ASSET PURCHASE AGREEMENT
BY AND AMONG
DYNASIL CORPORATION OF AMERICA
RMD INSTRUMENTS CORP.,
RMD INSTRUMENTS, LLC
AND
▇▇▇▇▇▇ ▇▇▇▇▇▇ 1988 FAMILY TRUST
▇▇▇▇▇ ▇▇▇▇ AND ▇▇▇▇▇ ▇▇▇▇, HUSBAND AND WIFE
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
JULY 1, 2008
TABLE OF CONTENTS
Page
SECTION 1. PURCHASE OF THE PURCHASED ASSETS AND PURCHASE PRICE 1
1.1 PURCHASE OF ASSETS AND PURCHASE PRICE. 1
1.2 LIABILITIES. 2
1.3 EXCLUDED ASSETS. 2
1.4 PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE. 2
SECTION 2. THE CLOSING. 4
2.1 THE CLOSING. 4
SECTION 3.REPRESENTATIONS AND WARRANTIES OF SELLER AND PRINCIPAL
MEMBERS. 4
3.1 DUE ORGANIZATION; SUBSIDIARIES. 4
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT. 4
3.3 NO CONFLICT. 5
3.4 LITIGATION. 5
3.5 PURCHASED ASSETS. 5
3.6 UNDISCLOSED LIABILITIES. 5
3.7 NO MATERIAL ADVERSE CHANGE. 6
3.8 TAX MATTERS. 6
3.9 CONTRACTS. 6
3.10 ERISA. 8
3.11 EMPLOYEES. 9
3.12 ENVIRONMENTAL MATTERS. 9
3.13 LICENSES AND PERMITS. 10
3.14 COMPLIANCE WITH LAWS. 10
3.15 PROPRIETARY ASSETS. 10
3.16 FINDER'S FEE. 12
3.17 CUSTOMERS, SUPPLIERS AND SERVICE PROVIDERS. 12
3.18 DISCLOSURE. 12
3.19 NO DISCLOSURE. 12
3.20 DEBTS. 12
3.21 INVESTIGATION. 13
3.22 SCHEDULES. 13
3.23 RELIANCE. 13
SECTION 3A. REPRESENTATIONS AND WARRANTIES OF THE MEMBERS 13
3A.1 AUTHORIZATION; TITLE 13
SECTION 4.REPRESENTATIONS AND WARRANTIES OF BUYER AND ACQUISITION
SUB 13
4.1 DUE ORGANIZATION; SUBSIDIARIES. 14
4.2 AUTHORITY; BINDING NATURE OF AGREEMENT. 14
4.3 CAPITALIZATION, ETC. 14
4.4 NON-CONTRAVENTION; CONSENTS. 15
4.5 SEC FILINGS; FINANCIAL STATEMENTS. 16
4.6 ABSENCE OF CHANGES. 17
4.7 CONTRACTS. 19
4.8 LIABILITIES. 19
4.9 LEGAL PROCEEDINGS; ORDERS. 19
4.10 FOREIGN CORRUPT PRACTICES ACT. 20
4.11 FINANCIAL ADVISOR. 20
4.12 PROPRIETARY ASSETS. 20
SECTION 5. COVENANTS OF SELLER AND PRINCIPAL MEMBERS 21
5.1 FURTHER ASSURANCES. 22
5.2 POST-CLOSING ASSURANCES. 22
5.3 EMPLOYEES. 22
SECTION 6. RETAINED EARNING RECAPTURE 22
SECTION 7. CONDITIONS PRECEDENT TO THE CLOSING 23
7.1 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS TO
COMPLETE THE CLOSING. 23
7.2 CONDITIONS PRECEDENT TO SELLER'S AND PRINCIPAL
MEMBERS' OBLIGATIONS TO COMPLETE THE CLOSING. 24
SECTION 8. INDEMNIFICATION 24
8.1 SURVIVAL; INDEMNITY. 24
8.2 INDEMNIFICATION OF BUYER. 25
8.3 INDEMNIFICATION OF SELLER AND PRINCIPAL MEMBERS. 26
8.4 MISCELLANEOUS INDEMNIFICATION PROVISIONS. 26
8.5 NOTIFICATION OF CLAIMS. 27
8.6 THIRD PARTY CLAIMS. 27
8.7 SELLER PARTY INDEMNIFICATION PAYMENT. 28
SECTION 9. EXPENSES 28
9.1 EXPENSES. 28
SECTION 10. MISCELLANEOUS 29
10.1 AMENDMENT. 29
10.2 WAIVER. 29
10.3 ENTIRE AGREEMENT; COUNTERPARTS. 29
10.4 APPLICABLE LAW; JURISDICTION. 29
10.5 ATTORNEYS' FEES. 30
10.6 ASSIGNABILITY; THIRD PARTY BENEFICIARIES. 30
10.7 NOTICES. 30
10.8 SEVERABILITY. 31
10.9 SPECIFIC PERFORMANCE. 32
10.10 CONSTRUCTION. 32
EXHIBIT A - CERTAIN DEFINITIONS
EXHIBIT B - CLOSING ALLOCATION SCHEDULE
EXHIBIT C - ▇▇▇▇ OF SALE
EXHIBIT D - SELLER'S CERTIFICATE
EXHIBIT E - BUYER'S CERTIFICATE
EXHIBIT F - RETAINED EARNINGS EXTRACTION
APPENDIX I - INVESTMENT LETTER
Asset Purchase Agreement
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is
made and entered into on July 1, 2008, by and among DYNASIL
CORPORATION OF AMERICA, a Delaware corporation ("Buyer"), RMD
Instruments Corp., a Delaware corporation and wholly-owned
subsidiary of Buyer ("Acquisition Sub"), RMD Instruments, LLC, a
Massachusetts limited liability company ("Seller") and ▇▇▇▇▇▇
▇▇▇▇▇▇ 1988 Family Trust, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇, husband and
wife, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the Members of Seller (the "Principal
Members"). Certain capitalized terms used in this Agreement are
defined in Exhibit A.
Recitals:
WHEREAS, Seller owns a business for engaged in the
design, manufacture, marketing and sale of instruments and
components (the "Business"); and
WHEREAS, Seller wishes to sell, and Buyer wishes to
purchase, substantially all of the assets of the Business,
subject to the terms and conditions set forth herein;
WHEREAS, the Principal Members own a majority of the
issued and outstanding Membership interests of Seller; and
WHEREAS, concurrently with the execution of this
Agreement, and as a condition and inducement to Buyer's
willingness to enter into this Agreement, Buyer, Radiation
Monitoring Devices, Inc. ("RMD, Inc."), and the stockholders of
RMD, Inc. (the "Stockholders") are entering into that certain
Agreement and Plan of Merger (the "Merger Agreement").
NOW THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and
agreements hereinafter set forth, the parties to this Agreement,
intending to be legally bound, agree as follows:
SECTION 1. PURCHASE OF THE PURCHASED ASSETS AND PURCHASE
PRICE
1.1 PURCHASE OF ASSETS AND PURCHASE PRICE.
Subject to the terms and conditions set forth herein,
Seller and Principal Members agree that, at the Closing, as
hereinafter defined, Seller shall sell, transfer, assign, convey
and deliver to Acquisition Sub, free and clear of any and all
Encumbrances, and Buyer agrees that on the Closing date, Buyer
shall purchase, acquire and accept from Seller, free and clear of
any and all Encumbrances, all of Seller's right, title and
interest in and to the assets owned, used or held by Seller in
the conduct of the Business (the "Purchased Assets") including,
without limitation:
(a) Seller's entire inventory, relating to the Business,
wherever located (the "Inventory").
(b) All of Seller's equipment, motor vehicles, office
furnishings and office equipment, phone systems, computers,
copiers and fixtures used by the Seller in the conduct of the
Business (the "Equipment").
(c) All Proprietary Assets.
(d) All licenses, sales agreements and other contracts relating
to the Business (the "Contracts") including, without limitation,
promissory notes and/or written promises to pay Seller.
(e) All of the goodwill relating to the Business (the
"Goodwill").
(f) All of Seller's operating data, books and records, and
current customer lists and records, financial, accounting and
credit records of customers, vendors and suppliers, reference
catalogs, product sales training materials, video tapes, discs,
reference books and other similar documents and records, phone
numbers, internet domain names, websites and all other
intellectual property and other proprietary rights of Seller
(collectively "Miscellaneous Property").
(g) All licenses, permits, approvals, qualifications,
registrations and other consents issued by any government or
agency to the Seller relating to the Business, and any
applications therefor (collectively, the "Licenses").
(h) All prepaid expenses.
(i) All rights and interests under all unfilled customer orders
(collectively, "Orders").
(j) Any remaining accounts receivable or other
assets in the Buyer column after the Retained Earnings Extraction
which shall be defined, calculated and administered as per
Section 2.1(e).
1.2 LIABILITIES.
Other than as set forth in Schedule 1.2 hereof, 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 or Seller's
members of any kind or nature whatsoever that have accrued or
become due on or prior to the Closing (including, without
limitation, accounts payable, long-term debt, accrued expenses,
capitalized leases, wages, salaries, fees, accrued income and
payroll taxes, accrued payroll and 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"). Subject to the foregoing, Seller and Principal
Members acknowledge that Buyer assumes no Liabilities whatsoever
and all Liabilities shall remain the respective responsibilities
of Seller and Members, as appropriate. All liabilities and
obligations of the Business and/or the Purchased Assets that
first accrue or become due following the Closing (including,
without limitation the Contracts and the Orders) shall be the
sole responsibility of Buyer.
1.3 EXCLUDED ASSETS.
Buyer is acquiring no right, title or interest in or to
the assets set forth on Schedule 1.3 hereto (collectively, the
"Excluded Assets").
1.4 PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE.
(A) The cumulative price to be paid by Buyer to Seller for the
Purchased Assets (the "Purchase Price") shall be (i) Twelve
Million Five Hundred Thousand Dollars ($12,500,000) payable in
case in same-day funds (the "Purchase Cash"); and (ii) One
Million (1,000,000) shares of the Common Stock of the Buyer (the
"Purchase Stock", and collectively, with the Purchase Cash, the
"Consideration").
(b) The Purchase Stock shall be unregistered, and any and all
certificates representing Purchase Stock, or issued in
replacement thereof or in exchange therefor shall bear the
following legend or one substantially similar thereto:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE IN
RELIANCE ON EXEMPTIONS THEREFROM AND, THEREFORE,
MAY NOT BE RESOLD UNLESS REGISTERED UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
(c) Each Member of Seller, upon no less than ninety (90) days'
prior notice to Buyer, and surrender of certificates representing
the subject Purchase Stock, shall have the right to require Buyer
to purchase all or any portion of the Purchase Stock held by such
Member for a repurchase price of Two Dollars ($2.00) per share,
at any time and from time to time during a period beginning
twenty-four (24) months after the Closing Date and ending forty-
eight (48) months after the Closing Date; provided that each
Member shall exercise this right (i) no more frequently than two
(2) times in any six (6) month period; and (ii) for no less than
fifty thousand (50,000) shares per exercise (or the balance of
their Purchase Stock if such balance is less than 50,000 shares).
The closing of a Buyer repurchase of Member Purchase Stock
pursuant to the exercise by the Member of his or its rights under
this Section 1.4(c) shall occur, subject to the provisions of
this Section 1.4(c), at the principal office of the Buyer on the
ninetieth (90th) day following delivery to Buyer by such Member
of written notice (or, if such date shall not be a regular
business day, on the first business day following such date). At
such closing, Buyer shall deliver the aggregate repurchase price
to such Member in cash in same-day funds against delivery by such
Principal Member of the certificate(s) representing the Purchase
Stock being repurchased at such closing, duly endorsed for
transfer on the books of Buyer or accompanied by a duly executed
stock power. If less than all shares of Purchase Stock evidenced
by any such certificate are being repurchased at such closing,
Buyer shall also deliver to such Member a new certificate
representing the balance of the Purchase Stock not so purchased.
If at any such closing Buyer shall fail or be unable to
consummate such repurchase in the manner required hereunder, for
any reason or no reason, the amount due to such Member at such
closing and unpaid thereat shall bear interest from such date at
an interest rate equal to the greater of (x) ten percent (10%) or
(y) the prime interest rate published by the Wall Street Journal
on the date of such failure to consummate the repurchase, plus
five percent (5%), payable on demand by such Member, until paid
in full, and Buyer shall deliver to such Member at such closing
Buyer's promissory note in aggregate principal amount equal to
the aggregate Purchase Stock repurchase price not paid by Buyer
at such closing, which promissory note shall have a maturity of,
and amortize over, three (3) years, shall bear interest at the
aforesaid rate payable quarterly in arrears (together with
amortizing principal payments) and shall be secured by such
Member's Purchase Stock not repurchased at such closing. The
right set forth in herein shall be subject to Member's compliance
with all applicable laws, rules and regulations. The right set
forth in this Section 1.4(c) is not prohibited by Buyer's bank
financing arrangements.
(d) The Purchase Price shall be allocated among the Purchased
Assets, as determined above, as set forth on Exhibit B hereto
(the "Closing Allocation Schedule"). Seller, Principal Members
and Buyer agree to jointly complete all required reports and
returns under Federal and state tax laws, rules and/or
regulations. 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 Closing Allocation Schedule.
SECTION 2. THE CLOSING.
2.1 THE CLOSING.
(A) The consummation of the purchase and sale contemplated
hereby (the "Closing") shall take place concurrently with the
Merger Agreement (such date, the "Closing Date"), or such other
time as Buyer and the Seller shall mutually agree.
(b) At the Closing, Seller and Principal Members shall deliver,
or cause to be delivered to Buyer, duly executed or certified to
the reasonable satisfaction of Buyer's attorney, each of the
agreements, documents, certificates, consents and instruments
referred to in Section 7.1(D) herein.
(c) At the Closing, Buyer shall deliver or cause to be delivered
to Seller and Principal Members, duly executed or certified to
the reasonable satisfaction of Seller's attorney, each of the
agreements, documents, certificates, consents and instruments
referred to in Section 7.2(D) herein.
(d) Buyer shall deliver the Purchase Price, as set forth in
Section 1.4.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER AND
PRINCIPAL MEMBERS.
Subject to, and except as disclosed in the schedules to
this Agreement, Seller represents and warrants to Buyer, as
follows:
3.1 DUE ORGANIZATION; SUBSIDIARIES.
The Seller is duly organized, validly existing and in
good standing under the Legal Requirements of the jurisdiction of
its incorporation. The Seller has all necessary power and
authority: (a) to conduct its business in the manner in which its
business is currently being conducted; (b) to own and use its
assets in the manner in which its assets are currently owned and
used; and (c) to perform its material obligations under all
Contracts. The Seller is qualified to do business as a foreign
corporation, and is in good standing, under the Legal
Requirements of all jurisdictions where the failure to be so
qualified would have a Material Adverse Effect on the Seller.
The Seller has delivered or made available to Parent accurate and
complete copies of the organizational documents of the Seller,
including all amendments thereto (collectively, the "Seller
Organization Documents"). The Seller has no Subsidiaries.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT.
The Seller has all requisite power and authority to
enter into and to perform its obligations under this Agreement,
including unanimous Principal Member approval and adoption of
this Agreement. This Agreement constitutes the legal, valid and
binding obligation of the Principal Members and the Seller,
enforceable against the Principal Members and the Seller in
accordance with its terms, subject to (a) Legal Requirements of
general application relating to bankruptcy, insolvency and the
relief of debtors, (b) rules of law governing specific
performance, injunctive relief and other equitable remedies and
(c) the approval of Members of the Seller. The Principal Members
hereby represent that they have (i) determined that the
transactions contemplated hereby are in the best interests of the
Seller and its Members, (ii) approved, adopted and declared
advisable this Agreement, and (iii) approved the transactions
contemplated by this Agreement.
3.3 NO CONFLICT.
Except as set forth on Schedule 3.3, neither the
execution and delivery of this Agreement nor the performance by
Seller and/or Principal Members of those acts and things required
of them in advance of Closing, nor the consummation of any and
all of the transactions contemplated hereby, will (a) violate or
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 Encumbrance upon any of the Purchased Assets, any of the
properties or other assets of Seller, 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 Body to which Seller is
a party, or by which any of their respective property or assets,
particularly the Purchased Assets, may be bound or affected; (b)
violate or conflict with any provision of any law, rule,
regulation, order, judgment, decree or ruling of any Governmental
Body applicable to Seller; or (c) require any consent, approval,
filing or notice on any provision of any law, rule, regulation,
order, judgment, decree or judgment of any Governmental Body.
3.4 LITIGATION.
Except as set forth on Schedule 3.4, there is no
pending Legal Proceeding and within the past 24 months no Person
has threatened in writing to commence any Legal Proceeding, that
involves the Seller or any of the Purchased Assets, in each case
which would be reasonably likely to have a Material Adverse
Effect to the Seller; and there is no Order to which the Seller,
or any of the Purchased Assets, is subject.
3.5 PURCHASED ASSETS.
The Purchased Assets being assigned, sold and
transferred to Buyer pursuant to this Agreement constitute
substantially all of the assets used, owned and/or occupied by
Seller for the conduct of the Business (with the exception of the
Excluded Assets). Seller owns, or will on the Closing Date own
outright and have good and marketable title to, the Purchased
Assets, free and clear of any Encumbrances. The ▇▇▇▇ 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 Purchased Assets free and clear of any and all
Encumbrances. All Equipment (except motor vehicles) is now, and
will be on the Closing Date, in good operating condition and
working order, reasonable wear and tear excepted. All accounts,
books, ledgers and other official records of Seller are accurate
and complete, and there are no discrepancies therein of any kind
which would give rise to monetary liability to Buyer after the
Closing, or which could have an adverse effect on the Purchased
Assets and/or the Business or the contemplated business of Buyer
after the Closing.
3.6 UNDISCLOSED LIABILITIES.
(a) Seller does not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency,
obligation or responsibility, fixed or unfixed, ▇▇▇▇▇▇ or
inchoate, liquidated or unliquidated, secured or unsecured,
accrued, absolute, contingent or otherwise that is not fully and
adequately reflected or reserved against on its financial
statements or covered in full by insurance, which will create an
Encumbrance upon the Purchased Assets and/or upon the
contemplated Business of Buyer on or on and after the Closing
Date. Seller and Principal Members have furnished to Buyer
complete and accurate copies of Seller's financial statements for
the calendar years June 30, 2007, 2006 and 2005 and for the six
months ended December 31, 2007 (the "Financial Statements").
Buyer may fully rely upon the contents of the Financial
Statements as being complete and accurate in all material
respects and prepared in accordance with Seller's prior practice,
consistently applied and as being reflective of the operation of
the Business for the period noted thereon. For purposes of this
Agreement "Seller Balance Sheet" means that balance sheet of
Seller as of December 31, 2007, and the "Seller Balance Sheet
Date" means December 31, 2007
(b) Since the Seller Balance Sheet Date, the Seller
has not accrued any contingent or other liabilities of any
nature, either mature or unmatured (whether due or to become due)
required to be reflected in financial statements, except for
normal and recurring liabilities that have been incurred by
Seller since the Seller Balance Sheet Date in the ordinary course
of business consistent with prior practice.
3.7 NO MATERIAL ADVERSE CHANGE.
Since the Seller Balance Sheet Date there has been no
material adverse change in the Business, operations or financial
condition of Seller, and Seller and Principal Members do not have
any knowledge of any such change that is threatened, nor has
there been any damage, destruction or loss which could materially
and adversely affect the Business or the Purchased Assets,
whether or not covered by insurance, not fully disclosed in the
Financial Statements.
3.8 TAX MATTERS.
All Tax Returns (except those not yet due or not yet
due because there are properly filed extensions) required to be
filed with respect to the Business have been duly filed. All
such Tax Returns were in all material respects true, complete and
correct and filed on a timely basis. Seller (i) has paid all
Taxes that are due, or claimed or assessed by the Internal
Revenue Service or any other domestic or foreign taxing authority
(each constituting a "Taxing Authority") to be due, from Seller
for the periods covered by such Tax Returns, or (ii) has duly and
fully provided reserves adequate to pay all Taxes in the
Financial Statements.
Seller does not have a negative balance in its
unemployment insurance account with any Governmental Body, or any
similar liability that would cause Buyer, as a result of the
transactions contemplated by this Agreement, to be burdened
subsequent to the Closing, with any material adverse consequence.
3.9 CONTRACTS.
Schedule 3.9 sets forth all of the following Contracts,
written or oral, between the Seller and any other party:
(i) any commitment for the delivery by the Seller of assets,
materials, supplies or services which commitment (A) involves or
is likely to involve more than $5,000 or (B) is not cancelable
upon no more than thirty (30) days' notice, without penalty;
(ii) any employment or consulting agreement, any plan or
agreement providing for bonuses, commissions, pensions, options,
stock purchases, deferred compensation, retirement payments or
profit sharing, or any collective bargaining agreement;
(iii) any loan agreement, mortgage, indenture or other
obligation for borrowed money or which creates a Encumbrance on
any Purchased Asset;
(iv) any contract or agreement for the purchase by the Seller of
any commodity, material, service or equipment, which contract or
agreement (A) involves or is likely to involve more than $5,000
or (B) is not cancelable upon no more than thirty (30) days'
notice, without penalty;
(v) any contract or agreement with any dealer, sales agent or
distributor of products;
(vi) any license agreement (whether as licensor or licensee)
(other than click-wrap, shrink-wrap, box-top and similar license
for commercially available software);
(vii) any guaranty or indemnification agreement;
(viii) any written contract with any officer, director or
partner of Seller or with any persons or organizations controlled
by or affiliated with Seller;
(ix) any supply agreement, sale agreement, purchase order or
other contract to sell or lease products or services to a
customer that is not capable of being fully performed within
sixty (60) days;
(x) any contract creating or relating to any partnership or
joint venture or any sharing of revenues, profits, losses, costs
or liabilities, under which the Seller has continuing material
obligations; or
(xi) any contract or agreement that adversely affects the Seller
or for which Seller may be liable in an amount in excess of
Twenty Five Thousand Dollars ($25,000).
Each Contract is valid and in full force and effect,
and is enforceable in accordance with its terms subject to (A)
Legal Requirements of general application relating to bankruptcy,
insolvency and the relief of debtors, and (B) rules of law
governing specific performance, injunctive relief and other
equitable remedies, except to the extent they have expired in
accordance with their terms and except where the failure to be in
full force and effect, individually or in the aggregate, would
not reasonably be expected to be material to the Seller. The
Seller has delivered to or made available to Buyer true and
complete copies of each Contract, except in the case of a
Contract which is derived from a standard form agreement of the
Seller, the Seller has delivered to or made available to Buyer a
form or forms of such agreement. In each case where a Contract
is derived from a standard form agreement, all of the terms,
conditions and provisions of such Contract are substantially
similar with respect to material terms to the form agreement from
which such agreement derived.
The Seller has not violated or breached, or committed
any material default under, any Contract. To the Seller's
knowledge, no other Person has materially violated or breached,
or committed any material default under, any Contract.
Except as set forth on Schedule 3.9, no event has
occurred, and no circumstance or condition exists, including,
without limitation, the transactions and events contemplated
hereby, that (with or without notice or lapse of time) could
reasonably be expected to (i) result in a material violation or
breach of any provision of any Contract by the Seller; (ii) give
any Person the right to declare a material default or exercise
any remedy under any Contract; (iii) give any Person the right to
accelerate the maturity or performance of any Contract; or (iv)
give any Person the right to cancel or terminate, or modify in
any material respect, any Contract.
3.10 ERISA.
(A) Except as disclosed on Schedule 3.10, neither Seller nor any
ERISA Affiliate (as hereinafter defined) maintains any Employee
Benefit Plan. "Employee Benefit Plan" means any "employee
benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, and any
interpretive rulings, regulations and notices ("ERISA") and any
other plan, policy, program, practice, agreement, understanding
or arrangement (whether written or unwritten) providing
compensation or other benefits to any current or former director,
officer, employee, contractor or consultant (or to any dependent
or beneficiary thereof), of Seller or any ERISA Affiliate, which
are now, or were within the past six years, maintained by Seller
or any ERISA Affiliate, or under which Seller or any ERISA
Affiliate has or could have any obligation or liability, whether
actual or contingent (and including, without limitation, any
liability arising out of an indemnification, guarantee, hold
harmless or similar agreement), including, without limitation,
all incentive, bonus, deferred compensation, vacation, holiday,
cafeteria, medical, disability, severance, change in control,
stock purchase, stock option, stock appreciation, phantom stock,
restricted stock or other stock-based compensation plans,
policies, programs, practices or arrangements. "ERISA Affiliate"
means any entity (whether or not incorporated) other than Seller
that, together with Seller, is or was a member of (i) a
controlled group of corporations within the meaning of Internal
Revenue Code ("Code") Section 414(b), (ii) a group of trades or
businesses under common control within the meaning of Section
414(c) of the Code, or (iii) an affiliated service group within
the meaning of Section 414(m) of the Code.
(b) Neither Seller nor any ERISA Affiliate maintains or has ever
maintained, contributed to or had an obligation to contribute to
or could have any obligation in respect of a plan subject to
Title IV of ERISA or to Section 412 of the Code. Neither Seller
nor any ERISA Affiliate has ever contributed to, or withdrawn in
a partial or complete withdrawal from, any "multiemployer plan"
(as defined in Section 3(37) of ERISA) or has any fixed or
contingent liability under Section 4204 of ERISA. No Employee
Benefit Plan is a "multiple employer plan" as described in
Section 3(40) of ERISA or Section 413(c) of the Code.
(c) As of and including the Closing date, Seller shall have made
all contributions required to be made by it up to and including
the Closing date with respect to each Employee Benefit Plan, or
adequate accruals therefor have been provided for and been
reflected on the balance sheet of Seller as provided to the
Buyers by Seller. All notices, filings and disclosures required
by ERISA or the Code (including notices under Section 4980B of
the Code) have been timely made.
(d) No Employee Benefit Plan provides for medical or health
benefits, or life insurance or other death benefits (through
insurance or otherwise) or provides for the continuation of such
benefits or coverage for any employee or any dependent or
beneficiary of any employee after such employee's retirement or
other termination of employment except as may be required by Part
6 of Subtitle B of Title I of ERISA and Section 4980B of the Code
("COBRA"), and there has been no communication to any employee
that could reasonably be expected to promise or guarantee any
such benefits. Seller shall retain any and all responsibility
for compliance with the COBRA requirements of the Code as they
apply to Seller's former employees and to Seller's employees who
are not hired by Buyer.
(e) The consummation of the transactions contemplated by this
Agreement, either alone or in combination with another event
(including, without limitation, the termination of employment of
any person), will not result in (i) Buyer liability under or with
respect to any Employee Benefit Plan, (ii) any payment
(including, without limitation, severance, unemployment
compensation, golden parachute or bonus payments or otherwise)
becoming due to any director, officer, employee or consultant of
Seller, (iii) any increase in the amount of compensation or
benefits payable in respect of any director, officer, employee or
consultant of Seller, or (iv) acceleration of the vesting or
timing of payment of any benefits or compensation payable in
respect of any director, officer, employee or consultant of
Seller, in each case under any Employee Benefit Plan or
otherwise.
3.11 EMPLOYEES.
Schedule 3.11 sets forth all employees of Seller, which
list shall set forth the names, job titles, tenure and
compensation arrangement for each employee. Seller is in
compliance in all material respects with its obligations under
all Legal Requirements and common law governing employment
practices. During the past three (3) years, Seller has not
suffered or sustained any labor dispute resulting in any work
stoppage and no such work stoppage is thereunder, to the
knowledge of Seller and Members. During the past three (3)
years, Seller has not suffered or sustained any charge by any
employee of any form of harassment in violation of any Federal
and/or state law, rule and/or regulation. Seller's employees are
not represented by any labor organization or union and, to the
knowledge of Seller and Principal Members, 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 Seller's employees. Neither Seller nor Principal Members
have made any statements or representations or distributed any
written material to any of Seller's employees regarding future
operating plans of Seller or Buyer after the Closing or Seller's
or Buyer's continued employment of Seller's employees subsequent
to the Closing, other than any such statements, representations
or written material expressly authorized in writing by Buyer.
3.12 ENVIRONMENTAL MATTERS.
The Seller is in compliance with, and has conducted
its activities in compliance with, all applicable Environmental
Laws, which compliance includes the possession of all material
permits and other Governmental Authorizations required under
applicable Environmental Laws, and compliance with the terms and
conditions thereof, except where the failure to so comply would
not result in a material liability or clean up obligation on the
Seller. Except as set forth on Schedule 3.12 The consummation of
the transactions contemplated by this Agreement will not affect
the validity of such material permits and Governmental
Authorizations held by the Seller, and will not require any
filing, notice, or remediation under any Environmental law. To
the knowledge of the Seller (including as set forth in that
certain ASTM Screen/Limited Assessment of ▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ Project #708-520 dated May 16, 2008, performed by
IES, Inc., a copy of which has been provided to Buyer (the "IES
Report")), there are no past or present events, conditions,
activities, or practices which would reasonably be expected to
prevent the Seller's compliance in all material respects with any
Environmental Law, or which would reasonably be expected to give
rise to any material liability of the Seller under any
Environmental Law. Other than as set forth in the IES Report,
within the past seven years, the Seller has not received written
notice, or to its knowledge, other communication (in writing or
otherwise) that alleges that the Seller is not in compliance with
any Environmental Law, and the Seller has no knowledge of any
circumstances that would reasonably be expected to result in such
claims or communications. To the Seller's knowledge, no current
or prior owner of any property owned, leased or controlled by any
of the Seller has received any written notice or other
communication (in writing or otherwise) that alleges that such
current or prior owner or any of the Seller is not in compliance
with any Environmental Law in such a manner as would be
reasonably likely to result in a material liability or clean up
obligation. The Seller has not assumed by contract, agreement or
otherwise any liabilities or obligations arising under any
Environmental Law, or is currently performing any required
investigation, response or other corrective action under any
Environmental Law. Except as set forth in the IES Report, there
are no underground storage tanks or related piping on any
property owned, leased, controlled by or used by the Seller, and
any former such tanks and piping have been removed or closed in
accordance with applicable Environmental Laws. Except as set
forth in the IES Report, to the Seller's knowledge, all property
that is owned by, leased to, controlled by or used by the Seller
is free of any friable asbestos or asbestos-containing material.
3.13 LICENSES AND PERMITS.
Schedule 3.13 sets forth all permits, licenses,
approvals, qualifications, registrations and other governmental
consents, if any, which are necessary in connection with the use
of the Purchased Assets and/or the operation of the Business
(collectively, the "Permits"), and no others are required. All
Permits have been obtained, are in full force and effect and in
good standing, and will be so on the Closing date, and, subject
to the preparation and filing of any necessary transfer
application(s) and payment of required fees, shall be transferred
to Buyer immediately following Closing. Except as set forth on
Schedule 3.13, no consents are required for transfer of any
Permit. Neither Seller nor Members have received any notice of
any claim of revocation or has knowledge of any event which might
give rise to such a claim with respect to such Permits.
3.14 COMPLIANCE WITH LAWS.
Except as otherwise disclosed herein, Seller has
complied in all material respects with all applicable Federal,
state and local laws, regulations and ordinances or any
requirement of any Governmental Body affecting the Business
and/or the Purchased Assets and have complied with the terms of
all permits, licenses, registrations, consents, trademark and
patent continuances, with respect to which the failure to comply
could materially and adversely affect the Business.
3.15 PROPRIETARY ASSETS.
(A) Schedule 3.15(a) sets forth as of the date of this Agreement
(i) all U.S. and foreign patents, patent applications, registered
trademarks, material unregistered trademarks, trademark
applications, copyright registrations and copyright applications,
Internet domain names, computer software (other than third party
software generally available for sale to the public) and
fictitious name and assumed name registrations owned by the
Seller; (ii) all patent applications and other Proprietary Assets
that are currently in the name of inventors or other Persons and
for which the Seller has the right to receive an assignment; and
(iii) all material third party licenses for Proprietary Assets to
which the Seller is the licensee party. Seller has good, valid
and marketable title to, or has a valid right to use, license or
otherwise exploit, all of the material Proprietary Assets
necessary for the conduct of the Business, free and clear of all
Encumbrances. Seller has not developed jointly with any other
Person any material Proprietary Asset with respect to which such
other Person has any rights. There is no contract pursuant to
which any Person has any right (whether or not currently
exercisable) to use, license or otherwise exploit any Proprietary
Asset owned or exclusively licensed by any Seller (except to the
extent that use of any such Proprietary Asset is incidental to
the use of any Seller Product).
(b) (i) All Proprietary Assets owned by Seller are, subsisting
and in effect and, valid and enforceable; (ii) none of the
Proprietary Assets and no Proprietary Asset that is currently
being developed or reduced to practice or which is the subject of
a current invention disclosure by the Seller (either by itself or
with any other Person) infringes, misappropriates, conflicts with
or otherwise violates any Proprietary Asset owned or used by any
other Person; (iii) none of the products or services that is or
has been designed, created, developed, assembled, performed,
manufactured, sold, marketed or licensed by the Seller is
infringing, misappropriating or making any unlawful or
unauthorized use of any Proprietary Asset owned or used by any
other Person, and, none of such products or services has at any
time infringed, misappropriated or made any unlawful or
unauthorized use of, and the Seller has not received in the past
three (3) years any written, or to the Seller's knowledge, oral
notice of any actual, alleged, possible or potential
infringement, misappropriation or unlawful or unauthorized use
of, any Proprietary Asset owned or used by any other Person; (iv)
the operation of the business of Seller as it currently is
conducted does not and will not when conducted in substantially
the same manner following the Closing, infringe or misappropriate
or make any unlawful or unauthorized use of any Proprietary Asset
of any other Person; and (v) to the Seller's knowledge, no other
Person is infringing, misappropriating or making any unlawful or
unauthorized use of, and no Proprietary Asset owned or used by
any other Person infringes or conflicts with, any Proprietary
Asset, and no such claims have been asserted or threatened
against any Person by the Seller or, to the knowledge of the
Seller, any other Person, in the past three (3) years. The
Proprietary Assets constitute all the Proprietary Assets
necessary to enable the Seller to conduct its business in the
manner in which such business is currently being conducted. Upon
the consummation of the transactions contemplated hereby, Seller
shall have good, valid, and enforceable title, or license (if the
applicable Proprietary Asset is licensed to Seller) to all
Proprietary Assets, free and clear of all Encumbrances and on,
and subject to, the same terms and conditions as in effect
immediately prior to the Closing. Seller has not entered into
any covenant not to compete or any Contract limiting its ability
to exploit fully any Proprietary Assets owned or licensed by
Seller or to transact business in any market or geographical area
or with any Person.
(c) Seller has taken all reasonable steps that are required to
protect Seller's rights in confidential information and trade
secrets of the Seller or provided by any other Person to the
Seller. Set forth on Schedule 3.15(c) is a list of each
employee, consultant and contractor of the Seller that has
executed a proprietary information and confidentiality agreement.
(d) Neither this Agreement nor the transactions contemplated by
this Agreement, including any assignment to Buyer by operation of
law, will result in (i) Buyer or any of its affiliates granting
to any third party any incremental right to or with respect to or
non-assertion under any Proprietary Assets owned by, or licensed
to, any of them; (ii) Buyer or any of its affiliates being bound
by, or subject to, any incremental non-compete or other
incremental material restriction on the operation or scope of
their respective businesses; or (iii) Buyer or any of its
affiliates being obligated to pay any incremental royalties or
other material amounts, or offer any incremental discounts, to
any third party. As used in this Section 3.15(d), an
"incremental" right, non-compete, restriction, royalty or
discount refers to a right, non-compete, restriction, royalty or
discount, as applicable, in excess, whether in terms of
contractual term, contractual rate or scope, of those that would
have been required to be offered or granted, as applicable, had
the parties to this Agreement not entered into this Agreement or
consummated the transactions contemplated hereby.
(e) With respect to the use of software in the Business as such
business is currently conducted, to the knowledge of the Seller,
no such software contains defects in its operation or any device
or feature designed to disrupt, disable, or otherwise impair the
functioning of any software. Such software has been validated
for its use. There have been no material security breaches in
any of the Seller's information technology systems, and there
have been no disruptions in any of the Seller's information
technology systems that materially adversely affected the
Business or operations.
(f) All products of the Seller ("Seller Product")
conform in all material respects with all applicable contractual
commitments and all express and implied warranties, the Seller's
published product specifications and with all regulations,
certification standards and other requirements of any applicable
Governmental Body or third party. The channel activities of the
Seller related to sales or distribution of Seller Products
conform in all material respects with all applicable contractual
commitments. Except as set forth in the Seller Financial
Statements, the Seller has no liability (whether known or
unknown, asserted or unasserted, absolute or contingent, accrued
or unaccrued, liquidated or unliquidated, due or to become due or
otherwise) for replacement or modification of any Seller Product
or other damages in connection therewith other than in the
ordinary course of business. There are no known material defects
in the design or technology embodied in any Seller Product which
impair or are likely to impair the intended use of such Seller
Product. There is no presently pending, or, to the knowledge of
the Seller, threatened, and, to the knowledge of the Seller,
there is no basis for, any civil, criminal or administrative
actions, suits, demands, claims, hearings, notices of violation,
investigations, proceedings or demand letters relating to any
alleged hazard or alleged defect in design, manufacture,
materials or workmanship, including any failure to warn or
alleged breach of express or implied warranty or representation,
relating to any Seller Product. The Seller has not extended to
any of its customers any written product warranties,
indemnifications or guarantees that deviate in any material
respect from the standard product warranties, indemnification
arrangements or guarantees of the Seller.
3.16 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.
3.17 CUSTOMERS, SUPPLIERS AND SERVICE PROVIDERS.
Schedule 3.17 lists the customers of the Seller for the
last completed fiscal year (in decreasing order of gross sales).
Except as disclosed in Schedule 3.17, Seller has not received any
written notice, or to the knowledge of the Seller, any verbal
notice or threats by such customers with respect to termination,
cancellation or limitation of, or adverse modification or change
in, the business relationship of the Seller, or Seller's business
with any customer or customers whose purchases are individually
or in the aggregate material to the Seller.
3.18 DISCLOSURE.
No representation or warranty made by Seller or
Principal Members, nor any information or statement contained in
any exhibit or schedule hereto or in any certificate to be
delivered by Principal Members or Seller pursuant hereto,
contains or will contain any untrue statement of a material fact,
or omits or will omit a material fact necessary to make the
statements of fact herein or therein not misleading in light of
the circumstances under which they were made.
3.19 NO DISCLOSURE.
Until the Closing or the termination of this Agreement,
Seller agrees not to disclose the existence of this Agreement
and/or any of the transactions contemplated hereby to any third
party except their attorneys, accountants and other confidential
advisors, and shall require the same confidentiality of their
attorneys, accountants and other financial advisors.
3.20 DEBTS.
Seller shall be responsible for payment of all
purchases and debts (collectively, the "Business Debts") which
incurred prior to the Closing Date, whether or not the invoice
was received prior to the purchase date, unless specifically
assumed by Buyer. Seller shall be responsible to pay any costs
which are required to wrap up the Seller's business activities
such as the A-133 audit. Seller has no outstanding Bank loans.
Payment of Business Debts shall be handled as described in
Sections 1.1(j) and 2.1 (e).
3.21 INVESTIGATION.
Except as set forth in Section 8.1, no due diligence or
investigation by Buyer shall diminish or obviate any of the
representations, warranties, covenants or agreements of Seller
and/or Principal Members under this Agreement.
3.22 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.
3.23 RELIANCE.
The foregoing representations and warranties are made
severally and not jointly by Seller and Principal Members 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
and/or information called for therein to the provided by Seller
and Principal Members to Buyer. All representations and
warranties made by Seller and Principal Members shall survive the
Closing, for the respective periods set forth in Section 8.1.
SECTION 3A. REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
Except as disclosed in the Schedules hereto prior to
the execution and delivery of this Agreement, each Principal
Member, severally and not jointly represents and warrants to
Buyer, as follows.
SECTION 3A.1 AUTHORIZATION; TITLE.
The Principal Member is authorized to enter into this
Agreement, to perform his obligations hereunder and to consummate
the transactions contemplated hereby, without violating any
agreement by which Principal Member or the Seller is bound.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER AND
ACQUISITION SUB
Except as disclosed in Buyer SEC Documents filed prior
to the date hereof or the Disclosure Letter delivered by Buyer
and Acquisition Sub to the Seller prior to the execution and
delivery of this Agreement (the "Buyer Disclosure Letter") and
referred to in the section of the Buyer Disclosure Letter
corresponding to the section(s) of this Section 3 to which such
disclosure applies (unless it is reasonably apparent from the
face of such disclosure that the disclosure or statement in one
section of the Buyer Disclosure Letter should apply to one or
more sections thereof), Buyer and Acquisition Sub represent and
warrant to the Seller as follows:
4.1 DUE ORGANIZATION; SUBSIDIARIES.
Buyer is a corporation duly organized, validly existing
and in good standing under the Legal Requirements of the
jurisdiction of its incorporation, and each of the other Dynasil
Corporations which is a "significant subsidiary" (as defined in
Regulation S-X) of Buyer is a corporation duly organized, validly
existing and in good standing under the Legal Requirements of the
jurisdiction of its incorporation or formation. Each of the
Dynasil Corporations has all necessary power and authority: (a)
to conduct its business in the manner in which its business is
currently being conducted; (b) to own and use its assets in the
manner in which its assets are currently owned and used; and (c)
to perform its material obligations under all Buyer Material
Contracts. Each of the Dynasil Corporations is qualified to do
business as a foreign corporation, and is in good standing, under
the Legal Requirements of all jurisdictions where the failure to
be so qualified would have a Material Adverse Effect on the
Dynasil Corporations. Buyer has delivered or made available to
the Seller accurate and complete copies of the certificate of
incorporation, bylaws and other charter or organizational
documents of each of the Dynasil Corporations, including all
amendments thereto (collectively, the "Buyer Organization
Documents"). Buyer has no Subsidiaries, except for the
corporations identified in Schedule 4.1 of the Buyer Disclosure
Letter. Buyer and each of its Subsidiaries are collectively
referred to herein as the "Dynasil Corporations". None of the
Dynasil Corporations has any equity interest or similar interest
in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any Entity,
other than the Dynasil Corporations' interests in their
Subsidiaries identified in Schedule 4.1 of the Buyer Disclosure
Letter.
4.2 AUTHORITY; BINDING NATURE OF AGREEMENT.
Each of Buyer and Acquisition Sub has all requisite
corporate power and authority to enter into and to perform its
obligations under this Agreement. This Agreement constitutes the
legal, valid and binding obligation of Buyer and Acquisition Sub,
enforceable against Buyer and Acquisition Sub in accordance with
its terms, subject to (a) Legal Requirements of general
application relating to bankruptcy, insolvency and the relief of
debtors, (b) rules of law governing specific performance,
injunctive relief and other equitable remedies and (c) the
approval of the stockholders of Buyer. Buyer hereby represents
that its Board of Directors, at a meeting duly called and held on
or prior to the date hereof, has by unanimous vote approved,
adopted and declared advisable this Agreement and the other
transactions contemplated by this Agreement. Acquisition Sub
hereby represents that its Board of Managers, by unanimous
written consent, approved and adopted this Agreement and the
other transactions contemplated by this Agreement, and
recommended that the Buyer adopt this Agreement. Buyer hereby
represents that it, as the sole stockholder of Acquisition Sub,
will approve and adopt this Agreement and the other transactions
contemplated by this Agreement immediately after the execution
and delivery of this Agreement by the parties hereto.
4.3 CAPITALIZATION, ETC.
(A) The authorized capital stock of Buyer consists of: (i)
25,000,000 shares of Buyer Common Stock and (ii) 10,000,000
shares of Buyer Preferred Stock. As of June 17, 2008, 6,478,507
shares of Buyer Common Stock have been issued or are outstanding
(excluding 810,160 shares of treasury stock) and 710,000 shares
of Series B Preferred Stock, par value $0.001 per share (the
"Buyer Preferred Stock") are outstanding, convertible into
944,300 shares of Buyer Common Stock are outstanding. 810,160
shares of Buyer Common Stock are held in Buyer's treasury and
none are held by any of Buyer's Subsidiaries. All of the
outstanding shares of Buyer Common Stock have been duly
authorized and validly issued, and are fully paid and
nonassessable. None of the outstanding shares of Buyer Common
Stock is entitled or subject to any preemptive right, right of
participation, right of maintenance or any similar right or
subject to any right of first refusal in favor of Buyer. There
is no contract to which Buyer is a party and, to Buyer's
knowledge, there is no contract between other Persons, relating
to the voting or registration of, or restricting any Person from
purchasing, selling, pledging or otherwise disposing of, any
shares of Buyer Common Stock. None of the Dynasil Corporations
is under any obligation, or is bound by any contract pursuant to
which it may become obligated, to repurchase, redeem or otherwise
acquire any outstanding shares of Buyer Common Stock, other than
those relating to the transactions contemplated hereby and the
sale of Series C Preferred Stock to provide funds.
(b) Buyer has delivered or made available to Seller accurate and
complete copies of the Buyer ESPP, all stock option plans
pursuant to which Buyer has granted Buyer Options, and the forms
of all stock option agreements evidencing such options. There
have been no repricings of any Buyer Options through amendments,
cancellation and reissuance or other means during the current or
prior two calendar years. None of the Buyer Options have been
granted in contemplation of the Merger or the transactions
contemplated in this Agreement and no Buyer Options have been
granted since June 11, 2008, after which grant there were 411,459
Buyer Options outstanding. Approximately 120,000 options are
anticipated to be issued to ▇▇▇▇▇ ▇▇▇▇▇▇ as part of the
transactions contemplated hereby. None of the Buyer Options were
granted with exercise prices below or deemed to be below fair
market value on the date of grant. All grants of Buyer Options
were validly made and properly approved by the board of directors
of Buyer (or a duly authorized committee or subcommittee thereof)
in compliance with all applicable law and recorded on the Buyer
Financial Statements in accordance with GAAP, and no such grants
involved any "back dating," "forward dating" or similar practices
with respect to such grants.
(c) Except as set forth in Section 4.3(a) or Section 4.3(b)
above, there is no: (i) outstanding commitment, subscription,
option, call, warrant or right (whether or not currently
exercisable) to acquire any shares of the capital stock or other
securities of any of the Dynasil Corporations; (ii) outstanding
security, instrument or obligation that is or may become
convertible into or exchangeable for any shares of the capital
stock or other securities of any of the Dynasil Corporations;
(iii) rights agreement, stockholder rights plan or similar plan
commonly referred to as a "poison pill"; or (iv) Contract under
which any of the Dynasil Corporations are or may become obligated
to sell or otherwise issue any shares of its capital stock or any
other securities ("Buyer Rights Agreements") (items (i) through
(iv) above, collectively, "Buyer Stock Rights").
(d) All outstanding shares of Buyer Common Stock, all
outstanding Buyer Options and all outstanding shares of capital
stock of each Subsidiary of Buyer have been issued and granted in
compliance with (i) all applicable securities laws and other
applicable Legal Requirements, and (ii) all requirements set
forth in Contracts applicable to the issuance of Buyer Common
Stock, granting Buyer Options and/or the issuance of shares of
capital stock of any Buyer Subsidiary. All of the outstanding
shares of capital stock of each of the Buyer's Subsidiaries have
been duly authorized and are validly issued, are fully paid and
nonassessable and, except as required by Legal Requirements
applicable to each of the Dynasil Corporations which is formed or
incorporated under the laws of a foreign jurisdiction, are owned
beneficially and of record by Buyer, free and clear of any
Encumbrances. Schedule 4.3(d) of the Buyer Disclosure Letter
sets forth all entities (other than Subsidiaries) in which any of
the Dynasil Corporations has any ownership interest and the
amount of such interest.
(e) Buyer directly owns all of the equity interests of
Acquisition Sub.
4.4 NON-CONTRAVENTION; CONSENTS.
Neither the execution, delivery or performance of this
Agreement nor the consummation of the Merger, or any of the other
transactions contemplated by this Agreement, will directly or
indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of any of
the provisions of the Buyer Organization Documents or any
resolution adopted by the stockholders, the Board of Directors or
any committee of the Board of Directors of any of the Dynasil
Corporations;
(b) contravene, conflict with or result in a violation of, or
give any Governmental Body the right to challenge any of the
transactions contemplated by this Agreement or to exercise any
remedy or obtain any relief under, any Legal Requirement or any
Order to which any of the Dynasil Corporations, or any of the
material assets owned or used by any of the Dynasil Corporations,
is subject;
(c) contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate or modify,
any material Governmental Authorization that is held by any of
the Dynasil Corporations or that is otherwise material to the
business of any of the Dynasil Corporations or to any of the
assets owned or used by any of the Dynasil Corporations; or
(d) contravene, conflict with or result in a violation or breach
of, or result in a default under, any provision of any Buyer
Material Contract (except for any such violation or breach which
by its terms can be cured and is so cured within the applicable
cure period or where the non-breaching party has no right to
accelerate or terminate as a result of such violation or breach),
or give any Person the right to (i) declare a default or exercise
any remedy under any Buyer Material Contract; (ii) accelerate the
maturity or performance of any Buyer Material Contract; or (iii)
cancel, terminate or modify any term of any Buyer Material
Contract.
Except as may be required by the Securities Act, the
Exchange Act, the DGCL and the rules and regulations of the
Nasdaq required under any Buyer Material Contract, none of the
Dynasil Corporations was, is or will be required to make any
filing with or give any notice to, or obtain any Consent from,
any Person in connection with the execution, delivery or
performance of this Agreement except where the failure to make
such filing, give such notice or obtain any such consent would
not have a Material Adverse Effect on the Dynasil Corporations.
4.5 SEC FILINGS; FINANCIAL STATEMENTS.
(A) All statements, reports, schedules, forms, exhibits and
other documents required to have been filed by Buyer with the SEC
since October 1, 2004 (the "Buyer SEC Documents") have been so
filed. As of their respective dates (or, if amended,
supplemented or superseded by a filing prior to the date of this
Agreement, then on the date of such amendment, supplement or
superseding filing): (i) each of the Buyer SEC Documents complied
in all material respects with the applicable requirements of the
Securities Act or the Exchange Act (as the case may be); and (ii)
none of the Buyer SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading.
(b) The Buyer SEC Documents include all certifications and
statements required of it, if any, by (i) Rule 13a-14 or 15d-14
under the Exchange Act, and (ii) 18 U.S.C. Section 1350 (Section
906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002).
(c) The financial statements (including related notes, if any)
contained in the Buyer SEC Documents (the "Buyer Financial
Statements"): (i) complied as to form in all material respects
with the published rules and regulations of the SEC applicable
thereto; (ii) were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered (except as may be
indicated in the notes to such financial statements or, in the
case of unaudited statements, as permitted by Form 10-QSB of the
SEC, and except that the unaudited financial statements may not
have contained footnotes and were subject to normal and recurring
year-end adjustments which were not, or are not reasonably
expected to be, individually or in the aggregate, material); and
(iii) fairly presented in all material respects the consolidated
financial position of Buyer and its consolidated subsidiaries as
of the respective dates thereof and the consolidated results of
operations and cash flows of Buyer and its consolidated
subsidiaries for the periods covered thereby. For purposes of
this Agreement, "Buyer Balance Sheet" means that consolidated
balance sheet of Buyer and its consolidated subsidiaries as of
September 30, 2007 set forth in the Buyer's Annual Report on Form
10-KSB filed with the SEC on December 20, 2007 (the "Buyer 10-
KSB") and the "Buyer Balance Sheet Date" means September 30,
2007.
(d) Buyer maintains a system of internal controls sufficient to
provide reasonable assurance that (i) transactions are executed
with management's authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in
accordance with GAAP and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with
management's authorization; (iv) the recorded amount for assets
is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences; (v)
all information (both financial and non-financial) required to be
disclosed by Buyer in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the
SEC; and (vi) all such information is accumulated and
communicated to Buyer's management as appropriate to allow timely
decisions regarding required disclosure and to make the
certifications of the Chief Executive Officer and Chief Financial
Officer of Buyer required under the Exchange Act with respect to
such reports. There are no significant deficiencies or material
weaknesses in the design or operation of Buyer's internal
controls, and Buyer has not been informed by its independent
auditors, accountants, consultants or others involved in the
review of internal controls that any such significant
deficiencies or material weaknesses exist, which could adversely
affect Buyer's ability to record, process, summarize and report
financial data. There is no fraud in connection with the Buyer
Financial Statements, whether or not material, that involves
management or other employees who have a significant role in
Buyer's internal controls.
4.6 ABSENCE OF CHANGES.
(A) Since the Buyer Balance Sheet Date (except as disclosed in
the Buyer SEC Documents),
(i) none of the Dynasil Corporations has made any material
changes in its pricing polices or payment or credit practices or
failed to pay any creditor any material amount owed to such
creditor when due or granted any extensions or credit other than
in the ordinary course of business consistent with prior
practice;
(ii) none of the Dynasil Corporations has terminated or closed
any material facility, business or operation;
(iii) none of the Dynasil Corporations has written up or
written down any of its material assets; and
(iv) there has been no material loss, destruction or damage to
any item of property of the Dynasil Corporations, whether or not
insured.
(b) Except as set forth in Schedule 4.6(b) of the Buyer
Disclosure Letter or in the Buyer SEC Documents, since the Buyer
Balance Sheet Date and through the date of this Agreement:
(i) there has not been any event that has had a Material Adverse
Effect on the Dynasil Corporations, and no fact, event,
circumstance or condition exists or has occurred that could
reasonably be expected to have a Material Adverse Effect on the
Dynasil Corporations;
(ii) each of the Dynasil Corporations has operated its respective
business in the ordinary course consistent with prior practice;
(iii) none of the Dynasil Corporations has (A) declared,
accrued, set aside or paid any dividend or made any other
distribution in respect of any shares of capital stock (other
than in connection with the Buyer Preferred Stock); (B)
repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities; (C) made any capital
expenditure which, when added to all other capital expenditures
made on behalf of the Dynasil Corporations since the Buyer
Balance Sheet Date, exceeds $150,000, in the aggregate; (D) made
any material Tax election; (E) settled any Legal Proceedings
involving amounts in excess of $100,000; or (F) entered into or
consummated any transactions with any affiliate;
(iv) none of the Dynasil Corporations has (A) sold or otherwise
disposed of, or acquired, leased, licensed, waived or
relinquished any material right or other material asset to, from
or for the benefit of, any other Person except for rights or
other assets sold, disposed of, acquired, leased, licensed,
waived or relinquished in the ordinary course of business
consistent with prior practice; (B) mortgaged, pledged or
subjected to any Encumbrance any of their respective property,
business or assets; (C) entered into or amended any lease of
real property (whether as lessor or lessee); or (D) canceled or
compromised any debt or claim other than accounts receivable in
the ordinary course of business consistent with prior practice;
(v) none of the Dynasil Corporations has (A) amended or waived
any of its material rights under, or permitted the acceleration
of vesting under, any provision of any of the Buyer Employee
Plans or any provision of any agreement or Buyer Stock Option
Plan evidencing any outstanding Buyer Option; (B) caused or
permitted any Buyer Employee Plan to be amended in any material
respect; or (C) paid any bonus or other incentive or equity
compensation or made any profit-sharing or similar payment to, or
materially increased the amount of the wages, salary,
commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or
consultants;
(vi) there has been no material labor dispute (including any work
slowdown, stoppage or strike) involving the Dynasil Corporations;
(vii) none of the Dynasil Corporations has made any material
change in its methods of accounting or accounting practices;
(viii) none of the Dynasil Corporations has made any loan,
advance or capital contributions to, or any other investment in,
any Person;
(ix) none of the Dynasil Corporations has terminated or amended,
or suffered a termination of, any Buyer Material Contract;
(x) none of the Dynasil Corporations has entered into any
contractual obligation to do any of the things referred to
elsewhere in this Section 4.6; and
(xi) there has been no material development in any Legal
Proceeding described in a Buyer SEC Document.
4.7 CONTRACTS.
(A) Each Buyer Material Contract is valid and in full force and
effect, and is enforceable in accordance with its terms subject
to (A) Legal Requirements of general application relating to
bankruptcy, insolvency and the relief of debtors, and (B) rules
of law governing specific performance, injunctive relief and
other equitable remedies, except to the extent they have expired
in accordance with their terms and except where the failure to be
in full force and effect, individually or in the aggregate, would
not reasonably be expected to be material to the Dynasil
Corporations. Buyer has delivered to or made available to the
Seller true and complete copies of each Buyer Material Contract,
except in the case of a Buyer Material Contract which is derived
from a standard form agreement of the Dynasil Corporations, Buyer
has delivered to or made available to the Seller a form or forms
of such agreement. In each case where a Buyer Material Contract
is derived from a standard form agreement, all of the terms,
conditions and provisions of such Buyer Material Contract are
substantially similar with respect to material terms to the form
agreement from which such agreement derived.
(b) None of the Dynasil Corporations has materially violated or
breached, or committed any material default under, any Buyer
Material Contract. To Buyer's knowledge, no other Person has
materially violated or breached, or committed any material
default under, any Buyer Material Contract.
(c) To Buyer's knowledge, no event has occurred, and no
circumstance or condition exists, that (with or without notice or
lapse of time) could reasonably be expected to (i) result in a
material violation or breach of any provision of any Buyer
Material Contract by any of the Dynasil Corporations; (ii) give
any Person the right to declare a material default or exercise
any remedy under any Buyer Material Contract; (iii) give any
Person the right to accelerate the maturity or performance of any
Buyer Material Contract; or (iv) give any Person the right to
cancel or terminate, or modify in any material respect, any Buyer
Material Contract
4.8 LIABILITIES.
Except as disclosed in Buyer SEC Documents, since the
Buyer Balance Sheet Date, none of the Dynasil Corporations has
any accrued, contingent or other liabilities of any nature,
either matured or unmatured (whether due or to become due)
required to be reflected in financial statements prepared in
accordance with GAAP, except for: (a) liabilities that are
reflected in the "Liabilities" column of the Buyer Balance Sheet
and the notes thereto; (b) normal and recurring liabilities that
have been incurred by the Dynasil Corporations since the Buyer
Balance Sheet Date in the ordinary course of business consistent
with prior practice; and (c) liabilities incurred in connection
with the transactions contemplated by this Agreement.
4.9 LEGAL PROCEEDINGS; ORDERS.
Except as set forth in the Buyer SEC Documents, there
is no pending Legal Proceeding and, to Buyer's knowledge, within
the past 24 months no Person has threatened in writing to
commence any Legal Proceeding, that involves any of the Dynasil
Corporations or any of the assets owned or used by any of the
Dynasil Corporations, in each case which would be reasonably
likely to be material to the Dynasil Corporations; and there is
no Order to which any of the Dynasil Corporations, or any of the
material assets owned or used by any of the Dynasil Corporations,
is subject.
4.10 FOREIGN CORRUPT PRACTICES ACT.
Neither Buyer, any other Dynasil Corporation, any of
the Dynasil Corporation's officers, directors, nor, to Buyer's
knowledge, any employees or agents, distributors, representatives
or other persons acting on the express, implied or apparent
authority of any Dynasil Corporation, have paid, given or
received or have offered or promised to pay, give or receive, any
bribe or other unlawful payment of money or other thing of value,
any unlawful discount, or any other unlawful inducement, to or
from any person or Governmental Body in the United States or
elsewhere in connection with or in furtherance of the business of
any of the Dynasil Corporations (including any unlawful offer,
payment or promise to pay money or other thing of value (a) to
any foreign official, political party (or official thereof) or
candidate for political office for the purposes of influencing
any act, decision or omission in order to assist any Dynasil
Corporation in obtaining business for or with, or directing
business to, any person, or (b) to any person, while knowing that
all or a portion of such money or other thing of value will be
offered, given or promised unlawfully to any such official or
party for such purposes). Neither the business of Buyer nor of
any other Dynasil Corporation is in any manner dependent upon the
making or receipt of such unlawful payments, discounts or other
inducements. Neither Buyer nor any other Dynasil Corporation has
otherwise taken any action that could cause Buyer or any other
Dynasil Corporation to be in violation of the Foreign Corrupt
Practices Act of 1977, as amended, the regulations thereunder, or
any applicable Legal Requirements of similar effect.
4.11 FINANCIAL ADVISOR.
No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection
with the any of the other transactions contemplated by this
Agreement based upon arrangements made by or on behalf of any of
the Dynasil Corporations.
4.12 PROPRIETARY ASSETS.
(A) Schedule 4.12 (a) of the Buyer Disclosure Letter sets forth
as of the date of this Agreement (i) all U.S. and foreign
patents, patent applications, registered trademarks, material
unregistered trademarks, trademark applications, copyright
registrations and copyright applications, Internet domain names,
computer software (other than third party software generally
available for sale to the public) and fictitious name and assumed
name registrations owned by Buyer; (ii) all patent applications
and other Proprietary Assets that are currently in the name of
inventors or other Persons and for which Buyer has the right to
receive an assignment; and (iii) all material third party
licenses for Proprietary Assets to which Buyer is the licensee
party. Buyer has good, valid and marketable title to, or has a
valid right to use, license or otherwise exploit, all of the
material Buyer Proprietary Assets necessary for the conduct of
the Buyer's business as presently conducted, free and clear of
all Encumbrances. Buyer has not developed jointly with any other
Person any material Proprietary Asset with respect to which such
other Person has any rights. There is no Buyer Material Contract
pursuant to which any Person has any right (whether or not
currently exercisable) to use, license or otherwise exploit any
Buyer Proprietary Asset owned or exclusively licensed by the
Buyer.
(b) Except as would not, individually or in the aggregate, have
a Material Adverse Effect on the Buyer, (i) to the knowledge of
the Buyer, all Buyer Proprietary Assets owned by Buyer are
subsisting and in effect and valid and enforceable; (ii) none of
the Buyer Proprietary Assets and no Proprietary Asset that is
currently being developed or reduced to practice or which is the
subject of a current invention disclosure by the Buyer (either by
itself or with any other Person) to the knowledge of the Buyer
infringes, misappropriates, conflicts with or otherwise violates
any Proprietary Asset owned or used by any other Person; (iii)
none of the products or services that is or has been designed,
created, developed, assembled, performed, manufactured, sold,
marketed or licensed by the Buyer is to the knowledge of the
Buyer infringing, misappropriating or making any unlawful or
unauthorized use of any Proprietary Asset owned or used by any
other Person, and, none of such products or services has at any
time infringed, misappropriated or made any unlawful or
unauthorized use of, and the Buyer has not received in the past
three (3) years any written, or to the Buyer's knowledge, oral
notice of any actual, alleged, possible or potential
infringement, misappropriation or unlawful or unauthorized use
of, any Proprietary Asset owned or used by any other Person; (iv)
the operation of the business of the Buyer as it currently is
conducted does not and will not when conducted by the Surviving
Entity in substantially the same manner following the Closing,
infringe or misappropriate or make any unlawful or unauthorized
use of any Proprietary Asset of any other Person; and (v) to the
Buyer's knowledge, no other Person is infringing,
misappropriating or making any unlawful or unauthorized use of,
and no Proprietary Asset owned or used by any other Person
infringes or conflicts with, any Buyer Proprietary Asset, and no
such claims have been asserted or threatened against any Person
by the Buyer or, to the knowledge of the Buyer, any other Person,
in the past three (3) years. The Buyer Proprietary Assets
constitute all the Proprietary Assets necessary to enable the
Buyer to conduct its business in the manner in which such
business is currently being conducted.
(c) The Buyer has taken all reasonable steps to protect its
rights in confidential information and trade secrets of the Buyer
or provided by any other Person to the Buyer.
(d) With respect to the use of software in the business of the
Buyer as such business is currently conducted, to the knowledge
of the Buyer, no such software contains defects in its operation
or any device or feature designed to disrupt, disable, or
otherwise impair the functioning of any software. Such software
has been validated for its use. There have been no material
security breaches in the Buyer's information technology systems,
and there have been no disruptions in the Buyer's information
technology systems that materially adversely affected such
Buyer's business or operations.
(e) All products of the Buyer ("Buyer Product") conform in all
material respects with all applicable contractual commitments and
all express and implied warranties, the Buyer's published product
specifications and with all regulations, certification standards
and other requirements of any applicable governmental entity or
third party. Except as set forth in the Buyer's SEC Documents,
no claims against the Buyer are pending or have been asserted for
liability for replacement or modification of any Buyer Product or
other damages in connection therewith other than in the ordinary
course of business. There are no known material defects in the
design or technology embodied in any Buyer Product which impair
or are likely to impair the intended use of such Buyer Product.
There is no presently pending, or, to the knowledge of the Buyer,
threatened, and, to the knowledge of the Buyer, there is no basis
for, any civil, criminal or administrative actions, suits,
demands, claims, hearings, notices of violation, investigations,
proceedings or demand letters relating to any alleged hazard or
alleged defect in design, manufacture, materials or workmanship,
including any failure to warn or alleged breach of express or
implied warranty or representation, relating to any Buyer
Product. The Buyer has not extended to any of its customers any
written product warranties, indemnifications or guarantees that
deviate in any material respect from the standard product
warranties, indemnification arrangements or guarantees of the
Buyer.
SECTION 5. COVENANTS OF SELLER AND PRINCIPAL MEMBERS
Seller and Principal Members, jointly and severally,
hereby covenant and agree with Buyer, that Seller and Principal
Members shall do, cooperate in doing, and/or refrain from doing,
as the case may be, the following:
5.1 FURTHER ASSURANCES.
Seller and Principal Members each agree that, prior to
the Closing, they 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 Encumbrances on the Purchased 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.
5.2 POST-CLOSING ASSURANCES.
At any time, and from time to time after the Closing,
and without further consideration, Seller and Principal Members
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 Purchased Assets and the Business
of the Seller and to assist Buyer in exercising all rights with
respect thereto.
5.3 EMPLOYEES.
Seller shall pay each of its employees on or before the
Closing, all amounts due and payable to such employee, including
satisfaction of all accrued, unused vacation and/or sick time
through the Closing date.
5.4 PURCHASE STOCK
Seller shall deliver Purchase Stock to a party only (i)
incompliance with all applicable laws, rules, regulations and
court orders, and (ii) only after such party has executed and
delivered to Dynasil an Investment Letter in substantially the
form attached as Appendix I hereto.
SECTION 6. RETAINED EARNING RECAPTURE
(A) As per the methodology in Exhibit F, the Seller shall be
entitled to extract a net amount of assets less liabilities
(retained by the Seller) which equals the retained earnings as of
the date of the sale less the net book value of fixed assets and
inventory (the "Retained Earnings Extraction"). The Retained
Earnings Extraction shall be estimated as of the Closing Date
with assets and liabilities divided at that time between Buyer
and Seller using the Exhibit F methodology. At seventy five (75)
days following closing, Buyer and Seller shall calculate the
final Retained Earnings Extraction and any balance owned by one
of the parties would be paid in cash within five (5) days except
as outlined in the balance of this section.,
(b) During the seventy five day period, with oversight from ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇, Buyer shall set-up separate accounts, held in
trust for Seller, and administer extracted assets and liabilities
on behalf of the Seller (collectively, "Seller's Extraction
Account"). If accounts receivable must be divided between Buyer
and Seller, specific receivables shall be identified for Seller's
Extraction Account and Buyer shall have the right to allocate any
questionable and international receivables to Seller's Extraction
Account. Buyer shall credit payments received for Seller's
retained assets such as accounts receivable to Seller's
Extraction Account as well as to pay Seller's Business Debts from
Seller's Extraction Account as presented from available Seller
funds. Seller shall be entitled to withdraw funds from Seller's
Extraction Account so long as the net value of the account
remains at a minimum value of $1 million with a minimum of
$500,000 of cash, under this Agreement and the Merger Agreement.
The Seller's Extraction Account shall contain and be applied
toward amounts relating to this Agreement and the Merger
Agreement. At the end of the seventy five day period, Seller can
withdraw all remaining cash in the Seller's Extraction Account if
only cash remains in such account. If non-cash assets and
liabilities remain open in the Seller's Extraction Account at the
end of the seventy five day period, Seller retains responsibility
for such items and Buyer may require Seller to maintain a
reasonable balance in the Seller's Extraction Account and will
assist in the administration as reasonably requested by Seller.
(c) With prior written notice to Seller, Buyer shall be entitled
to use up to $500,000 from Seller's Extraction Account if
reasonably required for Buyer working capital needs during the
seventy five day period.
(d) Any disputes regarding the calculation provided
for herein shall be resolved pursuant to Section 5.7 of the
Merger Agreement.
SECTION 7. 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 and/or
Principal Members, as the case may be, 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) The Seller shall have performed or complied in all material
respects with all of its covenants, obligations or agreements
required to be performed or complied with under the Agreement
prior to the Effective Time;
(b) The representations and warranties of the Seller contained
in this Agreement shall be accurate, as of the date of this
Agreement, and on and as of the Closing, except, for those
representations and warranties which address matters only as of a
particular date (which shall remain true and correct on and as of
such particular date), with the same force and effect as if made
on and as of the Closing;
(c) At the Closing, there shall not be any judgment, decree,
injunction, restraining order, ruling or order of any
Governmental Body outstanding against any party hereto that
prevents or makes financially impractical the consummation of the
transactions contemplated by this Agreement or any of the
conditions to the consummation of the transactions contemplated
by this Agreement.
(d) Since December 31, 2007, there shall not have been any
material adverse change in the condition (financial or
otherwise), results of operations, Business or performance of
Seller.
(e) Delivery by Seller and Principal Members, as appropriate, of
the following documents, duly executed or certified to the
reasonable satisfaction of Buyer:
(i) A ▇▇▇▇ of Sale (or Bills of Sale, at Buyer's request) in
substantially the form attached hereto as Exhibit C, dated the
Closing date.
(ii) A Certificate in substantially the form attached hereto as
Exhibit D hereto, executed by Seller and Principal Members, dated
the Closing date, confirming the matters set forth in Sections
7.1(a), (b) and (c).
(iii) A Certificate, executed by Seller and Principal
Members, dated the Closing date, stating that the copies of UCC-1
financing statements (if any) attached to the certificate are all
of the financing statements that, as of the Closing date, have
been filed against the Purchased Assets in each of the
jurisdictions in which Seller maintains a place of business or
maintains any of the Purchased Assets.
(iv) The Closing Allocation Schedule.
(f) The consummation of the transactions contemplated by the
Merger.
7.2 CONDITIONS PRECEDENT TO SELLER'S AND PRINCIPAL MEMBERS'
OBLIGATIONS TO COMPLETE THE CLOSING.
The obligations of Seller and Principal Members,
respectively, 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
and/or Principal Members:
(a) Buyer shall have performed or complied in all material
respects with all of its covenants, obligations or agreements
required to be performed or complied with under the Agreement
prior to the Closing;
(b) The representations and warranties of Buyer contained in
this Agreement shall be materially true, complete and correct as
of the Closing with the same force and effect as though made on
and as of the Closing.
(c) At the Closing, there shall not be any judgment, decree,
restraining order, injunction, ruling or order of any
Governmental Body outstanding against any party hereto that
prevents consummation of the transactions contemplated by this
Agreement or any of the conditions to the consummation of the
transactions contemplated by this Agreement.
(d) At the closing, Buyer shall deliver, or cause to be
delivered, to Seller and Principal Members the following
documents, duly executed or certified to the reasonable
satisfaction of Seller's attorney:
(i) A Certificate, in substantially the form attached hereto as
Exhibit E, executed by Buyer, dated the Closing date, confirming
the matters set forth in Sections 7.2(a) and (b).
(ii) The Closing Allocation Schedule.
SECTION 8. INDEMNIFICATION
8.1 SURVIVAL; INDEMNITY.
The representations and warranties of the parties shall
survive the Closing for a period of two (2) years; provided,
however, that (i) representations and warranties contained in
Section 3.8 shall survive until the expiration of the applicable
statute of limitations under the Code; (ii) all representations
and warranties relating to claims on SBIR contracts shall survive
until the expiration of the respective periods of government
audit and/or adjustment thereunder, plus ninety (90) days; and
(iii) the representations and warranties in Sections 3.1, 3.2,
and 3.3 and Article 3A.1 shall survive for a period of six (6)
years from the Closing Date (as applicable, the "Survival Date").
Nothing contained in the foregoing sentence shall prevent
recovery under this Article 8 (A) in the event of fraud or
intentional misrepresentation or (B) after the applicable
Survival Date so long as the party making a claim or seeking
recovery complies with the provisions of clause (1) and (2) of
the following sentence. No party shall have any claim or right
of recovery for any breach of a representation, warranty,
covenant or agreement unless (1) written notice is given in good
faith by that party to the other party of the representation,
warranty, covenant or agreement pursuant to which the claim is
made or right of recovery is sought, setting forth in reasonable
detail the breach of the representation, warranty, covenant or
agreement, the amount or nature of the claim being made, if then
ascertainable, and the general basis therefor and (2) such notice
is given prior to the Survival Date. For any such claim relating
to Environmental Matters, Taxes and/or SBIR contracts, the
representations and warranties contained in this Agreement, or
any exhibit or schedule to this Agreement or any certificate
delivered pursuant to this Agreement shall survive any audit or
investigation by any party hereto and shall not be affected or
deemed waived by reason of the fact that any such party or his or
its Representatives knew or should have known that any such
representation or warranty is or might be inaccurate in any
respect. The covenants and agreements set forth in this
Agreement shall survive until performed in full.
8.2 INDEMNIFICATION OF BUYER.
(a) Subject to the other provisions of this Article 8,
Seller and Principal Members agree, severally (based on their Pro
Rata Share) and not jointly to defend and indemnify the Buyer,
Acquisition Sub and their officers, directors, stockholders,
employees, affiliates (including without limitation the Parent
and Merger Sub), attorneys, accountants and agents (collectively,
the "Buyer Parties"), and hold them harmless from and against,
any and all damages, losses, liabilities, costs and expenses
(including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding) (collectively,
"Damages") incurred or suffered by any of the Buyer Parties
arising out of or related to (i) any breach or alleged breach of
any representation, warranty, covenant or agreement of Seller
contained in this Agreement, or any exhibit or schedule to this
Agreement or any certificate delivered by Seller pursuant to this
Agreement, (ii) any Liability (and/or any other obligation not
expressly assumed by Buyer herein) and/or (iii) any breach of any
representation, warranty, covenant or agreement of any of the
Principal Members contained herein. In addition, each Principal
Member shall, severally and not jointly, indemnify, defend and
hold Buyer parties harmless from and against all damages arising
out of or related to a breach of such Principal Member of any
representation or warranty in Article 3A, or any covenant or
agreement of such Principal Member.
(b) Subject to Section 8.2(c) below, Seller's,
Members', Stockholders' and Company's (collectively, the "Seller
Parties") obligations under this Section 8.2 and under the Merger
Agreement (i) shall in no event exceed $2,000,000 in aggregate
(the "Seller Cap"); and shall not apply unless and until the
aggregate amount of all such Damages exceed $100,000 in the
aggregate (the "Seller Basket"), in which case the appropriate
Seller Party shall be liable for all such Damage amounts,
regardless of the Seller Basket, subject to the Seller Cap.
(c) Notwithstanding anything to the contrary contained
herein or in the Merger Agreement, (i) the Seller Basket shall
not apply to any claims for indemnification which are
attributable to any breach of (x) Sections 2.1, 2.2, 2.3, 2.14 or
2A.1 of the Merger Agreement or Sections 3.1, 3.2, 3.3, 3.12 or
Article 3A of this Agreement (collectively, the "Fundamental
Representations") (y) any representation or warranty which
constitutes fraud by a Seller Party; and (ii) the Seller Cap
shall not apply to any claims for indemnification which are
attributable to (x) any breach of a Fundamental Representation,
(y) any breach of a representation or warranty which constitutes
fraud by a Seller Party or (z) any claim relating to
Environmental Matters, Taxes and/or SBIR contracts.
Notwithstanding anything to the contrary in this Agreement or the
Merger Agreement to the contrary, in no event shall a Seller
Party's total aggregate liability to a Buyer Party under this
Agreement and/or the Merger Agreement exceed such Seller Party's
Pro Rata Share.
(d) Notwithstanding anything to the contrary contained
herein or in the Merger Agreement, Seller Parties shall
indemnify, defend and hold the Buyer Parties harmless against any
Damages arising from, relating to or constituting any liability,
for investigative, remedial or response actions or otherwise,
under Environmental Laws, arising out of the ownership, operation
or condition of the Business and/or its properties on or prior to
the Closing (notwithstanding the disclosure of the possibility of
such event in the IES Report or otherwise).
8.3 INDEMNIFICATION OF SELLER AND PRINCIPAL MEMBERS.
(a) Subject to the other provisions of this Article 8,
Buyer agrees to indemnify and to hold the Seller and Principal
Members harmless from and against, any and all Damages incurred
or suffered by the Seller arising out of any breach or alleged
breach of any representation, warranty, covenant or agreement of
Buyer.
(b) Subject to Section 8.2(c) below, Buyer's and
Parent's obligations under this Section 8.3 and under the Merger
Agreement (i) shall in no event exceed $1,000,000 in the
aggregate (the "Buyer Cap"); and (b) shall not apply unless and
until the aggregate amount of all such Damages exceed $50,000 in
the aggregate (the "Buyer Basket"), in which case Buyer shall be
liable for all amounts regardless of the Buyer Basket, subject to
the Buyer Cap.
(c) Notwithstanding anything to the contrary contained
herein or in the Merger Agreement (i) the Buyer Basket shall not
apply to any claims for indemnification which are attributable to
any breach of (x) Sections 3.1, 3.2, 3.3 or 3.5 of the Merger
Agreement or Sections 4.1, 4.2, 4.3 or 4.5 of this Agreement
(collectively, the "Buyer Fundamental Representations") (y) any
representation or warranty that constitutes fraud by a Buyer
Party or (z) any default of Buyer's obligations pursuant to
Section 1.4(c) of this Agreement; and (ii) the Buyer Cap shall
not apply to any claims for indemnification which are
attributable to any (y) breach of a Buyer Fundamental
Representation or (z) breach of a representation or warranty
which constitutes fraud by a Buyer Party.
(d) Notwithstanding anything to the contrary contained
herein or in the Merger Agreement, Buyer Parties shall indemnify,
defend and hold the Seller Parties harmless against any Damages
arising from, relating to or constituting any liability, for
investigative, remedial or response actions or otherwise, under
Environmental Laws, arising out of the ownership, operation or
condition of the Business subsequent to the Closing.
8.4 MISCELLANEOUS INDEMNIFICATION PROVISIONS.
Notwithstanding anything to the contrary contained in
this Agreement, from and after the Closing date:
(a) For purposes of determining the amount of any Damages under
Section 8.2 or 8.3, (i) such amount shall be reduced by the
amount of any insurance proceeds received by the Indemnified
Party in respect of the Damages; and (ii) such amount shall
exclude all consequential or special damages suffered by the
Indemnified Party and all punitive damages awarded against the
Indemnifying Party.
(b) Notwithstanding anything in this Agreement or any
statute or the common law to the contrary, the parties
acknowledge and agree that the indemnification rights set forth
in this Article 8 shall be the sole and exclusive remedy of the
parties to this Agreement and the Merger Agreement for Damages of
any kind or nature arising under this Agreement, any statute or
the common law.
(c) Each party agrees to use commercially reasonable
efforts to mitigate any Damages or potential Damages for which
the other party or parties is or may be obligated to indemnify
such party under this Article 8.
(d) Other than as set forth in Section 8.1, neither
the Seller nor any Principal Member shall be liable to any Buyer
Party for Damages with respect to or in connection with any
breach of any representation or warranty of the Seller and/or the
Principal Members for which any of the Buyer Parties had actual
knowledge, based on a writing delivered by or on behalf of the
Seller, on and/or before the Closing Date.
8.5 NOTIFICATION OF CLAIMS.
Upon any party (the "Indemnified Party") becoming aware
of a fact, condition or event that constitutes a basis for a
claim for Damages in respect thereof against any other party (the
"Indemnifying Party") under Section 8.2 or 8.3, if such a claim
is to be made, the Indemnified Party will with reasonable
promptness notify the Indemnifying Party or Parties in writing of
such fact, condition or event, but in any event within sufficient
time to permit the Indemnifying Party or Parties to respond
timely to any complaint or other process served on the
Indemnified Party. The failure to notify the Indemnifying Party
or Parties under this Section 8.5 shall not relieve any
Indemnifying Party of any liability that it may have to the
Indemnified Party except to the extent that such failure to
notify shall have resulted in a waiver of any lawful and valid
affirmative defense to any third-party claim or otherwise
materially prejudices the Indemnifying Party or Parties in
connection with the administration or defense of such third-party
claim.
8.6 THIRD PARTY CLAIMS.
(a) Upon receipt by the Indemnifying Party or Parties
of any notice of claim for indemnification hereunder arising from
a third-party claim, the Indemnifying Party or Parties shall
assume the administration and defense of such third-party claim
with counsel that is reasonably satisfactory to the Indemnified
Party and shall proceed with the administration and defense of
such third-party claim diligently and in good faith; provided,
however, that any Indemnifying Party shall be entitled to assume
the administration and defense of such third-party claim only if
it agrees in writing with the Indemnified Party that it is
obligated to indemnify the Indemnified Party pursuant to this
Article 8 with respect to such third-party claim; and provided,
further that no Indemnifying Party shall be entitled to assume
the administration and defense of any third-party claim that (i)
seeks an injunction or other equitable relief that might
materially and adversely affect the Buyer, or (ii) involves any
criminal action or any claim that could reasonably be expected to
result in a criminal action against the Buyer. The Indemnified
Party shall be fully consulted by the Indemnifying Party or
Parties and shall have the right to participate, at its own
expense, in the investigation, administration and defense of such
third-party claim. Any party hereto receiving notice of any
proposed settlement of any such third-party claim shall promptly
provide a copy of such notice to the other parties hereto. The
Indemnifying Party or Parties shall not have the right to settle
or compromise any third-party claim for which indemnification is
being sought hereunder without the consent of the Indemnified
Party unless as a result of such settlement or compromise the
Indemnified Party is fully discharged and released from any and
all liability with respect to such third-party claim. The
Indemnified Party shall make available to the Indemnifying Party
or Parties and its counsel all books, records, documents and
other information relating to any third-party claim for which
indemnification is sought hereunder, and the parties to this
Agreement shall render to each other reasonable assistance in the
defense of any such third-party claim.
(b) In the event more than one party is an
Indemnifying Party, a majority in interest of such Indemnifying
Parties shall assume the administration and defense of such third-
party claim and appoint counsel reasonably satisfactory to the
Indemnified Party and proceed with the administration and defense
of such third-party claim diligently and in good faith. All
decisions and other actions that are taken by such majority in
interest of the Indemnifying Parties in connection with the
appointment of such counsel and the administration and defense of
such third-party claim shall be final, binding and conclusive on
all other Indemnifying Parties, and none of such other
Indemnifying Parties obligations under this Article 8 shall be
diminished as a result of such administration and defense of such
third-party claim.
(c) Notwithstanding any other provision of this
Agreement, the Indemnified Party shall have the absolute right,
at its election (to be exercised in its sole discretion by
written notice to the Indemnifying Party or Parties) to assume
from the Indemnifying Party or Parties the administration and
defense of any third-party claim against the Indemnified Party.
In such event, the Indemnifying Party or Parties shall be
responsible for the costs and expenses of the administration and
defense of such claim incurred prior to the Indemnified Party or
Parties' assumption of the administration and defense of such
claim and shall not be responsible for costs and expenses
incurred after such assumption.
8.7 SELLER PARTY INDEMNIFICATION PAYMENT.
Seller Parties shall have the right, but not the
obligation, to pay indemnification obligations by the return of
the Purchase Stock, valued at Two Dollars ($2.00) per share. If
Seller Parties have not paid any indemnification obligation
within thirty (30) days of (i) the entry of a final court order
or (ii) a written stipulation by the parties establishing a
liquidated amount of Damages, the Buyer may call the Purchase
Stock to the extent then owned by a Principal Member, valued at
Two Dollars ($2.00) per share, to satisfy such amount, in whole
or in part.
SECTION 9. EXPENSES
9.1 EXPENSES.
(A) Except as set forth in this Section, fees and expenses
incurred in connection with this Agreement and the transactions
contemplated by this Agreement ("Transaction Expenses") shall be
paid by the party incurring such expenses, whether or not the
Closing is consummated.
(b) Any transfer fee, real estate or otherwise,
incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the Seller and/or
the Principal Members.
SECTION 10. MISCELLANEOUS
10.1 AMENDMENT.
This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto.
10.2 WAIVER.
(A) No failure on the part of any party to exercise any power,
right, privilege or remedy under this Agreement, and no delay on
the part of any party in exercising any power, right, privilege
or remedy under this Agreement, shall operate as a waiver of such
power, right, privilege or remedy; and no single or partial
exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other
power, right, privilege or remedy.
(b) No party shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy
under this Agreement, unless the waiver of such claim, power,
right, privilege or remedy is expressly set forth in a written
instrument duly executed and delivered on behalf of such party;
and any such waiver shall not be applicable or have any effect
except in the specific instance in which it is given.
10.3 ENTIRE AGREEMENT; COUNTERPARTS.
This Agreement (and the exhibits and schedules hereto)
constitutes the entire agreement among the parties hereto and
supercedes all other prior agreements and understandings, both
written and oral, among or between any of the parties hereto with
respect to the subject matter hereof. This Agreement may be
executed in several counterparts, each of which shall be deemed
an original and all of which shall constitute one and the same
instrument.
10.4 APPLICABLE LAW; JURISDICTION.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard
to principles of conflict of laws. The parties hereto hereby
declare that it is their intention that this Agreement shall be
regarded as made under the laws of the State of Delaware and that
the laws of said State shall be applied in interpreting its
provisions in all cases where legal interpretation shall be
required. Each of the parties hereto agrees that any action,
suit or proceeding arising out of the transactions contemplated
by this Agreement (a "Proceeding") shall be commenced and
conducted exclusively in the federal or state courts of the State
of Delaware, and each of the parties hereby irrevocably and
unconditionally: (i) consents to submit to the exclusive
jurisdiction of the federal and state courts in the State of
Delaware for any Proceeding (and each party agrees not to
commence any Proceeding, except in such courts); (ii) waives any
objection to the laying of venue of any Proceeding in the federal
or state courts of the State of Delaware; (iii) waives, and
agrees not to plead or to make, any claim that any Proceeding
brought in any federal or state court of the State of Delaware
has been brought in an improper or otherwise inconvenient forum;
and (iv) waives, and agrees not to plead or to make, any claim
that any Proceeding shall be transferred or removed to any other
forum. Each of the parties hereto hereby irrevocably and
unconditionally agrees: (1) to the extent such party is not
otherwise subject to service of process in the State of Delaware,
to appoint and maintain an agent in the State of Delaware as such
party's agent for acceptance of legal process, and (2) that
service of process may also be made on such party by prepaid
certified mail with a proof of mailing receipt validated by the
United States Postal Service constituting evidence of valid
service, and that service made pursuant to clause (1) or (2)
above shall have the same legal force and effect as if served
upon such party personally within the State of Delaware.
10.5 ATTORNEYS' FEES.
In any action at law or suit in equity to enforce this
Agreement or the rights of any of the parties hereunder, the
prevailing party in such action or suit shall be entitled to
reasonable attorneys' fees and all other reasonable costs and
expenses incurred in such action or suit.
10.6 ASSIGNABILITY; THIRD PARTY BENEFICIARIES.
This Agreement shall be binding upon, and shall be
enforceable by and inure solely to the benefit of, the parties
hereto and their respective successors and permitted assigns;
provided, however, that neither this Agreement nor any of the
Seller's, Principal Members' or Buyer's rights hereunder may be
assigned without the prior written consent of the other parties,
as the case may be, and any attempted assignment of this
Agreement or any of such rights without such consent shall be
void and of no effect. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any Person (other
than the parties hereto) any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement except for
(i) the rights, benefits and remedies granted to the Indemnified
Persons under Section 8.6; and (ii) the rights of the Principal
Members to receive Consideration in accordance with the
provisions of this Agreement.
10.7 NOTICES.
Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in
writing and shall be deemed properly delivered, given and
received (i) on the date of delivery if delivered personally, or
(ii) on the date of confirmation of receipt (or the first
business day following such receipt if the date is not a business
day) if delivered by a nationally recognized overnight courier
service. All notices hereunder shall be delivered to the address
set forth beneath the name of such party below (or to such other
address as such party shall have specified in a written notice
given to the other parties hereto):
If to Buyer:
Dynasil Corporation of America
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.:
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to (which copy shall not constitute notice
hereunder):
Bond, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, PLLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to the Seller:
RMD Instruments, LLC
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to (which copy shall not constitute notice
hereunder):
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to a Principal Member:
▇▇▇▇▇▇ ▇▇▇▇▇▇ 1988 Family Trust
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
10.8 SEVERABILITY.
If any provision of this Agreement or any part of any
such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or
part thereof shall, with respect to such circumstances and in
such jurisdiction, be deemed amended to conform to applicable
Legal Requirements so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability
of such provision or part thereof under such circumstances and in
such jurisdiction shall not affect the validity or enforceability
of such provision or part thereof under any other circumstances
or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such
provision or the validity or enforceability of any other
provision of this Agreement; provided, however, that the economic
or legal substance of the transactions contemplated hereby is not
affected in a materially adverse manner to any party. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith in general fashion to modify this
Agreement so as to effect the original interest of the parties as
closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the maximum
extent possible.
10.9 SPECIFIC PERFORMANCE.
The parties agree that irreparable damage would occur
in the event that any provision of this Agreement is not
performed in accordance with its specific terms or is otherwise
breached. The parties agree that, in the event of any breach by
the other party of any covenant or obligation contained in this
Agreement, the other party shall be entitled (in addition to any
other remedy that may be available to it, including monetary
damages) to seek (a) a decree or order of specific performance to
enforce the observance and performance of such covenant or
obligation, and (b) an injunction restraining such breach. The
parties further agree that no party to this Agreement shall be
required to obtain, furnish or post any bond or similar
instrument in connection with or as a condition to obtaining any
remedy referred to in this Section 10.9, and each party waives
any objection to the imposition of such relief or any right it
may have to require the obtaining, furnishing or posting of any
such bond or similar instrument.
10.10 CONSTRUCTION.
(A) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice
versa; the masculine gender shall include the feminine and neuter
genders; the feminine gender shall include the masculine and
neuter genders; and the neuter gender shall include masculine and
feminine genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the
drafting party shall not be applied in the construction or
interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be
terms of limitation, but rather shall be deemed to be followed by
the words "without limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to
Sections of this Agreement and Exhibits to this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date and year first above written.
DYNASIL CORPORATION OF AMERICA
By
:
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
RMD INSTRUMENTS, LLC
By
:
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
PRINCIPAL MEMBERS
By _______________________________
: __________
▇▇▇▇▇▇ ▇▇▇▇▇▇, as Trustee of
▇▇▇▇▇▇ ▇▇▇▇▇▇ 1988 Family Trust
By _______________________________
: _______
▇▇▇▇▇ ▇▇▇▇
By _______________________________
: _______
▇▇▇▇▇ ▇▇▇▇
By _______________________________
: _______
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
[Signature Page to Asset Purchase Agreement]
EXHIBIT A
CERTAIN DEFINITIONS
As used in this Agreement, the following terms have the
following meanings unless the context otherwise requires:
"Allocation Schedule" is defined in Section 1.4(d) of
this Agreement.
"Business Debts" is defined in Section 3.20 of this
Agreement.
"Buyer Cap" is defined in Section 8.3(b) of this
Agreement.
"Buyer Basket" is defined in Section 8.3(b) of this
Agreement.
"Buyer Balance Sheet" is defined in Section 4.5(c) of
this Agreement.
"Buyer Balance Sheet Date" is defined in Section 4.5(c)
of this Agreement.
"Buyer Financial Statements" is defined in Section
4.5(c) of this Agreement.
"Buyer Material Contract" means a Dynasil Corporation
Contract required by the rules and regulations of the SEC to be
filed as an exhibit to the Buyer SEC Documents.
"Buyer Parties" is defined in Section 8.2(a) of this
Agreement.
"Buyer Product" is defined in Section 4.12(e) of this
Agreement.
"Buyer SEC Documents" is defined in Section 4.5(a) of
this Agreement.
"Closing" is defined in Section 2.1(a) of this
Agreement.
"Closing Allocation Schedule" is defined in Section
1.4(d) of this Agreement.
"Closing Date" is defined in Section 2.1(a) of this
Agreement.
"Code" is defined in Section 3.10(a) of this Agreement.
"COBRA" is defined in Section 3.10(d) of this
Agreement.
"Consideration" is defined in Section 1.4(a) of this
Agreement.
"Contracts" is defined in Section 1.1(d) of this
Agreement.
"Damages" is defined in Section 8.2(a) of this
Agreement.
"Dynasil Corporation Contract" shall mean any contract:
(a) to which any of the Dynasil Corporations is a party; (b) by
which any of the Dynasil Corporations or any asset of any of the
Dynasil Corporations is or may become bound or under which any of
the Dynasil Corporations has, or may become subject to, any
obligation; or (c) under which Buyer has or may acquire any right
or interest.
"Dynasil Corporations" is defined in Section 4.1 of
this Agreement.
"Employee Benefit Plan" is defined in Section 3.10(a)
of this Agreement.
"Encumbrance" shall mean any lien, pledge,
hypothecation, charge, mortgage, security interest, encumbrance,
claim, infringement, interference, option, right of first
refusal, preemptive right or community property interest
(including any restriction on the voting of any security, any
restriction on the transfer of any security or other asset, any
restriction on the receipt of any income derived from any asset,
any restriction on the use of any asset and any restriction on
the possession, exercise or transfer of any other attribute of
ownership of any asset); provided that the term Encumbrance shall
not be deemed to include (a) liens for current Taxes or income
Taxes not yet due and payable or that are being contested in good
faith, in each case, and for which adequate reserves have been
recorded, (b) liens for assessments or other governmental charges
or liens of landlords, carriers, warehousemen, mechanics or
materialmen securing obligations incurred in the ordinary course
of business consistent with prior practice that are not yet due
and payable or due but not delinquent or being contested in good
faith, (c) liens incurred in the ordinary course of business
consistent with prior practice in connection with workers'
compensation, unemployment insurance and other types of social
security or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return of money bonds and similar
obligations, (d) purchase money or similar security interests
granted in connection with the purchase of equipment or supplies
in the ordinary course of business consistent with prior practice
in an amount not to exceed $10,000 in the aggregate, (e) liens
arising as a matter of law in the ordinary course of business
with respect to Seller's obligations incurred after December 31,
2003, provided that the obligations secured by such liens are not
delinquent, (f) such title defects and liens, if any, as
individually or in the aggregate are not reasonably likely to
have a Material Adverse Effect on the Seller, (g) licenses or
other agreements relating to Proprietary Assets which are not
intended to secure an obligation; or (h) with respect to the
agreements of Seller and Principal Members in Section 1.1 hereof
and the representations and warranties set forth in Article 3
hereof, liens or other encumbrances of any type imposed by this
Agreement, the Merger Agreement and/or the transactions
contemplated herein and therein.
"Environmental Law" shall mean any foreign, federal,
state or local statute, law, rule, regulation, ordinance, treaty,
code, policy or rule of common law now or from time to time in
effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the
environment, natural resources, health, safety or Hazardous
Materials, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended; the Resource
Conservation and Recovery Act, as amended; the Hazardous
Materials Transportation Act, as amended; the Clean Water Act, as
amended; the Toxic Substances Control Act, as amended; the Clean
Air Act, as amended; the Safe Drinking Water Act, as amended; the
Atomic Energy Act, as amended; the Federal Insecticide, Fungicide
and Rodenticide Act, as amended; and the Occupational Safety and
Health Act, as amended.
"Equipment" is defined in Section 1.1(b) of this
Agreement.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Affiliate" as defined in Section 3.10(a) of this
Agreement.
"Excluded Assets" is defined in Section 1.3 of this
Agreement.
"Financial Statements" is defined in Section 3.6 of
this Agreement.
"Goodwill" is defined in Section 1.1(e) of this
Agreement.
"Governmental Authorization" shall mean any: (a)
permit, license, certificate, franchise, permission, variance,
clearance, registration, qualification or authorization issued,
granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal
Requirement; or (b) right under any Contract with any
Governmental Body.
"Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district
or other jurisdiction of any nature; (b) federal, state, local,
municipal, foreign or other government; (c) governmental or quasi-
governmental authority of any nature (including any governmental
division, department, agency, commission, instrumentality,
official, organization, unit or body and any court or other
tribunal); or (d) the National Association of Securities Dealers,
Inc. (including the rules and regulations of the Nasdaq).
"IES Report" is defined in Section 3.12 of this
Agreement.
"Indemnified Party" is defined in Section 8.5 of this
Agreement.
"Indemnifying Party" is defined in Section 8.5 of this
Agreement.
"Inventory" is defined in Section 1.1(a) of this
Agreement.
"knowledge" with respect to any party hereto shall mean
the actual knowledge, after due inquiry, of such party, such
party's manager, director and/or executive officers.
"Legal Requirement" shall mean any applicable federal,
state, local, municipal, foreign or other law, statute,
constitution, principle of common law, resolution, ordinance,
code, edict, decree, rule, regulation, ruling or requirement
issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental
Body (or under the authority of NASD or the Nasdaq), including
any Environmental Law.
"Liabilities" is defined in Section 1.2 of this
Agreement.
"Licenses" is defined in Section 1.1(g) of this
Agreement.
An event, violation, inaccuracy, circumstance or other
matter will be deemed to have a "Material Adverse Effect" on, or
shall be deemed to be "material" to, the Business or the
Purchased Assets if such event, violation, in accuracy,
circumstance or other matter had or could reasonably be expected
to have a material adverse effect on the business, condition,
assets, operations or financial performance of the Business
taken as a whole, or materially impede the consummation of the
transactions contemplated herein.
"Merger Agreement" is defined in the Recitals of this
Agreement.
"Miscellaneous Property" is defined in Section 1.1(f)
of this Agreement.
"Order" shall mean any: (a) order, judgment,
injunction, edict, decree, ruling, pronouncement, determination,
decision, opinion, verdict, sentence, subpoena, writ or award
issued, made, entered, rendered or otherwise put into effect by
or under the authority of any court, administrative agency or
other Governmental Body or any arbitrator or arbitration panel;
or (b) Contract with any Governmental Body entered into in
connection with any Legal Proceeding.
"Person" means any individual, entity or Governmental
Body.
"Permits" is defined in Section 3.13 of this Agreement.
"Pro-Rata Share" means the pro rata share of each
Principal Member based on their relative ownership of the Seller
immediately prior to the Closing, equal to 92.8773% for ▇▇▇▇▇▇
▇▇▇▇▇▇ 1988 Family Trust, 4.9175% for ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and 2.2052%
for ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ under this Agreement and the pro rata
Share of each of the Stockholders based on their relative
ownership of the Company prior to the consummation of the Merger
under the Merger Agreement, equal to 95.8773% for ▇▇▇▇▇▇ ▇▇▇▇▇▇
1988 Family Trust, 1.9175% for ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and 2.2052% for
▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇.
"Proceeding" is defined is Section 10.5 of this
Agreement.
"Proprietary Asset" shall mean any: (a) patent, patent
application, trademark (whether registered or unregistered),
trademark application, trade name, fictitious business name,
service ▇▇▇▇ (whether registered or unregistered), service ▇▇▇▇
application, copyright (whether registered or unregistered),
database rights, design rights, moral rights, domain name,
assumed and fictitious name registrations, copyright application,
copyright registration, mask work right, mask work right
application, trade secret, or any other intellectual or
industrial or intangible property right, know-how, customer
lists, computer software, source code, algorithm, invention,
engineering drawing, and technology; and (b) right to use or
exploit any of the foregoing.
"Purchased Assets" is defined is Section 1.1 of this
Agreement.
"Purchase Cash" is defined in Section 1.4(a) of this
Agreement.
"Purchase Price" in defined in Section 1.4(a) of this
Agreement.
"Purchase Stock" is defined in Section 1.4(a) of this
Agreement.
"Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors, consultants
and representatives of the Person and its Subsidiaries.
"Retained Earnings Extraction" is defined in Section
2.1(e) of this Agreement.
"Securities Act" shall mean the Securities Act of 1933,
as amended and the regulations promulgated thereunder.
"Seller Basket" is defined in Section 8.2(b) of this
Agreement.
"Seller Cap" is defined in Section 8.2(b) of this
Agreement.
"Seller Organization Documents" is defined in Section
3.1 of this Agreement.
"Seller Parties" is defined in Section 8.2(b) of this
Agreement.
"Seller Product" is defined in Section 3.16(f) of this
Agreement.
"Seller's Extraction Account" is defined in Section
2.1(e) of this Agreement.
"Stockholders" is defined in the Recitals of this
Agreement.
"Stock Merger Consideration" is defined in Section
1.5(a) of this Agreement.
"Survival Date" is defined in Section 8.1 of this
Agreement.
"Tax" shall mean all taxes, assessments, charges,
duties, fees, levies or other governmental charges, including,
without limitation, all Federal, state, local, foreign and other
income, franchise, profits, gross receipts, capital gains,
capital stock, transfer, net proceeds, alternative or add-on
minimum, ad valorem, turnover, personal property (tangible and
intangible), leasing, lease, user, employment, fuel, excess
profits, interest equalization, property, sales, use, value-
added, occupation, property, excise, severance, windfall profits,
stamp, license, payroll, social security, withholding and other
taxes, assessments, charges, duties, fees, levies or other
governmental charges of any kind whatsoever (whether payable
directly or by withholding and whether or not requiring the
filing of a Tax return), all estimated taxes, deficiency
assessments, additions to tax, penalties and interest and shall
include any liability for such amounts as a result either of
being a member of a combined, consolidated, unitary or affiliated
group or of a contractual obligation to indemnify any person or
other entity.
"Taxing Authority" is defined in Section 3.8 of this
Agreement.
"Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate,
schedule, notice, notification, form, election, certificate or
other document or information filed with or submitted to, or
required to be filed with or submitted to, any Governmental Body
in connection with the determination, assessment, collection or
payment of any Tax or in connection with the administration,
implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"Transaction Expenses" is defined in Section 9.3(a) of
this Agreement.
* * *
EXHIBIT B
CLOSING ALLOCATION SCHEDULE
EXHIBIT C
▇▇▇▇ OF SALE
EXHIBIT D
SELLER'S CERTIFICATE
EXHIBIT E
BUYER'S CERTIFICATE
EXHIBIT F
RETAINED EARNINGS EXTRACTION
APPENDIX I
INVESTMENT LETTER
[Member's Letterhead]
Dynasil Corporation of America
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
AS A CONDITION PRECEDENT TO RECEIVING SHARES (THE "PURCHASE
STOCK") OF DYNASIL CORPORATION OF AMERICA ("DYNASIL") IN
CONSIDERATION FOR THE PURCHASE OF THE ASSETS OF RMD INSTRUMENTS,
LLC (THE "ACQUISITION"), I HEREBY REPRESENT AND WARRANT THE
FOLLOWING:
(a) I am purchasing the Purchase Stock for the my own
account and with no intention of distributing or reselling the
Purchase Stock in any transaction which would be in violation of
the securities laws of the United States of America or any state
thereof, or in any transaction that would subject the issuance
and sale of the Purchase Stock pursuant to the Acquisition to the
registration requirements of the Securities Act and applicable
state securities laws. I understand that the Purchase Stock has
not been registered under the Securities Act or the securities
laws of any state by reason of a specific exemption from the
registration or qualification provisions of the Securities Act or
said securities laws, the availability of which depends upon,
among other things, the bona fide nature of the investment intent
and the accuracy of the representations as expressed herein. I
understand that Dynasil has no obligation to register the
Purchase Stock under the Securities Act or any state securities
laws.
(b) I acknowledge that, subject to the terms of the
Acquisition, the Purchase Stock must be held indefinitely unless
the Purchase Stock is so registered or an exemption from such
registration is available.
(c) I have had an opportunity to discuss the business,
management and financial affairs of Dynasil and the terms and
conditions of an investment in the Purchase Stock with, and have
had access to, the management of Dynasil and have had the
opportunity to review the information set forth in Dynasil's
public filings and any other information requested by RMD
Instruments, LLC.
(d) I understand and acknowledge that Dynasil will be
relying upon the representations and warranties set forth herein
in offering and selling the Purchase Stock in connection with the
Acquisition.
(e) I represent that the offering to me of the
Purchase Stock was made only through direct, personal
communication between me and a representative of Dynasil and/or
RMD Instruments, LLC and not through public solicitation or
advertising.
(f) I did not retain or consult any "Purchaser
Representative", as such term is defined in Rule 501 of
Regulation D promulgated under the Securities Act.
(g) I have such knowledge, experience and skill in
evaluating and investing in securities, based on actual
participation in financial, investment and business matters such
that I am capable of evaluating the merits and risks of an
investment in the Purchase Stock, and have such knowledge,
experience and skill in financial and business matters that I am
capable of evaluating the merits and risks of the prospective
investment in Dynasil and the suitability of the Purchase Stock
as an investment for myself.
(h) I have not received, and am not relying on, any
representations or warranties from Dynasil or any other person,
other than those contained in the Acquisition agreement and those
set forth in statements, reports, schedules, forms, exhibits and
other documents filed by Dynasil with the United States
Securities and Exchange Commission.
(i) I am able to bear the economic risk of an
investment in the Purchase Stock and have an adequate income
independent of any income produced from an investment in the
Purchase Stock and have sufficient net worth to sustain a loss of
all of my investment in the Purchase Stock without economic
hardship if such a loss should occur.
(j) I am an "accredited investor" as defined in Rule
501(a) under the Securities Act.
I understand that Dynasil is relying upon the representations and
warranties I make herein, and will indemnify, defend and hold
Dynasil and its affiliates, officers, directors and agents
harmless against any costs, fees or damages of any kind arising
out of the inaccuracy of any statement made herein.
WITNESS:
____________________________
Name:
____________________________
Name:
Date: