EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
Between: PERCEPTRON, INC., a Michigan corporation
NANOOSE SYSTEMS CORPORATION, a British Columbia
corporation
TRIDENT SYSTEMS, INC., a Georgia
corporation Collectively, "Seller"
And: U.S. NATURAL RESOURCES, INC., a Delaware
corporation "Buyer"
Dated: March 13, 2002
BACKGROUND
Buyer is engaged in the manufacture and sale of equipment used to cut,
handle and dry lumber. Seller, through its Forest Products Business Unit (the
"FPBU"), is engaged in the manufacture and sale of scanning equipment and
related automation software used to optimize the lumber cutting process. This
Asset Purchase Agreement sets forth the terms under which Seller will sell and
Buyer will purchase substantially all of the assets of the FPBU.
AGREEMENT
SECTION 1. ASSETS
1.1 Purchased Assets. Seller hereby sells, assigns, and delivers to Buyer,
and Buyer hereby purchases and accepts from Seller, as of the Closing (as
defined in Section 3.1), all of Seller's rights, title and interests in and to
all of the assets owned by Seller which are associated primarily with the FPBU,
other than Excluded Assets (collectively, the "Assets"). The Assets exclude the
Excluded Assets described in Section 1.2. The Assets include without limitation
the assets described below:
1.1.1 Accounts Receivable. Accounts receivable (representing monies
owed on delivered goods or services) as of the Closing Date, including billed
and unbilled amounts, and related security and collateral, as identified in
Disclosure Schedule 1.1.1 (which is a listing as of February 28, 2002 and which
will subsequently be updated through the Closing Date), but excluding all
accounts receivable from Syst-M and Mac Equipment (the "Accounts Receivable");
1.1.2 Inventory. Inventories as of the Closing Date of raw materials,
work-in-process, finished goods, components, spare parts, supplies and
packaging, held by the FPBU in the ordinary course of its business, excluding
inventory sold after the date of this Agreement and prior to the Closing in the
ordinary course of business, as identified in Disclosure Schedule 1.1.2 (which
is a listing as of February 22, 2002 for Inventory in Xxxx Xxxxx, Xxxxxxx; as of
February 23, 2002 for
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Inventory in Plymouth Meeting, Pennsylvania; as of February 24, 2002 for
Inventory in Plymouth, Michigan; and as of February 25, 2002 for Inventory in
Xxxxxxxxxx xxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx; and which will subsequently be
updated through the Closing Date) (the "Inventory");
1.1.3 Furniture and Equipment. Tangible personal property, including
machinery, shop equipment, tooling, jigs, fixtures, tools, shop supplies,
shelving and racking, furniture, office equipment, computers, printers and
office supplies used by or in the operation of the FPBU, as identified in
Disclosure Schedule 1.1.3, as well as any other tangible personal property owned
by Seller which, as of the Closing Date, is located on or about the premises
leased by Seller in Portland, Oregon; Xxxx Xxxxx, Xxxxxxx; Plymouth Meeting,
Pennsylvania; Parksville, British Columbia; Coquitlam, British Columbia; and
Montreal, Quebec or is in the possession of Seller's employees who are
associated primarily with the FPBU;
1.1.4 Reserved.
1.1.5 Assumed Contracts. Seller's interest in the contracts associated
primarily with the FPBU, as identified in Disclosure Schedule 1.1.5 (the
"Assumed Contracts"), together with all rights, privileges, claims, demands,
refunds and indemnifications in favor of Seller under the Assumed Contracts, but
excluding the contracts identified under Section 1.2.5 (the "Excluded
Contracts"). To the extent that Seller's rights under any Assumed Contract may
not be assigned without the consent of another person which has not been
obtained, this Agreement shall not constitute an agreement to assign the same if
an attempted assignment would constitute a breach thereof or be unlawful, and
Seller and Buyer shall use their reasonable efforts to obtain any such required
consent(s) as promptly as possible. If any such consent shall not be obtained or
if any attempted assignment would be ineffective or would impair Buyer's rights
under the Assumed Contract in question so that Buyer would not in effect acquire
the benefit of all such rights, Seller, to the maximum extent permitted by law
and the Assumed Contract, shall act after the Closing as Buyer's agent in order
to obtain for Buyer the benefits thereunder and shall cooperate, to the maximum
extent permitted by law and the Assumed Contract, with Buyer in any other
reasonable arrangement designed to provide such benefits to Buyer and Buyer
shall reimburse Seller for the costs incurred by Seller in providing such
benefits to Buyer and in complying with the terms of the Assumed Contract which
Buyer would have incurred directly if the Assumed Contract were to be assigned
to Buyer. The parties have attempted to identify all existing contracts
associated with the FPBU and to classify each contract either as an Assumed
Contract or an Excluded Contract. After the Closing, if Seller or Buyer becomes
aware of any contract associated with the FPBU, which is not identified as an
Assumed Contract or an Excluded Contract, the discovering party will promptly
provide the other party with a copy of the contract, together with an
explanation of the circumstances of discovery. Seller will thereafter provide
Buyer such additional information about the contract as may be reasonably
requested by Buyer. Within 30 days after its provision or receipt of the notice,
Buyer may, by written notice to Seller, agree to assume the contract, in which
case it will become an Assumed Contract; otherwise it will become an Excluded
Contract;
1.1.6 Leases. Seller's interests as tenant or lessee under the leases
of real property which are identified in Disclosure Schedule 1.1.6 (the
"Leases");
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1.1.7 Leasehold Improvements. Seller's interests in all leasehold
improvements and fixtures on the real property that is the subject of the
Leases, as identified in Disclosure Schedule 1.1.7 (the "Leasehold
Improvements");
1.1.8 Prepaid Items. Credits, prepaid expenses, advance payments,
security deposits and other prepaid items, together with related security
interests granted by the third parties holding the prepaid items, as identified
in Disclosure Schedule 1.1.8 (the "Prepaid Items");
1.1.9 Marketing Materials. Marketing and product brochures, sales
literature, installation and user guides and manuals, telephone lines and
numbers, internet domain names and sites, public advertising, and any other
advertising and promotional materials associated primarily with the FPBU, and
including associated copyrights, as identified in Disclosure Schedule 1.1.9;
1.1.10 Trademarks. The trademarks identified in Disclosure Schedule
1.1.10 (the "Trademarks") and the trademark licenses set forth in Section 1.3;
1.1.11 Intellectual Property. (a) All patents, patent applications,
inventions (regardless of whether patentable), invention disclosures,
improvements, trade secrets, proprietary information, proprietary processes or
formulae, manufacturing and process information, business plans, franchises,
market research, customer lists and information, credit information, licenses,
know how, technology, technical data, specifications, test data, and all
documentation relating to any of the foregoing; (b) documentation,
specifications, user manuals, designs, drawings, promotional literature,
marketing documents, and other literary works; (c) software, including both
source code (i.e., human readable) and object code (i.e., machine readable),
together with any associated compilers and programming guides; and (d) all
documentation related to any of the foregoing, in each case used exclusively in
the conduct of the FPBU, as identified in Disclosure Schedule 1.1.11
(collectively, the "Intellectual Property"), and the intellectual property
licenses set forth in Section 1.4 (subject to the limitations set forth in
Section 1.4.);
1.1.12 Sensors. All rights to manufacture, sell and service ultrasound
and ultrasonic sensors which are based on intellectual property acquired by
Seller from Sonic Technologies, Inc. and Sonic Industries, Inc. (the "Sonic
Sensors"), including all Intellectual Property in connection therewith, except
for the right to manufacture, sell, and service sensors based on U.S. Patent No.
5,613,493 "Ultrasonic Apparatus and Method for Measuring Animal Backfat"
(Issued: March 25, 1997) and U.S. Patent No. 6,012,332 "Ultrasonic Apparatus and
Method for Measuring Animal Backfat" (Issued January 11, 2000) (the "A-Scan
sensors"), which A-Scan sensors and the two foregoing patents shall be
considered Excluded Assets;
1.1.13 Books and Records. All books, records, papers, files, and
documents (whether in hard copy or computer format) that relate primarily to any
of the Assets or to the FPBU, including employee files, correspondence, data
processing records, engineering information, customer lists, files and records,
advertising and marketing data and records, designs, drawings, credit reports,
and other data relating primarily to the Assets or the FPBU, covering such
information to which Seller is a party but excluding third party information
unless Buyer agrees to be bound by any confidentiality agreement with respect to
such information to which Seller is a party and only with the permission of said
third party if such permission is required (the "Books and Records"). Seller may
retain a copy of all Books and Records;
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1.1.14 Customer Lists. Customer lists, distributor lists, supplier
lists, open bid and quotation documents, sales records and files, and completed
contract documents, maintenance and warranty records, databases and data
collections and other confidential or proprietary business information in the
possession, custody or control of Seller regarding the Assets or the FPBU (the
"Customer Lists");
1.1.15 Warranties. All rights under all warranties, representations,
guarantees and indemnifications related to the Assets made by third parties, as
identified in Disclosure Schedule 1.1.15 (the "Warranties");
1.1.16 Permits and Licenses. All rights, title and interests of Seller
in all permits, licenses, franchises, certificates of occupancy, variances,
exemptions, easements and other governmental authorizations, consents, waivers,
registrations and approvals with respect to the operation of the Assets or the
FPBU (the "Permits"), to the full extent the same may be assigned and
transferred to Buyer, as identified in Disclosure Schedule 1.1.16; and
1.1.17 Goodwill. All other goodwill and general intangibles of the
Seller related exclusively to the Assets or the FPBU (the "Goodwill").
The Assets will be transferred and conveyed to Buyer at the Closing in the
condition existing on the date of this Agreement, subject to additional
reasonable wear and tear through the date of the Closing, by xxxx of sale and
other necessary documents of transfer. The Assets will be transferred and
conveyed to Buyer free and clear of all liens, charges, encumbrances, debts,
liabilities and obligations whatsoever, except for the Assumed Liabilities (as
defined in Section 2.1).
1.2 Excluded Assets. Except as otherwise provided in this Agreement, the
Assets will not include any of the assets of Seller that are not associated
primarily with the FPBU or any of the following described assets which may be
associated primarily with the FPBU but are excluded nevertheless (collectively,
"Excluded Assets"):
1.2.1 Cash. All of Seller's cash and cash equivalents;
1.2.2 Deferred Income Taxes. All receivables and credits attributable
to Seller's income taxes;
1.2.3 Subsidiaries. The capital stock of Nanoose Systems Corporation
and of Trident Systems, Inc. and any other interests in any direct or indirect
subsidiaries of Seller;
1.2.4 Sensors. The rights to manufacture A-Scan, LASAR, TriCam and
Transverse TriCam sensors and related software, intellectual property and other
assets (the "Non-Sonic Sensors") using confidential and proprietary information
or intellectual property belonging to Seller, except as specifically provided in
this Agreement and the Ancillary Agreements (each of which is identified in
Section 4.1.6);
1.2.5 Excluded Contracts. The Excluded Contracts identified in
Disclosure Schedule 1.2.5;
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1.2.6 Excluded Accounts. Accounts receivable from Syst-M and Mac
Equipment;
1.2.7 Trademarks. The rights in trademarks reserved to Seller under
Section 1.3.1 and 1.3.3; and
1.2.8 Intellectual Property. The rights in the Intellectual Property
and other intellectual property reserved to Seller under Section 1.4.
1.3 Trademarks. The following provisions apply with respect to Trademarks
and other trademarks of Seller which are used by the FPBU:
1.3.1 Non-FPBU Trademarks. Seller owns and will continue to own, to the
exclusion of Buyer, all of its trademarks not associated primarily with the
FPBU, other than with respect to the trademark "Perceptron" which is covered
under Sections 1.3.3 and 1.3.5 and with respect to the trademarks "TriCam" and
"LASAR" which are covered under Sections 1.3.4 and 1.3.5.
1.3.2 FPBU Trademarks. Seller hereby grants to Buyer, and Buyer hereby
accepts, an exclusive, fully-paid and perpetual license in and to the Trademarks
in all countries where such rights exist, including any and all rights of
enforcement with respect thereto, all rights to xxx or recover for the
infringement thereof, and any and all causes of action related thereto. The
Trademarks are identified in Disclosure Schedule 1.1.10.
1.3.3 Trademark "Perceptron." Seller owns and will continue to own all
right, title and interests in the trademark "Perceptron," subject to the license
set forth in this Section 1.3.3. Seller hereby grants to Buyer a non-exclusive,
fully-paid license in and to the trademark "Perceptron" in all countries where
such rights exist. This license will expire on the second anniversary of the
Closing, after which Buyer will have no further rights of use. Buyer's use of
the Trademark "Perceptron" during the two-year period shall be subject to the
following provisions:
(a) Buyer can only use the trademark "Perceptron" in
connection with the words "Forest Products" or in connection with
Buyer's business name in a manner which indicates that Buyer is
conducting business under the name "Perceptron" and does not indicate
that such business is a stand-alone company or affiliated with Seller.
Acceptable uses would include "USNR-Perceptron," "Perceptron-USNR,"
"Perceptron Forest Products" and such other uses on which the parties
may agree, which agreement will not be unreasonably withheld;
(b) The logos associated with Seller's use of the trademark
"Perceptron" during the two years prior to the Closing Date will not be
used by Buyer; and
(c) The products sold by Buyer under the trademark
"Perceptron" will meet commercially reasonable standards as to quality
and specifications, generally in accordance with Seller's past
practices
1.3.4 Trademarks "TriCam" and "LASAR". Seller owns and will continue to
own all right, title and interests in the trademarks "TriCam" and "LASAR,"
subject to the license set
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forth in this Section 1.3.4. Seller hereby grants to Buyer a non-exclusive,
fully-paid license in and to the trademarks "TriCam and "LASAR" in all countries
where such rights exist, but only for use in connection with: (a) the sale or
offer for sale of products or services relating to "TriCam" or "LASAR" sensors
sold by the FPBU prior to the Closing, and (b) the sale or offer for sale of
products or services relating to "TriCam" or "LASAR" sensors purchased by Buyer
under this Agreement or under the License Agreement, and (c) to the extent
required for Buyer to fulfill legally-binding commitments to its customers, the
sale or offer for sale of products or services relating to "TriCam" or "LASAR"
sensors manufactured by or on behalf of Buyer under the License Agreement.
1.3.5 Other Use of Non-FPBU Trademarks. Notwithstanding any other
provision of this Agreement, Buyer will be entitled to own, use, or sell all of
the tangible items which Buyer purchases from Seller under this Agreement or
under the License Agreement, without time limitation, even if such items bear
non-FPBU trademarks.
1.4 Intellectual Property. The Intellectual Property being acquired by
Buyer is subject to the limitations and licenses set forth in this Section. The
Intellectual Property is associated exclusively with the FPBU; and certain other
intellectual property of Seller is associated with both the FPBU and Seller's
business units other than the FPBU ("Shared Intellectual Property"). Disclosure
Schedule 1.1.11 identifies the Intellectual Property and the Shared Intellectual
Property.
1.4.1 Exclusively FPBU Intellectual Property. The Intellectual Property
associated exclusively with the FPBU will be transferred to and owned by Buyer
and is subject to the terms of this Section 1.4.1. Buyer hereby grants to
Seller, as part of the Excluded Assets, a non-exclusive, fully paid, worldwide
and perpetual license to use, sublicense, modify, make, have made, exploit and
commercialize such Intellectual Property, but only to the extent reasonably
necessary for Seller to carry on the business conducted by Seller prior to the
Closing and provided that any use of such Intellectual Property by Seller will
not violate any of the provisions of the Non-Compete Agreement (as defined in
section 4.1.6).
1.4.2 Shared Intellectual Property. The Shared Intellectual Property
associated with both the FPBU and Seller's other business units will remain the
property of Seller and will be considered part of the Excluded Assets and is
subject to the terms of this Section 1.4.2. Seller hereby grants to Buyer, as
part of the Assets, a non-exclusive, fully-paid, worldwide and perpetual license
to use, modify, exploit and commercialize such Shared Intellectual Property to
the extent reasonably necessary for Buyer to carry on the business conducted by
the FPBU prior to the Closing, but excluding any Shared Intellectual Property
used exclusively for manufacturing non-Sonic Sensors. Notwithstanding the
foregoing, such license from Seller to Buyer will include the right to
manufacture and service sensors upon the effectiveness of the "License" set
forth in the License Agreement (as defined in Section 4.1.6) to the extent Buyer
is permitted to manufacture and service sensors under the terms of the License
Agreement.
1.4.3 Confidential Information. Each party understands and agrees that
all information disclosed by the other party hereunder relating to the
disclosing party's technology and business operations, including without
limitation inventions (whether or not patentable), techniques, processes,
methodologies, schematics, testing procedures, software design and architecture,
design and function specifications, analysis and performance information, user
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documentation, internal documentation and the features, mode of operation and
other details of its products and services, as well as names and expertise of
employees, consultants, customers and prospects, know-how, ideas, and technical,
business, financial, marketing, customer and product development plans,
forecasts, strategies and other information, is Confidential Information of the
disclosing party. Each party agrees not to disclose Confidential Information of
the other party to any third party except as contemplated by this Agreement. By
way of example, and not limitation, this Agreement contemplates a party
disclosing Confidential Information to a third party manufacturer who will use
such Confidential Information to make products for the party. Any such
disclosure under this Agreement shall only be made pursuant to a non-disclosure
agreement between the disclosing party and the third party.
1.5 Assignment of Canadian Assets. Buyer hereby assigns and transfers to
its affiliate, USNR/Kockums-Cancar Company, a Nova Scotia unlimited liability
company ("USNR/KCC"), all of Buyer's rights, title and interest in the portion
of the Assets which is located in Canada. Such assignment is without
representation or warranty. USNR/KCC does not assume and shall not be
responsible for or liable for any of the obligations of Buyer under this
Agreement, including without limitation any of the Assumed Liabilities. Seller
agrees to assign and transfer the portion of the Assets which is located in
Canada directly to USNR/KCC at the Closing.
SECTION 2. LIABILITIES
2.1 Assumed Liabilities. As of the Closing, and except as otherwise
provided in this Agreement, Buyer will be liable and responsible for, assume,
perform and satisfy, without any further liability, responsibility or recourse
to Seller or its successors or assigns, the following liabilities and
obligations of Seller which are related to the FPBU (collectively, the "Assumed
Liabilities"):
2.1.1 Contract Obligations. Any and all obligations to be performed
under the Assumed Contracts, except: a) any warranty obligations arising under
the Assumed Contracts for products delivered by Seller prior to the Closing,
subject to the provisions in Section 8.13, b) any warranty obligations covering
Non-Sonic Sensors, c) any liabilities relating to the performance or breach of
any Assumed Contract which performance or breach occurred prior to the Closing,
and d) any liabilities recorded as accounts payable on Seller's books as of the
Closing;
2.1.2 Employee Liabilities. Liabilities and obligations with respect to
employees of the FPBU who are hired by Buyer and which arise or accrue after the
Closing (but excluding liabilities associated with the length of service of such
employees with Seller) as well as the accrued vacation liabilities identified in
Disclosure Schedule 2.1.2 (the "Assumed Vacation Liabilities");
2.1.3 Customer Deposits. Liabilities and obligations associated with
deposits or advance payments received by the FPBU for undelivered goods or
services, but excluding any liabilities associated with deposits from Syst-M and
Mac Equipment, as identified in Disclosure Schedule 2.1.3 (which is a listing as
of February 28, 2002 and which will subsequently be updated through the Closing
Date) (the "Customer Deposits"); and
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2.1.4 Post-Closing Conduct of the FPBU. Except as otherwise provided in
this Agreement or any of the Ancillary Agreements, liabilities and obligations
attributable to the operation of the Assets and the conduct of the FPBU which
arise or accrue after the Closing.
2.2 Retained Liabilities. Buyer will not assume, and Seller will be liable
and responsible for, retain, perform and satisfy without any further liability,
responsibility or recourse to Buyer or its successors or assigns, all
liabilities or obligations of Seller, or as to which any of the Assets is
subject (whether absolute, accrued, contingent or otherwise), which are not
Assumed Liabilities, including without limitation the following (collectively,
"Retained Liabilities"):
2.2.1 Contract Obligations. Any and all obligations and liabilities
relating to the performance or breach of each Assumed Contract which performance
or breach occurred prior to the Closing, and all accounts payable of Seller
arising prior to the Closing. Buyer agrees to use its reasonable efforts, at
Seller's expense, to assist Seller in resolving any liability or obligation for
a breach or performance of an Assumed Contract which breach or performance
occurred prior to the Closing, but will not resolve any such breach or
performance issue without Seller's prior written consent if Buyer's resolution
of such breach or performance issue would require Seller to incur any cost;
2.2.2 Product Liabilities. Liabilities and obligations for products
sold by Seller prior to Closing for any bodily injuries or property damage and
for any liability alleged to arise from design defects, manufacturing defects,
failures to warn, negligence or strict liability or otherwise;
2.2.3 Employee Liabilities. Except as provided in Section 2.1.2,
liabilities and obligations relating to any employee of Seller to the extent
those liabilities or obligations arose from or during such employee's employment
with Seller or termination thereof, including liabilities for wages, bonuses,
severance, change-in-control payments, vacations, sick pay, pensions, 401(k) and
other employee benefits of every nature;
2.2.4 Unrelated Liabilities. Liabilities and obligations arising from
any activities of Seller not associated exclusively with the FPBU;
2.2.5 Excluded Asset Liabilities. Liabilities and obligations relating
to any Excluded Asset;
2.2.6 Environmental Liabilities. Liabilities and obligations arising
under any Environmental Law (as defined in Section 5.10) with respect to the
ownership or use of any Asset, the manufacture or sale of any product, the
occupancy of any real estate under the Leases, or the ownership or activities of
the FPBU prior to the Closing;
2.2.7 Tax Liabilities. Liabilities and obligations related to tax
liability or obligations of Seller including, but not limited to, any penalty or
interest for late or non-payment of Taxes (as defined in Section 8.6); and
2.2.8 Business Operations. All other liabilities and obligations of
Seller accrued, contingent or otherwise, arising from the operation and conduct
of Seller's business prior to the Closing, except for Assumed Liabilities.
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SECTION 3. PURCHASE PRICE AND PAYMENT
3.1 Closing. "Closing" means the meeting of the parties or other occurrence
at which the sale, assignment, transfer and delivery of the Assets by Seller to
Buyer, the payment of the Purchase Price (as defined in Section 3.2) and the
other transactions contemplated by this Agreement are completed. The Closing
will take place at the offices of Buyer's legal counsel, Ball Xxxxx LLP, Suite
1100, One Main Place, 000 XX Xxxx Xxxxxx, Xxxxxxxx, XX 00000, at 10:00 a.m.
P.S.T. on March 13, 2002 (the "Closing Date").
3.2 Purchase Price. The Purchase Price (which will be determined and paid
in US Dollars) for the Assets will be the sum of:
3.2.1 For the Assumed Contracts, Leasehold Interests, Marketing
Materials, Trademarks, Intellectual Property, Books and Records, Customer Lists,
Warranties, Permits and Goodwill, as well as all other intangible Assets, the
purchase price will be $1,000,000.; and
3.2.2 For the balance of the Assets, the purchase price will be the
aggregate book value of those assets as of the Closing, less applicable
discounts, in accordance with Section 3.3.
3.3 Book Value. The book values of the Assets used to determine the portion
of the purchase price under Section 3.2.2 will be determined as follows:
3.3.1 Accounts Receivable. The book value of Accounts Receivable will
be as shown in Disclosure Schedule 1.1.1 ($1,971,493), updated only to reflect
any new xxxxxxxx to customers or collections from customers from February 28,
2002 to the Closing Date, less a discount of $300,000.
3.3.2 Inventory. The book value of Inventory will be as shown in
Disclosure Schedule 1.1.2 ($2,418,052), updated only to reflect any receipts or
sales of Inventory by Seller from the applicable dates referenced in Section
1.1.2 to the Closing Date, less a discount of $400,000.
3.3.3 Prepaid Items. The book value of Prepaid Items will be fixed at
$32,064 (see Disclosure Schedule 1.1.8).
3.3.4 Other Tangible Assets. The book value for all other tangible
Assets, including without limitation all of the Assets specified in Section
1.1.3 (Furniture and Equipment) and Section 1.1.7 (Leasehold Improvements) will
be fixed at $924,691 (See Disclosure Schedule 3.3.4).
3.4 Payment of Preliminary Purchase Price. The parties acknowledge that it
will not be possible to determine the final Purchase Price until Seller
determines and Buyer verifies certain final book values as of the Closing Date
as provided in Sections 2.1.3 (Customer Deposits), 3.3.1 (Accounts Receivable)
and 3.3.2 (Inventory). Buyer will pay a preliminary Purchase Price of
$5,000,000, less a credit for the Assumed Vacation Liabilities ($42,095.00) and
a credit for fifty percent of the Customer Deposits (i.e., 50% of $702,183.00 or
$351,092.00), in cash at Closing by wire transfer (the fifty percent of the
Customer Deposits not credited to Buyer against the
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preliminary Purchase Price under this Section 3.4 shall be credited to Buyer
against the final Purchase Price under Section 3.5.1 or 3.5.2). The net payment
(preliminary Purchase Price, less credits) due from Buyer to Seller at Closing
will be $4,606,813.00.
3.5 Payment of Final Purchase Price. As soon as practical after the
Closing, but in no event later than 30 days after the Closing, Seller will
provide Buyer with a statement of the final book values under Sections 2.1.3
(Customer Deposits), 3.3.1 (Accounts Receivable), and 3.3.2 (Inventory),
including detailed supporting schedules, and a proposed final Purchase Price.
Buyer will have 15 days after receipt of such statement and schedules to verify
the book values and the proposed final Purchase Price. During the 15-day period,
Seller will provide Buyer with access to its books and records and provide Buyer
with such information as Buyer may reasonably request in order to verify the
book values that comprise the proposed final Purchase Price. The statement of
final book values shall be considered final, binding and conclusive on all
parties if no notice of disagreement has been delivered to Seller on or before
the end of the 15-day period. The final Purchase Price will be mutually
determined by the parties at the expiration of the 15-day period. If the parties
are unable to resolve the dispute within the 15-day period, the parties shall
submit to Ernst & Young LLP as arbitrator (the "Arbitrator") the statement of
final book values and supporting schedules, a copy of this Agreement and Buyer's
notice of disagreement for review and evaluation. Within thirty (30) days of the
submission to the Arbitrator, the Arbitrator shall make a written determination,
based solely on the presentations by the parties (and their representatives and
agents), in a form or forms determined by the Arbitrator, and not by independent
review, only with respect to those issues in dispute as set forth in the notice
of disagreement and shall render a report as to the dispute and the resulting
computation. The fees and expenses incurred in connection with the services
rendered pursuant to this Section 3.5 shall be borne by Seller and Buyer in
inverse proportion to the award granted each of them by the Arbitrator. For
example, if the dispute relates to $100,000 and the Arbitrator awards $60,000 to
party A and $40,000 to party B, then the Arbitrator's fees and expenses shall be
apportioned as follows: B shall pay 60% and A shall pay 40% of such fees and
expenses. When any dispute is resolved by agreement among the parties or by the
Arbitrator, changes to the statement of final book values shall be made
thereunder but only for items as to which Buyer has taken exception pursuant to
the notice of disagreement and such revised statement of final book values shall
be considered final, binding and conclusive on all parties. As of the Closing
Date, the pro forma calculation of the Purchase Price is as follows:
(a) Under Section 3.2.1 $ 1,000,000
(b) Under Section 3.3.1 $ 1,971,493 For Accounts Receivable
(c) Under Section 3.3.1 ($ 300,000) Discount on Accounts Receivable
(d) Under Section 3.3.2 $ 2,418,052 For Inventory
(e) Under Section 3.3.2 ($ 400,000) Discount on Inventory
(f) Under Section 3.3.3 $ 32,065 For Prepaid Items
(g) Under Section 3.3.4 $ 924,691 For Other Tangible Assets
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Pro forma Purchase Price $5,645,300
In determining the final Purchase Price, the figures shown
above in items (a), (c), (e), (f), and (g) will be fixed at
the amounts shown above. The figures shown above in item (b)
(for Accounts Receivable) and in item (d) (for Inventory)
shall
10
be adjusted as provided in Section 3.3.1 and Section 3.3.2,
respectively, and otherwise in accordance with this Section 3.5.
3.5.1 Payment by Buyer. If the final Purchase Price less the final
amount of credits to Buyer for Assumed Vacation Liabilities and 100% of the
Customer Deposits is an amount in excess of the amount paid by Buyer at Closing,
within 10 days after the final Purchase Price is determined, Buyer will pay the
amount in excess of what Buyer paid at Closing by issuance and delivery of
Buyer's promissory note to Seller in the form attached as Exhibit F (the
"Note").
3.5.2 Payment by Seller. If the final Purchase Price less the final
amount of credits to Buyer for Assumed Vacation Liabilities and 100% of the
Customer Deposits is an amount lower than the amount paid by Buyer at Closing,
within 10 days after the final Purchase Price is determined, Seller will refund
to Buyer, in cash by wire transfer, the amount paid by Buyer at Closing which is
in excess of the amount of the final Purchase Price less the final amount of
credits to Buyer for Assumed Vacation Liabilities and 100% of the Customer
Deposits.
3.6 Ancillary Agreements. Seller hereby acknowledges that Buyer would not
have entered into this Agreement but for the Ancillary Agreements, which are
referenced in Section 4.1.6.
3.7 Procedure at Closing. At the Closing, the parties agree to take the
following steps in the order listed below (provided, however, that upon their
completion, such steps will be deemed to have occurred simultaneously):
3.7.1 Seller's Documents. Seller will execute and deliver to Buyer each
of the Ancillary Agreements;
3.7.2 Buyer's Documents. Buyer will execute and deliver to Seller each
of the Ancillary Agreements;
3.7.3 Other Documents. The parties will execute and deliver such other
documents as the other party may reasonably request to consummate this
transaction; and
3.7.4 Good Faith. The parties will execute and deliver such documents
and use good faith efforts to comply with all other provisions of this Agreement
and will deliver any other document or instrument of conveyance and transfer
necessary to implement and consummate this Agreement or any other documents
which may be reasonably requested by Seller or Buyer to consummate the
transactions contemplated herein.
3.8 Allocations. The Purchase Price will be allocated among the Assets in
accordance with Sections 3.2 and 3.3. The parties will be bound by that
allocation in reporting the transactions contemplated by this Agreement to any
governmental authority (including the Internal Revenue Service). Expense items
such as telephone and utilities and for Assumed Contracts will be prorated based
on days elapsed as of the Closing, and the parties will settle such items by one
or more compensating payments of the net amount of such pro-rations as soon as
practical after the Closing.
11
3.9 Contingent Payments. Under certain circumstances, as defined in this
Section 3.9, Buyer will be obligated to pay Seller certain amounts in addition
to the Purchase Price (the "Contingent Payments"). Buyer will be obligated to
make Contingent Payments if Buyer's sales of certain types of products after the
Closing exceed certain threshold levels during specified periods of time, all as
specified in Sections 3.9.1 through 3.9.6 below.
3.9.1 If during the period from the Closing through December 31, 2002,
Buyer derives Revenue (as defined in Section 3.9.5) from the sale of products
which are acquired by Buyer from Seller under this Agreement and which are based
on the MainCam/DynaStar and TriStar/Profitizer products which were previously
acquired by Seller pursuant to a certain asset purchase agreement dated December
18, 2000 by and among Perceptron, Inc. (as purchaser) and Decision Dynamics,
Inc. and DDI Enterprise Asset Management Co. (as sellers) (the "DDI Asset
Purchase Agreement") or from enhancements or derivatives of such products (the
"DDI Products") and such Revenue exceed $2,000,000 during such period, then
Buyer will be obligated to make a Contingent Payment to Seller equal to
one-third of the amount of such Revenue which exceeds $2,000,000 during such
period, subject to the limitation set forth in Section 3.9.3.
3.9.2 If during the period from January 1, 2003 through December 31,
2003, Buyer derives Revenue from the sale of DDI Products which exceed
$2,000,000 during such period, then Buyer will be obligated to make a Contingent
Payment to Seller equal to one-third of the amount of such Revenue which exceeds
$2,000,000 during such period, subject to the limitation set forth in Section
3.9.3.
3.9.3 The maximum amount of Contingent Payments for which Buyer will be
obligated to Seller under Sections 3.9.1 and 3.9.2, in aggregate, will be
$550,000. Any Contingent Payment which becomes due from Buyer under Section
3.9.1 or 3.9.2 will be made within fifty days after the completion of the
calendar quarter in which that Contingent Payment becomes due.
3.9.4 If during the period from the Closing through September 30, 2004,
Buyer derives Revenue from the sale of products based on the intellectual
property acquired by Buyer from Seller under this Agreement and based on the
intellectual property acquired by Seller pursuant to a certain asset purchase
agreement effective October 1, 1998 by and among Perceptron, Inc. (as purchaser)
and Sonic Technologies, Inc. and Sonic Industries, Inc. (as sellers) (the "Sonic
Asset Purchase Agreement") (such products being referred to hereafter as "Sonic
Products") and such Revenue exceeds $18,000,000 during such period, then Buyer
will be obligated to make Contingent Payments to Seller as follows:
- For Revenue from $18,000,000 to $29,000,000, the
Contingent Payment will be ten percent (10%) of such
Revenue (and therefore will be a maximum of $1,100,000).
- For Revenue from $29,000,000 to $35,000,000, there will
be no Contingent Payment.
- For Revenue from $35,000,000 to $89,000,000, the
Contingent Payment will be five percent (5%) of such
Revenue (and therefore will be a maximum of $2,700,000).
- For Revenue in excess of $89,000,000, there will be no
Contingent Payment.
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The maximum amount of Contingent Payments for which Buyer will be obligated to
Seller under this Section 3.9.4, in aggregate, will be $3,800,000. Any
Contingent Payment which becomes due from Buyer under this Section 3.9.4 will be
made within twenty days after the completion of the calendar quarter in which
that Contingent Payment becomes due.
3.9.5 For the purposes of Section 3.9, the term "Revenue" will mean sales
revenue to Buyer for delivered products (DDI Products or Sonic Products, as
applicable) for which USNR has received payment. If any sale by Buyer includes
DDI Products or Sonic Products as well as other products which are not DDI
Products or Sonic Products, as applicable, then Revenue will include only the
portion of the sales revenue to Buyer which is attributable to the DDI Products
or Sonic Products, as applicable.
3.9.6 Buyer will be obligated to maintain reasonable records of Revenue
from DDI Products through December 31, 2003 and from Sonic Products through
September 30, 2004, as necessary to calculate the amounts of any Contingent
Payments which may become due from Buyer under Section 3.9, and Buyer shall make
such records available for inspection and copying by Seller, at Seller's
expense, during Buyer's normal business hours and upon five business day's
advance written notice. Such records and all information contained therein shall
be considered Buyer's Confidential Information (as defined in Section 1.4.3),
provided that Seller may disclose such information as reasonably necessary for
Seller to meets its obligations under the DDI Asset Purchase Agreement and the
Sonic Asset Purchase Agreement.
SECTION 4. CONDITIONS TO CLOSING
4.1 Conditions Precedent to Buyer's Obligations. The obligations of Buyer
to purchase the Assets from Seller, assume the Assumed Liabilities and otherwise
consummate the transactions contemplated by this Agreement are subject to
satisfaction of the following conditions and the receipt by Buyer of the
following documents at the Closing:
4.1.1 Accuracy of Representations. Seller's representations and
warranties set forth in Section 5 hereof will be true and correct in all
material respects as of the date of the Closing;
4.1.2 Seller's President and Secretary Certificate. The president or a
vice president of Seller will have executed and delivered to Buyer a President
(or Vice President) Certificate certifying that Seller's representations and
warranties set forth in Section 5 are true and correct as of the date of the
Closing. The secretary of Seller will have executed and delivered to Buyer a
Secretary Certificate certifying as to the incumbency of the officers of Seller
authorized to close this Agreement, and Seller will have delivered a certified
copy of the appropriate proceedings of the Board of Directors of Seller
authorizing and approving this Agreement and the transactions and documents
contemplated hereby;
4.1.3 Xxxx of Sale. Seller will have executed and delivered to Buyer an
Assignment and Xxxx of Sale with respect to the portion of the Assets which is
located in the United States substantially in the form attached as Exhibit A-1
and to USNR/KCC with respect to the portion of the Assets which is located in
Canada substantially in the form attached as Exhibit A-2;
13
4.1.4 Reserved.
4.1.5 License Agreement. The license referenced in Section 1.4.2 (with
respect to the Shared Intellectual Property) will be transferred to Buyer by a
License Agreement (from Seller to Buyer) delivered at Closing in the form
attached as Exhibit B;
4.1.6 Ancillary Agreements. Seller will have duly authorized, executed
and delivered to Buyer each of the following agreements (the "Ancillary
Agreements"):
(a) Covenant Not to Compete between Buyer and Seller in the
form attached as Exhibit C (the "Non-Compete Agreement");
(b) Sensor Supply and Manufacturing License Agreement in the
form attached as Exhibit D (the "License Agreement"); and
(c) Escrow Agreement among Buyer, Seller and Ball Xxxxx LLP
(as escrow agent), in the form attached as Exhibit E (the "Escrow
Agreement").
4.1.7 Employment Agreements. Each of Xxxxx Xxxxxxxxx and Xxxxx Best
will have entered into an employment agreement with Buyer in a form approved by
Buyer;
4.1.8 Assignments of Leases and Assumed Contracts. Seller will have
duly authorized, executed and delivered to Buyer an assignment with respect to
each of the Leases and Assumed Contracts, as requested by Buyer;
4.1.9 No Adverse Change. There will have occurred no material adverse
change to the Assets or in the operations or prospects of the FPBU since
December 12, 2001, other than changes in general economic conditions and actions
that are required to separate the FPBU and the Assets from Seller's other
operations. Since that date, Seller has not sold, transferred, encumbered,
disposed of or lost any material assets of the FPBU, other than sales of
inventory in the ordinary course of business, and there has been no material
adverse change in the Assets or the FPBU; and
4.1.10 No Proceedings. There will not be in effect at the Closing, and
no action will be pending or threatened the effect of which could be, any order
of any court or other governmental or administrative authority or arbitrator
allowing any third party to obtain damages against Buyer as a result of the
consummation of the transactions contemplated by this Agreement or restraining,
enjoining, or otherwise preventing Buyer from the carrying out of this Agreement
or the consummation of the transactions contemplated by this Agreement.
4.2 Conditions Precedent to Seller's Obligations. The obligations of Seller
to sell the Assets to Buyer and otherwise consummate the transactions
contemplated by this Agreement are subject to satisfaction of the following
conditions and the receipt by Seller of the following documents at the Closing:
4.2.1 Accuracy of Representations. Buyer's representations and
warranties set forth in Section 6 hereof will be true and correct in all
material respects as of the date of the Closing;
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4.2.2 Buyer's President and Secretary Certificate. The president or
vice president of Buyer will have executed and delivered to Seller a President
(or Vice President) Certificate certifying that Buyer's representations and
warranties set forth in Section 6 are true and correct as of the Closing. The
secretary of Buyer will have executed and delivered to Seller a Secretary
Certificate certifying as to the incumbency of the officers of Seller authorized
to close this Agreement, and Buyer will have delivered a certified copy of the
appropriate proceedings of the Board of Directors of Buyer authorizing and
approving this Agreement and the transactions and documents contemplated hereby;
4.2.3 Payment. Buyer will deliver to Seller by wire transfer the
payment required under Section 3.4;
4.2.4 Ancillary Agreements. Buyer will have duly authorized, executed
and delivered to Seller each of the Ancillary Agreements;
4.2.5 License Agreement. The license referenced in Section 1.4.1 (with
respect to the Intellectual Property) will be transferred to Seller by a License
Agreement (from Buyer to Seller) delivered at Closing in the form attached as
Exhibit G;
4.2.6 Assumption Agreement. Buyer will have duly authorized, executed
and delivered to Seller an Assumption Agreement in the form attached as Exhibit
H; and
4.2.7 No Proceedings. There will not be in effect at the Closing, and
no action will be pending or threatened the effect of which could be, any order
of any court or other governmental or administrative authority or arbitrator
allowing any third party to obtain damages against Seller as a result of the
consummation of the transactions contemplated by this Agreement or restraining,
enjoining, or otherwise preventing Seller from the carrying out of this
Agreement or the consummation of the transactions contemplated by this
Agreement.
4.3 Waiver. Buyer or Seller may waive in writing, in whole or in part, any
condition applicable to such party under Section 4. A waiver by any party of any
such condition shall not operate or be construed as the waiver of any other
condition. A waiver by any party of any of the foregoing conditions shall be
construed as the waiver of any breach of this Agreement resulting from the
failure to satisfy the condition.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that, except as otherwise stated
herein or as set forth in Disclosure Schedule 5:
5.1 Standing. Perceptron, Inc., Trident Systems, Inc. and Nanoose Systems
Corporation are corporations duly organized and validly existing under the laws
of the state of Michigan, state of Georgia and province of British Columbia,
respectively. Seller has all the requisite corporate power and authority to own,
lease and operate the Assets owned by it and to carry on the FPBU as it is
currently being conducted and to own, lease, and operate its properties in
connection with the FPBU. Seller is duly qualified or registered to do business
in all jurisdictions in which the Assets owned by it are located or in which the
operation of the FPBU requires qualification or registration,
15
except where the failure to be so qualified or registered would not have a
material adverse effect on the business or financial condition of the Seller or
the FPBU, taken as a whole, or on the Assets, taken as a whole, ("Material
Adverse Effect").
5.2 Corporate Power and Authorization. Seller has all requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, each Ancillary Agreement and each other agreement or instrument to be
executed and delivered by Seller in connection with this Agreement
(collectively, "Seller's Transaction Documents"). The execution, delivery and
performance by Seller of each of Seller's Transaction Documents have been duly
authorized by all necessary corporate action of Seller. Each of Seller's
Transaction Documents constitutes the valid and binding obligation of Seller,
enforceable in accordance with its terms except to the extent such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting the enforcement of creditors' rights.
5.3 No Conflicts. Neither the execution and delivery of the Seller's
Transaction Documents nor the performance of any of Seller's obligations
thereunder will, directly or indirectly (with or without notice, lapse of time
or both): (a) contravene, conflict with or result in a violation of any
provision of Seller's organizational documents or any resolution adopted by the
Board of Directors of Seller; (b) contravene, conflict with or result in a
violation of any law, regulation, order, judgment or decree applicable to it
other than those violations which do not have a Material Adverse Effect; (c) to
Seller's knowledge, contravene, conflict with or result in a violation or breach
of any provision of, or give any person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify any Assumed Contract or any other material
contract as to which Seller or any of the Assets is subject other than those
violations which do not have a Material Adverse Effect; or (d) result in the
imposition or creation of any lien on any of the Assets.
5.4 Legal Proceedings. There is no legal proceeding or other legal action
pending or, to Seller's knowledge, threatened against Seller that could prevent
the consummation of the transactions contemplated by this Agreement or affect
Seller's ability to perform its obligations under this Agreement or any of
Seller's Transaction Documents.
5.5 Approvals. No notice to, consent of, or registration or filing with,
any governmental authority or, to Seller's knowledge, any other person or entity
is required to be obtained or made by Seller to effectuate its execution or
performance of this Agreement or any of Seller's Transaction Documents.
5.6 Condition of Assets. To Seller's knowledge, the Assets include all of
the assets used primarily in the operation of the FPBU and will be transferred
to the Buyer in the same general operating condition, reasonable wear and tear
excepted, as when inspected by the Buyer during the period of February 20
through February 26, 2002.
5.7 Contracts. Seller has delivered or made available to Buyer as current
and complete copies of the Assumed Contracts and the Excluded Contracts as exist
in Seller's files. To Seller's knowledge, each of the Assumed Contracts was
entered into in the ordinary course of business and is in full force and effect
and does not and would not, if performed in accordance with its terms, violate
any applicable law, statute, regulation, ordinance, order, judgment, permit or
license, except
16
where the failure to do so would not have a Material Adverse Effect. To the best
of Seller's knowledge, there exists no material default or breach on the part of
Seller or any other party under any Assumed Contract. Seller has not received
notice from any party to any Assumed Contract that it will not consent to
assignment of such Assumed Contract to Buyer or that it intends to cancel such
Assumed Contract before its normal expiration.
5.8 Intellectual Property.
5.8.1 Representations. Disclosure Schedules 1.1.10 and 1.1.11 contain
complete and correct lists of all registered Trademarks, with registration
numbers and locations identified, as well as all registered copyrights, patents
and similar rights and all applications for the foregoing, owned by the Seller
and which are used in the FPBU (collectively the "Rights"). To Seller's
knowledge, with respect to the Rights:
(a) Except as listed in Disclosure Schedule 5.8.1, the Rights
are owned by Seller free and clear of any and all licenses, liens,
claims, security interests, charges or encumbrances whatsoever and all
such Rights and their registrations and applications are valid and
subsisting and have not been abandoned, and no other firm, corporation,
association or person has the right to use any such Rights in identical
form thereof, or in such near resemblance thereto as to be likely, when
applied to the goods of such person, to cause confusion, or to cause
mistake, or to deceive;
(b) Except as listed in Disclosure Schedule 5.8.1, the Seller
has not received any notice of interference or infringement of any
asserted rights of others, and no proceedings have been instituted, are
pending or threatened which challenge any rights in respect thereto or
the validity thereof; and
(c) Except as listed in Disclosure Schedule 5.8.1, neither the
designing, selling, or servicing of any FPBU product of Seller, nor the
activities of the FPBU, infringes or violates any patent, trademark,
copyright or other intellectual property right of a third party, and no
third party has infringed or is infringing on the Rights.
5.8.2 Licenses. There are no licenses currently in effect for any
Trademarks or Intellectual Property except as identified in Disclosure Schedule
5.8.1.
5.8.3 Inclusion. The Intellectual Property and the Shared Intellectual
Property includes all (i) inventions (regardless of whether patentable),
invention disclosures, improvements, trade secrets, proprietary information,
proprietary processes or formulae, manufacturing and process information,
business plans, franchises, market research, customer lists and information,
credit information, licenses, know how, technology, technical data,
specifications, test data, and all documentation relating to any of the
foregoing, (ii) documentation, specifications, user manuals, designs, drawings,
promotional literature, marketing documents, and other literary works, (iii)
software, (iv) customer lists, distributor lists, supplier lists, open bid and
quotation documents, sales records, and completed contract documents,
maintenance and warranty records, databases and data collections and other
confidential or proprietary business information, and (v) all documentation
17
related to any of the foregoing, relating to the FPBU which are held or used by
Seller in its conduct of the FPBU.
5.9 Title. Except with respect to the Intellectual Property, which is
covered in Section 5.8, Seller has good and marketable title to and is the sole
owner of all of the Assets, there are no outstanding options or rights in any
person to acquire any of the Assets, and the Assets are not subject to any
mortgage, lien, pledge, charge, security interest, encumbrance, restriction,
lease or adverse claim.
5.10 Environmental, Health and Safety. To Seller's knowledge, there are no
notices, reports and assessments to or from any governmental agency with respect
to any investigation or identifying or alleging any violation by Seller of, or
recommending or requiring any corrective action by Seller under, any
Environmental Law ("Environmental Law" means any federal, state, provincial or
local law, statute, regulation, ordinance, order or judgment relating to
pollution or the protection of the environment, natural resources or public
health and safety, including without limitation those relating to the presence,
ownership, use, handling, manufacture, generation, storage, treatment,
discharge, release, transportation, disposal, investigation or remediation of
any material, waste, chemical or byproduct defined as a hazardous or toxic
substance, pollutant, waste, or any other unwholesome, toxic or radioactive
material) in connection with any Asset or the FPBU, other than those violations
which do not have a Material Adverse Effect. Additionally, to Seller's
knowledge:
(a) there is no investigation or proceeding, by any
governmental agency under any Environmental Law relating to any Asset
or the FPBU;
(b) neither the ownership or use of any Assets nor the
activities of the FPBU as conducted by Seller during the past twelve
months violates or has violated any Environmental Law or any permit
granted under any Environmental Law, other than those violations which
do not have a Material Adverse Effect;
(c) the FPBU of the Seller has not been the subject of any (i)
actual or threatened release of, (ii) improperly or inadequately
contained or controlled, or (iii) contamination caused by any hazardous
substance, pollutant, or contaminant as defined by any Environmental
Law, including without limitation petroleum products, on any of the
owned or leased properties of Seller;
(d) Seller does not know of the presence of any hazardous
substance at the Seller's owned or leased properties including any
hazardous substance, pollutant or contaminant as defined by any
Environmental Law; and
(e) Seller has not been notified by any source that it is or
may be a potentially responsible party under the Comprehensive
Environmental Response Compensation and Liability Act, as amended.
5.11 Permits and Laws. Disclosure Schedule 5.11 lists all material
governmental permits, licenses and authorizations held by Seller in connection
with the ownership and use of the Assets and the activities of the FPBU. To
Seller's knowledge, such permits meet all requirements
18
of applicable governmental bodies required in order for the Seller to continue
to conduct the business of the FPBU in a manner consistent with past practices
during the twelve months prior to the Closing. During the past twelve months,
Seller has not received any citations, fines or penalties from any governmental
agency and has no knowledge of any activities of the FPBU which violate any
statute and/or regulations, other than violations that have been cured or
violations which do not have a Material Adverse Effect. To Seller's knowledge,
no material violations have been recorded or alleged in respect of any such
licenses, approvals or authorizations, and no proceeding is pending or, to the
knowledge of Seller, threatened or contemplated with respect to the revocation
or limitation of the same.
5.12 Government Matters. To Seller's knowledge, during the past twelve
months Seller has not received any notice of non-compliance or impending
regulatory action, notice of audit or warning letter from any United States,
state or foreign government agency or authority with respect to the Assets or
the FPBU, other than violations that have been cured or violations which do not
have a Material Adverse Effect. Seller is not awaiting results of any audit or
investigation by any such governmental agency or authority of any Asset or the
FPBU. To Seller's knowledge, Seller has filed all reports and notifications
required by any governmental agency to be filed with respect to any Asset or the
FPBU, where the failure to so file would have a Material Adverse Effect on the
Assets or the FPBU.
5.13 Employees. Seller is not a party or otherwise subject to any
collective bargaining agreement. To Seller's knowledge, during the past two
years, Seller is and has been in material compliance with all applicable laws
regarding employment and employment practices with respect to the employees of
the FPBU. Seller has not experienced any work stoppage involving the employees
of the FPBU within the past two years. To Seller's knowledge, the employee
pension benefit plans (within the meaning of Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") established and
maintained by Seller that are subject to ERISA (or comparable Canadian laws) are
in material compliance with the applicable requirements of ERISA (and such
comparable Canadian laws). To Seller's knowledge, each of the ERISA Plans is
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code") and the related trust is tax-exempt under Section 501(a) of the
Code. To Seller's knowledge, the Seller does not maintain any plans that are
subject to Section 412 of the Code. To Seller's knowledge, none of the ERISA
Plans, its related trusts or any trustee, investment manager or administrator
thereof has engaged in a nonexempt "prohibited transaction," as such term is
defined in Section 406 of ERISA and Section 4975 of the Code. To Seller's
knowledge, there are not and have not been any excess deferrals or excess
contributions under any ERISA Plan that have not been corrected. To Seller's
knowledge, each ERISA Plan is and has been operated and administered in material
conformance with the requirements of all applicable laws and regulations,
whether or not the ERISA Plan documents have been amended to reflect such
requirements. To Seller's knowledge, Seller has no obligation of any kind
(whether under the terms of the ERISA Plans or under any understanding with
employees) to make payments under, or to pay contributions to or in respect of,
any retirement plan or arrangement, or any other plan, agreement or arrangement
for deferred compensation of employees, whether or not tax qualified, including,
without limitation, a single employer tax qualified plan, a tax qualified plan
of a controlled group of corporations, a multi-employer pension plan, a
nonqualified deferred compensation plan, an individual employment or
compensation agreement or a commitment to provide medical benefits to retirees.
19
5.14 Brokers. Seller has not retained and is not liable to any broker,
finder, investment banker or other brokerage agent in connection with the
transactions contemplated by this Agreement.
5.15 No Violation. To Seller's knowledge, The business of the FPBU, as
conducted during the twelve months prior to the Closing, did not violate any law
or regulation, the violation of which would have a Material Adverse Effect on
the FPBU or the Assets.
5.16 Value. Seller has made its own independent evaluation of the value of
the Assets and the advisability of entering into the transactions contemplated
by this Agreement. In so doing, Seller has not relied upon any representation,
warranty, statement or promise of or by Buyer, except as specifically provided
in this Agreement.
5.17 Financial Statements. To the Seller's knowledge, each of the latest
balance sheets, statement of income and statements of cash flow of the FPBU
provided to the Buyer for the fiscal years ended June 30, 1999, 2000 and 2001
and for each of the quarterly periods thereon, and for the quarters ended
September 30, 2001 and December 31, 2001, have been prepared from the books and
records of the Company and its subsidiaries and fairly present in all material
respects the financial conditions of the FPBU as of the date stated.
5.18 Information. To the Seller's knowledge, the latest version of the
following historical information provided by the Seller to the Buyer in writing
after December 12, 2001 is true and correct in all material respects:
- Bills of Material for the FPBU products and the Sensors.
- Information concerning Seller's costs for materials, manufacturing
labor, manufacturing overhead, and warranty for FPBU products and
the Sensors.
- Seller's lines of business (products and markets) other than the
lines of business of the FPBU.
- Seller's transfer pricing policies with respect to the FPBU and
within the FPBU.
- Information related to accounts receivable of the FPBU, including
without limitation accounts receivable agings.
- Information related to inventory associated with the FPBU,
including without limitation schedules listing such inventory.
- Information concerning the location of business records related to
the FPBU.
- Information concerning prepaid expenses related to the FPBU,
including without limitation any schedules of such prepaid
expenses.
- Schedules listing depreciable fixed assets and other
non-capitalized tangible assets of the FPBU.
20
- Information regarding the information systems used by the FPBU,
including desktop and centralized computer hardware and related
peripheral equipment, desktop and centralized computer software,
networking hardware and software (LAN, WAN, VPN), Internet access,
and email.
- Information concerning advance payments by customers, including
without limitation schedules listing Customer Deposits.
- Information concerning Seller's standard terms of warranty and
outstanding warranty obligations related to the FPBU.
- Information concerning Seller's standard terms of sale for sales
from the FPBU and exceptions to such standard terms.
- Reports listing the FPBU's bookings and backlog from January 1,
1999 through February 28, 2003.
- Reports listing the FPBU's headcount from January 1, 1999 through
February 28, 2003.
- Lists of the FPBU's employees, including names, job titles, dates
of hire, supervisor, and compensation information.
- Price lists and discount schedules for the FPBU products.
- Samples of Seller's forms, literature, videos, CD-ROMs, and other
tangible, written marketing materials concerning the FPBU.
- Information concerning joint ventures and research partnerships
relating to the FPBU.
- Information concerning licenses, permits, registrations,
approvals, etc., relating to the FPBU.
- Information concerning trade group memberships relating to the
FPBU.
- Descriptions of the Seller's employee benefits for FPBU employees.
- Descriptions of the Seller's personnel policies applicable to the
FPBU employees.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that except as otherwise stated
herein or set forth in Disclosure Schedule 6:
6.1 Standing. Buyer is a corporation duly organized and validly existing
under the laws of the state of Delaware. Buyer has all the requisite corporate
power and authority to own, lease and operate its assets and to carry on its
business as it is currently being conducted and to own, lease, and operate its
properties in connection with the FPBU. Buyer is duly qualified or registered to
do business in all jurisdictions in which the operation of its business requires
qualification or
21
registration, except where the failure to be so qualified or registered would
not have a material adverse effect on the financial condition of Buyer taken as
a whole.
6.2 Corporate Power and Authorization. Buyer has all requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, each Ancillary Agreement and each other agreement or instrument to be
executed and delivered by Buyer in connection with this Agreement (collectively,
"Buyer's Transaction Documents"). The execution, delivery and performance by
Seller of each of Buyer's Transaction Documents have been duly authorized by all
necessary corporate action of Seller. Each of Buyer's Transaction Documents
constitutes the valid and binding obligation of Buyer, enforceable in accordance
with its terms except to the extent such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting the enforcement of creditors' rights.
6.3 No Conflicts. Neither the execution and delivery of the Buyer's
Transaction Documents nor the performance of any of Buyer's obligations
thereunder will, directly or indirectly (with or without notice, lapse of time
or both): (a) contravene, conflict with or result in a violation of any
provision of Buyer's organizational documents or any resolution adopted by the
Board of Directors of Buyer; (b) contravene, conflict with or result in a
violation of any legal requirement, except where the contravention, conflict or
violation would not have a material adverse effect on the financial condition of
Buyer taken as a whole; or (c) to Buyer's knowledge, contravene, conflict with
or result in a violation or breach of any provision of, or give any person the
right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify any material
contract as to which Buyer is subject other than those violations which do not
have a material adverse effect on the financial condition of Buyer taken as a
whole.
6.4 Legal Proceedings. There is no legal proceeding or other legal action
pending or, to Buyer's knowledge, threatened against Buyer that could prevent
the consummation of the transactions contemplated by this Agreement or affect
Buyer's ability to perform its obligations under this Agreement or any of
Buyer's Transaction Documents.
6.5 Approvals. No notice to, consent of, or registration or filing with,
any governmental authority or to Buyer's knowledge other person or entity is
required to be obtained or made by Buyer to effectuate its execution or
performance of this Agreement or any of Buyer's Transaction Documents.
6.6 Brokers. Buyer has not retained and is not liable to any broker,
finder, investment banker or other brokerage agent in connection with the
transactions contemplated by this Agreement.
6.7 Value. Buyer has made its own independent evaluation of the value of
the Assets and the advisability of entering into the transactions contemplated
by this Agreement. In so doing, Buyer has not relied upon any representation,
warranty, statement or promise of or by Seller, except for the information and
materials described in Sections 5.17 and 5.18, the representations of Seller in
this Section 6, and otherwise as specifically provided in this Agreement.
22
SECTION 7. LIMITATIONS ON REPRESENTATIONS & WARRANTIES
7.1 Survival of Representations. The representations and warranties made in
Sections 5 and 6 will survive for a period of two years from and after the
Closing (and thereafter, to the extent of a claim or action made prior to such
two-year period, until such claim or action is finally resolved). No claim for
indemnification pursuant to Section 10 will be made by either Buyer or Seller
based upon a breach or alleged breach of any representation or warranty unless
written notice of such claim or action is received by the other party prior to
expiration of the survival period applicable to the representation or warranty
pursuant to this Section 7.1.
7.2 Reliability of Representations. Buyer and Seller will be entitled to
rely upon the representations and warranties set forth herein and in each
Disclosure Schedule, but only for so long as such representations and warranties
will survive as set forth above.
SECTION 8. OTHER AGREEMENTS
8.1 Consents, Assignments and Further Assurances. From and after the date
of this Agreement, Buyer and Seller will each cooperate with each other and use
all commercially reasonable efforts to obtain as soon as practicable all
consents, approvals, authorizations and waivers required to be obtained from
governmental authorities, parties to Assumed Contracts and other persons
necessary in order to enable Seller to sell, assign and deliver the Assets and
Assumed Contracts to Buyer, and to enable Buyer to purchase, assume and accept
the Assets and Assumed Contracts from Seller and to conduct the FPBU as it has
been conducted by Seller during the twelve months prior to the Closing. Buyer
and Seller will each provide to the other such additional instruments and
documents and perform such other acts and deeds and render such additional
assistance as the other may reasonably request for the purpose of carrying out
or evidencing the transactions contemplated by this Agreement, including
effectuating the transfer of Intellectual Property and know-how related to the
Assets and the FPBU.
8.2 Books and Records; Mutual Cooperation. Each party will maintain and
preserve, for a period of not less than six years after the Closing, all books
and records in its possession relating to the Assets, Assumed Liabilities and
the FPBU. If a party intends to destroy or dispose of any such books and records
(the "Subject Records") before expiration of the six-year term, the party will
give not less that 60 days' written notice of such intent to the other party.
The other party may, by written notice delivered at any time during the 60-day
period, elect to receive a transfer of the Subject Records. In such event, the
transferring party will cooperate in transferring the records to the party that
requests the transfer. All costs of transferring the records will be borne by
the party requesting the transfer. For a period of not less than six years from
the Closing (plus any additional time during which a party has been advised that
there is a tax audit with respect to a period prior to the Closing) Buyer and
Seller will each, at the request of the other party, make available to such
other party from time to time on a reasonable basis records and other documents
relating to the Assets, Assumed Liabilities and the FPBU for periods prior to
the Closing. After the Closing Date, Buyer and Seller will each provide the
other with such assistance as may reasonably be requested by either of them in
connection with the preparation of any tax return, any audit or other
examination by any taxing authority, or any judicial or administrative
proceedings relating to the FPBU, and each will retain and provide the other
with any records or information which may be relevant to such return, audit,
examination, or proceedings. Such assistance will include making
23
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder and will include
providing copies of any relevant documents and information. The party requesting
assistance hereunder will reimburse the other for reasonable expenses incurred
in providing such assistance.
8.3 Wind-Down of FPBU. Seller will, promptly following the closing, wind
down and dissolve Nanoose Systems Corporation and Trident Systems, Inc., unless
Seller determines for tax or financial purposes that dissolution is not in
Seller's best interests, in which case Seller will, within 30 days after the
Closing, formally change the corporate names of Nanoose Systems Corporation and
Trident Systems, Inc. to names which do not use any of the words "Nanoose,"
"Trident," or "Perceptron" and will file such documents as might be required to
provide proper notice of such changes of name to applicable government
authorities. At Seller's request, Buyer will provide Seller with reasonable
assistance with respect to the Retained Liabilities and the wind-down of the
FPBU, including the collection of the Syst-M and Mac Equipment receivables.
Seller will reimburse Buyer for such assistance on a time and material basis,
without markup.
8.4 Employment Matters.
8.4.1 Transition. Seller will terminate all of the employees of the
FPBU immediately prior to the Closing. Buyer will offer new employment to those
employees of Seller listed on Disclosure Schedule 8.4.1 to be effective on the
day after the Closing Date, on terms and conditions determined by Buyer. Seller
will assist Buyer in its recruitment of such of the employees of the FPBU as
Buyer may desire to hire. All such offers will be subject to each employee
completing Buyer's standard employment application and meeting all of Buyer's
employment standards. The parties will, on a mutually approved basis, hold
meetings with the FPBU employees and issue communications to the employees
concerning the expected sale of the Assets to Buyer.
8.4.2 Payments. Seller will pay, within the time frames required by its
employment policies and applicable law, all wages, bonuses, severance (including
Canadian common law and statutory severance), vacation pay, sick pay, change in
control agreements and other arrangements to each of the employees of the FPBU
following their termination, except for the Assumed Vacation Liabilities
identified under Section 2.1.2 and Disclosure Schedule 2.1.2. If Buyer
terminates the employment of any of the employees listed on Disclosure Schedule
8.4.1 on or before December 13, 2002, Seller will be liable for and pay to Buyer
any statutory or common law severance that Buyer is required to pay to such
terminated employees that exceeds the amount that Buyer would have been required
to pay to such terminated employees if such employees were neither given nor
entitled to credit for any length of service with Seller (that is, as if each
such employee started new employment with Buyer on the day after Closing with no
tacking-on or credit for prior service with Seller). Buyer will provide Seller
with one or more invoices for such amounts, accompanied by reasonable supporting
documentation. Seller will pay the invoices within 30 days from receipt. If
Buyer terminates the employment of any of the employees listed on Disclosure
Schedule 8.4.1 after December 13, 2002, Buyer will be solely liable for any
statutory or common law severance payable to such terminated employees.
8.4.3 COBRA. Seller will be responsible for providing continuation
coverage as required by Section 5980B9(f) of the Code and Part 6 of Title I or
ERISA or any similar law in
24
effect in any jurisdiction (including Canadian jurisdictions) in which any
terminated employee resides ("COBRA") to those employee of Seller and other
qualified beneficiaries under COBRA with respect to such employees, who have a
COBRA qualifying event (due to termination of employment with Seller or
otherwise) prior to or in connection with the transactions contemplated by this
Agreement. Such employees and/or Seller will be responsible for the payment of
any COBRA premium in accordance with applicable law and agreements between
Seller and its employees.
8.4.4 WARN Act. Seller will be solely responsible for any notification
and liability under the Worker Adjustment and Retraining Notification Act, as
amended (the "WARN Act"), as well as under comparable Canadian laws, relating to
the termination of employees of Seller occurring on or prior to the Closing.
8.5 Post-Closing Use of Seller's Facilities. During the ninety-day period
after Closing, Buyer will be entitled to the continuing use of Seller's facility
in Plymouth, Michigan on a basis which is consistent with the use of that
facility by Seller's employees primarily associated with the FPBU during the
six-month period prior to Closing. The right to use the Plymouth facility will
include the right to reasonable use of utilities (such as electricity, heat,
local telephone, janitorial, security, garbage, water, etc.) and the reasonable
use of common areas (e.g., cafeteria, bathrooms, hallways, meeting rooms, etc.),
consistent with the use of such utilities and common areas by Seller's employees
primarily associated with the FPBU during the six-month period prior to Closing.
Buyer's use of the Plymouth facility during the ninety-day period will be
without charge to Buyer. However, Seller will be entitled to reimbursement from
Buyer for any out-of-pocket costs incurred by Seller after the Closing due to
usage of photocopying equipment, supplies, packing materials, shipping services,
and/or long-distance telephone services by Buyer's employees who are located at
the Plymouth facility after the Closing or due to any misuse of the Plymouth
facility by Buyer's employees after the Closing. Also, Buyer will have a period
of 60 days after the Closing within which Buyer will be permitted access to
Seller's leased facilities in Plymouth Meeting, PA, Coquitlam, BC and Montreal,
PQ, without charge, for the purposes of relocating any Assets located at those
facilities. Seller may accelerate this period as to any of the facilities in
Plymouth Meeting, Coquitlam or Montreal if it subleases such facility or is able
to terminate the lease of such facility before expiration of the 60-day period,
provided that Seller will give Buyer not less than 15 business days' advance
written notice of the last date on which Buyer will have access to such
facility. Buyer will remove from Seller's facilities all of the tangible Assets
located at those facilities within 90 days in the case of Seller's facility in
Plymouth, Michigan and within 60 days (or such shorter period as described in
the preceding sentence) in the case of other facilities of Seller.
8.6 Taxes. Seller will be responsible, at its cost and expense, for the
preparation and filing of all federal, state, local and foreign income tax
returns and other tax returns based on the income or operations of the FPBU for
periods ending on or before the Closing, and the payment of any taxes,
interests, assessments and penalties ("Taxes") or the collection of any refunds
relating thereto. Seller will also be responsible for the preparation and filing
of all other tax returns and the payment of any taxes or the collection of any
refunds relating to the FPBU that have a due date, whether extended or not, on
or before the Closing.
8.7 Bulk Sales Laws. Subject to all other terms of this Agreement, Seller
and Buyer each waive compliance with any bulk sales laws applicable to the sale
of the Assets or the transfer
25
of the FPBU to Buyer; provided, however, that Seller will pay and discharge when
due, and fully defend and indemnify Buyer from, any and all claims of creditors
which could be asserted against Buyer by reason of such noncompliance, other
than Assumed Liabilities.
8.8 Public Announcements. Prior to Closing, no party to this Agreement will
make any press release or public announcement concerning this Agreement or the
transactions contemplated by this Agreement without the prior agreement of both
Seller and Buyer; provided, however, that any party may, without obtaining any
such agreement, make any disclosures which either party in good faith believes
is required by applicable laws, governmental regulations or stock exchange rules
(in which case such party will consult with the other party prior to making such
disclosure). After Closing, Buyer may disclose or make public announcements with
respect to the transaction contemplated in this Agreement.
8.9 Exclusivity. Seller will not, for at least 30 days after the
termination of this Agreement: (a) make any offer to or solicit or accept any
offer from any third party which would involve a sale of any of the Assets
outside of the ordinary course of business; or (b) engage in any discussions
with any third party regarding the possibility of entering into a transaction
involving the sale of any of the Assets outside of the ordinary course of
business.
8.10 Expenses. Buyer and Seller will each be responsible for paying costs
it incurs in connection with the negotiation and execution of this Agreement and
any related due diligence. Each party will pay all applicable taxes arising out
of this Agreement for which it is liable under applicable law.
8.11 Buyer to be Bound by Confidentiality Provisions. On and after the
Closing Date, Buyer agrees to be bound by any and all confidentiality provisions
under any Assumed Contract and by all applicable laws imposing confidentiality
in connection with such Assumed Contracts.
8.12 Website and Email. For a period of one year after the Closing, Seller
will, at the request of Buyer, maintain a prominent button on its website
(xxx.xxxxxxxxxx.xxx) linking users to an Internet URL designated by Buyer. The
form of the link will be mutually approved. Also, for a period of one year after
closing, Seller will redirect emails sent to "xxxxxxxx@xxxxxxxxxx.xxx" email
addresses for certain former employees of Seller who become employed by Buyer,
to new "xxxxxxxx@xxxx.xxx" email addresses for such employees.
8.13 Warranty Administration. As set forth in Section 2.1.1, Buyer is not
assuming any warranty obligations with respect to products delivered by Seller
prior to the Closing. Seller will perform such warranty service or, at its
option, may request Buyer to perform the warranty service, which Buyer will
perform on a time and materials basis at Buyer's cost without xxxx-up for
overhead or profit. If Seller performs the warranty service and in that regard
requires access to Buyer's inventory, software, tools or other items, Buyer will
supply such items to Seller on a time and materials basis at Buyer's cost
without xxxx-up for overhead or profit. Buyer will provide warranty
administration services without charge. Such services will include customer
contact, communications with third-party suppliers of parts and components, such
as computers, advising customers on where to ship defective third-party parts
and components and general customer service.
26
8.14 Schedules. Notwithstanding anything to the contrary contained in this
Agreement, any of the exhibits or any Disclosure Schedule, any information
disclosed in one section of this Agreement, any exhibit, or any Disclosure
Schedule shall be deemed to be disclosed with respect to this Agreement, the
exhibits and all Disclosure Schedules, as the case may be. The Disclosure
Schedules and all exhibits hereto are incorporated herein and made a part of
this Agreement as if set forth herein in full.
SECTION 9. CANADIAN TAX PROVISIONS
9.1 ETA Election. Provided that Buyer can do so through USNR/KCC without
incurring any cost to Buyer or to USNR/KCC (or if Seller agrees to reimburse
Buyer for any cost to Buyer or to USNR/KCC), Buyer (through USNR/KCC) shall,
along with the Seller, jointly make the election provided for in paragraph
167(1)(b) of the Excise Tax Act (Canada) (the "ETA") to have subsection 167(1.1)
of the ETA apply to the sale and purchase of the Assets; and Buyer (through
USNR/KCC) shall file the election within the time prescribed by subsection
167(1.1) of the ETA.
9.2 Substantially All Assets. The Buyer and Seller acknowledge that the
Buyer is acquiring ownership, possession or use of all or substantially all of
the property that can reasonably be regarded as being necessary for the Buyer to
be capable of carrying on the business or part of the business for purposes of
the ETA election.
9.3 SSTA. The Buyer and Seller have negotiated and agreed on the Purchase
Price on the basis that it includes any non-recoverable transfer taxes. Section
91 of the Social Service Tax Act (British Columbia) (the "SSTA") provides that
"A person who sells or leases, as lessor, tangible personal property must not
advertise or hold out or state to the public or to any purchaser, user or
lessee, directly or indirectly, that the tax or any part of it imposed under
this SSTA (a) will be assumed or absorbed by the person, (b) will not be
considered as an element in the price to the purchaser, user or lessee, or (c)
if added, will be refunded." Accordingly, to the extent that any of the Assets
are subject to any tax ("SST") imposed under the Social Service Tax Act (British
Columbia), the Buyer and Seller agree that the amount of the Purchase Price
allocated to such Purchased Assets shall be adjusted to an amount equal to
93.02325% of the amount of the Purchase Price allocated to those assets.
9.4 Allocation and Payment. On Closing, the Buyer shall pay to the Seller
any applicable SST based on the amount of the Purchase Price allocated to any
assets that are subject to SST after taking into account the adjustment provided
for in Section 9.3.
9.5 Location of Inventory. The Buyer represents and warrants to the Seller
that the Buyer is acquiring the Inventory located in British Columbia, Canada
for the purposes of resale.
9.6 Registration. The Buyer represents to the Seller that, to Buyer's
knowledge, USNR/KCC is registered under section 92 of the SSTA, has been issued
registration certificate number R846067 under the authority of the SSTA, and the
certificate is in force and will be in force
27
as of the Closing, provided that Buyer shall have no liability to Seller based
upon this representation.
9.7 SST Remittance. The Seller shall remit any SST collected from the Buyer
within the time prescribed by the SSTA or any regulations promulgated
thereunder.
9.8 Duplicate Certificate. Within thirty days of Closing, the Seller shall
provide to the Buyer the duplicate copy of the certificate issued by the British
Columbia Commissioner of Tax to the Seller pursuant to subsection 99(1) of the
SSTA.
9.9 Accounts Receivable. For purposes of this Section 9 only, the Assets
consisting of Accounts Receivable identified on Disclosure Schedule 1.1.1 under
Parksville - Billed and Unbilled shall be deemed to be sold by Seller to Buyer
at the face amount of each such account receivable as of the Closing Date,
without discount.
SECTION 10. INDEMNIFICATION
10.1 Indemnification by Seller. From and after the Closing, Seller will
hold harmless, indemnify and defend Buyer and its permitted successors and
assigns, and their respective officers, directors, employees, stockholders,
agents and affiliates, from and against any and all damages, claims, losses,
liabilities and expenses (including without limitation costs of investigation
and reasonable attorneys' fees and expenses) ("Loss"), whether or not involving
a third-party claim, which may arise out of (a) any breach by Seller of any
representation or warranty in this Agreement or in any certificate or documents
delivered pursuant to this Agreement, (b) any other breach or violation by
Seller of any covenants of this Agreement, (c) any breach or other violation by
Seller of any of its obligations under any of the Seller's Transaction Documents
(other than the License Agreement), (d) except as specifically provided in
Sections 2.1, 2.2 and 2.3, any sale by Seller to any third party prior to the
Closing Date, and (e) except as specifically provided in Sections 2.1, 2.2 and
2.3, any action or failure to act by Seller prior to the Closing Date; provided,
however, that (1) there shall be no liability under this Section 10.1 for any
Loss unless the aggregate of all such Losses, but for this proviso, exceeds on a
cumulative basis an amount equal to $50,000; (2) the aggregate liability of
Seller under this Section 10.1 for any breach of any representation or warranty
in this Agreement shall not under any circumstances exceed $2,000,000; and (3)
any Losses shall first be satisfied by treating them as a prepayment of the
Note. The limitations on liability in this Section 10.1 shall not operate as or
be construed as limitations on Seller's liability under any of the Ancillary
Agreements.
10.2 Indemnification by Buyer. From and after the Closing, Buyer will hold
harmless, indemnify and defend Seller and its permitted successors and assigns,
and their respective officers, directors, employees, stockholders, agents and
affiliates, from and against any and all damages, claims, losses, liabilities
and expenses (including without limitation costs of investigation reasonable
attorneys' fees and expenses) ("Loss"), whether or not involving a third-party
claim which may arise out of (a) any breach by Buyer of any representation or
warranty in this Agreement or in any certificate or documents delivered pursuant
to this Agreement, (b) any other breach or violation by Buyer of any covenants
of this Agreement, (c) any breach or other violation by Buyer of any of its
obligations under any of the Buyer's Transaction Documents (other than the
License Agreement) and (d) except as otherwise provided in this Agreement
(including without limitation in
28
Sections 10.1 and 10.3) or in any of the Ancillary Agreements, liabilities and
obligations attributable to actions or failure to act by Buyer in connection
with the operation of the Assets after the Closing; provided, however, that (1)
there shall be no liability under this Section 10.2 for any Loss unless the
aggregate of all such Losses, but for this proviso, exceeds on a cumulative
basis an amount equal to $50,000 and (2) the aggregate liability of Buyer under
this Section 10.2 for any breach of any representation or warranty in this
Agreement shall not under any circumstances exceed $2,000,000. The limitations
on liability in this Section 10.2 shall not operate as or be construed as
limitations on Buyer's liability under any of the Ancillary Agreements.
10.3 Patent Infringement. Without regard to any exceptions to Seller's
representations and warranties in this Agreement or in any Disclosure Schedule,
Seller will indemnify Buyer, in accordance with the provisions of this Section
10, with respect to any claim that any sensor sold or licensed by Seller before
the Closing infringes any patent or other intellectual property right of any
third party.
10.4 Calculation of Losses. Prior to the assertion of any claim for
indemnification under this Section 10, the indemnified party shall utilize all
reasonable efforts, consistent with normal practices and policies and good
commercial practice (and which shall in any event include, without limitation,
seeking recoveries under insurance policies), to mitigate such Losses. Recovery
pursuant to this Section 10 shall in no event include any consequential,
incidental, or punitive damages to Buyer or to Seller, including but not limited
to, damages for lost profits, business losses or diminution in value of any
asset whatsoever ("Consequential Damages"). However, if Buyer is required to pay
any third party for Consequential Damages suffered by the third party, then the
amount of any such payment by Buyer for such third-party Consequential Damages
will be considered to be actual damages to Buyer and not as Consequential
Damages to Buyer. Buyer will endeavor to use commercially reasonable efforts, in
accordance with Buyer's normal past practices, to limit its exposure to
Consequential Damages in its dealings with third parties. However, Seller
acknowledges that Buyer's ability, through the exercise of commercially
reasonable efforts, to limit its exposure to liability for Consequential Damages
is not absolute and is instead affected by a number of factors. Those factors,
some of which are beyond the control of Buyer, include without limitation the
relative bargaining power of Buyer and it customers, prevailing commercial and
industry standards, the practices of Buyer's competitors and other competitive
factors, industry and general economic conditions, and Buyer's need to negotiate
contract terms with third parties which are favorable to Buyer in many respects
other than just with respect to limitation of Buyer's potential liability for
Consequential Damages. Further, Seller acknowledges that Buyer's normal
practices with regard to its efforts to limit its exposure to liability for
Consequential Damages have in the past and will in the future include from time
to time mistakes, errors of judgment, or other failures to obtain limitations on
Buyer's exposure to Consequential Damages which limitations may perhaps have
been obtainable by Buyer but for such mistakes, errors of judgment or other
failures. Nothing in this Section 10.4 shall limit Seller's indemnity obligation
to Buyer under Section 10 as a result of any such mistake, error of judgment or
other failure.
10.5 Notice and Defense of Claims. If either party ("Indemnitee") receives
notice or otherwise obtains knowledge of any matter with respect to which the
other party ("Indemnitor") may become obligated to hold harmless or indemnify
Indemnitee under this Section 10, then Indemnitee will promptly deliver to
Indemnitor a written notice describing such matter, provided
29
that failure to promptly deliver such notice will not affect the indemnification
obligation except to the extent the Indemnitor is prejudiced or injured thereby.
If such matter involves a third party, Indemnitor will have the right, at its
option, to assume the defense of such matter at its own expense and with its own
counsel, provided that such counsel does not have an actual or potential
conflict of interest. If Indemnitor elects to and does assume the defense of
such matter, (a) Indemnitee will fully cooperate as reasonably requested by
Indemnitor in the defense or settlement of such matter, (b) Indemnitor will keep
Indemnitee reasonably informed of developments and events relating to such
matter, and (c) Indemnitee will have the right to participate, at its own
expense, in the defense of such matter. Indemnitee will not settle or compromise
such matter, without the Indemnitor's prior written consent. If Indemnitor does
not assume the defense of such matter, it may participate, at its own expense,
in the defense thereof and Indemnitee will keep Indemnitor reasonably informed
of developments and events relating to such matter.
10.6 Payments to Indemnified Parties. An Indemnitor with an indemnification
obligation under this Section 10 will promptly reimburse each Indemnitee for all
amounts owed under this Section 10 from time to time, at the Indemnitee's
request, as such amounts are incurred.
10.7 Sole Remedy. Buyer and Seller acknowledge and agree that their sole
and exclusive remedy with respect to any and all claims relating to this
Agreement or the transactions contemplated hereby (other than injunctive relief
or specific performance, as provided in Section 11.1, and any claim based on
fraud) shall be under the indemnification provisions set forth in this Section
10, and that such remedy shall be exercised solely by means of the exercise of
their rights and remedies thereunder. In furtherance thereof, Buyer and Seller
hereby waive to the fullest extent permitted under applicable law, any and all
rights, claims, and causes of action relating to the transactions contemplated
by this Agreement that they may have under or based upon any federal, state,
local or foreign statute, law, ordinance, rule or regulation or otherwise except
under the indemnification provisions set forth in this Section 10.
10.8 Payments as Purchase Price. All indemnification payments made under
this Section 10 shall be treated by all parties as an adjustment to the Purchase
Price.
SECTION 11. MISCELLANEOUS
11.1 Specific Performance. Each party acknowledges that the other party
will be irreparably harmed in the event of a breach or threatened breach of the
provisions of this Agreement. In the event of a breach or threatened breach, the
aggrieved party will be entitled to an injunction, without posting of bond,
restraining the breaching party from engaging in any of the activities
prohibited by this Agreement, whether such activities actually have been engaged
in or are threatened. Nothing herein will be construed as prohibiting a party
from pursuing any other available remedies at law or in equity for such breach
or threatened breach, including the recovery of damages.
11.2 Severability. If any term, covenant, condition or provision of this
Agreement, or the application thereof to any party or circumstance, is to any
extent held invalid or unenforceable by a judicial order, the remainder of this
Agreement or the application of such term or provision to parties or
circumstances other than those as to which it is held invalid or unenforceable
will not be affected thereby and each term, covenant, condition or provision of
this Agreement will be valid
30
and be enforced to the fullest extent permitted by law. The invalid or
unenforceable provision will be curtailed, limited or eliminated only to the
extent necessary to remove such invalidity or unenforceability with respect to
the applicable law as it will then be applied.
11.3 Binding Effect. Buyer may assign its rights and obligations under this
Agreement, provided Buyer will remain liable to Seller for Buyer's obligations
under this Agreement, including for the breach of any such obligations by the
assignee. Seller may assign its rights and obligations under this Agreement,
provided that (a) the assignee is not a business entity which competes with
Buyer by selling products or services primarily intended for operators of wood
processing facilities (e.g., sawmills, planer xxxxx, panel xxxxx, etc.) and (b)
Seller will remain liable to Buyer for Seller's obligations under this Agreement
and each of the Ancillary Agreements, including for the breach of any such
obligations by the assignee. Seller may also assign it rights and obligations
under this Agreement in connection with the sale of all or substantially all of
its assets, but only if (i) Seller will remain liable to Buyer for Seller's
obligations under this Agreement, including for the breach of any such
obligations by the assignee, and (ii) the assignee assumes and agrees to perform
all of Seller's obligations under this Agreement. Subject to the foregoing, this
Agreement will be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.
11.4 Headings; Drafting. The headings used in this Agreement are intended
for convenience of reference only. The headings will not be considered to have
any substantive significance or to define, limit or enlarge the scope or meaning
of this Agreement or any provision hereof. This Agreement is deemed to have been
drafted jointly by the parties and, accordingly, any ambiguous provision will
not be resolved in favor of one party on the basis that the other party drafted
the ambiguous provision.
11.5 Jurisdiction and Venue. If Buyer brings legal action against Seller to
enforce or declare the terms of this Agreement, Buyer will initiate the legal
action in the U.S. District Court for the Eastern District of Michigan or in the
Circuit Court of the State of Michigan, in Washtenaw County, and the legal
action will thereafter be adjudicated exclusively within such court. If Seller
brings legal action against Buyer to enforce or declare the terms of this
Agreement, Seller will initiate the legal action in the U.S. District Court for
the District of Oregon or in the Circuit Court of the State of Oregon, in
Multnomah County, and the legal action will thereafter be adjudicated
exclusively within such court. Each party submits to the exclusive jurisdiction
of the federal and state courts as specified above. Each of the parties further
agrees that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth in the attached
Schedule of Notice Addresses (or such changed address as provided in Section
8.11 Notices below) shall be effective service of process for any action, suit
or proceeding with respect to any matters to which it has submitted to
jurisdiction in this Section 8.5 Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in such courts, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
During any time that litigation is pending between the parties, any new legal
action between the parties will be initiated and adjudicated in the same state
or federal court in which the litigation is already pending, regardless which
party initiates the new legal action and, to the extent permitted, shall be
consolidated with the pending litigation.
31
11.6 Governing Law. This Agreement will be governed by and interpreted in
accordance with the substantive laws of the State of Oregon, regardless of
whether jurisdiction and venue lie in Michigan or Oregon.
11.7 Attorney's Fees. If a suit, action, or other proceeding of any nature
whatsoever (including any proceeding under the U.S. Bankruptcy Code) is
instituted to enforce or interpret any provision of this Agreement or in
connection with any dispute hereunder, the party which substantially prevails
will be entitled to recover such amount as the court may adjudge reasonable as
attorney's fees and all other fees, costs, and expenses of litigation at trial
or any appeal or review, in addition to all other amounts provided by law.
11.8 Entire Agreement. This Agreement, together with the other agreements
and instruments referenced herein, contains the entire agreement with respect to
the matters contemplated by this Agreement and supersedes all prior oral and
written agreements, including the Letter of Intent dated February 15, 2002,
among the parties with respect to such matters.
11.9 Amendment. This Agreement may not be modified or amended except by a
written agreement signed by an officer of each party.
11.10 Waiver. Failure of any party to complain of any act or omission on
the part of any other party in breach or default of this Agreement, no matter
how long the same may continue, will not be deemed to be a waiver by the party
of its rights hereunder. No waiver by any party at any time, express or implied,
of any breach of any provision of this Agreement will be deemed a waiver of a
breach of any other provision of this Agreement or a consent to any subsequent
breach of the same or other provisions.
11.11 Notices. Any notice required or permitted to be given under this
Agreement will be in writing and will be deemed duly given if sent by (i)
facsimile transmission and mailed as indicated on the attached Schedule of
Notice Addresses (unless such address has changed by prior written notice); or
(ii) mailed, sent by overnight courier or delivered personally as indicated on
the attached Schedule of Notice Addresses (unless such address has been changed
by prior written notice). Delivery will be deemed effective on the first
business day after the date on which the facsimile is successfully transmitted,
or the notice is received in the case of any other notice. A party may change
its mailing address and/or fax number by providing written notice to the other
party.
11.12 Delays. Neither party will incur any liability for any delay in
performance which results from power failure, energy shortage, act of God, act
of governmental authority, act of a public enemy or of war, terrorist attack,
riot, fire, flood, civil commotion, insurrection, labor difficulty (including
without limitation, strike, boycott, or other work stoppage or slowdown), severe
or adverse weather condition, act of subcontractors or suppliers or other cause
beyond the party's control.
11.13 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together will constitute one and the same agreement,
and it may be executed by facsimile signature.
32
11.14 Further Assurances. From time to time, upon request of either party,
the other party will execute, acknowledge, and deliver such documents and
undertake such actions as may be reasonably requested in order to fulfill its
obligations under this Agreement.
11.15 Joint and Several Liability. The obligations and liabilities of
Seller under this Agreement shall be joint and several with respect to
Perceptron, Inc., Nanoose Systems Corporation, and Trident Systems, Inc. (the
"Perceptron Corporations"). However, in seeking performance and/or damages from
Seller under this Agreement, Buyer may at its option seek and obtain performance
and/or damages from any or all of the Perceptron Corporations.
33
11.16 Definition of "Knowledge." As used in this Agreement, the terms
"knowledge," "to its knowledge," "known," "to the best of its knowledge" and
words of similar import shall mean, with respect to Seller, knowledge by Xxxxxx
X. Xxxxx, Xxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxx Xxxxxxxxx, Xxxxx X. Xxxxxxxxxx,
Xxxxxxx X. Xxxxxxxxx, Xxxx Xxxxxxx, X. Xxxx Xxxxxxx, Xxxxx Best, Xxxxx Xxxxxxx,
Xxxx Xxxxxxx or Xxxxxxx Xxxxx and, with respect to Buyer, shall mean knowledge
by an officer of Buyer.
Seller: PERCEPTRON, INC.
By: /s/ X. X. Xxxxx
----------------------------------------------
Xxxxxx X. Xxxxx
Chairman and Chief Executive Officer
Nanoose: NANOOSE SYSTEMS CORPORATION
By: /s/ X. X. Xxxxx
----------------------------------------------
Xxxxxx X. Xxxxx
President
Trident: TRIDENT SYSTEMS, INC.
By: /s/ X. X. Xxxxx
----------------------------------------------
Xxxxxx X. Xxxxx
Chairman and Chief Executive Officer
Buyer: U. S. NATURAL RESOURCES, INC.
By: /s/ Xxxxxx Xxx Xxxxxxxxx
----------------------------------------------
Xxxxxx Xxx Xxxxxxxxx
President and CEO, Forest Group
34
SCHEDULE OF
NOTICE ADDRESSES
IF TO SELLER: PERCEPTRON, INC.
00000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Chairman and Chief Executive Officer
Facsimile: 000-000-0000
With copies to:
Perceptron, Inc.
00000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
General Counsel
Facsimile: 000-000-0000
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
IF TO BUYER U.S. NATURAL RESOURCES, INC.
X.X. Xxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxx Xxxxxxxxx
President and CEO, Forest Group
Facsimile: 000-000-0000
With copies to:
U.S. Natural Resources, Inc.
0000 XX Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
Facsimile: 000-000-0000
Ball Xxxxx LLP
000 XX Xxxx Xx., Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Facsimile: 000-000-0000
35
LIST OF EXHIBITS
--------------------------------------------------------------------------------
REFERENCE TITLE
--------------------------------------------------------------------------------
A-1 Assignment and Xxxx of Sale for U.S. Assets
--------------------------------------------------------------------------------
A-2 Assignment and Xxxx of Sale for Canadian Assets
--------------------------------------------------------------------------------
B License Agreement (From Seller to Buyer)
--------------------------------------------------------------------------------
C Covenant Not to Compete
--------------------------------------------------------------------------------
D Sensor Supply and Manufacturing License Agreement
--------------------------------------------------------------------------------
E Escrow Agreement
--------------------------------------------------------------------------------
F Promissory Note
--------------------------------------------------------------------------------
G License Agreement (From Buyer to Seller)
--------------------------------------------------------------------------------
H Assumption Agreement
--------------------------------------------------------------------------------
36
EXHIBIT C
COVENANT NOT TO COMPETE
Between: PERCEPTRON, INC., a Michigan corporation "Perceptron"
And: U.S. NATURAL RESOURCES, INC., a Delaware corporation "USNR"
Dated: March 13, 2002
BACKGROUND
USNR is purchasing and Perceptron is selling substantially all
of the assets of Perceptron's Forest Products Business Unit (the "FPBU")
pursuant to an Asset Purchase Agreement dated March 13, 2002 between USNR and
Perceptron (the "Asset Purchase Agreement"). Contemporaneously with the
execution of the Asset Purchase Agreement and this Agreement, Perceptron and
USNR are entering into a Sensor Supply and Manufacturing License Agreement in
the form attached as Exhibit B (the "License Agreement") and an Escrow Agreement
in the form attached as Exhibit C (the "Escrow Agreement"). This Agreement sets
forth the terms under which each of USNR and Perceptron will agree to not engage
in certain defined businesses. The mutual execution and delivery of this
Agreement is a condition precedent to the Closing of the Asset Purchase
Agreement.
AGREEMENT
1. Definitions. Capitalized terms not otherwise defined in this Agreement will
have the meanings given to the terms in the Asset Purchase Agreement. The
capitalized terms set forth in this Section 1 have the following meanings:
1.1 "Sensor" means a laser sensor manufactured by Perceptron of the type
sold by the FPBU during the two-year period prior to the Closing, as shown
on Exhibit A, and any replacements thereof.
1.2 "Model of Sensor" means a specific Model of Sensor, based on its
design, components, features and/or function, and any replacements thereof.
Each Model of Sensor is identified by a unique Perceptron part number, as
shown on Exhibit A.
1.3 "Type of Sensor" means a family of Sensors, consisting of one or more
Models of Sensors which share substantial design characteristics. There are
currently three Types of Sensors: LASAR, TriCam, and Transverse TriCam, as
shown on Exhibit A.
1
1.4 "Sonic Sensors" means all ultrasound and ultrasonic sensors based on
the intellectual property acquired by Perceptron from Sonic Technologies,
Inc. and Sonic Industries, Inc., excluding the "A-Scan sensors," as that
term is defined in the Asset Purchase Agreement.
2. Covenants by Perceptron. Perceptron will not, during the Term (as defined in
Section 4), directly or indirectly, compete with USNR in any business in which
the FPBU was engaged at any time during the three-year period prior to the
Closing. Without limiting the generality of this prohibition, Perceptron
specifically agrees that during the Term it will not, directly or indirectly:
2.1 Hire (as an employee, independent contractor, consultant or otherwise)
any individual who was employed primarily by the FPBU (or was otherwise
engaged to perform services for or on behalf of the FPBU) during the
two-year period prior to the Closing, until six months after the individual
has ceased to be employed by USNR, unless USNR does not hire such person at
the time of the closing of the Asset Purchase Agreement;
2.2 Hire (as an employee, independent contractor, consultant or otherwise)
any individual employed by USNR (or otherwise engaged to perform services
for or on behalf of USNR) on or after January 1, 2001, plus any individuals
hired by USNR after the Closing, until six months after the individual has
ceased to be employed by USNR;
2.3 Solicit or initiate contact with any individual referenced in Section
2.1 or 2.2 for the purpose of encouraging the individual to leave the
employment of USNR or to become employed (as an employee, independent
contractor, consultant or otherwise) by Perceptron, until six months after
the individual has ceased to be employed by USNR;
2.4 For as long as USNR remains a customer of Perceptron, sell any products
or services intended primarily for operators of wood processing facilities
(e.g., sawmills, planer xxxxx, panel xxxxx, etc.); provided, however, that
the prohibition in this Section 2.4 will terminate as to a specific Type of
Sensor if USNR fails to purchase at least 25 units of such Type of Sensor
during any calendar year, subject to the termination procedures set forth
in Section 5 below;
2.5 For as long as USNR remains a customer of Perceptron, license any
intellectual property (including without limitation any patents,
trademarks, trade secrets or know-how) to any third party primarily for use
in any wood processing facility (e.g., sawmills, planer xxxxx, panel xxxxx,
etc.) or for use in the conduct of any business which competes with USNR in
the manufacture, sale or servicing of products or services intended
primarily for operators of wood processing facilities, provided, however,
that the prohibition in this Section 2.5 will terminate as to a specific
Type of Sensor if USNR fails to purchase at least 25 units of such Type of
Sensor during any calendar year, subject to the termination procedures set
forth in Section 5 below;
2.6 Manufacture or sell any Sonic Sensor; or
2.7 Be a partner, shareholder, member, employee, agent or consultant of any
partnership, corporation, limited liability company, proprietorship or
other entity, that does any of the things prohibited in this Section 2;
provided, however, that the ownership by Perceptron of
2
less than 5% of the equity securities of any publicly traded corporation
will not constitute a violation of this Section 2.7.
The forgoing will not prohibit Perceptron from selling
products or services to any third party for use in products or services that are
not intended primarily for operators of wood processing facilities.
3. Covenants by USNR. USNR will not, during the Term (as defined in Section 4),
directly or indirectly:
3.1 Use any intellectual property licensed from Perceptron under or in
connection with the Asset Purchase Agreement or the License Agreement to
offer for sale any products or services which are similar to products or
services then being offered for sale by Perceptron and which are directly
related to automobile manufacturing;
3.2 Use any intellectual property licensed from Perceptron under or in
connection with the Asset Purchase Agreement or the License Agreement to
offer for sale any products or services which are similar to products or
services then being offered for sale by Perceptron and of the types offered
for sale by Perceptron's business units other than the FPBU during the
three-year period prior to the Closing, provided, however, that this
prohibition will only apply to the Perceptron business units, products and
markets identified in Schedule 3.2;
3.3 During the period ending on the second anniversary of the Closing, hire
(as an employee, independent contractor, consultant or otherwise) any
individual who was, prior to the Closing, an employee of Perceptron not
associated primarily with the FPBU during the two-year period prior to the
Closing, plus any individual hired by Perceptron after the Closing, until
six months after such individual has ceased to be employed by Perceptron;
3.4 During the period ending on the second anniversary of the Closing,
solicit or initiate contact with any individual referenced in Section 3.3
for the purpose of encouraging the individual to leave the employment of
Perceptron or become employed (as an employee, independent contractor,
consultant or otherwise) for USNR, until six months after such individual
has ceased to be employed by Perceptron; or
3.5 Be a partner, shareholder, member, employee, agent or consultant of any
partnership, corporation, limited liability company, proprietorship or
other entity, that does any of the things prohibited in this Section 3;
provided, however, that the ownership by USNR of less than 5% of the equity
securities of any publicly traded corporation will not constitute a
violation of this Section 3.5.
4. Term. The "Term" will begin on the Closing of the Asset Purchase Agreement
and expire on the tenth anniversary of the Closing.
5. Termination Procedure. The prohibitions against Perceptron set forth in
Sections 2.4 and 2.5 may be terminated with respect to a Type of Sensor if USNR
does not order from Perceptron at least 25 units of that Type of Sensor during
any calendar year (and thereafter not cancel any such order and, upon receipt of
the Sensors, accept and pay for the Sensors in accordance with
3
the License Agreement). Perceptron may terminate the prohibition with respect to
a Type of Sensor by following the following procedure:
5.1 If Perceptron desires to terminate the prohibition with respect to a
Type of Sensor, then within 60 days following the end of the calendar year
in which USNR did not order from Perceptron at least 25 units of a Type of
Sensor, Perceptron must deliver to USNR a written notice indicating
Perceptron's intention to terminate the prohibitions in Section 2.4 and 2.5
with respect to that Type of Sensor. If Perceptron does not deliver the
notice within the 60-day period, then Perceptron will no longer have the
right of termination with respect to such calendar year. The notice will
specify the Type of Sensor as to which 25 units were not ordered by USNR
during a calendar year, the applicable calendar year and the number of
units of that Type of Sensor that were ordered by USNR during such calendar
year.
5.2 The termination will be effective 30 days after USNR's receipt of the
notice specified in Section 5.1 unless, within such 30-day period, USNR
issues a purchase order to Perceptron for not less than the number of units
of the Type of Sensor necessary to bring the total number ordered by USNR
since the beginning of the prior calendar year to 25, plus an additional
number of units of the same Type of Sensor, at the rate of 25 per year, pro
rated since the end of the prior calendar year to the date of the purchase
order (and thereafter not cancel any such order and, upon receipt of the
Sensors, accept and pay for the Sensors in accordance with the License
Agreement).
6. General Provisions
6.1 Specific Performance. Each party acknowledges that the other party will
be irreparably harmed in the event of a breach or threatened breach of the
provisions of this Agreement. In the event of a breach or threatened
breach, the aggrieved party will be entitled to an injunction, without
posting of bond, restraining the breaching party from engaging in any of
the activities prohibited by this Agreement, whether such activities
actually have been engaged in or are threatened. Nothing herein will be
construed as prohibiting a party from pursuing any other available remedies
at law or in equity for such breach or threatened breach, including the
recovery of damages.
6.2 Severability. If any term, covenant, condition or provision of this
Agreement, or the application thereof to any party or circumstance, is to
any extent held invalid or unenforceable by a judicial order, the remainder
of this Agreement or the application of such term or provision to parties
or circumstances other than those as to which it is held invalid or
unenforceable will not be affected thereby and each term, covenant,
condition or provision of this Agreement will be valid and be enforced to
the fullest extent permitted by law. The invalid or unenforceable provision
will be curtailed, limited or eliminated only to the extent necessary to
remove such invalidity or unenforceability with respect to the applicable
law as it will then be applied.
6.3 Binding Effect. USNR may assign its rights and obligations under this
Agreement, provided that (x) USNR will remain liable to Perceptron for
USNR's obligations under this Agreement, including for the breach of any
such obligations by the assignee and (y) the assignee assumes and agrees to
perform all of USNR's obligations under this Agreement, the
4
License Agreement and the Escrow Agreement. Perceptron may assign its
rights and obligations under this Agreement, provided that (a) the assignee
is not a business entity which competes with USNR by selling products or
services primarily intended for operators of wood processing facilities
(e.g., sawmills, planer xxxxx, panel xxxxx, etc.) and (b) Perceptron will
remain liable to USNR for Perceptron's obligations under this Agreement,
the Asset Purchase Agreement, the License Agreement and the Escrow
Agreement including for the breach of any such obligations by the assignee.
Perceptron may also assign its rights and obligations under this Agreement
in connection with a sale of all or substantially all of its assets, but
only if (i) Perceptron will remain liable to USNR for Perceptron's
obligations under this Agreement, the Asset Purchase Agreement, the License
Agreement and the Escrow Agreement, including for the breach of any such
obligations by the assignee, and (ii) the assignee assumes and agrees to
perform all of Perceptron's obligations under this Agreement, the Asset
Purchase Agreement, the License Agreement and the Escrow Agreement, subject
to the following sentence. In the event of a merger or consolidation of
Perceptron with or into any other business entity, or the assignment of
this Agreement in connection with the sale of all or substantially all of
the assets of Perceptron, Perceptron's covenants set forth in Section 2 of
this Agreement will remain in effect and apply to the merged or
consolidated entity or the assignee, but such covenants will not apply to
any affiliate of such merged or consolidated entity or assignee, or
prohibit such merged or consolidated entity or assignee from being a
partner, shareholder or member of such affiliate, so long as the affiliate
does not use Perceptron intellectual property in any manner that Perceptron
could not use such intellectual property under the terms of Section 2 of
this Agreement. Subject to the foregoing, this Agreement will be binding
upon and inure to the benefit of the parties and their respective
successors and permitted assigns.
6.4 Headings; Drafting. The headings used in this Agreement are intended
for convenience of reference only. The headings will not be considered to
have any substantive significance or to define, limit or enlarge the scope
or meaning of this Agreement or any provision hereof. This Agreement is
deemed to have been drafted jointly by the parties and, accordingly, any
ambiguous provision will not be resolved in favor of one party on the basis
that the other party drafted the ambiguous provision.
6.5 Jurisdiction and Venue. If USNR brings legal action against Perceptron
to enforce or declare the terms of this Agreement, USNR will initiate the
legal action in the U.S. District Court for the Eastern District of
Michigan or in the Circuit Court of the State of Michigan, in Washtenaw
County, and the legal action will thereafter be adjudicated exclusively
within such court. If Perceptron brings legal action against USNR to
enforce or declare the terms of this Agreement, Perceptron will initiate
the legal action in the U.S. District Court for the District of Oregon or
in the Circuit Court of the State of Oregon, in Multnomah County, and the
legal action will thereafter be adjudicated exclusively within such court.
Each party submits to the exclusive jurisdiction of the federal and state
courts as specified above. Each of the parties further agrees that service
of any process, summons, notice or document by U.S. registered mail to such
party's respective address set forth in the attached Schedule of Notice
Addresses (or such changed address as provided in Section 6.11 Notices
below) shall be effective service of process for any action, suit or
proceeding with respect to any matters to which it has submitted to
jurisdiction in this Section 6.5. Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action,
suit or
5
proceeding arising out of this Agreement or the transactions contemplated
hereby in such courts, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought in any such court has been brought in an
inconvenient forum. During any time that litigation is pending between the
parties, any new legal action between the parties will be initiated and
adjudicated in the same state or federal court in which the litigation is
already pending, regardless which party initiates the new legal action and,
to the extent permitted, shall be consolidated with the pending litigation.
6.6 Governing Law. This Agreement will be governed by and interpreted in
accordance with the substantive laws of the State of Oregon, regardless of
whether jurisdiction and venue lie in Michigan or Oregon.
6.7 Attorney's Fees. If a suit, action, or other proceeding of any nature
whatsoever (including any proceeding under the U.S. Bankruptcy Code) is
instituted to enforce or interpret any provision of this Agreement or in
connection with any dispute hereunder, the party which substantially
prevails will be entitled to recover such amount as the court may adjudge
reasonable as attorney's fees and all other fees, costs, and expenses of
litigation at trial or any appeal or review, in addition to all other
amounts provided by law.
6.8 Entire Agreement. This Agreement, together with the Asset Purchase
Agreement and the other agreements and instruments referenced therein,
contains the entire agreement with respect to the matters contemplated by
this Agreement and supersedes all prior oral and written agreements,
including the Letter of Intent dated February 15, 2002, among the parties
with respect to such matters.
6.9 Amendment. This Agreement may not be modified or amended except by a
written agreement signed by an officer of each party.
6.10 Waiver. Failure of any party to complain of any act or omission on the
part of any other party in breach or default of this Agreement, no matter
how long the same may continue, will not be deemed to be a waiver by the
party of its rights hereunder. No waiver by any party at any time, express
or implied, of any breach of any provision of this Agreement will be deemed
a waiver of a breach of any other provision of this Agreement or a consent
to any subsequent breach of the same or other provisions.
6.11 Notices. Any notice required or permitted to be given under this
Agreement will be in writing and will be deemed duly given if sent by (i)
facsimile transmission and mailed as indicated on the attached Schedule of
Notice Addresses (unless such address has changed by prior written notice);
or (ii) mailed, sent by overnight courier or delivered personally as
indicated on the attached Schedule of Notice Addresses (unless such address
has been changed by prior written notice). Delivery will be deemed
effective on the first business day after the date on which the facsimile
is successfully transmitted, or the notice is received in the case of any
other notice. A party may change its mailing address and/or fax number by
providing written notice to the other party.
6
6.12 Delays. Neither party will incur any liability for any delay in
performance which results from power failure, energy shortage, act of God,
act of governmental authority, act of a public enemy or of war, terrorist
attack, riot, fire, flood, civil commotion, insurrection, labor difficulty
(including without limitation, strike, boycott, or other work stoppage or
slowdown), severe or adverse weather condition, act of subcontractors or
suppliers or other cause beyond the party's control.
6.13 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together will constitute one and the same
agreement, and it may be executed by facsimile signature.
6.14 Further Assurances. From time to time, upon request of either party,
the other party will execute, acknowledge, and deliver such documents and
undertake such actions as may be reasonably requested in order to fulfill
its obligations under this Agreement.
Perceptron: PERCEPTRON, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Xxxxxx X. Xxxxx
Chairman and Chief Executive Officer
USNR: U. S. NATURAL RESOURCES, INC.
By: /s/ Xxxxxx Xxx Xxxxxxxxx
---------------------------------------
Xxxxxx Xxx Xxxxxxxxx
President and CEO, Forest Group
7
SCHEDULE OF
NOTICE ADDRESSES
IF TO PERCEPTION: PERCEPTRON, INC.
00000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Chairman and Chief Executive Officer
Facsimile: 000-000-0000
With copies to:
Perceptron, Inc.
00000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
General Counsel
Facsimile: 000-000-0000
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
IF TO USNR: U.S. NATURAL RESOURCES, INC.
X.X. Xxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxx Xxxxxxxxx
President and CEO, Forest Group
Facsimile: 000-000-0000
With copies to:
U.S. Natural Resources, Inc.
0000 XX Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
Facsimile: 000-000-0000
Ball Xxxxx LLP
000 XX Xxxx Xx., Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Facsimile: 000-000-0000
8
LIST OF EXHIBITS
Exhibit A List of Type and Models of Sensors
Exhibit B Sensor Supply and Manufacturing License Agreement
Exhibit C Escrow Agreement
9
EXHIBIT F
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO EXEMPTIONS THEREUNDER
PROMISSORY NOTE
$___________ MARCH 13, 2002
--------------------------------------------------------------------------------
Maker: U.S. Natural Resources, Inc., a Delaware corporation
--------------------------------------------------------------------------------
Holder: Perceptron, Inc., a Michigan corporation
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Note Date: March 13, 2002
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Maturity Date: ________, 2006
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Principal Amount: __________ Dollars ($X,XXX,XXX.XX) or so much as
may be outstanding from time to time
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Loan Rate: The "Prime Rate" minus 0.25 percent. The
Principal Amount outstanding during each
calendar month will bear interest during such
calendar month at the Loan Rate in effect on
the last day of such calendar month.
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Prime Rate: The rate per annum then most recently
publicly announced by Bank One, Michigan, or
its successors, in Detroit, Michigan, as its
"prime rate," as in effect from time to time.
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1. Promise. Maker promises to pay to the order of Holder the Principal Amount,
together with interest thereon and other amounts due under this Promissory Note
(the "Note"), in lawful money of the United States of America in accordance with
the terms of this Note. This Note is issued in connection with the closing of an
Asset Purchase Agreement dated [Date of Closing], 2002 between Maker, as buyer,
and Holder, as seller (the "Asset Purchase Agreement").
2. Interest Accrual. The unpaid Principal Amount from time to time outstanding
under this Note will bear interest at the Loan Rate from the Note Date.
3. Payments. Maker will pay to Holder each of the payments described in this
Section 3. Each payment will be made to the address designated by Holder.
3.1 Interest. On the first business day of each calendar month, beginning
_____, 2002, Holder will send a monthly invoice to Maker showing the amount
of accrued interest on the Note through the end of the preceding calendar
month. Maker's payment for each such invoice will be due to Holder within
30 days from the date on which Maker receives the invoice. Maker may defer
the payment of all or any part of the interest obligation reflected in all
or any of the first 12 invoices. To the extent Maker does not pay in full
any of the first 12 invoices by its due date, the unpaid amount will be
deemed an advance by Holder to Maker under this Note, and the amount will
be added to the Principal Amount effective on
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the day after the due date and will thereafter bear interest as part of the
Principal Amount. For the purpose of calculating interest under this Note,
the Loan Rate in effect on the last day of a calendar month will be deemed
to be the Loan Rate for the entire calendar month, even if the Prime Rate
changed one or more times during the month. (For example, the Loan Rate in
effect on June 30, 2002 will be deemed to be the Loan Rate in effect for
the entire month of June 2002, even if the Prime Rate changed one or more
times during June 2002.)
3.2 Principal. Beginning with the 13th monthly invoice for interest, each
invoice will include, and Maker will pay to Holder within 30 days of
receipt of the invoice, in addition to accrued interest, an amount equal to
one thirty-sixth (1/36) of the unpaid Principal Amount or, if there has
been a prepayment of any portion of the Principal Amount, an amount equal
to the unpaid Principal Amount divided by the number of months remaining
until the Maturity Date. Interest on this Note shall accrue on any such
installment payment of the Principal Amount until the date such installment
is paid.
3.3 Maturity. Notwithstanding anything in this Note to the contrary, Maker
will repay the outstanding Principal Amount and all unpaid and accrued
interest under this Note on or before the Maturity Date, without further
notice or demand.
3.4 Prepayments. Maker may prepay all or any portion of the Principal
Amount at any time or from time-to-time without penalty.
4. Application of Payments. All payments under this Note will be applied first
to accrued interest and then to the Principal Amount.
5. Default. Each of the following will constitute an "Event of Default":
5.1 The failure of Maker to make any payment required under this Note
within 5 business days after receipt by Maker of a notice of payment
default from Holder; or
5.2 The sale by Maker of more than twenty-five percent of the "Assets"
(purchased under and as defined in the Asset Purchase Agreement) to any
unaffiliated third party outside the ordinary course of business.
6. Remedies. Upon the occurrence of an Event of Default, Holder may enforce any
right conferred upon Holder under this Note and pursue any other right or remedy
allowed by law or in equity. Without limitation of the foregoing, upon the
occurrence of an Event of Default, Holder will have the right to declare the
unpaid Principal Amount and all unpaid and accrued interest under this Note
immediately due and payable. The Maker hereby waives demand, presentment,
protest, diligence, notice of dishonor and any other notice or formality in
connection with this Note.
7. Interest Limitation. Interest, fees, and charges collected or to be collected
in connection with the indebtedness evidenced by this Note will not exceed the
maximum, if any, permitted by applicable law. If any such law is interpreted so
that any such interest, fees, or charges would exceed any such maximum, and if
Maker is entitled to the benefit of such law, then (a) such interest, fees, or
charges will be reduced to the permitted maximum and (b) any sums already
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collected from Maker which exceed the permitted maximum will be applied against
the Principal Amount of this Note or, if required by applicable law, refunded.
8. Commercial Use. Maker hereby represents that the obligation evidenced by this
Note is undertaken for commercial use and not for personal, family or household
purposes.
9. Miscellaneous.
9.1 Severability. If any term, covenant, condition or provision of this
Note, or the application thereof to any party or circumstance, is to any
extent held invalid or unenforceable by a judicial order, the remainder of
this Note or the application of such term or provision to parties or
circumstances other than those as to which it is held invalid or
unenforceable will not be affected thereby and each term, covenant,
condition or provision of this Note will be valid and be enforced to the
fullest extent permitted by law. The invalid or unenforceable provision
will be curtailed, limited or eliminated only to the extent necessary to
remove such invalidity or unenforceability with respect to the applicable
law as it will then be applied.
9.2 Headings; Drafting. The headings used in this Note are intended for
convenience of reference only. The headings will not be considered to have
any substantive significance or to define, limit or enlarge the scope or
meaning of this Note or any provision hereof. This Note is deemed to have
been drafted jointly by the parties and, accordingly, any ambiguous
provision will not be resolved in favor of one party on the basis that the
other party drafted the ambiguous provision.
9.3 Jurisdiction and Venue. If Maker brings legal action against Holder to
enforce or declare the terms of this Note, Maker will initiate the legal
action in the U.S. District Court for the Eastern District of Michigan or
in the Circuit Court of the State of Michigan, in Washtenaw County, and the
legal action will thereafter be adjudicated exclusively within such court.
If Holder brings legal action against Maker to enforce or declare the terms
of this Note, Holder will initiate the legal action in the U.S. District
Court for the District of Oregon or in the Circuit Court of the State of
Oregon, in Multnomah County, and the legal action will thereafter be
adjudicated exclusively within such court. Each party submits to the
exclusive jurisdiction of the state and federal courts as specified above.
Each of the parties further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective
address set forth in the attached Schedule of Notice Addresses (or such
changed address as provided in Section 9.9 Notices below) shall be
effective service of process for any action, suit or proceeding with
respect to any matters to which it has submitted to jurisdiction in this
Section 9.3 Each of the parties irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising
out of this Note or the transactions contemplated hereby in such courts,
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum. During
any time that litigation is pending between Maker and Holder, any new legal
action between Maker and Holder will be initiated and adjudicated in the
same state or federal court in which the litigation is already pending,
regardless which
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party initiates the new legal action and, to the extent permitted, will be
consolidated with the pending litigation.
9.4 Governing Law. This Note will be governed by and interpreted in
accordance with the substantive laws of the State of Oregon, regardless of
whether jurisdiction and venue lie in Michigan or Oregon.
9.5 Attorney's Fees. If a suit, action, or other proceeding of any nature
whatsoever (including any proceeding under the U.S. Bankruptcy Code) is
instituted to enforce or interpret any provision of this Note or in
connection with any dispute hereunder, the party which substantially
prevails will be entitled to recover such amount as the court may adjudge
reasonable as attorney's fees and all other fees, costs, and expenses of
litigation at trial or any appeal or review, in addition to all other
amounts provided by law.
9.6 Entire Agreement. This Note, together with the Asset Purchase Agreement
and the other agreements and instruments referenced therein, contains the
entire agreement with respect to the matters contemplated by this Note and
supersedes all prior oral and written agreements, including the Letter of
Intent dated February 15, 2002, between the parties with respect to such
matters.
9.7 Amendment. This Note may not be modified or amended except by a written
agreement signed by an officer of each party.
9.8 Waiver. Failure of any party to complain of any act or omission on the
part of any other party in breach or default of this Note, no matter how
long the same may continue, will not be deemed to be a waiver by the party
of its rights hereunder. No waiver by any party at any time, express or
implied, of any breach of any provision of this Note will be deemed a
waiver of a breach of any other provision of this Note or a consent to any
subsequent breach of the same or other provisions.
9.9 Notices. Any notice required or permitted to be given under this Note
will be in writing and will be deemed duly given if sent by (i) facsimile
transmission and mailed as indicated on the attached Schedule of Notice
Addresses (unless such address has changed by prior written notice) or (ii)
mailed, sent by overnight courier or delivered personally as indicated on
the attached schedule of Notice Addresses (unless such address has been
changed by prior written notice). Delivery will be deemed effective on the
first business day after the date on which the facsimile is successfully
transmitted, or the notice is received in the case of any other notice. A
party may change its mailing address and/or fax number by providing written
notice to the other party.
9.10 Counterparts. This Note may be executed in any number of counterparts,
all of which together will constitute one and the same agreement, and it
may be executed by facsimile signature.
9.11 Further Assurances. From time to time, upon request of either party,
the other party will execute, acknowledge, and deliver such documents and
undertake such actions as may be reasonably requested in order to fulfill
its obligations under this Note.
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9.12 Binding Effect. This Note is binding on the Maker and its successors,
and shall inure to the benefit of Holder, its successors and assigns.
Perceptron: Perceptron, Inc.
By: __________________________
Xxxxxx X. Xxxxx
Chairman and Chief Executive Officer
USNR: U. S. Natural Resources, Inc.
By: __________________________
Xxxxxx Xxx Xxxxxxxxx
President and CEO, Forest Group
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SCHEDULE OF
NOTICE ADDRESSES
IF TO PERCEPTRON: PERCEPTRON, INC.
00000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Chairman and Chief Executive Officer
Facsimile: 000-000-0000
With copies to:
Perceptron, Inc.
00000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
General Counsel
Facsimile: 000-000-0000
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
IF TO USNR: U.S. NATURAL RESOURCES, INC.
X.X. Xxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxx Xxxxxxxxx
President and CEO, Forest Group
Facsimile: 000-000-0000
With copies to:
U.S. Natural Resources, Inc.
0000 XX Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
Facsimile: 000-000-0000
Ball Xxxxx LLP
000 XX Xxxx Xx., Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Facsimile: 000-000-0000
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