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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended March 31, 2000
OR
[_] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission file number: 000-29282
MEDICONSULT.COM, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 84-1341886
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(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1330 Avenue of the Americas, 17th Floor
New York, New York 10019
(Address of principal executive offices, including zip code)
Registrant's Telephone No., including area code: (212) 841-7300
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
As of May 10, 2000, there were approximately 54,163,934 shares of the
Registrant's Common Stock outstanding.
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<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial statements
Unaudited Consolidated Balance Sheets - March 31, 2000 and
December 31, 1999
3
Unaudited Consolidated Statement of Operations - three months ended
March 31, 2000 and 1999
4
Unaudited Consolidated Statement of Cash Flows - three months ended
March 31, 2000 and 1999
5
Notes to Unaudited Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II. OTHER INFORMATION 15
Item 2. Changes in Securities 15
Item 6. Exhibits and Reports Filed on Form 8-K 16
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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Mediconsult.com, Inc.
Unaudited Consolidated Balance Sheets - March 31, 2000 and December 31, 1999
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<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
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ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents $ 7,088,071 $ 22,320,814
Accounts receivable 3,028,171 1,062,574
Unbilled revenue 4,562,793 3,433,663
Prepaid expenses and other current assets 566,254 556,646
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Total current assets 15,245,289 27,373,697
Fixed assets, net 3,100,220 2,291,772
Intangible assets, net 186,043,910 193,115,481
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Total assets $204,389,419 $222,780,950
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 9,029,407 $ 10,591,054
Advances from shareholder 314,979 314,979
Deferred revenue 251,021 322,488
Notes payable 2,334,549 4,974,100
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Total current liabilities 11,929,956 16,202,621
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Commitments and contingencies -- --
Stockholders' equity
Junior preferred stock, 4,000,000 shares designated,
no shares issued and outstanding at March 31,
2000 and December 31, 1999, respectively -- --
Common stock, $0.001 par value, 100,000,000 shares
authorized, 51,563,934 and 49,633,275 shares issued
and outstanding at March 31, 2000 and December 31,
1999, respectively 51,564 49,634
Additional paid-in capital 262,402,547 257,263,537
Deferred compensation (14,773,160) (16,051,925)
Accumulated deficit (55,221,488) (34,682,917)
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Total stockholders' equity 192,459,463 206,578,329
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Total liabilities and stockholders' equity $204,389,419 $222,780,950
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</TABLE>
See accompanying notes
<PAGE>
Mediconsult.com, Inc.
Unaudited Consolidated Statement of Operations for the Three Months Ended March
31, 2000 and 1999
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Three Months Ended March 31,
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2000 1999
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Revenues $ 6,224,191 $ 487,304
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Operating expenses:
Product and content development 8,016,917 904,530
Marketing, sales and client services 4,975,119 737,605
General and administrative 1,998,060 656,351
Depreciation and amortization 10,739,314 119,117
Fair value of options granted to employees 682,344 152,368
Fair value of warrants granted to third parties 493,697 --
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Total operating expenses 26,905,451 2,569,971
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Loss from operations (20,681,260) (2,082,667)
Interest income (expense), net 142,689 --
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Net loss (20,538,571) (2,082,667)
Dividends on preferred stock - 945,505
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Net loss attributable to common shareholders $(20,538,571) $(3,028,172)
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Per common share data
Basic and diluted net loss per share $ (0.41) $ (0.16)
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Weighted average shares of common stock
outstanding used in computing basic and
diluted net loss per share 50,563,198 18,531,750
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See accompanying notes
<PAGE>
Mediconsult.com, Inc.
Unaudited Consolidated Statement of Cash Flows for the Three Months Ended March
31, 2000 and 1999
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<TABLE>
<CAPTION>
Three Months Ended March 31,
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2000 1999
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<S> <C> <C>
Cash flows from operating activities
Net loss $(20,538,571) $(2,082,667)
Adjustment to reconcile net loss to net cash used in operating activities
Depreciation of fixed assets 532,605 50,948
Amortization of intangible assets 10,206,709 68,229
Services rendered in exchange for common stock 1,200,000 --
Amortization of deferred compensation related to shares issued
for services and membership interest in Pharma marketing 161,900 --
Fair value of options and warrants granted to consultants
and employees 1,176,041 152,368
Changes in assets and liabilities
Accounts receivable (1,965,597) (5,169)
Unbilled revenue (1,129,130) (207,310)
Prepaid expenses and other current assets 2,014 (118,669)
Accounts payable and accrued expenses (1,573,272) 531,705
Deferred revenue (71,467) (107,000)
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Net cash used in operating activities (11,998,768) (1,717,565)
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Cash flows from investing activities
Fixed assets purchases (1,341,053) (279,505)
Acquisition of subsidiaries, net of cash acquired of $82,652 (215,382) --
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Net cash used in investing activities (1,556,435) (279,505)
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Cash flows from financing activities
Repayment of long term debt (2,639,551) --
Proceeds from advances from shareholder -- 315,000
Proceeds from issuance of senior preferred stock -- 3,160,000
Proceeds from exercise of stock options 962,011 18,900
Deferred issue costs -- (219,229)
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Net cash (used in) provided by financing activities (1,677,540) 3,274,671
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(Decrease) increase in cash (15,232,743) 1,277,601
Cash - beginning of period 22,320,814 135,053
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Cash - end of period $ 7,088,071 $ 1,412,654
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</TABLE>
See accompanying notes.
<PAGE>
MEDICONSULT.COM, INC.
NOTES TO CONSOLIDATED FINANCING STATEMENTS
(Unaudited)
1. ORGANIZATION
Mediconsult.com, Inc. ("the Company" or "Mediconsult") was originally
incorporated under the laws of the State of Colorado in October 1989. In April
1996, the Company purchased Mediconsult.com Limited, a Bermuda corporation
("MCL"), through a merger in which MCL became a wholly-owned subsidiary,
resulting in 90% of the outstanding stock of Mediconsult being held by the
former stockholders of MCL, The Mediconsult Trust, controlled by Mr. Robert
Jennings, and Dr. Michel Bazinet. In December 1996, the Company consummated a
re-incorporation merger pursuant to which it became a Delaware corporation.
Mediconsult conducts its business primarily through MCL.
2. BASIS OF PRESENTATION
These consolidated financial statements are unaudited and reflect all
adjustments that, in the opinion of management, are necessary for a fair
presentation of the results for the interim period. The results of operations
for the current interim period are not necessarily indicative of results to be
expected for the current year or any other period. Certain amounts have been
reclassified to conform to the fiscal 2000 presentation.
These consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on form 10-K as filed with the Securities and Exchange Commission.
3. UNBILLED REVENUE
Unbilled revenue represents the value of development work completed but not
billed at March 31, 2000.
4. STOCK OPTIONS
The Company has a 1996 Stock Option Plan (the "Plan") to provide incentives to
employees, directors and consultants. The maximum term of options granted under
the Plan is ten years. The Board of Directors has the exclusive power over the
granting of options and their vesting provisions. Stock options for common stock
comprise:
<TABLE>
<CAPTION>
March 31, 2000
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No. Weighted Avg.
Shares Exercise Price
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<S> <C> <C>
Outstanding - December 31, 1999 4,008,651 $4.50
Granted during the period - -
Exercised during the period (1,260,454) 0.66
Cancelled during the period (403,654) 6.94
------------
Outstanding - March 31, 2000 2,344,543 6.16
============
Exercisable - March 31, 2000 723,341 $2.00
============
</TABLE>
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During the three months ended March 31, 1999 and 2000 the fair values of the
options granted to employees were $653,794, and nil respectively. The weighted
average exercise price and weighted average fair value of options whose exercise
price exceeded the market value at the grant date during the first three months
of 1999 and 2000 were $8.00 and nil, respectively. The weighted average exercise
price and weighted average fair value of options whose exercise price was less
than the market value at the grant date during the first three months of 1999
and 2000 were $7.36 and nil, respectively.
The fair values of the options were estimated using an option-pricing model
based on the weighted average risk-free interest rates ranging between 4.63% and
6.45%, an expected life of the options of one to five years, an expected
volatility of the common stock ranging between 110% and 133% and no expected
dividends on the common stock.
5. WARRANTS
The Company issued warrants to purchase 400,000 shares of common stock at an
exercise price of $1.22 per share to Arnold and S. Bleichroeder, Inc. in
consideration of investment advisory services. These warrants have been
delivered or are being held in escrow and are deliverable as follows: 200,000
were delivered upon initial filing of Mediconsult's secondary offering
prospectus in April 1999 and have been exercised: 100,000 were delivered on
March 15, 2000: and 100,000 will be delivered on September 15, 2000.The delivery
of the remaining 100,000 warrants is subject to continued performance of
financial advisory services for the Company by a particular individual on behalf
of this firm. The Company will be required to recognize as an expense the fair
value of the warrant over the vesting period. These warrants, which expire on
March 1, 2004, have net issue election and anti-dilution provision comparable to
the senior preferred stock warrants. These warrants do not confer upon the
holder any voting or any other right of a stockholder. On March 15, 2000,
warrants representing 100,000 shares vested, however the remaining warrants
representing the final 100,000 shares will not vest, due to the fact that the
individual referenced above is no longer employed at Arnold and S. Bleichroeder.
On March 23, 2000 the Company and Andersen Consulting "Andersen" entered into a
warrant agreement under which the Company issued Andersen warrants to purchase
1,503,425 shares of the Company's common stock at an exercise price of $3.8125
per share in connection with consulting services rendered by Andersen to the
Company under a consulting services agreement signed on September 10, 1999. The
warrants have a term of five years and vest over time, based upon consulting
services performed by Andersen on the Company's behalf. In connection with the
issuance of these warrants the Company reserved 1,503,425 shares of common stock
issuable upon exercising of these warrants.
6. RELATED PARTY TRANSACTIONS
None to report
7. SUBSEQUENT EVENTS
On May 1, 2000, McKesson HBOC, Inc., the leading online provider of information
and tools for physicians and patients, announced its investment of $6.5 million
to purchase 2.6 million newly issued shares of Mediconsult.com, Inc. The
investment forms the basis of a relationship through which the two companies
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will seek to accelerate deployment and adoption of web-based applications and
services for physicians.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Unless otherwise noted, references to "we," "our," and "us" refer to Mediconsult
and its subsidiaries.
OVERVIEW
Mediconsult.com, Inc. uses the Internet to educate and connect doctors and
patients. Our Web communities and interactive solutions educate physicians,
empower patients and enable more effective doctor-patient relationships. We
provide relevant tools, reliable services and quality medical information that
save doctors time and improve health outcomes for their patients.
Our focus is on the chronic medical conditions that are responsible for the
majority of healthcare spending. By fostering communities centered on prevalent
medical conditions and health issues, we believe we create significant
opportunities for pharmaceutical and other healthcare companies to effectively
reach physician and patient audiences using Internet-based marketing and
sponsorship programs.
BACKGROUND
For the period from the inception of our operations in April 1996 through
January 1997, our operating activities related primarily to the initial
development of the mediconsult.com Web site and operating infrastructure, and
the recruitment of employees. Since the launch of mediconsult.com in 1996,
we have focused on developing and organizing content in an easy to navigate
format, and improving the functionality of mediconsult.com. We continue to
refine our strategy of creating targeted online marketing and sponsorship
programs for large pharmaceutical and other healthcare organizations. We
continue to develop and implement these types of programs for our clients.
In May 1999, the Company acquired CyberDiet, LLC, which provides tailored
nutritional information and programs in exchange for 400,000 shares of
Mediconsult common stock. The total purchase price including acquisition costs
and assumption of net liabilities, was $2.8 million.
In June 1999, the Company acquired Cyber-Tech, Inc., a company that develops
online content and tools focused on heart disease and related areas. The
consideration paid to Cyber-Tech shareholders consisted of $3,765,000 in cash
and 267,732 shares of Mediconusult common stock. The total purchase price was
$7.6 million.
In October 1999, the Company acquired Mood Sciences, a company that specializes
in mental health disease management innovations in exchange for 215,000 shares
of Mediconsult common stock. The total purchase price, including acquisition
costs was $1.9 million.
In September 1999, the company entered into a various agreements with Pharma
Marketing, LLC, an entity organized to perform certain sales and marketing
operation of the Company and operate solely on behalf of the Company for
$1,250,000 and 200,000 shares of Mediconsult common stock.
<PAGE>
In December 1999, the Company acquired shares of Physicians' Online, Inc. a
provider of an exclusive network for physicians in addition to online medical
information and communications. As consideration for the acquisition, the
Company issued approximately 18.5 million shares of Mediconsult common stock.
The total value of consideration was $183.1 million including the assumption of
debt and acquisition costs.
In February 2000, the Company acquired Web Northstar Interactive, Corp., a
company that specializes in research evaluation. As consideration for the
acquisition, the company issued approximately 435 thousand shares for an
aggregate price of $2.8 million.
In March 2000, the Company acquired Storknet, a company dedicated to pregnancy
and parenting issues. As consideration for the acquisition the company issued
approximately 34 thousand shares for an aggregate price of $210,000.
REVENUE SOURCES
Our main sources of revenue have historically been through client services
related to the development, support of online marketing and sponsorship
programs for pharmaceutical, and other healthcare companies. These services
continue to be a source of revenue and typically include the design, development
and management of customized Web sites relating to a particular pharmaceutical
or other health-related products. Client services also include marketing
research, focus group testing and online testing of visitors' preferences.
Revenue from client services is recognized on the basis of contractual
commitments over the period of each engagement using the percentage-of-
completion method, based on labor hours and costs incurred as the measure of
progress towards completion. Revenue from support services, principally the
management of Web sites that we develop for our clients, is recognized ratably
over the periods services are provided, generally on a monthly basis. Payments
received from clients prior to the performance of client services are recorded
as unearned revenue.
We also provide advertising services involving the sale of advertising space on
certain Web sites we own, manage or sponsor. These services can be provided
separately or as part of a more comprehensive suite of client services.
Advertising services include banner advertisements, polls, surveys, registration
programs,coupons and other interactive forms of advertising. Revenue from
advertising sales is recognized ratably over the period in which the
advertisement is displayed, if no significant obligations remain. In certain
cases, advertising revenue from the sale of advertising space is related to the
delivery of impressions or click-throughs from pages viewed by visitors to our
Web sites. Payments received from advertisers prior to displaying their
advertisements are recorded as deferred revenue. Mediconsult does not recognize
revenue from barter transactions with respect to its advertising services.
Effective October 1, 1999 we no longer sell banner advertising on our consumer
Web sites. As a result, this source of revenue may decline in future periods
even though we will continue to sell such advertising on our professional sites
such as Physicians' Online.
<PAGE>
In 1999, we expanded our focus on long-term strategic relationships with major
pharmaceutical manufacturers to include other Internet-based initiatives in
addition to marketing programs. The initial relationship in this new strategic
direction was entered into with Bristol-Myers Squibb Company to develop
innovative new approaches to electronic medical education.
We also derive revenue from licensing our mediconsult.com content and providing
Web site support to healthcare and other organizations. These client
organizations make our content available to visitors to their Web sites or to
Web sites of their clients. Revenue from content licensing is recognized over
the period of the license. In certain cases, we design and develop these Web
sites. The portion of licensing revenue related to up-front customized design
work is recognized over the period that the work is performed. In certain cases,
we realize additional revenue from management of the Web site or its content.
Revenue from management services is recognized ratably over the period the
services are performed, generally on a monthly basis. We may also retain the
right to place advertising on a Web site that hosts our content.
MARKETING AND SALES INITIATIVES
In late 1997, we initiated our first significant marketing and advertising
program. The Company was engaged by Novartis Consumer Health Canada to develop a
comprehensive online smoking cessation program for its Habitrol brand, focused
on Canadian consumers. We developed the Web site for this program during early
1998, for which we received payment as services were performed. We receive
revenue for maintaining and upgrading this program (beginning with its launch in
June 1998), and receive monthly advertising revenue for referring visitor
traffic to the Habitrol Web site. We have recently expanded the Habitrol program
to provide French and professional healthcare versions of the Web site.
We have also generated revenue by developing programs for a number of branded
pharmaceutical products. For the three months ended March 31, 2000, revenue from
Bristol-Myers Squibb and Eli Lilly and Company represented $4.8 million or 77%
of the company's total revenue. We are also developing the Web sites for these
programs and receive payment as services are performed. We are developing a
custom version of an electronic medical education product for Bristol-Myers
Squibb. The loss of Bristol-Myers Squibb or Eli Lilly and Company as a customer
or any changes to the existing relationship that are less favorable to us, or
any significant reduction in traffic on or through the Web sites that we manage,
will materially and adversely affect our business, financial condition and
results of operations.
VISITOR TRAFFIC
To improve the depth and breadth of our medical content and to increase visitor
traffic, in 1999 and 2000 we completed strategic initiatives to purchase, manage
or sponsor the following Web sites:
. Pharminfo.com, a leading Web site providing information on
pharmaceutical products and clinical trials for pharmacists, physicians
and consumers;
. INCIID.org, a Web site providing information on infertility;
. Cyberdiet.com, a Web site providing tailored nutritional information and
programs;
<PAGE>
. Heartinfo.org, a leading Web site for patients and professionals
seeking information on heart disease and hypertension;
. Mood Sciences, a developer of a Web-based software tool for the
screening and monitoring of 12 mood related disorders;
. POL.net, the flagship site of Physicians' Online., a company with more
authenticated doctor-users than any other medical web site,
("Physicians' Online"); and
. Storknet.org, a leading Web site for pregnancy and parenting issues.
We believe that Mediconsult's Web sites together represent the most highly
trafficked physicians-only Web site and one of the most highly trafficked
consumer healthcare information sites on the Internet. During the first quarter
of 2000, our Web sites attracted 12.8 million visitors who viewed 86.2 million
pages. On average, viewers spent approximately 26 minutes per session on our Web
sites.
STOCK OPTIONS AND WARRANTS
Stock options granted to employees are expensed over their vesting period, based
on their fair value at the date of grant, under Statement of Financial
Accounting Standards No. 123 "ACCOUNTING FOR STOCK-BASED COMPENSATION." As more
fully described below in "Results of Operations," we have recorded compensation
expense in connection with the vesting of stock options during the three month
periods ended March 31, 1999 and 2000, as well as deferred compensation expense
for the value of options granted that were not vested as of such dates.
Pursuant to an agreement dated July 28, 1998 with Arnhold and S. Bleichroeder,
Inc. to provide us with investment advisory services, we have issued to this
firm 100,000 shares of our common stock and warrants to purchase an aggregate of
400,000 shares of common stock with an exercise price of $1.22 per share, which
was the closing price of our common stock on the contract date. Of this amount,
warrants for 200,000 shares of common stock were delivered upon initial filing
of a prospectus and warrants for 200,000 shares of common stock are deliverable
in 2000, if certain conditions are met. Warrants for 100,000 shares were
delivered on March 15, 2000. Delivery of the warrants will result in the
recognition of an expense in the statement of operation equal to the fair value
of the warrants on the date of delivery in accordance with EITF 96-18
"Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling Goods or Services". At March 31, 2000,
the criteria required for exercise of such warrants vesting in 2000 had not been
met.
RESULTS OF OPERATIONS
REVENUE. Revenue consists of fees received for the design, development and
implementation, of online marketing and sponsorship programs, including Web site
development and implementation, advertising services, internet service provider
membership fees, licensing our content and Web site support. Total revenues
increased from $0.5 million in the quarter ended March 31, 1999 to $6.2 million
in the quarter ended March 31, 2000, an increase of 1,177%. This increase was
primarily attributable to initiatives focused on the delivery of electronic
<PAGE>
medical education over the internet, and sponsorship programs of $0.05 million
for the quarter ended March 31, 1999 vs. $5.3 million for the quarter ended
March 31, 2000.
PRODUCT AND CONTENT DEVELOPMENT. Product and content development costs include
expenses incurred to develop, enhance, manage, monitor and operate our Web sites
and to develop new products such as electronic medical education and related
products. Total product and content development cost increased from $0.9 million
in the quarter ended March 31, 1999 to $8.0 million in the quarter ended March
31, 2000, an increase of 786%. The increase was primarily due to a buildup in
personnel in the later part of 1999 in conjunction with the acquisition of
Physicians' Online and increased hiring to support the growth in revenues of the
medical educational and sponsorship programs.
MARKETING, SALES AND CLIENT SERVICES. Marketing, sales and client services costs
include expenses incurred by the company to obtain and maintain client
relationships. These costs included salaries and fees paid to employees and
consultants, and programming costs. Total marketing, sales and client services
cost increased from $0.7 million in the quarter ended March 31,1999 to $5.0
million in the quarter ended March 31, 2000, an increase of 574%. This increase
was primarily due to costs associated with the development and implementation of
specific client medical education and sponsorship programs. A substantial
portion of the increase was attributable to a marketing agreement entered into
with Pharma Marketing, LLC which resulted in sales and marketing efforts being
significantly increased.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses consist
primarily of salaries and related costs for general corporate functions,
including finance, accounting and legal expenses, and fees for other
professional services. Total general and administrative expenses increased from
$0.7 million in the quarter ended March 31, 1999 to $2.0 million in the quarter
ended March 31, 2000, an increase of 204%. The increase was primarily
attributable to salaries and related expenses associated with acquired companies
and hiring additional personnel to support the growth of our operations.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense increased
$10.6 million to $10.7 million for the first quarter ended March 31, 2000. This
increase was primarily due to the amortization of goodwill of $9.6 million
relating to the Physicians' Online acquisition in December 1999.
FAIR VALUE OF OPTIONS GRANTED TO EMPLOYEES. We have recorded compensation
expense in connection with the vesting of employee stock options of $0.2 million
during the quarter ended March 31, 1999, and $0.7 million during the quarter
ended March 31, 2000. Compensation expense represents the amortization of
deferred compensation which is measured based on the fair value of the options
granted. These amounts are amortized over the vesting period of the applicable
options.
FAIR VALUE OF WARRANTS GRANTED TO THIRD PARTIES. We recorded expense in
connection with the vesting of warrants to Andersen Consulting and Arnhold &
S. Bleichroeder Inc. Compensation expense was $0.5 million for the three months
ended March 31, 2000. There was no corresponding expense for the three months
ended March 31, 1999.
INTEREST INCOME/(EXPENSE). During the quarter ended March 31, 2000, the Company
earned interest income, net of interest expense of $0.1 million, as compared to
nil in the quarter ended March 31, 1999. The increase in interest income
<PAGE>
reflects increased cash on hand, and interest expense is due to debt outstanding
relating to the Physicians' Online acquisition.
PREFERRED SHARES DIVIDEND. Preferred shares dividends were issued to senior
preferred stockholders and junior preferred stockholders, these costs were $0.9
million and nil for the quarter ended March 31, 1999 and March 31, 2000
respectively.
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
PROJECTED
The information and data contained in this quarterly report includes all
necessary adjustments, consisting only of normal recurring adjustments necessary
for fair presentation of this data. The results of operations for any quarter
are not necessarily indicative of the results of operations for any future
period.
We have a limited operating history upon which to evaluate our business and
predict revenue and planned operating expenses. Our quarterly operating results
may vary significantly in the foreseeable future due to a variety of factors,
many of which are outside of our control. The timing of sponsorship revenues is
one of the most significant factors affecting quarterly results. Once a contract
is executed, a significant portion of our revenue is derived from customized Web
site development and implementation projects, rather than from recurring fees.
As a result, we cannot predict with certainty when we will perform the work
necessary to receive payment for these projects.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have financed our operations primarily through the private
placement of equity securities and advances from our principal stockholder. In
February 1999, we received $3.2 million in proceeds from a private placement of
equity securities to certain unrelated investors. In April 1999, we received
approximately $58 million in net proceeds from a public offering of equity
securities. In May 2000, we received $6.5 million in proceeds from a placement
of equity securities to McKesson HBOC, Inc.
We have incurred substantial costs to design, develop and implement Internet-
based marketing and sponsorship programs for our clients, to build brand
awareness and to grow our business. As a result, we have incurred operating
losses and negative cash flows from operations in each quarter since we
commenced operations. As of March 31, 2000, we had an accumulated deficit of
$55.2 million.
Net cash used in operating activities during the three months ended March 31,
1999 was $1.7 million, compared to net cash used in operating activities during
the three months ended March 31, 2000 of $12.0 million. This increase in cash
used was primarily attributable to net losses during this period which were
partially offset by certain non-cash items of $13.3 million. This amount was
comprised of depreciation and amortization of $10.7 million, services rendered
in exchange for common stock of $1.2 million, deferred compensation amortization
of $0.2 million and expenses related to stock options and warrants granted to
consultants and employees of $1.2 million. Net cash used reflected several
factors, including (1) increased operating expenses as our business volume
increased; (2) a higher level of work in progress due to revenue growth; (3)
<PAGE>
increases in accounts receivables of $2.0 million; and (4) decreases in accounts
payables of $1.6 million.
Net cash used in investing activities during the three months ended March 31,
1999 was $0.3 million, compared to net cash used in investing activities during
the three months ended March 31, 2000 of $1.6 million. This increase in cash
used was attributable to $1.4 million of fixed assets purchases directly related
to the needs of the Company's growth, the balance of $3.1 million was offset by
the non-cash acquisition of North Star and Storknet in the first quarter of
2000.
Net cash provided by financing activities during the three months ended March
31, 1999 was $3.3 million, compared to net cash used in financing activities
during the three months ended March 31, 2000 of $1.7 million. This decrease was
primarily attributable to two major components (1) the repayment of $2.6 million
in long-term debt acquired in the Physicians' Online acquisition in the first
quarter ended March 31, 2000, and (2) the $3.2 million in proceeds from issuance
of senior preferred stock to the first quarter of 1999.
Our ability to generate significant revenue is uncertain. We incurred net losses
of approximately $20.5 million and $8.5 million after accounting for non-cash
items for the quarter ended March 31, 2000. We expect losses from operations and
negative cash flow to continue for the foreseeable future and at least through
the year 2000 as a result of our expansion plans and our expectation that
operating expenses will increase significantly in the next several years. The
rate at which these losses will be incurred may increase from current levels.
Although we have experienced revenue growth in recent periods, our revenue may
not remain at its current level or increase in the future. If our revenue does
not increase and if our spending levels are not adjusted accordingly, we may not
generate sufficient revenue to achieve profitability, which would have a
material, adverse effect on our business, financial condition and results of
operations. Even if we achieve profitability, we may not sustain or increase
profitability on a quarterly or annual basis in the future.
Our working capital requirements depend on numerous factors. We have experienced
a substantial increase in our expenditures since inception, consistent with
growth in our operations and staffing, and anticipate that this will continue
for the foreseeable future. We anticipate incurring additional expenses to
increase our marketing and sales efforts, for product development and for
technology and infrastructure development. Additionally, we will continue to
evaluate possible investments in businesses, products and technologies, the
expansion of our marketing and sales programs and more aggressive brand
promotions. If we experience a shortfall in revenue in relation to expenses, or
if our expenses precede increased revenue, our business, financial condition and
results of operation could be materially and adversely affected.
We currently anticipate that our available cash resources will be sufficient to
meet our presently anticipated working capital, capital expenditure and business
expansion requirements through the end of the year. We may need to raise
additional funds, however, in order to fund more rapid expansion, to develop new
or enhance existing services or products, to respond to competitive pressures or
to acquire complementary products, businesses or technologies. There can be no
assurance that any required additional financing will be available on terms
favorable to us, or at all. If additional funds are raised by the issuance of
equity securities, stockholders may experience dilution of their ownership
interest and these securities may have rights senior to those of the holders of
the common stock. If additional funds are raised by the issuance of debt, we may
be subject to certain limitations on our operations, including limitations on
<PAGE>
the payment of dividends. If adequate funds are not available or not available
on acceptable terms, we may be unable to fund our expansion, successfully
promote our brand name, take advantage of acquisition opportunities, develop or
enhance services or respond to competitive pressures, any of which could have a
material adverse effect on our business, financial condition and results of
operations.
The financial results are reported in U.S. dollars, which are affected by
changes in the value of the various foreign currencies in which we make payments
in relation to the U.S. dollar. We cannot however anticipate operating exposures
through foreign currency exchange option or forward contracts relating to
foreign currency. The primary currency for which we have foreign currency
exchange rate exposure is the Canadian dollar.
FORWARD LOOKING STATEMENTS
When used in this Quarterly Report on Form 10-Q, in documents incorporated
herein and elsewhere by us from time to time, the words "believes,"
"anticipates," "expects" and similar expressions are intended to identify
forward-looking statements concerning our business operations, economic
performance and financial condition, including in particular, our business
strategy and means to implement the strategy, our objectives, the amount of
future capital expenditures required, the likelihood of our success in
developing and introducing new products and expanding the business, and the
timing of the introduction of new and modified products or services. For those
statements, we claim the protection of the safe harbor for forward looking
statements contained in the Private Securities Litigation Reform Act of 1995.
These forward looking statements are based on a number of assumptions and
estimates which are inherently subject to significant risks and uncertainties,
many of which are beyond our control and reflect future business decisions which
are subject to change. A variety of factors could cause actual results to differ
materially from those anticipated in our forward-looking statements, including
the following factors: (a) those set forth in our Form 10-K for the period ended
December 31, 1999, incorporated herein by reference, and elsewhere herein; and
(b) those set forth from time to time in our press releases and reports and
other filings made with the Securities and Exchange Commission. We caution that
such factors are not exclusive. Consequently, all of the forward-looking
statements made in this document are qualified by these cautionary statements
and readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this Quarterly Report on Form 10-
Q. We undertake no obligation to publicly release the results of any revisions
of such forward-looking statements that may be made to reflect events or
circumstances after the date hereof, or thereof, as the case may be, or to
reflect the occurrence of unanticipated events.
PART II. OTHER INFORMATION
ITEM 1. CHANGES IN SECURITIES
Sales of Unregistered Securities
In the three month period ended March 31, 2000 we issued the following
unregistered securities: Effective February 11, 2000, we issued 435,161 shares
<PAGE>
of our common stock to the former shareholders of Web Northstar Interactive
Corp. in connection with the purchase of Web Northstar for an aggregate price of
$2,792,409. On March 23, 2000, we issued 33,676 shares of our common stock to
Maribeth Doerr, the sole proprietor of Doerr Consulting, in connection with the
purchase of the assets related to the Storknet website for an aggregate purchase
price of $200,000. Also on March 23, 2000, we issued warrants to purchase
1,503,425 shares of our common stock at an exercise price of $3.8125 per share
to Andersen Consulting in connection with Andersen's provision of consulting
services to the Company. The sales and issuance of these securities were exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
as a private placement.
ITEM 6. EXHIBITS AND REPORTS FILED ON FORM 8-K
<TABLE>
<CAPTION>
(a)
Exhibit Description
Number -----------
------
<S> <C>
2.1 Northstar Agreement and Plan of Merger*
3.1 Amended and Restated Certificate of Incorporation (1)
3.2 Amended and Restated By-laws(1)
4.1 Specimen common stock certificate(4)
4.2 Form of Investor Senior Preferred Stock Warrant (4)
4.3 Form of Warrant issued to Arnhold and S. Bleichroeder, Inc. (4)
4.4 Form of Warrant issued to Andersen Consulting*
10.1 Amended and Restated Mediconsult 1996 Stock Option Plan (2)
10.2 Amended and Restated Physicians' Online 1994 Stock Option Plan (2)
10.3 Escrow Agreement, dated June 14, 1999, among Mediconsult.com, Inc.,
Cyber-Tech, Inc., Andre Pilevsky, Daniel Rader, M.D and SunTrust Bank (3)
10.4 Escrow Agreement, dated December 16, 1999, among Mediconsult.com,
Inc., Physicians' Online, Inc., Jason Fisherman as representative, and
The Wilmington Trust Company (2)
10.5 Worldwide Web Server Agreement dated November 6, 1996 between Tvisions
Inc. and Mediconsult.com Limited (5)
10.6 Operating Agreement of Pharma Marketing, LLC, Dated September 7,
1999(1)
10.7 Service Agreement, dated September 7, 1999, between Pharma Marketing,
LLC and Mediconsult.com., Inc.(1)
10.8 Membership Investment Agreement, dated September 7, 1999, between
Pharma Marketing, LLC and Mediconsult.com, Inc.(1)
10.9 Letter agreement dated December 30, 1998 among the Company,
Pharmaceutical Information Associates, Ltd., VirSci Corporation and
Pharmaceutical Information.Net, Inc. (4)
10.10 Consulting Agreement dated March 3, 1997 between the Company and IBM
Canada (3)
10.11 Source Code License Agreement dated February 26, 1999 between
Tvisions, Inc. and Mediconsult.com Limited (4)
10.12 Agreement between Brystol-Meyers Squibb Company and Mediconsult.com
Limited, dated as of September 30, 1999 (1)
10.13 Project Order pursuant to Agreement between Brystol-Meyers Squibb
Company and Mediconsult.com Limited, dated as of September 30, 1999*
10.14 Agreement between the Company and Novartis Pharma AG (4)
10.15 Exclusive Sponsorship Agreement dated as of January 15, 1999 between
InterNational Council on Infertility Information Dissemination and
Mediconsult.com Limited (4)
10.16 Perc Pilot Program Agreement, dated February 25, 2000, by and between
Eli Lilly and Company and Mediconsult.com Limited.*
10.17 Internet Consulting and Software Services Agreement between
Mediconsult, Ltd. and Eli Lilly and Company.*
10.18 Employment Agreement effective as of January 1, 1999, between 3542491
Canada Inc. and David J. Austin (4)
10.19 Employment Agreement effective as of January 1, 1999, between
Mediconsult.com Limited and
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Robert A. Jennings (4)
10.20 Employment Agreement effective as of January 1, 1999, between 3542491
Canada Inc. and Ian Sutcliffe (4)
10.21 Employment Agreement dated as of April 1, 1999 between the Company and
E. Michael Ingram (4)
10.22 Employment Agreement, dated June 14, 1999, between Mediconsult.com
(US), Ltd. and Andre Pilevsky (3)
10.23 Employment Agreement, dated September 7, 1999, between Pharma
Marketing, LLC and Timothy J. McIntyre.
10.24 Noncompetition Agreement, dated June 14, 1999, between Mediconsult.com
(US), Ltd. and Andre Pilevsky (3)
10.25 Noncompetition Agreement, dated June 14, 1999, between Mediconsult.com
(US), Ltd. and Sharon Weinberg (3)
10.26 Noncompetition Agreement, dated June 14, 1999, between Mediconsult.com
(US), Ltd. and Daniel Rader, M.D(3)
10.27 Stock Purchase Agreement dated as of February 26, 1999 between the
Company and the Investors named therein (4)
10.28 Registration Rights Agreement dated February 26, 1999, among the
Company and the Investors named therein (4)
10.29 Stockholders' Agreement dated February 26, 1999 among the Company, the
Founders identified therein and the Investors identified on Schedule 1
thereto (4)
10.30 Registration Rights Agreement dated as of February 26, 1999 between
the Company and Arnhold and S. Bleichroeder, Inc. (4)
10.31 Registration Rights Agreement, dated as of March 23, 2000, between the
Company and Andersen Consulting*
27.1 Financial Data Schedule*
</TABLE>
___________
* Filed electronically herewith.
(1) Exhibits are incorporated by reference to Mediconsult's Annual Report on
Form 10-K (File No. 000-29282) filed April 10, 2000
(2) Exhibits are incorporated by reference to the Annexes to Mediconsult's
joint information/proxy statement/prospectus on Schedule 14C (File No. 000-
29282) filed November 19, 1999
(3) Exhibits are incorporated by reference to Mediconsult's Current Report on
Form 8-K (File No. 333-73059) filed June 29, 1999
(4) Exhibits are incorporated by reference to Mediconsult's Registration
Statement on Form S-1 (Registration No. 333-73059) filed April 2, 1999
(5) Exhibits are incorporated by reference to Mediconsult's Registration
Statement on Form 10-SB (File No. 333-21883) filed December 16, 1996
(b) None.
<PAGE>
SIGNATURES
Mediconsult.com, Inc.
Date: May 13, 2000 Signature: /s/ E. Michael Ingram
E. Michael Ingram
Chief Financial Officer
<PAGE>
Exhibit Description
Number -----------
------
2.1 Northstar Agreement and Plan of Merger*
3.1 Amended and Restated Certificate of Incorporation (1)
3.2 Amended and Restated By-laws(1)
4.1 Specimen common stock certificate(4)
4.2 Form of Investor Senior Preferred Stock Warrant (4)
4.3 Form of Warrant issued to Arnhold and S. Bleichroeder, Inc. (4)
4.4 Form of Warrant issued to Andersen Consulting*
10.1 Amended and Restated Mediconsult 1996 Stock Option Plan (2)
10.2 Amended and Restated Physicians' Online 1994 Stock Option Plan (2)
10.3 Escrow Agreement, dated June 14, 1999, among Mediconsult.com, Inc.,
Cyber-Tech, Inc., Andre Pilevsky, Daniel Rader, M.D and SunTrust Bank
(3)
10.4 Escrow Agreement, dated December 16, 1999, among Mediconsult.com,
Inc., Physicians' Online, Inc., Jason Fisherman as representative, and
The Wilmington Trust Company (2)
10.5 Worldwide Web Server Agreement dated November 6, 1996 between
Tvisions, Inc. and Mediconsult.com Limited (5)
10.6 Operating Agreement of Pharma Marketing, LLC, Dated September 7,
1999(1)
10.7 Service Agreement, dated September 7, 1999, between Pharma Marketing,
LLC and Mediconsult.com., Inc.(1)
10.8 Membership Investment Agreement, dated September 7, 1999, between
Pharma Marketing, LLC and Mediconsult.com, Inc.(1)
10.9 Letter agreement dated December 30, 1998 among the Company,
Pharmaceutical Information Associates, Ltd., VirSci Corporation and
Pharmaceutical Information.Net, Inc. (4)
10.10 Consulting Agreement dated March 3, 1997 between the Company and IBM
Canada (3)
10.11 Source Code License Agreement dated February 26, 1999 between
Tvisions, Inc. and Mediconsult.com Limited (4)
10.12 Agreement between Brystol-Meyers Squibb Company and Mediconsult.com
Limited, dated as of September 30, 1999 (1)
10.13 Project Order pursuant to Agreement between Brystol-Meyers Squibb
Company and Mediconsult.com Limited, dated as of September 30, 1999*
10.14 Agreement between the Company and Novartis Pharma AG (4)
10.15 Exclusive Sponsorship Agreement dated as of January 15, 1999 between
InterNational Council on Infertility Information Dissemination and
Mediconsult.com Limited (4)
10.16 Perc Pilot Program Agreement, dated February 25, 2000, by and between
Eli Lilly and Company and Mediconsult.com Limited.*
10.17 Internet Consulting and Software Services Agreement between
Mediconsult, Ltd. and Eli Lilly and Company.*
10.18 Employment Agreement effective as of January 1, 1999, between 3542491
Canada Inc. and David J. Austin (4)
10.19 Employment Agreement effective as of January 1, 1999, between
Mediconsult.com Limited and Robert A. Jennings (4)
10.20 Employment Agreement effective as of January 1, 1999, between 3542491
Canada Inc. and Ian Sutcliffe (4)
10.21 Employment Agreement dated as of April 1, 1999 between the Company and
E. Michael Ingram (4)
10.22 Employment Agreement, dated June 14, 1999, between Mediconsult.com
(US), Ltd. and Andre Pilevsky (3)
10.23 Employment Agreement, dated September 7, 1999, between Pharma
Marketing, LLC and Timothy J. McIntyre.
10.24 Noncompetition Agreement, dated June 14, 1999, between Mediconsult.com
(US), Ltd. and Andre Pilevsky (3)
10.25 Noncompetition Agreement, dated June 14, 1999, between Mediconsult.com
(US), Ltd. and Sharon Weinberg (3)
10.26 Noncompetition Agreement, dated June 14, 1999, between Mediconsult.com
(US), Ltd. and Daniel Rader, M.D(3)
<PAGE>
EXHIBIT 2.1
================================================================================
Agreement and Plan of Merger
dated as of February 11, 2000
among
Mediconsult.Com, Inc.,
Northstar Acquisition, Inc.,
Web North Star Interactive Corp.,
Cheryl Harris,
Joseph McCallion,
Khurshed F. Birdie
and
Charles Stafford
================================================================================
<PAGE>
Table Of Contents
<TABLE>
<S> <C>
ARTICLE I THE MERGER.......................................................................... 1
Section 1.1. The Merger........................................................................ 1
Section 1.2. Closing........................................................................... 2
Section 1.3. Effective Time.................................................................... 2
Section 1.4. Effects of the Merger............................................................. 2
Section 1.5. Certificate of Incorporation and By-Laws.......................................... 2
Section 1.6. Directors......................................................................... 2
Section 1.7. Officers.......................................................................... 2
Section 1.8. Tax-Free Reorganization........................................................... 2
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE COMPANY;
EXCHANGE OF CERTIFICATES........................................................................ 3
Section 2.1. Effect on Capital Stock........................................................... 3
(a) Cancellation of Treasury Stock.................................................... 3
(b) Merger Consideration; Conversion of Company Common Stock.......................... 3
(c) Receivables Consideration......................................................... 3
(d) Cancellation of Sub Stock......................................................... 4
Section 2.2. Exchange of Certificates.......................................................... 4
(a) MCNS to Provide Merger Consideration.............................................. 4
(b) Exchange Procedure................................................................ 4
ARTICLE III REPRESENTATIONS AND WARRANTIES...................................................... 4
Section 3.1. Representations and Warranties of the Company and the Shareholders................ 4
(a) Organization, Standing and Power.................................................. 5
(b) Authority; Binding Agreements..................................................... 5
(c) Capitalization; Equity Interests.................................................. 5
(d) Conflicts; Consents............................................................... 6
(e) Financial Information............................................................. 6
(f) Absence of Changes................................................................ 7
(g) Assets, Property and Related Matters; Real Property............................... 8
(h) Intellectual Property............................................................. 9
(i) Insurance......................................................................... 10
(j) Agreements, Etc................................................................... 11
(k) Litigation, Etc................................................................... 11
(l) Compliance; Governmental Authorizations........................................... 11
(m) Labor Relations; Employees........................................................ 12
(n) Accounts Receivable............................................................... 14
(o) Customers......................................................................... 14
(p) Accounts Payable.................................................................. 14
(q) Related Party Transactions........................................................ 14
(r) Taxes 15
(s) Disclosure........................................................................ 16
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(t) Bank Accounts; Powers-of-Attorney................................................. 16
(u) Brokers........................................................................... 16
Section 3.2. Representations and Warranties by MCNS and Sub.................................... 16
(a) Organization, Standing and Power.................................................. 17
(b) Authority; Binding Agreements..................................................... 17
(c) Conflicts; Consents............................................................... 17
(d) Capitalization.................................................................... 18
(e) SEC Documents; Financial Statements............................................... 18
(f) Brokers........................................................................... 19
ARTICLE IV ADDITIONAL AGREEMENTS............................................................... 19
Section 4.1. Payment of Accounts Payable....................................................... 19
Section 4.2. Expenses.......................................................................... 19
Section 4.3. Conduct of Business............................................................... 19
Section 4.4. Further Assurances................................................................ 19
Section 4.5. Releases; Prior Compensation...................................................... 20
Section 4.6. Public Announcements.............................................................. 20
ARTICLE V CONDITIONS PRECEDENT................................................................. 20
Section 5.1. Conditions to Obligations of MCNS and Sub......................................... 20
(a) Authorization..................................................................... 20
(b) Representations and Warranties.................................................... 20
(c) Consents, Amendments and Terminations............................................. 21
(d) Certificates...................................................................... 21
(e) Opinion of Counsel................................................................ 21
(f) Consulting Agreements............................................................. 21
(g) Employee Agreements............................................................... 21
(h) Investment Agreement.............................................................. 21
(i) Escrow Agreement.................................................................. 21
(j) Books and Records................................................................. 21
(k) Share Certificates and Letter of Transmittal...................................... 21
(l) Good Standing Certificates........................................................ 21
(m) Officer and Director Resignations................................................. 22
(n) Other Documents................................................................... 22
Section 5.2. Conditions of Obligations of Shareholders......................................... 22
(a) Authorization..................................................................... 22
(b) Representations and Warranties.................................................... 22
(c) Consulting Agreements............................................................. 22
(d) Certificate....................................................................... 22
(e) Opinion of Counsel................................................................ 22
(f) Payments.......................................................................... 22
(g) Other Documents................................................................... 22
ARTICLE VI INDEMNITY........................................................................... 23
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 6.1. Indemnification................................................................... 23
Section 6.2. Limitations....................................................................... 24
Section 6.3. No Election....................................................................... 24
ARTICLE VII MISCELLANEOUS.................................................................... 25
Section 7.1. Entire Agreement.................................................................. 25
Section 7.2. Termination....................................................................... 25
Section 7.3. Descriptive Headings; Certain Interpretations..................................... 25
Section 7.4. Notices........................................................................... 26
Section 7.5. Counterparts...................................................................... 26
Section 7.6. Survival.......................................................................... 26
Section 7.7. Benefits of Agreement............................................................. 27
Section 7.8. Amendments and Waivers............................................................ 27
Section 7.9. Assignment........................................................................ 27
Section 7.10. Enforceability.................................................................... 27
Section 7.11. GOVERNING LAW..................................................................... 27
</TABLE>
EXHIBITS
EXHIBIT A Form of Consulting Agreement for Joseph McCallion
EXHIBIT B Form of Consulting Agreement for Cheryl Harris
EXHIBIT C Form of Investment Agreement
EXHIBIT D Form of Escrow Agreement
EXHIBIT E Form of Employee Agreement
EXHIBIT F Form of Certificate of Officer of the Company
EXHIBIT G Form of Certificate of Secretary of the Company
EXHIBIT H Form of Certificate of Shareholders of the Company
EXHIBIT I Form of Opinion of Putney, Twombly, Hall & Hirson LLP
EXHIBIT J Form of Letter of Transmittal
EXHIBIT K Form of Certificate of Officer of MCNS
Exhibit L Form of Opinion of Covington & Burling
ANNEXES
Annex I Certain Company Employees
Annex II Allocation of Merger Consideration
iii
<PAGE>
SCHEDULES
3.1(c) Capitalization; Equity Interests
3.1(d) Conflicts
3.1(e)(i) Financial Information
3.1(e)(ii) Financial Information
3.1(f) Absence of Charges
3.1(g)(i) Assets, Property and Related Matters; Real Property
3.1(g)(ii) Assets, Property and Related Matters; Real Property
3.1(h) Intellectual Property
3.1(i) Insurance
3.1(j) Agreements
3.1(l) Compliance; Governmental Authorization
3.1(m)(ii) Labor Relations; Employees
3.1(n) Accounts Receivable
3.1(o) Customers
3.1(p) Accounts Payable
3.1(q) Related Party Transactions
3.1(r) Taxes
3.1(t) Bank Accounts; Powers-of-Attorney
iv
<PAGE>
Exhibit 2.1
Agreement and Plan of Merger (the "Agreement"), dated as of
February 11, 2000, among Web North Star Interactive Corp., a
New York corporation (the "Company"), Cheryl Harris, Joseph
McCallion, Khurshed F. Birdie and Charles Stafford, (each a
"Shareholder," and collectively, the "Shareholders"),
Northstar Acquisition, Inc., a New York corporation ("Sub"),
and Mediconsult.com, Inc., a Delaware corporation ("MCNS").
------------------------------------------------------------
The Company is engaged in the business of developing, owning and
marketing certain market research software (the "Business"), and the Company and
MCNS desire that Sub be merged (the "Merger") into the Company as a result of
which the Company will become a wholly owned subsidiary of MCNS. The Board of
Directors of each of the Company, Sub and MCNS, and the Shareholders, each have
approved the Merger, upon the terms and subject to the conditions set forth in
this Agreement As a result of the Merger, all of the issued and outstanding
shares of the Company's common stock, no par value (the "Company Common Stock"),
will be converted into the right to receive shares of common stock, $0.001 per
share par value (the "MCNS Common Stock") of MCNS and certain cash consideration
as described in Article II of this Agreement . All references to the Company
shall be deemed to be references to the Company and its predecessor business.
As a condition to Sub and MCNS's obligation to consummate the
Merger, (i) Joseph McCallion and Cheryl Harris will each enter into consulting
and non-competition agreements with MCNS in the forms attached hereto as Exhibit
A and Exhibit B, respectively (the "Consulting Agreements"), (ii) the
Shareholders will enter into Investment Agreements relating to the MCNS Common
Stock in the form attached hereto as Exhibit C (the "Investment Agreements"),
(iii) The Shareholders will enter into an escrow agreement relating to the
Merger Consideration in the form attached hereto as Exhibit D (the "Escrow
Agreement"), and (iv) Certain employees of the Company as identified on Annex I
will enter into an employee agreement in the form attached hereto as Exhibit E
(the "Employee Agreements," and, together with the Consulting Agreements, the
Investment Agreements, and the Escrow Agreement, the "Operative Documents").
The parties to this Agreement intend that the Merger qualify as a
"reorganization" within the meaning of Section 368 (a) of the Internal Revenue
Code of 1986, as amended (the "Code").
In consideration of the mutual benefits to be derived from this
Agreement and of the representations, warranties, conditions, agreements and
promises contained herein and other good and valuable consideration, the parties
agree as follows:
ARTICLE I
The Merger
----------
SECTION 1.1. The Merger. Upon the terms and subject to the
----------
conditions set forth in this Agreement, and in accordance with the New York
Business Corporation Law ("New York Law"), Sub shall be merged with and into the
Company at the Effective Time of the Merger (defined below). Following the
Merger, the separate corporate existence of Sub shall cease and the
<PAGE>
Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Sub in accordance with New York Law.
SECTION 1.2. Closing. The closing of the Merger (the "Closing")
-------
will take place at 10:00 a.m. on a date to be specified by the parties, which
(subject to satisfaction or waiver of the conditions set forth in Article V)
shall be no later than the second business day after satisfaction or waiver of
the conditions set forth in Article V, at the offices of Covington & Burling,
1330 Avenue of the Americas, New York, New York 10019, unless another date or
place is agreed to in writing by the parties (such date upon which the Closing
occurs, the "Closing Date").
SECTION 1.3. Effective Time. As soon as practicable following
--------------
the satisfaction or waiver of the conditions set forth in Article V, the parties
shall file a copy of the articles of merger or other appropriate documents in
the office of the New York Secretary of State (the "Certificate of Merger"),
executed in accordance with the relevant provisions of New York Law, and shall
make all other filings or recordings required under New York Law. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the New York Secretary of State in accordance with Section 904 of New York
Law (the time the Merger becomes effective, the "Effective Time of the Merger").
SECTION 1.4. Effects of the Merger. The Merger shall have the
---------------------
effects set forth in the New York Law.
SECTION 1.5. Certificate of Incorporation and By-Laws. (a) The
----------------------------------------
Certificate of Incorporation of Sub as in effect at the Effective Time of the
Merger shall be the Certificate of Incorporation of the Surviving Corporation,
until changed or amended.
(b) The By-Laws of Sub as in effect at the Effective Time of the
Merger shall be the By-Laws of the Surviving Corporation, until changed or
amended.
SECTION 1.6. Directors. The directors of Sub at the Effective
---------
Time of the Merger shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their successors are duly
elected and qualified.
SECTION 1.7. Officers. The officers of Sub at the Effective Time
--------
of the Merger shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their successors are duly
elected and qualified.
SECTION 1.8. Tax-Free Reorganization. The Merger is intended to
-----------------------
be a reorganization within the meaning of Section 368 (a) of the Code, and this
Agreement is intended to be a "plan of reorganization" within the meaning of the
regulations promulgated under Section 368 of the Code.
ARTICLE II
Effect of the Merger on the Capital Stock of the Company; Exchange of
---------------------------------------------------------------------
Certificates
------------
SECTION 2.1. Effect on Capital Stock. As of the Effective Time
-----------------------
of the Merger, by virtue of the Merger and without any action on the part of the
holder of any shares of capital stock of the Company (including the
Shareholders) or any shares of capital stock of Sub:
2
<PAGE>
(a) Cancellation of Treasury Stock. Each share of the Company Common
------------------------------
Stock that is held by the Company as treasury stock or owned by the Company or
any subsidiary of the Company, in each case immediately prior to the Effective
Time of the Merger, shall automatically be canceled and retired and shall cease
to exist, and no consideration shall be delivered in exchange therefor.
(b) Merger Consideration; Conversion of Company Common Stock. Subject
--------------------------------------------------------
to Section 2.1(b), all of the shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time of the Merger (other than
shares to be canceled in accordance with Section 2.1(a)) shall be converted into
the right to receive, in the aggregate, (i) 435,161 fully paid and non-
assessable shares of MCNS Common Stock (the "Stock Consideration"), (ii) the
Receivables Consideration (as defined, and payable as set forth, in subsection
(c) below). The Stock Consideration and the Receivables Consideration together
are the "Merger Consideration." A portion of the Stock Consideration equal to
46,622 shares MCNS Common Stock (the "Escrow Shares") shall be deposited in
escrow pursuant to Section 2.2(b) hereof and held and disposed of in accordance
with the terms of the Escrow Agreement. The Merger Consideration shall be
allocated among the Shareholders as set forth in Annex II hereto. As of the
Effective Time of the Merger, all such shares of Company Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and the holder of the certificate representing such shares of
Company Common Stock shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration upon surrender of such certificate
in accordance with Section 2.2(b). The Merger Consideration shall be the sole
consideration to the Shareholders in connection with this Agreement.
(c) Receivables Consideration.. On the ninetieth day from the Closing
-------------------------
Date (the "Adjustment Date") MCNS shall deliver to the Shareholders a notice
(the "Accounts Collected Notice") containing a true and correct list of the
Accounts Collected as of the Payment Date. The excess of (x) the Accounts
Collected over (y) the Cash Detriment shall constitute the "Receivables
Consideration". Within three business days of the Payment Date, MCNS shall
deliver a pro rata portion (based on each Shareholder's percentage interest as
set forth on Annex II hereto) of the Receivables Consideration to each
Shareholder, by wire transfer of immediately available funds to such accounts as
shall have been identified to MCNS by the Shareholders after delivery of the
Accounts Collected Notice. "Accounts Collected" shall mean the dollar amount
actually received by MCNS as of the Payment Date in respect of the Accounts
Receivable listed on Section 3.1(n) of the Disclosure Schedule and without the
performance by MCNS or the Surviving Corporation of additional services. The
"Cash Detriment" shall mean the amount by which the sum of (i) the aggregate
amount of the Accounts Payable listed on Section 3.1(p) of the Disclosure
Schedule, (ii) the amount owed to MCNS by the Company as of Closing pursuant to
a certain promissory note between MCNS and the Company dated January 28, 2000
and (iii) the aggregate amount owed to employees of the Company under pay to
stay agreements, exceeds $200,000.
(d) Cancellation of Sub Stock. Each issued and outstanding share of
-------------------------
the capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the Surviving
Corporation.
SECTION 2.2. Exchange of Certificates.
------------------------
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(a) MCNS to Provide Merger Consideration. After the Effective Time of
------------------------------------
the Merger, MCNS shall cause its transfer agent to promptly deliver the
certificates representing the Merger Consideration.
(b) Exchange Procedure. (i) Upon surrender of a certificate
------------------
representing shares of Company Common Stock ("Certificate") for cancellation to
MCNS or to such agent or agents as may be appointed by MCNS, together with a
stock power duly executed in blank, and such other documents as may reasonably
be required by MCNS or such agent, the holder of such Certificate shall, subject
to the provisions of Section 2.1(c) clause (ii) of this subsection (b), be
entitled to receive in exchange therefor the Merger Consideration.
(ii) The shares of MCNS Common Stock to be issued and delivered
as Merger Consideration shall be delivered to the respective Shareholder and to
the escrow agent pursuant to the Escrow Agreement in the amounts set forth on
Annex II. All shares delivered to the escrow agent shall be issued in the name
of the respective shareholder pursuant to a stock power executed by the
respective shareholder and under the terms and conditions and subject to
transfer as provided in the Escrow Agreement.
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.1. Representations and Warranties of the Company and the
-----------------------------------------------------
Shareholders. The Company and the Shareholders jointly and severally represent
- ------------
and warrant to MCNS and Sub as follows:
(a) Organization, Standing and Power. The Company (i) is a
--------------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of the State of New York and (ii) has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. The Company is duly qualified to do business and is in
good standing in each jurisdiction set forth in Section 3.1(a) of the Disclosure
Schedule. Section 3.1(a) of the Disclosure Schedule also sets forth each other
jurisdiction in which such qualification is necessary because of the property
owned, leased or operated by the Company or because of the nature of its
business as now being conducted. The Company has delivered to MCNS complete and
correct copies of its articles of incorporation and by-laws and all amendments
thereto to the date hereof and has made available to MCNS its minute books and
stock records. Section 3.1(a) of the Disclosure Schedule contains a true and
correct list of the directors and officers of the Company as of the date of this
Agreement and at all times since the last action of the board of directors and
the Shareholders.
(b) Authority; Binding Agreements. The Company and each Shareholder
-----------------------------
has the legal power and capacity to enter into this Agreement, and all other
agreements and documents to which the Company or such Shareholder is a party as
contemplated by this Agreement. This Agreement and such other agreements and
documents are, or upon execution and delivery thereof will be, the valid and
binding obligations of the Company and each Shareholder, enforceable against the
Company and such Shareholder in accordance with their respective terms.
4
<PAGE>
(c) Capitalization; Equity Interests. The authorized capital stock of
--------------------------------
the Company consists of 500 shares of Company Common Stock. At the time of
execution of this Agreement, 120.51 shares of Company Common Stock were issued
and outstanding. The Shareholders own of record and beneficially all of the
outstanding capital stock of the Company. Section 3.1(c) of the Disclosure
Schedule contains a true and correct list of the number of such shares of
capital stock owned by each Shareholder. Except as set forth above, at the time
of execution of this Agreement, no shares of capital stock or other voting
securities of the Company are issued, reserved for issuance or outstanding. All
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights. There
are no bonds, debentures, notes or other indebtedness or securities of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which shareholders of the
Company may vote. There are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company is a party or by which the Company is bound obligating the Company to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or obligating
the Company to issue, grant, extend or enter into any such security, option,
warrant, call right, commitment, agreement, arrangement or undertaking. There
are no outstanding rights, commitments, agreements, arrangements or undertakings
of any kind obligating the Company to repurchase, redeem or otherwise acquire
any shares of capital stock or other voting securities of the Company or any
securities of the type described in the two immediately preceding sentences. The
Company does not have any subsidiaries nor does it own or hold any equity or
other security interests in any other entity. The Company is not subject to any
liability for any claim that it violated any applicable Federal or state
securities laws in connection with the issuance of capital stock. For purposes
of this Agreement, a "subsidiary" of any person means another person, where the
amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly by
such first person; and a "person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity
(governmental or private).
(d) Conflicts; Consents. Neither the execution and delivery of this
-------------------
Agreement or any other agreement or document to which any Shareholder is a party
as contemplated by this Agreement, the consummation of the transactions
contemplated hereby or thereby nor compliance by the Company or any Shareholder
with any of the provisions hereof or thereof will (i) conflict with or result in
a breach of the articles of incorporation, by-laws or other constitutive
documents of the Company, (ii) conflict with or result in a default (or give
rise to any right of termination, cancellation or acceleration) under any of the
provisions of any note, bond, lease, mortgage, indenture, or any material
license, franchise, permit, agreement or other instrument or obligation to which
the Company or any Shareholder is a party, or by which the Company or any
Shareholder or the Company's or any Shareholder's properties or assets, may be
bound or affected, except for such conflicts, breaches or defaults as to which
requisite waivers or consents have been obtained before the Closing (which
waivers or consents are set forth in Section 3.1(d) of the Disclosure Schedule),
(iii) violate any law, statute, rule or regulation or order, writ, injunction or
decree applicable to the Company or any Shareholder or the Company's or any
Shareholder's properties or assets or (iv) result in the creation or imposition
of any Claim upon any Company Common Stock or any property or assets used or
held by the Company. No consent or approval by, or any notification of or
filing with, any person is required in connection with the execution, delivery
and performance by any Shareholder of this Agreement or any other agreement or
document to which such Shareholder is a
5
<PAGE>
party as contemplated by this Agreement or the consummation of the transactions
contemplated hereby or thereby except as set forth in Section 3.1(d) of the
Disclosure Schedule.
(e) Financial Information. (i) The following financial statements are
---------------------
contained in Section 3.1(e)(i) of the Disclosure Schedule:
(A) the unaudited balance sheets of the Company as of December 31,
1999 and the related statement of operations for the year then ended; and
(B) the unaudited monthly balance sheets of the Company as of the end
of each month commencing January 1, 2000 through the month end immediately
prior to the date of this Agreement and the related statement of operations
for each such month..
Except as indicated in Section 3.1(e) of the Disclosure Schedule, all such
financial statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a basis consistent with prior periods
and fairly present the financial condition, results of operations and cash flows
of the Company. The balance sheets of the Company as at the dates set forth
present fairly the financial position of the Company as at the dates thereof,
and the related statements of operations of the Company for each of the
respective specified periods then ended present fairly the results of operations
of the Company for each of the respective periods then ended. For the purposes
of this Agreement, all financial statements referred to in this paragraph shall
include any notes and schedules to such financial statements.
(ii) Except as set forth in Section 3.1(e)(ii) of the Disclosure
Schedule, there were no liabilities or obligations (whether absolute, accrued,
contingent or otherwise, and whether due or to become due) in respect of the
Company which were not shown or provided for on the balance sheets of the
Company to which such liabilities or obligations relate. All reserves
established by the Company are reflected on the balance sheets of the Company or
in the footnotes to the combined financial statements of the Company and are
adequate and there are no loss contingencies that are required to be accrued by
Statement of Financial Accounting Standard No. 5 of the Financial Accounting
Standards Board which are not provided for on such balance sheets.
(f) Absence of Changes. Except as set forth in Section 3.1(f) of the
------------------
Disclosure Schedule, since December 31, 1999, the Company has been operated in
the ordinary course consistent with past practice and there has not been:
(i) any material adverse change in the condition (financial or
otherwise) of the assets, liabilities, operations, customer contracts or other
customer arrangements, management personnel, billings, revenues, earnings,
business or prospects of the Company (a "Company Material Adverse Effect");
(ii) any obligation or liability (whether absolute, accrued,
contingent or otherwise, and whether due or to become due) incurred by the
Company, other than obligations under customer contracts, current obligations
and liabilities incurred in the ordinary course of business and consistent with
past practice;
(iii) any payment, discharge or satisfaction of any claim or
obligation of the Company, except in the ordinary course of business and
consistent with past practice;
6
<PAGE>
(iv) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of the Company
or any direct or indirect redemption, purchase or other acquisition of any such
shares;
(v) any issuance or sale, or any contract entered into for the
issuance or sale, of any shares of capital stock or securities convertible into
or exercisable for shares of capital stock of the Company;
(vi) any sale, assignment, pledge, encumbrance, transfer or
other disposition of any tangible asset of the Company, except as contemplated
by this Agreement, or any sale, assignment, transfer or other disposition of any
patents, trademarks, service marks, trade names, copyrights, licenses,
franchises, know-how or any other intangible assets;
(vii) any creation of any material claim or other encumbrance on
any property of the Company;
(viii) any material write-down of the value of any asset of the
Company or any material write-off as uncorrectable of any accounts or notes
receivable or any portion thereof;
(ix) any cancellation of any debts or claims or any amendment,
termination or waiver of any rights of value to the Company;
(x) any capital expenditure or commitment or addition to
property, plant or equipment of the Company, individually or in the aggregate,
in excess of $10,000;
(xi) any general increase in the compensation of employees of
the Company (including any increase pursuant to any bonus, pension, profit-
sharing or other benefit or compensation plan, policy or arrangement or
commitment), or any increase in any such compensation or bonus payable to any
officer, shareholder, director, consultant or agent of the Company having an
annual salary or remuneration in excess of $25,000;
(xii) any material damage, destruction or loss (whether or not
covered by insurance) affecting any asset or property of the Company;
(xiii) any change in the independent public accountants of the
Company or in the accounting methods or accounting practices, tax methods or tax
practices followed by the Company or any change in depreciation or amortization
policies or rates;
(xiv) any agreement or action not otherwise referred to in items
(i) through (xiii) above entered into or taken that is material to the Company;
or
(xv) any agreement, whether in writing or otherwise, to take
any of the actions specified in the foregoing items (i) through (xiv).
(g) Assets, Property and Related Matters; Real Property. (i) The
---------------------------------------------------
Company has good title to, or a valid leasehold interest in, as applicable, all
of the assets reflected on the financial statements contained in Section
3.1(e)(i) of the Disclosure Schedule, free and clear of all Claims. Such assets
(A) are in good operating condition and repair, subject to ordinary wear and
tear and (B) constitute all of the properties, interests, assets and rights held
for use or used in connection with the business and operations of the Company
and constitute all those necessary to continue to operate the
7
<PAGE>
business of the Company consistent with current and historical practice. All
items of personal property owned by the Company with an original cost or book
value in excess of $5,000 are listed in Section 3.1(g)(i) of the Disclosure
Schedule.
(ii) Section 3.1(g)(ii) of the Disclosure Schedule sets forth a
list of all personal property owned or leased by the Company. With respect to
property leased by the Company, (i) the Company is the owner and holder of all
the leasehold interests and estates purported to be granted by such leases, (ii)
all leases to which the Company is a party are in full force and effect and
constitute valid and binding obligations of the Company and, to the knowledge of
the Company and the Shareholders, of the other parties thereto, enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general equitable principles,
and (iii) the Company has made available to MCNS true and complete copies of all
written leases with respect to the property listed in Section 3.1(g)(ii) of the
Disclosure Schedule. There exists no default, or any event which upon notice or
the passage of time, or both, would give rise to any default, in the performance
by the Company or by any lessor under any lease. Except as set forth in Section
3.1(g)(ii) of the Disclosure Schedule, the Company has not, and to the knowledge
of the Company and the Shareholders, no other person has, granted any oral or
written right to anyone other than the Company to lease, sublease or otherwise
occupy any of the properties described in Section 3.1(g)(ii) of the Disclosure
Schedule through the end of the applicable lease periods. The Company does not
own any real property.
(iii) The real estate listed in Section 3.1(g)(ii) of the
Disclosure Schedule and all appurtenances and improvements, as used, constructed
or maintained by the Company at any time, conform to applicable Federal, state,
local and foreign laws and regulations. To the knowledge of the Company and the
Shareholders, the use of the buildings and structures located on such real
property or any appurtenances or equipment does not violate any restrictive
covenants or encroach on any property owned by others. No condemnation
proceeding is pending or, to the knowledge of the Company and the Shareholders,
threatened which would preclude or impair the use of any such property by the
Company for the uses for which they are intended.
(h) Intellectual Property. (i) Except as set forth in Section 3.1(h)
---------------------
of the Disclosure Schedule, the Company owns or has a valid right to use the
Intellectual Property Rights (as defined below) being used to conduct its
business as now operated (the "Necessary IP Rights") (a complete list of such
Necessary IP Rights and of licenses and registrations of such Necessary IP
Rights is attached hereto as part of Schedule 3.1(h) of the Disclosure
Schedule); and, the conduct of its business as now operated does not and will
not conflict with or infringe upon the Intellectual Property Rights of others.
No claim is pending or, to the knowledge of the Company and the Shareholders,
threatened against the Company or any of its officers, employees or consultants
to the effect that any such Necessary IP Right owned or licensed by the Company,
or which the Company otherwise has the right to use, is invalid or unenforceable
by the Company. Except pursuant to the terms of any licenses specified on
Section 3.1(h) of the Disclosure Schedule, the Company has no obligation to
compensate any Person for the use of any such Necessary IP Rights and the
Company has not granted any Person any license or other right to use any of the
Necessary IP Rights of the Company, whether requiring payment of royalties or
not. "Intellectual Property Rights" means rights in (i) any patent, copyright,
service marks, trade dress, trade name, licenses, franchises or domain name
(regardless of whether such rights have been registered), (ii) registrations and
applications for registration of any of the rights listed in clause (i) of this
definition, (iii) trade secrets, confidential information, know-how, moral
rights, processes, goodwill and any such other intangible
8
<PAGE>
assets of the Company, and (iv) data of any kind, including any rights to use
Personally-Identifiable Data, (v) the likeness, name, signature, voice or other
personal characteristics of any Person, and (vi) any other proprietary or
intellectual property rights of any kind. "Personally-Identifiable Data" means
any data containing personally-identifiable information relating to any natural
Person, or any e-mail address.
(ii) The Company has taken all reasonable measures to protect
and preserve the security, confidentiality, value and ownership of, or right to
use/license, its Necessary IP Rights, including trade secrets and other
confidential information and to obtain authorization, through privacy policies,
notices, consents or otherwise, to use Personally-Identifiable Data in the
Company's business as conducted and proposed to be conducted. All employees and
consultants of the Company involved in the design, review, evaluation or
development of products or Intellectual Property Rights have executed
nondisclosure and assignment of inventions agreements sufficient to protect the
confidentiality and value of the Necessary IP Rights and to vest in the Company
exclusive ownership of, or right to use/license such Necessary IP Rights. All
trade secrets and other confidential information constituting Necessary IP
Rights are presently valid and protectible and are not part of the public domain
or knowledge, nor, to the knowledge of the Company and the Shareholders, have
they been used, divulged or appropriated for the benefit of any Person other
than the Company or otherwise to the detriment of the Company. To the knowledge
of the Company and the Shareholders, no employee or consultant of the Company
has used any trade secrets or other confidential information of any other Person
in the course of their work for the Company. The Company is the exclusive owner
or licensee of all right, title and interest in its Necessary IP Rights as
purported to be owned or licensed by it (other than commercially available "off
the shelf" software ), and the Necessary IP Rights are valid and in full force
and effect. The Company has not granted any options, exclusive licenses,
assignments or agreements of any kind relating to (i) ownership in the Necessary
IP Rights or (ii) the marketing or distribution of products or services
embodying the Necessary IP Rights. Neither the Company nor any of the Company's
officers, employees or consultants has received notice of, and to the knowledge
of the Company and the Shareholders, there are no claims that the Necessary IP
Rights or the use or proposed use thereof by the Company infringes, violates or
conflicts with, or will infringe, violate or conflict with, any such right of
any third party.
(iii) Except as disclosed on Section 3.1(h) of the Disclosure
Schedule, the Company has not entered into any agreement to indemnify any Person
other than the Company against any charge of infringement of any third-party
Intellectual Property Rights, except infringement indemnities agreed to in the
ordinary course of business.
(iv) Without limiting the foregoing, the Company has licensed
or otherwise possesses the right to use all software, databases and system or
user documentation in use on or in connection with any computer owned or leased
by the Company or server hosted for the Company ("Internal Use Software") as
such Internal Use Software is used in connection with the business of the
Company as presently conducted either (i) by means of individually purchased or
otherwise lawfully and validly acquired licenses that authorize the use of such
Internal Use Software together with all other copies of such software used by
the Company, or (ii) by means of ownership of Intellectual Property rights in
software through development by employees or assignment by third parties. The
Company believes, but does not warrant, it can obtain on commercially reasonable
terms any additional rights in such Internal Use Software necessary for its
business as proposed to be conducted.
9
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(v) The Company possesses complete and accurate records of all
rights it holds to use Personally-Identifiable Data, including but not limited
to records of all privacy policies, terms and conditions, or other agreements
and understandings pursuant to which such Personally-Identifiable Data was
collected or provided.
(i) Insurance. Section 3.1(i) of the Disclosure Schedule contains a
---------
true and complete list of all policies of casualty, liability, theft, fidelity,
life and other forms of insurance held by the Company. True and complete copies
of such policies have been delivered or made available for inspection and copy
by MCNS. All insurance policies are in the name of the Company, outstanding and
in full force and effect, all premiums with respect to such policies are
currently paid and such policies will not be affected by, or terminated or lapse
by reason of, the transactions contemplated by this Agreement. The Company has
not received notice of cancellation or termination of any such policy, nor has
it been denied or had revoked or rescinded any policy of insurance, nor borrowed
against any such policies. No claim under any such policy is pending.
(j) Agreements, Etc. Section 3.1(j) of the Disclosure Schedule
----------------
contains a true and complete list of all written or oral contracts, agreements
and other instruments (except for written and oral contracts, agreements, and
other instruments which, as of the Closing, have been fully performed by all
parties thereto) to which the Company is a party (i) relating to indebtedness
for money borrowed or capital leases, (ii) of duration of six months or more
from the date hereof and not cancelable without penalty on 30 days or less
notice, (iii) relating to commitments in excess of $10,000, (iv) relating to the
employment, termination, or compensation of any director, officer, employee,
consultant or other agent of the Company, (v) relating to the sale or other
disposition of any assets, properties or rights, (vi) relating to the lease or
similar arrangement of any machinery, equipment, motor vehicles, furniture,
fixture or similar property, (vii) between the Company and any Shareholder or
affiliate of any Shareholder, (viii) that restricts the operation of the Company
anywhere in the world or (ix) that is otherwise material to the Company or
entered into other than in the ordinary course of business. The Company is not
in default under any such agreement or instrument where such default could,
singly or in the aggregate with defaults under other agreements or instruments,
have a Company Material Adverse Effect and, to the knowledge of the Company and
the Shareholders, all such agreements or instruments are in full force and
effect. The Company has furnished to, or made available for inspection and copy
by, MCNS true and complete copies of all documents described in Section 3.1(j)
of the Disclosure Schedule.
(k) Litigation, Etc. There have not been since the inception of the
----------------
Company, nor are there, any suits, actions, claims, investigations or legal or
administrative or arbitration proceedings in respect of the Company, pending or,
to the knowledge of the Company and the Shareholders, threatened, whether at law
or in equity, or before or by any Federal, foreign, state or municipal or other
governmental department, commission, board, bureau, agency or instrumentality.
There have not been since the inception of the Company, nor are there any
judgments, decrees, injunctions or orders of any court, governmental department,
commission, agency, instrumentality or arbitrator against the Company or any
Shareholder or any of their respective assets or properties.
(l) Compliance; Governmental Authorizations. (i) The Company has
---------------------------------------
complied and is in compliance with all Federal, state, local and foreign laws,
ordinances, regulations, interpretations and orders (including those relating to
disposal of materials, environmental protection and occupational safety and
health) applicable to it. The Company has all Federal, state, local and foreign
governmental licenses and permits necessary to conduct its business as presently
being conducted, which licenses and permits (and any exceptions thereto) are set
forth in Section 3.1(l) of
10
<PAGE>
the Disclosure Schedule. Such licenses and permits are in full force and effect,
no violations are or have been recorded in respect of any thereof, no proceeding
is pending or, to the knowledge of the Company and the Shareholders, threatened,
to revoke or limit any thereof, and neither the Company nor the Shareholders
know of any basis for any such proceeding.
(ii) There are no conditions relating to the Company or relating
to the Company's ownership, use or maintenance of any real property previously
owned or operated by the Company or any of its affiliates, and neither the
Company nor the Shareholders know or have reason to know of any such condition
in respect of such real property not related to the ownership, use or
maintenance, that could lead to any liability for violation of any Federal,
state, county or local laws, regulations, orders or judgments relating to
pollution or protection of the environment or any other applicable
environmental, health or safety statutes, ordinances, orders, rules, regulations
or requirements. The Company has received, handled, used, stored, treated,
shipped and disposed of all hazardous or toxic materials, substances and wastes
(whether or not on its properties or properties owned or operated by others) in
compliance with all applicable environmental, health or safety statutes,
ordinances, orders, rules, regulations or requirements.
(m) Labor Relations; Employees. (i) Within the last five years, the
--------------------------
Company has not experienced any labor disputes with, or any work stoppages by, a
group of employees due to labor disagreements and, to the knowledge of the
Company and the Shareholders, there is no such dispute or work stoppage
threatened against the Company. No employee of the Company is represented by any
union or collective bargaining agent and, to the knowledge of the Company and
the Shareholders, there has been no union organizational effort in respect of
any employees of the Company within the past five years.
(ii) Section 3.1(m)(ii) of the Disclosure Schedule contains a
list of each pension, retirement, savings, deferred compensation, and profit-
sharing plan and each stock option, stock appreciation, stock purchase,
performance share, bonus or other incentive plan, severance plan, health, group
insurance or other welfare plan, or other similar plan and any "employee benefit
plan" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations promulgated
thereunder ("ERISA"), under which the Company has any current or future
obligation or liability or under which any employee or former employee (or
beneficiary of any employee or former employee) of the Company has or may have
any current or future right to benefits (the term "plan" shall include any
contract, agreement, policy or understanding, each such plan being hereinafter
referred to individually as a "Plan"). The Company has delivered to MCNS true
and complete copies of (A) the current plan document (including all amendments
adopted since the most recent restatement) and the most recent summary plan
description (including all summaries of material modification prepared since the
most recent summary plan description); (B) annual reports for the three most
recent years for which reports have been filed; (C) each related trust
agreement, insurance contract, service provider agreement, or investment
management agreement (including all amendments to each such document); and (D)
the most recent IRS determination letter. Each Plan intended to be tax qualified
under Sections 401(a) and 501(a) of the Internal Revenue Code of 1986 (the
"Code") has been determined by the IRS to be tax qualified under Sections 401(a)
and 501(a) of the Code and, nothing has occurred since the date of such
determination or application that would adversely affect the qualified status of
any such Plan. There has been no prohibited transaction within the meaning of
Section 4975 of the Code and Section 406 of Title I of ERISA with respect to any
Plan.
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(iii) No Plan is subject to the provisions of Section 412 of the
Code or Part 3 of Subtitle B of Title I of ERISA. No Plan is subject to Title IV
of ERISA. During the past five years, neither the Company nor any business or
entity then controlling, controlled by, or under common control with the Company
contributed to or was obliged to contribute to an employee pension plan that was
subject to Title IV of ERISA. The Company has not at any time maintained, or
contributed to, any multiemployer plan described in Section 3(37) of ERISA, or
incurred any withdrawal liability under ERISA, and the transactions contemplated
by this Agreement will not subject the Company to any withdrawal liability under
ERISA.
(iv) There are no actions, claims, lawsuits or arbitrations
(other than routine claims for benefits) pending, or, to the knowledge of the
Company and the Shareholders, threatened, with respect to any Plan or the assets
of any Plan, and neither the Company nor the Shareholders have knowledge of any
facts which could give rise to any such actions, claims, lawsuits or
arbitrations (other than routine claims for benefits). The Company has satisfied
all funding, compliance and reporting requirements for all Plans. With respect
to each Plan, the Company has paid all contributions (including employee salary
reduction contributions) and all insurance premiums that have become due, the
payment has been made within the time required by applicable law and, if
applicable, within the deadline for claiming a tax deduction for the year with
respect to which the contribution is made, and any such expense accrued but not
yet due has been properly reflected in the financial information in Section
3.1(e) of the Disclosure Schedule.
(v) No Plan provides or is required to provide, now or in the
future, health, medical, dental, accident, disability, death, survivor, or
similar benefits (whether or not insured) to or in respect of any person for any
period extending beyond termination of employment, except to the extent required
under any state insurance law or under Part 6 of Subtitle B of Title I of ERISA
and under Section 4980(B) of the Code. No Plan covers any individual other than
employees of the Company and their dependents under the health and child care
policies listed in Section 3.1(m)(ii) of the Disclosure Schedule and delivered
to MCNS.
(vi) The consummation of the transactions contemplated by this
Agreement, either alone or in combination with another event, will not (A)
entitle any current or former employee, officer, consultant, or agent of the
Company to severance pay termination benefits, unemployment compensation or any
other payment, (B) accelerate the time of payment or vesting, or increase the
amount of compensation due to any such employee, officer, consultant, or agent,
(C) obligate MCNS or any of its affiliates to pay or otherwise be liable for any
compensation, vacation days, pension contribution or other benefits to any
employee, consultant, or agent of the Company for periods before the Closing
Date or for personnel whom MCNS does not actually employ, or (D) require assets
to be set aside or other forms of security to be provided with respect to any
liability under any Plan.
(vii) The Company has not made any representations or warranties
(whether written or oral, express or implied) contractually or otherwise to any
client or customer of the Company that the Company's employees rendering
services to such client or customer are not "leased employees" (within the
meaning of Section 414(n) of the Code) or that such employees would not be
required to participate under any pension benefit plan (within the meaning of
Section 3(2) of ERISA) (a "Pension Benefit Plan") of such client or customer
relating either to (A) providing benefits to employees of the Company under a
Pension Benefit Plan of the Company or (B) making contributions to or
reimbursing such client or customer for any contributions made to a Pension
Benefit Plan of such client or customer on behalf of employees of the Company.
12
<PAGE>
(viii) The Company has complied in all material respects with all
applicable provisions of ERISA and the Code, and with any other laws, rules, and
regulations that are applicable to the Plans. To the best of the Company's and
the Shareholders' knowledge, no Plan is subject to any ongoing audit,
investigation, or other administrative proceeding of any governmental entity,
and no Plan is the subject of any pending application for administrative relief
under any voluntary compliance program or closing agreement program of the
Internal Revenue Service (the "IRS") or the Department of Labor. The Company
has no plan or commitment, whether legally binding or not, to create any
additional Plan or to change the terms of any existing Plan.
(n) Accounts Receivable. Section 3.1(n) of the Disclosure Schedule
-------------------
contains a true aged list of unpaid accounts and notes receivable owing to the
Company as of the month end prior to the date of this Agreement and the expected
date of payment of each such receivable, all of which, to the Company's and the
Shareholders' knowledge, are collectible in the ordinary course of business
without the provision of further services by the Company or the Surviving
Corporation. MCNS acknowledges and agrees that the Shareholders are not
guaranteeing the collection of such receivables.
(o) Customers. Section 3.1(o) of the Disclosure Schedule contains (i)
---------
a true and complete list of the customers of the Company for each of the year
ended December 31, 1999 and the period beginning January 1, 2000 and ending the
month end prior to the date of this Agreement and, as of the date hereof, any
additions or deletions of customers from such month end to the date of this
Agreement, (ii) a true and complete description of the effective date and
expiration date and history of renewals for and commission revenues generated
under contracts with each of the customers listed in Section 3.1(o) of the
Disclosure Schedule, (iii) a true and complete list of all contracts pursuant to
which the Company provides goods or services to its customers (the "Client
Contracts") and (iv) a true and correct description of (A) the terms and
conditions of each oral Client Contract, (B) any and all disputes or defaults
arising under or with respect to the Client Contracts in connection with which a
client has threatened, or is expected to, terminate its contract with the
Company or claim for damages, and (C) all loans or advances made by the Company
to or on behalf of its customers, which description includes the date of such
loan or advance and the principal balance outstanding as of the date of this
Agreement under each such loan or advance. The Client Contracts are valid and
enforceable in accordance with their respective terms with respect to the
Company, and are valid and enforceable in accordance with their respective terms
with respect to any other party thereto. To the Company's and Shareholders'
knowledge, no customer of the Company has threatened to terminate, fail to renew
or adversely modify any relationship with the Company.
(p) Accounts Payable. Section 3.1(p) of the Disclosure Schedule
----------------
contains a true and complete list of all accounts payable of the Company as of
the date hereof.
(q) Related Party Transactions. Except as set forth in Section 3.1(q)
--------------------------
of the Disclosure Schedule, no current or former partner, director, officer,
employee or shareholder of the Company or any associate or affiliate (as defined
in the rules promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") thereof, or any relative with a relationship of not more
remote than first cousin of any of the foregoing, is presently, or during the
12-month period ending on the date hereof has been, (i) a party to any
transaction with the Company (including any contract, agreement or other
arrangement providing for the furnishing of services by, or rental of real or
personal property from, or otherwise requiring payments to, any such director,
officer, employee or shareholder or such associate) or (ii) to the knowledge of
the Company and the Shareholders, the direct or indirect owner of an interest in
any corporation, firm, association or
13
<PAGE>
business organization which is a present (or potential) competitor, supplier or
customer of the Company, nor does any such person receive income from any source
other than the Company which relates to Company's business or should properly
accrue to the Company.
(r) Taxes. Except as set forth in Section 3.1(r) of the Disclosure
-----
Schedule, all Federal, state, local and foreign tax returns and tax reports for
periods ending on or prior to the Closing Date by the Company have been or will
be filed, or a valid request for extension has been or will be filed with
respect thereto, on a timely basis (including any extensions) with the
appropriate governmental agencies in all jurisdictions in which such returns and
reports are required to be filed. All such returns and reports are and will be
true, correct and complete. Except as set forth in Section 3.1(r) of the
Disclosure Schedule, all taxes due from and payable by the Company or the
Shareholders with respect to amounts attributable to periods in which the
Company was an S Corporation with in the meaning of Sections 1361 and 1362 of
the Code (an "S Corporation") on or prior to the Closing Date have been fully
paid on a timely basis. There are no liens for taxes other than statutory liens
for taxes not yet due and payable. Except as set forth in Section 3.1(r) of the
Disclosure Schedule, the Company is not currently the beneficiary of any
extension of time within which to file any tax return. No claim has ever been
made by an authority in a jurisdiction where the Company does not file tax
returns that it is or may be subject to taxation by that jurisdiction, and the
Company has not received any notice, or request for information from any such
authority. Except as set forth in Section 3.1(r) of the Disclosure Schedule,
neither the IRS nor any other taxing authority has contacted the Company or any
Shareholder in connection with any tax return or report filed by the Company or
any Shareholders with respect to amounts attributable to a period in which the
Company was an S Corporation and there are no audits, examinations, claims or
adjustments which, either individually or in the aggregate, could result in any
liability for tax obligations of the Company in excess of the accrued liability
for taxes shown on the combined financial statements contained in Section
3.1(e)(i) of the Disclosure Schedule. No waivers of statutes of limitations
have been given or requested with respect to the Company. Except as set forth
in Section 3.1(r) of the Disclosure Schedule, no differences exist between the
amounts of the book basis and the tax basis of assets that are not accounted for
by an accrual on the books, in accordance with GAAP, of the Company for Federal
income tax purposes. Except as set forth in Section 3.1(r) of the Disclosure
Schedule, the Company is not required to include in income any adjustment
pursuant to Section 481(a) of the Code by reason of a voluntary change in
accounting method initiated by the Company, and the IRS has proposed no
adjustment or change in accounting method. The Company is not a member of an
affiliated group as defined in Section 1502 of the Code or any comparable state,
local or foreign provision. The Company is not a party to any tax sharing
agreement, tax indemnity obligation or similar agreement, arrangement or
practice with respect to taxes (including any closing agreement or other
agreement relating to taxes with any taxing authority). The Company is not a
party to any agreement, contract or arrangement that, individually or
collectively, would give rise to the payment of any amount that would not be
deductible pursuant to the terms of Sections 162(a)(1), 162(m) or 162(n) of the
Code. The Company has not filed a consent pursuant to Section 341 of the Code.
The Company is not a party to any agreement, contract or arrangement that would
result, separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code. All transactions or
methods of accounting that could give rise to an understatement of Federal
income tax (within the meaning of Section 6661 of the Code for tax returns filed
on or before December 31, 1990, and within the meaning of Section 6662 of the
Code for tax returns filed after December 31, 1990) have been adequately
disclosed on the tax returns in accordance with Section 6661(b)(2)(B) of the
Code for tax returns filed on or prior to December 31, 1990, and in accordance
with Section 6662(d)(2)(B) of the Code for tax returns filed after December 31,
1990. The Company is not nor has it been a United States real property holding
company (as
14
<PAGE>
defined in Section 897(c)(2) of the Code) during the applicable period specified
in Section 897(c)(1)(ii) of the Code. The Company has complied (and until the
Closing will comply) with all applicable laws relating to the payment and
withholding of taxes (including, but not limited to, withholding and reporting
requirements under Section 1441 through 1464, 3401 through 3406, 6041 and 6049
of the Code and similar provisions under any other laws) and, within the time
and in the manner prescribed by law, has withheld from wages, fees and other
payments and paid over to the proper governmental or regulatory authorities all
amounts required. From June 21, 1996 until December 24, 1997 the Company was a
validly electing S Corporation at all times.
For purposes of this Agreement, "taxes" means all Federal, state,
local or foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, excise, withholding and other taxes, duties or
assessments, together with all interest, penalties and additions imposed with
respect to such amounts.
(s) Disclosure. There have been no events, transactions or
----------
information relating to the Company which, singly or in the aggregate, could
reasonably be expected to have a Company Material Adverse Effect. No
representation or warranty of the Company or the Shareholders contained in this
Agreement, as modified by the Disclosure Schedule, and no statement contained in
any certificate, schedule, annex, list or other writing furnished to MCNS,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statement contained herein or therein, in light of
the circumstances under which they were made, not misleading.
(t) Bank Accounts; Powers-of-Attorney. (i) Section 3.1(t)(i) of
---------------------------------
the Disclosure Schedule contains a true and complete list of (A) all bank
accounts and safe deposit boxes of the Company and all persons who are
signatories thereunder or who have access thereto and (B) the names of all
persons holding general or special powers-of-attorney from the Company and a
summary of the terms thereof.
(ii) Except as set forth in Section 3.1(u)(ii) of the Disclosure
Schedule, the Company does not maintain nor has it maintained any escrow or
custody accounts with respect to customer funds.
(u) Brokers. No agent, broker, investment banker, person or firm
-------
acting on behalf of any Shareholder or the Company or under the authority of any
Shareholder or the Company is or will be entitled to any broker's or finder's
fee or any other commission or similar fee directly or indirectly from any of
the parties hereto in connection with any of the transactions contemplated
hereby.
SECTION 3.2. Representations and Warranties by MCNS and Sub. MCNS
----------------------------------------------
and Sub jointly and severally represent and warrant to Shareholders as follows:
(a) Organization, Standing and Power. Each of MCNS and Sub (i) is a
--------------------------------
corporation duly organized, validly existing and in good standing under the
laws, respectively, of the States of Delaware and New York and (ii) has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Each of MCNS and Sub is
duly qualified to do business and is in good standing in each jurisdiction in
which such qualification is necessary because of the property owned, leased or
operated by it or because of the nature of its business as now being conducted,
except where the failure, singly or in the aggregate, to be so qualified or in
good standing could not reasonably be expected to have a material adverse effect
15
<PAGE>
on the condition (financial or otherwise), assets, liabilities, operations,
customer contracts or other customer arrangements, management personnel,
billings, revenues, earnings or business of MCNS and its subsidiaries taken as a
whole (a "MCNS Adverse Effect").
(b) Authority; Binding Agreements. The execution and delivery of
-----------------------------
this Agreement and all other agreements and documents to which MCNS or Sub is a
party as contemplated by this Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of MCNS and Sub. Each of MCNS and Sub has
all requisite corporate power and authority to enter into this Agreement and the
other agreements and documents to which MCNS or Sub is a party as contemplated
by this Agreement and to consummate the transactions contemplated hereby and
thereby and this Agreement and such other agreements and documents have been, or
upon execution and delivery thereof will be, duly executed and delivered by each
of MCNS and Sub (to the extent it is a party). This Agreement and such other
agreements and documents are, or upon execution and delivery thereof will be,
the valid and binding obligations of each of MCNS and Sub (to the extent it is a
party), enforceable against such person in accordance with their respective
terms.
(c) Conflicts; Consents. The execution and delivery of this
-------------------
Agreement and the other agreements and documents to which MCNS or Sub is a party
as contemplated by this Agreement, the consummation of the transactions
contemplated hereby and thereby and compliance by MCNS and Sub with the
provisions hereof and thereof do not and will not (i) conflict with or result in
a breach of the certificate of incorporation, by-laws or other constitutive
documents of MCNS or Sub, (ii) conflict with or result in a default (or give
rise to any right of termination, cancellation or acceleration) under any of the
provisions of any note, bond, lease, mortgage, indenture, license, franchise,
permit, agreement or other instrument or obligation to which MCNS or Sub is a
party, or by which MCNS or Sub or any of MCNS's or Sub's properties or assets,
may be bound or affected, except for such conflict, breach or default as to
which requisite waivers or consents shall be obtained before the Closing, or
(iii) violate any law, statute, rule or regulation or order, writ, injunction or
decree applicable to MCNS or Sub or MCNS's or Sub's properties or assets. No
consent or approval by, or any notification of or filing with, any person is
required in connection with the execution, delivery and performance by MCNS or
Sub of this Agreement or the consummation of the transactions contemplated
hereby, except for (i) the filing with the SEC of such reports under Sections 13
and 16 of the Exchange Act as may be required in connection with this Agreement
and the transactions contemplated hereby, (ii) such filings as may be required
under state securities or "blue sky" laws in connection with the issuance of the
MCNS Common Stock in connection with the transactions contemplated hereby, and
(iii) the filing of appropriate documents with the relevant authorities of other
states in which the Company is qualified to do business.
(d) Capitalization. The authorized capital stock of MCNS consists of
--------------
100,000,000 shares of MCNS Common Stock and 5,000,000 shares of preferred stock.
At the close of business on December 31, 1999, (i) 47,474,249 shares of MCNS
Common Stock were issued and outstanding, (ii) no shares of MCNS Common Stock
were held by MCNS in its treasury, (iii) 2,540,000 shares of MCNS Common Stock
were reserved for issuance upon exercise of outstanding employee stock options
to purchase shares of MCNS Common Stock and (iv) 4,460,000 shares of MCNS Common
Stock were reserved for issuance upon exercise of employee stock options that
are not outstanding but may be issued in the future under various stock option
plans described, or incorporated by reference, in the MCNS SEC Documents (as
defined in Section 3.2(e)). Except as set forth in the MCNS SEC Documents, at
the time of execution of this Agreement, no shares of capital stock or other
voting securities of MCNS are issued, reserved for issuance or outstanding. All
16
<PAGE>
outstanding shares of capital stock of MCNS are, and all shares issued to
Shareholders pursuant to this Agreement will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. Except as described in the MCNS SEC Documents there are no bonds,
debentures, notes or other indebtedness or securities of MCNS having the right
to vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which stockholders of MCNS may vote. Except as set
forth in the MCNS SEC Documents, as of the date of this Agreement, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which MCNS or any of its
subsidiaries is a party or by which any of them is bound obligating MCNS or any
of its subsidiaries to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or other voting securities of MCNS
or of any of its subsidiaries or obligating MCNS or any of its subsidiaries to
issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. Except as set forth
in the MCNS SEC Documents, there are no outstanding commitments, agreements,
arrangements or undertakings of any kind obligating MCNS or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock or other voting securities of MCNS or any of its subsidiaries.
(e) SEC Documents; Financial Statements. (i) MCNS has filed all
-----------------------------------
reports, proxy statements, registration statements, forms and other documents
required to be filed with the SEC since January 1, 1998 (the "MCNS SEC
Documents"). As of their respective dates, and giving effect to any amendments
or supplements thereto filed prior to the date of this Agreement, (a) the MCNS
SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the applicable rules
and regulations of the SEC promulgated thereunder and (b) none of the MCNS SEC
Documents (except as to the financial statements contained therein, which are
dealt with below hereof) contained any untrue statement of a material fact or
omitted 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.
(ii) The financial statements of MCNS (including, in each case,
any notes and schedules thereto) included in the MCNS SEC Documents (a) comply
as to form in all material respects with all applicable accounting requirements
and the rules and regulations of the SEC with respect thereto, (b) are in
conformity with GAAP, applied on a consistent basis (except in the case of
unaudited statements, as permitted by the rules and regulations of the SEC)
during periods involved (except as may be indicated in the related notes and
schedules thereto) and (c) fairly present, in all material respects, the
consolidated financial position of MCNS and its consolidated Subsidiaries as of
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
(f) Brokers. No agent, broker, investment banker, person or firm
-------
acting on behalf of the Purchaser or MCNS or under the authority of the
Purchaser or MCNS is or will be entitled to any broker's or finder's fee or any
other commission or similar fee directly or indirectly from any of the parties
hereto in connection with any of the transactions contemplated hereby.
17
<PAGE>
ARTICLE IV
Additional Agreements
---------------------
SECTION 4.1. Payment of Accounts Payable. MCNS shall, within
---------------------------
three business days of Closing, pay to the entities listed on Section 3.1(p) of
the Disclosure Schedule the payables set forth next to the names of such
entities.
SECTION 4.2. Expenses. Each party hereto shall bear its own costs
--------
and expenses incurred in connection with the transactions contemplated hereby.
SECTION 4.3. Conduct of Business. (a) From the date hereof until
-------------------
the Closing Date, except as otherwise consented to by MCNS in writing,
Shareholders shall cause the Company to operate its business only in the
ordinary course of business consistent with past practice.
(b) Without limiting the generality of the foregoing, Shareholders
shall prohibit the Company, without the prior written consent of MCNS, directly
or indirectly, to cause or permit any state of affairs, action or omission
described in clauses (i) through (xv) of Section 3.1(f).
SECTION 4.4. Further Assurances. Each of the parties hereto
------------------
agrees to use all commercially reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations, to consummate and make
effective the transactions contemplated by this Agreement as expeditiously as
practicable and to ensure that the conditions set forth in Article V hereof are
satisfied, insofar as such matters are within the control of any of them. In
case at any time after the Closing Date, any further action is necessary or
desirable to carry out the purposes of this Agreement, each of the parties to
this Agreement shall take or cause to be taken all such necessary action,
including the execution and delivery of such further instruments and documents,
as may be reasonably requested by any party for such purposes or otherwise to
complete or perfect the transactions contemplated hereby.
SECTION 4.5. Releases; Prior Compensation. Each Shareholder agrees
----------------------------
and acknowledges that he has been paid in full for all services rendered to the
Company prior to the date hereof and has no outstanding claims against the
Company for any amounts arising because of such employment or otherwise.
Shareholders hereby release the Company and all of the Company's affiliates from
all rights any Shareholder may have to acquire any securities of the Company and
all actions, suits, debts, promises, agreements, damages, demands or claims of
any kind whatsoever arising from any event or action prior to the date hereof
that any Shareholder had, has or may in the future have against the Company,
except for the matters arising under this Agreement or related to the
transactions contemplated hereby.
SECTION 4.6. Public Announcements. MCNS, on the one hand, and
--------------------
Shareholders, on the other hand, will consult with each other before issuing,
and provide each other the opportunity to review and comment upon, press
releases or other public statements, if any, with respect to the transactions
contemplated by this Agreement, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or the Nasdaq National
Market.
18
<PAGE>
ARTICLE V
Conditions Precedent
--------------------
SECTION 5.1. Conditions to Obligations of MCNS and Sub. The
-----------------------------------------
obligations of MCNS and Sub to perform this Agreement are subject to the
satisfaction or waiver of the following conditions unless waived by MCNS or Sub:
(a) Authorization. All actions necessary to authorize the execution,
-------------
delivery and performance of this Agreement and the other agreements and
documents to which any Shareholder is a party as contemplated by this Agreement
and the consummation of the transactions contemplated hereby and thereby shall
have been duly and validly taken by the Company or Shareholders and the Company
and Shareholders shall have full power and authority to enter into and deliver
such agreements and to consummate the transactions contemplated hereby and
thereby.
(b) Representations and Warranties. The representations and
------------------------------
warranties of Shareholders contained herein shall be true and correct in all
material respects as of the date hereof and as of the Closing Date as if made on
and as of the Closing Date, and the Company and the Shareholders shall have
performed and complied with all covenants and agreements required to be
performed or complied with on or prior to the Closing Date. As of the Closing
Date, there shall have been no Company Material Adverse Effect.
(c) Consents, Amendments and Terminations. MCNS shall have received
-------------------------------------
duly executed and delivered copies of all waivers, consents, terminations and
approvals contemplated by Sections 3.1(d) of the Disclosure Schedule, all in
form and substance reasonably satisfactory to MCNS.
(d) Certificates. MCNS shall have received (i) a certificate of the
------------
Chairman of the Board and the President of the Company in substantially the form
of Exhibit F, (ii) a certificate of the Secretary of the Company substantially
in the form of Exhibit G, and (iii) a certificate of each Shareholder
substantially in the form of Exhibit H.
(e) Opinion of Counsel. MCNS shall have received the opinion dated
------------------
the Closing Date of Putney, Twombly, Hall & Hirson LLP, counsel to Shareholders
and the Company, in substantially the form of Exhibit A.
(f) Consulting Agreements. Joseph McCallion and Cheryl Harris shall
---------------------
have duly executed the Consulting Agreements in substantially the forms of
Exhibit A and Exhibit B, respectively.
(g) Employee Agreements. Certain employees of the Company, as listed
-------------------
in Annex I, shall have duly executed and delivered to MCNS the Employee
Agreement, in substantially the form of Exhibit E.
(h) Investment Agreement. The Shareholders shall have duly executed
--------------------
and delivered to MCNS the Investment Agreements, in substantially the form of
Exhibit C.
(i) Escrow Agreement. Each shareholder shall have duly executed and
----------------
delivered to MCNS the Escrow Agreement, in substantially the form of Exhibit D.
19
<PAGE>
(j) Books and Records. MCNS shall have received the complete stock
-----------------
ledgers, minute books and similar corporate records of the Company.
(k) Share Certificates and Letter of Transmittal. MCNS shall have
--------------------------------------------
received certificates representing all of the Company Shares, together with a
duly executed letter of transmittal substantially in the form of Exhibit J.
(l) Good Standing Certificates. MCNS shall have received
--------------------------
certificates from the Secretary of State or other appropriate official to the
effect that the Company is in good standing or subsisting in such jurisdiction,
and attesting to its payment of all franchise or similar taxes. MCNS shall have
received a certificate from the Secretary of State or other appropriate official
in each jurisdiction in which the Company is qualified or admitted to do
business to the effect that the Company is duly qualified or admitted in good
standing in such jurisdiction.
(m) Officer and Director Resignations. MCNS shall have received
---------------------------------
evidence of resignations of all officers and directors of the Company.
(n) Other Documents. MCNS and Sub shall have received such other
---------------
documents, certificates or instruments as they may reasonably request.
SECTION 5.2. Conditions of Obligations of Shareholders. The
-----------------------------------------
obligations of Shareholders to perform this Agreement are subject to the
satisfaction of the following conditions unless waived by Shareholders:
(a) Authorization. All actions necessary to authorize the execution,
-------------
delivery and performance of this Agreement and the other agreements and
documents to which MCNS or Sub is a party as contemplated by this Agreement and
the consummation of the transactions contemplated hereby and thereby shall have
been duly and validly taken by MCNS and Sub, as the case may be, and MCNS and
Sub shall have full power and authority to enter into and deliver such
agreements and to consummate transactions contemplated hereby and thereby, as
applicable.
(b) Representations and Warranties. The representations and
------------------------------
warranties of MCNS and Sub contained herein shall be true and correct in all
material respects as of the date hereof and as of the Closing Date as if made on
and as of the Closing Date, and MCNS and Sub shall have performed and complied
with all covenants and agreements required to be performed or complied with on
or prior to the Closing Date.
(c) Consulting Agreements. MCNS shall have duly executed the
---------------------
Consulting Agreements substantially in the forms of Exhibit A and Exhibit B.
(d) Certificate. Shareholders shall have received a certificate of
-----------
the Chief Financial Officer and General Counsel of MCNS and Sub confirming the
matters set forth in Section 5.2(b) in substantially the form of Exhibit K.
(e) Opinion of Counsel. Shareholders shall have received the opinion
------------------
dated the Closing Date of Covington & Burling, counsel to MCNS and Sub, in
substantially the form of Exhibit L.
(f) Payments. Shareholders shall have received, pursuant to Section,
--------
the Merger Consideration; provided however, that the certificates representing
the MCNS Common Stock
20
<PAGE>
portion of the Merger Consideration shall be delivered to the shareholders at
the address set forth in the Letters of Transmittal as promptly as practicable
following the Effective Time.
(g) Other Documents. Shareholders shall have received such other
---------------
documents, certificates or instruments as it may reasonably request.
ARTICLE VI
Indemnity
---------
SECTION 6.1. Indemnification. (a) Subject to the limitations set
---------------
forth in Section 6.1(c), Shareholders jointly and severally indemnify and hold
harmless MCNS, Sub and their respective affiliates, directors, officers,
employees and other agents and representatives from and against any and all
liabilities, judgments, claims, settlements, losses, damages, fees, liens,
taxes, penalties, obligations and expenses (collectively, "Losses") incurred or
suffered by any such person arising from, by reason of or in connection with
(i) any misrepresentation or breach of any representation,
warranty or agreement of the Company or of any Shareholder contained in this
Agreement or any certificate or other document delivered by any Shareholder
hereunder;
(ii) the non-fulfillment by the Company or any Shareholder of
any agreement made by the Company or such Shareholder in this Agreement;
(iii) the conduct of the business or other operations of the
Company before or on the Closing Date or any condition existing relating to
product or environmental liability prior to the Closing Date; and
(iv) any and all actions, suits, proceedings, demands,
judgments, costs and legal and other expenses incident to any of the matters
referred to in clauses (i) through (iii) of this Section 6.1(a).
(b) MCNS and Sub jointly and severally indemnify and hold harmless
Shareholders, and their respective agents and representatives, from and against
any and all Losses incurred or suffered by any such person arising from, by
reason of or in connection with:
(i) any misrepresentation or breach of any representation,
warranty or agreement of MCNS or Sub contained in this Agreement or any
certificate or other document delivered by MCNS or Sub hereunder;
(ii) the non-fulfillment by MCNS or Sub of any agreement made
by it in this Agreement; and
(iii) any and all actions, suits, proceedings, demands,
judgments, costs and legal and other expenses incident to any of the matters
referred to in clauses (i) and (ii) of this Section 6.1(b).
(c) Notwithstanding anything to the contrary in this Section 6.1, in
connection with any claim for indemnification for Losses under this Section 6.1,
(i) MCNS shall have recourse
21
<PAGE>
against each Shareholder only to the extent of the value of the Merger
Consideration received by each Shareholder as set forth in Annex II of this
Agreement, and the Shareholders, in the aggregate, shall have recourse against
MCNS only to the extent of the aggregate Merger Consideration received by all
the Shareholders, such value to be determined, in each case, by the sum of (x)
the cash received by such Shareholder as part of the Merger Consideration and
(y) the value of the MCNS Common Stock (based on the average closing price of
the MCNS Common Stock for the ten consecutive trading days ending three days
prior to the Closing Date) received by such Shareholder as part of the Merger
Consideration, (iii) Neither party's rights to indemnification under this
Section 6.1 shall arise until such Losses, in the aggregate, exceed $50,000,
whereupon indemnification shall arise with respect to the full amount of Losses
under this Section 6.1 (including such first $50,000), (iv) all indemnification
obligations of the Shareholders to MCNS under this Section 6.1 shall be first
satisfied by the property held under the Escrow Agreement, and (v) in the event
that a Shareholder shall use MCNS Common Stock to satisfy an indemnification
obligation, such shares shall be valued at the per share closing price for the
MCNS Common Stock on the date that such Shareholder receives notice of an
indemnification obligation.
(d) In case any claim or litigation which might give rise to any
obligation of a party under the indemnity and reimbursement provisions of this
Agreement (each an "Indemnifying Party") shall come to the attention of the
party seeking indemnification hereunder (the "Indemnified Party"), the
Indemnified Party shall notify in writing promptly the Indemnifying Party of the
existence and amount thereof. Failure to give such notice shall not prejudice
the rights of the Indemnified Party, except to the extent that the Indemnifying
Party shall have been materially prejudiced by such failure. The Indemnifying
Party shall be entitled to participate in and, if (i) in the judgment of the
Indemnified Party such claim can properly be resolved by money damages alone and
the Indemnifying Party has the financial resources to pay such damages and (ii)
the Indemnifying Party admits that this indemnity fully covers the claim or
litigation, the Indemnifying Party shall be entitled to direct the defense of
any claim at its expense, but such defense shall be conducted by legal counsel
reasonably satisfactory to the Indemnified Party.
(e) MCNS and Sub may, and may direct the Company to, set off against
any amounts due to any Shareholder (including amounts due such Shareholder under
any employment agreement with such Shareholder), the amount of any indemnity to
which MCNS or Sub becomes entitled under this Agreement; provided that MCNS or
Sub may exercise this right of setoff only following an adjudication as to the
liability of a Shareholder. The obligations of a Shareholder under this Section
6.1 for any claim to indemnity shall be reduced by the amount (if any) that MCNS
or Sub so sets off for such claim.
SECTION 6.2. Limitations. The indemnification and reimbursement
-----------
obligations (other than for claims relating to or arising out of
representations, warranties, and agreements that survive the Expiration Date
pursuant to Section 7.6) hereunder shall expire on April 1, 2001 (the
"Expiration Date"), except as to any claims for, or any claims that may result
in, any liability, judgment, claim, settlement, loss, damage, fee, lien, tax,
penalty, obligation or expense for which indemnity may be sought hereunder of
which the Indemnifying Party has received written notice from the Indemnified
Party on or before the Expiration Date.
SECTION 6.3. No Election. Nothing contained in this Article VI
-----------
shall be deemed an election of remedies under this Agreement or limit in any way
the liability of any party under any other agreement to which such party is a
party relating to this Agreement or the transactions contemplated by this
Agreement.
22
<PAGE>
ARTICLE VII
Miscellaneous
-------------
SECTION 7.1. Entire Agreement. This Agreement, the Operative
----------------
Documents and the schedules and exhibits hereto contain the entire agreement
among the parties with respect to the transactions contemplated by this
Agreement and supersede all prior agreements or understandings among the
parties.
SECTION 7.2. Termination. (a) This Agreement shall terminate on
-----------
the earlier to occur of any of the following events:
(i) the mutual written agreement of MCNS and Shareholders;
(ii) by written notice of MCNS or any Shareholder to the
other parties hereto, if the Closing shall not have occurred prior to the close
of business on March 1, 2000;
(iii) by written notice of MCNS to Shareholders, if any
Shareholder shall have materially breached any of its representations,
warranties or agreements contained herein; or
(iv) by written notice of any Shareholder to MCNS, if
either MCNS or Sub shall have materially breached any of its representations,
warranties or agreements contained herein.
(b) Nothing in this Section shall relieve any party of any liability
for a breach of this Agreement prior to the termination hereof. Except as
aforesaid, upon the termination of this Agreement, all rights and obligations of
the parties under this Agreement shall terminate, except their obligations under
Sections 4.2, 4.6 and Article VI.
SECTION 7.3. Descriptive Headings; Certain Interpretations. (a)
---------------------------------------------
Descriptive headings are for convenience only and shall not control or affect
the meaning or construction of any provision of this Agreement.
(b) Whenever any party makes any representation, warranty or other
statement to such party's knowledge, such party will be deemed to have made due
inquiry into the subject matter of such representation, warranty or other
statement, provided, however, that with respect to Khurshed F. Birdie, and
Charles Stafford, "knowledge" shall mean actual knowledge
(c) Except as otherwise expressly provided in this Agreement, the
following rules of interpretation apply to this Agreement: (i) the singular
includes the plural and the plural includes the singular; (ii) "or" and "any"
are not exclusive and "include" and "including" are not limiting; (iii) a
reference to any agreement or other contract includes permitted supplements and
amendments; (iv) a reference to a law includes any amendment or modification to
such law and any rules or regulations issued thereunder; (v) a reference to a
person includes its permitted successors and assigns; (vi) a reference to
generally accepted accounting principles refers to United States generally
accepted accounting principles; and (vii) a reference in this Agreement to an
Article, Section, Exhibit or Schedule is to the Article, Section, Exhibit or
Schedule of this Agreement.
SECTION 7.4. Notices. All notices, requests and other
-------
communications to any party hereunder shall be in writing and sufficient if
delivered personally or sent by telecopy (with
23
<PAGE>
confirmation of receipt) or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to MCNS or Sub, to:
Mediconsult.com, Inc.
1330 Avenue of the Americas
New York, NY 10019
Telecopy: 212-520-2901
Attention: E. Michael Ingram, Esq.
with a copy to:
Covington & Burling
1330 Avenue of the Americas
New York, New York 10019
Telecopy: 212-841-1010
Attention: Scott F. Smith, Esq.
If to Shareholders to the address or telecopy number of Shareholders set forth
on the signature pages of this Agreement, with a copy to:
Putney, Twombly, Hall & Hirson LLP
521 Fifth Avenue
New York, New York 10175
Telecopy: (212) 682-9380
Attention: William M. Pollak
or to such other address or telecopy number as the party to whom notice is to be
given may have furnished to the other party in writing in accordance herewith.
Each such notice, request or communication shall be effective when received if
delivered personally, upon receipt of the transmission report if delivered by
facsimile or, if given by mail, when delivered at the address specified in this
Section or on the fifth business day following the date on which such
communication is posted, whichever occurs first.
SECTION 7.5. Counterparts. This Agreement may be executed in any
------------
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.
SECTION 7.6. Survival. Except as set forth in 6.2, all
--------
representations and warranties, agreements and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith (unless
otherwise expressly provided herein or therein) shall survive the Closing and
shall remain in full force and effect until the Expiration Date; provided that
the representations and warranties in Section 3.1(a), (c), (d), (m) and (r) and
Section 3.2(a) and (b) and the agreements in Section 4.7 shall not expire on the
Expiration Date and shall survive, as set forth therein, or, if not set forth
therein, shall survive forever or until the expiration of the applicable statute
of limitations, if earlier.
24
<PAGE>
SECTION 7.7. Benefits of Agreement. All of the terms and provisions
---------------------
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. This Agreement is for the
sole benefit of the parties hereto and not for the benefit of any third party.
SECTION 7.8. Amendments and Waivers. No modification, amendment or
----------------------
waiver of any provision of, or consent required by, this Agreement, nor any
consent to any departure herefrom, shall be effective unless it is in writing
and signed by the parties hereto. Such modification, amendment, waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.
SECTION 7.9. Assignment. This Agreement and the rights and
----------
obligations hereunder shall not be assignable or transferable by any party
hereto without the prior written consent of the other parties hereto. Any
instrument purporting to make such assignment shall be void.
SECTION 7.10. Enforceability. It is the desire and intent of the
--------------
parties hereto that the provisions of this Agreement shall be enforced to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
such provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made.
SECTION 7.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
25
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be duly executed and delivered as of the day and year first above written.
<TABLE>
<S> <C>
MEDICONSULT.COM, INC. NORTHSTAR ACQUISITION, INC.
By: /s/ E. Michael Ingram By: /s/ E. Michael Ingram
--------------------- ---------------------
Name: Name:
Title Title
WEB NORTHSTAR INTERACTIVE CORP.
By: /s/ Cheryl Harris
-----------------
Name:
Title
SHAREHOLDERS:
/s/ Cheryl Harris
--------------------------------------
Cheryl Harris
Address:
Telecopy:
/s/ Joseph McCallion
- ----------------------------------------- /s/ Khurshed F. Birdie
Joseph McCallion --------------------------------------
Address: Khurshed F. Birdie
Address:
Telecopy:
Telecopy:
/s/ Charles Stafford
--------------------------------------
Charles Stafford
Address:
Telecopy:
</TABLE>
26
<PAGE>
Exhibit 4.4
THIS WARRANT WAS ORIGINALLY ISSUED ON MARCH 23, 2000, AND HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF THIS
WARRANT IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT, DATED
AS OF MARCH 23, 2000 BETWEEN THE ISSUER HEREOF (THE "COMPANY") AND THE INITIAL
HOLDER HEREOF, AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF THIS
WARRANT UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER.
MEDICONSULT. COM, INC.
WARRANT TO PURCHASE COMMON STOCK
--------------------------------
Date of Issuance: March 23, 2000 Void After: March 23, 2005
FOR VALUE RECEIVED, Mediconsult.com, Inc., a Delaware corporation (the
"Company"), hereby grants to Andersen Consulting LLP, an Illinois limited
liability partnership ("AC"), or its permitted assigns (the "Holder") the right
to purchase from the Company 1,503,425 shares of the Company's Common Stock at a
price per share of $3.8125 (the "Exercise Price") subject to the vesting
schedule set forth herein. This Warrant is issued pursuant to the terms of the
Warrant Agreement, dated as of March 23, 2000, by and between the Company and AC
(the "Warrant Agreement"). The amount and kind of securities purchasable
pursuant to the rights granted hereunder and the purchase price for such
securities are subject to adjustment pursuant to the provisions contained in
this Warrant.
This Warrant is subject to the following provisions:
1. Definitions. For the purposes of this Agreement, terms not otherwise
-----------
defined have the meanings set forth below:
"Change of Control" means any of (i) the acquisition by any "person" or
-----------------
"group" (as such terms are used in sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) at any time of beneficial ownership of 50.01%
or more of the outstanding capital stock of the Company on a fully-diluted
basis, (ii) the failure of individuals who are members of the board of directors
of the Company on the Date of Issuance (together with any new or replacement
directors whose initial nomination for election was approved by a majority of
the directors who were either directors on the Date of Issuance or previously so
approved) to constitute a majority of the board of directors of the Company or
(iii) a Corporate Change.
"Common Stock" means shares of the Company's Common Stock, $0.001 par
------------
value; provided that if there is a change in the class of securities issuable
--------
upon exercise of this Warrant, then the term "Common Stock" shall mean shares of
the security issuable upon exercise of this Warrant.
<PAGE>
"Corporate Change" means the occurrence of a recapitalization,
----------------
reorganization, reclassification, consolidation, merger, sale of all or
substantially all of the Company's assets to another Person or other similar
transaction which is effected in such a way that holders of the capital stock of
the Company are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets of an entity other than the Company in
exchange for such capital stock.
"Fair Market Value" means as to any security on any day (i) if the shares
-----------------
are listed on the Nasdaq National Market, national securities exchange or other
nationally recognized exchange or trading system as of such day, the last
reported sale price per share of the shares thereon on such day, or if no such
price is reported on such day, such price on the next preceding business day for
which such price is reported, or (ii) if the shares are not listed on the Nasdaq
National Market, national securities exchange or other nationally recognized
exchange or trading system as of such day, the amount determined in good faith
by the board of directors of the issuer and the Holder to represent the value
per share the shares would have if publicly traded on a nationally recognized
exchange or trading system (assuming the absence of unusual market conditions
and no premium for control or discount for minority interests, illiquidity or
restrictions on transfer). If such parties are unable to reach agreement within
a reasonable period of time, such fair value shall be determined by an appraiser
jointly selected by the Company and the Holder. The determination of such
appraiser shall be final and binding on the Company and the Holder, and the fees
and expenses of such appraiser shall be shared equally by the parties.
"Person" means an individual, partnership, joint venture, corporation,
------
limited liability company, trust, unincorporated organization or government or
department or agency thereof.
2. Exercise of Warrant
2.1. Exercise Period and Vesting.
---------------------------
(a) Subject to the vesting schedule set forth in paragraph (b)
below, the Holder may exercise, in whole or in part (but not as to a fractional
share of Common Stock), the vested purchase rights represented by this Warrant,
at any time and from time to time after the date hereof to and including March
23, 2005 (the "Exercise Period").
(b) The right to purchase 40% of the entire number of shares of
Common Stock issuable upon exercise of this Warrant, as such number may be
adjusted from time to time in accordance with Section 3 hereof (such entire
number the "Number Issuable"), shall vest on the date hereof. The right to
purchase the remainder of the Number Issuable shall vest from time to time as
follows. Upon the acceptance by an authorized officer of the Company of an
invoice representing a completed work order in connection with the Consulting
Services Agreement by AC, the right to purchase a number of shares equal in
value (valued at the Exercise Price) to 50% of the fees shown on such accepted
invoice shall vest. The rights to purchase the remainder of the Number Issuable
shall continue to vest in this manner upon the acceptance by the Company of
2
<PAGE>
additional invoices submitted by AC until the right to purchase the entire
Number Issuable has vested.
2.2. Exercise Procedure.
------------------
(a) This Warrant or any portion hereof shall be deemed to have been
exercised as of the close of business on the date (which shall be a business
day) when the Holder has delivered all of the following items to the Company at
the address given pursuant to Section 7.10 of the Warrant Agreement (the
"Exercise Date"):
(i) a completed Subscription, as described in Section 2.3 below,
duly executed by the Holder;
(ii) this Warrant; and
(iii) payment by a check or wire transfer to the Company in an amount
equal to the product of the Exercise Price multiplied by the number of
shares of Common Stock being purchased upon such exercise (the "Aggregate
Exercise Price").
(b) Net Issue Exercise. In lieu of paying the Aggregate Exercise
-------------------
Price payable upon an exercise of this Warrant (or a portion hereof), the Holder
may elect to surrender (in addition to the portion surrendered for exercise) a
portion of the Warrant as is determined by dividing (i) the Aggregate Exercise
Price payable in respect of the number of shares of Common Stock issuable upon
exercise of the Warrant or portion thereof by (ii) the excess of the Fair Market
Value per share of Common Stock as of the date of exercise over the per share
Exercise Price.
(c) Certificates for shares of Common Stock purchased upon exercise
of this Warrant shall be delivered by the Company to the Holder as promptly as
practicable after the Exercise Date. The Company will cooperate with the Holder
in all respects to facilitate the expeditious transfer of the Common Stock
following exercise of the Warrant.
(d) Share Legend. Each certificate representing Common Stock issued
------------
upon exercise of this Warrant shall bear the following legend unless such shares
or other securities have been registered under the Securities Act and any
applicable state securities laws:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE FEDERAL
OR APPLICABLE STATE SECURITIES LAWS AND INSTEAD ARE BEING
ISSUED PURSUANT TO EXEMPTIONS CONTAINED IN SAID LAWS. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT SHALL BE
EFFECTIVE UNDER THE SECURITIES ACT OF 1933 OR (B)
MEDICONSULT.COM, INC. SHALL HAVE RECEIVED AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO IT THAT NO VIOLATION OF
SUCH ACT OR SIMILAR STATE ACTS WILL BE INVOLVED IN SUCH
TRANSFER."
3
<PAGE>
(e) In the event of a partial exercise, unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised or
surrendered, the Company shall prepare a new Warrant, substantially identical
hereto, representing the rights formerly represented by this Warrant which have
not expired or been exercised or surrendered and shall, promptly deliver such
new Warrant to the Holder.
(f) The Common Stock issuable upon the exercise of this Warrant shall
be deemed to have been issued to the Holder as of the close of business on the
Exercise Date, and the Holder shall be deemed for all purposes to have become
the record holder of such Common Stock as of the close of business on the
Exercise Date.
(g) The issuance of certificates for shares of Common Stock upon
exercise of this Warrant shall be made without charge to the Holder for any
issuance tax in respect thereof or other cost incurred by the Company in
connection with such exercise and the related issuance of shares of Common
Stock.
(h) The Company shall not close its books against the transfer of
this Warrant or of any share of Common Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant. The Company shall from time to time take all necessary action
as may be necessary to assure that the par value per share of the Common Stock
issuable upon exercise of this Warrant is at all times equal to or less than the
Exercise Price then in effect.
(i) Notwithstanding any other provision hereof, if the Holder gives a
notice of exercise that is conditional upon the effectiveness of a registration
statement registering the resale of any Common Stock issuable upon the exercise
hereof or upon the occurrence of a Change in Control, the Holder shall not be
deemed to have exercised this Warrant (or any portion hereof) until the
effectiveness of such Registration Statement or the occurrence of such Change in
Control.
(j) The Company shall assist and cooperate with the Holder required
to make any governmental filings or obtain any governmental approvals prior to
or in connection with any exercise of this Warrant (including, without
limitation, making any filings required to be made by the Company).
(k) Upon any exercise of this Warrant, the Company may require
customary representations from the Holder to assure that the issuance of the
Common Stock hereunder shall not require registration or qualification under the
Securities Act or any state securities laws.
2.3. Upon any exercise of this Warrant, the Subscription shall be
substantially in the form set forth in Exhibit A hereto, except that if the
---------
shares of Common Stock are not to be issued in the name of the Person in whose
name this Warrant is registered, the Subscription shall also state the name of
the Person to whom the certificates for the shares of Common Stock are to be
issued or surrendered, and if the number of shares of Common Stock to be issued
does not include all the shares of Common Stock
4
<PAGE>
purchasable hereunder, it shall also state the name of the Person to whom a new
Warrant for the unexercised or unsurrendered portion of the rights hereunder is
to be delivered.
2.4. Fractional Shares. If a fractional share of Common Stock would, but
-----------------
for the provisions of Section 2.1, be issuable upon exercise of the rights
represented by this Warrant, the Company shall, within five business days after
the Exercise Date, deliver to the Purchaser payment by check or wire transfer to
the Purchaser in lieu of such fractional share in an amount equal to the
difference between the Fair Market Value of such fractional share as of the
Exercise Date and the Exercise Price of such fractional share.
3. Adjustment of Number of Shares. The Number Issuable (assuming full
------------------------------
vesting of this Warrant) shall be subject to adjustment from time to time as
follows: In case the Company shall at any time or from time to time after the
date hereof:
(a) subdivide (by stock split, stock dividend, recapitalization
or otherwise) the outstanding Common Stock into a larger number of shares;
(b) combine (by reverse stock split or otherwise) the
outstanding Common Stock into a smaller number of shares; or
(c) issue any equity securities in a reclassification of the
Common Stock;
then, and in each such case, the Number Issuable and the Exercise Price in
effect immediately prior to such event shall be adjusted (and any other
appropriate actions shall be taken by the Company) so that upon exercise of this
Warrant thereafter, the Holder shall be entitled to receive the same number of
shares of Common Stock or other securities of the Company which such holder
would have owned or had been entitled to receive upon or by reason of any of the
events described above, and the Aggregate Purchase Price payable upon such
exercise shall be the same, as if the Warrant been exercised immediately prior
to the happening of such event. Adjustments made pursuant to this Section 3
shall become effective retroactively to the close of business on the date upon
which such corporate action becomes effective.
4. Notices. The Company will provide the same notices to the Holder that
-------
the Company provides to its shareholders, at the same time and in the same
manner as the Company provides such notices to the shareholders.
5. Merger, Consolidation or Reorganization. In case of any Corporate
---------------------------------------
Change, the Company, or any successor or purchasing Person, as the case may be,
shall execute, make lawful provision for and deliver to each holder of the
Warrants evidenced hereby, prior to effecting any such Corporate Change, a
warrant certificate that the holder of each such Warrant then outstanding shall
have the right thereafter to exercise such Warrant into the kind and amount of
shares of stock or other securities (of the Company or another issuer) or
property or cash receivable upon such Corporate Change by a holder of
5
<PAGE>
the number of shares of Common Stock into which such Warrant could have been
exercised immediately prior to such Corporate Change. Such certificate shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in Section 3 and shall contain other
terms identical to the terms hereof.
6. Liquidation Dividends. If the Company declares or pays a dividend upon
---------------------
the Common Stock (or other securities that may be issuable upon exercise of this
Warrant from time to time) payable other than in cash out of earnings or earned
surplus (determined in accordance with generally accepted accounting principles,
consistently applied) except for a stock dividend payable in shares of Common
Stock (a "Liquidation Dividend"), then the Company shall pay to the Holder at
the time of payment thereof the Liquidation Dividend which would have been paid
to the Holder on the Common Stock had this Warrant been fully exercised
immediately prior to the date on which a record is taken for such Liquidation
Dividend, or, if no record is taken, the date as of which the record holders of
the Common Stock or such other securities entitled to such dividends are to be
determined.
Section 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Holder to purchase Common Stock, and no enumeration herein of the
rights or privileges of the Holder shall give rise to any liability of such
holder for the Exercise Price of Common Stock acquirable by exercise hereof or
as a stockholder of the Company.
Section 7. Warrant Transferable. Subject to the transfer conditions
--------------------
referred to in the legend endorsed hereon, this Warrant and all rights hereunder
are transferable, in whole or in part, without charge to the Holder, in
accordance with the terms of the Warrant Agreement, upon surrender of this
Warrant with a properly executed Assignment (in the form of Exhibit B hereto) at
---------
the address of the Company given pursuant to the Warrant Agreement.
Section 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Holder at the address
of the Company given pursuant to Section 7.10 of the Warrant Agreement, for new
Warrants of like tenor representing in the aggregate the purchase rights
hereunder, and each of such new Warrants shall represent such portion of such
rights as is designated by the Holder at the time of such surrender. The date
the Company initially issues this Warrant shall be deemed to be the "Date of
Issuance" of all such new Warrants regardless of the number of times new
certificates representing the unexpired and unexercised rights formerly
represented by this Warrant shall be issued.
Section 9. Replacement. Upon receipt of evidence reasonably satisfactory
-----------
to the Company (an affidavit of the Holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Company (provided that
if the Holder is a financial institution or other institutional
6
<PAGE>
investor its own agreement shall be satisfactory), or, in the case of any such
mutilation upon surrender of such certificate, the Company shall (at its
expense) execute and deliver in lieu of such certificate a new certificate of
like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
Section 10. Notices. All notices, deliveries, demands or other
-------
communications to be given hereunder shall be given as set forth in the Warrant
Agreement.
Section 11. Amendment and Waiver. Except as otherwise provided herein,
--------------------
the provisions of this Warrant may not be amended and the Company may not take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, without the written consent of the Holder.
Section 12. Descriptive Headings; Sections; Governing Law. The
---------------------------------------------
descriptive headings of the Sections of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. Unless the
context otherwise indicates, references herein to Sections are to Sections of
this Warrant. The corporate law of Delaware shall govern all issues concerning
the relative rights of the Company and its stockholders. All other questions
concerning the construction, validity and interpretation of this Warrant shall
be governed by and construed in accordance with the internal laws of the State
of New York, without regard to conflict of law principles.
* * * *
7
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
as of the date first above written.
MEDICONSULT.COM, INC.
By:____________________________
Name:
Title:
[Signature Page to Warrant]
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EXHIBIT A
FORM OF SUBSCRIPTION
--------------------
To: Mediconsult.com, Inc.
1330 Avenue of the Americas
17th Floor
New York, New York 10103
Attention: Secretary
The undersigned, pursuant to the provisions set forth in the attached
Warrant, hereby agrees to subscribe for the purchase of ________ shares of the
Common Stock covered by such Warrant and [makes payment herewith in full
therefor at] [surrenders _____ additional shares of the Common Stock covered by
such Warrant in lieu of payment of] the price per share provided by such
Warrant.
Dated:
WARRANT HOLDER:
[WARRANT HOLDER]
By:________________________________
Name:______________________________
Title:_____________________________
Address:
[Name in which shares should be registered:]
[Name and address of Person to which new Warrant should be delivered:]
9
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EXHIBIT B
FORM OF ASSIGNMENT
------------------
FOR VALUE RECEIVED, _______________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant with respect to the number of shares of Common Stock covered thereby set
forth below, unto:
Name of Assignee Address No. of Shares
- -----------------------------------------------------------------------
Dated: [WARRANT HOLDER]
By:______________________________
Name:____________________________
Title:___________________________
Address:
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Exhibit 10.13
SCHEDULE D
PROJECT ORDER
-------------
This Project Order confirms the mutual understanding and agreement of
Bristol-Myers Squibb Company ("B-MS") and Mediconsult (the "Company") as to
terms under which this Company will provide to B-MS the services described in
this Project Order (the "Order").
This Order is being entered into in accordance with the provisions of the
Medical Education Services Agreement dated as of between B-MS and the Company
(the "Agreement"), and except as otherwise provided in this Order, all
applicable provisions of the Agreement are incorporated into this Order by this
reference and each term defined in the Agreement will have the same meaning when
used in this Order.
The term of this Order will commence on 3/31/00 (the "Project Effective Date"),
and will continue thereafter until completion of the services described on the
attached Schedule D-1, D-2, as the case may be, unless terminated earlier in
accordance with the terms of the Agreement.
The Company and B-MS agree that the Company will perform the services described
in the attached Schedule D-1, D-2. For the services and resources provided by
the Company to B-MS under this Order, B-MS will pay the Company the amount set
forth in Schedule D-3, hereto, in accordance with Article 4.0 of the Agreement.
IN WITNESS WHEREOF, the parties hereto, each by a duly authorized
representative, have entered into this Order this 31st day of March 2000.
Bristol-Myers Squibb Company Mediconsult.com Limited
By: /s/ Brian Markson By: /s/ Robert Jennings
--------------------------- ---------------------------
Name: Brian Markson Name: Robert Jennings
------------------------- -------------------------
Title: President MD Title: CEO
------------------------ ------------------------
Date: 3/31/00 Date: 3/31/00
------------------------- -------------------------
<PAGE>
Exhibit 10.16
PERC PILOT PROGRAM AGREEMENT
AGREEMENT (the "Agreement") made as of February 25, 2000 (the
"Effective Date") by and among Eli Lilly and Company, an Indiana corporation
with offices at Lilly Corporate Center, Indianapolis, Indiana 46285 ("Lilly"),
Mediconsult.com, Limited., a Bermuda corporation with offices at Jardine House,
4th Floor, 33-35 Reid Street, Hamilton, Bermuda HM 12 ("Mediconsult").
WHEREAS, Lilly is a pharmaceutical company with certain products among
its product line targeted to patients suffering from diabetes and depression;
WHEREAS, Mediconsult is the publisher of a web site,
www.mediconsult.com, which is primarily devoted to the provision of patient
education materials;
WHEREAS, Mediconsult is the publisher of a web site, www.pol.com,
which is a portal devoted and targeted to the physician community;
WHEREAS, the parties wish to mutually develop and pilot a Patient
Education, Resource and Compliance ("PERC") System in the areas of diabetes and
depression;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, Lilly and Mediconsult (each a "Party", and collectively, the "Parties")
hereby agree as follows:
1. Definitions. Unless otherwise provided herein or in an amendment hereto,
-----------
capitalized terms shall have the following meanings:
1.1. Applicable Regulations. "Applicable Regulations" shall mean any
----------------------
federal, state or local law, rule, regulation, order decree and other
ruling regarding the advertisement, sale, purchase, order,
recommendation or distribution of drugs (as that term is defined in 21
U.S.C. 321(g)(1) or any item reimbursed by Medicare or Medicaid or
other federal or state health care program), or which is otherwise
applicable to the business of Lilly, or Mediconsult, as well as, the
business relationships by and among pharmaceutical companies, health
care related entities, and health care providers, including, without
limitation, compliance with the regulations proposed and/or promulgated
under Section 264 of the Health Insurance Portability and
Accountability Act of 1996 (Public Law 104-191).
1.2. Broadband Access. "Broadband Access" shall mean a connection to the
----------------
Internet with throughput speeds which are no less than the throughput
speeds provided by a full ISDN line.
1.3. Clinical Rules. "Clinical Rules" shall mean those clinical rules and
--------------
compliance algorithms designed to facilitate well-timed, effective
patient education messaging and agreed to by the parties.
<PAGE>
1.4. Deliverables. "Deliverables" shall mean the PERC System and the
------------
Websites.
1.5. Depression. "Depression" shall mean the medical condition generally
----------
indicated by or psychotic disorder commonly referred to as depression.
1.6. Diabetes. "Diabetes" shall mean the medical condition generally
--------
indicated by a variable disorder of Carbohydrate Metabolism caused by
an inadequate secretion or utilization of insulin.
1.7. Enrolled Patient. "Enrolled Patient" shall mean, with respect to
----------------
patients enrolled in the Pilot Program, the on-line registration by the
patient on the PERC System through the patient visiting the PERC System
registration site or the registration of the patient by the physician
or physician's staff by sending an email to Mediconsult for the purpose
of enrolling the patient in the PERC System.
1.8. Enrolled Physician. "Enrolled Physician" shall mean a physician who
------------------
agrees to and executes the Consulting Agreement.
1.9. Intellectual Capital. "Intellectual Capital" shall mean any software,
--------------------
computer programming scripts, web pages, databases, data elements,
graphics, trademarks, or other written materials (including materials
in electronic format) which are produced or developed in conjunction
with the services and products to be delivered by Mediconsult pursuant
this Agreement.
1.10. Lilly Materials. "Lilly Materials" shall mean all Intellectual Capital
---------------
provided by Lilly to Mediconsult, including, without limitation, the
patient education materials surrounding patient persistence and
compliance issues developed and owned by Lilly, and all such other
materials as Lilly may from time to time provide to Mediconsult.
1.11. Mediconsult Materials. "Mediconsult Materials" shall mean all
---------------------
Intellectual Capital that constitutes core technology related to
Mediconsult's physician/office professional Web site suite of products
currently known as MyDoctor.com and all Intellectual Capital created
before the Effective Date and provided by Mediconsult under this
Agreement other than third party Intellectual Capital.
1.12. PERC System. "PERC System" shall mean a system of integrated Internet
-----------
tools whose purpose is to facilitate better maintenance of patient
therapies via more effective physician-patient communications,
utilizing tools such as "opt-in" patient compliance programs delivered
via structured electronic messaging and other tools. The specifications
for the PERC System shall be mutually agreed to by Mediconsult and
Lilly, with the initial requirements set forth on Schedule 1 attached
----------
hereto.
1.13. Pilot Program. "Pilot Program" shall mean the implementation and
-------------
deployment of the PERC System as provided for in this Agreement.
1.14. Registered Patient. "Registered Patient" shall mean a patient that
------------------
registers for Virtual Office on-line in the Virtual Office.
2
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1.15. Virtual Office. "Virtual Office" shall mean the internet based system
--------------
implemented and maintained by Mediconsult for use by patients,
physicians and physician staffs, including the initial mapping of the
site, any functional changes to which must be mutually agreed to by the
parties, as more fully described on Schedule 2.
----------
1.16. Websites. "Websites" shall mean the Websites on the Internet developed
--------
by or at the direction of Mediconsult in order to fulfill the
requirements set forth in this Agreement, including, without
limitation, mydoctor.com, mediconsult.com, pol.net, the PERC System and
the Virtual Office.
2. Mediconsult Services. Mediconsult will provide the following services during
--------------------
the term and any extensions of this Agreement:
2.1. Develop, deploy and operate two (2) PERC Systems: one in the area of
Diabetes and one in Depression, with timing for the Pilot Program as
set forth in Schedule 3.
----------
2.2. Use commercially reasonable efforts to gain explicit agreement from Way
Over the Line to provide electronic script writing for all physician
offices enrolled in the Pilot Program to the extent Way Over The Line
is licensed in such jurisdiction and electronic script writing is not
prohibited by law, and for continued service in the event Lilly elects
to exercise the Option set forth in Section 8.2.
2.3. Mediconsult shall enter into a consulting agreement, the form of which
is attached hereto as Exhibit A, with each physician, which will
---------
require the physician to provide Mediconsult and Lilly with consulting
services regarding the effectiveness of the PERC System and suggested
improvements. Mediconsult shall forward all feedback received from the
physicians to Lilly. In exchange for the consulting services, each
participating physician shall receive for one full year the following
from Mediconsult:
2.3.1 Broadband Access, where such services are commercially
available, for every Physician enrolled in the Pilot Program;
2.3.2 Continuous availability of the Websites as specified in Section
3.3;
2.3.3 Technical support to the participating physician and such
physician's staff in the operation of the PERC System and
enrolling patients in the Pilot Program;
2.3.4 A listing in the mydoctor.com website; and
2.3.5 A wide range of services provided by Mediconsult within the
Virtual Office, including, marketing materials that direct,
educate and motivate patients to enroll in the Pilot Program,
and other services the minimum of which is set forth on Schedule
--------
3.
-
2.4. Enroll 25 physicians in the Pilot Program, divided roughly equally
between the Pilot Programs for Diabetes and Depression.
3
<PAGE>
2.5. Enroll a minimum of 5 patients per week per physician in the PERC
System Pilot Program during the Testing Period (as set forth in
Schedule 3) and 10 patients per week per physician during the Pilot
Period (as set forth in Schedule 3).
2.6. Provide agreed data intended to measure attitudinal changes,
subjective opinion and shifts in prescription volume utilizing
various software and tools to be mutually agreed to by and between
Mediconsult and Lilly, including initially, the metrics and items set
forth in Schedule 4.
----------
2.7. Secure the appropriate consents from participating patients to enable
the sharing of patient data with Lilly in compliance with Applicable
Regulations. Develop a privacy policy that is acceptable to Lilly.
2.8. Display a Lilly corporate icon, measuring approximately 134 pixels by
31 pixels (standard with other corporate icons displayed), providing
a clean link to the Lilly Web site (as determined by Lilly) on the
mediconsult.com home page, and other branding as set forth in
Schedule 2A and 2B, and in whatever manner is acceptable to
------------------
physicians.
2.9. Host an ongoing "private sponsored discussion" on www.pol.net in each
of the therapeutic areas of depression and diabetes for use by the
participating physicians in the Pilot Program, Mediconsult and Lilly.
The purpose of the discussions will be for the participants to share
feedback on the pilot program and provide a form of peer support to
participating physicians.
Provide Lilly with all physician and patient statistically aggregated data
collected through the Pilot Programs, and all other data which is permissible
based on appropriate consents and in accordance with Applicable Regulations.
3. Representations and Warranties of Mediconsult.
---------------------------------------------
3.1. All of the services to be performed hereunder will be rendered in a
manner consistent with professional standards generally applicable to
the industry in which Mediconsult does business using sound,
professional practices and in a competent and professional manner by
knowledgeable, trained and qualified personnel.
3.2. The Deliverables will appear and operate in conformance with the
specification mutually agreed to by Lilly and Mediconsult.
3.3. The Website will be available as follows: (i) all pages of the
Website and Virtual Office, including all servers supporting Website
operations (e.g., servers maintaining links, banner ads, etc.) will
be fully operational, available to, and accessible by, the public
99.0% of the time, 24 hours a day, 7 days a week, measured monthly,
excluding scheduled maintenance with a frequency no more than once
per month for no more than 90 minutes duration with each occurrence
and occurring between the hours of 3 a.m. and 6 a.m. Eastern Standard
Time; and (ii) Response time for the web server for the Website to
send all of the data making up a viewable page onto the Internet will
be no more than 3 seconds 95% of the time, provided, however, that as
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<PAGE>
technology improves, response time will decrease and Mediconsult
shall utilize technology that provides response times consistent with
websites considered competitive with the Website. Notwithstanding any
other provision herein, if Mediconsult fails to meet such criteria as
set forth in this Section more than two times in one month for two
consecutive months, then Lilly shall have the right to terminate this
Agreement.
3.4. Mediconsult, nor any entity acting on its behalf or for its benefit,
will not undertake any activity, including visits by persons who are
not genuine users of the Website or other surreptitious means,
designed to artificially inflate any measurement used to set
compensation or assess ROI or other success metric under this
Agreement.
3.5. Mediconsult has full authority to enter into this Agreement.
3.6. All obligations owed to third parties with respect to the activities
contemplated to be undertaken by Mediconsult pursuant to this
Agreement are or will be fully satisfied by Mediconsult, so that
Lilly will not have any obligations with respect thereto.
3.7. Mediconsult is the owner of or otherwise has the right to use and
distribute the Deliverables and any other materials and methodologies
used in connection with providing the services and Deliverables
hereunder.
3.8. Mediconsult will comply with Applicable Regulations.
3.9. The Deliverables shall not infringe upon any third party copyright,
trademark, patent, trade secret or other third-party right.
4. Lilly Services. Lilly will provide the following services during the term
--------------
and any extensions of this Agreement:
4.1. Provide Mediconsult with the Lilly Materials and Clinical Rules.
4.2. Lilly acknowledges and agrees that Lilly's performance of its
obligations under this Agreement and cooperation with Mediconsult are
essential to Mediconsult's ability to incorporate Lilly Materials
into the PERC System in the manner and within the time periods
specified in the Agreement. Each party agrees to cooperate in good
faith and maintain an appropriately high level of effort to meet the
timetable outlined in the Agreement and ensure effective
communication and coordination in all matters requiring the joint
efforts of Lilly and Mediconsult.
5. Representations and Warranties of Lilly.
---------------------------------------
5.1. Lilly has full authority to enter into this Agreement;
5.2. Lilly is the owner of or otherwise has the right to use and
distribute the Lilly Materials and Clinical Rules; and
5
<PAGE>
5.3. The use of the Lilly Materials and Clinical Rules shall not infringe
upon any third party copyright, trademark, patent, trade secret or
other third-party right.
6. Disclaimer of Warranty and Liability Limitations.
------------------------------------------------
6.1. Limited Warranty. THE WARRANTIES SET FORTH IN SECTIONS 3 AND 5 ARE
----------------
LIMITED WARRANTIES AND ARE THE ONLY WARRANTIES MADE BY THE RESPECTIVE
PARTIES. THE PARTIES EXPRESSLY DISCLAIM, AND HEREBY EXPRESSLY WAIVE,
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
6.2. Additional Limitations. Neither party will be liable to the other
----------------------
party for any indirect, incidental, consequential, punitive or
exemplary damages of any kind whether under this Agreement or
otherwise, including without limitation any loss of profit, business,
revenue, goodwill or anticipated savings. Mediconsult will not be
liable to Lilly for any loss or damage resulting from any defect in
hardware or software originally supplied by any person other than
Mediconsult. Each party's liability for breaches of this Agreement,
except for claims for indemnification pursuant to Article 10, will be
limited to an aggregate amount for all such breaches and claims equal
to $500,000; provided, that no such limitation will apply with
--------
respect to payment obligations of Lilly as set forth in this
Agreement.
7. Fees. In exchange for the services to be provided hereunder, Lilly agrees
----
to pay POL as follows: (i) $1,000,000 upon execution of this Agreement; and
(ii) $500,000, upon and only if Mediconsult Enrolls 25 physicians into the
Pilot Program.
8. Exclusivity and Option.
----------------------
8.1. Exclusivity. For the period of time set forth on Schedule Three,
-----------
including the Enrollment, Testing, Pilot and Evaluation Periods
(collectively the "Exclusivity Period") Mediconsult agrees to
exclusively work with Lilly in the development of this Pilot Program
and any PERC System or any similar systems for Diabetes or
Depression.
8.2. Option. Lilly shall have the option to continue the exclusive
------
sponsorship and promotion of the PERC Systems on a continuing basis
in the areas of Diabetes and Depression after expiration of the
Exclusivity Period, provided that Lilly indicates in writing prior to
expiration of the Exclusivity Period, its desire to continue its
exclusive sponsorship of the PERC System. Any continuation of Lilly's
sponsorship and promotion of the PERC System will be by a separate
agreement to be mutually agreed to by and among Lilly and Mediconsult
but the fees thereunder will be primarily based upon a performance
metric and will be no more than the lowest price paid by any other
party to Mediconsult (or its related entities providing such
services) for similar services with additional discounts to be
provided as agreed to by the parties. Mediconsult will not speak with
other entities about sponsorship of the PERC System in the areas of
Diabetes and Depression during the Exclusivity Period,
6
<PAGE>
except that beginning October 1, 2000, Mediconsult may speak with
other entities regarding sponsorship, but may not enter into an
agreement with any such companies unless and until the sooner of
Lilly determining that it does not want to extend its exclusivity, or
the Exclusivity Period expires or otherwise terminates as provided in
this Agreement.
9. Ownership Of Intellectual Capital. All rights, title and interest in and to
---------------------------------
the Intellectual Capital, except for Lilly Materials (owned solely by
Lilly) and Mediconsult Materials (owned solely by Mediconsult) developed
solely for the PERC system (PERC Intellectual Capital) shall be jointly
owned and retained by Lilly and Mediconsult. Furthermore, each party shall
have the right to utilize the PERC Intellectual Capital in any manner
without any obligation of accounting to the other parties for any profits
derived from such use.
10. Indemnification.
---------------
10.1. Mediconsult Indemnification. Mediconsult shall defend, indemnify, and
---------------------------
hold Lilly harmless from and against any and all claims, losses,
damages, suits, fees, judgments, costs and expenses (including
attorneys' fees) which Lilly may suffer or incur arising out of or in
connection with: (a) arising from or the Websites, PERC System,
Virtual Office, Mediconsult Materials or the operation of Mediconsult
business, (b) injuries to persons (including death) or loss of, or
damage to, property, occasioned by gross negligence, unlawful act, or
willful misconduct of Mediconsult, or of Mediconsult's personnel,
subcontractors, or agents, as well as any claim for payment of
compensation or salary asserted by any employee, agent, or
subcontractor of Mediconsult; and (c) any claim that Lilly's use,
copying, or distribution of the Deliverables or Mediconsult
Materials, or any portion thereof infringes or violates any patent,
copyright, trade secret, trademark, or other third party intellectual
property right. In the event that Lilly is in any way enjoined from
using the Deliverables, or any portion thereof, Mediconsult shall
promptly, at its expense (including, but not limited to the payment
of any royalties occasioned by the following) either: (i) provide to
Lilly non-infringing means of using the Deliverables; (ii) negotiate
and procure for Lilly the right to use the Deliverables without
restriction; or (iii) if neither (i) nor (ii) can be accomplished
within a reasonable time period and at no cost to Lilly, refund to
Lilly all monies paid under this Agreement.
10.2. Lilly Indemnification. Lilly shall defend, indemnify, and hold
---------------------
Mediconsult harmless from and against any and all claims, losses,
damages, suits, fees, judgments, costs and expenses (including
attorneys' fees) which Mediconsult may suffer or incur arising out of
or in connection with: (a) Lilly websites, the Lilly Materials, or
the operation of Lilly business, (b) injuries to persons (including
death) or loss of, or damage to, property, occasioned by gross
negligence, unlawful act, or willful misconduct of Lilly, or of
Lilly's personnel, subcontractors, or agents (except to the extent
Mediconsult or its affiliates are agents), as well as any claim for
payment of compensation or salary asserted by any employee, agent, or
subcontractor of Lilly; and (c) expenses (including attorneys' fees)
which Mediconsult may suffer or incur arising out of or in connection
with injuries to persons (including death) or loss of, or damage to,
property, occasioned by negligence, unlawful act, or willful
misconduct of
7
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Lilly, or of Lilly's personnel, subcontractors, or agents, as well as
any claim for payment of compensation or salary asserted by any
employee, agent, or subcontractor of Lilly.
11. Insurance. MCNS will at all times during the term of this Agreement
---------
maintain appropriate insurance coverage with responsible carriers. MCNS
shall provide Lilly proof of such coverage within ten (10) days of the
execution of this Agreement.
11.1. MCNS shall maintain workers compensation and employers liability
insurance, general liability insurance coverage that includes
property damage and personal injury components, and errors and
omissions liability coverage. Such insurance coverage, at a minimum,
shall include the following types and amounts:
11.1.1 Workers compensation and employers liability meeting the
statutory minimum in the states in which Services are to be
performed by MCNS employees;
11.1.2 Commercial general liability insurance naming Lilly as an
additional insured including premises and operations coverage
with limits of not less than $5,000,000 per occurrence and
$5,000,000 per incident;
11.1.3 Property damage liability insurance naming Lilly as an
additional insured with limits of not less than $3,000,000 per
occurrence and $3,000,000 per accident; and
11.1.4 Errors and omissions liability insurance, including, without
limitation, coverage for Mediconsult infringing third party
copyrights, naming Lilly as an additional insured with limits
of not less than $5,000,000 per occurrence and $5,000,000 per
incident.
11.2. In the event a policy required by this Agreement is canceled or
reduced to a level below the minimum liability limits prescribed
hereinabove, MCNS shall give Lilly fifteen (15) days prior written
notice of such termination or reduction. In that event, Lilly shall
have the right to terminate this Agreement if MCNS is unable to
secure the necessary coverage within thirty (30) days of such notice.
12. Termination. This Agreement and the License may be terminated as follows:
-----------
12.1. By Mediconsult upon thirty (30) days advance written notice for the
breach by Lilly of any of its obligations under this Agreement if
Lilly has not cured such breach within such notice period.
12.2. By Lilly upon thirty (30) days advance written notice for the breach
by Mediconsult of any of its obligations under this Agreement if
Mediconsult has not cured such breach within such notice period.
12.3. In the event of a termination by Lilly, Mediconsult shall refund to
Lilly all fees paid by Lilly to Mediconsult and for which Lilly has
not received goods or services as set
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forth herein as of the date of the notice of the breach. In the
event of any termination or expiration of this Agreement for any
reason, Mediconsult shall immediately remove all links to Lilly
websites and all advertising and promotional pieces and references to
Lilly on the Website, and further, shall remove all Lilly Material
within 30 days of termination.
12.4. In the event of a termination by Mediconsult, Lilly shall pay to
Mediconsult all fees due and not paid by Lilly to Mediconsult and for
which Lilly has received goods or services as set forth herein as of
the date of the notice of the breach and Lilly shall immediately
remove all links to Mediconsult websites and all advertising and
promotional pieces and references to Mediconsult on the Website, and
further, shall remove all Mediconsult Material within 30 days of
termination.
13. Publicity. Except as expressly provided in this Article 12, Mediconsult
---------
agrees that it shall not, without prior written consent of Lilly in each
instance, use in advertising, publicity or otherwise the name of Lilly, or
any partner or employee of Lilly, nor any trade name, trademark, trade
device or simulation thereof owned by Lilly, or represent, directly or
indirectly, that any product or any service provided by Mediconsult has
been approved, recommended, certified, or endorsed by Lilly. Mediconsult
and Lilly agree not to advertise any affiliation with each other under this
Agreement and not to publicly reveal the existence of this Agreement or any
of the terms, including, without limitation, pricing and amount of payments
by Lilly (aggregate or singular), of this Agreement, without the prior
written consent of the parties. Lilly acknowledges and agrees that
Mediconsult (a) may be required to file this Agreement as a "material
contract" with the United States Securities and Exchange Commission (the
"SEC'), in which case Mediconsult agrees to request confidential treatment
with respect to such portions of this Agreement as Lilly may reasonably
request, and (b) may include in its filings, reports and discussions with
the SEC, its stockholders and other persons information regarding this
Agreement which is consistent with the disclosure permitted by clause (a)
hereof and information regarding revenues earned under this Agreement as
specified Services are provided. Lilly agrees to consider in good faith any
request by Mediconsult for consent to include in such filings, reports or
discussions other information regarding this Agreement.
14. Reporting/Auditing. Mediconsult will engage an independent third party to
------------------
electronically monitor and record requests for the linked Lilly web page
via the hyperlink on the Website. The third party will report the recorded
information to Mediconsult and Lilly on a monthly basis. The third party
will employ measures to record visits by individual users, rather than
automated or repeated accesses. Lilly will employ measures to create
reports showing the number of unique individual users that make up the
subset of the reported requests for the Lilly web pages. In addition, Lilly
will have the right, at its expense and upon no less than five (5) working
days prior written notice, to perform an audit of Mediconsult's systems,
methodology and processes related to the delivery of the benefits set forth
in this Agreement, with specific emphasis on Mediconsult's security and
change control procedures related to the Websites. Such audit, which may be
conducted by Lilly personnel under obligations of confidentiality or by an
independent auditing firm, will not interfere unreasonably with
Mediconsult's business activities, and will be performed only when Lilly
has received a request from the U.S. Food and Drug Administration (or
agency with similar
9
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regulatory authority and jurisdiction over Lilly's business), or if Lilly
believes that such an audit is necessary in order to comply with Applicable
Regulations. Lilly will use information received during an audit solely for
the purposes of the Agreement and will otherwise maintain the
confidentiality of such information.
15. Website Content.
---------------
15.1. Lilly shall own all right, title and interest in and to all Lilly
Material. By its provision of the Lilly Material to Mediconsult,
Lilly is providing a limited, non-exclusive, terminable license to
Mediconsult solely for the use of the Lilly Material on the Website,
without modification, until this Agreement expires, or until such
Agreement is terminated in any manner, whichever should first occur.
Mediconsult shall utilize the Lilly Material without modification,
unless Mediconsult first gains the consent of Lilly to any
modifications it desires to make. Mediconsult agrees to notify Lilly
of any significant changes to the content or structure of the
Website prior to the changes being made. Lilly shall have the option
to terminate this Agreement on 5 days notice after any significant
change to the Website or the posting of any content on the Website
that Lilly reasonably determines would adversely affect Lilly, its
reputation or those of its products.
15.2. Mediconsult shall own all right, title and interest in and to all
Mediconsult Material. By its provision of the Mediconsult Material
to Lilly, Mediconsult is providing a limited, non-exclusive,
terminable license to Lilly solely for the use of the Mediconsult
Material on the Website, without modification, until this Agreement
expires, or until such Agreement is terminated in any manner,
whichever should first occur. Lilly shall utilize the Mediconsult
Material without modification, unless Lilly first gains the consent
of Mediconsult to any modifications it desires to make. Lilly agrees
to notify Mediconsult of any significant changes to the content or
structure of the Website prior to the changes being made.
Mediconsult shall have the option to terminate this Agreement on 5
days notice after any significant change to the Website or the
posting of any content on the Website that Mediconsult reasonably
determines would adversely affect Mediconsult, its reputation or
those of its products.
16. Assignment and Delegation. This Agreement will remain personal to each
-------------------------
party and neither party may assign this Agreement, or assign any of its
rights or delegate any of its obligations hereunder, to any third party
without the prior written consent of the other party; provided that
--------
Mediconsult may subcontract with other parties to provide the certain
required services hereunder. Any attempted unauthorized assignment by
either party will be null and void and the other party will have the right
to immediately terminate this Agreement in addition to all other rights and
remedies it may obtain under this Agreement. Subject to the foregoing, this
Agreement will bind and inure to the benefit of the parties and their
respective successors and permitted assigns. This Agreement is for the sole
benefit of the parties hereto and their respective successors and permitted
assigns and not for the benefit of, or enforceable by, any third party. In
addition, Mediconsult may not assign its rights nor delegate its duties
hereunder, nor may such be assumed by any entity, without written consent
of Lilly, by any mechanism for change of control, including, without
limitation, merger, purchase of assets and assumption of liabilities,
acquisition, reorganization, or otherwise, where such change in
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control affects more than a 15% ownership of Mediconsult, and where the
successor or purchaser of control, is a competitor of Lilly's in the
manufacture of pharmaceuticals. Any transaction in contravention of this
Section shall give rise to a right of termination by the other party.
17. Confidentiality, Proprietary Nature of Information. The parties hereto
--------------------------------------------------
acknowledge that all information and documents disclosed by a party, or
which come to the receiving party's attention during the course of its
performance of its obligations under this Agreement, constitute a valuable
asset of and are proprietary to the disclosing party. Therefore, each party
shall keep confidential and not disclose or otherwise make available to any
third party any confidential information, advice or material of any nature
that is provided or made available by the other party, including but not
limited to, any written reports or other data, without the prior written
consent of the other party. This provision shall survive termination of
this Agreement.
This section shall not apply to any information that:
i) is in or comes into the public domain through no breach by
the recipient of the information of its obligations under this Agreement,
ii) is independently developed by the recipient without
reference to otherwise confidential information of the other party,
iii) the recipient acquires from a third party who owes no
obligations of confidence to the other party to this Agreement in respect
thereof, or
iv) was already known to the recipient at the time it received
such information from the other party to this Agreement as shown by the
recipient's prior written records.
If either Mediconsult or Lilly is requested or required by any legal or
investigative process to disclose any information that it is not permitted to
disclose, that party shall provide the other with prompt notice of each such
request and the information requested so that the other party may seek to
prevent disclosure or the entry of protective order. If disclosure is required
and a protective order is not obtained, the party from whom disclosure is
required shall disclose only such information that it is advised by its counsel
is legally required to be disclosed.
18. Dispute Resolution. The following procedure may be utilized by the
------------------
initiation of either party for disputes that may arise under this Agreement.
Any party to this Agreement may notify the other party of the nature of the
dispute with as much detail as possible about the deficient performance of
the other party. Each party will use reasonable efforts to have
representatives of each party who have the authority to settle the dispute
meet within five (5) days of the date of the notification to reach an
agreement about the nature of the deficiency and the corrective action to be
taken by the respective parties. The parties shall within such time produce
a report about the nature of the dispute in detail and submit such report to
their respective management. If the parties are unable to agree on
corrective action, the respective managers to whom the involved parties
report ("Management") shall meet to facilitate an agreement within ten (10)
days of the date of the notification. If Management cannot resolve the
dispute with a written plan of corrective action within five (5) days of
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their initial meeting, or the agreed upon completion dates in the written
plan of corrective action are exceeded, or if a party reasonably determines
that this process will not address the dispute adequately, any party may
then proceed in accordance with its respective rights under this Agreement.
Pending resolution of any dispute, both parties will continue their
performance under this Agreement including, without limitation, the payment
of all non-disputed amounts due to the other party.
19. Independent Contractor. In performing its obligations under this Agreement,
----------------------
Mediconsult perform as independent contractors and not as agents or
employees of Lilly. For this reason, the activities in the performance of
their obligations under this Agreement shall be at their own risk and they
shall not be entitled to worker's compensation or other insurance
protection, nor to any other benefits generally provided by Lilly to its
employees. Mediconsult acknowledges its responsibility to withhold and pay
all Federal and state taxes and to obtain all insurance coverage, such as
workers' compensation, employer's liability, and bodily injury and property
damage.
20. Choice of Law. Except for the foregoing arbitration clause, this Agreement
-------------
shall be governed by and construed in accordance with the laws of the State
of Indiana, excluding all choice of law provisions.
21. Entire Agreement. This Agreement, constitutes the entire agreement between
----------------
the parties regarding its subject matter. Any modification of this Agreement
will be effective only if it is in writing and signed by the parties.
22. Waiver. None of the conditions of the Agreement shall be considered waived
------
unless such waiver is in writing and signed by the waiving party. No such
waiver shall be a waiver of any past or future default, breach or
modification of any of the conditions of the Agreement unless expressly
stipulated in such waiver.
23. Severability. If any provision in this Agreement is held to be invalid,
------------
void, or unenforceable, the remaining provisions shall nevertheless continue
in full force.
24. Notices. Any written notices to be given hereunder by either party shall be
-------
deemed effective upon personal delivery or upon mailing the notice to the
party to be served at the address set forth below:
LILLY:
-----
Eli Lilly and Company
Lilly Corporate Center
Indianapolis, Indiana 46282
Attn: Director eCommerce
Copy: Information Technology Counsel
Mediconsult:
-----------
Mediconsult.com, Limited
Jardine House, 4th Floor
33-35 Reid Street
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Hamilton, Bermuda HM 12
Attn: President
Copy:
Mediconsult.com, Inc.
1330 Avenue of the Americas, 17th Floor
New York, NY 10019
Attn: General Counsel
25. Force Majeure. Neither Mediconsult nor Lilly will be liable for delays or
-------------
defaults in furnishing goods or Services hereunder to the extent that such
delays or defaults on the part of Mediconsult or Lilly, as the case may be,
are beyond the control of such party, and may include:
(a) acts of God or of a public enemy;
(b) acts of any governmental authority;
(c) fires, severe weather, floods, earthquakes, natural disasters,
explosions or other catastrophes;
(d) embargoes, epidemics or quarantine restrictions;
(e) shortages of goods, labor strikes, organized slowdowns, or
labor stoppages;
(f) delay directly due to Lilly reporting problems or furnishing
information or materials in an untimely manner.
The effect of any event or condition specified in this Article 25 will be to
suspend Mediconsult's or Lilly's, as the case may be, obligations under this
Agreement to the extent such condition results in the Mediconsult's or Lilly's
inability to perform such obligation. Each such suspension will operate to
extend any grace or cure period applicable to the performance of such obligation
by the amount of time of such suspension. Any timetable (including all
deadlines and milestones) will be adjusted automatically to give appropriate
effect to each occurrence of any such event or condition; provided, however,
that if such delay (other than a delay caused directly by Lilly's untimely
actions) results in a material impact on the Mediconsult Services and such delay
continues for more than one week, then Lilly shall have the right to terminate
this Agreement.
26. Headings. The headings in this Agreement are solely for convenience of
--------
reference and shall not affect its interpretation.
27. Ambiguous Terms. Any ambiguities in this Agreement will not be strictly
---------------
construed against the drafter of the language concerned but will be
resolved by applying the most reasonable interpretation under the
circumstances, giving full consideration to the intentions of the parties
at the time of contracting. This Agreement will not be construed against
any party by reason of its preparation.
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ELI LILLY AND COMPANY MEDICONSULT.COM, LIMITED
/s/ Mike B. Kinney /s/ Robert Jennings
- ------------------------------------- ---------------------------------------
Signature Signature
Director of Procurement Chief Executive Officer
- ------------------------------------- ---------------------------------------
Printed Name and Title Printed Name and Title
February 25, 2000 February 25, 2000
- ------------------------------------- ---------------------------------------
Date Date
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Exhibit 10.17
INTERNET CONSULTING AND SOFTWARE
SERVICES AGREEMENT
AGREEMENT (the "Agreement") made as of November 24, 1999 (the "Effective Date")
by and between Eli Lilly and Company with offices at Lilly Corporate Center,
Indianapolis, Indiana ("Customer") and MEDICONSULT, Ltd., a Bermuda corporation,
with offices at 1330 Avenue of the Americas, New York, New York ("Developer").
WHEREAS, Customer desires to promote products and materials as proprietary to
Customer on the Internet;
WHEREAS, Developer is in the business of providing consulting and programming
services in connection with Internet marketing and desires to create and launch
a website for Customer subject to the terms and conditions set forth in this
Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
Customer and Developer (each a "Party", and collectively, the "Parties") hereby
agree as follows:
1. SERVICES
1.1 Scope of Services. Subject to the terms and conditions of this Agreement,
Developer shall, at no cost to Customer other than as expressly provided
herein, timely perform the services and deliver the materials set forth or
described in a Statement of Work attached hereto as Schedule 1 (or as a
successive schedule), and/or as otherwise subsequently agreed to in writing
by the parties (collectively, the "Services"), in order to create, execute,
and sustain an Internet promotional campaign, all in accordance with the
Specifications (as hereinafter defined.)
1.2 Specifications. The Statement of Work shall detail the design, technical
and functional capabilities, look and feel, and other attributes of the
Internet presence (the "Specifications"), including a web site (the
"Customer Site"). The Specifications shall include, without limitation: (i)
Developer's proposal to Customer, as applicable; (ii) a design for the
Customer Site, (iii) attributes of performance which the Customer Site will
achieve; (iv) deliverables to be provided by Developer as part of the
Services, including, without limitation, the Customer Site and all work
product, including all source code, created pursuant to a Statement of Work
and/or a Work Authorization (the "Deliverables"); and (v) design,
development, testing, delivery, implementation, maintenance and update
schedules for the Customer Site, and any Deliverables (the "Delivery
Schedule"). Developer represents and warrants that the Services, the
Deliverables, and the Customer Site shall conform in all material respects
to the Specifications.
1.3 The Customer may by notice in writing from time to time during the term of
this Agreement modify, delete, or add to the Services for any of the
Deliverables. At the time of any such change in the Services for a
Deliverable, the Developer and Customer shall agree as to what cost
adjustment, if any, will be required in the fee for such Services, as
"MEDICONSULT" Agreement
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hereafter designated, for the Deliverable to reflect that change in the
Services. If at any time the Developer acting in good faith reasonably
determines the instructions or directions from the Customer represent a
change in the scope of the Services required by the Developer that would
necessitate a change in the Services and in the fee for the Deliverable
affected by those instructions or directions, the Developer shall so notify
the Customer in writing and shall proceed only upon agreement between the
Customer and the Developer as to what adjustment, if any, is required in
the fee for the effected Deliverable to reflect those instructions or
directions by the Customer. Should the parties not reach agreement pursuant
to this Section 1.3, at the Customer's option, Customer may terminate this
Agreement, or specific Statement of Work, and Customer may contract with
other parties to perform the Services or any part thereof.
It is possible that Developer will be asked to provide Services, which are
not specified as Services in the Statement of Work or Scope of Services. In
these cases, a supplemental fee will be agreed upon, in writing, prior to
executing the project.
1.4 Work Authorization. With respect to each project assigned to the Developer
not covered in the Statement of Work or Scope of Services, the Developer
shall prepare a detailed estimate of the fee, including any Out-of-Pocket
Expenses, in a format designated by the Customer which itemizes the third-
party charges applicable to the project. The detailed estimate shall also
include an estimate of staff time. Each project estimate shall be submitted
to the Customer for signature approval. The Developer shall not proceed
with any project not covered in the Schedule, on behalf of the Customer or
incur expenses relating thereto without such approval. Following such
approval and until otherwise notified, the Developer shall be authorized to
proceed with such project and incur necessary expenses relating thereto.
2. NON-DISCLOSURE
2.1 Non-Disclosure. Developer agrees that it shall not, without prior written
consent of Customer, disclose, distribute or release to any third party, in
any manner or medium, directly or indirectly or through its
representatives: (i) the Customer Site, or any advertising, publicity or
promotion materials (including, without limitation, distribution through
the Internet) related to the Customer Site or which include the name of
Customer or its affiliates or subsidiaries or any trademark, trade name, or
any abbreviation, contraction, or other embodiment thereof; and (ii) any
materials or properties owned, controlled, licensed or otherwise
proprietary to Customer, whether or not such materials are incorporated in
to the Customer Site, prior to the "public" release of such materials.
3. DELIVERY AND ACCEPTANCE
3.1 Acceptance. Within thirty (30) days after receipt of each Deliverable and
the Customer Site, or as soon as practicable thereafter, Customer will test
and evaluate Developer's submission (the "Customer Acceptance Test"). The
Customer Acceptance Test shall be developed by Customer and shall
demonstrate to Customer's sole satisfaction that each Deliverable
(including, when applicable, the Customer Site) conforms in all material
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respects to the Specifications. In the event that the Deliverable meets the
Specifications, Customer shall notify Developer in writing that such
Deliverable has passed the Customer Acceptance Test ("Customer
Acceptance"). In the event a Deliverable fails to pass the Customer
Acceptance Test, Customer will advise Developer in writing as to which
aspects of the Deliverable failed. Developer shall, at no cost to Customer,
remedy such failure and deliver the corrected Deliverable to Customer for
review within thirty (30) days following receipt by Developer of notice of
the failure.
3.2 Time of Essence. Developer shall perform the Services, and shall otherwise
design, develop, test, deliver the Customer Site, promotional plan, and any
Deliverables, in strict compliance with the Customer Site Guidelines (as
hereinafter defined), the Delivery Schedule and any milestones contained
therein. Time is of the essence with respect to all aspects of this
Agreement and the subject matter hereof.
4. CONTINUING SERVICES
4.1 Transfer of Customer Site. Upon Customer acceptance of the Customer Site,
Developer shall transfer the Customer Site and any corresponding
Deliverables, including original source files, to the location specified in
writing by Customer (collectively, the "Host Server") in conformance with
the Delivery Schedule. The Customer Site will be hosted on the Host Server
or as otherwise specified by Customer (the "Hosting Service Provider").
Developer shall work in conjunction with the Hosting Service Provider in
connection with the transfer of the Customer Site to the Host Server.
Developer shall promptly inform Customer of any known failure by the
Hosting Service Provider to assist Developer in effecting such transfer.
4.2 Operation of the Customer Site. Developer represents and warrants that all
Services shall be performed so that the Customer Site and any Deliverables,
when operated on the Host Server by the Hosting Service Provider, will
function and perform in accordance with the Specifications. Developer
shall, at no cost to Customer or Hosting Service Provider, promptly provide
any updates, revisions, and replacements necessary for the Customer Site to
function and perform in accordance with the Specifications when operated on
the Host Server by the Hosting Service Provider. Customer reserves the
right to designate an alternative Host Server and Hosting Service Provider,
and such designation shall not relieve Developer of its obligations under
this Section 4.2, provided that any work completed by Developer outside of
the Services, will be provided as "out of scope" services at the rates set
forth on the Schedule. At no cost to Customer, Developer shall fully
cooperate with Customer and initial Hosting Service Provider in providing
the Services under this Agreement, including, but not limited to,
identifying and correcting any errors in the Customer Site.
4.3 Updates to the Customer Site. Following implementation of the Customer
Site, Developer shall perform updates to the Customer Site and any other
updates reasonably requested by Customer within the scope of the Statement
of Work. All such updates shall become part of the Customer Site and shall
be governed by the terms and conditions of this Agreement.
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4.4 Contact Person. Developer shall provide the staffing plan as specified in
the Schedule. Developer and Customer shall each designate a principal
contact person who shall act as a liaison between Developer and Customer
and who shall have sufficient authority to grant or communicate the
granting of all necessary approvals. Developer shall, upon request by
Customer, remove any Developer employee or agent from the Developer team
rendering the Services, and replace same with alternative qualified
Developer personnel.
4.5 Maintenance of Customer Site. Developer shall add materials and subsections
to the Customer Site promptly after receiving request(s) therefor from
Customer, and such work shall be completed on a time and materials basis at
the Out-of-Scope rate set forth on the Schedule, and pursuant to the
process set forth in Section 1.4.
4.6 Reports. From time to time Customer may request Developer to participate
in, and Developer will use commercially reasonable efforts to participate
in, a periodic performance evaluation with respect to (1) Developer's
servicing of Customer's account, (2) Developer's stewardship of the costs
incurred by Customer for Out-of-Pocket Expenses, (3) the working
relationship between Developer and Customer, (4) the implementation of this
Agreement, and (5) any significant changes to the Staffing Plan detailed in
the Project Pricing Proposal (specified in the Schedule). The form of such
report will be mutually agreed to by the parties.
5. COMPUTER SOFTWARE DELIVERABLES
5.1 Third Party Licenses. To the extent that any licenses are required to be
obtained from third parties for use of software necessary to operate or
maintain the Customer Site (not including server operating systems and core
web server software), Developer shall obtain, at Developer's sole cost,
such third party licenses for Customer's benefit following Customer's
approval in writing of any associated third-party fees. Upon request by
Customer, Developer promptly shall supply copies of all such license
agreements to Customer.
5.2 Millennium Compliant. Developer represents and warrants that the Software
associated with the Customer Site shall provide, among other things, the
following functionality: (i) accurate processing of date-related
information before, during and after January 1, 2000, including, without
limitation, accepting date input, providing date output, and performing
calculations on dates or portions of dates; (ii) function accurately in
accordance with the Statement of Work without interruption before, during
or after January 1, 2000 without any change in operations associated with
the advent of the new century; (iii) respond to two-digit date input in a
way that resolves any ambiguity as to century in a disclosed, defined and
predetermined manner; and (iv) store and provide output of date information
in ways that are unambiguous as to century.
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6. FEES AND PAYMENT
6.1 Initial Fees. In consideration of Developer providing the services and
delivering the Deliverables set forth herein, Customer agrees to pay
Developer the fees set forth in the Schedule to this Agreement.
6.2 Additional Services. In the event the parties agree to additional Services
other than those Services set forth in the Schedule, such additional
Services shall be detailed in a separate Schedule(s) to this Agreement
signed by both parties. The additional Schedule(s) will specifically set
forth the Services, Deliverables, fees and Out-of-Pocket Expenses. The fee
will be the base hourly rate times a multiple of three (3). Customer and
Developer shall agree on the amount of Out-of-Pocket Expenses for the
Services. "Out-of-Pocket Expenses" shall mean all expenses reasonably and
properly incurred by Developer in performing the Services.
6.3 Payment. Developer's invoices to Customer shall be payable within thirty
(30) days of receipt of Lilly Accounts Payable. For all invoices paid
within 30 days from the date of receipt, Lilly will receive a 1% discount
off invoice amount for prompt payment. If any rebates are due to Customer
under this Agreement, Developer will send the Cash Receipts Advice form (as
set forth in Exhibit C to the Schedule) with the rebate check and
appropriate documentation to:
Corporate Cashier Drop Code 2016
Eli Lilly and Company
Lilly Corporate Center
Indianapolis, Indiana 46285
6.4 Ancillary Rights. Except as set forth in Section 6.1, Developer shall have
no right to any royalties, revenues, fees or other payments in connection
with, or as a result of, the Services or the Customer Site, or with respect
to products or Services promoted on or by the Customer Site. Nor shall
Developer have any rights of attribution in connection with the Customer
Site, which shall contain appropriate Customer proprietary rights notices,
as directed by Customer.
7. CUSTOMER SITE GUIDELINES
7.1 Guidelines. In addition to any requirements set forth or described in the
Specifications, Developer and the Customer Site shall strictly adhere to
the guidelines set forth in this Article 7 (collectively, the "Customer
Site Guidelines").
7.2 Artistic Control. Customer shall have exclusive artistic and editorial
control over the Customer Site, including, without limitation, integration
of all Content, and the Design and look and feel of the Customer Site.
Developer shall not publish, or otherwise display the Customer Site or any
portion thereof without the prior written approval of Customer.
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7.3 Purpose. The Customer Site and any Deliverables shall be designated to
attract repeat user visits and promote the most current Content, assets and
properties identified by Customer.
7.4 Limitations. The Customer Site shall not, without the prior written consent
of Customer, contain: (i) software that is downloadable by users (other
than HTML and other software used to format and display HTML documents or
World Wide Web Pages, and elements embedded therein, such as sounds,
images, and audiovisual clips, which elements Customer acknowledges will be
downloadable by users); (ii) HTTP links to other Web sites; or (iii) the
capability to sell products directly through the Customer Site.
8. PROPRIETARY RIGHTS
8.1 Ownership of Content and Site. All rights, title and interest in and to the
Content (as provided by Customer and as digitized or otherwise reformatted
by Developer for the Customer Site, in all media now known or hereafter
developed), the Usage Information, Confidential Information (as hereinafter
defined), the Deliverables, the Customer Site and any trademarks, trade
names, logos, characters and other materials provided by Customer, and the
look and feel of the Customer Site, including, without limitation, all
copyrights, trademarks, trade names, source code, and other proprietary
rights inherent therein or appurtenant thereto (collectively, the "Customer
Materials") are owned and retained exclusively by Customer.
8.2 Use of Customer Materials. Developer shall not use the Customer Materials
or any portion thereof for any purpose other than that of fulfilling
Developer's obligations under this Agreement. The Customer Materials and
any portion thereof may not be used, disclosed, transmitted, transferred,
sold, assigned, leased or otherwise disposed of, or made available for
access by third parties, or be commercially exploited by or on behalf of
Developer, its employees or agents, except as expressly provided in this
Agreement.
8.3 Developer Materials. Unless otherwise indicated in the Statement of Work
and subject to Customer's ownership of all rights, title and interest in
and to the Customer Materials, all systems, software, programs, materials,
techniques, algorithms and methods not in the public domain or licensed by
Developer from any third party and rights thereto owned by Developer as of
the Effective Date of this Agreement are and shall remain the property of
Developer (collectively, the "Developer Materials").
8.4 Work Made for Hire. Except for the Developer Materials, all programs,
materials, products, and modifications developed or prepared for Customer
by Developer under this Agreement, including, without limitation, the
Customer Materials are and shall remain the property of Customer, and all
rights, title and interest therein shall vest in Customer and shall be
deemed to be a "work made for hire" and made in the course of the Services
rendered hereunder. To the extent that title to the Customer Materials does
not, by operation of law, vest in Customer or the Customer Materials are
not considered works made for hire, all right, title and interest therein
are hereby irrevocably assigned to Customer. All such materials shall
belong exclusively to Customer with Customer
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having the right to obtain and to hold in its own name copyrights,
registrations or such other protection as may be appropriate to the subject
matter, and any extensions and renewals thereof. Developer agrees to give
Customer and any person designated by Customer any reasonable assistance
required to perfect the rights defined in this Article 8.
8.5 License. Developer hereby grants to Customer a perpetual, non-transferable,
non-exclusive, royalty-free license to use in the operation of the Customer
Site, or by Customer's agent in the operation of such site, provided such
agent is not a healthcare content portal company, the Developer Materials
utilized in the Customer Site and to prepare derivative works thereto.
8.6 Content License. Customer hereby grants to Developer a non-exclusive, non-
transferable, limited license, solely during the Initial Term of this
Agreement and any Renewal Period, to use the Content solely for the benefit
of Customer in accordance with the terms and conditions of this Agreement.
Developer may make such copies of the Content as may be necessary to
perform its obligations under this Agreement, including back-up copies of
the Content.
9. CONFIDENTIALITY
9.1 Confidentiality. Unless otherwise agreed to in writing by both parties, the
parties shall maintain the strict confidentiality and shall not disclose to
any third party the existence of, or terms and conditions of, this
Agreement. In addition, Developer, in performing the Services for Customer
hereunder, will have access to or be exposed to, directly and indirectly,
Customer Materials, user information, data, knowledge, information about
the marketing, product and/or business affairs of Customer, and proprietary
and trade secret information of Customer, in oral, graphic, written,
electronic or machine readable form (collectively, the "Customer
Confidential Information"). Customer, in the course of this Agreement, will
have access to or be exposed to, directly or indirectly, Developer
Materials, data, and product and/or business affairs of Developer, and
proprietary and trade secret information of Developer, in oral, graphic,
written, electronic or machine readable form (collectively, the "Developer
Confidential Information"). Neither Customer Confidential Information, nor
Developer Confidential Information shall include information which can be
demonstrated: (i) to have been rightfully in the possession of the
Receiving Party (as hereafter defined) from a source other than Disclosing
Party (as hereafter defined) prior to the time of disclosure of said
information to Receiving Party hereunder ("Time of Receipt"); (ii) to have
been in the public domain prior to the Time of Receipt; (iii) to have
become part of the public domain after the Time of Receipt by a publication
or by any other means except an unauthorized act or omission or breach of
this Agreement on the part of Receiving Party, its employees, or agents; or
(iv) to have been supplied to Receiving Party after the Time of Receipt
without restriction by a third party who is under no obligation to
Disclosing Party to maintain such information in confidence. For purposes
of this Agreement, the Disclosing Party shall be the party disclosing
information pursuant to this Agreement, and the Receiving Party shall be
the party Receiving information pursuant to this Agreement.
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9.2 While this Agreement is in effect and, except if Developer terminates this
Agreement due to a material breach of this Agreement by Customer, for an
additional eighteen (18) month period thereafter, Developer will not,
without the prior written approval of Customer, accept assignments for
providing Services involving pharmaceutical products which are competitive
with the Customer products.
9.3 Obligations. All Confidential Information of Disclosing Party shall be held
in strict confidence by Receiving Party and shall not be disclosed or used
by Receiving Party without the prior written consent of Disclosing Party,
except as provided in this Agreement, or as may be required by law pursuant
to available confidentiality restrictions. Receiving Party shall hold
Confidential Information in strict confidence and shall use reasonable
efforts to provide protection for Confidential Information, including
measures at least as strict as those Receiving Party uses to protect its
own Confidential Information.
10. WARRANTIES
10.1 Developer Warranties. Developer represents and warrants that: (i) all of
the Services to be performed hereunder will be rendered using sound,
professional practices and in a competent and professional manner by
knowledgeable, trained and qualified personnel; (ii) the Deliverables and
the Customer Site will appear and operate in conformance with the
Specifications and the Customer Site Guidelines; (iii) Developer has full
authority to enter into this Agreement; (iv) all obligations owed to third
parties with respect to the activities contemplated to be undertaken by
Developer pursuant to this Agreement are or will be fully satisfied by
Developer, so that Customer will not have any obligations with respect
thereto; (v) Developer is the owner of or otherwise has the right to use
and distribute the Software, the Developer Materials, and other materials
and methodologies used in connection with providing the Services hereunder;
(vi) Developer will comply with all applicable federal, state and local
laws in the performance of its obligations hereunder; (vii) the Software,
the Developer Materials, and other materials and methodologies used by
Developer in fulfilling its obligations under this Agreement (except the
Content) shall not infringe upon any third-party copyright, trademark,
patent, trade secret or other third-party right; (viii) the Customer Site
shall not contain any Trojan horses, worms, viruses or other disabling
devices; and (ix) Developer, in implementing the Customer Site, shall not
alter the Customer Materials in any manner.
10.2 Customer Warranties. Customer represents and warrants that: (i) it has full
authority to enter into this Agreement; (ii) all obligations owed to third
parties with respect to the activities contemplated to be undertaken by
Customer pursuant to this Agreement are or will be fully satisfied by
Customer, so that Developer will not have any obligations with respect
thereto; and (iii) Customer has provided Content for the Customer Site that
does not infringe or violate copyright, patent, trademark, trade secret or
other proprietary rights of any third party.
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11. DISCLAIMERS OF WARRANTY
The warranties set forth in Section 1.2, 1.3, 3.2, 4.2, 4.6, 5.3, and
Article 10 of this Agreement are limited warranties and are the only
warranties made by the respective parties. The parties expressly disclaim,
and hereby expressly waive, all other warranties, express or implied,
including, without limitation, warranties of merchantability and fitness
for a particular purpose. Customer makes no warranties or guarantees as to
the accuracy or completeness of any content published or made accessible on
the customer site.
12. INDEMNIFICATION AND INSURANCE
12.1 Developer Indemnification. Developer shall indemnify, defend, and hold
harmless Customer, its directors, officers, employees and agents, against
same with respect to any claim, demand, cause of action, debt or liability,
including reasonable attorneys' fees, to the extent that the same is based
upon a claim that: (i) if true, would constitute a breach of any of
Developer's representations, warranties, or obligations hereunder; (ii)
arises out of the negligence or willful misconduct of Developer; or (iii)
any of the Developer Materials, or Services or Deliverable or the Customer
Site or any portion thereof infringes or violates any patents, copyrights,
trade names, trade secrets, license, or other rights of any third party.
12.2 Customer Indemnification. Customer shall indemnify, defend, and hold
harmless Developer, its directors, officers, employees and agents, with
respect to any claim, demand, cause of action, debt or liability, including
reasonable attorneys' fees, to the extent that the same is based upon a
claim that any of the Content provided by Customer infringes or violates
any U.S. patents which have issued as of the Effective Date, copyrights,
trade names, trade secrets, license, or other property rights of any third
party.
12.3 Notice. In claiming any indemnification hereunder, the indemnified Party
shall promptly provide the indemnifying Party with written notice of any
claim which the indemnified Party believes falls within the scope of this
Article 12. The indemnified Party may, at its own expense, assist in the
defense if it so chooses, provided that the indemnifying Party shall
control such defense and all negotiations relative to the settlement of any
such claim and further provided that any settlement intended to bind the
indemnified Party may not be entered into without the indemnified Party's
prior written consent, which shall not be unreasonably withheld or delayed.
Limitation of Liability. EXCEPT FOR EACH PARTY'S LIABILITIES AS SET FORTH
IN SECTIONS 12.1, 12.2 and 12.3 OF THIS AGREEMENT, AND EXCEPT FOR GROSS
NEGLIGENCE OR INTENTIONAL OR WILLFUL MISCONDUCT, IN NO EVENT SHALL EITHER
PARTY BE LIABLE FOR ANY SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR LOSS
OF PROFITS ARISING OUT OF OR IN CONNECTION WITH THEIR RESPECTIVE
OBLIGATIONS UNDER THIS AGREEMENT, AND WHETHER OR NOT IT HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGE. Except for each party's liabilities as set
forth in
9
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12.4 Sections 12.1, 12.3 and 12.3 of this Agreement, and except for gross
negligence or intentional or willful misconduct, any damages that either
party if required to pay for any reason whatsoever and regardless of the
form of action, in the aggregate, shall be limited to the amount of the
total fees payable to Developer hereunder.
12.5 Insurance.
12.5.1 Insurance. MCNS will at all times during the term of this Agreement
---------
maintain appropriate insurance coverage with responsible carriers. MCNS
shall provide Lilly proof of such coverage within ten (10) days of the
execution of this Agreement.
12.5.2 Required Coverage. MCNS shall maintain workers compensation and
-----------------
employers liability insurance, general liability insurance coverage that
includes property damage and personal injury components, and errors and
omissions liability coverage. Such insurance coverage, at a minimum,
shall include the following types and amounts:
12.5.2.1 Workers compensation and employers liability meeting the statutory
minimum in the states in which Services are to be performed by MCNS
employees;
12.5.2.2 Commercial general liability insurance naming Lilly as an additional
insured including premises and operations coverage with limits of not
less than $5,000,000 per occurrence and $5,000,000 per incident;
12.5.2.3 Property damage liability insurance naming Lilly as an additional
insured with limits of not less than $3,000,000 per occurrence and
$3,000,000 per accident; and
12.5.2.4 Errors and omissions liability insurance naming Lilly as an additional
insured with limits of not less than $5,000,000 per occurrence and
$5,000,000 per incident.
In the event a policy required by this Agreement is canceled or reduced to a
level below the minimum liability limits prescribed hereinabove, MCNS shall give
Lilly fifteen (15) days' prior written notice of such termination or reduction.
In that event, Lilly shall have the right to terminate this Agreement if MCNS is
unable to secure the necessary coverage within thirty (30) days of such notice.
13. TERM AND TERMINATION
13.1 Term. The initial term of this Agreement shall commence as of the Effective
Date and shall continue for a period of one (1) year ("Initial Term").
Thereafter the Agreement shall automatically be renewed, subject to Section
13.2, for successive periods of one (1) year (each a "Renewal Period"),
unless terminated by either of the Parties pursuant to the terms of this
Agreement.
13.2 Termination. Customer may terminate this Agreement at any time, with or
without cause by giving Developer at least thirty (30) days' prior written
notice (the "Termination Period"), unless a separate termination provision
is set forth in a Schedule, in which case the termination provision set
forth in the Schedule shall control. Except as otherwise
10
<PAGE>
herein provided, during the Termination Period, the rights, duties, and
responsibilities hereunder of each party shall continue in full force.
Either Party may terminate this Agreement at any time upon written notice
to the other Party in the event of the occurrence of one or more of the
following events: (i) if a petition under any foreign, state, or United
States bankruptcy act, receivership statute, or the like, as they now
exist, or as they may be amended, is filed by the other Party; or (ii) if
such a petition is filed by any third party, or an application for a
receiver of the other Party is made by anyone, and such petition or
application is not resolved favorably by such Party within sixty (60) days;
or (iii) the other Party materially breaches any of its representations,
warranties, obligations or agreements hereunder, and such breach, if
capable of being cured, is not cured within thirty (3) days following
receipt of written notice of such breach from the non-breaching Party.
Termination under Section 13.2(iii) hereof shall be effective, at the non-
breaching Party's option, upon the breaching Party's receipt of a notice of
a material breach under Section 13.2(iii).
13.3 Survival. Upon expiration or termination of this Agreement, all provisions
comprising the Parties' express warranties provided herein, in addition to
Section 2.2, 5.1, and Articles 8 (except Section 8.7), 9, 10, 11, 12
(except Section 12.4), 13 (except Section 13.5), and 14 shall survive.
13.4 Return of Customer Materials and Advertising. Upon expiration or
termination of this Agreement, or upon request by Customer, Developer shall
immediately cease using and return to Customer (or at Customer's request,
destroy) all copies of Customer Materials, if any, in its control or
possession, in addition to all other property belonging to and/or received
from Customer.
13.5 Transfer of Services. Upon termination or expiration of this Agreement,
Developer shall, at no cost to Customer, provide reasonable assistance to
Customer and any third parties authorized by Customer in assuming
performance of those Services necessary for continued and uninterrupted
operation of the Customer Site.
14. GENERAL PROVISIONS
14.1 No Agency or Joint Venture. The Parties agree and acknowledge that the
relationship of the Parties is in the nature of an independent contractor.
This Agreement shall not be deemed to create a partnership or joint venture
and neither Party is the other's agent, partner, employee, or
representative.
14.2 Force Majeure. Neither party shall be deemed in default of this Agreement
to the extent that performance of its obligations or attempts to cure any
breach are delayed or prevented by reason of any act of God or any act
beyond its reasonable control, provided that such Party gives the other
Party written notice thereof promptly upon discovery thereof and uses its
best efforts to cure the delay.
14.3 Partial Invalidity. Should any provision of this Agreement be held to be
void, invalid or inoperative, the remaining provisions of this Agreement
shall not be affected and shall
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<PAGE>
continue in effect and the invalid provisions shall be deemed modified to
the least degree necessary to remedy such invalidity.
14.4 No Waiver. The failure of either Party to partially or fully exercise any
right or the waiver by either Party of any breach, shall not prevent a
subsequent exercise of such right or be deemed a waiver of any subsequent
breach of the same or any other term of this Agreement.
14.5 No Assignment. Developer shall not assign this Agreement or any of its
rights or obligations under this Agreement to any other entity without the
prior written consent of Customer.
14.6 Notices. Any notice required or permitted to be sent shall be in writing
and shall be sent in a manner requiring a signed receipt such as
authenticated Internet transmission, authenticated facsimile transmission,
FedEx or like courier delivery, or if mailed, then mailed by registered or
certified mail, return receipt requested. Notice is effective upon receipt.
Notices shall be sent to the addresses first set forth above to the
attention of the signatories of this Agreement.
14.7 Entire Agreement. This Agreement, including any Schedules or Exhibits
annexed hereto, set forth the entire agreement between the Parties on this
subject, and supersedes all prior negotiations, understandings, and
agreements between the Parties concerning the subject matter. No Amendment
or modification of this Agreement shall be made except by writing signed by
the Party to be bound thereby.
14.8 Designated Suppliers. Developer must use suppliers designated by Customer
(Customer "Select" Suppliers) unless such suppliers are unable to supply
the applicable supplies.
14.9 Audits. Upon reasonable advance notice, all contracts, paper,
correspondence, copybooks, time sheets, account records, and other
materials which relate to the fees charged by Developer pursuant to this
Agreement (with the exception of employee salaries, which are proprietary
and confidential), will be open to inspection, examination and audit by
Customer or Customer's representative during Developer's normal business
hours at Developer's place of business. In addition, Customer will have the
right, at its expense and upon no less than five (5) working days' prior
written notice, to perform an audit of Developer's methodology and
processes in performing the Services, with specific emphasis on Developer's
security and change control procedures related to its development work.
Such audit, which may be conducted by Customer personnel under obligations
of confidentiality or by an independent auditing firm, will not interfere
unreasonably with Developer's business activities, and will be performed
only when Customer has received a request from the U.S. Food and Drug
Administration (or agency with similar regulatory authority and
jurisdiction over Customer's business), or if Customer believes that such
an audit is necessary in order to comply with Applicable Regulations.
Customer will use information received during an audit solely for the
purposes of the Agreement and will otherwise maintain the confidentiality
of such information.
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<PAGE>
14.10 Governing Law. This Agreement shall be governed and interpreted in
accordance with the laws of the State of Indiana without regard to
principals of conflict of laws.
IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of
the Effective Date.
CUSTOMER DEVELOPER
ELI LILLY AND COMPANY "MEDICONSULT"
By: /s/ Mike B. Kinney By: /s/ Robert Jennings
---------------------------- -------------------------
Name: Mike B. Kinney Name: Robert Jennings
Title: Director of Procurement Title: Chief Executive Officer
Date:___________________________ Date:_________________________
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Exhibit 10.31
REGISTRATION RIGHTS AGREEMENT, dated as of March 23, 2000,
between Mediconsult.com, Inc., a Delaware corporation (the
"Company"), and Andersen Consulting LLP, an Illinois limited
liability partnership and its permitted assigns, (the
"Warrant Holder").
------------------------------------------------------------
Introduction
------------
Pursuant to the Warrant Agreement, dated as of March 23, 2000 (the
"Warrant Agreement"), among the Company and the Warrant Holder, the Warrant
Holder is being issued a warrant (the "Warrant") to purchase certain shares of
common stock, par value $.001 per share or any other securities which may be
issuable upon exercise of the Warrant (the "Common Stock"), of the Company in
connection with the consummation of the transactions contemplated thereby.
As a condition to the consummation of the transactions contemplated by
the Warrant Agreement, the Company is entering into this Agreement.
The parties hereto agree as follows:
1. Definitions. Terms used herein and not otherwise defined shall
-----------
have the meanings given to them in the Warrant Agreement. As used herein, the
following terms have the following definitions:
Commission means the Securities and Exchange Commission, or any other
----------
federal agency at the time administering the Securities Act.
Distribution Period means (a) in the case of a distribution of
-------------------
Registrable Shares in a firm commitment underwritten public offering, the period
of time until each underwriter has completed the distribution of all securities
purchased by it, and (b) in the case of any other distribution of Registrable
Shares the period ending on the earlier of (i) the sale of all Registrable
Shares covered by such registration and (ii) the termination of the registration
rights hereunder pursuant to Section 10.
Holder means any Affiliate of the Warrant Holder holding the Warrant
------
or Registrable Shares hereunder.
Registrable Shares means the shares of Common Stock issuable upon
------------------
exercise of the vested portion of the Warrant (or any substitute warrant issued
pursuant to Section 5 of the Warrant) as such number of shares may be adjusted
from time to time in accordance with the term thereof, and, any securities
issued with respect to such shares by way of a stock dividend, stock split,
combination, recapitalization, Corporate Change or other similar event (if and
only if such issuance occurs at a time when such Common Stock remains
Registrable Shares). As to any particular Registrable Shares, such securities
shall cease to be Registrable Shares when (i) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such
<PAGE>
registration statement, (ii) they shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities Act,
(iii) they shall have been otherwise transferred, with new certificates for them
not bearing a legend restricting further transfer having been delivered by the
Company and subsequent disposition of them shall be unrestricted under the
Securities Act, or (iv) they shall have ceased to be outstanding.
Securities Act means the Securities Act of 1933, as amended.
--------------
2. Incidental Registration. (a) If at any time after the date
-----------------------
hereof, the Company proposes to register any of its securities ("Company
Shares") under the Securities Act (other than on Forms S-4, S-8 or any other
form which does not permit registration of securities by selling stockholders
for sale to the public for cash) in connection with the proposed offer and sale
for cash either for its own account or on behalf of any holder of Company
Shares, it will give prompt written notice to the Holder of its intention to do
so at least ten business days prior to the earliest date on which the Company
anticipates that such registration will be declared effective by the Commission.
Upon the Holder's written request to the Company, given within five business
days after receipt of any such notice, to register any of the Holder's
Registrable Shares, the Company will use its commercially reasonable best
efforts to cause the Registrable Shares as to which registration shall have been
so requested to be included in the shares of Company Shares to be covered by the
registration statement proposed to be filed by the Company; provided, that
--------
nothing set forth in this Agreement shall prevent the Company from, at any time,
withdrawing, abandoning or delaying any registration of such Company Shares.
The Company shall have the sole right to select the managing underwriter or
underwriters. The managing underwriter for such offering shall have the
authority, in its sole discretion, to reduce the number of Registrable Shares to
be included in such registration if and to the extent that it determines that
inclusion of such Registrable Shares would adversely effect the marketing of the
other Company Shares to be sold thereunder. Any such reduction in the shares
included in any such offering shall be effected (i) first, by excluding Company
Shares ("Piggyback Shares") that otherwise would be included by virtue of
incidental or piggyback registration rights (but not demand registration rights)
granted to stockholders of the Company (including the Holder), which exclusion
shall be effected on a pro rata basis based upon the number of Company Shares so
requested to be registered in such offering by all such stockholders proposing
to sell Piggyback Shares and (ii) second, only to the extent necessary and after
the exclusion of all Piggyback Shares, by excluding Company Shares included in
such registration by the Company and any stockholder of the Company who shall
have exercised a demand registration right in connection with such offering,
which exclusion shall be effected on a pro rata basis based upon the number of
Company Shares proposed to be registered on behalf of the Company and on behalf
of any such holder of demand registration rights; provided, however, that it is
understood and agreed that the rights granted hereunder are subject to
previously existing registration rights granted to pursuant to the registration
rights agreement dated February 26, 1999 between the Company and Arnhold and S.
Bleichroeder Inc., and the registration rights agreement, dated February 26,
1999, between the Company and the Nazem entities and individuals, in each case
only to the extent inconsistent with this provision.
(b) If any registration pursuant to this Section 2 shall be
underwritten, in whole or in part, the Company or the managing underwriter or
underwriters may require that the
2
<PAGE>
Registrable Shares requested for inclusion pursuant to this Section 2 be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters.
(c) Notwithstanding anything to the contrary set forth in this
Agreement, if, at any time during which a prospectus is required to be delivered
in connection with the sale of Registrable Shares, the Company reasonably
determines in good faith that a development has occurred or a condition exists
as a result of which the registration statement or the related prospectus may
contain or incorporate by reference a material misstatement or omission, the
correction of which might (a) interfere with or affect the negotiation or
completion of any non-ordinary course transaction that is being contemplated by
the Company (whether or not a final decision has been made to undertake such
transaction), or (b) involve initial or continuing disclosure obligations that
the Company reasonably determines in good faith may not be in the best interest
of the Company or its stockholders, the Company will immediately notify the
Holders by telephone and in writing, and the Company may suspend the
effectiveness of the registration statement. Upon receipt of such notification,
the Holders will immediately suspend all offers and transfers of any Registrable
Shares pursuant to the registration statement until such time as the Company
notifies the Holders that it has determined that such suspension period is
ended, which notification shall occur promptly after the Company has determined
that such suspension period has ended.
3. Preparation and Filing. If and whenever the Company is under an
----------------------
obligation pursuant to the provisions of Section 2 to effect the registration of
any Registrable Shares, the Company shall, as expeditiously as practicable:
(a) prepare, provide opportunity for counsel for the Holder to
review, and diligently pursue the filing with the Commission of a registration
statement with respect to such securities and use its commercially reasonable
best efforts to cause such registration statement to become and remain effective
for the Distribution Period, but no longer;
(b) prepare, provide opportunity for counsel for the Holder to
review, and file with the Commission such amendments and supplements to such
registration statements and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective for the Distribution
Period, but no longer;
(c) furnish to the holders of Registrable Shares included in such
registration statement such number of copies of a summary prospectus or other
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act and any amendments and supplements thereto,
and such other documents as such holders of Registrable Shares may reasonably
request in order to facilitate the public sale or other disposition of such
Registrable Shares;
(d) use its commercially reasonable best efforts to register or
qualify the Registrable Shares covered by such registration statement under the
securities or "blue sky" laws of such states as the Holder shall reasonably
request (provided, that the Company shall not be required to consent to general
--------
service of process for all purposes in any jurisdiction where it is not then
qualified) and do any and all other acts or things which may be necessary or
advisable to
3
<PAGE>
enable such seller to consummate the public sale or other disposition in such
jurisdictions of such securities;
(e) notify the Holder, at any time during the Distribution Period
when a prospectus relating to Registrable Shares covered by such registration
statement is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing and at the request of the Holder, prepare and furnish to the
Holder a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing; and
(f) cause all such Registrable Securities to be listed on each
securities exchange (including the Nasdaq National Market) on which similar
securities issued by the Company are then listed;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities;
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission; and
(k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such registration statement for sale in any
jurisdiction, the Company will notify each Seller of such Registrable Securities
of such stop order and use its reasonable best efforts promptly to obtain the
withdrawal of such order.
(l) Notwithstanding anything to the contrary contained herein, the
Company shall have the right to deregister any Registrable Shares that remain
unsold at the conclusion of any Distribution Period.
4
<PAGE>
4. Transfer Restrictions. Other than a Transfer to an Affiliate in
---------------------
compliance with the Securities Act, the Holder shall not offer, sell, contract
to sell or otherwise dispose of ("Transfer") more than 50% of the shares of
Common Stock registered for sale pursuant to Section 2 hereof in any three month
period; provided that if the Holder is prevented because of an underwriter
cutback from registering all the Registrable Shares requested to be registered,
the Transfer restriction shall apply to 50% of the shares of Common Stock
requested to be registered.
5. Holder's Lock-Up; Cooperation. If any Registrable Shares of the
-----------------------------
Holder are included in an underwritten registration pursuant to Section 2, the
Holder, as a condition to receiving the rights granted hereunder, may be
required to, and if required the Holder shall, enter into an agreement with the
managing underwriter or underwriters (a "Lock-up Agreement"), pursuant to which,
in addition to the transfer restrictions set forth in Section 4 above, the
Holder shall refrain from selling any shares of Common Stock not included in
such registration during the period of distribution of Common Stock by such
underwriters and for a period of up to 180 days following the effective date of
such registration. In connection with each registration pursuant to Section 2
hereof, the Holder shall furnish in writing to the Company and any underwriter
participating in such offering such information with respect to himself and the
proposed distribution by him as shall be reasonably necessary in order to assure
compliance with Federal and applicable state securities laws.
6. Underwriting Agreement. In connection with each registration
----------------------
pursuant to Section 2 covering an underwritten public offering, the Company and
the Holder agree to enter into a written agreement with the managing underwriter
or underwriters in such form and containing such provisions as are usual and
customary in the securities business for such an arrangement between reputable
underwriters and companies of the Company's size and investment stature;
provided that such agreement shall not contain any such provision applicable to
- --------
the Company or the Holder which is inconsistent with the provisions of this
Agreement; and provided, further, that the time and place of the closing under
-------- -------
said underwriting agreement shall be as mutually agreed upon between the Company
and such managing underwriter.
7. Expenses. All expenses incurred in complying with this
--------
Agreement, including, without limitation, all registration, qualification and
filing fees, fees and expenses of complying with securities and "blue sky" laws,
expenses, if any, and fees relating to the listing of the Registrable Shares on
the Nasdaq National Market or such other exchange as the Company's Common Stock
may then be listed or quoted, printing expenses and fees and disbursements of
the Company's counsel, and of the Company's independent certified public
accountants shall be paid by the Company; provided, that counsel to the Holder
---------
and all underwriting discounts and selling commissions applicable to the
Registrable Shares covered by registrations effected hereunder shall not be
borne by the Company but shall be borne by the Holder.
8. Indemnification. (a) In the event of any registration of any
---------------
Registrable Shares under the Securities Act pursuant to this Agreement or
registration or qualification of any Registrable Shares under state securities
or "blue sky" laws pursuant to this Agreement, the Company shall indemnify and
hold harmless the Holder, its partners, affiliates, officers and directors and
each other person or entity, if any, who controls such holder, within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which
5
<PAGE>
any of the foregoing persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any registration statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or any document prepared or furnished by the
Company incident to the registration or qualification of any Registrable Shares
pursuant to this Agreement, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading or, with respect to
any prospectus, necessary to make the statements therein in light of the
circumstances under which they were made, not misleading, or any violation by
the Company of the Securities Act, the Exchange Act of 1934 or state securities
or "blue sky" laws applicable to the Company and relating to action or inaction
required of the Company in connection with such registration or qualification
under such state securities or blue sky laws; and shall reimburse the Holder,
partner, officer, director or other person or entity acting on behalf of the
Holder and each such controlling person or entity for any legal or any other
expenses reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, that the
--------
Company shall not be liable (i) in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the registration statement, any preliminary prospectus or final prospectus or
any amendment or supplement or any document incident to the registration or
qualification of any Registrable Shares pursuant to this Agreement in reliance
upon and in conformity with written information furnished to the Company by the
Holder or such underwriter specifically for use in the preparation thereof and
(ii) to any broker or other person acting on behalf of the Holder to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any representation or other statement of such broker or other person that is not
in conformity with the preliminary prospectus or prospectus. The liability of
each Holder under this Section shall be limited to the proceeds (net of
underwriting commissions) received by such Holder from the sale of shares of
Registrable Shares covered by the registration statement.
(b) The Holder hereby indemnifies and holds harmless the Company,
each director of the Company, each officer of the Company who shall sign such
registration statement and any person who controls the Company within the
meaning of the Securities Act, and before Registrable Shares held by the Holder
shall be included in any registration pursuant to this Agreement, any
underwriter acting on the Holder's behalf shall agree to indemnify and hold
harmless the Company, each director of the Company, each officer of the Company
who shall sign such registration statement and any person who controls the
Company within the meaning of the Securities Act (in each case in the same
manner and to the same extent as set forth in (a) above) with respect to any
untrue statement or omission from such registration statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, if such untrue statement or omission was made in reliance upon and in
conformity with written information furnished to the Company by the Holder or
such underwriter, as the case may be, specifically for use in the preparation of
such registration statement, preliminary prospectus, final prospectus or
amendment or supplement.
6
<PAGE>
(c) Each person or entity entitled to indemnification hereunder (the
"indemnified party") shall give notice to the party required to provide
indemnification (the "indemnifying party") promptly after such indemnified party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the indemnifying party (at its expense) to assume the defense of any
claim or any litigation resulting therefrom; provided, that counsel for the
--------
indemnifying party, who shall conduct the defense of such claim or litigation,
shall be reasonably satisfactory to the indemnified party, and the indemnified
party may participate in such defense, but only at such indemnified party's
expense; and provided, further, that the failure of any indemnified party to
-------- -------
give notice as provided herein shall not relieve the indemnifying party of its
obligations under this Section 7 except to the extent that the omission results
in a failure of actual notice to the indemnifying party and such indemnifying
party is damaged as a result of the failure to give notice. It is understood
that the indemnifying party shall not, in connection with any action or related
actions in the same jurisdiction, be liable for the fees and disbursements of
more than one separate firm qualified in such jurisdiction to act as counsel for
the indemnified party. No indemnifying party, in the defense of any such claim
or litigation, shall, except with the consent of each indemnified party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation. The Company agrees to make such provisions as are reasonably
requested by any indemnified party for contribution to such party in the event
the Company's indemnification under this Section is unavailable for any reason.
Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in any underwriting agreement entered
into in connection with any offering are in conflict with the provisions of this
Section, the provisions in the underwriting agreement shall control with respect
to such offering.
(d) Maintain Current Public Information. The Company shall file all
-----------------------------------
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder and shall take such
further action as any Holder or Holders may reasonably request, all to the
extent required to enable such Holders to sell Registrable Shares pursuant to
(a) Rule 144 adopted by the SEC under the Securities Act (as such rule may be
amended from time to time) or any similar rule or regulation hereafter adopted
by the SEC or (b) a registration statement on Form S-3 or any similar
registration form hereafter adopted by the SEC. Upon request, the Company shall
deliver to any Holder a certificate by its chief executive officer or chief
financial officer as to whether it has complied with such requirements.
9. Representations and Warranties. (a) The Company hereby
------------------------------
represents and warrants to the Holder that:
(i) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of the
Company. The Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby and has duly executed and delivered this Agreement. This Agreement
constitutes the valid and binding obligation of the Company, enforceable
against it in accordance with its respective terms, subject to bankruptcy,
insolvency,
7
<PAGE>
fraudulent transfer, reorganization, moratorium and other laws of general
applicability relating to or affecting creditors' rights and to general
equitable principles.
(ii) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby nor compliance by the
Company with any of the provisions hereof will (A) conflict with or result
in a breach of the charter, by-laws or other constitutive documents of the
Company, (B) conflict with or result in a default (or give rise to any
right of termination, cancellation or acceleration) under any of the
provisions of any note, bond, lease, mortgage, indenture, license,
franchise, permit, agreement or other instrument or obligation to which the
Company is a party, or by which the Company or the Company's properties or
assets, may be bound or affected, except for such conflict, breach or
default as to which requisite waivers or consents shall be obtained before
the Closing, or (C) violate any law, statute, rule or regulation or order,
writ, injunction or decree applicable to the Company or the Company's
properties or assets or (D) result in the creation or imposition of any
security interest, lien or other encumbrance upon any of the Company's
properties or assets. No consent or approval by, or any notification of or
filing with, any person, firm, corporation, partnership, joint venture,
association or entity (governmental or private) (each, a "person" and
collectively, "persons") is required in connection with the execution,
delivery and performance by the Company of this Agreement or the
consummation of the transactions contemplated hereby, except as set forth
in the Warrant Agreement.
(b) Representations and Warranties of the Warrant Holder. The
----------------------------------------------------
Warrant Holder represents and warrants to the Company that:
(i) The Warrant Holder has all requisite partnership power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby and has duly executed and delivered this Agreement.
This Agreement constitutes the valid and binding obligation of the Warrant
Holder, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws
of general applicability relating to or affecting creditors' rights and to
general equitable principles.
(ii) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby nor compliance by the
Warrant Holder with any of the provisions hereto will (A) conflict with or
result in a default (or give rise to any right of termination, cancellation
or acceleration) under any of the provisions of any note, bond, lease,
mortgage, indenture, license, franchise, permit, agreement or other
instrument or obligation to which the Warrant Holder is a party, or by
which the Warrant Holder or the Warrant Holder's properties or assets may
be bound or affected, except for such conflict, breach or default as to
which requisite waivers or consents shall be obtained before the Closing,
(B) violate any law, statute, rule or regulation or order, writ, injunction
or decree applicable to the Warrant Holder or the Warrant Holder's
properties or assets or (C) result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of
the Warrant Holder. No consent or approval by, or any notification of or
filing with, any person is required in connection with the
8
<PAGE>
execution, delivery and performance by the Warrant Holder of this Agreement
or the consummation of the transactions contemplated hereby.
10. Termination of Registration Rights. The Holder shall not be
----------------------------------
entitled to execute any registration right provided for in this Agreement at any
time during which all the Registrable Shares, or shares that will become
Registrable Shares, held by the Holder may be sold without restriction of any
kind under Rule 144.
11. Miscellaneous.
-------------
(a) Entire Agreement. Except as set forth in the Warrant Agreement,
----------------
this Agreement constitutes the entire agreement between the Company and the
Warrant Holder with respect to the transactions contemplated hereby and
supersedes all prior agreements or understandings among the parties with respect
thereto.
(b) Headings. Descriptive headings are for convenience only and
--------
shall not control or affect the meaning or construction of any provision of this
Agreement.
(c) Notices. All notices or other communications provided in for or
-------
made pursuant to this Agreement shall be in writing and shall be sent by
confirmed telecopy (with an undertaking to provide a hard copy) or delivered by
hand or sent by overnight courier service prepaid to the address specified
below.
If to the Company:
Mediconsult.com, Inc.
1330 Avenue of the Americas
17th Floor
New York, New York 10019
Telecopy: (212) 841-7310
Attention: E. Michael Ingram
If to the Warrant Holder,
Andersen Consulting LLP
1661 Page Mill Road
Palo Alto, California 94304
Attention: General Counsel
Facsimile: (650) 213-2222
or to such other address as the parties may have furnished to each other in
writing in accordance herewith.
(d) Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
9
<PAGE>
(e) Amendments. This Agreement shall not be altered or otherwise
----------
amended except pursuant to an instrument in writing signed by each of the
parties hereto.
(f) Transferability. The registration and other rights granted to
---------------
the Holder hereunder are non-transferable and cannot be assigned or transferred
in any manner to any third party without the prior written consent of the
Company. Notwithstanding the foregoing, the Warrant Holder may assign the
rights granted to the Warrant Holder herein to any affiliate to whom the Warrant
Holder has transferred the Warrant or Registrable Shares in accordance with the
terms of the Warrant Agreement and the terms hereof will inure to be and be
binding thereon.
(g) CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAWS PROVISIONS TO THE CONTRARY.
(h) No Inconsistent Agreements. The Company shall not enter into
--------------------------
any agreement that is inconsistent with the terms hereof or that will prevent
the Warrant Holder from exercising its rights hereunder.
(i) Successors and Assigns. Except as otherwise provided herein,
----------------------
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
(j) 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.
10
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be duly executed and delivered as of the day and year first above written.
MEDICONSULT.COM, INC.
By: /s/ E. Michael Ingram
------------------------------
Name: E. Michael Ingram
Title: Chief Financial Officer
ANDERSEN CONSULTING LLP
By: /s/ George Smith
------------------------------
Name: George Smith
Title:
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<PAGE>
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<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,088,071
<SECURITIES> 0
<RECEIVABLES> 3,028,171
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<CURRENT-ASSETS> 15,245,289
<PP&E> 4,562,472
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0
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<COMMON> 51,564
<OTHER-SE> 192,407,899
<TOTAL-LIABILITY-AND-EQUITY> 204,389,419
<SALES> 6,224,191
<TOTAL-REVENUES> 6,224,191
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<TOTAL-COSTS> 26,905,451
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