This excerpt taken from the SMIT 8-K filed Sep 24, 2009.
Item 1.01 Entry into a Material Definitive Agreement.
On September 23, 2009, Schmitt Industries, Inc. (Schmitt) entered into an Asset Purchase Agreement (the Agreement) with Optical Dimensions, a sole proprietorship (Optical) to acquire all of the assets of Optical (the Transaction). Upon closing of the Transaction, Schmitt will own and operate Opticals business, including its patented laser light scatter surface roughness measurement technology. The Agreement provides that Schmitt will pay cash of $100,000 and issues shares of common stock of Schmitt equal to $100,000 in value based on the average closing price of Schmitts common stock, as reported on the NASDAQ National Market, over the five-day period immediately prior to closing. The Transaction is expected to close within the next six days.
Schmitt has issued a press release entitled Schmitt Industries Announces Agreement to Acquire Assets of Optical Dimensions. A copy of the press release is included as Exhibit 99.1 to this Current Report on Form 8-K.
This excerpt taken from the SMIT 8-K filed Dec 20, 2007.
Item 1.01. Entry into a Material Definitive Agreement.
On December 14, 2007, Schmitt Industries, Inc. (Schmitt) entered into an Arrangement Agreement (the Arrangement Agreement) with Xtero Datacom Inc., a British Columbia corporation (Xtero), pursuant to which Schmitt, through its newly formed, wholly owned subsidiary, Schmitt Industries (Canada) Limited, a British Columbia corporation (SCL), will acquire all of the issued and outstanding common shares of Xtero (the Transaction). The Arrangement Agreement was entered into in furtherance of the purposes of the Interim Acquisition Agreement dated October 4, 2007 (the Interim Acquisition Agreement) among Schmitt, Xtero and certain of Xteros shareholders. Upon closing of the Transaction, Xtero will become a wholly owned subsidiary of Schmitt and Schmitt will own and operate Xteros business, including its patented technologies for remote satellite sensing of large chemical storage tanks.
Under the Interim Acquisition Agreement, Xtero granted Schmitt an exclusive license for the Xtero technology to enable Schmitt to begin ramping up production and marketing of Xteros remote tank monitoring devices prior to closing of the Transaction. During the one-year term of the exclusive license (which term will be extended if the Transaction fails to close by May 31, 2008), Schmitt will pay Xtero royalties of 15% of the net sales of Xtero products and 25% of the net monitoring revenue generated from the use of these products.
Since February 2007, Schmitt has loaned Xtero $500,000 which funds have been used for patent work and other corporate product development and testing activities, and legal fees incurred by Xtero in connection with the structuring and negotiation of the Arrangement Agreement and the Transaction. Schmitt has also paid or reimbursed certain expenses incurred by or on behalf of Xtero since October 1, 2007, including operational expenses and consulting fees, in order to keep Xteros payables current pending completion of the Transaction.
The Arrangement Agreement provides that Schmitt will issue to Xtero shareholders a total of 200,000 shares of Schmitt common stock at closing. In addition, Xtero shareholders will be eligible to receive shares of SCL stock which are exchangeable for shares of Schmitt common stock on a one-for-one basis (Exchangeable Shares) based on the after-tax earnings derived from Xtero products during a five-year earn-out program ending on May 31, 2013. The use of Exchangeable Shares may permit Canadian shareholders of Xtero to defer any gain on the sale of their Xtero shares for Canadian income tax purposes. The number of Exchangeable Shares issuable in any year of the earn-out program will be calculated by dividing (i) 50% of net annual after-tax earnings (if any) derived from Xtero products by (ii) the average closing price for a share of Schmitt common stock (up to a maximum of $27.72) for the period from April 1 through July 31 of each of Schmitts fiscal years through 2012 and for the period from April 1 through May 31, 2013 for Schmitts 2013 fiscal year.
The Transaction is subject to various conditions, including approval by Xtero shareholders, approval by a British Columbia court and other customary closing conditions, and is expected to close by the end of January 2008. Approval of the Transaction by the Schmitt shareholders is not required. Either Schmitt or Xtero may terminate the Arrangement Agreement if the Transaction does not close by May 31, 2008, provided that the failure of the Transaction to have closed by that date was not caused by such partys failure to fulfill any of its obligations.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.