Exhibit 10.1

[Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed]

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this “ Agreement ”), dated as of July 1, 2019, is between ROSS OPTICAL INDUSTRIES, INC. (“ Seller ”) and EDWARD ROSS (" Ross "), DIVAKER MANGADU (" Mangadu "), and STEELE JONES (" Jones ") (collectively, “ Shareholders ”) on one hand, and Precision Optics Corporation, Inc. (“ Purchaser ”) on the other hand.

RECITALS:

A.            Seller is a Texas corporation organized in 1989, which is engaged in the business of the manufacture of scopes, lenses, and other optical products. One hundred percent of the capital stock of Seller is owned by Shareholders.

B.             Purchaser is a Massachusetts corporation organized in 1982, which is engaged in the business of developing and manufacturing advanced optical instruments.

C.            Seller intends to sell, assign, transfer, convey and deliver to Purchaser, and Purchaser intends to purchase, acquire and accept from Seller the Assets in accordance with the terms and conditions of this Agreement.

TERMS OF AGREEMENT:

NOW, THEREFORE, FOR VALUE RECEIVED, the mutual covenants herein and other good and valuable consideration, the sufficiency of which is acknowledged by the Seller, Shareholders, and Purchaser hereby stipulate and agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1.    Definitions . In addition to the terms defined elsewhere in this Agreement, the following terms have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Affiliate ” means, with respect to a specified Person, any other Person or member of a group of Person acting together that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with the specified Person. As used in this Agreement, the term “ control ” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“ Agreement ” means this Asset Purchase Agreement, as amended, including any Schedules and Exhibits attached hereto.

“ Annual Earn-Out Tariff Increase ” means the aggregate amount of tariffs assessed on goods imported from China by the Business over the applicable Earn-Out Period in excess of the aggregate amount of tariffs that would have been assessed if the tariff rate were equal to the Baseline Tariff Amount Percentage. Such Annual Earn-Out Tariff Increase will be recorded by Purchaser for the applicable Earn-Out Period.

“ Assets ” has the meaning given to it in Section 2.1.

“ Assignment of Contract ” has the meaning given to it in Section 6.4(g).

“ Assignment of Lease ” has the meaning given to it in Section 6.4(f).

“ Assumed Liabilities ” has the meaning given to it in Section 2.3.

“ Assumed Debt Consideration ” has the meaning given in Section 2.4(e).

“ Balance Sheet ” means the balance sheet included in the Financial Statements.

“ Balance Sheet Date ” means December 31, 2018.

‘ Baseline Tariff Amount Percentage ” means the rate of tariffs assessed on goods imported from China by the Business at December 31, 2018, which the parties agreed to be 10%.

“ Business ” means sales and manufacture of precision optical components and sub-assemblies (cementing, coating, and opto-mechanical assembly).

“ Business Day ” means any weekday on which nationally-chartered banks in Gardner, Massachusetts and El Paso, Texas are open for business.

“ Business Information ” has the meaning given in Section 5.4.

“ Business Intellectual Property ” has the meaning given in Section 3.11.

“ Cash Consideration ” has the meaning given to it in Section 2.4(a).

“ Charter Documents ” means (a) the certificate or articles of incorporation and the bylaws of a corporation, (b) the certificate of formation and partnership agreement of a partnership, (c) the certificate of formation and limited liability company agreement or operating agreement of a limited liability company and (d) the charter, formation and/or constitutional documents of any other legal entity, in each case including all amendments thereto.

“ Claim ” means any existing or threatened claim, demand, suit, action, investigation, proceeding or cause of action of any kind or character (in each case, whether civil, criminal, investigative or administrative, and whether made by a Governmental Authority or any other Person), known or unknown, absolute or contingent, asserted or unasserted, under any theory, including, without limitation, contract, tort, statutory liability, strict liability, employer liability, premises liability, products liability, breach of warranty or malpractice.

“ Closing Date ” has the meaning given to it in Section 2.6.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Contracts ” means all written, electronic, and oral contracts, agreements, commitments, franchises, understandings, arrangements, leases, licenses, registration, mortgages, bonds, notes, guarantees and other undertakings.

“ Earnest Money Escrow Agreement ” has the meaning given to it in Section 2.7.

“ Earn-Out Consideration ” has the meaning given to it in Section 2.4(b).

“ Earn-Out Period ” means, as the case may be, (i) July 1, 2019 to June 30, 2020, (ii) July 1, 2020 to June 30, 2021, or (iii) July 1, 2021 to June 30, 2022.

“ Effective Date ” means June 1, 2019.

“ Effective Date Balance Sheet ” means the Balance Sheet as of the Effective Date.

“ Encumbrance ” means any encumbrance, security interest, mortgage, deed of trust, lien, charge, pledge, option, right of first refusal or similar right, easement, restrictive covenant, Claim or restriction of any kind, including, without limitation, any restriction on the use, transfer, receipt of income or other exercise of any attributes of ownership.

“ Environmental Law ” means each present and future Law, Order or Permit pertaining to (a) public health or safety, (b) the protection, preservation or restoration of the environment or natural resources or (c) the generation, production, use, storage, transportation, processing, release or disposal of Hazardous Materials.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ Excluded Assets ” means the assets listed in Section 2.2 or, if necessary, in Schedule 2.2 .

“ Execution Date ” means the date upon which the last party signs this Agreement.

“ First Earn-Out Period ” means July 1, 2019 to June 30, 2020.

“ GAAP ” means generally accepted accounting principles in the United States of America as set forth in pronouncements of the Financial Accounting Standards Board (and its predecessors) and the American Institute of Certified Public Accountants.

“ Governmental Authority ” means any government or governmental or regulatory body thereof, or political subdivision thereof, whether federal, state, local or foreign, or any agency, department or instrumentality thereof, or any court (public or private).

“ Gross Margin ” means the difference between revenue and cost of goods sold divided by revenue.

“ Hazardous Material ” means any substance, material, contaminant, pollutant or waste presently or hereafter listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous under any Environmental Law or regulated as such by any Governmental Authority including, without limitation, any industrial substance, petroleum (or any derivative or by-product thereof), radon, radioactive material, asbestos (or asbestos containing material), urea formaldehyde, foam insulation, lead or polychlorinated biphenyls.

“ Intellectual Property ” means all United States and foreign intellectual and industrial property, including patent applications, patents and any reissues or reexaminations thereof, trademarks, service marks, trademark/service mark registrations and applications, brand names, trade names, all other names and slogans embodying business or product goodwill (or both), copyright registrations, mask works, copyrights, moral rights of authorship, rights in designs, trade secrets, technology, inventions, discoveries, improvements, know-how, proprietary rights, computer software and firmware, internet domain names, specifications, drawings, designs, formulae, processes, methods, technical information, confidential and proprietary information, and all other intellectual and industrial property rights, whether or not subject to statutory registration or protection.

“ Interim Financial Statements ” has the meaning given to it in Section 3.5.

“ Knowledge ” means whenever a statement regarding the existence or absence of facts in this Agreement is qualified by a phrase such as “to such Person’s Knowledge” or “Known to such Person,” or similar language it is intended by the Parties that the only information to be attributed to such Person is information actually or constructively known after reasonable investigation to (a) Shareholders in the case of an individual or (b) an officer as a result of his or her employment with Seller in the case of a corporation or other entity.

“ Law ” means any applicable law, statute, code, ordinance, rule or regulation promulgated by any Governmental Authority, including any policy having the force and effect of law, any rule of common law and any judicial or administrative interpretation thereof.

“ Lease ” means the lease agreement between Seller and Texzona Industries, Ltd., dated March 12, 2002, as amended from time to time.

“ Legal Proceeding ” means any judicial, administrative, regulatory or arbitral proceeding, investigation or inquiry or administrative charge or complaint pending at law or in equity by or before any Governmental Authority.

“ Liabilities ” means all liabilities, obligations, commitments, liens, requirements, duties, or responsibilities, whether accrued, absolute, contingent, known, unknown or otherwise, and whether or not resulting from a Claim or giving rise to a Loss.

“ Losses ” means all Liabilities, losses, damages, injuries, harm, diminutions in value, costs (including, without limitation, costs of investigation), fines, fees and expenses (including reasonable attorneys’ fees incident to any of the foregoing).

“ Material Adverse Change ” or “ Material Adverse Effect ” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets (each, taken as a whole) of the applicable Party in the aggregate (other than general economic, competitive or industry conditions which have not had nor might reasonably be expected to have a disproportionate effect on the Business), or (b) the ability of the applicable Party to consummate the transactions contemplated hereby on a timely basis.

“ Maximum Aggregate Cap ” has the meaning given to it in Section 3.15.

“ Order ” means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award by a Governmental Authority of competent jurisdiction.

“ Ordinary Course of Business ” means the usual and ordinary course of business for Seller or the Business, consistent with past practice.

“ Permit ” means any written approval, consent, exemption, franchise, license, permit, waiver, registration, filing, certificate or other authorization required by Law to conduct any portion of the Business as currently conducted or as proposed to be conducted following this transaction, including without limitation all construction, installation and maintenance licenses and local health and fire permits pertaining to the physical facilities, manufacturing, equipment, staffing and records.

“ Person ” means any natural person, corporation, partnership, firm, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization, Governmental Authority or other legal entity.

“ Purchaser Documents ” means this Agreement and each of the other agreements, certificates and instruments to be executed by Purchaser in connection with or pursuant to this Agreement.

“ Qualifying Revenue ” means revenues less returns.

“ Retained Liabilities ” has the meaning given to it in Section 2.9.

“ Second Earn-Out Period ” means July 1, 2020 to June 30, 2021.

“ Seller Documents ” means this Agreement and each of the other agreements, certificates and instruments to be executed by Seller, Shareholders, and/or by persons now employed by Seller in connection with or pursuant to this Agreement.

“ Taxes ” (including, with correlative meaning, the term “Tax”) means all taxes, charges, fees, levies, duties, penalties, assessments or other amounts imposed by or payable to any foreign, federal, state, local, foreign or other taxing authority or agency, including, without limitation, income, gross receipts, profits, windfall profits, gains, minimum, alternative minimum, estimated, ad valorem, value added, severance, stamp, customs, import, export, utility, use, service, excise, property, sales, transfer, franchise, payroll, withholding, social security, disability, employment, workers compensation, unemployment compensation and other taxes, and including any interest, penalties or additions attributable thereto.

“ Tax Return ” means any return, report, information return or other document (including any related or supporting information) required to be prepared with respect to Taxes.

“ Third Earn-Out Period ” means July 1, 2021 to June 30, 2022.

“ Third Party ” means any Person other than Seller, Shareholders, Purchaser or any of their respective Affiliates.

“ Three-Year Period ” means the period beginning on July 1, 2019 and ending on June 30, 2022.

“ United Bank ” means United Bank of El Paso del Norte, El Paso, Texas.

“ Working Capital ” means net current Assets less any net current Assumed Liabilities, not including the Excluded Assets nor the Retained Liabilities, and is determined in accordance with GAAP.

“ WOSC ” means Wholly Owned Subsidiary Corporation.

ARTICLE II

PURCHASE AND SALE OF ASSETS

Section 2.1.    Purchase and Sale of the Assets . On the terms and subject to the conditions set forth in this Agreement, on the Closing Date Seller shall sell, assign, transfer, convey and deliver to Purchaser, and Purchaser shall purchase, acquire and accept from Seller, free of all liens, claims, and encumbrances, expressly provided otherwise herein, all of the assets, properties, rights, titles and interests of every kind and nature owned, licensed or leased by Seller and used in or related to the Business (including indirect and other forms of beneficial ownership) as of the Closing Date, whether tangible, intangible or personal and wherever located and by whomever possessed, including, without limitation, all of the following assets, but excluding the Excluded Assets (collectively, the " Assets "):

Section 2.2.    Excluded Assets . The sale of the Assets by Seller to Purchaser pursuant to this Agreement will not include the following excluded assets listed in Schedule 2.2 (collectively, the “ Excluded Assets ”):

Section 2.3.    Assumed Liabilities . Subject to the terms and conditions set forth herein, Purchaser shall assume and agree to pay, perform and discharge only the following liabilities (the “ Assumed Liabilities ”), and no other liabilities:

(a)             Trade Accounts Payable . Those certain trade accounts payable of Seller to Third Parties in connection with the Business that remain unpaid and are not delinquent as of the Effective Date only if included in the Effective Date Balance Sheet;

(b)             Employee Liabilities . Any accrued and unpaid bonus payments, commissions, vacation, sick leave or other liabilities related to employees of the Business as of the Effective Date only if included in the Effective Date Balance Sheet;

Section 2.4.     Purchase Price . Purchaser shall pay to Seller and Ross up to an aggregate purchase price for the purchase and sale of the Assets of two million USD ($2,000,000), (the “ Purchase Price ”) to be paid as follows:

Section 2.5       Earn-Out .

(1) A product of applicable Qualifying Revenue and Gross Margin that exceeds or is equal to the product of the minimum required Qualifying Revenue and minimum required Gross Margin for the applicable Earn-Out Period as set forth above, then the Annual Earn-Out Payment for that Earn-Out Period shall be earned in full; or

(2) A product of applicable Qualifying Revenue and Gross Margin that is less than the product of the minimum required Qualifying Revenue and minimum required Gross Margin for the applicable Earn-Out Period as set forth above, then the Annual Earn-Out Payment shall be adjusted in accordance with Section 2.5(c).

Section 2.6.    Closing . It is anticipated that the Closing will take place approximately one week after the Execution Date. The consummation of the transactions contemplated by this Agreement (the “ Closing ”) will take place at the offices of Trombly Business Law, PC, 1314 Main Street, Suite 201, Louisville, CO 80027, or at another place, time and date as mutually agreed upon by Purchaser and Seller. The date on which the Closing occurs is referred to as the “ Closing Date .” All proceedings to be taken and all documents to be executed and delivered by all Parties at the Closing will be deemed to have been taken, executed, and delivered simultaneously, and no proceedings will be deemed taken nor any documents executed or delivered until all have been taken, executed and delivered. On the Closing Date, Seller shall deliver to Purchaser the Seller Documents, including the specific items set forth in Section 6.3 herein, and Purchaser shall deliver to Seller the Purchaser Documents, including the specific items set forth in Section 6.4 herein.

Section 2.7.     Earnest Money . Upon execution of this Agreement, within five (5) Business Days of the date of this Agreement, Purchaser shall deposit with Amy Trombly, Esq. (the " Earnest Money Escrow Agent") the sum of fifty thousand USD ($50,000) (the " Earnest Money "). To this end, Seller, Purchaser and the Escrow Agent shall enter into an Earnest Money escrow agreement (the “ Earnest Money Escrow Agreement ”). If and when Closing occurs, the Earnest Money shall be delivered by the Earnest Money Escrow Agent to Seller as part of the Cash Consideration of the Purchase Price. In the event Closing does not occur, and this Agreement is terminated by Seller, due to a breach of this Agreement by Purchaser which continues for more than thirty (30) days after written notice of default from Seller to Purchaser, then Purchaser shall cause the Earnest Money Escrow Agent to deliver the Earnest Money to Seller as liquidated damages, and not as a penalty, which will be Seller's sole and exclusive remedy. In the event Closing does not occur, or this Agreement is terminated, for any other reason whatsoever, including, without limitation, the failure to obtain audited Financial Statements as of December 31, 2018 and December 31, 2017, a breach of this Agreement by Seller or any of the Shareholders, failure of any contingency or condition precedent, then the Earnest Money will be delivered by the Earnest Money Escrow Agent to the Purchaser.

Section 2.8.     Holdback and Purchase Price Adjustment. On the Closing Date, Seller shall prepare and deliver to Purchaser a Balance Sheet of the Business as of the Effective Date in accordance with GAAP using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Financial Statements for the Balance Sheet Date (the “ Effective Date Balance Sheet ”). Purchaser shall have thirty (30) calendar days to review the Effective Date Balance Sheet and object in writing setting forth Purchaser’s objections in reasonable detail, indicating each disputed item or amount and the basis for Purchaser’s disagreement therewith to such Effective Date Balance Sheet. Upon the expiration of the 30-day review period, Purchaser will be deemed to have accepted the Effective Date Balance Sheet. If Seller does not agree with Purchaser’s objection, the parties shall promptly obtain an independent public accounting firm to resolve the dispute within another thirty (30) calendar days and share the costs of such audit equally. The independent auditor’s determination of the disputed amounts and their adjustments to the Effective Date Balance Sheet shall be conclusive and binding upon the parties hereto. Within three (3) Business Days of either Purchaser’s acceptance of the Effective Date Balance Sheet or a final determination of the Effective Date Balance Sheet by the independent auditor, Purchaser shall pay to Seller paid by wire transfer of immediately available funds to such account as is directed by Seller, the Holdback Amount, less, dollar by dollar (collectively the “ Purchase Price Adjustments ”),

If the aggregate amount of the Purchase Price Adjustments exceeds the Holdback Amount, Seller and Shareholders shall be jointly and severally liable to pay by wire transfer of immediately available funds to such account as is directed by Purchaser, the difference in cash to Purchaser within three (3) Business Days of finalization of the Effective Date Balance Sheet.

Section 2.9.      No Assumption of Seller’s Liabilities . Notwithstanding anything herein to the contrary, except for the Assumed Liabilities assumed, Purchaser is not assuming and shall not assume, or in any way undertake to pay, perform, satisfy, or discharge, any other debts, indebtedness, payables, or other amounts, judgments, claims, or other Liabilities of any kind due from Seller or any Shareholder (collectively, the “ Retained Liabilities ”), including without limitation, liabilities or obligations based on, arising out of or in connection with:

Except as provided in Schedule 2.9, at, and promptly after Closing, the Seller shall, and the Shareholders shall cause the Seller to, use the Cash Consideration of the Purchase Price to pay and otherwise satisfy all Seller’s Retained Liabilities. If any such Retained Liabilities are not so paid or provided for, or if Purchaser reasonably determines that failure to make any payments will impair Purchaser’s use or enjoyment of the Assets or conduct of the Business previously conducted by Seller with the Assets, Purchaser may, at any time after the Closing Date, elect to make all such payments directly (but will have no obligation to do so) and will be promptly reimbursed by Seller for the amount paid by Purchaser. Alternatively, Purchaser may withhold from the Annual Earn-Out Payment any such payments made in the Purchaser’s sole discretion. Notwithstanding the foregoing, Purchaser, before electing to make any such payment directly, shall provide Seller written notice of such failure by Seller, and Seller shall have five (5) Business Days to either (i) make such payment, or (ii) provide written notice to Purchaser that Seller is contesting such payment in good faith. In the event Seller provides such notice of contest, Purchaser shall not make such payment of such Retained Liability unless such contest actually and materially impairs Purchaser’s use or enjoyment of the Assets or conduct of the Business.

Section 2.10. Allocation of Purchase Price . On the Closing Date, Seller and Purchaser shall allocate the Purchase Price among the Assets in accordance with the methodology set forth on Schedule 2.10 , in a manner consistent with the Internal Revenue Code and the regulations thereunder, as agreed by their respective accountants, negotiating in good faith on their behalf. Such allocations shall be used by the Parties in preparing Form 8594, Asset Acquisition Statement, for Purchaser and Seller and all Tax Returns. Purchaser and Seller shall each file Form 8594, prepared in accordance with this Section 2.10, with the Tax Return for the period which includes the Closing Date. All allocations made pursuant to this Section 2.10 shall be binding upon the parties hereto and upon each of their successors and assigns, and the Parties shall report the transactions contemplated by this Agreement in accordance with such allocations. The Parties shall cooperate with one another with respect to the matters set forth in this Section 2.10.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

As a material consideration for the payment by Purchaser of the Purchase Price, Seller and Shareholders, jointly and severally, represent and warrant to Purchaser the following are true and correct as of the date hereof and as of the Effective Date and the Closing Date:

Section 3.1.     Organization . Seller is a domestic for-profit corporation, duly organized, validly existing and in good standing under the Laws of the State of Texas. The Seller is duly qualified or authorized to do business as a foreign corporation, and is in good standing, under the Laws of California, Georgia, New Mexico and each other jurisdiction where the Seller is required to be so qualified or authorized. The Seller has full power and authority to own, lease and operate its properties and to conduct the Business.

Section 3.2.    Enforceability . Seller and Shareholders have full power and authority to execute and deliver the Seller Documents, to perform their respective obligations under the Seller Documents and to consummate the transactions contemplated by the Seller Documents. The execution and delivery by Seller and Shareholders of the Seller Documents, the performance by Seller and Shareholders of their respective obligations under the Seller Documents and the consummation by Seller and Shareholders of the transactions contemplated by Seller Documents have been duly authorized. This Agreement has been duly and validly executed and delivered by Seller and Shareholders and constitutes the legal, valid and binding obligation of the Seller and Shareholders enforceable against the Seller and Shareholders in accordance with its terms. As of the Closing, the Seller Documents other than this Agreement will be duly and validly executed and delivered by Seller and Shareholders that is a party thereto and, upon such execution and delivery, will constitute the legal, valid and binding obligations of the particular Seller enforceable in accordance with the respective terms, except as limited by provisions of creditor’s rights, bankruptcy law or principles of equity.

Section 3.3.    No Conflicts . The execution and delivery by Seller and Shareholders of the Seller Documents, the performance by Seller and Shareholders of their respective obligations under the Seller Documents and the consummation by Seller and Shareholders of the transactions contemplated by Seller Documents do not, and will not:

(a)            violate any provision of Law or any Permit;

(b)           violate any provision of the Charter Documents of Seller;

(c)           except as specifically described in Schedule 3.3(c) , require any consent, waiver, approval, registration, Order, action or authorization of, declaration or filing with or notification to any Governmental Authority or other Person (whether pursuant to a Contract or otherwise), other than a consent, waiver, approval, authorization, declaration, filing or notification that has been obtained or made prior to the execution and delivery by Seller and Shareholders of this Agreement;

(d)           violate, conflict with, constitute a default under or breach any term, condition or provision of any Contract or Order (whether with the passage of time, the giving of notice or otherwise);

(e)            result in the termination of, give rise to a right of termination or cancellation of or accelerate the performance required pursuant to any contract to which the Seller is a party (whether with the passage of time, the giving of notice or otherwise); or

(f)            result in the creation of any Encumbrance with respect to any asset of the Seller.

Section 3.4      Capitalization. The aggregate number of shares and type of all authorized, issued and outstanding classes of capital stock, options and other securities of Seller (whether or not presently convertible into or exercisable or exchangeable for shares of capital stock of the Seller), and the ownership thereof, is set forth in Schedule 3.4 . All outstanding shares of capital stock are duly authorized, validly issued, fully paid and nonassessable and have been issued in compliance with all applicable securities laws. Seller has not issued any other options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or entered into any agreement giving any Person any right to subscribe for or acquire, any securities issued by Seller.

Section 3.5.    Financial Statements . Seller has provided to Purchaser (a) the audited balance sheets of Seller and its subsidiaries as of December 31, 2018 and December 31, 2017, and the related audited statements of operations, cash flows and shareholders’ equity of Seller for the annual periods then ended, including an unqualified opinion of an independent accounting firm (the " Financial Statements ") and (b) the unaudited balance sheets of Seller and its subsidiaries as of the end of each month ended since December 31, 2017 through May 31, 2019 and the related statement of operations for the periods then ended (item (b), the “ Interim Financial Statements ”), which present fairly the financial position of Seller and the results of operations as of the dates and for the periods therein specified, and have been prepared in accordance with GAAP, consistently applied throughout the periods involved, subject, in the case of interim financial statements, to normal periodic adjustments in an amount and of a character not materially inconsistent with prior periods. The Financial Statements and Interim Financial Statements do not contain any items of a special or nonrecurring nature, except as expressly stated therein, and have been prepared from the books and records of the Seller, which accurately and fairly reflect the consolidated financial condition and results of operations of the Seller as of the respective dates thereof and for the periods indicated.

Section 3.6.    Undisclosed Liabilities . The Seller has no Liabilities, including any Claims against Assets, other than as set forth or reflected on the Effective Date Balance Sheet.

Section 3.7.    Absence of Certain Developments . Since the Balance Sheet Date, the Business has been operated in the Ordinary Course of Business, has incurred no Liabilities other than in the Ordinary Course of Business and there has not been:

(a)            any Material Adverse Change, or the occurrence of any event that could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change;

(b)           any change, not disclosed in the Financial Statements, in the accounting methods, practices or principles or cash management practices of Seller;

(c)           any revaluation of any of the Assets, including, without limitation, the write-down or write-off of notes, accounts receivable or inventory, other than in the Ordinary Course of Business;

(d)           any sale, assignment, transfer, distribution, mortgage or pledge of any of the Assets of Seller, except sales of inventory in the Ordinary Course of Business, or the placement of any Encumbrance on any of the Assets;

(e)           any failure to use commercially reasonable efforts to preserve Seller, to keep available to Seller the services of its key employees and to preserve for Seller the goodwill of its suppliers, vendors, customers and others having business relations with it;

(f)            any breach or default (or event that with notice or lapse of time would constitute a breach or default), acceleration, termination (or threatened termination), modification or cancellation of any contract to which Seller is a party;

(g)           any (i) increase in the compensation payable or to become payable by Seller to any of its employees, including, without limitation, any bonuses and/or commissions; (ii) adoption, amendment or increase in the coverage or benefits available under any Employee Benefit Plan or Benefit Arrangement or (iii) amendment or execution of any employment, deferred compensation, severance, consulting, non-competition, employee retention plan or similar agreement to which Seller is a party or involving an employee of Seller (other than employment terminable at will without penalty);

(h)           any termination of employment (whether voluntary or involuntary) of, or receipt or expectation of receipt of any resignation by, any key employee of the Business, or any termination of employment (whether voluntary or involuntary) of employees of Seller materially in excess of historical attrition in personnel;

(i)            except as specifically described in Schedule 3.7(i) , any transaction between Seller and any Shareholder and/or Affiliate;

(j)            any cancellations or waivers of any Claims or rights of Seller of material value;

(k)           any execution of capital leases by Seller;

(l)            the incurrence of debt of any kind;

(m)          making or changing any election, changing any annual accounting period, adopting or changing any accounting method, filing any amended Tax Return, settling any Tax Claim or assessment relating to the Business, surrendering any right to claim a refund of Taxes, consenting to an extension or waiver of the limitation period applicable to any Tax Claim or assessment, or taking any other similar action, or omitting to take any action relating to the filing of any Tax Return or the payment of any Tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent or other action or omission would have the effect of increasing the present or future Tax liability or decreasing any present or future Tax asset of the Business;

(n)           any declaration or payment of any dividends or distributions on or in respect of any of Seller’s capital stock or redemption, purchase or acquisition of Seller’s capital stock;

(o)           any material change in cash management practices and policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts receivable, accrual of accounts receivable, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits;

(p)           any other transaction, agreement or commitment entered into or affecting the Business or the Assets of Seller not made in the Ordinary Course of Business; or

(q)           any agreement or understanding to do, or resulting in, any of the foregoing.

(r)            any cash payments or receipts from the Effective Date to the Closing Date for amounts related to Excluded Assets or Retained Liabilities, which if made or received will be treated as an adjustment to the Holdback per Section 2.8(c).

Section 3.8.     Status of Business Assets .

(a)           Seller has good and marketable title to all of the Assets, free and clear of all Encumbrances.

(b)           A true, correct, and complete list of the Assets as of the Closing Date is attached hereto as Schedule 3.8(b) . No part of the Business of Seller and no asset, right or interest related to, or employed in or reasonably necessary for the conduct of the Business (other than the Leased Property defined below) is owned or held by any Person other than Seller; with the exception of certain Inventory consisting of glass lenses in an aggregate amount of less than ten thousand USD ($10,000) held by WOSC.

(c)           Seller’s tangible personal property Assets are in good condition and repair, ordinary wear and tear excepted, and are in good working order (where applicable) and have been properly and regularly maintained.

(d)           Seller does not own, or have any interests in or rights with respect to, any real property. Seller occupies its current facilities at 1410 Gail Borden, Suite A3, El Paso, Texas (the “ Leased Property ”) pursuant to the Lease between the Seller and Texzona Industries, Ltd. (the " Landlord "), dated March 12, 2002, as amended, and extended by documents described in the Landlord Estoppel Certificate (collectively, the " Lease "). With respect to the Leased Property:

(i)       Seller has afforded Purchaser a right to inspect and view the Leased Property. There are presently no pending or threatened condemnation actions or special assessments of any nature on the Leased Property or any part thereof, Seller has received no notice of any condemnation actions or special assessments being contemplated, and Seller and Shareholders do not have any Knowledge of any being contemplated. Seller and Shareholders have received no request, written or otherwise, from any Governmental Authority with regard to dedication of the Leased Property or any part thereof;

(ii)       Seller and Shareholders have received no notice of, and have no other Knowledge or information of, any pending or contemplated change in any regulation or private restriction applicable to the Leased Property or any part thereof, of any pending or threatened judicial or administrative action by adjacent landowners or other Persons or of any natural or artificial condition adversely affecting the Leased Property or any part thereof;

(iii)     there is no Legal Proceeding pending or threatened against or relating to any portion of the Leased Property;

(iv)     there are no attachments, executions or assignments for the benefit of creditors or voluntary or involuntary proceedings in bankruptcy or under any other debtor relief Laws contemplated by a pending or threatened action or suit against the Seller, any Shareholder, or the Leased Property;

(v)       no Person has, or at the Closing Date shall have, any right or option to acquire all or any portion of the Leased Property; and

(vi)     no portion of the Leased Property shall be subject at the Closing Date to any agreement (written or oral), except the Lease.

Section 3.9.     Status of Business Contracts .

(a)            Each of Seller’s Contracts is a valid and binding agreement of Seller and is in full force and effect and enforceable against each party thereto in accordance with its terms. All of the Business Contracts, together with all amendments, waivers or other changes thereto, as of the Closing Date are listed in Schedule 3.9 . There has been no breach or default by any party (or event that with the passage of time, the giving of notice or both would constitute a breach or default) under any of Seller’s Contracts. The Seller thereto has performed all of the obligations required to be performed by it under each contract and is not in receipt of any notice of termination or written claim of default under any such of Seller’s Contracts. No party to any Seller Contract has threatened to, or notified Seller of any intention to, terminate or materially alter its relationship with Seller as a result of this Agreement or the consummation of the transactions contemplated hereby. To Seller’s and/or Shareholders’ Knowledge, no party to a Seller Contract intends to alter its relationship with Seller as a result of, or in connection with, the transactions contemplated by this Agreement.

(b)           Except for the Contracts listed in Schedule 3.9 , Seller is not a party to, and no asset or property of Seller is bound by, any of the following types of Contracts:

(i)       Contracts (including mortgages) pursuant to which any Assets are subject to any Encumbrance;

(ii)       Contracts pursuant to which Seller is obligated to provide indemnification to any Third Party;

(iii)     Contracts (including consent decrees) that impose (or could by their terms impose) any material restrictions on the Business with respect to its geographical area of operations or scope or type of business;

(iv)     Contracts between Seller, on the one hand, and any Shareholder or Affiliate, on the other hand; and

(v)      Contracts not entered into in the Ordinary Course of Business.

Section 3.10.  Status of Business Accounts Receivable and Payable . (a) Schedule 3.10(a) sets forth all accounts receivable as of the Effective Date, including the name of the customer, the date of the invoice, and the age of the account receivable. All of the notes and accounts receivable of the Business are and will be, good and valid receivables, subject to no counterclaims, charge backs, deductions, credits. Set offs or offsets, are reflected in the Effective Date Balance Sheet or arose in the Ordinary Course of Business since the Effective Date Balance Sheet Date. All of such accounts receivable (net of any allowance for doubtful accounts reflected in the Effective Date Balance Sheet) are fully collectible in the Ordinary Course of Business and without recourse to any Legal Proceeding.

(b) Schedule 3.10(b) sets forth all accounts payable as of the Effective Date, including the name of the vendor, the date of the invoice, and the age of the account payable. All accounts payable of the Business arose in bona fide arms length transactions in the Ordinary Course of Business and no account payable is delinquent by more than sixty (60) days in its payment. Since the date of the Effective Date Balance Sheet, the Business has paid its accounts payable in the ordinary course and in a manner which is consistent with its past practices. As of the Effective Date, the Business has no account payable to any Person (other than accounts payable in the Ordinary Course of Business which are not material in the aggregate) which is an Affiliate of the Business or any of its directors, officers, employees or stockholders.

Section 3.11.   Status of Business Intellectual Property .

(a)           Extent of and Title to Intellectual Property . Schedule 3.11(a) contains a complete and correct list of all of the Intellectual Property that is or has been used, held for use or is reasonably necessary for use in the Business or by Seller (the “ Business Intellectual Property ”). Seller possesses and either owns, is licensed under or has the valid right to use all of the Business Intellectual Property. The Business Intellectual Property owned by the Seller is not subject to any outstanding option, license or agreement of any kind, and is owned free and clear of all Encumbrances. All Business Intellectual Property licensed to Seller has been licensed pursuant to agreements that are set forth on Schedule 3.9 . All Business Intellectual Property that is neither owned by Seller nor licensed by Seller is in the public domain.

(b)            Registered Intellectual Property . Schedule 3.11(b) sets forth a correct and complete list of all of the following Business Intellectual Property, and indicates whether it is owned or licensed by Seller: (a) trademark and service mark registrations and applications for registration; (b) patents and pending patent applications; (c) copyright registrations and applications for registration and (d) trade names. All of the Business Intellectual Property issued by, registered with, or filed with a U.S. or foreign patent, trademark or copyright office has been duly issued by, registered with or duly filed in such office, as the case may be, and has been properly processed, maintained and renewed in accordance with all applicable provisions of applicable Law in the applicable country.

(c)            No Restrictions on Transfer . No Business Intellectual Property is subject to any outstanding Order, Contract or other Liability restricting in any manner the use thereof by the Business or Seller.

(d)            No Infringement by Third Parties . There is no unauthorized use, infringement or misappropriation of any Business Intellectual Property by any Person, including, without limitation, any current or former shareholder, director, officer, employee, consultant or other agent of Seller.

(e)            No Infringement by the Business . No Person has asserted, or threatened to assert, any Claim with respect to the Business Intellectual Property, including any claim of ownership of or infringement by the Business Intellectual Property. There is no reasonable basis for any bona fide Claim (i) to the effect that the Business as presently conducted or Seller infringes, violates or misappropriates any Intellectual Property of any other Person; or (ii) challenging the ownership, validity, enforceability or effectiveness of any of the Business Intellectual Property or any license.

(f)             Reasonable Safeguards Taken . Seller has taken reasonable precautions to protect its rights in and to the Business Intellectual Property, including maintaining the confidentiality of trade secrets, pending patent applications, know-how and other confidential Business Intellectual Property. Seller has not taken, or failed to take, any action that would preclude or hinder the protection or enforcement of the Business Intellectual Property.

(g)            No Competitive Intellectual Property . Except as specifically described in Schedule 3.11(g) , no Shareholder, director, officer, employee, consultant or other agent of Seller owns any rights in Intellectual Property that are directly or indirectly competitive with those owned or to be used by Seller or derived from or in connection with the conduct of the Business.

Section 3.12 .   Insurance . All of the material Assets of the Business are insured for the benefit of Seller, and will be so insured through the Closing Date, in amounts and against risks that are customary for the type of business conducted by Seller for a similar property with customary deductibles and retained amounts. Set forth on Schedule 3.12 is a complete and accurate list and description of all insurance policies, including fire, liability, product liability, errors and omissions, workers’ compensation, health and other forms of insurance, currently issued to Seller with respect to its business, properties or assets. With respect to each insurance policy, the policy is legal, valid, binding and in full force and effect, and Seller is not in default under the respective policy. There are no claims by Seller pending under any such policies and Seller has not been informed that coverage has been questioned, denied or disputed by the underwriters of such policies with respect to any such claims.

Section 3.13.   Employees .

(a)            Schedule 3.13 lists the name and address of each officer and employee of Seller and each consultant to Seller and whether or not their employment is terminable at will. Schedule 3.13 also sets forth, for each such Person, their date of employment, current job title or relationship to Seller, the aggregate annual cash compensation paid to such Person by Seller, a description of all bonus, commission or benefit plans applicable to such Person and the date and amount of their last increase in compensation. Schedule 3.13 shall also describe past practices with regards to bonuses and commissions.

(b)           Seller is not a party to any labor, union or collective bargaining agreement and there are no labor, union or collective bargaining agreements that pertain to any employee of Seller. There is no organizing activity (including any demand for recognition or certification proceeding pending with the National Labor Relations Board) involving any employees of Seller by any labor organization or group of employees presently pending or threatened. No strike, work stoppage, lockout, labor grievance or other labor dispute is presently pending or threatened against Seller, and no such strike, work stoppage, lockout, labor grievance or other labor dispute has ever occurred.

(c)           Seller is and has been in material compliance with all Laws relating to employment or labor, including, without limitation, the Occupational Safety and Health Act.

(d)           Except as set forth in Schedule 3.13 , Seller does not have any oral or written agreements or understandings to provide its employees pay raises, bonuses, stock options or other compensation benefits.

(e)           Except as set forth in Schedule 3.13 , Seller does not have any employment agreements with its employees.

Section 3.14.   Employee Benefits .

(a)           Except as disclosed in Schedule 3.14(a) , there are no material, written “employee benefit plans,” as defined in Section 3(3) of ERISA, maintained by Seller or to which Seller contributed or is obligated to contribute for current or former employees (collectively, the “ Employee Benefit Plans ”). There are no contracts providing for employment or severance, or plan or arrangement providing for insurance coverage, severance, termination or similar coverage. Any written compensation policies and practices maintained by Seller covering any employee or former employee that is not an Employee Benefit Plan (a “ Benefit Arrangement ”) is listed on Schedule 3.14(a) , and true, correct and complete copies thereof have been made available or delivered to Purchaser by Seller.

(b)           Except as disclosed in Schedule 3.14(b) , Seller does not maintain and has no obligation to contribute to (or any other liability with respect to) any funded or unfunded Employee Benefit Plan that provides post-retirement health, accident or life insurance benefits to current or former employees, current or former independent contractors, current or future retirees, their spouses, dependents or beneficiaries, other than limited health benefits required to be provided to former employees, their spouses and other dependents under Code Section 4980B.

(c)           Except as disclosed in Schedule 3.14(c) , there are no employee pension plans (as defined in Section 3(2) of ERISA) of Seller (the “ Employee Pension Plans ”).

Section 3.15.  Compliance with Law . Seller is, and at all times has been, in compliance with all Laws relating to the conduct of the Business, including, without limitation, all Laws relating to occupational health and safety, product quality, tax, safety, and employment and labor matters, except where such non-compliance does not result in costs, damages, fines or other expenses in the aggregate exceeding the Maximum Aggregate Cap. The parties understand and agree that Seller may have some instances of immaterial non-compliance with certain laws and regulations that might result in fees, damages, fines, costs of compliance (including legal, accounting, regulatory or other professional fees) or other expenses. In such instances, the Purchaser will not invoke its rights under this Agreement as long as the total aggregate of all such instances of immaterial non-compliance does not exceed, in total, $10,000 (the “Maximum Aggregate Cap.”).

Section 3.16. Permits . Seller has all Permits necessary for the conduct of the Business, all such Permits are in full force and effect and Seller is in compliance with the requirements of all such Permits. No loss or expiration of any Permit is pending, threatened or reasonably foreseeable, other than expiration of Permits that may be renewed in the Ordinary Course of Business without lapsing. Schedule 3.16 contains a list of all Permits of Seller.

Section 3.17.   Environmental Matters .

(a)            Legal Compliance . The Business is now and has always been conducted in compliance with all Environmental Laws. Seller has never generated, produced, used, stored, transported, processed, released or disposed of any Hazardous Materials, in any quantity, except in compliance with all Environmental Laws, except where such non-compliance does not result in costs, damages, fines or other expenses in the aggregate exceeding the Maximum Aggregate Cap.

(b)            Absence of Certain Hazardous Materials . To the Knowledge of Seller and Shareholders, the Leased Premises does not contain any Hazardous Materials in amounts exceeding the levels permitted by Environmental Laws.

(c)            No Claims or Proceedings . Seller is not subject to any pending Claim or Legal Proceeding investigating, asserting or alleging the violation of any Environmental Law. Neither Seller, nor any of its properties and assets, are subject to any Liability relating to any Claim or Legal Proceeding, any settlement thereof or any Order asserted, arising under or relating to any Environmental Law. There are no environmental conditions regarding the Business or the Assets of Seller that could reasonably be anticipated to (i) form the basis of any material Claim against the Assets or Seller, or (ii) cause the Business or the Assets to be subject to any material restriction on ownership, occupancy, use or transfer under any Environmental Law.

(d)            No Notices or Threats of Liability . Seller has not received any notice, demand letter or request for information from any Governmental Authority or other Person indicating, asserting or alleging that Seller is or has been in material violation of any Environmental Law, may be liable under any Environmental Law or may be a potentially responsible party at any Superfund site. No Governmental Authority or other Person has threatened to initiate any Claim, Legal Proceeding or investigation relating to the violation or possible violation of any Environmental Law by Seller.

(e)            Environmental Reports . No reports have been filed, or are required to be filed, by Seller relating to the Business or any of its properties or assets, concerning the release of any Hazardous Material or the threatened or actual violation of any Environmental Law. All existing, tangible environmental investigations, studies, audits, tests, reviews and other analyses regarding compliance or noncompliance with any Environmental Law by Seller, the Business, or the Leased Property have been delivered to Purchaser prior to the date hereof.

Section 3.18.  Legal Proceedings . There are no Legal Proceedings, pending or threatened. None of the Assets are subject to or bound by any Order currently in effect.

Section 3.19.   Taxes .

(a)           Except as disclosed in Schedule 3.19 , Seller has (i) duly and timely filed (or there has been filed on its behalf) with the appropriate taxing authorities all Tax Returns required to be filed by it and (ii) timely paid (or there has been paid on its behalf) all Taxes due or claimed to be due from it by any taxing authority. There are no liens for Taxes upon the Assets except for statutory liens for current Taxes not yet due.

(b)           All Tax Returns previously prepared are correct and complete in all material respects.

(c)           Seller has complied in all material respects with all applicable Laws, rules and regulations relating to the payment and withholding of Taxes (including, without limitation, withholding of Taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions under any foreign Laws) and has, within the time and manner prescribed by Law, withheld and paid over to the proper Governmental Authorities all amounts required to be withheld and paid over under all applicable Laws.

(d)           No federal, state, local or foreign audits or other administrative proceedings or court proceedings (the “ Audits ”) exist or have been initiated with regard to any Taxes or Tax Returns of Seller, and Seller has not received any notice that such an Audit is pending or threatened with respect to any Taxes due from, or with respect to, Seller or any Tax Return filed by or with respect to Seller.

(e)            There is no material dispute or Claim concerning any Tax liability of the Business either claimed or raised by any Governmental Authority or as to which Seller or any of the Shareholders has Knowledge.

(f)            The Seller and Shareholders acknowledge that they are responsible for seeking their own tax advice and that the Purchaser has not provided any corporate or individual tax advice regarding this Agreement, transactions contemplated by this Agreement or the impact of this Agreement on any individuals. The Seller and Shareholders have sought such tax advice as they deem necessary.

Section 3.20.   Related Party Transactions . There are no inter-company receivables or payables between Seller, on the one hand, and any related party, on the other hand, except as reflected in the Financial Statements.

Section 3.21.    Foreign Registrations/Assumed Names . Schedule 3.21 sets forth a list of each of the jurisdictions in which Seller is duly registered and authorized to conduct its business and/or has registered any assumed names.

Section 3.22.   Subsidiaries and Investments . Seller does not own, directly or indirectly, any stock, partnership interest or joint venture interest in, or any security or debt or equity interest issued by, any Person, or any option or right to acquire any of the foregoing.

Section 3.23.  Brokers’ Fees . Except as listed in Schedule 3.23 , Seller has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

Section 3.24. No Misrepresentations . The representations, warranties and statements made by Seller and Shareholders in or pursuant to this Agreement and/or in the documents, information, data, and other materials provided to date by Seller or Seller to Purchaser as part of the due diligence process of Purchaser or otherwise, are true, complete and correct in all material respects and do not contain any untrue statement of a material fact or omit to state any material fact necessary to make any such representation, warranty or statement, under the circumstances in which it is made, not misleading. Seller and Shareholders have disclosed to Purchaser all facts and information material to the proposed purchase of the Assets hereunder, and to the assets, liabilities, obligations, status, and value of Seller, that are Known to Seller or Shareholders.

Section 3.25. Loans and Indebtedness . Schedule 3.25 represents a true, correct, and complete list of all loans and indebtedness (other than accounts payable) owed by Seller as of the date of this Agreement, and the current balances and payment terms thereof.

Section 3.26. Inventory . Except as specifically described in Schedule 3.26 , all of the inventory of the Business reflected on the Effective Date Balance Sheet, whether located on the premises of the Business or elsewhere on the Effective Date, will consist of the quantity and quality usable and saleable in the ordinary Course of Business, are not damaged or defective and are merchantable. All Inventory is owned by the Business free and clear of all Encumbrances, and no Inventory is held on a consignment basis. All of the inventory of the Business will be properly reflected on the Effective Date Balance Sheet, books and records and will not be the subject of any counterclaim, charge back, deduction, credit, set off or offset. The quantities of each item of inventory (whether raw materials, work-in-process or finished goods) are not excessive, but are reasonable in the present circumstances of Seller.

Section 3.27. Product Warranty; Product Liability . No product of the Business manufactured, sold, licensed, leased or delivered to any party is subject to any guaranty, warranty, or other indemnity beyond the applicable standard terms and conditions of sale or lease, other than statutory warranties. Within the three years prior to the Closing Date, there have been no breaches of any warranty of any product of the Business manufactured, sold, licensed, leased or delivered to any party that have resulted in a Material Adverse Effect on the Business. There is no existing Liability, Claim or obligation arising from or alleged from any actual or alleged injury to persons or property as a result of the ownership, possession or use of any product manufactured, sold, leased or delivered by the Business.

Section 3.28. Customers and Suppliers . (a) Schedule 3.28(a) sets forth with respect to the Business (i) each customer who has paid aggregate consideration to Seller for goods or services rendered in an amount greater than or equal to $100,000 for each of the two most recent fiscal years (collectively, the “ Material Customers ”); and (ii) the amount of consideration paid by each Material Customer during such periods. Except as set forth in Schedule 3.28(a), Seller has not received any notice, and has no reason to believe, that any of the Material Customers has ceased, or intends to cease after the Closing, to use the goods or services of the Business or to otherwise terminate or materially reduce its relationship with the Business.

(b) Schedule 3.28(b) sets forth with respect to the Business (i) each supplier to whom Seller has paid consideration for goods or services rendered in an amount greater than or equal to $100,000 for each of the two most recent fiscal years (collectively, the “ Material Suppliers ”); and (ii) the amount of purchases from each Material Supplier during such periods. Except as set forth in Schedule 3.28(b), Seller has not received any notice, and has no reason to believe, that any of the Material Suppliers has ceased, or intends to cease, to supply goods or services to the Business or to otherwise terminate or materially reduce its relationship with the Business.

Section 3.29.   Compliance with Money Laundering Laws . The operations of the Business are and have been conducted at all times in compliance with applicable financial record keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions to which the Business is subject, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “ Money Laundering Laws ”); and no action, suit or proceeding by or before any court or Governmental Authority, or body or any arbitrator involving the Business with respect to the Money Laundering Laws is pending or threatened.

Section 3.30.  Off-Balance Sheet Arrangements . There are no transactions, arrangements and other relationships between and/or among the Seller, and/or, to the Knowledge of the Seller, any of its Affiliates and any unconsolidated entity, including, but not limited to, any structured finance, special purpose or limited purpose entity (each, an “ Off Balance Sheet Transaction ”) that could reasonably be expected to affect materially the Business’ liquidity or the availability of or requirements for its capital resources, including those Off Balance Sheet Transactions described in the Commission’s Statement about Management’s Discussion and Analysis of Financial Conditions and Results of Operations (Release Nos. 33-8056; 34-45321; FR-61).

Section 3.31.   OFAC . (i) Neither the Business nor any director, officer, employee, agent, Affiliate or representative of the Business, is a government, individual, or entity (in this Section 3.31, “Person”) that is, or is owned or controlled by a Person that is the subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control (“ OFAC ”), the United Nations Security Council (“ UNSC ”), the European Union (“ EU ”), Her Majesty’s Treasury (“ HMT ”), or other relevant sanctions authority (collectively, “ Sanctions ”). The Business represents and covenants that for the past five (5) years, it has not knowingly engaged in, is not now knowingly engaged in, and will not engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to Seller the following are true and correct as of the date hereof and as of the Closing Date:

Section 4.1.    Organization . Purchaser is a domestic for-profit corporation, duly organized, validly existing and in good standing under the Laws of the State of Massachusetts. Purchaser is duly qualified or authorized to do business as a foreign corporation and is in good standing under each jurisdiction where Purchaser is required to be so qualified or authorized.

Section 4.2.    Enforceability . Purchaser has full power and authority to execute and deliver this Agreement and each of the other agreements, certificates and instruments to be executed by Purchaser in connection with or pursuant to this Agreement (collectively, and together with this Agreement, the “ Purchaser Documents ”), to perform its obligations under Purchaser Documents and to consummate the transactions contemplated by this Agreement. The execution and delivery by Purchaser of Purchaser Documents, the performance by Purchaser of its obligations under Purchaser Documents and the consummation by Purchaser of the transactions contemplated by Purchaser Documents have been duly authorized by all necessary action. This Agreement has been duly and validly executed and delivered by Purchaser and constitutes the legal, valid and binding obligation of Purchaser enforceable against Purchaser in accordance with its terms. As of the Closing, the other Purchaser Documents will be duly and validly executed and delivered by Purchaser and, upon such execution and delivery, will constitute the legal, valid and binding obligations of Purchaser enforceable against Purchaser in accordance with their respective terms.

Section 4.3.    No Conflicts . The execution and delivery by Purchaser of Purchaser Documents, the performance by Purchaser of its obligations under Purchaser Documents and the consummation by Purchaser of the transactions contemplated by Purchaser Documents do not, and will not, (a) violate any provision of Law, (b) violate any provision of the Charter Documents of Purchaser or (c) require any consent, waiver, approval or authorization of, declaration or filing with or notification to any Governmental Authority or other Person (whether pursuant to a contract or otherwise), other than a consent, waiver, approval, authorization, declaration, filing or notification that has been obtained or made prior to the execution and delivery by Purchaser of this Agreement.

Section 4.4.     Legal Proceedings . There are no Legal Proceedings pending or threatened that question the validity of this Agreement or any action taken or to be taken by Purchaser in connection with the consummation of the transactions contemplated by this Agreement.

ARTICLE V

COVENANTS APPLICABLE TO PERIOD PRIOR TO CLOSING

Section 5.1.    Conduct of the Business Pending the Closing . (a) Except as otherwise expressly contemplated by this Agreement or consented to by Purchaser in writing, from the date of this Agreement until the Closing Date, Seller shall operate the Business in the Ordinary Course of Business consistent with past practices and use reasonable best efforts to maintain and preserve intact its current Business organization, operations and to preserve the rights, franchises, goodwill and relationships of its employees, customers, lenders, suppliers, regulators and others having relationships with the Business. Without limiting the foregoing, from the date hereof until the Closing Date, Seller shall:

(i) preserve and maintain all Permits required for the conduct of the Business as currently conducted or the ownership and use of the Assets;

(ii) pay the debts, Taxes and other obligations of the Business when due;

(iii) continue to collect Accounts Receivable in a manner consistent with past practice, without discounting such Accounts Receivable;

(iv) maintain the Assets in the same condition as they were on the date of this Agreement, subject to reasonable wear and tear;

(v) continue in full force and effect without modification all insurance policies, except as required by applicable Law;

(vi) defend and protect the properties and assets included in the Assets from infringement or usurpation;

(vii) perform all of its obligations under all Contracts;

(viii) maintain the books and records in accordance with past practice;

(ix) comply in all material respects with all Laws applicable to the conduct of the Business or the ownership and use of the Assets; and

(x) not take or permit any action that would cause any of the changes, events or conditions described in Section 3.7 to occur.

(b) From the date hereof until the Closing Date, Seller shall promptly notify Purchaser in writing of:

(i) any fact, circumstance, event or action the existence, occurrence or taking of which (A) has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (B) has resulted in, or could reasonably be expected to result in, any representation or warranty made by Seller hereunder not being true and correct or (C) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions set forth in Section 6.1 to be satisfied;

(ii) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

(iii) any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; and

(iv) any Actions commenced or, to Seller’s Knowledge, threatened against, relating to or involving or otherwise affecting the Business, the Assets or the Assumed Liabilities that, if pending on the date of this Agreement, would have been required to have been disclosed or that relates to the consummation of the transactions contemplated by this Agreement.

Purchaser’s receipt of information pursuant to this Section 5.1 shall not operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller in this Agreement and shall not be deemed to amend or supplement the Schedules.

Section 5.2.    Acquisition Proposals . Shareholders and Seller will not, directly or indirectly, initiate, solicit or encourage any Third Party to make, or facilitate (including by the provision of information regarding Seller), entertain, discuss or negotiate, or endorse, accept or enter into any agreement with respect to, any proposal for an acquisition. Seller and Shareholder will promptly notify Purchaser of all relevant terms of any inquiry or proposal received by them or any related Person, or any of their agents or representatives relating to an acquisition and, if such inquiry or proposal is in writing, Seller and Shareholders will promptly deliver a copy of such inquiry or proposal to Purchaser.

Section 5.3.     Access to Information .

(a)           Prior to the date of this Agreement and the Closing Date, Purchaser will be entitled, through its authorized officers, employees and representatives (including, without limitation, its legal counsel, accountants, investment bankers and other representatives) (collectively, the “ Purchaser Representatives ”), to: (a) have reasonable access to Seller’s directors, officers, employees, agents, assets and properties, as well as all relevant books, records and documents of or relating to the Business, (b) such information, financial records and other documents relating to Seller as any Purchaser Representative may reasonably request, (c) make extracts and copies of any such books, records, documents and information and (d) have reasonable access to Seller’s accountants, auditors, customers and suppliers for consultation or verification of any information. In this regard, Purchaser shall have (at least read-only) remote 24/7 Internet access to Seller's accounting software and data; otherwise, Purchaser’s investigation and examination will be conducted during regular business hours, under reasonable circumstances and upon reasonable prior notice to Seller. Purchaser will not contact, directly or indirectly, any employee, customer or vendor of Seller to discuss the transactions contemplated by this Agreement, or any other subject related thereto, without the prior written consent of Seller, which consent will not be unreasonably withheld, delayed or conditioned. At a time (within the thirty (30) calendar days immediately preceding the Closing) and place mutually agreeable to Purchaser and Seller, Seller shall arrange for face-to-face meetings between Purchaser and senior employees of Seller, and for group meetings between Purchaser and other employees of Seller, for the purpose of introducing such employees to Purchaser. Seller shall use commercially reasonable efforts to cause all such Persons to cooperate with Purchaser Representative(s) in such an investigation and examination. No disclosure by Seller or Shareholders whatsoever during any investigation by Purchaser will in and of itself cure any breach of any warranty or representation of Seller or Shareholder set forth in this Agreement.

(b)           For a period of up to two (2) years after the Closing Date, Seller has a right of access during business hours to historical files and computer records relating to the Business as reasonably necessary, in Seller's opinion, to properly prepare or defend tax returns (including employment tax returns), or prepare for or defend a tax audit. Purchaser agrees to provide written notice to Seller of the location of the historical files and computerized records of Seller. During the two (2) year access period, historical files and computerized records of Seller shall not be destroyed by Purchaser without first offering same to Seller.

Section 5.4.    Confidentiality . From and after the date of this Agreement, Seller and Shareholders shall, (a) maintain the confidentiality of the Business Information (as defined below), (b) not, directly or indirectly, (i) transfer or disclose any Business Information to any Third Party; (ii) use any Business Information; or (iii) take any other action with respect to the Business Information that is inconsistent with the confidential and proprietary nature thereof. “ Business Information ” means all information and materials relating to Seller or the Business, whether in oral, written, graphic or machine-readable form, that is proprietary in nature, including, without limitation, all specifications, user, operations or systems manuals, diagrams, graphs, models, sketches, technical data, research, business or financial information, plans, strategies, forecasts, forecast assumptions, business practices, marketing information and material, customer names, proprietary ideas, concepts, know-how, methodologies and all other information related to Seller or the Business; provided, however, that “Business Information” will not include any of the foregoing that is then in the public domain through no fault of Seller or any Shareholders.

Section 5.5.    Public Announcements . None of Seller, Shareholders, Purchaser or their respective related Persons, agents and representatives shall issue any press release or public announcement concerning this Agreement or the transactions contemplated by this Agreement without obtaining the prior written approval of the other Parties to this Agreement, except as required by Law.

Section 5.6.     Supplemental Disclosure . Seller and Shareholders shall promptly supplement or amend any disclosures made pursuant to this Agreement with respect to any matter that arises or is discovered after the date hereof.

ARTICLE VI

CONDITIONS PRECEDENT TO ASSETS OBLIGATIONS/CLOSING DELIVERIES AND STIPULATIONS

Section 6.1.    Conditions to Obligations to Close Transaction . The obligations of Purchaser to consummate the purchase of the Assets on the Closing Date, as well as the obligations of Seller to consummate the sale, transfer and assignment to Purchaser of the Assets on the Closing Date is subject to the satisfaction of the following conditions (any or all of which may be waived by Purchaser or Seller, respectively, at or prior to the Closing):

(a)            All representations and warranties of Purchaser and Seller contained in this Agreement must be true and correct in all material respects as of the date of this Agreement and at and as of the Closing Date, and Purchaser and Seller and Shareholders must have performed and complied, in all material respects, with all obligations and covenants required by this Agreement to be performed or complied with by them on or prior to the Closing Date;

(b)           All consents, approvals, Orders or authorizations of Governmental Authorities and other Persons (whether pursuant to Permits, Contracts or otherwise) necessary for the consummation of the transactions contemplated by this Agreement must have been obtained and all notices to Governmental Authorities and other Persons (whether pursuant to Permits, Contracts or otherwise) necessary for the consummation of the transactions contemplated by this Agreement must have been given;

(c)            There must not be pending any injunctions or other litigation against or by Purchaser, Shareholders, or Seller that affect this transaction; and

(d)           There must not have occurred any Material Adverse Change to the Assets, Business, Liabilities, Contracts, financial condition, operating results, customer relations, employee relations, business prospects, cash flow or net worth prior to the Closing Date.

Section 6.2.     Non-Competition/Non-Solicitation .

(a)             Non-Competition . For a period of five (5) years after the Closing Date, Seller, Ross and/or Jones, nor any of their affiliates, will not, anywhere in the United States of America, directly or indirectly, invest in, own, manage, operate, finance, control, advise, render services to or guarantee the obligations of any Person engaged in or planning to become engaged in the business of sales and manufacture of precision optical components and sub-assemblies (cementing, coating, and opto-mechanical assembly) (a “ Competing Business ”), provided, however, that Seller and Shareholders may (i) engage in the manufacture of riflescopes, binoculars and other equipment related to commercial and Military Arms as defined in the United States Munitions List (“ USML ”), and (ii) purchase or otherwise acquire up to (but not more than) three percent (3%) of any class of the securities of any such Competing Business (but may not otherwise participate in the activities of such Competing Business), and (iii) engage in the sale of certain Inventory held by WOSC.

(b)             Non-Solicitation and Non-Hire . For a period of five (5) years after the Closing Date, Seller, Ross and/or Jones will not, directly or indirectly: (i) solicit the business of any Person who is a customer of Purchaser or its Affiliates for the purpose of a Competing Business; (ii) cause, induce or attempt to cause of induce any customer, supplier, licensee, licensor, franchisee, employee, consultant or other business relation of Purchaser or its Affiliates to cease doing business with Purchaser or its Affiliates, to deal with any competitor of Purchaser or its Affiliates or in any way interfere with its relationship with Purchaser or its Affiliates, all of the foregoing solely as it relates to the Business; or (iii) hire, retain or attempt to hire or retain any employee of Purchaser or its Affiliates (current, or former if such Person was an employee or independent contractor in the twelve-month period prior to the relevant time period) or in any way interfere with the relationship between Purchaser or its Affiliates and any of its employees or independent contractors. Notwithstanding the foregoing not any other provision herein to the contrary, nothing in item (iii) above shall prohibit the recruiting or hiring or any individual that is recruited or hired in response to any “help wanted” general advertisement or other general solicitation seeking employees, whether made on a national, local or regional basis.

(c)            Modification of Covenant . If a final judgment of a court of tribunal of competent jurisdiction determined that any term of provision contained in Section 6.2(a) or Section 6.2(b) is invalid or unenforceable, then the parties agree that the court or tribunal will have the power to reduce the scope, duration or geographic area of the term or provision, to delete specific words or phrases or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. This Section 6.2 is reasonable and necessary to protect and preserve Purchaser’s legitimate business interests and the value of the Business and the Assets.

(d)            Enforcement of Covenant . The Parties agree that the remedy of damages at law for the breach of any of the covenants contained in this Section 6.2 is an inadequate remedy. In recognition of the irreparable harm that a violation by Seller or Shareholders of any of the covenants, agreements or obligations arising under this Section 6.2 would cause Purchaser or its Affiliates, Seller and Shareholders agree that in addition to any other remedies or relief afforded by law, a preliminary and permanent injunction against an actual or threated violation of violations may be issued against Seller and/or any Shareholder without showing actual monetary damages or posting of a bond or other security. In the event of an action to enforce the covenants in this Section 6.2, Purchaser and its Affiliates will be entitled to be reimbursed by Seller and/or any Shareholder for reasonable attorneys’ fees and other expenses incurred by Purchaser or its Affiliates with respect to such enforcement action if Purchaser or its Affiliates is the prevailing party therein. Likewise, In the event of an action to enforce the covenants in this Section 6.2, Seller and Shareholders will be entitled to be reimbursed by Purchaser and its Affiliates for reasonable attorneys’ fees and other expenses incurred by Seller and Shareholders with respect to such enforcement action if Seller and Shareholders are the prevailing party or parties therein.

Section 6.3.     Seller/Shareholders Closing Deliveries . At the Closing, Seller and Shareholders shall deliver (or cause to be delivered) to Purchaser each of the following:

(f)            executed original of the employment agreement with Mangadu;

(g)           executed original of the Earnest Money Escrow Agreement, signed by Seller;

(h)           executed Flow of Funds statement, signed by Seller;

(i)            executed original of consent to assignments of contract, signed by Seller and the other party to the contract, with respect to each and all Contracts to which Purchaser believes consent by such other parties required for assignment of such Contract under this Agreement, with such document to be form and substance mutually satisfactory to such parties, in form and substance as set forth on Exhibit Q (the " Assignment of Contract ").

(j)            a certificate (dated as of the Closing Date and in form and substance as set forth on Exhibit R ), executed on behalf of Seller and Shareholders, by an executive officer of Seller, certifying as to the fulfillment of the conditions set forth in Section 6.1 as applicable to Seller and/or any Shareholder;

(k)           executed original of an estoppel certificate, in form and substance consistent with Exhibit S , and otherwise reasonably satisfactory to the Parties, from the Landlord, confirming the status of the Lease, the lack of any default under the Lease, and other matters typical of a landlord estoppel certificate (the " Landlord Estoppel Certificate ");

(l)            executed original of a statement signed by United Bank that all loans have been repaid, that it will not object to the transfer of the Assets and that the Assets are no longer encumbered;

(m) executed original of the termination agreement of Lease, signed by Seller and Landlord;

(n)           actual or constructive delivery of all of the Assets, including any keys, codes, files and Business Information;

(o)           copies of the audited Financial Statements as of December 31, 2018 and December 31, 2017 for the periods then ended, with an unqualified opinion of an independent public accounting firm and including all applicable notes as required by GAAP;

(p)           copies of the unaudited Interim Financial Statements;

(q)           an updated Schedule 3.10(a) showing all accounts receivable as of the Effective Date and an updated Schedule 3.10(b) showing all accounts payable as of the Effective Date;

(r)            executed letter terminating any arrangements between Seller and/or the Business and Wholly Owned Subsidiary Corporation as of the Closing Date, signed by Seller;

(s)           executed letter terminating any accounting services arrangements between Seller and/or the Business and Jones & Company as of the Closing Date, signed by Seller;

(t)            an opinion of counsel to the Seller that the Seller and Shareholders have taken the appropriate steps to actions to enter into this Agreement and the transactions contemplated thereby; and

(u)           a written calculation of the Working Capital as of the Effective Date.

Section 6.4.   Purchaser’s Closing Deliveries . At Closing, Purchaser shall deliver (or cause to be delivered) to Seller, or the Escrow Agent as applicable, each of the following:

(a)            the Cash Consideration due at Closing in the form of a wire transfer to an account designated in writing by Seller;

(b)           executed Flow of Funds statement signed by Purchaser;

(c)            executed originals of the employment agreement with Mangadu signed by Purchaser;

(d)           executed original of the Earnest Money Escrow Agreement, signed by Purchaser; and

(e)           a certificate dated the Closing Date and in form and substance as set forth on Exhibit U , executed on behalf of Purchaser, by an executive officer of Purchaser, certifying as to the fulfillment of the conditions set forth in Section 6.1 (a)-(c) as applicable to Purchaser.

Section 6.5. Full Access . Seller and each of the Shareholders agree that, after Closing, they will furnish to Purchaser any additional information within their respective possession relating to the Assets or the Business as may be reasonably requested from time to time upon reasonable notice.

ARTICLE VII

POST-CLOSING COVENANTS

Section 7.1      Operation of the Business Post-Closing . Purchaser shall not have any obligation to support the generation of Qualifying Revenue or attainment of Gross Margin during the Three-Year Period or otherwise after the Closing Date. The management and operations of the Business and the sale of products, from and after the Closing Date, will be at Purchaser’s sole discretion; provided, however, that Purchaser shall not take any actions the primary purpose or effect of which is (1) to prevent Seller and Shareholders from receiving all or part of the Earn-Out Consideration, or (2) to delay the recognition of Qualifying Revenue so that it is not included in the calculation of the Earn-Out Period. To the extent that Purchaser is found to be in breach of its obligations under this Section 7.1, the sole and exclusive remedy will be the re-calculation of the Earn-Out Consideration for the applicable Earn-Out Period, including (without duplication of amounts previously included) in the calculation of Qualifying Revenue and Gross Margin for such period the amounts that would have been recognized in respect of any such sales in the absence of such breach, and the payment by Purchaser of the excess, if any, of such recalculated Earn-Out Consideration over the amount previously paid plus interest on such amount at a rate of 3.25% per annum accrued from the date that such Earn-Out Consideration should have been paid to the date of payment.

(a)           If Seller or any of the Shareholders believes that Purchaser may have breached this Section 7.1, they shall notify Purchaser immediately in writing of the purported action. Purchaser shall have thirty (30) calendar days from receipt of such notice to cure the action. If any Party disputes any such action after the lapse of the cure period, a Party may submit the dispute to final and binding arbitration before a single arbitrator in Denver, Colorado in accordance with the rules of the American Arbitration Association. The Parties shall split all costs of such arbitration in equal parts and the costs of their counsel independently. Judgment on the award may be entered in any court having jurisdiction.

Section 7.2.      Trade Name . Immediately after the Closing Date, Seller and Shareholders shall cease to use the name “Ross Optical Industries” or any variation thereof, and shall permit Purchaser to register such name as a trademark.

Section 7.3.       ITAR . Immediately after the Closing Date, Purchaser and Seller shall take all the necessary steps to effect a transfer of all ITAR licenses from Seller to Purchaser.

Section 7.4      Post-Closing Financial Statement Preparation . Seller agrees to assist Purchaser in a timely manner with preparation of Seller’s pre-closing historical interim financial statements for periods other than those represented by the Interim Financial Statements, as required by and upon any reasonable request made by Purchaser after Closing.

Section 7.5      State Registrations and Filings . Within 25 calendar days of Closing, Seller shall prepare all reports and filings necessary to bring the Seller and the Business in compliance with the States of California and New Mexico in respect to state registration and good standing, state tax compliance and employment reporting, including but not limited to tax filings, withholding reports and unemployment reports. In the event Seller fails to come into compliance in accordance with the foregoing, Purchaser may file any such reports and pay any taxes, fines or other expenses with the respective States and may deduct any expenses incurred from the Holdback Amount.

ARTICLE VIII

TERMINATION

Section 8.1.      Termination . This Agreement may be terminated prior to or in the absence of the Closing as follows:

(a)           by the written agreement of Purchaser and Seller;

(b)           by either Party, if a final non-appealable Order is in effect restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement;

(c)           by Purchaser, if Seller or any of the Shareholders materially breaches any representation, warranty, covenant or agreement set forth in this Agreement or in any instrument executed in connection with the transactions contemplated by this Agreement that would be reasonably likely to prevent the Closing from occurring in accordance with this Agreement on or before the Closing Date;

(d)           by Purchaser, if Closing does not occur by the Closing Date, unless the failure of such occurrence is due to the failure of Purchaser to perform or observe its agreements as set forth in this Agreement required to be performed or observed on or before the Closing Date;

(e)            by Seller, if Purchaser materially breaches any representation, warranty, covenant or agreement set forth in this Agreement or in any instrument executed in connection with the transactions contemplated by this Agreement that would be reasonably likely to prevent the Closing from occurring in accordance with this Agreement;

(f)            by either Party, if the Parties cannot reasonably reach agreement regarding matters for which this Agreement requires such agreement after the date of this Agreement;

(g)           by either Party, if the form and substance of any document to be signed at Closing which is required to be prepared hereafter cannot be reasonably agreed upon by the Parties thereto;

(h)           by Purchaser, if a delivery by Seller or any Shareholder under Section 6.4 is not performed;

(i)            by Seller, if a delivery by Purchaser under Section 6.5 is not performed;

(j)            by a Party, if a condition under Section 6.1 is not satisfied for reasons outside such Party's control;

(k)           by Seller, if Closing does not occur by the Closing Date, unless the failure of such occurrence is due to the failure of Seller or any Shareholders to perform or observe their agreements as set forth in this Agreement required to be performed or observed on or before the Closing Date; and

(l)            by Purchaser, pursuant to Section 8.3.

Section 8.2.  Effect of Termination . If this Agreement is terminated in accordance with Section 8.1, and the transactions contemplated by this Agreement are not consummated, this Agreement will become null and void and of no further force and effect, except (a) for this Section 8.2, (b) for Section 5.4 (if applicable), and Section 8.4 and (c) that the termination of this Agreement for any cause will not relieve any Party to this Agreement from any Liability that at the time of termination had already accrued to any other Party to this Agreement or that thereafter may accrue in respect of any act or omission of such Party prior to such termination.

Section 8.3.   Special Purchaser Termination Rights . Purchaser may terminate this Agreement at any time without any Liability accruing for such termination (a “ Termination for Cause ”): (i) upon the filing or threat of filing of a Legal Proceeding against Seller or any Shareholder relating to the transactions contemplated by this Agreement, (ii) if a substantial casualty occurs with respect to any material Assets, (iii) if negative publicity occurs with respect to Seller or the Business, (iv) Seller or the Business is found by a Governmental Authority to have violated any material term of a Permit, (v) if any Governmental Authority initiates an investigation or Legal Proceeding against the Business, Seller or any Shareholder, or (vi) if there is any material inaccuracy in the audited Financial Statements, the Interim Financial Statements, the financial information provided during due diligence or other material business records of Seller, any Shareholders, or the Business.

Section 8.4.    Return of Confidential Information . If this Agreement is terminated in accordance with Section 7.1, and the transactions contemplated by this Agreement are not consummated, (a) Purchaser will (and will cause each of its related Persons, agents and representatives to) return to Seller or destroy all confidential or proprietary information of Seller in its possession and certify such return or destruction to Seller and (b) Seller will (and will cause each of its related Persons, agents and representatives to) return to Purchaser or destroy all confidential or proprietary information of Purchaser in their possession and certify such return or destruction to Purchaser.

ARTICLE IX

INDEMNIFICATION

Section 9.1.    Indemnification by Seller and Shareholders . Subject to the other provisions of this Article IX, Seller and Shareholders will jointly and severally defend, indemnify and hold Purchaser and its Affiliates, and their respective officers, directors, shareholders, and beneficial and legal owners (whether direct or indirect), directors, officers, employees, consultants, agents and representatives (collectively, the “ Indemnitees ”) harmless from and against any and all Claims and Losses suffered by any Indemnitee arising from or relating to:

(a)           any facts that constitute, or any allegations that if true would constitute, a breach of any representation or warranty made by Seller or any Shareholders in this Agreement or in any certificate or other document required to be executed and delivered by Seller or any Shareholders pursuant to this Agreement; and/or

(b)           any facts that constitute, or any allegations that if true would constitute, a breach or default in the performance of any covenant, obligation or agreement of Seller or any Shareholders pursuant to this Agreement or any certificate or other document required to be executed and delivered by them pursuant to this Agreement.

Section 9.2.     Materiality . With respect to any claim for indemnification under this Article IX relating to a breach (or alleged breach) of a representation or warranty that may only be considered breached if the defect, inaccuracy, mistake or misrepresentation is material, the materiality of such defect, inaccuracy, mistake or misrepresentation will be considered for purposes of determining whether a breach of such representation and warranty has occurred, but will not be considered in determining the amount of the Losses arising out of such breach.

Section 9.3.    Survival of Representations and Warranties . The representations and warranties of Seller or any of the Shareholders set forth in this Agreement will survive the execution and delivery of this Agreement and the Closing until the three (3) year anniversary of the Closing Date, except that (a) if the violation of any representation or warranty would constitute a violation of any Law, such representation or warranty will survive until thirty (30) calendar days after expiration of the statute of limitations applicable to such violation and (b) any representation or warranty the violation of which is made the basis of a Claim for indemnification pursuant to this Article IX will survive until such Claim is finally resolved if Purchaser notifies Sellers of such Claim in reasonable detail prior to the date on which such representation or warranty would otherwise expire hereunder. No claim for indemnification pursuant to Section 9.1(a) based on the breach or alleged breach of a representation or warranty may be asserted by Purchaser after the date on which such representation or warranty expires.

Section 9.4.     Notice and Resolution of Claims .

(a)            Notice . Each Indemnitee must provide written notice within five (5) Business Days to Seller and each Shareholder (collectively, the “ Indemnifying Parties ”) after obtaining Knowledge of any claim that it may have pursuant to Section 9.1 (whether for its own Losses or in connection with a Third Party Claim); provided that the failure to provide reasonably prompt notice will not limit the rights of an Indemnitee to indemnification hereunder except to the extent that such failure materially increases the dollar amount of any such claim for indemnification or materially prejudices the ability of the Indemnifying Party to defend such claim. Such notice will set forth in reasonable detail the claim and the basis for indemnification.

(b)            Right to Assume Defense . With respect to a claim for indemnity that arises from a Third Party Claim, the Indemnifying Parties will have thirty (30) calendar days after receipt of notice to assume the conduct and control of the settlement or defense of such Third Party Claim, through counsel reasonably acceptable to the Indemnitee and at the expense of the Indemnifying Parties, if (i) the Indemnifying Parties acknowledge their obligation to indemnify the Indemnitee for any Losses resulting from such Third Party Claim, (ii) the Third Party Claim does not seek to impose any Liability on the Indemnitee other than for monetary damages and (iii) the Third Party Claim does not relate to the Indemnitee’s relationship with its customers or employees. The Indemnitee may participate in such defense or settlement through its own counsel, but such separate counsel will be at its own expense unless the conditions set forth above are not satisfied or unless one or more defenses, claims or counterclaims are available to the Indemnitee that conflict with one or more defenses, claims or counterclaims available to the Indemnifying Party. In no event, however, will the Indemnifying Parties be liable for the fees and expenses of more than one separate counsel of the Indemnitee.

(c)            Obligations Following Assumption of Defense . If the Indemnifying Parties assume the defense of a Third Party Claim, it must take all steps necessary to investigate and defend or settle such Third Party Claim and will hold the Indemnitee harmless from and against all Losses caused by or arising out of any settlement approved by the Indemnifying Parties or any judgment entered in connection with such Third Party Claim. Without the written consent of the Indemnitee, the Indemnifying Party will not consent to entry of any judgment or enter into any settlement that does not include an unconditional and complete release of the Indemnitee by the claimant or plaintiff making the Third Party Claim.

(d)            Failure to Assume Defense . Failure by the Indemnifying Parties to notify the Indemnitee of their election to assume the defense of any Third Party Claim within thirty (30) calendar days after their receipt of notice thereof pursuant to Section 9.4(a) will be deemed a waiver by the Indemnifying Parties of their right to assume the defense of such Third Party Claim. In such event, the Indemnitee may defend against such Third Party Claim in any manner it deems appropriate. The Indemnitee may settle such Third Party Claim or consent to the entry of any judgment with respect thereto, provided that it acts in good faith and in a commercially reasonable manner.

(e)            Payment of Indemnity . Upon final agreement by the Parties or the entry of a final, non-appealable order by a court of competent jurisdiction that an Indemnitee is entitled to indemnification under this Article IX, the Indemnifying Party must promptly pay or reimburse, as appropriate, the Indemnitee for all Losses to which it is entitled to be indemnified hereunder.

ARTICLE X

TAX MATTERS

Seller and Shareholders shall be responsible for preparing and filing the 2018 Tax Returns for the Business. Purchaser, Seller and Shareholders shall, and shall cause their respective representatives and agents to, provide any requesting Party to this Agreement with such assistance and documents, as may be reasonably requested by such Party in connection with (a) the preparation of any Tax Return of or relating to Seller, (b) the conduct of any audit relating to Liability for or refunds or adjustments with respect to Taxes and (c) any other Tax-related matter that is a subject of this Agreement. Such cooperation and assistance will be provided to the requesting Party promptly upon its request. The requesting Party shall bear any expenses, fees or costs of such request.

ARTICLE XI

MISCELLANEOUS

Section 11.1. Headings . Article and section headings of this Agreement are for reference purposes only and are to be given no effect in the construction or interpretation of this Agreement.

Section 11.2 Article, Section, Schedule and Exhibit References . Except as otherwise specifically provided, any reference to any article, section, schedule or exhibit will be deemed to refer to such article or section of or schedule or exhibit to this Agreement.

Section 11.3.  Usage . Whenever the plural form of a word is used in this Agreement, that word will include the singular form of that word. Whenever the singular form of a word is used in this Agreement, that word will include the plural form of that word. The term “or” does not exclude any of the items described. The term “include,” or any derivative of such term, does not mean that the items following such term are the only types of such items. The representations, warranties, covenants, and obligations of Seller hereunder shall be joint and several.

Section 11.4. Drafting . Neither this Agreement nor any provision contained in this Agreement may be interpreted in favor of or against any Party hereto because such Party or its legal counsel drafted this Agreement or such provision.

Section 11.5. Entire Agreement . This Agreement represents, and is intended to be, a complete statement of all of the terms and the arrangements between the Parties to this Agreement with respect to the matters provided for in this Agreement, and supersedes any and all previous oral or written and all contemporaneous oral agreements, understandings, negotiations and discussions between the Parties to this Agreement with respect to those matters.

Section 11.6. Governing Law . This Agreement will be governed by and construed in accordance with the laws of the State of Colorado without reference to the principles of conflicts of laws or any other principle that could result in the application of the laws of any other jurisdiction. The Parties agree that any action or proceeding arising out of or related in any way to this Agreement will be brought solely in a state district court of competent jurisdiction sitting in Denver, Denver County, Colorado. The Parties agree to enter into mediation prior to trial in any suit, action, or proceeding arising out of or relating to this Agreement.

SECTION 11.7 WAIVER OF JURY TRIAL. THE PARTIES HEREBY WAIVE ANY RIGHT TO A JURY TRIAL IN ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

Section 11.8.  Expenses .

(a)           Except as otherwise expressly provided in this Agreement and regardless of whether the transactions contemplated in this Agreement are consummated, each of the Parties to this Agreement will bear its own expenses (including, without limitation, fees and disbursements of its counsel, accountants, financial advisors and other experts), incurred in connection with the preparation, negotiation, execution, delivery and performance of this Agreement, each of the other documents and instruments executed in connection with or contemplated by this Agreement and the consummation of the transactions contemplated by this Agreement and thereby.

(b)           If attorneys’ fees or other costs are incurred to secure performance of any obligation under this Agreement, to establish damages for the breach thereof or to obtain any other appropriate relief, whether by way of prosecution or defense, the prevailing party will be entitled to recover reasonable attorneys’ fees and costs incurred in connection therewith.

Section 11.9. Notices . All notices, requests, demands and determinations under this Agreement (other than routine operational communications) must be in writing and will be deemed duly given: (a) when delivered by hand, (b) one day after being given to an express courier with a reliable system for tracking delivery, (c) when sent by confirmed facsimile with a copy sent by another means specified in this provision or (d) five days after the day of mailing, when mailed by registered or certified mail, return receipt requested, postage prepaid, and addressed as set forth below. A Party may from time to time change its address or designee for notification purposes by giving the other written notice of the new address or designee and the date upon which it will become effective.

Section 11.10. Severability . The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, each of which will remain in full force and effect, so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in a manner materially adverse to any Party.

Section 11.11. Binding Effect; No Assignment . This Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and assigns. Nothing in this Agreement will create or be deemed to create any Third Party beneficiary rights in any Person not Party to this Agreement except to the extent such obligations are specifically assumed. No assignment of this Agreement or of any rights or obligations under this Agreement may be made by any Party, other than by operation of Law, without the prior written consent of each of the other Parties to this Agreement and any attempted assignment without such required consents will be void; provided, however, that Purchaser may assign to one or more of its Affiliates any or all of its rights under this Agreement without the prior written consent of any other Parties, but no such assignment by Purchaser will release Purchaser from any of its obligations under this Agreement. The obligations of Seller and Shareholders herein shall be joint and several.

Section 11.12. Amendments . This Agreement may be amended, supplemented or modified, and any provision hereof may be waived, only by written instrument making specific reference to this Agreement signed by Purchaser, Seller and Shareholders. Except as otherwise provided in this Agreement, no action (other than a waiver) taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any Party, will be deemed to constitute a waiver by the Party taking such action of compliance with any representation, warranty, covenant or agreement contained in this Agreement. The waiver by any Party to this Agreement of a breach of any provision of this Agreement will not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. Except as otherwise expressly provided in this Agreement, no failure on the part of any Party to exercise, and no delay in exercising, any right, power or remedy under this Agreement will operate as a waiver thereof, nor will any single or partial exercise of such right, power or remedy by such Party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies under this Agreement are cumulative and are not exclusive of any other remedies provided by Law.

Section 11.13. Counterparts . This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF, the Parties to this Agreement have executed this Agreement as of the date first above written.

Exhibit 10.2

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (“ Agreement ”) is made as of the 1 ^st day of July, 2019 by and among Precision Optics Corporation, Inc., a Massachusetts corporation (the “ Company ”), and the Investors set forth on the signature pages affixed hereto (each, an “ Investor ” and collectively, the “ Investors ”).

RECITALS

A.       The Company and the Investors are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the provisions of Rule 506 of Regulation D (“ Regulation D ”), as promulgated by the U.S. Securities and Exchange Commission (the “ SEC ”) under the Securities Act of 1933, as amended;

B.       The Company intends to acquire substantially all of the assets of Ross Optical Industries, Inc., a Texas corporation engaged in the business of the manufacture of lenses and other optical products for an aggregate purchase price of $2,000,000 as further described in the asset purchase agreement (the “ Purchase Transaction ”);

C.       The Investors wish to purchase from the Company, and the Company wishes to sell and issue to the Investors, upon the terms and conditions stated in this Agreement, up to an aggregate of 760,000 shares (the “Shares”) of the Company’s common stock, $0.01 par value (“ Common Stock ”) at a purchase price of $1.25 per Share, or an aggregate of $950,000 (the “ Offering ”); and

D.       Contemporaneous with the sale of the Shares, the parties hereto will execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit A (the “ Registration Rights Agreement ”), pursuant to which the Company will agree to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, and applicable state securities laws.

In consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.              Definitions . In addition to those terms defined above and elsewhere in this Agreement, for the purposes of this Agreement, the following terms shall have the meanings set forth below:

“ Affiliate ” means, with respect to any Person, any other Person which directly or indirectly through one or more intermediaries Controls, is controlled by, or is under common control with, such Person.

“ Business Day ” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.

“ Common Stock Equivalents ” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“ Company’s Knowledge ” means the actual knowledge of the executive officers (as defined in Rule 405 under the 1933 Act) of the Company, after due inquiry.

“ Control ” (including the terms “controlling”, “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“ Intellectual Property ” means all of the following: (a) patents, patent applications, patent disclosures and inventions (whether or not patentable and whether or not reduced to practice); (b) trademarks, service marks, trade dress, trade names, corporate names, logos, slogans and Internet domain names, together with all goodwill associated with each of the foregoing; (c) copyrights and copyrightable works; (d) registrations, applications and renewals for any of the foregoing; and (e) proprietary computer software (including but not limited to data, data bases and documentation).

“ Material Adverse Effect ” means a material adverse effect on (a) the assets, liabilities, results of operations, condition (financial or otherwise), business or prospects of the Company and its Subsidiaries, taken as a whole, or (b) the ability of the Company to perform its obligations under the Transaction Documents.

“ Material Contract ” means any contract, instrument or other agreement to which the Company is a party or by which it is bound which has been filed as an exhibit to the SEC Filings pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K.

“ Person ” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

“ Purchase Price ” means an aggregate of $950,000 at $1.25 per share.

“ Registration Statement ” has the meaning set forth in the Registration Rights Agreement.

“ SEC Filings ” means the Company’s most recent Annual Report on Form 10-K for the fiscal year ended June 30, 2018 (the “ 10-K ”), and all other reports filed by the Company pursuant to Sections 13(a), 13(e), 14 and 15(d) of the 1934 Act since the filing of the 10-K and during the twelve (12) months preceding the date hereof.

“ Securities ” means the Shares.

“ Shares ” means the shares of Common Stock to be purchased by the Investors hereunder.

“ Subsidiary ” means any subsidiary of the Company as set forth on Schedule 3.1 , and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

“ Transaction Documents ” means this Agreement, the Registration Rights Agreement, the Private Placement Memorandum, and any documents referenced herein and therein, and the exhibits, appendices, and schedules hereto and thereto.

“ 1933 Act ” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

“ 1934 Act ” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

2.                    Closing .

2.1                Signing Date . On the date of this Agreement, each Investor shall pay the pro rata portion of the Purchase Price as set forth on the signature pages to this Agreement, by wire transfer of immediately available funds in accordance with the Company’s written wire instructions. In the event Closing does not occur or the asset purchase agreement to effect the Purchase Transaction is not signed, and this Agreement is terminated, the Company shall return to each Investor the pro rata portion of the Purchase Price without interest.

2.2                Closing Date . The date and time of the closing of the purchase of the Securities (the “ Closing ”) by the Investors shall be 12 noon, New York City time, on such date as shall be mutually agreed to by the Company and the Investors, which in no event shall be prior to, or more than sixty (60) days after, the date of this Agreement (such date on which the Closing actually occurs, the “ Closing Date ”), at the offices of Trombly Business Law, PC, 1314 Main St., Suite 102, Louisville, CO 80027.

2.2         Closing Actions . On the Closing Date, the Company shall irrevocably instruct the Company’s transfer agent to deliver to each Investor who has so paid the pro rata Purchase Price one or more stock certificates, evidencing the Shares duly executed on behalf of the Company and registered in the name of the Investor, within two (2) Business Days after the Closing.

3.                    Representations and Warranties of the Company . The Company hereby represents and warrants to each Investor that:

3.1                Organization, Good Standing and Qualification . All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1 hereto. Each of the Company and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own or lease its properties, in each case as described in the SEC Filings. Each of the Company and its Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary unless the failure to so qualify has not had and could not reasonably be expected to have a Material Adverse Effect.

3.2                Authorization . The Company has the corporate power and authority to enter into this Agreement and has taken all requisite action on its part, its officers, directors and shareholders necessary for (a) the authorization, execution and delivery of the Transaction Documents, (b) the authorization of the performance of all obligations of the Company hereunder or thereunder, and (c) the authorization, issuance (or reservation for issuance) and delivery of the Securities The Transaction Documents constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally and to general equitable principles.

3.3                Capitalization . The Company has duly and validly authorized capital stock as set forth in the SEC Filings and in the Articles of Incorporation of the Company, as amended and as in effect as of the Closing Date (the “ Certificate of Incorporation ”). All of the issued and outstanding shares of the Company’s capital stock have been duly authorized and validly issued and are fully paid, nonassessable and free of pre-emptive rights and were issued in full compliance with applicable state and federal securities law and any rights of third parties. Except as set forth in Schedule 3.3 , no Person is entitled to pre-emptive or similar statutory or contractual rights with respect to any securities of the Company. Except as set forth in Schedule 3.3 , there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements of any character under which the Company or any of its Subsidiaries is or may be obligated to issue any equity securities of any kind and except as contemplated by this Agreement, neither the Company nor any of its Subsidiaries is in negotiations for the issuance of any equity securities of any kind as of the date of this Agreement, other than to employees. There are no voting agreements, buy-sell agreements, option or right of first purchase agreements or other agreements of any kind among the Company and any of the securityholders of the Company relating to the securities of the Company held by them. Except as set forth in Schedule 3.3 , no Person has the right to require the Company to register any securities of the Company under the 1933 Act, whether on a demand basis or in connection with the registration of securities of the Company for its own account or for the account of any other Person.

Except as set forth on Schedule 3.3 , the issuance and sale of the Securities hereunder will not obligate the Company to issue shares of Common Stock or other securities to any other Person (other than the Investors) and will not result in the adjustment of the exercise, conversion, exchange or reset price of any outstanding security.

3.4                Valid Issuance . The Shares have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, will be validly issued, fully paid and nonassessable, and shall be free and clear of all encumbrances and restrictions, except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws.

3.5                Consents . The execution, delivery and performance by the Company of the Transaction Documents and the offer, issuance and sale of the Securities require no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official other than filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws which the Company undertakes to file within the applicable time periods. Subject to the accuracy of the representations and warranties of each Investor set forth in Section 4 hereof, the Company has taken all action necessary to exempt (a) the issuance and sale of the Securities, and (b) any provision of the Articles of Incorporation or the Company’s Bylaws, as in effect as of the Closing Date (the “ Bylaws ”), that is or could reasonably be expected to become applicable to the Investors as a result of the transactions contemplated hereby, including, without limitation, the issuance of the Securities and the ownership, disposition or voting of the Securities by the Investors or the exercise of any right granted to the Investors pursuant to this Agreement or the other Transaction Documents.

3.6                Delivery of SEC Filings; Business . The Company has made available to the Investors through the EDGAR system, true and complete copies of the Company’s SEC Filings. The SEC Filings are the only filings required of the Company pursuant to the 1934 Act for such period. The Company and its Subsidiaries are engaged in all material respects only in the business described in the SEC Filings and the SEC Filings contain a complete and accurate description in all material respects of the business of the Company and its Subsidiaries, taken as a whole.

3.7                Use of Proceeds . The net proceeds of the sale of the Securities hereunder shall be used by the Company to proceed with the Purchase Transaction.

3.8                No Material Adverse Change . Since the date of the latest audited financial statements included within the SEC Filings, there has not been:

(a)                 any change in the consolidated assets, liabilities, financial condition or operating results of the Company from that reflected in the financial statements included in the Company’s 10-K, except for changes in the ordinary course of business which have not had and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate;

(b)                 any declaration or payment of any dividend, or any authorization or payment of any distribution, on any of the capital stock of the Company, or any redemption or repurchase of any securities of the Company;

(c)                 any material damage, destruction or loss, whether or not covered by insurance to any assets or properties of the Company or its Subsidiaries;

(d)                 any waiver, not in the ordinary course of business, by the Company or any Subsidiary of a material right or of a material debt owed to it;

(e)                 any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company or a Subsidiary, except in the ordinary course of business and which is not material to the assets, properties, financial condition, operating results or business of the Company and its Subsidiaries, taken as a whole (as such business is presently conducted and as it is proposed to be conducted);

(f)                  any change or amendment to the Articles of Incorporation or Bylaws, or material change to any material contract or arrangement by which the Company or any Subsidiary is bound or to which any of their respective assets or properties is subject;

(g)                 any material labor difficulties or labor union organizing activities with respect to employees of the Company or any Subsidiary;

(h)                 any material transaction entered into by the Company or any Subsidiary other than in the ordinary course of business and other than the Purchase Transaction;

(i)                  the loss of the services of any key employee, or material change in the composition or duties of the senior management of the Company or any Subsidiary;

(j)                  the loss or, to the Company’s Knowledge, threatened loss of any customer which has had or could reasonably be expected to have a Material Adverse Effect; or

(k)                 any other event or condition of any character that has had or could reasonably be expected to have a Material Adverse Effect.

3.9                SEC Filings . At the time of filing thereof, the SEC Filings complied as to form in all material respects with the requirements of the 1934 Act and did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

3.10            No Conflict, Breach, Violation or Default . The execution, delivery and performance of the Transaction Documents by the Company and the issuance and sale of the Securities will not (a) conflict with or result in a breach or violation of (i) any of the terms and provisions of, or constitute a default under the Certificate of Incorporation or the Bylaws (true and complete copies of which have been made available to the Investors through the EDGAR system), or (ii) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any of its assets or properties, or (b) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any lien, encumbrance or other adverse claim upon any of the properties or assets of the Company or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any Material Contract, except in the case of clauses (a)(ii) and (b) above, such as could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.

3.11            Tax Matters . The Company has prepared and filed (or filed applicable extensions therefore) all tax returns required to have been filed by the Company with all appropriate governmental agencies and paid all taxes shown thereon or otherwise owed by it, other than any such taxes which the Company is contesting in good faith and for which adequate reserves have been provided and reflected in the Company’s financial statements included in the SEC Filings. The charges, accruals and reserves on the books of the Company in respect of taxes for all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against the Company nor, to the Company’s Knowledge, any basis for the assessment of any additional taxes, penalties or interest for any fiscal period or audits by any federal, state or local taxing authority except for any assessment which is not material to the Company. All taxes and other assessments and levies that the Company is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper governmental entity or third party when due, other than any such taxes which the Company is contesting in good faith and for which adequate reserves have been provided and reflected in the Company’s financial statements included in the SEC Filings. There are no tax liens or claims pending or, to the Company’s Knowledge, threatened in writing against the Company or any of its assets or property. There are no outstanding tax sharing agreements or other such arrangements between the Company and any other corporation or entity.

3.12            Title to Properties . The Company has good and marketable title to all real properties and all other properties and assets (excluding Intellectual Property assets which are the subject of Section 3.15 hereof) owned by it, in each case, free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or planned as of the date of this agreement to be made thereof by them unless failure to do so has not had and could not reasonably be expected to have a Material Adverse Effect; and the Company holds any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or planned as of the date of this agreement to be made thereof by them.

3.13            Certificates, Authorities and Permits . The Company possesses adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by it, except to the extent failure to possess such certificates, authorities or permits could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate, and the Company has not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Company, could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.

3.14            Labor Matters .

(a)                 The Company is not a party to or bound by any collective bargaining agreements or other agreements with labor organizations. The Company has not violated in any material respect any laws, regulations, orders or contract terms, affecting the collective bargaining rights of employees, labor organizations or any laws, regulations or orders affecting employment discrimination, equal opportunity employment, or employees’ health, safety, welfare, wages and hours.

(b)                 (i) There are no labor disputes existing, or to the Company’s Knowledge, threatened, involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts or any other disruptions of or by the Company’s employees, (ii) there are no unfair labor practices or petitions for election pending or, to the Company’s Knowledge, threatened before the National Labor Relations Board or any other federal, state or local labor commission relating to the Company’s employees, (iii) no demand for recognition or certification heretofore made by any labor organization or group of employees is pending with respect to the Company and (iv) to the Company’s Knowledge, the Company enjoys good labor and employee relations with its employees and labor organizations.

(c)                 The Company is, and at all times has been, in compliance with all applicable laws respecting employment (including laws relating to classification of employees and independent contractors) and employment practices, terms and conditions of employment, wages and hours, and immigration and naturalization, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate. There are no claims pending against the Company before the Equal Employment Opportunity Commission or any other administrative body or in any court asserting any violation of Title VII of the Civil Rights Act of 1964, the Age Discrimination Act of 1967, 42 U.S.C. §§ 1981 or 1983 or any other federal, state or local Law, statute or ordinance barring discrimination in employment.

3.15            Intellectual Property . The Company owns, or has obtained valid and enforceable licenses for, or other rights to use, the Intellectual Property necessary for the conduct of the business of the Company as conducted as of the date of this agreement and as described in the SEC Filings as being owned or licensed by them, except where the failure to own, license or have such rights could not reasonably be expected to result in a Material Adverse Effect, individually or in the aggregate. Except as set forth in Schedule 3.15 , (a) to the Company’s Knowledge, there are no third parties who have or will be able to establish rights to any Intellectual Property, except for the ownership rights of the owners of the Intellectual Property which is licensed to the Company as described in the SEC Filings or where such rights could not reasonably be expected to result in a Material Adverse Effect, individually or in the aggregate, (b) there is no pending or, to the Company’s Knowledge, threat of any, action, suit, proceeding or claim by others challenging the Company’s rights in or to, or the validity, enforceability, or scope of, any Intellectual Property owned by or licensed to the Company or claiming that the use of any Intellectual Property by the Company in its businesses as conducted as of the date of this agreement infringes, violates or otherwise conflicts with the intellectual property rights of any third party, and (c) to the Company’s Knowledge, the use by the Company of any Intellectual Property by the Company in its businesses as conducted as of the date of this agreement does not infringe, violate or otherwise conflict with the intellectual property rights of any third party.

3.16            Environmental Matters . To the Company’s Knowledge, the Company is not in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “ Environmental Laws ”), owns or operates any real property contaminated with any substance that is subject to any Environmental Laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim has had or could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate; and there is no pending or, to the Company’s Knowledge, threatened investigation that might lead to such a claim.

3.17            Litigation . There are no pending actions, suits or proceedings against or affecting the Company or any of its properties; and to the Company’s Knowledge, no such actions, suits or proceedings are threatened, except any such proceeding, which if resolved adversely to the Company, could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate. Neither the Company nor any director or officer thereof, is or has been the subject of any action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the Company’s Knowledge, there is not pending or contemplated, any investigation by the SEC involving the Company or any current or former director or officer of the Company. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the 1933 Act or the 1934 Act.

3.18            Financial Statements . The financial statements included in each SEC Filing comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing (or to the extent corrected by a subsequent restatement) and present fairly, in all material respects, the consolidated financial position of the Company as of the dates shown and its consolidated results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis (“ GAAP ”) (except as may be disclosed therein or in the notes thereto, and, in the case of quarterly financial statements, as permitted by Form 10-Q under the 1934 Act). Except as set forth in the SEC Filings filed prior to the date hereof, the Company has not incurred any liabilities, contingent or otherwise, except those incurred in the ordinary course of business, consistent (as to amount and nature) with past practices since the date of such financial statements, none of which, individually or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect.

3.19            Insurance Coverage . The Company maintains in full force and effect insurance coverage that is customary for comparably situated companies for the business being conducted and properties owned or leased by the Company.

3.20            Brokers and Finders . No Person, including, without limitation, any Investor or any current holder of shares of Common Stock, will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Company. Except as a result of any agreements or arrangements made by an Investor or its representatives or Affiliates, to the Company’s knowledge, Investors shall have no obligation with respect to any such fees or commissions of a type contemplated in this Section 3.20 that may be due in connection with the transactions contemplated by this Agreement.

3.21            No Directed Selling Efforts or General Solicitation . Neither the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D) in connection with the offer or sale of any of the Securities.

3.22            No Integrated Offering . Assuming the accuracy of the Investors’ representations and warranties set forth in Section 4 hereof, neither the Company nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any Company security or solicited any offers to buy any security, which are or will be integrated with this offering of the Securities hereunder in a manner that would adversely affect reliance by the Company on Section 4(a)(2) for the exemption from registration for the transactions contemplated hereby or would require registration of the Securities under the 1933 Act.

3.23            Private Placement . Assuming the accuracy of the Investors’ representations and warranties set forth in Section 4 hereof, the offer and sale of the Securities to the Investors as contemplated hereby is exempt from the registration requirements of the 1933 Act.

3.24            Bad Actor Disqualification .

(a)                 No Disqualification Events . With respect to Securities to be offered and sold hereunder in reliance on Rule 506 under the 1933 Act (“ Regulation D Securities ”), none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering, any beneficial owner of 20% or more of the Company's outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “ Issuer Covered Person ” and, together, “ Issuer Covered Persons ”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “ Disqualification Event ”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Investors a copy of any disclosures provided thereunder.

(b)                 Other Covered Persons . The Company is not aware of any person that (i) has been or will be paid (directly or indirectly) remuneration for solicitation of an Investor in connection with the sale of the Securities and (ii) who is subject to a Disqualification Event.

(c)                 Notice of Disqualification Events . The Company will notify the Investors in writing of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Issuer Covered Person, prior to any Closing of this Offering.

3.25            Questionable Payments . Neither the Company nor, to the Company’s Knowledge, any of its current or former shareholders, directors, officers, employees, agents or other Persons acting on behalf of the Company, has, on behalf of the Company or in connection with its businesses, (a) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to foreign or domestic political activity, (b) made any direct or indirect unlawful payments to any foreign or domestic governmental officials or employees from corporate funds, (c) established or maintained any unlawful or unrecorded fund of corporate monies or other assets, (d) made any false or fictitious entries on the books and records of the Company, or (e) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment of any nature.

3.26            Transactions with Affiliates . Except as disclosed in the SEC Filings, none of the officers or directors of the Company and, to the Company’s Knowledge, none of the employees of the Company is presently a party to any transaction with the Company (other than as holders of stock options and/or warrants, and for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the Company’s Knowledge, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

3.27            Internal Controls . Except as disclosed in the SEC Filings, the Company is in material compliance with the provisions of the Sarbanes-Oxley Act of 2002 applicable to the Company as of the date of this agreement. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (a) transactions are executed in accordance with management’s general or specific authorizations, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (c) access to assets is permitted only in accordance with management’s general or specific authorization, and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in 1934 Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s most recently filed periodic report under the 1934 Act, as the case may be, is being prepared. The Company’s certifying officers have evaluated the effectiveness of the Company’s controls and procedures as of the end of the period covered by the most recently filed periodic report under the 1934 Act (such date, the “ Evaluation Date ”). The Company presented in its most recently filed periodic report under the 1934 Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no significant changes in the Company’s internal controls (as such term is defined in Item 308 of Regulation S-K) or, to the Company’s Knowledge, in other factors that could significantly affect the Company’s internal controls. The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with GAAP and the applicable requirements of the 1934 Act while it continues to report under the 1934 Act.

3.28            Investment Company . The Company is not required to be registered as, and is not an Affiliate of, and immediately following the Closing will not be required to register as, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

3.29            Application of Takeover Protections . The Company and its board of directors have taken or will take prior to the Closing Date all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Articles of Incorporation or the laws of the state of its incorporation which is or could become applicable to the Investor as a result of the transactions contemplated by this Agreement, including, without limitation, the Company's issuance of the Securities and the Investors' ownership of the Securities.

3.30            Disclosure . Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents that will be timely publicly disclosed by the Company, the Company confirms that neither it nor any other Person acting on its behalf has provided the Investor or its agents or counsel with any information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed in the Registration Statement or the SEC Documents unless the Investor has agreed verbally or in writing to receive such information in which case this sentence does not apply. The Company understands and confirms that the Investor will rely on the foregoing representation in effecting purchases and sales of securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Investor regarding the Company, its business and the transactions contemplated hereby, including the disclosure schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that the Investor neither makes nor has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3 hereof.

3.31            Shell Company Status . The Company is not as of the date of this agreement, and never has been, an issuer identified in Rule 144(i)(1) under the 1933 Act.

3.32            Each of the Investors acknowledges and agrees that the Company has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3 . Each of the Investors further acknowledges and agrees that neither the Company nor any other Person has made any representation or warranty, expressed or implied, as to the accuracy or completeness of any information received by any such Investor which constitutes or may be deemed to constitute a projection, estimate or other forecast and certain business plan information, except that such information was prepared in good faith and based upon assumptions that the Company believes to have been reasonable at the time such information, if any, was provided to the applicable Investor.

4.                    Representations and Warranties of the Investors . Each of the Investors hereby severally, and not jointly, represents and warrants to the Company that:

4.1                Organization and Existence . If such Investor is not a natural person, such investor is a corporation, limited partnership or limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has all requisite corporate, partnership or limited liability company power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.

4.2                Authorization . The execution, delivery and performance by such Investor of the Transaction Documents to which such Investor is a party have been duly authorized and each will constitute the legal, valid and binding obligation of such Investor, enforceable against such Investor in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally.

4.3                Consents . All consents, approvals, orders and authorizations required on the part of such Investor in connection with the execution, delivery or performance of each Transaction Document and the consummation of the transactions contemplated hereby and thereby have been obtained and are effective as of the date hereof.

4.4                Purchase Entirely for Own Account . The Securities to be received by such Investor hereunder will be acquired for such Investor’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the 1933 Act, and such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same and has no arrangement or understanding with any other Persons regarding the distribution of such Securities in violation of the 1933 Act or any applicable state securities law without prejudice, however, to such Investor’s right at all times to sell or otherwise dispose of all or any part of such Securities in compliance with applicable federal and state securities laws. Such Investor is acquiring the Securities hereunder in the ordinary course of its business. Nothing contained herein shall be deemed a representation or warranty by such Investor to hold the Securities for any period of time. Such Investor is not a broker-dealer registered with the SEC under the 1934 Act or an entity engaged in a business that would require it to be so registered.

4.5                Investment Experience . Such Investor acknowledges that it can bear the economic risk and complete loss of its investment in the Securities and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby.

4.6                Disclosure of Information . The Company has made available the annual report on Form 10-K for the year ended June 30, 2018 and such Investor has had the opportunity to review such report. Such Investor has had an opportunity to receive all information related to the Company requested by it and to ask questions of and receive answers from the Company regarding the Company, its business and the terms and conditions of the offering of the Securities. Such Investor acknowledges receipt of copies of the SEC Filings. Neither such inquiries nor any other due diligence investigation conducted by such Investor shall modify, limit or otherwise affect such Investor’s right to rely on the Company’s representations and warranties contained in this Agreement.

4.7                Restricted Securities . Such Investor understands that the Securities are characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the 1933 Act only in certain limited circumstances.

4.8                Legends . It is understood that, except as provided below, certificates evidencing the Securities may bear the following or any similar legend:

(a)                 “THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), AND, ACCORDINGLY, MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT AND SUCH REGISTRATION STATEMENT REMAINS EFFECTIVE, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR (III) COMPANY COUNSEL HAS OPINED THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT.”

(b)                 If required by the authorities of any state in connection with the issuance or sale of the Securities, the legend required by such state authority.

4.9                Accredited Investor . Such Investor is an accredited investor as defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act. Such Investor was not organized for the specific purpose of acquiring the Securities and is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

4.10            No General Solicitation . Such Investor did not learn of the investment in the Securities as a result of any general solicitation or general advertising.

4.11            Brokers and Finders . No Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of such Investor.

4.12            Prohibited Transactions . Since such time as such Investor was first contacted by the Company or any other Person acting on behalf of the Company regarding the transactions contemplated hereby through the public announcement of the Transaction, neither such Investor nor any Affiliate of such Investor which (a) had knowledge of the transactions contemplated hereby, (b) has or shares discretion relating to such Investor’s investments or trading or information concerning such Investor’s investments, including in respect of the Securities, or (c) is subject to such Investor’s review or input concerning such Affiliate’s investments or trading has, directly or indirectly, effected or agreed to effect, or will directly or indirectly effect, any short sale, whether or not against the box, established any “put equivalent position” (as defined in Rule 16a-1(h) under the 1934 Act) with respect to the Common Stock, granted any other right (including, without limitation, any put or call option) with respect to the Common Stock or with respect to any security that includes, relates to or derived any significant part of its value from the Common Stock or otherwise sought to hedge its position in the Securities (each, a “ Prohibited Transaction ”). Such Investor acknowledges that the representations, warranties and covenants contained in this Section 4.12 are being made for the benefit of the Investors as well as the Company and that each of the other Investors shall have an independent right to assert any claims against such Investor arising out of any breach or violation of the provisions of this Section 4.12 .

The Company acknowledges and agrees that each Investor has not made any representations or warranties with respect to the transactions contemplated by the Transaction Documents other than those specifically set forth in this Section 4 .

5.                    Conditions to Closing .

5.1                Conditions to the Investors’ Obligations . The obligation of each Investor to purchase the Securities at the Closing is subject to the fulfillment to such Investor’s satisfaction, on or prior to the Closing Date, of the following conditions, any of which may be waived by such Investor (as to itself only):

(a)                 The representations and warranties made by the Company in Section 3 hereof qualified as to materiality shall be true and correct at all times prior to and on the Closing Date as so qualified, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date as so qualified, and, the representations and warranties made by the Company in Section 3 hereof not qualified as to materiality shall be true and correct in all material respects at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such earlier date. The Company shall have performed in all material respects all obligations and covenants herein required to be performed by it on or prior to the Closing Date.

(b)                 The Company shall have obtained any and all consents, permits, approvals, registrations and waivers necessary or appropriate for consummation of the purchase and sale of the Securities and the consummation of the other transactions contemplated by the Transaction Documents, all of which shall be in full force and effect.

(c)                 The Company shall have executed and delivered the Registration Rights Agreement.

(d)                 No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated hereby or in the other Transaction Documents.

(e)                 The Investors shall have received an opinion from Trombly Business Law, PC, dated as of the Closing Date, in form and substance reasonably acceptable to the Investors and addressing such legal matters as the Investors may reasonably request.

(f)                  No stop order or suspension of trading shall have been imposed by the SEC or any other governmental or regulatory body with respect to public trading in the Common Stock.

(g)                 The Company shall have entered into a binding asset purchase agreement to execute the Purchase Transaction.

5.2                Conditions to Obligations of the Company . The Company’s obligation to sell and issue the Shares at the Closing is subject to the fulfillment to the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of which may be waived by the Company:

(a)                 The representations and warranties made by the Investors in Section 4 hereof, other than the representations and warranties contained in Sections 4.4 , 4.5 , 4.6 , 4.7 , 4.8 , 4.9 and 4.10 (the “ Investment Representations ”), shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date with the same force and effect as if they had been made on and as of said date. The Investment Representations shall be true and correct in all respects when made, and shall be true and correct in all respects on the Closing Date with the same force and effect as if they had been made on and as of said date. The Investors shall have performed in all material respects all obligations and covenants herein required to be performed by them on or prior to the Closing Date.

(b)                 The Investors shall have executed and delivered the Registration Rights Agreement.

(c)                 The Investors shall have delivered the Purchase Price.

5.3                Termination of Obligations to Effect Closing .

(a)                 The obligations of the Company, on the one hand, and the Investors, on the other hand, to effect the Closing shall terminate as follows:

provided, however, that, except in the case of clause (i) above, the party seeking to terminate its obligation to effect the Closing shall not then be in breach of any of its representations, warranties, covenants or agreements contained in this Agreement or the other Transaction Documents if such breach has resulted in the circumstances giving rise to such party’s seeking to terminate its obligation to effect the Closing.

(b)                 In the event of termination by the Company or any Investor of its obligations to effect the Closing pursuant to this Section 5.3 , written notice thereof shall forthwith be given to the other Investors by the Company and the other Investors shall have the right to terminate their obligations to effect the Closing upon written notice to the Company and the other Investors. Nothing in this Section 5.3 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents.

6.                    Covenants and Agreements .

6.1                No Conflicting Agreements . The Company will not take any action, enter into any agreement or make any commitment that would conflict or interfere in any material respect with the Company’s obligations to the Investors under the Transaction Documents.

6.2                Insurance . The Company shall maintain appropriate insurance coverage consistent with its business being conducted.

6.3                Compliance with Laws . The Company will comply in all material respects with all applicable laws, rules, regulations, orders and decrees of all governmental authorities.

6.4                Listing of Underlying Shares and Related Matters . If the Company applies to have its Common Stock or other securities traded on any principal stock exchange or market, it shall include in such application the Shares and will take such other action as is necessary to cause such Common Stock to be so listed.

6.5                Termination of Covenants . The provisions of Sections 6.4 through 6.6 shall terminate and be of no further force and effect on the date on which the Company’s obligations under the Registration Rights Agreement to register or maintain the effectiveness of any registration covering the Registrable Securities (as such term is defined in the Registration Rights Agreement) terminates.

6.6                Removal of Legends . Consistent with federal and state securities laws, upon the earlier of (a) the sale or disposition of any Securities by an Investor pursuant to Rule 144 or pursuant to any other exemption under the 1933 Act or (b) any Securities of the Investor becoming eligible to be sold without restriction pursuant to all applicable requirements of Rule 144, upon the written request of such Investor, the Company shall or, in the case of Common Stock, shall cause the transfer agent for the Common Stock (the “ Transfer Agent ”) to issue replacement certificates representing such Securities.

6.7                Subsequent Equity Sales . The Company shall not, and shall use its best efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the 1933 Act) that will be integrated with the offer or sale of the Securities in a manner that would require the registration under the 1933 Act of the sale of the Securities to the Investors, or that will be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any trading market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

6.8                Equal Treatment of Investors . No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each Investor by the Company and negotiated separately by each Investor, and is intended for the Company to treat the Investors as a class and shall not in any way be construed as the Investors acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

6.9                Prohibited Transactions . From the date hereof until one (1) year after the Closing Date, no Investor shall enter into any Prohibited Transaction relating to the Common Stock.

7.                    Survival and Indemnification .

7.1                Survival . The representations, warranties, covenants and agreements contained in this Agreement shall survive the Closing of the transactions contemplated by this Agreement until the expiration of the applicable statute of limitations.

7.2                Indemnification . The Company agrees to indemnify and hold harmless each Investor, its Affiliates and, and each of their directors, officers, shareholders, partners, employees, agents, and any Person who controls Investor within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act (collectively, the “ Investor Parties ” and each an “ Investor Party ”), from and against any and all losses, claims, damages, liabilities and expenses (including, without limitation, actual and reasonable attorney fees and disbursements (subject to Section 7.3 below) and other actual expenses incurred in connection with investigating, preparing or defending any action, claim or proceeding, pending or threatened and the costs of enforcement thereof) (collectively, “ Losses ”) to which such Person may become subject as a result of (a) any breach of any representation, warranty, covenant or agreement made by or to be performed on the part of the Company under the Transaction Documents; (b) any action instituted against any Investor Party, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of an Investor Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of Investor’s representation, warranties or covenants or agreements under the Transaction Documents or any agreements or understandings Investor may have with any such stockholder or any violations by Investor of state or federal securities laws or any conduct by Investor which constitutes fraud, gross negligence, willful misconduct or malfeasance), (c) any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement (or in a Registration Statement as amended by any post-effective amendment thereof by the Company) or arising out of or based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and/or (d) any untrue statement or alleged untrue statement of a material fact included in any Prospectus ( or any amendments or supplements to any Prospectus ), or arising out of or based upon any omission or alleged omission to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that (i) the Company shall not be obligated to indemnify any Investor Party for any Losses finally adjudicated to have been caused solely by an untrue statement of a material fact or an omission to state a material fact made in reliance upon and conformity with information furnished to the Company in writing by or on behalf of such Person expressly for use in the Registration Statement or the Prospectus (or any amendment or supplement thereto) and (ii) the foregoing indemnity shall not inure to the benefit of any Investor Party from whom the Person asserting any Losses purchased Securities, if a copy of the Prospectus (as then supplemented) was not sent or given by or on behalf of such Investor Party to such Person, if required by law to have been delivered, at or prior to the written confirmation of the sale of such Securities to such person, and if delivery of the Prospectus (as then supplemented) would have cured the defect giving rise to such Losses, and the Company will reimburse any such Person for all such amounts as they are incurred by such Person.

7.3                Conduct of Indemnification Proceedings . Any person entitled to indemnification hereunder shall (a) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (b) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (i) the indemnifying party has agreed to pay such fees or expenses, (ii) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (iii) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided , further , that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. The Company will not be liable to any indemnified party under this Agreement (a) for any settlement by such indemnified party effected without the Company’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed, or (b) for any Losses incurred by such indemnified party which a court of competent jurisdiction determines in a final judgment which is not subject to further appeal are solely attributable to (A) a breach of any of the representations, warranties, covenants or agreements made by such indemnified party under this Agreement or in any other Transaction Document or (B) the fraud, gross negligence or willful misconduct of such indemnified party.

8.                    Miscellaneous .

8.1                Successors and Assigns . The provisions of this Agreement shall be binding upon and inure to the benefit of the Investors and their respective successors and assigns. An Investor may transfer or assign, in whole or from time to time in part, to one or more persons its rights hereunder in connection with the transfer of Securities by such Investor to such person, provided that (a) the Investor agrees in writing with such transferee or assignee to assign all or any portion of such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (b) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (i) the name and address of such transferee or assignee, and (ii) the securities with respect to which such registration rights are being transferred or assigned; (c) immediately following such transfer or assignment the further disposition of such securities by such transferee or assignee is restricted under the 1933 Act or applicable state securities laws if so required; (d) at or before the time the Company receives the written notice contemplated by clause (b) of this sentence such transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; (e) such transfer or assignment shall have been made in accordance with the applicable requirements of this Agreement; and (f) such transfer or assignment shall have been conducted in accordance with all applicable federal and state securities laws. The provisions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Without limiting the generality of the foregoing, in the event that the Company is a party to a merger, consolidation, share exchange or similar business combination transaction in which the Common Stock is converted into the equity securities of another Person, from and after the effective time of such transaction, such Person shall agree to and, by virtue of such transaction, have assumed the obligations of the Company hereunder, the term “Company” shall be deemed to refer to such Person and the term “Common Stock” shall be deemed to refer to the securities received by the Investors in connection with such transaction. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

8.2                Counterparts; Faxes . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed via facsimile or by e-mail in a “.pdf” format data file, which shall be deemed an original.

8.3                Titles and Subtitles . The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

8.4                Notices . Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given as hereinafter described (a) if given by personal delivery, then such notice shall be deemed given upon such delivery, (b) if given by facsimile or e-mail, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (c) if given by mail, then such notice shall be deemed given upon the earlier of (i) receipt of such notice by the recipient or (ii) three days after such notice is deposited in first class mail, postage prepaid, and (d) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one Business Day after delivery to such carrier. All notices shall be addressed to the party to be notified at the address as follows, or at such other address as such party may designate by ten days’ advance written notice to the other party:

If to the Company:

Precision Optics Corporation, Inc.
22 East Broadway

Gardner, Massachusetts 01440-3338
Attention: Chief Executive Officer
Fax: (978) 630-1487

E-mail:  

With a copy to (which shall not constitute notice):

Amy Trombly

Trombly Business Law, PC
1314 Main Street, Suite 102

Louisville, CO  80027

Fax: (617) 243-0066

E-mail:  

If to the Investors:

to the addresses set forth on the signature pages hereto.

8.5                Expenses . The parties hereto shall pay their own costs and expenses in connection herewith, regardless of whether the transactions contemplated hereby are consummated. In the event that legal proceedings are commenced by any party to this Agreement against another party to this Agreement in connection with this Agreement or the other Transaction Documents, the party or parties which do not prevail in such proceedings shall severally, but not jointly, pay their pro rata share of the reasonable attorneys’ fees and other reasonable out-of-pocket costs and expenses incurred by the prevailing party in such proceedings.

8.6                Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investors representing at least one-half of the shares issued in this transaction. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Securities purchased under this Agreement at the time outstanding, each future holder of all such Securities, and the Company.

8.7                Publicity . The Company will file a public release or announcement concerning the transactions contemplated hereby as required by law or the applicable rules or regulations of any securities exchange or securities market.

8.8                Severability . Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.

8.9                Entire Agreement . This Agreement, including the Exhibits and the Disclosure Schedules, and the other Transaction Documents constitute the entire agreement among the parties hereof with respect to the subject matter hereof and thereof and supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

8.10            Further Assurances . The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

8.11            Governing Law; Consent to Jurisdiction; Waiver of Jury Trial . This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York applicable to agreements made and to be performed entirely within the State of New York (except to the extent the provisions of the California Corporations Code would be mandatorily applicable to the issuance of the Shares). Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. TO THE EXTENT ALLOWABLE UNDER APPLICABLE LAW, EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

8.12            Independent Nature of Investors’ Obligations and Rights . The obligations of each Investor under any Transaction Document are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Transaction Document. The decision of each Investor to purchase Securities pursuant to the Transaction Documents has been made by such Investor independently of any other Investor. Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Investor acknowledges that no other Investor has acted as agent for such Investor in connection with making its investment hereunder and that no Investor will be acting as agent of such Investor in connection with monitoring its investment in the Securities or enforcing its rights under the Transaction Documents. Each Investor shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. Each Investor has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents. The Company acknowledges that each of the Investors has been provided with the same Transaction Documents for the purpose of closing a transaction with multiple Investors and not because it was required or requested to do so by any Investor.

[ Signature Pages Follow ]

IN WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement or caused their duly authorized officers to execute this Securities Purchase Agreement as of the date first above written.

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[Signature Page to Securities Purchase Agreement]

Subsequent to June 30, 2018, on August 2, 2018, the Company granted Mr. Forkey stock options to purchase up to 350,000 shares of common stock at an exercise price of $0.73 per share. The options vest as follows: (i) one–half of the options vest if we achieve revenues of $1.5 million or higher for two consecutive fiscal quarters, based on the reported revenues in Form 10-Ks or 10-Qs; and (ii) one-half of the options vest if the common stock is trading at $1.00 per share or higher for fifteen consecutive trading days. In the event of a change of control all unvested options will vest. The Company also granted Mr. Forkey 300,000 shares of common stock at a rate of 50,000 shares per fiscal quarter retroactively starting January 1, 2017 and through the quarter ended June 30, 2018. As of March 31, 2019, 200,000 shares have been issued, and the remaining 100,000 shares will be issued on January 1, 2020.

The Company also granted Mr. Major stock options to purchase up to 100,000 shares of common stock at an exercise price of $0.70 per share, which was the closing price of the common stock on August 2, 2018. The options vested on May 10, 2019.

On May 10, 2019, our Board of Directors approved the immediately effective acceleration of vesting of all unvested stock option grants held by our Chief Financial Officer, Donald A. Major. In addition, in accordance with the terms of our 2006 and 2011 Equity Incentive Plans, the Board approved an extension of the exercise period of all outstanding stock options held by Mr. Major beyond the original termination date following any future change in Mr. Major’s employment status with the Company. All options held by Mr. Major will now continue to be exerciseable until the stated option expiration date regardless of any future employment termination or other change in status, except in case of death of Mr. Major, in which case such stock options shall expire one year after the date of death.

Previously, on November 8, 2018, our Board of Directors approved a similar amendment of all existing stock options granted for board service and held by the members of our Board of Directors. Therefore, all such stock options held by our directors will now continue to be exerciseable until the stated option expiration date regardless of a termination of directorship or other change in status, except in case of death of a member of the Board of Directors, in which case such stock options shall expire one year after the date of death.

On October 16, 2018, the Company entered into agreements with accredited investors for the sale and purchase of 1,600,000 shares of our common stock, $0.01 par value at a purchase price of $1.25 per share. The Company received $2,000,000 in gross proceeds from the offering. The Company intends to use the net proceeds from this placement for general working capital purposes. In connection with the placement, the Company also entered into a registration rights agreement with the investors, whereby the Company was obligated to file a registration statement with the Securities Exchange Commission on or before 90 calendar days after October 16, 2018 to register the resale by the investors of 1,600,000 shares of our common stock purchased in the placement. The registration statement was filed with the Securities and Exchange Commission on January 3, 2019 and Amendment No. 1 to the registration statement was filed with the Securities and Exchange Commission on January 16, 2019. The registration statement became effective on February 5, 2019.

Schedule 3.15 Intellectual Property.

On July 28, 2011, as reported in the Company’s Form 8-K filed with the SEC on August 3, 2011, the Company entered into an asset purchase agreement with Intuitive Surgical Operations, Inc., through which the Company assigned all of the issued and pending patents that the Company held as of the date of the agreement. As part of the agreement the Company retained an exclusive license to directly and indirectly make, use, develop, modify, improve, substitute, iterate, combine, distribute, offer for sale, and sell, import and export products outside the field of medical robotics throughout countries worldwide and a non-exclusive license to directly and indirectly make, use, develop, modify, improve, substitute, iterate, combine, distribute, offer for sale, and sell, import and export products and services for in vitro procedures utilizing genomic and/or proteomic lab-on-a-chip or other similar benchtop diagnoses, both inside and outside the field of medical robotics throughout countries worldwide.

Exhibit A

Registration Rights Agreement

Exhibit 10.3

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (the “ Agreement ”) is made and entered into as of this 1st day of July, 2019, by and among Precision Optics Corporation, Inc., a Massachusetts corporation (the “ Company ”), and the “ Investors ” named in that certain Securities Purchase Agreement, dated as of the date hereof, by and among the Company and the Investors (the “ Purchase Agreement ”). Capitalized terms used herein have the respective meanings ascribed thereto in the Purchase Agreement unless otherwise defined herein.

WHEREAS, the Company and the Investors have entered into that certain Purchase Agreement, pursuant to which the Investors purchased from the Company up to an aggregate of 760,000 shares (the “ Shares ”) of the Company’s common stock, $0.01 par value (“ Common Stock ”) at a price of $1.25 per share or an aggregate price of $950,000; and

WHEREAS, the parties hereto are entering into this Agreement to provide certain registration rights under the 1933 Act (as defined below), and the rules and regulations promulgated thereunder, and applicable state securities laws to the Investors with respect to Registrable Securities (as defined below) each may hold; and

NOW, THEREFORE, in consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

As used in this Agreement, the following terms shall have the following meanings:

“ Business Day ” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.

“ Common Stock ” means the Company’s common stock, $0.01 par value, and any securities into which such shares may hereinafter be reclassified.

“ Investors ” means the Investors identified in the Purchase Agreement and any Affiliate or permitted transferee of any Investor who is a subsequent holder of any Registrable Securities.

“ Prospectus ” means the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus.

“ Register ,” “ registered ” and “ registration ” refer to a registration made by preparing and filing one or more Registration Statement (as defined below) or similar document in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous basis (“Rule 415”), and the declaration or ordering of effectiveness of such Registration Statement(s) by the SEC.

“ Registrable Securities ” means the Shares of Common Stock purchased by the Investors pursuant to the Purchase Agreement and any shares of Common Stock that may be issued or issuable to prevent dilution resulting from stock splits, stock dividends or similar transactions as permitted by Rule 416(a) of the 1933 Act; provided, that a security shall cease to be a Registrable Security upon the earlier of (i) sale pursuant to the Registration Statement or Rule 144 (or other available exemption) under the 1933 Act, or (ii) such security becoming eligible for sale without restriction by the holder thereof pursuant to Rule 144 (or other available exemption) under the 1933 Act, or (iii) at such time as the transfer agent agrees that the legend on certificates representing the shares of Common Stock can be removed based on Rule 144 or any other applicable law, rule regulation or legal interpretation of such laws, rules and regulations.

“ Registration Statement ” means any registration statement of the Company filed under the 1933 Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

“ Required Investors ” means the Investors holding a majority of the Registrable Securities.

“ SEC ” means the U.S. Securities and Exchange Commission.

“ SEC Guidance ” means (i) any publicly-available written or oral guidance of the SEC staff, or any comments, requirements or requests of the SEC staff and (ii) the 1933 Act.

“ 1933 Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“ 1934 Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

(a)       Each Investor acknowledges that the Company’s Common Stock currently trades on the OTCQB and that the Company is not currently eligible to use Form S-3 for the Registration Statement(s) required to be filed hereunder.

(b)      Promptly following the closing of the purchase and sale of the securities contemplated by the Purchase Agreement (the “ Closing Date ”) but no later than one hundred and twenty (120) calendar days after the Closing Date, the Company shall prepare and file with the SEC one Registration Statement on Form S-1, covering the resale of the Registrable Securities, subject to the limitation contained in Section 2.1(c). Such Registration Statement shall also cover, to the extent allowable under the 1933 Act and the rules promulgated thereunder (including Rule 416), but subject to the limitation contained in Section 2.1(c), such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the Registrable Securities.

(c)       Registration Limitation . Notwithstanding any other provision of this Agreement, if the SEC or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering, the Company shall reduce Registrable Securities on a pro rata basis. In the event of a reduction of the number of Registrable Securities hereunder, the Company shall give the Investor at least five (5) Business Days prior written notice along with the calculations as to such Investor’s allotment. In the event the Company amends the initial Registration Statement in accordance with the foregoing, the Company will use its best efforts to file with the Commission, as promptly as allowed by the SEC or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-1 (unless the Company is then eligible to use Form S-3) or such other form available to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended.

2.2   Expenses. The Company will pay all expenses associated with each registration, including filing and printing fees, the Company’s counsel and accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities laws and listing fees, but excluding discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect to the Registrable Securities being sold.

(a)        The Company shall use commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable. The Company shall (1) notify the Investors by facsimile or e-mail as promptly as practicable, and in any event, within two (2) Business Days, after any Registration Statement is declared effective and (2) promptly after a written request by an Investor, provide the Investors with printed copies of any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby.

(b)       The Company may suspend the use of any Prospectus included in any Registration Statement contemplated by this Section in the event that the Company determines in good faith that such suspension is necessary to (A) delay the disclosure of material non-public information concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company or (B) amend or supplement the affected Registration Statement or the related Prospectus so that such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading (an “ Allowed Delay ”); provided, that the Company shall promptly (a) notify each Investor in writing of the commencement of an Allowed Delay, (b) advise the Investors in writing to cease all sales under the Registration Statement until the end of the Allowed Delay and (c) use commercially reasonable efforts to terminate the Allowed Delay as promptly as practicable.

3.1    Use commercially reasonable efforts to cause such Registration Statement to become effective within one hundred and eighty (180) days after the date the Registration Statement is first filed and to remain continuously effective until the date on which the Investors have sold all the Registrable Securities (the “ Effectiveness Period ”);

3.2    Prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement and the Prospectus as may be necessary to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions of the 1933 Act and the 1934 Act with respect to the distribution of all of the Registrable Securities covered thereby;

3.3    Subject to the paragraph at the end of this Section, furnish (which may be by email notice of a filing on EDGAR) to the Investors and their counsel promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company (but not later than two (2) Business Days after the filing date, receipt date or sending date, as the case may be) one (1) copy of any Registration Statement and any amendment thereto, the Prospectus and each amendment or supplement thereto, in each case relating to such Registration Statement;

3.4    Use commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii) if such order is issued, obtain the withdrawal of any such order at the earliest possible moment;

3.5    Prior to any public offering of Registrable Securities, at the written request of the Required Investors and if required by applicable law, use commercially reasonable efforts to register or qualify such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions requested by the Investors and do any and all other commercially reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(f), (ii) subject itself to general taxation in any jurisdiction where it would not otherwise be so subject but for this Section 3(f), or (iii) file a general consent to service of process in any such jurisdiction;

3.6    Use commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed on each securities exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed;

3.7    Otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the 1933 Act and the 1934 Act, including, without limitation, Rule 172 under the 1933 Act, file any final Prospectus, including any supplement or amendment thereof, with the SEC pursuant to Rule 424 under the 1933 Act, promptly inform the Investors in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Investors are required to deliver a prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder; and

3.8    With a view to making available to the Investors the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the SEC that may at any time permit the Investors to sell shares of Common Stock to the public without registration, during the Effectiveness Period, the Company covenants and agrees to: (i) use its reasonable best efforts to make and keep public information available, as those terms are understood and defined in Rule 144; (ii) use its reasonable best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the 1934 Act; and (iii) furnish to each Investor upon request, as long as such Investor owns any Registrable Securities, (A) a written statement by the Company that it has complied with the reporting requirements of the 1934 Act, (B) such other information as may be reasonably requested in order to avail such Investor of any rule or regulation of the SEC that permits the selling of any such Registrable Securities without registration.

4.1    Each Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. Furthermore, each Investor will promptly, and in any event within three (3) calendar days of a Company request, respond fully to any reasonable request for information as required by the Company or the SEC or any other regulator for inclusion in the Registration Statement or in correspondence to the SEC or such other regulator. Failure to respond to such requests will stay any obligation of the Company to register such Investor’s securities.

4.2    Each Investor, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of a Registration Statement hereunder.

4.3    Each Investor agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay pursuant to Section 2.3(b) or (ii) the happening of an event pursuant to Section 3.7 hereof, such Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until the Investor is advised by the Company that such dispositions may again be made.

4.4    Each Investor covenants and agrees that it will comply with the prospectus delivery and other requirements of the 1933 Act as applicable to it in connection with sales of Registrable Securities pursuant to a Registration Statement, including compliance with the “Plan of Distribution” section of the then current prospectus relating to such Registration Statement.

5.1    Indemnification by the Company . The Company will indemnify and hold harmless each Investor who holds Registrable Securities and its officers, directors, members, employees and agents, successors and assigns, and each other Person, if any, who controls such Investor within the meaning of the 1933 Act, against any losses, liabilities, obligations, claims, contingencies, damages, actual costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation (collectively, “ Losses ”), insofar as such Losses arise out of or are based upon: (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, any Prospectus, or any amendment or supplement thereof or arising out of or based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) any blue sky application or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities under the securities laws thereof (any such application, document or information herein called a “Blue Sky Application”); (iii) the omission or alleged omission to state in a Blue Sky Application a material fact required to be stated therein or necessary to make the statements therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation promulgated under the 1933 Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with such registration; or (v) any failure to register or qualify the Registrable Securities included in any such Registration Statement in any state where the Company or its agents has affirmatively undertaken or agreed in writing that the Company will undertake such registration or qualification on an Investor’s behalf and will reimburse such Investor, and each such officer, director or member and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such Losses arise out of or are based upon (A) an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Investor or any such controlling person in writing specifically for use in such Registration Statement or Prospectus; (B) a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company; (C) the Investor’s use of an incorrect prospectus despite being promptly advised in advance by the Company in writing not to use such incorrect prospectus; (D) any claims based on the manner of sale of the Registrable Securities by the Investor; or (E) any omission of the Investor to notify the Company of any material fact that should be stated in the Registration Statement or prospectus relating to the Investor or the manner of sale.

5.2    Indemnification by the Investors . Each Investor agrees, severally and jointly, to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, shareholders and each person who controls the Company (within the meaning of the 1933 Act) against any losses, claims, damages, liabilities and expense (including reasonable attorney fees) resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement or Prospectus or amendment or supplement thereto or necessary to make the statements therein not misleading, to the extent, but only to the extent that such untrue statement or omission is contained in any information furnished in writing by such Investor to the Company specifically for inclusion in such Registration Statement or Prospectus or amendment or supplement thereto. In no event shall the liability of an Investor be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such Investor in connection with any claim relating to this Section 5 and the amount of any damages such Investor has otherwise been required to pay by reason of such untrue statement or omission) received by such Investor upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.

5.3    Conduct of Indemnification Proceedings . Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (c) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided, further, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. No indemnifying party will be liable to any indemnified party under this Agreement for any settlement by such indemnified party effected without the indemnifying party’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed.

5.4    Contribution . If for any reason the indemnification provided for in the preceding paragraphs 5.1 and 5.2 is unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no event shall the contribution obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such holder in connection with any claim relating to this Section 5 and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.

6.1    Amendments and Waivers . This Agreement may be amended only by a writing signed by the Company and the Required Investors.

6.2    Notices . All notices and other communications provided for or permitted hereunder shall be made as set forth in Section 8.4 of the Purchase Agreement.

6.3    Assignments and Transfers by Investors . The provisions of this Agreement shall be binding upon and inure to the benefit of the Investors and their respective successors and assigns. An Investor may transfer or assign, in whole or from time to time in part, to one or more persons its rights hereunder in connection with the transfer of Registrable Securities by such Investor to such person, provided that (i) the Investor agrees in writing with such transferee or assignee to assign all or any portion of such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by such transferee or assignee is restricted under the 1933 Act or applicable state securities laws if so required; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence such transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; (v) such transfer or assignment shall have been made in accordance with the applicable requirements of the Purchase Agreement; and (vi) such transfer or assignment shall have been conducted in accordance with all applicable federal and state securities laws. The term “Investor” in this Agreement shall also include all such transferees and assignees.

6.4    Assignments and Transfers by the Company . This Agreement may not be assigned by the Company (whether by operation of law or otherwise) without the prior written consent of the Required Investors, provided, however, that in the event that the Company is a party to a merger, consolidation, share exchange or similar business combination transaction in which the Common Stock is converted into the equity securities of another Person, from and after the effective time of such transaction, such Person shall, agree to and, by virtue of such transaction, have assumed the obligations of the Company hereunder, the term “Company” shall be deemed to refer to such Person and the term “Registrable Securities” shall be deemed to include the securities received by the Investors in connection with such transaction unless such securities are otherwise freely tradable by the Investors after giving effect to such transaction.

6.5    Benefits of the Agreement . The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

6.6    Remedies . In the event of a breach by the Company of any of its obligations under this Agreement, each Investor, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. The Company agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.

6.7    Piggy-Back Registrations . If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the 1933 Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the 1933 Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans, then the Company shall deliver to each Investor a written notice of such determination and, if within fifteen days after the date of the delivery of such notice, any such Investor shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Investor requests to be registered; provided, however, that the Company shall not be required to register any Registrable Securities pursuant to this Section 6.7 that are eligible for resale pursuant to Rule 144 (without volume restrictions or current public information requirements) promulgated by the SEC pursuant to the 1933 Act or that are the subject of a then effective Registration Statement.

6.8    No Inconsistent Agreements . Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Investors in this Agreement or otherwise conflicts with the provisions hereof. Except as set forth on Schedule 3.3, neither the Company nor any of its Subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full.

6.9    Cumulative Remedies . The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.

6.10   Independent Nature of Investors’ Obligations and Rights . The obligations of each Investor hereunder are several and not joint with the obligations of any other Investor hereunder, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Investors are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other matters, and the Company acknowledges that the Investors are not acting in concert or as a group, and the Company shall not asset any such claim, with respect to such obligations or transactions. Each Investor shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company contained was solely in the control of the Company, not the action or decision of any Investor, and was done solely for the convenience of the Company and not because it was required or requested to do so by any Investor. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and a Investor, solely, and not between the Company and the Investors collectively and not between and among Investors.

6.11   Counterparts; Faxes . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed via facsimile or by emailing a “.pdf” format data file, which shall be deemed an original.

6.12   Titles and Subtitles . The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

6.13   Severability . Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable in any respect.

6.14   Further Assurances . The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

6.15   Entire Agreement . This Agreement and the Purchase Agreement are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement and the Purchase Agreement supersede all prior agreements and understandings between the parties with respect to such subject matter.

6.16   Governing Law; Consent to Jurisdiction; Waiver of Jury Trial . This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York applicable to agreements made and to be performed entirely within the State of New York. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. TO THE EXTENT ALLOWABLE UNDER APPLICABLE LAW, EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

[ Signature Pages Follow .]

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written.

[Signature Page to Registration Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written.

Exhibit 10.4

[Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed]

DIVAKER MANGADU EMPLOYMENT AGREEMENT

This Agreement is made between Precision Optics Corporation, Inc. ("POC" or the “Company”) and Divaker Mangadu ("Employee").

1.        Employment .

(a)       POC hereby employs the Employee, and Employee accepts employment on the terms set forth below.

(b)       The Employee agrees to serve as the President of Ross Optical Industries (a division of Precision Optics Corporation) for POC and to provide such engineering, executive and administrative services in connection with such services as POC requests. The Employee agrees to render all services hereunder to the best of Employee’s ability, in accordance with sound business practices, and otherwise to the satisfaction of POC and in accordance with policies, procedures and standards established by POC.

2.        Exclusivity .

(a)       With the exception of the excepted services set forth in 2(b) below, the Employee shall devote Employee’s full time to the performance of Employee’s services under this Agreement and shall not engage in similar services for any other entity, except as specifically authorized by this Agreement.

(b)         POC consents to Employee continuing in his present role as an (i) owner in Ross Special Tactical Optics, a rifle scope and firearms business; and (ii) an owner and/or participant in a health consulting business operated by Employee’s wife, following the date of this Agreement, provided such ownership and/or involvement in the foregoing businesses does not materially impede or disrupt his services to POC hereunder. Employee’s ownership and/or participation in the foregoing businesses shall be referred to as the “Excepted Services” for purposes of this Agreement.

3.        Term .

(a)       The initial term of Employee’s employment (the “Initial Term”) shall commence on the Closing Date of that certain Asset Purchase Agreement between Ross Optical Industries and POC (“Employment Effective Date”), and shall continue for five years, unless sooner terminated pursuant to this Agreement. As used in this Agreement, the term “Employment Term” means the Initial Term and the term during which Employee’s employment may be renewed pursuant to paragraph 3(b).

(b)       The Employment Term shall be automatically renewed for a term of one year after the expiration of the Initial Term, and shall be renewed for successive terms of one year each thereafter, unless sooner terminated pursuant to paragraph 5 or unless POC or the Employee gives notice of an intent not to renew the Employment Term not less than ninety (90) days prior to the end of the then existing Employment Term. The terms of Employee’s employment for each renewed term shall be the same as set forth herein for the Initial Term or as mutually agreed to between POC and the Employee.

4.        Compensation . Subject to the other terms of this Agreement, as compensation for services rendered during the Employment Term, POC shall compensate Employee in accordance with the following provisions:

(a)       The Employee will be paid a biweekly salary of $5,384.62 during the Initial Term. Salary payments during the Initial Term and all renewal terms shall be made according to normal payroll practices in place at POC and shall be subject to all applicable deductions, withholdings, etc. for taxes payable under this Agreement as required by applicable law plus other deductions pursuant to POC policies for employee benefits.

(b)       The Employee shall be eligible for an annual bonus of up to $40,000 for each Bonus Year (as defined hereinafter), provided the target net revenue level is achieved. The annual target net revenue level will be $[___] for the first Bonus Year of this agreement. “Bonus Year” shall mean the twelve months period beginning July 1 ^st of each year. The first Bonus Year will begin on July 1, 2019. Annual target net revenue levels will be set by POC in POC’s sole discretion before the start of each subsequent Bonus Year and represent net revenues generated by the Ross Optical division of POC. If the annual target net revenue is not achieved, a pro-rated bonus will be issued, equal to the total bonus multiplied by the percentage of the target net revenue achieved, provided at least 80% of the annual target net revenue is achieved. If less than 80% of the annual target net revenue is achieved, no bonus will be paid The annual bonus will be paid on a yearly basis, in the first regular payroll following the Company’s 10K filing.

Employee bonus, if any, for the Bonus Year in which employment is terminated will be determined according to the process described in section 5(c).

(c)         Upon approval by POC’s Board of Directors, the Employee shall receive 100,000 stock options to purchase shares of Precision Optics Corporation common stock at an exercise price equal to the closing stock price on the date of this Agreement. The Options shall vest in 3 installments of 33,000, 33,000 and 34,000 each, one, two, and three years, respectively after the date of issue, and include all other terms and conditions pursuant to the POC stock option plan.

(d)         POC will reimburse Employee for all reasonable travel expenses required for Employee to accomplish the services pursuant to this Agreement consistent with POC’s policies for reimbursement.

(e)       During the term of this Agreement, Employee will be eligible to participate in all benefit plans made available by the Company from time to time to employees generally, subject to plan terms and generally applicable Company policies. Employee’s years of service at POC shall reflect and include Employee’s years of service at Ross Optical Industries. Current benefits for POC employees, for which Employee will be eligible, include:

(i) 160 hours of paid vacation per year earned at a rate of 13.33 hours per each month of completed employment pursuant to this Agreement.

(ii) Twelve days of paid holidays per year specified by POC each year.

(iii) 40 hours of paid sick leave per year.

(iv) Group medical and dental insurance provided through a PEO (Professional Employer Organization) relationship with Automatic Data Processing, Inc. (“ADP”) as POC’s outsourced human resource provider. The Company currently pays 80% of the premium for health and dental insurance and the employee pays the remaining 20%. Employees pay co-pays and the Company pays the balance of yearly deductibles for medical services received by the employee. These percentage splits of costs may fluctuate as insurance costs, which are wholly unpredictable, fluctuate.

(v) Life insurance at one times Employee’s annualized rate of pay up to a maximum of $150,000 paid for by POC.

(vi) Short and long term disability insurance paid for by POC.

(vii) Participation in the Precision Optics Corporation, Inc. Profit Sharing & 401(k) Plan.

(viii) Use of a mobile phone with call and data plan paid by POC.

5.        Termination .

(a)       Either party may terminate this Agreement at any time after providing ninety (90) days’ written notice to the other party. If Employee is terminated without cause by POC, within the first 5 years from the Employment Effective Date, POC shall pay to Employee a lump-sum severance payment of $75,000 within fifteen (15) business days of termination and all unvested equity awards shall vest immediately and continue to be exerciseable for the remainder of their term. If Employee is terminated without cause by POC after 5 years from the Employment Effective Date, POC shall pay to Employee a lump-sum severance payment equal to one-half of Employee’s then current yearly salary. If Employee terminates without cause, or if Employee is terminated by POC with cause at any time, POC shall not be liable to pay any severance payment and all unvested equity awards shall be forfeited.

(b)       Upon termination of employment, the Employee shall immediately return to POC all property of POC in the possession of or under the control of the Employee. In the event of termination of employment with the Company for any reason whatsoever, Employee agrees to promptly surrender and deliver to the Company all records, materials, equipment, drawings, documents, and data of any nature pertaining to any invention, trade secret, or confidential information of the Company, and Employee will not take with him any description containing or pertaining to any confidential information, knowledge or data of the Company which Employee may produce or obtain during the course of his employment. In the event of termination of employment, Employee agrees to sign and deliver the “Termination Certificate” attached hereto as Schedule A.

(c)       Upon termination for any reason, Employee life insurance and disability insurance benefits terminate on the last day of employment, Employee medical insurance benefits will continue until the end of the month in which termination occurs, after which time all benefits will end. If POC terminates Employee for cause, no bonus will be paid. Upon termination for any other reason, a pro-rated bonus will be paid based on net revenues achieved through the end of the last quarter completed before termination, and a target net revenue level that is pro-rated according to the number of completed quarters.

(d)       For purposes of this Agreement, cause shall mean

(i) the Employee’s willful failure to perform his duties (other than any such failure resulting from incapacity due to physical or mental illness);

(ii) the Employee’s willful failure to comply with any valid and legal directive of POC communicated to him in writing;

(iii) the Employee’s willful engagement in dishonesty, illegal conduct or gross misconduct, which is, in each case, materially injurious to the Company or its affiliates;

(iv) the Employee’s embezzlement, misappropriation or fraud, whether or not related to the Executive’s employment with the Company;

(v) the Employee’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent) or a crime that constitutes a misdemeanor involving moral turpitude;

(vi) the Employee’s violation of a material policy of the Corporation that has been provided to Employee (documents made public on the Company’s website or through filings with the U.S. Securities and Exchange Commission are deemed provided to the Employee);

(vii) the Employee’s willful unauthorized disclosure of confidential information;

(viii) the Employee’s material breach of any material obligation under this Agreement or any other written agreement between the Employee and the Company; or

(ix) any material failure by the Employee to comply with the Company’s written policies or rules, as they may be in effect from time to time during the employment term, if such failure causes material, reputational or financial harm to the Company.

For purposes of this provision, no act or failure to act on the part of the Employee shall be considered “willful” unless it is done, or omitted to be done, by the Employee in bad faith or without reasonable belief that the Employee’s action or omission was in the best interests of the Company.

6.        Non-Competition .

(a)       In consideration for this Agreement the Employee agrees to the terms and conditions of this paragraph 6. The following definitions shall apply:

“Affiliate" means, when used with reference to a specified person, any person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the specified person.

“Client" means any current, former, or prospective client or customer of POC and its affiliates during Employee’s employment with POC.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or otherwise.

“Person” includes a natural person, partnership, limited liability partnership, company, firm, corporation, joint-stock company, trust, unincorporated association, joint venture or other entity or governmental entity, and other pronouns that have a similarly extended meaning.

“Services” means the services provided by POC to any Client and includes designing, manufacturing and prototyping of optical products and optical sub-assemblies and all other products and services of POC.

“Term of the Covenants” means the period beginning on the Employment Effective Date and ending five(5) years after the Employment Effective Date, or on the date that Employee is terminated by POC without cause, whichever is sooner.

“Territory” means the United States of America.

(b)       During the Term of the Covenants, Employee agrees, directly or indirectly:

(i) not to (A) interfere with or attempt to interfere with the relationship between POC or its Affiliates and any (I) Client or (II) other Person with a business or prospective business relationship with POC or its Affiliate; or (B) persuade or attempt to persuade any (I) Client or (II) other Person with a business or prospective business relationship with POC or its Affiliates to discontinue or alter in a manner adverse to POC such Person's relationship or prospective relationship with POC or its Affiliates; or

(ii) with the exception of the Excepted Services, not to have an interest in any Person (whether as an owner, shareholder, partner, member, or any other capacity) that (A) solicits a Client to seek services from any Person other than POC or that assists others in the soliciting of a Client for services from any Person other than POC; (B) interferes with or attempts to interfere with the relationship between (I) a Client or (II) other Person with a business or prospective business relationship with POC or its Affiliates; or (C) persuades or attempts to persuade any (I) Client or (II) other Person with a business or prospective business relationship with POC or its Affiliates to discontinue or alter in a manner adverse to POC such Client’s or other Person’s relationship or prospective relationship with POC or its Affiliates.; or (D) competes with POC, including as it relates to the Services;.

(iii)       with the exception of the Excepted Services, or in instances where Employee is terminated by POC without cause, not to (i) render Services anywhere in the Territory except as an employee of or as otherwise requested by POC; or (ii) have an interest in any Person (other than POC), whether as an owner, shareholder, partner, member or any other capacity, that renders Services anywhere within the Territory.

(iv)       This paragraph 6 is reasonable and valid in all respects and Employee irrevocably waives (and irrevocably agrees not to raise) as a defense any issue of reasonableness (including the reasonableness of the Territory or the duration and scope of Employee's covenants) in any proceeding to enforce any provision of this paragraph 6, the intention of the parties being to provide for the legitimate and reasonable protection of the interests of POC by providing, without limitation, a scope, duration and territory allowed by law. This paragraph 6 is an integral part of POC’s agreement to provide trade secrets and confidential information and to pay Employee the compensation specified in paragraph 4, as well as the other terms described herein. The Employee agrees that the length of the Term of the Covenants and the scope of the Territory are reasonably necessary to protect the business and affairs of POC and its affiliates.

(v)       Paragraphs 6(b)(i), 6(b)(ii) and 6(b)(iii) apply whether Employee is acting on Employee’s own behalf or in the service of another and whether as a sole practitioner, partner, employee, consultant or in any other capacity. Paragraphs 6(b)(i), 6(b)(ii), and 6(b)(iii) apply in all cases where the Employment Term is terminated by either party and whether with or without cause, except that in the case of POC terminating the Employment Term without cause, 6(b)(i), 6(b)(ii) and 6(b)(iii) do not apply. The covenants in this paragraph 6(b) apply, without limitation, to the sending of a mailer, advertisement or other communication directed to Clients offering services or announcing the location of a new business or having an interest in a Person that sends such a communication. Upon any breach of any of the covenants contained in paragraph 6 by Employee, any obligation of POC to pay Employee may immediately be terminated by POC and such obligation shall then be considered null and void. The Term of the Covenants shall be extended by the amount of time Employee has breached the terms of this paragraph 6. POC, without liability to the Employee, may notify any person of the terms of Employee’s covenants in this Agreement, POC’s intention to enforce such covenants, and such other matters as POC deems appropriate to protect POC’s interests.

7.        Additional Employee Covenants .

(i)       The Employee represents and warrants to POC that: (i) all information provided to POC by Employee prior to the Employment Effective Date is correct; and (ii) Employee has the right and authority to be employed by POC pursuant to this Agreement. POC may terminate the employment upon notice to Employee if a former employer of Employee asserts a claim against POC that, if true, would constitute a breach of the foregoing representation and warranty. During and after the employment, Employee shall indemnify POC from any claim, liability, loss, or expense arising out of any claim that Employee’s employment pursuant to this Agreement or actions in connection with Employee’s employment infringe the contract rights of a third party.

(ii)       Employee acknowledges that he is expressly prohibited from offering, purchasing or selling securities of POC based on any material non public information obtained during the course of performing services pursuant to this Agreement in accordance with POC’s applicable Insider Trading Policy and the Code of Conduct. In addition Employee is prohibited from informing or "tipping," any other person about such material information. Employee agrees to execute and comply with the POC’s Insider Trading Policy and Code of Conduct .

(iii)        Confidentiality . Employee agrees to keep confidential, except as the Company may otherwise consent in writing, and not to disclose or make any use of except for the benefit of the Company, at any time, either during or subsequent to Employee’s employment, any trade secrets, confidential information, knowledge, data or other information of the Company relating to products, processes, know-how, designs, formulas, test data, customer lists, business plans, marketing plans and strategies, pricing strategies, or other subject matter pertaining to any business of the Company or any of its clients, customers, consultants, licensees, or affiliates, which Employee may produce, obtain, or otherwise acquire during the course of Employee’s employment, except as herein provided. Employee further agrees not to deliver, reproduce, or in any way allow any such trade secrets, confidential information, knowledge, data, or other information, or any documentation relating thereto to be delivered to or used by any third parties without specific direction or consent of a duly authorized representative of the Company.

(iv)        Inventions . Employee hereby assigns and transfers to the Company all rights, title, and interest in and to all inventions (as used in the Agreement “inventions” shall include but not be limited to ideas, improvements, designs and discoveries) whether or not patentable and whether or not reduced to practice, made or conceived by Employee (whether made solely by Employee or jointly with others), during the period of employment with the Company, which relate in any manner to the actual or demonstrably anticipated business, work, or research and development of the Company or its subsidiaries, or result from or are suggested by any task assigned to Employee or any work performed by Employee for or on behalf of the Company or its subsidiaries. Employee agrees that all such inventions are the sole property of the Company.

(v)        Disclosure of Inventions and Patents . Employee agrees that in connection with any “invention” as defined in paragraph 7(iv) above:

a. Employee will disclose such invention promptly in writing to the immediate supervisor at the Company, with a copy to the President, in order to permit the Company to claim rights to which it may be entitled under this Agreement. Such disclosure shall be received in confidence by the Company.

b. Employee will, at the Company’s request, promptly execute a written assignment of title to the Company for any invention required to be assigned by this paragraph and Employee will preserve any such assignable invention as confidential information of the Company.

c. Upon request, Employee agrees to assist the Company or its nominee (at its expense) during and at any time subsequent to employment in every reasonable way to obtain for its own benefit patents and copyrights for such inventions in any and all countries, which inventions shall be and remain the sole and exclusive property of the Company or its nominee whether or not patented or copyrighted. Employee agrees to execute such papers and perform such lawful acts as the Company deems to be necessary to allow it to exercise all rights, title, and interest in such patents and copyrights.

d. Employee further agrees to execute, acknowledge, and deliver to the Company or its nominee upon request and at its expense all such documents, including applications for patents and copyrights and assignments of inventions, patents, and copyrights to be issued therefore, as the Company may determine necessary or desirable to apply for and obtain letters, patents and copyrights on such assignable inventions in any and all countries and/or to protect the interest of the Company or its nominee in such inventions, patents, and copyrights, and to vest title thereto in the Company or its nominee.

e. Employee agrees to keep and maintain adequate and current written records of all inventions made by Employee (in the form of notes, sketches, drawings, and as may be specified by the Company) which records shall be available to and remain the sole property of the Company at all times.

f. It is understood that all inventions, if any, patented or unpatented, which Employee made prior to employment with the Company are excluded from the scope of this Agreement. To preclude any possible uncertainty, Employee has set forth on Schedule B attached hereto a complete list of all prior inventions, including numbers of all patents and patent applications, and a brief description of all unpatented inventions which are not the property of a previous employer. Employee represents and covenants that the list is complete and that, if no items are on the list, Employee has no such prior inventions. Employee agrees to notify the Company in writing before making any disclosure or performing any work on behalf of the Company which appears to threaten or conflict with the proprietary rights Employee claims in any invention or idea. In the event of Employee’s failure to give such notice, Employee agrees that he will make no claim against the Company with respect to any such inventions or ideas.

(vi)        Other Obligations . Employee acknowledges that the Company from time to time may have agreements with other companies and/or persons which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. Employee agrees to be bound by all such obligations and restrictions and to take all action necessary to discharge the obligations of the Company thereunder.

(vii)        Trade Secrets of Others . Employee represents that performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by Employee in confidence or in trust prior to Employee’s employment with the Company, and Employee will not disclose to the Company or induce the Company to use any confidential or proprietary information or material belonging to any previous employer or others. Employee agrees not to enter into any agreement either written or oral in conflict herewith.

(viii)        Clawback . Any incentive-based compensation, or any other compensation, paid to Consultant pursuant to this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement). The Company will make any determination for clawback or recovery in its sole discretion and in accordance with any applicable law or regulation.

(ix)        Foreign Corrupt Practices Act. Employee will be familiar with and comply with the provisions of the United States Foreign Corrupt Practices Act, including any amendments which. may be effected during the term hereof. In particular, in carrying out services under this Agreement, Employee will not make or offer to make the unlawful payment of money or anything else of value to (1) any government official of any country, (2) any political party of any country, (3) any candidate of any political party of any country, or (4) any other person, while knowing or having reason to know, that such person will make an unlawful payment to a government official, a political party, or a candidate of a political party of any country.

Any breach of this paragraph 7 will result in the automatic termination of this Agreement and will entitle POC to the return of any amounts paid hereunder to Employee.

(x)       Paragraphs (iii),(iv),(v),(vi),(vii),(viii) of this Section 7 shall survive any termination of this agreement.

8.        Notice . Any notice required or permitted to be given hereunder shall be in writing and shall be effective when personally delivered or when mailed by certified or registered mail, return receipt requested, postage prepaid, addressed either to POC or to the Employee at Employee’s residential address or office address, as selected by POC, as reflected on POC’s records. Without limiting the foregoing and the requirements for any other notice, Employee specifically acknowledges that any notices to POC pursuant to paragraph 6(c) must be made in accordance with the foregoing. Either party may change the party’s address for notice by notice to the other party.

9.        Remedies . The prevailing party in any suit brought to enforce or interpret any provision of this Agreement shall be entitled to recover reasonable attorney's fees and court and other costs in addition to any other relief awarded. The Employee authorizes POC to withhold and offset compensation payable to Employee for any lawful purpose, including without limitation, to repay any amount Employee owes to POC and to pay the cost of performing any obligation of Employee that Employee fails to perform.

10.       Parties . POC may assign this Agreement to any entity that succeeds to POC’s interest, including through sale or merger.

11.       Choice of Law . The laws of the state of Texas (excluding choice of law provisions thereof) apply to this Agreement.

12.       Entire Agreement/Modification/Invalidity . This written document, together with any other written document executed contemporaneously herewith, represents the final agreement of the parties with respect to the subject matter of this document and may not be contradicted by evidence of prior or contemporaneous oral agreements of the parties. There are no unwritten oral agreements between the parties regarding the subject matter of this document. Each party represents that such party has not relied upon any representation, warranty or covenant of the other party regarding the subject matter of this document unless the representation, warranty or covenant is contained in this Agreement. No modification of this Agreement shall be binding unless signed by the party to be charged. No partial invalidity of this Agreement shall affect the remainder.

13.        Arbitration . POC and Employee agree that any and all disputes relating to this Agreement or the employment relationship shall be submitted to binding arbitration before one arbitrator in accordance with the rules of the Judicial Workplace Arbitrations, Inc.,under rules applicable to employment disputes, with such arbitration to take place in Boston, MA, except that the arbitrator can award only those damages, if any, that could be recoverable under the state or federal substantive law applicable to the dispute. The judgment rendered by the arbitrator may be entered in any court of competent jurisdiction. The Parties agree that the Federal Arbitration Act governs all aspects of this Agreement.

14.        Severability . In the event that any provision of any paragraph of this Agreement shall be deemed to be invalid or unenforceable for any reason whatsoever, it is agreed such invalidity or unenforceability shall not affect any other provision of such paragraph or of this Agreement, and the remaining terms, covenants, restrictions or provisions in such paragraph and in this Agreement shall remain in full force and effect and any court of competent jurisdiction may so modify the objectionable provision as to make it valid, reasonable and enforceable.

15.        Execution . The parties have signed this Agreement in multiple counterparts of equal dignity on the date(s) set forth below. The Employment Effective Date of this Agreement shall be the date set forth in 3(a) as the commencement of the Initial Term of this Agreement.

Schedule A

Precision Optics Corporation

Termination Certificate

This is to certify that, to the best of my knowledge and belief, I do not have in my possession, nor have I failed to return any records, documents, data, specifications, drawings, blueprints, reproductions, sketches, notes, reports, proposals, or copies of them, or other documents or materials, equipment, or other property belonging to the Company, its successors and assigns (hereafter referred to as “the Company”).

I further certify that I have complied with and will continue to comply with all the terms of Section 7 of the DIVAKER MANGADU EMPLOYMENT AGREEMENT signed by me with the Company, including the reporting of any inventions (as defined therein) conceived or made by me covered by the Agreement.

I further agree that in compliance with Section 7 of the DIVAKER MANGADU EMPLOYMENT AGREEMENT, I will preserve as confidential all trade secrets, confidential information, knowledge, data or other information relating to products, processes, know-how, designs, formulas, test data, customer lists, or other subject matter pertaining to any business of the Company or any of its clients, customers, consultants, licensees, or affiliates.

Schedule B – list of prior patents