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ASSET PURCHASE AGREEMENT
between
TELECOM ANALYSIS SYSTEMS, INC.
and
WIRELESS TELECOM GROUP, INC.
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Dated as of January 7, 1999
TABLE OF CONTENTS
Page
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1. Assets...............................................................................1
1.2. Excluded Assets......................................................................2
ARTICLE II
THE CLOSING
2.1. Place and Date.......................................................................2
2.2. Purchase Price.......................................................................2
2.3. Determination of the Initial Purchase Price..........................................3
2.4. Allocation of Consideration..........................................................4
2.5. Assumption of Liabilities............................................................4
2.6. Excluded Liabilities.................................................................5
2.7. Consent of Third Parties.............................................................5
2.8. The Purchase Price Adjustment........................................................6
2.9. Like-Kind Exchange...................................................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF NEPTUNE
3.1. Authorization, etc...................................................................8
3.2. No Conflicts, etc....................................................................9
3.3. Corporate Status.....................................................................9
3.4. Financial Statements.................................................................9
3.5. Undisclosed Liabilities, etc.........................................................9
3.6. Absence of Changes..................................................................10
3.7. Tax Matters.........................................................................12
3.8. Neptune Assets; Operations of Neptune...............................................13
3.9. Real Property; Personal Property....................................................13
3.10. Contracts...........................................................................14
3.11. Intellectual Property...............................................................15
3.12. Insurance...........................................................................17
3.13. Litigation..........................................................................17
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3.14. Compliance with Laws and Instruments; Consents; Governmental Permits................18
3.15. Environmental Matters...............................................................19
3.16. Affiliate Transactions..............................................................20
3.17. Employees, Labor Matters, etc.......................................................20
3.18. Employee Benefit Plans and Related Matters; ERISA...................................21
3.19. Inventories.........................................................................21
3.20. Customers; Sales Representatives....................................................22
3.21. Suppliers; Raw Materials............................................................22
3.22. Products............................................................................22
3.23. Absence of Certain Business Practices...............................................24
3.24. Territorial Restrictions............................................................24
3.25. Brokers, Finders, etc...............................................................24
3.26. Disclosure..........................................................................24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF TAS
4.1. Authorization, etc..................................................................25
4.2. No Conflicts, etc...................................................................25
4.3. Corporate Status....................................................................25
4.4. TAS Assets..........................................................................26
4.5. Intellectual Property...............................................................26
4.6. Litigation..........................................................................28
4.7. Compliance with Laws and Instruments; Consents; Governmental Permits................28
4.8. Inventories.........................................................................29
4.9. Brokers, Finders, etc...............................................................29
4.10. Operation of the TAS Business.......................................................29
4.11. Absence of Certain Business Practices...............................................29
4.12. Territorial Restrictions............................................................30
4.13. Affiliate Transactions..............................................................30
4.14. Suppliers; Raw Materials............................................................30
4.15. Products............................................................................30
4.16. Insurance...........................................................................31
4.17. Customers; Sales Representatives....................................................31
4.18. Tax Matters.........................................................................32
4.19. Disclosure..........................................................................32
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ARTICLE V
COVENANTS OF THE PARTIES
5.1. Conduct of the Businesses...........................................................32
5.2. Access and Information..............................................................33
5.3. Public Announcements................................................................34
5.4. Further Actions.....................................................................34
5.5. Further Assurances..................................................................34
ARTICLE VI
COVENANTS OF NEPTUNE
6.1. Liability for Transfer Taxes........................................................35
6.2. Certificates of Tax Authorities.....................................................35
6.3. Use of Business Names and Marks.....................................................35
6.4. Production of Backlog...............................................................36
6.5. Transfer of Certain Intellectual Property Assets....................................36
6.6. Year-End Inventory Count............................................................36
6.7. Compliance with ISRA................................................................36
6.8. Sublease............................................................................37
6.9. Option to Acquire the Mahwah Facility...............................................37
6.10. Iridium Circuit Enhancement.........................................................38
6.11. Neptune's Net Worth and Net Current Asset Value.....................................38
6.12. Third Party Consents................................................................38
6.13. Non-competition and Confidentiality Commitments.....................................38
ARTICLE VII
COVENANTS OF TAS
7.1. Liability of Transfer Taxes.........................................................38
7.2. Certificates of Tax Authorities.....................................................39
7.3. Use of Names and Marks..............................................................39
7.4. Production of Backlog...............................................................39
7.5. Transfer of Certain Intellectual Property Assets....................................40
7.6. Year-End Inventory Count............................................................40
7.7. Compliance with ISRA................................................................40
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ARTICLE VIII
CONDITIONS PRECEDENT
TO OBLIGATIONS OF EACH PARTY
8.1. HSR Act Notification................................................................41
8.2. No Injunction, etc..................................................................41
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF TAS
9.1. Representations, Performance........................................................41
9.2. Assumption Agreement................................................................42
9.3. Consents............................................................................42
9.4. No Material Adverse Effect..........................................................42
9.5. Ancillary Agreements................................................................42
9.6. Opinion of Counsel..................................................................43
9.7. Transfer Documents..................................................................43
9.8. [This Section 9.8 intentionally left blank.]........................................43
9.9. FIRPTA Certificate..................................................................43
9.10. Financing Statement.................................................................43
9.11. ISRA Compliance.....................................................................44
9.12. Corporate Proceedings...............................................................44
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF NEPTUNE
10.1. Representations, Performance, etc...................................................44
10.2. Assumption Agreement................................................................44
10.3. Opinion of Counsel..................................................................45
10.4. Ancillary Agreements................................................................45
10.5. Transfer Documents..................................................................45
10.6. FIRPTA Certificate..................................................................45
10.7. Financing Statement.................................................................45
10.8. Corporate Proceedings...............................................................46
ARTICLE XI
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
11.1. Employment of Neptune's Employees...................................................46
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11.2. Welfare and Fringe Benefit Plans....................................................47
11.3. Workers' Compensation...............................................................47
11.4. Employment Taxes....................................................................47
ARTICLE XII
TERMINATION
12.1. Termination.........................................................................48
12.2. Effect of Termination...............................................................49
ARTICLE XIII
DEFINITIONS, INDEMNIFICATION, MISCELLANEOUS
13.1. Definition of Certain Terms.........................................................50
13.2. Indemnification.....................................................................58
13.3. Survival of Representations and Warranties, etc.....................................62
13.4. Expenses............................................................................63
13.5. Severability........................................................................63
13.6. Notices.............................................................................63
13.7. Headings............................................................................65
13.8. Entire Agreement....................................................................65
13.9. Counterparts........................................................................65
13.10. Governing Law, etc..................................................................65
13.11. Binding Effect......................................................................65
13.12. Assignment..........................................................................66
13.13. No Third Party Beneficiaries........................................................66
13.14. Amendment; Waivers, etc.............................................................66
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of January 7, 1999, between
Telecom Analysis Systems, Inc., a New Jersey corporation ("TAS") and Wireless
Telecom Group, Inc., a New Jersey corporation ("NEPTUNE").
W I T N E S S E T H:
WHEREAS, Neptune is in the business of designing, developing,
assembling, manufacturing and selling certain wireless and satellite test
equipment product lines set forth on Schedule A hereto (the "NEPTUNE BUSINESS");
WHEREAS, TAS is in the business of designing, developing,
assembling, manufacturing and selling certain single-function noise generator
product lines set forth on Schedule B hereto (the "TAS BUSINESS");
WHEREAS, TAS wishes to purchase or acquire from Neptune, and
Neptune wishes to sell, assign and transfer to TAS, the Neptune Assets (as
defined in Section 1.1(a)), and TAS has agreed to assume the Assumed Neptune
Liabilities (as defined in Section 2.5(a)), upon the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, Neptune wishes to purchase or acquire from TAS, and TAS
wishes to sell, assign and transfer to Neptune, the TAS Assets (as defined in
Section 1.1(b)), and Neptune has agreed to assume the Assumed TAS Liabilities
(as defined in Section 2.5(b)), upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties made herein, and of the mutual benefits to be
derived hereby, the parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1. Assets. (a) Neptune Assets. Subject to and upon the terms
and conditions set forth in this Agreement, at the Closing (as defined in
Section 2.1), Neptune will sell, transfer, convey, assign and deliver to TAS,
and TAS will purchase or acquire from Neptune, all right, title and interest of
Neptune in and to the properties, assets and rights set forth on Schedule
1.1(a),
1
whether accrued, contingent or otherwise and whether now existing or hereinafter
acquired as the same may exist on the Closing Date (collectively, the "NEPTUNE
ASSETS").
(b) TAS Assets. Subject to and upon the terms and conditions set
forth in this Agreement, at the Closing, TAS will sell, transfer, convey, assign
and deliver to Neptune, and Neptune will purchase or acquire from TAS, all
right, title and interest of TAS in and to the properties, assets and rights set
forth on Schedule 1.1(b), whether accrued, contingent or otherwise and whether
now existing or hereinafter acquired as the same may exist on the Closing Date
(collectively, the "TAS ASSETS").
Subject to the terms and conditions of this Agreement, at the
Closing, good, valid and marketable title to the Neptune Assets shall be
transferred or otherwise conveyed to TAS and good, valid and marketable title to
the TAS Assets shall be transferred or otherwise conveyed to Neptune, in each
case free and clear of all liabilities, obligations, liens and encumbrances ex
cepting only Permitted Liens and, in the case of the Neptune Assets, the Assumed
Neptune Liabilities or, in the case of the TAS Assets, the Assumed TAS
Liabilities.
1.2. Excluded Assets. (a) Excluded Neptune Assets.
Notwithstanding anything to the contrary set forth herein, the Neptune Assets
shall not include any property, asset or right not set forth on Schedule 1.1(a)
(collectively, the "EXCLUDED NEPTUNE ASSETS").
(b) Excluded TAS Assets. Notwithstanding anything to the contrary
set forth herein, the TAS Assets shall not include any property, asset or right
not set forth on Schedule 1.1(b) (collectively, the "EXCLUDED TAS ASSETS").
ARTICLE II
THE CLOSING
2.1. Place and Date. The closing of the transactions contemplated
hereby (the "CLOSING") shall take place at 10:00 A.M. local time on February 9,
1999 at the offices of Debevoise & Plimpton, 875 Third Avenue, New York, New
York 10021. In the event that the conditions set forth in Articles VIII, IX and
X have not been satisfied as of such date, the Closing shall take place within
four business days after the date on which such conditions have been satisfied
or waived by the relevant party, or such other time and place upon which the
parties may agree. The day on which the Closing actually occurs is herein
sometimes referred to as the "CLOSING DATE."
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2.2. Purchase Price. On the terms and subject to the conditions
set forth in this Agreement, TAS agrees (a) to pay or cause to be paid to
Neptune an aggregate amount equal to the sum of (i) the Initial Purchase Price
(as determined pursuant to Section 2.3(b)) plus (ii) $200,000 (the "NON-COMPETE
CONSIDERATION") in consideration of the Neptune Non-Competition Agreement (as
defined in Section 9.5(b)) (the Initial Purchase Price together with the
Non-Compete Consideration, the "TOTAL CONSIDERATION") and (b) to assume the
Assumed Neptune Liabilities as provided in Section 2.5(a). On the terms and
subject to the conditions set forth in this Agreement, Neptune agrees (x) to pay
or cause to be paid to TAS $2,500,000 (the "OTHER CONSIDERATION") and (y) to
assume the Assumed TAS Liabilities as provided in Section 2.5(b). The parties
agree that the Other Consideration shall be netted against the Initial Purchase
Price and the remainder of the Total Consideration shall be payable, as follows:
(A) At the Closing, $1,500,000 shall be deposited by TAS in
escrow for the satisfaction of Neptune's obligations under Section
13.2(a) and $500,000 (such $500,000, the "PURCHASE PRICE ADJUSTMENT
DEPOSIT") shall be deposited by TAS in escrow for satisfaction of
Neptune's obligations under Section 2.8(e)(i), in each case pursuant to
an escrow agreement substantially in the form attached hereto as Exhibit
A to TAS and Neptune (the "ESCROW AGREEMENT"); and
(B) At the Closing, the remainder of the Total Consideration will
be wire transferred to such bank account or accounts as specified in
written instructions of Neptune, given to TAS at least five days prior
to the Closing.
2.3. Determination of the Initial Purchase Price. (a) Estimation
of Closing Net Asset Value. At least 5 days prior to the Closing Date, Neptune
shall deliver to TAS a statement (the "ESTIMATED STATEMENT OF CLOSING NET ASSET
VALUE") setting forth Neptune's good faith estimate of (x) the book values of
the Neptune Inventories, the Neptune Fixed Assets, the Neptune Employee Accruals
and the Neptune Payable as of the Closing Date and (y) the aggregate net book
value of the Neptune Inventories and the Neptune Fixed Assets after subtracting
the aggregate book value of the Neptune Employee Accruals and the Neptune
Payable (the "ESTIMATED CLOSING NET ASSET VALUE"), together with reasonable
supporting documentation for such estimate, it being understood and agreed that,
the Estimated Statement of Closing Net Asset Value shall (i) include the Neptune
Inventories and the Neptune Fixed Assets (and no other assets or properties of
Neptune or any of its Affiliates) and the Neptune Employee Accruals and the
Neptune Payable (and no other liabilities of Neptune or any of its Affiliates)
and (ii) reflect Neptune's reasonable estimate of the same values for the
Neptune Inventories, the Neptune Fixed Assets, the Neptune Employee Accruals and
the Neptune Payable as would be reflected for such assets and liabilities on a
balance sheet of Neptune as at the Closing Date, prepared in accordance
3
with Schedule 2.3(a) and otherwise in accordance with GAAP applied consistently
in accordance with past practice.
(b) The "INITIAL PURCHASE PRICE" shall be equal to (i)
$18,718,616(1) (ii) minus the amount, if any, by which the Estimated Closing
Net Asset Value is less than $8,000,000.
2.4. Allocation of Consideration. The parties agree to allocate
(a) the Initial Purchase Price (as so adjusted) and the Assumed Neptune
Liabilities among the Neptune Assets and (b) the Other Consideration and the
Assumed TAS Liabilities (as defined in Section 2.5(b)) among the TAS Assets in
accordance with allocation schedules to be agreed to by TAS and Neptune no later
than the earlier of (x) 30 days after the determination of the Adjusted Net
Asset Value pursuant to Section 2.8 or (y) 30 days before the date by which
either TAS or Neptune is required to file a Tax Return which includes items of
gain/loss resulting from the purchase and sale contemplated hereby, provided
however that the parties agree that in such allocation schedule the aggregate
fair market value of the Class I, Class II and Class III assets with respect to
the Neptune Assets shall be the greater of the Adjusted Net Asset Value and
$8,000,000. Such allocation schedule shall be prepared in accordance with
section 1060 of the Code. In connection with the determination of such
allocation schedule, the parties shall cooperate with each other and provide
such information as either of them shall reasonably request. The parties will
each report the federal, state and local and other Tax consequences of the
purchase and sale contemplated hereby (including the filing of Internal Revenue
Service Form 8594) in a manner consistent with such allocation schedules.
2.5. Assumption of Liabilities. (a) Assumption of Liabilities by
TAS. Subject to the terms and conditions set forth herein, at the Closing TAS
shall assume and agree to pay, honor and discharge when due all of the following
liabilities, to the extent such liabilities exist at or arise on or after the
Closing Date (collectively, the "ASSUMED NEPTUNE LIABILITIES"):
(i) liabilities and costs, not in excess of $100,000 in the
aggregate (in addition to any liabilities or costs for product warranty
claims which TAS is obligated to pay and/or bear pursuant to the
Manufacturing Agreement), in respect of product warranty claims arising
with respect to the MP 2700, the UFX-BER Series (cellular and
non-cellular), the SLE Series, the MP 2600, the MP 2500, the BS 800/1900
and the MS 800/1900 products delivered prior to the Closing;
(ii) liabilities in respect of Transferred Employees to the
extent specifically assumed by TAS pursuant to Article XI (the "NEPTUNE
EMPLOYEE ACCRUALS");
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(1) $18,800,000 minus $81,384 (total rent for a six-month sublease of 40% of
the Mahwah Facility).
4
(iii) the trade account payable resulting from Purchase Order
#020297-00, between Neptune and Joe Roscoe, dated July 15, 1998, for the
purchase by Neptune of a frequency synthesizer reflected on the
Statement of Closing Net Asset Value (the "NEPTUNE PAYABLE"); and
(iv) any and all liabilities, obligations and commitments arising
out of the Contracts set forth on Schedule 1.1(a), but not including any
obligation or liability for any breach thereof occurring prior to the
Closing.
(b) Assumption of Liabilities by Neptune. Subject to the terms
and conditions set forth herein, at the Closing Neptune shall assume and agree
to pay, honor and discharge when due, to the extent such liabilities exist at or
arise on or after the Closing Date, the liabilities and costs as set forth on
Schedule 2.5(b) (collectively, the "ASSUMED TAS LIABILITIES") .
2.6. Excluded Liabilities. (a) Exclusion of Liabilities by TAS.
Notwithstanding the provisions of Section 2.5(a) or any other provision hereof
or any schedule or exhibit hereto and regardless of any disclosure to TAS, TAS
shall not assume any liabilities, obligations or commitments of Neptune, or any
liabilities arising out of the conduct of the Neptune Business or the ownership,
use or possession of the Neptune Assets prior to the Closing, of any nature
whatsoever, whether known or unknown, contingent or otherwise, other than the
Assumed Neptune Liabilities, including, but not limited to, any such
liabilities, obligations or commitments to any Affiliates of Neptune or any
other third party (the "EXCLUDED NEPTUNE LIABILITIES").
(b) Exclusion of Liabilities by Neptune. Notwithstanding the
provisions of Section 2.5(b) or any other provision hereof or any schedule or
exhibit hereto and regardless of any disclosure to Neptune, Neptune shall not
assume any liabilities, obligations or commitments of TAS, or any liabilities
arising out of the conduct of the TAS Business or the ownership, use or
possession of the TAS Assets prior to the Closing, of any nature whatsoever,
whether known or unknown, contingent or otherwise, other than the Assumed TAS
Liabilities, including, but not limited to, any such liabilities, obligations or
commitments to any Affiliates of TAS or any other third party (the "EXCLUDED TAS
LIABILITIES").
2.7. Consent of Third Parties. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall not constitute an agreement to
assign or transfer any instrument, contract, lease, permit or other agreement or
arrangement or any claim, right or benefit arising thereunder or resulting
therefrom if an assignment or transfer or an attempt to make such an assignment
or transfer without the consent of a third party would constitute a breach or
violation thereof; and any transfer or assignment of any interest under any such
instrument, contract, lease, permit or other agreement or arrangement that
requires the consent of a third party shall be made
5
subject to such consent or approval being obtained. In the event any such
consent or approval is not obtained on or prior to the Closing Date, the
transferor shall continue to use all reasonable efforts to obtain any such
consent or approval after the Closing Date until such time as such consent or
approval has been obtained, and the transferor will cooperate with the
transferee in any lawful and economically feasible arrangement to provide that
the transferee shall receive the interest of the transferor in the benefits
under any such instrument, contract, lease or permit or other agreement or
arrangement, including performance by the transferor, as agent, if economically
feasible, provided that the transferee shall undertake to pay or satisfy the
corresponding liabilities for the enjoyment of such benefit to the extent the
transferee would have been responsible therefor hereunder if such consent or
approval had been obtained. The transferor shall pay and discharge, and shall
indemnify and hold the transferee harmless from and against, any and all
out-of-pocket costs of seeking to obtain or obtaining any such consent or
approval whether before or after the Closing Date. Nothing in this Section 2.7
shall be deemed a waiver by the transferee of its right to have received on or
before the Closing an effective assignment of all of the Neptune Assets or the
TAS Assets, as the case may be, to the extent provided for in this Agreement,
nor shall this Section 2.7 be deemed to constitute an agreement to exclude from
the Neptune Assets or the TAS Assets, as the case may be, any assets described
under Schedules 1.1(a) or 1.1(b).
2.8. The Purchase Price Adjustment. (a) As soon as practicable
following the Closing Date, Neptune shall prepare a statement setting forth (i)
the book values of the Neptune Inventories (provided that TAS shall be permitted
to participate in the count of Neptune Inventories in connection therewith), the
Neptune Fixed Assets, the Neptune Employee Accruals and the Neptune Payable as
of the Closing Date and immediately prior to the Closing and (ii) the aggregate
net book value of the Neptune Inventories and the Neptune Fixed Assets after
subtracting the aggregate book value of the Neptune Employee Accruals and the
Neptune Payable (the "STATEMENT OF CLOSING NET ASSET VALUE"), which shall be
prepared consistently with the Estimated Statement of Closing Net Asset Value.
Such Statement of Closing Net Asset Value shall be audited by Neptune's
independent accountants and such accountants' report shall be delivered to TAS
no later than 30 days after the Closing Date.
(b) Following the Closing Date, TAS shall afford Neptune and its
Affiliates and their respective employees and advisors access to all books and
records relating to the Neptune Business and make available the assistance of
any employees of TAS related to the Neptune Business, in each case as is
necessary to enable Neptune to prepare the Statement of Closing Net Asset Value.
(c) TAS shall have a period of 30 days to review the Statement of
Closing Net Asset Value following delivery thereof by Neptune. During such
period, Neptune shall afford TAS and its Affiliates and their respective
employees and advisors access to any of its books,
6
records and work papers relating to the Statement of Closing Net Asset Value.
The Statement of Closing Net Asset Value will become final and binding upon the
parties on the 31st day following delivery thereof, unless TAS delivers a
written notice (the "DISPUTE NOTICE") to Neptune prior to such date which
specifies in reasonable detail the items and amounts in the Statement of Closing
Net Asset Value with which TAS disagrees.
(d) If TAS delivers a Dispute Notice in accordance with Section 2.8(c), then the
parties shall, during the 15-day period beginning on Neptune's receipt of the
Dispute Notice, seek in good faith to resolve in writing any differences which
they may have with respect to the matters specified in the Dispute Notice. If
Neptune and TAS are unable to resolve all of TAS's objections within such 15-day
period, then such unresolved objections shall be submitted to a
nationally-recognized accounting firm mutually acceptable to TAS and Neptune
(the "THIRD PARTY ACCOUNTANTS") for review and final and binding resolution of
any and all matters which remain in dispute and which were included in the
Dispute Notice. Neptune and TAS shall use reasonable efforts to cause the Third
Party Accountants to render a decision resolving the matters in dispute within
30 days following the final submission of such matter to the Third Party
Accountants for decision following such briefing and other procedures as the
Third Party Accountants shall establish. Neptune and TAS agree that judgment may
be entered upon the determination of the Third Party Accountants in any court
having jurisdiction over the party against which such determination is to be
enforced. The fees, costs and expenses of the Third Party Accountants (i) shall
be borne by TAS in the proportion that the aggregate dollar amount of such
disputed items so submitted that are unsuccessfully disputed by TAS (as finally
determined by the Third Party Accountants) bears to the aggregate dollar amount
of such items so submitted and (ii) shall be borne by Neptune in the proportion
that the aggregate dollar amount of such disputed items so submitted that are
successfully disputed by TAS (as finally determined by the Third Party
Accountants) bears to the aggregate dollar amount of such items so submitted.
(e) Within 10 days after the earlier of the date that (x) the
Statement of Closing Net Asset Value becomes final pursuant to Section 2.8(c),
(y) the parties reach agreement pursuant to Section 2.8(c) or (z) the Third
Party Accountants render their decision pursuant to Section 2.8(d), a final
adjustment to the Initial Purchase Price will be made as follows and TAS and
Neptune shall deliver joint instructions to the Escrow Agent (as defined in the
Escrow Agreement) for the disposition of the Purchase Price Adjustment Deposit
in accordance therewith as follows:
(i) If the net asset value of the Neptune Assets as finally
determined in accordance with Section 2.8(c) or (d) (the "ADJUSTED NET
ASSET VALUE") is less than the Estimated Closing Net Asset Value, then
the Initial Purchase Price shall be decreased by the difference between
the Estimated Closing Net Asset Value and the Adjusted Net Asset
7
Value and TAS shall be entitled to receive such difference (the
"PURCHASE PRICE ADJUSTMENT"). TAS shall receive from the Purchase Price
Escrow Account, in accordance with the Escrow Agreement, an amount equal
to the Purchase Price Adjustment, and Neptune shall receive any balance
of the Purchase Price Adjustment Deposit remaining after payment of the
Purchase Price Adjustment. If the Purchase Price Adjustment Deposit is
insufficient to pay the entire Purchase Price Adjustment, Neptune shall
promptly pay to TAS, in cash, an amount equal to the difference between
the Purchase Price Adjustment and the Purchase Price Adjustment Deposit.
(ii) In the event the Adjusted Net Asset Value exceeds the
Estimated Closing Net Asset Value, then the Initial Purchase Price shall
be increased by the excess of the Adjusted Net Asset Value over the
Estimated Closing Net Asset Value, provided however, that no adjustment
to the Initial Purchase Price shall exceed the amount by which
$8,000,000 exceeds the Estimated Closing Net Asset Value. Neptune shall
be entitled to receive the Purchase Price Adjustment Deposit which shall
be delivered to Neptune in accordance with the Escrow Agreement. TAS
shall promptly pay to Neptune, in cash, an amount equal to the excess of
the Adjusted Net Asset Value over the Estimated Net Asset Value,
provided, however, that the amount payable by TAS pursuant to this
Section 2.8(e)(ii) shall in no event exceed the amount by which
$8,000,000 exceeds the Estimated Closing Net Asset Value.
(iii) In the event the Adjusted Net Asset Value equals the
Estimated Closing Net Asset Value, Neptune shall be entitled to receive
the Purchase Price Adjustment Deposit which shall be delivered to
Neptune in accordance with the Escrow Agreement.
(f) The provisions of this Section 2.8 shall in no way limit,
supersede or otherwise affect the rights of any party under Section 13.2, and
nothing contained in Section 13.2 shall limit, supersede or otherwise affect the
rights of any party under this Section 2.8; provided, that no party shall be
entitled to be compensated more than once for the same Loss.
2.9. Like-Kind Exchange. If the parties hereto mutually agree to
treat the transactions contemplated by this Agreement as a like-kind exchange
within the meaning of section 1031 of the Code for U.S. federal, state or local
income tax purposes, the parties agree to take any reasonable action (including,
without limitation, amending this Agreement or any other related agreements) to
enable the transactions be so treated and shall file all Tax Returns in a manner
consistent with such treatment.
8
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF NEPTUNE
Neptune represents and warrants to TAS as follows, as of the date
hereof and as of the Closing Date:
3.1. Authorization, etc. Neptune has full corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements to
which it is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Ancillary Agreements, the performance of the
obligations of Neptune hereunder and thereunder, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
requisite corporate action of Neptune. No approval or vote of any of the
shareholders of Neptune shall be required to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements. Neptune has duly
executed and delivered this Agreement and on the Closing Date will have duly
executed and delivered the Ancillary Agreements to which it is a party. This
Agreement constitutes, and each such Ancillary Agreement when so executed and
delivered will constitute, the legal, valid and binding obligation of Neptune
enforceable against Neptune in accordance with its respective terms.
3.2. No Conflicts, etc. Except as set forth on Schedule 3.2
attached hereto, the execution, delivery and performance of this Agreement and
the Ancillary Agreements to which it is a party by Neptune, and the consummation
of the transactions contemplated hereby and thereby, do not and will not
conflict with, contravene, result in a violation or breach of or default under
(with or without the giving of notice or the lapse of time or both), create in
any other Person a right or claim of termination, amendment, or require
modification, acceleration or cancellation of, or result in the creation of any
Lien (or any obligation to create any Lien) upon any of the Neptune Assets
under, (a) any law applicable to Neptune or its properties or assets, (b) any
provision of any of the Organizational Documents of Neptune or (c) any Contract
to which Neptune is a party or by which any of its properties or assets may be
bound, except, in the case of this clause (c), for violations and defaults that,
individually and in the aggregate, are not reasonably likely to result in a
Material Adverse Effect.
3.3. Corporate Status. Neptune is a corporation duly organized,
validly existing and in good standing under the laws of New Jersey, and has full
corporate power and authority to conduct the Neptune Business and to own or
lease and to operate the Neptune Assets as and in the places where such Neptune
Business is conducted and such Neptune Assets are owned, leased or operated.
9
3.4. Financial Statements. (a) Schedule 3.4(a) sets forth
complete and correct copies of the Financial Statements. The Financial
Statements insofar as they describe or relate to or could affect the assets,
liabilities, revenues, expenses or cash flows associated with the Neptune
Business, are complete and correct in all respects, have been derived from the
accounting books and records of Neptune, have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods presented in the
Financial Statements subject, in the case of interim unaudited Financial
Statements, only to normal recurring year-end adjustments.
(b) The balance sheets included in the Financial Statements
present fairly, insofar as the assets and liabilities associated with the
Neptune Business are concerned, the financial position of Neptune as at the
respective dates thereof, and the statements of income and statements of cash
flows included in such Financial Statements present fairly, insofar as the
revenues, expenses and cash flows associated with the Neptune Business are
concerned, the results of operations and cash flows of Neptune for the
respective periods indicated.
3.5. Undisclosed Liabilities, etc. To Neptune's Knowledge,
Neptune has no liabilities or obligations of any nature, whether known, unknown,
absolute, accrued, contingent or otherwise and whether due or to become due,
arising out of or relating to the Neptune Business except (a) as set forth in
Schedule 3.5, (b) as and to the extent disclosed or reserved against in the June
30, 1998 Balance Sheet and (c) for liabilities and obligations that (i) are
incurred after June 30, 1998 in the ordinary course of business and are not
prohibited by this Agreement and (ii) individually and in the aggregate, will
not be material to the Neptune Business or have or result in a Material Adverse
Effect.
3.6. Absence of Changes. Since June 30, 1998, there has not
occurred or come to exist any Material Adverse Effect or any event, occurrence,
fact, condition, change, development or effect that, individually or in the
aggregate, is reasonably likely to result in a Material Adverse Effect, Neptune
has conducted the Neptune Business only in the ordinary course and has not, on
behalf of, in connection with or relating to the Neptune Business or the Neptune
Assets:
(a) mortgaged, pledged or otherwise subjected to any Lien, any
properties or assets, tangible or intangible, except for Permitted Liens
arising in the ordinary course of business;
(b) discharged or satisfied any Lien, other than those then
required to be discharged or satisfied, or paid any obligation or
liability, absolute, accrued, contingent or otherwise, whether due or to
become due, other than current liabilities shown on the June 30, 1998
Balance Sheet and current liabilities incurred since the date thereof in
the ordinary course of business;
10
(c) modified any existing Contract or entered into (x) any
agreement, commitment or other transaction, other than agreements
entered into in the ordinary course of business and involving an
expenditure of less than $25,000 in each case or $100,000 in the
aggregate, or (y) any agreement or commitment that, pursuant to its
terms, is not cancelable without penalty on less than 30 days' notice;
(d) received any notice of termination of any existing Contract,
Lease or other agreement which, in any case or in the aggregate, is
reasonably likely to result in a Material Adverse Effect;
(e) except as set forth on Schedule 3.6(e), paid (or agreed to
pay) any bonus to any employee (other than the Non-Transferrable
Employees), sales representative, agent or consultant, or granted (or
agreed to grant) to any employee (other than the Non-Transferrable
Employees), sales representative, agent or consultant any other increase
in compensation in any form;
(f) except as set forth on Schedule 3.6(f), entered into, adopted
or amended any employment, consulting, retention, change-in-control,
collective bargaining, bonus or other incentive compensation,
profit-sharing, health or other welfare, stock option or other equity,
pension, retirement, vacation, severance, deferred compensation or other
employment, compensation or benefit plan, policy, agreement, trust, fund
or arrangement for the benefit of any employee (other than the
Non-Transferrable Employees), sales representative, agent, consultant or
Affiliate (whether or not legally binding);
(g) suffered any damage, destruction or loss (whether or not
covered by insurance), or any strike or other employment-related
problem, or any change in relations with or any loss of a supplier,
customer or employee, which, individually or in the aggregate, is
reasonably likely to result in a Material Adverse Effect;
(h) changed in any respect its accounting practices, policies or
principles;
(i) incurred, assumed, guaranteed or otherwise become directly or
indirectly liable with respect to any liability or obligation in excess
of $50,000 at any one time outstanding (whether absolute, accrued,
contingent or otherwise and whether direct or indirect, or as guarantor
or otherwise with respect to any liability or obligation of any other
Person);
(j) transferred or granted any rights or licenses under, or
entered into any settlement regarding the infringement of, Intellectual
Property or modified any existing
11
rights with respect thereto or entered into any licensing or similar
agreements or arrangements;
(k) sold, transferred, leased to others or otherwise disposed of
any of the Neptune Assets with a value in excess of $25,000 in each case
or $100,000 in the aggregate, other than inventory in the ordinary
course of business;
(l) instituted, settled or agreed to settle any Litigation,
before any court or governmental body relating to the Neptune Business
or the Neptune Assets;
(m) failed to replenish the Neptune Business' inventories and
supplies in a normal and customary manner consistent with its prior
practice and prudent business practices prevailing in the industry, or
made any purchase commitment in excess of the normal, ordinary and usual
requirements of its business or at any price in excess of the then
current market price or upon terms and conditions more onerous than
those usual and customary in the industry;
(n) suffered any change, event or condition which, in any case or
in the aggregate, is reasonably likely to result in a Material Adverse
Effect, including, without limitation, any change in the Neptune
Business' revenues, costs, backlog or relations with its employees,
agents, customers or suppliers;
(o) made any material changes in policies or practices relating
to selling practices, returns, discounts or other terms of sale or
accounting therefor or in policies of employment; or
(p) taken any action or omitted to take any action that would
result in the occurrence of any of the foregoing.
3.7. Tax Matters. (a) (i) All material Tax Returns required to be
filed by Neptune have been filed, (ii) all such Tax Returns are true and correct
in all material respects, (iii) all material Taxes (whether or not reflected on
such Tax Returns) required to be paid by Neptune have been paid, (iv) all
material Taxes with respect to Neptune for any taxable period (or a portion
thereof) ending on or prior to the Closing Date (which are not yet due and
payable on or prior to the Closing Date) have been properly reserved for in the
books and records of Neptune, and (v) all material Taxes required to be withheld
by Neptune have been duly and timely withheld, and such withheld Taxes have been
either duly and timely paid to the proper governmental authority or properly set
aside in accounts for such purpose and will be duly and timely paid to the
proper governmental authority.
12
(b) No agreement or other document waiving or extending, or
having the effect of waiving or extending, the statute of limitations or the
period of assessment or collection of any Taxes with respect to Neptune is
currently in effect and no power of attorney with respect to any such Taxes has
been filed or entered into with any governmental authority. The time for filing
any Tax Return with respect to Neptune has not been extended to a date later
than the date of this Agreement.
(c) Except as set forth on Schedule 3.7(c) hereto, no material
Taxes with respect to Neptune are currently under audit, examination or
investigation by any governmental authority. No governmental authority is now
asserting or, to the knowledge of Neptune, threatening to assert against Neptune
any deficiency or claim for Taxes or any adjustment to Taxes.
(d) Since 1992, no governmental authority has asserted or raised
(or threatened to assert or raise) any claim or issue concerning any liability
for Taxes with respect to Neptune. To the knowledge of Neptune, no circumstances
exist to form the basis for asserting or raising such a claim or issue.
(e) TAS will not be required to deduct or withhold any
consideration or amount paid to Neptune pursuant to section 1445(a) of the Code
in connection with the transaction contemplated by this Agreement.
(f) Schedule 3.7(f) contains a list of states, territories and
jurisdictions in which an income, franchise, sales or use tax return with
respect to the Neptune Assets or the Neptune Business was filed for the past
three years.
(g) None of the Neptune Assets are subject to Tax liens except
for Taxes not yet due and payable.
3.8. Neptune Assets; Operations of Neptune. (a) Neptune Assets.
The Neptune Assets (except (i) inventories sold, (ii) cash disposed of, (iii)
accounts receivable collected, (iv) prepaid expenses realized, (v) contracts
fully performed, in the case of (i)-(v) in the ordinary course of business, (vi)
properties or assets replaced by equivalent or superior properties or assets and
(vii) properties or assets listed on Schedule 3.8(a) hereto), taken as a whole,
constitute all of the properties and assets necessary for the conduct of or
otherwise material to the Neptune Business during the past twelve months. The
Neptune Assets comprise all assets the use of which is necessary for the
continued conduct of the Neptune Business by TAS as now being conducted by
Neptune. Except for Excluded Neptune Assets, there are no assets or properties
used in the Neptune Business and owned by any Person other than Neptune which
will not be leased or licensed to TAS under valid, current lease or license
arrangements. Neptune owns, or otherwise
13
has sufficient and legally enforceable rights to use, the Neptune Assets.
Neptune has good, valid and marketable title to or, in the case of leased
property, has good and valid leasehold interests in, all Neptune Assets that are
material to the Neptune Business, including, but not limited to, all such
Neptune Assets that will be reflected in the Statement of Closing Net Asset
Value (except as may be disposed of in the ordinary course of business after the
date hereof and in accordance with this Agreement), in each case free and clear
of any Lien, except Permitted Liens. Neptune has maintained all tangible Neptune
Assets that are material to the Neptune Business in good repair, working order
and operating condition subject only to ordinary wear and tear and normal
obsolescence. All such tangible Neptune Assets are fully adequate and suitable
for the purposes for which they are presently being used.
(b) Operation of the Neptune Business. Neptune has conducted the
Neptune Business itself and not through any division or any direct or indirect
subsidiary or Affiliate of Neptune. No part of the Neptune Business is operated
by Neptune through any entity other than Neptune.
3.9. Real Property; Personal Property. (a) Owned Real Property.
There is no real property owned by Neptune or any of its Affiliates relating to
or used or held for use in connection with, necessary for the conduct of, or
otherwise material to the Neptune Business as currently conducted.
(b) Leases. Schedule 3.9(b) contains a complete and correct list
of all Leases setting forth the address, landlord and tenant for each Lease.
Neptune has delivered to TAS correct and complete copies of the Leases. Each
Lease is legal, valid, binding, in full force and effect and enforceable against
each party thereto, except to the extent that any failure to be so enforceable,
individually and in the aggregate, is not reasonably likely to result in a
Material Adverse Effect. Neptune is not, and, to Neptune's Knowledge, no other
party is, in default, vio lation or breach in any respect under any Lease, and
no event has occurred and is continuing that constitutes or, with notice or the
passage of time or both, would constitute a default, violation or breach in any
respect under any Lease which is reasonably likely to result in a Material
Adverse Effect. Except as set forth on Schedule 3.9(b), each Lease grants the
tenant under the Lease the exclusive right to use and occupy the premises and
rights demised and intended to be demised thereunder. Neptune has good and valid
title to the leasehold estate under its respective Leases free and clear of any
Liens other than Permitted Liens. Neptune enjoys peaceful and undisturbed
possession under its respective Leases for the Leased Real Property.
(c) Leasehold Interests, etc. The Leased Real Property
constitutes all of the leasehold interests in real property used in, material
to or necessary for the conduct of or otherwise material to the Neptune
Business.
14
(d) No Proceedings. There are no proceedings in eminent domain or
other similar proceedings pending or, to Neptune's Knowledge, threatened
affecting any portion of the Leased Real Property. There exists no writ,
injunction, decree, order or judgment outstanding, nor any Litigation, pending
or threatened, relating to the ownership, lease, use, occupancy or operation by
any Person of any Leased Real Property.
(e) Current Use. To Neptune's Knowledge the use and operation of
the Leased Real Property by Neptune does not violate in any material respect any
instrument of record or agreement affecting the Leased Real Property. To
Neptune's Knowledge there is no violation of any covenant, condition,
restriction, easement or agreement or order of any governmental authority or
agency that affects the Leased Real Property or the ownership, operation, use or
occupancy thereof which violation is reasonably likely to result in a Material
Adverse Effect. No material damage or destruction has occurred with respect to
any of the Leased Real Property that, individually or in the aggregate, is
reasonably likely to result in a Material Adverse Effect.
3.10. Contracts. (a) Disclosure. Neptune has delivered to TAS
complete and correct copies of the Contracts.
(b) Enforceability. (i) All Contracts are legal, valid, binding,
in full force and effect and enforceable against each party thereto, except to
the extent that any failure to be enforceable, individually and in the
aggregate, is not reasonably likely to result in a Material Adverse Effect.
Except as set forth in Schedule 3.10(b), there does not exist under any Contract
any violation, breach or event of default, or event or condition that, after
notice or lapse of time or both, is reasonably likely to constitute a violation,
breach or event of default thereunder, on the part of Neptune or, to Neptune's
Knowledge, any other Person. Except as set forth in Schedule 3.10(b), no
consent by any third party is required under any Contract as a result of or in
connection with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements.
(ii) Neptune has no outstanding powers of attorney relating to
the Neptune Business, except powers of attorney relating to representation
before governmental agencies or given in connection with qualification to
conduct business in a jurisdiction.
(c) Neptune has no outstanding obligations pursuant to the
Statement of Work for Iridium Communications System L-Band RF Effects Link
Model, between Motorola, Inc. Satellite Communications Division and Neptune,
Subcontract No. C408JE dated July 25, 1995.
3.11. Intellectual Property. (a) Disclosure. Schedule 3.11(a)
sets forth a complete and correct list of all Intellectual Property that is
owned by Neptune and related to, used or held
15
for use in connection with, necessary for the conduct of, or otherwise material
to the Neptune Business (the "NEPTUNE OWNED INTELLECTUAL PROPERTY"), other than
Neptune Owned Intellectual Property that (i) consists of inventions, trade
secrets, processes, formulae, know-how, designs, research and development,
ideas, engineering notebooks, and confidential business and technical
information, or (ii) is not registered or subject to application for
registration and is not material to the Neptune Business.
(b) Title. All of the Neptune Intellectual Property Assets are
owned by Neptune, except as set forth on Schedule 3.11(b)(i). Except as set
forth on Schedule 3.11(b)(ii), Neptune has the legal right to use the Neptune
Intellectual Property Assets in connection with the Neptune Business free from
any Liens (except for Permitted Liens incurred in the ordinary course of
business) and free from any requirement of any past, present or future royalty
payments, license fees, charges or other payments, or conditions or restrictions
whatsoever. Except as set forth on Schedule 3.11(b)(iii), the Neptune
Intellectual Property Assets comprise all of the Intellectual Property necessary
for TAS to conduct and operate the Neptune Business as now being operated by
Neptune. Except as set forth on Schedule 3.11(b)(iv), immediately after the
Closing, TAS will own all of the Neptune Owned Intellectual Property and will
have a right to use all other Neptune Intellectual Property Assets, in each case
free from Liens (except for Permitted Liens incurred in the ordinary course of
business) and on the same terms and conditions as in effect prior to the
Closing.
(c) Licensing and Similar Arrangements. Schedule 3.11(c) sets
forth all written or oral agreements and arrangements (i) pursuant to which
Neptune has licensed Neptune Intellectual Property Assets to, or the use of
Neptune Intellectual Property Assets is otherwise permitted (through
non-assertion, settlement or similar agreements or otherwise) with respect to,
any other Person (including any of Neptune's Affiliates), and (ii) pursuant to
which Neptune has had Intellectual Property licensed to it in connection with
the Neptune Business, or has otherwise been permitted to use Intellectual
Property in connection with the Neptune Business (through non-assertion,
settlement or similar agreements or otherwise). Except as set forth on Schedule
3.11(c) hereto, all of the agreements and arrangements set forth or required to
be set forth in Schedule 3.11(c): (i) are in full force and effect and
enforceable in accordance with their terms, and no default exists or is
threatened thereunder by Neptune, or to Neptune's Knowledge, by any other party
thereto, (ii) are free and clear of all Liens (except for Permitted Liens
incurred in the ordinary course of business), and (iii) do not contain any
assignment, change in control or other terms or conditions that will become
applicable or inapplicable as a result of the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements. Neptune has
delivered to TAS true and complete copies of all agreements and arrangements
(including amendments) set forth on Schedule 3.11(c). All royalties, license
fees, charges and other amounts
16
payable by, on behalf of, to, or for the account of, Neptune in respect of any
Intellectual Property included in the Neptune Assets are reflected in the
Financial Statements.
(d) No Infringement. To Neptune's Knowledge, the conduct of the
Neptune Business does not infringe or otherwise conflict with any rights of any
Person in respect of any Intellectual Property. To Neptune's Knowledge, none of
the Neptune Intellectual Property Assets being transferred is being infringed or
otherwise used or available for use by any Person.
(e) No Intellectual Property Litigation. No claim or demand of
any Person has been made or, to Neptune' Knowledge, threatened, nor is there any
Litigation that is pending or, to Neptune's Knowledge, threatened, that (i)
challenges the rights of Neptune in respect of any Intellectual Property, (ii)
asserts that Neptune is infringing or otherwise in conflict with, or is required
to pay any royalty, license fee, charge or other amount with regard to, any
Intellectual Property, or (iii) claims that any default exists under any
agreement or arrangement set forth or required to be set forth in Schedule
3.11(c). None of the Neptune Intellectual Property Assets being transferred are
subject to any outstanding order, ruling, decree, judgment or stipulation by or
with any court, tribunal, arbitrator or other governmental authority or agency,
or has been the subject of any Litigation within the last ten years, whether or
not resolved in favor of Neptune.
(f) Due Registration, etc. Except as set forth on Schedule
3.11(f), the Neptune Owned Intellectual Property has been duly registered with,
filed in or issued by, as the case may be, the United States Patent and
Trademark Office, the United States Copyright Office or other filing offices,
domestic or foreign, to the extent necessary or desirable to ensure protection
under any applicable law, and such registrations, filings, issuances and other
actions remain in full force and effect. Except as set forth on Schedule
3.11(f), Neptune has taken reasonable actions to ensure protection of the
Neptune Intellectual Property Assets being transferred (including maintaining
the secrecy of all confidential Neptune Intellectual Property Assets being
transferred) under any applicable law.
(g) Use of Name and Mark. There are, and immediately after the
Closing there will be, no contractual restriction or limitations pursuant to any
orders, decisions, injunctions, judgments, awards or decrees of any governmental
authority or agency on TAS's right to use the names and marks "WT Com",
"Wireless Telecom", "Wireless Telecom International" or any of the names by
which any of the products included in the Neptune Business, including but not
limited to the Neptune Product Lines, are known or sold in the conduct of the
Neptune Business as presently carried on by Neptune.
(h) Calendar Function. (i) Except as set forth on Schedule
3.11(h), all Software, firmware, hardware and equipment included in the Neptune
Assets being transferred either
17
(x) does not contain or call on a calendar function, including but not limited
to any function that is indexed to a computer processing unit clock, provides
specific days, dates or times, or calculates spans of dates or times, or (y)
contains or calls on such a calendar function, and is and will be able to
record, store, process, calculate, compare, sequence and provide true and
accurate day, date and time data from, into and between the twentieth and
twenty-first centuries, including but not limited to with respect to the years
1999, 2000 and 2001 and leap year calculations.
(ii) All equipment, including but not limited to hardware,
firmware and Software which has been or may be supplied and/or licensed to
customers of the Neptune Business by Neptune (collectively, the "NEPTUNE
EQUIPMENT") either (x) does not have a calendar function or (y) is, or shall be,
prior to the time supplied and/or licensed, Year 2000 Compliant, provided that
for the purposes of clause (y) hereof such Neptune Equipment is used either
independently of any other products or in combination with other products that
are Year 2000 Compliant.
(iii) For the avoidance of doubt, for the purposes of this
Section 3.11(h), nothing set forth in any disclosure schedule hereto other than
Schedule 3.11(h) shall be deemed disclosure against this Section 3.11(h).
3.12. Insurance. All insurance policies maintained by Neptune for
the benefit of or in connection with the Neptune Assets or the Neptune Business
are in full force and effect, and all premiums due thereon have been paid.
Neptune has complied in all material respects with the terms and provisions of
such policies. The insurance coverage provided by such policies is on such terms
(including without limitation as to deductibles and self-insured retentions),
covers such risks, contains such deductibles and retentions, and is in such
amounts, as the insurance customarily carried by comparable companies of
established reputation similarly situated and carrying on the same or similar
business.
3.13. Litigation. Except as set forth on Schedule 3.13, there is
no Litigation pending or, to the knowledge of Neptune, threatened by, against or
affecting Neptune with respect to the Neptune Business or the Neptune Assets,
that, individually or in the aggregate, is reasonably likely to result in a
Material Adverse Effect (in each case, if adversely determined, and without
regard to whether the defense thereof or liability in respect thereof is covered
by policies of insurance or any indemnity, contribution, cost sharing or similar
agreement or arrangement by or with any other Person). There are no outstanding
orders, judgments, decrees or injunctions issued by any governmental authority
or agency against or affecting Neptune that is reasonably likely to result in a
Material Adverse Effect.
3.14. Compliance with Laws and Instruments; Consents;
Governmental Permits. (a) Compliance. Except as set forth on Schedule 3.14(a),
(i) Neptune is not in conflict with or in
18
violation or breach of or default under (and there exists no event that, with
notice or passage of time or both, would constitute a conflict, violation,
breach or default with, of or under) (x) any law applicable to the Neptune
Assets or the Neptune Business, (y) any provision of its Organizational
Documents, or (z) any Contract, or any other agreement or instrument to which it
is party or by which it or any of the properties or assets of the Neptune
Business is bound or affected, except for any such conflicts, breaches,
violations and defaults that, individually or in the aggregate, is not
reasonably likely to result in a Material Adverse Effect, and (ii) Neptune has
not received any notice or has knowledge of any claim alleging any such
conflict, violation, breach or default.
(b) Consents. (i) Except as specified in Schedule 3.14(b)(i), no
governmental approval or other consent is required to be obtained or made by
Neptune in connection with the execution and delivery of this Agreement and the
Ancillary Agreements or the consummation of the transactions contemplated hereby
or thereby, except for consents the failure of which to be made or obtained,
individually and in the aggregate, is not reasonably likely to result in a
Material Adverse Effect or materially impair the ability of TAS, following the
Closing, to continue to conduct the Neptune Business or to own or lease and to
operate the Neptune Assets.
(ii) Schedule 3.14(b)(ii) contains a complete and correct list of
all governmental permits and other authorizations necessary for, or otherwise
material to, the conduct of the Neptune Business. Except as set forth in
Schedule 3.14(b)(ii), all such governmental permits and other authorizations
have been duly obtained and are held by Neptune and are in full force and
effect. Neptune is in compliance with all governmental permits and other
authorizations held by it, except for such failures so to comply that,
individually and in the aggregate, are not reasonably likely to result in a
Material Adverse Effect. There is no Litigation pending or, to Neptune's
Knowledge, threatened, that is reasonably likely to result in the revocation,
cancellation, suspension or modification or nonrenewal of any such governmental
permit or other authorization; Neptune has not been notified that any such
governmental permit or other authorization will be modified, suspended,
cancelled modified or cannot be renewed in the ordinary course of business; and
there is no reasonable basis for any such revocation, cancellation, suspension,
modification or nonrenewal. The execution, delivery and performance of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby do not and will not violate any such
governmental permit or other authorization, or result in any revocation,
cancellation, suspension, modification or nonrenewal thereof, except for any
such violations, revocations, cancellations, suspensions, modifications or
nonrenewals which, individually or in the aggregate, will not have or result in
a Material Adverse Effect.
3.15. Environmental Matters. (a) Compliance with Environmental
Law. Neptune has complied and is in compliance in all material respects with all
applicable Environmental Laws
19
pertaining to any of the Neptune Assets and the use and ownership thereof, and
to the operation of the Neptune Business. No Person is alleging or has, since
December 31, 1996, alleged any material violation by Neptune of any applicable
Environmental Law relating to any of the Neptune Assets or the use or ownership
thereof, or to the operation of the Neptune Business or to the use or occupation
of the Leased Real Property.
(b) Permits. All Environmental Permits are identified in Schedule
3.15(b), and to Neptune's Knowledge, Neptune currently holds, and at all times
has held, all such Environmental Permits, and all such Environmental Permits
shall be validly transferred to TAS on the Closing Date. Neptune has not been
notified by any relevant governmental authority or agency that any Environmental
Permit will be modified, suspended, cancelled or revoked, or cannot be renewed
in the ordinary course of business.
(c) Other Environmental Matters. (i) Neither Neptune nor, to
Neptune's Knowledge, any other Person (including any tenant, subtenant or
landlord) has caused or taken any action that will result in, and neither
Neptune nor any of its Affiliates is subject to, any material liability or
obligation relating to (x) the environmental conditions on, under, or about the
real property or other properties or assets owned, leased, operated or used by
Neptune or any predecessor thereto at the present time or in the past in
connection with the operation of the Neptune Business, including without
limitation, the air, soil and groundwater conditions at such properties or (y)
the past or present use, management, handling, transport, treatment, generation,
storage, disposal or Release of any Hazardous Substances in connection with the
operation of the Neptune Business.
(ii) Neptune has disclosed and made available to TAS all
information, including, without limitation, all studies, analyses and test
results, in the possession, custody or control of or otherwise known to Neptune
relating to (x) the environmental conditions on, under or about the real
property or other properties or assets owned, leased, operated or used by
Neptune or any predecessor in interest thereto at the present time or in the
past in connection with the operation of the Neptune Business, and (y) any
Hazardous Substances used, managed, handled, transported, treated, generated,
stored or Released by Neptune or any other Person on, under, about or from any
of such real property, or otherwise in connection with operation of the Neptune
Business.
(iii) None of the real property owned, leased, operated or used
by Neptune or any predecessor thereto at the present time or in the past in
connection with the operation of the Neptune Business is listed or proposed for
listing under CERCLA or on any similar state list, or the subject of federal,
state or local enforcement actions or investigations or Remedial Action. Neither
Neptune nor any of its Affiliates has, in connection with the operation of the
Neptune Business, transported or arranged for transportation (directly or
indirectly) of any Hazardous
20
Substances to any location that is listed or proposed for listing under CERCLA
or on any similar state list, or the subject of federal, state or local
enforcement actions or investigations or Remedial Action.
(iv) No work, repair, construction or capital expenditure is
required or planned in respect of the Neptune Assets pursuant to or to comply
with any Environmental Law, nor has Neptune or its Affiliates received any
notice of any such requirement, except for such work, repair, construction or
capital expenditure as is not material to the Neptune Business and is in the
ordinary course of business.
3.16. Affiliate Transactions. Neptune, in connection with its
operation of the Neptune Business, does not owe any amount to, or have any
contract with or commitment to, any Affiliate, directors, officers, employees or
consultants (other than compensation for current services not yet due and
payable and reimbursement of expenses arising in the ordinary course of
business), and none of such persons owes any amount to Neptune in connection
with the Neptune Business.
3.17. Employees, Labor Matters, etc. (a) Except as set forth on
Schedule 3.17(a), Neptune is not a party to or bound by any collective
bargaining agreement, and there are no labor unions or other organizations
representing, purporting to represent or attempting to represent any employees
employed by Neptune in connection with the Neptune Business. Since June 1995,
there has not occurred or, to Neptune's Knowledge, been threatened any material
strike, slowdown, picketing, work stoppage, concerted refusal to work overtime
or other similar labor activity with respect to any employees of Neptune in
connection with the Neptune Business. Except as set forth on Schedule 3.17(a),
there are no labor disputes currently subject to any grievance procedure,
arbitration or Litigation and there is no representation petition pending or, to
Neptune's Knowledge, threatened with respect to any employee of Neptune in
connection with the Neptune Business. Neptune has complied with all applicable
laws pertaining to the employment or termination of employment of the employees
employed in connection with the Neptune Business, including, without limitation,
all such laws relating to labor relations, equal employment opportunities, fair
employment practices, prohibited discrimination or distinction and other similar
employment activities, except for any failure so to comply that, individually
and in the aggregate, is not reasonably likely to result in any material
liability or obligation on the part of Neptune or TAS or any of its Affiliates,
or is reasonably likely to result in a Material Adverse Effect.
(b) Schedule 3.17(b) sets forth (i) each person currently
employed by Neptune engaged in the Neptune Business who has entered into a
Non-competition and Confidentiality Commitment in form and substance similar to
the form set forth on Schedule 3.17(b) (the "Non-
21
competition and Confidentiality Commitment") and (ii) each such employee who has
not entered into such commitment.
(c) Schedule 3.17(c) sets forth a complete and accurate list of
Neptune employees substantially involved in the Neptune Business and not being
made available by Neptune for hire by TAS following the Closing Date (the
"NON-TRANSFERRABLE EMPLOYEES").
3.18. Employee Benefit Plans and Related Matters; ERISA. (a)
Employee Benefit Plans. Schedule 3.18(a) sets forth a complete and correct list
of each "employee benefit plan", as such term is defined in section 3(3) of
ERISA, and each bonus, incentive or deferred compensation, severance,
termination, retention, change of control, stock option, stock appreciation,
stock purchase, phantom stock or other equity-based, performance or other
employee or retiree benefit or compensation plan, program, arrangement,
agreement, policy or understanding, whether written or unwritten, that provides
or may provide benefits or compensation in respect of any employee or former
employee of Neptune or the beneficiaries or dependents of any such employee or
former employee (collectively, the "EMPLOYEES") or under which any Employee is
or may become eligible to participate or derive a benefit and that is or has
been maintained or established by Neptune or any other trade or business,
whether or not incorporated, which, together with Neptune is or would have been
at any date of determination occurring within the preceding six years, treated
as a single employer under section 414 of the Code (such other trades and
businesses hereinafter referred to as the "RELATED PERSONS"), or to which
Neptune or any Related Person contributes or is or has been obligated or
required to contribute (collectively, the "PLANS"). With respect to each such
Plan, Neptune has provided TAS complete and correct copies of such Plan, if
written, or a description of such Plan, if not written.
(b) Qualification. Each Plan intended to be qualified under
section 401(a) of the Code, and the trust (if any) forming a part thereof, has
received a favorable determination letter from the IRS as to its qualification
under the Code and to the effect that each such trust is exempt from taxation
under section 501(a) of the Code, and nothing has occurred since the date of
such determination letter that could reasonably be expected to adversely affect
such qualification or tax-exempt status. None of the Neptune Assets are subject
to any lien in favor of, or enforceable by, the Pension Benefit Guaranty
Corporation.
3.19. Inventories. Except as set forth in Schedule 3.19, the
Neptune Inventories are of good and merchantable quality for the purpose for
which they were manufactured. Except as set forth in Schedule 3.19, (a) all such
inventories are of such quality as to meet in all material respects the quality
control standards of Neptune and (b) all such inventories are recorded on the
books at the lower of cost or market value determined in accordance with GAAP.
22
3.20. Customers; Sales Representatives. (a) Schedule 3.20(a) sets
forth for the year ended December 31, 1997 and for the nine-month period ended
September 30, 1998 (a) a list of all customers of the Neptune Business (on a
no-names, no-addresses basis) and the top 10 customers of the Neptune Business
based on the aggregate value of goods and services ordered from Neptune by such
customers during each such period and (b) the products purchased by each such
customer and the amount for which each such customer (on a no-names,
no-addresses basis) was invoiced during each period. Neptune has not received
any notice or has any reason to believe that any customer material to the
Neptune Business as of the date hereof and as of the Closing Date (i) has
ceased, or will cease, to use the products, goods or services, (ii) has
materially reduced or will materially reduce, the use of products, goods or
services or (iii) has sought, or is seeking, to materially reduce the price it
will pay for products, goods or services, which cessations and reductions,
either individually or in the aggregate, are reasonably likely to result in a
Material Adverse Effect.
(b) Schedule 3.20(b) sets forth a complete and correct list of
(a) each sales representative who is individually responsible for the account of
any customer of the Neptune Business that ordered goods and services from
Neptune with an aggregate value of $100,000 or more during the year ended
December 31, 1997 and the nine-month period ended September 30, 1998 and (b) all
sales representatives (on a no-names, no-addresses basis) who collectively are
responsible for the account of any customer of the Neptune Business that ordered
goods and services from Neptune with an aggregate value of $200,000 or more
during the nine-month period ended September 30, 1998 (collectively, the
"NEPTUNE SALES REPRESENTATIVES"), indicating with respect to each such Neptune
Sales Representative the aggregate value of goods and services ordered from
Neptune by customers for whose accounts such Neptune Sales Representative was
responsible.
3.21. Suppliers; Raw Materials. Schedule 3.21 sets forth as of
June 30, 1998 the names and addresses of the 20 largest suppliers of the Neptune
Business based on the aggregate value of raw materials, supplies, merchandise
and other goods and services ordered by Neptune from such suppliers during the
6-month period ended June 30, 1998.
3.22. Products. (a) Warranties. Neptune has delivered to TAS
complete and correct copies of the standard terms and conditions of sale or
lease for each of its products or services (containing applicable guaranty,
warranty and indemnity provisions) included in the Neptune Business, including
terms and conditions previously applicable to the extent Neptune could have any
continuing obligations thereunder. Except as required by law or as set forth on
Schedule 3.22(a), no product manufactured, sold, leased or delivered by, or
service rendered by or on behalf of, Neptune in connection with the Neptune
Business is subject to any guaranty, warranty or other indemnity, express or
implied, beyond such standard terms and conditions.
23
(b) Product Liability. To Neptune's Knowledge, except as set
forth on Schedule 3.22(b), Neptune has no liability or obligation of any nature
(whether known or unknown, accrued, absolute or contingent, and whether due or
to become due), whether based on strict liability, negligence, breach of
warranty (express or implied), breach of contract or otherwise, in respect of
any product, component or other item manufactured, sold, designed or produced
prior to the Closing by, or service rendered prior to the Closing by or on
behalf of, Neptune or any predecessor thereto in connection with the Neptune
Business. There are no material defects or flaws in the Software sold or
licensed by Neptune to its customers of the Neptune Business in the ordinary
course of business, which defects or flaws would prevent such Software from
performing in all material respects the tasks and functions for which it was
designed in accordance with, and subject to the limitations described in, the
manuals, license and sale agreements and other documentation furnished to such
customers in connection with such Software.
(c) Product Returns. Except as set forth on Schedule 3.22(f)(ii),
there have been no returns of products of Neptune sold in connection with the
Neptune Business between January 1, 1998 and September 30, 1998. Except as set
forth on Schedule 3.22(c) hereof, the products of Neptune which both are (i)
sold prior to the Closing Date in connection with the Neptune Business and (ii)
returned by any purchaser of such products to Neptune have not exceeded in the
aggregate, based on the sale price of such products, one percent of the
aggregate gross sales of the Neptune Business since September 30, 1998.
(d) Product and Technology Development. Other than the Multipath
Fading Emulator, Carrier to Noise Generator, Baseband I/Q Interface, Mobile
Station Interface, Base Station Interface, CDMA Automatic Test Software,
Satellite Link Emulator, Ideal Vector Modulator, Phase Continuous Digital Delay
Line, Frequency Synthesizer, New Instrument Platform, Digital Signal Generator,
Integrated Impairment Generator, Modulation Analyzer and Mobile Phone Tester,
there are no wireless or satellite test equipment products or technologies
currently under development by Neptune in connection with the Neptune Business.
(e) Product Backlog. The backlog of product orders existing as of
the date hereof for the MP 2700, the UFX-BER Series cellular and non-cellular
and the SLE Series products does not exceed $1,000,000 in the aggregate, and no
price of any such backlog product shall have been discounted by Neptune from its
standard list prices for such product, except in the ordinary course consistent
with past practice since January 1, 1997.
(f) Product Sales, Orders and Backlog. (i) Schedule 3.22(f)(i)
sets forth a complete and accurate list of aggregate product orders, sales, and
backlog for the products relating to the Neptune Business for the 11-month
period ended November 30, 1998.
24
(ii) Schedule 3.22(f)(ii) sets forth for each product relating to
the Neptune Business sold since January 1, 1998 the date of shipment of such
product and the invoice amount for such shipment.
3.23. Absence of Certain Business Practices. To Neptune's
Knowledge, neither Neptune nor any officer, employee or agent of Neptune, or any
other Person acting on its behalf, has, directly or indirectly, within the past
five years given or agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other person who is or may be in a position
to help or hinder the Neptune Business (or assist Neptune in connection with any
actual or proposed transaction) (i) which subjected or was reasonably likely to
subject Neptune to any damage or penalty in any civil, criminal or governmental
Litigation or proceeding, (ii) which if not given in the past, is reasonably
likely to result in a Material Adverse Effect, (iii) which if not continued in
the future, would reasonably likely to have resulted in a Material Adverse
Effect or subject Neptune to suit or penalty in any private or governmental
Litigation or proceeding, (iv) for any of the purposes described in section
162(c) of the Code or (v) for the purpose of establishing or maintaining any
concealed fund or concealed bank account.
3.24. Territorial Restrictions. Except as set forth on Schedule
3.24 hereto, Neptune is not restricted by any written agreement or understanding
with third parties from carrying on the Neptune Business anywhere in the world.
3.25. Brokers, Finders, etc. All negotiations relating to this
Agreement, the Ancillary Agreements and the transactions contemplated hereby and
thereby have been carried on without the participation of any Person acting on
behalf of Neptune in such a manner as to, and the transactions contemplated
hereby and thereby will not otherwise, give rise to any valid claim against
Neptune or TAS for any brokerage or finder's commission, fee or similar
compensation, or for any bonus payable to any officer, director, employee, agent
or representative of or consultant to Neptune upon consummation of the
transactions contemplated hereby or thereby.
3.26. Disclosure. This Agreement and each Ancillary Agreement,
and each certificate or other instrument or document furnished by or on behalf
of Neptune to TAS or any agent or representative of TAS pursuant hereto or in
connection herewith do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated herein or therein or
necessary to make the statements contained herein or therein in light of the
circumstances under which they were made, not misleading.
25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF TAS
TAS represents and warrants to Neptune as follows, as of the date
hereof and as of the Closing Date:
4.1. Authorization, etc. TAS has full corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements to
which it is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by TAS of this Agreement and the Ancillary Agreements, the performance
of TAS's obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby and thereby, have been authorized by all
requisite corporate action of TAS. TAS has duly executed and delivered this
Agreement and on the Closing Date TAS will have duly executed and delivered the
Ancillary Agreements. This Agreement constitutes and each such Ancillary
Agreement will constitute, the legal valid and binding obligation of TAS
enforceable against TAS in accordance with its respective terms.
4.2. No Conflicts, etc. The execution, delivery and performance
by TAS of this Agreement and each of the Ancillary Agreements, and the
consummation of the transactions contemplated hereby and thereby, do not and
will not conflict with, contravene or result in a violation or breach of or
default under (with or without the giving of notice or the lapse of time, or
both) (i) the certificate of incorporation or by-laws of TAS, (ii) any law
applicable to TAS or any of its Affiliates or any of their respective properties
or assets or (iii) any contract, agreement or other instrument applicable to TAS
or any of its Affiliates or any of their respective properties or assets,
except, in the case of clause (iii), for violations and defaults that,
individually and in the aggregate, are not reasonably likely to have a Material
Adverse Effect. Except as specified in Schedule 4.2, no governmental approval or
other consent is required to be obtained or made by TAS in connection with the
execution and delivery of this Agreement or the Ancillary Agreements or the
consummation of the transactions contemplated thereby.
4.3. Corporate Status. TAS is a corporation duly organized,
validly existing and in good standing under the laws of New Jersey, and has full
corporate power and authority to conduct the TAS Business and to own or lease
and to operate the TAS Assets as and in the places where such TAS Business is
conducted and such TAS Assets are owned, leased or operated.
26
4.4. TAS Assets. TAS owns, or otherwise has sufficient and
legally enforceable rights to use, the TAS Assets. TAS has good, valid and
marketable title to all TAS Assets that are material to the TAS Business (except
as may be disposed of in the ordinary course of business after the date hereof
and in accordance with this Agreement), in each case free and clear of any Lien,
except Permitted Liens. TAS has maintained all tangible TAS Assets that are
material to the TAS Business in good repair, working order and operating
condition subject only to ordinary wear and tear. All such tangible TAS Assets
are fully adequate and suitable for the purposes for which they are presently
being used.
4.5. Intellectual Property. (a) Disclosure. Schedule 4.5(a) sets
forth a complete and correct list of all Intellectual Property that is owned by
TAS and related to, used or held for use in connection with, necessary for the
conduct of, or otherwise material to the TAS Business (the "TAS OWNED
INTELLECTUAL PROPERTY"), other than any TAS Owned Intellectual Property that (i)
consists of inventions, trade secrets, processes, formulae, know-how, designs,
research and development, ideas, engineering notebooks, and confidential
business and technical information, or (ii) is not registered or subject to
application for registration and is not material to the TAS Business.
(b) Title. All of the TAS Intellectual Property Assets are owned
by TAS, except as set forth in Schedule 4.5(b)(i). TAS has the legal right to
use the TAS Intellectual Property Assets in connection with the TAS Business
free from any Liens (except for Permitted Liens incurred in the ordinary course
of business) and free from any requirement of any past, present or future
royalty payments, license fees, charges or other payments, or conditions or
restrictions whatsoever. Except as set forth on Schedule 4.5(b)(ii), the TAS
Intellectual Property Assets comprise all of the Intellectual Property necessary
for Neptune to conduct and operate the TAS Business as now being operated by
TAS. Except as set forth in Schedule 4.5(b)(iii), immediately after the Closing,
Neptune will own all of the TAS Owned Intellectual Property and will have a
right to use all other TAS Intellectual Property Assets, in each case free from
Liens (except for Permitted Liens incurred in the ordinary course of business)
and on the same terms and conditions as in effect prior to the Closing.
(c) Licensing and Similar Arrangements. Schedule 4.5(c) sets
forth all written or oral agreements and arrangements (i) pursuant to which TAS
has licensed TAS Intellectual Property Assets to, or the use of TAS
Intellectual Property Assets is otherwise permitted (through non-assertion,
settlement or similar agreements or otherwise) with respect to, any other Person
(including any of TAS's Affiliates), and (ii) pursuant to which TAS has had
Intellectual Property licensed to it in connection with the TAS Business, or has
otherwise been permitted to use Intellectual Property in connection with the TAS
Business (through non-assertion, settlement or similar agreements or otherwise).
Except as set forth in Schedule 4.5(c), all of the agreements and
27
arrangements set forth or required to be set forth in Schedule 4.5(c): (i) are
in full force and effect and enforceable in accordance with their terms, and no
default exists or is threatened thereunder by TAS, or to TAS' Knowledge, by any
other party thereto, (ii) are free and clear of all Liens (except for Permitted
Liens incurred in the ordinary course of business), and (iii) do not contain any
assignment, change in control or other terms or conditions that will become
applicable or inapplicable as a result of the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements. TAS has delivered
to Neptune true and complete copies of all agreements and arrangements
(including amendments) set forth on Schedule 4.5(c).
(d) No Infringement. To TAS' Knowledge, the conduct of the TAS
Business does not infringe or otherwise conflict with any rights of any Person
in respect of any Intellectual Property. To TAS' Knowledge, none of the TAS
Intellectual Property Assets being transferred is being infringed or otherwise
used or available for use by any Person.
(e) No Intellectual Property Litigation. No claim or demand of
any Person has been made or, to TAS' Knowledge, threatened, nor is there any
Litigation that is pending or, to TAS' Knowledge, threatened, that (i)
challenges the rights of TAS in respect of any Intellectual Property, (ii)
asserts that TAS is infringing or otherwise in conflict with, or is required to
pay any royalty, license fee, charge or other amount with regard to, any
Intellectual Property, or (iii) claims that any default exists under any
agreement or arrangement set forth or required to be set forth in Schedule
4.5(c). None of the TAS Intellectual Property Assets being transferred are
subject to any outstanding order, ruling, decree, judgment or stipulation by or
with any court, tribunal, arbitrator or other governmental authority or agency,
or has been the subject of any Litigation within the last ten years, whether or
not resolved in favor of TAS.
(f) Due Registration, etc. The TAS Owned Intellectual Property
has not been registered with, filed in or issued by, as the case may be, the
United States Patent and Trademark Office, the United States Copyright Office or
other filing offices, domestic or foreign. Except as set forth in Schedule
4.5(f), TAS has taken reasonable actions to ensure protection of the TAS
Intellectual Property Assets being transferred (including maintaining the
secrecy of all confidential TAS Intellectual Property Assets being transferred)
under any applicable law.
(g) Use of Name and Mark. There are, and immediately after the
Closing there will be, no contractual restriction or limitations pursuant to any
orders, decisions, injunctions, judgments, awards or decrees of any governmental
authority or agency on Neptune's right to use the names "420 Wideband Noise
Generator" and "430 Wideband Noise Generator", in the conduct of the TAS
Business as presently carried on by TAS or as such TAS Business may be extended
by Neptune.
28
(h) Calendar Function. (i) All Software, firmware, hardware and
equipment included in the TAS Assets being transferred either (x) does not
contain or call on a calendar function, including but not limited to any
function that is indexed to a computer processing unit clock, provides specific
days, dates or times, or calculates spans of dates or times, or (y) contains or
calls on such a calendar function, and is and will be able to record, store,
process, calculate, compare, sequence and provide true and accurate day, date
and time data from, into and between the twentieth and twenty-first centuries,
including but not limited to with respect to the years 1999, 2000 and 2001 and
leap year calculations.
(ii) All equipment, including but not limited to hardware,
firmware and Software which has been or may be supplied and/or licensed to
customers of the TAS Business by TAS (collectively, the "TAS EQUIPMENT") either
(x) does not have a calendar function or (y) is, or shall be, prior to the time
supplied and/or licensed, Year 2000 Compliant, provided that for the purposes of
clause (y) hereof such TAS Equipment is used either independently of any other
products or in combination with other products that are Year 2000 Compliant.
4.6. Litigation. Except as set forth on Schedule 4.6, there is no
Litigation pending or, to TAS' Knowledge, threatened by, against or affecting
TAS with respect to the TAS Business or the TAS Assets, that, individually or in
the aggregate, is reasonably likely to result in a Material Adverse Effect (in
each case, if adversely determined, and without regard to whether the defense
thereof or liability in respect thereof is covered by policies of insurance or
any indemnity, contribution, cost sharing or similar agreement or arrangement by
or with any other Person). There are no outstanding orders, judgments, decrees
or injunctions issued by any governmental authority or agency against or
affecting TAS that is reasonably likely to result in a Material Adverse Effect.
4.7. Compliance with Laws and Instruments; Consents; Governmental
Permits. (a) Compliance. Except as set forth on Schedule 4.7(a), (i) TAS is not
in conflict with or in violation or breach of or default under (and there exists
no event that, with notice or passage of time or both, would constitute a
conflict, violation, breach or default with, of or under) (x) any law applicable
to it or any of the TAS Assets, or the TAS Business, (y) any provision of its
Organizational Documents, or (z) any Contract, or other agreement or instrument
to which it is party or by which it or any of the properties or assets of the
TAS Business is bound or affected, except for any such conflicts, breaches,
violations and defaults that, individually or in the aggregate, is not
reasonably likely to result in a Material Adverse Effect, and (ii) TAS has not
received any notice or has knowledge of any claim alleging any such conflict,
violation, breach or default. To TAS' Knowledge, there are no proposed laws
which would be applicable to the TAS Business or the TAS Assets and which might
adversely affect the properties, assets, liabilities, operations or prospects of
the TAS Business, either before or after the Closing.
29
(b) Consents. (i) Except as specified in Schedule 4.7(b)(i), no
governmental approval or other consent is required to be obtained or made by TAS
in connection with the execution and delivery of this Agreement and the
Ancillary Agreements or the consummation of the transactions contemplated hereby
or thereby, except for consents the failure of which to be made or obtained,
individually and in the aggregate, is not reasonably likely to result in a
Material Adverse Effect or materially impair the ability of Neptune, following
the Closing, to continue to conduct the TAS Business or to own or lease and to
operate the TAS Assets.
(ii) Schedule 4.7(b)(ii) contains a complete and correct list of
all governmental permits and other authorizations necessary for, or otherwise
material to, the conduct of the TAS Business. Except as set forth in Schedule
4.7(b)(ii), all such governmental permits and other authorizations have been
duly obtained and are held by TAS and are in full force and effect. TAS is in
compliance with all governmental permits and other authorizations held by it,
except for such failures so to comply that, individually and in the aggregate,
is not reasonably likely to result in a Material Adverse Effect. There is no
Litigation pending or, to TAS' Knowledge, threatened, that would result in the
revocation, cancellation, suspension or modification or nonrenewal of any such
governmental permit or other authorization; TAS has not been notified that any
such governmental permit or other authorization will be modified, suspended,
cancelled, modified or cannot be renewed in the ordinary course of business; and
there is no reasonable basis for any such revocation, cancellation, suspension,
modification or nonrenewal. The execution, delivery and performance of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby do not and will not violate any such
governmental permit or other authorization, or result in any revocation,
cancellation, suspension, modification or nonrenewal thereof.
4.8. Inventories. Except as set forth in Schedule 4.8, the TAS
Inventories are of good and merchantable quality for the purpose for which they
were manufactured. Except as set forth in Schedule 4.8, (a) all such inventories
are of such quality as to meet in all material respects the quality control
standards of TAS and (b) all such inventories are recorded on the books at the
lower of cost or market value determined in accordance with GAAP.
4.9. Brokers, Finders, etc. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on without
the participation of any Person acting on behalf of TAS in such manner as to
give rise to any valid claim against Neptune for any brokerage or finder's
commission, fee or similar compensation.
4.10. Operation of the TAS Business. TAS has conducted the TAS
Business itself and not through any division or any direct or indirect
subsidiary or affiliate of TAS. No part of the TAS Business is operated by TAS
through any entity other than TAS.
30
4.11. Absence of Certain Business Practices. To TAS' Knowledge,
neither TAS nor any officer, employee or agent of TAS, or any other Person
acting on its behalf, has, directly or indirectly, within the past five years
given or agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the TAS Business (or assist TAS in connection with any actual or proposed
transaction) (i) which subjected or was reasonably likely to subject TAS to any
damage or penalty in any civil, criminal or governmental Litigation or
proceeding, (ii) which if not given in the past, would reasonably likely to have
resulted in a Material Adverse Effect, (iii) which if not continued in the
future, would reasonably likely to have resulted in a Material Adverse Effect or
subject TAS to suit or penalty in any private or governmental Litigation or
proceeding, (iv) for any of the purposes described in section 162(c) of the Code
or (v) for the purpose of establishing or maintaining any concealed fund or
concealed bank account.
4.12. Territorial Restrictions. TAS is not restricted by any
written agreement or understanding with third parties from carrying on the TAS
Business anywhere in the world.
4.13. Affiliate Transactions. TAS, in connection with its
operation of the TAS Business, does not owe any amount to, or have any contract
with or commitment to, any Affiliate, directors, officers, employees or
consultants (other than compensation for current services not yet due and
payable and reimbursement of expenses arising in the ordinary course of
business), and none of such persons owes any amount to TAS in connection with
the TAS Business.
4.14. Suppliers; Raw Materials. Schedule 4.14 sets forth as of
June 30, 1998 the names and addresses of the seven largest suppliers of the TAS
Business based on the aggregate value of raw materials, supplies, merchandise
and other goods and services ordered by TAS from such suppliers during the
6-month period ended June 30, 1998.
4.15. Products. (a) Warranties. TAS has delivered to Neptune
complete and correct copies of the standard terms and conditions of sale or
lease for each of its products or services (containing applicable guaranty,
warranty and indemnity provisions) included in the TAS Business, including terms
and conditions previously applicable to the extent TAS could have any continuing
obligations thereunder. Except as required by law or as set forth on Schedule
4.15(a), no product manufactured, sold, leased or delivered by, or service
rendered by or on behalf of, TAS in connection with the TAS Business is subject
to any guaranty, warranty or other indemnity, express or implied, beyond such
standard terms and conditions.
(b) Product Liability. To TAS' Knowledge, except as set forth on
Schedule 4.15(b), TAS has no liability or obligation of any nature (whether
known or unknown, accrued, absolute or contingent, and whether due or to become
due), whether based on strict liability,
31
negligence, breach of warranty (express or implied), breach of contract or
otherwise, in respect of any product, component or other item manufactured,
sold, designed or produced prior to the Closing by, or service rendered prior to
the Closing by or on behalf of, TAS or any predecessor thereto in connection
with the TAS Business.
(c) Product Returns. The products of TAS which both are (i) sold
prior to the Closing Date in connection with the TAS Business and (ii) returned
by any purchaser of such products to TAS have not exceeded in the aggregate,
based on the sale price of such products, one percent of the aggregate gross
sales of the TAS Business during the 12-month period immediately preceding the
Closing Date.
(d) Product Development. Other than the 420 Wideband Noise
Generator and the 430 Wideband Noise Generator, there are no single-function
noise generator products currently under development by TAS in connection with
the TAS Business.
(e) Product Backlog. The backlog of product orders existing as of
the date hereof for the 420 Wideband Noise Generator and the 430 Wideband Noise
Generator does not exceed $50,000 in the aggregate, and no price of any such
backlog product shall have been discounted by TAS from its standard list prices
for such product, except in the ordinary course consistent with past practice
since January 1, 1997.
(f) Product Sales, Orders and Backlog. (i) Schedule 4.15(f)(i)
sets forth a complete and accurate list of aggregate product orders, sales, and
backlog for the products relating to the TAS Business during the 11-month period
ended November 30, 1998.
(ii) Schedule 4.15(f)(ii) sets forth for each product relating to
the TAS Business sold since June 30, 1998 the date of shipment of such product
and the invoice amount for such shipment.
4.16. Insurance. All insurance policies maintained by TAS for the
benefit of or in connection with the TAS Assets or the TAS Business are in full
force and effect, and all premiums due thereon have been paid. TAS has complied
in all material respects with the terms and provisions of such policies. The
insurance coverage provided by such policies is on such terms (including without
limitation as to deductibles and self-insured retentions), covers such risks,
contains such deductibles and retentions, and is in such amounts, as the
insurance customarily carried by comparable companies of established reputation
similarly situated and carrying on the same or similar business.
32
4.17. Customers; Sales Representatives. (a) Schedule 4.17(a) sets
forth for the year ended December 31, 1997 and for the nine-month period ended
September 30, 1998 (a) a list of all customers of the TAS Business (on a
no-names, no-addresses basis) and the top 10 customers of the TAS Business based
on the aggregate value of goods and services ordered from TAS by such customers
during each such period and (b) the products purchased by each such customer and
the amount for which each such customer was invoiced during each period. TAS has
not received any notice or has any reason to believe that any material customer
(i) has ceased, or will cease, to use the products, goods or services, (ii) has
materially reduced or will materially reduce, the use of products, goods or
services or (iii) has sought, or is seeking, to materially reduce the price it
will pay for products, goods or services, which cessations and reductions,
either individually or in the aggregate, are reasonably likely to result in a
Material Adverse Effect.
(b) Schedule 4.17(b) sets forth a complete and correct list of
(a) each sales representative who is individually responsible for the account of
any customer of the TAS Business that ordered goods and services from TAS with
an aggregate value of $100,000 or more during the year ended December 31, 1997
and the nine-month period ended September 30, 1998 and (b) all sales
representatives (on a no-names, no addresses basis) who collectively are
responsible for the account of any customer of the TAS Business that ordered
goods and services from TAS with an aggregate value of $200,000 or more during
the nine-month period ended September 30, 1998 (collectively, the "TAS SALES
REPRESENTATIVES"), indicating with respect to each such TAS Sales Representative
the aggregate value of goods and services ordered from TAS by customers for
whose accounts such TAS Sales Representative was responsible.
4.18. Tax Matters. (i) All material Tax Returns required to be
filed by TAS have been filed, (ii) all such Tax Returns are true and correct in
all material respects, (iii) all material Taxes (whether or not reflected on
such Tax Returns) required to be paid by TAS have been paid, (iv) all material
Taxes with respect to TAS for any taxable period (or a portion thereof) ending
on or prior to the Closing Date (which are not yet due and payable on or prior
to the Closing Date) have been properly reserved for in the books and records of
TAS, and (v) all material Taxes required to be withheld by TAS have been duly
and timely withheld, and such withheld Taxes have been either duly and timely
paid to the proper governmental authority or properly set aside in accounts for
such purpose and will be duly and timely paid to the proper governmental
authority.
4.19. Disclosure. This Agreement and each Ancillary Agreement,
and each certificate or other instrument or document furnished by or on behalf
of TAS to Neptune or any agent or representative of Neptune pursuant hereto or
in connection herewith do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated herein or therein or
necessary to make the statements contained herein or therein in light of the
circumstances under which they were made, not misleading.
33
ARTICLE V
COVENANTS OF THE PARTIES
5.1. Conduct of the Businesses. From the date hereof to the
Closing Date, except as expressly permitted or required by this Agreement or as
otherwise consented to by the other party in writing, each of Neptune, on the
one hand, and TAS, on the other hand, covenants and agrees that it will, with
respect to the Neptune Business and the Neptune Assets, in the case of Neptune,
and the TAS Business and the TAS Assets, in the case of the TAS:
(a) carry on its Business in, and only in, the ordinary course,
in substantially the same manner as heretofore conducted, and use all
reasonable efforts to preserve intact its present business organization,
maintain its properties in good operating condition and repair, keep
available the services of its present officers and significant
employees, and preserve its relationship with customers, suppliers and
others having business dealings with it, to the end that its goodwill
and going business shall be in all material respects unimpaired
following the Closing;
(b) pay accounts payable and other obligations of its Business
when they become due and payable in the ordinary course of business
consistent with prior practice;
(c) perform in all material respects all of its obligations under
all Contracts (in the case of Neptune) and other agreements and
instruments relating to or affecting its Business or its Assets, and
comply in all material respects with all laws applicable to it, its
Assets or its Business;
(d) not enter into or assume any material agreement, contract or
instrument relating to its Business, or enter into or permit any
material amendment, supplement, waiver or other modification in respect
thereof;
(e) in the case of Neptune, not grant (or commit to grant) any
increase in the compensation (including incentive or bonus compensation)
of any Transferred Employee (as defined in Section 11.1(a)) institute,
adopt or amend (or commit to institute, adopt or amend) any compensation
or benefit plan, policy, program or arrangement or collective bargaining
agreement applicable to any such employee;
(f) not transfer or grant any rights or licenses under, or enter
into any settlement regarding the breach or infringement of, any
Intellectual Property included in its Business,
34
or modify any existing rights with respect thereto or enter into
any licensing or similar agreements or arrangements; and
(g) not take any action or omit to take any action, which action
or omission would result in a breach of any of its representations and
warranties set forth in Article III or Article IV of this Agreement, as
the case may be.
5.2. Access and Information. (a) Prior to the Closing Date, each
party will (and will cause each of its Affiliates and its Affiliates'
accountants, counsel, consultants, employees and agents to), upon reasonable
notice, give the other party and its accountants, counsel, consultants,
employees and agents, full access during normal business hours to, and furnish
them with all documents, records, work papers and information with respect to,
all of such Person's properties, assets, books, contracts, commitments, reports
and records relating to its Business, the other party shall from time to time
reasonably request. In addition, each party will permit the other party and its
accountants, counsel, consultants, employees and agents, reasonable access to
such personnel of such party during normal business hours as may be necessary or
useful to such party in its review of the properties, assets and business
affairs of the other party and the above-mentioned documents, records and
information. Each party will keep the other party generally informed as to the
affairs of its Business.
(b) Each party will, and will cause each of its Affiliates to,
retain all books and records relating to its Business in accordance with such
party's record retention policies as presently in effect. During the seven-year
period beginning on the Closing Date, neither party shall dispose of nor permit
the disposal of any such books and records not required to be retained under
such policies without first giving 60 days' prior written notice to the other
party offering to surrender the same to the other party at such other party's
expense.
(c) Each party shall take all steps necessary to preserve the
confidential nature of all material confidential information (including, without
limitation, any proprietary information) with respect to its Business,
including, but not limited to, the manufacturing or marketing of any of the
products or services of its Business.
5.3. Public Announcements. Each party acknowledges that
circumstances may arise where the other party is advised by its financial
advisors to make an announcement in respect of the transactions contemplated
hereby. Prior to the Closing, except as required by applicable law or in
accordance with the rules of the American Stock Exchange or the London Stock
Exchange, as in effect from time to time or under the circumstances described in
the prior sentence (in which case TAS or Neptune, as the case may be, shall use
reasonable efforts to obtain the other party's prior approval as to the form and
wording of any such announcement), neither
35
party shall, nor shall it permit its Affiliates to, make any public announcement
in respect of this Agreement or the transactions contemplated hereby without the
prior written consent of the other party.
5.4. Further Actions. Each party agrees to use all reasonable
good faith efforts to consummate the transactions contemplated by this
Agreement, including without limitation all reasonable good faith efforts by
Neptune to obtain the consent of its shareholders to the transactions
contemplated by this Agreement as a result of the change in law referenced in
Section 8.2. At all times prior to the Closing, each party shall promptly notify
the other party in writing of any fact, condition, event or occurrence that will
or may result in the failure of any of the conditions benefitting the other
party to be satisfied, promptly upon becoming aware of the same.
5.5. Further Assurances. Following the Closing, each party shall,
and shall cause each of its Affiliates to, from time to time, execute and
deliver such additional instruments, documents, conveyances or assurances and
take such other actions as shall be necessary, or otherwise reasonably
requested by the other party, to confirm and assure the rights and obligations
provided for in this Agreement and in the Ancillary Agreements and render
effective the consummation of the transactions contemplated hereby and thereby.
ARTICLE VI
COVENANTS OF NEPTUNE
6.1. Liability for Transfer Taxes. Neptune shall be responsible
for the timely payment of, and shall indemnify and hold harmless TAS against,
(a) all sales (including, without limitation, bulk sales), use, value added,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar Taxes and fees arising out of or in
connection with or attributable to the transfer of the Neptune Assets or the
Neptune Business pursuant to this Agreement and the Ancillary Agreements
("NEPTUNE TRANSFER TAXES"), and (b) all property Taxes in respect of the Neptune
Assets attributable to periods (or portions thereof) up to and including the
Closing Date. Neptune shall prepare and timely file all Tax Returns required to
be filed in respect of Neptune Transfer Taxes (including, without limitation,
all notices required to be given with respect to bulk sales taxes). Neptune's
preparation of any such Tax Returns shall be subject to TAS's approval, which
approval shall not be withheld unreasonably.
6.2. Certificates of Tax Authorities. On or before the Closing
Date, Neptune shall provide to TAS copies of certificates from the New Jersey
Division of Taxation stating that no Taxes are due to the State of New Jersey
for which TAS could have liability to withhold or pay Taxes with respect to the
transfer of the Neptune Assets or the Neptune Business pursuant to New
36
Jersey Statutes Annotated 54:32B-22, provided that any failure to provide such
certificates to TAS which is not the fault of Neptune shall not relieve TAS of
its obligations to enter into and complete the Closing. If Neptune shall fail to
provide such certificates, TAS shall withhold or, where appropriate, escrow such
amount as necessary based upon TAS's reasonable estimate of the amount of such
potential liability, or as determined by the New Jersey Division of Taxation, to
cover such Taxes until such time as certificates are provided.
6.3. Use of Business Names and Marks. (a) After the Closing,
Neptune will not, directly or indirectly, use or do business, or allow any
Affiliate to use or do business, or assist any third party in using or doing
business, under the names and marks "Wireless Telecom", "WT Com", "Wireless
Telecom International" or any of the names by which any of the products included
in the Neptune Business, including but not limited to the Neptune Product Lines,
are known or sold (or any other name or mark confusingly similar to such names
and marks); provided that Neptune shall not be required to change its corporate
name.
(b) To the extent the trademarks, service marks, brand names or trade,
corporate or business names of TAS or of any of TAS's Affiliates are used by TAS
on internal components included in the TAS Assets that are embedded within the
final product and not visible to the end-user, Neptune may sell such components
after the Closing. Neptune shall not otherwise be permitted to use the
trademarks, service marks, brand names or trade, corporate or business names of
TAS or of any of TAS's Affiliates after the Closing.
6.4. Production of Backlog. (a) Neptune agrees to use
commercially reasonable efforts to fulfill the backlog of product orders set
forth on Schedule 6.4 in substantially the same manner and with the same care
and diligence as exercised by Neptune prior to the date of this Agreement.
Neptune agrees that, as of the Closing Date, there will be no unfulfilled
backlog of product orders for any product of the Neptune Businesses other than
products to be manufactured by TAS pursuant to the Manufacturing Agreement.
(b) Between the date of this Agreement and the Closing, Neptune
shall not accept any order for the customized or non-standard manufacture of the
products to be manufactured by TAS pursuant to the Manufacturing Agreement or
discount the sale price of any product of the Neptune Business below Neptune's
standard list prices for such products, except with the prior written consent of
TAS. Neptune agrees to give TAS prompt notice of orders or all inquiries
regarding orders for any product that is part of a Neptune Product Line.
(c) Notwithstanding anything in this Agreement to the contrary,
Neptune shall be liable for the payment of all product warranty claims in excess
of the $100,000 of product
37
warranty claims to be assumed by TAS pursuant to Section 2.5(a)(i) for products
included in the Neptune Product Lines delivered prior to the Closing.
6.5. Transfer of Certain Intellectual Property Assets. For a
period of no more than 60 days following the Closing Date, Neptune will provide
all reasonable support and assistance to TAS, including but not limited to
access to employees of Neptune, as may be required to successfully transfer to
TAS any know-how, trade secrets or ideas included in the Neptune Intellectual
Property Assets.
6.6. Year-End Inventory Count. Neptune agrees that TAS and/or its
designated representative shall be permitted to participate in Neptune's 1998
year-end count of the Neptune Inventories as conducted by Neptune or its
designated representative in the ordinary course. Neptune shall give TAS
reasonable advance notice of such inventory count, including the date(s),
approximate time and location.
6.7. Compliance with ISRA. (a) In connection with the
transactions regarding the Neptune Assets contemplated by this Agreement,
Neptune shall either: (i) obtain from NJDEP a Letter of Non-Applicability (terms
for which ISRA or regulations promulgated thereunder (including without
limitation, N.J.A.C. 7:26B-1.1, et seq. and N.J.A.C. 7:26:E-1.1, et seq.)
provide a definition shall have the same meaning unless otherwise designated in
this Agreement) or an equivalent written determination by NJDEP that the
transaction is exempt from the requirements of ISRA; or (ii) attain compliance
with the requirements of ISRA by obtaining from NJDEP: (A) approval of a
proposed Negative Declaration, as such term is defined at N.J.S.A. 13:1K-8; (B)
a No Further Action Letter, as such term is defined at N.J.S.A. 13:1K-8; or (C)
an equivalent final written approval of the implementation of a Remedial Action
Workplan which is acceptable to NJDEP. Receipt of any of such approvals or
documents from NJDEP along with payment of all fees and costs and compliance
with other requirements imposed by NJDEP under ISRA and other applicable New
Jersey environmental statutes shall be deemed "ISRA Compliance." As required by
NJDEP, Neptune shall obtain and maintain with NJDEP a Remediation Funding Source
as such term is defined at N.J.S.A. 58:10B-1 in an amount and form approved by
NJDEP.
(b) Neptune shall have the sole and exclusive responsibility to
comply at its own cost and expense with ISRA in connection with the Neptune
Assets.
(c) If Neptune has not obtained ISRA Compliance before the
Closing Date, Neptune shall keep TAS fully informed of its progress in achieving
ISRA Compliance by sending copies of all correspondence and documents between
Neptune and NJDEP.
38
(d) Neptune agrees to grant to TAS, its consultants and
contractors (upon five business days' prior written notice), and to NJDEP
(without notice), the right to enter upon the Leased Real Property at all
reasonable times, as required to perform or monitor the work necessary for
Neptune to achieve ISRA Compliance.
(e) Neptune's obligations with respect to its compliance with
ISRA shall be deemed terminated and of no further force and effect after
delivery of a Negative Declaration, No Further Action Letter or written
equivalent from NJDEP that the condition of the Leased Real Property is
satisfactory to NJDEP.
6.8. Sublease. Between the date of this Agreement and the Closing
Date, at the request of TAS Neptune shall use its reasonable best efforts to
cause a sublease in favor of TAS to be executed in respect of the San Diego
Facility.
6.9. Option to Acquire the Mahwah Facility. At the written
request of TAS to be delivered between the Closing Date and August 6, 1999,
Neptune agrees to exercise its rights to purchase the Mahwah Facility pursuant
to the Option Agreement of Sale and to sell the Mahwah Facility to TAS or its
designated nominee for the same Purchase Price (as defined in the Option
Agreement of Sale) and otherwise on terms and conditions no less favorable to
those on which Neptune purchased the Mahwah Facility. TAS agrees to pay all
reasonable costs and expenses incurred by Neptune, but only to the extent such
costs are not included in the Purchase Price, in connection with Neptune's
purchase of the Mahwah Facility pursuant to the Option Agreement of Sale and the
resale of the Mahwah Facility by Neptune to TAS or its designated nominee
("Other Costs"), provided that Neptune shall obtain TAS's approval prior to
incurring such Other Costs, which approval shall not be unreasonably withheld.
6.10. Iridium Circuit Enhancement. Neptune agrees that from and
after the Closing Date it will have no interest in, nor will it assert any claim
to, or seek to obtain any Intellectual Property rights in, to or under the
Circuit Enhancement under development for Iridium, Inc. As used herein, "Circuit
Enhancement" shall mean the circuit board developed and produced by Neptune and
Motorola, Inc. and the software developed by Neptune for use in conjunction with
the circuit board, in each case, as such may be further developed after the date
hereof.
6.11. Neptune's Net Worth and Net Current Asset Value. For a
period of three years following the Closing Date, Neptune agrees that it shall
maintain a Net Worth of not less than $7,500,000 and a Net Current Asset Value
of not less than $3,000,000.
39
6.12. Third Party Consents. Neptune shall use its best efforts
(which shall not include the payment of unreasonable costs) to obtain the third
party consents for the software licenses set forth on Annex A to Schedule
3.10(b), provided that the parties agree that to the extent such consents are
not obtained at least 5 days prior to the Closing Date, none of the Estimated
Statement of Closing Net Asset Value, the Statement of Closing Net Asset Value
and the Adjusted Net Asset Value shall reflect the book values of such software
licenses. Neptune shall use its best efforts (which shall not include the
payment of unreasonable costs) to obtain the third party consents for the
non-disclosure agreements set forth on Schedule 3.10(b), including, without
limitation, sending to such third parties written requests for such consents no
later than 5 business days after the date hereof.
6.13. Non-competition and Confidentiality Commitments. Neptune
agrees to assign to TAS as of the Closing Date Neptune's rights relating to the
Neptune Business under the Non-competition and Confidentiality Commitments with
employees of Neptune engaged in the Neptune Business who are not Transferred
Employees. Following the Closing, TAS shall be deemed to be a third party
beneficiary of Neptune's rights under such Non-competition and Confidentiality
Commitments, including but not limited to Neptune's right to enforce such
agreements. Neptune further agrees to assist TAS in such enforcement, or if
requested by TAS, to enforce such rights on TAS's behalf.
ARTICLE VII
COVENANTS OF TAS
7.1. Liability of Transfer Taxes. TAS shall be responsible for
the timely payment of, and shall indemnify and hold harmless Neptune against,
(a) all sales (including, without limitation, bulk sales), use, value added,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar Taxes and fees, arising out of or in
connection with or attributable to the transfer of the TAS Assets and the TAS
Business pursuant to this Agreement and the Ancillary Agreements ("TAS TRANSFER
TAXES") and (b) all property Taxes in respect of the TAS Assets attributable to
periods (or portions thereof) up to and including the Closing Date. TAS shall
prepare and timely file all Tax Returns required to filed in respect of Transfer
Taxes (including, without limitation, all notices required to be given with
respect to bulk sales taxes). TAS's preparation of any such Tax Returns shall be
subject to Neptune's approval, which approval shall not be withheld
unreasonably.
7.2. Certificates of Tax Authorities. On or before the Closing
Date, TAS shall provide to Neptune copies of certificates from the New Jersey
Division of Taxation stating that no Taxes are due to the State of New Jersey
for which Neptune could have liability to withhold or
40
pay Taxes with respect to the transfer of the TAS Assets or the TAS Business
pursuant to New Jersey Statutes Annotated 54:32B-22, provided that any failure
to provide such certificates to Neptune which is not the fault of TAS shall not
relieve Neptune of its obligations to enter into and complete the Closing. If
TAS shall fail to provide such certificates, Neptune shall withhold or, where
appropriate, escrow such amount as necessary based upon Neptune's reasonable
estimate of the amount of such potential liability, or as determined by the New
Jersey Division of Taxation, to cover such Taxes until such time as certificates
are provided.
7.3. Use of Names and Marks. (a) After the Closing, TAS will not,
directly or indirectly, use, or allow any Affiliate to use, or assist any third
party in using, under the names "420 Wideband Noise Generator" and "430 Wideband
Noise Generator"(or any other name or mark confusingly similar to such names).
(b) To the extent the trademarks, service marks, brand names or
trade, corporate or business names of Neptune or of any of Neptune's Affiliates
are used by Neptune on internal components included in the Neptune Assets that
are embedded within the final product and not visible to the end-user, TAS may
sell such components after the Closing. TAS shall not otherwise be permitted to
use the trademarks, service marks, brand names or trade, corporate or business
names of Neptune or of any of Neptune's Affiliates after the Closing.
7.4. Production of Backlog. (a) TAS agrees to use its best
efforts to fulfill the backlog of orders set forth on Schedule 7.4 in
substantially the same manner and with the same care and diligence as exercised
by TAS in the manufacture of such products prior to the date of this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary,
TAS shall be liable for the payment of all product warranty claims arising with
respect to the 420 Wideband Noise Generator and the 430 Wideband Noise Generator
products delivered prior to the Closing in excess of the $100,000 of product
warranty claims to be assumed by Neptune pursuant to Section 2.5(b).
7.5. Transfer of Certain Intellectual Property Assets. For a
period of no more than 60 days following the Closing Date, TAS will provide all
reasonable support and assistance to Neptune, including but not limited to
access to employees of TAS, as may be required to successfully transfer to
Neptune any know-how, trade secrets or ideas included in the TAS Intellectual
Property Assets.
7.6. Year-End Inventory Count. TAS agrees that Neptune and/or its
designated representative shall be permitted to participate in TAS's 1998
year-end count of the TAS
41
Inventories as conducted by TAS or its designated representative in the
ordinary course. TAS shall give Neptune reasonable advance notice of such
inventory count, including the date(s), approximate time and location.
7.7. Compliance with ISRA. (a) In connection with the
transactions regarding the TAS Assets contemplated by this Agreement, TAS shall
either: (i) obtain from NJDEP a Letter of Non-Applicability (terms for which
ISRA or regulations promulgated thereunder (including without limitation,
N.J.A.C. 7:26B-1.1, et seq. and N.J.A.C. 7:26:E-1.1, et seq.) provide a
definition shall have the same meaning unless otherwise designated in this
Agreement) or an equivalent written determination by NJDEP that the transaction
is exempt from the requirements of ISRA; or (ii) attain compliance with the
requirements of ISRA by obtaining from NJDEP: (A) approval of a proposed
Negative Declaration, as such term is defined at N.J.S.A. 13:1K-8; (B) a No
Further Action Letter, as such term is defined at N.J.S.A. 13:1K-8; or (C) an
equivalent final written approval of the implementation of a Remedial Action
Workplan which is acceptable to NJDEP. Receipt of any of such approvals or
documents from NJDEP along with payment of all fees and costs and compliance
with other requirements imposed by NJDEP under ISRA and other applicable New
Jersey environmental statutes shall be deemed "ISRA Compliance." As required by
NJDEP, TAS shall obtain and maintain with NJDEP a Remediation Funding Source as
such term is defined at N.J.S.A. 58:10B-1 in an amount and form approved by
NJDEP.
(b) TAS shall have the sole and exclusive responsibility to
comply at its own cost and expense with ISRA in connection with the TAS Assets.
(c) If TAS has not obtained ISRA Compliance before the Closing
Date, TAS shall keep Neptune fully informed of its progress in achieving ISRA
Compliance by sending copies of all correspondence and documents between TAS and
NJDEP.
(d) TAS agrees to grant to Neptune, its consultants and
contractors (upon five business days' prior written notice), and to NJDEP
(without notice), the right to enter upon the real property leased by TAS and
used in connection with the TAS Business at all reasonable times with three
business days' prior written notice, as required to perform or monitor the work
necessary for TAS to achieve ISRA Compliance.
(e) TAS's obligations with respect to its compliance with ISRA
shall be deemed terminated and of no further force and effect after delivery of
a Negative Declaration, No Further Action Letter or written equivalent from
NJDEP that TAS's ISRA actions are satisfactory to NJDEP.
42
ARTICLE VIII
CONDITIONS PRECEDENT
TO OBLIGATIONS OF EACH PARTY
The obligations of the parties to consummate the transactions
contemplated hereby shall be subject to the fulfillment on or prior to the
Closing Date of the following conditions:
8.1. HSR Act Notification. In respect of the notifications of TAS
and Neptune pursuant to the HSR Act, the applicable waiting period and any
extensions thereof shall have expired or been terminated.
8.2. No Injunction, etc. Consummation of the transactions
contemplated hereby shall not have been restrained, enjoined or otherwise
prohibited by any applicable law, including any order, injunction, decree or
judgment of any court or other governmental authority or agency. No court or
other governmental authority or agency shall have determined any applicable law
to make illegal the consummation of the transactions contemplated hereby or by
the Ancillary Agreements, and no proceeding with respect to the application of
any such applicable law to such effect shall be pending. In the event there is a
change in law as a result of which Neptune shall be required to obtain the
consent of its shareholders to the transactions contemplated by this Agreement,
consummation of the transactions contemplated hereby shall have been approved by
the shareholders of Neptune.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF TAS
The obligations of TAS to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver by TAS) on or
prior to the Closing Date of the following additional conditions, which Neptune
agrees to use reasonable good faith efforts to cause to be fulfilled:
9.1. Representations, Performance. The representations and
warranties of Neptune contained in this Agreement and in the Ancillary
Agreements to which it is a party (i) shall be true and correct in all respects
(in the case of any representation or warranty containing any materiality
qualification) or in all material respects (in the case of any representation or
warranty without any materiality qualification) at and as of the date hereof,
and (ii) shall be repeated and shall be true and correct in all respects (in the
case of any representation or warranty containing any materiality qualification)
or in all material respects (in the case of any representation or warranty
without any materiality qualification) on and as of the Closing Date with the
same effect as though made on
43
and as of the Closing Date except to the extent such representations and
warranties speak of a date or period certain. Neptune shall have duly performed
and complied in all material respects with all agreements and conditions
required by this Agreement and each of the Ancillary Agreements to be performed
or complied with by it prior to or on the Closing Date. Neptune shall have
delivered to TAS a certificate or certificates, dated the Closing Date and
signed by its duly authorized officers, to the foregoing effect.
9.2. Assumption Agreement. [This Section 9.2 intentionally left
blank.]
9.3. Consents. Neptune shall have obtained and shall have
delivered to TAS copies of (i) all governmental approvals required to be
obtained by Neptune in connection with the execution and delivery of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby or thereby and (ii) all consents (including, without
limitation, all consents required under any Contract (including, but not limited
to, those Contracts set forth in Schedule 3.10(b) (other than the non-disclosure
agreements set forth on such Schedule) and any Intellectual Property license
other than the software licenses set forth on Annex A to Schedule 3.10(b))
necessary to be obtained in order to consummate the sale and transfer of the
Neptune Assets pursuant to this Agreement and the consummation of the other
transactions contemplated thereby and by the Ancillary Agreements.
9.4. No Material Adverse Effect. Except as set forth in Schedules
3.6(e) and (f), no event, occurrence, fact, condition, change, development or
effect shall have occurred, exist or come to exist since December 31, 1997 that,
individually or in the aggregate, has constituted or resulted in, or is
reasonably likely to result in a Material Adverse Effect.
9.5. Ancillary Agreements. Neptune (or the other parties referred
to below) shall have entered into each of the following agreements with TAS:
(a) the Escrow Agreement;
(b) a Non-Competition Agreement, substantially in the form
attached hereto as Exhibit B (the "NEPTUNE NON-COMPETITION AGREEMENT");
(c) a Sublease Agreement with respect to the Mahwah Facility,
substantially in the form attached hereto as Exhibit C (the "SUBLEASE
AGREEMENT");
(d) a License Agreement, substantially in the form attached
hereto as Exhibit D (the "LICENSE AGREEMENT");
44
(e) a Manufacturing Agreement, substantially in the form attached
hereto as Exhibit E (the "MANUFACTURING AGREEMENT"); and
9.6. Opinion of Counsel. TAS shall have received an opinion,
addressed to it and dated the Closing Date, from Morrison Cohen Singer &
Weinstein LLP, counsel to Neptune, and from Reed Smith Shaw & McClay, special
New Jersey counsel to Neptune substantially in the form attached hereto as
Exhibit F and Exhibit G, respectively.
9.7. Transfer Documents. Neptune shall have delivered to TAS at
the Closing all documents, certificates and agreements (in form and substance
reasonably satisfactory to TAS) necessary to transfer to TAS good and marketable
title to the Neptune Assets, free and clear of any and all Liens thereon, other
than Permitted Liens, including without limitation:
(a) a bill of sale, assignment and general conveyance,
substantially in the form attached hereto as Exhibit H, dated the
Closing Date, with respect to the Neptune Assets (other than any Neptune
Asset to be transferred pursuant to any of the instruments referred to
in any other clause of this Section 9.7);
(b) assignments of all Contracts, Intellectual Property and any
other agreements and instruments constituting the Neptune Assets, dated
the Closing Date, assigning to TAS all of Neptune's right, title and
interest therein and thereto, substantially in the form attached hereto
as Exhibits I and J, with any required consent endorsed thereon;
9.8. [This Section 9.8 intentionally left blank.]
9.9. FIRPTA Certificate. TAS shall have received a certificate of
Neptune, dated the Closing Date and sworn to under penalty of perjury, setting
forth the name, address and federal tax identification number of Neptune and
stating that Neptune is not a "foreign person" within the meaning of section
1445 of the Code, such certificate to be in the form set forth in the Treasury
Regulations thereunder.
9.10. Financing Statement. Neptune shall have delivered to TAS
releases or terminations under the Uniform Commercial Code and any other
applicable federal, state or local statutes or regulations of any financing
statements or similar filings filed against any of the Neptune Assets
(including, without limitation, any Liens asserted by any governmental authority
with respect to Taxes).
9.11. ISRA Compliance. Neptune shall have received from NJDEP
pursuant to ISRA, and delivered to TAS satisfactory proof of receipt of, either:
(i) a Letter of Non-Applic-
45
ability, (ii) NJDEP's approval of a Negative Declaration, (iii) NJDEP's issuance
of a No Further Action Letter or an equivalent written document, (iv) NJDEP's
approval of a Remedial Action Workplan addressing all environmental issues at
the Leased Real Property, or in lieu thereof, or (v) a Remediation Agreement
issued by NJDEP pursuant to N.J.S.A. 13:1K-9(e).
9.12. Corporate Proceedings. All corporate and other proceedings
of Neptune in connection with the this Agreement and the Ancillary Agreements
and the transactions contemplated hereby and thereby (including but not limited
to the approval of the shareholders of Neptune), and all documents and
instruments incident thereto, shall be reasonably satisfactory in substance and
form to TAS and its counsel, and TAS and its counsel shall have received all
such documents and instruments, or copies thereof, certified if requested, as
may be reasonably requested.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF NEPTUNE
The obligation of Neptune to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver by Neptune),
on or prior to the Closing Date, of the following additional conditions, which
TAS agrees to use reasonable good faith efforts to cause to be fulfilled.
10.1. Representations, Performance, etc. The representations and
warranties of TAS contained in this Agreement and the Ancillary Agreements (i)
shall be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) at and as of the date hereof and (ii) shall be repeated and
shall be true and correct in all respects (in the case of any representation
or warranty containing any materiality qualification) or in all material
respects (in the case of any representation or warranty without any materiality
qualification) on and as of the Closing Date with the same effect as though
made at and as of such time except to the extent such representations and
warranties speak of a date or period certain. TAS shall have duly performed
and complied in all material respects with all agreements and conditions
required this Agreement and the Ancillary Agreements to be performed or
complied with by it prior to or on the Closing Date. TAS shall have delivered
to Neptune a certificate, dated the Closing Date and signed by its duly
authorized officer, to the foregoing effect.
10.2. Assumption Agreement. Neptune shall have received from TAS
a written instrument, substantially in the form attached hereto as Exhibit K,
evidencing the assumption of the Assumed Neptune Liabilities by TAS.
46
10.3. Opinion of Counsel. Neptune shall have received an opinion,
addressed to it and dated the Closing Date, of Debevoise & Plimpton, special
counsel for TAS, substantially in the form attached hereto as Exhibit L.
10.4. Ancillary Agreements. TAS shall have entered into each
of the following agreements with Neptune:
(a) the Escrow Agreement;
(b) a Non-Competition Agreement, substantially in the form
attached hereto as Exhibit M (the "TAS NON-COMPETITION AGREEMENT"),
pursuant to which TAS agrees not to engage, either directly or
indirectly, in any business competitive with the TAS Business anywhere
in the world for a period of three years after the Closing Date;
(c) the License Agreement; and
(d) the Manufacturing Agreement.
10.5. Transfer Documents. TAS shall have delivered to Neptune at
the Closing all documents, certificates and agreements (in form and substance
reasonably satisfactory to Neptune) necessary to transfer to Neptune good and
marketable title to the TAS Assets, free and clear of any and all Liens thereon,
other than Permitted Liens, including without limitation:
(a) a bill of sale, assignment and general conveyance,
substantially in the form attached hereto as Exhibit I, dated the
Closing Date, with respect to the TAS Assets (other than any TAS Asset
to be transferred pursuant to any of the instruments referred to in any
other clause of this Section 10.5); and
(b) assignments of all Intellectual Property and any other
agreements and instruments constituting the TAS Assets, dated the
Closing Date, assigning to Neptune all of TAS's right, title and
interest therein and thereto, substantially in the form attached hereto
as Exhibit K, with any required consent endorsed thereon;
10.6. FIRPTA Certificate. Neptune shall have received a
certificate of TAS, dated the Closing Date and sworn to under penalty of
perjury, setting forth the name, address and federal tax identification number
of TAS and stating that TAS is not a "foreign person" within the meaning of
section 1445 of the Code, such certificate to be in the form set forth in the
Treasury Regulations thereunder.
47
10.7. Financing Statement. TAS shall have delivered to Neptune
releases or terminations under the Uniform Commercial Code and any other
applicable federal, state or local statutes or regulations of any financing
statements or similar filings filed against any of the TAS Assets (including,
without limitation, any Liens asserted by any governmental authority with
respect to Taxes).
10.8. Corporate Proceedings. All corporate and other proceedings
of TAS in connection with the this Agreement and the Ancillary Agreements and
the transactions contemplated hereby and thereby, and all documents and
instruments incident thereto, shall be reasonably satisfactory in substance and
form to Neptune and its counsel, and Neptune and its counsel shall have received
all such documents and instruments, or copies thereof, certified if re quested,
as may be reasonably requested.
ARTICLE XI
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
11.1. Employment of Neptune's Employees. (a) Effective as of the
Closing Date, TAS shall offer employment to those employees selected by TAS who
are employed by Neptune in the operation of the Neptune Business at wage or
salary levels, as applicable, that are competitive with industry standards.
Those employees who accept such offers of employment effective as of the Closing
Date shall be referred to herein as the "TRANSFERRED EMPLOYEES". Effective as of
the Closing Date, TAS shall assume the liability of Neptune in respect of the
Transferred Employees for accrued but unpaid salaries, wages, vacation and sick
pay and 1998 incentive compensation, but only to the extent such liability is
properly reflected on the Statement of Closing Net Asset Value (as defined in
Section 2.8) and has arisen in the ordinary course of business consistent with
past practices. Neptune shall remain responsible for payment of any and all
retention, change in control, severance or other similar compensation or
benefits which are or may become payable in connection with the consummation of
the transactions contemplated by this Agreement or the Ancillary Agreements.
Neptune will, and will cause each of its Affiliates to, use all
reasonable efforts to cause its employees employed in the Neptune Business to
make available their employment services to TAS. For a period of three years
from the Closing Date, Neptune will not, nor will it permit any of its
Affiliates to, solicit, offer to employ or retain the services of or otherwise
in terfere with the relationship of TAS with any Person employed by or otherwise
engaged to perform services for TAS in connection with the Neptune Business.
48
(b) Neither TAS nor any of its Affiliates shall have any Benefit
Liability with respect to any Employee (as defined in Section 3.18(a)) or Plan
(as defined in Section 3.18(a)) or any claim thereof or related thereto except
to the extent expressly provided in this Article XI with respect to the
Transferred Employees. From and after the Closing, Neptune shall remain solely
responsible for any and all Benefit Liabilities in respect of the Employees,
including the Transferred Employees and their beneficiaries and dependents,
relating to or arising in connection with or as a result of (i) the employment
or the actual or constructive termination of employment of any such Employee by
Neptune (including, without limitation, in connection with the consummation of
the transactions contemplated by this Agreement or the Ancillary Agreements),
(ii) the participation in or accrual of benefits or compensation under, or the
failure to participate in or to accrue compensation or benefits under, any Plan
or other employee or retiree benefit or compensation plan, program, practice,
policy, agreement or arrangement of Neptune or (iii) accrued but unpaid
salaries, wages, bonuses, incentive compensation, vacation or sick pay or other
compensation or payroll items (including, without limitation, deferred
compensation), except, in any such case, to the extent any such Benefit
Liability is specifically assumed by TAS pursuant to this Section 11.1(a).
11.2. Welfare and Fringe Benefit Plans. (a) From and after the
Closing Date, Neptune shall remain solely responsible for any and all Benefit
Liabilities to or in respect of the Transferred Employees or their beneficiaries
or dependents relating to or arising in connection with any claims, whether such
claims are asserted before, on or after the Closing Date, for life, disability,
accidental death or dismemberment, supplemental unemployment compensation,
medical, dental, hospitalization, other health or other welfare or fringe
benefits or expense reimbursements which claims relate to or are based upon an
occurrence on or before the Closing Date (including claims for continuing
treatment in respect of any illness, accident, disability, condition or
confinement which occurs or commences on or before the Closing Date).
(b) From and after the Closing Date, Neptune shall remain solely
responsible for any and all Benefit Liabilities relating to or arising in
connection with the requirements of section 4980B of the Code to provide
continuation of health care coverage under any Plan in respect of (A) Employees,
other than the Transferred Employees and their covered dependents, and (B) to
the extent related to a qualifying event occurring on or before the Closing
Date, Transferred Employees and their covered dependents.
11.3. Workers' Compensation. From and after the Closing Date,
Neptune shall remain solely responsible for any and all Benefit Liabilities to
or in respect of any Employee relating to or arising in connection with any and
all claims for workers' compensation benefits arising in connection with any
occupational injury or disease occurring or existing on or prior to the Closing
Date.
49
11.4. Employment Taxes. (a) Neptune and TAS will (i) treat TAS as
a "successor employer" and Neptune as a "predecessor," within the meaning of
sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to Transferred
Employees who are employed by TAS for purposes of Taxes imposed under the United
States Federal Unemployment Tax Act ("FUTA") or the United States Federal
Insurance Contributions Act ("FICA") and (ii) cooperate with each other to
avoid, to the extent possible, the filing of more than one IRS Form W-2 with
respect to each such Transferred Employee for the calendar year within which the
Closing Date occurs.
(b) At the request of TAS with respect to any particular
applicable Tax law relating to employment, unemployment insurance, social
security, disability, workers' compensation, payroll, health care or other
similar Tax other than Taxes imposed under FICA and FUTA, Neptune and TAS will
(i) treat TAS as a successor employer and Neptune as a predecessor employer,
within the meaning of the relevant provisions of such Tax law, with respect to
Transferred Employees who are employed by TAS and (ii) cooperate with each other
to avoid, to the extent possible, the filing of more than one individual
information reporting form pursuant to each such Tax law with respect to each
such Transferred Employee for the calendar year within which the Closing Date
occurs.
ARTICLE XII
TERMINATION
12.1. Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by the written agreement of TAS and Neptune;
(b) by TAS, or Neptune, by written notice to the other party if
the transactions contemplated hereby shall not have been consummated
pursuant hereto by 5:00 p.m. New York City time on March 12, 1999,
unless such date shall be extended by the mutual written consent of TAS
and Neptune , provided however, that in the event the consent of
Neptune's shareholders referenced in Section 5.4 becomes required due to
a change in applicable law, such date shall be extended until such time
as is reasonably necessary to convene and hold a meeting of Neptune's
shareholders at which the requisite number of such shareholders vote on
the approval of the transactions contemplated hereby, but in no event
shall such date extend beyond 5:00 p.m. New York City time on June 12,
1999;
(c) by TAS by written notice to Neptune if (i) the
representations and warranties of Neptune shall not have been true and
correct in all respects (in the case of any
50
representation or warranty containing any materiality qualification) or
in all material respects (in the case of any representation or warranty
without any materiality qualification) as of the date when made or (ii)
if any of the conditions set forth in Articles VIII or IX shall not have
been fulfilled by 5:00 p.m. New York City time on March 12, 1999 unless
such failure shall be due to the failure of TAS to perform or comply
with any of the covenants, agreements or conditions hereof to be
performed or complied with by it prior to the Closing, provided however,
in the event the consent of Neptune's shareholders referenced in Section
5.4 becomes required due to a change in applicable law and such consent
is the sole remaining unfulfilled condition, such date shall be extended
until such time as is reasonably necessary to convene and hold a meeting
of Neptune's shareholders at which the requisite number of such
shareholders vote on the approval of the transactions contemplated
hereby, but in no event shall such date extend beyond 5:00 p.m. New York
City time on June 12, 1999; or
(d) by Neptune by written notice to TAS if (i) the
representations and warranties of TAS shall not have been true and
correct in all respects (in the case of any representation or warranty
containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) as of the date when made or (ii) if any of the
conditions set forth in Articles VIII or X shall not have been fulfilled
by 5:00 p.m. New York City time on March 12, 1999, provided however,
that in the event the consent of Neptune's shareholders referenced in
Section 5.4 becomes required due to a change in applicable law, such
date shall be extended until such time as is reasonably necessary to
convene and hold a meeting of Neptune's shareholders at which the
requisite number of such shareholders vote on the approval of the
transactions contemplated hereby, but in no event shall such date extend
beyond 5:00 p.m. New York City time on June 12, 1999, unless the failure
to fulfill any such conditions or obtain such shareholder consent shall
be due to the failure of Neptune to perform or comply with any of the
covenants, agreements or conditions hereof to be performed or complied
with by it prior to the Closing.
12.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to the provisions of Section 12.1, this Agreement shall
become void and have no effect, without any liability to any Person in respect
hereof or of the transactions contemplated hereby on the part of any party
hereto, or any of its directors, officers, employees, agents, consultants,
representatives, advisers, stockholders or Affiliates, except pursuant to the
Confidentiality Agreement, or Sections 13.2 and 13.4 of this Agreement and
except for any liability resulting from such party's breach of this Agreement.
51
ARTICLE XIII
DEFINITIONS, INDEMNIFICATION, MISCELLANEOUS
13.1. Definition of Certain Terms. The terms defined in this
Section 13.1, whenever used in this Agreement (including in the Schedules),
shall have the respective meanings indicated below for all purposes of this
Agreement. All references herein to a Section, Article or Schedule are to a
Section, Article or Schedule of or to this Agreement, unless otherwise
indicated.
Adjusted Net Asset Value: as defined in Section 2.8(e)(i).
Affiliate: of a Person means a Person that directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first Person. "Control" (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.
Agreement: this Asset Purchase Agreement, including the Schedules
hereto.
Ancillary Agreements: the agreements and other documents and
instruments described in Section 9.5 and Section 10.4.
Assets: the Neptune Assets or the TAS Assets, as appropriate in
the context used.
Assumed Neptune Liabilities: as defined in Section 2.5(a).
Assumed TAS Liabilities: as defined in Section 2.5(b).
Benefit Liabilities: liabilities, obligations, commitments, costs
and expenses, including reasonable fees and disbursements of attorneys and other
advisors, including any such expenses incurred in connection with the
enforcement of any applicable provision of this Agreement.
Business: the Neptune Business or the TAS Business, as
appropriate in the context used.
CERCLA: the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, 42 U.S.C. 'SS'. 9601 et seq.
52
Closing: as defined in Section 2.1.
Closing Date: as defined in Section 2.1.
Code: the Internal Revenue Code of 1986, as amended.
Confidentiality Agreement: the Confidentiality Agreement, dated
as of July 16, 1998, between Neptune and Bowthorpe plc.
Contracts: the contracts, arrangements, licenses, leases and
other agreements whether written or oral set forth on Schedule 1.1(a).
Dispute Notice: as defined in Section 2.8(c)
$ or dollars: lawful money of the United States.
Employee: as defined in Section 3.18(a).
Environmental Laws: all applicable laws relating to the
protection of the environment, to human health and safety, or to any emission,
discharge, generation, processing, storage, holding, abatement, existence,
Release, threatened Release or transportation of any Hazardous Substances,
including, without limitation, (i) CERCLA, the Resource Conservation and
Recovery Act, and the Occupational Safety and Health Act, (ii) all other
requirements pertaining to reporting, licensing, permitting, investigation or
remediation of emissions, discharges, releases or threatened releases of
Hazardous Materials into the air, surface water, groundwater or land, or
relating to the manufacture, processing, distribution, use, sale, treatment,
receipt, storage, disposal, transport or handling of Hazardous Substances, and
(iii) all other requirements pertaining to the protection of the health and
safety of employees or the public.
Environmental Liabilities and Costs: all Losses, whether direct
or indirect, known or unknown, current or potential, past, present or future,
imposed by, under or pursuant to Environmental Laws, including, without
limitation, all Losses related to Remedial Actions, and all fees, disbursements
and expenses of governmental authorities, counsel, experts, personnel and
consultants based on, arising out of or otherwise in respect of: (i) the
ownership or operation of the Neptune Business, Leased Real Property or Leases
or any other real properties, assets, equipment or facilities, by Neptune, or
any of their predecessors or Affiliates; (ii) the environmental conditions
existing on the Closing Date on, under, above, or about any Leased Real Property
or property subject to Leases or any other real properties, assets, equipment or
facilities currently or previously owned, leased or operated by Neptune, or any
of their predecessors or Affiliates; and
53
(iii) expenditures necessary to cause any Leased Real Property or any aspect of
the Neptune Business to be in compliance with any and all requirements of
Environmental Laws as of the Closing Date, including, without limitation, all
Environmental Permits issued under or pursuant to such Environmental Laws, and
reasonably necessary to make full economic use of any Leased Real Property.
Environmental Permits: any federal, state and local permit,
license, registration, consent, order, administrative consent order,
certificate, approval or other authorization necessary for, or advisable to be
held or obtained by Neptune under any Environmental Law in connection with, the
conduct of the Neptune Business as currently conducted or previously conducted.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
Escrow Agreement: as defined in Section 2.2(A).
Estimated Closing Net Asset Value: as defined in Section 2.3
Estimated Statement of Closing Net Asset Value: as defined in
Section 2.3.
Excluded Neptune Assets: as defined in Section 1.2.
Excluded Neptune Liabilities: as defined in Section 2.6(a).
Excluded TAS Assets: as defined in Section 1.2.
Excluded TAS Liabilities: as defined in Section 2.6(b).
FICA: as defined in Section 11.4(a).
Financial Statements: (i) the audited financial statements of
Neptune as at and for periods ended December 31, 1997 and (ii) unaudited
financial statements of Neptune as at and for the six-month period ended June
30, 1998 and as at and for the nine-month period ended September 30, 1998,
including balance sheets, statement of incomes, statements of stockholders'
equity, statements of cash flow and, with respect to the audited financial
statements contained herein, accompanying notes.
FUTA: as defined in Section 11.4(a).
GAAP: generally accepted accounting principles as in effect in
the United States.
54
Hazardous Substances: any material or substance that: (i) is or
contains asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum or petroleum-derived substances or wastes, radon gas or related
materials (ii) requires investigation, removal or remediation under any
Environmental Law, or is defined, listed or identified as a "pollutant",
"contaminant", "toxic substance", "hazardous waste" or "hazardous substance"
thereunder, or (iii) is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is regulated by
any governmental authority or Environmental Law.
Indemnified Party: as defined in Section 12.2(e).
Indemnifying Party: as defined in Section 12.2(e).
Initial Purchase Price: as defined in Section 2.3(b).
Intellectual Property: any and all United States and foreign: (a)
patents (including design patents, industrial designs and utility models) and
patent applications (including docketed patent disclosures awaiting filing,
reissues, divisions, continuations, continuations-in-part, extensions and
re-examinations), patent disclosures awaiting filing determination, inventions
and improvements thereto; (b) trademarks, service marks, trade names, trade
dress, domain names, logos, business and product names, slogans, and
registrations and applications for registration or renewal thereof; (c)
copyrights and registrations or renewals thereof; (d) inventions, processes,
designs, formulae, trade secrets, know-how, research and development, ideas,
engineering notebooks, industrial models, confidential and technical
information, manufacturing, engineering and technical drawings, product
specifications and confidential business information; (e) mask works and other
semiconductor chip rights and applications, registrations and renewals thereof;
(f) Software and firmware; (g) intellectual property rights similar to any of
the foregoing; (h) copies and tangible embodiments thereof (in whatever form or
medium, including electronic media) and (j) licenses of any of the foregoing.
IRS: the Internal Revenue Service.
ISRA: the Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et seq.
Leased Real Property: all interests leased pursuant to the
Leases.
Leases: the Lease, dated July 14, 1998, between Panorama Park,
Inc. and Neptune relating to the Mahwah Facility and the Lease, dated June 1998,
between Prentiss Properties Acquisition Partners, L.P. and Neptune relating to
the San Diego Facility.
55
License Agreement: as defined in Section 9.5(d).
Lien: any mortgage, pledge, hypothecation, right of others,
claim, security interest, encumbrance, lease, sublease, license, occupancy
agreement, adverse claim or interest, easement, covenant, encroachment, burden,
title defect, title retention agreement, voting trust agreement, interest,
equity, option, lien, right of first refusal, charge or other restrictions or
limitations of any nature whatsoever, including but not limited to such as may
arise under any Contracts.
Litigation: any action, claim, demand, suit, proceeding,
arbitration, grievance, citation, summons, subpoena, inquiry or investigation of
any nature, civil, criminal, regulatory or otherwise, in law or in equity.
Losses: as defined in Section 13.2(a).
Mahwah Facility: the facility located at 3 Industrial Avenue,
Mahwah, New Jersey.
Manufacturing Agreement: as defined in Section 9.5(e).
Material Adverse Effect: any event, occurrence, fact, condition,
change or effect that is materially adverse to the business, operations, results
of operations, condition (financial or otherwise), properties (including
intangible properties), assets (including intangible assets) or liabilities of
the Neptune Business or the TAS Business, as appropriate in the context in which
such term is used, or that will materially impair the ability of Neptune or TAS,
as appropriate, to perform its obligations under this Agreement or the Ancillary
Agreements.
Neptune: as defined in the preamble to this Agreement.
Neptune Assets: as defined in Section 1.1(a).
Neptune Business: as defined in the first WHEREAS clause of this
Agreement.
Neptune Employee Accruals: as defined in Section 2.5(a)(ii).
Neptune Equipment: as defined in Section 3.11(h)(ii).
Neptune Fixed Assets: as defined in Schedule 1.1(a)(i).
Neptune Indemnities: as defined in Section 12.2(b).
56
Neptune Intellectual Property Assets: all Intellectual Property,
including without limitation such Intellectual Property set forth on Schedule
3.11, and all rights of Neptune thereunder or in respect thereof relating to,
used or held for use in connection with, necessary for the conduct of, or
otherwise material to, the Neptune Business, including, but not limited to,
rights to sue for and remedies against past, present and future infringements
thereof, and rights of priority and protection of interests therein under the
laws of any jurisdiction worldwide and all tangible embodiments thereof.
Neptune Inventories: as defined in Schedule 1.1(a)(ii).
Neptune Non-Competition Agreement: as defined in Section 9.5(b).
Neptune Owned Intellectual Property: as defined in Section
3.11(a).
Neptune Product Lines: the wireless and satellite test equipment
product lines and components set forth on Schedule A.
Neptune Payable: as defined in Section 2.5(a)(iii).
Neptune Sale: the sale or any other transfer by Neptune of its
properties or assets remaining after the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements, the merger or any
other consolidation with another entity or the distribution of any extraordinary
dividends to shareholders of Neptune.
Neptune Sales Representatives: as defined in Section 3.20(b).
Neptune Transfer Taxes: as defined in Section 6.1.
Neptune's Knowledge: the actual, conscious knowledge, after
due inquiry, of the officers of Neptune.
Net Current Asset Value: the excess of (x) the sum of cash and
cash equivalents, accounts receivable, inventory and prepaid expenses over (y)
the sum of accounts payable and accrued liabilities, each such current asset and
current liability account to be prepared consistently with the June 30, 1998
balance sheet included in the Financial Statements.
Net Worth: Neptune's total stockholders' equity calculated
consistently with the June 30, 1998 balance sheet included in the Financial
Statements.
57
Non-Compete Consideration: as defined in Section 2.2.
Non-Competition and Confidentiality Commitment: as defined in
Section 3.17(b).
Non-Transferrable Employees: as defined in Section 3.17(c).
NJDEP: the New Jersey Department of Environmental Protection.
Option Agreement of Sale: the option agreement dated July 14,
1998, between Panorama Park, Inc. and Neptune, pursuant to which Neptune has the
right to acquire the Mahwah Facility.
Organizational Documents: as to any Person, its certificate of
incorporation or articles of incorporation, by-laws and other organizational
documents, as amended.
Other Consideration: as defined in Section 2.2.
Permitted Liens: (i) Liens for Taxes not yet due and payable or
(ii) Liens that, individually and in the aggregate, do not and would not
materially detract from the value of the Assets or materially interfere with the
use thereof as currently used or contemplated to be used or otherwise.
Person: any natural person, firm, partnership, limited liability
company, association, corporation, company, trust, business trust, governmental
authority or other entity.
Plans: as defined in Section 3.18(a).
Purchase Price Adjustment: as defined in Section 2.8(e)(i).
Purchase Price Adjustment Deposit: as defined in Section 2.2(A).
Purchase Price Escrow Account: the escrow account established
pursuant to the Escrow Agreement in which the Purchase Price Adjustment Deposit
will be deposited.
Related Persons: as defined in Section 3.18(a).
Release: any releasing, disposing, discharging, injecting,
spilling, leaking, leaching, pumping, dumping, emitting, escaping, emptying,
seeping, dispersal, migration, transporting, placing and the like, including
without limitation, the moving of any materials
58
through, into or upon, any land, soil, surface water, ground water or air, or
otherwise entering into the environment.
Remedial Action Workplan: as defined in ISRA
Remedial Actions: as defined in ISRA
San Diego Facility: the facility located at 12220 El Camino Real,
Suite 110, San Diego, California 92130.
Software: all computer software, including but not limited to
application software and system software, including all source code and object
code versions thereof, in any and all forms and media, whether recorded on
paper, magnetic media or other electronic or non-electronic media (including
data and related documentation, user manuals, training materials, flow charts,
diagrams, descriptive tests and programs, computer print-outs, underlying tapes,
computer databases and similar items) integrated circuits, embedded systems and
other electro-mechanical or processor based systems.
Statement of Closing Net Asset Value: as defined in Section
2.8(a).
TAS: as defined in the preamble to this Agreement.
TAS Assets: as defined in Section 1.1(b).
TAS Business: as defined in the second WHEREAS clause of this
Agreement.
TAS Equipment: as defined in Section 4.5(h)(ii).
TAS Indemnitees: as defined in Section 13.2(a).
TAS Intellectual Property Assets: all Intellectual Property,
including without limitation the Intellectual Property set forth on Schedules
4.5(a) and 4.5(b)(i), and all rights of TAS thereunder or in respect thereof
relating solely to, used or held for use in connection solely with, necessary
solely for the conduct of, or otherwise material solely to, the TAS Business,
including, but not limited to, rights to sue for and remedies against past,
present and future infringements thereof, and rights of priority and protection
of interests therein under the laws of any jurisdiction worldwide and all
tangible embodiments thereof.
TAS Non-Competition Agreement: as defined in Section 10.4(b).
59
TAS Owned Intellectual Property: as defined in Section 4.5(a).
TAS' Knowledge: the actual, conscious knowledge, after due
inquiry, of the officers of TAS.
TAS Sales Representatives: as defined in Section 4.17(b).
TAS Transfer Taxes: as defined in Section 7.1.
Tax: any federal, state, provincial, local, foreign or other
income, alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits, windfall profits, gross
receipts, value added, sales, use, goods and services, excise, customs duties,
transfer, conveyance, mortgage, registration, stamp, documentary, recording,
premium, severance, environmental (including taxes under section 59A of the
Code), real property, personal property, ad valorem, intangibles, rent,
occupancy, license, occupational, employment, unemployment insurance, social
security, disability, workers' compensation, payroll, health care, withholding,
estimated or other similar tax, duty or other governmental charge or assessment
or deficiencies thereof (including all interest and penalties thereon and
additions thereto whether disputed or not).
Tax Return: any return, report, declaration, form, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
Third Party Accountants: as defined in Section 2.8(d).
Total Consideration: as defined in Section 2.2.
Transferred Employees: as defined in Section 11.1.
Treasury Regulations: the regulations prescribed pursuant to the
Code.
Year 2000 Compliant: neither the performance, nor the
functionality of the equipment, hardware, firmware and software will be affected
by dates prior to, during and after the year 2000, including but not limited to,
(a) no value for a current date will cause any interruption in the operation of
the equipment, hardware, firmware and software, (b) the equipment, hardware,
firmware and software shall calculate, manipulate and represent all date values
within the application domain correctly for the purposes for which they were
intended, (c) in all interfaces and data storage, the century in any date is
specified either explicitly or by
60
unambiguous inferencing rules and (d) the equipment, hardware, firmware and
software recognize the year 2000, and all leap years beyond the year 2000, as
leap years.
13.2. Indemnification. (a) By Neptune. Neptune covenants and
agrees to defend, indemnify and hold harmless TAS, its officers, directors,
employees, agents, advisers, representatives and Affiliates (collectively, the
"TAS INDEMNITEES") from and against, and pay or reimburse TAS Indemnitees for,
any and all claims, liabilities, obligations, losses, fines, costs, royalties,
proceedings, deficiencies or damages (whether absolute, accrued, conditional or
otherwise and whether or not resulting from third party claims), including
out-of-pocket expenses and reasonable attorneys' and accountants' fees incurred
in the investigation or defense of any of the same or in asserting any of their
respective rights hereunder (collectively, "LOSSES"), resulting from or arising
out of:
(i) any inaccuracy of any representation or warranty made by
Neptune herein or under any Ancillary Agreement or document or
certificate delivered in connection herewith or therewith (except for
product liability claims of up to $100,000 in the aggregate with respect
to any products included in the Neptune Business delivered prior to
closing);
(ii) any failure of Neptune to perform any covenant or
agreement hereunder or under any Ancillary Agreement or fulfill any
other obligation in respect hereof or of any Ancillary Agreement;
(iii) any Excluded Neptune Liabilities (as defined in Section
2.6) or Excluded Neptune Assets (as defined in Section 1.2);
(iv) any and all Taxes of Neptune and its Affiliates;
(v) any and all Benefit Liabilities in respect of Employees
except, with respect to Transferred Employees, to the extent assumed by
TAS pursuant to Article XI;
(vi) all Environmental Liabilities and Costs arising out of or
resulting from the Neptune Business prior to the Closing or relating to
the Excluded Neptune Assets;
(vii) subject to Section 13.2(a)(viii) below, the operation of
the Neptune Business or the Neptune Assets prior to the Closing;
(viii) product warranty claims in excess of $100,000 in the
aggregate with respect to any products included in the Neptune Business
delivered prior to the Closing; or
61
(ix) the Assumed TAS Liabilities.
For purposes of this Section 13.2(a), any inaccuracy in any representation or
warranty with respect to Section 3.7 shall be determined without regard to any
materiality qualification contained in or otherwise applicable to such
representation or warranty, which qualification limits the scope of such
representation or warranty and, giving effect thereto, renders such
representation or warranty accurate.
(b) By TAS. TAS covenants and agrees to defend, indemnify and
hold harmless Neptune and the officers, directors, employees, agents, advisers,
representatives and Affiliates of Neptune (collectively, the "NEPTUNE
INDEMNITEES") from and against any and all Losses resulting from or arising out
of:
(i) any inaccuracy in any representation or warranty by TAS
made or contained in this Agreement or any Ancillary Agreement or in
connection herewith or therewith;
(ii) any failure of TAS to perform any covenant or agreement
made or contained in this Agreement or any Ancillary Agreement or
fulfill any other obligation in respect hereof or thereof;
(iii) any Excluded TAS Liabilities (as defined in Section 2.6) or
any Excluded TAS Asset (as defined in Section 1.2);
(iv) product liability claims with respect to any products
included in the TAS Business delivered prior to the Closing; or
(v) the Assumed Neptune Liabilities.
(vi) any and all Taxes of TAS and its Affiliates;
(vii) all Environmental Liabilities and Costs arising out of or
resulting from the TAS Business prior to the Closing;
(viii) the operation of the TAS Business or the TAS Assets prior
to the Closing;
For purposes of this Section 13.2(b), any inaccuracy in any representation or
warranty with respect to Section 4.18 shall be determined without regard to any
materiality qualification contained in or otherwise applicable to such
representation or warranty, which qualification limits
62
the scope of such representation or warranty and, giving effect thereto, renders
such representation or warranty accurate.
(c) Effect of Indemnification. The provisions of this Section
13.2 shall in no way limit, supersede or otherwise affect the rights of any
party under Section 2.8, and nothing contained in Section 2.8 relating to an
adjustment to the Initial Purchase Price shall limit, supersede or otherwise
affect the rights of any party under this Section 13.2; provided, that no party
shall be entitled to be compensated more than once for the same Loss.
(d) Limitations on Indemnity Obligation. (i) Limitation on
Neptune's Obligation. Notwithstanding anything in this Section 13.2 to the
contrary, to the extent indemnification is sought under this Agreement, Neptune
shall be required to provide indemnification only up to an amount equal to the
Initial Purchase Price, provided, however, that Neptune shall be required to
provide indemnification for Losses resulting from or arising out of a breach of
any representation or warranty or covenant contained in Sections 3.7, 3.15 and
3.18 without regard to such cap.
(ii) Limitation on TAS' Obligation. Notwithstanding anything in
this Section 13.2 to the contrary, to the extent indemnification is sought under
this Agreement, TAS shall be required to provide indemnification only up to a
maximum of $2,500,000.
(e) Indemnification Procedures. (i) Third Party Claims Generally.
In the case of any claim (other than a claim covered by Section 13.2(e)(iii))
asserted by a third party against, or commencement of any action by a third
party reasonably believed to give rise to a claim for indemnification from, a
party entitled to indemnification under this Agreement (the "INDEMNIFIED
PARTY"), notice shall be given by the Indemnified Party to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and the Indemnified Party shall permit the Indemnifying Party (at the
expense of such Indemnifying Party) to assume the defense of any claim or any
litigation resulting therefrom, provided that (i) the counsel for the
Indemnifying Party who shall conduct the defense of such claim or litigation
shall be reasonably satisfactory to the Indemnified Party, (ii) the Indemnified
Party may participate in such defense at such Indemnified Party's expense, and
(iii) the omission by any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its indemnification obligation
under this Agreement except to the extent that such omission results in a
failure of actual notice to the Indemnifying Party and such Indemnifying Party
is materially damaged as a result of such failure to give notice. Except with
the prior written consent of the Indemnified Party (such consent not to be
unreasonably withheld), no Indemnifying Party, in the defense of any such claim
or litigation, shall consent to entry of any judgment or enter into any
settlement that provides for injunctive or other nonmonetary relief affecting
the Indemnified Party or that does not include as an uncon-
63
ditional term thereof the giving by each claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such claim or
litigation. In the event that the Indemnified Party shall in good faith
determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party is reasonably likely to affect adversely the Indemnified
Party's Tax liability or the ability of TAS to conduct its business, or that the
Indemnified Party may have available to it one or more defenses or counterclaims
that are inconsistent with one or more of those that may be available to the
Indemnifying Party in respect of such claim or any litigation relating thereto,
the Indemnified Party shall have the right at all times to take over and assume
control over the defense, settlement, negotiations or litigation relating to any
such claim at the sole cost of the Indemnifying Party, provided that if the
Indemnified Party does so take over and assume control, the Indemnified Party
shall not settle such claim or litigation without the written consent of the
Indemnifying Party, such consent not to be unreasonably withheld. In the event
that the Indemnifying Party does not accept the defense of any matter as above
provided in this Section 13(e)(i), the Indemnified Party shall have the full
right to defend against any such claim or demand and shall be entitled to settle
or agree to pay in full such claim or demand. In any event, the Indemnifying
Party and the Indemnified Party shall cooperate in the defense of any claim or
litigation subject to this Section 13.2 and the records of each shall be made
available to the other with respect to such defense.
(ii) Other Claims. In the event an Indemnified Party obtains
knowledge that it has sustained any Loss not involving a third party claim or
action which such Indemnified Party reasonably believes may give rise to a claim
for indemnification from an Indemnifying Party hereunder, notice shall be given
by the Indemnified Party to the Indemnifying Party promptly setting forth in
reasonable detail such claim or action, provided that the omission by any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its indemnification obligation under this Agreement except
to the extent that such omission results in a failure of actual notice to the
Indemnifying Party and such Indemnifying Party is materially damaged as a result
of such failure to give notice. If the Indemnifying Party disputes its liability
with respect to such claim, the Indemnifying Party and the Indemnified Party
shall proceed in good faith to negotiate a resolution of such dispute and, if
not resolved through negotiations within 60 business days of such dispute, such
dispute shall be resolved by litigation in an appropriate court of competent
jurisdiction in accordance with Section 13.10.
(iii) Product Warranty Claims. In the case of any claim asserting
a breach of warranty applicable to a Neptune Product, TAS may satisfy such claim
and be entitled to indemnification therefor pursuant to Section 13.2(a)(viii),
to the extent applicable; provided that TAS shall give notice of such claim to
Neptune and shall use reasonable efforts to consult with
64
Neptune regarding the legitimacy of such claim and commercially reasonable
methods of satisfying such claim.
(f) Time Limitation. All claims for indemnification under clause
(i) of the first sentence of Section 13.2(a) or clause (i) of the first sentence
of Section 13.2(b) must be asserted within 30 days of the termination of the
respective survival periods set forth in Section 12.3.
(g) Tax Treatment of Indemnity Payments. The parties agree to
treat any indemnity payment made pursuant to Section 13.2(a) or 13.2(b) as an
adjustment to the Initial Purchase Price with respect to the Neptune Assets or
TAS Assets, as applicable, for all Tax purposes unless otherwise required by
law.
13.3. Survival of Representations and Warranties, etc. The
representations and warranties contained in this Agreement shall survive the
execution and delivery of this Agreement, any examination by or on behalf of the
parties hereto and the completion of the transactions contemplated herein, but
only to the extent specified below:
(a) except as set forth in clauses (b) and (c) below, the
representations and warranties contained in Articles III and IV shall
survive for a period of 2 years following the Closing Date;
(b) the representations and warranties contained in Section 3.15
shall survive for a period of 6 years following the Closing Date;
(c) the representations and warranties contained in the fifth
sentence of Sections 3.8(a), the penultimate sentence of Section 3.9(b)
and the second sentence of Section 4.4 shall survive without limitation;
and
(d) the representations and warranties of Neptune contained in
Sections 3.7, 3.18 and Article XI shall survive as to any Tax or ERISA
matter covered by such representations and warranties for 60 days
following the expiration of the applicable statute of limitations for
such Tax or ERISA matter.
13.4. Expenses. Except as provided in Sections 2.8(d), 6.1 and
7.1, Neptune, on the one hand, and TAS, on the other hand, shall bear their
respective expenses, costs and fees (including attorneys', auditors' and
financing commitment fees) in connection with the transactions contemplated
hereby, including the preparation, execution and delivery of this Agreement and
compliance herewith, whether or not the transactions contemplated hereby shall
be consummated.
65
13.5. Severability. If any provision of this Agreement, including
any phrase, sentence, clause, Section or subsection is inoperative or
unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatsoever.
13.6. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, (b) sent by next-day or overnight mail or delivery or (c) sent by
telecopy or telegram (with confirmation the following business day by next
business day or overnight mail delivery), to:
(i) if to TAS,
Telecom Analysis Systems, Inc.
34 Industrial Way East, Suite 6
Eatontown, New Jersey 07724
Telephone: (732) 544-8700
Telecopy: (732) 544-1473
Attention: President
with a copy to:
Bowthorpe plc
Gatwick Road
Crawley, West Sussex
RH102RZ United Kingdom
Telephone: 44-129-352-8888
Telecopy: 44-129-354-1905
Attention: Company Secretary
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telephone: (212) 909-6451
Telecopy: (212) 909-6836
Attention: Robert F. Quaintance, Esq.
66
(ii) if to Neptune,
Wireless Telecom Group, Inc.
East 64 Midland Avenue
Paramus, New Jersey 07652
Telephone: (201) 261-8797
Telecopy: (201) 261-8339
Attention: President
with a copy to:
Morrison Cohen Singer & Weinstein LLP
750 Lexington Avenue
New York, New York 10022
(212) 735-8680
(212) 735-8708
Attention: Robert H. Cohen, Esq.
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (x) if by certified or
registered mail, on the seventh business day after the mailing thereof, (y) if
by next-day or overnight mail or delivery, on the day delivered if it is a
business day, or otherwise the next business day, (z) if by telecopy or
telegram, on the next day (if it is a business day, or otherwise the next
business day) following the day on which such telecopy or telegram was sent,
provided that a copy is also sent by certified or registered mail.
13.7. Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
13.8. Entire Agreement. This Agreement (including the Schedules
hereto), the Ancillary Agreements (when executed and delivered) and the
Confidentiality Agreement constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.
13.9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
67
13.10. Governing Law, etc. This Agreement shall be governed in
all respects, including as to validity, interpretation and effect, by the
internal laws of the State of New York, without giving effect to the conflict of
laws rules thereof. The parties hereto hereby irrevocably submit to the
jurisdiction of the courts of the State of New York and the Federal courts of
the United States of America located in the State, City and County of New York
solely in respect of the interpretation and enforcement of the provisions of
this Agreement and of the documents referred to in this Agreement, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any of such document may not be enforced
in or by said courts, and the parties hereto irrevocably agree that all claims
with respect to such action or proceeding shall be heard and determined in such
New York State or Federal court. The parties hereto hereby consent to and grant
any such court jurisdiction over the person of such parties and over the subject
matter of any such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
13.6, or in such other manner as may be permitted by law, shall be valid and
sufficient service thereof.
13.11. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. If at any time prior to the third anniversary
of the Closing Date, (i) Neptune's Net Worth is less than $7,500,000 or
Neptune's Net Current Asset Value is less than $3,000,000, and Neptune engages
in a Neptune Sale or, (ii) as a result of any Neptune Sale, such net worth or
net current asset value would be reduced to less than such specified amounts,
then in the case of either (i) or (ii) Neptune shall not consummate any such
Neptune Sale, unless such buyer, transferee or surviving entity assumes the
indemnification obligations of Neptune pursuant to Section 13.2 pursuant to a
written instrument of assumption in form and substance reasonably satisfactory
to TAS. The parties acknowledge that the covenants contained in this Section
13.11 are of a special and unique character and that any breach of any such
covenants or obligations would cause irreparable harm for which remedies at law
are inadequate. Notwithstanding anything to the contrary contained herein, TAS
shall have the right to injunctive or other equitable relief, in addition to all
of its other rights and remedies at law to enforce the provisions of this
Section 13.11. All costs and expenses (including attorneys' fees) reasonably
incurred in any dispute concerning the enforcement of this Agreement shall be
borne by the non-prevailing party.
13.12. Assignment. This Agreement shall not be assignable or
otherwise transferable by any party hereto without the prior written consent of
the other party hereto.
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13.13. No Third Party Beneficiaries. Except as provided in
Section 13.2 with respect to indemnification of Indemnified Parties hereunder,
nothing in this Agreement shall confer any rights upon any person or entity
other than the parties hereto and their respective heirs, successors and
permitted assigns.
13.14. Amendment; Waivers, etc. No amendment, modification or
discharge of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party against whom
enforcement of the amendment, modification, discharge or waiver is sought. Any
such waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way impair the rights of the party
granting such waiver in any other respect or at any other time. Neither the
waiver by any of the parties hereto of a breach of or a default under any of the
provisions of this Agreement, nor the failure by any of the parties, on one or
more occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder, shall be construed as a waiver of any
other breach or default of a similar nature, or as a waiver of any of such
provisions, rights or privileges hereunder. The rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies that any
party may otherwise have at law or in equity. The rights and remedies of any
party based upon, arising out of or otherwise in respect of any inaccuracy or
breach of any representation, warranty, covenant or agreement or failure to
fulfill any condition shall in no way be limited by the fact that the act,
omission, occurrence or other state of facts upon which any claim of any such
inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement as to which there is no
inaccuracy or breach. The representations and warranties of any party hereunder
shall not be affected or deemed waived by reason of any investigation made by or
on behalf of the other party (including but not limited to by any of its
advisors, consultants or representatives) or by reason of the fact that such
other party or any of such advisors, consultants or representatives knew or
should have known that any such representation or warranty is or might be
inaccurate.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date first above written.
TELECOM ANALYSIS SYSTEMS, INC.
By: /s/ Charles W. Simmons
------------------------------------
Name: Charles W. Simmons
Title: President
WIRELESS TELECOM GROUP, INC.
By: /s/ Demir R. Eden
------------------------------------
Name: Demir Richard Eden
Title: President