Item 1.01. Entry Into a Material Definitive Agreement.
Merger Agreement
On
The terms of the Merger Agreement provide that, unless otherwise specified in
the Merger Agreement, at the effective time of the Merger (the "Effective
Time"), each issued and outstanding share of common stock and preferred stock of
the Company will be canceled and converted into the right to receive an amount
equal to
The terms of the Merger Agreement also provide that each stock option of the Company that is outstanding and unexercised immediately prior to the Effective Time, whether or not then vested or exercisable, will be cancelled without any consideration payable therefor and each holder of such stock options will cease to have any rights with respect to such stock options.
The terms of the Merger Agreement also provide that each warrant to purchase stock of the Company will be cancelled and terminated and of no further force or effect.
The Merger and the Merger Agreement have been approved by the board of directors of the Company.
Completion of the transaction is subject to closing conditions set forth in Article VI of the Merger Agreement, including (i) the absence of any order, judgment or decree by any governmental entity that has the effect of making the transactions contemplated by the Merger Agreement illegal, otherwise restraining or prohibiting the consummation of such transactions or causing any of such transactions to be rescinded following completion, (ii) subject to certain exceptions, the accuracy of each party's representations and warranties, (iii) compliance in all material respects by each party with its obligations under the Merger Agreement, (iv) that the Amendment (as defined below) is in full force and effect, (v) achievement of certain threshold figures for free cash and transaction expenses of the Company, (vi) the amendment of certain employee agreements, and (vii) a minimum number of shares subject to appraisal claims under applicable law. The transaction is not subject to a financing condition.
The Merger Agreement contains customary representations and warranties of both the Company and Buyer. The Company has also agreed to customary covenants regarding the operation of the Company and its subsidiaries prior to the closing of the Merger, including covenants not to, during the pendency of the Merger, solicit alternative transactions or, subject to certain exceptions, enter into discussions concerning, or provide confidential information in connection with, an alternative transaction.
The Merger Agreement contains certain customary termination rights for the
Company and Buyer, including a right for either party to terminate the Merger
Agreement if the Merger is not completed by
The foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement attached hereto as Exhibit 2.1 and incorporated herein by reference.
The Merger Agreement has been attached as an exhibit hereto to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company, Buyer or Merger Sub, their respective businesses, or the actual conduct of their respective businesses during the period prior to the consummation of the Merger. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of the Merger Agreement as of the specific dates therein, were solely for the benefit of NTD: being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Accordingly, the representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time and investors should not rely on them as statements of fact.
Amendment to Loan Agreement
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The Amendment also provides for, among others, the following additional amendments to the Loan Agreement to become effective upon the consummation of the Merger and satisfaction of the other conditions set forth in the Amendment (the "Accelmed Closing Date"):
? The Company would make a$5 million partial prepayment of the outstanding loans under the Loan Agreement. ? During the first two years until approximately two years after the date of the Amendment, the outstanding loans under the amended Loan Agreement would not amortize but would continue to accrue interest (the "Interest Only Period"). Following the Interest Only Period, the loans would amortize in eight equal quarterly payments. ? The existing interest rate on the loans would be reduced from thirteen percent (13%) per annum to eight percent (8%) per annum, which the Company may choose to pay in cash or in kind during the Interest Only Period. ? The maturity date of the loans under the Loan Agreement would be extended to a four (4) year maturity. ? The company would be allowed to prepay the loans at any time without any prepayment penalties. ? The existing minimum revenue covenant would be deleted, together with the related right to cure breaches of such minimum revenue covenant with limited equity contributions. ? The minimum liquidity covenant would be reduced from$3 million to$1 million . ? The lenders under the Loan Agreement would continue to be able to designate a board observer during any time that the lenders have not designated a director on the Company's board of directors. ? The definition of a "change of control" would be amended to take the Company's new ownership into account, so that the lenders and/or Buyer and their respective affiliates owning more than 50% of the Company would not constitute a change of control under the Loan Agreement. ? A new event of default would be added to the Loan Agreement as follows: if the Company or any of its subsidiary guarantors breach in any material respect the Merger Agreement, the Trigger Exchange Agreement or any other material agreement contemplated by the Buyer transactions referred to in the Amendment, subject to a thirty day cure period so long as the Company is using commercially reasonable efforts to remedy such breach.
The foregoing summary of the Amendment and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Amendment (including the form of amended Loan Agreement attached thereto), attached hereto as Exhibit 10.1 and incorporated herein by reference.
Trigger Exchange Agreement
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The foregoing summary of the Trigger Exchange Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Trigger Exchange Agreement attached hereto as Exhibit 10.2 and incorporated herein by reference.
Cautionary Note Regarding Forward-Looking Statements
This announcement contains forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended) concerning the Company and Buyer. These statements include, but are not limited to, statements regarding the expected completion and timing of the proposed transaction, expected benefits and costs of the proposed transaction, and management plans relating to the proposed transaction, and statements that address each company's expected future business and financial performance and other statements identified by words such as "will", "expect", "believe", "anticipate", "estimate", "should", "intend", "plan", "potential", "predict" "project", "aim", and similar words, phrases or expressions. These forward-looking statements are based on current expectations and beliefs of the management of the Company and Buyer (as the case may be), as well as assumptions made by, and information currently available to, such management, current market trends and market conditions and involve risks and uncertainties, many of which are outside of each company's and each company's management's control, and which may cause actual results to differ materially from those contained in forward-looking statements. Accordingly, you should not place undue reliance on such statements.
Those risks, uncertainties and assumptions include: the risk that the proposed
transaction may not be completed in a timely manner or at all, which may
adversely affect the Company's business and the price of the common stock of the
Company; the failure to satisfy any of the conditions to the consummation of the
proposed transaction; the occurrence of any event, change or other circumstance
that could give rise to the termination of the Merger Agreement; the effect of
the announcement or pendency of the proposed transaction on the Company's
business relationships, operating results and business generally; risks that the
proposed transaction disrupts current plans and operations and the potential
difficulties in employee retention as a result of the proposed transaction;
risks related to diverting management's attention from ongoing business
operations; the outcome of any legal proceedings that may be instituted related
to the Merger Agreement or the proposed transaction; unexpected costs, charges
or expenses resulting from the proposed transaction; and other risks described
in the Company's filings with the
Forward-looking statements speak only as of the date of this communication. Neither the Company nor Buyer undertake any intent or obligation to publicly update or revise any of the estimates and other forward-looking statements made in this announcement, whether as a result of new information, future events or otherwise, except as required by law.
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