PURCHASE AGREEMENT
THIS
AGREEMENT is made as of the [__] day of [____], 2006, by and between Precision
Optics Corporation (the “Company”),
a
corporation organized under the laws of The Commonwealth of Massachusetts,
with
its principal offices at 00 Xxxx Xxxxxxxx, Xxxxxxx, XX 00000, and the purchaser
whose name and address is set forth on the signature page hereof (the
“Purchaser”).
IN
CONSIDERATION of the mutual covenants contained in this Agreement, the Company
and the Purchaser agree as follows:
SECTION
1. Authorization
of Sale of the Shares.
Subject
to the terms and conditions of this Agreement, the Company has authorized the
issuance and sale of up to 10,000,000.00 shares of its common stock, $.01 par
value (the “Common Stock”).
SECTION
2. Agreement
to Sell and Purchase the Shares.
At the
Closing (as defined in Section 3), the Company will, subject to the terms of
this Agreement, issue and sell to the Purchaser and the Purchaser will buy
from
the Company, upon the terms and conditions hereinafter set forth, the number
of
shares of Common Stock (at the purchase price) shown below (the
“Shares”):
Number
of Shares to Be
Purchased
|
Price
Per
Share
|
Aggregate
Price
|
||
$
|
||||
SECTION
3. Delivery
of the Shares at the Closing.
The
completion of the purchase and sale of the Shares (the “Closing”)
shall
occur as soon as practicable and as agreed to by the parties hereto, within
three business days following the execution of this Agreement, or on such later
date as the parties shall agree in writing, but not prior to the date that
the
conditions for Closing set forth below have been satisfied or waived by the
appropriate party (the “Closing
Date”).
At
the
Closing, the Purchaser shall deliver, in immediately available funds, the full
amount of the purchase price for the Shares being purchased hereunder by wire
transfer to an account designated by the Company and the Company shall deliver
to the Purchaser one or more stock certificates registered in the name of the
Purchaser, representing the number of Shares set forth in Section 2 above and
bearing an appropriate legend referring to the fact that the Common Stock was
sold in reliance upon the exemption from registration under the Securities
Act
of 1933, as amended (the “Securities
Act”),
provided by Section 4(2) thereof and Rule 506 thereunder. The name(s) in which
the stock certificates are to be registered are set forth in the Securities
Certificate Questionnaire attached hereto as part of Appendix
I.
The
Company’s obligation to complete the purchase and sale of the Shares and deliver
such stock certificate(s) to the Purchaser at the Closing shall be subject
to
the following conditions, any one or more of which may be waived by the Company:
(a) receipt by the Company of same-day funds in the full amount of the purchase
price for the Shares being purchased hereunder; and (b) the accuracy of the
representations and warranties made by the Purchaser and the fulfillment of
those undertakings of the Purchaser to be fulfilled prior to the Closing. The
Purchaser’s obligation to accept delivery of such stock certificate(s) and to
pay for the Shares evidenced thereby shall be subject to the following
conditions: (a) each of the representations and warranties of the Company made
herein (i) that are not qualified by Material Adverse Effect (as defined in
Section 4.5 below) shall be accurate as of the Closing Date except to the extent
the failure of the representations and warranties would not have a Material
Adverse Effect and (ii) that are qualified by Material Adverse Effect will
be
accurate as of the Closing Date as so qualified and (b) the fulfillment in
all
material respects of those undertakings of the Company to be fulfilled prior
to
Closing.
SECTION
4. Representations,
Warranties and Covenants of the Company.
The
Company represents and warrants to, and covenants with, the Purchaser as
follows:
4.1. Organization
and Qualification.
The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and the Company
is
qualified to do business as a foreign corporation in each jurisdiction in which
qualification is required, except where failure to so qualify would not have
a
Material Adverse Effect (as defined herein). The Company’s subsidiaries (each a
“Subsidiary”
and
collectively the “Subsidiaries”)
are
listed on Exhibit
A
to this
Agreement. Each Subsidiary is a direct or indirect wholly owned subsidiary
of
the Company (except for a qualifying share held by the managing director of
the
subsidiary). Each Subsidiary is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and is qualified
to
do business as a foreign corporation in each jurisdiction in which qualification
is required, except where failure to so qualify would not have a Material
Adverse Effect.
4.2. Reporting
Company; Form S-3.
The
Company is not an “ineligible issuer” (as defined in Rule 405 promulgated under
the Securities Act) and is eligible to register the Shares for resale by the
Purchaser on a registration statement on Form S-3 under the Securities Act.
The
Company is subject to the reporting requirements of the Securities Exchange
Act
of 1934, as amended (the “Exchange
Act”),
and
has filed all reports required thereby. Provided the Purchaser is not deemed
to
be an underwriter with respect to the Shares, to the Company’s knowledge, there
exist no facts or circumstances (including without limitation any required
approvals or waivers or any circumstances that may delay or prevent the
obtaining of accountant’s consents) that reasonably could be expected to
prohibit or delay the preparation and filing of a registration statement on
Form
S-3 that will be available for the resale of the Shares by the
Purchaser.
4.3. Authorized
Capital Stock.
The
issued and outstanding shares of Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, were not issued in violation of
or
subject to any preemptive rights or other rights to subscribe for or purchase
securities, and conform in all material respects to the description thereof
contained in the Company’s filings with the Securities and Exchange Commission.
Except as set forth in the Company’s SEC filings and except for options and
other awards that may be granted under the Company’s Amended and Restated 1997
Incentive Plan, the Company does not have outstanding any options to purchase,
or any preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments
to
issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations. Following the sale of Shares, consistent
with its past practice and in order to provide incentives for its employees,
the
Company intends to update its Amended and Restated 1997 Incentive Plan to allow
for the grant of options amounting to up to 20% of the total outstanding shares
of stock. With respect to each of the Subsidiaries (i) all the issued and
outstanding shares of such Subsidiary’s capital stock have been duly authorized
and validly issued, are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, were not issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities, and (ii) there are no outstanding options to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts
or
commitments to issue or sell, shares of such Subsidiary’s capital stock or any
such options, rights, convertible securities or obligations.
-2-
4.4. Issuance,
Sale and Delivery of the Shares.
The
Shares have been duly authorized and, when issued, delivered and paid for in
the
manner set forth in this Agreement, will be validly issued, fully paid and
nonassessable. No preemptive rights or other rights to subscribe for or purchase
any shares of common stock of the Company exist with respect to the issuance
and
sale of the Shares by the Company pursuant to this Agreement. No stockholder
of
the Company has any right (which has not been waived or has not expired by
reason of lapse of time following notification of the Company’s intention to
file the Registration Statement (as hereinafter defined)) to require the Company
to register the sale of any capital stock owned by such stockholder under the
Registration Statement. No further approval or authority of the stockholders
or
the Board of Directors of the Company will be required for the issuance and
sale
of the Shares to be sold by the Company as contemplated herein.
4.5. Due
Execution, Delivery and Performance of the Agreement.
The
Company has full legal right, corporate power and authority to enter into this
Agreement and perform the transactions contemplated hereby. The Agreement has
been duly authorized, executed and delivered by the Company. This Agreement
is a
legal, valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as enforceability may be limited
by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
of
general application relating to or affecting the enforcement of creditors’
rights and the application of equitable principles relating to the availability
of remedies, and except as rights to indemnity or contribution, including but
not limited to, indemnification provisions set forth in Section 7.3 of this
Agreement may be limited by federal or state securities law or the public policy
underlying such laws. The execution and performance of the Agreement by the
Company and the consummation of the transactions herein contemplated will not
violate any provision of the certificate of incorporation or bylaws of the
Company or the organizational documents of any Subsidiary and will not result
in
the creation of any lien, charge, security interest or encumbrance upon any
assets of the Company or any Subsidiary pursuant to the terms or provisions
of,
or will not conflict with, result in the breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a default under
any agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which any of the Company or any Subsidiary is
a
party or by which any of the Company or its/or any Subsidiary or their
respective properties may be bound or affected and in each case that would
have
a Material Adverse Effect, or, to the knowledge of the Company, any statute
or
any authorization, judgment, decree, order, rule or regulation of any court
or
any regulatory body, administrative agency or other governmental agency or
body
applicable to the Company or any Subsidiary or any of its/their respective
properties. No consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental agency or body
is
required for the execution and delivery of this Agreement or the consummation
of
the transactions contemplated by this Agreement, except for compliance with
the
Blue Sky laws and federal securities laws applicable to the offering of the
Shares. For the purposes of this Agreement the term “Material
Adverse Effect”
shall
mean a material adverse effect on the condition (financial or otherwise),
properties, business or results of operations of the Company and its
Subsidiaries, taken as a whole.
-3-
4.6. No
Defaults.
Neither
the Company nor any Subsidiary is in violation or default of any provision
of
its certificate of incorporation or bylaws, or other organizational documents,
or in breach of or default with respect to any provision of any agreement,
judgment, decree, order, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which it is a party or by which it
or
any of its properties is bound; and there does not exist any state of fact
that,
with notice or lapse of time or both, would constitute an event of default
on
the part of the Company or any Subsidiary (as defined in such documents), except
such defaults that individually or in the aggregate would not cause a Material
Adverse Effect.
4.7. No
Actions.
There
are no legal or governmental actions, suits or proceedings pending or, to the
Company’s knowledge, threatened against the Company or any Subsidiary before or
by any court, regulatory body or administrative agency or any other governmental
agency or body, domestic, or foreign, which actions, suits or proceedings,
individually or in the aggregate, might reasonably be expected to have a
Material Adverse Effect; and no labor disturbance by the employees of the
Company exists or, to the Company’s knowledge, is imminent, that might
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any Subsidiary is a party to or subject to the provisions of any injunction,
judgment, decree or order of any court, regulatory body, administrative agency
or other governmental agency or body that might have a Material Adverse
Effect.
4.8. Properties.
The
Company and each Subsidiary has good and valid title to all the properties
and
assets described as owned by it in the consolidated financial statements of
the
Company, free and clear of all liens, mortgages, pledges, or encumbrances of
any
kind except (i) those, if any, reflected in such consolidated financial
statements, or (ii) those that are not material in amount and do not adversely
affect the use made and proposed to be made of such property by the Company
or
its Subsidiaries. The Company and each Subsidiary holds its leased properties
under valid and binding leases, with such exceptions as are not materially
significant in relation to its business. The Company and any Subsidiary owns
or
leases all such properties as are necessary to its operations as now
conducted.
-4-
4.9. No
Material Change.
Since
June 30, 2005, and except as described in or contemplated by the Company filings
with the SEC, (i) the Company and its Subsidiaries have not incurred any
material liabilities or obligations, indirect, or contingent, or entered into
any material agreement or other transaction that is not in the ordinary course
of business or that could reasonably be expected to result in a material
reduction in the future earnings of the Company; (ii) the Company and its
Subsidiaries have not sustained any material loss or interference with their
businesses or properties from fire, flood, windstorm, accident or other calamity
not covered by insurance; (iii) the Company and its Subsidiaries have not paid
or declared any dividends or other distributions with respect to their capital
stock and none of the Company or any Subsidiary is in default in the payment
of
principal or interest on any outstanding debt obligations; (iv) there has not
been any change in the capital stock of the Company or its Subsidiaries other
than the sale of the Shares hereunder and shares or options issued pursuant
to
equity incentive plans or purchase plans approved by the Company’s Board of
Directors, or indebtedness material to the Company or its Subsidiaries (other
than in the ordinary course of business and any required scheduled payments);
and (v) there has not occurred any event that has caused or could reasonably
be
expected to cause a Material Adverse Effect.
4.10. Intellectual
Property.
Except
as disclosed in the Company’s filings with the SEC, (i) the Company or a
Subsidiary owns or has obtained valid and enforceable licenses for the
inventions, patent applications, patents, trademarks (both registered and
unregistered), trade names, copyrights and trade secrets necessary for the
conduct of the Company’s business as currently conducted (collectively, the
“Intellectual
Property”);
and
(ii) (a) to the knowledge of the Company, there are no third parties who have
any ownership rights to any Intellectual Property that is owned by, or has
been
licensed to, the Company or each Subsidiary for the products described in the
the Company’s SEC filings that would preclude the Company or any Subsidiary
from conducting its business as currently conducted and have a Material Adverse
Effect, except for the ownership rights of the owners of the Intellectual
Property licensed by the Company or any Subsidiary; (b) to the Company’s
knowledge, there are currently no sales of any products that would constitute
an
infringement by third parties of any Intellectual Property owned or licensed
by
the Company or any Subsidiary, which infringement would have a Material Adverse
Effect; (c) there is no pending or, to the Company’s knowledge, threatened
action, suit, proceeding or claim by others challenging the rights of the
Company or any Subsidiary in or to any Intellectual Property owned or licensed
by the Company or any Subsidiary, other than claims which could not reasonably
be expected to have a Material Adverse Effect; (d) there is no pending or,
to
the Company’s knowledge, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any Intellectual Property owned, or
licensed by the Company or any Subsidiary, other than non-material actions,
suits, proceedings and claims; and (e) there is no pending or, to the Company’s
knowledge, threatened action, suit, proceeding or claim by others that the
Company or any of any Subsidiaries infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary right of others, other
than non-material actions, suits, proceedings and claims.
4.11. Additional
Information.
The
information contained or incorporated in the Company’s SEC filings, taken as a
whole as of the date hereof do not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein in light of the circumstances in which they
were
made not misleading.
-5-
4.12. Financial
Statements.
The
consolidated financial statements of the Company and the related notes and
schedules thereto included in its Exchange Act filings fairly present the
financial position, results of operations, stockholders’ equity and cash flows
of the Company and its consolidated Subsidiaries at the dates and for the
periods specified therein. Such financial statements and the related notes
and
schedules thereto have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
(except as otherwise noted therein) and all adjustments necessary for a fair
presentation of results for such periods have been made; provided, however,
that
the unaudited financial statements are subject to normal year-end audit
adjustments (which are not expected to be material) and do not contain all
footnotes required under generally accepted accounting principles.
SECTION
5. Representations,
Warranties and Covenants of the Purchaser.
The
Purchaser represents and warrants to, and covenants with, the Company that:
5.1. Experience.
(i) The
Purchaser is knowledgeable, sophisticated and experienced in making, and is
qualified to make, decisions with respect to investments in shares representing
an investment decision like that involved in the purchase of the Shares,
including investments in securities issued by the Company, has reviewed
carefully the Company’s filings with the SEC and has requested, received,
reviewed and considered all information it deems relevant in making an informed
decision to purchase the Shares; (ii) the Purchaser is acquiring the Shares
set
forth in Section 2 above in the ordinary course of its business and for its
own
account for investment only and with no present intention of distributing any
of
such Shares or any arrangement or understanding with any other persons regarding
the distribution of such securities (this representation and warranty not
limiting the Purchaser’s right to sell pursuant to the Registration Statement or
in compliance with the Securities Act and the Rules and Regulations, or, other
than with respect to any claims arising out of a breach of this representation
and warranty, the Purchaser’s right to indemnification under Section 7.3); (iii)
the Purchaser will not, directly or indirectly, offer, sell, pledge, transfer
or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) any of the Shares nor will the Purchaser engage
in
any short sale that results in a disposition of any of the Shares, except in
compliance with the Securities Act and the Rules and Regulations and any
applicable state securities laws; (iv) the Purchaser has completed or caused
to
be completed the Registration Statement Questionnaire attached hereto as part
of
Appendix
I,
for use
in preparation of the Registration Statement, and the answers thereto are true
and correct as of the date hereof and will be true and correct as of the
effective date of the Registration Statement and the Purchaser will notify
the
Company immediately of any material change in any such information provided
in
the Registration Statement Questionnaire until such time as the Purchaser has
sold all of its Shares or until the Company is no longer required to keep the
Registration Statement effective; (v) the Purchaser has, in connection with
its
decision to purchase the number of Shares set forth in Section 2 above, relied
solely upon the Company’s filings with the SEC and the documents included
therein or incorporated by reference and the representations and warranties
of
the Company contained herein; (vi) the Purchaser has had an opportunity to
discuss this investment with representatives of the Company and ask questions
of
them and has had the opportunity to obtain such additional information which
the
Company possesses or can acquire without unreasonable effort or expense that
is
necessary to make an informed investment decision with respect to the
investment; and (vii) the Purchaser is an “accredited investor” within the
meaning of Rule 501(a) promulgated under the Securities Act.
-6-
5.2. Reliance
on Exemptions.
The
Purchaser understands that the Shares are being offered and sold to it in
reliance upon specific exemptions from the registration requirements of the
Securities Act, the Rules and Regulations and state securities laws and that
the
Company is relying upon the truth and accuracy of, and the Purchaser’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Purchaser set forth herein in order to determine
the
availability of such exemptions and the eligibility of the Purchaser to acquire
the Shares.
5.3. Investment
Decision.
The
Purchaser understands that nothing in the Agreement or any other materials
presented to the Purchaser in connection with the purchase and sale of the
Shares constitutes legal, tax or investment advice. The Purchaser has consulted
such legal, tax and investment advisors as it, in its sole discretion, has
deemed necessary or appropriate in connection with its purchase of the Shares.
5.4. Risk
of Loss.
The
Purchaser understands that its investment in the Shares involves a significant
degree of risk, including a risk of total loss of Purchaser’s investment, and
the Purchaser has full cognizance of and understands all of the risk factors
related to Purchaser’s purchase of the Shares, including, but not limited to,
those set forth under or incorporated by reference in the caption “Risk Factors”
in the Company’s SEC filings. The Purchaser understands that the market price of
the Common Stock has been volatile and that no representation is being made
as
to the future value of the Common Stock. The Purchaser has the knowledge and
experience in financial and business matters as to be capable of evaluating
the
merits and risks of an investment in the Shares and has the ability to bear
the
economic risks of an investment in the Shares.
5.5. No
Government Review.
The
Purchaser understands that no United States federal or state agency or any
other
government or governmental agency has passed upon or made any recommendation
or
endorsement of the Shares.
5.6. Transfer
of Resale.
The
Purchaser understands that, until such time as the Registration Statement has
been declared effective or the Shares may be sold pursuant to Rule 144 under
the
Securities Act without any restriction as to the number of securities as of
a
particular date that can then be immediately sold, the Shares will bear a
restrictive legend in substantially the following form:
“THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”)
OR THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT
BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER
JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT
AND
SUCH OTHER APPLICABLE LAWS.”
-7-
5.7. Stop
Transfer.
The
certificates representing the Shares will be subject to a stop transfer order
with the Company’s transfer agent that restricts the transfer of such shares
except upon receipt by the transfer agent of a written confirmation from the
Purchaser to the effect that the Purchaser has satisfied its prospectus delivery
requirements, in the form attached as Exhibit
B
hereto.
5.8. Residency.
The
Purchaser’s principal executive offices are in the jurisdiction set forth
immediately below the Purchaser’s name on the signature pages hereto.
5.9. Organization;
Validity; Enforcements.
The
Purchaser further represents and warrants to, and covenants with, the Company
that (i) the Purchaser has power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement, (ii) the making and performance of this Agreement by the
Purchaser and the consummation of the transactions herein contemplated will
not
violate any provision of the organizational documents of the Purchaser or
conflict with, result in the breach or violation of, or constitute, either
by
itself or upon notice or the passage of time or both, a default under any
material agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Purchaser is a party or,
any
statute or any authorization, judgment, decree, order, rule or regulation of
any
court or any regulatory body, administrative agency or other governmental agency
or body applicable to Purchaser, (iii) no consent, approval, authorization
or
other order of any court, regulatory body, administrative agency or other
governmental agency or body is required on the part of the Purchaser for the
execution and delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement, (iv) upon the execution and delivery of this
Agreement, this Agreement shall constitute a legal, valid and binding obligation
of the Purchaser, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to
or
the enforcement of creditor’s rights and the application of equitable principles
relating to the availability of remedies, and except as rights to indemnity
or
contribution, including, but not limited to, the indemnification provisions
set
forth in Section 7.3 of this Agreement, may be limited by federal or state
securities law or the public policy underlying such laws and (v) there is not
in
effect any order enjoining or restraining the Purchaser from entering into
or
engaging in any of the transactions contemplated by this Agreement.
SECTION
6. Intentionally
Omitted.
SECTION
7. Registration
of the Shares; Compliance with the Securities Act.
7.1. Registration
Procedures and Expenses. The
Company shall:
-8-
(a) as
soon
as practicable, but in no event later than ten (10) days following the Closing
Date, prepare and file with the Commission a Registration Statement on Form
S-3
(the “Registration
Statement”)
relating to the resale of the Shares;
(b) use
its
reasonable best efforts, subject to receipt of necessary information from the
Purchaser, to cause the Commission to declare the Registration Statement
effective as soon as possible;
(c) promptly
prepare and file with the Commission such amendments and supplements to the
Registration Statement and the prospectus used in connection therewith as may
be
necessary to keep the Registration Statement effective until the earlier of
(i)
two years after the date of the Closing (ii) such time as all of the Shares
have been sold pursuant to the Registration Statement, or (iii) the date on
which the Shares may be resold by the Purchaser without registration by reason
of Rule 144(k) under the Securities Act or any other rule of similar effect;
or
(iii) such time as all Shares purchased by such Purchaser under this Agreement
have been sold;
(d) so
long
as the Registration Statement is effective covering the resale of the Shares
owned by the Purchaser, furnish to the Purchaser with respect to the Shares
registered under the Registration Statement (and to each underwriter, if any,
of
such Shares) such number of copies of prospectuses and such other documents
as
the Purchaser may reasonably request, in order to facilitate the public sale
or
other disposition of all or any of such securities by the Purchaser;
(e) in
consultation with its counsel, file documents required of the Company for
compliance with Blue Sky requirements in states specified in writing by the
Purchaser; provided,
however,
that
the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified
or
has not so consented;
(f) bear
all
expenses in connection with the procedures in paragraphs (a) through (e) of
this
Section 7.1 and the registration of the Shares pursuant to the Registration
Statement, other than fees and expenses, if any, of counsel or other advisers
to
the Purchaser or underwriting discounts, brokerage fees and commissions incurred
by the Purchaser, if any in connection with the offering of the Shares pursuant
to the Registration Statement;
(g) advise
the Purchaser (via e-mail address provided pursuant to Section 9(b)) on the
same
day that: (i) the prospectus or any prospectus supplement or post-effective
amendment has been filed, and, with respect to the Registration Statement or
any
post-effective amendment thereto, when the same has become effective; (ii)
the
Company shall receive notice or obtain knowledge of the issuance of any stop
order by the Commission delaying or suspending the effectiveness of the
Registration Statement or of the initiation of any proceeding for that purpose,
or any other order issued by any state securities commission or other regulatory
authority suspending the qualification or exemption from qualification of such
shares under state securities or “blue sky” laws; and (iii) the Company shall
receive notice or obtain knowledge of the existence of any fact or the happening
of any event that makes any statement of a material fact in the Registration
Statement, the prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or which results in an omission of
a
material fact necessary in order to make the statement contained therein in
light of the circumstances in which it was made not misleading;
-9-
(h) file
a
Form D with respect to the Shares as required under Regulation D and to provide
a copy thereof to the Purchaser promptly after filing; and
(i) in
order
to enable the Purchaser to sell the Shares under Rule 144 to the Securities
Act,
for a period of two years from Closing, use its commercially reasonable efforts
to comply with the requirements of Rule 144, including without limitation,
use
its commercially reasonable efforts to comply with the requirements of Rule
144(c) with respect to public information about the Company and to timely file
all reports required to be filed by the Company under the Exchange Act.
The
Company understands that the Purchaser disclaims being an underwriter, but
the
Purchaser being deemed an underwriter shall not relieve the Company of any
obligations it has hereunder.
7.2. Transfer
of Shares After Registration.
The
Purchaser agrees that it will not effect any disposition of the Shares or its
right to purchase the Shares that would constitute a sale within the meaning
of
the Securities Act or pursuant to any applicable state securities laws, except
as contemplated in the Registration Statement referred to in Section 7.1 or
as
otherwise permitted by law, and that it will promptly notify the Company of
any
changes in the information set forth in the Registration Statement regarding
the
Purchaser or its plan of distribution.
7.3. Indemnification.
For the
purpose of this Section 7.3:
(i) the
term
“Purchaser/Affiliate”
shall
mean any affiliates of the Purchaser, including a transferee who is an affiliate
of the Purchaser, and any person who controls the Purchaser or any affiliate
of
the Purchaser within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act; and
(ii) the
term
“Registration
Statement”
shall
include any preliminary prospectus, final prospectus, exhibit, supplement or
amendment included in or relating to, and any document incorporated by reference
in, the Registration Statement referred to in Section 7.1.
-10-
(a) The
Company agrees to indemnify and hold harmless the Purchaser and each
Purchaser/Affiliate, against any losses, claims, damages, liabilities or
expenses, joint or several, to which the Purchaser or Purchaser/Affiliates
may
become subject, under the Securities Act, the Exchange Act, or any other federal
or state statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the prior
written consent of the Company), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, including the
prospectus, financial statements and schedules, and all other documents filed
as
a part thereof, as amended at the time of effectiveness of the Registration
Statement, including any information deemed to be a part thereof as of the
time
of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule
434, of the Rules and Regulations, or the prospectus, in the form first filed
with the Commission pursuant to Rule 424(b) of the Regulations, or filed as
part
of the Registration Statement at the time of effectiveness if no Rule 424(b)
filing is required (the “Prospectus”),
or
any subsequent amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state in any of them a material fact
required to be stated therein or necessary to make the statements in the
Registration Statement or any amendment or supplement thereto not misleading
or
in the Prospectus or any amendment or supplement thereto not misleading in
light
of the circumstances under which they were made; and will reimburse each
Purchaser and each Purchaser/Affiliate for any legal and other expenses as
such
expenses are reasonably incurred by such Purchaser or such Purchaser/Affiliate
in connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action; provided,
however,
that
the Company will not be liable for amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company, and the Company will not be liable in any such case
to
the extent that any such loss, claim, damage, liability or expense arises out
of
or is based upon (i) an untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Purchaser expressly
for use therein, or (ii) the failure of a Purchaser to comply with the covenants
and agreements contained in Sections 5.10 or 7.2 hereof, or (iii) the inaccuracy
of any representation or warranty made by a Purchaser herein or (iv) any
statement or omission in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Purchaser prior to the pertinent sale
or
sales by the Purchaser.
(b) The
Purchaser will severally, but not jointly, indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, against
any losses, claims, damages, liabilities or expenses to which the Company,
each
of its directors, each of its officers who signed the Registration Statement
or
controlling person may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common
law
or otherwise (including in settlement of any litigation, but only if such
settlement is effected with the prior written consent of such Purchaser) insofar
as such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon (i) any failure
to
comply with the covenants and agreements contained in Sections 5.10 or 7.2
hereof or (ii) the inaccuracy of any representation or warranty made by such
Purchaser herein or (iii) any untrue or alleged untrue statement of any material
fact contained in the Registration Statement, the Prospectus, or any amendment
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements in the Registration Statement or any amendment
or supplement thereto not misleading or in the Prospectus or any amendment
or
supplement thereto not misleading in the light of the circumstances under which
they were made, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was
made in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Purchaser expressly for use
therein; and will reimburse the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person for any
legal and other expense reasonably incurred by the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that each Purchaser’s aggregate liability under
Section 7.3(b)(iii) shall not exceed the amount of proceeds received by such
Purchaser on the sale of the Shares pursuant to the Registration
Statement.
-11-
(c) Promptly
after receipt by an indemnified party under this Section 7.3 of notice of the
threat or commencement of any action, such indemnified party will, if a claim
in
respect thereof is to be made against an indemnifying party under this Section
7.3 promptly notify the indemnifying party in writing thereof, but the omission
to notify the indemnifying party will not relieve it from any liability that
it
may have to any indemnified party for contribution or otherwise under the
indemnity agreement contained in this Section 7.3 to the extent it is not
prejudiced as a result of such failure. In case any such action is brought
against any indemnified party and such indemnified party seeks or intends to
seek indemnity from an indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party; provided,
however,
if the
defendants in any such action include both the indemnified party, and the
indemnifying party and the indemnified party shall have reasonably concluded,
based on an opinion of counsel reasonably satisfactory to the indemnifying
party, that there is likely to be a conflict of interest between the positions
of the indemnifying party and the indemnified party in conducting the defense
of
any such action or that there are likely to be legal defenses available to
it
and/or other indemnified parties that are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall
have
the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying
party
to such indemnified party of its election to assume the defense of such action
and approval by the indemnified party of counsel, the indemnifying party will
not be liable to such indemnified party under this Section 7.3 for any legal
or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
such counsel in connection with the assumption of legal defenses in accordance
with the proviso to the preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel, reasonably satisfactory to such indemnifying party,
representing all of the indemnified parties who are parties to such action)
or
(ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of action, in each of which
cases
the reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party. The indemnifying party shall not be liable for any
settlement of any action without its written consent.
-12-
(d) If
the
indemnification provided for in this Section 7.3 is required by its terms but
is
for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party under paragraphs (a), (b) or (c) of this Section
7.3 in respect to any losses, claims, damages, liabilities or expenses referred
to herein, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Purchaser from the placement of the Shares contemplated by
this
Agreement or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not
only the relative benefits referred to in clause (i) above but the relative
fault of the Company and the Purchaser in connection with the statements or
omissions or inaccuracies in the representations and warranties in this
Agreement that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and each Purchaser on the
other
shall be deemed to be in the same proportion as the amount paid by such
Purchaser to the Company pursuant to this Agreement for the Shares purchased
by
such Purchaser that were sold pursuant to the Registration Statement bears
to
the difference (the “Difference”)
between the amount such Purchaser paid for the Shares that were sold pursuant
to
the Registration Statement and the amount received by such Purchaser from such
sale. The relative fault of the Company on the one hand and each Purchaser
on
the other shall be determined by reference to, among other things, whether
the
untrue or alleged statement of a material fact or the omission or alleged
omission to state a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the Company
or
by such Purchaser and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in paragraph (c) of this Section 7.3,
any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth
in
paragraph (c) of this Section 7.3 with respect to the notice of the threat
or
commencement of any threat or action shall apply if a claim for contribution
is
to be made under this paragraph (d); provided,
however,
that no
additional notice shall be required with respect to any threat or action for
which notice has been given under paragraph (c) for purposes of indemnification.
The Company and the Purchaser agree that it would not be just and equitable
if
contribution pursuant to this Section 7.3 were determined solely by pro rata
allocation (even if the Purchaser were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to in this paragraph. Notwithstanding the
provisions of this Section 7.3, no Purchaser shall be required to contribute
any
amount in excess of the amount by which the Difference exceeds the amount of
any
damages that such Purchaser has otherwise been required to pay by reason of
such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Purchaser’s obligation to
contribute pursuant to this Section 7.3 are several and not joint.
-13-
7.4. Termination
of Conditions and Obligations.
The
conditions precedent imposed by Section 5.10 or Section 7.2 upon the
transferability of the securities purchased pursuant to this Agreement shall
cease and terminate as to any particular number of securities upon the earlier
of (i) the passage of two years from the effective date of the Registration
Statement and (ii) at such time as an opinion of counsel satisfactory in
form and substance to the Company shall have been rendered to the effect that
such conditions are not necessary in order to comply with the Securities Act.
7.5. Information
Available.
The
Company, upon the reasonable request of the Purchaser, shall make available
for
inspection by the Purchaser, any underwriter participating in any disposition
pursuant to the Registration Statement and any attorney, accountant or other
agent retained by the Purchaser or any such underwriter, all financial and
other
records, pertinent corporate documents and properties of the Company, and cause
the Company’s officers, employees and independent accountants to supply all
information reasonably requested by the Purchaser or any such underwriter,
attorney, accountant or agent in connection with the Registration
Statement.
SECTION
8. Intentionally
Omitted.
SECTION
9. Notices.
All
notices, requests, consents and other communications hereunder shall be in
writing, shall be mailed by first-class registered or certified airmail, e-mail,
confirmed facsimile or nationally recognized overnight express courier postage
prepaid, and shall be deemed given when so mailed and shall be delivered as
addressed as follows:
9.1. if
to the
Company, to:
Precision
Optics Corporation
00
Xxxx
Xxxxxxxx
Xxxxxxx,
XX 00000
Attention:
Xxxxxxx Xxxxxx
Facsimile:
000 000-0000
-14-
with
a
copy to:
Ropes
& Xxxx LLP
Xxx
Xxxxxxxxxxxxx Xxxxx
Xxxxxx,
XX 00000
Attention:
Xxxxxxx X’Xxxxx
Facsimile:
000-000-0000
E-mail:
Xxxxxxx.xxxxxx@xxxxxxxxx.xxx
or
to
such other person at such other place as the Company shall designate to the
Purchaser in writing or by e-mail; and
9.2. if
to the
Purchaser, at its address as set forth at the end of this Agreement, or at
such
other address or addresses as may have been furnished to the Company in
writing.
SECTION
10. Changes.
This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and the Purchaser. Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon each holder
of
any securities purchased under this Agreement at the time outstanding, each
future holder of all such securities, and the Company.
SECTION
11. Headings.
The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.
SECTION
12. Severability.
In case
any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
SECTION
13. Governing
Law.
This
Agreement is to be construed in accordance with and governed by the federal
law
of the United States of America and the internal laws of the Commonwealth of
Massachusetts without giving effect to any choice of law rule that would cause
the application of the laws of any jurisdiction other than the internal laws
of
the Commonwealth of Massachusetts to the rights and duties of the
parties.
SECTION
14. Counterparts.
This
Agreement may be executed in counterparts, each of which shall constitute an
original, but all of which, when taken together, shall constitute but one
instrument, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other parties. Facsimile
signatures shall be deemed original signatures.
SECTION
15. Entire
Agreement.
This
Agreement and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company nor
the
Purchaser makes any representation, warranty, covenant or undertaking with
respect to such matters. Each party expressly represents and warrants that
it is
not relying on any oral or written representations, warranties, covenants or
agreements outside of this Agreement.
-15-
SECTION
16. Fees
and Expenses.
Except
as set forth herein, each of the Company and the Purchaser shall pay its
respective fees and expenses related to the transactions contemplated by this
Agreement.
SECTION
17. Parties.
This
Agreement is made solely for the benefit of and is binding upon the Purchaser
and the Company and to the extent provided in Section 7.3, any person
controlling the Company or the Purchaser, the officers and directors of the
Company, and their respective executors, administrators, successors and assigns
and subject to the provisions of Section 7.3, no other person shall acquire
or
have any right under or by virtue of this Agreement. The term “successor and
assigns” shall not include any subsequent purchaser, as such purchaser, of the
Shares sold to the Purchaser pursuant to this Agreement.
[Remainder
of Page Left Intentionally Blank]
-16-
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
duly authorized representatives as of the day and year first above
written.
Precision
Optics Corporation
|
||
By:
|
||
Name:
|
||
Title:
|
Print
or
Type:
Name
of Purchaser
(Individual
or Institution)
|
Jurisdiction
of Purchaser’s Executive Offices
|
Name
of Individual representing
Purchaser
(if an Institution)
|
Title
of Individual representing
Purchaser
(if an Institution)
|
Signature
by:
Individual
Purchaser or Individual
representing
Purchaser:
|
|
Address: | |
Telephone: | |
Facsimile: | |
E-mail: |
Signature
Page
EXHIBIT
A
Name
of Subsidiary
|
State
or Other Jurisdiction of Incorporation/Organization
|
|
Wood’s
Precision Optics Corporation, Ltd.
|
Hong
Kong, China
|
2
Appendix
I
(Page
1
of 3)
PRECISION
OPTICS CORPORATION
SECURITIES
CERTIFICATE QUESTIONNAIRE
Pursuant
to Section 3 of the Agreement, please provide us with the following information:
1.
|
The
exact name that your Shares are to be registered in (this is the
name that
will appear on your certificate(s)).
|
|
|
2.
|
The
relationship between the Purchaser of the securities and the Registered
Holder listed in response to item 1 above:
|
|
|
3.
|
The
mailing address of the Registered Holder listed in response to item
1
above:
|
|
|
4.
|
The
Social Security Number or Tax Identification Number of the Registered
Holder listed in response to item 1 above:
|
|
3
Appendix
I
(Page
2
of 3)
PRECISION
OPTICS CORPORATION
REGISTRATION
STATEMENT QUESTIONNAIRE
In
connection with the preparation of the Registration Statement, please provide
us
with the following information:
SECTION
1. Pursuant
to the “Selling Stockholder” section of the Registration Statement, please state
your or your organization’s name exactly as it should appear in the Registration
Statement:
SECTION
2. Please
provide the number of shares that you or your organization will own immediately
after Closing, including those Shares purchased by you or your organization
pursuant to this Purchase Agreement and those shares purchased by you or your
organization through other transactions and provide the number of shares that
you have or your organization has the right to acquire within 60 days of
Closing:
SECTION
3. Have
you
or your organization had any position, office or other material relationship
within the past three years with the Company or its affiliates?
_____
Yes
_____ No
If
yes,
please indicate the nature of any such relationships below:
SECTION
4. Are
you
(i) an NASD Member (see definition), (ii) a Controlling (see definition)
shareholder of an NASD Member, (iii) a Person Associated with a Member of the
NASD (see definition), or (iv) an Underwriter or a Related Person (see
definition) with respect to the proposed offering; or (b) do you own any shares
or other securities of any NASD Member not purchased in the open market; or
(c)
have you made any outstanding subordinated loans to any NASD
Member?
4
Answer:
[
] Yes [ ] No If
“yes,”
please describe below
5
Appendix
I
(Page
3
of 3)
NASD
Member.
The
term “NASD member” means either any broker or dealer admitted to membership in
the National Association of Securities Dealers, Inc. (“NASD”). (NASD Manual,
By-laws Article I, Definitions)
Control.
The
term “control” (including the terms “controlling,” “controlled by” and “under
common control with”) means the possession, direct or indirect, of the power,
either individually or with others, to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting
securities, by contract, or otherwise. (Rule 405 under the Securities Act of
1933, as amended)
Person
Associated with a member of the NASD.
The
term “person associated with a member of the NASD” means every sole proprietor,
partner, officer, director, branch manager or executive representative of any
NASD Member, or any natural person occupying a similar status or performing
similar functions, or any natural person engaged in the investment banking
or
securities business who is directly or indirectly controlling or controlled
by a
NASD Member, whether or not such person is registered or exempt from
registration with the NASD pursuant to its bylaws. (NASD Manual, By-laws Article
I, Definitions)
Underwriter
or a Related Person.
The
term “underwriter or a related person” means, with respect to a proposed
offering, underwriters, underwriters’ counsel, financial consultants and
advisors, finders, members of the selling or distribution group, and any and
all
other persons associated with or related to any of such persons. (NASD
Interpretation)
6
APPENDIX
II
[Transfer
Agent]
[Address]
Attention:
PURCHASER’S
CERTIFICATE OF SUBSEQUENT SALE
The
undersigned, [an officer of, or other person duly authorized by]
_____________________________________________________________
hereby certifies
[fill
in official name of individual or
institution]
that
he/she [said institution] is the Purchaser of the shares evidenced by the
attached certificate,
and
as
such, sold such shares on _______________ in accordance with the terms of the
[date]
Purchase
Agreement and in accordance with Registration Statement
number
____________________________________________ or otherwise in accordance with
[fill
in
the number of or otherwise identify Registration Statement]
the
Securities Act of 1933, as amended, and, in the case of a transfer pursuant
to
the Registration Statement,
the requirement of delivering a current prospectus by the Company has
been complied
with in connection with such sale.
Print
or
Type:
Name
of Purchaser
(Individual
or
Institution):
|
|
Name
of Individual
representing
Purchaser
(if an
Institution)
|
|
Title
of Individual
representing
Purchaser
(if an
Institution):
|
|
Signature
by:
|
|
Individual
Purchaser
or
Individual repre-
senting
Purchaser:
|
7