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EXHIBIT 2.1
AGREEMENT OF PURCHASE FOR THE
PRECISION GUNNERY TRAINING SYSTEMS ASSETS
DATED AS OF
MAY 31, 2000
BY AND BETWEEN
EIDETICS CORPORATION, A CALIFORNIA CORPORATION ("BUYER")
AND
PERCEPTRONICS, INC., A DELAWARE CORPORATION ("SELLER")
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TABLE OF CONTENTS
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PAGE
<S> <C> <C>
1. DEFINITIONS...........................................................................................1
1.1 Definitions.........................................................................1
2. PURCHASE AND SALE.....................................................................................4
2.1 Purchase and Sale...................................................................4
2.2 Excluded Assets.....................................................................5
2.3 Assumption of Liabilities...........................................................5
2.4 Excluded Liabilities................................................................5
2.5 Assignment of Contracts and Rights..................................................6
2.6 Purchase Price; Allocation of Purchase Price........................................7
2.7 Closing.............................................................................8
2.8 Consideration at Closing...........................................................10
2.9 Conditions Precedent to Buyer's Performance........................................10
2.10 Conditions Precedent to Seller's Performance.......................................11
3. REPRESENTATIONS AND WARRANTIES OF SELLER.............................................................11
3.1 Corporate Existence and Power......................................................11
3.2 Corporate Authorization............................................................11
3.3 Governmental Authorization.........................................................12
3.4 Non-Contravention..................................................................12
3.5 Consents...........................................................................12
3.6 Intentionally Deleted..............................................................12
3.7 Absence of Certain Changes.........................................................12
3.8 Properties.........................................................................13
3.9 Purchased Assets...................................................................13
3.10 Title to Purchased Assets..........................................................13
3.11 No Undisclosed Material Liabilities................................................13
3.12 Litigation.........................................................................13
3.13 Assumed Contracts..................................................................14
3.14 Licenses and Permits...............................................................15
3.15 Insurance Coverage.................................................................15
3.16 Compliance with Laws...............................................................15
3.17 Intentionally Deleted..............................................................15
3.18 Intentionally Deleted .............................................................15
3.19 Proprietary Rights.................................................................16
3.20 Intentionally Deleted .............................................................16
3.21 Finders' Fees......................................................................16
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3.22 Intentionally Deleted..............................................................16
3.23 Other Information..................................................................16
4. REPRESENTATIONS AND WARRANTIES OF BUYER..............................................................17
4.1 Organization and Existence.........................................................17
4.2 Corporate Authorization............................................................17
4.3 Governmental Authorization.........................................................17
4.4 Non-Contravention..................................................................17
4.5 Finders' Fees; Side Deals..........................................................17
4.6 Financing; Financial Information...................................................18
4.7 Litigation.........................................................................18
5. COVENANTS AND OTHER AGREEMENTS.......................................................................18
5.1 Noncompetition.....................................................................18
5.2 Trademarks; Tradenames.............................................................19
5.3 Best Efforts; Further Assurances...................................................19
5.4 Public Announcements...............................................................19
5.5 Bulk Sales Laws....................................................................20
5.6 Intentionally Deleted..............................................................20
6. TAX MATTERS..........................................................................................20
6.1 Tax Definitions....................................................................20
6.2 Tax Matters........................................................................21
6.3 Tax Cooperation; Allocation of Taxes...............................................21
7. EMPLOYEE BENEFITS....................................................................................22
7.1 Employee Benefits Definitions......................................................22
7.2 ERISA Representations..............................................................23
7.3 Employees and Offers of Employment.................................................23
7.4 Seller's Benefit Arrangements......................................................24
7.5 No Third Party Beneficiaries.......................................................24
8. SURVIVAL; INDEMNIFICATION............................................................................24
8.1 Survival...........................................................................24
8.2 Indemnification....................................................................25
8.3 Procedures; No Waiver; Exclusivity.................................................26
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9. MISCELLANEOUS........................................................................................26
9.1 Notices............................................................................26
9.2 Amendments; No Waivers.............................................................27
9.3 Expenses...........................................................................27
9.4 Successors and Assigns.............................................................28
9.5 Arbitration........................................................................28
9.6 Governing Law......................................................................28
9.7 Counterparts.......................................................................28
9.8 Facsimile Copies...................................................................28
9.9 Entire Agreement...................................................................28
9.10 Severance of Provisions............................................................28
9.11 Rules of Construction..............................................................29
9.12 Attorneys Fees, Costs and Expenses.................................................29
9.13 Time is of the Essence.............................................................29
9.14 Captions...........................................................................29
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SCHEDULE 2.2 EXCLUDED ASSETS
SCHEDULE 2.3 ASSUMED LIABILITIES
SCHEDULE 2.6 ALLOCATION STATEMENT
SCHEDULE 3.5 CONSENTS
SCHEDULE 3.8 PERSONAL PROPERTY
SCHEDULE 3.13 ASSUMED CONTRACTS
SCHEDULE 3.19 PROPRIETARY RIGHTS
EXHIBIT A FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT B FORM OF BILL OF SALE AND GENERAL ASSIGNMENT
EXHIBIT C INTENTIONALLY DELETED
EXHIBIT D FORM OF SECRETARY'S CERTIFICATE (BUYER)
EXHIBIT E FORM OF SELLER'S COUNSEL OPINION
EXHIBIT F FORM OF ESCROW AGREEMENT
EXHIBIT G FORM OF SECRETARY'S CERTIFICATE (SELLER)
</TABLE>
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AGREEMENT OF PURCHASE
THIS AGREEMENT is dated as of May 31, 2000 between EIDETICS
CORPORATION, a California corporation ("BUYER"), and PERCEPTRONICS, INC., a
Delaware corporation ("SELLER").
W I T N E S S E T H :
WHEREAS, Seller engages in the business of designing, developing,
manufacturing, distributing, computer-based simulation systems that include
precision gunnery training systems ("PGTS"), the improved tow vehicle ("ITV")
PGTS and other military and commercial training simulators and devices
(collectively, the " PGTS BUSINESS") and software products and services for
creating Internet-based collaborative 3D and other virtual media experiences.
WHEREAS, Buyer and Seller entered into a Teaming Agreement executed on
December 27, 1999 ("TEAMING AGREEMENT") and a Memorandum of Understanding
executed on December 27, 1999 ("MOU");
WHEREAS, Buyer desires to purchase all of the assets of the PGTS
Business from Seller, and Seller desires to sell all of the assets of the PGTS
Business to Buyer, upon the terms and subject to the conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the foregoing recitals and the
representations, warranties, covenants and agreements herein contained, the
Buyer and Seller (individually a "Party" and collectively the "Parties") agree
as follows:
1. DEFINITIONS.
1.1 DEFINITIONS.
(a) The following terms, as used herein, have the
following meanings:
"AFFILIATE" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by, or under common control with
such other Person and any stockholder owning greater than five percent (5%) of
the equity of any Person, and any officers or director of a Person.
"ANCILLARY AGREEMENTS" means the MOU and the Teaming
Agreement.
"CLOSING DATE" means the date of the Closing.
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"ENVIRONMENT" means any and all environmental media, including
without limitation ambient air, surface water, ground water, drinking water
supply, land surface or subsurface strata, and also means any indoor location.
"ENVIRONMENTAL LAWS" means any and all federal, state, local
and foreign statutes, laws (including common or case law), regulations,
ordinances, rules, judgments, judicial decisions, orders, decrees, codes, plans,
injunctions, Environmental Permits, or governmental restrictions, relating to
the protection of human health or safety or the Environment or to emissions,
discharges or Releases of any Hazardous Substance into the Environment, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of any Hazardous Substance or the
containment, removal or remediation thereof.
"ENVIRONMENTAL LIABILITIES" means any and all liabilities
arising in connection with or in any way relating to the PGTS Business or the
Purchased Assets or Seller's use or ownership thereof, whether vested or
unvested, contingent or fixed, actual or potential, known or unknown, which (i)
arise under or relate to matters governed by Environmental Laws and (ii) arise
from or relate in any way to actions occurring or conditions existing before the
Closing Date.
"ENVIRONMENTAL PERMITS" means any and all governmental
permits, licenses, concessions, grants, franchises, agreements, authorizations,
registrations or other governmental approvals issued or required under any
Environmental Laws.
"ESCROW AGENT" means the escrow agent under the Escrow
Agreement.
"ESCROW AGREEMENT" means the Escrow Agreement to be entered
into as of the Closing Date between Buyer, Seller and a financial institution
reasonably acceptable to Buyer and Seller, as Escrow Agent, substantially in the
form of EXHIBIT F.
"GOVERNMENTAL AUTHORITY" means any government, court,
regulatory or administrative agency or commission, or other governmental
authority, agency or instrumentality, whether federal, state or local
(domestic or foreign).
"HAZARDOUS SUBSTANCE" means any and all pollutants and
contaminants, and any and all toxic, caustic, radioactive or otherwise hazardous
materials, substances or wastes that are regulated under any Environmental Laws,
and includes, without limitation, petroleum and its derivatives and by-products,
and any other hydrocarbons.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset.
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"MATERIAL ADVERSE CHANGE" means a material adverse change in
the business, assets, condition (financial or otherwise), results of operations
or prospects of the PGTS Business.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
the business, assets, condition (financial or otherwise), results of operations
or prospects of the PGTS Business.
"PERSON" means an individual, corporation, partnership,
association, trust, limited liability company, or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"PROPRIETARY RIGHTS" means all (A) patents, patent
applications, (B) trademarks, service marks, trade dress, logos, tradenames,
service names and corporate names and registrations and applications for
registration thereof, (C) copyrights and registrations and applications for
registration thereof, (D) mask works and registrations and applications for
registration thereof, (E) computer software, data and documentation, (F) trade
secrets and confidential business information, whether patentable or
nonpatentable and whether or not reduced to practice, know-how, research and
development information, copyrightable works, financial, marketing and business
data, pricing and cost information, business and marketing plans, prospective
vendors and other customer and supplier lists and information, (G) other
proprietary rights relating to any of the foregoing (including without
limitation associated goodwill and remedies against infringements thereof and
rights of protection of an interest therein under the laws of all jurisdictions)
and (H) copies and tangible embodiments thereof.
"RELEASE" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing into the Environment (including, without limitation, the abandonment
or discarding of barrels, containers and other closed receptacles containing any
Hazardous Substance).
"SELLER'S PROPRIETARY RIGHTS" means all Proprietary Rights
relating to the PGTS Business that are owned by Seller or an Affiliate thereof
or that are used in the operation of the PGTS Business.
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2. PURCHASE AND SALE
2.1 PURCHASE AND SALE. Upon the terms and subject to the
conditions of this Agreement, Buyer agrees to purchase from Seller and Seller
agrees to sell, transfer, assign and deliver, or cause to be sold, transferred,
assigned and delivered, to Buyer at Closing, free and clear of all Liens, except
as specifically set forth herein, all right, title and interest of Seller and
its Affiliates in, to and under the assets, properties and business, other than
the Excluded Assets and as otherwise limited or excluded hereunder, of every
kind and description, wherever located, tangible or intangible, owned, held or
used in the conduct of the PGTS Business by Seller or any Affiliate of Seller
(the "PURCHASED ASSETS"), as set forth below:
(a) the machinery, equipment, furniture, office
equipment, tools, communications equipment, vehicles, property and
other tangible assets listed on SCHEDULE 3.8;
(b) the supplies and other materials (promotional or
otherwise) used in the PGTS Business, wherever situated, and other
supplies and materials listed on SCHEDULE 3.8;
(c) the contracts and the other arrangements listed on
SCHEDULE 3.13 (collectively, the "ASSUMED CONTRACTS") and all deposits
and advances related in any way thereto;
(d) finished goods, raw materials and work in process
inventory listed on SCHEDULE 3.8;
(e) Intentionally Deleted;
(f) all prepaid expenses and deposits made by the Seller
in the conduct of the PGTS Business with respect to the PGTS Business
including, without limitation, ad valorem taxes, lease deposits, rental
deposits and all deposits and advances made by customers under the
Egyptian Contract and the Saudi Contract (as defined herein);
(g) all of Seller's rights, claims, credits, causes of
action or rights of set-off against third parties relating to the
Purchased Assets;
(h) Intentionally Deleted;
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(i) all transferable licenses, permits or other
governmental authorizations affecting, or relating in any way to, the
PGTS Business;
(j) the books, records, files and papers, whether in hard
copy or computer format, including, without limitation, vendors, sales
and promotional literature, market research, manuals and data, sales
and purchase correspondence, lists of present suppliers and former
suppliers, lists of present customers and former customers, personnel
and employment records, and any information relating to Tax imposed
solely by reason of the transfer of the Purchased Assets; and
(k) all goodwill associated with the PGTS Business or the
Purchased Assets, together with the right to represent to third parties
that Buyer is the successor to the PGTS Business.
2.2 EXCLUDED ASSETS. Buyer expressly understands and agrees that
the assets and properties of Seller that are listed on Schedule 2.2 of this
Agreement (the "EXCLUDED ASSETS") shall be excluded from the Purchased Assets.
Notwithstanding the foregoing, no Excluded Asset may be used by any Person in
violation of Seller's obligations under this Agreement.
2.3 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, Buyer agrees, effective at the time of Closing, to
assume the following liabilities (the "ASSUMED LIABILITIES"):
(a) all liabilities arising after the Closing Date under
the Assumed Contracts (other than liabilities or obligations
attributable to any failure by Seller to comply with the terms
thereof); and
(b) the liabilities to the extent listed on SCHEDULE 2.3.
2.4 EXCLUDED LIABILITIES. Notwithstanding any provision in this
Agreement or any other writing to the contrary, Buyer is assuming only the
Assumed Liabilities and is not assuming any other liability or obligation of
Seller or any Affiliate of Seller (or any predecessor owner of all or part of
its business and assets) of whatever nature whether presently in existence or
arising or asserted hereafter. All such other liabilities and obligations shall
be retained by and remain obligations and liabilities of Seller or such
Affiliate (all such liabilities and obligations not being assumed being herein
referred to as the "EXCLUDED LIABILITIES"). Without limiting the foregoing, each
of the following shall be Excluded Liabilities for the purposes of this
Agreement:
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(a) any obligation or liability for Tax arising from or
with respect to the Purchased Assets or the operation of the PGTS
Business or which is otherwise imposed on Seller or any of its
Affiliates that are attributable to the Pre-Closing Tax Period;
(b) any liabilities or obligations relating to Seller
employee benefits or Seller compensation arrangements, including,
without limitation, any liabilities or obligations under any of
Seller's Benefit Arrangements or Employee Plan;
(c) any action, suit, investigation or proceeding pending
against Seller or in respect of the PGTS Business and any action, suit,
investigation or proceeding commenced after the date hereof in respect
of the conduct of the PGTS Business prior to Closing;
(d) any liability or obligation relating to an Excluded
Asset; and
(e) any Environmental Liability.
2.5 ASSIGNMENT OF CONTRACTS AND RIGHTS. Anything in this
Agreement to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign any Purchased Asset or any claim or right
or any benefit arising thereunder or resulting therefrom if an attempted
assignment thereof, without consent of a third party thereto, would
constitute a breach or other contravention thereof or in any way adversely
affect the rights of Buyer or Seller thereunder. Seller and Buyer will use
their best efforts to obtain the consent of the other parties to any such
Purchased Asset or claim or right or any benefit arising thereunder for the
assignment thereof to Buyer as Buyer may request. If such consent is not
obtained, or if an attempted assignment thereof would be ineffective or would
adversely affect the rights of Seller thereunder so that Buyer would not in
fact receive all such rights, Seller and Buyer will cooperate in a mutually
agreeable arrangement under which Buyer would obtain the benefits and assume
the obligations thereunder in accordance with this Agreement, including
subcontracting, sub-licensing, or subleasing to Buyer, or under which Seller
would enforce for the benefit of Buyer, with Buyer assuming Seller's
obligations, any and all rights of Seller against a third party thereto.
Seller will promptly pay to Buyer when received all monies received by Seller
under any Purchased Asset or any claim or right or any benefit arising
thereunder, except to the extent the same represents an Excluded Asset. In
such event, Seller and Buyer shall, to the extent the benefits therefrom and
obligations thereunder have not been provided by alternate arrangements
satisfactory to Buyer and Seller, negotiate in good faith an adjustment in
the consideration paid by Buyer for the Purchased Assets.
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2.6 PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE.
(a) The purchase price for the Purchased Assets (the
"PURCHASE PRICE") is $498,069.35, plus the amounts as set forth in
SECTION 2.6(b), to be paid through assumption of liabilities as
provided in SCHEDULE 2.3 herein and subject to adjustment for
authorized sales of inventory under MOU Section 4(b).
(b) For a period of four years after the date of the
acquisition by Buyer of the Purchased Assets, Buyer shall pay to Seller
a three percent (3%) royalty fee on cash-basis gross revenues (as
payments are received actually or constructively by Buyer) allocable to
PGTS sales and/or sales of simulators using as a material and integral
component of such simulator the acquired Perceptronics simulation
technology, including but not limited to PGTS, TT150 and AGPT. The
royalty rate shall be paid only on the portion of a contract
specifically relating to the PGTS Assets and not to other contract
deliverables. No royalty fee shall be paid on Egyptian Program
Contracts under this provision as fees on Egyptian Program Contracts
are treated under MOU Section 7(a). Notwithstanding the foregoing, any
amounts paid by Buyer with respect to the Lease under SCHEDULE 2.3,
item 1, shall offset Buyer's obligation to pay the first amounts of
royalty fees otherwise payable under this section and
the fee otherwise payable under MOU Section 7(a).
(c) Buyer and Seller hereby agree to the allocation
statement set forth on SCHEDULE 2.6 (the "ALLOCATION STATEMENT"),
setting forth the value of the Purchased Assets and of the covenant not
to compete described herein, which shall be used for the allocation of
the Purchase Price. Seller and Buyer agree to report an allocation of
such Purchase Price among the Purchased Assets in a manner entirely
consistent with the Allocation Statement, and agree to act in
accordance with such Allocation Statement in the preparation of
financial statements and filing of all tax returns (including, without
limitation, filing Form 8594 with their Federal income tax return for
the taxable year that includes the date of the Closing) and in the
course of any tax audit, tax review or tax litigation relating thereto.
No later than 10 days prior to the filing of their respective Forms
8594 relating to this transaction, each party shall deliver to the
other party a copy of its Form 8594.
(d) The Purchase Price shall be paid as provided in
SECTION 2.7 and SECTION 2.8.
(e) The Parties shall each pay for one-half (1/2) of all
Escrow charges, except as provided in SECTION 5.5 or as otherwise
provided herein.
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2.7 CLOSING. The closing (the "CLOSING") of the purchase and sale
of the Purchased Assets and the assumption of the Assumed Liabilities hereunder
shall take place on or before July 28, 2000 at the offices of Perceptronics at
21010 Erwin Street, Woodland Hills, CA 91367.
(a) Upon execution of this Agreement, Seller shall
deliver to the Escrow Agent $2,500 to be held in accordance with the
terms of the Escrow Agreement.
(b) Upon execution of this Agreement, Buyer shall deliver
to the Escrow Agent $2,500 apart from the Purchase Price to be held in
accordance with the terms of the Escrow Agreement.
(c) Seller and Buyer shall enter into an Assignment and
Assumption Agreement substantially in the form of EXHIBIT A attached
hereto, and Seller shall deliver to Buyer such deeds, bills of sale
(including a bill of sale substantially in the form of EXHIBIT B
attached hereto), endorsements, consents, assignments and other good
and sufficient instruments of conveyance and assignment (the
"CONVEYANCE DOCUMENTS") as the parties and their respective counsel
shall deem reasonably necessary or appropriate to vest in Buyer all
right, title and interest in, to and under the Purchased Assets.
(d) Seller, Buyer and the Escrow Agent shall enter into
the Escrow Agreement.
(e) Seller shall deliver original contracts (including an
assignment thereof to Buyer and, if necessary, the other party's
written consent thereto) of all Assumed Contracts.
(f) Seller shall deliver a certificate of good standing
of Seller, issued as of a recent date by the Secretary of State of the
State of Delaware and the Secretary of State of the State of
California.
(g) Intentionally Deleted.
(h) Seller shall deliver a secretary's certificate dated
the date of the Closing as to (i) the resolutions of the Board of
Directors of Seller authorizing the execution, delivery and performance
of this Agreement and each exhibit hereto to which it is a signatory
and the consummation of the transactions contemplated herein and
therein and to the approval by stockholders of Seller; and (ii) the
incumbency and signatures of the officers of Seller executing this
Agreement or any other documents related to the transaction. The
secretary's certificate shall be
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substantially in the form of EXHIBIT G attached hereto. Seller shall
deliver a certificate executed by the president or vice president and
the secretary or treasurer of Seller certifying that all Seller's
representations and warranties under this Agreement are true as of
the Closing Date, as though each of those representations and
warranties had been made on that date.
(i) Seller shall deliver the consents set forth on
SCHEDULE 3.5.
(j) Seller shall cause Seller's counsel to deliver a
written opinion to Buyer substantially in the form of EXHIBIT E
attached hereto.
(k) Buyer shall deliver a certificate of good standing of
Buyer issued
as of a recent date by the Secretary of State of the State of
California.
(l) Buyer shall deliver a secretary's certificate dated
the date of the Closing as to (i) the resolutions of the Board of
Directors of Buyer authorizing the execution, delivery and performance
of this Agreement and each exhibit hereto to which it is a party and
the consummation of the transactions contemplated herein and therein;
and (ii) the incumbency of the officers of Buyer executing this
Agreement and each exhibit hereto to which it is a party. The
secretary's certificate shall be substantially in the form of EXHIBIT D
attached hereto. Buyer shall deliver a certificate executed by the
president or vice president and the secretary or treasurer of Buyer
certifying that all Buyer's representations and warranties under this
Agreement are true as of the Closing Date, as though each of those
representations and warranties had been made on that date.
(m) Seller shall deliver to Escrow, properly authorized
and executed Termination Statements (Form UCC-2) and all other
documents reasonably necessary to terminate all security interests and
Liens claimed by any Person (whether the original secured party or any
assignee) with respect to all Liens on the Purchased Assets under
Financing Statements (Form UCC-1) including, without limitation, the
following:
(i) Financing Statement, File No. 9805160087,
filed on February 13, 1998; Debtor: Perceptronics, Inc.; Original
Secured Party: World Trade Finance, Inc.
(ii) Financing Statement, File No. 9727960699,
filed on October 1, 1997; Debtor: Perceptronics, Inc.; Original Secured
Party: The Pacific Bank, N.A.
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(iii) Financing Statement, File No. 9629660051,
filed on October 17, 1996; Debtor: Perceptronics, Inc.; Original
Secured Party: World Trade Finance, Inc.
2.8 CONSIDERATION AT CLOSING.
(a) At or before Closing Buyer shall pay the following
into Escrow for payment by Escrow to the lenders described below:
(i) $137,278.01, as payment by Buyer of all
outstanding principal and other charges to July 3, 2000 under the loan
by City National Bank (Loan 20967/2304), plus daily interest in the
amount of $43.43 per day through the Closing Date.
(ii) $43,091.34, as payment by Buyer of all
outstanding principal and other charges to June 30, 2000 under the loan
by the United States Small Business Administration/Pacific Bank (Loan
7646523003), plus daily interest in the amount of $4.67 per day through
the Closing Date.
2.9 CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE. The obligations
of Buyer to purchase the Purchased Assets and assume the Assumed Liabilities
under this Agreement are subject to the satisfaction, at or before the Closing,
of all the conditions set out below in this SECTION 2.9, in addition to those
otherwise and elsewhere set forth in this Agreement. Buyer may waive any or all
of these conditions in whole or in part without prior notice; provided however,
that no such waiver of a condition constitutes a waiver by Buyer of any of its
other rights or remedies, at law or in equity, if Seller is in default of any of
its representations, warranties or covenants under this Agreement that have not
been waived by Buyer.
(a) Except as otherwise permitted by this Agreement, all
warranties by Seller in this Agreement, or in any written statement
that will be delivered to Buyer under this Agreement, must be true on
the Closing Date as though made at that time.
(b) On or before the Closing Date, Seller will have
performed, satisfied and complied with all covenants, agreements and
conditions required of it by this Agreement.
(c) During the period from December 31, 1999 to the
Closing Date, there will not have been any Material Adverse Change in
the financial condition or the results of operations of Seller and
Seller will not have sustained any material loss or damage to its
insured or uninsured assets that has a Material Adverse Effect.
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2.10 CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE. The
obligations of Seller to sell the Purchased Assets and assign the Assumed
Liabilities under this Agreement are subject to the satisfaction, at or
before the Closing, of all the conditions set out below in this SECTION 2.10,
in addition to those otherwise and elsewhere set forth in this Agreement.
Seller may waive any or all of these conditions in whole or in part without
prior notice; provided however, that no such waiver of a condition
constitutes a waiver by Seller of any of its other rights or remedies, at law
or in equity, if Buyer is in default of any of its representations,
warranties or covenants under this Agreement that have not been waived by
Seller.
(a) Except as otherwise permitted by this Agreement, all
warranties by Buyer in this Agreement, or in any written statement that
will be delivered to Seller under this Agreement, must be true on the
Closing Date as though made at that time.
(b) On or before the Closing Date, Buyer will have
performed, satisfied and complied with all covenants, agreements and
conditions required of it by this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that:
3.1 CORPORATE EXISTENCE AND POWER. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware,
and has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted. Seller is duly qualified to do business as a foreign corporation and
is in good standing in California and in each jurisdiction where the character
of the property owned or leased by it or the nature of its activities make such
qualification necessary.
3.2 CORPORATE AUTHORIZATION. The execution, delivery and
performance by Seller of this Agreement and the Ancillary Agreements, and the
consummation by Seller of the transactions contemplated hereby and thereby, are
within Seller's corporate powers and have been duly authorized by all necessary
corporate action on the part of Seller. This Agreement and the Ancillary
Agreements constitute valid and binding agreements of Seller. Seller has
obtained consents from a majority of the outstanding shares of common stock to
consummate the transaction, and prior to the closing will have complied with all
requirements of the SEC and the Delaware General Corporation Law with respect to
stockholder approval of the transaction.
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3.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Seller of this Agreement and the Ancillary Agreements do not
require any action by or in respect of, or filing with, any Governmental
Authority, except as provided in SECTION 2.5.
3.4 NON-CONTRAVENTION. The execution, delivery and performance by
Seller of this Agreement and the Ancillary Agreements do not and will not (i)
contravene or conflict with the corporate charter or bylaws of Seller, (ii)
contravene or conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or decree binding upon or
applicable to Seller or the PGTS Business; (iii) assuming the receipt of all
Consents, constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Seller or to a loss
of any benefit relating to the PGTS Business to which Seller is entitled under
any provision of any agreement, contract or other instrument binding upon Seller
or by which any of the Purchased Assets is or may be bound that will have a
Material Adverse Effect on the PGTS Business, or (iv) result in the creation or
imposition of any Lien on any Purchased Asset which could reasonably be expected
to have a Material Adverse Effect on the PGTS Business.
3.5 CONSENTS. SCHEDULE 3.5 sets forth each material agreement,
contract or other instrument binding upon Seller or any Permit requiring a
consent as a result of the execution, delivery and performance of this
Agreement, the Consulting Agreement and the Escrow Agreement or the consummation
of the transactions contemplated hereby (each such consent, a "CONSENT").
3.6 Intentionally Deleted
3.7 ABSENCE OF CERTAIN CHANGES. Since December 1, 1999, Seller has
conducted the PGTS Business in the ordinary course consistent with past
practices, and there has not been:
(a) any Material Adverse Change;
(b) any creation or other incurrence of any Lien on any
Purchased Asset which could reasonably be expected to individually or
in the aggregate have a Material Adverse Effect on the PGTS Business;
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(c) any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the PGTS Business or
any Purchased Asset which could reasonably be expected to individually
or in the aggregate have a Material Adverse Effect on the PGTS
Business; or
(d) any transaction, contract, agreement or other
instrument entered into, or commitment made, by Seller relating to the
PGTS Business or any Purchased Asset (including the acquisition or
disposition of any assets) or any relinquishment by Seller of any
contract or other right, in either case, other than transactions and
commitments in the ordinary course of business consistent with past
practices and those contemplated by this Agreement which could
reasonably be expected to individually or in the aggregate have a
Material Adverse Effect on the PGTS Business.
3.8 PROPERTIES. No Purchased Asset is subject to any Lien other
than as set forth on the UCC-1 Debtor Report dated March 20, 2000, which such
Liens shall be terminated prior to the Closing.
3.9 PURCHASED ASSETS. The Purchased Assets and the Excluded Assets
together constitute all of the material assets or property used in the PGTS
Business.
3.10 TITLE TO PURCHASED ASSETS. Upon consummation of the
transactions contemplated hereby, Buyer will have acquired good and marketable
title in and to, or a valid leasehold interest in, each of the material
Purchased Assets, free and clear of all Liens other than easements, covenants,
rights of way and similar restrictions of record with respect to the real
property subject to the Lease described in SCHEDULE 3.5. Seller shall have
delivered to Buyer prior to the execution of this Agreement copies of all tax
liens, judgments, financing statements and fixture filings (in each case whether
or not of record) of which Seller has knowledge covering all or any portion of
the Purchased Assets.
3.11 NO UNDISCLOSED MATERIAL LIABILITIES. There are no material
liabilities of the PGTS Business of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a material liability. Notwithstanding the foregoing,
Seller acknowledges that Buyer is assuming only the Assumed Liabilities.
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3.12 LITIGATION. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Seller or threatened against
the PGTS Business or any Purchased Asset before any Governmental Authority or
arbitrator related to the PGTS Business.
3.13 ASSUMED CONTRACTS.
(a) Except for the Assumed Contracts disclosed in
SCHEDULE 3.13, with respect to the PGTS Business, Seller is not a party
to or subject to:
(i) any lease;
(ii) any contract for the purchase of materials,
supplies, goods, services, equipment or other assets;
(iii) any sales, distribution or other similar
agreement providing for the sale by Seller of materials, supplies,
goods, services, equipment or other assets;
(iv) any partnership, joint venture or other
similar contract arrangement or agreement;
(v) promotional contracts, advertising and
advertising agency contracts and public relations agency contracts;
(vi) any license agreement, franchise agreement
or agreement in respect of similar rights granted to or held by Seller;
(vii) any agency, dealer, sales representative or
other similar agreement;
(viii) any agreement, contract or commitment that
substantially limits the freedom of Seller to compete in any line of
business or with any Person or in any area or to own, operate, sell,
transfer, pledge or otherwise dispose of or encumber any Purchased
Asset or that would so limit the freedom of the Buyer after the Closing
Date;
(ix) any agreement, contract or commitment which
is or relates
to an agreement with or for the benefit of any Affiliate of Seller; or
(x) any other agreement, contract or commitment
not made in the ordinary course of business which is material to the
PGTS Business taken as a whole.
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(b) Each Assumed Contract is a valid and binding
agreement of Seller and is in full force and effect, and neither Seller
nor, to the knowledge of Seller, any other party thereto is in default
in any material respect under the terms of any such Assumed Contract,
nor, to the knowledge of Seller, has any event or circumstance occurred
that, with notice or lapse of time or both, would constitute any event
of default thereunder other than any Assumed Liabilities as
specifically set forth herein.
3.14 LICENSES AND PERMITS. SCHEDULE 3.14 correctly describes each
material license, franchise, permit or other similar authorization affecting, or
relating in any way to, the conduct of the PGTS Business, together with the name
of the government agency or entity issuing such license or permit (the
"PERMITS"). All Permits are valid and in full force and effect and, assuming the
related Consents have been obtained prior to the Closing Date, are transferable
by Seller and will not be terminated or impaired or become terminable as a
result of the transactions contemplated hereby. Upon consummation of such
transactions, Buyer will, assuming the related Consents have been obtained prior
to the Closing Date, have all of the right, title and interest in all the
Permits.
3.15 INSURANCE COVERAGE. Seller has furnished to Buyer a list of,
and true and complete copies of, to the extent received by Seller, all insurance
policies and fidelity bonds covering the Purchased Assets, the business and
operations of the PGTS Business and its employees. There is no claim by Seller
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds.
3.16 COMPLIANCE WITH LAWS. Seller is not in material violation of,
has not since January 1, 1996 violated, and to Seller's knowledge is not under
investigation with respect to and has not been threatened to be charged with or
given notice of any material violation of, any material law, rule, ordinance or
regulation, or judgment, order or decree entered by any Governmental Authority
applicable to the Purchased Assets or the conduct of the PGTS Business.
3.17 Intentionally Deleted
3.18 Intentionally Deleted
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3.19 PROPRIETARY RIGHTS.
(a) SCHEDULE 3.19 sets forth a list of Proprietary
Rights, specifying as to each, as applicable: (i) the nature of such
Proprietary Right; (ii) the owner of such Proprietary Right; (iii) the
jurisdictions by or in which such Proprietary Right has been issued or
registered or in which an application for such issuance or registration
has been filed, including the respective registration or application
numbers; and (iv) material licenses, sublicenses and other agreements
as to which Seller or any of its Affiliates is a party and pursuant to
which any Person is authorized to use such Proprietary Right, including
the identity of all parties thereto, a description of the nature and
subject matter thereof, the applicable royalty and the term thereof.
(b) (i) Seller has not during the four years preceding
the date of this Agreement been sued or charged in writing with or been
a defendant in any claim, suit, action or proceeding relating to the
PGTS Business that has not been finally terminated prior to the date
hereof and that involves a claim of infringement of any Proprietary
Rights, (ii) to Seller's knowledge, Seller, in the conduct of the PGTS
Business, has not infringed and is not infringing the Proprietary
Rights of any other Person, and (iii) Seller has no knowledge of any
continuing infringement by any other Person of any of Seller's
Proprietary Rights. To Seller's knowledge, no Proprietary Right of
Seller is subject to any outstanding order, judgment, decree,
stipulation or agreement restricting the use thereof by Seller with
respect to the PGTS Business or restricting the licensing thereof by
Seller to any Person. Seller has not entered into any agreement to
indemnify any other Person against any charge of infringement of any
Proprietary Right.
3.20 Intentionally Deleted
3.21 FINDERS' FEES. Other than as specifically provided herein,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of Seller who might be
entitled to any fee or commission from Buyer or any of its Affiliates upon
consummation of the transactions contemplated by this Agreement.
3.22 Intentionally Deleted
3.23 OTHER INFORMATION. None of the documents or information
delivered to Buyer in connection with the transactions contemplated by this
Agreement and the Ancillary Agreements contains any untrue statement of a fact
or omits to state a fact necessary in order to make the statements contained
therein not misleading so as to cause a Material Adverse Effect with respect to
the Purchased Assets.
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4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warranties to Seller that:
4.1 ORGANIZATION AND EXISTENCE. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of California and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
4.2 CORPORATE AUTHORIZATION. The execution, delivery and
performance by Buyer of this Agreement, each of the Ancillary Agreements and the
consummation by Buyer of the transactions contemplated hereby and thereby are
within the corporate powers of Buyer and have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement and each of the
Ancillary Agreements to which Buyer is a party constitute valid and binding
agreements of Buyer.
4.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Buyer of this Agreement and each of the Ancillary Agreements
require no action by or in respect of, or filing with, any Governmental
Authority.
4.4 NON-CONTRAVENTION. The execution, delivery and performance by
Buyer of this Agreement and each of the Ancillary Agreements does not and will
not (i) contravene or conflict with the corporate charter or bylaws of Buyer or
(ii) contravene or conflict with any provision of any law, regulation, judgment,
injunction, order or decree binding upon Buyer.
4.5 FINDERS' FEES; SIDE DEALS.
(a) Other than as specifically provided herein, there is
no investment banker, broker, finder or other intermediary that has
been retained by or is authorized to act on behalf of Buyer who might
be entitled to any fee or commission from Seller or any of its
Affiliates upon consummation of the transactions contemplated by this
Agreement.
(b) Buyer has no direct or indirect agreement,
arrangement or understanding with Seller or any stockholder of Seller
except for this Agreement and the Ancillary Agreements.
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4.6 FINANCING; FINANCIAL INFORMATION. Buyer has sufficient funds
available to purchase the Purchased Assets.
4.7 LITIGATION. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Buyer threatened against or
affecting, Buyer before any court or arbitrator or any governmental body, agency
or official which in any matter challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated hereby.
5. COVENANTS AND OTHER AGREEMENTS
5.1 NONCOMPETITION.
(a) Seller agrees that, for a period of five years from
the Closing Date, neither it nor its Affiliates shall
(i) engage, either directly or indirectly, as a
principal or for its own account, solely or jointly with others, or
through any form of ownership in another Person, or otherwise, in any
business that competes with the PGTS Business anywhere in the world; or
(ii) solicit for employment any employee of Buyer
or any former employee of Seller whose primary duties and
responsibilities were or are related to the PGTS Business.
(b) If any provision contained in this Section shall for
any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any
other provisions of this Section, but this Section shall be construed
as if such invalid, illegal or unenforceable provision had never been
contained herein. It is the intention of the parties that if any of
the restrictions or covenants contained herein is held to cover a
geographic area or to be for a length of time which is not permitted
by applicable law, or in any way construed to be too broad or to any
extent invalid, such provision shall not be construed to be null,
void and of no effect, but to the extent such provision would be
valid or enforceable under applicable law, a court of competent
jurisdiction shall construe and interpret or reform this Section to
provide for a covenant having the maximum enforceable geographic area,
time period and other provisions (not greater than those contained
herein) as shall be valid and enforceable under such applicable law.
Seller acknowledges that Buyer would be irreparably harmed by any
breach of this Section and that there would be no adequate remedy at
law or in damages to compensate Buyer for any such breach. Seller
agrees that Buyer shall be entitled to injunctive relief requiring
specific performance by Seller of this Section, and Seller consents
to the entry thereof.
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5.2 TRADEMARKS; TRADENAMES. Perceptronics hereby grants to
Eidetics the perpetual right to use the name "Perceptronics Training Systems",
PTS and all reasonable variations thereof and Perceptronics shall take no action
inconsistent with the grant of this perpetual license.
5.3 BEST EFFORTS; FURTHER ASSURANCES.
(a) Subject to the terms and conditions of this
Agreement, each party will use its best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things
reasonably necessary under applicable laws and regulations to
consummate the transactions contemplated by this Agreement. Seller and
Buyer each agrees to execute and deliver such other documents,
certificates, agreements and other writings and to take such other
actions as may be reasonably necessary in order to consummate or
implement expeditiously the transactions contemplated by this Agreement
and to vest in Buyer good and marketable title to the Purchased Assets.
(b) Seller hereby constitutes and appoints, effective as
of the Closing Date, Buyer and its successors and assigns as the true
and lawful attorney of Seller with full power of substitution in the
name of Buyer or in the name of Seller, but for the benefit of Buyer
(i) to collect for the account of Buyer any items of Purchased Assets
and (ii) to institute and prosecute all proceedings which Buyer may in
its sole discretion deem proper in order to assert or enforce any
right, title or interest in, to or under the Purchased Assets, and to
defend or compromise any and all actions, suits or proceedings in
respect of the Purchased Assets. Buyer shall be entitled to retain for
its account any amounts collected pursuant to the foregoing powers,
including any amounts payable as interest in respect thereof.
(c) This SECTION 5.3 shall survive the Closing for six
years.
5.4 PUBLIC ANNOUNCEMENTS. No notices to third parties or other
publicity, including press releases, concerning the Egyptian Program Contracts
or Buyer's acquisition of the PGTS Assets may be made, if such notice or press
release specifically identifies or generally describes Buyer as the purchaser of
the PGTS Assets, unless jointly agreed by the parties which such approval will
not be unreasonably withheld. The Parties will cooperate in any disclosure
required under any Federal or State securities laws.
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5.5 BULK SALES LAWS. The Buyer shall comply with its obligations
and the Seller shall comply with its obligations, in each case as set forth
under the provisions of any applicable "bulk sales", "bulk transfer" or similar
laws. Buyer shall bear the cost of compliance with the bulk sales, bulk transfer
or similar laws, other than costs incurred by Seller to comply with Seller's
obligations. Buyer hereby agrees to hold Seller and its Affiliates harmless from
any and all damage, loss, liability and expense incurred or suffered by Buyer or
any of its Affiliates arising out of the failure of Buyer (or any party acting
on behalf of Buyer, including without limitation Escrow Agent), to comply in any
manner with Buyer's obligations as set forth in the California Commercial Code,
Section 6101, ET. SEQ., other than a failure arising out of Seller's failure to
comply with its obligations under California Commercial Code Section 6101, ET.
SEQ.
5.6 INTENTIONALLY DELETED.
6. TAX MATTERS
6.1 TAX DEFINITIONS. The following terms, as used herein, have the
following meanings:
"AFTER-TAX AMOUNT" with respect to any payment shall be calculated
by taking into account the hypothetical Tax consequences of such payment,
using the maximum applicable rate or rates applicable to Buyer, or any of its
Affiliates, as appropriate, for the relevant year. For purposes of this
Agreement, the term "After-Tax Amount" is intended to ensure that with
respect to any payment received by Buyer or any of its Affiliates hereunder
in respect of Seller's indemnification obligations, the amount of such
payment shall be supplemented by a further payment to Buyer or any of its
Affiliates so that the sum of the two payments (taking into account the
above-referenced Tax consequences resulting from the receipt of such two
payments) shall be equal to the initial payment received.
"CODE" means the Internal Revenue Code of 1986, as amended.
"POST-CLOSING TAX PERIOD" means any Tax period (or portion thereof)
ending on or after the Closing Date.
"PRE-CLOSING TAX PERIOD" means any Tax period (or portion thereof)
ending on or before the close of business on the date preceding the Closing
Date.
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"TAX" means any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, franchise, capital, paid-up
capital, profits, greenmail, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed by any Governmental Authority
responsible for the imposition of any such tax.
6.2 TAX MATTERS. Seller hereby represents and warrants to Buyer
that:
(a) Seller has timely paid all Taxes, and all interest
and penalties due thereon and payable by it, for the Pre-Closing Tax
Period which will have been required to be paid on or prior to the
Closing Date, the non-payment of which would result in a Lien on any
Purchased Asset or would result in Buyer becoming liable or responsible
therefor.
(b) Seller has established adequate reserves for the
payment of, and will timely pay all Tax liabilities, assessments,
interest and penalties which arise from or with respect to the
Purchased Assets or the operation of the PGTS Business and are incurred
in or attributable to the Pre-Closing Tax Period, the non-payment of
which would result in a Lien on any Purchased Asset or would result in
Buyer becoming liable therefor.
(c) In connection with the foregoing representations, no
state of facts exists or has existed that would constitute grounds for
the assessment against Buyer, whether by reason of transferee liability
or otherwise, of any liability for Tax relating to the income, assets
or operations of Seller, or arising out of the transactions set forth
in this Agreement.
6.3 TAX COOPERATION; ALLOCATION OF TAXES.
(a) Buyer and Seller agree to furnish or cause to be
furnished to each other, upon request, as promptly as practicable,
such information and assistance relating to the Purchased Assets and
the PGTS Business as is reasonably necessary for the filing of all
Tax returns, and making of any election related to Taxes, the
preparation for any audit by any taxing authority, and the prosecution
or defense of any claim, suit or proceeding relating to any Tax return.
Seller and Buyer shall cooperate with each other in the conduct of any
audit or other proceeding related to Taxes involving the PGTS Business
and each shall execute and deliver such powers of attorney and other
documents as are necessary to carry out the intent of this paragraph
(a) of SECTION 6.3.
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(b) All personal property taxes and similar AD VALOREM
obligations (but not real property taxes), if any, levied with
respect to the Purchased Assets for a taxable period which includes
(but does not end on) the Closing Date (collectively, the
"APPORTIONED OBLIGATIONS") shall be apportioned between Seller, on
the one hand, and Buyer, on the other hand, as of the Closing Date
based on the number of days of such taxable period included in the
Pre-Closing Tax Period and the number of days of such taxable period
included in the Post-Closing Tax Period. Seller shall be liable for
the proportionate amount of such taxes that is attributable to the
Pre-Closing Tax Period. Within one year after the Closing, Seller
and Buyer shall present a statement to the other setting forth the
amount of reimbursement to which each is entitled under this SECTION
6.3(b) together with such supporting evidence as is reasonably
necessary to calculate the proration amount. The proration amount
shall be paid by the party owing it to the other within 10 days
after delivery of such statement. Thereafter, Seller shall notify
Buyer upon receipt of any bill for real or personal property taxes
relating to the Purchased Assets, part or all of which are
attributable to the Post-Closing Tax Period, and shall promptly
deliver such bill to Buyer who shall pay the same to the appropriate
taxing authority, provided that if such bill covers the Pre-Closing
Tax Period, Seller shall also remit prior to the due date of
assessment to Buyer payment for the proportionate amount of such
bill that is attributable to the Pre-Closing Tax Period. If either
Seller or Buyer shall thereafter make a payment for which it is
entitled to reimbursement under this SECTION 6.3(b), the other party
shall make such reimbursement promptly but in no event later than 30
days after the presentation of a statement setting forth the amount
of reimbursement to which the presenting party is entitled along
with such supporting evidence as is reasonably necessary to
calculate the amount of reimbursement. Any payment required under
this Section and not made within 10 days of delivery of the
statement shall bear interest at the rate per annum determined, from
time to time, under the provisions of Section 6621(a)(2) of the Code
for each day until paid.
(c) Any transfer, documentary, sales, use or other Taxes
assessed upon or with respect to the transfer of the Purchased Assets
to Buyer and any recording or filing fees with respect thereto shall be
the responsibility of Seller.
7. EMPLOYEE BENEFITS
7.1 EMPLOYEE BENEFITS DEFINITIONS. The following terms, as used
herein, having the following meanings:
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"BENEFIT ARRANGEMENT" means an employment, severance or similar
contract, arrangement or policy and each plan or arrangement providing for
severance, insurance coverage (including any self-insured arrangements),
workers' compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights or other forms
of incentive compensation or post-retirement insurance, compensation or benefits
that (i) is not an Employee Plan and (ii) is maintained or contributed to by
Seller or any of its ERISA Affiliates.
"EMPLOYEE PLAN" means each "employee benefit plan", as such term is
defined in Section 3(3) of ERISA, that (i) is subject to any provision of ERISA
and (ii) is maintained or contributed to by Seller or any of its ERISA
Affiliates, as the case may be.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" of any entity means any other entity that, together
with such entity, would be treated as a single employer under Section 414 of the
Code.
"MULTIEMPLOYER PLAN" means each Employee Plan that is a multiemployer
plan, as defined in Section 3(37) of ERISA.
7.2 ERISA REPRESENTATIONS. Seller hereby represents and warrants
to Buyer that:
(a) Neither Seller nor any ERISA Affiliate thereof
maintains or has ever maintained or contributed to any Multiemployer
Plan or "employee pension benefit plan" as defined in Section 3(2) of
ERISA.
(b) Any liability or obligation under any Benefit
Arrangement or Employee Plan is an Excluded Liability.
(c) No employee of the PGTS Business will become entitled
to any bonus, retirement, severance or similar benefit or enhanced
benefit solely as a result of the transactions contemplated hereby
other than ones for which Seller is responsible.
7.3 EMPLOYEES AND OFFERS OF EMPLOYMENT. The former employees of
Seller who accept and commence employment with Buyer are hereinafter
collectively referred to as the "TRANSFERRED EMPLOYEES". Buyer shall not assume
responsibility for any Transferred Employee until such employee commences
employment with Buyer.
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7.4 SELLER'S BENEFIT ARRANGEMENTS.
(a) Seller shall retain all obligations and liabilities
under Seller's Employee Plans and Benefit Arrangements in respect of
each employee or former employee (including any beneficiary thereof),
including any Transferred Employee.
(b) With respect to the Transferred Employees (including
any beneficiary or dependent thereof), Seller shall retain (i) all
liabilities and obligations arising under any group life, accident,
medical, dental or disability plan or similar arrangement (whether or
not insured) to the extent that such liability or obligation relates to
contributions or premiums accrued (whether or not payable), or to
claims incurred (whether or not reported), on or prior to the Closing
Date, (ii) all liabilities and obligations arising under any worker's
compensation arrangement to the extent such liability or obligation
relates to the period prior to the Closing Date, including liability
for any retroactive workman's compensation premiums attributable to
such period and (iii) all other liabilities and obligations arising
under the Employee Plans and the Benefit Arrangements to the extent any
such liability or obligation relates to the period prior to the Closing
Date, including, without limitation, liabilities and obligations in
respect of accruals through the Closing Date under any bonus plan or
arrangement, and any vacation plans, arrangements and policies.
7.5 NO THIRD PARTY BENEFICIARIES. No provision of this Article
shall create any third party beneficiary or other rights in any employee or
former employee (including any beneficiary or dependent thereof) of Seller or of
any of its Affiliates in respect of continued employment (or resumed employment)
with either Buyer or the PGTS Business or any of their Affiliates and no
provision of this Article VII shall create any such rights in any such Persons
in respect of any benefits that may be provided, directly or indirectly, under
any Employee Plan or Benefit Arrangement or any plan or arrangement that may be
established by Buyer or any of its Affiliates. No provision of this Agreement
shall constitute a limitation on rights to amend, modify or terminate after the
Closing Date any such plans or arrangements of Buyer or any of its Affiliates.
8. SURVIVAL; INDEMNIFICATION
8.1 SURVIVAL. The representations and warranties of the parties
hereto contained in this Agreement or in any certificate or other writing
delivered pursuant hereto or in connection herewith shall survive the Closing
indefinitely; PROVIDED that
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(i) the agreements in Article II shall survive the Closing indefinitely; (ii)
each of the covenants and agreements in Article V shall survive for the
period of time stated in such covenant or agreement; and (iii) the covenants,
agreements, representations and warranties contained in Articles VI and VII
shall survive until expiration of the applicable statutory period of
limitations (giving effect to any waiver, mitigation or extension thereof),
if later. Notwithstanding the preceding sentence, any covenant, agreement,
representation or warranty in respect of which indemnity may be sought under
SECTION 8.2 shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence, if notice in reasonable detail of the
inaccuracy or breach thereof giving rise to such right to indemnity shall
have been given to the party against whom such indemnity may be sought prior
to such time.
8.2 INDEMNIFICATION.
(a) Seller and its Affiliates hereby indemnify Buyer and
its Affiliates against and agrees to hold each of them harmless from
any and all damage, loss, liability and expense (including, without
limitation, reasonable expenses of investigation and reasonable
attorneys' fees and expenses in connection with any action, suit or
proceeding) (collectively, "LOSS") incurred or suffered by Buyer or any
of its Affiliates arising out of:
(i) any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by Seller pursuant to
this Agreement; or
(ii) the failure of Seller to assume full
responsibility for, and pay when due, any Excluded Liability or any
obligation or liability of the PGTS Business relating to the Excluded
Assets;
PROVIDED that Seller shall not be liable under SECTION 8.2(a)(i) unless the
aggregate amount of Loss with respect to all matters referred to in this SECTION
8.2(a)(i) exceeds $5,000 and then only to the extent of such excess; it is
understood that the immediately preceding proviso shall not apply to liabilities
under SECTION 8.2(a)(ii).
(b) Buyer hereby indemnifies Seller and its Affiliates
against and agrees to hold each of them harmless from any and all Loss
incurred or suffered by Seller or any of its Affiliates arising out of
any misrepresentation or breach of warranty, covenant or agreement made
or to be performed by the Buyer pursuant to this Agreement; PROVIDED
that (i) Buyer shall not be liable under
25
<PAGE>
this SECTION 8.2(b) unless the aggregate amount of Loss with respect to
all matters referred to in this SECTION 8.2(b) exceeds $5,000 and then
only to the extent of such excess and (ii) Buyer's maximum liability
under this SECTION 8.2(b) shall not exceed the unpaid portion of the
Purchase Price, if any.
(c) In no event shall the aggregate indemnification
obligation of either party under SECTION 8.2(a) or SECTION 8.2(b)
exceed the amount of the Purchase Price, provided that such limitation
shall not apply to any claim a party may have for actual fraud,
fraudulent misrepresentation or gross negligence of the other party.
8.3 PROCEDURES; NO WAIVER; EXCLUSIVITY.
(a) The party seeking indemnification under SECTION 8.2
(the "INDEMNIFIED PARTY") agrees to give prompt notice to the party
against whom indemnity is sought (the "INDEMNIFYING PARTY"") of the
assertion of any claim, or the commencement of any suit, action or
proceeding in respect of which indemnity may be sought under such
Section; PROVIDED that the failure to give such notice shall not affect
the Indemnified Party's rights hereunder except to the extent the
Indemnifying Party is materially prejudiced by such failure. The
Indemnifying Party may, and at the request of the Indemnified Party
shall, participate in and control the defense of any such third party
suit, action or proceeding at its own expense.
(b) No investigation by Buyer of the PGTS Business or
Purchased Assets shall limit Buyer's rights to indemnification
hereunder.
9. MISCELLANEOUS
9.1 NOTICES. All notices, requests and other communications to
either party hereunder shall be in writing (including telex, telecopy or similar
writing) and shall be given,
if to Buyer, to: EIDETICS CORPORATION
3425 Lomita Boulevard
Torrance, CA 90505
Attention: Mr. Allan Klein
Telecopy: (310) 326-9358
26
<PAGE>
with a copy to: Barton, Klugman & Oetting, LLP
333 South Grand Avenue
Suite 3700
Los Angeles, CA 90071-1599
Attention: Jeffrey B. Harris, Esq.
Telecopy: (213) 625-1832
if to Seller, to: PERCEPTRONICS, INC.
21010 Erwin Street
Woodland Hills, CA 91367
Attention: Mr. Gershon Weltman, President
Telecopy: (818) 348-0540
with a copy to: Brand Farrar & Buxbaum
515 South Flower Street, Suite 3500
Los Angeles, CA 90071-2201
Attn: John M. Iino, Esq.
Telecopy: 213-426-6222
or to such other address as any such party may designate in writing in
accordance with this SECTION 9.1.
9.2 AMENDMENTS; NO WAIVERS.
(a) Any provisions of this Agreement may be amended or
waived prior to the Closing Date if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by Buyer
and Seller, or in the case of a waiver, by the party against whom the
waiver is to be effective.
(b) No failure or delay by either party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative
and not exclusive of any rights or remedies provided by law.
9.3 EXPENSES. Except as otherwise provided herein, all costs
and expenses incurred in connection with this Agreement shall be paid by the
party incurring such cost or expense. No cost or expense of the Seller shall
be an Assumed Liability.
27
<PAGE>
9.4 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
9.5 ARBITRATION. Any controversy or claim arising out of, or
relating to, this Agreement, or the making, performance or interpretation of it,
shall be settled by binding arbitration in the County of Los Angeles, State of
California, under the commercial arbitration rules of the American Arbitration
Association then existing, and judgment on the arbitration award may be entered
in any court having jurisdiction over the subject matter of the controversy.
9.6 GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of California, without regard to
conflict of law principles.
9.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one and the same instrument. The signature page
of any counterpart may be detached therefrom without impairing the legal effect
of the signature(s) thereon provided such signature page is attached to any
other counterpart identical thereto except having additional signature pages
executed by other Parties to this Agreement attached thereto.
9.8 FACSIMILE COPIES. The Parties agree that facsimile signatures
on this Agreement will have the same force and effect as original signatures
until such time as the originally executed documents are delivered to the
Parties.
9.9 ENTIRE AGREEMENT. This Agreement and the Ancillary
Agreements, constitute all of the agreements between the parties with respect
to the subject matter hereof and supersedes all other prior agreements,
understandings and negotiations, both written and oral, between the parties
with respect to the subject matter of this Agreement. No representation,
inducement, promise, understanding, condition or warranty not set forth
herein or in the Ancillary Agreements has been made or relied upon by either
party hereto. Nothing in this Agreement or the Ancillary Agreements, is
intended to confer upon any Person other than the parties hereto any rights
or remedies hereunder.
9.10 SEVERANCE OF PROVISIONS. Wherever possible, each provision of
this Agreement shall be interpreted in such a manner as to be valid under
applicable law, but, if any provision of this Agreement shall be invalid or
prohibited as to a person or circumstance, such invalidity or prohibition shall
be construed as if such invalid or prohibited provision had not been inserted
herein and shall not affect the remainder of such provision or the remaining
provisions of this Agreement as to that person or circumstance.
28
<PAGE>
9.11 RULES OF CONSTRUCTION. This Agreement has been negotiated by
the Parties and is to be interpreted according to its fair meaning as if the
Parties had prepared it together and not strictly for or against any party.
References in this Agreement to "SECTION" or "SECTIONS" refer to a Section or
Sections of this Agreement, unless the context expressly indicates otherwise.
References to "PROVISIONS" of this Agreement refer to the terms, conditions and
promises contained in this Agreement. References in this Agreement to laws and
regulations refer to such laws and regulations as in effect on this date and to
the corresponding provisions, if any, of any successor law or regulation. At
each place in this Agreement where the context so requires, the masculine,
feminine or neuter gender includes the others and the singular or plural number
includes the other. Forms of the verb "INCLUDING" mean "including without
limitation." "OR" is inclusive and includes "and." The introductory headings at
the beginning of Sections of this Agreement are solely for the convenience of
the Parties and do not affect any provision of this Agreement.
9.12 ATTORNEYS FEES, COSTS AND EXPENSES. If any action is brought
by either party against the other party, the prevailing party shall be entitled
to recover from the other party all reasonable attorneys fees, costs and
expenses incurred in connection with the prosecution or defense of such action,
including costs and fees incurred in preparation of the prosecution or defense
of any such action and costs and fees on appeal. For purposes of this Agreement,
the term "attorneys fees" or "attorneys fees and costs" shall mean the
reasonable fees and expenses of counsel to the Parties hereto, which may
include, without limitation, printing, photostating, duplicating and other
expenses, air freight charges, and fees billed for law clerks, paralegals and
other persons not admitted to the bar but performing services under the
supervision of an attorney.
9.13 TIME IS OF THE ESSENCE. Time shall be deemed to be of the
essence where any act is to be performed by any party under the terms of this
Agreement.
9.14 CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
29
<PAGE>
IN WITNESS WHEREOF, the parties hereto here caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
EIDETICS CORPORATION, A CALIFORNIA
CORPORATION
By: /s/ Allan Klein
--------------------------------
Name: Allan Klein
Title: President
By: /s/ Allan Klein
--------------------------------
Name: Allan Klein
Title: Assistant Secretary
PERCEPTRONICS, INC.
By: /s/ Gershon Weltman
--------------------------------
Name: Gershon Weltman
Title: President
By: /s/ Gershon Weltman
--------------------------------
Name: Gershon Weltman
Title: Secretary
30
<PAGE>
SCHEDULE 2.2
EXCLUDED ASSETS
1. 1-Early non-functional MK table top tank gunnery trainer.
<PAGE>
SCHEDULE 2.3
ASSUMED LIABILITIES
1. The Pre-April 1, 2000 (which term shall mean the date the Case
Designation Number for the Egyptian Contract is issued by the
Department of Defense) unpaid rent obligation under that certain
Standard Industrial/Commercial Single-Tenant Lease - Gross dated August
11, 1997 by and between Grinbaum Properties Ltd. ("LESSOR") and
Perceptronics, Inc. ("LESSEE") for the premises commonly known as 9851
Owensmouth Avenue, Chatsworth, California ("LEASE") in the amount of
$13,400.
2. The financial obligations under that certain Administrative and
Management Support Services Agreement entered into on July 9, 1998
between Perceptronics, Inc. and Almona ("ALMONA CONTRACT") with an
agreed-upon present value of $277,500 and remaining required payments
of $293,000.
3. Rent obligations of $6,700 per month beginning April 1, 2000 through
the Closing Date (aggregating $26,800 through July 1, 2000) and all
obligations arising under the Lease after the Closing Date.
<PAGE>
SCHEDULE 2.6
ALLOCATION STATEMENT
<TABLE>
<S> <C>
1. Finished Goods (1) $167,449.35
2. Other Inventory for Resale 80,620.00
3. Intellectual Property, technology, product rights, drawings
documentation 140,000.00
4. Equipment, furniture, fixtures and tooling 10,000.00
5. Pre-inventory costs 100,000.00
----------
$498,069.35
===========
Covenant Not to Compete (Royalty Fee (Section 2.6(b))less $13,400) Contingent
</TABLE>
-----------------
(1) Plus interest from June 30, 2000 on the United States Small
Business Administration Loan/Pacific Bank described in Section 2.8(a)
(ii) and interest from July 3, 2000 on the City National Bank Loan
described in Section 2.8(a)(i).
<PAGE>
SCHEDULE 3.5
CONSENTS
1. Standard Industrial/Commercial Single-Tenant Lease - Gross dated August
11, 1997 by and between Grinbaum Properties Ltd. ("LESSOR") and
Perceptronics, Inc. ("LESSEE") for the premises commonly known as 9851
Owensmouth Avenue, Chatsworth, California ("LEASE").
2. Administrative and Management Support Services Agreement entered into
on July 9, 1998 between Perceptronics, Inc. and Almona ("ALMONA
AGREEMENT")
3. FMF Contract for Supply of Equipment (CONTRACT No. :
CAIRO/P/OV/PERCEPTRONICS/00/13 by and between the Armament Authority
[representing the Ministry of Defense of the Government of the Arab
Republic of Egypt] and Seller or Supplier represented by Thomas J.
Lubazcewski by virtue of the Power of Attorney issued on 15 November
1999 By: Perceptronics, Inc.
("EGYPTIAN CONTRACT").
4. Application for License for Permanent Export of Unclassified Defense
Articles and Related Unclassified Technical Data, to be resubmitted to
the U.S. Department of State. PM/DTC Code # 0501-2151.
<PAGE>
SCHEDULE 3.8
PERSONAL PROPERTY
A. Deposits and Advances from the Egyptian Contract.
B. Manufacturing/Engineering Equipment:
<TABLE>
<S> <C>
----------------------------------------------------------------------------------
1. Pallet Jacks (2)
----------------------------------------------------------------------------------
2. Fork Lift Truck (1)
----------------------------------------------------------------------------------
3. Pallet Racks (1 set of 2)
----------------------------------------------------------------------------------
4. Heavy Duty Racking (1 set of 1, 1 set of 2, 1 set of 4, 1 set of 5)
----------------------------------------------------------------------------------
5. Medium Duty Shelving (3 sets of 5, 1 set of 4, 1 set of 9, 1 set of 6)
----------------------------------------------------------------------------------
6. Ladders (2)
----------------------------------------------------------------------------------
7. Rollstairs (1)
----------------------------------------------------------------------------------
8. Weighing/Counting Scales (2)
----------------------------------------------------------------------------------
9. Taping & Strapping Equipment (1 each)
----------------------------------------------------------------------------------
10. Work Benches & Chairs (19 Benches, 24 Chairs)
----------------------------------------------------------------------------------
11. Hand Tools (14 Small Tool Boxes, 3 Large)
----------------------------------------------------------------------------------
12. Portable Power Tools (4 Drills, 2 Sanders)
----------------------------------------------------------------------------------
13. Pneumatic Tools (6, 1 Nail Gun)
----------------------------------------------------------------------------------
14. Wire Prep Equipment (4)
----------------------------------------------------------------------------------
15. Crimping Tools (40+)
----------------------------------------------------------------------------------
16. Labeling Equipment (2 systems)
----------------------------------------------------------------------------------
17. Assembly Fixtures & Tooling (2-PGTS, 8-LEO, 12 Simnet)
----------------------------------------------------------------------------------
18. Vapor Degreaser (1)
----------------------------------------------------------------------------------
19. Test Equipment (1-Cable Tester, 1-OScope, 3-Meters (DVMs), 2-Power
Supplies)
Schedule 3.8
1
<PAGE>
----------------------------------------------------------------------------------
20. Mechanical Inspection Equipment (5-Calipers, 4-Micrometers, 1-Digital
Thermometer, 26-Gage Sets, 1-Flat Table, 1 Force Gage)
----------------------------------------------------------------------------------
21. Microscopes (2)
----------------------------------------------------------------------------------
22. Magnifiers (4)
----------------------------------------------------------------------------------
23. Material Handling Carts (57)
----------------------------------------------------------------------------------
24. Floor Storage Racks (9)
----------------------------------------------------------------------------------
25. Plastic Storage/Handling Tubs (300+)
----------------------------------------------------------------------------------
26. TOW Tripod & Launch tube (1 set)
----------------------------------------------------------------------------------
27. Office Furniture (9-Desks, 8-Desk Chairs, 13-Tables, 32-Chairs, 24-Book
Cases, 54-4 Draw Files, 16-2 Door Cabinets, 6-3 Draw Files, 8-2 Draw Files)
----------------------------------------------------------------------------------
28. Drawing Files (11)
----------------------------------------------------------------------------------
29. Drawing Plotter (1)
----------------------------------------------------------------------------------
30. Microfiche Reader & Storage (1)
----------------------------------------------------------------------------------
31. Personal Computers & Printers (4-Mac's, 1 Printer)
----------------------------------------------------------------------------------
32. Telephone & Fax Equipment (6-Phones, 1-Fax)
----------------------------------------------------------------------------------
33. Kitchen Equipment (1-Microwave, 2-Coffee Makers)
----------------------------------------------------------------------------------
</TABLE>
C. Additional PGTS Assets
1. Electronics Rack with:
A/C Distribution Box, Power Supply and Old Sound System
2. Green Cart, Low 4 wheeler
3. Old dragon and Stand
4. Dragon Containers, 14 or 15 of them
5. Drill Press, Table Mount
6. Table Top Trainers:
1 - MK728
1 - MK60A3
1 - MK13
1 - MK 60
1 - MK1
Each of the above includes: containers, VDP's and Floppy Drives
Schedule 3.8
2
<PAGE>
7. Component Racks, four (4) of them
8. Stand, 3ft, 2 wheels
9. Stand, 4 wheel, short
10. Acculight, light table 16" x 16"
11. Round Tables (2)
12. LEO Simulator;
Driver's Steeering
Driver's brake
Driver's accelerator
TC's Control
Map Light
Crew Lights (2)
Loader Control, upper
Shell
13. ASAT Trainer
D. Items to be Moved from Perceptronics to the Manufacturing Facility
After Completion of Sale
1. Contract File Cabinet (1) and Documents
2. Export License File Cabinet (1) and Documents
3. Purchasing File Cabinets (5) and Documents
4. DBA Software
5. Lubaczewski's Old Chair
Schedule 3.8
3
<PAGE>
SCHEDULE 3.13
-------------
ASSUMED CONTRACTS
1. Standard Industrial/Commercial Single-Tenant Lease - Gross dated August
11, 1997 by and between Grinbaum Properties Ltd. ("Lessor") and
Perceptronics, Inc. ("Lessee") for the premises commonly known as 9851
Owensmouth Avenue, Chatsworth, California ("Lease").
2. Administrative and Management Support Services Agreement entered into
on July 9, 1998 between Perceptronics, Inc. and Almona ("Almona
Agreement").
3. The Egyptian Contract (as described in Schedule 3.5).
4. All rights to Subcontracts, if any, with Applied Controls Technology
for the purchase of PGTS products.
<PAGE>
SCHEDULE 3.14
LICENSES AND PERMITS
--------------------
1. Application for License for Permanent Export of Unclassified Defense
Articles and Related Unclassified Technical Data, to be resubmitted to
the U.S. Department of State. PM/DTC Code # 0501-2151.
<PAGE>
SCHEDULE 3.19
-------------
PROPRIETARY RIGHTS
Tapes and Disks in Safe in Document Control:
1. Cover Final Report
2. Windows '95 Upgrade
3. Sound Blaster CD
4. Amiga Developer CD '96
5. Microsoft Access 2.0
6. MS Mouse 9.0
7. Autocad 12
8. Autocad 13
9. Windows in Arabic
10. Excel in Arabic
11. Eagle PCB Design
12. Computer system backups of technical data packages for various training
simulator systems
13. PCAS 2000 Leo 2 sound system - This is a computer controlled sound
effects generator built originally for the Leopard 2 Tank simulators
developed by Perceptronics for Wegmann & Co. of Germany for sale to the
German and Swedish armies. The Sound System was developed independently
with Perceptronics funds and also sold as a proprietary commercial
product.
14. PGTS PCB board files - These files contain information pertaining to
the
Schedule 3.19
1
<PAGE>
design and manufacture of the Printed Circuit Boards (PCB) used in
the PGTS units. Circuits and/or boards having specific identified
proprietary rights established with the U.S. Government are (a) the
Cross Pulse Circuit (TOW and DRAGON PGTS); (b) the Tachometer
Interface Analog and Digital Circuits (TOW PGTS); and (c) the
Position Sensing Circuits (DRAGON PGTS).
15. PGTS Source Code - These files contain the fundamental Computer
Software Source Code for the PGTS trainers. Software having specific
identified proprietary rights established with the U.S. Government are:
(a) PGTS Indoor System Operating System Software; (b) TOW Application
Software; and (c) DRAGON Application Software.
16. SOFATS parts list, interconnection diagrams, test program and system
diagrams on Mac format - SOFATS (Special Operating Forces Aircrew
Training System) is a re-configurable (transport-to-helicopter) aircrew
training simulator developed by Perceptronics for the U.S. Air Force
under subcontract to Loral Defense Systems in Akron, Ohio. These files
contain the project and manufacturing data for that simulator system.
17. Dragon, Comm. Truck, FRG Truck board files on 5-1/4" disks - These
files contain design and manufacturing data for the TT150 commercial
truck simulator(s) delivered to various customers and for the prototype
truck simulator(s) developed for the Federal Republic of Germany (FRG)
in collaboration with Wegman & Co., Germany.
18. TP4/5 Autocad drawings on 5-1/4" disks - These files contain design and
manufacturing data for the TP4 and TP5 tabletop tank gunnery trainers
developed by Perceptronics for the Israel Army under direct contract
with the Israel Ministry of Defense, New York.
19. FREDS, ASAT, TOC RADIO, FAADS, LEO 2, PCB boards on 5-1/4" disks -
These files contain design and manufacturing data for the printed
circuit boards of the (a) FREDS helicopter simulator, FAADS Forward
Anti Aircraft Defense System simulator and TOC RADIO simulator
developed under direct contract with the U.S. Army and/or DARPA as part
of the SIMNET program; (b) the ASAT Aircraft Situational Assessment
Trainer developed by Perceptronics as a product and sold to the
University of Central Florida; and (c) the Leo 2 Leopard
Tank simulator(s) developed for the German and Swedish armies under
subcontract to Wegmann & Co., Germany.
Schedule 3.19
2
<PAGE>
EXHIBIT A
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of May 31 , 2000, between
PERCEPTRONICS, INC., a Delaware corporation ("Seller"), and EIDETICS
CORPORATION, a California corporation ("Buyer").
W I T N E S S E T H
WHEREAS, Buyer and Seller have concurrently herewith consummated the
purchase by Buyer of the Purchased Assets pursuant to the terms and conditions
of the Asset Purchase Agreement dated the date hereof by and between Buyer and
Seller, ("Asset Purchase Agreement"; capitalized terms used herein and not
otherwise defined herein shall have the meanings given in the Asset Purchase
Agreement);
AND WHEREAS, pursuant to the Asset Purchase Agreement, Buyer has agreed
to assume certain liabilities and obligations of Seller with respect to the
Purchased Assets and the PGTS Business;
NOW, THEREFORE, in consideration of the sale of the Purchase Assets and
in accordance with the terms of the Asset Purchase Agreement, Buyer and Seller
agree as follows:
A. Seller does hereby sell, transfer, assign and deliver to Buyer
all of the right, title and interest of Seller in, to and under the Purchased
Assets; PROVIDED that no sale, transfer, assignment or delivery shall be made or
any or any material portion of any of the Assumed Contracts or Permits if an
attempted sale, assignment, transfer or delivery, without the consent of a third
party, would constitute a breach or other contravention thereof or in any way
adversely affect the rights of Buyer or Seller thereunder.
B. Buyer does hereby accept all the right, title and interest of
Seller in, to and under all of the Purchased Assets (except as aforesaid) and
Buyer assumes and agrees to pay, perform and discharge promptly and fully when
due all of the Assumed Liabilities.
C. This Agreement shall be construed in accordance with and
governed by the laws of the State of California.
<PAGE>
D. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
E. In the event of any conflict between this Agreement and the
Asset Purchase Agreement, the provisions of the Asset Purchase Agreement shall
prevail. Nothing herein is intended to alter or diminish the rights and
obligations of Buyer or Seller as set forth in the Asset Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PERCEPTRONICS , INC.
By:___________________________
Name: Gershon Weltman
Title: President
By:___________________________
Name: Gershon Weltman
Title: Secretary
EIDETICS CORPORATION
By:___________________________
Name: Allan Klein
Title: President
By:___________________________
Name: Allan Klein
Title: Assistant Secretary
<PAGE>
EXHIBIT B
FORM OF BILL OF SALE AND GENERAL ASSIGNMENT
<PAGE>
BILL OF SALE AND GENERAL ASSIGNMENT
PERCEPTRONICS, INC., a Delaware corporation ("Seller"), for good and
valuable consideration to them paid, receipt and sufficiency of which is hereby
acknowledged, and pursuant to the Asset Purchase Agreement dated the date hereof
by and between EIDETICS CORPORATION ("Buyer") and Seller (the "Asset Purchase
Agreement"; capitalized terms used herein and not otherwise defined shall have
the meanings given in the Asset Purchase Agreement), and notwithstanding that
the following property may be conveyed by separate and specific transfer
documents, by these presents do sell, assign, transfer and deliver unto Buyer,
and his successors and assigns, as of the Closing Date, all of their right,
title and interest in the Purchased Assets;
TO HAVE AND TO HOLD the Purchased Assets unto Buyer and his successors
and assigns, to and for his or their use forever,
This Bill of Sale is being delivered pursuant to the Asset Purchase
Agreement and shall be construed consistently therewith.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be signed on
the Closing Date.
PERCEPTRONICS, INC.
By: _____________________________
Name: Gershon Weltman
Title: President
By: ________________________________
Name: Gershon Weltman
Title: Secretary
<PAGE>
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
On this ___ day of June, 2000, before me before me,
_______________________, a Notary Public in and for the said State and County,
personally appeared __________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signatures
on the instrument the persons, or the entity upon behalf of which the persons
acted, executed the instrument.
WITNESS my hand and official seal.
--------------------------------
Notary Public
<PAGE>
EXHIBIT C
INTENTIONALLY DELETED
<PAGE>
EXHIBIT D
FORM OF SECRETARY'S CERTIFICATE (BUYER)
<PAGE>
EIDETICS CORPORATION
Secretary's Certificate
I, Allan Klein, Assistant Secretary of EIDETICS CORPORATION, a
California corporation ("Company"), pursuant to Section 2.7(l) of the Asset
Purchase Agreement dated as of May 31, 2000, between PERCEPTRONICS, INC., a
Delaware corporation and the Company ("Agreement"), do hereby certify as
follows:
1. Attached hereto as EXHIBIT A is a true and correct copy of the
Written Consent of the Directors of the Company authorizing the execution,
delivery and performance of the Agreement and each exhibit thereto and the
consummation of the transactions contemplated in the Agreement.
2. Each person who, as an officer, a director or an employee of
the Company or attorney-in-fact of such officer, director or employee, signed
the Agreement and Ancillary Agreements was, at the respective time of such
signing and delivery of the Agreement and Ancillary Agreements, and is now, duly
elected or appointed, qualified and acting as such officer, director, employee
or attorney-in-fact, and the signatures of such persons appearing on such
documents are their genuine signatures, the persons named below were, on May 1,
2000 and have been at all times since that date to and including the date
hereof, (i) either the duly elected, qualified and acting officer of the
Company, holding the offices set forth opposite his or her name, or (ii) an
employee of the Company, holding the positions set forth opposite his or her
name, and the signature appearing opposite his or her name below is his or her
genuine signature:
<TABLE>
<CAPTION>
Name Office/Position Signature
---- --------------- ---------
<S> <C> <C>
Allan Klein President/Chief Financial
-------------
Officer/Assistant Secretary
</TABLE>
All capitalized terms used and not defined in this Certificate shall
have the meanings assigned to them in the Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate and
affixed the seal of the Company this ____ day of June, 2000.
------------------------------
Allan Klein
Assistant Secretary
1
<PAGE>
As President of the Company, the undersigned hereby certifies that
Allan Klein is the Assistant Secretary of the Company and his genuine signature
appears above his name printed above.
------------------------------
Allan Klein
President
2
<PAGE>
EXHIBIT A
WRITTEN CONSENT OF THE DIRECTORS OF
EIDETICS CORPORATION, a CALIFORNIA CORPORATION
IN LIEU OF MEETING
Pursuant to Section 307(b) of the California Corporations Code, the
undersigned, being the members of the Board of Directors of Eidetics Corporation
do hereby dispense with the formality of a meeting and by written consent adopt
the following resolutions:
WHEREAS, there has been presented to this Board of Directors an Asset
Purchase Agreement and ancillary agreements ("Agreement") between Perceptronics,
Inc., a Delaware corporation, ("Seller") and Eidetics Corporation, a California
corporation ("Corporation"); and
WHEREAS, it is deemed to be in the best interests of the Corporation to
approve and to enter into the Agreement;
NOW, THEREFORE, BE IT RESOLVED: That the terms and conditions
of the Agreement are hereby approved, and the officers of the
Corporation are each hereby authorized and directed by and on behalf of
the Corporation to execute the Agreement, in the form presented to this
Board, but with such changes to the Agreement as the officers executing
them shall deem appropriate, as conclusively evidenced by their
execution of the Agreement; and that Allan Klein, as the President,
Chief Financial Officer and Assistant Secretary of the Corporation, and
the other officers of the Corporation are each hereby authorized and
directed to execute and deliver such documents, including Escrow
Instructions, and to take such actions as they may deem necessary or
advisable to effect the purposes of such Agreement.
This Written Consent may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which when taken together
shall constitute one and the same instrument. The signature page of any
counterpart may be detached therefrom without impairing the legal effect of the
signature(s) thereon provided such signature page is attached to any other
counterpart identical thereto except having additional signature pages executed
by the other directors.
3
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Written Consent
of Directors as of June ___, 2000.
------------------------------
------------------------------, Director
[Printed Name]
------------------------------
------------------------------, Director
[Printed Name]
------------------------------
------------------------------, Director
[Printed Name]
------------------------------
------------------------------, Director
[Printed Name]
------------------------------
------------------------------, Director
[Printed Name]
4
<PAGE>
EXHIBIT E
FORM OF SELLER'S COUNSEL OPINION
<PAGE>
EXHIBIT E
July _____, 2000
Eidetics Corporation
3425 Lomita Boulevard
Torrance, California 90505
Re: PURCHASE OF THE ASSETS OF THE PRECISION GUNNERY TRAINING
SYSTEMS BUSINESS OF PERCEPTRONICS, INC.
Ladies and Gentlemen:
We have acted as counsel for Perceptronics, Inc., a Delaware
corporation ("Seller"), in connection with the above-captioned transaction and
are providing this opinion pursuant to Section 2.7(j) of the Agreement (as
defined below).
In rendering the opinions set forth herein, we have examined that
certain Agreement of Purchase for the Precision Gunnery Training Systems Assets,
dated as of May 31, 2000 (the "Agreement"), by and between Eidetics Corporation,
a California corporation ("Buyer"), and Seller. Unless otherwise defined herein,
the definitions of capitalized terms used in this opinion shall be the same as
those set forth in the Agreement.
We have examined and relied upon such matters of law, such other
documents, certificates and statements of public officials and such certificates
and representations of officers as we deem relevant to rendering the opinions we
express herein. In all of our examinations, we have assumed the accuracy of all
information furnished to us, the genuineness of all documents submitted to us as
original or certified documents, the conformity to the original or certified
documents of all copies submitted to us as conformed or photostatic copies and
the genuineness of all signatures (other than Seller's) on all documents. In
rendering the opinions, we have assumed and are expressly relying upon the
representations and warranties of all parties to the Agreement other than Seller
and we have assumed and are expressly relying upon the representations and
warranties of Seller in the Agreement as to factual matters.
On the basis of the foregoing and in reliance thereon, and subject to
the assumptions, qualifications, limitations and exceptions set forth herein, we
are of the opinion that:
<PAGE>
Eidetics Corporation EXHIBIT E
July _____, 2000
Page 2 of 4
1. Seller is a corporation validly existing and in good standing
under the laws of the State of Delaware, and has all requisite corporate powers
necessary to carry on its business as now conducted.
2. Seller has the corporate power and authority to execute and
deliver the Agreement, and to perform the transactions contemplated thereby. The
execution and delivery of the Agreement and the performance of the transactions
contemplated thereby have been duly authorized by Seller and its stockholders.
3. The Agreement constitutes the legal, valid and binding
obligation of Seller.
4. Except as set forth in the Agreement, the execution and
delivery by Seller of the Agreement and the performance of the transactions
contemplated thereby do not require any action by or in respect of any
Governmental Authority prior to the commencement of such transactions that if
not taken or made would have a Material Adverse Effect on the Purchased Assets
as delivered at Closing.
5. Except as set forth in the Agreement, the execution and
delivery by Seller of the Agreement and the performance of the transactions
contemplated thereby do not, and will not, (a) contravene or conflict with the
Certificate of Incorporation or By-Laws of Seller nor (b) contravene or conflict
with or constitute a violation of any provision of law having general
applicability to the type of business conducted by Seller.
6. To our knowledge, there is no action, suit, investigation or
proceeding pending or threatened against or affecting the PGTS Business or any
Purchased Asset before any Governmental Authority or arbitrator.
During the course of our representation of Seller in connection with
the transactions contemplated by the Agreement, we participated in
conferences with representatives of Seller, at which the contents of the
Agreement and related matters were discussed. Except as specifically noted
below, we are not passing upon and do not assume any responsibility for the
accuracy, completeness or fairness of the representations, warranties or
covenants of Seller contained in the Agreement, and we make no
representation, express or implied, that we have independently verified the
accuracy, completeness or fairness of such statements. However, based upon
and subject to the foregoing, to our knowledge, we have not become aware of
any facts that indicate that any of the representations and warranties of
Seller in the Agreement are untrue or inaccurate in any material respect.
The foregoing opinions are subject to the following assumptions,
exceptions, qualifications and limitations:
<PAGE>
Eidetics Corporation EXHIBIT E
July _____, 2000
Page of 3 of 4
A. We are not admitted to practice in the State of Delaware;
however, we are generally familiar with the Delaware General Corporation Law as
presently in effect (the "Delaware Law") and have made such inquiries as we
consider necessary to render the opinions set forth herein relating to the
Delaware Law. Except with respect to the Delaware Law and the present judicial
interpretations thereof to the limited extent set forth above, this opinion is
limited to the present laws of the State of California, the present federal laws
of the United States and the present judicial interpretations thereof and to the
facts as they presently exist. We assume no obligation to revise or supplement
this opinion in the event of changes in such laws or the judicial
interpretations thereof or in the event of changes in such facts. We render no
opinions with respect to state securities or Blue Sky laws.
B. Our opinions as to the binding nature and enforceability of
the Agreement are subject to (i) the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws and court decisions
affecting the enforcement of the rights of creditors generally, including,
without limitation, the effect of statutory or other laws regarding fraudulent
conveyances and preferential transfers and (ii) general principles of equity,
regardless of whether a matter is considered in a proceeding in equity or at
law, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing. Without limitation, we express no opinion (i) as to
the ability to obtain specific performance, injunctive relief or other equitable
relief as a remedy for noncompliance with the Agreement. We assume that the
Agreement is enforceable against all parties other than Seller. We express no
opinion as to the enforceability of any provision of the Agreement to the extent
such provisions purport to bind persons not party to the Agreement.
C. We express no opinion as to legality, validity, binding
nature or enforceability of (i) any provision of the Agreement insofar as it
provides for non-competition or non-solicitation obligations, (ii) any
obligations in the Agreement to indemnify another party, to the extent such
provision may be held unenforceable as contrary to public policy, (iii) any
provision of the Agreement insofar as it provides for the payment or
reimbursement of costs and expenses or indemnification for claims, losses or
liability in excess of a reasonable amount determined by any court or other
tribunal, (iv) any provision of the Agreement relating to indemnification or
contribution to the extent such indemnification or contribution relates to
any claims made under Federal securities laws or state securities or Blue Sky
laws or is against public policy, (v) any provision of the Agreement relating
to conflict of laws or choice of laws, (vi) any provision in the Agreement to
the effect that rights or remedies are not exclusive, that every right or
remedy is cumulative and may be exercised in addition to any other right or
remedy, that the election of some particular remedy does not preclude
recourse to one or more others or that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such right
or remedy, (vii) any waiver of unknown future
<PAGE>
Eidetics Corporation EXHIBIT E
July _____, 2000
Page of 4 of 4
rights or waiver of rights existing, or duties owed, that are broadly or
vaguely stated or that do not describe the right or duty purportedly waived
with reasonable specificity, (viii) any waiver or consent (whether or not
characterized as a waiver or consent in the Agreement) relating to the rights
of Seller or duties owing to it existing as a matter of law, to the extent
such waiver or consent is found to be against public policy or is ineffective
pursuant to Delaware statutes, the law of the United States of America or
other applicable laws or judicial decisions or (ix) any provision providing
for arbitration of disputes.
D. We express no opinion as to, on or with respect to any party
other than Seller.
E. We express no opinion with respect to the treatment of any of
the transactions contemplated by the Agreement for federal and state income tax
purposes.
F. Whenever an opinion herein is stated to be "to our knowledge"
or of which we are "aware", such statement means that no lawyer in our firm who
participated in our representation of Seller in connection with the transactions
contemplated by the Agreement (namely Margaret G. Graf, John M. Iino and Brian
J. Kim) is currently and actually aware of the existence or absence of facts
contrary to the opinion so stated. We have undertaken no independent
investigation to determine the existence or absence of such facts, and no
inference as to our knowledge of the existence or absence of such facts should
be drawn from our representation of Seller.
We advise you that Brand Farrar & Buxbaum LLP owns 14,285 shares of
Common Stock of Seller.
This opinion is rendered as of the date above and has been delivered
solely for your benefit in connection with the transactions contemplated by
the Agreement. Unless expressly provided otherwise, it may not be relied upon
by any other person or entity, or by you for any other purpose, and may not
be copied or quoted in whole or in part without our prior express written
permission.
Yours very truly,
Brand Farrar & Buxbaum LLP
<PAGE>
EXHIBIT F
FORM OF ESCROW AGREEMENT
<PAGE>
[D & G ESCROW CORPORATION LETTERHEAD]
May 26, 2000
ESCROW INSTRUCTIONS ESCROW NO: 2-62374-2
OFFICER: Doreen Freeman
D & G ESCROW CORPORATION IS LICENSED BY THE DEPARTMENT OF CORPORATION, STATE OF
CALIFORNIA, LICENSE NO. 963-0081
FOR THE CONSIDERATION STATED, the Transferor (Seller), PERCEPTRONICS, INC.,
A DELAWARE CORPORATION, whose mailing address is 21010 ERWIN STREET, WOODLAND
HILLS, CA 91367, and whose Federal Tax I.D. Number is 95-2577731, will hand
you, or cause to be handed to you a release from the California Employment
Development Department and a Bill of Sale for the assets set forth in that
Agreement Of Purchase For The Precision Gunnery Training System Assets dated
May 31, 2000 (the "Agreement").
The Transferee (Buyer), EIDETICS CORPORATION, A CALIFORNIA CORPORATION, whose
mailing address is 3425 LOMITA BLVD., TORRANCE, CA 90505, and whose Federal Tax
I.D. Number is 33-0685527, will hand you a Notice of Bulk Sale, and will hand
you funds and/or documents as set forth below:
<TABLE>
<CAPTION>
CONSIDERATION CONSIDERATION ALLOCATED AS FOLLOWS
--------------------------------------------------- --------------------------------------------------
<S> <C>
Cash thru Esc. City Natl. Bk $137,278.01 Intellectual Property $140,000.00
Assumption Almona Contract $277,500.00 Fixtures/Equipment/Tooling $10,000.00
--------------------------------------------------- --------------------------------------------------
Lease Assumption $40,200.00 Pre Inventory Costs $100,000.00
--------------------------------------------------- --------------------------------------------------
Cash thru Esc. SBA Loan $43,091.34 Finished Goods $167,449.35
--------------------------------------------------- --------------------------------------------------
Other Inventory for Resale $80,620.00
--------------------------------------------------
TOTAL CONSIDERATION $498,069.35 TOTAL ALLOCATION $498,069.35
--------------------------------------------------- --------------------------------------------------
</TABLE>
ASSIGNMENT OF LEASE:
Buyer and Seller herein agree that they will obtain a valid assignment of the
existing lease directly from the landlord outside of escrow, unless escrow
holder is advised to the contrary. Buyer does acknowledge and agree he has
examined the existing lease, approves of same, accepts all of the terms and
conditions therein and will execute an assumption of said lease. Escrow Holder
is not to be concerned with the form or content of said lease and/or
assignments, but only with the receipt of a copy of said Lease and/or
assignments for escrow holder to retain, evidencing buyers right to entry of
said premises.
OFFSET STATEMENT:
Escrow Holder is authorized and instructed to obtain an Offset Statement from
the current landlord, and to charge Seller/Transferor, for any amounts which may
be owed and to remit same to Landlord at close of escrow.
SEARCHES:
You are to order financing statement searches (UCC-3) from the Secretary of
State AND County Searches for tax liens, judgments and financing statement
filings, affecting Seller and business and any other entity which has or may
have had an interest in the business, fixtures and/or equipment to pay for the
said searches from funds on deposit in escrow.
Escrow Holder is further instructed to obtain releases of any such liens and/or
encumbrances as may be shown on said search reports and to pay same from
Seller's proceeds at close of escrow.
PRORATIONS:
Prorate as of the date of possession: Personal Property Taxes, Items per
Lessor's offset statement, and Insurance at Buyers option per policy (ies) or
resume deposited into escrow OR BUYER MAY OBTAIN NEW INSURANCE OUTSIDE OF ESCROW
AND ESCROW HOLDER'S RECEIPT OF THE BALANCE OF BUYER'S DOWN PAYMENT AND CLOSING
COSTS SHALL EVIDENCE FULL SATISFACTION OF SAME.
CLOSE OF ESCROW:
The close of escrow shall be on or before July 28, 2000, when all Bulk Sales
provisions have been met.
EIDETICS CORPORATION, A CALIFORNIA CORPORATION
------------------------------------------------
BY: ALLAN KLEIN, PRESIDENT & ASSISTANT SECRETARY
PERCEPTRONICS, INC., A DELAWARE CORPORATION
------------------------------------------------
BY: GERSHON WELTMAN, PRESIDENT & SECRETARY
<PAGE>
Date: May 26, 2000 Escrow Number: 2-62374-2 Page 2 of 3
POSSESSION:
Possession shall be granted to and taken by Buyer as of close of escrow.
INVENTORY:
Inventory of stock in trade, if any, shall be taken at time of possession based
on current wholesale prices. Usual costs of escrow (including inventory costs
if billed through escrow) shall be paid one-half by Buyer and one-half by
Seller.
BUSINESS NAME:
The name PRECISION GUNNERY TRAINING SYSTEMS is included in the purchase price.
FICTITIOUS BUSINESS NAME STATEMENT:
Escrow holder is authorized and instructed to file and publish a Fictitious
Business Name Statement in the name of PRECISION GUNNERY TRAINING SYSTEMS for
the benefit of and at the expense of the buyers herein.
RELEASES:
Prior to final disbursement of the net proceeds to the Seller named herein, the
Seller will submit a release into escrow from the California Employment
Development Department.
CORPORATE MATTERS:
Buyer and Seller herein will submit to escrow written consent authorizing the
purchase and sale of certain assets of the Corporation. Buyer and Seller will
indicate in the minutes of the meeting who is authorized to sign for the
Corporation and execute all documents in this escrow.
PURCHASE AGREEMENT:
ALL PARTIES HEREIN ACKNOWLEDGE AND AGREE THAT THE "AGREEMENT" AND ANY AMENDMENTS
THERETO ARE HEREBY INCORPORATED INTO THIS ESCROW INSTRUCTION AND MADE A PART
HEREOF. D & G ESCROW CORPORATION IS ONLY CONCERNED WITH THOSE ITEMS REQUIRED AS
ESCROW HOLDER IN THE PROCESSING OF THIS ESCROW. SHOULD THERE BE A CONFLICT
BETWEEN THE "AGREEMENT" AND THE ESCROW INSTRUCTIONS IN CARRYING OUT THE DUTIES
AS ESCROW AGENT, AN AMENDMENT WILL BE DRAWN FROM CLARIFICATION OF SAME.
BILL OF SALE:
Buyer shall prepare a Bill of Sale and Seller will execute the Bill of Sale.
Said Bill of Sale will be delivered to Buyer herein unrecorded at the close of
escrow.
CONTRACTS AND LEASES:
The Seller will deposit all location leases, contracts and billings into escrow
that are being assumed by the Buyer to enable him to make payments, etc. timely.
CONTINUING BUSINESS OPERATIONS:
The Seller will conduct the business as he is presently conducting same until
the close of escrow. Except as contemplated by the "Agreement", Seller shall
pay, or cause to be paid, all debts owed by him as they fall due during the term
of this escrow and maintain the goodwill of all those with whom Seller had
business relations. Seller hereby holds Buyer, D & G ESCROW CORPORATION and
Broker, if any, free and harmless, legally and equitably, from any and all
past, present and/or future liabilities and/or responsility of any claim,
demand, action or suits that may arise, including creditors claims not
disclosed in this escrow and further agrees to defend Buyer and D & G ESCROW
CORPORATION and Broker, if any, from any such claim, demand, action or suits
that may arise including but not limited to attorney fees and court costs.
CHANGE OF RECORDS WITH UTILITY COMPANIES:
The change of records on utilities and phone service will be taken care of
between the parties hereto outside of escrow and you as Escrow Holder are not to
be concerned with same.
DOCUMENTS:
The documents prepared in this escrow (assignments, notes, etc.) are not valid
until the actual close of escrow and will be marked void should this escrow not
be consummated.
BROKERS: ETC.
Each party agrees in this escrow to hold the other party harmless from claim
for Brokers Commissions, Finders Fees, Legal or Accounting Costs which either
party has incurred in this escrow.
EIDETICS CORPORATION, A CALIFORNIA CORPORATION
------------------------------------------------
BY: ALLAN KLEIN, PRESIDENT & ASSISTANT SECRETARY
PERCEPTRONICS, INC., A DELAWARE CORPORATION
------------------------------------------------
BY: GERSHON WELTMAN, PRESIDENT & SECRETARY
<PAGE>
Date: May 26, 2000 Escrow Number: 2-62374-2 Page 3 of 3
SELLER'S OTHER BUSINESS:
Seller states that he has not owned any other businesses within the last three
years, EXCEPT: NONE.
AS A MATTER OF RECORD ONLY, WITH WHICH D & G ESCROW CORPORATION IS NOT TO BE
RESPONSIBLE, LIABLE NOR FURTHER CONCERNED, AND TRANSFEROR (SELLER) AND
TRANSFEREE (BUYER) UNDERSTAND AND ARE AWARE THAT D & G ESCROW CORPORATION
WILL NOT FOLLOW UP ON, INVESTIGATE, OR VERIFY ANY OF THE FOLLOWING ITEMS
LISTED UNDER AS A MATTER OF RECORD ONLY:
ARBITRATION OF DISPUTES:
Any dispute or claim in law or equity arising out of this contract or any
resulting transaction shall be decided by neutral, binding arbitration in
accordance with the rules of the American Arbitration Association, and not by
court action, except as provided by California law for judicial review of
arbitration proceedings. Judgment upon the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof. The parties shall have
the right to discover in accordance with Code of Civil Procedure Section
1283.05. The following matters are excluded from arbitration hereunder: (a) a
judicial or non-judicial foreclosure or other action or proceeding to enforce a
deed of trust, mortgage, or real property sales contract as defined in Civil
Code Section 2985, (b) an unlawful detainer action, (c) the filing or
enforcement of a mechanic's lien, (d) any matter which is within the
jurisdiction of a probate court, or (e) an action for bodily injury or wrongful
death, or for latent or patent defects to which Code of Civil Procedure Section
337.1 or 337.15 applies. The filing of a judicial action to enable the
recording of a notice of pending action, for order of attachment, receivership,
injunction, or other provisional remedies, shall not constitute a waiver of the
rights to arbitrate under this provision.
Any dispute or claim by or against broker(s) and/or associate licensee(s)
participating in this transaction shall be submitted to arbitration consistent
with the provision above only if the broker(s) and/or associate licensee(s)
making the claim or against whom the claim is made shall have agreed to submit
it to arbitration consistent with this provision.
"NOTICE: BY INITIALLING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE 'ARBITRATION OF DISPUTES' PROVISION
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING
UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR
JURY TRIAL. BY INITIALLING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL
RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN
THE 'ARBITRATION OF DISPUTES' PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION
AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THIS CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY."
"WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THE 'ARBITRATION OF DISPUTES' PROVISION
TO NEUTRAL ARBITRATION."
BUYERS'S INITIALS: SELLER'S INITIALS:
------ ------ ------ ------
THE GENERAL PROVISIONS ATTACHED HERETO ARE BY REFERENCE THEREIN INCORPORATED
HEREIN AND MADE A PART HEREOF AND HAVE BEEN READ AND ARE HEREBY APPROVED BY THE
UNDERSIGNED.
EIDETICS CORPORATION, A CALIFORNIA CORPORATION
------------------------------------------------
BY: ALLAN KLEIN, PRESIDENT & ASSISTANT SECRETARY
PERCEPTRONICS, INC., A DELAWARE CORPORATION
------------------------------------------------
BY: GERSHON WELTMAN, PRESIDENT & SECRETARY
<PAGE>
[D & G ESCROW CORPORATION LETTERHEAD]
May 26, 2000
Doreen Freeman, Escrow Number: 2-62374-2
Escrow Officer
PROPERTY ADDRESS:
9851 OWENSMOUTH AVENUE
CHATSWORTH, CA 91311
BULK GENERAL PROVISIONS
ESCROW COSTS AND FEES:
Each Buyer and Seller herein shall be jointly and severally liable to Escrow
Holder for all escrow fees and costs. However, Buyer and Seller agree that as
between themselves, escrow fees and escrow costs shall be borne equally.
Buyer shall be totally responsible for the processing and publishing of the
Notice to Creditors of Bulk Transfer and for the UCC and County Searches.
Escrow fees and costs shall be paid first from any funds deposited in escrow
and then by additional deposits from the parties to escrow as necessary.
Escrow Holder is authorized to pay all costs of the escrow out of the funds
initially deposited in escrow. All costs incurred by escrow in the processing
of this escrow such as recording fees, publishing fees, search fees and
filing fees are to be pre-released upon Escrow Holder's receipt of a billing
for same. In the event escrow has been closed and escrow holder has been
instructed to hold escrow funds for any purpose, there will be a hold open
charge for processing and accounting work at the rate of $50.00 per month or
any portion thereof. Failure of Seller or Buyer to complete this escrow shall
and the parties to this escrow transaction agree to pay for all costs and
charges incurred, and usual escrow cancellation fee. The parties herein are
aware that in the event of cancellation of this escrow transaction escrow
holder must receive mutually executed cancellation instructions from all
parties.
YOU ARE AUTHORIZED AND INSTRUCTED TO:
At least twelve (12) business days prior to the scheduled sale date shown
herein:
Prepare a Notice to Creditors of Bulk Sale, to be signed by Transferee, and
record said notice in the office of the County Recorder of the County in which
the business is located or the County in which the chief executive office of
Transferor is located;
Publish a copy of said Notice in a newspaper of general circulation published
in the Judicial District of said County, and, IF DIFFERENT, in the Judicial
District of the County in which is located the chief executive office of
Transferor or, if not in California, the principal business office in
California; Mail a copy of said Notice by certified mail to the County Tax
Collector of said County.
Not more than ten (10) days after receipt of a creditor's claim acknowledge
receipt of said claim to the creditor.
Hold all documents and cash until at 10:00 a.m., the noticed sale date, at which
time or whenever after which time you are in a position so to do, you shall:
Deliver all documents and funds in accordance with these instructions;
Mail the Financing Statement, if any, to the Secretary of State, Sacramento,
California, for filing;
IN THE EVENT THAT THE CLAIMS SUBMITTED INTO ESCROW EXCEED THE FUNDS DEPOSITED
INTO ESCROW BY BUYER, ESCROW HOLDER MAY RESIGN AS ESCROW HOLDER AND TERMINATE
THE ESCROW, OR REQUIRE SELLER TO IMMEDIATELY
EIDETICS CORPORATION, A CALIFORNIA CORPORATION
-------------------------------------------------
BY: ALLAN KLEIN, PRESIDENT & ASSISTANT SECRETARY
PERCEPTRONICS, INC., A DELAWARE CORPORATION
-------------------------------------------------
BY: GERSHON WELTMAN, PRESIDENT & SECRETARY
<PAGE>
[D & G ESCROW CORPORATION LETTERHEAD]
May 26, 2000
Doreen Freeman, Escrow Number: 2-62374-2
Escrow Officer
ADVANCE ADDITIONAL FUNDS IN AMOUNT ACCEPTABLE TO ESCROW HOLDER. IN THE EVENT
THAT THE ESCROW HOLDER ELECTS TO TERMINATE THE ESCROW AS THE RESULT OF A
DEFICIT, ESCROW HOLDER SHALL RETURN ALL DEPOSITS TO BUYER, LESS ESCROW FEES,
COSTS AND THOSE FUNDS PRE-RELEASED TO SELLER IN ACCORDANCE WITH THESE
INSTRUCTIONS.
Pay all creditor's claims actually received by you in writing before the close
of business on the day specified in the notice as the last day for filing claims
and which have been approved by any one of the Transferors. Distribute the
consideration in the following order of priorities:
First, all obligations owing to the United States, to the extent given priority
by federal law.
Second, secured claims, including statutory and judicial liens, to the extent of
the consideration fairly attributable to the value of the properties securing
the claims and in accordance with the priorities provided by law. A secured
creditor shall participate in the distribution pursuant to this subdivision only
if a release of lien is deposited by the secured creditor conditioned only upon
receiving an amount equal to the distribution.
Third, escrow and professional charges and broker's fees attributable directly
to the sale.
Fourth, Wage claims given priority by Section 1205 of the Code of Civil
Procedure.
Fifth, all other tax claims.
Sixth, all other unsecured claims.
In the event it should appear that there are not sufficient funds accruing to
the account of the Seller herein for settlement in full of all approved claims
as might be filed in this escrow, and/or required releases have not been
deposited into escrow, any note and corresponding security device of such nature
as called for in these escrow instructions shall be retained by Escrow Holder.
Buyer herein will pay all payments as they fall due on said Note, paying same
direct to Escrow Holder upon notification from Escrow Holder to do so.
At such time as sufficient funds have accrued by means of note payment
collections, Escrow Holder shall make prorata distributions to all creditors
whose claims could not be paid in full at the date that escrow was scheduled to
be completed or until the note due the seller has been paid in full, whichever
occurs earlier.
The number of prorata distributions made, and the dates of such distributions
shall be at the sole discretion of the Escrow Holder, but same shall be made
from time to time, and, at such times as the Escrow Holder deems reasonable, to
effectively retire the aggregated indebtedness.
Escrow Holder will release the Note and corresponding Security device, if any
exists, to the Seller immediately upon such time as all approved claims have
been paid in full, and Escrow Holder will notify buyer, in writing, the date of
such payment in full, further directing the BUyer to make all future payments
directly to Secured Party.
EIDETICS CORPORATION, A CALIFORNIA CORPORATION
------------------------------------------------
BY: ALLAN KLEIN, PRESIDENT & ASSISTANT SECRETARY
PERCEPTRONICS, INC., A DELAWARE CORPORATION
------------------------------------------------
BY: GERSHON WELTMAN, PRESIDENT & SECRETARY
<PAGE>
[D & G ESCROW CORPORATION LETTERHEAD]
May 26, 2000
Doreen Freeman, Escrow Number: 2-62374-2
Escrow Officer
All collection and prorate distributions costs shall be borne by the Seller
exclusively, and such fees and charges shall be deducted from payments received
from the buyer, being first deducted before such prorata distribution.
Should provision of this supplement be inconsistent with provision of the Escrow
Instructions, to which this addendum is added and made a part thereof, the
provisions of this supplement shall control.
In the event funds are insufficient to pay all claims escrow holder shall
withhold one and one-half times the amount of any claim not so approved. On or
before two (2) business days after the distribution, mail a written notice to
each claimant whose claim is disapproved stating that the amount withheld will
be paid to the Transferor unless attached within twenty-five (25) days from the
mailing of the Notice.
If funds in your hands are insufficient to comply with the preceding
instructions, postpone the close of escrow for not less than twenty-five (25)
days nor more than thirty (30) days from the date of the mailing of a written
notice to all claimants. The written notice shall be mailed within five (5)
business days after the time the escrow would otherwise have closed and shall
set forth the total consideration deposited or agreed to be deposited in the
escrow, the name of each claimant who has timely filed a claim and the amount of
the claim, the amount proposed to be paid to or withheld for each claimant in
accordance with Section 6106.1(2) of the Commercial Code and the date on or
before which distribution will be made to the claimants, which shall be not more
than five (5) days after the new date specified for close of escrow. If no
written objection to the proposed distribution is received prior to the new date
specified for close of escrow, pay the approved claims in accordance with the
proposed distribution set forth in the notice and withhold the amount of the
disapproved claims. On or before two (2) business days after the distribution,
mail a written notice to each claimant unless attached within twenty-five (25)
days from the mailing of the notice.
If a written objection to the proposed distribution is received prior to the new
date specified for the close of escrow, or if conflicting demands are otherwise
made upon you by claimants, or if for any reason you are in doubt as to the
proper distribution of funds, and if all such matters are not resolved to your
satisfaction within forty-five (45) days after close of escrow, institute an
action in interpleader pursuant to Section 386(b) of the Code of Civil Procedure
and deposit the balance of the consideration with the Clerk of the Court.
Make prorations based on a 30-day month.
"Close of Escrow" shall mean the date specified in the Notice to Creditors or as
soon thereafter as all of the conditions have complied with, unless written
demand shall have been made upon Escrow not to complete it.
Make disbursements by Escrow check. If business being sold is held jointly with
others, any cash disbursed from this escrow will be disbursed in one check
unless instructed in writing to the contrary by all parties conveying said
business.
Mail fire and other insurance policies to the holder of the secured liens, if
any, in the order of their priorities.
EIDETICS CORPORATION, A CALIFORNIA CORPORATION
-----------------------------------------------
BY: ALLAN KLEIN, PRESIDENT & ASSISTANT SECRETARY
PERCEPTRONICS, INC., A DELAWARE CORPORATION
-----------------------------------------------
BY: GERSHON WELTMAN, PRESIDENT & SECRETARY
<PAGE>
[D & G ESCROW CORPORATION LETTERHEAD]
May 26, 2000
Doreen Freeman, Escrow Number: 2-62374-2
Escrow Officer
Mail documents to which the Buyer and Seller are entitled and checks, if any,
to the addresses given by the parties.
Escrow holder shall not be liable for the sufficiency or correctness as to form,
manner of execution, or validity of any instrument deposited, nor as to
identity, authority, or rights of any person executing the same nor for failure
to comply with any of the provisions of any agreement, contract or instrument
filed or referred to in said escrow, nor for the forgeries, false impersonations
or fraud occurring or perpetrated by any person in connection with this escrow.
The escrow holder's duties hereunder shall be limited to the safekeeping of such
money, instruments or other documents received by the escrow holder, and of the
disposition of same in accordance with the written instructions accepted in this
escrow. Escrow holder is authorized to destroy without further notice to the
parties, all documents, papers, instructions and any other material connected
with this escrow five (5) years after the close of escrow.
Escrow's liability as escrow shall be confirmed to the things specifically
provided for in the written instructions in this escrow.
Should Escrow, before the close, receive or become aware of any conflicting
demands or claims with respect to this escrow or the rights of any of the
parities hereto, or any money or property deposited herein or affected hereby,
Escrow shall have the right to discontinue any or all further acts on Escrow's
part until such conflict is resolved to Escrow's satisfaction, and Escrow shall
have the further right to commence or defend any action or proceedings for the
determination of such conflict. The parties hereto jointly and severally agree
to pay all costs, damages, judgments and expenses, including court costs and
attorney's fees suffered or incurred by escrow holder in connection with, or
arising out of this escrow, and including but without limiting the generality of
the foregoing, a suit in interpleader brought by Escrow. In the event Escrow
files a suit in Interpleader, Escrow shall ipso facto be fully released and
discharged from all obligations further to perform any and all duties or
obligations imposed upon escrow holder in this escrow.
Unless otherwise provided herein Escrow is authorized to deposited all funds
herein in a Trust Account in Escrow's name in a chartered bank of escrow
holder's selection subject to Escrow's order.
These instructions or any amendments thereto may be executed in counter parts,
each of which shall be deemed an original regardless of the date of its
execution and delivery. All such counterparts together shall constitute one and
the same.
SHOULD YOU HAVE ANY LEGAL QUESTIONS CONCERNING THIS ESCROW OR TRANSACTION,
CONSULT YOUR ATTORNEY. THE UNDERSIGNED BUYER AND SELLER ACKNOWLEDGE THAT THEY
HAVE RECEIVED, READ, APPROVE AND AGREE TO THE FOREGOING TERMS, CONDITIONS,
INSTRUCTIONS AND GENERAL PROVISIONS HEREIN.
EIDETICS CORPORATION, A CALIFORNIA CORPORATION
-----------------------------------------------
BY: ALLAN KLEIN, PRESIDENT & ASSISTANT SECRETARY
PERCEPTRONICS, INC., A DELAWARE CORPORATION
-----------------------------------------------
BY: GERSHON WELTMAN, PRESIDENT & SECRETARY
<PAGE>
EXHIBIT G
FORM OF SECRETARY'S CERTIFICATE (SELLER)
<PAGE>
PERCEPTRONICS, INC.
Secretary's Certificate
I, Gershon Weltman, Secretary of PERCEPTRONICS, INC., a Delaware
corporation ("Company"), pursuant to Section 2.7(h) of the Asset Purchase
Agreement dated as of May 31, 2000, between EIDETICS CORPORATION, a California
corporation and the Company ("Agreement"), do hereby certify as follows:
1. Attached hereto as EXHIBIT A is a true and correct copy of the
Written Consent of the Directors of the Company authorizing the execution,
delivery and performance of the Agreement and each exhibit thereto and the
consummation of the transactions contemplated in the Agreement.
2. Each person who, as an officer, a director or an employee of
the Company or attorney-in-fact of such officer, director or employee, signed
the Agreement and Ancillary Agreements was, at the respective time of such
signing and delivery of the Agreement and Ancillary Agreements, and is now, duly
elected or appointed, qualified and acting as such officer, director, employee
or attorney-in-fact, and the signatures of such persons appearing on such
documents are their genuine signatures, the persons named below were, on May 1,
2000 and have been at all times since that date to and including the date
hereof, (i) either the duly elected, qualified and acting officer of the
Company, holding the offices set forth opposite his or her name, or (ii) an
employee of the Company, holding the positions set forth opposite his or her
name, and the signature appearing opposite his or her name below is his or her
genuine signature:
<TABLE>
<CAPTION>
Name Office/Position Signature
---- --------------- ---------
<S> <C> <C>
Gershon Weltman President/Secretary --------------------
</TABLE>
All capitalized terms used and not defined in this Certificate shall
have the meanings assigned to them in the Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate and
affixed the seal of the Company this ____ day of June, 2000.
------------------------------
Gershon Weltman
Secretary
1
<PAGE>
As President of the Company, the undersigned hereby certifies that
Gershon Weltman, the Secretary of the Company and his genuine signature appears
above his name printed above.
--------------------------------
Gershon Weltman
President
2
