<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
________
Date of Report (Date of earliest event reported): October 19, 1999
NETIVATION.COM, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 000-26337
(State or Other Jurisdiction _______________ 82-0514605
of Incorporation or (Commission File (I.R.S. Employer)
Organization Number) Identification Number)
806 CLEARWATER LOOP, SUITE N
POST FALLS, ID 83854
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (208) 777-4203
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
MEDMarket, Inc.
- ---------------
On October 18, 1999, Netivation.com, Inc. ("Netivation"), acquired all of
the issued and outstanding stock of MEDMarket, Inc. ("MEDMarket"). MEDMarket, a
Colorado corporation, was founded in 1995 and has developed the MEDMarket
Network. The MEDMarket Network is an integrated network of medical business-to-
business Web properties comprised of the MEDMarket Virtual Industrial Park, The
Internet Medical Products Guide, RAInfo and Dr. MEDMarket. MEDMarket's stock was
acquired pursuant to an Agreement and Plan of Merger and Reorganization dated as
of September 17, 1999, wherein MEDMarket became a wholly-owned subsidiary of
Netivation. Pursuant to the transaction two of the prior officers of MEDMarket,
Thomas A. Slater and Paul Barloon, will become the General Manager
1
<PAGE>
and the Product Manager, respectively of MEDMarket. Prior to the closing, there
was no material relationship between the principals or affiliates of MEDMarket
and Netivation.
The amount of consideration for the acquisition was $925,000; comprised of
cash of $100,000, assumption of up to $75,000 of MEDMarket liabilities, and
100,000 shares of Netivation common stock valued at closing at $750,000.
MEDMarket's shareholders have agreed that the Netivation common stock issued to
them shall remain subject to a one-year lock-up term. Netivation's 100,000
shares issued to MEDMarket represent approximately 1.08% of Netivation's
outstanding stock.
The cash portion of the acquisition was financed by proceeds Netivation
received through its initial public offering.
The purchase price was the result of arm's-length negotiation between
MEDMarket and Netivation, based on Netivation's evaluation of the fair market
value of MEDMarket's business, revenue streams, and key industry contacts.
Netivation intends that the assets of MEDMarket will be used by Netivation
and/or by Netivation's wholly-owned subsidiary in a manner generally consistent
with the use of such assets by MEDMarket immediately prior to the consummation
of the acquisition.
Politicallyblack.com
- --------------------
On October 19, 1999, Netivation.com, Inc. ("Netivation") acquired all of
the issued and outstanding stock of politicallyblack.com, Inc.
("Politicallyblack"). Politicallyblack, a Maryland corporation, formed in April
1999, has the first web site dedicated to promoting African American economics,
politics, technology and civic participation. The Politicallyblack web site
features the most comprehensive news service and up-to-date legislative analyses
on minority issues. Politicallyblack's stock was acquired pursuant to an
Agreement and Plan of Merger dated as of October 12, 1999, wherein
Politicallyblack merged into a wholly-owned subsidiary of Netivation, which is
now known as Politicallyblack.com, Inc., a Delaware corporation. Pursuant to the
transaction, the two prior officers of Politicallyblack, Roderick Conrad and
Charles Ellison will continue in their positions as the President and Chief
Executive Officer, and the Vice President and Secretary and Chief Operating
Officer, respectively of Politicallyblack.com, Inc. Prior to the closing, there
was no material relationship between the principals or affiliates of
Politicallyblack and Netivation.
The amount of consideration for the acquisition was $276,250; comprised of
cash of $55,000, assumption of all of Politicallyblack's liabilities, if any,
and 30,000 shares of Netivation common stock valued at closing at $221,250. The
30,000 shares issued to Politicallyblack represent approximately 0.33% of
Netivation's outstanding stock.
The cash portion of the acquisition was financed by proceeds Netivation
received through its initial public offering.
2
<PAGE>
The purchase price was the result of arm's-length negotiation between
Politicallyblack and Netivation, based on Netivation's evaluation of the fair
market value of Politicallyblack's business and key industry contacts.
Netivation intends that the assets of Politicallyblack will be used by
Netivation and/or by Netivation's wholly-owned subsidiary in a manner generally
consistent with the use of such assets by Politicallyblack immediately prior to
the consummation of the acquisition.
Raintree Communications Corporation
- -----------------------------------
On October 21, 1999, Netivation.com, Inc. ("Netivation") acquired all of
the issued and outstanding stock of Raintree Communications Corporation
("Raintree"). Raintree, a Virginia corporation, was founded in 1994, and has
developed a telephone-based service known as Policy Voice. The telephone service
combines the use of interactive voice response units with database and fax
servers to provide members with access to legislative messages, allows members
to request documents on-demand, or be transferred to the office of their federal
or state legislator. Raintree's stock was acquired pursuant to an Agreement and
Plan of Merger dated as of October 19, 1999, wherein Raintree became a wholly-
owned subsidiary of Netivation. Pursuant to the transaction, one of the officers
of Raintree, Sean Kennedy, will become President of Raintree. Prior to the
closing, there was no material relationship between the principals or affiliates
of Raintree and Netivation.
The amount of consideration for the acquisition was $1,150,000; comprised
of cash of $100,000, assumption of Raintree's liabilities, if any, and 150,000
shares of Netivation common stock valued at closing at $1,050,000. The 150,000
shares issued to Raintree represent approximately 1.63% of Netivation's
outstanding stock.
The cash portion of the acquisition was financed by proceeds Netivation
received through its initial public offering.
The purchase price was the result of arm's-length negotiation between
Raintree and Netivation, based on Netivation's evaluation of the fair market
value of Raintree's business, revenue streams, and key industry contacts.
Public Disclosure, Inc.
- -----------------------
On October 22, 1999, Netivation.com, Inc. ("Netivation") acquired all of
the issued and outstanding stock of Public Disclosure, Inc. ("PDI"). PDI, a
Washington corporation, is the developer and provider of FECInfo, a
comprehensive up-to-the-minute web site of Federal Election Commission
information on federal candidates and interest groups. PDI's stock was acquired
pursuant to an Agreement and Plan of Merger dated as of October 22, 1999,
wherein PDI merged into a wholly-owned subsidiary of Netivation, which is now
know as Public Disclosure, Inc., a Delaware corporation. Pursuant to the
transaction, the prior officers of PDI, Kent Cooper and Anthony Raymond will
become the Co-Chief Executive Officer and Secretary and the Co-Chief Executive
Officer and Treasurer, respectively, of Public Disclosure, Inc., a
3
<PAGE>
wholly-owned subsidiary of Netivation. Prior to the closing, there was no
material relationship between the principals or affiliates of Public Disclosure
and Netivation.
The amount of consideration for the acquisition was $2,083,750; comprised
of cash of $190,000, assumption of PDI's liabilities, if any, and 300,000 shares
of Netivation common stock valued at closing at $1,893,750. The 300,000 shares
issued to PDI represent approximately 3.263% of Netivation's outstanding stock.
The cash portion of the acquisition was financed by proceeds Netivation
received through its initial public offering.
The purchase price was the result of arm's-length negotiation between PDI
and Netivation, based on Netivation's evaluation of the fair market value of
PDI's business, database, revenues and key industry contacts.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Pursuant to Item 310 of Regulation S-B(c) and (d), any required financial
statements will be filed as an amendment to this report not later than sixty
(60) days from the date this report is filed.
(c) Exhibits.
2.1 Agreement and Plan of Merger and Reorganization, dated
as of September 17, 1999, among Netivation.com, Inc.,
Netivation.com Merger Two Corp., MEDMarket, Inc., and
MEDMarket's selling shareholders.
Exhibit A - Selling Stockholders
B - Certain Definitions
C - Director and Officer of
Surviving Corporation
D - Allocation of Merger
Consideration
E - Form of Legal Opinion
F - Form of Employment and
Noncompetition Agreement
G - Form of Escrow Agreement
Schedule 2.6 - Liabilities
2.7 - Agreements
2.8 - Obligations to Related Parties
2.9 - Changes to Public
Disclosure, Inc.
2.10 - Leases
2.15 - Employees
4
<PAGE>
2.2 Agreement and Plan of Merger, dated as of October 12,
1999, among Netivation.com, Inc., Netivation.com Merger
Six Corp., Politicallyblack.com, Inc. and the Selling
Stockholders of Politicallyblack.com, Inc.
Exhibit A - Selling Stockholders
B - Certain Definitions
C - Director and Officer of
Surviving Corporation
D - Allocation of Merger
Consideration
E - Form of Legal Opinion
F - Form of Employment and
Noncompetition Agreement
G - Form of Escrow Agreement
H - Form of Prospective Offeree
Questionnaire
Schedule 2.3 - Voting Rights
2.6 - Liabilities
2.7 - Agreements
2.8 - Obligations to Related Parties
2.9 - Changes to
Politicallyblack.com
2.10 - Assets
2.15 - Employees
2.3 Agreement and Plan of Merger, dated as of October 19,
1999, among Netivation.com, Inc., Netivation.com Merger
Four Corp., Raintree Communications Corporation and the
Selling Stockholders of Raintree Communications
Corporation.
Exhibit A - Selling Stockholders
B - Certain Definitions
C - Director and Officer of
Surviving Corporation
D - Allocation of Merger
Consideration
E - Form of Legal Opinion
F - Form of Employment and
Noncompetition Agreement
G - Form of Escrow Agreement
H - Form of Prospective Offeree
Questionnaire
I - Form of Lock-Up
J - Piggy-Back Registration
Rights
5
<PAGE>
Schedule 2 - Schedule of Exceptions
2.10 - Assets
2.17 - Consents
2.4 Agreement and Plan of Merger, dated as of October 22,
1999, among Netivation.com, Inc., Netivation.com Merger
Five Corp., Public Disclosure, Inc., and the Selling
Stockholders of Public Disclosure, Inc.
Exhibit A - Selling Stockholders
B - Certain Definitions
C - Director and Officer of
Surviving Corporation
D - Allocation of Merger
Consideration
E - Form of Legal Opinion
F - Form of Employment and
Noncompetition Agreement
G - Form of Escrow Agreement
H - Form of Prospective Offeree
Questionnaire
Schedule 2.1 - Authority to do Business
2.6 - Liabilities
2.7 - Agreements
2.8 - Obligations to Related Parties
2.9 - Changes to Public
Disclosure, Inc.
2.10 - Assets
2.11 - Patents and Trademarks
2.11(a)- Outstanding Options,
Licenses and Agreements
2.13 - Litigation
2.14 - Tax Returns and Payments
2.15 - Employees
99.1 Press Release dated October 20, 1999 for MEDMarket, Inc.
Acquisition
99.2 Press Release dated October 28, 1999 for
politicallyblack.com, Inc., Raintree Communications
Corporation, and Public Disclosure, Inc.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
Dated as of November 10, 1999.
NETIVATION.COM, INC.
By /s/ Anthony J. Paquin
-----------------------------------------------
Anthony J. Paquin
President and Chief Executive Officer
7
<PAGE>
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
NETIVATION.COM, INC.
a Delaware corporation;
NETIVATION.COM MERGER TWO CORP., a Delaware corporation;
MEDMarket, INC., a Colorado corporation;
and
the Selling Stockholders of MEDMarket, Inc.
listed on Exhibit A hereto
---------------------
Dated as of September___, 1999
---------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1 - DESCRIPTION OF TRANSACTION.............................................................. 1
1.1 Merger of Merger Sub into MEDMarket..................................................... 1
1.2 Effect of the Merger.................................................................... 1
1.3 Closing; Effective Time................................................................. 1
1.4 Certificate of Incorporation, Bylaws and Directors and Officers......................... 2
1.5 Conversion of MEDMarket Stock........................................................... 2
1.6 Additional Consideration................................................................ 3
1.7 Closing of MEDMarket's Transfer Books................................................... 3
1.8 Exchange of Certificates................................................................ 3
1.9 Dissenting Shares....................................................................... 4
1.10 Tax Consequences........................................................................ 5
1.11 Accounting Treatment.................................................................... 5
1.12 Further Action.......................................................................... 5
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF MEDMarket
AND THE SELLING STOCKHOLDERS........................................................................ 5
2.1 Organization, Good Standing and Qualification........................................... 5
2.2 Subsidiaries............................................................................ 6
2.3 Capitalization; Voting Rights........................................................... 6
2.4 Authorization; Binding Obligations...................................................... 6
2.5 Financial Statements.................................................................... 7
2.6 Liabilities............................................................................. 7
2.7 Agreements; Action...................................................................... 7
2.8 Obligations to Related Parties.......................................................... 8
2.9 Absence of Changes...................................................................... 8
2.10 Title to Properties and Assets; Liens, Etc.............................................. 9
2.11 Patents and Trademarks.................................................................. 9
2.12 Compliance with Other Instruments....................................................... 10
2.13 Litigation.............................................................................. 10
2.14 Tax Returns and Payments................................................................ 11
2.15 Employees............................................................................... 11
2.16 [Intentionally Omitted]................................................................. 12
2.17 Registration Rights..................................................................... 12
2.18 Compliance with Legal Requirements; Consents............................................ 12
2.19 Selling Stockholders.................................................................... 13
2.20 Full Disclosure......................................................................... 13
2.21 Year 2000 Compliance.................................................................... 13
2.22 [Intentionally Omitted]................................................................. 14
2.23 Securities Laws Matters................................................................. 14
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF NETIVATION............................................ 14
3.1 Organization, Good Standing and Qualification........................................... 14
3.2 Subsidiaries............................................................................ 15
3.3 Capitalization; Voting Rights........................................................... 15
3.4 Authorization; Binding Obligations...................................................... 16
3.5 Full Disclosure......................................................................... 16
SECTION 4 - CERTAIN COVENANTS OF MEDMarket AND THE
SELLING STOCKHOLDERS................................................................................ 16
4.1 Access and Investigation................................................................ 16
4.2 Operation of Business................................................................... 17
4.3 Notification; Updates to Schedule of Exceptions......................................... 19
4.4 No Negotiation.......................................................................... 19
SECTION 5 - ADDITIONAL COVENANTS OF THE PARTIES..................................................... 20
5.1 Filings and Consents.................................................................... 20
5.2 Disclosure Document..................................................................... 20
5.3 MEDMarket Stockholders' Meeting......................................................... 20
5.4 Public Announcements.................................................................... 21
5.5 Best Efforts............................................................................ 21
5.6 Tax Matters............................................................................. 21
5.7 Capital Infusion........................................................................ 21
SECTION 6 - CONDITIONS PRECEDENT TO OBLIGATIONS OF NETIVATION
AND MERGER SUB...................................................................................... 21
6.1 Accuracy of Representations............................................................. 21
6.2 Performance of Covenants................................................................ 22
6.3 Stockholder Approval.................................................................... 22
6.4 Consents ............................................................................... 22
6.5 No Material Adverse Change.............................................................. 22
6.6 Agreements and Documents................................................................ 22
6.7 [Intentionally Omitted]................................................................. 23
6.8 Lock-Up Agreements...................................................................... 23
6.9 No Restraints........................................................................... 23
6.10 No Proceedings.......................................................................... 23
6.11 Securities Law Compliance............................................................... 23
6.12 Dissenters Rights....................................................................... 23
6.13 Unaccredited Investors.................................................................. 23
6.14 Proceedings and Documents............................................................... 23
6.15 Corporate Approvals..................................................................... 23
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
SECTION 7 - CONDITIONS PRECEDENT TO OBLIGATIONS OF MEDMarket
AND THE SELLING STOCKHOLDERS........................................................................ 24
7.1 Accuracy of Representations............................................................. 24
7.2 Performance of Covenants................................................................ 24
7.3 Consents ............................................................................... 24
7.4 Agreements and Documents................................................................ 24
7.5 No Restraints........................................................................... 25
7.6 No Proceedings.......................................................................... 25
7.7 Corporate Approvals..................................................................... 25
SECTION 8 - TERMINATION............................................................................. 25
8.1 Termination Events...................................................................... 25
8.2 Termination Procedures.................................................................. 26
8.3 Effect of Termination................................................................... 26
SECTION 9 - INDEMNIFICATION, ETC.................................................................... 26
9.1 Survival of Representations, Warranties and Covenants................................... 26
9.2 Indemnification by the Selling Stockholders............................................. 27
9.3 Contribution............................................................................ 27
9.4 Ceiling; Limitation on Additional Damages............................................... 27
9.5 Interest................................................................................ 28
9.6 Defense of Third Party Claims........................................................... 28
9.7 Setoff.................................................................................. 28
9.8 Indemnity Reserve....................................................................... 28
9.9 Exercise of Remedies by Netivation Indemnitees Other Than Netivation.................... 29
SECTION 10 - MISCELLANEOUS PROVISIONS............................................................... 29
10.1 Selling Stockholders' Agent............................................................. 29
10.2 Further Assurances...................................................................... 30
10.3 Fees and Expenses....................................................................... 30
10.4 Attorneys' Fees......................................................................... 30
10.5 Notices................................................................................. 31
10.6 Headings................................................................................ 31
10.7 Counterparts............................................................................ 32
10.8 Governing Law........................................................................... 32
10.9 Successors and Assigns.................................................................. 32
10.10 Remedies Cumulative; Specific Performance............................................... 32
10.11 Waiver.................................................................................. 32
10.12 Amendments.............................................................................. 33
10.13 Time of the Essence..................................................................... 33
10.14 Severability............................................................................ 33
10.15 Parties in Interest..................................................................... 33
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
10.16 Entire Agreement........................................................................ 33
10.17 Construction............................................................................ 33
</TABLE>
-iv-
<PAGE>
EXHIBITS
Exhibit A - Selling Stockholders
Exhibit B - Certain Definitions
Exhibit C - Director and Officer of Surviving Corporation
Exhibit D - Allocation of Merger Consideration
Exhibit E - Form of Legal Opinion
Exhibit F - Form of Employment and Noncompetition Agreement
Exhibit G - Form of Escrow Agreement
-vi-
<PAGE>
AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is
made and entered into as of September ____, 1999, by and among: NETIVATION.COM,
INC., a Delaware corporation ("Netivation"), NETIVATION.COM MERGER TWO CORP., a
Delaware corporation and a wholly-owned subsidiary of Netivation ("Merger Sub"),
MEDMarket, INC., a Colorado corporation ("MEDMarket"), and the stockholders of
MEDMarket set forth on Exhibit A hereto (the "Selling Stockholders"). Certain
capitalized terms used in this Agreement are defined in Exhibit B.
RECITALS
A. The parties intend to effect a merger of Merger Sub into
MEDMarket in accordance with this Agreement and the Delaware General Corporation
Law ("Delaware Law") and the Colorado General Corporation Law ("Colorado Law")
(the "Merger"). Upon consummation of the Merger, Merger Sub will cease to
exist, and MEDMarket will become a wholly-owned subsidiary of Netivation.
B. The Selling Stockholders own an aggregate of 100,000 shares of
capital stock of MEDMarket (the "MEDMarket Stock"), constituting 100% of the
MEDMarket capital stock on a fully-diluted basis.
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1 - DESCRIPTION OF TRANSACTION
1.1 Merger of Merger Sub into MEDMarket. Upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time (as defined
in Section 1.3), Merger Sub shall be merged with and into MEDMarket, and the
separate existence of Merger Sub shall cease. MEDMarket will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set
forth in this Agreement and in the applicable provisions of Delaware Law and
Colorado Law.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 1
<PAGE>
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Moffatt, Thomas, Barrett, Rock & Fields, Chartered, 101 S. Capitol Boulevard,
10th Floor, Boise, Idaho 83702 on or before September 24, 1999 or at such other
time as the parties may agree (the "Scheduled Closing Time"). (The date on
which the Closing actually takes place is referred to in this Agreement as the
"Closing Date.") Contemporaneously with or as promptly as practicable after the
Closing, a properly executed certificate of merger (the "Certificate of
Merger"), conforming to the requirements of Delaware Law and Colorado Law, shall
be filed with the Secretary of State of the State of Delaware and the State of
Colorado. The Merger shall become effective at the time such Certificate of
Merger is filed with and accepted by the Secretary of State of the State of
Delaware and the State of Colorado (the "Effective Time").
1.4 Certificate of Incorporation, Bylaws and Directors and Officers.
(a) The certificate of incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended as provided
by law; provided, however, that Article I of the Certificate of Incorporation
shall be amended to read as follows: "The name of this corporation is
MEDMarket, Inc."
(b) The bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter amended.
(c) The directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals identified on
Exhibit C.
1.5 Conversion of MEDMarket Stock.
(a) Subject to Sections 1.8(c) and 1.9, at the Effective Time,
by virtue of the Merger and without any further action on the part of
Netivation, Merger Sub, MEDMarket or any stockholder of MEDMarket: (i) each
share of Common Stock of MEDMarket issued and outstanding immediately prior to
the Effective Time shall be converted into the right to receive one (1) share of
Common Stock of Netivation (the "Netivation Stock"). All outstanding shares of
MEDMarket capital stock shall be exchanged for no more than One Hundred Thousand
(100,000) shares of Netivation Stock. Each share of common stock of Merger Sub
issued and outstanding immediately prior to the Effective Time shall
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 2
<PAGE>
be converted into one (1) share of common stock of the Surviving Corporation.
The Merger Consideration to be received by the Selling Stockholders is set forth
on Exhibit D. If, between the date of this Agreement and the Closing Date, the
shares of capital stock of MEDMarket or the Netivation Stock are changed into a
different number or class of shares by reason of any stock dividend,
subdivision, reclassification, recapitalization, split-up, combination or
similar transaction, the Merger Consideration shall be appropriately adjusted.
(b) If any shares of capital stock of MEDMarket outstanding
immediately prior to the Effective Time are unvested or are subject to a
repurchase option, risk of forfeiture or other condition under any applicable
restricted stock purchase agreement or other agreement with MEDMarket, then the
shares of Netivation Stock issued in exchange for such shares of capital stock
of MEDMarket will also be unvested and subject to the same repurchase option,
risk of forfeiture or other condition, and the certificates representing such
shares of Netivation Stock may be accordingly marked with appropriate legends.
1.6 Additional Consideration.
(a) At Closing, Netivation shall pay to the Selling Stockholders
the sum of One Hundred Thousand Dollars ($100,000) to be allocated among them as
provided in Exhibit D.
(b) At Closing, Netivation shall repay the corporate debt and
payables in the aggregate principal amount of not more than Seventy-Five
Thousand Dollars ($75,000) owed by MEDMarket to the Region 9 Economic
Development District, Burns National Bank, Kerry Yndestad, Gemini Investments,
and others.
1.7 Closing of MEDMarket's Transfer Books. At the Effective Time,
holders of certificates representing MEDMarket Stock that were outstanding
immediately prior to the Effective Time shall cease to have any rights as
stockholders of MEDMarket, and the stock transfer books of MEDMarket shall be
closed with respect to all shares of such capital stock outstanding immediately
prior to the Effective Time. No further transfer of any such capital stock of
MEDMarket shall be made on such stock transfer books after the Effective Time.
If, after the Effective Time, a valid certificate previously representing any of
such capital stock of MEDMarket (a "MEDMarket Stock Certificate") is presented
to the Surviving Corporation or Netivation, such MEDMarket Stock Certificate
shall be canceled and shall be exchanged as provided in Section 1.8.
1.8 Exchange of Certificates.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 3
<PAGE>
(a) At or as soon as practicable after the Effective Time,
Netivation will send to each holder of a MEDMarket Stock Certificate a letter of
transmittal and instructions for use in customary form and containing such
provisions as may reasonably be required for use in effecting the surrender of
such MEDMarket Stock Certificate for payment therefor and conversion thereof.
Upon surrender of a MEDMarket Stock Certificate to Netivation for exchange,
together with a duly executed letter of transmittal and such other documents as
may be reasonably required by Netivation, the holder of such MEDMarket Stock
Certificate shall be entitled to receive in exchange therefor certificates
representing the number of whole shares of Netivation Stock that such holder has
the right to receive pursuant to the provisions of this Section 1 and the
MEDMarket Stock Certificate so surrendered shall be canceled. Until surrendered
as contemplated by this Section 1.8, each MEDMarket Stock Certificate shall be
deemed, from and after the Effective Time, to represent only the right to
receive upon such surrender a certificate representing shares of Netivation
Stock (and cash in lieu of any fractional share of Netivation Stock) as
contemplated by this Section 1. If any MEDMarket Stock Certificate shall have
been lost, stolen or destroyed, Netivation may, in its discretion and as a
condition precedent to the issuance of any certificates representing Netivation
Stock, require the owner of such lost, stolen or destroyed MEDMarket Stock
Certificate to provide an appropriate affidavit and to deliver a bond (in such
sum as Netivation may reasonably direct) as indemnity.
(b) No dividends or other distributions declared or made with
respect to Netivation Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered MEDMarket Stock Certificate with respect
to the shares of Netivation Stock represented thereby, and no cash payment in
lieu of any fractional share shall be paid to any such holder, until such holder
surrenders such MEDMarket Stock Certificate in accordance with this Section 1.8
(at which time such holder shall be entitled to receive all such dividends and
distributions and such cash payment).
(c) No fractional shares of Netivation Stock shall be issued in
connection with the Merger. In lieu of such fractional shares, any holder of
capital stock of MEDMarket who would otherwise be entitled to receive a fraction
of a share of Netivation Stock shall, upon surrender of such holder's MEDMarket
Stock Certificate(s), be paid in cash the dollar amount (rounded to the nearest
whole cent), without interest, determined by multiplying such fraction by the
closing price of one share of Netivation Stock as reported by the NASDAQ
consolidated reporting system on the Closing Date.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 4
<PAGE>
(d) Each certificate representing any of the shares of Netivation
Stock to be issued in the Merger shall bear a legend identical or similar in
effect to the following legend (together with any other legend or legends
required by applicable state securities laws or otherwise):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
UNLESS REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE."
(e) Netivation and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable to
any holder or former holder of capital stock of MEDMarket pursuant to this
Agreement such amounts as Netivation or the Surviving Corporation may be
required to deduct or withhold therefrom under the Code or under any provision
of state, local or foreign tax law. To the extent such amounts are so deducted
or withheld, such amounts shall be treated for all purposes under this Agreement
as having been paid to the Person to whom such amounts would otherwise have been
paid.
1.9 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, shares of capital stock of MEDMarket that are issued and
outstanding immediately prior to the Effective Time and that are held by
stockholders who have not voted such shares in favor of the Merger and who have
delivered a written demand for appraisal of such shares in the manner provided
under Colorado Law ("Dissenting Shares") shall not be canceled and converted in
accordance with Section 1.5 unless and until such holder shall have failed to
perfect, or shall have effectively withdrawn or lost, such holder's right to
appraisal and payment under Colorado Law. If such holder shall have so failed
to perfect, or shall have effectively withdrawn or lost such right, such
holder's capital stock of MEDMarket shall thereupon be deemed to have been
canceled and converted as described in Section 1.5 at the Effective Time, and
each such share shall represent solely the right to receive the Merger
Consideration described in Section 1.5. MEDMarket shall give prompt notice of
any demands received by MEDMarket for appraisal of its shares, and, prior to the
Effective Time, Netivation shall have the right to participate in all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, MEDMarket shall not, except with the prior written consent of
Netivation, make any payment with respect to, or settle or offer to settle, any
such demands. From and after the Effective Time, no stockholder of MEDMarket
who has demanded appraisal rights as provided under Colorado Law
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 5
<PAGE>
shall be entitled to vote such holder's shares of Netivation Stock or capital
stock of MEDMarket for any purpose or to receive payment of dividends or other
distributions with respect to such holder's shares (except dividends and other
distributions payable to stockholders of record of MEDMarket at a date which is
prior to the Effective Time).
1.10 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.11 Accounting Treatment. For accounting purposes, the Merger is
intended to be treated as a "purchase."
1.12 Further Action. If, at any time after the Effective Time, any
further action is determined by Netivation to be necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation or
Netivation with full right, title and possession of and to all rights and
property of MEDMarket, the officers and directors of the Surviving Corporation
and Netivation shall be fully authorized (in the name of MEDMarket and
otherwise) to take such action.
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF
MEDMarket AND THE SELLING STOCKHOLDERS
MEDMarket and each of the Selling Stockholders jointly and severally
represent and warrant, to and for the benefit of the Netivation Indemnitees, as
follows:
2.1 Organization, Good Standing and Qualification. MEDMarket is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado. MEDMarket has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
the Transactional Agreements, to carry out the provisions of the Transactional
Agreements and to carry on its business as presently conducted and as presently
proposed to be conducted. MEDMarket is duly qualified and is authorized to do
business and is in good standing as a foreign corporation in all jurisdictions
(other than Illinois) in which the nature of its activities and of its
properties (both owned and leased) make such qualifications necessary, except
for those jurisdictions in which failure to do so would not have a Material
Adverse Effect on MEDMarket or its business. MEDMarket has made available to
Netivation true, correct and
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 6
<PAGE>
complete copies of MEDMarket's certificate of incorporation and bylaws, each as
amended to date.
2.2 Subsidiaries. MEDMarket owns no equity securities of any other
corporation, limited partnership or similar entity. MEDMarket is not a
participant in any joint venture, partnership or similar arrangement.
2.3 Capitalization; Voting Rights. The authorized capital stock of
MEDMarket consists of 100,000 shares of Common Stock, of which 100,000 shares
are issued and outstanding. Exhibit A sets forth the names of the stockholders
of MEDMarket and the number of shares of capital stock owned of record by each
such stockholder. The Selling Stockholders together own all of the outstanding
shares of capitol stock of MEDMarket. All issued and outstanding shares of
MEDMarket's Common Stock (i) have been duly authorized and validly issued, (ii)
are fully paid and nonassessable and (iii) were issued in compliance with all
applicable state and federal laws concerning the issuance of securities. There
are no outstanding options, warrants, rights (including conversion or preemptive
rights and rights of first refusal), proxy or stockholder agreements, or
agreements of any kind for the purchase or acquisition from MEDMarket of any of
its securities.
2.4 Authorization; Binding Obligations. MEDMarket has the absolute
and unrestricted right, power and authority to enter into and to perform its
obligations under the Transactional Agreements to which MEDMarket is or may
become a party. This Agreement constitutes the legal, valid and binding
obligation of MEDMarket, enforceable against MEDMarket in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies. Upon the execution
of each of the other Transactional Agreements at the Closing, each of such other
Transactional Agreements will constitute the legal, valid and binding obligation
of MEDMarket, enforceable against MEDMarket in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
2.5 Financial Statements. MEDMarket has delivered to Netivation (i)
its unaudited balance sheet and profit and loss statement as of December 31,
1996, 1997, and 1998 and (ii) its unaudited balance sheet and profit and loss
statement as of September 14, 1999 (the "Statement Date") (collectively, the
"MEDMarket Financial Statements"). The MEDMarket Financial Statements are
complete and correct in all material respects, and present fairly the financial
condition and position of MEDMarket for the periods covered thereby.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 7
<PAGE>
2.6 Liabilities. Except as set forth in Schedule 2.6, MEDMarket has
no material liabilities and, to the knowledge of MEDMarket, has no material
contingent liabilities not otherwise disclosed in the MEDMarket Financial
Statements, except current liabilities incurred in the Ordinary Course of
Business subsequent to the Statement Date which have not been, either in any
individual case or in the aggregate, materially adverse. All obligations of
MEDMarket to affiliates, officers, directors and stockholders of MEDMarket are
disclosed on the MEDMarket Financial Statements.
2.7 Agreements; Action.
(a) Except as set forth in Schedule 2.7, there are no agreements,
understandings, instruments, contracts, proposed transactions, judgments,
orders, writs or decrees to which MEDMarket is a party or to its knowledge by
which it is bound which may involve (i) obligations (contingent or otherwise)
of, or payments to, MEDMarket in excess of $10,000, or (ii) the license of any
patent, copyright, trade secret or other proprietary right to or from MEDMarket
(other than licenses arising from the purchase of "off the shelf" or other
standard products), or (iii) provisions restricting or affecting the
development, manufacture or distribution of MEDMarket's products or services or
(iv) indemnification by MEDMarket with respect to infringements of proprietary
rights.
(b) MEDMarket has not (i) incurred any indebtedness for money
borrowed or any other liabilities (other than with respect to dividend
obligations, distributions, indebtedness and other obligations incurred in the
Ordinary Course of Business or as disclosed in the MEDMarket Financial
Statements) individually in excess of $10,000 or, in excess of $10,000 in the
aggregate, (ii) made any loans or advances to any person, other than ordinary
advances for travel expenses or (iii) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
Ordinary Course of Business.
(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities MEDMarket has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 8
<PAGE>
2.8 Obligations to Related Parties. Except as set forth in Schedule
2.8, there are no obligations of MEDMarket to officers, directors, stockholders,
or employees of MEDMarket other than (a) for payment of salary for services
rendered, (b) reimbursement for reasonable expenses incurred on behalf of
MEDMarket and (c) for other standard employee benefits made generally available
to all employees. Except as set forth in Schedule 2.8, no such officer,
director or stockholder, or any member of their immediate families is, directly
or indirectly, interested in any material contract with MEDMarket (other than
such contracts as relate to any such person's ownership of capital stock or
other securities of MEDMarket). MEDMarket is not a guarantor or indemnitor of
any indebtedness of any other person, firm or corporation.
2.9 Absence of Changes. Except as set forth in Schedule 2.9, since
the Statement Date, there has not been:
(a) Any change in the assets, liabilities, financial condition or
operations of MEDMarket from that reflected in the MEDMarket Financial
Statements, other than changes in the Ordinary Course of Business, none of which
individually or in the aggregate has had or is expected to have a Material
Adverse Effect on such assets, liabilities, financial condition or operations of
MEDMarket;
(b) Any resignation or termination of any key officers of
MEDMarket; and MEDMarket, to its knowledge, does not know of the impending
resignation or termination of employment of any such officer;
(c) Any material change, except in the Ordinary Course of
Business, in the contingent obligations of MEDMarket by way of guaranty,
endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of MEDMarket;
(e) Any waiver by MEDMarket of a valuable right or of a material
debt owed to it;
(f) Any direct or indirect loans made by MEDMarket to any
stockholder, employee, officer or director of MEDMarket, other than advances
made in the Ordinary Course of Business;
(g) Any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 9
<PAGE>
(h) Any declaration or payment of any dividend or other
distribution of the assets of MEDMarket;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or
guaranteed by MEDMarket, except those for immaterial amounts and for current
liabilities incurred in the Ordinary Course of Business;
(k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(l) Any change in any material agreement to which MEDMarket is a
party or by which it is bound which materially and adversely affects the
business, assets, liabilities, financial condition, operations or prospects of
MEDMarket; or
(m) Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition, operations or prospects of
MEDMarket. For purposes of this subsection (m), a material and adverse effect
shall only be deemed to occur if its monetary impact exceeds, or with the
passage of time, will exceed $10,000.
2.10 Title to Properties and Assets; Liens, Etc. MEDMarket has good
and marketable title to its properties and assets (including, but not limited to
the web sites located at www.medmarket.com; impg.medmarket.com;
rainfo.medmarket.com; alt.medmarket.com; and dr.medmarket.com), and good title
to its leasehold estates, in each case subject to no mortgage, pledge, lien,
lease, encumbrance or charge, other than (i) those resulting from taxes which
have not yet become due and payable, (ii) minor liens and encumbrances which do
not materially detract from the value of the property subject thereto or
materially impair the operations of MEDMarket and (iii) those that have arisen
from purchase money security interests in an amount not to exceed $10,000. All
facilities, machinery, equipment, fixtures, vehicles and other properties owned,
leased or used by MEDMarket are in good operating condition and repair and are
reasonably fit and usable for the purposes for which they are being used.
Except as set forth in Schedule 2.10 MEDMarket is in compliance with all
material terms of each lease to which it is a party or is otherwise bound.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 10
<PAGE>
2.11 Patents and Trademarks. MEDMarket owns or possesses sufficient
legal rights to all trademarks (including, but not limited to the marks
MEDMARKET and MEDMARKET.COM), service marks, trade names, copyrights, trade
secrets and licenses, and, to the knowledge of MEDMarket, to all patents,
information and other proprietary rights and processes necessary for its
business as now conducted and as proposed to be conducted, without any known
infringement of the rights of others. There are no outstanding options,
licenses or agreements of any kind relating to the foregoing, nor is MEDMarket
bound by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information and other proprietary rights and processes
of any other person or entity other than such licenses or agreements arising
from the purchase of "off the shelf" or standard products. MEDMarket has not
received any communications alleging that MEDMarket has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. To MEDMarket's knowledge,
none of MEDMarket's employees is obligated under any contract (including
licenses, covenants or commitments or any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that
would interfere with their duties to MEDMarket's business by the employees of
MEDMarket. The conduct of MEDMarket's business as proposed, will not, to the
knowledge of MEDMarket, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any employee is now obligated. MEDMarket does
not believe it is or will be necessary to utilize any inventions, trade secrets
or proprietary information of any of its employees made prior to their
employment by MEDMarket, except for inventions, trade secrets or proprietary
information that have been assigned to MEDMarket.
2.12 Compliance with Other Instruments. MEDMarket is not in violation
or default of any term of its certificate of incorporation or bylaws, or of any
provision of any mortgage, indenture, contract, agreement, instrument or
contract to which it is party or by which it is bound or of any judgment,
decree, order, writ or, to its knowledge, any statute, rule or regulation
applicable to MEDMarket which would materially and adversely affect the
business, assets, liabilities, financial condition, operations or prospects of
MEDMarket. The execution, delivery, and performance of and compliance with the
Transactional Agreements will not, with or without the passage of time or giving
of notice, result in any such material violation, or be in conflict with or
constitute a default under any such term, or result in the creation of any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of MEDMarket or the suspension, revocation, impairment, forfeiture or
nonrenewal of any permit,
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 11
<PAGE>
license, authorization or approval applicable to MEDMarket, its business or
operations or any of its assets or properties.
2.13 Litigation. There is no action, suit, proceeding or
investigation pending, or to the knowledge of MEDMarket, currently threatened
against MEDMarket that questions the validity of this Agreement or Transactional
Agreements or the right of MEDMarket to enter into any of such agreements, or to
consummate the transactions contemplated hereby or thereby, or which might
result, either individually or in the aggregate, in any material adverse change
in the assets, condition, affairs or prospects of MEDMarket, financially or
otherwise, or any change in the current equity ownership of MEDMarket, nor is
MEDMarket aware that there is any basis for the foregoing. The foregoing
includes, without limitation, actions pending or threatened (or any basis
therefor known to MEDMarket) involving the prior employment of any of
MEDMarket's employees, their use in connection with MEDMarket's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers.
MEDMarket is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by
MEDMarket currently pending or which MEDMarket intends to initiate.
2.14 Tax Returns and Payments.
(a) Each tax required to have been paid, or claimed by any
Governmental Body to be payable, by MEDMarket (whether pursuant to any tax
return or otherwise) has been duly paid in full and on a timely basis. Any tax
required to have been withheld or collected by MEDMarket, including with respect
to employees, has been duly withheld and collected; and (to the extent required)
each such tax has been paid to the appropriate Governmental Body.
(b) All tax returns required to be filed by or on behalf of
MEDMarket with any Governmental Body have been timely filed, with the exception
of the Colorado Unemployment Tax due for the forth quarter of 1998 ("MEDMarket
Returns"). All taxes required to be paid by MEDMarket for the fiscal year 1998
have either been paid in full or shall not result in any liability to MEDMarket.
All MEDMarket Returns (i) have been filed when due and (ii) have been accurately
and completely prepared in full compliance with all applicable legal
requirements. MEDMarket has delivered to Netivation accurate and complete copies
of the last three years MEDMarket Returns.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 12
<PAGE>
(c) Other than a Colorado State Unemployment Tax Insurance Audit
performed in January 28, 1998, there have been no examinations or audits of any
MEDMarket Return, and, to the knowledge of MEDMarket, no such examination or
audit has been proposed or scheduled by any Governmental Body. MEDMarket has
delivered to Netivation accurate and complete copies of all audit reports and
similar documents (to which MEDMarket has access) relating to the MEDMarket
Returns.
(d) No claim or Proceeding is pending or, to the knowledge of
MEDMarket, has been threatened against MEDMarket in respect of any tax. There
are no unsatisfied Liabilities for taxes (including Liabilities for interest,
additions to tax and penalties thereon and related expenses) with respect to any
notice of deficiency or similar document received by MEDMarket. There are no
liens for taxes upon any of the assets of MEDMarket, except liens for current
taxes not yet due and payable. MEDMarket has not entered into or become bound by
any agreement or consent pursuant to Section 341(f) of the Code.
(e) To the knowledge of MEDMarket, there is no agreement, plan,
arrangement or other contract covering any employee or independent contractor or
former employee or independent contractor of MEDMarket that, individually or
collectively, could give rise, directly or indirectly, to the payment of any
amount that would not be deductible pursuant to Section 280G or Section 162 of
the Code. MEDMarket is not, and has never been, a party to or bound by any tax
indemnity agreement, tax sharing agreement, tax allocation agreement or similar
contract.
2.15 Employees. Except as set forth in Schedule 2.15, MEDMarket is
not a party to or bound by any currently effective employment contract, deferred
compensation arrangement, bonus plan, incentive plan, profit sharing plan,
retirement agreement or other employee compensation plan or agreement. To the
knowledge of MEDMarket, no employee of MEDMarket, nor any consultant with whom
MEDMarket has contracted, is in violation of any term of any employment
contract, proprietary information agreement or any other agreement relating to
the right of any such individual to be employed by, or to contract with,
MEDMarket because of the nature of the business to be conducted by MEDMarket;
and to the knowledge of MEDMarket the continued employment by MEDMarket of its
present employees, and the performance of MEDMarket's contracts with its
independent contractors, will not result in any such violation. MEDMarket has
not received any notice alleging that any such violation has occurred. No
employee of MEDMarket has been granted the right to continued employment by
MEDMarket or to any material compensation following termination of employment
with MEDMarket. To the knowledge of MEDMarket, no officer or key employee, or
any group of key employees, intends to terminate their employment with
MEDMarket, nor does
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 13
<PAGE>
MEDMarket have a present intention to terminate the employment of any officer,
key employee or group of key employees.
2.16 [INTENTIONALLY OMITTED]
2.17 Registration Rights. MEDMarket is presently not under any
obligation, and has not granted any rights, to register any of MEDMarket's
presently outstanding securities or any of its securities that may hereafter be
issued.
2.18 Compliance with Legal Requirements; Consents.
(a) MEDMarket is, and has at all times since inception been, in
full compliance with each legal requirement that is or was applicable to it or
to the conduct of its business or the ownership or use of any of its assets,
except where the failure to comply with each such legal requirement has not had
and will not have a Material Adverse Effect on MEDMarket.
(b) Neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with or result in a violation of
(i) any of the provisions of the MEDMarket's certificate of incorporation or
bylaws or (ii) any resolution adopted by MEDMarket's stockholders or MEDMarket's
board of directors;
(ii) contravene, conflict with or result in a violation
of, or give any Governmental Body or other Person the right to exercise any
remedy or obtain any relief under, any legal requirement or any order to which
MEDMarket, or any of the assets owned or used by MEDMarket, is subject (the
parties intend to payoff the Region 9 loans at Closing);
(iii) contravene, conflict with or result in a violation or
Breach of, or result in a default under, any provision of any contract to which
MEDMarket is a party; or
(iv) give any Person the right to (A) declare a default or
exercise any remedy under any contract to which MEDMarket is a party, (B)
accelerate the maturity or performance of any contract to which MEDMarket is a
party or (C) cancel, terminate or modify any contract to which MEDMarket is a
party.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 14
<PAGE>
Neither MEDMarket nor any of the Selling Stockholders was, is or will
be required to make any filing with or give any notice to, or to obtain any
consent from, any Person in connection with the execution and delivery of any of
the Transactional Agreements or the consummation or performance of any of the
Transactions.
2.19 Selling Stockholders. Each Selling Stockholder represents that
(i) he, she or it has the absolute and unrestricted right, power and authority
to enter into and to perform his, her or its obligations under each of the
Transactional Agreements to which such Selling Stockholder is or may become a
party, (b) this Agreement constitutes his, her or its legal, valid and binding
obligation, enforceable against such Selling Stockholder in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies and (c) upon the
execution of each of the other Transactional Agreements at the Closing, each of
such other Transactional Agreements will constitute the legal, valid and binding
obligation of such Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
2.20 Full Disclosure. This Agreement does not (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact or (ii) omit to state any material fact necessary in order
to make the representations, warranties and information of or with respect to
MEDMarket and the Selling Stockholders contained and to be contained herein (in
light of the circumstances under which such representations, warranties and
information were or will be made or provided) not false or misleading.
MEDMarket has provided Netivation and Netivation's Representatives with full and
complete access to all of MEDMarket's records and other documents and data.
2.21 Year 2000 Compliance. MEDMarket has developed a detailed plan to
ensure that it, its affiliates, and all customers, suppliers and vendors that
are material to its business, become Year 2000 Compliant on or before October
15, 1999. The plan (a) effectively prioritizes mission-critical systems, (b) has
the involvement of executive management, (c) includes assessment of key
customer, supplier, and vendor Year 2000 compliance, (d) includes contingency
planning to mitigate risk from Year 2000 business interruptions affecting key
vendors, suppliers, or customers, and (e) has been allocated adequate resources
within MEDMarket's abilities.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 15
<PAGE>
2.22 [INTENTIONALLY OMITTED]
2.23 Securities Laws Matters. Each Selling Stockholder understands
that the Netivation Stock has not been registered under the Securities Act and
that the Netivation Stock being issued in the Transaction is being issued
pursuant to an exemption from registration contained in the Securities Act,
based in part upon the Selling Stockholders' representations contained in this
Agreement. Each Selling Stockholder hereby severally and not jointly represents
and warrants as follows:
(a) Knowledge and Experience. Each Selling Stockholder is
knowledgeable and has substantial experience in evaluating and investing in
transactions in companies similar to Netivation so that he is capable of
evaluating the merits and risks of his investment in Netivation. Each Selling
Stockholder has by reason of his business or financial knowledge and experience,
the capacity to protect his own interests in connection with the Transaction.
Further, each Selling Stockholder is aware of no publication of any
advertisement in connection with the Transaction. Each Selling Stockholder can
bear the economic risk of the Transaction. Each Selling Stockholder has been
advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions.
(b) Netivation Information. Each Selling Stockholder has had an
opportunity to discuss Netivation's business, management and financial affairs,
both as currently conducted and as proposed to be conducted following the
Merger, with directors, officers and management of Netivation and has had the
opportunity to review Netivation's operations and facilities. Each Selling
Stockholder has also had the opportunity to ask questions of, and receive
answers from, Netivation and its management regarding the terms and conditions
of the Transaction and the receipt of Netivation Stock.
(c) Acquisition for Own Account. Each Selling Stockholder is
acquiring the Netivation Stock for his own account for investment only, and not
with a view towards distribution.
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF NETIVATION
Netivation represents and warrants to MEDMarket and the Selling
Stockholders as follows:
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 16
<PAGE>
3.1 Organization, Good Standing and Qualification.
(a) Netivation is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Netivation has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver this Agreement and the Transactional Agreements,
to issue and sell the Netivation Stock, to carry out the provisions of this
Agreement and the Transactional Agreements and to carry on its business as
presently conducted and as presently proposed to be conducted. Netivation is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its activities
and of its properties (both owned and leased) make such qualifications
necessary, except for those jurisdictions in which failure to do so would not
have a Material Adverse Effect on Netivation or its business. Netivation has
made available to MEDMarket true, correct and complete copies of the
Netivation's certificate of incorporation and bylaws, each as amended to date.
(b) Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Merger Sub has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver the Transactional Agreements, to carry out the
provisions of the Transactional Agreements and to carry on its business as
presently conducted and as presently proposed to be conducted.
3.2 Subsidiaries. Except for Merger Sub, Netivation Acquisition
Company, InterLink Internet Services, Inc., and The Online Medical Bookstore,
Inc., all of which are wholly-owned subsidiaries of Netivation, Netivation owns
no equity securities of any other corporation, limited partnership or similar
entity. Netivation is not a participant in any joint venture, partnership or
similar arrangement.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 17
<PAGE>
3.3 Capitalization; Voting Rights.
(a) The authorized capital stock of Netivation, as of September
14, 1999, consists of (a) 30,000,000 shares of Common Stock, of which 8,660,055
shares are issued and outstanding, and (b) 2,000,000 shares of Preferred Stock,
of which 0 shares are issued and outstanding. All issued and outstanding shares
of Netivation's Common Stock and Preferred Stock (i) have been duly authorized
and validly issued, (ii) are fully paid and nonassessable and (iii) were issued
in compliance with all applicable state and federal laws concerning the issuance
of securities. The Netivation Stock has been duly authorized and, when issued in
compliance with the provisions of this Agreement and its certificate of
incorporation, will be validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, other than liabilities
imposed upon stockholders generally by the provisions of Delaware Law, and will
not be subject to any other restrictions, except as set forth in or provided by
this Agreement and as may be imposed by applicable law.
(b) The authorized capital stock of Merger Sub consists of one
thousand (1000) shares of Common Stock, all of which have been issued to
Netivation. All of the issued and outstanding shares of Common Stock of Merger
Sub (i) have been duly authorized and validly issued, (ii) are fully paid and
nonassessable and (iii) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities.
3.4 Authorization; Binding Obligations. Each of Netivation and
Merger Sub has the absolute and unrestricted right, power and authority to enter
into and to perform its obligations under the Transactional Agreements to which
Netivation and Merger Sub, as the case may be, is or may become a party. This
Agreement constitutes the legal, valid and binding obligation of each of
Netivation and Merger Sub, enforceable against them in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies. Upon the execution
of each of the other Transactional Agreements at the Closing, each of such other
Transactional Agreements will constitute the legal, valid and binding obligation
of Netivation, enforceable against Netivation in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
3.5 Full Disclosure. Netivation has delivered to MEDMarket an
accurate and complete copy of its Registration Statement on Form SB-2 No. 333-
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 18
<PAGE>
74569 filed with the Securities and Exchange Commission (the "SEC") on June 22,
1999 (the "Registration Statement"), which is the most recent document filed
with the SEC as of the date hereof. The Registration Statement (i) complies in
all material respects with the applicable requirements of the Securities Act and
(ii) does 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 the light of the circumstances under which they were
made, not misleading.
SECTION 4 - CERTAIN COVENANTS OF MEDMarket
AND THE SELLING STOCKHOLDERS
4.1 Access and Investigation. MEDMarket and the Selling Stockholders
shall ensure that, at all times during the Pre-Closing Period:
(a) MEDMarket and its Representatives provide Netivation and its
Representatives with access, during normal business hours upon reasonable
notice, to MEDMarket's Representatives, personnel and assets and to all existing
books, records, tax returns, work papers and other documents and information
relating to MEDMarket;
(b) MEDMarket and its Representatives provide Netivation and its
Representatives with such copies of existing books, records, tax returns, work
papers and other documents and information relating to MEDMarket as Netivation
may request in good faith; and
(c) MEDMarket and its Representatives compile and provide
Netivation and its Representatives with such additional financial, operating and
other data and information regarding MEDMarket as Netivation may request in good
faith. Without limiting the generality of the foregoing, during the Pre-Closing
Period, MEDMarket shall promptly provide Netivation with copies of:
(i) all material operating and financial reports prepared
by MEDMarket for its senior management, including copies of the unaudited
monthly balance sheets of MEDMarket and the related unaudited monthly statements
of operations, statements of stockholders' equity and statements of cash flows;
(ii) any written materials or communications sent by or on
behalf of MEDMarket to its stockholders generally;
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 19
<PAGE>
(iii) any material notice, document or other communication
sent by or on behalf of MEDMarket to any party to any MEDMarket contract or sent
to MEDMarket by any party to any MEDMarket contract (other than any
communication that relates solely to commercial transactions between MEDMarket
and the other party to any such MEDMarket contract and that is of the type sent
in the Ordinary Course of Business);
(iv) any written notice, report or other document filed
with or sent to any Governmental Body in connection with the Merger or any of
the other Transactions; and
(v) any material written notice, report or other document
received by MEDMarket from any Governmental Body.
4.2 Operation of Business. MEDMarket and the Selling Stockholders
shall ensure that, during the Pre-Closing Period:
(a) MEDMarket conducts its operations exclusively in the Ordinary
Course of Business and in the same manner as such operations have been conducted
prior to the date of this Agreement;
(b) MEDMarket uses its commercially reasonable efforts to
preserve intact its current business organization, keep available the services
of its current officers and employees and maintain its relations and good will
with suppliers, customers, landlords, creditors, licensors, licensees, employees
and other Persons having business relationships with MEDMarket;
(c) MEDMarket keeps in full force all existing insurance
policies;
(d) MEDMarket's officers confer regularly, upon request, with
Netivation concerning operational matters and otherwise report regularly, upon
request, to Netivation concerning the status of MEDMarket's business, condition,
assets, liabilities, operations, financial performance and prospects;
(e) MEDMarket immediately notifies Netivation of any inquiry,
proposal or offer from any Person relating to any Acquisition Transaction;
(f) MEDMarket not declare, accrue, set aside or pay any dividend
or make any other distribution in respect of any shares of capital stock, and
does not repurchase, redeem or otherwise reacquire any shares of capital stock
or other securities;
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 20
<PAGE>
(g) MEDMarket does not sell or otherwise issue any shares of
capital stock or any other securities;
(h) MEDMarket does not amend its certificate of incorporation or
bylaws, and does not effect or become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(i) MEDMarket does not form any subsidiary or acquire any equity
interest or other interest in any other entity;
(j) MEDMarket does not make any capital expenditure, except for
capital expenditures that are made in the Ordinary Course of Business and that
do not exceed $10,000;
(k) MEDMarket does not (i) lend money to any Person or (ii)
incur, assume or otherwise become subject to any Liability, except for current
liabilities incurred in the Ordinary Course of Business;
(l) MEDMarket does not establish or adopt any employee benefit
plan, and does not pay or agree to pay any bonus or make any profit-sharing or
similar payment to, or increase the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers or employees (except for regularly scheduled salary
increases in the Ordinary Course of Business);
(m) MEDMarket does not change any of its methods of accounting or
accounting practices in any respect;
(n) MEDMarket does not commence any Proceeding, except in the
Ordinary Course of Business;
(o) MEDMarket does not enter into any transaction or take any
other action of the type referred to in Section 2.9;
(p) MEDMarket does not enter into any transaction or take any
other action outside the Ordinary Course of Business;
(q) MEDMarket does not enter into any transaction or take any
other action that is reasonably likely to cause or constitute a Breach of any
representation or warranty made by MEDMarket or the Selling Stockholders; and
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 21
<PAGE>
(r) MEDMarket does not agree, commit or offer (in writing or
otherwise), and does not attempt, to take any of the actions described in
clauses "(f)" through "(q)" of this Section 4.2.
4.3 Notification; Updates to Schedule of Exceptions.
(a) During the Pre-Closing Period, MEDMarket and/or the Selling
Stockholders shall promptly notify Netivation in writing of:
(i) the discovery by MEDMarket or any of the Selling
Stockholders of any event, condition, fact or circumstance that occurred or
existed on or prior to the date of this Agreement and that caused or constitutes
a Breach of any representation or warranty made by MEDMarket or the Selling
Stockholders in this Agreement;
(ii) any event, condition, fact or circumstance that
occurs, arises or exists after the date of this Agreement and that would cause
or constitute a Breach of any representation or warranty made by MEDMarket or
the Selling Stockholders in this Agreement if (A) such representation or
warranty had been made as of the time of the occurrence, existence or discovery
of such event, condition, fact or circumstance or (B) such event, condition,
fact or circumstance had occurred, arisen or existed on or prior to the date of
this Agreement;
(iii) any Breach of any covenant or obligation of MEDMarket
or the Selling Stockholders; and
(iv) any event, condition, fact or circumstance that may
make the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 4.3(a) requires any change in the
Schedule of Exceptions, or if any such event, condition, fact or circumstance
would require such a change assuming the Schedule of Exceptions were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then MEDMarket shall promptly deliver to Netivation an
update to the Schedule of Exceptions specifying such change. No such update
shall be deemed to supplement or amend the Schedule of Exceptions for the
purpose of (i) determining the accuracy of any of the representations and
warranties made by MEDMarket in this Agreement for purposes of Section 6.1, but
shall be deemed to supplement or amend the Schedule of Exceptions for purposes
of Section 9 or
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 22
<PAGE>
(ii) determining whether any of the other conditions set forth in Section 6 have
been satisfied.
4.4 No Negotiation. MEDMarket shall ensure that, during the Pre-
Closing Period, neither MEDMarket nor any of MEDMarket's Representatives
directly or indirectly:
(a) solicits or encourages the initiation of any inquiry,
proposal or offer from any Person (other than Netivation) relating to any
Acquisition Transaction;
(b) participates in any discussions or negotiations with, or
provides any non-public information to, any Person (other than Netivation)
relating to any Acquisition Transaction; or
(c) considers the merits of any unsolicited inquiry, proposal or
offer from any Person (other than Netivation) relating to any Acquisition
Transaction.
SECTION 5 - ADDITIONAL COVENANTS OF THE PARTIES
5.1 Filings and Consents. As promptly as practicable after the
execution of this Agreement, each party to this Agreement (i) shall make all
filings (if any) and give all notices (if any) required to be made and given by
such party in connection with the Transactions and (ii) shall use all
commercially reasonable efforts to obtain all consents (if any) required to be
obtained (pursuant to any applicable legal requirement or contract, or
otherwise) by such party in connection with the Transactions. Each of the
parties shall (upon request) promptly deliver to the other a copy of each such
filing made, each such notice given and each such consent obtained by MEDMarket
or Netivation, as the case may be, during the Pre-Closing Period.
5.2 Disclosure Document. As soon as practicable following the date
hereof, Netivation and MEDMarket shall prepare and provide to the stockholders
of MEDMarket a disclosure document regarding the issuance of Netivation Stock
(the "Disclosure Document"). Each party shall provide to the other such
information as may reasonably be requested in connection with the preparation of
the Disclosure Document. Each party shall promptly supplement, update and
correct any information provided by it for use in the Disclosure Document if and
to the extent that it is or shall have become incomplete, false or misleading.
In any such event, Netivation and MEDMarket shall take all steps necessary to
cause the Disclosure Document as so supplemented, updated or corrected to be
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 23
<PAGE>
disseminated to the stockholders of MEDMarket as and to the extent required by
applicable United States federal securities laws.
5.3 MEDMarket Stockholders' Meeting. MEDMarket shall, in accordance
with its certificate of incorporation and bylaws and the applicable requirements
of Colorado Law, call and hold a special meeting of its stockholders, or solicit
written consents from its stockholders, as promptly as practicable for the
purpose of permitting them to consider and to vote upon and approve the Merger
and this Agreement. MEDMarket shall use its best efforts (i) to solicit from
each of such stockholders a proxy or consent in favor of the approval of the
Merger and this Agreement and (ii) to cause each of such stockholders to execute
and deliver to Netivation a Subscription Agreement in a form acceptable to
Netivation certifying, among other items, as to whether each of such
stockholders is an "accredited investor" as such term is defined in Rule 501
under the Securities Act.
5.4 Public Announcements. During the Pre-Closing Period, (i) neither
MEDMarket nor Netivation shall (and neither MEDMarket nor Netivation shall
permit any of its respective Representatives to) issue any press release or make
any public statement regarding this Agreement or the Transactions, without the
other party's prior written consent, and (ii) each party will use reasonable
efforts to consult with the other party prior to issuing any press release or
making any public statement regarding the Merger; provided that Netivation shall
be free to make any disclosure regarding the Merger that it deems necessary in
connection with filings with the SEC made in connection with the Registration
Statement.
5.5 Best Efforts. During the Pre-Closing Period, (i) MEDMarket shall
use commercially reasonable efforts to cause the conditions set forth in Section
6 to be satisfied on a timely basis and (ii) Netivation and Merger Sub shall use
their commercially reasonable efforts to cause the conditions set forth in
Section 7 to be satisfied on a timely basis and Netivation will take all actions
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
5.6 Tax Matters. At or prior to the Closing, (a) MEDMarket shall
execute and deliver to Moffatt, Thomas, Barrett, Rock & Fields, Chtd. and to
Netivation a tax representation letter, in a form reasonably acceptable to such
parties, and (b) Netivation shall execute and deliver to Moffatt, Thomas,
Barrett, Rock & Fields, Chtd. and to MEDMarket a tax representation letter, in a
form reasonably acceptable to such parties. MEDMarket and the Selling
Stockholders will use all of their respective reasonable efforts to cause the
transactions contemplated hereby to qualify as a reorganization under the
provisions of Section 368(a) of the Code and will not take any action after the
Acquisition is effected
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 24
<PAGE>
that could reasonably be expected to cause the Acquisition to lose its tax-free
status. All parties hereto agree to file this Agreement with their respective
federal income tax returns for the year in which the Acquisition closes and to
comply with the reporting requirements of United States Treasury Regulations
Section 1.368-2(g), if applicable.
5.7 Capital Infusion. MEDMarket acknowledges that Netivation has
provide it with Twenty Thousand Dollars ($20,000) for working capital purposes.
SECTION 6 - CONDITIONS PRECEDENT TO OBLIGATIONS
OF NETIVATION AND MERGER SUB
The obligations of Netivation and Merger Sub to effect the
Transactions are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Netivation, in
whole or in part, in accordance with Section 10.11):
6.1 Accuracy of Representations. Each of the representations and
warranties made by MEDMarket and the Selling Stockholders in this Agreement
shall have been accurate in all material respects as of the date of this
Agreement and shall be accurate in all material respects as of the Scheduled
Closing Time as if made at the Scheduled Closing Time.
6.2 Performance of Covenants. Each covenant and obligation that
MEDMarket or any of the Selling Stockholders is required to comply with or to
perform pursuant to this Agreement at or prior to the Closing shall have been
duly complied with and performed in all material respects.
6.3 Stockholder Approval. The principal terms of the Merger shall
have been duly approved by the stockholders of MEDMarket in accordance with the
provisions of Colorado Law and applicable agreements.
6.4 Consents. All consents required to be obtained by MEDMarket in
connection with the Transactions (including the consents identified in Schedule
2.18) shall have been obtained and shall be in full force and effect.
6.5 No Material Adverse Change. Except for adverse changes that
result from general economic conditions, there shall have been no material
adverse change in MEDMarket's business, condition, assets, liabilities,
operations, financial performance or prospects since the date of this Agreement.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 25
<PAGE>
6.6 Agreements and Documents. Netivation shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) the Escrow Agreement, substantially in the form of Exhibit G;
(b) an Employment and Noncompetition Agreement, substantially in
the form of Exhibit F, executed by each of Thomas A. Slater and Paul J. Barloon;
(c) a Tax Representation Letter executed by MEDMarket;
(d) written resignations of all officers and directors of
MEDMarket, effective as of the Closing Date;
(e) a certificate executed by each of the Selling Stockholders
containing the representation and warranty of each such Selling Stockholder that
(i) each of the representations and warranties made by MEDMarket and the Selling
Stockholders in this Agreement is accurate in all material respects as of the
Closing Date as if made on the Closing Date and (ii) the conditions set forth in
this Section 6 have been duly satisfied (the "Selling Stockholders' Closing
Certificate");
(f) a legal opinion from counsel for MEDMarket and the Selling
Stockholders, substantially in the form of Exhibit E.
(g) such other documents as Netivation may reasonably request in
good faith for the purpose of (i) evidencing the accuracy of any representation
or warranty made by MEDMarket or the Selling Stockholders, (ii) evidencing the
compliance by MEDMarket or the Selling Stockholders with, or the performance by
MEDMarket or the Selling Stockholders of, any covenant or obligation set forth
in this Agreement, (iii) evidencing the compliance with any applicable federal
or state securities law, (iv) evidencing the satisfaction of any condition set
forth in this Section 6 or (v) otherwise facilitating the consummation or
performance of any of the Transactions.
6.7 [INTENTIONALLY OMITTED]
6.8 Lock-Up Agreements. Each of the Selling Stockholders shall have
delivered to Netivation a lock-up agreement, in a form acceptable to
Netivation's underwriters , providing for a maximum of a one (1) year lock-up
period from the Effective Time.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 26
<PAGE>
6.9 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any legal requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.10 No Proceedings. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Merger or seeking to prohibit or limit the
exercise by Netivation of any material right pertaining to its ownership of
stock of the Surviving Corporation.
6.11 Securities Law Compliance. All applicable requirements of the
Securities Act and any applicable state securities laws shall have been
satisfied.
6.12 Dissenters Rights. No stockholder of MEDMarket shall have
exercised dissenters rights with respect to approval of the Transactions.
6.13 Unaccredited Investors. The Subscription Agreements delivered
pursuant to Sections 5.3 and 6.6 shall indicate that no more than 35 of the
stockholders of MEDMarket are "unaccredited investors," as defined by Rule 501
under the Securities Act.
6.14 Proceedings and Documents. All corporate and other proceedings
in connection with the Transactions and all documents and instruments incident
to such Transactions shall be reasonably satisfactory in substance and form to
Netivation.
6.15 Corporate Approvals. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of MEDMarket, Netivation, Merger Sub and the Selling Stockholders.
SECTION 7 - CONDITIONS PRECEDENT TO OBLIGATIONS
OF MEDMarket AND THE SELLING STOCKHOLDERS
The obligations of MEDMarket and the Selling Stockholders to effect
the Transactions are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which, notwithstanding the provisions
of Sections 10.11 and 10.12, may be waived solely by MEDMarket, in whole or in
part, in accordance with Section 10.11):
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 27
<PAGE>
7.1 Accuracy of Representations. Each of the representations and
warranties made by Netivation in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in all
material respects as of the Scheduled Closing Time as if made at the Scheduled
Closing Time.
7.2 Performance of Covenants. Each covenant and obligation that
Netivation and Merger Sub are required to comply with or to perform pursuant to
this Agreement at or prior to the Closing shall have been duly complied with and
performed in all material respects.
7.3 Consents. All consents required to be obtained by Netivation in
connection with the Transactions shall have been obtained and shall be in full
force and effect.
7.4 Agreements and Documents. MEDMarket shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) the Escrow Agreement, substantially in the form of Exhibit G;
(b) an Employment and Noncompetition Agreement, substantially in
the form of Exhibit F, executed by each of Thomas A. Slater and Paul J. Barloon;
(c) a Tax Representation Letter executed by Netivation;
(d) a certificate executed by Netivation containing the
representation and warranty of Netivation that (i) each of the representations
and warranties made by Netivation in this Agreement is accurate in all material
respects as of the Closing Date as if made on the Closing Date and (ii) the
conditions set forth in this Section 7 have been duly satisfied; and
(e) such other documents as MEDMarket may reasonably request in
good faith for the purpose of (i) evidencing the accuracy of any representation
or warranty made by Netivation, (ii) evidencing the compliance by Netivation
with, or the performance by Netivation of, any covenant or obligation set forth
in this Agreement, (iii) evidencing the compliance with any applicable federal
or state securities law, (iv) evidencing the satisfaction of any condition set
forth in this Section 7 or (v) otherwise facilitating the consummation or
performance of any of the Transactions.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 28
<PAGE>
7.5 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any legal requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
7.6 No Proceedings. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Merger or seeking to prohibit or limit the
exercise by Netivation of any material right pertaining to its ownership of
stock of the Surviving Corporation.
7.7 Corporate Approvals. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of the MEDMarket, Netivation, Merger Sub and the Selling Stockholders.
SECTION 8 - TERMINATION
8.1 Termination Events. This Agreement may be terminated prior to
the Closing:
(a) by Netivation if (i) there is a material Breach of any
covenant or obligation of MEDMarket or any of the Selling Stockholders or (ii)
Netivation reasonably determines that the timely satisfaction of any condition
set forth in Section 6 has become impossible (other than as a result of any
failure on the part of Netivation or Merger Sub to comply with or perform any
covenant or obligation of Netivation or Merger Sub set forth in this Agreement);
(b) by the Agent (as defined in Section 10.1) if (i) there is a
material Breach of any covenant or obligation of Netivation or (ii) the Agent
reasonably determines that the timely satisfaction of any condition set forth in
Section 7 has become impossible (other than as a result of any failure on the
part of MEDMarket or any of the Selling Stockholders to comply with or perform
any covenant or obligation of MEDMarket or the Selling Stockholders set forth in
this Agreement);
(c) by Netivation at or after the Scheduled Closing Time if any
condition set forth in Section 6 has not been satisfied by the Scheduled Closing
Time;
(d) by the Agent at or after the Scheduled Closing Time if any
condition set forth in Section 7 has not been satisfied by the Scheduled Closing
Time;
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 29
<PAGE>
(e) by Netivation if the Closing has not taken place on or before
September 30, 1999 (other than as a result of any failure on the part of
Netivation or Merger Sub to comply with or perform any covenant or obligation of
Netivation or Merger Sub set forth in this Agreement);
(f) by the Agent if the Closing has not taken place on or before
September 30, 1999 (other than as a result of the failure on the part of
MEDMarket or any of the Selling Stockholders to comply with or perform any
covenant or obligation of MEDMarket or the Selling Stockholders set forth in
this Agreement); or
(g) by the mutual consent of Netivation, MEDMarket and the Agent.
8.2 Termination Procedures. If Netivation wishes to terminate this
Agreement pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e),
Netivation shall deliver to the Agent a written notice stating that Netivation
is terminating this Agreement and setting forth a brief description of the basis
on which Netivation is terminating this Agreement. If the Agent wishes to
terminate this Agreement pursuant to Section 8.1(b), Section 8.1(d) or Section
8.1(f), the Agent shall deliver to Netivation a written notice terminating this
Agreement and setting forth a brief description of the basis on which this
Agreement is terminated.
8.3 Effect of Termination. If this Agreement is terminated pursuant
to Section 8.1, all further obligations of the parties under this Agreement
shall automatically terminate; provided, however, that: (a) neither MEDMarket
nor the Selling Stockholders nor Netivation shall be relieved of any obligation
or liability arising from any prior Breach by such party of any provision of
this Agreement; (b) the parties shall, in all events, remain bound by and
continue to be subject to the provisions set forth in Section 9; and (c)
MEDMarket and Netivation shall, in all events, remain bound by and continue to
be subject to Section 5.4.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 30
<PAGE>
SECTION 9 - INDEMNIFICATION, ETC.
9.1 Survival of Representations, Warranties and Covenants.
(a) The representations, warranties and covenants of each party
pursuant to this Agreement shall survive the Closing and shall expire on the
first anniversary of the Closing Date; provided, however, (i) that fraud claims
and claims under Section 2.14 shall survive for the statute of limitations
applicable to claims based on such matters and (ii) that if, at any time prior
to the first anniversary of the Closing Date, any Netivation Indemnitee seeking
indemnification under this Section 9 (acting in good faith) delivers to the
Agent a written notice alleging the existence of a Breach of any of the
representations and warranties made by MEDMarket or any of the Selling
Stockholders or a Breach of any covenant contained herein (and setting forth in
reasonable detail the basis for such Netivation Indemnitee's belief that such a
Breach may exist) and asserting a claim for recovery under Section 9.2 based on
such alleged Breach, then the claim asserted in such notice shall survive the
first anniversary of the Closing Date until such time as such claim is fully and
finally resolved.
(b) The representations, warranties, covenants and obligations of
MEDMarket and the Selling Stockholders, and the rights and remedies that may be
exercised by the Netivation Indemnitees, shall not be limited or otherwise
affected by or as a result of any information furnished to, or any investigation
made by or knowledge of, any of the Netivation Indemnitees or their
Representatives.
(c) For purposes of this Agreement, each statement or other item
of information set forth in the Schedule of Exceptions or in any update to the
Schedule of Exceptions shall be deemed to be a representation and warranty made
in this Agreement.
9.2 Indemnification by the Selling Stockholders.
(a) Subject to the provisions of this Section 9, the Selling
Stockholders, jointly and severally, shall indemnify and hold harmless each of
the Netivation Indemnitees from and against the amount of any Damages incurred
by any of the Netivation Indemnitees directly or indirectly as a result of (i)
any Breach of a representation or warranty of MEDMarket or any of the Selling
Stockholders contained in Section 2 hereof or in any instrument delivered
pursuant to this Agreement (each as modified by the Schedule of Exceptions
delivered by MEDMarket and the Selling Stockholders on the date of this
Agreement and not as modified by any revisions to such Schedule of Exceptions
after such date), (ii) any
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 31
<PAGE>
Breach of any covenant or obligation contained herein, (iii) any final
determination of MEDMarket's net tax liability for the fiscal year immediately
prior to the Closing or (iv) any Breach of any representation or warranty made
in the Selling Stockholders' Closing Certificate.
(b) The Selling Stockholders acknowledge and agree that, if there
is any Breach of any representation or warranty or other provision relating to
MEDMarket or MEDMarket's business, condition, assets, Liabilities, operations,
financial performance or net income (or any aspect or portion thereof), then
Netivation itself shall be deemed, by virtue of its ownership of the capital
stock of MEDMarket, to have incurred Damages as result of such Breach or
Liability.
9.3 Contribution. Each Selling Stockholder waives and acknowledges
and agrees that such Selling Stockholder shall not have and shall not exercise
or assert (or attempt to exercise or assert), any right of contribution, right
of indemnity or other similar right or remedy against the Surviving Corporation
in connection with any indemnification obligation or any other Liability to
which such Selling Stockholder may become subject under the Transactional
Agreements or otherwise in connection with any of the Transactions.
9.4 Ceiling; Limitation on Additional Damages. Claims for Damages
made by the Netivation Indemnitees pursuant to the provisions of Sections 9.2(a)
or 9.6 shall be limited to an amount equal to the closing price (as reported by
the NASDAQ consolidated reporting system) of the Netivation Stock on the Closing
Date, multiplied by 100,000. The provisions of this Section 9.4 shall not apply
to claims for willful misconduct, fraud, bad faith or recklessness on the part
of MEDMarket or any Selling Stockholder; provided that each Selling Stockholder
shall be liable only up to the pro rata portion of such amount pertaining to
that Selling Stockholder.
9.5 Interest. Any party that is required to indemnify any Netivation
Indemnitee pursuant to this Section 9 with respect to any Damages shall also be
required to pay such Netivation Indemnitee interest on the amount of such
Damages (for the period commencing as of the date on which such Netivation
Indemnitee first incurred or otherwise became subject to such Damages and ending
on the date on which the applicable indemnification payment is made by such
party) at a floating rate equal to three (3) percentage points above the rate of
interest publicly announced by Bank of America, N.T. & S.A. from time to time as
its prime, base or reference rate. (For purposes of this Section 9.5, a
Netivation Indemnitee that suffers Damages by virtue of being required to pay
any judgment or to make any settlement payment to any third party with respect
to any third party claim against such Netivation Indemnitee shall be deemed to
have first
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 32
<PAGE>
become subject to such Damages at the time such Netivation Indemnitee pays such
judgment or makes such settlement payment.)
9.6 Defense of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Proceeding (whether against
MEDMarket, against any other Netivation Indemnitee or any other Person) with
respect to which any of the Selling Stockholders may become obligated to
indemnify, hold harmless, compensate or reimburse any Netivation Indemnitee
pursuant to this Section 9, Netivation shall have the right, at its election, to
proceed with the defense of such claim or Proceeding on its own. If Netivation
so proceeds with the defense of any such claim or Proceeding:
(a) all expenses relating to the defense of such claim or
Proceeding (whether or not incurred by Netivation) shall be borne and paid
exclusively by the Selling Stockholders;
(b) the Selling Stockholders shall make available to Netivation
any documents and materials in the possession or control of any of the Selling
Stockholders that may be necessary to the defense of such claim or Proceeding;
and
(c) Netivation shall keep the Agent informed of all material
developments and events relating to such claim or Proceeding.
9.7 Setoff. In addition to any rights of setoff or other rights that
any of the Netivation Indemnitees may have at common law or otherwise,
Netivation shall have the right to set off any amount that may be owed to any
Netivation Indemnitee under this Section 9 against any amount otherwise payable
by any Indemnitee to the Agent or any of the Selling Stockholders.
9.8 Indemnity Reserve. In order to secure Netivation's and each
Netivation Indemnitee's rights of indemnity, the Selling Stockholders shall
place 25,000 shares of Netivation Stock in escrow in accordance with the terms
of the Escrow Agreement, substantially in the form attached hereto as Exhibit G.
9.9 Exercise of Remedies by Netivation Indemnitees Other Than
Netivation. No Netivation Indemnitee (other than Netivation or any successor
thereto or assignee thereof) shall be permitted to assert any indemnification
claim or exercise any other remedy under this Agreement unless Netivation (or
any successor thereto or assignee thereof) shall have consented to the assertion
of such indemnification claim or the exercise of such other remedy.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 33
<PAGE>
SECTION 10 - MISCELLANEOUS PROVISIONS
10.1 Selling Stockholders' Agent.
(a) The Selling Stockholders hereby irrevocably nominate,
constitute and appoint Andrew D. Craig as the agent and true and lawful
attorney-in-fact of the Selling Stockholders (the "Agent"), with full power of
substitution, to act in the name, place and stead of the Selling Stockholders
for purposes of executing any documents and taking any actions that the Agent
may, in his sole discretion, determine to be necessary, desirable or appropriate
in connection with any of the Transactional Agreements or any of the
Transactions on behalf of the Selling Stockholders. Andrew D. Craig hereby
accepts his appointment as Agent.
(b) The Selling Stockholders hereby grant to the Agent full
authority to execute, deliver, acknowledge, certify and file on behalf of the
Selling Stockholders (in the name of any or all of the Selling Stockholders or
otherwise) any and all documents that the Agent may, in his sole discretion,
determine to be necessary, desirable or appropriate, in such forms and
containing such provisions as the Agent may, in his sole discretion, determine
to be appropriate (including the Selling Stockholders' Closing Certificate and
any amendment to or waiver of rights under any of the Transactional Agreements).
Notwithstanding anything to the contrary contained in the Transactional
Agreements:
(i) Netivation shall be entitled to deal exclusively with
the Agent, acting on behalf of the Selling Stockholders, on all matters relating
to the Transactional Agreements and the respective Transactions (including all
matters relating to any notice to, or any consent to be given or action to be
taken by, any Selling Stockholder, including any matters set forth in Section
9); and
(ii) each Netivation Indemnitee shall be entitled to rely
conclusively (without further evidence of any kind whatsoever) on any document
executed or purported to be executed on behalf of any Selling Stockholder by the
Agent, and on any other action taken or purported to be taken on behalf of any
Selling Stockholder by the Agent, as fully binding upon such Selling
Stockholder.
(c) The Selling Stockholders recognize and intend that the power
of attorney granted herein (i) is coupled with an interest and is irrevocable,
(ii) may be delegated by the Agent and (iii) shall survive the death or
incapacity of each of the Selling Stockholders.
(d) The Agent shall be entitled to treat as genuine, and as the
document it purports to be, any letter, facsimile, telex or other document that
is believed by him to be genuine and to have been telexed, telegraphed, faxed or
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 34
<PAGE>
cabled by any Selling Stockholder or to have been signed and presented by an
Selling Stockholder.
(e) If the Agent shall die, become disabled or otherwise be
unable to fulfill his responsibilities hereunder, then the Selling Stockholders
shall, within ten (10) days after such death or disability, appoint a successor
agent and, immediately thereafter, shall notify Netivation of the identity of
such successor. Any such successor shall succeed the Agent as Agent hereunder.
If for any reason there is no Agent at any time, all references herein to the
Agent shall be deemed to refer to the Selling Stockholders.
(f) All expenses incurred by the Agent in connection with the
performance of his duties as Agent shall be borne and paid by the Selling
Stockholders.
10.2 Further Assurances. Each party hereto shall execute and cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the Transactions.
10.3 Fees and Expenses. Subject to Section 9, each party to this
Agreement shall bear and pay all fees, costs and expenses (including legal fees
and accounting fees) that have been incurred or that are incurred in the future
by such party in connection with the Transactions, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) the
investigation and review conducted by Netivation and its Representatives with
respect to MEDMarket's business (and the furnishing of information to Netivation
and its Representatives in connection with such investigation and review), (ii)
the negotiation, preparation and review of this Agreement (including the
Schedule of Exceptions) and all agreements, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
Transactions, (iii) the preparation and submission of any filing or notice
required to be made or given in connection with any of the Transactions and the
obtaining of any consent required to be obtained in connection with any of such
Transactions and (iv) the consummation of the Merger.
10.4 Attorneys' Fees. If any action or Proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 35
<PAGE>
10.5 Notices. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or overnight delivery service or by facsimile) to
the address or facsimile telephone number set forth beneath the name of such
party below (or to such other address or facsimile telephone number as such
party shall have specified in a written notice given to the other parties
hereto):
if to Netivation: Netivation.com, Inc.
806 Clearwater Loop, Suite M
Post Falls, ID 83854
Attention: Anthony J. Paquin, President and
Chief Executive Officer
Facsimile: (208) 777-8904
with a copy to: Moffatt Thomas Barrett Rock & Fields, Chtd.
101 S. Capitol Blvd., 10/th/ Floor
Boise, ID 83702
Attention: Mark A. Ellison
Facsimile: (208) 385-5384
if to the Agent Andrew D. Craig, Esq.
or any of the 1570 East 2/nd/ Ave.
Selling Stockholders: Durango, CO 81301
Facsimile:(970) 385-4012
with a copy to: Thomas A. Slater
439 S. Main St.
Bourbonnais, IL 60914
Facsimile: (815) 936-9419
Any of the above addresses may be changed at any time by notice given
as provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, telecopied or by overnight courier, and three (3) business
days after the date of mailing, if mailed by certified mail, return receipt
requested.
10.6 Headings. The boldface headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 36
<PAGE>
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
10.8 Governing Law. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of Idaho
(without giving effect to principles of conflicts of laws).
10.9 Successors and Assigns. This Agreement shall be binding upon:
MEDMarket and its successors and assigns (if any); the Selling Stockholders and
their respective personal representatives, executors, administrators, estates,
heirs, successors and assigns (if any); Netivation and its successors and
assigns (if any); and Merger Sub and its successors and assigns (if any). This
Agreement shall inure to the benefit of: MEDMarket; the Selling Stockholders;
Netivation; Merger Sub; the Netivation Indemnitees; and the respective
successors and assigns (if any) of the foregoing. Each party may freely assign
any or all of its rights (but not its obligations) under this Agreement
(including its indemnification rights under Section 9), in whole or in part, to
any other Person without obtaining the consent or approval of any other party
hereto or of any other Person.
10.10 Remedies Cumulative; Specific Performance. The rights and
remedies of the parties hereto shall be cumulative (and not alternative). The
parties to this Agreement agree that, in the event of any Breach or threatened
Breach by any party to this Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other party to this
Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (i) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (ii) an injunction restraining such Breach or threatened
Breach.
10.11 Waiver.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 37
<PAGE>
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10.12 Amendments. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of all of the parties hereto.
10.13 Time of the Essence. Time is of the essence of this Agreement.
10.14 Severability. In the event that any provision of this
Agreement, or the application of any such provision to any Person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as to
which it is determined to be invalid, unlawful, void or unenforceable, shall not
be impaired or otherwise affected and shall continue to be valid and enforceable
to the fullest extent permitted by law.
10.15 Parties in Interest. Except for the provisions of Section 9,
none of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties hereto and their respective
successors and assigns (if any).
10.16 Entire Agreement. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter hereof and thereof.
10.17 Construction.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 38
<PAGE>
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
The parties hereto have caused this Agreement to be executed and delivered
as of the date first set forth above.
NETIVATION:
NETIVATION.COM, INC.,
By___________________________________
Anthony J. Paquin
President and Chief Executive Officer
MERGER SUB:
NETIVATION.COM MERGER TWO CORP.,
a Delaware corporation
By___________________________________
Anthony J. Paquin
President and Chief Executive Officer
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 39
<PAGE>
MEDMarket:
MEDMarket, INC.,
a Colorado corporation
By___________________________________
Thomas A. Slater
President
SELLING STOCKHOLDERS:
Thomas A. Slater
Paul J. Barloon
Tim Corbett
____________________________________
C. Donald Kafader
____________________________________
Scott Oblander
AGENT:
Andrew D. Craig
SECRETARY'S CERTIFICATE
I, Gary S. Paquin, Secretary of Netivation.com Merger Two Inc., hereby
certify that this Agreement has been adopted pursuant to the first sentence of
Title 8, Section 251(f) of the Delaware Corporations Laws, and that the
conditions specified in that sentence have been satisfied.
Gary S. Paquin, Secretary
<PAGE>
AGREEMENT AND PLAN OF MERGER
among:
NETIVATION.COM, INC.
a Delaware corporation;
NETIVATION.COM MERGER SIX CORP.,
a Delaware corporation;
POLITICALLYBLACK.COM, INC.
a Maryland corporation;
and
the Selling Stockholders of Politicallyblack.com, Inc.
listed on Exhibit A hereto
Dated as of October___, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
SECTION 1 - DESCRIPTION OF TRANSACTION................................................ 1
1.1 Merger of Politicallyblack into Merger Sub.................................... 1
1.2 Effect of the Merger.......................................................... 1
1.3 Closing; Effective Time....................................................... 1
1.4 Certificate of Incorporation, Bylaws and Directors and Officers............... 2
1.5 Conversion of Politicallyblack Stock.......................................... 2
1. 7 Closing of Politicallyblack's Transfer Books................................. 3
1. 8 Exchange of Certificates...................................................... 3
1. 9 Dissenting Shares............................................................. 4
1.10 Tax Consequences.............................................................. 5
1.11 Accounting Treatment.......................................................... 5
1.12 Further Action................................................................ 5
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF POLITICALLYBLACK AND THE SELLING
STOCKHOLDERS.......................................................................... 5
2.1 Organization Good Standing and Qualification.................................. 5
2.2 Subsidiaries.................................................................. 6
2.3 Capitalization; Voting Rights................................................. 6
2.4 Authorization; Binding Obligations............................................ 6
2.5 Financial Statements.......................................................... 6
2.6 Liabilities................................................................... 6
2.7 Agreements; Action............................................................ 7
2.8 Obligations to Related Parties................................................ 7
2.9 Absence of Changes............................................................ 7
2.10 Title to Properties and Assets; Liens, Etc.................................... 9
2.11 Patents and Trademarks........................................................ 9
2.12 Compliance with Other Instruments............................................. 10
2.13 Litigation.................................................................... 10
2.14 Tax Returns and Payments...................................................... 10
2.15 Employees..................................................................... 11
2.16 Registration Rights........................................................... 12
2.17 Compliance with Legal Requirements; Consents.................................. 12
2.18 Selling Stockholders.......................................................... 13
2.19 Full Disclosure............................................................... 13
2.20 Year 2000 Compliance.......................................................... 13
2.21 Securities Laws Matters....................................................... 13
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF NETIVATION.............................. 14
3.1 Organization, Good standing and Qualification................................. 14
3.2 Subsidiaries.................................................................. 15
3.3 Capitalization; voting Rights................................................. 15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
3.4 Authorization; Binding Obligations...................................................... 15
3.5 Full Disclosure......................................................................... 16
SECTION 4 - CERTAIN COVENANTS OF Politicallyblack AND THE SELLING STOCKHOLDERS.................. 16
4.1 Access and Investigation................................................................ 16
4.2 Operation of Business................................................................... 17
4.3 Notification; Updates to Schedule of Exceptions......................................... 19
4.4 No Negotiation.......................................................................... 20
SECTION 5 - ADDITIONAL COVENANTS OF THE PARTIES................................................. 20
5.1 Filings and Consents.................................................................... 20
5.2 Politicallyblack Stockholders' Meeting.................................................. 20
5.3 Public Announcements.................................................................... 20
5.4 Best Efforts............................................................................ 21
5.5 Tax Matters............................................................................. 21
SECTION 6 - CONDITIONS PRECEDENT TO OBLIGATIONS OF NETIVATION AND MERGER SUB................... 21
6.1 Accuracy of Representations............................................................. 21
6.2 Performance of Covenants................................................................ 21
6.3 Stockholder Approval.................................................................... 21
6.4 Consents................................................................................ 22
6.5 No Material Adverse Change.............................................................. 22
6.6 Agreements and Documents................................................................ 22
6.7 Lock-Up Agreements...................................................................... 23
6.8 No Restraints........................................................................... 23
6.9 No Proceedings.......................................................................... 23
6.10 Securities Law Compliance............................................................... 23
6.11 Dissenters Rights....................................................................... 23
6.12 Unaccredited Investors.................................................................. 23
6.13 Proceedings and Documents............................................................... 23
6.14 Corporate Approvals..................................................................... 23
SECTION 7 - CONDITIONS PRECEDENT TO OBLIGATIONS OF POLITICALLYBLACK AND THE
SELLING STOCKHOLDERS............................................................................ 23
7.1 Accuracy of Representations............................................................. 24
7.2 Performance of Covenants................................................................ 24
7.3 Consents................................................................................ 24
7.4 Agreements and Documents................................................................ 24
7.5 No Restraints........................................................................... 24
7.6 No Proceedings.......................................................................... 25
7.7 Corporate Approvals..................................................................... 25
SECTION 8 - TERMINATION......................................................................... 25
8.1 Termination Events...................................................................... 25
8.2 Termination Procedures.................................................................. 26
8.3 Effect of Termination................................................................... 26
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 9 - INDEMNIFICATION, ETC................................................ 26
9.1 Survival of Representations, Warranties and Covenants..................... 26
9.2 Indemnification by the Selling Stockholders............................... 27
9.3 Contribution.............................................................. 27
9.4 Ceiling; Limitation on Additional Damages................................. 27
9.5 Interest.................................................................. 28
9.6 Defense of Third Party Claims............................................. 28
9.7 Setoff.................................................................... 28
9.8 Indemnity Reserve......................................................... 28
9.9 Exercise of Remedies by Netivation Indemnitees Other Than Netivation...... 29
SECTION 10 - MISCELLANEOUS PROVISIONS........................................... 29
10.1 Further Assurances........................................................ 29
10.2 Fees and Expenses......................................................... 29
10.3 Attorneys' Fees........................................................... 29
10.4 Notices................................................................... 29
10.5 Headings.................................................................. 30
10.6 Counterparts.............................................................. 30
10.7 Governing Law............................................................. 30
10.8 Successors and Assigns.................................................... 31
10.9 Remedies Cumulative; Specific Performance................................. 31
10.10 Waiver.................................................................... 31
10.11 Amendments................................................................ 31
10.12 Time of the Essence....................................................... 31
10.13 Severability.............................................................. 31
10.14 Parties in Interest....................................................... 32
10.15 Entire Agreement.......................................................... 32
10.16 Construction.............................................................. 32
</TABLE>
EXHIBITS
Exhibit A - Selling Stockholders
Exhibit B - Certain Definitions
Exhibit C - Director and Officer of Surviving Corporation
Exhibit D - Allocation of Merger Consideration
Exhibit E - Form of Legal Opinion
Exhibit F - Form of Employment and Noncompetition Agreement
Exhibit G - Form of Escrow Agreement
Exhibit H - Form of Prospective Offeree Questionnaire
iii
<PAGE>
2.3 Voting Rights
2.6 Liabilities
2.7 Agreements
2.9 Changes to Politicallyblack.com, Inc.
2.10 Assets
2.15 Employees
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered
into as of October ____, 1999, by and among: NETIVATION.COM, INC., a Delaware
corporation ("Netivation"), NETIVATION.COM MERGER SIX CORP., a Delaware
corporation and a wholly-owned subsidiary of Netivation ("Merger Sub"),
POLITICALLYBLACK.COM, INC., a Maryland corporation ("Politicallyblack"), and the
stockholders of Politicallyblack set forth on Exhibit A hereto (the "Selling
Stockholders"). Certain capitalized terms used in this Agreement are defined in
Exhibit B.
RECITALS
A. The parties intend to effect a merger of Politicallyblack into
Merger Sub in accordance with this Agreement and the Delaware General
Corporation Law ("Delaware Law") and the Maryland General Corporation Law
("Maryland Law") (the "Merger"). Upon consummation of the Merger,
Politicallyblack will cease to exist, and Merger Sub will remain a wholly-owned
subsidiary of Netivation.
B. The Selling Stockholders own an aggregate of 5000 shares of
capital stock of Politicallyblack (the "Politicallyblack Stock"), constituting
100% of the Politicallyblack capital stock on a fully-diluted basis.
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1 - DESCRIPTION OF TRANSACTION
1.1 Merger of Politicallyblack into Merger Sub. Upon the terms and
subject to the conditions set forth in this Agreement, at the Effective Time (as
defined in Section 1.3), Politicallyblack shall be merged with and into Merger
Sub, and the separate existence of Politicallyblack shall cease. Merger Sub
will continue as the surviving corporation in the Merger (the "Surviving
Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set
forth in this Agreement and in the applicable provisions of Delaware Law and
Maryland Law.
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Moffatt, Thomas, Barrett, Rock & Fields, Chartered, 101 S. Capitol Boulevard,
10th Floor, Boise, Idaho 83702 on or before October 28, 1999, or at such other
time as the parties may agree (the "Scheduled Closing Time"). (The date on
which the Closing actually takes place is referred to in
AGREEMENT AND PLAN OF MERGER - 1
<PAGE>
this Agreement as the "Closing Date.") Contemporaneously with or as promptly as
practicable after the Closing, a properly executed certificate of merger (the
"Certificate of Merger"), conforming to the requirements of Delaware Law and
Maryland Law, shall be filed with the Secretaries of State of the State of
Delaware and the State of Maryland. The Merger shall become effective at the
time such Certificate of Merger is filed with and accepted by the Secretaries of
State of the State of Delaware and the State of Maryland (the "Effective Time").
1.4 Certificate of Incorporation, Bylaws and Directors and Officers.
(a) The certificate of incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended as provided
by law; provided, however, that Article I of the Certificate of Incorporation
shall be amended to read as follows: The name of this corporation is
"Politicallyblack.com, Inc."
(b) The bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter amended.
(c) The directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals identified on
Exhibit C.
1.5 Conversion of Politicallyblack Stock.
(a) Subject to Sections 1.7(c) and 1.8, at the Effective Time, by
virtue of the Merger and without any further action on the part of Netivation,
Merger Sub, Politicallyblack or any stockholder of Politicallyblack: (i) each
share of Common Stock of Politicallyblack issued and outstanding immediately
prior to the Effective Time shall be converted into the right to receive six (6)
shares of Common Stock of Netivation (the "Netivation Stock"). All outstanding
shares of Politicallyblack capital stock shall be exchanged for no more than
Thirty Thousand (30,000) shares of Netivation Stock. Each share of common stock
of Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into one (1) share of common stock of the Surviving
Corporation. The Merger Consideration to be received by the Selling Stockholders
is set forth on Exhibit D. If, between the date of this Agreement and the
Closing Date, the shares of capital stock of Politicallyblack or the Netivation
Stock are changed into a different number or class of shares by reason of any
stock dividend, subdivision, reclassification, recapitalization, split-up,
combination or similar transaction, the Merger Consideration shall be
appropriately adjusted.
(b) If any shares of capital stock of Politicallyblack
outstanding immediately prior to the Effective Time are unvested or are subject
to a repurchase option, risk of forfeiture or other condition under any
applicable restricted stock purchase agreement or other agreement with
Politicallyblack, then the shares of Netivation Stock issued in exchange for
such shares of capital stock of Politicallyblack will also be unvested and
subject to the same
AGREEMENT AND PLAN OF MERGER - 2
<PAGE>
repurchase option, risk of forfeiture or other condition, and the certificates
representing such shares of Netivation Stock may be accordingly marked with
appropriate legends.
1.6 Additional Consideration. At Closing, Netivation shall pay
Twenty Seven Thousand Five Hundred Dollars ($27,500) cash to each of the Selling
Stockholders.
1.7 Closing of Politicallyblack's Transfer Books. At the Effective
Time, holders of certificates representing Politicallyblack capital stock that
were outstanding immediately prior to the Effective Time shall cease to have any
rights as stockholders of Politicallyblack, and the stock transfer books of
Politicallyblack shall be closed with respect to all shares of such capital
stock outstanding immediately prior to the Effective Time. No further transfer
of any such capital stock of Politicallyblack shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any of such capital stock of
Politicallyblack(a "Politicallyblack Stock Certificate") is presented to the
Surviving Corporation or Netivation, such Politicallyblack Stock Certificate
shall be canceled and shall be exchanged as provided in Section 1.8.
1.8 Exchange of Certificates.
(a) At or as soon as practicable after the Effective Time,
Netivation will send to each holder of a Politicallyblack Stock Certificate a
letter of transmittal and instructions for use in customary form and containing
such provisions as may reasonably be required for use in effecting the surrender
of such Politicallyblack Stock Certificate for payment therefor and conversion
thereof. Upon surrender of a Politicallyblack Stock Certificate to Netivation
for exchange, together with a duly executed letter of transmittal and such other
documents as may be reasonably required by Netivation, the holder of such
Politicallyblack Stock Certificate shall be entitled to receive in exchange
therefor certificates representing the number of whole shares of Netivation
Stock that such holder has the right to receive pursuant to the provisions of
this Section 1 and the Politicallyblack Stock Certificate so surrendered shall
be canceled. Until surrendered as contemplated by this Section 1.8, each
Politicallyblack Stock Certificate shall be deemed, from and after the Effective
Time, to represent only the right to receive upon such surrender a certificate
representing shares of Netivation Stock (and cash in lieu of any fractional
share of Netivation Stock) as contemplated by this Section 1. If any
Politicallyblack Stock Certificate shall have been lost, stolen or destroyed,
Netivation may, in its discretion and as a condition precedent to the issuance
of any certificates representing Netivation Stock, require the owner of such
lost, stolen or destroyed Politicallyblack Stock Certificate to provide an
appropriate affidavit and to deliver a bond (in such sum as Netivation may
reasonably direct) as indemnity.
(b) No dividends or other distributions declared or made with
respect to Netivation Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Politicallyblack Stock Certificate with
respect to the shares of Netivation Stock represented thereby, and no cash
payment in lieu of any fractional share shall be paid to any such
AGREEMENT AND PLAN OF MERGER - 3
<PAGE>
holder, until such holder surrenders such Politicallyblack Stock Certificate in
accordance with this Section 1.8 (at which time such holder shall be entitled to
receive all such dividends and distributions and such cash payment).
(c) No fractional shares of Netivation Stock shall be issued in
connection with the Merger. In lieu of such fractional shares, any holder of
capital stock of Politicallyblack who would otherwise be entitled to receive a
fraction of a share of Netivation Stock shall, upon surrender of such holder's
Politicallyblack Stock Certificate(s), be paid in cash the dollar amount
(rounded to the nearest whole cent), without interest, determined by multiplying
such fraction by the closing price of one share of Netivation Stock as reported
by the NASDAQ consolidated reporting system on the Closing Date.
(d) Each certificate representing any of the shares of Netivation
Stock to be issued in the Merger shall bear a legend identical or similar in
effect to the following legend (together with any other legend or legends
required by applicable state securities laws or otherwise):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
UNLESS REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE."
(e) Netivation and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable to
any holder or former holder of capital stock of Politicallyblack pursuant to
this Agreement such amounts as Netivation or the Surviving Corporation may be
required to deduct or withhold therefrom under the Code or under any provision
of state, local or foreign tax law. To the extent such amounts are so deducted
or withheld, such amounts shall be treated for all purposes under this Agreement
as having been paid to the Person to whom such amounts would otherwise have been
paid.
1.9 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, shares of capital stock of Politicallyblack that are issued and
outstanding immediately prior to the Effective Time and that are held by
stockholders who have not voted such shares in favor of the Merger and who have
delivered a written demand for appraisal of such shares in the manner provided
under Maryland Law ("Dissenting Shares") shall not be canceled and converted in
accordance with Section 1.5 unless and until such holder shall have failed to
perfect, or shall have effectively withdrawn or lost, such holder's right to
appraisal and payment under Maryland Law. If such holder shall have so failed
to perfect, or shall have effectively withdrawn or lost such right, such
holder's capital stock of Politicallyblack shall thereupon be deemed to have
been canceled and converted as described in Section 1.5 at the Effective Time,
and each such share shall represent solely the right to receive the merger
consideration described in Section 1.5.
AGREEMENT AND PLAN OF MERGER - 4
<PAGE>
Politicallyblack shall give prompt notice of any demands received by
Politicallyblack for appraisal of its shares, and, prior to the Effective Time,
Netivation shall have the right to participate in all negotiations and
proceedings with respect to such demands. Prior to the Effective Time,
Politicallyblack shall not, except with the prior written consent of Netivation,
make any payment with respect to, or settle or offer to settle, any such
demands. From and after the Effective Time, no stockholder of Politicallyblack
who has demanded appraisal rights as provided under Maryland Law shall be
entitled to vote such holder's shares of Netivation Stock or capital stock of
Politicallyblack for any purpose or to receive payment of dividends or other
distributions with respect to such holder's shares (except dividends and other
distributions payable to stockholders of record of Politicallyblack at a date
which is prior to the Effective Time).
1.10 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.11 Accounting Treatment. For accounting purposes, the Merger is
intended to be treated as a "purchase."
1.12 Further Action. If, at any time after the Effective Time, any
further action is determined by Netivation to be necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation or
Netivation with full right, title and possession of and to all rights and
property of Politicallyblack, the officers and directors of the Surviving
Corporation and Netivation shall be fully authorized (in the name of
Politicallyblack and otherwise) to take such action.
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF POLITICALLYBLACK AND THE SELLING
STOCKHOLDERS
Politicallyblack and each of the Selling Stockholders jointly and
severally represent and warrant, to and for the benefit of the Netivation
Indemnitees, as follows:
2.1 Organization, Good Standing and Qualification. Politicallyblack
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland. Politicallyblack has all requisite corporate
power and authority to own and operate its properties and assets, to execute and
deliver the Transactional Agreements, to carry out the provisions of the
Transactional Agreements and to carry on its business as presently conducted and
as presently proposed to be conducted. Politicallyblack is duly qualified and
authorized to do business and is in good standing as foreign entities in all
jurisdictions in which the nature of its activities and of its properties (both
owned and leased) make such qualifications necessary, except for those
jurisdictions in which failure to do so would not have a Material Adverse Effect
on Politicallyblack or its respective businesses. Politicallyblack has made
available to Netivation
AGREEMENT AND PLAN OF MERGER - 5
<PAGE>
true, correct and complete copies of Politicallyblack's articles of
incorporation and bylaws, each as amended to date.
2.2 Subsidiaries. Politicallyblack owns no equity securities of any
other corporation, limited partnership or similar entity. Politicallyblack is
not a participant in any joint venture, partnership or similar arrangement.
2.3 Capitalization; Voting Rights. The authorized capital stock of
Politicallyblack consists of 5000 shares of Common Stock, of which 5000 shares
are issued and outstanding. Exhibit A sets forth the names of the stockholders
of Politicallyblack and the number of shares of capital stock owned of record by
each such stockholder. The Selling Stockholders together own all of the
outstanding shares of capital stock of Politicallyblack. All issued and
outstanding shares of Politicallyblack's Common Stock (i) have been duly
authorized and validly issued, (ii) are fully paid and nonassessable and (iii)
were issued in compliance with all applicable state and federal laws concerning
the issuance of securities. Except as set forth in Schedule 2.3, there are no
outstanding options, warrants, rights (including conversion or preemptive rights
and rights of first refusal), proxy or stockholder agreements, or agreements of
any kind for the purchase or acquisition from Politicallyblack of any of its
securities.
2.4 Authorization; Binding Obligations. Politicallyblack has the
absolute and unrestricted right, power and authority to enter into and to
perform its obligations under the Transactional Agreements to which
Politicallyblack is or may become a party. This Agreement constitutes the
legal, valid and binding obligation of Politicallyblack, enforceable against
Politicallyblack in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies. Upon the execution of each of the other Transactional
Agreements at the Closing, each of such other Transactional Agreements will
constitute the legal, valid and binding obligation of Politicallyblack,
enforceable against Politicallyblack in accordance with its terms, subject to
(i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
2.5 Financial Statements. Politicallyblack has delivered to
Netivation its unaudited balance sheet as of September 30, 1999 (the "Statement
Date") (the "Politicallyblack Financial Statements"). The Politicallyblack
Financial Statements are complete and correct in all material respects, and
present fairly the financial condition and position of Politicallyblack for the
periods covered thereby.
2.6 Liabilities. Except as set forth in Schedule 2.6,
Politicallyblack has no material liabilities and, to the Knowledge of
Politicallyblack, has no material contingent liabilities not otherwise disclosed
in the Politicallyblack Financial Statements, except current liabilities
incurred in the Ordinary Course of Business subsequent to the Statement Date
which have not been, either in any individual case or in the aggregate,
materially adverse. All
AGREEMENT AND PLAN OF MERGER - 6
<PAGE>
obligations of Politicallyblack to affiliates, officers, members, directors and
stockholders of Politicallyblack are disclosed on the Politicallyblack Financial
Statements.
2.7 Agreements; Action.
(a) Except as set forth in Schedule 2.7, there are no agreements,
understandings, instruments, contracts, proposed transactions, judgments,
orders, writs or decrees to which Politicallyblack is a party or is bound which
may involve (i) obligations (contingent or otherwise) of, or payments to,
Politicallyblack in excess of $10,000, or (ii) the license of any patent,
copyright, trade secret or other proprietary right to or from
Politicallyblack(other than licenses arising from the purchase of "off the
shelf" or other standard products), or (iii) provisions restricting or affecting
the development, manufacture or distribution of Politicallyblack's products or
services or (iv) indemnification by Politicallyblack with respect to
infringements of proprietary rights.
(b) Politicallyblack has not (i) incurred any indebtedness for
money borrowed or any other liabilities (other than with respect to dividend
obligations, distributions, indebtedness and other obligations incurred in the
Ordinary Course of Business or as disclosed in the Politicallyblack Financial
Statements) individually in excess of $10,000 or, in excess of $15,000 in the
aggregate, (ii) made any loans or advances to any person, other than ordinary
advances for travel expenses or (iii) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
Ordinary Course of Business.
(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities Politicallyblack has reason to believe are affiliated therewith)
shall be aggregated for the purpose of meeting the individual minimum dollar
amounts of such subsections.
2.8 Obligations to Related Parties. Except as set forth in Schedule
2.8, there are no obligations of Politicallyblack to officers, directors,
stockholders, members or employees of either other than (a) for payment of
salary for services rendered, (b) reimbursement for reasonable expenses incurred
on behalf of Politicallyblack and (c) for other standard employee benefits made
generally available to all employees. Except as set forth in Schedule 2.8, no
such officer, director or stockholder, or any member of their immediate families
is, directly or indirectly, interested in any material contract with
Politicallyblack (other than such contracts as relate to any such person's
ownership of capital stock or other securities of Politicallyblack).
Politicallyblack is not a guarantor or indemnitor of any indebtedness of any
other person, firm or corporation.
2.9 Absence of Changes. Except as set forth in Schedule 2.9, since
the Statement Date, there has not been:
AGREEMENT AND PLAN OF MERGER - 7
<PAGE>
(a) Any change in the assets, liabilities, financial condition or
operations of Politicallyblack from that reflected in the Politicallyblack
Financial Statements, other than changes in the Ordinary Course of Business,
none of which individually or in the aggregate has had or is expected to have a
Material Adverse Effect on such assets, liabilities, financial condition or
operations of Politicallyblack;
(b) Any resignation or termination of any key officers of
Politicallyblack; and Politicallyblack, to its Knowledge, does not know of the
impending resignation or termination of employment of any such officer;
(c) Any material change, except in the Ordinary Course of
Business, in the contingent obligations of Politicallyblack by way of guaranty,
endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of Politicallyblack;
(e) Any waiver by Politicallyblack of a valuable right or of a
material debt owed to it;
(f) Any direct or indirect loans made by Politicallyblack to any
stockholder, employee, officer or director of Politicallyblack, other than
advances made in the Ordinary Course of Business;
(g) Any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(h) Any declaration or payment of any dividend or other
distribution of the assets of Politicallyblack;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or
guaranteed by Politicallyblack, except those for immaterial amounts and for
current liabilities incurred in the Ordinary Course of Business;
(k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(l) Any change in any material agreement to which
Politicallyblack is a party or by which it is bound which materially and
adversely affects the business, assets, liabilities, financial condition,
operations or prospects of Politicallyblack; or
AGREEMENT AND PLAN OF MERGER - 8
<PAGE>
(m) Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition, operations or prospects of
Politicallyblack. For purposes of this subsection (m), a material and adverse
effect shall only be deemed to occur if its monetary impact exceeds, or with the
passage of time, will exceed $10,000.
2.10 Title to Properties and Assets; Liens, Etc. Schedule 2.10 is a
complete and accurate list of all material assets (whether leased or owned),
including intellectual property, of Politicallyblack. Politicallyblack has good
and marketable title to all of its properties and assets, including those listed
on Schedule 2.10, and good title to its leasehold estates, in each case subject
to no mortgage, pledge, lien, lease, encumbrance or charge, other than (i) those
resulting from taxes which have not yet become due and payable, (ii) minor liens
and encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of Politicallyblack and
(iii) those that have arisen from purchase money security interests in an amount
not to exceed $10,000. None of the Selling Shareholders has any right in or
claim to any of the intellectual property utilized by Politicallyblack. All
facilities, machinery, equipment, fixtures, vehicles and other properties owned,
leased or used by Politicallyblack are in good operating condition and repair
and are reasonably fit and usable for the purposes for which they are being
used. Except as set forth in Schedule 2.10, Politicallyblack is in compliance
with all material terms of each lease to which it is a party or is otherwise
bound.
2.11 Patents and Trademarks. Politicallyblack owns or possesses
sufficient legal rights to all trademarks, service marks, trade names,
copyrights, trade secrets and licenses, and, to the Knowledge of
Politicallyblack, to all patents, information and other proprietary rights and
processes necessary for its business as now conducted and as proposed to be
conducted, without any known infringement of the rights of others. There are no
outstanding options, licenses or agreements of any kind relating to the
foregoing, nor, except as disclosed in Schedule 2.11, is Politicallyblack bound
by or a party to any options, licenses or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes of any other
person or entity other than such licenses or agreements arising from the
purchase of "off the shelf" or standard products. Politicallyblack has not
received any communications alleging that either has violated or, by conducting
its business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity. To Politicallyblack's Knowledge, none of
Politicallyblack's employees is obligated under any contract (including
licenses, covenants or commitments or any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that
would interfere with their duties to Politicallyblack's business by the
employees of Politicallyblack. The conduct of Politicallyblack's business as
proposed, will not, to the Knowledge of Politicallyblack, conflict with or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, any contract, covenant or instrument under which any employee is
now obligated. Politicallyblack does not believe it is or will be necessary to
utilize
AGREEMENT AND PLAN OF MERGER - 9
<PAGE>
any inventions, trade secrets or proprietary information of any of its employees
made prior to their employment by Politicallyblack, except for inventions, trade
secrets or proprietary information that have been assigned to Politicallyblack.
2.12 Compliance with Other Instruments. Politicallyblack is not in
violation or default of any term of their charter documents, or of any provision
of any mortgage, indenture, contract, agreement, instrument or contract to which
either is party or by which either is bound or of any judgment, decree, order,
writ or, to Politicallyblack's Knowledge, any statute, rule or regulation
applicable to Politicallyblack which would materially and adversely affect the
business, assets, liabilities, financial condition, operations or prospects of
Politicallyblack. The execution, delivery, and performance of and compliance
with the Transactional Agreements will not, with or without the passage of time
or giving of notice, result in any such material violation, or be in conflict
with or constitute a default under any such term, or result in the creation of
any mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of Politicallyblack or the suspension, revocation, impairment, forfeiture
or nonrenewal of any permit, license, authorization or approval applicable to
Politicallyblack, or the business or operations or any of its assets or
properties.
2.13 Litigation. There is no action, suit, proceeding or
investigation pending, or to the Knowledge of Politicallyblack, currently
threatened against Politicallyblack that questions the validity of this
Agreement or Transactional Agreements or the right of Politicallyblack to enter
into any of such agreements, or to consummate the transactions contemplated
hereby or thereby, or which might result, either individually or in the
aggregate, in any material adverse change in the assets, condition, affairs or
prospects of Politicallyblack, financially or otherwise, or any change in the
current equity ownership of Politicallyblack, nor is Politicallyblack aware that
there is any basis for the foregoing. The foregoing includes, without
limitation, actions pending or threatened (or any basis therefor known to
Politicallyblack) involving the prior employment of any of Politicallyblack's
employees, their use in connection with Politicallyblack's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers.
Politicallyblack is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by
Politicallyblack currently pending or which Politicallyblack intends to
initiate.
2.14 Tax Returns and Payments.
(a) Each tax required to have been paid, or claimed by any
Governmental Body to be payable, by Politicallyblack(whether pursuant to any tax
return or otherwise) has been duly paid in full and on a timely basis. Any tax
required to have been withheld or collected by Politicallyblack, including with
respect to employees, has been duly withheld and collected; and (to the extent
required) each such tax has been paid to the appropriate Governmental Body.
AGREEMENT AND PLAN OF MERGER - 10
<PAGE>
(b) All tax returns required to be filed by or on behalf of
Politicallyblack with any Governmental Body have been timely filed
(collectively, the "Politicallyblack Returns"). All taxes required to be paid by
Politicallyblack for the fiscal year 1998 have either been paid in full or shall
not result in any liability to Politicallyblack. All Politicallyblack Returns
(i) have been filed when due and (ii) have been accurately and completely
prepared in full compliance with all applicable legal requirements.
Politicallyblack has delivered to Netivation accurate and complete copies of the
1998 Politicallyblack Returns.
(c) There have been no examinations or audits of any
Politicallyblack Return, and, to the Knowledge of Politicallyblack, no such
examination or audit has been proposed or scheduled by any Governmental Body.
Politicallyblack has delivered to Netivation accurate and complete copies of all
audit reports and similar documents (to which Politicallyblack has access)
relating to the Politicallyblack Returns.
(d) No claim or proceeding is pending or, to the Knowledge of
Politicallyblack, has been threatened against Politicallyblack in respect of any
tax. There are no unsatisfied Liabilities for taxes (including Liabilities for
interest, additions to tax and penalties thereon and related expenses) with
respect to any notice of deficiency or similar document received by
Politicallyblack. There are no liens for taxes upon any of the assets of
Politicallyblack, except liens for current taxes not yet due and payable.
Politicallyblack has not entered into or become bound by any agreement or
consent pursuant to Section 341(f) of the Code.
(e) To the Knowledge of Politicallyblack, there is no agreement,
plan, arrangement or other contract covering any employee or independent
contractor or former employee or independent contractor of Politicallyblack
that, individually or collectively, could give rise, directly or indirectly, to
the payment of any amount that would not be deductible pursuant to Section 280G
or Section 162 of the Code. Politicallyblack is not, and has never been, a party
to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar contract.
2.15 Employees. Except as set forth in Schedule 2.15,
Politicallyblack is not a party to or bound by any currently effective
employment contract, deferred compensation arrangement, bonus plan, incentive
plan, profit sharing plan, retirement agreement or other employee compensation
plan or agreement. To the Knowledge of Politicallyblack, no employee of
Politicallyblack, nor any consultant with whom Politicallyblack has contracted,
is in violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, Politicallyblack because of the nature of
the business to be conducted by Politicallyblack; and to the Knowledge of
Politicallyblack the continued employment by Politicallyblack of its present
employees, and the performance of Politicallyblack's contracts with its
independent contractors, will not result in any such violation. Politicallyblack
has not received any notice alleging that
AGREEMENT AND PLAN OF MERGER - 11
<PAGE>
any such violation has occurred. No employee of Politicallyblack has been
granted the right to continued employment by Politicallyblack or to any material
compensation following termination of employment with Politicallyblack. To the
Knowledge of Politicallyblack, no officer or key employee, or any group of key
employees, intends to terminate their employment with Politicallyblack, nor does
Politicallyblack have a present intention to terminate the employment of any
officer, key employee or group of key employees.
2.16 Registration Rights. Politicallyblack is not presently under any
obligation, and has not granted any rights, to register any of either's
presently outstanding securities or any of its securities that may hereafter be
issued.
2.17 Compliance with Legal Requirements; Consents.
(a) Politicallyblack is, and has at all times since inception
been, in full compliance with each legal requirement that is or was applicable
to it or to the conduct of its business or the ownership or use of any of its
assets, except where the failure to comply with each such legal requirement has
not had and will not have a Material Adverse Effect on Politicallyblack.
(b) Neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with or result in a violation of (i)
any of the provisions of Politicallyblack's articles of incorporation or bylaws,
or(ii) any resolution adopted by Politicallyblack's stockholders or
Politicallyblack's board of directors;
(ii) contravene, conflict with or result in a violation of,
or give any Governmental Body or other Person the right to exercise any remedy
or obtain any relief under, any legal requirement or any order to which
Politicallyblack, or any of the assets owned or used by Politicallyblack, is
subject;
(iii) contravene, conflict with or result in a violation or
Breach of, or result in a default under, any provision of any contract to which
Politicallyblack is a party; or
(iv) give any Person the right to (A) declare a default or
exercise any remedy under any contract to which Politicallyblack is a party, (B)
accelerate the maturity or performance of any contract to which Politicallyblack
is a party or (C) cancel, terminate or modify any contract to which
Politicallyblack is a party.
Neither Politicallyblack nor any of the Selling Stockholders was, is
or will be required to make any filing with or give any notice to, or to obtain
any consent from, any Person
AGREEMENT AND PLAN OF MERGER - 12
<PAGE>
other than Selling Stockholders' spouses in connection with the execution and
delivery of any of the Transactional Agreements or the consummation or
performance of any of the Transactions.
2.18 Selling Stockholders. Each Selling Stockholder represents that
(i) he, she or it has the absolute and unrestricted right, power and authority
to enter into and to perform his, her or its obligations under each of the
Transactional Agreements to which such Selling Stockholder is or may become a
party, (b) this Agreement constitutes his, her or its legal, valid and binding
obligation, enforceable against such Selling Stockholder in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies and (c) upon the
execution of each of the other Transactional Agreements at the Closing, each of
such other Transactional Agreements will constitute the legal, valid and binding
obligation of such Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
2.19 Full Disclosure. This Agreement does not (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact or (ii) omit to state any material fact necessary in order
to make the representations, warranties and information of or with respect to
Politicallyblack and the Selling Stockholders contained and to be contained
herein (in light of the circumstances under which such representations,
warranties and information were or will be made or provided) not false or
misleading. Politicallyblack has provided Netivation and Netivation's
Representatives with full and complete access to all of Politicallyblack's
records and other documents and data.
2.20 Year 2000 Compliance. Politicallyblack has developed a detailed
plan to ensure that it, its affiliates, and all customers, suppliers and vendors
that are material to its business, become Year 2000 Compliant on or before
November 1, 1999. The plan (a) effectively prioritizes mission-critical
systems, (b) has the involvement of executive management, (c) includes
assessment of key customer, supplier, and vendor Year 2000 compliance, (d)
includes contingency planning to mitigate risk from Year 2000 business
interruptions affecting key vendors, suppliers, or customers, and (e) has been
allocated adequate resources within Politicallyblack's abilities.
2.21 Securities Laws Matters. Each Selling Stockholder understands
that the Netivation Stock has not been registered under the Securities Act and
that the Netivation Stock being issued in the Transaction is being issued
pursuant to an exemption from registration contained in the Securities Act,
based in part upon the Selling Stockholders' representations contained in this
Agreement. Each Selling Stockholder hereby severally and not jointly represents
and warrants as follows:
AGREEMENT AND PLAN OF MERGER - 13
<PAGE>
(a) Knowledge and Experience. Each Selling Stockholder is
knowledgeable and has substantial experience in evaluating and investing in
transactions in companies similar to Netivation so that he is capable of
evaluating the merits and risks of his investment in Netivation. Each Selling
Stockholder has by reason of his business or financial knowledge and experience,
the capacity to protect his own interests in connection with the Transaction.
Further, each Selling Stockholder is aware of no publication of any
advertisement in connection with the Transaction. Each Selling Stockholder can
bear the economic risk of the Transaction. Each Selling Stockholder has been
advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions. Each Selling
Stockholder acknowledges that he or she could be deemed an affiliate of
Netivation pursuant to Rule 144 such that he or she would be required to hold
Netivation Stock for two (2) years from the Closing Date before reselling those
shares in reliance upon Rule 144.
(b) Netivation Information. Each Selling Stockholder has had an
opportunity to discuss Netivation's business, management and financial affairs,
both as currently conducted and as proposed to be conducted following the
Merger, with directors, officers and management of Netivation and has had the
opportunity to review Netivation's operations and facilities. Each Selling
Stockholder has also had the opportunity to ask questions of, and receive
answers from, Netivation and its management regarding the terms and conditions
of the Transaction and the receipt of Netivation Stock.
(c) Acquisition for Own Account. Each Selling Stockholder is
acquiring the Netivation Stock for his own account for investment only, and not
with a view towards distribution.
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF NETIVATION
Netivation represents and warrants to Politicallyblack and the Selling
Stockholders as follows:
3.1 Organization, Good Standing and Qualification.
(a) Netivation is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Netivation has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver this Agreement and the Transactional Agreements,
to issue and sell the Netivation Stock, to carry out the provisions of this
Agreement and the Transactional Agreements and to carry on its business as
presently conducted and as presently proposed to be conducted. Netivation is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its activities
and of its properties (both owned and leased) make such qualifications
necessary, except for those jurisdictions in which failure to do so would not
have a Material Adverse Effect on Netivation or its business. Netivation has
made available
AGREEMENT AND PLAN OF MERGER - 14
<PAGE>
to Politicallyblack true, correct and complete copies of the Netivation's
certificate of incorporation and bylaws, each as amended to date.
(b) Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Merger Sub has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver the Transactional Agreements, to carry out the
provisions of the Transactional Agreements and to carry on its business as
presently conducted and as presently proposed to be conducted.
3.2 Subsidiaries. Except for Merger Sub, Netivation.com Merger Two
Corp., Netivation.com Merger Three Corp., Netivation.com Merger Four Corp.,
Netivation.com Merger Five Corp., InterLink Internet Services, Inc., and The
Online Medical Bookstore, Inc., all of which are wholly-owned subsidiaries of
Netivation, Netivation owns no equity securities of any other corporation,
limited partnership or similar entity. Netivation is not a participant in any
joint venture, partnership or similar arrangement.
3.3 Capitalization; Voting Rights.
(a) The authorized capital stock of Netivation, as of October 8,
1999, consists of (a) 30,000,000 shares of Common Stock, of which 8,660,055
shares are issued and outstanding, and (b) 2,000,000 shares of Preferred Stock,
of which 0 shares are issued and outstanding. All issued and outstanding shares
of Netivation's Common Stock and Preferred Stock (i) have been duly authorized
and validly issued, (ii) are fully paid and nonassessable and (iii) were issued
in compliance with all applicable state and federal laws concerning the issuance
of securities. The Netivation Stock has been duly authorized and, when issued in
compliance with the provisions of this Agreement and its certificate of
incorporation, will be validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, other than liabilities
imposed upon stockholders generally by the provisions of Delaware Law, and will
not be subject to any other restrictions, except as set forth in or provided by
this Agreement and as may be imposed by applicable law.
(b) The authorized capital stock of Merger Sub consists of one
thousand (1,000) shares of Common Stock, one hundred (100) shares of which have
been issued to Netivation. All of the issued and outstanding shares of Common
Stock of Merger Sub (i) have been duly authorized and validly issued, (ii) are
fully paid and nonassessable and (iii) were issued in compliance with all
applicable state and federal laws concerning the issuance of securities.
3.4 Authorization; Binding Obligations. Each of Netivation and
Merger Sub has the absolute and unrestricted right, power and authority to enter
into and to perform its obligations under the Transactional Agreements to which
Netivation and Merger Sub, as the case may be, is or may become a party. This
Agreement constitutes the legal, valid and binding obligation of each of
Netivation and Merger Sub, enforceable against them in accordance with its
AGREEMENT AND PLAN OF MERGER - 15
<PAGE>
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies. Upon the execution
of each of the other Transactional Agreements at the Closing, each of such other
Transactional Agreements will constitute the legal, valid and binding obligation
of Netivation, enforceable against Netivation in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
3.5 Full Disclosure. Netivation has delivered to Politicallyblack an
accurate and complete copy of its Registration Statement on Form SB-2 No. 333-
74569 filed with the Securities and Exchange Commission (the "SEC") on June 22,
1999 (the "Registration Statement"), which is the most recent document filed
with the SEC as of the date hereof. The Registration Statement (i) complies in
all material respects with the applicable requirements of the Securities Act and
(ii) does 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 the light of the circumstances under which they were
made, not misleading.
SECTION 4 - CERTAIN COVENANTS OF POLITICALLYBLACK AND THE SELLING STOCKHOLDERS
4.1 Access and Investigation. Politicallyblack and the Selling
Stockholders shall ensure that, at all times during the Pre-Closing Period:
(a) Politicallyblack and its Representatives provide Netivation
and its Representatives with access, during normal business hours upon
reasonable notice, to Politicallyblack's Representatives, personnel and assets
and to all existing books, records, tax returns, work papers and other documents
and information relating to Politicallyblack;
(b) Politicallyblack and its Representatives provide Netivation
and its Representatives with such copies of existing books, records, tax
returns, work papers and other documents and information relating to
Politicallyblack as Netivation may request in good faith; and
(c) Politicallyblack and its Representatives compile and provide
Netivation and its Representatives with such additional financial, operating and
other data and information regarding Politicallyblack as Netivation may request
in good faith. Without limiting the generality of the foregoing, during the Pre-
Closing Period, Politicallyblack shall promptly provide Netivation with copies
of:
(i) all material operating and financial reports prepared by
Politicallyblack for its senior management, including copies of the unaudited
monthly balance sheets of Politicallyblack and the related unaudited monthly
statements of operations, statements of stockholders' equity and statements of
cash flows;
AGREEMENT AND PLAN OF MERGER - 16
<PAGE>
(ii) any written materials or communications sent by or on
behalf of Politicallyblack to its stockholders generally;
(iii) any material notice, document or other communication
sent by or on behalf of Politicallyblack to any party to any Politicallyblack
contract or sent to Politicallyblack by any party to any Politicallyblack
contract (other than any communication that relates solely to commercial
transactions of the type sent in the Ordinary Course of Business);
(iv) any written notice, report or other document filed with
or sent to any Governmental Body in connection with the Merger or any of the
other Transactions; and
(v) any material written notice, report or other document
received by Politicallyblack from any Governmental Body.
4.2 Operation of Business. Politicallyblack and the Selling
Stockholders shall ensure that, during the Pre-Closing Period:
(a) Politicallyblack conducts its operations exclusively in
the Ordinary Course of Business and in the same manner as such operations have
been conducted prior to the date of this Agreement;
(b) Politicallyblack uses its commercially reasonable efforts to
preserve intact its current business organization, keep available the services
of its current officers and employees and maintain its relations and good will
with suppliers, customers, landlords, creditors, licensors, licensees, employees
and other Persons having business relationships with Politicallyblack;
(c) Politicallyblack keeps in full force all existing insurance
policies;
(d) Politicallyblack's officers confer regularly, upon request,
with Netivation concerning operational matters and otherwise report regularly,
upon request, to Netivation concerning the status of Politicallyblack's
business, condition, assets, liabilities, operations, financial performance and
prospects;
(e) Politicallyblack immediately notifies Netivation of any
inquiry, proposal or offer from any Person relating to any Acquisition
Transaction;
(f) Politicallyblack does not declare, accrue, set aside or pay
any dividend or make any other distribution in respect of any shares of capital
stock or other securities, and does not repurchase, redeem or otherwise
reacquire any shares of capital stock or other securities;
AGREEMENT AND PLAN OF MERGER - 17
<PAGE>
(g) Politicallyblack does not sell or otherwise issue any shares
of capital stock or any other securities;
(h) Politicallyblack does not amend its articles of incorporation
or bylaws, and does not effect or become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(i) Politicallyblack does not form any subsidiary or acquires any
equity interest or other interest in any other entity;
(j) Politicallyblack does not make any capital expenditure,
except for capital expenditures that are made in the Ordinary Course of Business
and that do not exceed $10,000;
(k) Politicallyblack does not (i) lend money to any Person or
(ii) incur, assume or otherwise become subject to any Liability, except for
current liabilities incurred in the Ordinary Course of Business;
(l) Politicallyblack does not establish or adopt any employee
benefit plan, nor pay or agree to pay any bonus nor makes any profit-sharing or
similar payment to, nor increase the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers or employees (except for regularly scheduled salary
increases in the Ordinary Course of Business);
(m) Politicallyblack does not change any of its methods of
accounting or accounting practices in any respect;
(n) Politicallyblack does not commence any Proceeding, except in
the Ordinary Course of Business;
(o) Politicallyblack does not enter into any transaction or take
any other action of the type referred to in Section 2.9;
(p) Politicallyblack does not enter into any transaction or take
any other action outside the Ordinary Course of Business;
(q) Politicallyblack does not enter into any transaction or take
any other action that is reasonably likely to cause or constitute a Breach of
any representation or warranty made by Politicallyblack or the Selling
Stockholders; and
AGREEMENT AND PLAN OF MERGER - 18
<PAGE>
(r) Politicallyblack does not agree, commit or offer (in writing
or otherwise), or attempt, to take any of the actions described in clauses "(f)"
through "(q)" of this Section 4.2.
4.3 Notification; Updates to Schedule of Exceptions.
(a) During the Pre-Closing Period, Politicallyblack and/or the
Selling Stockholders shall promptly notify Netivation in writing of:
(i) the discovery by Politicallyblack or any of the Selling
Stockholders of any event, condition, fact or circumstance that occurred or
existed on or prior to the date of this Agreement and that caused or constitutes
a Breach of any representation or warranty made by Politicallyblack or the
Selling Stockholders in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute a Breach of any representation or warranty made by Politicallyblack
or the Selling Stockholders in this Agreement if (A) such representation or
warranty had been made as of the time of the occurrence, existence or discovery
of such event, condition, fact or circumstance or (B) such event, condition,
fact or circumstance had occurred, arisen or existed on or prior to the date of
this Agreement;
(iii) any Breach of any covenant or obligation of
Politicallyblack or the Selling Stockholders; and
(iv) any event, condition, fact or circumstance that may make
the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 4.3(a) requires any change in the
Schedule of Exceptions, or if any such event, condition, fact or circumstance
would require such a change assuming the Schedule of Exceptions were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then Politicallyblack shall promptly deliver to Netivation
an update to the Schedule of Exceptions specifying such change. No such update
shall be deemed to supplement or amend the Schedule of Exceptions for the
purpose of (i) determining the accuracy of any of the representations and
warranties made by Politicallyblack in this Agreement for purposes of Section
6.1, but shall be deemed to supplement or amend the Schedule of Exceptions for
purposes of Section 9 or (ii) determining whether any of the other conditions
set forth in Section 6 have been satisfied.
AGREEMENT AND PLAN OF MERGER - 19
<PAGE>
4.4 No Negotiation. Politicallyblack shall ensure that, during the
Pre-Closing Period, neither Politicallyblack nor any of Politicallyblack's
Representatives directly or indirectly:
(a) solicits or encourages the initiation of any inquiry,
proposal or offer from any Person (other than Netivation) relating to any
Acquisition Transaction;
(b) participates in any discussions or negotiations with, or
provides any non-public information to, any Person (other than Netivation)
relating to any Acquisition Transaction; or
(c) considers the merits of any unsolicited inquiry, proposal or
offer from any Person (other than Netivation) relating to any Acquisition
Transaction.
SECTION 5 - ADDITIONAL COVENANTS OF THE PARTIES
5.1 Filings and Consents. As promptly as practicable after the
execution of this Agreement, each party to this Agreement (i) shall make all
filings (if any) and give all notices (if any) required to be made and given by
such party in connection with the Transactions and (ii) shall use all
commercially reasonable efforts to obtain all consents (if any) required to be
obtained (pursuant to any applicable legal requirement or contract, or
otherwise) by such party in connection with the Transactions. Each of the
parties shall (upon request) promptly deliver to the other a copy of each such
filing made, each such notice given and each such consent obtained by
Politicallyblack or Netivation, as the case may be, during the Pre-Closing
Period.
5.2 Politicallyblack Stockholders' Meeting. Politicallyblack shall,
in accordance with its certificate of incorporation and bylaws and the
applicable requirements of Maryland Law, call and hold a special meeting of its
stockholders, or solicit written consents from its stockholders, as promptly as
practicable for the purpose of permitting them to consider and to vote upon and
approve the Merger and this Agreement. Politicallyblack shall use its best
efforts (i) to solicit from each of such stockholders a proxy or consent in
favor of the approval of the Merger and this Agreement and (ii) to cause each of
such stockholders to execute and deliver to Netivation a Prospective Offeree
Questionnaire in a form acceptable to Netivation certifying, among other items,
as to whether each of such stockholders is an "accredited investor" as such term
is defined in Rule 501 under the Securities Act.
5.3 Public Announcements. During the Pre-Closing Period, (i) neither
Politicallyblack nor Netivation shall (and neither Politicallyblack nor
Netivation shall permit any of its respective Representatives to) issue any
press release or make any public statement regarding this Agreement or the
Transactions, without the other party's prior written consent, and (ii) each
party will use reasonable efforts to consult with the other party prior to
issuing any press release or making any public statement regarding the Merger;
provided that Netivation shall be
AGREEMENT AND PLAN OF MERGER - 20
<PAGE>
free to make any disclosure regarding the Merger that it deems necessary in
connection with filings with the SEC made in connection with the Registration
Statement.
5.4 Best Efforts. During the Pre-Closing Period, (i)
Politicallyblack shall use commercially reasonable efforts to cause the
conditions set forth in Section 6 to be satisfied on a timely basis and (ii)
Netivation and Merger Sub shall use their commercially reasonable efforts to
cause the conditions set forth in Section 7 to be satisfied on a timely basis
and Netivation will take all actions necessary to cause Merger Sub to perform
its obligations under this Agreement and to consummate the Merger on the terms
and conditions set forth in this Agreement.
5.5 Tax Matters. At or prior to the Closing, (a) Politicallyblack
shall execute and deliver to Moffatt, Thomas, Barrett, Rock & Fields, Chtd. and
to Netivation a tax representation letter, in a form reasonably acceptable to
such parties, and (b) Netivation shall execute and deliver to Moffatt, Thomas,
Barrett, Rock & Fields, Chtd. and to Politicallyblack a tax representation
letter, in a form reasonably acceptable to such parties. Politicallyblack and
the Selling Stockholders will use all of their respective reasonable efforts to
cause the transactions contemplated hereby to qualify as a reorganization under
the provisions of Section 368(a) of the Code and will not take any action after
the Acquisition is effected that could reasonably be expected to cause the
Acquisition to lose its tax-free status. All parties hereto agree to file this
Agreement with their respective federal income tax returns for the year in which
the Acquisition closes and to comply with the reporting requirements of United
States Treasury Regulations Section 1.368-2(g), if applicable.
SECTION 6 - CONDITIONS PRECEDENT TO OBLIGATIONS OF NETIVATION AND MERGER SUB
The obligations of Netivation and Merger Sub to effect the
Transactions are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Netivation, in
whole or in part, in accordance with Section 10.10):
6.1 Accuracy of Representations. Each of the representations and
warranties made by Politicallyblack and the Selling Stockholders in this
Agreement shall have been accurate in all material respects as of the date of
this Agreement and shall be accurate in all material respects as of the
Scheduled Closing Time as if made at the Scheduled Closing Time.
6.2 Performance of Covenants. Each covenant and obligation that
Politicallyblack or any of the Selling Stockholders is required to comply with
or to perform pursuant to this Agreement at or prior to the Closing shall have
been duly complied with and performed in all material respects.
6.3 Stockholder Approval. The principal terms of the Merger shall
have been duly approved by the stockholders of Politicallyblack in accordance
with the provisions of Maryland Law and applicable agreements.
AGREEMENT AND PLAN OF MERGER - 21
<PAGE>
6.4 Consents. All consents required to be obtained by
Politicallyblack in connection with the Transactions (including the consents
identified in Schedule 2.18) shall have been obtained and shall be in full force
and effect.
6.5 No Material Adverse Change. Except for adverse changes that
result from general economic conditions, there shall have been no material
adverse change in Politicallyblack's business, condition, assets, liabilities,
operations, financial performance or prospects since the date of this Agreement.
6.6 Agreements and Documents. Netivation shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) the Escrow Agreement, substantially in the form of Exhibit G;
(b) an Employment and Noncompetition Agreement, substantially in
the form of Exhibit F, executed by Roderick Conrad and Charles D. Ellison;
(c) a Tax Representation Letter executed by Politicallyblack;
(d) a Prospective Offeree Questionnaire substantially in the form
of Exhibit H executed by each Selling Stockholder;
(e) written resignations of all officers and directors of
Politicallyblack, effective as of the Closing Date;
(f) a certificate executed by each of the Selling Stockholders
containing the representation and warranty of each such Selling Stockholder that
(i) each of the representations and warranties made by Politicallyblack and the
Selling Stockholders in this Agreement is accurate in all material respects as
of the Closing Date as if made on the Closing Date and (ii) the conditions set
forth in this Section 6 have been duly satisfied (the "Selling Stockholders'
Closing Certificate");
(g) a legal opinion from counsel for Politicallyblack and the
Selling Stockholders, substantially in the form of Exhibit E.
(h) such other documents as Netivation may reasonably request in
good faith for the purpose of (i) evidencing the accuracy of any representation
or warranty made by Politicallyblack or the Selling Stockholders, (ii)
evidencing the compliance by Politicallyblack or the Selling Stockholders with,
or the performance by Politicallyblack or the Selling Stockholders of, any
covenant or obligation set forth in this Agreement, (iii) evidencing the
compliance with any applicable federal or state securities law, (iv) evidencing
the satisfaction
AGREEMENT AND PLAN OF MERGER - 22
<PAGE>
of any condition set forth in this Section 6 or (v) otherwise facilitating the
consummation or performance of any of the Transactions.
6.7 Lock-Up Agreements. Each of the Selling Stockholders shall have
delivered to Netivation a lock-up agreement, in a form acceptable to
Netivation's underwriters, providing for a maximum of a twelve (12) month lock-
up period from the Effective Time.
6.8 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any legal requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.9 No Proceedings. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Merger or seeking to prohibit or limit the
exercise by Netivation of any material right pertaining to its ownership of
stock of the Surviving Corporation.
6.10 Securities Law Compliance. All applicable requirements of the
Securities Act and any applicable state securities laws shall have been
satisfied.
6.11 Dissenters Rights. No stockholder of Politicallyblack shall have
exercised dissenters rights with respect to approval of the Transactions.
6.12 Unaccredited Investors. The Prospective Offeree Questionnaires
delivered pursuant to Sections 5.2 and 6.6 shall indicate that no more than 35
of the stockholders of Politicallyblack are "unaccredited investors," as defined
by Rule 501 under the Securities Act.
6.13 Proceedings and Documents. All corporate and other proceedings
in connection with the Transactions and all documents and instruments incident
to such Transactions shall be reasonably satisfactory in substance and form to
Netivation.
6.14 Corporate Approvals. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of Politicallyblack, Netivation, Merger Sub and the Selling Stockholders.
SECTION 7 - CONDITIONS PRECEDENT TO OBLIGATIONS OF POLITICALLYBLACK AND THE
SELLING STOCKHOLDERS
The obligations of Politicallyblack and the Selling Stockholders to
effect the Transactions are subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived solely
by Politicallyblack, in whole or in part, in accordance with Section 10.10):
AGREEMENT AND PLAN OF MERGER - 23
<PAGE>
7.1 Accuracy of Representations. Each of the representations and
warranties made by Netivation in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in all
material respects as of the Scheduled Closing Time as if made at the Scheduled
Closing Time.
7.2 Performance of Covenants. Each covenant and obligation that
Netivation and Merger Sub are required to comply with or to perform pursuant to
this Agreement at or prior to the Closing shall have been duly complied with and
performed in all material respects.
7.3 Consents. All consents required to be obtained by Netivation in
connection with the Transactions shall have been obtained and shall be in full
force and effect.
7.4 Agreements and Documents. Politicallyblack shall have received
the following agreements and documents, each of which shall be in full force and
effect:
(a) the Escrow Agreement, substantially in the form of Exhibit G;
(b) an Employment and Noncompetition Agreement, substantially in
the forms of Exhibit F, executed by Roderick Conrad and Charles D. Ellison;
(c) a Tax Representation Letter executed by Netivation;
(d) a certificate executed by Netivation containing the
representation and warranty of Netivation that (i) each of the representations
and warranties made by Netivation in this Agreement is accurate in all material
respects as of the Closing Date as if made on the Closing Date and (ii) the
conditions set forth in this Section 7 have been duly satisfied; and
(e) such other documents as Politicallyblack may reasonably
request in good faith for the purpose of (i) evidencing the accuracy of any
representation or warranty made by Netivation, (ii) evidencing the compliance by
Netivation with, or the performance by Netivation of, any covenant or obligation
set forth in this Agreement, (iii) evidencing the compliance with any applicable
federal or state securities law, (iv) evidencing the satisfaction of any
condition set forth in this Section 7 or (v) otherwise facilitating the
consummation or performance of any of the Transactions.
7.5 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any legal requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
AGREEMENT AND PLAN OF MERGER - 24
<PAGE>
7.6 No Proceedings. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Merger or seeking to prohibit or limit the
exercise by Netivation of any material right pertaining to its ownership of
stock of the Surviving Corporation.
7.7 Corporate Approvals. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of the Politicallyblack, Netivation, Merger Sub and the Selling
Stockholders.
SECTION 8 - TERMINATION
8.1 Termination Events. This Agreement may be terminated prior to
the Closing:
(a) by Netivation if (i) there is a material Breach of any
covenant or obligation of Politicallyblack or any of the Selling Stockholders or
(ii) Netivation reasonably determines that the timely satisfaction of any
condition set forth in Section 6 has become impossible (other than as a result
of any failure on the part of Netivation or Merger Sub to comply with or perform
any covenant or obligation of Netivation or Merger Sub set forth in this
Agreement);
(b) by the Selling Stockholders if (i) there is a material Breach
of any covenant or obligation of Netivation or (ii) the Selling Stockholders
reasonably determines that the timely satisfaction of any condition set forth in
Section 7 has become impossible (other than as a result of any failure on the
part of Politicallyblack or any of the Selling Stockholders to comply with or
perform any covenant or obligation of Politicallyblack or the Selling
Stockholders set forth in this Agreement);
(c) by Netivation at or after the Scheduled Closing Time if any
condition set forth in Section 6 has not been satisfied by the Scheduled Closing
Time;
(d) by the Selling Stockholders at or after the Scheduled Closing
Time if any condition set forth in Section 7 has not been satisfied by the
Scheduled Closing Time;
(e) by Netivation if the Closing has not taken place on or before
November 29, 1999 (other than as a result of any failure on the part of
Netivation or Merger Sub to comply with or perform any covenant or obligation of
Netivation or Merger Sub set forth in this Agreement);
(f) by the Selling Stockholders if the Closing has not taken
place on or before November 29, 1999 (other than as a result of the failure on
the part of Politicallyblack or any of the Selling Stockholders to comply with
or perform any covenant or obligation of Politicallyblack or the Selling
Stockholders set forth in this Agreement); or
AGREEMENT AND PLAN OF MERGER - 25
<PAGE>
(g) by the mutual consent of Netivation, Politicallyblack and the
Selling Stockholders.
8.2 Termination Procedures. If Netivation wishes to terminate this
Agreement pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e),
Netivation shall deliver to the Selling Stockholders a written notice stating
that Netivation is terminating this Agreement and setting forth a brief
description of the basis on which Netivation is terminating this Agreement. If
the Selling Stockholders wish to terminate this Agreement pursuant to Section
8.1(b), Section 8.1(d) or Section 8.1(f), the Selling Stockholders shall deliver
to Netivation a written notice terminating this Agreement and setting forth a
brief description of the basis on which this Agreement is terminated.
8.3 Effect of Termination. If this Agreement is terminated pursuant
to Section 8.1, all further obligations of the parties under this Agreement
shall automatically terminate; provided, however, that: (a) neither
Politicallyblack nor the Selling Stockholders nor Netivation shall be relieved
of any obligation or liability arising from any prior Breach by such party of
any provision of this Agreement; (b) the parties shall, in all events, remain
bound by and continue to be subject to the provisions set forth in Section 9;
and (c) Politicallyblack and Netivation shall, in all events, remain bound by
and continue to be subject to Section 5.3.
SECTION 9 - INDEMNIFICATION, ETC.
9.1 Survival of Representations, Warranties and Covenants.
(a) The representations, warranties and covenants of each party
pursuant to this Agreement shall survive the Closing and shall expire on the
first anniversary of the Closing Date; provided, however, (i) that fraud claims
and claims under Section 2.14 shall survive for the statute of limitations
applicable to claims based on such matters and (ii) that if, at any time prior
to the first anniversary of the Closing Date, any Netivation Indemnitee seeking
indemnification under this Section 9 (acting in good faith) delivers to the
Selling Stockholders a written notice alleging the existence of a Breach of any
of the representations and warranties made by Politicallyblack or any of the
Selling Stockholders or a Breach of any covenant contained herein (and setting
forth in reasonable detail the basis for such Netivation Indemnitee's belief
that such a Breach may exist) and asserting a claim for recovery under Section
9.2 based on such alleged Breach, then the claim asserted in such notice shall
survive the first anniversary of the Closing Date until such time as such claim
is fully and finally resolved.
(b) The representations, warranties, covenants and obligations of
Politicallyblack and the Selling Stockholders, and the rights and remedies that
may be exercised by the Netivation Indemnitees, shall not be limited or
otherwise affected by or as a result of any information furnished to, or any
investigation made by or Knowledge of, any of the Netivation Indemnitees or
their Representatives.
AGREEMENT AND PLAN OF MERGER - 26
<PAGE>
(c) For purposes of this Agreement, each statement or other item
of information set forth in the Schedule of Exceptions or in any update to the
Schedule of Exceptions shall be deemed to be a representation and warranty made
in this Agreement.
9.2 Indemnification by the Selling Stockholders.
(a) Subject to the provisions of this Section 9, the Selling
Stockholders, jointly and severally, shall indemnify and hold harmless each of
the Netivation Indemnitees from and against the amount of any Damages incurred
by any of the Netivation Indemnitees directly or indirectly as a result of (i)
any Breach of a representation or warranty of Politicallyblack or any of the
Selling Stockholders contained in Section 2 hereof or in any instrument
delivered pursuant to this Agreement (each as modified by the Schedule of
Exceptions delivered by Politicallyblack and the Selling Stockholders on the
date of this Agreement and not as modified by any revisions to such Schedule of
Exceptions after such date), (ii) any Breach of any covenant or obligation
contained herein , (iii) any final determination of Politicallyblack's net tax
liability for the fiscal year immediately prior to the Closing or (iv) any
Breach of any representation or warranty made in the Selling Stockholders'
Closing Certificate.
(b) The Selling Stockholders acknowledge and agree that, if there
is any Breach of any representation or warranty or other provision relating to
Politicallyblack or Politicallyblack's business, condition, assets, Liabilities,
operations, financial performance or net income (or any aspect or portion
thereof), then Netivation itself shall be deemed, by virtue of its ownership of
the capital stock of Politicallyblack, to have incurred Damages as result of
such Breach or Liability.
9.3 Contribution. Each Selling Stockholder waives and acknowledges
and agrees that such Selling Stockholder shall not have and shall not exercise
or assert (or attempt to exercise or assert), any right of contribution, right
of indemnity or other similar right or remedy against the Surviving Corporation
in connection with any indemnification obligation or any other Liability to
which such Selling Stockholder may become subject under the Transactional
Agreements or otherwise in connection with any of the Transactions.
9.4 Ceiling; Limitation on Additional Damages. The Selling
Stockholders shall have no liability nor be subject to any claim for Damages
made by Netivation Indemnities pursuant to the provisions of Section 9.2(a) or
9.6 unless and until the aggregrate amount of Damages exceeds the sum of
$25,000. After the aggregrate amount of Damages exceeds the sum of $25,000, the
Selling Stockholders shall be liable for the full amount of Damages. Claims for
Damages made by the Netivation Indemnitees pursuant to the provisions of
Sections 9.2(a) or 9.6 shall be limited to an amount equal to the closing price
(as reported by the NASDAQ consolidated reporting system) of the thirty thousand
(30,000) shares of Netivation Stock on the Closing Date. The provisions of this
Section 9.4 shall not apply to claims for willful misconduct, fraud, bad faith
or recklessness on the part of Politicallyblack or any Selling Stockholder.
AGREEMENT AND PLAN OF MERGER - 27
<PAGE>
9.5 Interest. Any party that is required to indemnify any Netivation
Indemnitee pursuant to this Section 9 with respect to any Damages shall also be
required to pay such Netivation Indemnitee interest on the amount of such
Damages (for the period commencing as of the date on which such Netivation
Indemnitee first incurred or otherwise became subject to such Damages and ending
on the date on which the applicable indemnification payment is made by such
party) at a floating rate equal to three (3) percentage points above the rate of
interest publicly announced by Bank of America, N.T. & S.A. from time to time as
its prime, base or reference rate. (For purposes of this Section 9.5, a
Netivation Indemnitee that suffers Damages by virtue of being required to pay
any judgment or to make any settlement payment to any third party with respect
to any third party claim against such Netivation Indemnitee shall be deemed to
have first become subject to such Damages at the time such Netivation Indemnitee
pays such judgment or makes such settlement payment.)
9.6 Defense of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Proceeding (whether against
Politicallyblack, against any other Netivation Indemnitee or any other Person)
with respect to which any of the Selling Stockholders may become obligated to
indemnify, hold harmless, compensate or reimburse any Netivation Indemnitee
pursuant to this Section 9, Netivation shall have the right, at its election, to
proceed with the defense of such claim or Proceeding on its own. If Netivation
so proceeds with the defense of any such claim or Proceeding:
(a) all expenses relating to the defense of such claim or
Proceeding (whether or not incurred by Netivation) shall be borne and paid
exclusively by the Selling Stockholders;
(b) the Selling Stockholders shall make available to Netivation
any documents and materials in the possession or control of any of the Selling
Stockholders that may be necessary to the defense of such claim or Proceeding;
and
(c) Netivation shall keep the Selling Stockholders informed of
all material developments and events relating to such claim or Proceeding.
9.7 Setoff. In addition to any rights of setoff or other rights that
any of the Netivation Indemnitees may have at common law or otherwise,
Netivation shall have the right to set off any amount that may be owed to any
Netivation Indemnitee under this Section 9 against any amount otherwise payable
by any Indemnitee to any of the Selling Stockholders.
9.8 Indemnity Reserve. In order to secure Netivation's and each
Netivation Indemnitee's rights of indemnity, the Selling Stockholders shall
place 10,000 shares of Netivation Stock in escrow in accordance with the terms
of the Escrow Agreement, substantially in the form attached hereto as Exhibit G.
AGREEMENT AND PLAN OF MERGER - 28
<PAGE>
9.9 Exercise of Remedies by Netivation Indemnitees Other Than
Netivation. No Netivation Indemnitee (other than Netivation or any successor
thereto or assignee thereof) shall be permitted to assert any indemnification
claim or exercise any other remedy under this Agreement unless Netivation (or
any successor thereto or assignee thereof) shall have consented to the assertion
of such indemnification claim or the exercise of such other remedy.
SECTION 10 - MISCELLANEOUS PROVISIONS
10.1 Further Assurances. Each party hereto shall execute and cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the Transactions.
10.2 Fees and Expenses. Subject to Section 9, each party to this
Agreement shall bear and pay all fees, costs and expenses (including legal fees
and accounting fees) that have been incurred or that are incurred in the future
by such party in connection with the Transactions, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) the
investigation and review conducted by Netivation and its Representatives with
respect to Politicallyblack's business (and the furnishing of information to
Netivation and its Representatives in connection with such investigation and
review), (ii) the negotiation, preparation and review of this Agreement
(including the Schedule of Exceptions) and all agreements, certificates,
opinions and other instruments and documents delivered or to be delivered in
connection with the Transactions, and (iii) the preparation and submission of
any filing or notice required to be made or given in connection with any of the
Transactions and the obtaining of any consent required to be obtained in
connection with any of such Transactions. Provided, however, if the Merger is
consummated, all reasonable legal fees and other reasonable legal expenses
incurred on behalf of Politicallyblack in connection with the Transactions would
be borne by Netivation. Any legal expenses incurred on behalf of
Politicallyblack in excess of $5,000 shall require written preapproval by
Netivation.
10.3 Attorneys' Fees. If any action or Proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
10.4 Notices. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or overnight delivery service or by facsimile) to
the address or facsimile telephone number set forth beneath the name of such
party below (or to such other address or facsimile telephone number as such
party shall have specified in a written notice given to the other parties
hereto):
AGREEMENT AND PLAN OF MERGER - 29
<PAGE>
if to Netivation: Netivation.com, Inc.
806 Clearwater Loop, Suite N
Post Falls, ID 83854
Attention: Anthony J. Paquin, President and
Chief Executive Officer
Facsimile: (208) 777-8904
with a copy to: Moffatt Thomas Barrett Rock & Fields, Chtd.
101 S. Capitol Blvd., 10/th/ Floor
Boise, ID 83702
Attention: Mark A. Ellison
Facsimile: (208) 385-5384
if to the Roderick Conrad
Selling Stockholders: Charles D. Ellison
Politicallyblack.com, Inc.
225 10th Street, NE #1
Washington, DC 20002
with copies to: _____________________
_____________________
_____________________
Any of the above addresses may be changed at any time by notice given
as provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, telecopied or by overnight courier, and three (3) business
days after the date of mailing, if mailed by certified mail, return receipt
requested.
10.5 Headings. The boldface headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.6 Counterparts. This Agreement may be executed in several
counterparts, and transmitted by facsimile, each of which shall constitute an
original and all of which, when taken together, shall constitute one agreement.
10.7 Governing Law. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of Idaho
(without giving effect to principles of conflicts of laws).
AGREEMENT AND PLAN OF MERGER - 30
<PAGE>
10.8 Successors and Assigns. This Agreement shall be binding upon:
Politicallyblack and its successors and assigns (if any); the Selling
Stockholders and their respective personal representatives, executors,
administrators, estates, heirs, successors and assigns (if any); Netivation and
its successors and assigns (if any); and Merger Sub and its successors and
assigns (if any). This Agreement shall inure to the benefit of:
Politicallyblack; the Selling Stockholders; Netivation; Merger Sub; the
Netivation Indemnitees; and the respective successors and assigns (if any) of
the foregoing. Each party may freely assign any or all of its rights (but not
its obligations) under this Agreement (including its indemnification rights
under Section 9), in whole or in part, to any other Person without obtaining the
consent or approval of any other party hereto or of any other Person.
10.9 Remedies Cumulative; Specific Performance. The rights and
remedies of the parties hereto shall be cumulative (and not alternative). The
parties to this Agreement agree that, in the event of any Breach or threatened
Breach by any party to this Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other party to this
Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (i) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (ii) an injunction restraining such Breach or threatened
Breach.
10.10 Waiver.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10.11 Amendments. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of all of the parties hereto.
10.12 Time of the Essence. Time is of the essence of this Agreement.
10.13 Severability. In the event that any provision of this
Agreement, or the application of any such provision to any Person or set of
circumstances, shall be determined to be
AGREEMENT AND PLAN OF MERGER - 31
<PAGE>
invalid, unlawful, void or unenforceable to any extent, the remainder of this
Agreement, and the application of such provision to Persons or circumstances
other than those as to which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and shall continue to
be valid and enforceable to the fullest extent permitted by law.
10.14 Parties in Interest. Except for the provisions of Section 9,
none of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties hereto and their respective
successors and assigns (if any).
10.15 Entire Agreement. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter hereof and thereof.
10.16 Construction.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
The parties hereto have caused this Agreement to be executed and delivered
as of the date first set forth above.
NETIVATION:
NETIVATION.COM, INC.,
a Delaware corporation
By______________________________________
AGREEMENT AND PLAN OF MERGER - 32
<PAGE>
Anthony J. Paquin
President and Chief Executive Officer
MERGER SUB:
NETIVATION.COM MERGER SIX CORP.,
a Delaware corporation
By_________________________________________
Anthony J. Paquin
President and Chief Executive Officer
POLITICALLYBLACK:
POLITICALLYBLACK.COM, INC.,
a Maryland corporation
By_________________________________________
Roderick Conrad
President
SELLING STOCKHOLDERS:
___________________________________________
Roderick Conrad
___________________________________________
Charles D. Ellison
SECRETARY'S CERTIFICATE
AGREEMENT AND PLAN OF MERGER - 33
<PAGE>
I, Gary S. Paquin, Secretary of Netivation.com Merger Six Corp., hereby
certify that this Agreement has been adopted pursuant to the first sentence of
Title 8, Section 251(f) of the Delaware Corporations Laws, and that the
conditions specified in that sentence have been satisfied.
________________________________
Gary S. Paquin, Secretary
AGREEMENT AND PLAN OF MERGER - 34
<PAGE>
AGREEMENT AND PLAN OF MERGER
among:
NETIVATION.COM, INC.
a Delaware corporation;
NETIVATION.COM MERGER FIVE CORP.,
a Delaware corporation;
PUBLIC DISCLOSURE, INC.,
a District of Columbia corporation;
and
the Selling Stockholders of Public Disclosure, Inc.
listed on Exhibit A hereto
Dated as of October___, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1 - DESCRIPTION OF TRANSACTION....................................................................... 1
1.1 Merger of Public Disclosure into Merger Sub...................................................... 1
1.2 Effect of the Merger............................................................................. 1
1.3 Closing; Effective Time.......................................................................... 1
1.4 Certificate of Incorporation, Bylaws and Directors and Officers.................................. 2
1.5 Conversion of Public Disclosure Stock............................................................ 2
1.6 Additional Consideration......................................................................... 3
1.7 Closing of Public Disclosure's Transfer Books.................................................... 3
1.8 Exchange of Certificates......................................................................... 3
1.9 Dissenting Shares................................................................................ 4
1.10 Tax Consequences................................................................................. 5
1.11 Accounting Treatment............................................................................. 5
1.12 Further Action................................................................................... 5
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF PUBLIC DISCLOSURE AND THE SELLING STOCKHOLDERS................. 5
2.1 Organization, Good Standing and Qualification.................................................... 5
2.2 Subsidiaries..................................................................................... 6
2.3 Capitalization; Voting Rights.................................................................... 6
2.4 Authorization; Binding Obligations............................................................... 6
2.5 Financial Statements............................................................................. 6
2.6 Liabilities...................................................................................... 6
2.7 Agreements; Action............................................................................... 7
2.8 Obligations to Related Parties................................................................... 7
2.9 Absence of Changes............................................................................... 7
2.10 Title to Properties and Assets; Liens, Etc....................................................... 9
2.11 Patents and Trademarks........................................................................... 9
2.12 Compliance with Other Instruments................................................................ 10
2.13 Litigation....................................................................................... 10
2.14 Tax Returns and Payments......................................................................... 10
2.15 Employees........................................................................................ 11
2.16 Registration Rights.............................................................................. 12
2.17 Compliance with Legal Requirements; Consents..................................................... 12
2.18 Selling Stockholders............................................................................. 13
2.19 Full Disclosure.................................................................................. 13
2.20 Year 2000 Compliance............................................................................. 13
2.21 Securities Laws Matters.......................................................................... 13
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF NETIVATION..................................................... 14
3.1 Organization, Good Standing and Qualification.................................................... 14
3.2 Subsidiaries..................................................................................... 15
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
3.3 Capitalization; Voting Rights..................................................................... 15
3.4 Authorization; Binding Obligations................................................................ 15
3.5 Full Disclosure................................................................................... 15
SECTION 4 - CERTAIN COVENANTS OF PUBLIC DISCLOSURE AND THE SELLING STOCKHOLDERS............................... 16
4.1 Access and Investigation.......................................................................... 16
4.2 Operation of Business............................................................................. 17
4.3 Notification; Updates to Schedule of Exceptions; Opportunity to Cure.............................. 18
4.4 No Negotiation.................................................................................... 20
SECTION 5 - ADDITIONAL COVENANTS OF THE PARTIES............................................................... 20
5.1 Notification; Opportunity to Cure................................................................. 20
5.2 Filings and Consents.............................................................................. 21
5.3 Public Disclosure Stockholders' Meeting........................................................... 21
5.4 Public Announcements.............................................................................. 21
5.5 Best Efforts...................................................................................... 22
5.6 Tax Matters....................................................................................... 22
5.7 Support to Public Disclosure...................................................................... 22
5.8 First Right to Purchase Assets of Public Disclosure............................................... 22
5.9 Piggyback Registration............................................................................ 23
5.10 Non-Partisanship.................................................................................. 23
5.11 Political Party Contributions..................................................................... 23
SECTION 6 - CONDITIONS PRECEDENT TO OBLIGATIONS OF NETIVATION AND MERGER SUB.................................. 23
6.1 Accuracy of Representations....................................................................... 23
6.2 Performance of Covenants.......................................................................... 23
6.3 Stockholder Approval.............................................................................. 23
6.4 Consents.......................................................................................... 23
6.5 No Material Adverse Change........................................................................ 23
6.6 Agreements and Documents.......................................................................... 24
6.7 No Restraints..................................................................................... 24
6.8 No Proceedings.................................................................................... 24
6.9 Securities Law Compliance......................................................................... 24
6.10 Dissenters Rights................................................................................. 25
6.11 Unaccredited Investors............................................................................ 25
6.12 Proceedings and Documents......................................................................... 25
6.13 Corporate Approvals............................................................................... 25
SECTION 7 - CONDITIONS PRECEDENT TO OBLIGATIONS OF PUBLIC DISCLOSURE AND THE SELLING STOCKHOLDERS............. 25
7.1 Accuracy of Representations....................................................................... 25
7.2 Performance of Covenants.......................................................................... 25
7.3 Consents ......................................................................................... 25
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
7.4 Agreements and Documents.......................................................................... 25
7.5 No Restraints..................................................................................... 26
7.6 No Proceedings.................................................................................... 26
7.7 Corporate Approvals............................................................................... 26
SECTION 8 - TERMINATION....................................................................................... 26
8.1 Termination Events................................................................................ 26
8.2 Termination Procedures............................................................................ 27
8.3 Effect of Termination............................................................................. 27
SECTION 9 - INDEMNIFICATION, ETC.............................................................................. 28
9.1 Survival of Representations, Warranties and Covenants............................................. 28
9.2 Indemnification by the Selling Stockholders....................................................... 28
9.3 Contribution...................................................................................... 29
9.4 Ceiling; Limitation on Additional Damages......................................................... 29
9.5 Defense of Third Party Claims..................................................................... 29
9.6 Indemnity Reserve................................................................................. 29
9.7 Exercise of Remedies by Netivation Indemnitees Other Than Netivation.............................. 30
SECTION 10 - MISCELLANEOUS PROVISIONS......................................................................... 30
10.1 Selling Stockholders' Agent...................................................................... 30
10.2 Further Assurances............................................................................... 31
10.3 Fees and Expenses................................................................................ 31
10.4 Attorneys' Fees.................................................................................. 31
10.5 Notices.......................................................................................... 31
10.6 Headings......................................................................................... 32
10.7 Counterparts..................................................................................... 32
10.8 Governing Law.................................................................................... 33
10.9 Successors and Assigns........................................................................... 33
10.10 Remedies Cumulative; Specific Performance........................................................ 33
10.11 Waiver........................................................................................... 33
10.12 Amendments....................................................................................... 33
10.13 Time of the Essence.............................................................................. 33
10.14 Severability..................................................................................... 34
10.15 Parties in Interest.............................................................................. 34
10.16 Entire Agreement................................................................................. 34
10.17 Construction..................................................................................... 34
</TABLE>
-iii-
<PAGE>
EXHIBITS
Exhibit A - Selling Stockholders
Exhibit B - Certain Definitions
Exhibit C - Director and Officer of Surviving Corporation
Exhibit D - Allocation of Merger Consideration
Exhibit E - Forms of Legal Opinion
Exhibit F - Form of Employment and Noncompetition Agreement
Exhibit G - Form of Escrow Agreement
Exhibit H - Form of Prospective Offeree Questionnaire
SCHEDULES
2.1 Authority to Do Business
2.6 Liabilities
2.7 Agreements
2.8 Obligations to Related Parties
2.9 Changes to Public Disclosure, Inc.
2.10 Assets
2.11 Patents and Trademarks
2.11(a) Outstanding Options, Licenses and Agreements
2.13 Litigation
2.14 Tax Returns and Payments
2.15 Employees
-iv-
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered
into as of October ____, 1999, by and among: NETIVATION.COM, INC., a Delaware
corporation ("Netivation"), NETIVATION.COM MERGER FIVE CORP., a Delaware
corporation and a wholly-owned subsidiary of Netivation ("Merger Sub"), PUBLIC
DISCLOSURE, INC., a District of Columbia corporation ("Public Disclosure"), and
the stockholders of Public Disclosure set forth on Exhibit A hereto (the
"Selling Stockholders"). Certain capitalized terms used in this Agreement are
defined in Exhibit B.
RECITALS
A. The parties intend to effect a merger of Public Disclosure into
Merger Sub in accordance with this Agreement and the Delaware General
Corporation Law ("Delaware Law") and the District of Columbia Corporation Law
("D.C. Law") (the "Merger"). Upon consummation of the Merger, Public Disclosure
will cease to exist, and Merger Sub will remain a wholly-owned subsidiary of
Netivation.
B. The Selling Stockholders own an aggregate of four (4) shares of
capital stock of Public Disclosure (the "Public Disclosure Stock"), constituting
100% of the Public Disclosure capital stock on a fully-diluted basis.
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1 - DESCRIPTION OF TRANSACTION
1.1 Merger of Public Disclosure into Merger Sub. Upon the terms and
subject to the conditions set forth in this Agreement, at the Effective Time (as
defined in Section 1.3), Public Disclosure shall be merged with and into Merger
Sub, and the separate existence of Public Disclosure shall cease. Merger Sub
will continue as the surviving corporation in the Merger (the "Surviving
Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set
forth in this Agreement and in the applicable provisions of Delaware Law and
D.C. Law.
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Moffatt, Thomas, Barrett, Rock & Fields, Chartered, 101 S. Capitol Boulevard,
10th Floor, Boise, Idaho 83702 on or before October 28, 1999, or at such other
time as the parties may agree (the "Scheduled Closing Time"). (The date on
which the Closing actually takes place is referred to in this Agreement as the
AGREEMENT AND PLAN OF MERGER - 1
<PAGE>
"Closing Date.") Contemporaneously with or as promptly as practicable after the
Closing, a properly executed certificate of merger (the "Certificate of
Merger"), conforming to the requirements of Delaware Law and D.C. Law, shall be
filed with the Secretaries of State of the State of Delaware and the District of
Columbia. The Merger shall become effective at the time such Certificate of
Merger is filed with and accepted by the Secretary of State of the State of
Delaware and the District of Columbia (the "Effective Time").
1.4 Certificate of Incorporation, Bylaws and Directors and Officers.
(a) The certificate of incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended as provided
by law; provided, however, that Article I of the Certificate of Incorporation
shall be amended to read as follows: "The name of this corporation is "Public
Disclosure, Inc."
(b) The bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter amended.
(c) The directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals identified on
Exhibit C.
1.5 Conversion of Public Disclosure Stock.
(a) Subject to Sections 1.8(c) and 1.9, at the Effective Time, by
virtue of the Merger and without any further action on the part of Netivation,
Merger Sub, Public Disclosure or any stockholder of Public Disclosure, each
share of Common Stock of Public Disclosure issued and outstanding immediately
prior to the Effective Time shall be converted into the right to receive 75,000
shares of Common Stock of Netivation (the "Netivation Stock"). All outstanding
shares of Public Disclosure capital stock shall be exchanged for no more than
Three Hundred Thousand (300,000) shares of Netivation Stock. The Merger
Consideration to be received by the Selling Stockholders is set forth on Exhibit
D. If the Netivation Stock price drops below $2.50 before the Closing, Public
Disclosure may immediately terminate this Agreement and Netivation will
reimburse Public Disclosure for its expenses related to this Agreement. If,
between the date of this Agreement and the Closing Date, the shares of capital
stock of Public Disclosure or the Netivation Stock are changed into a different
number or class of shares by reason of any stock dividend, subdivision,
reclassification, recapitalization, split-up, combination or similar
transaction, the Merger Consideration shall be appropriately adjusted.
(b) If any shares of capital stock of Public Disclosure
outstanding immediately prior to the Effective Time are unvested or are subject
to a repurchase option, risk of forfeiture or other condition under any
applicable restricted stock purchase agreement or other agreement with Public
Disclosure, then the shares of Netivation Stock issued in exchange for such
shares of capital stock of Public Disclosure will also be unvested and subject
to the same repurchase
AGREEMENT AND PLAN OF MERGER - 2
<PAGE>
option, risk of forfeiture or other condition, and the certificates representing
such shares of Netivation Stock may be accordingly marked with appropriate
legends.
1.6 Additional Consideration. At Closing, Netivation shall pay One
Hundred Ninety Thousand Dollars ($190,000) cash to the Selling Stockholders. In
addition, Netivation shall assume Public Disclosure's outstanding corporate
debts and payables.
1.7 Closing of Public Disclosure's Transfer Books. At the Effective
Time, holders of certificates representing Public Disclosure capital stock that
were outstanding immediately prior to the Effective Time shall cease to have any
rights as stockholders of Public Disclosure, and the stock transfer books of
Public Disclosure shall be closed with respect to all shares of such capital
stock outstanding immediately prior to the Effective Time. No further transfer
of any such capital stock of Public Disclosure shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any of such capital stock of Public
Disclosure (a "Public Disclosure Stock Certificate") is presented to the
Surviving Corporation or Netivation, such Public Disclosure Stock Certificate
shall be canceled and shall be exchanged as provided in Section 1.8.
1.8 Exchange of Certificates.
(a) At or as soon as practicable after the Effective Time,
Netivation will send to each holder of a Public Disclosure Stock Certificate a
letter of transmittal and instructions for use in customary form and containing
such provisions as may reasonably be required for use in effecting the surrender
of such Public Disclosure Stock Certificate for payment therefor and conversion
thereof. Upon surrender of a Public Disclosure Stock Certificate to Netivation
for exchange, together with a duly executed letter of transmittal and such other
documents as may be reasonably required by Netivation, the holder of such Public
Disclosure Stock Certificate shall be entitled to receive in exchange therefor
certificates representing the number of whole shares of Netivation Stock that
such holder has the right to receive pursuant to the provisions of this Section
1 and the Public Disclosure Stock Certificate so surrendered shall be canceled.
Until surrendered as contemplated by this Section 1.8, each Public Disclosure
Stock Certificate shall be deemed, from and after the Effective Time, to
represent only the right to receive upon such surrender a certificate
representing shares of Netivation Stock (and cash in lieu of any fractional
share of Netivation Stock) as contemplated by this Section 1. If any Public
Disclosure Stock Certificate shall have been lost, stolen or destroyed,
Netivation may, in its discretion and as a condition precedent to the issuance
of any certificates representing Netivation Stock, require the owner of such
lost, stolen or destroyed Public Disclosure Stock Certificate to provide an
appropriate affidavit and to deliver a bond (in such sum as Netivation may
reasonably direct) as indemnity.
(b) No dividends or other distributions declared or made with
respect to Netivation Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Public Disclosure Stock Certificate with
respect to the shares of Netivation Stock represented thereby, and no cash
payment in lieu of any fractional share shall be paid to any such
AGREEMENT AND PLAN OF MERGER - 3
<PAGE>
holder, until such holder surrenders such Public Disclosure Stock Certificate in
accordance with this Section 1.8 (at which time such holder shall be entitled to
receive all such dividends and distributions and such cash payment).
(c) No fractional shares of Netivation Stock shall be issued in
connection with the Merger. In lieu of such fractional shares, any holder of
capital stock of Public Disclosure who would otherwise be entitled to receive a
fraction of a share of Netivation Stock shall, upon surrender of such holder's
Public Disclosure Stock Certificate(s), be paid in cash the dollar amount
(rounded to the nearest whole cent), without interest, determined by multiplying
such fraction by the closing price of one share of Netivation Stock as reported
by the NASDAQ consolidated reporting system on the Closing Date.
(d) Each certificate representing any of the shares of Netivation
Stock to be issued in the Merger shall bear a legend identical or similar in
effect to the following legend (together with any other legend or legends
required by applicable state securities laws or otherwise):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED
SECURITIES WITHIN THE MEANING OF RULE 144 OF THE SECURITIES ACT OF
1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS REGISTERED
UNDER THE ACT OR UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE ACT IS AVAILABLE."
(e) Netivation and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable to
any holder or former holder of capital stock of Public Disclosure pursuant to
this Agreement such amounts as Netivation or the Surviving Corporation may be
required to deduct or withhold therefrom under the Code or under any provision
of state, local or foreign tax law. To the extent such amounts are so deducted
or withheld, such amounts shall be treated for all purposes under this Agreement
as having been paid to the Person to whom such amounts would otherwise have been
paid.
1.9 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, shares of capital stock of Public Disclosure that are issued and
outstanding immediately prior to the Effective Time and that are held by
stockholders who have not voted such shares in favor of the Merger and who have
delivered a written demand for appraisal of such shares in the manner provided
under D.C. Law ("Dissenting Shares") shall not be canceled and converted in
accordance with Section 1.5 unless and until such holder shall have failed to
perfect, or shall have effectively withdrawn or lost, such holder's right to
appraisal and payment under D.C. Law. If such holder shall have so failed to
perfect, or shall have effectively withdrawn or lost such right, such holder's
capital stock of Public Disclosure shall thereupon be deemed to have been
canceled and converted as described in Section 1.5 at the Effective Time, and
each such share shall represent solely the right to receive the merger
consideration described in Section 1.5. Public Disclosure shall give prompt
AGREEMENT AND PLAN OF MERGER - 4
<PAGE>
notice of any demands received by Public Disclosure for appraisal of its shares,
and, prior to the Effective Time, Netivation shall have the right to participate
in all negotiations and proceedings with respect to such demands. Prior to the
Effective Time, Public Disclosure shall not, except with the prior written
consent of Netivation, make any payment with respect to, or settle or offer to
settle, any such demands. From and after the Effective Time, no stockholder of
Public Disclosure who has demanded appraisal rights as provided under D.C. Law
shall be entitled to vote such holder's shares of Netivation Stock or capital
stock of Public Disclosure for any purpose or to receive payment of dividends or
other distributions with respect to such holder's shares (except dividends and
other distributions payable to stockholders of record of Public Disclosure at a
date which is prior to the Effective Time).
1.10 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.11 Accounting Treatment. For accounting purposes, the Merger is
intended to be treated as a "purchase."
1.12 Further Action. If, at any time after the Effective Time, any
further action is determined by Netivation to be necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation or
Netivation with full right, title and possession of and to all rights and
property of Public Disclosure, the officers and directors of the Surviving
Corporation and Netivation shall be fully authorized (in the name of Public
Disclosure and otherwise) to take such action.
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF
PUBLIC DISCLOSURE AND THE SELLING STOCKHOLDERS
Public Disclosure and Kent C. Cooper and Anthony D. Raymond jointly
and severally represent and warrant, to and for the benefit of the Netivation
Indemnitees, as follows:
2.1 Organization, Good Standing and Qualification. Public Disclosure
is a corporation duly organized, validly existing and in good standing under the
laws of the District of Columbia. Public Disclosure has all requisite
corporate power and authority to own and operate its properties and assets, to
execute and deliver the Transactional Agreements, to carry out the provisions of
the Transactional Agreements and to carry on its business as presently conducted
and as presently proposed to be conducted. Except as set forth on Schedule 2.1,
Public Disclosure is duly qualified and authorized to do business and is in good
standing as foreign entities in all jurisdictions in which the nature of its
activities and of its properties (both owned and leased) make such
qualifications necessary, except for those jurisdictions in which failure to do
so would not have a Material Adverse Effect on Public Disclosure or its
respective businesses. Public Disclosure has
AGREEMENT AND PLAN OF MERGER - 5
<PAGE>
made available to Netivation true, correct and complete copies of Public
Disclosure's articles of incorporation and bylaws, each as amended to date.
2.2 Subsidiaries. Public Disclosure owns no equity securities of any
other corporation, limited partnership or similar entity. Public Disclosure is
not a participant in any joint venture, partnership or similar arrangement.
2.3 Capitalization; Voting Rights. The authorized capital stock of
Public Disclosure consists of four (4) shares of Common Stock, of which four (4)
shares are issued and outstanding. Exhibit A sets forth the names of the
stockholders of Public Disclosure and the number of shares of capital stock
owned of record by each such stockholder. The Selling Stockholders together own
all of the outstanding shares of capital stock of Public Disclosure. All issued
and outstanding shares of Public Disclosure's Common Stock (i) have been duly
authorized and validly issued, (ii) are fully paid and nonassessable and (iii)
were issued in compliance with all applicable state and federal laws concerning
the issuance of securities. There are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first refusal), proxy
or stockholder agreements, or agreements of any kind for the purchase or
acquisition from Public Disclosure of any of its securities.
2.4 Authorization; Binding Obligations. Public Disclosure has the
absolute and unrestricted right, power and authority to enter into and to
perform its obligations under the Transactional Agreements to which Public
Disclosure is or may become a party. This Agreement constitutes the legal,
valid and binding obligation of Public Disclosure, enforceable against Public
Disclosure in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies. Upon the execution of each of the other Transactional
Agreements at the Closing, each of such other Transactional Agreements will
constitute the legal, valid and binding obligation of Public Disclosure,
enforceable against Public Disclosure in accordance with its terms, subject to
(i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
2.5 Financial Statements. Public Disclosure has delivered to
Netivation its unaudited balance sheet as of December 31, 1998 (the "Statement
Date") and its unaudited income statement for the nine (9) months ended
September 30, 1999 (collectively, the "Public Disclosure Financial Statements").
The Public Disclosure Financial Statements are complete and correct in all
material respects, and present fairly the financial condition and position of
Public Disclosure for the periods covered thereby.
2.6 Liabilities. Except as set forth in Schedule 2.6, Public
Disclosure has no material liabilities and, to the Knowledge of Public
Disclosure, has no material contingent liabilities not otherwise disclosed in
the Public Disclosure Financial Statements, except current liabilities incurred
in the Ordinary Course of Business subsequent to the Statement Date which have
not been,
AGREEMENT AND PLAN OF MERGER - 6
<PAGE>
either in any individual case or in the aggregate, materially adverse. All
obligations of Public Disclosure to affiliates, officers, members, directors and
stockholders of Public Disclosure are disclosed on the Public Disclosure
Financial Statements.
2.7 Agreements; Action.
(a) To the Knowledge of Public Disclosure and Kent C. Cooper and
Anthony D. Raymond, and except as set forth in Schedule 2.7, there are no
agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which Public Disclosure is a party or is
bound which may involve (i) obligations (contingent or otherwise) of, or
payments to, Public Disclosure in excess of $10,000, or (ii) the license of any
patent, copyright, trade secret or other proprietary right to or from Public
Disclosure (other than licenses arising from the purchase of "off the shelf" or
other standard products), or (iii) provisions restricting or affecting the
development, manufacture or distribution of Public Disclosure's products or
services or (iv) indemnification by Public Disclosure with respect to
infringements of proprietary rights.
(b) Public Disclosure has not (i) incurred any indebtedness for
money borrowed or any other liabilities (other than with respect to dividend
obligations, distributions, indebtedness and other obligations incurred in the
Ordinary Course of Business or as disclosed in the Public Disclosure Financial
Statements) individually in excess of $10,000 or, in excess of $15,000 in the
aggregate, (ii) made any loans or advances to any person, other than ordinary
advances for travel expenses or (iii) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
Ordinary Course of Business.
(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities Public Disclosure has reason to believe are affiliated therewith)
shall be aggregated for the purpose of meeting the individual minimum dollar
amounts of such subsections.
2.8 Obligations to Related Parties. Except as set forth in Schedule
2.8, there are no obligations of Public Disclosure to officers, directors,
stockholders, members or employees other than (a) for payment of salary for
services rendered, (b) reimbursement for reasonable expenses incurred on behalf
of Public Disclosure and (c) for other standard employee benefits made generally
available to all employees. Except as set forth in Schedule 2.8, no such
officer, director or stockholder, or any member of their immediate families is,
directly or indirectly, interested in any material contract with Public
Disclosure (other than such contracts as relate to any such person's ownership
of capital stock or other securities of Public Disclosure). Public Disclosure
is not a guarantor or indemnitor of any indebtedness of any other person, firm
or corporation.
2.9 Absence of Changes. Except as set forth in Schedule 2.9, since
the Statement Date, there has not been:
AGREEMENT AND PLAN OF MERGER - 7
<PAGE>
(a) Any change in the assets, liabilities, financial condition or
operations of Public Disclosure from that reflected in the Public Disclosure
Financial Statements, other than changes in the Ordinary Course of Business,
none of which individually or in the aggregate has had or is expected to have a
Material Adverse Effect on such assets, liabilities, financial condition or
operations of Public Disclosure;
(b) Any resignation or termination of any key officers of Public
Disclosure; and Public Disclosure, to its Knowledge, does not know of the
impending resignation or termination of employment of any such officer;
(c) Any material change, except in the Ordinary Course of Business, in
the contingent obligations of Public Disclosure by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of Public Disclosure;
(e) Any waiver by Public Disclosure of a valuable right or of a
material debt owed to it;
(f) Any direct or indirect loans made by Public Disclosure to any
stockholder, employee, officer or director of Public Disclosure, other than
advances made in the Ordinary Course of Business;
(g) Any material change in any compensation arrangement or agreement
with any employee, officer, director or stockholder;
(h) Any declaration or payment of any dividend or other
distribution of the assets of Public Disclosure;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or guaranteed
by Public Disclosure, except those for immaterial amounts and for current
liabilities incurred in the Ordinary Course of Business;
(k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(l) Any change in any material agreement to which Public Disclosure is
a party or by which it is bound which materially and adversely affects the
business, assets, liabilities, financial condition, operations or prospects of
Public Disclosure; or
AGREEMENT AND PLAN OF MERGER - 8
<PAGE>
(m) Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition, operations or prospects of
Public Disclosure. For purposes of this subsection (m), a material and adverse
effect shall only be deemed to occur if its monetary impact exceeds, or with the
passage of time, will exceed $10,000.
2.10 Title to Properties and Assets; Liens, Etc. Schedule 2.10 is a
complete and accurate list of all material assets (whether leased or owned),
including intellectual property, of Public Disclosure. Public Disclosure has
good and marketable title to all of its properties and assets, including those
listed on Schedule 2.10, and good title to its leasehold estates, in each case
subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than
(i) those resulting from taxes which have not yet become due and payable, (ii)
minor liens and encumbrances which do not materially detract from the value of
the property subject thereto or materially impair the operations of Public
Disclosure and (iii) those that have arisen from purchase money security
interests in an amount not to exceed $10,000. None of the Selling Shareholders
has any right in or claim to any of the intellectual property utilized by Public
Disclosure. All facilities, machinery, equipment, fixtures, vehicles and other
properties owned, leased or used by Public Disclosure are in good operating
condition and repair and are reasonably fit and usable for the purposes for
which they are being used. Except as set forth in Schedule 2.10, Public
Disclosure is in compliance with all material terms of each lease to which it is
a party or is otherwise bound.
2.11 Patents and Trademarks. Except as specified in Schedule 2.11, to
the Knowledge of Public Disclosure and Kent C. Cooper and Anthony D. Raymond,
Public Disclosure owns or possesses sufficient legal rights to all trademarks,
service marks, trade names, copyrights, trade secrets and licenses, patents,
information and other proprietary rights and processes necessary for its
business as now conducted and as proposed to be conducted, without any known
infringement of the rights of others. Except as disclosed in Schedule 2.11(a),
there are no outstanding options, licenses or agreements of any kind relating to
the foregoing, nor is Public Disclosure bound by or a party to any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information and
other proprietary rights and processes of any other person or entity other than
such licenses or agreements arising from the purchase of "off the shelf" or
standard products. Public Disclosure has not received any communications
alleging that either has violated or, by conducting its business as proposed,
would violate any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other person or
entity. To Public Disclosure's Knowledge, none of Public Disclosure's employees
is obligated under any contract (including licenses, covenants or commitments or
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with their duties to
Public Disclosure's business by the employees of Public Disclosure. The conduct
of Public Disclosure's business as proposed, will not, to the Knowledge of
Public Disclosure, conflict with or result in a breach of the terms, conditions
or provisions of, or constitute a default under, any contract, covenant or
instrument under which any employee is now obligated. Public Disclosure does
not believe it is or will be necessary to utilize any inventions, trade secrets
or proprietary information of any of its employees made prior
AGREEMENT AND PLAN OF MERGER - 9
<PAGE>
to their employment by Public Disclosure, except for inventions, trade secrets
or proprietary information that have been assigned to Public Disclosure.
2.12 Compliance with Other Instruments. To the Knowledge of Public
Disclosure and Kent C. Cooper and Anthony D. Raymond, Public Disclosure is not
in violation or default of any term of their charter documents, or of any
provision of any mortgage, indenture, contract, agreement, instrument or
contract to which either is party or by which either is bound or of any
judgment, decree, order, writ or, to Public Disclosure's Knowledge, any statute,
rule or regulation applicable to Public Disclosure which would materially and
adversely affect the business, assets, liabilities, financial condition,
operations or prospects of Public Disclosure. The execution, delivery, and
performance of and compliance with the Transactional Agreements will not, with
or without the passage of time or giving of notice, result in any such material
violation, or be in conflict with or constitute a default under any such term,
or result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of Public Disclosure or the suspension,
revocation, impairment, forfeiture or nonrenewal of any permit, license,
authorization or approval applicable to Public Disclosure, or the business or
operations or any of its assets or properties.
2.13 Litigation. Except as specified in Schedule 2.13, there is no
action, suit or proceeding pending, or to the Knowledge of Public Disclosure,
currently threatened against Public Disclosure that questions the validity of
this Agreement or Transactional Agreements or the right of Public Disclosure to
enter into any of such agreements, or to consummate the transactions
contemplated hereby or thereby, or which might result, either individually or in
the aggregate, in any material adverse change in the assets, condition, affairs
or prospects of Public Disclosure, financially or otherwise, or any change in
the current equity ownership of Public Disclosure, nor is Public Disclosure
aware that there is any basis for the foregoing. The foregoing includes,
without limitation, actions pending or threatened (or any basis therefor known
to Public Disclosure) involving the prior employment of any of Public
Disclosure's employees, their use in connection with Public Disclosure's
business of any information or techniques allegedly proprietary to any of their
former employers, or their obligations under any agreements with prior
employers. Public Disclosure is not a party or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by
Public Disclosure currently pending or which Public Disclosure intends to
initiate.
2.14 Tax Returns and Payments. Except as provided in Schedule 2.14:
(a) All material taxes required to have been paid, or claimed by
any Governmental Body to be payable, by Public Disclosure (whether pursuant to
any tax return or otherwise) have been duly paid in full and on a timely basis.
All material taxes required to have been withheld or collected by Public
Disclosure, including with respect to employees, has been duly withheld and
collected; and (to the extent required) each such tax has been paid to the
appropriate Governmental Body.
AGREEMENT AND PLAN OF MERGER - 10
<PAGE>
(b) All material tax returns required to be filed by or on behalf
of Public Disclosure with any Governmental Body have been timely filed
(collectively, the "Public Disclosure Returns"). All material taxes required to
be paid by Public Disclosure for the fiscal year 1998 have either been paid in
full or shall not result in any liability to Public Disclosure. All Public
Disclosure Returns (i) have been filed when due and (ii) have been accurately
and completely prepared in full compliance with all applicable legal
requirements. Public Disclosure has delivered to Netivation accurate and
complete copies of the 1998 Public Disclosure Returns.
(c) There have been no examinations or audits of any Public
Disclosure Return, and, to the Knowledge of Public Disclosure, no such
examination or audit has been proposed or scheduled by any Governmental Body.
Public Disclosure has delivered to Netivation accurate and complete copies of
all audit reports and similar documents (to which Public Disclosure has access)
relating to the Public Disclosure Returns.
(d) No claim or proceeding is pending or, to the Knowledge of
Public Disclosure, has been threatened against Public Disclosure in respect of
any tax. There are no unsatisfied Liabilities for taxes (including Liabilities
for interest, additions to tax and penalties thereon and related expenses) with
respect to any notice of deficiency or similar document received by Public
Disclosure. There are no material liens for taxes upon any of the assets of
Public Disclosure, except liens for current taxes not yet due and payable.
Public Disclosure has not entered into or become bound by any agreement or
consent pursuant to Section 341(f) of the Code.
(e) To the Knowledge of Public Disclosure, there is no agreement,
plan, arrangement or other contract covering any employee or independent
contractor or former employee or independent contractor of Public Disclosure
that, individually or collectively, could give rise, directly or indirectly, to
the payment of any amount that would not be deductible pursuant to Section 280G
or Section 162 of the Code. Public Disclosure is not, and has never been, a
party to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar contract.
2.15 Employees. Except as set forth in Schedule 2.15, Public
Disclosure is not a party to or bound by any currently effective employment
contract, deferred compensation arrangement, bonus plan, incentive plan, profit
sharing plan, retirement agreement or other employee compensation plan or
agreement. To the Knowledge of Public Disclosure, no employee of Public
Disclosure, nor any consultant with whom Public Disclosure has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, Public Disclosure because of the nature of
the business to be conducted by Public Disclosure; and to the Knowledge of
Public Disclosure the continued employment by Public Disclosure of its present
employees, and the performance of Public Disclosure's contracts with its
independent contractors, will not result in any such violation. Public
Disclosure has not received any notice alleging that any such violation has
occurred. No employee of Public Disclosure has been granted the right to
continued employment by Public Disclosure or to any material compensation
following termination of employment with Public Disclosure. To the Knowledge of
Public Disclosure, no officer or key employee, or any
AGREEMENT AND PLAN OF MERGER - 11
<PAGE>
group of key employees, intends to terminate their employment with Public
Disclosure, nor does Public Disclosure have a present intention to terminate the
employment of any officer, key employee or group of key employees.
2.16 Registration Rights. Public Disclosure is not presently under
any obligation, and has not granted any rights, to register any of its presently
outstanding securities or any of its securities that may hereafter be issued.
2.17 Compliance with Legal Requirements; Consents.
(a) To the Knowledge of Public Disclosure and Kent C. Cooper and
Anthony D. Raymond, Public Disclosure is in full compliance with each legal
requirement that is or was applicable to it or to the conduct of its business or
the ownership or use of any of its assets, except where the failure to comply
with each such legal requirement has not had and will not have a Material
Adverse Effect on Public Disclosure.
(b) Neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with or result in a violation of
(i) any of the provisions of Public Disclosure's articles of incorporation or
bylaws, or (ii) any resolution adopted by Public Disclosure's stockholders or
Public Disclosure's board of directors;
(ii) contravene, conflict with or result in a violation of,
or give any Governmental Body or other Person the right to exercise any remedy
or obtain any relief under, any legal requirement or any order to which Public
Disclosure, or any of the assets owned or used by Public Disclosure, is subject;
(iii) contravene, conflict with or result in a violation or
Breach of (resulting in a Material Adverse Effect), or result in a default
under, any provision of any contract to which Public Disclosure is a party; or
(iv) give any Person the right to (A) declare a default or
exercise any remedy under any contract to which Public Disclosure is a party,
(B) accelerate the maturity or performance of any contract to which Public
Disclosure is a party or (C) cancel, terminate or modify any contract to which
Public Disclosure is a party.
Neither Public Disclosure nor any of the Selling Stockholders was, is
or will be required to make any filing with or give any notice to, or to obtain
any consent from, any Person other than Selling Stockholders' spouses in
connection with the execution and delivery of any of the Transactional
Agreements or the consummation or performance of any of the Transactions.
AGREEMENT AND PLAN OF MERGER - 12
<PAGE>
2.18 Selling Stockholders. Each Selling Stockholder represents that
(i) he, she or it has the absolute and unrestricted right, power and authority
to enter into and to perform his, her or its obligations under each of the
Transactional Agreements to which such Selling Stockholder is or may become a
party, (b) this Agreement constitutes his, her or its legal, valid and binding
obligation, enforceable against such Selling Stockholder in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies and (c) upon the
execution of each of the other Transactional Agreements at the Closing, each of
such other Transactional Agreements will constitute the legal, valid and binding
obligation of such Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
2.19 Full Disclosure. This Agreement does not (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact or (ii) omit to state any material fact necessary in order
to make the representations, warranties and information of or with respect to
Public Disclosure and the Selling Stockholders contained and to be contained
herein (in light of the circumstances under which such representations,
warranties and information were or will be made or provided) not false or
misleading. Public Disclosure has provided Netivation and Netivation's
Representatives with full and complete access to all of Public Disclosure's
records and other documents and data.
2.20 Year 2000 Compliance. Public Disclosure has developed a detailed
plan to ensure that it, its affiliates, and all customers, suppliers and vendors
that are material to its business, become Year 2000 Compliant on or before
November 1, 1999. The plan (a) effectively prioritizes mission-critical
systems, (b) has the involvement of executive management, (c) includes
assessment of key customer, supplier, and vendor Year 2000 compliance, (d)
includes contingency planning to mitigate risk from Year 2000 business
interruptions affecting key vendors, suppliers, or customers, and (e) has been
allocated adequate resources within Public Disclosure's abilities.
2.21 Securities Laws Matters. Each Selling Stockholder understands
that the Netivation Stock being issued in the Transaction is being issued
pursuant to an exemption from registration contained in the Securities Act,
based in part upon the Selling Stockholders' representations contained in this
Agreement. Each Selling Stockholder hereby severally and not jointly represents
and warrants as follows:
(a) Knowledge and Experience. Each Selling Stockholder is
knowledgeable and has substantial experience in evaluating and investing in
transactions in companies similar to Netivation so that he is capable of
evaluating the merits and risks of his investment in Netivation. Each Selling
Stockholder has by reason of his business or financial knowledge and experience,
the capacity to protect his own interests in connection with the Transaction.
Further, each Selling Stockholder is aware of no publication of any
advertisement in connection with the Transaction. Each Selling Stockholder can
bear the economic risk of the Transaction. Each Selling Stockholder has been
advised or is aware of the provisions of Rule 144
AGREEMENT AND PLAN OF MERGER - 13
<PAGE>
promulgated under the Securities Act, which permits limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions. Each Selling Stockholder shall not sell or otherwise transfer any
Netivation Stock until the requirements of Rule 144 are satisfied for such sale
or transfer unless the stock is earlier registered.
(b) Netivation Information. Each Selling Stockholder has had an
opportunity to discuss Netivation's business, management and financial affairs,
both as currently conducted and as proposed to be conducted following the
Merger, with directors, officers and management of Netivation and has had the
opportunity to review Netivation's operations and facilities. Each Selling
Stockholder has also had the opportunity to ask questions of, and receive
answers from, Netivation and its management regarding the terms and conditions
of the Transaction and the receipt of Netivation Stock.
(c) Acquisition for Own Account. Each Selling Stockholder is
acquiring the Netivation Stock for his own account for investment only, and not
with a view towards distribution.
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF NETIVATION
Netivation represents and warrants to Public Disclosure and the
Selling Stockholders as follows:
3.1 Organization, Good Standing and Qualification.
(a) Netivation is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Netivation has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver this Agreement and the Transactional Agreements,
to issue and sell the Netivation Stock, to carry out the provisions of this
Agreement and the Transactional Agreements and to carry on its business as
presently conducted and as presently proposed to be conducted. Netivation is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its activities
and of its properties (both owned and leased) make such qualifications
necessary, except for those jurisdictions in which failure to do so would not
have a Material Adverse Effect on Netivation or its business. Netivation has
made available to Public Disclosure true, correct and complete copies of the
Netivation's certificate of incorporation and bylaws, each as amended to date.
(b) Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Merger Sub has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver the Transactional Agreements, to carry out the
provisions of the Transactional Agreements and to carry on its business as
presently conducted and as presently proposed to be conducted.
3.2 Subsidiaries. Except for Merger Sub, Netivation.com Merger Two
Corp., Netivation.com Merger Three Corp., Netivation.com Merger Four Corp.,
Netivation.com Merger
AGREEMENT AND PLAN OF MERGER - 14
<PAGE>
Six Corp., InterLink Internet Services, Inc., and The Online Medical Bookstore,
Inc., all of which are wholly-owned subsidiaries of Netivation, Netivation owns
no equity securities of any other corporation, limited partnership or similar
entity. Netivation is not a participant in any joint venture, partnership or
similar arrangement.
3.3 Capitalization; Voting Rights.
(a) The authorized capital stock of Netivation, as of October 7,
1999, consists of (a) 30,000,000 shares of Common Stock, of which 8,660,055
shares are issued and outstanding, and (b) 2,000,000 shares of Preferred Stock,
of which 0 shares are issued and outstanding. All issued and outstanding shares
of Netivation's Common Stock and Preferred Stock (i) have been duly authorized
and validly issued, (ii) are fully paid and nonassessable and (iii) were issued
in compliance with all applicable state and federal laws concerning the issuance
of securities. The Netivation Stock has been duly authorized and, when issued in
compliance with the provisions of this Agreement and its certificate of
incorporation, will be validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, other than liabilities
imposed upon stockholders generally by the provisions of Delaware Law, and will
not be subject to any other restrictions, except as set forth in or provided by
this Agreement and as may be imposed by applicable law.
(b) The authorized capital stock of Merger Sub consists of one
thousand (1,000) shares of Common Stock, one hundred (100) shares of which have
been issued to Netivation. All of the issued and outstanding shares of Common
Stock of Merger Sub (i) have been duly authorized and validly issued, (ii) are
fully paid and nonassessable and (iii) were issued in compliance with all
applicable state and federal laws concerning the issuance of securities.
3.4 Authorization; Binding Obligations. Each of Netivation and
Merger Sub has the absolute and unrestricted right, power and authority to enter
into and to perform its obligations under the Transactional Agreements to which
Netivation and Merger Sub, as the case may be, is or may become a party. This
Agreement constitutes the legal, valid and binding obligation of each of
Netivation and Merger Sub, enforceable against them in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies. Upon the execution
of each of the other Transactional Agreements at the Closing, each of such other
Transactional Agreements will constitute the legal, valid and binding obligation
of Netivation, enforceable against Netivation in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
3.5 Full Disclosure. Netivation has delivered to Public Disclosure
an accurate and complete copy of its Registration Statement on Form SB-2 No.
333-74569 filed with the Securities and Exchange Commission (the "SEC") on June
22, 1999 (the "Registration Statement"), which is the most recent document filed
with the SEC as of the date hereof. The Registration Statement (i) complies in
all material respects with the applicable requirements of the Securities Act
AGREEMENT AND PLAN OF MERGER - 15
<PAGE>
and (ii) does 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 the light of the circumstances under which they
were made, not misleading.
SECTION 4 - CERTAIN COVENANTS OF PUBLIC DISCLOSURE
AND THE SELLING STOCKHOLDERS
4.1 Access and Investigation. Public Disclosure and the Selling
Stockholders shall ensure that, at all times during the Pre-Closing Period:
(a) Public Disclosure and its Representatives provide Netivation
and its Representatives with access, during normal business hours upon
reasonable notice, to Public Disclosure's Representatives, personnel and assets
and to all existing books, records, tax returns, work papers and other documents
and information relating to Public Disclosure;
(b) Public Disclosure and its Representatives provide Netivation
and its Representatives with such copies of existing books, records, tax
returns, work papers and other documents and information relating to Public
Disclosure as Netivation may request in good faith; and
(c) Public Disclosure and its Representatives compile and provide
Netivation and its Representatives with such additional financial, operating and
other data and information regarding Public Disclosure as Netivation may request
in good faith. Without limiting the generality of the foregoing, during the
Pre-Closing Period, Public Disclosure shall promptly provide Netivation with
copies of:
(i) all material operating and financial reports prepared
by Public Disclosure for its senior management, including copies of the
unaudited monthly balance sheets of Public Disclosure and the related unaudited
monthly statements of operations, statements of stockholders' equity and
statements of cash flows;
(ii) any written materials or communications sent by or on
behalf of Public Disclosure to its stockholders generally;
(iii) any material notice, document or other communication
sent by or on behalf of Public Disclosure to any party to any Public Disclosure
contract or sent to Public Disclosure by any party to any Public Disclosure
contract (other than any communication that relates solely to commercial
transactions of the type sent in the Ordinary Course of Business);
(iv) any written notice, report or other document filed with
or sent to any Governmental Body in connection with the Merger or any of the
other Transactions; and
(v) any material written notice, report or other document
received by Public Disclosure from any Governmental Body.
AGREEMENT AND PLAN OF MERGER - 16
<PAGE>
4.2 Operation of Business. Public Disclosure and the Selling
Stockholders shall use its or their reasonable best efforts to ensure that,
during the Pre-Closing Period, unless prior written approval is provided by
Netivation:
(a) Public Disclosure conducts its operations exclusively in the
Ordinary Course of Business and in the same manner as such operations have been
conducted prior to the date of this Agreement;
(b) Public Disclosure preserves intact its current business
organization, keeps available the services of its current officers and employees
and maintains its relations and good will with suppliers, customers, landlords,
creditors, licensors, licensees, employees and other Persons having business
relationships with Public Disclosure;
(c) Public Disclosure keeps in full force all existing insurance
policies;
(d) Public Disclosure's officers confer regularly, upon request,
with Netivation concerning operational matters and otherwise report regularly,
upon request, to Netivation concerning the status of Public Disclosure's
business, condition, assets, liabilities, operations, financial performance and
prospects;
(e) Public Disclosure immediately notifies Netivation of any
inquiry, proposal or offer from any Person relating to any Acquisition
Transaction;
(f) Public Disclosure does not declare, accrue, set aside or pay
any dividend or make any other distribution in respect of any shares of capital
stock or other securities, and does not repurchase, redeem or otherwise
reacquire any shares of capital stock or other securities;
(g) Public Disclosure does not sell or otherwise issue any shares
of capital stock or any other securities;
(h) Public Disclosure does not amend its articles of
incorporation or bylaws, and does not effect or become a party to any
Acquisition Transaction, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction;
(i) Public Disclosure does not form any subsidiary or acquires
any equity interest or other interest in any other entity;
(j) Public Disclosure does not make any capital expenditure,
except for capital expenditures that are made in the Ordinary Course of Business
and that do not exceed $10,000;
AGREEMENT AND PLAN OF MERGER - 17
<PAGE>
(k) Public Disclosure does not (i) lend money to any Person or
(ii) incur, assume or otherwise become subject to any Liability, except for
current liabilities incurred in the Ordinary Course of Business;
(l) Public Disclosure does not establish or adopt any employee
benefit plan, nor pay or agree to pay any bonus nor makes any profit-sharing or
similar payment to, nor increase the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers or employees (except for regularly scheduled salary
increases in the Ordinary Course of Business);
(m) Public Disclosure does not change any of its methods of
accounting or accounting practices in any respect;
(n) Public Disclosure does not commence any Proceeding, except in
the Ordinary Course of Business;
(o) Public Disclosure does not enter into any transaction or take
any other action of the type referred to in Section 2.9;
(p) Public Disclosure does not enter into any transaction or take
any other action outside the Ordinary Course of Business;
(q) Public Disclosure does not enter into any transaction or take
any other action that is reasonably likely to cause or constitute a Breach of
any representation or warranty made by Public Disclosure or the Selling
Stockholders; and
(r) Public Disclosure does not agree, commit or offer (in writing
or otherwise), or attempt, to take any of the actions described in clauses
"(f)" through "(q)" of this Section 4.2.
4.3 Notification; Updates to Schedule of Exceptions; Opportunity to
Cure.
(a) During the Pre-Closing Period, Public Disclosure and/or the
Selling Stockholders shall promptly notify Netivation in writing of:
(i) the discovery by Public Disclosure or any of the Selling
Stockholders of any event, condition, fact or circumstance that occurred or
existed on or prior to the date of this Agreement that caused or constitutes a
Breach of any representation or warranty made by Public Disclosure or the
Selling Stockholders in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute a Breach of any representation or warranty made by Public Disclosure
or the Selling Stockholders in this Agreement if (A) such representation or
warranty had been made as of the time of the occurrence, existence or
AGREEMENT AND PLAN OF MERGER - 18
<PAGE>
discovery of such event, condition, fact or circumstance or (B) such event,
condition, fact or circumstance had occurred, arisen or existed on or prior to
the date of this Agreement;
(iii) any Breach of any covenant or obligation of Public
Disclosure or the Selling Stockholders; and
(iv) any event, condition, fact or circumstance that may
make the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 4.3(a) requires any change in the
Schedule of Exceptions, or if any such event, condition, fact or circumstance
would require such a change assuming the Schedule of Exceptions were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then Public Disclosure shall promptly deliver to
Netivation an update to the Schedule of Exceptions specifying such change. No
such update shall be deemed to supplement or amend the Schedule of Exceptions
for the purpose of (i) determining the accuracy of any of the representations
and warranties made by Public Disclosure in this Agreement for purposes of
Section 6.1, but shall be deemed to supplement or amend the Schedule of
Exceptions for purposes of Section 9 or (ii) determining whether any of the
other conditions set forth in Section 6 have been satisfied.
(c) Upon receipt of any notification pursuant to Section 4.3(a),
Netivation shall send written notice to Public Disclosure and/or the Selling
Stockholders of its decision to seek termination of this Agreement or pursue any
other available remedy. Netivation shall provide Public Disclosure and/or the
Selling Stockholders a reasonable opportunity to cure, but in no event less than
ten (10) days.
(d) During the Pre-Closing Period, Public Disclosure and/or the
Selling Stockholders, as appropriate, shall promptly notify Netivation in
writing of the awareness by Public Disclosure or its representatives or any of
the Selling Stockholders of any event, condition, fact or circumstance that
occurred or existed on or prior to the date of this Agreement or thereafter that
caused or constitutes or will cause or constitute a Breach of any representation
or warranty made by Netivation in this Agreement.
(e) Upon receipt of any notification pursuant to Section 4.3(d),
Netivation shall send written notice to Public Disclosure and/or the Selling
Stockholders of its intent to cure the defect. Public Disclosure and the Selling
Stockholders shall provide a reasonable opportunity to cure the defect, but in
no event less than ten (10) days. Public Disclosure and the Selling Stockholders
shall not have the right to sue for indemnity or contribution for any defect
that Public Disclosure and/or the Selling Stockholders were aware of prior to or
during the Pre-Closing Period for which no notification pursuant to section
4.3(d) was given to Netivation.
AGREEMENT AND PLAN OF MERGER - 19
<PAGE>
4.4 No Negotiation. Public Disclosure shall ensure that, during the
Pre-Closing Period, neither Public Disclosure nor any of Public Disclosure's
Representatives directly or indirectly:
(a) solicits or encourages the initiation of any inquiry,
proposal or offer from any Person (other than Netivation) relating to any
Acquisition Transaction;
(b) participates in any discussions or negotiations with, or
provides any non-public information to, any Person (other than Netivation)
relating to any Acquisition Transaction; or
(c) considers the merits of any unsolicited inquiry, proposal or
offer from any Person (other than Netivation) relating to any Acquisition
Transaction.
SECTION 5 - ADDITIONAL COVENANTS OF THE PARTIES
5.1 Notification; Opportunity to Cure.
(a) During the Pre-Closing Period, Netivation shall promptly
notify Public Disclosure and/or the Selling Stockholders in writing of:
(i) the discovery by Netivation of any event, condition,
fact or circumstance that occurred or existed on or prior to the date of this
Agreement that caused or constitutes a Breach of any representation or warranty
made by Netivation in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute a Breach of any representation or warranty made by Netivation in this
Agreement if (A) such representation or warranty had been made as of the time of
the occurrence, existence or discovery of such event, condition, fact or
circumstance or (B) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement;
(iii) any Breach of any covenant or obligation of
Netivation; and
(iv) any event, condition, fact or circumstance that may
make the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) Upon receipt of any notification pursuant to Section 5.1(a),
Public Disclosure and/or the Selling Stockholders shall send written notice to
Netivation of its/their decision to seek termination of this Agreement or pursue
any other available remedy. Public Disclosure and/or the Selling Stockholders
shall provide Netivation a reasonable opportunity to cure, but in no event less
than ten (10) days.
AGREEMENT AND PLAN OF MERGER - 20
<PAGE>
(c) During the Pre-Closing Period, Netivation shall promptly
notify Public Disclosure and/or the Selling Stockholders, as appropriate, in
writing of the awareness by Netivation or its representatives of any event,
condition, fact or circumstance that occurred or existed on or prior to the date
of this Agreement or thereafter that caused or constitutes or will cause or
constitute a Breach of any representation or warranty made by Public Disclosure
and/or a Selling Stockholder in this Agreement.
(d) Upon receipt of any notification pursuant to Section 5.1(c),
Public Disclosure and/or the Selling Stockholders shall send written notice to
Netivation of its/their intent to cure the defect. Netivation shall provide a
reasonable opportunity to cure the defect, but in no event less than ten (10)
days. Netivation shall not have the right to sue for indemnity for any defect
that Netivation was aware of prior to or during the Pre-Closing Period for which
no notification pursuant to Section 5.1(c) was given to Public Disclosure
Net.Capitol and/or the Selling Stockholders, as appropriate.
5.2 Filings and Consents. As promptly as practicable after the
execution of this Agreement, each party to this Agreement (i) shall make all
filings (if any) and give all notices (if any) required to be made and given by
such party in connection with the Transactions and (ii) shall use all
commercially reasonable efforts to obtain all consents (if any) required to be
obtained (pursuant to any applicable legal requirement or contract, or
otherwise) by such party in connection with the Transactions. Each of the
parties shall (upon request) promptly deliver to the other a copy of each such
filing made, each such notice given and each such consent obtained by Public
Disclosure or Netivation, as the case may be, during the Pre-Closing Period.
5.3 Public Disclosure Stockholders' Meeting. Public Disclosure
shall, in accordance with its certificate of incorporation and bylaws and the
applicable requirements of D.C. Law, call and hold a special meeting of its
stockholders, or solicit written consents from its stockholders, as promptly as
practicable for the purpose of permitting them to consider and to vote upon and
approve the Merger and this Agreement. Public Disclosure shall use its best
efforts (i) to solicit from each of such stockholders a proxy or consent in
favor of the approval of the Merger and this Agreement and (ii) to cause each of
such stockholders to execute and deliver to Netivation a Prospective Offeree
Questionnaire in a form acceptable to Netivation certifying, among other items,
as to whether each of such stockholders is an "accredited investor" as such term
is defined in Rule 501 under the Securities Act.
5.4 Public Announcements. During the Pre-Closing Period, (i) neither
Public Disclosure nor Netivation shall (and neither Public Disclosure nor
Netivation shall permit any of its respective Representatives to) issue any
press release or make any public statement regarding this Agreement or the
Transactions, without the other party's prior written consent, and (ii) each
party will use reasonable efforts to consult with the other party prior to
issuing any press release or making any public statement regarding the Merger;
provided that Netivation shall be free to make any disclosure regarding the
Merger that it deems necessary in connection with filings with the SEC made in
connection with the Registration Statement.
AGREEMENT AND PLAN OF MERGER - 21
<PAGE>
5.5 Best Efforts. During the Pre-Closing Period, (i) Public
Disclosure shall use commercially reasonable efforts to cause the conditions set
forth in Section 6 to be satisfied on a timely basis and (ii) Netivation and
Merger Sub shall use their commercially reasonable efforts to cause the
conditions set forth in Section 7 to be satisfied on a timely basis and
Netivation will take all actions necessary to cause Merger Sub to perform its
obligations under this Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement.
5.6 Tax Matters. At or prior to the Closing, (a) Public Disclosure
shall execute and deliver to Moffatt, Thomas, Barrett, Rock & Fields, Chtd. and
to Netivation a tax representation letter, in a form reasonably acceptable to
such parties, and (b) Netivation shall execute and deliver to Long, Aldridge &
Norman LLP, Moffatt, Thomas, Barrett, Rock & Fields, Chtd. and to Public
Disclosure a tax representation letter, in a form reasonably acceptable to such
parties. Public Disclosure and the Selling Stockholders will use all of their
respective reasonable efforts to cause the transactions contemplated hereby to
qualify as a reorganization under the provisions of Section 368(a) of the Code
and will not take any action after the Acquisition is effected that could
reasonably be expected to cause the Acquisition to lose its tax-free status.
All parties hereto agree to file this Agreement with their respective federal
income tax returns for the year in which the Acquisition closes and to comply
with the reporting requirements of United States Treasury Regulations Section
1.368-2(g), if applicable. Netivation will use its reasonable best efforts to
support the investigation of certain tax advantages for Public Disclosure in the
Enterprise Zone of the District of Columbia.
5.7 Support to Public Disclosure. During the twelve (12) month
period after Closing, Netivation shall invest at least $100,000 of financial,
management, technical and/or other resources into the business of Public
Disclosure to facilitate its growth.
5.8 First Right to Purchase Assets of Public Disclosure.
(a) During the 36 month period after Closing, if Netivation
decides to sell any key assets of Public Disclosure to a non-affiliate, then the
Selling Stockholders shall have the first right to purchase such assets.
Netivation shall give the Agent a thirty (30) day written notice pursuant to
Section 10.5 of its intent to sell such assets. During the thirty (30) day
period following written notice, Netivation will negotiate in good faith with
the Agent to effectuate an agreement for the sale of such assets to the Selling
Stockholders.
(b) During the 36 month period after Closing, if Netivation
receives an unsolicited bona fide offer to sell any key assets of Public
Disclosure to a non-affiliate, then the Selling Stockholders shall have the
first right to purchase such assets. Netivation shall give the Agent a fifteen
(15) day written notice pursuant to Section 10.5 of the unsolicited offer and a
copy of the offer. During the fifteen (15) day period following written notice,
the Selling Stockholders shall have the right to match the offer and to
effectuate an agreement for the sale of such assets to the Selling Stockholders.
If the Selling Stockholders do not match the offer, then Netivation shall have
the right to effectuate an agreement for the sale of such assets with the party
making the unsolicited bona fide offer on terms similar in all material respects
to the unsolicited bona fide offer.
AGREEMENT AND PLAN OF MERGER - 22
<PAGE>
5.9 Piggyback Registration. If Netivation determines to register any
of its common stock in a subsequent public offering to be consummated at any
time after twelve (12) months following Closing, Netivation shall provide
piggyback registration rights, subject to any underwriter's restrictions, to the
Selling Shareholders' Netivation Stock in such registration. If Netivation
consummates any such public offering before twelve (12) months following
Closing, Netivation may, in its sole discretion, offer piggyback registration
rights to the Selling Shareholders' Netivation Stock in connection with such
registration.
5.10 Non-Partisanship. After Closing, Netivation will use its
reasonable best efforts to ensure that the Surviving Corporation maintains
politically non-partisanship standing in relation to the business it conducts.
5.11 Political Party Contributions. Netivation shall not contribute
corporate treasury dollars to specific political parties.
SECTION 6 - CONDITIONS PRECEDENT TO OBLIGATIONS
OF NETIVATION AND MERGER SUB
The obligations of Netivation and Merger Sub to effect the
Transactions are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Netivation, in
whole or in part, in accordance with Section 10.11):
6.1 Accuracy of Representations. Each of the representations and
warranties made by Public Disclosure and the Selling Stockholders in this
Agreement shall have been accurate in all material respects as of the date of
this Agreement and shall be accurate in all material respects as of the
Scheduled Closing Time as if made at the Scheduled Closing Time.
6.2 Performance of Covenants. Each covenant and obligation that
Public Disclosure or any of the Selling Stockholders is required to comply with
or to perform pursuant to this Agreement at or prior to the Closing shall have
been duly complied with and performed in all material respects.
6.3 Stockholder Approval. The principal terms of the Merger shall
have been duly approved by the stockholders of Public Disclosure in accordance
with the provisions of D.C. Law and applicable agreements.
6.4 Consents. All consents required to be obtained by Public
Disclosure in connection with the Transactions (including the consents
identified in Section 2.17) shall have been obtained and shall be in full force
and effect.
6.5 No Material Adverse Change. Except for adverse changes that
result from general economic conditions, there shall have been no material
adverse change in Public Disclosure's business, condition, assets, liabilities,
operations, financial performance or prospects since the date of this Agreement.
AGREEMENT AND PLAN OF MERGER - 23
<PAGE>
6.6 Agreements and Documents. Netivation shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) the Escrow Agreement, substantially in the form of Exhibit G;
(b) an Employment and Noncompetition Agreement, substantially in
the form of Exhibits F, executed by Kent C. Cooper and Anthony D. Raymond;
(c) a Tax Representation Letter executed by Public Disclosure;
(d) a Prospective Offeree Questionnaire substantially in the form
of Exhibit H executed by each Selling Stockholder;
(e) a certificate executed by each of the Selling Stockholders
containing the representation and warranty of each such Selling Stockholder that
(i) each of the representations and warranties made by Public Disclosure and the
Selling Stockholders in this Agreement is accurate in all material respects as
of the Closing Date as if made on the Closing Date and (ii) the conditions set
forth in this Section 6 have been duly satisfied (the "Selling Stockholders'
Closing Certificate");
(f) a legal opinion from counsel for Public Disclosure and the
Selling Stockholders, substantially in the form of Exhibit E.
(g) such other documents as Netivation may reasonably request in
good faith for the purpose of (i) evidencing the accuracy of any representation
or warranty made by Public Disclosure or the Selling Stockholders, (ii)
evidencing the compliance by Public Disclosure or the Selling Stockholders with,
or the performance by Public Disclosure or the Selling Stockholders of, any
covenant or obligation set forth in this Agreement, (iii) evidencing the
compliance with any applicable federal or state securities law, (iv) evidencing
the satisfaction of any condition set forth in this Section 6 or (v) otherwise
facilitating the consummation or performance of any of the Transactions.
6.7 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any legal requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.8 No Proceedings. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Merger or seeking to prohibit or limit the
exercise by Netivation of any material right pertaining to its ownership of
stock of the Surviving Corporation.
6.9 Securities Law Compliance. All applicable requirements of the
Securities Act and any applicable state securities laws shall have been
satisfied.
AGREEMENT AND PLAN OF MERGER - 24
<PAGE>
6.10 Dissenters Rights. No stockholder of Public Disclosure shall
have exercised dissenters rights with respect to approval of the Transactions.
6.11 Unaccredited Investors. The Prospective Offeree Questionnaires
delivered pursuant to Sections 5.3 and 6.6 shall indicate that no more than 35
of the stockholders of Public Disclosure are "unaccredited investors," as
defined by Rule 501 under the Securities Act.
6.12 Proceedings and Documents. All corporate and other proceedings
in connection with the Transactions and all documents and instruments incident
to such Transactions shall be reasonably satisfactory in substance and form to
Netivation.
6.13 Corporate Approvals. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of Public Disclosure, Netivation, Merger Sub and the Selling Stockholders.
SECTION 7 - CONDITIONS PRECEDENT TO OBLIGATIONS
OF PUBLIC DISCLOSURE AND THE SELLING STOCKHOLDERS
The obligations of Public Disclosure and the Selling Stockholders to
effect the Transactions are subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived solely
by Public Disclosure, in whole or in part, in accordance with Section 10.11):
7.1 Accuracy of Representations. Each of the representations and
warranties made by Netivation in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in all
material respects as of the Scheduled Closing Time as if made at the Scheduled
Closing Time.
7.2 Performance of Covenants. Each covenant and obligation that
Netivation and Merger Sub are required to comply with or to perform pursuant to
this Agreement at or prior to the Closing shall have been duly complied with and
performed in all material respects.
7.3 Consents. All consents required to be obtained by Netivation in
connection with the Transactions shall have been obtained and shall be in full
force and effect.
7.4 Agreements and Documents. Public Disclosure shall have received
the following agreements and documents, each of which shall be in full force and
effect:
(a) the Escrow Agreement, substantially in the form of Exhibit G;
(b) an Employment and Noncompetition Agreement, substantially in
the forms of Exhibit F, executed by Kent C. Cooper and Anthony D. Raymond;
(c) a Tax Representation Letter executed by Netivation;
AGREEMENT AND PLAN OF MERGER - 25
<PAGE>
(d) a certificate executed by Netivation containing the
representation and warranty of Netivation that (i) each of the representations
and warranties made by Netivation in this Agreement is accurate in all material
respects as of the Closing Date as if made on the Closing Date and (ii) the
conditions set forth in this Section 7 have been duly satisfied;
(e) a legal opinion from counsel for Netivation and Merger Sub,
substantially in the form of Exhibit E; and
(f) such other documents as Public Disclosure may reasonably
request in good faith for the purpose of (i) evidencing the accuracy of any
representation or warranty made by Netivation, (ii) evidencing the compliance by
Netivation with, or the performance by Netivation of, any covenant or obligation
set forth in this Agreement, (iii) evidencing the compliance with any applicable
federal or state securities law, (iv) evidencing the satisfaction of any
condition set forth in this Section 7 or (v) otherwise facilitating the
consummation or performance of any of the Transactions.
7.5 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any legal requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
7.6 No Proceedings. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Merger or seeking to prohibit or limit the
exercise by Netivation of any material right pertaining to its ownership of
stock of the Surviving Corporation.
7.7 Corporate Approvals. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of Netivation and Merger Sub.
SECTION 8 - TERMINATION
8.1 Termination Events. This Agreement may be terminated prior to
the Closing:
(a) by Netivation if (i) there is a material Breach of any
covenant or obligation of Public Disclosure or any of the Selling Stockholders
or (ii) Netivation reasonably determines that the timely satisfaction of any
condition set forth in Section 6 has become impossible (other than as a result
of any failure on the part of Netivation or Merger Sub to comply with or perform
any covenant or obligation of Netivation or Merger Sub set forth in this
Agreement);
(b) by the Agent (as defined in Section 10.1) if (i) there is a
material Breach of any covenant or obligation of Netivation or (ii) the Agent
reasonably determines that the timely satisfaction of any condition set forth in
Section 7 has become impossible (other than as a
AGREEMENT AND PLAN OF MERGER - 26
<PAGE>
result of any failure on the part of Public Disclosure or any of the Selling
Stockholders to comply with or perform any covenant or obligation of Public
Disclosure or the Selling Stockholders set forth in this Agreement);
(c) by Netivation at or after the Scheduled Closing Time if any
condition set forth in Section 6 has not been satisfied by the Scheduled Closing
Time;
(d) by the Agent at or after the Scheduled Closing Time if any
condition set forth in Section 7 has not been satisfied by the Scheduled Closing
Time;
(e) by Netivation if the Closing has not taken place on or before
October 28, 1999 (other than as a result of any failure on the part of
Netivation or Merger Sub to comply with or perform any covenant or obligation of
Netivation or Merger Sub set forth in this Agreement);
(f) by the Agent if the Closing has not taken place on or before
October 28, 1999 (other than as a result of the failure on the part of Public
Disclosure or any of the Selling Stockholders to comply with or perform any
covenant or obligation of Public Disclosure or the Selling Stockholders set
forth in this Agreement); or
(g) by the mutual consent of Netivation, Public Disclosure and
the Agent.
8.2 Termination Procedures. If Netivation wishes to terminate this
Agreement pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e),
Netivation shall deliver to the Agent a written notice pursuant to Section 10.5
stating that Netivation is terminating this Agreement and setting forth a brief
description of the basis on which Netivation is terminating this Agreement. If
the Agent wishes to terminate this Agreement pursuant to Section 8.1(b), Section
8.1(d) or Section 8.1(f), the Agent shall deliver to Netivation a written notice
pursuant to Section 10.5 terminating this Agreement and setting forth a brief
description of the basis on which this Agreement is terminated.
8.3 Effect of Termination. If this Agreement is terminated pursuant
to Section 8.1, all further obligations of the parties under this Agreement
shall automatically terminate; provided, however, that: (a) neither Public
Disclosure nor the Selling Stockholders nor Netivation shall be relieved of any
obligation or liability arising from any prior Breach by such party of any
provision of this Agreement; (b) the parties shall, in all events, remain bound
by and continue to be subject to the provisions set forth in Section 9; and (c)
Public Disclosure and Netivation shall, in all events, remain bound by and
continue to be subject to Section 5.4.
AGREEMENT AND PLAN OF MERGER - 27
<PAGE>
SECTION 9 - INDEMNIFICATION, ETC.
9.1 Survival of Representations, Warranties and Covenants.
(a) The representations, warranties and covenants of each party
pursuant to this Agreement shall survive the Closing and shall expire on the
first anniversary of the Closing Date; provided, however, (i) that fraud claims
and claims under Section 2.14 shall survive for the statute of limitations
applicable to claims based on such matters and (ii) that if, at any time prior
to the first anniversary of the Closing Date, any Netivation Indemnitee seeking
indemnification under this Section 9 (acting in good faith) delivers to the
Agent a written notice alleging the existence of a Breach of any of the
representations and warranties or a Breach of any covenant contained herein (and
setting forth in reasonable detail the basis for such Netivation Indemnitee's
belief that such a Breach may exist) and asserting a claim for recovery under
Section 9.2 based on such alleged Breach, then the claim asserted in such notice
shall survive the first anniversary of the Closing Date until such time as such
claim is fully and finally resolved.
(b) The representations, warranties, covenants and obligations of
Public Disclosure and the Selling Stockholders, and the rights and remedies that
may be exercised by the Netivation Indemnitees, shall not be limited or
otherwise affected by or as a result of any information furnished to, or any
investigation made by or Knowledge of, any of the Netivation Indemnitees or
their Representatives.
(c) For purposes of this Agreement, each statement or other item
of information set forth in the Schedule of Exceptions or in any update to the
Schedule of Exceptions shall be deemed to be a representation and warranty made
in this Agreement.
9.2 Indemnification by the Selling Stockholders.
(a) Subject to the provisions of this Section 9, the Selling
Stockholders, jointly and severally, shall indemnify and hold harmless each of
the Netivation Indemnitees from and against the amount of any Damages incurred
by any of the Netivation Indemnitees directly or indirectly as a result of (i)
any Breach of a representation or warranty of Public Disclosure or any of the
Selling Stockholders contained in Section 2 hereof or in any instrument
delivered pursuant to this Agreement (each as modified by the Schedule of
Exceptions delivered by Public Disclosure and the Selling Stockholders on the
date of this Agreement and not as modified by any revisions to such Schedule of
Exceptions after such date), (ii) any Breach of any covenant or obligation
contained herein, (iii) any final determination of Public Disclosure's net tax
liability for the fiscal year immediately prior to the Closing or (iv) any
Breach of any representation or warranty made in the Selling Stockholders'
Closing Certificate.
(b) The Selling Stockholders acknowledge and agree that, if there
is any Breach of any representation or warranty or other provision relating to
Public Disclosure or Public Disclosure's business, condition, assets,
Liabilities, operations, financial performance or net income (or any aspect or
portion thereof), then Netivation itself shall be deemed, by virtue of its
ownership
AGREEMENT AND PLAN OF MERGER - 28
<PAGE>
of the capital stock of Public Disclosure, to have incurred Damages as result of
such Breach or Liability.
9.3 Contribution. Each Selling Stockholder waives and acknowledges
and agrees that such Selling Stockholder shall not have and shall not exercise
or assert (or attempt to exercise or assert), any right of contribution, right
of indemnity or other similar right or remedy against the Surviving Corporation
in connection with any indemnification obligation or any other Liability to
which such Selling Stockholder may become subject under the Transactional
Agreements or otherwise in connection with any of the Transactions.
9.4 Ceiling; Limitation on Additional Damages. The Selling
Stockholders shall have no liability nor be subject to any claim for Damages
made by Netivation Indemnities pursuant to the provisions of Sections 9.2(a) or
9.6 unless and until the aggregate amount of Damages exceeds the sum of $50,000.
After the aggregate amount of Damages exceeds the sum of $50,000, the Selling
Stockholders shall be liable for the full amount of Damages. Claims for Damages
made by the Netivation Indemnitees pursuant to the provisions of Sections 9.2(a)
or 9.6 shall be limited to an amount equal to the closing price (as reported by
the NASDAQ consolidated reporting system) of two hundred fifty thousand
(250,000) shares of Netivation Stock on the Closing Date. The provisions of
this Section 9.4 shall not apply to claims for willful misconduct, fraud, bad
faith or recklessness on the part of Public Disclosure or any Selling
Stockholder.
9.5 Defense of Third Party Claims. In the event of the assertion or
commencement of a claim or Proceeding resulting from a Breach of any
representation, warranty or covenant contained herein with respect to which any
of the Selling Stockholders may become obligated to indemnify, hold harmless,
compensate or reimburse any Netivation Indemnitee pursuant to this Section 9,
Netivation shall have the right, at its election, to proceed with the defense of
such claim or Proceeding on its own. If Netivation so proceeds with the defense
of any such claim or Proceeding:
(a) all expenses relating to the defense of such claim or
Proceeding (whether or not incurred by Netivation) shall be borne and paid
exclusively by the Selling Stockholders;
(b) the Selling Stockholders shall make available to Netivation
any documents and materials in the possession or control of any of the Selling
Stockholders that may be necessary to the defense of such claim or Proceeding;
and
(c) Netivation shall keep the Agent informed of all material
developments and events relating to such claim or Proceeding.
9.6 Indemnity Reserve. In order to secure Netivation's and each
Netivation Indemnitee's rights of indemnity, the Selling Stockholders shall
place an aggregate of 100,000 shares
AGREEMENT AND PLAN OF MERGER - 29
<PAGE>
of Netivation Stock in escrow in accordance with the terms of the Escrow
Agreement, substantially in the form attached hereto as Exhibit G.
9.7 Exercise of Remedies by Netivation Indemnitees Other Than
Netivation. No Netivation Indemnitee (other than Netivation or any successor
thereto or assignee thereof) shall be permitted to assert any indemnification
claim or exercise any other remedy under this Agreement unless Netivation (or
any successor thereto or assignee thereof) shall have consented to the assertion
of such indemnification claim or the exercise of such other remedy.
SECTION 10 - MISCELLANEOUS PROVISIONS
10.1 Selling Stockholders' Agent.
(a) The Selling Stockholders hereby irrevocably nominate,
constitute and appoint Kent C. Cooper as the agent and true and lawful attorney-
in-fact of the Selling Stockholders (the "Agent"), with full power of
substitution, to act in the name, place and stead of the Selling Stockholders
for purposes of executing any documents and taking any actions that the Agent
may, in his sole discretion, determine to be necessary, desirable or appropriate
in connection with any of the Transactional Agreements or any of the
Transactions on behalf of the Selling Stockholders. Kent C. Cooper hereby
accepts his appointment as Agent.
(b) The Selling Stockholders hereby grant to the Agent full
authority to execute, deliver, acknowledge, certify and file on behalf of the
Selling Stockholders (in the name of any or all of the Selling Stockholders or
otherwise) any and all documents that the Agent may, in his sole discretion,
determine to be necessary, desirable or appropriate, in such forms and
containing such provisions as the Agent may, in his sole discretion, determine
to be appropriate (including the Selling Stockholders' Closing Certificate and
any amendment to or waiver of rights under any of the Transactional Agreements).
Notwithstanding anything to the contrary contained in the Transactional
Agreements:
(i) Netivation shall be entitled to deal exclusively with
the Agent, acting on behalf of the Selling Stockholders, on all matters relating
to the Transactional Agreements and the respective Transactions (including all
matters relating to any notice to, or any consent to be given or action to be
taken by, any Selling Stockholder, including any matters set forth in Section
9); and
(ii) each Netivation Indemnitee shall be entitled to rely
conclusively (without further evidence of any kind whatsoever) on any document
executed or purported to be executed on behalf of any Selling Stockholder by the
Agent, and on any other action taken or purported to be taken on behalf of any
Selling Stockholder by the Agent, as fully binding upon such Selling
Stockholder.
(c) The Selling Stockholders recognize and intend that the power
of attorney granted herein (i) is coupled with an interest and is irrevocable,
(ii) may be delegated by the Agent and (iii) shall survive the death or
incapacity of each of the Selling Stockholders.
AGREEMENT AND PLAN OF MERGER - 30
<PAGE>
(d) The Agent shall be entitled to treat as genuine, and as the
document it purports to be, any letter, facsimile, telex or other document that
is believed by him to be genuine and to have been telexed, telegraphed, faxed or
cabled by any Selling Stockholder or to have been signed and presented by an
Selling Stockholder.
(e) If the Agent shall die, become disabled or otherwise be
unable to fulfill his responsibilities hereunder, then the Selling Stockholders
shall, within ten (10) days after such death or disability, appoint a successor
agent and, immediately thereafter, shall notify Netivation of the identity of
such successor. Any such successor shall succeed the Agent as Agent hereunder.
If for any reason there is no Agent at any time, all references herein to the
Agent shall be deemed to refer to the Selling Stockholders.
(f) Subject to Section 10.3, all expenses incurred by the Agent
in connection with the performance of his duties as Agent shall be borne and
paid by the Selling Stockholders.
10.2 Further Assurances. Each party hereto shall execute and cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the Transactions.
10.3 Fees and Expenses. Subject to Section 9, each party to this
Agreement shall bear and pay all fees, costs and expenses (including legal fees
and accounting fees) that have been incurred or that are incurred in the future
by such party in connection with the Transactions; provided, however, that
Netivation shall reimburse Public Disclosure up to $20,000 for such fees, costs
and expenses that Public Disclosure incurs in connection with the Transactions.
Public Disclosure's fees, costs and expenses shall include those incurred by
Public Disclosure in connection with or by virtue of (i) the investigation and
review conducted by Public Disclosure and its Representatives with respect to
Public Disclosure's business (and the furnishing of information to Netivation
and its Representatives in connection with such investigation and review), (ii)
the negotiation, preparation and review of this Agreement (including the
Schedule of Exceptions) and all agreements, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
Transactions, (iii) the preparation and submission of any filing or notice
required to be made or given by Public Disclosure in connection with any of the
Transactions and the obtaining of any consent required to be obtained by Public
Disclosure in connection with any of such Transactions and (iv) the consummation
of the Merger.
10.4 Attorneys' Fees. If any action or Proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
AGREEMENT AND PLAN OF MERGER - 31
<PAGE>
10.5 Notices. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or overnight delivery service or by facsimile) to
the address or facsimile telephone number set forth beneath the name of such
party below (or to such other address or facsimile telephone number as such
party shall have specified in a written notice given to the other parties
hereto):
if to Netivation: Netivation.com, Inc.
806 Clearwater Loop, Suite N
Post Falls, ID 83854
Attention: Anthony J. Paquin, President and
Chief Executive Officer
Facsimile: (208) 777-8904
with a copy to: Moffatt Thomas Barrett Rock & Fields, Chtd.
101 S. Capitol Blvd., 10/th/ Floor
Boise, ID 83702
Attention: Mark A. Ellison
Facsimile: (208) 385-5384
if to the Agent Kent C. Cooper
or any of the P.O. Box 77161
Selling Stockholders: Washington, D.C. 20013-7161
with a copy to: Anthony D. Raymond
P.O. Box 77161
Washington, D.C. 20013-7161
with a copy to: Ian K. Portnoy
701 Pennsylvania Avenue, N.W., Ste 600
Washington, D.C. 20004
Facsimile: (202) 624-1298
Any of the above addresses may be changed at any time by notice given
as provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, telecopied or by overnight courier, and three (3) business
days after the date of mailing, if mailed by certified mail, return receipt
requested.
10.6 Headings. The boldface headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
AGREEMENT AND PLAN OF MERGER - 32
<PAGE>
10.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
10.8 Governing Law. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of Idaho
(without giving effect to principles of conflicts of laws).
10.9 Successors and Assigns. This Agreement shall be binding upon:
Public Disclosure and its successors and assigns (if any); the Selling
Stockholders and their respective personal representatives, executors,
administrators, estates, heirs, successors and assigns (if any); Netivation and
its successors and assigns (if any); and Merger Sub and its successors and
assigns (if any). This Agreement shall inure to the benefit of: Public
Disclosure; the Selling Stockholders; Netivation; Merger Sub; the Netivation
Indemnitees; and the respective successors and assigns (if any) of the
foregoing. Each party may freely assign any or all of its rights (but not its
obligations) under this Agreement (including its indemnification rights under
Section 9), in whole or in part, to any other Person without obtaining the
consent or approval of any other party hereto or of any other Person.
10.10 Remedies Cumulative; Specific Performance. The rights and
remedies of the parties hereto shall be cumulative (and not alternative). The
parties to this Agreement agree that, in the event of any Breach or threatened
Breach by any party to this Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other party to this
Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (i) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (ii) an injunction restraining such Breach or threatened
Breach.
10.11 Waiver.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
AGREEMENT AND PLAN OF MERGER - 33
<PAGE>
10.12 Amendments. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of all of the parties hereto.
10.13 Time of the Essence. Time is of the essence of this Agreement.
10.14 Severability. In the event that any provision of this
Agreement, or the application of any such provision to any Person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as to
which it is determined to be invalid, unlawful, void or unenforceable, shall not
be impaired or otherwise affected and shall continue to be valid and enforceable
to the fullest extent permitted by law.
10.15 Parties in Interest. Except for the provisions of Section 9,
none of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties hereto and their respective
successors and assigns (if any).
10.16 Entire Agreement. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter hereof and thereof.
10.17 Construction.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
AGREEMENT AND PLAN OF MERGER - 34
<PAGE>
The parties hereto have caused this Agreement to be executed and delivered
as of the date first set forth above.
NETIVATION:
NETIVATION.COM, INC.,
By _________________________________________
Anthony J. Paquin
President and Chief Executive Officer
MERGER SUB:
NETIVATION.COM MERGER FIVE CORP.,
a Delaware corporation
By __________________________________________
Anthony J. Paquin
President and Chief Executive Officer
PUBLIC DISCLOSURE:
PUBLIC DISCLOSURE, INC.
a District of Columbia corporation
By __________________________________________
Kent C. Cooper
Vice President
By __________________________________________
Anthony D. Raymond
Vice President
AGREEMENT AND PLAN OF MERGER - 35
<PAGE>
SELLING STOCKHOLDERS:
________________________
Kent C. Cooper
________________________
Anthony D. Raymond
________________________
Patricia Ann O'Connor
________________________
Marleen Hinkler
AGENT:
________________________
Kent C. Cooper
SECRETARY'S CERTIFICATE
I, Gary S. Paquin, Secretary of Netivation.com Merger Five Corp., hereby
certify that this Agreement has been adopted pursuant to the first sentence of
Title 8, Section 251(f) of the Delaware Corporations Laws, and that the
conditions specified in that sentence have been satisfied.
Gary S. Paquin, Secretary
<PAGE>
AGREEMENT AND PLAN OF MERGER
among:
NETIVATION.COM, INC.
a Delaware corporation;
NETIVATION.COM MERGER FOUR CORP.,
a Delaware corporation;
RAINTREE COMMUNICATIONS CORPORATION,
a Virginia corporation;
and
the Selling Stockholders of Raintree Communications Corporation
listed on Exhibit A hereto
Dated as of October___, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1 - DESCRIPTION OF TRANSACTION................................................................. 4
1.1 Merger of Raintree into Merger Sub......................................................... 4
1.2 Effect of the Merger....................................................................... 4
1.3 Closing; Effective Time.................................................................... 4
1.4 Certificate of Incorporation, Bylaws and Directors and Officers............................ 5
1.5 Conversion of Raintree Stock............................................................... 5
1.6 Additional Consideration................................................................... 6
1.7 Closing of Raintree's Transfer Books....................................................... 6
1.8 Exchange of Certificates................................................................... 7
1.9 Dissenting Shares.......................................................................... 8
1.10 Tax Consequences........................................................................... 8
1.11 Accounting Treatment....................................................................... 8
1.12 Further Action............................................................................. 8
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF RAINTREE AND THE SELLING STOCKHOLDERS.................... 9
2.1 Organization, Good Standing and Qualification.............................................. 9
2.2 Subsidiaries............................................................................... 9
2.3 Capitalization; Voting Rights.............................................................. 9
2.4 Authorization; Binding Obligations......................................................... 9
2.5 Financial Statements....................................................................... 10
2.6 Liabilities................................................................................ 10
2.7 Agreements; Action......................................................................... 10
2.8 Obligations to Related Parties............................................................. 10
2.9 Absence of Changes......................................................................... 11
2.10 Title to Properties and Assets; Liens, Etc................................................. 12
2.11 Patents and Trademarks..................................................................... 12
2.12 Compliance with Other Instruments.......................................................... 13
2.13 Litigation................................................................................. 13
2.14 Tax Returns and Payments................................................................... 13
2.15 Employees.................................................................................. 14
2.16 Registration Rights........................................................................ 14
2.17 Compliance with Legal Requirements; Consents............................................... 15
2.18 Selling Stockholders....................................................................... 15
2.19 Full Disclosure............................................................................ 16
2.20 Year 2000 Compliance....................................................................... 16
2.21 Securities Laws Matters.................................................................... 16
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF NETIVATION............................................... 17
3.1 Organization, Good Standing and Qualification.............................................. 17
3.2 Subsidiaries............................................................................... 17
3.3 Capitalization; Voting Rights.............................................................. 17
3.4 Authorization; Binding Obligations......................................................... 18
3.5 Full Disclosure............................................................................ 18
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 4 - CERTAIN COVENANTS OF RAINTREE AND THE SELLING STOCKHOLDERS................................. 19
4.1 Access and Investigation................................................................... 19
4.2 Operation of Business...................................................................... 20
4.3 Notification; Updates to Schedule of Exceptions............................................ 21
4.4 No Negotiation............................................................................. 22
SECTION 5 - ADDITIONAL COVENANTS OF THE PARTIES........................................................ 23
5.1 Filings and Consents....................................................................... 23
5.2 Raintree Stockholders' Meeting............................................................. 23
5.3 Public Announcements....................................................................... 23
5.4 Best Efforts............................................................................... 23
5.5 Tax Matters................................................................................ 23
SECTION 6 - CONDITIONS PRECEDENT TO OBLIGATIONS OF NETIVATION AND MERGER SUB........................... 24
6.1 Accuracy of Representations................................................................ 24
6.2 Performance of Covenants................................................................... 24
6.3 Stockholder Approval....................................................................... 24
6.4 Consents................................................................................... 24
6.5 No Material Adverse Change................................................................. 24
6.6 Agreements and Documents................................................................... 24
6.7 Lock-Up Agreements......................................................................... 25
6.8 No Restraints.............................................................................. 25
6.9 No Proceedings............................................................................. 25
6.10 Securities Law Compliance.................................................................. 25
6.11 Dissenters Rights.......................................................................... 25
6.12 Unaccredited Investors..................................................................... 26
6.13 Proceedings and Documents.................................................................. 26
6.14 Corporate Approvals........................................................................ 26
SECTION 7 - CONDITIONS PRECEDENT TO OBLIGATIONS OF RAINTREE AND THE SELLING STOCKHOLDERS............... 26
7.1 Accuracy of Representations................................................................ 26
7.2 Performance of Covenants................................................................... 26
7.3 Consents................................................................................... 26
7.4 Agreements and Documents................................................................... 26
7.5 No Restraints.............................................................................. 27
7.6 No Proceedings............................................................................. 27
7.7 Corporate Approvals........................................................................ 27
SECTION 8 - TERMINATION................................................................................ 27
8.1 Termination Events......................................................................... 27
8.2 Termination Procedures..................................................................... 28
8.3 Effect of Termination...................................................................... 28
SECTION 9 - INDEMNIFICATION, ETC....................................................................... 29
9.1 Survival of Representations, Warranties and Covenants...................................... 29
9.2 Indemnification by the Selling Stockholders................................................ 29
9.3 Indemnification by Netivation.............................................................. 30
9.4 Minimum Claim Against the Selling Stockholders............................................. 31
9.5 Minimum Claim Against Netivation........................................................... 31
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
9.6 Defense of Third Party Claims............................................................... 31
9.7 Setoff...................................................................................... 31
9.8 Indemnity Reserve........................................................................... 31
9.9 Exercise of Remedies by Netivation Indemnitees Other Than Netivation........................ 32
SECTION 10 - MISCELLANEOUS PROVISIONS.................................................................... 32
10.1 Selling Stockholders' Agent................................................................. 32
10.2 Further Assurances.......................................................................... 33
10.3 Fees and Expenses........................................................................... 33
10.4 Attorneys' Fees............................................................................. 33
10.5 Notices..................................................................................... 33
10.6 Headings.................................................................................... 34
10.7 Counterparts................................................................................ 34
10.8 Governing Law............................................................................... 34
10.9 Successors and Assigns...................................................................... 34
10.10 Remedies Cumulative; Specific Performance................................................... 35
10.11 Waiver...................................................................................... 35
10.12 Amendments.................................................................................. 35
10.13 Time of the Essence......................................................................... 35
10.14 Severability................................................................................ 35
10.15 Parties in Interest......................................................................... 35
10.16 Entire Agreement............................................................................ 35
10.17 Construction................................................................................ 36
</TABLE>
EXHIBITS
Exhibit A - Selling Stockholders
Exhibit B - Certain Definitions
Exhibit C - Director and Officer of Surviving Corporation
Exhibit D - Allocation of Merger Consideration
Exhibit E - Forms of Legal Opinion
Exhibit F - Form of Employment and Noncompetition Agreement
Exhibit G - Form of Escrow Agreement
Exhibit H - Form of Prospective Offeree Questionnaire
Exhibit I - Form of Lock-Up
Exhibit J - Piggy-Back Registration Rights
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered
into as of October ____, 1999, by and among: NETIVATION.COM, INC., a Delaware
corporation ("Netivation"), NETIVATION.COM MERGER FOUR CORP., a Delaware
corporation and a wholly-owned subsidiary of Netivation ("Merger Sub"), RAINTREE
COMMUNICATIONS CORPORATION, a Virginia corporation ("Raintree"), and the
stockholders of Raintree set forth on Exhibit A hereto (the "Selling
Stockholders"). Certain capitalized terms used in this Agreement are defined in
Exhibit B.
RECITALS
A. The parties intend to effect a merger of Raintree into Merger Sub
in accordance with this Agreement and the Delaware General Corporation Law
("Delaware Law") and the Virginia Stock Corporation Act ("Virginia Law") (the
"Merger"). Upon consummation of the Merger, Merger Sub will cease to exist, and
Raintree will remain a wholly-owned subsidiary of Netivation.
B. The Selling Stockholders own an aggregate of 100 shares of
capital stock of Raintree (the "Raintree Stock"), constituting 100% of the
Raintree capital stock on a fully-diluted basis.
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1 - DESCRIPTION OF TRANSACTION
1.1 Merger of Merger Sub into Raintree . Upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time (as defined
in Section 1.3), Merger Sub shall be merged with and into Raintree, and the
separate existence of Merger Sub shall cease. Raintree will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set
forth in this Agreement and in the applicable provisions of Delaware Law and
Virginia Law.
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Moffatt, Thomas, Barrett, Rock & Fields, Chartered, 101 S. Capitol Boulevard,
10th Floor, Boise, Idaho 83702 on or before October 29,1999, or at such other
time as the parties may agree (the "Scheduled Closing Time"). (The date on
which the Closing actually takes place is referred to in this Agreement as the
"Closing Date.") Contemporaneously with or as promptly as practicable after the
Closing, a properly executed certificate of merger (the "Certificate of
Merger"), conforming to the requirements of Delaware Law and Virginia Law, shall
be filed with the Secretary of State of the State of Delaware and the Clerk of
the Virginia State Corporation
<PAGE>
Commission. The Merger shall become effective at the time such Certificate of
Merger is filed with and accepted by the Secretary of State of the State of
Delaware and the Clerk of the Virginia State Corporation Commission (the
"Effective Time").
1.4 Certificate of Incorporation, Bylaws and Directors and Officers.
(a) The certificate of incorporation of Raintree, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended.
(b) The bylaws of Raintree, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter amended.
(c) The directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals identified on
Exhibit C.
1.5 Conversion of Raintree Stock.
(a) Subject to Sections 1.7(c), 1.8, and the earnout provisions
of this paragraph at the Effective Time, by virtue of the Merger and without any
further action on the part of Netivation, Merger Sub, Raintree or any
stockholder of Raintree, each share of Common Stock of Raintree issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive up to 2,100 shares of Common Stock of Netivation (the
"Netivation Stock"). The Merger Consideration that may be received by the
Selling Stockholders is set forth on Exhibit D and shall be payable to the
Selling Stockholders as follows:
(i) on the Closing Date - 150,000 shares of common stock
of Netivation less the number of shares to be placed in escrow pursuant to
Section 9.8;
(ii) on March 15, 2001 - 20,000 shares of common stock of
Netivation if the calendar year 2000 gross revenues of the Surviving Corporation
exceed $500,000;
(iii) on March 15, 2002 - 20,000 shares of common stock of
Netivation if the calendar year 2001 gross revenues of the Surviving Corporation
exceed $1,000,000;
(iv) on March 15, 2003 - 20,000 shares of common stock of
Netivation if the calendar year 2002 gross revenues of the Surviving Corporation
exceed $1,500,000.
Netivation covenants that it shall provide general administrative and sales
support for Raintree for the periods during which the measurement of gross
revenues in clauses (ii), (iii), and (iv) shall apply. For this purpose,
general administrative support shall mean that Netivation shall provide
accounting, contract administration and other office administrative tasks to
permit Sean Kennedy to focus principally on customer sales and business
development. Sales support shall
<PAGE>
mean that Netivation will include adequate training of its sales personnel in
the Raintree services and will include for such personnel sales incentives for
sales of Raintree services comparable to those for sales of other Netivation
products. In addition, Netivation shall make available to Raintree the customer
list of Netivation and provide introductions to the principal contacts of such
customers if requested by Raintree. In addition, Netivation shall permit
Raintree to retain reasonable working capital to fund commercially reasonable
sales efforts and business development of Raintree. This paragraph shall survive
the Closing.
The number of shares of shares of Netivation Stock issuable to the Selling
Stockholders hereunder shall be rounded to the nearest whole share; Netivation
shall not be obligated to issue fractional shares of Netivation Stock and cash
shall not be paid in lieu of fractional shares. If, between the date of this
Agreement and the Closing Date, the shares of capital stock of Raintree or the
Netivation Stock are changed into a different number or class of shares by
reason of any stock dividend, subdivision, reclassification, recapitalization,
split-up, combination or similar transaction, the Merger Consideration shall be
appropriately adjusted.
(b) All of the outstanding common stock of Merger Sub shall, by
virtue of the Transactions, and without any action on the part of the holder
thereof, be converted into 100 shares of the common stock of the Surviving
Corporation. Each certificate for common stock of Merger Sub shall, by virtue of
the Transactions, be deemed for all purposes to evidence ownership of the
appropriate number of shares of common stock of the Surviving Corporation into
which such common stock of Merger Sub was converted pursuant to the
Transactions.
(c) If any shares of capital stock of Raintree outstanding
immediately prior to the Effective Time are unvested or are subject to a
repurchase option, risk of forfeiture or other condition under any applicable
restricted stock purchase agreement or other agreement with Raintree, then the
shares of Netivation Stock issued in exchange for such shares of capital stock
of Raintree will also be unvested and subject to the same repurchase option,
risk of forfeiture or other condition, and the certificates representing such
shares of Netivation Stock may be accordingly marked with appropriate legends.
1.6 Additional Consideration. At Closing, Netivation shall pay One
Hundred Thousand Dollars ($100,000) cash to the Selling Stockholders in
proportion to each Selling Stockholder's interest in Raintree immediately prior
to Closing.
1.7 Closing of Raintree's Transfer Books. At the Effective Time,
holders of certificates representing Raintree capital stock that were
outstanding immediately prior to the Effective Time shall cease to have any
rights as stockholders of Raintree, and the stock transfer books of Raintree
shall be closed with respect to all shares of such capital stock outstanding
immediately prior to the Effective Time. No further transfer of any such
capital stock of Raintree shall be made on such stock transfer books after the
Effective Time. If, after the Effective Time, a valid certificate previously
representing any of such capital stock of Raintree (a "Raintree Stock
Certificate") is presented to the Surviving Corporation or Netivation, such
Raintree Stock Certificate shall be canceled and shall be exchanged as provided
in Section 1.8.
<PAGE>
1.8 Exchange of Certificates.
(a) At or as soon as practicable after the Effective Time,
Netivation will send to each holder of a Raintree Stock Certificate a letter of
transmittal and instructions for use in customary form and containing such
provisions as may reasonably be required for use in effecting the surrender of
such Raintree Stock Certificate for payment therefor and conversion thereof.
Upon surrender of a Raintree Stock Certificate to Netivation for exchange,
together with a duly executed letter of transmittal and such other documents as
may be reasonably required by Netivation, the holder of such Raintree Stock
Certificate shall be entitled to receive in exchange therefor certificates
representing the number of whole shares of Netivation Stock that such holder has
the right to receive pursuant to the provisions of this Section 1 and the
Raintree Stock Certificate so surrendered shall be canceled. Until surrendered
as contemplated by this Section 1.8, each Raintree Stock Certificate shall be
deemed, from and after the Effective Time, to represent only the right to
receive upon such surrender a certificate representing shares of Netivation
Stock (and cash in lieu of any fractional share of Netivation Stock) as
contemplated by this Section 1. If any Raintree Stock Certificate shall have
been lost, stolen or destroyed, Netivation may, in its discretion and as a
condition precedent to the issuance of any certificates representing Netivation
Stock, require the owner of such lost, stolen or destroyed Raintree Stock
Certificate to provide an appropriate affidavit and to deliver a bond (in such
sum as Netivation may reasonably direct) as indemnity.
(b) No dividends or other distributions declared or made with
respect to Netivation Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Raintree Stock Certificate with respect
to the shares of Netivation Stock represented thereby, and no cash payment in
lieu of any fractional share shall be paid to any such holder, until such holder
surrenders such Raintree Stock Certificate in accordance with this Section 1.8
(at which time such holder shall be entitled to receive all such dividends and
distributions and such cash payment).
(c) No fractional shares of Netivation Stock shall be issued in
connection with the Merger. In lieu of such fractional shares, any holder of
capital stock of Raintree who would otherwise be entitled to receive a fraction
of a share of Netivation Stock shall, upon surrender of such holder's Raintree
Stock Certificate(s), be paid in cash the dollar amount (rounded to the nearest
whole cent), without interest, determined by multiplying such fraction by the
closing price of one share of Netivation Stock as reported by the NASDAQ
consolidated reporting system on the Closing Date.
(d) Each certificate representing any of the shares of Netivation
Stock to be issued in the Merger shall bear a legend identical or similar in
effect to the following legend (together with any other legend or legends
required by applicable state securities laws or otherwise):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
UNLESS
<PAGE>
REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT IS AVAILABLE."
(e) Netivation and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable to
any holder or former holder of capital stock of Raintree pursuant to this
Agreement such amounts as Netivation or the Surviving Corporation may be
required to deduct or withhold therefrom under the Code or under any provision
of state, local or foreign tax law. To the extent such amounts are so deducted
or withheld, such amounts shall be treated for all purposes under this Agreement
as having been paid to the Person to whom such amounts would otherwise have been
paid.
1.9 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, shares of capital stock of Raintree that are issued and
outstanding immediately prior to the Effective Time and that are held by
stockholders who have not voted such shares in favor of the Merger and who have
delivered a written demand for appraisal of such shares in the manner provided
under Virginia Law ("Dissenting Shares") shall not be canceled and converted in
accordance with Section 1.5 unless and until such holder shall have failed to
perfect, or shall have effectively withdrawn or lost, such holder's right to
appraisal and payment under Virginia Law. If such holder shall have so failed
to perfect, or shall have effectively withdrawn or lost such right, such
holder's capital stock of Raintree shall thereupon be deemed to have been
canceled and converted as described in Section 1.5 at the Effective Time, and
each such share shall represent solely the right to receive the merger
consideration described in Section 1.5. Raintree shall give prompt notice of
any demands received by Raintree for appraisal of its shares, and, prior to the
Effective Time, Netivation shall have the right to participate in all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, Raintree shall not, except with the prior written consent of
Netivation, make any payment with respect to, or settle or offer to settle, any
such demands. From and after the Effective Time, no stockholder of Raintree who
has demanded appraisal rights as provided under Virginia Law shall be entitled
to vote such holder's shares of Netivation Stock or capital stock of Raintree
for any purpose or to receive payment of dividends or other distributions with
respect to such holder's shares (except dividends and other distributions
payable to stockholders of record of Raintree at a date which is prior to the
Effective Time).
1.10 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.11 Accounting Treatment. For accounting purposes, the Merger is
intended to be treated as a "purchase."
1.12 Further Action. If, at any time after the Effective Time, any
further action is determined by Netivation to be necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation or
Netivation with full right, title and possession of and to all rights and
property of Raintree, the officers and directors of the Surviving Corporation
and Netivation shall be fully authorized (in the name of Raintree and otherwise)
to take such action.
<PAGE>
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF RAINTREE AND THE SELLING
STOCKHOLDERS
Except as set forth in Schedule 2 (the "Schedule of Exceptions"),
Raintree and each of the Selling Stockholders jointly and severally represent
and warrant, to and for the benefit of the Netivation Indemnitees, as follows:
2.1 Organization, Good Standing and Qualification. Raintree is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Virginia. Raintree has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
the Transactional Agreements, to carry out the provisions of the Transactional
Agreements and to carry on its business as presently conducted and as presently
proposed to be conducted. Raintree is duly qualified and authorized to do
business and is in good standing as foreign entities in all jurisdictions in
which the nature of its activities and of its properties (both owned and leased)
make such qualifications necessary, except for those jurisdictions in which
failure to do so would not have a Material Adverse Effect on Raintree or its
respective businesses. Raintree has made available to Netivation true, correct
and complete copies of Raintree's articles of incorporation and bylaws, each as
amended to date.
2.2 Subsidiaries. Raintree owns no equity securities of any other
corporation, limited partnership or similar entity. Raintree is not a
participant in any joint venture, partnership or similar arrangement.
2.3 Capitalization; Voting Rights. The authorized capital stock of
Raintree consists of 1000 shares of Common Stock, of which 100 shares are issued
and outstanding. Exhibit A sets forth the names of the stockholders of Raintree
and the number of shares of capital stock owned of record by each such
stockholder. The Selling Stockholders together own all of the outstanding
shares of capital stock of Raintree. All issued and outstanding shares of
Raintree's Common Stock (i) have been duly authorized and validly issued, (ii)
are fully paid and nonassessable and (iii) were issued in compliance with all
applicable state and federal laws concerning the issuance of securities. There
are no outstanding options, warrants, rights (including conversion or preemptive
rights and rights of first refusal), proxy or stockholder agreements, or
agreements of any kind for the purchase or acquisition from Raintree of any of
its securities.
2.4 Authorization; Binding Obligations. Raintree has all requisite
right, power and authority to enter into and to perform its obligations under
the Transactional Agreements to which Raintree is or may become a party. This
Agreement constitutes the legal, valid and binding obligation of Raintree,
enforceable against Raintree in accordance with its terms, subject to (i) laws
of general application relating to bankruptcy, insolvency and the relief of
debtors and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies. Upon the execution of each of the other
Transactional Agreements at the Closing, each of such other Transactional
Agreements will constitute the legal, valid and binding obligation of Raintree,
enforceable against Raintree in accordance with its terms, subject to (i) laws
of general application relating to bankruptcy, insolvency and the relief of
debtors and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
<PAGE>
2.5 Financial Statements. Raintree has delivered to Netivation its
unaudited balance sheet as of May 31, 1999 (the "Statement Date") and its
unaudited income statement for the four (4) months ended September 30, 1999
(collectively, the "Raintree Financial Statements"). The Raintree Financial
Statements are complete and correct in all material respects, and present fairly
the financial condition and position of Raintree for the periods covered
thereby.
2.6 Liabilities. Raintree has no material liabilities and, to the
Knowledge of Raintree, has no material contingent liabilities not otherwise
disclosed in the Raintree Financial Statements, except current liabilities
incurred in the Ordinary Course of Business subsequent to the Statement Date
which have not been, either in any individual case or in the aggregate,
materially adverse. All obligations of Raintree to affiliates, officers,
members, directors and stockholders of Raintree are disclosed on the Raintree
Financial Statements.
2.7 Agreements; Action.
(a) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
Raintree is a party or is bound which may involve (i) obligations (contingent or
otherwise) of, or payments to, Raintree in excess of $10,000, or (ii) the
license of any patent, copyright, trade secret or other proprietary right to or
from Raintree (other than licenses arising from the purchase of "off the shelf"
or other standard products), or (iii) provisions restricting or affecting the
development, manufacture or distribution of Raintree's products or services or
(iv) indemnification by Raintree with respect to infringements of proprietary
rights.
(b) Raintree has not (i) incurred any indebtedness for money
borrowed or any other liabilities (other than with respect to dividend
obligations, distributions, indebtedness and other obligations incurred in the
Ordinary Course of Business or as disclosed in the Raintree Financial
Statements) individually in excess of $10,000 or, in excess of $15,000 in the
aggregate, (ii) made any loans or advances to any person, other than ordinary
advances for travel expenses or (iii) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
Ordinary Course of Business.
(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities Raintree has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
2.8 Obligations to Related Parties. There are no obligations of
Raintree to officers, directors, stockholders, members or employees of either
other than (a) for payment of salary for services rendered, (b) reimbursement
for reasonable expenses incurred on behalf of Raintree and (c) for other
standard employee benefits made generally available to all employees. No such
officer, director or stockholder, or any member of their immediate families is,
directly or indirectly, interested in any material contract with Raintree (other
than such contracts as relate
<PAGE>
to any such person's ownership of capital stock or other securities of
Raintree). Raintree is not a guarantor or indemnitor of any indebtedness of any
other person, firm or corporation.
2.9 Absence of Changes. Since the Statement Date, there has not
been:
(a) Any change in the assets, liabilities, financial condition or
operations of Raintree from that reflected in the Raintree Financial Statements,
other than changes in the Ordinary Course of Business, none of which
individually or in the aggregate has had or is expected to have a Material
Adverse Effect on such assets, liabilities, financial condition or operations of
Raintree;
(b) Any resignation or termination of any key officers of
Raintree; and Raintree, to its Knowledge, does not know of the impending
resignation or termination of employment of any such officer;
(c) Any material change, except in the Ordinary Course of
Business, in the contingent obligations of Raintree by way of guaranty,
endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of Raintree;
(e) Any waiver by Raintree of a valuable right or of a material
debt owed to it;
(f) Any direct or indirect loans made by Raintree to any
stockholder, employee, officer or director of Raintree, other than advances made
in the Ordinary Course of Business;
(g) Any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(h) Any declaration or payment of any dividend or other
distribution of the assets of Raintree;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or
guaranteed by Raintree, except those for immaterial amounts and for current
liabilities incurred in the Ordinary Course of Business;
(k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
<PAGE>
(l) Any change in any material agreement to which Raintree is a
party or by which it is bound which materially and adversely affects the
business, assets, liabilities, financial condition, operations or prospects of
Raintree; or
(m) Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition, operations or prospects of
Raintree. For purposes of this subsection (m), a material and adverse effect
shall only be deemed to occur if its monetary impact exceeds, or with the
passage of time, will exceed $10,000.
2.10 Title to Properties and Assets; Liens, Etc. Schedule 2.10 is a
complete and accurate list of all material assets (whether leased or owned),
including intellectual property, of Raintree. Raintree has good title to all of
its properties and assets, including those listed on Schedule 2.10, and good
title to its leasehold estates, in each case subject to no mortgage, pledge,
lien, lease, encumbrance or charge, other than (i) those resulting from taxes
which have not yet become due and payable, (ii) minor liens and encumbrances
which do not materially detract from the value of the property subject thereto
or materially impair the operations of Raintree and (iii) those that have arisen
from purchase money security interests in an amount not to exceed $10,000. None
of the Selling Stockholders has any right in or claim to any of the intellectual
property utilized by Raintree. All facilities, machinery, equipment, fixtures,
vehicles and other properties owned, leased or used by Raintree are in good
operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used. Raintree is in compliance with all
material terms of each lease to which it is a party or is otherwise bound.
2.11 Patents and Trademarks. Raintree owns or possesses sufficient
legal rights to all trademarks, service marks, trade names, copyrights, trade
secrets and licenses, and, to the Knowledge of Raintree, to all patents,
information and other proprietary rights and processes necessary for its
business as now conducted and as proposed to be conducted, without any known
infringement of the rights of others. There are no outstanding options,
licenses or agreements of any kind relating to the foregoing, nor is Raintree
bound by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information and other proprietary rights and processes
of any other person or entity other than such licenses or agreements arising
from the purchase of "off the shelf" or standard products. Raintree has not
received any communications alleging that it either has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. To Raintree's Knowledge, none
of Raintree's employees is obligated under any contract (including licenses,
covenants or commitments or any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with their duties to Raintree's business by the employees of Raintree.
The conduct of Raintree's business as proposed, will not, to the Knowledge of
Raintree, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any employee is now obligated. Raintree does not believe
it is or will be necessary to utilize any inventions, trade secrets or
proprietary information of any of its employees made prior to their employment
by Raintree, except for inventions, trade secrets or proprietary information
that have been assigned to Raintree.
<PAGE>
2.12 Compliance with Other Instruments. Raintree is not in violation
or default of any term of its charter documents, or of any provision of any
mortgage, indenture, contract, agreement, instrument or contract to which either
is party or by which either is bound or of any judgment, decree, order, writ or,
to Raintree's Knowledge, any statute, rule or regulation applicable to Raintree
which would materially and adversely affect the business, assets, liabilities,
financial condition, operations or prospects of Raintree. The execution,
delivery, and performance of and compliance with the Transactional Agreements
will not, with or without the passage of time or giving of notice, result in any
such material violation, or be in conflict with or constitute a default under
any such term, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of Raintree or the
suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to Raintree, or the business or
operations or any of its assets or properties.
2.13 Litigation. There is no action, suit, proceeding or
investigation pending, or to the Knowledge of Raintree, currently threatened
against Raintree that questions the validity of this Agreement or Transactional
Agreements or the right of Raintree to enter into any of such agreements, or to
consummate the transactions contemplated hereby or thereby, or which might
result, either individually or in the aggregate, in any material adverse change
in the assets, condition, affairs or prospects of Raintree, financially or
otherwise, or any change in the current equity ownership of Raintree, nor is
Raintree aware that there is any basis for the foregoing. The foregoing
includes, without limitation, actions pending or threatened (or any basis
therefor known to Raintree) involving the prior employment of any of Raintree's
employees, their use in connection with Raintree's business of any information
or techniques allegedly proprietary to any of their former employers, or their
obligations under any agreements with prior employers. Raintree is not a party
or subject to the provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by Raintree currently pending or which Raintree
intends to initiate.
2.14 Tax Returns and Payments.
(a) Each tax required to have been paid, or claimed by any
Governmental Body to be payable, by Raintree (whether pursuant to any tax return
or otherwise) has been duly paid in full and on a timely basis. Any tax
required to have been withheld or collected by Raintree, including with respect
to employees, has been duly withheld and collected; and (to the extent required)
each such tax has been paid to the appropriate Governmental Body.
(b) All tax returns required to be filed by or on behalf of
Raintree with any Governmental Body have been timely filed (collectively, the
"Raintree Returns"). All taxes required to be paid by Raintree for the fiscal
year ending May 31, 1999 have either been paid in full or shall not result in
any liability to Raintree. All Raintree Returns (i) have been filed when due and
(ii) have been accurately and completely prepared in full compliance with all
applicable legal requirements, in all material respects. Raintree has delivered
to Netivation accurate and complete copies of the 1998 Raintree Returns.
<PAGE>
(c) There have been no examinations or audits of any Raintree
Return, and, to the Knowledge of Raintree, no such examination or audit has been
proposed or scheduled by any Governmental Body. Raintree has delivered to
Netivation accurate and complete copies of all audit reports and similar
documents (to which Raintree has access) relating to the Raintree Returns.
(d) No claim or proceeding is pending or, to the Knowledge of
Raintree, has been threatened against Raintree in respect of any tax. There are
no unsatisfied Liabilities for taxes (including Liabilities for interest,
additions to tax and penalties thereon and related expenses) with respect to any
notice of deficiency or similar document received by Raintree. There are no
liens for taxes upon any of the assets of Raintree, except liens for current
taxes not yet due and payable. Raintree has not entered into or become bound by
any agreement or consent pursuant to Section 341(f) of the Code.
(e) To the Knowledge of Raintree, there is no agreement, plan,
arrangement or other contract covering any employee or independent contractor or
former employee or independent contractor of Raintree that, individually or
collectively, could give rise, directly or indirectly, to the payment of any
amount that would not be deductible pursuant to Section 280G or Section 162 of
the Code. Raintree is not, and has never been, a party to or bound by any tax
indemnity agreement, tax sharing agreement, tax allocation agreement or similar
contract.
2.15 Employees. Raintree is not a party to or bound by any currently
effective employment contract, deferred compensation arrangement, bonus plan,
incentive plan, profit sharing plan, retirement agreement or other employee
compensation plan or agreement. To the Knowledge of Raintree, no employee of
Raintree, nor any consultant with whom Raintree has contracted, is in violation
of any term of any employment contract, proprietary information agreement or any
other agreement relating to the right of any such individual to be employed by,
or to contract with, Raintree because of the nature of the business to be
conducted by Raintree; and to the Knowledge of Raintree the continued employment
by Raintree of its present employees, and the performance of Raintree's
contracts with its independent contractors, will not result in any such
violation. Raintree has not received any notice alleging that any such
violation has occurred. No employee of Raintree has been granted the right to
continued employment by Raintree or to any material compensation following
termination of employment with Raintree. To the Knowledge of Raintree, no
officer or key employee, or any group of key employees, intends to terminate
their employment with Raintree, nor does Raintree have a present intention to
terminate the employment of any officer, key employee or group of key employees.
2.16 Registration Rights. Raintree is not presently under any
obligation, and has not granted any rights, to register any of its presently
outstanding securities or any of its securities that may hereafter be issued.
<PAGE>
2.17 Compliance with Legal Requirements; Consents.
(a) Raintree is, and has at all times since inception been, in
full compliance with each legal requirement that is or was applicable to it or
to the conduct of its business or the ownership or use of any of its assets,
except where the failure to comply with each such legal requirement has not had
and will not have a Material Adverse Effect on Raintree.
(b) Neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with or result in a violation of
(i) any of the provisions of Raintree's articles of incorporation or bylaws,
or(ii) any resolution adopted by Raintree's stockholders or Raintree's board of
directors;
(ii) contravene, conflict with or result in a violation of,
or give any Governmental Body or other Person the right to exercise any remedy
or obtain any relief under, any legal requirement or any order to which
Raintree, or any of the assets owned or used by Raintree, is subject;
(iii) contravene, conflict with or result in a violation or
Breach of, or result in a default under, any provision of any contract to which
Raintree is a party; or
(iv) give any Person the right to (A) declare a default or
exercise any remedy under any contract to which Raintree is a party, (B)
accelerate the maturity or performance of any contract to which Raintree is a
party or (C) cancel, terminate or modify any contract to which Raintree is a
party.
Other than filings to be made in accordance with the Virginia Law and
the consents listed on Schedule 2.17, neither Raintree nor any of the Selling
Stockholders was, is or will be required to make any filing with or give any
notice to, or to obtain any consent from, any Person other than Selling
Stockholders' spouses in connection with the execution and delivery of any of
the Transactional Agreements or the consummation or performance of any of the
Transactions.
2.18 Selling Stockholders. Each Selling Stockholder represents that
(i) he, she or it has the absolute and unrestricted right, power and authority
to enter into and to perform his, her or its obligations under each of the
Transactional Agreements to which such Selling Stockholder is or may become a
party, (b) this Agreement constitutes his, her or its legal, valid and binding
obligation, enforceable against such Selling Stockholder in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies and (c) upon the
execution of each of the other Transactional Agreements at the Closing, each of
such other Transactional Agreements will constitute the legal, valid and binding
obligation of such Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy,
<PAGE>
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
2.19 Full Disclosure. This Agreement does not (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact or (ii) omit to state any material fact necessary in order
to make the representations, warranties and information of or with respect to
Raintree and the Selling Stockholders contained and to be contained herein (in
light of the circumstances under which such representations, warranties and
information were or will be made or provided) not false or misleading. Raintree
has provided Netivation and Netivation's Representatives with full and complete
access to all of Raintree's records and other documents and data.
2.20 Year 2000 Compliance. Raintree has requested of its principal
vendor, Transaction Network Services, Inc. ("TNS") information to assess the
Year 2000 compliance of TNS. Raintree is implementing a plan to ensure that
its systems will be Year 2000 Compliant on or before December 1, 1999.
2.21 Securities Laws Matters. Each Selling Stockholder understands
that the Netivation Stock has not been registered under the Securities Act and
that the Netivation Stock being issued in the Transaction is being issued
pursuant to an exemption from registration contained in the Securities Act,
based in part upon the Selling Stockholders' representations contained in this
Agreement. Each Selling Stockholder hereby severally and not jointly represents
and warrants as follows:
(a) Knowledge and Experience. Each Selling Stockholder is
knowledgeable and has substantial experience in evaluating and investing in
transactions in companies similar to Netivation so that such Selling Stockholder
is capable of evaluating the merits and risks of his investment in Netivation.
Each Selling Stockholder has by reason of such Selling Stockholder's business or
financial knowledge and experience, the capacity to protect such Selling
Stockholder's own interests in connection with the Transaction. Further, each
Selling Stockholder is aware of no publication of any advertisement in
connection with the Transaction. Each Selling Stockholder can bear the economic
risk of the Transaction. Each Selling Stockholder has been advised or is aware
of the provisions of Rule 144 promulgated under the Securities Act, including
affiliate status, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions.
(b) Netivation Information. Each Selling Stockholder has had an
opportunity to discuss Netivation's business, management and financial affairs,
both as currently conducted and as proposed to be conducted following the
Merger, with directors, officers and management of Netivation and has had the
opportunity to review Netivation's operations and facilities. Each Selling
Stockholder has also had the opportunity to ask questions of, and receive
answers from, Netivation and its management regarding the terms and conditions
of the Transaction and the receipt of Netivation Stock.
(c) Acquisition for Own Account. Each Selling Stockholder is
acquiring the Netivation Stock for such Selling Stockholder's own account for
investment only, and not with a view towards distribution.
<PAGE>
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF NETIVATION
Netivation represents and warrants to Raintree and the Selling
Stockholders as follows:
3.1 Organization, Good Standing and Qualification.
(a) Netivation is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Netivation has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver this Agreement and the Transactional Agreements,
to issue and sell the Netivation Stock, to carry out the provisions of this
Agreement and the Transactional Agreements and to carry on its business as
presently conducted and as presently proposed to be conducted. Netivation is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its activities
and of its properties (both owned and leased) make such qualifications
necessary, except for those jurisdictions in which failure to do so would not
have a Material Adverse Effect on Netivation or its business. Netivation has
made available to Raintree true, correct and complete copies of the Netivation's
certificate of incorporation and bylaws, each as amended to date.
(b) Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Merger Sub has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver the Transactional Agreements, to carry out the
provisions of the Transactional Agreements and to carry on its business as
presently conducted and as presently proposed to be conducted.
3.2 Subsidiaries. Except for Merger Sub, Netivation.com Merger Two
Corp., Netivation.com Merger Three Corp., Netivation.com Merger Five Corp.,
Netivation.com Merger Six Corp., InterLink Internet Services, Inc., and The
Online Medical Bookstore, Inc., all of which are wholly-owned subsidiaries of
Netivation, Netivation owns no equity securities of any other corporation,
limited partnership or similar entity. Netivation is not a participant in any
joint venture, partnership or similar arrangement.
3.3 Capitalization; Voting Rights.
(a) The authorized capital stock of Netivation, as of September
30, 1999, consists of (a) 30,000,000 shares of Common Stock, of which 8,660,055
shares are issued and outstanding, and (b) 2,000,000 shares of Preferred Stock,
of which 0 shares are issued and outstanding. All issued and outstanding shares
of Netivation's Common Stock and Preferred Stock (i) have been duly authorized
and validly issued, (ii) are fully paid and nonassessable and (iii) were issued
in compliance with all applicable state and federal laws concerning the issuance
of securities. The Netivation Stock has been duly authorized and, when issued in
compliance with the provisions of this Agreement and its certificate of
incorporation, will be validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, other than liabilities
imposed upon stockholders generally by the provisions of Delaware Law, and will
<PAGE>
not be subject to any other restrictions, except as set forth in or provided by
this Agreement and as may be imposed by applicable law.
(b) The authorized capital stock of Merger Sub consists of one
thousand (1,000) shares of Common Stock, one hundred (100) shares of which have
been issued to Netivation. All of the issued and outstanding shares of Common
Stock of Merger Sub (i) have been duly authorized and validly issued, (ii) are
fully paid and nonassessable and (iii) were issued in compliance with all
applicable state and federal laws concerning the issuance of securities.
3.4 Authorization; Binding Obligations. Each of Netivation and
Merger Sub has the absolute and unrestricted right, power and authority to enter
into and to perform its obligations under the Transactional Agreements to which
Netivation and Merger Sub, as the case may be, is or may become a party. This
Agreement constitutes the legal, valid and binding obligation of each of
Netivation and Merger Sub, enforceable against them in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies. Upon the execution
of each of the other Transactional Agreements at the Closing, each of such other
Transactional Agreements will constitute the legal, valid and binding obligation
of Netivation, enforceable against Netivation in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
3.5 Full Disclosure.
(a) Netivation has delivered to Raintree an accurate and complete
copy of its Registration Statement on Form SB-2 No. 333-74569 filed with the
Securities and Exchange Commission (the "SEC") on June 22, 1999 (the
"Registration Statement"), and its 10Q for the period ending June 30, 1999 (the
"10Q"), which is the most recent document filed with the SEC as of the date
hereof. The Registration Statement and the 10Q (i) comply in all material
respects with the applicable requirements of the Securities Act and (ii) do not
contain any untrue statements of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) There is no material action, suit, proceeding or
investigation pending, or to the Knowledge of Netivation, currently threatened
against Netivation that questions the validity of this Agreement or
Transactional Agreements or the right of Netivation to enter into any of such
agreements, or to consummate the transactions contemplated hereby or thereby.
(c) Neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will materially, directly or indirectly, (with or without notice
or lapse of time):
<PAGE>
(i) contravene, conflict with or result in a violation of
(A) any of the provisions of Netivation's certificate of incorporation or
bylaws, or (B) any resolution adopted by Netivation's stockholders or
Netivation's board of directors;
(ii) contravene, conflict with or result in a violation of,
or give any Governmental Body or other Person the right to exercise any remedy
or obtain any relief under, any legal requirement or any order to which
Netivation, or any of the assets owned or used by Netivation, is subject;
(iii) contravene, conflict with or result in a violation or
Breach of, or result in a default under, any provision of any contract to which
Netivation is a party; or
(iv) give any Person the right to (A) declare a default or
exercise any remedy under any contract to which Netivation is a party, (B)
accelerate the maturity or performance of any contract to which Netivation is a
party or (C) cancel, terminate or modify any contract to which Netivation is a
party.
(d) Other than filings to be made in accordance with the Delaware
Law, neither Netivation nor Merger Sub was, is or will be required to make any
filing with or give any notice to, or to obtain any consent from, any Person in
connection with the execution and delivery of any of the Transactional
Agreements or the consummation or performance of any of the Transactions.
SECTION 4 - CERTAIN COVENANTS OF RAINTREE AND THE SELLING STOCKHOLDERS
4.1 Access and Investigation. Raintree and the Selling Stockholders
shall ensure that, at all times during the Pre-Closing Period:
(a) Raintree and its Representatives provide Netivation and its
Representatives with access, during normal business hours upon reasonable
notice, to Raintree's Representatives, personnel and assets and to all existing
books, records, tax returns, work papers and other documents and information
relating to Raintree;
(b) Raintree and its Representatives provide Netivation and its
Representatives with such copies of existing books, records, tax returns, work
papers and other documents and information relating to Raintree as Netivation
may request in good faith; and
(c) Raintree and its Representatives compile and provide
Netivation and its Representatives with such additional financial, operating and
other data and information regarding Raintree as Netivation may request in good
faith. Without limiting the generality of the foregoing, during the Pre-Closing
Period, Raintree shall promptly provide Netivation with copies of:
(i) all material operating and financial reports prepared
by Raintree for its senior management, including copies of the unaudited monthly
balance sheets of
<PAGE>
Raintree and the related unaudited monthly statements of operations, statements
of stockholders' equity and statements of cash flows;
(ii) any written materials or communications sent by or on
behalf of Raintree to its stockholders generally;
(iii) any material notice, document or other communication
sent by or on behalf of Raintree to any party to any Raintree contract or sent
to Raintree by any party to any Raintree contract (other than any communication
that relates solely to commercial transactions of the type sent in the Ordinary
Course of Business);
(iv) any written notice, report or other document filed with
or sent to any Governmental Body in connection with the Merger or any of the
other Transactions; and
(v) any material written notice, report or other document
received by Raintree from any Governmental Body.
4.2 Operation of Business. Raintree and the Selling Stockholders
shall ensure that, during the Pre-Closing Period:
(a) Raintree conducts its operations exclusively in the Ordinary
Course of Business and in the same manner as such operations have been conducted
prior to the date of this Agreement;
(b) Raintree uses its commercially reasonable efforts to preserve
intact its current business organization, keep available the services of its
current officers and employees and maintain its relations and good will with
suppliers, customers, landlords, creditors, licensors, licensees, employees and
other Persons having business relationships with Raintree;
(c) Raintree keeps in full force all existing insurance policies;
(d) Raintree's officers confer regularly, upon request, with
Netivation concerning operational matters and otherwise report regularly, upon
request, to Netivation concerning the status of Raintree's business, condition,
assets, liabilities, operations, financial performance and prospects;
(e) Raintree immediately notifies Netivation of any inquiry,
proposal or offer from any Person relating to any Acquisition Transaction;
(f) Raintree does not declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any shares of capital
stock or other securities, and does not repurchase, redeem or otherwise
reacquire any shares of capital stock or other securities;
(g) Raintree does not sell or otherwise issue any shares of
capital stock or any other securities;
<PAGE>
(h) Raintree does not amend its articles of incorporation or
bylaws, and does not effect or become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(i) Raintree does not form any subsidiary or acquires any equity
interest or other interest in any other entity;
(j) Raintree does not make any capital expenditure, except for
capital expenditures that are made in the Ordinary Course of Business and that
do not exceed $10,000;
(k) Raintree does not (i) lend money to any Person or (ii) incur,
assume or otherwise become subject to any Liability, except for current
liabilities incurred in the Ordinary Course of Business;
(l) Raintree does not establish or adopt any employee benefit
plan, nor pay or agree to pay any bonus nor make any profit-sharing or similar
payment to, nor increase the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its directors,
officers or employees (except for regularly scheduled salary increases in the
Ordinary Course of Business);
(m) Raintree does not change any of its methods of accounting or
accounting practices in any respect;
(n) Raintree does not commence any Proceeding, except in the
Ordinary Course of Business;
(o) Raintree does not enter into any transaction or take any
other action of the type referred to in Section 2.9;
(p) Raintree does not enter into any transaction or take any
other action outside the Ordinary Course of Business;
(q) Raintree does not enter into any transaction or take any
other action that is reasonably likely to cause or constitute a Breach of any
representation or warranty made by Raintree or the Selling Stockholders; and
(r) Raintree does not agree, commit or offer (in writing or
otherwise), or attempt, to take any of the actions described in clauses "(f)"
through "(q)" of this Section 4.2.
4.3 Notification; Updates to Schedule of Exceptions.
(a) During the Pre-Closing Period, Raintree and/or the Selling
Stockholders shall promptly notify Netivation in writing of:
(i) the discovery by Raintree or any of the Selling
Stockholders of any event, condition, fact or circumstance that occurred or
existed on or prior to
<PAGE>
the date of this Agreement and that caused or constitutes a Breach of any
representation or warranty made by Raintree or the Selling Stockholders in this
Agreement;
(ii) any event, condition, fact or circumstance that
occurs, arises or exists after the date of this Agreement and that would cause
or constitute a Breach of any representation or warranty made by Raintree or the
Selling Stockholders in this Agreement if (A) such representation or warranty
had been made as of the time of the occurrence, existence or discovery of such
event, condition, fact or circumstance or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement;
(iii) any Breach of any covenant or obligation of Raintree
or the Selling Stockholders; and
(iv) any event, condition, fact or circumstance that may
make the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 4.3(a) requires any change in the
Schedule of Exceptions, or if any such event, condition, fact or circumstance
would require such a change assuming the Schedule of Exceptions were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then Raintree shall promptly deliver to Netivation an
update to the Schedule of Exceptions specifying such change. No such update
shall be deemed to supplement or amend the Schedule of Exceptions for the
purpose of (i) determining the accuracy of any of the representations and
warranties made by Raintree in this Agreement for purposes of Section 6.1, but
shall be deemed to supplement or amend the Schedule of Exceptions for purposes
of Section 9 or (ii) determining whether any of the other conditions set forth
in Section 6 have been satisfied.
4.4 No Negotiation. Raintree shall ensure that, during the Pre-
Closing Period, neither Raintree nor any of Raintree's Representatives directly
or indirectly:
(a) solicits or encourages the initiation of any inquiry,
proposal or offer from any Person (other than Netivation) relating to any
Acquisition Transaction;
(b) participates in any discussions or negotiations with, or
provides any non-public information to, any Person (other than Netivation)
relating to any Acquisition Transaction; or
(c) considers the merits of any unsolicited inquiry, proposal or
offer from any Person (other than Netivation) relating to any Acquisition
Transaction.
<PAGE>
SECTION 5 - ADDITIONAL COVENANTS OF THE PARTIES
5.1 Filings and Consents. As promptly as practicable after the
execution of this Agreement, each party to this Agreement (i) shall make all
filings (if any) and give all notices (if any) required to be made and given by
such party in connection with the Transactions and (ii) shall use all
commercially reasonable efforts to obtain all consents (if any) required to be
obtained (pursuant to any applicable legal requirement or contract, or
otherwise) by such party in connection with the Transactions. Each of the
parties shall (upon request) promptly deliver to the other a copy of each such
filing made, each such notice given and each such consent obtained by Raintree
or Netivation, as the case may be, during the Pre-Closing Period.
5.2 Raintree Stockholders' Meeting. Raintree shall, in accordance
with its articles of incorporation and bylaws and the applicable requirements of
Virginia Law, call and hold a special meeting of its stockholders, or solicit
written consents from its stockholders, as promptly as practicable for the
purpose of permitting them to consider and to vote upon and approve the Merger
and this Agreement. Raintree shall use its best efforts (i) to solicit from
each of such stockholders a proxy or consent in favor of the approval of the
Merger and this Agreement and (ii) to cause each of such stockholders to execute
and deliver to Netivation a Prospective Offeree Questionnaire in a form
acceptable to Netivation certifying, among other items, as to whether each of
such stockholders is an "accredited investor" as such term is defined in Rule
501 under the Securities Act.
5.3 Public Announcements. During the Pre-Closing Period, (i) neither
Raintree nor Netivation shall (and neither Raintree nor Netivation shall permit
any of its respective Representatives to) issue any press release or make any
public statement regarding this Agreement or the Transactions, without the other
party's prior written consent, and (ii) each party will use reasonable efforts
to consult with the other party prior to issuing any press release or making any
public statement regarding the Merger; provided that Netivation shall be free to
make any disclosure regarding the Merger that it deems necessary in connection
with filings with the SEC made in connection with the Registration Statement.
5.4 Best Efforts. During the Pre-Closing Period, (i) Raintree shall
use commercially reasonable efforts to cause the conditions set forth in Section
6 to be satisfied on a timely basis and (ii) Netivation and Merger Sub shall use
their commercially reasonable efforts to cause the conditions set forth in
Section 7 to be satisfied on a timely basis and Netivation will take all actions
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
5.5 Tax Matters. At or prior to the Closing, (a) Raintree shall
execute and deliver to Moffatt, Thomas, Barrett, Rock & Fields, Chtd. and to
Netivation a tax representation letter, in a form reasonably acceptable to such
parties, and (b) Netivation shall execute and deliver to Moffatt, Thomas,
Barrett, Rock & Fields, Chtd. and to Raintree a tax representation letter, in a
form reasonably acceptable to such parties. Raintree and the Selling
Stockholders will use all of their respective reasonable efforts to cause the
transactions contemplated hereby to qualify as a reorganization under the
provisions of Section 368(a) of the Code and will not take any action after the
Acquisition is effected that could reasonably be expected to cause the
Acquisition to lose its tax-free status. All parties hereto agree to file this
Agreement with their
<PAGE>
respective federal income tax returns for the year in which the Acquisition
closes and to comply with the reporting requirements of United States Treasury
Regulations Section 1.368-2(g), if applicable.
5.6 Piggy-Back Registration Rights. The Selling Stockholders shall
have the registration rights enumerated on Exhibit J.
SECTION 6 - CONDITIONS PRECEDENT TO OBLIGATIONS OF NETIVATION AND MERGER SUB
The obligations of Netivation and Merger Sub to effect the
Transactions are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Netivation, in
whole or in part, in accordance with Section 10.11):
6.1 Accuracy of Representations. Each of the representations and
warranties made by Raintree and the Selling Stockholders in this Agreement shall
have been accurate in all material respects as of the date of this Agreement and
shall be accurate in all material respects as of the Scheduled Closing Time as
if made at the Scheduled Closing Time.
6.2 Performance of Covenants. Each covenant and obligation that
Raintree or any of the Selling Stockholders is required to comply with or to
perform pursuant to this Agreement at or prior to the Closing shall have been
duly complied with and performed in all material respects.
6.3 Stockholder Approval. The principal terms of the Merger shall
have been duly approved by the stockholders of Raintree in accordance with the
provisions of Virginia Law and applicable agreements.
6.4 Consents. All consents required to be obtained by Raintree in
connection with the Transactions (including the consents identified in Schedule
2.17) shall have been obtained and shall be in full force and effect.
6.5 No Material Adverse Change. Except for adverse changes that
result from general economic conditions, there shall have been no material
adverse change in Raintree's business, condition, assets, liabilities,
operations, financial performance or prospects since the date of this Agreement.
6.6 Agreements and Documents. Netivation shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) the Escrow Agreement, substantially in the form of Exhibit G;
(b) an Employment and Noncompetition Agreement, substantially in
the form of Exhibits F, executed by Sean W. Kennedy;
(c) a Tax Representation Letter executed by Raintree;
<PAGE>
(d) a Prospective Offeree Questionnaire substantially in the form
of Exhibit H executed by each Selling Stockholder;
(e) written resignations of all officers and directors of
Raintree, effective as of the Closing Date;
(f) a certificate executed by each of the Selling Stockholders
containing the representation and warranty of each such Selling Stockholder that
(i) each of the representations and warranties made by Raintree and the Selling
Stockholders in this Agreement is accurate in all material respects as of the
Closing Date as if made on the Closing Date and (ii) the conditions set forth in
this Section 6 have been duly satisfied (the "Selling Stockholders' Closing
Certificate");
(g) a legal opinion from counsel for Raintree and the Selling
Stockholders, substantially in the form of Exhibit E.
(h) such other documents as Netivation may reasonably request in
good faith for the purpose of (i) evidencing the accuracy of any representation
or warranty made by Raintree or the Selling Stockholders, (ii) evidencing the
compliance by Raintree or the Selling Stockholders with, or the performance by
Raintree or the Selling Stockholders of, any covenant or obligation set forth in
this Agreement, (iii) evidencing the compliance with any applicable federal or
state securities law, (iv) evidencing the satisfaction of any condition set
forth in this Section 6 or (v) otherwise facilitating the consummation or
performance of any of the Transactions.
6.7 Lock-Up Agreements. Each of the Selling Stockholders shall have
delivered to Netivation a lock-up agreement, substantially in the form of
Exhibit I.
6.8 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any legal requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.9 No Proceedings. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Merger or seeking to prohibit or limit the
exercise by Netivation of any material right pertaining to its ownership of
stock of the Surviving Corporation.
6.10 Securities Law Compliance. All applicable requirements of the
Securities Act and any applicable state securities laws shall have been
satisfied.
6.11 Dissenters Rights. No stockholder of Raintree shall have
exercised dissenters rights with respect to approval of the Transactions.
<PAGE>
6.12 Unaccredited Investors. The Prospective Offeree Questionnaires
delivered pursuant to Sections 5.2 and 6.6 shall indicate that no more than 35
of the stockholders of Raintree are "unaccredited investors," as defined by Rule
501 under the Securities Act.
6.13 Proceedings and Documents. All corporate and other proceedings
in connection with the Transactions and all documents and instruments incident
to such Transactions shall be reasonably satisfactory in substance and form to
Netivation.
6.14 Corporate Approvals. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of Raintree, Netivation, Merger Sub and the Selling Stockholders.
SECTION 7 - CONDITIONS PRECEDENT TO OBLIGATIONS OF RAINTREE AND THE SELLING
STOCKHOLDERS
The obligations of Raintree and the Selling Stockholders to effect the
Transactions are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived solely by Raintree,
in whole or in part, in accordance with Section 10.11):
7.1 Accuracy of Representations. Each of the representations and
warranties made by Netivation in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in all
material respects as of the Scheduled Closing Time as if made at the Scheduled
Closing Time.
7.2 Performance of Covenants. Each covenant and obligation that
Netivation and Merger Sub are required to comply with or to perform pursuant to
this Agreement at or prior to the Closing shall have been duly complied with and
performed in all material respects.
7.3 Consents. All consents required to be obtained by Netivation in
connection with the Transactions shall have been obtained and shall be in full
force and effect.
7.4 Agreements and Documents. Raintree shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) the Escrow Agreement, substantially in the form of Exhibit G;
(b) an Employment and Noncompetition Agreement, substantially in
the forms of Exhibit F, executed by Sean W. Kennedy;
(c) a Tax Representation Letter executed by Netivation;
(d) a certificate executed by Netivation containing the
representation and warranty of Netivation that (i) each of the representations
and warranties made by Netivation in this Agreement is accurate in all material
respects as of the Closing Date as if made on the Closing Date and (ii) the
conditions set forth in this Section 7 have been duly satisfied; and
<PAGE>
(e) such other documents as Raintree may reasonably request in
good faith for the purpose of (i) evidencing the accuracy of any representation
or warranty made by Netivation, (ii) evidencing the compliance by Netivation
with, or the performance by Netivation of, any covenant or obligation set forth
in this Agreement, (iii) evidencing the compliance with any applicable federal
or state securities law, (iv) evidencing the satisfaction of any condition set
forth in this Section 7 or (v) otherwise facilitating the consummation or
performance of any of the Transactions.
(f) a legal opinion from counsel for Netivation and Merger Sub,
substantially in the form of Exhibit E.
7.5 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any legal requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
7.6 No Proceedings. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Merger or seeking to prohibit or limit the
exercise by Netivation of any material right pertaining to its ownership of
stock of the Surviving Corporation.
7.7 Corporate Approvals. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of Netivation and Merger Sub.
SECTION 8 - TERMINATION
8.1 Termination Events. This Agreement may be terminated prior to
the Closing:
(a) by Netivation if (i) there is a material Breach of any
covenant or obligation of Raintree or any of the Selling Stockholders or (ii)
Netivation reasonably determines that the timely satisfaction of any condition
set forth in Section 6 has become impossible (other than as a result of any
failure on the part of Netivation or Merger Sub to comply with or perform any
covenant or obligation of Netivation or Merger Sub set forth in this Agreement);
(b) by the Agent (as defined in Section 10.1) if (i) there is a
material Breach of any covenant or obligation of Netivation or (ii) the Agent
reasonably determines that the timely satisfaction of any condition set forth in
Section 7 has become impossible (other than as a result of any failure on the
part of Raintree or any of the Selling Stockholders to comply with or perform
any covenant or obligation of Raintree or the Selling Stockholders set forth in
this Agreement);
(c) by Netivation at or after the Scheduled Closing Time if any
condition set forth in Section 6 has not been satisfied by the Scheduled Closing
Time;
<PAGE>
(d) by the Agent at or after the Scheduled Closing Time if any
condition set forth in Section 7 has not been satisfied by the Scheduled Closing
Time;
(e) by Netivation if the Closing has not taken place on or before
October 29, 1999 (other than as a result of any failure on the part of
Netivation or Merger Sub to comply with or perform any covenant or obligation of
Netivation or Merger Sub set forth in this Agreement);
(f) by the Agent if the Closing has not taken place on or before
October 29, 1999 (other than as a result of the failure on the part of Raintree
or any of the Selling Stockholders to comply with or perform any covenant or
obligation of Raintree or the Selling Stockholders set forth in this Agreement);
or
(g) by the mutual consent of Netivation, Raintree and the Agent.
8.2 Termination Procedures. If Netivation wishes to terminate this
Agreement pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e),
Netivation shall deliver to the Agent a written notice stating that Netivation
is terminating this Agreement and setting forth a brief description of the basis
on which Netivation is terminating this Agreement. If the Agent wishes to
terminate this Agreement pursuant to Section 8.1(b), Section 8.1(d) or Section
8.1(f), the Agent shall deliver to Netivation a written notice terminating this
Agreement and setting forth a brief description of the basis on which this
Agreement is terminated.
8.3 Effect of Termination. If this Agreement is terminated pursuant
to Section 8.1, all further obligations of the parties under this Agreement
shall automatically terminate; provided, however, that: (a) neither Raintree
nor the Selling Stockholders nor Netivation shall be relieved of any obligation
or liability arising from any prior Breach by such party of any provision of
this Agreement; (b) the parties shall, in all events, remain bound by and
continue to be subject to the provisions set forth in Section 9; and (c)
Raintree and Netivation shall, in all events, remain bound by and continue to be
subject to Section 5.3.
<PAGE>
SECTION 9 - INDEMNIFICATION, ETC.
9.1 Survival of Representations, Warranties and Covenants.
(a) The representations, warranties and covenants of each party
pursuant to this Agreement shall survive the Closing and shall expire on the
first anniversary of the Closing Date; provided, however, (i) that fraud claims
and claims under Section 2.14 shall survive for the statute of limitations
applicable to claims based on such matters, (ii) that if, at any time prior to
the first anniversary of the Closing Date, any Netivation Indemnitee seeking
indemnification under this Section 9 (acting in good faith) delivers to the
Agent a written notice alleging the existence of a Breach of any of the
representations and warranties made by Raintree or any of the Selling
Stockholders or a Breach of any covenant contained herein (and setting forth in
reasonable detail the basis for such Netivation Indemnitee's belief that such a
Breach may exist) and asserting a claim for recovery under Section 9.2 based on
such alleged Breach, then the claim asserted in such notice shall survive the
first anniversary of the Closing Date until such time as such claim is fully and
finally resolved, and (iii) the covenant of Netivation in Section 1.5 shall
survive the Closing and expire on March 15, 2003.
(b) The representations, warranties, covenants and obligations of
Raintree and the Selling Stockholders, and the rights and remedies that may be
exercised by the Netivation Indemnitees, shall not be limited or otherwise
affected by or as a result of any information furnished to, or any investigation
made by or Knowledge of, any of the Netivation Indemnitees or their
Representatives.
(c) For purposes of this Agreement, each statement or other item
of information set forth in the Schedule of Exceptions or in any update to the
Schedule of Exceptions shall be deemed to be a representation and warranty made
in this Agreement.
9.2 Indemnification by the Selling Stockholders.
(a) Subject to the provisions of this Section 9, the Selling
Stockholders shall indemnify and hold harmless each of the Netivation
Indemnitees from and against the amount of any Damages incurred by any of the
Netivation Indemnitees directly or indirectly as a result of (i) any Breach of a
representation or warranty of Raintree or any of the Selling Stockholders
contained in Section 2 hereof or in any instrument delivered pursuant to this
Agreement (each as modified by the Schedule of Exceptions delivered by Raintree
and the Selling Stockholders on the date of this Agreement and not as modified
by any revisions to such Schedule of Exceptions after such date), (ii) any
Breach of any covenant or obligation contained herein , (iii) any final
determination of Raintree's net tax liability for the fiscal year immediately
prior to the Closing or (iv) any Breach of any representation or warranty made
in the Selling Stockholders' Closing Certificate.
(b) The Selling Stockholders acknowledge and agree that, if and
to the extent that there are any Damages as a result of any Breach of any
representation or warranty, then Netivation itself shall be deemed, by virtue of
its ownership of the capital stock of Raintree, to have incurred Damages as
result of such Breach or Liability.
<PAGE>
(c) Each Selling Stockholder waives and acknowledges and agrees
that such Selling Stockholder shall not have and shall not exercise or assert
(or attempt to exercise or assert), any right of contribution, right of
indemnity or other similar right or remedy against the Surviving Corporation in
connection with any indemnification obligation or any other Liability to which
such Selling Stockholder may become subject under the Transactional Agreements
or otherwise in connection with any of the Transactions.
(d) Claims for Damages made by the Netivation Indemnitees
pursuant to the provisions of Sections 9.2(a) or 9.6 shall be limited to an
amount equal to (i) the fair market value on the date such claim is fully and
finally resolved of the Netivation Stock, which was received by the Selling
Stockholders on the Closing Date and still held by the Selling Stockholders on
the date such claim is fully and finally resolved; plus (ii) the amount realized
from the sale of Netivation Stock, which was received on the Closing Date but
sold by the Selling Stockholders prior to the full and final resolution of such
claim; plus (iii) $100,000. The provisions of this Section 9.2 shall not apply
to claims for willful misconduct, fraud, bad faith or recklessness on the part
of Raintree or any Selling Stockholder.
9.3 Indemnification by Netivation.
(a) Subject to the provisions of this Section 9, Netivation shall
indemnify and hold harmless each of the Selling Stockholders from and against
the amount of any Damages incurred by any of the Selling Stockholders directly
or indirectly as a result of (i) any Breach of a representation or warranty of
Netivation contained in Section 3 hereof or in any instrument delivered pursuant
to this Agreement or (ii) any Breach of any covenant or obligation contained
herein
(b) Netivation acknowledges and agrees that, if and to the extent
that there are any Damages as a result of any Breach of any representation or
warranty, then the Selling Stockholders shall be deemed, by virtue of such
Selling Stockholders ownership of the Netivation Stock, to have incurred Damages
as result of such Breach or Liability.
(c) Netivation waives and acknowledges and agrees that Netivation
shall not have and shall not exercise or assert (or attempt to exercise or
assert), any right of contribution, right of indemnity or other similar right or
remedy against the Surviving Corporation in connection with any indemnification
obligation or any other Liability to which Netivation may become subject under
the Transactional Agreements or otherwise in connection with any of the
Transactions.
(d) Claims for Damages made by the Selling Stockholders pursuant
to the provisions of Sections 9.3(a) shall be limited to an amount equal to
$900,000 minus the total of (i) the product of the number of shares of
Netivation Stock held by the Selling Stockholders, at the time of the claim,
multiplied by the fair market value of said shares on the date such claim is
fully and finally resolved; plus (ii) the total sales price of the shares of
Netivation Stock sold prior to the full resolution of such claim by the Selling
Stockholders. The provisions of this Section 9.3 shall not apply to claims for
willful misconduct, fraud, bad faith or recklessness on the part of Netivation.
<PAGE>
9.4 Minimum Claim Against the Selling Stockholders. The Selling
Stockholders shall have no liability nor be subject to any claim for Damages
made by Netivation Indemnities pursuant to the provisions of Section 9.2(a)
unless and until the aggregate amount of Damages exceeds the sum of $25,000.
After the aggregate amount of damages exceeds the sum of $25,000, Sean W.
Kennedy and Sandy Kennedy shall be jointly and severally liable for 75% of the
full amount of Damages and Resource Rentals, Inc. shall be liable for 25% of the
full amount of Damages.
9.5 Minimum Claim Against Netivation. Netivation shall have no
liability nor be subject to any claim for Damages made by the Selling
Stockholders pursuant to the provisions of Section 9.3(a) unless and until the
aggregate amount of Damages exceeds the sum of $25,000. If the aggregate amount
of Damages exceeds the sum of $25,000, then Netivation may be subject to the
full amount of any such claim.
9.6 Defense of Third Party Claims. In the event of the assertion or
commencement by any Person not a party to this Agreement (a "Third Party")of any
claim or Proceeding (whether against Raintree, against any other Netivation
Indemnitee or any other Person) with respect to which any of the parties to this
Agreement (the "Indemnifying Party") may become obligated to indemnify, hold
harmless, compensate or reimburse any other party to this Agreement (the
"Indemnitee") pursuant to this Section 9, the Indemnifying Party shall have the
right, at its election, to proceed with the defense of such claim or Proceeding,
provided however, that the Indemnifying Party must conduct the defense of the
Third Party's claim actively and diligently thereafter in order to preserve its
rights in this regard; and provided further that the Indemnitee may retain
separate co-counsel at its sole cost and expense. If the Indemnifying Party so
proceeds with the defense of any such claim or Proceeding:
(a) all expenses relating to the defense of such claim or
Proceeding (whether or not incurred by the Indemnitee) shall be borne and paid
exclusively by the Indemnifying Party;
(b) the Indemnifying Party shall make available to the Indemnitee
any documents and materials in the possession or control of any Indemnifying
Party that may be necessary to the defense of such claim or Proceeding; and
(c) The Indemnifying Party shall keep the Indemnitee informed of
all material developments and events relating to such claim or Proceeding.
9.7 Setoff. In addition to any rights of setoff or other rights that
any of the Netivation Indemnitees may have at common law or otherwise,
Netivation shall have the right to set off any amount that may be owed to any
Netivation Indemnitee under this Section 9 against any amount otherwise payable
by any Indemnitee to the Agent or any of the Selling Stockholders.
9.8 Indemnity Reserve. In order to secure Netivation's and each
Netivation Indemnitee's rights of indemnity, the Selling Stockholders shall
place 37,500 shares of Netivation Stock in escrow in accordance with the terms
of the Escrow Agreement, substantially in the form attached hereto as Exhibit G.
<PAGE>
9.9 Exercise of Remedies by Netivation Indemnitees Other Than
Netivation. No Netivation Indemnitee (other than Netivation or any successor
thereto or assignee thereof) shall be permitted to assert any indemnification
claim or exercise any other remedy under this Agreement unless Netivation (or
any successor thereto or assignee thereof) shall have consented to the assertion
of such indemnification claim or the exercise of such other remedy.
SECTION 10 - MISCELLANEOUS PROVISIONS
10.1 Selling Stockholders' Agent.
(a) The Selling Stockholders hereby irrevocably nominate,
constitute and appoint Sean Kennedy as the agent and true and lawful
attorney-in-fact of the Selling Stockholders (the "Agent"), with full power of
substitution, to act in the name, place and stead of the Selling Stockholders
for purposes of executing any documents and taking any actions that the Agent
may, in his sole discretion, determine to be necessary, desirable or appropriate
in connection with any of the Transactional Agreements or any of the
Transactions on behalf of the Selling Stockholders. Sean Kennedy hereby accepts
his appointment as Agent.
(b) The Selling Stockholders hereby grant to the Agent full
authority to execute, deliver, acknowledge, certify and file on behalf of the
Selling Stockholders (in the name of any or all of the Selling Stockholders or
otherwise) any and all documents that the Agent may, in his sole discretion,
determine to be necessary, desirable or appropriate, in such forms and
containing such provisions as the Agent may, in his sole discretion, determine
to be appropriate (including the Selling Stockholders' Closing Certificate and
any amendment to or waiver of rights under any of the Transactional Agreements).
Notwithstanding anything to the contrary contained in the Transactional
Agreements:
(i) Netivation shall be entitled to deal exclusively with
the Agent, acting on behalf of the Selling Stockholders, on all matters relating
to the Transactional Agreements and the respective Transactions (including all
matters relating to any notice to, or any consent to be given or action to be
taken by, any Selling Stockholder, including any matters set forth in Section
9); and
(ii) each Netivation Indemnitee shall be entitled to rely
conclusively (without further evidence of any kind whatsoever) on any document
executed or purported to be executed on behalf of any Selling Stockholder by the
Agent, and on any other action taken or purported to be taken on behalf of any
Selling Stockholder by the Agent, as fully binding upon such Selling
Stockholder.
(c) The Selling Stockholders recognize and intend that the power
of attorney granted herein (i) is coupled with an interest and is irrevocable,
(ii) may be delegated by the Agent and (iii) shall survive the death or
incapacity of each of the Selling Stockholders.
(d) The Agent shall be entitled to treat as genuine, and as the
document it purports to be, any letter, facsimile, telex or other document that
is believed by him
<PAGE>
to be genuine and to have been telexed, telegraphed, faxed or cabled by any
Selling Stockholder or to have been signed and presented by an Selling
Stockholder.
(e) If the Agent shall die, become disabled or otherwise be
unable to fulfill his responsibilities hereunder, then the Selling Stockholders
shall, within ten (10) days after such death or disability, appoint a successor
agent and, immediately thereafter, shall notify Netivation of the identity of
such successor. Any such successor shall succeed the Agent as Agent hereunder.
If for any reason there is no Agent at any time, all references herein to the
Agent shall be deemed to refer to the Selling Stockholders.
(f) All expenses incurred by the Agent in connection with the
performance of his duties as Agent shall be borne and paid by the Selling
Stockholders.
10.2 Further Assurances. Each party hereto shall execute and cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the Transactions.
10.3 Fees and Expenses. Subject to Section 9, each party to this
Agreement shall bear and pay all fees, costs and expenses (including legal fees
and accounting fees) that have been incurred or that are incurred in the future
by such party in connection with the Transactions, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) the
investigation and review conducted by Netivation and its Representatives with
respect to Raintree's business (and the furnishing of information to Netivation
and its Representatives in connection with such investigation and review), (ii)
the negotiation, preparation and review of this Agreement (including the
Schedule of Exceptions) and all agreements, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
Transactions, (iii) the preparation and submission of any filing or notice
required to be made or given in connection with any of the Transactions and the
obtaining of any consent required to be obtained in connection with any of such
Transactions and (iv) the consummation of the Merger.
10.4 Attorneys' Fees. If any action or Proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
10.5 Notices. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or overnight delivery service or by facsimile) to
the address or facsimile telephone number set forth beneath the name of such
party below (or to such other address or facsimile telephone number as such
party shall have specified in a written notice given to the other parties
hereto):
if to Netivation: Netivation.com, Inc.
806 Clearwater Loop, Suite N
Post Falls, ID 83854
<PAGE>
Attention: Anthony J. Paquin, President and
Chief Executive Officer
Facsimile: (208) 777-8904
with a copy to: Moffatt Thomas Barrett Rock & Fields, Chtd.
101 S. Capitol Blvd., 10/th/ Floor
Boise, ID 83702
Attention: Mark A. Ellison
Facsimile: (208) 385-5384
if to the Agent Sean W. Kennedy
or any of the 21102 Raintree Court
Selling Ashburn, VA 20147-5411
Stockholders: Facsimile: (703) 729-2392
with a copy to: Cohen Mohr LLP
1420 Beverly Road, Ste. 380
McLean, VA 22101
Attention: Daniel H. DuVal
Facsimile: (703) 761-0180
Any of the above addresses may be changed at any time by notice given
as provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, telecopied or by overnight courier, and three (3) business
days after the date of mailing, if mailed by certified mail, return receipt
requested.
10.6 Headings. The boldface headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.7 Counterparts. This Agreement may be executed in several
counterparts and transmitted by facsimile, each of which shall constitute an
original and all of which, when taken together, shall constitute one agreement.
10.8 Governing Law. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of Idaho
(without giving effect to principles of conflicts of laws).
10.9 Successors and Assigns. This Agreement shall be binding upon:
Raintree and its successors and assigns (if any); the Selling Stockholders and
their respective personal representatives, executors, administrators, estates,
heirs, successors and assigns (if any); Netivation and its successors and
assigns (if any); and Merger Sub and its successors and assigns (if any). This
Agreement shall inure to the benefit of: Raintree; the Selling Stockholders;
Netivation; Merger Sub; the Netivation Indemnitees; and the respective
successors and assigns (if any) of the foregoing. Each party may freely assign
any or all of its rights (but not its
<PAGE>
obligations) under this Agreement (including its indemnification rights under
Section 9), in whole or in part, to any other Person without obtaining the
consent or approval of any other party hereto or of any other Person.
10.10 Remedies Cumulative; Specific Performance. The rights and
remedies of the parties hereto shall be cumulative (and not alternative). The
parties to this Agreement agree that, in the event of any Breach or threatened
Breach by any party to this Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other party to this
Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (i) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (ii) an injunction restraining such Breach or threatened
Breach.
10.11 Waiver.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10.12 Amendments. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of all of the parties hereto.
10.13 Time of the Essence. Time is of the essence of this Agreement.
10.14 Severability. In the event that any provision of this
Agreement, or the application of any such provision to any Person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as to
which it is determined to be invalid, unlawful, void or unenforceable, shall not
be impaired or otherwise affected and shall continue to be valid and enforceable
to the fullest extent permitted by law.
10.15 Parties in Interest. Except for the provisions of Section 9,
none of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties hereto and their respective
successors and assigns (if any).
10.16 Entire Agreement. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof
<PAGE>
and thereof and supersede all prior agreements and understandings among or
between any of the parties relating to the subject matter hereof and thereof.
10.17 Construction.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
The parties hereto have caused this Agreement to be executed and delivered
as of the date first set forth above.
NETIVATION:
NETIVATION.COM, INC.,
a Delaware corporation
By ___________________________________________
Anthony J. Paquin
President and Chief Executive Officer
MERGER SUB:
NETIVATION.COM MERGER FOUR CORP.,
a Delaware corporation
By ___________________________________________
Anthony J. Paquin
President and Chief Executive Officer
<PAGE>
RAINTREE:
RAINTREE COMMUNICATIONS CORP.,
a Virginia corporation
By ___________________________________________
Sean W. Kennedy
President
SELLING STOCKHOLDERS:
Sean W. Kennedy and Sandy Kennedy, joint tenants
in the entirety with right of survivorship:
______________________________________________
Sean W. Kennedy
______________________________________________
Sandy Kennedy
Resource Rentals, Inc.
By:___________________________________________
Henry Nichols, President
AGENT:
______________________________________________
Sean Kennedy
SECRETARY'S CERTIFICATE
I, Gary S. Paquin, Secretary of Netivation.com Merger Four Corp., hereby
certify that this Agreement has been adopted pursuant to the first sentence of
Title 8, Section 251(f) of the Delaware Corporations Laws, and that the
conditions specified in that sentence have been satisfied.
_________________________________
Gary S. Paquin, Secretary
<PAGE>
Wednesday October 20, 8:07 am Eastern Time
Company Press Release
SOURCE: Netivation.com
Netivation.com Completes Acquisition of MEDMarket, Inc.
WASHINGTON, D.C. (October 20, 1999) Netivation.com (NASDAQ: NTVN - news), an
Internet healthcare and public policy company, today announced it has completed
the acquisition of MEDMarket, Inc., a developer of Internet e-commerce Web sites
for medical manufacturer and supplier companies. The acquisition is expected to
enhance Netivation.com's business-to-business e-commerce strategy in the
healthcare marketplace.
The online healthcare market, including both consumer and business-to-business
transactions, is projected to become a $300 billion industry, according to e-
Healthcare Market Reporter.
With the acquisition complete, MEDMarket becomes a wholly owned subsidiary of
Netivation.com. The terms of the deal include $100,000 in cash and 100,000
shares of Netivation.com common stock in exchange for 100 percent of the
outstanding stock of MEDMarket.
"This acquisition will be key to our plan to greatly expand our healthcare e-
commerce efforts, which includes DiscountMedBooks.com, MedMarketAuction.com and
MedMarket.com," said Tony Paquin, president and CEO of Netivation.com. "This
suite of e-commerce sites makes us one of the leading healthcare e-commerce
companies on the Web."
"The acquistion is a win-win situation for both companies," MEDMarket President
Tom Slater said. "Netivation.com's terrific marketing resources will expand the
customer base for MEDMarket's excellent line of products."
MEDMarket, Inc., founded in 1995, is the developer of The MEDMarket Network. The
MEDMarket Network is an integrated network of medical, business-to-business Web
sites, comprised of the MEDMarket Virtual Industrial Park (www.medmarket.com),
The Internet Medical Products Guide (impg.medmarket.com), Dr. MEDMarket
(dr.medmarket.com), and RAinfo (rainfo.medmarket.com).
<PAGE>
Each site addresses a single, vertical niche within the medical industry. The
MEDMarket Virtual Industrial Park is a venue for vendors to showcase their
products and services to the medical product manufacturing industry. In a
closely related niche, The Internet Medical Products Guide consists of
manufacturers and distributors offering their products to the online medical
community. Through these two properties, MEDMarket has the only Web business
model that is addressing both the production and sale of medical products.
An excellent complement to the manufacturing focus of the MEDMarket Virtual
Industrial Park, the RAinfo site provides FDA news, regulations, guidelines,
discussions, and employment opportunities to regulatory affairs professionals
within the medical product industry.
Leveraging the significant medical community traffic that frequents The
MEDMarket Network, the Dr. MEDMarket site offers additional products of interest
to this audience such as management and consulting services, specialized
furniture, and software products.
Netivation.com is the developer of Internet communities, including Medinex.com.
Medinex.com (www.medinexpro.com) is a healthcare community that provides
content, products and services to primary care physicians, healthcare-conscious
consumers, patients and their families. Medinex.com includes a medical search
engine, a doctor's advice column, the latest health news, Web sites for
healthcare professionals and The Online Discount Medical Bookstore
(www.discountmedbooks.com). The company also produces MedinexPro, an Internet-
based physician's office management software product.
This news release contains certain forward-looking statements concerning
Netivation.com's positioning for the future. As required by the Private
Securities Litigation Reform Act of 1995, the company advises that forward-
looking statements are subject to risks known and unknown, uncertainties and
other factors that could cause the company's actual results, performance, or
achievements to differ materially from those stated or inferred by forward-
looking statements. Such risks and uncertainties are discussed in detail in
Netivation.com's registration statement, filed with the Securities and Exchange
Commission on June 22, 1999. Bear in mind that the registration statement
discussion is effective only as of the date of filing and the risks and
uncertainties could change after such date. Given these uncertainties,
prospective investors are cautioned not to place undue reliance on such forward-
looking statements.
SOURCE: Netivation.com
<PAGE>
Thursday October 28, 8:01 am Eastern Time
Company Press Release
SOURCE: Netivation.com
Netivation.com Completes Acquisitions of Three Internet Political Companies
Public Disclosure, Raintree Communications, politicallyblack.com Strengthen
Votenet's Position as Leader in Online Politics
WASHINGTON, D.C. (October 28, 1999)
Netivation.com (NASDAQ: NTVN), an Internet public policy and healthcare
technology company, today announced it has completed the acquisition of three
Internet political companies, thus strengthening the position of the company's
public policy division - Votenet.com - as the leader in online politics.
Netivation.com has acquired Public Disclosure Inc. (www.publicdisclosure.org)
the provider of FECInfo (www.tray.com) a comprehensive up-to-the-minute Web site
of Federal Election Commission (FEC) information on federal candidates and
interest groups; Raintree Communications (www.policyvoice.com), a provider of
automated voice and data services for grassroots lobbying; and
politicallyblack.com (www.politicallyblack.com), the leading political
information center and news Web site for African Americans.
With these acquisitions, Netivation.com announced the formation of a political
information and products division to be located in Washington, D.C.
Netivation.com is building its base of political products, information and
services, as well as acquiring small companies that already generate revenue
from the political community. The political community market is estimated to be
more than $2.5 billion a year, involving such things as election campaigns,
lobbying, and public policy issue communications.
"These acquisitions demonstrate our commitment to maintaining our leadership
role in the political technology marketplace," Netivation.com President and CEO
Tony Paquin said. "I believe that Votenet.com will revolutionize politics in the
United States."
With the acquisitions complete, the three companies become wholly owned
subsidiaries of
<PAGE>
Netivation.com. In exchange for 100 percent of the outstanding stock of each of
the companies, Netivation is paying $190,000 and 300,000 shares of
Netivation.com common stock for Public Disclosure, $100,000 and 150,000 shares
of Netivation.com common stock for Raintree Communications, plus up to another
60,000 shares based on performance criteria, and $55,000 and 30,000 shares of
Netivation.com common stock for politicallyblack.com.
Kent Cooper and Tony Raymond, co-founders of Public Disclosure Inc, will manage
and expand Netivation.com's political Web site, Votenet.com (www.votenet.com).
They also will continue their operations and make available their unique
enhanced money-in-politics databases and linking software for use in other
products and services of the Netivation.com political division. Public
Disclosure Inc. was established in June of 1998 and provides clients with timely
research and access to relational databases of political money. Clients have
been primarily national news media companies (such as the Washington Post,
Associated Press, Bloomberg News, etc.), non-profit foundations, and Washington
D.C. lobby firms. It also provides a free public Web site, making available 20
years of political campaign finance data.
Votenet.com will be enhanced with information from Public Disclosure's FECInfo,
Raintree Communications, politicallyblack.com and other sites to provide public
policy information, original political content on elections, lobbying, and the
legislative process. Revenue comes from sponsorships and advertising
opportunities, as well as sales of campaign tools and services. Votenet.com
provides services and information to enhance communication and understanding of
the political process, its players and practices, and provides tools for
citizens to discuss issues and communicate with their representatives at the
federal, state and local levels.
Tony Raymond stated, "In the past, politics on the Internet was relegated to
news sites, while campaign software was in the domain of companies periodically
shipping software on disks. Today, Netivation.com commits itself to changing the
meaning and relationship of people in politics. From a free public Web site,
people will have immediate access into the political arena and receive original
political content - from information on PAC contributions and insider trading of
political money to grassroots lobbying resources. People will have the most up-
to-date political tools immediately available from the Internet."
Kent Cooper stated, "The Internet is quickly fostering and increasing the
natural competition of political ideas and interests in every community. It will
produce an active and ever-expanding marketplace for political information and
communication technology products."
Sean Kennedy, founder of Raintree Communications, will maintain his grassroots
activism company, enhancing Votenet.com with Raintree's wide range of political
activism tools, including Policy Voice. Policy Voice offers associations,
corporations, and unions a PIN-controlled, interactive voice network featuring
legislative updates, legislative documents by fax request, automatic transfer to
federal and state legislators, and model fax letters to legislators. Raintree's
client list includes the American Medical Association, American Society of
Association Executives, American Insurance Association, National Association of
Realtors, and the Health Insurance Association of America.
Roderick Conrad and Charles Ellison, founders of politicallyblack.com, also will
continue to build the only politically oriented news site aimed at the African-
American community, augmenting the scope of resources offered by Votenet.com.
Politicallyblack.com's hard-hitting, cutting-edge selection of news, commentary,
discussion and exclusive Capitol Hill reports and Generation X perspective round
out Votenet.com's offerings on the political front.
The political division of Netivation.com already provides Internet-based
political tools such as a political
<PAGE>
search engine, Web sites for candidates and organizations, Governet campaign
software, online fundraising services, and CapitolWatch, an e-mail news service.
Netivation.com will consolidate these products and services with those of the
newly acquired companies and use the combined talent of the staff to create new
products. Netivation.com markets these products and services through a central
sales team to the political community of candidates, citizens, voters, political
parties, media organizations, lobbyists, trade associations, corporations,
unions, and other interest groups.
As previously announced, Netivation.com also has signed a letter of intent to
acquire Net.Capitol (www.netcapitol.com), a public affairs technology firm.
Netivation.com is the developer of Internet communities, including Medinex.com.
Medinex.com (www.medinexpro.com) is a healthcare community that provides
content, products and services to primary care physicians, healthcare-conscious
consumers, patients and their families.
This news release contains certain forward-looking statements concerning
Netivation.com's positioning for the future. As required by the Private
Securities Litigation Reform Act of 1995, the company advises that forward-
looking statements are subject to risks known and unknown, uncertainties and
other factors that could cause the company's actual results, performance, or
achievements to differ materially from those stated or inferred by forward-
looking statements. Such risks, uncertainties, and other factors are discussed
in detail in Netivation.com's registration statement, filed with the Securities
and Exchange Commission on June 22, 1999. The registration statement discussion
is effective only as of the date of filing and the risks, uncertainties, and
other factors could change after such date. Given these risks and uncertainties,
prospective investors are cautioned not to place undue reliance on such forward-
looking statements. All subsequent written or oral forward-looking statements
attributable to the company or persons acting on its behalf are expressly
qualified in their entirety by these cautionary statements. The forward-looking
statements included in this news release are made only as of the date of this
release. The company does not intend, and undertakes no obligation, to update
these forward-looking statements.
SOURCE: Netivation.com
