AMENDMENT TO AMENDED AND RESTATED COMMON STOCK AND WARRANT AGREEMENT
This AMENDMENT, dated as of October 18, 2000 (this "AMENDMENT"),
amends the Amended and Restated Common Stock and Warrant Agreement made and
entered into as of March 30, 2000, and amended and restated as of May 24,
2000 (the "AGREEMENT"), by and between ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware
corporation ("PARENT"), and VHA Inc., a Delaware corporation ("VHA").
RECITALS
WHEREAS, Parent, Novation, LLC, a Delaware limited liability company
("NOVATION"), VHA, University HealthSystem Consortium, an Illinois
corporation ("UHC"), and Healthcare Purchasing Partners International, LLC,
a Delaware limited liability company ("HPPI") have entered into that
certain Outsourcing and Operating Agreement, dated as of March 30, 2000,
and amended and restated as of May 24, 2000 (the "OUTSOURCING AGREEMENT").
Capitalized terms in this Amendment which are not otherwise defined in this
Amendment shall have the meanings assigned to them in the Agreement, or if
not defined therein, in the Outsourcing Agreement.
WHEREAS, in consideration of the services rendered and to be rendered
by VHA pursuant to the Outsourcing Agreement and VHA's fulfillment of its
duties and obligations thereunder, Parent issued to VHA (i) 46,267,530
shares (such shares, the "SHARES") of Parent common stock, par value $0.001
per share ("COMMON STOCK"), some of which Shares are subject to risk of
forfeiture, and (ii) a warrant to purchase 30,845,020 shares of Common
Stock (the "WARRANT").
WHEREAS, in order to increase the ability of VHA to create incentive
programs for its member and patron healthcare organizations to adopt and
utilize Parent's internet exchange, Parent and VHA mutually desire to (i)
extend the period under which certain of the Shares are subject to
forfeiture from four years to five years, (ii) substitute for the Warrant
30,845,020 shares of restricted Common Stock, which shares shall be subject
to forefiture by VHA to Parent, in each case, subject to the terms and
conditions set forth in this Amendment, and (iii) amend certain other
agreements between the parties set forth in the Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth in this
Amendment, in the Agreement and the Outsourcing Agreement, the parties
agree as follows:
ARTICLE I
AMENDMENT OF SHARES FORFEITURE PROVISIONS
1.1 Amendment of Shares Forfeiture Provisions. Section 1.5 of the
Agreement is hereby amended to read in its entirety as follows:
"1.5 Forfeiture of Shares.
(a) Thirty-three percent of the aggregate number of Shares
issued to VHA pursuant to Section 1.2 of the Agreement shall be fully
vested, and shall not be subject to any risk of forfeiture, upon
their issuance.
(b) Definitions.
(i) A "SHARES DETERMINATION DATE" shall be each of April 1,
2001, April 1, 2002, April 1, 2003, April 1, 2004 and April 1, 2005.
(ii) The "SHARES TARGET NUMBER" of VHA HCOs for the Measuring
Date (as defined in Section 1.5(c) of the Agreement) January 31,
2001, is 6 VHA HCOs; for the Measuring Date January 31, 2002, is 31
VHA HCOs; for the Measuring Date January 31, 2003, is 49 VHA HCOs;
for the Measuring Date January 31, 2004, is 67 VHA HCOs; and for the
Measuring Date January 31, 2005, is 85 VHA HCOs.
(iii) The "SHARES TARGET PURCHASING VOLUME" for the one year
period ending on the Measuring Date January 31, 2001, is $216
million; for the one year period ending on the Measuring Date January
31, 2002, is $966 million; for the one year period ending on the
Measuring Date January 31, 2003, is $1.567 billion; for the one year
period ending on the Measuring Date January 31, 2004, is $2.21
billion; and for the one year period ending on the Measuring Date
January 31, 2005, is $2.83 billion.
(iv) "SHARES CUMULATIVE SIGNED PURCHASING VOLUME" means, as of
any Shares Determination Date, the aggregate dollar volume of
purchases during the one year period ending on the Measuring Date
immediately preceding such Shares Determination Date by VHA HCOs that
Signed-Up (as defined in Section 2.3(d) of this Amendment) with
Parent on or prior to such Shares Determination Date (calculated, for
each such VHA HCO, by multiplying (A) the amount of Novation LLC
contract purchases (as reported in the SRIS system maintained for
Novation LLC's benefit) by such VHA HCO during such one year period
by (B) 2.4); provided, that if any VHA HCO terminated its Contract on
or prior to the Shares Determination Date in question, its purchasing
volume for the one year period ending on the Measuring Date in
question shall not be included in the determination of the Shares
Cumulative Signed Purchasing Volume being calculated.
(v) "CONTRACT" shall mean a written agreement, arrangement or
understanding between a VHA HCO and Parent providing for Parent to be
the Preferred Provider (as defined in Section 2.3 of this Amendment)
of an Internet-based system for the acquisition of Novation LLC
contracted products by such VHA HCO.
(c) Forfeiture. Sixty-seven percent of the aggregate number of
Shares issued to VHA pursuant to Section 1.2 of the Agreement shall
be subject to forfeiture by VHA to Parent pursuant to the terms of
this Section 1.5(c). VHA shall forfeit and return to Parent, without
the payment of any consideration by Parent to VHA or the taking of
any action by Parent, 3.35% of the aggregate number of Shares issued
to VHA pursuant to Section 1.2 of the Agreement on the first Shares
Determination Date, 13.4% of the aggregate number of Shares issued to
VHA pursuant to Section 1.2 of the Agreement on the second Shares
Determination Date, and 16.75% of the aggregate number of Shares
issued to VHA pursuant to Section 1.2 of the Agreement on each of the
third, fourth and fifth Shares Determination Dates, if both (i) on
the January 31 immediately prior to such Shares Determination Date (a
"MEASURING DATE"), the number of Healthcare Organizations (as defined
in Section 2.3(b) of this Amendment) that are members or patrons of
VHA ("VHA HCOS"), that Signed-Up with Parent on or prior to such
Measuring Date and did not terminate their Contract on or prior to
such Measuring Date is less than the Shares Target Number of VHA HCOs
for such Measuring Date, and (ii) the Shares Cumulative Signed
Purchasing Volume as of such Determination Date is less than the
Shares Target Purchasing Volume for the one year period ending on the
Measuring Date which is immediately prior to such Shares
Determination Date.
(d) VHA shall require any proposed transferee of Shares that
are subject to forfeiture under Section 1.5(c) of the Agreement to
agree that such transferred Shares will remain subject to forfeiture
to the extent provided in such Section.
(e) In the event that a merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving Parent occurs in which all shares of Common
Stock are converted into cash, or a cash tender offer for any or all
shares of Common Stock is consummated, the provisions of Section 1.5
of the Agreement regarding forfeiture of Shares shall terminate. In
the event that a merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction
involving Parent occurs in which any shares of Common Stock are
reclassified, or converted into securities of a person other than
Parent, or an exchange offer for any or all shares of Common Stock
into securities of a person other than Parent is consummated, the
provisions of Section 1.5 of the Agreement regarding forfeiture of
Shares shall terminate, unless VHA elects to waive the provisions of
this Section 1.5(e) of the Agreement no later than 30 days before the
consummation of such transaction."
1.2 Anti-Dilution Adjustments. The number of shares of Common Stock
represented by the Shares, Restricted Shares (as defined in Section 2.1 of
this Amendment) or Vested Shares shall be equitably adjusted to reflect
appropriately the effect of any stock split, reverse stock split, stock
dividend (including any dividend or distribution of securities convertible
into Common Stock), reorganization, spin-off, recapitalization,
reclassification or other like change with respect to Common Stock
occurring on or after the date hereof. The number of Restricted Shares
which shall become Vested Shares (as defined in Section 2.2 of this
Amendment) in accordance with the provisions of Article II shall be
equitably adjusted to reflect appropriately the effect of any stock split,
reverse stock split, stock dividend (including any dividend or distribution
of securities convertible into Common Stock), reorganization, spin-off,
recapitalization, reclassification or other like change with respect to
Common Stock occurring on or after the date hereof and prior to the vesting
or forfeiture of all Restricted Shares.
ARTICLE II
SUBSTITUTION OF RESTRICTED SHARES FOR WARRANT
2.1 Authorization; Closing. As of the consummation of transactions
substituting the Restricted Shares for the Warrant (the "SUBSTITUTION
CLOSING"), Parent will have authorized the issuance of 23,133,764 shares of
restricted Common Stock (the "TRANCHE A SHARES") and 7,711,256 shares of
restricted Common Stock (the "TRANCHE B Shares", and collectively with the
Tranche A Shares, the "RESTRICTED SHARES"). The Substitution Closing will
take place at the offices of Fenwick & West LLP, Two Palo Alto Square, Palo
Alto, California, at a time and date to be specified by the parties.
2.2 Cancellation and Substitution of Warrant and Issuance of
Restricted Shares.
(a) At the Substitution Closing, VHA shall return to Parent for
cancellation, and Parent shall cancel, the Warrant. On and after the
Substitution Closing, the Warrant shall, in all respects, be cancelled,
terminated, and of no further force or effect.
(b) At the Substitution Closing, Parent shall issue to VHA,
23,133,764 Tranche A Shares and 7,711,256 Tranche B Shares. VHA's right to
fully enjoy beneficial ownership of the Restricted Shares shall be subject
to a substantial risk of forfeiture by VHA to Parent pursuant to the terms
and to the extent set forth in this Article II (the "FORFEITURE RISK").
Restricted Shares that become vested pursuant to this Article II and are no
longer subject to the Forfeiture Risk are referred to as "VESTED SHARES."
2.3 Definitions.
(a) "CUMULATIVE SIGNED PURCHASING VOLUME" means, as of any
Determination Date (as defined in Section 2.4(a), (b), (c) and (d) of this
Amendment), the sum of (x) the cumulative dollar volume of purchases by
Healthcare Organizations that are members or patrons of VHA (calculated,
for each such Healthcare Organization, by multiplying (A) the amount of
Novation LLC contract purchases (as reported in the SRIS system maintained
for Novation LLC's benefit) by such Healthcare Organization during the most
recent complete calendar year ending prior to the first Determination Date
on or prior to which such Healthcare Organization Signed-Up with Neoforma
by (B) 2.4 (the "BASE AMOUNT")) and that Signed-Up with Neoforma on or
prior to such Determination Date, plus (y) 80.4% of the cumulative dollar
volume of purchases by Healthcare Organizations that are members or patrons
of Healthcare Purchasing Partners International, LLC (using, for each such
Healthcare Organization, its Base Amount) and that Signed-Up with Neoforma
on or prior to such Determination Date, provided that (i) for purposes of
computing the first Base Amount for each Healthcare Organization, such Base
Amount will be increased by 3.625% and (ii) in addition to the increase in
the Base Amount for any Healthcare Organization pursuant to the preceding
clause (i), the Base Amount for each Healthcare Organization shall also be
increased annually by 7.25% when computing Cumulative Signed Purchasing
Volume for Determination Dates which are subsequent to the first
Determination Date on or prior to which a particular Healthcare
Organization Signed-Up with Neoforma. For purposes of clarity, the parties
agree that once a Healthcare Organization is deemed to have "Signed-Up"
with Neoforma, its Cumulative Signed Purchasing Volume, as computed and
increased under the formula set forth in this definition, shall be included
in the computation of Cumulative Signed Purchasing Volume for all
Determination Dates arising on or after the date such Healthcare
Organization Signed-Up with Neoforma, whether or not such Healthcare
Organization continues to do business with Neoforma.
(b) "HEALTHCARE ORGANIZATION" shall mean any facility
providing health care services.
(c) "PREFERRED PROVIDER" means the Healthcare Organization
agrees to use the Neoforma internet-based system for at least 50% of its
internet-based purchases of Novation contracted products.
(d) "SIGNED-UP" means, with respect to any Healthcare
Organization, that such Healthcare Organization and Neoforma have entered
into a written agreement, arrangement or understanding for Neoforma to be
the Preferred Provider of an Internet-based system for the acquisition of
Novation contracted products by such Healthcare Organization.
2.4 Vesting of Tranche A Shares.
(a) 5,783,441 Tranche A Shares shall become Vested Shares on
June 30, 2001 (the "FIRST DETERMINATION DATE") if Cumulative Signed
Purchasing Volume as of the First Determination Date is at least $2,328
million (the "FIRST TRANCHE A TARGET AMOUNT").
(b) 5,783,441 Tranche A Shares shall become Vested Shares on
June 30, 2002 (the "SECOND DETERMINATION DATE") if Cumulative Signed
Purchasing Volume as of the Second Determination Date is at least $6,233
million (the "SECOND TRANCHE A TARGET AMOUNT").
(c) 5,783,441 Tranche A Shares shall become Vested Shares on
June 30, 2003 (the "THIRD DETERMINATION DATE") if Cumulative Signed
Purchasing Volume as of the Third Determination Date is at least $9,629
million (the "THIRD TRANCHE A TARGET AMOUNT").
(d) 5,783,441 Tranche A Shares shall become Vested Shares on
June 30, 2004 (the "FOURTH DETERMINATION DATE") if Cumulative Signed
Purchasing Volume as of the Fourth Determination Date is at least $13,253
million (the "FOURTH TRANCHE A TARGET AMOUNT").
(e) In the event the Tranche A Target Amount of Cumulative
Signed Purchasing Volume specified in any of Section 2.4 paragraphs (a),
(b), (c) or (d) of this Amendment is not achieved as of the particular
Determination Date specified in such paragraph (such shortfall below a
particular Tranche A Target Amount being referred to as a "TRANCHE A
SHORTFALL AMOUNT"), then the number of Tranche A Shares which shall become
Vested Shares at a particular Determination Date pursuant to Section 2.4
paragraphs (a), (b), (c) or (d) of this Amendment shall equal the product
of 5,783,441 and a fraction, the numerator of which is the Cumulative
Signed Purchasing Volume as of the Determination Date in question and the
denominator of which is the Tranche A Target Amount for the Determination
Date in question. By way of example, using the formula in the preceding
sentence, if as of June 30, 2001, Cumulative Signed Purchasing Volume is
$2,000 million, 4,968,592 Tranche A Shares shall become Vested Shares:
5,783,441 x 2,000 = 4,968,592 Vested Shares
------
2,328
If there is a Tranche A Shortfall Amount relating to a
particular Determination Date, then the number of Tranche A Shares which
will not vest due to such shortfall shall equal 5,783,441 minus the number
of Tranche A Shares which became Vested Shares on such Determination Date
(the "TRANCHE A SHORTFALL SHARES"). Using the facts set forth in the
preceding example, if as of June 30, 2001, Cumulative Signed Purchasing
Volume is $2,000 million, and 4,968,592 Tranche A Shares become Vested
Shares, then 814,849 Tranche A Shares shall be deemed Tranche A Shortfall
Shares as of the First Determination Date:
5,783,441 - 4,968,592 = 814,849 Tranche A Shortfall Shares
A Determination Date as of which there is a Tranche A Shortfall
Amount is referred to as a "TRANCHE A SHORTFALL DETERMINATION DATE". A
Determination Date which occurs immediately after a Tranche A Shortfall
Determination Date is referred to as a "TRANCHE A CATCH UP DETERMINATION
DATE". If as of a Tranche A Catch Up Determination Date, the applicable
Tranche A Target Amount for such Tranche A Catch Up Determination Date is
met or exceeded, then the Tranche A Shortfall Shares which did not vest on
such Tranche A Shortfall Determination Date shall immediately become Vested
Shares on the Tranche A Catch Up Determination Date, it being agreed that
if the Tranche A Target Amount relating to such Tranche A Catch Up
Determination Date is not met, such Tranche A Shortfall Shares shall never
become vested. By way of example, if the Tranche A Shortfall Amount on the
First Determination Date is $328 million resulting in 814,849 Tranche A
Shortfall Shares, and as of the Second Determination Date (which, in this
example, is the Tranche A Catch Up Determination Date with respect to the
First Determination Date) the Second Tranche A Target Amount of Cumulative
Signed Purchasing Volume of $6,233 million is met, then the 814,849 Tranche
A Shortfall Shares relating to the First Determination Date which had
become a Tranche A Shortfall Determination Date will become Vested Shares
on the Second Determination Date, provided however, that if as of the
Second Determination Date Cumulative Signed Purchasing Volume is less than
$6,233 million, the 814,849 Tranche A Shortfall Shares relating to the
First Determination Date shall never become vested, even if as of the Third
Determination Date or the Fourth Determination Date the relevant Tranche A
Target Amount for such Determination Date is met or exceeded.
2.5 Forfeiture of Tranche A Shares. On and following any date on
which any Tranche A Shares cannot become Vested Shares pursuant to the
provisions of Section 2.4 of this Amendment, all such Tranche A Shares that
cannot become Vested Shares shall, without the payment of any consideration
by Parent or any further action by VHA or Parent, be forfeited by VHA to
Parent. Upon any such forfeiture of Tranche A Shares, VHA shall promptly
but in no event later than three business days after such forfeiture return
the shares so forfeited to Parent for cancellation.
2.6 Vesting of Tranche B Shares.
(a) 1,927,814 Tranche B Shares shall become Vested Shares on
the First Determination Date if Cumulative Signed Purchasing Volume as of
the First Determination Date is at least $3,104 million (the "FIRST TRANCHE
B TARGET AMOUNT").
(b) 1,927,814 Tranche B Shares shall become Vested Shares on
the Second Determination Date if Cumulative Signed Purchasing Volume as of
the Second Determination Date is at least $8,311 million (the "SECOND
TRANCHE B TARGET AMOUNT").
(c) 1,927,814 Tranche B Shares shall become Vested Shares on
the Third Determination Date if Cumulative Signed Purchasing Volume as of
the Third Determination Date is at least $12,838 million (the "THIRD
TRANCHE B TARGET AMOUNT").
(d) 1,927,814 Tranche B Shares shall become Vested Shares on
the Fourth Determination Date if Cumulative Signed Purchasing Volume as of
the Fourth Determination Date is at least $17,671 million (the "FOURTH
TRANCHE B TARGET AMOUNT").
(e) In the event the Tranche B Target Amount of Cumulative
Signed Purchasing Volume specified in any of Section 2.6 paragraphs (a),
(b), (c) or (d) of this Amendment is not achieved as of the particular
Determination Date specified in such paragraph (such shortfall below a
particular Tranche B Target Amount being referred to as a "TRANCHE B
SHORTFALL AMOUNT"), then the number of Tranche B Shares which shall become
Vested Shares at a particular Determination Date pursuant to Section 2.6
paragraphs (a), (b), (c) or (d) of this Amendment shall equal the product
of 1,927,814 and a fraction, the numerator of which is the Cumulative
Signed Purchasing Volume as of the Determination Date in question minus the
Tranche A Target Amount for the Determination Date in question and the
denominator of which is the Tranche B Target Amount for the Determination
Date in question minus the Tranche A Target Amount for the Determination
Date in question. It is agreed that no Tranche B Shares will become Vested
Shares on a particular Determination Date if the Tranche A Target Amount
relating to such Determination Date is not exceeded. By way of example, if
as of June 30, 2001, Cumulative Signed Purchasing Volume is $3,000 million,
1,669,447 Tranche B Shares shall become Vested Shares:
1,927,814 x 3,000 - 2,328 = 1,669,447 Vested Shares
--------------
3,104 - 2,328
If there is a Tranche B Shortfall Amount relating to a
particular Determination Date, then the number of Tranche B Shares which
will not vest due to such shortfall shall equal 1,927,814 minus the number
of Tranche B Shares which became Vested Shares on such Determination Date
(the "TRANCHE B SHORTFALL SHARES"). If no Tranche B Shares became Vested
Shares on a Determination Date, then there will be 1,927,814 Tranche B
Shortfall Shares with respect to the Determination Date in question. Using
the facts set forth in the preceding example, if as of June 30, 2001,
Cumulative Signed Purchasing Volume is $3,000 million, and 1,669,447
Tranche B Shares become Vested Shares, then 258,367 Tranche B Shares shall
be deemed Tranche B Shortfall Shares as of the First Determination Date:
1,927,814 - 1,669,447 = 258,367 Tranche B Shortfall Shares
A Determination Date as of which there is a Tranche B Shortfall
Amount is referred to as a "TRANCHE B SHORTFALL DETERMINATION DATE". A
Determination Date which occurs immediately after a Tranche B Shortfall
Determination Date is referred to as a "TRANCHE B CATCH UP DETERMINATION
DATE". If as of a Tranche B Catch Up Determination Date, the applicable
Tranche B Target Amount for such Tranche B Catch Up Determination Date is
met or exceeded, then the Tranche B Shortfall Shares which did not vest on
such Tranche B Shortfall Determination Date shall immediately become Vested
Shares on the Tranche B Catch Up Determination Date, it being agreed that
if the Tranche B Target Amount relating to such Tranche B Catch Up
Determination Date is not met, such Tranche B Shortfall Shares shall never
become vested. By way of example, if the Tranche B Shortfall Amount on the
First Determination Date is $104 million resulting in 258,367 Tranche B
Shortfall Shares, and as of the Second Determination Date (which, in this
example, is the Tranche B Catch Up Determination Date with respect to the
First Determination Date) the Second Tranche B Target Amount of Cumulative
Signed Purchasing Volume of $8,311 million is met, then the 258,367 Tranche
B Shortfall Shares relating to the First Determination Date which had
become a Shortfall Determination Date will become Vested Shares on the
Second Determination Date, provided however, that if as of the Second
Determination Date Cumulative Signed Purchasing Volume is less than $8,311
million, the 258,367 Tranche B Shortfall Shares relating to the First
Determination Date shall never become vested, even if as of the Third
Determination Date or the Fourth Determination Date the relevant Tranche B
Target Amount for such Determination Date is met or exceeded.
2.7 Forfeiture of Tranche B Shares. On and following any date on
which any Tranche B Shares cannot become Vested Shares pursuant to the
provisions of Section 2.6 of this Amendment, all such Tranche B Shares that
cannot become Vested Shares shall, without the payment of any consideration
by Parent or any further action by VHA or Parent, be forfeited by VHA to
Parent. Upon any such forfeiture of Tranche B Shares, VHA shall promptly
but in no event later than three business days after such forfeiture return
the shares so forfeited to Parent for cancellation.
2.8 Continuation of Vesting Provisions. In the event of a merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Parent pursuant to which
shares of Common Stock are converted into a different number or kind of
security or other property (other than cash), all Restricted Shares that
are not Vested Shares shall remain subject to the vesting provisions and
the Forfeiture Right described in this Article II, after equitably and
proportionately adjusting the provisions of this Article II to the number
and kind of securities or other property into which the Restricted Shares
have been converted pursuant to such corporate transaction. In the event of
a merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Parent pursuant
to which all shares of Common Stock are converted into cash, or a cash
tender offer for all shares of Common Stock is consummated as to all shares
of Common Stock, all Restricted Shares shall become Vested Shares.
ARTICLE III
REPRESENTATIONS, WARRANTIES
AND CERTAIN AGREEMENTS OF PARENT
Parent hereby represents and warrants to VHA, subject to the
exceptions specifically disclosed in writing in the disclosure letter
delivered by Parent dated as of the date hereof and certified by a duly
authorized officer of Parent (the "PARENT DISCLOSURE LETTER") (which Parent
Disclosure Letter shall be deemed to be representations and warranties to
VHA by Parent under this Section 3), as follows:
3.1 Organization of Parent.
(a) Parent and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority, and all requisite qualifications to do business as a foreign
corporation, to conduct its business in the manner in which its business is
currently being conducted, except where the failure to be so organized,
existing or in good standing or to have such power, authority or
qualifications would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
(b) The Restricted Shares, when issued and paid for as provided
in this Agreement, will be duly authorized and validly issued, fully paid
and nonassessable.
(c) Based in part on the representations made by VHA in Article
IV hereof, the issuance of the Restricted Shares solely to VHA in
accordance with this Agreement (assuming no change in currently applicable
law) is exempt from the registration and prospectus delivery requirements
of the Securities Act of 1933, as amended (the "1933 ACT").
3.2 Due Authorization.
(a) Parent has all requisite corporate power and authority to
enter into this Amendment and to consummate the transactions contemplated
hereby. The execution and delivery of this Amendment and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent. This Amendment has been
duly executed and delivered by Parent and, assuming the due authorization,
execution and delivery thereof by VHA, constitutes the valid and binding
obligation of Parent, enforceable against Parent in accordance with its
terms, except as enforceability may be limited by bankruptcy and other
similar laws affecting the rights of creditors generally and general
principles of equity.
(b) The execution and delivery of this Amendment by Parent does
not, and the performance of this Amendment by Parent will not, (i) conflict
with or violate the Parent Charter Documents, (ii) conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to Parent
or by which any of its properties is bound or affected, or (iii) result in
any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or impair Parent's
rights or alter the rights or obligations of any third party under, or give
to others any rights of termination, amendment, acceleration or
cancellation of; or result in the creation of an Encumbrance on any of the
properties or assets of Parent pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent is a party or by which Parent or
any of its properties are bound or affected, except, in the case of clauses
(ii) and (iii), for such conflicts, violations, breaches, defaults,
impairments, or rights which, individually or in the aggregate, would not
have a Material Adverse Effect on Parent or a material adverse effect on
Parent's ability to perform its obligations hereunder. There are no
consents, waivers or approvals under any of Parent's or any of its
subsidiaries' agreements, contracts, licenses or leases required to be
obtained in connection with the consummation of the transactions
contemplated hereby, which, if individually or in the aggregate not
obtained, would have a Material Adverse Effect on Parent or a material
adverse effect on Parent's ability to perform its obligations hereunder.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency
or commission or other governmental entity or instrumentality, foreign or
domestic ("GOVERNMENTAL ENTITY") is required to be obtained or made by
Parent in connection with the execution, delivery and performance of this
Amendment or the consummation of the transactions contemplated hereby,
except for (i) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal, foreign and state securities (or related) laws, and (ii) such
other consents, authorizations, filings, approvals and registrations which
if not obtained or made would not have a Material Adverse Effect on Parent
or have a material adverse effect on the ability of the parties hereto to
consummate or perform the transactions contemplated hereby.
3.3 Nasdaq Listing. Parent agrees to authorize for listing on the
Nasdaq Stock Market the Restricted Shares issuable in connection with this
Amendment, effective upon official notice of issuance.
3.4 Litigation. There are no claims, suits, actions or proceedings
pending or, to the knowledge of Parent, threatened against, relating to or
affecting Parent or any of its subsidiaries, before any Governmental Entity
or any arbitrator that seeks to restrain or enjoin the consummation of the
transactions contemplated by this Amendment.
3.5 Brokers' and Finders' Fees. Parent has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this
Amendment.
3.6 Anti-Takeover Protections. The Board of Directors of Parent has
taken all actions so that the restrictions contained in Section 203 of the
General Corporation Law of the State of Delaware applicable to a "business
combination" (as defined in such Section 203) will not apply to the
execution, delivery or performance of this Amendment. To Parent's
knowledge, no other anti-takeover, control share acquisition, fair price,
moratorium or other similar statute or regulation applies or purports to
apply to this Amendment or the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS, WARRANTIES
AND CERTAIN AGREEMENTS OF VHA
VHA hereby represents and warrants to Parent, subject to the
exceptions specifically disclosed in writing in the disclosure letter
delivered by VHA dated as of the date hereof and certified by a duly
authorized officer of VHA (the "VHA DISCLOSURE LETTER") (which VHA
Disclosure Letter shall be deemed to be representations and warranties to
Parent by VHA under this Article IV), as follows:
4.1 Organization, Good Standing and Qualification. VHA represents
that it is an entity duly organized, validly existing and in good standing
under the laws of the state of its formation and has all requisite power
and authority, and all requisite qualifications to do business as a foreign
entity, to conduct its business in the manner in which its business is
currently being conducted, except where the failure to be so organized,
existing or in good standing or to have such power, authority or
qualifications would not have a Material Adverse Effect on VHA.
4.2 Authorization.
(a) VHA has all requisite power and authority to enter into
this Amendment and to consummate the transactions contemplated hereby. The
execution and delivery of this Amendment and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of VHA. This Amendment has been duly executed and
delivered by VHA and constitutes the valid and binding obligations of VHA,
enforceable against VHA in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws
affecting the rights of creditors generally and general principles of
equity.
(b) The execution and delivery of this Amendment by VHA does
not, and the performance of this Amendment by VHA will not, (i) conflict
with or violate the certificate of incorporation, bylaws, operating
agreement or other organizational documents of VHA, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
VHA or by which any of its properties are bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or impair
VHA's rights or alter the rights or obligations of any third party under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of an Encumbrance on any of the
properties or assets of VHA pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which VHA is a party or by which VHA or any of
its properties are bound or affected, except, in the case of clauses (ii)
and (iii), for such conflicts, violations, breaches, defaults, impairments,
or rights which, individually or in the aggregate, would not have a
Material Adverse Effect on VHA or a material adverse effect on VHA's
ability to perform its obligations hereunder. There are no consents,
waivers or approvals under any of VHA's or any of its subsidiaries'
agreements, contracts, licenses or leases which are required to be obtained
in connection with the consummation of the transactions contemplated
hereby, which, if individually or in the aggregate not obtained, would have
a Material Adverse Effect on VHA or a material adverse effect on VHA's
ability to perform its obligations hereunder.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is
required to be obtained or made by VHA in connection with the execution and
delivery of this Amendment or the consummation of the transactions
contemplated hereby, except for (i) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under applicable federal, foreign and state securities (or related) laws,
and (ii) such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not have a Material
Adverse Effect on VHA or have a material adverse effect on the ability of
the parties hereto to consummate or perform the transactions contemplated
hereby.
4.3 Acquisition for Own Account. Except as previously disclosed to
Parent, the Restricted Shares to be delivered to VHA hereunder will be
acquired for VHA's own account, not as a nominee or agent, and not with a
view to the public resale or distribution thereof within the meaning of the
1933 Act, and VHA represents that it has no present intention or agreement
to sell, grant any participation in, or otherwise distribute any of the
Restricted Shares to be acquired by VHA hereunder in any public resale or
distribution within the meaning of the 1933 Act. VHA also represents that
it has not been formed for the specific purpose of acquiring the Restricted
Shares.
4.4 Disclosure of Information. VHA believes it has received or has
had full access to all the information it considers necessary or
appropriate to make an informed ownership decision with respect to the
Restricted Shares to be issued to VHA under this Agreement. VHA further has
had an opportunity to ask questions and receive answers from Parent
regarding the terms and conditions of the offering of the Restricted Shares
and to obtain additional information (to the extent Parent possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to VHA or to which VHA had
access. The foregoing, however, does not in any way limit or modify the
representations and warranties made by Parent in Article III.
4.5 Experience. VHA understands that ownership of the Restricted
Shares involves substantial risk. VHA: (i) has experience as owner of
securities of companies in the development stage and acknowledges that VHA
is able to fend for itself, can bear the economic risk of VHA's ownership
of the Restricted Shares and has such knowledge and experience in financial
or business matters that VHA is capable of evaluating the merits and risks
of ownership of the Restricted Shares and protecting its own interests in
connection with this ownership and/or (ii) has a preexisting personal or
business relationship with Parent and certain of its officers, directors or
controlling persons of a nature and duration that enables VHA to be aware
of the character, business acumen and financial circumstances of such
persons.
4.6 Accredited Investor Status. VHA is an "accredited investor"
within the meaning of Regulation D promulgated under the 1933 Act.
4.7 Restricted Securities. VHA understands that the Restricted
Shares will be characterized as "restricted securities" under the 1933 Act
inasmuch as they are being acquired from Parent in a transaction not
involving a public offering and that under the 1933 Act and applicable
regulations thereunder such securities may be resold without registration
under the 1933 Act only in certain limited circumstances. In this
connection, VHA represents that VHA is familiar with Rule 144 of the SEC,
as presently in effect, and understands the resale limitations imposed
thereby and by the 1933 Act.
4.8 No Solicitation. At no time was VHA presented with or solicited
by any publicly issued or circulated newspaper, mail, radio, television or
other form of general advertising or solicitation in connection with the
issuance or delivery of the Restricted Shares.
4.9 Further Limitations on Disposition. Without in any way limiting
the representations set forth above, VHA agrees not to make any disposition
of all or any portion of the Shares or the Vested Shares or of any interest
therein to any person or entity unless:
(a) there is then in effect a registration statement under the
1933 Act covering such proposed disposition of Shares or the Vested
Shares and such disposition is made in accordance with such
registration statement; or
(b) VHA shall have notified Parent of the proposed disposition
of the Shares or the Vested Shares and shall have furnished Parent
with a statement of the circumstances surrounding such proposed
disposition, and, at the expense of VHA or its transferee, with an
opinion of counsel, reasonably satisfactory to Parent, that such
disposition will not require registration of such securities under
the 1933 Act.
VHA acknowledges and agrees that Restricted Shares that are not
Vested Shares may not be sold, pledged, Encumbered, transferred, assigned
or otherwise disposed of in any manner.
4.10 Transfer of Restricted Shares. VHA agrees that it will not,
directly or indirectly, in a single transaction or series of related
transactions, without the prior written consent of Parent, sell, pledge,
Encumber, transfer, assign or otherwise dispose (each, a "TRANSFER") of
legal or beneficial ownership of any Restricted Shares to any person prior
to such time as they become Vested Shares pursuant to this Agreement. Any
purported Transfer in violation of the foregoing restriction shall be void
and Parent may, and may instruct the transfer agent of the Common Stock to,
refuse to record, whether on the stock records of Parent or otherwise, any
purported transfer of unvested Restricted Shares or recognize any purported
transferee of unvested Restricted Shares and Parent may issue stop transfer
orders with respect to any such Transfer of unvested Restricted Shares.
4.11 Legends. VHA understands and agrees that the certificates
evidencing the Shares and the Restricted Shares will bear legends
substantially similar to those set forth in paragraphs (a) and (b) below,
and that the certificates evidencing the Restricted Shares will bear a
legend substantially similar to those set forth in paragraph (c) below, in
addition to any other legend that may be required by applicable law, by
Parent's Certificate of Incorporation or Bylaws, or by any agreement
between Parent and VHA:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE
AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OTHERWISE PERMITTED
UNDER CONTRACTUAL RESTRICTIONS ON RESALE APPLICABLE TO THESE
SECURITIES IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
(b) THE SECURITIES REPRESENTED HEREBY MAY BE SUBJECT TO CERTAIN
RESTRICTIONS ON RESALE AND ON VOTING AND THE HOLDERS HEREOF MAY BE
BOUND BY CERTAIN RESTRICTIONS ON ACQUISITION OF THE ISSUER'S CAPITAL
STOCK PURSUANT TO AN AMENDED AND RESTATED COMMON STOCK AND WARRANT
AGREEMENT BETWEEN THE ORIGINAL HOLDER OF THESE SECURITIES AND THE
ISSUER, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER.
(c) PURSUANT TO THE TERMS OF AN AMENDED AND RESTATED COMMON
STOCK AND WARRANT AGREEMENT BETWEEN THE ORIGINAL HOLDER OF THESE
SECURITIES AND THE ISSUER, A COPY OF WHICH MAY BE OBTAINED FROM THE
ISSUER, THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD, PLEDGED,
ENCUMBERED OR OTHERWISE TRANSFERRED. THE ISSUER WILL NOT RECOGNIZE ON
ITS STOCK TRANSFER RECORDS ANY PURPORTED TRANSFEREE OF THE SECURITIES
REPRESENTED HEREBY.
The legend set forth in (a) above shall be removed by Parent from any
certificate evidencing Shares or Vested Shares upon delivery to Parent of
an opinion by counsel, reasonably satisfactory to Parent, to the effect
that a registration statement under the 1933 Act is at that time in effect
with respect to the legended security or to the effect that such security
can be freely transferred in a public sale without such a registration
statement being in effect and that such transfer will not jeopardize the
exemption or exemptions from registration pursuant to which Parent issued
the Shares or the Vested Shares when they were Restricted Shares. The
legend set forth in (b) above shall be removed by Parent from any
certificate evidencing Shares or Vested Shares upon delivery to Parent of
an opinion by counsel, reasonably satisfactory to Parent, to the effect
that the resale, voting and standstill restrictions contained in this
Agreement, as amended hereby, are no longer applicable to the holder of the
securities represented thereby. The legend set forth in (c) above shall be
removed by Parent from any certificate evidencing Restricted Shares which
have become Vested Shares.
4.12 Dividends for Restricted Shares. In the event that Parent
declares a dividend or other distribution to holders of its Common Stock,
any such dividend paid or distribution made in respect of Restricted Shares
that have not become Vested Shares shall be paid or made to an escrow
holder selected by Parent and reasonably satisfactory to VHA and held by
such person to be delivered either to VHA upon the vesting and delivery of
the Restricted Shares in respect of which such dividend or distribution was
made or to Parent upon the forfeiture of the Restricted Shares in respect
of which such dividend or distribution was made.
ARTICLE V
ADDITIONAL AMENDMENTS
5.1 Amendment of Voting Provisions. Section 6.1 of the Agreement is
hereby amended to read in its entirety as follows:
"6.1 Voting of Common Stock. VHA agrees that from and after the
date of the Closing through the fifth anniversary of the Closing (the
"FIFTH ANNIVERSARY"), and for as long after the Fifth Anniversary as
the outstanding shares of Common Stock (including Restricted Shares
and Vested Shares) beneficially owned by VHA together with all
"affiliates" (which for purposes of this Agreement (other than
Section 4.12) shall have the meaning given such term in Rule
144(a)(1) promulgated under the ▇▇▇▇ ▇▇▇) of VHA exceeds 35% of the
then outstanding Common Stock of Parent (the entire such period, the
"RESTRICTED PERIOD"), to the extent that the outstanding shares of
Common Stock (including outstanding Shares, Restricted Shares and
Vested Shares) beneficially owned by VHA together with all affiliates
of VHA exceeds 19.9% of the then outstanding Common Stock of Parent
(the shares (including outstanding Shares, Restricted Shares and
Vested Shares) in excess of such 19.9% threshold, "EXCESS Shares"),
VHA shall, and shall cause its affiliates to, vote all Excess Shares
it holds or is entitled to vote in proportion to the votes cast by
all other stockholders of Parent in connection with each matter
submitted to Parent's stockholders for approval, except that in the
cases of (i) a proposed Change of Control, (ii) the election of VHA's
designated nominees to the Board of Directors of Parent, or (iii) an
amendment of the Certificate of Incorporation of Parent that would
materially and adversely affect VHA as a Parent stockholder in a
manner different from the effect such amendment would have on other
Parent stockholders generally, VHA may vote without restriction a
number of shares of Common Stock (including Shares, Restricted Shares
and Vested Shares) it beneficially owns equal to the product of (A) a
fraction, the numerator of which is equal to (w) the number of shares
of Common Stock (including Shares, Restricted Shares and Vested
Shares) VHA beneficially owns on the record date used to determine
stockholders eligible to vote on such matter minus (x) the number of
Restricted Shares that are not Vested Shares on such date, and the
denominator of which is (y) the total number of shares of Common
Stock outstanding on such date minus (z) the number of Restricted
Shares that are not Vested Shares on such date, multiplied by (B) the
total number of shares of Common Stock outstanding on such date, and
any shares of Common Stock beneficially owned by VHA in excess of
such number shall be voted as Excess Shares. On all matters submitted
to Parent stockholders for approval other than those identified in
items (i), (ii) and (iii) of the preceding sentence, VHA shall, and
shall cause its affiliates to, vote all Excess Shares in proportion
to the votes cast by all other stockholders of Parent in connection
with each matter submitted to Parent stockholders' for approval,
including, without limitation, on any matters regarding equity-based
or other compensation plans of Parent, the issuance of capital stock
of Parent, amendments to the Certificate of Incorporation of Parent
other than as set forth in clause (iii) above, elections of directors
other than VHA's designated nominees to the Board of Directors, or
transactions involving interested or related parties. Notwithstanding
any voting restrictions set forth herein, the Board of Directors of
Parent may waive any voting restriction set forth herein with respect
to any particular matter. For purposes of this Agreement, "CHANGE OF
CONTROL" means the consummation of any transaction or series of
related transactions, including an acquisition of Parent by another
entity and any reorganization, merger, consolidation or share
exchange, that results in the beneficial owners of Parent's capital
stock immediately prior to the transaction or transactions holding
less than 50% of the voting power of Parent immediately after the
transaction or transactions, or a transaction or series of related
transactions which result in the sale, exchange, transfer,
acquisition or disposition of more than 50% of the assets of Parent.
5.2 Other Amendments.
(a) Section 6.2 of the Agreement shall be amended by deleting
the phrase "except pursuant to the Warrant."
(b) Section 6.4 of the Agreement shall be amended by deleting
the phrase, in two locations, "on a fully converted basis (taking into
account for VHA, all shares of Common Stock issuable upon exercise of the
Warrant)."
(c) Section 10.9 of the Agreement is hereby amended to
read in its entirety as follows:
"10.9 Entire Agreement. The Agreement, as amended by this
Amendment, together with all exhibits and schedules thereto and
hereto, and the Outsourcing Agreement constitute the entire agreement
and understanding of the parties with respect to the subject matter
thereof and hereof and supersedes any and all prior negotiations,
correspondence, agreements, understandings duties or obligations
between the parties with respect to the subject matter hereof."
ARTICLE VI
GENERAL PROVISIONS
6.1 Reaffirmation. The Agreement, as amended hereby, is in all
respects ratified, reaffirmed and remade, and is in full force and effect.
6.2 Governing Law. This Amendment shall be governed by and construed
under the internal laws of the State of Delaware as applied to agreements
among Delaware residents entered into and to be performed entirely within
Delaware, without reference to principles of conflict of laws or choice of
laws.
6.3 Counterparts. This Amendment may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized respective officers as of
the date first written above.
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
VHA INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
[SIGNATURE PAGE TO AMENDMENT TO AMENDED AND RESTATED COMMON STOCK AND
WARRANT AGREEMENT]