Exhibit
2.1
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
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 Bill 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
Bill 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.
22
East
Broadway
Gardner,
MA 01440
Attn:
Richard E. Forkey, President
Telephone:
(978) 630-1800
Fax:
(978) 630-1370
With
contemporaneous copy to:
Patrick
O’Brien, Esq.
Ropes
& Gray LLP
One
International Place
Boston,
MA 02110
Telephone:
617-951-7000
Fax:
617-951-7050
If
to
Buyer to:
Dynasil
Corporation of America
385
Cooper Road,
West
Berlin, New Jersey 08091
Attn:
Craig T. Dunham, President
Telephone:
(856) 767-6813
With
contemporaneous copy to:
J.P.
Paraschos, Esq.
Bond,
Schoeneck & King, PLLC
One
Lincoln Center
Syracuse,
New York 13202
Telephone
(315) 218-8000
Fax
(315)
218-8100
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
/s/
Craig Dunham
_____________
Craig
Dunham
President
PRECISION
OPTICS CORPORATION, INC.
/s/
Richard Forkey
______________
Richard
Forkey
President
|