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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
AMONG
HEALTHEON/WEBMD CORPORATION,
TECH ACQUISITION CORPORATION
AND
ONHEALTH NETWORK COMPANY
DATED AS OF FEBRUARY 15, 2000
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TABLE OF CONTENTS
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER...................................1
1.1 Merger................................................................1
1.2 Time and Place of Closing.............................................2
1.3 Effective Time........................................................2
ARTICLE 2 - TERMS OF MERGER....................................................2
2.1 Charter...............................................................2
2.2 Bylaws................................................................2
2.3 Directors and Officers................................................2
2.4 Tax-Free Reorganization...............................................3
ARTICLE 3 - MANNER OF CONVERTING SHARES........................................3
3.1 Conversion of Shares..................................................3
3.2 Anti-Dilution Provisions..............................................3
3.3 Dissenting Shares.....................................................4
3.4 Conversion of Company Options.........................................4
3.5 Company Warrants......................................................5
ARTICLE 4 - EXCHANGE OF SHARES.................................................6
4.1 Exchange Procedures...................................................6
4.2 No Further Transfers of Company Common Stock..........................8
4.3 Lost, Stolen or Destroyed Certificates................................8
4.4 Rights of Former Stockholders.........................................8
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF COMPANY..........................9
5.1 Organization, Standing, and Power.....................................9
5.2 Authorization of Agreement; No Breach.................................9
5.3 Capital Stock........................................................10
5.4 Company Subsidiaries.................................................11
5.5 SEC Filings; Financial Statements....................................12
5.6 Absence of Undisclosed Liabilities...................................12
5.7 Absence of Changes...................................................12
5.8 Tax Matters..........................................................13
5.9 Intellectual Property................................................14
5.10 Insurance............................................................16
5.11 Compliance with Laws.................................................16
5.12 Orders and Litigation................................................17
5.13 Environmental Matters................................................17
5.14 Contracts and Commitments............................................17
5.15 State Takeover Statutes..............................................18
5.16 Benefit Plans........................................................18
5.17 Board Approval.......................................................20
5.18 Governmental Approvals; Required Consents............................21
5.19 Accounts Receivable..................................................21
5.20 Tax Treatment........................................................21
5.21 Affiliate Transactions...............................................21
5.22 Customers............................................................21
5.23 Fairness Opinion.....................................................21
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ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF HEALTHEON/WEBMD
AND MERGER CORP...................................................22
6.1 Organization, Standing, and Power....................................22
6.2 Authorization of Agreement; No Breach................................22
6.3 Capital Stock........................................................23
6.4 Healtheon/WebMD SEC Filings; Financial Statements....................24
6.5 Absence of Undisclosed Liabilities...................................24
6.6 Absence of Certain Changes or Events.................................25
6.7 Compliance with Laws.................................................25
6.8 Governmental Approvals; Required Consents............................25
6.9 Healtheon/WebMD Common Stock.........................................25
6.10 Interim Operations of Merger Corp....................................25
6.11 Tax Treatment........................................................25
6.12 Orders and Litigation................................................26
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CLOSING...............................26
7.1 Conduct of Company's Business........................................26
7.2 Conduct of Healtheon/WebMD's Business................................28
7.3 Adverse Changes in Condition.........................................29
ARTICLE 8 - ADDITIONAL AGREEMENTS.............................................29
8.1 Stockholder Approval; Registration Statement.........................29
8.2 Applications.........................................................31
8.3 Filings with State Offices...........................................32
8.4 Agreement as to Efforts to Consummate................................32
8.5 Investigation and Confidentiality....................................32
8.6 Nasdaq National Market Listing.......................................33
8.7 No Solicitation by Company...........................................33
8.8 Tax Treatment........................................................35
8.9 Employee Benefits....................................................35
8.10 Blue Sky Laws........................................................36
8.11 Non-solicitation of Employees........................................36
8.12 Press Releases.......................................................36
8.13 Directors and Officers Indemnification...............................37
8.14 Company Affiliates; Restrictive Legend; Restrictions on Transfer.....37
8.15 Voting Agreements....................................................38
8.16 Loan Agreement and Warrant...........................................38
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE.................39
9.1 Conditions to Obligations of Each Party..............................39
9.2 Conditions to Obligations of Healtheon/WebMD and Merger Corp.........40
9.3 Conditions to Obligations of Company.................................41
ARTICLE 10 - TERMINATION......................................................41
10.1 Termination..........................................................41
10.2 Notice of Termination; Effect of Termination.........................43
10.3 Fees and Expenses....................................................43
ARTICLE 11 - MISCELLANEOUS....................................................45
11.1 Definitions..........................................................45
11.2 Brokers and Finders; Expenses........................................51
11.3 Entire Agreement.....................................................51
11.4 Amendments...........................................................52
11.5 Waivers..............................................................52
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11.6 Assignment...........................................................52
11.7 Notices..............................................................52
11.8 Governing Law........................................................53
11.9 Counterparts.........................................................53
11.10 Captions.............................................................53
11.11 Interpretations......................................................54
11.12 Enforcement of Agreement.............................................54
11.13 Severability.........................................................54
11.14 Facsimile Signatures.................................................54
11.15 Nonsurvival of Representations and Warranties........................54
EXHIBITS
Exhibit 8.15 - Form of Voting Agreement
Exhibit 8.16A - Form of Loan Agreement
Exhibit 8.16B - Form of Common Stock Purchase Warrant
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of February 15, 2000, by and among HEALTHEON/WEBMD CORPORATION
("Healtheon/WebMD"), a Delaware corporation; TECH ACQUISITION CORPORATION
("Merger Corp"), a Washington corporation and a wholly owned subsidiary of
Healtheon/WebMD; and ONHEALTH NETWORK COMPANY ("Company"), a Washington
corporation.
PREAMBLE:
This Agreement provides for the acquisition of Company by
Healtheon/WebMD by means of the merger of Merger Corp with and into Company,
pursuant to which the outstanding shares of Company Common Stock shall be
converted into the right to receive shares of Healtheon/WebMD Common Stock and
Company shall become a wholly owned subsidiary of Healtheon/WebMD. The Board of
Directors of Healtheon/WebMD has determined that the Merger is fair to
Healtheon/WebMD and the holders of Healtheon/WebMD Common Stock and is in the
best interests of Healtheon/WebMD and such stockholders. The Board of Directors
of Company (i) has determined that the merger of Merger Corp with and into
Company is fair to Company and the holders of shares of Company Common Stock and
is in the best interests of Company and such stockholders and (ii) has approved
and determined to be advisable this Agreement and the transactions contemplated
hereby has recommended that the stockholders of Company adopt this Agreement.
The Board of Directors of Merger Corp has determined that the merger of Merger
Corp with and into Company is in the best interests of Merger Corp and its sole
stockholder and Healtheon/WebMD has adopted this Agreement and approved the
Merger as the sole stockholder of Merger Corp. For Federal income tax purposes,
it is intended that the merger of Merger Corp with and into Company shall
qualify as a reorganization under the provisions of Section 368(a) of the United
States Internal Revenue Code of 1986, as amended (the "Internal Revenue Code").
Certain terms used in this Agreement are defined in Section 11.1 of
this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time, Merger Corp shall be merged with and into Company (the
"Merger") in accordance
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with Section 23B.11.010 of the Washington Business Corporations Act (the
"WBCA"). Following the Merger, the separate corporate existence of Merger Corp
shall cease and Company shall be the Surviving Corporation resulting from the
Merger and shall become vested with all of the property, rights, privileges,
powers and franchises of Company and Merger Corp and shall assume all of the
debts, liabilities, obligations, restrictions, disabilities and duties of each
of Company and Merger Corp. The Merger shall be consummated pursuant to the
terms of this Agreement, which have been approved and adopted by the respective
Boards of Directors of Healtheon/WebMD, Merger Corp and Company.
1.2 Time and Place of Closing. Subject to the terms and conditions of
this Agreement, the closing of the transactions contemplated herein (the
"Closing") will take place at a time and date to be specified by the parties,
which shall be no later than the second business day after the satisfaction or
waiver of the conditions set forth in Article 9 (other than those that by their
nature will be satisfied on the Closing Date), or at such other time and date as
the parties hereto agree in writing (the "Closing Date"). The place of Closing
shall be at the offices of Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P., Bank of
America Corporate Center, Suite 2600, 100 North Xxxxx Street, Charlotte, North
Carolina, or such other place as may be mutually agreed upon by the Parties.
1.3 Effective Time. Subject to the provisions of this Agreement, on the
Closing Date, the parties hereto shall cause the Merger to be consummated by
filing the articles of merger (the "Articles of Merger") with the Secretary of
State of the State of Washington, in such form as is required by, and executed
in accordance with, Section 23B.11.050 of the WBCA. The term "Effective Time"
means the date and at the time the Articles of Merger reflecting the Merger
become effective with the Secretary of State of the State of Washington.
ARTICLE 2
TERMS OF MERGER
2.1 Charter. The Articles of Incorporation of Company as in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
of the Surviving Corporation. Such Articles of Incorporation shall remain the
Articles of Incorporation of Surviving Corporation until otherwise amended or
repealed until otherwise amended or repealed in accordance with the WBCA.
2.2 Bylaws. The Bylaws of Merger Corp in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation until
otherwise amended or repealed.
2.3 Directors and Officers. The directors of Merger Corp immediately
prior to the Effective Time, together with such additional persons as may
thereafter be duly elected, shall serve as the directors of the Surviving
Corporation from and after the Effective Time in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation. The officers of Merger
Corp in office immediately prior to the Effective Time, together with such
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additional persons as may thereafter be duly elected, shall serve as the
officers of the Surviving Corporation from and after the Effective Time in
accordance with the Bylaws of the Surviving Corporation.
2.4 Tax-Free Reorganization. The Parties intend for the Merger to be a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
and to adopt this Agreement as a plan of reorganization within the meaning of
the regulations promulgated under Section 368 of the Internal Revenue Code.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this Article 3,
at the Effective Time, by virtue of the Merger and without any action on the
part of the Parties or the stockholders of any of the Parties, the shares of the
constituent corporations of the Merger shall be converted as follows:
(a) Conversion of Merger Corp Common Stock. Each share of
Merger Corp Common Stock issued and outstanding at the Effective Time shall be
converted into and become one (1) fully paid and nonassessable share of
Surviving Corporation Common Stock.
(b) Conversion of Company Common Stock. Excluding shares held
by stockholders who perfect their statutory dissenters' rights as provided in
Section 3.3 of this Agreement, each share of Company Common Stock issued and
outstanding at the Effective Time shall cease to be outstanding and shall be
converted into and exchanged for the right to receive .189435 shares of
Healtheon/WebMD Common Stock (as adjusted by Section 3.2, the "Exchange Ratio").
(c) Fractional Shares. No certificates representing fractional
shares of Healtheon/WebMD Common Stock will be issued as a result of the Merger.
Each holder of shares of Company Common Stock who would otherwise have been
entitled to receive a fraction of a share of Healtheon/WebMD Common Stock (after
aggregating all fractional shares of Healtheon/WebMD Common Stock that otherwise
would be received by such holder) shall, upon surrender of such Company stock
certificates, receive from Healtheon/WebMD an amount of cash (rounded to the
nearest whole cent), without interest, equal to the product obtained by
multiplying (i) such fractional share interest to which such holder would
otherwise be entitled by (ii) the average of the high and low sales prices for a
share of Healtheon/WebMD Common Stock on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") Composite Transaction Tape on the
first trading day immediately following the Effective Time.
3.2 Anti-Dilution Provisions. In the event the number of shares of
Healtheon/WebMD Common Stock issued and outstanding prior to the Effective Time
changes as a result of a stock split, stock dividend, subdivision,
reclassification, recapitalization,
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combination of shares or similar recapitalization with respect to such stock (an
"Anti-Dilution Event") and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Exchange Ratio shall be correspondingly adjusted so that
each holder of Company Common Stock will receive in the Merger the same
proportionate amount of Healtheon/WebMD Common Stock that such holder would have
been entitled to receive if the Effective Time had been immediately prior to
such Anti-Dilution Event.
3.3 Dissenting Shares. Any holder of shares of Company Capital Stock
who perfects its dissenters' rights in accordance with and as contemplated by
Section 23B.13.210 of the WBCA shall not be converted into Healtheon/WebMD
Common Stock but instead shall be entitled to receive such consideration as
determined pursuant to such provision of the WBCA; provided, that no such
payment shall be made to any dissenting stockholder unless and until such
dissenting stockholder has complied with the applicable provisions of the WBCA
and surrendered to the Surviving Corporation the certificate or certificates
representing the shares for which payment is being made. In the event that a
dissenting stockholder of Company fails to perfect, or effectively withdraws or
loses, its right to appraisal and payment for its shares under the WBCA,
Healtheon/WebMD shall issue and deliver the number of shares of Healtheon/WebMD
Common Stock to which such holder of shares of Company Capital Stock would
otherwise be entitled under this Article 3 (without interest) upon surrender by
such holder of the certificate or certificates representing such shares (or
compliance with Section 4.3) held by such holder.
3.4 Conversion of Company Options.
(a) At the Effective Time, each outstanding Company Option,
whether or not exercisable, shall be converted into and become rights with
respect to Healtheon/WebMD Common Stock, and Healtheon/WebMD shall assume
Company's obligations with respect to each Company Option and the related
Company Stock Plan, in accordance with its terms, except that from and after the
Effective Time, (i) Healtheon/WebMD and its compensation committee shall be
substituted for Company and the committee of Company's Board of Directors
(including, if applicable, the entire Board of Directors of Company)
administering the Company Stock Plan, if any, under which such Company Option
was granted or otherwise governed, (ii) each Company Option assumed by
Healtheon/WebMD may be exercised solely for shares of Healtheon/WebMD Common
Stock, (iii) the number of shares of Healtheon/WebMD Common Stock subject to
such Company Option shall be equal to the number of whole shares (rounded to the
nearest whole share) of Company Common Stock subject to such Company Option
immediately prior to the Effective Time multiplied by the Exchange Ratio, (iv)
the per share exercise price under each such Company Option shall be adjusted by
dividing the per share exercise price under each such Company Option by the
Exchange Ratio and rounding to the nearest whole cent, and (v) all references in
the Company Stock Plans and the stock option certificates and agreements to
Company (or its predecessors) shall be deemed to refer to Healtheon/WebMD.
Notwithstanding the provisions of clauses (iii) and (iv) of the first sentence
of this Section 3.4(a), each Company Option which is an "incentive stock option"
shall be adjusted as required by Section 424 of the Internal Revenue
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Code, and the regulations promulgated thereunder, so as not to constitute a
modification, extension or renewal of such Company Option, within the meaning of
Section 424(h) of the Internal Revenue Code.
(b) As soon as practicable after the Effective Time,
Healtheon/WebMD shall deliver to the holders of Company Options appropriate
documentation evidencing the foregoing assumption by Healtheon/WebMD of such
Company Options and the related Company Stock Plan and the agreements evidencing
such Company Options shall continue in effect on the same terms and conditions
(subject to adjustments required by this Section 3.4 after giving effect to the
Merger and the provisions set forth above). Healtheon/WebMD shall comply with
the terms of the Company Stock Plans and ensure, to the extent lawful, and
subject to the provisions of the applicable Company Stock Plan, that Company
Options which qualified as incentive stock options prior to the Effective Time
of the Merger continue to qualify as incentive stock options after the Effective
Time of the Merger.
(c) Healtheon/WebMD shall take all corporate action necessary
to reserve for issuance a sufficient number of shares of Healtheon/WebMD Common
Stock for delivery upon the exercise of Company Options.
(d) Healtheon/WebMD agrees to file, if available for use by
Healtheon/WebMD, a registration statement on Form S-8 for the shares of
Healtheon/WebMD Common Stock issuable with respect to the Company Options as
soon as is reasonably practicable after the Effective Time and shall maintain
the effectiveness of such registration statement thereafter for so long as any
such Company Options remain outstanding.
3.5 Company Warrants.
(a) At the Effective Time, Healtheon/WebMD shall assume the
obligations of Company under the Company Warrants outstanding at the Effective
Time, whether or not the Company Warrants are then exercisable. Thereafter, the
Company Warrants shall represent the right to receive upon exercise the number
of shares of Healtheon/WebMD Common Stock equal to the product of (i) the
Exchange Ratio and (ii) the number of shares of Company Common Stock for which
such Company Warrant could have been exercised immediately prior to the
Effective Time, with such product rounded to the nearest whole share. The per
share exercise price under each such Company Warrant shall be adjusted by
dividing the per share exercise price under each such Company Warrant by the
Exchange Ratio and rounding to the nearest whole cent. At the Effective Time,
(i) all references in the instruments evidencing the Company Warrants to Company
shall be deemed to refer to Healtheon/WebMD and (ii) Healtheon/WebMD shall
assume all of Company's obligations under such instruments with respect to such
Company Warrants as so amended.
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(b) As soon as practicable after the Effective Time of the
Merger, Healtheon/WebMD shall deliver to the holders of the Company Warrants
documentation evidencing the foregoing assumption by Healtheon/WebMD of such
Company Warrants.
(c) Healtheon/WebMD shall take all corporate action necessary
to reserve for issuance a sufficient number of shares of Healtheon/WebMD Common
Stock for delivery upon exercise of the Company Warrants.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures.
(a) Exchange Agent. Promptly after the Effective Time,
Healtheon/WebMD and the Surviving Corporation shall select an exchange agent
(the "Exchange Agent") to act as exchange agent for the Merger.
(b) Healtheon/WebMD to Provide Common Stock. Promptly after
the Effective Time, Healtheon/WebMD shall deposit with the Exchange Agent for
exchange the shares of Healtheon/WebMD Common Stock issuable pursuant to Section
3.1(b) in exchange for outstanding shares of Company Common Stock, cash payable
in lieu of fractional shares pursuant to Section 3.1(d) and any dividends or
distributions to which holders of shares of Company Common Stock may be entitled
pursuant to Section 4.1(d) (such certificates for shares of Healtheon/WebMD
Common Stock, together with the amount of any dividends or other distributions
payable with respect thereto and any cash payable in lieu of fractional shares,
being hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall,
pursuant to irrevocable instructions, deliver the Healtheon/WebMD Common Stock
contemplated to be issued pursuant to Section 3.1(b) out of the Exchange Fund.
The Exchange Fund shall not be used for any other purpose.
(c) Exchange Procedures. Promptly after the Effective Time,
Healtheon/WebMD shall cause the Exchange Agent to mail to each holder of record
(as of the Effective Time) of a certificate or certificates (the "Certificates")
which immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into the right to receive
shares of Healtheon/WebMD Common Stock pursuant to Section 3.1(b), cash in lieu
of any fractional shares pursuant to Section 3.1(d) and any dividends or other
distributions pursuant to Section 4.1(d), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as
Healtheon/WebMD and Company may reasonably agree) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing shares of Healtheon/WebMD Common Stock, cash in lieu of any
fractional shares pursuant to Section 3.1(d) and any dividends or other
distributions pursuant to Section 4.1(d). Upon surrender of Certificates for
cancellation to the Exchange Agent or to
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such other agent or agents as may be appointed by Healtheon/WebMD, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the holders of such Certificates shall be
entitled to receive in exchange therefor certificates representing the number of
whole shares of Healtheon/WebMD Common Stock which such holder has the right to
receive under Section 3.1(b) in respect of the shares of Company Common Stock
formerly represented by such Certificate and payment in lieu of fractional
shares which such holders have the right to receive pursuant to Section 3.1(d),
and any dividends or distributions payable pursuant to Section 4.1(d), and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, for
all corporate purposes, to evidence the ownership of the number of whole shares
of Healtheon/WebMD Common Stock into which such shares of Company Common Stock
shall have been so converted pursuant to Section 3.1(b) and the right to receive
an amount in cash in lieu of the issuance of any fractional shares in accordance
with Section 3.1(d) and any dividends or distributions payable pursuant to
Section 4.1(d).
(d) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the date of this
Agreement with respect to Healtheon/WebMD Common Stock with a record date after
the Effective Time will be paid to the holders of any unsurrendered Certificates
(other than holders of shares to be canceled pursuant to Sections 3.3 of this
Agreement) with respect to the shares of Healtheon/WebMD Common Stock
represented thereby until the holders of record of such Certificates shall
surrender such Certificates. Subject to applicable law, following surrender of
any such Certificates, the Exchange Agent or Healtheon/WebMD shall deliver to
the record holders thereof, without interest, certificates representing whole
shares of Healtheon/WebMD Common Stock issued in exchange therefor pursuant to
Section 3.1(b) hereof along with payment in lieu of fractional shares pursuant
to Section 3.1(d) hereof and the amount of any such dividends or other
distributions with a record date after the Effective Time payable with respect
to such whole shares of Healtheon/WebMD Common Stock.
(e) Transfers of Ownership. If certificates for shares of
Healtheon/WebMD Common Stock are to be issued in a name other than that in which
the Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to Healtheon/WebMD or any agent
designated by it any transfer or other taxes required by reason of the issuance
of certificates for shares of Healtheon/WebMD Common Stock in any name other
than that of the registered holder of the Certificates surrendered, or
established to the satisfaction of Healtheon/WebMD or any agent designated by it
that such tax has been paid or is not payable.
(f) Required Withholding. Each of the Exchange Agent,
Healtheon/WebMD and the Surviving Corporation shall be entitled to deduct and
withhold from any consideration payable or otherwise deliverable pursuant to
this Agreement to any holder or former holder of Company Common Stock such
amounts as may be required to be deducted or withheld therefrom under the
Internal Revenue Code or under any provision of state, local or foreign tax law
or under any other applicable legal requirement. To the extent
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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.
(g) Termination of Exchange Fund, No Liability. Any portion of
the Exchange Fund (including the proceeds of any investments thereof and any
Healtheon/WebMD Common Stock) that remains unclaimed by the stockholders of
Company for 180 days after the Effective Time shall be paid to Healtheon/WebMD.
Any stockholders of Company who have not theretofore complied with this Article
4 shall thereafter look only to Healtheon/WebMD for payment of their shares of
Healtheon/WebMD Common Stock and any cash, dividends and other distributions in
respect thereof payable and/or issuable pursuant to Section 3.1(b) or this
Article 4 upon due surrender of their Certificates (or affidavits of loss in
lieu thereof), in each case, without any interest thereon. Notwithstanding
anything to the contrary in this Section 4.1, neither the Exchange Agent,
Healtheon/WebMD, the Surviving Corporation nor any party hereto shall be liable
to a holder of shares of Healtheon/WebMD Common Stock or Company Common Stock
for any amount properly paid to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
4.2 No Further Transfers of Company Common Stock. At the Effective
Time, the stock transfer books of Company shall be closed and no transfer of
Company Common Stock by any such former holder shall thereafter be made or
recognized. There shall be no further recordation of transfers on the stock
books of the Surviving Corporation of shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If after the Effective Time
Certificates are presented to the Surviving Corporation for any reason, they
shall be exchanged as provided in this Article 4.
4.3 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such shares of
Healtheon/WebMD Common Stock, cash for fractional shares, if any, as may be
required pursuant to Section 3.1(d) and any dividends or distributions payable
pursuant to Section 4.1(d); provided, however the Exchange Agent may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver an indemnity
against any claim that may be made against the Surviving Corporation,
Healtheon/WebMD, Company or the Exchange Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed.
4.4 Rights of Former Stockholders. Former stockholders of record of
Company will not be entitled to vote or give their consent after the Effective
Time at any meeting or action by written consent of Healtheon/WebMD stockholders
until such holders have exchanged their certificates representing Company
Capital Stock (other than Company Common Stock to be canceled pursuant to
Sections 3.3 of this Agreement) for certificates representing Healtheon/WebMD
Common Stock in accordance with the provisions of this Agreement.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF COMPANY
Subject to the exceptions set forth in the disclosure letter
referencing specific representations delivered to Healtheon/WebMD on the date of
this Agreement (the "Company Disclosure Letter"), as of the date hereof and as
of the Closing Date, Company represents and warrants to Healtheon/WebMD and
Merger Corp as follows:
5.1 Organization, Standing, and Power. Company is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Washington and has the corporate power and authority to carry on its business as
it has been and is now being conducted. Company is duly qualified or licensed to
transact business as a foreign corporation and is in good standing in all
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed would not have
a Company Material Adverse Effect. Copies of the Charter and all amendments
thereto of Company and the bylaws, as amended, of Company and copies of all
resolutions adopted and action taken by the stockholders or Board of Directors
and all committees thereof of Company, which have been made available to
Healtheon/WebMD for review, are true and complete in all Material respects and
accurately reflect all proceedings of the stockholders and Board of Directors
(and all committees thereof) of Company. The stock record books of Company,
which have been made available to Healtheon/WebMD for review, contain true and
complete records of the record ownership of Company Capital Stock and all prior
issuances and transfers of record ownership of the shares of its capital stock.
5.2 Authorization of Agreement; No Breach. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary
corporate action of Company, other than the meeting of the stockholders of
Company to approve this Agreement to be held pursuant to Section 8.1. This
Agreement constitutes, and all agreements and other instruments and documents to
be executed and delivered by Company pursuant to this Agreement will constitute,
legal, valid and binding obligations of Company enforceable against it in
accordance with their respective terms, except to the extent such enforceability
is subject to (i) Laws of general application relating to bankruptcy,
insolvency, moratorium and the relief of debtors, (ii) the availability of
specific performance, injunctive relief or other equitable remedies and (iii)
limitations on the enforceability of indemnification provisions under applicable
federal and state securities Laws. The execution, delivery and performance of
this Agreement and the agreements and other documents and instruments to be
executed and delivered by Company pursuant to this Agreement and the
consummation of the transactions contemplated hereby and thereby will not,
subject to obtaining the Consents identified or contemplated herein (including
without limitation all filings or Consents under the HSR Act, the Securities
Laws and state securities Laws), (i) violate or result in a breach of the
Charter or bylaws of Company; (ii) violate any Law, Order, administrative
decision or award of any court, arbitrator, mediator, tribunal or Regulatory
Authority applicable to or binding upon Company or upon the Assets or business
of Company; (iii) conflict with or constitute a Default under any Material
Contract to which Company is a party or by which Company is
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bound; or (iv) create a Material Lien upon the Assets or business of Company,
other than, in the case of clauses (ii), (iii) and (iv) above, any such
violation, conflict, Default, or Lien that, if occurring, would not have a
Company Material Adverse Effect and other than Liens created under the Security
Agreement executed by Company in connection with the Loan Agreement executed
pursuant to Section 8.16.
5.3 Capital Stock.
(a) As of the date hereof, the authorized capital stock of
Company consists of (i) 100,000,000 shares of Company Common Stock, of which
24,109,705 shares are issued and outstanding, and (ii) 1,000,000 shares of
Company Preferred Stock, of which no shares are issued and outstanding. Company
has no other capital stock authorized, issued or outstanding. All of such shares
are duly and validly issued and outstanding, are fully paid and non-assessable,
and were issued in compliance with the 1933 Act and all applicable state
securities Laws, except where the failure to comply would not have a Company
Material Adverse Effect.
(b) As of the date hereof, 6,826,752 shares of Company Common
Stock were subject to issuance pursuant to outstanding Company Options, and as
of the date hereof, 140,878 shares of Company Common Stock were subject to
issuance pursuant to outstanding Company Warrants (exclusive of the
Healtheon/WebMD Warrant issued pursuant to Section 8.16). Section 5.3(b) of the
Company Disclosure Letter sets forth the following information with respect to
the Company Options outstanding as of the date hereof: (i) the aggregate number
of shares of Company Common Stock subject to Company Options under each Company
Stock Plan; and (ii) the exercise price of the Company Options outstanding under
each Company Stock Plan. As a result of the execution of the Voting Agreements,
vesting of all Company Options granted pursuant to the Company Stock Plans will
accelerate (other than those where employees have specifically waived
acceleration). Section 5.3(b) of the Company Disclosure Letter also lists the
names of all individuals or entities who own Company Warrants, together with the
number of shares of Company Common Stock subject to such Warrants, the exercise
prices applicable to such Company Warrants and indicates the extent of
acceleration of such Company Warrants in the context of the transactions
contemplated hereby. The Company Options that have been designated as "incentive
stock options" under the Company Stock Plans or Contracts pursuant to which such
Company Options were granted were authorized and granted in accordance with the
rules applicable to incentive stock options under the Internal Revenue Code.
(c) Except for the Company Options, the Company Warrants and
as set forth in Section 5.3(c) of the Company Disclosure Letter, there are no
outstanding warrants, options, rights, calls or other commitments of any nature
to which Company is a party relating to Company Common Stock, and there are no
outstanding securities of Company convertible into or exchangeable for shares of
Company Common Stock or any other capital stock (together with Company Options
and Company Warrants, the "Company Equity Rights"). All Company Equity Rights
were issued or granted in compliance with the 1933 Act and all applicable state
securities Laws, except where the failure to comply would not have a Company
Material Adverse Effect.
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(d) To the Knowledge of Company, other than the Voting
Agreements entered into pursuant to Section 8.15, there are no voting agreements
or voting trusts between or among any Person or Persons relating to Company or
the Company Common Stock. Except for the Company Options, the Company Warrants
and as set forth in Section 5.3(c) of the Company Disclosure Letter, Company is
not obligated to issue or repurchase any shares of Company Capital Stock or
Company Equity Rights for any purpose and no Person has entered into any
Contract (whether preemptive or contractual) with Company for the purchase,
subscription or issuance of any unissued shares or other securities of Company,
whether now or in the future.
(e) In Company's reasonable judgement, each Stockholder
executing a Voting Agreement is an affiliate of Company within the meaning of
Rule 145 under the 1933 Act. The shares of Company Common Stock subject to the
Voting Agreements, together with the Company Common Stock issuable upon exercise
of the Healtheon/WebMD Warrants (as defined in Section 8.16), are sufficient to
approve the Merger and the Agreement for all purposes under the WBCA and
Company's Certificate of Incorporation and Bylaws, regardless of the extent to
which Company Options, Company Warrants or other Company Equity Rights may be
exercised after the date hereof.
(f) On a fully exercised (for cash) and converted to Company
Common Stock basis, the number of shares of Company Common Stock outstanding on
the date hereof would be 31,077,335. The weighted average exercise price of the
Company Options and Company Warrants outstanding on the date hereof is no less
than $6.80 per share of Company Common Stock.
5.4 Company Subsidiaries. Section 5.4 of the Company Disclosure Letter
sets forth a list of all Subsidiaries of Company. Each Subsidiary of Company is
a corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization. Each Subsidiary of
Company has the corporate power and authority to carry on its business as it is
now being conducted. Each Subsidiary of Company is duly qualified as a foreign
corporation authorized to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified or in good standing would not have a Company
Material Adverse Effect. All of the outstanding shares of capital stock or other
equity interests in each of Company's Subsidiaries have been validly issued, are
fully paid and nonassessable, and, except as set forth in the Company SEC
Documents, are owned by Company or another Subsidiary of Company free and clear
of all Liens, and none are subject to preemptive rights. Neither Company nor any
of its Subsidiaries has any equity or similar interest in any other Person
(other than Company's investments in its Subsidiaries).
5.5 SEC Filings; Financial Statements.
(a) Company has filed all reports, schedules, forms,
statements and other documents (which are publicly available) with the SEC
pursuant to applicable Securities Laws
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from January 1, 1997 to the date of this Agreement relating to Company and its
Subsidiaries (the "Company SEC Documents"), and the Company SEC Documents
constitute all of the documents required to have been filed by Company pursuant
to such Laws for such period. As of their respective dates, or if amended, as of
the date of the last such amendment, the Company SEC Documents complied in all
Material respects, with the requirements of the 1933 Act or the 1934 Act, as the
case may be, and none of the Company SEC Documents contained when filed any
untrue statement of a Material fact or omitted to state any Material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made not misleading and did not
at the time they were filed omit any documents required to be filed as exhibits
thereto. The consolidated financial statements of Company included in the
Company SEC Documents (the "Company Financial Statements") fairly presented the
consolidated financial position of Company and its consolidated Subsidiaries as
at the respective dates thereof and the consolidated results of their operations
and their consolidated cash flows for the respective periods then ended and have
been prepared in conformity with GAAP (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto). Since September 30, 1999, Company has not made any change in the
accounting practices or policies applied in the preparation of its financial
statements, except as have been required by GAAP.
(b) All documents required to be filed by Company with respect
to Company and its Subsidiaries with the SEC after the date hereof and prior to
the Effective Time (the "Subsequent Company SEC Documents") will comply, in all
Material respects, with the requirements of the 1933 Act or the 1934 Act, as the
case may be, and the Subsequent Company SEC Documents (including any and all
financial statements included therein) will not contain when filed, any untrue
statement of a Material fact with respect to Company and its Subsidiaries or
omit to state any Material fact with respect to Company and its Subsidiaries
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made not misleading.
5.6 Absence of Undisclosed Liabilities. Except for Liabilities which
are accrued or reserved against in the Company Financial Statements and
liabilities incurred in connection with the Loan Agreement entered into pursuant
to Section 8.16, neither Company nor any of its Subsidiaries has any Material
Liabilities, other than Liabilities incurred in the ordinary course of the
business consistent with past practice since September 30, 1999 or Liabilities
arising under this Agreement.
5.7 Absence of Changes. Except as set forth in the Company SEC
Documents, since September 30, 1999, Company and its Subsidiaries have conducted
their respective businesses and operations in the ordinary and usual course
consistent with past practice, except for such business and operations as have
not resulted and would not result in a Company Material Adverse Effect, and
there has not occurred (i) any event, condition or occurrence which has a
Company Material Adverse Effect or is reasonably likely to have a Company
Material Adverse Effect; or (ii) any event that, if taken during the period from
the date of this Agreement through the Effective Time, would constitute a breach
of Section 7.1 hereof.
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5.8 Tax Matters. (a) Company has filed all federal, and all Material
state, local, foreign and provincial tax returns, declarations, statements,
reports, schedules, bonus and information returns and any amendments to any of
the preceding ("Tax Returns") required to have been filed on or prior to the
date hereof, or appropriate extensions therefor have been properly obtained, and
such Tax Returns are in all Material respects true, correct and complete; (b)
all Taxes shown to be due on such Tax Returns either (x) have been timely paid
or (y) extensions for payment have been properly obtained or such Taxes are
being timely and properly contested and, in either case, adequate reserves
pursuant to GAAP have been established on Company's consolidated financial
statements with respect thereto; (c) Company and each of its Subsidiaries have
complied in all Material respects with all rules and regulations relating to the
withholding of Taxes; (d) neither Company nor any of its Subsidiaries has waived
any statute of limitations in respect of its Taxes or Tax Returns; (e) Section
5.8 of the Company Disclosure Letter sets forth all pending audits, examinations
or claims by any taxing authority of any Tax Returns; (f) except as have been
advanced in pending audits or examinations listed in Section 5.8 of the Company
Disclosure Letter, no claims that have been communicated in writing to Company
by a taxing authority in connection with the examination of any federal or
Material state Tax Returns of Company and its Subsidiaries are currently
pending; (g) all deficiencies asserted or assessments made as a result of any
examination of such Tax Returns by any taxing authority have been paid in full
or are being timely and properly contested and proper accruals pursuant to GAAP
have been established on Company's consolidated financial statements with
respect thereto; (h) neither Company nor any of its Subsidiaries has any
Material liability for Taxes of any Person other than Company and its
Subsidiaries (A) under Treasury Regulations Section 1.1502-6 (or any similar
provision of applicable Law), (B) as a transferee or successor, or (C) by virtue
of any express or implied agreement or otherwise; (i) neither Company nor any of
its Subsidiaries has been a member of any affiliated group within the meaning of
Section 1504(a) of the Internal Revenue Code other than the affiliated group of
which Company is the common parent corporation; (j) none of the property owned
or used by Company or its Subsidiaries is subject to a tax benefit transfer
lease executed in accordance with Section 168(f)(8) of the Internal Revenue Code
of 1954, as amended by the Economic Recovery Act of 1981; (k) none of the
property owned by Company or its Subsidiaries is "tax exempt use property"
within the meaning of Section 168(h) of the Internal Revenue Code; (l) except as
set forth in Section 5.8 of the Company Disclosure Letter, none of Company or
its Subsidiaries is obligated to make any payments or is a party to any
agreement that under any circumstances could obligate any of Company or its
Subsidiaries to make any payments that will not be deductible under either
Section 162(m) or Section 280G of the Internal Revenue Code (or cause Company or
any of its Subsidiaries to incur a payment to reimburse a person for a tax
imposed under Internal Revenue Code Section 4999); and (m) none of Company or
its Subsidiaries is a party to any Tax allocation agreement, any Tax sharing
agreement, or any Tax indemnity agreement.
5.9 Intellectual Property.
(a) Company or one of its Subsidiaries owns or has the right
to use all Intellectual Property which is Material to the operation of the
business of Company and its Subsidiaries as currently conducted or to products
or services currently under
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development by Company or any of its Subsidiaries (collectively, "Material
Intellectual Property"), and, except as set forth in Section 5.9 of the Company
Disclosure Letter, has the right to use and/or license, the same in the ordinary
course of Company's business without Material liability to, or any requirement
of consent from, any other person or party, which right to use or license shall
not be affected by the execution of this Agreement or the consummation of the
Merger. All Material Intellectual Property is either owned by Company or its
Subsidiaries free and clear of all Liens, is used pursuant to a license
agreement or is in the public domain; each such license agreement is valid and
enforceable and in full force and effect; neither Company nor any of its
Subsidiaries is in Material Default thereunder; and to the Knowledge of Company,
no corresponding licensor is in Material Default thereunder. Except as set forth
in Section 5.9 of the Company Disclosure Letter, none of the Material
Intellectual Property of Company and its Subsidiaries infringes or otherwise
conflicts with any Intellectual Property or other right of any Person; there is
no pending or, to the Knowledge of Company, threatened (in writing) litigation,
adversarial proceeding, administrative action or other challenge or claim
relating to any Material Intellectual Property of Company or any of its
Subsidiaries; there is no outstanding Order relating to any Material
Intellectual Property of Company or any of its Subsidiaries; to the Knowledge of
Company, there is currently no infringement by any Person of any Material
Intellectual Property of Company or any of its Subsidiaries. Notwithstanding
anything to the contrary herein, Company's only warranties with respect to (i)
the Company's right to use or license third party patents, (ii) Company
agreements to license third party patents, and (iii) infringement of third party
patents are as follows: to the Knowledge of Company (which, for purposes of this
section only, shall include the knowledge of the Persons responsible for
Intellectual Property at Company, including without limitation the Chief
Technology Officer of Company), Company has the right to use and/or license its
Material Intellectual Property without liability to, or any requirement of
consent from, any third party under such third party's patent rights; and none
of the Material Intellectual Property of Company and its Subsidiaries infringes
or otherwise conflicts with any patent of any third party.
(b) Except as set forth in Section 5.9 of the Company
Disclosure Letter, Company and each of its Subsidiaries has taken reasonable
steps to protect, maintain and safeguard its respective Material Intellectual
Property, including any Material Intellectual Property of Company or any of its
Subsidiaries for which improper or unauthorized disclosure would impair its
value or validity Materially, and has executed and required appropriate
nondisclosure agreements and made appropriate filings and registrations in
connection with the foregoing.
(c) Company or one of its Subsidiaries is the sole and
exclusive owner of all Owned Software (as defined in Section 5.9(e) below). A
true and complete list of all Material Owned Software of Company or any of its
Subsidiaries has heretofore been made available to Healtheon/WebMD and all Owned
Software acquired by Company at a cost in excess of $25,000 is set forth on the
Company Disclosure Letter. Except as set forth in Section 5.9 of the Company
Disclosure Letter and for Owned Software that is not licensed or no longer
offered for license to third parties, all of the Owned Software of Company and
any of its Subsidiaries is Year 2000 Compliant (as defined in Section 5.9(e)
below). A true and complete
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list of all Material Third Party Software (as defined in Section 5.9(e) below)
used by Company or any of its Subsidiaries has heretofore been made available to
Healtheon/WebMD. The Company has no Knowledge that any Material Third Party
Software currently used by Company or any of its Subsidiaries is not Year 2000
Compliant.
(d) Company or one of its Subsidiaries is the sole and
exclusive owner of all Owned Databases (as defined in Section 5.9(e) below). A
true and complete list of all Material Owned Databases of Company or any of its
Subsidiaries has heretofore been made available to Healtheon/WebMD. The Company
has no Knowledge that any of the Owned Databases of Company or any of its
Subsidiaries are not Year 2000 Compliant. A true and complete list of all
Material Third Party Databases (as defined in Section 5.9(f) below) used by
Company or any of its Subsidiaries has heretofore been made available to
Healtheon/WebMD.
(e) As used in this Section 5.9:
(i) "Databases" means and includes all compilations
of data and all related documentation and written narratives of all procedures
used in connection with the collection, processing and distribution of data
contained therein, together with information that describes the attributes of
certain data and such data's relationship to other data, including, without
limitation, (A) whether the data must be numerical, alphabetic, or alphanumeric,
(B) range or type limitations of the data, (C) one-to-one, one-to-many, or
many-to-many relationships with other data, (D) file layouts, and (E) data
formats, that are required to conduct the businesses of Company and its
Subsidiaries to the extent such businesses are currently conducted, including,
without limitation, the products and services currently under development by
Company or any of its Subsidiaries.
(ii) "Owned Databases" means all Databases other than
Third Party Databases.
(iii) "Owned Software" means all Software other than
Third Party Software and Software in the public domain.
(iv) "Software" means and includes all computer
programs, whether in source code, object code or other form (including without
limitation any embedded in or otherwise constituting part of a computer hardware
device), algorithms, edit controls, methodologies, applications, flow charts and
any and all systems documentation (including, but not limited to, data entry and
data processing procedures, report generation and quality control procedures),
logic and designs for all programs, and file layouts and written narratives of
all procedures used in the coding or maintenance of the foregoing, that is
required to conduct the businesses of Company and its Subsidiaries to the extent
such businesses are currently conducted, including, without limitation, the
products and services currently under development by Company or any of its
Subsidiaries.
(v) "Third Party Databases" means Databases licensed
or leased to Company or any of its Subsidiaries by third parties.
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(vi) "Third Party Software" means Software licensed
or leased to Company or its Subsidiaries by third parties, including commonly
available "shrink wrap" software copyrighted by third parties.
(vii) "Year 2000 Compliant" means, when used with
respect to any Software, that such Software will accept, receive, input,
calculate, compare, sort, store, extract, sequence, and otherwise process data
inputs and date values, and return and display date values, in a correct and
accurate manner, without interruption or abnormal end of process resulting from
the use of such date values, regardless of the dates used, whether before, on,
or after January 1, 2000, for any date value or values in the twentieth or
twenty-first centuries until the year 2034.
5.10 Insurance. A complete and accurate list of all insurance policies
held by Company and now in force (including, without limitation, property
damage, public liability, communications liability, workers' compensation,
fidelity bonds, errors and omissions, theft, forgery and other coverage) is set
forth in Section 5.10 of the Company Disclosure Schedule, and true and correct
copies of all insurance policies have been made available to Healtheon/WebMD.
There is no Material claim by Company or any of its Subsidiaries pending under
any insurance policies of Company or any of its Subsidiaries as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies.
5.11 Compliance with Laws. (i) Each of Company and its Subsidiaries
holds, and is in compliance with the terms of, all Permits necessary for the
conduct or operation of their businesses as currently conducted (the "Company
Permits"), except for failures to hold or to comply with the Company Permits
which would not have a Company Material Adverse Effect; (ii) with respect to the
Company Permits, no action or proceeding is pending or, to the Knowledge of
Company, threatened in writing, and no fact exists or event has occurred that
would have a Company Material Adverse Effect; (iii) the business of Company and
its Subsidiaries has been and is being conducted in compliance with all
applicable Laws, including without limitation all Laws concerning privacy and/or
data protection, except for violations or failures to so comply that would not
have a Company Material Adverse Effect; (iv) no investigation or review by any
Regulatory Authority with respect to Company or its Subsidiaries is pending or,
to the Knowledge of Company, threatened in writing, other than, in each case,
those which would not have a Company Material Adverse Effect; and (v) neither
Company nor any of its Subsidiaries has received any written communication in
the past two years from a Regulatory Authority that alleges that Company or any
of its Subsidiaries is not in compliance in any Material respect with any
applicable Law.
5.12 Orders and Litigation. Except as set forth in the Company SEC
Documents, there are no outstanding Orders against Company or any of its
Subsidiaries, any of their Assets or business, or, to the Knowledge of Company,
against any of Company's or its Subsidiaries' current or former directors or
officers (during the period served as such) or any other person whom Company or
any of its Subsidiaries has agreed to indemnify, as such, concerning such
Person's conduct as a director or officer of Company or any of its Subsidiaries.
Except as set
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forth in the Company SEC Documents, there is no Litigation pending or, to the
Knowledge of Company, threatened in writing against Company or any of its
Subsidiaries, any of their Assets or business, or, to the Knowledge of Company,
any of the Company's or its Subsidiaries' current or former directors or
officers or any other person whom Company or any of its Subsidiaries has agreed
to indemnify which, if adversely determined, would have a Company Material
Adverse Effect; nor is there any reasonable basis for any such Litigation that
could have an Company Material Adverse Effect.
5.13 Environmental Matters.
(a) No Person (including any Regulatory Authority) has
asserted against Company or any of its Subsidiaries (i) any written requests,
claims or demands for damages, costs, expenses or causes of action arising out
of Hazardous Materials in connection with or related to any past or present
facilities, or Assets owned, leased or operated by Company or any of its
Subsidiaries currently or in the past (collectively, the "Company Facilities"),
or (ii) any actual or alleged injury to human health or the environment by
reason of the current condition or operation of the Company Facilities, or past
conditions and operations or activities on the Company Facilities.
(b) Neither Company nor any Subsidiary is subject to any
pending, or to the Knowledge of Company, threatened (in writing) Litigation
relating to or arising from the generation, emission, disposal, discharge,
release or threatened release, treatment, or storage of any Hazardous Material
associated with the Company Facilities or Company's or any of its Subsidiaries'
operations.
(c) There is no environmental condition, situation or incident
on, at or concerning any Company Facility or Company's or any of its
Subsidiaries' operations that has resulted in or could reasonably be expected to
result in a Company Material Adverse Effect.
5.14 Contracts and Commitments. Except for agreements listed as
exhibits to any Company SEC Document and on Section 5.14 of the Company
Disclosure Letter, none of Company or any of its Subsidiaries is a party to any:
(a) employment agreement (other than oral "at-will" employment of employees and
the Company's standard for Offer Letter, the form of which has been made
available to Healtheon/WebMD); (b) collective bargaining agreement; (c) Contract
relating to the borrowing of money in excess of $1,000,000 by Company or any
Subsidiary or the guaranty of any obligation for the borrowing of money in
excess of $1,000,000 by Company or any Subsidiary; (d) Material Contract which
grants any Person the exclusive right to any of the Material Assets of Company
or any of its Subsidiaries or purports to limit in any Material respect the
manner in which, or the localities in which, Company or any of its Subsidiaries
is entitled to conduct all or any Material portion of the business of Company or
any of its Subsidiaries; (e) Contract that requires the Consent of, or
terminates or becomes terminable by, any Person other than Company or any of its
Subsidiaries as a result of the transactions contemplated by this Agreement; (f)
Material Contract of any sort, other than in the ordinary course of business,
which (i) is not terminable by Company or a Subsidiary, as applicable, on ninety
(90) or fewer days' notice at any time without penalty and contemplates the
receipt, payment or rendering by or to Company or a
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subsidiary of more than $500,000 in cash or fair market value of Assets or
securities, (ii) contemplates any joint venture, partnership, strategic alliance
or similar arrangement extending beyond six (6) months or involving equity or
investments of more than $500,000, or (iii) is otherwise Material to Company and
its Subsidiaries taken as a whole; or (g) any Material Contracts pursuant to
which any of Company's pages are linked with other web sites or pages therein,
Material Contracts with web site hosts or Internet access providers, Material
Contracts regarding data center hosting or security, Material Contracts relating
to advertising or sponsorships, Material Contracts providing for the
acquisition, purchase, license, use, display or distribution of content,
information or data or the provision of services through the Company's web
pages, or Material Contracts regarding the establishment or maintenance of
networks, servers, telecommunication links, virtual private networks or other
similar non-public networks. There is not, under any of the aforesaid
obligations, any Default by Company or any of its Subsidiaries except for
Defaults or other events which would not have a Company Material Adverse Effect.
5.15 State Takeover Statutes. The provisions of Section 23B.19.040 of
the WBCA will not apply to this Agreement or the Merger. No other state takeover
statutes or similar statute or regulation applies to the Merger and this
Agreement or the transactions contemplated by this Agreement.
5.16 Benefit Plans.
(a) Section 5.16 of the Company Disclosure Letter sets forth
the name of each Company Plan (as defined below) and of each bonus, deferred
compensation (together with a list of participants therein), incentive
compensation, profit sharing, salary continuation (together with a list of
participants therein), employee benefit, fringe benefit, stock purchase, stock
option, employment, severance, termination, golden parachute, consulting or
supplemental retirement plan or agreement relating to Company and its
Subsidiaries or to their employees or independent contractors (collectively, the
"Benefit Plans"), true copies of which have heretofore been made available to
Healtheon/WebMD. Company has also delivered to Healtheon/WebMD true, complete
and correct copies of (1) each Benefit Plan (or, in the case of any unwritten
Benefit Plans, descriptions thereof), (2) the two most recent annual reports on
Form 5500 (including all schedules and attachments thereto) filed with the IRS
with respect to each Benefit Plan (if any such report was required by applicable
Law), (3) the most recent summary plan description (or similar document) for
each Benefit Plan for which such a summary plan description is required by
applicable Law or was otherwise provided to plan participants or beneficiaries
and (4) each trust agreement and insurance or annuity contract or other funding
or financing arrangement relating to any Benefit Plan. Each Company Plan and
Benefit Plan has been administered in all Material respects in accordance with
its terms and complies in all Material respects with ERISA, the Internal Revenue
Code and all other applicable Laws. All contributions to, and payments from, the
Benefit Plans that may have been required to be made in accordance with the
terms of the Benefit Plans, any applicable collective bargaining agreement and,
when applicable, Section 302 of ERISA or Section 412 of the Internal Revenue
Code, have been timely made. All such contributions to, and payments from, the
Benefit Plans, except those payments to be made from a trust qualified under
Section 401(a) of the Internal Revenue Code, for any period ending before the
Effective Time that are
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not yet, but will be, required to be made, will be properly accrued and
reflected in the balance sheet included in the Company Financial Statements. No
"reportable event" (within the meaning of Section 4043 of ERISA) has occurred
with respect to any Company Plan for which the 30-day notice requirement has not
been waived (other than with respect to the transactions contemplated by this
Agreement); neither Company nor any of its ERISA Affiliates has withdrawn from
any Company Plan under Section 4063 of ERISA or Company Multiemployer Plan (as
defined below) under Section 4203 or 4205 of ERISA or has taken, or is currently
considering taking, any action to do so; and no action has been taken, or is
currently being considered, to terminate any Company Plan subject to Title IV of
ERISA. No Company Plan, nor any trust created thereunder, has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived. As of the most recent valuation date for each Company Plan that
is a "defined benefit plan" (as defined in Section 3(35) of ERISA (hereinafter a
"Defined Benefit Plan")), there was not any amount of "unfunded benefit
liabilities" (as defined in Section 4001(a)(18) of ERISA) under such Defined
Benefit Plan, and Company is not aware of any facts or circumstances that would
Materially change the funded status of any such Defined Benefit Plan. Company
has furnished to Healtheon/WebMD the most recent actuarial report or valuation
with respect to each Defined Benefit Plan. The information supplied to the plan
actuary by Company and any ERISA Affiliate (as defined below) for use in
preparing those reports or valuations was complete and accurate in all Material
respects and Company has no reason to believe that the conclusions expressed in
those reports or valuations are incorrect. Neither Company nor any ERISA
Affiliate has (a) engaged in a transaction described in Section 4069 of ERISA
that could subject Company to liability at any time after the date hereof or (b)
acted in a manner that could, or failed to act so as to, result in Material
fines, penalties, taxes or related charges under (x) Section 502(c)(i)(1) of
ERISA, (y) Section 4071 of ERISA or (z) Chapter 43 of the Internal Revenue Code.
There are no Material (individually or in the aggregate) actions, suits or
claims pending or, to the Knowledge of Company, threatened in writing (other
than routine claims for benefits) with respect to any Company Plan or Benefit
Plan. Neither Company nor any of its ERISA Affiliates has incurred or could
reasonably be expected to incur any Material liability under or pursuant to
Title IV of ERISA that has not been satisfied in full. To the Knowledge of
Company, no Material non-exempt prohibited transactions described in Section 406
of ERISA or Section 4975 of the Internal Revenue Code have occurred. All Company
Plans that are intended to be qualified under Section 401(a) of the Internal
Revenue Code have received a favorable determination letter as to such
qualification from the IRS, and no event has occurred, either by reason of any
action or failure to act, which could be expected to cause the loss of any such
qualification, and Company is not aware of any reason why any Company Plan and
Benefit Plan is not so qualified in operation. Company has delivered to
Healtheon/WebMD (i) a copy of the most recent determination letter received with
respect to each Company Plan for which such a letter has been issued, as well as
a copy of any pending application for a determination letter and (ii) a list of
all Company Plan amendments as to which a favorable determination letter has not
yet been received. None of Company, any of its ERISA Affiliates
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or, to the Knowledge of Company, any trustee, administrator or other fiduciary
of any Benefit Plan or any agent of any of the foregoing has engaged in any
transaction or acted in a manner that could, or has failed to act so as to,
subject Company, any such ERISA Affiliate or any trustee, administrator or other
fiduciary to any Material liability for breach of fiduciary duty under ERISA or
any other applicable law. Neither Company nor any of its ERISA Affiliates knows
or has been notified by any Company Multiemployer Plan that such Company
Multiemployer Plan is currently in reorganization or insolvency under and within
the meaning of Section 4241 or 4245 of ERISA or that such Company Multiemployer
Plan intends to terminate or has been terminated under Section 4041A of ERISA.
As used herein: (i) "Company Plan" means a "pension plan" (as defined in Section
3(2) of ERISA, other than a Company Multiemployer Plan) or a "welfare plan" (as
defined in Section 3(l) of ERISA) established or maintained by Company or any
Person that, together with Company, is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Internal Revenue Code (each, an "ERISA
Affiliate") or to which Company or any of its ERISA Affiliates has contributed
in the last six years or otherwise may have any liability; and (ii) "Company
Multiemployer Plan" means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which Company or any of its ERISA Affiliates is or has
been obligated to contribute or otherwise may have any liability.
(b) Except as contemplated by this Agreement, the consummation
of the transactions contemplated by this Agreement will not, either alone or in
combination with any other event that is reasonably likely to occur, (A) entitle
any current or former director, officer or employee of Company or any of its
ERISA Affiliates to severance pay, golden parachute payments, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, or (B) accelerate the time of payment or vesting, or increase the
amount of compensation due any such director, officer or employee.
(c) The list of welfare plans in Section 5.16 of the Company
Disclosure Letter discloses whether each welfare plan is (i) unfunded, (ii)
funded through a "welfare benefit fund", as such term is defined in Section
419(e) of the Internal Revenue Code, or other funding mechanism or (iii)
insured. Each such welfare plan may be amended or terminated without Material
liability to Company at any time after the Effective Time. Company and its ERISA
Affiliates comply in all Material respects with the applicable requirements of
Section 4980B(f) of the Internal Revenue Code with respect to each Benefit Plan
that is a group health plan, as such term is defined in Section 5000(b)(1) of
the Internal Revenue Code.
5.17 Board Approval. The Board of Directors of Company has, as of the
date of this Agreement, (a) determined that the Merger is fair to, and in the
best interests of Company and its Stockholders, and (b) approved and determined
to be advisable this Agreement and the transactions contemplated hereby and has
recommended that the Stockholders of Company adopt this Agreement.
5.18 Governmental Approvals; Required Consents. No filing or
registration with, or Consent of, any Governmental Entity or any other third
party is required by or with respect to Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or is necessary for
the consummation of the transactions contemplated hereby (including, without
limitation, the Merger) except: (i) the filing of a notification under the HSR
Act, (ii) the filing of the Articles of Merger with the Secretary of State of
the State of Washington, (iii) the Consents, filings and notifications listed in
Section 5.14(e) of the Company Disclosure Letter; (iv) the effectiveness of the
Healtheon/WebMD Registration Statement and filing any notices required under
state securities laws in accordance with Section
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8.1; and (v) such other Consents, registrations and filings the failure of which
to obtain or make would not have a Company Material Adverse Effect.
5.19 Accounts Receivable. All accounts receivable of Company and its
Subsidiaries, whether or not reflected in the Company Financial Statements
represent in all Material respects sales made in the ordinary course of
business, and the reserves shown on the Company Financial Statements have been
established in accordance with GAAP, consistently applied, and are considered by
management of Company and Company to be adequate.
5.20 Tax Treatment. Neither Company nor, to the Knowledge of Company,
any Affiliate of Company has taken any action or has any Knowledge of any fact
or circumstance that is reasonably likely to prevent the Merger from qualifying
as a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code.
5.21 Affiliate Transactions. Except as set forth in the Company SEC
Documents, there are no transactions involving Company of a nature that would be
required to be described under Item 404 of Regulation S-K promulgated under the
0000 Xxx.
5.22 Customers. Section 5.22 of the Company Disclosure Letter lists
Company's top 20 customers (collectively, the "Customers"), by the unaudited
revenues received by Company from each such Customer during 1999. Company does
not have any Knowledge of any oral or written notice from any of the Customers
stating that such Customer intends to terminate its business relationship with
Company or Materially reduce the volume of business it does with Company.
5.23 Fairness Opinion. Company's Board of Directors has received an
opinion from FleetBoston Xxxxxxxxx Xxxxxxxx Inc., dated as of the date hereof,
to the effect that as of the date hereof, the Exchange Ratio is fair to Company
Stockholders, other than Healtheon/WebMD, Merger Corp, any affiliates of
Healtheon/WebMD or Merger Corp or any Stockholders exercising dissenters' rights
under the WBCA, from a financial point of view, a written copy of which will be
delivered to Healtheon/WebMD promptly after receipt by Company.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF HEALTHEON/WEBMD AND MERGER CORP
Subject to the exceptions set forth in the disclosure letter
referencing specific representations delivered to Healtheon/WebMD on or prior to
the date of this Agreement (the "Healtheon/WebMD Disclosure Letter"), as of the
date hereof and as of the Closing Date, Healtheon/WebMD and Merger Corp, jointly
and severally, represent and warrant to Company as follows:
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6.1 Organization, Standing, and Power. (a) Healtheon/WebMD is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of Delaware, and has the power and authority to carry on its
business as it has been and is now being conducted. Healtheon/WebMD and each of
its Subsidiaries is duly qualified or licensed to transact business as a foreign
corporation and is in good standing in all jurisdictions where the character of
its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed would not have a Healtheon/WebMD Material Adverse
Effect. Copies of the Certificate of Incorporation and all amendments thereto of
Healtheon/WebMD and the bylaws, as amended, of Healtheon/WebMD and copies of all
resolutions adopted and action taken by the stockholders or Board of Directors
and all committees thereof of Healtheon/WebMD, which have been made available to
Company for review, are true and complete in all Material respects and
accurately reflect all proceedings of the stockholders and Board of Directors
(and all committees thereof) of Healtheon/WebMD.
(b) Merger Corp is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Washington as a
wholly owned Subsidiary of Healtheon/WebMD.
6.2 Authorization of Agreement; No Breach. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
corporate action of Healtheon/WebMD. This Agreement constitutes, and all
agreements and other instruments and documents to be executed and delivered by
Healtheon/WebMD pursuant to this Agreement will constitute, legal, valid and
binding obligations of Healtheon/WebMD enforceable against it in accordance with
their respective terms, except to the extent such enforceability is subject to
(i) Laws of general application relating to bankruptcy, insolvency, moratorium
and the relief of debtors and (ii) the availability of specific performance,
injunctive relief or other equitable remedies. Each of Healtheon/WebMD and
Merger Corp has the corporate power and authority necessary to execute, deliver
and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Merger, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Merger Corp. This Agreement
represents a legal, valid, and binding obligation of Merger Corp, enforceable
against Merger Corp in accordance with its terms. Except in such case that will
not result in a Healtheon/WebMD Material Adverse Effect, the execution, delivery
and performance of this Agreement and the agreements and other documents and
instruments to be executed and delivered by Healtheon/WebMD pursuant to this
Agreement and the consummation of the transactions contemplated hereby and
thereby will not, subject to obtaining the Consents identified or contemplated
herein (including without limitation all filings or Consents under the HSR Act,
the Securities Laws and state securities Laws and the rules and regulations of
the NASD), (i) violate or result in a breach of or Default under the certificate
of incorporation or bylaws of Healtheon/WebMD or any of its Subsidiaries or any
other Material Contract to which Healtheon/WebMD or any of its Subsidiaries is a
party or is bound; (ii) violate any Law, Order, administrative decision or award
of any court, arbitrator, mediator, tribunal or Regulatory Authority applicable
to or binding upon Healtheon/WebMD or its Subsidiaries or upon their respective
securities, Assets
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or business; or (iii) create a Material Lien upon the securities, Assets or
business of Healtheon/WebMD or any of its Subsidiaries.
6.3 Capital Stock.
(a) As of February 7, 2000, the authorized capital stock of
Healtheon/WebMD consists of: (i) 600,000,000 shares of Healtheon/WebMD Common
Stock, of which 179,772,040 shares (plus any shares issued upon exercise of
Healtheon/WebMD Options and Warrants (as defined in Section 6.3(b) since
February 7, 2000) are issued and outstanding and (ii) 5,000,000 shares of
Preferred Stock, $0.0001 par value per share, of which 155,951 shares are issued
and outstanding. All of the outstanding shares of Healtheon/WebMD Common Stock
have been duly authorized and validly issued, and are fully paid and
nonassessable, and were issued in compliance with the 1933 Act and applicable
state securities Laws, except where the failure to comply would not have a
Healtheon/WebMD Material Adverse Effect.
(b) The authorized capital stock of Merger Corp consists of
10,000 shares of Merger Corp Common Stock, of which 100 shares are validly
issued and outstanding, fully paid and nonassessable, are owned directly by
Healtheon/WebMD free and clear of any Liens, and constitutes all of the
outstanding shares of capital stock of Merger Corp.
(c) As of February 7, 2000, an aggregate of 65,701,201 shares
of Healtheon/WebMD Common Stock (less any shares of Common Stock subject to
Healtheon/WebMD Options and Warrants that have been exercised since February 7,
2000) are subject to issuance pursuant to outstanding options to purchase
Healtheon/WebMD Common Stock under Healtheon/WebMD's stock option plans and
outstanding warrants to purchase Healtheon/WebMD Common Stock. (Stock options
granted by Healtheon/WebMD pursuant to its stock option plans and warrants are
referred to in this Agreement as "Healtheon/WebMD Options and Warrants".) All
Healtheon/WebMD Options and Warrants were issued or granted in Material
compliance with the 1933 Act and applicable state securities Laws, except where
the failure to comply would not have a Healtheon/WebMD Material Adverse Effect.
(d) Except as set forth above, in the Healtheon/WebMD SEC
Documents and in Section 6.3(d) of the Healtheon/WebMD Disclosure Letter, as of
the date of this Agreement, there are no subscriptions, options, warrants,
equity securities, partnership interests or similar ownership interests, calls,
rights (including preemptive rights), commitments or agreements of any character
to which Healtheon/WebMD or any of its Subsidiaries is a party or by which it is
bound obligating Healtheon/WebMD or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, or repurchase, redeem or
otherwise acquire, or cause the repurchase, redemption or acquisition of, any
shares of capital stock, partnership interests or similar ownership interests of
Healtheon/WebMD or any of its Subsidiaries or obligating Healtheon/WebMD or any
of its Subsidiaries to grant, extend, accelerate the vesting of or enter into
any such subscription, option, warrant, equity security, call, right, commitment
or agreement.
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6.4 Healtheon/WebMD SEC Filings; Financial Statements. Healtheon/WebMD
has filed all reports, schedules, forms, statements and other documents (which
are publicly available) with the SEC pursuant to applicable Securities Laws from
January 1, 1999 to the date of this Agreement relating to Healtheon/WebMD and
its Subsidiaries (the "Healtheon/WebMD SEC Documents"), and the Healtheon/WebMD
SEC Documents constitute all of the documents required to have been filed by
Healtheon/WebMD pursuant to such Laws for such period. As of their respective
dates, or if amended, as of the date of the last such amendment, the
Healtheon/WebMD SEC Documents complied, and all documents required to be filed
by Healtheon/WebMD with the SEC after the date hereof and prior to the Effective
Time (the "Subsequent Healtheon/WebMD SEC Documents") will comply, in all
Material respects, with the requirements of the 1933 Act or the 1934 Act, as the
case may be, and none of the Healtheon/WebMD SEC Documents contained when filed,
and the Subsequent Healtheon/WebMD SEC Documents will not contain when filed,
any untrue statement of a Material fact or omitted, or will omit, to state any
Material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, or are to be
made, not misleading and did not at the time they were filed omit any documents
required to be filed as exhibits thereto. The consolidated financial statements
of Healtheon/WebMD included in the Healtheon/WebMD SEC Documents when filed
fairly presented, and those included in the Subsequent Healtheon/WebMD SEC
Documents when filed will fairly present, the consolidated financial position of
Healtheon/WebMD and its consolidated Subsidiaries as at the respective dates
thereof and the consolidated results of their operations and their consolidated
cash flows for the respective periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein) and have been prepared in conformity with GAAP
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto).
6.5 Absence of Undisclosed Liabilities. Except as disclosed on the
Healtheon/WebMD SEC Documents, Healtheon/WebMD does not have any Material
Liabilities, other than Liabilities incurred in the ordinary course of business
since September 30, 1999 or Liabilities arising under this Agreement.
6.6 Absence of Certain Changes or Events. Except as disclosed in
Section 6.6 of the Healtheon/WebMD Disclosure Letter, since September 30, 1999,
there has not occurred (i) any events, changes or occurrences (other than events
or condition affecting the economy generally) which have had, or are reasonably
likely to have a Healtheon/WebMD Material Adverse Effect, (ii) any declaration,
setting aside or payment of any dividend or distribution of any kind by
Healtheon/WebMD or Merger Corp on any class of its capital stock or (iii) any
change in Healtheon/WebMD's accounting methods, principles or practices utilized
by or affecting Healtheon/WebMD except as required by concurrent changes in
GAAP.
6.7 Compliance with Laws. The business of Healtheon/WebMD and Merger
Corp has been and is being conducted in compliance with all applicable Laws,
except for violations or failures to so comply that would not have Material
Adverse Effect on Healtheon/WebMD; and no investigation or review by any
Governmental Entity with respect to Healtheon/WebMD
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or Merger Corp is pending or, to the Knowledge of Healtheon/WebMD, threatened in
writing, other than, in each case, those which would not have a Healtheon/WebMD
Material Adverse Effect.
6.8 Governmental Approvals; Required Consents. No filing or
registration with, or Consent of, any Governmental Entity or any other third
party is required by or with respect to Healtheon/WebMD or Merger Corp in
connection with the execution and delivery of this Agreement or is necessary for
the consummation of the transactions contemplated hereby (including, without
limitation, the Merger) except: (i) the filing of a notification under the HSR
Act, (ii) the filing of Articles of Merger with the Secretary of State of the
State of Washington, (iii) the Consents, filings and notifications listed in
Section 6.8 of the Healtheon/WebMD Disclosure Letter; (iv) the effectiveness of
the Healtheon/WebMD Registration Statement and filing any notices required under
state securities laws in accordance with Section 8.1; and (v) such other
Consents, registrations and filings the failure of which to obtain or make would
not have a Healtheon/WebMD Material Adverse Effect.
6.9 Healtheon/WebMD Common Stock. The shares of Healtheon/WebMD Common
Stock to be issued in accordance with the terms and provisions of this Agreement
will, when so issued, be duly authorized, validly issued, fully paid and
non-assessable and will have been issued in compliance with the 1933 Act and
applicable state securities laws, except where the failure to comply would not
have a Material adverse effect.
6.10 Interim Operations of Merger Corp. Merger Corp was formed solely
for the purpose of engaging in the transactions contemplated by this Agreement,
has engaged in no other business activities and has conducted its operations
only as contemplated hereby. Merger Corp has no liabilities other than those
existing under this Agreement.
6.11 Tax Treatment. Neither Healtheon/WebMD nor, to the Knowledge of
Healtheon/WebMD, any Affiliate of Healtheon/WebMD has taken any action or has
any Knowledge of any fact or circumstance that is reasonably likely to prevent
the transactions contemplated hereby, including the Merger, from qualifying as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code.
6.12 Orders and Litigation. Except as set forth in the Healtheon/WebMD
SEC Documents, there are no outstanding Orders against Healtheon/WebMD or any of
its Subsidiaries, any of their Assets or business, or, to the Knowledge of
Healtheon/WebMD, any of Healtheon/WebMD's or its Subsidiaries' current or former
directors or officers (during the period served as such) or any other person
whom Healtheon/WebMD or any of its Subsidiaries has agreed to indemnify, as
such. Except as set forth in the Healtheon/WebMD SEC Documents, there is no
Material Litigation pending or, to the Knowledge of Healtheon/WebMD, threatened
in writing against Healtheon/WebMD or any of its Subsidiaries, any of their
Assets or business, or, to the Knowledge Healtheon/WebMD, any of the
Healtheon/WebMD's or its Subsidiaries' current or former directors or officers
or any other person whom Healtheon/WebMD or any of its Subsidiaries has agreed
to indemnify, as
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such; nor is there any reasonable basis for any such Litigation that could
reasonably be expected to have a Healtheon/WebMD Material Adverse Effect.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CLOSING
7.1 Conduct of Company's Business. Except as set forth in Section 7.1
of the Company Disclosure Letter, between the date hereof and the Closing Date,
except with the prior written consent of Healtheon/WebMD or as expressly
contemplated by this Agreement, Company shall, and shall cause its Subsidiaries
to:
(a) conduct its business in substantially the same manner as
presently being conducted and refrain from entering into any Material
transaction or Material Contract other than in the ordinary course of business
and consistent with past practices; and not make any Material change in its
methods of management, marketing, accounting, or operations;
(b) consult with Healtheon/WebMD prior to undertaking any
Material new business opportunity outside the ordinary course of business;
(c) not enter into any new employment Contract or make any
commitment to employees (including any commitment to pay severance, retirement
or other benefits) except in the ordinary course of business and consistent with
past practice;
(d) not increase the compensation (including fringe benefits)
payable or to become payable to any officer, director, employee, agent or
independent contractor of Company, except general hourly rate increases and
normal merit increases for employees other than (x) executive officers made in
the ordinary course of business and consistent with past practice and (y) for
increases committed to prior to the date of this Agreement and not in
contemplation thereof;
(e) except as contemplated in the Loan Agreement (as defined
in Section 8.16) or in the ordinary course of business and consistent with past
practices, not (i) create or incur any indebtedness for borrowed money (or, even
if in the ordinary course of business, not in excess of $500,000 in the
aggregate), or (ii) create any Liens of any nature whatsoever other than Liens
created under the Security Agreement executed by Company in connection with the
Loan Agreement executed pursuant to Section 8.16;
(f) except in the ordinary course of business and, even if in
the ordinary course of business, then not in an amount to exceed $200,000
individually or $1,000,000 in the aggregate, not make or commit to make any
capital expenditure, or enter into any lease of capital equipment as lessee or
lessor;
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(g) not enter into, terminate or Materially amend any Material
strategic alliance agreement or any other Material Contract relating to the
distribution, sale, license or marketing by third parties of Company's products
or services;
(h) not amend the Charter, Bylaws or other governing
instruments of Company, except as contemplated by this Agreement;
(i) not make any Material changes in its accounting methods or
practices or revalue its Assets, except for (i) those changes required by the
SEC or GAAP, and (ii) changes in its tax accounting methods or practices that
may be necessitated by changes in applicable Tax Laws;
(j) not issue, sell, pledge, encumber, authorize the issuance
of, enter into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, (i) any additional
shares of Company Common Stock, or any stock appreciation rights, or any option,
warrant, conversion, or other right to acquire any such stock, or any security
convertible into any such stock, or pay or declare or agree to pay or declare
any dividend or other distribution with respect to any Company Common Stock,
except for (A) shares of Company Common Stock which may be issued upon the
exercise of the Company Options or Company Warrants outstanding or issued on the
date hereof, including the Healtheon/WebMD Warrants; (B) options issued to new
employees of Company under the Company Stock Plans in the ordinary course of
business not to exceed 750,000 in the aggregate; and (C) 22,500 shares of
Company Common Stock issuable to Xxx X. Xxxxx; or (ii) any Material Assets of
Company or any of its Subsidiaries, except for sales in the ordinary course of
business and in a manner consistent with past practice;
(k) not make any loan to any Person or increase the aggregate
amount of any loan currently outstanding to any Person, except for usual and
customary advances to employees made in the ordinary course of business;
(l) not purchase or redeem, or agree to purchase or redeem,
any Company Capital Stock or Company Equity Rights;
(m) except as provided by the terms of the Company Options on
the date hereof and except for obtaining waivers of acceleration of vesting of
Company Options triggered by the Voting Agreements entered into pursuant to
Section 8.15, not waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of options or restricted stock, reprice options
granted under any Company Stock Plans or authorize cash payments in exchange for
any options granted under any of such plans;
(n) not grant any severance or termination pay to any officer
or employee except pursuant to written agreements outstanding or policies
existing on the date hereof or adopt any new severance plan;
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(o) not transfer or license to any Person or otherwise extend,
amend or modify any rights to the Intellectual Property of Company, or enter
into any grants of future patent rights, other than in the ordinary course of
business consistent with past practice;
(p) not acquire or agree to acquire or, subject to Section
8.7, be acquired, by merging or consolidating with, or by purchasing any Person,
interest in, portion of or the capital or the Assets of, or by any other manner,
any business or any Person or division thereof, otherwise acquire or agree to
acquire any Assets which are Material to the business of Company or enter into
any joint ventures, strategic partnerships or alliances;
(q) not Materially modify or amend, or terminate any Material
Contract (including any of the Company Stock Plans) to which Company is a party
or waive, release, or assign any Material rights or claims thereunder, in any
such case in a manner Materially adverse to Healtheon/WebMD; and
(r) not make any agreement or commitment which will result in
or cause to occur a violation of any of the items contained in paragraphs (a)
through (q) above.
7.2 Conduct of Healtheon/WebMD's Business. Except as set forth in
Section 7.2 of the Healtheon/WebMD Disclosure Letter, between the date hereof
and the Closing Date, except with the prior written consent of Company or as
expressly contemplated by this Agreement, Healtheon/WebMD shall, and shall cause
its Subsidiaries to:
(a) use reasonable efforts to maintain its material rights and
material franchises and preserve its material relationships with customers,
suppliers and others having business dealings with it;
(b) not to declare or pay any dividends on or make other
distributions in respect of any of its capital stock;
(c) not take any action that would prevent or impede the
Merger from qualifying as a reorganization under Section 368(a) of the Internal
Revenue Code;
(d) not take any action that would, or that could reasonably
be expected to, result in any of the conditions to the Merger set forth in
Article 9 not being satisfied;
(e) not take any action that would cause any of its
representations and warranties set forth in this Agreement to no longer be true
and correct; and
(f) not authorize, commit or agree to take any of the
foregoing actions.
7.3 Adverse Changes in Condition. Each Party agrees (a) to give written
notice promptly to the other Parties upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have a Healtheon/WebMD Material
Adverse Effect or a Company Material Adverse Effect, respectively, or (ii) would
cause or constitute a breach of any of its representations,
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warranties, agreements or covenants contained herein, such that the conditions
set forth in Sections 9.2(a) and (b) or Sections 9.3(a) and (b) with respect to
such Party (as appropriate) would not be satisfied as of the time of such breach
or as of the time of such representation or warranty shall have become untrue,
and (b) to use its reasonable efforts to prevent or promptly to remedy the same.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Stockholder Approval; Registration Statement.
(a) Unless this Agreement is terminated in accordance with its
terms, the Board of Directors of Company shall unanimously recommend to the
Stockholders that the Stockholders vote in favor of the adoption of this
Agreement and the Merger and the Board of Directors and officers of Company
shall use their reasonable best efforts to obtain such Stockholders' approval.
Regardless of whether the Board of Directors of Company recommends or withdraws
its recommendation to the Stockholders that the Stockholders vote in favor of
the adoption of this Agreement and the Merger, unless this Agreement is
terminated in accordance with Section 10.1 hereof, Company and its Board of
Directors shall take all action necessary and in accordance with the WBCA and
its Charter and Bylaws to convene a meeting of Company's Stockholders to
consider adoption and approval of this Agreement and approval of the Merger (the
"Stockholders Meeting") to be held as promptly as practicable, in any event,
within 30 days after the declaration of the effectiveness of the Healtheon/WebMD
Registration Statement. Company will use its reasonable best efforts to solicit
from its Stockholders proxies in favor of the adoption and approval of this
Agreement and the approval of the Merger, and will take all other action
necessary or advisable to secure the vote or consent of its Stockholders
required by the WBCA to obtain such approvals and shall ensure that the
Stockholders Meeting is called, noticed, convened, held and conducted, and that
all proxies solicited by Company in connection with the Stockholders Meeting are
solicited, in compliance with the WBCA, Company's Charter and Bylaws, and all
other applicable legal requirements. The Board of Directors of the Company
(including any committee thereof) may not withdraw, amend or modify, or propose
to withdraw or modify, in a manner adverse to Healtheon/WebMD the approval or
recommendation by the Company Board of Directors of this Agreement or the Merger
unless, following the receipt of a Superior Proposal (as defined in Section
8.7(c), below), in the reasonable good faith judgment of the Company Board,
after consultation with outside legal counsel, the failure to do so would be
inconsistent with its fiduciary duties to the Company's Stockholders under
applicable law; provided, however, that, the Board of Directors of the Company
shall submit this Agreement to the Company's stockholders for approval, whether
or not the Board of Directors of the Company at any time subsequent to the date
hereof determines that this Agreement is no longer advisable or recommends that
the stockholders of the Company reject it or otherwise modifies or withdraws its
recommendation. Unless the Board of Directors of the Company has withdrawn its
recommendation of this Agreement in compliance herewith, the Company shall use
its best efforts to solicit from stockholders of the Company proxies in favor of
the approval and adoption of this Agreement and the Merger and to secure the
vote or consent of stockholders required by
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the WBCA and its Articles of Incorporation and Bylaws to approve and adopt this
Agreement and the Merger.
(b) Subject to Section 8.1(a), the Proxy Statement/Prospectus
shall include a statement to the effect that the Board of Directors of Company
has recommended that the Stockholders vote in favor of the approval and adoption
of the Agreement and the Merger. Notwithstanding anything permitted by Section
8.1(a), neither Company nor its Board of Directors shall take any action that
would cause any Voting Agreement to be unenforceable in accordance with its
terms under applicable law.
(c) (i) As promptly as reasonably possible after the execution
of this Agreement, Company and Healtheon/WebMD shall prepare and cause to be
filed with the SEC the Proxy Statement/Prospectus and Healtheon/WebMD shall
prepare and cause to be filed with the SEC the Healtheon/WebMD Registration
Statement in which the Proxy Statement/Prospectus will be included as a
prospectus. Each of the Parties hereto shall provide promptly to the other such
information concerning its business and financial statements and affairs as, in
the reasonable judgment of the providing Party or its counsel, may be required
or appropriate for inclusion in the Proxy Statement/Prospectus and the
Healtheon/WebMD Registration Statement or in any amendments or supplements
thereto, and to cause its counsel and auditors to cooperate with the others'
counsel and auditors in preparation of the Proxy Statement/Prospectus and the
Healtheon/WebMD Registration Statement. Healtheon/WebMD will respond to any
comments to the SEC, will use its respective commercially reasonable best
efforts to have the Healtheon/WebMD Registration Statement declared effective
under the 1933 Act as promptly as reasonably practicable after such filing and
Company will cause the Proxy Statement/Prospectus to be mailed to Company's
Stockholders at the earliest practicable time after the Healtheon/WebMD
Registration Statement is declared effective by the SEC. Whenever any event
occurs which is required to be set forth in an amendment or supplement to the
Proxy Statement/Prospectus or the Healtheon/WebMD Registration Statement, the
Parties hereto, as the case may be, will promptly inform the other Parties
hereto of such occurrence and cooperate in filing with the SEC or its staff or
any other governmental officials, and/or mailing to Company's Stockholders, such
amendment or supplement.
(ii) Each Party hereto hereby covenants that none of the
information to be supplied by it or on its behalf for inclusion or incorporation
by reference in the Healtheon/WebMD Registration Statement will, at the time
such Healtheon/WebMD Registration Statement becomes effective under the 1933
Act, contain any untrue statement of a Material fact or omit to state any
Material fact required to be stated therein or necessary in order to make the
statements therein not misleading. Each Party hereto hereby covenants that none
of the information to be supplied by it or on its behalf for inclusion or
incorporation by reference in the Proxy Statement/Prospectus will, at the time
such documents are filed, when such documents are first mailed to the
Stockholders of Company, at the time of the Stockholders Meeting and at the
Effective Time, contain any untrue statement of a Material fact or omit to state
any Material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Healtheon/WebMD Registration Statement and Proxy
Statement/Prospectus
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will comply as to form in all Material respects with the provisions of the 1933
Act and the 1934 Act, as applicable, and the rules and regulations promulgated
by the SEC thereunder.
(d) Company shall cause its certified public accountants to
deliver a comfort letter, in form and substance customary for transactions of
this type and reasonably satisfactory to Healtheon/WebMD, with respect to any
financial information relating to Company included in the Healtheon/WebMD
Registration Statement. In the event that the Company has not filed its 1999
audited financial statements with the SEC on or before March 31, 2000, the
Company will deliver to Healtheon/WebMD customary review letters from its
auditors with respect to each of the first three fiscal quarters of 1999.
8.2 Applications.
(a) The Parties shall promptly prepare and file, and shall
cooperate in the preparation and, where appropriate, filing of, applications
with any Regulatory Authorities having jurisdiction over the transactions
contemplated by this Agreement seeking the requisite Consents necessary to
consummate the transactions contemplated by this Agreement. To the extent
required by the HSR Act, each of the Parties will promptly file with the United
States Federal Trade Commission and the United States Department of Justice the
notification and report form required for the transactions contemplated hereby
and any supplemental or additional information which may reasonably be requested
in connection therewith pursuant to the HSR Act and will comply in all Material
respects with the requirements of the HSR Act. The Parties shall deliver to each
other copies of all filings, correspondence and orders to and from all
Regulatory Authorities in connection with the transactions contemplated hereby.
Notwithstanding anything herein to the contrary, nothing in this Agreement shall
be deemed to require Healtheon/WebMD, Company or any Subsidiary or Affiliate of
any such Party to agree to any Material divestiture by itself or any of its
Affiliates of shares of capital stock or of any business or Assets, or the
imposition of any Material limitation on the ability of any of them to conduct
their businesses or to own or exercise control of such Assets or stock.
(b) Healtheon/WebMD shall use commercially reasonable best
efforts to cause the shares of Healtheon/WebMD Common Stock to be issued
pursuant to this Agreement in the Merger to be listed for trading on the Nasdaq
National Market no later than the Closing.
8.3 Filings with State Offices. Upon the terms and subject to the
conditions of this Agreement, the Articles of Merger shall be executed and filed
with the Secretary of State of the State of Washington in accordance with the
WBCA in connection with the Closing.
8.4 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to lift or rescind any
Order adversely affecting its legal ability to consummate the transactions
contemplated herein and to cause to be satisfied the conditions referred to in
Article 9 of this Agreement; provided, that nothing herein
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shall preclude either Party from exercising its rights under this Agreement.
Each Party shall use, and shall cause each of its Subsidiaries to use, its
reasonable efforts to obtain all Consents necessary or desirable for the
consummation of the transactions contemplated by this Agreement (including
without limitation any Consents listed in Sections 5.18 and 6.8 of this
Agreement). In connection with and without limiting the foregoing, Company and
its Board of Directors shall, if any state takeover statute or similar Law is or
becomes applicable to the Merger, this Agreement or any of the transactions
contemplated by this Agreement, use commercially reasonable efforts to ensure
that the Merger and the other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such Law on the Merger, this
Agreement and the transactions contemplated hereby.
8.5 Investigation and Confidentiality.
(a) Prior to the Effective Time, Healtheon/WebMD and Company
shall each advise the other of all Material developments relevant to its
business and to consummation of the Merger and shall permit each other to make
or cause to be made such investigation of the business and properties of it and
its Subsidiaries and of their respective financial and legal conditions as the
other may reasonably request, provided that such investigation shall be
reasonably related to the transactions contemplated hereby and shall not
interfere unnecessarily with normal operations. No information or Knowledge
obtained in any investigation pursuant to this Section 8.5(a) shall affect or be
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the Parties to consummate the Merger.
(b) Each Party shall, and shall cause its advisers and agents
to, maintain the confidentiality of all confidential information furnished to it
by the other Parties concerning or related to any such other Parties or their
Subsidiaries and shall not use or disclose such information for any purpose
except in furtherance of the transactions contemplated by this Agreement. If
this Agreement is terminated prior to the Effective Time, each Party shall
promptly return or certify the destruction of all documents and copies thereof,
and all work papers containing confidential information received from the other
Parties.
8.6 Nasdaq National Market Listing. The Surviving Corporation shall use
its best efforts to cause the Company Common Stock to be de-listed from the
Nasdaq National Market and de-registered under the Exchange Act as soon as
practicable following the Effective Time.
8.7 No Solicitation by Company.
(a) From and after the date of this Agreement until the
Effective Time or termination of this Agreement pursuant to Article 10, Company
and its Subsidiaries will not, nor will they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them to,
directly or indirectly, (i) solicit, initiate, encourage or induce the making,
submission or announcement of any Company Acquisition Proposal (as hereinafter
defined); (ii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other action
to facilitate any inquiries or the making of
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any proposal that constitutes or may reasonably be expected to lead to, any
Company Acquisition Proposal; (iii) engage in discussions with any person with
respect to any Company Acquisition Proposal, except as to the existence of these
provisions, or (iv) enter into any letter of intent or similar document or any
Contract contemplating or otherwise relating to any Company Acquisition
Proposal. For purposes of this Agreement, "Company Acquisition Proposal" shall
mean any offer or proposal (other than an offer or proposal by Healtheon/WebMD)
relating to any transaction or series of related transactions involving: (A) any
purchase from Company or acquisition by any person or "group" (as defined under
Section 13(d) of the Exchange Act and the rules and regulations thereunder) of
more than a 15% interest in the total outstanding voting securities of Company
or any tender offer or exchange offer that if consummated would result in any
person or "group" (as defined under Section 13(d) of the Exchange Act and the
rules and regulations thereunder) beneficially owning 15% or more of the total
outstanding voting securities of Company or any merger, consolidation, business
combination or similar transaction involving Company; (B) any sale, lease (other
than in the ordinary course of business), exchange, transfer, license (other
than in the ordinary course of business), acquisition or disposition of more
than 15% of the consolidated assets of Company; (C) any other transaction that
results in the creation of a minority interest in a subsidiary of Company that
exceeds 15% of the consolidated assets of Company or that results in a
subsidiary of Company which accounts for more than 15% of the consolidated
assets of Company no longer being a subsidiary of Company; or (D) any
liquidation or dissolution of Company. Company and its subsidiaries will
immediately cease any and all existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any Company Acquisition
Proposal. Company agrees that it will take all necessary steps to promptly
inform the individuals or entities referred to in the first sentence of this
Section 8.7(a) of the obligations undertaken in this Section 8.7(a). Company
also agrees that if it has not already done so it will promptly request each
person that has heretofore executed a confidentiality agreement in connection
with its consideration of acquiring it or any of its subsidiaries to return all
confidential information heretofore furnished to such person by or on behalf of
it or any of its subsidiaries. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in this Section 8.7(a) by any
officer, director or employee of Company or any of its subsidiaries or any
investment banker, attorney or other advisor or representative of Company or any
of its subsidiaries shall be deemed to be a breach of this Section 8.7(a) by
Company.
(b) In addition to the obligations of Company set forth in
paragraph (a) of this Section 8.7, Company shall immediately advise
Healtheon/WebMD orally and in writing of any request for information or other
inquiry which Company reasonably believes may lead to a Company Acquisition
Proposal, the material terms and conditions of such request, Company Acquisition
Proposal or inquiry, and the identity of the person or group making any such
request, Company Acquisition Proposal or inquiry. Company will keep
Healtheon/WebMD informed as promptly as practicable in all material respects of
the status and details (including material amendments or proposed material
amendments) of any such request, Company Acquisition Proposal or inquiry.
(c) Notwithstanding subsections (a) and (b), above, that
nothing contained in this Section 8.7 shall prevent the Company or the Company's
Board of Directors from furnishing
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non-public information to, or entering into discussions or negotiations with,
any person in connection with an unsolicited, bona fide written Company
Acquisition Proposal by such person, if and only to the extent that (1) such
person has made a written proposal to the Company Board of Directors to
consummate a Company Acquisition Proposal, (2) the Company Board of Directors
determines in good faith, after consultation with the Company's financial
advisor, that such Company Acquisition Proposal is reasonably capable of being
completed on substantially the terms proposed, and would, if consummated, result
in a transaction that would provide greater value to the holders of Company
Common Stock than the transaction contemplated by this Agreement (a "Superior
Proposal"), (3) the failure to take such action would, in the reasonable good
faith judgment of the Company Board of Directors, after consultation with
outside legal counsel, be inconsistent with its fiduciary duties to the
Company's stockholders under applicable law, and (4) prior to furnishing such
non-public information to, or entering into discussions or negotiations with,
such person or entity, the Company receives from such person an executed
confidentiality and standstill agreement with material terms no less favorable
to the Company than those contained in the Confidentiality and Nonsolicitation
Agreement between Company and Healtheon/WebMD dated February 9, 2000. The
Company agrees not to release any party to, or waive any provision of, any
standstill agreement to which it is a party or any confidentiality agreement
between it and another person who has made, or who may reasonably be considered
likely to make, a Company Acquisition Proposal, unless the failure to take such
action would, in the reasonable good faith judgment of the Company Board, after
consultation with outside legal counsel, be inconsistent with its fiduciary
duties to the Company's stockholders under applicable law.
Nothing contained in this Section 8.7 shall prohibit Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to
Company's stockholders if, in the good faith judgment of the Board of Directors
of Company, after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable law.
8.8 Tax Treatment. Each of the Parties undertakes and agrees to use its
reasonable efforts to take no action which would cause the Merger not to qualify
for treatment as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code for federal income tax purposes.
8.9 Employee Benefits.
(a) Following the Effective Time, Healtheon/WebMD shall
provide to officers and employees of Company and its Subsidiaries employee
benefits based on the positions they hold with Healtheon/WebMD and/or its
Subsidiaries after the Effective Time under employee benefit plans on terms and
conditions which are substantially similar in the aggregate to those provided by
Healtheon/WebMD and its Subsidiaries to their similarly situated officers and
employees after the Effective Time. With respect to any benefits plans of
Healtheon/WebMD or its Subsidiaries in which the officers and employees of
Company and its Subsidiaries participate after the Effective Time,
Healtheon/WebMD shall, or shall cause the Surviving Corporation to: (i) waive
any limitations as to pre-existing conditions, exclusions and waiting periods
with respect to participation and coverage requirements applicable to such
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officers and employees under any welfare benefit plan in which such employees
may be eligible to participate after the Effective Time (provided, however, that
no such waiver shall apply to a pre-existing condition of any such officer or
employee who was, as of the Effective Time, excluded from participation in a
Company benefit plan by nature of such pre-existing condition), (ii) provide
each such officer and employee with credit for any co-payments and deductibles
paid prior to the Effective Time during the year in which the Effective Time
occurs in satisfying any applicable deductible or out-of-pocket requirements
under any welfare benefit plan in which such employees may be eligible to
participate after the Effective Time, and (iii) other than with respect to
vesting credit with respect to Healtheon/WebMD options granted to such officers
and employees, recognize all service of such officers and employees with Company
and its Subsidiaries (and their respective predecessors) for all purposes
(including without limitation purposes of eligibility to participate, vesting
credit, entitlement for benefits, and benefit accrual) in any benefit plan in
which such employees may be eligible to participate after the Effective Time,
except to the extent such treatment would result in duplicative accrual of
benefits for the same period of service.
(b) Not later than the day immediately prior to the Closing
Date (the "Termination Date"), Company shall cause (i) the adoption of
appropriate resolutions which terminate each retirement plan of Company which
qualifies or is intended to qualify under Section 401(a) of the Internal Revenue
Code (each, an "Company Retirement Plan"), effective as of the Termination Date,
(ii) the cessation of all employee salary deferral contributions under each
Company Retirement Plan, effective as of the Termination Date, and (iii) the
adoption of appropriate resolutions, contemporaneously with the adoption of
resolutions identified in clause (i) above, which reserve the right to amend
each Company Retirement Plan notwithstanding such applicable plan's termination.
Company represents and warrants that all contributions to each Company
Retirement Plan with respect to eligible Company employees which are required to
be made by the time set forth in such Company Retirement Plan or under ERISA
(which evidences, in part, each Company Retirement Plan) with respect to the
period ending December 31, 1999, have been paid to each applicable trust
relating to a given Company Retirement Plan, and that all such contributions
required to be made by such time in such Company Retirement Plan section with
respect to the period ending on the Closing Date will have been made to such
trust on or before the Closing Date. Nothing in this Agreement shall give any
employee of Company any third-party beneficiary or other rights under this
Agreement.
8.10 Blue Sky Laws. Healtheon/WebMD shall take such reasonable steps as
may be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable to the issuance of the shares of
Healtheon/WebMD Common Stock in connection with the Merger. Company shall use
its reasonable commercial efforts to assist Healtheon/WebMD as may be necessary
to register, or qualify for valid exemptions from, the issuance of the shares of
Healtheon/WebMD Common Stock in the Merger under the securities and blue sky
laws of all jurisdictions which are applicable in connection with such issuance.
8.11 Non-solicitation of Employees. Until the Effective Time or, in the
event this Agreement is terminated without completion of the Merger, for a
period of one (1) year from the date hereof, none of the Parties will solicit
for employment any current employee of the
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other Parties or any Subsidiary of the other Parties unless such employee has
been terminated previously by his or her employer nor make any offer to such
employee without prior notice to his or her employer; provided that in no event
will a general solicitation for employment which is not principally directed at
Company employees (whether by general advertisement in any media or otherwise)
be a violation of this Section 8.11.
8.12 Press Releases. Prior to the Effective Time, Healtheon/WebMD and
Company shall consult with each other as to the form and substance of any press
release or other public disclosure related to this Agreement or any other
transaction contemplated hereby and no Party shall issue any press release or
make any other public disclosure without the prior approval of the other Parties
(which approval shall not be unreasonably withheld or delayed); provided, that
nothing in this Section 8.12 shall be deemed to prohibit any Party from making
any disclosure which its counsel deems necessary or advisable in order to
satisfy such Party's disclosure obligations imposed by Law.
8.13 Directors and Officers Indemnification.
(a) Healtheon/WebMD and Company agree that all rights to
indemnification and exculpation now existing in favor of any employee, agent,
director or officer of Company and its Subsidiaries (the "Indemnified Parties"),
as provided in their respective charters or Bylaws and their respective
Indemnification Agreements, shall survive the Merger and shall continue in full
force and effect for a period of 3 years after the Effective Time; provided that
in the event any claim or claims are asserted or made within such 3 year period,
all rights to indemnification in respect of any such claim shall continue until
final disposition of such claim. Healtheon/WebMD hereby agrees, effective as of
the Effective Time, to guarantee Company's indemnification and exculpation
obligations existing in favor of the Indemnified Parties, as provided in
Company's and its Subsidiaries' respective applicable Charters or Bylaws and
their respective Indemnification Agreements, for the period of time set forth
under this Section 8.13(a).
(b) Healtheon/WebMD agrees that from and after the Effective
Time, the Surviving Corporation shall cause the policies of director and officer
liability insurance maintained by the Company on the date hereof to be
maintained in effect for the period of time directors and officers are entitled
to indemnification under Section 8.13(a) above; provided that the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions which are no less advantageous to the
Indemnified Parties, provided that such substitution shall not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time; and provided, further, that the Surviving Corporation shall not
be required to pay an annual premium in excess of 150% of the last annual
premium paid by Company prior to the date hereof (the "Maximum Amount") (which
premium is set forth in Section 8.13 of the Company Disclosure Letter), and if
the Surviving Corporation is unable to obtain the insurance required by this
Section 8.13 for the Maximum Amount, it shall obtain as much comparable
insurance as possible for an annual premium equal to the Maximum Amount.
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(c) In the event Healtheon/WebMD merges or is acquired in a
transaction in which it is not the surviving corporation, or if Healtheon/WebMD
sells substantially all of its assets, Healtheon/WebMD will cause proper
provision to be made in such transaction so that Healtheon/WebMD's successor or
acquiror will assume the obligations set forth in Sections 8.13(a) and (b)
above. The parties agree that Company's directors and officers are the third
party beneficiaries of, and entitled to enforce, the provisions of this Section
8.13.
8.14 Company Affiliates; Restrictive Legend; Restrictions on Transfer.
Not later than 30 days prior to the Company Stockholders Meeting, Company shall
deliver to Healtheon/WebMD a list of those persons who may be deemed to be, in
Company's reasonable judgment at the time this Agreement is submitted for
adoption by the Stockholders of Company, affiliates of Company within the
meaning of Rule 145 promulgated under the 1933 Act (each a "Rule 145
Affiliate"). Company will provide Healtheon/WebMD with such information and
documents as Healtheon/WebMD reasonably requests for purposes of reviewing such
list. Healtheon/WebMD will give stop transfer instructions to its transfer agent
with respect to any Healtheon/WebMD Common Stock received pursuant to the Merger
by Company Stockholders who are Rule 145 Affiliates and there will be placed on
the certificates representing such Healtheon/WebMD Common Stock, or any
substitution therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, APPLIES AND MAY ONLY BE TRANSFERRED (A) IN CONFORMITY
WITH RULE 145(d) UNDER SUCH ACT, OR (B) IN ACCORDANCE WITH A WRITTEN
OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND
SUBSTANCE THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED."
Healtheon/WebMD will consider in good faith a request from a Rule 145 Affiliate
to remove such legend that is received on or after the one year anniversary of
the Closing Date.
8.15 Voting Agreements; Notice of Record Date. Simultaneously with the
execution and delivery of this Agreement, each of the Persons listed in Section
8.15 of the Company Disclosure Letter has executed and delivered a Voting
Agreement in the form of Exhibit 8.15 hereto pursuant to which such Person has
agreed, among other things, to vote all shares of Company Capital Stock held of
record by such Person and all shares of Company Capital Stock for which such
Person has been granted a proxy in favor of the Merger at the Stockholders
Meeting (the "Voting Agreements"). As soon as reasonably practicable after the
date hereof, the Company shall use its reasonable best efforts to cause each of
Xxxxxx Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxxx Xxxxxxx to execute an agreement in
favor of Healtheon/WebMD to exercise their Company Options upon the request of
Healtheon/WebMD, provided that Healtheon/WebMD shall (a) loan the funds required
for such exercise and (b) indemnify such persons for any adverse tax
consequences resulting from such exercise, all on terms mutually acceptable to
the respective parties. Prior to 10 a.m.
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eastern time on the official record date set by the Board of Directors of the
Company for the Stockholders entitled to notice of and to vote at the special
meeting of the Stockholders taken for the purposes of voting on the approval of
the Merger (the "Record Date"), the Company shall provide Healtheon/WebMD with
notice of the total number of issued and outstanding shares of Company Common
Stock as of 10 a.m. eastern time on the Record Date.
8.16 Loan Agreement and Warrant. Simultaneously with the execution and
delivery of this Agreement, the Company and Healtheon/WebMD shall execute and
deliver a Loan Agreement in the form of Exhibit 8.16A (the "Loan Agreement") and
in connection therewith the Company shall issue and deliver to Healtheon/WebMD a
Common Stock Purchase Warrant in the form of Exhibit 8.16B (the "Healtheon/WebMD
Warrant").
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective obligations
of each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by the Parties pursuant to Section 11.5 of
this Agreement:
(a) Stockholder Approval. The Stockholders shall have approved
this Agreement, and the consummation of the transactions contemplated hereby,
including the Merger, as and to the extent required by Law and by Company's
Charter.
(b) Regulatory Approvals. All waiting periods, if any, under
the HSR Act relating to the transactions contemplated hereby will have expired
or terminated early.
(c) Legal Proceedings. No court or governmental or Regulatory
Authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, Materially restricts or
makes illegal consummation of the transactions contemplated by this Agreement.
(d) Tax Opinions. Each of Healtheon/WebMD and Company shall
have received the opinion of Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P. ("Xxxxxx
Xxxxxxx") and Xxxxxxx Xxxxx & Xxxxx LLP ("Xxxxxxx Xxxxx"), respectively, to the
effect that the Merger will constitute a tax-free reorganization within the
meaning of 368(a) of the Internal Revenue Code, which opinion shall be in form
and substance reasonably satisfactory to Healtheon/WebMD and Company,
respectively; provided, however, that if counsel to either Healtheon/WebMD or
Company does not render such opinion, this condition shall nonetheless be deemed
to be satisfied with respect to such Party if counsel to the other Party renders
such opinion to such Party, which opinion shall be in form and substance
reasonably satisfactory to such Party. In rendering such opinion, Xxxxxx Xxxxxxx
and Xxxxxxx Xxxxx shall be entitled rely upon representations of the Parties
hereto reasonably satisfactory in form and substance to such
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counsel. The Parties to this Agreement agree to make reasonable representations
as required by Xxxxxx Xxxxxxx and Xxxxxxx Xxxxx for the purpose of rendering
such opinion(s).
(e) Healtheon/WebMD Registration Statement; Nasdaq. All of the
shares of Healtheon/WebMD Common Stock to be issued in connection with the
Merger shall be authorized for quotation on the Nasdaq Stock Market upon notice
of issuance and the SEC shall have declared the Healtheon/WebMD Registration
Statement effective and no stop order suspending the effectiveness of the
Healtheon/WebMD Registration Statement or any part thereof shall have been
issued, and no proceeding for that purpose, or similar proceeding with respect
to the Proxy Statement/Prospectus, shall have been initiated or threatened in
writing by the SEC.
9.2 Conditions to Obligations of Healtheon/WebMD and Merger Corp. The
obligations of Healtheon/WebMD and Merger Corp to perform this Agreement and
consummate the Merger and the other transactions contemplated hereby are subject
to the satisfaction of the following conditions, unless waived by
Healtheon/WebMD pursuant to Section 11.5 of this Agreement:
(a) Representations and Warranties. The representations and
warranties of Company set forth in this Agreement shall be true and correct in
all Material respects (except that those representations and warranties which
are qualified as to Material, Materiality, Material Adverse Effect or similar
expressions, or are subject to the same or similar type exceptions, shall be
true and correct in all respects) as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date).
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of Company to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior to
the Effective Time shall have been duly performed and complied with in all
Material respects.
(c) Certificates. Company shall have delivered to
Healtheon/WebMD (i) a certificate, dated as of the Effective Time and signed on
its behalf by its chief executive officer and its chief financial officer, to
the effect that the conditions of its obligations set forth in Section 9.2(a)
and 9.2(b) of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by Company's Board of Directors and stockholders
evidencing the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated hereby, all in such reasonable detail as
Healtheon/WebMD and its counsel shall reasonably request.
(d) No Material Adverse Change. There shall not have been any
Material Adverse Change with respect to Company and its Subsidiaries, taken as a
whole, between the date hereof and the Closing Date, and Company shall have
delivered to Healtheon/WebMD a certificate, dated as of the Closing Date, signed
by its chief executive officer and chief financial officer certifying to such
effect.
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(e) Dissenting Stockholders. Holders of less than three
percent (3%) of the Company Capital Stock shall have elected to seek their
statutory dissenters' rights as provided in Section 3.3 of this Agreement.
(f) Certain SEC Matters. There shall be no claims or
litigation threatened in writing or pending arising out of the Pending Matter
(as defined in Section 10.1(h)) or the matter set forth on Section 5.5 of the
Company Disclosure Letter which in the reasonable opinion of Healtheon/WebMD can
reasonably be expected to result in judgments, settlements or recoveries against
the Company for which Healtheon/WebMD would be responsible, in excess of the
Company's available insurance coverage.
9.3 Conditions to Obligations of Company. The obligations of Company to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Company pursuant to Section 11.5 of this Agreement:
(a) Representations and Warranties. The representations and
warranties of Healtheon/WebMD and Merger Corp set forth in this Agreement shall
be true and correct in all Material respects (except that those representations
and warranties which are qualified as to Material, Materiality, Material Adverse
Effect or similar expressions, or are subject to the same or similar type
exceptions, shall be true and correct in all respects) as of the date of this
Agreement and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined to a specified
date shall speak only as of such date).
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of Healtheon/WebMD and Merger Corp to be performed
and complied with pursuant to this Agreement and the other agreements
contemplated hereby (including without limitation, the Loan Agreement) prior to
the Effective Time shall have been duly performed and complied with.
(c) Certificates. Healtheon/WebMD shall have delivered to
Company (i) a certificate, dated as of the Effective Time and signed on its
behalf by a duly authorized officer to the effect that the conditions of its
obligations set forth in Section 9.3(a) and 9.3(b) of this Agreement have been
satisfied, and (ii) certified copies of resolutions duly adopted by
Healtheon/WebMD's Board of Directors and Merger Corp's Board of Directors and
sole shareholder evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such reasonable
detail as Company and its counsel shall request.
(d) No Material Adverse Change. There shall not have been any
Material Adverse Change with respect to Healtheon/WebMD and its Subsidiaries,
taken as a whole, between the date hereof and the Closing Date, and
Healtheon/WebMD shall have delivered to
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Company a certificate, dated as of the Closing Date, signed by its chief
executive officer and chief financial officer certifying to such effect.
ARTICLE 10
TERMINATION
10.1 Termination.
This Agreement may be terminated at any time prior to the Effective
Time, whether before or after the requisite approval of the Stockholders of
Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Healtheon/WebMD and Company;
(b) by either Company or Healtheon/WebMD if the Merger shall
not have been consummated by October 31, 2000 (the "End Date") for any reason;
provided, however, that the right to terminate this Agreement under this Section
10.1(b) shall not be available to any party whose action or failure to act has
been a principal cause of or resulted in the failure of the Merger to occur on
or before such date and such action or failure to act constitutes a material
breach of this Agreement;
(c) by either Company or Healtheon/WebMD if a Governmental
Entity shall have issued an order, decree or ruling or taken any other action,
in any case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree, ruling or other action is final and
nonappealable;
(d) by Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Healtheon/WebMD set forth in this
Agreement, or if any representation or warranty of Healtheon/WebMD shall have
become untrue, in either case such that the conditions set forth in Section
9.3(a) or Section 9.3(b) would not be satisfied as of the time of such breach or
as of the time such representation or warranty shall have become untrue,
provided that if such inaccuracy in Healtheon/WebMD's representations and
warranties or breach by Healtheon/WebMD is curable by Healtheon/WebMD through
the exercise of its commercially reasonable efforts, then Company may not
terminate this Agreement under this Section 10.1(d) prior to the expiration of
30 days from the date of notice of such breach, provided Healtheon/WebMD
continues to exercise commercially reasonable efforts to cure such breach (it
being understood that Company may not terminate this Agreement pursuant to this
paragraph (d) if it shall have materially breached this Agreement or if such
breach by Healtheon/WebMD is cured prior to the expiration of 30 days from the
date of notice of such breach);
(e) by Healtheon/WebMD, upon a breach of any representation,
warranty, covenant or agreement on the part of Company set forth in this
Agreement, or if any representation or warranty of Company shall have become
untrue, in either case such that the
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conditions set forth in Section 9.2(a) or Section 9.2(b) would not be satisfied
as of the time of such breach or as of the time such representation or warranty
shall have become untrue, provided, that if such inaccuracy in Company's
representations and warranties or breach by Company is curable by Company
through the exercise of its commercially reasonable efforts, then
Healtheon/WebMD may not terminate this Agreement under this Section 10.1(e)
prior to the expiration of 30 days from the date of notice of such breach,
provided Company continues to exercise commercially reasonable efforts to cure
such breach (it being understood that Healtheon/WebMD may not terminate this
Agreement pursuant to this paragraph (e) if it shall have materially breached
this Agreement or if such breach by Company is cured prior to the expiration of
30 days from the date of notice of such breach); or
(f) by Healtheon/WebMD, if (i) the Board of Directors of
Company or any committee thereof shall have withdrawn or modified in a manner
adverse to Healtheon/WebMD its approval or recommendation of the Merger or this
Agreement, (ii) Company shall fail to convene the Stockholders Meeting as
required pursuant to Section 8.1(a) hereof or (iii) the Board of Directors of
Company shall have recommended to the Stockholders of the Company a Company
Acquisition Proposal or shall have resolved to do so;
(g) by Healtheon/WebMD, if the Stockholders fail to adopt and
approve this Agreement and approve of the Merger at the Stockholders Meeting; or
(h) by Healtheon/WebMD if it is determined by the Board of
Directors of Healtheon/WebMD after receipt of written advice from counsel (which
counsel, prior to delivery of any such advice, shall consult with counsel for
Company) that, as a result of developments in In the Matter of OnHealth Network
Company (LA-1940) before the SEC (the "Pending Matter") after the date hereof,
there is a reasonable probability that there will be a material delay in the
effectiveness of the registration statement filed, or contemplated to be filed,
by Healtheon/WebMD with the SEC with respect to any transaction described in
Rule 145(a) promulgated under the 1933 Act (a "Rule 145 Transaction") or by any
other Person with respect to a Rule 145 Transaction involving Healtheon/WebMD or
any material assets of Healtheon/WebMD (a "Material Delay"), then
Healtheon/WebMD may terminate this Agreement if, within 20 days after notice by
Healtheon/WebMD to the Company of Healtheon/WebMD 's intention to terminate the
Agreement pursuant to this Section, the Material Delay is not resolved to the
reasonable satisfaction of Healtheon/WebMD.
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10.2 Notice of Termination; Effect of Termination.
Any termination of this Agreement under Section 10.1 above will be
effective immediately upon the delivery of a valid written notice of the
terminating party to the other parties hereto. In the event of the termination
of this Agreement as provided in Section 10.1, this Agreement shall be of no
further force or effect, except (i) as set forth in Section 8.5(b), Section
8.11, Section 8.12, Section 10.2, Section 10.3 and Article 11, each of which
shall survive the termination of this Agreement, and (ii) nothing herein shall
relieve any party from liability for any willful breach of this Agreement. No
termination of this Agreement shall affect the obligations of the parties
contained in the Confidentiality Agreement, all of which obligations shall
survive termination of this Agreement in accordance with their terms.
10.3 Fees and Expenses.
(a) Except as set forth in this Section 10.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such fees or expenses
whether or not the Merger is consummated; provided, however, that
Healtheon/WebMD and Company shall share equally all fees and expenses, other
than attorneys' and accountants fees and expenses, incurred in relation to (i)
the printing, filing (with the SEC) and mailing of the Prospectus/Proxy
Statement (including any preliminary materials related thereto) and the
Healtheon/WebMD Registration Statement (including financial statements and
exhibits) and any amendments or supplements thereto (including filing fees) and
(ii) the filings of the premerger notification and report forms under the HSR
Act (including filing fees).
(b) The Company agrees that:
(i) if (A) Healtheon/WebMD shall terminate this Agreement
pursuant to Section 10.1(f) and (B) at the time of the occurrence of the
circumstance permitting termination pursuant to such Section, there shall exist
a Company Acquisition Proposal, or
(ii) if (A) Healtheon/WebMD shall terminate this Agreement
pursuant to Section 10.1(g) and (B) at the time of such failure to so approve
this Agreement there shall exist a Company Acquisition Proposal,
then Company shall pay to Healtheon/WebMD an amount equal to the sum of
$9,000,000 (the "Company Alternative Transaction Fee"); provided, however, that
Healtheon/WebMD shall not, upon a termination pursuant to Section 10.1(f) or
pursuant to Section 10.1(g), be entitled to receive the Company Alternative
Transaction Fee pursuant to this Section 10.3(b) if the Board of Directors of
Company shall, prior to such termination, have withdrawn or modified in a manner
adverse to Healtheon/WebMD its approval or recommendation of the Merger or this
Agreement or Company shall have failed to convene the Stockholders Meeting as
required pursuant to Section 8.1(a) hereof due (in each case) solely to a breach
by Healtheon/WebMD of any representation, warranty, covenant or agreement on the
part of Healtheon/WebMD set forth in this Agreement, which breach is not cured
by Healtheon/WebMD within 10 days
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following notice of such breach, and which breach would cause the conditions set
forth in Sections 9.1 and 9.3 to not be satisfied.
(c) Each of the Company and Healtheon/WebMD agrees that the
agreements contained in Section 10.3(b) are an integral part of the transactions
contemplated by this Agreement. Each of the Company and Healtheon/WebMD agrees
that the payments provided for in Section 10.3(b) shall be the sole and
exclusive remedies of Healtheon/WebMD upon a termination of this Agreement
pursuant to Sections 10.1(f) and (g), as the case may be, and such remedies
shall be limited to the sums stipulated in Section 10.3(b), regardless of the
circumstances giving rise to such termination; provided, however, that nothing
herein shall relieve any Party from liability for any willful breach of any
representation, warranty, covenant or other agreement in this Agreement
occurring prior to termination.
(d) Any payment of a Company Alternative Transaction Fee
required to be made pursuant to Section 10.3(b) shall be made to Healtheon/WebMD
not later than two business days after termination of this Agreement. All
payments to Healtheon/WebMD under this Section 10.3 shall be made by wire
transfer of immediately available funds to an account designated by
Healtheon/WebMD.
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(e) In the event that the Company shall fail to pay any
amount payable pursuant to this Section 10.3 when due, Healtheon/WebMD shall be
entitled to collect and Company agrees to pay (i) the costs and expenses
actually incurred or accrued by Healtheon/WebMD (including, without limitation,
fees and expenses of counsel) in connection with the collection under and
enforcement of this Section 10.3, together with (ii) interest on such unpaid
amounts, commencing on the date that such amounts became due, at a rate equal to
the rate of interest publicly announced by Citibank, N.A., from time to time, in
The City of New York, as such bank's Base Rate plus 2.00%.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the capitalized terms
set forth below shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Affiliate" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any officer,
director, partner, employer, or direct or indirect beneficial owner of any 10%
or greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger,
including the Exhibits and Disclosure Letters delivered pursuant hereto and
incorporated herein by reference.
"Articles of Merger" shall mean the Articles of Merger to be
executed as contemplated by the WBCA and filed with the Secretary of State of
the State of Washington relating to the Merger as contemplated by Section 1.1 of
this Agreement.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued or
contingent, or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of such Person
or any Affiliate of such Person and wherever located.
"Charter" shall mean the Articles of Incorporation of Company,
as amended.
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"Closing Date" shall mean the date on which the Closing
occurs.
"Company Capital Stock" shall mean the Company Common Stock
and the Company Preferred Stock.
"Company Common Stock" shall mean the Company common stock,
$.01 par value per share.
"Company Preferred Stock" shall mean the Company preferred
stock, $.01 par value per share.
"Company Material Adverse Effect" shall mean an event, change
or occurrence which, individually or together with any other event, change or
occurrence, has a Material adverse impact on (i) the financial position,
business, or results of operations or business prospects of Company and its
Subsidiaries, taken as a whole, or (ii) the ability of Company to perform its
obligations under this Agreement or to consummate the Merger or the other
transactions contemplated by this Agreement; provided that "Material Adverse
Effect" shall not be deemed to include events, changes or occurrences (x)
generally affecting the healthcare information technology industry, (y)
generally affecting the overall U.S. economy, or (z) resulting from the
announcement of this Agreement or the transactions contemplated herein.
"Company Option" shall mean any stock option granted pursuant
to the terms and conditions of the Company Stock Plans.
"Company Stock Plans" shall mean the Company's 1997 Stock
Option Plan, the Company's 1991 Stock Option Plan, the Company's Director Stock
Option Plan, the Company's 1997-1998 New Hire Stock Option Plan and the
1998-1999 New Hire Stock Option Plan.
"Company Warrants" shall mean any warrant or other rights to
purchase shares of Company Common Stock.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person pursuant to
any Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement,
arrangement, commitment, contract, indenture, instrument, lease, obligation,
plan, restriction, understanding or undertaking of any kind or character, or
other document to which any Person is a party or by which such Person is bound
or affecting such Person's capital stock, Assets or business.
"Default" shall mean (i) any breach or violation of or default
under any Contract, Order or Permit, (ii) any occurrence of any event that with
the passage of time or the giving of notice or both would constitute a breach or
violation of or default under any Contract, Order or Permit, or (iii) any
occurrence of any event that with or without the passage
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of time or the giving of notice would give rise to a right to terminate or
revoke, change the current terms of, or renegotiate, or to accelerate, increase,
or impose any Liability under, any Contract, Order or Permit.
"Environmental Laws" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient air, surface
water, ground water, land surface or subsurface strata) and which are
administered, interpreted or enforced by the United States Environmental
Protection Agency and state and local agencies with jurisdiction over, and
including common law in respect of, pollution or protection of the environment,
including the Comprehensive Environmental Response Compensation and Liability
Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases or threatened releases of any
Hazardous Substance, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
Hazardous Substance.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Exhibits" shall mean the Exhibits so marked, copies of which
are attached to this Agreement. Such Exhibits are hereby incorporated by
reference herein and made a part hereof, and may be referred to in this
Agreement and any other related instrument or document without being attached
hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"Governmental Entity" shall mean any government or any agency,
bureau, board, directorate, commission, court, department, official, political
subdivision, tribunal, or other instrumentality of any government, whether
federal, state or local, domestic or foreign.
"Healtheon/WebMD Registration Statement" shall mean the
Registration Statement on Form S-4 to be filed with the SEC by Healtheon/WebMD
in connection with the registration of shares of Healtheon/WebMD Common Stock
for issuance pursuant to the Merger as contemplated by this Agreement, and all
amendments and supplements thereto.
"Healtheon/WebMD Common Stock" shall mean the $0.0001 par
value Common Stock of Healtheon/WebMD.
"Healtheon/WebMD Material Adverse Effect" shall mean an event,
change or occurrence which, individually or together with any other event,
change or occurrence, has a Material adverse impact on (i) the financial
position, business, or results of operations or business prospects of
Healtheon/WebMD and its Subsidiaries, taken as a whole, or (ii) the ability of
Healtheon/WebMD to perform its obligations under this Agreement or to consummate
the Merger or the other transactions contemplated by this Agreement; provided
that "Material Adverse Effect" shall not be deemed to include events, changes or
occurrences
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(x) generally affecting the healthcare information technology industry, or (y)
generally affecting the overall U.S. economy.
"Hazardous Material" shall mean the emission, disposal,
discharge or other release or threatened release of any hazardous substance,
pollutant or contaminant (in each case, as defined in or governed by any
applicable Law) or any other substance the release, disposal, treatment or
storage of which is regulated under applicable Law.
"HSR Act" shall mean Section 7A of the Xxxxxxx Act, as added
by Title II of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"Intellectual Property" shall mean all rights, privileges and
priorities provided under applicable Law relating to intellectual property,
whether registered or unregistered, including without limitation all (i) (a)
inventions, discoveries, processes, formulae, designs, methods, techniques,
procedures, concepts, developments, technology, mask works, and confidential
information, new and useful improvements thereof and know-how relating thereto,
whether or not patented or eligible for patent protection; (b) copyrights and
copyrightable works, including computer applications, programs, Software,
Databases and related items; (c) trademarks, service marks, trade names, brand
names, product names, corporate names, logos and trade dress, the goodwill of
any business symbolized thereby, and all common-law rights relating thereto; and
(d) trade secrets, data and other confidential information; and (ii) all
registrations, applications, recordings, and licenses or other similar
agreements related to the foregoing
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated thereunder.
"Knowledge" shall mean with respect to a Party, with respect
to any matter in question, that any of the Chief Executive Officer, Chief
Financial Officer, General Counsel or Controller of such Party has actual
knowledge of such matter.
"Law" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a Person or
its Assets, Liabilities or business, including those promulgated, interpreted or
enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right
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or interest, charge, or claim of any nature whatsoever of, on, or with respect
to any Asset, other than (i) Liens for current property Taxes not yet due and
payable, (ii) Liens reflected on the Company Financial Statements, (iii) Liens
which do not Materially detract from the value or Materially interfere with the
present use of the Asset subject thereto or affected thereby; (iv) Liens which
are licenses and related restrictions.
"Litigation" shall mean any action, suit, arbitration, filed
cause of action, filed claim, filed complaint, criminal prosecution, demand
letter, governmental or other examination or investigation, hearing, inquiry,
administrative or other proceeding, or notice (written or oral) by any Person
alleging potential Liability or requesting information relating to or affecting
a Party, its business, its Assets (including Contracts related to it), or the
transactions contemplated by this Agreement.
"Material" for purposes of this Agreement shall be determined
in light of the facts and circumstances of the matter in question; provided that
any specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"Material Adverse Change" with respect to a Party shall mean
an event, change or occurrence which, individually or together with any other
event, change or occurrence, has a Material Adverse Effect with respect to such
Party.
"Merger Corp Common Stock" shall mean the $.01 par value
Common Stock of Merger Corp.
"Order" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award, ruling,
or writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency or Regulatory Authority.
"Party" shall mean either Healtheon/WebMD, Merger Corp or
Company, and "Parties" shall mean all of Healtheon/WebMD, Company and Merger
Corp.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, consent, easement, filing,
franchise, letter of good standing, license, notice, permit, qualification,
registration or right of or from any Governmental Entity (or any extension,
modification, amendment or waiver of any of these) to which any Person is a
party or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets or business, or any notice, statement, filing or other
communication to be filed with or delivered to any Governmental Entity.
"Person" shall mean a natural person or any legal, commercial
or Governmental Entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
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"Proxy Statement/Prospectus" shall mean the Proxy
Statement/Prospectus to be contained in the Healtheon/WebMD Registration
Statement and distributed to the stockholders of Company as contemplated by
Section 8.1.
"Regulatory Authorities" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, and all foreign,
federal, state and local regulatory agencies and other Governmental Entities or
bodies having jurisdiction over the Parties and their respective Assets,
employees, businesses and/or Subsidiaries, including the NASD and the SEC.
"Representative" shall mean the accountants, lawyers and
financial advisors of any Party.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940,
as amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
"Stockholders" shall mean the holders of Company Common Stock.
"Subsidiaries" shall mean all those corporations,
partnerships, associations, or other entities of which the entity in question
owns or controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which 50% or
more of the outstanding equity securities is owned directly or indirectly by its
parent; provided, there shall not be included any such entity acquired through
foreclosure or any such entity the equity securities of which are owned or
controlled in a fiduciary capacity.
"Surviving Corporation" shall mean Company as the surviving
corporation resulting from the Merger.
"Surviving Corporation Common Stock" shall mean the Common
Stock of the Surviving Corporation in the Merger.
"Tax" or "Taxes" shall mean (i) any and all federal, state,
local and foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities relating to taxes, including taxes based upon or
measured by gross receipts, income, profits, sales, use and occupation, and
value added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts; (ii) any liability for the
payment of any amounts of the type described in clause (i) as a result of being
a member of an affiliated, consolidated, combined or unitary group for any
period; and (iii) any liability for the payment of any amounts of the type
described in clause (i) or (ii) as a result of any express or implied obligation
to indemnify any other person or as a result of any obligations under any
agreements
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or arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity.
"Transactions" are the transactions contemplated by this
Agreement and the Exhibits attached hereto.
(b) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
11.2 Brokers and Finders; Expenses. Except for FleetBoston Xxxxxxxxx
Xxxxxxxx Inc., the investment banker for Company, each of the Parties represents
and warrants that neither it nor any of its officers, directors, employees, or
Affiliates has employed any broker or finder or incurred any Liability for any
financial advisory fees, investment bankers' fees, brokerage fees, commissions,
or finders' fees in connection with this Agreement or the transactions
contemplated hereby. In the event of a claim by any broker or finder based upon
his or its representing or being retained by or allegedly representing or being
retained by Healtheon/WebMD or Company in connection with the transactions
contemplated hereby, each of Healtheon/WebMD or Company as the case may be,
agrees to indemnify and hold the other Parties harmless of and from any
Liability in respect of any such claim. Company hereby represents and warrants
to Healtheon/WebMD that copies of all of its Contracts with FleetBoston
Xxxxxxxxx Xxxxxxxx Inc. have been made available to Healtheon/WebMD. Except as
otherwise provided in this Agreement, Healtheon/WebMD shall pay all fees,
disbursements and expenses of Healtheon/WebMD's accountants and counsel incurred
in connection with this Agreement or the transactions contemplated hereby,
including the fees required to be paid by Healtheon/WebMD by the Federal Trade
Commission in connection with the filing under the HSR Act. Except as otherwise
provided in this Agreement, Company shall pay all fees, disbursements and
expenses of FleetBoston Xxxxxxxxx Xxxxxxxx Inc., and the accountants and counsel
of Company incurred in connection with this Agreement or the transactions
contemplated hereby, including the fees required to be paid by Company by the
Federal Trade Commission in connection with the filing under the HSR Act.
11.3 Entire Agreement. Except as otherwise expressly provided herein,
this Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
11.4 Amendments. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after any
stockholder approval of has been obtained; provided, that after any such
approval by the holders of Company Common
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Stock, there shall be made no amendment that pursuant to the WBCA requires
further approval by such Stockholders without the further approval of such
Stockholders.
11.5 Waivers.
(a) Prior to or at the Effective Time, Healtheon/WebMD, acting
through its Board of Directors, chief executive officer or other authorized
officers, shall have the right to waive any Default in the performance of any
term of this Agreement by Company, to waive or extend the time for the
compliance or fulfillment by Company of any and all of their obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Healtheon/WebMD under this Agreement, except any condition which,
if not satisfied, would result in the violation of any Law. No such waiver shall
be effective unless in writing signed by duly authorized officers of
Healtheon/WebMD.
(b) Prior to or at the Effective Time, Company, acting through
its Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of this
Agreement by Healtheon/WebMD, to waive or extend the time for the compliance or
fulfillment by Healtheon/WebMD of any and all of its obligations under this
Agreement, and to waive any or all of the conditions precedent to the
obligations of Company under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of Company.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.6 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Parties. This Agreement will be binding
upon, inure to the benefit of and be enforceable by the Parties and their
respective successors and assigns.
11.7 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
Healtheon/WebMD: Healtheon/WebMD Corporation
000 Xxxxx Xxxxxxxx
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, XX 00000
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Telecopy Number: (000) 000-0000
Attention: W. Xxxxxxx Xxxxxx
Copy to Counsel: Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P.
Bank of America Corporate Center
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: H. Xxxxx Xxxx III
C. Xxxx Xxxxx
Xxxxxxx X. Xxxxxxx
Company: OnHealth Network Company
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telecopy No. (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
Copy to Counsel: Xxxxxxx Xxxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Telecopy No. (000) 000-0000
Attention: Xxxx X. Xxxxxx
11.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Delaware, without regard to any
applicable conflicts of Laws.
11.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.10 Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.11 Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary
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meaning of the words used so as fairly to accomplish the purposes and intentions
of all parties hereto.
11.12 Enforcement of Agreement. The Parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
11.13 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
11.14 Facsimile Signatures. Any signature page delivered by a facsimile
or telecopy machine will be binding to the same extent as an original signature
page. Any Party who delivers such a signature page agrees to later deliver an
original counterpart to any Party which requests it.
11.15 Nonsurvival of Representations and Warranties. None of the
representations and warranties of the Parties in this Agreement will survive the
Effective Time of the Merger. Nothing in this Section 11.15 shall limit any
covenant or agreement of the Parties which by its terms contemplates performance
after the Effective Time.
* * * * * * * * * *
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by officers thereunto as of the day and year first above
written.
HEALTHEON/WEBMD CORPORATION
By: /s/ W. Xxxxxxx Xxxxxx
Name: W. Xxxxxxx Xxxxxx
Title: Executive Vice President
TECH ACQUISITION CORPORATION
By: /s/ W. Xxxxxxx Xxxxxx
Name: W. Xxxxxxx Xxxxxx
Title: Executive Vice President
ONHEALTH NETWORK COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
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