AGREEMENT AND PLAN OF MERGER
by and among
MEDLOG ACQUISITION INC.,
MEDSCAPE, INC.,
DIALOG MEDICAL, INC.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.
and
▇▇▇▇ ▇. ▇▇▇▇, M.D.
Dated as of_February 18, 2000
INDEX TO SCHEDULES
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Schedule 1.6(c) - The Dialog Shareholder and Non-founding
Shareholders and the Number of Conversion Issuance Shares Deliverable to
each shareholder and Allocation of Contingent
Rights
Schedule 1.6(e)(i)- Number of Initial Contingent Shares
Deliverable to the Dialog
Shareholders and Dialog Non-founding Shareholders
Schedule 1.6(e)(ii) - Number of Remaining Contingent Shares Deliverable
to the Dialog Shareholders and Dialog
Non-founding Shareholders
Schedule 2.1 - Jurisdictions of Qualification
Schedule 2.3 - Authorization
Schedule 2.5 - Ownership of Shares
Schedule 2.8(a) - Balance Sheets
Schedule 2.8(b) - Income Statements
Schedule 2.8(d) - Accounts Receivable
Schedule 2.9 - Taxes
Schedule 2.10 - Legal Proceedings
Schedule 2.11 - Labor and Employee Benefit Matters
Schedule 2.12 - Violations of Law
Schedule 2.13 - Insurance
Schedule 2.14 - Contracts
Schedule 2.15 - Affiliate Transactions
Schedule 2.16 - Environmental Matters
Schedule 2.17 - Real Property
Schedule 2.18 - Information Technology
Schedule 2.19 - Data and Databases
Schedule 2.20 - Intellectual Property
Schedule 2.21 - Bank Accounts
Schedule 2.22 - Adverse Changes
Schedule 2.23 - Major Customers; Relationship with Customers and Suppliers
Schedule 2.24 - Physicians' Contracts
Schedule 2.25 - Undisclosed Liabilities
MEDSCAPE SCHEDULES:
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Schedule 3.16 - Adverse Changes - Medscape
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER dated as of February 18 __, 2000
(this "AGREEMENT") is among Medscape, Inc. ("MEDSCAPE"), a Delaware corporation,
Medlog Acquisition Inc. ("MAC"), a Delaware corporation, Dialog Medical, Inc.
("DIALOG"), a Delaware corporation, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
M.D., and ▇▇▇▇ ▇. ▇▇▇▇, M.D. (each a "DIALOG SHAREHOLDER" and, collectively, the
"DIALOG SHAREHOLDERS"), and together with Dialog, collectively the "DIALOG
PARTIES"). The parties wish to effect the acquisition of Dialog by Medscape
through a merger of MAC into Dialog on the terms and conditions hereof. This
Agreement is intended to be a "PLAN OF REORGANIZATION" within the meaning of
ss.368(a) of the Internal Revenue Code of 1986, as amended (the "CODE").
Accordingly, in consideration of the mutual representations, warranties
and covenants contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions hereof,
and in accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), MAC shall be merged with and into Dialog (the "MERGER"). The Merger
shall occur at the Effective Time (as defined herein). Following the Merger,
Dialog shall continue as the surviving corporation (the "SURVIVING CORPORATION")
and the separate corporate existence of MAC shall cease.
1.2 EFFECTIVE TIME. As soon as practicable after satisfaction or waiver
of all conditions to the Merger, the parties shall cause a Certificate of Merger
to be filed in accordance with Section 252 of the DGCL (the "MERGER
CERTIFICATE") and shall take all
such further actions as may be required by law to make the Merger effective. The
Merger shall be effective at such time as the Merger Certificate is filed with
the Secretary of State of the State of Delaware in accordance with the DGCL or
at such later time as is specified in such documents (the "EFFECTIVE TIME").
Immediately prior to the filing of the Merger Certificate, a closing (the
"CLOSING") will at the offices of Medscape at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇▇▇, (or at such other place or other manner as the parties may
agree) for the purposes of confirming satisfaction or waiver of all conditions
to the Merger. Subject to satisfaction or waiver of each of the conditions
specified in Article VI hereof, the Closing shall take place on such date as the
parties may agree, but not later than __March 31______, 2000. The date on which
the Closing occurs is referred to herein as the "CLOSING DATE."
1.3 EFFECTS OF THE MERGER. The Merger shall have the effects set forth
in Section 259, 260 and 261 of the DGCL.
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation and Bylaws of Dialog, in each case as in effect immediately prior
to the Effective Time shall be the Certificate of Incorporation and Bylaws of
the Surviving Corporation immediately after the Effective Time, until duly
amended in accordance with applicable law.
1.5 DIRECTORS AND OFFICERS. The directors and officers of MAC
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation immediately after the Effective Time, each such
officer and director to hold office in accordance with their respective terms.
1.6 CONVERSION OF STOCK.
(a) MERGER CONSIDERATION. For purposes of this Agreement, "MERGER CONSIDERATION"
means:
(i) 150,000 shares of common stock, $0.01 par value per share, of Medscape
(the "CONVERSION ISSUANCE Shares"),
(ii) in the event Medscape Common Stock falls below ten dollars and fifty
cents ($10.50) per share, (as adjusted for any stock split, stock
dividend or similar stock recapitalization or merger, or
reorganization) prior to the filing of a registration statement to
register the resale of the Conversion Issuance Shares based on the
average closing price of Medscape Common Stock on NASDAQ (or any
shares into which such is converted) over a twenty (20) trading day
period, five (5) trading days prior to the filing of the registration
statement to register the resale of the Conversion Issuance Shares
(the "Average Closing Price"), the number of Conversion Issuance
Shares shall be increased so that the total number of shares of
Medscape Common Stock comprising the Conversion Shares times the
Average Closing Price is equal to $1,575,000 (the "Conversion Issuance
Share Price") ; and
(iii) the right, subject to the provisions of Section 1.6(d) below, to
receive up to an additional 125,000 shares of Medscape Common Stock
(the "CONTINGENT SHARES" and together with the Conversion Issuance
Shares, the "MEDSCAPE SHARES") contingent upon the achievement of
certain revenue milestones by the Surviving Corporation as more fully
set forth in Section 1.6(d) (the "CONTINGENT RIGHTS").
(b) CONVERSION. At the Effective Time, by virtue of the Merger and without any
action on the part of Medscape or Dialog:
(i) All shares of Common Stock of Dialog, $0.01 par value per share (the
"DIALOG COMMON STOCK") and all shares of Preferred Stock of Dialog,
$0.01 par value per share (the "DIALOG PREFERRED Stock", and
collectively, with the Dialog Common Stock, the "DIALOG STOCK")
outstanding immediately prior to the Effective Time, shall be
converted into and become the right to receive in accordance with
Section 1.6(c) and 1.6(d)
(subject to the payment of cash for fractional shares as provided in
Section 1.9): (x) the Conversion Issuance Shares, and (y), the
Contingent Rights.
(ii) All shares of Dialog Stock held at the Effective Time by Dialog as
treasury stock or by a subsidiary of Dialog shall be canceled and no
payment shall be made with respect thereto.
(iii) All shares of Common Stock of MAC, $0.01 par value per share,
outstanding immediately prior to the Effective Time, shall be
converted into the right to receive the same number of shares of
Surviving Corporation.
(c) ALLOCATION OF MERGER CONSIDERATION. The Merger Consideration shall be
allocated among the holders of shares of Dialog Stock outstanding
immediately prior to the Effective Time by allocating to each such holder
of Dialog Stock outstanding at the Effective Time as more fully set forth
in Schedule 1.6(c).
(d) CONTINGENT RIGHTS. As further consideration for the Merger, and subject to
the other provisions of this Section 1.6:
(i) if the Business shall have (x) achieved "REVENUE", as more fully
described in the Employment Agreement, equal to or exceeding
$1,750,000 (ONE MILLION SEVEN HUNDRED AND FIFTY THOUSAND DOLLARS) for
the period beginning on the Closing Date and ending on the first
anniversary thereof, and (y) completed the development of Resource
Version 3.0, then Medscape shall issue, in the aggregate, to
Contingent Rights Holders (named on Schedule 1.6(e)(i)) _sixty-two
thousand five hundred (62,500) of the Contingent Shares (the "INITIAL
CONTINGENT SHARES"). Further, if the Business shall have achieved
Revenue equal to or exceeding $1,000,000
(ONE MILLION DOLLARS) at any time during the period beginning on the
Closing Date and ending on the first anniversary thereof, then
Medscape shall issue to Contingent Rights Holders fifty percent (50%)
of the Initial Contingent Shares. The Initial Contingent Shares shall
be allocated among the Contingent Rights Holders as more fully set
forth in Schedule 1.6(d)(i).
(ii) if the Business shall have achieved "REVENUE, as more fully described
in the Employment Agreement of not less than $3,500,000 (THREE
MILLION FIVE HUNDRED THOUSAND DOLLARS) for the period beginning on
the day immediately following the first anniversary hereof and ending
on the second anniversary hereof, then Medscape shall issue, in the
aggregate, to the Contingent Rights Holders the remaining number of
the Contingent Shares (the "REMAINING CONTINGENT SHARES" and together
with the Initial Contingent Shares, the "Contingent Shares").
Further, if the Business shall have achieved Revenue equal to or
exceeding $2,500,000 (TWO MILLION FIVE HUNDRED THOUSAND DOLLARS) at
any time during the period beginning on the Closing Date and ending
on the first anniversary thereof, then Medscape shall issue to the
Contingent Rights Holders fifty percent (50%) of the Remaining
Contingent Shares. The Remaining Contingent Shares shall be allocated
as more fully set forth in Schedule 1.6(d)(ii).
(iii) In the event that the Business does not achieve Revenue, as more
fully described in the Employment Agreement, equal to $1,750,000 (ONE
MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS) at the end of the first
anniversary of the Closing date but does achieve Revenue equal to or
exceeding $5,250,000 (FIVE MILLION TWO HUNDRED FIFTY THOUSAND
DOLLARS) at the end of the second anniversary of the
Closing Date, then the Contingent Rights Holders shall receive one
hundred percent (100%) of the Initial Contingent Shares and one hundred
percent (100%) of the Remaining Contingent Shares.
For Purposes hereof, "Contingent Rights Holders" means the Dialog
Shareholders, other than the Non-Founding Shareholders. The Contingent
Rights Holders shall not be entitled to receive, and Medscape shall
have no obligation to issue, the portion of the Contingent Shares
allocable to Contingent Rights Holders if to the extent that the
foregoing Revenue targets are not met.
(e) ADJUSTMENT. The Merger Consideration (including, for the avoidance of
doubt, the Contingent Shares, and any additonal shares issued under
1.6(a)(ii)) shall be adjusted in the event of any change in Medscape Common
Stock by reason of stock splits, stock dividends, stock recapitalizations,
combinations or subdivisions of the Common Stock of Medscape, mergers or
other exchanges or conversion of shares by operation of law or the like
occurring after the date of this Agreement, such that, after the record
date therefor the Merger Consideration shall be equal to the number and
class of shares or other securities or property that would have been
received in respect of a share of Medscape Common Stock, as the case may
be.
1.7 CLOSING OF DIALOG TRANSFER BOOKS. At the Effective Time, the stock
transfer books of Dialog shall be closed and no transfer of Dialog Stock shall
thereafter be made.
1.8 ISSUANCE OF MEDSCAPE CERTIFICATES. The shares of Dialog Stock
outstanding immediately prior to the Effective Time (and any certificates
representing such shares) shall be deemed canceled as of the Effective Time.
Medscape Common Stock into which Dialog Stock shall be converted in the Merger
shall be deemed to have
been issued at the Effective Time. The surrender and exchange of the Dialog
Shares for the Merger Consideration shall occur at the Closing.
1.9 NO FRACTIONAL SHARES. No certificates representing fractional
shares of Medscape Common Stock shall be issued upon the surrender of Dialog
Stock certificates for exchange into the Merger Consideration (including, for
the avoidance of doubt, the Contingent Shares, and any additonal shares issued
under 1.6(a)(ii)). No fractional interest shall entitle the owner to vote or to
any rights of a security holder. In lieu of fractional shares, each stockholder
who would otherwise have been entitled to a fractional share of Medscape Common
Stock, will receive from Medscape at Closing (or other applicable date) an
amount in cash (without interest) determined by multiplying such fraction by the
fair market value of a share of Medscape Common Stock. Such fair market value
shall equal the mean of the daily high and low sales prices of the Medscape
Common Stock on the NASDAQ National Market, as reported by NASDAQ, averaged over
the period of ten (10) trading days ending on the fifth trading day prior to the
Closing Date (or such other applicable date).
1.10 CLOSING. (a) At the Closing:
(a) the Dialog Parties shall deliver to Medscape and MAC the following:
(i) stock certificates evidencing all of the Dialog Stock;
(ii) written resignations of each director and officer of Dialog effective
as of the Closing Date
(iii) the original minute books, stock record books and corporate seals, if
any of Dialog, and the original membership interest record books and
limited liability company records of the Predecessor Entity (as
defined below);
(iv) the certificates of the Dialog Shareholders' Representative described
in Sections 6.2(a) and (b) hereof;
(v) all other documents, certificates and instruments required to be
delivered by the Dialog Parties at or prior to Closing pursuant to
Section 6.2 hereof and the other provisions of this Agreement; and
(vi) such other documents as Medscape and MAC or their counsel may
reasonably request to demonstrate satisfaction of the conditions and
compliance with the covenants set forth in this Agreement.
(vii) Promissory Note in the principle amount of $100,000.00 (ONE HUNDRED
THOUSAND DOLLARS), which shall accrue interest at a rate of six
percent (6%) per annum which shall become due and payable in full on
the date which is fifteen (15) months from the Closing, made by the
Dialog Shareholders in favor of Medscape on terms and conditions to be
negotiated by Medscape and the Dialog Shareholders,
(b) Medscape will deliver to the Dialog Shareholders' Representative (as
hereinafter defined) the following:
(i) stock certificates evidencing the Conversion Issuance Shares (1)
registered, in each case, in the name of the appropriate Dialog
Shareholder or the Dialog Non-founding Shareholder and evidencing that
number of shares allocable to such Dialog Shareholder or the Dialog
Non-founding Shareholder, as determined in accordance with Section
1.6(c);
(ii) the certificates of an executive officer of Medscape described in
Sections 6.1(a) and (b) hereof;
(iii) a check pursuant to the Promissory Note in the amount of $100,000.00.
(iv) an employment agreement for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Employment
Agreement") that will specify a salary in the amount of $100,000.00
(ONE
HUNDRED THOUSAND DOLLARS) and other terms and conditions to be
negotiated by the Medscape and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
(v) a standard Medscape Stock Option Agreement granting ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
an option to purchase 20,000 (TWENTY THOUSAND) shares of Medscape
Common Stock,
(vi) a Registration Rights Agreement based on terms and conditions agreed
to by Medscape and the Dialog Shareholders and Non-founding Dialog
Shareholders,
(vii) all other documents, certificates and instruments required to be
delivered by Medscape at or prior to Closing pursuant to Section 6.1
hereof and the other provisions of this Agreement; and
(viii) such other documents as the Dialog Shareholders' Representative or
the Dialog Shareholders' counsel may reasonably request to
demonstrate satisfaction by Medscape of the conditions and compliance
with its covenants set forth in this Agreement; and
(c) MAC will deliver to the Dialog Shareholders' Representative the following:
(i) the certificates of an executive officer of MAC described in Sections
6.1(a) and (b) hereof; (ii) all other documents, certificates and
instruments required to be delivered by MAC at or prior to Closing
pursuant to Section 6.1 hereof and the other provisions of this
Agreement; and (iii) such other documents as the Dialog Shareholders'
Representative or the Dialog Shareholders' counsel may reasonably
request to demonstrate satisfaction by MAC of the conditions and
compliance with the covenants set forth in this Agreement.
1.11 EXCHANGE OF AND PAYMENT FOR DIALOG STOCK. (a) The surrender and
exchange of the certificates evidencing the Dialog Stock for (i) the Conversion
Issuance
Shares and (ii) the grant of Contingent Rights shall occur at the Closing as
provided in Section 1.10. Until surrendered as contemplated in the preceding
sentence, any certificate which immediately prior to the Effective Time shall
have represented any Dialog Stock shall be deemed at and after the Effective
Time to represent only the right to receive upon such surrender the Merger
Consideration.
(b) The Merger Consideration and cash in lieu of fractional shares thereof
shall be deemed, when issued or paid hereunder, to have been issued or paid, as
the case may be, in full satisfaction of all rights pertaining to the Dialog
Stock.
1.12 DIALOG SHAREHOLDERS' REPRESENTATIVE. Each of the Dialog Parties
hereby constitutes and appoints ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as the representative and
attorney-in-fact of such Dialog Shareholder (the "DIALOG SHAREHOLDERS'
REPRESENTATIVE") with full power and authority to act for all the Dialog Parties
under this Agreement, including to do and perform such acts as are specifically
required by this Agreement to be performed by the Dialog Shareholders'
Representative. The Dialog Shareholders' Representative shall not be liable to
any other Dialog Party for any actions taken by him pursuant to this power of
attorney except in the case of his willful misconduct. The Dialog Shareholders'
Representative may, on behalf of all the Dialog Parties, execute amendments to
this Agreement or waivers of any of the provisions hereof; PROVIDED that any
such amendment or waiver does not adversely affect one or more Dialog Party in a
manner which is materially different than each other Dialog Party. This power of
attorney shall be deemed coupled with an interest, shall survive and not be
affected by the bankruptcy or disability of any Dialog Party, and shall extend
to each Dialog Party's successors.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF DIALOG AND THE DIALOG SHAREHOLDERS
Each of the Dialog Shareholders, jointly and severally, hereby
represents and warrants on behalf of themselves and on behalf of the
Non-founding Dialog Shareholders (as defined in 2.5 below), to each of MAC and
Medscape as follows:
2.1 CORPORATE EXISTENCE AND QUALIFICATION OF DIALOG; BUSINESS OF
DIALOG. Dialog is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with all requisite corporate
power and corporate authority and all governmental licenses, authorizations,
consents and approvals required to own its properties and to conduct its
business as presently conducted and as presently proposed to be conducted.
Dialog is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary,
which jurisdictions are listed on SCHEDULE 2.1 hereto. The Dialog Shareholders'
Representative has delivered to Medscape and MAC true, correct and complete
copies of the Certificate of Incorporation and the Bylaws of Dialog and all
documents and certificates relating to the formation and conversion of the
Predecessor Entity (as hereinafter defined). The business of Dialog consists
solely of:
(a) the development, marketing and distribution of patient education/informed
consent software applications for use by physicians, including applications
pertaining to urology, OBGYN, orthopedics, cardiology, dermatology and
interventional radiology;
(b) the development and deployment of proprietary data and knowledge bases
pertaining to patient education and informed consent; and
(c) related activities; (the foregoing, collectively referred to as the
"BUSINESS"). Dialog is the successor entity to Dialog Medical, LLC, a
Delaware limited liability company (the "PREDECESSOR ENTITY").
The conversion of the Predecessor Entity was effected as of August 27, 1999 in
accordance with all applicable law and was duly authorized by all appropriate
action on the part of the limited liability company.
2.2 NO CONFLICTS. The execution, delivery and performance by the
Dialog Parties of this Agreement, the consummation of the transactions
contemplated hereby and compliance by the Dialog Parties with the terms hereof
will not (a) violate, conflict with, cause an event of default under, give rise
to a right of termination, cancellation or acceleration of any right or
obligation of Dialog under, or result in the creation or imposition of any lien,
mortgage, security interest, charge, encumbrance or restriction (a "LIEN") on
any asset of Dialog or on the Dialog Stock under any agreement, instrument,
license, franchise, judgment, order, law, rule or regulation by which any Dialog
Party is bound or to which Dialog's property is subject, or (b) violate or
conflict with the Certificate of Incorporation or Bylaws of Dialog.
2.3 GOVERNMENTAL AUTHORIZATIONS. Except as set forth on SCHEDULE 2.3,
the execution, delivery and performance by each Dialog Party of this Agreement
and the consummation of the transactions contemplated hereby by each Dialog
Party do not require any action by or in respect of, or filing with, any court,
arbitrator, administrative agency or commission or governmental body, agency,
official or authority, domestic or foreign (a "GOVERNMENTAL ENTITY"), or any
individual, corporation, partnership, limited liability company, joint venture,
trust, business association or other entity ("PERSON," which term shall include
Governmental Entities), except for (a) such as have been or will be taken or
made prior to the Closing and (b) those, the absence of which would materially
impair or delay the ability of any Dialog Party to consummate the transactions
contemplated hereby.
2.4 CAPITALIZATION. The authorized capital stock of Dialog consists
solely of (a) one hundred thousand (100,000) shares of Common Stock, of which
ten thousand two hundred twenty-seven (10,227) are issued and outstanding as of
the date
hereof; and (b) fifty thousand (50,000) shares of Preferred Stock, of which
three hundred and two (302) are issued and outstanding as of the date hereof.
All of such issued and outstanding shares of Dialog Stock are owned by the
Dialog Shareholders and Non-founding Dialog Shareholders. Dialog has not issued
any securities other than the Dialog Stock set forth above and no other capital
stock of Dialog is authorized or outstanding. All outstanding shares of Dialog
Stock have been duly authorized and validly issued and are fully paid and
nonassessable. The Dialog Stock was not issued in violation of any federal or
state securities law or any other legal requirement. Other than this Agreement,
and except as set forth in Schedule 1.6(c),, there are no outstanding
subscriptions, rights, options, warrants, conversion rights, agreements or other
claims for the purchase or acquisition from Dialog or any Dialog Shareholder of
any shares of Dialog Stock or any other securities of Dialog or obligating
Dialog to issue, repurchase or otherwise acquire any shares of Dialog Stock or
any other securities of Dialog or any securities convertible into, exercisable
or exchangeable for, or otherwise entitling the holder to acquire any shares of
Dialog Stock or any other securities of Dialog.
2.5 OWNERSHIP OF DIALOG STOCK. Each Dialog Shareholder and each other
shareholder of Dialog set forth on Schedule 1.6(c) (the "Non-founding Dialog
Shareholder" and collectively the "Non-founding Dialog Shareholders") is the
sole record and beneficial holder of that number of shares of Dialog Stock set
forth opposite his name on SCHEDULE 2.5. Each Dialog Shareholder and
Non-founding Dialog Shareholder owns each of his shares of Dialog Stock free and
clear of all Liens and rights of others of any kind other than those created or
permitted under this Agreement or by Medscape and MAC.
2.6 BINDING EFFECT. Each Dialog Shareholder and Dialog has all
requisite capacity and authority to execute this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each Dialog Party. The execution and delivery of this Agreement by
the Dialog Parties and the consummation of the transactions contemplated hereby
by the Dialog Parties do not and will not require the approval of any Person.
Assuming the due execution and delivery of this Agreement by Medscape and MAC,
this Agreement constitutes a valid and binding obligation of each Dialog Party,
enforceable against such Dialog Party in accordance with its terms.
2.7 OTHER EQUITY INTERESTS. Dialog does not have, and has not had at
any time, any direct or indirect equity interest in any other corporation,
partnership, joint venture, limited liability company or other entity or any
commitment to acquire any such equity interest.
2.8 FINANCIAL STATEMENTS, BOOKS AND RECORDS AND ACCOUNTS RECEIVABLE.
(a) The unaudited balance sheet of Dialog as of December 31, , 1999
and the unaudited balance sheet of Dialog as of February 17, 2000, annexed
hereto as SCHEDULE 2.8(A) (collectively the "BALANCE SHEETS") have been prepared
from the books and records of Dialog and fairly present in all material respects
the financial position of Dialog as of the respective dates thereof in
conformity with generally accepted accounting principles consistently applied
("GAAP"), and include all adjustments required for a fair presentation.
(b) The unaudited statement of income of Dialog for the six months
ended December 31, 1999, and the unaudited statement of income and cash flows
for Dialog for the twelve months ended December 31, 1999, annexed hereto as
SCHEDULE 2.8(B) (collectively the "INCOME STATEMENTS" and, together with the
Balance Sheets, the "FINANCIAL STATEMENTS") have been prepared from the books
and records of Dialog and fairly present in all material respects the results of
operations of Dialog for the periods covered thereby in conformity with GAAP,
and include all adjustments required for a fair presentation.
(c) The books of account, minute books, stock record books,
membership interest record books, and other records of Dialog and of the
Predecessor Entity, all of which have been made available to Medscape and MAC by
the Dialog Parties, are true, correct and complete. The minute books of Dialog
contain true, correct and complete records of all meetings of, and corporate or
other actions taken by, the stockholders, the Board of Directors, and committees
of the Board of Directors of Dialog, and no meeting of the stockholders,
members, the Board of Directors or any committee of the Board of Directors has
been held for which minutes have not been prepared and are not contained in such
minute books.
(d) All accounts receivable of Dialog that are reflected on the
February 17, 2000 Balance Sheets or the accounting records of Dialog as of the
Closing Date (collectively, the "ACCOUNTS RECEIVABLE") represent or will
represent valid obligations arising from sales actually made or services
actually performed by Dialog in the ordinary course of business. Unless paid
prior to the Closing Date, except as set forth on SCHEDULE 2.8(D), the Accounts
Receivable are or will be as of the Closing Date current and collectible net of
the respective reserves shown on the Balance Sheet (in the case of Accounts
Receivable existing as of _________) or on the accounting records (in the case
of Accounts Receivable arising after _______) of Dialog as of the Closing Date
(which reserves are adequate). Except as set forth on SCHEDULE 2.8(D), there is
no contest, claim, or right of set-off, other than returns in the ordinary
course of business, under any Contract (as hereinafter defined) with any obligor
of an Accounts Receivable relating to the amount or validity of such Accounts
Receivable. SCHEDULE 2.8(D) contains a true, correct and complete list of all
Accounts Receivable as of February 17, 2000, which list sets forth the aging of
such Accounts Receivable.
2.9 TAXES. (a) Dialog, its predecessor entity Dialog Medical LLC
(f/k/a GOC Partners LLC), and any consolidated, combined, or unitary group of
which it is or was a member, as the cases may be (individually, a "TAX
AFFILIATE" and collectively the "TAX
AFFILIATES", has (i) prepared and timely filed all returns, declarations,
reports, estimates, information returns and statements ("RETURNS") required to
have been filed or sent by or with respect to them to date in respect of any
Taxes (as hereinafter defined), and all such Returns are correct and complete;
(ii) timely and properly paid all Taxes that are shown as due and payable on
such Returns; and (iii) complied with all applicable laws, rules, and
regulations relating to the payment and withholding of Taxes and timely and
properly withheld from employee wages and paid over to the proper Governmental
Entity all amounts required to be so withheld and paid over under all applicable
laws.
(b) (i) There are no Liens for Taxes upon the assets of Dialog or any Tax
Affiliate except Liens for Taxes not yet due; (ii) neither Dialog nor any of its
Tax Affiliates has requested any extension of time within which to file any
Return which Return has not since been filed; (iii) no deficiency for any Taxes
has been proposed, asserted, or assessed against Dialog or any of its Tax
Affiliates which has not been resolved and paid in full; (iv) there are no
outstanding waivers or consents given by Dialog or any of its Tax Affiliates
regarding the application of the statute of limitations with respect to any
Taxes or Returns; and (v) no federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Returns.
(c) Neither Dialog nor any of its Tax Affiliates (i) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by Dialog or any of its Tax
Affiliates; or (ii) is required to include in income any adjustment pursuant to
Section 481(a) of the Code by reason of a voluntary change in accounting method
initiated by Dialog or a Tax Affiliate or has any knowledge that the Internal
Revenue Service (the "IRS") has proposed any such adjustment or change in
accounting method. No property of Dialog or any of its Tax Affiliates is
property that Dialog, or any of its Tax Affiliates or any party to this
transaction is or will
be required to treat as being owned by another Person pursuant to Section
168(f)(8) of the Code (prior to its amendment by the Tax Reform Act of 1986) or
its "tax-exempt use property" within the meaning of Section 168(h) of the Code.
(d) All transactions that could give rise to a substantial understatement
of federal income tax within the meaning of Section 6662 of the Code have been
adequately disclosed in accordance with Section 6662 of the Code. Neither Dialog
nor any of its Tax Affiliates is a party to any agreement, contract or
arrangement that would result, separately or in the aggregate, from this
Agreement, the consummation of the Merger or from any of the transactions
contemplated hereby, in the payment of any "excess parachute payments" within
the meaning of Section 280G of the Code.
(e) For purposes of this Agreement, "TAX" means any obligation or liability
(including any tax, withholding, fee or excise imposed by any Governmental
Entity, including any gross or net income, franchise, employment-related, real
or personal property, transfer, intangibles, documentary, gains, sales or use
tax) together with any and all interest, penalties and additions imposed with
respect thereto.
2.10 LEGAL PROCEEDINGS. Except as set forth on SCHEDULE 2.10, there
are no outstanding orders, judgments, injunctions, awards or decrees of any
court, arbitration tribunal or any Governmental Entity against or involving
Dialog or the Dialog Shareholders (in their capacity as such), or any of
Dialog's securities, assets or properties. There are no claims, suits, actions,
arbitrations, legal, administrative and other proceedings, or governmental
investigations (whether or not the defense thereof or liabilities in respect
thereof are covered by insurance) pending, or to the best knowledge of the
Dialog Parties, threatened against or involving Dialog or the Dialog
Shareholders (in their capacity as such), or any of Dialog's securities, assets
or properties.
2.11 LABOR AND EMPLOYEE BENEFIT MATTERS.
(a) SCHEDULE 2.11 hereto contains a true, correct and complete list
of (i) each plan, program, policy, payroll practice, contract, agreement or
other arrangement providing for compensation, severance, termination pay,
performance awards, stock or stock-related awards, fringe benefits or other
employee pension or welfare benefits of any kind, whether formal or informal,
funded or unfunded, or written or oral, and whether or not legally binding,
which is now sponsored, maintained, contributed to or required to be contributed
to, by Dialog or pursuant to which Dialog has, or could reasonably be expected
to have, any liability, including, without limitation, any "employee benefit
plan" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (each a "BENEFIT PLAN"); and (ii)
each management, employment, bonus, option, equity (or equity related),
severance, consulting, non-compete, confidentiality or similar agreement or
contract currently in effect between Dialog and any current, former or retired
employee, officer, consultant, independent contractor, agent or partner of
Dialog (each an "BENEFIT AGREEMENT"). SCHEDULE 2.11 further attaches true,
correct and complete copies of each written document or agreement (or a written
description of any oral agreement or arrangement) relating to the matters set
forth in the preceding subsections (i) and (ii). Dialog does not currently
sponsor, maintain, contribute to, nor is it required to contribute to, nor has
Dialog or the Predecessor Entity ever sponsored, maintained, contributed to or
been required to contribute to, or incurred any liability with respect to, (i)
any "defined benefit plan" (as defined in ERISA Section 3(35)), (ii) any
"multiemployer plan" (as defined in ERISA Section 3(37)) or any plan that has
two or more contributing sponsors at least two of whom are not under common
control (within the meaning of Section 4063 of ERISA), (iii) any plan that is,
is intended to be, or has ever been treated, as a "qualified plan" (within the
meaning of Section 401(a) of the Code), (iv) any plan that is, is intended to
be, or has ever been treated as, a plan subject to Title IV of ERISA, or (v)
any Benefit Plan or Benefit Agreement which provides, or has, or imposes on
Dialog, any liability to provide, life insurance, medical, severance or other
welfare benefits to any current or former employee of Dialog or former employee
of the Predecessor Entity (or spouse, dependent or beneficiary thereof) upon or
following such employee's or former employee's retirement or termination of
service with Dialog or the Predecessor Entity, except as required by Section
4980B of the Code or Part 6 of Title I of ERISA.
(b) Dialog is not and has never been (nor was the Predecessor Entity ever):
(i) a member of a "controlled group of companies," under "common control" or a
member of an "affiliated service group" within the meaning of Section 414(b),
(c) or (m) of the Code, (ii) required to be aggregated under Section 414(o) of
the Code, or (iii) under "common control," within the meaning of Section
4001(a)(14) of ERISA, or any regulations promulgated or proposed under any of
the foregoing sections, in each case with any other entity.
(c) Dialog has provided to Medscape and MAC accurate and complete copies of
all documents embodying or relating to each Benefit Plan and each Benefit
Agreement, including all amendments thereto, trust or funding agreements
relating thereto, the two most recent annual reports required under ERISA, if
any, the most recent determination letter received from the Internal Revenue
Service, if any, and the most recent summary plan description (with all material
modifications), as applicable, for each such plan or agreement.
(d) All contributions required to be made as of the Effective Time to or
with respect to any Benefit Plan or Benefit Agreement by applicable law or
regulation or by any plan document or other contractual undertaking, and all
premiums due or payable as of the Effective Time with respect to insurance
policies funding any Benefit Plan or Benefit Agreement have been timely made or
paid in full.
(e) Each Benefit Plan is currently, and has been at all times, maintained
in accordance with its terms and in compliance in all material respects with
all applicable laws, statutes, orders, rules and regulations, including, without
limitation, ERISA and the Code. No material liability to any Governmental Entity
or other Person under any federal, state or local law, rule, regulation or
pronouncement has been or is expected to be incurred by Dialog with respect to
any Benefit Plan or Benefit Agreement or with respect to any benefit or
compensation plan, program or arrangement heretofore maintained, sponsored or
contributed to by the Predecessor Entity. There is not now, nor to the Dialog
Parties' knowledge, do any circumstances exist that could reasonably be expected
to give rise to, any requirement for the posting of security with respect to a
Benefit Plan or Benefit Agreement or the imposition of any Lien on the assets of
Dialog under applicable law, including, without limitation, ERISA and the Code.
(f) Except as set forth on SCHEDULE 2.11, the execution of, and performance
of the transactions contemplated by, this Agreement will not (either alone or
upon the occurrence of any additional or subsequent events directly related to
the transactions contemplated by this Agreement) constitute an event under any
Benefit Plan or Benefit Agreement that will or may result in any payment,
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligations to fund benefits with respect to any current or former
employee of Dialog or the Predecessor Entity (or any spouse, dependent or
beneficiary thereof).
(g) Except as set forth on SCHEDULE 2.11, (i) Dialog is not delinquent in
payments to any of its employees for any wages, salaries, commissions, bonuses
or other direct compensation for any services performed by the date hereof or
amounts required to be reimbursed by them to the date hereof, (ii) Dialog is in
material compliance with all applicable federal, state and local laws, rules and
regulations respecting employment, employment practices, labor, terms and
conditions of employment and wages and hours, (iii) Dialog is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied,
commitment or arrangement with any labor union, and no labor union has requested
or has sought to represent any of the employees, representatives or agents of
Dialog, (iv) there is no labor strike, dispute, slowdown or stoppage actually
pending, or, to the knowledge of the Dialog Parties, threatened, against or
involving Dialog, and (v) to the knowledge of the Dialog Parties, no salaried
key employee has any plans to terminate his or her employment with Dialog.
(h) For purposes of this SECTION 2.11, the term "employee" shall be
considered to include individuals rendering, or in the case of a "former
employee," individuals who rendered, services to Dialog or the Predecessor
Entity as independent contractors.
(i) SCHEDULE 2.11 contains a true, correct and complete list of the
name of each individual who is employed by Dialog on the date hereof along with
his or her current job title, base compensation, eligibility for bonus
compensation or any other compensation, date of hire, last date and amount of
increase in compensation, any employee benefit which is not generally available
to employees of Dialog and employment address. SCHEDULE 2.11 contains a true,
correct and complete list of persons currently rendering services to Dialog, or
who have rendered services to Dialog since the formation of the Predecessor
Entity for which Dialog is or has been obligated to issue a Form 1099, as
consultants or independent contractors, along with information regarding
compensation and reimbursement levels for each such person during all such
periods, and each such person who was classified as a consultant or an
independent contractor was properly so classified under applicable laws and
regulations and no federal, state or local taxes should have been withheld from
any payment made to any such person which were not withheld.
(j) Except as set forth on SCHEDULE 2.11, with respect to each Benefit
Plan or Benefit Agreement, there have been no "prohibited transactions" (within
the meaning of Section 406 of ERISA and Section 4975 of the Code) and no
fiduciary with
respect to any Benefit Plan or Benefit Agreement has incurred, or to the Dialog
Parties' knowledge can reasonably be expected to incur, liability for a breach
of fiduciary duty or other failure to act or comply in connection with the
administration or investment of the assets of any Benefit Plan or Benefit
Agreement. Further, no action, suit, proceeding, or hearing, or to the Dialog
Parties' knowledge, investigation with respect to any Benefit Plan or Benefit
Agreement is pending or, to the knowledge of the Dialog Parties, threatened.
None of the directors, officers or employees of Dialog has, nor does any Dialog
Party have, any knowledge of any existing circumstances that could reasonably be
expected to give rise to any action, suit, proceeding, hearing, or investigation
involving a Benefit Plan or Benefit Agreement.
2.12 COMPLIANCE WITH LAWS. (a) Dialog and the conduct of the Business
is in compliance in all material respects with (i) all statutes, laws,
regulations, ordinances, rules, licenses, judgments, orders or decrees
applicable thereto (including regulations promulgated by or under the Food and
Drug Administration (FDA), the Health Care Finance Administration (HCFA) or the
Health Insurance Portability and Accountability Act of 1996 (HIPAA)), including
compliance with any government contractor affirmative action plan, if
applicable, and (ii) the Certificate of Incorporation and Bylaws of Dialog.
Dialog has not received notice of any alleged violation of any statute, law,
regulation, ordinance, rule, judgment, order, decree or license applicable
thereto or to its properties from any Person and neither Dialog nor any Dialog
Shareholder has any knowledge of any such violation.
(b) Dialog holds all licenses, permits, certificates, franchises,
orders or approvals of any Governmental Entity that are material to the conduct
of the Business and the uses of its assets (collectively "PERMITS") necessary to
operate the Business as presently conducted. SCHEDULE 2.12 sets forth a true,
accurate and complete list of all such Permits as of the date hereof. Such
Permits are in full force and effect and the validity and effectiveness thereof
will not be affected by the transactions contemplated
hereby. No violations are or have been recorded with any Governmental Entity in
respect of any Permit, no proceeding is pending, or to the best knowledge of the
Dialog Parties, threatened to revoke or limit any Permit, and the Dialog Parties
know of no grounds for any such revocation or limitation.
2.13 INSURANCE. Dialog maintains insurance policies with insurers, in
such amounts and against such risks of Dialog as are customary and reasonable
for the Business and its assets. Dialog is included as an insured party under
such policies, with full rights as a loss payee (provided that certain policies
designate certain Persons as additional insureds). Attached hereto as SCHEDULE
2.13 are true, correct and complete copies of all policies of liability, theft,
fire, title, workers' compensation and other forms of insurance and surety bonds
insuring Dialog or the employees, properties, assets and Business of Dialog,
together with a list and brief description of the foregoing. All policies listed
in SCHEDULE 2.13 are in full force and effect; no such policy or the future
proceeds thereof has been assigned to any other Person; and all premiums and
other payments due under or on account of any such policy have been paid except
where the failure to make such payment would not result in the termination of
any such policy. There are no outstanding unpaid claims under any such policy.
Dialog has not received notice of cancellation or non-renewal of, or any
material amendment to, or any material increase in deductibles or premiums
under, any such policy.
2.14 CONTRACTS. Except as set forth on SCHEDULE 2.14, Dialog is not a
party to or bound by any written or oral (a) employment or consulting agreement;
(b) joint venture or partnership contract or agreement; (c) contract or
agreement restricting the right of Dialog to compete with any other Person; (d)
any loan agreement, indenture, promissory note or conditional sales agreement or
any pledge, security agreement, deed of trust, financing statement or any other
document granting or evidencing a Lien on any assets of Dialog; (e) any
guarantee, assumption of an obligation for borrowed money or purchase money
indebtedness or other obligation of reimbursement of any
maker of a letter of credit; (f) contract, agreement or commitment providing for
the purchase or sale of assets outside the ordinary course of business; (g)
agreement, contract or commitment relating to capital expenditures in excess of
$5,000.00 in any single case or $25,000.00in the aggregate; (h) licenses,
whether as licensor or licensee, of any material invention (whether patented or
not), trade secret, know-how, copyright, trademark, service ▇▇▇▇, trade name,
domain name, or other intellectual property, except for pre-packaged software;
(i) lease or sublease of, or option relating to, real estate; (j) lease as
lessee or lessor of personal property; (k) capitalized lease or sale-leaseback;
(l) data licensing, distribution, supply or development agreement or any
agreement related to a website or services, commerce, hosting, or data exchange,
delivery or distribution via the Internet; (m) royalty agreement; (n) any
revocable or irrevocable power of attorney; (o) software agreement, except for
pre-packaged software; (p) promotional agreement; (q) other contract or
agreement entered into other than in the ordinary course of business; or (r)
other contract or agreement providing for payments to or from Dialog in excess
of $25,000 in the aggregate or requiring one year or longer to perform. All of
the foregoing types of contracts and agreements are hereinafter referred to as
"CONTRACTS." Except as set forth thereon, each Contract set forth on SCHEDULE
2.14 is in full force and effect and, to the knowledge of the Dialog Parties is
legal, valid and binding and enforceable against each other Person that is a
party thereto. Except as set forth on SCHEDULE 2.14, Dialog is not nor, to the
knowledge of the Dialog Parties, is any other party to any such Contract, in
material breach thereof or default thereunder and there does not exist under any
provision thereof any event that, with the giving of notice or the lapse of time
or both, would constitute such a material breach or default by Dialog or, to the
knowledge of the Dialog Parties, by any other party to any such Contract. Except
as set forth on SCHEDULE 2.14, the Dialog Shareholders' Representative has
delivered or made available to Medscape and MAC
true, correct and complete copies of each of such written Contracts or provided
summaries of any such oral Contracts.
2.15 AFFILIATE TRANSACTIONS. Except as disclosed in SCHEDULE 2.15, (a)
neither any Dialog Shareholder (or any of their respective Affiliates (as
defined below)), nor any officer or director of Dialog has provided or caused to
be provided, and does not currently provide or cause to be provided, to Dialog
any assets, services (other than as an employee or partner) or facilities or has
made any payments to or on behalf of Dialog, and (b) Dialog has not provided or
caused to be provided, and does not currently provide or cause to be provided,
to any Dialog Shareholder (or any of their Affiliates) or to any of Dialog's
Affiliates any assets, services or facilities or has made any payment (other
than member distributions, salary, bonus or business expense reimbursement
payments made to a Dialog Shareholder in the ordinary course of business) to or
on behalf of any Dialog Shareholder or any of Dialog's Affiliates or any of
Dialogue Shareholder's Affiliates. An "AFFILIATE" of any Person means any other
Person directly or indirectly controlling, controlled by or under common control
with such Person and shall include any officer, director, member, partner or
other equity holder of any such entity and the spouse or any issue of a natural
person or any trust for their benefit.
2.16 ENVIRONMENTAL COMPLIANCE.
(a) For purposes of this Agreement: (i) "HAZARDOUS SUBSTANCE" means any
pollutant, contaminant, hazardous substance or waste, solid waste, radioactive
material, pesticide, petroleum or any fraction thereof, asbestos, lead,
formaldehyde, or any other chemical, substance or material listed or identified
as a hazardous substance in or regulated by any Environmental Law; (ii)
"ENVIRONMENTAL LAW" means any federal, state, local or other governmental
statute, regulation, law or ordinance, rule or standard, or any rule of common
law dealing with or relating to the protection of human health, safety or
comfort (including noise), the use or preservation of natural resources or the
pollution, protection or restoration of the environment; (iii) "REAL PROPERTY",
for purposes of this Section 2.16, means all real property (including installed
equipment, fixtures, piping, drains, sewers, tanks, improvements and
appurtenances thereto) presently or formerly owned absolutely, owned in fee,
leased (including easements and rights of way), or otherwise occupied by Dialog;
and (iv) "ENVIRONMENTAL LOSSES" means any and all damages, losses, expenses,
costs (including reasonable attorneys' fees, court costs and interest paid or
accrued), penalties, Liens, interest, fines, assessments, charges and
liabilities of any kind imposed or incurred by, under, because of or pursuant to
Environmental Laws, whether based in negligence, strict liability, contract or
otherwise, under any theory or process of recovery or relief, at law or in
equity, including, without limitation, those related to remediation, removal,
response, restoration, mitigation, abatement, investigation, testing,
monitoring, personal injury, death and property damage.
(b) Except as set forth on SCHEDULE 2.16, there are no claims pending
or, to the knowledge of the Dialog Parties, threatened and neither Dialog nor
any Dialog Shareholder has received written notice, alleging that Dialog or any
of the Real Property is, has been or may be in violation of or non-compliance
with any Environmental Law or relating to any Environmental Losses.
(c) To the knowledge of the Dialog Parties, no Hazardous Substances
have ever been disposed of, buried, spilled, leaked, discharged, emitted or
released at levels requiring investigation, study, removal or remediation under,
or which form or may form the basis of a claim pursuant to, any Environmental
Law, in, on, from, adjacent to or under the Real Property.
(d) To the knowledge of the Dialog Parties, no Hazardous Substances
have been sent, transported or otherwise conveyed by or on behalf or at the
direction of Dialog from any of the Real Property to any other location from
which there is or may be a release or threatened release of Hazardous Substances
for which Dialog has been
notified that it has or may have liability or responsibility for cleanup costs
or injury or damages, whether as a potentially responsible party or otherwise.
(e) The Real Property is not being used and, to the knowledge of the
Dialog Parties, never has been used in connection with the manufacturing,
generating, treating, storing or transporting of any Hazardous Substances in
quantities regulated under any Environmental Law, and, to the knowledge of the
Dialog Parties, no Hazardous Substances have been treated, accumulated, stored
or disposed of there.
(f) To the knowledge of the Dialog Parties, there are not now and never
have been any underground or above ground storage tanks, or any sumps, ponds,
pits, lagoons, impoundments or other containment facilities of any kind on, at,
under or adjacent to the Real Property which contain or ever did contain any
Hazardous Substances.
(g) SCHEDULE 2.16 identifies and the Dialog Shareholders'
Representative has provided or made available to Medscape and MAC true, correct
and complete copies of all environmental audits or assessments relating in whole
or in part to Dialog, or the Business undertaken by or on behalf of Dialog or,
if such audits or assessments are in the possession of Dialog or any Dialog
Shareholder, undertaken by or on behalf of any Governmental Entity and written
communications relating in whole or in part to Dialog, or the Business, with any
Governmental Entity, in each case within the past six years, which describe the
environmental compliance or liability status of any Real Property or the
compliance or noncompliance of the operation of the Real Property or of the
conduct of the Business with respect to any Environmental Law.
(h) Except as set forth on SCHEDULE 2.16, Dialog operates and, to the
knowledge of the Dialog Parties, at all times has operated, and to the knowledge
of the Dialog Parties, the Real Property is and, has been constructed and
operated, in substantial compliance with all applicable Environmental Laws.
(i) SCHEDULE 2.16 contains a true, correct and complete listing of all
material Permits and other authorizations issued under or pursuant to the
authority of any Environmental Law. Except to the extent, if any, set forth on
SCHEDULE 2.16, all Permits and other authorizations presently required pursuant
to any applicable Environmental Law for the lawful operation of the Business are
in the possession of Dialog and are duly issued and in full force and effect. To
the knowledge of the Dialog Parties, there is not any threat that any such
permit, license or other authorization will be withdrawn, terminated, limited or
materially changed pursuant to any Environmental Law.
2.17 PROPERTIES. (a) REAL PROPERTY. Dialog does not own, nor has it
ever owned, any real property or any buildings or other structures and does not
have any options or any contractual obligations to purchase or acquire any
interest in real property, except as disclosed on SCHEDULE 2.17. SCHEDULE 2.17
sets forth a true, correct and complete list of all leases of real property to
which Dialog is a party (collectively, the "LEASES"). True, correct and complete
copies of all leases and all amendments, modifications and supplemental
agreements thereto have been delivered to Medscape and to MAC by Dialog. The
Leases are in full force and effect and to the best knowledge of the Dialog
Parties are binding and enforceable against each of the parties thereto in
accordance with their respective terms. To the best knowledge of the Dialog
Parties, no party to any Lease has given notice to any other party thereto
claiming the existence or occurrence of a breach or a default thereunder and
there has not occurred any event or circumstance which constitutes, or with the
passages of time or the giving of notice, would constitute, a breach or a
default thereunder.
(b) TANGIBLE PERSONAL PROPERTY. Dialog has good and marketable title
to, free and clear of all Liens, or otherwise has the unrestricted right to use,
each item of equipment, furniture, leasehold improvements, fixtures, vehicles,
structures, any related capitalized items and other tangible personal property
material to the Business
("TANGIBLE PERSONAL PROPERTY"). Each item of Tangible Personal Property is in
good and sufficient operating condition and repair (excepting ordinary wear and
tear), is adequate for the use to which it is being put, and is not in need of
maintenance or repairs, except for ordinary routine maintenance and repairs for
which Dialog is not obligated to pay or that are not material in cost or nature.
To the best knowledge of the Dialog Parties, Dialog has not received notice that
any of its Tangible Property is in violation of any existing law or any
building, zoning, health, safety or other ordinance, code or regulation. The
Tangible Personal Property described above comprise all of the assets which are
necessary or appropriate for the conduct of the Business as currently conducted.
(c) TITLE. Dialog owns outright and has good title to all of its
material assets and properties, including, all of the assets and properties
reflected on the February 17, 2000 Balance Sheet, free and clear of all Liens,
except for (i) assets and properties disposed of in the ordinary course of
business, (ii) Liens securing the claims of materialmen, carriers, landlords and
like Persons, all of which are not yet due and payable, (iii) Liens for Taxes
not yet due and payable or for Taxes being contested in good faith by
appropriate proceedings, or (iv) Liens reflected on the February 17, 2000
Balance Sheet.
2.18 INFORMATION TECHNOLOGY. SCHEDULE 2.18 sets forth a list and brief
description of all computer hardware, software and networks used by Dialog and
identifies which are owned by Dialog directly and which are licensed to Dialog
for use.
2.19 DATA; DATABASES. Except as set forth on SCHEDULE 2.19 Dialog has
the unrestricted right to use all software associated with its databases. Except
as set forth in SCHEDULE 2.19, Dialog has the unrestricted right to use all of
the data which comprise all of its databases including data taken directly from
any and all external sources as well as derived data.
2.20 INTELLECTUAL PROPERTY.
(a) SCHEDULE 2.20 sets forth a true, correct and complete list or
description of all trademarks, trademark registrations, service marks, service
▇▇▇▇ registrations, trade names, company names, patents, design patents,
copyrights, domain names and all registrations and pending applications for the
foregoing, in each case which are used in or required for the Business as
currently being conducted (collectively, the "INTELLECTUAL PROPERTY RIGHTS").
Except as disclosed on SCHEDULE 2.20, Dialog is the sole and exclusive owner of,
with all right, title and interest in and to (free and clear of any Lien) the
Intellectual Property Rights described on SCHEDULE 2.20 and has sole and
exclusive rights, without being contractually obligated to pay any compensation
to any Person, to the use thereof or the material covered thereby in connection
with the services or products in respect of which they are being used as of the
date of this Agreement or as otherwise stated in the description of goods and
services contained in the relevant materials relating to any Intellectual
Property Rights filed with the United States Copyright Office or the United
States Patent and Trademark Office. Except as set forth on SCHEDULE 2.20, Dialog
has not granted any licenses or other rights to the Intellectual Property Rights
to any other Person and no other Person has granted to Dialog any licenses or
other rights to the Intellectual Property Rights. Each such license granted to
Dialog is valid and binding on Dialog, and to the knowledge of the Dialog
Parties, the other parties thereto, and the intellectual property used by Dialog
pursuant to such license will be available to the Surviving Entity on terms and
conditions after the Closing which are identical to the terms and conditions in
force prior to the Closing. Except as set forth on SCHEDULE 2.20, there are no
interferences, oppositions, cancellations or other contested proceedings
pending, or to the knowledge of the Dialog Parties threatened, in the United
States Copyright Office, the United States Patent and Trademark Office or any
Federal, state or local court or before any Governmental Entity, relating to any
registration, grant, license or pending
application with respect to any Intellectual Property Rights and none of
the Dialog Parties have any knowledge of any facts that could reasonably be
expected to give rise to any such interferences, oppositions, cancellations or
other contested proceeding.
(b) Except as set forth on SCHEDULE 2.20, (i) Dialog has not been sued
or charged or been a defendant in any claim, suit, action or proceeding which
involves a claim of infringement of any Intellectual Property Rights, (ii) to
the knowledge of the Dialog Parties, there are no other claims that Dialog is
infringing any existing patent, trademark or copyright or any basis for any such
claim, without regard to whether any such patent, trademark or copyright is
ultimately found to be valid, (iii) to the knowledge of the Dialog Parties,
there are no continuing infringements by any other Person of the Intellectual
Property Rights and (iv) to the knowledge of the Dialog Parties, the use of the
Intellectual Property Rights in connection with the Business, as currently being
conducted, does not infringe the patent, trademark, copyright or any other right
of any Person.
2.21 BANK ACCOUNTS. SCHEDULE 2.21 sets forth a true, correct and
complete list of each bank at which Dialog has an account or safe deposit box
and the address of each such bank, the number of such account or box and the
name of each individual authorized to draw on or have access thereto.
2.22 ABSENCE OF CERTAIN CHANGES. Since December 22, 1999, except as set
forth on SCHEDULE 2.22, Dialog has conducted the Business in the ordinary course
and maintained its records and books of account in reasonable detail which
accurately and fairly reflect the transactions of Dialog in all material
respects. Since December 22, 1999 there has not been, except as disclosed on
SCHEDULE 2.22:
(a) any materially adverse change in the nature of the Business, the results of
Dialog's operations, Dialog's assets, Dialog's financial condition, or the
manner of conducting the Business;
(b) any damage, destruction or casualty loss (whether or not covered by
insurance) adversely affecting the Business, the results of operations, the
assets or the financial condition of Dialog or its ability to carry on its
operations substantially as presently conducted and as proposed to be
conducted;
(c) any declaration, setting aside or payment of distributions in respect of
the Dialog Stock; (d) any entering into of any employment agreement, or any
increase in the compensation payable, or to become payable, by Dialog to
any of its officers or partners, employees or agents over the rates payable
as of December 22, 1999;
(e) any issuance of securities of Dialog, including options, warrants or other
agreements evidencing or requiring such issuance;
(f) any amendment or termination of, default by Dialog or, to the knowledge of
any Dialog Party, default by any other party under, any contract, agreement
or license to which Dialog is a party and which materially adversely
affects Dialog;
(g) any labor dispute or collective labor negotiation involving Dialog;
(h) any discharge or satisfaction of any Lien, obligation or liability
(accrued, absolute, fixed or contingent) of Dialog except in the ordinary
course of business;
(i) incurrence by Dialog of any obligation or liability (accrued, absolute,
fixed or contingent) except current liabilities incurred, and obligations
entered into, in the ordinary course of business and consistent with prior
practice (for purposes of this Agreement, Medscape, MAC and the Dialog
Parties agree that the incurrence of any debt other than normal trade
credit shall not be in the ordinary course of business);
(j) institution of any severance, retirement, bonus, equity option, profit
sharing pension plan or similar agreement or changes made in any such
existing plans of Dialog, other than severance or bonus arrangements with
employees of Dialog
entered into in the ordinary course of business consistent with past
practices or as otherwise specifically contemplated hereby;
(k) any capital expenditure involving an amount of more than Five Thousand
Dollars ($5,000) in any one instance or an aggregate of more than Ten
Thousand Dollars ($10,000);
(l) announcement or initiation of any general increase in compensation, bonus,
insurance or employee benefits involving employees of Dialog;
(m) sale or disposition (other than inventory in the ordinary course of
business), or lease of any property of Dialog or mortgage, pledge, or grant
or imposition of any Lien on any asset or property of Dialog;
(n) cancellation or waiver of any claims or rights with a value in excess of
Twenty-Six Thousand Dollars ($26,000);
(o) any amendment to the Certificate of Incorporation or Bylaws of Dialog; or
(p) any agreement to effect any of the foregoing.
2.23 RELATIONSHIP WITH ADVERTISERS, SUPPLIERS AND CUSTOMERS. SCHEDULE
2.23 sets forth a true, correct and complete list of each customer of Dialog
which represented in excess of five (5%) percent of Dialog's revenues in any of
the fiscal years ended December 31, 1997 or December 31, 1998 or which in the
good faith judgment of the Dialog Parties is expected to account for in excess
of five (5%) percent of Dialog's revenues in the fiscal year ended December 31,
1999, and identifies any such customer which has terminated its relationship
with Dialog or significantly reduced the volume of business conducted by it with
Dialog since January 1, 2000. Except as described in SCHEDULE 2.23, the Dialog
Parties have no actual knowledge that any significant supplier of goods,
products or services to Dialog, or any significant customer of Dialog, (i) has
made any material complaint or objection with respect to the service or any
business practices of Dialog or the transactions contemplated hereby or (ii)
will cease to do business, or significantly reduce the business conducted, with
the Surviving
Corporation with respect to the Business after or as a result of the
consummation of any transactions contemplated hereby.
2.24 PHYSICIANS' CONTRACTS. Attached hereto as SCHEDULE 2.24 are true,
accurate and complete copies of each contract, agreement or arrangement between
Dialog and any physician, pursuant to which Dialog has incurred an obligation to
pay fees, commissions, or any other amounts ("PHYSICIANS' CONTRACTS"). As of the
Closing, all such Physicians' Contracts will have expired or been duly
terminated in accordance with their respective terms and any and all liabilities
of Dialog thereunder or in connection therewith shall have been fully paid or
discharged in full within thirty (30) days of the Closing. Except as disclosed
in SCHEDULE 2.24, Dialog has not incurred any liability to pay any amount in
excess of payments expressly provided for under each such Physician's Contract,
including any fee or other amount for or in consideration of early termination
of such Physician's Contract.
2.25 UNDISCLOSED LIABILITIES. Except (a) as disclosed in SCHEDULE 2.25
or the other Schedules hereto, (b) as and to the extent disclosed or reserved
against on the February 17, 2000Balance Sheet, (c) as incurred after December
22, 1999 in the ordinary course of business consistent with prior practice and
not prohibited by this Agreement, or (d) as incurred in connection with this
Agreement or any of the transactions contemplated hereby, Dialog does not have
any material liabilities or obligations of any nature, absolute, accrued,
contingent or otherwise and whether due or to become due required by GAAP to be
set forth on the February 17, 2000 Balance Sheet.
2.26 FINDER'S FEES. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Dialog or any Dialog Shareholder other than ▇▇▇ ▇▇▇▇▇▇ who would have a claim
to any fee or commission from Dialog or any Dialog Shareholder, Medscape, MAC or
the Surviving Corporation or any of their respective Affiliates in connection
with the transactions
contemplated by this Agreement, and no Dialog Party has incurred any obligation
to pay a brokerage, finder's fee or commission to any Person, other than ▇▇▇
▇▇▇▇▇▇, the fees and expenses of whom shall be borne by Dialog.
2.27 NO MATERIAL OMISSIONS. Neither this Agreement (including the
Schedules hereto) nor any certificate delivered pursuant hereto contains any
untrue statement of a material fact relating to any Dialog Shareholder or Dialog
or omits to state a material fact relating to any Dialog Shareholder or Dialog
necessary to make the statements made, in light of the circumstances in which
they are made, not misleading. In each case where a representation and warranty
is made "to the knowledge" of Dialog, the Dialog Parties or any Dialog
Shareholder, each of Dialog, the Dialog Parties, or the Dialog Shareholders, as
applicable, has made inquiry of the responsible officer, employee or agent of
Dialog whose responsibilities with Dialog would include those matters which are
the subject of the representation and warranty.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MEDSCAPE
Medscape represents and warrants to the Dialog Shareholders as follows:
3.1 ORGANIZATION; STANDING AND POWER; BUSINESS OF MEDSCAPE. Medscape is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, with all requisite corporate power and authority
and all governmental licenses, authorizations, consents and approvals required
to own its properties and to conduct its business as presently conducted and as
presently proposed to be conducted. Medscape has delivered to the Dialog
Shareholders' Representative true, correct and complete copies of the
Certificate of Incorporation and the Bylaws of Medscape.
3.2 NO CONFLICTS. The execution, delivery and performance by Medscape
of this Agreement, the consummation of the transactions contemplated hereby and
compliance by Medscape with the terms hereof will not (a) violate, conflict
with, cause an event of default under, give rise to a right of termination,
cancellation or acceleration of any right or obligation of Medscape under, or
result in the creation or imposition of any Lien on any asset of Medscape or on
the securities of Medscape under any agreement, instrument, License, franchise,
judgment, order, law, rule or regulation by which Medscape is bound or to which
Medscape's property is subject, nor (b) violate or conflict with the Articles of
Incorporation or Bylaws of Medscape.
3.3 CAPITALIZATION. The capitalization of Medscape is as disclosed in
its public filings with the Securities and Exchange Commission . Except for the
obligations set forth in this Agreement or as set forth on SCHEDULE 3.3, (i) no
subscription, warrant, option, preemptive rights, convertible security or other
right (contingent or otherwise) to purchase or acquire any shares of capital
stock or other security of Medscape issued by Medscape is authorized or
outstanding, (ii) there is no commitment or offer by Medscape to issue or
provide any such subscription, warrant, option, preemptive right, convertible
security or other right or to issue or distribute to holders of any shares of
its capital stock any evidences of indebtedness or assets of Medscape, (iii)
Medscape has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any shares of its capital stock or any interest therein or to
pay any dividend or make any other distribution in respect thereof, (iv) there
are no restrictions on the transfer of Medscape's capital stock other than those
arising from securities laws, and (v) there are no voting trusts, proxies or
other agreements, instruments or understandings with respect to outstanding
shares of Medscape's capital stock to which Medscape is a party.
3.4 DUE AUTHORIZATION AND ISSUANCE OF THE SHARES. Upon issuance in
accordance with the terms hereof, the Medscape Shares constituting the Merger
Consideration, will be duly authorized, validly issued, fully paid,
non-assessable and will have been issued in compliance with all charter
documents of Medscape and all applicable federal and state laws.
3.5 BINDING EFFECT. Medscape has all requisite power and authority to
execute this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Medscape. The execution
and delivery of this Agreement by Medscape and the consummation of the
transactions contemplated hereby by Medscape do not and will not require the
approval of any Person. Assuming the due execution and delivery of this
Agreement by MAC and the Dialog Parties, this Agreement constitutes a valid and
binding obligation of Medscape, enforceable against Medscape in accordance with
its terms.
3.6 SEC REPORTS; FINANCIAL STATEMENTS; BOOKS AND RECORDS; (a) Medscape
has previously delivered to Dialog Form 10-Q, as filed with the Securities and
Exchange Commission ("SEC"), and all other reports filed by Medscape with the
SEC under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")
since November 14, 1999. As of their respective dates, such reports complied in
all material respects with applicable SEC requirements and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Medscape has timely
filed with the SEC all reports required to be filed under Sections 13, 14 or
15(d) of the Exchange Act since becoming registered under the Exchange Act.
(b) The consolidated financial statements contained in the Medscape
quarterly report on Form 10-Q for the quarter ended September 30,, 1999 (the
"MEDSCAPE 10-Q") have been prepared from, and are in accordance with, the books
and records of Medscape and fairly present the consolidated financial condition,
results of operations and cash flows of Medscape as of the dates and for the
periods presented therein, all in accordance with GAAP applied on a consistent
basis, except as otherwise indicated therein and subject (in the case of
unaudited financial statements included in
the Medscape 10-Q) to normal year-end and audit adjustments and footnote
disclosures which in the aggregate are not material.
3.7 ABSENCE OF CERTAIN CHANGES. Since the Medcsape 10-Q, except as set
forth on SCHEDULE 3.7, Medscape has conducted its business in the ordinary
course and maintained its records and books of account in reasonable detail
which accurately and fairly reflect the transactions of Medscape in all material
respects. Since the Form 10-Qthere has not been, except as disclosed on SCHEDULE
3.7:
(a) any materially adverse change in the nature of the Medscape's business, the
results of Medscape's operations, Medscape's assets, Medscape's financial
condition, or the manner of conducting its business;
(b) any damage, destruction or casualty loss (whether or not covered by
insurance) adversely affecting the Medscape's business, the results of
operations, the assets or the financial condition of Medscape or its
ability to carry on its operations substantially as presently conducted and
as proposed to be conducted; or
(c) Any declaration, setting aside or payment of distributions in respect of
any capital stock.
ARTICLE IV
MAC represents and warrants to the Dialog Shareholders as follows:
4.1 ORGANIZATION; STANDING AND POWER; BUSINESS OF MAC. MAC is a newly
formed Delaware corporation and a direct, wholly owned subsidiary of Medscape
which was formed solely for the purpose of consummating the transactions
contemplated hereby. MAC is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. MAC has delivered to
the Sellers' Representative true, correct and complete copies of the Certificate
of Incorporation and the Bylaws of MAC.
4.2 NO CONFLICTS. The execution, delivery and performance by MAC of
this Agreement, the consummation of the transactions contemplated hereby and
compliance by MAC with the terms hereof will not (a) violate, conflict with,
cause an event of default under, give rise to a right of termination,
cancellation or acceleration of any right or obligation of MAC under, or result
in the creation or imposition of any Lien on any asset of MAC under any
agreement, instrument, Permit, franchise, judgment, order, law, rule or
regulation by which MAC is bound or to which MAC's property is subject, nor (b)
violate or conflict with the Articles of Incorporation or Bylaws of MAC.
4.3 CAPITALIZATION. All of the outstanding shares of MAC are owned by
Medscape.
4.4 BINDING EFFECT. MAC has all requisite power and authority to
execute this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by MAC. The execution and
delivery of this Agreement by MAC and the consummation of the transactions
contemplated hereby by MAC do not and will not require the approval of any
Person. Assuming the due execution and delivery of this Agreement by the Dialog
Parties and Medscape, this Agreement constitutes a valid and binding obligation
of MAC, enforceable against MAC in accordance with its terms.
ARTICLE V
COVENANTS AND AGREEMENTS
5.1 CONFIDENTIALITY OBLIGATIONS. The Dialog Parties, Medscape and MAC
will, and will cause Dialog's agents and employees to, hold in confidence,
unless compelled to disclose by judicial or administrative process, or in the
opinion of counsel, by other requirements of law, all Confidential Information
(as hereinafter defined) and will not disclose the same to any Person. If this
Agreement is terminated, (i) Medscape and MAC will promptly return to the Dialog
Parties or destroy all documents (including copies) containing or based upon
Confidential Information pertaining to Dialog, and (ii)
the Dialog Parties will promptly return to Medscape or destroy all documents
(including copies) containing or based upon Confidential Information pertaining
to Medscape or MAC. For purposes hereof, "CONFIDENTIAL INFORMATION" shall mean
all information of any kind related to Dialog, Medscape or MAC, except
information (i) ascertainable or obtained from public or published information,
(ii) received from a third party not known to the receiving party to be under an
obligation to keep such information confidential, (iii) that is or becomes known
to the public (other than through a breach of this Agreement), (iv) that was in
the receiving party's possession before disclosure thereof to it in connection
with this Agreement, as established by written records, or (v) that was
independently developed by the receiving party without reference to Confidential
Information. In the event that any party or any of its Affiliates is notified
that he or it is or may become legally compelled to disclose any of the
Confidential Information, such party will provide the other parties with prompt
written notice of the existence, terms and circumstances surrounding such notice
so that the party affected by disclosure may, at its cost and expense, seek a
protective order or other appropriate remedy. In the event that such protective
order or other remedy is not obtained prior to the time disclosure is required,
the party required to make the disclosure will furnish only that portion of the
Confidential Information that they are advised in writing by counsel is legally
required to be furnished, and will furnish to the party affected by such
disclosure a copy of such written advice of counsel. The respective obligations
of Medscape and MAC under this Section 5.1 shall terminate on and as of the
Closing.
5.2 CONSUMMATION OF AGREEMENT. Subject to the terms and conditions
hereof, each party to this Agreement agrees to fully cooperate with the others
and the others' counsel, accountants and representatives in connection with any
steps required to be taken as part of its obligations under this Agreement. Each
party shall use all reasonable efforts consistent with reasonable business
practice to cause all conditions to its obligations and to the other parties
under this Agreement to be satisfied as
promptly as possible, and will not undertake a course of action inconsistent
with this Agreement or which would make any of its representations, warranties,
agreements or covenants in this Agreement untrue in any material respect or any
conditions precedent to its obligations hereunder unable to be satisfied at or
prior to the Closing.
5.3 CONDUCT OF THE DIALOG BUSINESS. Except with the prior written
consent of MAC and Medscape and except as otherwise contemplated herein, during
the period from the date hereof to the Closing Date, Dialog and the Dialog
Shareholders shall observe the following covenants:
(a) AFFIRMATIVE COVENANTS Except as provided in this Agreement or any
Schedule herein, Dialog will, and the Dialog Shareholders shall cause Dialog to:
(i) PRESERVATION OF BUSINESS. Use all reasonable efforts to preserve intact
the Business and keep available the services of present employees, in
each case in accordance with past practice, and use all reasonable
efforts to advertise, promote and market Dialog's services and products,
keep Dialog's properties intact, preserve its good will and maintain all
physical properties in good operating condition;
(ii) INSURANCE. Use all reasonable efforts to keep in effect casualty,
liability, worker's compensation and other insurance policies in coverage
amounts not less than those in effect as of the date of this Agreement;
(iii) INTELLECTUAL PROPERTY RIGHTS. Use all reasonable efforts to preserve and
protect Dialog's Intellectual Property Rights;
(iv) NOTIFICATION. Promptly notify Medscape and MAC of (1) any emergency or
other material change in Dialog's condition (financial or otherwise),
business, operations, properties, assets, liabilities, prospects or (2)
of any litigation or governmental complaints, investigations or hearings
(or communications indicating that the same may be contemplated); and
(iv) ORDINARY COURSE. Operate the Business diligently and solely in the
ordinary course.
(b) NEGATIVE COVENANTS Except as provided in this Agreement or any Schedule
herein, Dialog will not, and the Dialog Shareholders shall not nor cause Dialog
to:
(i) DISPOSITION OF ASSETS. Sell or transfer or mortgage, pledge or create or
permit to be created any Lien on any of Dialog's assets, or the Dialog
Stock, other than sales and transfers in the ordinary course of business
and Liens existing under arrangements disclosed herein or permitted
hereunder;
(ii) LIABILITIES. Without the consent of Medscape and MAC, (1) incur any
obligation or liability other than in the ordinary course of business,
(2) incur any indebtedness for borrowed money or enter into any contract
or commitment involving payments by Dialog of $5,000 or more, other than
purchase orders or commitments for inventory material and supplies in the
ordinary course of business;
(iii) COMPENSATION. Without the consent of Medscape and MAC, (1) change the
compensation, fringe benefits of any officer, director or employee, or
(2) enter into or modify any Benefit Plan or any employment, severance or
other agreement with any officer, director or employee of Dialog other
than changes required by law to maintain the tax-qualified status of any
Benefit Plan or as otherwise required by law;
(iv) CAPITAL STOCK. (1) Grant or accelerate the exercisability of, any option,
warrant or right to purchase, or to convert any obligation into, shares
of Dialog's capital stock, (2) declare or pay any dividend or other
distribution with respect to any shares of Dialog's capital stock, or (3)
issue any shares of Dialog's capital stock, except upon the exercise of
options outstanding on the date hereof or as contemplated in Schedules
delivered by or on behalf of Dialog pursuant hereto;
(v) CHARTER AND BYLAWS. Amend the Articles of Incorporation or Bylaws of
Dialog;
(vi) ACQUISITIONS. Make any material acquisition of property other than in the
ordinary course of business; (vii) MATERIAL AGREEMENTS. Without the
consent of Medscape, enter into or modify any material agreement with any
other Person (other than agreements in the ordinary course of business
involving payments by Dialog of less than $5,000); or
(viii) BREACH OF REPRESENTATIONS. Take any other action that would make any
representation or warranty contained in Article II to be untrue or
incorrect.
5.4 CONTINUED EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES. From the
date hereof, up to and including the Closing Date, Dialog shall conduct, and the
Dialog Shareholders shall cause Dialogue to conduct, the Business and affairs of
Dialog in a manner such that the representations and warranties contained in
this Agreement shall be true and correct on and as of the Closing Date as if
made on and as of the Closing Date.
5.5 COVENANT NOT TO COMPETE. (a) Each of the Dialog Shareholders hereby
covenants and agrees, individually and for himself, that for a period of four
(4) years from the Closing Date, he shall not (except on behalf of Dialog, the
Surviving Corporation or an Affiliate of the Surviving Corporation, if employed
thereby), independently or in connection with any other Person, directly or
indirectly:
(1) participate, consult with or advise or engage in (as a principal,
employee or consultant), an online business operated over the World Wide
Web (the " TERRITORY"), in any Competitive Business (as hereinafter
defined); or
(2) establish, acquire or own any interest in any Competitive Business
established or conducting business in the Territory, PROVIDED, HOWEVER,
that nothing herein shall restrict any Dialog Shareholder from acquiring
(i) any interest in a registered investment company or (ii) a less than
1% interest in any public company listed on a national securities
exchange or admitted for trading on NASDAQ NMS; or
(3) (A) solicit, recruit or hire any employees of Medscape or the Surviving
Corporation; and (B) solicit or encourage any employee of Medscape or the
Surviving Corporation to leave the employment thereof; or soliciting or
encouraging any of Medscape's or the Surviving Corporation's customers,
suppliers or others with whom it does business to cease doing business
with Medscape or the Surviving Corporation.
For purposes hereof, "COMPETITIVE BUSINESS" means the business of, or any
business engaged directly or indirectly in any line of business in which Dialog
is engaged as of the date of this Agreement.
(b) n this Section 5.5 are reasonable in scope and duration and are
necessary to protect, and to enable the Surviving Corporation (and any successor
thereto) as the owner of Business and assets of Dialog to receive the
anticipated benefits of, the goodwill of Dialog and its business. The parties
hereto agree that, if any of the length of time, the geographical area, the
scope or another parameter of the restrictions set forth above is deemed to be
unlawfully restrictive by a court of competent jurisdiction, such provision
shall be deemed to be amended and shall be construed by such court to have the
broadest type, scope and duration permissible under applicable law, and if no
validating construction is possible, shall be severable from the rest of this
Agreement, and the validity, legality or enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
(c) The parties recognize that the performance of the obligations
under this Section 5.5 by each of the Dialog Shareholders is special, unique and
extraordinary in character. In addition to such other rights and remedies as the
Surviving Corporation or Medscape may have at equity or in law with respect to
any breach of this Agreement, if any Dialog Shareholder commits a material
breach of any of the provisions of this
Section 5.5, the Surviving Corporation or Medscape shall have the right and
remedy to seek to have such provisions specifically enforced by any court of
competent jurisdiction with respect to such Dialog Shareholder or to enjoin such
Dialog Shareholder from performing services for any Person, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Surviving Corporation, Medscape, Dialog and the
Business and that money damages will not provide an adequate remedy to the
Surviving Corporation and Medscape.
5.6 ACCESS TO INFORMATION. Prior to the Effective Time, each of
Medscape and MAC shall be entitled, through its employees and representatives,
to have such access to the assets, properties, business, books, records and
operations of Dialog as Medscape or MAC shall reasonably request in connection
with Medscape and MAC's investigation of Dialog with respect to the transactions
contemplated hereby. Any such investigation and examination shall be conducted
at reasonable times and the Dialog Parties shall cooperate fully therein. No
investigation by Medscape or MAC shall diminish or obviate any of the
representations, warranties, covenants or agreements made by any of the Dialog
Parties contained in this Agreement (or any of the Schedules hereto). In order
that Medscape and MAC shall have full opportunity to make such investigation,
the Dialog Parties shall furnish the representatives of Medscape and MAC during
such period with all such information and copies of such documents concerning
the business and affairs of Dialog as such representatives may reasonably
request and cause Dialog's officers, employees, consultants, agents, accountants
and attorneys to reasonably cooperate fully with such representatives in
connection with such investigation.
5.7 EXPENSES. If the Merger is not consummated, each of the parties
shall bear its or his respective expenses incurred in connection with this
Agreement and the transactions contemplated hereby. If the Merger is
consummated, (i) the Surviving Corporation, as the successor to Dialog, shall be
liable for all unpaid expenses of Dialog and
(ii) the Dialog Shareholders shall each be liable for all of their
unpaid expenses (including their respective legal fees), which shall in no event
be charged to Dialog.
5.8 AUTHORIZATIONS. Prior to the Closing Date, the parties shall use
all reasonable efforts to obtain all authorizations, consents and permits
required to permit the consummation of the transactions contemplated hereby,
including all consents required from third parties who have contractual
relationships with Dialog.
5.9 FURTHER ASSURANCES. Each of the parties shall execute such
documents, further instruments of transfer an assignment and other papers and
take such further actions as may be reasonably required or desirable to carry
out the provisions hereof and the transactions contemplated hereby.
5.10 Requirements of Rule 144. Medscape covenants that until all of the
shares issued as Merger Consideration are sold by the Dialog Shareholders and
that Non-founding Dialog Shareholders that it will take all actions reasonably
necessary to permit the public sale pursuant to Rule 144 under the Securities
Act of 1933 including the filing with the SEC in a timely manner all reports and
other documents required of Medscape under the Securities of Act of 1933 and the
Securities Exchange Act of 1934.
ARTICLE VI
CONDITIONS TO OBLIGATIONS
6.1 CONDITIONS TO DIALOG SHAREHOLDERS' OBLIGATIONS. The obligation of
the Dialog Shareholders to sell the Dialog Stock pursuant to the provisions of
this Agreement shall be subject to the satisfaction at or before the Closing of
the following conditions, which may be waived in writing in whole or in part by
the Dialog Shareholders' Representative:
(a) COVENANTS. Each of Medscape and MAC shall have performed and complied in
all material respects with their covenants and agreements contained herein
and
the Dialog Shareholders' Representative shall have received a certificate
to this effect from each of the Medscape and MAC.
(b) REPRESENTATIONS AND WARRANTIES. All of the representations and warranties
of Medscape contained in Article lIl of this Agreement and of MAC contained
in Article IV of this Agreement shall have been true, correct and complete
in all material respects as of the date hereof; all such representations
and warranties shall be true, correct and complete in all material respects
at and as of the Closing Date, and the Dialog Shareholders' Representative
shall have received a certificate to this effect from each of Medscape and
MAC.
(c) OTHER DOCUMENTS. Each of Medscape and MAC shall have executed and delivered
each agreement, certificate document or other instrument referenced in
Sections 1.10(b) and (c) required to be executed by it.
(d) SECRETARY CERTIFICATE. Each of Medscape and MAC shall have delivered to the
Dialog Shareholders' Representative a certificate of the secretary of
Medscape or MAC, as applicable, certifying as to requisite corporate or
other action authorizing the transactions contemplated by this Agreement
and the incumbency of officers and directors.
(e) NO INJUNCTION. No Governmental Entity of competent jurisdiction shall have
enacted, issued, promulgated or enforced any statute, rule, regulation,
executive order, decree, judgment, preliminary or permanent injunction or
other order which is in effect and which prohibits, enjoins or otherwise
restrains the consummation of the transactions contemplated hereby;
(f) MERGER CERTIFICATE. Medscape shall have executed and delivered the Merger
Certificate referred to in Section 1.2.
(g) Stockholder Approval. The Merger shall have been duly approved by consent
of the stockholders on the terms and conditions set out in this Agreement.
(h) Waiver of a Contribution or Indemnification for Payments. Each of the
Dialog Shareholders and each of the Non-founding Dialog Shareholders shall
have executed a waiver in compliance with Section 7.7.
6.2 _ CONDITIONS TO MEDSCAPE AND MAC'S OBLIGATIONS. The obligation of
Medscape and MAC to consummate the transactions contemplated by this Agreement
are subject to the satisfaction at or before the Closing of the following
conditions, which may be waived in writing in whole or in part by Medscape and
MAC: (a) COVENANTS. The Dialog Parties shall have performed and complied in all
material respects with their covenants and agreements contained herein and
Medscape and MAC shall have received a certificate to this effect from each of
the Dialog Shareholders.
(b) REPRESENTATIONS AND WARRANTIES. All of the representations and warranties
of the Dialog Parties contained in Article ll of this Agreement shall have
been true, correct and complete in all material respects as of the date
hereof; all such representations and warranties shall be true, correct and
complete in all material respects at and as of the Closing Date, and
Medscape and MAC shall have received a certificate to this effect from the
Dialog Parties.
(c) CONSENTS; PHYSICIANS' CONTRACTS. The Dialog Parties shall have obtained
consents from all third parties which are required to be obtained in
connection with the transactions contemplated by this Agreement, including
any consents to assignment of any Contract to which Dialog is a party where
the transfer of the Dialog Stock to MAC may be deemed an assignment of such
Contract, and all such consents shall be in full force and effect. All
Physicians' Contracts shall have expired or been duly terminated in
accordance with their respective terms.
(d) OTHER DOCUMENTS. The applicable Dialog Parties shall have executed and
delivered each agreement, certificate document or other instrument
referenced in Sections 1.10(a) required to be executed by him or it.
(e) SECRETARY CERTIFICATE; GOOD STANDING CERTIFICATE. Dialog shall have
delivered to Medscape and MAC a certificate of the secretary of Dialog
certifying as to requisite corporate or other action authorizing the
transactions contemplated by this Agreement, the incumbency of officers and
directors, and the status of record ownership of Dialog's shareholders,
together with a certificate of good standing issued by the Secretary of
State of Delaware with respect to Dialog dated as of the Closing Date.
(f) BANK ACCOUNTS. Dialog shall have delivered to Medscape and MAC
documentation necessary to change the authorized signatories for Dialog's
bank and brokerage accounts, as specified by Medscape and MAC.
(g) MERGER CERTIFICATE. Dialog shall have executed and delivered the Merger
Certificate referred to in Section 1.2.
(h) NO INJUNCTION. No Governmental Entity of competent jurisdiction shall have
enacted, issued, promulgated or enforced any statute, rule, regulation,
executive order, decree, judgment, preliminary or permanent injunction or
other order which is in effect and which prohibits, enjoins or otherwise
restrains the consummation of the transactions contemplated hereby.
(i) Approvals. The Merger shall have been duly approved by the Board of
Directors of Medscape.
(j) Tender of Shares. All the Dialog stockholders shall tender their shares at
the time of Closing.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION BY DIALOG SHAREHOLDERS. Each of the Dialog
Shareholders jointly and severally, agrees promptly to indemnify, defend and
hold
harmless the Surviving Corporation and Medscape from and against any and all
assessments, judgments, debts, obligations, liabilities, losses, costs, damages
or expenses (including interest, penalties and reasonable out-of-pocket fees,
expenses and disbursements in connection with any action, suit or proceeding)
net of insurance proceeds actually received (collectively, "DAMAGES"), suffered,
paid or incurred by MAC, the Surviving Corporation or Medscape resulting from or
caused by or arising out of any breach of the representations and warranties
made by any Dialog Shareholder to MAC, the Surviving Corporation and Medscape in
this Agreement or in any Schedule hereto or any certificate delivered hereunder.
In addition, each of the Dialog Shareholders jointly and severally agrees
promptly to indemnify, defend and hold harmless the Surviving Corporation and
Medscape from and against any and all Damages suffered, paid or incurred by the
Surviving Corporation, Medscape or Dialog resulting from or caused by or arising
out of any failure by such Dialog Shareholder to perform any of his covenants or
agreements contained in this Agreement.
7.2 Limitations/Dialog Shareholders. The Dialog Shareholders's
liability shall in no event exceed $3,000,000 (THREE MILLION DOLLARS).
Further,the Dialog Shareholders shall not be under any liability or claim
arising under this Agreement that shall accrue to Medscape under this Agreement
hereof unless and except to the extent that the liability of Medscape would in
respect of any single claim exceed $100,000 (ONE HUNDRED THOUSAND DOLLARS)
except:
(a) to the extent that the liability of Medscape would in respect of any single
claim under Section 2.11 exceed $25,000 (TWENTY-FIVE THOUSAND DOLLARS)
(b) to the extent that the liability of Medscape would in respect of any single
claim under Section 2.20 exceed $50,000 (FIFTY THOUSAND DOLLARS)
(c) that the Dialog Shareholders shall be fully liable for any liability or
claim arising under this Agreement under Section 2.24.
7.3 INDEMNIFICATION BY THE SURVIVING CORPORATION. The Surviving
Corporation agrees to indemnify and hold harmless the Dialog Shareholders from
and against any and all Damages suffered, paid or incurred by any Dialog
Shareholder resulting from or caused by or arising out of: (i) any breach of the
representations and warranties made by MAC in this Agreement or any certificate
delivered hereunder and (ii) any failure by MAC to perform any covenant or
agreement of MAC contained in this Agreement. In no event shall the liability to
the Surviving Corporation exceed $3,000,000 (THREE MILLION DOLLARS).
7.4 INDEMNIFICATION BY MEDSCAPE. Medscape agrees to indemnify and
hold harmless the Dialog Shareholders from and against any and all Damages
suffered, paid or incurred by any Dialog Shareholder resulting from or caused by
or arising out of: (i) any breach of the representations and warranties made by
Medscape in this Agreement or any certificate delivered hereunder and (ii) any
failure by Medscape to perform any covenant or agreement of Medscape contained
in this Agreement. In no event shall the liability to the Dialog Shareholders
exceed $3,000,000 (THREE MILLION DOLLARS).
7.5 INDEMNITY PROCEDURE FOR THIRD PARTY CLAIMS. Promptly after
receipt by a party seeking indemnification hereunder (an "INDEMNIFIED PARTY") of
notice of any claim or the commencement by any third party of any action, suit
or proceeding which might result in the other party hereto (the "INDEMNIFYING
PARTY") becoming obligated to indemnify or make any other payment to the
Indemnified Party under this Agreement, the Indemnified Party shall notify the
Indemnifying Party forthwith in writing of the commencement thereof or of the
claim, and shall furnish the Indemnifying Party with all information and
documents relating thereto promptly after its receipt thereof. The failure of
the Indemnified Party to so notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability which it may have on account of this
indemnification or otherwise, except and only to the extent that the
Indemnifying Party is
materially prejudiced thereby. The Indemnifying Party shall have the right,
within thirty (30) days after being so notified, to assume and control the
defense of such claim, litigation or proceeding with counsel reasonably
satisfactory to the Indemnified Party in good faith and at the Indemnifying
Party's own expense; provided that unless and until the Indemnifying Party shall
assume such defense pursuant to this sentence, the Indemnified Party shall have
the right to conduct and control the defense of such claim, litigation or
proceeding (including the settlement thereof upon Dialog's consent) without the
Indemnifying Party's consent and shall be entitled to payment from the
Indemnifying Party of all reasonable costs of such defense (including attorney's
fees and expenses). In any such claim, litigation or proceeding the defense of
which the Indemnifying Party shall have so assumed, the Indemnified Party shall
have the right to participate therein and retain its own counsel at its own
expense, unless (i) the Indemnifying Party and the Indemnified Party shall have
mutually agreed to the retention of the same counsel or (ii) the named parties
to any such litigation or proceeding (including impleaded parties) include both
the Indemnifying Party and the Indemnified Party, and representation of such
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them; in the case of clause (ii) above, such
separate counsel may be retained by the Indemnified Party at the expense of the
Indemnifying Party. The Indemnifying Party may elect to settle any claim, action
or proceeding defended by it without the written consent of the Indemnified
Party provided that such settlement is limited to payment of monetary damages
which are payable in full by the Indemnifying Party and the Indemnified Party is
fully discharged at the time of the settlement from any liability with respect
to the claim, action or proceeding, and the Indemnified Party shall not admit
any liability with respect thereto or settle, compromise, pay or discharge the
same without the prior written consent of the Indemnifying Party so long as the
Indemnifying Party is controlling or defending such claim in good faith. The
Indemnifying Party may not enter into any settlement that is not limited to
payment of
monetary damages without the Indemnified Party's prior written consent which
will not be unreasonably withheld. Each of the Dialog Shareholders, Medscape and
the Surviving Corporation covenant to use all reasonable efforts to cooperate
fully with respect to the defense of any claim, action or proceeding covered by
this Section 7.5. At the option of the Dialog Shareholders, they shall have the
right to tender the shares issued as the Merger Consideration in lieu of a cash
payment.
7.6 TAX INDEMNIFICATION. (a) Without regard to any other limitation on
liability set forth in the Agreement, after the Closing Date, the Dialog
Shareholders, jointly and severally, will fully indemnify, defend and hold
harmless the Surviving Corporation and Medscape from and against any and all
Damages resulting from, arising out of or relating to Taxes for periods ending
on or before the Closing, or for any Taxes not disclosed in SCHEDULE 2.9,
imposed on Dialog or the Surviving Corporation for, or resulting from the denial
of any deduction or credit claimed for, any taxable period ending on or before
the Closing Date.
(b) This Section 7.6 shall remain in force for the period described in
Section 9.6 of the Agreement.
7.7 WAIVER OF RIGHT TO CONTRIBUTION. Each Dialog Shareholder and
Non-Founding Dialog Shareholder hereby waives, effective as of the Closing Date,
any rights which such shareholder may have against the Surviving Corporation in
connection with any contribution or indemnification for payments made after the
Closing Date pursuant to this Agreement or otherwise.
7.8 SOLE REMEDY. In the event of a breach of a representation or
warranty or covenant hereunder, the remedy of the beneficiary of such
representation or warranty or covenant shall be limited solely to the indemnity
set forth in this Article VII.
ARTICLE VIII
TERMINATION; WAIVER
8.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual consent of Medscape, MAC and the Dialog Parties;
(b) by Medscape and MAC or by the Dialog Parties if the Closing shall not
have occurred on or before March 31, 2000, unless the failure of the
Closing to occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants
or agreement of such party set forth herein;
(c) by Medscape or MAC if there has been a material misrepresentation or
material breach of the representations, warranties, covenants or
obligations of any of the Dialog Parties set forth herein, PROVIDED
that in the case of a breach of any such covenant or obligation, such
breach has not been cured within ten (10) business days after Medscape
and MAC have notified the Dialog Shareholders' Representative of such
breach; or
(d) by the Dialog Parties if there has been a material misrepresentation or
material breach of the representations, warranties, covenants or
obligations of either Medscape or MAC set forth herein, PROVIDED that
in the case of a breach of any such covenant or obligation, such breach
has not been cured within ten (10) business days after the Dialog
Shareholders' Representative has notified Medscape or MAC, as
applicable, of such breach.
The power of termination provided for by this Section 8.1 will be effective only
after written notice thereof shall have been given to the other parties. If this
Agreement is terminated in accordance with this Section 8.1, this Agreement and
the transactions contemplated hereby shall be abandoned without further action
by the parties.
8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become null
and void and have no effect, and no party shall have any liability or obligation
of any nature whatsoever hereunder, or in connection with the transactions
contemplated hereby, except (a) Section 5.1 (Confidential Information) and
Section 5.8 (Expenses) shall survive any termination of this Agreement.
8.3 EXTENSION; WAIVER. At any time prior to the Closing Date, the
parties hereto may, subject to Section 9.4 below, (a) extend the time for the
performance of any of the obligations or other acts of the parties hereto, (b)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto and (c) waive compliance with any of
the agreements or conditions hereto.
ARTICLE IX
MISCELLANEOUS
9.1 EXPENSES. Except as otherwise provided herein, all costs and
expenses incurred in connection with the transactions contemplated hereby (i)
incurred by either Medscape or MAC shall be paid by Medscape and (ii) incurred
by the Dialog Parties shall be paid by the Dialog Party incurring such expenses.
The Dialog Shareholders shall not charge any such expenses to Dialog.
9.2 INTERPRETATION. When a reference is made in this Agreement to a
Section, Schedule or Exhibit, such reference shall be to a Section, Schedule or
Exhibit of this Agreement unless otherwise indicated. The table of contents and
caption 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
"included," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." All accounting terms
not defined in this Agreement shall have the meanings determined by GAAP.
9.3 FURTHER ASSURANCES. Each of the parties hereto covenants and agrees
to take any and all such further action and to execute, acknowledge and deliver
such instruments, documents and agreements as any other party may reasonably
request to effectuate, consummate or confirm the transactions contemplated
hereby.
9.4 AMENDMENT AND WAIVER. This Agreement may be amended only in a
writing signed by the Dialog Parties (or the Dialog Shareholders' Representative
acting on their behalf), MAC and Medscape. Any provision of this Agreement may
be waived by the party entitled to the benefit thereof only in a writing
executed by the party against whom such waiver is sought to be enforced. No
waiver shall be deemed a waiver of any other provision of this Agreement, and no
waiver of a breach hereunder shall be deemed a waiver of, or operate as an
estoppel with respect to, any other or subsequent breach of this Agreement.
9.5 NOTICE. All notices, demands and other communications to be given
or delivered hereunder shall be in writing and will be deemed to have been given
if personally delivered or sent by overnight courier (in each such case delivery
will be effective upon receipt) or by confirmed facsimile to the addresses
indicated below or to such other addresses as the parties may specify on notice
as herein provided:
If to MAC or the Surviving Corporation, to:
Medscape, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Legal Department
with a copy to:
Patterson, Belknap, ▇▇▇▇ & ▇▇▇▇▇ LLP
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to Medscape, to:
Medscape, Inc.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Legal Department
with a copy to:
Patterson, Belknap, ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to the Dialog Shareholders, to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Sellers' Representative
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▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
with a copy to:
Long, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
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▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
9.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
Notwithstanding any investigation by any party hereto, each of the
representations and warranties of the parties and the related indemnification
obligations that are set forth in this Agreement or in any certificate delivered
hereunder shall survive the Closing Date
until the first anniversary of the Closing Date (the "EXPIRATION DATE") except
those representations and warranties contained in Section 2.4, Section 3.3 and
Section 4.3 (Capitalization) which shall survive indefinitely and Section 2.9
(Taxes), Section 2.11 (Labor and Employee Benefit Matters) and Section 2.16
(Environmental Compliance) which shall remain in force until the expiration of
the applicable statute of limitations, and further respect to Resource Version
3.0, the indemnity obligation shall survive until the first anniversary of the
release of Resource Version 3.0; provided, however, that delivery by one party
to the other of notice of a breach of any representation or warranty, specifying
the breach in reasonable detail, on or prior to the Expiration Date, or the
expiration of the applicable statute of limitations, as the case may be, shall
be deemed to preserve such party's claim solely with respect to that particular
breach of representation and warranty. Those covenants contained in this
Agreement that contemplate or may involve actions to be taken or obligations in
effect after the Closing Date shall survive the Closing Date until the
expiration of the applicable statute of limitations.
9.7 BINDING AGREEMENT; ASSIGNMENT. This Agreement and all of the
provisions hereof will be binding upon and inure to the benefit of the parties
hereto and their respective successors. The Dialog Shareholders may not assign
their rights or delegate their duties hereunder without the prior written
consent of MAC and Medscape, which consent may be granted, withheld or
conditioned in the sole and absolute discretion of MAC and Medscape.
9.8 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
9.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which need not contain signatures of more than one party,
but all such counterparts taken together will constitute one and the same
instrument. Signatures may be exchanged by facsimile, with original signatures
to immediately follow by overnight courier. Each party to this Agreement agrees
that it will be bound by his or its own signature delivered by facsimile and
that he or it accepts the signatures of the other parties to this Agreement
delivered by facsimile.
9.10 GOVERNING LAW. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New York, without reference
to the choice of law provisions thereof.
9.11 REMEDIES. All rights, remedies or powers hereby conferred shall,
to the extent not prohibited by law, be deemed cumulative and not exclusive of
any other thereof, or of any other rights, remedies or powers available. No
single or partial exercise of any right, remedy or power by a party shall
preclude further exercise thereof. No delay or omission to exercise any right,
power or remedy accruing to a party upon the occurrence of any breach of any
warranty, covenant or agreement contained in this Agreement shall impair any
such right, power or remedy or be construed to be a waiver of any such breach or
any acquiescence therein or to any similar breach thereafter occurring.
9.12 PUBLIC ANNOUNCEMENTS. No public announcement concerning the
transactions contemplated hereby may be made by any party without the consent of
the others except as may be required by law or the rules of any applicable
securities exchange.
9.13 ENTIRE AGREEMENT. This Agreement (including the Exhibits,
Schedules, documents and instruments referred to herein) constitutes the entire
agreement and understanding of the parties hereto and thereto with respect to
the subject matter hereof and thereof and supersedes all other prior agreements
and
understandings, both written or oral, between such parties with respect to
the subject matter hereof and thereof.
9.14 Schedules. Notwithstanding Section 9.13, the Schedules attached
hereto may be amended by either party and are subject to approval by each party
prior to the Closing. Further, anything contained in any single Schedule shall
be considered disclosed for all purposes of the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered on their behalf as of the day and year first above
written.
MEDSCAPE, INC.
By:_________________________
Name:
Title:
MEDLOG ACQUISITION INC.
By:_________________________
Name:
Title:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.,
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▇▇▇▇ ▇. ▇▇▇▇, M.D.