<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 19, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________
NATIONAL DATA CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 7389 58-0977458
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of incorporation) Classification Code Number) Identification No.)
NATIONAL DATA PLAZA
ATLANTA, GEORGIA 30329-2010
(404) 728-2000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
E. MICHAEL INGRAM
GENERAL COUNSEL AND SECRETARY
NATIONAL DATA CORPORATION
NATIONAL DATA PLAZA
ATLANTA, GEORGIA 30329-2010
(404) 728-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
JOEL J. HUGHEY WARREN HAUSER ROBERT A. SCHWED
MARK F. MCELREATH PHARMACEUTICAL MARKETING REBOUL, MACMURRAY, HEWITT,
ALSTON & BIRD LLP SERVICES INC. MAYNARD & KRISTOL
ONE ATLANTIC CENTER 45 ROCKEFELLER PLAZA 45 ROCKEFELLER PLAZA
1201 WEST PEACHTREE STREET SUITE 912 NEW YORK, NEW YORK 1011
ATLANTA, GEORGIA 30309-3424 NEW YORK, NEW YORK 10111 (212) 841-5700
(404) 881-7000 (212) 841-0610
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF EACH CLASS MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED (1) PER SHARE (2) OFFERING PRICE (2) FEE (2)
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Common Stock (including rights to purchase
shares of Common Stock or Series A Junior 1,059,829 shares $0.00 $0.00 $100
Participating Preferred Stock)
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(1) Represents the estimated number of shares of Common Stock, par value $.125
per share ("NDC Common Stock"), issuable by the Registrant upon consummation
of the purchase (the "Stock Purchase") of all of the Common Stock, par value
$.01 per share ("PMSI Database Common Stock") of PMSI Database Holdings,
Inc. ("PMSI Database") from Pharmaceutical Marketing Services Inc. ("PMSI"),
the sole stockholder of PMSI Database.
(2) Pursuant to Rules 457(f)(2) and 457(f)(3), the registration fee was computed
on the basis of the book value of the PMSI Database Common Stock as of June
30, 1997, of $5,665,000 less $6,500,000 payable by the Registrant to PMSI as
additional consideration for the Stock Purchase.
______________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 19, 1997
PROSPECTUS
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NATIONAL DATA CORPORATION
COMMON STOCK
(PAR VALUE $.125 PER SHARE)
_______________________
This Prospectus is being furnished to Pharmaceutical Marketing Services
Inc., a Delaware corporation ("PMSI"), as the sole holder of common stock, $.01
par value ("PMSI Database Common Stock"), of PMSI Database Holdings, Inc., a
Delaware corporation ("PMSI Database"), in connection with that certain Stock
Purchase Agreement, dated as of August 20, 1997 (the "Stock Purchase
Agreement"), by and among PMSI, PMSI Database and National Data Corporation, a
Delaware corporation ("NDC"), which provides for, among other things, the
purchase by NDC of all of the outstanding shares of PMSI Database Common Stock
(the "Stock Purchase"). See "Summary," "The Stock Purchase" and Annex A to this
Prospectus.
Upon consummation of the Stock Purchase, in consideration of the
conveyance of all the outstanding PMSI Database Common Stock by PMSI, NDC will
deliver to PMSI $6,500,000 in cash and 1,059,829 shares of NDC's common stock,
$.125 par value (the "NDC Common Stock"), subject to certain adjustments
discussed in the Stock Purchase Agreement and in this Prospectus.
This Prospectus constitutes a prospectus of NDC relating to the 1,059,829
shares of NDC Common Stock issuable to PMSI in the Stock Purchase. This
Prospectus is also intended for use by PMSI to offer and resell such shares of
NDC Common Stock. See "Certain Differences in the Rights of NDC And PMSI
Database Stockholders," "The Stock Purchase -- Resales of NDC Common Stock" and
"PMSI Database Holdings, Inc. -- Security Ownership of Directors, Executive
Officers and Principal Security Holders of PMSI Database."
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
INVESTORS IN EVALUATING AN INVESTMENT IN NDC COMMON STOCK, SEE "RISK FACTORS"
BEGINNING ON PAGE 15.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ________________, 1997.
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TABLE OF CONTENTS
<TABLE>
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<S> <C>
AVAILABLE INFORMATION................................................................................. 1
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE..................................................... 2
SUMMARY............................................................................................... 3
Parties to the Merger............................................................................... 3
The Stock Purchase.................................................................................. 4
Market Prices and Dividends......................................................................... 9
Comparison of Certain Unaudited Per Share Data...................................................... 11
Recent Developments................................................................................. 11
Selected Financial Data............................................................................. 12
SELECTED FINANCIAL DATA OF NDC (HISTORICAL)........................................................... 12
SELECTED FINANCIAL DATA OF PMSI DATABASE (HISTORICAL)................................................. 13
SELECTED PRO FORMA COMBINED FINANCIAL DATA OF NDC, PMSI DATABASE AND SOURCE........................... 14
RISK FACTORS.......................................................................................... 15
THE STOCK PURCHASE.................................................................................... 17
General............................................................................................. 17
Background of the Stock Purchase.................................................................... 17
The Purchase Price.................................................................................. 20
Indemnification..................................................................................... 21
Certain Federal Income Tax Consequences............................................................. 22
Interests of Certain Persons in the Stock Purchase.................................................. 22
Conditions to Consummation.......................................................................... 23
Regulatory Approvals................................................................................ 24
Amendment, Waiver, and Termination.................................................................. 24
Conduct of Business Pending the Stock Purchase...................................................... 25
Expenses and Fees................................................................................... 26
Accounting Treatment................................................................................ 27
Resales of NDC Common Stock......................................................................... 27
PMSI DATABASE HOLDINGS, INC........................................................................... 28
Business............................................................................................ 28
Selected Financial Information...................................................................... 28
Management's Discussion and Analysis of Financial Condition and Results of Operation................ 28
Security Ownership of Directors, Executive Officers and Principal Securityholders of PMSI Database.. 29
CERTAIN DIFFERENCES IN THE RIGHTS OF NDC AND PMSI DATABASE STOCKHOLDERS............................... 30
Authorized Capital Stock............................................................................ 30
Directors and Classes of Directors.................................................................. 31
Stockholder Meetings................................................................................ 32
Anti-Takeover Provisions............................................................................ 32
Stockholder Rights Plan............................................................................. 33
EXPERTS............................................................................................... 33
LEGAL MATTERS......................................................................................... 34
</TABLE>
ANNEXES:
ANNEX A -- Stock Purchase Agreement, dated as of August 20, 1997,
by and among NDC, PMSI and PMSI Database
ANNEX B -- Financial Statements of PMSI Database Holdings, Inc.
ANNEX C -- Pro Forma Combined Financial Data
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AVAILABLE INFORMATION
NDC is subject to the reporting and informational requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), and, in accordance therewith, files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy and information statements,
and other information filed by NDC with the Commission may be inspected and
copied at the principal office of the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and should be available at the
Commission's Regional Offices at 7 World Trade Center, New York, New York 10048,
and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates and also may be accessed electronically by means of
the Commission's home page on the Internet at http://www.sec.gov. In addition,
reports, proxy statements and other information concerning NDC may be inspected
at the offices of the New York Stock Exchange, Inc. ("NYSE"), 20 Broad Street,
New York, New York 10005.
This Prospectus constitutes a part of a Registration Statement on Form S-4
(together with any amendments thereto, the "Registration Statement"), which has
been filed by NDC with the Commission under the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities Act"). This
Prospectus omits certain information contained in the Registration Statement,
and reference is hereby made to the Registration Statement and to the exhibits
thereto for further information with respect to NDC and the securities to which
this Prospectus relates. Statements contained in this Prospectus concerning the
provisions of certain documents filed as exhibits to the Registration Statement
are necessarily brief descriptions thereof, and are not necessarily complete,
and each such statement is qualified in its entirety by reference to the full
text of such document.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM:
NATIONAL DATA CORPORATION, NATIONAL DATA PLAZA, ATLANTA, GEORGIA 30329-2010,
ATTN: CORPORATE SECRETARY, (404) 728-2855, AS TO NDC DOCUMENTS; AND FROM
PHARMACEUTICAL MARKETING SERVICES INC., 45 ROCKEFELLER PLAZA, SUITE 912, NEW
YORK, NEW YORK 10111, ATTN: CORPORATE SECRETARY, (212) 841-0610, AS TO PMSI
DATABASE AND PMSI DOCUMENTS.
All information contained herein with respect to NDC and its subsidiaries has
been supplied by NDC. All information with respect to PMSI, its subsidiaries
and PMSI Database has been supplied by PMSI including, but not limited to, "The
Stock Purchase -- Background of the Stock Purchase," "The Stock Purchase --
Interests of Certain Persons in the Stock Purchase" and "PMSI Database Holdings,
Inc."
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and, if given or
made, such information or representation should not be relied upon as having
been authorized by NDC, PMSI or PMSI Database. Neither the delivery of this
Prospectus nor any distribution of the securities to which this Prospectus
relates shall, under any circumstances, create any implication that there has
been no change in the affairs of NDC, PMSI, PMSI Database or any of their
respective subsidiaries since the date hereof or that the information contained
herein is correct as of any time subsequent to its date. This Prospectus does
not constitute an offer to sell, or a solicitation of an offer to purchase, any
securities other than the securities to which it relates or an offer to sell or
a solicitation of an offer to purchase the securities offered by this Prospectus
in any jurisdiction in which such an offer or solicitation is not lawful.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by NDC with the Commission (File No. 001-12392)
under Section 13(a) or 15(d) of the Exchange Act are hereby incorporated by
reference in this Prospectus:
NDC documents:
(i) NDC's Annual Report on Form 10-K for the fiscal year ended May 31,
1997;
(ii) the description of NDC Common Stock contained in NDC's Registration
Statement on Form 8-A as filed with the Commission on October 5,
1993; and
(iii) the description of NDC Series A Junior Participating Preferred Stock
contained in NDC's Registration Statement on Form 8-A as filed with
the Commission on January 22, 1991, as amended on October 5, 1993.
All documents filed by NDC pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the
Closing Date (hereinafter defined) are hereby incorporated by reference in this
Prospectus and shall be deemed a part hereof from the date of filing of such
document.
Any statement contained herein, in any amendment or supplement hereto or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of the Registration Statement
and this Prospectus to the extent that a statement contained herein, in any
amendment or supplement hereto or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of the
Registration Statement, this Prospectus, or any amendment or supplement hereto.
The information contained in this Prospectus should be read in conjunction with
the foregoing materials.
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SUMMARY
The following is a summary of certain information contained elsewhere in this
Prospectus. This summary is not intended to be a complete description of the
matters covered in this Prospectus and is subject to and qualified in its
entirety by reference to the more detailed information contained elsewhere in
this Prospectus, including the Annexes hereto, and in the documents incorporated
by reference in this Prospectus. The Stock Purchase Agreement is set forth in
Annex A to this Prospectus and reference is made thereto for a complete
description of the terms of the Stock Purchase. Stockholders are urged to read
carefully the entire Prospectus, including the Annexes. As used in this
Prospectus, the terms "NDC," "PMSI" and "PMSI Database" refer to such
corporations, respectively, and where the context requires, such corporations
and their respective subsidiaries.
PARTIES TO THE MERGER
NDC. NDC is a Delaware corporation that was incorporated in 1967. NDC is
a leading provider of high-volume information services and application systems
to the health care and payment systems markets. NDC serves a diverse customer
base comprised of almost 120,000 health care providers, 3,500 health care plans,
more than 750,000 merchant locations, 35,000 corporations and 400 banking
institutions, as well as federal and state government agencies. NDC markets its
services directly to merchants and health care providers and indirectly through
business alliances with a wide range of banks, insurance companies and
distributors.
NDC is one of the largest independent providers of health care information
services and integrated payment systems and services in the United States,
processing transactions at an annualized rate of approximately 3 billion at the
end of fiscal 1997. NDC provides electronic claims processing and adjudication
services, practice management systems, electronic data interchange ("EDI")
services, billing services, business office management services and clinical
data base information for pharmacies, dentists, physicians, hospitals, health
maintenance organizations, managed care companies, clinics and nursing homes, as
well as other health care providers. Management believes that NDC is the
largest independent processor of real-time health care transactions in the
country, and that it is well positioned to capitalize on the growing demand for
cost containment and improved patient care in the health care industry. By the
end of fiscal 1997, approximately 41% of NDC's total revenue was derived from
NDC's health care systems and services, which represent the fastest growing
portion of NDC's business.
NDC's Global Payment Systems LLC subsidiary ("Global Payment Systems" or
"Global") offers such services as authorization, equipment deployment, customer
support, back office processing, merchant accounting and card issuing services
on an outsourcing basis for banks and other participants in the payment systems
industry. Global also offers information reporting and EDI services, cash
management systems and services and electronic tax filing and payment services
to government and corporate customers. In recent years, NDC has expanded the
range of payment instruments services offered and distribution channels. NDC
recently introduced a purchase card processing program that provides electronic
payment capabilities for business-to-business purchasing transactions.
Approximately 29% of NDC's total revenue for fiscal 1997 was derived from
Global.
The Integrated Payment Systems business unit provides a broad range of
payment acceptance services primarily in partnership with banks. Under its Bank
Alliance Program, as well as through other distribution channels, it adds sales,
marketing and risk management services to the range of services provided by
Global Payment Systems. NDC's Integrated Payment Systems unit accounted for
approximately 30% of NDC's total revenue for fiscal 1997.
For the year ended May 31, 1997, NDC reported total revenues of $433.9
million and net income of $38.8 million. As of May 31, 1997, NDC had total
consolidated assets of $521.7 million and consolidated stockholders' equity of
$277.5 million.
NDC's principal executive offices are located at National Data Plaza,
Atlanta, Georgia 30329-2010, and its telephone number is (404) 728-2000. For
additional information regarding NDC and its business, see "Available
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Information," "Incorporation of Certain Information By Reference," "--Market
Prices and Dividends," "--Comparison of Certain Unaudited Per Share Data," and
"--Selected Financial Data."
PMSI DATABASE. PMSI Database, a Delaware corporation, was formed as a
holding company by PMSI on June 24, 1997. To date, PMSI Database has not
conducted any business but does hold the assets contributed to it by PMSI. These
assets are comprised of (i) PMSI's minority interest in a United States joint
venture ("Source US") with Source Informatics Inc., a Delaware Corporation
("Source"), to jointly offer a range of services generated from a database of
prescription data collected by Source from retail and mail order pharmacies in
the United States (the "Alpha Database"), and (ii) PMSI's Over-the-Counter
Physician Database business (the "OTC Business").
PMSI Database's principal executive offices are located at 45 Rockefeller
Plaza, Suite 912, New York, New York 10111, and its telephone number is (212)
841-0610. For additional information regarding PMSI Database and its business,
see "--Comparison of Certain Unaudited Per Share Data," "--Selected Financial
Data" and "PMSI Database Holdings, Inc."
As a condition to the consummation of the Stock Purchase, prior to the
Closing Date (hereinafter defined), pursuant to that certain Securities Transfer
Agreement (the "Source Divestiture Agreement") between PMSI and Source, Source
shall convey to PMSI: (i) Source's business operating in Europe as of August 20,
1997 ("Source Europe"); (ii) all of the shares of PMSI held by Source or any
subsidiary of Source; and (iii) all of the stock of those subsidiaries of Source
conducting Source Europe business.
THE STOCK PURCHASE
GENERAL. The Stock Purchase Agreement provides that NDC will acquire from
PMSI all of the outstanding shares of PMSI Database Common Stock for cash and
shares of NDC Common Stock. Pursuant to the NDC Rights Agreement (hereinafter
defined), each share of NDC Common Stock issued in connection with the Stock
Purchase shall be accompanied by an NDC Right (hereinafter defined). If the
Stock Purchase Agreement is adopted by the stockholders of PMSI, all required
governmental and other consents and approvals are obtained, and all of the other
conditions to the obligations of the parties to consummate the Stock Purchase
are either satisfied or waived (as permitted), the Stock Purchase will be
consummated. A copy of the Stock Purchase Agreement is set forth in Annex A to
this Prospectus.
Simultaneously with and as a condition to the consummation of the Stock
Purchase, NDC will consummate the merger of one of its subsidiaries with and
into Source resulting in Source becoming a wholly-owned subsidiary of NDC (the
"Merger"), pursuant to that certain Agreement and Plan of Merger (the "Source
Merger Agreement"), dated as of August 20, 1997, by and among NDC, Source, and
Dunkirk, Inc., a Delaware corporation and a wholly-owned subsidiary of NDC
formed for the purpose of accomplishing the Merger. If the Source Merger
Agreement is adopted by the stockholders of Source at the special meeting called
therefore, all required governmental and other consents and approvals obtained,
and all of the other conditions to the obligations to the parties to consummate
the Source Merger Agreement are either satisfied or waived (as permitted), the
transactions contemplated by the Source Merger Agreement will be consummated.
PURCHASE PRICE. The Stock Purchase Agreement provides that, subject to a
working capital adjustment (discussed below), as consideration for the purchase
by NDC of all of the outstanding shares of PMSI Database Common Stock, PMSI
shall receive: (i) $6,500,000 (the "Cash Amount"); and (ii) 1,059,829 shares of
NDC Common Stock (the "Base Amount" and, together with the Cash Amount, the
"Purchase Price").
BASE AMOUNT ADJUSTMENT. If, at the close of trading on the 10th trading date
immediately preceding the Closing Date (the "Determination Date"), the average
of the daily closing sales prices of NDC Common Stock as reported on the NYSE
Composite Transactions reporting system (as reported by The Wall Street Journal
or, if not reported thereby another authoritative source as chosen by NDC) for
the ten consecutive full trading days in which such shares are traded on the
NYSE ending at the close of trading on the Determination Date (the "Average
Closing
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Price"), shall be greater than $50.50 (the "Upper Threshold Price"), the Base
Amount shall be adjusted to equal that number of shares of NDC Common Stock
(rounded to the nearest whole share) obtained by dividing the product of the
Base Amount and the Upper Threshold Price by the Average Closing Price as of the
Determination Date. If the Average Closing Price on the Determination Date
shall be less than $37.25 (the "Lower Threshold Price"), PMSI shall have the
right to refuse to consummate the Stock Purchase, provided that PMSI shall have
given written notice of such refusal to NDC not later than two trading days
following the Determination Date. During the five-day period commencing with
the receipt of such notice, NDC shall have the option, in its sole discretion,
to elect to revise the Base Amount to equal that number of shares of NDC Common
Stock (rounded to the nearest whole share) obtained by dividing the product of
the Base Amount and the Lower Threshold Price by the Average Closing Price as of
the Determination Date. If NDC makes the election contemplated by the preceding
sentence within such five-day period, it shall give prompt written notice to
PMSI of such election and the revised Base Amount, whereupon the Stock Purchase
Agreement shall remain in effect in accordance with its terms (except that the
Base Amount shall have been so modified).
WORKING CAPITAL ADJUSTMENT. The Purchase Price shall be adjusted in the
manner described below:
Preliminary Balance Sheet. PMSI will cause to be prepared and delivered
to NDC a balance sheet for PMSI Database, as of the most recent month ending
more than ten days prior to the Closing Date (the "Preliminary Balance Sheet")
and a certificate based on such Preliminary Balance Sheet setting forth PMSI's
calculation of Working Capital, Current Assets and Current Liabilities
(hereinafter defined) as of such date ("Estimated Working Capital," "Estimated
Current Assets" and "Estimated Current Liabilities," respectively). The
Preliminary Balance Sheet shall fairly present the financial position of PMSI
Database as at the close of business on the date of the Preliminary Balance
Sheet in accordance with generally accepted accounting principles ("GAAP")
applied on a basis consistent with those used in the preparation of the balance
sheet of PMSI Database as of March 31, 1997 (the "PMSI Database Balance Sheet").
As used herein and in the Stock Purchase Agreement, "Working Capital" shall mean
the amount equal to Current Assets less Current Liabilities, "Current Assets"
shall mean the amount equal to the sum of cash, accounts receivable (net of any
reserves), inventories, prepaid expenses, work-in-process, and any other current
assets recognized by GAAP, and "Current Liabilities" shall mean the amount equal
to the sum of accounts payable, accrued current liabilities of PMSI Database
(other than the current portion of capitalized lease obligations), accrued sales
commissions (but only as to revenues realized and included in the PMSI Database
statements of income prior to such date), accrued bonuses (the amount equal to
that percentage of budgeted annual bonuses for PMSI Database's fiscal year 1998
equal to the ratio of the earnings of PMSI Database through the date of
calculation to budgeted earnings for the full fiscal year), accrued vacation
pay, current portion of long-term indebtedness, pre-billed revenues and any
other current liabilities recognized by GAAP.
NDC shall have five business days from the receipt of the Preliminary
Balance Sheet and the calculation of Estimated Working Capital, Estimated
Current Assets and Estimated Current Liabilities to review such statement and
calculations and following such review such statement and calculations shall be
final and binding.
If Estimated Current Assets are less than the product of 1.1659 and
Estimated Current Liabilities (such amount, the "Estimated Working Capital
Adjustment") as of the date of the Preliminary Balance Sheet, the Cash Amount
payable by NDC shall be decreased by the Estimated Working Capital Adjustment.
Closing Balance Sheet. As promptly as practicable, but not later than 30
days after the Closing Date, NDC will cause to be prepared and delivered to PMSI
a balance sheet for PMSI Database as of the Closing Date (the "Closing Balance
Sheet") setting forth NDC's calculation of Working Capital, Current Assets and
Current Liabilities, each as of the Closing Date ("Closing Working Capital,"
"Closing Current Assets" and "Closing Current Liabilities," respectively). The
Closing Balance Sheet shall fairly present the financial position of PMSI
Database as at the close of business on the Closing Date in accordance with GAAP
applied on a basis consistent with those used in the preparation of the PMSI
Database Balance Sheet.
The Closing Balance Sheet and the calculation of Closing Working Capital,
Closing Current Assets and Closing Current Liabilities shall be deemed final
upon the earliest of: (i) the date on which NDC and PMSI jointly agree that such
documents are final; (ii) the 30th day after delivery of such documents, if PMSI
has not delivered a
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notice to NDC expressing disagreement with such calculations and setting forth
its calculation of such amount(s); and (iii) the date on which all disputes
relating to such statements and calculations between the parties are resolved.
If PMSI shall deliver a notice of disagreement, PMSI and NDC, during the
30 days following such delivery, shall use their reasonable efforts to reach
agreement on the disputed items or amounts (the "Disputed Amounts"). If, during
such period, PMSI and NDC are unable to reach such agreement, they shall
promptly thereafter cause Price Waterhouse LLP (or if said firm shall be
unwilling to act thereunder, such other independent accountants of nationally
recognized standing reasonably satisfactory to NDC and PMSI), promptly to review
the Stock Purchase Agreement and any other documents necessary to calculate the
Disputed Amounts (including all work papers of the parties used in calculating
the Disputed Amounts) and such accountants shall then deliver a report to NDC
and PMSI setting forth their calculations which shall be final and binding.
"Final Current Assets" and "Final Current Liabilities" shall mean: (i)
NDC's calculation of Closing Current Assets and Closing Current Liabilities, if
no notice of disagreement with respect thereto is duly delivered by PMSI; or
(ii) if such a notice of disagreement is delivered, (a) as agreed by NDC and
PMSI or (b) in the absence of such agreement, as shown in the independent
accountant's calculation, subject to certain threshold limits.
If Final Current Assets are less than the product of 1.1659 and Final
Current Liabilities (the amount of such shortfall referred to as, the "Final
Working Capital Deficit"), PMSI shall pay to NDC in cash the amount of the Final
Working Capital Deficit as an adjustment to the Purchase Price. If Final
Current Assets are greater than the product of 1.1659 and Final Current
Liabilities (the amount of such surplus referred to as, the "Final Working
Capital Surplus"), NDC shall pay to PMSI in cash the amount of the Final Working
Capital Surplus as an adjustment to the Purchase Price.
Allocation with Source. NDC, PMSI and Source have agreed to the following
adjustment in order to properly allocate the working capital adjustment based on
their respective closing balance sheets. For purposes of such allocation,
"Total Current Assets" shall mean the amount equal to the sum of Final Current
Assets and "Final Current Assets" calculated pursuant to the Source Merger
Agreement; "Total Current Liabilities" shall mean the amount equal to the sum of
Final Current Liabilities and "Final Current Liabilities" calculated pursuant to
the Source Merger Agreement; "Current Asset Allocation Amount" shall mean the
product of: (1) Final Current Assets divided by Total Current Assets; and (2)
the Total Working Capital Deficit (hereinafter defined) or Total Working
Capital Surplus (hereinafter defined), as the case may be.
If Total Current Assets are less than the product of 0.9975 and Total
Current Liabilities (the "Total Working Capital Deficit"), then PMSI shall pay
to NDC the amount of the Current Asset Allocation Amount in cash as a further
adjustment to the Purchase Price. If Total Current Assets are greater than the
product of 0.9975 and Total Current Liabilities, (the "Total Working Capital
Surplus") then NDC shall pay to PMSI the amount of the Current Asset Allocation
Amount in cash as a further adjustment to the Purchase Price.
For purposes of any adjustments to the Purchase Price based on the Closing
Balance Sheet, the parties shall take into account any adjustment made to the
Purchase Price at closing pursuant to the Preliminary Balance Sheet.
INDEMNIFICATION. Subject to certain limitations described below, PMSI will
indemnify NDC and its officers, directors, stockholders, controlling persons,
affiliates and representatives (collectively, the "NDC Indemnities") from and
against all losses asserted against, or paid, suffered or incurred by, an NDC
Indemnitiee resulting from, based upon, or arising out of: (i) a breach of any
representation or warranty of PMSI or PMSI Database; (ii) a breach of or failure
to perform any covenant or agreement of PMSI or PMSI Database; (iii) any
liability which is not expressly assumed by NDC pursuant to the Stock Purchase
Agreement; and (iv) any liability relating to Source Europe which will be
acquired by PMSI pursuant to the Source Divestiture Agreement. Subject to
certain limitations described below, NDC will indemnify PMSI and its officers,
directors, stockholders, controlling persons, affiliates and representatives
(collectively, the "PMSI Indemnitees") from and against all losses asserted
against, or paid, suffered or incurred by, a PMSI Indemnitee resulting from,
based upon, or arising out of: (i) a
-6-
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<PAGE>
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breach of any representation or warranty of NDC; (ii) a breach of or failure to
perform any covenant or agreement of NDC; and (iii) any liability which was
expressly assumed by NDC pursuant to the Stock Purchase Agreement.
Neither PMSI nor NDC shall have any liability with respect to the matters
described above until the total of all losses with respect thereto exceeds
$30,000 (the "Threshold Amount") in which event PMSI or NDC, as the case may be,
shall be obligated to indemnify the other party for all such losses; provided,
however, that each individual claim of $10,000 or less shall not be
indemnifiable, and shall not be includable in determining whether the Threshold
Amount has been reached. In addition, the aggregate liability of PMSI and NDC
for indemnification of the other party for losses shall not exceed $1,000,000
(the "Maximum Amount").
Notwithstanding the foregoing, the Threshold Amount and Maximum Amount
limitations shall not apply to the indemnification rights of NDC with respect to
the liability of PMSI relating to, arising out of, or based upon any liability
which was not expressly assumed by NDC pursuant to the Stock Purchase Agreement
or any liability relating to Source Europe, and shall not apply to the
indemnification rights of PMSI relating to, arising out of or based upon any
liability expressly assumed by NDC pursuant to the Stock Purchase Agreement.
The liability of NDC and PMSI with respect to any indemnification claim shall
be reduced by the tax benefit actually realized and any insurance proceeds
received and shall include any tax detriment actually suffered, by the
indemnified party as a result of any losses upon which such indemnification
claim is based. PMSI and PMSI Database, on the one hand, and NDC, on the other
hand, will have no liability to the other party under or in connection with any
indemnification claim unless written notice asserting an indemnification claim
based thereon is given to the other party prior to August 31, 1999; provided,
however, that the liability of PMSI relating to, arising out of or based upon
any liability which was not expressly assumed by NDC pursuant to the Stock
Purchase Agreement or any liability relating to Source Europe, and the liability
of NDC relating to, arising out of or based upon any liability expressly assumed
by NDC pursuant to the Stock Purchase Agreement, may be asserted at any time.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The Stock Purchase is intended to
be a taxable sale of the common stock of PMSI Database to NDC pursuant to the
terms of the Stock Purchase Agreement. Both parties will make an election under
section 338(h)(10) of the Internal Revenue Code of 1986, as amended, (the
"Code") to treat the Stock Purchase as a deemed sale of assets by PMSI Database
to NDC, which will be followed by a deemed liquidation of PMSI Database and a
distribution to PMSI of the consideration received. See "The Stock Purchase--
Certain Federal Income Tax Consequences."
BECAUSE CERTAIN TAX CONSEQUENCES OF THE STOCK PURCHASE MAY VARY DEPENDING
UPON THE PARTICULAR CIRCUMSTANCES OF THE STOCKHOLDER AND OTHER FACTORS, PMSI IS
URGED TO CONSULT IT'S OWN TAX ADVISOR TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES OF THE STOCK PURCHASE (INCLUDING THE APPLICATION AND EFFECT OF
FOREIGN, STATE AND LOCAL INCOME AND OTHER TAX LAWS).
CONDITIONS TO CONSUMMATION. Consummation of the Merger is subject to various
conditions, including among other matters: (i) adoption of the Stock Purchase
Agreement and the Souce Divestiture Agreement by the requisite vote of PMSI
stockholders; (ii) receipt of all governmental and other consents and approvals
necessary to permit consummation of the Stock Purchase, including expiration or
termination of the statutory waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 ("HSR Act"); (iii) consummation of the
Merger; (iv) consummation of the transactions contemplated by the Source
Divestiture Agreement; (v) consummation of certain agreements related to the
Stock Purchase Agreement; (vi) receipt of releases from third parties for
certain agreements with respect to Source Europe to which Source is a party or
is otherwise obligated; and (vii) satisfaction of certain other traditional
conditions. The foregoing are the material conditions to the consummation of the
Stock Purchase. See "The Stock Purchase--Conditions to Consummation" and "--
Amendment, Waiver and Termination."
VOTE OF PMSI STOCKHOLDERS REQUIRED; RECOMMENDATION OF PMSI BOARD OF
DIRECTORS. The consummation of the Stock Purchase is conditioned upon adoption
of the Stock Purchase Agreement and consummation of the transactions
contemplated therein by the holders of a majority of the outstanding shares of
the common stock of
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PMSI present and entitled to vote at a special meeting of the stockholders of
PMSI (the "Special Meeting") called for such purpose. PMSI's Board of Directors
has fixed the close of business on September 30, 1997, as the record date for
determining the PMSI stockholders entitled to receive notice of and to vote at
the Special Meeting (the "Record Date"). As of the Record Date, PMSI's directors
and executive officers, and their affiliates, held approximately [_______]% of
the outstanding shares of common stock of PMSI entitled to vote at the Special
Meeting. As of the Record Date, NDC, its directors and executive officers, and
their affiliates, held no shares of the common stock of PMSI. Certain members of
the Board of Directors and certain executive officers of PMSI also serve as
directors and executive officers of Source. In addition, certain directors of
PMSI are stockholders of Source. The Board of Directors of PMSI, therefore,
formed a committee (the "Committee") comprised solely of directors who are
neither directors nor stockholders of Source and directed the Committee to
negotiate the terms of the Stock Purchase. The Committee recommended to the
entire Board of Directors of PMSI that it approve the Stock Purchase.
Certain stockholders of PMSI who are affiliates of Source have agreed that
they will vote their shares of PMSI at the Special Meeting in accordance with
the vote of the unaffiliated stockholders.
The Board of Directors of PMSI believes that the Stock Purchase is in the
best interests of PMSI and its stockholders and has unanimously approved the
Stock Purchase Agreement and the consummation of the transactions contemplated
therein. In considering the Stock Purchase, the Committee and the whole Board of
Directors of PMSI considered a number of factors, including the terms of the
Stock Purchase, the compatibility of the operations of PMSI Database and NDC and
the financial condition, results of operation and future prospects of PMSI
Database and NDC. See "The Stock Purchase--Reasons for the Stock Purchase."
REGULATORY APPROVALS. The consummation of the Stock Purchase is subject to
the expiration or termination of the statutory waiting period under the HSR Act.
See "The Stock Purchase--Regulatory Approvals."
TERMINATION. The Stock Purchase Agreement may be terminated, and the Stock
Purchase abandoned, at any time prior to the Closing Date by mutual consent of
the Boards of Directors of PMSI and NDC. In addition, the Stock Purchase
Agreement may be terminated, and the Stock Purchase abandoned, prior to the
Closing Date by either NDC or PMSI if: (i) the other party materially breaches
and does not timely cure any representation, warranty, covenant or other
agreement contained in the Stock Purchase Agreement; (ii) any consent or
approval of certain regulatory authorities is denied by final nonappealable
action of such authority or if any action taken by such authority is not
appealed within the time limit for appeal; (iii) the PMSI stockholders fail to
adopt the Stock Purchase Agreement and the transactions contemplated thereby at
the Special Meeting; (iv) any of the conditions precedent to the obligations of
the terminating party to consummate the Stock Purchase cannot be satisfied or
fulfilled by January 31, 1998; or (v) the Stock Purchase has not been
consummated by January 31, 1998. In addition, NDC may unilaterally terminate
the Stock Purchase Agreement if the Board of Directors of PMSI or PMSI Database
fail to reapprove or resolves not to affirm the Stock Purchase or recommends
entering into a transaction other than the Stock Purchase involving a stock
purchase, share exchange, consolidation or transfer of substantially all of PMSI
Database's assets. Furthermore, PMSI may unilaterally terminate the Stock
Purchase Agreement in the event that the Average Closing Price of the shares of
NDC Common Stock is less than the Lower Threshold Amount as of the Determination
Date, subject to NDC's right to revise the Base Amount based on the Lower
Threshold Amount. See "The Stock Purchase--Amendment, Waiver and Termination."
CONDUCT OF BUSINESS PENDING THE STOCK PURCHASE. PMSI and PMSI Database have
agreed in the Stock Purchase Agreement among other things, to operate the PMSI
Database business only in the ordinary course and to take no action that would
adversely affect any party's ability to perform its covenants and agreements
under the Stock Purchase Agreement. In addition, PMSI and PMSI Database have
agreed not to take certain actions relating to the operation of PMSI Database
pending consummation of the Stock Purchase without the prior written consent of
NDC, except as otherwise permitted by the Stock Purchase Agreement, including,
among other things: (i) amending its Certificate of Incorporation or Bylaws;
(ii) entering into, modifying, amending or terminating any material contract;
(iii) repurchasing, redeeming or otherwise acquiring any shares of PMSI Database
Common Stock; (iv) subject to certain exceptions, issuing any additional shares
of its capital stock or giving any person the right to acquire any such shares,
or issuing any long-term debt; (v) subject to certain exceptions, granting any
increase in compensation or benefits, or paying any bonus, to any of its
directors, officers or employees; or (vi) modifying or adopting any employee
benefit plans, including any employment contract. See "The Stock Purchase--
Conduct of Business Pending the Stock Purchase."
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<PAGE>
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EXPENSES AND FEES. The Stock Purchase Agreement provides that each party
shall be responsible for its own costs and expenses incurred in connection with
the negotiation and consummation of the transactions contemplated by the Stock
Purchase Agreement, except that each of NDC and PMSI shall pay one-half of the
filing fees payable in connection with the HSR Act filing, and NDC shall pay all
costs associated with the Registration Statement and this Prospectus and
printing costs incurred in connection with the Registration Statement and this
Prospectus.
If the Stock Purchase Agreement is terminated by NDC because the stockholders
of PMSI, or PMSI as the sole stockholder of PMSI Database, fail to approve the
Stock Purchase Agreement, then PMSI shall promptly pay NDC all the out-of-pocket
costs and expenses of NDC, including costs of counsel, investment brokers,
actuaries and accountants up to a maximum of $750,000.
ACCOUNTING TREATMENT. It is anticipated that the Stock Purchase will be
accounted for under the "purchase" method of accounting. See "The Stock
Purchase--Accounting Treatment."
RESALE OF NDC COMMON STOCK. The NDC Common Stock issued in connection with
the Stock Purchase will be freely transferable by the holders of such shares,
except for those holders who may be deemed to be "affiliates" (generally
including directors, certain executive officers and holders of 10% or more of
the outstanding capital stock) of PMSI, PMSI Database or NDC under applicable
federal securities laws.
As a condition precedent to consummation of the Stock Purchase, NDC and PMSI
will execute a registration rights agreement (the "Registration Rights
Agreement") in the form attached as an exhibit to the Stock Purchase Agreement,
giving PMSI various rights with regard to the registration of NDC Common Stock
owned by it. Under the Registration Rights Agreement, NDC will agree to use its
best efforts to make this Registration Statement available for use by PMSI for a
period of 90 days from the Closing Date to offer and sell the shares of NDC
Common Stock received by PMSI in the Stock Purchase.
The form of Registration Rights Agreement also provides for one demand
registration right to be granted to PMSI. This demand registration right will
permit PMSI to require NDC to effect one registration statement during a 12-
month period beginning on the Closing Date. See "The Stock Purchase--Resales of
NDC Common Stock."
This Registration Statement is intended for use by PMSI to offer and resell
the shares of NDC Common Stock received by it pursuant to the Stock Purchase
Agreement.
CLOSING DATE. The closing of the Stock Purchase shall take place on such
date as the parties shall mutually agree (the "Closing Date").
MARKET PRICES AND DIVIDENDS
NDC Common Stock is traded on the NYSE under the symbol "NDC." The following
table sets forth the high and low sale prices per share of NDC Common Stock on
the NYSE, and the dividends declared per share of NDC Common Stock with respect
to each quarterly period since June 1, 1996. There is no established trading
market for shares of PMSI Database Common Stock. No cash dividends have been
declared or paid on PMSI Database Common Stock.
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<PAGE>
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<TABLE>
<CAPTION>
SALE PRICES PER SHARE OF NDC DIVIDENDS DECLARED
COMMON STOCK PER SHARE OF
------------
NDC
HIGH LOW COMMON STOCK
---- --- ------------
<S> <C> <C> <C>
FISCAL 1996
Quarter ended August 31, 1995 $26.63 $ 20.50 $.075
Quarter ended November 30, 1995 28.00 22.00 .075
Quarter ended February 29, 1996 35.00 20.00 .075
Quarter ending May 31, 1996 40.25 29.88 .075
FISCAL 1997
Quarter ended August 31, 1996 44.50 33.75 .075
Quarter ended November 30, 1996 46.63 37.88 .075
Quarter ended February 29, 1997 47.50 35.00 .075
Quarter ending May 31, 1997 44.00 33.75 .075
FISCAL 1998
Quarter ended August 31, 1997 46.50 36.125 --
Quarter ending November 30, 1997
(through September 16, 1997) 40.25 36.8125 --
</TABLE>
On August 19, 1997, the last trading day prior to public announcement that
NDC and PMSI had executed the Stock Purchase Agreement, the last reported sale
prices per share of NDC Common Stock on the NYSE was $36.81. On September 16,
1997, the last reported sale prices per share of NDC Common Stock on the NYSE
was $38.875.
The Stock Purchase Agreement provides for the filing of a listing application
with the NYSE covering the shares of NDC Common Stock issuable pursuant to the
Stock Purchase. It is a condition to consummation of the Stock Purchase that NDC
use its reasonable efforts to ensure that such shares of NDC Common Stock be
authorized for listing on the NYSE effective upon official notice of issuance.
See "The Stock Purchase--Conditions to Consummation."
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COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA
The following summary presents selected comparative unaudited per share data
for NDC and PMSI Database on a historical basis and on a pro forma combined
basis assuming the Stock Purchase and the Merger had been effective during the
period presented, and on an equivalent pro forma combined basis assuming the
Stock Purchase and the Merger had been effective during the period presented.
The Stock Purchase is reflected under the purchase method of accounting and pro
forma data is derived accordingly. The information shown below should be read
in conjunction with the historical financial statements of NDC and PMSI
Database, including the respective notes thereto, appearing elsewhere or
incorporated by reference herein, and with the unaudited pro forma combined
financial information including the notes thereto, appearing elsewhere herein.
See "Available Information," "Incorporation of Certain Information by
Reference," "Annex B - Financial Statements of PMSI Database Holdings, Inc." and
"Annex C - Pro Forma Combined Financial Information."
<TABLE>
<CAPTION>
YEAR ENDED
MAY 31, 1997
------------
<S> <C>
NET INCOME PER SHARE:
NDC Historical................................ $ 1.38
PMSI Database Historical...................... --
Pro Forma Combined............................ 1.38
Equivalent Pro Forma(a)....................... 1.04
DIVIDENDS PER COMMON SHARE:
NDC Historical................................ 0.30
PMSI Database Historical...................... --
Pro Forma Combined............................ 0.30
Equivalent Pro Forma(a)....................... 0.23
STOCKHOLDER'S EQUITY (BOOK VALUE)
PER COMMON SHARE:
(AT PERIOD END)
NDC Historical................................ 10.45
PMSI Database Historical...................... --
Pro Forma Combined............................ 11.02
Equivalent Pro Forma(a)....................... 8.27
</TABLE>
- -------------
(a) Excludes the effect of the cash to be issued in conjunction with the Stock
Purchase and Merger.
RECENT DEVELOPMENTS
On September 17, 1997, NDC reported results for the first quarter of its
fiscal year ending May 31, 1998, including revenue of $120.1 million, pre-tax
income of $17.1 million, net income of $10.6 million and earnings per share of
$0.38.
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SELECTED FINANCIAL DATA
Set forth below is certain unaudited historical consolidated selected
financial data relating to NDC and PMSI Database and certain unaudited pro forma
combined selected financial data, giving effect to the Stock Purchase and the
Merger on a purchase accounting basis. This information should be read in
conjunction with the historical financial statements of NDC and PMSI Database,
including the respective notes thereto, and with the unaudited pro forma
combined financial information appearing elsewhere in this Prospectus or
incorporated by referenced herein. See "Available Information," "Incorporation
of Certain Information by Reference," "Annex B - Financial Statements of PMSI
Database Holdings, Inc." and "Annex C - Pro Forma Combined Financial
Information."
SELECTED FINANCIAL DATA OF NDC (HISTORICAL)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth selected historical financial data of NDC and
has been derived from and should be read in conjunction with NDC's Annual Report
on Form 10-K for the fiscal year ended May 31, 1997, which is incorporated by
reference herein. See "Available Information" and "Incorporation of Certain
Information by Reference."
<TABLE>
<CAPTION>
FISCAL YEARS ENDED MAY 31
-----------------------------------------------------------------
1997 1996 1995 1994 1993
--------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues....................................... $433,860 $325,803 $278,083 $237,659 $239,810
Operating income (loss)........................ 66,656 (11,834) 28,426 18,423 14,894
Income (loss) from
continuing operations........................ 38,753 (8,458) 18,421 12,226 8,045
PER SHARE DATA:
Income (loss) from
continuing operations........................ $ 1.38 $ (0.31) $ 0.79 $ 0.55 $ 0.37
Cash dividends................................. 0.30 0.30 0.30 0.29 0.29
Fully diluted weighted average
common and common equivalent
shares outstanding............................. 28,039 27,189 23,481 22,851 18,803
BALANCE SHEET DATA
(AT PERIOD END):
Total assets................................... $521,683 $368,039 $255,758 $214,864 $203,391
Long-term obligations.......................... 155,690 13,324 26,410 21,664 20,254
Total stockholders' equity..................... 277,470 233,299 164,651 134,723 124,001
</TABLE>
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SELECTED FINANCIAL DATA OF PMSI DATABASE (HISTORICAL)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth selected historical financial data of PMSI
Database more fully set forth in Annex B.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30
-----------------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues............................................ $25,009 $19,801 $18,010 $14,225 $14,675
Operating income.................................... 5,918 3,025 3,793 2,818 3,584
Income from continuing operations................... 3,529 1,789 2,344 2,211 1,895
PER SHARE DATA:
Income from continuing operations................... - - - - -
Cash dividends...................................... - - - - -
Weighted average common
shares outstanding................................ 100 100 100 100 100
BALANCE SHEET DATA
(AT PERIOD END):
Total assets........................................ $14,209 $8,213 $7,135 $6,795 $9,351
Long-term obligations............................... 776 189 7 29 53
Total stockholders' equity.......................... 5,665 2,136 2,247 3,403 1,192
</TABLE>
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SELECTED PRO FORMA COMBINED FINANCIAL DATA
OF NDC, PMSI DATABASE AND SOURCE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth selected pro forma combined financial
information as of and for the year ended May 31, 1997, giving effect to the
Merger and the consummation of the Stock Purchase using the purchase method of
accounting. The pro forma combined financial information represents the
historical operations of NDC, Source and PMSI Database adjusted for the effects
of the Stock Purchase and the Merger as well as the effects of the acquisition
of NDC Healthcare EDI Services, Inc. consummated in October 1996. This
information has also be adjusted to conform presentation format and accounting
policy to those of NDC. For comparability purposes, Source and PMSI Database's
twelve months ended June 30, 1997, are used in conjunction with the NDC twelve
months ended May 31, 1997. The weighted average common shares outstanding and
related per share data has been adjusted to reflect the maximum number of shares
of NDC Common Stock issuable in the Stock Purchase and the Merger. The pro forma
combined financial information is provided for informational purposes only and
is not necessarily indicative of actual results that would have been achieved
had the Stock Purchase and the Merger been consummated at the beginning of the
period presented or of future results. The selected pro forma combined financial
information is derived from the Pro Forma Combined Financial Information
attached to this Prospectus as Annex C. This information should be read in
conjunction with the historical financial statements of NDC and PMSI Database,
including the respective notes thereto, appearing elsewhere or incorporated by
reference herein.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
MAY 31, 1997
------------------
PRO FORMA COMBINED
------------------
<S> <C>
INCOME STATEMENT DATA:
Revenues................................. $523,605
Operating income......................... 73,364
Income from
continuing operations.................. 42,454
PER SHARE DATA:
Income from
continuing operations.................. $ 1.38
Cash dividends........................... 0.30
Weighted average common
shares outstanding..................... 30,654
BALANCE SHEET DATA
(AT MAY 31, 1997):
Total assets............................. $647,762
Long-term obligations.................... 305,134
Total stockholders' equity............... 321,450
</TABLE>
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<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following factors should be considered carefully in evaluating an investment in
NDC Common Stock.
COMPETITION
The markets for the applications systems and services offered by NDC are
highly competitive. Competition in the health care transaction processing and
payment systems markets affects NDC's ability to gain new customers and the
prices it can charge. The key competitive factors for NDC are functionality of
products, quality of service and price. Many of NDC's competitors have access to
significant capital and management, marketing and technological resources that
are equal to or greater than those of NDC, and there can be no assurance that
NDC will continue to be able to compete successfully with them. In addition, NDC
competes with businesses that internally perform data processing or other
services offered by NDC.
MARKETS AND APPLICATIONS
NDC's future growth and profitability will depend, in part, upon the further
expansion of the health care transaction processing and payment systems markets,
the emergence of other markets for electronic transaction processing services
and NDC's ability to penetrate such markets. Further expansion of these markets
is dependent upon the continued growth in the number of transactions available
to be processed and the continued automation of traditional paper-based
processing systems. NDCs ability to penetrate such markets will depend, in
turn, upon its ability to apply its existing technology, or to develop new
technology, to meet the particular service needs of each new market. There can
be no assurance that markets for NDC's services will continue to expand and
develop or that NDC will be successful in its efforts, or have adequate
financial, marketing and technological resources to penetrate new markets.
INTEGRATED PAYMENT SYSTEMS BUSINESS
NDC's merchant customers have liability for charges disputed by cardholders.
However, in the case of merchant fraud, or insolvency or bankruptcy of the
merchant, NDC may be liable for any of such charges disputed by cardholders.
NDC requires cash deposits and other types of collateral by certain merchants to
minimize any such contingent liability. Based on its historical loss
experience, NDC has established reserves for estimated losses on transactions
processed which management believes are adequate. There can be no assurance,
however, that such reserves for losses will be adequate. Any such losses in
excess of reserves could have a material adverse effect on the financial
condition and results of operations of NDC.
ACQUISITION RISKS
NDC completed five acquisitions in fiscal 1997, and intends to seek
additional acquisition opportunities and alliance relationships with other
businesses that will allow it to increase its market penetration, technological
capabilities, product offerings and distribution capabilities. There can be no
assurance that NDC will be able successfully to identify suitable acquisition
candidates, complete acquisitions, integrate acquired operations into its
existing operations or expand into new markets. There can also be no assurance
that future acquisitions will not have an adverse effect upon NDC's operating
results, particularly in the fiscal quarters immediately following the
completion of such acquisitions while the operations of the acquired business
are being integrated into NDC's operations. Once integrated, acquired
operations may not achieve levels of revenues, profitability or productivity
comparable with those achieved by NDC's existing operations, or otherwise
perform as expected. In addition, NDC competes for acquisition and expansion
opportunities with companies that have substantially greater resources.
-15-
<PAGE>
FORWARD-LOOKING STATEMENTS
When used in this Prospectus and elsewhere by management or NDC from time to
time, the words "believes," "anticipates," "expects" and similar expressions are
intended to identify forward-looking statements concerning NDC's operations,
economic performance and financial condition, including in particular, the
likelihood of NDC's success in developing and expanding its business. These
statements are based on a number of assumptions and estimates which are
inherently subject to significant uncertainties and contingencies, many of which
are beyond the control of NDC, and reflect future business decisions which are
subject to change. A variety of factors could cause actual results to differ
materially from those anticipated in NDC's forward-looking statements, some of
which include competition in the market for NDC's services, continued expansion
of NDC's processing and payment systems markets, successfully completing and
integrating acquisitions in existing and new markets and other risk factors that
are discussed from time to time in NDC's Commission reports and other filings.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date they are made. NDC undertakes no
obligations to publicly release the results of any revisions to such forward-
looking statements that may be made to reflect events or circumstances after the
date hereof, or thereof, as the case may be, or to reflect the occurrence of
unanticipated events.
-16-
<PAGE>
THE STOCK PURCHASE
The following information describes certain information pertaining to the
Stock Purchase. This description does not purport to be complete and is
qualified in its entirely by reference to the Annexes hereto, including the
Stock Purchase Agreement, a copy of which is set forth in Annex A to this
Prospectus and is incorporated herein by reference.
GENERAL
The Stock Purchase Agreement provides that NDC will acquire from PMSI all of
the outstanding shares of PMSI Database Common Stock for cash and shares of NDC
Common Stock. Pursuant to the NDC Rights Agreement, each share of NDC Common
Stock issued in connection with the Stock Purchase shall be accompanied by an
NDC Right. If the Stock Purchase Agreement is adopted by the stockholders of
PMSI at a Special Meeting, all required governmental and other consents and
approvals are obtained and all of the other conditions to the obligations of the
parties to consummate the Stock Purchase are either satisfied or waived (as
permitted), the Stock Purchase will be consummated. A copy of the Stock Purchase
Agreement is set forth in Annex A to this Prospectus.
Simultaneously with and as a condition to the consummation of the Stock
Purchase, NDC will consummate the merger of one of its subsidiaries with and
into Source with Source becoming a wholly-owned subsidiary of NDC, pursuant to
that certain Agreement and Plan of Merger, dated as of August 20, 1997, by and
among NDC, Source and Dunkirk, Inc. If the Source Merger Agreement is adopted
by the stockholders of Source at the special meeting called therefore, all
required governmental and other consents and approvals obtained, and all of the
other conditions to the obligations to the parties to consummate the Source
Merger Agreement are either satisfied or waived (as permitted), the transactions
contemplated by the Source Merger Agreement will be consummated.
BACKGROUND OF THE STOCK PURCHASE
In April 1996, PMSI's Board decided, following the conclusion of a strategic
reassessment, to concentrate PMSI's efforts on the development of its core
business as an information services provider to the pharmaceutical and
healthcare industries. As a consequence, PMSI announced that it would divest its
non-database segment. Since that date, PMSI has sold all businesses in this
segment, except its French point-of-sale business, which is presented in PMSI's
financial statements as an "asset held for sale."
In May 1996, to further its efforts towards achieving its business goals
while building stockholder value and to avoid any appearance of a conflict of
interest with Source, which PMSI perceived as having potentially conflicting
goals, PMSI formed the Committee, comprised solely of independent directors,
none of whom are directors or stockholders of Source. The Committee then
retained investment bankers to evaluate how PMSI could best achieve such goals.
Subsequently, PMSI and its investment bankers had preliminary discussions
regarding business combinations with several potentially interested parties.
In addition, during this period PMSI also reviewed the feasibility and
financial implications of acquiring Source, since PMSI had been informally
notified by the board of directors of Source that Source was looking for a way
of creating liquidity for its stockholders. From a business and strategic
perspective, the acquisition of Source by PMSI had certain attractive features
given the significant business relationships between the two parties. In 1991,
PMSI and Walsh, as the predecessor of Source, had entered into an agreement with
respect to the Alpha Database and in 1994 PMSI and Walsh had commenced the
Source US operating venture to more fully exploit the databases produced by
Source. More recently, PMSI and Source had also reached agreement in principle
for PMSI's profit participation in Source Europe's efforts to build and
commercialize similar databases in major European markets. However, after
considering the matter, the Committee concluded that the acquisition of Source
in a purchase transaction at the value placed on the business by the Source
board would be significantly dilutive to future earnings per share. Furthermore,
the Source Board of Directors was seeking liquidity that would have been
difficult for PMSI to achieve, the Committee therefore rejected the acquisition
of Source as a viable option.
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During the first half of calendar 1996, Source US and NDC, which has been a
significant data supplier to Source US since inception of the US operating
venture between Source and PMSI, commenced discussions with regard to creating a
new information service. During the course of these discussions, NDC management
suggested that, due to the complementary nature of the businesses, there be a
senior management meeting of all three companies to explore the potential for
further cooperation.
Commencing in November 1996, senior management from NDC, PMSI and Source met
several times to explore the potential synergies among their businesses. While
a possible transaction in which NDC would acquire all of PMSI and Source was
discussed, NDC did not submit an acquisition proposal to PMSI and Source. NDC
expressed the view that, since it had no significant operations outside the
United States, it believed that the greatest benefits would be derived from
cooperative ventures with Source US, the OTC Business and NDC's health care
transaction processing network, all based and operating solely in the United
States. In May 1997, NDC expressed an interest in acquiring these parts of the
PMSI and Source businesses. NDC's proposal contemplated the acquisition by NDC
of the OTC Business and all the outstanding capital stock of Source and that of
Source US, subject to Source's divestiture of its interest in Source Europe. The
Committee considered that, the proposal did present PMSI with the opportunity to
capitalize on the value of its minority participation in Source US and the value
of the OTC Business (which is the only PMSI operation located in the same
offices and utilizing significant common resources as Source) and to construct a
financially attractive transaction to acquire 100% of Source Europe to further
strengthen and expand PMSI's European businesses. Moreover, since no other
possible business combinations had progressed beyond the preliminary stage, the
Committee determined that NDC's proposal was the transaction most likely to
increase stockholder value in PMSI.
In June 1997, NDC, PMSI and Source commenced negotiations on a proposal for
PMSI to acquire 100% of Source Europe and for NDC to acquire 100% of Source US
(including PMSI's interest in Source US) together with the OTC Business, for a
total purchase price payable to PMSI and the stockholders of Source consisting
of $153 million, based on a value of $43.875 per share, payable 75% in
registered shares of NDC Common Stock and 25% in cash. The investment bankers
were directed to negotiate on PMSI's behalf both the allocation between PMSI
and Source of the total NDC consideration to be received in the Stock Purchase
and the Merger and the terms of the transfer from Source to PMSI of Source
Europe. Source was represented in these negotiations by its own investment
bankers.
Through July and August 1997, PMSI, Source and NDC continued to negotiate the
terms of the Stock Purchase and the Merger. On August 20, 1997, the Stock
Purchase Agreement, the Source Divestiture Agreement and the Source Merger
Agreement were executed.
RECOMMENDATION OF THE BOARD OF DIRECTORS; REASONS FOR THE STOCK PURCHASE
Over the last few years, Source US has been a major factor in the growth of
PMSI's information business. However, the Source US venture is governed by the
Alpha Database License Agreement (the "Alpha Database Agreement"), between
Source and PMSI, which is cancelable by Source in its complete discretion in
2011 at the end of the 20-year term. PMSI's minority position in Source US
allows it to recognize a fixed 26% of revenue and a percentage of total costs
that increases over time from 22.6% in 1995 to 26% in 2002. As a consequence,
overall operating profits of Source US recognized by PMSI will decline over the
next four years to 26% of Source US's total operating profits and stay at that
level for the remaining nine years of the Alpha Database Agreement.
In view of the desire of Source stockholders for liquidity, it became clear
to the Board of Directors of PMSI that there was a significant likelihood that,
in order to achieve such liquidity, Source would have to sell its majority
ownership of Source US, leaving PMSI, if it took no other action, as a minority
partner in a venture controlled by an unknown third party. The Board decided
that increasing long-term stockholder value was best served either by full
ownership of such databases or compete liquidation of its minority interest in
the operating venture. The Committee and the Board unanimously felt that
maintaining access to the Source US databases only through PMSI's minority
ownership of finite
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duration was not an effective way to increase PMSI stockholder value. Rather,
after investigating and rejecting on financial grounds the possibility of
purchasing Source, the Committee and the Board concluded that it
would best serve the interests of PMSI's stockholders to take the opportunity of
selling PMSI's interests in the venture at the same time as the sale by Source
of its majority interest and investing in wholly-owned healthcare database
businesses.
The Committee and the Board approved including the OTC Business in the sale
to NDC because this business is physically located in Phoenix, Arizona with, and
supported by, Source US and would be difficult to manage and develop as a stand-
alone operation. Moreover, NDC included it in its formal offer. The Committee
and the Board also concluded that the sale of Source US and the OTC Business
would have no material adverse impact on Scott-Levin, PMSI's other business in
the United States, since this research and consulting business is located
separately in Newtown, Pennsylvania. Scott-Levin has a substantially broader
client base than either Source US or the OTC Business. In addition, the
Committee and Board concluded that the sale of Source US and the OTC Business
would have no material adverse impact on PMSI's growing information services
business in Japan.
In June, 1997, PMSI and Source commenced negotiations on a proposal for PMSI
to acquire 100% of Source Europe. Concurrent with the Stock Purchase, and as a
condition of closing, PMSI will purchase Source Europe from Source. Source
Europe is a development stage business focused on building a range of services
similar to Source US, for clients in continental Europe. While PMSI is currently
developing software and databases to deliver prescriber-linked prescription
service and has delivered initial services to certain clients, the business will
need further funding to continue business development through cash flow self-
sufficiency. Source Europe may also require additional investment in the event
of problems with the development of the software and databases, delays in
bringing products to market or delays in obtaining government approval to launch
prescriber-based services in certain countries. Source Europe has incurred
operating losses since inception in 1994.
Prior to approving the acquisition of this venture, PMSI's Board requested a
detailed review of this opportunity for PMSI by management and independent
advisers. The review concluded that, although the transaction is not without
risks, the acquisition and the completion of the development of Source Europe
are in the overall best interests of PMSI given the substantial investment
already made by Source in the venture over the past three fiscal years, the
projected future returns and required costs of completing the project and the
availability to PMSI of some of the same experienced team that developed Source
US. To date the investments in Source Europe include researching the market
potential and entry strategies for Source Europe data services in Europe,
entering into contracts with prescription data vendors in five national markets,
developing the databases, gaining regulatory approval in certain markets and
initiating the procedure for regulatory approval in other markets for the
collection of prescriber level data and delivery of data products, building
infrastructure and entering into contracts with over 30 pharmaceutical companies
and obtaining sales commitments from others.
The pharmaceutical industry in the countries covered by Source Europe has a
market size in excess of the market in the United States and management of PMSI
believes that the European market for prescription data has the potential of
generating profits at least as high as those for the prescription information
services business in the United States. Moreover, the Board believes that this
European market is as yet essentially unrealized, offering Source Europe an
opportunity to participate in the development of the market and in its potential
gains. The Board believes that PMSI's already existing European presence and
infrastructure, along with the overall experience, background and industry
knowledge of PMSI's management and personnel place it and Source Europe in the
position to exploit this opportunity. Source Europe is already delivering
initial data products to clients and beginning to recognize revenue. The
Committee and the Board concluded that Source Europe would be complementary to
PMSI's existing European businesses and would thereby enhance PMSI's market
position in the future.
Source Europe's operating results have been significantly affected by the
expense of creating a management infrastructure to support an international
business, including the addition of staff and expansion of office facilities as
well as the cost of investment in technology and database development. With the
close of this transaction, PMSI will implement plans to combine Source Europe
with PMSI's European operations and pursue investment to increase PMSI's
revenues.
The Committee and the Board reviewed the effects on fiscal 1998 financial
results of the Stock Purchase, the acquisition of Source Europe and the
investment in Source Europe to complete its development including a reduction in
information services revenue and a dilution in PMSI's earnings per share.
However, the Committee and the Board also considered the cash and PMSI common
stock to be received from Source in the Stock Purchase should contribute
significantly to the funding requirements and that, over the longer term, the
revenue from Source Europe should at least replace the revenues that had been
derived from the OTC Business and Source US. Therefore, the Committee and the
Board concluded that the potential financial return from Source Europe
outweighed the risks in taking on a developmental stage of business of this
magnitude.
THE COMMITTEE, COMPRISED SOLELY OF INDEPENDENT DIRECTORS OF PMSI WHO ARE
NEITHER DIRECTORS NOR STOCKHOLDERS OF SOURCE, UNANIMOUSLY APPROVED THE STOCK
PURCHASE AGREEMENT AND THE SOURCE DIVESTITURE AGREEMENT AND RECOMMENDED TO THE
BOARD THAT THE STOCK PURCHASE AGREEMENT AND THE SOURCE DIVESTITURE AGREEMENT BE
APPROVED. THE BOARD HAS UNANIMOUSLY APPROVED THE STOCK PURCHASE AGREEMENT AND
THE SOURCE DIVESTITURE AGREEMENT AND RECOMMENDS THAT HOLDERS OF PMSI COMMON
STOCK VOTE "FOR" APPROVAL OF SUCH.
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THE PURCHASE PRICE
PURCHASE PRICE. The Stock Purchase Agreement provides that, subject to a
working capital adjustment (discussed below), as consideration for the purchase
by NDC of all of the outstanding shares of PMSI Database Common Stock, PMSI
shall receive: (i) $6,500,000; and (ii) 1,059,829 shares of NDC Common Stock.
BASE AMOUNT ADJUSTMENT. If, at the Determination Date, the Average Closing
Price shall be greater than the Upper Threshold Price, the Base Amount shall be
adjusted to equal that number of shares of NDC Common Stock (rounded to the
nearest whole share) obtained by dividing the product of the Base Amount and the
Upper Threshold Price by the Average Closing Price as of the Determination Date.
If the Average Closing Price on the Determination Date shall be less than the
Lower Threshold Price, PMSI shall have the right to refuse to consummate the
Stock Purchase, provided PMSI shall have given written notice of such refusal to
NDC not later than two trading days following the Determination Date. During
the five-day period commencing with the receipt of such notice, NDC shall have
the option, in its sole discretion, to elect to revise the Base Amount to equal
that number of shares of NDC Common Stock (rounded to the nearest whole share)
obtained by dividing the product of the Base Amount and the Lower Threshold
Price by the Average Closing Price as of the Determination Date. If NDC makes
the election contemplated by the preceding sentence within such five-day period,
it shall give prompt written notice to PMSI of such election and the revised
Base Amount, whereupon the Stock Purchase Agreement shall remain in effect in
accordance with its terms (except that the Base Amount shall have been so
modified).
WORKING CAPITAL ADJUSTMENT. The Purchase Price shall be further adjusted in
the manner described below:
Preliminary Balance Sheet. PMSI will cause to be prepared and delivered
to NDC the Preliminary Balance Sheet and a certificate based on such Preliminary
Balance Sheet setting forth PMSI's calculation of Estimated Working Capital,
Estimated Current Assets and Estimated Current Liabilities. The Preliminary
Balance Sheet shall fairly present the financial position of PMSI Database as at
the close of business on the date of the Preliminary Balance Sheet in accordance
with GAAP applied on a basis consistent with those used in the preparation of
the PMSI Database Balance Sheet.
NDC shall have five business days from the receipt of the Preliminary
Balance Sheet and the calculation of Estimated Working Capital, Estimated
Current Assets and Estimated Current Liabilities to review such statement and
calculations and following such review such statement and calculations shall be
final and binding.
If Estimated Current Assets are less than the product of 1.1659 and
Estimated Current Liabilities as of the date of the Preliminary Balance Sheet,
the Cash Amount payable by NDC shall be decreased by the Estimated Working
Capital Adjustment.
Closing Balance Sheet. As promptly as practicable, but not later than 30
days after the Closing Date, NDC will cause to be prepared and delivered to PMSI
the Closing Balance Sheet setting forth NDC's calculation of Closing Working
Capital, Closing Current Assets and Closing Current Liabilities. The Closing
Balance Sheet shall fairly present the financial position of PMSI Database as at
the close of business on the Closing Date in accordance with GAAP applied on a
basis consistent with those used in the preparation of the PMSI Database Balance
Sheet.
The Closing Balance Sheet and the calculation of Closing Working Capital,
Closing Current Assets and Closing Current Liabilities shall be deemed final
upon the earliest of: (i) the date on which NDC and PMSI jointly agree that such
documents are final; (ii) the 30th day after delivery of such documents, if PMSI
has not delivered a notice to NDC expressing disagreement with such calculations
and setting forth its calculation of such amount(s); and (iii) the date on which
all disputes relating to such statements and calculations between the parties
are resolved.
If PMSI shall deliver a notice of disagreement, PMSI and NDC shall, during
the 30 days following such delivery, use their reasonable efforts to reach
agreement on the Disputed Amounts. If, during such period, PMSI and NDC are
unable to reach such agreement, they shall promptly thereafter cause Price
Waterhouse LLP (or if
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said firm shall be unwilling to act thereunder, such other independent
accountants of nationally recognized standing reasonably satisfactory to NDC and
PMSI), promptly to review the Stock Purchase Agreement and any other documents
necessary to calculate the Disputed Amounts (including all work papers of the
parties used in calculating the Disputed Amounts) and such accountants shall
then deliver a report to NDC and PMSI setting forth their calculations which
shall be final and binding.
If Final Current Assets are less than the product of 1.1659 times Final
Current Liabilities, PMSI shall pay to NDC in cash the amount of the Final
Working Capital Deficit as an adjustment to the Purchase Price. If Final
Current Assets are greater than the product of 1.1659 times Final Current
Liabilities, NDC shall pay to PMSI in cash the amount of the Final Working
Capital Surplus as an adjustment to the Purchase Price.
Allocation with Source. NDC, PMSI and Source have agreed to the following
adjustment in order to properly allocate the working capital adjustment based on
their respective closing balance sheets. If Total Current Assets are less than
the product of 0.9975 and Total Current Liabilities, then PMSI shall pay to NDC
the amount of the Current Asset Allocation Amount in cash as a further
adjustment to the Purchase Price. If Total Current Assets are greater than the
product of 0.9975 and Total Current Liabilities, then NDC shall pay to PMSI the
amount of the Current Asset Allocation Amount in cash, as a further adjustment
to the Purchase Price.
For purposes of any adjustments to the Purchase Price based on the Closing
Balance Sheet, the parties shall take into account any adjustment made to the
Purchase Price at closing pursuant to the Preliminary Balance Sheet.
INDEMNIFICATION
Subject to certain limitations described below and in the Stock Purchase
Agreement, PMSI will indemnify NDC and its officers, directors, stockholders,
controlling persons, affiliates and representatives from and against all losses
asserted against, or paid, suffered or incurred by, an NDC Indemnitee resulting
from, based upon, or arising out of: (i) a breach or any representation or
warranty of PMSI or PMSI Database; (ii) a breach of or failure to perform any
covenant or agreement of PMSI or PMSI Database (except with respect to certain
contract terminations); (iii) any liability which is not expressly assumed by
NDC pursuant to the Stock Purchase Agreement; and (iv) any liability relating to
Source Europe which will be acquired by PMSI pursuant to the Source Divestiture
Agreement. Subject to certain limitations described below and in the Stock
Purchase Agreement, NDC will indemnify PMSI and its officers, directors,
stockholders, controlling persons, affiliates and representatives from and
against all losses asserted against, or paid, suffered or incurred by, a PMSI
Indemnitee resulting from, based upon, or arising out of: (i) a breach of any
representation or warranty of NDC; (ii) a breach of or failure to perform any
covenant or agreement of NDC; and (iii) any liability which was expressly
assumed by NDC pursuant to the Stock Purchase Agreement.
Neither PMSI nor NDC shall have any liability with respect to the matters
describe above until the total of all losses with respect thereto exceeds the
Threshold Amount in which event PMSI or NDC, as the case may be, shall be
obligated to indemnify for all such losses; provided, however, that each
individual claim of $10,000 or less shall not be indemnifiable, and shall not be
includable in determining whether the Threshold Amount has been reached. In
addition, the aggregate liability of PMSI and NDC for indemnification of the
other party for losses shall not exceed the Maximum Amount.
Notwithstanding the foregoing, the Threshold Amount and Maximum Amount
limitations shall not apply to the indemnification rights of NDC with respect to
the liability of PMSI relating to, arising out of, or based upon any liability
which was not expressly assumed by NDC pursuant to the Stock Purchase Agreement
or any liability relating to Source Europe, and shall not apply to the
indemnification rights of PMSI relating to, arising out of or based upon any
liability expressly assumed by NDC pursuant to the Stock Purchase Agreement.
The liability of NDC and PMSI with respect to any indemnification claim shall
be reduced by the tax benefit actually realized and any insurance proceeds
received, and shall include any tax detriment actually suffered by the
indemnified party as a result of any losses upon which such indemnification
claim is based. PMSI, on the one hand, and NDC, on the other hand, will have no
liability to the other party under or in connection with any indemnification
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claim unless written notice asserting an indemnification claim based thereon is
given to the other party prior to August 31, 1999; provided, however, the
liability of PMSI relating to, arising out of or based upon any liability which
was not expressly assumed by NDC pursuant to the Stock Purchase Agreement or any
liability relating to Source Europe, and the liability of NDC relating to,
arising out of or based upon any liability expressly assumed by NDC pursuant to
the Stock Purchase Agreement may be asserted at any time.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material federal income tax consequences
of the Stock Purchase. This discussion is based on the provisions of the Code,
the United States Department of the Treasury Regulations thereunder and rulings
and court decisions as of the date hereof, all of which are subject to change,
possibly retroactive. The discussion is included for general information
purposes only and applies only to PMSI. NDC and PMSI have not requested a ruling
from the Internal Revenue Service (the "Service") and neither party has obtained
a tax opinion from counsel.
The Stock Purchase is intended to be a taxable sale of the common stock of
PMSI Database to NDC pursuant to the terms of the Stock Purchase Agreement.
Both parties will make an election under section 338(h)(10) of the Code to treat
the Stock Purchase as a sale of assets by PMSI Database to NDC, which will be
followed by a liquidation of PMSI Database and a distribution to PMSI of the
consideration received.
INTERESTS OF CERTAIN PERSONS IN THE STOCK PURCHASE
Other than as described herein, no director or executive officer of NDC or
PMSI, and no associate of any such person, has any substantial interest, direct
or indirect, in the Stock Purchase.
Certain members of the Board of Directors of PMSI also serve as directors of
Source. In addition, certain directors of PMSI are stockholders of Source.
Handel E. Evans and Dennis M.J. Turner, directors and the Chairman of the
Board and the Chief Executive Officer, respectively, of PMSI, are also directors
and the Chairman of the Board and the Chief Executive Officer, respectively, of
Source. In addition, Patrick J. Welsh, a director of PMSI, is also a director
of Source and is a general partner of the general partner of a significant
stockholder of PMSI ("WCAS") and, along with certain of its affiliated entities,
the largest stockholder of Source.
At consummation of the Stock Purchase, Messrs. Evans and Turner are to each
receive aggregate annual bonuses from PMSI of $570,000. In determining these
bonuses, compensation committees of each of PMSI and Source considered the
successful completion of the transactions pursuant to the Stock Purchase and the
Source Divestiture Agreement. At consummation of the Stock Purchase, the
employment by Source of Messrs. Evans and Turner will be terminated and they
will each receive termination payments pursuant to their respective employment
agreements with Source aggregating $1.2 million and $880,000 respectively, after
which Mr. Evans will enter into an employment agreement with PMSI as its full-
time Chairman of the Board and Mr. Turner will enter into an employment
agreement with PMSI as its full-time Chief Executive Officer. In the event that
either Source or PMSI do not have sufficient cash available to consummate the
Stock Purchase and the Source Divestiture Agreement, including related expenses,
Messrs. Evans and Turner have agreed to receive partial payment of their
respective termination payments in the form of registered NDC Common Stock. In
addition, the annual bonuses of three other executives of PMSI and Source,
including Warren J. Hauser, Vice President and Secretary of PMSI, aggregating
$490,000, will reflect the successful completion of the Stock Purchase.
Mr. Evans and trusts for the benefit of his family beneficially own an
aggregate of 133,879 shares of PMSI common stock (representing approximately
1.0% of the shares of PMSI common stock outstanding and entitled to vote on the
Stock Purchase as of the Record Date) and options to purchase an additional
300,000 shares of PMSI common stock, 250,000 of which are currently exercisable.
Mr. Turner and trusts for the benefit of his family beneficially own an
aggregate of 134,384 shares of PMSI common stock (representing approximately
1.0% of the shares of PMSI common stock outstanding and entitled to vote on
the Stock Purchase as of the Record Date) and
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options to purchase an additional 300,000 shares of PMSI common stock, 250,000
of which are currently exercisable.
Messrs. Evans and Turner and trusts for the benefit of their respective
families currently own an aggregate of 247,586 and 242,584 shares,
respectively of Source common stock (representing approximately 3.6% and 3.5%,
respectively, of the outstanding capital stock of Source entitled to vote on the
Merger). In addition, Messrs. Evans and Turner own options to purchase 201,250
and 151,250 shares, respectively, of Source common stock, all of which are
currently exercisable or will become exercisable upon consummation of the
Merger.
Mr. Welsh owns 15,733 shares of PMSI common stock and 26,550 shares of Source
Common Stock. In addition, Mr. Welsh may be deemed to beneficially own an
aggregate of 746,315 shares of PMSI common stock (or approximately 5.6% of the
shares of PMSI common stock outstanding and entitled to vote on the Stock
Purchase as of the Record Date) and an aggregate of 2,544,147 shares of Source
common stock (or approximately 37.19% of the Source capital stock outstanding
and entitled to vote on the Merger) owned by WCAS and related entities. In
addition, Mr. Welsh owns options to purchase an aggregate of 24,000 shares of
PMSI common stock, 16,000 of which are currently exercisable, and options to
purchase an aggregate of 7,500 shares of Source common stock, all of which are
currently exercisable.
The Stock Purchase Agreement provides that, after the Closing Date, NDC will
either provide generally to officers and employees of PMSI working in the PMSI
Database business, employee benefits under employee benefit plans, on terms and
conditions that, when taken as a whole, are substantially similar to those
currently provided by NDC and its subsidiaries to their similarly situated
officers and employees. For purposes of participation and vesting and benefit
accrual (other than benefit accrual under retirement plan) under such employee
benefit plans, service with PMSI or its subsidiaries prior to the Closing Date
will be treated as service with NDC or its subsidiaries. Subject to certain
exceptions set forth in the Stock Purchase Agreement, NDC will honor all
employment, severance, consulting and other compensation contracts previously
disclosed to NDC between PMSI or any of its subsidiaries and any current or
former director, officer or employee, and all provisions for vested amounts
earned or accrued through the Closing Date under PMSI's benefit plans.
CONDITIONS TO CONSUMMATION
The obligations of PMSI, PMSI Database and NDC to consummate the Stock
Purchase are subject to the satisfaction or waiver (to the extent permitted) of
the following conditions: (i) the stockholders of PMSI shall have adopted the
Stock Purchase Agreement and the Source Divestiture Agreement and the
consummation of the transactions contemplated thereby by the requisite vote;
(ii) PMSI, as the sole stockholder of PMSI Database, shall have adopted the
Stock Purchase Agreement and the consummation of the transactions contemplated
thereby; (iii) the required regulatory approvals and clearances described under
"--Regulatory Approvals" shall have been received and shall be in full force and
effect with all waiting periods required by law having expired, and no such
regulatory approval shall be conditioned or restricted in a manner which would,
in the reasonable judgment of the Board of Directors of NDC, so materially
adversely affect the economic or business benefits of the transactions
contemplated by the Stock Purchase Agreement that had NDC known of such
condition it would not, in its reasonable judgment, have entered into the Stock
Purchase Agreement; (iv) each party shall have received any required consents of
third parties and no consent so obtained which is necessary to consummate the
transactions contemplated by the Stock Purchase Agreement shall be conditioned
or restricted in a manner which in the reasonable judgment of the Board of
Directors of NDC would so materially adversely impact the economic or business
assumptions of the Stock Purchase Agreement that, had such condition or
requirement been known, NDC would not, in its reasonable judgment have entered
into the Stock Purchase Agreement; (v) no court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law or order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, restricts or makes illegal
consummation of the transactions contemplated by the Stock Purchase Agreement;
(vi) the Registration Statement of which this Prospectus is a part shall have
been declared effective by the Commission and shall not be subject to a stop
order or any threatened stop order, and the shares of NDC Common Stock issuable
in connection with the Stock Purchase Agreement shall have been qualified,
registered or otherwise approved for exchange under the securities laws of the
various states in which such qualification,
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registration or approval is required; (vii) the shares of NDC Common Stock
issuable pursuant to the Stock Purchase Agreement shall have been approved for
listing on the NYSE, subject to effective notice of issuance; (viii) the
accuracy, as of the date of the Stock Purchase Agreement and as of the Closing
Date, of the representations and warranties of the other party as set forth in
the Stock Purchase Agreement; (ix) prior to the Closing Date, the other party
shall have performed in all material respects all of the agreements, covenants,
acts and undertakings to be performed by it pursuant to the Stock Purchase
Agreement; (x) each party shall have received customary closing documents,
including, without limitation, an opinion of the other party's counsel, dated
the Closing Date, as to certain matters; (xi) the consummation of the Merger;
(xii) consummation of the transactions contemplated by the Source Divestiture
Agreement; (xiii) the execution of certain agreements related to the Stock
Purchase Agreement; (xiv) the execution of the Registration Rights Agreement;
and (xv) the release by third parties for certain agreements relating to Source
Europe to which Source is a party or otherwise obligated.
No assurances can be provided as to when or if all of the conditions
precedent to the Stock Purchase can or will be satisfied or waived by the
appropriate party. As of the date of this Prospectus, the parties have no reason
to believe that any of the conditions set forth above will not be satisfied.
The conditions to consummation of the Stock Purchase may be waived, in whole
or in part, to the extent permissible under applicable law, by the party for
whose benefit the condition has been imposed, without the adoption of the PMSI
stockholders. See "--Amendment, Waiver and Termination."
REGULATORY APPROVALS
The obligations of NDC, PMSI and PMSI Database to perform under the Stock
Purchase Agreement and consummate the Stock Purchase are subject to the consent
of, filings and registrations with, and notifications to, all regulatory
authorities required for consummation of the Stock Purchase having been obtained
or made and being in full force and effect and the expiration of all waiting
periods required by law. Furthermore, no consent from any regulatory authority
which is necessary to consummate the Stock Purchase shall be conditioned or
restricted in a manner which in the reasonable judgment of the Board of
Directors of NDC would so materially adversely impact the economic or business
benefits of the Stock Purchase that, had such condition or requirement been
known, NDC would not, in its reasonable judgment, have entered into the Stock
Purchase Agreement.
Under the HSR Act and the rules promulgated thereunder by the Federal Trade
Commission (the "FTC"), the Stock Purchase may not be consummated until
notifications have been given and certain information has been furnished to the
FTC and the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the applicable waiting period has expired or been terminated.
NDC and PMSI filed notification and report forms under the HSR Act with the FTC
and the Antitrust Division on ___________, 1997. At any time before or after
consummation of the Stock Purchase, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the consummation of the Stock
Purchase or seeking divestiture of substantial assets of NDC or PMSI. At any
time before or after the Closing Date, and notwithstanding that the waiting
period under the HSR Act has expired, any state could take such action under the
antitrust laws as it deems necessary or desirable in the public interest. Such
state action could include seeking to enjoin the consummation for the Stock
Purchase or seeking divestiture of substantial assets of NDC or PMSI. Private
parties may also seek to take legal action under the antitrust laws under
certain circumstances.
Based on information available to them, NDC and PMSI believe that the Stock
Purchase can be effected in compliance with federal and state antitrust laws.
However, there can be no assurance that a challenge to the consummation of the
Stock Purchase on antitrust grounds will not be made or that, if such a
challenge were made, NDC and PMSI would prevail or would not be required to
accept certain adverse conditions in order to consummate the Stock Purchase.
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AMENDMENT, WAIVER AND TERMINATION
To the extent permitted by law, PMSI and NDC, with the approval of their
respective Boards of Directors, may amend the Stock Purchase Agreement by
written agreement at any time without the approval of the stockholders of PMSI,
provided that after the adoption of the Stock Purchase Agreement by PMSI's
stockholders, no amendment may decrease the consideration to be received by PMSI
without the requisite approval of PMSI stockholders.
Prior to or at the Closing Date, either PMSI or NDC, acting through its
respective Board of Directors, chief executive officer or other authorized
officer, may waive any default in the performance of any term of the Stock
Purchase Agreement by the other party, may waive or extend the time for the
fulfillment by the other party of any of its obligations under the Stock
Purchase Agreement, and may waive any of the conditions precedent to the Stock
Purchase Agreement, except any condition that, if not satisfied, would result in
the violation of an applicable law or governmental regulation.
The Stock Purchase Agreement may be terminated, and the Stock Purchase
abandoned, at any time prior to the Closing Date: (a) by the mutual consent of
PMSI and NDC; (b) by either party in the event of any inaccuracy of any
representation or warranty of the other party contained in the Stock Purchase
Agreement which cannot be or has not been cured within 30 days after giving
written notice to the breaching party of such inaccuracy and which inaccuracy
would provide the terminating party the ability to refuse to consummate the
Stock Purchase under the applicable standards set forth in the Stock Purchase
Agreement (provided that the terminating party is not then in breach of any
representation, warranty, covenant or other agreement contained in the Stock
Purchase Agreement); (c) by either party in the event of a material breach by
the other party of any covenant or agreement contained in the Stock Purchase
Agreement which cannot be or has not been cured within 30 days after the giving
of written notice to the breaching party of such breach (provided that the
terminating party is not then in breach of any representation, warranty,
covenant or other agreement contained in the Stock Purchase Agreement); (d) by
either party if the Stock Purchase is not consummated by January 31, 1998,
provided that the failure to consummate is not due to the breach by the party
electing to terminate; (e) by either party if any approval of any regulatory
authority required for consummation of the Stock Purchase and the other
transactions contemplated by the Stock Purchase Agreement has been denied by
final nonappealable action, or if any action taken by such authority is not
appealed within the time limit for appeal (provided that the terminating party
is not then in breach of any representation, warranty, covenant or other
agreement contained in the Stock Purchase Agreement); (f) by either party if the
stockholders of PMSI fail to vote their approval of the matters submitted for
the approval by such stockholders at the Special Meeting (provided that the
terminating party is not then in breach of any representation, warranty,
covenant or other agreement contained in the Stock Purchase Agreement); or (g)
if any of the conditions precedent to the obligations of such party to
consummate the Stock Purchase cannot be satisfied, fulfilled, or waived by the
appropriate party by January 31, 1998 (provided that the terminating party is
not then in breach of any representation, warranty, covenant or other agreement
contained in the Stock Purchase Agreement. See "--Expenses and Fees."
In addition, NDC may unilaterally terminate the Stock Purchase Agreement if
the Board of Directors of PMSI or PMSI Database fails to reapprove or resolves
not to affirm the Stock Purchase or recommends entering into a transaction other
than the Stock Purchase involving a stock purchase, share exchange,
consolidation or transfer of substantially all of PMSI Database's assets.
Furthermore, PMSI may unilaterally terminate the Stock Purchase Agreement in the
event that the Average Closing Price of the shares of NDC Common Stock is less
than the Lower Threshold Amount as of the Determination Date, subject to NDC's
right to revise the Base Amount based on the Lower Threshold Price. See "The
Stock Purchase--Amendment, Waiver and Termination."
CONDUCT OF BUSINESS PENDING THE STOCK PURCHASE
PMSI and PMSI Database have agreed in the Stock Purchase Agreement, unless
the prior consent of NDC is obtained, and except as otherwise contemplated by
the Stock Purchase Agreement, to operate PMSI Database's business only in the
ordinary course, use its reasonable efforts to preserve PMSI Database's business
organizations and assets and to
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maintain PMSI Database's assets, rights and franchises and to take no action
that would adversely affect either the ability of either party to perform its
covenants and agreements under the Stock Purchase Agreement or the ability of
either party to obtain any consents or approvals pursuant to any contract, law,
order or permit that are required for the transactions contemplated by the Stock
Purchase Agreement. In addition, the Stock Purchase Agreement contains certain
other restrictions applicable to the conduct of the business of PMSI Database
prior to consummation of the Stock Purchase, as described below.
PMSI and PMSI Database have agreed in the Stock Purchase Agreement not to
take certain actions relating to the operation of PMSI Database's business
pending consummation of the Stock Purchase without the prior approval of NDC.
Those actions include, without limitation: (i) amending PMSI Database's
Certificate of Incorporation or Bylaws; (ii) subject to certain exceptions,
incurring any additional debt or other obligation for borrowed money on any
asset of PMSI Database; (iii) acquiring or exchanging any shares of PMSI
Database capital stock or paying any dividend or other distribution in respect
of PMSI Database capital stock; (iv) subject to certain exceptions, issuing,
selling or pledging additional shares of any PMSI Database Common Stock, any
rights to acquire any such stock or any security convertible into such stock,
except pursuant to the exercise of outstanding stock options; (v) purchasing any
assets other than in the ordinary course; (vi) adjusting or reclassifying any of
PMSI Database capital stock; (vii) subject to certain exceptions, purchasing any
securities of or acquiring control over any other entity; (viii) granting any
increase in compensation or benefits to its employees or officers (except as
previously disclosed to NDC or as required by law), paying any bonus (except as
previously disclosed to NDC or in accordance with any existing program or plan),
entering into or amending any severance agreements with its officers or granting
any increase in compensation or other benefits to any of its directors (except
as previously disclosed to NDC); (ix) entering into or amending any employment
contract that it does not have the unconditional right to terminate without
certain liability (except as previously disclosed to NDC and except for any
amendment required by law); (x) adopting any new employee benefit plan or
program or materially changing any existing plan or program; (xi) making any
significant changes in tax or accounting methods, except for any change required
by law; (xii) commencing any litigation other than in accordance with past
practice or settling any litigation for material money damages; or (xiii)
materially amending or terminating any material contracts including, without
limitation, the Source Divestiture Agreement.
In addition, PMSI has agreed not to solicit, directly or indirectly, any
acquisition proposal with respect to the PMSI Database business from any other
person or entity. PMSI also has agreed not to negotiate with respect to any such
proposal, to provide information to any party making such a proposal or to enter
into any agreement with respect to any such proposal, except in compliance with
its legal obligations or the fiduciary obligations of its Board of Directors.
PMSI has also agreed to cause its advisors and other representatives not to
engage in any of the foregoing activities. Furthermore, PMSI has agreed that
prior to the Closing Date, it shall: (i) acquire Source Europe, and all of the
shares of Source Informatics European Holding LLC held by Source or any
subsidiary of Source, all pursuant to the Source Divestiture Agreement; (ii) use
commercially reasonable efforts to obtain consents to the assignment of the
contracts associated with the business of PMSI Database in connection with the
contribution of assets in the formation of PMSI Database and the transactions
contemplated by the Stock Purchase Agreement; (iii) obtain releases with respect
to certain agreements relating to Source Europe to which Source is a party or
otherwise obligated; and (iv) satisfy all intercompany accounts between PMSI and
its subsidiaries, on the one hand, and Source and its subsidiaries on the other
hand.
Pursuant to the Stock Purchase Agreement, NDC has agreed that, prior to the
Closing Date, it will continue to conduct its business and the business of its
subsidiaries in a manner designed in its reasonable judgment to enhance the
long-term value of the NDC Common Stock and the business prospects of NDC. NDC
further agrees that it will take no action which would materially adversely
affect either the ability of NDC, PMSI or PMSI Database to obtain the consents
required by the Stock Purchase Agreement or the ability of NDC, PMSI or PMSI
Database to perform its covenants and agreements contained in the Stock Purchase
Agreement.
EXPENSES AND FEES
The Stock Purchase Agreement provides that each party shall be responsible
for its own costs and expenses incurred in connection with the negotiation and
consummation of the transactions contemplated by the Stock
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Purchase Agreement, except that each of NDC and PMSI shall pay one-half of the
filing fees payable in connection with the HSR filing, and NDC shall pay all
costs associated with the Registration Statement and this Prospectus and
printing costs incurred in connection with the Registration Statement and this
Prospectus.
If the Stock Purchase Agreement is terminated by NDC because the stockholders
of PMSI or PMSI, as the sole stockholder of PMSI Database, fail to approve the
Stock Purchase Agreement, then PMSI shall promptly pay NDC all the out-of-pocket
costs and expenses of NDC, including costs of counsel, investment brokers,
actuaries and accountants up to a maximum of $750,000.
ACCOUNTING TREATMENT
The Stock Purchase is anticipated to be accounted for under the "purchase"
method of accounting, pursuant to which the assets and liabilities of PMSI will
be recorded at their respective fair values and added to those of NDC as of the
Closing Date. Financial statements of NDC issued after the Closing Date will
reflect such values and will not be restated retroactively to reflect the
historical financial position or results of operations of PMSI Database.
RESALES OF NDC COMMON STOCK
The shares of NDC Common Stock issued in connection with the Stock Purchase
will be freely transferable under the Securities Act, except for shares issued
to any stockholder who may be deemed to be an "affiliate" (generally including,
without limitation, directors, certain executive officers, and beneficial owners
of 10% or more of any class of capital stock) of PMSI, PMSI Database or NDC for
purposes of Rule 145 under the Securities Act as of the date of the Special
Meeting. Such affiliates may not sell their shares of NDC Common Stock acquired
in connection with the Stock Purchase except pursuant to an effective
registration statement under the Securities Act or other applicable exemption
from the registration requirements of the Securities Act. NDC may place
restrictive legends on certificates representing NDC Common Stock issued to all
persons who are deemed to be "affiliates" of PMSI under Rule 145. In addition,
PMSI has agreed to enter into a written agreement in substantially the form
attached to the Stock Purchase Agreement relating to such restrictions on sale
or other transfer.
As a condition precedent to consummation of the Stock Purchase, NDC and PMSI
will execute the Registration Rights Agreement, giving PMSI various rights to
the registration of NDC Common Stock owned by it while the Registration Rights
Agreement is in effect. Under the Registration Rights Agreement, NDC will agree
to use its best efforts to make this Registration Statement available for use by
PMSI for a period of 90 days from the Closing Date to offer and sell the shares
of NDC Common Stock received by PMSI pursuant to the Stock Purchase Agreement.
The form of Registration Rights Agreement also provides for one demand
registration right to be granted to PMSI. This demand registration right will
permit PMSI to require NDC to effect one registration statement during a 12-
month period from the Closing Date.
This Registration Statement is intended for use by PMSI to offer and resell
the shares of NDC Common Stock received by it pursuant to the Stock Purchase
Agreement.
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PMSI DATABASE HOLDINGS, INC.
BUSINESS
PMSI Database was formed as a holding company by PMSI on June 24, 1997, for
purposes of accomplishing the Stock Purchase. PMSI Database's assets,
contributed to it by PMSI, are comprised of (i) PMSI's minority interest in
Source US which jointly offers a range of services generated from Source's Alpha
Database and (ii) PMSI's OTC Business. PMSI Database has not conducted any
business other than organizational activities and holding the assets described.
SELECTED FINANCIAL INFORMATION
SELECTED FINANCIAL DATA OF PMSI DATABASE (HISTORICAL)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth selected historical financial data of PMSI
Database more fully set forth in Annex B.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30
----------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................... $25,009 $19,801 $18,010 $14,225 $14,675
Operating income............ 5,918 3,025 3,793 2,818 3,584
Income from continuing
operations................. 3,529 1,789 2,344 2,211 1,895
PER SHARE DATA:
Income from continuing
operations................. - - - - -
Cash dividends.............. - - - - -
Weighted average common
shares outstanding......... 100 100 100 100 100
BALANCE SHEET DATA
(AT PERIOD END):
Total assets................ $14,209 $8,213 $7,135 $6,795 $9,351
Long-term obligations....... 776 189 7 29 53
Total stockholders' equity.. 5,665 2,136 2,247 3,403 1,192
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
PMSI Database represents PMSI's minority interest in Source US together with
its OTC Business.
REVENUE
Revenue for the year ended June 30, 1997 was $25.0 million, an increase of
$5.2 million (27%) over revenue for the year ended June 30, 1996. Revenues from
product lines of Source US grew by 20% and revenue from the OTC Business almost
doubled in its first full year of trading.
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<PAGE>
Revenue for the year ended June 30, 1996 was $19.8 million, an increase of
$1.8 million (10%) over revenue for the year ended June 30, 1995. This was
attributable to the establishment of the OTC Physician Survey and the
development of additional products for Source US.
PRODUCTION COSTS
PMSI Database production costs principally consist of costs of data
collection, outside supplies and services, internal computer costs and
associated personnel costs.
Production costs for the year ended June 30, 1997 were $6.5 million (26% of
revenue), compared with $5.6 million (28% of revenue) for the year ended June
30, 1995. The 2% decrease was due to revenue growth partially offset by the high
level of fixed costs in the OTC Business.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were $12.1 million (48% of
revenue) for the year ended June 30, 1997 compared to $10.9 million (55% of
revenue) for the year ended June 30, 1996. This 10% increase was due to
additional selling costs associated with higher revenues.
Selling, general and administrative expenses were $10.9 million (55% of
revenue) for the year ended June 30, 1996 compared to $9.3 million (52% of
revenue) for the year ended June 30, 1995. This 3% increase was due to
additional selling and administrative costs associated with the establishment of
the OTC Business.
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL
SECURITYHOLDERS OF PMSI DATABASE
PMSI is the sole record and beneficial owner of all the outstanding capital
stock of PMSI Database. PMSI is an "affiliate" of PMSI Database for purposes of
Rule 145 under the Securities Act and, in connection with any offer or resale to
the public of the NDC Common Stock received in connection with the Stock
Purchase, may be deemed to be an underwriter in connection therewith. This
Prospectus is intended to be used by PMSI to comply with the prospectus delivery
requirements of the Securities Act in connection with any offers or resales of
NDC Common Stock for a period of 90 days from the Closing Date.
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CERTAIN DIFFERENCES IN THE RIGHTS OF NDC AND PMSI DATABASE STOCKHOLDERS
At the Closing Date, PMSI will become a stockholder of NDC, and its rights
as stockholder will be determined by NDC's Certificate of Incorporation and
Bylaws. The following is a summary of the material differences in the rights of
stockholders of NDC and PMSI Database. Both NDC and PMSI Database are Delaware
corporations governed by the DGCL. Accordingly, except as set forth below, there
are no material differences between the rights of an NDC stockholder under NDC's
Certificate of Incorporation and Bylaws and the DGCL, on the one hand, and the
rights of a PMSI Database stockholder under PMSI Database's Certificate of
Incorporation and Bylaws and the DGCL, on the other hand. This summary does not
purport to be a complete discussion of, and is qualified in its entirety by
reference to, the DGCL and the Certificate of Incorporation and Bylaws of each
corporation.
AUTHORIZED CAPITAL STOCK
NDC. The authorized capital stock of NDC consists of 100,000,000 shares of
Common Stock, par value $.125 per share, and 1,000,000 shares of Preferred
Stock, par value $1.00 per share. The following description of the capital stock
is qualified in all respects by reference to the Certificate of Incorporation,
as amended, and Bylaws, as amended, of NDC, copies of which are on file at NDC's
principal executive offices.
NDC COMMON STOCK.
The holders of NDC Common Stock, subject to such rights as may be granted
to the holders of NDC Preferred Stock, elect all directors and are entitled to
one vote per share. All shares of NDC Common Stock participate equally in
dividends when, as and if declared by the Board of Directors and share ratably,
subject to the rights and preferences of any NDC Preferred Stock, in net assets
on liquidation. The shares of NDC Common Stock outstanding are duly authorized,
validly issued, fully paid and nonassessable. The shares of NDC Common Stock
have no preference, conversion, exchange, preemptive or cumulative voting
rights.
STOCK PURCHASE RIGHTS
Pursuant to a Rights Agreement dated as of January 18, 1991, each share of
NDC Common Stock is issued one NDC right (an "NDC Right") which entitles the
registered holder to purchase from the NDC one one-hundredth of a share (a
"Unit") of Series A Junior Participating Preferred Stock, par value $1.00 per
share (the "NDC Participating Preferred"), at a purchase price of $45.00 per
Unit, subject to adjustment. Until the Separation Date, as hereinafter defined
(see "--Stockholder Rights Plan"), the NDC Rights are unexercisable and attach
to and transfer with the NDC Common Stock certificates.
The NDC Rights may have certain anti-takeover effects because the rights
will cause substantial dilution to a person or group that attempts to acquire
NDC on terms not approved by the Board of Directors of NDC unless the offer is
conditioned on a substantial number of NDC Rights being acquired. However, the
NDC Rights should not interfere with the Stock Purchase or any other business
combination approved by a majority of the directors since the NDC Rights may be
redeemed by NDC at $.01 per NDC Right at any time on or prior to a stock
acquisition. Thus, the NDC Rights are intended to encourage persons who may seek
to acquire control of NDC to initiate such an acquisition through negotiations
with the Board of Directors. However, the effect of the NDC Rights may be to
discourage a third party from making a partial tender offer or otherwise
attempting to obtain a substantial equity position in the equity securities of,
or seeking to obtain control of, NDC. To the extent any potential acquirers are
deterred by the NDC Rights, the NDC Rights may have the effect of preserving
incumbent management in office.
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<PAGE>
NDC PREFERRED STOCK
NDC is authorized to issue 1,000,000 shares of Preferred Stock, par value
$1.00 per share, none of which is outstanding, although 300,000 shares of
Preferred Stock have been reserved for issuance pursuant to the NDC Rights
described above. NDC Preferred Stock may be issued from time to time by the
Board of Directors of NDC, without stockholder approval, in such series and with
such voting powers, full or limited, and such designations, preferences and
relative, participating, optional or other special rights, qualifications,
limitations or restrictions as may be fixed by the Board of Directors. The
issuance of NDC Preferred Stock by the Board of Directors could adversely affect
the rights of holders of shares of NDC Common Stock since NDC Preferred Stock
may be issued having preference over the NDC Common Stock with respect to
dividends and liquidation, and have voting rights, contingent or otherwise, that
could dilute the voting rights, net income per share and net book value of the
NDC Common Stock. In addition, while the Board of Directors has no current
intention of doing so, the ability of the Board of Directors to issue shares of
NDC Preferred Stock and to set the voting powers and such designations,
preferences and relative, participating, optional or other special rights,
qualifications, limitations or restrictions thereof without further stockholder
action could help to perpetuate incumbent management of NDC or prevent a
business combination involving NDC that is favored by NDC's stockholders. As of
the date of this Prospectus, other than in connection with the NDC Rights
described above, the Board of Directors has not authorized the issuance of any
shares of NDC Preferred Stock, and NDC has no agreements, arrangements or
understandings with respect to the issuance of any shares of NDC Preferred
Stock.
PMSI DATABASE. The authorized capital stock of PMSI Database consists of
1,000 shares of PMSI Database Common Stock, $.01 par value. The following
description of Common Stock is qualified in all respects by reference to the
Certificate of Incorporation and Bylaws, of PMSI Database, copies of which are
on file at PMSI Database's principal executive offices.
PMSI DATABASE COMMON STOCK
The holders of PMSI Database Common Stock are entitled to one vote per
share on all matters submitted to PMSI for a vote. All shares of PMSI Database
Common Stock participate equally in dividends when, as and if declared by the
Board of Directors and share ratably, in net assets on dissolution. The shares
of PMSI Database Common Stock outstanding are duly authorized, validly issued,
fully paid and nonassessable. The shares of PMSI Database Common Stock have no
preference, conversion, exchange or cumulative voting right.
DIRECTORS AND CLASSES OF DIRECTORS
NDC. The Board of Directors of NDC is divided into three classes as nearly
equal in number as the total number of directors permits. Directors are elected
to each class at successive annual meetings to serve three-year terms. Any newly
created or eliminated directorships resulting from an increase or decrease in
the number of authorized directors are divided equally among the three classes
so as to maintain such classes as nearly equal as possible. Any director or the
entire Board of Directors of NDC may be removed from office only upon the
affirmative vote of at least 80% of the holders of all classes of NDC stock,
voting as a single class.
The above-mentioned provisions (the "NDC Board Provisions") with regard to
the Board of Directors of NDC may have certain anti-takeover effects by
preventing or delaying a change in the membership of the Board of Directors of
NDC. The NDC Board Provisions are intended to encourage persons who may seek to
acquire control of NDC to initiate such an acquisition through negotiations with
the Board of Directors of NDC. However, the effect of the NDC Board Provisions
may be to discourage a third party from making a partial tender offer or
otherwise attempting to obtain a substantial position in the equity securities
of, or seeking to obtain control of, NDC. To the extent any potential acquirers
are deterred by the NDC Board Provisions, the NDC Board Provisions may have the
effect of preserving incumbent management in office.
PMSI DATABASE. The Board of Directors of PMSI Database consists of one
members, serving as a single class. Directors of PMSI Database serve until their
successors are elected and qualified. Directors of PMSI
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Database may be removed, with or without cause, by the affirmative vote of the
holders of a majority of the shares of PMSI Database capital stock entitled to
vote at an election of directors.
STOCKHOLDER MEETINGS
NDC. NDC's Bylaws provide for annual meetings of stockholders to be held on
the third Thursday of October and for special meetings to be held: (i) on call
of the Chairman or President; (ii) at the request of a majority of the members
of the Board of Directors; or (iii) at the request of the holders of a majority
of the then-outstanding capital stock of NDC entitled to vote. Stockholders
entitled to vote are entitled to written notice stating the place, date, hour
and, in the case of a special meeting, the purpose of the meeting, not less than
10 nor more than 50 days before the date of the meeting. The holders of a
majority of the stock issued and outstanding and entitled to vote at a meeting,
present in person or represented by proxy, constitutes a quorum. When a quorum
is present at a meeting, the vote of the holders of a majority of the stock
having voting power, present in person or by proxy, can approve any resolution
properly brought before the meeting, except for resolutions: (i) increasing the
number of authorized shares of capital stock; (ii) approving a Business
Combination (as defined in NDC's Certificate of Incorporation); (iii) amending
Article Fourth of NDC's Certificate of Incorporation (Business Combination
provisions); (iv) removing any director or the entire Board of Directors; (v)
amending Article Eighth, Thirteenth, or Fourteenth of NDC's Certificate of
Incorporation (board classes, no stockholder action except at a meeting and
board authority to alter, amend or repeal bylaws without stockholder approval);
or (vi) requiring a greater vote than is provided by applicable law. The
foregoing resolutions must be approved by the affirmative vote of (i) 50%; (ii)
66.67%; (iii) 66.67%; (iv) 80%; and (v) 80%, respectively of the stockholders
entitled to vote. NDC's Bylaws provide that its stockholders may take action
without a meeting only upon the written consent of all such stockholders.
PMSI DATABASE. PMSI Database's bylaws provide for annual meetings to be
held on such dates and at such times as shall be designated by the Board of
Directors and for special meetings to be held (i) at the request of the Chairman
or by order of the Board of Directors; (ii) at the request of the President of
PMSI Database or (iii) written request of stockholders holding of record at
least 50% of the outstanding shares entitled to vote at such meeting.
Stockholders entitled to vote are entitled to written notice stating the place,
date, hour, and, in the case of a special meeting, the purpose of the meeting,
not less than 10 nor more than 60 days before the date of the meeting. The
holders of a majority of the stock issued and outstanding and entitled to vote
at a meeting, present in person or represented by proxy, constitute a quorum.
When a quorum is present at a meeting, the vote of the holders of a majority of
the stock having voting power, present in person or by proxy, can approve any
resolution properly brought before the meeting, except where a greater vote is
required by applicable law.
ANTI-TAKEOVER PROVISIONS
NDC. The provisions of NDC's Certificate of Incorporation, Bylaws, and the
NDC Rights Agreement contain certain protective provisions, which are intended
to facilitate stability of leadership and enhance the NDC Board of Directors'
role in connection with attempts to acquire control of NDC so that the Board may
further and protect the interests of NDC, its stockholders and its other
constituencies as appropriate under the circumstances. In particular, if the
Board determines that a sale of control is in the best interests of the
stockholders, these protective provisions are designed to enhance the Board's
ability to maximize the value to be received by the stockholders upon such a
sale. Although NDC management believes that the protective provisions are
beneficial to NDC's stockholders, such provisions may also discourage certain
acquisition proposals, which may deprive NDC's stockholders of certain
opportunities to sell their shares at a premium over prevailing market prices.
Pursuant to its authority to issue different series of NDC Preferred Stock,
the Board of Directors of NDC has established the NDC Rights Agreement and has
designated the preferences and rights of the NDC Participating Preferred to
include certain provisions which may have the effect of discouraging unsolicited
offers to acquire NDC. See "-- Stockholder Rights Plan."
PMSI DATABASE. PMSI Database does not have any antitakeover provisions in
its governing instruments.
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STOCKHOLDER RIGHTS PLAN
NDC. Each share of NDC Common Stock has attached to it an NDC Right issued
pursuant to a Rights Agreement between NDC and Wachovia Bank of North Carolina,
N.A., as Rights Agent (the "NDC Rights Agreement"). Each NDC Right entitles its
registered holder to purchase a Unit equal to one one-hundredth of a share of
NDC Participating Preferred at a price of $45.00 (the "Rights Purchase Price"),
as adjusted from time to time under certain circumstances, after the earlier of
(i) the tenth day following the commencement of, or first public announcement of
an intention to commence, a tender offer or exchange offer which, if successful,
would result in any person or group having beneficial ownership of 15% or more
of the outstanding NDC Common Stock (an "Acquiring Person"), and (ii) the tenth
day after the first date of a public announcement that a person or group has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding NDC Common Stock (the "Stock Acquisition Date") (in either
case, the "Separation Date").
The NDC Rights will not trade separately from the NDC Common Stock unless
and until the Separation Date occurs. The dividend, liquidation and voting
rights of the shares of NDC Participating Preferred are designed so that the
value of the one one-hundredth of a share of NDC Participating Preferred
purchasable upon the exercise of each NDC Right should approximate the value of
one share of NDC Common Stock.
In the event that any person or group becomes an Acquiring Person, each
holder of an NDC Right, except an Acquiring Person or any affiliate or associate
thereof, will be entitled to purchase at the then-current Rights Purchase Price
shares of NDC Common Stock with a market value of two times the Rights Purchase
Price.
In the event that NDC is acquired in a merger or other business
combination, or 30% or more of its assets or earning power is sold to any person
or group other than NDC or its wholly-owned subsidiaries, then, in each such
case, each holder of an NDC Right, except an Acquiring Person or an affiliate or
an associate thereof, will be entitled to purchase shares of stock of the other
party to the business combination with a market value of two times the Rights
Purchase Price.
Prior to the Stock Acquisition Date the NDC Rights are redeemable for one
cent per NDC Right at the option of the Board of Directors. The NDC Rights will
expire on January 18, 2001 or at an earlier date under certain circumstances.
The NDC Rights will not prevent a takeover of NDC. The NDC Rights, however,
may cause substantial dilution to a person or group that acquires 15% or more of
the NDC Common Stock unless the NDC Rights are first redeemed or terminated by
the Board of Directors of NDC. Nevertheless, the NDC Rights should not interfere
with a transaction that in the opinion of NDC's Board of Directors is in the
best interests of NDC and its stockholders because the NDC Rights can be
redeemed or terminated, as hereinbefore described, before the consummation of
such a transaction.
PMSI DATABASE. PMSI Database has not adopted any rights or similar plan.
EXPERTS
The consolidated financial statements of NDC at May 31, 1996 and 1997, and
for each of the years in the three-year period ended May 31, 1997, incorporated
by reference from NDC's Annual Report on Form 10-K for the fiscal year ended May
31, 1997, have been audited by Arthur Andersen LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference in reliance upon such reports given on the authority of said firm as
experts in accounting and auditing.
The financial statements of PMSI Database at June 30, 1997, and for the
year ended June 30, 1997 have been audited by Arthur Andersen LLP, independent
certified public accountants, as set forth in their report included herein, in
reliance upon such report, and upon the authority of said firm as experts in
accounting and auditing.
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<PAGE>
LEGAL MATTERS
The legality of the shares of NDC Common Stock being offered hereby is
being passed upon for NDC by Alston & Bird llp, Atlanta, Georgia. Neil Williams,
a partner of Alston & Bird LLP, is a director and stockholder of NDC.
-34-
<PAGE>
ANNEX A
STOCK PURCHASE AGREEMENT
A-1
<PAGE>
STOCK PURCHASE AGREEMENT
BY AND AMONG
NATIONAL DATA CORPORATION,
PMSI DATABASE HOLDINGS, INC.
AND
PHARMACEUTICAL MARKETING SERVICES INC.,
THE SOLE STOCKHOLDER OF PMSI DATABASE HOLDINGS, INC.
DATED AS OF AUGUST 20, 1997
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<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of August 20, 1997, by and among NATIONAL DATA CORPORATION ("NDC"), a
Delaware corporation; PMSI DATABASE HOLDINGS, INC. ("PMSI Database"), a Delaware
corporation; and PHARMACEUTICAL MARKETING SERVICES INC., a Delaware corporation
and the sole stockholder of PMSI Database ("PMSI").
PREAMBLE
--------
The respective Boards of Directors of PMSI Database, PMSI and NDC are of
the opinion that the transactions described herein are in the best interests of
the parties to this Agreement and their respective stockholders. PMSI is the
record and beneficial owner of all of the issued and outstanding shares of PMSI
Database Common Stock (the "Shares"). PMSI desires to sell all of the Shares to
NDC, and NDC desires to purchase the Shares from PMSI, upon the terms and
subject to the conditions set forth in this Agreement. The transactions
described in this Agreement are subject to the approvals of the stockholders of
PMSI and PMSI Database, expiration of the required waiting period under the HSR
Act, the consummation of the Agreement and Plan of Merger dated as of even date
herewith by and among Source Informatics Inc. ("Source"), Dunkirk, Inc. and NDC
(the "Source Agreement"), the consummation of the Source Transfer Agreement and
the satisfaction of certain other conditions described in this Agreement.
Certain terms used in this Agreement are defined in Section 9.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
PURCHASE AND SALE
-----------------
1.1 PURCHASE AND SALE. Upon the terms and subject to the conditions of
-----------------
this Agreement, PMSI shall sell to NDC, and NDC shall purchase from PMSI, the
Shares at the Closing (the "Stock Purchase"). The aggregate purchase price for
the Shares is equal to (i) the Cash Amount and (ii)1,059,829 shares of NDC
Common Stock (the "Base Amount");
(a) At the Closing Date, the "Cash Amount" shall be equal to $6,500,000
less the adjustment, if any, made pursuant to Section 1.2(c) hereof.
(b) In the event that the Average Closing Price at the close of trading on
the tenth trading day immediately preceding the Closing Date (the "Determination
Date") shall be greater than $50.50 (the "Upper Threshold Price"), the Base
Amount shall be adjusted to equal that number of shares of NDC Common Stock
(rounded to the nearest whole share) obtained by dividing the product of the
Base Amount and the Upper Threshold Price by the Average Closing Price as of the
Determination Date; provided further, that, in the event that the Average
Closing Price on the Determination Date shall be less than $37.25 (the "Lower
Threshold Price" and, together with the Upper Threshold Price, the "Threshold
Prices"), the Base Amount may, at the sole discretion of NDC, and in accordance
with the provisions of Section 8.1(h), be adjusted to equal that number of
shares of NDC Common Stock (rounded to the nearest whole share) obtained by
dividing the product of the Base Amount and the Lower Threshold Price by the
Average Closing Price as of the Determination Date.
(c) Pursuant to the NDC Rights Agreement, each share of NDC Common Stock
issued in connection with the Stock Purchase shall be accompanied by a NDC
Right.
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<PAGE>
1.2 PRELIMINARY BALANCE SHEET.
-------------------------
(a) PMSI will cause to be prepared and delivered to NDC a balance
sheet for PMSI Database as of the most recent month ending more than ten days
prior to the Closing Date (the "Preliminary Balance Sheet") and a certificate
based on such Preliminary Balance Sheet setting forth PMSI's calculation of
Working Capital, Current Assets and Current Liabilities as of such date
("Estimated Working Capital," "Estimated Current Assets" and "Estimated Current
Liabilities", respectively). The Preliminary Balance Sheet shall (v) include
only the assets, liabilities and stockholders' equity of the Acquired Business
and the Joint Venture Interest, (x) fairly present the financial position of
PMSI Database as at the close of business on such date in accordance with
generally accepted accounting principles applied on a basis consistent with
those used in the preparation of the balance sheet of PMSI Database dated March
31, 1997 (the "PMSI Database Balance Sheet") previously delivered to NDC, (y)
include no material increase in long-term indebtedness and include line items
substantially consistent with those in the PMSI Database Balance Sheet, and (z)
subject to the provisions of clause (x) above, be prepared in accordance with
accounting policies and practices consistent with those used in the preparation
of the PMSI Database Balance Sheet. As used herein, "Working Capital" shall mean
the amount equal to Current Assets less Current Liabilities; "Current Assets"
shall mean the amount equal to the sum of cash, accounts receivable (net of any
reserves), inventories, prepaid expenses and work-in-process and any other
assets classified as current assets under GAAP; and "Current Liabilities" shall
mean the amount equal to the sum of accounts payable, accrued current
liabilities of PMSI Database (other than the current portion of capitalized
lease obligations), accrued sales commissions (but only as to revenues realized
and included in the PMSI Database statements of income prior to such date),
Accrued Bonuses, accrued vacation pay, current portion of long-term indebtedness
and pre-billed revenues and any other liabilities classified as current
liabilities under GAAP.
(b) NDC shall have five (5) business days from the receipt of the
Preliminary Balance Sheet and the calculation of Estimated Working Capital,
Estimated Current Assets and Estimated Current Liabilities delivered pursuant to
Section 1.2(a) to review such statement and calculations and following such
review such shall be final and binding upon the parties hereto.
(c) If Estimated Current Assets are less than the product of 1.1659
times Estimated Current Liabilities (the amount of such difference referred to
as, the "Estimated Working Capital Adjustment") as of the date of the
Preliminary Balance Sheet, the Cash Amount payable by NDC pursuant to Section
1.1 shall be decreased by the Estimated Working Capital Adjustment.
1.3 CLOSING BALANCE SHEET.
---------------------
(a) As promptly as practicable, but not later than 30 days after the
Closing Date, NDC will cause to be prepared and delivered to PMSI a balance
sheet for PMSI Database as of the Closing Date (the "Closing Balance Sheet")
setting forth NDC's calculation of Working Capital, Current Assets and Current
Liabilities as of the Closing Date (the "Closing Working Capital," "Closing
Current Assets" and "Closing Current Liabilities," respectively). The Closing
Balance Sheet shall (v) include only the assets, liabilities and stockholders'
equity of the Acquired Business and the Joint Venture Interest (x) fairly
present the financial position of PMSI Database as at the close of business on
the Closing Date in accordance with generally accepted accounting principles
applied on a basis consistent with those used in the preparation of the PMSI
Database Balance Sheet, (y) include no material increase in long-term
indebtedness and include line items substantially consistent with those in the
PMSI Database Balance Sheet, and (z) subject to the provisions of clause (x)
above, be prepared in accordance with accounting policies and practices
consistent with those used in the preparation of the PMSI Database Balance
Sheet.
(b) The Closing Balance Sheet and the calculation of Closing Working
Capital, Closing Current Assets and Closing Current Liabilities delivered
pursuant to Section 1.3(a) shall be deemed final upon the earliest of (i) the
date on which NDC and PMSI jointly agree that such documents are final, (ii) the
30th day after delivery of such documents pursuant to Section 1.3(a), if PMSI
has not delivered a notice to NDC expressing disagreement with such calculations
and setting forth its calculation of such amount(s), and (iii) the date on which
all disputes relating to such statements and calculations between the parties
are resolved in accordance with Section 1.3(c). If PMSI delivers a notice of
disagreement pursuant to this Section 1.3(b) it shall specify those items or
amounts as to
A-4
<PAGE>
which it disagrees, and it shall be deemed to have agreed with all other items
and amounts contained in the Closing Balance Sheet and the calculation of
Closing Working Capital delivered pursuant to Section 1.3(a) (except to the
extent resolution of the items or amounts to which it expresses disagreement
requires conforming changes to other items and amounts contained in the Closing
Balance Sheet or the calculation of Closing Working Capital).
(c) If PMSI shall deliver a notice of disagreement pursuant to Section
1.3(b), PMSI and NDC shall, during the 30 days following such delivery, use
their reasonable efforts to reach agreement on the disputed items or amounts
(the "Disputed Amounts"). If, during such period, PMSI and NDC are unable to
reach such agreement, they shall promptly thereafter cause Price Waterhouse LLP
(or if said firm shall have a conflict due to a relationship with NDC, PMSI, or
any of their respective Subsidiaries or shall be unwilling to act thereunder,
such other independent accountants of nationally recognized standing reasonably
satisfactory to NDC and PMSI who shall not have any material relationship with
NDC or PMSI), promptly to review this Agreement, the documents delivered
pursuant to Section 1.3(a) and any other documents necessary to calculate the
Disputed Amounts (including all work papers of the parties used in calculating
the Disputed Amounts). In making such calculation, such independent accountants
shall act as experts and not arbitrators and shall consider only the Disputed
Amounts, solely in accordance with the terms of this Agreement. Such
independent accountants shall deliver to PMSI and NDC, as promptly as
practicable, a report setting forth such calculation. Such report shall be
final and binding upon PMSI and NDC. The cost of such review and report shall
be borne (i) by PMSI if the difference between Closing Working Capital shown in
the independent accountant's calculation and PMSI's calculation of Closing
Working Capital delivered pursuant to Section 1.3(b) is greater than the
difference between Closing Working Capital shown in the independent accountant's
calculation and NDC's calculation of Closing Working Capital delivered pursuant
to Section 1.3(a), (ii) by NDC if the difference between Closing Working Capital
shown in the independent accountant's calculation and PMSI's calculation of
Closing Working Capital delivered pursuant to Section 1.3(b) is less than the
difference between Closing Working Capital shown in the independent accountant's
calculation and NDC's calculation of Closing Working Capital delivered pursuant
to Section 1.3(a), and (iii) otherwise equally by PMSI and NDC.
(d) PMSI and NDC agree that they will, and will cause their respective
independent accountants and PMSI Database to, cooperate and assist in the
preparation of the Closing Balance Sheet and the calculation of Closing Working
Capital, Closing Current Assets and Closing Current Liabilities and in the
conduct of the reviews referred to in this Section 1.3, including, without
limitation, making available, to the extent necessary, relevant books, records,
working papers, analyses and schedules, and permitting representatives of the
parties to consult with the respective employees, auditors, actuaries, attorneys
and agents of PMSI Database.
1.4 ADJUSTMENT OF PURCHASE PRICE.
-----------------------------
(a) Subject to Section 1.4(c) below,
(i) If Final Current Assets are less than the product of 1.1659
times Final Current Liabilities (the amount of such shortfall referred to as,
the "Final Working Capital Deficit"), then PMSI shall pay to NDC in cash, as an
adjustment to the Purchase Price, the Final Working Capital Deficit, plus any
amount owing to NDC pursuant to Section 1.4(b) below.
(ii) If Final Current Assets are greater than the product of
1.1659 times Final Current Liabilities (the amount of such surplus referred to
as, the "Final Working Capital Surplus"), then NDC shall pay to PMSI in cash, as
an adjustment to the Purchase Price, the Final Working Capital Surplus.
(iii) "Final Working Capital," "Final Current Assets" and "Final
Current Liabilities" mean such amounts (A) as shown in NDC's calculation
delivered pursuant to Section 1.3(a), if no notice of disagreement with respect
thereto is duly delivered pursuant to Section 1.3(b); or (B) if such a notice of
disagreement is delivered, (1) as agreed by NDC and PMSI pursuant to Section
1.3(b) or (2) in the absence of such agreement, as shown in the independent
accountant's calculation delivered pursuant to Section 1.3(c); provided that, in
no event shall Final Working Capital be (A) more than PMSI's calculation of
Closing Working Capital delivered pursuant to Section 1.3(b), if any, or (B)
less than the lesser of NDC's calculation of Closing Working Capital delivered
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<PAGE>
pursuant to Section 1.3(a) or PMSI's calculation of Closing Working Capital
delivered pursuant to Section 1.3(b), if any.
(b) (i) If Total Current Assets are less than the product of 0.9975
times Total Current Liabilities (the "Total Working Capital Deficit"), then PMSI
shall pay to NDC in cash, as a further adjustment to the Purchase Price, an
amount equal to the Current Asset Allocation Amount.
(ii) If Total Current Assets are greater than the product of
0.9975 times Total Current Liabilities (the "Total Working Capital Surplus"),
then NDC shall pay to PMSI in cash, as a further adjustment to the Purchase
Price, an amount equal to the Current Asset Allocation Amount.
(iii) As used herein, "Total Current Assets" shall mean the
amount equal to the sum of Final Current Assets in this Agreement and Final
Current Assets calculated pursuant to the Source Agreement; "Total Current
Liabilities" shall mean the amount equal to the sum of Final Current Liabilities
in this Agreement and Final Current Liabilities calculated pursuant to the
Source Agreement; "Current Asset Allocation Amount" shall mean the amount equal
to the product of (A) the quotient of Final Current Assets in this Agreement
divided by Total Combined Assets multiplied by (B) the Total Working Capital
Deficit or Total Working Capital Surplus, as the case may be; and "Total
Combined Assets" shall mean the amount equal to the sum of Final Current Assets
in this Agreement and Final Current Assets calculated pursuant to the Source
Agreement
(c) For purposes of any adjustments to the Purchase Price made
pursuant to this Section, the parties shall take into account any adjustment
made to the Purchase Price at Closing pursuant to Section 1.2(c) hereof.
(d) Any payment pursuant to Section 1.4(a) shall be made at a mutually
convenient time and place within ten days after Final Working Capital, Final
Current Assets and Final Current Liabilities have been determined by delivery by
NDC or PMSI, as the case may be, of one or more certified or official bank
checks payable in immediately available funds to the appropriate party or
parties or by causing such payments to be credited to such account of the
appropriate party or parties as may be designated by such other party or
parties.
(e) Any payment pursuant to Section 1.4(b) shall be made at a mutually
convenient time and place within ten days after Current Asset Allocation Amount
has been determined by delivery by NDC or PMSI, as the case may be, of one or
more certified or official bank checks payable in immediately available funds to
the appropriate party or parties or by causing such payments to be credited to
such account of the appropriate party or parties as may be designated by such
other party or parties.
(f) The amount of any payment to be made pursuant to Sections 1.4(a)
and (b) shall bear interest from and including the Closing Date to but excluding
the date of payment at a rate per annum equal to the Prime Rate determined as of
the Closing Date. Such interest shall be payable at the same time as the
payment to which it relates and shall be calculated daily on the basis of a year
of 365 days and the actual number of days elapsed.
1.5 ANTI-DILUTION PROVISIONS. In the event NDC changes the number of
-------------------------
shares of NDC Common Stock issued and outstanding prior to the Closing Date as a
result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefore (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Closing Date, the Base Amount shall be proportionately adjusted.
1.6 TIME AND PLACE OF CLOSING. The closing of the transactions
-------------------------
contemplated hereby (the "Closing") will take place at 9:00 A.M. on the date
that the Closing Date occurs (or the immediately preceding day if the Closing
Date is earlier than 9:00 A.M.), or at such other time as the Parties, acting
through their authorized officers, may mutually agree. The Closing shall be
held at such location as may be mutually agreed upon by the Parties.
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<PAGE>
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF PMSI DATABASE AND PMSI
--------------------------------------------------------
PMSI and PMSI Database, jointly and severally, hereby represent and
warrant to NDC as follows:
2.1 ORGANIZATION, STANDING, AND POWER. PMSI Database is a corporation
----------------------------------
duly organized, validly existing, and in good standing under the Laws of the
State of Delaware, and has the corporate power and authority to carry on the
Acquired Business as now and previously conducted by PMSI and to own, lease and
operate the Acquired Assets. PMSI Database is, or will be prior to Closing,
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of the Acquired Assets or the nature or conduct of the Acquired
Business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a PMSI Database
Material Adverse Effect. The minute book and other organizational documents for
PMSI Database have been made available to NDC for its review and, except as
disclosed in Section 2.1 of the PMSI Database Disclosure Memorandum, are true
and complete in all material respects as in effect as of the date of this
Agreement and accurately reflect in all material respects all amendments thereto
and all proceedings of the Board of Directors and stockholders thereof. The
minute books of PMSI as such relate to PMSI Database, the Acquired Business, the
Acquired Assets and the Joint Venture Interest have been made available to NDC
for its review.
2.2 AUTHORITY OF PMSI DATABASE; NO BREACH BY AGREEMENT.
---------------------------------------------------
(a) PMSI Database has the corporate power and authority necessary to
execute, deliver, and perform its obligations under this Agreement and, subject
to receipt of stockholder approval, to consummate the transactions contemplated
hereby. The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Stock
Purchase, have been duly and validly authorized by all necessary corporate
action in respect thereof on the part of PMSI Database, subject to the adoption
of this Agreement by PMSI, as the sole stockholder of PMSI Database. Subject to
such requisite stockholder approval, this Agreement represents a legal, valid,
and binding obligation of PMSI Database, enforceable against PMSI Database in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by PMSI
Database, nor the consummation by PMSI Database of the transactions contemplated
hereby, nor compliance by PMSI Database with any of the provisions hereof, will
(i) conflict with or result in a breach of any provision of PMSI Database's
Certificate of Incorporation or Bylaws or any resolution adopted by the board of
directors or stockholder of PMSI Database, or (ii) except as disclosed in
Section 2.2 of the PMSI Database Disclosure Memorandum and, subject to receipt
of the requisite Consents referred to in Sections 6.1(b) and 6.1(c), constitute
or result in a Default under, or require any Consent pursuant to, or result in
the creation of any Lien on any Acquired Asset under, any Acquired Contract or
Acquired Permit.
(c) Other than in connection or compliance with the provisions of
applicable state corporate and securities Laws and other than Consents required
from Regulatory Authorities, and other than notices to or filings with the
Internal Revenue Service or the Pension Benefit Guaranty Corporation with
respect to any employee benefit plans, or under the HSR Act, no notice to,
filing with, or Consent of, any Regulating Authority is necessary for the
consummation by PMSI Database of the Stock Purchase and the other transactions
contemplated in this Agreement, or necessary for the consummation by PMSI
Database and PMSI of the Contribution.
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2.3 AUTHORITY OF PMSI; NO BREACH BY AGREEMENT.
------------------------------------------
(a) PMSI has the corporate power and authority necessary to execute,
deliver, and perform its obligations under this Agreement and, subject to
receipt of stockholder approval, to consummate the transactions contemplated
hereby. The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Stock
Purchase, have been duly and validly authorized by all necessary corporate
action in respect thereof on the part of PMSI, subject to the adoption of this
Agreement by the stockholders of PMSI. Subject to such requisite stockholder
approval, this Agreement represents a legal, valid, and binding obligation of
PMSI, enforceable against PMSI in accordance with its terms (except in all cases
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Neither the execution and delivery of this Agreement by PMSI, nor
the consummation by PMSI of the transactions contemplated hereby, nor compliance
by PMSI with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of PMSI Database's Certificate of Incorporation or
Bylaws, or (ii) conflict with or result in a breach of any provision of PMSI's
Certificate of Incorporation or Bylaws or the certificate or articles of
incorporation or bylaws of any Subsidiary of PMSI, or (iii) except as disclosed
in Section 2.3 of the PMSI Database Disclosure Memorandum and, subject to
receipt of the requisite Consents referred to in Sections 6.1(b) and 6.1(c),
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Acquired Asset under, any Acquired
Contract or Acquired Permit.
(c) Other than in connection or compliance with the provisions of the
applicable state corporate and securities Laws and other than Consents required
from Regulatory Authorities, and other than notices to or filings with the
Internal Revenue Service or the Pension Benefit Guaranty Corporation with
respect to any employee benefit plans, or under the HSR Act, no notice to,
filing with, or Consent of, any Regulatory Authority is necessary for the
consummation by PMSI of the transactions contemplated in this Agreement.
2.4 CAPITAL STOCK.
--------------
(a) The authorized capital stock of PMSI Database consists of 1,000
shares of PMSI Database Common Stock, of which 100 shares are issued and
outstanding as of the date of this Agreement and at the Closing Date. All of
the issued and outstanding shares of capital stock of PMSI Database are duly and
validly issued and outstanding and are fully paid and nonassessable under the
DGCL. None of the outstanding shares of capital stock of PMSI Database has been
issued in violation of any preemptive rights of the current or past stockholders
of PMSI Database.
(b) Except as set forth in Section 2.4(a), there are no shares of
capital stock or other equity securities of PMSI Database outstanding and no
outstanding Equity Rights relating to the capital stock of PMSI Database. As of
the date of this Agreement, a Subsidiary of PMSI owns, and, as of the Closing
Date, PMSI will own, all right, title and interest (legal and beneficial) in and
to all of the issued and outstanding shares of PMSI Database's capital stock
free and clear of all Liens. Except as specifically contemplated by this
Agreement, no Person has any Contract or any right or privilege (whether pre-
emptive or contractual) capable of becoming a Contract for the purchase from
PMSI of any of the shares of PMSI Database's capital stock, or any Contract or
Equity Right for the purchase, subscription or issuance of any securities of
PMSI Database.
2.5 PMSI DATABASE SUBSIDIARIES. PMSI Database has no Subsidiaries.
---------------------------
2.6 FINANCIAL STATEMENTS. Each of the OTC Financial Statements
---------------------
(including, in each case, any related notes) was prepared in accordance with
GAAP applied on a consistent basis as of and for the periods involved (except as
may be indicated in the notes to such financial statements), and fairly
presented in all material respects the financial position of the Acquired
Business as of their respective dates and the results of operations
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and cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount or
effect. Except as set forth on Section 2.6 of the PMSI Database Disclosure
Memorandum, the Acquired Business has no liabilities or obligations (secured or
unsecured, whether accrued, absolute, direct, indirect, contingent or otherwise,
and whether due or to become due) which are not fully and adequately accrued or
reserved against in the OTC Financial Statements, as of their respective dates,
in accordance with GAAP consistently applied. Further, the OTC Balance Sheet
only includes the Acquired Assets and the Assumed Liabilities relating to the
Acquired Business and does not include (i) Retained Liabilities, (ii) domestic
income tax assets or liabilities, (iii) recorded goodwill, and (iv) deferred
gains on sale and lease-back transactions. The Statements of Income are those of
the Acquired Business and the Acquired Assets and do not include revenue,
expenses or income tax of PMSI or any other Assets of PMSI or the Joint Venture
Interest.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. At the Closing, PMSI Database
-----------------------------------
will have no Liabilities other than the Assumed Liabilities and the Liabilities
set forth in Section 2.7 of the PMSI Database Disclosure Memorandum. None of
the Assumed Liabilities or those Liabilities set forth in Section 2.7 of the
PMSI Database Disclosure Memorandum are reasonably likely to have, individually
or in the aggregate, a PMSI Database Material Adverse Effect.
2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1997, except
-------------------------------------
as disclosed in the OTC Financial Statements delivered prior to the date of this
Agreement or as disclosed in Section 2.8 of the PMSI Database Disclosure
Memorandum, (i) there have been no events, changes, or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a PMSI
Database Material Adverse Effect, (ii) neither PMSI Database nor PMSI has taken
any action, or failed to take any action, prior to the date of this Agreement,
which action or failure, if taken after the date of this Agreement, would
represent or result in a material breach or violation of any of the covenants
and agreements of PMSI Database and PMSI provided in Article 4.
2.9 TAX MATTERS.
------------
(a) All Tax Returns required to be filed by or on behalf of PMSI
Database or PMSI on behalf of or including the Acquired Business have been
timely filed or requests for extensions have been timely filed, granted, and
have not expired for periods ended on or before June 30, 1996, and on or before
the date of the most recent fiscal year end immediately preceding the Closing
Date, and all such Tax Returns filed are complete and accurate in all material
respects. All Taxes shown on filed Tax Returns have been paid. There is no
audit examination or deficiency or refund Litigation with respect to any Taxes,
except as reserved against in the PMSI Database Financial Statements or as
disclosed in Section 2.9 of the PMSI Database Disclosure Memorandum for which
PMSI Database could be found responsible. All Taxes and other Liabilities due
with respect to completed and settled examinations or concluded Litigation have
been paid. There are no Liens with respect to Taxes upon any of the Acquired
Assets, except for any such Liens which are not reasonably likely to have a PMSI
Database Material Adverse Effect.
(b) PMSI has not executed an extension or waiver of any statute of
limitations on the assessment or collection of any Tax due with respect to the
Acquired Business or the Acquired Assets (excluding such statutes that relate to
years currently under examination by the Internal Revenue Service or other
applicable taxing authorities) or with respect to the filing of any Tax Return
including the Acquired Business that is currently in effect.
(c) The provision for any Taxes due or to become due for the Acquired
Business and the Acquired Assets for the period or periods through and including
the date of the respective PMSI Database Financial Statements that has been made
and is reflected on such PMSI Database Financial Statements is sufficient to
cover all such Taxes.
(d) Deferred Taxes of PMSI Database reflected on the PMSI Database
Financial Statements have been provided for in accordance with GAAP.
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(e) PMSI Database is not a party to any Tax allocation or sharing
agreement and PMSI Database has not been a member of an affiliated group filing
a consolidated federal income Tax Return (other than a group the common PMSI of
which was PMSI Database or PMSI) that has any Liability for Taxes of any Person
(other than PMSI Database) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign Law) as a transferee or successor
or by Contract or otherwise.
(f) PMSI Database and PMSI with respect to the Acquired Business and
the Acquired Assets are in compliance with, and its records contain all
information and documents (including properly completed IRS Forms W-9) necessary
to comply with in all material respects, all applicable information reporting
and Tax withholding requirements under federal, state, and local Tax Laws, and
such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code.
(g) Except as disclosed in Section 2.9 of the PMSI Database
Disclosure Memorandum, PMSI Database and PMSI with respect to the Acquired
Business and the Acquired Assets have not made any payments, are not obligated
to make any payments, and are not a party to any Contract that could obligate
either of them to make any payments that would be disallowed as a deduction
under Section 280G or 162(m) of the Internal Revenue Code.
2.10 ASSETS.
-------
(a) Except as disclosed in Section 2.10 of the PMSI Database
Disclosure Memorandum or as disclosed or reserved against in the OTC Financial
Statements delivered prior to the date of this Agreement and except for the
Contracts set forth in Sections 2.2 and 2.3 of the PMSI Database Disclosure
Memorandum, PMSI Database currently has, good, valid and marketable title, free
and clear of all Liens, to all of the Acquired Assets. All tangible properties
that are material to the conduct of the Acquired Business are in good condition,
reasonable wear and tear excepted, and are usable in the ordinary course of
business consistent with PMSI's past practices with respect to the Acquired
Business.
(b) The Acquired Assets and the Acquired Business are insured under
various policies of general liability and other forms of insurance, which
policies are in amounts adequate in the reasonable judgment of PMSI and PMSI
Database. Neither PMSI nor PMSI Database has been refused any insurance, with
respect to the Acquired Assets or the Acquired Business, by any insurance
carrier to which it has applied for insurance or with which it has carried
insurance during the past five (5) years. There are no outstanding requirements
or recommendations by any current insurer or underwriter with respect to the
Acquired Business or the Acquired Assets which require or recommend changes in
the conduct of the Acquired Business, or require any repairs or other work to be
done with respect to any of the Acquired Assets or operations of the Acquired
Business.
(c) The Acquired Assets include all rights, properties, interests in
properties, and assets necessary to permit NDC to carry on the Acquired Business
as presently conducted by PMSI and PMSI Database.
2.11 INTELLECTUAL PROPERTY. Section 2.11 of the PMSI Database Disclosure
----------------------
Memorandum is a complete and accurate list of all Acquired Intellectual
Property, containing a brief description of all governmental registrations or
applications for governmental registrations of each such item and the nature of
PMSI Database's interest therein. PMSI Database owns or has a license to use
all of the Acquired Intellectual Property. PMSI Database is the owner of or has
a license to any Acquired Intellectual Property sold or licensed to a third
party by PMSI Database, and PMSI Database has the right to convey by sale or
license any Acquired Intellectual Property so conveyed. PMSI Database is not in
Default under any of its Acquired Intellectual Property licenses. No
proceedings have been instituted, or are pending or to the Knowledge of PMSI
Database and PMSI threatened, which challenge the rights of PMSI or PMSI
Database with respect to Acquired Intellectual Property used, sold or licensed
by PMSI or PMSI Database in the course of the Acquired Business, nor has any
person claimed or alleged any rights to such Acquired Intellectual Property.
The conduct of the Acquired Business does not infringe any Intellectual Property
of any other person. Except as disclosed in Section 2.11 of the PMSI Database
Disclosure
A-10
<PAGE>
Memorandum, neither PMSI nor PMSI Database is obligated to pay any recurring
royalties to any Person with respect to any Acquired Intellectual Property.
Except as disclosed in Section 2.11 of the PMSI Database Disclosure Memorandum,
every Employee is a party to a Contract which requires such Person to assign any
interest in any Intellectual Property to PMSI which rights have been assigned to
PMSI Database and to keep confidential any trade secrets, proprietary data,
customer information, or other business information of the Acquired Business,
and no such Employee is party to any Contract with any Person other than PMSI
which requires such Employee to assign any interest in any Intellectual Property
developed while in the employ of PMSI to any Person other than PMSI or to keep
confidential any trade secrets, proprietary data, customer information, or other
business information of any Person other than PMSI. Except as disclosed in
Section 2.11 of the PMSI Database Disclosure Memorandum, no Employee is party to
any Contract which restricts or prohibits such Employee from engaging in
activities competitive with any Person, including PMSI and PMSI Database, in
each case with respect to the Acquired Business. All material items of the
Acquired Intellectual Property and the material registrations, applications, and
agreements related thereto will be legally assigned to PMSI Database, subject to
the consent of any third party as set forth in Section 2.11 of the PMSI Database
Disclosure Memorandum.
2.12 COMPLIANCE WITH LAWS. PMSI or PMSI Database has in effect all
---------------------
Acquired Permits. The Acquired Permits include all Permits necessary for PMSI
Database to own, lease, or operate the Acquired Assets and to carry on the
Acquired Business as now conducted, and there has occurred no Default under any
such Acquired Permit and, except as set forth in Section 2.12 of the PMSI
Database Disclosure Memorandum, all right in and to such Acquired Permits has
been legally transferred to PMSI Database and did not require the consent of
any third party. Except as disclosed in Section 2.12 of the PMSI Database
Disclosure Memorandum, neither PMSI nor PMSI Database:
(a) is in Default under any of the provisions of its Certificate of
Incorporation or Bylaws (or other governing instruments);
(b) is in Default under any Laws, Orders, or Acquired Permits
applicable to the Acquired Business or the Employees; or
(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting
that PMSI Database or PMSI with respect to the Acquired Business is not in
compliance in any material respect with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, (ii) threatening to
revoke any Acquired Permits, or (iii) requiring PMSI with respect to the
Acquired Business or PMSI Database to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment, or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking.
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority relating to the Acquired Business
or the Acquired Assets have been made available to NDC.
2.13 LABOR RELATIONS. PMSI Database and PMSI have disclosed in Section
----------------
2.13 of the PMSI Database Disclosure Memorandum all employees of the Acquired
Business (the "Employees"). With respect to the Acquired Business, PMSI and
PMSI Database are not the subject of any Litigation asserting that they have
committed an unfair labor practice (within the meaning of the National Labor
Relations Act or comparable state law) or seeking to compel them to bargain with
any labor organization as to wages or conditions of employment, nor is PMSI
Database, or PMSI with respect to the Acquired Business, a party to any
collective bargaining agreement, nor is there any strike or other labor dispute
involving the Acquired Business, pending or threatened, or to the Knowledge of
PMSI and PMSI Database, is there any activity involving the Employees seeking to
certify a collective bargaining unit or engaging in any other organization
activity.
2.14 EMPLOYEES AND EMPLOYEE BENEFIT PLANS.
-------------------------------------
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<PAGE>
(a) Neither PMSI Database nor any ERISA Affiliate of PMSI Database
currently or within the 6 years preceding the Closing Date, has maintained,
sponsored in whole or in part, or contributed to any plan or arrangement which
is a "defined benefit plan" (as defined in Section 414(j) of the Internal
Revenue Code) or which is a multiemployer plan within the meaning of Section
3(37) of ERISA. For purposes of this Section 2.14, "ERISA Affiliate" shall mean
any entity which is considered one employer with PMSI Database under Section
4001 of ERISA or Section 414 of the Internal Revenue Code.
(b) All PMSI Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws the
breach or violation of which are reasonably likely to have, individually or in
the aggregate, a PMSI Database Material Adverse Effect.
(c) PMSI Database will not have had any employees prior to Closing.
2.15 MATERIAL CONTRACTS. Section 2.15 of the PMSI Database Disclosure
-------------------
Memorandum contains a true and correct list, and (if oral) summary description,
of all PMSI Database Contracts (as defined below). Except as contemplated
hereunder and except as disclosed in Section 2.15 of the PMSI Database
Disclosure Memorandum or otherwise reflected in the OTC Financial Statements or
the PMSI Database Balance Sheet, neither PMSI Database, nor PMSI with respect to
the Acquired Business and the Joint Venture Interest, nor any of the Acquired
Assets, the Acquired Business, or the related operations, is a party to, or is
bound or affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract, (ii) any Contract relating to
the borrowing of money by PMSI Database, or PMSI with respect to the Acquired
Business or the Joint Venture Interest, or the guarantee by PMSI Database, or
PMSI with respect to the Acquired Business or the Joint Venture Interest, of any
such obligation (other than Contracts evidencing trade payables and Contracts
relating to borrowings or guarantees made in the ordinary course of business),
(iii) any Contract which prohibits or restricts PMSI Database, or PMSI with
respect to the Acquired Business or the Joint Venture Interest, from engaging in
any business activities in any geographic area, line of business or otherwise in
competition with any other Person, (iv) any Contract between or among PMSI
Database and PMSI or any Affiliate of PMSI Database or PMSI, (v) any Contract
involving Intellectual Property (other than Contracts entered into in the
ordinary course with customers and "shrink-wrap" software licenses), (vi) any
Contract relating to the provision of data processing, network communication, or
other technical services to or by PMSI Database, or PMSI with respect to the
Acquired Business or the Joint Venture Interest, (vii) any Contract relating to
the purchase or sale of any goods or services including customer contracts
(other than Contracts entered into in the ordinary course of business and
involving payments under any individual Contract not in excess of $50,000),
(viii) real property leases and (ix) all Contracts referred to in Section
2.17(b) as of the date of this Agreement (together referred to as the "PMSI
Database Contracts"). Except as set forth in Sections 2.2 and 2.3 of the PMSI
Database Disclosure Memorandum, with respect to each PMSI Database Contract and
except as disclosed in Section 2.15 of the PMSI Database Disclosure Memorandum:
(i) the Contract is in full force and effect; (ii) neither PMSI Database nor
PMSI is in Default thereunder; (iii) neither PMSI Database nor PMSI has
repudiated or waived any material provision of any such Contract; (iv) no other
party to any such Contract is, to the Knowledge of PMSI Database and PMSI, in
Default in any respect or has repudiated or waived any material provision
thereunder; (v) there exists no actual, or to the Knowledge of PMSI or PMSI
Database, threatened, cancellation, termination, or limitation of, or any
material amendment, modification, or change to any Contract; (vi) neither PMSI
Database nor PMSI has received formal notice that any party to a PMSI Database
Contract will not renew such Contract at the end of its existing term; and (vii)
no PMSI Database Contract requires consent for assignment in connection with the
transactions contemplated by this Agreement including the Contribution. All of
the indebtedness of PMSI Database for money borrowed is prepayable at any time
by PMSI Database without penalty or premium.
2.16 REAL PROPERTY; LEASED REAL PROPERTY. PMSI Database does not own or
-----------------------------------
lease any real property that is used or will be used in the Acquired Business.
2.17 PERSONAL PROPERTY.
-----------------
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<PAGE>
(a) Section 2.17(a) of the PMSI Database Disclosure Memorandum contains a
substantially true and correct list of all equipment (excluding items of
equipment having a value of less than $50,000 individually) as of the date
hereof that will be included in the Acquired Assets.
(b) Section 2.17(b) of the PMSI Database Disclosure Memorandum contains a
substantially true and correct list of all Acquired Personal Property (except
miscellaneous leases of property having a value of less than $20,000
individually) leased by PMSI or PMSI Database. True and correct copies of the
lease for each item listed in Section 2.17(b) of the PMSI Database Disclosure
Memorandum and any amendments, extensions, and renewals thereof have heretofore
been furnished to NDC. Each of such leases is in effect, and PMSI and PMSI
Database have neither received nor sent written notice or other written
correspondence that indicates the existence of Material default under any such
lease, except for defaults subsequently cured or waived prior to the date of
this Agreement. No rights of PMSI or PMSI Database under any of such leases
have been assigned or otherwise transferred as security for any obligation of
PMSI or PMSI Database other than to the lessor under a lease to secure PMSI's or
PMSI Database's obligations under such lease. Except as described in Section
2.17(b) of the PMSI Database Disclosure Memorandum, all such leases are fully
assignable without the consent of any third party.
(c) Section 2.17(c) of the PMSI Database Disclosure Memorandum contains a
substantially true and correct list of all Acquired Personal Property (except
personal property having a value of less than $20,000 individually) owned by
PMSI Database. All Acquired Personal Property that is material to the conduct
of the Acquired Business is in good condition, reasonable wear and use excepted,
and are usable in the ordinary course of business consistent with PMSI's past
practices.
2.18 LEGAL PROCEEDINGS. There is no Litigation instituted or pending,
-----------------
or, to the Knowledge of PMSI and PMSI Database, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against PMSI Database or PMSI
with respect to the Acquired Business, or against any director, employee or
employee benefit plan of PMSI or PMSI Database, or against any Acquired Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a PMSI Database Material Adverse Effect, nor
are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against PMSI Database or PMSI with
respect to the Acquired Business and Acquired Assets that are reasonably likely
to have, individually or in the aggregate, a PMSI Database Material Adverse
Effect. Section 2.18 of the PMSI Database Disclosure Memorandum contains a
summary of all Litigation as of the date of this Agreement to which PMSI
Database is a party, or to which PMSI with respect to the Acquired Business is a
party and which names such as a defendant or cross-defendant or for which PMSI
Database, the Acquired Business or the Acquired Assets has any potential
Liability.
2.19 STATEMENTS TRUE AND CORRECT. None of the information supplied or to
----------------------------
be supplied by PMSI or PMSI Database or any Affiliate thereof for inclusion in
the Registration Statement to be filed by NDC with the SEC will, when the
Registration Statement becomes effective, include any untrue statement of a
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the information supplied or to be supplied by PMSI or
PMSI Database or any Affiliate thereof for inclusion in any documents to be
filed by PMSI or PMSI Database or any Affiliate thereof with any Regulatory
Authority in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, include any untrue statement of a
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. All documents that PMSI or PMSI Database or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable Law.
2.20 REGULATORY MATTERS. Neither PMSI Database, PMSI nor any Affiliate
-------------------
thereof has taken or agreed to take any action or has any Knowledge of any fact
or circumstance that is reasonably likely to materially impede or delay receipt
of any Consents of Regulatory Authorities referred to in Section 6.1(b) or
result in the imposition of a condition or restriction of the type referred to
in the last sentence of such Section.
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<PAGE>
2.21 CHARTER PROVISIONS. PMSI, as the sole stockholder of PMSI Database,
-------------------
and PMSI Database have taken all reasonable action so that the entering into of
this Agreement and the consummation of the Stock Purchase and the other
transactions contemplated by this Agreement, except as set forth herein, do not
and will not result in the grant of any rights to any Person under the
Certificate of Incorporation, Bylaws or other governing instruments of PMSI
Database or restrict or impair the ability of NDC or any of its Subsidiaries to
vote, or otherwise to exercise the rights of a stockholder with respect to,
shares of PMSI Database that may be directly or indirectly acquired or
controlled by them.
2.22 OPINION OF FINANCIAL ADVISOR. PMSI or PMSI Database has received
-----------------------------
the opinion of Cowen & Company, dated the date of this Agreement, to the effect
that the consideration to be received in the Stock Purchase and pursuant to the
Source Transfer Agreement by PMSI is fair, from a financial point of view, to
PMSI.
2.23 BOARD RECOMMENDATION. The Board of Directors of PMSI Database and
---------------------
PMSI, at meetings duly called and held, have by unanimous vote of the directors
present and voting (who constituted all of the directors then in office other
than those directors who abstained from voting because of a conflict of
interest) (i) determined that this Agreement and the transactions contemplated
hereby, including the Stock Purchase and the transactions contemplated thereby,
taken together, are fair to and in the best interests of the stockholders of
PMSI, and PMSI, as the sole stockholder of PMSI Database, and (ii) resolved to
recommend that the holders of the shares of PMSI and PMSI, as the sole
stockholder of PMSI Database, adopt this Agreement.
2.24 JOINT VENTURE INTEREST. The Amended and Restated Alphabase Data
-----------------------
License Agreement is in full force and effect and, subject to receipt by PMSI
Database of the Consents set forth in Sections 2.2 and 2.3 of the PMSI Database
Disclosure Memorandum, PMSI Database owns all right, title and interest in the
Joint Venture Interest free and clear of any Liens.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF NDC
-------------------------------------
NDC hereby represents and warrants to PMSI Database and PMSI as follows:
3.1 ORGANIZATION, STANDING, AND POWER. NDC is a corporation duly
----------------------------------
organized, validly existing, and in good standing under the Laws of the State of
Delaware, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its material Assets. NDC is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a NDC Material Adverse Effect.
3.2 AUTHORITY; NO BREACH BY AGREEMENT.
----------------------------------
(a) NDC has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Stock Purchase, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of NDC. This
Agreement represents a legal, valid, and binding obligation of NDC, enforceable
against NDC in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
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<PAGE>
(b) Neither the execution and delivery of this Agreement by NDC, nor
the consummation by NDC of the transactions contemplated hereby, nor compliance
by NDC with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of NDC's Certificate of Incorporation or Bylaws or any
resolution adopted by the Board of Directors or stockholders of NDC, or (ii)
subject to receipt of the requisite Consents referred to in Section 6.1(b),
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Asset of any NDC Entity under, any
Contract or Permit of any NDC Entity.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NYSE, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, no notice to, filing with, or Consent of, any public body
or authority is necessary for the consummation by NDC of the Stock Purchase and
the other transactions contemplated in this Agreement.
3.3 CAPITAL STOCK.
--------------
(a) The authorized capital stock of NDC consists of (i) 100,000,000
shares of NDC Common Stock, of which 26,629,947 shares are issued and
outstanding as of August 18, 1997, and (ii) 1,000,000 shares of NDC Preferred
Stock, of which no shares are issued and outstanding. All of the issued and
outstanding shares of NDC Capital Stock are, and all of the shares of NDC Common
Stock to be issued in exchange for shares of PMSI Database Common Stock upon
consummation of the Stock Purchase, when issued in accordance with the terms of
this Agreement, will be, duly and validly issued and outstanding and fully paid
and nonassessable under the DGCL. None of the outstanding shares of NDC Capital
Stock has been, and none of the shares of NDC Common Stock to be issued in
exchange for shares of PMSI Database Common Stock upon consummation of the Stock
Purchase will be, issued in violation of any preemptive rights of the current or
past stockholders of NDC.
(b) Except as set forth in Section 3.3(a), or as provided pursuant to
the NDC Rights Agreement, or as disclosed in Section 3.3(b) of the NDC
Disclosure Memorandum, there are no shares of capital stock or other equity
securities of NDC outstanding and no outstanding Equity Rights relating to the
capital stock of NDC.
3.4 SEC FILINGS; FINANCIAL STATEMENTS.
----------------------------------
(a) NDC has timely filed and made available to PMSI Database all SEC
Documents required to be filed by NDC since May 31, 1993 (the "NDC SEC
Reports"). The NDC SEC Reports (i) at the time filed, complied in all material
respects with the applicable requirements of the Securities Laws and other
applicable Laws and (ii) did not, at the time they were filed (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such NDC SEC Reports or necessary in
order to make the statements in such NDC SEC Reports, in light of the
circumstances under which they were made, not misleading. No NDC Subsidiary is
required to file any SEC Documents.
(b) Each of the NDC Financial Statements (including, in each case,
any related notes) contained in the NDC SEC Reports, including any NDC SEC
Reports filed after the date of this Agreement until the Closing Date, complied
as to form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial position of NDC
and its Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring year-
end adjustments which were not or are not expected to be material in amount or
effect.
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3.5 ABSENCE OF UNDISCLOSED LIABILITIES. No NDC Entity has any
-----------------------------------
Liabilities that are reasonably likely to have, individually or in the
aggregate, a NDC Material Adverse Effect, except Liabilities which are accrued
or reserved against in the consolidated balance sheets of NDC as of May 31, 1996
and February 28, 1997, included in the NDC Financial Statements delivered prior
to the date of this Agreement or reflected in the notes thereto. No NDC Entity
has incurred or paid any Liability since February 28, 1997, except for such
Liabilities incurred or paid (i) in the ordinary course of business consistent
with past business practice and which are not reasonably likely to have,
individually or in the aggregate, a NDC Material Adverse Effect or (ii) in
connection with the transactions contemplated by this Agreement.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since February 28, 1997,
-------------------------------------
except as disclosed in the NDC Financial Statements delivered prior to the date
of this Agreement or as disclosed in Section 3.6 of the NDC Disclosure
Memorandum, (i) there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a NDC
Material Adverse Effect, and (ii) the NDC Entities have not taken any action, or
failed to take any action, prior to the date of this Agreement, which action or
failure, if taken after the date of this Agreement, would represent or result in
a material breach or violation of any of the covenants and agreements of NDC
provided in Article 7.
3.7 COMPLIANCE WITH LAWS. Each NDC Entity has in effect all Permits
---------------------
necessary for it to own, lease or operate its material Assets and to carry on
its business as now conducted, and there has occurred no Default under any such
Permit. Except as disclosed in Section 3.7 of the NDC Disclosure Memorandum,
none of the NDC Entities:
(a) is in Default under its Certificate of Incorporation or Bylaws (or
other governing instruments); or
(b) is in Default under any Laws, Orders or Permits applicable to its
business or employees conducting its business; or
(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting
that any NDC Entity is not in compliance in any material respect with any of
the Laws or Orders which such governmental authority or Regulatory Authority
enforces, or (iii) requiring any NDC Entity to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive, commitment
or memorandum of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business.
3.8 LEGAL PROCEEDINGS. There is no Litigation instituted or pending, or,
------------------
to the Knowledge of NDC, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any NDC Entity, or against any director,
employee or employee benefit plan of any NDC Entity, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a NDC Material Adverse Effect, nor are there
any Orders of any Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against any NDC Entity, that are reasonably likely to
have, individually or in the aggregate, a NDC Material Adverse Effect.
3.9 STATEMENTS TRUE AND CORRECT. None of the information supplied or to
----------------------------
be supplied by any NDC Entity or any Affiliate thereof for inclusion in the
Registration Statement to be filed by NDC or in the proxy statement to be filed
by PMSI with the SEC, will include an untrue statement of a material fact, or
omit to state any material fact necessary to make the statements therein in
light of the circumstances under which they were made, not misleading, with
respect to the Registration Statement, on the date such Registration Statement
becomes effective, and with respect to the proxy statement as of its date. None
of the information supplied or to be supplied by any NDC Entity or any Affiliate
thereof for inclusion in any documents to be filed by any NDC Entity or any
Affiliate thereof with the SEC or any other Regulatory Authority in connection
with the transactions contemplated hereby, will, at the respective time such
documents are filed, be false or misleading with respect to any material
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fact, or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. All documents that any NDC Entity or any Affiliate thereof is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
3.10 REGULATORY MATTERS. No NDC Entity or any Affiliate thereof has
-------------------
taken or agreed to take any action or has any Knowledge of any fact or
circumstance that is reasonably likely to materially impede or delay receipt of
any Consents of Regulatory Authorities referred to in Section 6.1(b) or result
in the imposition of a condition or restriction of the type referred to in the
last sentence of such Section.
3.11 RIGHTS AGREEMENT. Execution of this Agreement and consummation of
-----------------
the Stock Purchase and the other transactions contemplated by this Agreement
will not result in the grant of any rights to any Person under the NDC Rights
Agreement (other than as contemplated by Section 1.1) or enable or require the
NDC Rights to be exercised, distributed or triggered.
ARTICLE 4
CONDUCT OF BUSINESS PENDING CONSUMMATION
----------------------------------------
4.1 AFFIRMATIVE COVENANTS OF PMSI DATABASE AND PMSI.
------------------------------------------------
(a) Subject to the Consents set forth in Sections 2.3 and 2.4 of the PMSI
Database Disclosure Memorandum, PMSI has, or shall have prior to Closing,
assigned, transfered, conveyed, and delivered to PMSI Database, and PMSI
Database has, or shall have prior to Closing, acquired, and accepted from PMSI,
all of the right, title, and interest of PMSI in and to the Acquired Assets and
the Joint Venture Interest, free and clear of any and all Liens.
(b) The "Acquired Assets" shall consist of all of the right, title, and
interest of PMSI and PMSI Database in and to all of the following Assets, as the
same shall exist at the Closing Date, which shall be delivered free and clear of
any and all Liens:
(i) The Personal Property primarily utilized in the Acquired
Business (the "Acquired Personal Property");
(ii) The Intellectual Property primarily utilized in the Acquired
Business (the "Acquired Intellectual Property");
(iii) The Contracts primarily utilized in the Acquired Business (the
"Acquired Contracts");
(iv) The Accounts Receivable relating to the Acquired Business (the
"Acquired Accounts Receivable");
(v) The Permits primarily utilized in the Acquired Business (the
"Acquired Permits"); and
(vi) The Other Assets primarily utilized in the Acquired Business
(the "Acquired Other Assets").
(c) Prior to Closing, as partial consideration for the Contribution, PMSI
Database shall assume responsibility for the performance and satisfaction of the
Assumed Liabilities. PMSI Database shall not assume responsibility for, and
PMSI will remain obligated with respect to, the Retained Liabilities.
(d) From the date of this Agreement until the earlier of the Closing Date
or the termination of this Agreement, unless the prior written consent of NDC
shall have been obtained, and except as otherwise expressly
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contemplated herein, either PMSI shall, or shall cause PMSI Database to, (i)
operate the Acquired Business and the Joint Venture Interest only in the usual,
regular, and ordinary course as previously operated by PMSI, (ii) use its
reasonable efforts to preserve intact the business organization of the Acquired
Business and the Acquired Assets and maintain its rights and franchises with
respect to the Acquired Business and the Joint Venture Interest; (iii) maintain
the Acquired Assets in their present order and condition, reasonable wear and
use excepted, and maintain all policies of insurance covering the Acquired
Assets in amounts and on terms substantially equivalent to those in effect on
the date hereof; (iv) take all steps reasonably necessary to maintain the
Acquired Intellectual Property and other intangible assets of the Acquired
Business and the Joint Venture Interest; (v) use reasonable best efforts to
preserve the goodwill and patronage of its customers, Employees, suppliers and
others having a business relationship with the Acquired Business and the Joint
Venture Interest; and (vi) take no action which would (A) materially adversely
affect the ability of any Party to obtain any Consents required for the
transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentences of Section 6.1(b) or
6.1(c), or (ii) materially adversely affect the ability of any Party to perform
its covenants and agreements under this Agreement.
(e) Prior to or contemporaneous with the Closing, pursuant to the Source
Transfer Agreement, the terms and conditions of which will have been approved by
NDC, PMSI shall acquire (i) Source's business operated in Europe as of the
Closing Date (the "European Business"), (ii) all of the shares of PMSI held by
Source or any Subsidiary of Source (the "Divestiture"), and (iii) all of the
stock of the Source Divestiture Subsidiaries. In connection with the
Divestiture, PMSI shall obtain a release of all obligations of Source under the
European Contracts.
(f) Prior to Closing, PMSI Database and PMSI shall use commercially
reasonable efforts to obtain Consents to the assignment of the PMSI Database
Contracts and any other Contracts to which PMSI, SLA or PMSI Database is a party
as required by the Contract in connection with the Contribution and the
transactions contemplated hereby. If, on the Closing Date, PMSI Database, SLA
and PMSI have not obtained any Consent discussed above after having used
commercially reasonable efforts to obtain such Consent or an attempted transfer
of any of the PMSI Database Contracts and any other Contracts to which PMSI or
SLA is a party would be ineffective or the failure to have such Consent would
adversely affect PMSI's or SLA's ability to convey any such Contract and the
failure to transfer such asset, either individually or in the aggregate, is not
reasonably likely to have a PMSI Database Material Adverse Effect, then such
Contracts shall constitute "Deferred Contracts" and shall not be transferred to
PMSI Database. After the Closing: (a) PMSI will (i) continue to use
commercially reasonable efforts to obtain the Consent and/or to remove any other
impediments to the assignment and transfer of each Deferred Contract and will
assign and transfer or cause SLA to assign and transfer each Deferred Contract
to PMSI Database within five (5) business days after the receipt of such Consent
and/or removal of such impediment; (ii) until the assignment and transfer with
respect to any Deferred Contract is accomplished, cooperate or cause SLA to
cooperate with PMSI Database in any lawful arrangement that is not unduly
economically burdensome (including performance by PMSI or SLA as agent) to
provide that PMSI Database shall receive the benefits of such Deferred Contract
to the same extent as if it were transferred to PMSI Database at Closing; and
(iii) until the assignment and transfer with respect to any Deferred Contract is
accomplished, enforce, at the request and for the account of PMSI Database, any
of PMSI's or SLA's rights thereto or interests therein against any other parties
thereto (including the right to terminate any such Deferred Contract in
accordance with its terms, provided that PMSI Database pays any cancellation or
other fee due upon such termination); and (b) if and only to the extent that
PMSI Database receives the benefits of a Deferred Contract, PMSI Database shall
perform the obligations of PMSI or SLA arising with respect to such Deferred
Contract to the extent that, by reason of consummation of the transactions
contemplated by this Agreement or the Source Agreement, PMSI Database has
control over the resources necessary to perform such obligations or, to the
extent that PMSI Database does not have such resources, to reimburse PMSI for
the reasonable cost of such performance. NDC shall notify PMSI on the Closing
Date as to the PMSI Database Contracts which will be performed by PMSI Database
pursuant to this Section. To the extent PMSI Database performs the obligations
of PMSI with respect to any Deferred Contract, any account receivable created on
account of such performance shall be deemed when created to be a Acquired
Contract conveyed hereunder. After the Closing, PMSI Database and NDC will act
with reasonable diligence and use commercially reasonable efforts to assist, and
cooperate with, PMSI or SLA in obtaining such Consents and removing any such
impediments to the transfer of the Deferred Contracts.
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<PAGE>
(g) Prior to Closing, all indebtedness or other obligations or accounts of
any kind between a PMSI Entity on the one hand and Source and its Subsidiaries
or PMSI Database on the other hand will have been paid in full and discharged.
4.2 NEGATIVE COVENANTS OF PMSI DATABASE AND PMSI. From the date of this
---------------------------------------------
Agreement until the earlier of the Closing Date or the termination of this
Agreement, unless the prior written consent of NDC shall have been obtained, and
except as otherwise expressly contemplated herein, PMSI and PMSI Database
covenant and agree that they will not do or agree or commit to do any of the
following with respect to the Acquired Business and the Acquired Assets:
(a) amend the Certificate of Incorporation, Bylaws or other governing
instruments of PMSI Database, or
(b) except as provided in the budget set forth in Section 4.2(b) of
the PMSI Database Disclosure Memorandum and only for the purposes set forth
therein, PMSI Database shall not incur any additional debt obligation,
capital lease obligation or other obligation for borrowed money or make any
capital expenditures in excess of an aggregate of $50,000 or impose, or
suffer the imposition, on any Acquired Asset of any Lien or permit any such
Lien to exist (other than in connection with Liens in effect as of the date
hereof that are disclosed in the PMSI Database Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange, directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of PMSI Database, or declare or pay any dividend or make any
other distribution in respect of PMSI Database's capital stock; or
(d) except for this Agreement, issue, sell, pledge, encumber,
authorize the issuance of, enter into any Contract to issue, sell, pledge,
encumber, or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of PMSI Database Common Stock, or any
stock appreciation rights, or any option, warrant, or other Equity Right of
PMSI Database; or
(e) except for the Contribution, purchase or acquire any assets or
properties, whether real or personal, tangible or intangible, that if
acquired would be an Acquired Asset, and not sell, lease or otherwise dispose
of any real or personal property or asset (other than cash which may be
distributed or otherwise transferred out of PMSI Database to PMSI) that would
have been an Acquired Asset, in each case except in the ordinary course of
business and consistent with past practices; or
(f) adjust, split, combine or reclassify any capital stock of PMSI
Database or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of PMSI Database Common Stock; or
(g) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, PMSI Database shall not purchase any securities or make any
material investment, either by purchase of stock of securities, contributions
to capital, Asset transfers, or purchase of any Assets, in any Person, or
otherwise acquire direct or indirect control over any Person, other than in
connection with (i) foreclosures in the ordinary course of business, or (ii)
the creation of new wholly owned Subsidiaries organized to conduct or
continue activities otherwise permitted by this Agreement; or
(h) grant any increase in compensation or benefits to the Employees
of the Acquired Business, except in accordance with past practice disclosed
in Section 4.2(h) of the PMSI Database Disclosure Memorandum or as required
by Law; pay any severance or termination pay or any bonus other than pursuant
to written policies or written Contracts in effect on the date of this
Agreement and disclosed in Section 4.2(h) of the PMSI Database Disclosure
Memorandum; and enter into or amend any severance
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agreements with Employees of the Acquired Business; grant any material
increase in fees or other increases in compensation or other benefits to
directors of PMSI Database except in accordance with past practice disclosed
in Section 4.2(h) of the PMSI Database Disclosure Memorandum; or
(i) enter into or amend any employment Contract with any Employee of
the Acquired Business that PMSI does not and PMSI Database will not have the
unconditional right to terminate without Liability (other than Liability for
services already rendered), at any time on or after the Closing Date; or
(j) adopt any new employee benefit plan of PMSI Database; or
(k) make any significant change in any Tax or accounting methods or
systems of internal accounting controls with respect to PMSI Database or the
Acquired Business, except as may be appropriate to conform to changes in Tax
Laws or regulatory accounting requirements or GAAP; or
(l) commence any Litigation with respect to PMSI Database or the
Acquired Business other than in accordance with past practice, settle any
Litigation involving any Liability of the Acquired Business or the Acquired
Assets for material money damages or restrictions upon the operations of the
Acquired Business or the Acquired Assets ; or
(m) enter into, materially modify or amend, or terminate any PMSI
Database Contract or other material Contract with respect to PMSI Database or
the Acquired Business (including any loan Contract with an unpaid balance
exceeding $50,000) or waive, release, compromise or assign any material
rights or claims; or
(n) modify or amend, or waive any provision of, the Source Transfer
Agreement, a fully executed copy of which which with all attachments,
exhibits and schedules thereto is attached hereto as Schedule 4.2(n).
4.3 COVENANTS OF NDC. From the date of this Agreement until the earlier
-----------------
of the Closing Date or the termination of this Agreement, unless the prior
written consent of PMSI shall have been obtained, and except as otherwise
expressly contemplated herein, NDC covenants and agrees that it shall (a)
continue to conduct its business and the business of its Subsidiaries in a
manner designed, in its reasonable judgment, to enhance the long-term value of
the NDC Common Stock and the business prospects of the NDC Entities and to the
extent consistent therewith use all reasonable efforts to preserve intact the
NDC Entities' core businesses and goodwill with their respective employees and
the communities they serve, and (b) take no action which would (i) materially
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentences of Section 6.1(b) or
6.1(c), or (ii) materially adversely affect the ability of any Party to perform
its covenants and agreements under this Agreement; provided, that the foregoing
shall not prevent any NDC Entity from acquiring any Assets or other businesses
or from discontinuing or disposing of any of its Assets or business if such
action is, in the judgment of NDC, desirable in the conduct of the business of
NDC and its Subsidiaries, provided that such actions shall not materially delay
the Closing Date or materially hinder consummation of the Stock Purchase. NDC
further covenants and agrees that it will not, without the prior written consent
of PMSI, which consent shall not be unreasonably withheld, amend the Certificate
of Incorporation or Bylaws of NDC or, except as expressly contemplated by this
Agreement, the NDC Rights Agreement, in each case, in any manner adverse to the
holders of PMSI Database Common Stock as compared to rights of holders of NDC
Common Stock generally as of the date of this Agreement. In addition, NDC
covenants and agrees that it shall maintain PMSI Database as its Subsidiary and
maintain substantially all of the Acquired Assets in PMSI Database for a period
of one year and will treat the Joint Venture Interest as a partnership for
federal income tax purposes during that one-year period.
4.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written
-----------------------------
notice promptly to the other Parties upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a PMSI Database
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Material Adverse Effect or a NDC Material Adverse Effect, as applicable, or (ii)
would cause or constitute a material breach of any of its representations,
warranties, or covenants contained herein, and to use its reasonable efforts to
prevent or promptly to remedy the same.
4.5 REPORTS. Each Party and its Subsidiaries shall file all reports
--------
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Closing Date and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in stockholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not material). As of their
respective dates, such reports filed with the SEC will comply in all material
respects with the Securities Laws and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.
ARTICLE 5
ADDITIONAL AGREEMENTS
---------------------
5.1 REGISTRATION STATEMENT; PMSI APPROVAL. As soon as reasonably
--------------------------------------
practicable after execution of this Agreement, NDC shall prepare and file the
Registration Statement with the SEC, and shall use its reasonable efforts to
cause the Registration Statement to become effective under the 1933 Act and take
any action required to be taken under the applicable state Blue Sky or
securities Laws in connection with the issuance of the shares of NDC Common
Stock upon consummation of the Stock Purchase. PMSI and PMSI Database shall
cooperate in the preparation and filing of the Registration Statement and shall
furnish all information concerning them and the holders of PMSI's capital stock
as NDC may reasonably request in connection with such action. PMSI shall call a
Stockholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon adoption of this Agreement, the Source Transfer Agreement and such
other related matters as it deems appropriate. In connection with the
Stockholders' Meeting, (i) PMSI shall prepare and file with the SEC a Proxy
Statement and mail such Proxy Statement to its stockholders, (ii) NDC shall
furnish to PMSI and PMSI Database all information that such may reasonably
request in preparation of such Proxy Statement and notice of meeting, (iii) the
Board of Directors of PMSI shall recommend to its stockholders the approval of
the matters submitted for approval, subject only to the Board of Director's
legal obligations (if any) as directors of PMSI, and (iv) the Board of Directors
and officers of PMSI shall use their reasonable efforts to obtain such
stockholders' approval. NDC and PMSI Database shall make all necessary filings
with respect to the Stock Purchase under the Securities Laws.
5.2 EXCHANGE LISTING. NDC shall use its reasonable efforts to list,
-----------------
prior to the Closing Date, on the NYSE, subject to official notice of issuance,
the shares of NDC Common Stock to be issued to PMSI pursuant to the Stock
Purchase, and NDC shall give all notices and make all filings with the NYSE
required in connection with the transactions contemplated herein.
5.3 APPLICATIONS; ANTITRUST NOTIFICATION. NDC shall promptly prepare and
-------------------------------------
file, and PMSI Database and PMSI shall reasonably cooperate in the preparation
and, where appropriate, filing of, applications with all Regulatory Authorities
having jurisdiction over the transactions contemplated by this Agreement seeking
the requisite Consents necessary to consummate the transactions contemplated by
this Agreement. To the extent required by the HSR Act, each of the Parties will
promptly file with the United States Federal Trade Commission and the United
States Department of Justice the notification and report form required for the
transactions contemplated hereby and any supplemental or additional information
which may reasonably be requested in connection therewith pursuant to the HSR
Act and will comply in all material respects with the requirements of the
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HSR Act. The Parties shall deliver to each other copies of all filings,
correspondence and orders to and from all Regulatory Authorities in connection
with the transactions contemplated hereby.
5.4 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
--------------------------------------
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 6; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement. Each Party shall use,
and shall cause each of its Subsidiaries to use, its reasonable efforts to
obtain all Consents necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
5.5 INVESTIGATION AND CONFIDENTIALITY.
----------------------------------
(a) Prior to the Closing Date, NDC on the one hand and PMSI and PMSI
Database on the other hand shall keep each other advised of all material
developments relevant to their business and to consummation of the Stock
Purchase and shall permit the other to make or cause to be made such
investigation of the business and properties of such and its Subsidiaries and of
their respective financial and legal conditions as the other reasonably
requests, provided that such investigation shall be reasonably related to the
transactions contemplated hereby and shall not interfere unnecessarily with
normal operations.
(b) NDC on the one hand and PMSI and PMSI Database on the other hand
shall, and shall cause its advisers and agents to, maintain the confidentiality
of all confidential information furnished to it by the other concerning its and
its Subsidiaries' businesses, operations, and financial positions except to the
extent such disclosure is required by law and shall not use such information for
any purpose except in furtherance of the transactions contemplated by this
Agreement. If this Agreement is terminated prior to the Closing Date, each
Party shall promptly return or certify the destruction of all documents and
copies thereof, and all work papers containing confidential information received
from the other.
(c) NDC on the one hand and PMSI and PMSI Database on the other hand
agrees to give the other notice as soon as practicable after any determination
by it of any fact or occurrence relating to the other which it has discovered
through the course of its investigation and which represents, or is reasonably
likely to represent, either a material breach of any representation, warranty,
covenant or agreement of the other Party or which has had or is reasonably
likely to have a PMSI Database Material Adverse Effect or a NDC Material Adverse
Effect, as applicable.
5.6 PRESS RELEASES. Prior to the Closing Date, PMSI Database and NDC
---------------
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 5.6
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
5.7 CERTAIN ACTIONS. Except with respect to this Agreement and the
----------------
transactions contemplated hereby, PMSI and PMSI Database shall not, and shall
use their best efforts to cause any Affiliate or any Representatives thereof
retained by PMSI or PMSI Database not to, directly or indirectly solicit any
Acquisition Proposal by any Person that relates specifically to the Acquired
Business or the Acquired Assets. Except to the extent the Board of Directors of
PMSI and PMSI Database, after having consulted with and considered the advice of
outside counsel, reasonably determines in good faith that the failure to take
such actions would constitute a breach of fiduciary duties of the members of
such Board of Directors to the stockholders of PMSI under applicable law, PMSI,
PMSI Database, and any Affiliate or Representative thereof shall not furnish any
non-public information that it is not legally obligated to furnish, negotiate
with respect to, or enter into any Contract with
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respect to, any such Acquisition Proposal. PMSI and PMSI Database shall promptly
advise NDC following the receipt of any such Acquisition Proposal and the
details thereof, and advise NDC of any developments with respect to such
Acquisition Proposal promptly upon the occurrence thereof. PMSI and PMSI
Database shall (i) immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons conducted heretofore
with respect to any of the foregoing, and (ii) direct and use its reasonable
efforts to cause all of its Affiliates and Representatives not to engage in any
of the foregoing.
5.8 CHARTER PROVISIONS. PMSI Database shall take all necessary action to
-------------------
ensure that the entering into of this Agreement and the consummation of the
Stock Purchase and the other transactions contemplated hereby do not and will
not, except as set forth herein, result in the grant of any rights to any Person
under the Certificate of Incorporation, Bylaws or other governing instruments of
PMSI Database or restrict or impair the ability of NDC or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a stockholder with
respect to, shares of PMSI Database that may be directly or indirectly acquired
or controlled by them.
5.9 AGREEMENT OF AFFILIATES. PMSI will not sell, pledge, transfer, or
------------------------
otherwise dispose of the shares of PMSI Database Common Stock held by PMSI
except as contemplated by this Agreement and will not sell, pledge, transfer, or
otherwise dispose of the shares of NDC Common Stock to be received by PMSI upon
consummation of the Stock Purchase except in compliance with applicable
provisions of the 1933 Act and the rules and regulations thereunder. NDC shall
be entitled to place restrictive legends upon certificates for shares of NDC
Common Stock issued to PMSI pursuant to this Agreement to enforce the applicable
provisions of Law. NDC shall not be required to maintain the effectiveness of
the Registration Statement under the 1933 Act for the purposes of resale of NDC
Common Stock by PMSI except as provided in the Registration Rights Agreement.
With respect to the NDC Common Stock to be received by PMSI upon consummation of
the Stock Purchase, NDC will provide PMSI with certain registration rights
pursuant to a registration rights agreement in substantially the form of Exhibit
1 hereto (the "Registration Rights Agreement").
5.10 EMPLOYMENT OF EMPLOYEES. On the Closing Date, NDC shall offer
------------------------
employment to those Employees of the Acquired Business listed on Schedule 2.13
of the PMSI Database Disclosure Memorandum. PMSI agrees to use its commercially
reasonable efforts to assist NDC in hiring such Employees and will use its
commercially reasonable efforts to make such Employees available to NDC. All
such Employees accepting NDC's offer of employment are hereinafter referred to
as the "Hired Employees." Except as otherwise provided herein, PMSI shall be
responsible for the payment of all earned but unpaid salaries, bonus, vacation
pay, sick pay, holiday pay, severance pay and other like obligations and
payments to the Employees for all periods ending on or prior to the Closing
Date. PMSI shall be responsible for the payment of any amounts due to its
Employees (including the Hired Employees) pursuant to the PMSI Benefit Plans as
a result of the employment of its Employees, and, in determining bonuses and
other similar payments due to Hired Employees for any period ended on or prior
to the Closing Date, PMSI shall, if payment thereof will occur after the Closing
Date and the applicable performance period has been completed prior to the
Closing Date, waive any requirement that such Employees be employees of PMSI on
the date such bonuses or other similar payments are paid. PMSI shall be
responsible for all incurred but unreported or unpaid medical claims occurring
prior to the Closing Date and for the cost associated with any hospital
confinement which commences prior to the Closing Date. NDC shall become
responsible for all costs and liabilities attributable to Hired Employees
accruing on and after the Closing Date; provided, however, that NDC shall not be
responsible for (a) liabilities arising under the PMSI Benefit Plans or (b)
liabilities associated with any leaves taken prior to the Closing Date in
connection with the Family and Medical Leave Act of 1993. Effective on the
Closing Date, PMSI shall, and hereby does, release all Hired Employees from any
employment and/or confidentiality agreement previously entered into between PMSI
and such Hired Employees relating to the Acquired Business to the extent (but
only to the extent) necessary for NDC to operate the Acquired Business in the
same manner as operated by PMSI prior to the Closing Date.
PMSI shall be responsible for complying with the requirements of Section
4980B of the Internal Revenue Code and Part VI of Title I of ERISA for the
Employees (including the Hired Employees, as defined in this Section 5.10) and
their "qualified beneficiaries" whose "qualifying event" (as such terms are
defined in Section 4980B of the Internal Revenue Code) occurs on or prior to the
Closing Date.
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5.11 TAX MATTERS.
-----------
(a) PMSI and NDC shall make a timely election under (S)338(h)(10)
of the Code and (S)1.338(h)(10)-1 of the Treasury Regulations promulgated
pursuant to the Code, and any corresponding elections under state or local tax
law. PMSI and NDC shall (i) take, and cooperate with each other to take, all
actions necessary and appropriate (including, without limitation, the
preparation, completion and timely joint filing by PMSI and NDC of Form 8023-A,
and the preparation, completion and timely filing of such other forms, returns,
elections, schedules and other documents and instruments) to effect, perfect and
preserve a timely (S)338(h)(10) election in accordance with (S)338(h)(10) of the
Code and (S)1.338(h)(10)-1 of the Treasury Regulations promulgated pursuant to
the Code, and (ii) report the purchase and sale of the Shares consistent with
the election pursuant to (S)338(h)(10) and shall take no position contrary
thereto or inconsistent therewith in any Tax Return, or in any discussion with
or any proceeding before any taxing authority or other governmental body or
otherwise. In the event an election under (S)338(h)(10) is not available under
the law of any state or locality but an election can be made under Section
338(g) of the Code, such election shall be made in such state or locality and
PMSI shall bear the cost of any tax on PMSI Database related thereto (other than
the cost of any state tax for such election in the following states: Arizona,
California, Connecticut, Delaware, Illinois, New Jersey, New York and
Pennsylvania).
(b) The Purchase Price and all other items that comprise the
"modified aggregate deemed sale price" (as defined in, and required to be
allocated pursuant to, Section 338(h)(10) of the Code) shall be allocated in
accordance with a schedule prepared by NDC and consented to by PMSI, which
consent will not be withheld or delayed unreasonably. Such allocation shall, for
tax purposes, be binding on PMSI Database, PMSI and NDC. PMSI Database, PMSI and
NDC shall file their respective Tax Returns in accordance with such allocation
and shall not take any position inconsistent with such allocation. In the event
that such allocation is disputed by any Tax authority, the party receiving
notice of such dispute shall promptly notify and consult with the other parties
hereto concerning resolution of such dispute and no such dispute shall be
finally settled or compromised without the mutual consent of the parties, which
consent will not be unreasonably withheld.
(c) NDC shall have the sole and exclusive authority to prepare,
execute and file on behalf of PMSI Database (A) the federal income tax returns
to be filed on behalf of PMSI Database for the period ending as of the close of
business on the Closing Date that will include the gain or loss resulting from
the "deemed sale" and "deemed liquidation" that will occur (pursuant to Treasury
Regulation (S)1.338(h)(10)-1(e)(1) and (2) promulgated under the Code) by reason
of PMSI's and NDC's election pursuant to (S)338(h)(10) of the Code and (B) the
corresponding state and local income tax returns to be filed on behalf of PMSI
Database for the period ending as of the close of business on the Closing Date.
PMSI, upon written notice of request to NDC, shall have the right to review and
consent to such returns prior to filing, which consent shall not be unreasonably
withheld or delayed .
5.12 JOINT MARKETING. The parties hereto agree that from the date of
---------------
this Agreement each will use its reasonable efforts to negotiate and enter into
a joint marketing arrangement for the purpose of jointly promoting their
respective businesses throughout the world.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
-------------------------------------------------
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
----------------------------------------
obligations of each Party to perform this Agreement and consummate the Stock
Purchase and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by both Parties pursuant
to Section 9.6:
(A) STOCKHOLDER APPROVAL. The stockholders of PMSI shall have
--------------------
adopted this Agreement and the Source Transfer Agreement, and the
consummation of the transactions contemplated hereby and thereby,
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including the Stock Purchase in the manner described in the Proxy
Statement. PMSI, as the sole stockholder of PMSI Database shall have
adopted this Agreement and the consummation of the transactions
contemplated hereby.
(B) REGULATORY APPROVALS. All Consents of, filings and registrations
--------------------
with, and notifications to, all Regulatory Authorities required for
consummation of the transactions contemplated under this Agreement shall
have been obtained or made and shall be in full force and effect and all
waiting periods required by Law shall have expired. No Consent obtained
from any Regulatory Authority which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a
manner (including requirements relating to the raising of additional
capital or the disposition of Assets) which in the reasonable judgment of
the Board of Directors of NDC would so materially adversely impact the
economic or business assumptions of the transactions contemplated by this
Agreement that, had such condition or requirement been known, such Party
would not, in its reasonable judgment, have entered into this Agreement.
(C) CONSENTS AND APPROVALS. Each Party shall have obtained any and
----------------------
all Consents required for consummation of the transactions contemplated
under this Agreement (other than those referred to in Section 6.1(b)),
including those Consents listed in Sections 2.2 and 2.3 of the PMSI
Database Disclosure Memorandum and Section 3.2 of the NDC Disclosure
Memorandum or for the preventing of any Default under any Contract or
Permit of such Party which, if not obtained or made, is reasonably likely
to have, individually or in the aggregate, a PMSI Database Material Adverse
Effect or a NDC Material Adverse Effect, as applicable. No Consent so
obtained which is necessary to consummate the transactions contemplated
hereby shall be conditioned or restricted in a manner which in the
reasonable judgment of the Board of Directors of NDC would so materially
adversely impact the economic or business assumptions of the transactions
contemplated by this Agreement that, had such condition or requirement been
known, such Party would not, in its reasonable judgment, have entered into
this Agreement.
(D) LEGAL PROCEEDINGS. No court or governmental or regulatory
-----------------
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions contemplated by
this Agreement.
(E) REGISTRATION STATEMENT. The Registration Statement shall be
----------------------
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness thereof
shall have been initiated and be continuing, and all necessary approvals
under state securities Laws or the 1933 Act or 1934 Act relating to the
issuance, trading or resale of the shares of NDC Common Stock issuable
pursuant to the Stock Purchase shall have been received.
(F) EXCHANGE LISTING. The shares of NDC Common Stock issuable
----------------
pursuant to the Stock Purchase shall have been approved for listing on the
NYSE, subject to official notice of issuance.
6.2 CONDITIONS TO OBLIGATIONS OF NDC. The obligations of NDC to perform
---------------------------------
this Agreement and consummate the Stock Purchase and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by NDC pursuant to Section 9.6(a):
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
------------------------------
6.2(a), the accuracy of the representations and warranties of PMSI Database
and PMSI set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Closing Date with the same effect as though
all such representations and warranties had been made on and as of the
Closing Date (provided that representations and warranties which are
confined to a specified date shall speak only as of such date). The
representations and warranties set forth in Section 2.4 shall be true and
correct (except for inaccuracies which are de
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<PAGE>
minimus in amount). The representations and warranties set forth in
Sections 2.20 and 2.21 shall be true and correct in all material respects.
There shall not exist inaccuracies in the representations and warranties of
PMSI Database and PMSI set forth in this Agreement (including the
representations and warranties set forth in Sections 2.4, 2.20 and 2.21)
such that the aggregate effect of such inaccuracies has, or is reasonably
likely to have, a PMSI Database Material Adverse Effect; provided that, for
purposes of this sentence only, those representations and warranties which
are qualified by references to "material" or "Material Adverse Effect" or
to the "Knowledge" of any Person shall be deemed not to include such
qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
---------------------------------------
agreements and covenants of PMSI Database and PMSI to be performed and
complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Closing Date shall have been duly
performed and complied with in all material respects.
(C) CERTIFICATES. Each of PMSI and PMSI Database shall have delivered
------------
to NDC (i) a certificate, dated as of the Closing Date and signed on its
behalf by its chief executive officer and its chief financial officer, to
the effect that the conditions set forth in Section 6.1 as relates to PMSI
or PMSI Database, respectively, and in Section 6.2(a) and 6.2(b) have been
satisfied, and (ii) certified copies of resolutions duly adopted by each of
PMSI's and PMSI Database's Board of Directors and stockholders evidencing
the taking of all corporate action necessary to authorize the execution,
delivery and performance of this Agreement by such Party, and the
consummation of the transactions contemplated hereby, all in such
reasonable detail as NDC and its counsel shall request.
(D) OPINION OF COUNSEL. NDC shall have received an opinion of Willkie
------------------
Farr & Gallagher, counsel to PMSI, or the General Counsel of PMSI dated as
of the Closing, in form reasonably satisfactory to NDC, as to the matters
set forth in Exhibit 2.
(E) NONCOMPETITION AGREEMENT. PMSI shall have executed and delivered
------------------------
to NDC a noncompetition agreement in substantially the form of Exhibit 3
(the "Noncompetition Agreement").
(F) SOURCE AGREEMENT. All conditions to the closing of the
----------------
transactions contemplated under the Source Agreement shall have been
satisfied or waived and the consummation of such transaction shall have
occurred concurrently with the Closing.
(G) SOURCE TRANSFER AGREEMENT. All conditions to the closing of the
--------------------------
transactions contemplated under the Source Agreement shall have been
satisfied in all materials respects and the consummation of such
transaction shall have occurred concurrently with the Closing.
(H) EUROPEAN CONTRACT RELEASES. Source shall have been released from
--------------------------
any and all obligations under the European Contracts to the reasonable
satisfaction of NDC.
(I) CONSENTS. PMSI and any of its Subsidiaries which is a party
--------
thereto shall have received the Consent of all third parties to the
assignment of, or the release of PMSI or under, those Contracts listed in
Section 6.2(i) of the NDC Disclosure Memorandum for the transactions
contemplated herein.
(J) SLA LETTER AGREEMENT. SLA shall have executed and delivered to
--------------------
NDC a letter agreement substantially in the form of Exhibit 4 hereto.
6.3 CONDITIONS TO OBLIGATIONS OF PMSI DATABASE AND PMSI. The obligations
----------------------------------------------------
of PMSI Database and PMSI to perform this Agreement and consummate the Stock
Purchase and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by PMSI pursuant to
Section 9.6(b):
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<PAGE>
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
------------------------------
6.3(a), the accuracy of the representations and warranties of NDC set forth
in this Agreement shall be assessed as of the date of this Agreement and as
of the Closing Date with the same effect as though all such representations
and warranties had been made on and as of the Closing Date (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties of NDC set
forth in Sections 3.3, 3.4 and 3.10 shall be true and correct in all
material respects. There shall not exist inaccuracies in the
representations and warranties of NDC set forth in this Agreement
(including the representations and warranties discussed above and set forth
in Sections 3.3, 3.4 and 3.10) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a NDC Material Adverse
Effect; provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" or to the "Knowledge" of any Person
shall be deemed not to include such qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
---------------------------------------
agreements and covenants of NDC to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Closing Date shall have been duly performed and complied with in all
material respects.
(C) CERTIFICATES. NDC shall have delivered to PMSI (i) a certificate,
------------
dated as of the Closing Date and signed on its behalf by its chief
executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 6.1 as relates to NDC and in Section 6.3(a)
and 6.3(b) have been satisfied, and (ii) certified copies of resolutions
duly adopted by NDC's Board of Directors evidencing the taking of all
corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as PMSI and its counsel
shall request.
(D) OPINION OF COUNSEL. PMSI shall have received an opinion of the
------------------
General Counsel of NDC or Alston & Bird LLP, counsel to NDC, dated as of
the Closing Date, in form reasonably acceptable to PMSI Database, as to the
matters set forth in Exhibit 5.
(E) REGISTRATION RIGHTS AGREEMENT. NDC shall have executed and
-----------------------------
delivered to PMSI the Registration Rights Agreement.
(F) NDC NONCOMPETITION AGREEMENT. NDC shall have executed and
delivered to PMSI a noncompetition agreement substantially in the form of
Exhibit 6 hereto.
ARTICLE 7
INDEMNIFICATION
---------------
7.1 INDEMNIFICATION.
----------------
(A) AGREEMENT OF PMSI TO INDEMNIFY. Subject to the terms and
-------------------------------
conditions of this Article 7, PMSI agrees to indemnify, defend, and hold
harmless NDC and its officers, directors, stockholders, controlling persons,
Affiliates and Representatives, and each of them, from, against, for and in
respect of any and all Losses asserted against, or paid, suffered or incurred
by, an Indemnitee and resulting from, based upon, or arising out of:
(i) the inaccuracy, untruth, incompleteness or breach of any
representation or warranty of PMSI or PMSI Database contained in or made
pursuant to this Agreement or in any certificate, Schedule, or Exhibit
furnished by PMSI or PMSI Database in connection herewith (except that PMSI
shall not be obligated to indemnify NDC for Losses arising out of the
termination or cancellation of a PMSI Database Contract by a third party
prior to Closing; provided that such termination or cancellation was not
due to any breach of such Contract by PMSI Database or PMSI), and for
purposes of this Section 7.1(a)(i) any qualification of such
representations and warranties by reference to the materiality of matters
stated therein
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<PAGE>
or as to matters having or not having a "Material Adverse Effect,", and any
limitation of such representations and warranties as being "to the
knowledge of," or "known to" or words of similar effect, shall be
disregarded, in determining any inaccuracy, untruth, incompleteness or
breach thereof;
(ii) a breach of or failure to perform any covenant or agreement
of PMSI or PMSI Database made in this Agreement;
(iii) any Retained Liability; and
(iv) the European business of Source, to be acquired by PMSI
pursuant to the Source Transfer Agreement.
(B) AGREEMENT OF NDC TO INDEMNIFY. Subject to the terms and
------------------------------
conditions of this Article 7, NDC agrees to indemnify, defend, and hold harmless
PMSI and its officers, directors, stockholders, controlling persons, Affiliates
and Representatives, and each of them, from, against, for and in respect of any
and all Losses asserted against, or paid, suffered or incurred by, an Indemnitee
and resulting from, based upon, or arising out of:
(i) the inaccuracy, untruth, incompleteness or breach of any
representation or warranty of NDC contained in or made pursuant to this
Agreement or in any certificate, Schedule, or Exhibit furnished by NDC in
connection herewith and for purposes of this Section 7.1(b)(i) any
qualification of such representations and warranties by reference to the
materiality of matters stated therein or as to matters having or not having
a "Material Adverse Effect,", and any limitation of such representations
and warranties as being "to the knowledge of," or "known to" or words of
similar effect, shall be disregarded, in determining any inaccuracy,
untruth, incompleteness or breach thereof;
(ii) a breach of or failure to perform any covenant or agreement
of NDC made in this Agreement;
(iii) any Assumed Liability.
7.2 PROCEDURES FOR INDEMNIFICATION. As used herein, the term
-------------------------------
"Indemnitor" means the party against whom indemnification hereunder is entitled
to be sought, and the term "Indemnitee" means the party entitled to seek
indemnification hereunder.
(a) An Indemnification Claim shall be made by an Indemnitee by
delivery of a written notice to the Indemnitor requesting indemnification and
specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, containing (by
attachment or otherwise) such other information as such Indemnitee shall have
concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim the
procedures set forth in Section 7.3 shall be observed by the Indemnitee and the
Indemnitor.
(c) If the Indemnification Claim involves a matter other than a
Third Party Claim, the Indemnitor shall have 30 days to object to such
Indemnification Claim by delivery of a written notice of such objection to such
Indemnitee specifying in reasonable detail the basis for such objection. Failure
to timely so object shall constitute a final and binding acceptance of the
Indemnification Claim by the Indemnitor, and the Indemnification Claim shall be
paid in accordance with subsection (d) hereof. If an objection is timely
interposed by the Indemnitor and the dispute is not resolved by such Indemnitee
and the Indemnitor within 15 days from the date the Indemnitee receives such
objection, such dispute shall be resolved by arbitration as provided in Section
7.9.
(d) Upon determination of the amount of an Indemnification Claim,
whether by agreement between the Indemnitor and the Indemnitee or by an
arbitration award or by any other final adjudication, shall be paid by the
Indemnitor within ten days of the date such amount is determined.
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<PAGE>
7.3 THIRD PARTY CLAIMS. The obligations and liabilities of the
-------------------
parties hereunder with respect to a Third Party Claim shall be subject to the
following terms and conditions:
(a) The Indemnitee shall give the Indemnitor written notice of a
Third Party Claim promptly after receipt by the Indemnitee of notice
thereof, and the Indemnitor may undertake the defense, compromise and
settlement thereof by representatives of its own choosing reasonably
acceptable to the Indemnitee. The failure of the Indemnitee to notify the
Indemnitor of such claim shall not relieve the Indemnitor of any liability
that it may have with respect to such claim except to the extent the
Indemnitor demonstrates that the defense of such claim is prejudiced by
such failure. The assumption of the defense, compromise and settlement of
any such Third Party Claim by the Indemnitor shall be an acknowledgment of
the obligation of the Indemnitor to indemnify the Indemnitee with respect
to such claim hereunder. If the Indemnitee desires to participate in, but
not control, any such defense, compromise and settlement, it may do so at
its sole cost and expense. If, however, the Indemnitor fails or refuses to
undertake the defense of such Third Party Claim within ten (10) days after
written notice of such claim has been given to the Indemnitor by the
Indemnitee, the Indemnitee shall have the right to undertake the defense,
compromise and settlement of such claim with counsel of its own choosing.
In the circumstances described in the preceding sentence, the Indemnitee
shall, promptly upon its assumption of the defense of such claim, make an
Indemnification Claim as specified in Section 7.2 which shall be deemed an
Indemnification Claim that is not a Third Party Claim for the purposes of
the procedures set forth herein.
(b) If, in the reasonable opinion of the Indemnitee, any Third
Party Claim or the litigation or resolution thereof involves an issue or
matter which could have a material adverse effect on the business,
operations, assets, properties or prospects of the Indemnitee (including,
without limitation, the administration of the tax returns and
responsibilities under the tax laws of the Indemnitee), the Indemnitee
shall have the right to control the defense, compromise and settlement of
such Third Party Claim undertaken by the Indemnitor, and the costs and
expenses of the Indemnitee in connection therewith shall be included as
part of the indemnification obligations of the Indemnitor hereunder. If the
Indemnitee shall elect to exercise such right, the Indemnitor shall have
the right to participate in, but not control, the defense, compromise and
settlement of such Third Party Claim at its sole cost and expense.
(c) No settlement of a Third Party Claim involving the asserted
liability of an Indemnitor under this Article shall be made without the
prior written consent by or on behalf of the Indemnitor, which consent
shall not be unreasonably withheld or delayed. Consent shall be presumed in
the case of settlements of $20,000 or less where the Indemnitor has not
responded within five business days of notice of a proposed settlement. If
the Indemnitor assumes the defense of such a Third Party Claim, (a) no
compromise or settlement thereof may be effected by the Indemnitor without
the Indemnitee's consent unless (i) there is no finding or admission of any
violation of law or any violation of the rights of any person and no effect
on any other claim that may be made against the Indemnitee, (ii) the sole
relief provided is monetary damages that are paid in full by the
Indemnitor, and (iii) the compromise or settlement includes, as an
unconditional term thereof, the giving by the claimant or the plaintiff to
the Indemnitee of a release, in form and substance satisfactory to the
Indemnitee, from all liability in respect of such Third Party Claim, and
(b) the Indemnitee shall have no liability with respect to any compromise
or settlement thereof effected without its consent.
(d) In connection with the defense, compromise or settlement of
any Third Party Claim, the parties to this Agreement shall execute such
powers of attorney as may reasonably be necessary or appropriate to permit
participation of counsel selected by any party hereto and, as may
reasonably be related to any such claim or action, shall provide access to
the counsel, accountants and other representatives of each party during
normal business hours to all properties, personnel, books, tax records,
contracts, commitments and all other business records of such other party
and will furnish to such other party copies of all such documents as may
reasonably be requested (certified, if requested).
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<PAGE>
7.4 SURVIVAL. Subject to Section 7.5, all representations, warranties
---------
and agreements contained in this Agreement or in any certificate delivered
pursuant to this Agreement shall survive the Closing notwithstanding any
investigation conducted with respect thereto or any knowledge acquired as to the
accuracy or inaccuracy of any such representation or warranty.
7.5 TIME LIMITATIONS. PMSI and PMSI Database, on the one hand, and
-----------------
NDC, on the other hand, will have no liability to the other party under or in
connection with: (a) a breach of any of the representations, warranties,
covenants or agreements made or to be performed by such party contained in this
Agreement unless written notice asserting an Indemnification Claim based thereon
is given to the other party prior to August 31, 1999; provided, however, the
liability of PMSI relating to, arising out of or based upon Section 7.1(a)(iii),
7.1(a)(iv) hereof, and the liability of NDC relating to, arising out of or based
upon Section 7.1(b)(iii), may be asserted at any time.
7.6 LIMITATIONS AS TO AMOUNT.
-------------------------
(a) Except as provided in Sections 1.2 and 1.4 herein, neither
PMSI nor NDC shall have any liability with respect to the matters described in
clauses (a)(i) or (a)(ii) with respect to PMSI and (b)(i) and (b)(ii) with
respect to NDC of Section 7.1 until the total of all Losses with respect thereto
exceeds $30,000 (the "Threshold Amount") in which event PMSI or NDC, as the case
may be, shall be obligated to indemnify as provided in this Article 7 for all
such Losses; provided, however, that each individual claim of $10,000 or less
shall not be indemnifiable, and shall not be includable in determining whether
the $30,000 threshold has been reached.
(b) The aggregate liability of PMSI under Sections 7.1(a)(i) and
7.1(a)(ii) (other than Sections 1.2 and 1.4) and NDC under Sections 7.1(b)(i)
and 7.1(b)(ii) (other than Sections 1.2 and 1.4) hereof shall not exceed
$1,000,000 (the "Maximum Amount").
(c) The Threshold Amount and Maximum Amount limitations shall not
apply to the indemnification rights of the parties hereto for any liability
under Sections 1.2, 1.4, 7.1(a)(iii), 7.1(a)(iv) and 7.1(b)(iii) hereof and the
payment of such amounts by PMSI or NDC shall not count toward the calculation of
the Maximum Amount.
7.7 TAX EFFECT AND INSURANCE. The liability of an Indemnitor with
------------------------
respect to any Indemnification Claim shall be reduced by the tax benefit
actually realized and any insurance proceeds received by the Indemnitee as a
result of any Losses upon which such Indemnification Claim is based, and shall
include any tax detriment actually suffered by the Indemnitee as a result of
such Losses or the claims hereunder. The amount of any such tax benefit or
detriment shall be determined by taking into account the effect, if any and to
the extent determinable, of timing differences resulting from the acceleration
or deferral of items of gain or loss resulting from such Losses and shall
otherwise be determined so that payment by the Indemnitor of the Indemnification
Claim, as adjusted to give effect to any such tax benefit or detriment, will
make the Indemnitee as economically whole as is reasonably practical with
respect to the Losses upon which the Indemnification Claim is based. Any
dispute as to the amount of such tax benefit or detriment shall be resolved by
arbitration as provided in this Section 7.9 of this Agreement.
7.8 SUBROGATION. Upon payment in full of any Indemnification Claim,
------------
whether such payment is effected by set-off or otherwise, or the payment of any
judgment or settlement with respect to a Third Party Claim, the Indemnitor shall
be subrogated to the extent of such payment to the rights of the Indemnitee
against any person or entity with respect to the subject matter of such
Indemnification Claim or Third Party Claim.
7.9 ARBITRATION. All disputes arising under this Article 10 (other
------------
than claims in equity) shall be resolved by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
Arbitration shall be by a single arbitrator experienced in the matters at issue
and selected by PMSI and NDC in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. The arbitration shall be held in such
place in Washington, D.C., as may be specified by the arbitrator (or any place
agreed to by PMSI, NDC and the arbitrator). The decision of the arbitrator shall
be final and binding as to any
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<PAGE>
matters submitted under this Article 7; provided, however, if necessary, such
decision and satisfaction procedure may be enforced by either PMSI or NDC in any
court of record having jurisdiction over the subject matter or over any of the
parties to this Agreement. All costs and expenses incurred in connection with
any such arbitration proceeding (including reasonable attorneys fees) shall be
borne by the party against which the decision is rendered, or, if no decision is
rendered, such costs and expenses shall be borne equally by the Indemnitor and
the Indemnitee. If the arbitrator's decision is a compromise, the determination
of which party or parties bears the costs and expenses incurred in connection
with any such arbitration proceeding shall be made by the arbitrator on the
basis of the arbitrator's assessment of the relative merits of the parties'
positions.
ARTICLE 8
TERMINATION
-----------
8.1 TERMINATION. Notwithstanding any other provision of this
------------
Agreement, and notwithstanding the approval of this Agreement by the
stockholders of PMSI and PMSI Database, this Agreement may be terminated and the
Stock Purchase abandoned at any time prior to the Closing Date:
(a) By mutual consent of NDC and PMSI ; or
(b) By either Party (provided that the terminating Party is not then
in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by
the other Party of any representation or warranty contained in this Agreement
which cannot be or has not been cured within 30 days after the giving of
written notice to the breaching Party of such breach and which breach is
reasonably likely, in the opinion of the non-breaching Party, to have,
individually or in the aggregate, a PMSI Database Material Adverse Effect or
a NDC Material Adverse Effect, as applicable, on the breaching Party; or
(c) By either Party (provided that the terminating Party is not then
in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by
the other Party of any covenant or agreement contained in this Agreement
which cannot be or has not been cured within 30 days after the giving of
written notice to the breaching Party of such breach; or
(d) By either Party (provided that the terminating Party is not then
in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event (i) any Consent of any
Regulatory Authority required for consummation of the Stock Purchase and the
other transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
stockholders of PMSI or PMSI Database fail to vote their approval of the
matters relating to this Agreement and the Source Transfer Agreement and the
transactions contemplated hereby and thereby at the Stockholders' Meeting
where such matters were presented to such stockholders for approval and voted
upon in accordance with the procedure set forth in the Proxy Statement; or
(e) By either Party in the event that the Stock Purchase shall not
have been consummated by January 31, 1998, if the failure to consummate the
transactions contemplated hereby on or before such date is not caused by any
breach of this Agreement by the Party electing to terminate pursuant to this
Section 8.1(e); or
(f) By either Party (provided that the terminating Party is not then
in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event that any of the
conditions precedent to the obligations of such Party to consummate the Stock
Purchase cannot be satisfied or fulfilled by the date specified in Section
8.1(e); or
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(g) By NDC, in the event that the Board of Directors of PMSI or PMSI
Database shall have failed to reaffirm their approval of the Stock Purchase
and the transactions contemplated by this Agreement (to the exclusion of any
other Acquisition Proposal), or shall have resolved not to reaffirm the Stock
Purchase, or shall have affirmed, recommended or authorized entering into any
other Acquisition Proposal or other transaction involving a Stock Purchase,
share exchange, consolidation or transfer of substantially all of the
Acquired Assets; or
(h) By PMSI if the Average Closing Price on the Determination Date of
shares of NDC Common Stock shall be less than the Lower Threshold Price;
subject, however, to the following three sentences. If PMSI elects to refuse
to consummate the Stock Purchase pursuant to this Section 8.1(h), it shall
give written notice thereof to NDC not later than two trading days following
the Determination Date. During the five-day period commencing with its
receipt of such notice, NDC shall have the option, in its sole discretion, to
elect to revise the Base Amount to equal that number of shares of NDC Common
Stock (rounded to the nearest whole share) obtained by dividing the product
of the Base Amount and the Lower Threshold Price by the Average Closing
Price. If NDC makes an election contemplated by the preceding sentence,
within such five-day period, it shall give prompt written notice to PMSI of
such election and the revised Base Amount, whereupon the condition to
consummation provided in this Section 8.1(h) shall be deemed to be satisfied
and this Agreement shall remain in effect in accordance with its terms
(except as the Base Amount shall have been so modified), and any references
in this Agreement to "Base Amount" shall thereafter be deemed to refer to the
Base Amount as adjusted pursuant to this Section 8.1(h).
8.2 EFFECT OF TERMINATION. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 8.1, this Agreement shall
become void and have no effect, except that (i) the provisions of this Section
8.2 and Article 9 and Section 5.5(b) shall survive any such termination and
abandonment, and (ii) a termination pursuant to Sections 8.1(b), 8.1(c) or
8.1(f) shall not relieve the breaching Party from Liability for an uncured
willful breach of a representation, warranty, covenant, or agreement giving rise
to such termination.
ARTICLE 9
MISCELLANEOUS
-------------
9.1 DEFINITIONS.
-----------
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"ACCOUNTS RECEIVABLE" shall mean all accounts, notes and other
receivables.
"ACCRUED BONUSES" shall mean the amount equal to that percentage of
budgeted annual bonuses which shall equal the ratio of the earnings of the
Joint Venture Interest through the Closing Date to budgeted earnings for the
full fiscal year. All budgeted amounts used herein to be as set forth in
Schedule 4.2(b) of the Source Disclosure Memorandum.
"ACQUIRED BUSINESS" shall mean the business and assets related to the
Over-the-Counter Business and the Research Solutions Group.
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<PAGE>
"ACQUISITION PROPOSAL" with respect to (X) PMSI Database, shall mean
any tender offer or exchange offer or any proposal for a merger, acquisition
of all of the stock or assets of, or other business combination involving the
acquisition of PMSI Database or the acquisition of a substantial equity
interest in, or a substantial portion of the assets of, PMSI Database and (y)
PMSI, shall mean any proposal for an acquisition of the Acquired Assets or
the Joint Venture Interest.
"AFFILIATE" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person or; (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner of any 10% or
greater equity or voting interest of such Person.
"AGREEMENT" shall mean this Stock Purchase Agreement, including the
Exhibits delivered pursuant hereto and incorporated herein by reference.
"AMENDED AND RESTATED ALPHA DATABASE LICENSE AGREEMENT" shall mean
that certain Amended and Restated Alpha Database License Agreement dated as
of July 1, 1994 by and among Walsh International Holdings Limited and Walsh
America Limited and PMSI and all customer, data provider and service
contracts, agreements or understandings relating thereto.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued
or contingent, or otherwise relating to or utilized in such Person's
business, directly or indirectly, in whole or in part, whether or not carried
on the books and records of such Person, and whether or not owned in the name
of such Person or any Affiliate of such Person and wherever located.
"ASSUMED LIABILITIES" means (a) the liabilities of PMSI Database of
the type and in the amounts included in the Closing Balance Sheet and set
forth in Section 2.6 and 2.7 of the PMSI Database Disclosure Memorandum, (b)
the obligations arising after the Closing Date under the Acquired Contracts
and (c) the liabilities arising after and resulting from events following the
Closing Date with respect to the Acquired Business, the Acquired Assets and
the Joint Venture Interests.
"AVERAGE CLOSING PRICE" shall mean the average of the daily closing
sales prices of NDC Common Stock as reported on the NYSE Composite
Transactions reporting system (as reported by The Wall Street Journal or, if
not reported thereby, another authoritative source as chosen by NDC) for the
ten consecutive full trading days in which such shares are traded on the NYSE
ending at the close of trading on the Determination Date.
"CLOSING BALANCE SHEET" shall mean the balance sheet for PMSI Database
as of the Closing Date delivered by NDC to PMSI.
"CLOSING DATE" shall mean a date on which the parties mutually agree.
"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of any
kind or character, or other document to which any Person is a party or that
is binding on any Person or its capital stock, Assets or business.
"CONTRIBUTION" shall mean the contribution of the Acquired Assets and
the Joint Venture Interest by PMSI and its Subsidiaries to PMSI Database as
contemplated herein.
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<PAGE>
"DEFAULT" shall mean (i) any breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit, (ii)
any occurrence of any event that with the passage of time or the giving of
notice or both would constitute a breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time or
the giving of notice would give rise to a right of any Person to exercise any
remedy or obtain any relief under, terminate or revoke, suspend, cancel, or
modify or change the current terms of, or renegotiate, or to accelerate the
maturity or performance of, or to increase or impose any Liability under, any
Contract, Law, Order, or Permit, where, in any such event, such Default is
reasonably likely to have, individually or in the aggregate, a PMSI Database
Material Adverse Effect or a NDC Material Adverse Effect, as applicable.
"DETERMINATION DATE" shall mean the close of trading on the tenth
trading day immediately preceding the Closing Date.
"DGCL" shall mean the Delaware General Corporation Law.
"EQUITY RIGHTS" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings, warrants,
or other binding obligations of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the
capital stock of a Person or by which a Person is or may be bound to issue
additional shares of its capital stock or other Equity Rights.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EUROPEAN CONTRACTS" shall mean all material Contracts relating to the
European Business of Source to which a Source Entity is a party, or under
which a Source Entity has obligations contingent or otherwise.
"EXHIBITS" 1 through 6, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be referred
to in this Agreement and any other related instrument or document without
being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HSR ACT" shall mean Section 7A of the Clayton Act, as added by Title
II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder.
"INDEMNIFICATION CLAIM" shall mean a claim for indemnification under
Article 7.
"INTELLECTUAL PROPERTY" shall mean copyrights, patents, trademarks,
service marks, service names, trade names, applications therefore, technology
rights and licenses, computer software (including any source or object codes
therefore or documentation relating thereto), trade secrets, franchises,
know-how, inventions, and other intellectual property rights.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"JOINT VENTURE INTEREST" means all right, title and interest of PMSI
in the Amended and Restated Alphabase Data License Agreement.
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<PAGE>
"KNOWLEDGE" as used with respect to a Person (including references to
such Person being aware of a particular matter) shall mean those facts that
are known or should reasonably have been known after due inquiry by the
chairman, president, chief financial officer, chief accounting officer, chief
operating officer, general counsel, any assistant or deputy general counsel,
or any senior, executive or other vice president or general manager of such
Person and the knowledge of any such persons obtained or which would have
been obtained from a reasonable investigation.
"LAW" shall mean any code, law (including common law), ordinance,
regulation, reporting or licensing requirement, rule, or statute applicable
to a Person or its Assets, Liabilities, or business, including those
promulgated, interpreted or enforced by any Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including
costs of investigation, collection and defense), claim, deficiency, guaranty
or endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course
of business) of any type, whether accrued, absolute or contingent, liquidated
or unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, and (iii) Liens which do not materially impair
the use of or title to the Assets subject to such Lien.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, governmental or other examination or
investigation, hearing, administrative or other proceeding relating to or
affecting a Party, its business, its Assets (including Contracts related to
it), or the transactions contemplated by this Agreement.
"LOSSES" shall mean any and all demands, claims, actions or causes of
action, assessments, losses, diminution in value, damages (including special
and consequential damages), liabilities, costs, and expenses, including
interest, penalties, cost of investigation and defense, and reasonable
attorneys' and other professional fees and expenses.
"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine materiality
in that instance.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ NATIONAL MARKET" shall mean the Nasdaq National Market, a
district tier of The Nasdaq Stock Market operated by The Nasdaq Stock Market,
Inc., a wholly-owned subsidiary of the National Association of Securities
Dealers Automated Quotations System.
"NDC CAPITAL STOCK" shall mean, collectively, the NDC Common Stock,
the NDC Preferred Stock and any other class or series of capital stock of
NDC.
"NDC COMMON STOCK" shall mean the $0.125 par value common stock of
NDC.
"NDC DISCLOSURE MEMORANDUM" shall mean the written information
entitled "NDC Corporation Disclosure Memorandum" delivered prior to the date
of this Agreement to PMSI Database describing in reasonable detail the
matters contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made unless
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<PAGE>
such disclosure is reasonably adequate to inform the other party that each
matter disclosed would be responsive to another section of disclosure in the
Disclosure Memorandum.
"NDC ENTITIES" shall mean, collectively, NDC and its Subsidiaries.
"NDC FINANCIAL STATEMENTS" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of NDC as of February
28, 1997, and as of May 31, 1996 and 1995, and the related statements of
income, changes in stockholders' equity, and cash flows (including related
notes and schedules, if any) for the nine months ended February 28, 1997, and
for each of the three fiscal years ended May 31, 1996, 1995 and 1994, as
filed by NDC in SEC Documents, and (ii) the consolidated balance sheets of
NDC (including related notes and schedules, if any) and related statements of
income, changes in stockholders' equity, and cash flows (including related
notes and schedules, if any) included in the SEC Documents filed with respect
to periods ended subsequent to February 28, 1997.
"NDC MATERIAL ADVERSE EFFECT" shall mean an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of NDC and its Subsidiaries, taken as a
whole, or (ii) the ability of NDC to perform its obligations under this
Agreement or to consummate the Stock Purchase or the other transactions
contemplated by this Agreement, provided that "Material Adverse Effect" shall
not be deemed to include the impact of (a) actions and omissions of NDC (or
any of its Subsidiaries) taken with the prior informed written Consent of
PMSI in contemplation of the transactions contemplated hereby, and (b) the
direct effects of compliance with this Agreement on the operating performance
of NDC, including expenses incurred by NDC in consummating the transactions
contemplated by this Agreement.
"NDC PREFERRED STOCK" shall mean the $1.00 par value preferred stock
of NDC.
"NDC RIGHTS" shall mean the preferred stock purchase rights issued
pursuant to the NDC Rights Agreement.
"NDC RIGHTS AGREEMENT" shall mean that certain Rights Agreement, dated
January 18, 1991, between NDC and Wachovia Bank of North Carolina, N.A., as
Rights Agent.
"NDC SUBSIDIARIES" shall mean the Subsidiaries of NDC and any
corporation or other organization acquired as a Subsidiary of NDC in the
future and held as a Subsidiary by NDC at the Closing Date.
"NYSE" shall mean the New York Stock Exchange, Inc.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"OTC BALANCE SHEET" shall mean the balance sheet of the Acquired
Business as of March 31, 1997.
"OTC FINANCIAL STATEMENTS" shall mean the OTC Balance Sheet (including
related notes and schedules, if any), and the related statement of income
(including related notes and schedules, if any) with respect to period ended
March 31, 1997.
"OTHER ASSETS" shall mean all goods or assets of any kind or nature,
tangible or intangible, other than Personal Property, Contracts, Accounts
Receivable, Intellectual Property and Permits.
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<PAGE>
"OVER-THE-COUNTER BUSINESS" shall mean the business currently operated
by PMSI or any of its Subsidiaries relating to the development, use or
exploitation of over-the-counter medicine databases.
"PARTY" shall mean either PMSI, PMSI Database or NDC, and "PARTIES"
shall mean all of PMSI, PMSI Database and NDC.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets, or business.
"PERSON" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in
a representative capacity.
"PERSONAL PROPERTY" shall mean equipment, tools, computers, terminals,
point of sale terminals, computer equipment, office equipment, furniture,
business machines, telephones and telephone systems, parts, accessories and
other items of personal property.
"PMSI" shall mean PMSI, Inc., a Delaware corporation.
"PMSI BENEFIT PLAN" shall include any pension, retirement, profit-
sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plan, any other written
employee program, arrangement or agreement, any medical, vision, dental or
other health plan, any life insurance plan, and any other employee benefit
plan or fringe benefit plan, including any "employee benefit plan" as that
term is defined in Section 3(3) of ERISA, which is or, within the 6 years
preceding the Closing Date, has been adopted, maintained, sponsored in whole
or in part by or contributed to by PMSI Database or PMSI for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors
or other beneficiaries.
"PMSI DATABASE BALANCE SHEET" shall mean the balance sheet of the
Acquired Business and the Joint Venture Interest dated March 31, 1997.
"PMSI DATABASE COMMON STOCK" shall mean the $0.01 par value common
stock of PMSI Database.
"PMSI DATABASE DISCLOSURE MEMORANDUM" shall mean the written
information entitled "PMSI Database Disclosure Memorandum" delivered prior to
the date of this Agreement to NDC describing in reasonable detail the matters
contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made unless such disclosure is reasonably adequate to
inform the other party that each matter disclosed would be responsive to
another section of disclosure in the Disclosure Memorandum.
"PMSI DATABASE FINANCIAL STATEMENTS" shall mean the PMSI Database
Balance Sheet (including related notes and schedules, if any) and the related
statements of income, changes in stockholders' equity, and cash flows
(including related notes and schedules, if any) with respect to period ended
March 31, 1997.
"PMSI DATABASE MATERIAL ADVERSE EFFECT" shall mean an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of PMSI Database and its Subsidiaries,
taken as a whole, or (ii) the ability of PMSI Database to perform its
obligations under this Agreement or to consummate the Stock Purchase or the
other transactions contemplated by this Agreement, provided that "Material
Adverse Effect" shall not be deemed to include the impact of (a) actions and
omissions of PMSI Database (or any of
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<PAGE>
its Subsidiaries) taken with the prior informed written Consent of NDC in
contemplation of the transactions contemplated hereby, and (b) the direct
effects of compliance with this Agreement on the operating performance of
PMSI Database, including expenses incurred by PMSI Database in consummating
the transactions contemplated by this Agreement.
"PMSI ENTITY" shall mean PMSI and its Subsidiaries.
"PRIME RATE" shall mean the rate of interest per annum publicly
announced from time to time in the Wall Street Journal.
"PROXY STATEMENT" shall mean the proxy statement used by PMSI to
solicit the approval of its stockholders of the transactions contemplated by
this Agreement and the Source Transfer Agreement.
"PURCHASE PRICE" shall mean the total consideration to be paid to PMSI
by NDC for the purchase of the PMSI Database Common Stock pursuant to Section
1.1 of this Agreement as adjusted pursuant to Sections 1.2 and 1.4 hereof.
"REGISTRATION STATEMENT" shall mean the Registration Statement on Form
S-4, or other appropriate form, including any pre-effective or post-effective
amendments or supplements thereto, filed with the SEC by NDC under the 1933
Act with respect to the shares of NDC Common Stock to be issued to the
stockholders of PMSI Database in connection with the transactions
contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the SEC, the NYSE,
the NASD, the Federal Trade Commission, the United States Department of
Justice, and all other federal, state, county, local or other governmental or
regulatory agencies, authorities (including self-regulatory authorities),
instrumentalities, commissions, boards or bodies having jurisdiction over the
Parties and their respective Subsidiaries.
"REPRESENTATIVE" shall mean any investment banker, financial advisor,
attorney, accountant, consultant, or other representative engaged by a
Person.
"RETAINED LIABILITY" shall mean all Liabilities and obligations of
PMSI or its Affiliates whether known or unknown, absolute, contingent, or
otherwise, and whether or not related to the Acquired Business, the Acquired
Assets, and the Joint Venture Interest other than Assumed Liabilities,
including but not limited to (i) any Liability or obligation arising or
accruing under any Contract, including the Amended and Restated Alpha
Database License Agreement, prior to the Closing Date and any Liability or
obligation arising from or related to any breach or violation by PMSI or its
Affiliates under any provision of any Contract prior to the Closing Date;
(ii) any Liability of PMSI with respect to any claim or cause of action,
regardless of when made or asserted, which arises out of or in connection
with the operation of the Acquired Business by PMSI or PMSI Database prior to
the Closing Date; and (iii) any Liability of PMSI for the payment of Taxes
relating to the Acquired Business, the Joint Venture Interest or the Acquired
Assets relating to periods prior to the Closing Date except to the extent
reflected in the Closing Balance Sheet and Schedules.
"SEC DOCUMENTS" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with any Regulatory Authority
pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules
and regulations of any Regulatory Authority promulgated thereunder.
"SLA" shall mean PMSI Scott-Levin, Inc., a New Jersey corporation.
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"SOURCE ENTITY" shall mean Source and its Subsidiaries other than the
Source Divestiture Subsidiaries.
"SOURCE DIVESTITURE SUBSIDIARIES" shall mean the European Subsidiaries
of Source which are to be sold to PMSI under the Source Transfer Agreement.
"SOURCE TRANSFER AGREEMENT" means that certain Securities Transfer
Agreement, dated as of the date hereof, between Source and PMSI.
"STOCKHOLDERS' MEETING" shall mean the meeting of the stockholders of
PMSI to be held pursuant to Section 5.1, including any adjournment or
adjournments thereof.
"SUBSIDIARIES" shall mean all those corporations, associations, or
other business entities of which the entity in question either (i) owns or
controls 50% or more of the outstanding equity securities either directly or
through an unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its PMSI
(provided, there shall not be included any such entity the equity securities
of which are owned or controlled in a fiduciary capacity), (ii) in the case
of partnerships, serves as the sole general partner or the managing general
partner, (iii) in the case of a limited liability company, serves as the sole
managing member, or (iv) otherwise has the ability to elect a majority of the
directors, trustees or managing members (or Persons performing similar
functions) thereof.
"TAX RETURN" shall mean any report, return, information return, or
other information required to be supplied to a taxing authority in connection
with Taxes, including any return of an affiliated or combined or unitary
group that includes a Party or its Subsidiaries.
"TAX" or "TAXES" shall mean any federal, state, county, local, or
foreign taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single
business and unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever, imposes
or required to be withheld by the United States or any state, county, local
or foreign government or subdivision or agency thereof, including any
interest, penalties, and additions imposed thereon or with respect thereto.
"THIRD PARTY CLAIM" shall mean any Litigation (including, without
limitation, a binding arbitration or an audit by any taxing authority) that
is instituted against an Indemnitee by a Person other than an Indemnitor and
which, if prosecuted successfully, would result in a Loss for which such
Indemnitee is entitled to indemnification hereunder.
(b) The terms set forth below shall have the meanings ascribed thereto
in the referenced sections:
<TABLE>
<S> <C>
Base Amount Section 1.1
Cash Amount Section 1.1(a)
Closing Section 1.6
Closing Balance Sheet Section 1.3(a)
Closing Current Assets Section 1.3(a)
Closing Current Liabilities Section 1.3(a)
Closing Working Capital Section 1.3(a)
Current Asset Allocation Amount Section 1.4(c)
Current Assets Section 1.2(a)
Current Liabilities Section 1.2(a)
Disputed Amounts Section 1.3(c)
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Divestiture Section 4.1(e)
Employees Section 2.13
Estimated Current Assets Section 1.2(a)
Estimated Current Liabilities Section 1.2(a)
Estimated Working Capital Section 1.2(a)
Estimated Working Capital Adjustment Section 1.2(c)
ERISA Affiliate Section 2.14
European Business Section 4.1(e)
European Contracts Section 2.15
Exchange Agent Section 4.1
Final Current Assets Section 1.4(a)
Final Current Liabilities Section 1.4(a)
Final Working Capital Section 1.4(a)
Final Working Capital Deficit Section 1.4(a)
Final Working Capital Surplus Section 1.4(a)
Hired Employees Section 5.11
Indemnitee Section 7.2
Indemnitor Section 7.2
Lower Threshold Price Section 1.1(b)
Maximum Amount Section 7.6
NDC SEC Reports Section 3.4(a)
Noncompetition Agreement Section 6.2(g)
PMSI Database Contracts Section 2.15
Preliminary Balance Sheet Section 1.2(a)
Registration Rights Agreement Section 5.10
Shares Preamble
Stock Purchase Section 1.1
Source Preamble
Source Agreement Preamble
Threshold Amount Section 7.6
Threshold Prices Section 1.1(b)
Total Combined Assets Section 1.4(b)
Total Current Assets Section 1.4(b)
Total Current Liabilities Section 1.4(b)
Total Working Capital Deficit Section 1.4(b)
Total Working Capital Surplus Section 1.4(b)
Upper Threshold Price Section 1.1(b)
Working Capital Section 1.2
</TABLE>
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
9.2 EXPENSES.
--------
(a) Except as otherwise provided in this Section 9.2, each of the
Parties shall bear and pay all direct costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
filing, registration and application fees, printing fees, and fees and expenses
of its own financial or other consultants, investment bankers, accountants, and
counsel, except that each of NDC and PMSIs shall bear and pay one-half of the
filing fees payable in connection with the HSR Act.
(b) Notwithstanding the foregoing, if this Agreement is terminated
by NDC pursuant to Section 8.1(d)(ii) (as relates to approval of PMSI or
PMSI's stockholders),
A-40
<PAGE>
then PMSI Database shall promptly pay NDC all the out-of-pocket costs and
expenses of NDC relating to this Agreement and the Source Agreement not to
exceed $750,000, including costs of counsel, investment bankers, actuaries and
accountants.
(c) Nothing contained in this Section 9.2 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by a Party of the
terms of this Agreement or otherwise limit the rights of the nonbreaching Party.
9.3 BROKERS AND FINDERS. Except for Cowen & Company as to PMSI Database
--------------------
and PMSI and except for Lazard Freres & Co. LLC as to NDC, each of the Parties
represents and warrants that neither it nor any of its officers, directors,
employees, or Affiliates has employed any broker or finder or incurred any
Liability for any financial advisory fees, investment bankers' fees, brokerage
fees, commissions, or finders' fees in connection with this Agreement or the
transactions contemplated hereby. In the event of a claim by any broker or
finder based upon his or its representing or being retained by or allegedly
representing or being retained by PMSI Database or PMSI or by NDC, each of PMSI
Database and PMSI and NDC, as the case may be, agrees to indemnify and hold the
other Party harmless of and from any Liability in respect of any such claim.
9.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein,
-----------------
this Agreement (including the documents and instruments referred to herein)
constitutes 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. Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, other than as provided in
Article 7 with respect to Indemnitees. THIS AGREEMENT DOES NOT CONSTITUTE AN
AGREEMENT BETWEEN THE PARTIES NOR SHALL IT BE USED AS EVIDENCE OF SUCH AGREEMENT
UNTIL THIS AGREEMENT HAS BEEN EXECUTED BY THE PARTIES.
9.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
-----------
amended by a subsequent writing signed by each of the Parties upon the approval
of each of the Parties, whether before or after stockholder approval of this
Agreement has been obtained; provided, that after any such approval there shall
be made no amendment that pursuant to Section 251 of the DGCL requires further
approval by such stockholders without the further approval of such stockholders.
9.6 WAIVERS.
-------
(a) Prior to or at the Closing Date, NDC, acting through its Board of
Directors, chief executive officer or other authorized officer, shall have the
right to waive any Default in the performance of any term of this Agreement by
PMSI Database or PMSI, to waive or extend the time for the compliance or
fulfillment by PMSI Database or PMSI of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of NDC under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of NDC.
(b) Prior to or at the Closing Date, PMSI, acting through its Board of
Directors, chief executive officer or other authorized officer, shall have the
right to waive any Default in the performance of any term of this Agreement by
NDC, to waive or extend the time for the compliance or fulfillment by NDC of any
and all of its obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of PMSI Database and the PMSI under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of PMSI.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
A-41
<PAGE>
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
9.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
----------
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
9.8 NOTICES. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
PMSI Database or
PMSI: Pharmaceutical Marketing Services Inc.
45 Rockefeller Plaza
9th Floor
New York ,New York 10111
Telecopy Number: (212) 841-5760
Attention: Warren Hauser, Esq.
Copy to Counsel: Willkie Farr & Gallagher
45th Floor, Citicorp Center
153 East 53rd Street
New York, New York 10022
Telecopy Number: (212) 821-8111
Attention: William Grant, Esq.
NDC: National Data Corporation
One National Data Plaza
Atlanta, Georgia 30329
Telecopy Number: (404) 728-2990
Attention: E. Michael Ingram, Esq.
Copy to Counsel: Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Telecopy Number: (404) 881-7777
Attention: B. Harvey Hill, Jr., Esq.
9.9 GOVERNING LAW. This Agreement shall be governed by and construed in
-------------
accordance with the Laws of the State of Delaware, without regard to any
applicable conflicts of Laws.
9.10 COUNTERPARTS. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
A-42
<PAGE>
9.11 CAPTIONS; ARTICLES AND SECTIONS. The captions contained in this
-------------------------------
Agreement are for reference purposes only and are not part of this Agreement.
Unless otherwise indicated, all references to particular Articles or Sections
shall mean and refer to the referenced Articles and Sections of this Agreement.
9.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
---------------
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
9.13 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 specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
9.14 SEVERABILITY. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
A-43
<PAGE>
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day and year
first above written.
NATIONAL DATA CORPORATION
By: /s/ E. Michael Ingram
Name: E. Michael Ingram
Title: Senior Vice President
PMSI DATABASE HOLDINGS, INC.
By: /s/ Fred Kyle
Name: Fred Kyle
Title: Vice Chairman
PHARMACEUTICAL MARKETING
SERVICES INC.
By: /s/ Fred Kyle
Name: Fred Kyle
Title: Vice Chairman
A-44
<PAGE>
ANNEX B
FINANCIAL STATEMENTS
OF
PMSI DATABASE HOLDINGS, INC.
B-1
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PMSI DATABASE HOLDINGS, INC.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS B-3
FINANCIAL STATEMENTS
Balance Sheets as of June 30, 1997 (Audited) and 1996 (Unaudited) B-4
Statements of Operations for the Years Ended June 30, 1997 (Audited), 1996
(Unaudited), and 1995 (Unaudited) B-5
Statements of Stockholder's Equity for the Years Ended June 30, 1997 (Audited), 1996
(Unaudited), and 1995 (Unaudited) B-6
Statements of Cash Flows for the Years Ended June 30, 1997 (Audited), 1996
(Unaudited), and (Unaudited) 1995 B-7
NOTES TO FINANCIAL STATEMENTS B-8
</TABLE>
B-2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To PMSI Database Holdings, Inc.:
We have audited the accompanying balance sheet of PMSI DATABASE HOLDINGS, INC.
as of June 30, 1997 and the related statements of operations, stockholder's
equity, and cash flows for the year then ended. These financial statements are
the responsibility of PMSI Database Holdings, Inc.'s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PMSI Database Holdings, Inc. as
of June 30, 1997 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
Atlanta, Georgia
September 5, 1997
B-3
<PAGE>
PMSI DATABASE HOLDINGS, INC.
BALANCE SHEETS
JUNE 30, 1997 AND 1996
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
1997 1996
-------- ---------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,343 $ 169
Accounts receivable, less allowance for doubtful accounts of
$82 and $86 in 1997 and 1996, respectfully 6,784 5,805
Deferred data costs 887 252
Prepaid expenses 46 43
Deferred tax asset 306 360
Due from Scott Levin 1,409 297
Due from Source 0 377
------- ------
Total current assets 10,775 7,303
PROPERTY AND EQUIPMENT, NET 3,428 858
OTHER ASSETS 6 52
------- ------
Total assets $14,209 $8,213
======= ======
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable $ 766 $ 359
Accrued liabilities 1,127 1,183
Unearned revenue 4,302 4,193
Current portion of capital lease obligations 298 7
Due to Parent 671 146
Due to Source 604 0
------- ---------
Total current liabilities 7,768 5,888
LONG-TERM LIABILITIES:
Capital lease obligations 513 0
Deferred tax liability 263 189
------- ---------
Total liabilities 8,544 6,077
COMMITMENTS AND CONTINGENCIES (NOTE 8) ======= =========
STOCKHOLDER'S EQUITY:
Common stock, $.01 par value; 1,000 shares authorized,
100 shares issued and outstanding 0 0
Retained earnings 5,665 2,136
------- ---------
Total stockholder's equity 5,665 2,136
------- ---------
Total liabilities and stockholder's equity $14,209 $8,213
======= =========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
B-4
<PAGE>
PMSI DATABASE HOLDINGS, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1997, 1996, AND 1995
(In Thousands)
<TABLE>
<CAPTION>
1997 1996 1995
-------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
REVENUES $25,009 $19,801 $18,010
------- ------- -------
OPERATING EXPENSES:
Production costs 6,494 5,639 4,778
Selling, general, and administrative 12,062 10,934 9,345
Depreciation and amortization 535 203 94
------- ------- -------
Total operating expenses 19,091 16,776 14,217
------- ------- -------
OPERATING INCOME 5,918 3,025 3,793
------- ------- -------
OTHER INCOME (EXPENSE):
Interest income 91 107 118
Interest expense (42) (10) 0
Other (105) (141) (5)
------- ------- -------
(56) (44) 113
------- ------- -------
NET INCOME BEFORE INCOME TAX 5,862 2,981 3,906
INCOME TAX PROVISION 2,333 1,192 1,562
------- ------- -------
NET INCOME $ 3,529 $ 1,789 $ 2,344
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
B-5
<PAGE>
PMSI DATABASE HOLDINGS, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED JUNE 30, 1997, 1996, AND 1995
<TABLE>
<CAPTION>
COMMON STOCK
---------------------- RETAINED
SHARES AMOUNT EARNINGS TOTAL
-------- -------- ---------- ---------
<S> <C> <C> <C> <C>
BALANCE, JUNE 30, 1994 (UNAUDITED) 100 $0 $3,403 $3,403
Net income 0 0 2,344 2,344
Dividends paid to Parent 0 0 (3,500) (3,500)
-------- -------- ---------- ---------
BALANCE, JUNE 30, 1995 (UNAUDITED) 100 0 2,247 2,247
Net income 0 0 1,789 1,789
Dividends paid to Parent 0 0 (1,900) (1,900)
-------- -------- ---------- ---------
BALANCE, JUNE 30, 1996 (UNAUDITED) 100 0 2,136 2,136
Net income 0 0 3,529 3,529
-------- -------- ---------- ---------
BALANCE, June 30, 1997 100 $0 $5,665 $5,665
======== ======== ========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
B-6
<PAGE>
PMSI DATABASE HOLDINGS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1997, 1996, AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
(UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $3,529 $1,789 $2,344
------ ------ ------
Adjustments to reconcile net income to net cash provided by (used
in) operating activities:
Depreciation and amortization 535 203 94
Deferred income tax expense 128 78 94
Changes in operating assets and liabilities:
Accounts receivable (979) (2,257) 1,568
Deferred data costs (635) 31 238
Prepaid expenses (3) (43) 100
Due from (to) Parent 525 (3,790) 3,593
Due from (to) Source 981 671 6
Due to Scott Levin (1,112) (143) (154)
Accounts payable 407 (263) 59
Accrued liabilities (56) 704 (613)
Unearned revenue 109 2,922 (1,469)
Other 46 (1) (44)
------ ------ ------
Total adjustments (54) (1,888) 3,472
------ ------ ------
Net cash provided by (used in) operating activities 3,475 (99) 5,816
------ ------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,345) (749) (124)
Proceeds from sale of fixed assets 44 4 2
------ ------ ------
Net cash used in investing activities (2,301) (745) (122)
------ ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payment on capital leases 0 (24) (20)
Dividend to Parent 0 (1,900) (3,500)
------ ------ ------
Net cash used in financing activities 0 (1,924) (3,520)
------ ------ ------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
1,174 (2,768) 2,174
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 169 2,937 763
------ ------ ------
CASH AND CASH EQUIVALENTS, END OF YEAR $1,343 $ 169 $2,937
====== ====== ======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest during the year $ 42 $ 10 $ 0
====== ====== ======
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Assets purchased under capital leases $ 804 $ 0 $ 0
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
B-7
<PAGE>
PMSI DATABASE HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 (AUDITED), 1996 (UNAUDITED), AND 1995 (UNAUDITED)
1. ORGANIZATION AND NATURE OF BUSINESS
Pharmaceutical Marketing Services, Inc. ("PMSI" or the "Parent") provides a
range of information services to the pharmaceutical and health care
companies in the United States, Europe, and Japan to enable them to
optimize their sales and marketing performance in a value-driven
environment. On June 24, 1997, PMSI formed PMSI Database Holdings, Inc.
("PMSI Database"), a wholly owned subsidiary, to hold PMSI's interests in
both the Alpha Database License Agreement (Note 3) and its over-the-counter
and research solutions lines of business. The financial statements and
related footnotes contained herein reflect the operations related to the
Alpha Database License agreement and the over-the-counter and research
solutions lines of business and have been restated as if the formation of
PMSI Database was accounted for as a pooling of interest. As discussed in
Note 9, PMSI and PMSI Database entered into a stock purchase agreement with
National Data Corporation ("NDC") in August 1997.
PMSI Database provides a range of data services, primarily based on a
proprietary database of prescriptions dispensed, which are used by
pharmaceutical companies in sales force compensation, territory
realignment, and focused promotion.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRESENTATION
The balance sheet as of June 30, 1996 and the related statements of
operations, stockholder's equity, and cash flows for the two years ended
June 30, 1996 are unaudited and, in the opinion of management, contain all
adjustments (consisting of only normal recurring items) necessary for the
fair presentation of the financial position and results of operations for
such periods.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
B-8
<PAGE>
CASH AND CASH EQUIVALENTS
PMSI Database considers all highly liquid investments with maturity dates
of three months or less from the date of acquisition by PMSI Database to be
cash equivalents.
REVENUE RECOGNITION
Revenue is recognized on the delivery of a product or as the service is
rendered. Prebillings for products that have not yet been delivered or for
services not yet rendered are classified as unearned revenue until the
earnings process is complete.
CREDIT RISK
Financial instruments which potentially subject PMSI Database to
concentrations of credit risk consist principally of cash balances and
trade receivables. PMSI Database invests its excess cash with major banks.
PMSI Database's customer base principally comprises companies within the
pharmaceutical industry. PMSI Database maintains reserves for potential
credit losses, and such losses have been within management's expectations,
given the generally strong credit ratings of the customers. PMSI Database
does not require collateral from its customers.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. All maintenance and repairs
are expensed as incurred. Depreciation is provided using the straight-line
method. Furniture, office equipment, and computer equipment are depreciated
over five years. Leasehold improvements are amortized over the estimated
lives of the assets or the lease terms, whichever are shorter.
Upon disposal, cost and accumulated depreciation are removed from the
accounts and gains (losses) are recognized in the statement of operations.
DATABASES AND SOFTWARE COSTS
Costs associated with maintenance and updating of databases and all costs
associated with internally developed software are expensed as incurred.
DEFERRED DATA COSTS
Deferred data costs consist of costs incurred by PMSI Database to obtain
prescription data information used in PMSI Database's products. PMSI
Database purchases data monthly and delivers products based on this
information in the following month. In order to match the cost of these
products with the associated revenue, PMSI Database defers approximately
one month's cost of prescription data.
INCOME TAXES
The income tax returns of PMSI include the operations of PMSI Database. For
purposes of these financial statements, income taxes related to PMSI
Database have been computed and recorded on a separate return basis based
on the statutory rates in effect.
B-9
<PAGE>
Deferred income taxes are recorded using enacted tax laws and rates for the
years in which the taxes are expected to be paid. Deferred income taxes are
provided for items when there is a temporary difference in recording such
items for financial reporting and income tax reporting.
LONG-LIVED ASSETS
PMSI Database periodically reviews the values assigned to long-lived assets
such as property and equipment to determine whether any impairments are
other than temporary. Management believes that the long-lived assets in the
accompanying balance sheets are appropriately valued.
ADVERTISING EXPENSE
PMSI Database expenses all advertising costs as they are incurred.
CONCENTRATION OF REVENUES
PMSI Database derived approximately 32%, 36%, and 32% of its revenues from
two customers during fiscal 1997, 1996, and 1995, respectively. PMSI
Database's revenues consist primarily of those earned under the Alpha
Database license agreement (Note 3).
3. RELATED-PARTY TRANSACTIONS
TRANSACTIONS WITH SOURCE
PMSI Database has a licensing agreement with the Source Informatics, Inc.
("Source") to market certain services. Additionally, Source provides certain
services to PMSI Database. The principal agreements and terms are as
follows:
ALPHA (PRESCRIPTION) DATABASE LICENSE AGREEMENT
The Alpha Database License agreement, as amended and restated July 1,
1994, grants PMSI the sharing of revenue and expenses with Source for
a period of three years through June 30, 1997. Thereafter, the
agreement will be automatically renewed for three additional five-year
periods unless PMSI Database or Source, for cause, terminates the
agreement. The database license fee amounts paid by PMSI Database were
approximately $3,126,000, $3,094,000, and $2,663,000 for the years
ended June 30, 1997, 1996, and 1995, respectively. Revenues earned
under these agreements are allocated to both parties based upon
historical percentages of revenue derived from Alpha Database.
DATA PROCESSING AGREEMENT
Source provides specific data processing services to PMSI Database.
Costs charged to PMSI Database totaled approximately $711,000,
$1,191,000, and $1,883,000 for the years ended June 30, 1997, 1996,
and 1995, respectively.
B-10
<PAGE>
FACILITIES AGREEMENT
PMSI Database sublets space to and from Source for facilities in
Newtown, Pennsylvania, and Phoenix, Arizona, respectively. The
revenues associated with the sublet agreement were approximately
$222,000, $136,000, and $91,000 for the years ended June 30, 1997,
1996, and 1995, respectively, and the expenses associated with the
Phoenix facilities were approximately $367,000, $492,000, and $259,000
for the years ended June 30, 1997, 1996, and 1995, respectively.
MANAGEMENT AND EXECUTIVE SERVICES AGREEMENT
Source provides administrative, management, and executive services to
PMSI Database. The amounts charged under this agreement were
approximately $1,384,000, $2,240,000, and $1,299,000 for the years
ended June 30, 1997, 1996, and 1995, respectively.
TRANSACTIONS WITH WALSH AMERICA
PMSI Database provides facilities and computer services to Walsh America, a
company which, until the spinoff by Walsh International of Source in April
1996, had certain common management personnel with PMSI Database. The
costs charged by PMSI Database for these services were approximately
$88,000, $38,000, and $36,000 for the years ended June 30, 1997, 1996, and
1995, respectively, and were treated as a reduction of the related expenses.
4. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following (in thousands):
<TABLE>
<CAPTION>
1997 1996
----------- -----------
(Unaudited)
<S> <C> <C>
Assets under capital lease $ 803 $ 82
Furniture and office equipment 43 46
Computer equipment 3,482 1,114
Leasehold improvements 48 48
----------- -----------
4,376 1,290
Less accumulated depreciation and
amortization (948) (432)
----------- -----------
$ 3,428 $ 858
=========== ===========
</TABLE>
B-11
<PAGE>
5. ACCRUED LIABILITIES
Accrued liabilities consisted of the following (in thousands):
<TABLE>
<CAPTION>
1997 1996
-------- --------
(Unaudited)
<S> <C> <C>
Bonuses $ 371 $ 668
Accrued vacation 167 174
Other liabilities 589 341
-------- --------
$ 1,127 $ 1,183
======== ========
</TABLE>
6. INCOME TAX
The provision for income tax includes the following:
<TABLE>
<CAPTION>
1997 1995 1996
-------- -------- --------
(Unaudited)
<S> <C> <C> <C>
Current tax expense $ 2,205 $ 1,114 $ 1,468
Deferred tax expense 128 78 94
-------- -------- --------
Total $ 2,333 $ 1,192 $ 1,562
======== ======== ========
</TABLE>
Deferred tax assets (liabilities) at June 30, 1997 and 1996 consisted of the
following (in thousands):
<TABLE>
<CAPTION>
1997 1996
------- -------
(Unaudited)
<S> <C> <C>
Deferred tax liabilities $ (263) $ (189)
Deferred tax assets:
Allowance for doubtful accounts 33 34
Accrued expenses 266 319
Other 7 7
------- -------
Deferred tax assets 306 360
------- -------
Net deferred tax asset $ 43 $ 171
======= =======
</TABLE>
A reconciliation of federal statutory and effective income tax rates is as
follows as of June 30, 1997, 1996, and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
----- ------ ------
(Unaudited)
<S> <C> <C> <C>
U.S. statutory rate 34% 34% 34%
State taxes, net of federal benefit 6 6 6
----- ------ ------
Provision for income taxes 40% 40% 40%
===== ====== ======
</TABLE>
B-12
<PAGE>
7. EMPLOYEE BENEFIT PLANS
PMSI Database operates a defined contribution profit-sharing plan. The
employer's contribution is a discretionary amount to match employee
contributions. The total cost associated with these plans for the years
ended June 30, 1997, 1996, and 1995 were approximately $65,000, $56,000, and
$15,000, respectively.
8. COMMITMENTS AND CONTINGENCIES
LEASES
PMSI Database leases certain equipment and facilities under agreements which
are classified as capital leases and operating leases.
Obligations under long-term and noncancelable lease agreements at June 30,
1997 are as follows (in thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
---------- ----------
<S> <C> <C>
1998 $330 $189
1999 290 197
2000 248 81
2001 0 0
Thereafter 0 0
---------- ----------
Total minimum lease payments 868 $467
==========
Less amount representing interest (57)
Present value of minimum lease payment 811
Less current portion (298)
----------
$513
==========
</TABLE>
Rent expense for the years ended June 30, 1997, 1996, and 1995 was
approximately $200,000, $201,000, and $215,000, respectively.
LEGAL PROCEEDINGS
PMSI Database is subject to legal proceedings and claims which arise in the
ordinary course of business. In the opinion of management, the ultimate
outcome of any pending matters will not have a material adverse effect on
the results of operations or financial position of PMSI Database operations.
9. SUBSEQUENT EVENT
In August 1997, PMSI Database entered into a stock purchase agreement with
NDC to sell the stock of PMSI Database to NDC in subject to PMSI stockholder
approval and exchange for a combination of cash and NDC common stock. The
transaction is expected to close in November 1997.
B-13
<PAGE>
ANNEX C
PRO FORMA COMBINED FINANCIAL DATA
The following table sets forth selected pro forma condensed consolidated
financial information as of and for the year ended May 31, 1997, giving effect
to the Merger and the consummation of the Stock Purchase using the purchase
method of accounting. The pro forma condensed consolidated financial information
represents the historical operations of NDC, Source and PMSI Database adjusted
for the effects of the Stock Purchase and the Merger as well as the effects of
the acquisition of Health EDI completed in October 1997. This information has
also been adjusted to conform to the presentation format of NDC. For
comparability purposes, Source and PMSI Database's twelve months ended June 30,
1997 are used in conjunction with the NDC twelve months ended May 31, 1997.
Source and PMSI Database share operations and record revenues and expenses in
accordance with the Alpha Database (Prescription) License Agreement. As the
results of these shared operations represent the majority of PMSI Database's
results of operations and net assets, combined with the fact that these entities
will be combined subsequent to the Merger and consummation of the stock purchase
by NDC, these entities are presented as a single operating entity, to best
reflect the nature of the entities operations.
C-1
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MAY 31, 1997
(in thousands)
<TABLE>
<CAPTION>
SOURCE/
PMSI
DATABASE
NDC HISTORICAL PRO FORMA PRO FORMA
HISTORICAL COMBINED ADJUSTMENTS CONSOLIDATED
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 19,240 $ 3,451 $ (1,343) (a) $ 21,348
Accounts receivable, net of allowance 78,269 18,210 0 96,479
Other current assets 11,115 5,630 (1,409) (b) 15,336
---------- ---------- ----------- ------------
Total current assets 108,624 27,291 (2,752) 133,163
---------- ---------- ----------- ------------
PROPERTY, PLANT, AND EQUIPMENT, NET 49,907 14,189 0 64,096
INTANGIBLE ASSETS, NET 348,476 0 80,616 (c) 429,092
OTHER 14,676 370 6,365 (c) 21,411
---------- ---------- ----------- ------------
Total assets $521,683 $41,850 $ 84,229 $ 647,762
========== ========== =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued liabilities $ 51,789 $13,110 $ (1,812) (b) $ 63,087
Due to Parent 0 39,575 (39,575)(b) 0
Line of credit payable 0 0 42,250 (d) 42,250
Notes and earn-out payable 1,372 96 0 1,468
Income taxes payable 4,282 0 0 4,282
Obligations under capital leases 2,513 4,831 0 7,344
Deferred income 7,389 15,358 0 22,747
---------- ---------- ----------- ------------
Total current liabilities 67,345 72,970 863 141,178
Long-Term Debt 149,750 0 0 149,750
Obligations under capital leases 2,287 6,023 0 8,310
Other long-term liabilities 3,653 2,243 0 5,896
---------- ---------- ----------- ------------
Total liabilities 223,035 81,236 863 305,134
---------- ---------- ----------- ------------
MINORITY INTEREST 21,178 0 0 21,178
STOCKHOLDERS' EQUITY:
Common and preferred stock $3,321 $ 0 $ 327 (e) $3,648
Additional paid-in capital 182,695 0 104,288 (e) 286,983
Retained earnings (accumulated deficit) 93,099 (39,386) (60,635)(c) 32,464
39,386 (f)
Equity adjustments (1,645) 0 0 (1,645)
---------- ---------- ----------- ------------
Total stockholder's equity 277,470 (39,386) 83,366 321,450
---------- ---------- ----------- ------------
Total liabilities and stockholders' equity $521,683 $41,850 $ 84,229 $647,762
========== ========== ============ ============
</TABLE>
Adjustments:
(a) Reflects the PMSI Database cash, after the effects of settling all
intercompany and affiliate accounts in (b), that is not being acquired by
NDC under the terms of the Merger and Stock Purchase agreements.
(b) Reflects the repayment and/or forgiveness of all intercompany and affiliate
accounts.
(c) Reflects the excess of the purchase price ($146.9 million, assuming a $40
stock price and $4 million in offering expenses) over the net liabilities
($0.8 million) assumed in the acquisitions. This amount is net of a
projected non-recurring charge of approximately $67.0 million ($60.6
million after-tax) related to purchased in-process research and development
costs.
(d) Reflects borrowings on NDC's line of credit to fund the cash portion of the
purchase price ($38.25 million) and the payment of estimated acquisition
costs of $4 million.
(e) Reflects the issuance of 1,555,556 (including 455,840 escrowed shares) and
1,059,829 shares of NDC stock to Source and PMSI Database, respectively,
under the terms of the Stock Purchase agreement
(f) Reflects the elimination of Source and PMSI Database's historical equity
balances.
C-2
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED MAY 31, 1997
(in thousands except per share data)
<TABLE>
<CAPTION>
EQUIFAX
SOURCE/ HEALTH EDI
PMSI FOUR MONTHS
DATABASE ENDED
NDC COMBINED SEPTEMBER 30, PRO FORMA PRO FORMA
HISTORICAL HISTORICAL 1996 ADJUSTMENTS (a) CONSOLIDATED (a)
---------- ---------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
REVENUES $433,860 $84,894 $ 0 $ 0 $523,605
COST OF SERVICE 207,754 27,034 2,218 4,031 (b) 241,037
SALES, GENERAL AND ADMINISTRATIVE 159,450 45,262 2,262 2,230 (c) 209,204
---------- ---------- ------------- ----------- ----------------
367,204 72,296 4,480 6,261 450,241
---------- ---------- ------------- ----------- ----------------
OPERATING INCOME 66,656 12,598 371 (6,261) 73,364
OTHER INCOME (EXPENSE):
Interest and other income 2,403 871 0 0 3,274
Interest and other expense (6,814) (1,128) 0 (2,429) (d) (10,371)
Minority interest (1,694) 0 0 0 (1,694)
---------- ---------- ------------- ----------- ----------------
Total other income (expense) (6,105) (257) 0 (2,429) (8,791)
---------- ---------- ------------- ----------- ----------------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 60,551 12,341 371 (8,690) 64,573
PROVISION FOR INCOME TAXES (21,798) (2,333) (141) 2,153 (e) (22,119)
---------- ---------- ------------- ----------- ----------------
INCOME FROM CONTINUING OPERATIONS $ 38,753 $10,008 $ 230 $(6,537) $42,454
---------- ---------- ------------- ----------- ----------------
FULLY DILUTED WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT SHARES
OUTSTANDING 28,039 0 0 2,615 (f) 30,654
INCOME FROM CONTINUING OPERATIONS PER
SHARE
$1.38 $1.38
</TABLE>
Adjustments
(a) Excludes the impact of the non-recurring charge related to purchased in-
process research and development costs of $67.0 million ($60.6 million
after-tax), or $(1.98) per share.
(b) Reflects the amortization of intangibles resulting from the
Stock Purchase and merger assuming a weighted average life of 20 years.
(c) Reflects increase to historical selling, general, and administrative
expenses to reflect certain increased allocated costs, primarily corporate
level expenses, that were previously allocated to other related entities.
(d) Represents additional interest expense on the borrowings on NDC's line of
credit using NDC's weighted average interest rate of 5.75% for fiscal 1997.
(e) Reflects the income tax effects of the pro forma adjustments above.
(f) Reflects the issuance of 1,555,556 (including 455,840 escrowed shares) and
1,059,829 shares of NDC stock to Source and PMSI Database, respectively,
under the terms of the Stock Purchase agreement.
C-3
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Bylaws provide for indemnification of directors and officers
of the Registrant to the full extent permitted by Delaware law.
Section 145 of the General Corporation Law of the State of Delaware provides
generally that a corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at its request in such capacity in another
corporation or business association, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
In addition, pursuant to the authority of Delaware law, the Certificate of
Incorporation of the Registrant also eliminates the monetary liability of
directors to the fullest extent permitted by Delaware law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions, the Registrant
has been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits (See exhibit index immediately preceding the exhibits for the
page number where each exhibit can be found)
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ -----------------------
2.1* Stock Purchase Agreement, dated as of August 20, 1997, by and
among NDC, PMSI and PMSI Database)
3.1 Certificate of Incorporation, as amended (included as Exhibit
4(a) to the Registrant's Registration Statement on Form S-8
(Registration No. 333-05427), previously filed with the
Commission and incorporated by reference herein)
3.2 Certificate of Amendment to Certificate of Incorporation of the
Registrant, dated October 28, 1996 (filed as Exhibit 3.1 to the
Registrant's Current Report on Form 8-K dated October 29, 1996,
file No. 001-12392, and incorporated herein by reference).
3.3 Amended Certificate of Designations of the Registrant, dated
October 28, 1996 (filed as Exhibit 3.2 to the Registrant's
Current Report on Form 8-K dated October 29, 1996, file No. 001-
12392, and incorporated herein by reference).
3.4 Bylaws, as amended (included as Exhibit 3(ii) to the Registrant's
Form 10-K for the fiscal year ended May 31, 1991, previously
filed with the Commission and incorporated by reference herein)
3.5 Amendment to Bylaws (included as Exhibit 3(iii) to the
Registrant's Form 10-K for the fiscal year ended May 31, 1996,
previously filed with the Commission and incorporated by
reference herein)
II-1
<PAGE>
4.1 See Exhibits 3.1 through 3.5 for provisions of the Certificate of
Incorporation and Bylaws of the Registrant defining rights of
holders of Common Stock of the Registrant
4.2 Rights Agreement (included as Exhibit 1 to the Registrant's Form
8-A filed with the Commission on January 22, 1991, as amended on
October 5, 1993 (file No. 001-12392) and incorporated by
reference herein)
5.1** Opinion of Alston & Bird LLP
11.1 Statement regarding computation of per share earnings (included
as Exhibit 11 to the Registrant's Form 10-K for the fiscal year
ended May 31, 1997, previously filed with the Commission and
incorporated by reference herein)
21.1 Subsidiaries of the Registrant (included as Exhibit 21 to the
Registrant's Form 10-K for the fiscal year ended May 31, 1997,
previously filed with the Commission and incorporated by
reference herein)
23.1** Consent of Alston & Bird LLP (included in Exhibit 5.1 hereto)
23.2 Consent of Arthur Andersen LLP
24.1 Powers of Attorney (included on signature page hereof)
_______________
* Exhibits to the Stock Purchase Agreement are to be filed by amendment.
** Denotes items to be filed by amendment.
(b) Financial Statement Schedules
Schedules are omitted because they are not required or are not applicable, or
the required information is shown in the financial statements or notes thereto.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers for sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
II-2
<PAGE>
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the Registrant's Certificate of Incorporation or
Bylaws, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment for the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Atlanta, State of
Georgia, on September 17, 1997.
NATIONAL DATA CORPORATION
By: /s/ Robert A. Yellowlees
--------------------------------
Robert A. Yellowlees
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears below
constitutes and appoints Robert A. Yellowlees and E. Michael Ingram, and either
of them (with full power in each to act alone), as true and lawful attorneys-in-
fact, with full power of substitution, for him and in his name, place and stead,
in any and all capacities, to sign any amendments to this Registration Statement
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that said attorneys-in-fact, or their substitute or
substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on September 17, 1997.
SIGNATURE TITLE
- --------- -----
/s/ Robert A. Yellowlees Chairman of the Board and Chief Executive
- --------------------------
Robert A. Yellowlees Officer (principal executive officer)
/s/ M.P. Stephenson Chief Financial Officer
- --------------------------
M.P. Stephenson (principal financial and accounting officer)
/s/ Edward L. Barlow Director
- --------------------------
Edward L. Barlow
/s/ J. Veronica Biggins Director
- --------------------------
J. Veronica Biggins
/s/ James B. Edwards Director
- --------------------------
James B. Edwards
Director
- --------------------------
Don W. Sands
Neil Williams Director
- --------------------------
Neil Williams
II-4
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ -----------------------
2.1* Stock Purchase Agreement, dated as of August 20, 1997, by and
among NDC, PMSI and PMSI Database)
3.1 Certificate of Incorporation, as amended (included as Exhibit
4(a) to the Registrant's Registration Statement on Form S-8
(Registration No. 333-05427), previously filed with the
Commission and incorporated by reference herein)
3.2 Certificate of Amendment to Certificate of Incorporation of the
Registrant, dated October 28, 1996 (filed as Exhibit 3.1 to the
Registrant's Current Report on Form 8-K dated October 29, 1996,
file No. 001-12392, and incorporated herein by reference).
3.3 Amended Certificate of Designations of the Registrant, dated
October 28, 1996 (filed as Exhibit 3.2 to the Registrant's
Current Report on Form 8-K dated October 29, 1996, file No. 001-
12392, and incorporated herein by reference).
3.4 Bylaws, as amended (included as Exhibit 3(ii) to the Registrant's
Form 10-K for the fiscal year ended May 31, 1991, previously
filed with the Commission and incorporated by reference herein)
3.5 Amendment to Bylaws (included as Exhibit 3(iii) to the
Registrant's Form 10-K for the fiscal year ended May 31, 1996,
previously filed with the Commission and incorporated by
reference herein)
4.1 See Exhibits 3.1 through 3.5 for provisions of the Certificate of
Incorporation and Bylaws of the Registrant defining rights of
holders of Common Stock of the Registrant
4.2 Rights Agreement (included as Exhibit 1 to the Registrant's Form
8-A filed with the Commission on January 22, 1991, as amended on
October 5, 1993 (file No. 001-12392) and incorporated by
reference herein)
5.1** Opinion of Alston & Bird LLP
11.1 Statement regarding computation of per share earnings (included
as Exhibit 11 to the Registrant's Form 10-K for the fiscal year
ended May 31, 1997, previously filed with the Commission and
incorporated by reference herein)
21.1 Subsidiaries of the Registrant (included as Exhibit 21 to the
Registrant's Form 10-K for the fiscal year ended May 31, 1997,
previously filed with the Commission and incorporated by
reference herein)
23.1** Consent of Alston & Bird LLP (included in Exhibit 5.1 hereto)
23.2 Consent of Arthur Andersen LLP
24.1 Powers of Attorney (included on signature page hereof)
- ------
* Exhibits to Stock Purchase Agreement to be filed by amendment.
** To be filed by amendment.
<PAGE>
EXHIBIT 2
EXECUTION VERSION
STOCK PURCHASE AGREEMENT
BY AND AMONG
NATIONAL DATA CORPORATION,
PMSI DATABASE HOLDINGS, INC.
AND
PHARMACEUTICAL MARKETING SERVICES INC.,
THE SOLE STOCKHOLDER OF PMSI DATABASE HOLDINGS, INC.
Dated as of August 20, 1997
<PAGE>
TABLE OF CONTENTS
Page
CONTENTS ----
PARTIES................................................................... 1
PREAMBLE.................................................................. 1
ARTICLE 1 - PURCHASE AND SALE............................................. 1
1.1 Purchase and Sale........................................... 1
1.2 Preliminary Balance Sheet................................... 2
1.3 Closing Balance Sheet....................................... 3
1.4 Adjustment of Purchase Price................................ 4
1.5 Anti-Dilution Provisions.................................... 6
1.6 Time and Place of Closing................................... 6
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF PMSI DATABASE AND PMSI...... 6
2.1 Organization, Standing, and Power........................... 6
2.2 Authority of PMSI Database; No Breach By Agreement.......... 7
2.3 Authority of PMSI; No Breach By Agreement................... 7
2.4 Capital Stock............................................... 8
2.5 PMSI Database Subsidiaries.................................. 9
2.6 Financial Statements........................................ 9
2.7 Absence of Undisclosed Liabilities.......................... 9
2.8 Absence of Certain Changes or Events........................ 9
2.9 Tax Matters................................................. 9
2.10 Assets...................................................... 10
2.11 Intellectual Property....................................... 11
2.12 Compliance with Laws........................................ 12
2.13 Labor Relations............................................. 12
2.14 Employees and Employee Benefit Plans........................ 13
2.15 Material Contracts.......................................... 13
2.16 Real Property; Leased Real Property......................... 14
2.17 Personal Property........................................... 14
2.18 Legal Proceedings........................................... 15
2.19 Statements True and Correct................................. 15
2.20 Regulatory Matters.......................................... 15
2.22 Charter Provisions.......................................... 15
2.23 Opinion of Financial Advisor................................ 16
2.24 Board Recommendation........................................ 16
2.25 Joint Venture Interest...................................... 16
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF NDC......................... 16
3.1 Organization, Standing, and Power........................... 16
3.2 Authority; No Breach By Agreement........................... 16
3.3 Capital Stock............................................... 17
3.4 SEC Filings; Financial Statements........................... 18
-i-
<PAGE>
3.5 Absence of Undisclosed Liabilities.......................... 18
3.6 Absence of Certain Changes or Events........................ 18
3.7 Compliance with Laws........................................ 18
3.8 Legal Proceedings........................................... 19
3.9 Statements True and Correct................................. 19
3.10 Regulatory Matters.......................................... 20
3.11 Rights Agreement............................................ 20
ARTICLE 4 - CONDUCT OF BUSINESS PENDING CONSUMMATION...................... 20
4.1 Affirmative Covenants of PMSI Database and PMSI............. 20
4.2 Negative Covenants of PMSI Database and PMSI................ 22
4.3 Covenants of NDC............................................ 24
4.4 Adverse Changes in Condition................................ 25
4.5 Reports..................................................... 25
ARTICLE 5 - ADDITIONAL AGREEMENTS......................................... 25
5.1 Registration Statement; PMSI Approval....................... 25
5.2 Exchange Listing............................................ 26
5.3 Applications; Antitrust Notification........................ 26
5.4 Agreement as to Efforts to Consummate....................... 26
5.5 Investigation and Confidentiality........................... 26
5.6 Press Releases.............................................. 27
5.7 Certain Actions............................................. 27
5.9 Charter Provisions.......................................... 28
5.10 Agreement of Affiliates..................................... 28
5.10 Employment of Employees..................................... 28
5.11 Tax Matters................................................. 29
ARTICLE 6 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE............. 30
6.1 Conditions to Obligations of Each Party..................... 30
6.2 Conditions to Obligations of NDC............................ 31
6.3 Conditions to Obligations of PMSI Database and PMSI......... 33
ARTICLE 7 - INDEMNIFICATION............................................... 34
7.1 Agreement of Indemnitor to Indemnify........................ 34
7.2 Procedures for Indemnification.............................. 35
7.3 Third Party Claims.......................................... 35
7.4 Survival.................................................... 37
7.5 Time Limitations............................................ 37
7.6 Limitations as to Amount.................................... 37
7.7 Tax Effect and Insurance.................................... 37
7.8 Subrogation................................................. 38
7.9 Arbitration................................................. 38
ARTICLE 8 - TERMINATION................................................... 38
8.1 Termination................................................. 38
8.2 Effect of Termination....................................... 40
-ii-
<PAGE>
ARTICLE 9 - MISCELLANEOUS................................................. 40
9.1 Definitions................................................. 40
9.2 Expenses.................................................... 50
9.3 Brokers and Finders......................................... 51
9.4 Entire Agreement............................................ 51
9.5 Amendments.................................................. 51
9.6 Waivers..................................................... 52
9.7 Assignment.................................................. 52
9.8 Notices..................................................... 52
9.9 Governing Law............................................... 53
9.10 Counterparts................................................ 53
9.11 Captions; Articles and Sections............................. 53
9.12 Interpretations............................................. 54
9.13 Enforcement of Agreement.................................... 54
9.14 Severability................................................ 54
SIGNATURES................................................................ 55
-iii-
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of August 20, 1997, by and among NATIONAL DATA CORPORATION ("NDC"), a
Delaware corporation; PMSI DATABASE HOLDINGS, INC. ("PMSI Database"), a Delaware
corporation; and PHARMACEUTICAL MARKETING SERVICES INC., a Delaware corporation
and the sole stockholder of PMSI Database ("PMSI").
Preamble
--------
The respective Boards of Directors of PMSI Database, PMSI and NDC are of
the opinion that the transactions described herein are in the best interests of
the parties to this Agreement and their respective stockholders. PMSI is the
record and beneficial owner of all of the issued and outstanding shares of PMSI
Database Common Stock (the "Shares"). PMSI desires to sell all of the Shares to
NDC, and NDC desires to purchase the Shares from PMSI, upon the terms and
subject to the conditions set forth in this Agreement. The transactions
described in this Agreement are subject to the approvals of the stockholders of
PMSI and PMSI Database, expiration of the required waiting period under the HSR
Act, the consummation of the Agreement and Plan of Merger dated as of even date
herewith by and among Source Informatics Inc. ("Source"), Dunkirk, Inc. and NDC
(the "Source Agreement"), the consummation of the Source Transfer Agreement and
the satisfaction of certain other conditions described in this Agreement.
Certain terms used in this Agreement are defined in Section 9.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
PURCHASE AND SALE
-----------------
1.1 Purchase and Sale. Upon the terms and subject to the conditions of
-----------------
this Agreement, PMSI shall sell to NDC, and NDC shall purchase from PMSI, the
Shares at the Closing (the "Stock Purchase"). The aggregate purchase price for
the Shares is equal to (i) the Cash Amount and (ii)1,059,829 shares of NDC
Common Stock (the "Base Amount");
(a) At the Closing Date, the "Cash Amount" shall be equal to $6,500,000
less the adjustment, if any, made pursuant to Section 1.2(c) hereof.
(b) In the event that the Average Closing Price at the close of trading
on the tenth trading day immediately preceding the Closing Date (the
"Determination Date") shall be greater than $50.50 (the "Upper Threshold
Price"), the Base Amount shall be adjusted to equal that
<PAGE>
number of shares of NDC Common Stock (rounded to the nearest whole share)
obtained by dividing the product of the Base Amount and the Upper Threshold
Price by the Average Closing Price as of the Determination Date; provided
further, that, in the event that the Average Closing Price on the Determination
Date shall be less than $37.25 (the "Lower Threshold Price" and, together with
the Upper Threshold Price, the "Threshold Prices"), the Base Amount may, at the
sole discretion of NDC, and in accordance with the provisions of Section 8.1(h),
be adjusted to equal that number of shares of NDC Common Stock (rounded to the
nearest whole share) obtained by dividing the product of the Base Amount and the
Lower Threshold Price by the Average Closing Price as of the Determination Date.
(c) Pursuant to the NDC Rights Agreement, each share of NDC Common Stock
issued in connection with the Stock Purchase shall be accompanied by a NDC
Right.
1.2 Preliminary Balance Sheet.
-------------------------
(a) PMSI will cause to be prepared and delivered to NDC a balance
sheet for PMSI Database as of the most recent month ending more than ten days
prior to the Closing Date (the "Preliminary Balance Sheet") and a certificate
based on such Preliminary Balance Sheet setting forth PMSI's calculation of
Working Capital, Current Assets and Current Liabilities as of such date
("Estimated Working Capital," "Estimated Current Assets" and "Estimated Current
Liabilities", respectively). The Preliminary Balance Sheet shall (v) include
only the assets, liabilities and stockholders' equity of the Acquired Business
and the Joint Venture Interest, (x) fairly present the financial position of
PMSI Database as at the close of business on such date in accordance with
generally accepted accounting principles applied on a basis consistent with
those used in the preparation of the balance sheet of PMSI Database dated March
31, 1997 (the "PMSI Database Balance Sheet") previously delivered to NDC, (y)
include no material increase in long-term indebtedness and include line items
substantially consistent with those in the PMSI Database Balance Sheet, and (z)
subject to the provisions of clause (x) above, be prepared in accordance with
accounting policies and practices consistent with those used in the preparation
of the PMSI Database Balance Sheet. As used herein, "Working Capital" shall
mean the amount equal to Current Assets less Current Liabilities; "Current
Assets" shall mean the amount equal to the sum of cash, accounts receivable (net
of any reserves), inventories, prepaid expenses and work-in-process and any
other assets classified as current assets under GAAP; and "Current Liabilities"
shall mean the amount equal to the sum of accounts payable, accrued current
liabilities of PMSI Database (other than the current portion of capitalized
lease obligations), accrued sales commissions (but only as to revenues realized
and included in the PMSI Database statements of income prior to such date),
Accrued Bonuses, accrued vacation pay, current portion of long-term indebtedness
and pre-billed revenues and any other liabilities classified as current
liabilities under GAAP.
(b) NDC shall have five (5) business days from the receipt of the
Preliminary Balance Sheet and the calculation of Estimated Working Capital,
Estimated Current Assets and Estimated Current Liabilities delivered pursuant to
Section 1.2(a) to review such statement and calculations and following such
review such shall be final and binding upon the parties hereto.
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<PAGE>
(c) If Estimated Current Assets are less than the product of 1.1659
times Estimated Current Liabilities (the amount of such difference referred to
as, the "Estimated Working Capital Adjustment") as of the date of the
Preliminary Balance Sheet, the Cash Amount payable by NDC pursuant to Section
1.1 shall be decreased by the Estimated Working Capital Adjustment.
1.3 Closing Balance Sheet.
---------------------
(a) As promptly as practicable, but not later than 30 days after the
Closing Date, NDC will cause to be prepared and delivered to PMSI a balance
sheet for PMSI Database as of the Closing Date (the "Closing Balance Sheet")
setting forth NDC's calculation of Working Capital, Current Assets and Current
Liabilities as of the Closing Date (the "Closing Working Capital," "Closing
Current Assets" and "Closing Current Liabilities," respectively). The Closing
Balance Sheet shall (v) include only the assets, liabilities and stockholders'
equity of the Acquired Business and the Joint Venture Interest (x) fairly
present the financial position of PMSI Database as at the close of business on
the Closing Date in accordance with generally accepted accounting principles
applied on a basis consistent with those used in the preparation of the PMSI
Database Balance Sheet, (y) include no material increase in long-term
indebtedness and include line items substantially consistent with those in the
PMSI Database Balance Sheet, and (z) subject to the provisions of clause (x)
above, be prepared in accordance with accounting policies and practices
consistent with those used in the preparation of the PMSI Database Balance
Sheet.
(b) The Closing Balance Sheet and the calculation of Closing Working
Capital, Closing Current Assets and Closing Current Liabilities delivered
pursuant to Section 1.3(a) shall be deemed final upon the earliest of (i) the
date on which NDC and PMSI jointly agree that such documents are final, (ii) the
30th day after delivery of such documents pursuant to Section 1.3(a), if PMSI
has not delivered a notice to NDC expressing disagreement with such calculations
and setting forth its calculation of such amount(s), and (iii) the date on which
all disputes relating to such statements and calculations between the parties
are resolved in accordance with Section 1.3(c). If PMSI delivers a notice of
disagreement pursuant to this Section 1.3(b) it shall specify those items or
amounts as to which it disagrees, and it shall be deemed to have agreed with all
other items and amounts contained in the Closing Balance Sheet and the
calculation of Closing Working Capital delivered pursuant to Section 1.3(a)
(except to the extent resolution of the items or amounts to which it expresses
disagreement requires conforming changes to other items and amounts contained in
the Closing Balance Sheet or the calculation of Closing Working Capital).
(c) If PMSI shall deliver a notice of disagreement pursuant to
Section 1.3(b), PMSI and NDC shall, during the 30 days following such delivery,
use their reasonable efforts to reach agreement on the disputed items or amounts
(the "Disputed Amounts"). If, during such period, PMSI and NDC are unable to
reach such agreement, they shall promptly thereafter cause Price Waterhouse LLP
(or if said firm shall have a conflict due to a relationship with NDC, PMSI, or
any of their respective Subsidiaries or shall be unwilling to act thereunder,
such other independent accountants of nationally recognized standing reasonably
satisfactory to NDC and PMSI who shall not have any material relationship with
NDC or PMSI), promptly to review this Agreement, the documents delivered
pursuant to Section 1.3(a) and any other documents
- 3 -
<PAGE>
necessary to calculate the Disputed Amounts (including all work papers of the
parties used in calculating the Disputed Amounts). In making such calculation,
such independent accountants shall act as experts and not arbitrators and shall
consider only the Disputed Amounts, solely in accordance with the terms of this
Agreement. Such independent accountants shall deliver to PMSI and NDC, as
promptly as practicable, a report setting forth such calculation. Such report
shall be final and binding upon PMSI and NDC. The cost of such review and report
shall be borne (i) by PMSI if the difference between Closing Working Capital
shown in the independent accountant's calculation and PMSI's calculation of
Closing Working Capital delivered pursuant to Section 1.3(b) is greater than the
difference between Closing Working Capital shown in the independent accountant's
calculation and NDC's calculation of Closing Working Capital delivered pursuant
to Section 1.3(a), (ii) by NDC if the difference between Closing Working Capital
shown in the independent accountant's calculation and PMSI's calculation of
Closing Working Capital delivered pursuant to Section 1.3(b) is less than the
difference between Closing Working Capital shown in the independent accountant's
calculation and NDC's calculation of Closing Working Capital delivered pursuant
to Section 1.3(a), and (iii) otherwise equally by PMSI and NDC.
(d) PMSI and NDC agree that they will, and will cause their
respective independent accountants and PMSI Database to, cooperate and assist in
the preparation of the Closing Balance Sheet and the calculation of Closing
Working Capital, Closing Current Assets and Closing Current Liabilities and in
the conduct of the reviews referred to in this Section 1.3, including, without
limitation, making available, to the extent necessary, relevant books, records,
working papers, analyses and schedules, and permitting representatives of the
parties to consult with the respective employees, auditors, actuaries, attorneys
and agents of PMSI Database.
1.4 Adjustment of Purchase Price.
-----------------------------
(a) Subject to Section 1.4(c) below,
(i) If Final Current Assets are less than the product of 1.1659
times Final Current Liabilities (the amount of such shortfall referred to as,
the "Final Working Capital Deficit"), then PMSI shall pay to NDC in cash, as an
adjustment to the Purchase Price, the Final Working Capital Deficit, plus any
amount owing to NDC pursuant to Section 1.4(b) below.
(ii) If Final Current Assets are greater than the product of
1.1659 times Final Current Liabilities (the amount of such surplus referred to
as, the "Final Working Capital Surplus"), then NDC shall pay to PMSI in cash, as
an adjustment to the Purchase Price, the Final Working Capital Surplus.
(iii) "Final Working Capital," "Final Current Assets" and "Final
Current Liabilities" mean such amounts (A) as shown in NDC's calculation
delivered pursuant to Section 1.3(a), if no notice of disagreement with respect
thereto is duly delivered pursuant to Section 1.3(b); or (B) if such a notice of
disagreement is delivered, (1) as agreed by NDC and PMSI pursuant to Section
1.3(b) or (2) in the absence of such agreement, as shown in the independent
accountant's calculation delivered pursuant to Section 1.3(c); provided that, in
no event shall Final Working Capital be (A) more than PMSI's calculation of
Closing Working Capital delivered
- 4 -
<PAGE>
pursuant to Section 1.3(b), if any, or (B) less than the lesser of NDC's
calculation of Closing Working Capital delivered pursuant to Section 1.3(a) or
PMSI's calculation of Closing Working Capital delivered pursuant to Section
1.3(b), if any.
(b) (i) If Total Current Assets are less than the product of 0.9975
times Total Current Liabilities (the "Total Working Capital Deficit"), then PMSI
shall pay to NDC in cash, as a further adjustment to the Purchase Price, an
amount equal to the Current Asset Allocation Amount.
(ii) If Total Current Assets are greater than the product of
0.9975 times Total Current Liabilities (the "Total Working Capital Surplus"),
then NDC shall pay to PMSI in cash, as a further adjustment to the Purchase
Price, an amount equal to the Current Asset Allocation Amount.
(iii) As used herein, "Total Current Assets" shall mean the
amount equal to the sum of Final Current Assets in this Agreement and Final
Current Assets calculated pursuant to the Source Agreement; "Total Current
Liabilities" shall mean the amount equal to the sum of Final Current Liabilities
in this Agreement and Final Current Liabilities calculated pursuant to the
Source Agreement; "Current Asset Allocation Amount" shall mean the amount equal
to the product of (A) the quotient of Final Current Assets in this Agreement
divided by Total Combined Assets multiplied by (B) the Total Working Capital
Deficit or Total Working Capital Surplus, as the case may be; and "Total
Combined Assets" shall mean the amount equal to the sum of Final Current Assets
in this Agreement and Final Current Assets calculated pursuant to the Source
Agreement
(c) For purposes of any adjustments to the Purchase Price made
pursuant to this Section, the parties shall take into account any adjustment
made to the Purchase Price at Closing pursuant to Section 1.2(c) hereof.
(d) Any payment pursuant to Section 1.4(a) shall be made at a mutually
convenient time and place within ten days after Final Working Capital, Final
Current Assets and Final Current Liabilities have been determined by delivery by
NDC or PMSI, as the case may be, of one or more certified or official bank
checks payable in immediately available funds to the appropriate party or
parties or by causing such payments to be credited to such account of the
appropriate party or parties as may be designated by such other party or
parties.
(e) Any payment pursuant to Section 1.4(b) shall be made at a mutually
convenient time and place within ten days after Current Asset Allocation Amount
has been determined by delivery by NDC or PMSI, as the case may be, of one or
more certified or official bank checks payable in immediately available funds to
the appropriate party or parties or by causing such payments to be credited to
such account of the appropriate party or parties as may be designated by such
other party or parties.
(f) The amount of any payment to be made pursuant to Sections 1.4(a)
and (b) shall bear interest from and including the Closing Date to but excluding
the date of payment at a
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<PAGE>
rate per annum equal to the Prime Rate determined as of the Closing Date. Such
interest shall be payable at the same time as the payment to which it relates
and shall be calculated daily on the basis of a year of 365 days and the actual
number of days elapsed.
1.5 Anti-Dilution Provisions. In the event NDC changes the number of
-------------------------
shares of NDC Common Stock issued and outstanding prior to the Closing Date as a
result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Closing Date, the Base Amount shall be proportionately adjusted.
1.6 Time and Place of Closing. The closing of the transactions
-------------------------
contemplated hereby (the "Closing") will take place at 9:00 A.M. on the date
that the Closing Date occurs (or the immediately preceding day if the Closing
Date is earlier than 9:00 A.M.), or at such other time as the Parties, acting
through their authorized officers, may mutually agree. The Closing shall be
held at such location as may be mutually agreed upon by the Parties.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF PMSI DATABASE AND PMSI
--------------------------------------------------------
PMSI and PMSI Database, jointly and severally, hereby represent and
warrant to NDC as follows:
2.1 Organization, Standing, and Power. PMSI Database is a corporation
----------------------------------
duly organized, validly existing, and in good standing under the Laws of the
State of Delaware, and has the corporate power and authority to carry on the
Acquired Business as now and previously conducted by PMSI and to own, lease and
operate the Acquired Assets. PMSI Database is, or will be prior to Closing,
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of the Acquired Assets or the nature or conduct of the Acquired
Business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a PMSI Database
Material Adverse Effect. The minute book and other organizational documents for
PMSI Database have been made available to NDC for its review and, except as
disclosed in Section 2.1 of the PMSI Database Disclosure Memorandum, are true
and complete in all material respects as in effect as of the date of this
Agreement and accurately reflect in all material respects all amendments thereto
and all proceedings of the Board of Directors and stockholders thereof. The
minute books of PMSI as such relate to PMSI Database, the Acquired Business, the
Acquired Assets and the Joint Venture Interest have been made available to NDC
for its review.
- 6 -
<PAGE>
2.2 Authority of PMSI Database; No Breach By Agreement.
---------------------------------------------------
(a) PMSI Database has the corporate power and authority necessary to
execute, deliver, and perform its obligations under this Agreement and, subject
to receipt of stockholder approval, to consummate the transactions contemplated
hereby. The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Stock
Purchase, have been duly and validly authorized by all necessary corporate
action in respect thereof on the part of PMSI Database, subject to the adoption
of this Agreement by PMSI, as the sole stockholder of PMSI Database. Subject to
such requisite stockholder approval, this Agreement represents a legal, valid,
and binding obligation of PMSI Database, enforceable against PMSI Database in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by PMSI
Database, nor the consummation by PMSI Database of the transactions contemplated
hereby, nor compliance by PMSI Database with any of the provisions hereof, will
(i) conflict with or result in a breach of any provision of PMSI Database's
Certificate of Incorporation or Bylaws or any resolution adopted by the board of
directors or stockholder of PMSI Database, or (ii) except as disclosed in
Section 2.2 of the PMSI Database Disclosure Memorandum and, subject to receipt
of the requisite Consents referred to in Sections 6.1(b) and 6.1(c), constitute
or result in a Default under, or require any Consent pursuant to, or result in
the creation of any Lien on any Acquired Asset under, any Acquired Contract or
Acquired Permit.
(c) Other than in connection or compliance with the provisions of
applicable state corporate and securities Laws and other than Consents required
from Regulatory Authorities, and other than notices to or filings with the
Internal Revenue Service or the Pension Benefit Guaranty Corporation with
respect to any employee benefit plans, or under the HSR Act, no notice to,
filing with, or Consent of, any Regulating Authority is necessary for the
consummation by PMSI Database of the Stock Purchase and the other transactions
contemplated in this Agreement, or necessary for the consummation by PMSI
Database and PMSI of the Contribution.
2.3 Authority of PMSI; No Breach By Agreement.
------------------------------------------
(a) PMSI has the corporate power and authority necessary to execute,
deliver, and perform its obligations under this Agreement and, subject to
receipt of stockholder approval, to consummate the transactions contemplated
hereby. The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Stock
Purchase, have been duly and validly authorized by all necessary corporate
action in respect thereof on the part of PMSI, subject to the adoption of this
Agreement by the stockholders of PMSI. Subject to such requisite stockholder
approval, this Agreement represents a legal, valid,
- 7 -
<PAGE>
and binding obligation of PMSI, enforceable against PMSI in accordance with its
terms (except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, conservatorship,
moratorium, or similar Laws affecting the enforcement of creditors' rights
generally and except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by PMSI, nor
the consummation by PMSI of the transactions contemplated hereby, nor compliance
by PMSI with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of PMSI Database's Certificate of Incorporation or
Bylaws, or (ii) conflict with or result in a breach of any provision of PMSI's
Certificate of Incorporation or Bylaws or the certificate or articles of
incorporation or bylaws of any Subsidiary of PMSI, or (iii) except as disclosed
in Section 2.3 of the PMSI Database Disclosure Memorandum and, subject to
receipt of the requisite Consents referred to in Sections 6.1(b) and 6.1(c),
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Acquired Asset under, any Acquired
Contract or Acquired Permit.
(c) Other than in connection or compliance with the provisions of the
applicable state corporate and securities Laws and other than Consents required
from Regulatory Authorities, and other than notices to or filings with the
Internal Revenue Service or the Pension Benefit Guaranty Corporation with
respect to any employee benefit plans, or under the HSR Act, no notice to,
filing with, or Consent of, any Regulatory Authority is necessary for the
consummation by PMSI of the transactions contemplated in this Agreement.
2.4 Capital Stock.
--------------
(a) The authorized capital stock of PMSI Database consists of 1,000
shares of PMSI Database Common Stock, of which 100 shares are issued and
outstanding as of the date of this Agreement and at the Closing Date. All of
the issued and outstanding shares of capital stock of PMSI Database are duly and
validly issued and outstanding and are fully paid and nonassessable under the
DGCL. None of the outstanding shares of capital stock of PMSI Database has been
issued in violation of any preemptive rights of the current or past stockholders
of PMSI Database.
(b) Except as set forth in Section 2.4(a), there are no shares of
capital stock or other equity securities of PMSI Database outstanding and no
outstanding Equity Rights relating to the capital stock of PMSI Database. As of
the date of this Agreement, a Subsidiary of PMSI owns, and, as of the Closing
Date, PMSI will own, all right, title and interest (legal and beneficial) in and
to all of the issued and outstanding shares of PMSI Database's capital stock
free and clear of all Liens. Except as specifically contemplated by this
Agreement, no Person has any Contract or any right or privilege (whether pre-
emptive or contractual) capable of becoming a Contract for the purchase from
PMSI of any of the shares of PMSI Database's capital stock, or any Contract or
Equity Right for the purchase, subscription or issuance of any securities of
PMSI Database.
- 8 -
<PAGE>
2.5 PMSI Database Subsidiaries. PMSI Database has no Subsidiaries.
---------------------------
2.6 Financial Statements. Each of the OTC Financial Statements
---------------------
(including, in each case, any related notes) was prepared in accordance with
GAAP applied on a consistent basis as of and for the periods involved (except as
may be indicated in the notes to such financial statements), and fairly
presented in all material respects the financial position of the Acquired
Business as of their respective dates and the results of operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount or effect. Except
as set forth on Section 2.6 of the PMSI Database Disclosure Memorandum, the
Acquired Business has no liabilities or obligations (secured or unsecured,
whether accrued, absolute, direct, indirect, contingent or otherwise, and
whether due or to become due) which are not fully and adequately accrued or
reserved against in the OTC Financial Statements, as of their respective dates,
in accordance with GAAP consistently applied. Further, the OTC Balance Sheet
only includes the Acquired Assets and the Assumed Liabilities relating to the
Acquired Business and does not include (i) Retained Liabilities, (ii) domestic
income tax assets or liabilities, (iii) recorded goodwill, and (iv) deferred
gains on sale and lease-back transactions. The Statements of Income are those
of the Acquired Business and the Acquired Assets and do not include revenue,
expenses or income tax of PMSI or any other Assets of PMSI or the Joint Venture
Interest.
2.7 Absence of Undisclosed Liabilities. At the Closing, PMSI Database
-----------------------------------
will have no Liabilities other than the Assumed Liabilities and the Liabilities
set forth in Section 2.7 of the PMSI Database Disclosure Memorandum. None of
the Assumed Liabilities or those Liabilities set forth in Section 2.7 of the
PMSI Database Disclosure Memorandum are reasonably likely to have, individually
or in the aggregate, a PMSI Database Material Adverse Effect.
2.8 Absence of Certain Changes or Events. Since March 31, 1997, except
-------------------------------------
as disclosed in the OTC Financial Statements delivered prior to the date of this
Agreement or as disclosed in Section 2.8 of the PMSI Database Disclosure
Memorandum, (i) there have been no events, changes, or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a PMSI
Database Material Adverse Effect, (ii) neither PMSI Database nor PMSI has taken
any action, or failed to take any action, prior to the date of this Agreement,
which action or failure, if taken after the date of this Agreement, would
represent or result in a material breach or violation of any of the covenants
and agreements of PMSI Database and PMSI provided in Article 4.
2.9 Tax Matters.
------------
(a) All Tax Returns required to be filed by or on behalf of PMSI
Database or PMSI on behalf of or including the Acquired Business have been
timely filed or requests for extensions have been timely filed, granted, and
have not expired for periods ended on or before June 30, 1996, and on or before
the date of the most recent fiscal year end immediately preceding the Closing
Date, and all such Tax Returns filed are complete and accurate in all material
respects. All Taxes shown on filed Tax Returns have been paid. There is no
audit examination or deficiency or refund Litigation with respect to any Taxes,
except as reserved against in the PMSI
- 9 -
<PAGE>
Database Financial Statements or as disclosed in Section 2.9 of the PMSI
Database Disclosure Memorandum for which PMSI Database could be found
responsible. All Taxes and other Liabilities due with respect to completed and
settled examinations or concluded Litigation have been paid. There are no Liens
with respect to Taxes upon any of the Acquired Assets, except for any such Liens
which are not reasonably likely to have a PMSI Database Material Adverse Effect.
(b) PMSI has not executed an extension or waiver of any statute of
limitations on the assessment or collection of any Tax due with respect to the
Acquired Business or the Acquired Assets (excluding such statutes that relate to
years currently under examination by the Internal Revenue Service or other
applicable taxing authorities) or with respect to the filing of any Tax Return
including the Acquired Business that is currently in effect.
(c) The provision for any Taxes due or to become due for the Acquired
Business and the Acquired Assets for the period or periods through and including
the date of the respective PMSI Database Financial Statements that has been made
and is reflected on such PMSI Database Financial Statements is sufficient to
cover all such Taxes.
(d) Deferred Taxes of PMSI Database reflected on the PMSI Database
Financial Statements have been provided for in accordance with GAAP.
(e) PMSI Database is not a party to any Tax allocation or sharing
agreement and PMSI Database has not been a member of an affiliated group filing
a consolidated federal income Tax Return (other than a group the common PMSI of
which was PMSI Database or PMSI) that has any Liability for Taxes of any Person
(other than PMSI Database) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign Law) as a transferee or successor
or by Contract or otherwise.
(f) PMSI Database and PMSI with respect to the Acquired Business and
the Acquired Assets are in compliance with, and its records contain all
information and documents (including properly completed IRS Forms W-9) necessary
to comply with in all material respects, all applicable information reporting
and Tax withholding requirements under federal, state, and local Tax Laws, and
such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code.
(g) Except as disclosed in Section 2.9 of the PMSI Database Disclosure
Memorandum, PMSI Database and PMSI with respect to the Acquired Business and the
Acquired Assets have not made any payments, are not obligated to make any
payments, and are not a party to any Contract that could obligate either of them
to make any payments that would be disallowed as a deduction under Section 280G
or 162(m) of the Internal Revenue Code.
2.10 Assets.
-------
(a) Except as disclosed in Section 2.10 of the PMSI Database
Disclosure Memorandum or as disclosed or reserved against in the OTC Financial
Statements delivered prior to the date of this Agreement and except for the
Contracts set forth in Sections 2.2 and 2.3 of the
-10-
<PAGE>
PMSI Database Disclosure Memorandum, PMSI Database currently has, good, valid
and marketable title, free and clear of all Liens, to all of the Acquired
Assets. All tangible properties that are material to the conduct of the Acquired
Business are in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with PMSI's past practices
with respect to the Acquired Business.
(b) The Acquired Assets and the Acquired Business are insured under
various policies of general liability and other forms of insurance, which
policies are in amounts adequate in the reasonable judgment of PMSI and PMSI
Database. Neither PMSI nor PMSI Database has been refused any insurance, with
respect to the Acquired Assets or the Acquired Business, by any insurance
carrier to which it has applied for insurance or with which it has carried
insurance during the past five (5) years. There are no outstanding requirements
or recommendations by any current insurer or underwriter with respect to the
Acquired Business or the Acquired Assets which require or recommend changes in
the conduct of the Acquired Business, or require any repairs or other work to be
done with respect to any of the Acquired Assets or operations of the Acquired
Business.
(c) The Acquired Assets include all rights, properties, interests in
properties, and assets necessary to permit NDC to carry on the Acquired Business
as presently conducted by PMSI and PMSI Database.
2.11 Intellectual Property. Section 2.11 of the PMSI Database
----------------------
Disclosure Memorandum is a complete and accurate list of all Acquired
Intellectual Property, containing a brief description of all governmental
registrations or applications for governmental registrations of each such item
and the nature of PMSI Database's interest therein. PMSI Database owns or has a
license to use all of the Acquired Intellectual Property. PMSI Database is the
owner of or has a license to any Acquired Intellectual Property sold or licensed
to a third party by PMSI Database, and PMSI Database has the right to convey by
sale or license any Acquired Intellectual Property so conveyed. PMSI Database
is not in Default under any of its Acquired Intellectual Property licenses. No
proceedings have been instituted, or are pending or to the Knowledge of PMSI
Database and PMSI threatened, which challenge the rights of PMSI or PMSI
Database with respect to Acquired Intellectual Property used, sold or licensed
by PMSI or PMSI Database in the course of the Acquired Business, nor has any
person claimed or alleged any rights to such Acquired Intellectual Property.
The conduct of the Acquired Business does not infringe any Intellectual Property
of any other person. Except as disclosed in Section 2.11 of the PMSI Database
Disclosure Memorandum, neither PMSI nor PMSI Database is obligated to pay any
recurring royalties to any Person with respect to any Acquired Intellectual
Property. Except as disclosed in Section 2.11 of the PMSI Database Disclosure
Memorandum, every Employee is a party to a Contract which requires such Person
to assign any interest in any Intellectual Property to PMSI which rights have
been assigned to PMSI Database and to keep confidential any trade secrets,
proprietary data, customer information, or other business information of the
Acquired Business, and no such Employee is party to any Contract with any Person
other than PMSI which requires such Employee to assign any interest in any
Intellectual Property developed while in the employ of PMSI to any Person other
than PMSI or to keep confidential any trade secrets, proprietary data, customer
information, or other business information of any Person other than
-11-
<PAGE>
PMSI. Except as disclosed in Section 2.11 of the PMSI Database Disclosure
Memorandum, no Employee is party to any Contract which restricts or prohibits
such Employee from engaging in activities competitive with any Person, including
PMSI and PMSI Database, in each case with respect to the Acquired Business. All
material items of the Acquired Intellectual Property and the material
registrations, applications, and agreements related thereto will be legally
assigned to PMSI Database, subject to the consent of any third party as set
forth in Section 2.11 of the PMSI Database Disclosure Memorandum.
2.12 Compliance with Laws. PMSI or PMSI Database has in effect all
---------------------
Acquired Permits. The Acquired Permits include all Permits necessary for PMSI
Database to own, lease, or operate the Acquired Assets and to carry on the
Acquired Business as now conducted, and there has occurred no Default under any
such Acquired Permit and, except as set forth in Section 2.12 of the PMSI
Database Disclosure Memorandum, all right in and to such Acquired Permits has
been legally transferred to PMSI Database and did not require the consent of
any third party. Except as disclosed in Section 2.12 of the PMSI Database
Disclosure Memorandum, neither PMSI nor PMSI Database:
(a) is in Default under any of the provisions of its Certificate of
Incorporation or Bylaws (or other governing instruments);
(b) is in Default under any Laws, Orders, or Acquired Permits
applicable to the Acquired Business or the Employees; or
(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting
that PMSI Database or PMSI with respect to the Acquired Business is not in
compliance in any material respect with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, (ii) threatening to
revoke any Acquired Permits, or (iii) requiring PMSI with respect to the
Acquired Business or PMSI Database to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment, or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking.
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority relating to the Acquired Business
or the Acquired Assets have been made available to NDC.
2.13 Labor Relations. PMSI Database and PMSI have disclosed in Section
----------------
2.13 of the PMSI Database Disclosure Memorandum all employees of the Acquired
Business (the "Employees"). With respect to the Acquired Business, PMSI and
PMSI Database are not the subject of any Litigation asserting that they have
committed an unfair labor practice (within the meaning of the National Labor
Relations Act or comparable state law) or seeking to compel them to bargain with
any labor organization as to wages or conditions of employment, nor is PMSI
Database, or PMSI with respect to the Acquired Business, a party to any
collective bargaining
-12-
<PAGE>
agreement, nor is there any strike or other labor dispute involving the Acquired
Business, pending or threatened, or to the Knowledge of PMSI and PMSI Database,
is there any activity involving the Employees seeking to certify a collective
bargaining unit or engaging in any other organization activity.
2.14 Employees and Employee Benefit Plans.
-------------------------------------
(a) Neither PMSI Database nor any ERISA Affiliate of PMSI Database
currently or within the 6 years preceding the Closing Date, has maintained,
sponsored in whole or in part, or contributed to any plan or arrangement which
is a "defined benefit plan" (as defined in Section 414(j) of the Internal
Revenue Code) or which is a multiemployer plan within the meaning of Section
3(37) of ERISA. For purposes of this Section 2.14, "ERISA Affiliate" shall mean
any entity which is considered one employer with PMSI Database under Section
4001 of ERISA or Section 414 of the Internal Revenue Code.
(b) All PMSI Benefit Plans are in compliance with the applicable terms
of ERISA, the Internal Revenue Code, and any other applicable Laws the breach or
violation of which are reasonably likely to have, individually or in the
aggregate, a PMSI Database Material Adverse Effect.
(c) PMSI Database will not have had any employees prior to Closing.
2.15 Material Contracts. Section 2.15 of the PMSI Database Disclosure
-------------------
Memorandum contains a true and correct list, and (if oral) summary description,
of all PMSI Database Contracts (as defined below). Except as contemplated
hereunder and except as disclosed in Section 2.15 of the PMSI Database
Disclosure Memorandum or otherwise reflected in the OTC Financial Statements or
the PMSI Database Balance Sheet, neither PMSI Database, nor PMSI with respect to
the Acquired Business and the Joint Venture Interest, nor any of the Acquired
Assets, the Acquired Business, or the related operations, is a party to, or is
bound or affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract, (ii) any Contract relating to
the borrowing of money by PMSI Database, or PMSI with respect to the Acquired
Business or the Joint Venture Interest, or the guarantee by PMSI Database, or
PMSI with respect to the Acquired Business or the Joint Venture Interest, of any
such obligation (other than Contracts evidencing trade payables and Contracts
relating to borrowings or guarantees made in the ordinary course of business),
(iii) any Contract which prohibits or restricts PMSI Database, or PMSI with
respect to the Acquired Business or the Joint Venture Interest, from engaging in
any business activities in any geographic area, line of business or otherwise in
competition with any other Person, (iv) any Contract between or among PMSI
Database and PMSI or any Affiliate of PMSI Database or PMSI, (v) any Contract
involving Intellectual Property (other than Contracts entered into in the
ordinary course with customers and "shrink-wrap" software licenses), (vi) any
Contract relating to the provision of data processing, network communication, or
other technical services to or by PMSI Database, or PMSI with respect to the
Acquired Business or the Joint Venture Interest, (vii) any Contract relating to
the purchase or sale of any goods or services including customer contracts
(other than Contracts entered into in the ordinary course of business and
involving payments under any individual
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<PAGE>
Contract not in excess of $50,000), (viii) real property leases and (ix) all
Contracts referred to in Section 2.17(b) as of the date of this Agreement
(together referred to as the "PMSI Database Contracts"). Except as set forth in
Sections 2.2 and 2.3 of the PMSI Database Disclosure Memorandum, with respect to
each PMSI Database Contract and except as disclosed in Section 2.15 of the PMSI
Database Disclosure Memorandum: (i) the Contract is in full force and effect;
(ii) neither PMSI Database nor PMSI is in Default thereunder; (iii) neither PMSI
Database nor PMSI has repudiated or waived any material provision of any such
Contract; (iv) no other party to any such Contract is, to the Knowledge of PMSI
Database and PMSI, in Default in any respect or has repudiated or waived any
material provision thereunder; (v) there exists no actual, or to the Knowledge
of PMSI or PMSI Database, threatened, cancellation, termination, or limitation
of, or any material amendment, modification, or change to any Contract; (vi)
neither PMSI Database nor PMSI has received formal notice that any party to a
PMSI Database Contract will not renew such Contract at the end of its existing
term; and (vii) no PMSI Database Contract requires consent for assignment in
connection with the transactions contemplated by this Agreement including the
Contribution. All of the indebtedness of PMSI Database for money borrowed is
prepayable at any time by PMSI Database without penalty or premium.
2.16 Real Property; Leased Real Property. PMSI Database does not own or
-----------------------------------
lease any real property that is used or will be used in the Acquired Business.
2.17 Personal Property.
-----------------
(a) Section 2.17(a) of the PMSI Database Disclosure Memorandum contains a
substantially true and correct list of all equipment (excluding items of
equipment having a value of less than $50,000 individually) as of the date
hereof that will be included in the Acquired Assets.
(b) Section 2.17(b) of the PMSI Database Disclosure Memorandum contains a
substantially true and correct list of all Acquired Personal Property (except
miscellaneous leases of property having a value of less than $20,000
individually) leased by PMSI or PMSI Database. True and correct copies of the
lease for each item listed in Section 2.17(b) of the PMSI Database Disclosure
Memorandum and any amendments, extensions, and renewals thereof have heretofore
been furnished to NDC. Each of such leases is in effect, and PMSI and PMSI
Database have neither received nor sent written notice or other written
correspondence that indicates the existence of Material default under any such
lease, except for defaults subsequently cured or waived prior to the date of
this Agreement. No rights of PMSI or PMSI Database under any of such leases
have been assigned or otherwise transferred as security for any obligation of
PMSI or PMSI Database other than to the lessor under a lease to secure PMSI's or
PMSI Database's obligations under such lease. Except as described in Section
2.17(b) of the PMSI Database Disclosure Memorandum, all such leases are fully
assignable without the consent of any third party.
(c) Section 2.17(c) of the PMSI Database Disclosure Memorandum contains a
substantially true and correct list of all Acquired Personal Property (except
personal property having a value of less than $20,000 individually) owned by
PMSI Database. All Acquired Personal Property that is material to the conduct
of the Acquired Business is in good condition,
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<PAGE>
reasonable wear and use excepted, and are usable in the ordinary course of
business consistent with PMSI's past practices.
2.18 Legal Proceedings. There is no Litigation instituted or pending,
-----------------
or, to the Knowledge of PMSI and PMSI Database, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against PMSI Database or PMSI
with respect to the Acquired Business, or against any director, employee or
employee benefit plan of PMSI or PMSI Database, or against any Acquired Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a PMSI Database Material Adverse Effect, nor
are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against PMSI Database or PMSI with
respect to the Acquired Business and Acquired Assets that are reasonably likely
to have, individually or in the aggregate, a PMSI Database Material Adverse
Effect. Section 2.18 of the PMSI Database Disclosure Memorandum contains a
summary of all Litigation as of the date of this Agreement to which PMSI
Database is a party, or to which PMSI with respect to the Acquired Business is a
party and which names such as a defendant or cross-defendant or for which PMSI
Database, the Acquired Business or the Acquired Assets has any potential
Liability.
2.19 Statements True and Correct. None of the information supplied or
----------------------------
to be supplied by PMSI or PMSI Database or any Affiliate thereof for inclusion
in the Registration Statement to be filed by NDC with the SEC will, when the
Registration Statement becomes effective, include any untrue statement of a
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the information supplied or to be supplied by PMSI or
PMSI Database or any Affiliate thereof for inclusion in any documents to be
filed by PMSI or PMSI Database or any Affiliate thereof with any Regulatory
Authority in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, include any untrue statement of a
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. All documents that PMSI or PMSI Database or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable Law.
2.20 Regulatory Matters. Neither PMSI Database, PMSI nor any Affiliate
-------------------
thereof has taken or agreed to take any action or has any Knowledge of any fact
or circumstance that is reasonably likely to materially impede or delay receipt
of any Consents of Regulatory Authorities referred to in Section 6.1(b) or
result in the imposition of a condition or restriction of the type referred to
in the last sentence of such Section.
2.21 Charter Provisions. PMSI, as the sole stockholder of PMSI
-------------------
Database, and PMSI Database have taken all reasonable action so that the
entering into of this Agreement and the consummation of the Stock Purchase and
the other transactions contemplated by this Agreement, except as set forth
herein, do not and will not result in the grant of any rights to any Person
under the Certificate of Incorporation, Bylaws or other governing instruments of
PMSI Database or restrict or impair the ability of NDC or any of its
Subsidiaries to vote, or otherwise to
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<PAGE>
exercise the rights of a stockholder with respect to, shares of PMSI Database
that may be directly or indirectly acquired or controlled by them.
2.22 Opinion of Financial Advisor. PMSI or PMSI Database has received
-----------------------------
the opinion of Cowen & Company, dated the date of this Agreement, to the effect
that the consideration to be received in the Stock Purchase and pursuant to the
Source Transfer Agreement by PMSI is fair, from a financial point of view, to
PMSI.
2.23 Board Recommendation. The Board of Directors of PMSI Database and
---------------------
PMSI, at meetings duly called and held, have by unanimous vote of the directors
present and voting (who constituted all of the directors then in office other
than those directors who abstained from voting because of a conflict of
interest) (i) determined that this Agreement and the transactions contemplated
hereby, including the Stock Purchase and the transactions contemplated thereby,
taken together, are fair to and in the best interests of the stockholders of
PMSI, and PMSI, as the sole stockholder of PMSI Database, and (ii) resolved to
recommend that the holders of the shares of PMSI and PMSI, as the sole
stockholder of PMSI Database, adopt this Agreement.
2.24 Joint Venture Interest. The Amended and Restated Alphabase Data
-----------------------
License Agreement is in full force and effect and, subject to receipt by PMSI
Database of the Consents set forth in Sections 2.2 and 2.3 of the PMSI Database
Disclosure Memorandum, PMSI Database owns all right, title and interest in the
Joint Venture Interest free and clear of any Liens.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF NDC
-------------------------------------
NDC hereby represents and warrants to PMSI Database and PMSI as follows:
3.1 Organization, Standing, and Power. NDC is a corporation duly
----------------------------------
organized, validly existing, and in good standing under the Laws of the State of
Delaware, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its material Assets. NDC is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a NDC Material Adverse Effect.
3.2 Authority; No Breach By Agreement.
----------------------------------
(a) NDC has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Stock Purchase, have been
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<PAGE>
duly and validly authorized by all necessary corporate action in respect thereof
on the part of NDC. This Agreement represents a legal, valid, and binding
obligation of NDC, enforceable against NDC in accordance with its terms (except
in all cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by NDC, nor
the consummation by NDC of the transactions contemplated hereby, nor compliance
by NDC with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of NDC's Certificate of Incorporation or Bylaws or any
resolution adopted by the Board of Directors or stockholders of NDC, or (ii)
subject to receipt of the requisite Consents referred to in Section 6.1(b),
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Asset of any NDC Entity under, any
Contract or Permit of any NDC Entity.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NYSE, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, no notice to, filing with, or Consent of, any public body
or authority is necessary for the consummation by NDC of the Stock Purchase and
the other transactions contemplated in this Agreement.
3.3 Capital Stock.
--------------
(a) The authorized capital stock of NDC consists of (i) 100,000,000
shares of NDC Common Stock, of which 26,629,947 shares are issued and
outstanding as of August 18, 1997, and (ii) 1,000,000 shares of NDC Preferred
Stock, of which no shares are issued and outstanding. All of the issued and
outstanding shares of NDC Capital Stock are, and all of the shares of NDC Common
Stock to be issued in exchange for shares of PMSI Database Common Stock upon
consummation of the Stock Purchase, when issued in accordance with the terms of
this Agreement, will be, duly and validly issued and outstanding and fully paid
and nonassessable under the DGCL. None of the outstanding shares of NDC Capital
Stock has been, and none of the shares of NDC Common Stock to be issued in
exchange for shares of PMSI Database Common Stock upon consummation of the Stock
Purchase will be, issued in violation of any preemptive rights of the current or
past stockholders of NDC.
(b) Except as set forth in Section 3.3(a), or as provided pursuant to
the NDC Rights Agreement, or as disclosed in Section 3.3(b) of the NDC
Disclosure Memorandum, there are no shares of capital stock or other equity
securities of NDC outstanding and no outstanding Equity Rights relating to the
capital stock of NDC.
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<PAGE>
3.4 SEC Filings; Financial Statements.
----------------------------------
(a) NDC has timely filed and made available to PMSI Database all SEC
Documents required to be filed by NDC since May 31, 1993 (the "NDC SEC
Reports"). The NDC SEC Reports (i) at the time filed, complied in all material
respects with the applicable requirements of the Securities Laws and other
applicable Laws and (ii) did not, at the time they were filed (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such NDC SEC Reports or necessary in
order to make the statements in such NDC SEC Reports, in light of the
circumstances under which they were made, not misleading. No NDC Subsidiary is
required to file any SEC Documents.
(b) Each of the NDC Financial Statements (including, in each case, any
related notes) contained in the NDC SEC Reports, including any NDC SEC Reports
filed after the date of this Agreement until the Closing Date, complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial position of NDC
and its Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring year-
end adjustments which were not or are not expected to be material in amount or
effect.
3.5 Absence of Undisclosed Liabilities. No NDC Entity has any
-----------------------------------
Liabilities that are reasonably likely to have, individually or in the
aggregate, a NDC Material Adverse Effect, except Liabilities which are accrued
or reserved against in the consolidated balance sheets of NDC as of May 31, 1996
and February 28, 1997, included in the NDC Financial Statements delivered prior
to the date of this Agreement or reflected in the notes thereto. No NDC Entity
has incurred or paid any Liability since February 28, 1997, except for such
Liabilities incurred or paid (i) in the ordinary course of business consistent
with past business practice and which are not reasonably likely to have,
individually or in the aggregate, a NDC Material Adverse Effect or (ii) in
connection with the transactions contemplated by this Agreement.
3.6 Absence of Certain Changes or Events. Since February 28, 1997,
-------------------------------------
except as disclosed in the NDC Financial Statements delivered prior to the date
of this Agreement or as disclosed in Section 3.6 of the NDC Disclosure
Memorandum, (i) there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a NDC
Material Adverse Effect, and (ii) the NDC Entities have not taken any action, or
failed to take any action, prior to the date of this Agreement, which action or
failure, if taken after the date of this Agreement, would represent or result in
a material breach or violation of any of the covenants and agreements of NDC
provided in Article 7.
3.7 Compliance with Laws. Each NDC Entity has in effect all Permits
---------------------
necessary for it to own, lease or operate its material Assets and to carry on
its business as now conducted,
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<PAGE>
and there has occurred no Default under any such Permit. Except as disclosed in
Section 3.7 of the NDC Disclosure Memorandum, none of the NDC Entities:
(a) is in Default under its Certificate of Incorporation or Bylaws
(or other governing instruments); or
(b) is in Default under any Laws, Orders or Permits applicable to its
business or employees conducting its business; or
(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting
that any NDC Entity is not in compliance in any material respect with any of
the Laws or Orders which such governmental authority or Regulatory Authority
enforces, or (iii) requiring any NDC Entity to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive, commitment
or memorandum of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business.
3.8 Legal Proceedings. There is no Litigation instituted or pending, or,
------------------
to the Knowledge of NDC, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any NDC Entity, or against any director,
employee or employee benefit plan of any NDC Entity, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a NDC Material Adverse Effect, nor are there
any Orders of any Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against any NDC Entity, that are reasonably likely to
have, individually or in the aggregate, a NDC Material Adverse Effect.
3.9 Statements True and Correct. None of the information supplied or to
----------------------------
be supplied by any NDC Entity or any Affiliate thereof for inclusion in the
Registration Statement to be filed by NDC or in the proxy statement to be filed
by PMSI with the SEC, will include an untrue statement of a material fact, or
omit to state any material fact necessary to make the statements therein in
light of the circumstances under which they were made, not misleading, with
respect to the Registration Statement, on the date such Registration Statement
becomes effective, and with respect to the proxy statement as of its date. None
of the information supplied or to be supplied by any NDC Entity or any Affiliate
thereof for inclusion in any documents to be filed by any NDC Entity or any
Affiliate thereof with the SEC or any other Regulatory Authority in connection
with the transactions contemplated hereby, will, at the respective time such
documents are filed, be false or misleading with respect to any material fact,
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. All
documents that any NDC Entity or any Affiliate thereof is responsible for filing
with any Regulatory Authority in connection with the transactions contemplated
hereby will comply as to form in all material respects with the provisions of
applicable Law.
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<PAGE>
3.10 Regulatory Matters. No NDC Entity or any Affiliate thereof has
-------------------
taken or agreed to take any action or has any Knowledge of any fact or
circumstance that is reasonably likely to materially impede or delay receipt of
any Consents of Regulatory Authorities referred to in Section 6.1(b) or result
in the imposition of a condition or restriction of the type referred to in the
last sentence of such Section.
3.11 Rights Agreement. Execution of this Agreement and consummation of
-----------------
the Stock Purchase and the other transactions contemplated by this Agreement
will not result in the grant of any rights to any Person under the NDC Rights
Agreement (other than as contemplated by Section 1.1) or enable or require the
NDC Rights to be exercised, distributed or triggered.
ARTICLE 4
CONDUCT OF BUSINESS PENDING CONSUMMATION
----------------------------------------
4.1 Affirmative Covenants of PMSI Database and PMSI.
------------------------------------------------
(a) Subject to the Consents set forth in Sections 2.3 and 2.4 of the PMSI
Database Disclosure Memorandum, PMSI has, or shall have prior to Closing,
assigned, transferred, conveyed, and delivered to PMSI Database, and PMSI
Database has, or shall have prior to Closing, acquired, and accepted from PMSI,
all of the right, title, and interest of PMSI in and to the Acquired Assets and
the Joint Venture Interest, free and clear of any and all Liens.
(b) The "Acquired Assets" shall consist of all of the right, title, and
interest of PMSI and PMSI Database in and to all of the following Assets, as the
same shall exist at the Closing Date, which shall be delivered free and clear of
any and all Liens:
(i) The Personal Property primarily utilized in the Acquired
Business (the "Acquired Personal Property");
(ii) The Intellectual Property primarily utilized in the Acquired
Business (the "Acquired Intellectual Property");
(iii) The Contracts primarily utilized in the Acquired Business (the
"Acquired Contracts");
(iv) The Accounts Receivable relating to the Acquired Business (the
"Acquired Accounts Receivable");
(v) The Permits primarily utilized in the Acquired Business (the
"Acquired Permits"); and
(vi) The Other Assets primarily utilized in the Acquired Business
(the "Acquired Other Assets").
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<PAGE>
(c) Prior to Closing, as partial consideration for the Contribution,
PMSI Database shall assume responsibility for the performance and satisfaction
of the Assumed Liabilities. PMSI Database shall not assume responsibility for,
and PMSI will remain obligated with respect to, the Retained Liabilities.
(d) From the date of this Agreement until the earlier of the Closing Date
or the termination of this Agreement, unless the prior written consent of NDC
shall have been obtained, and except as otherwise expressly contemplated herein,
either PMSI shall, or shall cause PMSI Database to, (i) operate the Acquired
Business and the Joint Venture Interest only in the usual, regular, and ordinary
course as previously operated by PMSI, (ii) use its reasonable efforts to
preserve intact the business organization of the Acquired Business and the
Acquired Assets and maintain its rights and franchises with respect to the
Acquired Business and the Joint Venture Interest; (iii) maintain the Acquired
Assets in their present order and condition, reasonable wear and use excepted,
and maintain all policies of insurance covering the Acquired Assets in amounts
and on terms substantially equivalent to those in effect on the date hereof;
(iv) take all steps reasonably necessary to maintain the Acquired Intellectual
Property and other intangible assets of the Acquired Business and the Joint
Venture Interest; (v) use reasonable best efforts to preserve the goodwill and
patronage of its customers, Employees, suppliers and others having a business
relationship with the Acquired Business and the Joint Venture Interest; and (vi)
take no action which would (A) materially adversely affect the ability of any
Party to obtain any Consents required for the transactions contemplated hereby
without imposition of a condition or restriction of the type referred to in the
last sentences of Section 6.1(b) or 6.1(c), or (ii) materially adversely affect
the ability of any Party to perform its covenants and agreements under this
Agreement.
(e) Prior to or contemporaneous with the Closing, pursuant to the Source
Transfer Agreement, the terms and conditions of which will have been approved by
NDC, PMSI shall acquire (i) Source's business operated in Europe as of the
Closing Date (the "European Business"), (ii) all of the shares of PMSI held by
Source or any Subsidiary of Source (the "Divestiture"), and (iii) all of the
stock of the Source Divestiture Subsidiaries. In connection with the
Divestiture, PMSI shall obtain a release of all obligations of Source under the
European Contracts.
(f) Prior to Closing, PMSI Database and PMSI shall use commercially
reasonable efforts to obtain Consents to the assignment of the PMSI Database
Contracts and any other Contracts to which PMSI, SLA or PMSI Database is a party
as required by the Contract in connection with the Contribution and the
transactions contemplated hereby. If, on the Closing Date, PMSI Database, SLA
and PMSI have not obtained any Consent discussed above after having used
commercially reasonable efforts to obtain such Consent or an attempted transfer
of any of the PMSI Database Contracts and any other Contracts to which PMSI or
SLA is a party would be ineffective or the failure to have such Consent would
adversely affect PMSI's or SLA's ability to convey any such Contract and the
failure to transfer such asset, either individually or in the aggregate, is not
reasonably likely to have a PMSI Database Material Adverse Effect, then
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such Contracts shall constitute "Deferred Contracts" and shall not be
transferred to PMSI Database. After the Closing: (a) PMSI will (i) continue to
use commercially reasonable efforts to obtain the Consent and/or to remove any
other impediments to the assignment and transfer of each Deferred Contract and
will assign and transfer or cause SLA to assign and transfer each Deferred
Contract to PMSI Database within five (5) business days after the receipt of
such Consent and/or removal of such impediment; (ii) until the assignment and
transfer with respect to any Deferred Contract is accomplished, cooperate or
cause SLA to cooperate with PMSI Database in any lawful arrangement that is not
unduly economically burdensome (including performance by PMSI or SLA as agent)
to provide that PMSI Database shall receive the benefits of such Deferred
Contract to the same extent as if it were transferred to PMSI Database at
Closing; and (iii) until the assignment and transfer with respect to any
Deferred Contract is accomplished, enforce, at the request and for the account
of PMSI Database, any of PMSI's or SLA's rights thereto or interests therein
against any other parties thereto (including the right to terminate any such
Deferred Contract in accordance with its terms, provided that PMSI Database pays
any cancellation or other fee due upon such termination); and (b) if and only to
the extent that PMSI Database receives the benefits of a Deferred Contract, PMSI
Database shall perform the obligations of PMSI or SLA arising with respect to
such Deferred Contract to the extent that, by reason of consummation of the
transactions contemplated by this Agreement or the Source Agreement, PMSI
Database has control over the resources necessary to perform such obligations
or, to the extent that PMSI Database does not have such resources, to reimburse
PMSI for the reasonable cost of such performance. NDC shall notify PMSI on the
Closing Date as to the PMSI Database Contracts which will be performed by PMSI
Database pursuant to this Section. To the extent PMSI Database performs the
obligations of PMSI with respect to any Deferred Contract, any account
receivable created on account of such performance shall be deemed when created
to be a Acquired Contract conveyed hereunder. After the Closing, PMSI Database
and NDC will act with reasonable diligence and use commercially reasonable
efforts to assist, and cooperate with, PMSI or SLA in obtaining such Consents
and removing any such impediments to the transfer of the Deferred Contracts.
(g) Prior to Closing, all indebtedness or other obligations or accounts
of any kind between a PMSI Entity on the one hand and Source and its
Subsidiaries or PMSI Database on the other hand will have been paid in full and
discharged.
4.2 Negative Covenants of PMSI Database and PMSI. From the date of this
---------------------------------------------
Agreement until the earlier of the Closing Date or the termination of this
Agreement, unless the prior written consent of NDC shall have been obtained, and
except as otherwise expressly contemplated herein, PMSI and PMSI Database
covenant and agree that they will not do or agree or commit to do any of the
following with respect to the Acquired Business and the Acquired Assets:
(a) amend the Certificate of Incorporation, Bylaws or other governing
instruments of PMSI Database, or
(b) except as provided in the budget set forth in Section 4.2(b) of
the PMSI Database Disclosure Memorandum and only for the purposes set forth
therein, PMSI
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Database shall not incur any additional debt obligation, capital lease
obligation or other obligation for borrowed money or make any capital
expenditures in excess of an aggregate of $50,000 or impose, or suffer the
imposition, on any Acquired Asset of any Lien or permit any such Lien to
exist (other than in connection with Liens in effect as of the date hereof
that are disclosed in the PMSI Database Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange, directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of PMSI Database, or declare or pay any dividend or make any
other distribution in respect of PMSI Database's capital stock; or
(d) except for this Agreement, issue, sell, pledge, encumber,
authorize the issuance of, enter into any Contract to issue, sell, pledge,
encumber, or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of PMSI Database Common Stock, or any
stock appreciation rights, or any option, warrant, or other Equity Right of
PMSI Database; or
(e) except for the Contribution, purchase or acquire any assets or
properties, whether real or personal, tangible or intangible, that if
acquired would be an Acquired Asset, and not sell, lease or otherwise dispose
of any real or personal property or asset (other than cash which may be
distributed or otherwise transferred out of PMSI Database to PMSI) that would
have been an Acquired Asset, in each case except in the ordinary course of
business and consistent with past practices; or
(f) adjust, split, combine or reclassify any capital stock of PMSI
Database or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of PMSI Database Common Stock; or
(g) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, PMSI Database shall not purchase any securities or make any
material investment, either by purchase of stock of securities, contributions
to capital, Asset transfers, or purchase of any Assets, in any Person, or
otherwise acquire direct or indirect control over any Person, other than in
connection with (i) foreclosures in the ordinary course of business, or (ii)
the creation of new wholly owned Subsidiaries organized to conduct or
continue activities otherwise permitted by this Agreement; or
(h) grant any increase in compensation or benefits to the Employees
of the Acquired Business, except in accordance with past practice disclosed
in Section 4.2(h) of the PMSI Database Disclosure Memorandum or as required
by Law; pay any severance or termination pay or any bonus other than pursuant
to written policies or written Contracts in effect on the date of this
Agreement and disclosed in Section 4.2(h) of the PMSI Database Disclosure
Memorandum; and enter into or amend any severance agreements with Employees
of the Acquired Business; grant any material increase in fees or other
increases in
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compensation or other benefits to directors of PMSI Database except in
accordance with past practice disclosed in Section 4.2(h) of the PMSI
Database Disclosure Memorandum; or
(i) enter into or amend any employment Contract with any Employee of
the Acquired Business that PMSI does not and PMSI Database will not have the
unconditional right to terminate without Liability (other than Liability for
services already rendered), at any time on or after the Closing Date; or
(j) adopt any new employee benefit plan of PMSI Database; or
(k) make any significant change in any Tax or accounting methods or
systems of internal accounting controls with respect to PMSI Database or the
Acquired Business, except as may be appropriate to conform to changes in Tax
Laws or regulatory accounting requirements or GAAP; or
(l) commence any Litigation with respect to PMSI Database or the
Acquired Business other than in accordance with past practice, settle any
Litigation involving any Liability of the Acquired Business or the Acquired
Assets for material money damages or restrictions upon the operations of the
Acquired Business or the Acquired Assets ; or
(m) enter into, materially modify or amend, or terminate any PMSI
Database Contract or other material Contract with respect to PMSI Database or
the Acquired Business (including any loan Contract with an unpaid balance
exceeding $50,000) or waive, release, compromise or assign any material
rights or claims; or
(n) modify or amend, or waive any provision of, the Source Transfer
Agreement, a fully executed copy of which with all attachments,
exhibits and schedules thereto is attached hereto as Schedule 4.2(n).
4.3 Covenants of NDC. From the date of this Agreement until the earlier
-----------------
of the Closing Date or the termination of this Agreement, unless the prior
written consent of PMSI shall have been obtained, and except as otherwise
expressly contemplated herein, NDC covenants and agrees that it shall (a)
continue to conduct its business and the business of its Subsidiaries in a
manner designed, in its reasonable judgment, to enhance the long-term value of
the NDC Common Stock and the business prospects of the NDC Entities and to the
extent consistent therewith use all reasonable efforts to preserve intact the
NDC Entities' core businesses and goodwill with their respective employees and
the communities they serve, and (b) take no action which would (i) materially
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentences of Section 6.1(b) or
6.1(c), or (ii) materially adversely affect the ability of any Party to perform
its covenants and agreements under this Agreement; provided, that the foregoing
shall not prevent any NDC Entity from acquiring any Assets or other businesses
or from discontinuing or disposing of any of its Assets or business if such
action is, in the judgment of NDC, desirable in the conduct of the business of
NDC and its Subsidiaries, provided that such actions shall not materially delay
the Closing Date or materially hinder consummation of
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the Stock Purchase. NDC further covenants and agrees that it will not, without
the prior written consent of PMSI, which consent shall not be unreasonably
withheld, amend the Certificate of Incorporation or Bylaws of NDC or, except as
expressly contemplated by this Agreement, the NDC Rights Agreement, in each
case, in any manner adverse to the holders of PMSI Database Common Stock as
compared to rights of holders of NDC Common Stock generally as of the date of
this Agreement. In addition, NDC covenants and agrees that it shall maintain
PMSI Database as its Subsidiary and maintain substantially all of the Acquired
Assets in PMSI Database for a period of one year and will treat the Joint
Venture Interest as a partnership for federal income tax purposes during that
one-year period.
4.4 Adverse Changes in Condition. Each Party agrees to give written
-----------------------------
notice promptly to the other Parties upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a PMSI Database Material Adverse Effect or a NDC Material Adverse
Effect, as applicable, or (ii) would cause or constitute a material breach of
any of its representations, warranties, or covenants contained herein, and to
use its reasonable efforts to prevent or promptly to remedy the same.
4.5 Reports. Each Party and its Subsidiaries shall file all reports
--------
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Closing Date and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in stockholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not material). As of their
respective dates, such reports filed with the SEC will comply in all material
respects with the Securities Laws and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.
ARTICLE 5
ADDITIONAL AGREEMENTS
---------------------
5.1 Registration Statement; PMSI Approval. As soon as reasonably
--------------------------------------
practicable after execution of this Agreement, NDC shall prepare and file the
Registration Statement with the SEC, and shall use its reasonable efforts to
cause the Registration Statement to become effective under the 1933 Act and take
any action required to be taken under the applicable state Blue Sky or
securities Laws in connection with the issuance of the shares of NDC Common
Stock upon consummation of the Stock Purchase. PMSI and PMSI Database shall
cooperate in the preparation and filing of the Registration Statement and shall
furnish all information concerning
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<PAGE>
them and the holders of PMSI's capital stock as NDC may reasonably request in
connection with such action. PMSI shall call a Stockholders' Meeting, to be held
as soon as reasonably practicable after the Registration Statement is declared
effective by the SEC, for the purpose of voting upon adoption of this Agreement,
the Source Transfer Agreement and such other related matters as it deems
appropriate. In connection with the Stockholders' Meeting, (i) PMSI shall
prepare and file with the SEC a Proxy Statement and mail such Proxy Statement to
its stockholders, (ii) NDC shall furnish to PMSI and PMSI Database all
information that such may reasonably request in preparation of such Proxy
Statement and notice of meeting, (iii) the Board of Directors of PMSI shall
recommend to its stockholders the approval of the matters submitted for
approval, subject only to the Board of Director's legal obligations (if any) as
directors of PMSI, and (iv) the Board of Directors and officers of PMSI shall
use their reasonable efforts to obtain such stockholders' approval. NDC and PMSI
Database shall make all necessary filings with respect to the Stock Purchase
under the Securities Laws.
5.2 Exchange Listing. NDC shall use its reasonable efforts to list,
-----------------
prior to the Closing Date, on the NYSE, subject to official notice of issuance,
the shares of NDC Common Stock to be issued to PMSI pursuant to the Stock
Purchase, and NDC shall give all notices and make all filings with the NYSE
required in connection with the transactions contemplated herein.
5.3 Applications; Antitrust Notification. NDC shall promptly prepare and
-------------------------------------
file, and PMSI Database and PMSI shall reasonably cooperate in the preparation
and, where appropriate, filing of, applications with all Regulatory Authorities
having jurisdiction over the transactions contemplated by this Agreement seeking
the requisite Consents necessary to consummate the transactions contemplated by
this Agreement. To the extent required by the HSR Act, each of the Parties will
promptly file with the United States Federal Trade Commission and the United
States Department of Justice the notification and report form required for the
transactions contemplated hereby and any supplemental or additional information
which may reasonably be requested in connection therewith pursuant to the HSR
Act and will comply in all material respects with the requirements of the HSR
Act. The Parties shall deliver to each other copies of all filings,
correspondence and orders to and from all Regulatory Authorities in connection
with the transactions contemplated hereby.
5.4 Agreement as to Efforts to Consummate. Subject to the terms and
--------------------------------------
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 6; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement. Each Party shall use,
and shall cause each of its Subsidiaries to use, its reasonable efforts to
obtain all Consents necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
5.5 Investigation and Confidentiality.
----------------------------------
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<PAGE>
(a) Prior to the Closing Date, NDC on the one hand and PMSI and PMSI
Database on the other hand shall keep each other advised of all material
developments relevant to their business and to consummation of the Stock
Purchase and shall permit the other to make or cause to be made such
investigation of the business and properties of such and its Subsidiaries and of
their respective financial and legal conditions as the other reasonably
requests, provided that such investigation shall be reasonably related to the
transactions contemplated hereby and shall not interfere unnecessarily with
normal operations.
(b) NDC on the one hand and PMSI and PMSI Database on the other hand
shall, and shall cause its advisers and agents to, maintain the confidentiality
of all confidential information furnished to it by the other concerning its and
its Subsidiaries' businesses, operations, and financial positions except to the
extent such disclosure is required by law and shall not use such information for
any purpose except in furtherance of the transactions contemplated by this
Agreement. If this Agreement is terminated prior to the Closing Date, each
Party shall promptly return or certify the destruction of all documents and
copies thereof, and all work papers containing confidential information received
from the other.
(c) NDC on the one hand and PMSI and PMSI Database on the other hand
agrees to give the other notice as soon as practicable after any determination
by it of any fact or occurrence relating to the other which it has discovered
through the course of its investigation and which represents, or is reasonably
likely to represent, either a material breach of any representation, warranty,
covenant or agreement of the other Party or which has had or is reasonably
likely to have a PMSI Database Material Adverse Effect or a NDC Material Adverse
Effect, as applicable.
5.6 Press Releases. Prior to the Closing Date, PMSI Database and NDC
---------------
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 5.6
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
5.7 Certain Actions. Except with respect to this Agreement and the
----------------
transactions contemplated hereby, PMSI and PMSI Database shall not, and shall
use their best efforts to cause any Affiliate or any Representatives thereof
retained by PMSI or PMSI Database not to, directly or indirectly solicit any
Acquisition Proposal by any Person that relates specifically to the Acquired
Business or the Acquired Assets. Except to the extent the Board of Directors of
PMSI and PMSI Database, after having consulted with and considered the advice of
outside counsel, reasonably determines in good faith that the failure to take
such actions would constitute a breach of fiduciary duties of the members of
such Board of Directors to the stockholders of PMSI under applicable law, PMSI,
PMSI Database, and any Affiliate or Representative thereof shall not furnish any
non-public information that it is not legally obligated to furnish, negotiate
with respect to, or enter into any Contract with respect to, any such
Acquisition Proposal. PMSI and PMSI Database shall promptly advise NDC
following the receipt of any such Acquisition Proposal and
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<PAGE>
the details thereof, and advise NDC of any developments with respect to such
Acquisition Proposal promptly upon the occurrence thereof. PMSI and PMSI
Database shall (i) immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons conducted heretofore
with respect to any of the foregoing, and (ii) direct and use its reasonable
efforts to cause all of its Affiliates and Representatives not to engage in any
of the foregoing.
5.8 Charter Provisions. PMSI Database shall take all necessary action to
-------------------
ensure that the entering into of this Agreement and the consummation of the
Stock Purchase and the other transactions contemplated hereby do not and will
not, except as set forth herein, result in the grant of any rights to any Person
under the Certificate of Incorporation, Bylaws or other governing instruments of
PMSI Database or restrict or impair the ability of NDC or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a stockholder with
respect to, shares of PMSI Database that may be directly or indirectly acquired
or controlled by them.
5.9 Agreement of Affiliates. PMSI will not sell, pledge, transfer, or
------------------------
otherwise dispose of the shares of PMSI Database Common Stock held by PMSI
except as contemplated by this Agreement and will not sell, pledge, transfer, or
otherwise dispose of the shares of NDC Common Stock to be received by PMSI upon
consummation of the Stock Purchase except in compliance with applicable
provisions of the 1933 Act and the rules and regulations thereunder. NDC shall
be entitled to place restrictive legends upon certificates for shares of NDC
Common Stock issued to PMSI pursuant to this Agreement to enforce the applicable
provisions of Law. NDC shall not be required to maintain the effectiveness of
the Registration Statement under the 1933 Act for the purposes of resale of NDC
Common Stock by PMSI except as provided in the Registration Rights Agreement.
With respect to the NDC Common Stock to be received by PMSI upon consummation of
the Stock Purchase, NDC will provide PMSI with certain registration rights
pursuant to a registration rights agreement in substantially the form of Exhibit
1 hereto (the "Registration Rights Agreement").
5.10 Employment of Employees. On the Closing Date, NDC shall offer
------------------------
employment to those Employees of the Acquired Business listed on Schedule 2.13
of the PMSI Database Disclosure Memorandum. PMSI agrees to use its commercially
reasonable efforts to assist NDC in hiring such Employees and will use its
commercially reasonable efforts to make such Employees available to NDC. All
such Employees accepting NDC's offer of employment are hereinafter referred to
as the "Hired Employees." Except as otherwise provided herein, PMSI shall be
responsible for the payment of all earned but unpaid salaries, bonus, vacation
pay, sick pay, holiday pay, severance pay and other like obligations and
payments to the Employees for all periods ending on or prior to the Closing
Date. PMSI shall be responsible for the payment of any amounts due to its
Employees (including the Hired Employees) pursuant to the PMSI Benefit Plans as
a result of the employment of its Employees, and, in determining bonuses and
other similar payments due to Hired Employees for any period ended on or prior
to the Closing Date, PMSI shall, if payment thereof will occur after the Closing
Date and the applicable performance period has been completed prior to the
Closing Date, waive any requirement that such Employees be employees of PMSI on
the date such bonuses or other similar payments are paid. PMSI shall be
responsible for all incurred but unreported or unpaid medical claims occurring
prior to the
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<PAGE>
Closing Date and for the cost associated with any hospital confinement which
commences prior to the Closing Date. NDC shall become responsible for all costs
and liabilities attributable to Hired Employees accruing on and after the
Closing Date; provided, however, that NDC shall not be responsible for (a)
liabilities arising under the PMSI Benefit Plans or (b) liabilities associated
with any leaves taken prior to the Closing Date in connection with the Family
and Medical Leave Act of 1993. Effective on the Closing Date, PMSI shall, and
hereby does, release all Hired Employees from any employment and/or
confidentiality agreement previously entered into between PMSI and such Hired
Employees relating to the Acquired Business to the extent (but only to the
extent) necessary for NDC to operate the Acquired Business in the same manner as
operated by PMSI prior to the Closing Date.
PMSI shall be responsible for complying with the requirements of Section
4980B of the Internal Revenue Code and Part VI of Title I of ERISA for the
Employees (including the Hired Employees, as defined in this Section 5.10) and
their "qualified beneficiaries" whose "qualifying event" (as such terms are
defined in Section 4980B of the Internal Revenue Code) occurs on or prior to the
Closing Date.
5.11 Tax Matters.
-----------
(a) PMSI and NDC shall make a timely election under (S)338(h)(10) of
the Code and (S)1.338(h)(10)-1 of the Treasury Regulations promulgated pursuant
to the Code, and any corresponding elections under state or local tax law. PMSI
and NDC shall (i) take, and cooperate with each other to take, all actions
necessary and appropriate (including, without limitation, the preparation,
completion and timely joint filing by PMSI and NDC of Form 8023-A, and the
preparation, completion and timely filing of such other forms, returns,
elections, schedules and other documents and instruments) to effect, perfect and
preserve a timely (S)338(h)(10) election in accordance with (S)338(h)(10) of the
Code and (S)1.338(h)(10)-1 of the Treasury Regulations promulgated pursuant to
the Code, and (ii) report the purchase and sale of the Shares consistent with
the election pursuant to (S)338(h)(10) and shall take no position contrary
thereto or inconsistent therewith in any Tax Return, or in any discussion with
or any proceeding before any taxing authority or other governmental body or
otherwise. In the event an election under (S)338(h)(10) is not available under
the law of any state or locality but an election can be made under Section
338(g) of the Code, such election shall be made in such state or locality and
PMSI shall bear the cost of any tax on PMSI Database related thereto (other than
the cost of any state tax for such election in the following states: Arizona,
California, Connecticut, Delaware, Illinois, New Jersey, New York and
Pennsylvania).
(b) The Purchase Price and all other items that comprise the "modified
aggregate deemed sale price" (as defined in, and required to be allocated
pursuant to, Section 338(h)(10) of the Code) shall be allocated in accordance
with a schedule prepared by NDC and consented to by PMSI, which consent will not
be withheld or delayed unreasonably. Such allocation shall, for tax purposes,
be binding on PMSI Database, PMSI and NDC. PMSI Database, PMSI and NDC shall
file their respective Tax Returns in accordance with such allocation and shall
not take any position inconsistent with such allocation. In the event that such
allocation is disputed by any Tax authority, the party receiving notice of such
dispute shall
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<PAGE>
promptly notify and consult with the other parties hereto concerning resolution
of such dispute and no such dispute shall be finally settled or compromised
without the mutual consent of the parties, which consent will not be
unreasonably withheld.
(c) NDC shall have the sole and exclusive authority to prepare,
execute and file on behalf of PMSI Database (A) the federal income tax returns
to be filed on behalf of PMSI Database for the period ending as of the close of
business on the Closing Date that will include the gain or loss resulting from
the "deemed sale" and "deemed liquidation" that will occur (pursuant to Treasury
Regulation (S)1.338(h)(10)-1(e)(1) and (2) promulgated under the Code) by reason
of PMSI's and NDC's election pursuant to (S)338(h)(10) of the Code and (B) the
corresponding state and local income tax returns to be filed on behalf of PMSI
Database for the period ending as of the close of business on the Closing Date.
PMSI, upon written notice of request to NDC, shall have the right to review and
consent to such returns prior to filing, which consent shall not be unreasonably
withheld or delayed.
5.12 Joint Marketing. The parties hereto agree that from the date of this
---------------
Agreement each will use its reasonable efforts to negotiate and enter into a
joint marketing arrangement for the purpose of jointly promoting their
respective businesses throughout the world.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
-------------------------------------------------
6.1 Conditions to Obligations of Each Party. The respective obligations
---------------------------------------
of each Party to perform this Agreement and consummate the Stock Purchase and
the other transactions contemplated hereby are subject to the satisfaction of
the following conditions, unless waived by both Parties pursuant to Section 9.6:
(a) Stockholder Approval. The stockholders of PMSI shall have
--------------------
adopted this Agreement and the Source Transfer Agreement, and the
consummation of the transactions contemplated hereby and thereby, including
the Stock Purchase in the manner described in the Proxy Statement. PMSI, as
the sole stockholder of PMSI Database shall have adopted this Agreement and
the consummation of the transactions contemplated hereby.
(b) Regulatory Approvals. All Consents of, filings and registrations
--------------------
with, and notifications to, all Regulatory Authorities required for
consummation of the transactions contemplated under this Agreement shall have
been obtained or made and shall be in full force and effect and all waiting
periods required by Law shall have expired. No Consent obtained from any
Regulatory Authority which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner (including
requirements relating to the raising of additional capital or the disposition
of Assets) which in the reasonable judgment of the Board of Directors of NDC
would so materially adversely impact the economic or business assumptions of
the transactions contemplated by this
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Agreement that, had such condition or requirement been known, such Party
would not, in its reasonable judgment, have entered into this Agreement.
(c) Consents and Approvals. Each Party shall have obtained any and
----------------------
all Consents required for consummation of the transactions contemplated under
this Agreement (other than those referred to in Section 6.1(b)), including
those Consents listed in Sections 2.2 and 2.3 of the PMSI Database Disclosure
Memorandum and Section 3.2 of the NDC Disclosure Memorandum or for the
preventing of any Default under any Contract or Permit of such Party which,
if not obtained or made, is reasonably likely to have, individually or in the
aggregate, a PMSI Database Material Adverse Effect or a NDC Material Adverse
Effect, as applicable. No Consent so obtained which is necessary to
consummate the transactions contemplated hereby shall be conditioned or
restricted in a manner which in the reasonable judgment of the Board of
Directors of NDC would so materially adversely impact the economic or
business assumptions of the transactions contemplated by this Agreement that,
had such condition or requirement been known, such Party would not, in its
reasonable judgment, have entered into this Agreement.
(d) Legal Proceedings. No court or governmental or regulatory
-----------------
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, restricts or makes
illegal consummation of the transactions contemplated by this Agreement.
(e) Registration Statement. The Registration Statement shall be
----------------------
effective under the 1933 Act, no stop orders suspending the effectiveness of
the Registration Statement shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness thereof
shall have been initiated and be continuing, and all necessary approvals
under state securities Laws or the 1933 Act or 1934 Act relating to the
issuance, trading or resale of the shares of NDC Common Stock issuable
pursuant to the Stock Purchase shall have been received.
(f) Exchange Listing. The shares of NDC Common Stock issuable
----------------
pursuant to the Stock Purchase shall have been approved for listing on the
NYSE, subject to official notice of issuance.
6.2 Conditions to Obligations of NDC. The obligations of NDC to perform
--------------------------------
this Agreement and consummate the Stock Purchase and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by NDC pursuant to Section 9.6(a):
(a) Representations and Warranties. For purposes of this Section
------------------------------
6.2(a), the accuracy of the representations and warranties of PMSI Database
and PMSI set forth in this Agreement shall be assessed as of the date of this
Agreement and as of the Closing Date with the same effect as though all such
representations and warranties had been made on
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and as of the Closing Date (provided that representations and warranties
which are confined to a specified date shall speak only as of such date). The
representations and warranties set forth in Section 2.4 shall be true and
correct (except for inaccuracies which are de minimus in amount). The
representations and warranties set forth in Sections 2.20 and 2.21 shall be
true and correct in all material respects. There shall not exist inaccuracies
in the representations and warranties of PMSI Database and PMSI set forth in
this Agreement (including the representations and warranties set forth in
Sections 2.4, 2.20 and 2.21) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a PMSI Database Material
Adverse Effect; provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" or to the "Knowledge" of any Person
shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
---------------------------------------
agreements and covenants of PMSI Database and PMSI to be performed and
complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Closing Date shall have been duly performed
and complied with in all material respects.
(c) Certificates. Each of PMSI and PMSI Database shall have
------------
delivered to NDC (i) a certificate, dated as of the Closing Date and signed
on its behalf by its chief executive officer and its chief financial officer,
to the effect that the conditions set forth in Section 6.1 as relates to PMSI
or PMSI Database, respectively, and in Section 6.2(a) and 6.2(b) have been
satisfied, and (ii) certified copies of resolutions duly adopted by each of
PMSI's and PMSI Database's Board of Directors and stockholders evidencing the
taking of all corporate action necessary to authorize the execution, delivery
and performance of this Agreement by such Party, and the consummation of the
transactions contemplated hereby, all in such reasonable detail as NDC and
its counsel shall request.
(d) Opinion of Counsel. NDC shall have received an opinion of
------------------
Willkie Farr & Gallagher, counsel to PMSI, or the General Counsel of PMSI
dated as of the Closing, in form reasonably satisfactory to NDC, as to the
matters set forth in Exhibit 2.
(e) Noncompetition Agreement. PMSI shall have executed and delivered
------------------------
to NDC a noncompetition agreement in substantially the form of Exhibit 3 (the
"Noncompetition Agreement").
(f) Source Agreement. All conditions to the closing of the
----------------
transactions contemplated under the Source Agreement shall have been
satisfied or waived and the consummation of such transaction shall have
occurred concurrently with the Closing.
(g) Source Transfer Agreement. All conditions to the closing of the
-------------------------
transactions contemplated under the Source Agreement shall have been
satisfied in all materials respects and the consummation of such transaction
shall have occurred concurrently with the Closing.
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(h) European Contract Releases. Source shall have been released from
--------------------------
any and all obligations under the European Contracts to the reasonable
satisfaction of NDC.
(i) Consents. PMSI and any of its Subsidiaries which is a party
--------
thereto shall have received the Consent of all third parties to the
assignment of, or the release of PMSI or under, those Contracts listed in
Section 6.2(i) of the NDC Disclosure Memorandum for the transactions
contemplated herein.
(j) SLA Letter Agreement. SLA shall have executed and delivered to
--------------------
NDC a letter agreement substantially in the form of Exhibit 4 hereto.
6.3 Conditions to Obligations of PMSI Database and PMSI. The obligations
---------------------------------------------------
of PMSI Database and PMSI to perform this Agreement and consummate the Stock
Purchase and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by PMSI pursuant to
Section 9.6(b):
(a) Representations and Warranties. For purposes of this Section
------------------------------
6.3(a), the accuracy of the representations and warranties of NDC set forth
in this Agreement shall be assessed as of the date of this Agreement and as
of the Closing Date with the same effect as though all such representations
and warranties had been made on and as of the Closing Date (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties of NDC set
forth in Sections 3.3, 3.4 and 3.10 shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of NDC set forth in this Agreement (including the representations
and warranties discussed above and set forth in Sections 3.3, 3.4 and 3.10)
such that the aggregate effect of such inaccuracies has, or is reasonably
likely to have, a NDC Material Adverse Effect; provided that, for purposes of
this sentence only, those representations and warranties which are qualified
by references to "material" or "Material Adverse Effect" or to the
"Knowledge" of any Person shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
---------------------------------------
agreements and covenants of NDC to be performed and complied with pursuant to
this Agreement and the other agreements contemplated hereby prior to the
Closing Date shall have been duly performed and complied with in all material
respects.
(c) Certificates. NDC shall have delivered to PMSI (i) a
------------
certificate, dated as of the Closing Date and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions set forth in Section 6.1 as relates to NDC and in Section
6.3(a) and 6.3(b) have been satisfied, and (ii) certified copies of
resolutions duly adopted by NDC's Board of Directors evidencing the taking of
all corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as PMSI and its counsel
shall request.
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(d) Opinion of Counsel. PMSI shall have received an opinion of the
------------------
General Counsel of NDC or Alston & Bird LLP, counsel to NDC, dated as of the
Closing Date, in form reasonably acceptable to PMSI Database, as to the
matters set forth in Exhibit 5.
(e) Registration Rights Agreement. NDC shall have executed and
-----------------------------
delivered to PMSI the Registration Rights Agreement.
(f) NDC Noncompetition Agreement. NDC shall have executed and
----------------------------
delivered to PMSI a noncompetition agreement substantially in the form of
Exhibit 6 hereto.
ARTICLE 7
INDEMNIFICATION
---------------
7.1 Indemnification.
---------------
(a) Agreement of PMSI to Indemnify. Subject to the terms and
------------------------------
conditions of this Article 7, PMSI agrees to indemnify, defend, and hold
harmless NDC and its officers, directors, stockholders, controlling persons,
Affiliates and Representatives, and each of them, from, against, for and in
respect of any and all Losses asserted against, or paid, suffered or incurred
by, an Indemnitee and resulting from, based upon, or arising out of:
(i) the inaccuracy, untruth, incompleteness or breach of any
representation or warranty of PMSI or PMSI Database contained in or made
pursuant to this Agreement or in any certificate, Schedule, or Exhibit
furnished by PMSI or PMSI Database in connection herewith (except that PMSI
shall not be obligated to indemnify NDC for Losses arising out of the
termination or cancellation of a PMSI Database Contract by a third party
prior to Closing; provided that such termination or cancellation was not due
to any breach of such Contract by PMSI Database or PMSI), and for purposes of
this Section 7.1(a)(i) any qualification of such representations and
warranties by reference to the materiality of matters stated therein or as to
matters having or not having a "Material Adverse Effect,", and any limitation
of such representations and warranties as being "to the knowledge of," or
"known to" or words of similar effect, shall be disregarded, in determining
any inaccuracy, untruth, incompleteness or breach thereof;
(ii) a breach of or failure to perform any covenant or agreement of
PMSI or PMSI Database made in this Agreement;
(iii) any Retained Liability; and
(iv) the European business of Source, to be acquired by PMSI pursuant
to the Source Transfer Agreement.
(b) Agreement of NDC to Indemnify. Subject to the terms and conditions
------------------------------
of this Article 7, NDC agrees to indemnify, defend, and hold harmless PMSI and
its officers, directors, stockholders, controlling persons, Affiliates and
Representatives, and each of them, from, against,
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for and in respect of any and all Losses asserted against, or paid, suffered or
incurred by, an Indemnitee and resulting from, based upon, or arising out of:
(i) the inaccuracy, untruth, incompleteness or breach of any
representation or warranty of NDC contained in or made pursuant to this
Agreement or in any certificate, Schedule, or Exhibit furnished by NDC in
connection herewith and for purposes of this Section 7.1(b)(i) any
qualification of such representations and warranties by reference to the
materiality of matters stated therein or as to matters having or not having a
"Material Adverse Effect,", and any limitation of such representations and
warranties as being "to the knowledge of," or "known to" or words of similar
effect, shall be disregarded, in determining any inaccuracy, untruth,
incompleteness or breach thereof;
(ii) a breach of or failure to perform any covenant or agreement of
NDC made in this Agreement;
(iii) any Assumed Liability.
7.2 Procedures for Indemnification. As used herein, the term
------------------------------
"Indemnitor" means the party against whom indemnification hereunder is entitled
to be sought, and the term "Indemnitee" means the party entitled to seek
indemnification hereunder.
(a) An Indemnification Claim shall be made by an Indemnitee by
delivery of a written notice to the Indemnitor requesting indemnification and
specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, containing (by
attachment or otherwise) such other information as such Indemnitee shall have
concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim the
procedures set forth in Section 7.3 shall be observed by the Indemnitee and the
Indemnitor.
(c) If the Indemnification Claim involves a matter other than a
Third Party Claim, the Indemnitor shall have 30 days to object to such
Indemnification Claim by delivery of a written notice of such objection to such
Indemnitee specifying in reasonable detail the basis for such objection. Failure
to timely so object shall constitute a final and binding acceptance of the
Indemnification Claim by the Indemnitor, and the Indemnification Claim shall be
paid in accordance with subsection (d) hereof. If an objection is timely
interposed by the Indemnitor and the dispute is not resolved by such Indemnitee
and the Indemnitor within 15 days from the date the Indemnitee receives such
objection, such dispute shall be resolved by arbitration as provided in
Section 7.9.
(d) Upon determination of the amount of an Indemnification Claim,
whether by agreement between the Indemnitor and the Indemnitee or by an
arbitration award or by any other final adjudication, shall be paid by the
Indemnitor within ten days of the date such amount is determined.
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7.3 Third Party Claims. The obligations and liabilities of the parties
------------------
hereunder with respect to a Third Party Claim shall be subject to the following
terms and conditions:
(a) The Indemnitee shall give the Indemnitor written notice of a
Third Party Claim promptly after receipt by the Indemnitee of notice thereof,
and the Indemnitor may undertake the defense, compromise and settlement
thereof by representatives of its own choosing reasonably acceptable to the
Indemnitee. The failure of the Indemnitee to notify the Indemnitor of such
claim shall not relieve the Indemnitor of any liability that it may have with
respect to such claim except to the extent the Indemnitor demonstrates that
the defense of such claim is prejudiced by such failure. The assumption of
the defense, compromise and settlement of any such Third Party Claim by the
Indemnitor shall be an acknowledgment of the obligation of the Indemnitor to
indemnify the Indemnitee with respect to such claim hereunder. If the
Indemnitee desires to participate in, but not control, any such defense,
compromise and settlement, it may do so at its sole cost and expense. If,
however, the Indemnitor fails or refuses to undertake the defense of such
Third Party Claim within ten (10) days after written notice of such claim has
been given to the Indemnitor by the Indemnitee, the Indemnitee shall have the
right to undertake the defense, compromise and settlement of such claim with
counsel of its own choosing. In the circumstances described in the preceding
sentence, the Indemnitee shall, promptly upon its assumption of the defense
of such claim, make an Indemnification Claim as specified in Section 7.2
which shall be deemed an Indemnification Claim that is not a Third Party
Claim for the purposes of the procedures set forth herein.
(b) If, in the reasonable opinion of the Indemnitee, any Third Party
Claim or the litigation or resolution thereof involves an issue or matter
which could have a material adverse effect on the business, operations,
assets, properties or prospects of the Indemnitee (including, without
limitation, the administration of the tax returns and responsibilities under
the tax laws of the Indemnitee), the Indemnitee shall have the right to
control the defense, compromise and settlement of such Third Party Claim
undertaken by the Indemnitor, and the costs and expenses of the Indemnitee in
connection therewith shall be included as part of the indemnification
obligations of the Indemnitor hereunder. If the Indemnitee shall elect to
exercise such right, the Indemnitor shall have the right to participate in,
but not control, the defense, compromise and settlement of such Third Party
Claim at its sole cost and expense.
(c) No settlement of a Third Party Claim involving the asserted
liability of an Indemnitor under this Article shall be made without the prior
written consent by or on behalf of the Indemnitor, which consent shall not be
unreasonably withheld or delayed. Consent shall be presumed in the case of
settlements of $20,000 or less where the Indemnitor has not responded within
five business days of notice of a proposed settlement. If the Indemnitor
assumes the defense of such a Third Party Claim, (a) no compromise or
settlement thereof may be effected by the Indemnitor without the Indemnitee's
consent unless (i) there is no finding or admission of any violation of law
or any violation of the rights of any person and no effect on any other claim
that may be made against the Indemnitee, (ii) the sole relief provided is
monetary damages that are paid in full by the Indemnitor, and (iii) the
compromise or settlement includes, as an unconditional term thereof, the
giving by the
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claimant or the plaintiff to the Indemnitee of a release, in form and
substance satisfactory to the Indemnitee, from all liability in respect of
such Third Party Claim, and (b) the Indemnitee shall have no liability with
respect to any compromise or settlement thereof effected without its consent.
(d) In connection with the defense, compromise or settlement of any
Third Party Claim, the parties to this Agreement shall execute such powers of
attorney as may reasonably be necessary or appropriate to permit
participation of counsel selected by any party hereto and, as may reasonably
be related to any such claim or action, shall provide access to the counsel,
accountants and other representatives of each party during normal business
hours to all properties, personnel, books, tax records, contracts,
commitments and all other business records of such other party and will
furnish to such other party copies of all such documents as may reasonably be
requested (certified, if requested).
7.4 Survival. Subject to Section 7.5, all representations, warranties
--------
and agreements contained in this Agreement or in any certificate delivered
pursuant to this Agreement shall survive the Closing notwithstanding any
investigation conducted with respect thereto or any knowledge acquired as to the
accuracy or inaccuracy of any such representation or warranty.
7.5 Time Limitations. PMSI and PMSI Database, on the one hand, and NDC,
----------------
on the other hand, will have no liability to the other party under or in
connection with: (a) a breach of any of the representations, warranties,
covenants or agreements made or to be performed by such party contained in this
Agreement unless written notice asserting an Indemnification Claim based thereon
is given to the other party prior to August 31, 1999; provided, however, the
liability of PMSI relating to, arising out of or based upon Section 7.1(a)(iii),
7.1(a)(iv) hereof, and the liability of NDC relating to, arising out of or based
upon Section 7.1(b)(iii), may be asserted at any time.
7.6 Limitations as to Amount.
------------------------
(a) Except as provided in Sections 1.2 and 1.4 herein, neither PMSI
nor NDC shall have any liability with respect to the matters described in
clauses (a)(i) or (a)(ii) with respect to PMSI and (b)(i) and (b)(ii) with
respect to NDC of Section 7.1 until the total of all Losses with respect thereto
exceeds $30,000 (the "Threshold Amount") in which event PMSI or NDC, as the case
may be, shall be obligated to indemnify as provided in this Article 7 for all
such Losses; provided, however, that each individual claim of $10,000 or less
shall not be indemnifiable, and shall not be includable in determining whether
the $30,000 threshold has been reached.
(b) The aggregate liability of PMSI under Sections 7.1(a)(i) and
7.1(a)(ii) (other than Sections 1.2 and 1.4) and NDC under Sections 7.1(b)(i)
and 7.1(b)(ii) (other than Sections 1.2 and 1.4) hereof shall not exceed
$1,000,000 (the "Maximum Amount").
(c) The Threshold Amount and Maximum Amount limitations shall not
apply to the indemnification rights of the parties hereto for any liability
under Sections 1.2, 1.4,
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7.1(a)(iii), 7.1(a)(iv) and 7.1(b)(iii) hereof and the payment of such amounts
by PMSI or NDC shall not count toward the calculation of the Maximum Amount.
7.7 Tax Effect and Insurance. The liability of an Indemnitor with
------------------------
respect to any Indemnification Claim shall be reduced by the tax benefit
actually realized and any insurance proceeds received by the Indemnitee as a
result of any Losses upon which such Indemnification Claim is based, and shall
include any tax detriment actually suffered by the Indemnitee as a result of
such Losses or the claims hereunder. The amount of any such tax benefit or
detriment shall be determined by taking into account the effect, if any and to
the extent determinable, of timing differences resulting from the acceleration
or deferral of items of gain or loss resulting from such Losses and shall
otherwise be determined so that payment by the Indemnitor of the Indemnification
Claim, as adjusted to give effect to any such tax benefit or detriment, will
make the Indemnitee as economically whole as is reasonably practical with
respect to the Losses upon which the Indemnification Claim is based. Any
dispute as to the amount of such tax benefit or detriment shall be resolved by
arbitration as provided in this Section 7.9 of this Agreement.
7.8 Subrogation. Upon payment in full of any Indemnification Claim,
-----------
whether such payment is effected by set-off or otherwise, or the payment of any
judgment or settlement with respect to a Third Party Claim, the Indemnitor shall
be subrogated to the extent of such payment to the rights of the Indemnitee
against any person or entity with respect to the subject matter of such
Indemnification Claim or Third Party Claim.
7.9 Arbitration. All disputes arising under this Article 10 (other than
-----------
claims in equity) shall be resolved by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
Arbitration shall be by a single arbitrator experienced in the matters at issue
and selected by PMSI and NDC in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. The arbitration shall be held in such
place in Washington, D.C., as may be specified by the arbitrator (or any place
agreed to by PMSI, NDC and the arbitrator). The decision of the arbitrator
shall be final and binding as to any matters submitted under this Article 7;
provided, however, if necessary, such decision and satisfaction procedure may be
enforced by either PMSI or NDC in any court of record having jurisdiction over
the subject matter or over any of the parties to this Agreement. All costs and
expenses incurred in connection with any such arbitration proceeding (including
reasonable attorneys fees) shall be borne by the party against which the
decision is rendered, or, if no decision is rendered, such costs and expenses
shall be borne equally by the Indemnitor and the Indemnitee. If the
arbitrator's decision is a compromise, the determination of which party or
parties bears the costs and expenses incurred in connection with any such
arbitration proceeding shall be made by the arbitrator on the basis of the
arbitrator's assessment of the relative merits of the parties' positions.
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ARTICLE 8
TERMINATION
-----------
8.1 Termination. Notwithstanding any other provision of this
-----------
Agreement, and notwithstanding the approval of this Agreement by the
stockholders of PMSI and PMSI Database, this Agreement may be terminated and the
Stock Purchase abandoned at any time prior to the Closing Date:
(a) By mutual consent of NDC and PMSI ; or
(b) By either Party (provided that the terminating Party is not then
in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by
the other Party of any representation or warranty contained in this Agreement
which cannot be or has not been cured within 30 days after the giving of
written notice to the breaching Party of such breach and which breach is
reasonably likely, in the opinion of the non-breaching Party, to have,
individually or in the aggregate, a PMSI Database Material Adverse Effect or
a NDC Material Adverse Effect, as applicable, on the breaching Party; or
(c) By either Party (provided that the terminating Party is not then
in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by
the other Party of any covenant or agreement contained in this Agreement
which cannot be or has not been cured within 30 days after the giving of
written notice to the breaching Party of such breach; or
(d) By either Party (provided that the terminating Party is not then
in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event (i) any Consent of any
Regulatory Authority required for consummation of the Stock Purchase and the
other transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
stockholders of PMSI or PMSI Database fail to vote their approval of the
matters relating to this Agreement and the Source Transfer Agreement and the
transactions contemplated hereby and thereby at the Stockholders' Meeting
where such matters were presented to such stockholders for approval and voted
upon in accordance with the procedure set forth in the Proxy Statement; or
(e) By either Party in the event that the Stock Purchase shall not
have been consummated by January 31, 1998, if the failure to consummate the
transactions contemplated hereby on or before such date is not caused by any
breach of this Agreement by the Party electing to terminate pursuant to this
Section 8.1(e); or
(f) By either Party (provided that the terminating Party is not then
in material breach of any representation, warranty, covenant, or other
agreement contained in this
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Agreement) in the event that any of the conditions precedent to the
obligations of such Party to consummate the Stock Purchase cannot be
satisfied or fulfilled by the date specified in Section 8.1(e); or
(g) By NDC, in the event that the Board of Directors of PMSI or PMSI
Database shall have failed to reaffirm their approval of the Stock Purchase
and the transactions contemplated by this Agreement (to the exclusion of any
other Acquisition Proposal), or shall have resolved not to reaffirm the Stock
Purchase, or shall have affirmed, recommended or authorized entering into any
other Acquisition Proposal or other transaction involving a Stock Purchase,
share exchange, consolidation or transfer of substantially all of the
Acquired Assets; or
(h) By PMSI if the Average Closing Price on the Determination Date of
shares of NDC Common Stock shall be less than the Lower Threshold Price;
subject, however, to the following three sentences. If PMSI elects to refuse
to consummate the Stock Purchase pursuant to this Section 8.1(h), it shall
give written notice thereof to NDC not later than two trading days following
the Determination Date. During the five-day period commencing with its
receipt of such notice, NDC shall have the option, in its sole discretion, to
elect to revise the Base Amount to equal that number of shares of NDC Common
Stock (rounded to the nearest whole share) obtained by dividing the product
of the Base Amount and the Lower Threshold Price by the Average Closing
Price. If NDC makes an election contemplated by the preceding sentence,
within such five-day period, it shall give prompt written notice to PMSI of
such election and the revised Base Amount, whereupon the condition to
consummation provided in this Section 8.1(h) shall be deemed to be satisfied
and this Agreement shall remain in effect in accordance with its terms
(except as the Base Amount shall have been so modified), and any references
in this Agreement to "Base Amount" shall thereafter be deemed to refer to the
Base Amount as adjusted pursuant to this Section 8.1(h).
8.2 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 8.1, this Agreement shall
become void and have no effect, except that (i) the provisions of this Section
8.2 and Article 9 and Section 5.5(b) shall survive any such termination and
abandonment, and (ii) a termination pursuant to Sections 8.1(b), 8.1(c) or
8.1(f) shall not relieve the breaching Party from Liability for an uncured
willful breach of a representation, warranty, covenant, or agreement giving rise
to such termination.
ARTICLE 9
MISCELLANEOUS
-------------
9.1 Definitions.
-----------
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
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"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Accounts Receivable" shall mean all accounts, notes and other
receivables.
"Accrued Bonuses" shall mean the amount equal to that percentage of
budgeted annual bonuses which shall equal the ratio of the earnings of the
Joint Venture Interest through the Closing Date to budgeted earnings for the
full fiscal year. All budgeted amounts used herein to be as set forth in
Schedule 4.2(b) of the Source Disclosure Memorandum.
"Acquired Business" shall mean the business and assets related to the
Over-the-Counter Business and the Research Solutions Group.
"Acquisition Proposal" with respect to (X) PMSI Database, shall mean
any tender offer or exchange offer or any proposal for a merger, acquisition
of all of the stock or assets of, or other business combination involving the
acquisition of PMSI Database or the acquisition of a substantial equity
interest in, or a substantial portion of the assets of, PMSI Database and (y)
PMSI, shall mean any proposal for an acquisition of the Acquired Assets or
the Joint Venture Interest.
"Affiliate" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person or; (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner of any 10% or
greater equity or voting interest of such Person.
"Agreement" shall mean this Stock Purchase Agreement, including the
Exhibits delivered pursuant hereto and incorporated herein by reference.
"Amended and Restated Alpha Database License Agreement" shall mean
that certain Amended and Restated Alpha Database License Agreement dated as
of July 1, 1994 by and among Walsh International Holdings Limited and Walsh
America Limited and PMSI and all customer, data provider and service
contracts, agreements or understandings relating thereto.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued
or contingent, or otherwise relating to or utilized in such Person's
business, directly or indirectly, in whole or in part, whether or not carried
on the books and records of such Person, and whether or not owned in the name
of such Person or any Affiliate of such Person and wherever located.
"Assumed Liabilities" means (a) the liabilities of PMSI Database of
the type and in the amounts included in the Closing Balance Sheet and set
forth in Section 2.6 and 2.7 of the PMSI Database Disclosure Memorandum, (b)
the obligations arising after the
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Closing Date under the Acquired Contracts and (c) the liabilities arising
after and resulting from events following the Closing Date with respect to
the Acquired Business, the Acquired Assets and the Joint Venture Interests.
"Average Closing Price" shall mean the average of the daily closing
sales prices of NDC Common Stock as reported on the NYSE Composite
Transactions reporting system (as reported by The Wall Street Journal or, if
not reported thereby, another authoritative source as chosen by NDC) for the
ten consecutive full trading days in which such shares are traded on the NYSE
ending at the close of trading on the Determination Date.
"Closing Balance Sheet" shall mean the balance sheet for PMSI
Database as of the Closing Date delivered by NDC to PMSI.
"Closing Date" shall mean a date on which the parties mutually agree.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of any
kind or character, or other document to which any Person is a party or that
is binding on any Person or its capital stock, Assets or business.
"Contribution" shall mean the contribution of the Acquired Assets and
the Joint Venture Interest by PMSI and its Subsidiaries to PMSI Database as
contemplated herein.
"Default" shall mean (i) any breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit, (ii)
any occurrence of any event that with the passage of time or the giving of
notice or both would constitute a breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time or
the giving of notice would give rise to a right of any Person to exercise any
remedy or obtain any relief under, terminate or revoke, suspend, cancel, or
modify or change the current terms of, or renegotiate, or to accelerate the
maturity or performance of, or to increase or impose any Liability under, any
Contract, Law, Order, or Permit, where, in any such event, such Default is
reasonably likely to have, individually or in the aggregate, a PMSI Database
Material Adverse Effect or a NDC Material Adverse Effect, as applicable.
"Determination Date" shall mean the close of trading on the tenth
trading day immediately preceding the Closing Date.
"DGCL" shall mean the Delaware General Corporation Law.
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<PAGE>
"Equity Rights" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings, warrants,
or other binding obligations of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the
capital stock of a Person or by which a Person is or may be bound to issue
additional shares of its capital stock or other Equity Rights.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"European Contracts" shall mean all material Contracts relating to
the European Business of Source to which a Source Entity is a party, or under
which a Source Entity has obligations contingent or otherwise.
"Exhibits" 1 through 6, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be referred
to in this Agreement and any other related instrument or document without
being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HSR Act" shall mean Section 7A of the Clayton Act, as added by Title
II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder.
"Indemnification Claim" shall mean a claim for indemnification under
Article 7.
"Intellectual Property" shall mean copyrights, patents, trademarks,
service marks, service names, trade names, applications therefor, technology
rights and licenses, computer software (including any source or object codes
therefor or documentation relating thereto), trade secrets, franchises, know-
how, inventions, and other intellectual property rights.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"Joint Venture Interest" means all right, title and interest of PMSI
in the Amended and Restated Alphabase Data License Agreement.
"Knowledge" as used with respect to a Person (including references to
such Person being aware of a particular matter) shall mean those facts that
are known or should reasonably have been known after due inquiry by the
chairman, president, chief financial officer, chief accounting officer, chief
operating officer, general counsel, any assistant or deputy general counsel,
or any senior, executive or other vice president or general manager
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<PAGE>
of such Person and the knowledge of any such persons obtained or which would
have been obtained from a reasonable investigation.
"Law" shall mean any code, law (including common law), ordinance,
regulation, reporting or licensing requirement, rule, or statute applicable
to a Person or its Assets, Liabilities, or business, including those
promulgated, interpreted or enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including
costs of investigation, collection and defense), claim, deficiency, guaranty
or endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course
of business) of any type, whether accrued, absolute or contingent, liquidated
or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, and (iii) Liens which do not materially impair
the use of or title to the Assets subject to such Lien.
"Litigation" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, governmental or other examination or
investigation, hearing, administrative or other proceeding relating to or
affecting a Party, its business, its Assets (including Contracts related to
it), or the transactions contemplated by this Agreement.
"Losses" shall mean any and all demands, claims, actions or causes of
action, assessments, losses, diminution in value, damages (including special
and consequential damages), liabilities, costs, and expenses, including
interest, penalties, cost of investigation and defense, and reasonable
attorneys' and other professional fees and expenses.
"Material" for purposes of this Agreement shall be determined in
light of the facts and circumstances of the matter in question; provided that
any specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"Nasdaq National Market" shall mean the Nasdaq National Market, a
district tier of The Nasdaq Stock Market operated by The Nasdaq Stock Market,
Inc., a wholly-owned subsidiary of the National Association of Securities
Dealers Automated Quotations System.
"NDC Capital Stock" shall mean, collectively, the NDC Common Stock,
the NDC Preferred Stock and any other class or series of capital stock of
NDC.
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"NDC Common Stock" shall mean the $0.125 par value common stock of
NDC.
"NDC Disclosure Memorandum" shall mean the written information
entitled "NDC Corporation Disclosure Memorandum" delivered prior to the date
of this Agreement to PMSI Database describing in reasonable detail the
matters contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made unless such disclosure is reasonably adequate to
inform the other party that each matter disclosed would be responsive to
another section of disclosure in the Disclosure Memorandum.
"NDC Entities" shall mean, collectively, NDC and its Subsidiaries.
"NDC Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of NDC as of February
28, 1997, and as of May 31, 1996 and 1995, and the related statements of
income, changes in stockholders' equity, and cash flows (including related
notes and schedules, if any) for the nine months ended February 28, 1997, and
for each of the three fiscal years ended May 31, 1996, 1995 and 1994, as
filed by NDC in SEC Documents, and (ii) the consolidated balance sheets of
NDC (including related notes and schedules, if any) and related statements of
income, changes in stockholders' equity, and cash flows (including related
notes and schedules, if any) included in the SEC Documents filed with respect
to periods ended subsequent to February 28, 1997.
"NDC Material Adverse Effect" shall mean an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of NDC and its Subsidiaries, taken as a
whole, or (ii) the ability of NDC to perform its obligations under this
Agreement or to consummate the Stock Purchase or the other transactions
contemplated by this Agreement, provided that "Material Adverse Effect" shall
not be deemed to include the impact of (a) actions and omissions of NDC (or
any of its Subsidiaries) taken with the prior informed written Consent of
PMSI in contemplation of the transactions contemplated hereby, and (b) the
direct effects of compliance with this Agreement on the operating performance
of NDC, including expenses incurred by NDC in consummating the transactions
contemplated by this Agreement.
"NDC Preferred Stock" shall mean the $1.00 par value preferred stock
of NDC.
"NDC Rights" shall mean the preferred stock purchase rights issued
pursuant to the NDC Rights Agreement.
"NDC Rights Agreement" shall mean that certain Rights Agreement,
dated January 18, 1991, between NDC and Wachovia Bank of North Carolina,
N.A., as Rights Agent.
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"NDC Subsidiaries" shall mean the Subsidiaries of NDC and any
corporation or other organization acquired as a Subsidiary of NDC in the
future and held as a Subsidiary by NDC at the Closing Date.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"OTC Balance Sheet" shall mean the balance sheet of the Acquired
Business as of March 31, 1997.
"OTC Financial Statements" shall mean the OTC Balance Sheet
(including related notes and schedules, if any), and the related statement of
income (including related notes and schedules, if any) with respect to period
ended March 31, 1997.
"Other Assets" shall mean all goods or assets of any kind or nature,
tangible or intangible, other than Personal Property, Contracts, Accounts
Receivable, Intellectual Property and Permits.
"Over-the-Counter Business" shall mean the business currently
operated by PMSI or any of its Subsidiaries relating to the development, use
or exploitation of over-the-counter medicine databases.
"Party" shall mean either PMSI, PMSI Database or NDC, and "Parties"
shall mean all of PMSI, PMSI Database and NDC.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets, or business.
"Person" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in
a representative capacity.
"Personal Property" shall mean equipment, tools, computers,
terminals, point of sale terminals, computer equipment, office equipment,
furniture, business machines, telephones and telephone systems, parts,
accessories and other items of personal property.
"PMSI" shall mean PMSI, Inc., a Delaware corporation.
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"PMSI Benefit Plan" shall include any pension, retirement, profit-
sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plan, any other written
employee program, arrangement or agreement, any medical, vision, dental or
other health plan, any life insurance plan, and any other employee benefit
plan or fringe benefit plan, including any "employee benefit plan" as that
term is defined in Section 3(3) of ERISA, which is or, within the 6 years
preceding the Closing Date, has been adopted, maintained, sponsored in whole
or in part by or contributed to by PMSI Database or PMSI for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors
or other beneficiaries.
"PMSI Database Balance Sheet" shall mean the balance sheet of the
Acquired Business and the Joint Venture Interest dated March 31, 1997.
"PMSI Database Common Stock" shall mean the $0.01 par value common
stock of PMSI Database.
"PMSI Database Disclosure Memorandum" shall mean the written
information entitled "PMSI Database Disclosure Memorandum" delivered prior to
the date of this Agreement to NDC describing in reasonable detail the matters
contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made unless such disclosure is reasonably adequate to
inform the other party that each matter disclosed would be responsive to
another section of disclosure in the Disclosure Memorandum.
"PMSI Database Financial Statements" shall mean the PMSI Database
Balance Sheet (including related notes and schedules, if any) and the related
statements of income, changes in stockholders' equity, and cash flows
(including related notes and schedules, if any) with respect to period ended
March 31, 1997.
"PMSI Database Material Adverse Effect" shall mean an event, change
or occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of PMSI Database and its Subsidiaries,
taken as a whole, or (ii) the ability of PMSI Database to perform its
obligations under this Agreement or to consummate the Stock Purchase or the
other transactions contemplated by this Agreement, provided that "Material
Adverse Effect" shall not be deemed to include the impact of (a) actions and
omissions of PMSI Database (or any of its Subsidiaries) taken with the prior
informed written Consent of NDC in contemplation of the transactions
contemplated hereby, and (b) the direct effects of compliance with this
Agreement on the operating performance of PMSI Database, including expenses
incurred by PMSI Database in consummating the transactions contemplated by
this Agreement.
"PMSI Entity" shall mean PMSI and its Subsidiaries.
"Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time in the Wall Street Journal.
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"Proxy Statement" shall mean the proxy statement used by PMSI to
solicit the approval of its stockholders of the transactions contemplated by
this Agreement and the Source Transfer Agreement.
"Purchase Price" shall mean the total consideration to be paid to
PMSI by NDC for the purchase of the PMSI Database Common Stock pursuant to
Section 1.1 of this Agreement as adjusted pursuant to Sections 1.2 and 1.4
hereof.
"Registration Statement" shall mean the Registration Statement on
Form S-4, or other appropriate form, including any pre-effective or post-
effective amendments or supplements thereto, filed with the SEC by NDC under
the 1933 Act with respect to the shares of NDC Common Stock to be issued to
the stockholders of PMSI Database in connection with the transactions
contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the SEC, the NYSE,
the NASD, the Federal Trade Commission, the United States Department of
Justice, and all other federal, state, county, local or other governmental or
regulatory agencies, authorities (including self-regulatory authorities),
instrumentalities, commissions, boards or bodies having jurisdiction over the
Parties and their respective Subsidiaries.
"Representative" shall mean any investment banker, financial advisor,
attorney, accountant, consultant, or other representative engaged by a
Person.
"Retained Liability" shall mean all Liabilities and obligations of
PMSI or its Affiliates whether known or unknown, absolute, contingent, or
otherwise, and whether or not related to the Acquired Business, the Acquired
Assets, and the Joint Venture Interest other than Assumed Liabilities,
including but not limited to (i) any Liability or obligation arising or
accruing under any Contract, including the Amended and Restated Alpha
Database License Agreement, prior to the Closing Date and any Liability or
obligation arising from or related to any breach or violation by PMSI or its
Affiliates under any provision of any Contract prior to the Closing Date;
(ii) any Liability of PMSI with respect to any claim or cause of action,
regardless of when made or asserted, which arises out of or in connection
with the operation of the Acquired Business by PMSI or PMSI Database prior to
the Closing Date; and (iii) any Liability of PMSI for the payment of Taxes
relating to the Acquired Business, the Joint Venture Interest or the Acquired
Assets relating to periods prior to the Closing Date except to the extent
reflected in the Closing Balance Sheet and Schedules.
"SEC Documents" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with any Regulatory Authority
pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules
and regulations of any Regulatory Authority promulgated thereunder.
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"SLA" shall mean PMSI Scott-Levin, Inc., a New Jersey corporation.
"Source Entity" shall mean Source and its Subsidiaries other than the
Source Divestiture Subsidiaries.
"Source Divestiture Subsidiaries" shall mean the European
Subsidiaries of Source which are to be sold to PMSI under the Source Transfer
Agreement.
"Source Transfer Agreement" means that certain Securities Transfer
Agreement, dated as of the date hereof, between Source and PMSI.
"Stockholders' Meeting" shall mean the meeting of the stockholders of
PMSI to be held pursuant to Section 5.1, including any adjournment or
adjournments thereof.
"Subsidiaries" shall mean all those corporations, associations, or
other business entities of which the entity in question either (i) owns or
controls 50% or more of the outstanding equity securities either directly or
through an unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its PMSI
(provided, there shall not be included any such entity the equity securities
of which are owned or controlled in a fiduciary capacity), (ii) in the case
of partnerships, serves as the sole general partner or the managing general
partner, (iii) in the case of a limited liability company, serves as the sole
managing member, or (iv) otherwise has the ability to elect a majority of the
directors, trustees or managing members (or Persons performing similar
functions) thereof.
"Tax Return" shall mean any report, return, information return, or
other information required to be supplied to a taxing authority in connection
with Taxes, including any return of an affiliated or combined or unitary
group that includes a Party or its Subsidiaries.
"Tax" or "Taxes" shall mean any federal, state, county, local, or
foreign taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single
business and unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever, imposes
or required to be withheld by the United States or any state, county, local
or foreign government or subdivision or agency thereof, including any
interest, penalties, and additions imposed thereon or with respect thereto.
"Third Party Claim" shall mean any Litigation (including, without
limitation, a binding arbitration or an audit by any taxing authority) that
is instituted against an Indemnitee by a Person other than an Indemnitor and
which, if prosecuted successfully, would result in a Loss for which such
Indemnitee is entitled to indemnification hereunder.
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(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
<TABLE>
<S> <C>
Base Amount Section 1.1
Cash Amount Section 1.1(a)
Closing Section 1.6
Closing Balance Sheet Section 1.3(a)
Closing Current Assets Section 1.3(a)
Closing Current Liabilities Section 1.3(a)
Closing Working Capital Section 1.3(a)
Current Asset Allocation Amount Section 1.4(c)
Current Assets Section 1.2(a)
Current Liabilities Section 1.2(a)
Disputed Amounts Section 1.3(c)
Divestiture Section 4.1(e)
Employees Section 2.13
Estimated Current Assets Section 1.2(a)
Estimated Current Liabilities Section 1.2(a)
Estimated Working Capital Section 1.2(a)
Estimated Working Capital Adjustment Section 1.2(c)
ERISA Affiliate Section 2.14
European Business Section 4.1(e)
European Contracts Section 2.15
Exchange Agent Section 4.1
Final Current Assets Section 1.4(a)
Final Current Liabilities Section 1.4(a)
Final Working Capital Section 1.4(a)
Final Working Capital Deficit Section 1.4(a)
Final Working Capital Surplus Section 1.4(a)
Hired Employees Section 5.11
Indemnitee Section 7.2
Indemnitor Section 7.2
Lower Threshold Price Section 1.1(b)
Maximum Amount Section 7.6
NDC SEC Reports Section 3.4(a)
Noncompetition Agreement Section 6.2(g)
PMSI Database Contracts Section 2.15
Preliminary Balance Sheet Section 1.2(a)
Registration Rights Agreement Section 5.10
Shares Preamble
Stock Purchase Section 1.1
Source Preamble
Source Agreement Preamble
Threshold Amount Section 7.6
Threshold Prices Section 1.1(b)
</TABLE>
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<TABLE>
<S> <C>
Total Combined Assets Section 1.4(b)
Total Current Assets Section 1.4(b)
Total Current Liabilities Section 1.4(b)
Total Working Capital Deficit Section 1.4(b)
Total Working Capital Surplus Section 1.4(b)
Upper Threshold Price Section 1.1(b)
Working Capital Section 1.2
</TABLE>
(c) Any singular term in this Agreement shall be deemed to include
the plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
9.2 Expenses.
--------
(a) Except as otherwise provided in this Section 9.2, each of the
Parties shall bear and pay all direct costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
filing, registration and application fees, printing fees, and fees and expenses
of its own financial or other consultants, investment bankers, accountants, and
counsel, except that each of NDC and PMSIs shall bear and pay one-half of the
filing fees payable in connection with the HSR Act.
(b) Notwithstanding the foregoing, if this Agreement is
terminated by NDC pursuant to Section 8.1(d)(ii) (as relates to approval of
PMSI or PMSI's stockholders) ,
then PMSI Database shall promptly pay NDC all the out-of-pocket costs and
expenses of NDC relating to this Agreement and the Source Agreement not to
exceed $750,000, including costs of counsel, investment bankers, actuaries and
accountants.
(c) Nothing contained in this Section 9.2 shall constitute or shall
be deemed to constitute liquidated damages for the willful breach by a Party of
the terms of this Agreement or otherwise limit the rights of the nonbreaching
Party.
9.3 Brokers and Finders. Except for Cowen & Company as to PMSI Database
--------------------
and PMSI and except for Lazard Freres & Co. LLC as to NDC, each of the Parties
represents and warrants that neither it nor any of its officers, directors,
employees, or Affiliates has employed any broker or finder or incurred any
Liability for any financial advisory fees, investment bankers' fees, brokerage
fees, commissions, or finders' fees in connection with this Agreement or the
transactions contemplated hereby. In the event of a claim by any broker or
finder based upon his or its representing or being retained by or allegedly
representing or being retained by PMSI Database or PMSI or by NDC, each of PMSI
Database and PMSI and NDC, as the case may be, agrees to indemnify and hold the
other Party harmless of and from any Liability in respect of any such claim.
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9.4 Entire Agreement. Except as otherwise expressly provided herein,
-----------------
this Agreement (including the documents and instruments referred to herein)
constitutes 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. Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, other than as provided in
Article 7 with respect to Indemnitees. This Agreement does not constitute an
agreement between the Parties nor shall it be used as evidence of such agreement
until this Agreement has been executed by the Parties.
9.5 Amendments. To the extent permitted by Law, this Agreement may be
-----------
amended by a subsequent writing signed by each of the Parties upon the approval
of each of the Parties, whether before or after stockholder approval of this
Agreement has been obtained; provided, that after any such approval there shall
be made no amendment that pursuant to Section 251 of the DGCL requires further
approval by such stockholders without the further approval of such stockholders.
9.6 Waivers.
-------
(a) Prior to or at the Closing Date, NDC, acting through its Board
of Directors, chief executive officer or other authorized officer, shall have
the right to waive any Default in the performance of any term of this Agreement
by PMSI Database or PMSI, to waive or extend the time for the compliance or
fulfillment by PMSI Database or PMSI of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of NDC under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of NDC.
(b) Prior to or at the Closing Date, PMSI, acting through its Board
of Directors, chief executive officer or other authorized officer, shall have
the right to waive any Default in the performance of any term of this Agreement
by NDC, to waive or extend the time for the compliance or fulfillment by NDC of
any and all of its obligations under this Agreement, and to waive any or all of
the conditions precedent to the obligations of PMSI Database and the PMSI under
this Agreement, except any condition which, if not satisfied, would result in
the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of PMSI.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
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9.7 Assignment. Except as expressly contemplated hereby, neither this
----------
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
9.8 Notices. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
PMSI Database or
PMSI: Pharmaceutical Marketing Services Inc.
45 Rockefeller Plaza
9th Floor
New York, New York 10111
Telecopy Number: (212) 841-5760
Attention: Warren Hauser, Esq.
Copy to Counsel: Willkie Farr & Gallagher
45th Floor, Citicorp Center
153 East 53rd Street
New York, New York 10022
Telecopy Number: (212) 821-8111
Attention: William Grant, Esq.
NDC: National Data Corporation
One National Data Plaza
Atlanta, Georgia 30329
Telecopy Number: (404) 728-2990
Attention: E. Michael Ingram, Esq.
Copy to Counsel: Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Telecopy Number: (404) 881-7777
Attention: B. Harvey Hill, Jr., Esq.
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9.9 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the Laws of the State of Delaware, without regard to any
applicable conflicts of Laws.
9.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
9.11 Captions; Articles and Sections. The captions contained in this
-------------------------------
Agreement are for reference purposes only and are not part of this Agreement.
Unless otherwise indicated, all references to particular Articles or Sections
shall mean and refer to the referenced Articles and Sections of this Agreement.
9.12 Interpretations. Neither this Agreement nor any uncertainty or
---------------
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
9.13 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 specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
9.14 Severability. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day and year
first above written.
NATIONAL DATA CORPORATION
By: /s/ E. Michael Ingram
----------------------------
Name: E. Michael Ingram
Title: Senior Vice President
PMSI DATABASE HOLDINGS, INC.
By: /s/ Fred Kyle
----------------------------
Name: Fred Kyle
Title: Vice Chairman
PHARMACEUTICAL MARKETING
SERVICES INC.
By: /s/ Fred Kyle
----------------------------
Name: Fred Kyle
Title: Vice Chairman
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LIST OF EXHIBITS*
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Exhibit Number Description
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1. Form of Registration Rights Agreement.
2. Matters as to which Willkie Farr & Gallagher will opine.
3. Form of Noncompetition Agreement.
4. Form of SLA Letter Agreement.
5. Matters as to which counsel to NDC will opine.
6. Form of NDC Noncompetition Agreement.
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* To be filed by amendment.
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EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
As independent public accountants, we hereby consent to the use of our report
included herein and to the incorporation by reference of our reports dated July
16, 1997 (except with respect to Note 18, for which the date is August 20, 1997)
included in National Data Corporation's Annual Report on Form 10-K for the year
ending May 31, 1997 (and to all references to our Firm) included in or made a
part of this registration statement.
/s/ Arthur Andersen LLP
Atlanta, Georgia
September 18, 1997
