Exhibit 10.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Merger Agreement" or
"Agreement") dated as of March 16, 2004, by and among NANOGRAM DEVICES
CORPORATION ("NDC") , a Delaware corporation having its principal executive
office at 00000 Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000; XXXXXX XXXXXXXXXX
TECHNOLOGIES, INC. ("Purchaser"), a Delaware corporation having its principal
executive office at 0000 Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000; and PLUTO
ACQUISITION CORPORATION ("Merger Sub") , a Delaware corporation and an indirect
wholly owned subsidiary of Purchaser having its offices at 0000 Xxxxxx Xxxxx,
Xxxxxxxx, Xxx Xxxx 00000.
WITNESSETH:
WHEREAS, the parties hereto desire that NDC shall be acquired by Purchaser
through the merger ("Merger") of Merger Sub with and into NDC, with NDC as the
surviving corporation ("Surviving Corporation"), pursuant to this Agreement and
the Delaware General Corporation Law ("DGCL"); and
WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set
forth or as referenced below:
1.1 "Affiliates" means with respect to any Person (first Person), (a) each
other Person that controls, is controlled by, or is under common control with,
such first Person, (b) each other Person that holds a Material Interest in such
first Person, (c) each other Person that serves as a director, officer, general
partner, executor or trustee of such first Person (or in a similar capacity),
(d) each other Person in which such first Person holds a Material Interest and
(e) each other Person with respect to which such first Person serves as a
general partner or a trustee (or in a similar capacity). For purposes of this
definition "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
voting securities or other voting interests representing at least 10% of the
outstanding voting power of an entity or equity securities or other equity
interests representing at least 10% of the outstanding equity securities or
equity interests in an entity.
1.2 "Agreement" and "Merger Agreement" are defined in the preamble hereto.
1.3 "Business" means the business of NDC as operated on the date of this
Agreement and the business for which NDC has undertaken research, design and/or
development.
1.4 "Code" means the Internal Revenue Code of 1986, as amended.
1.5 "Competitively Sensitive Contracts" means the Contracts listed in Part
3.14(d) of the NDC Disclosure Schedule and identified as such thereon.
1.6 "Contract" means any agreement, contract, license, lease, instrument,
note, bond, mortgage, indenture, guarantee or other legally binding commitment
or obligation, whether oral or written.
1.7 "DGCL" is defined in the recitals hereto.
1.8 "Encumbrance" means with respect to any Person any mortgage, deed of
trust, pledge, lien, security interest, charge, claim or other security
arrangement of any nature whatsoever, whether voluntarily or involuntarily
given, including any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or lease intended as, or having the effect of,
security and any filed financing statement or other notice of any of the
foregoing (whether or not an Encumbrance is created or exists at the time of the
filing).
1.9 "Environmental Law" means any and all applicable Legal Requirements,
and without limiting the foregoing, any regulations, orders, decrees, judgments
or injunctions promulgated or entered into by any Governmental Entity, relating
to the preservation or reclamation of natural resources, or to the management,
Release (as hereinafter defined) or threatened Release of Hazardous Material (as
hereinafter defined), including but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.ss.ss.9601 et
seq. ("CERCLA"), the Federal Water Pollution Control Act, 33 U.S.C.ss.ss.1251 et
seq., the Clean Air Act, 42 X.X.X.xx. 7401 et seq., the Toxic Substances Control
Act, 15 X.X.X.xx. 2601 et seq., the Occupational Safety and Health Act, 29
U.S.C.ss.651 et seq., the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C.ss.11001 et. seq., the Safe Drinking Water Act, 42
U.S.C.ss.300(f) et seq., the Hazardous Materials Transportation Act, 49
U.S.C.ss.ss.1801 et seq., and any similar or implementing state or local law,
and all amendments or regulations promulgated thereunder.
1.10 "Environmental Liabilities" means all claims, demands, causes of
action, liabilities, investigations, judgments, damages, costs and expenses
(including, without limitation, costs of suit, reasonable attorneys' fees, costs
of negotiation, consulting fees and expert fees, Remedial Action costs,
penalties, fines and punitive damages, whether in respect of death, personal
injury, property damage, cleanup and removal expense, cost recovery contribution
or compensation, under Environmental Laws in effect prior to or as of the
Closing Date, which arise from (i) the Release of Hazardous Materials prior to
the Closing Date at, on, in or under any Facilities of NDC, (ii) any violation
by NDC of any Environmental Law in effect at the time of the Closing Date, due
to conditions existing or events occurring prior to the Closing Date, or (iii)
the off-site treatment, storage or disposal of Hazardous Materials from any of
the Facilities of NDC at any time prior to the Closing Date.
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1.11 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.12 "Escrow Fund" means the money to be deposited by Purchaser with the
Escrow Agent equal to the Escrow Amount, as defined in Section 2.5.4(a).
1.13 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
1.14 "Facilities" means the Real Property, any other real property that was
ever owned or leased by NDC, and all improvements thereon.
1.15 "Field of Use" shall be as defined in Exhibit D (D-15) of the
Technology Transfer and License Agreement dated as of January 20, 2003.
1.16 "Former Holders" means each former holder of NDC Stock (other than
shares cancelled pursuant to Section 2.5.2(c) and Dissenting Shares) and former
holders of Options (determined as of immediately prior to the Effective Time).
1.17 "GAAP" means generally accepted accounting principles in the United
States.
1.18 "Governmental Authorization" means any permit, license, franchise,
approval, consent, permission, confirmation, endorsement, waiver, certification,
registration, qualification, clearance or other authorization issued, granted,
given or otherwise made available by or under the authority of any Governmental
Entity or pursuant to any Legal Requirement.
1.19 "Governmental Entity" means any nation, state, municipality and any
federal, state, local, foreign, provincial or supranational court or
governmental agency, authority, instrumentality or regulatory body.
1.20 "Hazardous Material" means all explosive or regulated radioactive
materials or substances; petroleum and petroleum products (including crude oil
or any fraction thereof); asbestos or asbestos-containing materials; and any
hazardous or toxic materials, wastes or chemicals designated, defined, listed or
regulated as such pursuant to any Environmental Law.
1.21 "Indebtedness" means indebtedness for borrowed money or the equivalent
or represented by notes, bonds or other similar instruments or letters of credit
(or reimbursement agreements in respect thereof) or representing the balance
deferred and unpaid of the purchase price of any property (other than trade
payables constituting current liabilities and personal property leases), and
including without limitation capital lease obligations, including all accrued
and unpaid interest thereon, and applicable prepayment, breakage or other
premiums, fees or penalties and the costs of discharging such indebtedness, all
as determined in accordance with GAAP.
1.22 "Intellectual Property" means (a) domestic United States and foreign
letters patent, patents and patent applications, (b) software; (c) inventions,
designs, processes, formulas, know-how and trade secrets; (d) trade names,
trademarks, service marks, and United States and foreign trademark registrations
and applications, service xxxx registrations and applications; (e) copyrights,
copyright registrations and copyright applications, and (f) internet websites
and domain names.
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1.23 "Legal Requirement" shall mean any federal, state, local, provincial,
foreign, international, multinational or other statute, law, treaty, rule,
regulation, guideline, administrative order, directives, ordinance, constitution
or principle of common law (or any interpretation thereof by a Governmental
Entity).
1.24 "Material Adverse Effect" means:
(a) with respect to NDC, an effect that would be materially adverse:
(i) to the business, results of operation or financial condition of NDC; (ii) to
NDC's ability to perform any of its material obligations under this Agreement or
to consummate the Merger; or (iii) to the ability of the Surviving Corporation
or Purchaser to conduct the Business of NDC following the Effective Time or the
ability of Purchaser to exercise full rights of ownership of NDC or its assets
or business; or
(b) with respect to Purchaser, an effect that would be materially
adverse (i) to the business, results of operation, financial conditions or
prospects of Purchaser and its Subsidiaries, considered as a whole; or (ii) to
Purchaser's ability to perform any of its material obligations under this
Agreement or to consummate the Merger; or (iii) to the ability of the Surviving
Corporation or Purchaser to conduct the Business of NDC, following the Effective
Time or the ability of Purchaser to exercise full rights of ownership of NDC or
its assets or business;
provided, however, that in determining whether a Material Adverse Effect has
occurred there shall be excluded any effect on the referenced party the cause of
which is (i) general changes in conditions in the medical device or health care
industry, in the financial markets or in the global or United States economy so
long as any such change does not materially affect the referenced party to a
materially different extent than other similarly situated Persons, and (ii) any
action or omission of NDC or Purchaser or any Purchaser Subsidiary taken with
the prior written consent of Purchaser or NDC, as applicable, in contemplation
of the Merger.
1.25 "Merger" is defined in the recitals hereto.
1.26 "Merger Sub" is defined in the preamble of this Agreement.
1.27 "NDC/Asante Letter" means a certain agreement between NDC and
Asante Partners, dated on or about December 17, 2003, a complete copy of which
is attached to the NDC Disclosure Schedule.
1.28 "NDC Disclosure Schedule" means the Disclosure Schedule delivered
by NDC to Purchaser dated the date of this Agreement. Any information with
respect to a matter that is disclosed by NDC to Purchaser for any purpose in the
NDC Disclosure Schedule shall be deemed to be disclosed for all purposes
hereunder provided that such information sufficiently identifies the matter in
question in all material respects.
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1.29 "NDC Financial Statements" means (i) the balance sheet of NDC as of
December 31, 2003 (unaudited) and the related statements of income and expense,
cash flows and stockholders' equity (including related notes, if any) for the 12
months ended December 31, 2003 (unaudited), and (ii) the balance sheet of NDC as
of January 31, 2004 (unaudited) and the related statements of income and
expense, cash flows and changes in stockholders' equity (including related
notes, if any) for the 1 month ended January 31, 2004.
1.30 "NDC Stock" means the NDC Common Stock, the NDC Series A-1 Stock and
the NDC Series A-2 Stock; and (a) "NDC Common Stock" means the common stock,
$.001 par value per share, of NDC, (b) "NDC Series A-1 Stock" means the Series
A-1 Preferred Stock, $.001 par value per share, of NDC, and (c) "NDC Series A-2
Stock" means the Series A-2 Preferred Stock, $.001 par value per share, of NDC.
1.31 "NDC Stock Plan" means the NanoGram Devices Corporation 2002 Stock
Plan listed in the NDC Disclosure Schedule, a copy of which has been provided to
Purchaser; and "Options" means all Rights to purchase NDC Stock thereunder.
1.32 "Optionees" means all Persons who have been granted Options under the
NDC Stock Plan.
1.33 Intentionally Omitted.
1.34 "Person" means any individual and any corporation, partnership,
limited liability company, firm, trust, or other business entity and any
Governmental Entity.
1.35 "Principal Stockholders" means the Stockholders of NDC listed on
Schedule 1.
1.36 "Purchaser" is defined in the preamble of this Agreement.
1.37 "Real Property" means all of the real property currently leased by
NDC, whether or not used in their business, all of which is disclosed in more
detail in the NDC Disclosure Schedule.
1.38 "Release" shall have the same meaning as in CERCLA.
1.39 "Remedial Action" shall mean (a) "remedial action" as such term is
defined in CERCLA and (b) all other action required by any Governmental Entity
to respond to a Release or threatened Release of Hazardous Material.
1.40 "Rights" means warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock, and stock appreciation rights, performance units
and other similar stock-based rights whether they obligate the issuer thereof to
issue stock or other securities or to pay cash.
1.41 "SEC Documents" means all forms, reports and documents filed, or
required to be filed, by Purchaser pursuant to the Securities Laws.
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1.42 "Securities Act" means the Securities Act of 1933, as amended.
1.43 "Securities Laws" means the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended; the rules and
regulations of the Securities and Exchange Commission promulgated thereunder;
and the blue sky and other Legal Requirements of any state that are applicable
to the purchase and sale of securities generally.
1.44 "Stockholders" means all Persons who hold issued and outstanding
shares of NDC Stock as of the Effective Time.
1.45 "Subsidiary" or "Subsidiaries" means with respect to any party, any
corporation, company, partnership or other organization, whether incorporated or
unincorporated, which is consolidated with such party for financial reporting
purposes.
1.46 "Surviving Corporation" is defined in the recitals hereto.
1.47 "Tax," collectively, "Taxes" means all taxes, however denominated,
including any interest, penalties, criminal sanctions or additions to tax
(including, without limitation, any underpayment penalties for insufficient
estimated tax payments) or other additional amounts that may become payable in
respect thereof (or in respect of a failure to file any Tax Return when and as
required), imposed by any Governmental Entity, which taxes shall include,
without limiting the generality of the foregoing, all income taxes, payroll and
employment taxes, withholding taxes (including withholding taxes in connection
with amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other person or entity), unemployment insurance taxes, social
security (or similar) taxes, sales and use taxes, excise taxes, franchise taxes,
gross receipts taxes, occupation taxes, real and personal property taxes, stamp
taxes, value added taxes, transfer taxes, profits or windfall profits taxes,
licenses in the nature of taxes, estimated taxes, severance taxes, duties
(custom and others), workers' compensation taxes, premium taxes, environmental
taxes (including taxes under Section 59A of the Code) , disability taxes,
registration taxes, alternative or add-on minimum taxes, estimated taxes, and
other fees, assessments, charges or obligations of the same or of a similar
nature.
1.48 "Tax Return," collectively, "Tax Returns" means all returns, reports,
estimates, information statements or other written submissions, and any
schedules or attachments thereto, required or permitted to be filed pursuant to
Legal Requirements of any Governmental Entity Tax authority, including but not
limited to, original returns and filings, amended returns, claims for refunds,
information returns, ruling requests, administrative or judicial filings,
accounting method change requests, responses to revenue agents' reports
(federal, state or local) and settlement documents.
1.49 "Transaction Expenses" means all fees, costs, expenses and
disbursements, incurred by the Stockholders, the Optionees and/or NDC in
connection with the transactions contemplated by this Agreement, the Merger and
the other agreements referenced or provided for herein, including, without
limitation, (a) the fees and expenses of Xxxxxx Xxxxxx White & XxXxxxxxx LLP
("Xxxxxx") and any other legal counsel retained by any Stockholder, any Optionee
or NDC; (b) the fees and expenses of Asante Partners payable by NDC or any other
Person pursuant to the NDC/Asante Letter or otherwise; (c) the fees and expenses
of Ernst & Young and any other accountants of NDC including any indirect fees
and expenses resulting from outsourcing or through service agreements; (d) any
amounts payable in accordance with Section 8.5 of this Agreement; (e) any
incentive bonuses payable to the management of NDC in connection with the
actions contemplated hereby; and (f) any fees and expenses of any other counsel,
accountants, financial advisors or other similar professionals with respect to
services rendered to the Stockholders, the Optionees or NDC in connection with
the transactions contemplated by this Agreement.
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1.50 "USPTO" means the United States Patent and Trademark Office.
1.51 "USTs" means underground storage tanks.
The following terms are defined in the Section of this Agreement indicated
below:
Acquisition Proposal 5.6(b)(12)
Adjusted Aggregate Payment Amount 2.5.4(b)(ii)(A)
Adjusted Per Share Amount 2.5.4(b)(ii)(B)
Affiliate Transaction 3.15(b)
Aggregate Payment Amount 2.5.1(a)
Aggregate Exercise Price and Exercise Price 2.5.1(b)
Aggregate Converted Stock Payment 2.5.1(c)
Aggregate Series A-2 Stock Amount 2.5.1(d)
Balance Sheet 3.7(b)
Certificates 2.5.5(b)
Closing and Closing Date 2.7
Confidentiality Agreement 5.4(c)
Converted Stock Amount 2.5.1(f)
Deductible Amount 8.3.3(a)
Determination Date 2.5.4(b)
Dispute Notice 8.4(c)
Dissenting Shares 2.5.2(d)(i)
Dissenting Stockholder 2.5.2(d)(i)
Effective Time 2.7
Employment Agreements 5.9(b)
ERISA Affiliate 3.13(a)
Escrow Agent 2.5.4(a)
Escrow Amount 2.5.4(a)
Estimated Transaction Expenses 8.7
Exchange Fund 2.5.5(b)
Indebtedness Reduction Amount 2.6
Initial Option Value 2.5.1(g)
Initial Per Share Amount 2.5.1(h)
Indemnifiable Loss 8.6 Indemnitor and Indemnitee 8.4(a)
Key Employees 5.9(b)
Losses 8.1
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Material Contracts 3.14(a)
Merger Consideration 2.5.1(i)
NDC Charter 3.5(a)
NDC Employees 5.8(a)
NDC Intellectual Property 3.21(a)
NDC Patents 3.21(h)
NDC Plans 3.13(a)
NDC Consent Solicitation 5.1(a)
NDC Stockholders Meeting 5.1(a)
Option Agreement 2.5.5(c)
Option Converted Stock Amount 2.5.1(j)
Optionee Acknowledgement 5.12(c)
Option Withholding 2.5.1(k)
Option Value 2.5.3(b)
Per Common Share Consideration 2.5.2(a)(i)
Per Option Consideration 2.5.2(b)
Per Preferred Share Consideration 2.5.2(a)(ii)
Per Share Amount 2.5.3
Preclosing Dividend 2.6
Proxy Materials 5.1(c)
Purchaser Indemnified Persons 8.1
Purchaser Initial Amount 2.5.1(l)
Purchaser Plan 5.8(a)(ii)
Released Payment 2.5.4(b)
Remaining Stockholders 2.5.5(b)
Special Bonus 5.8(d)
Stockholder Indemnified Persons 8.2
Stockholder Representative 5.10(a)
Stockholder Representative Expenses 5.10(b)
Third Party Claim 8.4(a)
Total Converted Stock Amount 2.5.1(m)
Transaction Expenses Reduction Amount 2.6
Transfer Taxes 8.5
Voting Agreement 5.9(a)
In addition, the following terms shall be interpreted as set forth below:
(a) The words "hereof," "herein," and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provisions of this Agreement.
(b) Terms defined in the singular shall have a comparable meaning when
used in the plural, and vice-versa.
(c) References to the "Knowledge" of NDC shall refer to the actual
knowledge of Xxxxx Xxxxxxx, Xxxxx X. Xxxxxx, and for purposes of the
representations and warranties contained in Section 3.21 only, Xxxxx Xxxxxxxx,
or the knowledge of any fact or matter which any such person would have
following inquiries of those employees and directors of NDC whom such persons
would reasonably believe would have actual knowledge of such matters presented.
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(d) References to an "Exhibit" or to a "Schedule" are, unless
otherwise specified, to one of the Exhibits or Schedules attached to or
referenced in this Agreement, and reference to an "Article" or a "Section" are,
unless otherwise specified, to one of the Articles or Sections of this
Agreement.
ARTICLE 2
THE PLAN OF MERGER; CLOSING
2.1 THE MERGER
Subject to the terms and conditions of this Agreement, at the Effective
Time (as hereinafter defined), Merger Sub shall be merged with and into NDC,
pursuant to the provisions of, and with the effect provided in the DGCL. At the
Effective Time, the separate existence of Merger Sub shall cease and NDC, as the
Surviving Corporation, shall continue unaffected and unimpaired by the Merger.
2.2 CERTIFICATE OF INCORPORATION AND BY-LAWS
(a) The Certificate of Incorporation of NDC in effect immediately
prior to the Effective Time shall be amended and restated in its entirety to
read as set forth in the form of Certificate of Merger substantially in the form
of Exhibit A and, as so amended, shall be the Certificate of Incorporation of
the Surviving Corporation.
(b) The Bylaws of NDC in effect immediately prior to the Effective
Time shall be amended and restated in its entirety to read as set forth on
Exhibit B and, as so amended and restated, the Bylaws of the Surviving
Corporation, until thereafter amended in accordance with applicable law.
2.3 BOARD OF DIRECTORS
The directors and officers of Merger Sub immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation,
each to hold office in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Corporation.
2.4 MERGER SUB STOCK
At the Effective Time, each issued and outstanding share of the
common stock, $.01 par value per share, of Merger Sub shall be automatically
converted into one validly issued, fully paid and nonassessable share of common
stock, $.01 par value per share, of the Surviving Corporation. Each stock
certificate of Merger Sub evidencing ownership of any such shares of common
stock of the Merger Sub shall continue to evidence ownership of such shares of
common stock of the Surviving Corporation.
2.5 CONVERSION OF NDC STOCK
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2.5.1 Certain Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth or referenced below:
(a) "Aggregate Payment Amount" shall mean $45,000,000 plus the
Aggregate Exercise Price.
(b) "Aggregate Exercise Price" shall mean the sum of all the Exercise
Prices of all Options outstanding immediately prior to the Effective Time; and
"Exercise Price" shall mean an amount equal to the product of (i) the per share
exercise price of each Option outstanding immediately prior to the Effective
Time, multiplied by (ii) the number of shares of Converted Stock represented by
such Option.
(c) "Aggregate Converted Stock Payment" shall mean the Aggregate
Payment Amount minus the Aggregate Series A-2 Stock Amount.
(d) "Aggregate Series A-2 Stock Amount" shall mean, the product of (a)
$1.00, multiplied by (b) the number of shares of NDC Series A-2 Stock
outstanding immediately prior to the Effective Time.
(e) "Converted Stock" shall mean (i) with respect to each share of
Series A-1 Stock and Series A-2 Stock outstanding immediately prior to the
Effective Time, such number of shares of NDC Common Stock issuable upon
conversion of such Series A-1 Stock and Series A-2 Stock, respectively,
immediately prior to the Effective Time, (ii) with respect to each Option
outstanding immediately prior to the Effective Time, such number of shares of
NDC Common Stock issuable upon the exercise in full of such Option immediately
prior to the Effective Time, and (iii) with respect to each share of NDC Common
Stock outstanding immediately prior to the Effective Time, one share of NDC
Common Stock.
(f) "Converted Stock Amount" shall mean (i) the total number of shares
of NDC Common Stock issuable upon conversion of the Series A-1 Stock and Series
A-2 Stock outstanding immediately prior to the Effective Time plus (ii) the
total number of shares of NDC Common Stock outstanding immediately prior to the
Effective Time, in each case other than shares of NDC Stock to be cancelled
pursuant to Paragraph (c) of 2.5.3.
(g) "Initial Option Value" shall mean, with respect to each Option
outstanding immediately prior to the Effective Time, an amount equal to the
product of (a)(x) the Initial Per Share Amount, minus (y) the per-share Exercise
Price of such Option, multiplied by (b) the number of shares (or fractions
thereof) of Converted Stock represented by such Option; provided, however, that
the payment with respect to each Option shall be reduced by the amount of Option
Withholding attributable to each such Option.
(h) "Initial Per Share Amount" shall mean (a) the Per Share Amount,
minus (b) the product of (x) the Escrow Amount (as defined in Section 2.5.4(a)),
multiplied by (y) a fraction, the numerator of which is one and the denominator
of which is the Total Converted Stock Amount.
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(i) "Merger Consideration" shall mean the amount of cash that each
holder of NDC Stock and Optionee shall be entitled to pursuant to the Merger and
as determined in accordance with this Section 2.5.
(j) "Option Converted Stock Amount" shall mean the total number of
shares of NDC Common Stock issuable upon the exercise in full of all Options
outstanding immediately prior to the Effective Date.
(k) "Option Withholding" shall mean the total amount of income tax
withholding required with respect to payment of the Per Option Consideration
pursuant to Section 2.5.2(b).
(l) "Purchaser Initial Amount" shall mean an amount equal to (a)
$45,000,000 minus (b) the Escrow Fund.
(m) "Total Converted Stock Amount" shall mean (a) the Converted Stock
Amount plus (b) the Option Converted Stock Amount.
2.5.2 Conversion of Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of any party hereto, the Surviving
Corporation or any holder of NDC Stock:
(a) NDC Stock.
(i) Subject to Section 2.5.4 hereof, each share of NDC Common Stock
and each share of NDC Series A-1 Stock issued and outstanding immediately prior
to the Effective Time (other than shares of NDC Common Stock and shares of NDC
Series A-1 Stock to be cancelled pursuant to Paragraph (c) hereof and, subject
to Paragraph (d) hereof, Dissenting Shares), shall be cancelled and extinguished
and be converted into and become the right to receive in cash, in accordance
with Section 2.5 and, except as set forth in Section 2.6, without interest or
dividends thereon, an amount equal for each share (or fraction thereof) of
Converted Stock, the Per Share Amount as determined pursuant to Section 2.5.3
(the "Per Common Share Consideration").
(ii) Subject to Section 2.5.4 hereof, each share of NDC Series A-2
Stock issued and outstanding immediately prior to the Effective Time (other than
shares of NDC Series A-2 Stock to be cancelled pursuant to Paragraph (c) hereof
and, subject to Paragraph (d) hereof, Dissenting Shares), shall be cancelled and
extinguished and be converted into and become the right to receive in cash, in
accordance with Section 2.5 and, except as set forth in Section 2.6, without
interest or dividends thereon, an amount equal to (i) $1.00, plus, (ii) for each
share (or fraction thereof) of Converted Stock represented thereby, the Per
Share Amount (or a corresponding fraction thereof), as determined pursuant to
Section 2.5.3 hereof ((i) and(ii) being collectively referred to as the "Per
Preferred Share Consideration").
(b) Options. (i) Each Option outstanding immediately prior to the
Effective Time for which Optionee Acknowledgements have been received shall be
cancelled in accordance with this Agreement and such Optionee Acknowledgements
and (ii) subject to Paragraph (c) and (d) of this Section 2.5.2, each such
Option shall thereupon represent the right to receive in cash (without interest
or dividends thereon), in accordance with Section 2.5.3, the Option Value of
such Option (for each Option, the "Per Option Consideration").
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(c) Treasury Stock. Each share of NDC Stock held in NDC's name
immediately prior to the Effective Time shall be cancelled and retired and cease
to exist, without any conversion thereof or payment with respect thereto.
(d) Dissenting Shares.
(i) Notwithstanding anything in this Merger Agreement to the
contrary, any shares of NDC Stock held by any Person (a "Dissenting
Stockholder") who has demanded and perfected his right for appraisal of such
shares in accordance with the DGCL and who, as of the Effective Time, has not
effectively withdrawn or lost such right to appraisal ("Dissenting Shares")
shall not be converted as described in Section 2.5.2(a) but shall become the
right to receive such consideration as may be determined to be due such
Dissenting Stockholder pursuant to Section 262 of the DGCL and shall not be
entitled to receive his applicable portion of the Merger Consideration;
provided, however, that if, in accordance with such Section of the DGCL, any
Dissenting Stockholder shall fail to perfect, withdraw or otherwise lose his
right to appraisal under such Section of the DGCL, the Dissenting Shares held by
such Dissenting Stockholder shall thereupon be deemed to have been converted
into and to have become exchangeable for, as of the Effective Time, the right,
subject to Sections 2.5.3(a) and 2.5.3(b), to receive, in accordance with this
Section 2.5 and, except as set forth in Section 2.6, without interest or
dividends thereon), for each share (or fraction thereof) of NDC Stock, the
Merger Consideration (or a corresponding fraction thereof).
(ii) NDC shall give Purchaser (i) prompt notice of any written
demands for appraisal of any shares of the NDC Stock, withdrawals of such
demands, and any other instruments served pursuant to the DGCL that relate to
such demands received by NDC and (ii) the opportunity to participate in all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. NDC shall not, except with the prior written consent of Purchaser, which
consent shall not be unreasonably withheld, voluntarily make or offer to make
any payments in excess of $5,000 in the aggregate, with respect to any demands
for appraisal and/or refusals to consent of holders of NDC Stock or offer to
settle or settle any such demands and/or refusals to consent.
2.5.3 Merger Consideration
(a) Per Share Amount. Subject to Section 2.5.4, the term "Per Share
Amount" means for each share of Converted Stock represented by NDC Stock or
Options a cash amount equal to (i) the Aggregate Converted Stock Payment
multiplied by (ii) a fraction, the numerator of which is one and the denominator
of which is the Total Converted Stock Amount.
(b) Subject to Section 2.5.4, the term "Option Value" means, with
respect to each Option an amount equal to the product of (i)(x) the Per Share
Amount, minus (y) the per-share Exercise Price of such Option, multiplied by
(ii) the number of shares (or fractions thereof) of Converted Stock represented
by such Option; provided, however, that the payment with respect to each Option
shall be reduced by the amount of Option Withholding attributable to each such
Option.
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(c) Not later than one (1) business day prior to the Effective Time,
NDC shall notify the Purchaser in writing of the Per Share Amount, the Initial
Per Share Amount, the Option Value and the Initial Option Value, which notice
shall set forth in reasonable detail the calculation thereof. The Closing of the
Merger shall be effectuated based on the Initial Per Share Amount and the
Initial Option Value set forth in such certificate (unless there is manifest
error in such calculation).
2.5.4 Escrow.
(a) Establishment of Escrow. At or prior to the Effective Time,
Purchaser and the Stockholder Representative will enter into an escrow agreement
with Manufacturers and Traders Trust Company or such other financial institution
mutually agreed upon by NDC and Purchaser (the "Escrow Agent"), substantially in
the form of Exhibit C hereto (the "Escrow Agreement"). At the Effective Time,
$4,500,000 of the Merger Consideration (the "Escrow Amount") will be deposited
with the Escrow Agent in accordance with the Escrow Agreement. In accordance
with the terms of the Escrow Agreement, on or prior to the Effective Time,
Purchaser will take all steps necessary to enable it or the Surviving
Corporation to deliver to the Escrow Agent the Escrow Amount by wire transfer in
immediately available funds, all to be managed and paid out by the Escrow Agent
in accordance with the terms of the Escrow Agreement. The Escrow Amount, as
increased by any earnings thereon and as reduced by any disbursements therefrom,
is referred to in this Agreement as the "Escrow Fund."
(b) Adjusted Per Share Amount.
(i) Whenever a payment is to be made by the Escrow Agent to the
Former Holders (a "Released Payment"), the Surviving Corporation shall calculate
the Adjusted Per Share Amount as of the date of such payment (the "Determination
Date") and deliver a notice to the Stockholder Representative setting forth the
Adjusted Per Share Amount. The Escrow Agent will provide for such Released
Payment to be disbursed to the Former Holders in accordance with the Escrow
Agreement.
(ii) For purposes hereof:
(A) "Adjusted Aggregate Payment Amount" shall mean (i) the
Aggregate Payment Amount minus (ii) (x) initial Escrow Amount minus (y) the sum
of any payments made by the Escrow Agent as of the Determination Date to
Purchaser Indemnified Persons; and
(B) The "Adjusted Per Share Amount" shall mean (i) the
Adjusted Aggregate Payment Amount minus the Aggregate Series A-2 Stock Amount
multiplied by (ii) a fraction, the numerator of which is one and the denominator
of which is the Total Converted Stock Amount.
2.5.5 Closing and Payment Mechanics.
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(a) At the Closing, each Principal Stockholder shall deliver to
Purchaser the certificate or certificates evidencing all of the NDC Stock held
by such Principal Stockholder and/or an Optionee Acknowledgement in a form
reasonably acceptable to Purchaser and NDC with respect to any vested Options
held by such Principal Stockholder (the "Option Acknowledgement"), in each case,
as applicable, and an IRS Form W-9 and Purchaser shall deliver, by wire transfer
of immediately available funds to an account designated by such Principal
Stockholder prior to the Closing, an amount equal to: (i) with respect to each
share of NDC Series A-2 Stock represented by such Certificate the sum of (x)
$1.00 plus the Initial Per Share Amount, multiplied by (y) the number of shares
of Converted Stock represented by each such share of Series A-2 Stock; (ii) with
respect to each share of NDC Common Stock and NDC Series A-1 Stock represented
by such Certificate, the product of (x) the Initial Per Share Amount, multiplied
by (y) the number of shares of Converted Stock represented by each such share of
NDC Common Stock and NDC Series A-1 Stock; and (iii) with respect to any such
Option, the Initial Option Value of such Option; provided, however, that the
payment with respect to each Option shall be reduced by the amount of Option
Withholding attributable to each such Option (for clarification, this includes a
reduction of the payment to any Stockholder with respect to NDC Stock who shall
have exercised an Option immediately prior to the Effective Terms to the extent
required by applicable Legal Requirements).
(b) With respect to the Stockholders and Option holders who are not
Principal Stockholders (the "Remaining Stockholders"), at the Closing Purchaser
shall deposit in a separate bank account of Purchaser for the benefit of the
Surviving Corporation, and the Surviving Corporation shall hold for the benefit
of the Remaining Stockholders, an amount equal to the Purchaser Initial Amount
less all amounts paid pursuant to Section 2.5.5(a) above and any Option
Withholding or any withholding effectuated or to be effectuated by NDC and/or
the Surviving Corporation (the "Exchange Fund"). Purchaser shall cause the
Surviving Corporation to deliver the amounts contemplated to be delivered
pursuant to Section 2.5, less all amounts paid pursuant to Section 2.5.5(a), out
of the Exchange Fund. The Exchange Fund shall not be used for any other purpose.
(c) Within two business days after the Effective Time, the Surviving
Corporation shall mail to each Remaining Stockholder (i) a letter of transmittal
(which shall include a release reasonably acceptable to Purchaser by the
Stockholder of claims against NDC) and instructions for use in effecting the
surrender of the Certificates or the surrender of the original agreement
evidencing the grant of an Option to an Optionee (the "Option Agreement") and
delivery of the Option Acknowledgement, as applicable, pursuant to such letter
of transmittal and (ii) if applicable, an Option Acknowledgement. Upon surrender
of the certificate or certificates evidencing NDC Stock held by such Remaining
Stockholders (the "Certificates") and/or delivery of the Option Agreement and
Option Acknowledgement with respect to all Options then exercisable by such
Remaining Stockholder, as applicable, to the Surviving Corporation, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may be
reasonably required pursuant to such instructions, such Remaining Stockholder
shall be entitled to receive, in accordance with the terms of this Agreement, in
exchange therefor the amounts provided for below, and any Certificate shall then
be cancelled:
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(i) with respect to each share of NDC Series A-2 Stock represented
by such Certificate the sum of (x) $1.00 plus the Initial Per Share Amount,
multiplied by (y) the number of shares of Converted Stock represented by each
such share of Series A-2 Stock;
(ii) with respect to each share of NDC Common Stock and NDC Series
A-1 Stock represented by such Certificate, the product of (x) the Initial Per
Share Amount, multiplied by (y) the number of shares of Converted Stock
represented by each such share of NDC Common Stock and NDC Series A-1 Stock, and
(iii) with respect to an Option to the extent exercisable at the
Effective Time, the Initial Option Value of such Option; provided, however, that
the payment with respect to each Option shall be reduced by the amount of Option
Withholding attributable to each such Option.
No interest shall accrue or be paid on the amounts payable upon the
surrender of any Certificate and/or delivery of the Option Acknowledgement,
as applicable. Upon such surrender of an Option Agreement hereunder, such
Option Agreement shall forthwith be cancelled. Until so surrendered and
cancelled, each Option Agreement shall represent solely the right to
receive per Option represented by such Option Agreement (and exercisable as
of the Effective Time), the Per Option Consideration.
(d) If any cash is to be paid to a Person other than the Person in
whose name the Certificates surrendered in exchange therefor is registered, it
shall be a condition of the payment that the Person requesting such payment
shall pay to the Paying Agent any transfer taxes required by reason of issuance
of such check to a Person other than the registered holder of the Certificates
surrendered, or shall establish to the reasonable satisfaction of the Paying
Agent that such tax has been paid or is not applicable.
(e) Any portion of the Exchange Fund remaining unclaimed by the
Remaining Stockholders as of a date which is immediately prior to such time as
such amounts would otherwise escheat to or become property of any government
entity shall, to the extent permitted by applicable law, become the property of
the Purchaser free and clear of any claims or interest of any Person previously
entitled thereto.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate or Option Agreement to be lost, stolen or destroyed and, if
required by Purchaser, the posting by such person of a bond in such amount as
Purchaser may reasonably direct as indemnity against any claim that may be made
against it with respect to such Certificate or Option Agreement, the Surviving
Corporation will issue in exchange for such lost, stolen or destroyed
Certificate or Option Agreement the amounts deliverable in respect thereof
pursuant to the Merger.
(g) At the Effective Time, the stock transfer books of NDC shall be
closed and no transfer of NDC Stock shall thereafter be made or recognized. If,
after the Effective Time, Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be cancelled and exchanged for
the Merger Consideration as provided in this Section. Any other provision of
this Merger Agreement notwithstanding, neither Purchaser or its agent nor any
party to the Merger shall be liable to a Former Holder for any amount paid or
properly delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat or similar law.
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(h) All of the shares of NDC Stock converted into and exchangeable for
the Merger Consideration pursuant to this Article 2 shall no longer be
outstanding and shall automatically be cancelled and cease to exist as of the
Effective Time. Each Certificate previously representing any such shares of NDC
Stock shall thereafter represent the right to receive the Merger Consideration
pursuant to this Article 2, as allocated among the holders of NDC Stock in
accordance with this Section.
2.6 DIVIDEND
At or prior to the Closing, NDC shall declare and pay a dividend to the
Stockholders of NDC (the "Preclosing Dividend") in an amount equal to all cash
and cash equivalents of NDC as of the date of such dividend payment minus the
sum of (a) an amount equal to the Estimated Transaction Expenses, if any, which
have not been paid prior to the calculation and payment of the Preclosing
Dividend (if applicable, the "Transaction Expenses Reduction Amount") and (b)
the amount of the Special Bonus (which is $60,000). NDC shall notify Purchaser
in writing of the Transaction Expenses Reduction Amount, and the amount and date
of the Preclosing Dividend.
2.7 THE CLOSING
The Merger and the transactions contemplated by this Agreement (the
"Closing"), subject to and in accordance with all of the terms and conditions
contained therein, shall be consummated at a closing to be held at the offices
of the law firm of Heller, Ehrman, White & XxXxxxxxx LLP, 0000 Xxxx Xxxx Xxxx,
Xxxxx Xxxx, Xxxxxxxxxx 00000, on March 16, 2004 mutually agreed by the Purchaser
and NDC, or if later, the first business day following satisfaction of the
conditions to consummation of the Merger set forth in Article 6 hereof other
than conditions to be satisfied at the Closing (such date, the "Closing Date").
In connection with such Closing, NDC shall execute a Certificate of Merger
substantially in the form of Exhibit A and otherwise in the form required by and
executed in accordance with the DGCL, and Purchaser shall cause to be delivered
and filed, as soon as practicable on the Closing Date, the Certificate of Merger
to the Delaware Secretary of State in accordance with the DGCL. The Merger shall
be effective at the time and on the date (the "Effective Time") specified in
such Certificate of Merger.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF NDC
Except as set forth in the NDC Disclosure Schedule, NDC hereby represents
and warrants to Purchaser and Merger Sub as follows:
3.1 CAPITAL STRUCTURE OF NDC
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(a) The authorized capital stock of NDC consists of (a) 20,000,000
shares of Common Stock, par value $.001 per share, of which as of March 12,
2004, 2,492,707 shares were issued and outstanding and no shares were held in
treasury, and, except for exercises of outstanding stock options, since that
date no shares have been issued; (b) 4,000,000 shares of Series A-1 Preferred
Stock, par value $.001 per share, of which as of March 12, 2004 3,500,000 shares
were issued and outstanding, no shares were held in treasury and since that date
no shares have been issued; and (c) 11,000,000 shares of Series A-2 Preferred
Stock, par value $.001 per share, of which as of March 12, 2004 9,253,500 shares
were issued and outstanding, no shares were held in treasury and since that date
no shares have been issued.
(b) Except as set forth in the NDC Disclosure Schedule, as of the date
hereof, no shares of NDC Stock are reserved for issuance. All outstanding shares
of NDC Stock have been duly authorized and validly issued and are fully paid and
nonassessable and, as of the date hereof, are owned of record as set forth in
the NDC Disclosure Schedule. Except as set forth on the NDC Disclosure Schedule,
NDC does not have, and is not bound by, any Rights which are authorized, issued
or outstanding with respect to NDC Stock. None of the shares of NDC Stock has
been issued in violation of the preemptive rights of any person.
(c) No shares of NDC Stock have been issued in violation of any
Securities Laws.
3.2 ORGANIZATION, STANDING AND AUTHORITY OF NDC
NDC is a duly incorporated corporation, validly existing and in good
standing under the laws of the State of Delaware with full corporate power and
authority to carry on its business as now conducted and is duly licensed or
qualified to do business in California and any other states of the United States
and foreign jurisdictions where its ownership or leasing of property or the
conduct of its Business requires such qualification, except where the failure to
have such corporate power and authority or to be so licensed or qualified would
not have a Material Adverse Effect on NDC.
3.3 NO SUBSIDIARIES
As of the date hereof, NDC has no Subsidiaries and does not own, directly
or indirectly, five percent (5%) or more of the outstanding capital stock or
other voting securities of any corporation or other Person.
3.4 MINUTE BOOKS
The minute books of NDC contain records which are accurate in all material
respects of all corporate actions of its stockholders and board of directors
(including committees of its Board of Directors).
3.5 AUTHORIZED AND EFFECTIVE AGREEMENT
(a) NDC has all requisite corporate power and authority to enter into
and perform all of its obligations under this Agreement. The execution and
delivery of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of NDC, except for the
affirmative vote of (i) the holders of a majority of the outstanding shares of
NDC Common Stock, NDC Series A-1 Stock and NDC Series A-2 Stock, voting together
as a single class and (ii) a majority of the holders of NDC Series A-1 Stock and
Series A-2 Stock voting together as a separate class, which are the only
stockholder votes required to approve the Merger pursuant to the DGCL and NDC's
Certificate of Incorporation, as amended (the "NDC Charter"), and NDC's Bylaws.
The Board of Directors of NDC has approved the Merger and declared its
advisability. The Board of Directors of NDC has directed that this Agreement and
the Merger be submitted to NDC's Stockholders for approval either at a special
meeting to be held as soon as practicable or by solicitation of Stockholder
written consents in lieu of a meeting.
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(b) This Agreement constitutes the legal, valid and binding obligation
of NDC, enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency and other Legal Requirements of general applicability
relating to or affecting creditors' rights and to general equity principles.
(c) Neither the execution and delivery of this Agreement, nor
consummation of the Merger and the other transactions contemplated hereby, nor
compliance by NDC with any of the provisions hereof shall (i) conflict with or
result in a breach of any provision of the NDC Charter or Bylaws of NDC, or any
material Contract to which NDC is a party, or (ii) violate any Legal
Requirements applicable to NDC.
(d) Other than (i) the filing of the Certificate of Merger with the
Delaware Secretary of State and (ii) the approval of the Stockholders set forth
in Section 3.5(a), no consent, approval or authorization of, or declaration,
notice, filing or registration with, any Governmental Entity, or any other
Person, is required to be made or obtained by NDC on or prior to the Effective
Time in connection with the execution, delivery and performance of this
Agreement or the consummation of the Merger and the other transactions
contemplated hereby or thereby, except where the failure to obtain such consents
would not have a Material Adverse Effect on NDC.
3.6 GOVERNMENTAL AUTHORIZATIONS: COMPLIANCE WITH LAWS
Except as set forth in Part 3.6 of NDC Disclosure Schedule, to the
Knowledge of NDC, NDC owns, holds or possesses all material Governmental
Authorizations necessary to entitle it to use its corporate name, to own or
lease, operate and use its assets and properties and to carry on and conduct its
Business as presently conducted, all such material Governmental Authorizations
are validly held and in full force and effect, and NDC is not in violation of,
or in default under, any such Governmental Authorization. To the Knowledge of
NDC, no such material Governmental Authorization shall properly be subject to
suspension, modification or cancellation as a result of the execution, delivery
and performance of this Agreement or the consummation of the Merger. NDC is not,
nor at any time has it been, subject to, in violation of, or in default under
(i) any judgment, order, writ, injunction or decree of any Governmental Entity
issued against it or (ii) to the Knowledge of NDC, any material Legal
Requirements applicable to it or the operation of the Business. NDC has not
received any written notice from any Governmental Entity concerning revocation,
suspension, modification, cancellation or nonrenewal of any material
Governmental Authorization or been provided written notice of material
violations under any Legal Requirement applicable to it.
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3.7 FINANCIAL STATEMENTS; BOOKS AND RECORDS
The NDC Financial Statements fairly present, and the NDC Financial
Statements prepared by NDC after the date of this Agreement will fairly present,
the financial position of NDC as of the dates indicated and the income, changes
in stockholders' equity and cash flows of NDC for the periods then ended in
conformity with GAAP applied on a consistent basis except as disclosed therein,
except that the Financial Statements do not contain footnotes and are subject to
normal recurring year-end adjustments. The books and records of NDC fairly
reflect in all material respects the transactions to which it is a party or by
which its properties are subject or bound. Such books and records have been
properly kept and maintained and are in compliance with all applicable Legal
Requirements and all accounting requirements.
3.8 MATERIAL ADVERSE CHANGE
(a) NDC has not suffered any change in its financial condition, results
of operations, prospects or business since December 31, 2003 which individually
or in the aggregate with any other such changes would constitute a Material
Adverse Effect with respect to NDC.
(b) Except as set forth in the NDC Disclosure Schedule, NDC has not
declared, set aside, made or paid any dividend or other distribution in respect
of its capital stock prior to the date of this Agreement and, except as
contemplated by Section 2.6, will not declare or pay any such dividend prior to
the Effective Time.
(c) Except as set forth in the NDC Disclosure Schedule, NDC has not
made any commitments for any capital expenditure in excess of $25,000 in any
instance.
3.9 ABSENCE OF UNDISCLOSED LIABILITIES
NDC does not have any liability (contingent or otherwise) that is material
to NDC, or that, when combined with all similar undisclosed liabilities, would
be material to NDC, except as disclosed in the NDC Financial Statements dated
prior to the date hereof and except for liabilities incurred in the ordinary
course of business subsequent to December 31, 2003.
3.10 PROPERTIES
(a) NDC has good and marketable title free and clear of all defects,
equitable interests or other Encumbrances to all of the properties and assets
which are reflected on the NDC Financial Statements as of December 31, 2003 or
acquired after such date, except (i) liens for Taxes not yet due and payable,
(ii) such imperfections of title, easements and Encumbrances, if any, as are not
material in character, amount or extent and (iii) dispositions for adequate
consideration in the ordinary course of business. Such properties and assets,
together with any properties and assets licensed or leased by NDC and disclosed
in the NDC Disclosure Schedule, constitute all tangible and intangible assets
necessary for the operation of NDC's Business as conducted on the date hereof.
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(b) To the Knowledge of NDC, the fixtures, equipment, facilities and
operating assets of NDC are suitable for the uses for which intended, free from
material defects and in good operating condition (ordinary wear and tear
excepted). To the Knowledge of NDC, all such assets are being and have been
properly and regularly serviced and maintained in a manner that would not void
or limit the coverage of any warranty thereon. To the Knowledge of NDC, all
improvements and modifications of such facilities by NDC, NDC's uses of such
facilities and all such facilities and their uses conform to applicable zoning
and building laws in all material respects.
3.11 LEGAL PROCEEDINGS
There are no actions, suits or proceedings instituted, pending or, to the
Knowledge of NDC, threatened against NDC or against any asset, interest or right
of NDC. There are no actions, suits or proceedings instituted, pending or, to
the Knowledge of NDC, threatened which present a claim to restrain or prohibit
the transactions contemplated herein or to impose any material liability in
connection therewith. There are no actions, suits or proceedings instituted,
pending or, to the Knowledge of NDC, threatened against, to the Knowledge of
NDC, any current or former director or officer of NDC, that would reasonably be
expected to give rise to a claim for indemnification.
3.12 TAX MATTERS
(a) NDC has timely filed, or has timely requested filing extensions
for, all Tax Returns required to be filed with respect to NDC under all
applicable Legal Requirements. All Taxes due by or on behalf of NDC (whether or
not shown on any Tax Return) have been paid or adequate reserves have been
established on the NDC Financial Statements as of December 31, 2003 for the
payment of such Taxes for periods through the date of such NDC Financial
Statements. NDC will not have any liability for any such Taxes in excess of the
amounts so paid or reserves or accruals so established, other than Taxes arising
after 2003 in the ordinary course of NDC's business.
(b) All Tax Returns filed by NDC are complete and accurate in all
material respects. No audit examination, deficiency, adjustment, refund claim or
litigation with respect to Tax Returns, paid Taxes, unpaid Taxes or Tax
attributes of NDC has been proposed, asserted or assessed (tentatively or
otherwise). There are currently no agreements in effect with respect to NDC to
extend the period of limitations for the assessment or collection of any Tax. No
notice has been received from, and no claim has been made by, any Governmental
Entity in a jurisdiction where NDC does not file Tax Returns that NDC is or may
be subject to taxation by that jurisdiction.
(c) NDC has withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party.
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(d) Except as set forth on the NDC Disclosure Schedule, there are no
federal, state, local or foreign Tax liens or other Encumbrances upon any of the
properties or assets of NDC or its shares that arose in connection with any
failure (or alleged failure) to pay any Tax, and there are no unpaid Taxes which
are or could become a lien on the properties or assets of NDC.
(e) NDC has delivered or made available upon request complete copies of
all Tax Returns (including all attachments) filed by NDC in the past two years.
(f) Neither the transactions contemplated hereby nor the termination of
the employment of any employee of NDC prior to or following consummation of the
transactions contemplated hereby will result in NDC (or any successor thereof)
making or being required to make any "excess parachute payment' as that term is
defined in Section 280G of the Code.
(g) NDC is not a party to any Contract providing for the allocation or
sharing of, or indemnification for, Taxes. NDC is not liable for, or potentially
liable for, any Tax of any affiliated group of entities under Treasury
Regulations Section 1.1502-6 or under any similar provision of state, local or
foreign law.
(h) NDC is not required to include in income any adjustment in any
taxable period ending after the date hereof pursuant to Section 481(a) of the
Code.
(i) NDC has not executed or entered into any written Contract with any
Tax authority conceding or agreeing to any treatment of Taxes or Tax attributes
affecting NDC.
(j) For purposes of this Section 3.12 references to NDC shall include
predecessors thereof, to the extent provided for in the Code or any other Legal
Requirement applicable to NDC's Tax obligations, and any corporation,
partnership, limited liability company, joint venture or other entity which NDC
controls directly or indirectly (through one or more intermediaries). For
purposes of the previous sentence, "control" means the possession, direct or
indirect, of the power either (1) to vote fifty percent (50%) or more of the
voting interests of a corporation, partnership, limited liability company, joint
venture or other entity, or (2) to direct or cause the direction of the
management and policies of a corporation, partnership, limited liability
company, joint venture or other entity, whether by contract or otherwise.
(k) NDC is not a member of an affiliated group of corporations that
files consolidated federal tax returns.
(l) NDC does not hold any partnership interest (or any interest in any
entity treated as a partnership for federal tax purposes).
3.13 EMPLOYEE BENEFIT PLANS
(a) A true and complete list of each NDC Plan is included in, and a
complete copy of each NDC Plan is attached to, the NDC Disclosure Schedule. For
purposes of this Section 3.13, the term "NDC Plan" means each bonus, deferred
compensation, incentive compensation, stock purchase, stock option, retirement,
death benefit, severance pay, medical, life or other insurance, profit-sharing,
or pension plan, program, agreement or arrangement, and each other employee
benefit plan, program, agreement or arrangement, sponsored, maintained or
contributed to or required to be contributed to by NDC or by any trade or
business, whether or not incorporated, that together with NDC would be deemed a
"single employer" under Section 414 of the Code (an "ERISA Affiliate") for the
benefit of any employee or director or former employee or former director of NDC
or any ERISA Affiliate of NDC.
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(b) With respect to each of the NDC Plans, NDC has made available to
Purchaser true and complete copies of each of the following documents: (a) the
NDC Plan and related documents (including all amendments thereto); (b) the two
(2) most recent annual reports (including all attachments), financial
statements, and actuarial valuation reports, if any such reports were required;
(c) the most recent summary plan description, together with each summary of
material modifications, required under ERISA with respect to such NDC Plan and
all material communications relating to each such NDC Plan; and (d) the most
recent determination letter received from the IRS with respect to each NDC Plan
that is intended to be qualified under the Code and all material communications
to or from the IRS or any other Governmental Entity relating to each NDC Plan.
(c) No liability under Title IV of ERISA has been incurred by NDC or
any ERISA Affiliate of NDC that has not been satisfied in full, and no condition
exists that presents a material risk to NDC or any ERISA Affiliate of NDC of
incurring a liability under such Title, other than liability for premium
payments to the Pension Benefit Guaranty Corporation, which premiums have been
or will be paid when due.
(d) Neither NDC nor any ERISA Affiliate of NDC, nor any of the NDC
Plans, nor, to the Knowledge of NDC, any trust created thereunder, nor any
trustee or administrator thereof has engaged in any prohibited transaction
(within the meaning of Section 406 of ERISA and Section 4975 of the Code) with
respect to any NDC Plan.
(e) Full payment has been made, or will be made in accordance with
Section 404(a)(6) of the Code, of all amounts that NDC or any ERISA Affiliate of
NDC is required to pay under Section 412 of the Code or under the terms of the
NDC Plans.
(f) The fair market value of the assets held under each NDC Plan that
is subject to Title IV of ERISA equals or exceeds the actuarial present value of
all accrued benefits under each such NDC Plan. No reportable event under Section
4043 of ERISA has occurred with respect to any NDC Plan.
(g) Neither NDC nor any ERISA Affiliate has ever maintained, adopted or
established, contributed or been required to contribute to, or otherwise
participated or been required to participate in, nor will they become obligated
to do so through the Closing Date, any "multiemployer plan" as defined in ERISA
Section 3(37). No amount is due from, or owed by, NDC or any ERISA Affiliate on
account of a multiemployer plan or on account of any withdrawal therefrom.
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(h) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each of the NDC Plans that is intended to be
"qualified" within the meaning of Section 401(a) of the Code to the effect that
such plan is so qualified and, to the Knowledge of NDC, no condition exists that
could adversely affect the qualified status of any such NDC Plan. Each of the
NDC Plans that is intended to satisfy the requirements of Section 125 or
501(c)(9) of the Code satisfies such requirements in all material respects. Each
of the NDC Plans has been operated and administered in accordance with its terms
and applicable laws, including but not limited to ERISA and the Code.
(i) There are no actions, proceedings, suits or claims pending, or, to
the Knowledge of NDC, threatened or anticipated (other than routine claims for
benefits) against any NDC Plan, the assets of any NDC Plan or against NDC or any
ERISA Affiliate of NDC with respect to any NDC Plan. There is no judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against or in favor of any NDC Plan or any fiduciary thereof (other
than rules of general applicability). There are no pending or, to the Knowledge
of NDC, threatened audits, examinations or investigations by any Governmental
Entity involving any NDC Plan.
(j) The consummation of the transactions contemplated by this Agreement
will not result in, and is not a precondition to, (i) any current or former
employee or director of NDC or any ERISA Affiliate of NDC becoming entitled to
severance pay, unemployment compensation or any similar payment, (ii) any
acceleration in the time of payment or vesting, or increase in the amount, of
any compensation due to any such current or former employee or director, or
(iii) any renewal or extension of the term of any agreement regarding
compensation for any such current or former employee or director.
(k) No liability has been incurred by NDC or any ERISA affiliate of NDC
for any tax, penalty or other liability with respect to any NDC Plan and to the
Knowledge of NDC such NDC Plans do not expect to incur any such liability prior
to the Closing Date.
(l) NDC has made all required contributions under each NDC Plan on a
timely basis or, if not yet due, adequate accruals therefore have been provided
for in the applicable financial statements.
(m) No NDC Plan provides benefits, including severance or other
post-employment benefit, salary continuation, termination, death, disability,
health or medical benefits (whether or not insured), life insurance, or similar
benefit with respect to current or former employees (or their spouses or
dependents) of NDC beyond their retirement or other termination of service other
than (i) coverage required by applicable law, (ii) death, disability, or
retirement benefits under any employee pension plan as defined in ERISA Section
3(1), (iii) deferred compensation benefits accrued as liabilities on the
financial statements or interim financial statements of NDC or (iv) benefits,
the full cost of which is borne by the current or former employee (or his or her
beneficiary).
(n) To the Knowledge of NDC, NDC has complied with, and satisfied, the
requirements of the provisions of Part 6 of Subtitle B of Title I of ERISA and
Code Section 4980B and all regulations thereunder ("COBRA") with respect to each
NDC Plan that is subject to the requirements of COBRA. To the Knowledge of NDC,
each NDC Plan which is a group health plan, within the meaning of Code Section
9832(a) has complied with and satisfied the applicable requirements of Code
Sections 9801 and 9802.
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3.14 MATERIAL CONTRACTS
(a) Part 3.14 of the NDC Disclosure Schedule sets forth a complete and
correct list of all of the Material Contracts (as hereinafter defined) to which
NDC is a party, indicating as to each Material Contract the categories of the
definition of Material Contract specified below (i.e. (i)-(xvii)) which are
applicable thereto. As used in this Agreement, "Material Contracts" means:
(i) all Contracts under which NDC is lessee of, or holds or
operates, any machinery, equipment, vehicle or other tangible personal property
owned by a third Person;
(ii) all Contracts to which NDC is a party and which are with its
agents, suppliers, customers, advertisers, consultants, advisors, sales
representatives, distributors or dealers of NDC, other than any Contracts which
by their terms are cancelable by NDC with notice of not more than 60 days and
without cancellation penalties or severance payments, in the case of any such
Contract, in excess of $10,000;
(iii) all Contracts with any Governmental Entity;
(iv) all Contracts (A) that limit or purport to limit the ability
of NDC to compete in any line of business or with any person or in any
geographic area or during any period of time or (B) to develop, manufacture,
market or distribute any products or services;
(v) all material licenses, options or other Contracts relating in
whole or in part to the Intellectual Property set forth in Part 3.21 of the NDC
Disclosure Schedule (including any license or other Contract under which NDC is
licensee or licensor of any such Intellectual Property) or to trade secrets,
confidential information or proprietary rights and processes of NDC or any other
Person;
(vi) all mortgages, indentures, security agreements, pledges,
notes, or loan agreements to which NDC is a party;
(vii) any (A) employment or severance agreement, (B) Contract with
any executive officer or other key employee of NDC (I) the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving NDC of the nature of any of the transactions
contemplated by this Agreement, (II) providing any term of employment or
compensation guarantee extending for a period longer than one year or (III)
providing severance benefits or other benefits after the termination of
employment of such executive officer or key employee not comparable to benefits
available to employees generally, (C) Contract, plan or arrangement under which
any Person may receive payments that may be subject to the tax imposed by
Section 4999 of the Code or included in the determination of such Person's
"parachute payment" under Section 280 of the Code and (D) Contract or plan,
including any stock option plan, stock appreciation right plan, restricted stock
plan or stock purchase plan, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the occurrence of
the Merger or any of the other transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the basis of the
Merger or any of the other transactions contemplated by this Agreement;
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(viii) all Contracts between or among NDC and any Affiliate of NDC
that will survive (in whole or in part) the Effective Time;
(ix) all Contracts (or a representative form thereof) providing for
benefits under any NDC Plan;
(x) all Contracts (including so-called take-or-pay, cash deficiency
or keepwell agreements) under which (A) any Person (including NDC) has directly
or indirectly guaranteed Indebtedness, liabilities or obligations of NDC or (B)
NDC has directly or indirectly guaranteed Indebtedness, liabilities or
obligations of any Person other than endorsements for the purpose of collection
in the ordinary course of business, but including agreements having the effect
of a guarantee, whether or not required to be reflected on NDC's balance sheet
in accordance with GAAP;
(xi) all Contracts under which NDC has, directly or indirectly,
made any advance, loan, extension of credit or capital contribution to, or other
investment in, any Person;
(xii) any other Contract to which NDC is a party or by or to which
it or any of its assets or Business is bound or subject which has an aggregate
future liability to any Person in excess of $10,000;
(xiii) all Contracts granting any Person any right of first
refusal, right of first offer, buy-sell or economically preferential right or
other similar rights, other than in the ordinary course of business consistent
with past practice, to purchase any of the properties or assets of NDC or to
license, develop, commercialize or use any Intellectual Property of NDC;
(xiv) all leases where NDC is (A) lessee or sublessee, or (B)
lessor or sublessor of, real property;
(xv) all Contracts pursuant to which NDC has an obligation to
indemnify any Person, other than indemnity obligations which arise by operation
of law and other than contractual indemnity obligations entered into in the
ordinary course of business; or
(xvi) all other Contracts whether or not made in the ordinary
course of business, the absence of which could reasonably be expected to have a
Material Adverse Effect.
For purposes of this Section 3.14, the term "lease" shall include any and all
leases, subleases, sale/leaseback agreements or similar arrangements.
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(b) Each Material Contract listed in the NDC Disclosure Schedule, (A)
is valid and binding on NDC is and, to the Knowledge of NDC, the other parties
thereto and is in full force and effect and (B) following the completion of the
transactions contemplated by this Agreement shall continue in full force and
effect without material penalty or other material adverse consequence.
(c) NDC is not in material breach of, or material default under, any
Material Contract. To the Knowledge of NDC, no other party to any Material
Contract is in material breach thereof.
(d) Reference is made to a Master Business and Manufacturing Agreement
between NDC and Eagle-Picher Energy Products (the "NDC/EP Agreement"). The
"Qualification Date" as defined in the NDC/EP Agreement has not occurred as of
the date of this Agreement and will not occur prior to the Effective Time.
3.15 CERTAIN BUSINESS RELATIONSHIPS WITH NDC
(a) Except as set forth in Part 3.15 of the NDC Disclosure Schedule,
(i) no Stockholder or, to the Knowledge of NDC, any Affiliate of such
Stockholder or of NDC has been involved in any business arrangement or
relationship with NDC, within the past 12 months other than an employment or
consulting arrangement with NDC, and no such Stockholder or Affiliate is
indebted to NDC, (ii) no Contract that constitutes an Affiliate Transaction will
continue in effect, and no payment or provision of compensation or benefits to
any person that constitutes an Affiliate Transaction will continue, after the
Merger, and the termination of such Contracts, compensation and benefits prior
to or upon the Closing Date shall not result in any liabilities of NDC, and
(iii) to the Knowledge of NDC, no Stockholder nor any Affiliate of such
Stockholder or of NDC has or will have after the Closing or has had during the
past 12-months any interest (other than as a Stockholder of NDC) in any
property, asset or Contract used in, necessary or pertaining to the business of
NDC. Any arrangement, relationship, Contract or interest referred to in clauses
(i) through (iii), if existing, is on an arms'-length basis.
(b) For purposes hereof, "Affiliate Transaction" means any (i)
transaction involving NDC and any Stockholder or any Affiliate of any
Stockholder, (ii) transaction involving NDC and any present officer, director or
employee (other than the payment of cash compensation recorded as such on the
books of NDC) of NDC or any Person (other than NDC) with respect to which any
such officer, director or employee is an Affiliate or (iii) any Contract (other
than any NDC Plan) between NDC and any Person referred to in clause (i) or (ii)
above.
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3.16 EMPLOYEES
(a) Part 3.16 of the NDC Disclosure Schedule contains a complete and
accurate list of the following information for each employee of NDC, including
each employee on leave of absence or layoff status: employee, name, job title,
current compensation paid or payable and any change in compensation since
January 1, 2004, vacation accrued and service credited for purposes of vesting
and eligibility to participate under any NDC Plan.
(b) Except as set forth on Part 3.16 of the NDC Disclosure Schedule,
to the Knowledge of NDC, no director, officer or other key employee of NDC
intends to terminate his or her employment with NDC as a result of the Merger.
3.17 LABOR MATTERS
With respect to its employees, NDC is not a party to any labor agreement
with any labor organization, group or association and has not engaged in any
unfair labor practice. Prior to the date hereof, to the Knowledge of NDC, NDC
has not experienced any attempt by organized labor or its representatives to
make NDC conform to demands of organized labor relating to its employees or to
enter into a binding agreement with organized labor that would cover the
employees of NDC. To the Knowledge of NDC, there is no unfair labor practice
charge or other complaint by any employee or former employee of NDC against any
of them pending before any court, arbitrator or Governmental Entity arising out
of NDC's activities; there is no labor strike or labor disturbance pending or,
to the Knowledge of NDC, threatened against any of them; and NDC has not
experienced a work stoppage or other material labor difficulty since January 1,
2003.
3.18 BROKERS AND FINDERS
Neither NDC nor, to the Knowledge of NDC, any of its Stockholders,
respective officers, directors or employees has employed any broker, finder or
financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated herein, except for NDC's retention
of Asante Partners to perform certain financial advisory services.
3.19 INSURANCE
Part 3.19 of the NDC Disclosure Schedule lists (a) all policies and
Contracts of insurance maintained by NDC and (b) all self-insurance programs and
arrangements applicable to NDC, and its Business.
NDC currently maintains insurance in such amounts as may be required under
any applicable Legal Requirements (except where the failure to maintain such
insurance would not have a Material Adverse Effect on NDC) or Contract to which
NDC is a party and, to the Knowledge of NDC, otherwise in amounts considered by
NDC to be reasonably necessary for their operations. NDC has not received any
notice of a material premium increase over current rates or cancellation with
respect to any of its insurance policies or bonds, and NDC has not been refused
any insurance coverage sought under its policies and Contracts of insurance, and
NDC has no reason to believe that existing insurance coverage cannot be renewed
as and when the same shall expire, upon terms and conditions substantially as
favorable as those presently in effect, other than possible increases in
premiums or unavailability in coverage that have not resulted from any
extraordinary loss experience of NDC. NDC has not incurred or suffered any claim
as of the date hereof under any insurance policy.
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3.20 ENVIRONMENTAL MATTERS
Except as set forth in Part 3.20 of the NDC Disclosure Schedule or as
described in any third party reports supplied by NDC or obtained by Purchaser
and specifically listed on Part 3.20 of the NDC Disclosure Schedule:
(a) NDC is in material compliance with all Environmental Laws.
(b) Neither NDC nor, to the Knowledge of NDC, any other Person for
whose conduct NDC is or may be held responsible has any Environmental
Liabilities with respect to the Facilities or, to the Knowledge of NDC, with
respect to any other properties and assets (whether real, personal or mixed) in
which NDC (or any predecessor) has or had an interest, or at any property
geologically or hydrologically adjoining the Facilities or any such other
property or assets.
(c) NDC does not have any basis to expect, nor has NDC or, to the
Knowledge of NDC, any other Person for whose conduct NDC is or may be held
responsible received, any citation, directive, inquiry, notice, order, summons,
complaint or warning that relates to (i) any alleged, actual, or potential
violation or failure to comply with any Environmental Law or (ii) any alleged,
actual or potential obligation to undertake or bear the cost of any
Environmental Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal or mixed) in which NDC has or had
an interest, or with respect to any property or facility to which Hazardous
Materials generated, manufactured, refined, transferred, imported, used, or
processed by NDC, or any other Person for whose conduct NDC is or may be held
responsible, have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(d) Except in material compliance with or as permitted by applicable
Environmental Law, to the Knowledge of NDC, there are no Hazardous Materials
present on or in the environment at the Facilities or, to the Knowledge of NDC,
at any geologically or hydrologically adjoining property in material quantities
that emanated from NDC or any predecessor thereof, including any Hazardous
Materials contained in barrels, above or UST's, landfills, land deposits, dumps,
equipment (whether moveable or fixed) or other containers, either temporary or
permanent, and deposited or located in land, water, sumps, or any other part of
the Facilities or such adjoining property, or incorporated into any structure
therein or thereon.
(e) To the Knowledge of NDC, and except in material compliance with or
as permitted by applicable Environmental Law, there has been no Release or
threat of Release, of any material amounts of Hazardous Materials at or from the
Facilities.
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(f) NDC has delivered or made available to Purchaser true and complete
copies and results of all reports, studies, analyses, tests, or monitoring
possessed or initiated by NDC and such other reports, if any, as Purchaser has
requested pertaining to Hazardous Materials or any business activities which is
regulated under any Environmental Law in, on, or under the Facilities, or
concerning compliance by NDC, or any other Person for whose conduct NDC is or
may be held responsible, with Environmental Laws.
3.21 INTELLECTUAL PROPERTY
(a) Except as set forth in Part 3.21 of the NDC Disclosure Schedule and
except for standardized software generally available to the public, NDC owns,
free and clear of any Encumbrances, or has an exclusive license in the Field of
Use to use: (i) all Intellectual Property used in connection with the Business
or under development or design, or inactive, of NDC, (ii) all amendments,
modifications or improvements thereto made by employees or consultants of NDC,
and (iii) all discoveries, know-how, trade secrets, processes, formulas,
drawings or designs related thereto (the Intellectual Property covered by
clauses (i), (ii) and (iii) being collectively the "NDC Intellectual Property").
Except as set forth in Part 3.21 of the NDC Disclosure Schedule, all of the NDC
Intellectual Property is (x) listed in the NDC Disclosure Schedule in the case
of Patents and published patent applications, trademarks, copyrights and (y)
identified in the case of unpublished patent applications.
(b) Except as provided in Part 3.21 of the NDC Disclosure Schedule, to
the Knowledge of NDC, neither any NDC Intellectual Property nor the manufacture,
use, distribution, advertisement or sale of any products by NDC would infringe
or infringes or misappropriates the Intellectual Property rights of any Person
and no claim has been asserted nor, to the Knowledge of NDC, threatened in
writing by any Person to that effect or challenging or questioning the validity
or effectiveness of any license or other Contract with respect to NDC
Intellectual Property.
(c) All NDC Intellectual Property listed in the NDC Disclosure Schedule
has the status indicated therein and, unless provided otherwise in Part 3.21 of
the NDC Disclosure Schedule, is in good standing and has not been abandoned. NDC
has paid all filing fees, maintenance fees and other amounts that NDC was
required to pay and that were due and owing as of the date hereof under
applicable Legal Requirements with respect to NDC Intellectual Property or under
any Contract. The issued patents and trademark registrations included within NDC
Intellectual Property are valid and, to NDC's Knowledge, no challenge against
any of NDC Intellectual Property has been brought by any party in any judicial
or administrative proceeding.
(d) To the Knowledge of NDC, no Person nor such Person's business or
products has infringed, or misappropriated any NDC Intellectual Property, or
currently is infringing, or misappropriating any NDC Intellectual Property.
(e) To the Knowledge of NDC, no employee or consultant of NDC is
subject to or otherwise restricted by any employment, nondisclosure, assignment
of inventions, nonsolicitation of employees or noncompetition agreement between
such employee or consultant and a third party that has been violated or will be
violated as a result of the Merger. All employees and consultants of NDC have
signed a confidentiality and assignment of inventions agreement substantially in
the form(s) previously delivered to Purchaser, and each such agreement is, and
after the Effective Time shall remain, the legal, binding and enforceable
obligation of such employee or consultant.
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(f) NDC has not granted any license rights (including but not limited
to any grantback rights under any Contract) or otherwise transferred any NDC
Intellectual Property to any Person, or agreed to indemnify any third party with
respect to any alleged infringement or misappropriation of any third party's
Intellectual Property by NDC's Business or products. NDC is not bound by or a
party to any options, licenses or Contracts of any kind relating to the
Intellectual Property Rights of any other Person, except as set forth in Part
3.21 of the NDC Disclosure Schedule and except for standardized licensed
software generally available to the public.
(g) None of the Stockholders or current officers and employees of NDC
have any patents issued or applications pending for any device, process, design
or invention of any kind now used by NDC, or under development or design by NDC
for use, in connection with the Business, which patents or applications have not
been assigned to NDC, with such assignment duly recorded in the United States'
Patent Office and/or such other Governmental Entity as commercially reasonable
under the circumstances.
(h) For purposes of this Section 3.21(h), the term "NDC Patents" means
U.S. Patent Nos. 6,503,646; 6,391,494; and 6,225,007. With respect to the NDC
Patents:
(i) NDC represents and warrants that with respect to each of the
NDC Patents and each pending U.S. application claiming priority thereto, to the
Knowledge of NDC there is no material prior art or other information that was
neither disclosed to the USPTO in accordance with its Rules nor cited by the
patent examiner in connection with the prosecution of the patent or application.
(ii) NDC represents and warrants that with respect to each of the
Licensed Patents (as defined in the Technology Transfer and License Agreement
between NDC and NanoGram Corporation dated January 20, 2003) and each pending
U.S. patent application claiming priority thereto, to the Knowledge of NDC there
is no material prior art or other information that was neither disclosed to the
USPTO in accordance with its Rules nor cited by the patent examiner in
connection with the prosecution of the patent or application.
(iii) NDC represents and warrants that, to the Knowledge of NDC,
there is no NDC Patent or foreign counterpart thereto, or any pending
application (domestic or foreign) claiming priority to an NDC Patent, has been
or is currently the subject of any ex parte or inter partes proceeding (such as
an opposition, protest, interference, reexamination, reissue proceeding, nullity
action or civil lawsuit), in the U.S. or any foreign country.
(iv) NDC represents and warrants that with respect to each of the
NDC Patents and each pending patent application claiming priority thereto, to
the Knowledge of NDC there are no (i) material issues concerning misjoinder of
inventors or (ii) no material issues concerning nonjoinder of inventors who are
not under obligation to assign their rights to NDC.
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3.22 BANK ACCOUNTS, ETC.
Part 3.22 of the NDC Disclosure Schedule sets forth a list of each bank,
broker or other depository with which NDC has an account or safe deposit box,
the names and numbers of such accounts or boxes, and the names of all Persons
authorized to draw or execute transactions on such account.
Part 3.22 of the NDC Disclosure Schedule sets forth the names of all
Persons, if any, holding powers of attorney from NDC and a description of the
scope of each such power of attorney.
3.23 REPORTS BY WGT CONSULTANTS
To the Knowledge of NDC, the information that NDC provided to WGT
Consultants, as described in the Memorandum of Understanding between NDC and
Purchaser dated January 30, 2004 ("MOU") including but not limited to those set
forth in Attachment B of the MOU, did not contain any untrue material fact or
omit a material fact necessary to make the information contained therein, in
light of the circumstances under which they were made, not misleading.
3.24 DISCLOSURE
Without limitation of the representations and warranties contained in this
Article 3, no information disclosed in the NDC Disclosure Schedule contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
PURCHASER AND MERGER SUB
Purchaser and Merger Sub hereby jointly and severally represent and warrant
to NDC as follows:
4.1 ORGANIZATION, STANDING AND AUTHORITY OF PURCHASER
Purchaser is a duly incorporated corporation, validly existing and in good
standing under the laws of Delaware, with full corporate power and authority to
carry on its business as now conducted and is duly licensed or qualified to do
business in the states of the United States and foreign jurisdictions where its
ownership or leasing of property or the conduct of its business requires such
qualification, except where the failure to have such corporate power and
authority or to be so licensed or qualified would not have a Material Adverse
Effect on Purchaser. Merger Sub is a duly incorporated corporation, validly
existing and in good standing under the laws of Delaware with full corporate
power and authority to carry on its business as now conducted and is duly
qualified to do business in the State of Minnesota.
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4.2 AUTHORIZED AND EFFECTIVE AGREEMENT
(a) Each of Purchaser and Merger Sub has all requisite corporate power
and authority to enter into and perform all of its obligations under this
Agreement. The execution, delivery and performance of this Agreement by
Purchaser and Merger Sub and the consummation of the Merger and the other
transactions contemplated hereby have been duly authorized by the boards of
directors of Purchaser and Merger Sub and by Purchaser as the sole stockholder
of Merger Sub, which authorizations constitute all necessary corporate action in
respect thereof and which have not been rescinded, revoked or otherwise
adversely modified.
(b) This Agreement constitutes the legal, valid and binding obligations
of each of Purchaser and Merger Sub, enforceable against it in accordance with
its terms subject, as to enforceability, to bankruptcy, insolvency and other
Legal Requirements of general applicability relating to or affecting creditors'
rights and to general equity principles.
(c) Neither the execution and delivery of this Agreement, nor
consummation of the Merger and the other transactions contemplated hereby, nor
compliance by Purchaser or Merger Sub with any of the provisions hereof shall
(i) conflict with or result in a breach of any provision of the certificate of
incorporation or bylaws of Purchaser or any Purchaser Subsidiary or (ii) violate
any Legal Requirements applicable to Purchaser or any Purchaser Subsidiary.
(d) Other than the filing of the Certificate of Merger with the
Delaware Secretary of State, no consent, approval or authorization of, or
declaration, notice, filing or registration with, any Governmental Entity, or
any other Person, is required to be made or obtained by Purchaser or Merger Sub
on or prior to the Effective Time in connection with the execution, delivery and
performance of this Agreement and the Plan of Merger or the consummation of the
transactions contemplated hereby or thereby.
4.3 SEC DOCUMENTS
Purchaser has filed all SEC Documents required by the Securities Laws since
December 31, 2002. As of their respective dates, the SEC Documents filed by
Purchaser (i) were prepared in all material respects in accordance with the
Securities Laws, and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading.
4.4 BROKERS AND FINDERS
Neither Purchaser nor any Purchaser Subsidiary, nor any of their respective
officers, directors or employees, has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in connection with
the transactions contemplated herein or the Merger.
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4.5 INTERIM OPERATIONS OF MERGER SUB
Merger Sub was formed solely for the purposes of engaging in the
transaction contemplated by this Agreement, and Merger Sub has engaged in no
business other than in connection with the transactions contemplated by this
Agreement.
4.6 FINANCING
Purchaser has, and will have available to it at all times prior to and upon
the consummation of the Merger, sufficient funds to consummate the transactions
contemplated by this Agreement.
4.7 DISCLOSURE
Without limitation of the representations and warranties contained in this
Article 4, no representation or warranty by WGT and Merger Sub in this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances under which they were made, not misleading.
ARTICLE 5
COVENANTS
5.1 NDC STOCKHOLDERS' APPROVAL
(a) NDC shall, as soon as reasonably practicable following the date of
this Agreement, take all action necessary in accordance with the DGCL, the NDC
Charter and the Bylaws of NDC (i) to cause a special meeting of NDC's
stockholders to be called and held as soon as reasonably practicable for the
purpose of voting upon the Merger and the adoption of this Agreement and to
submit this Agreement and the Merger to a vote of its stockholders (the "NDC
Stockholders Meeting) or (ii) to solicit written consents ("Written Consents")
from the stockholders of NDC in favor and for the approval of the Merger and the
adoption of this Agreement ("NDC Consent Solicitation"). Subject to the
fiduciary duties of the board of directors of NDC as determined by the board of
directors of NDC, in its good faith judgment, after consultation with
independent counsel (who may be NDC's regularly engaged independent legal
counsel), the board of directors of NDC shall recommend that its stockholders
vote or deliver written consents in favor of such approval and adoption of the
Merger and this Agreement at the NDC Stockholders Meeting or in connection with
the NDC Consent Solicitation, as applicable. The Agreement and the Merger shall
be submitted to the stockholders at the NDC Stockholders Meeting or, if
applicable, any Written Consents delivered to NDC shall continue to be given
effect, whether or not the board of directors of NDC determines at any time
hereafter that the Agreement or the Merger is no longer advisable.
(b) In connection with the NDC Stockholders Meeting or NDC Consent
Solicitation, whichever is applicable, NDC shall take all action reasonably
necessary to comply with the Securities Laws applicable to the Merger and the
NDC Stockholders Meeting or NDC Consent Solicitation, as the case may be.
Without limiting the foregoing, all information contained in any proxy statement
or information statement of NDC provided to the stockholders of NDC in
connection with the NDC Stockholders Meeting or NDC Consent Solicitation ("Proxy
Materials") shall be true in all material respects, and the Proxy Materials
shall not omit to state any material fact necessary to make the statements in
the Proxy Materials not misleading. NDC agrees that it will provide Purchaser
with a copy of any Proxy Materials not less than two (2) days prior to their
mailing or delivery to stockholders.
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5.2 [INTENTIONALLY OMITTED]
5.3 BEST EFFORTS
(a) Subject to the terms and conditions of this Agreement, Purchaser,
Merger Sub and NDC shall each use its reasonable best efforts in good faith to
take or cause to be taken all action necessary or desirable on its part so as to
permit consummation of the Merger on or at the earliest possible date,
including, without limitation, requesting the delivery of appropriate opinions,
consents and letters from its counsel and independent auditors and requesting
the consents listed on Schedule 6.1(c). Subject to the terms and conditions of
this Agreement, no party hereto shall take or fail to take, or to the best of
its ability permit to be taken or omit to be taken by any third Persons, any
action that would substantially impair completion of the Merger pursuant to this
Agreement or that would materially delay such completion. In the event that
either party has taken any action, whether before, on or after the date hereof,
that would adversely affect the completion of the Merger pursuant to this
Agreement, each party shall take such action as the other party may reasonably
request to cure such effect to the extent curable without a Material Adverse
Effect on either of the parties.
(b) Unless prohibited by applicable law, NDC shall give reasonably
prompt notice to Purchaser, and Purchaser shall give reasonably prompt notice to
NDC, of (i) the occurrence, or failure to occur, of any event known to it which
occurrence or failure would reasonably be expected to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate at any time
from the date hereof to the Closing Date such that the condition set forth in
Section 6.2(a) or 6.3(a), as applicable, would not be met if such failure to be
true or accurate were to occur and be continuing on the Closing Date, and (ii)
any material failure of NDC or Purchaser known to NDC or Purchaser, as the case
may be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder, and each party shall use all
reasonable best efforts to remedy such failure.
(c) In the event that this Agreement is terminated without the
transactions contemplated hereby having been consummated, upon the request of
NDC, Purchaser will and will cause its representatives to promptly redeliver or
cause to be redelivered, or, at its sole discretion, destroy or caused to be
destroyed, all copies of documents and information furnished by NDC, as the case
may be, or its representatives to such party and its representatives in
connection with this Agreement or the transactions contemplated hereby and
destroy or cause to be destroyed all notes, memoranda, summaries, analyses,
compilations and other writings related thereto or based thereon prepared by
Purchaser or its representatives.
(d) Each party shall provide and shall request its auditors to provide
the other party with such historical financial information regarding it (and
related audit reports and consents) as the other party may reasonably request
for disclosure purposes under the Securities Laws.
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5.4 INVESTIGATION AND CONFIDENTIALITY
(a) Except as provided in Paragraph (b) of this Section 5.4, Purchaser
and Merger Sub have completed their review of NDC's financial, operational and
other business records. No such review or investigation and no investigation
pursuant to Section 5.5(b) shall affect or be deemed to modify any
representation or warranty made by, or the conditions to the obligations to
consummate the merger of, NDC.
(b) NDC shall (i) provide to Purchaser reasonable access during normal
business hours to the officers, employees, agents, properties, offices and other
facilities of NDC and to the books and records of NDC and (ii) furnish to
Purchaser such information concerning the business, properties, contracts,
assets, liabilities, personnel and other aspects of NDC as Purchaser may
reasonably request. The manner in which such access is provided shall be subject
to NDC's standard security measures with respect to non-employee visitors.
(c) Each party hereto shall hold all information furnished by the other
party or its representatives pursuant to this Agreement in confidence to the
extent required by, and in accordance with, the provisions of the
confidentiality agreement, dated on or about December 13, 2003, between
Purchaser and NDC ("Confidentiality Agreement").
5.5 PRESS RELEASES
NDC and Purchaser shall agree with each other as to the form and substance
of any press release prior to Closing related to this Agreement and the Merger,
and shall consult each other as to the form and substance of other public
disclosures related thereto; provided, however, that nothing contained herein
shall prohibit Purchaser, following notification to NDC or after the Closing,
from making any disclosure which is required by any Legal Requirement or any
requirement of the NYSE.
5.6 ACTIONS PENDING THE MERGER
(a) Prior to the Closing Date, and except as otherwise provided for by
this Agreement, or consented to or approved by Purchaser, NDC shall use its
commercially reasonable efforts to preserve in all material respects its
properties, business and relationships with customers, employees and other
Persons.
(b) NDC shall not, except with the prior written consent of Purchaser
and except as expressly contemplated or permitted by this Agreement:
(1) carry on its business other than in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted;
(2) declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock except pursuant to Section 2.6;
35
(3) issue any shares of its capital stock or permit any treasury
shares to become outstanding other than pursuant to Rights outstanding at the
date hereof or that become outstanding hereafter in accordance with the terms of
this Agreement;
(4) incur any Indebtedness (other than accrual of interest with
respect to Indebtedness outstanding on the date hereof);
(5) issue, grant or authorize any Rights or effect any
recapitalization, reclassification, stock dividend, stock split or like change
in capitalization, or redeem, repurchase or otherwise acquire any shares of its
capital stock;
(6) amend its certificate of incorporation or bylaws (other than
to allow the conversion of the shares of NDC Series A-1 Stock into NDC Common
Stock with the approval of a majority of the outstanding shares of NDC Series
A-1 Stock);
(7) merge with any other corporation or Person, permit any other
corporation or Person to merge into it or consolidate with any other corporation
or Person; or acquire control over any other corporation or Person or
organization or create any Subsidiary;
(8) waive or release any material right or cancel or compromise
any debt or claim;
(9) liquidate or sell or dispose of any material assets or
acquire any material assets; except as set forth in the NDC Disclosure Schedule,
make any capital expenditure in excess of $10,000 in any instance or $25,000 in
the aggregate; or establish new facilities, close existing facilities or enter
into or modify any leases or other contracts relating thereto;
(10) except for the acceleration of all outstanding Options
immediately prior to the Effective Time, increase the rate of compensation of,
pay or agree to pay any bonus to, or provide any other employee benefit or
incentive to, any of its directors, officers or employees, except in a manner
consistent with past practice or as required by law or contractual obligation in
effect as of the date hereof;
(11) except as required by GAAP, alter or revise its accounting
principles, procedures, methods or practices in effect at December 31, 2003 in
any material respect;
(12) authorize or permit any of its officers, directors,
employees or agents to directly or indirectly solicit, initiate or encourage any
inquiries relating to, or the making of any proposal which constitutes, an
Acquisition Proposal (as defined below), or (i) recommend or endorse, (ii)
participate in any discussions or negotiations in connection with, (iii) provide
any Person(s) with any nonpublic information in response to or relating to, or
(iv) otherwise facilitate any effort or attempt to make or implement, an
Acquisition Proposal. NDC will take all actions necessary or advisable to inform
the appropriate Persons referred to in the first sentence hereof of the
obligations undertaken in this Agreement. NDC will notify Purchaser as promptly
as practicable (and in any event, within one (1) business day) following receipt
of any such inquiries or Acquisition Proposals are received by, or, any such
information is requested from, NDC and NDC will as promptly as practicable
inform Purchaser in writing of all of the material terms and conditions thereof.
Notwithstanding anything to the contrary in this Section 5.6(b)(12), NDC may,
prior to the Effective Time, furnish information (of the same type and scope
that NDC provided to Purchaser prior to or following the date of this Agreement)
to, enter into a confidentiality agreement with or enter into discussions or
negotiations with, a Person who has made a written, bona fide Acquisition
Proposal if the board of directors of NDC has determined, in its good faith
judgment after consultation with independent legal counsel (who may be NDC's
regularly engaged independent legal counsel), that such action is required to
comply with its fiduciary obligations to NDC and its stockholders. As used in
this Agreement, "Acquisition Proposal" shall mean any proposal for a merger,
consolidation or other business combination involving NDC or any proposal or
offer to acquire in any manner a substantial equity interest in, or a
substantial portion of the assets of, NDC other than the Merger and the other
transactions contemplated or permitted by this Agreement;
36
(13) knowingly take any action, or knowingly fail to take any
action, that would render any representation, warranty, covenant or agreement of
NDC in this Agreement inaccurate or breached such that the conditions in Section
6.3 will not be satisfied; or
(14) agree or consent to do any of the foregoing.
(c) For purposes of this Section 5.6, consent or written consent, as
the case may be, shall be deemed to have been given by a party if such party has
received a written request for consent hereunder from the other party and has
not in any way responded to that request within five (5) business days of the
receipt of such request.
5.7 INDEBTEDNESS
(a) NDC covenants and agrees that it will have no Indebtedness as of
the Effective Time except for (i) any obligation under the agreement between NDC
and St. Jude Medical CRMD dated in October 2003 and (ii) any obligation under
the Nitrogen Supply Agreement with MG Industries.
(b) Except as set forth in Section 5.7 of the NDC Disclosure Schedule,
NDC covenants and agrees that, in addition to and with limiting its obligations
under Section 5.6(b)(1), NDC will pay prior to the Effective Time (i) all
bonuses and other incentive compensation to employees and/or consultants
required with respect of services prior to December 31, 2003 and (ii) all of its
trade and other accounts payable the goods and/or services for which were
provided to NDC 30 days or more prior to the Effective Time; provided, however,
that for clarification, NDC shall not by reason of this Section be required to
pay any accrued bonuses for 2004 prior to Closing.
(c) NDC covenants and agrees that it will pay or cause to be paid all
Transaction Expenses on or prior to the Closing Date (whether by reducing the
Preclosing Dividend by the Transaction Expenses Reduction Amount pursuant to
Section 2.6 or otherwise. Without limiting the foregoing, prior to the Closing
Date, NDC shall have requested final invoices from all relevant third parties
(including accountants, attorneys and other similar professionals) reflecting
all fees and expenses payable by the Stockholders and NDC with respect to
services rendered in connection with the transactions contemplated hereby. Not
later than one business day prior to the Closing Date, the chief financial
officer of NDC shall certify in writing to Purchaser the amount of all
Transaction Expenses that will have been paid by NDC immediately prior to the
Effective Time and an estimate of (i) any Transaction Expenses incurred but not
paid as of the Effective Time and (ii) an estimate of any Transaction Expenses
reasonably expected to be incurred after the Effective Time (the amounts in
clauses (i) and (ii) being collectively, the "Estimated Transaction Expenses").
NDC shall deliver to Purchaser at Closing evidence of final payment from each
Person who provided services or incurred expenses, disbursements or costs
constituting Transaction Expenses as contemplated by Section 1.49 and rendered a
final xxxx to NDC, in a form reasonably satisfactory to Purchaser.
37
5.8 NDC EMPLOYEES
(a) Except as otherwise agreed in the Employment Agreements, except as
provided for in Paragraph (a) of this Section 5.8 and except as otherwise
provided for in the NDC Disclosure Schedule, on and after the Effective Time,
all persons who are actively employed by NDC at the Effective Time ("NDC
Employees") shall continue to be employed by the Surviving Corporation on terms
and conditions (including benefits) as may be determined by Purchaser in its
reasonable discretion but which in the aggregate shall be comparable to the
terms and conditions under which the NDC Employees were employed immediately
prior to the Effective Time. Notwithstanding the foregoing, the following
provisions shall apply.
(i) Purchaser shall use commercially reasonable efforts to maintain
and operate for the benefit of NDC Employees those NDC Plans that were in effect
immediately preceding the Effective Time . With respect to each NDC Plan, if
Purchaser determines, in its reasonable judgment, that it is not commercially
reasonable to maintain the NDC Plan , Purchaser shall not be required to
maintain that plan.
(ii) If Purchaser does not maintain and operate any NDC Plan at any
time after the Effective Date and prior to January 1, 2005, NDC Employees
covered by such plan shall be eligible to participate in a comparable benefit
plan sponsored by the Purchaser ("Purchaser Plan"), if such a comparable plan
exists, subject to the applicable terms of the Purchaser Plan. For purposes of
determining eligibility for, accrual and vesting of benefits under a Purchaser
Plan, service with NDC or any predecessor thereto prior to the Effective Time
shall be treated as service with the Purchaser. Moreover, Purchaser shall, to
the extent permitted by Purchaser's Plans, waive any pre-existing condition
exclusion and actively-at work requirements, eligibility waiting periods and
evidence of insurability requirements under any of Purchaser's group health
plans to the extent permitted by such plans.
(iii) This Section shall not be construed to limit the ability of
Purchaser and the Surviving Corporation to terminate the employment of an NDC
Employee at any time for Cause (as defined below) or for any other reason;
provided, however, that if an NDC Employee is terminated , other than for Cause,
Purchaser shall pay to the NDC Employee, in addition to those amounts required
by applicable law, a one time, lump sum payment in the amount of such employee's
salary from the date of termination . This payment will be reduced to the extent
the employee receives any other payment pursuant to the terms of any NDC,
Purchaser, or Surviving Corporation severance plan upon his or her termination.
Purchaser agrees to notify all NDC Employees (other than Key Employees) by no
later than September 30, 2004 as to whether their employment will continue . For
purposes of this Section 5.8(a)(iii), "Cause" shall exist if any of the
following occurs: (i) commission of any crime involving fraud, dishonesty or
moral turpitude by the employee; (ii) attempted commission of or participation
in a fraud or act of dishonesty by the employee against NDC, Purchaser or
Surviving Corporation that results in (or might have reasonably resulted in)
harm to the business of NDC, Purchaser, or Surviving Corporation; (iii)
intentional violation of any contract or agreement between the employee and NDC,
Purchaser, or Surviving Corporation or any statutory duty the employee owes to
NDC, Purchaser, or Surviving Corporation; or (iv) willful misconduct or gross
negligence by the employee in the performance of his or her duties.
38
(b) Prior to the Effective Time, NDC shall take all actions that may be
reasonably requested by Purchaser in writing upon advance notice with respect to
(i) causing one or more NDC Plans to terminate as of the Effective Time or for
benefit accrual and entitlements to cease as of the Effective Time, (ii) causing
the continuation on and after the Effective Time of any contract, arrangement or
insurance policy relating to any NDC Plan for such period as may be requested by
Purchaser, or (iii) cooperating with Purchaser to facilitate the merger of any
NDC Plan into any employee benefit plans maintained by Purchaser on or following
the Effective Time; provided, however, that with respect to any such action: (1)
Purchaser shall, at NDC's request, reimburse NDC for reasonable out-of-pocket
expenses incurred by NDC with respect to such action; (2) such action shall have
no material effect on the NDC Plans prior to the Effective Time; (3) NDC shall
not be required to take any action that would result in a breach of its
obligations under this Agreement or any other Contract in effect on the date
hereof; and (4) NDC shall not be required to take any action that would result
in a violation of the terms of any NDC Plan or of any applicable Legal
Requirement.
(c) _______ and _____ shall not be NDC Employees except for purposes of
Section 5.8(a)(i) and (a)(ii), but for so long as they continue to be employed
by the Surviving Corporation after the Merger, their terms and conditions of
employment (including benefits) will be, subject to clauses (i) and (ii) of
Section 5.8, comparable to their terms and conditions of employment prior to the
Merger. In addition, Purchaser agrees to cause the Surviving Corporation after
the Merger to perform all Contracts relating to the employment of Xxxx Xxxxx and
Xxx Xxxxx between NDC and such individuals that have been disclosed to Purchaser
prior to the date of this Agreement.
(d) NDC authorized a special bonus to _____ of its employees of _____
each pursuant to a Memorandum by Xxxxx Xxxxxxx dated March 9, 2004, a copy of
which was delivered to WGT on March 11, 2004, the aggregate amount of which is
_____ (the "Special Bonus"). The Surviving Corporation shall pay the Special
Bonus to those employees of NDC who satisfy the conditions thereof.
39
5.9 OTHER AGREEMENTS
(a) Concurrently with the execution of this Agreement, each Principal
Stockholder of NDC has entered into a Voting and Cooperation Agreement with
Purchaser in the form attached hereto as Exhibit D pursuant to which such
Principal Stockholder has delivered a Written Consent in favor of the Merger
voting all shares of NDC Stock with respect to which such Person shall have
voting rights on the record date for any NDC Stockholders Meeting in favor of
the Merger; and further agrees not to dispose of any shares of NDC Stock he or
she, or it holds as of the date of such agreement prior to the close of business
on such record date (the "Voting Agreements").
(b) Concurrently with the execution of this Agreement, Purchaser and
each of the executives of NDC listed in Schedule 5.9 hereto (the "Key
Employees") have entered into Employment Agreements ("Employment Agreements")
which will be effective as of the Effective Time.
5.10 STOCKHOLDER REPRESENTATIVE
(a) In the event that the Merger is approved by the Stockholders,
effective upon, and by virtue of, such vote, and without further act of any
Stockholder, Xxx Xxxxxxxx shall be appointed as agent and attorney-in-fact (the
"Stockholder Representative") for each Stockholder and Option holder (other than
such NDC Stockholders who shall have perfected appraisal rights under the DGCL),
for and on behalf of the Stockholders (other than such NDC Stockholder who shall
have perfected appraisal rights under the DGCL) and Option holders, (i) to give
and receive notices and communications, (ii) to authorize delivery to Purchaser
of funds from the Escrow Fund pursuant to the Escrow Agreement and/or in
satisfaction of claims by Purchaser Indemnified Persons, (iii) to object to such
deliveries, (iv) to agree to, negotiate, enter into settlements and compromises
of, and demand arbitration and comply with orders of courts and awards of
arbitrators with respect to such claims, and (v) to take all actions necessary
or appropriate in the judgment of the Stockholder Representative for the
accomplishment of the foregoing. All actions of the Stockholder Representative
shall be in writing signed by the above-named individual, or his successors,
acting in his capacity as Stockholder Representative. The Stockholder
Representative may resign upon thirty (30) days prior written notice to
Purchaser. Such appointment may be changed by the Stockholders and Option
holders from time to time upon not less than thirty (30) days prior written
notice to Purchaser; provided, however, that the Stockholder Representative may
not be removed unless holders of at least a majority in interest in the Escrow
Fund agree to such removal and to the identity of the substituted
representative. Any vacancy in the position of Stockholder Representative may be
filled by approval of the holders of a majority in interest in the Escrow Fund.
No bond shall be required of the Stockholder Representative, and the Stockholder
Representative shall not receive any compensation for his or her services.
Notices or communications to or from the Stockholder Representative shall
constitute notice to or from each of the Stockholders and Optionees.
40
(b) The Stockholder Representative shall not be liable for any act done
or omitted hereunder as Stockholder Representative while acting in good faith in
the exercise of reasonable judgment, and any act done or omitted pursuant to the
advice of counsel shall be evidence of such good faith. Stockholders and Option
holders on whose behalf the Escrow Fund is placed in escrow shall severally, in
accordance with their Pro Rata Portion, and not jointly, indemnify the
Stockholder Representative and hold the Stockholder Representative harmless
against any loss, liability or expense incurred while the Stockholder
Representative is acting without gross negligence or bad faith on the part of
the Stockholder Representative and arising out of or in connection with the
acceptance or administration of the Stockholder Representative's duties
hereunder, including the reasonable fees and expenses of any legal counsel
retained by the Stockholder Representative ("Stockholder Representative
Expenses"). Following the expiration of the Escrow Period and the resolution of
all pending claims made by the Purchaser Indemnified Persons for Losses, the
Stockholder Representative shall have the right to recover the Stockholder
Representative Expenses from the remaining portion of the Escrow Fund prior to
any distribution to the Stockholders and Option holders and prior to any such
distribution, shall deliver to the Escrow Agent a certificate setting forth the
Stockholder Representative Expenses actually incurred. Upon receipt of such
certificate, the Escrow Agent shall pay such Stockholder Representative Expenses
to the Stockholder Representative.
(c) A decision, act, consent or instruction of the Stockholder
Representative shall constitute a decision of all Stockholders and Option
holders for whom a portion of the Escrow Fund is placed in escrow and shall be
final, binding and conclusive upon each of such Stockholders and Option holders,
and the Escrow Agent and Purchaser may rely upon any such decision, act, consent
or instruction of the Stockholder Representative as being the decision, act,
consent or instruction of each and every such Stockholder and Option holder. The
Escrow Agent and Purchaser are hereby relieved from any liability to any person
for any acts done by them in accordance with such decision, act, consent or
instruction of the Stockholder Representative.
(d) The Stockholder Representative may, in all questions arising in
connection with the acceptance or administration of the Stockholder
Representative's duties hereunder, rely on the advice of legal counsel, and for
anything done, omitted or suffered in good faith by the Stockholder
Representative based on such advice, the Stockholder Representative shall not be
liable to any Stockholder or Option holder. The Stockholder Representative
undertakes to perform such duties, and only such duties as are specifically set
forth hereunder, and no implied covenants or obligations shall be read into this
Agreement against the Stockholder Representative.
5.11 [INTENTIONALLY OMITTED]
5.12 OPTIONS
(a) Subject to the provisions of this Section 5.12 and Section 2.5,
each holder of an Option at the Effective Time shall be entitled to receive, per
Option, the Per Option Consideration in the manner provided in Section 2.5 upon
delivery to the Surviving Corporation of the Optionee Acknowledgement provided
for in Section 5.12(c) below.
(b) NDC will use its commercially reasonable efforts to obtain an
Optionee Acknowledgement executed by each holder of an Option prior to the
Closing Date.
41
(c) Prior to or as soon as reasonably practicable after the date of
this Agreement, NDC shall distribute to each holder of an Option a form of an
Election and Acknowledgement, the form and substance of which shall be
consistent with this Agreement and otherwise reasonably satisfactory to
Purchaser (an "Optionee Acknowledgement") between NDC and such Optionee pursuant
to which such Optionee shall agree, if it does not exercise such Option, that,
(i) all of such Optionee's outstanding Options shall be terminated immediately
prior to the Effective Time in consideration of such Optionee's right to
receive, subject to Section 2.5, per Option, the Per Option Consideration in
accordance with this Agreement; (ii) in the event that this Agreement is
terminated for any reason, all such Optionee's outstanding Options (whether
in-the-money or not) shall be deemed to remain in full force and effect; (iii)
in accordance with Section 5.10, Xxx Xxxxxxxx shall be appointed as the
Stockholder Representative; and (iv) such Optionee is agreeing to the terms of
Article 8 hereof. No Optionee shall be entitled to receive a payment under this
Agreement in respect of any Option unless such Optionee shall have previously
executed and delivered to NDC and Purchaser an Optionee Acknowledgement.
(d) This clause will confirm that WGT and Merger Sub have notified NDC
that they do not desire to assume the Options under the NDC Stock Plan (as
contemplated by Section 14(c) of the NDC Stock Plan).
ARTICLE 6
CONDITIONS PRECEDENT
6.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER, MERGER SUB AND NDC
The respective obligations of the parties to effect the Merger shall be
subject to satisfaction or waiver of the following conditions at or prior to the
Closing Date: (a) The approval of the Merger and the adoption of this Agreement
by the stockholders of NDC contemplated by Section 5.1 shall have been duly and
validly obtained in accordance with all applicable Legal Requirements;
(b) NDC shall have obtained the consents or waivers identified on
Schedule 6.1(b);
(c) None of the parties hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the Merger and the other transactions contemplated
by this Agreement;
(d) The Stockholder Representative, Purchaser and the Escrow Agent shall
have entered into the Escrow Agreement; and
(e) The approval of the conversion of all outstanding shares of NDC
Series A-1 Stock into NDC Common Stock shall have been duly and validly obtained
in accordance with all applicable Legal Requirements.
42
6.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF NDC
The obligations of NDC to effect the Merger shall be subject to
satisfaction of the following additional conditions at or prior to the Closing
Date unless waived by NDC pursuant to Section 7.3;
(a) The representations and warranties of Purchaser and Merger Sub set
forth in Article 4 hereof shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date (or on the date when made in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Agreement or consented to in writing by
NDC;
(b) Purchaser and Merger Sub shall have in all material respects
performed all obligations and complied with all covenants required by this
Agreement to be performed or complied with at or prior to the Closing Date; and
(c) Each of Purchaser and Merger Sub shall have delivered to NDC a
certificate, dated the Closing Date and signed by its respective Chairman, CEO
or Vice President to the effect that the conditions set forth in paragraphs (a)
and (b) of this section have been satisfied.
6.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AND MERGER SUB
The respective obligations of Purchaser and Merger Sub to effect the Merger
shall be subject to satisfaction of the following additional conditions at or
prior to the Closing Date unless waived by Purchaser pursuant to Section 7.3:
(a) The representations and warranties of NDC set forth in Article 3
hereof shall be true and correct in all material respects as of the Closing Date
as though made on and as of the Closing Date (or on the date when made in the
case of any representation and warranty which specifically relates to an earlier
date) , except as affected by the transactions contemplated by this Agreement or
consented to in writing by Purchaser; provided, however, that the condition
contained in this paragraph (a) shall be deemed to be satisfied unless the
failure of such representations and warranties to be so true and correct
constitute, individually or in the aggregate, a Material Adverse Effect on
Purchaser;
(b) NDC shall have in all material respects performed all obligations
and complied with all covenants required by this Agreement to be performed or
complied with at or prior to the Closing Date;
(c) NDC shall not have, since the date of this Agreement, suffered any
business interruption, damage to or destruction of its properties, or other
incident, occurrence, or event that, individually or in the aggregate, has had
or would reasonably be expected to have a Material Adverse Effect;
(d) NDC shall have delivered to Purchaser and Merger Sub a certificate,
dated the Closing Date and signed by each of its Chief Executive Officer and
Chief Business Officer to the effect that the conditions set forth in paragraphs
(a), (b) and (c) of this section have been satisfied;
43
(e) This Agreement and the transactions contemplated hereby shall have
been approved by holder of 90% of the outstanding shares of capital stock of
NDC; and
(f) The Key Employees shall have executed and delivered the Employment
Agreements to Purchaser.
ARTICLE 7
TERMINATION, WAIVER AND AMENDMENT
7.1 TERMINATION
This Agreement may be terminated, either before or after approval by the
Stockholders of NDC:
(a) At any time on or prior to the Effective Time, by the mutual
consent in writing of the parties hereto;
(b) At any time on or prior to the Closing Date, by Purchaser in
writing if NDC has, or by NDC in writing if Purchaser or Merger Sub has, in any
material respect, breached (i) any covenant or agreement contained herein or in
the Plan of Merger or (ii) any representation or warranty contained herein, and
in either case (x) such breach has not been cured within 10 days after the date
on which written notice of such breach is given to the party committing such
breach and (y) such breach would entitle the non-breaching party not to
consummate the transactions contemplated hereby under Article 6 hereof;
(c) At any time, by any party hereto in writing, if any Governmental
Entity of competent jurisdiction shall have issued a final, nonappealable order
enjoining or otherwise prohibiting the Merger;
(d) At any time, by any party hereto in writing, if the Stockholders of
NDC do not approve the transactions contemplated herein upon a vote held at the
NDC Stockholders Meeting duly called for that purpose or any adjournment
thereof; or
(e) By any party hereto in writing, if the Closing Date has not
occurred by the close of business on March 16, 2004 unless the failure of the
Closing to occur by such date shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
set forth herein but, in any event, by any party hereto on or after March 17,
2004.
7.2 EFFECT OF TERMINATION
In the event this Agreement is terminated pursuant to Section 7.1, this
Agreement and the plan of merger provided for in Article 2 shall become void and
have no effect, except that (i) the provisions relating to confidentiality and
expenses set forth in Sections 5.4 and 9.1, respectively, shall survive any such
termination and (ii) a termination pursuant to Section 7.1(b)(i) or (b)(ii)
shall not relieve the breaching party from liability for an uncured willful
breach of such covenant or agreement or representation or warranty giving rise
to such termination.
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7.3 WAIVER
Except where not permitted by applicable Legal Requirements, Purchaser and
NDC, respectively, by written instrument signed by an executive officer of such
party, may at any time (whether before or after approval of this Agreement by
the Stockholders of Merger Sub and NDC) extend the time for the performance of
any of the obligations or other acts of NDC, on the one hand, or Purchaser or
Merger Sub, on the other hand, and may waive (i) any inaccuracies of such
parties in the representations or warranties contained in this Agreement or any
document delivered pursuant hereto or thereto, (ii) compliance with any of the
covenants, undertakings or agreements of such parties, or satisfaction of any of
the conditions precedent to its obligations, contained herein or (iii) the
performance by such parties of any of its obligations set out herein or therein;
provided, however, that no such waiver, or amendment or supplement contemplated
by Section 7.4, executed after adoption of this Agreement and approval of the
Merger by the Stockholders of NDC shall, without the further approval thereof,
change the amount or kind of Merger Consideration or the indemnification
obligations of the Stockholders and Option holders pursuant to Article 8.
7.4 AMENDMENT OR SUPPLEMENT
This Agreement may be amended or supplemented at any time only by mutual
agreement of the parties hereto. Any such amendment or supplement must be in
writing and approved by their respective Boards of Directors and/or officers
authorized thereby and shall be subject to the proviso in Section 7.3.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION BY STOCKHOLDERS
Subject to the limits set forth in this Article 8, the Stockholders and
holders of Options shall severally in accordance with their Pro Rata Portion (as
defined below), and not jointly, indemnify, defend and hold Purchaser and its
Affiliates and each of their respective stockholders, partners, affiliates,
officers, directors, employees, agents, successors and assigns (Purchaser and
such persons are collectively hereinafter referred to as "Purchaser Indemnified
Persons"), harmless from and against any and all losses, liabilities, damages,
claims, diminution in value, expenses or deficiencies (including but not limited
to interest, penalties, fines, judgments, settlements, costs of preparation and
investigation, costs incurred in enforcing this indemnity and reasonable
attorneys' fees and expenses) (collectively, "Losses") that Purchaser
Indemnified Persons may suffer, sustain, incur or become subject to arising out
of or due to: (i) any inaccuracy of any representation of NDC or the Stockholder
Representative in this Agreement or in the NDC Disclosure Schedule and in any
certificate delivered pursuant to the Escrow Agreement; (ii) the breach of any
warranty of NDC or the Stockholder Representative in this Agreement or the NDC
Disclosure Schedule and in any certificate delivered pursuant to the Escrow
Agreement; (iii) the non-fulfillment of any covenant, agreement or other
obligation of NDC under this Agreement; and (iv) the indemnification provisions
contained in the NDC/Asante Letter. A Stockholder's or Option holder's "Pro Rata
Portion" shall be equal to the quotient obtained by dividing (x) the sum of the
amount payable to such Stockholder pursuant to Section 2.5.2(a) of this
Agreement plus the amount payable to such Option holder pursuant to Section
2.5.2(b) of this Agreement (which amount shall include the amount of any Option
Withholding attributable to such Option) by (y) the Aggregate Payment Amount.
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8.2 INDEMNIFICATION BY PURCHASER
Subject to the limits set forth in this Article 8, Purchaser agrees to
indemnify, defend and hold NDC, the Stockholders, the Optionees and each of
their respective Affiliates, successors and permitted assigns (NDC, the
Stockholders, the Optionees and such persons are hereinafter collectively
referred to as "Stockholder Indemnified Persons"), harmless from and against any
and all Losses that the Stockholder Indemnified Persons may suffer, sustain,
incur or become subject to arising out of or due to: (a) any inaccuracy of any
representation of Purchaser and Merger Sub in this Agreement, (b) the breach of
any warranty of Purchaser or Merger Sub in this Agreement and (c) the
non-fulfillment of any covenant, undertaking, agreement or other obligation of
Purchaser or Merger Sub under this Agreement not otherwise expressly waived in
writing by NDC; provided, however, that (a) Purchaser's maximum total liability
under this Section 8.2 shall not exceed $4,500,000, and (b) except with respect
to claims made pursuant to Section 5.8, no Stockholder Indemnified Person shall
have any recourse to Purchaser or any Purchaser Indemnified Person for any claim
for defense, indemnification or otherwise pursuant to this Agreement other than
pursuant to this Section 8.2.
8.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; SURVIVAL OF
INDEMNIFICATION; LIMITATIONS
8.3.1 Survival of Representations and Warranties. The representations
and warranties of the NDC contained in this Agreement or in any document
delivered pursuant hereto shall survive the Effective Time and any investigation
at any time made by or on behalf of any other Party and shall remain in full
force and effect thereafter as provided in this Article 8.
The representations and warranties of Purchaser and Merger Sub
contained in this Agreement shall expire as of the Closing and be of no further
force and effect.
8.3.2 Survival of Indemnification
(a) The right of Purchaser Indemnified Persons to indemnity in
accordance with the provisions of Sections 8.1 shall survive the Effective Time
and any investigation at any time made by or on behalf of any other party and
shall remain in full force and effect thereafter until the first anniversary of
the Effective Time, and shall remain in effect with respect to any claims,
notice of which shall have been given on or prior to such first anniversary in
accordance with Section 8.4.
(b) Stockholder Indemnified Persons' right to indemnity in accordance
with the provisions of Section 8.2 shall survive the termination of this
Agreement for a period of one (1) year, and shall remain in effect with respect
to any claims, notice of which shall have been given on or prior to the
anniversary of such one year period.
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8.3.3 Limitations on Amount
(a) No Indemnitor shall be entitled to any recovery from any Indemnitee
under the provisions of clauses (i) and (ii) of Section 8.1 or under Section 8.2
unless and until the amount of such Losses suffered, sustained, or incurred by
the asserting party, or to which such party becomes subject, by reason of
inaccuracy, breach or other basis of indemnification thereunder, shall exceed
$250,000 calculated on a cumulative basis and not per item basis (the
"Deductible"), at which point the indemnifying party shall be liable only for
amounts in excess of the Deductible; provided, however, that such Deductible
shall not apply with respect to claims for indemnification hereunder resulting
from Purchaser's (or the Surviving Corporation's) breach of the covenants set
forth in Section 5.8.
(b) The provisions of Section 8.3.3(a) shall not apply to claims by
Purchaser Indemnified Persons under clauses (iii) or (iv) of Section 8.1.
(i) The maximum aggregate amount of Losses for which the
Stockholders and Optionees shall be required to indemnify the Purchaser
Indemnified Persons under this Article 8 shall be limited to such Stockholder's
or Option holder's Pro Rata Portion of the Escrow Fund.
8.4 NOTICE AND OPPORTUNITY TO DEFEND; DISPUTE RESOLUTION
(a) If there occurs an event which any Purchaser Indemnified Person or
any Stockholder Indemnified Person, as applicable, asserts is an indemnifiable
event pursuant to Sections 8.1, 8.2 or 8.5, the Person seeking indemnification
(the "Indemnitee") shall notify the Person obligated to provide indemnification
(the "Indemnitor") promptly. If such event involves a claim or Loss by a Person
other than a Purchaser Indemnified Person or a Stockholder Indemnified Person (a
"Third Party Claim"), the Indemnitee shall give the Indemnitor written notice of
such claim specifying the amount thereof, if any, or the commencement of such
action or proceeding. Delay or failure to so notify the Indemnitor shall only
relieve the Indemnitor of its obligations to the extent, if at all, that it is
prejudiced by reasons of such delay or failure. The Indemnitor shall have a
period of 30 calendar days following the delivery of such written notice with
which to respond thereto. If the Indemnitor assumes the defense of the matter
within such 30-day period, then the Indemnitor shall be obligated to compromise
or defend, at its own expense and by counsel chosen by the Indemnitor, such
matter, and the Indemnitor shall provide the Indemnitee with such assurances as
may be reasonably required by the Indemnitee to assure that the Indemnitor will
assume and be responsible for the entire liability at issue, subject to any
limitations expressly set forth in this Article 8. If the Indemnitor fails to
assume the defense of such matter within said 30-day period, the Indemnitee
against which such matter has been asserted will (upon delivering notice to such
effect to the Indemnitor) have the right to undertake, the defense, compromise
or settlement of such matter on behalf of the Indemnitee. The Indemnitee and
Indemnitor, as applicable (the "Non-Controlling Party"), agree to cooperate
fully with the party controlling the defense of the matter (the "Controlling
Party") and such Controlling Party's counsel in the defense of the matter. Such
cooperation shall include, without limitation, providing reasonable access to
books, records or real property within the possession, custody or control of the
Non-Controlling Party and making the Non-Controlling Party's employees
reasonably available to the Non-Controlling Party in each case upon reasonable
prior notice and for the sole purpose of, and only to the extent reasonably
necessary to, conduct such defense. In any event, the Non-Controlling Party
shall have the right to participate at its own expense in the defense of such
asserted liability. Any compromise or settlement of such asserted liability by
the Indemnitor shall require the prior written consent of the Indemnitee, which
consent will not be unreasonably withheld.
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(b) Anything contained in this Section 8.4 to the contrary
notwithstanding, the Indemnitor shall not be entitled to assume the defense of
any Third Party Claim against a Purchaser Indemnified Person or Stockholder
Indemnified Person, in each case in the capacity as Indemnitee (the
"Indemnitee's Indemnified Person") and shall be liable for the reasonable fees
and expenses of counsel incurred by the Indemnitee in defending such Third Party
Claim, if the Third Party Claim seeks an order, injunction or other relief other
than money damages against the Indemnitee's Indemnified Person; provided,
however, that the Indemnitor shall have the right to participate in the defense
thereof and employ counsel, at Indemnitor's expense, separate from the counsel
employed by the Indemnitee's Indemnified Person, it being understood that the
Indemnitee's Indemnified Person shall control such defense.
(c) In the event any Indemnitee should have a claim against any
Indemnitor under Section 8.1, 8.2 or 8.5 that does not involve a Third Party
Claim being asserted against or sought to be collected from such Indemnitee, the
Indemnitee shall deliver notice of such claim (in reasonable detail) with
reasonable promptness to the Indemnitor. Delay or failure to so notify the
Indemnitor shall only relieve the Indemnitor of its obligations to the extent,
if at all, that it is prejudiced by reasons of such delay or failure. If the
Indemnitor does not notify the Indemnitee within 30 calendar days followings its
receipt of such notice that the Indemnitor disputes its liability to the
Indemnitee under Article 8, which dispute may be as to the validity of such
claim, the amount thereof or both ("Dispute Notice"), such claim specified by
the Indemnitee in its notice shall conclusively be deemed a liability of the
Indemnitor under Article 8 and the Indemnitee shall, subject to the limits set
forth in this Article 8, be entitled to recover from the Escrow Fund the amount
of such liability set forth by the Indemnitee in its notice and up to (and
including) the full amount of the Escrow Fund. If the Indemnitor has timely
disputed its liability with respect to such claim in a Dispute Notice as
provided above, the Indemnitor and the Indemnitee shall proceed in good faith to
negotiate a resolution of such dispute and, except as provided for in Section
8.7(d), if not resolved through negotiations within 60 calendar days after
delivery of a Dispute Notice, such dispute shall be resolved in accordance with
the provisions of Section 8.4(e) below.
(d) The terms and conditions of the Escrow Agreement shall govern any
claim by any Purchaser Indemnified Person against the Escrow Fund.
48
(e) If no agreement with respect to a dispute can be reached pursuant
to Section 8.4(c) above, either Indemnitee or the Indemnitor may, by written
notice to the other, demand arbitration of the matter unless the amount of the
Losses is at issue in pending litigation with a third party, in which event
arbitration shall not be commenced until such amount it ascertained or both
parties agree to arbitration; and in either such event the matter shall be
settled by arbitration conducted by three arbitrators. Within fifteen (15) days
after such written notice is sent, Indemnitee and Indemnitor shall select one
arbitrator mutually agreeable to both Indemnitee and Indemnitor; provided,
however, that if Indemnitee and Indemnitor are unable to agree on the identity
of such arbitrator following such fifteen (15) day period, then within fifteen
(15) days following the expiration of the initial fifteen (15) day period
Indemnitee (on the one hand) and the Indemnitor (on the other hand) shall each
select one arbitrator, and the two arbitrators so selected shall select a third
arbitrator. The decision of the arbitrator or arbitrators (as the case may be)
as to the validity and amount of any claim in such Dispute Note shall be binding
and conclusive upon the parties to this Agreement, and the Escrow Agent shall be
entitled to act in accordance with such decision and make or withhold payments
out of the Escrow Fund in accordance with such decision. Judgment upon any award
rendered by the arbitrator or arbitrators (as the case may be) may be entered in
any court having jurisdiction. Any such arbitration shall be held in (i) Santa
Xxxxx or San Mateo County, California if commenced by Purchaser or a Purchaser
Indemnified Person or (ii) in Buffalo, New York, if commenced by a Stockholder
Indemnified Person, under the commercial rules then in effect of the American
Arbitration Association. The non-prevailing party to an arbitrator shall pay its
own expenses, the fees of each arbitrator, the administrative fee of the
American Arbitrator Association, and the expenses, including, without
limitation, the reasonable attorneys' fees and costs, incurred by the prevailing
party to the arbitrator.
8.5 TAX MATTERS
The Stockholders shall pay and shall hold each Purchaser Indemnified Person
(without duplication) harmless from all transfer, documentary, sales, use,
registration and similar Taxes (including all applicable real estate transfer or
gains taxes and state transfer taxes, and related fees, including any penalties
interest and additions to Tax) attributable to the Merger ("Transfer Taxes"). On
or prior to the Closing, the Stockholders shall present Tax receipts or other
documents, satisfactory to Purchaser, demonstrating that all Transfer Taxes have
been paid in full.
8.6 REDUCTION FOR INSURANCE.
The amount which an Indemnitor is required to pay to, for, or on behalf of
any Indemnitee pursuant to this Article 8 shall be reduced (including, without
limitation, retroactively) by any insurance proceeds actually recovered by or on
behalf of the Indemnitee in reduction of the related indemnifiable loss (the
"Indemnifiable Loss"). Amounts required to be paid, as so reduced, are
hereinafter sometimes called an "Indemnity Payment." If an Indemnitee shall have
received, or if an Indemnitor shall have paid on its behalf, an Indemnity
Payment in respect of an Indemnifiable Loss and shall subsequently receive,
directly or indirectly, insurance proceeds in respect of such Indemnifiable
Loss, then such Indemnitee shall promptly pay to the Indemnitor the amount of
such insurance proceeds, or, if less, the amount of the Indemnity Payment. The
parties hereto agree that the foregoing shall not affect the subrogation rights
of any insurance companies making payments hereunder.
49
8.7 ADDITIONAL PROVISIONS
(a) The Escrow Fund shall be sole and exclusive remedy of Purchaser and
any Purchaser Indemnified Person with respect to any claims for indemnification
under this Article 8 and the Purchaser and each Purchaser Indemnified Person
shall have no further recourse against any Stockholder, Option holder or officer
of NDC with respect to any such claims.
(b) Nothing in Article 8 shall limit the liability of either party for
any breach of any representation, warranty or covenant if the Merger is not
consummated and, notwithstanding anything to the contrary herein, the existence
of this Article 8 and of the rights and restrictions set forth herein do not
limit any equitable remedies.
(c) No Stockholder shall have any right to contribution or
indemnification from the Surviving Corporation for any claim made by any
Purchaser Indemnified Party under this Agreement after the Effective Time.
8.8 TAX TREATMENT.
Indemnification and related payments made pursuant to this Article shall be
treated for Tax purposes as adjustments to the Merger Consideration.
ARTICLE 9
MISCELLANEOUS
9.1 EXPENSES
Whether or not the Merger is consummated, each party hereto shall bear and
pay all costs and expenses incurred by it in connection with this Agreement and
the transactions contemplated in this Agreement, including but not limited to
the fees and expenses of its own financial consultants, accountants and counsel.
9.2 ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereto, written or oral, other than
documents referred to herein and the Confidentiality Agreement, which shall
survive the execution and delivery of this Agreement, except as inconsistent
herewith. The terms and conditions of this Agreement and the plan of merger
provided for herein shall inure to the benefit of and be binding upon the
parties hereto and thereto and their respective successors. Except as set forth
in Section 5.8 (NDC Employees); and as otherwise specifically set forth herein,
nothing in this Agreement is intended to confer upon any party, other than the
parties hereto, and their respective successors, any rights, remedies,
obligations or liabilities.
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9.3 NO ASSIGNMENT
No party hereto may assign any of its rights or obligations under this
Agreement to any other Person.
9.4 NOTICES
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent and
received by facsimile transmission or overnight express or by registered or
certified mail, postage prepaid, at the following addresses (or at such other
address for a party as shall be specified in a notice given in accordance with
this Section 9.4):
If to NDC or, prior to the Closing, to the Stockholder Representative:
NanoGram Devices Corporation
00000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxx, President and CEO
Facsimile No: 000-000-0000
If to the Stockholder Representative after the Closing:
Xxx Xxxxxxxx
c/o Venrock Associates
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile No: 000-000-0000
With a required copy in either case to:
Xxxxxx Xxxxxx White & XxXxxxxxx LLP
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxx, Esq.
Facsimile No: 000-000-0000
If to Purchaser or Merger Sub:
Xxxxxx Xxxxxxxxxx Technologies, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Chief Financial Officer
Facsimile No: 000-000-0000
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With a required copy to:
Xxxxxxx Xxxx LLP
Xxx X&X Xxxxx, Xxxxx 0000
Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
and Xxxxxx X. Xxxxxx, Esq.
Facsimile No: 000-000-0000
9.5 CAPTIONS
The captions contained in this Agreement are for reference purposes only
and are not part of this Agreement.
9.6 COUNTERPARTS
This Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
9.7 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and entirely to be
performed within such jurisdiction, except to the extent that federal law may
apply or that the DGCL is mandatorily applicable to the internal corporate
affairs of the parties to the Merger.
9.8 CONSENT TO JURISDICTION
Each party to this Agreement irrevocably submits to the exclusive
jurisdiction of (a) the Supreme Court of the State of New York, Erie County, and
(b) the United States District Court for the Western District of New York, for
the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each party to this Agreement
agrees to commence any action, suit or proceeding relating hereto either in the
United States District Court for the Western District of New York or if such
suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, Erie
County. Each party further agrees that service of any process, summons, notice
or document by U.S. registered mail to such party's respective address set forth
above in Section 9.4 shall be effective service of process for any action, suit
or proceeding in New York with respect to any matters to which it has submitted
to jurisdiction in this Section 9.8. Each party to this Agreement irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) the Supreme Court of the State of New York, Erie
County, or (ii) the United States District Court for the Western District of New
York, and hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
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9.9 WAIVER OF JURY TRIAL
Each party to this Agreement waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any
litigation arising out of or relating to the Merger, this Agreement, or the
transactions contemplated hereby. Each party to this Agreement (i) certifies
that no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it
has been induced to enter into this Agreement by, among other things, the mutual
waivers and certifications set forth above in this Section.
9.10 INVALID PROVISIONS
It any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future law or order, and if the rights or
obligations of any party hereto under this Agreement will not be materially and
adversely affected thereby, (i) such provision will be fully severable, (ii)
this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, and (iii) the
remaining provision of this Agreement will remain in full force and effect and
will not be affected by illegal, invalid or unenforceable provision or by its
severance herefrom.
9.11 ENFORCEMENT OF AGREEMENT
The parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement was not performed in accordance
with its specified terms. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions and to enforce specifically the terms
and provisions hereof in any court of competent jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
(Remainder of this page left intentionally blank.)
53
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have caused this Agreement to be executed in counterparts by their duly
authorized officers, all as of the day and year first above written.
XXXXXX XXXXXXXXXX TECHNOLOGIES, INC.
By /s/ Xxxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxxx X. Xxxxxxxx
Executive Vice President and CFO
PLUTO ACQUISITION CORPORATION
By /s/ Xxxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxxx X. Xxxxxxxx
Executive Vice President
NANOGRAM DEVICES CORPORATION
By /s/ Xxxxx Xxxxxxx
------------------------------------
Xxxxx Xxxxxxx
President and CEO
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SCHEDULES AND EXHIBITS
Schedules
Schedule 1 - List of Principal Stockholders
Schedule 5.9 Key Employees
Schedule 6.1(b) Third Party Consents
Exhibits
Exhibit A - Certificate of Merger (Including
Amended/Restated
Certificate of Incorporation of Surviving
Corporation)
Exhibit B - Amended and Restated Bylaws of Surviving
Corporation
Exhibit C - Form of Escrow Agreement
Exhibit D - Form of Voting and Cooperation Agreement
55
