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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
XXXXXXXXXX.XXX, INC.
a Delaware corporation;
XXXXXXXXXX.XXX MERGER TWO CORP., a Delaware corporation;
MEDMarket, INC., a Colorado corporation;
and
the Selling Stockholders of MEDMarket, Inc.
listed on Exhibit A hereto
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Dated as of September___, 1999
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TABLE OF CONTENTS
Page
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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................................................................. 00
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XXXXXXX 0 - XXXXXXXXXXXXXXX XXX XXXXXXXXXX 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
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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
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10.16 Entire Agreement........................................................................ 33
10.17 Construction............................................................................ 33
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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
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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: XXXXXXXXXX.XXX,
INC., a Delaware corporation ("Netivation"), XXXXXXXXXX.XXX 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
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxxx, Xxxxxx, Xxxxxxx, Rock & Fields, Chartered, 000 X. Xxxxxxx Xxxxxxxxx,
00xx Xxxxx, Xxxxx, Xxxxx 00000 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
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, Xxxxx National Bank, Xxxxx Xxxxxxxx, 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
(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
(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
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
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
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
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
(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 xxx.xxxxxxxxx.xxx; xxxx.xxxxxxxxx.xxx;
xxxxxx.xxxxxxxxx.xxx; xxx.xxxxxxxxx.xxx; and xx.xxxxxxxxx.xxx), 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
2.11 Patents and Trademarks. MEDMarket owns or possesses sufficient
legal rights to all trademarks (including, but not limited to the marks
MEDMARKET and XXXXXXXXX.XXX), 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
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
(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
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
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
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
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
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
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
(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
(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
(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
(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
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 Xxxxxxx, Xxxxxx, Xxxxxxx, 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 Xxxxxxx, Xxxxxx,
Xxxxxxx, 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
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
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 Xxxxxx X. Xxxxxx and Xxxx X. Xxxxxxx;
(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
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
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 Xxxxxx X. Xxxxxx and Xxxx X. Xxxxxxx;
(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
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
(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
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
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
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
SECTION 10 - MISCELLANEOUS PROVISIONS
10.1 Selling Stockholders' Agent.
(a) The Selling Stockholders hereby irrevocably nominate,
constitute and appoint Xxxxxx X. Xxxxx 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. Xxxxxx X. Xxxxx 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
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
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: Xxxxxxxxxx.xxx, Inc.
000 Xxxxxxxxxx Xxxx, Xxxxx X
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, President and
Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to: Xxxxxxx Xxxxxx Xxxxxxx Rock & Fields, Chtd.
000 X. Xxxxxxx Xxxx., 00/xx/ Xxxxx
Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
if to the Agent Xxxxxx X. Xxxxx, Esq.
or any of the 0000 Xxxx 0/xx/ Xxx.
Selling Stockholders: Xxxxxxx, XX 00000
Facsimile:(000) 000-0000
with a copy to: Xxxxxx X. Xxxxxx
000 X. Xxxx Xx.
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
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
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
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
(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:
XXXXXXXXXX.XXX, INC.,
By___________________________________
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
MERGER SUB:
XXXXXXXXXX.XXX MERGER TWO CORP.,
a Delaware corporation
By___________________________________
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - 39
MEDMarket:
MEDMarket, INC.,
a Colorado corporation
By___________________________________
Xxxxxx X. Xxxxxx
President
SELLING STOCKHOLDERS:
Xxxxxx X. Xxxxxx
Xxxx X. Xxxxxxx
Xxx Xxxxxxx
____________________________________
C. Xxxxxx Xxxxxxx
____________________________________
Xxxxx Xxxxxxxx
AGENT:
Xxxxxx X. Xxxxx
SECRETARY'S CERTIFICATE
I, Xxxx X. Xxxxxx, Secretary of Xxxxxxxxxx.xxx 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.
Xxxx X. Xxxxxx, Secretary
