ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is
dated as of this 18th day of January, 2008 by and between PRECISION
OPTICS CORPORATION, INC., a Massachusetts corporation
("Seller"), and OPTOMETRICS CORPORATION, a Delaware
corporation ("Buyer").
WITNESSETH:
WHEREAS, Seller owns certain equipment used to create optical
filters (as set forth in Appendix I hereto, including spare parts listed
thereon, the "Equipment"), certain inventory (as set forth in Appendix II
hereto, the "Inventory") and intellectual property specifically related
thereto (the "Intellectual Property"); and
WHEREAS, Seller operates a business wherein it manufactures
optical filter products and provides services related thereto (the
"Business"); and
WHEREAS, Seller wishes to sell, and Buyer wishes to purchase,
the Equipment, the Intellectual Property, the Customer List (as hereinafter
defined) and the Inventory (collectively, the "Assets"), subject to the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual terms,
conditions and other agreements set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
mutually acknowledged, the parties hereby agree as follows:
ARTICLE I: PURCHASE OF THE PURCHASED ASSETS AND
PURCHASE PRICE; ETC.
1.1 Purchase of Assets. Subject to the terms and conditions
set forth herein, Seller agrees that, at the Closing, as hereinafter defined,
Seller shall sell, transfer, assign, convey and deliver to Buyer, free and
clear of any and all Liens, and Buyer agrees that on the Closing date,
Buyer shall purchase, acquire and accept from Seller, free and clear of any
and all Liens, the Assets, including all rights and interests under all
unfilled customer orders relating to the Business. For the avoidance of
doubt, the Assets shall not include any accounts receivable for products of
the Business shipped prior to the time of Closing.
1.2 Liabilities. Buyer does not assume or agree to pay,
perform, or discharge any debt, obligation, liability, indebtedness,
contract, Tax or liability, known or unknown, contingent or otherwise, of
Seller arising prior to the time of Closing related to the Assets (including,
without limitation, accounts payable, long-term debt, accrued expenses,
capitalized leases, wages, salaries, fees, accrued income and payroll taxes,
accrued payroll and/or vacation pay, notes due to officers, bank debt,
employee benefits, contributions and premiums for employee benefits,
commissions and bonuses, and other indebtedness for borrowed money)
(collectively, "Liabilities"). Seller acknowledges that Buyer assumes no
Liabilities whatsoever and all Liabilities shall remain the sole
responsibility of Seller.
1.3 Purchase Price; Allocation of Purchase Price; Royalties.
A. Purchase Price. The price to be paid by Buyer to
Seller for the Assets (the "Purchase Price") shall be Two Hundred Fifty
Thousand Dollars ($250,000) and shall be paid by wire transfer at the
Closing to such account as Seller shall direct, in writing.
B. Allocation of Purchase Price. The Purchase Price
shall be allocated among the Assets, as determined above, as set forth on
Exhibit A hereto (the "Allocation Schedule"). Seller and Buyer agree to
jointly complete (i) Internal Revenue Service Form 8594, and any other
required reports in accordance with Internal Revenue Code Section 1060,
as amended, and the regulations promulgated thereunder, with their
respective federal income tax returns for the year in which the Closing
occurs in accordance with the Allocation Schedule and (ii) and promptly
complete, execute and file such tax reports as are required under the laws
of the Commonwealth of Massachusetts. The parties hereby covenant and
agree with each other that none of them will take a position on any tax
return or other document or instrument before any Governmental or
Regulatory Body charged with the collection of any tax, or in any judicial
proceeding, that is in any way inconsistent with the allocation set forth in
the Allocation Schedule.
C. Royalty. For a period of three (3) years after the
Closing (the "Royalty Period"), Buyer shall pay to Seller a royalty of
twenty five percent (25%) of revenues from Products (as hereinafter
defined) sold to those customers on the Customer List (the "Royalty"), to
the extent such revenues exceed Three Hundred Thousand Dollars
($300,000) during a calendar year. Royalty payments shall be made
quarterly after the $300,000 annual threshold has been reached in a
calendar year, in arrears, within fifteen (15) days of the end of each
calendar quarter. If the Royalty calculated is less than zero in any
calendar quarter, then the Royalty shall be zero. "Products" shall mean
those products sold to a customer on the Customer List and fabricated
using any of the Equipment or Intellectual Property; products fabricated
using any of the Equipment and/or Intellectual Property sold to parties not
on the Customer List shall not be considered "Products". The Royalty
due Seller shall be calculated on a quarterly basis, as follows: {0.25 x
[(cumulative revenue since January 1st of the then current calendar year)
$300,000] cumulative Royalty paid since January 1st of the then
current calendar year}.
ARTICLE II: CLOSING
2.1 The Closing.
A. Subject to the satisfaction or waiver of the
conditions set forth in Sections 7.1 and 7.2, the consummation of the
purchase and sale of the Assets (the "Closing") shall take place on or
about January 18, 2008, to be effective as of 11:59 p.m., eastern standard
time, on such date, or at such date and time as mutually agreed to by the
parties in writing.
B. At the Closing, Seller shall deliver, or cause to be
delivered, to Buyer duly executed copies of each of the documents set
forth in Section 7.1(C).
C. At the Closing, Buyer shall deliver, or cause to be
delivered, to Seller 1) the Purchase Price, 2) an amount equal to $970.81
representing the pro-rated payment for the month of January 2008 in
accordance with Section 5.7(A) hereof and 3) duly executed copies of
each of the documents set forth in Section 7.2(B).
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF
SELLER
Seller represents and warrant to Buyer, as follows:
3.1 Organization and Qualification. Seller is a corporation
validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, and has all the requisite corporate
power and authority to (a) own the Assets as they are now owned and
operated; and (b) carry on the Business as it is now conducted.
3.2 Validity and Execution of This Agreement. Seller has
now, and will continue to have on the Closing date, the full legal right,
capacity and power and all requisite corporate and individual authority,
subject to the conditions set forth herein, required to enter into, execute
and deliver this Agreement and any other certificate, agreement,
document and/or instrument contemplated hereby, to perform fully its
obligations hereunder and thereunder and to close upon the transaction
contemplated hereby. This Agreement and such other certificates,
agreements, documents and/or instruments called for under the terms of
this Agreement have been, or will be at Closing, duly executed and
delivered by Seller, and each constitutes valid and binding obligation of
Seller, enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of
general application effecting the rights and remedies of creditors and
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
3.3 No Conflict. Neither the execution and delivery of this
Agreement nor the performance by Seller of those acts and things required
of it in advance of Closing, nor the consummation of any and all of the
transactions contemplated hereby, will (a) violate or conflict with any of
the provisions of the Seller's Articles of Organization, as amended, By-
Laws or other organizational documents; (b) violate, conflict with, result
in the acceleration of or entitle any party to accelerate the maturity or the
cancellation of the performance of any obligation under, or result in the
creation or imposition of any Lien upon any of the Assets, or constitute a
default (or an event which might, with the passage of time or the giving of
notice, or both, constitute a default) under any mortgage, indenture, deed
of trust, lease, contract, loan or credit agreement, license or other
instrument or any order, judgment, regulation or ruling of any
Governmental or Regulatory Body to which Seller is a party, or by which
any of the Assets, may be bound or affected; (c) violate or conflict with
any provision of any law, rule, regulation, order, judgment, decree or
ruling of any Governmental or Regulatory Body applicable to Seller; or
(d) require any consent, approval, filing or notice on any provision of any
law, rule, regulation, order, judgment, decree or judgment of any
Governmental or Regulatory Body, except for filings with the US
Securities and Exchange Commission.
3.4 Litigation. There are no outstanding orders, judgments,
stipulations, injunctions, investigations, awards or decrees of any
Governmental or Regulatory Body or arbitration tribunal by which Seller
or any of the Assets are bound. Except as set forth a Schedule 3.4, there
are no actions, suits, claims, investigations, legal, administrative or
arbitral proceedings pending, or, to the Knowledge of Seller, threatened
(whether or not the defense thereof or liabilities in respect thereof are
covered by insurance) against or affecting Seller, or any of the Assets, and
there are no facts which are likely to give rise to any such action, suit,
claim, investigation or legal, administrative or arbitral proceeding, or
which questions of validity, and/or enforceability of this Agreement or the
transactions contemplated hereby.
3.5 Purchased Assets. Schedule 3.5 sets forth each of the
Assets, in sufficient detail to allow specific identification, as well as such
Assets' location. Seller owns, or will on the Closing date own outright
and have good and marketable title to, the Assets, free and clear of any
Lien. The Xxxx of Sale and such other conveyancing documents as shall be
executed and delivered to Buyer, will convey to Buyer good and
marketable title to the Assets free and clear of any and all Liens. Except
as noted on Appendix I, the Equipment is now and will be on the Closing
date, in working condition, free of material defects.
3.6 Employees. Schedule 3.6 sets forth the employees of
Seller that, prior to the Closing date, have operated and/or maintained the
Equipment (the "Relevant Employees"), which list shall set forth the
names, job titles, tenure and compensation arrangement for each Relevant
Employee. Seller is in compliance in all material respects with its
obligations under all statutes and ordinances, executive orders, regulations
and common law governing employment practices. The Relevant
Employees are not represented by any labor organization or union and, to
the knowledge of Seller, there are no attempts being made by any labor
organization or union to organize any employees employed by Seller.
Notwithstanding anything to the contrary contained herein, Buyer shall
not be obligated to hire any of the Relevant Employees.
3.7 Non-Infringement. To Seller's Knowledge, the Assets
and their contemplated use do not, individually or collectively, infringe
the rights of any third party. To Seller's Knowledge, no third party is (i)
infringing upon any Intellectual Property, or (ii) claiming that any of the
Assets, or their use infringe upon such third party's rights.
3.8 Finder's Fee. Seller has not employed any broker, finder
or representative or incurred any liability for brokerage fees, commissions
or finders' fees in connection with the transactions contemplated herein to
any broker, finder or representative.
3.9 Customers, Suppliers and Service Providers. Seller has
no knowledge of any termination, cancellation or threatened termination
or cancellation of, or limitation, modification or change in, the business
relationship between the Seller and any of the customers on the Customer
List.
3.10 Investigation. No due diligence or investigation by Buyer
shall diminish or obviate any of the representations, warranties, covenants
or agreements of Seller under this Agreement.
3.11 Schedules. All schedules furnished or delivered by or on
behalf of Seller pursuant to this Agreement are correct and complete, and
all information required to be furnished or delivered pursuant thereto has
been furnished or delivered to Buyer. No schedule contains an untrue
statement of material fact or omits to state a material fact necessary to
make the statements not misleading.
3.12 Reliance. The foregoing representations and warranties
are made by Seller with the knowledge, understanding and expectation
that Buyer is entering into this Agreement, and intends to consummate the
transactions contemplated herein, in full and complete reliance upon said
representations and warranties and the documentation provided by Seller
to Buyer. All representations and warranties made by Seller shall survive
the Closing.
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF
BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization and Qualification. Buyer is a corporation
validly existing and in good standing under the laws of the State of
Delaware and has all the requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder.
4.2 Validity and Execution of Agreement. Buyer has, and
will have on the Closing date, the full legal right, capacity and power
required to enter into, execute and deliver this Agreement and any other
certificate, agreement, document and/or instrument contemplated hereby,
and to perform fully its obligations hereunder and thereunder and to close
upon the transactions contemplated hereby. This Agreement and such
other certificates, agreements, documents and/or instruments called for
under the terms of this Agreement have been, or will be at Closing, duly
executed and delivered by Buyer and each constitutes the valid and
binding obligation of Buyer enforceable against Buyer in accordance with
its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application effecting the rights and remedies of
creditors and general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
4.3 No Conflict. Neither the execution and delivery of this
Agreement nor any other document, instrument and/or certificate required
to be delivered hereunder nor the performance by Buyer of the
transactions contemplated hereby or its obligations hereunder, including
payment of Royalties, will a) violate or conflict with any provision of
Buyer's charter, Buyer's By-Laws, any law, rule, regulation, order,
judgment, decree or ruling of any Governmental or Regulatory Body
applicable to Buyer or b) require any consent, approval, filing or notice on
any provision of any law, rule, regulation, order, judgment, decree or
judgment of any Governmental or Regulatory Body, except for filings
with the US Securities and Exchange Commission.
4.4 Finder's Fee. Buyer has not employed any broker, finder
or representative or incurred any liability for brokerage fees, commissions
or finders' fees in connection with the transactions contemplated herein to
any broker, finder or representative.
ARTICLE V: COVENANTS OF SELLER
Seller hereby covenants and agrees with Buyer, that Seller shall
do, cooperate in doing, and/or refrain from doing, as the case may be, the
following:
5.1 Corporate Examinations and Investigations. From and
after the execution of this Agreement and through the Closing, Buyer shall
be entitled, through its employees, representatives, accountants,
consultants, and attorneys, to make such investigation of the Assets, and
the Business as Buyer deems necessary in making its due diligence
inquiry of same. Any such investigation and examination shall be
conducted at reasonable times and under reasonable circumstances and
Seller shall cooperate fully therein. In order that Buyer may have full
opportunity to make such examination or investigation, Seller shall cause
their respective officers, employees, consultants, agents, accountants and
attorneys to cooperate fully with such representatives of Buyer in
connection with such review and examination and to make full disclosure
to Buyer of all material facts affecting the Assets and the Business.
5.2 Conduct of Business. From the date hereof to the Closing,
Seller shall (i) conduct the Business in the usual and ordinary course and
in such a manner so that the representations and warranties contained in
Article III shall continue to be true and correct on and as of the Closing as
if made on and as of the Closing; and (ii) refrain from misusing, selling or
otherwise disposing or diminishing the value of any of the Assets other
than in the ordinary course of Business.
5.3 Preservation of Business. From the date hereof through
the Closing, Seller shall (i) use its reasonable best efforts to keep available
the services of the Relevant Employees; (ii) properly store, maintain and
service the Assets in a manner consistent with industry standards; and (iii)
continue to perform its obligations to its customers, vendors and service
providers.
5.4 Further Assurances. Seller agrees that, prior to the
Closing, it will take, or cause to be taken, all actions and do, or cause to be
done, all things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement, including
releasing or causing the release of any and all Liens on the Assets and
obtaining all necessary waivers, consents and approvals relating to the
licenses, permits, registrations, approval and consents necessary for the
conduct of the Business and the transfer of same to Buyer and/or as
otherwise required under this Agreement, all immediately prior to or
contemporaneously with the Closing.
5.5 Post-Closing Assurances. Subject to Section 5.7 hereof,
at any time, and from time to time after the Closing, and without further
consideration, Seller will, at the request of Buyer, execute and deliver, or
cause the execution and delivery of, such other instruments of sale,
transfer, conveyance, assignment and confirmation or take or cause to be
taken such other action as Buyer may reasonably deem necessary or
desirable in order to transfer, convey and assign more effectively to Buyer
or to put Buyer in actual possession and operating control of, the Assets
and the Business and to assist Buyer in exercising all rights with respect
thereto.
5.6 Meetings With Customers. Seller shall use its reasonable
best efforts to cause those of Seller's customers with whom Buyer
requests to meet to so meet in person or by teleconference at a mutually
convenient time and location (in the case of any meeting in person), for
the purposes of Buyer assuring each customer's post-Closing continuity of
business with Buyer on terms no more onerous than currently exist.
5.7 Use and Removal of Equipment.
A. Buyer may, for up to six (6) months following Closing,
continue to operate the Equipment and the Business from the Equipment's
current location at Seller's facility (the portion of Seller's facility
dedicated to the Business being the "Facility"). Such time period while
Equipment remains at the Facility, referred to herein as the "Occupancy
Period". Upon Closing and during the Occupancy Period, Buyer and its
employees and agents shall have reasonable access during normal
business hours to the Equipment and Facility. Seller shall maintain such
other utility connections for power, water, telephone, internet and nitrogen
as may be required to operate the Equipment. On the first calendar day of
each month, during the Occupancy Period, Buyer shall pay Seller
$2315.00 per month (pro-rated for partial months) in full satisfaction of
utility access and other charges relating to the operation of the Equipment
and the Business while at the Facility; provided, however, that Buyer shall
pay Seller $131.00 per run in excess of ten (10) coating runs in a calendar
month, and shall make such payment within five (5) days of the end of
such calendar month; provided, further, that if Buyer or Seller is able to
demonstrate that a coating run uses significantly more or less electricity
than Seller has used in the past, the per coating run fee shall be adjusted
accordingly. Buyer shall pay Seller $970.81 on the Closing date in
satisfaction of their monetary obligations under this Section 5.7 for the
month of January 2008. For the avoidance of doubt, Seller shall not be
responsible for any costs of maintenance of or repair to the Assets
following Closing, except to the extent damage thereto results directly
from the actions or omissions of Seller's agents, employees and/or
personnel.
B. While the Equipment remains at the Facility, Seller shall fully
cooperate with Buyer to ensure Buyer's ability to operate the Equipment
in substantially the same manner as the Equipment has been heretofore
operated. Buyer shall not permit any Person other than Buyer's
employees or agents to enter or use the Facility without Seller's prior
consent, which shall not be unreasonably withheld, conditioned or
delayed. Buyer acknowledges and agrees that Seller shall have no
liability for the actions of any of Buyer's employees or agents that enter or
use the Facility (or any other Person entering the Facility at the request of
Buyer and approved by Seller). Buyer agrees to maintain insurance for
premises liability for the Facility during the Occupancy Period. Seller
shall cooperate with Buyer in removal of the Equipment from the Facility,
provided that Buyer shall be responsible for all costs of removing the
Equipment from the Facility, except for any work required to be
performed on the Facility in order to permit removal of Equipment. Upon
and following Closing, Buyer shall be responsible for insuring the
Equipment while at the Facility.
ARTICLE VI: COVENANTS OF BUYER
6.1 Sales Taxes. On the Closing date, Seller shall provide for
filing the necessary sales tax return, and Buyer shall pay all resulting sales
taxes under any applicable State sales tax laws or regulations relating to
the sale by Seller to Buyer of the Assets.
6.2 Conduct and Maintenance of Business; Insurance. For
the duration of the Royalty Period, Buyer shall (a) maintain the
Equipment in condition no worse than received at the Closing (b) use
commercially reasonable efforts to maintain the Business as has been
conducted in the ordinary course, (c) maintain insurance on the
Equipment in accordance with its usual and customary practices for like
materials, and (d) provide Seller with prompt notice of its intent to
discontinue the Business and reasonable assistance in finding Seller a
replacement supplier for the services provided by the Business. In the
event Buyer determines to discontinue the Business, Seller shall, for sixty
(60) days following receipt of written notice of such determination from
Buyer, have a right of first refusal to repurchase the Assets on terms
similar to those contained herein.
6.3 Removal of Assets. Buyer shall remove the Assets from
Seller's premises no later than six (6) months after Closing.
6.4 Run Rate. During the Occupancy Period, Buyer shall,
within three (3) days of the end of each calendar month, inform Seller of
the number of coating runs Buyer performed during such calendar month.
ARTICLE VII: CONDITIONS PRECEDENT TO THE CLOSING
7.1 Conditions Precedent to Buyer's Obligations to
Complete the Closing. The obligations of Buyer to enter into and
complete the Closing are subject to the occurrence of the following
conditions with respect to Buyer and the fulfillment by Seller, on or prior
to the Closing, of the following conditions, any one or more of which may
be waived by Buyer in its sole discretion, in writing:
A. Representations, Warranties and Covenants.
The representations and warranties of Seller contained in this Agreement
shall be true, complete and correct on and as of the Closing with the same
force and effect as though made on and as of the Closing. Seller shall
have performed and complied with all covenants and agreements required
by this Agreement to be performed or complied with by Seller on or prior
to the Closing.
B. Satisfactory Due Diligence and Customer
Interviews. The results of Buyer's due diligence shall be satisfactory to
Buyer, in its sole discretion, and Buyer shall have received assurances that
it considers adequate, in its sole discretion, that (i) the Relevant
Employees will continue as employees of Buyer to operate the Equipment
and the Business; and (ii) the material customers of the Business shall
remain customers on substantially similar terms following the Closing.
C. Documents to be Delivered by Seller and/or to be
Received by Buyer. Delivery by Seller, as appropriate, of the following
documents, duly executed or certified to the reasonable satisfaction of
Buyer:
(i) A Xxxx of Sale (or Bills of Sale, at Buyer's
request) in substantially the form attached hereto as Exhibit B, dated as of
the Closing date;
(ii) A Non-Compete and Non-Solicitation
Agreement, dated as of the Closing date, in substantially the form attached
hereto as Exhibit C (the "Non-Compete Agreement"); and
(iii) The Allocation Schedule.
7.2 Conditions Precedent to Seller's Obligations to
Complete the Closing. The obligations of Seller to complete the Closing
are subject to the fulfillment, on or prior to the Closing date, of the
following conditions, any one or more of which may be waived by Seller.
A. Representations and Warranties. The
representations and warranties of Buyer contained in this Agreement shall
be true, complete and correct as of the Closing with the same force and
effect as though made on and as of the Closing. Buyer shall have
performed and complied with, or caused to be performed and complied
with, all covenants and agreements required by the Agreement to be
performed or complied with by Buyer on or prior to the Closing.
B. Documents to be Delivered by Buyer. At the
Closing, Buyer shall deliver, or cause to be delivered, to Seller the
Purchase Price, the amount required under Section 5.7(A) hereof and the
following documents, duly executed or certified to the reasonable
satisfaction of Seller:
(i) The Non-Compete Agreement; and
(ii) the Allocation Schedule.
ARTICLE VIII: INDEMNIFICATION
8.1 Indemnification of Buyer. Seller agrees to indemnify,
defend and hold Buyer harmless from and against any and all losses,
liabilities (including any special, consequential, indirect, exemplary,
punitive or other damages, fines or penalties and any other interest
thereon), expenses (including reasonable fees and disbursements of
counsel and expenses of investigation and defense), claims, liens or other
obligations of any nature whatsoever (hereinafter individually, a "Loss"
and collectively, "Losses") which, directly or indirectly, arise out of,
result from or relate to any (i) inaccuracy in, or any breach or alleged
breach of, any representation, warranty and/or covenant of Seller
contained in this Agreement or in any other document contemplated by
this Agreement to be delivered by Seller to Buyer in advance of and/or at
Closing; (ii) Liability (and/or other obligation not expressly assumed by
Buyer herein); or (iii) breach of any covenant or agreement of Seller
contained in this Agreement or in any other document or instrument
executed in conjunction with this Agreement.
8.2 Indemnification of Seller. Buyer agrees to indemnify,
defend and hold Seller harmless from and against any and all Loss or
Losses which, directly or indirectly, arise out of, result from or relate to
any (i) inaccuracy in or any breach or alleged breach of any
representation, warranty and/or covenant of Buyer contained in this
Agreement or in any other document contemplated by this Agreement to
be delivered by Buyer to Seller in advance of and/or at Closing; or (ii)
breach of any covenant or agreement of Buyer contained in this
Agreement or in any other document or instrument executed in
conjunction with this Agreement.
8.3 Method of Asserting Claims. The party making a claim
under this Article VIII is referred to as the "Indemnified Party" and the
party against whom such claims are asserted under this Article VIII is
referred to as the "Indemnifying Party". All claims by any Indemnified
Party under this Article VIII shall be asserted and resolved as follows:
A. In the event that any claim or demand for which an
Indemnifying Party would be liable to an Indemnified Party hereunder is
assessed against or sought to be collected from such Indemnified Party by
a third party, said Indemnified Party shall with reasonable promptness
notify in writing the Indemnifying Party of said claim or demand,
specifying the nature of the specific basis for such claim or demand, and
the amount or the estimated amount thereof to the extent then feasible
(which estimate shall not be conclusive of the final amount of such claim
and demand; any such notice, together with any notice given pursuant to
Section 8.3(B) hereof, collectively being the "Claim Notice"); provided,
however, that any failure to give such Claim Notice will not be deemed a
waiver of any rights of the Indemnified Party except to the extent that the
rights of the Indemnifying Party are actually prejudiced. The
Indemnifying Party, upon request of the Indemnified Party, shall retain
counsel (which shall be reasonably acceptable to the Indemnified Party) to
represent the Indemnified Party, and shall pay the reasonable fees and
disbursements of such counsel with regard thereto; provided, further, that
any Indemnified Party is hereby authorized prior to the date on which it
receives written notice from the Indemnifying Party designating such
counsel, to retain counsel, whose reasonable fees and expenses shall be at
the expense of the Indemnifying Party, to file any motion, answer or other
pleadings and take such other action which it reasonably shall deem
necessary to protect its interests or those of the Indemnifying Party until
the date on which the Indemnified Party receives such notice from the
Indemnifying Party. After the Indemnifying Party shall retain such
counsel, the Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (x) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such
counsel or (y) the named parties of any such proceeding (including any
impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests
between them. The Indemnifying Party shall not, in connection with any
proceedings or related proceedings in the same jurisdiction, be liable for
the fees and expenses of more than one such firm for the Indemnified
Party (except to the extent the Indemnified Party retained counsel to
protect its (or the Indemnifying Party's) rights prior to the selection of
counsel by the Indemnifying Party). If requested by the Indemnifying
Party, the Indemnified Party agrees to cooperate with the Indemnifying
Party and its counsel in contesting any claim or demand which the
Indemnifying Party defends. A claim or demand may be settled by the
Indemnifying Party, unless (a) such settlement would have a Material
Adverse Effect on the business or properties of the Indemnified Party or
(b) the Losses to the Indemnified Party are not fully covered by the
indemnities provided herein. No claims or demand may be settled without
the consent of the Indemnifying Party, which consent will not be
unreasonably withheld, conditioned or delayed.
B. In the event that any Indemnified Party shall have a
Claim against any Indemnifying Party hereunder which does not involve a
claim or demand being asserted against or sought to be collected from it
by a third party, the Indemnified Party shall send a Claim Notice with
respect to such claim to the Indemnifying Party. If the Indemnifying
Party does not notify the Indemnified Party within fifteen (15) days of
receipt of the Claim Notice that it disputes such claim, the amount of such
claim shall be conclusively deemed a liability of the Indemnifying Party
hereunder, provided, however, that the Claim Notice fully advises the
Indemnifying Party of this conclusive presumption.
C. So long as any right to indemnification exists
pursuant to this Article VIII, the affected parties each agree to retain all
books, records, accounts, instruments and documents reasonably related to
the Claim Notice. In each instance, the Indemnified Party shall have the
right to be kept fully informed by the Indemnifying Party and its legal
counsel with respect to any legal proceedings. Any information or
documents made available to any party hereunder, which information is
designated as confidential by the party providing such information, shall
not be disclosed to any third Person (except for the representatives of the
party being provided with the information, in which event the party being
provided with the information shall insure that its representatives not
disclose any such information which is otherwise required hereunder to be
kept confidential). The provisions of the foregoing sentence shall not
apply to information (i) readily ascertainable from public or published
information or trade sources, (ii) already known or subsequently
developed by the party receiving such information, (iii) received from a
third Person not under any obligation to the party providing such
information to keep such information confidential or (iv) required by law
or by order of any Governmental or Regulatory Body to be disclosed.
8.4 Payment. The Indemnifying Party shall make prompt
payment to the Indemnified Party of any amounts owing under this Article
VIII. In the event that Seller does not promptly pay such amounts, Buyer
shall be entitled, in addition to all other remedies available to it, at law or
equity, to offset amounts owing under this Article VIII against any
Royalty owing to Seller.
ARTICLE IX: TERMINATION OF AGREEMENT
9.1 Termination. This Agreement may be terminated by
written notice from the terminating party or parties to the other parties
hereto at any time prior to the Closing date as follows:
(i) By Buyer, if any of the obligations or
conditions of Seller, or any other conditions precedent to Buyer's
obligation to complete the Closing, as set forth in this Agreement, shall
not have been complied with or performed or satisfied in any material
respect and such non-compliance or non-performance or non-satisfaction
shall not have been cured or eliminated within ten (10) days after written
notice of same has been given to Seller.
(ii) By the mutual consent of Buyer and Seller; or
(iii) By Buyer or Seller as otherwise permitted
under the provisions of this Agreement.
9.2 Survival. In the event that this Agreement is terminated
pursuant to Section 9.1 hereof (i) this Agreement shall become null and
void and of no further force and effect and (ii) there shall be no further
obligation or liability hereunder on the part of the parties hereto. Except
as otherwise provided for herein, the representations and warranties of the
parties shall survive the Closing, but any claim for breach thereof shall be
subject to and brought in accordance with Article VIII hereof.
9.3 Inadequate Customer Assurances or Unsatisfactory
Due Diligence. In the event that (i) any customer of Seller requested to
meet with Buyer pursuant to Section 5.6 fails to meet or confer with
Buyer or provide adequate assurances of continued relations with the
business, post-Closing, or (ii) Buyer is not satisfied with its due diligence
inquiry under Section 7.1(B), Buyer has the right, but not the obligation to
terminate this Agreement, without penalty, upon written notice to Seller.
ARTICLE X: MISCELLANEOUS
10.1 Certain Definitions. As used in this Agreement, the
following terms have the following meanings unless the context otherwise
requires:
"Affiliate" with respect to any Person means any other
Person controlling, controlled by or under common control with such
Person.
"Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks are authorized or
required by law to close in New York.
"By-Laws" shall mean the By-Laws of a Person, as
amended to date.
"Customer List" means the list set forth on Appendix III
hereto, which list may be supplemented from time to time by mutual
agreement of the parties to include customers introduced to Buyer by
Seller during the Royalty Period.
"Dollars" or "$" means, at the time of the determination,
the lawful currency of the United States.
"Governmental or Regulatory Body" means any
government or political subdivision thereof, whether federal, state, county,
local or foreign, or any agency, authority or instrumentality of any such
government or political subdivision.
"Inventory" shall mean the items set forth on Appendix II
hereto, which represent all tools, tooling, supplies finished goods, work-
in-process and raw materials required to operate the Business as
conducted on the date hereof.
"Knowledge" shall mean an individual and/or an entity
will be deemed to have "Knowledge" of a particular fact or other matter
if:
(a) Such individual or entity is actually aware
of such fact or other matter; or
(b) A prudent individual, whether operating in
that person's individual capacity or as an officer, partner, or member of an
entity, could be expected to discover or otherwise become aware of such
fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or
matter.
A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or matter if any individual who is
serving as a director, officer, partner, member, receiver or trustee of such
Person (or in any similar capacity) has, or at any time had, "Knowledge"
of such fact or other matter.
"Lien or Liens" means any lien, pledge, hypothecation,
mortgage, security interest, claim, lease, charge, option, right of first
refusal, easement, servitude, transfer restriction under any stockholder or
similar agreement, encumbrance or any other restriction or limitation
whatsoever.
"Material Adverse Effect" means any change or changes
or effect or effects that individually or in the aggregate are or may
reasonably be expected to be materially adverse to the business,
operations, income, conditions (financial or otherwise) or assets of a
Person or, with respect to Buyer or Seller, the ability of such Person to
perform its obligations under this Agreement.
"Person" means any individual, corporation, partnership,
firm, joint venture, association, joint-stock company, trust, unincorporated
organization, Governmental or Regulatory Body or other entity.
"Tax" or "Taxes" means all taxes, charges, fees, levies or
other assessments imposed by any federal, state, local or foreign tax
authority, including, without limitation, gross income, gross receipts,
income, capital, excise, property (tangible and intangible), sales transfer,
value added, employment, unemployment insurance, payroll and franchise
taxes, and such terms shall include any interest, penalties or additions
attributable to or imposed on or with respect to such assessments.
10.2 Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in
writing and shall be given personally, telegraphed, telexed, sent by
facsimile transmission or sent by prepaid air courier or certified or express
mail, postage prepaid. Any such notice shall be deemed to have been
given (a) when received, if delivered in person, telegraphed, telexed, sent
by facsimile transmission or sent by prepaid air courier or express mail or
(b) three (3) Business Days following the mailing thereof, if mailed by
certified mail, postage prepaid, return receipt requested, in any such case
as follows (or to such other address or addresses as a party may have
advised the other in the manner provided in this Section 10.2):
If to Seller to:
Precision Optics Corporation, Inc.
00 Xxxx Xxxxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, President
Telephone: (000) 000-0000
Fax: (000) 000-0000
With contemporaneous copy to:
Xxxxxxx X'Xxxxx, Esq.
Ropes & Xxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
If to Buyer to:
Dynasil Corporation of America
000 Xxxxxx Xxxx,
Xxxx Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx X. Xxxxxx, President
Telephone: (000) 000-0000
With contemporaneous copy to:
X.X. Xxxxxxxxx, Esq.
Bond, Xxxxxxxxx & Xxxx, PLLC
Xxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Telephone (000) 000-0000
Fax (000) 000-0000
10.3 Entire Agreement. This Agreement and the agreements,
certificates and other documents delivered, or to be delivered pursuant to
this Agreement, contain the entire agreement among the parties with
respect to the transactions described herein and supersede all prior
agreements, written or oral, with respect thereto.
10.4 Waivers and Amendments. This Agreement may be
amended, superseded, canceled, renewed or extended, and the terms
hereof may be waived only by a written instrument signed by Seller and
Buyer, or, in the case of a waiver, by the party waiving compliance. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver hereof.
10.5 Governing Law; Construction. This Agreement shall be
governed by and interpreted, construed and enforced in accordance with
the laws of the Commonwealth of Massachusetts applicable to a contract
executed and performed in such state, excluding any conflicts of law rule
or principle that would refer the governance, interpretation, construction
or enforcement of this Agreement to the laws of another jurisdiction. In
as much as this Agreement is the result of negotiations between
sophisticated parties of equal bargaining power represented by counsel,
the parties hereto agree that no provisions of this Agreement or any
related document shall be construed for or against or interpreted to the
advantage or disadvantage of any party hereto by any court or other
governmental authority by reason of any party's having or being deemed
to have structured or drafted such provision, each party having
participated equally in the structuring and drafting hereof.
10.6 Venue; Waiver of Jury Trial. To the fullest extent
permitted by applicable law, each party hereto (i) agrees that any claim,
action or proceeding by such party seeking any relief whatsoever arising
out of, or in connection with, this Agreement or the transactions
contemplated hereby shall be brought only in any Massachusetts state or
federal court and not in any other state or federal court in the United
States of America or any court in any other country, (ii) agrees to submit
to the exclusive jurisdiction of such courts for purposes of all legal
proceedings arising out of, or in connection with, this Agreement or the
transactions contemplated hereby, (iii) waives and agrees not to assert any
objection that it may now or hereafter have to the laying of the venue of
any such proceeding brought in such a court or any claim that any such
proceeding brought in such a court has been brought in an inconvenient
forum, and (iv) agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by applicable
laws. EACH OF THE PARTIES IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO
TRIAL BY JURY, FROM WHATEVER SOURCE ARISING, IN
CONNECTION WITH ANY LITIGATION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. The prevailing party
in any dispute arising hereunder shall be entitled to recover its costs
(including, without limitation, reasonable attorneys' and experts' fees)
from the losing party.
10.7 Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors, assigns and legal representatives. This Agreement is not
assignable by Seller without the specific written consent of the Buyer,
which shall not be unreasonably withheld. Buyer may assign all or any
part of its rights and/or obligations under this Agreement to an Affiliate of
Buyer without the consent of Seller.
10.8 Variations in Pronouns. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
context may require.
10.9 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of
a number of copies hereof each signed by less than all, but together signed
by all of the parties hereto.
10.10 Headings. The headings in this Agreement are for
reference only and shall not affect the interpretation of this Agreement.
10.11 Severability of Provisions. If any provisions or any
portion of any provision of this Agreement or the application of such
provision or any portion thereof to any Person or circumstance shall be
held invalid or unenforceable, the remaining portion of such provision and
the remaining provisions of this Agreement, or the application of such
provision or portion of such provisions held invalid or unenforceable with
respect to Persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby.
10.12 Survival of Representations. Except as otherwise
provided for herein, all statements contained in any certificate or other
instrument delivered by or on behalf of Seller pursuant hereto, shall be
deemed representations and warranties by Seller. Except as otherwise
provided for herein, all representations, warranties and agreements made
by Seller in this Asset Purchase Agreement, or pursuant hereto, or in any
document, instrument, certificate and/or agreement to be delivered at
Closing shall survive the Closing and continue thereafter.
10.13 Specific Performance. If, for any reason, Seller fails to
consummate any of the transactions contemplated herein, then the parties
hereto agree that Buyer shall be entitled to specific performance of this
Agreement, in addition to any and all other rights which it may have
against Seller.
10.14 Buyer Services. For as long as Buyer operates the
Equipment, Buyer shall offer to Seller coating services of the Business
upon reasonable pricing and delivery terms. If Seller requires coating
services that were developed by Seller prior to Closing, Buyer shall
provide such services at a reasonable discount from Buyer's standard
pricing. For avoidance of doubt, coatings, services and/or products sold to
Seller hereunder shall be excluded from the calculation of Royalties in
Section 1.3(C).
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date and year first above written.
OPTOMETRICS
CORPORATION
_______________________
Xxxxx Xxxxxx
President
PRECISION OPTICS
CORPORATION, INC.
________________________
Xxxxxxx Xxxxxx
President
