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EXHIBIT 2.4
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AGREEMENT AND PLAN OF MERGER
AMONG
METAMOR WORLDWIDE, INC.,
CORESTAFF ACQUISITION SUB #13, INC.
NDC GROUP, INC.,
AND
THE STOCKHOLDERS OF NDC GROUP, INC.
April 16, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
ARTICLE II
CLOSING AND POST CLOSING MATTERS
2.1 The Merger...........................................................7
2.2 Consideration........................................................7
2.3 Effective Time of the Merger........................................10
2.4 Certificate of Incorporation; Name..................................11
2.5 By-Laws.............................................................11
2.6 Directors...........................................................11
2.7 Officers............................................................11
2.8 Other Effects on Capital Stock......................................11
2.9 NDC Options.........................................................11
2.10 Rights..............................................................11
2.11 Documents...........................................................11
2.12 Additional Agreements; Reasonable Efforts...........................12
2.13 Dissenters Rights...................................................12
2.14 Closing.............................................................12
2.15 Registration Rights.................................................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
CONCERNING THE TRANSACTION
3.1 General Stockholder Representations.................................15
3.2 Investment Representations..........................................16
3.3 Reorganization Status...............................................17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
CONCERNING THE TRANSACTION
4.1 Organization of Buyer...............................................17
4.2 Authorization of Transaction........................................17
4.3 Noncontravention....................................................17
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4.4 Broker's Fees.......................................................18
4.5 Buyer Common Stock..................................................18
4.6 SEC Documents.......................................................18
4.7 Reorganization Status...............................................18
ARTICLE V
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
5.1 Organization, Qualification, and Corporate Power....................20
5.2 Capitalization......................................................20
5.3 Noncontravention....................................................20
5.4 Subsidiaries........................................................21
5.5 Financial Statements................................................21
5.6 Events Subsequent to Most Recent Fiscal Year End....................21
5.7 Undisclosed Liabilities.............................................23
5.8 Tax Matters.........................................................23
5.9 Tangible Assets.....................................................25
5.10 Real Property.......................................................25
5.11 Real Property Leases................................................25
5.12 Intellectual Property...............................................26
5.13 Contracts...........................................................30
5.14 Notes and Accounts Receivable.......................................31
5.15 Powers of Attorney..................................................31
5.16 Insurance...........................................................32
5.17 Litigation..........................................................32
5.18 Employees...........................................................32
5.19 Employee Benefits...................................................33
5.20 Guaranties..........................................................34
5.21 Environment, Health, and Safety.....................................34
5.22 Legal Compliance....................................................36
5.23 Certain Business Relationships with the Company.....................37
5.24 Brokers' Fees.......................................................37
5.25 Books and Records...................................................37
5.26 Payments to Officials...............................................37
5.27 Disclosure..........................................................37
ARTICLE VI
ARTICLE VII
COVENANTS
7.1 General.............................................................38
7.2 Litigation Support..................................................38
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7.3 Transition..........................................................38
7.4 Confidentiality.....................................................38
7.5 Monitoring Information..............................................39
7.6 Continuation of Indemnification.....................................39
7.7 Additional Tax Matters..............................................39
7.8 Covenant Not to Compete.............................................40
7.9 Conduct of Business During Earn-Out Period..........................40
7.10 Filing of Reports; Rule 144 etc.....................................40
7.11 Nasdaq Listing......................................................40
ARTICLE VIII
RESERVED
ARTICLE IX
INDEMNITIES
9.1 Survival............................................................40
9.2 Indemnification Provisions for Benefit of Buyer.....................41
9.3 Indemnification Provisions for Benefit of the Stockholders..........43
9.4 Indemnification and Contribution with Respect to Registration
Rights..............................................................43
9.5 Matters Involving Third Parties.....................................45
9.6 Determination of Loss...............................................45
9.7 Exclusive Remedy....................................................46
9.8 Payment; General Right of Offset....................................46
9.9 Tax Disputes........................................................46
ARTICLE X
RESERVED.
ARTICLE XI
MISCELLANEOUS
11.1 Power of Attorney...................................................47
11.2 Press Releases and Announcements....................................47
11.3 No Third-Party Beneficiaries........................................47
11.4 Entire Agreement....................................................47
11.5 Succession and Assignment...........................................47
11.6 Facsimile/Counterparts..............................................48
11.7 Headings............................................................48
11.8 Notices.............................................................48
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11.9 Governing Law.......................................................49
11.10 Amendments and Waivers..............................................49
11.11 Severability........................................................49
11.12 Expenses............................................................49
11.13 Construction........................................................50
11.14 Incorporation of Exhibits, Annexes, and Schedules...................50
11.15 Specific Performance................................................50
11.16 Submission to Jurisdiction..........................................50
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LIST OF EXHIBITS, ANNEXES AND SCHEDULES
EXHIBITS
Exhibit A Financial Statements
ANNEXES
Annex I Determination of EBIT
SCHEDULES
Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER dated as of April 16, 1998 (this
"AGREEMENT"), among Metamor Worldwide, Inc., a Delaware corporation ("BUYER"),
Corestaff Acquisition Sub #13, Inc., a Delaware corporation and wholly-owned
subsidiary of Buyer ("MERGER SUB"), NDC Group, Inc., a Virginia corporation
(the "COMPANY,"), and the stockholders of the Company named on the signature
page hereto (the "STOCKHOLDERS").
W I T N E S S E T H:
WHEREAS, the Stockholders own all of the capital stock of the Company;
and
WHEREAS, the persons listed in Section 5.2 of the Disclosure Schedule
as the optionholders (the "OPTIONHOLDERS") are the sole owners of outstanding
NDC Options; and
WHEREAS, the parties hereto deem it advisable and in the best
interests of their respective companies and stockholders to consummate the
merger of the Company with and into Merger Sub (the "MERGER"), with the Merger
Sub as the surviving corporation in the Merger, upon the terms and conditions
set forth in this Agreement; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties, covenants and agreements made by each to the other
in connection with the transactions described in this Agreement, including
certain additional agreements related to the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
The following terms shall have the following respective meanings for
all purposes of this Agreement:
"ADJUSTED EBIT" means earnings before interest and taxes
(prepared on an accrual basis of accounting and in accordance with GAAP, as
consistently applied by the Company prior to the closing of the Merger), plus
mutually agreed upon "ADJUSTMENTS" and "ADDBACKS" during the Earn-Out Period
(as defined in Section 2.2(b) below), and as determined by Annex I attached
hereto.
"ADVERSE CONSEQUENCES" means all charges, complaints,
actions, suits, proceedings, hearings, investigations, claims, demands,
judgments, orders, decrees, stipulations, injunctions,
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damages, dues, penalties, fines, costs, amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses, and fees, including
all attorneys' fees and court costs.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934, as amended.
"AFFILIATED GROUP" means any affiliated group within the
meaning of Code Sec. 1504 (or any similar group defined under a similar
provision of state, local or foreign law).
"BASIS" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that forms or could form the
basis for any specified consequence.
"BUYER" shall have the meaning set forth in the preface
above.
"BUYER COMMON STOCK" shall mean the common stock, par value
of $.01 per share, of Buyer.
"BUYER SHARES" means the shares of Buyer Common Stock.
"CLOSING" shall have the meaning set forth in Section 2.15
below.
"CLOSING DATE" shall have the meaning set forth in Section
2.15 below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" shall mean the Securities and Exchange
Commission.
"COMPANY COMMON STOCK" shall mean the common stock, no par
value per share, of the Company.
"CONFIDENTIAL INFORMATION" means all confidential information
and trade secrets of the Company including, without limitation, the identity,
lists or descriptions of any customers, referral sources or organizations;
financial statements, cost reports or other financial information; contract
proposals, or bidding information; business plans and training operations
methods and manuals; personnel records; fee structure; and management systems,
policies or procedures, including related forms and manuals.
"CONTROLLED GROUP OF CORPORATIONS" has the meaning set forth
in Code Sec. 1563.
"CUSTOMER CONTRACT OR AGREEMENT" means any contract or
agreement of the Company related to (a) information technology,
telecommunications or computer support services, training, education and change
management services; (b) maintenance contracts for application software; (c)
maintenance support arrangements, (d) reengineering and refurbishment
arrangements;
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(e) consulting or professional resource arrangements; (f) any other contract
integration or support services arrangement; and (g) agreements related to any
other services provided by the Company.
"DEFERRED INTERCOMPANY TRANSACTION" has the meaning set forth
in Treas. Reg. Section 1.1502-13.
"DGCL" has the meaning set forth in Section 2.3 below.
"DISCLOSURE SCHEDULE" has the meaning set forth in Article V
below.
"DOCUMENTATION" has the meaning set forth in Section 5.12(i)
below.
"EARN-OUT PAYMENTS" has the meaning set forth in Section
2.2(b) below.
"EARN-OUT PERIOD" has the meaning set forth in Section 2.2(b)
below.
"EFFECTIVE TIME" shall have the meaning set forth in Section
2.3 below.
"E&Y EARN-OUT PAYMENT DETERMINATION" has the meaning set
forth in Section 2.2(c) below.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multi employer Plan), or (d) Employee Welfare Benefit Plan or
Material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in
ERISA Sec. 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in
ERISA Sec. 3(1).
"EPA" shall mean the United States Environmental Protection
Agency.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in
Sec. 302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"FIDUCIARY" has the meaning set forth in ERISA Sec. 3(21).
"FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 5.5 below.
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"FIRST EARN-OUT PAYMENT" has the meaning set forth in Section
2.2(b) below.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any governmental,
quasi-governmental, state, county, city or other political subdivision of the
United States or any other country, or any agency, court or instrumentality,
foreign or domestic, or statutory or regulatory body thereof.
"INDEMNIFIED PARTY" has the meaning set forth in Section 9.5
below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 9.5
below.
"INITIAL PAYMENT" has the meaning set forth in Section 2.2(a)
below.
"INTELLECTUAL PROPERTY" means all (a) trademarks, service
marks, trade dress, logos, trade names, and corporate names and registrations
and applications for registration thereof, (b) patents, patent applications,
and provisional applications, including all continuations, divisionals and
related applications, (c) copyrights and registrations and applications for
registration thereof, (d) computer software, data, and documentation, (e) to
the extent legally protectable, trade secrets and confidential business
information (including ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know-how,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, copyrightable works, financial, marketing, and business data, pricing and
cost information, business and marketing plans, and customer and supplier lists
and information), (f) to the extent legally protectable, other proprietary
rights, and (g) copies and tangible embodiments thereof (in whatever form or
medium).
"KNOWLEDGE" means that which is known or understood or should
have been known or understood after reasonable investigation and inquiry, which
inquiry shall include an inquiry of the employees of the Company with
responsibility for the matters in question.
"LIABILITY" means any liability (whether known or unknown,
whether absolute or contingent, whether liquidated or unliquidated, and whether
due or to become due), including any liability for Taxes.
"LICENSES" has the meaning set forth in Section 5.12(l) below.
"MERGER" has the meaning set forth in Section 2.1 below.
"METAMOR SOLUTIONS" has the meaning set forth in Section
7.8(a) below.
"MERGER CONSIDERATION" has the meaning set forth in Section
2.2(a) below.
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"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth
in Section 5.5 below.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in
Section 5.5 below.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Sec.
3(37).
"NDC OPTIONS" shall mean all outstanding options to purchase
Company Common Stock as described in Section 5.2 of the Disclosure Schedule.
"NET WORKING CAPITAL" means $1,391,009, which has been
determined by the parties to equal, as of February 28, 1998, total current
assets of the Company less the sum of the following: (i) total current
liabilities of the Company, (ii) long-term debt of the Company and (iii)
deferred income taxes of the Company, determined in accordance with GAAP,
consistently applied, and based on the accrual method of accounting.
"OPTIONHOLDER" has the meaning set forth in the recitals
above.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means an individual, corporation, partnership, joint
venture, limited liability company, limited liability partnership, association,
trust or other entity or organization, including a Governmental Authority.
"PRINCIPAL STOCKHOLDERS" shall mean ▇▇. ▇▇▇▇▇ ▇▇▇▇ and ▇▇.
▇▇▇▇ ▇▇▇▇▇▇▇▇.
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA
Sec. 406 and Code Sec. 4975.
"REPORTABLE EVENT" has the meaning set forth in ERISA Sec.
4043.
"REQUIRED FILING DATE" has the meaning set forth in Section
2.15(a) below.
"REQUISITE STOCKHOLDER" means ▇▇. ▇▇▇▇▇ ▇▇▇▇.
"SEC DOCUMENTS" shall have the meaning set forth in Section
4.6 below.
"SECOND EARN-OUT PAYMENT" has the meaning set forth in
Section 2.2(b) below.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
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"SECURITY INTEREST" means any mortgage, pledge, security
interest, encumbrance, charge, or other lien, other than (a) mechanic's,
materialmen's and similar liens, (b) liens for Taxes not yet due and payable
(or for Taxes that the taxpayer is contesting in good faith through appropriate
proceedings), (c) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation, (d) liens
arising in connection with sales of foreign receivables, (e) liens on goods in
transit incurred pursuant to documentary letters of credit, (f) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(g) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"SEVERAL" has the meaning set forth in Section 11.1 below.
"SHELF REGISTRATION STATEMENT" has the meaning set forth in
Section 2.15(a) below.
"STOCKHOLDER" has the meaning set forth in the preface above.
"STOCKHOLDERS" has the meaning set forth in the preface
above.
"SHARES" means the shares of the Company Common Stock.
"SOFTWARE PROGRAMS" has the meaning set forth in Section
5.12(a) below.
"SUBSIDIARY" means any corporation with respect to which
another specified corporation has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
"SURVIVING CORPORATION" has the meaning set forth in Section
2.1 below.
"TAX" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty or
addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"VGCL" has the meaning set forth in Section 2.3 below.
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ARTICLE II
CLOSING AND POST CLOSING MATTERS
2.1 THE MERGER. In reliance upon the representations, warranties,
covenants and agreements of the parties set forth herein and upon the terms and
subject to the conditions of this Agreement, at the Closing, the Company shall
be merged with and into Merger Sub (the "MERGER"), with Merger Sub being the
surviving corporation (the "SURVIVING CORPORATION").
2.2 CONSIDERATION.
(a) In consideration for the acquisition, by merger, of all
of the outstanding shares of Company Common Stock and the cancellation
of all of the NDC Options, Buyer shall pay to the Stockholders and the
Optionholders an aggregate of $20,491,009 (subject to adjustment as
set forth herein) (the "Initial Payment") and the Earn-Out Payments
(as hereinafter defined) (the Initial Payment and the Earn-Out
Payments being referred to collectively as the "Merger
Consideration"), each payable as follows:
(i) Principal Stockholders. As of the Effective
Time, by virtue of the Merger and without any action on the
part of any holder of the shares of Company Common Stock,
each Principal Stockholder (in its capacity as a stockholder
and not in its capacity as an Optionholder) in consideration
for all of the Company Common Stock owned or held by such
Principal Stockholder, upon the surrender of the certificates
formerly representing such shares shall (a) receive a
proportionate share determined in accordance with Schedule
2.2(a) of the Initial Payment, payable in shares of Buyer
Common Stock and cash as provided below and (b) be entitled
to receive a proportionate share determined in accordance
with Schedule 2.2(a) of the Earn-Out Payments, payable as set
forth in Section 2.2(d) below. The shares of Buyer Common
Stock issuable as part of the Initial Payment to the
Principal Stockholders shall represent seventy percent (70%)
of the Initial Payment.
(ii) Other Stockholders. As of the Effective Time,
by virtue of the Merger and without any action on the part of
any holder of the shares of Company Common Stock, each
Stockholder (other than the Principal Stockholders) in
consideration for all of the Company Common Stock owned or
held by such Stockholder, upon the surrender of the
certificates formerly representing such shares shall (a)
receive a proportionate share determined in accordance with
Schedule 2.2(a) of the Initial Payment, payable in cash and
(b) be entitled to receive a proportionate share determined
in accordance with Schedule 2.2(a) of the Earn-Out Payments,
payable in cash.
(iii) Optionholders. As of the Effective Time, by
virtue of the Merger and without any action on the part of
any holder of the shares of Company Common Stock, each
Optionholder in consideration for the cancellation of all NDC
Options
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held by such Optionholder, upon the surrender of agreements representing such
NDC Options shall (a) receive a proportionate share determined in accordance
with Schedule 2.2(a) of the Initial Payment, payable in cash and (b) be
entitled to receive a proportionate share determined in accordance with
Schedule 2.2(a) of the Earn-Out Payments, payable in cash. Notwithstanding the
foregoing, any Optionholder, either directly or through its attorney-in-fact,
may deliver notice to Buyer to pay its proportionate interest in an Earn-Out
Payment to a designee of such Optionholder on the Optionholder's behalf.
(b) The number of Buyer Shares to be issued to the Principal
Stockholders in connection with the Initial Payment shall be
determined using a valuation of $45.00 per share (subject to
adjustment in the event of a stock split, recapitalization,
combination or stock dividend). On the second (2nd) anniversary of the
Closing Date, in the event the fair market value (based on the average
closing prices of Buyer Common Stock for the twenty (20) trading days
first preceding the second anniversary of the Closing Date), as
adjusted below (the "Deemed Fair Market Value") of the Buyer Common
Stock received by the Principal Stockholders as part of the Initial
Payment is less than $14,000,000 (subject to adjustment on a
proportionate basis with any adjustment to the Initial Payment and
subject to adjustment as set forth below) (the "Guaranteed Amount"),
then Buyer agrees to pay to the Principal Stockholders an amount equal
to the amount by which the Deemed Fair Market value is less than the
Guaranteed Amount either through the issuance of additional shares of
Buyer Common Stock valued at its fair market value (as determined in
this paragraph) or a cash payment, or a combination of both (the
"Special Payment"), at Buyer's sole election, except as provided in
Section 2.2(g). The Guaranteed Amount shall be reduced
dollar-for-dollar to the extent the Principal Stockholders (i) sell
any Buyer Shares before the second (2nd) anniversary date following
the Closing Date for less than $45 per share or (ii) satisfy
indemnification obligations with Buyer Common Stock pursuant to
Section 9.8. The Deemed Fair Market Value shall be increased
dollar-for-dollar to the extent the Principal Stockholders sell any
Buyer Shares before the second (2nd) anniversary date following the
Closing Date for more than $45 per share.
The Principal Stockholders agree that they will not dispose
of any Buyer Common Stock received as part of the Initial Payment
prior to the earlier of the first (1st) anniversary to the Closing and
the date ▇▇▇▇▇ ▇▇▇▇ is terminated from employment by the Company for
other than "cause" as defined in ▇▇. ▇▇▇▇'▇ employment agreement with
the Surviving Corporation.
(c) Subject to the obligation of Buyer to set off against
payment of indemnification obligations of the Stockholders as provided
in Section 9.8, in addition to the Initial Payment Buyer agrees to pay
to the Stockholders and Optionholders, if earned, the following earned
payout amounts:
(i) an earned payout amount (the "FIRST EARN-OUT
PAYMENT") equal to the product of 6.0 multiplied by the
excess of (A) the Adjusted EBIT of the Surviving Corporation
for the twelve (12) month period ending December 31, 1998
over (B) $800,000; and
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(ii) an additional amount (the "SECOND EARN-OUT
PAYMENT") equal to the product of 5.0 multiplied by the
excess of (A) Adjusted EBIT of the Surviving Corporation for
the twelve (12) month period ending December 31, 1999 over
(B) $1,200,000, provided that any Adjusted EBIT of the
Company for the twelve (12) month period ending December 31,
1998 in excess of $3,400,000 shall be added to Adjusted EBIT
of the Surviving Corporation for the twelve (12) month period
ending December 31, 1999 for purposes of calculating the
Second Earn-Out Payment.
The First Earn-Out Payment and the Second Earn-Out Payment
are collectively referred to herein as the "EARN-OUT PAYMENTS." In no
event shall the First Earn-Out Payment exceed $11,000,000, or the
Second Earn-Out Payment exceed $26,000,000 less the actual amount of
the First Earn-Out Payment paid to the Stockholders and Optionholders.
The two-year period from January 1, 1998 to December 31, 1999
shall be referred to as the "EARN-OUT PERIOD."
(d) The First Earn-Out Payment and the Second Earn-Out
Payment shall be payable by Buyer (i) to the Principal Stockholders
(in their capacity as Stockholders and not in their capacity as
Optionholders) in Buyer Common Stock or a combination of cash and
Buyer Common Stock (at Buyer's sole election, subject to Section
2.2(g)) and (ii) to the Stockholders other than the Principal
Stockholders and the Optionholders (including the Principal
Stockholders) in cash, in each case by March 15, 1999 and 2000,
respectively, and the Adjusted EBIT amount shall be based on the
internally-generated financial statements (which have been prepared by
the Principal Stockholders under the direction of Buyer) of the
Surviving Corporation for the relevant portion of the Earn-Out Period.
Any Buyer Common Stock issued to the Stockholders to satisfy the
Earn-Out Payments shall be valued at the average closing prices of
Buyer Common Stock for the twenty (20) trading day period preceding
the third trading day prior to (x) March 15, 1999 for the First
Earn-Out Payment and (y) March 15, 2000 for the Second Earn-Out
Payment. In the event there is a dispute between Buyer and the
Stockholders regarding the Earn-Out Payments (including the
calculation of Adjusted EBIT), the applicable Earn-Out Payment shall
be determined by Ernst & Young, LLP in accordance with this Agreement
(at the expense of Buyer), which determination (each an "E&Y EARN-OUT
PAYMENT DETERMINATION") shall be submitted in writing to Buyer and the
Requisite Stockholder no later than February 15, 1999, in the case of
the First Earn-Out Payment, and February 15, 2000, in the case of the
Second Earn-Out Payment. If, within five (5) days after receipt of an
E&Y Earn-Out Payment Determination, Buyer and/or the Requisite
Stockholder delivers written notice to the other party that such party
disagrees with the E&Y Earn-Out Payment Determination (an "EARN-OUT
PAYMENT DISAGREEMENT NOTICE"), then Buyer and the Requisite
Stockholder shall attempt in good faith to mutually determine the
correct amount of the Earn-Out Payment within five (5) days after
either Buyer or the Requisite Stockholder first delivers the Earn-Out
Payment Disagreement Notice to the other party. If Buyer and the
Requisite Stockholder cannot in good faith mutually determine the
amount of the Earn-Out Payments within such period, then the item or
items in dispute shall be resolved by another "Big Six" (as combined
from
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time-to-time) accounting firm mutually acceptable to Buyer and the
Requisite Stockholder (whose decision shall be conclusive and binding
on the Parties with respect to such disputed item(s)). Any adjustment
in the Earn-Out Payment determined by such "Big Six" accounting firm
shall be made within thirty (30) days following its selection. In the
event such resolution would result in an increase in the Earn-Out
Payment, the cost of such "Big Six" accounting firm shall be paid for
solely by Buyer. Conversely, in the event that such "Big Six"
accounting firm determines that such resolution would result in a
decrease in the Earn-Out Payment, the cost of such "Big Six"
accounting firm shall be paid for solely by the Stockholders. In the
event that such "Big Six" accounting firm determines that no changes
shall be made to the Earn-Out Payment, the cost of such "Big Six"
accounting firm shall be paid by the party disputing the E & Y
Earn-Out Payment Determination.
(e) At the Closing, each Stockholder shall surrender to Buyer
the certificates for Company Common Stock owned by such Stockholder in
exchange for the Merger Consideration, as may be adjusted pursuant to
Section 2.2(d) above. As of and after the Effective Time, no holder of
any certificate that immediately prior to the Effective Time
represented shares of Company Common Stock shall have any rights as a
holder of Company Common Stock other than to receive the Merger
Consideration issuable to such holder pursuant to the Merger.
(f) Buyer shall pay cash in lieu of any resulting fractional
shares of Buyer Common Stock, if any.
(g) Notwithstanding any other provision of this Article II,
the Special Payment and each Earn-Out Payment shall include not less
than the number of shares necessary to cause the aggregate value of
the shares of Buyer Common Stock issued to the Principal Stockholders
pursuant to Section 2.2(a)(i) (and the portion of the Special Payment
that relates to shares of Buyer Common Stock) to be greater than fifty
percent (50%) of the total consideration paid to the Stockholders
pursuant to Sections 2.2(a)(i) and (ii) (and the portion of the
Special Payment that relates to shares of Buyer Common Stock issued
pursuant to Section 2.2(a)(i)). Solely for purposes of making the
computations required to be made pursuant to this Section 2.2(g), the
value of the Buyer Common Stock shall be treated as being equal to the
lesser of the value of Buyer Common Stock on the Closing Date or the
date such shares are actually issued.
2.3 EFFECTIVE TIME OF THE MERGER. On the Closing Date, the parties
shall file Certificates of Merger with each of the Secretary of State of the
State of Delaware and the Secretary of State of the Commonwealth of Virginia,
in such form as required by, and executed in accordance with, the relevant
provisions of the General Corporation Law of the State of Delaware ("DGCL") and
the General Corporation Law of the Commonwealth of Virginia ("VGCL") and shall
make all other filings or recordings required under the DGCL and the VGCL to
cause the Merger to become effective. The Merger shall become effective at such
time as the Certificates of Merger, together with any required supporting
documentation, are duly filed with the Secretary of State of the State of
Delaware and the Secretary of State of the Commonwealth of Virginia or at such
other time as
NDC GROUP, INC.
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is permissible in accordance with the DGCL and the VGCL and as Buyer and the
Company shall agree (the time the Merger becomes effective being the "EFFECTIVE
TIME").
2.4 CERTIFICATE OF INCORPORATION; NAME. The Certificate of
Incorporation of Merger Sub shall be the Certificate of Incorporation of the
Surviving Corporation after the Effective Time. As of the Effective Time, the
name of the Surviving Corporation shall be changed to "NDC Group, Inc."
2.5 BY-LAWS. The By-Laws of Merger Sub shall be the By-Laws of the
Surviving Corporation after the Effective Time.
2.6 DIRECTORS. The directors of Merger Sub shall be the directors of
the Surviving Corporation, who shall serve until their respective successors
are duly elected and qualified in the manner provided in the Certificate of
Incorporation and By-Laws of the Surviving Corporation, or as otherwise
provided by law.
2.7 OFFICERS. The officers of the Surviving Corporation shall
initially consist of the officers of Merger Sub (including ▇▇▇▇▇ ▇▇▇▇ as Chief
Executive Officer,) until their successors are duly elected and qualified in
the manner provided in the Certificate of Incorporation and By-Laws of the
Surviving Corporation, or as otherwise provided by law.
2.8 OTHER EFFECTS ON CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or capital stock of Merger Sub:
(a) all shares of Company Common Stock that are owned by the
Company as treasury stock shall be canceled and retired and shall
cease to exist and no consideration shall be delivered in exchange
therefor.
(b) all options, warrants and other rights to purchase Shares
of Company Common Stock shall be cancelled immediately prior to the
Effective Time.
2.9 NDC OPTIONS. Immediately prior to the Merger, the Company shall,
and the Stockholders shall cause the Company to, cause the cancellation of each
NDC Option held by an Optionholder in exchange for the right of such
Optionholder to participate in the Earn-Out Payments as set forth in Section
2.2 above. The Stockholders approving the Merger acknowledge and concur in the
participation of the Optionholders in the Earn-Out Payment pursuant to the
contractual rights conferred in the cancellation agreement to be entered into
by each Optionholder.
2.10 RIGHTS. At and after the Effective Time, the Surviving
Corporation shall possess all the rights and property and be subject to all of
the debts and liabilities of Merger Sub and the Company as provided in the DGCL
and the VGCL.
2.11 DOCUMENTS. On the Closing Date, Buyer, Merger Sub, the Company
and the Stockholders shall execute and deliver all appropriate documents and
instruments to effectuate the
NDC GROUP, INC.
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18
transactions as set forth in this Agreement, including, on the part of the
Stockholders, the various certificates, instruments and documents referred to
in Section 8.1 below and, on the part of Buyer, the various certificates,
instruments and documents referred to in Section 8.2 below.
2.12 ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. Subject to the terms
and conditions of this Agreement, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including cooperating fully with the other
parties, including by provision of information and making of all necessary
filings with Governmental Entities. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of either of
the Company or Merger Sub, the parties shall take all such necessary action.
2.13 DISSENTERS RIGHTS. The Stockholders each hereby waive any
dissenters rights of appraisal or similar rights to which they may be entitled
under the DGCL, including any notice required in connection therewith.
2.14 CLOSING. Subject to the terms and conditions of this Agreement,
including without limitation thereto the conditions to closing set forth in
Article IX hereof, the transactions described and provided for in this
Agreement shall be consummated at a closing (the "CLOSING") that shall take
place at the offices of Buyer in Houston, Texas commencing at 9:00 a.m. local
time on the second business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby or such other date as Buyer and the Stockholders may
mutually determine (the "CLOSING DATE").
2.15 REGISTRATION RIGHTS.
(a) Buyer shall prepare for filing and cause to be filed with
the Commission within thirty (30) days (the "REQUIRED FILING DATE")
after the applicable payment date of Buyer Common Stock to the
Principal Stockholders pursuant to the Special Payment, if any, and
the Earn-Out Payments, a "shelf" registration statement pursuant to
Rule 415 under the Securities Act (the "SHELF REGISTRATION STATEMENT")
registering the resale by the Principal Stockholders of such Buyer
Common Stock received as part of the Special Payment and the Earn-Out
Payments, as the case may be. In addition, in the event either of the
Principal Stockholders is terminated from employment for other than
"cause" (as defined in their respective employment agreements) prior
to the first (1st) anniversary of the Closing, the Company shall, upon
request by such terminated Principal Stockholder, file a Shelf
Registration Statement within thirty (30) days registering the resale
of Buyer Common Stock such terminated Principal Stockholder received
pursuant to the Initial Payment. The Shelf Registration Statement,
may, at Buyer's option, cover securities other than the shares of
Buyer Common Stock. Buyer shall use reasonable efforts to cause the
Commission to declare effective the Shelf Registration Statement.
Buyer agrees to use reasonable efforts to keep the Shelf Registration
Statement continuously effective for a period ending on the
NDC GROUP, INC.
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19
earliest to occur of (i) the date on which all shares of Buyer Common
Stock covered thereby are freely transferable without restrictions
under the Securities Act, (ii) the date on which all Buyer Common
Stock covered thereby have been sold or otherwise transferred or
disposed of by the Stockholders and (iii) one year after the Principal
Stockholders' receipt of the Buyer Common Stock covered thereby. Buyer
shall not be obligated to effect more than one registration for Buyer
Common Stock paid in connection with the Special Payment, if any, one
registration for Buyer Common Stock paid in connection with the First
Earn-Out Payment and one registration for Buyer Common Stock paid in
connection with the Second Earn-Out Payment. Except as provided above,
the Buyer is not obligated hereunder to register any of the shares of
Buyer Common Stock issued in connection with the Initial Payment.
(b) Notwithstanding anything to the contrary in this
Agreement, Buyer may defer the filing (but not the preparation) of the
Shelf Registration Statement until a date not later than sixty (60)
days after the Required Filing Date if (i) Buyer or its subsidiaries
are engaged in confidential negotiations or other confidential
business activities, disclosure of which would be required in such
registration statement (but would not be required if such registration
statement were not filed), or (ii) prior to filing the registration
statement, Buyer had determined to effect a registered underwritten
public offering for Buyer's account and had taken substantial steps to
effect such offering.
(c) In connection with Buyer's obligations with respect to
the Shelf Registration Statement as set forth in Section 2.15(a),
Buyer shall: (i) prepare and file with the Commission such amendments
and supplements to such Shelf Registration Statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective for the period specified in
paragraph (a) above and comply with the provisions of the Securities
Act with respect to the disposition of all Buyer Common Stock covered
by such Shelf Registration Statement in accordance with the sellers'
intended method of disposition set forth in such registration
statement for such period; (ii) furnish to the Principal Stockholders
a copy of the Shelf Registration Statement, each amendment and
supplement thereto and such reasonable number of copies of the
prospectus included in such registration statement (including each
preliminary prospectus, as the Principal Stockholders may reasonably
request in order to facilitate the disposition of the shares of Buyer
Common Stock owned by the Principal Stockholders and covered by the
Shelf Registration Statement; (iii) notify the Principal Stockholders
at any time when a prospectus relating thereto is required to be
delivered under the Securities Act within the period that Buyer is
required to keep the Shelf Registration Statement effective of the
happening of any event as a result of which the prospectus included in
such Shelf Registration Statement (as then in effect) contains an
untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances then existing, not misleading,
and Buyer will prepare and as soon as reasonably practicable file a
supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such shares of Buyer Common Stock, such
prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances then
NDC GROUP, INC.
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20
existing, not misleading; (iv) advise the Principal Stockholders,
after receiving notice thereof, of any stop order issued or threatened
by the Commission with respect to the Shelf Registration Statement and
to use its reasonable efforts to take all actions required to prevent
the entry of such stop order, or to remove it if entered; and (v) use
reasonable efforts to register or qualify the Buyer Common Stock
covered by such Shelf Registration Statement under the securities or
"blue sky" laws of such jurisdictions as the sellers of Buyer Common
Stock may reasonably request.
(d) Each Principal Stockholder agrees that, upon receipt of
any notice from Buyer of the happening of any event of the kind
described in Section 2.15(c)(iii) above, such Principal Stockholder
will forthwith discontinue disposition of shares of Buyer Common Stock
pursuant to the Shelf Registration Statement until such Principal
Stockholder receives the copies of the supplemented or amended
prospectus contemplated by Section 2.15(c)(iii) above, and, if so
directed by Buyer, such Principal Stockholder will deliver to Buyer
all copies of the prospectus covering such shares of Buyer Common
Stock current at the time of receipt of such notice.
(e) Each Principal Stockholder hereby covenants that he will
not make any sale of shares of Buyer Common Stock that are registered
in accordance with this Section 2.15 hereof without complying with the
prospectus delivery requirements under the Securities Act.
(f) Buyer may require each Principal Stockholder to furnish
to Buyer such information regarding such Principal Stockholder and the
distribution of such shares of Buyer Common Stock as Buyer may from
time to time request in writing. Each Principal Stockholder agrees to
notify Buyer as promptly as practicable of any inaccuracy or change in
information previously furnished by such Principal Stockholder to
Buyer or of the occurrence of any event in either case as a result of
which any prospectus relating to such registration contains an untrue
statement of a material fact regarding such Principal Stockholder or
the distribution of such shares of Buyer Common Stock or omits to
state any material fact regarding such Principal Stockholder or the
distribution of such shares of Buyer Common Stock required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and promptly
to furnish to Buyer any additional information required to correct and
update any previously furnished information or required so that such
prospectus shall not contain, with respect to such Principal
Stockholder or the distribution of such shares of Buyer Common Stock
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances then existing, not misleading.
(g) All expenses incident to Buyer's performance of or
compliance with the provisions of this Section 2.15 will be borne by
Buyer, except that each Principal Stockholder shall pay any and all
underwriting fees, discounts or commissions and fees and disbursements
of counsel to such Principal Stockholder attributable to the sale of
shares of such Principal Stockholder's Buyer Common Stock.
NDC GROUP, INC.
AGREEMENT AND PLAN OF MERGER
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21
(h) Buyer will not grant any registration rights which
adversely affect the registration rights granted under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
CONCERNING THE TRANSACTION
3.1 GENERAL STOCKHOLDER REPRESENTATIONS. Each of the Stockholders,
severally and not jointly, represents and warrants to Buyer as follows:
(a) AUTHORIZATION OF TRANSACTION. The Stockholder has full
power and authority to execute and deliver this Agreement and to
perform his obligations hereunder. This Agreement constitutes the
valid and legally binding obligation of the Stockholder, enforceable
in accordance with its terms and conditions, except that (A) such
enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium or other laws, decisions or equitable
principles now or hereafter in effect relating to or affecting the
enforcement of creditors' rights or debtors' obligations generally,
and to general equity principles, (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court
before which any proceeding therefore may be brought, and (C) no
representation is made as to the enforceability of the obligation of
the Stockholders to indemnify Buyer with respect to Liabilities
arising under the Shelf Registration Statement. The Stockholder need
not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement.
(b) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any statute, regulation, rule,
judgment, order, decree, stipulation, injunction, charge, or other
restriction of any government, governmental agency, or court to which
the Stockholder is subject or (B) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest, or
other arrangement to which the Stockholder is a party or by which he
is bound or to which any of his assets is subject.
(c) BROKER'S FEES. The Stockholder has no obligation or
Liability to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement
for which Buyer could become liable or obligated.
(d) SHARES. The Stockholder holds of record and owns
beneficially the number of Shares set forth next to his name in
Section 3.1(d) of the Disclosure Schedule, free and
NDC GROUP, INC.
AGREEMENT AND PLAN OF MERGER
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22
clear of any restrictions on transfer (other than any restrictions
under the Securities Act and state securities laws), claims, Taxes,
Security Interests, options, warrants, rights, contracts, calls,
commitments, equities, and demands. The Stockholders hold all of the
issued and outstanding shares of the Company and upon the consummation
of the transaction contemplated hereby, Buyer will hold all of the
issued and outstanding shares of the Company; provided, that the
representation contained in this sentence is made only by the
Principal Stockholders. Except as set forth next to his name in
Section 3.1(d) of the Disclosure Schedule, the Stockholder is not a
party to any option, warrant, right, contract, call, put, or other
agreement or commitment providing for the disposition or acquisition
of any capital stock of the Company (other than this Agreement). The
Stockholder is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any capital
stock of the Company. The Principal Stockholders hereby further
represent and warrant that (i) except as provided in Section 5.2 of
the Disclosure Schedule, all other Shares or options, rights, warrants
or other interests in the equity of the Company, if any, have been
fully repurchased by the Company prior to the Closing Date and (ii)
there are no pending or threatened suits, claims or actions by any
former holders of Shares or options, rights, warrants or other
interests in the equity of the Company with respect to the repurchase
of their equity interest in the Company.
3.2 INVESTMENT REPRESENTATIONS. Each of the Principal Stockholders,
severally and not jointly, represents and warrants to Buyer as follows:
(a) The Principal Stockholder, either alone or with his
purchaser representative as defined in Rule 501(h) under the
Securities Act, if any, has substantial experience in evaluating and
investing in private placement transactions so that such Principal
Stockholder is capable of evaluating the merits and risks of its
investment in the Buyer Common Stock. The Principal Stockholder, by
reason of such Principal Stockholder's business or financial
experience, either alone or with his purchaser representative as
defined in Rule 501(h) under the Securities Act, if any, has the
capacity to protect his or her own interests in connection with the
acquisition of the Buyer Common Stock hereunder. Each of the Principal
Stockholders is an "accredited investor" as defined in Rule 501 of
Regulation D promulgated pursuant to the Securities Act has such
knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the transactions
contemplated by this Agreement. Section 3.2(a) of the Disclosure
Schedule sets forth each state in which the Principal Stockholder may
be considered a resident. The Principal Stockholder has received a
copy of the SEC Documents. The Principal Stockholder is familiar with
the business and financial condition, properties, operations and
prospects of Buyer. The Principal Stockholder has had an opportunity
to discuss Buyer's business and financial condition, properties,
operations and prospects with Buyer's management. The Principal
Stockholder has also had an opportunity to ask questions of officers
of Buyer, which questions were answered to such Principal
Stockholder's satisfaction. The Principal Stockholder understands that
such discussion was intended to describe certain aspects of Buyer's
business and financial condition, properties, operations and
prospects, but was not a thorough or exhaustive description.
NDC GROUP, INC.
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23
(b) The Principal Stockholder understands that the shares of
Buyer Common Stock may be "restricted securities" under the applicable
federal securities laws and that the Securities Act and the rules of
the Commission provide in substance that such Principal Stockholder
may dispose of the shares of Buyer Common Stock only pursuant to an
effective registration statement under the Securities Act or an
exemption therefrom, and such Principal Stockholder understands that
Buyer has no obligation or intention to register the shares of Buyer
Common Stock (except pursuant to the registration rights granted in
connection with this Agreement) or to take action so as to permit
sales pursuant to the Securities Act (other than comply with Rule
144(c)). As a consequence of all of the foregoing, the Principal
Stockholder understands that such Principal Stockholder may have to
bear the economic risk of the investment in the Buyer Common Stock for
an indefinite period of time.
3.3 REORGANIZATION STATUS. No Stockholder has taken or agreed to take
any action that would prevent the Merger from constituting a reorganization
within the meaning of Code Sec. 368(a).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
CONCERNING THE TRANSACTION
Buyer represents and warrants to the Stockholders as follows:
4.1 ORGANIZATION OF BUYER. Each of Buyer and Merger Sub is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware.
4.2 AUTHORIZATION OF TRANSACTION. Buyer has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement has been
duly and validly authorized, executed and delivered by Buyer and constitutes
the valid and legally binding obligation of Buyer, enforceable in accordance
with its terms and conditions, except that (A) such enforceability may be
subject to bankruptcy, insolvency, reorganization, moratorium or other laws,
decisions or equitable principles now or hereafter in effect relating to or
affecting the enforcement of creditors' rights or debtors' obligations
generally, and to general equity principles, (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, and (C) no representation is made as to the
enforceability of the obligation of Buyer to indemnify the Stockholders with
respect to Liabilities arising under the Shelf Registration Statement. Buyer
need not give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement.
4.3 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(A) violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any government,
NDC GROUP, INC.
AGREEMENT AND PLAN OF MERGER
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24
governmental agency, or court to which Buyer is subject or any provision of its
charter or bylaws or (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
material contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which Buyer is a party
or by which it is bound or to which any of its assets is subject.
4.4 BROKER'S FEES. Buyer has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which any Stockholder could
become liable or obligated.
4.5 BUYER COMMON STOCK. On the appropriate payment date for the
Initial Payment, the Special Payment, if any, and the Earn-Out Payments, the
Principal Stockholders shall acquire good title to the shares of Buyer Common
Stock issued to the Principal Stockholders pursuant to this Agreement, free and
clear of all encumbrances.
4.6 SEC DOCUMENTS. Buyer has furnished or made available to the
Stockholders a true and complete copy of its definitive proxy statement in
connection with the annual meeting of its stockholders, its annual report and
Form 10-K for the fiscal year ended December 31, 1997, its current reports on
Form 8-K, and any other document dated prior to the date of this Agreement,
which Buyer filed under the Exchange Act with the Commission ("SEC DOCUMENTS"),
which are all of the documents (other than preliminary material) that Buyer was
required to file with the Commission since such date. Such SEC Documents (i)
were prepared in all material respects in accordance with the Exchange Act and
the applicable regulations of the Commission thereunder and (ii) did not at the
time they were filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
4.7 REORGANIZATION STATUS. The Buyer has not taken any action that
would prevent the Merger from constituting a reorganization within the meaning
of Section 368(a) of the Code. Without limiting the generality of the
foregoing:
(a) Following the Merger, Surviving Corporation will not
issue additional shares of its stock that would result in Buyer losing
control of Surviving Corporation within the meaning of Section 368(c)
of the Code.
(b) Buyer has no plan or intention to reacquire any of its
stock issued in the Merger.
(c) Buyer has no plan or intention to liquidate Surviving
Corporation; to merge Surviving Corporation with and into another
corporation; to sell or otherwise dispose of the stock of Surviving
Corporation; or to cause Surviving Corporation to sell or otherwise
dispose of any of the assets of the Company acquired in the Merger,
except for dispositions made in the ordinary course of business or
transfers described in Section 368(a)(2)(C) of the Code.
NDC GROUP, INC.
AGREEMENT AND PLAN OF MERGER
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(d) Following the Merger, Surviving Corporation will continue
the historic business of Company or use a significant portion of
Company's historic business assets in a business.
(e) Except as otherwise provided in the Agreement, Buyer and
Surviving Corporation will pay their own respective expenses and fees
incurred in connection with the Merger.
ARTICLE V
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
The Stockholders, severally and not jointly, represent and warrant to
Buyer that the statements contained in this Article V are correct and complete
as of the date of this Agreement, except as set forth in the disclosure
schedule delivered by the Stockholders to Buyer on the date hereof (the
"DISCLOSURE SCHEDULE"). An event or matter will be deemed to be "MATERIAL," to
have a "MATERIAL" change in or in respect of, to have a "MATERIAL ADVERSE
EFFECT" or to be "MATERIALLY" affected if such loss is material or the loss may
reasonably be expected to occur to the Company or Buyer with respect to such
event or matter, when taken together with all other related losses that may
reasonably be expected to occur to the Company or Buyer as a result of any such
events or matters, would exceed $20,000 in the aggregate or unless such event
or matter constitutes a criminal violation of law. For purposes of this
paragraph, the word "LOSS" shall mean any and all direct or indirect payments,
obligations, assessments, losses, losses of income, liabilities, costs and
expenses paid or incurred, or reasonably likely to be paid or incurred, or that
are reasonably expected to occur, including without limitation, penalties,
interest on any amount payable to a third party as a result of the foregoing,
and any legal or other expenses reasonably expected to be incurred in
connection with defending any demands, claims, actions or causes of action
that, if adversely determined, could reasonably be expected to result in
losses, and all amounts paid in settlement of claims or actions; provided,
however, that losses shall be net of any insurance proceeds entitled to be
received from a nonaffiliated insurance company on account of such loss (after
taking into account any cost incurred in obtaining such proceeds). A Customer
Contract or Agreement is "MATERIAL" if during the eight months ended February
28, 1998 such Customer Contract or Agreement produced $25,000 of Gross Profit
Margin less any bad debt specifically related to such Customer Contract or
Agreement. Any item intended to be disclosed must be identified with the
particular representation or warranty it is intended to limit and shall not be
deemed to limit any other representation, warranty or covenant in the
Agreement. Nothing in the Disclosure Schedule shall be deemed adequate to
disclose an exception to a representation or warranty made herein, unless the
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail to the satisfaction of Buyer.
Without limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be deemed adequate
to disclose an exception to a representation or warranty made herein (unless
the representation or warranty has to do with the existence of the document or
other items itself). The Disclosure Schedule will be
NDC GROUP, INC.
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arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Article V.
5.1 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Company is duly authorized
to conduct business and is in good standing under the laws of each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties requires such qualification. The Company has full corporate power
and authority to carry on the business in which it is engaged and to own and
use the properties owned and used by it. Section 5.1 of the Disclosure Schedule
lists the directors and officers of the Company. The Stockholders have
delivered to Buyer correct and complete copies of the charter and bylaws of the
Company (as amended to date). The minute books containing the records of
meetings of the stockholders, the board of directors, and any committees of the
board of directors, the stock certificate books, and the stock record books of
the Company are correct and complete. The Company is not in default under or in
violation of any provision of its charter or bylaws. The execution and delivery
of this Agreement and the effectuation of the transactions contemplated hereby
has been duly authorized by all of the directors of the Company and the
Requisite Stockholder, and the Company will deliver to Buyer on the date hereof
and at the Closing complete and correct copies, certified by its secretary, of
the resolutions duly and validly adopted by its directors and stockholders
evidencing such authorization (which resolutions will not have been modified,
revoked or rescinded in any respect prior to, and will be in full force and
effect at, the Closing). No other corporate act or proceeding on the part of
the Company or the Stockholders is necessary for the due and valid
authorization of this Agreement or the transactions contemplated hereby.
5.2 CAPITALIZATION. The entire authorized capital stock of the Company
consists of 4,000,000 shares of common stock, without par value (the "SHARES"),
of which 1,775,000 Shares are issued and outstanding and no Shares are held in
treasury. All of the issued and outstanding Shares have been duly authorized,
are validly issued, fully paid, and nonassessable, and are held of record by
the respective Stockholders as set forth in Section 3.1(d) of the Disclosure
Schedule. Section 5.2 of the Disclosure Schedule sets forth all outstanding NDC
Options and the amounts owned by each Optionholder. Other than as set forth in
Section 5.2 of the Disclosure Schedule, there are no outstanding or authorized
options, warrants, rights, contracts, calls, puts, rights to subscribe,
conversion rights, or other agreements or commitments to which the Company is a
party or which are binding upon the Company providing for the issuance,
disposition, or acquisition of any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, deferred bonus
programs, or similar rights with respect to the Company. There are no voting
trusts, proxies, or any other agreements or understandings with respect to the
voting of the capital stock of the Company.
5.3 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any provision
of the charter or bylaws of the Company or (ii) conflict with, result in a
breach of, constitute a default under, result
NDC GROUP, INC.
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in the acceleration of, create in any part the right to accelerate, terminate,
modify, or cancel, or require any notice under any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest, or other
arrangement to which the Company is a party or by which it is bound or to which
any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). The Company does not need to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency, which it has not already obtained, in
order for the Parties to consummate the transactions contemplated by this
Agreement.
5.4 SUBSIDIARIES. The Company has no Subsidiaries.
5.5 FINANCIAL STATEMENTS. Attached hereto as Exhibit A are the
financial statements (collectively the "FINANCIAL STATEMENTS"), including
balance sheets, income statements, and cash flow statements, for the Company
prepared in accordance with GAAP (except as disclosed in Section 5.5 of the
Disclosure Schedule and except in the case of clause (ii) below for the
preparation of footnotes) for each of the (i) fiscal years ended June 30, 1996
and 1997 (the fiscal year ended June 30, 1997 being referred to herein as the
"MOST RECENT FISCAL YEAR END") and (ii) the eight (8) month period ended
February 28, 1998 (the "MOST RECENT FINANCIAL STATEMENTS"). The Financial
Statements for the fiscal years ended June 30, 1996 and 1997 have been audited
by ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co. L.L.C.
5.6 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Except as set
forth in Section 5.6 of the Disclosure Schedule, since the date of the Most
Recent Fiscal Year End, the business of the Company has been conducted in the
Ordinary Course of Business and there has not been any material adverse change
in the assets, Liabilities, business, financial condition, operations, results
of operations, or future prospects of the Company. Without limiting the
generality of the foregoing (except as set forth in the Disclosure Schedule),
since that date:
(a) The Company has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, for consideration
in excess of $20,000;
(b) The Company has not entered into any contract, lease,
sublease, license or sublicense (or series of related contracts,
leases, subleases, licenses and sublicenses) either involving more
than $20,000;
(c) No party (including the Company) has accelerated,
terminated, modified, or canceled any contract, lease, sublease,
license or sublicense (or series of related contracts, leases,
subleases, licenses and sublicenses), or notified the Company of its
intention to so cancel, terminate, modify or cancel, any agreement
with the Company involving more than $20,000;
(d) The Company has not imposed any Security Interest upon
any of its assets, tangible or intangible;
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(e) The Company has not made any capital expenditure (or
series of related capital expenditures) either involving more than
$50,000 singly or $200,000 in the aggregate;
(f) The Company has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of any other
person (or series of related capital investments, loans, and
acquisitions) either involving more than $50,000 individually or
$200,000 in the aggregate;
(g) The Company has not created, incurred, assumed, or
guaranteed any indebtedness (including capitalized lease obligations)
either involving more than $20,000 singly or $50,000 in the aggregate;
(h) The Company has not delayed or postponed (beyond its
normal practice) the payment of accounts payable and other Liabilities
past the time when such are due;
(i) The Company has not settled, canceled, compromised,
waived, or released any right, claim action or proceeding (or series
of related rights, claims, actions or proceedings) involving more than
$20,000;
(j) The Company has not granted any license or sublicense of
any rights under or with respect to any Intellectual Property;
(k) There has been no change made or authorized in the
charter or bylaws of the Company;
(l) The Company has not issued, sold, or otherwise disposed
of any of its capital stock, or granted any options, warrants, or
other rights to purchase or obtain (including upon conversion or
exercise) any of its capital stock;
(m) The Company has not declared, set aside, or paid any
dividend or distribution with respect to its capital stock or
redeemed, purchased, or otherwise acquired any of its capital stock;
(n) The Company has not experienced any Material damage,
destruction or loss (whether or not covered by insurance) to its
property;
(o) The Company has not made any loan to, or entered into any
other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business giving rise to any claim or
right on its part against the person or on the part of the person
against it;
(p) The Company has not entered into any employment contract
or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
NDC GROUP, INC.
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(q) The Company has not granted an increase outside the
Ordinary Course of Business in the base compensation of any of its
directors, officers, and employees;
(r) The Company has not adopted any (A) bonus, (B)
profit-sharing, (C) incentive compensation, (D) pension, (E)
retirement, (F) medical, hospitalization, life, or other insurance,
(G) severance, or (H) other plan, contract or commitment for any of
its directors, officers, and employees, or modified or terminated any
existing such plan, contract or commitment;
(s) The Company has not made any other change in employment
terms for any of its directors, officers, and full-time staff
employees;
(t) The Company has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course
of Business;
(u) The Company shall have made no dividend, consulting or
other payment to the Stockholders, except for employment salaries (not
to exceed current compensation levels) to Stockholders, except for
those payments set forth in Section 5.6(u) of the Disclosure Schedule
which were made prior to the contemplation of the transaction
contemplated by this Agreement;
(v) There has not been any other Material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving the Company; and
(w) The Company has not committed to do any of the foregoing.
5.7 UNDISCLOSED LIABILITIES. Except as set forth in Section 5.7 of the
Disclosure Schedule, the Company does not have any Liability (and to the
Knowledge of the Stockholders there is no Basis for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand against it giving rise to any Liability), except for (i) Liabilities set
forth on the face of the Financial Statements (rather than in any notes
thereto), (ii) Liabilities which have arisen after the Most Recent Fiscal Year
End in the Ordinary Course of Business (none of which relates to any breach of
contract, breach of warranty, tort, infringement, or violation of law or arose
out of any charge, complaint, action, suit, proceedings, hearing,
investigation, claim, or demand) or (iii) Liabilities that are specifically
disclosed as a Liability in the Disclosure Schedule.
5.8 TAX MATTERS.
(a) The Company has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in
all respects. All Taxes owed by the Company (whether or not shown on
any Tax Return) have been paid. The Company currently is not the
beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction
where the Company does not file Tax
NDC GROUP, INC.
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Returns that either of them is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the assets of
the Company that arose in connection with any failure (or alleged
failure) to pay any Tax.
(b) Except as disclosed in Section 5.8(b) of the Disclosure
Schedule, the Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other third party.
(c) There is no dispute or claim concerning any Tax Liability
of the Company either (A) claimed or raised by any authority in
writing or (B) as to which any of the Stockholders and the directors
and officers (and employees responsible for Tax matters) of the
Company has Knowledge based upon personal contact with any agent of
such authority. Section 5.8 of the Disclosure Schedule lists all
federal and state income Tax Returns filed with any Governmental
Authority with respect to the Company for taxable periods ending prior
to the date hereof, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the
subject of audit. The Company has delivered to Buyer correct and
complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to
by the Company.
(d) The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency.
(e) The Company has not filed a consent under Code Sec.
341(f) concerning collapsible corporations. The Company has not made
any payments, is not obligated to make any payments, or is not a party
to any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Code Sec. 280G.
The Company has not been a United States real property holding
corporation within the meaning of Code Sec. 897(c)(2) during the
applicable period specified in Code Sec. 897(c)(1)(A)(ii). The Company
has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Code Sec. 6661. The Company
is not a party to any Tax allocation or sharing agreement. The Company
has never been (or has any Liability for unpaid Taxes because it once
was) a member of an Affiliated Group during any part of any
consolidated return year within any part of which consolidated return
year any corporation other than the Company also was a member of the
Affiliated Group.
(f) Section 5.8 of the Disclosure Schedule sets forth the
following information with respect to the Company as of the most
recent practicable date (as well as on an estimated pro forma basis as
of June 30, 1997): (A) the amount of any net operating loss, net
capital loss, unused investment or other credit, unused foreign tax,
or excess charitable contribution allocable to the Company; and (B)
the amount of any deferred gain or loss allocable to the Company
arising out of any Deferred Intercompany Transaction.
NDC GROUP, INC.
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(g) The unpaid Taxes of the Company as of February 28, 1998
do not exceed the reserve for Tax Liability (rather than any reserve
for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the Financial Statements
(rather than in any notes thereto).
(h) The Company has not taken or agreed to take any action
that would prevent the Merger from constituting a reorganization
within the meaning of Code Sec. 368(a). Without limiting the
generality of the foregoing:
(i) Prior to and in connection with the Merger, (A)
none of the Company Common Stock will be redeemed, (B) no
extraordinary distribution will be made with respect to
Company Common Stock, and (C) none of the Company Common
Stock will be acquired by any person related (as defined in
Treas. Reg. Section 1.368-1(e)(3) without regard to Section
1.368-1(e)(3)(i)(A)) to the Company.
(ii) Except as provided in this Agreement, the
Company and the Stockholders will each pay their respective
expenses, if any, incurred in connection with the Merger.
5.9 TANGIBLE ASSETS. The Company owns or leases all tangible assets
necessary for the conduct of its business as presently conducted. To the
Company's knowledge, each such tangible asset is free from defects (patent and
latent), has been maintained in accordance with normal industry practice, is in
good operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used.
5.10 REAL PROPERTY. The Company does not own any real property.
5.11 REAL PROPERTY LEASES. Section 5.11 of the Disclosure Schedule
lists and describes briefly all real property leased or subleased to the
Company. The Stockholders have delivered to Buyer correct and complete copies
of the leases and subleases listed in Section 5.11 of the Disclosure Schedule
(as amended to date). With respect to each lease and sublease listed in Section
5.11 of the Disclosure Schedule:
(a) The lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(b) The Stockholders shall use their best efforts to ensure
that the lease or sublease will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms (during
the current term of such lease or sublease) following the Closing;
(c) The Company is not and, to the Company's knowledge, no
other party to the lease or sublease is in breach or default, and no
event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
NDC GROUP, INC.
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(d) No party to the lease or sublease has repudiated any
provision thereof;
(e) There are no disputes, oral agreements, or forbearance
programs in effect involving the Company as to the lease or sublease;
(f) The Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(g) All facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses
and permits) required to be obtained by the Company in connection with
the operation thereof and have been operated and maintained by the
Company in accordance with applicable laws, rules, and regulations;
and
(h) The real property listed in Section 5.11 of the
Disclosure Schedule represents all of the real property necessary to
operate the business in the manner that it is currently being
operated.
5.12 INTELLECTUAL PROPERTY.
(a) The Company is the sole and exclusive owner of all right,
title and interest in and has good and valid title to, or, as to third
party rights identified in Section 5.12 of the Disclosure Schedule,
has obtained a license to use all Intellectual Property necessary for
the operation of the business of the Company as presently conducted,
free and clear of all mortgages, pledges, liens, security interests,
conditional sales agreements, encumbrances or charges of any kind.
Each item of Intellectual Property owned or used by the Company
immediately prior to the Closing hereunder will be owned or available
for use by the Company on identical terms and conditions immediately
subsequent to the Closing hereunder. The Company is the sole and
exclusive owner of all right, title and interest in and has good and
valid title to, or, as to third party programs identified in Section
5.12 of the Disclosure Schedule, has obtained a license to use and for
the right to sublicense, the software programs developed, authored
and/or licensed by the Company for resale or for the right to
sublicense including without limitation those software programs listed
on Section 5.12 of the Disclosure Schedule (the "SOFTWARE PROGRAMS")
and the Documentation, free and clear of all mortgages, pledges,
liens, security interests, conditional sales agreements, encumbrances
or charges of any kind. Section 5.12 of the Disclosure Schedule
contains a complete list of all Software Programs, registered
trademarks and service marks, all reserved trade names, all registered
copyrights, all pending applications for registration of any marks or
copyrights, and all filed patent applications and issued patents
necessary for the conduct of, the business of the Company as
heretofore conducted.
(b) Section 5.12 of the Disclosure Schedule sets forth the
form and placement of the proprietary legends and copyright notices
displayed in or on the Software Programs. In no instance has the
eligibility of the Software Programs (to the Knowledge of any of the
Stockholders and the officers of the Company (and employees with
responsibility for Intellectual Property Matters) with respect to
third party Software Programs, Documentation
NDC GROUP, INC.
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33
or Intellectual Property) for protection under applicable copyright
law been forfeited to the public domain by omission of any required
notice or any other action.
(c) The Company has enforced the trade secret protection
program set forth in Section 5.12 of the Disclosure Schedule, and,
except as set forth in Section 5.12 of the Disclosure Schedule, there
has been no violation of such program by any person or entity. The
source code and Documentation (except end-user manuals) relating to
the Software Programs (to the Knowledge of any of the Stockholders and
the officers of the Company (and employees with responsibility for
Intellectual Property matters) with respect to third party Software
Programs) (i) have at all times been maintained in strict confidence,
(ii) have been disclosed by the Company only to employees having a
"need to know" the contents thereof in connection with the performance
of their duties to the Company and (iii) have not been disclosed to
any third party.
(d) All personnel, including employees, agents, consultants,
and contractors, who have contributed to or participated in the
conception and development of the Software Programs, Documentation or
Intellectual Property (to the Knowledge of any of the Stockholders and
the officers of the Company (and employees with responsibility for
Intellectual Property matters) with respect to third party Software
Programs) have executed nondisclosure agreements in the form of
Exhibit 5.12 and either (1) have been party to a written agreement
with the Company that has accorded the Company full, effective,
exclusive and original ownership of all the Software Programs,
Documentation and Intellectual Property, or (2) have executed
appropriate instruments of assignment in favor of the Company as
assignee that have conveyed to the Company full, effective, and
exclusive ownership of all the Software Programs, Documentation and
Intellectual Property.
(e) Section 5.12 of the Disclosure Schedule contains a
complete list of software libraries, compilers and other third-party
software used in the development of the Software Programs. Section
5.12 of the Disclosure Schedule lists all license agreements for the
use of all such software and, if any such software is not licensed,
the basis of the use of such software by the Company. All use of each
of such Software Programs by the Company has been in full compliance
with the respective license agreement or other right of use listed on
Section 5.12 of the Disclosure Schedule.
(f) The Software Programs will perform in accordance with the
technical specifications therefor and with the warranties set forth in
the Licenses.
(g) The Software Programs (to the Knowledge of any of the
Stockholders and the officers of the Company (and employees with
responsibility for Intellectual Property matters) with respect to
third party Software Programs), the use thereof by the Company and the
use, license, sale or lease of the Software Programs (to the Knowledge
of any of the Stockholders and the officers of the Company (and
employees with responsibility for Intellectual Property matters) with
respect to third party Software Programs), or of any part thereof, or
of any copy, or of any part thereof, do not and will not infringe on,
or contribute to the infringement of, any copyright, trade secret, any
other exclusionary right of any third
NDC GROUP, INC.
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party or, to the knowledge of any of the Stockholders and officers (or
employees with responsibility for Intellectual Property matters), any
patent in either the United States or any foreign country. No person
or entity has asserted a claim that the Company's use, license, sale
or lease of any Software Program, or any part thereof, infringes or
contributes to the infringement of any patent claim, copyright or
trade secret right of any third party in either the United States or
any foreign country, and the Stockholders are not aware of any basis
for any such claim.
(h) Except with respect to demonstration or trial copies, no
portion of the Software Programs (to the Knowledge of any of the
Stockholders and the officers of the Company (and employees with
responsibility for Intellectual Property matters) with respect to
third party Software Programs) contains or will contain any "back
door," "time bomb," "Trojan horse," "worm," "drop dead device,"
"virus" or other software routines or hardware components designed to
permit unauthorized access; to disable or erase software, hardware, or
data; or to perform any other such actions.
(i) The documentation of the Software Programs developed or
authored by the Company includes without limitation the source code
(with comments) for all Software Programs, as well as any pertinent
commentary or explanation that may be necessary to render such
materials understandable and usable by a trained computer programmer,
any programs (including compilers), "workbenches," tools and higher
level (or "proprietary") language necessary for the development,
maintenance and implementation of the Software Programs and any and
all materials relating to the Software Programs, including without
limitation all notes, flow charts, programmer's or user's manuals
(collectively, the "DOCUMENTATION").
(j) The Stockholders have delivered to Buyer correct and
complete copies of all trademarks, service marks, trade names,
copyrights, patents, registrations, applications, licenses,
agreements, and permissions (as amended to date), and have made
available to Buyer correct and complete copies of all other written
documentation (if any) evidencing ownership and prosecution (if
applicable) of each such item. With respect to each item of
Intellectual Property necessary for the conduct of, the business of
the Company as heretofore conducted:
(i) to the Knowledge of any of the Stockholders and
the officers of the Company (or employees with responsibility
for Intellectual Property matters), the identified owner
possesses all right, title, and interest in and to the item;
(ii) to the Knowledge of any of the Stockholders and
the officers of the Company (or employees with responsibility
for Intellectual Property matters), the item is not subject
to any outstanding judgment, order, decree, stipulation,
injunction, or charge;
(iii) to the Knowledge of any of the Stockholders
and the officers of the Company (or employees with
responsibility for Intellectual Property matters), no
NDC GROUP, INC.
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charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending or threatened
which challenges the legality, validity, enforceability, use,
or ownership of the item; and
(iv) Except as set forth in Section 5.12 of the
Disclosure Schedule, the Company has never agreed to
indemnify any person or entity for or against any
interference, infringement, misappropriation, or other
conflict with respect to the item.
(k) The Stockholders have supplied Buyer with correct and
complete copies of all third party licenses, sublicenses, agreements,
and permissions (as amended to date). With respect to each such item
except as set forth in Section 5.12(k) of the Disclosure Schedule:
(i) the license, sublicense, agreement, or
permission covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the license, sublicense, agreement, or
permission will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the Closing;
(iii) no party to the license, sublicense,
agreement, or permission is in breach or default, and, to the
Knowledge of any of the Stockholders and the officers of the
Company (or employees with responsibility for Intellectual
Property matters), no event has occurred which with notice or
lapse of time would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
(iv) no party to the license, sublicense, agreement,
or permission has repudiated any provision thereof;
(v) to the Knowledge of any of the Stockholders and
the officers of the Company (or employees with responsibility
for Intellectual Property matters), the underlying item of
Intellectual Property is not subject to any outstanding
judgment, order, decree, stipulation, injunction, or charge;
(vi) to the Knowledge of any of the Stockholders and
the officers of the Company (or employees with responsibility
for Intellectual Property matters), no charge, complaint,
action, suit, proceedings, hearing, investigation, claim or
demand is pending or threatened which challenges the
legality, validity, or enforceability of the underlying item
of Intellectual Property; and
(vii) the Company has not granted any sublicense or
similar right with respect to the license, sublicense,
agreement, or permission.
(l) Section 5.12 of the Disclosure Schedule sets forth a
complete and accurate list of all licenses and sublicenses of the
Software Programs and of all customer trial
NDC GROUP, INC.
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agreements for the Software Programs granted by the Company to other
parties (the "LICENSES"). All Licenses identified in Section 5.12 of
the Disclosure Schedule constitute only end-user agreements, each of
which grants the end user thereunder principally the nonexclusive
right and license to use an identified Software Program and related
user documentation, for internal purposes only, at the sites specified
in each agreement.
(m) The Software Programs (i) have been designed to ensure
year 2000 compatibility, which shall include, but is not limited to,
date data century recognition, and calculations that accommodate same
century and multi-century formulas and date values; (ii) operate or
will operate in accordance with their specifications prior to, during
and after the calendar year 2000 A.D.; and (iii) shall not end
abnormally or provide invalid or incorrect results as a result of date
data, specifically including date data which represents or references
different centuries or more than one century.
5.13 CONTRACTS. Section 5.13 of the Disclosure Schedule lists the
following contracts, agreements, and other written arrangements to which the
Company is a party:
(a) any written arrangement (or group of related written
arrangements) for the lease of personal property from or to third
parties providing for lease payments in excess of $20,000 per annum;
(b) any written arrangement (or group of related written
arrangements) for the purchase or sale of raw materials, commodities,
supplies, products, or other personal property or for the furnishing
or receipt of services which either calls for performance over a
period of more than one year or involves more than the sum of $20,000;
(c) any written arrangement concerning a partnership or joint
venture;
(d) any written arrangement (or group of related written
arrangements) under which it has created, incurred, assumed, or
guaranteed (or may create, incur, assume, or guarantee) indebtedness
(including capitalized lease obligations) involving more than $20,000
or under which it has imposed (or may impose) a Security Interest on
any of its assets, tangible or intangible;
(e) any written arrangement concerning confidentiality or
noncompetition;
(f) any written arrangement involving any of the Stockholders
and their Affiliates;
(g) any written arrangement with any of its directors,
officers, and employees in the nature of a collective bargaining
agreement, employment agreement, or severance agreement;
NDC GROUP, INC.
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(h) any written arrangement under which the consequences of a
default or termination could have an adverse effect on the assets,
Liabilities, business, financial condition, operations, results of
operations, or future prospects of the Company;
(i) any written arrangement involving a governmental entity
or quasi-governmental agency;
(j) any written Customer Contract or Agreement; or
(k) any other written arrangement (or group of related
written arrangements) either involving more than $20,000 or not
entered into in the Ordinary Course of Business.
The Company has delivered to Buyer a correct and complete copy of each
written arrangement listed in Section 5.13 of the Disclosure Schedule (as
amended to date). With respect to each written arrangement so listed: (A) the
written arrangement is legal, valid, binding, enforceable (except that (A) such
enforceability may be subject to bankruptcy, insolvency, reorganization,
moratorium or other laws, decisions or equitable principals now or hereafter in
effect relating to or affecting the enforcement of creditors' rights or
debtors' obligations generally, and to general equity principles and (B) the
remedy of specific performance and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought), and in full force and effect; (B) the
written arrangement will continue to be legal, valid, binding, enforceable and
in full force and effect on the same or substantially similar terms following
the Closing; (C) no party is in Material breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default or permit termination, modification, or acceleration, under the written
arrangement; and (D) no party has repudiated any provision of the written
arrangement. The Company is not a party to any verbal contract, agreement, or
other arrangement which, if reduced to written form, would be required to be
listed in Section 5.13 of the Disclosure Schedule under the terms of this
Section 5.13. No unfilled Material Customer Contract or Agreement obligating
the Company to perform services will result in a loss to the Company upon
completion of performance. The Company is not a party to any contract,
agreement or other arrangement which was entered into on terms which would not
be considered market standard if such arrangement was entered into in an
arms-length transaction. None of the Company's twenty-five (25) highest
grossing revenue customers in the eight months ended February 28, 1998 has
Materially curtailed or terminated its relationship with it or has indicated
that it will stop, or Materially decrease the rate of, buying services from it.
5.14 NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable
of the Company are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims, are presently current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the Financial Statements (rather than in any notes thereto) as adjusted
for the passage of time through the Closing Date in accordance with the past
custom and practice of the Company.
5.15 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of the Company.
NDC GROUP, INC.
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5.16 INSURANCE. Section 5.16 of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which the Company is a party, a named insured,
or otherwise the beneficiary of coverage:
(a) The name, address, and telephone number of the agent;
(b) The name of the insurer, the name of the policyholder,
and the name of each covered insured;
(c) The policy number and the period of coverage;
(d) The scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
(e) A description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal,
valid, binding, and enforceable and in full force and effect; (B) the policy
will continue to be legal, valid, binding, and enforceable and in full force
and effect on identical terms following the Closing Date; (C) the Company is
not in breach or default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default or permit termination,
modification, or acceleration, under the policy; and (D) no party to the policy
has repudiated any provision thereof. The Company has been covered during the
past three (3) years by insurance in scope and amount customary and reasonable
for the businesses in which it has engaged during the aforementioned period.
Section 5.16 of the Disclosure Schedule describes any self-insurance
arrangements affecting the Company.
5.17 LITIGATION. Section 5.17 of the Disclosure Schedule sets forth
each instance in which the Company (i) is subject to any unsatisfied judgment,
order, decree, stipulation, injunction, or charge or (ii) is a party or, to the
Knowledge of any of the Stockholders and the officers of the Company (and
employees with responsibility for litigation matters) of the Company, is
threatened to be made a party to any charge, complaint, action, suit,
proceeding, hearing, or investigation of or in any court or quasi-judicial or
administrative agency of any Governmental Authority or before any arbitrator.
None of the Stockholders and the directors and officers (and employees with
responsibility for litigation matters) of the Company has any reason to believe
that any such charge, complaint, action, suit, proceeding, hearing, or
investigation may be brought or threatened against the Company.
5.18 EMPLOYEES. To the Knowledge of the Stockholders, no key employee
or full-time group of employees has any plans to terminate employment with the
Company. The Company is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes,
NDC GROUP, INC.
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grievances, claims of unfair labor practices, or other collective bargaining
disputes. The Company has not committed any unfair labor practice. None of the
Stockholders and the directors and officers (and employees with responsibility
for employment matters) of the Company has any Knowledge of any organizational
effort presently being made or threatened by or on behalf of any labor union
with respect to employees of the Company.
5.19 EMPLOYEE BENEFITS. Section 5.19 of the Disclosure Schedule lists
all Employee Benefit Plans that the Company maintains or to which the Company
contributes for the benefit of any current or former employee of the Company.
(a) Each Employee Benefit Plan (and each related trust or
insurance contract) complies in form and in operation in all Material
respects with the applicable requirements of ERISA and the Code.
(b) All required reports and descriptions (including Form
5500 Annual Reports, Summary Annual Reports, PBGC-1's and Summary Plan
Descriptions) have been filed or distributed appropriately with
respect to each Employee Benefit Plan. The requirements of Part 6 of
Subtitle B of Title I of ERISA and of Code Sec. 4980(B) have been met
with respect to each Employee Welfare Benefit Plan.
(c) All contributions (including all employer contributions
and employee salary reduction contributions) which are due have been
paid to each Employee Pension Benefit Plan and all contributions for
any period ending on or before the Closing Date which are not yet due
have been paid to each Employee Pension Benefit Plan or accrued in
accordance with the past custom and practice of the Company. All
premiums or other contributions for all periods ending on or before
the Closing Date have been paid with respect to each Employee Welfare
Benefit Plan.
(d) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan meets the requirements of a "qualified plan"
under Code Sec. 401(a) and has received that includes the requirements
of the Tax Reform Act of 1986 a favorable determination letter from
the Internal Revenue Service.
(e) The market value of assets under each Employee Pension
Benefit Plan (other than any Multiemployer Plan) equals or exceeds the
present value of Liabilities thereunder (determined on a plan
termination basis) as of the last day of the most recent plan year. No
Employee Pension Benefit Plan (other than any Multiemployer Plan) has
been completely or partially terminated or been the subject of a
Reportable Event as to which notices would be required to be filed
with the PBGC. No proceeding by the PBGC to terminate any Employee
Pension Benefit Plan (other than any Multiemployer Plan) has been
instituted or, to the Knowledge of any of the Stockholders and the
officers of the Company (and employees with responsibility for
employee benefits matters) of the Company, threatened.
(f) There have been no non-exempt Prohibited Transactions
with respect to any Employee Benefit Plan. No Fiduciary has any
Liability for breach of fiduciary duty or any
NDC GROUP, INC.
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other failure to act or comply in connection with the administration
or investment of the assets of any Employee Benefit Plans. No charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or
demand with respect to the administration or the investment of the
assets of any Employee Benefit Plan (other than routine claims for
benefits) is pending or, to the Knowledge of any of the Stockholders
and the officers of the Company (and employees with responsibility for
employee benefits matters) of the Company, threatened. None of the
Stockholders and the directors and officers (and employees with
responsibility for employee benefits matters) of the Company has any
Knowledge of any Basis for any such charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand.
(g) The Stockholders have delivered to Buyer correct and
complete copies of (A) the plan documents and summary plan
descriptions, (B) the most recent determination letter received from
the Internal Revenue Service, (C) the most recent Form 5500 Annual
Report, and (D) all related trust agreements, insurance contracts, and
other funding agreements which implement each Employee Benefit Plan.
(h) Neither the Company nor the other members of the
Controlled Group of Corporations that includes the Company contributes
to, ever has contributed to, or ever has been required to contribute
to any Multiemployer Plan or has any Liability (including withdrawal
Liability) under any Multiemployer Plan. The Company has not incurred,
and none of the Stockholders and the directors and officers (and
employees with responsibility for employee benefits matters) of the
Company has any reason to expect that the Company will incur, any
Liability to the PBGC (other than PBGC premium payments) or otherwise
under Title IV of ERISA (including any withdrawal Liability) or under
the Code with respect to any Employee Pension Benefit Plan that the
Company and the Controlled Group of Corporations which includes the
Company maintains or ever has maintained or to which any of them
contributes, ever has contributed, or ever has been required to
contribute. The Company does not maintain, nor has it ever maintained
or contributed to, or ever been required to contribute to any Employee
Welfare Benefit Plan providing health, accident, or life insurance
benefits to former employees, their spouses, or their dependents
(other than in accordance with Code Sec. 4980(B)).
5.20 GUARANTIES. The Company is not a guarantor or otherwise liable
for any Liability or obligation (including indebtedness) of any other Person.
5.21 ENVIRONMENT, HEALTH, AND SAFETY.
(a) The Company and its predecessors and Affiliates have
complied with all laws (including rules and regulations thereunder) of
any Governmental Authority concerning the environment, public health
and safety, and employee health and safety, and no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand, or
notice has been filed or commenced against any of them alleging any
failure to comply with any such law or regulation, the violation of
which would have a Material adverse effect to the Company.
NDC GROUP, INC.
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41
(b) To the Knowledge of the Stockholders, the Company does
not have any Liability (and, to the Knowledge of the Stockholders,
there is no Basis related to the past or present operations,
properties, or facilities of the Company and its predecessors and
Affiliates for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against the
Company giving rise to any Liability) under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Resource Conservation and Recovery Act of 1976, the Federal Water
Pollution Control Act of 1972, the Clean Air Act of 1970, the Safe
Drinking Water Act of 1974, the Toxic Substances Control Act of 1976,
the Refuse Act of 1989, or the Emergency Planning and Community
Right-to-Know Act of 1986 (each as amended), any other law (or rule or
regulation thereunder) of any Governmental Authority or common law
remedy concerning release or threatened release of hazardous
substances, public health and safety, or pollution or protection of
the environment.
(c) To the Knowledge of the Stockholders, the Company does
not have any Material Liability (and the Company and its predecessors
and Affiliates has handled or disposed of any substance, arranged for
the disposal of any substance, or owned or operated any property or
facility in any manner that, to the Knowledge of the Stockholders,
could form the Basis for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand
(under the common law or pursuant to any statute) against the Company
giving rise to any Material Liability) for damage to any site,
location, or body of water (surface or subsurface) or for illness or
personal injury.
(d) To the Knowledge of the Stockholders, the Company does
not have any Material Liability (and, to the Knowledge of the
Stockholders, there is no Basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or
demand against the Company giving rise to any Liability) under the
Occupational Safety and Health Act, as amended, or any other law (or
rule or regulation thereunder) of any Governmental Authority
concerning employee health and safety.
(e) To the Knowledge of the Stockholders, the Company does
not have any Material Liability (and the Company has not exposed any
employee to any substance or condition that, to the Knowledge of the
Stockholders, could form the Basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or
demand (under the common law or pursuant to statute) against the
Company giving rise to any Liability) for any illness of or personal
injury to any employee.
(f) The Company has obtained and been in compliance with all
of the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are
contained in, all laws of any Governmental Authority (including rules,
regulations, codes, plans, judgments, orders, decrees, stipulations,
injunctions, and charges thereunder) relating to public health and
safety, worker health and safety, and pollution or protection of the
environment, including laws relating to emissions, discharge,
releases, or threatened releases of pollutants,
NDC GROUP, INC.
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42
contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes, the violation of which would have a Material adverse effect
to the Company.
(g) To the Knowledge of the Stockholders and the officers of
the Company, all properties and equipment used in the business of the
Company have been free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2 trans-dichloroethylene, dioxins, dibenzofurans,
and Extremely Hazardous Substances at such levels that could give rise
to any Material liability to the Company.
(h) To the Knowledge of the Stockholders and the officers of
the Company, no pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste ever has been buried, stored,
spilled, leaked, discharged, emitted, or released on any real property
that the Company owns or ever has owned or that the Company leases or
ever has leased.
5.22 LEGAL COMPLIANCE.
(a) The Company has complied with all laws (including rules
and regulations thereunder) of all Governmental Authorities, and no
charge, complaint, action, suit, proceeding, hearing, investigation,
claim, demand, or notice has been filed or commenced against the
Company alleging any failure to comply with any such law or
regulation.
(b) The Company has complied with all applicable laws
(including rules and regulations thereunder) relating to the
employment of labor, employee civil rights, and equal employment
opportunities.
(c) The Company has not violated in any respect or received a
notice or charge asserting any violation of the ▇▇▇▇▇▇▇ Act, the
▇▇▇▇▇▇▇ Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ Act, or the Federal Trade Act, each
as amended.
(d) The Company has complied with all applicable laws
(including rules and regulations thereunder) relating to the residency
status of foreign individuals which are employees of the Company and
obtaining the requisite visas, permits and other documentation to
permit such individuals to work in the United States.
(e) The Company has not:
(i) made or agreed to make any contribution,
payment, or gift of funds or property to any governmental
official, employee, or agent where either the contribution,
payment, or gift or the purpose thereof was illegal under the
laws of any Governmental Authority;
NDC GROUP, INC.
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43
(ii) established or maintained any unrecorded fund
or asset for any purpose, or made any false entries on any
books or records for any reason; or
(iii) made or agreed to make any contribution, or
reimbursed any political gift or contribution made by any
other person, to any candidate for public office with regards
to any Governmental Authority.
(f) The Company has filed in a timely manner all reports,
documents, and other materials it was required to file (and the
information contained therein was correct and complete in all
respects) under all applicable laws (including rules and regulations
thereunder).
(g) The Company has possession of all records and documents
it was required to retain under all applicable laws (including rules
and regulations thereunder).
5.23 CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY. Except as set
forth in Section 5.23 of the Disclosure Schedule, none of the Stockholders and
their Affiliates has been involved in any business arrangement or relationship
with the Company within the past twelve (12) months (other than employment),
and none of the Stockholders and their Affiliates owns any property or right,
tangible or intangible, which is used in the business of the Company.
5.24 BROKERS' FEES. Except as disclosed in Section 5.24 of the
Disclosure Schedule, the Company does not have any obligation or Liability to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
5.25 BOOKS AND RECORDS. The Company has furnished Buyer with true and
complete copies of the books and records relating to the ownership and
operation of the Company. The books and records reflect all minutes and written
consents adopted by the Boards of Directors of the Company. The books and
records have been maintained in accordance with applicable legal requirements,
comprise all of the books and records relating to the ownership and operation
of the Company, reflect all proceedings and transactions customarily contained
in corporate books and records.
5.26 PAYMENTS TO OFFICIALS. During the three year period prior to the
date hereof, neither the Company nor any of the Stockholders on behalf of the
Company has paid or given or has authorized or committed to the payment or gift
of money or anything of value to any official or employee of any government
entity or instrumentality or any political party or candidate for political
office for the purpose of influencing any governmental action or decision in
order to obtain or retain business or to direct business to any other party.
5.27 DISCLOSURE. The representations and warranties contained in this
Article V along with the Disclosure Schedule and any other information,
statement or certificate provided by the Company or the Stockholders does not
contain any untrue statement of fact or omit to state any fact necessary in
order to make the statements and information contained in this Article V not
misleading.
NDC GROUP, INC.
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44
ARTICLE VI
Reserved.
ARTICLE VII
COVENANTS
The Parties further agree as follows:
7.1 GENERAL. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other party hereto reasonably
may request, all at the sole cost and expense of the requesting party (unless
the requesting party is entitled to indemnification therefor under Article IX
below). The Stockholders acknowledge and agree that, from and after the
Closing, Buyer will be entitled to possession of all documents, books, records,
agreements, and financial data of any sort relating to the Company.
7.2 LITIGATION SUPPORT. In the event and for so long as any party
hereto actively is contesting or defending against any charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand in
connection with (i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Company, each of the other Parties will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense,
all at the sole cost and expense of the contesting or defending party (unless
the contesting or defending party is entitled to indemnification therefor under
Article IX below).
7.3 TRANSITION. None of the Stockholders will take any action that
primarily is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of the
Company from maintaining the same business relationships with the Company after
the Closing for a period of twenty-four (24) months thereafter as it maintained
with the Company prior to the Closing. Each of the Stockholders will refer all
customer inquiries relating to the lines of businesses of the Company to the
Company from and after the Closing for a period of twenty-four (24) months
thereafter.
7.4 CONFIDENTIALITY. Each of the Stockholders will treat and hold as
such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement for a period
of three (3) years from the Closing, and deliver promptly to Buyer or destroy,
at the request and option of Buyer, all tangible embodiments (and all
NDC GROUP, INC.
AGREEMENT AND PLAN OF MERGER
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45
copies) of the Confidential Information which are in his or its possession. In
the event that any of the Stockholders is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, that Stockholder will notify Buyer
promptly of the request or requirement so that Buyer may seek an appropriate
protective order or waive compliance with the provisions of this Section 7.4.
If, in the absence of a protective order or the receipt of a waiver hereunder,
any of the Stockholders is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt,
that Stockholder may disclose the Confidential Information to the tribunal;
provided, however, that the disclosing Stockholder shall use his reasonable
best efforts to obtain, at the reasonable request of Buyer, an order or other
assurance that confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as Buyer shall designate. The
foregoing provisions shall not apply to any Confidential Information which is
generally available to the public immediately prior to the time of disclosure.
7.5 MONITORING INFORMATION. Prior to the Closing, the Stockholders
shall cause the Company to deliver such information as may reasonably be
requested by Buyer.
7.6 CONTINUATION OF INDEMNIFICATION. The Surviving Corporation shall,
for a period of not less than six years from the Closing Date, indemnify,
defend and hold harmless each person who is now or has been at any time prior
to the Effective Time a director or officer of the Company (each a "Company
Indemnified Party") to the same extent that such Company Indemnified Party is
currently indemnified by the Company pursuant to the Company's Articles of
Incorporation and By-Laws for acts or omissions occurring at or prior to the
Effective Time. Notwithstanding the foregoing, nothing in this Section 7.6
shall in any way limit the indemnification obligations of the Stockholders to
Buyer under Article IX.
7.7 ADDITIONAL TAX MATTERS.
(a) The parties intend that the Merger will qualify as a
reorganization within the meaning of Code Sec. 368. All parties to
this Agreement shall file all Tax Returns consistent with such
treatment. No party to this Agreement shall take any action that would
prevent the Merger from qualifying as a reorganization within the
meaning of Code Sec. 368, or take any action that would be
inconsistent with such treatment.
(b) Buyer and the Stockholders recognize that each of them
will need access, from time to time, after the Closing Date, to
certain accounting and Tax records and information held by Buyer
and/or the Company to the extent such records and information pertain
to events occurring on or prior to the Closing Date; therefore, Buyer
agrees to cause the Company to (A) use its best efforts to properly
retain and maintain such records for a period of six (6) years from
the date the Tax Returns for the year in which the Closing occurs are
filed or until the expiration of the statute of limitations with
respect to such year, whichever is later, and (B) allow the
Stockholders and their agents and representatives at times and dates
mutually acceptable to the Parties, to inspect, review and make copies
of
NDC GROUP, INC.
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46
such records as such other party may deem necessary or appropriate
from time to time, such activities to be conducted during normal
business hours and at the other party's expense.
7.8 COVENANT NOT TO COMPETE. In connection with the Merger, ▇▇▇▇▇ ▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇▇ have entered into Non-Competition/No Solicitation Agreements
in the form of Exhibit C hereto.
7.9 CONDUCT OF BUSINESS DURING EARN-OUT PERIOD. During the Earn-Out
Period, unless terminated pursuant to his employment agreement, ▇▇▇▇▇ ▇▇▇▇
shall be entitled to operate and manage the business of the Company, consistent
with prudent business practices. Buyer agrees that it will not, during the
Earn-Out Period, unreasonably require that the business of the Company be
operated substantially differently than it was operated in the past,
unreasonably change the prices charged, the level of compensation of full-time
employees and the level of "G&A" expenses, unless the prior practices are
unreasonable or imprudent, and in no event shall Buyer do any of the foregoing
during the Earn-Out Period without the prior consultation with and notice to
▇▇▇▇▇ ▇▇▇▇.
7.10 FILING OF REPORTS; RULE 144 ETC. Buyer will file the reports
required to be filed by it under the Securities Act and the Exchange Act and
the rules and regulations adopted by the Commission thereunder to enable such
Principal Stockholder to sell Buyer Common stock without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
under the Securities Act, as such rule may be amended from time to time, or (b)
any successor rule or regulation hereafter adopted by the Commission. Upon the
request of any Principal Stockholder, the Company will deliver to such holder a
written statement as to whether it has complied with such requirements.
7.11 NASDAQ LISTING. The shares of Buyer Common Stock to be issued
pursuant to this Agreement at any time following the Closing Date will, at the
later of the time of issuance and the termination of the lock-up period set
forth in Section 2.2(b), be authorized for listing on the Nasdaq National
Market.
ARTICLE VIII
RESERVED
ARTICLE IX
INDEMNITIES
9.1 SURVIVAL. Except as otherwise specifically provided in this
Agreement, all of the representations, warranties and covenants of the
Stockholders (other than the representations and warranties of the Stockholders
contained in Article III or Section 5.8 above) and of Buyer shall survive the
Closing hereunder (even if Buyer knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and continue in
full force and effect for a period of one
NDC GROUP, INC.
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47
(1) year thereafter after which they shall terminate and be of no further force
or effect. All of the representations and warranties of Stockholders contained
in Article III and Section 5.8 of this Agreement and the representations,
warranties and covenants of Buyer shall survive the Closing (even if Buyer knew
or had reason to know of any misrepresentation or breach of warranty or
covenant at the time of Closing) and continue in full force and effect for the
statute of limitations.
9.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER.
(a) In the event any Stockholder (or in the event any third
party alleges facts that, if true, would mean any Stockholder has
breached) breaches any of its representations, warranties, and
covenants contained herein during the period such representations,
warranties and covenants survive, and provided that Buyer makes a
written claim for indemnification against such Stockholder pursuant to
Section 11.8 below within the applicable survival period, then such
Stockholder shall indemnify Buyer from and against the entirety of any
Adverse Consequences (other than Adverse Consequences for which Buyer
is entitled to recover under Section 9.2(f)) Buyer may suffer through
and after the date of the claim for indemnification (including any
Adverse Consequences Buyer may suffer after the end of the applicable
survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach (or the alleged breach); provided,
however, that the Stockholders shall not have any obligation to
indemnify Buyer from and against any Adverse Consequences resulting
from, arising out of, relating to, in the nature of, or caused by the
breach of any representation or warranty of the Stockholders contained
in Article V above (i) until Buyer has suffered aggregate losses by
reason of all such breaches in excess of a $125,000 deductible (at
which point the Stockholders will be obligated to indemnify Buyer from
and against all such aggregate losses including losses relating back
to the first dollar above $125,000) and (ii) in excess of $6,000,000
(after which point Stockholders shall have no obligation to indemnify
Buyer from and against further such Adverse Consequences); provided,
however, that the limitation set forth in (i) and (ii) above
specifically shall not apply to the liability of any Stockholder with
respect to Adverse Consequences resulting from or attributable to
intentional fraud or any willful misconduct by the Stockholders;
provided further, however that the limitation set forth in (i) above
specifically shall not apply to the liability of any Stockholder with
respect to Adverse Consequences resulting from breaches of the
representations and warranties contained in Sections 5.8, 5.14 and
5.17 hereof.
(b) Each of the Stockholders (on a pro rata basis based on
each Stockholder's proportionate interest in the Company immediately
prior to the Effective Time) agrees to indemnify Buyer from and
against the entirety of the amount, up to the aggregate Merger
Consideration, of any and all uncollected notes and accounts
receivable of the Company due by Lightcom International, Inc. (other
than amounts specifically recorded as a reserve for bad debts set
forth on the face of the Financial Statements and relating to Lightcom
International, Inc., which the Stockholders shall not be under any
obligation to indemnify Buyer) and any other Adverse Consequences
Buyer may suffer resulting from, arising out of, relating to, in the
nature of or caused by any disputes between the Company and Lightcom
International, Inc. based on events occurring prior to the Closing,
including but not limited to NDC Group,
NDC GROUP, INC.
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Inc. v. Lightcom International, Inc., Civil Action No. 97-CA08899,
filed in the Superior Court of the District of Colombia, Civil
Division.
(c) Each of the Stockholders agrees to indemnify Buyer (on a
pro rata basis based on each Stockholder's interest in the Company
immediately prior to the Effective Time) from and against the entirety
of any Adverse Consequences Buyer may suffer resulting from, arising
out of, relating to, in the nature of, or caused by any Liability of
the Company arising under United States Treasury Reg. Section 1.1502-6
(because the Company once was a member of an Affiliated Group during
any part of any consolidated return year within any part of which
consolidated return year any corporation other than the Company also
was a member of the Affiliated Group).
(d) Each of the Stockholders agrees to indemnify Buyer (on a
pro rata basis based on each Stockholder's interest in the Company
immediately prior to the Effective Time) from and against the entirety
of any severance, stamp or similar non-income taxes which may become
due and owing to any Governmental Authority by reason of the sale of
the Company to Buyer.
(e) Each of the Stockholders agrees to indemnify Buyer (on a
pro rata basis based on each Stockholder's interest in the Company
immediately prior to the Effective Time) from and against the entirety
of any Adverse Consequences, up to the aggregate Merger Consideration,
which may become due and owing by reason of the Company's failure to
properly obtain any visas required for employees of the Company to
work in the United States.
(f) Each of the Stockholders shall be liable for, and hereby
indemnifies, Buyer (on a pro rata basis based on each Stockholder's
interest in the Company immediately prior to the Effective Time) for
all income Taxes imposed on the Company with respect to any taxable
year or period ending on or before the Closing Date or beginning
before and ending after the Closing Date ("PRE-CLOSING TAXES");
provided, however, that such indemnity shall be made only to the
extent Pre-Closing Taxes are in excess of the reserve, if any, for
such Tax Liability as reflected in the Financial Statements or in the
computation of the Net Working Capital and provided, further, that the
Stockholders shall not have any obligation to indemnify Buyer from and
against any Pre-Closing Taxes to the extent that the aggregate of any
such Taxes and any Adverse Consequences for which the Stockholders
have indemnified Buyer pursuant to Section 9.2(a) exceed the maximum
liability set forth in clause (ii) of Section 9.2(a). In order to
apportion appropriately any income Taxes relating to any taxable year
or period that begins before and ends after the Closing Date, the
Parties hereto shall, to the extent permitted or not prohibited by
applicable law, elect with the relevant taxing authority, if required
or necessary, to terminate the taxable year of the Company as of the
Closing Date. In any case where applicable law does not permit the
Company to treat such date as the end of a taxable year or period,
then whenever it is necessary to determine the liability for income
Taxes of the Company, for a portion of a taxable year or period, such
determination shall (unless otherwise agree to in writing by Buyer and
the Stockholders) be determined by a closing of the Company' books,
except that
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exemptions, allowances or deductions that are calculated on an annual
basis, such as the deduction for depreciation, shall be apportioned on
a time basis. In no event shall such apportionment of income Taxes be
greater than the income Taxes which would have been allocated to the
Company if such income Taxes had been based upon a time period in
proportion to the number of days during such taxable year or period
the Stockholders and Buyer owned the stock in the Company.
Notwithstanding the foregoing provisions of this Section 9.2(f), to
the extent the Pre-Closing Taxes include any Taxes attributable to
income recognized by the Company solely as a result of the
transactions contemplated by this Agreement, the Stockholders shall be
liable for and shall indemnify the Buyer only to the extent of fifty
percent (50%) of such Pre-Closing Taxes, provided, that such
Pre-Closing Taxes are not a result of actions taken by the Buyer that
are inconsistent with the terms of this Agreement and that would
constitute a breach of Section 7.7(a) by the Buyer.
9.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE STOCKHOLDERS. In the
event Buyer breaches any of its representations, warranties, and covenants
contained herein, and provided that any of the Stockholders makes a written
claim for indemnification against Buyer pursuant to Section 11.8 below within
the applicable survival period, then Buyer agrees to indemnify each of the
Stockholders from and against the entirety of any Adverse Consequences the
Stockholder may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Stockholder may suffer
after the end of the applicable survival period) resulting from, arising out
of, relating to, in the nature of, or caused by the breach.
9.4 INDEMNIFICATION AND CONTRIBUTION WITH RESPECT TO REGISTRATION
RIGHTS.
(a) In the event of a registration of any of the Buyer Common
Stock under the Securities Act pursuant to Section 2.15 hereof, Buyer will
indemnify and hold harmless each seller of such Buyer Common Stock thereunder,
each underwriter of such Buyer Common Stock, if any, thereunder and each other
Person, if any, who controls such seller or underwriter within the meaning of
the Securities Act against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such Buyer Common
Stock was registered under the Securities Act pursuant to Section 2.15, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
each such seller, each such underwriter and each such controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that Buyer will not be liable in any such case if and to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by any such seller,
any such underwriter or any such controlling person in writing specifically for
use in such registration statement or prospectus.
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(b) In the event of a registration of any of the Buyer Common
Stock under the Securities Act pursuant to Section 2.15, each seller of such
Buyer Common Stock thereunder, severally and not jointly, will indemnify and
hold harmless Buyer, each person, if any, who controls Buyer within the meaning
of the Securities Act, each officer of Buyer who signs the registration
statement, each director of Buyer, each underwriter and each person who
controls any underwriter within the meaning of the Securities Act, against all
losses, claims, damages or liabilities, joint or several, to which Buyer or
such officer, director, underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the registration statement under which such Buyer Common Stock was
registered under the Securities Act pursuant to Section 2.15, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
Buyer and each such officer, director, underwriter and controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that such seller will be liable hereunder in any such case
if and only to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity with
information pertaining to such seller, as such, furnished in writing to Buyer
by such seller specifically for use in such registration statement or
prospectus; provided, further, however, that the liability of a seller
hereunder shall be limited to the net proceeds received by such seller from the
sale of Buyer Common Stock covered by such registration statement.
(c) In order to provide for just and equitable contribution
to joint liability under the Securities Act in any case in which either (i) any
holder of Buyer Common Stock exercising rights under this Agreements or any
controlling person of any such holder, makes a clam for indemnification
pursuant to this Section 9.4, but it is judicially determined (by the entry of
a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 9 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of any such
selling holder or any such controlling person in circumstances for which
indemnification is provided under this Section 9.4; then, and in each such
case, Buyer and such holder will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion so that such holder is responsible for the portion
represented by the percentage that the public offering of its Buyer Common
Stock offered by the registration statement bears to the public offering price
of all securities offered by such registration statement, and Buyer is
responsible for the remaining portion; provided, however, that, in any such
case, (A) no such holder will be required to contribute any amount in excess of
the public offering price of all such Buyer Common Stock offered by it pursuant
to such registration statement; and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
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9.5 MATTERS INVOLVING THIRD PARTIES. If any third party shall notify
any party hereto (the "INDEMNIFIED PARTY") with respect to any matter which may
give rise to a claim for indemnification against any other party hereto (the
"INDEMNIFYING PARTY") under this Article IX, then the Indemnified Party shall
notify each Indemnifying Party thereof promptly; provided, however, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any liability or obligation hereunder
unless (and then solely to the extent) the Indemnifying Party thereby is
materially prejudiced as a result of such delay. In the event any Indemnifying
Party notifies the Indemnified Party within thirty (30) days after the
Indemnified Party has given notice of the matter that the Indemnifying Party is
assuming the defense thereof, (A) the Indemnifying Party will defend the
Indemnified Party against the matter with counsel of its choice reasonably
satisfactory to the Indemnified Party, (B) the Indemnified Party may retain
separate co-counsel at its sole cost and expense (except that the Indemnifying
Party will be responsible for the fees and expenses of the separate co-counsel
to the extent the Indemnified Party reasonably concludes that the counsel the
Indemnifying Party has selected has a conflict of interest), (C) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the matter without the written consent of the
Indemnifying Party (not to be withheld unreasonably), and (D) the Indemnifying
Party will not consent to the entry of any judgment with respect to the matter,
or enter into any settlement which does not include a provision whereby the
plaintiff or claimant in the matter releases the Indemnified Party from all
Liability with respect thereto, without the written consent of the Indemnified
Party (not to be withheld unreasonably). In the event no Indemnifying Party
notifies the Indemnified Party within thirty (30) days after the Indemnified
Party has given notice of the matter that the Indemnifying Party is assuming
the defense thereof, however, the Indemnified Party may defend against, or
enter into any settlement with respect to, the matter in any manner it
reasonably may deem appropriate. At any time after commencement of any such
action, any Indemnifying Party may request an Indemnified Party to accept a
bona fide offer from the other Parties to the action for a monetary settlement
payable solely by such Indemnifying Party (which does not burden or restrict
the Indemnified Party nor otherwise prejudice him or her) whereupon such action
shall be taken unless the Indemnified Party determines that the dispute should
be continued, in which case the Indemnifying Party shall be liable for
indemnity hereunder only to the extent of the lesser of (i) the amount of the
settlement offer or (ii) the amount for which the Indemnified Party may be
liable with respect to such action. In addition, the party controlling the
defense of any third party claim shall deliver, or cause to be delivered, to
the other party copies of all correspondence, pleadings, motions, briefs,
appeals or other written statements relating to or submitted in connection with
the defense of the third party claim, and timely notices of, and the right to
participate in (as an observer) any hearing or other court proceeding relating
to the third party claim.
9.6 DETERMINATION OF LOSS. The amount of indemnification to be paid by
any party hereto to another party hereto shall be reduced by (as applicable)
(i) any insurance proceeds received, including both defense and indemnification
costs, with respect to any insurance policy maintained by the Company providing
coverage with respect to any of the Adverse Consequences; and (ii) any Tax
benefits received by Buyer or the Company as a result of any of the Adverse
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Consequences (utilizing the Applicable Rate as the discount rate). All
indemnification payments under this Article IX shall be deemed adjustments to
the Purchase Price.
9.7 EXCLUSIVE REMEDY. Buyer and each Stockholder acknowledge and agree
that the foregoing indemnification provisions in this Article IX shall be the
exclusive remedy of both Buyer and the Stockholders for any breach of the
representations, warranties and covenants (other than the covenant contained in
Section 7.8 herein, as to which the non-breaching party may pursue any remedy
available at law or in equity against the breaching party) of either party
hereto.
9.8 PAYMENT; GENERAL RIGHT OF OFFSET. The Indemnifying Parties shall
promptly pay to the Indemnified Party as may be entitled to indemnity hereunder
the amount of any Adverse Consequences to which the Indemnified Party may
become entitled to by reason of the provisions of this Agreement. The payment
required to be made pursuant to this Section 9.8 shall be made, at the election
of the Indemnifying Party, in cash or Buyer Common Stock. If Buyer is the
Indemnified Party, in lieu of receiving a payment from the Stockholders, Buyer
shall first offset against any Earn-Out Payment, including any interest payable
thereon, payable to Stockholders and Optionholders the amount of any Adverse
Consequences or any other payments to which Buyer has become entitled to by
reason of the provisions of this Agreement (as finally determined). Buyer shall
be responsible to Stockholder for such sums which should not have been subject
to an offset. For purposes of this Section 9.8, shares of Buyer Common Stock
used by the Stockholders, as the Indemnifying Party, to satisfy indemnity
claims made prior to the date the Special Payment is due shall be valued at $45
per share in order to determine the number of shares payable in respect of any
indemnity obligation. None of the parties hereto shall elect to pay any
indemnity obligation in cash if such election would result in the Merger not
being treated as a tax free reorganization under the meaning of Section 368 of
the Code.
9.9 TAX DISPUTES. In the event that any dispute arises between the
Company and the Internal Revenue Service or any state tax authority relating to
an issue in which Stockholders have agreed to indemnify Buyer, the Stockholders
shall have the right to associate with Buyer in the defense or settlement of
any such claims. Moreover, Buyer at all times shall act in good faith in order
to minimize the tax liability as to issues in which Stockholders have agreed to
indemnify Buyer and shall not settle or compromise any claims without the
consent of Stockholders, which consent shall not be unreasonably withheld.
ARTICLE X
RESERVED.
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ARTICLE XI
MISCELLANEOUS
11.1 POWER OF ATTORNEY. Each Stockholder hereby constitutes and
appoints the Requisite Stockholder as his true and lawful attorney-in-fact,
agent and representative, with full power of substitution and resubstitution,
for him and in his name, place and ▇▇▇▇▇, in any and all capacities, to
negotiate and sign all amendments to this Agreement, and all other documents in
connection with the transactions contemplated by this Agreement, including
without limitation those instruments called for by this Agreement and all
waivers, consents, instructions, authorizations and other actions called for,
contemplated or that may otherwise be necessary or appropriate in connection
with this Agreement or any of the foregoing agreements or instruments, granting
unto the Requisite Stockholder full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that the Requisite Stockholder, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof, including
without limitation the power and authority to receive and give receipt for all
consideration due him pursuant to this Agreement and to receive all notices,
requests and demands that may be made under and pursuant to this Agreement.
Should the Requisite Stockholder be unable or unwilling to serve or to appoint
his successor to serve in his stead, and unless the Requisite Stockholder
appoint a successor to serve in his stead, such Stockholders shall be deemed to
be represented by such Stockholders (other than the Requisite Stockholder) who
immediately prior to the Effective Time held a majority in interest in the
Company.
11.2 PRESS RELEASES AND ANNOUNCEMENTS. No party hereto shall issue any
press release or announcement relating to the subject matter of this Agreement
prior to the Closing without the prior written approval of Buyer and the
Stockholders; provided, however, that any party hereto may make any public
disclosure it believes in good faith is required by law or regulation (in which
case the disclosing party will advise the other parties hereto prior to making
the disclosure).
11.3 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
11.4 ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, that may have related in any way to the subject
matter hereof.
11.5 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No party hereto may assign either this
Agreement or any of his or its rights, interests, or obligations hereunder
without the prior written approval of Buyer and the Stockholders; provided,
however, that Buyer may (i) assign any or all of its rights and interests
hereunder to a wholly-owned subsidiary of Buyer
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(in any or all of which cases Buyer nonetheless shall remain liable and
responsible for the performance of all of its obligations hereunder).
11.6 FACSIMILE/COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. A facsimile, telecopy or
other reproduction of this Agreement may be executed by one or more parties
hereto, and an executed copy of this Agreement may be delivered by one or more
parties hereto by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen, and such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all parties
hereto agree to execute an original of this Agreement and provide such
requesting party with a full set of original signature pages for each of the
parties hereto other than the requesting party within two (2) days of the
original execution date hereof.
11.7 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.8 NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given on the
second business day after it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to a Stockholder:
at the address shown for such Stockholder on
Section 3.4 of the Disclosure Schedule.
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
High Street Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer:
Metamor Worldwide, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Metamor Worldwide, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party hereto may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any party
hereto may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
11.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the
State of Delaware.
11.10 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Buyer and the Stockholders. No waiver by any party hereto of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
11.11 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgement of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
11.12 EXPENSES. Except as otherwise provided in this Agreement, each
of Buyer, the Company and the Stockholders will bear their own costs and
expenses (including legal and investment banking fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby. The
Stockholders acknowledge and agree that the Company and
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Buyer shall not be liable for any fees or expenses of the Stockholders
(including but not limited to legal, accounting and/or investment banking)
associated with the transactions contemplated by this Agreement. However, Buyer
shall pay the investment banking, legal and accounting fees and disbursements
of the Company in cash by wire transfers at the Closing, and the aggregate
amount so paid shall be deducted from, and reduce on a dollar-for-dollar basis
the Initial Payment.
11.13 CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties hereto to express their mutual intent,
and no rule of strict construction shall be applied against any party hereto.
Any reference to any statute or law of any Governmental Authority shall be
deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The parties hereto intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any party hereto has breached any representation, warranty, or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) of another representation, warranty or covenant which such
party has not breached, such fact shall not detract from or mitigate the fact
that such party is in breach of the first representation, warranty, or
covenant.
11.14 INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
11.15 SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 11.16 below), in addition to any other remedy to which they
may be entitled, at law or in equity.
11.16 SUBMISSION TO JURISDICTION. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE STOCKHOLDERS OR BUYER HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE. ANY LEGAL
ACTION OR PROCEEDING AGAINST ANY STOCKHOLDER OR BUYER WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT AND ENFORCED IN A FEDERAL OR STATE COURT LOCATED IN
THE STATE OF DELAWARE OR IN A FEDERAL OR STATE COURT LOCATED IN THE
COMMONWEALTH OF VIRGINIA AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
OF THE STOCKHOLDERS AND BUYER HEREBY IRREVOCABLY ACCEPTS FOR THEMSELVES AND IN
RESPECT OF THEIR PROPERTY, GENERALLY, IRREVOCABLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH OF THE STOCKHOLDERS AND BUYER AGREE
THAT A JUDGMENT, AFTER EXHAUSTION OF ALL AVAILABLE APPEALS, IN ANY SUCH ACTION
OR PROCEEDINGS SHALL BE CONCLUSIVE AND BINDING UPON THE STOCKHOLDERS AND BUYER,
AND MAY
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BE ENFORCED IN ANY OTHER JURISDICTION BY A SUIT UPON SUCH JUDGMENT, A CERTIFIED
COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE JUDGMENT. THE STOCKHOLDERS
HEREBY IRREVOCABLY DESIGNATE, APPOINT AND EMPOWER CT CORPORATION SYSTEM, WITH
OFFICES ON THE DATE HEREOF AT THE CORPORATION TRUST CENTER, 1209 ORANGE STREET,
WILMINGTON, DELAWARE, SO LONG AS THIS AGREEMENT IS OUTSTANDING, AS THEIR
DESIGNEE, APPOINTEE AND AGENT WITH RESPECT TO ANY ACTION OR PROCEEDING TO
RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON THEIR BEHALF, AND IN RESPECT OF
THEIR PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND
DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING AND AGREE THAT
THE FAILURE OF ANY SUCH AGENT TO GIVE ANY ADVICE OF ANY SERVICE OF PROCESS TO
THE STOCKHOLDERS SHALL NOT IMPAIR OR AFFECT THE VALIDITY OF SUCH SERVICE OR OF
ANY JUDGMENT BASED THEREON. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND
AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE STOCKHOLDERS AGREE TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN THE STATE OF TEXAS ON THE
TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO BUYER. THE
STOCKHOLDERS AND BUYER FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
THE STOCKHOLDERS AND BUYER (AS THE CASE MAY BE), AT THEIR ADDRESS SET FORTH IN
SECTION 3.4 OF THE DISCLOSURE SCHEDULE, WITH RESPECT TO THE STOCKHOLDERS AND
SECTION 11.8 HEREIN, WITH RESPECT TO BUYER, SUCH SERVICE TO BECOME EFFECTIVE 30
DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF BUYER TO
SERVE PROCESS OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE
STOCKHOLDERS IN ANY OTHER MANNER PERMITTED BY LAW. THE STOCKHOLDERS AND BUYER
HEREBY WAIVE IRREVOCABLY, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
TO THE LAYING OF VENUE IN DELAWARE AND/OR VIRGINIA OR ANY CLAIM OF INCONVENIENT
FORUM IN RESPECT OF ANY SUCH ACTION IN DELAWARE AND/OR VIRGINIA TO WHICH IT
MIGHT OTHERWISE NOW OR HEREAFTER BE ENTITLED IN ANY ACTIONS ARISING OUT OF OR
BASED ON THIS AGREEMENT.
NDC GROUP, INC.
AGREEMENT AND PLAN OF MERGER
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
BUYER:
METAMOR WORLDWIDE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President and Secretary
MERGER SUB:
CORESTAFF ACQUISITION SUB #13, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President and Secretary
THE COMPANY:
NDC GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇
President and Secretary
THE PRINCIPAL STOCKHOLDERS:
/s/ ▇▇▇▇▇ ▇▇▇▇
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/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇
NDC GROUP, INC.
AGREEMENT AND PLAN OF MERGER
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THE OTHER STOCKHOLDERS:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
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▇▇▇▇ ▇▇▇▇ ▇▇▇▇
NDC GROUP, INC.
AGREEMENT AND PLAN OF MERGER
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