STOCK PURCHASE AGREEMENT
Exhibit
10.18
THIS
STOCK PURCHASE AGREEMENT (this “Agreement”) is entered
into as of June 28, 2007 by and between APA Enterprises, Inc., a Minnesota
corporation (the ”Seller”) and
Photonics International, Inc., a Minnesota corporation (the
“Purchaser”), with reference to the following
facts:
A. The
Seller owns 10,000 equity shares (collectively, the
“Shares”), of APA Optronics (India), Private Limited,
a corporation formed under the laws of India, The Companies Act, 1956 (the
“Company”).
B. Seller
desires to sell to Purchaser, and Purchaser desires to buy from the Seller,
all
of the Shares owned by Seller (the “Sale Shares”) upon
the terms set forth herein.
NOW,
THEREFORE, IN CONSIDERATION OF the foregoing facts and the mutual promises
set
forth herein, the parties agree as follows:
1. Purchase
and Sale. Subject to the terms and conditions hereof,
Seller agrees to sell, and Purchaser agrees to purchase, the Sale Shares owned
by Seller for an aggregate purchase price (the “Purchase
Price computed as described on Schedule A
hereto. The Purchase Price shall be paid to Seller by delivery of
Seller's promissory note in form satisfactory to Seller (the
"Note"). The face amount of the Note delivered at Closing (as defined
in Section 5) shall be adjusted post-Closing, but not later than July 20, 2007,
to reflect a Purchase Price computed in accordance with Schedule A using data
as
of June 28, 2007. The Note shall be secured by the security
agreements listed on Schedule B hereto (collectively, the "Security
Agreements). In addition, Purchaser, Xxxx X. Xxxx and the Company
shall enter into a Non-Compete Agreement with the Seller, in form and substance
acceptable to Seller.
2. Representations
and Warranties of Seller. Seller represents and warrants
that:
(a) Binding
Obligations. This Agreement and all other agreements executed by
Seller in connection herewith constitute the legal, valid and binding
obligations of Seller and are enforceable against Seller in accordance with
their respective terms except as such enforcement may be limited by applicable
bankruptcy, insolvency or other similar laws of general application affecting
the enforcement of creditors’ rights generally or by judicial discretion as to
the availability of equitable remedies or legal or equitable
principles.
(b) Ownership
of Sale Shares. Seller (i) is the sole owner of the Sale Shares
to be transferred hereunder, and such sole ownership is free and clear of any
liens, security interests or other encumbrances, (ii) has not granted any other
option or rights to the Sale Shares or any interest therein
and (iii) has not pledged, collaterally assigned or
otherwise hypothecated any interest therein. Seller’s transfer,
assignment and sale of the Sale Shares to Purchaser pursuant hereto will convey
good and valid title to the Sale Shares to Purchaser, free and clear of any
liens, security interests or other encumbrances.
1
3. Representations
and Warranties of Purchaser. Purchaser represents and warrants
that:
(a) Authorization. Purchaser
has all requisite power and authority to enter into this Agreement and to carry
out the provisions hereof. All organizational acts and proceedings
required for the authorization, execution, delivery and performance of this
Agreement have, or prior to the Closing will have, been taken.
(b) Binding
Obligations. This Agreement and all other agreements executed by
Purchaser in connection herewith constitute the legal, valid and binding
obligations of Purchaser and are enforceable against Purchaser in accordance
with their respective terms except as such enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors’ rights generally.
(c) Investment
Intent. The Purchaser is purchasing the Sale Shares for
investment for its own account only and not with a view to, or for resale in
connection with, any “distribution” thereof within the meaning of the Securities
Act of 1933 (the ”Securities
Act”). The Purchaser understands that the Sale Shares
have not been registered under the Securities Act or other securities laws
in
reliance on specific exemptions therefrom, which exemptions depend upon, among
other things, the bona fide nature of the Purchaser’s investment intent as
expressed herein.
(d) The
Purchaser is a resident of the state indicated in the Preamble hereof, is
legally competent to execute this Agreement, and:
(i) if
the Purchaser is an individual, has his or her principal residence in such
state;
(ii) if
the Purchaser is a corporation, partnership, trust, limited liability company
or
other form of business organization, has its principal office in such state;
or
(iii) if
the Purchaser is a corporation, partnership, trust, limited liability company
or
other form of business organization, the Purchaser has not been organized for
the specific purpose of acquiring the Sale Shares.
(e) The
Purchaser has not been offered the Sale Shares by any form of general
solicitation or general advertising, including but not limited to any
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio,
or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
(f) The
Purchaser understands that there are substantial restrictions on the
transferability of the Sale Shares and, accordingly, the Purchaser will need
to
bear the economic risk of the investment in the Sale Shares for an indefinite
period of time and will not be readily able to liquidate the investment in
case
of an emergency.
2
(g) The
Purchaser understands that the Company has a limited financial or operating
history, the Sale Shares are a speculative investment which involve a high
degree of financial risk, and there is no assurance of any economic, income
or
tax benefit from such investment.
(h) In making
this investment, the Purchaser is relying solely upon the advice of the
Purchaser’s personal tax advisors, and not the Seller, the Company or its
advisers and counsel, with respect to the tax aspects of an investment in the
Sale Shares.
(i) If
the Purchaser is a corporation, partnership, trust, limited liability company,
employee benefit plan or other entity, the Purchaser is authorized and qualified
to become a stockholder of the Company and the person signing
this Agreement on behalf of such entity has been duly authorized by
such entity to do so.
(j) No
representations or warranties have been made to the Purchaser by the Seller
or
the Company or any officer, employee, agent or affiliate of the Seller or the
Company, and the Purchaser’s investment decision has been based solely upon the
Purchaser’s independent evaluation and due diligence, if any, of the
Company.
(k) The
Purchaser is experienced in business matters and regards himself, herself or
itself as a sophisticated investor able to evaluate investment and financial
information and to choose independent professional advisors to assist in such
evaluation and, either alone or with such advisers, has such knowledge and
experience in financial and business matters that the Purchaser is capable
of
evaluating the merits and risks of an investment in the Sale Shares and has
the
capacity to protect the Purchaser’s own interests in connection with the
Purchaser’s proposed investment in the Sale Shares.
(l) The
Purchaser is an “accredited investor” as that term is defined in Rule 501 of
Regulation D under the Securities Act.
(m) Registration
or Exemption Requirements. The Purchaser acknowledges and
understands that the Sale Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. The Purchaser understands that any
certificate(s) evidencing the Sale Shares will be imprinted with a legend that
prohibits the transfer of the Sale Shares unless they are registered or such
registration is not required.
4. Pre-Emptive
Rights and Other Transfer Restriction. Purchaser
warrants and represents that:
(a)
the
Board of Directors of the Company (consisting of Xxxx X. Xxxx and Kul Xxxxxxx
Xxxx, who are brothers) has waived any transfer fee which could be assessed
with
respect to the sale contemplated by this Agreement in accordance with Section
20
of the Articles of Association of the Company (the "Articles"); and
3
(b)
Xxxx
X. Xxxx, who owns one equity share in the Company has received notice of, and
has irrevocably waived, all pre-emptive right to purchase the Sale Shares under
Section 21 of the Articles.
5. Closing. The
closing of the transactions contemplated herein
(the ”Closing”) shall take place on or before
July 2, 2007 (the “Closing Date”) and shall be
consummated by mail in accordance with arrangements reasonably acceptable to
counsel for the Seller and the Purchaser.
(a) Documents
to be Delivered by Seller. At the Closing, the Seller shall
deliver to Purchaser:
(1) stock
powers with respect to the Sale Shares; and
(2) the
original share certificate or evidence of the Seller’s ownership of the Sale
Shares.
The
Seller shall execute, acknowledge and deliver any further deeds, assignments,
conveyances and other assurances, documents and instruments of transfer
reasonably requested by the Purchaser and shall take such further action as
reasonably requested by the Purchaser to effectuate the transactions
contemplated by this Agreement.
(b) Documents
to be Delivered by Purchaser. At the Closing, Purchaser shall deliver to the
Seller the Note, the Security Agreements, and the Non-Compete
Agreement.
(c) Name
Change and Use of Name Pending Change. Not later than March 31,
2008, Purchaser shall change the name of the Company to a name which does not
include "APA" and shall not thereafter use any name that includes
"APA". Purchaser shall deliver proof of such name change to
Seller. Failure to timely change the name or give notice of the
change shall result in a penalty of $500 per day of delay, which shall be added
to the principal of the Note. In addition, following Closing and
prior to March 31, 2008, Purchaser shall use its best efforts to adopt and
do
business under a name which does not include "APA."
6. Miscellaneous.
(a) Notices. All
notices hereunder shall be in writing and shall be deemed to have been duly
given upon receipt, if personally delivered, or on the third business day
following mailing, postage prepaid, addressed to the parties at the following
addresses or at such other addresses as shall be specified in writing and in
accordance with this Section:
4
|
|
If
to the Seller:
|
| Attn: Xxxxx Xxxxxxxx |
| 0000 xXxxxxx Xxxx, Xxxxx 000 |
| Xxxxxxxx, XX 00000 |
|
|
If
to the Purchaser:
|
Photonics
International, Inc.
|
| Attn: Xxxx X. Xxxx |
| 0 Xxxx Xxx Xxxx |
| Xxxxx Xxxx, XX 00000 |
(b) Governing
Law. This agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota, without reference to
conflicts of law principles.
(c) Survival. All
agreements, covenants and representations contained herein or made in writing
by
the Seller in connection with the transactions contemplated hereby shall survive
the execution and delivery of this Agreement and the Closing Date.
(d) Severability. Should
any one or more of the provisions of this Agreement or of any agreement entered
into pursuant to this Agreement be determined to be illegal or unenforceable,
all other provisions of this Agreement and of each other agreement entered
into
pursuant to this Agreement shall be given effect separately from the provision
or provisions determined to be illegal or unenforceable and shall not be
affected thereby.
(e) Successors
and Assigns. All the terms and provisions of this agreement shall
be binding upon, inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, whether so expressed or
not.
(f) Entire
Agreement. This Agreement and all schedules, certificates, lists,
exhibits or other information furnished to Purchaser pursuant to this Agreement
shall constitute the entire agreement of the parties.
(g) Counterparts. This
Agreement may be executed in two or more counterparts and by different parties
hereto in separate counterparts, with the same effect as if all parties had
signed the same document. All such counterparts shall be deemed an
original, shall be construed together and shall constitute one and the same
instrument.
(h) Costs
and Expenses. Each of the Purchaser and the Seller shall bear
their respective costs and expenses in connection with the negotiation,
execution and performance of this Agreement and the transactions contemplated
thereby.
5
IN
WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement as
of
the date first set forth above.
|
SELLER:
|
|||
|
By:
|
/s/
Xxxxxx X. Xxxx
|
||
|
Its
|
Chairman
|
||
|
PURCHASER:
|
|||
|
PHOTONICS
INTERNATIONAL, INC.
|
|||
|
/s/
Xxxx X. Xxxx
|
|||
|
By:
|
Xxxx
X Xxxx
|
||
|
Its
|
President
|
||
6
SCHEDULE
A
|
Exchange
Rate 6/12/07 except where noted (to be based on rate as of
6/30/07)
|
40.73
|
||||||||
|
As
of approx 6/8/07
|
|||||||||
|
US
$
|
Discount
|
Net
|
RS
|
Discount
|
Net
|
|
|||
|
Commitment
to Bldg @ Exchange of 44.5
|
$385,000
|
0.0%
|
$385,000
|
INR
17,132,500.00
|
0.0%
|
INR
17,132,500.00
|
a
|
||
|
Spent
@ Exchange of 44.5
|
$256,183
|
0.0%
|
$256,183
|
|
INR
11,400,150.00
|
0.0%
|
INR
11,400,150.00
|
b
|
|
|
Remaining
Blding Investment (@ current exchange)
|
$140,740
|
140,740.24
|
INR
5,732,350.00
|
INR
5,732,350.00
|
c
=
a - b
|
||||
|
Other
Liabilities (non building)
|
$28,185
|
0.0%
|
$28,185
|
|
INR
1,147,984.00
|
0.0%
|
INR
1,147,984.00
|
d
|
|
|
Total
Commitments
|
$168,925
|
|
$168,925
|
|
INR
6,880,334.00
|
|
INR
6,880,334.00
|
e
=
c + d
|
|
|
Assets
|
|||||||||
|
Cash
|
$84,328
|
0.0%
|
$84,328
|
INR
3,434,696.47
|
0.0%
|
INR
3,434,696.47
|
f
|
||
|
A/R
|
$72,119
|
10.0%
|
$64,907
|
INR
2,937,417.75
|
10.0%
|
INR
2,643,675.98
|
g
|
||
|
FO
Inv less than 6 Mo's Old
|
$11,798
|
0.0%
|
$11,798
|
INR
480,540.00
|
0.0%
|
INR
480,540.00
|
h
|
||
|
All
other inventory
|
$21,374
|
100.0%
|
$0
|
INR
870,573.00
|
100.0%
|
INR
0.00
|
i
|
||
|
Advances
|
$3,879
|
25.0%
|
$2,909
|
INR
158,000.00
|
25.0%
|
INR
118,500.00
|
j
|
||
|
Fixed
Deposits
|
$56,884
|
25.0%
|
$42,663
|
|
INR
2,316,867.47
|
25.0%
|
INR
1,737,650.60
|
k
|
|
|
Total
Variable Assets
|
$250,383
|
|
$206,606
|
|
INR
10,198,094.69
|
|
INR
8,415,063.05
|
l
=
sum(f - k)
|
|
|
Net
Assets less Commitments
|
$37,681
|
INR
1,534,729.05
|
m
=
l - e
|
||||||
|
Less
Fees/penalties/taxes to exit Noida
|
$45,888
|
62.5%
|
$17,208
|
|
INR
1,869,000.00
|
62.5%
|
INR
700,875.00
|
n
|
|
|
Net
Addition (Reduction) to purchase price of $500,000
|
$20,473
|
INR
833,854.05
|
o
=
m - n
|
||||||
***
Final
numbers to be determined by July 20, 2007 based on numbers as of June 30,
2007
7
SCHEDULE
B
Guaranty
by Xxxx X. Xxxx
Stock
Pledge Agreement
Separation
Payments Pledge Agreement by Xxxx X. Xxxx
Agreement
to Provide Additional Collateral
8
