AGREEMENT AND PLAN OF MERGER
among:
XXXXXXXXXX.XXX, INC.
a Delaware corporation;
XXXXXXXXXX.XXX MERGER FOUR CORP.,
a Delaware corporation;
RAINTREE COMMUNICATIONS CORPORATION,
a Virginia corporation;
and
the Selling Stockholders of Raintree Communications Corporation
listed on Exhibit A hereto
Dated as of October___, 1999
TABLE OF CONTENTS
Page
SECTION 1 - DESCRIPTION OF TRANSACTION................................................................. 4
1.1 Merger of Raintree into Merger Sub......................................................... 4
1.2 Effect of the Merger....................................................................... 4
1.3 Closing; Effective Time.................................................................... 4
1.4 Certificate of Incorporation, Bylaws and Directors and Officers............................ 5
1.5 Conversion of Raintree Stock............................................................... 5
1.6 Additional Consideration................................................................... 6
1.7 Closing of Raintree's Transfer Books....................................................... 6
1.8 Exchange of Certificates................................................................... 7
1.9 Dissenting Shares.......................................................................... 8
1.10 Tax Consequences........................................................................... 8
1.11 Accounting Treatment....................................................................... 8
1.12 Further Action............................................................................. 8
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF RAINTREE AND THE SELLING STOCKHOLDERS.................... 9
2.1 Organization, Good Standing and Qualification.............................................. 9
2.2 Subsidiaries............................................................................... 9
2.3 Capitalization; Voting Rights.............................................................. 9
2.4 Authorization; Binding Obligations......................................................... 9
2.5 Financial Statements....................................................................... 10
2.6 Liabilities................................................................................ 10
2.7 Agreements; Action......................................................................... 10
2.8 Obligations to Related Parties............................................................. 10
2.9 Absence of Changes......................................................................... 11
2.10 Title to Properties and Assets; Liens, Etc................................................. 12
2.11 Patents and Trademarks..................................................................... 12
2.12 Compliance with Other Instruments.......................................................... 13
2.13 Litigation................................................................................. 13
2.14 Tax Returns and Payments................................................................... 13
2.15 Employees.................................................................................. 14
2.16 Registration Rights........................................................................ 14
2.17 Compliance with Legal Requirements; Consents............................................... 15
2.18 Selling Stockholders....................................................................... 15
2.19 Full Disclosure............................................................................ 16
2.20 Year 2000 Compliance....................................................................... 16
2.21 Securities Laws Matters.................................................................... 16
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF NETIVATION............................................... 17
3.1 Organization, Good Standing and Qualification.............................................. 17
3.2 Subsidiaries............................................................................... 17
3.3 Capitalization; Voting Rights.............................................................. 17
3.4 Authorization; Binding Obligations......................................................... 18
3.5 Full Disclosure............................................................................ 18
i
SECTION 4 - CERTAIN COVENANTS OF RAINTREE AND THE SELLING STOCKHOLDERS................................. 19
4.1 Access and Investigation................................................................... 19
4.2 Operation of Business...................................................................... 20
4.3 Notification; Updates to Schedule of Exceptions............................................ 21
4.4 No Negotiation............................................................................. 22
SECTION 5 - ADDITIONAL COVENANTS OF THE PARTIES........................................................ 23
5.1 Filings and Consents....................................................................... 23
5.2 Raintree Stockholders' Meeting............................................................. 23
5.3 Public Announcements....................................................................... 23
5.4 Best Efforts............................................................................... 23
5.5 Tax Matters................................................................................ 23
SECTION 6 - CONDITIONS PRECEDENT TO OBLIGATIONS OF NETIVATION AND MERGER SUB........................... 24
6.1 Accuracy of Representations................................................................ 24
6.2 Performance of Covenants................................................................... 24
6.3 Stockholder Approval....................................................................... 24
6.4 Consents................................................................................... 24
6.5 No Material Adverse Change................................................................. 24
6.6 Agreements and Documents................................................................... 24
6.7 Lock-Up Agreements......................................................................... 25
6.8 No Restraints.............................................................................. 25
6.9 No Proceedings............................................................................. 25
6.10 Securities Law Compliance.................................................................. 25
6.11 Dissenters Rights.......................................................................... 25
6.12 Unaccredited Investors..................................................................... 26
6.13 Proceedings and Documents.................................................................. 26
6.14 Corporate Approvals........................................................................ 26
SECTION 7 - CONDITIONS PRECEDENT TO OBLIGATIONS OF RAINTREE AND THE SELLING STOCKHOLDERS............... 26
7.1 Accuracy of Representations................................................................ 26
7.2 Performance of Covenants................................................................... 26
7.3 Consents................................................................................... 26
7.4 Agreements and Documents................................................................... 26
7.5 No Restraints.............................................................................. 27
7.6 No Proceedings............................................................................. 27
7.7 Corporate Approvals........................................................................ 27
SECTION 8 - TERMINATION................................................................................ 27
8.1 Termination Events......................................................................... 27
8.2 Termination Procedures..................................................................... 28
8.3 Effect of Termination...................................................................... 28
SECTION 9 - INDEMNIFICATION, ETC....................................................................... 29
9.1 Survival of Representations, Warranties and Covenants...................................... 29
9.2 Indemnification by the Selling Stockholders................................................ 29
9.3 Indemnification by Netivation.............................................................. 30
9.4 Minimum Claim Against the Selling Stockholders............................................. 31
9.5 Minimum Claim Against Netivation........................................................... 31
ii
9.6 Defense of Third Party Claims............................................................... 31
9.7 Setoff...................................................................................... 31
9.8 Indemnity Reserve........................................................................... 31
9.9 Exercise of Remedies by Netivation Indemnitees Other Than Netivation........................ 32
SECTION 10 - MISCELLANEOUS PROVISIONS.................................................................... 32
10.1 Selling Stockholders' Agent................................................................. 32
10.2 Further Assurances.......................................................................... 33
10.3 Fees and Expenses........................................................................... 33
10.4 Attorneys' Fees............................................................................. 33
10.5 Notices..................................................................................... 33
10.6 Headings.................................................................................... 34
10.7 Counterparts................................................................................ 34
10.8 Governing Law............................................................................... 34
10.9 Successors and Assigns...................................................................... 34
10.10 Remedies Cumulative; Specific Performance................................................... 35
10.11 Waiver...................................................................................... 35
10.12 Amendments.................................................................................. 35
10.13 Time of the Essence......................................................................... 35
10.14 Severability................................................................................ 35
10.15 Parties in Interest......................................................................... 35
10.16 Entire Agreement............................................................................ 35
10.17 Construction................................................................................ 36
EXHIBITS
Exhibit A - Selling Stockholders
Exhibit B - Certain Definitions
Exhibit C - Director and Officer of Surviving Corporation
Exhibit D - Allocation of Merger Consideration
Exhibit E - Forms of Legal Opinion
Exhibit F - Form of Employment and Noncompetition Agreement
Exhibit G - Form of Escrow Agreement
Exhibit H - Form of Prospective Offeree Questionnaire
Exhibit I - Form of Lock-Up
Exhibit J - Piggy-Back Registration Rights
iii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered
into as of October ____, 1999, by and among: XXXXXXXXXX.XXX, INC., a Delaware
corporation ("Netivation"), XXXXXXXXXX.XXX MERGER FOUR CORP., a Delaware
corporation and a wholly-owned subsidiary of Netivation ("Merger Sub"), RAINTREE
COMMUNICATIONS CORPORATION, a Virginia corporation ("Raintree"), and the
stockholders of Raintree set forth on Exhibit A hereto (the "Selling
Stockholders"). Certain capitalized terms used in this Agreement are defined in
Exhibit B.
RECITALS
A. The parties intend to effect a merger of Raintree into Merger Sub
in accordance with this Agreement and the Delaware General Corporation Law
("Delaware Law") and the Virginia Stock Corporation Act ("Virginia Law") (the
"Merger"). Upon consummation of the Merger, Merger Sub will cease to exist, and
Raintree will remain a wholly-owned subsidiary of Netivation.
B. The Selling Stockholders own an aggregate of 100 shares of
capital stock of Raintree (the "Raintree Stock"), constituting 100% of the
Raintree capital stock on a fully-diluted basis.
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1 - DESCRIPTION OF TRANSACTION
1.1 Merger of Merger Sub into Raintree . Upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time (as defined
in Section 1.3), Merger Sub shall be merged with and into Raintree, and the
separate existence of Merger Sub shall cease. Raintree will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set
forth in this Agreement and in the applicable provisions of Delaware Law and
Virginia Law.
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxxx, Xxxxxx, Xxxxxxx, Rock & Fields, Chartered, 000 X. Xxxxxxx Xxxxxxxxx,
00xx Xxxxx, Xxxxx, Xxxxx 00000 on or before October 29,1999, or at such other
time as the parties may agree (the "Scheduled Closing Time"). (The date on
which the Closing actually takes place is referred to in this Agreement as the
"Closing Date.") Contemporaneously with or as promptly as practicable after the
Closing, a properly executed certificate of merger (the "Certificate of
Merger"), conforming to the requirements of Delaware Law and Virginia Law, shall
be filed with the Secretary of State of the State of Delaware and the Clerk of
the Virginia State Corporation
Commission. The Merger shall become effective at the time such Certificate of
Merger is filed with and accepted by the Secretary of State of the State of
Delaware and the Clerk of the Virginia State Corporation Commission (the
"Effective Time").
1.4 Certificate of Incorporation, Bylaws and Directors and Officers.
(a) The certificate of incorporation of Raintree, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended.
(b) The bylaws of Raintree, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter amended.
(c) The directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals identified on
Exhibit C.
1.5 Conversion of Raintree Stock.
(a) Subject to Sections 1.7(c), 1.8, and the earnout provisions
of this paragraph at the Effective Time, by virtue of the Merger and without any
further action on the part of Netivation, Merger Sub, Raintree or any
stockholder of Raintree, each share of Common Stock of Raintree issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive up to 2,100 shares of Common Stock of Netivation (the
"Netivation Stock"). The Merger Consideration that may be received by the
Selling Stockholders is set forth on Exhibit D and shall be payable to the
Selling Stockholders as follows:
(i) on the Closing Date - 150,000 shares of common stock
of Netivation less the number of shares to be placed in escrow pursuant to
Section 9.8;
(ii) on March 15, 2001 - 20,000 shares of common stock of
Netivation if the calendar year 2000 gross revenues of the Surviving Corporation
exceed $500,000;
(iii) on March 15, 2002 - 20,000 shares of common stock of
Netivation if the calendar year 2001 gross revenues of the Surviving Corporation
exceed $1,000,000;
(iv) on March 15, 2003 - 20,000 shares of common stock of
Netivation if the calendar year 2002 gross revenues of the Surviving Corporation
exceed $1,500,000.
Netivation covenants that it shall provide general administrative and sales
support for Raintree for the periods during which the measurement of gross
revenues in clauses (ii), (iii), and (iv) shall apply. For this purpose,
general administrative support shall mean that Netivation shall provide
accounting, contract administration and other office administrative tasks to
permit Xxxx Xxxxxxx to focus principally on customer sales and business
development. Sales support shall
mean that Netivation will include adequate training of its sales personnel in
the Raintree services and will include for such personnel sales incentives for
sales of Raintree services comparable to those for sales of other Netivation
products. In addition, Netivation shall make available to Raintree the customer
list of Netivation and provide introductions to the principal contacts of such
customers if requested by Raintree. In addition, Netivation shall permit
Raintree to retain reasonable working capital to fund commercially reasonable
sales efforts and business development of Raintree. This paragraph shall survive
the Closing.
The number of shares of shares of Netivation Stock issuable to the Selling
Stockholders hereunder shall be rounded to the nearest whole share; Netivation
shall not be obligated to issue fractional shares of Netivation Stock and cash
shall not be paid in lieu of fractional shares. If, between the date of this
Agreement and the Closing Date, the shares of capital stock of Raintree or the
Netivation Stock are changed into a different number or class of shares by
reason of any stock dividend, subdivision, reclassification, recapitalization,
split-up, combination or similar transaction, the Merger Consideration shall be
appropriately adjusted.
(b) All of the outstanding common stock of Merger Sub shall, by
virtue of the Transactions, and without any action on the part of the holder
thereof, be converted into 100 shares of the common stock of the Surviving
Corporation. Each certificate for common stock of Merger Sub shall, by virtue of
the Transactions, be deemed for all purposes to evidence ownership of the
appropriate number of shares of common stock of the Surviving Corporation into
which such common stock of Merger Sub was converted pursuant to the
Transactions.
(c) If any shares of capital stock of Raintree outstanding
immediately prior to the Effective Time are unvested or are subject to a
repurchase option, risk of forfeiture or other condition under any applicable
restricted stock purchase agreement or other agreement with Raintree, then the
shares of Netivation Stock issued in exchange for such shares of capital stock
of Raintree will also be unvested and subject to the same repurchase option,
risk of forfeiture or other condition, and the certificates representing such
shares of Netivation Stock may be accordingly marked with appropriate legends.
1.6 Additional Consideration. At Closing, Netivation shall pay One
Hundred Thousand Dollars ($100,000) cash to the Selling Stockholders in
proportion to each Selling Stockholder's interest in Raintree immediately prior
to Closing.
1.7 Closing of Raintree's Transfer Books. At the Effective Time,
holders of certificates representing Raintree capital stock that were
outstanding immediately prior to the Effective Time shall cease to have any
rights as stockholders of Raintree, and the stock transfer books of Raintree
shall be closed with respect to all shares of such capital stock outstanding
immediately prior to the Effective Time. No further transfer of any such
capital stock of Raintree shall be made on such stock transfer books after the
Effective Time. If, after the Effective Time, a valid certificate previously
representing any of such capital stock of Raintree (a "Raintree Stock
Certificate") is presented to the Surviving Corporation or Netivation, such
Raintree Stock Certificate shall be canceled and shall be exchanged as provided
in Section 1.8.
1.8 Exchange of Certificates.
(a) At or as soon as practicable after the Effective Time,
Netivation will send to each holder of a Raintree Stock Certificate a letter of
transmittal and instructions for use in customary form and containing such
provisions as may reasonably be required for use in effecting the surrender of
such Raintree Stock Certificate for payment therefor and conversion thereof.
Upon surrender of a Raintree Stock Certificate to Netivation for exchange,
together with a duly executed letter of transmittal and such other documents as
may be reasonably required by Netivation, the holder of such Raintree Stock
Certificate shall be entitled to receive in exchange therefor certificates
representing the number of whole shares of Netivation Stock that such holder has
the right to receive pursuant to the provisions of this Section 1 and the
Raintree Stock Certificate so surrendered shall be canceled. Until surrendered
as contemplated by this Section 1.8, each Raintree Stock Certificate shall be
deemed, from and after the Effective Time, to represent only the right to
receive upon such surrender a certificate representing shares of Netivation
Stock (and cash in lieu of any fractional share of Netivation Stock) as
contemplated by this Section 1. If any Raintree Stock Certificate shall have
been lost, stolen or destroyed, Netivation may, in its discretion and as a
condition precedent to the issuance of any certificates representing Netivation
Stock, require the owner of such lost, stolen or destroyed Raintree Stock
Certificate to provide an appropriate affidavit and to deliver a bond (in such
sum as Netivation may reasonably direct) as indemnity.
(b) No dividends or other distributions declared or made with
respect to Netivation Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Raintree Stock Certificate with respect
to the shares of Netivation Stock represented thereby, and no cash payment in
lieu of any fractional share shall be paid to any such holder, until such holder
surrenders such Raintree Stock Certificate in accordance with this Section 1.8
(at which time such holder shall be entitled to receive all such dividends and
distributions and such cash payment).
(c) No fractional shares of Netivation Stock shall be issued in
connection with the Merger. In lieu of such fractional shares, any holder of
capital stock of Raintree who would otherwise be entitled to receive a fraction
of a share of Netivation Stock shall, upon surrender of such holder's Raintree
Stock Certificate(s), be paid in cash the dollar amount (rounded to the nearest
whole cent), without interest, determined by multiplying such fraction by the
closing price of one share of Netivation Stock as reported by the NASDAQ
consolidated reporting system on the Closing Date.
(d) Each certificate representing any of the shares of Netivation
Stock to be issued in the Merger shall bear a legend identical or similar in
effect to the following legend (together with any other legend or legends
required by applicable state securities laws or otherwise):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
UNLESS
REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT IS AVAILABLE."
(e) Netivation and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable to
any holder or former holder of capital stock of Raintree pursuant to this
Agreement such amounts as Netivation or the Surviving Corporation may be
required to deduct or withhold therefrom under the Code or under any provision
of state, local or foreign tax law. To the extent such amounts are so deducted
or withheld, such amounts shall be treated for all purposes under this Agreement
as having been paid to the Person to whom such amounts would otherwise have been
paid.
1.9 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, shares of capital stock of Raintree that are issued and
outstanding immediately prior to the Effective Time and that are held by
stockholders who have not voted such shares in favor of the Merger and who have
delivered a written demand for appraisal of such shares in the manner provided
under Virginia Law ("Dissenting Shares") shall not be canceled and converted in
accordance with Section 1.5 unless and until such holder shall have failed to
perfect, or shall have effectively withdrawn or lost, such holder's right to
appraisal and payment under Virginia Law. If such holder shall have so failed
to perfect, or shall have effectively withdrawn or lost such right, such
holder's capital stock of Raintree shall thereupon be deemed to have been
canceled and converted as described in Section 1.5 at the Effective Time, and
each such share shall represent solely the right to receive the merger
consideration described in Section 1.5. Raintree shall give prompt notice of
any demands received by Raintree for appraisal of its shares, and, prior to the
Effective Time, Netivation shall have the right to participate in all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, Raintree shall not, except with the prior written consent of
Netivation, make any payment with respect to, or settle or offer to settle, any
such demands. From and after the Effective Time, no stockholder of Raintree who
has demanded appraisal rights as provided under Virginia Law shall be entitled
to vote such holder's shares of Netivation Stock or capital stock of Raintree
for any purpose or to receive payment of dividends or other distributions with
respect to such holder's shares (except dividends and other distributions
payable to stockholders of record of Raintree at a date which is prior to the
Effective Time).
1.10 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.11 Accounting Treatment. For accounting purposes, the Merger is
intended to be treated as a "purchase."
1.12 Further Action. If, at any time after the Effective Time, any
further action is determined by Netivation to be necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation or
Netivation with full right, title and possession of and to all rights and
property of Raintree, the officers and directors of the Surviving Corporation
and Netivation shall be fully authorized (in the name of Raintree and otherwise)
to take such action.
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF RAINTREE AND THE SELLING
STOCKHOLDERS
Except as set forth in Schedule 2 (the "Schedule of Exceptions"),
Raintree and each of the Selling Stockholders jointly and severally represent
and warrant, to and for the benefit of the Netivation Indemnitees, as follows:
2.1 Organization, Good Standing and Qualification. Raintree is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Virginia. Raintree has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
the Transactional Agreements, to carry out the provisions of the Transactional
Agreements and to carry on its business as presently conducted and as presently
proposed to be conducted. Raintree is duly qualified and authorized to do
business and is in good standing as foreign entities in all jurisdictions in
which the nature of its activities and of its properties (both owned and leased)
make such qualifications necessary, except for those jurisdictions in which
failure to do so would not have a Material Adverse Effect on Raintree or its
respective businesses. Raintree has made available to Netivation true, correct
and complete copies of Raintree's articles of incorporation and bylaws, each as
amended to date.
2.2 Subsidiaries. Raintree owns no equity securities of any other
corporation, limited partnership or similar entity. Raintree is not a
participant in any joint venture, partnership or similar arrangement.
2.3 Capitalization; Voting Rights. The authorized capital stock of
Raintree consists of 1000 shares of Common Stock, of which 100 shares are issued
and outstanding. Exhibit A sets forth the names of the stockholders of Raintree
and the number of shares of capital stock owned of record by each such
stockholder. The Selling Stockholders together own all of the outstanding
shares of capital stock of Raintree. All issued and outstanding shares of
Raintree's Common Stock (i) have been duly authorized and validly issued, (ii)
are fully paid and nonassessable and (iii) were issued in compliance with all
applicable state and federal laws concerning the issuance of securities. There
are no outstanding options, warrants, rights (including conversion or preemptive
rights and rights of first refusal), proxy or stockholder agreements, or
agreements of any kind for the purchase or acquisition from Raintree of any of
its securities.
2.4 Authorization; Binding Obligations. Raintree has all requisite
right, power and authority to enter into and to perform its obligations under
the Transactional Agreements to which Raintree is or may become a party. This
Agreement constitutes the legal, valid and binding obligation of Raintree,
enforceable against Raintree in accordance with its terms, subject to (i) laws
of general application relating to bankruptcy, insolvency and the relief of
debtors and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies. Upon the execution of each of the other
Transactional Agreements at the Closing, each of such other Transactional
Agreements will constitute the legal, valid and binding obligation of Raintree,
enforceable against Raintree in accordance with its terms, subject to (i) laws
of general application relating to bankruptcy, insolvency and the relief of
debtors and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
2.5 Financial Statements. Raintree has delivered to Netivation its
unaudited balance sheet as of May 31, 1999 (the "Statement Date") and its
unaudited income statement for the four (4) months ended September 30, 1999
(collectively, the "Raintree Financial Statements"). The Raintree Financial
Statements are complete and correct in all material respects, and present fairly
the financial condition and position of Raintree for the periods covered
thereby.
2.6 Liabilities. Raintree has no material liabilities and, to the
Knowledge of Raintree, has no material contingent liabilities not otherwise
disclosed in the Raintree Financial Statements, except current liabilities
incurred in the Ordinary Course of Business subsequent to the Statement Date
which have not been, either in any individual case or in the aggregate,
materially adverse. All obligations of Raintree to affiliates, officers,
members, directors and stockholders of Raintree are disclosed on the Raintree
Financial Statements.
2.7 Agreements; Action.
(a) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
Raintree is a party or is bound which may involve (i) obligations (contingent or
otherwise) of, or payments to, Raintree in excess of $10,000, or (ii) the
license of any patent, copyright, trade secret or other proprietary right to or
from Raintree (other than licenses arising from the purchase of "off the shelf"
or other standard products), or (iii) provisions restricting or affecting the
development, manufacture or distribution of Raintree's products or services or
(iv) indemnification by Raintree with respect to infringements of proprietary
rights.
(b) Raintree has not (i) incurred any indebtedness for money
borrowed or any other liabilities (other than with respect to dividend
obligations, distributions, indebtedness and other obligations incurred in the
Ordinary Course of Business or as disclosed in the Raintree Financial
Statements) individually in excess of $10,000 or, in excess of $15,000 in the
aggregate, (ii) made any loans or advances to any person, other than ordinary
advances for travel expenses or (iii) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
Ordinary Course of Business.
(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities Raintree has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
2.8 Obligations to Related Parties. There are no obligations of
Raintree to officers, directors, stockholders, members or employees of either
other than (a) for payment of salary for services rendered, (b) reimbursement
for reasonable expenses incurred on behalf of Raintree and (c) for other
standard employee benefits made generally available to all employees. No such
officer, director or stockholder, or any member of their immediate families is,
directly or indirectly, interested in any material contract with Raintree (other
than such contracts as relate
to any such person's ownership of capital stock or other securities of
Raintree). Raintree is not a guarantor or indemnitor of any indebtedness of any
other person, firm or corporation.
2.9 Absence of Changes. Since the Statement Date, there has not
been:
(a) Any change in the assets, liabilities, financial condition or
operations of Raintree from that reflected in the Raintree Financial Statements,
other than changes in the Ordinary Course of Business, none of which
individually or in the aggregate has had or is expected to have a Material
Adverse Effect on such assets, liabilities, financial condition or operations of
Raintree;
(b) Any resignation or termination of any key officers of
Raintree; and Raintree, to its Knowledge, does not know of the impending
resignation or termination of employment of any such officer;
(c) Any material change, except in the Ordinary Course of
Business, in the contingent obligations of Raintree by way of guaranty,
endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of Raintree;
(e) Any waiver by Raintree of a valuable right or of a material
debt owed to it;
(f) Any direct or indirect loans made by Raintree to any
stockholder, employee, officer or director of Raintree, other than advances made
in the Ordinary Course of Business;
(g) Any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(h) Any declaration or payment of any dividend or other
distribution of the assets of Raintree;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or
guaranteed by Raintree, except those for immaterial amounts and for current
liabilities incurred in the Ordinary Course of Business;
(k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(l) Any change in any material agreement to which Raintree is a
party or by which it is bound which materially and adversely affects the
business, assets, liabilities, financial condition, operations or prospects of
Raintree; or
(m) Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition, operations or prospects of
Raintree. For purposes of this subsection (m), a material and adverse effect
shall only be deemed to occur if its monetary impact exceeds, or with the
passage of time, will exceed $10,000.
2.10 Title to Properties and Assets; Liens, Etc. Schedule 2.10 is a
complete and accurate list of all material assets (whether leased or owned),
including intellectual property, of Raintree. Raintree has good title to all of
its properties and assets, including those listed on Schedule 2.10, and good
title to its leasehold estates, in each case subject to no mortgage, pledge,
lien, lease, encumbrance or charge, other than (i) those resulting from taxes
which have not yet become due and payable, (ii) minor liens and encumbrances
which do not materially detract from the value of the property subject thereto
or materially impair the operations of Raintree and (iii) those that have arisen
from purchase money security interests in an amount not to exceed $10,000. None
of the Selling Stockholders has any right in or claim to any of the intellectual
property utilized by Raintree. All facilities, machinery, equipment, fixtures,
vehicles and other properties owned, leased or used by Raintree are in good
operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used. Raintree is in compliance with all
material terms of each lease to which it is a party or is otherwise bound.
2.11 Patents and Trademarks. Raintree owns or possesses sufficient
legal rights to all trademarks, service marks, trade names, copyrights, trade
secrets and licenses, and, to the Knowledge of Raintree, to all patents,
information and other proprietary rights and processes necessary for its
business as now conducted and as proposed to be conducted, without any known
infringement of the rights of others. There are no outstanding options,
licenses or agreements of any kind relating to the foregoing, nor is Raintree
bound by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information and other proprietary rights and processes
of any other person or entity other than such licenses or agreements arising
from the purchase of "off the shelf" or standard products. Raintree has not
received any communications alleging that it either has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. To Raintree's Knowledge, none
of Raintree's employees is obligated under any contract (including licenses,
covenants or commitments or any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with their duties to Raintree's business by the employees of Raintree.
The conduct of Raintree's business as proposed, will not, to the Knowledge of
Raintree, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any employee is now obligated. Raintree does not believe
it is or will be necessary to utilize any inventions, trade secrets or
proprietary information of any of its employees made prior to their employment
by Raintree, except for inventions, trade secrets or proprietary information
that have been assigned to Raintree.
2.12 Compliance with Other Instruments. Raintree is not in violation
or default of any term of its charter documents, or of any provision of any
mortgage, indenture, contract, agreement, instrument or contract to which either
is party or by which either is bound or of any judgment, decree, order, writ or,
to Raintree's Knowledge, any statute, rule or regulation applicable to Raintree
which would materially and adversely affect the business, assets, liabilities,
financial condition, operations or prospects of Raintree. The execution,
delivery, and performance of and compliance with the Transactional Agreements
will not, with or without the passage of time or giving of notice, result in any
such material violation, or be in conflict with or constitute a default under
any such term, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of Raintree or the
suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to Raintree, or the business or
operations or any of its assets or properties.
2.13 Litigation. There is no action, suit, proceeding or
investigation pending, or to the Knowledge of Raintree, currently threatened
against Raintree that questions the validity of this Agreement or Transactional
Agreements or the right of Raintree to enter into any of such agreements, or to
consummate the transactions contemplated hereby or thereby, or which might
result, either individually or in the aggregate, in any material adverse change
in the assets, condition, affairs or prospects of Raintree, financially or
otherwise, or any change in the current equity ownership of Raintree, nor is
Raintree aware that there is any basis for the foregoing. The foregoing
includes, without limitation, actions pending or threatened (or any basis
therefor known to Raintree) involving the prior employment of any of Raintree's
employees, their use in connection with Raintree's business of any information
or techniques allegedly proprietary to any of their former employers, or their
obligations under any agreements with prior employers. Raintree is not a party
or subject to the provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by Raintree currently pending or which Raintree
intends to initiate.
2.14 Tax Returns and Payments.
(a) Each tax required to have been paid, or claimed by any
Governmental Body to be payable, by Raintree (whether pursuant to any tax return
or otherwise) has been duly paid in full and on a timely basis. Any tax
required to have been withheld or collected by Raintree, including with respect
to employees, has been duly withheld and collected; and (to the extent required)
each such tax has been paid to the appropriate Governmental Body.
(b) All tax returns required to be filed by or on behalf of
Raintree with any Governmental Body have been timely filed (collectively, the
"Raintree Returns"). All taxes required to be paid by Raintree for the fiscal
year ending May 31, 1999 have either been paid in full or shall not result in
any liability to Raintree. All Raintree Returns (i) have been filed when due and
(ii) have been accurately and completely prepared in full compliance with all
applicable legal requirements, in all material respects. Raintree has delivered
to Netivation accurate and complete copies of the 1998 Raintree Returns.
(c) There have been no examinations or audits of any Raintree
Return, and, to the Knowledge of Raintree, no such examination or audit has been
proposed or scheduled by any Governmental Body. Raintree has delivered to
Netivation accurate and complete copies of all audit reports and similar
documents (to which Raintree has access) relating to the Raintree Returns.
(d) No claim or proceeding is pending or, to the Knowledge of
Raintree, has been threatened against Raintree in respect of any tax. There are
no unsatisfied Liabilities for taxes (including Liabilities for interest,
additions to tax and penalties thereon and related expenses) with respect to any
notice of deficiency or similar document received by Raintree. There are no
liens for taxes upon any of the assets of Raintree, except liens for current
taxes not yet due and payable. Raintree has not entered into or become bound by
any agreement or consent pursuant to Section 341(f) of the Code.
(e) To the Knowledge of Raintree, there is no agreement, plan,
arrangement or other contract covering any employee or independent contractor or
former employee or independent contractor of Raintree that, individually or
collectively, could give rise, directly or indirectly, to the payment of any
amount that would not be deductible pursuant to Section 280G or Section 162 of
the Code. Raintree is not, and has never been, a party to or bound by any tax
indemnity agreement, tax sharing agreement, tax allocation agreement or similar
contract.
2.15 Employees. Raintree is not a party to or bound by any currently
effective employment contract, deferred compensation arrangement, bonus plan,
incentive plan, profit sharing plan, retirement agreement or other employee
compensation plan or agreement. To the Knowledge of Raintree, no employee of
Raintree, nor any consultant with whom Raintree has contracted, is in violation
of any term of any employment contract, proprietary information agreement or any
other agreement relating to the right of any such individual to be employed by,
or to contract with, Raintree because of the nature of the business to be
conducted by Raintree; and to the Knowledge of Raintree the continued employment
by Raintree of its present employees, and the performance of Raintree's
contracts with its independent contractors, will not result in any such
violation. Raintree has not received any notice alleging that any such
violation has occurred. No employee of Raintree has been granted the right to
continued employment by Raintree or to any material compensation following
termination of employment with Raintree. To the Knowledge of Raintree, no
officer or key employee, or any group of key employees, intends to terminate
their employment with Raintree, nor does Raintree have a present intention to
terminate the employment of any officer, key employee or group of key employees.
2.16 Registration Rights. Raintree is not presently under any
obligation, and has not granted any rights, to register any of its presently
outstanding securities or any of its securities that may hereafter be issued.
2.17 Compliance with Legal Requirements; Consents.
(a) Raintree is, and has at all times since inception been, in
full compliance with each legal requirement that is or was applicable to it or
to the conduct of its business or the ownership or use of any of its assets,
except where the failure to comply with each such legal requirement has not had
and will not have a Material Adverse Effect on Raintree.
(b) Neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with or result in a violation of
(i) any of the provisions of Raintree's articles of incorporation or bylaws,
or(ii) any resolution adopted by Raintree's stockholders or Raintree's board of
directors;
(ii) contravene, conflict with or result in a violation of,
or give any Governmental Body or other Person the right to exercise any remedy
or obtain any relief under, any legal requirement or any order to which
Raintree, or any of the assets owned or used by Raintree, is subject;
(iii) contravene, conflict with or result in a violation or
Breach of, or result in a default under, any provision of any contract to which
Raintree is a party; or
(iv) give any Person the right to (A) declare a default or
exercise any remedy under any contract to which Raintree is a party, (B)
accelerate the maturity or performance of any contract to which Raintree is a
party or (C) cancel, terminate or modify any contract to which Raintree is a
party.
Other than filings to be made in accordance with the Virginia Law and
the consents listed on Schedule 2.17, neither Raintree nor any of the Selling
Stockholders was, is or will be required to make any filing with or give any
notice to, or to obtain any consent from, any Person other than Selling
Stockholders' spouses in connection with the execution and delivery of any of
the Transactional Agreements or the consummation or performance of any of the
Transactions.
2.18 Selling Stockholders. Each Selling Stockholder represents that
(i) he, she or it has the absolute and unrestricted right, power and authority
to enter into and to perform his, her or its obligations under each of the
Transactional Agreements to which such Selling Stockholder is or may become a
party, (b) this Agreement constitutes his, her or its legal, valid and binding
obligation, enforceable against such Selling Stockholder in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies and (c) upon the
execution of each of the other Transactional Agreements at the Closing, each of
such other Transactional Agreements will constitute the legal, valid and binding
obligation of such Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
2.19 Full Disclosure. This Agreement does not (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact or (ii) omit to state any material fact necessary in order
to make the representations, warranties and information of or with respect to
Raintree and the Selling Stockholders contained and to be contained herein (in
light of the circumstances under which such representations, warranties and
information were or will be made or provided) not false or misleading. Raintree
has provided Netivation and Netivation's Representatives with full and complete
access to all of Raintree's records and other documents and data.
2.20 Year 2000 Compliance. Raintree has requested of its principal
vendor, Transaction Network Services, Inc. ("TNS") information to assess the
Year 2000 compliance of TNS. Raintree is implementing a plan to ensure that
its systems will be Year 2000 Compliant on or before December 1, 1999.
2.21 Securities Laws Matters. Each Selling Stockholder understands
that the Netivation Stock has not been registered under the Securities Act and
that the Netivation Stock being issued in the Transaction is being issued
pursuant to an exemption from registration contained in the Securities Act,
based in part upon the Selling Stockholders' representations contained in this
Agreement. Each Selling Stockholder hereby severally and not jointly represents
and warrants as follows:
(a) Knowledge and Experience. Each Selling Stockholder is
knowledgeable and has substantial experience in evaluating and investing in
transactions in companies similar to Netivation so that such Selling Stockholder
is capable of evaluating the merits and risks of his investment in Netivation.
Each Selling Stockholder has by reason of such Selling Stockholder's business or
financial knowledge and experience, the capacity to protect such Selling
Stockholder's own interests in connection with the Transaction. Further, each
Selling Stockholder is aware of no publication of any advertisement in
connection with the Transaction. Each Selling Stockholder can bear the economic
risk of the Transaction. Each Selling Stockholder has been advised or is aware
of the provisions of Rule 144 promulgated under the Securities Act, including
affiliate status, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions.
(b) Netivation Information. Each Selling Stockholder has had an
opportunity to discuss Netivation's business, management and financial affairs,
both as currently conducted and as proposed to be conducted following the
Merger, with directors, officers and management of Netivation and has had the
opportunity to review Netivation's operations and facilities. Each Selling
Stockholder has also had the opportunity to ask questions of, and receive
answers from, Netivation and its management regarding the terms and conditions
of the Transaction and the receipt of Netivation Stock.
(c) Acquisition for Own Account. Each Selling Stockholder is
acquiring the Netivation Stock for such Selling Stockholder's own account for
investment only, and not with a view towards distribution.
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF NETIVATION
Netivation represents and warrants to Raintree and the Selling
Stockholders as follows:
3.1 Organization, Good Standing and Qualification.
(a) Netivation is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Netivation has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver this Agreement and the Transactional Agreements,
to issue and sell the Netivation Stock, to carry out the provisions of this
Agreement and the Transactional Agreements and to carry on its business as
presently conducted and as presently proposed to be conducted. Netivation is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its activities
and of its properties (both owned and leased) make such qualifications
necessary, except for those jurisdictions in which failure to do so would not
have a Material Adverse Effect on Netivation or its business. Netivation has
made available to Raintree true, correct and complete copies of the Netivation's
certificate of incorporation and bylaws, each as amended to date.
(b) Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Merger Sub has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver the Transactional Agreements, to carry out the
provisions of the Transactional Agreements and to carry on its business as
presently conducted and as presently proposed to be conducted.
3.2 Subsidiaries. Except for Merger Sub, Xxxxxxxxxx.xxx Merger Two
Corp., Xxxxxxxxxx.xxx Merger Three Corp., Xxxxxxxxxx.xxx Merger Five Corp.,
Xxxxxxxxxx.xxx Merger Six Corp., InterLink Internet Services, Inc., and The
Online Medical Bookstore, Inc., all of which are wholly-owned subsidiaries of
Netivation, Netivation owns no equity securities of any other corporation,
limited partnership or similar entity. Netivation is not a participant in any
joint venture, partnership or similar arrangement.
3.3 Capitalization; Voting Rights.
(a) The authorized capital stock of Netivation, as of September
30, 1999, consists of (a) 30,000,000 shares of Common Stock, of which 8,660,055
shares are issued and outstanding, and (b) 2,000,000 shares of Preferred Stock,
of which 0 shares are issued and outstanding. All issued and outstanding shares
of Netivation's Common Stock and Preferred Stock (i) have been duly authorized
and validly issued, (ii) are fully paid and nonassessable and (iii) were issued
in compliance with all applicable state and federal laws concerning the issuance
of securities. The Netivation Stock has been duly authorized and, when issued in
compliance with the provisions of this Agreement and its certificate of
incorporation, will be validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, other than liabilities
imposed upon stockholders generally by the provisions of Delaware Law, and will
not be subject to any other restrictions, except as set forth in or provided by
this Agreement and as may be imposed by applicable law.
(b) The authorized capital stock of Merger Sub consists of one
thousand (1,000) shares of Common Stock, one hundred (100) shares of which have
been issued to Netivation. All of the issued and outstanding shares of Common
Stock of Merger Sub (i) have been duly authorized and validly issued, (ii) are
fully paid and nonassessable and (iii) were issued in compliance with all
applicable state and federal laws concerning the issuance of securities.
3.4 Authorization; Binding Obligations. Each of Netivation and
Merger Sub has the absolute and unrestricted right, power and authority to enter
into and to perform its obligations under the Transactional Agreements to which
Netivation and Merger Sub, as the case may be, is or may become a party. This
Agreement constitutes the legal, valid and binding obligation of each of
Netivation and Merger Sub, enforceable against them in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies. Upon the execution
of each of the other Transactional Agreements at the Closing, each of such other
Transactional Agreements will constitute the legal, valid and binding obligation
of Netivation, enforceable against Netivation in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
3.5 Full Disclosure.
(a) Netivation has delivered to Raintree an accurate and complete
copy of its Registration Statement on Form SB-2 No. 333-74569 filed with the
Securities and Exchange Commission (the "SEC") on June 22, 1999 (the
"Registration Statement"), and its 10Q for the period ending June 30, 1999 (the
"10Q"), which is the most recent document filed with the SEC as of the date
hereof. The Registration Statement and the 10Q (i) comply in all material
respects with the applicable requirements of the Securities Act and (ii) do not
contain any untrue statements of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) There is no material action, suit, proceeding or
investigation pending, or to the Knowledge of Netivation, currently threatened
against Netivation that questions the validity of this Agreement or
Transactional Agreements or the right of Netivation to enter into any of such
agreements, or to consummate the transactions contemplated hereby or thereby.
(c) Neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will materially, directly or indirectly, (with or without notice
or lapse of time):
(i) contravene, conflict with or result in a violation of
(A) any of the provisions of Netivation's certificate of incorporation or
bylaws, or (B) any resolution adopted by Netivation's stockholders or
Netivation's board of directors;
(ii) contravene, conflict with or result in a violation of,
or give any Governmental Body or other Person the right to exercise any remedy
or obtain any relief under, any legal requirement or any order to which
Netivation, or any of the assets owned or used by Netivation, is subject;
(iii) contravene, conflict with or result in a violation or
Breach of, or result in a default under, any provision of any contract to which
Netivation is a party; or
(iv) give any Person the right to (A) declare a default or
exercise any remedy under any contract to which Netivation is a party, (B)
accelerate the maturity or performance of any contract to which Netivation is a
party or (C) cancel, terminate or modify any contract to which Netivation is a
party.
(d) Other than filings to be made in accordance with the Delaware
Law, neither Netivation nor Merger Sub was, is or will be required to make any
filing with or give any notice to, or to obtain any consent from, any Person in
connection with the execution and delivery of any of the Transactional
Agreements or the consummation or performance of any of the Transactions.
SECTION 4 - CERTAIN COVENANTS OF RAINTREE AND THE SELLING STOCKHOLDERS
4.1 Access and Investigation. Raintree and the Selling Stockholders
shall ensure that, at all times during the Pre-Closing Period:
(a) Raintree and its Representatives provide Netivation and its
Representatives with access, during normal business hours upon reasonable
notice, to Raintree's Representatives, personnel and assets and to all existing
books, records, tax returns, work papers and other documents and information
relating to Raintree;
(b) Raintree and its Representatives provide Netivation and its
Representatives with such copies of existing books, records, tax returns, work
papers and other documents and information relating to Raintree as Netivation
may request in good faith; and
(c) Raintree and its Representatives compile and provide
Netivation and its Representatives with such additional financial, operating and
other data and information regarding Raintree as Netivation may request in good
faith. Without limiting the generality of the foregoing, during the Pre-Closing
Period, Raintree shall promptly provide Netivation with copies of:
(i) all material operating and financial reports prepared
by Raintree for its senior management, including copies of the unaudited monthly
balance sheets of
Raintree and the related unaudited monthly statements of operations, statements
of stockholders' equity and statements of cash flows;
(ii) any written materials or communications sent by or on
behalf of Raintree to its stockholders generally;
(iii) any material notice, document or other communication
sent by or on behalf of Raintree to any party to any Raintree contract or sent
to Raintree by any party to any Raintree contract (other than any communication
that relates solely to commercial transactions of the type sent in the Ordinary
Course of Business);
(iv) any written notice, report or other document filed with
or sent to any Governmental Body in connection with the Merger or any of the
other Transactions; and
(v) any material written notice, report or other document
received by Raintree from any Governmental Body.
4.2 Operation of Business. Raintree and the Selling Stockholders
shall ensure that, during the Pre-Closing Period:
(a) Raintree conducts its operations exclusively in the Ordinary
Course of Business and in the same manner as such operations have been conducted
prior to the date of this Agreement;
(b) Raintree uses its commercially reasonable efforts to preserve
intact its current business organization, keep available the services of its
current officers and employees and maintain its relations and good will with
suppliers, customers, landlords, creditors, licensors, licensees, employees and
other Persons having business relationships with Raintree;
(c) Raintree keeps in full force all existing insurance policies;
(d) Raintree's officers confer regularly, upon request, with
Netivation concerning operational matters and otherwise report regularly, upon
request, to Netivation concerning the status of Raintree's business, condition,
assets, liabilities, operations, financial performance and prospects;
(e) Raintree immediately notifies Netivation of any inquiry,
proposal or offer from any Person relating to any Acquisition Transaction;
(f) Raintree does not declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any shares of capital
stock or other securities, and does not repurchase, redeem or otherwise
reacquire any shares of capital stock or other securities;
(g) Raintree does not sell or otherwise issue any shares of
capital stock or any other securities;
(h) Raintree does not amend its articles of incorporation or
bylaws, and does not effect or become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(i) Raintree does not form any subsidiary or acquires any equity
interest or other interest in any other entity;
(j) Raintree does not make any capital expenditure, except for
capital expenditures that are made in the Ordinary Course of Business and that
do not exceed $10,000;
(k) Raintree does not (i) lend money to any Person or (ii) incur,
assume or otherwise become subject to any Liability, except for current
liabilities incurred in the Ordinary Course of Business;
(l) Raintree does not establish or adopt any employee benefit
plan, nor pay or agree to pay any bonus nor make any profit-sharing or similar
payment to, nor increase the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its directors,
officers or employees (except for regularly scheduled salary increases in the
Ordinary Course of Business);
(m) Raintree does not change any of its methods of accounting or
accounting practices in any respect;
(n) Raintree does not commence any Proceeding, except in the
Ordinary Course of Business;
(o) Raintree does not enter into any transaction or take any
other action of the type referred to in Section 2.9;
(p) Raintree does not enter into any transaction or take any
other action outside the Ordinary Course of Business;
(q) Raintree does not enter into any transaction or take any
other action that is reasonably likely to cause or constitute a Breach of any
representation or warranty made by Raintree or the Selling Stockholders; and
(r) Raintree does not agree, commit or offer (in writing or
otherwise), or attempt, to take any of the actions described in clauses "(f)"
through "(q)" of this Section 4.2.
4.3 Notification; Updates to Schedule of Exceptions.
(a) During the Pre-Closing Period, Raintree and/or the Selling
Stockholders shall promptly notify Netivation in writing of:
(i) the discovery by Raintree or any of the Selling
Stockholders of any event, condition, fact or circumstance that occurred or
existed on or prior to
the date of this Agreement and that caused or constitutes a Breach of any
representation or warranty made by Raintree or the Selling Stockholders in this
Agreement;
(ii) any event, condition, fact or circumstance that
occurs, arises or exists after the date of this Agreement and that would cause
or constitute a Breach of any representation or warranty made by Raintree or the
Selling Stockholders in this Agreement if (A) such representation or warranty
had been made as of the time of the occurrence, existence or discovery of such
event, condition, fact or circumstance or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement;
(iii) any Breach of any covenant or obligation of Raintree
or the Selling Stockholders; and
(iv) any event, condition, fact or circumstance that may
make the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 4.3(a) requires any change in the
Schedule of Exceptions, or if any such event, condition, fact or circumstance
would require such a change assuming the Schedule of Exceptions were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then Raintree shall promptly deliver to Netivation an
update to the Schedule of Exceptions specifying such change. No such update
shall be deemed to supplement or amend the Schedule of Exceptions for the
purpose of (i) determining the accuracy of any of the representations and
warranties made by Raintree in this Agreement for purposes of Section 6.1, but
shall be deemed to supplement or amend the Schedule of Exceptions for purposes
of Section 9 or (ii) determining whether any of the other conditions set forth
in Section 6 have been satisfied.
4.4 No Negotiation. Raintree shall ensure that, during the Pre-
Closing Period, neither Raintree nor any of Raintree's Representatives directly
or indirectly:
(a) solicits or encourages the initiation of any inquiry,
proposal or offer from any Person (other than Netivation) relating to any
Acquisition Transaction;
(b) participates in any discussions or negotiations with, or
provides any non-public information to, any Person (other than Netivation)
relating to any Acquisition Transaction; or
(c) considers the merits of any unsolicited inquiry, proposal or
offer from any Person (other than Netivation) relating to any Acquisition
Transaction.
SECTION 5 - ADDITIONAL COVENANTS OF THE PARTIES
5.1 Filings and Consents. As promptly as practicable after the
execution of this Agreement, each party to this Agreement (i) shall make all
filings (if any) and give all notices (if any) required to be made and given by
such party in connection with the Transactions and (ii) shall use all
commercially reasonable efforts to obtain all consents (if any) required to be
obtained (pursuant to any applicable legal requirement or contract, or
otherwise) by such party in connection with the Transactions. Each of the
parties shall (upon request) promptly deliver to the other a copy of each such
filing made, each such notice given and each such consent obtained by Raintree
or Netivation, as the case may be, during the Pre-Closing Period.
5.2 Raintree Stockholders' Meeting. Raintree shall, in accordance
with its articles of incorporation and bylaws and the applicable requirements of
Virginia Law, call and hold a special meeting of its stockholders, or solicit
written consents from its stockholders, as promptly as practicable for the
purpose of permitting them to consider and to vote upon and approve the Merger
and this Agreement. Raintree shall use its best efforts (i) to solicit from
each of such stockholders a proxy or consent in favor of the approval of the
Merger and this Agreement and (ii) to cause each of such stockholders to execute
and deliver to Netivation a Prospective Offeree Questionnaire in a form
acceptable to Netivation certifying, among other items, as to whether each of
such stockholders is an "accredited investor" as such term is defined in Rule
501 under the Securities Act.
5.3 Public Announcements. During the Pre-Closing Period, (i) neither
Raintree nor Netivation shall (and neither Raintree nor Netivation shall permit
any of its respective Representatives to) issue any press release or make any
public statement regarding this Agreement or the Transactions, without the other
party's prior written consent, and (ii) each party will use reasonable efforts
to consult with the other party prior to issuing any press release or making any
public statement regarding the Merger; provided that Netivation shall be free to
make any disclosure regarding the Merger that it deems necessary in connection
with filings with the SEC made in connection with the Registration Statement.
5.4 Best Efforts. During the Pre-Closing Period, (i) Raintree shall
use commercially reasonable efforts to cause the conditions set forth in Section
6 to be satisfied on a timely basis and (ii) Netivation and Merger Sub shall use
their commercially reasonable efforts to cause the conditions set forth in
Section 7 to be satisfied on a timely basis and Netivation will take all actions
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
5.5 Tax Matters. At or prior to the Closing, (a) Raintree shall
execute and deliver to 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 Raintree a tax representation letter, in a
form reasonably acceptable to such parties. Raintree and the Selling
Stockholders will use all of their respective reasonable efforts to cause the
transactions contemplated hereby to qualify as a reorganization under the
provisions of Section 368(a) of the Code and will not take any action after the
Acquisition is effected that could reasonably be expected to cause the
Acquisition to lose its tax-free status. All parties hereto agree to file this
Agreement with their
respective federal income tax returns for the year in which the Acquisition
closes and to comply with the reporting requirements of United States Treasury
Regulations Section 1.368-2(g), if applicable.
5.6 Piggy-Back Registration Rights. The Selling Stockholders shall
have the registration rights enumerated on Exhibit J.
SECTION 6 - CONDITIONS PRECEDENT TO OBLIGATIONS OF NETIVATION AND MERGER SUB
The obligations of Netivation and Merger Sub to effect the
Transactions are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Netivation, in
whole or in part, in accordance with Section 10.11):
6.1 Accuracy of Representations. Each of the representations and
warranties made by Raintree and the Selling Stockholders in this Agreement shall
have been accurate in all material respects as of the date of this Agreement and
shall be accurate in all material respects as of the Scheduled Closing Time as
if made at the Scheduled Closing Time.
6.2 Performance of Covenants. Each covenant and obligation that
Raintree or any of the Selling Stockholders is required to comply with or to
perform pursuant to this Agreement at or prior to the Closing shall have been
duly complied with and performed in all material respects.
6.3 Stockholder Approval. The principal terms of the Merger shall
have been duly approved by the stockholders of Raintree in accordance with the
provisions of Virginia Law and applicable agreements.
6.4 Consents. All consents required to be obtained by Raintree in
connection with the Transactions (including the consents identified in Schedule
2.17) shall have been obtained and shall be in full force and effect.
6.5 No Material Adverse Change. Except for adverse changes that
result from general economic conditions, there shall have been no material
adverse change in Raintree's business, condition, assets, liabilities,
operations, financial performance or prospects since the date of this Agreement.
6.6 Agreements and Documents. Netivation shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) the Escrow Agreement, substantially in the form of Exhibit G;
(b) an Employment and Noncompetition Agreement, substantially in
the form of Exhibits F, executed by Xxxx X. Xxxxxxx;
(c) a Tax Representation Letter executed by Raintree;
(d) a Prospective Offeree Questionnaire substantially in the form
of Exhibit H executed by each Selling Stockholder;
(e) written resignations of all officers and directors of
Raintree, effective as of the Closing Date;
(f) a certificate executed by each of the Selling Stockholders
containing the representation and warranty of each such Selling Stockholder that
(i) each of the representations and warranties made by Raintree and the Selling
Stockholders in this Agreement is accurate in all material respects as of the
Closing Date as if made on the Closing Date and (ii) the conditions set forth in
this Section 6 have been duly satisfied (the "Selling Stockholders' Closing
Certificate");
(g) a legal opinion from counsel for Raintree and the Selling
Stockholders, substantially in the form of Exhibit E.
(h) such other documents as Netivation may reasonably request in
good faith for the purpose of (i) evidencing the accuracy of any representation
or warranty made by Raintree or the Selling Stockholders, (ii) evidencing the
compliance by Raintree or the Selling Stockholders with, or the performance by
Raintree or the Selling Stockholders of, any covenant or obligation set forth in
this Agreement, (iii) evidencing the compliance with any applicable federal or
state securities law, (iv) evidencing the satisfaction of any condition set
forth in this Section 6 or (v) otherwise facilitating the consummation or
performance of any of the Transactions.
6.7 Lock-Up Agreements. Each of the Selling Stockholders shall have
delivered to Netivation a lock-up agreement, substantially in the form of
Exhibit I.
6.8 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any legal requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.9 No Proceedings. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Merger or seeking to prohibit or limit the
exercise by Netivation of any material right pertaining to its ownership of
stock of the Surviving Corporation.
6.10 Securities Law Compliance. All applicable requirements of the
Securities Act and any applicable state securities laws shall have been
satisfied.
6.11 Dissenters Rights. No stockholder of Raintree shall have
exercised dissenters rights with respect to approval of the Transactions.
6.12 Unaccredited Investors. The Prospective Offeree Questionnaires
delivered pursuant to Sections 5.2 and 6.6 shall indicate that no more than 35
of the stockholders of Raintree are "unaccredited investors," as defined by Rule
501 under the Securities Act.
6.13 Proceedings and Documents. All corporate and other proceedings
in connection with the Transactions and all documents and instruments incident
to such Transactions shall be reasonably satisfactory in substance and form to
Netivation.
6.14 Corporate Approvals. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of Raintree, Netivation, Merger Sub and the Selling Stockholders.
SECTION 7 - CONDITIONS PRECEDENT TO OBLIGATIONS OF RAINTREE AND THE SELLING
STOCKHOLDERS
The obligations of Raintree and the Selling Stockholders to effect the
Transactions are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived solely by Raintree,
in whole or in part, in accordance with Section 10.11):
7.1 Accuracy of Representations. Each of the representations and
warranties made by Netivation in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in all
material respects as of the Scheduled Closing Time as if made at the Scheduled
Closing Time.
7.2 Performance of Covenants. Each covenant and obligation that
Netivation and Merger Sub are required to comply with or to perform pursuant to
this Agreement at or prior to the Closing shall have been duly complied with and
performed in all material respects.
7.3 Consents. All consents required to be obtained by Netivation in
connection with the Transactions shall have been obtained and shall be in full
force and effect.
7.4 Agreements and Documents. Raintree shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) the Escrow Agreement, substantially in the form of Exhibit G;
(b) an Employment and Noncompetition Agreement, substantially in
the forms of Exhibit F, executed by 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 Raintree may reasonably request in
good faith for the purpose of (i) evidencing the accuracy of any representation
or warranty made by Netivation, (ii) evidencing the compliance by Netivation
with, or the performance by Netivation of, any covenant or obligation set forth
in this Agreement, (iii) evidencing the compliance with any applicable federal
or state securities law, (iv) evidencing the satisfaction of any condition set
forth in this Section 7 or (v) otherwise facilitating the consummation or
performance of any of the Transactions.
(f) a legal opinion from counsel for Netivation and Merger Sub,
substantially in the form of Exhibit E.
7.5 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any legal requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
7.6 No Proceedings. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Merger or seeking to prohibit or limit the
exercise by Netivation of any material right pertaining to its ownership of
stock of the Surviving Corporation.
7.7 Corporate Approvals. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of Netivation and Merger Sub.
SECTION 8 - TERMINATION
8.1 Termination Events. This Agreement may be terminated prior to
the Closing:
(a) by Netivation if (i) there is a material Breach of any
covenant or obligation of Raintree or any of the Selling Stockholders or (ii)
Netivation reasonably determines that the timely satisfaction of any condition
set forth in Section 6 has become impossible (other than as a result of any
failure on the part of Netivation or Merger Sub to comply with or perform any
covenant or obligation of Netivation or Merger Sub set forth in this Agreement);
(b) by the Agent (as defined in Section 10.1) if (i) there is a
material Breach of any covenant or obligation of Netivation or (ii) the Agent
reasonably determines that the timely satisfaction of any condition set forth in
Section 7 has become impossible (other than as a result of any failure on the
part of Raintree or any of the Selling Stockholders to comply with or perform
any covenant or obligation of Raintree or the Selling Stockholders set forth in
this Agreement);
(c) by Netivation at or after the Scheduled Closing Time if any
condition set forth in Section 6 has not been satisfied by the Scheduled Closing
Time;
(d) by the Agent at or after the Scheduled Closing Time if any
condition set forth in Section 7 has not been satisfied by the Scheduled Closing
Time;
(e) by Netivation if the Closing has not taken place on or before
October 29, 1999 (other than as a result of any failure on the part of
Netivation or Merger Sub to comply with or perform any covenant or obligation of
Netivation or Merger Sub set forth in this Agreement);
(f) by the Agent if the Closing has not taken place on or before
October 29, 1999 (other than as a result of the failure on the part of Raintree
or any of the Selling Stockholders to comply with or perform any covenant or
obligation of Raintree or the Selling Stockholders set forth in this Agreement);
or
(g) by the mutual consent of Netivation, Raintree and the Agent.
8.2 Termination Procedures. If Netivation wishes to terminate this
Agreement pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e),
Netivation shall deliver to the Agent a written notice stating that Netivation
is terminating this Agreement and setting forth a brief description of the basis
on which Netivation is terminating this Agreement. If the Agent wishes to
terminate this Agreement pursuant to Section 8.1(b), Section 8.1(d) or Section
8.1(f), the Agent shall deliver to Netivation a written notice terminating this
Agreement and setting forth a brief description of the basis on which this
Agreement is terminated.
8.3 Effect of Termination. If this Agreement is terminated pursuant
to Section 8.1, all further obligations of the parties under this Agreement
shall automatically terminate; provided, however, that: (a) neither Raintree
nor the Selling Stockholders nor Netivation shall be relieved of any obligation
or liability arising from any prior Breach by such party of any provision of
this Agreement; (b) the parties shall, in all events, remain bound by and
continue to be subject to the provisions set forth in Section 9; and (c)
Raintree and Netivation shall, in all events, remain bound by and continue to be
subject to Section 5.3.
SECTION 9 - INDEMNIFICATION, ETC.
9.1 Survival of Representations, Warranties and Covenants.
(a) The representations, warranties and covenants of each party
pursuant to this Agreement shall survive the Closing and shall expire on the
first anniversary of the Closing Date; provided, however, (i) that fraud claims
and claims under Section 2.14 shall survive for the statute of limitations
applicable to claims based on such matters, (ii) that if, at any time prior to
the first anniversary of the Closing Date, any Netivation Indemnitee seeking
indemnification under this Section 9 (acting in good faith) delivers to the
Agent a written notice alleging the existence of a Breach of any of the
representations and warranties made by Raintree or any of the Selling
Stockholders or a Breach of any covenant contained herein (and setting forth in
reasonable detail the basis for such Netivation Indemnitee's belief that such a
Breach may exist) and asserting a claim for recovery under Section 9.2 based on
such alleged Breach, then the claim asserted in such notice shall survive the
first anniversary of the Closing Date until such time as such claim is fully and
finally resolved, and (iii) the covenant of Netivation in Section 1.5 shall
survive the Closing and expire on March 15, 2003.
(b) The representations, warranties, covenants and obligations of
Raintree and the Selling Stockholders, and the rights and remedies that may be
exercised by the Netivation Indemnitees, shall not be limited or otherwise
affected by or as a result of any information furnished to, or any investigation
made by or Knowledge of, any of the Netivation Indemnitees or their
Representatives.
(c) For purposes of this Agreement, each statement or other item
of information set forth in the Schedule of Exceptions or in any update to the
Schedule of Exceptions shall be deemed to be a representation and warranty made
in this Agreement.
9.2 Indemnification by the Selling Stockholders.
(a) Subject to the provisions of this Section 9, the Selling
Stockholders shall indemnify and hold harmless each of the Netivation
Indemnitees from and against the amount of any Damages incurred by any of the
Netivation Indemnitees directly or indirectly as a result of (i) any Breach of a
representation or warranty of Raintree or any of the Selling Stockholders
contained in Section 2 hereof or in any instrument delivered pursuant to this
Agreement (each as modified by the Schedule of Exceptions delivered by Raintree
and the Selling Stockholders on the date of this Agreement and not as modified
by any revisions to such Schedule of Exceptions after such date), (ii) any
Breach of any covenant or obligation contained herein , (iii) any final
determination of Raintree's net tax liability for the fiscal year immediately
prior to the Closing or (iv) any Breach of any representation or warranty made
in the Selling Stockholders' Closing Certificate.
(b) The Selling Stockholders acknowledge and agree that, if and
to the extent that there are any Damages as a result of any Breach of any
representation or warranty, then Netivation itself shall be deemed, by virtue of
its ownership of the capital stock of Raintree, to have incurred Damages as
result of such Breach or Liability.
(c) Each Selling Stockholder waives and acknowledges and agrees
that such Selling Stockholder shall not have and shall not exercise or assert
(or attempt to exercise or assert), any right of contribution, right of
indemnity or other similar right or remedy against the Surviving Corporation in
connection with any indemnification obligation or any other Liability to which
such Selling Stockholder may become subject under the Transactional Agreements
or otherwise in connection with any of the Transactions.
(d) Claims for Damages made by the Netivation Indemnitees
pursuant to the provisions of Sections 9.2(a) or 9.6 shall be limited to an
amount equal to (i) the fair market value on the date such claim is fully and
finally resolved of the Netivation Stock, which was received by the Selling
Stockholders on the Closing Date and still held by the Selling Stockholders on
the date such claim is fully and finally resolved; plus (ii) the amount realized
from the sale of Netivation Stock, which was received on the Closing Date but
sold by the Selling Stockholders prior to the full and final resolution of such
claim; plus (iii) $100,000. The provisions of this Section 9.2 shall not apply
to claims for willful misconduct, fraud, bad faith or recklessness on the part
of Raintree or any Selling Stockholder.
9.3 Indemnification by Netivation.
(a) Subject to the provisions of this Section 9, Netivation shall
indemnify and hold harmless each of the Selling Stockholders from and against
the amount of any Damages incurred by any of the Selling Stockholders directly
or indirectly as a result of (i) any Breach of a representation or warranty of
Netivation contained in Section 3 hereof or in any instrument delivered pursuant
to this Agreement or (ii) any Breach of any covenant or obligation contained
herein
(b) Netivation acknowledges and agrees that, if and to the extent
that there are any Damages as a result of any Breach of any representation or
warranty, then the Selling Stockholders shall be deemed, by virtue of such
Selling Stockholders ownership of the Netivation Stock, to have incurred Damages
as result of such Breach or Liability.
(c) Netivation waives and acknowledges and agrees that Netivation
shall not have and shall not exercise or assert (or attempt to exercise or
assert), any right of contribution, right of indemnity or other similar right or
remedy against the Surviving Corporation in connection with any indemnification
obligation or any other Liability to which Netivation may become subject under
the Transactional Agreements or otherwise in connection with any of the
Transactions.
(d) Claims for Damages made by the Selling Stockholders pursuant
to the provisions of Sections 9.3(a) shall be limited to an amount equal to
$900,000 minus the total of (i) the product of the number of shares of
Netivation Stock held by the Selling Stockholders, at the time of the claim,
multiplied by the fair market value of said shares on the date such claim is
fully and finally resolved; plus (ii) the total sales price of the shares of
Netivation Stock sold prior to the full resolution of such claim by the Selling
Stockholders. The provisions of this Section 9.3 shall not apply to claims for
willful misconduct, fraud, bad faith or recklessness on the part of Netivation.
9.4 Minimum Claim Against the Selling Stockholders. The Selling
Stockholders shall have no liability nor be subject to any claim for Damages
made by Netivation Indemnities pursuant to the provisions of Section 9.2(a)
unless and until the aggregate amount of Damages exceeds the sum of $25,000.
After the aggregate amount of damages exceeds the sum of $25,000, Xxxx X.
Xxxxxxx and Xxxxx Xxxxxxx shall be jointly and severally liable for 75% of the
full amount of Damages and Resource Rentals, Inc. shall be liable for 25% of the
full amount of Damages.
9.5 Minimum Claim Against Netivation. Netivation shall have no
liability nor be subject to any claim for Damages made by the Selling
Stockholders pursuant to the provisions of Section 9.3(a) unless and until the
aggregate amount of Damages exceeds the sum of $25,000. If the aggregate amount
of Damages exceeds the sum of $25,000, then Netivation may be subject to the
full amount of any such claim.
9.6 Defense of Third Party Claims. In the event of the assertion or
commencement by any Person not a party to this Agreement (a "Third Party")of any
claim or Proceeding (whether against Raintree, against any other Netivation
Indemnitee or any other Person) with respect to which any of the parties to this
Agreement (the "Indemnifying Party") may become obligated to indemnify, hold
harmless, compensate or reimburse any other party to this Agreement (the
"Indemnitee") pursuant to this Section 9, the Indemnifying Party shall have the
right, at its election, to proceed with the defense of such claim or Proceeding,
provided however, that the Indemnifying Party must conduct the defense of the
Third Party's claim actively and diligently thereafter in order to preserve its
rights in this regard; and provided further that the Indemnitee may retain
separate co-counsel at its sole cost and expense. If the Indemnifying Party so
proceeds with the defense of any such claim or Proceeding:
(a) all expenses relating to the defense of such claim or
Proceeding (whether or not incurred by the Indemnitee) shall be borne and paid
exclusively by the Indemnifying Party;
(b) the Indemnifying Party shall make available to the Indemnitee
any documents and materials in the possession or control of any Indemnifying
Party that may be necessary to the defense of such claim or Proceeding; and
(c) The Indemnifying Party shall keep the Indemnitee informed of
all material developments and events relating to such claim or Proceeding.
9.7 Setoff. In addition to any rights of setoff or other rights that
any of the Netivation Indemnitees may have at common law or otherwise,
Netivation shall have the right to set off any amount that may be owed to any
Netivation Indemnitee under this Section 9 against any amount otherwise payable
by any Indemnitee to the Agent or any of the Selling Stockholders.
9.8 Indemnity Reserve. In order to secure Netivation's and each
Netivation Indemnitee's rights of indemnity, the Selling Stockholders shall
place 37,500 shares of Netivation Stock in escrow in accordance with the terms
of the Escrow Agreement, substantially in the form attached hereto as Exhibit G.
9.9 Exercise of Remedies by Netivation Indemnitees Other Than
Netivation. No Netivation Indemnitee (other than Netivation or any successor
thereto or assignee thereof) shall be permitted to assert any indemnification
claim or exercise any other remedy under this Agreement unless Netivation (or
any successor thereto or assignee thereof) shall have consented to the assertion
of such indemnification claim or the exercise of such other remedy.
SECTION 10 - MISCELLANEOUS PROVISIONS
10.1 Selling Stockholders' Agent.
(a) The Selling Stockholders hereby irrevocably nominate,
constitute and appoint Xxxx Xxxxxxx 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. Xxxx Xxxxxxx 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 cabled by any
Selling Stockholder or to have been signed and presented by an Selling
Stockholder.
(e) If the Agent shall die, become disabled or otherwise be
unable to fulfill his responsibilities hereunder, then the Selling Stockholders
shall, within ten (10) days after such death or disability, appoint a successor
agent and, immediately thereafter, shall notify Netivation of the identity of
such successor. Any such successor shall succeed the Agent as Agent hereunder.
If for any reason there is no Agent at any time, all references herein to the
Agent shall be deemed to refer to the Selling Stockholders.
(f) All expenses incurred by the Agent in connection with the
performance of his duties as Agent shall be borne and paid by the Selling
Stockholders.
10.2 Further Assurances. Each party hereto shall execute and cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the Transactions.
10.3 Fees and Expenses. Subject to Section 9, each party to this
Agreement shall bear and pay all fees, costs and expenses (including legal fees
and accounting fees) that have been incurred or that are incurred in the future
by such party in connection with the Transactions, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) the
investigation and review conducted by Netivation and its Representatives with
respect to Raintree's business (and the furnishing of information to Netivation
and its Representatives in connection with such investigation and review), (ii)
the negotiation, preparation and review of this Agreement (including the
Schedule of Exceptions) and all agreements, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
Transactions, (iii) the preparation and submission of any filing or notice
required to be made or given in connection with any of the Transactions and the
obtaining of any consent required to be obtained in connection with any of such
Transactions and (iv) the consummation of the Merger.
10.4 Attorneys' Fees. If any action or Proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
10.5 Notices. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or overnight delivery service or by facsimile) to
the address or facsimile telephone number set forth beneath the name of such
party below (or to such other address or facsimile telephone number as such
party shall have specified in a written notice given to the other parties
hereto):
if to Netivation: 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 Xxxx X. Xxxxxxx
or any of the 00000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxxxx, XX 00000-0000
Stockholders: Facsimile: (000) 000-0000
with a copy to: Xxxxx Xxxx LLP
0000 Xxxxxxx Xxxx, Xxx. 000
XxXxxx, XX 00000
Attention: Xxxxxx X. XxXxx
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 shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.7 Counterparts. This Agreement may be executed in several
counterparts and transmitted by facsimile, each of which shall constitute an
original and all of which, when taken together, shall constitute one agreement.
10.8 Governing Law. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of Idaho
(without giving effect to principles of conflicts of laws).
10.9 Successors and Assigns. This Agreement shall be binding upon:
Raintree and its successors and assigns (if any); the Selling Stockholders and
their respective personal representatives, executors, administrators, estates,
heirs, successors and assigns (if any); Netivation and its successors and
assigns (if any); and Merger Sub and its successors and assigns (if any). This
Agreement shall inure to the benefit of: Raintree; the Selling Stockholders;
Netivation; Merger Sub; the Netivation Indemnitees; and the respective
successors and assigns (if any) of the foregoing. Each party may freely assign
any or all of its rights (but not its
obligations) under this Agreement (including its indemnification rights under
Section 9), in whole or in part, to any other Person without obtaining the
consent or approval of any other party hereto or of any other Person.
10.10 Remedies Cumulative; Specific Performance. The rights and
remedies of the parties hereto shall be cumulative (and not alternative). The
parties to this Agreement agree that, in the event of any Breach or threatened
Breach by any party to this Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other party to this
Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (i) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (ii) an injunction restraining such Breach or threatened
Breach.
10.11 Waiver.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10.12 Amendments. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of all of the parties hereto.
10.13 Time of the Essence. Time is of the essence of this Agreement.
10.14 Severability. In the event that any provision of this
Agreement, or the application of any such provision to any Person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as to
which it is determined to be invalid, unlawful, void or unenforceable, shall not
be impaired or otherwise affected and shall continue to be valid and enforceable
to the fullest extent permitted by law.
10.15 Parties in Interest. Except for the provisions of Section 9,
none of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties hereto and their respective
successors and assigns (if any).
10.16 Entire Agreement. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof
and thereof and supersede all prior agreements and understandings among or
between any of the parties relating to the subject matter hereof and thereof.
10.17 Construction.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
The parties hereto have caused this Agreement to be executed and delivered
as of the date first set forth above.
NETIVATION:
XXXXXXXXXX.XXX, INC.,
a Delaware corporation
By ___________________________________________
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
MERGER SUB:
XXXXXXXXXX.XXX MERGER FOUR CORP.,
a Delaware corporation
By ___________________________________________
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
RAINTREE:
RAINTREE COMMUNICATIONS CORP.,
a Virginia corporation
By ___________________________________________
Xxxx X. Xxxxxxx
President
SELLING STOCKHOLDERS:
Xxxx X. Xxxxxxx and Xxxxx Xxxxxxx, joint tenants
in the entirety with right of survivorship:
______________________________________________
Xxxx X. Xxxxxxx
______________________________________________
Xxxxx Xxxxxxx
Resource Rentals, Inc.
By:___________________________________________
Xxxxx Xxxxxxx, President
AGENT:
______________________________________________
Xxxx Xxxxxxx
SECRETARY'S CERTIFICATE
I, Xxxx X. Xxxxxx, Secretary of Xxxxxxxxxx.xxx Merger Four Corp., hereby
certify that this Agreement has been adopted pursuant to the first sentence of
Title 8, Section 251(f) of the Delaware Corporations Laws, and that the
conditions specified in that sentence have been satisfied.
_________________________________
Xxxx X. Xxxxxx, Secretary
