SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM 8-K/A
CURRENT REPORT
(Amendment No. 2)
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 13, 2000
MEDICAL MANAGER CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 0-17822 22-2975182
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
669 River Drive, River Drive Center II,
Elmwood Park, NJ 07407
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 703-3400
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Item 7. Financial Statements and Exhibits
(c) Exhibits.
Item 7(c) of the previous filing on Form 8-K/A, filed on
February 13, 2000, is amended therein by adding the following exhibits, as
attached hereto:
Exhibit 2.1 - Agreement and Plan of Merger between Healtheon/WebMD Corporation
and Medical Manager Corporation, dated February 13, 2000.
Exhibit 2.2 - Agreement and Plan of Merger among Healtheon/WebMD Corporation,
Avicenna Systems Corporation and CareInsite, Inc., dated February
13, 2000.
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EXHIBIT INDEX
Exhibit
No. Description
2.1 Agreement and Plan of Merger between Healtheon/WebMD
Corporation and Medical Manager Corporation, dated February 13,
2000.
2.2 Agreement and Plan of Merger among Healtheon/WebMD
Corporation, Avicenna Systems Corporation and CareInsite, Inc.,
dated February 13, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MEDICAL MANAGER CORPORATION
Date: February 16, 2000 By: /s/ Anthony Vuolo
---------------------------------------
Name: Anthony Vuolo
Title: Senior Vice President, Business
Development
AGREEMENT AND PLAN OF MERGER
dated as of February 13, 2000
between
HEALTHEON/WEBMD CORPORATION
and
MEDICAL MANAGER CORPORATION
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.01. The Merger.......................................................2
SECTION 1.02. Effective Time; Closing..........................................2
SECTION 1.03. Effect of the Merger.............................................3
SECTION 1.04. Certificate of Incorporation; By-Laws............................3
SECTION 1.05. Directors and Officers...........................................3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities.........................................4
SECTION 2.02. Exchange of Certificates.........................................4
SECTION 2.03. Stock Transfer Books.............................................8
SECTION 2.04. Company Stock Options............................................8
SECTION 2.05. Company Warrants.................................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification..................................10
SECTION 3.02. Certificate of Incorporation and Bylaws.........................10
SECTION 3.03. Capitalization..................................................11
SECTION 3.04. Authority Relative to This Agreement............................12
SECTION 3.05. No Conflict; Required Filings and Consents......................12
SECTION 3.06. Permits; Compliance.............................................13
SECTION 3.07. SEC Filings; Financial Statements; Absence of Liabilities.......14
SECTION 3.08. Absence of Certain Changes or Events............................15
SECTION 3.09. Absence of Litigation...........................................15
SECTION 3.10. Employee Benefit Plans..........................................16
SECTION 3.11. Tax Matters.....................................................16
SECTION 3.12. Intellectual Property...........................................17
SECTION 3.13. Taxes...........................................................18
SECTION 3.14. Vote Required...................................................19
SECTION 3.15. Opinion of Financial Advisor....................................19
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SECTION 3.16. Brokers.........................................................19
SECTION 3.17. Contracts.......................................................19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
SECTION 4.01. Organization and Qualification..................................20
SECTION 4.02. Certificate of Incorporation and By-Laws........................21
SECTION 4.03. Capitalization..................................................21
SECTION 4.04. Authority Relative to This Agreement............................22
SECTION 4.05. No Conflict; Required Filings and Consents......................22
SECTION 4.06. Permits; Compliance.............................................23
SECTION 4.07. SEC Filings; Financial Statements; Absence of Liabilities.......23
SECTION 4.08. Absence of Certain Changes or Events............................24
SECTION 4.09. Absence of Litigation...........................................24
SECTION 4.10. Employee Benefit Plans..........................................25
SECTION 4.11. Tax Matters.....................................................26
SECTION 4.12. Intellectual Property...........................................26
SECTION 4.13. Taxes...........................................................27
SECTION 4.14. Vote Required...................................................28
SECTION 4.15. Opinion of Financial Advisor....................................28
SECTION 4.16. Brokers.........................................................28
SECTION 4.17. Contracts.......................................................28
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the Merger...........28
SECTION 5.02. Conduct of Business by Parent Pending the Merger................32
SECTION 5.03. Adverse Changes in Condition....................................34
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement; Joint Proxy Statement...................34
SECTION 6.02. Stockholders' Meetings..........................................36
SECTION 6.03. Access to Information; Confidentiality..........................37
SECTION 6.04. No Solicitation of Transactions.................................38
SECTION 6.05. Directors' and Officers' Indemnification and Insurance..........40
SECTION 6.06. Further Action; Consents; Filings...............................41
SECTION 6.07. Plan of Reorganization..........................................42
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SECTION 6.08. Public Announcements............................................43
SECTION 6.09. NASDAQ Listing..................................................43
SECTION 6.10. Conveyance Taxes................................................43
SECTION 6.11. Governance......................................................43
SECTION 6.12. Employee Benefit Matters........................................44
SECTION 6.13. Exemption From Liability Under Section 16(b)....................46
SECTION 6.14. Company Affiliates; Restrictive Legend; Restrictions on
Transfer........................................................47
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party....................47
SECTION 7.02. Conditions to the Obligations of Parent........................48
SECTION 7.03. Conditions to the Obligations of the Company...................49
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination....................................................50
SECTION 8.02. Effect of Termination..........................................51
SECTION 8.03. Amendment......................................................51
SECTION 8.04. Waiver.........................................................52
SECTION 8.05. Expenses.......................................................52
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and Agreements.....54
SECTION 9.02. Notices........................................................55
SECTION 9.03. Certain Definitions............................................56
SECTION 9.04. Severability...................................................58
SECTION 9.05. Assignment; Binding Effect; Benefit............................58
SECTION 9.06. Specific Performance...........................................58
SECTION 9.07. Governing Law; Forum...........................................58
SECTION 9.08. Interpretation.................................................59
SECTION 9.09. Counterparts...................................................59
SECTION 9.10. Entire Agreement...............................................60
SECTION 9.11. WAIVER OF JURY TRIAL...........................................60
SECTION 9.12. Brokers and Finders............................................60
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Glossary of Defined Terms
Location of
Defined Term Definition
affiliate................................................................ss.9.03
Agreement...............................................................Preamble
beneficial owner.........................................................ss.9.03
Blue Sky Laws......................................................ss.3.05(b)(i)
business day.............................................................ss.9.03
CareInsite Merger.......................................................Recitals
CareInsite Merger Agreement.............................................Recitals
CareInsite SEC Reports................................................ss.3.07(a)
Certificate of Merger....................................................ss.1.02
Certificates..........................................................ss.2.02(b)
Claim.................................................................ss.6.05(b)
Closing..................................................................ss.1.02
Closing Date.............................................................ss.1.02
Code....................................................................Recitals
Combined SEC Reports.....................................................3.07(a)
Company.................................................................Preamble
Company Acquisition Proposal..........................................ss.6.04(a)
Company Alternative Transaction Fee...................................ss.8.05(b)
Company Benefit Plans.................................................ss.3.10(a)
Company Board..........................................................Recitals
Company Common Stock...................................................Recitals
Company Disclosure Letter...........................................Article III
Company Insiders.........................................................ss.6.13
Company Licensed Intellectual Property...........................ss.3.12(b)(iii)
Company Material Adverse Effect..........................................ss.3.01
Company Owned Intellectual Property...............................ss.3.12(b)(ii)
Company Permits.......................................................ss.3.06(a)
Company Preferred Stock...............................................ss.3.03(a)
Company SEC Reports...................................................ss.3.07(a)
Company Stock Option..................................................ss.2.04(a)
Company Stock Option Plans............................................ss.2.04(a)
Company Stock Options.................................................ss.2.04(a)
Company Stockholders' Meeting......................................ss.6.01(a)(i)
Company Subsidiaries.....................................................ss.3.01
Company Superior Proposal.....................................ss.6.04(a)(iii)(A)
Company Systems.......................................................ss.3.12(c)
Company Voting Agreement................................................Recitals
Company Warrants......................................................ss.2.05(a)
Confidentiality Agreement.............................................ss.6.03(b)
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Contract.................................................................ss.9.03
control..................................................................ss.9.03
controlled by............................................................ss.9.03
Delaware Law............................................................Recitals
Effective Time...........................................................ss.1.02
employee benefit plan.....................................ss.3.10(a), ss.4.10(a)
ERISA.................................................................ss.3.10(a)
Excess Shares.....................................................ss.2.02(e)(ii)
Exchange Act.......................................................ss.3.05(b)(i)
Exchange Agent........................................................ss.2.02(a)
Exchange Fund.........................................................ss.2.02(a)
Exchange Ratio........................................................ss.2.01(a)
Expenses..............................................................ss.8.05(a)
GAAP..................................................................ss.3.07(b)
Governmental Entity...................................................ss.3.05(b)
HSR Act............................................................ss.3.05(b)(i)
Indemnified Parties...................................................ss.6.05(a)
Intellectual Property.................................................ss.3.12(a)
Knowledge................................................................ss.9.03
Law...............................................................ss.3.05(a)(ii)
Merger..................................................................Recitals
NASD...............................................................ss.3.05(b)(i)
NASDAQ............................................................ss.2.02(e)(ii)
Order.....................................................ss.6.06(c), ss.7.01(d)
Parent..................................................................Preamble
Parent Acquisition Proposal...........................................ss.6.04(b)
Parent Alternative Transaction Fee.............................ss.8.05(c)(ii)(B)
Parent Benefit Plans..................................................ss.4.10(a)
Parent Board............................................................Recitals
Parent By-Laws........................................................ss.4.03(d)
Parent Common Stock.....................................................Recitals
Parent Disclosure Letter..............................................Article IV
Parent Licensed Intellectual Property............................ss.4.12(a)(iii)
Parent Material Adverse Effect...........................................ss.4.01
Parent Options and Warrants...........................................ss.4.03(b)
Parent Owned Intellectual Property................................ss.4.12(a)(ii)
Parent Permits........................................................ss.4.06(a)
Parent Proposal.........................................................Recitals
Parent SEC Reports....................................................ss.4.07(a)
Parent Stockholders' Meeting.......................................ss.6.01(a)(i)
Parent Subsidiaries......................................................ss.4.01
Parent Superior Proposal......................................ss.6.04(b)(iii)(A)
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Parent Systems........................................................ss.4.12(b)
Parent Voting Agreement.................................................Recitals
Pension Plan..........................................................ss.6.12(c)
Permits...............................................................ss.3.06(a)
Person...................................................................ss.9.03
Porex Savings Plan.......................................................6.12(c)
Proxy Statement....................................................ss.6.01(a)(i)
Registration Statement............................................ss.6.01(a)(ii)
Representatives....................................................ss.6.03(a)(i)
Rule 145 Affiliate.......................................................ss.6.14
SEC...................................................................ss.3.07(a)
Section 16 Information...................................................ss.6.13
Securities Act.....................................................ss.3.05(b)(i)
Stockholders' Meetings.............................................ss.6.01(a)(i)
subsidiaries.............................................................ss.9.03
subsidiary...............................................................ss.9.03
Surplus Account.......................................................ss.6.12(c)
Surviving Corporation....................................................ss.1.01
Taxes.............................................................ss.3.13(a)(iv)
Termination Date......................................................ss.8.01(b)
Year 2000 Compliant.......................................ss.3.12(c), ss.4.12(b)
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AGREEMENT AND PLAN OF MERGER dated as of February 13, 2000
(this "Agreement") between HEALTHEON/WEBMD CORPORATION, a Delaware corporation
("Parent"), and MEDICAL MANAGER CORPORATION, a Delaware corporation (the
"Company").
W I T N E S S E T H
WHEREAS, the Boards of Directors of Parent and the Company
have each determined that it is in the best interests of their respective
stockholders for Parent and the Company to combine their respective businesses
upon the terms and conditions set forth herein;
WHEREAS, in furtherance of such business combination, upon the
terms and subject to the conditions of this Agreement and in accordance with the
General Corporation Law of the State of Delaware ("Delaware Law") the Company
will merge with and into Parent (the "Merger");
WHEREAS, the Company Board (the "Company Board") (i) has
determined that the Merger is consistent with and in furtherance of the
long-term business strategy of the Company and has declared this Agreement, the
Merger and the other transactions contemplated hereby to be advisable and (ii)
has recommended that the stockholders of the Company approve and adopt this
Agreement and the Merger (the "Company Proposal");
WHEREAS, the Parent Board (the "Parent Board") (i) has
determined that the Merger is consistent with and in furtherance of the
long-term business strategy of Parent and has declared this Agreement, the
Merger and the other transactions contemplated hereby to be advisable and (ii)
has recommended that the stockholders of Parent approve and adopt this Agreement
and the Merger (the "Parent Proposal");
WHEREAS, CareInsite, Inc., a majority-owned public subsidiary
("CareInsite") of Avicenna Systems Corporation ("ASC"), and ASC have agreed to a
merger (the "CareInsite Merger") whereby CareInsite will merge with and into
ASC, with ASC as the surviving corporation, pursuant to an Agreement and Plan of
Merger dated as of the date hereof among Parent, ASC and CareInsite (the
"CareInsite Merger Agreement");
WHEREAS, the satisfaction or, if permissible, waiver of all of
the conditions precedent to the closing of the CareInsite Merger is a condition
precedent to the closing of the Merger;
WHEREAS, as a condition to the willingness of the parties to
enter into this Agreement, Parent will have entered into a voting agreement,
dated as of the date of this Agreement, with certain members of the Company
Board, each a holder of common stock, par value $.01 per share, of the Company
("Company Common Stock"), pursuant to which each member has agreed, among other
things, to vote its shares of Company Common Stock in favor
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2
of the Company Proposal and to take certain other actions in support of the
Merger (the "Company Voting Agreement");
WHEREAS, as a condition to the willingness of the parties to
enter into this Agreement, the Company will have entered into a voting
agreement, dated as of the date of this Agreement, with certain members of the
Parent Board and certain significant holders of shares of common stock, par
value $.0001 per share, of the Parent (the "Parent Common Stock"), pursuant to
which each of them has entered into an agreement to, among other things, vote
its shares of Parent Common Stock in favor of the Parent Proposal and to take
certain other actions in support of the Merger and Parent hereby agrees to use
its best efforts to cause the Persons listed in Section 1.0 of the Parent
Disclosure Letter (as defined below) to execute counterparts of such agreements
as soon as possible following the date hereof (the "Parent Voting Agreement");
WHEREAS, as a condition to the willingness of the parties to
enter into this Agreement, (i) Medical Manager Health Systems Inc., CareInsite
and Parent have entered into the Interchange Agreement, dated as of the date
hereof and (ii) CareInsite, Parent, and ASC have entered into the CareInsite
Merger Agreement; and
WHEREAS, for federal income tax purposes, the Merger is
intended to qualify as a reorganization under the provisions of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Section 251 of
Delaware Law, at the Effective Time (as defined below in Section 1.02), the
Company shall be merged with and into Parent. As a result of the Merger, the
separate corporate existence of the Company shall cease and Parent shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation").
SECTION 1.02. Effective Time; Closing. The closing of the
transactions contemplated hereby (the "Closing") shall take place on the first
business day after the satisfaction or, if permissible, waiver of the conditions
set forth in Article VII (other than those that by their nature will be
satisfied on the Closing Date, as defined below) or on such other date
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3
as Parent and the Company shall agree in writing (such date, the "Closing
Date"). On the Closing Date, the parties hereto shall cause the Merger to be
consummated by filing a certificate of merger (the "Certificate of Merger") with
the Secretary of State of the State of Delaware, in such form as is required by,
and executed and acknowledged in accordance with, Section 251 of Delaware Law.
The term "Effective Time" means the date and time of the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware (or
such later time as may be agreed by the parties hereto and specified in the
Certificate of Merger). The Closing will be held at the offices of counsel to
Parent (or such other place as the parties may agree).
SECTION 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of the Company and Parent shall vest in the Surviving Corporation,
and all debts, liabilities, obligations, restrictions, disabilities and duties
of each of the Company and Parent shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving Corporation.
SECTION 1.04. Certificate of Incorporation; By-Laws. (a) At
the Effective Time, the Certificate of Incorporation of Parent, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by Delaware Law.
(b) At the Effective Time, the By-Laws of Parent, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended as provided by Delaware Law, the
Certificate of Incorporation of the Surviving Corporation and such By-Laws.
SECTION 1.05. Directors and Officers. The directors of Parent
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of
Parent immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of Parent, the
Company or the holders of any of the following securities:
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(a) each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than any
shares of Company Common Stock to be cancelled pursuant to Section
2.01(b)) shall be canceled and shall be converted, subject to Section
2.02(e), into the right to receive 1.65 shares (the "Exchange Ratio")
of Parent Common Stock; provided, however, that, if between the date of
this Agreement and the Effective Time the outstanding shares of Parent
Common Stock or of Company Common Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Exchange Ratio shall be
correspondingly adjusted to the extent appropriate to reflect such
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares; and
(b) each share of Company Common Stock held in the
treasury of the Company and each share of Company Common Stock owned by
Parent or any direct or indirect wholly owned subsidiary of Parent
immediately prior to the Effective Time shall be cancelled and
extinguished without any conversion thereof and no payment or
distribution shall be made with respect thereto.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent.
Parent shall deposit, or shall cause to be deposited, with a bank or trust
company designated by Parent and reasonably satisfactory to the Company (the
"Exchange Agent"), for the benefit of the holders of shares of Company Common
Stock, for exchange in accordance with this Article II through the Exchange
Agent, certificates representing the shares of Parent Common Stock issuable
pursuant to Section 2.01(a) as of the Effective Time, cash in lieu of any
fractional shares pursuant to Section 2.02(e) and any dividends or other
distributions pursuant to Section 2.02(c) (such certificates for shares of
Parent Common Stock, together with cash in lieu of fractional shares and any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver out of the Exchange Fund the Parent Common Stock
contemplated to be issued pursuant to Section 2.01(a), the cash in lieu of
fractional shares of Parent Common Stock to be paid pursuant to Section 2.02(e)
and any dividends or other distributions pursuant to Section 2.02(c). Except as
contemplated by Section 2.02(f) hereof, the Exchange Fund shall not be used for
any other purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, and in any event not later than five business days, Parent shall
cause the Exchange Agent to mail to each holder of record (as of the Effective
Time) of a certificate or certificates which immediately prior to the Effective
Time represented outstanding shares of Company Common Stock (the "Certificates")
whose shares were converted into the right to receive shares of Parent Common
Stock pursuant to Section 2.01(a), cash in lieu of fractional shares of Parent
Common Stock to be paid pursuant to Section 2.02(e) and any dividends or other
distributions pursuant to Section 2.02(c), (i) a letter of transmittal (which
shall be in customary form and shall specify that
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delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock and cash in
lieu of any fractional shares and any dividends or other distributions pursuant
to Section 2.02(c). Upon surrender to the Exchange Agent of a Certificate for
cancellation, together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, and such other documents
as may be reasonably required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Parent Common Stock which such
holder has the right to receive in respect of the shares of Company Common Stock
formerly represented by such Certificate (after taking into account all shares
of Company Common Stock then held by such holder), cash in lieu of any
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.02(e) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.02(c), and the Certificate so
surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of shares of Company Common Stock which is not registered in the
transfer records of the Company, a certificate representing the proper number of
shares of Parent Common Stock, cash in lieu of any fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section 2.02(e) and
any dividends or other distributions to which such holder is entitled pursuant
to Section 2.02(c) may be issued to a transferee if the Certificate representing
such shares of Company Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.02(b), each Certificate shall be
deemed at all times after the Effective Time to represent only the right to
receive upon such surrender the certificate representing shares of Parent Common
Stock, cash in lieu of any fractional shares of Parent Common Stock to which
such holder is entitled pursuant to Section 2.02(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.02(c).
(c) Distributions with Respect to Unexchanged Shares of Parent
Common Stock. No dividends or other distributions declared or made after the
Effective Time with respect to the Parent Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock represented thereby, and no
cash payment in lieu of any fractional shares shall be paid to any such holder
pursuant to Section 2.02(e), until the holder of such Certificate shall
surrender such Certificate. Subject to the effect of escheat, tax or other
applicable Laws (as defined in Section 3.05), following surrender of any such
Certificate, there shall be paid to the holder of the certificates representing
whole shares of Parent Common Stock issued in exchange therefor, without
interest, (i) promptly, the amount of any cash payable with respect to a
fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 2.02(e) and the amount of dividends or other distributions
with a record date after the Effective Time and theretofore paid with respect to
such whole shares of Parent Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions, with a record date after
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the Effective Time but prior to surrender and a payment date occurring after
surrender, payable with respect to such whole shares of Parent Common Stock.
(d) No Further Rights in Company Common Stock. All shares of
Parent Common Stock issued upon conversion of shares of Company Common Stock in
accordance with the terms hereof (including any cash paid pursuant to Section
2.02(c) or (e)) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution with respect
to Parent Common Stock shall be payable on or with respect to any fractional
share and such fractional share interests will not entitle the owner thereof to
any rights of a stockholder of Parent.
(ii) As promptly as practicable following the Effective Time,
the Exchange Agent shall determine the excess of (x) the number of full shares
of Parent Common Stock delivered to the Exchange Agent by Parent pursuant to
Section 2.02(a) over (y) the aggregate number of full shares of Parent Common
Stock to be distributed to holders of Company Common Stock pursuant to Section
2.02(b) (such excess being herein called the "Excess Shares"). As soon after the
Effective Time as practicable, the Exchange Agent, as agent for such holders of
Parent Common Stock, shall sell the Excess Shares at then prevailing prices on
the National Market System of the Nasdaq Stock Market ("NASDAQ"), all in the
manner provided in paragraph (iii) of this Section 2.02(e).
(iii) The sale of the Excess Shares by the Exchange Agent
shall be executed on the NASDAQ through one or more member firms of the NASDAQ
and shall be executed in round lots to the extent practicable. Until the net
proceeds of any such sale or sales have been distributed to such holders of
Company Common Stock, the Exchange Agent will hold such proceeds in trust for
such holders of Company Common Stock as part of the Exchange Fund. Parent shall
pay all commissions, transfer taxes and other out-of-pocket transaction costs of
the Exchange Agent incurred in connection with such sale or sales of Excess
Shares. In addition, Parent shall pay the Exchange Agent's compensation and
expenses in connection with such sale or sales. The Exchange Agent shall
determine the portion of such net proceeds to which each holder of Company
Common Stock shall be entitled, if any, by multiplying the amount of the
aggregate net proceeds by a fraction the numerator of which is the amount of the
fractional share interest to which such holder of Company Common Stock is
entitled (after taking into account all shares of Company Common Stock then held
by such holder) and the denominator of which is the aggregate amount of
fractional share interests to which all holders of Certificates representing
Company Common Stock are entitled.
(iv) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Company Common Stock with
respect to any fractional share
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interests, the Exchange Agent shall promptly pay such amounts to such holders of
Company Common Stock subject to and in accordance with the terms of Section
2.02(c).
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of Company Common Stock for 180
days after the Effective Time shall be delivered to Parent, upon demand, and any
holders of the Company Common Stock who have not theretofore complied with this
Article II shall thereafter look only to Parent for the shares of Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock to which
they are entitled pursuant to Section 2.02(e) and any dividends or other
distributions with respect to the Parent Common Stock to which they are entitled
pursuant to Section 2.02(c).
(g) No Liability. Neither Parent nor the Surviving Corporation
shall be liable to any holder of shares of Company Common Stock for any such
shares of Company Common Stock (or dividends or distributions with respect
thereto), or cash lawfully delivered to a public official pursuant to any
abandoned property, escheat or similar Law.
(h) Withholding Rights. Each of the Exchange Agent, the
Surviving Corporation and Parent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as it may be required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax Law. To the extent that amounts are so
withheld by the Exchange Agent, the Surviving Corporation or Parent, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made by the
Surviving Corporation or Parent, as the case may be.
(i) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Parent Common Stock, any cash in lieu of fractional
shares of Parent Common Stock to which the holders thereof are entitled pursuant
to Section 2.02(e) and any dividends or other distributions to which the holders
thereof are entitled pursuant to Section 2.02(c).
SECTION 2.03. Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company. From and after the Effective Time, the holders of
Certificates representing shares of Company Common Stock outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
shares of Company Common Stock, except as otherwise provided in
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8
this Agreement or by Law. On or after the Effective Time, any Certificates
presented to the Exchange Agent or Parent for any reason shall be converted into
shares of Parent Common Stock, any cash in lieu of fractional shares of Parent
Common Stock to which the holders thereof are entitled pursuant to Section
2.02(e) and any dividends or other distributions to which the holders thereof
are entitled pursuant to Section 2.02(c).
SECTION 2.04. Company Stock Options. (a) At the Effective
Time, each outstanding stock option (each a "Company Stock Option" and
collectively, the "Company Stock Options") granted pursuant to the terms and
conditions of the Company's stock option plans and arrangements (collectively,
the "Company Stock Option Plans"), whether or not exercisable, shall be
converted into and become rights with respect to Parent Common Stock, and the
Parent shall assume the Company's obligations with respect to each Company Stock
Option and the related Company Stock Option Plan, in accordance with its terms,
except that from and after the Effective Time, (i) Parent and its compensation
committee shall be substituted for the Company and the committee of the
Company's Board of Directors (including, if applicable, the entire Company
Board) administering the Company Stock Option Plan, if any, under which such
Company Stock Option was granted or otherwise governed, (ii) each Company Stock
Option assumed by Parent may be exercised solely for shares of Parent Common
Stock, (iii) the number of shares of Parent Common Stock subject to such Company
Stock Option shall be equal to the number of whole shares (rounded to the
nearest whole share) of Company Common Stock subject to such Company Stock
Option immediately prior to the Effective Time multiplied by the Exchange Ratio,
(iv) the per share exercise price under each such Company Stock Option shall be
adjusted by dividing the per share exercise price under each such Company Stock
Option by the Exchange Ratio and rounding to the nearest whole cent, and (v) all
references in the Company Stock Option Plans and the stock option certificates
and agreements to the Company (or its predecessors) shall be deemed to refer to
Parent. Notwithstanding the provisions of clauses (iii) and (iv) of the first
sentence of this Section 2.04(a), each Company Stock Option which is an
"incentive stock option" shall be adjusted as required by Section 424 of the
Code, and the regulations promulgated thereunder, so as not to constitute a
modification, extension or renewal of such Company Stock Option, within the
meaning of Section 424(h) of the Code.
(b) As soon as practicable after the Effective Time, Parent
shall deliver to the holders of Company Stock Options appropriate documentation
evidencing the foregoing assumption by Parent of such Company Stock Options and
the related Company Stock Option Plan and the agreements evidencing such Company
Stock Options shall continue in effect on the same terms and conditions (subject
to adjustments required by this Section 2.04 after giving effect to the Merger
and the provisions set forth above). Parent shall comply with the terms of the
Company Stock Option Plans and ensure, to the extent lawful, and subject to the
provisions of the applicable Company Stock Option Plan, that Company Stock
Options which qualified as incentive stock options prior to the Effective Time
of the Merger continue to qualify as incentive stock options after the Effective
Time of the Merger.
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9
(c) Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery upon the exercise of Company Stock Options.
(d) Parent agrees to file, as of the Effective Time, a
registration statement on Form S-8 for the shares of Parent Common Stock
issuable with respect to the Company Stock Options and shall maintain the
effectiveness of such registration statement thereafter for so long as any such
Company Stock Options remain outstanding.
SECTION 2.05. Company Warrants. (a) At the Effective Time,
Parent shall assume the obligations of the Company under any warrant or other
rights to purchase shares of Company Common Stock (the "Company Warrants")
outstanding at the Effective Time, whether or not the Company Warrants are then
exercisable. Thereafter, the Company Warrants shall represent the right to
receive upon exercise the number of shares of Parent Common Stock equal to the
product of (i) the Exchange Ratio and (ii) the number of shares of Company
Common Stock for which such Company Warrant could be exercised at any time, with
such product rounded to the nearest whole share. The per share exercise price
under each such Company Warrant shall be adjusted by dividing the per share
exercise price under each such Company Warrant by the Exchange Ratio and
rounding to the nearest whole cent. At the Effective Time, (i) all references in
the instruments evidencing the Company Warrants to the Company shall be deemed
to refer to Parent and (ii) Parent shall assume all of the Company's obligations
under such instruments with respect to such Company Warrants as so amended.
(b) As soon as practicable after the Effective Time of the
Merger, Parent shall deliver to the holders of the Company Warrants
documentation evidencing the foregoing assumption by Parent of such Company
Warrants.
(c) Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery upon exercise of the Company Warrants.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Letter of even date
herewith delivered by the Company to Parent concurrently with the execution of
this Agreement (the "Company Disclosure Letter") (it being agreed that
disclosure of an item or fact in any section of the Company Disclosure Letter
shall not be deemed disclosed with respect to any other section of the Company
Disclosure Letter), the Company hereby represents and warrants to Parent that:
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10
SECTION 3.01. Organization and Qualification. The Company is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Delaware. The Company has all corporate power and authority
to own, lease and operate its properties and to carry on its business as it is
now being conducted. Each subsidiary of the Company (collectively, the "Company
Subsidiaries") is a corporation duly incorporated, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted. Each of the Company
and the Company Subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would not have
a Company Material Adverse Effect (as defined below). The term "Company Material
Adverse Effect" means an event, change or occurrence which, individually or
together with any other event, change or occurrence, has a material adverse
effect on (i) the financial position, business, or results of operations of the
Company and the Company Subsidiaries, taken as a whole, or (ii) the ability of
the Company to perform its obligations under this Agreement or to consummate the
Merger or the other transactions contemplated by this Agreement, but shall not
include (x) any adverse effect due to changes, after the date of this Agreement,
in conditions generally affecting (1) the healthcare or electronic commerce
industries or (2) the U.S. economy as a whole, (y) any change or adverse effect
caused by, or relating to, the announcement of this Agreement or the
transactions contemplated hereby, or (z) any adverse effect due to legal or
regulatory changes, effective after the date of this Agreement; provided that
any order or regulatory action specifically related to the Company may be
considered in determining the existence of a Company Material Adverse Effect.
SECTION 3.02. Certificate of Incorporation and Bylaws. The
Company has heretofore furnished to Parent complete and correct copies of the
Certificate of Incorporation and the By-Laws, each as amended to the date of
this Agreement, of the Company. Such Certificate of Incorporation and By-Laws
are in full force and effect. Neither the Company nor any Company Subsidiary is
in violation of any provision of its Certificate of Incorporation, By-Laws or
equivalent organizational documents.
SECTION 3.03. Capitalization. (a) The authorized capital stock
of the Company consists of (a) 300,000,000 shares of Company Common Stock and
(b) 10,000,000 shares of preferred stock, par value $.01 per share (the "Company
Preferred Stock"). As of the date hereof, (i) 35,704,665 shares of Company
Common Stock were issued and outstanding (plus any shares issued upon exercise
of Company Stock Options since February 11, 2000), all of which are validly
issued, fully paid and nonassessable and (ii) 5,268,463 shares of Company Common
Stock are held in the treasury of the Company. As of the date of this Agreement,
no shares of the Company Preferred Stock were issued and outstanding. The
Company has no other capital stock authorized, issued or outstanding.
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11
(b) As of February 11, 2000, (i) 17,779,543 shares of Company
Common Stock were subject to issuance pursuant to outstanding Company Stock
Options, (ii) 170,911 shares of Company Common Stock were subject to issuance
pursuant to outstanding Company Warrants and (iii) 138,354 securities
convertible into 2,305,900 shares of Company Common Stock were outstanding. The
Company Disclosure Letter sets forth, with respect to the Company Stock Options
outstanding as of February 11, 2000, the aggregate number of shares of Company
Common Stock subject to Company Stock Options under each Company Stock Option
Plan and the weighted average exercise price of such Company Stock Options. The
Company Disclosure Letter also lists the names of all individuals or entities
who own Company Warrants, together with the number of shares of Company Common
Stock subject to such Company Warrants and the exercise prices of such Company
Warrants. No options, warrants or other rights to acquire shares of Company
Common Stock have been granted from February 11, 2000 to the date of this
Agreement.
(c) Except for (i) Company Stock Options granted pursuant to
the Company Stock Option Plans, (ii) stock options granted pursuant to the
CareInsite stock option plans and arrangements described in Section 2.04 of the
CareInsite Merger Agreement, and (iii) the Company Warrants, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of the Company or
any Company Subsidiary or obligating the Company or any Company Subsidiary to
issue or sell any shares of capital stock of, or other equity interests in, the
Company or any Company Subsidiary. All shares of Company Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of Company Common Stock or any capital
stock of any Company Subsidiary. Each outstanding share of capital stock of each
Company Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by the Company or another Company
Subsidiary is free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on the Company's or
such other Company Subsidiary's voting rights, charges and other encumbrances of
any nature whatsoever. There are no outstanding contractual obligations of the
Company or any Company Subsidiary to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any Company
Subsidiary, other than a Company Subsidiary that is wholly owned by the Company
and other Company Subsidiaries, or any other Person.
(d) On a fully exercised and converted to Company Common Stock
basis, the number of shares of Company Common Stock outstanding on the date
hereof would be 55,961,019.
SECTION 3.04. Authority Relative to This Agreement. The
Company has all necessary corporate power and authority to execute and deliver
this Agreement and, subject to the terms and conditions of this Agreement and
the approval of this Agreement by the holders of
<PAGE>
12
a majority of then outstanding shares of Company Common Stock, to perform its
obligations hereunder and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this Agreement
have been duly and validly authorized by all necessary corporate action and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the Merger and the other transactions
contemplated by this Agreement (other than, with respect to the Merger, the
approval of the Company Proposal by the holders of a majority of then
outstanding shares of Company Common Stock and the filing and recordation of
appropriate merger documents as required by Delaware Law and subject to the
terms and conditions of this Agreement). This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent, constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
Laws now or hereafter in effect relating to creditors' rights and by general
equitable principles (regardless of whether enforceability is considered in a
proceeding in equity or at Law).
SECTION 3.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Certificate of Incorporation or By-Laws of the Company or any
equivalent organizational documents of any Company Subsidiary, (ii) assuming
that all consents, approvals, authorizations and other actions described in
Section 3.05(b) have been obtained and all filings and obligations described in
Section 3.05(b) have been made, conflict with or violate any federal, state or
local statute, law, ordinance, regulation, rule, code, order, judgment or decree
of the United States of America or any foreign, state or local regulatory agency
or other Governmental Entity (as defined below) or any other jurisdiction and
any enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment (collectively, the
"Law") applicable to the Company or any Company Subsidiary or by which any
property or asset of the Company or any Company Subsidiary is bound or affected,
(iii) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any right of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or other encumbrance on any property or asset of the
Company or any Company Subsidiary pursuant to, any Contract, or (iv) result in
any drag along or tag along rights of any stockholder of any Company Subsidiary,
except, with respect to clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences that would not have a
Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any domestic or foreign governmental or regulatory authority
("Governmental Entity"), except (i) for applicable requirements, if any, of
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13
the Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "Exchange Act") and the Securities Act
of 1933, as amended (together with the rules and regulations promulgated
thereunder, the "Securities Act"), state securities or "blue sky" Laws ("Blue
Sky Laws"), the Rules of the National Association of Securities Dealers
("NASD"), state takeover Laws, the pre-merger notification requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act"), filings or approvals required under
the competition Laws of foreign jurisdictions, and the filing and recordation of
the Certificate of Merger as required by the Delaware Law, and (ii) for such
consents, approvals, authorizations or permits, or such filings or
notifications, the failure to obtain or to make as would not prevent
consummation of the Merger and would not have a Company Material Adverse Effect.
SECTION 3.06. Permits; Compliance. (a) Except as set forth in
the Combined SEC Reports (as defined in Section 3.07), the Company and the
Company Subsidiaries are in possession of, and is in compliance with the terms
of, all federal, state, local, and foreign governmental approval, authorization,
certificate, consent, easement, filing, franchise, letter of good standing,
license, notice, permit, qualification, registration or right of or from any
Governmental Entity (or any extension, modification, amendment or waiver of any
of these), or any notice, statement, filing or other communication to be filed
with or delivered to any Governmental Entity ("Permits") that are required for
the operation of the business of the Company and the Company Subsidiaries, taken
as a whole, as they are operated on the date hereof except for such Permits, the
absence of which would not have a Company Material Adverse Effect (collectively,
the "Company Permits"). Except as set forth in the Combined SEC Reports, no
suspension or cancellation of any Company Permit is pending or, to the Knowledge
(as defined in Section 9.03) of the Company, threatened, except with respect to
Company Permits the suspension or cancellation of which would not have a Company
Material Adverse Effect.
(b) Except as set forth in the Combined SEC Reports and as
would not have a Company Material Adverse Effect, the business of the Company
and the Company Subsidiaries has been and is being conducted in compliance with
all applicable Laws. Except as set forth in the Combined SEC Reports and as
would not have a Company Material Adverse Effect, neither the Company nor any
Company Subsidiary is in conflict with, or has violated any provision of, or
committed or failed to perform any act which, with or without notice, lapse of
time, or both, would constitute a default under the provisions of (i) any Law
applicable to the Company or any Company Subsidiary or by which any property or
asset of the Company or any Company Subsidiary is bound or affected or (ii) any
Company Permit. Except as set forth in the Combined SEC Reports and those which
would not have a Company Material Adverse Effect, (i) no investigation or review
by any Governmental Entity with respect to the Company or the Company
Subsidiaries is pending or, to the Knowledge of the Company, threatened in
writing; and (ii) neither the Company nor any of the Company Subsidiaries has
received any written communication in the past two years from any Governmental
Entity that alleges that the Company or any of the Company Subsidiaries is not
in compliance in any material respect with any applicable Law.
<PAGE>
14
SECTION 3.07. SEC Filings; Financial Statements; Absence of
Liabilities. (a) The Company has filed all forms, reports and documents required
to be filed by it with the Securities and Exchange Commission (the "SEC") since
July 1, 1998 (collectively, the "Company SEC Reports"), and CareInsite has filed
all forms, reports and documents required to be filed by it with the SEC since
June 15, 1999 (collectively, the "CareInsite SEC Reports" and together with the
Company SEC Reports, the "Combined SEC Reports"). As of the respective dates
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, on the date of such amending or superseding filing), (i) the
Combined SEC Reports complied in all material respects in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(ii) none of the Combined SEC Reports contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Except for CareInsite,
no Company Subsidiary is required to file any form, report or other document
with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any notes and schedules thereto) contained in the Combined SEC
Reports complied as to form with the applicable accounting requirements and
rules and regulations of the SEC and was prepared in accordance with United
States generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods indicated (except as may be indicated in the notes
thereto
<PAGE>
15
or, in the case of unaudited financial statements, as permitted by Form 10-Q of
the SEC), and each presented fairly, in all material respects, the consolidated
financial position of the Company and the consolidated Company Subsidiaries as
at the respective dates thereof and their results of operations and cash flows
for the respective periods indicated therein, all in accordance with GAAP
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments which were not and are not expected to be material in amount).
(c) Except for liabilities and obligations reflected on the
consolidated balance sheet of the Company as of December 31, 1999 (including the
notes thereto), liabilities and obligations incurred in the ordinary course of
business consistent with past practice since December 31, 1999 and other
liabilities and obligations that would not have a Company Material Adverse
Effect, neither the Company nor any Company Subsidiary has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
which would be required to be reflected on a balance sheet prepared in
accordance with GAAP.
SECTION 3.08. Absence of Certain Changes or Events. During the
period commencing December 31, 1999 and ending on the date of this Agreement,
there has not been:
(a) a Company Material Adverse Effect;
(b) any event, condition or occurrence which is
reasonably likely to have a Company Material Adverse Effect; or
(c) except as set forth in the Combined SEC Reports or
as disclosed in connection with the other representations and
warranties of the Company in this Agreement, any event that, if taken
during the period from the date of this Agreement through the Effective
Time, would constitute a breach of Sections 5.01(c) through (g) and (o)
hereof.
SECTION 3.09. Absence of Litigation. (a) As of the date of
this Agreement, there is no litigation, suit, claim, action, proceeding or
investigation pending or, to the Knowledge of the Company, threatened against
the Company or any Company Subsidiary, or any property or asset of the Company
or any Company Subsidiary, by or before any court, arbitrator or Governmental
Entity, domestic or foreign, except as set forth in the Combined SEC Reports and
would not have a Company Material Adverse Effect.
(b) Except as set forth in the Combined SEC Reports and as
would not have a Company Material Adverse Effect, as of the date of this
Agreement, neither the Company nor any Company Subsidiary nor any property or
asset of the Company or any Company Subsidiary is subject to any continuing
order of, consent decree, settlement agreement or other similar written
agreement with, or, to the Knowledge of the Company, continuing investigation
by, any
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16
Governmental Entity, or any order, writ, judgment, injunction, decree,
determination or award of any Governmental Entity or arbitrator.
SECTION 3.10. Employee Benefit Plans. (a) With respect to each
employee benefit plan, program, arrangement and contract (including, without
limitation, any "employee benefit plan", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
maintained or contributed to by the Company or any Company Subsidiary with
respect to any current or former director, officer or employee of the Company or
any Company Subsidiary, or with respect to which the Company or any Company
Subsidiary could incur liability under Section 4069, 4201 or 4212(c) of ERISA
(the "Company Benefit Plans"), the Company has made available to Parent a true
and correct copy of (i) the most recent annual report (Form 5500) filed with the
Internal Revenue Service (the "IRS"), (ii) such Company Benefit Plan, (iii) each
trust agreement relating to such Company Benefit Plan, (iv) the most recent
summary plan description for each Company Benefit Plan for which a summary plan
description is required, (v) the most recent actuarial report or valuation
relating to a Company Benefit Plan subject to Title IV of ERISA, if any, and
(vi) the most recent determination letter, if any, issued by the IRS with
respect to any Company Benefit Plan qualified under Section 401(a) of the Code.
(b) With respect to the Company Benefit Plans, no event has
occurred and, to the knowledge of the Company, there exists no condition or set
of circumstances, in connection with which the Company or any Company Subsidiary
could be subject to any liability under the terms of such Company Benefit Plans,
ERISA, the Code or any other applicable Law except as would not have a Company
Material Adverse Effect. Neither the Company nor any Company Subsidiary has any
actual or contingent material liability under Title IV of ERISA (other than the
payment of premiums to the Pension Benefit Guaranty Corporation). None of the
Company Benefit Plans is a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA).
(c) The Company has made available to Parent (i) copies of all
employment agreements and severance agreements with executive officers of the
Company or CareInsite and (ii) copies of all plans, programs, agreements and
other arrangements of the Company or any Company Subsidiary with or relating to
its or such Company Subsidiary's employees which contain change in control
provisions. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
"golden parachute" or otherwise) becoming due to any director, officer or
employee of the Company or any Company Subsidiary under any Company Benefit Plan
or otherwise, (ii) increase any benefits otherwise payable under any Company
Benefit Plan or (iii) result in any acceleration of the time of payment or
vesting of any benefits (including under the Company Stock Option Plans).
(d) No Company Benefit Plan provides retiree medical or
retiree life insurance benefits to any person (except to the extent required by
law).
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17
SECTION 3.11. Tax Matters. To the Knowledge of the Company,
neither the Company nor any of its affiliates has taken or agreed to take any
action that would prevent the Merger from constituting a transaction qualifying
as a reorganization under Section 368(a) of the Code. To the Knowledge of the
Company, there are no agreements, plans or other circumstances that would
prevent the Merger from qualifying under Section 368(a) of the Code.
SECTION 3.12. Intellectual Property. (a) "Intellectual
Property" means (i) patents, patent applications and statutory invention
registrations, (ii) trademarks, service marks, URLs, trade dress, logos, trade
names, corporate names, and other source identifiers, and registrations and
applications for registration thereof, (iii) copyrightable works, copyrights,
and registrations and applications for registration thereof, (iv) all computer
programs, whether in source code, object code or other form (including without
limitation any embedded in or otherwise constituting part of a computer hardware
device) and all databases and data collections, and (v) confidential and
proprietary information, including trade secrets and know-how.
(b) Except as set forth in the Combined SEC Reports and as
would not have a Company Material Adverse Effect, (i) to the Knowledge of the
Company, the conduct of the business of the Company and the Company Subsidiaries
as currently conducted does not infringe or misappropriate the Intellectual
Property of any third party, and to the Knowledge of the Company, no claim has
been asserted to the Company that the conduct of the business of the Company and
the Company Subsidiaries as currently conducted infringes or may infringe or
misappropriates the Intellectual Property of any third party, (ii) with respect
to each item of Intellectual Property owned by the Company and the Company
Subsidiaries and material to the businesses of the Company and the Company
Subsidiaries as currently conducted ("Company Owned Intellectual Property"), the
Company or a Company Subsidiary is the owner of the entire right, title and
interest in and to such Intellectual Property and is entitled to use such
Intellectual Property in the continued operation of its respective business,
(iii) with respect to each item of Intellectual Property licensed to the Company
or a Company Subsidiary that is material to the businesses of the Company and
the Company Subsidiaries as currently conducted ("Company Licensed Intellectual
Property"), the Company or a Company Subsidiary has the right to use such
Company Licensed Intellectual Property in the continued operation of its
respective business in accordance with the terms of the license agreement
governing such Company Licensed Intellectual Property, (iv) to the Knowledge of
the Company, the Company Owned Intellectual Property is valid and enforceable,
and has not been adjudged invalid or unenforceable in whole or part, (v) to the
Knowledge of the Company, no person is engaging in any activity that infringes
the Company Owned Intellectual Property, (vi) to the Knowledge of the Company,
each license of Company Licensed Intellectual Property is valid and enforceable,
is binding on all parties to such license, and is in full force and effect,
except to the extent expired in accordance with its terms, and (vii) to the
Knowledge of the Company, no party to any license of the Company Licensed
Intellectual Property is in breach thereof or default thereunder.
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(c) Except as set forth in the Combined SEC Reports and as
would not have a Company Material Adverse Effect, to the Knowledge of the
Company, all Company Systems and Company Owned Intellectual Property are Year
2000 Compliant. For purposes hereof, "Company Systems" shall mean all computer,
hardware, software, systems, and equipment (including embedded microcontrollers
in non-computer equipment) material to or necessary for the Company to carry on
its business as currently conducted. For purposes hereof, "Year 2000 Compliant"
means that the Company Systems and Company Owned Intellectual Property provide
uninterrupted millennium functionality in that the Company Systems and Company
Owned Intellectual Property will record, store, process and present calendar
dates falling on or after January 1, 2000, in the same manner and with the same
functionality as the Company Systems and Company Owned Intellectual Property
record, store, process, and present calendar dates falling on or before December
31, 1999.
SECTION 3.13. Taxes. (a) Except as would not have a Company
Material Adverse Effect, (i) the Company and each of the Company Subsidiaries
have timely filed or will timely file all returns and reports required to be
filed by them with any taxing authority with respect to Taxes for any period
ending on or before the Effective Time, taking into account any extension of
time to file granted to or obtained on behalf of the Company and the Company
Subsidiaries, (ii) all Taxes that are due prior to the Effective Time have been
paid or will be paid (other than Taxes which (A) are not yet delinquent or (B)
are being contested in good faith and have not been finally determined), (iii)
as of the date of this Agreement, no deficiency for any Tax has been asserted or
assessed by a taxing authority against the Company or any of the Company
Subsidiaries and (iv) the Company and each of the Company Subsidiaries have
provided adequate reserves in accordance with generally accepted accounting
principles in their financial statements for any Taxes that have not been paid,
whether or not shown as being due on any returns. As used in this Agreement,
"Taxes" shall mean any and all taxes, fees, levies, duties, tariffs, imposts and
other charges of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any government or taxing authority, including, without limitation: taxes or
other charges on or with respect to income, franchises, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation or
net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added or gains taxes; license, registration and
documentation fees; and customers' duties, tariffs and similar charges.
(b) To the Knowledge of the Company, there are no material
disputes pending, or claims asserted in writing for, Taxes or assessments upon
the Company or any of the Company Subsidiaries, nor has the Company or any of
the Company Subsidiaries been requested in writing to give any currently
effective waivers extending the statutory period of limitation applicable to any
federal or state income tax return for any period which disputes, claims,
assessments or waivers are reasonably likely to have a Company Material Adverse
Effect.
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19
(c) There are no Tax liens upon any property or assets of the
Company or any of the Company Subsidiaries except liens for current Taxes not
yet due and except for liens which have not had and are not reasonably likely to
have a Company Material Adverse Effect.
(d) Neither the Company nor any of the Company Subsidiaries
has been required to include in income any adjustment pursuant to Section 481 of
the Code by reason of a voluntary change in accounting method initiated by the
Company or any of the Company Subsidiaries, and the IRS has not initiated or
proposed any such adjustment or change in accounting method, in either case
which adjustment or change has had or is reasonably likely to have a Company
Material Adverse Effect.
(e) Except as set forth in the financial statements described
in Section 3.07, neither the Company nor any of the Company Subsidiaries has
entered into a transaction which is being accounted for under the installment
method of Section 453 of the Code, which would be reasonably likely to have a
Company Material Adverse Effect.
SECTION 3.14. Vote Required. The only vote of the holders of
any class or series of capital stock of the Company necessary to approve the
Company Proposal is the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock.
SECTION 3.15. Opinion of Financial Advisor. The Company has
received the opinions of Merrill Lynch & Co., Warburg Dillon Reed LLC and
Donaldson, Lufkin & Jenrette Securities Corporation dated February 13, 2000
that, as of such date, the Exchange Ratio is fair, from a financial point of
view, to the stockholders of the Company.
SECTION 3.16. Brokers. No broker, finder or investment banker
(other than Merrill Lynch & Co., Warburg Dillon Reed LLC and Donaldson, Lufkin &
Jenrette Securities Corporation is entitled to any brokerage, finder's or other
fee or commission in connection with the Merger or the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company.
SECTION 3.17. Contracts. Except for agreements listed as
exhibits to any Combined SEC Reports, none of the Company or any of the Company
Subsidiaries is a party to any: (a) Contract which grants any person the
exclusive right to any of the material assets of the Company or any of the
Company Subsidiaries or purports to limit in any material respect the manner in
which, or the localities in which, the Company or any of the Company
Subsidiaries is entitled to conduct all or any material portion of the business
of the Company or any of the Company Subsidiaries; (b) Contract that requires
the consent of, or terminates or becomes terminable by, any party other than the
Company or any of the Company Subsidiaries as a result of the transactions
contemplated by this Agreement where the failure to obtain such consent or the
termination of such Contract could be reasonably expected to have a Company
Material
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20
Adverse Effect; or (c) Contract of any sort, other than in the ordinary course
of business, which contemplates any joint venture, partnership, strategic
alliance or similar arrangement extending beyond six (6) months or involving
equity or investments of more than $20,000,000. There is not, under any of the
aforesaid obligations, any default by the Company or any of the Company
Subsidiaries except for defaults or other events which would not have a Company
Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth in the Disclosure Letter of even date
herewith delivered by Parent to the Company concurrently with the execution of
this Agreement (the "Parent Disclosure Letter") (it being agreed that disclosure
of an item or fact in any section of the Parent Disclosure Letter shall not be
deemed disclosed with respect to any other section of the Parent Disclosure
Letter), Parent hereby represents and warrants to the Company that:
SECTION 4.01. Organization and Qualification. Parent is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Delaware. Parent has all corporate power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted. Each subsidiary of Parent (collectively, the "Parent
Subsidiaries") is a corporation duly incorporated, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted. Each of Parent and
the Parent Subsidiaries is duly qualified or licensed as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would not have
a Parent Material Adverse Effect (as defined below). The term "Parent Material
Adverse Effect" means an event, change or occurrence which, individually or
together with any other event, change or occurrence, has a material adverse
effect on (i) the financial position, business, or results of operations of
Parent and the Parent Subsidiaries, taken as a whole, or (ii) the ability of
Parent to perform their respective obligations under this Agreement or to
consummate the Merger or the other transactions contemplated by this Agreement,
but shall not include (x) any adverse effect due to changes, after the date of
this Agreement, in conditions generally affecting (1) the healthcare or
electronic commerce industries or (2) the U.S. economy as a whole, (y) any
change or adverse effect caused by, or relating to, the entering into of this
Agreement, the consummation of the transactions contemplated hereby or the
announcement thereof, or (z) any adverse effect due to legal or regulatory
changes, effective after the date of this Agreement.
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21
SECTION 4.02. Certificate of Incorporation and By-Laws. Parent
has heretofore furnished to the Company complete and correct copies of the
Parent Certificate of Incorporation and the Parent By-Laws (as defined below).
Such Certificate of Incorporation and By-Laws are in full force and effect.
Neither Parent nor any Parent Subsidiary is in violation of any provision of its
Certificate of Incorporation, By-Laws or equivalent organizational documents.
SECTION 4.03. Capitalization. (a) The authorized capital stock
of Parent consists of: (i) 600,000,000 shares of Parent Common Stock, of which
179,772,040 shares are issued and outstanding as of February 7, 2000 and (ii)
5,000,000 shares of Preferred Stock, $0.0001 par value per share, of which
155,951 shares are issued and outstanding as of February 7, 2000. All of the
outstanding shares of Parent Common Stock have been duly authorized and validly
issued, and are fully paid and nonassessable.
(b) As of February 7, 2000, an aggregate of 65,701,201 shares
of Parent Common Stock are subject to issuance pursuant to outstanding options
to purchase Parent Common Stock under Parent's stock option plans and
outstanding warrants to purchase Parent Common Stock. (Stock options granted by
Parent pursuant to its stock option plans and warrants are referred to in this
Agreement as "Parent Options and Warrants".) No options or warrants to acquire
shares of Parent Common Stock have been granted from February 7, 2000 to the
date of this Agreement.
(c) Except as set forth in Section 4.03(a) and (b) above, as
of the date of this Agreement, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of Parent or any Parent Subsidiary or obligating
Parent or any Parent Subsidiary to issue or sell any shares of capital stock of,
or other equity interests in, Parent or any Parent Subsidiary. All shares of
Parent Common Stock subject to issuance as aforesaid, upon issuance on the terms
and conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. There are
no outstanding contractual obligations of Parent or any Parent Subsidiary to
repurchase, redeem or otherwise acquire any shares of Parent Common Stock or any
capital stock of any Parent Subsidiary. Each outstanding share of capital stock
of each Parent Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by Parent or another Parent Subsidiary
is free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on Parent's or such other
Parent Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever. There are no outstanding contractual obligations of Parent or any
Parent Subsidiary to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any Parent Subsidiary, other than a
Parent Subsidiary that is wholly owned by Parent and other Parent Subsidiaries,
or any other Person.
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22
(d) The shares of Parent Common Stock to be issued in the
Merger pursuant to Section 2.01(a) will be duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights created by
Law, the Certificate of Incorporation of Parent or Amended and Restated By-Laws
of Parent (the "Parent By-Laws") or any agreement or arrangement to which the
Parent is a party or is bound.
SECTION 4.04. Authority Relative to This Agreement. Parent has
all necessary corporate power and authority to execute and deliver this
Agreement, and, subject to the terms and conditions of this Agreement and
obtaining the necessary approvals of Parent's stockholders, to perform its
obligations hereunder and to consummate the Merger and the other transactions
contemplated by this Agreement. The execution and delivery of this Agreement by
Parent and the consummation by Parent of the Merger and the other transactions
contemplated by this Agreement have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Parent are necessary to authorize this Agreement or to consummate the Merger and
the other transactions contemplated by this Agreement (other than, with respect
to the Merger, the approval of the Parent Proposal by a majority of the
outstanding shares of Parent Common Stock, and the filing and recordation of the
appropriate merger documents as required by Delaware Law and subject to the
terms and conditions of this Agreement). This Agreement has been duly and
validly executed and delivered by Parent and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of Parent, enforceable against Parent in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar Laws now or
hereafter in effect relating to creditors' rights and by general equitable
principles (regardless of whether enforceability is considered in a proceeding
in equity or at Law).
SECTION 4.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Parent does not, and the
performance of this Agreement by Parent will not, (i) conflict with or violate
the Certificate of Incorporation of Parent or the Parent By-Laws or any
equivalent organizational documents of any Parent Subsidiary, (ii) assuming that
all consents, approvals, authorizations and other actions described in Section
4.05(b) have been obtained and all filings and obligations described in Section
4.05(b) have been made, conflict with or violate any Law applicable to Parent or
any Parent Subsidiary or by which any property or asset of Parent or any Parent
Subsidiary is bound or affected, or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Parent or any Parent Subsidiary pursuant
to, any Contract, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults, or other occurrences that would not
have a Parent Material Adverse Effect.
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23
(b) The execution and delivery of this Agreement by Parent
does not, and the performance of this Agreement by Parent will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (i) for the applicable requirements, if any,
of the Exchange Act and the Securities Act, Blue Sky Laws, the NASD, state
takeover Laws, the HSR Act, filings or approvals required under the competition
Laws of foreign jurisdictions, and the filing and recordation of the Certificate
of Merger as required by Delaware Law, (ii) the request that the shares of
Parent Common Stock to be issued pursuant to this Agreement in the Merger be
listed for trading on the NASDAQ, and (iii) for such consents, approvals,
authorizations or permits, or such filings or notifications, the failure to
obtain or make as would not prevent consummation of the Merger and would not
have a Parent Material Adverse Effect.
SECTION 4.06. Permits; Compliance. (a) Except as set forth in
the Parent SEC Reports (as defined in Section 4.07), Parent and the Parent
Subsidiaries are in possession and are in compliance with the terms of all
Permits that are required for the operation of the business except for such
Permits, the absence of which would not have a Parent Material Adverse Effect
(collectively, the "Parent Permits"). Except as set forth in the Parent SEC
Reports, no suspension or cancellation of any Parent Permit is pending or, to
the Knowledge of Parent, threatened, except with respect to Parent Permits the
suspension or cancellation of which would not, individually or in the aggregate,
have a Parent Material Adverse Effect.
(b) Except as set forth in the Parent SEC Reports and as would
not have a Parent Material Adverse Effect, the business of Parent and the Parent
Subsidiaries has been and is being conducted in compliance with all applicable
Laws. Except as set forth in the Parent SEC Reports and as would not have a
Parent Material Adverse Effect, neither Parent nor any Parent Subsidiary is in
conflict with, or has violated any provision of, or committed or failed to
perform any act which, with or without notice, lapse of time, or both, would
constitute a default under the provisions of (i) any Law applicable to Parent or
any Parent Subsidiary or by which any property or asset of Parent or any Parent
Subsidiary is bound or affected or (ii) any Parent Permit. Except as set forth
in the Parent SEC Reports, no investigation or review by any Governmental Entity
with respect to Parent or the Parent Subsidiaries is pending or, to the
Knowledge of Parent, threatened in writing, other than, in each case, those
which would not have a Parent Material Adverse Effect; and neither Parent nor
any of the Parent Subsidiaries has received any written communication in the
past two years from any Governmental Entity that alleges that Parent or any of
the Parent Subsidiaries is not in compliance in any material respect with any
applicable Law.
SECTION 4.07. SEC Filings; Financial Statements; Absence of
Liabilities. (a) Parent has filed all forms, reports and documents required to
be filed by it with the SEC since February 1, 1999 (collectively, the "Parent
SEC Reports"). As of the respective dates they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, on the date of such
amending or superseding filing), (i) the Parent SEC Reports complied in all
material espects
<PAGE>
24
in accordance with the requirements of the Securities Act or the Exchange Act,
as the case may be, and (ii) none of the Parent SEC Reports contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. No Parent
Subsidiary is required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any notes and schedules thereto) contained in the Parent SEC
Reports complied as to form with the applicable accounting requirements and
rules and regulations of the SEC and was prepared in accordance with GAAP
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto or, in the case of unaudited financial
statements, as permitted by Form 10-Q of the SEC), and each presented fairly, in
all material respects, the consolidated financial position of Parent and the
consolidated Parent Subsidiaries as at the respective dates thereof and their
results of operations and cash flows for the respective periods indicated
therein, all in accordance with GAAP (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which were not and are
not expected to be material in amount).
(c) Except for liabilities and obligations reflected on the
consolidated balance sheet of Parent as of September 30, 1999 (including the
notes thereto), liabilities and obligations incurred in the ordinary course of
business consistent with past practice since September 30, 1999 and liabilities
and obligations arising under this Agreement and the CareInsite Merger
Agreement, neither Parent nor any Parent Subsidiary has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
which would be required to be reflected on a balance sheet prepared in
accordance with GAAP.
SECTION 4.08. Absence of Certain Changes or Events. During the
period commencing September 30, 1999 and ending on the date of this Agreement,
there has not been:
(a) a Parent Material Adverse Effect;
(b) any event, condition or occurrence which is reasonably
likely to have a Parent Material Adverse Effect; or
(c) except as set forth in the Parent SEC Reports or as
disclosed in connection with the other representations and warranties
of Parent in this Agreement, any event that, if taken during the
period from the date of this Agreement through the Effective Time,
would constitute a breach of Sections 5.02(c) through (f) and (i)
hereof.
SECTION 4.09. Absence of Litigation. (a) Except as set forth
in the Parent SEC Reports, as of the date of this Agreement, there is no
litigation, suit, claim, action,
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25
proceeding or investigation pending or, to the Knowledge of Parent, threatened
against Parent or any Parent Subsidiary, or any property or asset of Parent or
any Parent Subsidiary, by or before any court, arbitrator or Governmental
Entity, domestic or foreign, except as would not have a Parent Material Adverse
Effect.
(b) Except as set forth in the Parent SEC Reports and as would
not have a Parent Material Adverse Effect, as of the date of this Agreement
neither Parent nor any Parent Subsidiary nor any property or asset of Parent or
any Parent Subsidiary is subject to any continuing order of, consent decree,
settlement agreement or other similar written agreement with, or, to the
Knowledge of Parent, continuing investigation by, any Governmental Entity, or
any order, writ, judgment, injunction, decree, determination or award of any
Governmental Entity or arbitrator.
SECTION 4.10. Employee Benefit Plans. (a) With respect to each
employee benefit plan, program, arrangement and contract (including, without
limitation, any "employee benefit plan", as defined in Section 3(3) of ERISA),
maintained or contributed to by Parent or any Parent Subsidiary, or with respect
to which Parent or any Parent Subsidiary could incur liability under Section
4069, 4201 or 4212(c) of ERISA (the "Parent Benefit Plans"), Parent has made
available to the Company a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the IRS, (ii) such Parent Benefit Plan, (iii) each
trust agreement relating to such Parent Benefit Plan, (iv) the most recent
summary plan description for each Parent Benefit Plan for which a summary plan
description is required, (v) the most recent actuarial report or valuation
relating to a Parent Benefit Plan subject to Title IV of ERISA, if any, and (vi)
the most recent determination letter, if any, issued by the IRS with respect to
any Parent Benefit Plan qualified under Section 401(a) of the Code.
(b) With respect to the Parent Benefit Plans, no event has
occurred and, to the knowledge of Parent, there exists no condition or set of
circumstances, in connection with which Parent or any Parent Subsidiary could be
subject to any liability under the terms of such Parent Benefit Plans, ERISA,
the Code or any other applicable Law, except as would not have a Parent Material
Adverse Effect. Neither Parent nor any Parent Subsidiary has any actual or
contingent material liability under Title IV of ERISA (other than the payment of
premiums to the Pension Benefit Guaranty Corporation). None of the Parent
Benefit Plans is a "multiemployer plan" (as defined in Section 4001(a)(3) of
ERISA).
(c) Parent has made available to the Company (i) copies of all
employment agreements and severance agreements with executive officers of Parent
or any Parent Subsidiary and (ii) copies of all plans, programs, agreements and
other arrangements of Parent or any Parent Subsidiary with or relating to its or
such Parent Subsidiary's employees which contain change in control provisions.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation, "golden parachute" or
otherwise) becoming
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26
due to any director, officer or employee of Parent or any Parent Subsidiary
under any Parent Benefit Plan or otherwise, (ii) increase any benefits otherwise
payable under any Parent Benefit Plan or (iii) result in any acceleration of the
time of payment or vesting of any benefits (including under the stock option
plans of Parent).
(d) No Parent Benefit Plan provides retiree medical or retiree
life insurance benefits to any person (except to the extent required by Law).
SECTION 4.11. Tax Matters. To the Knowledge of Parent, neither
Parent nor any of its affiliates has taken or agreed to take any action that
would prevent the Merger from constituting a transaction qualifying as a
reorganization under Section 368(a) of the Code. To the Knowledge of Parent,
there are no agreements, plans or other circumstances that would prevent the
Merger from qualifying under Section 368(a) of the Code.
SECTION 4.12. Intellectual Property. (a) Except as set forth
in the Parent SEC Reports and as would not have a Parent Material Adverse
Effect, (i) to the Knowledge of Parent, the conduct of the business of Parent
and the Parent Subsidiaries as currently conducted does not infringe or
misappropriate the Intellectual Property of any third party, and to the
Knowledge of Parent, no claim has been asserted to Parent that the conduct of
the business of Parent and the Parent Subsidiaries as currently conducted
infringes or may infringe or misappropriates the Intellectual Property of any
third party, (ii) with respect to each item of Intellectual Property owned by
Parent and the Parent Subsidiaries and material to the businesses of Parent and
the Parent Subsidiaries as currently conducted ("Parent Owned Intellectual
Property"), Parent or a Parent Subsidiary is the owner of the entire right,
title and interest in and to such Intellectual Property and is entitled to use
such Intellectual Property in the continued operation of its respective
business, (iii) with respect to each item of Intellectual Property licensed to
Parent or a Parent Subsidiary that is material to the businesses of Parent and
the Parent Subsidiaries as currently conducted ("Parent Licensed Intellectual
Property"), Parent or a Parent Subsidiary has the right to use such Parent
Licensed Intellectual Property in the continued operation of its respective
business in accordance with the terms of the license agreement governing such
Parent Licensed Intellectual Property, (iv) to the Knowledge of Parent, the
Parent Owned Intellectual Property is valid and enforceable, and has not been
adjudged invalid or unenforceable in whole or part, (v) to the Knowledge of
Parent, no person is engaging in any activity that infringes the Parent Owned
Intellectual Property, (vi) to the Knowledge of Parent, each license of Parent
Licensed Intellectual Property is valid and enforceable, is binding on all
parties to such license, and is in full force and effect, except to the extent
expired in accordance with its terms, and (vii) to the Knowledge of Parent, no
party to any license of the Parent Licensed Intellectual Property is in breach
thereof or default thereunder.
(b) Except as set forth in the Parent SEC Reports and as would
not have a Parent Material Adverse Effect, to the Knowledge of Parent, all
Parent Systems and Parent Owned Intellectual Property are Year 2000 Compliant.
For purposes hereof, "Parent Systems"
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27
shall mean all computer, hardware, software, systems, and equipment (including
embedded microcontrollers in non-computer equipment) material to or necessary
for Parent to carry on its business as currently conducted. For purposes hereof,
"Year 2000 Compliant" means that the Parent Systems and Parent Owned
Intellectual Property provide uninterrupted millennium functionality in that the
Parent Systems and Parent Owned Intellectual Property will record, store,
process and present calendar dates falling on or after January 1, 2000, in the
same manner and with the same functionality as the Parent Systems and Parent
Owned Intellectual Property record, store, process, and present calendar dates
falling on or before December 31, 1999.
SECTION 4.13. Taxes. (a) Except as would not have a Parent
Material Adverse Effect, (i) Parent and each of the Parent Subsidiaries have
timely filed or will timely file all returns and reports required to be filed by
them with any taxing authority with respect to Taxes for any period ending on or
before the Effective Time, taking into account any extension of time to file
granted to or obtained on behalf of Parent and the Parent Subsidiaries, (ii) all
Taxes that are due prior to the Effective Time have been paid or will be paid
(other than Taxes which (1) are not yet delinquent or (2) are being contested in
good faith and have not been finally determined), (iii) as of the date of this
Agreement, no deficiency for any material amount of Tax has been asserted or
assessed by a taxing authority against Parent or any of the Parent Subsidiaries
and (iv) Parent and each of the Parent Subsidiaries have provided adequate
reserves in accordance with generally accepted accounting principles in their
financial statements for any Taxes that have not been paid, whether or not shown
as being due on any returns.
(b) To the Knowledge of Parent, there are no material disputes
pending, or claims asserted in writing for, Taxes or assessments upon Parent or
any of the Parent Subsidiaries, nor has Parent or any of the Parent Subsidiaries
been requested in writing to give any currently effective waivers extending the
statutory period of limitation applicable to any federal or state income tax
return for any period in which disputes, claims, assessments or waivers are
reasonably likely to have a Parent Material Adverse Effect.
(c) There are no Tax liens upon any property or assets of
Parent or any of the Parent Subsidiaries except liens for current Taxes not yet
due and except for liens which have not had and are not reasonably likely to
have a Parent Material Adverse Effect.
(d) Neither Parent nor any of the Parent Subsidiaries has been
required to include in income any adjustment pursuant to Section 481 of the Code
by reason of a voluntary change in accounting method initiated by Parent or any
of the Parent Subsidiaries, and the IRS has not initiated or proposed any such
adjustment or change in accounting method, in either case which adjustment or
change has had or is reasonably likely to have a Parent Material Adverse Effect.
(e) Except as set forth in the financial statements described
in Section 4.07, neither Parent nor any of the Parent Subsidiaries has entered
into a transaction which is being
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28
accounted for under the installment method of Section 453 of the Code, which
would be reasonably likely to have a Parent Material Adverse Effect.
SECTION 4.14. Vote Required. The affirmative vote of a
majority of the shares of Parent Common Stock at the Parent Stockholders'
Meeting (as defined below) is required to approve the Parent Proposal. No other
vote of the stockholders of Parent is required by Law, the Certificate of
Incorporation of Parent, the Parent By-Laws or otherwise in order for Parent to
consummate the Merger and the transactions contemplated hereby.
SECTION 4.15. Opinion of Financial Advisor. Parent has
received the opinion of Morgan Stanley & Co., Incorporated, dated February 13,
2000 that, as of such date, the Exchange Ratio is fair, from a financial point
of view, to Parent.
SECTION 4.16. Brokers. No broker, finder or investment banker
(other than Morgan Stanley & Co., Incorporated and FleetBoston Robertson
Stephens, Inc.) is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the other transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent.
SECTION 4.17. Contracts. Except for agreements listed as
exhibits to any Parent SEC Reports, none of Parent or any of the Parent
Subsidiaries is a party to any: (a) Contract which grants any person the
exclusive right to any of the material assets of Parent or any of the Parent
Subsidiaries or purports to limit in any material respect the manner in which,
or the localities in which, the Parent or any of the Parent Subsidiaries is
entitled to conduct all or any material portion of the business of Parent or any
of the Parent Subsidiaries; (b) Contract that requires the consent of, or
terminates or becomes terminable by, any party other than the Parent or any of
the Parent Subsidiaries as a result of the transactions contemplated by this
Agreement where the failure to obtain such consent or the termination of such
Contract could be reasonably expected to have a Parent Material Adverse Effect;
or (c) Contract of any sort, other than in the ordinary course of business,
which contemplates any joint venture, partnership, strategic alliance or similar
arrangement extending beyond six (6) months or involving equity or investments
of more than $20,000,000. There is not, under any of the aforesaid obligations,
any default by Parent or any of the Parent Subsidiaries except for defaults or
other events which would not have a Parent Material Adverse Effect.
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the
Merger. The Company covenants and agrees that, between the date of this
Agreement and the Effective Time, except as specifically contemplated by any
other provision of this Agreement or Section
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29
5.01 of the Company Disclosure Letter, unless Parent shall otherwise agree in
writing (such agreement not to be unreasonably withheld or delayed):
(a) the Company and the Company Subsidiaries shall use all
reasonable efforts to preserve intact their present lines of business,
maintain their rights and franchises and preserve their relationships
with employees, customers, suppliers and others having business
dealings with them; provided, however, that no action by the Company
or any Company Subsidiary with respect to matters specifically
addressed by any other provision of this Section 5.01 or Section 6.07
shall be deemed a breach of this Section 5.01(a);
(b) neither the Company nor any Company Subsidiary shall amend
or otherwise change its Certificate of Incorporation or By-Laws or
equivalent organizational documents, except for the issuance of
preferred stock in connection with acquisitions permitted pursuant to
Section 5.01(f)(i);
(c) neither the Company nor any Company Subsidiary shall
issue, sell, pledge, dispose of, grant or encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, any
shares of capital stock of the Company or any Company Subsidiary of
any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of the Company or any Company Subsidiary, except for (i)
the issuance of any shares of Company Common Stock issuable pursuant
to Company Stock Options outstanding on the date hereof in accordance
with the respective terms thereof, (ii) the issuance, in the ordinary
course of business and consistent with past practice, of Company Stock
Options to purchase a maximum of 450,000 shares of Company Common
Stock pursuant to Company Stock Option Plans in effect on the date of
this Agreement in connection with the commencement of the employment
of any Person by the Company or any Company Subsidiary and the shares
of Company Common Stock issuable pursuant to such Company Stock
Options, in accordance with the terms of the Company Stock Option
Plans, (iii) issuances by a direct or indirect wholly owned subsidiary
of the Company of capital stock to such subsidiary's parent, and (iv)
issuances of capital stock in acquisitions permitted under Section
5.01(f);
(d) neither the Company nor any Company Subsidiary shall
declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of
its capital stock, other than dividends by a direct or indirect wholly
owned subsidiary of the Company to such subsidiary's parent;
(e) neither the Company nor any Company Subsidiary shall
reclassify, combine, split, subdivide or redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock, except for
any such transaction by a wholly owned subsidiary of
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30
the Company that remains a wholly owned subsidiary of the Company
after the consummation of such transaction;
(f) neither the Company nor any Company Subsidiary shall: (i)
acquire or dispose of (including, without limitation, by merger,
consolidation, or acquisition or disposition of stock or assets) any
interest in any corporation, partnership, other business organization
or any division thereof, (x) for or with a fair market value in excess
of $500,000,000 or (y) in the case of acquisitions, as could
reasonably be expected to result in any (A) delay in the consummation
of the Merger or the transactions contemplated herein or (B) decrease
in the likelihood that the conditions set forth in Sections 7.01(d)
and (e) would be satisfied, or (ii) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any Person, or make any loans or advances, except for
(A) indebtedness incurred in the ordinary course of business and
consistent with past practice, (B) indebtedness of the Company to a
direct or indirect wholly owned Company Subsidiary or indebtedness of
a direct or indirect wholly owned Company Subsidiary to the Company or
another direct or indirect wholly owned Company Subsidiary, or (C)
indebtedness that in the aggregate does not exceed $100,000,000;
(g) neither the Company nor any Company Subsidiary shall
change its method of accounting in effect at December 31, 1999, except
as required by changes in GAAP or the accounting rules and regulations
of the SEC;
(h) neither the Company nor any Company Subsidiary shall take
any action that would prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Internal Revenue Code;
(i) neither the Company nor any Company Subsidiary shall make
any material tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
(j) neither the Company nor any Company Subsidiary shall enter
into any new employment Contract or make any material commitment to
employees (including any commitment to pay severance, retirement or
other material benefits) except in the ordinary course of business and
consistent with past practice;
(k) neither the Company nor any Company Subsidiary shall
increase the compensation (including material fringe benefits) payable
or to become payable to any officer, director, or employee, except (x)
general hourly rate increases and normal merit increases for employees
other than executive officers made in the ordinary course of business
and consistent with past practice and (y) for increases committed to
prior to the date of this Agreement and not in contemplation thereof;
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31
(l) neither the Company nor any Company Subsidiary shall make
any loan to any Person or increase the aggregate amount of any loan
currently outstanding to any Person, except for usual and customary
advances to employees made in the ordinary course of business or
pursuant to commitments made prior to the date of this Agreement and
not in contemplation thereof;
(m) neither the Company nor any Company Subsidiary shall waive
any stock repurchase rights, accelerate, amend or change the period of
exercisability of outstanding options, reprice outstanding options
granted under any Company Stock Option Plans or authorize cash
payments in exchange for any outstanding options granted under any of
such plans;
(n) neither the Company nor any Company Subsidiary shall grant
any severance or termination pay to any officer or employee except
pursuant to written agreements outstanding or policies existing on the
date hereof or adopt any new severance plan;
(o) neither the Company nor any Company Subsidiary shall
transfer or license to any Person or otherwise extend, amend or modify
any rights to the Intellectual Property of them, or enter into any
grants of future patent rights, other than in the ordinary course of
business consistent with past practice;
(p) not materially modify or amend, or terminate any Contract
referred to in Section 3.17 of this Agreement (including any of the
Company Stock Plans) to which the Company or any Company Subsidiary is
a party or waive, release, or assign any material rights or claims
thereunder, in any such case in a manner materially adverse to Parent.
(q) neither the Company nor any Company Subsidiary shall
authorize or enter into any agreement to do anything prohibited by
Sections 5.01(b) through (p); and
(r) the Company will (i) use its reasonable best efforts to
consummate the transactions contemplated by the agreements listed in
Section 5.02(r) of the Company Disclosure Letter in accordance with
the terms thereof, (ii) not take any action which would materially
adversely impact the timing of the closing of such transactions or the
ability of the Company to satisfy the conditions precedent to the
closing of such transactions, and (iii) not waive or amend any
material provision of such agreements without the prior written
approval of Parent;
provided, that CareInsite shall not be prohibited from taking any action under
this Section 5.01 which the board of directors of CareInsite determines is
consistent with its fiduciary duties to the stockholders of CareInsite (other
than the Company or any other Company Subsidiary).
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32
SECTION 5.02. Conduct of Business by Parent Pending the
Merger. Parent agrees that, between the date of this Agreement and the Effective
Time, except as specifically contemplated by any other provision of this
Agreement or Section 5.02 of the Parent Disclosure Letter, unless the Company
shall otherwise agree in writing (such agreement not to be unreasonably withheld
or delayed):
(a) Parent and the Parent Subsidiaries shall use all
reasonable efforts to preserve intact their present lines of business,
maintain their rights and franchises and preserve their relationships
with employees, customers, suppliers and others having business
dealings with them; provided, however, that no action by Parent or any
Parent Subsidiary with respect to matters specifically addressed by
any other provision of this Section 5.02 or Section 6.07 shall be
deemed a breach of this Section 5.02(a);
(b) neither Parent nor any Parent Subsidiary shall amend or
otherwise change its Certification of Incorporation or By-Laws or
equivalent organizational documents, except for the issuance of
preferred stock in connection with acquisitions permitted pursuant to
Section 5.02(e);
(c) neither Parent nor any Parent Subsidiary shall issue,
sell, pledge, dispose of, grant or encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, any
shares of capital stock of Parent or any Parent Subsidiary of any
class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of Parent or any Parent Subsidiary, except for (i) the
issuance of shares of Parent Common Stock issuable pursuant to Parent
Stock Options outstanding on the date hereof in accordance with the
terms thereof, (ii) the issuance, in the ordinary course of business
and consistent with past practice, of Parent Stock Options to purchase
shares of Parent Common Stock pursuant to Parent Stock Option Plans in
effect on the date of this Agreement and the shares of Parent Common
Stock issuable pursuant to such Parent Stock Options, in accordance
with the terms of the Parent Stock Option Plans, (iii) issuances for
Parent's Employee Stock Purchase Plan, (iv) issuances by a direct or
indirect wholly owned subsidiary of Parent of capital stock to such
subsidiary's parent, and (v) issuances of capital stock in
acquisitions permitted under Section 5.02(e);
(d) neither Parent nor any Parent Subsidiary shall declare,
set aside, make or pay any dividend or other distribution, payable in
cash, stock, property or otherwise, with respect to any of its capital
stock, other than dividends by a direct or indirect wholly owned
subsidiary of Parent to such subsidiary's parent;
(e) neither Parent nor any Parent Subsidiary shall: (i)
acquire or dispose of (including, without limitation, by merger,
consolidation, or acquisition or disposition of
<PAGE>
33
stock or assets) any interest in any corporation, partnership, other
business organization or any division thereof, for or with a fair
market value in excess of $500,000,000 and, in the case of
acquisitions, as could reasonably be expected to result in any (A)
delay in the consummation of the Merger or the transactions
contemplated herein or (B) decrease in the likelihood that the
conditions set forth in Sections 7.01(d) and (e) would be satisfied,
or (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any Person,
or make any loans or advances, except for (A) indebtedness incurred in
the ordinary course of business and consistent with past practice, (B)
indebtedness of Parent to a direct or indirect wholly owned Parent
Subsidiary or indebtedness of a direct or indirect wholly owned Parent
Subsidiary to Parent or another direct or indirect wholly owned Parent
Subsidiary, or (C) indebtedness that in the aggregate does not exceed
$100,000,000;
(f) neither Parent nor any Parent Subsidiary shall change its
methods of accounting in effect at September 30, 1999, except as
required by changes in GAAP or the accounting rules and regulations of
the SEC;
(g) neither Parent nor any Parent Subsidiary shall take any
action that would prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Internal Revenue Code;
(h) neither Parent nor any Parent Subsidiary shall make any
material tax election or settle or compromise any federal, state,
local, or foreign income tax liability;
(i) not materially modify or amend, or terminate any Contract
referred to in Section 4.17 of this Agreement (including Parent Stock
Plans) to which Parent or any Parent Subsidiary is a party or waive,
release, or assign any material rights or claims thereunder, in any
such case in a manner materially adverse to the Company;
(j) neither the Company nor any Company Subsidiary shall
transfer or license to any Person or otherwise extend, amend or modify
any rights to the Intellectual Property of them, or enter into any
grants of future patent rights, other than in the ordinary course of
business consistent with past practice;
(k) neither Parent nor any Parent Subsidiary shall authorize
or enter into any agreement to do anything prohibited by Sections
5.02(b) through (j); and
(l) Parent will (i) use its reasonable best efforts to
consummate the transactions contemplated by the agreements listed in
Section 5.02(l) of the Parent Disclosure Letter in accordance with the
terms thereof, and (ii) not take any action which would materially
adversely delay the closing of such transactions or the ability of
Parent
<PAGE>
34
to satisfy the conditions precedent to the closing of such transactions
and (iii) not waive or amend any material provision of such agreements
without the prior written approval of the Company.
SECTION 5.03. Adverse Changes in Condition. Each party agrees
(i) to give written notice promptly to the other parties upon becoming aware of
the occurrence or impending occurrence of any event or circumstance relating to
it or any of its Subsidiaries which (A) is reasonably likely to have a Parent
Material Adverse Effect or a Company Material Adverse Effect, or (B) would cause
or constitute a breach of any of its representations, warranties, agreements or
covenants contained herein, such that the conditions set forth in Section 7.02
or Section 7.03 with respect to such party (as appropriate) would not be
satisfied as of the time of such breach or as of the time of such representation
or warranty shall have become untrue, and (ii) to use its reasonable efforts to
prevent or promptly to remedy the same.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement; Joint Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement, (i) Parent
and the Company shall prepare and file with the SEC a joint proxy statement
(together with any amendments thereof or supplements thereto, the "Proxy
Statement") relating to the meetings of the Company's stockholders (the "Company
Stockholders' Meeting") and Parent's stockholders (the "Parent Stockholders'
Meeting" and, together with the Company Stockholders' Meeting, the
"Stockholders' Meetings") to be held to consider approval and adoption of this
Agreement and the Merger by the Company's stockholders and the approval of the
Parent Proposal by Parent's stockholders and (ii) Parent shall prepare and file
with the SEC a registration statement on Form S-4 (together with all amendments
thereto, the "Registration Statement") in which the Proxy Statement shall be
included as a prospectus, in connection with the registration under the
Securities Act of the shares of Parent Common Stock to be issued to the
stockholders of the Company pursuant to the Merger. Parent and the Company each
shall use their reasonable best efforts to cause the Registration Statement to
become effective as promptly as practicable, and, prior to the effective date of
the Registration Statement, Parent shall take all or any action required under
any applicable federal or state securities Laws in connection with the issuance
of shares of Parent Common Stock pursuant to the Merger. The Company shall
promptly furnish all information concerning the Company as Parent may reasonably
request in connection with such actions and the preparation of the Registration
Statement and Proxy Statement. As promptly as practicable after the Registration
Statement shall have become effective, each of Parent and the Company shall mail
the Proxy Statement to its stockholders.
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35
(b) (i) The Proxy Statement shall include the recommendation
of the Company Board to the holders of Company Common Stock in favor of the
Company Proposal; provided, however, that the Company Board may, at any time
prior to the Effective Time, withdraw, modify or change any such recommendation
to the extent that the Company Board determines in good faith after consultation
with outside legal counsel (who may be the Company's regularly engaged outside
legal counsel) that the failure to so withdraw, modify or change its
recommendation could reasonably be deemed to cause the Company Board to breach
its fiduciary duties to the holders of Company Common Stock under applicable Law
and, notwithstanding anything to the contrary contained in this Agreement, such
a withdrawal, modification or change in such recommendation shall not constitute
a breach of this Agreement by the Company. Notwithstanding anything to the
contrary in this Agreement, such a withdrawal, modification or change, in such
recommendation shall not relieve the Company in any way whatsoever of its other
obligations under this Section 6.01 or its obligations under Section 6.02 of
this Agreement.
(ii) The Proxy Statement shall include the recommendation of
the Parent Board to the holders of Parent Common Stock in favor of
approval of the Parent Proposal; provided, however, that the Parent
Board may, at any time prior to the Effective Time, withdraw, modify
or change any such recommendation to the extent that the Parent Board
determines in good faith after consultation with outside legal counsel
(who may be Parent's regularly engaged outside legal counsel) that the
failure to so withdraw, modify or change its recommendation could
reasonably be deemed to cause the Parent Board to breach its fiduciary
duties to the holders of Parent Common Stock under applicable Law and,
notwithstanding anything to the contrary contained in this Agreement,
such a withdrawal, modification or change in such recommendation shall
not constitute a breach of this Agreement by the Company.
Notwithstanding anything to the contrary in this Agreement, such a
withdrawal, modification or change in such recommendation shall not
relieve Parent in any way whatsoever of its other obligations under
this Section 6.01 or its obligations under Section 6.02 of this
Agreement.
(c) No amendment or supplement to the Proxy Statement or the
Registration Statement will be made by Parent or the Company without the
approval of the other party (such approval not to be unreasonably withheld or
delayed). Parent and the Company shall each advise the other, promptly after the
receipt of notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the issuance
of any stop order, of the suspension of the qualification of the Parent Common
Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or of any request by the SEC for amendment of the Proxy Statement
or the Registration Statement or comments thereon and responses thereto or
requests by the SEC for additional information.
(d) The information supplied by Parent for inclusion in the
Registration Statement and the Proxy Statement shall not, at (i) the time the
Registration Statement is
<PAGE>
36
declared effective, (ii) the time the Proxy Statement (or any amendment thereof
or supplement thereto) is first mailed to the stockholders of the Parent and the
Company, (iii) the time of each of the Stockholders' Meetings and (iv) the
Effective Time, contain any untrue statement of a material fact or fail 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. If, at any time prior to the Effective Time, any event or
circumstance relating to Parent or any Parent Subsidiary, or their respective
officers or directors, should be discovered by Parent which should be set forth
in an amendment or a supplement to the Registration Statement or Proxy
Statement, Parent shall promptly inform the Company. All documents that Parent
is responsible for filing with the SEC in connection with the Merger or the
other transactions contemplated by this Agreement will comply as to form in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations thereunder and the Exchange Act and the rules and
regulations thereunder.
(e) The information supplied by the Company for inclusion in
the Registration Statement and the Proxy Statement shall not, at (i) the time
the Registration Statement is declared effective, (ii) the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the stockholders of the Company and Parent, (iii) the time of each of the
Stockholders' Meetings and (iv) the Effective Time, contain any untrue statement
of a material fact or fail 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. If, at any time prior
to the Effective Time, any event or circumstance relating to the Company or any
Company Subsidiary, or their respective officers or directors, should be
discovered by the Company which should be set forth in an amendment or a
supplement to the Registration Statement or Proxy Statement, the Company shall
promptly inform Parent. All documents that the Company is responsible for filing
with the SEC in connection with the Merger or the other transactions
contemplated by this Agreement will comply as to form in all material respects
with the applicable requirements of the Securities Act and the rules and
regulations thereunder and the Exchange Act and the rules and regulations
thereunder.
SECTION 6.02. Stockholders' Meetings. (a) The Company shall
call and hold the Company Stockholders' Meeting, and Parent shall call and hold
the Parent Stockholders' Meeting, as promptly as practicable for the purpose of
voting upon the approval of the Company Proposal by the Company's stockholders
and the approval of the Parent Proposals by Parent's stockholders, as the case
may be, and Parent and the Company shall use their reasonable best efforts to
hold the Stockholders' Meetings on the same day and as soon as practicable after
the date on which the Registration Statement becomes effective.
(b) Parent shall use its reasonable best efforts to solicit
from holders of Parent Common Stock proxies in favor of approval of the Parent
Proposal, and shall take all other action necessary or advisable to secure the
vote or consent of holders of Parent Common Stock required by the rules of the
NASDAQ or Delaware Law to obtain approval of the Parent Proposal, except
<PAGE>
37
to the extent that the Parent Board determines in good faith after consultation
with outside legal counsel (who may be Parent's regularly engaged outside legal
counsel) that doing so could reasonably be deemed to cause the Parent Board to
breach its fiduciary duties to the holders of Parent Common Stock under
applicable Law and any such failure to solicit proxies or take other
solicitation action under this sentence to secure the vote or consent of holders
of Parent Common Stock shall not constitute a breach of this Agreement by
Parent. Notwithstanding anything to the contrary contained in this Agreement,
such failure to solicit proxies in favor of the approval of the Parent Proposal
shall not relieve Parent in any way whatsoever of its obligations under Section
6.01 of this Agreement or its other obligations under this Section 6.02.
(c) The Company shall use its reasonable best efforts to
solicit from holders of Company Common Stock proxies in favor of the Company
Proposal, and shall take all other action necessary or advisable to secure the
vote or consent of holders of Company Common Stock required by the rules of the
NASDAQ or Delaware Law to obtain the approval of the Company Proposal, except to
the extent that the Company Board determines in good faith after consultation
with outside legal counsel (who may be the Company's regularly engaged outside
legal counsel) that doing so could reasonably be deemed to cause the Company
Board to breach its fiduciary duties to the holders of Company Common Stock
under applicable Law and any such failure to solicit proxies or take other
solicitation action under this sentence to secure the vote or consent of holders
of Company Common Stock shall not constitute a breach of this Agreement by the
Company. Notwithstanding anything to the contrary contained in this Agreement,
such failure to solicit proxies in favor of the approval and adoption of the
Agreement and the Merger shall not relieve the Company in any way whatsoever of
its obligations under Section 6.01 of this Agreement or its other obligations
under this Section 6.02.
SECTION 6.03. Access to Information; Confidentiality. (a)
Except as required pursuant to any confidentiality agreement or similar
agreement or arrangement to which Parent or the Company or any of their
respective subsidiaries is a party or pursuant to applicable Law, from the date
of this Agreement to the Effective Time, Parent and the Company shall (and shall
cause their respective subsidiaries to): (i) provide to the other (and its
officers, directors, employees, accountants, consultants, legal counsel, agents
and other representatives, collectively, "Representatives") access at reasonable
times upon prior notice to the officers, employees, agents, properties, offices
and other facilities of the other and its subsidiaries and to the books and
records thereof and (ii) furnish promptly such information concerning the
business, properties, contracts, assets, liabilities, personnel and other
aspects of the other party and its subsidiaries as the other party or its
Representatives may reasonably request.
(b) With respect to information that is made available by one
party to another pursuant to Section 6.03(a) or pursuant to any other provision
of this Agreement, the receiving party shall comply with, and shall cause its
Representatives to comply with, the provisions relating to confidentiality
contained in the Confidentiality Agreement currently in existence between the
parties (the "Confidentiality Agreement").
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38
(c) No investigation by either the Company or Parent shall
affect the representations and warranties of the other.
SECTION 6.04. No Solicitation of Transactions. (a) The Company
agrees that, from and after the date hereof until the earlier of the Effective
Time or the termination of this Agreement in accordance with Article VIII, it
shall not, and that it shall cause its Representatives not to, directly or
indirectly, initiate, solicit or encourage any inquiries or the making of any
proposal, or offer with respect to a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving, or any purchase or sale of all or any
significant portion of the assets or 20% or more of the equity securities of,
the Company or any Company Subsidiary (any such proposal or offer being
hereinafter referred to as a "Company Acquisition Proposal"). The Company
further agrees that it shall not, and that it shall cause its Representatives
not to, directly or indirectly, have any discussion with or provide any
confidential information or data relating to the Company or any Company
Subsidiary to any Person relating to a Company Acquisition Proposal or engage in
any negotiations concerning a Company Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement a Company Acquisition
Proposal or accept a Company Acquisition Proposal; provided, however, that
nothing contained in this Section 6.04(a) shall prevent the Company or the
Company Board from (i) complying with Rule 14d-9 or Rule 14e-2 promulgated under
the Exchange Act with regard to a Company Acquisition Proposal; (ii) engaging in
any discussions or negotiations with, or providing any information to, any
Person in response to an unsolicited written Company Acquisition Proposal by any
such Person; or (iii) recommending such an unsolicited written Company
Acquisition Proposal to the holders of Company Common Stock if, in any such case
as is referred to in clause (ii) or (iii), (A) the Company Board concludes in
good faith (after consultation with its financial advisors) that such Company
Acquisition Proposal would, if consummated, result in a transaction more
favorable to holders of Company Common Stock than the transaction contemplated
by this Agreement (any such more favorable Company Acquisition Proposal being
referred to in this Agreement as a "Company Superior Proposal"), (B) the Company
Board determines in good faith after consultation with outside legal counsel
(who may be the Company's regularly engaged outside legal counsel) that such
action could reasonably be deemed to be necessary for it to act in a manner
consistent with its fiduciary duties under applicable Law, (C) prior to
providing any information or data regarding the Company to any Person or any of
such Person's Representatives in connection with a Company Superior Proposal by
such Person, the Company receives from such Person an executed confidentiality
agreement on terms at least as restrictive on such Person as those contained in
the Confidentiality Agreement, (D) prior to providing any information or data to
any Person or any of such Person's Representatives or entering into discussions
or negotiations with any Person or any of such Person's Representatives in
connection with a Company Superior Proposal by such Person, the Company notifies
Parent promptly of the receipt of such Company Superior Proposal indicating, in
connection with such notice, the name of such Person and attaching a copy of the
proposal or offer or providing a complete written summary thereof, and (E) the
Company has not breached its obligations under
<PAGE>
39
the first sentence of this Section 6.04(a). The Company agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Company Acquisition Proposal. The Company agrees that it shall keep
Parent informed, on a current basis, of the status and terms of any such
proposals or offers and the status of any such discussions or negotiations. The
Company agrees that it will take the necessary steps to promptly inform each
Representative of the Company of the obligations undertaken in this Section
6.04(a).
(b) Parent agrees that, from and after the date hereof until
the earlier of the Effective Time or the termination of this Agreement in
accordance with Article VIII, it shall not, and that it shall cause its
Representatives not to, directly or indirectly, initiate, solicit or encourage
any inquiries or the making of any proposal, or offer with respect to a merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving, or
any purchase or sale of all or any significant portion of the assets or 20% or
more of the equity securities of, Parent or any Parent Subsidiary that, in any
such case, could reasonably be expected to preclude the completion of the Merger
or the other transactions contemplated by this Agreement (any such proposal or
offer being hereinafter referred to as a "Parent Acquisition Proposal"). Parent
further agrees that it shall not, and that it shall cause its Representatives
not to, directly or indirectly, have any discussion with or provide any
confidential information or data relating to Parent or any Parent Subsidiary to
any Person relating to a Parent Acquisition Proposal or engage in any
negotiations concerning a Parent Acquisition Proposal, or otherwise facilitate
any effort or attempt to make or implement a Parent Acquisition Proposal or
accept a Parent Acquisition Proposal; provided, however, that nothing contained
in this Section 6.04(b) shall prevent Parent or the Parent Board from (i)
complying with Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act with
regard to a Parent Acquisition Proposal; (ii) engaging in any discussions or
negotiations with, or providing any information to, any Person in response to an
unsolicited written Parent Acquisition Proposal by any such Person; or (iii)
recommending such an unsolicited written Parent Acquisition Proposal to the
holders of Parent Common Stock if, in any such case as is referred to in clause
(ii) or (iii), (A) the Parent Board concludes in good faith (after consultation
with its financial advisors) that such Parent Acquisition Proposal would, if
consummated, result in a transaction more favorable to holders of Parent Common
Stock than the transaction contemplated by this Agreement (any such more
favorable Parent Acquisition Proposal being referred to in this Agreement as a
"Parent Superior Proposal"), (B) the Parent Board determines in good faith after
consultation with outside legal counsel (who may be Parent's regularly engaged
outside legal counsel) that such action could reasonably be deemed to be
necessary for it to act in a manner consistent with its fiduciary duties under
applicable Law, (C) prior to providing any information or data regarding Parent
or any Parent Subsidiary to any Person or any of such Person's Representatives
in connection with a Parent Superior Proposal by such Person, Parent receives
from such Person an executed confidentiality agreement on terms at least as
restrictive on such Person as those contained in the Confidentiality Agreement,
(D) prior to providing any information or data to any Person or any of such
Person's Representatives or entering into
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40
discussions or negotiations with any Person or any of such Person's
Representatives in connection with a Parent Superior Proposal by such Person,
Parent notifies the Company promptly of the receipt of such Parent Superior
Proposal indicating, in connection with such notice, the name of such Person and
attaching a copy of the proposal or offer or providing a complete written
summary thereof, and (E) Parent has not breached its obligations under the first
sentence of this Section 6.04(b). Parent agrees that it will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any Parent Acquisition
Proposal. Parent agrees that it shall keep the Company informed, on a current
basis, of the status and terms of any such proposals or offers and the status of
any such discussions or negotiations. Parent agrees that it will take the
necessary steps to promptly inform each Representative of Parent of the
obligations undertaken in this Section 6.04(b).
SECTION 6.05. Directors' and Officers' Indemnification and
Insurance. (a) From and after the Effective Time, Parent shall, and shall cause
the Surviving Corporation to, indemnify and hold harmless each present and
former director and officer of the Company and each person who served at the
request of the Company as a director, officer or trustee of another corporation,
partnership, joint venture, trust, pension or other employee benefit plan or
enterprise (collectively, the "Indemnified Parties"), to the fullest extent
permitted under applicable Law, against all costs and expenses (including
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
settlement amounts paid in connection with any claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), whether
civil, criminal, administrative or investigative, arising out of or pertaining
to any action or omission in their capacity as an officer, director, employee or
fiduciary, including, without limitation, the transactions contemplated by this
Agreement (and shall also advance, or cause to be advanced, expenses as incurred
to the fullest extent permitted under applicable Law). Parent agrees that all
rights to indemnification existing in favor of the Indemnified Parties as
provided in the Company's Certificate of Incorporation and By-Laws, as in effect
as of the date hereof, with respect to matters occurring through the Effective
Time, shall survive the Merger and shall continue in full force and effect for a
period of not less than six (6) years from the Effective Time. From and after
the Effective Time, Parent shall assume the obligations of the Company to
provide indemnification to Indemnified Parties under indemnification agreements
or similar contracts.
(b) Without limiting or expanding the foregoing, in the event
any claim, action, suit, proceeding or investigation (a "Claim") that is subject
to Section 6.05(a) is brought against any Indemnified Party at or after the
Effective Time, (i) the Indemnified Parties may retain counsel satisfactory to
them and reasonably satisfactory to Parent and the Surviving Corporation, (ii)
Parent and the Surviving Corporation shall pay all reasonable fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor are
received, and (iii) Parent and the Surviving Corporation will use all reasonable
efforts to assist in the vigorous defense of any such matter, provided that
neither Parent nor the Surviving Corporation shall be
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41
liable for any settlement of any Claim effected without its written consent,
which consent, however, shall not be unreasonably withheld or delayed. Any
Indemnified Party wishing to claim indemnification under this Section 6.05, upon
learning of any such Claim, shall notify Parent (but the failure so to notify
Parent shall not relieve Parent and the Surviving Corporation from any liability
that either may have under this Section 6.05 except to the extent such failure
materially prejudices them). The Indemnified Parties as a group may retain only
one law firm to represent them with respect to each such matter unless, under
applicable standards of professional conduct, there is or would reasonably be
expected to be a conflict on any significant issue between the positions of any
two or more Indemnified Parties.
(c) For a period of six (6) years after the Effective Time,
Parent shall cause to be maintained in effect the current directors' and
officers' liability insurance policies maintained by the Company (provided that
Parent may substitute therefor policies of at least the same coverage containing
other terms and conditions which are no less advantageous) with respect to
claims arising from facts or events that occurred prior to the Effective Time;
provided further that Parent shall not be required to maintain such policies to
the extent that the annual premiums (or incremental annual premiums in the case
of substitute policies that provide coverage to other Persons or for other
matters) exceed 200% of the most recent annual premium paid for such policies by
the Company.
SECTION 6.06. Further Action; Consents; Filings. (a) Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
its best efforts to (i) take, or cause to be taken, all actions necessary,
proper or advisable under applicable Law or otherwise to consummate and make
effective the Merger and the other transactions contemplated by this Agreement,
(ii) obtain from Governmental Entities any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made by Parent or
the Company or any of their subsidiaries, as the case may be, in connection with
the authorization, execution and delivery of this Agreement and the consummation
of the Merger and the other transactions contemplated by this Agreement and
(iii) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement, the Merger and the other
transactions contemplated by this Agreement required under (A) the Exchange Act
and the Securities Act and the rules and regulations thereunder and any other
applicable federal or state securities Laws, (B) the HSR Act and (C) any other
applicable Law. The parties hereto shall cooperate with each other in connection
with the making of all such filings, including by providing copies of all such
documents to the nonfiling party and its advisors prior to filing and, if
requested, by accepting all reasonable additions, deletions or changes suggested
in connection therewith. The parties hereto shall furnish all information
required for any application or other filing to be made pursuant to the rules
and regulations of any applicable Law (including all information required to be
in the Proxy Statement) in connection with the transactions contemplated by this
Agreement.
(b) Parent and the Company shall file as soon as practicable
(but not later than five business days) after the date of this Agreement
notifications under the HSR Act and shall
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42
respond as promptly as practicable to all inquiries or requests received from
the Federal Trade Commission or the Antitrust Division of the Department of
Justice for additional information or documentation and shall respond as
promptly as practicable to all inquiries and requests received from any State
Attorney General or other Governmental Entity in connection with antitrust
matters. The parties shall cooperate with each other in connection with the
making of all such filings or responses, including providing copies of all such
documents to the other party and its advisors prior to filing or responding.
(c) Each of the Company and Parent agree to cooperate and use
their best efforts vigorously to contest and resist any action, including
legislative, administrative or judicial action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order (whether
temporary, preliminary or permanent) (an "Order") that is in effect and that
restricts, prevents or prohibits the consummation of the Merger or any other
transactions contemplated by this Agreement, including, without limitation, by
vigorously pursuing all available avenues of administrative and judicial appeal
and all available legislative action. Notwithstanding any other provision of
this Agreement to the contrary, each of the Company and Parent also agree, if
requested by the other, to take any and all actions as is or may be required by
Governmental Entities as a condition to the granting of any approvals required
in order to permit the consummation of the Merger or the other transactions
contemplated hereby or as may be required to avoid, lift, vacate or reverse any
legislative, administrative or judicial action which would otherwise cause any
condition to Closing not to be satisfied; provided, however, that Parent and the
Parent Subsidiary shall not be required to take any actions otherwise required
hereunder if the effect of such action would have a material adverse effect on
the financial position, business, or results of operations of the Parent, the
Parent Subsidiaries, the Company and the Company Subsidiaries, all taken as a
whole.
SECTION 6.07. Plan of Reorganization. (a) This Agreement is
intended to constitute a "plan of reorganization" within the meaning of section
1.368-2(g) of the income tax regulations promulgated under the Code. From and
after the date of this Agreement and until the Effective Time, each party hereto
shall use its reasonable best efforts to cause the Merger to qualify, and will
not knowingly take any action, cause any action to be taken, fail to take any
action or cause any action to fail to be taken which action or failure to act
could prevent the Merger from qualifying as a reorganization under the
provisions of section 368(a) of the Code. Following the Effective Time, neither
the Surviving Corporation, Parent nor any of their affiliates shall knowingly
take any action, cause any action to be taken, fail to take any action or cause
any action to fail to be taken, which action or failure to act could cause the
Merger to fail to qualify as a reorganization under section 368(a) of the Code.
(b) As of the date hereof, to the Company's Knowledge, there
is no reason (i) why it would not be able to deliver to Company's counsel or
Parent's counsel, at the date of the legal opinions referred to below,
certificates substantially in compliance with IRS published advance ruling
guidelines, with customary exceptions and modifications thereto, to enable such
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43
firms to deliver the legal opinions contemplated by Section 7.01(f) or (ii) why
Company's counsel or Parent's counsel would not be able to deliver the opinions
required by Section 7.01(f).
(c) As of the date hereof, to Parent's Knowledge, there is no
reason (i) why it would not be able to deliver to Company's counsel or Parent's
counsel, at the date of the legal opinions referred to below, certificates
substantially in compliance with IRS published advance ruling guidelines, with
customary exceptions and modifications thereto, to enable such firms to deliver
the legal opinions contemplated by Section 7.01(f) or (ii) why Company's counsel
or Parent's counsel would not be able to deliver the opinions required by
Section 7.01(f).
SECTION 6.08. Public Announcements. The initial press release
relating to this Agreement shall be a joint press release, the text of which has
been agreed to by each of Parent and the Company. Unless otherwise required by
applicable Law or by obligations pursuant to any listing agreement with or rules
of any securities exchange, the parties hereto shall consult with each other
before issuing any press release or otherwise making any public statement with
respect to this Agreement, the transactions contemplated hereby or the
activities and operations of the other party and shall not issue any such
release or make any such statement without the prior written consent of the
other party (such consent not to be unreasonably withheld or delayed).
SECTION 6.09. NASDAQ Listing. Parent shall promptly prepare
and submit to the NASDAQ a listing application covering the shares of Parent
Common Stock to be issued in the Merger, and shall use its reasonable efforts to
obtain, prior to the Effective Time, approval for the listing of such Parent
Common Stock, subject to official notice to the NASDAQ of issuance, and the
Company shall cooperate with Parent with respect to such listing.
SECTION 6.10. Conveyance Taxes. Parent shall be liable for and
shall hold the Company and the holders of shares of Company Common Stock who are
holders of the shares of Company Common Stock immediately prior to the Effective
Time harmless against any real property transfer or gains, sales, use, transfer,
value added, stock transfer or stamp taxes, any transfer, recording
registration, and other fees, and any similar Taxes which become payable in
connection with the transactions contemplated by this Agreement, but not
including income taxes. The parties acknowledge that this Section 6.10 is
specifically intended to benefit the holders of shares of Company Common Stock
who are holders of the shares of Company Common Stock immediately prior to the
Effective Time.
SECTION 6.11. Governance. (a) Immediately following the
Effective Time, Parent shall cause the following changes to the Parent Board,
which changes shall be effected as promptly as possible following the Effective
Time:
(i) the appointment of Martin J. Wygod as a director of Parent
Board;
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44
(ii) the appointment of two (2) additional individuals,
designated by the Company Board, as in existence on the date hereof,
to the Parent Board (such directors and Martin J. Wygod being, the
"Initial Company Designees");
(iii) the appointment of at least one (1) Initial Company
Designee to each committee of the Parent Board (including the
compensation committee and the governance or executive committee); and
(iv) the appointment of Martin J. Wygod as co-chairman of the
Parent Board.
(b) Parent shall cause the Parent Board to consist of 12
directors, out of which three (3) directorships shall be vacant, immediately
prior to the Effective Time.
(c) Parent shall cause each of the Initial Company Designees
to be appointed to serve as a director of the Parent Board. Martin J. Wygod
shall serve for an initial term of no less than three (3) years. The other
Initial Company Designees shall serve as a director of the Parent Board for an
initial term of no less than one (1) year. Thereafter, the Parent shall nominate
such Initial Company Designees to serve on the Parent Board to ensure that each
of the Initial Company Designees serve for at least three (3) years from the
Effective Time. In the event of removal, resignation or other inability of an
Initial Company Designee to serve, the Company Board, as in existence on the
date hereof, shall appoint another individual to complete the term of such
Initial Company Designee.
(d) KippGroup. Martin J. Wygod shall be the final arbiter on
behalf of Parent and the Company, with full authority, with respect to the
matters provided for in Sections 1.02(b) 1.02(c) 1.02(d), 1.02(f),
1.02(g),1.02(h), 2.06, 2.07, 2.08 and 2.09 of the Stock Purchase Agreement,
dated January 13, 1999, among Synetic, Inc., David R. Kipp and James P. Kipp,
until such time as the matters referred to in such sections have been finally
and fully resolved.
SECTION 6.12. Employee Benefit Matters. (a) Parent hereby
agrees that, for a period of two (2) years immediately following the Effective
Time the Surviving Corporation shall, or shall cause the Company Subsidiaries
to, maintain employee benefit plans, programs and arrangements for the benefit
of active and retired employees of the Company and the Company Subsidiaries that
in the aggregate will provide compensation and benefits that are substantially
equivalent to the compensation and benefits provided to such active and retired
employees under the employee benefit plans, programs and arrangements of the
Company and the Company Subsidiaries as in effect immediately prior to the
Effective Time; provided, however, that changes may be made to such employee
benefit plans and arrangements to the extent necessary in light of applicable
Law. From and after the Effective Time, the Surviving Corporation shall honor,
and shall cause the Company Subsidiaries to honor, in accordance with their
terms, all existing employment and severance agreements and arrangements and
severance, termination protection and bonus plans which are applicable to any
current or former employees
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45
or directors of the Company or any of the Company Subsidiaries and that have
been disclosed or made available to Parent.
(b) With respect to any benefits plans of Parent or Parent
Subsidiaries in which the officers and employees of the Company and the Company
Subsidiaries participate after the Effective Time, the Surviving Corporation
shall use reasonable efforts to: (i) waive any limitations as to pre-existing
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to such officers and employees under any
welfare benefit plan in which such employees may be eligible to participate
after the Effective Time (provided, however, that no such waiver shall apply to
a pre-existing condition of any such officer or employee who was, as of the
Effective Time, excluded from participation in a Company benefit plan by nature
of such pre-existing condition), (ii) provide each such officer and employee
with credit for any co-payments and deductibles paid prior to the Effective Time
during the year in which the Effective Time occurs in satisfying any applicable
deductible or out-of-pocket requirements under any welfare benefit plan in which
such employees may be eligible to participate after the Effective Time, and
(iii) other than with respect to vesting credit with respect to Parent options
granted to such officers and employees (other than pursuant to Section 2.04),
recognize all service of such officers and employees with the Company and the
Company Subsidiaries (and their respective predecessors) for all purposes
(including without limitation purposes of eligibility to participate, vesting
credit, entitlement for benefits, and benefit accrual) in any benefit plan in
which such employees may be eligible to participate after the Effective Time,
except to the extent such treatment would result in duplicative accrual of
benefits for the same period of service.
(c) Following the Effective Time, the Surviving Corporation
shall or shall cause the Company Subsidiaries, as applicable, to continue to
maintain the Porex 401(k) Savings Plan and related trust (the "Porex Savings
Plan") for the benefit of the employees of Porex Corporation and the
participating employers thereunder for a period of time which shall be not less
than the number of plan years necessary to allocate the "Surplus Account"
transferred to the Porex Savings Plan, as a qualified replacement plan, from the
terminated Pension Plan for Employees of Porex Technologies Corp. and its
related trust (the "Pension Plan"). For purposes of determining allocations of
such contributions to participants under the Porex Savings Plan each plan year,
the level of employer contributions in place immediately prior to the Effective
Time shall continue in effect during the time period necessary to allocate 100%
of the "Surplus Account", including any earnings thereon, to the accounts of
such participants, subject to the limitations of Section 415 of the Code. All
allocations of employer contributions from the "Surplus Account" shall be fully
vested and nonforfeitable for each participant. For purposes of this paragraph,
"Surplus Account" shall mean the amount of the Pension Plan assets which
represents 100% of the full amount which Porex Corporation could receive as an
employer reversion from the terminated Pension Plan following complete
distribution of all liabilities under the Pension Plan and its related trust,
plus any earnings thereon.
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46
(d) If at any time following the Effective Time but prior to
the date two (2) years following the Effective Time, (i) Parent shall terminate
any employee of the Company or any Company Subsidiary without "cause" (as
defined below) or (ii) any such employee shall terminate his or her employment
with Parent, the Company or any Company Subsidiary following a "material
reduction in the duties" or material reduction in compensation of such employee
or the relocation of such employee to a location more than 25 miles from such
employee's existing work location, without the employee's consent, Parent shall
cause all Company Stock Options granted to such employee to become fully
exercisable upon such termination. A "material reduction in the duties" of an
employee means a substantive reduction in duties, not a change in title or
reporting hierarchy occurring as a result of the Merger (including as a result
of the Company being combined with Parent or becoming a subsidiary of Parent
following the Merger). "Cause" means (A) repeated failure by an employee to
perform his or her duties in any material respect following notice and a
reasonable period of time to correct such failure; (B) an employee engaging in
an act of dishonesty that is materially and demonstrably injurious to the
Company or Parent; or (C) the conviction of an employee of a felony in respect
of a dishonest or fraudulent act or other crime of moral turpitude involving
Parent or the Company. In the case of any employee who is an executive officer
of Parent, the Company or a Company Subsidiary, any assertion that "cause"
exists shall be made only with the approval of the Parent Board. Notwithstanding
the foregoing, in the case of a sale of a Company Subsidiary (or the assets
thereof) that is treated, as a result of such sale, as a termination of
employment of an employee of such Company Subsidiary for purposes of this
Section 6.12(d), the acceleration of vesting provided for herein shall be made
subject to such further terms and conditions as the Parent Board may impose at
the time of such sale.
SECTION 6.13. Exemption From Liability Under Section 16(b).
Assuming that the Company delivers to Parent the Section 16 Information (defined
below) in a timely fashion, the Parent Board, or a committee of two or more
Non-Employee Directors thereof (as such item is defined for purposes of Rule
16b-3 under the Exchange Act), shall adopt resolutions prior to the consummation
of the Merger, providing that the receipt by the Company Insiders (as defined
below) of Parent Common Stock in exchange for shares of the Company Common
Stock, and of options for Parent Common Stock upon conversion of options for the
Company Common Stock, in each case pursuant to the transactions contemplated
hereby and to the extent such securities are listed in the Section 16
Information, are intended to be exempt from liability pursuant to Section 16(b)
under the Exchange Act. Such resolutions shall comply with the approval
conditions of Rule 16b-3 under the Exchange Act for purposes of such Section
16(b) exemption, including, but not limited to, specifying the name of the
Company Insiders, the number of securities to be acquired or disposed of for
each such person, the material terms of any derivative securities, and that the
approval is intended to make the receipt of such securities exempt pursuant to
Rule 16b-3(d). "Section 16 Information" shall mean information accurate in all
respects regarding the Company Insiders, the number of shares of the Company
Common Stock held by each such Company Insider and expected to be exchanged for
Parent Common Stock in the Merger, and the number and description of the options
on the Company
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47
Common Stock held by each such Company Insider that are expected to be converted
into options on Parent Common Stock in connection with the Merger. "Company
Insiders" shall mean those officers and directors of the Company who will be
subject to the reporting requirements of Section 16(b) of the Exchange Act with
respect to Parent and who are listed in the Section 16 Information.
SECTION 6.14. Company Affiliates; Restrictive Legend;
Restrictions on Transfer. Not later than 30 days prior to the Company
Stockholders Meeting, the Company shall deliver to Parent a list of those
Persons who may be deemed to be, in the Company's reasonable judgment at the
time this Agreement is submitted for adoption by the Stockholders of the
Company, affiliates of the Company within the meaning of Rule 145 promulgated
under the 1933 Act (each a "Rule 145 Affiliate"). The Company will provide
Parent with such information and documents as Parent reasonably requests for
purposes of reviewing such list. Parent will give stop transfer instructions to
its transfer agent with respect to any Parent Common Stock received pursuant to
the Merger by the Company Stockholders who are Rule 145 Affiliates and there
will be placed on the certificates representing such Parent Common Stock, or any
substitution therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, APPLIES AND MAY ONLY BE TRANSFERRED (A) IN CONFORMITY
WITH RULE 145(d) UNDER SUCH ACT, OR (B) IN ACCORDANCE WITH A WRITTEN
OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND
SUBSTANCE, THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED."
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party. The
obligations of the Company and Parent to consummate the Merger are subject to
the satisfaction of the following conditions:
(a) the Registration Statement shall have been declared
effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceeding for that purpose shall have
been initiated by the SEC;
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48
(b) the Company Proposal shall have been approved by the
requisite affirmative vote of the stockholders of the Company in
accordance with Delaware Law, the Certificate of Incorporation of the
Company and the Company By-Laws;
(c) the Parent Proposal shall have been approved by the
requisite affirmative vote of the stockholders of Parent in accordance
with Delaware Law, the Certificate of Incorporation of Parent and the
Parent By-Laws;
(d) no Governmental Entity or court of competent jurisdiction
located or having jurisdiction in the United States shall have
enacted, issued, promulgated, enforced or entered any Law, judgment,
decree, executive order or award (an "Order") or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such Order or other
action shall have become final and nonappealable or shall have failed
to issue an Order or to take any other action necessary to fulfill the
conditions to the Closing of the Merger and such denial of a request
to issue such Order or take such other action shall have become final
and nonappealable, which has the effect of making the Merger illegal
or otherwise prohibiting consummation of the Merger;
(e) any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act shall have expired
or been terminated; and
(f) all conditions to the closing of the CareInsite Merger
(except for the condition that the closing of the Merger shall have
occurred) shall have been satisfied or, if permissible, waived as
provided in the CareInsite Merger Agreement.
SECTION 7.02. Conditions to the Obligations of Parent. The
obligations of Parent to consummate the Merger are subject to the satisfaction
of the following additional conditions:
(a) Each of the representations and warranties of the Company
contained in this Agreement shall be true and correct as of the
Effective Time as though made on and as of the Effective Time, except
where failure to be so true and correct would not have a Company
Material Adverse Effect, and except that those representations and
warranties which address matters only as of a particular date or
period of time shall remain true and correct as of such date or period
of time, except where failure to be so true and correct would not have
a Company Material Adverse Effect. Parent shall have received a
certificate of the President or Chief Financial Officer of the Company
to such effect;
(b) The Company shall have performed or complied, in all
material respects, with all agreements and covenants required by this
Agreement to be performed or
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49
complied with by it on or prior to the Effective Time. Parent shall
have received a certificate of the Chief Executive Officer or Chief
Financial Officer of the Company to such effect; and
(c) Parent shall have received a written opinion of Nelson
Mullins Riley & Scarborough, L.L.P., legal counsel to Parent, in form
and substance reasonably satisfactory to Parent, which shall be to the
effect that the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code and that Parent and the Company
will each be a party to the reorganization within the meaning of
Section 368(b) of the Code, and such opinion shall not have been
withdrawn; provided that, if counsel to Parent does not render such
opinion, this condition shall nonetheless be deemed to be satisfied
with respect to Parent if counsel to the Company renders such opinion
to Parent, which opinion shall be in form and substance reasonably
satisfactory to Parent. In rendering such opinion, legal counsel shall
be entitled to rely upon, among other things, reasonable and customary
assumptions as well as representations of Parent, the Company and
others. In addition, in the event that legal counsel cannot deliver
tax opinions based on the Merger being structured as a merger of the
Company with and into Parent or the CareInsite Merger being structured
as a merger of CareInsite with and into ASC, the parties shall use
their best efforts to restructure either or both of such mergers in a
manner upon which legal counsel is able to deliver such tax opinions.
SECTION 7.03. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Merger are subject to the
satisfaction of the following additional conditions:
(a) Each of the representations and warranties of Parent
contained in this Agreement shall be true and correct as of the
Effective Time as though made on and as of the Effective Time, except
where the failure to be so true and correct would not have a Parent
Material Adverse Effect, and except that those representations and
warranties which address matters only as of a particular date or
period of time shall remain true and correct as of such date or period
of time, except where the failure to be so true and correct would not
have a Parent Material Adverse Effect. The Company shall have received
a certificate of the President or Chief Financial Officer of Parent to
such effect;
(b) Parent shall have performed or complied, in all material
respects, with all agreements and covenants required by this Agreement
to be performed or complied with by them on or prior to the Effective
Time, and the Company shall have received a certificate of the Chief
Executive Officer or Chief Financial Officer of Parent to such effect;
and
(c) The Company shall have received a written opinion of
Shearman & Sterling, legal counsel to the Company, in form and
substance reasonably satisfactory to
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50
the Company, which shall be to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Code and that Parent and the Company will each be a party to the
reorganization within the meaning of Section 368(b) of the Code, and
such opinion shall not have been withdrawn; provided that, if counsel
to the Company does not render such opinion, this condition shall
nonetheless be deemed to be satisfied with respect to such party if
counsel to Parent renders such opinion to the Company, which opinion
shall be in form and substance reasonably satisfactory to the Company.
In rendering such opinion, legal counsel shall be entitled to rely
upon, among other things, reasonable and customary assumptions as well
as representations of Parent, the Company, and others. In addition, in
the event that legal counsel cannot deliver tax opinions based on the
Merger being structured as a merger of the Company with and into Parent
or the CareInsite Merger being structured as a merger of CareInsite
with and into ASC, the parties shall use their best efforts to
restructure either or both of such mergers in a manner upon which legal
counsel is able to deliver tax opinions.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated
and the Merger and the other transactions contemplated by this Agreement may be
abandoned at any time prior to the Effective Time, notwithstanding any requisite
approval and adoption of this Agreement and the transactions contemplated by
this Agreement, as follows:
(a) by mutual written consent duly authorized by the Boards of
Directors of each of Parent and the Company;
(b) by either Parent or the Company if the Effective Time
shall not have occurred on or before September 30, 2000 (the
"Termination Date"); provided, however, that the right to terminate
this Agreement under this Section 8.01(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement
has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before the Termination Date;
(c) by either Parent or the Company, if any Governmental
Entity (i) shall have issued an Order or taken any other action
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such Order or other
action shall have become final and nonappealable or (ii) shall have
failed to issue an Order or to take any other action necessary to
fulfill the conditions to the Closing of the Merger and such failure
of a request to issue such Order or take such other action shall have
become final and nonappealable;
<PAGE>
51
(d) by Parent if (i) the Company Board withdraws, modifies or
changes its recommendation of the Company Proposal in a manner adverse
to Parent or shall have resolved to do so, or (ii) the Company Board
shall have recommended to the stockholders of the Company a Company
Acquisition Proposal or shall have resolved to do so;
(e) by the Company, if (i) the Parent Board withdraws,
modifies or changes its recommendation of the Parent Proposal in a
manner adverse to the Company or shall have resolved to do so or (ii)
the Parent Board shall have recommended to the stockholders of Parent
a Parent Acquisition Proposal or shall have resolved to do so;
(f) by either Parent or the Company, if the Company Proposal
shall fail to receive the requisite vote at the Company Stockholders'
Meeting; provided, however, the right to terminate this Agreement
under this Section 8.01(f) shall not be available to the Company if
the failure to obtain the requisite vote shall have been caused by the
action or failure to act of the Company and such action or failure to
act constitutes a material breach by the Company of this Agreement;
(g) by either Parent or the Company, if the Parent Proposal
shall fail to receive the requisite vote at the Parent Stockholders'
Meeting; provided, however, the right to terminate this Agreement
under this Section 8.01(g) shall not be available to Parent if the
failure to obtain the requisite vote shall have been caused by the
action or failure to act of Parent and such action or failure to act
constitutes a material breach by Parent of this Agreement; or
(h) by either Parent or the Company, if the CareInsite Merger
Agreement is terminated in accordance with its terms.
SECTION 8.02. Effect of Termination. In the event of
termination of this Agreement pursuant to Section 8.01, this Agreement shall
forthwith become void and there shall be no liability under this Agreement on
the part of Parent or the Company or any of their respective officers or
directors and all rights and obligations of each party hereto shall cease,
except (a) as provided in Sections 8.05 and 9.01 and (b) nothing herein shall
relieve any party from liability for any willful breach of any representation,
warranty, covenant or other agreement in this Agreement occurring prior to
termination.
SECTION 8.03. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after the approval of the Company Proposal by the stockholders of the Company,
no amendment may be made which would reduce the amount or change the type of
consideration into which each share of Company Common Stock shall be converted
upon consummation of the Merger and provided further that the parties shall not
amend any provision of this Agreement without the prior written consent of the
special
<PAGE>
52
committee of CareInsite (which shall not be unreasonably withheld or delayed) if
such amendment could reasonably be expected to delay the consummation of the
CareInsite Merger or adversely affect CareInsite or its stockholders or would
change the Exchange Ratio.
SECTION 8.04. Waiver. At any time prior to the Effective Time,
any party hereto may (a) extend the time for the performance of any obligation
or other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any agreement or condition
contained herein; provided, however, that no such extension or waiver may be
granted without the prior written consent of the special committee of CareInsite
(which shall not be unreasonably withheld or delayed) if such extension or
waiver could reasonably be expected to delay the consummation of the CareInsite
Merger or adversely affect CareInsite or its stockholders or would change the
Exchange Ratio. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
SECTION 8.05. Expenses. (a) Except as set forth in this
Section 8.05, all Expenses (as defined below) incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses, whether or not the Merger or any other
transaction is consummated, except that the Company and Parent each shall pay
one-half of all Expenses relating to printing, filing and mailing the
Registration Statement and the Proxy Statement, including all SEC and other
regulatory filing fees incurred in connection with the Registration Statement
and the Proxy Statement. "Expenses" as used in this Agreement shall include all
reasonable out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement, the preparation, printing, filing
and mailing of the Registration Statement and the Proxy Statement, the
solicitation of stockholder approvals, the filing of any required notices under
the HSR Act or other similar regulations and all other matters related to the
closing of the Merger and the other transactions contemplated by this Agreement.
(b) The Company agrees that:
(i) if (A) Parent shall terminate this Agreement pursuant to
Section 8.01(d) and (B) at the time of the occurrence of the
circumstance permitting termination pursuant to such Section, there
shall exist a Company Acquisition Proposal, or
(ii) if (A) Parent or the Company shall terminate this
Agreement pursuant to Section 8.01(f) due to the failure of the
Company's stockholders to approve this Agreement and (B) at the time
of such failure to so approve this Agreement there shall exist a
Company Acquisition Proposal,
<PAGE>
53
then the Company shall pay to Parent an amount equal to the sum of $200,000,000
(the "Company Alternative Transaction Fee") and all of Parent's Expenses;
provided, however, that Parent shall not, upon a termination pursuant to Section
8.01(d) by Parent or pursuant to Section 8.01(f) by Parent or the Company, be
entitled to receive the Company Alternative Transaction Fee or any of Parent's
Expenses pursuant to this Section 8.05(b) if the Company Board shall, prior to
such termination, have withdrawn, modified or changed its recommendation of this
Agreement or the transactions contemplated hereby in a manner adverse to Parent
due solely to a breach by Parent of any representation, warranty, covenant or
agreement on the part of Parent set forth in this Agreement, which breach is not
cured by Parent within 10 days following notice of such breach, and would cause
the conditions set forth in Sections 7.03(a) and 7.03(b) to not be satisfied.
(c) Parent agrees that:
(i) if (A) the Company shall terminate this Agreement pursuant
to Section 8.01(e) and (B) at the time of the occurrence of the
circumstance permitting termination pursuant to such Section, there
shall exist a Parent Acquisition Proposal, or
(ii) if (A) the Company or Parent shall terminate this
Agreement pursuant to Section 8.01(g) due to the failure of Parent's
stockholders to approve the Parent Proposal and (B) at the time of
such failure to so approve this Agreement there shall exist a Parent
Acquisition Proposal,
then Parent shall pay to the Company an amount equal to the sum of $130,000,000
(the "Parent Alternative Transaction Fee") and all of the Company's Expenses;
provided, however, that the Company shall not, upon a termination pursuant to
Section 8.01(e) by the Company or pursuant to Section 8.01(g) by the Company or
Parent, be entitled to receive the Parent Alternative Transaction Fee or any of
the Company's Expenses pursuant to this Section 8.05(c) if the Parent Board
shall, prior to such termination, have withdrawn, modified or changed its
recommendation of this Agreement or the transactions contemplated hereby in a
manner adverse to the Company due solely to a breach by the Company of any
representation, warranty, covenant or agreement on the part of the Company set
forth in this Agreement, which breach is not cured by the Company within 10 days
following notice of such breach, and would cause the conditions set forth in
Sections 7.02(a) and 7.02(b) to not be satisfied.
(d) Each of the Company and Parent agrees that the agreements
contained in Sections 8.05(b) and (c) are an integral part of the transactions
contemplated by this Agreement. Each of the Company and Parent agrees that the
payments provided for in Sections 8.05(b) and (c) shall be the sole and
exclusive remedies of the parties upon a termination of this Agreement pursuant
to Sections 8.01(d), (e), (f) and (g), as the case may be, and such remedies
shall be limited to the sums stipulated in Sections 8.05(b) and (c), regardless
of the circumstances giving rise to such termination; provided, however, that
nothing herein shall relieve any party from
<PAGE>
54
liability for any willful breach of any representation, warranty, covenant or
other agreement in this Agreement occurring prior to termination.
(e) Any payment of a Company Alternative Transaction Fee
required to be made pursuant to Section 8.05(b) shall be made to Parent not
later than two (2) business days after termination of this Agreement. Payment of
Expenses pursuant to Section 8.05(b) shall be made not later than two (2)
business days after delivery to the Company by Parent of notice of demand for
payment and an itemization setting forth in reasonable detail all Expenses of
Parent (which itemization may be supplemented and updated from time to time by
Parent until the 60th day after Parent delivers such notice of demand for
payment). All payments to Parent under this Section 8.05 shall be made by wire
transfer of immediately available funds to an account designated by Parent.
(f) Any payment of a Parent Alternative Transaction Fee
required to be made pursuant to Section 8.05(c) shall be made to the Company not
later than two business days after termination of this Agreement. Payment of
Expenses pursuant to Section 8.05(c) shall be made not later than two business
days after delivery to Parent by the Company of notice of demand for payment and
an itemization setting forth in reasonable detail all Expenses of the Company
(which itemization may be supplemented and updated from time to time by the
Company until the 60th day after the Company delivers such notice of demand for
payment). All payments to the Company under this Section 8.05 shall be made by
wire transfer of immediately available funds to an account designated by the
Company.
(g) In the event that the Company or Parent, as the case may
be, shall fail to pay any amount payable pursuant to this Section 8.05 when due,
the other party's "Expenses" shall be deemed to include (i) the costs and
expenses actually incurred or accrued by such other party (including, without
limitation, fees and expenses of counsel) in connection with the collection
under and enforcement of this Section 8.05, together with (ii) interest on such
unpaid amounts, commencing on the date that such amounts became due, at a rate
equal to the rate of interest publicly announced by Citibank, N.A., from time to
time, in The City of New York, as such bank's Base Rate plus 2.00%.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that (a) those covenants
and agreements that by their terms apply or are to be performed in whole or in
part after the Effective Time and this Article IX shall survive the
<PAGE>
55
Effective Time for the respective periods set forth therein or, if no such
period is specified, for six years and (b) the representations, warranties and
agreements set forth in Sections 6.03(b), 6.08, 8.02, and 8.05 and this Article
IX shall survive termination for the respective periods set forth therein or, if
no such period is specified, for six years. Nothing in this Section 9.01 shall
relieve any party of responsibility for any willful breach of any
representation, warranty, covenant or other agreement in this Agreement
occurring prior to termination.
SECTION 9.02. Notices. (a) All notices and other
communications given or made pursuant to this Agreement shall be in writing and
shall be sent by an overnight courier service that provides proof of receipt,
mailed by registered or certified mail (postage prepaid, return receipt
requested) or telecopied to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
if to the Company:
Medical Manager Corporation
669 River Drive
Center 2
Elmwood Park, NJ 07407
Telephone No.: (201) 703-3400
Telecopier No.: (201) 703-3401
Attention: James R. Love, CFO
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telephone No.: (212) 848-4000
Telecopier No.: (212) 848-7179
Attention: Creighton O'M. Condon
Mark Roppel
<PAGE>
56
if to Parent:
Healtheon/WebMD Corporation
400 The Lenox Building 3399
Peachtree Road NE
Atlanta, GA 30326
Telephone No.: (404) 495-7600
Telecopier No.: (404) 479-7603
Attention: Jack Dennison,
Executive Vice President, General Counsel
with a copy to:
Nelson Mullins Riley & Scarborough, L.L.P.
Bank of America Corporate Center
Suite 2600
100 N. Tryon Street
Charlotte, North Carolina 28202
Telephone No.: (704) 417-3200
Telecopier No.: (704) 377-4814
Attention: H. Bryan Ives III
C. Mark Kelly
(b) If this Agreement provides for a designated period after a
notice within which to perform an act, such period shall commence on the date of
receipt or refusal of the notice.
(c) If this Agreement requires the exercise of a right by
notice on or before a certain date or within a designated period, such right
shall be deemed exercised on the date of delivery to the courier service,
telecopying or mailing of the notice pursuant to which such right is exercised.
(d) Notices of changes of address shall be effective only upon
receipt.
SECTION 9.03. Certain Definitions. For purposes of this
Agreement, except as otherwise provided herein, the terms set forth below shall
have the following meanings:
"affiliate" of a specified Person means a Person who
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with such specified Person.
<PAGE>
57
"beneficial owner" with respect to any shares means a
Person who shall be deemed to be the beneficial owner of such shares
(i) which such Person or any of its affiliates or associates (as such
term is defined in Rule 12b-2 promulgated under the Exchange Act)
beneficially owns, directly or indirectly, (ii) which such Person or
any of its affiliates or associates has, directly or indirectly, (A)
the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration
rights, exchange rights, warrants or options, or otherwise or (B) the
right to vote pursuant to any agreement, arrangement or understanding
or (iii) which are beneficially owned, directly or indirectly, by any
other Persons with whom such Person or any of its affiliates or
associates or Person with whom such Person or any of its affiliates or
associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any such shares.
"business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings, or,
in the case of determining a date when any payment is due, any day on
which banks are not required or authorized to close in The City of New
York.
"Contract" means any agreement, contract, indenture,
instrument, lease or any written arrangement, commitment, obligation,
plan, restriction, understanding or undertaking of any kind or
character, or other document to which any Person is a party or by which
such Person is bound or affecting such Person's capital stock, assets
or business.
"control" (including the terms "controlled by" and
"under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities, as trustee or executor, by
contract or credit arrangement or otherwise.
"Knowledge" means, with respect to any matter in
question, (i) in the case of the Company, if any of the executive
officers of the Company has actual knowledge of such matter after
making reasonable inquiry of officers and employees charged with senior
administrative or operational responsibility for such matters and (ii)
in the case of Parent, if any of the executive officers of Parent has
actual knowledge of such matter after making reasonable inquiry of
officers and employees charged with senior administrative or
operational responsibility for such matters.
"Person" means an individual, corporation,
partnership, limited partnership, syndicate, person (including, without
limitation, a "person" as defined in section 13(d)(3) of the Exchange
Act), trust, association, limited liability company or entity or
government, political subdivision, agency or instrumentality of a
government.
<PAGE>
58
"subsidiary" or "subsidiaries" of any Person means any
corporation, partnership, joint venture or other legal entity of which
such Person (either alone or through or together with any other
subsidiary) owns, directly or indirectly, more than 50% of the stock or
other equity interests, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body
of such corporation or other legal entity.
SECTION 9.04. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement be consummated as originally contemplated to the
fullest extent possible.
SECTION 9.05. Assignment; Binding Effect; Benefit. (a) Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of Law or
otherwise) without the prior written consent of the other parties.
(b) This Agreement shall be binding upon and inure solely to
the benefit of the parties hereto and their respective successors and permitted
assigns, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, other than Article II (which
may be enforced by the beneficiaries thereof), Section 6.05, Section 8.02 and
Section 8.03 (which is intended to be for the benefit of the Persons covered
thereby and their respective heirs and representatives and may be enforced by
such Persons) and Section 9.10 (which may be enforced by CareInsite).
SECTION 9.06. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
SECTION 9.07. Governing Law; Forum. (a) This Agreement shall
be governed by, and construed in accordance with, the Laws of the State of
Delaware applicable to contracts executed in and to be performed in that state.
<PAGE>
59
(b) Each of the parties hereto irrevocably agrees that all
legal actions or proceedings with respect to this Agreement shall be brought and
determined in the courts of the State of Delaware or in the United States
District Court for the State of Delaware, and each of the parties hereto hereby
irrevocably submits with regard to any such action or proceeding for itself and
in respect to its property, generally and unconditionally, to the jurisdiction
of the aforesaid courts. Each of the parties hereto hereby irrevocably waives,
and agrees not to assert, by way of motion, as a defense, counterclaim or
otherwise, in any action or proceeding with respect to this Agreement, (i) any
claim that it is not personally subject to the jurisdiction of the above-named
courts for any reason other than the failure to serve process in accordance with
applicable Law, (ii) that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such
courts and (iii) to the fullest extent permitted by applicable Law, that (A) the
suit, action or proceeding in any such court is brought in an inconvenient
forum, (B) the venue of such suit, action or proceeding is improper and (C) this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
SECTION 9.08. Interpretation. (a) If a reference is made in
this Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit or Schedule to this Agreement unless otherwise indicated.
The table of contents, glossary of defined terms and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The phrases "the date of this
Agreement" and "the date hereof" shall be deemed to refer to February 13, 2000.
(b) The parties hereto acknowledge that certain matters set
forth in the Company Disclosure Letter and certain matters set forth in the
Parent Disclosure Letter are included for informational purposes only,
notwithstanding the fact that, because they do not rise above applicable
materiality thresholds or otherwise, they would not be required to be set forth
therein by the terms of this Agreement. The parties agree that disclosure of
such matters shall not be taken as an admission by the Company or Parent, as the
case may be, that such disclosure is required to be made under the terms of any
provision of this Agreement and in no event shall the disclosure of such matters
be deemed or interpreted to broaden or otherwise amplify the representations and
warranties contained in this Agreement or to imply that such matters are or are
not material and neither party shall use, in any dispute between the parties,
the fact of any such disclosure as evidence of what is or is not material for
purposes of this Agreement.
SECTION 9.09. Counterparts. This Agreement may be executed and
delivered in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed and delivered shall be deemed
to be an original but all of which taken together shall constitute one and the
same agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
<PAGE>
60
SECTION 9.10. Entire Agreement. This Agreement constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties and the stockholders of the parties with
respect to the subject matter hereof, other than the Confidentiality Agreement,
the Company Voting Agreement, the Parent Voting Agreement, the CareInsite Merger
Agreement, and the Company Voting Agreements (as defined in the CareInsite
Merger Agreement), all of which shall survive the execution and delivery of this
Agreement.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH OF PARENT AND THE
COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT AND THE
COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
SECTION 9.12. Brokers and Finders. Except for Morgan Stanley &
Co. Incorporated, and FleetBoston Robertson Stephens, Inc., the investment
banker for Parent, and Merrill Lynch & Co., Warburg Dillon Reed LLC and
Donaldson, Lufkin & Jenrette Securities Corporation, the investment bankers for
the Company, each of the parties represents and warrants that neither it nor any
of its officers, directors, employees, or affiliates has employed any broker or
finder or incurred any liability for any financial advisory fees, investment
bankers' fees, brokerage fees, commissions, or finders' fees in connection with
this Agreement or the transactions contemplated hereby. In the event of a claim
by any broker or finder based upon his or its representing or being retained by
or allegedly representing or being retained by Parent or the Company in
connection with the transactions contemplated hereby, each of Parent or the
Company, as the case may be, agrees to indemnify and hold the other parties
harmless of and from any liability in respect of any such claim. The Company
hereby represents and warrants to Parent that copies of all of its Contracts
with its investment bankers set forth in this Section 9.12 have been made
available to Parent. Parent hereby represents and warrants to the Company that
copies of all of its Contracts with its investment bankers set forth in this
Section 9.12 have been made available to the Company.
<PAGE>
61
IN WITNESS WHEREOF, Parent and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
HEALTHEON/WEBMD CORPORATION
By /s/ Jeffrey T. Arnold
-------------------------------------------
Name: Jeffrey T. Arnold
Title: Chief Executive Officer
MEDICAL MANAGER CORPORATION
By /s/ John Kang
-------------------------------------------
Name: John Kang
Title: Co-Chief Executive Officer
================================================================================
----------------------------
AGREEMENT AND PLAN OF MERGER
----------------------------
DATED AS OF FEBRUARY 13, 2000
AMONG
HEALTHEON/WEBMD CORPORATION,
AVICENNA SYSTEMS CORPORATION
AND
CAREINSITE, INC.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.01. The Merger.................................................2
SECTION 1.02. Effective Time; Closing....................................2
SECTION 1.03. Effect of the Merger.......................................3
SECTION 1.04. Certificate of Incorporation; By-Laws......................3
SECTION 1.05. Directors and Officers.....................................3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities...................................4
SECTION 2.02. Exchange of Certificates...................................5
SECTION 2.03. Stock Transfer Books.......................................8
SECTION 2.04. Company Stock Options......................................9
SECTION 2.05. Company Warrants..........................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND ASC
SECTION 3.01. Organization and Qualification............................10
SECTION 3.02. Certificate of Incorporation and By-Laws..................11
SECTION 3.03. Capitalization............................................11
SECTION 3.04. Authority Relative to This Agreement......................13
SECTION 3.05. No Conflict; Required Filings and Consents................13
SECTION 3.06. Permits; Compliance.......................................14
SECTION 3.07. SEC Filings; Financial Statements; Absence of
Liabilities...............................................15
SECTION 3.08. Absence of Certain Changes or Events......................16
SECTION 3.09. Absence of Litigation.....................................16
SECTION 3.10. Employee Benefit Plans....................................16
SECTION 3.11. Tax Matters...............................................17
SECTION 3.12. Intellectual Property.....................................17
SECTION 3.13. Taxes.....................................................19
SECTION 3.14. Vote Required.............................................20
SECTION 3.15. Opinion of Financial Advisor..............................20
(i)
<PAGE>
SECTION 3.16. Brokers...................................................20
SECTION 3.17. Contracts.................................................20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
SECTION 4.01. Organization and Qualification............................21
SECTION 4.02. Certificate of Incorporation and By-Laws..................21
SECTION 4.03. Capitalization............................................22
SECTION 4.04. Authority Relative to This Agreement......................23
SECTION 4.05. No Conflict; Required Filings and Consents................23
SECTION 4.06. Permits; Compliance.......................................24
SECTION 4.07. SEC Filings; Financial Statements; Absence of
Liabilities...............................................24
SECTION 4.08. Absence of Certain Changes or Events......................25
SECTION 4.09. Absence of Litigation.....................................25
SECTION 4.10. Employee Benefit Plans....................................26
SECTION 4.11. Tax Matters...............................................27
SECTION 4.12. Intellectual Property.....................................27
SECTION 4.13. Taxes.....................................................28
SECTION 4.14. Vote Required.............................................29
SECTION 4.15. Opinion of Financial Advisor..............................29
SECTION 4.16. Brokers...................................................29
SECTION 4.17. Contracts.................................................29
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the Merger.....30
SECTION 5.02. Conduct of Business by Parent Pending the Merger..........33
SECTION 5.03. Adverse Changes in Condition..............................35
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement; Joint Proxy Statement.............35
SECTION 6.02. Stockholders' Meetings....................................38
SECTION 6.03. Access to Information; Confidentiality....................39
SECTION 6.04. No Solicitation of Transactions...........................39
SECTION 6.05. Directors' and Officers' Indemnification and Insurance....41
SECTION 6.06. Amendment of Company Charter..............................43
(ii)
<PAGE>
SECTION 6.07. Further Action; Consents; Filings.........................43
SECTION 6.08. Plan of Reorganization....................................44
SECTION 6.09. Public Announcements......................................45
SECTION 6.10. NASDAQ Listing............................................45
SECTION 6.11. Conveyance Taxes..........................................45
SECTION 6.12. [RESERVED]................................................45
SECTION 6.13. Employee Benefit Matters..................................45
SECTION 6.14. Exemption from Liability Under Section 16(b)..............47
SECTION 6.15. [RESERVED]................................................47
SECTION 6.16. Company Affiliates; Restrictive Legend; Restrictions
on Transfer...............................................47
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party...............48
SECTION 7.02. Conditions to the Obligations of Parent...................49
SECTION 7.03. Conditions to the Obligations of the Company..............50
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination...............................................51
SECTION 8.02. Effect of Termination.....................................52
SECTION 8.03. Amendment.................................................52
SECTION 8.04. Waiver....................................................52
SECTION 8.05. Expenses..................................................53
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements................................................54
SECTION 9.02. Notices...................................................55
SECTION 9.03. Certain Definitions.......................................56
SECTION 9.04. Severability..............................................58
SECTION 9.05. Assignment; Binding Effect; Benefit.......................58
SECTION 9.06. Specific Performance......................................58
SECTION 9.07. Governing Law; Forum......................................59
SECTION 9.08. Interpretation............................................59
SECTION 9.09. Counterparts..............................................60
SECTION 9.10. Entire Agreement..........................................60
SECTION 9.11. WAIVER OF JURY TRIAL......................................60
SECTION 9.12. Brokers and Finders.......................................60
(iii)
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AGREEMENT AND PLAN OF MERGER dated as of February 13, 2000
(this "Agreement") among Healtheon/WebMD Corporation, a Delaware corporation
("Parent"), Avicenna Systems Corporation, a Massachusetts corporation ("ASC"),
and CareInsite, Inc., a Delaware corporation (the "Company") and an indirect
majority-owned subsidiary of Medical Manager Corporation.
W I T N E S S E T H
WHEREAS, the Boards of Directors of Parent, ASC and the
Company have each determined that it is in the best interests of their
respective stockholders for Parent and the Company to combine their respective
businesses upon the terms and conditions set forth herein;
WHEREAS, in furtherance of such business combination, upon the
terms and subject to the conditions of this Agreement and in accordance with the
General Corporation Law of the State of Delaware ("Delaware Law") and the
Business Corporation Law of the Commonwealth of Massachusetts ("Massachusetts
Law "), the Company will merge with and into ASC (the "Merger");
WHEREAS, the Board of Directors of the Company (the "Company
Board"), by resolution adopted in accordance with Delaware Law, has appointed a
special committee of independent members of the Company Board (the "Special
Committee") which (i) has determined that the Merger is consistent with and in
furtherance of the long-term business strategy of the Company and has declared
to be advisable this Agreement, the Merger and the other transactions
contemplated hereby and (ii) has recommended that the stockholders of the
Company approve and adopt this Agreement and the Merger (the "Company
Proposal");
WHEREAS, the Special Committee and the Company Board have
considered the form and terms of the Agreement and Plan of Merger (the "Medical
Manager Merger Agreement"), dated as of the date of this Agreement, between
Parent and Medical Manager Corporation ("Medical Manager") and have determined
that the transactions contemplated thereby are in the best interests of the
Company and its stockholders and have approved such transactions;
WHEREAS, the Board of Directors of Parent (the "Parent Board")
(i) has determined that the Merger is consistent with and in furtherance of the
long-term business strategy of Parent and has declared to be advisable this
Agreement, the Merger and the other transactions contemplated hereby and (ii)
has recommended that the stockholders of Parent vote to approve the issuance of
shares of common stock, par value $0.0001 per share, of Parent (the "Parent
Common Stock") to the stockholders of the Company pursuant to the Merger (the
"Parent Proposal");
WHEREAS, as a condition to the willingness of the parties to
enter into this Agreement, Parent has entered into a voting agreement, dated as
of the date of this Agreement, with (i) each of ASC and Cerner Corporation
("Cerner"), significant stockholders of common
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2
stock, par value $.01 per share, of the Company ("Company Common Stock"),
pursuant to which each of ASC and Cerner has agreed, among other things, to vote
its shares of Company Common Stock in favor of the Company Proposal and to take
certain other actions in support of the Merger and (ii) Medical Manager, the
owner of all of the common stock of ASC (the "ASC Common Stock"), pursuant to
which Medical Manager has agreed, among other things, to vote the ASC Common
Stock in favor of the Company Proposal, to cause ASC to vote its shares of
Company Common Stock in favor of the Company Proposal and to take certain other
actions in support of the Merger (the "Company Voting Agreements");
WHEREAS, the consummation of the transactions contemplated by
the Medical Manager Merger Agreement is a condition to the consummation of the
transactions contemplated by this Agreement; and
WHEREAS, for federal income tax purposes, the Merger is
intended to qualify as a reorganization under the provisions of section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Section 252 of
Delaware Law and Section 79 of Chapter 156B of Massachusetts Law, at the
Effective Time (as defined below in Section 1.02), the Company shall be merged
with and into ASC. As a result of the Merger, the separate corporate existence
of the Company shall cease and ASC shall continue as the surviving corporation
in the Merger (the "Surviving Corporation").
SECTION 1.02. Effective Time; Closing. The closing of the
transactions contemplated hereby (the "Closing") shall take place on the first
business day after the satisfaction or, if permissible, waiver of the conditions
set forth in Article VII (other than those that by their nature will be
satisfied on the Closing Date, as defined below) or on such other date as Parent
and the Company shall agree in writing (such date, the "Closing Date"). On the
Closing Date, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, in such form as is required by, and executed
and acknowledged in accordance with, Section 252 of Delaware Law and by filing
articles of merger (the "Articles of Merger") with the state secretary
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3
of the Commonwealth of Massachusetts pursuant to Section 79 of Chapter 156B of
Massachusetts Law. The term "Effective Time" means the date and time of the
filing of the Certificate of Merger with the state secretary of the State of
Delaware and the Articles of Merger with the Secretary of State of the
Commonwealth of Massachusetts (or such later time as may be agreed by the
parties hereto and specified in the Certificate of Merger and Articles of
Merger). The Closing will be held at the offices of counsel to Parent (or such
other place as the parties may agree).
SECTION 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law and Massachusetts Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of the Company and ASC shall vest in the
Surviving Corporation, and all debts, liabilities, obligations, restrictions,
disabilities and duties of each of the Company and ASC shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
SECTION 1.04. Certificate of Incorporation; By-Laws. (a) At
the Effective Time, the Certificate of Incorporation of ASC, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by Massachusetts Law.
(b) At the Effective Time, the By-Laws of ASC, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended as provided by Massachusetts Law, the
Certificate of Incorporation of the Surviving Corporation and such By-Laws.
SECTION 1.05. Directors and Officers. The directors of ASC
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
ASC immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of Parent, ASC, the
Company or the holders of any of the following securities:
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4
(a) each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of
Company Common Stock to be cancelled pursuant to Section 2.01(c) or
Section 2.01(d)) shall be canceled and shall be converted, subject to
Section 2.02(e), into the right to receive 1.3 shares (the "Exchange
Ratio") of Parent Common Stock; provided, however, that, if between the
date of this Agreement and the Effective Time the outstanding shares of
Parent Common Stock or of Company Common Stock shall have been changed
into a different number of shares or a different class, by reason of
any stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares, the Exchange Ratio shall be
correspondingly adjusted to the extent appropriate to reflect such
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares;
(b) each share of preferred stock, par value $.01 per share,
of the Company (the "Company Preferred Stock" and, together with the
Company Common Stock, the "Company Capital Stock") issued and
outstanding immediately prior to the Effective Time (other than any
shares of Company Preferred Stock to be canceled pursuant to Section
2.01(c)) shall be converted into the right to receive newly issued
preferred stock of Parent ("Parent New Preferred Stock") with terms
identical to the Company Preferred Stock; provided that each share of
Parent New Preferred Stock shall after the Effective Time represent the
right to receive upon conversion (A) the number of shares of Parent
Common Stock equal to (i) the Exchange Ratio multiplied by (ii) the
number of shares of Company Common Stock into which such share of
Company Preferred Stock is convertible immediately prior to the
Effective Time;
(c) each share of Company Capital Stock held in the treasury
of the Company shall be cancelled and extinguished without any
conversion thereof and no payment or distribution shall be made with
respect thereto;
(d) each share of Company Common Stock owned by ASC
immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof and no payment or
distribution shall be made with respect thereto; and
(e) each share of ASC Common Stock issued and outstanding
immediately prior to the Effective Time shall remain outstanding as a
share of ASC Common Stock following the Merger.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent.
Parent shall deposit, or shall cause to be deposited, with a bank or trust
company designated by Parent and reasonably satisfactory to the Company (the
"Exchange Agent"), for the benefit of the holders of shares of Company Common
Stock, for exchange in accordance with this Article II through the Exchange
Agent, certificates representing the shares of Parent Common Stock issuable
pursuant to Section 2.01(a) as of the Effective Time, cash in lieu of any
fractional shares
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5
pursuant to Section 2.02(e) and any dividends or other distributions pursuant to
Section 2.02(c) (such certificates for shares of Parent Common Stock, together
with cash in lieu of fractional shares and any dividends or distributions with
respect thereto, being hereinafter referred to as the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions, deliver out of the
Exchange Fund the Parent Common Stock contemplated to be issued pursuant to
Section 2.01(a), the cash in lieu of fractional shares of Parent Common Stock to
be paid pursuant to Section 2.02(e) and any dividends or other distributions
pursuant to Section 2.02(c). Except as contemplated by Section 2.02(f) hereof,
the Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, and in any event not later than five business days, Parent shall
cause the Exchange Agent to mail to each holder of record (as of the Effective
Time) of a certificate or certificates which immediately prior to the Effective
Time represented outstanding shares of Company Common Stock (the "Certificates")
whose shares were converted into the right to receive shares of Parent Common
Stock pursuant to Section 2.01(a), cash in lieu of fractional shares of Parent
Common Stock to be paid pursuant to Section 2.02(e) and any dividends or other
distributions pursuant to Section 2.02(c) (i) a letter of transmittal (which
shall be in customary form and shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock and cash in lieu of any fractional
shares and any dividends or other distributions pursuant to Section 2.02(c).
Upon surrender to the Exchange Agent of a Certificate for cancellation, together
with such letter of transmittal, duly executed and completed in accordance with
the instructions thereto, and such other documents as may be reasonably required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of Parent Common Stock which such holder has the right to receive in
respect of the shares of Company Common Stock formerly represented by such
Certificate (after taking into account all shares of Company Common Stock then
held by such holder), cash in lieu of any fractional shares of Parent Common
Stock to which such holder is entitled pursuant to Section 2.02(e) and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.02(c), and the Certificate so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of shares of Company Common
Stock which is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common Stock,
cash in lieu of any fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.02(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.02(c) may
be issued to a transferee if the Certificate representing such shares of Company
Common Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.02(b), each Certificate shall be deemed at all
times after the Effective Time to represent only the right to receive upon such
surrender the certificate
<PAGE>
6
representing shares of Parent Common Stock, cash in lieu of any fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 2.02(e) and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.02(c). As promptly as practicable after the
Effective Time, the holders of Company Preferred Stock shall surrender the
certificates representing the Company Preferred Stock and shall upon surrender
thereof receive in exchange therefor pursuant to Section 2.01(b) a certificate
representing the number of shares of Parent New Preferred Stock.
(c) Distributions with Respect to Unexchanged Shares of Parent
Common Stock. No dividends or other distributions declared or made after the
Effective Time with respect to the Parent Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock represented thereby, and no
cash payment in lieu of any fractional shares shall be paid to any such holder
pursuant to Section 2.02(e), until the holder of such Certificate shall
surrender such Certificate. Subject to the effect of escheat, tax or other
applicable Laws (as defined in Section 3.05), following surrender of any such
Certificate, there shall be paid to the holder of the certificates representing
whole shares of Parent Common Stock issued in exchange therefor, without
interest, (i) promptly, the amount of any cash payable with respect to a
fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 2.02(e) and the amount of dividends or other distributions
with a record date after the Effective Time and theretofore paid with respect to
such whole shares of Parent Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions, with a record date after
the Effective Time but prior to surrender and a payment date occurring after
surrender, payable with respect to such whole shares of Parent Common Stock.
(d) No Further Rights in Company Common Stock. All shares of
Parent Common Stock issued upon conversion of shares of Company Common Stock in
accordance with the terms hereof (including any cash paid pursuant to Section
2.02(c) or (e)) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution with respect
to Parent Common Stock shall be payable on or with respect to any fractional
share and such fractional share interests will not entitle the owner thereof to
any rights of a stockholder of Parent.
(ii) As promptly as practicable following the Effective Time,
the Exchange Agent shall determine the excess of (x) the number of full shares
of Parent Common Stock delivered to the Exchange Agent by Parent pursuant to
Section 2.02(a) over (y) the aggregate number of full shares of Parent Common
Stock to be distributed to holders of Company Common Stock pursuant to Section
2.02(b) (such excess being herein called the "Excess
NYDOCS02/503910 7
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7
Shares"). As soon after the Effective Time as practicable, the Exchange Agent,
as agent for such holders of Parent Common Stock, shall sell the Excess Shares
at then prevailing prices on the National Market System of the Nasdaq Stock
Market (the "NASDAQ"), all in the manner provided in paragraph (iii) of this
Section 2.02(e).
(iii) The sale of the Excess Shares by the Exchange Agent
shall be executed on the NASDAQ through one or more member firms of the NASDAQ
and shall be executed in round lots to the extent practicable. Until the net
proceeds of any such sale or sales have been distributed to such holders of
Company Common Stock, the Exchange Agent will hold such proceeds in trust for
such holders of Company Common Stock as part of the Exchange Fund. Parent shall
pay all commissions, transfer taxes and other out-of-pocket transaction costs of
the Exchange Agent incurred in connection with such sale or sales of Excess
Shares. In addition, Parent shall pay the Exchange Agent's compensation and
expenses in connection with such sale or sales. The Exchange Agent shall
determine the portion of such net proceeds to which each holder of Company
Common Stock shall be entitled, if any, by multiplying the amount of the
aggregate net proceeds by a fraction the numerator of which is the amount of the
fractional share interest to which such holder of Company Common Stock is
entitled (after taking into account all shares of Company Common Stock then held
by such holder) and the denominator of which is the aggregate amount of
fractional share interests to which all holders of Certificates representing
Company Common Stock are entitled.
(iv) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Company Common Stock with
respect to any fractional share interests, the Exchange Agent shall promptly pay
such amounts to such holders of Company Common Stock subject to and in
accordance with the terms of Section 2.02(c).
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of Company Common Stock for 180
days after the Effective Time shall be delivered to Parent, upon demand, and any
holders of the Company Common Stock who have not theretofore complied with this
Article II shall thereafter look only to Parent for the shares of Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock to which
they are entitled pursuant to Section 2.02(e) and any dividends or other
distributions with respect to the Parent Common Stock to which they are entitled
pursuant to Section 2.02(c).
(g) No Liability. Neither Parent nor the Surviving Corporation
shall be liable to any holder of shares of Company Common Stock for any such
shares of Company Common Stock (or dividends or distributions with respect
thereto), or cash lawfully delivered to a public official pursuant to any
abandoned property, escheat or similar Law.
(h) Withholding Rights. Each of the Exchange Agent, the
Surviving Corporation and Parent shall be entitled to deduct and withhold from
the consideration otherwise
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8
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as it may be required to deduct and withhold with respect to
the making of such payment under the Code, or any provision of state, local or
foreign tax Law. To the extent that amounts are so withheld by the Exchange
Agent, the Surviving Corporation or Parent, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation or Parent, as
the case may be.
(i) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Parent Common Stock, any cash in lieu of fractional
shares of Parent Common Stock to which the holders thereof are entitled pursuant
to Section 2.02(e) and any dividends or other distributions to which the holders
thereof are entitled pursuant to Section 2.02(c).
SECTION 2.03. Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company. From and after the Effective Time, the holders of
Certificates representing shares of Company Common Stock outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
shares of Company Common Stock, except as otherwise provided in this Agreement
or by Law. On or after the Effective Time, any Certificates presented to the
Exchange Agent or Parent for any reason shall be converted into shares of Parent
Common Stock, any cash in lieu of fractional shares of Parent Common Stock to
which the holders thereof are entitled pursuant to Section 2.02(e) and any
dividends or other distributions to which the holders thereof are entitled
pursuant to Section 2.02(c).
SECTION 2.04. Company Stock Options. (a) At the Effective
Time, each outstanding stock option (each a "Company Stock Option" and,
collectively, the "Company Stock Options") granted pursuant to the terms and
conditions of the Company's stock option plans and arrangements (collectively,
the "Company Stock Option Plans"), whether or not exercisable, shall be
converted into and become rights with respect to Parent Common Stock, and the
Parent shall assume the Company's obligations with respect to each Company Stock
Option and the related Company Stock Option Plan, in accordance with its terms,
except that from and after the Effective Time (i) Parent and its compensation
committee shall be substituted for the Company and the committee of the
Company's Board of Directors (including, if applicable, the entire Company
Board) administering the Company Stock Option Plan, if any, under which such
Company Stock Option was granted or otherwise governed, (ii) each Company Stock
Option assumed by Parent may be exercised solely for shares of Parent Common
Stock, (iii) the number
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9
of shares of Parent Common Stock subject to such Company Stock Option shall be
equal to the number of whole shares (rounded to the nearest whole share) of
Company Common Stock subject to such Company Stock Option immediately prior to
the Effective Time multiplied by the Exchange Ratio, (iv) the per share exercise
price under each such Company Stock Option shall be adjusted by dividing the per
share exercise price under each such Company Stock Option by the Exchange Ratio
and rounding to the nearest whole cent, and (v) all references in the Company
Stock Option Plans and the stock option certificates and agreements to the
Company (or its predecessors) shall be deemed to refer to Parent.
Notwithstanding the provisions of clauses (iii) and (iv) of the first sentence
of this Section 2.04(a), each Company Stock Option which is an "incentive stock
option" shall be adjusted as required by Section 424 of the Code, and the
regulations promulgated thereunder, so as not to constitute a modification,
extension or renewal of such Company Stock Option, within the meaning of Section
424(h) of the Code.
(b) As soon as practicable after the Effective Time, Parent
shall deliver to the holders of Company Stock Options appropriate documentation
evidencing the foregoing assumption by Parent of such Company Stock Options and
the related Company Stock Option Plan and the agreements evidencing such Company
Stock Options shall continue in effect on the same terms and conditions (subject
to adjustments required by this Section 2.04 after giving effect to the Merger
and the provisions set forth above). Parent shall comply with the terms of the
Company Stock Option Plans and ensure, to the extent lawful, and subject to the
provisions of the applicable Company Stock Option Plan, that Company Stock
Options which qualified as incentive stock options prior to the Effective Time
of the Merger continue to qualify as incentive stock options after the Effective
Time of the Merger.
(c) Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery upon the exercise of Company Stock Options.
(d) Parent agrees to file, as of the Effective Time, a
registration statement on Form S-8 for the shares of Parent Common Stock
issuable with respect to the Company Stock Options and shall maintain the
effectiveness of such registration statement thereafter for so long as any such
Company Stock Options remain outstanding.
SECTION 2.05. Company Warrants. (a) At the Effective Time,
Parent shall assume the obligations of the Company under any warrant or other
rights to purchase shares of Company Capital Stock (the "Company Warrants")
outstanding at the Effective Time, whether or not the Company Warrants are then
exercisable. Thereafter, the Company Warrants shall represent the right to
receive upon exercise the number of shares of Parent Common Stock equal to the
product of (i) the Exchange Ratio and (ii) the number of shares of Company
Common Stock which such Company Warrant represents, with such product rounded to
the nearest whole share. The per share exercise price under each such Company
Warrant shall be adjusted by dividing the per share exercise price under each
such Company Warrant by the Exchange Ratio
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10
and rounding to the nearest whole cent. At the Effective Time, (i) all
references in the instruments evidencing the Company Warrants to the Company
shall be deemed to refer to Parent and (ii) Parent shall assume all of the
Company's obligations under such instruments with respect to such Company
Warrants as so amended.
(b) As soon as practicable after the Effective Time of the
Merger, Parent shall deliver to the holders of the Company Warrants
documentation evidencing the foregoing assumption by Parent of such Company
Warrants.
(c) Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery upon exercise of the Company Warrants.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND ASC
Except as set forth in the Disclosure Letter of even date
herewith delivered by the Company to Parent concurrently with the execution of
this Agreement (the "Company Disclosure Letter") (it being agreed that
disclosure of an item or fact in any section of the Company Disclosure Letter
shall not be deemed disclosed with respect to any other section of the Company
Disclosure Letter), the Company and ASC hereby jointly represent and warrant to
Parent that:
SECTION 3.01. Organization and Qualification. The Company is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Delaware and ASC is a corporation duly incorporated,
validly existing and in good standing under the Laws of the State of
Massachusetts. Each of the Company and ASC has all corporate power and authority
to own, lease and operate its properties and to carry on its business as it is
now being conducted. Each subsidiary of the Company (collectively, the "Company
Subsidiaries") is a corporation duly incorporated, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted. Each of ASC, the
Company and the Company Subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would not have
a Company Material Adverse Effect (as defined below). The term "Company Material
Adverse Effect" means an event, change or occurrence which, individually or
together with any other event, change or occurrence, has a material adverse
effect on (a) the financial position, business, or results of operations of the
Company, the Company Subsidiaries, Medical Manager and each of the other
Subsidiaries of Medical Manager,
<PAGE>
11
all taken as a whole, or (b) the ability of the Company to perform its
obligations under this Agreement or to consummate the Merger or the other
transactions contemplated by this Agreement, but shall not include (x) any
adverse effect due to changes, after the date of this Agreement, in conditions
generally affecting (1) the healthcare or electronic commerce industries or (2)
the U.S. economy as a whole, (y) any change or adverse effect caused by, or
relating to, the announcement of this Agreement or the transactions contemplated
hereby, or (z) any adverse effect due to legal or regulatory changes, effective
after the date of this Agreement; provided that any order or regulatory action
specifically related to the Company may be considered in determining the
existence of a Company Material Adverse Effect.
SECTION 3.02. Certificate of Incorporation and By-Laws. The
Company and ASC have heretofore furnished to Parent complete and correct copies
of the Certificate of Incorporation and the By-Laws, each as amended to the date
of this Agreement, of the Company and ASC. Such Certificates of Incorporation
and By-Laws are in full force and effect. None of ASC, the Company or any
Company Subsidiary is in violation of any provision of its Certificate of
Incorporation, By-Laws or equivalent organizational documents.
SECTION 3.03. Capitalization. (a) The authorized capital stock
of the Company consists of (i) 300,000,000 shares of Company Common Stock and
(ii) 30,000,000 shares of Company Preferred Stock. As of the date hereof, (1)
74,082,150 shares of Company Common Stock were issued and outstanding, all of
which are validly issued, fully paid and nonassessable, (2) 100 shares of the
Company's Series A Convertible Redeemable Preferred Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable, and
(3) no shares of Company Common Stock are held in the treasury of the Company.
The Company has no other capital stock authorized, issued or outstanding.
(b) As of February 11, 2000, (i) 6,731,500 shares of Company
Common Stock were subject to issuance pursuant to outstanding Company Stock
Options, (ii) 4,122,129 shares of Company Common Stock were subject to issuance
pursuant to outstanding Company Warrants and (iii) 812,184 shares of Company
Common Stock were reserved for issuance upon the conversion of shares of Series
A Convertible Redeemable Preferred Stock. The Company Disclosure Letter sets
forth, with respect to the Company Stock Options outstanding as of February 11,
2000, the aggregate number of shares of Company Common Stock subject to Company
Stock Options under each Company Stock Option Plan and the weighted average
exercise price of such Company Stock Options. The Company Disclosure Letter also
lists the names of all individuals or entities who own Company Warrants,
together with the number of shares of Company Common Stock subject to such
Company Warrants and the exercise prices of such Company Warrants. No options,
warrants or other rights to acquire shares of Company Common Stock have been
granted from February 11, 2000 to the date of this Agreement.
(c) Except for (i) Company Stock Options granted pursuant to
the Company Stock Option Plans and (ii) the Company Warrants, there are no
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12
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of the Company or
any Company Subsidiary or obligating the Company or any Company Subsidiary to
issue or sell any shares of capital stock of, or other equity interests in, the
Company or any Company Subsidiary. All shares of Company Capital Stock subject
to issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of Company Capital Stock or any capital
stock of any Company Subsidiary. Each outstanding share of capital stock of each
Company Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by the Company or another Company
Subsidiary is free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on the Company's or
such other Company Subsidiary's voting rights, charges and other encumbrances of
any nature whatsoever. There are no outstanding contractual obligations of the
Company or any Company Subsidiary to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any Company
Subsidiary, other than a Company Subsidiary that is wholly owned by the Company
and other Company Subsidiaries, or any other Person.
(d) On a fully exercised and converted to Company Common Stock
basis, the number of shares of Company Common Stock outstanding on the date
hereof would be 85,747,963, of which 50,763,375 are owned by ASC. The weighted
average exercise price of the Company Stock Options and Company Warrants
outstanding on the date hereof is no less than $21.79 per share of Company
Common Stock.
<PAGE>
13
(e) All of the capital stock of ASC is owned of record and
beneficially by Medical Manager. Such capital stock consists solely of ASC
Common Stock.
SECTION 3.04. Authority Relative to This Agreement. Each of
ASC and the Company has all necessary corporate power and authority to execute
and deliver this Agreement and, subject to the terms and conditions of this
Agreement and the approval of this Agreement by the holders of a majority of
then outstanding shares of Company Common Stock, to perform its obligations
hereunder and to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by each of the Company and ASC and the
consummation by each of the Company and ASC of the transactions contemplated by
this Agreement have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of the Company or ASC are
necessary to authorize this Agreement or to consummate the Merger and the other
transactions contemplated by this Agreement (other than, with respect to the
Merger, the approval of the Company Proposal by the holders of a majority of
then outstanding shares of Company Common Stock and the filing and recordation
of appropriate merger documents as required by Delaware Law and Massachusetts
Law and subject to the terms and conditions of this Agreement). This Agreement
has been duly and validly executed and delivered by each of the Company and ASC
and, assuming the due authorization, execution and delivery by Parent,
constitutes a legal, valid and binding obligation of each of the Company and
ASC, enforceable against each of the Company and ASC in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar Laws now or
hereafter in effect relating to creditors' rights and by general equitable
principles (regardless of whether enforceability is considered in a proceeding
in equity or at Law).
SECTION 3.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Certificate of Incorporation or By-Laws of the Company or any
equivalent organizational documents of any Company Subsidiary, (ii) assuming
that all consents, approvals, authorizations and other actions described in
Section 3.05(b) have been obtained and all filings and obligations described in
Section 3.05(b) have been made, conflict with or violate any federal, state or
local statute, law, ordinance, regulation, rule, code, order, judgment or decree
of the United States of America or any foreign, state or local regulatory agency
or other Governmental Entity (as defined below) or any other jurisdiction and
any enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment (collectively, the
"Law") applicable to the Company or any Company Subsidiary or by which any
property or asset of the Company or any Company Subsidiary is bound or affected,
(iii) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any right of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or other encumbrance on any property or asset of the
Company or any
<PAGE>
14
Company Subsidiary pursuant to, any Contract, or (iv) result in any drag along
or tag along rights of any stockholder of any Company Subsidiary, except, with
respect to clauses (ii) and (iii), for any such conflicts, violations, breaches,
defaults or other occurrences that would not have a Company Material Adverse
Effect.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any domestic or foreign governmental or regulatory authority
("Governmental Entity"), except (i) for applicable requirements, if any, of the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "Exchange Act"), and the Securities Act
of 1933, as amended (together with the rules and regulations promulgated
thereunder, the "Securities Act"), state securities or "blue sky" Laws ("Blue
Sky Laws"), the Rules of the National Association of Securities Dealers
("NASD"), state takeover Laws, the pre-merger notification requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act"), filings or approvals required under
the competition Laws of foreign jurisdictions, and the filing and recordation of
the Certificate of Merger as required by the Delaware Law and the Articles of
Merger as required by Massachusetts Law, and (ii) for such consents, approvals,
authorizations or permits, or such filings or notifications, the failure to
obtain or to make as would not prevent consummation of the Merger and would not
have a Company Material Adverse Effect.
SECTION 3.06. Permits; Compliance. (a) Except as set forth in
the Combined SEC Reports (as defined in Section 3.07), the Company and the
Company Subsidiaries are in possession of, and are in compliance with the terms
of, all federal, state, local, and foreign governmental approvals,
authorizations, certificates, consents, easements, filings, franchises, letters
of good standing, licenses, notices, permits, qualifications, registration or
rights of or from any Governmental Entity (or any extension, modification,
amendment or waiver of any of these), or any notice, statement, filing or other
communication to be filed with or delivered to any Governmental Entity
("Permits") that is required for the operation of the business of the Company
and the Company Subsidiaries, taken as a whole, as they are operated on the date
hereof except for such Permits, the absence of which would not have a Company
Material Adverse Effect (collectively, the "Company Permits"). Except as set
forth in the Combined SEC Reports, no suspension or cancellation of any Company
Permit is pending or, to the Knowledge (as defined in Section 9.03) of the
Company, threatened, except with respect to Company Permits the suspension or
cancellation of which would not have a Company Material Adverse Effect.
(b) Except as set forth in the Combined SEC Reports and as
would not have a Company Material Adverse Effect, the business of the Company
and the Company Subsidiaries has been and is being conducted in compliance with
all applicable Laws. Except as set forth in
<PAGE>
15
the Combined SEC Reports and as would not have a Company Material Adverse
Effect, neither the Company nor any Company Subsidiary is in conflict with, or
has violated any provision of, or committed or failed to perform any act which,
with or without notice, lapse of time, or both, would constitute a default under
the provisions of (i) any Law applicable to the Company or any Company
Subsidiary or by which any property or asset of the Company or any Company
Subsidiary is bound or affected or (ii) any Company Permit. Except as set forth
in the Combined SEC Reports and those which would not have a Company Material
Adverse Effect (i) no investigation or review by any Governmental Entity with
respect to the Company or the Company Subsidiaries is pending or, to the
Knowledge of the Company, threatened in writing, and (ii) neither the Company
nor any of the Company Subsidiaries has received any written communication in
the past two years from any Governmental Entity that alleges that the Company or
any of the Company Subsidiaries is not in compliance in any material respect
with any applicable Law.
SECTION 3.07. SEC Filings; Financial Statements; Absence of
Liabilities. (a) The Company has filed all forms, reports and documents required
to be filed by it with the Securities and Exchange Commission (the "SEC") since
June 15, 1999 (collectively, the "Company SEC Reports", and, together with all
forms, reports and documents required to be filed by Medical Manager since July
1, 1998, the "Combined SEC Reports"). As of the respective dates they were filed
(or, if amended or superseded by a filing prior to the date of this Agreement,
on the date of such amending or superseding filing), (i) the Combined SEC
Reports complied in all material respects in accordance with the requirements of
the Securities Act or the Exchange Act, as the case may be, and (ii) none of the
Combined SEC Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any notes and schedules thereto) contained in the Combined SEC
Reports complied as to form with the applicable accounting requirements and
rules and regulations of the SEC and was prepared in accordance with United
States generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods indicated (except as may be indicated in the notes
thereto or, in the case of unaudited financial statements, as permitted by Form
10-Q of the SEC), and each presented fairly, in all material respects, the
consolidated financial position of the Company and the consolidated Company
Subsidiaries as at the respective dates thereof and their results of operations
and cash flows for the respective periods indicated therein, all in accordance
with GAAP (subject, in the case of unaudited statements, to normal and recurring
year-end adjustments which were not and are not expected to be material in
amount).
(c) Except for liabilities and obligations reflected on the
consolidated balance sheet of the Company as of December 31, 1999 (including the
notes thereto), liabilities and
<PAGE>
16
obligations incurred in the ordinary course of business consistent with past
practice since December 31, 1999 and other liabilities and obligations that
would not have a Company Material Adverse Effect, neither the Company nor any
Company Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which would be required to be
reflected on a balance sheet prepared in accordance with GAAP.
SECTION 3.08. Absence of Certain Changes or Events. During the
period commencing December 31, 1999 and ending on the date of this Agreement,
there has not been:
(a) a Company Material Adverse Effect;
(b) any event, condition or occurrence which is reasonably
likely to have a Company Material Adverse Effect; or
(c) except as set forth in the Combined SEC Reports, or
disclosed in another representation of the Company contained in this
Agreement, any event that, if taken during the period from the date of
this Agreement through the Effective Time, would constitute a breach of
Sections 5.01(c) through (g) and (o) hereof.
SECTION 3.09. Absence of Litigation. (a) As of the date of
this Agreement, there is no litigation, suit, claim, action, proceeding or
investigation pending or, to the Knowledge of the Company, threatened against
the Company or any Company Subsidiary, or any property or asset of the Company
or any Company Subsidiary, by or before any court, arbitrator or Governmental
Entity, domestic or foreign, except as set forth in the Combined SEC Reports and
would not have a Company Material Adverse Effect.
(b) Except as set forth in the Combined SEC Reports and as
would not have a Company Material Adverse Effect, as of the date of this
Agreement, neither the Company nor any Company Subsidiary nor any property or
asset of the Company or any Company Subsidiary is subject to any continuing
order of, consent decree, settlement agreement or other similar written
agreement with, or, to the Knowledge of the Company, continuing investigation
by, any Governmental Entity, or any order, writ, judgment, injunction, decree,
determination or award of any Governmental Entity or arbitrator.
SECTION 3.10. Employee Benefit Plans. (a) With respect to each
employee benefit plan, program, arrangement and contract (including, without
limitation, any "employee benefit plan", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
maintained or contributed to by the Company or any Company Subsidiary with
respect to any current or former director, officer or employee of the Company or
any Company Subsidiary, or with respect to which the Company or any Company
Subsidiary could incur liability under Section 4069, 4201 or 4212(c) of ERISA
(the "Company
<PAGE>
17
Benefit Plans"), the Company has made available to Parent a true and correct
copy of (i) the most recent annual report (Form 5500) filed with the Internal
Revenue Service (the "IRS"), (ii) such Company Benefit Plan, (iii) each trust
agreement relating to such Company Benefit Plan, (iv) the most recent summary
plan description for each Company Benefit Plan for which a summary plan
description is required, (v) the most recent actuarial report or valuation
relating to a Company Benefit Plan subject to Title IV of ERISA, if any, and
(vi) the most recent determination letter, if any, issued by the IRS with
respect to any Company Benefit Plan qualified under Section 401(a) of the Code.
(b) With respect to the Company Benefit Plans, no event has
occurred and, to the knowledge of the Company, there exists no condition or set
of circumstances, in connection with which the Company or any Company Subsidiary
could be subject to any liability under the terms of such Company Benefit Plans,
ERISA, the Code or any other applicable Law except as would not have a Company
Material Adverse Effect. Neither the Company nor any Company Subsidiary has any
actual or contingent material liability under Title IV of ERISA (other than the
payment of premiums to the Pension Benefit Guaranty Corporation). None of the
Company Benefit Plans is a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA).
(c) The Company has made available to Parent (i) copies of all
employment agreements and severance agreements with executive officers of the
Company and (ii) copies of all plans, programs, agreements and other
arrangements of the Company or any Company Subsidiary with or relating to its or
such Company Subsidiary's employees which contain change in control provisions.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation, "golden parachute" or
otherwise) becoming due to any director, officer or employee of the Company or
any Company Subsidiary under any Company Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any Company Benefit Plan or (iii)
result in any acceleration of the time of payment or vesting of any benefits
(including under the Company Stock Option Plans).
(d) No Company Benefit Plan provides retiree medical or
retiree life insurance benefits to any person (except to the extent required by
Law).
SECTION 3.11. Tax Matters. To the Knowledge of the Company,
neither the Company nor any of its affiliates has taken or agreed to take any
action that would prevent the Merger from constituting a transaction qualifying
as a reorganization under Section 368(a) of the Code. To the Knowledge of the
Company, there are no agreements, plans or other circumstances that would
prevent the Merger from qualifying under Section 368(a) of the Code.
SECTION 3.12. Intellectual Property. (a) "Intellectual
Property" means (i) patents, patent applications and statutory invention
registrations, (ii) trademarks, service
<PAGE>
18
marks, URLs, trade dress, logos, trade names, corporate names, and other source
identifiers, and registrations and applications for registration thereof, (iii)
copyrightable works, copyrights, and registrations and applications for
registration thereof, (iv) all computer programs, whether in source code, object
code or other form (including without limitation any embedded in or otherwise
constituting part of a computer hardware device), and all databases and data
collections, and (v) confidential and proprietary information, including trade
secrets and know-how.
(b) Except as set forth in the Combined SEC Reports and as
would not have a Company Material Adverse Effect, (i) to the Knowledge of the
Company, the conduct of the business of the Company and the Company Subsidiaries
as currently conducted does not infringe or misappropriate the Intellectual
Property of any third party, and, to the Knowledge of the Company, no claim has
been asserted to the Company that the conduct of the business of the Company and
the Company Subsidiaries as currently conducted infringes or may infringe or
misappropriates the Intellectual Property of any third party, (ii) with respect
to each item of Intellectual Property owned by the Company and the Company
Subsidiaries and material to the businesses of the Company and the Company
Subsidiaries as currently conducted ("Company Owned Intellectual Property"), the
Company or a Company Subsidiary is the owner of the entire right, title and
interest in and to such Intellectual Property and is entitled to use such
Intellectual Property in the continued operation of its respective business,
(iii) with respect to each item of Intellectual Property licensed to the Company
or a Company Subsidiary that is material to the businesses of the Company and
the Company Subsidiaries as currently conducted ("Company Licensed Intellectual
Property"), the Company or a Company Subsidiary has the right to use such
Company Licensed Intellectual Property in the continued operation of its
respective business in accordance with the terms of the license agreement
governing such Company Licensed Intellectual Property, (iv) to the Knowledge of
the Company, the Company Owned Intellectual Property is valid and enforceable,
and has not been adjudged invalid or unenforceable in whole or part, (v) to the
Knowledge of the Company, no person is engaging in any activity that infringes
the Company Owned Intellectual Property, (vi) to the Knowledge of the Company,
each license of Company Licensed Intellectual Property is valid and enforceable,
is binding on all parties to such license, and is in full force and effect,
except to the extent expired in accordance with its terms, and (vii) to the
Knowledge of the Company, no party to any license of the Company Licensed
Intellectual Property is in breach thereof or default thereunder.
(c) Except as set forth in the Combined SEC Reports and as
would not have a Company Material Adverse Effect, to the Knowledge of the
Company, all Company Systems and Company Owned Intellectual Property are Year
2000 Compliant. For purposes hereof, "Company Systems" shall mean all computer,
hardware, software, systems, and equipment (including embedded microcontrollers
in non-computer equipment) material to or necessary for the Company to carry on
its business as currently conducted. For purposes hereof, "Year 2000 Compliant"
means that the Company Systems and Company Owned Intellectual Property
<PAGE>
19
provide uninterrupted millennium functionality in that the Company Systems and
Company Owned Intellectual Property will record, store, process and present
calendar dates falling on or after January 1, 2000 in the same manner and with
the same functionality as the Company Systems and Company Owned Intellectual
Property record, store, process, and present calendar dates falling on or before
December 31, 1999.
SECTION 3.13. Taxes. (a) Except as would not have a Company
Material Adverse Effect, (i) the Company and each of the Company Subsidiaries
have timely filed or will timely file all returns and reports required to be
filed by them with any taxing authority with respect to Taxes for any period
ending on or before the Effective Time, taking into account any extension of
time to file granted to or obtained on behalf of the Company and the Company
Subsidiaries, (ii) all Taxes that are due prior to the Effective Time have been
paid or will be paid (other than Taxes which (A) are not yet delinquent or (B)
are being contested in good faith and have not been finally determined), (iii)
as of the date of this Agreement, no deficiency for any Tax has been asserted or
assessed by a taxing authority against the Company or any of the Company
Subsidiaries and (iv) the Company and each of the Company Subsidiaries have
provided adequate reserves in accordance with generally accepted accounting
principles in their financial statements for any Taxes that have not been paid,
whether or not shown as being due on any returns. As used in this Agreement,
"Taxes" shall mean any and all taxes, fees, levies, duties, tariffs, imposts and
other charges of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any government or taxing authority, including, without limitation: taxes or
other charges on or with respect to income, franchises, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation or
net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added or gains taxes; license, registration and
documentation fees; and customers' duties, tariffs and similar charges.
(b) To the Knowledge of the Company, there are no material
disputes pending, or claims asserted in writing, for Taxes or assessments upon
the Company or any of the Company Subsidiaries, nor has the Company or any of
the Company Subsidiaries been requested in writing to give any currently
effective waivers extending the statutory period of limitation applicable to any
federal or state income tax return for any period which disputes, claims,
assessments or waivers are reasonably likely to have a Company Material Adverse
Effect.
(c) There are no Tax liens upon any property or assets of the
Company or any of the Company Subsidiaries except liens for current Taxes not
yet due and except for liens which have not had and are not reasonably likely to
have a Company Material Adverse Effect.
(d) Neither the Company nor any of the Company Subsidiaries
has been required to include in income any adjustment pursuant to Section 481 of
the Code by reason of a
<PAGE>
20
voluntary change in accounting method initiated by the Company or any of the
Company Subsidiaries, and the IRS has not initiated or proposed any such
adjustment or change in accounting method, in either case which adjustment or
change has had or is reasonably likely to have a Company Material Adverse
Effect.
(e) Except as set forth in the financial statements described
in Section 3.07, neither the Company nor any of the Company Subsidiaries has
entered into a transaction which is being accounted for under the installment
method of Section 453 of the Code which would be reasonably likely to have a
Company Material Adverse Effect.
SECTION 3.14. Vote Required. The only vote of the holders of
any class or series of capital stock of the Company necessary to approve the
Company Proposal is the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock.
SECTION 3.15. Opinion of Financial Advisor. The Company has
received the opinion of Bank of America Securities LLC dated February 13, 2000
that, as of such date, the Exchange Ratio is fair, from a financial point of
view, to the stockholders of the Company.
SECTION 3.16. Brokers. No broker, finder or investment banker
(other than Bank of America Securities LLC) is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger or the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
SECTION 3.17. Contracts. Except for agreements listed as
exhibits to any Combined SEC Reports, none of the Company or any of the Company
Subsidiaries is a party to any: (a) Contract which grants any person the
exclusive right to any of the material assets of the Company or any of the
Company Subsidiaries or purports to limit in any material respect the manner in
which, or the localities in which, the Company or any of the Company
Subsidiaries is entitled to conduct all or any material portion of the business
of Company or any of the Company Subsidiaries; (b) Contract that requires the
consent of, or terminates or becomes terminable by, any party other than the
Company or any of the Company Subsidiaries as a result of the transactions
contemplated by this Agreement where the failure to obtain such consent or the
termination of such Contract could be reasonably expected to have a Company
Material Adverse Effect; or (c) Contract of any sort, other than in the ordinary
course of business, which contemplates any joint venture, partnership, strategic
alliance or similar arrangement extending beyond six (6) months or involving
equity or investments of more than $20,000,000. There is not, under any of the
aforesaid obligations, any default by the Company or any of the Company
Subsidiaries except for defaults or other events which would not have a Company
Material Adverse Effect.
<PAGE>
21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth in the Disclosure Letter of even date
herewith delivered by Parent to the Company concurrently with the execution of
this Agreement (the "Parent Disclosure Letter") (it being agreed that disclosure
of an item or fact in any section of the Parent Disclosure Letter shall not be
deemed disclosed with respect to any other section of the Parent Disclosure
Letter), Parent hereby represents and warrants to the Company that:
SECTION 4.01. Organization and Qualification. Parent is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Delaware. Parent has all corporate power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted. Each subsidiary of Parent (collectively, the "Parent
Subsidiaries") is a corporation duly incorporated, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted. Each of Parent and
the Parent Subsidiaries is duly qualified or licensed as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would not have
a Parent Material Adverse Effect (as defined below). The term "Parent Material
Adverse Effect" means an event, change or occurrence which, individually or
together with any other event, change or occurrence, has a material adverse
effect on (a) the financial position, business, or results of operations of
Parent and the Parent Subsidiaries, taken as a whole, or (b) the ability of
Parent to perform its obligations under this Agreement or to consummate the
Merger or the other transactions contemplated by this Agreement, but shall not
include (x) any adverse effect due to changes, after the date of this Agreement,
in conditions generally affecting (1) the healthcare or electronic commerce
industries or (2) the U.S. economy as a whole, (y) any change or adverse effect
caused by, or relating to, the entering into of this Agreement, the consummation
of the transactions contemplated hereby or the announcement thereof, or (z) any
adverse effect due to legal or regulatory changes, effective after the date of
this Agreement.
SECTION 4.02. Certificate of Incorporation and By-Laws. Parent
has heretofore furnished to the Company complete and correct copies of the
Parent Certificate of Incorporation and the Parent By-Laws (as defined below).
Such Certificate of Incorporation and By-Laws are in full force and effect.
Neither Parent nor any Parent Subsidiary is in violation of any provision of its
Certificate of Incorporation, By-Laws or equivalent organizational documents.
<PAGE>
22
SECTION 4.03. Capitalization. (a) The authorized capital stock
of Parent consists of: (i) 600,000,000 shares of Parent Common Stock, of which
179,772,040 shares are issued and outstanding as of February 7, 2000 and (ii)
5,000,000 shares of Preferred Stock, $0.0001 par value per share, of which
155,951 shares are issued and outstanding as of February 7, 2000. All of the
outstanding shares of Parent Common Stock have been duly authorized and validly
issued, and are fully paid and nonassessable.
(b) As of February 7, 2000, an aggregate of 65,701,201 shares
of Parent Common Stock are subject to issuance pursuant to outstanding options
to purchase Parent Common Stock under Parent's stock option plans and
outstanding warrants to purchase Parent Common Stock. (Stock options granted by
Parent pursuant to its stock option plans and warrants are referred to in this
Agreement as "Parent Options and Warrants".) No options or warrants to acquire
shares of Parent Common Stock have been granted from February 7, 2000 to the
date of this Agreement.
(c) Except as set forth in Section 4.03(a) and (b) above or in
connection with the Medical Manager Merger Agreement, as of the date of this
Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of Parent or any Parent Subsidiary or obligating Parent or any
Parent Subsidiary to issue or sell any shares of capital stock of, or other
equity interests in, Parent or any Parent Subsidiary. All shares of Parent
Common Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. There are
no outstanding contractual obligations of Parent or any Parent Subsidiary to
repurchase, redeem or otherwise acquire any shares of Parent Common Stock or any
capital stock of any Parent Subsidiary. Each outstanding share of capital stock
of each Parent Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by Parent or another Parent Subsidiary
is free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on Parent's or such other
Parent Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever. There are no outstanding contractual obligations of Parent or any
Parent Subsidiary to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any Parent Subsidiary, other than a
Parent Subsidiary that is wholly owned by Parent and other Parent Subsidiaries,
or any other Person.
(d) The shares of Parent Common Stock to be issued in the
Merger pursuant to Section 2.01(a) will be duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights created by
Law, the Certificate of Incorporation of Parent or Amended and Restated By-Laws
of Parent (the "Parent By-Laws") or any agreement or arrangement to which the
Parent is a party or is bound.
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23
SECTION 4.04. Authority Relative to This Agreement. Parent has
all necessary corporate power and authority to execute and deliver this
Agreement, and, subject to the terms and conditions of this Agreement and
obtaining the necessary approvals of Parent's stockholders, to perform its
obligations hereunder and to consummate the Merger and the other transactions
contemplated by this Agreement. The execution and delivery of this Agreement by
Parent and the consummation by Parent of the Merger and the other transactions
contemplated by this Agreement have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Parent are necessary to authorize this Agreement or to consummate the Merger and
the other transactions contemplated by this Agreement (other than, with respect
to the Merger, the approval of the Parent Proposal by a majority of the
outstanding shares of Parent Common Stock, and the filing and recordation of the
appropriate merger documents as required by Delaware Law and Massachusetts Law
and subject to the terms and conditions of this Agreement). This Agreement has
been duly and validly executed and delivered by Parent and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of Parent, enforceable against Parent in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
Laws now or hereafter in effect relating to creditors' rights and by general
equitable principles (regardless of whether enforceability is considered in a
proceeding in equity or at Law).
SECTION 4.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Parent does not, and the
performance of this Agreement by Parent will not, (i) conflict with or violate
the Certificate of Incorporation of Parent or the Parent By-Laws or any
equivalent organizational documents of any Parent Subsidiary, (ii) assuming that
all consents, approvals, authorizations and other actions described in Section
4.05(b) have been obtained and all filings and obligations described in Section
4.05(b) have been made, conflict with or violate any Law applicable to Parent or
any Parent Subsidiary or by which any property or asset of Parent or any Parent
Subsidiary is bound or affected, or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Parent or any Parent Subsidiary pursuant
to, any Contract, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences as would not have
a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent
does not, and the performance of this Agreement by Parent will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (i) for the applicable requirements, if any,
of the Exchange Act and the Securities Act, Blue Sky Laws, the NASD, state
takeover Laws, the HSR Act, filings or approvals required under the competition
Laws of foreign jurisdictions and the filing and recordation of the Certificate
of Merger as
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24
required by Delaware Law and the Articles of Merger as required by Massachusetts
Law, (ii) the request that the shares of Parent Common Stock to be issued
pursuant to this Agreement in the Merger be listed for trading on the Nasdaq
National Market, and (iii) for such consents, approvals, authorizations or
permits, or such filings or notifications, the failure to obtain or make which
would not prevent consummation of the Merger and would not have a Parent
Material Adverse Effect.
SECTION 4.06. Permits; Compliance. (a) Except as set forth in
the Parent SEC Reports (as defined in Section 4.07), Parent and the Parent
Subsidiaries are in possession and are in compliance with the terms of all
Permits that are required for the operation of the business except for such
Permits the absence of which would not have a Parent Material Adverse Effect
(collectively, the "Parent Permits"). Except as set forth in the Parent SEC
Reports, no suspension or cancellation of any Parent Permit is pending or, to
the Knowledge of Parent, threatened, except with respect to Parent Permits the
suspension or cancellation of which would not, individually or in the aggregate,
have a Parent Material Adverse Effect.
(b) Except as set forth in the Parent SEC Reports and as would
not have a Parent Material Adverse Effect, the business of Parent and the Parent
Subsidiaries has been and is being conducted in compliance with all applicable
Laws. Except as set forth in the Parent SEC Reports and as would not have a
Parent Material Adverse Effect, neither Parent nor any Parent Subsidiary is in
conflict with, or has violated any provision of, or committed or failed to
perform any act which, with or without notice, lapse of time, or both, would
constitute a default under the provisions of (i) any Law applicable to Parent or
any Parent Subsidiary or by which any property or asset of Parent or any Parent
Subsidiary is bound or affected or (ii) any Parent Permit. Except as set forth
in the Parent SEC Reports, no investigation or review by any Governmental Entity
with respect to Parent or the Parent Subsidiaries is pending or, to the
Knowledge of Parent, threatened in writing, other than, in each case, those
which would not have a Parent Material Adverse Effect; and neither Parent nor
any of the Parent Subsidiaries has received any written communication in the
past two years from any Governmental Entity that alleges that Parent or any of
the Parent Subsidiaries is not in compliance in any material respect with any
applicable Law.
SECTION 4.07. SEC Filings; Financial Statements; Absence of
Liabilities. (a) Parent has filed all forms, reports and documents required to
be filed by it with the SEC since February 1, 1999 (collectively, the "Parent
SEC Reports"). As of the respective dates they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, on the date of such
amending or superseding filing), (i) the Parent SEC Reports complied in all
material respects in accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be, and (ii) none of the Parent SEC Reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were
<PAGE>
25
made, not misleading. No Parent Subsidiary is required to file any form, report
or other document with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any notes and schedules thereto) contained in the Parent SEC
Reports complied as to form with the applicable accounting requirements and
rules and regulations of the SEC and was prepared in accordance with GAAP
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto or, in the case of unaudited financial
statements, as permitted by Form 10-Q of the SEC), and each presented fairly, in
all material respects, the consolidated financial position of Parent and the
consolidated Parent Subsidiaries as at the respective dates thereof and their
results of operations and cash flows for the respective periods indicated
therein, all in accordance with GAAP (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which were not and are
not expected to be material in amount).
(c) Except for liabilities and obligations reflected on the
consolidated balance sheet of Parent as of September 30, 1999 (including the
notes thereto), liabilities and obligations incurred in the ordinary course of
business consistent with past practice since September 30, 1999 and liabilities
and obligations arising under this Agreement and the Medical Manager Merger
Agreement, neither Parent nor any Parent Subsidiary has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
which would be required to be reflected on a balance sheet prepared in
accordance with GAAP.
SECTION 4.08. Absence of Certain Changes or Events. During the
period commencing September 30, 1999 and ending on the date of this Agreement,
there has not been:
(a) a Parent Material Adverse Effect;
(b) any event, condition or occurrence which is reasonably
likely to have a Parent Material Adverse Effect; or
(c) except as set forth in the Parent SEC Reports, or
disclosed in another representation of the Parent contained in this
Agreement, in any event that, if taken during the period from the date
of this Agreement through the Effective Time, would constitute a breach
of Sections 5.02(c) through (f) and (i) hereof.
SECTION 4.09. Absence of Litigation. (a) Except as set forth
in the Parent SEC Reports, as of the date of this Agreement, there is no
litigation, suit, claim, action, proceeding or investigation pending or, to the
Knowledge of Parent, threatened against Parent or any Parent Subsidiary, or any
property or asset of Parent or any Parent Subsidiary, by or before
<PAGE>
26
any court, arbitrator or Governmental Entity, domestic or foreign, except as
would not have a Parent Material Adverse Effect.
(b) Except as set forth in the Parent SEC Reports and as would
not have a Parent Material Adverse Effect, as of the date of this Agreement
neither Parent nor any Parent Subsidiary nor any property or asset of Parent or
any Parent Subsidiary is subject to any continuing order of, consent decree,
settlement agreement or other similar written agreement with, or, to the
Knowledge of Parent, continuing investigation by, any Governmental Entity, or
any order, writ, judgment, injunction, decree, determination or award of any
Governmental Entity or arbitrator.
SECTION 4.10. Employee Benefit Plans. (a) With respect to each
employee benefit plan, program, arrangement and contract (including, without
limitation, any "employee benefit plan", as defined in Section 3(3) of ERISA),
maintained or contributed to by Parent or any Parent Subsidiary, or with respect
to which Parent or any Parent Subsidiary could incur liability under Section
4069, 4201 or 4212(c) of ERISA (the "Parent Benefit Plans"), Parent has made
available to the Company a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the IRS, (ii) such Parent Benefit Plan, (iii) each
trust agreement relating to such Parent Benefit Plan, (iv) the most recent
summary plan description for each Parent Benefit Plan for which a summary plan
description is required, (v) the most recent actuarial report or valuation
relating to a Parent Benefit Plan subject to Title IV of ERISA, if any, and (vi)
the most recent determination letter, if any, issued by the IRS with respect to
any Parent Benefit Plan qualified under Section 401(a) of the Code.
(b) With respect to the Parent Benefit Plans, no event has
occurred and, to the knowledge of Parent, there exists no condition or set of
circumstances in connection with which Parent or any Parent Subsidiary could be
subject to any liability under the terms of such Parent Benefit Plans, ERISA,
the Code or any other applicable Law, except as would not have a Parent Material
Adverse Effect. Neither Parent nor any Parent Subsidiary has any actual or
contingent material liability under Title IV of ERISA (other than the payment of
premiums to the Pension Benefit Guaranty Corporation). None of the Parent
Benefit Plans is a "multiemployer plan" (as defined in Section 4001(a)(3) of
ERISA).
(c) Parent has made available to the Company (i) copies of all
employment agreements and severance agreements with executive officers of Parent
or any Parent Subsidiary and (ii) copies of all plans, programs, agreements and
other arrangements of Parent or any Parent Subsidiary with or relating to its or
such Parent Subsidiary's employees which contain change in control provisions.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation, "golden parachute" or
otherwise) becoming due to any director, officer or employee of Parent or any
Parent Subsidiary under any Parent
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27
Benefit Plan or otherwise, (ii) increase any benefits otherwise payable under
any Parent Benefit Plan or (iii) result in any acceleration of the time of
payment or vesting of any benefits (including under the stock option plans of
Parent).
(d) No Parent Benefit Plan provides retiree medical or retiree
life insurance benefits to any person (except to the extent required by Law).
SECTION 4.11. Tax Matters. To the Knowledge of Parent, neither
Parent nor any of its affiliates has taken or agreed to take any action that
would prevent the Merger from constituting a transaction qualifying as a
reorganization under Section 368(a) of the Code. To the Knowledge of Parent,
there are no agreements, plans or other circumstances that would prevent the
Merger from qualifying under Section 368(a) of the Code.
SECTION 4.12. Intellectual Property. (a) Except as set forth
in the Parent SEC Reports and as would not have a Parent Material Adverse
Effect, (i) to the Knowledge of Parent, the conduct of the business of Parent
and the Parent Subsidiaries as currently conducted does not infringe or
misappropriate the Intellectual Property of any third party, and to the
Knowledge of Parent, no claim has been asserted to Parent that the conduct of
the business of Parent and the Parent Subsidiaries as currently conducted
infringes or may infringe or misappropriates the Intellectual Property of any
third party, (ii) with respect to each item of Intellectual Property owned by
Parent and the Parent Subsidiaries and material to the businesses of Parent and
the Parent Subsidiaries as currently conducted ("Parent Owned Intellectual
Property"), Parent or a Parent Subsidiary is the owner of the entire right,
title and interest in and to such Intellectual Property and is entitled to use
such Intellectual Property in the continued operation of its respective
business, (iii) with respect to each item of Intellectual Property licensed to
Parent or a Parent Subsidiary that is material to the businesses of Parent and
the Parent Subsidiaries as currently conducted ("Parent Licensed Intellectual
Property"), Parent or a Parent Subsidiary has the right to use such Parent
Licensed Intellectual Property in the continued operation of its respective
business in accordance with the terms of the license agreement governing such
Parent Licensed Intellectual Property, (iv) to the Knowledge of Parent, the
Parent Owned Intellectual Property is valid and enforceable, and has not been
adjudged invalid or unenforceable in whole or part, (v) to the Knowledge of
Parent, no person is engaging in any activity that infringes the Parent Owned
Intellectual Property, (vi) to the Knowledge of Parent, each license of Parent
Licensed Intellectual Property is valid and enforceable, is binding on all
parties to such license, and is in full force and effect, except to the extent
expired in accordance with its terms, and (vii) to the Knowledge of Parent, no
party to any license of the Parent Licensed Intellectual Property is in breach
thereof or default thereunder.
(b) Except as set forth in the Parent SEC Reports and as would
not have a Parent Material Adverse Effect, to the Knowledge of Parent, all
Parent Systems and Parent Owned Intellectual Property are Year 2000 Compliant.
For purposes hereof, "Parent Systems"
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28
shall mean all computer, hardware, software, systems, and equipment (including
embedded microcontrollers in non-computer equipment) material to or necessary
for Parent to carry on its business as currently conducted. For purposes hereof,
"Year 2000 Compliant" means that the Parent Systems and Parent Owned
Intellectual Property provide uninterrupted millennium functionality in that the
Parent Systems and Parent Owned Intellectual Property will record, store,
process and present calendar dates falling on or after January 1, 2000, in the
same manner and with the same functionality as the Parent Systems and Parent
Owned Intellectual Property record, store, process, and present calendar dates
falling on or before December 31, 1999.
SECTION 4.13. Taxes. (a) Except as would not have a Parent
Material Adverse Effect, (i) Parent and each of the Parent Subsidiaries have
timely filed or will timely file all returns and reports required to be filed by
them with any taxing authority with respect to Taxes for any period ending on or
before the Effective Time, taking into account any extension of time to file
granted to or obtained on behalf of Parent and the Parent Subsidiaries, (ii) all
Taxes that are due prior to the Effective Time have been paid or will be paid
(other than Taxes which (1) are not yet delinquent or (2) are being contested in
good faith and have not been finally determined), (iii) as of the date of this
Agreement, no deficiency for any material amount of Tax has been asserted or
assessed by a taxing authority against Parent or any of the Parent Subsidiaries
and (iv) Parent and each of the Parent Subsidiaries have provided adequate
reserves in accordance with generally accepted accounting principles in their
financial statements for any Taxes that have not been paid, whether or not shown
as being due on any returns.
(b) To the Knowledge of Parent, there are no material disputes
pending, or claims asserted in writing for, Taxes or assessments upon Parent or
any of the Parent Subsidiaries, nor has Parent or any of the Parent Subsidiaries
been requested in writing to give any currently effective waivers extending the
statutory period of limitation applicable to any federal or state income tax
return for any period which disputes, claims, assessments or waivers are
reasonably likely to have a Parent Material Adverse Effect.
(c) There are no Tax liens upon any property or assets of
Parent or any of the Parent Subsidiaries except liens for current Taxes not yet
due and except for liens which have not had and are not reasonably likely to
have a Parent Material Adverse Effect.
(d) Neither Parent nor any of the Parent Subsidiaries has been
required to include in income any adjustment pursuant to Section 481 of the Code
by reason of a voluntary change in accounting method initiated by Parent or any
of the Parent Subsidiaries, and the IRS has not initiated or proposed any such
adjustment or change in accounting method, in either case which adjustment or
change has had or is reasonably likely to have a Parent Material Adverse Effect.
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29
(e) Except as set forth in the financial statements described
in Section 4.07, neither Parent nor any of the Parent Subsidiaries has entered
into a transaction which is being accounted for under the installment method of
Section 453 of the Code, which would be reasonably likely to have a Parent
Material Adverse Effect.
SECTION 4.14. Vote Required. The affirmative vote of a
majority of the shares of Parent Common Stock at the Parent Stockholders'
Meeting (as defined below) is required to approve the Parent Proposal. No other
vote of the stockholders of Parent is required by Law, the Certificate of
Incorporation of Parent, the Parent By-Laws or otherwise in order for Parent to
consummate the Merger and the transactions contemplated hereby.
SECTION 4.15. Opinion of Financial Advisor. Parent has
received the opinion of Morgan Stanley & Co. Incorporated, dated February 13,
2000 that, as of such date, the Exchange Ratio is fair, from a financial point
of view, to Parent.
SECTION 4.16. Brokers. No broker, finder or investment banker
(other than Morgan Stanley & Co., Incorporated and FleetBoston Robertson
Stephens, Inc.) is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the other transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent.
SECTION 4.17. Contracts. Except for agreements listed as
exhibits to any Parent SEC Reports, none of Parent or any of the Parent
Subsidiaries is a party to any: (a) Contract which grants any person the
exclusive right to any of the material assets of Parent or any of the Parent
Subsidiaries or purports to limit in any material respect the manner in which,
or the localities in which, the Parent or any of the Parent Subsidiaries is
entitled to conduct all or any material portion of the business of Parent or any
of the Parent Subsidiaries; (b) Contract that requires the consent of, or
terminates or becomes terminable by, any party other than the Parent or any of
the Parent Subsidiaries as a result of the transactions contemplated by this
Agreement where the failure to obtain such consent or the termination of such
Contract could be reasonably expected to have a Parent Material Adverse Effect;
or (c) Contract of any sort, other than in the ordinary course of business,
which contemplates any joint venture, partnership, strategic alliance or similar
arrangement extending beyond six (6) months or involving equity or investments
of more than $20,000,000. There is not, under any of the aforesaid obligations,
any default by Parent or any of the Parent Subsidiaries except for defaults or
other events which would not have a Parent Material Adverse Effect.
<PAGE>
30
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the
Merger. The Company covenants and agrees that, between the date of this
Agreement and the Effective Time, except as specifically contemplated by any
other provision of this Agreement or Section 5.01 of the Company Disclosure
Letter, unless Parent shall otherwise agree in writing (such agreement not to be
unreasonably withheld or delayed):
(a) the Company and the Company Subsidiaries shall use all
reasonable efforts to preserve intact their present lines of business,
maintain their rights and franchises and preserve their relationships
with employees, customers, suppliers and others having business
dealings with them; provided, however, that no action by the Company or
any Company Subsidiary with respect to matters specifically addressed
by any other provision of this Section 5.01 or Section 6.07 shall be
deemed a breach of this Section 5.01(a);
(b) neither the Company nor any Company Subsidiary shall amend
or otherwise change its Certificate of Incorporation or By-Laws or
equivalent organizational documents, except as contemplated by Section
6.06 hereof or in connection with the issuance of preferred stock in
connection with acquisitions permitted pursuant to Section 5.01(f)(i);
(c) neither the Company nor any Company Subsidiary shall
issue, sell, pledge, dispose of, grant or encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, any
shares of capital stock of the Company or any Company Subsidiary of any
class, or any options, warrants, convertible securities or other rights
of any kind to acquire any shares of such capital stock, or any other
ownership interest (including, without limitation, any phantom
interest), of the Company or any Company Subsidiary, except for (i) the
issuance of any shares of Company Common Stock issuable pursuant to
Company Stock Options outstanding on the date hereof in accordance with
the respective terms thereof, (ii) the issuance, in the ordinary course
of business and consistent with past practice, of Company Stock Options
to purchase a maximum of 450,000 shares of Company Common Stock to new
employees of the Company in connection with the commencement of their
employment with the Company of any Company Subsidiary pursuant to
Company Stock Option Plans in effect on the date of this Agreement and
the shares of Company Common Stock issuable pursuant to such Company
Stock Options, in accordance with the terms of the Company Stock Option
Plans, (iii) issuances by a direct or indirect wholly owned subsidiary
of the Company of
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31
capital stock to such subsidiary's parent and (iv) issuances of capital
stock in acquisitions permitted under Section 5.01(f);
(d) neither the Company nor any Company Subsidiary shall
declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of
its capital stock, other than dividends by a direct or indirect wholly
owned subsidiary of the Company to such subsidiary's parent;
(e) neither the Company nor any Company Subsidiary shall
reclassify, combine, split, subdivide or redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock, except for
any such transaction by a wholly owned subsidiary of the Company that
remains a wholly owned subsidiary of the Company after the consummation
of such transaction;
(f) neither the Company nor any Company Subsidiary shall: (i)
acquire or dispose of (including, without limitation, by merger,
consolidation, or acquisition or disposition of stock or assets) any
interest in any corporation, partnership, other business organization
or any division thereof, (x) for or with a fair market value in excess
of $500,000,000 or (y) in the case of acquisitions, that could
reasonably be expected to result in any (A) delay in the consummation
of the Merger or the transactions contemplated herein or (B) decrease
in the likelihood that the conditions set forth in Sections 7.01(d) and
(e) would be satisfied, or (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations
of any Person, or make any loans or advances, except for (A)
indebtedness incurred in the ordinary course of business and consistent
with past practice, (B) indebtedness of the Company to a direct or
indirect wholly owned Company Subsidiary or indebtedness of a direct or
indirect wholly owned Company Subsidiary to the Company or another
direct or indirect wholly owned Company Subsidiary, and (C)
indebtedness that in the aggregate does not exceed $100,000,000;
(g) neither the Company nor any Company Subsidiary shall
change its method of accounting in effect at December 31, 1999, except
as required by changes in GAAP or the accounting rules and regulations
of the SEC;
(h) neither the Company nor any Company Subsidiary shall take
any action that would prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Code;
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32
(i) neither the Company nor any Company Subsidiary shall make
any material tax election or settle or compromise any material federal,
state, local or foreign income tax liability;
(j) neither the Company nor any Company Subsidiary shall enter
into any new employment Contract or make any material commitment to
employees (including any commitment to pay severance, retirement or
other material benefits) except in the ordinary course of business and
consistent with past practice;
(k) neither the Company nor any Company Subsidiary shall
increase the compensation (including material fringe benefits) payable
or to become payable to any officer, director or employee, except (x)
general hourly rate increases and normal merit increases for employees
other than executive officers made in the ordinary course of business
and consistent with past practice and (y) for increases committed to
prior to the date of this Agreement and not in contemplation thereof;
(l) neither the Company nor any Company Subsidiary shall make
any loan to any Person or increase the aggregate amount of any loan
currently outstanding to any Person, except for usual and customary
advances to employees made in the ordinary course of business or
pursuant to commitments made prior to the date of this Agreement and
not in contemplation thereof;
(m) neither the Company nor any Company Subsidiary shall waive
any stock repurchase rights, accelerate, amend or change the period of
exercisability of outstanding options, reprice outstanding options
granted under any Company Stock Option Plans or authorize cash payments
in exchange for any outstanding options granted under any of such
plans;
(n) neither the Company nor any Company Subsidiary shall grant
any severance or termination pay to any officer or employee except
pursuant to written agreements outstanding or policies existing on the
date hereof or adopt any new severance plan;
(o) neither the Company nor any Company Subsidiary shall
transfer or license to any Person or otherwise extend, amend or modify
any rights to the Intellectual Property of them, or enter into any
grants of future patent rights, other than in the ordinary course of
business consistent with past practice;
(p) neither the Company nor any Company Subsidiary shall not
materially modify or amend, or terminate any Contract referred to in
Section 3.17 of this Agreement (including any of the Company Stock
Plans) to which the Company or any Company
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33
Subsidiary is a party or waive, release, or assign any material rights
or claims thereunder, in any such case in a manner materially adverse
to Parent;
(q) neither the Company nor any Company Subsidiary shall
authorize or enter into any agreement to do anything prohibited by
Sections 5.01(b) through (p); and
(r) the Company will (i) use its reasonable best efforts to
consummate the transactions contemplated by the agreements listed in
Section 5.02(r) of the Company Disclosure Letter in accordance with the
terms thereof, (ii) not take any action which would materially
adversely impact the timing of the closing of such transactions or the
ability of the Company to satisfy the conditions precedent to the
closing of such transactions, and (iii) not waive or amend any material
provision of such agreements without the prior written approval of
Parent.
SECTION 5.02. Conduct of Business by Parent Pending the
Merger. Parent agrees that, between the date of this Agreement and the Effective
Time, except as specifically contemplated by any other provision of this
Agreement or Section 5.02 of the Parent Disclosure Letter, unless the Company
shall otherwise agree in writing (such agreement not to be unreasonably withheld
or delayed):
(a) Parent and the Parent Subsidiaries shall use all
reasonable efforts to preserve intact their present lines of business,
maintain their rights and franchises and preserve their relationships
with employees, customers, suppliers and others having business
dealings with them; provided, however, that no action by Parent or any
Parent Subsidiary with respect to matters specifically addressed by any
other provision of this Section 5.02 or Section 6.07 shall be deemed a
breach of this Section 5.02(a);
(b) neither Parent nor any Parent Subsidiary shall amend or
otherwise change its Certification of Incorporation or By-Laws or
equivalent organizational documents, except as contemplated by Section
2.01(b) or for the issuance of preferred stock in connection with
acquisitions permitted pursuant to Section 5.02(e);
(c) neither Parent nor any Parent Subsidiary shall issue,
sell, pledge, dispose of, grant or encumber, or authorize the issuance,
sale, pledge, disposition, grant or encumbrance of, any shares of
capital stock of Parent or any Parent Subsidiary of any class, or any
options, warrants, convertible securities or other rights of any kind
to acquire any shares of such capital stock, or any other ownership
interest (including, without limitation, any phantom interest), of
Parent or any Parent Subsidiary, except for (i) the issuance of shares
of Parent Common Stock issuable pursuant to Parent Stock Options
outstanding on the date hereof in accordance with the terms thereof,
(ii) the issuance, in the ordinary course of business and consistent
with past practice, of Parent
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34
Stock Options to purchase shares of Parent Common Stock pursuant to
Parent Stock Option Plans in effect on the date of this Agreement and
the shares of Parent Common Stock issuable pursuant to such Parent
Stock Options, in accordance with the terms of the Parent Stock Option
Plans, (iii) issuances for Parent's Employee Stock Purchase Plan, (iv)
issuances by a direct or indirect wholly owned subsidiary of Parent of
capital stock to such subsidiary's parent and (v) issuances of capital
stock in acquisitions permitted under Section 5.02(e);
(d) neither Parent nor any Parent Subsidiary shall declare,
set aside, make or pay any dividend or other distribution, payable in
cash, stock, property or otherwise, with respect to any of its capital
stock, other than dividends by a direct or indirect wholly owned
subsidiary of Parent to such subsidiary's parent;
(e) neither Parent nor any Parent Subsidiary shall: (i)
acquire or dispose of (including, without limitation, by merger,
consolidation, or acquisition or disposition of stock or assets) any
interest in any corporation, partnership, other business organization
or any division thereof, for or with a fair market value in excess of
$500,000,000 and, in the case of acquisitions, that could reasonably be
expected to result in any (A) delay in the consummation of the Merger
or the transactions contemplated herein or (B) decrease in the
likelihood that the conditions set forth in Sections 7.01(d) and (e)
would be satisfied, or (ii) incur any indebtedness for borrowed money
or issue any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations
of any Person, or make any loans or advances, except for (A)
indebtedness incurred in the ordinary course of business and consistent
with past practice, (B) indebtedness of Parent to a direct or indirect
wholly owned Parent Subsidiary or indebtedness of a direct or indirect
wholly owned Parent Subsidiary to Parent or another direct or indirect
wholly owned Parent Subsidiary, and (C) indebtedness that in the
aggregate does not exceed $100,000,000;
(f) neither Parent nor any Parent Subsidiary shall change its
methods of accounting in effect at September 30, 1999, except as
required by changes in GAAP or the accounting rules and regulations of
the SEC;
(g) neither Parent nor any Parent Subsidiary shall take any
action that would prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Code;
(h) neither Parent nor any Parent Subsidiary shall make any
material tax election or settle or compromise any federal, state,
local, or foreign income tax liability;
(i) neither Parent nor any Parent Subsidiary shall not
materially modify or amend, or terminate any Contract referred to in
Section 4.17 of this Agreement (including
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35
Parent Stock Plans) to which Parent or any Parent Subsidiary is a party
or waive, release, or assign any material rights or claims thereunder,
in any such case in a manner materially adverse to the Company;
(j) neither the Parent nor any Parent Subsidiary shall
transfer or license to any Person or otherwise extend, amend or modify
any rights to the Intellectual Property of them, or enter into any
grants of future patent rights, other than in the ordinary course of
business consistent with past practice;
(k) neither Parent nor any Parent Subsidiary shall authorize
or enter into any agreement to do anything prohibited by Sections
5.02(b) through (j); and
(l) Parent will (i) use its reasonable best efforts to
consummate the transactions contemplated by the agreements listed in
Section 5.02(l) of the Parent Disclosure Letter in accordance with the
terms thereof, and (ii) not take any action which would materially
adversely delay the closing of such transactions or the ability of
Parent to satisfy the conditions precedent to the closing of such
transactions and (iii) not waive or amend any material provision of
such agreements without the prior written approval of the Company.
SECTION 5.03. Adverse Changes in Condition. Each party agrees
(a) to give written notice promptly to the other parties upon becoming aware of
the occurrence or impending occurrence of any event or circumstance relating to
it or any of its Subsidiaries which (i) is reasonably likely to have a Parent
Material Adverse Effect or a Company Material Adverse Effect, or (ii) would
cause or constitute a breach of any of its representations, warranties,
agreements or covenants contained herein, such that the conditions set forth in
Section 7.02 or Section 7.03 with respect to such party (as appropriate) would
not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, and (b) to use its
reasonable efforts to prevent or promptly to remedy the same.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement; Joint Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement, (i) Parent
and the Company shall prepare and file with the SEC a joint proxy statement
(together with any amendments thereof or supplements thereto, the "Proxy
Statement") relating to the meetings of the Company's stockholders (the "Company
Stockholders' Meeting") and Parent's stockholders (the "Parent Stockholders'
Meeting" and, together with the Company Stockholders' Meeting, the
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36
"Stockholders' Meetings") to be held to consider approval and adoption of this
Agreement and the Merger by the Company's stockholders and the approval of the
Parent Proposal by Parent's stockholders and (ii) Parent shall prepare and file
with the SEC a registration statement on Form S-4 (together with all amendments
thereto, the "Registration Statement") in which the Proxy Statement shall be
included as a prospectus, in connection with the registration under the
Securities Act of the shares of Parent Common Stock to be issued to the
stockholders of the Company pursuant to the Merger and to the stockholders of
Medical Manager pursuant to the Medical Manager Merger Agreement. Parent and the
Company each shall use their reasonable best efforts to cause the Registration
Statement to become effective as promptly as practicable, and, prior to the
effective date of the Registration Statement, Parent shall take all or any
action required under any applicable federal or state securities Laws in
connection with the issuance of shares of Parent Common Stock pursuant to the
Merger. The Company shall promptly furnish all information concerning the
Company as Parent may reasonably request in connection with such actions and the
preparation of the Registration Statement and Proxy Statement. As promptly as
practicable after the Registration Statement shall have become effective, each
of Parent and the Company shall mail the Proxy Statement to its stockholders.
(b) (i) The Proxy Statement shall include the recommendation
of the Special Committee to the holders of Company Common Stock in favor of the
Company Proposal; provided, however, that the Special Committee may, at any time
prior to the Effective Time, withdraw, modify or change any such recommendation
to the extent that the Special Committee determines in good faith after
consultation with outside legal counsel to the Special Committee that the
failure to so withdraw, modify or change its recommendation could reasonably be
deemed to cause the Board of Directors or the Special Committee to breach its
fiduciary duties to the holders of Company Common Stock under applicable Law
and, notwithstanding anything to the contrary contained in this Agreement, such
a withdrawal, modification or change in such recommendation shall not constitute
a breach of this Agreement by the Company. Notwithstanding anything to the
contrary in this Agreement, such a withdrawal, modification or change, in such
recommendation shall not relieve the Company in any way whatsoever of its other
obligations under this Section 6.01 or its obligations under Section 6.02 of
this Agreement.
(ii) The Proxy Statement shall include the recommendation of
the Parent Board to the holders of Parent Common Stock in favor of approval of
the Parent Proposal; provided, however, that the Parent Board may, at any time
prior to the Effective Time, withdraw, modify or change any such recommendation
to the extent that the Parent Board determines in good faith after consultation
with outside legal counsel (who may be Parent's regularly engaged outside legal
counsel) that the failure to so withdraw, modify or change its recommendation
could reasonably be deemed to cause the Parent Board to breach its fiduciary
duties to the holders of Parent Common Stock under applicable Law and,
notwithstanding anything to the contrary contained in this Agreement, such a
withdrawal, modification or change in such recommendation shall not constitute a
breach of this Agreement by the Company.
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37
Notwithstanding anything to the contrary in this Agreement, such a withdrawal,
modification or change, in such recommendation shall not relieve Parent in any
way whatsoever of its other obligations under this Section 6.01 or its
obligations under Section 6.02 of this Agreement.
(c) No amendment or supplement to the Proxy Statement or the
Registration Statement will be made by Parent or the Company without the
approval of the other party (such approval not to be unreasonably withheld or
delayed). Parent and the Company shall each advise the other, promptly after the
receipt of notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the issuance
of any stop order, of the suspension of the qualification of the Parent Common
Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or of any request by the SEC for amendment of the Proxy Statement
or the Registration Statement or comments thereon and responses thereto or
requests by the SEC for additional information.
(d) The information supplied by Parent for inclusion in the
Registration Statement and the Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to the
stockholders of the Parent and the Company, (iii) the time of each of the
Stockholders' Meetings and (iv) the Effective Time, contain any untrue statement
of a material fact or fail 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. If, at any time prior
to the Effective Time, any event or circumstance relating to Parent or any
Parent Subsidiary, or their respective officers or directors, should be
discovered by Parent which should be set forth in an amendment or a supplement
to the Registration Statement or Proxy Statement, Parent shall promptly inform
the Company. All documents that Parent is responsible for filing with the SEC in
connection with the Merger or the other transactions contemplated by this
Agreement will comply as to form in all material respects with the applicable
requirements of the Securities Act and the rules and regulations thereunder and
the Exchange Act and the rules and regulations thereunder.
(e) The information supplied by the Company for inclusion in
the Registration Statement and the Proxy Statement shall not, at (i) the time
the Registration Statement is declared effective, (ii) the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the stockholders of the Company and Parent, (iii) the time of each of the
Stockholders' Meetings and (iv) the Effective Time, contain any untrue statement
of a material fact or fail 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. If, at any time prior
to the Effective Time, any event or circumstance relating to the Company or any
Company Subsidiary, or their respective officers or directors, should be
discovered by the Company which should be set forth in an amendment or a
supplement to the Registration Statement or Proxy Statement, the Company shall
promptly inform Parent. All
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38
documents that the Company is responsible for filing with the SEC in connection
with the Merger or the other transactions contemplated by this Agreement will
comply as to form in all material respects with the applicable requirements of
the Securities Act and the rules and regulations thereunder and the Exchange Act
and the rules and regulations thereunder.
SECTION 6.02. Stockholders' Meetings. (a) The Company shall
call and hold the Company Stockholders' Meeting, and Parent shall call and hold
the Parent Stockholders' Meeting, as promptly as practicable for the purpose of
voting upon the approval of the Company Proposal by the Company's stockholders
and the approval of the Parent Proposal by Parent's stockholders, as the case
may be, and Parent and the Company shall use their reasonable best efforts to
hold the Stockholders' Meetings on the same day and on the same day that
Parent's Stockholders hold their meeting to vote on the Medical Manager Merger
and the adoption of the Medical Manager Merger Agreement and as soon as
practicable after the date on which the Registration Statement becomes
effective. Parent agrees to seek stockholder approval of the Company's 1999
Non-Employee Director Stock Option Plan at the Parent Stockholders' Meeting.
(b) Parent shall use its reasonable best efforts to solicit
from holders of Parent Common Stock proxies in favor of approval of the Parent
Proposal, and shall take all other action necessary or advisable to secure the
vote or consent of holders of Parent Common Stock required by the rules of the
NASDAQ or Delaware Law or Massachusetts Law to obtain approval of the Parent
Proposal, except to the extent that the Parent Board determines in good faith
after consultation with outside legal counsel (who may be Parent's regularly
engaged outside legal counsel) that doing so could reasonably be deemed to cause
the Parent Board to breach its fiduciary duties to the holders of Parent Common
Stock under applicable Law and any such failure to solicit proxies or take other
solicitation action under this sentence to secure the vote or consent of holders
of Parent Common Stock shall not constitute a breach of this Agreement by
Parent. Notwithstanding anything to the contrary contained in this Agreement,
such failure to solicit proxies in favor of the approval of the Parent Proposal
shall not relieve Parent in any way whatsoever of its obligations under Section
6.01 of this Agreement or its other obligations under this Section 6.02.
(c) The Company shall use its reasonable best efforts to
solicit from holders of Company Common Stock proxies in favor of the Company
Proposal and shall take all other action necessary or advisable to secure the
vote or consent of holders of Company Common Stock required by the rules of the
NASDAQ or Delaware Law or Massachusetts Law to obtain the approval of the
Company Proposal, except to the extent that the Special Committee determines in
good faith after consultation with outside legal counsel to the Special
Committee that doing so could reasonably be deemed to cause the Board of
Directors or the Special Committee to breach its fiduciary duties to the holders
of Company Common Stock under applicable Law and any such failure to solicit
proxies or take other solicitation action under this
<PAGE>
39
sentence to secure the vote or consent of holders of Company Common Stock shall
not constitute a breach of this Agreement by the Company. Notwithstanding
anything to the contrary contained in this Agreement, such failure to solicit
proxies in favor of the Company Proposal shall not relieve the Company in any
way whatsoever of its obligations under Section 6.01 of this Agreement or its
other obligations under this Section 6.02. Notwithstanding anything permitted by
the foregoing, neither Company, its Board of Directors nor the Special Committee
shall take any action that would cause any Company Voting Agreement to be
unenforceable in accordance with its terms under applicable law.
SECTION 6.03. Access to Information; Confidentiality. (a)
Except as required pursuant to any confidentiality agreement or similar
agreement or arrangement to which Parent or the Company or any of their
respective subsidiaries is a party or pursuant to applicable Law, from the date
of this Agreement to the Effective Time, each of Parent and the Company shall
(and shall cause their respective subsidiaries to): (i) provide to the other
(and its officers, directors, employees, accountants, consultants, legal
counsel, agents and other representatives, collectively, "Representatives")
access at reasonable times upon prior notice to the officers, employees, agents,
properties, offices and other facilities of the other and its subsidiaries and
to the books and records thereof and (ii) furnish promptly such information
concerning the business, properties, contracts, assets, liabilities, personnel
and other aspects of the other party and its subsidiaries as the other party or
its Representatives may reasonably request.
(b) With respect to information that is made available by one
party to another pursuant to Section 6.03(a) or pursuant to any other provision
of this Agreement, the receiving party shall comply with, and shall cause its
Representatives to comply with, the provisions relating to confidentiality
contained in the Confidentiality Agreement currently in existence between the
parties (the "Confidentiality Agreement").
(c) No investigation by either the Company or Parent shall
affect the representations and warranties of the other.
SECTION 6.04. No Solicitation of Transactions. (a) The Company
agrees that, from and after the date hereof until the earlier of the Effective
Time or the termination of this Agreement in accordance with Article VIII, it
shall not, and that it shall cause its Representatives not to, directly or
indirectly, initiate, solicit or encourage any inquiries or the making of any
proposal, or offer with respect to a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving, or any purchase or sale of all or any
significant portion of the assets or 20% or more of the equity securities of,
the Company or any Company Subsidiary (any such proposal or offer being
hereinafter referred to as a "Company Acquisition Proposal"). The Company
further agrees that it shall not, and that it shall cause its Representatives
not to, directly or indirectly, have any discussion with or provide any
confidential information or data relating to
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40
the Company or any Company Subsidiary to any Person relating to a Company
Acquisition Proposal or engage in any negotiations concerning a Company
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement a Company Acquisition Proposal or accept a Company Acquisition
Proposal; provided, however, that nothing contained in this Section 6.04(a)
shall prevent the Company or the Special Committee from (i) complying with Rule
14d-9 or Rule 14e-2 promulgated under the Exchange Act with regard to a Company
Acquisition Proposal; (ii) engaging in any discussions or negotiations with, or
providing any information to, any Person in response to an unsolicited written
Company Acquisition Proposal by any such Person; or (iii) recommending such an
unsolicited written Company Acquisition Proposal to the holders of Company
Common Stock if, in any such case as is referred to in clause (ii) or (iii), (A)
the Special Committee determines in good faith after consultation with outside
legal counsel to the Special Committee that such action could reasonably be
deemed to be necessary for it to act in a manner consistent with its fiduciary
duties under applicable Law, (B) prior to providing any information or data
regarding the Company to any Person or any of such Person's Representatives in
connection with a Company Acquisition Proposal by such Person, the Company
receives from such Person an executed confidentiality agreement on terms at
least as restrictive on such Person as those contained in the Confidentiality
Agreement, (C) prior to providing any information or data to any Person or any
of such Person's Representatives or entering into discussions or negotiations
with any Person or any of such Person's Representatives in connection with a
Company Acquisition Proposal by such Person, the Company notifies Parent
promptly of the receipt of such Company Acquisition Proposal indicating, in
connection with such notice, the name of such Person and attaching a copy of the
proposal or offer or providing a complete written summary thereof, and (D) the
Company has not breached its obligations under the first sentence of this
Section 6.04(a). The Company agrees that it will immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Company Acquisition Proposal.
The Company agrees that it shall keep Parent informed, on a current basis, of
the status and terms of any such proposals or offers and the status of any such
discussions or negotiations. The Company agrees that it will take the necessary
steps to promptly inform each Representative of the Company of the obligations
undertaken in this Section 6.04(a).
(b) Parent agrees that, from and after the date hereof until
the earlier of the Effective Time or the termination of this Agreement in
accordance with Article VIII, it shall not, and that it shall cause its
Representatives not to, directly or indirectly, initiate, solicit or encourage
any inquiries or the making of any proposal, or offer with respect to a merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving, or
any purchase or sale of all or any significant portion of the assets or 20% or
more of the equity securities of, Parent or any Parent Subsidiary that, in any
such case, could reasonably be expected to preclude the completion of the Merger
or the other transactions contemplated by this Agreement (any such proposal or
offer being hereinafter referred to as an "Parent Acquisition Proposal"). Parent
further agrees that it
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41
shall not, and that it shall cause its Representatives not to, directly or
indirectly, have any discussion with or provide any confidential information or
data relating to Parent or any Parent Subsidiary to any Person relating to a
Parent Acquisition Proposal or engage in any negotiations concerning a Parent
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement a Parent Acquisition Proposal or accept a Parent Acquisition Proposal;
provided, however, that nothing contained in this Section 6.04(b) shall prevent
Parent or the Parent Board from (i) complying with Rule 14d-9 or Rule 14e-2
promulgated under the Exchange Act with regard to a Parent Acquisition Proposal;
(ii) engaging in any discussions or negotiations with, or providing any
information to, any Person in response to an unsolicited written Parent
Acquisition Proposal by any such Person; or (iii) recommending such an
unsolicited written Parent Acquisition Proposal to the holders of Parent Common
Stock if, in any such case as is referred to in clause (ii) or (iii), (A) the
Parent Board concludes in good faith (after consultation with its financial
advisors) that such Parent Acquisition Proposal would, if consummated, result in
a transaction more favorable to holders of Parent Common Stock than the
transaction contemplated by this Agreement (any such more favorable Parent
Acquisition Proposal being referred to in this Agreement as a "Parent Superior
Proposal"), (B) the Parent Board determines in good faith after consultation
with outside legal counsel (who may be Parent's regularly engaged outside legal
counsel) that such action could reasonably be deemed to be necessary for it to
act in a manner consistent with its fiduciary duties under applicable Law, (C)
prior to providing any information or data regarding Parent or any Parent
Subsidiary to any Person or any of such Person's Representatives in connection
with a Parent Superior Proposal by such Person, Parent receives from such Person
an executed confidentiality agreement on terms at least as restrictive on such
Person as those contained in the Confidentiality Agreement, (D) prior to
providing any information or data to any Person or any of such Person's
Representatives or entering into discussions or negotiations with any Person or
any of such Person's Representatives in connection with a Parent Superior
Proposal by such Person, Parent notifies the Company promptly of the receipt of
such Parent Superior Proposal indicating, in connection with such notice, the
name of such Person and attaching a copy of the proposal or offer or providing a
complete written summary thereof, and (E) Parent has not breached its
obligations under the first sentence of this Section 6.04(b). Parent agrees that
it will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Parent Acquisition Proposal. Parent agrees that it shall keep the Company
informed, on a current basis, of the status and terms of any such proposals or
offers and the status of any such discussions or negotiations. Parent agrees
that it will take the necessary steps to promptly inform each Representative of
Parent of the obligations undertaken in this Section 6.04(b).
SECTION 6.05. Directors' and Officers' Indemnification and
Insurance. (a) From and after the Effective Time, Parent shall, and shall cause
the Surviving Corporation to, indemnify and hold harmless each present and
former director and officer of the Company and each person who served at the
request of the Company as a director, officer or trustee of
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42
another corporation, partnership, joint venture, trust, pension or other
employee benefit plan or enterprise (collectively, the "Indemnified Parties"),
to the fullest extent permitted under applicable Law, against all costs and
expenses (including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and settlement amounts paid in connection with any claim, action,
suit, proceeding or investigation (whether arising before or after the Effective
Time), whether civil, criminal, administrative or investigative, arising out of
or pertaining to any action or omission in their capacity as an officer,
director, employee or fiduciary, including, without limitation, the transactions
contemplated by this Agreement (and shall also advance, or cause to be advanced,
expenses as incurred to the fullest extent permitted under applicable Law).
Parent agrees that all rights to indemnification existing in favor of the
Indemnified Parties as provided in the Company's Certificate of Incorporation
and By-Laws, as in effect as of the date hereof, with respect to matters
occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time. From and after the Effective Time, Parent shall assume the
obligations of the Company to provide indemnification to Indemnified Parties
under indemnification agreements or similar contracts.
(b) Without limiting or expanding the foregoing, in the event
any claim, action, suit, proceeding or investigation (a "Claim") that is subject
to Section 6.05(a) is brought against any Indemnified Party at or after the
Effective Time, (i) the Indemnified Parties may retain counsel satisfactory to
them and reasonably satisfactory to Parent and the Surviving Corporation, (ii)
Parent and the Surviving Corporation shall pay all reasonable fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor are
received, and (iii) Parent and the Surviving Corporation will use all reasonable
efforts to assist in the vigorous defense of any such matter, provided that
neither Parent nor the Surviving Corporation shall be liable for any settlement
of any Claim effected without its written consent, which consent, however, shall
not be unreasonably withheld or delayed. Any Indemnified Party wishing to claim
indemnification under this Section 6.05, upon learning of any such Claim, shall
notify Parent (but the failure so to notify Parent shall not relieve Parent and
the Surviving Corporation from any liability that either may have under this
Section 6.05 except to the extent such failure materially prejudices them). The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to each such matter unless, under applicable standards of
professional conduct, there is or would reasonably be expected to be a conflict
on any significant issue between the positions of any two or more Indemnified
Parties.
(c) For a period of six years after the Effective Time, Parent
shall cause to be maintained in effect the current directors' and officers'
liability insurance policies maintained by the Company (provided that Parent may
substitute therefor policies of at least the same coverage containing other
terms and conditions which are no less advantageous) with respect to claims
arising from facts or events that occurred prior to the Effective Time; provided
further that Parent shall not be required to maintain such policies to the
extent that the annual premiums (or
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43
incremental annual premiums in the case of substitute policies that provide
coverage to other Persons or for other matters) exceed 200% of the most recent
annual premium paid for such policies by the Company.
SECTION 6.06. Amendment of Company Charter. Immediately prior
to the Effective Time, the Certificate of Designation of Preferences and Rights
of the Series A Convertible Redeemable Preferred Stock of the Company set forth
in Article IV of the Certificate of Incorporation of the Company shall be
amended to allow the Company Preferred Stock which is outstanding immediately
prior to the Effective Time to be converted into Parent New Preferred Stock
without adversely affecting the relative rights, preferences, powers and
privileges of the Company Preferred Stock.
SECTION 6.07. Further Action; Consents; Filings. (a) Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
its best efforts to (i) take, or cause to be taken, all actions necessary,
proper or advisable under applicable Law or otherwise to consummate and make
effective the Merger and the other transactions contemplated by this Agreement,
(ii) obtain from Governmental Entities any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made by Parent or
the Company or any of their subsidiaries, as the case may be, in connection with
the authorization, execution and delivery of this Agreement and the consummation
of the Merger and the other transactions contemplated by this Agreement and
(iii) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement, the Merger and the other
transactions contemplated by this Agreement required under (A) the Exchange Act
and the Securities Act and the rules and regulations thereunder and any other
applicable federal or state securities Laws, (B) the HSR Act and (C) any other
applicable Law. The parties hereto shall cooperate with each other in connection
with the making of all such filings, including by providing copies of all such
documents to the nonfiling party and its advisors prior to filing and, if
requested, by accepting all reasonable additions, deletions or changes suggested
in connection therewith. The parties hereto shall furnish all information
required for any application or other filing to be made pursuant to the rules
and regulations of any applicable Law (including all information required to be
in the Proxy Statement) in connection with the transactions contemplated by this
Agreement.
(b) Parent and the Company shall file as soon as practicable
(but not later than five business days) after the date of this Agreement
notifications under the HSR Act and shall respond as promptly as practicable to
all inquiries or requests received from the Federal Trade Commission or the
Antitrust Division of the Department of Justice for additional information or
documentation and shall respond as promptly as practicable to all inquiries and
requests received from any State Attorney General or other Governmental Entity
in connection with antitrust matters. The parties shall cooperate with each
other in connection with the making of all such filings or responses, including
providing copies of all such documents to the other party and its advisors prior
to filing or responding.
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(c) Each of the Company and Parent agree to cooperate and use
their best efforts vigorously to contest and resist any action, including
legislative, administrative or judicial action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order (whether
temporary, preliminary or permanent) (an "Order") that is in effect and that
restricts, prevents or prohibits the consummation of the Merger or any other
transactions contemplated by this Agreement, including, without limitation, by
vigorously pursuing all available avenues of administrative and judicial appeal
and all available legislative action. Notwithstanding any other provision of
this Agreement to the contrary, each of the Company and Parent also agree, if
requested by the other, to take any and all actions as are or may be required by
Governmental Entities as a condition to the granting of any approvals required
in order to permit the consummation of the Merger or the other transactions
contemplated hereby or as may be required to avoid, lift, vacate or reverse any
legislative, administrative or judicial action which would otherwise cause any
condition to Closing not to be satisfied; provided however, that Parent and the
Parent Subsidiaries shall not be required to take any actions otherwise required
hereunder if the effect of such action would have a material adverse effect on
the financial position, business, or results of operations of the Parent, the
Parent Subsidiaries, the Company, the Company Subsidiaries, Medical Manager and
each of the other Subsidiaries of Medical Manager, all taken as a whole.
SECTION 6.08. Plan of Reorganization. (a) This Agreement is
intended to constitute a "plan of reorganization" within the meaning of section
1.368-2(g) of the income tax regulations promulgated under the Code. From and
after the date of this Agreement and until the Effective Time, each party hereto
shall use its reasonable best efforts to cause the Merger to qualify, and will
not knowingly take any action, cause any action to be taken, fail to take any
action or cause any action to fail to be taken which action or failure to act
could prevent the Merger from qualifying as a reorganization under the
provisions of section 368(a) of the Code. Following the Effective Time, neither
the Surviving Corporation, Parent nor any of their affiliates shall knowingly
take any action, cause any action to be taken, fail to take any action or cause
any action to fail to be taken, which action or failure to act could cause the
Merger to fail to qualify as a reorganization under section 368(a) of the Code.
(b) As of the date hereof, to the Company's Knowledge, there
is no reason (i) why it would not be able to deliver to the Company's counsel or
Parent's counsel, at the date of the legal opinions referred to below,
certificates substantially in compliance with IRS published advance ruling
guidelines, with customary exceptions and modifications thereto, to enable such
firms to deliver the legal opinions contemplated by Section 7.01(f) or (ii) why
the Company's counsel or Parent's counsel would not be able to deliver the
opinions required by Section 7.01(f).
(c) As of the date hereof, to Parent's Knowledge, there is no
reason (i) why it would not be able to deliver to the Company's counsel or
Parent's counsel, at the date of the legal
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45
opinions referred to below, certificates substantially in compliance with IRS
published advance ruling guidelines, with customary exceptions and modifications
thereto, to enable such firms to deliver the legal opinions contemplated by
Section 7.01(f) or (ii) why the Company's counsel or Parent's counsel would not
be able to deliver the opinions required by Section 7.01(f).
SECTION 6.09. Public Announcements. The initial press release
relating to this Agreement shall be a joint press release, the text of which has
been agreed to by each of Parent and the Company. Unless otherwise required by
applicable Law or by obligations pursuant to any listing agreement with or rules
of any securities exchange, the parties hereto shall consult with each other
before issuing any press release or otherwise making any public statement with
respect to this Agreement, the transactions contemplated hereby or the
activities and operations of the other party and shall not issue any such
release or make any such statement without the prior written consent of the
other party (such consent not to be unreasonably withheld or delayed).
SECTION 6.10. NASDAQ Listing. Parent shall promptly prepare
and submit to the NASDAQ a listing application covering the shares of Parent
Common Stock to be issued in the Merger, and shall use its reasonable efforts to
obtain, prior to the Effective Time, approval for the listing of such Parent
Common Stock, subject to official notice to the NASDAQ of issuance, and the
Company shall cooperate with Parent with respect to such listing.
SECTION 6.11. Conveyance Taxes. The Company shall be liable
for and shall hold Parent and the holders of shares of Company Common Stock who
are holders of the shares of Company Common Stock immediately prior to the
Effective Time harmless against any real property transfer or gains, sales, use,
transfer, value added, stock transfer or stamp taxes, any transfer, recording
registration, and other fees, and any similar Taxes which become payable in
connection with the transactions contemplated by this Agreement, but not
including income taxes. The parties acknowledge that this Section 6.11 is
specifically intended to benefit the holders of shares of Company Common Stock
who are holders of the shares of Company Common Stock immediately prior to the
Effective Time.
SECTION 6.12. [RESERVED].
SECTION 6.13. Employee Benefit Matters. (a) Parent hereby
agrees that, for a period of two years immediately following the Effective Time,
it shall, or shall cause the Surviving Corporation and the Company Subsidiaries
to, maintain employee benefit plans, programs and arrangements for the benefit
of active and retired employees of the Company and the Company Subsidiaries that
in the aggregate will provide compensation and benefits that are substantially
equivalent to the compensation and benefits provided to such active and retired
employees under the employee benefit plans, programs and arrangements of the
Company and the Company Subsidiaries as in effect immediately prior to the
Effective Time; provided,
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46
however, that changes may be made to such employee benefit plans and
arrangements to the extent necessary in light of applicable Law. From and after
the Effective Time, Parent shall honor, and shall cause the Surviving
Corporation and the Company Subsidiaries to honor, in accordance with their
terms, all existing employment and severance agreements and arrangements and
severance, termination protection and bonus plans which are applicable to any
current or former employees or directors of the Company or any of the Company
Subsidiaries and that have been disclosed or made available to Parent.
(b) With respect to any benefits plans of Parent or Parent
Subsidiaries in which the officers and employees of the Company and the Company
Subsidiaries participate after the Effective Time, Parent shall, or shall cause
the Surviving Corporation to, use reasonable efforts to: (i) waive any
limitations as to pre-existing conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to such officers
and employees under any welfare benefit plan in which such employees may be
eligible to participate after the Effective Time (provided, however, that no
such waiver shall apply to a pre-existing condition of any such officer or
employee who was, as of the Effective Time, excluded from participation in a
Company benefit plan by nature of such pre-existing condition), (ii) provide
each such officer and employee with credit for any co-payments and deductibles
paid prior to the Effective Time during the year in which the Effective Time
occurs in satisfying any applicable deductible or out-of-pocket requirements
under any welfare benefit plan in which such employees may be eligible to
participate after the Effective Time, and (iii) other than with respect to
vesting credit with respect to Parent options granted to such officers and
employees (other than pursuant to Section 2.04), recognize all service of such
officers and employees with the Company and the Company Subsidiaries (and their
respective predecessors) for all purposes (including without limitation purposes
of eligibility to participate, vesting credit, entitlement for benefits, and
benefit accrual) in any benefit plan in which such employees may be eligible to
participate after the Effective Time, except to the extent such treatment would
result in duplicative accrual of benefits for the same period of service.
(c) If at any time following the Effective Time but prior to
the date two (2) years following the Effective Time, (i) Parent shall terminate
any employee of the Company or any Company Subsidiary without "cause" (as
defined below) or (ii) any such employee shall terminate his or her employment
with Parent, the Company or any Company Subsidiary following a "material
reduction in the duties" or material reduction in compensation of such employee
or the relocation of such employee to a location more than 25 miles from such
employee's existing work location, without the employee's consent, Parent shall
cause all Company Stock Options granted to such employee to become fully
exercisable upon such termination. A "material reduction in the duties" of an
employee means a substantive reduction in duties, not a change in title or
reporting hierarchy occurring as a result of the Merger (including as a result
of the Company being combined with Parent or becoming a subsidiary of Parent
following the Merger). "Cause" means (A) repeated failure by an employee to
perform his
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47
or her duties in any material respect following notice and a reasonable period
of time to correct such failure; (B) an employee engaging in an act of
dishonesty that is materially and demonstrably injurious to the Company or
Parent; or (C) the conviction of an employee of a felony in respect of a
dishonest or fraudulent act or other crime of moral turpitude involving Parent
or the Company. In the case of any employee who is an executive officer of
Parent, the Company or a Company Subsidiary, any assertion that "cause" exists
shall be made only with the approval of the Parent Board. Notwithstanding the
foregoing, in the case of a sale of a Company Subsidiary (or the assets thereof)
that is treated, as a result of such sale, as a termination of employment of an
employee of such Company Subsidiary for purposes of this Section 6.13(c), the
acceleration of vesting provided for herein shall be made subject to such
further terms and conditions as the Parent Board may impose at the time of such
sale.
SECTION 6.14. Exemption from Liability Under Section 16(b).
Assuming that the Company delivers to Parent the Section 16 Information (defined
below) in a timely fashion, the Parent Board, or a committee of two or more
Non-Employee Directors thereof (as such item is defined for purposes of Rule
16b-3 under the Exchange Act), shall adopt resolutions prior to the consummation
of the Merger, providing that the receipt by the Company Insiders (as defined
below) of Parent Common Stock in exchange for shares of the Company Common
Stock, and of options for Parent Common Stock upon conversion of options for the
Company Common Stock, in each case pursuant to the transactions contemplated
hereby and to the extent such securities are listed in the Section 16
Information, are intended to be exempt from liability pursuant to Section 16(b)
under the Exchange Act. Such resolutions shall comply with the approval
conditions of Rule 16b-3 under the Exchange Act for purposes of such Section
16(b) exemption, including, but not limited to, specifying the name of the
Company Insiders, the number of securities to be acquired or disposed of for
each such person, the material terms of any derivative securities, and that the
approval is intended to make the receipt of such securities exempt pursuant to
Rule 16b-3(d). "Section 16 Information" shall mean information accurate in all
respects regarding the Company Insiders, the number of shares of the Company
Common Stock held by each such Company Insider and expected to be exchanged for
Parent Common Stock in the Merger, and the number and description of the options
on the Company Common Stock held by each such Company Insider that are expected
to be converted into options on Parent Common Stock in connection with the
Merger. "Company Insiders" shall mean those officers and directors of the
Company who will be subject to the reporting requirements of Section 16(b) of
the Exchange Act with respect to Parent and who are listed in the Section 16
Information.
SECTION 6.15. [RESERVED].
SECTION 6.16. Company Affiliates; Restrictive Legend;
Restrictions on Transfer. Not later than 30 days prior to the Company
Stockholders Meeting, the Company shall deliver to Parent a list of those
Persons who may be deemed to be, in the Company's reasonable
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48
judgment at the time this Agreement is submitted for adoption by the
Stockholders of the Company, affiliates of the Company within the meaning of
Rule 145 promulgated under the 1933 Act (each a "Rule 145 Affiliate"). The
Company will provide Parent with such information and documents as Parent
reasonably requests for purposes of reviewing such list. Parent will give stop
transfer instructions to its transfer agent with respect to any Parent Common
Stock received pursuant to the Merger by the Company Stockholders who are Rule
145 Affiliates and there will be placed on the certificates representing such
Parent Common Stock, or any substitution therefor, a legend stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, APPLIES AND MAY ONLY BE TRANSFERRED (A) IN CONFORMITY WITH RULE 145(d)
UNDER SUCH ACT, OR (B) IN ACCORDANCE WITH A WRITTEN OPINION OF COUNSEL,
REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND SUBSTANCE THAT SUCH TRANSFER IS
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED."
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party. The
obligations of the Company and Parent to consummate the Merger are subject to
the satisfaction of the following conditions:
(a) the Registration Statement shall have been declared
effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceeding for that purpose shall have
been initiated by the SEC;
(b) the Company Proposal shall have been approved by the
requisite affirmative vote of the stockholders of the Company in
accordance with Delaware Law and the Certificate of Incorporation of
the Company and the Company By-Laws;
(c) the Parent Proposal shall have been approved by the
requisite affirmative vote of the stockholders of Parent in accordance
with Delaware Law, the Certificate of Incorporation of Parent and the
Parent By-Laws;
(d) no Governmental Entity or court of competent jurisdiction
located or having jurisdiction in the United States shall have enacted,
issued, promulgated, enforced
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49
or entered any Law, judgment, decree, executive order or award (an
"Order") or taken any other action permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this
Agreement, and such Order or other action shall have become final and
nonappealable or shall have failed to issue an Order or to take any
other action necessary to fulfill the conditions to the Closing of the
Merger and such denial of a request to issue such Order or take such
other action shall have become final and nonappealable, which has the
effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger;
(e) any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act shall have expired
or been terminated; and
(f) the Medical Manager Merger and the transactions
contemplated by the Medical Manager Merger Agreement shall have been
consummated.
SECTION 7.02. Conditions to the Obligations of Parent. The
obligations of Parent to consummate the Merger are subject to the satisfaction
of the following additional conditions:
(a) Each of the representations and warranties of the Company
and ASC contained in this Agreement shall be true and correct as of the
Effective Time as though made on and as of the Effective Time, except
where failure to be so true and correct would not have a Company
Material Adverse Effect, and except that those representations and
warranties which address matters only as of a particular date or period
of time shall remain true and correct as of such date or period of
time, except where failure to be so true and correct would not have a
Company Material Adverse Effect. Parent shall have received a
certificate of the President or Chief Financial Officer of the Company
to such effect;
(b) The Company and ASC shall have performed or complied, in
all material respects, with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to
the Effective Time, and Parent shall have received a certificate of the
Chief Executive Officer or Chief Financial Officer of the Company to
such effect; and
(c) Parent shall have received a written opinion of Nelson
Mullins Riley & Scarborough, L.L.P., legal counsel to Parent, in form
and substance reasonably satisfactory to Parent, which shall be to the
effect that the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code and that Parent, ASC and the
Company will each be a party to the reorganization within the meaning
of
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50
Section 368(b) of the Code, and such opinion shall not have been
withdrawn; provided, that if counsel to Parent does not render such
opinion, this condition shall nonetheless be deemed to be satisfied
with respect to Parent if counsel to the Company renders such opinion
to Parent, which opinion shall be in form and substance reasonably
satisfactory to Parent. In rendering such opinion, legal counsel shall
be entitled to rely upon, among other things, reasonable and customary
assumptions as well as representations of Parent, the Company and
others. In addition, in the event that legal counsel cannot deliver tax
opinions based on the Medical Manager Merger being structured as a
merger of Medical Manager Corporation with and into Parent or the
Merger being structured as a merger of the Company with and into ASC,
the parties shall use their best efforts to restructure either or both
of such mergers in a manner upon which legal counsel is able to deliver
tax opinions.
SECTION 7.03. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Merger are subject to the
satisfaction of the following additional conditions:
(a) Each of the representations and warranties of Parent
contained in this Agreement shall be true and correct as of the
Effective Time, as though made on and as of the Effective Time except
where the failure to be so true and correct would not have a Parent
Material Adverse Effect, and except that those representations and
warranties which address matters only as of a particular date or period
of time shall remain true and correct as of such date or period of
time, except where the failure to be so true and correct would not have
a Parent Material Adverse Effect. The Company shall have received a
certificate of the President or Chief Financial Officer of Parent to
such effect;
(b) Parent shall have performed or complied, in all material
respects, with all agreements and covenants required by this Agreement
to be performed or complied with by them on or prior to the Effective
Time, and the Company shall have received a certificate of the Chief
Executive Officer or Chief Financial Officer of Parent to such effect;
and
(c) The Company shall have received a written opinion of Davis
Polk & Wardwell, legal counsel to the Company, in form and substance
reasonably satisfactory to the Company, which shall be to the effect
that the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code and that Parent, ASC and the Company will
each be a party to the reorganization within the meaning of Section
368(b) of the Code, and such opinion shall not have been withdrawn;
provided, that if counsel to the Company does not render such opinion,
this condition shall nonetheless be deemed to be satisfied with respect
to such party if counsel to Parent renders such opinion to the Company,
which opinion shall be in form and substance
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51
reasonably satisfactory to the Company. In rendering such opinion,
legal counsel shall be entitled to rely upon, among other things,
reasonable and customary assumptions as well as representations of
Parent, the Company and others. In addition, in the event that legal
counsel cannot deliver tax opinions based on the Medical Manager Merger
being structured as a merger of Medical Manager Corporation with and
into Parent or the Merger being structured as a merger of the Company
with and into ASC, the parties shall use their best efforts to
restructure either or both of such mergers in a manner upon which legal
counsel is able to deliver tax opinions.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated
and the Merger and the other transactions contemplated by this Agreement may be
abandoned at any time prior to the Effective Time, notwithstanding any requisite
approval and adoption of this Agreement and the transactions contemplated by
this Agreement, as follows:
(a) by mutual written consent duly authorized by the Boards of
Directors of each of Parent and the Company;
(b) by either Parent or the Company if the Effective Time
shall not have occurred on or before September 30, 2000 (the
"Termination Date"); provided, however, that the right to terminate
this Agreement under this Section 8.01(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Effective Time to
occur on or before the Termination Date;
(c) by either Parent or the Company, if any Governmental
Entity (i) shall have issued an Order or taken any other action
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such Order or other
action shall have become final and nonappealable or (ii) shall have
failed to issue an Order or to take any other action necessary to
fulfill the conditions to the Closing of the Merger and such denial of
a request to issue such Order or take such other action shall have
become final and nonappealable;
(d) by the Company, if (i) the Parent Board withdraws,
modifies or changes its recommendation of the Parent Proposal in a
manner adverse to the Company or shall have resolved to do so or (ii)
the Parent Board shall have recommended to the stockholders of Parent a
Parent Acquisition Proposal or shall have resolved to do so;
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52
(e) by either Parent or the Company, if the Company Proposal
shall fail to receive the requisite vote for approval at the Company
Stockholders' Meeting; provided, however, the right to terminate this
Agreement under this Section 8.01(e) shall not be available to the
Company if the failure to obtain the requisite vote shall have been
caused by the action or failure to act of the Company and such action
or failure to act constitutes a material breach by the Company of this
Agreement;
(f) by either Parent or the Company, if the approval of the
Parent Proposal shall fail to receive the requisite vote at the Parent
Stockholders' Meeting; provided, however, the right to terminate this
Agreement under this Section 8.01(f) shall not be available to Parent
if the failure to obtain the requisite vote shall have been caused by
the action or failure to act of Parent and such action or failure to
act constitutes a material breach by Parent of this Agreement; or
(g) by either Parent or the Company, if the Medical Manager
Merger Agreement is terminated in accordance with its terms.
SECTION 8.02. Effect of Termination. In the event of
termination of this Agreement pursuant to Section 8.01, this Agreement shall
forthwith become void and there shall be no liability under this Agreement on
the part of Parent, ASC or the Company or any of their respective officers or
directors and all rights and obligations of each party hereto shall cease,
except (a) as provided in Sections 8.05 and 9.01 and (b) nothing herein shall
relieve any party from liability for any willful breach of any representation,
warranty, covenant or other agreement in this Agreement occurring prior to
termination.
SECTION 8.03. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after the approval of the Company Proposal by the stockholders of the Company,
no amendment may be made which would reduce the amount or change the type of
consideration into which each share of Company Common Stock shall be converted
upon consummation of the Merger and provided, further, that the parties shall
not amend any provision of this Agreement without the prior written consent of
the Special Committee (which shall not be unreasonably withheld or delayed) if
such amendment could reasonably be expected to delay the consummation of the
Merger or adversely affect the Company or its stockholders or would change the
Exchange Ratio.
SECTION 8.04. Waiver. At any time prior to the Effective Time,
any party hereto may (a) extend the time for the performance of any obligation
or other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any agreement or condition
contained herein; provided, however, that no such extension or waiver may be
granted
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53
without the prior written consent of the Special Committee (which shall not be
unreasonably withheld or delayed) if such extension or waiver could reasonably
be expected to delay the consummation of the Merger or adversely affect the
Company or its stockholders or would change the Exchange Ratio. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
SECTION 8.05. Expenses. (a) Except as set forth in this
Section 8.05, all Expenses (as defined below) incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses, whether or not the Merger or any other
transaction is consummated. "Expenses" as used in this Agreement shall include
all reasonable out-of-pocket expenses (including, without limitation, all fees
and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement, the preparation,
printing, filing and mailing of the Registration Statement and the Proxy
Statement, the solicitation of stockholder approvals, the filing of any required
notices under the HSR Act or other similar regulations and all other matters
related to the closing of the Merger and the other transactions contemplated by
this Agreement.
(b) Parent agrees that:
(i) if (A) the Company shall terminate this Agreement
pursuant to Section 8.01(d) and (B) at the time of the occurrence of
the circumstance permitting termination pursuant to such Section, there
shall exist a Parent Acquisition Proposal, or
(ii) if (A) the Company or Parent shall terminate
this Agreement pursuant to Section 8.01(f) due to the failure of
Parent's stockholders to approve the Parent Proposal and (B) at the
time of such failure to so approve this Agreement there shall exist a
Parent Acquisition Proposal,
then Parent shall pay to the Company an amount equal to the sum of $70,000,000
(the "Parent Alternative Transaction Fee") and all of the Company's Expenses;
provided, however, that the Company shall not, upon a termination pursuant to
Section 8.01(d) by the Company or pursuant to Section 8.01(f) by the Company or
Parent, be entitled to receive the Parent Alternative Transaction Fee or any of
the Company's Expenses pursuant to this Section 8.05(b) if the Parent Board
shall, prior to such termination, have withdrawn, modified or changed its
recommendation of this Agreement or the transactions contemplated hereby in a
manner adverse to the Company due solely to a breach (i) by the Company of any
representation, warranty, covenant or agreement on the part of the Company set
forth in this Agreement, which breach is not cured by the Company within 10 days
following notice of such breach, and would cause the conditions set forth in
Sections 7.02(a) and 7.02(b) to not be satisfied or (ii) by Medical Manager of
any
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54
representation, warranty, covenant or agreement on the part of Medical Manager
set forth in the Medical Manager Merger Agreement, which breach is not cured by
Medical Manager within 10 days following notice of such breach, and would cause
the conditions set forth in Sections 7.02(a) and 7.02(b) of the Medical Manager
Merger Agreement to not be satisfied.
(c) Each of the Company and Parent agrees that the agreements
contained in Sections 8.05(b) are an integral part of the transactions
contemplated by this Agreement. Each of the Company and Parent agrees that the
payments provided for in Section 8.05(b) shall be the sole and exclusive
remedies of the parties upon a termination of this Agreement pursuant to
Sections 8.01(d) and (f), as the case may be, and such remedies shall be limited
to the sums stipulated in Sections 8.05(b), regardless of the circumstances
giving rise to such termination; provided, however, that nothing herein shall
relieve any party from liability for any willful breach of any representation,
warranty, covenant or other agreement in this Agreement occurring prior to
termination.
(d) Any payment of a Parent Alternative Transaction Fee
required to be made pursuant to Section 8.05(b) shall be made to the Company not
later than two business days after termination of this Agreement. Payment of
Expenses pursuant to Section 8.05(b) shall be made not later than two business
days after delivery to Parent by the Company of notice of demand for payment and
an itemization setting forth in reasonable detail all Expenses of the Company
(which itemization may be supplemented and updated from time to time by the
Company until the 60th day after the Company delivers such notice of demand for
payment). All payments to the Company under this Section 8.05 shall be made by
wire transfer of immediately available funds to an account designated by the
Company.
(e) In the event that the Company or Parent, as the case may
be, shall fail to pay any amount payable pursuant to this Section 8.05 when due,
the other party's "Expenses" shall be deemed to include (i) the costs and
expenses actually incurred or accrued by such other party (including, without
limitation, fees and expenses of counsel) in connection with the collection
under and enforcement of this Section 8.05, together with (ii) interest on such
unpaid amounts, commencing on the date that such amounts became due, at a rate
equal to the rate of interest publicly announced by Citibank, N.A., from time to
time, in the City of New York, as such bank's Base Rate plus 2.00%.
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55
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that (a) those covenants
and agreements that by their terms apply or are to be performed in whole or in
part after the Effective Time and this Article IX shall survive the Effective
Time for the respective periods set forth therein or, if no such period is
specified, for six years and (b) the representations, warranties and agreements
set forth in Sections 6.03(b), 6.09, 8.02, and 8.05 and this Article IX shall
survive termination for the respective periods set forth therein or, if no such
period is specified, for six years. Nothing in this Section 9.01 shall relieve
any party for any willful breach of any representation, warranty, covenant or
other agreement in this Agreement occurring prior to termination.
SECTION 9.02. Notices. (a) All notices and other
communications given or made pursuant to this Agreement shall be in writing and
shall be sent by an overnight courier service that provides proof of receipt,
mailed by registered or certified mail (postage prepaid, return receipt
requested) or telecopied to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
if to Parent:
Healtheon/WebMD Corporation
400 The Lenox Building
3399 Peachtree Road NE
Atlanta, Georgia 30326
Telephone No.: (404) 495-7600
Telecopier No.: (404) 479-7603
Attention: Jack Dennison, Executive Vice President,
General Counsel
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56
with a copy to:
Nelson Mullins Riley & Scarborough, L.L.P.
Bank of America Corporate Center
Suite 2600
100 N. Tryon Street
Charlotte, North Carolina 28202
Telephone No.: (704) 417-3200
Telecopier No.: (704) 377-4814
Attention: H. Bryan Ives III
C. Mark Kelly
if to the Company:
CareInsite, Inc.
669 River Drive
Elmwood Park, New Jersey 07407
Telephone No.: 201-703-3400
Telecopier No.: 201-703-3401
Attention: David Amburgey
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telephone No.: (201) 450-4000
Telecopier No.: (201) 450-4800
Attention: John Bick, Esq.
(b) If this Agreement provides for a designated period after a
notice within which to perform an act, such period shall commence on the date of
receipt or refusal of the notice.
(c) If this Agreement requires the exercise of a right by
notice on or before a certain date or within a designated period, such right
shall be deemed exercised on the date of delivery to the courier service,
telecopying or mailing of the notice pursuant to which such right is exercised.
(d) Notices of changes of address shall be effective only upon
receipt.
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57
SECTION 9.03. Certain Definitions. For purposes of this
Agreement, except as otherwise provided herein, the terms set forth below shall
have the following meanings:
"affiliate" of a specified Person means a Person who
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with such specified Person.
"beneficial owner" with respect to any shares means a
Person who shall be deemed to be the beneficial owner of such shares
(a) which such Person or any of its affiliates or associates (as such
term is defined in Rule 12b-2 promulgated under the Exchange Act)
beneficially owns, directly or indirectly, (b) which such Person or any
of its affiliates or associates has, directly or indirectly, (i) the
right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration
rights, exchange rights, warrants or options, or otherwise or (ii) the
right to vote pursuant to any agreement, arrangement or understanding
or (c) which are beneficially owned, directly or indirectly, by any
other Persons with whom such Person or any of its affiliates or
associates or Person with whom such Person or any of its affiliates or
associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any such shares.
"business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings, or,
in the case of determining a date when any payment is due, any day on
which banks are not required or authorized to close in the City of New
York.
"Contract" means any agreement, contract, indenture,
instrument, lease, or any written arrangement, commitment, obligation,
plan, restriction, understanding or undertaking of any kind or
character, or other document to which any Person is a party or by which
such Person is bound or affecting such Person's capital stock, assets
or business.
"control" (including the terms "controlled by" and
"under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities, as trustee or executor, by
contract or credit arrangement or otherwise.
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"Knowledge" means, with respect to any matter in
question, (a) in the case of the Company, if any of the executive
officers of the Company has actual knowledge of such matter after
making reasonable inquiry of officers and employees charged with senior
administrative or operational responsibility of such matters and (b) in
the case of Parent, if any of the executive officers of Parent has
actual knowledge of such matter after making reasonable inquiry of
officers and employees charged with senior administrative or
operational responsibility of such matters.
"Medical Manager Merger" means the merger of Medical
Manager with and into Parent pursuant to the Medical Manager Merger
Agreement.
"Person" means an individual, corporation,
partnership, limited partnership, syndicate, person (including, without
limitation, a "person" as defined in section 13(d)(3) of the Exchange
Act), trust, association, limited liability company or entity or
government, political subdivision, agency or instrumentality of a
government.
"subsidiary" or "subsidiaries" of any Person means
any corporation, partnership, joint venture or other legal entity of
which such Person (either alone or through or together with any other
subsidiary) owns, directly or indirectly, more than 50% of the stock or
other equity interests, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body
of such corporation or other legal entity.
SECTION 9.04. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement be consummated as originally contemplated to the
fullest extent possible.
SECTION 9.05. Assignment; Binding Effect; Benefit. (a) Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of Law or
otherwise) without the prior written consent of the other parties.
(b) This Agreement shall be binding upon and inure solely to
the benefit of the parties hereto and their respective successors and permitted
assigns, and nothing in this
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Agreement, express or implied, is intended to or shall confer upon any other
Person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Article II (which may be enforced by the
beneficiaries thereof), Section 6.05 (which is intended to be for the benefit of
the Persons covered thereby and their respective heirs and representatives and
may be enforced by such Persons), Section 8.02 and Section 8.03.
SECTION 9.06. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
SECTION 9.07. Governing Law; Forum. (a) This Agreement shall
be governed by, and construed in accordance with, the Laws of the State of
Delaware applicable to contracts executed in and to be performed in that state.
(b) Each of the parties hereto irrevocably agrees that all
legal actions or proceedings with respect to this Agreement shall be brought and
determined in the courts of the State of Delaware or in the United States
District Court for the State of Delaware, and each of the parties hereto hereby
irrevocably submits with regard to any such action or proceeding for itself and
in respect to its property, generally and unconditionally, to the jurisdiction
of the aforesaid courts. Each of the parties hereto hereby irrevocably waives,
and agrees not to assert, by way of motion, as a defense, counterclaim or
otherwise, in any action or proceeding with respect to this Agreement, (i) any
claim that it is not personally subject to the jurisdiction of the above-named
courts for any reason other than the failure to serve process in accordance with
applicable Law, (ii) that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such
courts and (iii) to the fullest extent permitted by applicable Law, that (A) the
suit, action or proceeding in any such court is brought in an inconvenient
forum, (B) the venue of such suit, action or proceeding is improper and (C) this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
SECTION 9.08. Interpretation. (a) If a reference is made in
this Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit or Schedule to this Agreement unless otherwise indicated.
The table of contents, glossary of defined terms and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The phrases "the date of this
Agreement" and "the date hereof" shall be deemed to refer to February 13, 2000.
(b) The parties hereto acknowledge that certain matters set
forth in the Company Disclosure Letter and certain matters set forth in the
Parent Disclosure Letter are
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60
included for informational purposes only, notwithstanding the fact that, because
they do not rise above applicable materiality thresholds or otherwise, they
would not be required to be set forth therein by the terms of this Agreement.
The parties agree that disclosure of such matters shall not be taken as an
admission by the Company or Parent, as the case may be, that such disclosure is
required to be made under the terms of any provision of this Agreement and in no
event shall the disclosure of such matters be deemed or interpreted to broaden
or otherwise amplify the representations and warranties contained in this
Agreement or to imply that such matters are or are not material and neither
party shall use, in any dispute between the parties, the fact of any such
disclosure as evidence of what is or is not material for purposes of this
Agreement.
SECTION 9.09. Counterparts. This Agreement may be executed and
delivered in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed and delivered shall be deemed
to be an original but all of which taken together shall constitute one and the
same agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.10. Entire Agreement. This Agreement constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties and the stockholders of the parties with
respect to the subject matter hereof, other than the Confidentiality Agreement,
the Company Voting Agreement (as defined in the Medical Manager Merger
Agreement), the Parent Voting Agreement, (as defined in the Medical Manager
Merger Agreement), the Medical Manager Merger Agreement and the Company Voting
Agreements, all of which shall survive the execution and delivery of this
Agreement.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH OF PARENT AND THE
COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, ASC AND
THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
THEREOF.
SECTION 9.12. Brokers and Finders. Except for Morgan Stanley
and Co. Incorporated and FleetBoston Robertson Stephens, Inc., the investment
banker for Parent, and Bank of America Securities, Inc., the investment banker
for the Company, each of the parties represents and warrants that neither it nor
any of its officers, directors, employees, or Affiliates has employed any broker
or finder or incurred any liability for any financial advisory fees, investment
bankers' fees, brokerage fees, commissions, or finders' fees in connection with
this Agreement or the transactions contemplated hereby. In the event of a claim
by any broker or finder based upon his or its representing or being retained by
or allegedly representing or being retained by Parent or the Company in
connection with the transactions contemplated hereby,
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61
each of Parent or the Company as the case may be, agrees to indemnify and hold
the other parties harmless of and from any liability in respect of any such
claim. The Company hereby represents and warrants to Parent that copies of all
of its Contracts with Bank of America Securities LLC have been made available to
Parent. Parent hereby represents and warrants to the Company that copies of all
of its Contracts with Morgan Stanley and Co. Incorporated and FleetBoston
Robertson Stephens, Inc. have been made available to the Company.
<PAGE>
IN WITNESS WHEREOF, Parent, ASC and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
HEALTHEON/WEBMD CORPORATION
By /s/ Jeffrey T. Arnold
---------------------------------
Name: Jeffrey T. Arnold
Title: Chief Executive Officer
AVICENNA SYSTEMS CORPORATION
By /s/ David Schlanger
---------------------------------
Name: David Schlanger
Title: Senior Vice President
CAREINSITE, INC.
By /s/ James R. Love
---------------------------------
Name: James R. Love
Title: Chief Financial Officer
