AGREEMENT AND PLAN OF MERGER
among:
XXXXXXXXXX.XXX, INC.
a Delaware corporation;
XXXXXXXXXX.XXX MERGER FIVE CORP.,
a Delaware corporation;
PUBLIC DISCLOSURE, INC.,
a District of Columbia corporation;
and
the Selling Stockholders of Public Disclosure, Inc.
listed on Exhibit A hereto
Dated as of October___, 1999
TABLE OF CONTENTS
Page
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SECTION 1 - DESCRIPTION OF TRANSACTION....................................................................... 1
1.1 Merger of Public Disclosure into Merger Sub...................................................... 1
1.2 Effect of the Merger............................................................................. 1
1.3 Closing; Effective Time.......................................................................... 1
1.4 Certificate of Incorporation, Bylaws and Directors and Officers.................................. 2
1.5 Conversion of Public Disclosure Stock............................................................ 2
1.6 Additional Consideration......................................................................... 3
1.7 Closing of Public Disclosure's Transfer Books.................................................... 3
1.8 Exchange of Certificates......................................................................... 3
1.9 Dissenting Shares................................................................................ 4
1.10 Tax Consequences................................................................................. 5
1.11 Accounting Treatment............................................................................. 5
1.12 Further Action................................................................................... 5
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF PUBLIC DISCLOSURE AND THE SELLING STOCKHOLDERS................. 5
2.1 Organization, Good Standing and Qualification.................................................... 5
2.2 Subsidiaries..................................................................................... 6
2.3 Capitalization; Voting Rights.................................................................... 6
2.4 Authorization; Binding Obligations............................................................... 6
2.5 Financial Statements............................................................................. 6
2.6 Liabilities...................................................................................... 6
2.7 Agreements; Action............................................................................... 7
2.8 Obligations to Related Parties................................................................... 7
2.9 Absence of Changes............................................................................... 7
2.10 Title to Properties and Assets; Liens, Etc....................................................... 9
2.11 Patents and Trademarks........................................................................... 9
2.12 Compliance with Other Instruments................................................................ 10
2.13 Litigation....................................................................................... 10
2.14 Tax Returns and Payments......................................................................... 10
2.15 Employees........................................................................................ 11
2.16 Registration Rights.............................................................................. 12
2.17 Compliance with Legal Requirements; Consents..................................................... 12
2.18 Selling Stockholders............................................................................. 13
2.19 Full Disclosure.................................................................................. 13
2.20 Year 2000 Compliance............................................................................. 13
2.21 Securities Laws Matters.......................................................................... 13
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF NETIVATION..................................................... 14
3.1 Organization, Good Standing and Qualification.................................................... 14
3.2 Subsidiaries..................................................................................... 15
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3.3 Capitalization; Voting Rights..................................................................... 15
3.4 Authorization; Binding Obligations................................................................ 15
3.5 Full Disclosure................................................................................... 15
SECTION 4 - CERTAIN COVENANTS OF PUBLIC DISCLOSURE AND THE SELLING STOCKHOLDERS............................... 16
4.1 Access and Investigation.......................................................................... 16
4.2 Operation of Business............................................................................. 17
4.3 Notification; Updates to Schedule of Exceptions; Opportunity to Cure.............................. 18
4.4 No Negotiation.................................................................................... 20
SECTION 5 - ADDITIONAL COVENANTS OF THE PARTIES............................................................... 20
5.1 Notification; Opportunity to Cure................................................................. 20
5.2 Filings and Consents.............................................................................. 21
5.3 Public Disclosure Stockholders' Meeting........................................................... 21
5.4 Public Announcements.............................................................................. 21
5.5 Best Efforts...................................................................................... 22
5.6 Tax Matters....................................................................................... 22
5.7 Support to Public Disclosure...................................................................... 22
5.8 First Right to Purchase Assets of Public Disclosure............................................... 22
5.9 Piggyback Registration............................................................................ 23
5.10 Non-Partisanship.................................................................................. 23
5.11 Political Party Contributions..................................................................... 23
SECTION 6 - CONDITIONS PRECEDENT TO OBLIGATIONS OF NETIVATION AND MERGER SUB.................................. 23
6.1 Accuracy of Representations....................................................................... 23
6.2 Performance of Covenants.......................................................................... 23
6.3 Stockholder Approval.............................................................................. 23
6.4 Consents.......................................................................................... 23
6.5 No Material Adverse Change........................................................................ 23
6.6 Agreements and Documents.......................................................................... 24
6.7 No Restraints..................................................................................... 24
6.8 No Proceedings.................................................................................... 24
6.9 Securities Law Compliance......................................................................... 24
6.10 Dissenters Rights................................................................................. 25
6.11 Unaccredited Investors............................................................................ 25
6.12 Proceedings and Documents......................................................................... 25
6.13 Corporate Approvals............................................................................... 25
SECTION 7 - CONDITIONS PRECEDENT TO OBLIGATIONS OF PUBLIC DISCLOSURE AND THE SELLING STOCKHOLDERS............. 25
7.1 Accuracy of Representations....................................................................... 25
7.2 Performance of Covenants.......................................................................... 25
7.3 Consents ......................................................................................... 25
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7.4 Agreements and Documents.......................................................................... 25
7.5 No Restraints..................................................................................... 26
7.6 No Proceedings.................................................................................... 26
7.7 Corporate Approvals............................................................................... 26
SECTION 8 - TERMINATION....................................................................................... 26
8.1 Termination Events................................................................................ 26
8.2 Termination Procedures............................................................................ 27
8.3 Effect of Termination............................................................................. 27
SECTION 9 - INDEMNIFICATION, ETC.............................................................................. 28
9.1 Survival of Representations, Warranties and Covenants............................................. 28
9.2 Indemnification by the Selling Stockholders....................................................... 28
9.3 Contribution...................................................................................... 29
9.4 Ceiling; Limitation on Additional Damages......................................................... 29
9.5 Defense of Third Party Claims..................................................................... 29
9.6 Indemnity Reserve................................................................................. 29
9.7 Exercise of Remedies by Netivation Indemnitees Other Than Netivation.............................. 30
SECTION 10 - MISCELLANEOUS PROVISIONS......................................................................... 30
10.1 Selling Stockholders' Agent...................................................................... 30
10.2 Further Assurances............................................................................... 31
10.3 Fees and Expenses................................................................................ 31
10.4 Attorneys' Fees.................................................................................. 31
10.5 Notices.......................................................................................... 31
10.6 Headings......................................................................................... 32
10.7 Counterparts..................................................................................... 32
10.8 Governing Law.................................................................................... 33
10.9 Successors and Assigns........................................................................... 33
10.10 Remedies Cumulative; Specific Performance........................................................ 33
10.11 Waiver........................................................................................... 33
10.12 Amendments....................................................................................... 33
10.13 Time of the Essence.............................................................................. 33
10.14 Severability..................................................................................... 34
10.15 Parties in Interest.............................................................................. 34
10.16 Entire Agreement................................................................................. 34
10.17 Construction..................................................................................... 34
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EXHIBITS
Exhibit A - Selling Stockholders
Exhibit B - Certain Definitions
Exhibit C - Director and Officer of Surviving Corporation
Exhibit D - Allocation of Merger Consideration
Exhibit E - Forms of Legal Opinion
Exhibit F - Form of Employment and Noncompetition Agreement
Exhibit G - Form of Escrow Agreement
Exhibit H - Form of Prospective Offeree Questionnaire
SCHEDULES
2.1 Authority to Do Business
2.6 Liabilities
2.7 Agreements
2.8 Obligations to Related Parties
2.9 Changes to Public Disclosure, Inc.
2.10 Assets
2.11 Patents and Trademarks
2.11(a) Outstanding Options, Licenses and Agreements
2.13 Litigation
2.14 Tax Returns and Payments
2.15 Employees
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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 FIVE CORP., a Delaware
corporation and a wholly-owned subsidiary of Netivation ("Merger Sub"), PUBLIC
DISCLOSURE, INC., a District of Columbia corporation ("Public Disclosure"), and
the stockholders of Public Disclosure set forth on Exhibit A hereto (the
"Selling Stockholders"). Certain capitalized terms used in this Agreement are
defined in Exhibit B.
RECITALS
A. The parties intend to effect a merger of Public Disclosure into
Merger Sub in accordance with this Agreement and the Delaware General
Corporation Law ("Delaware Law") and the District of Columbia Corporation Law
("D.C. Law") (the "Merger"). Upon consummation of the Merger, Public Disclosure
will cease to exist, and Merger Sub will remain a wholly-owned subsidiary of
Netivation.
B. The Selling Stockholders own an aggregate of four (4) shares of
capital stock of Public Disclosure (the "Public Disclosure Stock"), constituting
100% of the Public Disclosure capital stock on a fully-diluted basis.
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1 - DESCRIPTION OF TRANSACTION
1.1 Merger of Public Disclosure into Merger Sub. Upon the terms and
subject to the conditions set forth in this Agreement, at the Effective Time (as
defined in Section 1.3), Public Disclosure shall be merged with and into Merger
Sub, and the separate existence of Public Disclosure shall cease. Merger Sub
will continue as the surviving corporation in the Merger (the "Surviving
Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set
forth in this Agreement and in the applicable provisions of Delaware Law and
D.C. Law.
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxxx, Xxxxxx, Xxxxxxx, Rock & Fields, Chartered, 000 X. Xxxxxxx Xxxxxxxxx,
00xx Xxxxx, Xxxxx, Xxxxx 00000 on or before October 28, 1999, or at such other
time as the parties may agree (the "Scheduled Closing Time"). (The date on
which the Closing actually takes place is referred to in this Agreement as the
AGREEMENT AND PLAN OF MERGER - 1
"Closing Date.") Contemporaneously with or as promptly as practicable after the
Closing, a properly executed certificate of merger (the "Certificate of
Merger"), conforming to the requirements of Delaware Law and D.C. Law, shall be
filed with the Secretaries of State of the State of Delaware and the District of
Columbia. The Merger shall become effective at the time such Certificate of
Merger is filed with and accepted by the Secretary of State of the State of
Delaware and the District of Columbia (the "Effective Time").
1.4 Certificate of Incorporation, Bylaws and Directors and Officers.
(a) The certificate of incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended as provided
by law; provided, however, that Article I of the Certificate of Incorporation
shall be amended to read as follows: "The name of this corporation is "Public
Disclosure, Inc."
(b) The bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter amended.
(c) The directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals identified on
Exhibit C.
1.5 Conversion of Public Disclosure Stock.
(a) Subject to Sections 1.8(c) and 1.9, at the Effective Time, by
virtue of the Merger and without any further action on the part of Netivation,
Merger Sub, Public Disclosure or any stockholder of Public Disclosure, each
share of Common Stock of Public Disclosure issued and outstanding immediately
prior to the Effective Time shall be converted into the right to receive 75,000
shares of Common Stock of Netivation (the "Netivation Stock"). All outstanding
shares of Public Disclosure capital stock shall be exchanged for no more than
Three Hundred Thousand (300,000) shares of Netivation Stock. The Merger
Consideration to be received by the Selling Stockholders is set forth on Exhibit
D. If the Netivation Stock price drops below $2.50 before the Closing, Public
Disclosure may immediately terminate this Agreement and Netivation will
reimburse Public Disclosure for its expenses related to this Agreement. If,
between the date of this Agreement and the Closing Date, the shares of capital
stock of Public Disclosure or the Netivation Stock are changed into a different
number or class of shares by reason of any stock dividend, subdivision,
reclassification, recapitalization, split-up, combination or similar
transaction, the Merger Consideration shall be appropriately adjusted.
(b) If any shares of capital stock of Public Disclosure
outstanding immediately prior to the Effective Time are unvested or are subject
to a repurchase option, risk of forfeiture or other condition under any
applicable restricted stock purchase agreement or other agreement with Public
Disclosure, then the shares of Netivation Stock issued in exchange for such
shares of capital stock of Public Disclosure will also be unvested and subject
to the same repurchase
AGREEMENT AND PLAN OF MERGER - 2
option, risk of forfeiture or other condition, and the certificates representing
such shares of Netivation Stock may be accordingly marked with appropriate
legends.
1.6 Additional Consideration. At Closing, Netivation shall pay One
Hundred Ninety Thousand Dollars ($190,000) cash to the Selling Stockholders. In
addition, Netivation shall assume Public Disclosure's outstanding corporate
debts and payables.
1.7 Closing of Public Disclosure's Transfer Books. At the Effective
Time, holders of certificates representing Public Disclosure capital stock that
were outstanding immediately prior to the Effective Time shall cease to have any
rights as stockholders of Public Disclosure, and the stock transfer books of
Public Disclosure shall be closed with respect to all shares of such capital
stock outstanding immediately prior to the Effective Time. No further transfer
of any such capital stock of Public Disclosure shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any of such capital stock of Public
Disclosure (a "Public Disclosure Stock Certificate") is presented to the
Surviving Corporation or Netivation, such Public Disclosure Stock Certificate
shall be canceled and shall be exchanged as provided in Section 1.8.
1.8 Exchange of Certificates.
(a) At or as soon as practicable after the Effective Time,
Netivation will send to each holder of a Public Disclosure Stock Certificate a
letter of transmittal and instructions for use in customary form and containing
such provisions as may reasonably be required for use in effecting the surrender
of such Public Disclosure Stock Certificate for payment therefor and conversion
thereof. Upon surrender of a Public Disclosure Stock Certificate to Netivation
for exchange, together with a duly executed letter of transmittal and such other
documents as may be reasonably required by Netivation, the holder of such Public
Disclosure Stock Certificate shall be entitled to receive in exchange therefor
certificates representing the number of whole shares of Netivation Stock that
such holder has the right to receive pursuant to the provisions of this Section
1 and the Public Disclosure Stock Certificate so surrendered shall be canceled.
Until surrendered as contemplated by this Section 1.8, each Public Disclosure
Stock Certificate shall be deemed, from and after the Effective Time, to
represent only the right to receive upon such surrender a certificate
representing shares of Netivation Stock (and cash in lieu of any fractional
share of Netivation Stock) as contemplated by this Section 1. If any Public
Disclosure Stock Certificate shall have been lost, stolen or destroyed,
Netivation may, in its discretion and as a condition precedent to the issuance
of any certificates representing Netivation Stock, require the owner of such
lost, stolen or destroyed Public Disclosure Stock Certificate to provide an
appropriate affidavit and to deliver a bond (in such sum as Netivation may
reasonably direct) as indemnity.
(b) No dividends or other distributions declared or made with
respect to Netivation Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Public Disclosure Stock Certificate with
respect to the shares of Netivation Stock represented thereby, and no cash
payment in lieu of any fractional share shall be paid to any such
AGREEMENT AND PLAN OF MERGER - 3
holder, until such holder surrenders such Public Disclosure Stock Certificate in
accordance with this Section 1.8 (at which time such holder shall be entitled to
receive all such dividends and distributions and such cash payment).
(c) No fractional shares of Netivation Stock shall be issued in
connection with the Merger. In lieu of such fractional shares, any holder of
capital stock of Public Disclosure who would otherwise be entitled to receive a
fraction of a share of Netivation Stock shall, upon surrender of such holder's
Public Disclosure Stock Certificate(s), be paid in cash the dollar amount
(rounded to the nearest whole cent), without interest, determined by multiplying
such fraction by the closing price of one share of Netivation Stock as reported
by the NASDAQ consolidated reporting system on the Closing Date.
(d) Each certificate representing any of the shares of Netivation
Stock to be issued in the Merger shall bear a legend identical or similar in
effect to the following legend (together with any other legend or legends
required by applicable state securities laws or otherwise):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED
SECURITIES WITHIN THE MEANING OF RULE 144 OF THE SECURITIES ACT OF
1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS REGISTERED
UNDER THE ACT OR UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE ACT IS AVAILABLE."
(e) Netivation and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable to
any holder or former holder of capital stock of Public Disclosure pursuant to
this Agreement such amounts as Netivation or the Surviving Corporation may be
required to deduct or withhold therefrom under the Code or under any provision
of state, local or foreign tax law. To the extent such amounts are so deducted
or withheld, such amounts shall be treated for all purposes under this Agreement
as having been paid to the Person to whom such amounts would otherwise have been
paid.
1.9 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, shares of capital stock of Public Disclosure that are issued and
outstanding immediately prior to the Effective Time and that are held by
stockholders who have not voted such shares in favor of the Merger and who have
delivered a written demand for appraisal of such shares in the manner provided
under D.C. Law ("Dissenting Shares") shall not be canceled and converted in
accordance with Section 1.5 unless and until such holder shall have failed to
perfect, or shall have effectively withdrawn or lost, such holder's right to
appraisal and payment under D.C. Law. If such holder shall have so failed to
perfect, or shall have effectively withdrawn or lost such right, such holder's
capital stock of Public Disclosure shall thereupon be deemed to have been
canceled and converted as described in Section 1.5 at the Effective Time, and
each such share shall represent solely the right to receive the merger
consideration described in Section 1.5. Public Disclosure shall give prompt
AGREEMENT AND PLAN OF MERGER - 4
notice of any demands received by Public Disclosure for appraisal of its shares,
and, prior to the Effective Time, Netivation shall have the right to participate
in all negotiations and proceedings with respect to such demands. Prior to the
Effective Time, Public Disclosure shall not, except with the prior written
consent of Netivation, make any payment with respect to, or settle or offer to
settle, any such demands. From and after the Effective Time, no stockholder of
Public Disclosure who has demanded appraisal rights as provided under D.C. Law
shall be entitled to vote such holder's shares of Netivation Stock or capital
stock of Public Disclosure for any purpose or to receive payment of dividends or
other distributions with respect to such holder's shares (except dividends and
other distributions payable to stockholders of record of Public Disclosure at a
date which is prior to the Effective Time).
1.10 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.11 Accounting Treatment. For accounting purposes, the Merger is
intended to be treated as a "purchase."
1.12 Further Action. If, at any time after the Effective Time, any
further action is determined by Netivation to be necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation or
Netivation with full right, title and possession of and to all rights and
property of Public Disclosure, the officers and directors of the Surviving
Corporation and Netivation shall be fully authorized (in the name of Public
Disclosure and otherwise) to take such action.
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF
PUBLIC DISCLOSURE AND THE SELLING STOCKHOLDERS
Public Disclosure and Xxxx X. Xxxxxx and Xxxxxxx X. Xxxxxxx jointly
and severally represent and warrant, to and for the benefit of the Netivation
Indemnitees, as follows:
2.1 Organization, Good Standing and Qualification. Public Disclosure
is a corporation duly organized, validly existing and in good standing under the
laws of the District of Columbia. Public Disclosure has all requisite
corporate power and authority to own and operate its properties and assets, to
execute and deliver the Transactional Agreements, to carry out the provisions of
the Transactional Agreements and to carry on its business as presently conducted
and as presently proposed to be conducted. Except as set forth on Schedule 2.1,
Public Disclosure is duly qualified and authorized to do business and is in good
standing as foreign entities in all jurisdictions in which the nature of its
activities and of its properties (both owned and leased) make such
qualifications necessary, except for those jurisdictions in which failure to do
so would not have a Material Adverse Effect on Public Disclosure or its
respective businesses. Public Disclosure has
AGREEMENT AND PLAN OF MERGER - 5
made available to Netivation true, correct and complete copies of Public
Disclosure's articles of incorporation and bylaws, each as amended to date.
2.2 Subsidiaries. Public Disclosure owns no equity securities of any
other corporation, limited partnership or similar entity. Public Disclosure is
not a participant in any joint venture, partnership or similar arrangement.
2.3 Capitalization; Voting Rights. The authorized capital stock of
Public Disclosure consists of four (4) shares of Common Stock, of which four (4)
shares are issued and outstanding. Exhibit A sets forth the names of the
stockholders of Public Disclosure and the number of shares of capital stock
owned of record by each such stockholder. The Selling Stockholders together own
all of the outstanding shares of capital stock of Public Disclosure. All issued
and outstanding shares of Public Disclosure's Common Stock (i) have been duly
authorized and validly issued, (ii) are fully paid and nonassessable and (iii)
were issued in compliance with all applicable state and federal laws concerning
the issuance of securities. There are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first refusal), proxy
or stockholder agreements, or agreements of any kind for the purchase or
acquisition from Public Disclosure of any of its securities.
2.4 Authorization; Binding Obligations. Public Disclosure has the
absolute and unrestricted right, power and authority to enter into and to
perform its obligations under the Transactional Agreements to which Public
Disclosure is or may become a party. This Agreement constitutes the legal,
valid and binding obligation of Public Disclosure, enforceable against Public
Disclosure in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies. Upon the execution of each of the other Transactional
Agreements at the Closing, each of such other Transactional Agreements will
constitute the legal, valid and binding obligation of Public Disclosure,
enforceable against Public Disclosure in accordance with its terms, subject to
(i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
2.5 Financial Statements. Public Disclosure has delivered to
Netivation its unaudited balance sheet as of December 31, 1998 (the "Statement
Date") and its unaudited income statement for the nine (9) months ended
September 30, 1999 (collectively, the "Public Disclosure Financial Statements").
The Public Disclosure Financial Statements are complete and correct in all
material respects, and present fairly the financial condition and position of
Public Disclosure for the periods covered thereby.
2.6 Liabilities. Except as set forth in Schedule 2.6, Public
Disclosure has no material liabilities and, to the Knowledge of Public
Disclosure, has no material contingent liabilities not otherwise disclosed in
the Public Disclosure Financial Statements, except current liabilities incurred
in the Ordinary Course of Business subsequent to the Statement Date which have
not been,
AGREEMENT AND PLAN OF MERGER - 6
either in any individual case or in the aggregate, materially adverse. All
obligations of Public Disclosure to affiliates, officers, members, directors and
stockholders of Public Disclosure are disclosed on the Public Disclosure
Financial Statements.
2.7 Agreements; Action.
(a) To the Knowledge of Public Disclosure and Xxxx X. Xxxxxx and
Xxxxxxx X. Xxxxxxx, and except as set forth in Schedule 2.7, there are no
agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which Public Disclosure is a party or is
bound which may involve (i) obligations (contingent or otherwise) of, or
payments to, Public Disclosure in excess of $10,000, or (ii) the license of any
patent, copyright, trade secret or other proprietary right to or from Public
Disclosure (other than licenses arising from the purchase of "off the shelf" or
other standard products), or (iii) provisions restricting or affecting the
development, manufacture or distribution of Public Disclosure's products or
services or (iv) indemnification by Public Disclosure with respect to
infringements of proprietary rights.
(b) Public Disclosure has not (i) incurred any indebtedness for
money borrowed or any other liabilities (other than with respect to dividend
obligations, distributions, indebtedness and other obligations incurred in the
Ordinary Course of Business or as disclosed in the Public Disclosure Financial
Statements) individually in excess of $10,000 or, in excess of $15,000 in the
aggregate, (ii) made any loans or advances to any person, other than ordinary
advances for travel expenses or (iii) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
Ordinary Course of Business.
(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities Public Disclosure has reason to believe are affiliated therewith)
shall be aggregated for the purpose of meeting the individual minimum dollar
amounts of such subsections.
2.8 Obligations to Related Parties. Except as set forth in Schedule
2.8, there are no obligations of Public Disclosure to officers, directors,
stockholders, members or employees other than (a) for payment of salary for
services rendered, (b) reimbursement for reasonable expenses incurred on behalf
of Public Disclosure and (c) for other standard employee benefits made generally
available to all employees. Except as set forth in Schedule 2.8, no such
officer, director or stockholder, or any member of their immediate families is,
directly or indirectly, interested in any material contract with Public
Disclosure (other than such contracts as relate to any such person's ownership
of capital stock or other securities of Public Disclosure). Public Disclosure
is not a guarantor or indemnitor of any indebtedness of any other person, firm
or corporation.
2.9 Absence of Changes. Except as set forth in Schedule 2.9, since
the Statement Date, there has not been:
AGREEMENT AND PLAN OF MERGER - 7
(a) Any change in the assets, liabilities, financial condition or
operations of Public Disclosure from that reflected in the Public Disclosure
Financial Statements, other than changes in the Ordinary Course of Business,
none of which individually or in the aggregate has had or is expected to have a
Material Adverse Effect on such assets, liabilities, financial condition or
operations of Public Disclosure;
(b) Any resignation or termination of any key officers of Public
Disclosure; and Public Disclosure, to its Knowledge, does not know of the
impending resignation or termination of employment of any such officer;
(c) Any material change, except in the Ordinary Course of Business, in
the contingent obligations of Public Disclosure by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of Public Disclosure;
(e) Any waiver by Public Disclosure of a valuable right or of a
material debt owed to it;
(f) Any direct or indirect loans made by Public Disclosure to any
stockholder, employee, officer or director of Public Disclosure, other than
advances made in the Ordinary Course of Business;
(g) Any material change in any compensation arrangement or agreement
with any employee, officer, director or stockholder;
(h) Any declaration or payment of any dividend or other
distribution of the assets of Public Disclosure;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or guaranteed
by Public Disclosure, except those for immaterial amounts and for current
liabilities incurred in the Ordinary Course of Business;
(k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(l) Any change in any material agreement to which Public Disclosure is
a party or by which it is bound which materially and adversely affects the
business, assets, liabilities, financial condition, operations or prospects of
Public Disclosure; or
AGREEMENT AND PLAN OF MERGER - 8
(m) Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition, operations or prospects of
Public Disclosure. For purposes of this subsection (m), a material and adverse
effect shall only be deemed to occur if its monetary impact exceeds, or with the
passage of time, will exceed $10,000.
2.10 Title to Properties and Assets; Liens, Etc. Schedule 2.10 is a
complete and accurate list of all material assets (whether leased or owned),
including intellectual property, of Public Disclosure. Public Disclosure has
good and marketable title to all of its properties and assets, including those
listed on Schedule 2.10, and good title to its leasehold estates, in each case
subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than
(i) those resulting from taxes which have not yet become due and payable, (ii)
minor liens and encumbrances which do not materially detract from the value of
the property subject thereto or materially impair the operations of Public
Disclosure and (iii) those that have arisen from purchase money security
interests in an amount not to exceed $10,000. None of the Selling Shareholders
has any right in or claim to any of the intellectual property utilized by Public
Disclosure. All facilities, machinery, equipment, fixtures, vehicles and other
properties owned, leased or used by Public Disclosure are in good operating
condition and repair and are reasonably fit and usable for the purposes for
which they are being used. Except as set forth in Schedule 2.10, Public
Disclosure is in compliance with all material terms of each lease to which it is
a party or is otherwise bound.
2.11 Patents and Trademarks. Except as specified in Schedule 2.11, to
the Knowledge of Public Disclosure and Xxxx X. Xxxxxx and Xxxxxxx X. Xxxxxxx,
Public Disclosure owns or possesses sufficient legal rights to all trademarks,
service marks, trade names, copyrights, trade secrets and licenses, patents,
information and other proprietary rights and processes necessary for its
business as now conducted and as proposed to be conducted, without any known
infringement of the rights of others. Except as disclosed in Schedule 2.11(a),
there are no outstanding options, licenses or agreements of any kind relating to
the foregoing, nor is Public Disclosure bound by or a party to any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information and
other proprietary rights and processes of any other person or entity other than
such licenses or agreements arising from the purchase of "off the shelf" or
standard products. Public Disclosure has not received any communications
alleging that either has violated or, by conducting its business as proposed,
would violate any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other person or
entity. To Public Disclosure's Knowledge, none of Public Disclosure's employees
is obligated under any contract (including licenses, covenants or commitments or
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with their duties to
Public Disclosure's business by the employees of Public Disclosure. The conduct
of Public Disclosure's business as proposed, will not, to the Knowledge of
Public Disclosure, conflict with or result in a breach of the terms, conditions
or provisions of, or constitute a default under, any contract, covenant or
instrument under which any employee is now obligated. Public Disclosure does
not believe it is or will be necessary to utilize any inventions, trade secrets
or proprietary information of any of its employees made prior
AGREEMENT AND PLAN OF MERGER - 9
to their employment by Public Disclosure, except for inventions, trade secrets
or proprietary information that have been assigned to Public Disclosure.
2.12 Compliance with Other Instruments. To the Knowledge of Public
Disclosure and Xxxx X. Xxxxxx and Xxxxxxx X. Xxxxxxx, Public Disclosure is not
in violation or default of any term of their charter documents, or of any
provision of any mortgage, indenture, contract, agreement, instrument or
contract to which either is party or by which either is bound or of any
judgment, decree, order, writ or, to Public Disclosure's Knowledge, any statute,
rule or regulation applicable to Public Disclosure which would materially and
adversely affect the business, assets, liabilities, financial condition,
operations or prospects of Public Disclosure. The execution, delivery, and
performance of and compliance with the Transactional Agreements will not, with
or without the passage of time or giving of notice, result in any such material
violation, or be in conflict with or constitute a default under any such term,
or result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of Public Disclosure or the suspension,
revocation, impairment, forfeiture or nonrenewal of any permit, license,
authorization or approval applicable to Public Disclosure, or the business or
operations or any of its assets or properties.
2.13 Litigation. Except as specified in Schedule 2.13, there is no
action, suit or proceeding pending, or to the Knowledge of Public Disclosure,
currently threatened against Public Disclosure that questions the validity of
this Agreement or Transactional Agreements or the right of Public Disclosure to
enter into any of such agreements, or to consummate the transactions
contemplated hereby or thereby, or which might result, either individually or in
the aggregate, in any material adverse change in the assets, condition, affairs
or prospects of Public Disclosure, financially or otherwise, or any change in
the current equity ownership of Public Disclosure, nor is Public Disclosure
aware that there is any basis for the foregoing. The foregoing includes,
without limitation, actions pending or threatened (or any basis therefor known
to Public Disclosure) involving the prior employment of any of Public
Disclosure's employees, their use in connection with Public Disclosure's
business of any information or techniques allegedly proprietary to any of their
former employers, or their obligations under any agreements with prior
employers. Public Disclosure is not a party or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by
Public Disclosure currently pending or which Public Disclosure intends to
initiate.
2.14 Tax Returns and Payments. Except as provided in Schedule 2.14:
(a) All material taxes required to have been paid, or claimed by
any Governmental Body to be payable, by Public Disclosure (whether pursuant to
any tax return or otherwise) have been duly paid in full and on a timely basis.
All material taxes required to have been withheld or collected by Public
Disclosure, including with respect to employees, has been duly withheld and
collected; and (to the extent required) each such tax has been paid to the
appropriate Governmental Body.
AGREEMENT AND PLAN OF MERGER - 10
(b) All material tax returns required to be filed by or on behalf
of Public Disclosure with any Governmental Body have been timely filed
(collectively, the "Public Disclosure Returns"). All material taxes required to
be paid by Public Disclosure for the fiscal year 1998 have either been paid in
full or shall not result in any liability to Public Disclosure. All Public
Disclosure Returns (i) have been filed when due and (ii) have been accurately
and completely prepared in full compliance with all applicable legal
requirements. Public Disclosure has delivered to Netivation accurate and
complete copies of the 1998 Public Disclosure Returns.
(c) There have been no examinations or audits of any Public
Disclosure Return, and, to the Knowledge of Public Disclosure, no such
examination or audit has been proposed or scheduled by any Governmental Body.
Public Disclosure has delivered to Netivation accurate and complete copies of
all audit reports and similar documents (to which Public Disclosure has access)
relating to the Public Disclosure Returns.
(d) No claim or proceeding is pending or, to the Knowledge of
Public Disclosure, has been threatened against Public Disclosure in respect of
any tax. There are no unsatisfied Liabilities for taxes (including Liabilities
for interest, additions to tax and penalties thereon and related expenses) with
respect to any notice of deficiency or similar document received by Public
Disclosure. There are no material liens for taxes upon any of the assets of
Public Disclosure, except liens for current taxes not yet due and payable.
Public Disclosure has not entered into or become bound by any agreement or
consent pursuant to Section 341(f) of the Code.
(e) To the Knowledge of Public Disclosure, there is no agreement,
plan, arrangement or other contract covering any employee or independent
contractor or former employee or independent contractor of Public Disclosure
that, individually or collectively, could give rise, directly or indirectly, to
the payment of any amount that would not be deductible pursuant to Section 280G
or Section 162 of the Code. Public Disclosure is not, and has never been, a
party to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar contract.
2.15 Employees. Except as set forth in Schedule 2.15, Public
Disclosure is not a party to or bound by any currently effective employment
contract, deferred compensation arrangement, bonus plan, incentive plan, profit
sharing plan, retirement agreement or other employee compensation plan or
agreement. To the Knowledge of Public Disclosure, no employee of Public
Disclosure, nor any consultant with whom Public Disclosure has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, Public Disclosure because of the nature of
the business to be conducted by Public Disclosure; and to the Knowledge of
Public Disclosure the continued employment by Public Disclosure of its present
employees, and the performance of Public Disclosure's contracts with its
independent contractors, will not result in any such violation. Public
Disclosure has not received any notice alleging that any such violation has
occurred. No employee of Public Disclosure has been granted the right to
continued employment by Public Disclosure or to any material compensation
following termination of employment with Public Disclosure. To the Knowledge of
Public Disclosure, no officer or key employee, or any
AGREEMENT AND PLAN OF MERGER - 11
group of key employees, intends to terminate their employment with Public
Disclosure, nor does Public Disclosure have a present intention to terminate the
employment of any officer, key employee or group of key employees.
2.16 Registration Rights. Public Disclosure is not presently under
any obligation, and has not granted any rights, to register any of its presently
outstanding securities or any of its securities that may hereafter be issued.
2.17 Compliance with Legal Requirements; Consents.
(a) To the Knowledge of Public Disclosure and Xxxx X. Xxxxxx and
Xxxxxxx X. Xxxxxxx, Public Disclosure is in full compliance with each legal
requirement that is or was applicable to it or to the conduct of its business or
the ownership or use of any of its assets, except where the failure to comply
with each such legal requirement has not had and will not have a Material
Adverse Effect on Public Disclosure.
(b) Neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with or result in a violation of
(i) any of the provisions of Public Disclosure's articles of incorporation or
bylaws, or (ii) any resolution adopted by Public Disclosure's stockholders or
Public Disclosure's board of directors;
(ii) contravene, conflict with or result in a violation of,
or give any Governmental Body or other Person the right to exercise any remedy
or obtain any relief under, any legal requirement or any order to which Public
Disclosure, or any of the assets owned or used by Public Disclosure, is subject;
(iii) contravene, conflict with or result in a violation or
Breach of (resulting in a Material Adverse Effect), or result in a default
under, any provision of any contract to which Public Disclosure is a party; or
(iv) give any Person the right to (A) declare a default or
exercise any remedy under any contract to which Public Disclosure is a party,
(B) accelerate the maturity or performance of any contract to which Public
Disclosure is a party or (C) cancel, terminate or modify any contract to which
Public Disclosure is a party.
Neither Public Disclosure nor any of the Selling Stockholders was, is
or will be required to make any filing with or give any notice to, or to obtain
any consent from, any Person other than Selling Stockholders' spouses in
connection with the execution and delivery of any of the Transactional
Agreements or the consummation or performance of any of the Transactions.
AGREEMENT AND PLAN OF MERGER - 12
2.18 Selling Stockholders. Each Selling Stockholder represents that
(i) he, she or it has the absolute and unrestricted right, power and authority
to enter into and to perform his, her or its obligations under each of the
Transactional Agreements to which such Selling Stockholder is or may become a
party, (b) this Agreement constitutes his, her or its legal, valid and binding
obligation, enforceable against such Selling Stockholder in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies and (c) upon the
execution of each of the other Transactional Agreements at the Closing, each of
such other Transactional Agreements will constitute the legal, valid and binding
obligation of such Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
2.19 Full Disclosure. This Agreement does not (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact or (ii) omit to state any material fact necessary in order
to make the representations, warranties and information of or with respect to
Public Disclosure and the Selling Stockholders contained and to be contained
herein (in light of the circumstances under which such representations,
warranties and information were or will be made or provided) not false or
misleading. Public Disclosure has provided Netivation and Netivation's
Representatives with full and complete access to all of Public Disclosure's
records and other documents and data.
2.20 Year 2000 Compliance. Public Disclosure has developed a detailed
plan to ensure that it, its affiliates, and all customers, suppliers and vendors
that are material to its business, become Year 2000 Compliant on or before
November 1, 1999. The plan (a) effectively prioritizes mission-critical
systems, (b) has the involvement of executive management, (c) includes
assessment of key customer, supplier, and vendor Year 2000 compliance, (d)
includes contingency planning to mitigate risk from Year 2000 business
interruptions affecting key vendors, suppliers, or customers, and (e) has been
allocated adequate resources within Public Disclosure's abilities.
2.21 Securities Laws Matters. Each Selling Stockholder understands
that the Netivation Stock being issued in the Transaction is being issued
pursuant to an exemption from registration contained in the Securities Act,
based in part upon the Selling Stockholders' representations contained in this
Agreement. Each Selling Stockholder hereby severally and not jointly represents
and warrants as follows:
(a) Knowledge and Experience. Each Selling Stockholder is
knowledgeable and has substantial experience in evaluating and investing in
transactions in companies similar to Netivation so that he is capable of
evaluating the merits and risks of his investment in Netivation. Each Selling
Stockholder has by reason of his business or financial knowledge and experience,
the capacity to protect his own interests in connection with the Transaction.
Further, each Selling Stockholder is aware of no publication of any
advertisement in connection with the Transaction. Each Selling Stockholder can
bear the economic risk of the Transaction. Each Selling Stockholder has been
advised or is aware of the provisions of Rule 144
AGREEMENT AND PLAN OF MERGER - 13
promulgated under the Securities Act, which permits limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions. Each Selling Stockholder shall not sell or otherwise transfer any
Netivation Stock until the requirements of Rule 144 are satisfied for such sale
or transfer unless the stock is earlier registered.
(b) Netivation Information. Each Selling Stockholder has had an
opportunity to discuss Netivation's business, management and financial affairs,
both as currently conducted and as proposed to be conducted following the
Merger, with directors, officers and management of Netivation and has had the
opportunity to review Netivation's operations and facilities. Each Selling
Stockholder has also had the opportunity to ask questions of, and receive
answers from, Netivation and its management regarding the terms and conditions
of the Transaction and the receipt of Netivation Stock.
(c) Acquisition for Own Account. Each Selling Stockholder is
acquiring the Netivation Stock for his own account for investment only, and not
with a view towards distribution.
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF NETIVATION
Netivation represents and warrants to Public Disclosure and the
Selling Stockholders as follows:
3.1 Organization, Good Standing and Qualification.
(a) Netivation is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Netivation has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver this Agreement and the Transactional Agreements,
to issue and sell the Netivation Stock, to carry out the provisions of this
Agreement and the Transactional Agreements and to carry on its business as
presently conducted and as presently proposed to be conducted. Netivation is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its activities
and of its properties (both owned and leased) make such qualifications
necessary, except for those jurisdictions in which failure to do so would not
have a Material Adverse Effect on Netivation or its business. Netivation has
made available to Public Disclosure true, correct and complete copies of the
Netivation's certificate of incorporation and bylaws, each as amended to date.
(b) Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Merger Sub has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver the Transactional Agreements, to carry out the
provisions of the Transactional Agreements and to carry on its business as
presently conducted and as presently proposed to be conducted.
3.2 Subsidiaries. Except for Merger Sub, Xxxxxxxxxx.xxx Merger Two
Corp., Xxxxxxxxxx.xxx Merger Three Corp., Xxxxxxxxxx.xxx Merger Four Corp.,
Xxxxxxxxxx.xxx Merger
AGREEMENT AND PLAN OF MERGER - 14
Six Corp., InterLink Internet Services, Inc., and The Online Medical Bookstore,
Inc., all of which are wholly-owned subsidiaries of Netivation, Netivation owns
no equity securities of any other corporation, limited partnership or similar
entity. Netivation is not a participant in any joint venture, partnership or
similar arrangement.
3.3 Capitalization; Voting Rights.
(a) The authorized capital stock of Netivation, as of October 7,
1999, consists of (a) 30,000,000 shares of Common Stock, of which 8,660,055
shares are issued and outstanding, and (b) 2,000,000 shares of Preferred Stock,
of which 0 shares are issued and outstanding. All issued and outstanding shares
of Netivation's Common Stock and Preferred Stock (i) have been duly authorized
and validly issued, (ii) are fully paid and nonassessable and (iii) were issued
in compliance with all applicable state and federal laws concerning the issuance
of securities. The Netivation Stock has been duly authorized and, when issued in
compliance with the provisions of this Agreement and its certificate of
incorporation, will be validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, other than liabilities
imposed upon stockholders generally by the provisions of Delaware Law, and will
not be subject to any other restrictions, except as set forth in or provided by
this Agreement and as may be imposed by applicable law.
(b) The authorized capital stock of Merger Sub consists of one
thousand (1,000) shares of Common Stock, one hundred (100) shares of which have
been issued to Netivation. All of the issued and outstanding shares of Common
Stock of Merger Sub (i) have been duly authorized and validly issued, (ii) are
fully paid and nonassessable and (iii) were issued in compliance with all
applicable state and federal laws concerning the issuance of securities.
3.4 Authorization; Binding Obligations. Each of Netivation and
Merger Sub has the absolute and unrestricted right, power and authority to enter
into and to perform its obligations under the Transactional Agreements to which
Netivation and Merger Sub, as the case may be, is or may become a party. This
Agreement constitutes the legal, valid and binding obligation of each of
Netivation and Merger Sub, enforceable against them in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies. Upon the execution
of each of the other Transactional Agreements at the Closing, each of such other
Transactional Agreements will constitute the legal, valid and binding obligation
of Netivation, enforceable against Netivation in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
3.5 Full Disclosure. Netivation has delivered to Public Disclosure
an accurate and complete copy of its Registration Statement on Form SB-2 No.
333-74569 filed with the Securities and Exchange Commission (the "SEC") on June
22, 1999 (the "Registration Statement"), which is the most recent document filed
with the SEC as of the date hereof. The Registration Statement (i) complies in
all material respects with the applicable requirements of the Securities Act
AGREEMENT AND PLAN OF MERGER - 15
and (ii) does not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
SECTION 4 - CERTAIN COVENANTS OF PUBLIC DISCLOSURE
AND THE SELLING STOCKHOLDERS
4.1 Access and Investigation. Public Disclosure and the Selling
Stockholders shall ensure that, at all times during the Pre-Closing Period:
(a) Public Disclosure and its Representatives provide Netivation
and its Representatives with access, during normal business hours upon
reasonable notice, to Public Disclosure's Representatives, personnel and assets
and to all existing books, records, tax returns, work papers and other documents
and information relating to Public Disclosure;
(b) Public Disclosure and its Representatives provide Netivation
and its Representatives with such copies of existing books, records, tax
returns, work papers and other documents and information relating to Public
Disclosure as Netivation may request in good faith; and
(c) Public Disclosure and its Representatives compile and provide
Netivation and its Representatives with such additional financial, operating and
other data and information regarding Public Disclosure as Netivation may request
in good faith. Without limiting the generality of the foregoing, during the
Pre-Closing Period, Public Disclosure shall promptly provide Netivation with
copies of:
(i) all material operating and financial reports prepared
by Public Disclosure for its senior management, including copies of the
unaudited monthly balance sheets of Public Disclosure and the related unaudited
monthly statements of operations, statements of stockholders' equity and
statements of cash flows;
(ii) any written materials or communications sent by or on
behalf of Public Disclosure to its stockholders generally;
(iii) any material notice, document or other communication
sent by or on behalf of Public Disclosure to any party to any Public Disclosure
contract or sent to Public Disclosure by any party to any Public Disclosure
contract (other than any communication that relates solely to commercial
transactions of the type sent in the Ordinary Course of Business);
(iv) any written notice, report or other document filed with
or sent to any Governmental Body in connection with the Merger or any of the
other Transactions; and
(v) any material written notice, report or other document
received by Public Disclosure from any Governmental Body.
AGREEMENT AND PLAN OF MERGER - 16
4.2 Operation of Business. Public Disclosure and the Selling
Stockholders shall use its or their reasonable best efforts to ensure that,
during the Pre-Closing Period, unless prior written approval is provided by
Netivation:
(a) Public Disclosure conducts its operations exclusively in the
Ordinary Course of Business and in the same manner as such operations have been
conducted prior to the date of this Agreement;
(b) Public Disclosure preserves intact its current business
organization, keeps available the services of its current officers and employees
and maintains its relations and good will with suppliers, customers, landlords,
creditors, licensors, licensees, employees and other Persons having business
relationships with Public Disclosure;
(c) Public Disclosure keeps in full force all existing insurance
policies;
(d) Public Disclosure's officers confer regularly, upon request,
with Netivation concerning operational matters and otherwise report regularly,
upon request, to Netivation concerning the status of Public Disclosure's
business, condition, assets, liabilities, operations, financial performance and
prospects;
(e) Public Disclosure immediately notifies Netivation of any
inquiry, proposal or offer from any Person relating to any Acquisition
Transaction;
(f) Public Disclosure does not declare, accrue, set aside or pay
any dividend or make any other distribution in respect of any shares of capital
stock or other securities, and does not repurchase, redeem or otherwise
reacquire any shares of capital stock or other securities;
(g) Public Disclosure does not sell or otherwise issue any shares
of capital stock or any other securities;
(h) Public Disclosure does not amend its articles of
incorporation or bylaws, and does not effect or become a party to any
Acquisition Transaction, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction;
(i) Public Disclosure does not form any subsidiary or acquires
any equity interest or other interest in any other entity;
(j) Public Disclosure does not make any capital expenditure,
except for capital expenditures that are made in the Ordinary Course of Business
and that do not exceed $10,000;
AGREEMENT AND PLAN OF MERGER - 17
(k) Public Disclosure does not (i) lend money to any Person or
(ii) incur, assume or otherwise become subject to any Liability, except for
current liabilities incurred in the Ordinary Course of Business;
(l) Public Disclosure does not establish or adopt any employee
benefit plan, nor pay or agree to pay any bonus nor makes any profit-sharing or
similar payment to, nor increase the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers or employees (except for regularly scheduled salary
increases in the Ordinary Course of Business);
(m) Public Disclosure does not change any of its methods of
accounting or accounting practices in any respect;
(n) Public Disclosure does not commence any Proceeding, except in
the Ordinary Course of Business;
(o) Public Disclosure does not enter into any transaction or take
any other action of the type referred to in Section 2.9;
(p) Public Disclosure does not enter into any transaction or take
any other action outside the Ordinary Course of Business;
(q) Public Disclosure does not enter into any transaction or take
any other action that is reasonably likely to cause or constitute a Breach of
any representation or warranty made by Public Disclosure or the Selling
Stockholders; and
(r) Public Disclosure does not agree, commit or offer (in writing
or otherwise), or attempt, to take any of the actions described in clauses
"(f)" through "(q)" of this Section 4.2.
4.3 Notification; Updates to Schedule of Exceptions; Opportunity to
Cure.
(a) During the Pre-Closing Period, Public Disclosure and/or the
Selling Stockholders shall promptly notify Netivation in writing of:
(i) the discovery by Public Disclosure or any of the Selling
Stockholders of any event, condition, fact or circumstance that occurred or
existed on or prior to the date of this Agreement that caused or constitutes a
Breach of any representation or warranty made by Public Disclosure or the
Selling Stockholders in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute a Breach of any representation or warranty made by Public Disclosure
or the Selling Stockholders in this Agreement if (A) such representation or
warranty had been made as of the time of the occurrence, existence or
AGREEMENT AND PLAN OF MERGER - 18
discovery of such event, condition, fact or circumstance or (B) such event,
condition, fact or circumstance had occurred, arisen or existed on or prior to
the date of this Agreement;
(iii) any Breach of any covenant or obligation of Public
Disclosure or the Selling Stockholders; and
(iv) any event, condition, fact or circumstance that may
make the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 4.3(a) requires any change in the
Schedule of Exceptions, or if any such event, condition, fact or circumstance
would require such a change assuming the Schedule of Exceptions were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then Public Disclosure shall promptly deliver to
Netivation an update to the Schedule of Exceptions specifying such change. No
such update shall be deemed to supplement or amend the Schedule of Exceptions
for the purpose of (i) determining the accuracy of any of the representations
and warranties made by Public Disclosure in this Agreement for purposes of
Section 6.1, but shall be deemed to supplement or amend the Schedule of
Exceptions for purposes of Section 9 or (ii) determining whether any of the
other conditions set forth in Section 6 have been satisfied.
(c) Upon receipt of any notification pursuant to Section 4.3(a),
Netivation shall send written notice to Public Disclosure and/or the Selling
Stockholders of its decision to seek termination of this Agreement or pursue any
other available remedy. Netivation shall provide Public Disclosure and/or the
Selling Stockholders a reasonable opportunity to cure, but in no event less than
ten (10) days.
(d) During the Pre-Closing Period, Public Disclosure and/or the
Selling Stockholders, as appropriate, shall promptly notify Netivation in
writing of the awareness by Public Disclosure or its representatives or any of
the Selling Stockholders of any event, condition, fact or circumstance that
occurred or existed on or prior to the date of this Agreement or thereafter that
caused or constitutes or will cause or constitute a Breach of any representation
or warranty made by Netivation in this Agreement.
(e) Upon receipt of any notification pursuant to Section 4.3(d),
Netivation shall send written notice to Public Disclosure and/or the Selling
Stockholders of its intent to cure the defect. Public Disclosure and the Selling
Stockholders shall provide a reasonable opportunity to cure the defect, but in
no event less than ten (10) days. Public Disclosure and the Selling Stockholders
shall not have the right to xxx for indemnity or contribution for any defect
that Public Disclosure and/or the Selling Stockholders were aware of prior to or
during the Pre-Closing Period for which no notification pursuant to section
4.3(d) was given to Netivation.
AGREEMENT AND PLAN OF MERGER - 19
4.4 No Negotiation. Public Disclosure shall ensure that, during the
Pre-Closing Period, neither Public Disclosure nor any of Public Disclosure's
Representatives directly or indirectly:
(a) solicits or encourages the initiation of any inquiry,
proposal or offer from any Person (other than Netivation) relating to any
Acquisition Transaction;
(b) participates in any discussions or negotiations with, or
provides any non-public information to, any Person (other than Netivation)
relating to any Acquisition Transaction; or
(c) considers the merits of any unsolicited inquiry, proposal or
offer from any Person (other than Netivation) relating to any Acquisition
Transaction.
SECTION 5 - ADDITIONAL COVENANTS OF THE PARTIES
5.1 Notification; Opportunity to Cure.
(a) During the Pre-Closing Period, Netivation shall promptly
notify Public Disclosure and/or the Selling Stockholders in writing of:
(i) the discovery by Netivation of any event, condition,
fact or circumstance that occurred or existed on or prior to the date of this
Agreement that caused or constitutes a Breach of any representation or warranty
made by Netivation in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute a Breach of any representation or warranty made by Netivation in this
Agreement if (A) such representation or warranty had been made as of the time of
the occurrence, existence or discovery of such event, condition, fact or
circumstance or (B) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement;
(iii) any Breach of any covenant or obligation of
Netivation; and
(iv) any event, condition, fact or circumstance that may
make the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) Upon receipt of any notification pursuant to Section 5.1(a),
Public Disclosure and/or the Selling Stockholders shall send written notice to
Netivation of its/their decision to seek termination of this Agreement or pursue
any other available remedy. Public Disclosure and/or the Selling Stockholders
shall provide Netivation a reasonable opportunity to cure, but in no event less
than ten (10) days.
AGREEMENT AND PLAN OF MERGER - 20
(c) During the Pre-Closing Period, Netivation shall promptly
notify Public Disclosure and/or the Selling Stockholders, as appropriate, in
writing of the awareness by Netivation or its representatives of any event,
condition, fact or circumstance that occurred or existed on or prior to the date
of this Agreement or thereafter that caused or constitutes or will cause or
constitute a Breach of any representation or warranty made by Public Disclosure
and/or a Selling Stockholder in this Agreement.
(d) Upon receipt of any notification pursuant to Section 5.1(c),
Public Disclosure and/or the Selling Stockholders shall send written notice to
Netivation of its/their intent to cure the defect. Netivation shall provide a
reasonable opportunity to cure the defect, but in no event less than ten (10)
days. Netivation shall not have the right to xxx for indemnity for any defect
that Netivation was aware of prior to or during the Pre-Closing Period for which
no notification pursuant to Section 5.1(c) was given to Public Disclosure
Net.Capitol and/or the Selling Stockholders, as appropriate.
5.2 Filings and Consents. As promptly as practicable after the
execution of this Agreement, each party to this Agreement (i) shall make all
filings (if any) and give all notices (if any) required to be made and given by
such party in connection with the Transactions and (ii) shall use all
commercially reasonable efforts to obtain all consents (if any) required to be
obtained (pursuant to any applicable legal requirement or contract, or
otherwise) by such party in connection with the Transactions. Each of the
parties shall (upon request) promptly deliver to the other a copy of each such
filing made, each such notice given and each such consent obtained by Public
Disclosure or Netivation, as the case may be, during the Pre-Closing Period.
5.3 Public Disclosure Stockholders' Meeting. Public Disclosure
shall, in accordance with its certificate of incorporation and bylaws and the
applicable requirements of D.C. Law, call and hold a special meeting of its
stockholders, or solicit written consents from its stockholders, as promptly as
practicable for the purpose of permitting them to consider and to vote upon and
approve the Merger and this Agreement. Public Disclosure shall use its best
efforts (i) to solicit from each of such stockholders a proxy or consent in
favor of the approval of the Merger and this Agreement and (ii) to cause each of
such stockholders to execute and deliver to Netivation a Prospective Offeree
Questionnaire in a form acceptable to Netivation certifying, among other items,
as to whether each of such stockholders is an "accredited investor" as such term
is defined in Rule 501 under the Securities Act.
5.4 Public Announcements. During the Pre-Closing Period, (i) neither
Public Disclosure nor Netivation shall (and neither Public Disclosure nor
Netivation shall permit any of its respective Representatives to) issue any
press release or make any public statement regarding this Agreement or the
Transactions, without the other party's prior written consent, and (ii) each
party will use reasonable efforts to consult with the other party prior to
issuing any press release or making any public statement regarding the Merger;
provided that Netivation shall be free to make any disclosure regarding the
Merger that it deems necessary in connection with filings with the SEC made in
connection with the Registration Statement.
AGREEMENT AND PLAN OF MERGER - 21
5.5 Best Efforts. During the Pre-Closing Period, (i) Public
Disclosure shall use commercially reasonable efforts to cause the conditions set
forth in Section 6 to be satisfied on a timely basis and (ii) Netivation and
Merger Sub shall use their commercially reasonable efforts to cause the
conditions set forth in Section 7 to be satisfied on a timely basis and
Netivation will take all actions necessary to cause Merger Sub to perform its
obligations under this Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement.
5.6 Tax Matters. At or prior to the Closing, (a) Public Disclosure
shall execute and deliver to 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 Long, Xxxxxxxx &
Xxxxxx LLP, Xxxxxxx, Xxxxxx, Xxxxxxx, Rock & Fields, Chtd. and to Public
Disclosure a tax representation letter, in a form reasonably acceptable to such
parties. Public Disclosure and the Selling Stockholders will use all of their
respective reasonable efforts to cause the transactions contemplated hereby to
qualify as a reorganization under the provisions of Section 368(a) of the Code
and will not take any action after the Acquisition is effected that could
reasonably be expected to cause the Acquisition to lose its tax-free status.
All parties hereto agree to file this Agreement with their respective federal
income tax returns for the year in which the Acquisition closes and to comply
with the reporting requirements of United States Treasury Regulations Section
1.368-2(g), if applicable. Netivation will use its reasonable best efforts to
support the investigation of certain tax advantages for Public Disclosure in the
Enterprise Zone of the District of Columbia.
5.7 Support to Public Disclosure. During the twelve (12) month
period after Closing, Netivation shall invest at least $100,000 of financial,
management, technical and/or other resources into the business of Public
Disclosure to facilitate its growth.
5.8 First Right to Purchase Assets of Public Disclosure.
(a) During the 36 month period after Closing, if Netivation
decides to sell any key assets of Public Disclosure to a non-affiliate, then the
Selling Stockholders shall have the first right to purchase such assets.
Netivation shall give the Agent a thirty (30) day written notice pursuant to
Section 10.5 of its intent to sell such assets. During the thirty (30) day
period following written notice, Netivation will negotiate in good faith with
the Agent to effectuate an agreement for the sale of such assets to the Selling
Stockholders.
(b) During the 36 month period after Closing, if Netivation
receives an unsolicited bona fide offer to sell any key assets of Public
Disclosure to a non-affiliate, then the Selling Stockholders shall have the
first right to purchase such assets. Netivation shall give the Agent a fifteen
(15) day written notice pursuant to Section 10.5 of the unsolicited offer and a
copy of the offer. During the fifteen (15) day period following written notice,
the Selling Stockholders shall have the right to match the offer and to
effectuate an agreement for the sale of such assets to the Selling Stockholders.
If the Selling Stockholders do not match the offer, then Netivation shall have
the right to effectuate an agreement for the sale of such assets with the party
making the unsolicited bona fide offer on terms similar in all material respects
to the unsolicited bona fide offer.
AGREEMENT AND PLAN OF MERGER - 22
5.9 Piggyback Registration. If Netivation determines to register any
of its common stock in a subsequent public offering to be consummated at any
time after twelve (12) months following Closing, Netivation shall provide
piggyback registration rights, subject to any underwriter's restrictions, to the
Selling Shareholders' Netivation Stock in such registration. If Netivation
consummates any such public offering before twelve (12) months following
Closing, Netivation may, in its sole discretion, offer piggyback registration
rights to the Selling Shareholders' Netivation Stock in connection with such
registration.
5.10 Non-Partisanship. After Closing, Netivation will use its
reasonable best efforts to ensure that the Surviving Corporation maintains
politically non-partisanship standing in relation to the business it conducts.
5.11 Political Party Contributions. Netivation shall not contribute
corporate treasury dollars to specific political parties.
SECTION 6 - CONDITIONS PRECEDENT TO OBLIGATIONS
OF NETIVATION AND MERGER SUB
The obligations of Netivation and Merger Sub to effect the
Transactions are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Netivation, in
whole or in part, in accordance with Section 10.11):
6.1 Accuracy of Representations. Each of the representations and
warranties made by Public Disclosure and the Selling Stockholders in this
Agreement shall have been accurate in all material respects as of the date of
this Agreement and shall be accurate in all material respects as of the
Scheduled Closing Time as if made at the Scheduled Closing Time.
6.2 Performance of Covenants. Each covenant and obligation that
Public Disclosure or any of the Selling Stockholders is required to comply with
or to perform pursuant to this Agreement at or prior to the Closing shall have
been duly complied with and performed in all material respects.
6.3 Stockholder Approval. The principal terms of the Merger shall
have been duly approved by the stockholders of Public Disclosure in accordance
with the provisions of D.C. Law and applicable agreements.
6.4 Consents. All consents required to be obtained by Public
Disclosure in connection with the Transactions (including the consents
identified in Section 2.17) shall have been obtained and shall be in full force
and effect.
6.5 No Material Adverse Change. Except for adverse changes that
result from general economic conditions, there shall have been no material
adverse change in Public Disclosure's business, condition, assets, liabilities,
operations, financial performance or prospects since the date of this Agreement.
AGREEMENT AND PLAN OF MERGER - 23
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. Xxxxxx and Xxxxxxx X. Xxxxxxx;
(c) a Tax Representation Letter executed by Public Disclosure;
(d) a Prospective Offeree Questionnaire substantially in the form
of Exhibit H executed by each Selling Stockholder;
(e) a certificate executed by each of the Selling Stockholders
containing the representation and warranty of each such Selling Stockholder that
(i) each of the representations and warranties made by Public Disclosure and the
Selling Stockholders in this Agreement is accurate in all material respects as
of the Closing Date as if made on the Closing Date and (ii) the conditions set
forth in this Section 6 have been duly satisfied (the "Selling Stockholders'
Closing Certificate");
(f) a legal opinion from counsel for Public Disclosure and the
Selling Stockholders, substantially in the form of Exhibit E.
(g) such other documents as Netivation may reasonably request in
good faith for the purpose of (i) evidencing the accuracy of any representation
or warranty made by Public Disclosure or the Selling Stockholders, (ii)
evidencing the compliance by Public Disclosure or the Selling Stockholders with,
or the performance by Public Disclosure or the Selling Stockholders of, any
covenant or obligation set forth in this Agreement, (iii) evidencing the
compliance with any applicable federal or state securities law, (iv) evidencing
the satisfaction of any condition set forth in this Section 6 or (v) otherwise
facilitating the consummation or performance of any of the Transactions.
6.7 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any legal requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.8 No Proceedings. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Merger or seeking to prohibit or limit the
exercise by Netivation of any material right pertaining to its ownership of
stock of the Surviving Corporation.
6.9 Securities Law Compliance. All applicable requirements of the
Securities Act and any applicable state securities laws shall have been
satisfied.
AGREEMENT AND PLAN OF MERGER - 24
6.10 Dissenters Rights. No stockholder of Public Disclosure shall
have exercised dissenters rights with respect to approval of the Transactions.
6.11 Unaccredited Investors. The Prospective Offeree Questionnaires
delivered pursuant to Sections 5.3 and 6.6 shall indicate that no more than 35
of the stockholders of Public Disclosure are "unaccredited investors," as
defined by Rule 501 under the Securities Act.
6.12 Proceedings and Documents. All corporate and other proceedings
in connection with the Transactions and all documents and instruments incident
to such Transactions shall be reasonably satisfactory in substance and form to
Netivation.
6.13 Corporate Approvals. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of Public Disclosure, Netivation, Merger Sub and the Selling Stockholders.
SECTION 7 - CONDITIONS PRECEDENT TO OBLIGATIONS
OF PUBLIC DISCLOSURE AND THE SELLING STOCKHOLDERS
The obligations of Public Disclosure and the Selling Stockholders to
effect the Transactions are subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived solely
by Public Disclosure, in whole or in part, in accordance with Section 10.11):
7.1 Accuracy of Representations. Each of the representations and
warranties made by Netivation in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in all
material respects as of the Scheduled Closing Time as if made at the Scheduled
Closing Time.
7.2 Performance of Covenants. Each covenant and obligation that
Netivation and Merger Sub are required to comply with or to perform pursuant to
this Agreement at or prior to the Closing shall have been duly complied with and
performed in all material respects.
7.3 Consents. All consents required to be obtained by Netivation in
connection with the Transactions shall have been obtained and shall be in full
force and effect.
7.4 Agreements and Documents. Public Disclosure shall have received
the following agreements and documents, each of which shall be in full force and
effect:
(a) the Escrow Agreement, substantially in the form of Exhibit G;
(b) an Employment and Noncompetition Agreement, substantially in
the forms of Exhibit F, executed by Xxxx X. Xxxxxx and Xxxxxxx X. Xxxxxxx;
(c) a Tax Representation Letter executed by Netivation;
AGREEMENT AND PLAN OF MERGER - 25
(d) a certificate executed by Netivation containing the
representation and warranty of Netivation that (i) each of the representations
and warranties made by Netivation in this Agreement is accurate in all material
respects as of the Closing Date as if made on the Closing Date and (ii) the
conditions set forth in this Section 7 have been duly satisfied;
(e) a legal opinion from counsel for Netivation and Merger Sub,
substantially in the form of Exhibit E; and
(f) such other documents as Public Disclosure may reasonably
request in good faith for the purpose of (i) evidencing the accuracy of any
representation or warranty made by Netivation, (ii) evidencing the compliance by
Netivation with, or the performance by Netivation of, any covenant or obligation
set forth in this Agreement, (iii) evidencing the compliance with any applicable
federal or state securities law, (iv) evidencing the satisfaction of any
condition set forth in this Section 7 or (v) otherwise facilitating the
consummation or performance of any of the Transactions.
7.5 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any legal requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
7.6 No Proceedings. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Merger or seeking to prohibit or limit the
exercise by Netivation of any material right pertaining to its ownership of
stock of the Surviving Corporation.
7.7 Corporate Approvals. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of Netivation and Merger Sub.
SECTION 8 - TERMINATION
8.1 Termination Events. This Agreement may be terminated prior to
the Closing:
(a) by Netivation if (i) there is a material Breach of any
covenant or obligation of Public Disclosure or any of the Selling Stockholders
or (ii) Netivation reasonably determines that the timely satisfaction of any
condition set forth in Section 6 has become impossible (other than as a result
of any failure on the part of Netivation or Merger Sub to comply with or perform
any covenant or obligation of Netivation or Merger Sub set forth in this
Agreement);
(b) by the Agent (as defined in Section 10.1) if (i) there is a
material Breach of any covenant or obligation of Netivation or (ii) the Agent
reasonably determines that the timely satisfaction of any condition set forth in
Section 7 has become impossible (other than as a
AGREEMENT AND PLAN OF MERGER - 26
result of any failure on the part of Public Disclosure or any of the Selling
Stockholders to comply with or perform any covenant or obligation of Public
Disclosure or the Selling Stockholders set forth in this Agreement);
(c) by Netivation at or after the Scheduled Closing Time if any
condition set forth in Section 6 has not been satisfied by the Scheduled Closing
Time;
(d) by the Agent at or after the Scheduled Closing Time if any
condition set forth in Section 7 has not been satisfied by the Scheduled Closing
Time;
(e) by Netivation if the Closing has not taken place on or before
October 28, 1999 (other than as a result of any failure on the part of
Netivation or Merger Sub to comply with or perform any covenant or obligation of
Netivation or Merger Sub set forth in this Agreement);
(f) by the Agent if the Closing has not taken place on or before
October 28, 1999 (other than as a result of the failure on the part of Public
Disclosure or any of the Selling Stockholders to comply with or perform any
covenant or obligation of Public Disclosure or the Selling Stockholders set
forth in this Agreement); or
(g) by the mutual consent of Netivation, Public Disclosure and
the Agent.
8.2 Termination Procedures. If Netivation wishes to terminate this
Agreement pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e),
Netivation shall deliver to the Agent a written notice pursuant to Section 10.5
stating that Netivation is terminating this Agreement and setting forth a brief
description of the basis on which Netivation is terminating this Agreement. If
the Agent wishes to terminate this Agreement pursuant to Section 8.1(b), Section
8.1(d) or Section 8.1(f), the Agent shall deliver to Netivation a written notice
pursuant to Section 10.5 terminating this Agreement and setting forth a brief
description of the basis on which this Agreement is terminated.
8.3 Effect of Termination. If this Agreement is terminated pursuant
to Section 8.1, all further obligations of the parties under this Agreement
shall automatically terminate; provided, however, that: (a) neither Public
Disclosure nor the Selling Stockholders nor Netivation shall be relieved of any
obligation or liability arising from any prior Breach by such party of any
provision of this Agreement; (b) the parties shall, in all events, remain bound
by and continue to be subject to the provisions set forth in Section 9; and (c)
Public Disclosure and Netivation shall, in all events, remain bound by and
continue to be subject to Section 5.4.
AGREEMENT AND PLAN OF MERGER - 27
SECTION 9 - INDEMNIFICATION, ETC.
9.1 Survival of Representations, Warranties and Covenants.
(a) The representations, warranties and covenants of each party
pursuant to this Agreement shall survive the Closing and shall expire on the
first anniversary of the Closing Date; provided, however, (i) that fraud claims
and claims under Section 2.14 shall survive for the statute of limitations
applicable to claims based on such matters and (ii) that if, at any time prior
to the first anniversary of the Closing Date, any Netivation Indemnitee seeking
indemnification under this Section 9 (acting in good faith) delivers to the
Agent a written notice alleging the existence of a Breach of any of the
representations and warranties or a Breach of any covenant contained herein (and
setting forth in reasonable detail the basis for such Netivation Indemnitee's
belief that such a Breach may exist) and asserting a claim for recovery under
Section 9.2 based on such alleged Breach, then the claim asserted in such notice
shall survive the first anniversary of the Closing Date until such time as such
claim is fully and finally resolved.
(b) The representations, warranties, covenants and obligations of
Public Disclosure and the Selling Stockholders, and the rights and remedies that
may be exercised by the Netivation Indemnitees, shall not be limited or
otherwise affected by or as a result of any information furnished to, or any
investigation made by or Knowledge of, any of the Netivation Indemnitees or
their Representatives.
(c) For purposes of this Agreement, each statement or other item
of information set forth in the Schedule of Exceptions or in any update to the
Schedule of Exceptions shall be deemed to be a representation and warranty made
in this Agreement.
9.2 Indemnification by the Selling Stockholders.
(a) Subject to the provisions of this Section 9, the Selling
Stockholders, jointly and severally, shall indemnify and hold harmless each of
the Netivation Indemnitees from and against the amount of any Damages incurred
by any of the Netivation Indemnitees directly or indirectly as a result of (i)
any Breach of a representation or warranty of Public Disclosure or any of the
Selling Stockholders contained in Section 2 hereof or in any instrument
delivered pursuant to this Agreement (each as modified by the Schedule of
Exceptions delivered by Public Disclosure and the Selling Stockholders on the
date of this Agreement and not as modified by any revisions to such Schedule of
Exceptions after such date), (ii) any Breach of any covenant or obligation
contained herein, (iii) any final determination of Public Disclosure's net tax
liability for the fiscal year immediately prior to the Closing or (iv) any
Breach of any representation or warranty made in the Selling Stockholders'
Closing Certificate.
(b) The Selling Stockholders acknowledge and agree that, if there
is any Breach of any representation or warranty or other provision relating to
Public Disclosure or Public Disclosure's business, condition, assets,
Liabilities, operations, financial performance or net income (or any aspect or
portion thereof), then Netivation itself shall be deemed, by virtue of its
ownership
AGREEMENT AND PLAN OF MERGER - 28
of the capital stock of Public Disclosure, to have incurred Damages as result of
such Breach or Liability.
9.3 Contribution. Each Selling Stockholder waives and acknowledges
and agrees that such Selling Stockholder shall not have and shall not exercise
or assert (or attempt to exercise or assert), any right of contribution, right
of indemnity or other similar right or remedy against the Surviving Corporation
in connection with any indemnification obligation or any other Liability to
which such Selling Stockholder may become subject under the Transactional
Agreements or otherwise in connection with any of the Transactions.
9.4 Ceiling; Limitation on Additional Damages. The Selling
Stockholders shall have no liability nor be subject to any claim for Damages
made by Netivation Indemnities pursuant to the provisions of Sections 9.2(a) or
9.6 unless and until the aggregate amount of Damages exceeds the sum of $50,000.
After the aggregate amount of Damages exceeds the sum of $50,000, the Selling
Stockholders shall be liable for the full amount of Damages. Claims for Damages
made by the Netivation Indemnitees pursuant to the provisions of Sections 9.2(a)
or 9.6 shall be limited to an amount equal to the closing price (as reported by
the NASDAQ consolidated reporting system) of two hundred fifty thousand
(250,000) shares of Netivation Stock on the Closing Date. The provisions of
this Section 9.4 shall not apply to claims for willful misconduct, fraud, bad
faith or recklessness on the part of Public Disclosure or any Selling
Stockholder.
9.5 Defense of Third Party Claims. In the event of the assertion or
commencement of a claim or Proceeding resulting from a Breach of any
representation, warranty or covenant contained herein with respect to which any
of the Selling Stockholders may become obligated to indemnify, hold harmless,
compensate or reimburse any Netivation Indemnitee pursuant to this Section 9,
Netivation shall have the right, at its election, to proceed with the defense of
such claim or Proceeding on its own. If Netivation so proceeds with the defense
of any such claim or Proceeding:
(a) all expenses relating to the defense of such claim or
Proceeding (whether or not incurred by Netivation) shall be borne and paid
exclusively by the Selling Stockholders;
(b) the Selling Stockholders shall make available to Netivation
any documents and materials in the possession or control of any of the Selling
Stockholders that may be necessary to the defense of such claim or Proceeding;
and
(c) Netivation shall keep the Agent informed of all material
developments and events relating to such claim or Proceeding.
9.6 Indemnity Reserve. In order to secure Netivation's and each
Netivation Indemnitee's rights of indemnity, the Selling Stockholders shall
place an aggregate of 100,000 shares
AGREEMENT AND PLAN OF MERGER - 29
of Netivation Stock in escrow in accordance with the terms of the Escrow
Agreement, substantially in the form attached hereto as Exhibit G.
9.7 Exercise of Remedies by Netivation Indemnitees Other Than
Netivation. No Netivation Indemnitee (other than Netivation or any successor
thereto or assignee thereof) shall be permitted to assert any indemnification
claim or exercise any other remedy under this Agreement unless Netivation (or
any successor thereto or assignee thereof) shall have consented to the assertion
of such indemnification claim or the exercise of such other remedy.
SECTION 10 - MISCELLANEOUS PROVISIONS
10.1 Selling Stockholders' Agent.
(a) The Selling Stockholders hereby irrevocably nominate,
constitute and appoint Xxxx X. Xxxxxx 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 X. Xxxxxx hereby
accepts his appointment as Agent.
(b) The Selling Stockholders hereby grant to the Agent full
authority to execute, deliver, acknowledge, certify and file on behalf of the
Selling Stockholders (in the name of any or all of the Selling Stockholders or
otherwise) any and all documents that the Agent may, in his sole discretion,
determine to be necessary, desirable or appropriate, in such forms and
containing such provisions as the Agent may, in his sole discretion, determine
to be appropriate (including the Selling Stockholders' Closing Certificate and
any amendment to or waiver of rights under any of the Transactional Agreements).
Notwithstanding anything to the contrary contained in the Transactional
Agreements:
(i) Netivation shall be entitled to deal exclusively with
the Agent, acting on behalf of the Selling Stockholders, on all matters relating
to the Transactional Agreements and the respective Transactions (including all
matters relating to any notice to, or any consent to be given or action to be
taken by, any Selling Stockholder, including any matters set forth in Section
9); and
(ii) each Netivation Indemnitee shall be entitled to rely
conclusively (without further evidence of any kind whatsoever) on any document
executed or purported to be executed on behalf of any Selling Stockholder by the
Agent, and on any other action taken or purported to be taken on behalf of any
Selling Stockholder by the Agent, as fully binding upon such Selling
Stockholder.
(c) The Selling Stockholders recognize and intend that the power
of attorney granted herein (i) is coupled with an interest and is irrevocable,
(ii) may be delegated by the Agent and (iii) shall survive the death or
incapacity of each of the Selling Stockholders.
AGREEMENT AND PLAN OF MERGER - 30
(d) The Agent shall be entitled to treat as genuine, and as the
document it purports to be, any letter, facsimile, telex or other document that
is believed by him to be genuine and to have been telexed, telegraphed, faxed or
cabled by any Selling Stockholder or to have been signed and presented by an
Selling Stockholder.
(e) If the Agent shall die, become disabled or otherwise be
unable to fulfill his responsibilities hereunder, then the Selling Stockholders
shall, within ten (10) days after such death or disability, appoint a successor
agent and, immediately thereafter, shall notify Netivation of the identity of
such successor. Any such successor shall succeed the Agent as Agent hereunder.
If for any reason there is no Agent at any time, all references herein to the
Agent shall be deemed to refer to the Selling Stockholders.
(f) Subject to Section 10.3, all expenses incurred by the Agent
in connection with the performance of his duties as Agent shall be borne and
paid by the Selling Stockholders.
10.2 Further Assurances. Each party hereto shall execute and cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the Transactions.
10.3 Fees and Expenses. Subject to Section 9, each party to this
Agreement shall bear and pay all fees, costs and expenses (including legal fees
and accounting fees) that have been incurred or that are incurred in the future
by such party in connection with the Transactions; provided, however, that
Netivation shall reimburse Public Disclosure up to $20,000 for such fees, costs
and expenses that Public Disclosure incurs in connection with the Transactions.
Public Disclosure's fees, costs and expenses shall include those incurred by
Public Disclosure in connection with or by virtue of (i) the investigation and
review conducted by Public Disclosure and its Representatives with respect to
Public Disclosure's business (and the furnishing of information to Netivation
and its Representatives in connection with such investigation and review), (ii)
the negotiation, preparation and review of this Agreement (including the
Schedule of Exceptions) and all agreements, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
Transactions, (iii) the preparation and submission of any filing or notice
required to be made or given by Public Disclosure in connection with any of the
Transactions and the obtaining of any consent required to be obtained by Public
Disclosure in connection with any of such Transactions and (iv) the consummation
of the Merger.
10.4 Attorneys' Fees. If any action or Proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
AGREEMENT AND PLAN OF MERGER - 31
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. Xxxxxx
or any of the X.X. Xxx 00000
Xxxxxxx Xxxxxxxxxxxx: Xxxxxxxxxx, X.X. 00000-0000
with a copy to: Xxxxxxx X. Xxxxxxx
X.X. Xxx 00000
Xxxxxxxxxx, X.X. 00000-0000
with a copy to: Xxx X. Xxxxxxx
000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxx 000
Xxxxxxxxxx, X.X. 00000
Facsimile: (000) 000-0000
Any of the above addresses may be changed at any time by notice given
as provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, telecopied or by overnight courier, and three (3) business
days after the date of mailing, if mailed by certified mail, return receipt
requested.
10.6 Headings. The boldface headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
AGREEMENT AND PLAN OF MERGER - 32
10.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
10.8 Governing Law. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of Idaho
(without giving effect to principles of conflicts of laws).
10.9 Successors and Assigns. This Agreement shall be binding upon:
Public Disclosure and its successors and assigns (if any); the Selling
Stockholders and their respective personal representatives, executors,
administrators, estates, heirs, successors and assigns (if any); Netivation and
its successors and assigns (if any); and Merger Sub and its successors and
assigns (if any). This Agreement shall inure to the benefit of: Public
Disclosure; the Selling Stockholders; Netivation; Merger Sub; the Netivation
Indemnitees; and the respective successors and assigns (if any) of the
foregoing. Each party may freely assign any or all of its rights (but not its
obligations) under this Agreement (including its indemnification rights under
Section 9), in whole or in part, to any other Person without obtaining the
consent or approval of any other party hereto or of any other Person.
10.10 Remedies Cumulative; Specific Performance. The rights and
remedies of the parties hereto shall be cumulative (and not alternative). The
parties to this Agreement agree that, in the event of any Breach or threatened
Breach by any party to this Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other party to this
Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (i) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (ii) an injunction restraining such Breach or threatened
Breach.
10.11 Waiver.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
AGREEMENT AND PLAN OF MERGER - 33
10.12 Amendments. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of all of the parties hereto.
10.13 Time of the Essence. Time is of the essence of this Agreement.
10.14 Severability. In the event that any provision of this
Agreement, or the application of any such provision to any Person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as to
which it is determined to be invalid, unlawful, void or unenforceable, shall not
be impaired or otherwise affected and shall continue to be valid and enforceable
to the fullest extent permitted by law.
10.15 Parties in Interest. Except for the provisions of Section 9,
none of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties hereto and their respective
successors and assigns (if any).
10.16 Entire Agreement. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter hereof and thereof.
10.17 Construction.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
AGREEMENT AND PLAN OF MERGER - 34
The parties hereto have caused this Agreement to be executed and delivered
as of the date first set forth above.
NETIVATION:
XXXXXXXXXX.XXX, INC.,
By _________________________________________
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
MERGER SUB:
XXXXXXXXXX.XXX MERGER FIVE CORP.,
a Delaware corporation
By __________________________________________
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
PUBLIC DISCLOSURE:
PUBLIC DISCLOSURE, INC.
a District of Columbia corporation
By __________________________________________
Xxxx X. Xxxxxx
Vice President
By __________________________________________
Xxxxxxx X. Xxxxxxx
Vice President
AGREEMENT AND PLAN OF MERGER - 35
SELLING STOCKHOLDERS:
________________________
Xxxx X. Xxxxxx
________________________
Xxxxxxx X. Xxxxxxx
________________________
Xxxxxxxx Xxx X'Xxxxxx
________________________
Xxxxxxx Xxxxxxx
AGENT:
________________________
Xxxx X. Xxxxxx
SECRETARY'S CERTIFICATE
I, Xxxx X. Xxxxxx, Secretary of Xxxxxxxxxx.xxx Merger Five Corp., hereby
certify that this Agreement has been adopted pursuant to the first sentence of
Title 8, Section 251(f) of the Delaware Corporations Laws, and that the
conditions specified in that sentence have been satisfied.
Xxxx X. Xxxxxx, Secretary
