion
--------------------------------------------------------------------------------
Holder Percentage
--------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇ 7%
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 7%
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 7%
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇ 7%
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ 7%
--------------------------------------------------------------------------------
Green Mountain Partners II, LP 52%
--------------------------------------------------------------------------------
Phoenix Mutual Life Insurance Company 13%
--------------------------------------------------------------------------------
EXHIBIT 6.8
Governmental and Other Consents
None
EXHIBIT 6.10
Material Adverse Changes
1. Expenditures in connection with the replacement of the Company's Septic
System and ▇▇▇▇▇ field.
2. See Exhibit 6.23
EXHIBIT 6.11
Title to Assets, Absence of Liens and Encumbrances
1. See attached Owner' Title Insurance Policy ▇▇. ▇▇ ▇▇▇▇▇▇▇ and update
letter issued by Old Republic National Title Insurance Company dated
August 5, 2005.
2. See attached UCC search results
EXHIBIT 6.12
Insurance
See attached insurance certificate.
EXHIBIT 6.13.1
Commitments
(a) IKON copier lease(s)
(c) Management Agreements with the Individual Sellers See attached list of
Employee Loans regarding 401-K litigation (See exhibit 6.17).
(e) Confidentiality Agreements with customers. Employees are subject to
confidentiality and other provisions regarding Company proprietary
information.
(f) See attached list of purchase orders over $100,000
(i) See attached list of vendor orders over $10,000
(j) Representative Agreement between the Company and ▇▇▇ ▇▇▇▇▇
(m) Ford Motor Company Loan secured by Truck.
EXHIBIT 6.13.3
Fulfillment of Commitments, No Default
None
EXHIBIT 6.14
Patents, Trademarks, Copyrights
1. Registered domain name: "▇▇▇.▇▇▇▇▇.▇▇▇"
2. Registered Tradename "Ranor"
EXHIBIT 6.15
Permits, Licenses, Etc.
1. National Board of Boiler & Pressure Vessel Inspectors Certificate of
Authorization R - Scope: repairs and/or alterations at Company's facility
and extended for field repairs and/or alterations controlled by such
location.
2. American Society of Mechanical Engineers Certificates of Authorization
for:
a. Code Symbol, NPT, Scope: Class 1, 2, 3 MC & TC fabrication without
design responsibility and as a material organization supplying
ferrous & nonferrous material at Company's facility only;
b. Code Symbol NA, Scope: Class 1, 2, 3 & MC shop assembly at Company's
facility only;
c. Code Symbol NS, Scope: Class 1, 2, 3 & MC fabrication of supports
without design responsibility at Company's facility;
d. Code Symbol PP, Scope : Fabrication and assembly of pressure piping
at Company's location and field sites controlled by such location;
e. Code Symbol S, Scope: Manufacture and assembly of power boilers at
Company's facility and field sites controlled by such location;
f. Code symbol U, Scope: Manufacture of pressure vessels at Company's
facility and field sites controlled by such location.
EXHIBIT 6.17
Litigation
1. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Equal Employment Opportunity Commission
Socket No. ▇▇▇-▇▇▇▇-▇▇▇▇▇. ▇▇. ▇▇▇▇▇▇▇ filed a claim with the EEOC
claiming age discrimination by the Company. The Company denied
liability and presented its position to the EEOC investogator. On
July 16, 2003, the EEOC dismissed the action based on its
investigation. ▇▇. ▇▇▇▇▇▇▇ did not file a complaint within 90 days
of the dismissal, so his federal claims have been extinguished. It
is possible that ▇▇. ▇▇▇▇▇▇▇ would pursue claims of discrimination
under Massachusetts law.
2. 401(K) Litigation - Some employees of the Company are suing the
trustees of the 401-K Plan of the prior Ranor entity from which the
Company purchased the assets in 2002. The Company has no obligation
for future litigation costs.
EXHIBIT 6.18(a)
Customers, Suppliers, Distributors and Agents
None
EXHIBIT 6.18(b)
Ten (10) Largest Purchasers and Providers
Ten (10) largest current Purchasers:
1. BAE Systems
2. General Dynamics
3. ▇▇▇▇▇▇▇▇ Grumman/Newport News
4. ▇▇▇▇▇▇▇▇▇▇▇ Gloucester Eng. Inc.
5. Siemens Westinghouse
6. Scandia National Labs
7. Scientech
8. Spincraft
9. Cabot Corp.
10. GT Equipment
Ten (10) largest current Providers:
1. Fallon Community Health
2. ▇▇▇▇ Forge Co.
3. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
4. American Alloy Steel Inc.
5. Massachusetts Electric
6. ▇▇▇▇▇▇ Aluminum Co. Inc.
7. ▇▇▇▇▇▇▇▇▇ Steel Company
8. Dav-Tech Plating Inc.
9. Airgas East
10. Fitchburg Gas & Light Co.
EXHIBIT 6.20
Employee Benefit Plans
1. 401 K Plan
2. Health, Life and Disability Insurance
3. Vacation Policy
EXHIBIT 6.21
Powers of Attorney
None
EXHIBIT 6.22
Labor Disputes, Unfair Labor Practices
See Exhibit 6.17
EXHIBIT 6.23
Environmental Matters
1. Underground Storage Tanks - According to information received from the prior
owner of the Company's property:
o No underground storage tanks currently are located on the Company's
site.
o In 1993 three underground storage tanks were removed from Company's
site. Two tanks had held diesel oil, and one was used for gasoline.
o Approximately 155 cubic yards of petroleum-contaminated soils were
excavated from the area surrounding the dispensers and piping and
were recycled off-site.
2. Septic Problem
Inspection revealed surface sewage breakout in the area of the existing leaching
area servicing Company 's Westminster facility, therefore creating a health
nuisance condition and violation of the following Massachusetts General Laws:
o Chapter 111, section 122: A nuisance condition was found on the
site, which is deemed to be injurious to the public health. Such a
condition must be destroyed or removed.
o 310 CMR 15.303[1]a(2), Title 5 of the Massachusetts Environmental
Code: There is a discharge of effluent directly or indirectly to the
surface of the ground through ponding, surface breakout, or damp
soils above the disposal area or to a surface water of the
Commonwealth.
o Installation of a new septic system was completed July, 2005.
3. Paint Problem
The Company currently has partial cans of paint and other hazmat materials
stored at the facility. These unused materials need to be disposed of in an
environmentally safe manner.
4. Wood Problem
Pallets and crates from some products received is not reusable. The Company
piles these pallets and crates behind the garage.
5. Lubricant Problem
Metal chips and shavings removed from certain machines in the machine shop are
placed in open containers and stored behind the machine shop. Rain may have been
washing machine coolant residue from these metal chips and shavings into the
soil. The Company has not addressed this matter.
Environmental Permits
Paintbooth permit from the Massachusetts Department of Environmental Protection
is necessary for the Company's paint booth. The Company is pursing the necessary
application but has not yet received the permit. Failure to receive this permit
could be material to the operations of the Company's business.
Lead
The Company has lead that was left at the facility by the prior owner. The
Company has an obligation to remove the lead.
See Environmental Risk Limited Phase I dated July 2002, a copy of which has been
provided to Purchaser.
EXHIBIT 6.25
Recent Dividends and Other Distributions
None
EXHIBIT 11.11
Form of Employment Agreement
See Attached.
EXHIBIT 11.12
Sellers' Counsel Opinion Paragraphs
See Attached.
EXHIBIT I
Real Property Description
See Title Policy ▇▇. ▇▇ ▇▇▇▇▇▇▇ attached as Exhibit 6.11.
First Amendment to Stock Purchase Agreement
Reference is made to a Stock Purchase Agreement made and entered into as
of the 17th day of August, 2005 by and among Ranor Acquisition LLC, a Delaware
limited liability company, Green Mountain Partners III, LP, Phoenix Life
Insurance Company, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇
and ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Ranor, Inc. for the purchase by Ranor Acquisition LLC of
100% of the stock and warrants of Ranor Inc. [the "Original Agreement"]. The
purpose of this First Amendment to Stock Purchase Agreement is to amend the
Original Agreement.
1. Amendments.
(a) Footnote 1 in the Original Agreement is hereby deleted.
(b) The first sentence of Section 4.1 of the Original Agreement
shall be replaced in its entirety with the following sentence
"Subject to the provisions of this Agreement, the consummation
of the transactions contemplated by this Agreement (the "Closing")
shall be held at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ at 10:00AM (local time) on or before
November 15, 2005 (the date of the Closing being referred to herein
as the "Closing Date").
(c) The reference to "October 17, 2005" in Section 16.2(a)(i) is
replaced with "November 15, 2005."
2. Original Agreement. In all other respects the Original Agreement shall
remain unaltered and in full force and effect.
2
IN WITNESS WHEREOF, the undersigned have executed this First Amendment
to Stock Purchase Agreement, or have caused it to be executed in their
respective names by an officer hereunder duly authorized, as of the 15th day of
October, 2005.
Ranor, Inc.
By:
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
Sellers:
Green Mountain Partners III, LP
By: Green Mountain Investments III,
LLC, its general partner
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Individually
By:
---------------------------------- ------------------------------------
▇▇▇ ▇▇▇▇▇▇▇, President ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Individually
Phoenix Life Insurance Company
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, Individually
By:
---------------------------------- ------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President ▇▇▇▇▇▇▇ ▇▇▇▇▇, Individually
-------------------------------------
▇▇▇ ▇▇▇▇, individually
Purchaser:
Ranor Acquisition LLC
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
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