AGREEMENT AND PLAN OF MERGER
among:
XXXXXXXXXX.XXX, INC.
a Delaware corporation;
XXXXXXXXXX.XXX MERGER SIX CORP.,
a Delaware corporation;
XXXXXXXXXXXXXXXX.XXX, INC.
a Maryland corporation;
and
the Selling Stockholders of Xxxxxxxxxxxxxxxx.xxx, Inc.
listed on Exhibit A hereto
Dated as of October___, 1999
TABLE OF CONTENTS
Page
SECTION 1 - DESCRIPTION OF TRANSACTION................................................ 1
1.1 Merger of Politicallyblack into Merger Sub.................................... 1
1.2 Effect of the Merger.......................................................... 1
1.3 Closing; Effective Time....................................................... 1
1.4 Certificate of Incorporation, Bylaws and Directors and Officers............... 2
1.5 Conversion of Politicallyblack Stock.......................................... 2
1. 7 Closing of Politicallyblack's Transfer Books................................. 3
1. 8 Exchange of Certificates...................................................... 3
1. 9 Dissenting Shares............................................................. 4
1.10 Tax Consequences.............................................................. 5
1.11 Accounting Treatment.......................................................... 5
1.12 Further Action................................................................ 5
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF POLITICALLYBLACK AND THE SELLING
STOCKHOLDERS.......................................................................... 5
2.1 Organization Good Standing and Qualification.................................. 5
2.2 Subsidiaries.................................................................. 6
2.3 Capitalization; Voting Rights................................................. 6
2.4 Authorization; Binding Obligations............................................ 6
2.5 Financial Statements.......................................................... 6
2.6 Liabilities................................................................... 6
2.7 Agreements; Action............................................................ 7
2.8 Obligations to Related Parties................................................ 7
2.9 Absence of Changes............................................................ 7
2.10 Title to Properties and Assets; Liens, Etc.................................... 9
2.11 Patents and Trademarks........................................................ 9
2.12 Compliance with Other Instruments............................................. 10
2.13 Litigation.................................................................... 10
2.14 Tax Returns and Payments...................................................... 10
2.15 Employees..................................................................... 11
2.16 Registration Rights........................................................... 12
2.17 Compliance with Legal Requirements; Consents.................................. 12
2.18 Selling Stockholders.......................................................... 13
2.19 Full Disclosure............................................................... 13
2.20 Year 2000 Compliance.......................................................... 13
2.21 Securities Laws Matters....................................................... 13
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF NETIVATION.............................. 14
3.1 Organization, Good standing and Qualification................................. 14
3.2 Subsidiaries.................................................................. 15
3.3 Capitalization; voting Rights................................................. 15
i
3.4 Authorization; Binding Obligations...................................................... 15
3.5 Full Disclosure......................................................................... 16
SECTION 4 - CERTAIN COVENANTS OF Politicallyblack AND THE SELLING STOCKHOLDERS.................. 16
4.1 Access and Investigation................................................................ 16
4.2 Operation of Business................................................................... 17
4.3 Notification; Updates to Schedule of Exceptions......................................... 19
4.4 No Negotiation.......................................................................... 20
SECTION 5 - ADDITIONAL COVENANTS OF THE PARTIES................................................. 20
5.1 Filings and Consents.................................................................... 20
5.2 Politicallyblack Stockholders' Meeting.................................................. 20
5.3 Public Announcements.................................................................... 20
5.4 Best Efforts............................................................................ 21
5.5 Tax Matters............................................................................. 21
SECTION 6 - CONDITIONS PRECEDENT TO OBLIGATIONS OF NETIVATION AND MERGER SUB................... 21
6.1 Accuracy of Representations............................................................. 21
6.2 Performance of Covenants................................................................ 21
6.3 Stockholder Approval.................................................................... 21
6.4 Consents................................................................................ 22
6.5 No Material Adverse Change.............................................................. 22
6.6 Agreements and Documents................................................................ 22
6.7 Lock-Up Agreements...................................................................... 23
6.8 No Restraints........................................................................... 23
6.9 No Proceedings.......................................................................... 23
6.10 Securities Law Compliance............................................................... 23
6.11 Dissenters Rights....................................................................... 23
6.12 Unaccredited Investors.................................................................. 23
6.13 Proceedings and Documents............................................................... 23
6.14 Corporate Approvals..................................................................... 23
SECTION 7 - CONDITIONS PRECEDENT TO OBLIGATIONS OF POLITICALLYBLACK AND THE
SELLING STOCKHOLDERS............................................................................ 23
7.1 Accuracy of Representations............................................................. 24
7.2 Performance of Covenants................................................................ 24
7.3 Consents................................................................................ 24
7.4 Agreements and Documents................................................................ 24
7.5 No Restraints........................................................................... 24
7.6 No Proceedings.......................................................................... 25
7.7 Corporate Approvals..................................................................... 25
SECTION 8 - TERMINATION......................................................................... 25
8.1 Termination Events...................................................................... 25
8.2 Termination Procedures.................................................................. 26
8.3 Effect of Termination................................................................... 26
ii
SECTION 9 - INDEMNIFICATION, ETC................................................ 26
9.1 Survival of Representations, Warranties and Covenants..................... 26
9.2 Indemnification by the Selling Stockholders............................... 27
9.3 Contribution.............................................................. 27
9.4 Ceiling; Limitation on Additional Damages................................. 27
9.5 Interest.................................................................. 28
9.6 Defense of Third Party Claims............................................. 28
9.7 Setoff.................................................................... 28
9.8 Indemnity Reserve......................................................... 28
9.9 Exercise of Remedies by Netivation Indemnitees Other Than Netivation...... 29
SECTION 10 - MISCELLANEOUS PROVISIONS........................................... 29
10.1 Further Assurances........................................................ 29
10.2 Fees and Expenses......................................................... 29
10.3 Attorneys' Fees........................................................... 29
10.4 Notices................................................................... 29
10.5 Headings.................................................................. 30
10.6 Counterparts.............................................................. 30
10.7 Governing Law............................................................. 30
10.8 Successors and Assigns.................................................... 31
10.9 Remedies Cumulative; Specific Performance................................. 31
10.10 Waiver.................................................................... 31
10.11 Amendments................................................................ 31
10.12 Time of the Essence....................................................... 31
10.13 Severability.............................................................. 31
10.14 Parties in Interest....................................................... 32
10.15 Entire Agreement.......................................................... 32
10.16 Construction.............................................................. 32
EXHIBITS
Exhibit A - Selling Stockholders
Exhibit B - Certain Definitions
Exhibit C - Director and Officer of Surviving Corporation
Exhibit D - Allocation of Merger Consideration
Exhibit E - Form of Legal Opinion
Exhibit F - Form of Employment and Noncompetition Agreement
Exhibit G - Form of Escrow Agreement
Exhibit H - Form of Prospective Offeree Questionnaire
iii
2.3 Voting Rights
2.6 Liabilities
2.7 Agreements
2.9 Changes to Xxxxxxxxxxxxxxxx.xxx, Inc.
2.10 Assets
2.15 Employees
iv
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 SIX CORP., a Delaware
corporation and a wholly-owned subsidiary of Netivation ("Merger Sub"),
XXXXXXXXXXXXXXXX.XXX, INC., a Maryland corporation ("Politicallyblack"), and the
stockholders of Politicallyblack set forth on Exhibit A hereto (the "Selling
Stockholders"). Certain capitalized terms used in this Agreement are defined in
Exhibit B.
RECITALS
A. The parties intend to effect a merger of Politicallyblack into
Merger Sub in accordance with this Agreement and the Delaware General
Corporation Law ("Delaware Law") and the Maryland General Corporation Law
("Maryland Law") (the "Merger"). Upon consummation of the Merger,
Politicallyblack will cease to exist, and Merger Sub will remain a wholly-owned
subsidiary of Netivation.
B. The Selling Stockholders own an aggregate of 5000 shares of
capital stock of Politicallyblack (the "Politicallyblack Stock"), constituting
100% of the Politicallyblack capital stock on a fully-diluted basis.
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1 - DESCRIPTION OF TRANSACTION
1.1 Merger of Politicallyblack into Merger Sub. Upon the terms and
subject to the conditions set forth in this Agreement, at the Effective Time (as
defined in Section 1.3), Politicallyblack shall be merged with and into Merger
Sub, and the separate existence of Politicallyblack shall cease. Merger Sub
will continue as the surviving corporation in the Merger (the "Surviving
Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set
forth in this Agreement and in the applicable provisions of Delaware Law and
Maryland Law.
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of 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
AGREEMENT AND PLAN OF MERGER - 1
this Agreement as the "Closing Date.") Contemporaneously with or as promptly as
practicable after the Closing, a properly executed certificate of merger (the
"Certificate of Merger"), conforming to the requirements of Delaware Law and
Maryland Law, shall be filed with the Secretaries of State of the State of
Delaware and the State of Maryland. The Merger shall become effective at the
time such Certificate of Merger is filed with and accepted by the Secretaries of
State of the State of Delaware and the State of Maryland (the "Effective Time").
1.4 Certificate of Incorporation, Bylaws and Directors and Officers.
(a) The certificate of incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended as provided
by law; provided, however, that Article I of the Certificate of Incorporation
shall be amended to read as follows: The name of this corporation is
"Xxxxxxxxxxxxxxxx.xxx, Inc."
(b) The bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter amended.
(c) The directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals identified on
Exhibit C.
1.5 Conversion of Politicallyblack Stock.
(a) Subject to Sections 1.7(c) and 1.8, at the Effective Time, by
virtue of the Merger and without any further action on the part of Netivation,
Merger Sub, Politicallyblack or any stockholder of Politicallyblack: (i) each
share of Common Stock of Politicallyblack issued and outstanding immediately
prior to the Effective Time shall be converted into the right to receive six (6)
shares of Common Stock of Netivation (the "Netivation Stock"). All outstanding
shares of Politicallyblack capital stock shall be exchanged for no more than
Thirty Thousand (30,000) shares of Netivation Stock. Each share of common stock
of Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into one (1) share of common stock of the Surviving
Corporation. The Merger Consideration to be received by the Selling Stockholders
is set forth on Exhibit D. If, between the date of this Agreement and the
Closing Date, the shares of capital stock of Politicallyblack or the Netivation
Stock are changed into a different number or class of shares by reason of any
stock dividend, subdivision, reclassification, recapitalization, split-up,
combination or similar transaction, the Merger Consideration shall be
appropriately adjusted.
(b) If any shares of capital stock of Politicallyblack
outstanding immediately prior to the Effective Time are unvested or are subject
to a repurchase option, risk of forfeiture or other condition under any
applicable restricted stock purchase agreement or other agreement with
Politicallyblack, then the shares of Netivation Stock issued in exchange for
such shares of capital stock of Politicallyblack will also be unvested and
subject to the same
AGREEMENT AND PLAN OF MERGER - 2
repurchase option, risk of forfeiture or other condition, and the certificates
representing such shares of Netivation Stock may be accordingly marked with
appropriate legends.
1.6 Additional Consideration. At Closing, Netivation shall pay
Twenty Seven Thousand Five Hundred Dollars ($27,500) cash to each of the Selling
Stockholders.
1.7 Closing of Politicallyblack's Transfer Books. At the Effective
Time, holders of certificates representing Politicallyblack capital stock that
were outstanding immediately prior to the Effective Time shall cease to have any
rights as stockholders of Politicallyblack, and the stock transfer books of
Politicallyblack shall be closed with respect to all shares of such capital
stock outstanding immediately prior to the Effective Time. No further transfer
of any such capital stock of Politicallyblack shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any of such capital stock of
Politicallyblack(a "Politicallyblack Stock Certificate") is presented to the
Surviving Corporation or Netivation, such Politicallyblack Stock Certificate
shall be canceled and shall be exchanged as provided in Section 1.8.
1.8 Exchange of Certificates.
(a) At or as soon as practicable after the Effective Time,
Netivation will send to each holder of a Politicallyblack Stock Certificate a
letter of transmittal and instructions for use in customary form and containing
such provisions as may reasonably be required for use in effecting the surrender
of such Politicallyblack Stock Certificate for payment therefor and conversion
thereof. Upon surrender of a Politicallyblack Stock Certificate to Netivation
for exchange, together with a duly executed letter of transmittal and such other
documents as may be reasonably required by Netivation, the holder of such
Politicallyblack Stock Certificate shall be entitled to receive in exchange
therefor certificates representing the number of whole shares of Netivation
Stock that such holder has the right to receive pursuant to the provisions of
this Section 1 and the Politicallyblack Stock Certificate so surrendered shall
be canceled. Until surrendered as contemplated by this Section 1.8, each
Politicallyblack Stock Certificate shall be deemed, from and after the Effective
Time, to represent only the right to receive upon such surrender a certificate
representing shares of Netivation Stock (and cash in lieu of any fractional
share of Netivation Stock) as contemplated by this Section 1. If any
Politicallyblack Stock Certificate shall have been lost, stolen or destroyed,
Netivation may, in its discretion and as a condition precedent to the issuance
of any certificates representing Netivation Stock, require the owner of such
lost, stolen or destroyed Politicallyblack Stock Certificate to provide an
appropriate affidavit and to deliver a bond (in such sum as Netivation may
reasonably direct) as indemnity.
(b) No dividends or other distributions declared or made with
respect to Netivation Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Politicallyblack Stock Certificate with
respect to the shares of Netivation Stock represented thereby, and no cash
payment in lieu of any fractional share shall be paid to any such
AGREEMENT AND PLAN OF MERGER - 3
holder, until such holder surrenders such Politicallyblack Stock Certificate in
accordance with this Section 1.8 (at which time such holder shall be entitled to
receive all such dividends and distributions and such cash payment).
(c) No fractional shares of Netivation Stock shall be issued in
connection with the Merger. In lieu of such fractional shares, any holder of
capital stock of Politicallyblack who would otherwise be entitled to receive a
fraction of a share of Netivation Stock shall, upon surrender of such holder's
Politicallyblack Stock Certificate(s), be paid in cash the dollar amount
(rounded to the nearest whole cent), without interest, determined by multiplying
such fraction by the closing price of one share of Netivation Stock as reported
by the NASDAQ consolidated reporting system on the Closing Date.
(d) Each certificate representing any of the shares of Netivation
Stock to be issued in the Merger shall bear a legend identical or similar in
effect to the following legend (together with any other legend or legends
required by applicable state securities laws or otherwise):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
UNLESS REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE."
(e) Netivation and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable to
any holder or former holder of capital stock of Politicallyblack pursuant to
this Agreement such amounts as Netivation or the Surviving Corporation may be
required to deduct or withhold therefrom under the Code or under any provision
of state, local or foreign tax law. To the extent such amounts are so deducted
or withheld, such amounts shall be treated for all purposes under this Agreement
as having been paid to the Person to whom such amounts would otherwise have been
paid.
1.9 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, shares of capital stock of Politicallyblack that are issued and
outstanding immediately prior to the Effective Time and that are held by
stockholders who have not voted such shares in favor of the Merger and who have
delivered a written demand for appraisal of such shares in the manner provided
under Maryland Law ("Dissenting Shares") shall not be canceled and converted in
accordance with Section 1.5 unless and until such holder shall have failed to
perfect, or shall have effectively withdrawn or lost, such holder's right to
appraisal and payment under Maryland Law. If such holder shall have so failed
to perfect, or shall have effectively withdrawn or lost such right, such
holder's capital stock of Politicallyblack shall thereupon be deemed to have
been canceled and converted as described in Section 1.5 at the Effective Time,
and each such share shall represent solely the right to receive the merger
consideration described in Section 1.5.
AGREEMENT AND PLAN OF MERGER - 4
Politicallyblack shall give prompt notice of any demands received by
Politicallyblack for appraisal of its shares, and, prior to the Effective Time,
Netivation shall have the right to participate in all negotiations and
proceedings with respect to such demands. Prior to the Effective Time,
Politicallyblack shall not, except with the prior written consent of Netivation,
make any payment with respect to, or settle or offer to settle, any such
demands. From and after the Effective Time, no stockholder of Politicallyblack
who has demanded appraisal rights as provided under Maryland Law shall be
entitled to vote such holder's shares of Netivation Stock or capital stock of
Politicallyblack for any purpose or to receive payment of dividends or other
distributions with respect to such holder's shares (except dividends and other
distributions payable to stockholders of record of Politicallyblack at a date
which is prior to the Effective Time).
1.10 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.11 Accounting Treatment. For accounting purposes, the Merger is
intended to be treated as a "purchase."
1.12 Further Action. If, at any time after the Effective Time, any
further action is determined by Netivation to be necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation or
Netivation with full right, title and possession of and to all rights and
property of Politicallyblack, the officers and directors of the Surviving
Corporation and Netivation shall be fully authorized (in the name of
Politicallyblack and otherwise) to take such action.
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF POLITICALLYBLACK AND THE SELLING
STOCKHOLDERS
Politicallyblack and each of the Selling Stockholders jointly and
severally represent and warrant, to and for the benefit of the Netivation
Indemnitees, as follows:
2.1 Organization, Good Standing and Qualification. Politicallyblack
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland. Politicallyblack has all requisite corporate
power and authority to own and operate its properties and assets, to execute and
deliver the Transactional Agreements, to carry out the provisions of the
Transactional Agreements and to carry on its business as presently conducted and
as presently proposed to be conducted. Politicallyblack is duly qualified and
authorized to do business and is in good standing as foreign entities in all
jurisdictions in which the nature of its activities and of its properties (both
owned and leased) make such qualifications necessary, except for those
jurisdictions in which failure to do so would not have a Material Adverse Effect
on Politicallyblack or its respective businesses. Politicallyblack has made
available to Netivation
AGREEMENT AND PLAN OF MERGER - 5
true, correct and complete copies of Politicallyblack's articles of
incorporation and bylaws, each as amended to date.
2.2 Subsidiaries. Politicallyblack owns no equity securities of any
other corporation, limited partnership or similar entity. Politicallyblack is
not a participant in any joint venture, partnership or similar arrangement.
2.3 Capitalization; Voting Rights. The authorized capital stock of
Politicallyblack consists of 5000 shares of Common Stock, of which 5000 shares
are issued and outstanding. Exhibit A sets forth the names of the stockholders
of Politicallyblack and the number of shares of capital stock owned of record by
each such stockholder. The Selling Stockholders together own all of the
outstanding shares of capital stock of Politicallyblack. All issued and
outstanding shares of Politicallyblack's Common Stock (i) have been duly
authorized and validly issued, (ii) are fully paid and nonassessable and (iii)
were issued in compliance with all applicable state and federal laws concerning
the issuance of securities. Except as set forth in Schedule 2.3, there are no
outstanding options, warrants, rights (including conversion or preemptive rights
and rights of first refusal), proxy or stockholder agreements, or agreements of
any kind for the purchase or acquisition from Politicallyblack of any of its
securities.
2.4 Authorization; Binding Obligations. Politicallyblack has the
absolute and unrestricted right, power and authority to enter into and to
perform its obligations under the Transactional Agreements to which
Politicallyblack is or may become a party. This Agreement constitutes the
legal, valid and binding obligation of Politicallyblack, enforceable against
Politicallyblack in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies. Upon the execution of each of the other Transactional
Agreements at the Closing, each of such other Transactional Agreements will
constitute the legal, valid and binding obligation of Politicallyblack,
enforceable against Politicallyblack in accordance with its terms, subject to
(i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
2.5 Financial Statements. Politicallyblack has delivered to
Netivation its unaudited balance sheet as of September 30, 1999 (the "Statement
Date") (the "Politicallyblack Financial Statements"). The Politicallyblack
Financial Statements are complete and correct in all material respects, and
present fairly the financial condition and position of Politicallyblack for the
periods covered thereby.
2.6 Liabilities. Except as set forth in Schedule 2.6,
Politicallyblack has no material liabilities and, to the Knowledge of
Politicallyblack, has no material contingent liabilities not otherwise disclosed
in the Politicallyblack Financial Statements, except current liabilities
incurred in the Ordinary Course of Business subsequent to the Statement Date
which have not been, either in any individual case or in the aggregate,
materially adverse. All
AGREEMENT AND PLAN OF MERGER - 6
obligations of Politicallyblack to affiliates, officers, members, directors and
stockholders of Politicallyblack are disclosed on the Politicallyblack Financial
Statements.
2.7 Agreements; Action.
(a) Except as set forth in Schedule 2.7, there are no agreements,
understandings, instruments, contracts, proposed transactions, judgments,
orders, writs or decrees to which Politicallyblack is a party or is bound which
may involve (i) obligations (contingent or otherwise) of, or payments to,
Politicallyblack in excess of $10,000, or (ii) the license of any patent,
copyright, trade secret or other proprietary right to or from
Politicallyblack(other than licenses arising from the purchase of "off the
shelf" or other standard products), or (iii) provisions restricting or affecting
the development, manufacture or distribution of Politicallyblack's products or
services or (iv) indemnification by Politicallyblack with respect to
infringements of proprietary rights.
(b) Politicallyblack has not (i) incurred any indebtedness for
money borrowed or any other liabilities (other than with respect to dividend
obligations, distributions, indebtedness and other obligations incurred in the
Ordinary Course of Business or as disclosed in the Politicallyblack Financial
Statements) individually in excess of $10,000 or, in excess of $15,000 in the
aggregate, (ii) made any loans or advances to any person, other than ordinary
advances for travel expenses or (iii) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
Ordinary Course of Business.
(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities Politicallyblack has reason to believe are affiliated therewith)
shall be aggregated for the purpose of meeting the individual minimum dollar
amounts of such subsections.
2.8 Obligations to Related Parties. Except as set forth in Schedule
2.8, there are no obligations of Politicallyblack to officers, directors,
stockholders, members or employees of either other than (a) for payment of
salary for services rendered, (b) reimbursement for reasonable expenses incurred
on behalf of Politicallyblack and (c) for other standard employee benefits made
generally available to all employees. Except as set forth in Schedule 2.8, no
such officer, director or stockholder, or any member of their immediate families
is, directly or indirectly, interested in any material contract with
Politicallyblack (other than such contracts as relate to any such person's
ownership of capital stock or other securities of Politicallyblack).
Politicallyblack is not a guarantor or indemnitor of any indebtedness of any
other person, firm or corporation.
2.9 Absence of Changes. Except as set forth in Schedule 2.9, since
the Statement Date, there has not been:
AGREEMENT AND PLAN OF MERGER - 7
(a) Any change in the assets, liabilities, financial condition or
operations of Politicallyblack from that reflected in the Politicallyblack
Financial Statements, other than changes in the Ordinary Course of Business,
none of which individually or in the aggregate has had or is expected to have a
Material Adverse Effect on such assets, liabilities, financial condition or
operations of Politicallyblack;
(b) Any resignation or termination of any key officers of
Politicallyblack; and Politicallyblack, to its Knowledge, does not know of the
impending resignation or termination of employment of any such officer;
(c) Any material change, except in the Ordinary Course of
Business, in the contingent obligations of Politicallyblack by way of guaranty,
endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of Politicallyblack;
(e) Any waiver by Politicallyblack of a valuable right or of a
material debt owed to it;
(f) Any direct or indirect loans made by Politicallyblack to any
stockholder, employee, officer or director of Politicallyblack, other than
advances made in the Ordinary Course of Business;
(g) Any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(h) Any declaration or payment of any dividend or other
distribution of the assets of Politicallyblack;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or
guaranteed by Politicallyblack, except those for immaterial amounts and for
current liabilities incurred in the Ordinary Course of Business;
(k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(l) Any change in any material agreement to which
Politicallyblack is a party or by which it is bound which materially and
adversely affects the business, assets, liabilities, financial condition,
operations or prospects of Politicallyblack; or
AGREEMENT AND PLAN OF MERGER - 8
(m) Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition, operations or prospects of
Politicallyblack. For purposes of this subsection (m), a material and adverse
effect shall only be deemed to occur if its monetary impact exceeds, or with the
passage of time, will exceed $10,000.
2.10 Title to Properties and Assets; Liens, Etc. Schedule 2.10 is a
complete and accurate list of all material assets (whether leased or owned),
including intellectual property, of Politicallyblack. Politicallyblack has good
and marketable title to all of its properties and assets, including those listed
on Schedule 2.10, and good title to its leasehold estates, in each case subject
to no mortgage, pledge, lien, lease, encumbrance or charge, other than (i) those
resulting from taxes which have not yet become due and payable, (ii) minor liens
and encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of Politicallyblack and
(iii) those that have arisen from purchase money security interests in an amount
not to exceed $10,000. None of the Selling Shareholders has any right in or
claim to any of the intellectual property utilized by Politicallyblack. All
facilities, machinery, equipment, fixtures, vehicles and other properties owned,
leased or used by Politicallyblack are in good operating condition and repair
and are reasonably fit and usable for the purposes for which they are being
used. Except as set forth in Schedule 2.10, Politicallyblack is in compliance
with all material terms of each lease to which it is a party or is otherwise
bound.
2.11 Patents and Trademarks. Politicallyblack owns or possesses
sufficient legal rights to all trademarks, service marks, trade names,
copyrights, trade secrets and licenses, and, to the Knowledge of
Politicallyblack, to all patents, information and other proprietary rights and
processes necessary for its business as now conducted and as proposed to be
conducted, without any known infringement of the rights of others. There are no
outstanding options, licenses or agreements of any kind relating to the
foregoing, nor, except as disclosed in Schedule 2.11, is Politicallyblack bound
by or a party to any options, licenses or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes of any other
person or entity other than such licenses or agreements arising from the
purchase of "off the shelf" or standard products. Politicallyblack has not
received any communications alleging that either has violated or, by conducting
its business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity. To Politicallyblack's Knowledge, none of
Politicallyblack's employees is obligated under any contract (including
licenses, covenants or commitments or any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that
would interfere with their duties to Politicallyblack's business by the
employees of Politicallyblack. The conduct of Politicallyblack's business as
proposed, will not, to the Knowledge of Politicallyblack, conflict with or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, any contract, covenant or instrument under which any employee is
now obligated. Politicallyblack does not believe it is or will be necessary to
utilize
AGREEMENT AND PLAN OF MERGER - 9
any inventions, trade secrets or proprietary information of any of its employees
made prior to their employment by Politicallyblack, except for inventions, trade
secrets or proprietary information that have been assigned to Politicallyblack.
2.12 Compliance with Other Instruments. Politicallyblack is not in
violation or default of any term of their charter documents, or of any provision
of any mortgage, indenture, contract, agreement, instrument or contract to which
either is party or by which either is bound or of any judgment, decree, order,
writ or, to Politicallyblack's Knowledge, any statute, rule or regulation
applicable to Politicallyblack which would materially and adversely affect the
business, assets, liabilities, financial condition, operations or prospects of
Politicallyblack. The execution, delivery, and performance of and compliance
with the Transactional Agreements will not, with or without the passage of time
or giving of notice, result in any such material violation, or be in conflict
with or constitute a default under any such term, or result in the creation of
any mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of Politicallyblack or the suspension, revocation, impairment, forfeiture
or nonrenewal of any permit, license, authorization or approval applicable to
Politicallyblack, or the business or operations or any of its assets or
properties.
2.13 Litigation. There is no action, suit, proceeding or
investigation pending, or to the Knowledge of Politicallyblack, currently
threatened against Politicallyblack that questions the validity of this
Agreement or Transactional Agreements or the right of Politicallyblack to enter
into any of such agreements, or to consummate the transactions contemplated
hereby or thereby, or which might result, either individually or in the
aggregate, in any material adverse change in the assets, condition, affairs or
prospects of Politicallyblack, financially or otherwise, or any change in the
current equity ownership of Politicallyblack, nor is Politicallyblack aware that
there is any basis for the foregoing. The foregoing includes, without
limitation, actions pending or threatened (or any basis therefor known to
Politicallyblack) involving the prior employment of any of Politicallyblack's
employees, their use in connection with Politicallyblack's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers.
Politicallyblack is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by
Politicallyblack currently pending or which Politicallyblack intends to
initiate.
2.14 Tax Returns and Payments.
(a) Each tax required to have been paid, or claimed by any
Governmental Body to be payable, by Politicallyblack(whether pursuant to any tax
return or otherwise) has been duly paid in full and on a timely basis. Any tax
required to have been withheld or collected by Politicallyblack, including with
respect to employees, has been duly withheld and collected; and (to the extent
required) each such tax has been paid to the appropriate Governmental Body.
AGREEMENT AND PLAN OF MERGER - 10
(b) All tax returns required to be filed by or on behalf of
Politicallyblack with any Governmental Body have been timely filed
(collectively, the "Politicallyblack Returns"). All taxes required to be paid by
Politicallyblack for the fiscal year 1998 have either been paid in full or shall
not result in any liability to Politicallyblack. All Politicallyblack Returns
(i) have been filed when due and (ii) have been accurately and completely
prepared in full compliance with all applicable legal requirements.
Politicallyblack has delivered to Netivation accurate and complete copies of the
1998 Politicallyblack Returns.
(c) There have been no examinations or audits of any
Politicallyblack Return, and, to the Knowledge of Politicallyblack, no such
examination or audit has been proposed or scheduled by any Governmental Body.
Politicallyblack has delivered to Netivation accurate and complete copies of all
audit reports and similar documents (to which Politicallyblack has access)
relating to the Politicallyblack Returns.
(d) No claim or proceeding is pending or, to the Knowledge of
Politicallyblack, has been threatened against Politicallyblack in respect of any
tax. There are no unsatisfied Liabilities for taxes (including Liabilities for
interest, additions to tax and penalties thereon and related expenses) with
respect to any notice of deficiency or similar document received by
Politicallyblack. There are no liens for taxes upon any of the assets of
Politicallyblack, except liens for current taxes not yet due and payable.
Politicallyblack has not entered into or become bound by any agreement or
consent pursuant to Section 341(f) of the Code.
(e) To the Knowledge of Politicallyblack, there is no agreement,
plan, arrangement or other contract covering any employee or independent
contractor or former employee or independent contractor of Politicallyblack
that, individually or collectively, could give rise, directly or indirectly, to
the payment of any amount that would not be deductible pursuant to Section 280G
or Section 162 of the Code. Politicallyblack is not, and has never been, a party
to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar contract.
2.15 Employees. Except as set forth in Schedule 2.15,
Politicallyblack is not a party to or bound by any currently effective
employment contract, deferred compensation arrangement, bonus plan, incentive
plan, profit sharing plan, retirement agreement or other employee compensation
plan or agreement. To the Knowledge of Politicallyblack, no employee of
Politicallyblack, nor any consultant with whom Politicallyblack has contracted,
is in violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, Politicallyblack because of the nature of
the business to be conducted by Politicallyblack; and to the Knowledge of
Politicallyblack the continued employment by Politicallyblack of its present
employees, and the performance of Politicallyblack's contracts with its
independent contractors, will not result in any such violation. Politicallyblack
has not received any notice alleging that
AGREEMENT AND PLAN OF MERGER - 11
any such violation has occurred. No employee of Politicallyblack has been
granted the right to continued employment by Politicallyblack or to any material
compensation following termination of employment with Politicallyblack. To the
Knowledge of Politicallyblack, no officer or key employee, or any group of key
employees, intends to terminate their employment with Politicallyblack, nor does
Politicallyblack have a present intention to terminate the employment of any
officer, key employee or group of key employees.
2.16 Registration Rights. Politicallyblack is not presently under any
obligation, and has not granted any rights, to register any of either's
presently outstanding securities or any of its securities that may hereafter be
issued.
2.17 Compliance with Legal Requirements; Consents.
(a) Politicallyblack is, and has at all times since inception
been, in full compliance with each legal requirement that is or was applicable
to it or to the conduct of its business or the ownership or use of any of its
assets, except where the failure to comply with each such legal requirement has
not had and will not have a Material Adverse Effect on Politicallyblack.
(b) Neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with or result in a violation of (i)
any of the provisions of Politicallyblack's articles of incorporation or bylaws,
or(ii) any resolution adopted by Politicallyblack's stockholders or
Politicallyblack's board of directors;
(ii) contravene, conflict with or result in a violation of,
or give any Governmental Body or other Person the right to exercise any remedy
or obtain any relief under, any legal requirement or any order to which
Politicallyblack, or any of the assets owned or used by Politicallyblack, is
subject;
(iii) contravene, conflict with or result in a violation or
Breach of, or result in a default under, any provision of any contract to which
Politicallyblack is a party; or
(iv) give any Person the right to (A) declare a default or
exercise any remedy under any contract to which Politicallyblack is a party, (B)
accelerate the maturity or performance of any contract to which Politicallyblack
is a party or (C) cancel, terminate or modify any contract to which
Politicallyblack is a party.
Neither Politicallyblack nor any of the Selling Stockholders was, is
or will be required to make any filing with or give any notice to, or to obtain
any consent from, any Person
AGREEMENT AND PLAN OF MERGER - 12
other than Selling Stockholders' spouses in connection with the execution and
delivery of any of the Transactional Agreements or the consummation or
performance of any of the Transactions.
2.18 Selling Stockholders. Each Selling Stockholder represents that
(i) he, she or it has the absolute and unrestricted right, power and authority
to enter into and to perform his, her or its obligations under each of the
Transactional Agreements to which such Selling Stockholder is or may become a
party, (b) this Agreement constitutes his, her or its legal, valid and binding
obligation, enforceable against such Selling Stockholder in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies and (c) upon the
execution of each of the other Transactional Agreements at the Closing, each of
such other Transactional Agreements will constitute the legal, valid and binding
obligation of such Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
2.19 Full Disclosure. This Agreement does not (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact or (ii) omit to state any material fact necessary in order
to make the representations, warranties and information of or with respect to
Politicallyblack and the Selling Stockholders contained and to be contained
herein (in light of the circumstances under which such representations,
warranties and information were or will be made or provided) not false or
misleading. Politicallyblack has provided Netivation and Netivation's
Representatives with full and complete access to all of Politicallyblack's
records and other documents and data.
2.20 Year 2000 Compliance. Politicallyblack has developed a detailed
plan to ensure that it, its affiliates, and all customers, suppliers and vendors
that are material to its business, become Year 2000 Compliant on or before
November 1, 1999. The plan (a) effectively prioritizes mission-critical
systems, (b) has the involvement of executive management, (c) includes
assessment of key customer, supplier, and vendor Year 2000 compliance, (d)
includes contingency planning to mitigate risk from Year 2000 business
interruptions affecting key vendors, suppliers, or customers, and (e) has been
allocated adequate resources within Politicallyblack's abilities.
2.21 Securities Laws Matters. Each Selling Stockholder understands
that the Netivation Stock has not been registered under the Securities Act and
that the Netivation Stock being issued in the Transaction is being issued
pursuant to an exemption from registration contained in the Securities Act,
based in part upon the Selling Stockholders' representations contained in this
Agreement. Each Selling Stockholder hereby severally and not jointly represents
and warrants as follows:
AGREEMENT AND PLAN OF MERGER - 13
(a) Knowledge and Experience. Each Selling Stockholder is
knowledgeable and has substantial experience in evaluating and investing in
transactions in companies similar to Netivation so that he is capable of
evaluating the merits and risks of his investment in Netivation. Each Selling
Stockholder has by reason of his business or financial knowledge and experience,
the capacity to protect his own interests in connection with the Transaction.
Further, each Selling Stockholder is aware of no publication of any
advertisement in connection with the Transaction. Each Selling Stockholder can
bear the economic risk of the Transaction. Each Selling Stockholder has been
advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions. Each Selling
Stockholder acknowledges that he or she could be deemed an affiliate of
Netivation pursuant to Rule 144 such that he or she would be required to hold
Netivation Stock for two (2) years from the Closing Date before reselling those
shares in reliance upon Rule 144.
(b) Netivation Information. Each Selling Stockholder has had an
opportunity to discuss Netivation's business, management and financial affairs,
both as currently conducted and as proposed to be conducted following the
Merger, with directors, officers and management of Netivation and has had the
opportunity to review Netivation's operations and facilities. Each Selling
Stockholder has also had the opportunity to ask questions of, and receive
answers from, Netivation and its management regarding the terms and conditions
of the Transaction and the receipt of Netivation Stock.
(c) Acquisition for Own Account. Each Selling Stockholder is
acquiring the Netivation Stock for his own account for investment only, and not
with a view towards distribution.
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF NETIVATION
Netivation represents and warrants to Politicallyblack and the Selling
Stockholders as follows:
3.1 Organization, Good Standing and Qualification.
(a) Netivation is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Netivation has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver this Agreement and the Transactional Agreements,
to issue and sell the Netivation Stock, to carry out the provisions of this
Agreement and the Transactional Agreements and to carry on its business as
presently conducted and as presently proposed to be conducted. Netivation is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its activities
and of its properties (both owned and leased) make such qualifications
necessary, except for those jurisdictions in which failure to do so would not
have a Material Adverse Effect on Netivation or its business. Netivation has
made available
AGREEMENT AND PLAN OF MERGER - 14
to Politicallyblack true, correct and complete copies of the Netivation's
certificate of incorporation and bylaws, each as amended to date.
(b) Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Merger Sub has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver the Transactional Agreements, to carry out the
provisions of the Transactional Agreements and to carry on its business as
presently conducted and as presently proposed to be conducted.
3.2 Subsidiaries. Except for Merger Sub, Xxxxxxxxxx.xxx Merger Two
Corp., Xxxxxxxxxx.xxx Merger Three Corp., Xxxxxxxxxx.xxx Merger Four Corp.,
Xxxxxxxxxx.xxx Merger Five Corp., InterLink Internet Services, Inc., and The
Online Medical Bookstore, Inc., all of which are wholly-owned subsidiaries of
Netivation, Netivation owns no equity securities of any other corporation,
limited partnership or similar entity. Netivation is not a participant in any
joint venture, partnership or similar arrangement.
3.3 Capitalization; Voting Rights.
(a) The authorized capital stock of Netivation, as of October 8,
1999, consists of (a) 30,000,000 shares of Common Stock, of which 8,660,055
shares are issued and outstanding, and (b) 2,000,000 shares of Preferred Stock,
of which 0 shares are issued and outstanding. All issued and outstanding shares
of Netivation's Common Stock and Preferred Stock (i) have been duly authorized
and validly issued, (ii) are fully paid and nonassessable and (iii) were issued
in compliance with all applicable state and federal laws concerning the issuance
of securities. The Netivation Stock has been duly authorized and, when issued in
compliance with the provisions of this Agreement and its certificate of
incorporation, will be validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, other than liabilities
imposed upon stockholders generally by the provisions of Delaware Law, and will
not be subject to any other restrictions, except as set forth in or provided by
this Agreement and as may be imposed by applicable law.
(b) The authorized capital stock of Merger Sub consists of one
thousand (1,000) shares of Common Stock, one hundred (100) shares of which have
been issued to Netivation. All of the issued and outstanding shares of Common
Stock of Merger Sub (i) have been duly authorized and validly issued, (ii) are
fully paid and nonassessable and (iii) were issued in compliance with all
applicable state and federal laws concerning the issuance of securities.
3.4 Authorization; Binding Obligations. Each of Netivation and
Merger Sub has the absolute and unrestricted right, power and authority to enter
into and to perform its obligations under the Transactional Agreements to which
Netivation and Merger Sub, as the case may be, is or may become a party. This
Agreement constitutes the legal, valid and binding obligation of each of
Netivation and Merger Sub, enforceable against them in accordance with its
AGREEMENT AND PLAN OF MERGER - 15
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies. Upon the execution
of each of the other Transactional Agreements at the Closing, each of such other
Transactional Agreements will constitute the legal, valid and binding obligation
of Netivation, enforceable against Netivation in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
3.5 Full Disclosure. Netivation has delivered to Politicallyblack an
accurate and complete copy of its Registration Statement on Form SB-2 No. 333-
74569 filed with the Securities and Exchange Commission (the "SEC") on June 22,
1999 (the "Registration Statement"), which is the most recent document filed
with the SEC as of the date hereof. The Registration Statement (i) complies in
all material respects with the applicable requirements of the Securities Act and
(ii) does not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
SECTION 4 - CERTAIN COVENANTS OF POLITICALLYBLACK AND THE SELLING STOCKHOLDERS
4.1 Access and Investigation. Politicallyblack and the Selling
Stockholders shall ensure that, at all times during the Pre-Closing Period:
(a) Politicallyblack and its Representatives provide Netivation
and its Representatives with access, during normal business hours upon
reasonable notice, to Politicallyblack's Representatives, personnel and assets
and to all existing books, records, tax returns, work papers and other documents
and information relating to Politicallyblack;
(b) Politicallyblack and its Representatives provide Netivation
and its Representatives with such copies of existing books, records, tax
returns, work papers and other documents and information relating to
Politicallyblack as Netivation may request in good faith; and
(c) Politicallyblack and its Representatives compile and provide
Netivation and its Representatives with such additional financial, operating and
other data and information regarding Politicallyblack as Netivation may request
in good faith. Without limiting the generality of the foregoing, during the Pre-
Closing Period, Politicallyblack shall promptly provide Netivation with copies
of:
(i) all material operating and financial reports prepared by
Politicallyblack for its senior management, including copies of the unaudited
monthly balance sheets of Politicallyblack and the related unaudited monthly
statements of operations, statements of stockholders' equity and statements of
cash flows;
AGREEMENT AND PLAN OF MERGER - 16
(ii) any written materials or communications sent by or on
behalf of Politicallyblack to its stockholders generally;
(iii) any material notice, document or other communication
sent by or on behalf of Politicallyblack to any party to any Politicallyblack
contract or sent to Politicallyblack by any party to any Politicallyblack
contract (other than any communication that relates solely to commercial
transactions of the type sent in the Ordinary Course of Business);
(iv) any written notice, report or other document filed with
or sent to any Governmental Body in connection with the Merger or any of the
other Transactions; and
(v) any material written notice, report or other document
received by Politicallyblack from any Governmental Body.
4.2 Operation of Business. Politicallyblack and the Selling
Stockholders shall ensure that, during the Pre-Closing Period:
(a) Politicallyblack conducts its operations exclusively in
the Ordinary Course of Business and in the same manner as such operations have
been conducted prior to the date of this Agreement;
(b) Politicallyblack uses its commercially reasonable efforts to
preserve intact its current business organization, keep available the services
of its current officers and employees and maintain its relations and good will
with suppliers, customers, landlords, creditors, licensors, licensees, employees
and other Persons having business relationships with Politicallyblack;
(c) Politicallyblack keeps in full force all existing insurance
policies;
(d) Politicallyblack's officers confer regularly, upon request,
with Netivation concerning operational matters and otherwise report regularly,
upon request, to Netivation concerning the status of Politicallyblack's
business, condition, assets, liabilities, operations, financial performance and
prospects;
(e) Politicallyblack immediately notifies Netivation of any
inquiry, proposal or offer from any Person relating to any Acquisition
Transaction;
(f) Politicallyblack does not declare, accrue, set aside or pay
any dividend or make any other distribution in respect of any shares of capital
stock or other securities, and does not repurchase, redeem or otherwise
reacquire any shares of capital stock or other securities;
AGREEMENT AND PLAN OF MERGER - 17
(g) Politicallyblack does not sell or otherwise issue any shares
of capital stock or any other securities;
(h) Politicallyblack does not amend its articles of incorporation
or bylaws, and does not effect or become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(i) Politicallyblack does not form any subsidiary or acquires any
equity interest or other interest in any other entity;
(j) Politicallyblack does not make any capital expenditure,
except for capital expenditures that are made in the Ordinary Course of Business
and that do not exceed $10,000;
(k) Politicallyblack does not (i) lend money to any Person or
(ii) incur, assume or otherwise become subject to any Liability, except for
current liabilities incurred in the Ordinary Course of Business;
(l) Politicallyblack does not establish or adopt any employee
benefit plan, nor pay or agree to pay any bonus nor makes any profit-sharing or
similar payment to, nor increase the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers or employees (except for regularly scheduled salary
increases in the Ordinary Course of Business);
(m) Politicallyblack does not change any of its methods of
accounting or accounting practices in any respect;
(n) Politicallyblack does not commence any Proceeding, except in
the Ordinary Course of Business;
(o) Politicallyblack does not enter into any transaction or take
any other action of the type referred to in Section 2.9;
(p) Politicallyblack does not enter into any transaction or take
any other action outside the Ordinary Course of Business;
(q) Politicallyblack does not enter into any transaction or take
any other action that is reasonably likely to cause or constitute a Breach of
any representation or warranty made by Politicallyblack or the Selling
Stockholders; and
AGREEMENT AND PLAN OF MERGER - 18
(r) Politicallyblack does not agree, commit or offer (in writing
or otherwise), or attempt, to take any of the actions described in clauses "(f)"
through "(q)" of this Section 4.2.
4.3 Notification; Updates to Schedule of Exceptions.
(a) During the Pre-Closing Period, Politicallyblack and/or the
Selling Stockholders shall promptly notify Netivation in writing of:
(i) the discovery by Politicallyblack or any of the Selling
Stockholders of any event, condition, fact or circumstance that occurred or
existed on or prior to the date of this Agreement and that caused or constitutes
a Breach of any representation or warranty made by Politicallyblack or the
Selling Stockholders in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute a Breach of any representation or warranty made by Politicallyblack
or the Selling Stockholders in this Agreement if (A) such representation or
warranty had been made as of the time of the occurrence, existence or discovery
of such event, condition, fact or circumstance or (B) such event, condition,
fact or circumstance had occurred, arisen or existed on or prior to the date of
this Agreement;
(iii) any Breach of any covenant or obligation of
Politicallyblack or the Selling Stockholders; and
(iv) any event, condition, fact or circumstance that may make
the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 4.3(a) requires any change in the
Schedule of Exceptions, or if any such event, condition, fact or circumstance
would require such a change assuming the Schedule of Exceptions were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then Politicallyblack shall promptly deliver to Netivation
an update to the Schedule of Exceptions specifying such change. No such update
shall be deemed to supplement or amend the Schedule of Exceptions for the
purpose of (i) determining the accuracy of any of the representations and
warranties made by Politicallyblack in this Agreement for purposes of Section
6.1, but shall be deemed to supplement or amend the Schedule of Exceptions for
purposes of Section 9 or (ii) determining whether any of the other conditions
set forth in Section 6 have been satisfied.
AGREEMENT AND PLAN OF MERGER - 19
4.4 No Negotiation. Politicallyblack shall ensure that, during the
Pre-Closing Period, neither Politicallyblack nor any of Politicallyblack's
Representatives directly or indirectly:
(a) solicits or encourages the initiation of any inquiry,
proposal or offer from any Person (other than Netivation) relating to any
Acquisition Transaction;
(b) participates in any discussions or negotiations with, or
provides any non-public information to, any Person (other than Netivation)
relating to any Acquisition Transaction; or
(c) considers the merits of any unsolicited inquiry, proposal or
offer from any Person (other than Netivation) relating to any Acquisition
Transaction.
SECTION 5 - ADDITIONAL COVENANTS OF THE PARTIES
5.1 Filings and Consents. As promptly as practicable after the
execution of this Agreement, each party to this Agreement (i) shall make all
filings (if any) and give all notices (if any) required to be made and given by
such party in connection with the Transactions and (ii) shall use all
commercially reasonable efforts to obtain all consents (if any) required to be
obtained (pursuant to any applicable legal requirement or contract, or
otherwise) by such party in connection with the Transactions. Each of the
parties shall (upon request) promptly deliver to the other a copy of each such
filing made, each such notice given and each such consent obtained by
Politicallyblack or Netivation, as the case may be, during the Pre-Closing
Period.
5.2 Politicallyblack Stockholders' Meeting. Politicallyblack shall,
in accordance with its certificate of incorporation and bylaws and the
applicable requirements of Maryland Law, call and hold a special meeting of its
stockholders, or solicit written consents from its stockholders, as promptly as
practicable for the purpose of permitting them to consider and to vote upon and
approve the Merger and this Agreement. Politicallyblack shall use its best
efforts (i) to solicit from each of such stockholders a proxy or consent in
favor of the approval of the Merger and this Agreement and (ii) to cause each of
such stockholders to execute and deliver to Netivation a Prospective Offeree
Questionnaire in a form acceptable to Netivation certifying, among other items,
as to whether each of such stockholders is an "accredited investor" as such term
is defined in Rule 501 under the Securities Act.
5.3 Public Announcements. During the Pre-Closing Period, (i) neither
Politicallyblack nor Netivation shall (and neither Politicallyblack nor
Netivation shall permit any of its respective Representatives to) issue any
press release or make any public statement regarding this Agreement or the
Transactions, without the other party's prior written consent, and (ii) each
party will use reasonable efforts to consult with the other party prior to
issuing any press release or making any public statement regarding the Merger;
provided that Netivation shall be
AGREEMENT AND PLAN OF MERGER - 20
free to make any disclosure regarding the Merger that it deems necessary in
connection with filings with the SEC made in connection with the Registration
Statement.
5.4 Best Efforts. During the Pre-Closing Period, (i)
Politicallyblack shall use commercially reasonable efforts to cause the
conditions set forth in Section 6 to be satisfied on a timely basis and (ii)
Netivation and Merger Sub shall use their commercially reasonable efforts to
cause the conditions set forth in Section 7 to be satisfied on a timely basis
and Netivation will take all actions necessary to cause Merger Sub to perform
its obligations under this Agreement and to consummate the Merger on the terms
and conditions set forth in this Agreement.
5.5 Tax Matters. At or prior to the Closing, (a) Politicallyblack
shall execute and deliver to Xxxxxxx, Xxxxxx, Xxxxxxx, Rock & Fields, Chtd. and
to Netivation a tax representation letter, in a form reasonably acceptable to
such parties, and (b) Netivation shall execute and deliver to Xxxxxxx, Xxxxxx,
Xxxxxxx, Rock & Fields, Chtd. and to Politicallyblack a tax representation
letter, in a form reasonably acceptable to such parties. Politicallyblack and
the Selling Stockholders will use all of their respective reasonable efforts to
cause the transactions contemplated hereby to qualify as a reorganization under
the provisions of Section 368(a) of the Code and will not take any action after
the Acquisition is effected that could reasonably be expected to cause the
Acquisition to lose its tax-free status. All parties hereto agree to file this
Agreement with their respective federal income tax returns for the year in which
the Acquisition closes and to comply with the reporting requirements of United
States Treasury Regulations Section 1.368-2(g), if applicable.
SECTION 6 - CONDITIONS PRECEDENT TO OBLIGATIONS OF NETIVATION AND MERGER SUB
The obligations of Netivation and Merger Sub to effect the
Transactions are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Netivation, in
whole or in part, in accordance with Section 10.10):
6.1 Accuracy of Representations. Each of the representations and
warranties made by Politicallyblack and the Selling Stockholders in this
Agreement shall have been accurate in all material respects as of the date of
this Agreement and shall be accurate in all material respects as of the
Scheduled Closing Time as if made at the Scheduled Closing Time.
6.2 Performance of Covenants. Each covenant and obligation that
Politicallyblack or any of the Selling Stockholders is required to comply with
or to perform pursuant to this Agreement at or prior to the Closing shall have
been duly complied with and performed in all material respects.
6.3 Stockholder Approval. The principal terms of the Merger shall
have been duly approved by the stockholders of Politicallyblack in accordance
with the provisions of Maryland Law and applicable agreements.
AGREEMENT AND PLAN OF MERGER - 21
6.4 Consents. All consents required to be obtained by
Politicallyblack in connection with the Transactions (including the consents
identified in Schedule 2.18) shall have been obtained and shall be in full force
and effect.
6.5 No Material Adverse Change. Except for adverse changes that
result from general economic conditions, there shall have been no material
adverse change in Politicallyblack's business, condition, assets, liabilities,
operations, financial performance or prospects since the date of this Agreement.
6.6 Agreements and Documents. Netivation shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) the Escrow Agreement, substantially in the form of Exhibit G;
(b) an Employment and Noncompetition Agreement, substantially in
the form of Exhibit F, executed by Xxxxxxxx Xxxxxx and Xxxxxxx X. Xxxxxxx;
(c) a Tax Representation Letter executed by Politicallyblack;
(d) a Prospective Offeree Questionnaire substantially in the form
of Exhibit H executed by each Selling Stockholder;
(e) written resignations of all officers and directors of
Politicallyblack, effective as of the Closing Date;
(f) a certificate executed by each of the Selling Stockholders
containing the representation and warranty of each such Selling Stockholder that
(i) each of the representations and warranties made by Politicallyblack and the
Selling Stockholders in this Agreement is accurate in all material respects as
of the Closing Date as if made on the Closing Date and (ii) the conditions set
forth in this Section 6 have been duly satisfied (the "Selling Stockholders'
Closing Certificate");
(g) a legal opinion from counsel for Politicallyblack and the
Selling Stockholders, substantially in the form of Exhibit E.
(h) such other documents as Netivation may reasonably request in
good faith for the purpose of (i) evidencing the accuracy of any representation
or warranty made by Politicallyblack or the Selling Stockholders, (ii)
evidencing the compliance by Politicallyblack or the Selling Stockholders with,
or the performance by Politicallyblack or the Selling Stockholders of, any
covenant or obligation set forth in this Agreement, (iii) evidencing the
compliance with any applicable federal or state securities law, (iv) evidencing
the satisfaction
AGREEMENT AND PLAN OF MERGER - 22
of any condition set forth in this Section 6 or (v) otherwise facilitating the
consummation or performance of any of the Transactions.
6.7 Lock-Up Agreements. Each of the Selling Stockholders shall have
delivered to Netivation a lock-up agreement, in a form acceptable to
Netivation's underwriters, providing for a maximum of a twelve (12) month lock-
up period from the Effective Time.
6.8 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any legal requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.9 No Proceedings. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Merger or seeking to prohibit or limit the
exercise by Netivation of any material right pertaining to its ownership of
stock of the Surviving Corporation.
6.10 Securities Law Compliance. All applicable requirements of the
Securities Act and any applicable state securities laws shall have been
satisfied.
6.11 Dissenters Rights. No stockholder of Politicallyblack shall have
exercised dissenters rights with respect to approval of the Transactions.
6.12 Unaccredited Investors. The Prospective Offeree Questionnaires
delivered pursuant to Sections 5.2 and 6.6 shall indicate that no more than 35
of the stockholders of Politicallyblack are "unaccredited investors," as defined
by Rule 501 under the Securities Act.
6.13 Proceedings and Documents. All corporate and other proceedings
in connection with the Transactions and all documents and instruments incident
to such Transactions shall be reasonably satisfactory in substance and form to
Netivation.
6.14 Corporate Approvals. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of Politicallyblack, Netivation, Merger Sub and the Selling Stockholders.
SECTION 7 - CONDITIONS PRECEDENT TO OBLIGATIONS OF POLITICALLYBLACK AND THE
SELLING STOCKHOLDERS
The obligations of Politicallyblack and the Selling Stockholders to
effect the Transactions are subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived solely
by Politicallyblack, in whole or in part, in accordance with Section 10.10):
AGREEMENT AND PLAN OF MERGER - 23
7.1 Accuracy of Representations. Each of the representations and
warranties made by Netivation in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in all
material respects as of the Scheduled Closing Time as if made at the Scheduled
Closing Time.
7.2 Performance of Covenants. Each covenant and obligation that
Netivation and Merger Sub are required to comply with or to perform pursuant to
this Agreement at or prior to the Closing shall have been duly complied with and
performed in all material respects.
7.3 Consents. All consents required to be obtained by Netivation in
connection with the Transactions shall have been obtained and shall be in full
force and effect.
7.4 Agreements and Documents. Politicallyblack shall have received
the following agreements and documents, each of which shall be in full force and
effect:
(a) the Escrow Agreement, substantially in the form of Exhibit G;
(b) an Employment and Noncompetition Agreement, substantially in
the forms of Exhibit F, executed by Xxxxxxxx Xxxxxx and Xxxxxxx X. Xxxxxxx;
(c) a Tax Representation Letter executed by Netivation;
(d) a certificate executed by Netivation containing the
representation and warranty of Netivation that (i) each of the representations
and warranties made by Netivation in this Agreement is accurate in all material
respects as of the Closing Date as if made on the Closing Date and (ii) the
conditions set forth in this Section 7 have been duly satisfied; and
(e) such other documents as Politicallyblack may reasonably
request in good faith for the purpose of (i) evidencing the accuracy of any
representation or warranty made by Netivation, (ii) evidencing the compliance by
Netivation with, or the performance by Netivation of, any covenant or obligation
set forth in this Agreement, (iii) evidencing the compliance with any applicable
federal or state securities law, (iv) evidencing the satisfaction of any
condition set forth in this Section 7 or (v) otherwise facilitating the
consummation or performance of any of the Transactions.
7.5 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any legal requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
AGREEMENT AND PLAN OF MERGER - 24
7.6 No Proceedings. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Merger or seeking to prohibit or limit the
exercise by Netivation of any material right pertaining to its ownership of
stock of the Surviving Corporation.
7.7 Corporate Approvals. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of the Politicallyblack, Netivation, Merger Sub and the Selling
Stockholders.
SECTION 8 - TERMINATION
8.1 Termination Events. This Agreement may be terminated prior to
the Closing:
(a) by Netivation if (i) there is a material Breach of any
covenant or obligation of Politicallyblack or any of the Selling Stockholders or
(ii) Netivation reasonably determines that the timely satisfaction of any
condition set forth in Section 6 has become impossible (other than as a result
of any failure on the part of Netivation or Merger Sub to comply with or perform
any covenant or obligation of Netivation or Merger Sub set forth in this
Agreement);
(b) by the Selling Stockholders if (i) there is a material Breach
of any covenant or obligation of Netivation or (ii) the Selling Stockholders
reasonably determines that the timely satisfaction of any condition set forth in
Section 7 has become impossible (other than as a result of any failure on the
part of Politicallyblack or any of the Selling Stockholders to comply with or
perform any covenant or obligation of Politicallyblack or the Selling
Stockholders set forth in this Agreement);
(c) by Netivation at or after the Scheduled Closing Time if any
condition set forth in Section 6 has not been satisfied by the Scheduled Closing
Time;
(d) by the Selling Stockholders at or after the Scheduled Closing
Time if any condition set forth in Section 7 has not been satisfied by the
Scheduled Closing Time;
(e) by Netivation if the Closing has not taken place on or before
November 29, 1999 (other than as a result of any failure on the part of
Netivation or Merger Sub to comply with or perform any covenant or obligation of
Netivation or Merger Sub set forth in this Agreement);
(f) by the Selling Stockholders if the Closing has not taken
place on or before November 29, 1999 (other than as a result of the failure on
the part of Politicallyblack or any of the Selling Stockholders to comply with
or perform any covenant or obligation of Politicallyblack or the Selling
Stockholders set forth in this Agreement); or
AGREEMENT AND PLAN OF MERGER - 25
(g) by the mutual consent of Netivation, Politicallyblack and the
Selling Stockholders.
8.2 Termination Procedures. If Netivation wishes to terminate this
Agreement pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e),
Netivation shall deliver to the Selling Stockholders a written notice stating
that Netivation is terminating this Agreement and setting forth a brief
description of the basis on which Netivation is terminating this Agreement. If
the Selling Stockholders wish to terminate this Agreement pursuant to Section
8.1(b), Section 8.1(d) or Section 8.1(f), the Selling Stockholders shall deliver
to Netivation a written notice terminating this Agreement and setting forth a
brief description of the basis on which this Agreement is terminated.
8.3 Effect of Termination. If this Agreement is terminated pursuant
to Section 8.1, all further obligations of the parties under this Agreement
shall automatically terminate; provided, however, that: (a) neither
Politicallyblack nor the Selling Stockholders nor Netivation shall be relieved
of any obligation or liability arising from any prior Breach by such party of
any provision of this Agreement; (b) the parties shall, in all events, remain
bound by and continue to be subject to the provisions set forth in Section 9;
and (c) Politicallyblack and Netivation shall, in all events, remain bound by
and continue to be subject to Section 5.3.
SECTION 9 - INDEMNIFICATION, ETC.
9.1 Survival of Representations, Warranties and Covenants.
(a) The representations, warranties and covenants of each party
pursuant to this Agreement shall survive the Closing and shall expire on the
first anniversary of the Closing Date; provided, however, (i) that fraud claims
and claims under Section 2.14 shall survive for the statute of limitations
applicable to claims based on such matters and (ii) that if, at any time prior
to the first anniversary of the Closing Date, any Netivation Indemnitee seeking
indemnification under this Section 9 (acting in good faith) delivers to the
Selling Stockholders a written notice alleging the existence of a Breach of any
of the representations and warranties made by Politicallyblack or any of the
Selling Stockholders or a Breach of any covenant contained herein (and setting
forth in reasonable detail the basis for such Netivation Indemnitee's belief
that such a Breach may exist) and asserting a claim for recovery under Section
9.2 based on such alleged Breach, then the claim asserted in such notice shall
survive the first anniversary of the Closing Date until such time as such claim
is fully and finally resolved.
(b) The representations, warranties, covenants and obligations of
Politicallyblack and the Selling Stockholders, and the rights and remedies that
may be exercised by the Netivation Indemnitees, shall not be limited or
otherwise affected by or as a result of any information furnished to, or any
investigation made by or Knowledge of, any of the Netivation Indemnitees or
their Representatives.
AGREEMENT AND PLAN OF MERGER - 26
(c) For purposes of this Agreement, each statement or other item
of information set forth in the Schedule of Exceptions or in any update to the
Schedule of Exceptions shall be deemed to be a representation and warranty made
in this Agreement.
9.2 Indemnification by the Selling Stockholders.
(a) Subject to the provisions of this Section 9, the Selling
Stockholders, jointly and severally, shall indemnify and hold harmless each of
the Netivation Indemnitees from and against the amount of any Damages incurred
by any of the Netivation Indemnitees directly or indirectly as a result of (i)
any Breach of a representation or warranty of Politicallyblack or any of the
Selling Stockholders contained in Section 2 hereof or in any instrument
delivered pursuant to this Agreement (each as modified by the Schedule of
Exceptions delivered by Politicallyblack and the Selling Stockholders on the
date of this Agreement and not as modified by any revisions to such Schedule of
Exceptions after such date), (ii) any Breach of any covenant or obligation
contained herein , (iii) any final determination of Politicallyblack's net tax
liability for the fiscal year immediately prior to the Closing or (iv) any
Breach of any representation or warranty made in the Selling Stockholders'
Closing Certificate.
(b) The Selling Stockholders acknowledge and agree that, if there
is any Breach of any representation or warranty or other provision relating to
Politicallyblack or Politicallyblack's business, condition, assets, Liabilities,
operations, financial performance or net income (or any aspect or portion
thereof), then Netivation itself shall be deemed, by virtue of its ownership of
the capital stock of Politicallyblack, to have incurred Damages as result of
such Breach or Liability.
9.3 Contribution. Each Selling Stockholder waives and acknowledges
and agrees that such Selling Stockholder shall not have and shall not exercise
or assert (or attempt to exercise or assert), any right of contribution, right
of indemnity or other similar right or remedy against the Surviving Corporation
in connection with any indemnification obligation or any other Liability to
which such Selling Stockholder may become subject under the Transactional
Agreements or otherwise in connection with any of the Transactions.
9.4 Ceiling; Limitation on Additional Damages. The Selling
Stockholders shall have no liability nor be subject to any claim for Damages
made by Netivation Indemnities pursuant to the provisions of Section 9.2(a) or
9.6 unless and until the aggregrate amount of Damages exceeds the sum of
$25,000. After the aggregrate amount of Damages exceeds the sum of $25,000, the
Selling Stockholders shall be liable for the full amount of Damages. Claims for
Damages made by the Netivation Indemnitees pursuant to the provisions of
Sections 9.2(a) or 9.6 shall be limited to an amount equal to the closing price
(as reported by the NASDAQ consolidated reporting system) of the thirty thousand
(30,000) shares of Netivation Stock on the Closing Date. The provisions of this
Section 9.4 shall not apply to claims for willful misconduct, fraud, bad faith
or recklessness on the part of Politicallyblack or any Selling Stockholder.
AGREEMENT AND PLAN OF MERGER - 27
9.5 Interest. Any party that is required to indemnify any Netivation
Indemnitee pursuant to this Section 9 with respect to any Damages shall also be
required to pay such Netivation Indemnitee interest on the amount of such
Damages (for the period commencing as of the date on which such Netivation
Indemnitee first incurred or otherwise became subject to such Damages and ending
on the date on which the applicable indemnification payment is made by such
party) at a floating rate equal to three (3) percentage points above the rate of
interest publicly announced by Bank of America, N.T. & S.A. from time to time as
its prime, base or reference rate. (For purposes of this Section 9.5, a
Netivation Indemnitee that suffers Damages by virtue of being required to pay
any judgment or to make any settlement payment to any third party with respect
to any third party claim against such Netivation Indemnitee shall be deemed to
have first become subject to such Damages at the time such Netivation Indemnitee
pays such judgment or makes such settlement payment.)
9.6 Defense of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Proceeding (whether against
Politicallyblack, against any other Netivation Indemnitee or any other Person)
with respect to which any of the Selling Stockholders may become obligated to
indemnify, hold harmless, compensate or reimburse any Netivation Indemnitee
pursuant to this Section 9, Netivation shall have the right, at its election, to
proceed with the defense of such claim or Proceeding on its own. If Netivation
so proceeds with the defense of any such claim or Proceeding:
(a) all expenses relating to the defense of such claim or
Proceeding (whether or not incurred by Netivation) shall be borne and paid
exclusively by the Selling Stockholders;
(b) the Selling Stockholders shall make available to Netivation
any documents and materials in the possession or control of any of the Selling
Stockholders that may be necessary to the defense of such claim or Proceeding;
and
(c) Netivation shall keep the Selling Stockholders informed of
all material developments and events relating to such claim or Proceeding.
9.7 Setoff. In addition to any rights of setoff or other rights that
any of the Netivation Indemnitees may have at common law or otherwise,
Netivation shall have the right to set off any amount that may be owed to any
Netivation Indemnitee under this Section 9 against any amount otherwise payable
by any Indemnitee to any of the Selling Stockholders.
9.8 Indemnity Reserve. In order to secure Netivation's and each
Netivation Indemnitee's rights of indemnity, the Selling Stockholders shall
place 10,000 shares of Netivation Stock in escrow in accordance with the terms
of the Escrow Agreement, substantially in the form attached hereto as Exhibit G.
AGREEMENT AND PLAN OF MERGER - 28
9.9 Exercise of Remedies by Netivation Indemnitees Other Than
Netivation. No Netivation Indemnitee (other than Netivation or any successor
thereto or assignee thereof) shall be permitted to assert any indemnification
claim or exercise any other remedy under this Agreement unless Netivation (or
any successor thereto or assignee thereof) shall have consented to the assertion
of such indemnification claim or the exercise of such other remedy.
SECTION 10 - MISCELLANEOUS PROVISIONS
10.1 Further Assurances. Each party hereto shall execute and cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the Transactions.
10.2 Fees and Expenses. Subject to Section 9, each party to this
Agreement shall bear and pay all fees, costs and expenses (including legal fees
and accounting fees) that have been incurred or that are incurred in the future
by such party in connection with the Transactions, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) the
investigation and review conducted by Netivation and its Representatives with
respect to Politicallyblack's business (and the furnishing of information to
Netivation and its Representatives in connection with such investigation and
review), (ii) the negotiation, preparation and review of this Agreement
(including the Schedule of Exceptions) and all agreements, certificates,
opinions and other instruments and documents delivered or to be delivered in
connection with the Transactions, and (iii) the preparation and submission of
any filing or notice required to be made or given in connection with any of the
Transactions and the obtaining of any consent required to be obtained in
connection with any of such Transactions. Provided, however, if the Merger is
consummated, all reasonable legal fees and other reasonable legal expenses
incurred on behalf of Politicallyblack in connection with the Transactions would
be borne by Netivation. Any legal expenses incurred on behalf of
Politicallyblack in excess of $5,000 shall require written preapproval by
Netivation.
10.3 Attorneys' Fees. If any action or Proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
10.4 Notices. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or overnight delivery service or by facsimile) to
the address or facsimile telephone number set forth beneath the name of such
party below (or to such other address or facsimile telephone number as such
party shall have specified in a written notice given to the other parties
hereto):
AGREEMENT AND PLAN OF MERGER - 29
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 Xxxxxxxx Xxxxxx
Selling Stockholders: Xxxxxxx X. Xxxxxxx
Xxxxxxxxxxxxxxxx.xxx, Inc.
000 00xx Xxxxxx, XX #0
Xxxxxxxxxx, XX 00000
with copies to: _____________________
_____________________
_____________________
Any of the above addresses may be changed at any time by notice given
as provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, telecopied or by overnight courier, and three (3) business
days after the date of mailing, if mailed by certified mail, return receipt
requested.
10.5 Headings. The boldface headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.6 Counterparts. This Agreement may be executed in several
counterparts, and transmitted by facsimile, each of which shall constitute an
original and all of which, when taken together, shall constitute one agreement.
10.7 Governing Law. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of Idaho
(without giving effect to principles of conflicts of laws).
AGREEMENT AND PLAN OF MERGER - 30
10.8 Successors and Assigns. This Agreement shall be binding upon:
Politicallyblack and its successors and assigns (if any); the Selling
Stockholders and their respective personal representatives, executors,
administrators, estates, heirs, successors and assigns (if any); Netivation and
its successors and assigns (if any); and Merger Sub and its successors and
assigns (if any). This Agreement shall inure to the benefit of:
Politicallyblack; the Selling Stockholders; Netivation; Merger Sub; the
Netivation Indemnitees; and the respective successors and assigns (if any) of
the foregoing. Each party may freely assign any or all of its rights (but not
its obligations) under this Agreement (including its indemnification rights
under Section 9), in whole or in part, to any other Person without obtaining the
consent or approval of any other party hereto or of any other Person.
10.9 Remedies Cumulative; Specific Performance. The rights and
remedies of the parties hereto shall be cumulative (and not alternative). The
parties to this Agreement agree that, in the event of any Breach or threatened
Breach by any party to this Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other party to this
Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (i) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (ii) an injunction restraining such Breach or threatened
Breach.
10.10 Waiver.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10.11 Amendments. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of all of the parties hereto.
10.12 Time of the Essence. Time is of the essence of this Agreement.
10.13 Severability. In the event that any provision of this
Agreement, or the application of any such provision to any Person or set of
circumstances, shall be determined to be
AGREEMENT AND PLAN OF MERGER - 31
invalid, unlawful, void or unenforceable to any extent, the remainder of this
Agreement, and the application of such provision to Persons or circumstances
other than those as to which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and shall continue to
be valid and enforceable to the fullest extent permitted by law.
10.14 Parties in Interest. Except for the provisions of Section 9,
none of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties hereto and their respective
successors and assigns (if any).
10.15 Entire Agreement. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter hereof and thereof.
10.16 Construction.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
The parties hereto have caused this Agreement to be executed and delivered
as of the date first set forth above.
NETIVATION:
XXXXXXXXXX.XXX, INC.,
a Delaware corporation
By______________________________________
AGREEMENT AND PLAN OF MERGER - 32
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
MERGER SUB:
XXXXXXXXXX.XXX MERGER SIX CORP.,
a Delaware corporation
By_________________________________________
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
POLITICALLYBLACK:
XXXXXXXXXXXXXXXX.XXX, INC.,
a Maryland corporation
By_________________________________________
Xxxxxxxx Xxxxxx
President
SELLING STOCKHOLDERS:
___________________________________________
Xxxxxxxx Xxxxxx
___________________________________________
Xxxxxxx X. Xxxxxxx
SECRETARY'S CERTIFICATE
AGREEMENT AND PLAN OF MERGER - 33
I, Xxxx X. Xxxxxx, Secretary of Xxxxxxxxxx.xxx Merger Six Corp., hereby
certify that this Agreement has been adopted pursuant to the first sentence of
Title 8, Section 251(f) of the Delaware Corporations Laws, and that the
conditions specified in that sentence have been satisfied.
________________________________
Xxxx X. Xxxxxx, Secretary
AGREEMENT AND PLAN OF MERGER - 34
