ASSET PURCHASE AND SALE AGREEMENT
AGREEMENT made this 17 day of February, 2005, by and among
Optometrics LLC, a Massachusetts Limited Liability Corporation
with an address of 8 Nemco Way, Stony Brook Industrial Park,
Ayer, Massachusetts (the "Seller"); Frank Denton ("Denton"),
residing at 31 Pond Street, #13, Waltham, Massachusetts 02451,
and Laura Lunardo ("Lunardo"), residing at One Bennetts Crossing,
Ayer, Massachusetts 01432, and Dynasil Corporation of America, a
New Jersey corporation with an address of 385 Cooper Road, West
Berlin, NJ 08091 (the "Buyer").
WHEREAS, the Seller desires to sell substantially all of its
assets and business to the Buyer and the Buyer desires to
purchase the same upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements
and covenants herein contained, the parties hereto agree as
follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Purchase of Assets.
(a) Seller shall sell and the Buyer shall purchase
substantially all of the assets of the Seller, including without
limitation those assets set forth below, free and clear of all
liens, claims and encumbrances, except as specifically described
or set forth herein, all of which shall be collectively referred
to herein as the "Purchased Assets":
(i) All rights, title and interest in and to the
optical systems and components business known as
Optometrics LLC (the "Subject Business") as currently
conducted by the Seller, at the Seller's premises in
Ayer, Massachusetts, together with the goodwill of the
Subject Business, including without limitation all
rights of the Seller in and to the name "Optometrics"
and all variations thereof;
(ii) The inventory of the Seller's products held for
sale in the conduct of the Subject Business as of the
Closing Date (collectively the "Inventory"), consisting
of finished merchandise, raw materials, work in process
and supplies, and described on Schedule 1(a)(ii) hereto
which shall be updated or supplemented as of the
Closing Date;
(iii) All patents, trademarks, tradenames,
registered copyrights and service marks as described
and set forth in Schedule 1(a)(iii) attached hereto, as
well as all copyrights, trade secrets and the worldwide
website, domain name, phone number and other rights
used by the Seller in the conduct of the Subject
Business;
(iv) All proprietary processes and formulae and all
proprietary technical and other information and/or
licenses, franchises, permits, authorizations,
agreements and arrangements and other rights to use the
foregoing used by the Seller in connection with the
Subject Business, as more particularly described in
Schedule 1(a)(iv) attached hereto (the "Intellectual
Property");
(v) All of the Seller's machinery, equipment,
furniture, fixtures, leasehold improvements, trade
fixture supplies, spare parts, hardware, accessories
and other tangible property (including, but not limited
to, office supplies, computer supplies and tools owned
by the Seller and used in the conduct of the Subject
Business) including without limitation those items
described in Schedule 1(a)(v) attached hereto, other
than equipment subject to capital lease/purchase
agreements (which will be assigned over to Buyer to the
extent allowed by such agreements) (the "Personal
Property");
(vi) All of the Seller's customer and vendor lists,
copies of the price lists, forms, historical sales data
and other existing financial, accounting and business
records, files and data relating to or used or useful
in connection with the Subject Business, whether in
physical or electronic form, as the customers are more
particularly described in Schedule 1(a)(vi) attached
hereto ("Customers");
(vii) All of the Seller's contracts with customers
and unfilled customer orders relating to the Subject
Business and all deposits and other payments relating
thereto, including without limitation those items
described in Schedule 1(a)(vii) attached hereto
("Customer Contracts");
(viii) The full benefit of all warranties and
warranty rights (implied, expressed or otherwise)
against manufacturers, vendors, suppliers, contractors
or other persons to which the Seller is or may be
entitled;
(ix) All prepaid expenses and prepaid corporate taxes,
including without limitation, prepaid insurance
premiums and prepaid service agreements, including
without limitation those items described in Schedule
1(a)(ix) attached hereto ("Prepaid Expenses");
(x) All rights (except such rights in those insurance
policies purchased pursuant to Paragraph 4.4 intended
to cover any liability of Seller, Denton and/or Lunardo
resulting from claims of any predecessor in interest)
and obligations of the Seller in, to and under all
contracts, leases, insurance policies and other
agreements with third parties relating to or used or
useful in connection with the Subject Business,
including without limitation those items described in
Schedule 1(a)(x) attached hereto, but specifically
excluding any agreements, instruments or documents
relating to items of indebtedness by the Subject
Business to Optometrics Holdings LLC or to any of its
predecessor businesses (collectively, the "Assumed
Agreements");
(xi) All customer and trade and other accounts
receivable and other amounts due or owing to the Seller
and arising out of the operation of the Subject
Business as of the Closing Date, including without
limitation those items described in Schedule 1(a)(xi)
attached hereto, which Schedule shall be updated and
supplemented by the Seller as of the Closing Date (as
hereinafter defined)) (the "Receivables");
(xii) All cash, bank accounts, equity or debt
securities, recoverable or prepaid local, state or
federal income and/or sales taxes (other than prepaid
state and federal income tax on undistributed profits),
bonds, deposits, judgments or any other interests to
which the Seller is a party or a beneficiary, the
location and account numbers of all of which are set
forth on Schedule 1(a)(xii); and
(xiii) All other assets used in connection with the
Subject Business, as more fully described in Schedule
1(a)(xiii).
(b) Anything in this Agreement to the contrary
notwithstanding, the Purchased Assets shall not include the real
estate located at 8 Nemco Way, Stony Brook Industrial Park, Ayer,
Massachusetts standing in the name of Optometrics Holdings LLC
(the "Excluded Assets"). Buyer agrees that, the provisions of
Section 1.1(a)(i) notwithstanding, Lunardo and Denton shall be
granted a royalty-free, perpetual right and license to use the
name "Optometrics" solely for the purposes of operating the
Limited Liability Company "Optometrics Holdings LLC" in its
present organization and for its existing purpose and under its
existing ownership.
1.2 Assumption of Liabilities.
(a) The Buyer agrees to execute and deliver to the Seller
at the Closing, an instrument in form and substance reasonably
satisfactory to the Seller and its counsel, pursuant to which the
Buyer shall assume and shall agree to pay, perform and discharge
all of the Seller's obligations and liabilities arising under the
Customer Contracts, including, without limitation, accounts
payable, other expenses payable (including but not limited to
insurance premiums, but excluding all intercompany debt between
Seller and Optometrics Holdings LLC as of the Closing Date) and
all payroll-related liabilities including payroll taxes incurred
by the Seller prior to or as of the Closing Date, all federal,
state and local taxes on undistributed profits incurred prior to
the Closing Date (net of any previously distributed amounts) and
the liabilities otherwise specifically set forth in this Section
1.2. The parties acknowledge and agree that tax liabilities are
estimates only until applicable tax returns have been completed
and submitted. The liabilities of the Seller that the Buyer has
agreed to assume (other than the Assumed Agreements and Customer
Contracts) pursuant to this Section 1.2 aggregated approximately
$246,000 as of August 31, 2004 and are listed on Schedule 1.2(a)
hereto, together with the estimated amounts thereof at the date
of this Agreement. Those liabilities are hereinafter sometimes
collectively referred to as the "Assumed Liabilities".
(b) In addition to the Assumed Liabilities described in
Section 1.2(a), the Buyer shall assume (if so allowed by the
lender) or agree to pay off up to the aggregate amount of
$375,000 in borrowings by the Seller under (i) a Line of Credit
Note with a face value of $350,000 held by Citizens Bank of
Massachusetts; and (ii) a Term Note with a face value of $350,000
held by Citizens Bank of Massachusetts. The Buyer agrees that it
will undertake commercially reasonable efforts to remove or
obtain the release of Denton and Lunardo as personal guarantors
of such debt, including, but not limited to, providing the
Buyer's guaranty if required by Citizens Bank of Massachusetts
("Citizens").
(c) In addition to the Assumed Liabilities, the Buyer shall
assume up to the aggregate amount of $32,500 in obligations under
the capital lease/purchase agreements (which will be assigned
over to Buyer to the extent allowed by such agreements) listed on
Schedule 1.2(c) attached hereto from the Closing Date.
(d) Buyer will not assume or be responsible for any of the
following liabilities, obligations, undertakings or commitments
of the Seller, Denton or Lunardo, whether or not arising out of
or relating to the Subject Business for any dates or time periods
prior to the Closing Date, or any claims or demands based thereon
or attributable thereto (whether accrued, absolute or contingent,
whether known or unknown and regardless of the terms thereof or
manner of assertion) and all such liabilities, obligations,
undertakings and commitments and all such claims and demands
shall remain the sole obligation and responsibility of Seller:
(i) United States, foreign, state or local income or
similar taxes applicable to, imposed upon or arising out of the
transfer to the Buyer of the Assets, assumption by the Buyer of
the Assumed Liabilities under this Agreement or for distributions
of Seller's profits prior to or on the Closing Date except to the
extent set forth in Section 1.10.
(ii) Liabilities, costs, obligations or expenses of the
Seller incurred in connection with this Agreement and the
transactions contemplated herein;
(iii) Except as provided in Section 5.1 of this
Agreement, liabilities resulting from any claim of violation of
any employment-related statute, law, or regulation or any
employment agreement, incentive compensation or bonus plan,
collective bargaining agreement, employee benefit plan, or
pension plan (other than as accrued in the Financial Statements)
by Seller, Denton or Lunardo occurring prior to the Closing Date;
(iv) Liabilities or obligations arising out of or with
respect to the discharge or termination of any employee by Seller
at any time prior to the Closing Date, or any liabilities and
obligations relating to employee compensation, payroll deductions
and payroll taxes for any time periods prior to the Closing Date
other than to the extent accrued or reserved for on the Financial
Statements referred to in Section 2.7 of this Agreement;
(v) Liabilities to any member, director, officer, employee
of the Seller or any affiliate or related party of any of them
for money borrowed, advances under any note, loan or similar
obligation made prior to the Closing Date;
(vi) Liability or other claims of any description whatsoever
relating to any services rendered or goods sold by, with respect
to or on account of, the Seller or the Subject Business prior to
the Closing, including without limitation, any warranty, product
liability or similar claim, other than to the extent insured
against by the Seller or to the extent that any such liability or
claims do not exceed by the amount of Five Thousand Dollars (U.S.
$5,000.00) or more the amount accrued or reserved for on the
Financial Statements referred to in Section 2.7 of this
Agreement; provided that any such liability or claim results in
direct financial loss to Buyer (solely by way of example, where a
warranty claim results in a direct payment to a customer and not
where the product is corrected, substituted for another or
replacement product, credited against future purchases, or where
the product is returned and resold).
(vii) Liability arising out of any violation or any
alleged violation by Seller prior to the Closing of any
applicable laws, rules or regulations;
(vii) Except to the extent set forth in Section 1.10 of
this Agreement with respect to undistributed profits, liabilities
and obligations for federal, state, local, foreign and other
governmental taxes imposed on or with respect to the gross or net
income of Seller for all periods ended or ending on or prior to
the Closing;
(viii) Except to the extent set forth in Section 2.14 of
this Agreement, liabilities arising out of the Seller's breach,
occurring and known to the Seller, Denton or Lunardo, prior to
the Closing of the terms of any contracts;
(ix) Liabilities under any bulk sale or similar law, rule or
regulation for the benefit of trade or commercial creditors of
the Seller or the Subject Business;
(x) Except to the extent set forth elsewhere in this
Section 1.2, liabilities, debts or obligations of the Seller or
the Subject Business for money borrowed under any loan, line of
credit or lending facility (whether secured or unsecured, or
currently outstanding), any note, loan agreement, security
agreement, mortgage, deed of trust or other agreement, document
or instrument to which Seller is a party or by which it, the
Subject Business or the Assets are bound or encumbered other than
as set forth in Schedule 2.9;
(e) In addition to the Assumed Liabilities described in
Section 1.2(a), subject to the continuing accuracy and
completeness in all material respects of the statements and
representations made to the Buyer by Denton and Lunardo with
respect thereto, the Buyer shall assume all liability, cost and
expense of or accruing to the Seller, Optometrics Holdings, LLC,
Denton and Lunardo arising under, related to or in connection
with the lawsuit entitled McPherson, Inc. v. Optometrics, LLC,
C.A. No.: MICV2004-04412.
1.3 Closing. The Closing of the transactions contemplated
by this Agreement (the "Closing") shall be held at 10:00 a.m. on
March 8, 2005 (the "Closing Date") at the offices of Davis, Malm
& D'Agostine, P.C., One Boston Place, 37th Floor, Boston,
Massachusetts 02108, or at such other place, date or time as may
be agreed to in writing by the parties. Anything herein to the
contrary notwithstanding, either the Seller or the Buyer may
unilaterally extend the scheduled Closing Date for up to an
additional 30 days upon written notice to the other party, but in
no event shall the Closing Date be extended past April 8, 2005
without the agreement in writing of the Seller and the Buyer.
1.4 Deposit. As a deposit against its failure to perform
its obligations hereunder, upon the execution hereof, Buyer shall
deliver to Denton and Lunardo, a check payable jointly to them in
the amount of Twenty-Five Thousand Dollars ($25,000) (the
"Deposit") which they will deposit into an insured bank account.
If the transactions contemplated by this Agreement are
consummated, the amount of the Deposit, together with any
interest earned thereon, will be credited toward the Purchase
Price (as hereafter defined) due to Denton and Lunardo pursuant
to Section 1.6 hereof. If the Seller, Denton or Lunardo fail to
satisfy the conditions set forth in Article VI (excluding
Paragraph 6.7, but including Paragraph 6.8 (but only to the
extent, with regard to Paragraph 6.8, that Buyer's due diligence
investigation reveals a past or current practice on the part of
Sellers that is illegal or a fact or circumstance that would be
materially adverse and would cause a reasonable person in the
position of Buyer to terminate this Agreement)), or this
Agreement is terminated pursuant to Sections 9.1(a) or 9.1(c)(i),
the Deposit, together with any interest earned thereon, will be
refunded by Denton and Lunardo to Buyer. If the Buyer fails to
satisfy the conditions set forth in Article VII or if this
Agreement is terminated pursuant to Section 9.1(d) or (e), or as
otherwise set forth herein, the Deposit, together with any
interest earned thereon, shall be retained by Denton and Lunardo.
1.5 Transactions at Closing. At the Closing, the Buyer
will deliver to the Seller the consideration payable in
accordance with the provisions of Section 1.6 below in addition
to any other instruments or documents referred to herein. In
addition, the Seller shall deliver to the Buyer, bills of sale,
and such other instruments in form reasonably satisfactory to the
Buyer, as shall be required to transfer title to the Purchased
Assets, as of the Closing Date.
1.6 Payment of Purchase Price. In consideration for the
sale and transfer of the Assets by Seller to Buyer, Buyer will,
on the Closing Date, pay Denton or Lunardo, as follows (the
"Purchase Price"):
(a) An amount equal to Seven Hundred Thousand Dollars
($700,000) shall be paid by the Buyer at the Closing by bank,
cashiers' or certified checks, with payments to be made as
follows: (i) Three Hundred Fifty Thousand Dollars ($350,000) will
be paid to Denton; and (ii) Three Hundred Fifty Thousand Dollars
($350,000) will be paid to Lunardo; and
(b) Buyer shall transfer or cause to be transferred to
Sellers as of the Closing shares of the common stock of Dynasil
Corporation of America, as follows: (i) One Hundred Fifty
Thousand (150,000) of such shares shall be transferred to Denton;
and (ii) One Hundred Fifty Thousand (150,000) of such shares
shall be transferred to Lunardo.
1.7 Lease of Premises. As part of the consideration to be
paid by the Buyer to the Seller hereunder, Buyer will enter into
a Commercial Lease Agreement with Optometrics Holdings LLC,
leasing the premises at 8 Nemco Way, Ayer, Massachusetts for the
term and rental rate and upon the terms and conditions of the
Commercial Lease Agreement set forth in Exhibit B attached
hereto.
1.8 Employment Agreements. As part of the consideration to
be paid by the Buyer to the Seller hereunder, Buyer will enter
into employment agreements with Denton and Lunardo in the form
attached hereto as Exhibit D.
1.9 Allocation of Purchase Price. The allocation of the
amounts paid by Buyer to Seller in consideration of the sale and
transfer of the Purchased Assets by Seller to Buyer shall be as
set forth in Schedule 1.9 attached hereto. Buyer and Seller
agree: (a) to report the sale of the Purchased Assets for federal
and state tax purposes in accordance with the allocation so
stipulated; and (b) not to take any position inconsistent with
such allocation on any of their respective tax returns.
1.10 Post Closing Adjustment for Tax Distribution. The
parties contemplate that prior to the Closing, the Seller will
distribute to Denton and Lunardo cash amounts that are estimated
to be sufficient to enable Denton and Lunardo to pay the income
taxes on the Seller's undistributed profits for the 2004 tax year
(to the extent, but only to the extent, such amounts have not
already been distributed prior to the date hereof). Denton and
Lunardo, on the one hand, and the Buyer, on the other hand, agree
that on or before May 1, 2005, Lunardo will determine the amount
of Denton and Lunardo's tax liability on the Seller's
undistributed profits for tax year 2004 and will provide to Buyer
completed tax returns for Denton and Lunardo showing tax
liability both before and after application of the undistributed
profits. Denton and Lunardo agree that, not later than May 15,
2005, they will promptly pay to the Buyer the amount by which the
amount of cash distributed exceeded their income tax liability
for 2004 and the Seller agrees that, not later than May 15, 2005,
it will promptly pay to Denton and Lunardo the amount by which
the amount distributed was less than their income tax liability
for 2004. Denton and Lunardo, on the one hand, and the Buyer, on
the other hand, agree that on or before May 1, 2006, Lunardo will
determine the amount of Denton and Lunardo's tax liability on the
Seller's undistributed profits for 2005 through the Closing and
will provide to Buyer completed tax returns for Denton and
Lunardo showing that tax liability both before and after
application of the undistributed profits. Seller agrees that, not
later than May 15, 2006, it will promptly pay to Denton and
Lunardo an amount sufficient to enable Denton and Lunardo to pay
the income taxes on Seller's undistributed profits through the
Closing for 2005 and for that tax year.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER, DENTON AND LUNARDO
2.1 Date of Representations and Warranties. As of the date
of this Agreement and as of the Closing, the Seller makes the
representations and warranties contained in this Article II. The
representations and warranties of the Seller set forth in this
Article II shall be subject to and qualified by any information
disclosed in the corresponding section of the disclosure
schedules attached hereto and made a part hereof (collectively,
the "Disclosure Schedules") prepared by Seller and delivered to
Buyer prior to the execution and delivery of this Agreement. The
representations set forth in this Article II shall survive the
Closing and the transactions contemplated hereby.
2.2 Organization and Qualification of the Seller. The
Seller is a Limited Liability Corporation duly organized validly
existing and in good standing under the laws of the Commonwealth
of Massachusetts with full power and authority to own or lease
its properties, conduct its business in the manner and in the
place where such properties are owned or leased or such business
is currently conducted and perform and discharge all of its
obligations and liabilities, including those arising under this
Agreement. The Seller is qualified to transact business in the
Commonwealth of Massachusetts and in all other jurisdictions in
which the nature of its business as presently conducted requires
such qualification, except where the failure to qualify will not
have a material adverse effect on the Subject Business.
2.3 Binding Effect. This Agreement has been duly executed
and delivered by the Seller and constitutes the legal, valid and
binding obligation of the Seller enforceable against the Seller
in accordance with its terms.
2.4 Ownership of Assets. Immediately after the Closing, the
Buyer will own the Purchased Assets outright, as the sole owner
with the free right to the use, ownership and enjoyment of same
with good and marketable title subject to no liens, mortgages,
claims, charges or other encumbrances, except those created or
assumed by the Buyer.
2.5 Consents and Authorizations. Seller is not required to
obtain any authorization, consent or approval from, or file any
notice, report or other filing (other than a Change of Name
filing as required herein) with, any governmental or regulatory
authority or other person in connection with this Agreement or
the consummation of the transactions contemplated by this
Agreement which has not been obtained.
2.6 No Violation. Except as set forth in Schedule 2.6, the
execution, delivery and performance of this Agreement by Seller
and the consummation by Seller of the transactions contemplated
by this Agreement, will not result in or give rise to (i) any
violation of any provision of the Certificate of Organization or
Formation, Operating Agreement or any other charter,
organizational or similar document or agreement of Seller; (ii)
any default (or event which with notice or passage of time or
both would constitute a default) or acceleration of any
obligation under any indenture, trust, deed, loan agreement or
other instrument relating to or evidencing indebtedness for
monies borrowed by or credit available to Seller (provided that
the parties have cooperated in good faith to fulfill all
requirements of the loan instruments issued by Citizens,
including but not limited to, notice requirements), (iii) any
violation of any provision of any material lease, court order,
arbitration award, judgment or decree to which Seller is a party
or by which Seller, or its property is bound, (iv) a default (or
event which with notice or passage of time or both would
constitute a default) under or the acceleration of any obligation
under any material contract, agreement, instrument or obligation
relating to the Subject Business to which Seller is a party,
other than those contracts, instruments or agreements which are
not assignable or transferable. For purposes of this Section 2.6,
the parties agree that defaults that would result in a payment of
less than three percent (3%) of the Seller's current assets at
the date hereof are not "material" for purposes of subparagraph
(iv) hereof.
2.7 Financial Statements. Seller will make available a true
and correct copy of the audited financial statements of Seller as
of December 31, 2004, when available, and the unaudited financial
statements of Seller as of August 31, 2004, December 31, 2003 and
2002 (the "Financial Statements"), the latter two of which have
been reviewed by Belanger & Company, P.C., as indicated in their
report with respect thereto. Except as reflected in the notes
thereto, the Financial Statements were prepared by Seller in
accordance with generally accepted accounting principles,
consistently applied, are materially true and correct and fairly
present the financial condition of the Company as of the dates
indicated and the results of the operations for the periods then
ended. Seller will make available to Buyer and Buyer's
representatives all work papers, ledgers, journals and books of
account used in the preparation of the Financial Statements.
2.8 Undisclosed Liabilities. Except as set forth in the
Financial Statements (including the notes thereto), there are no
liabilities of the Seller, whether accrued, absolute, contingent
or otherwise, that are required to be set forth or described in
the Financial Statements in accordance with generally accepted
accounting principles. Further, there are no such liabilities
that have occurred since August 31, 2004, none of which has had a
material adverse effect on the Subject Business or the financial
condition, operating results of the Subject Business or the
Seller. As of the date hereof, there are no circumstances,
conditions, happenings, events or arrangements, contractual or
otherwise, of which Seller has actual knowledge which could
reasonably be expected to give rise to any such liabilities,
except in the normal course of the Subject Business and
consistent with its past practices.
2.9 Title to Assets. Seller has good, valid and marketable
title and owns outright all of the Assets free and clear of any
claims, liens, encumbrances or charge except as set forth in
Schedules 1.2(c) and 2.9 attached hereto.
2.10 Accounts Receivable. The accounts receivable shown in
the Financial Statements and those arising since August 31, 2004
are valid receivables that arose entirely in the ordinary course
of the Subject Business and, except to the extent of reserves or
accruals reflected on the Financial Statements that the Seller
believes are adequate and consistent with the Seller's past
practices and historical experience, are collectible in the
ordinary course of the Subject Business.
2.11 Equipment. All equipment included among the Purchased
Assets is in good operating condition and repair, subject only to
ordinary wear and tear, and, except as may require replacement in
the normal course, adequate for the current use by the Seller.
2.12 Inventory. The Inventory is in good condition and
salable in the ordinary course of business.
2.13 Adverse Changes. Since August 31, 2004, there has not
been:
(a) Any material adverse change in the financial condition
or operating results of the Seller or any damage, destruction or
deterioration, other than ordinary wear and tear, in the physical
or operating condition of any of its Assets individually or in
the aggregate that has had a material adverse effect on the
Subject Business.
(b) Any mortgage, pledge, lien or encumbrance granted or
made upon any of the Assets.
(c) Any sale, transfer or other disposition of any of the
Assets, except in the ordinary course of the Subject Business.
2.14 Litigation and Claims. Except as set forth on Schedule
2.14, there is no action, suit, proceeding or claim by any
person, any investigation by any governmental agency or
instrumentality pending or, to the knowledge of the Seller,
threatened against or involving Seller. There is no outstanding
judgment, order, writ, injunction or decree or, to the knowledge
of Seller, application, request or motion therefor, of any court,
governmental agency or arbitration tribunal in a proceeding to
which the Seller was or is a party or relating to the Subject
Business. Seller has not received any notice, and has no
knowledge, of any liability, claim, charge or assessment against
Seller or the Purchased Assets relating to or arising out of any
(a) unpaid tax or assessment; (b) employment or collective
bargaining agreement; (c) unpaid wages, salaries, overtime or
vacation pay, sick leave or any law, rule or regulation relating
to employment; (d) any employee benefit plan; (e) law, rule or
regulation relating to the environment; (f) patent, trademark,
trade secret or other intellectual property; or (g) product
warranty or product liability claims.
2.15 Leases. Seller will make available to the Buyer true
and correct copies of each lease pursuant to which real or
personal property is occupied or possessed by Seller, and each
lease pursuant to which the Seller leases real or personal
property to others, in connection with the Subject Business,
including the premises occupied by the Seller (collectively, the
"Leases"). Neither the Seller nor any other party thereto, is in
default of any material provision of any of the Leases.
2.16 Material Contracts. Seller will make available to the
Buyer true and correct copies of all contracts and commitments of
Seller relating to the Subject Business (collectively, the
"Contracts"), which involve an annual expenditure by Seller of,
or under which Seller has become absolutely or contingently
liable for, more than $5,000 (collectively, the "Material
Contracts"). Seller is not in default of, nor has Seller violated
any, material terms under any of the Material Contracts and, to
the best of Seller's knowledge, no event has occurred which, with
the passage of time or the giving of notice, or both, would
constitute a default under any Material Contract which
individually or in the aggregate would have a material adverse
effect upon the financial condition of the Seller or the Subject
Business.
2.17 Insurance Coverage. Seller has maintained in full force
and effect the insurance policies covering the Subject Business
listed on Schedule 2.17 hereto. In the opinion of the Seller,
Denton and Lunardo, those policies are adequate in amount and
coverage for the conduct of the Subject Business. All premiums
necessary to maintain such insurance policies have been paid or
accrued in full and reflected in the Financial Statements. Copies
of all such insurance policies will be made available to the
Buyer. The foregoing provision shall be subject to the terms of
Section 4.4 herein.
2.18 Compliance with Laws. Seller has received all necessary
authorizations, approvals, licenses, permits and orders of and
from all governmental and regulatory officers and bodies that are
material to the operation of the Subject Business as it is now
being conducted. Seller is in full compliance with all material
applicable federal, state or local laws, rules, regulations and
administrative orders relating to the Subject Business as it is
now conducted, including without limitation, all such laws,
rules, regulations, standards and orders relating to protection
of the environment, occupational health and safety, except where
noncompliance would not have a material adverse effect on the
Subject Business. No orders, decrees or mandates of any federal,
state or local court or regulatory agency have been entered
against Seller, and Seller has not received any citations or
notice of violation of any laws, regulations, standards or orders
relating to the environment or occupational health and safety,
any proposed penalties, or any claim or charges of unfair labor
practices, labor discrimination or other unfair labor practices
pending before any federal, state or local court or regulatory
agency which remain unresolved.
2.19 Prohibited Payments. Neither the Seller nor any member,
officer, director, or employee of the Seller has offered, paid or
agreed to pay to any person or entity, including any governmental
official, or solicited, received or agreed to receive from any
such person or entity, directly or indirectly, any money or
anything of value for the purpose or with the intent of obtaining
or maintaining the Subject Business or otherwise affecting the
Subject Business or the operations, properties or condition
(financial or otherwise) of the Seller and which is or was in
violation of any law, rule or regulation, or not properly and
correctly recorded or disclosed on the books and records of the
Seller.
2.20 Information Systems. Seller will make available to the
Buyer, all available license or other agreements regarding all
computer hardware and software programs constituting or forming a
part of Seller's management and information or operating systems
owned by or under license to Seller and used or useful in the
Subject Business (collectively, the "Information Systems"). All
of the Information Systems are in executable and useable form,
and are owned outright by Seller or available to Seller under
valid and enforceable licenses, leases or similar arrangements
with the owner thereof, which may be assignable to the Buyer at
the Closing. To the knowledge of Seller without investigation, no
portion of the Information Systems violates any United States or
foreign patent, copyright, trademarks, or trade secrets of any
person.
2.21 Full Disclosure. The representations and warranties of
Seller, Denton and Lunardo set forth in this Agreement do not
contain any material misstatement of fact or omit to state a
material fact necessary to make the statements contained therein,
in the circumstances in which they were made, not misleading.
2.22 Intellectual Property. Schedule 1(a)(iv) sets forth, to
the best of Seller's, Denton's and Lunardo's present knowledge, a
complete and correct description of all intellectual property
owned in whole or in part by Seller (and when owned in part, so
indicated in Schedule 1(a)(iv)), licensed by or to Seller, or
used by Seller in connection with the Subject Business. Seller
represents that: (i) except for royalties paid for the use of
software acquired in the ordinary course of business, no person
has a right to receive a royalty or similar payment in respect of
any intellectual property other than as indicated on Schedule
1(a)(iv); (ii) all known and available licenses granted by or to
Seller, or any other known and available agreements to which
Seller is a party, relating in whole or in part to any of the
intellectual property are listed on Schedule 1(a)(iv); (iii)
Seller's use of the intellectual property does not infringe upon
or otherwise violate the rights of any third party; (iv) no
proceedings have been instituted against or notices received by
Seller alleging that such use of its intellectual property
infringes upon or otherwise violates any rights of a third party;
and (v) except to the extent set forth in Schedule 1(a)(iv),
Seller is not, nor will it be as a result of the execution,
delivery and performance of this Agreement, in violation of any
license or agreement to use any intellectual property unless such
license or agreement is not assignable by its terms.
2.23 Employee Benefit Plans. (a) Schedule 2.23 contains a
list of all "employee pension benefit plans" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (sometimes referred to as the
"Pension Plans"), "employee welfare benefit plans" (as defined in
Section 3(1) of ERISA ), bonus, stock option, stock purchase,
deferred compensation plans or arrangements and other employee
fringe benefit plans (collectively, the "Benefit Plans")
maintained, or contributed to, by Seller for the benefit of any
present or former employees of Seller. Each Benefit Plan has been
administered in all material respects in accordance with its
terms. There are no lawsuits, actions, termination proceedings or
other proceedings pending or threatened against or involving any
Benefit Plan and there are no investigations by any governmental
entity or other claims (except claims for benefits payable in the
normal operation of the Benefit Plans) pending or threatened
against or involving any Benefit Plan or asserting any rights to
benefits under any Benefit Plan. Except as set forth in Schedule
2.23, Seller is not required to contribute to any "multi-employer
plan" (as defined in Section 4001(a)(3) of ERISA) for the benefit
of any officer or employee of Seller, or has incurred any
material withdrawal liability, within the meaning of Section 4201
of ERISA , with respect to any such multi-employer plan, which
liability has not been fully paid as of the date hereof.
2.24 Tax Matters. (a) All Tax Returns required to be filed
by or with respect to Seller have been duly and timely filed. All
such Tax Returns are true, correct and complete and all Taxes
shown as due and payable by or with respect to Seller on such Tax
Returns have been paid in full on a timely basis except as set
forth in Section 1.10. The charges, accruals, and reserves for
Taxes due, or accrued but not yet due, relating to the income,
properties or operations of Seller as reflected on the Financial
Statements and the books of Seller are and will be adequate to
cover such Taxes. All Taxes that Seller is required by law to
withhold or collect have been duly withheld or collected, and
have been timely paid over to the appropriate governmental
authorities to the extent due and payable. There are no
outstanding agreements or waivers extending the statutory period
of limitation applicable to any Tax Returns required to be filed
by or with respect to Seller, and no extensions of time within
which to file a Tax Return have been requested for any Tax Return
that has not yet been filed. Seller will not be required to
include any adjustment for any Tax period or portion thereof that
ends after the Closing Date under Section 481(c) of the Internal
Revenue Code (the "Code") (or any similar provision of state,
local or foreign law) as a result of a change in method of
accounting for a Tax period ending prior to the Closing Date or
pursuant to the provisions of any agreement entered into with any
taxing authority with regard to the Tax liability of Seller for
any Tax period ending prior to the Closing Date. There are no
liens for any Tax on the Assets except for liens for Taxes not
yet due and payable or liens for Taxes that are being contested
in appropriate proceedings and for which adequate reserves have
been made as listed in Schedule 2.24 hereto. For purposes of this
Agreement, "Tax" (including with correlative meaning the terms
"Taxes" and "Taxable") means (a) all foreign, federal, state,
local and other taxes, including all income, gross receipts,
sales, use, ad valorem, value-added, intangible, unitary,
transfer, franchise, license, payroll, employment, estimated,
excise, environmental, stamp, occupation, premium, property,
prohibited transactions, windfall or excess profits, customs,
duties or other taxes, levies, fees, assessments or charges of
any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts with respect
thereto, (b) any Liability for payment of amounts described in
clause (a) as a result of transferee liability, of being a member
of an affiliated, consolidated, combined or unitary group for any
period, or otherwise through operation of law, and (c) any
liability for payment of amounts described in clause (a) or (b)
as a result of any tax sharing, tax indemnity or tax allocation
agreement or any other express or implied agreement to indemnify
any other Person for Taxes and "Tax Return" means any return
(including any information return), report, statement, schedule,
notice, form, estimate, or declaration of estimated tax relating
to or required to be filed with any governmental authority in
connection with the determination, assessment, collection or
payment of any Tax.
2.25 Environmental Matters. Except as set forth on Schedule
2.25 or as described in the environmental report dated May 6,
2004, a copy of which the Seller will provide to the Buyer, no
underground storage tanks and no amount of any substance that has
been designated by any governmental authority or applicable law
to be radioactive, toxic, hazardous or otherwise a danger to
health or the environment, including PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous
substances pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or defined
as a hazardous waste pursuant to the Resource Conservation and
Recovery Act of 1976, as amended, and the regulations promulgated
pursuant to said laws (other than customary office and janitorial
supplies that are properly and safely maintained) (a ''Hazardous
Material''), currently exist on any property owned, leased or
operated by Seller or are present in amounts that either violate
or reasonably could be expected to give rise to liability under
applicable laws in, on or under any property, including the land
and the improvements, ground water and surface water thereof,
that Seller currently owns, occupies or leases. To the best of
the Seller's, Denton's and Lunardo's knowledge, Seller has not
transported, handled, stored, used, manufactured, disposed of or
released, or exposed its employees or others to, Hazardous
Materials in violation of any law in effect prior to or as of the
Closing Date, and Seller has not disposed of, transported,
stored, handled, sold, or manufactured any product containing a
Hazardous Material (collectively, ''Hazardous Material
Activities'') in violation of any rule, regulation, treaty or
statute promulgated by any governmental authority in effect prior
to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity. Seller
currently holds in full force and effect all material requisite
environmental approvals, permits, licenses, clearances and
consents (collectively, the "Environmental Permits") for the
conduct of the Hazardous Material Activities and its other
activities as such activities are currently being conducted.
Seller, to the best of its, Denton's and Lunardo's knowledge: (A)
is in compliance in all material respects with all terms and
conditions of the Environmental Permits and (B) is in compliance
in all material respects with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the laws of
all governmental authorities relating to pollution or protection
of the environment or human health or safety or contained in any
regulation, code, plan, order, decree, judgment, notice or demand
letter issued, entered, promulgated or approved thereunder. No
action, suit or proceeding is pending or threatened concerning
any Environmental Permit, Hazardous Material or any Hazardous
Material Activity, and Seller has not received any notice that it
is responsible for or potentially responsible for any cleanup or
for paying for any clean up of any Hazardous Material.
2.26 Customers and Suppliers. Schedule 2.26 sets forth lists
of Seller's top ten customers and suppliers (in each case, in
dollar volume) for the past two fiscal years. No entity listed on
Schedule 2.26 as a top ten customer or supplier for the Seller's
most recent fiscal year has terminated, or has indicated that it
will terminate its relationship with the Seller or altered, or
has indicated that it will alter, such relationship.
2.27 Employment. Schedule 2.27 sets forth the names, titles
and current rates of compensation (whether in the form of
salaries, bonuses, commissions or other supplemental compensation
now or hereafter payable) of all employees of the Seller. The
Seller will make available to the Buyer copies of any employment,
severance or other compensation contracts and agreements relating
to those employees. The Seller will also make available to the
Buyer true, correct and complete copies of all written personnel
policies, rules or procedures applicable to those employees.
Further, except as set forth in Schedule 2.27, (i) Seller is not
aware of any violation of any applicable laws respecting
employment and employment practices, terms and conditions of
employment, wages, hours of work and occupational safety and
health, nor has Seller ever been; (ii) no charges with respect to
or relating to Seller are pending before the Equal Employment
Opportunity Commission or any other agency responsible for the
prevention of unlawful employment practices; (iii) the Seller has
received no notice of the intent of any federal, state or local
agency responsible for the enforcement of labor or employment
laws to conduct an investigation with respect to or relating to
Seller and no such investigation is in progress; and (iv) no
complaints, lawsuits or other proceedings are pending or
threatened in any forum by or on behalf of any present or former
employee of Seller, any applicant for employment or classes of
the foregoing alleging breach of any express or implied contract
of employment, any law or regulation governing employment or the
termination thereof or other discriminatory, wrongful or tortuous
conduct in connection with the employment relationship.
2.28 Certain Transactions. Except as set forth in Schedule
2.28, or with regard to occasional advances made against wages or
salaries earned, there are no transactions between Seller and any
of its members, directors, officers, employees, or the family
members or affiliates of any of them.
2.29 [Intentionally deleted]
2.30 Location of Purchased Assets. Except as set forth on
Schedule 2.30, all of the Purchased Assets are located and used
at the Seller's facility in Ayer, Massachusetts, a leased storage
facility in Ayer, Massachusetts or at banks, brokerage firms or
other financial, depositary or similar institutions under the
Seller's name and control.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
3.1 Date of Representations and Warranties. As of the date
of this Agreement and as of the Closing, the Buyer makes the
representations and warranties contained in this Article III.
3.2 Organization and Qualification of the Buyer. The Buyer
is a corporation duly organized validly existing and in good
standing under the laws of New Jersey with full power and
authority to own or lease its properties and conduct its business
in the manner and in the place where such properties are owned or
leased or such business is conducted.
3.3 Binding Effect. This Agreement has been duly executed
and delivered by the Buyer and constitutes the legal, valid and
binding obligation of the Buyer enforceable against the Buyer in
accordance with its terms.
3.4 Government Consent, etc. No consent, approval or
authorization of or registration, designation, declaration or
filing with any governmental authority on the part of the Buyer
is required in connection with the purchase of the Purchased
Assets pursuant to this Agreement or the consummation of any
other transaction contemplated hereby.
ARTICLE IV
COVENANTS OF THE SELLER
Between the date hereof and the Closing, the Seller shall
comply with the following covenants:
4.1 Regular Course of Business. The Seller shall carry on
its business in good faith and in the ordinary course
substantially in the same manner as heretofore conducted, and
will use commercially reasonable efforts to preserve its business
organization, preserve the goodwill of the Subject Business and
assets, keep available the services of its present officers,
agents and employees and preserve the Seller's present
relationships with persons having dealings with it.
4.2 Prohibited Activities. The Seller shall not, without
the Buyer's prior written consent: (a) issue, sell or deliver, or
agree to issue, sell or deliver, any equity securities of the
Seller or other security of the Seller, grant or issue or agree
to grant or issue any subscription, option, warrant or other
right calling for the issuance thereof or declare or pay any
dividend or other distribution on any of them; (b) purchase any
shares of capital stock or any other securities of any
corporation; (c) make any change in any employee benefit plan, or
amend, alter or enter into any compensation arrangement with any
officer or employee of the Seller other than in the ordinary
course of business (excepting therefrom special 2004 bonus
payments aggregating not more than $20,000 for senior management
personnel of the Subject Business which shall be implemented
prior to the Closing Date); (d) sell, mortgage, pledge or
otherwise dispose of or encumber any asset of the Seller or
cancel any debt or claim due the Seller other than in the
ordinary course of business; (e) merge or consolidate with any
other business entity or acquire control of any other business
entity or business activity or take any steps incident thereto or
in furtherance thereof; (f) make any material alteration in the
manner of keeping its books, accounts or records or in the
accounting practices therein reflected, except as required by
law; (g) effect any change in or agree to change the certificate
or articles of organization or formation, operating agreement or
any other similar, constituent document or agreement of the
Seller; (h) make any capital expenditure or enter into any lease
for capital equipment or any commitment to do either other than
in the ordinary course of business in excess of $25,000 for any
single purchase; (i) fail to timely pay all of its current
liabilities and obligations after the date hereof and prior to
Closing; (j) change its accounting methods or practices; (k)
enter into any contract or commitment, incur any liability or
engage in any transaction relating to the Subject Business
requiring an expenditure in excess of $25,000, other than in the
ordinary course of business and consistent with past practices,
or which is reasonably necessary for the consummation of the
transactions contemplated by this Agreement; or (l) make any
distributions to members or employees, consultants, advisors or
agents other than historical salaries, bonuses other than in
accordance with its past practices and employee salary or benefit
plans (including the senior management special bonus referred to
above), and distributions to pay estimated taxes in respect of
undistributed 2004 profits of the Seller.
4.3 Borrowing. The Seller shall not incur, assume or
guaranty any indebtedness or other obligation except for existing
commercial indebtedness owed to Citizens Bank and normal amounts
of trade indebtedness other than as permitted by Section 4.2(h).
4.4 Insurance. The Seller shall maintain in full force and
effect all its present insurance policies as listed on Schedule
2.17 attached hereto (the "Policies"), and shall not take any
action which would enable the insurers thereunder to avoid
liabilities for claims arising out of occurrences prior to the
date of Closing. Prior to the Closing, and at Seller's sole
expense, but not in excess of $12,900 in premium expense, Seller
may purchase insurance covering any liability of the Seller,
Denton and/or Lunardo resulting from claims of any predecessor in
interest to the Seller, which insurance, if purchased, shall be
included in the Policies referenced herein.
4.5 Tax Returns. The Seller shall duly and timely file or
cause to be filed all tax returns required to be filed for all
taxable periods ending on or prior to the Closing. The Seller
shall promptly pay all taxes and governmental charges lawfully
levied or assessed upon it or its properties for all periods
ending on or prior to the Closing, unless contesting the same in
good faith and having established reasonable reserves therefor.
4.6 Compliance with the Laws. The Seller shall duly observe
and conform to: (a) the lawful requirements of any governmental
authorities relating to any of its properties or to the operation
and conduct of its business; and (b) covenants, terms, and
conditions upon or under which any of its properties are held.
4.7 Further Assurances. The Seller agrees to do or to cause
to be done such further acts and things as may be reasonably
required to carry into effect the purposes of this Agreement or
to better assure and confirm in Buyer at Closing full title to
the Purchased Assets to be transferred hereunder.
4.8 Claims, etc. The Seller has notified or will notify the
Buyer promptly in writing of any claim, lawsuit, action or
proceeding that may be asserted, commenced or threatened (where
Seller has knowledge of such threat and has reason to believe
that such threat is likely to result in any such action or
proceeding) against Seller and affecting in any material respect
the Subject Business, or challenging or seeking to enjoin or
restrict, or which could be expected to prevent or restrict, the
consummation of the transactions contemplated by this Agreement.
4.9 Access to Information. From and after the date of this
Agreement, Seller shall give Buyer, its counsel, accountants and
other representatives, full access during Seller's normal
business hours, subject to reasonable security measures and
reasonable prior notice, to all of the Assets and all books,
records, agreements and commitments relating to the Subject
Business, and shall furnish or cause to be furnished to Buyer's
representatives during such period all such information
concerning the Subject Business as the Buyer may reasonably
request; provided that the Buyer shall hold all such information
in confidence (except that the Buyer may disclose such documents
and information as required by law).
4.10 Action and Consents. The Seller will take all necessary
limited liability company actions and use its best efforts to
obtain all governmental and other third party consents,
approvals, novations, assignments and waivers required to be
obtained by Seller for the consummation of the transactions
contemplated in this Agreement and the continuation of the
Subject Business for a reasonable time period following the
Closing. In furtherance of the foregoing, the Buyer and the
Seller will jointly cooperate and work together to obtain the
foregoing.
4.11 Exclusivity. Until the earlier to occur of the Closing
or the termination of this Agreement, none of the Seller, Denton
or Lunardo will (i) solicit, initiate, or encourage the
submission of any proposal or offer from any person, firm or
entity relating to the acquisition of any capital stock or other
voting securities, or any substantial portion of the assets, of
any of the Seller (including any acquisition structured as a
merger, consolidation, or share exchange), (ii) participate in
any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any
person, firm or entity to do or seek any of the foregoing or
(iii) accept in whole or in part any such proposal or offer.
ARTICLE V
COVENANTS OF THE BUYER
5.1 Employees. Prior to Closing, and in furtherance of its
covenant set forth in Section 5.2, the Buyer shall offer
employment, effective as of the completion of Closing, to all
active employees of Seller (collectively, the "Employees") at
substantially similar compensation and benefit levels as the
Employees received as employees of Seller, with credit for term
of service while employed by Seller. Seller shall not be liable
for any amount of vacation pay for an Employee that is equal to
or less than the amount reserved or accrued therefor by the
Seller in the Financial Statements, but shall be liable for all
such amounts that exceed such accruals or reserves.
5.2 Standstill Period. From the Closing Date and for a
period of six (6) months thereafter (the "Standstill Period"),
and except in the event of a sale of all or substantially all of
the assets or controlling interest of Buyer, Buyer agrees that it
shall operate the Subject Business in the ordinary course thereof
and that without the mutual agreement of Denton and Lunardo, it
shall not, nor shall it permit any other entity or individual
under its control, directly or indirectly, to: (i) sell all or
any substantial part of the assets of the Subject Business other
than products of the Subject Business sold in the ordinary
course; (ii) make any reductions in personnel other than changes
caused by normal attrition or loss of business; (iii) reduce any
of the personnel benefits or employee benefit plans currently
offered by Seller, or (iv) reduce any wages, salaries, bonus
programs or compensation plans or manner or method of payment of
compensation to employees of the Subject Business. Further,
during the Standstill Period, without the mutual agreement of
Denton and Lunardo, Buyer agrees not to substantively change the
manner, method or means of producing the products of the Subject
Business or the raw materials, sources of raw materials, or
vendors or suppliers used in the production thereof. The
foregoing notwithstanding, Buyer may use alternate sources of raw
materials, vendors or suppliers if the sources, vendors or
suppliers used by the Subject Business are unable to deliver the
raw materials in a timely manner or in the event Buyer may obtain
raw materials of a better quality or at better prices, terms or
conditions than those available to the Subject Business. The
obligations set forth in this Section 5.2 shall survive the
Closing.
5.3 [Intentionally deleted]
5.4 Further Assurances. The Buyer agrees to do or to cause
to be done such further acts and things as may be reasonably
required to carry into effect the purposes of this Agreement.
5.5 Action and Consents. The Buyer will take all necessary
corporate actions and use its best efforts to obtain all
governmental and other third party consents, approvals,
novations, assignments and waivers required to be obtained by
Buyer for the consummation of the transactions contemplated in
this Agreement. In furtherance of the foregoing, the Buyer and
the Seller will jointly cooperate and work together to obtain the
foregoing.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE BUYER
The obligations of the Buyer under this Agreement to
consummate the sale of the Purchased Assets and the other
transactions contemplated hereby shall be subject to the
satisfaction, on or before the Closing, of the following
conditions:
6.1 Representations and Warranties. The representations and
warranties contained in Article II hereof shall be true and
accurate in all material respects as of the date when made and on
and as of the date of Closing.
6.2 Performance of Covenants. The Seller, Denton and
Lunardo shall have performed and complied in all material
respects with each and every covenant, agreement and condition
required by this Agreement to be performed or complied with by
any of them prior to or on the Closing Date.
6.3 Instruments of Transfer. The Seller shall have executed
and delivered to the Buyer (i) a General Bill of Sale and
Assignment in substantially the form of Exhibit A attached
hereto, and (ii) such other bills of sale, assignments and other
instruments of transfer and assignment as may be reasonably
requested by the Buyer in accordance with the provisions hereof,
transferring to the Buyer all of the Seller's right, title and
interest in and to the Purchased Assets to be transferred, sold,
assigned and conveyed by the Seller to the Buyer pursuant to the
provisions of this Agreement.
6.4 Absence of Changes. There shall not have been any
material adverse change or impairment in the assets, financial
condition or business of the Seller or the occurrence of any
event or advent of any condition that could reasonably be
expected to materially impair the ability of the Buyer to conduct
the Subject Business on the same basis as it has been conducted
prior to the date hereof between the date hereof and the Closing.
6.5 No Legal Action. Other than as set forth in Schedule
2.14, no action, suit, investigation or other proceeding relating
to the transactions contemplated hereby shall have been
instituted or threatened before any court or by any governmental
body which seeks to restrain, enjoin or modify in any material
respect the transactions contemplated hereby, or which seeks
material damages or other material relief in connection
therewith, and no law, rule or regulation shall have been
enacted, issued or promulgated which creates a substantial risk
that such transactions may be restrained, modified in a material
respect, or adjudged illegal or invalid for any reason.
6.6 Certificates. Seller, Denton and Lunardo shall have
delivered to the Buyer a certificate or certificates, dated as of
the Closing, to the effect that their representations and
warranties in this Agreement are true and correct in all material
respects as of the Closing Date, all of the conditions set forth
in this Agreement to be fulfilled by them have been fulfilled and
such other matters as the Buyer may reasonably request.
6.7 Financing. The Buyer shall have obtained or had made
available to it financing in an amount and on terms deemed
acceptable by it in its sole judgment to enable it to pay the
Purchase Price, enable it to fulfill its other obligations under
this Agreement and fund its anticipated working capital
requirements for the Subject Business for a reasonable period
after Closing. In the event the Buyer has been unable to obtain
or had made available to it such financing, and as a result
thereof, Buyer fails to consummate the purchase of the Purchased
Assets hereunder, Seller shall retain, as liquidated damages and
not as a penalty, the Deposit which shall be non-refundable and
non-returnable.
6.8 Due Diligence, Documents and Actions Satisfactory. The
Buyer shall have completed or obtained to its sole satisfaction
all items of due diligence it shall deem necessary or
appropriate. Further, any and all opinions, certificates and
other documents delivered to Buyer by Seller at or prior to the
Closing and all actions to be taken by the Seller, Denton or
Lunardo in connection with consummation of the transactions
contemplated hereby will be reasonably satisfactory in form and
substance to the Buyer. In the event Buyer fails to consummate
the purchase of the Purchased Assets hereunder because Buyer's
due diligence investigation reveals a past practice on the part
of Sellers that is illegal or a fact or circumstance that would
be materially adverse and would cause a reasonable person in the
position of Buyer to terminate this Agreement, then the Deposit,
together with any interest earned thereon, will be refunded by
Denton and Lunardo to Buyer. Otherwise, the Deposit, together
with any interest earned thereon, shall be retained by Denton and
Lunardo as liquidated damages and not as a penalty.
6.9 Permits, Licenses, Consents and Approvals. The Seller
shall have received and delivered to the Seller all permits,
licenses, consents or approvals from government authorities or
other third parties required to consummate the transactions
contemplated by this Agreement.
6.10 Execution of Employment Agreements. Denton and Lunardo
shall have executed and delivered to the Buyer the Employment
Agreements referenced in Section 1.7 hereof.
6.11 No Increase in Assumed Liabilities. Without the Buyer's
consent, the Assumed Liabilities (excluding all 2004 federal,
state and local taxes, taxes on undistributed profits, net of any
previously distributed amounts) shall not exceed the aggregate
amount shown on Schedule 1.2(a) hereto by more than twenty
percent (20%).
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE SELLER
The obligations of the Seller under this Agreement to
consummate the sale of the Purchased Assets and the other
transactions contemplated hereby shall be subject to the
satisfaction, on or before the Closing, of the following
conditions:
7.1 Representations and Warranties. The representations and
warranties of the Buyer contained in Article III hereof shall be
true and accurate in all material respects as of the date when
made and on the date of Closing.
7.2 Board Approval. The Buyer shall have received the
approval of its Board of Directors to the consummation of the
transactions contemplated hereby.
7.3 Performance of Covenants. The Buyer shall have
performed and complied in all material respects with each and
every covenant, agreement and condition required by this
Agreement to be performed or complied with by it prior to or on
the Closing Date.
7.4 Assumption Agreement. The Buyer shall have executed and
delivered to the Seller an instrument of assumption substantially
in the form of Exhibit C attached hereto pursuant to which the
Seller shall assume the Assumed Liabilities (the "Instrument of
Assumption");
7.5 Payment of Purchase Price. The Buyer shall have paid
the Purchase Price due at the Closing, including delivery of the
cash portion thereof and delivery of the certificates evidencing
the transfer of the shares of common stock of Dynasil Corporation
of America to Denton and Lunardo as provided herein.
7.6 Execution of Lease and Employment Agreements. The
Buyer shall have executed and delivered to Optometrics Holdings
LLC the Commercial Lease Agreement referenced in Section 1.6
hereof. The Buyer shall also have executed and delivered to
Denton and Lunardo the Employment Agreements referenced in
Section 1.7 hereof.
7.7 Certificates. Buyer shall have delivered to the Seller
a certificate or certificates, dated as of the Closing, to the
effect that its representations and warranties in this Agreement
are true and correct in all material respects as of the Closing
Date, all of the conditions set forth in this Agreement to be
fulfilled by Seller has been fulfilled and such other matters as
the Buyer may reasonably request.
7.8 Release of Denton and Lunardo as Guarantors. Unless
waived in their sole discretion, Denton and Lunardo shall have
(a) been released by Citizens from their personal guarantees of
the Seller's indebtedness to Citizens or (b) received such
indemnity against liabilities relating to or arising under such
indebtedness as they shall reasonably request.
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
8.1 Survival of Warranties. All representations,
warranties, agreements, covenants, and obligations set forth
herein or in any schedule, certificate or financial statement
delivered incident to the transactions contemplated hereby are
material, shall be deemed to have been relied upon, shall survive
the Closing, and shall not merge into the performance of any
obligations hereunder, for a period of two years from Closing.
8.2 Indemnification by Seller, Denton and Lunardo. Each of
the Seller, Denton and Lunardo jointly agree to indemnify the
Buyer with respect to any and all claims, losses, liabilities,
costs and expenses (including attorney's fees and reimbursable
expenses) which may be reasonably incurred by the Buyer arising
out of the material inaccuracy of any representation or breach of
warranty by any of them herein or in any document, instrument or
certificate delivered to the Buyer pursuant to Sections 6.3 or
6.6 or the breach in any material respect by any of them of any
covenant or agreement made by them in this Agreement or the
Schedules hereto. The amount to be paid by way of indemnity in
respect of any such claims, losses, liabilities, costs and
expenses shall be such amount as may be necessary to compensate
the Buyer for any diminution in the value of or increase in the
cost of acquiring, owning, operating or dealing with the
Purchased Assets to the extent it arises or results solely from
such inaccuracy or breach.
8.3 Indemnification by the Buyer. The Buyer agrees to
indemnify the Seller with respect to any and all claims, losses,
liabilities, costs, and expenses (including attorneys' fees and
reimbursable expenses) which may be reasonably incurred by the
Seller arising out of the inaccuracy of any representations or
breach of warranties of the Buyer or the breach by the Buyer of
any of its covenants or agreements made in this Agreement or any
document or instrument delivered by it in connection with the
transactions contemplated hereby.
8.4 Limitation on Indemnification; Offset. Notwithstanding
the foregoing, the right of any indemnitee to indemnification
hereunder shall not apply except to the extent that all such
claims exceed $50,000 in the aggregate; provided however, that
the maximum aggregate liability hereunder for all claims against
any indemnitor shall not exceed an aggregate of Nine Hundred
Thousand Dollars ($900,000). As regards the indemnification
obligations hereunder of the Seller, Denton and Lunardo, the
first Seven Hundred Thousand Dollars ($700,000) of such
obligation shall be payable jointly by Denton and Lunardo,
provided, however, that, at its sole option, the Buyer may reduce
the monthly amounts payable by it as rent under the Commercial
Lease Agreement referred to in Section 1.7 by an amount not to
exceed Five Thousand Dollars ($5,000) per month as a set-off
against amounts otherwise payable jointly by Denton and Lunardo
in respect of such aggregate $700,000 indemnification obligation.
Further, as regards the indemnification obligation of the Seller,
Denton and Lunardo for any amounts in excess of $700,000 (but not
in excess of an aggregate of $900,000), those amounts shall not
be payable jointly by Denton and Lunardo, but shall be
recoverable by the Buyer only by reducing the monthly amounts
payable by it as rent under the Commercial Lease Agreement
referred to in Section 1.7 by an amount not to exceed Five
Thousand Dollars ($5,000) per month. For purposes of
clarification, in no event shall the reduction in monthly amounts
payable to Denton and Lunardo as rent under the Commercial Lease
Agreement pursuant to this Section 8.4 exceed Five Thousand
Dollars ($5,000) per month in the aggregate.
8.4.1 In the event of any claim by a predecessor in
interest to the Seller arising out of acts or
circumstances covered by the insurance referred to in
Paragraph 4.4 herein, to the extent any insurance
proceeds are available to Seller, Denton or Lunardo
after payment of any and all losses or liabilities
incurred by Seller, Denton or Lunardo, the Seller,
Denton or Lunardo shall pay and assign any such excess
insurance proceeds to Buyer.
ARTICLE IX
TERMINATION
9.1 Termination of Agreement. Unless the Closing Date is
extended by mutual written agreement of the parties, this
Agreement will automatically terminate if the Closing does not
occur by the close of business on March 31, 2005. Further, the
Buyer and the Seller may terminate this Agreement as provided
below:
(a) the Buyer and the Seller may terminate this Agreement
by mutual written consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving
written notice to the Seller on or before the Closing Date if the
Buyer is not in its sole discretion satisfied with the results of
its continuing business, legal, and accounting due diligence
regarding the Seller.
(c) the Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the Closing (i)
in the event the Seller has breached any representation,
warranty, or covenant contained in this Agreement in any material
respect, the Buyer has notified the Seller of the breach, and the
breach has continued without cure for a period of 30 days after
the notice of breach or (ii) if the Closing shall not have
occurred on or before March 31, 2005 by reason of the failure of
any condition precedent under Article VI hereof (unless the
failure results primarily from the Buyer itself breaching any
representation, warranty, or covenant contained in this
Agreement);
(d) the Seller may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing (i)
in the event the Buyer has breached any representation, warranty,
or covenant contained in this Agreement in any material respect,
the Seller has notified the Buyer of the breach, and the breach
has continued without cure for a period of 30 days after the
notice of breach or (ii) if the Closing shall not have occurred
on or before March 31, 2005, by reason of the failure of any
condition precedent under Article VII hereof (unless the failure
results primarily from the Seller, Denton or Lunardo breaching
any representation, warranty, or covenant contained in this
Agreement); and
(e) the Seller may terminate this Agreement by written
notice to the Buyer upon the occurrence of any of the following
events: (1) any voluntary petition in bankruptcy or any petition
for similar relief is filed by the Buyer; (2) any involuntary
petition in bankruptcy is filed against the Buyer and such
petition has not been dismissed within sixty (60) days from the
filing thereof; (3) a receiver is appointed for the Buyer or any
material portion of the property of the Buyer; (4) the Buyer
makes an assignment for the benefit of creditors; (5) the Buyer
admits in writing its inability to meet its debts as they become
due.
9.2 Effect of Termination. If any Party terminates this
Agreement pursuant to Section 9.1 above, all rights and
obligations of the Parties hereunder shall terminate without any
liability of any party to any other party (except for disposition
of the Deposit in accordance with the terms and conditions set
forth herein and the liability, if any, of any party then in
breach).
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Change of Name. Promptly after the Closing, Seller
shall change its name to a name, which is not confusingly similar
to "Optometrics".
10.2 Notices. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given
if delivered in hand or mailed, postage prepaid, by certified or
registered mail or sent by Federal Express or comparable courier
to the parties at their addresses set forth in the preamble
hereto or to such other address of which any party may by
certified mail notify the other. Notwithstanding the foregoing,
copies of all of the foregoing sent or given to the Seller,
Denton or Lunardo also shall be sent or given to their counsel:
Charles Verbisky, Esq., 425 Winter Street, Walpole, MA. 02081,
telephone: 617-872-4215, facsimile: 508-660-6775 and
email:cverbisky@aol.com and copies of all of the foregoing sent
or given to the Buyer also shall be sent or given to its counsel:
Gerald Chalphin, Esq., 427 E. Mt. Pleasant Avenue, Philadelphia,
PA 19119, telephone: 215-248-1113, facsimile: 215-248-1113 and
email: gchalphin@verizon.net.
10.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Massachusetts excluding its conflict of laws provisions.
Exclusive venue and jurisdiction for all purposes hereunder shall
be the state and/or federal courts located in the Commonwealth of
Massachusetts and the parties hereto hereby consent to such
exclusive venue and jurisdiction and irrevocably waive their
right to argue forum non conveniens with respect thereto.
10.4 Entire Agreement. This Agreement, including the
schedules referred to herein, together with the Commercial Lease
Agreement and Employment Agreements are complete and all
promises, representations, understandings, warranties and
agreements with respect to the subject matter hereof, and all
inducement to the making of this Agreement relied upon by any
party hereto, have been expressed herein and therein. This
Agreement may not be modified or amended except in writing signed
by the parties hereto.
10.5 Broker or Finder. Seller, Denton, Lunardo and Buyer
warrant and represent to each other that no person or persons
assisted the negotiation of this Agreement in the capacity of
broker or agent or finder. Seller, Denton, Lunardo and Buyer
agree to indemnify and hold each other harmless from and against
any loss, damage, cost or expense, including reasonable
attorneys' fees and expenses incurred by either party as a result
of the other party's breach of the foregoing warranty and
representation.
10.6 Expenses. Each of the parties hereto will bear its own
legal fees, consulting or professional fees and other expenses
incurred in connection with this Agreement or any transaction
contemplated by this Agreement.
10.7 Binding Agreement and Assignment. This Agreement and
all of the provisions hereof shall be binding upon and inure to
the benefit to the parties hereto and their respective heirs,
successors and assigns, but, except to the extent permitted by
the next sentence, neither this Agreement nor any of the rights,
interests and obligations hereunder shall be assigned by either
of the parties hereto without the prior written consent of the
other. Without limiting the generality of the foregoing, the
Buyer may assign all or any part of its rights and delegate all
or any part of its obligations under this Agreement to its wholly-
owned subsidiary, Optometrics Corporation; provided, however,
that notwithstanding any such assignment or delegation, the Buyer
shall nonetheless be liable for the full and faithful performance
of such obligations.
Executed under seal as of the date and year first above
written.
SELLER: BUYER:
OPTOMETRICS LLC DYNASIL CORPORATION OF AMERICA
By: /s/ Frank Denton
Frank Denton, Member By: /s/ Craig T. Dunham
Craig T. Dunham
By: /s/ Laura Lunardo President and Chief
Laura Lunardo, Member Executive Officer
/s/ Frank Denton
Frank Denton, Individually
/s/ Laura Lunardo
Laura Lunardo, Individually
SCHEDULES
Schedule 1(a)(ii) Inventory
Schedule 1(a)(iii) Trademarks, Tradenames
Schedule 1(a)(iv) Intellectual Property
Schedule 1(a)(v) Personal Property
Schedule 1(a)(vi) Customer List, etc.
Schedule 1(a)(vii) Customer Contracts
Schedule 1(a)(ix) Prepaid Expenses
Schedule 1(a)(x) Assumed Agreements
Schedule 1(a)(xi) Receivables
Schedule 1(a)(xii) Bank and Securities Accounts, etc.
Schedule 1(a)(xiii) Other Assets
Schedule 1.2(a) Assumed Liabilities
Schedule 1.2(c) Capital Lease/Purchase Agreements
Schedule 1.9 Allocation of Purchase Price
Schedule 2.6 Exceptions to No Violations
Schedule 2.9 Exceptions to Good Title
Schedule 2.14 Litigation and Claims
Schedule 2.17 Insurance Policies
Schedule 2.23 Employee Benefit Plans
Schedule 2.24 Tax Liens, Reserves
Schedule 2.25 Environmental Matters
Schedule 2.26 Customers and Suppliers
Schedule 2.27 Employment
Schedule 2.28 Related Party Transactions
Schedule 2.30 Location of Purchased Assets
EXHIBITS
Exhibit A General Bill of Sale and Assignment
Exhibit B Form of Commercial Lease Agreement
Exhibit C Instrument of Assumption
Exhibit D Form of Employment Agreements