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EXHIBIT 99.2
AMENDED AND RESTATED COMMON STOCK AND WARRANT AGREEMENT
This AMENDED AND RESTATED COMMON STOCK AND WARRANT AGREEMENT (this
"AGREEMENT") made and entered into as of March 30, 2000, and amended and
restated as of May 24, 2000, 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 the date of the amendment and restatement of this Agreement (the "OUTSOURCING
AGREEMENT"). Capitalized terms in this Agreement which are not otherwise defined
in this Agreement shall have the meanings assigned to them in the Outsourcing
Agreement.
WHEREAS, the actions to be undertaken by VHA and UHC pursuant to the
Outsourcing Agreement (including, without limitation, the agreement to promote
and market the Exchange among Members, to develop new initiatives targeted
toward increasing Members' participation on the Exchange, to promote use of the
asset management and recovery services and related activities of Neoforma
Auction and Neoforma Plan, and to not directly or indirectly develop, promote,
contract for the development of, assist others to develop, or enter into any
agreement with any other person to provide to any of them, or promote to their
members, any Internet-based exchange related to Supply Chain Management Services
by acute or non-acute healthcare providers anywhere in the world other than the
Exchange) are important to the success of Parent and the Exchange operated by
Parent.
WHEREAS, Parent wishes to compensate VHA for the services it will render
pursuant to the Outsourcing Agreement and thereby better secure VHA's
fulfillment of its duties and obligations thereunder by issuing to VHA
46,267,530 shares of Parent's common stock, par value $0.001 per share ("COMMON
STOCK"), and a warrant to acquire 30,845,020 shares of Common Stock, exercisable
subject to the terms and conditions set forth in this Agreement and in such
warrant.
WHEREAS, the sole consideration being furnished by VHA in exchange for
the Shares (as defined in Section 1.2 hereof) and Warrant (as defined in Section
1.1 hereof) is the services to be provided by VHA pursuant to the Outsourcing
Agreement.
WHEREAS, VHA and UHC are organizations whose patrons are hospitals and
health care providers, who view e-commerce as an essential part of their
cooperative purchasing programs on behalf of their patrons for the future, and
who desire to more fully develop the services they render to their patrons
through this Agreement and the Outsourcing Agreement (the term "patron" is
defined in the Outsourcing Agreement).
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WHEREAS, based on the foregoing recitals, the parties hereto entered
into the Common Stock and Warrant Agreement, dated as of March 30, 2000 (the
"PRIOR AGREEMENT"), and desire to amend and restate their agreement as set forth
in this Agreement and to supersede the terms of the Prior Agreement with the
terms of this Agreement in all respects.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth in this
Agreement and the Outsourcing Agreement, the parties agree as follows:
ARTICLE I
AGREEMENT TO ISSUE STOCK
1.1 Authorization. As of the Closing (as defined below), Parent
will have authorized the issuance, pursuant to the terms and conditions of this
Agreement, of a total of 46,267,530 shares of Common Stock and of a Common Stock
warrant in the form attached hereto as Exhibit A (the "WARRANT") to acquire
30,845,020 shares of Common Stock (collectively, the "WARRANT STOCK") subject to
the conditions set forth in this Agreement and the Warrant.
1.2 Agreement to Issue the Shares. Parent will issue to VHA at
the Closing, subject to approval of Parent's stockholders, 46,267,530 shares of
Common Stock (the "SHARES"). VHA's right to fully enjoy beneficial ownership of
certain of the Shares shall be subject to a substantial risk of forfeiture to
the extent, and in the manner, described in Section 1.5 of this Agreement.
1.3 Agreement to Issue the Warrant. Parent will issue to VHA at
the Closing, subject to approval of Parent's stockholders, the Warrant to
acquire up to 30,845,020 shares (subject to adjustment as provided in the
Warrant) of Warrant Stock at an exercise price per share of $0.01 (subject to
adjustment as provided in the Warrant), subject to vesting as set forth therein.
1.4 Anti-Dilution Adjustments. The number of shares of Common
Stock represented by the Shares and the number of shares of Common Stock
issuable upon exercise of the Warrant 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 Closing.
1.5 Forfeiture of Shares.
(a)(i) Thirty-three percent of the aggregate number of
Shares issued to VHA pursuant to Section 1.2 shall be fully vested, and shall
not be subject to any risk of forfeiture, upon their issuance.
(ii) Sixty-seven percent of the aggregate number of
Shares issued to VHA pursuant to Section 1.2 shall be subject to forfeiture by
VHA to Parent pursuant to the terms of this Section 1.5(a)(ii). On each
Determination Date (as defined below), 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, 16.75% of the aggregate number of Shares issued to VHA
pursuant to Section
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1.2 , if both (i) on the January 31 immediately prior to such Determination Date
(a "MEASURING DATE"), the number of Healthcare Organizations (as defined in the
Warrant) that are members or patrons of VHA ("VHA HCOS"), that Signed-Up (as
defined in the Warrant) with Parent on or prior to such Measuring Date and did
not terminate their Contract (as defined below) on or prior to such Measuring
Date is less than the Target Number (as defined below) of VHA HCOs for such
Measuring Date, and (ii) the Cumulative Signed Purchasing Volume (as defined
below) as of such Determination Date is less than the Target Purchasing Volume
(as defined below) for the one year period ending on the Measuring Date which is
immediately prior to such Determination Date. A "DETERMINATION DATE" shall be
each of April 1, 2001, April 1, 2002, April 1, 2003 and April 1, 2004. The
"TARGET NUMBER" of VHA HCOs for the Measuring Date 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; and for the Measuring Date January 31,
2004, is 67 VHA HCOs. The "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; and for the one year period ending on the Measuring Date January 31,
2004, is $2.21 billion. "CUMULATIVE SIGNED PURCHASING VOLUME" means, as of any
Determination Date, the aggregate dollar volume of purchases during the one year
period ending on the Measuring Date immediately preceding such Determination
Date by VHA HCOs that Signed-Up with Parent on or prior to such 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
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 Cumulative Signed Purchasing Volume being calculated.
"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 the Warrant) of an Internet-based system for the acquisition of
Novation LLC contracted products by such VHA HCO.
(b) VHA shall require any proposed transferee of Shares
that are subject to forfeiture under Section 1.5 (a)(ii) to agree that such
transferred Shares will remain subject to forfeiture to the extent provided in
such Section.
(c) 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 this Section 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 this Section regarding forfeiture of Shares shall
terminate, unless VHA elects to waive the provisions of this Section 1.5(c) no
later than 30 days before the consummation of such transaction.
1.6 Tax Reporting. Parent and VHA agree that the Shares and
Warrant to be issued to VHA pursuant to Sections 1.2 and 1.3, respectively,
constitute consideration for the services to be provided by VHA pursuant to the
Outsourcing Agreement. Parent and VHA agree
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to report the vesting of the Shares and Warrant as compensation for services
rendered for all income tax purposes and shall not make any inconsistent
statement or adjustment on any tax return or during the course of any tax audit.
ARTICLE II
CLOSING
2.1 Closing. The issuance of the Shares and the Warrant 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, which shall
be no later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VII and Article VIII, or at such other date,
time and location as Parent and VHA mutually agree upon (which time and place
are referred to in this Agreement as the "CLOSING"). At the Closing, Parent will
deliver to VHA certificates representing the Shares and the Warrant.
ARTICLE III
REPRESENTATIONS AND WARRANTIES 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) Other than the corporations identified in Part 3.1 of the
Parent Disclosure Letter, neither Parent nor any of the other corporations
identified in Part 3.1 of the Parent Disclosure Letter owns any capital stock
of, or any equity interest of any nature in, any corporation, partnership, joint
venture arrangement or other business entity, other than the entities identified
in Part 3.1 of the Parent Disclosure Letter, except for passive investments in
equity interests of public companies as part of the cash management program of
Parent. Neither Parent nor any of its subsidiaries is obligated to make any
material future investment in or capital contribution to any other entity. Part
3.1 of the Parent Disclosure Letter indicates the jurisdiction of organization
of each entity listed therein and Parent's direct or indirect equity interest
therein.
(c) Parent has delivered or made available to Novation a true
and correct copy of the Certificate of Incorporation (including any Certificates
of Designation) and Bylaws of Parent and similar governing instruments of each
of its subsidiaries, each as amended to date (collectively, the "PARENT CHARTER
DOCUMENTS"), and each such instrument is in full force and
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effect. Neither Parent nor any of its subsidiaries is in violation of any of the
provisions of the Parent Charter Documents.
3.2 Capitalization.
(a) The authorized capital stock of Parent consists solely of
200,000,000 shares of Common Stock, of which there were 69,092,732 shares issued
and outstanding as of the close of business on May 16, 2000, and 5,000,000
shares of Preferred Stock, par value $0.001 per share, of which no shares are
issued or outstanding. All outstanding shares of Common Stock are duly
authorized, validly issued, fully paid and nonassessable and are not subject to
any right of rescission or preemptive rights created by statute, the Parent
Charter Documents or any agreement or document to which Parent is a party or by
which it is bound. As of the date of this Agreement, there are no shares of
Common Stock held in treasury by Parent.
(b) As of the close of business on May 16, 2000, (i) 7,315,539
shares of Common Stock are subject to issuance pursuant to outstanding options
("PARENT OPTIONS") to purchase Common Stock under Parent's 1997 Stock Plan and
1999 Equity Incentive Plan ("PARENT STOCK OPTION PLANS") for an aggregate
exercise price of $45,840,941, (ii) 135,000 shares of Common Stock are subject
to issuance pursuant to Parent Options other than pursuant to the Parent Stock
Option Plans for an aggregate exercise price of $1,345,938, (iii) 1,081,792
shares of Common Stock are subject to issuance pursuant to Parent Options other
than pursuant to the Parent Stock Option Plans from the Pharos and EquipMD
acquisitions for an aggregate exercise price of $3,384,412, and (iv) 750,000
shares of Parent Common Stock are reserved for future issuance under Parent's
1998 Equity Employee Stock Purchase Plan ("PARENT ESPP"). Parent has made
available to VHA an accurate and complete copy of each of Parent Stock Option
Plans and the form of all stock option agreements evidencing Parent Options. All
shares of Common Stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.
Other than as set forth on Part 3.2(b) of the Parent Disclosure Letter, there
are no commitments or agreements of any character to which Parent is bound
obligating Parent to accelerate the vesting of any Parent Option as a result of
the consummation of the transactions contemplated by this Agreement.
(c) All outstanding shares of Parent Common Stock, all
outstanding Parent Options, and all outstanding shares of capital stock of each
subsidiary of Parent have been issued and granted in material compliance with
(i) all applicable securities laws and other applicable material Legal
Requirements and (ii) all material requirements set forth in applicable
agreements or instruments. For the purposes of this Agreement, "LEGAL
REQUIREMENTS" means any federal, state, local, municipal, foreign or other law,
statute, constitution, principle of common law, resolution, ordinance, code,
edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Entity (as defined in Section 3.4).
(d) The Shares and Warrant, when issued and paid for as provided
in this Agreement, will be duly authorized and validly issued, fully paid and
nonassessable. The Warrant Stock, when issued and paid for as provided in this
Agreement and the Warrant, will be duly authorized and validly issued, fully
paid and nonassessable.
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(e) Based in part on the representations made by VHA in Section
4 hereof, the offer and sale of the Shares and the Warrant solely to VHA in
accordance with this Agreement and (assuming no change in currently applicable
law or the Warrant, and no transfer of the Warrant by the holder thereof and no
commission or other remuneration is paid or given, directly or indirectly, for
soliciting the exercise of the Warrant) the issuance of the Warrant Stock is
exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (the "1933 ACT").
3.3 Obligations With Respect to Capital Stock. Except as set
forth in Section 3.2 or Part 3.3 of the Parent Disclosure Letter, there are no
equity securities, partnership interests or similar ownership interests of any
class of Parent equity security, or any securities exchangeable or convertible
into or exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. All stock and
rights to purchase stock of any subsidiary of Parent are owned free and clear of
all Encumbrances. Except as set forth in Section 3.2 or Part 3.2 or Part 3.3 of
the Parent Disclosure Letter, there are no subscriptions, options, warrants,
equity securities, partnership interests or similar ownership interests, calls,
rights (including preemptive rights), commitments or agreements of any character
to which Parent or any of its subsidiaries is a party or by which it is bound
obligating Parent or any of its subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or
cause the repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of Parent or any of its
subsidiaries or obligating Parent or any of its subsidiaries to grant, extend,
accelerate the vesting of or enter into any such subscription, option, warrant,
equity security, call, right, commitment or agreement. There are no registration
rights, and there is no shareholder agreement, investor agreement, voting trust,
proxy, rights agreement, "poison pill" anti-takeover plan or other agreement or
understanding to which Parent is a party or by which it is bound with respect to
any equity security of any class of Parent or with respect to any equity
security, partnership interest or similar ownership interest of any class of any
of its subsidiaries.
3.4 Due Authorization.
(a) Parent has all requisite corporate power and authority to
enter into this Agreement and the Outsourcing Agreement, to issue the Warrant
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Outsourcing Agreement, the
issuance of the Warrant and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Parent, subject only to the approval by Parent's stockholders of
the issuance of Common Stock pursuant to this Agreement and the Warrant. The
affirmative vote of the holders of a majority in interest of the stock present
or represented by proxy at the Parent stockholders' meeting (the "PARENT
STOCKHOLDERS' MEETING") called to consider approval of the issuance of the
Common Stock pursuant to this Agreement and the Warrant (the "PARENT STOCKHOLDER
APPROVAL") is sufficient for Parent's stockholders to approve the issuance of
Common Stock pursuant to this Agreement and the Warrant, and no other approval
of any holder of any securities of Parent is required in connection with the
consummation of the transactions contemplated hereby. This Agreement and the
Outsourcing Agreement have each been duly executed and delivered by Parent and,
subject to approval of Parent stockholders in the case of this Agreement and the
issuance of the Warrant and, assuming the due authorization, execution and
delivery thereof by Novation, HPPI, VHA and UHC, as applicable, constitute the
valid and binding obligations of Parent, enforceable against Parent in
accordance with their terms, except as
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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 Agreement and the
Outsourcing Agreement by Parent does not, and the performance of this Agreement
and the Outsourcing Agreement by Parent will not, (i) conflict with or violate
the Parent Charter Documents, (ii) subject to obtaining the Parent Stockholder
Approvals and compliance with the requirements set forth in Section 3.4(c),
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. Part 3.4(b) of the Parent Disclosure Letter lists all
consents, waivers and 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.
(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 Agreement 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 the HSR Act and the securities or antitrust
laws of any foreign country, 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 the transactions contemplated
hereby.
3.5 SEC Filings; Parent Financial Statements.
(a) Parent has filed all forms, reports and documents required
to be filed by Parent with the SEC since the effective date of the Registration
Statement of Parent's initial public offering, and has made available to Parent
such forms, reports and documents in the form filed with the SEC. All such
required forms, reports and documents (including those that Parent may file
subsequent to the date hereof) and the Parent Initial Registration Statement are
referred to herein as the "PARENT SEC REPORTS." As of their respective dates,
the Parent SEC Reports (i) were prepared in accordance with the requirements of
the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934
ACT"), as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Parent SEC Reports, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of
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the circumstances under which they were made, not misleading, except to the
extent corrected prior to the date of this Agreement by a subsequently filed
Parent SEC Report. None of Parent's subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Parent SEC Reports (the
"PARENT FINANCIALS"), including any Parent SEC Reports filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 1O-Q, 8-K or any successor form under the ▇▇▇▇ ▇▇▇) and (iii) fairly
presented the consolidated financial position of Parent and its subsidiaries as
at the respective dates thereof and the consolidated results of Parent's
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements may not contain footnotes and were or are subject
to normal and recurring year-end adjustments. The balance sheet of Parent
contained in Parent SEC Reports as of December 31, 1999 is hereinafter referred
to as the "PARENT BALANCE SHEET." Except as disclosed in the Parent Financials,
since the date of the Parent Balance Sheet neither Parent nor any of its
subsidiaries has any liabilities required under GAAP to be set forth on a
balance sheet (absolute, accrued, contingent or otherwise) which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of Parent and its subsidiaries taken as a
whole, except for liabilities incurred since the date of the Parent Balance
Sheet in the ordinary course of business consistent with past practices and
liabilities incurred in connection with this Agreement.
3.6 Absence of Certain Changes or Events. Since the date of the
Parent Balance Sheet there has not been (i) any Material Adverse Effect with
respect to Parent, (ii) any declaration, setting aside or payment of any
dividend on, or other distribution (whether in cash, stock or property) in
respect of, any of Parent's or any of its subsidiaries' capital stock, or any
purchase, redemption or other acquisition by Parent of any of Parent's capital
stock or any other securities of Parent or its subsidiaries or any options,
warrants, calls or rights to acquire any such shares or other securities except
for repurchases from employees following their termination pursuant to the terms
of their pre-existing stock option or purchase agreements, (iii) any split,
combination or reclassification of any of Parent's or any of its subsidiaries'
capital stock, (iv) any granting by Parent or any of its subsidiaries of any
increase in compensation or fringe benefits to any of their officers or
employees, or any payment by Parent or any of its subsidiaries of any bonus to
any of their officers or employees, or any granting by Parent or any of its
subsidiaries of any increase in severance or termination pay or any entry by
Parent or any of its subsidiaries into, or material modification or amendment
of, any currently effective employment, severance, termination or
indemnification agreement or any agreement the benefits of which are contingent
or the terms of which are materially altered upon the occurrence of a
transaction involving Parent of the nature contemplated hereby, in each case,
other than in the ordinary course of business consistent with past practice, (v)
any material change or alteration in the policy of Parent relating to the
granting of stock options or other equity compensation to its employees and
consultants other than in the ordinary course of business consistent with past
practice, (vi) entry by Parent or any of its subsidiaries into, or material
modification, amendment or cancellation of, any licensing or other agreement
with regard to the acquisition, distribution or licensing of any material
Intellectual Property other than licenses, distribution agreements, advertising
agreements, or other similar agreements entered into in the ordinary course of
business consistent with past practice, (vii) any material change by Parent in
its accounting
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methods, principles or practices, except as required by concurrent changes in
GAAP, or (viii) any material revaluation by Parent of any of its material
assets, including writing off notes or accounts receivable other than in the
ordinary course of business.
3.7 Taxes.
(a) Parent and each of its subsidiaries have timely filed all
material federal, state, local and foreign returns, estimates, information
statements and reports ("RETURNS") relating to Taxes required to be filed by or
on behalf of Parent and each of its subsidiaries with any Tax authority, such
Returns are true, correct and complete in all material respects, and Parent and
each of its subsidiaries have paid all Taxes shown to be due on such Returns.
(b) Parent and each of its subsidiaries have withheld with
respect to its employees all federal and state income taxes, Taxes pursuant to
the Federal Insurance Contribution Act ("FICA"), Taxes pursuant to the Federal
Unemployment Tax Act ("FUTA") and other Taxes required to be withheld, except
such Taxes which are not material to Parent.
(c) Neither Parent nor any of its subsidiaries has been
delinquent in the payment of any material Tax nor is there any material Tax
deficiency outstanding, proposed or assessed against Parent or any of its
subsidiaries, nor has Parent or any of its subsidiaries executed any unexpired
waiver of any statute of limitations on or extending the period for the
assessment or collection of any Tax.
(d) No audit or other examination of any Return of Parent or any
of its subsidiaries by any Tax authority is presently in progress, nor has
Parent or any of its subsidiaries been notified of any request for such an audit
or other examination.
(e) No adjustment relating to any Returns filed by Parent or any
of its subsidiaries has been proposed in writing formally or informally by any
Tax authority to Parent or any of its subsidiaries or any Tax or financial
representative thereof.
(f) Neither Parent nor any of its subsidiaries has any liability
for unpaid Taxes which has not been accrued for or reserved on the Parent
Balance Sheet in accordance with GAAP, whether asserted or unasserted,
contingent or otherwise, which is material to Parent, other than any liability
for unpaid Taxes that may have accrued since the date of the Parent Balance
Sheet in connection with the operation of the business of Parent and its
subsidiaries in the ordinary course.
(g) There is no agreement, plan or arrangement to which Parent
or any of its subsidiaries is a party, including this Agreement and the
agreements entered into in connection with this Agreement, covering any employee
or former employee of Parent or any of its subsidiaries that, individually or
collectively, would be reasonably likely to give rise to the payment of any
amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of
the Code. There is no contract, agreement, plan or arrangement to which the
Parent is a party or by which it is bound to compensate any individual for
excise taxes paid pursuant to Section 4999 of the Code.
(h) Neither Parent nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any
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disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the
Code) owned by Parent.
(i) Neither Parent nor any of its subsidiaries is party to or
has any obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement.
(j) Except as may be required as a result of the transactions
contemplated hereby, Parent and its subsidiaries have not been and will not be
required to include any adjustment in Taxable income for any Tax period (or
portion thereof) pursuant to Section 481 of the Code or any comparable provision
under state or foreign Tax laws as a result of transactions, events or
accounting methods employed prior to the Closing.
(k) None of Parent's or its subsidiaries' assets are tax exempt
use property within the meaning of Section 168(h) of the Code.
(l) Parent has not been distributed in a transaction qualifying
under Section 355 of the Code within the last two years, nor has Parent
distributed any corporation in a transaction qualifying under Section 355 of the
Code within the last two years.
For the purposes of this Agreement, "TAX" or "TAXES" refers to
(i) any and all federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities relating to taxes,
including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes, together
with all interest, penalties and additions imposed with respect to such amounts,
(ii) any liability for payment of any amounts of the type described in clause
(i) as a result of being a member of an affiliated consolidated, combined or
unitary group, and (iii) any liability for amounts of the type described in
clauses (i) and (ii) as a result of any express or implied obligation to
indemnify another person or as a result of any obligations under any agreements
or arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity.
3.8 Title to Properties.
(a) All real property leases to which Parent is a party and each
amendment thereto that is in effect as of the date of this Agreement that
provide for annual payments in excess of $250,000 are in full force and effect
and are valid and enforceable in accordance with their respective terms, and
there is not, under any of such leases, any existing default or event of default
(or event which with notice or lapse of time, or both, would constitute a
default) that would give rise to a material claim against Parent which could
reasonably be expected to have a Material Adverse Effect on Parent.
(b) Parent has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Encumbrances, except as reflected in Parent
Financials and except where the failure to have valid title or a valid leasehold
interest would not have a Material Adverse Effect on Parent.
3.9 Intellectual Property. For the purposes of this Agreement,
the following terms have the following definitions:
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"INTELLECTUAL PROPERTY" means any or all of the following and
all rights in, arising out of, or associated therewith: (i) all United States,
international and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary information,
know how, technology, technical data and customer lists, and all documentation
relating to any of the foregoing; (iii) all copyrights, copyrights registrations
and applications therefor, and all other rights corresponding thereto throughout
the world; (iv) all industrial designs and any registrations and applications
therefor throughout the world; (v) all trade names, URLs, logos, common law
trademarks and service marks, trademark and service ▇▇▇▇ registrations and
applications therefor throughout the world; (vi) all databases and data
collections and all rights therein throughout the world; (vii) all moral and
economic rights of authors and inventors, however denominated, throughout the
world, and (viii) any similar or equivalent rights to any of the foregoing
anywhere in the world.
"PARENT INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or exclusively licensed to, Parent or one of its
subsidiaries.
"PARENT REGISTERED INTELLECTUAL PROPERTY" means all of the
Registered Intellectual Property owned by, or filed in the name of, Parent or
one of its subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (i) patents and patent applications (including
provisional applications); (ii) registered trademarks, applications to register
trademarks, intent-to-use applications, or other registrations or applications
related to trademarks; (iii) registered copyrights and applications for
copyright registration; and (iv) any other Intellectual Property that is the
subject of an application, certificate, filing, registration or other document
issued, filed with, or recorded by any Governmental Entity.
(a) No material Parent Intellectual Property or product or
service of Parent is subject to any proceeding, agreement, or stipulation to
which Parent is a party, or any outstanding decree, order or judgment, which
arose out of any proceeding to which Parent was either a party or of which
Parent has knowledge, restricting in any manner the use, transfer, or licensing
thereof by Parent, or which may affect the validity, use or enforceability of
such Parent Intellectual Property.
(b) Each material item of Parent Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance and
renewal fees currently due in connection with such Parent Registered
Intellectual Property have been made and all necessary documents, recordations
and certificates in connection with such Parent Registered Intellectual Property
have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Parent Registered Intellectual Property,
except, in each case, as would not materially adversely affect such item of
Parent Registered Intellectual Property.
(c) Parent or one of its subsidiaries owns and has good and
exclusive title to, or has license sufficient for the conduct of its business as
currently conducted to, each material item of Parent Intellectual Property free
and clear of any Encumbrance (excluding licenses and related restrictions).
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(d) Neither Parent nor any of its subsidiaries has transferred
ownership of, or granted any exclusive license with respect to, any Intellectual
Property that is or was material Parent Intellectual Property, to any third
party.
(e) Part 3.9(e) of the Parent Disclosure Letter lists all
material contracts, licenses and agreements to which Parent is a party (i)
pursuant to which any exclusive rights with respect to Parent Intellectual
Property are licensed, granted or transferred to any third party; or (ii)
pursuant to which a third party has licensed, transferred, sold or distributed
any material Intellectual Property to Parent.
(f) The operation of the business of Parent as such business
currently is conducted, including Parent's design, development, marketing and
sale of the products or services of Parent (including with respect to products
currently under development) has not, does not and will not materially infringe
or materially misappropriate the Intellectual Property of any third party or, to
its knowledge, constitute unfair competition or trade practices under the laws
of any jurisdiction.
(g) Parent has not received written notice from any third party
that the operation of the business of Parent or any act, product or service of
Parent, infringes or misappropriates the Intellectual Property of any third
party or constitutes unfair competition or trade practices under the laws of any
jurisdiction, which allegation, if true, would have a Material Adverse Effect on
Parent.
(h) To the knowledge of Parent, no person has or is infringing
or misappropriating any Parent Intellectual Property, which infringement or
misappropriation, individually or in the aggregate, would have a Material
Adverse Effect on Parent.
(i) Parent and its subsidiaries have taken reasonable steps to
protect Parent's and its subsidiaries' rights in Parent's and such subsidiaries'
confidential information and trade secrets, except where the failure to do so
would not have a Material Adverse Effect on Parent.
(j) None of the Parent Intellectual Property or product or
service of Parent contains any defect in connection with processing data
containing dates in leap years or in the year 2000 or any preceding or following
years, which defects, individually or in the aggregate, would have a Material
Adverse Effect on Parent.
3.10 Compliance with Laws; Certain Agreements.
(a) Neither Parent nor any of its subsidiaries is in conflict
with, or in default or in violation of (i) any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its subsidiaries or by which
Parent or any of its subsidiaries or any of their respective properties is bound
or affected, or (ii) any note, bond, mortgage, indenture, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or
any of its subsidiaries is a party or by which Parent or any of its subsidiaries
or its or any of their respective properties is bound or affected, except for
conflicts, violations and defaults that, individually or in the aggregate, would
not have a Material Adverse Effect on Parent. To Parent's knowledge, no
investigation or review by any Governmental Entity is pending or has been
threatened in a writing delivered to Parent against Parent or any of its
subsidiaries. There is no agreement with any Governmental Entity, judgment,
injunction, order or decree binding upon Parent or any of its subsidiaries which
has or could reasonably be expected to have the effect of
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prohibiting or materially impairing any material business practice of Parent or
any of its subsidiaries, or any acquisition of material property by Parent or
any of its subsidiaries.
(b) Parent and its subsidiaries hold all permits, licenses,
exemptions, orders and approvals from governmental authorities that are material
to or required for the operation of the business of Parent as currently
conducted (collectively, the "PARENT PERMITS"), and are in compliance with the
terms of the Parent Permits, except where the failure to hold such Parent
Permits, or be in such compliance, would not, individually or in the aggregate,
have a Material Adverse Effect on Parent.
3.11 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 Agreement or which could reasonably be
expected, either singularly or in the aggregate with all such claims, actions or
proceedings, to have a Material Adverse Effect on Parent following the
transactions contemplated hereby or have a material adverse effect on the
ability of the parties hereto to consummate the transactions contemplated
hereby.
3.12 Employee Benefit Plans.
(a) Definitions. With the exception of the definition of
"Affiliate" set forth in Section 3.12(a)(i) below (which definition shall apply
only to this Section 3.12), for purposes of this Agreement, the following terms
shall have the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity
under common control with Parent within the meaning of Section 414(b), (c), (m)
or (o) of the Code and the regulations issued thereunder;
(ii) "PARENT EMPLOYEE PLAN" shall mean any plan,
program, policy, practice, contract, agreement or other arrangement providing
for compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written or unwritten or otherwise, funded or unfunded,
including without limitation, each "EMPLOYEE BENEFIT PLAN," within the meaning
of Section 3(3) of ERISA which is maintained, contributed to, or required to be
contributed to, by Parent or any Affiliate for the benefit of any Parent
Employee;
(iii) "PARENT EMPLOYEE" shall mean any current, former,
or retired employee, officer, or director of Parent or any Affiliate;
(iv) "PARENT EMPLOYEE AGREEMENT" shall mean each
management, employment, severance, consulting, relocation, repatriation,
expatriation, visas, work permit or similar agreement or contract between Parent
or any Affiliate and any Parent Employee or consultant (excluding any offer
letter or other agreement that does not subject Parent to any potential
liability in excess of $200,000);
(v) "INTERNATIONAL PARENT EMPLOYEE PLAN" shall mean each
Parent Employee Plan that has been adopted or maintained by Parent, whether
informally or formally, for the benefit of Parent Employees outside the United
States; and
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(vi) "PENSION PLAN" shall mean each Parent Employee Plan
which is an "employee pension benefit plan," within the meaning of Section 3(2)
of ERISA.
(b) Schedule. Part 3.12 of the Parent Disclosure Letter contains
an accurate and complete list of each Parent Employee Plan. Parent does not have
any plan or commitment to establish any new Parent Employee Plan, to modify any
Parent Employee Plan (except to the extent required by law or to conform any
such Parent Employee Plan to the requirements of any applicable law, or as
required by this Agreement), or to enter into any Parent Employee Plan, nor does
it have any intention or commitment to do any of the foregoing.
(c) Documents. Parent has provided or has made available to VHA:
(i) correct and complete copies of all documents embodying each Parent Employee
Plan (including all amendments thereto and written interpretations thereof);
(ii) the most recent annual actuarial valuations, if any, prepared for each
Parent Employee Plan; (iii) the three most recent annual reports (Form Series
5500 and all schedules and financial statements attached thereto), if any,
required under ERISA or the Code in connection with each Parent Employee Plan or
related trust; (iv) if the Parent Employee Plan is funded, the most recent
annual and periodic accounting of Parent Employee Plan assets; (v) the most
recent summary plan description together with the summary of material
modifications thereto, if any, required under ERISA with respect to each Parent
Employee Plan; (vi) all IRS determination, opinion, notification and advisory
letters, and rulings relating to Parent Employee Plans and copies of all
applications and correspondence to or from the IRS or the DOL with respect to
any Parent Employee Plan; (vii) all material written agreements and contracts
relating to each Parent Employee Plan, including, but not limited to,
administrative service agreements, group annuity contracts and group insurance
contracts; (viii) all communications material to any Parent Employee or Parent
Employees relating to any Parent Employee Plan and any proposed Parent Employee
Plans, in each case, relating to any amendments, terminations, establishments,
increases or decreases in benefits, acceleration of payments or vesting
schedules or other events which would result in any material liability to
Parent; (ix) all COBRA forms and related notices; and (x) all registration
statements and prospectuses prepared in connection with each Parent Employee
Plan.
(d) Employee Plan Compliance. Except, in each case, as would
not, individually or in the aggregate, have a Material Adverse Effect on Parent
(i) Parent has performed in all material respects all obligations required to be
performed by it under, is not in default or violation of, and has no knowledge
of any default or violation by any other party to, each Parent Employee Plan,
and each Parent Employee Plan has been established and maintained in all
material respects in accordance with its terms and in compliance with all
applicable laws, statutes, orders, rules and regulations, including but not
limited to ERISA or the Code; (ii) each Parent Employee Plan intended to qualify
under Section 401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code has either received a favorable determination letter
from the IRS with respect to each such Plan as to its qualified status under the
Code or has remaining a period of time under applicable Treasury regulations or
IRS pronouncements in which to apply for such a determination letter and make
any amendments necessary to obtain a favorable determination and no event has
occurred which would adversely affect the status of such determination letter or
the qualified status of such Plan; (iii) no "prohibited transaction," within the
meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not
otherwise exempt under Section 408 of ERISA, has occurred with respect to any
Parent Employee Plan; (iv) there are no actions, suits or claims pending, or, to
the knowledge of Parent, threatened or reasonably anticipated (other than
routine claims for benefits)
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against any Parent Employee Plan or against the assets of any Parent Employee
Plan; (v) each Parent Employee Plan can be amended, terminated or otherwise
discontinued after the Closing in accordance with its terms, without liability
to Parent or any of its Affiliates (other than ordinary administration expenses
typically incurred in a termination event); (vi) there are no audits, inquiries
or proceedings pending or, to the knowledge of Parent, threatened by the IRS or
DOL with respect to any Parent Employee Plan; (vii) neither Parent nor any
Affiliate is subject to any material penalty or tax with respect to any Parent
Employee Plan under Section 402(i) of ERISA or Sections 4975 through 4980 of the
Code; and (viii) all contributions due from the Parent or any Affiliate with
respect to any of the Parent Employee Plans have been made as required under
ERISA or have been accrued on the Parent Balance Sheet.
(e) Pension Plans. Parent does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has Parent contributed to or
been required to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Parent Employee Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any reason,
except as may be required by COBRA or other applicable statute, and Parent has
never represented, promised or contracted (whether in oral or written form) to
any Parent Employee (either individually or to Parent Employees as a group) or
any other person that such Parent Employee(s) or other person would be provided
with retiree life insurance, retiree health or other retiree employee welfare
benefits, except to the extent required by statute.
(h) COBRA; FMLA. Except as would not have a Material Adverse
Effect on Parent, neither Parent nor any Affiliate has, prior to the Closing
violated any of the health care continuation requirements of COBRA, the
requirements of FMLA or any similar provisions of state law applicable to its
Employees.
(i) Effect of Transaction. The execution of this Agreement and
the consummation of the transactions contemplated hereby will not (either alone
or upon the occurrence of any additional or subsequent events) constitute an
event under any Parent Employee Plan, Parent Employee Agreement, trust or loan
that will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any Parent Employee. No
payment or benefit which will or may be made by Parent or its Affiliates with
respect to any Parent Employee as a result of the transactions contemplated by
this Agreement will be characterized as an "excess parachute payment," within
the meaning of Section 280G(b)(1) of the Code or will be treated as a
nondeductible expense within the meaning of Section 162 of the Code.
(j) Employment Matters. Except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect on Parent,
Parent and each of its subsidiaries: (i) is in compliance in all material
respects with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to Parent Employees;
(ii) has
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withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to Parent Employees; (iii) has properly
classified independent contractors for purposes of federal and applicable state
tax laws, laws applicable to employee benefits and other applicable laws; (iv)
is not liable for any arrears of wages or any taxes or any penalty for failure
to comply with any of the foregoing; and (v) is not liable for any material
payment to any trust or other fund or to any governmental or administrative
authority, with respect to unemployment compensation benefits, social security
or other benefits or obligations for Parent Employees (other than routine
payments to be made in the normal course of business and consistent with past
practice). There are no pending, or, to Parent's knowledge, threatened material
claims or actions against Parent under any worker's compensation policy or
long-term disability policy. To Parent's knowledge, no Parent Employee has
violated in any material manner any employment contract, nondisclosure agreement
or noncompetition agreement by which such Parent Employee is bound due to such
Parent Employee being employed by Parent and disclosing to Parent or using trade
secrets or proprietary information of any other person or entity.
(k) Labor. No work stoppage or labor strike against Parent is
pending, threatened or reasonably anticipated. Parent does not know of any
activities or proceedings of any labor union to organize any Parent Employees.
There are no actions, suits, claims, labor disputes or grievances pending, or,
to the knowledge of Parent, threatened or reasonably anticipated relating to any
labor, safety or discrimination matters involving any Parent Employee, including
charges of unfair labor practices or discrimination complaints, which, if
adversely determined, would, individually or in the aggregate, result in any
material liability to Parent. Neither Parent nor any of its subsidiaries has
engaged in any unfair labor practices within the meaning of the National Labor
Relations Act. Parent is not presently, nor has it been in the past, a party to,
or bound by, any collective bargaining agreement or union contract with respect
to Employees and no collective bargaining agreement is being negotiated by
Parent.
(l) International Employee Plan. Each International Parent
Employee Plan has been established, maintained and administered in material
compliance with its terms and conditions and with the requirements prescribed by
any and all statutory or regulatory laws that are applicable to such
International Parent Employee Plan. Furthermore, no International Parent
Employee Plan has unfunded liabilities, that as of the Closing, will not be
offset by insurance or fully accrued. Except as required by law, no condition
exists that would prevent Parent from terminating or amending any International
Parent Employee Plan at any time for any reason.
3.13 Environmental Matters. During the period that Parent has
leased or owned its properties or leased, owned or operated any facilities,
there have been no disposals, releases or threatened releases of Hazardous
Materials (as defined below) on, from or under any such properties or facilities
that would have a Material Adverse Effect on Parent. Parent has no knowledge of
any presence, disposals, releases or threatened releases of Hazardous Materials
on, from or under any of such properties or facilities, which may have occurred
prior to Parent or any of its subsidiaries having taken possession of any of
such properties or facilities which might reasonably be expected to have a
Material Adverse Effect on Parent. None of the properties or facilities
currently leased or owned by Parent or any of its subsidiaries or any properties
or facilities previously leased or owned by Parent or any of its subsidiaries is
in violation of any federal, state or local law, ordinance, regulation or order
relating to industrial hygiene or to the environmental conditions on, under or
about such properties or facilities, including, but not limited to, soil and
ground water condition which violation would have a Material Adverse
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Effect on Parent. During Parent's occupancy of any properties or facilities
owned or leased at any time by Parent, neither Parent, nor to Parent's
knowledge, any third party, has used, generated, manufactured, released or
stored on, under or about such properties and facilities or transported to or
from such properties and facilities any Hazardous Materials that would have or
is reasonably likely to have a Material Adverse Effect on Parent. During the
time that Parent or any of its subsidiaries has owned or leased the properties
and facilities currently occupied by it or any properties and facilities
previously occupied by Parent or any of its subsidiaries, there has been no
material litigation, proceeding or administrative action brought or threatened
against Parent or any of its subsidiaries, or any material settlement reached by
Parent or any of its subsidiaries with, any party or parties alleging the
presence, disposal, release or threatened release of any Hazardous Materials on,
from or under any of such properties or facilities.
For purposes of this Agreement, the terms "DISPOSAL," "RELEASE,"
and "THREATENED RELEASE" have the definitions assigned thereto by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601 et seq., as amended ("CERCLA"). For the purposes of this
Section 3.13, "HAZARDOUS MATERIALS" mean any hazardous or toxic substance,
material or waste which is or becomes prior to the Closing Date, regulated
under, or defined as a "hazardous substance," "pollutant," "contaminant," "toxic
chemical," "hazardous material," "toxic substance" or "hazardous chemical" under
(i) CERCLA; (ii) the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. Section 11001 et seq.; (iii) the Hazardous Materials Transportation Act,
49 U.S.C. Section 1801, et seq.; (iv) the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq.; (v) the Occupational Safety and Health Act of 1970,
29 U.S.C. Section 651 et seq.; (vi) regulations promulgated under any of the
above statutes; or (vii) any other applicable federal, state or local statute,
ordinance, rule or regulation that has a scope or purpose similar to those
identified above.
3.14 Certain Agreements. Other than (i) this Agreement, (ii) the
Amended and Restated Common Stock and Warrant Agreement, dated as of the date of
this Agreement, between Parent and UHC (the "UHC AGREEMENT"), (iii) the
Outsourcing Agreement, and other related agreements, except as otherwise set
forth in Part 3.14 of the Parent Disclosure Letter, neither Parent nor any of
its subsidiaries is a party to or is bound by:
(a) other than as disclosed in Part 3.12 of the Parent
Disclosure Letter, any employment agreement or commitment with any officer or
member of Parent's Board of Directors, other than those that are terminable by
Parent or any of its subsidiaries on no more than thirty days notice without
liability or financial obligation, except to the extent general principles of
wrongful termination law may limit Parent's or any of its subsidiaries' ability
to terminate employees at will, or any consulting agreement;
(b) any material agreement of indemnification, any material
guaranty or any material instrument evidencing indebtedness for borrowed money
by way of direct loan, sale of debt securities or purchase money obligation;
(c) any agreement or obligation containing covenants purporting
to limit or which effectively limit the Parent's or any of its subsidiaries'
freedom to compete in any line of business or in any geographic area or which
would so limit Parent or any of its subsidiaries after the Closing or granting
any exclusive distribution or other exclusive rights;
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(d) any agreement or obligation currently in force relating to
the disposition or acquisition by Parent or any of its subsidiaries after the
date of this Agreement of a material amount of assets not in the ordinary course
of business, or pursuant to which Parent has any material ownership or
participation interest in any corporation, partnership, joint venture, strategic
alliance or other business enterprise other than Parent's subsidiaries;
(e) any agreement or obligation currently in force to provide
source code to any third party for any product or technology;
(f) any agreement or obligation with any affiliate of Parent; or
(g) any agreement or commitment currently in force providing for
capital expenditures by Parent or its subsidiaries in excess of $1,000,000.
The agreements required to be disclosed in the Parent Disclosure
Letter pursuant to clauses (a) through (g) above or pursuant to Section 3.9 or
filed with any Parent SEC Report ("PARENT CONTRACTS") are valid and in full
force and effect, except to the extent that such invalidity would not have a
Material Adverse Effect on Parent. Neither Parent nor any of its subsidiaries,
nor to Parent's knowledge, any other party thereto, is in breach, violation or
default under, and neither Parent nor any of its subsidiaries has received
written notice that it has breached, violated or defaulted, any of the terms or
conditions of any Parent Contract in such a manner as would have a Material
Adverse Effect on Parent.
3.15 Brokers' and Finders' Fees. Except for fees payable to
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., 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 Agreement or any transaction
contemplated hereby.
3.16 Insurance. Parent and each of its subsidiaries have
policies of insurance and bonds of the type and in amounts customarily carried
by persons conducting business or owning assets similar to those of the Parent
and its subsidiaries. There is no material claim pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds. All premiums due and payable
under all such policies have been paid and the Parent and its subsidiaries are
otherwise in compliance in all material respects with the terms of such policies
and bonds.
3.17 Disclosure. The information included or incorporation by
reference in the proxy statement (the "PROXY STATEMENT") to be mailed to
Parent's stockholders soliciting the Parent Stockholder Approval shall not, on
the date the Proxy Statement is mailed to Parent's stockholders, at the time of
the Parent Stockholders' Meeting or as of the Closing, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Parent
Stockholders' Meeting which has become false or misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the 1934
Act and the rules and regulations thereunder. If at any time prior to the
Closing, any event relating to Parent or any of its affiliates, officers or
directors should be discovered by Parent which is required to be set forth in a
supplement to the Proxy Statement, Parent shall promptly inform VHA.
Notwithstanding
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the foregoing, Parent makes no representation or warranty with respect to any
information supplied by Novation, HPPI, UHC or VHA which is contained in the
Proxy Statement.
3.18 Board Approval. As of the date of this Agreement, the Board
of Directors of Parent has approved this Agreement and recommends that the
stockholders of Parent approve the Parent Stockholder Approval.
3.19 Opinion of Financial Advisor. Parent's Board of Directors
has received an opinion from ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., dated as of the date of this
Agreement, to the effect that, as of such date, the Transaction is fair to
Parent from a financial point of view, a copy of the written opinion of which
will be delivered to VHA after receipt thereof by Parent. The transactions
contemplated by this Agreement, the UHC Agreement and the Outsourcing Agreement
are collectively referred to herein as the "TRANSACTION".
3.20 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 ("DELAWARE LAW") applicable to
a "business combination" (as defined in such Section 203) will not apply to the
execution, delivery or performance of this Agreement or the transactions
contemplated by this Agreement. To Parent's knowledge, no other anti-takeover,
control share acquisition, fair price, moratorium or other similar statute or
regulation ("TAKEOVER STATUTE") applies or purports to apply to this Agreement
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 Section 4), 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
Agreement and the Outsourcing Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Outsourcing Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of VHA. This Agreement and the Outsourcing Agreement have
each been duly executed and delivered by VHA and constitute the valid and
binding obligations of VHA, enforceable against VHA in accordance with their
terms, except as
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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 Agreement and the
Outsourcing Agreement by VHA does not, and the performance of this Agreement and
the Outsourcing Agreement by VHA will not, (i) conflict with or violate the
certificate of incorporation, bylaws, operating agreement or other
organizational documents of VHA, (ii) subject to compliance with the
requirements set forth in Section 4.2(c) with regard to VHA, 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. Except as set forth in a letter delivered by VHA
to Parent concurrently with the execution of this Agreement, no consents,
waivers and approvals under any of VHA's or any of its subsidiaries' agreements,
contracts, licenses or leases 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.
(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
Agreement or the Outsourcing Agreement or the consummation of the transactions
contemplated hereby or thereby, 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 the HSR
Act and the securities or antitrust laws of any foreign country, 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 the
transactions contemplated hereby.
4.3 Acquisition for Own Account. The Shares, Warrant and Warrant
Stock 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 Shares, Warrant or Warrant Stock 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 Shares, Warrant or Warrant Stock under this Agreement.
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 Shares, Warrant and
Warrant Stock 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 Shares, Warrant and
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Warrant Stock 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 Section 3.
4.5 Experience. VHA understands that ownership of the Shares,
Warrant and Warrant Stock 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 Shares, Warrant and Warrant Stock and has such knowledge and experience in
financial or business matters that VHA is capable of evaluating the merits and
risks of this ownership of the Shares, Warrant and Warrant Stock 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 Shares and
the Warrant are, and upon issuance under the Warrant, the Warrant Stock 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 Shares or the Warrant.
4.9 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, VHA further agrees not to make any
disposition of all or any portion of the Shares or Warrant Stock 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 Warrant Stock
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 Warrant Stock 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 that the Warrant is non-transferable to the extent it has not
vested.
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4.10 Legends. VHA understands and agrees that the certificates
evidencing the Shares, the Warrant and the Warrant Stock will bear legends
substantially similar to those set forth below, as applicable, 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 A COMMON STOCK AND WARRANT AGREEMENT BETWEEN THE ORIGINAL
HOLDERS OF THESE SECURITES AND THE ISSUER, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER.
The legend set forth in (a) above shall be removed by Parent from any
certificate evidencing Shares or Warrant Stock 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 Warrant Stock.
4.11 Disclosure. The information supplied by VHA for inclusion
or incorporation by reference in the Proxy Statement shall not on the date the
Proxy Statement is mailed to Parent's stockholders, at the time of the Parent
Stockholders' Meeting or as of the Closing, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not false or misleading; or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Parent
Stockholders' Meeting which has become false or misleading. If at any time prior
to the Closing any event relating to VHA or any of its affiliates, officers or
directors should be discovered by VHA which is required to be set forth in a
supplement to the Proxy Statement, VHA shall promptly inform Parent.
Notwithstanding the foregoing, VHA makes no representation or warranty with
respect to any information supplied by Parent which is contained in the Proxy
Statement.
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4.12 Anti-Takeover Protections. For the three years prior to the
date of this Agreement, none of VHA, its "affiliates" nor "associates" (as such
terms are defined in Section 203 of the Delaware Law) were the owner of 15% or
more of the outstanding voting stock of Parent. To VHA's knowledge, no other
Takeover Statute applies or purports to apply to this Agreement or the
transactions contemplated hereby.
ARTICLE V
CONDUCT PRIOR TO THE CLOSING
5.1 Conduct of Business by Parent. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms or the Closing, Parent and each of its
subsidiaries shall, except to the extent that VHA shall otherwise consent in
writing, carry on its business in compliance in all material respects with all
applicable material laws and regulations, pay its debts and taxes when due
subject to good faith disputes over such debts or taxes, pay or perform other
material obligations when due, and use its commercially reasonable efforts
consistent with past practices and policies to (i) preserve intact its present
business organization, (ii) keep available the services of its present officers
and employees and (iii) preserve its relationships with customers, suppliers,
licensors, licensees, and others with which it has business dealings. In
addition, Parent will promptly notify VHA of any material adverse event
involving its business or operations.
In addition, except as permitted by the terms of this Agreement,
and except as contemplated by this Agreement or provided in the Parent
Disclosure Letter, without the prior written consent of VHA, during the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement pursuant to its terms or the Closing, Parent shall
not do any of the following and shall not permit its subsidiaries to do any of
the following:
(a) Waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of options or restricted stock, or reprice
options granted under any employee, consultant, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(b) Grant any severance or termination pay to any officer or
employee except pursuant to written agreements in effect, or policies existing,
on the date hereof and as previously disclosed in writing to VHA, or adopt any
new severance plan;
(c) Transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to any Intellectual
Property material to the business of Parent that is owned by, or exclusively
licensed to, Parent or one of its subsidiaries, other than non-exclusive
licenses, distribution agreements, advertising agreements, or other similar
agreements in the ordinary course of business and consistent with past practice;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
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(e) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Parent or its subsidiaries, except
repurchases of unvested shares at cost in connection with the termination of the
employment relationship with any employee pursuant to stock option or purchase
agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise
encumber any shares of capital stock or any securities convertible into shares
of capital stock, or subscriptions, rights, warrants or options to acquire any
shares of capital stock or any securities convertible into shares of capital
stock, or enter into other agreements or commitments of any character obligating
it to issue any such shares or convertible securities, other than the grant,
issuance, delivery and/or sale of (i) shares of Common Stock pursuant to the
exercise of Parent Options outstanding on the date of this Agreement, or granted
in accordance with clause (iii) of this Section 5.1(f), (ii) shares of Common
Stock issuable to participants in the Parent ESPP consistent with the terms
thereof, (iii) Parent Options granted to existing employees and newly-hired
employees in an aggregate amount not to exceed 2,000,000, none of which Parent
Options shall provide for or permit any acceleration of the exercisability
thereof in connection with any of the transactions contemplated by this
Agreement, and (iv) shares of Common Stock issued in connection with
acquisitions, joint ventures, strategic relationships or alliances, and
commercial transactions permitted under Section 5.1(h) below;
(g) Cause, permit or propose any amendments to its Certificate
of Incorporation, Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries), other than an amendment to its
Certificate of Incorporation to increase the authorized number of shares of
Common Stock;
(h) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any equity interest in or a portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof; or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to the business of Parent, or enter into any material joint ventures,
strategic relationships or alliances, or enter into any commercial transaction
involving the issuance or potential issuance of equity securities of Parent;
provided, that Parent shall not be prohibited hereunder from (x) acquiring
EquipMD, Inc. pursuant to the Agreement and Plan of Merger among Parent,
Augustacorp, Inc. and EquipMD, Inc. (a true and complete copy of which has been
made available to VHA) or (y) making or agreeing to make acquisitions, entering
into joint ventures, strategic relationships or alliances, or entering into
commercial transactions involving the issuance or potential issuance of Common
Stock, all of which together do not involve the issuance or potential issuance
of more than 5,000,000 shares of Common Stock in the aggregate, and none of
which acquisitions, joint ventures, strategic relationships, alliances,
agreements or commercial transactions could reasonably be expected to materially
delay the issuances of Common Stock and Warrant contemplated by this Agreement
(Parent and VHA acknowledge that the fact that an acquisition would be deemed
"significant" under Item 2 of Form 8-K under the 1934 Act does not necessarily
mean that such acquisition could reasonably be expected to materially delay the
issuances of Common Stock and the Warrant contemplated by this Agreement);
provided, further, that Parent shall provide written notice to VHA prior to
signing any agreement regarding any such acquisition or transaction;
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(i) Sell, lease, license, encumber (except in connection with
actions permitted under Section 5.1(j)) or otherwise dispose of any properties
or assets which are material, individually or in the aggregate, to the business
of Parent;
(j) Incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
Parent, enter into any "keep well" or other agreement to maintain any financial
statement condition or enter into any arrangement having the economic effect of
any of the foregoing other than (i) in connection with the financing of ordinary
course trade payables consistent with past practice, (ii) pursuant to existing
credit facilities in the ordinary course of business, (iii) equipment leasing
arrangements or (iv) in aggregate amount not to exceed $1,000,000;
(k) (i) Adopt or amend any employee benefit plan or employee
stock purchase or employee stock option plan, or enter into any employment
contract or collective bargaining agreement (other than offer letters and letter
agreements entered into in the ordinary course of business consistent with past
practice with employees who are terminable "at will") other than an increase in
the number of shares of Common Stock reserved for issuance under Parent Stock
Option Plans or Parent ESPP, or (ii) pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage rates
or fringe benefits (including rights to severance or indemnification) of its
directors, officers, employees or consultants other than in the ordinary course
of business, consistent with past practice, or change in any material respect
any management policies or procedures;
(l) Make any capital expenditures outside of the ordinary course
of business or any capital expenditures in excess of $1,000,000, individually,
or $10,000,000, in the aggregate;
(m) Materially modify, amend or terminate any material contract
or agreement to which Parent or any subsidiary thereof is a party, or waive,
release or assign any material rights or claims thereunder, except in the
ordinary course of business;
(n) Materially revalue any of its assets or, except as required
by GAAP, make any change in accounting methods, principles or practices;
(o) Initiate or settle any material litigation, arbitration,
mediation or other legal proceeding;
(p) Take or permit any action with the intent to directly or
indirectly adversely impact any of the transactions contemplated by this
Agreement; or
(q) Agree in writing or otherwise to take any of the actions
described in Section 5.1 (a) through (p) above.
5.2 Meeting of Parent Stockholders.
(a) Promptly after the date hereof, Parent will take all action
necessary in accordance with the Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Parent Stockholders' Meeting to be held
as promptly as practicable and in any event (to the extent permissible under
applicable law) within 45 days after the completion of the SEC's review
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of the Proxy Statement for the purpose of voting upon the Parent Stockholder
Approval. Subject to Section 5.2(c), Parent will use its commercially reasonable
efforts to solicit from its stockholders proxies in favor of the approval of the
Parent Stockholder Approval and will take all other action necessary or
advisable to secure the vote or consent of its stockholders required by the
rules of the Nasdaq Stock Market, Delaware Law, its Certificate of Incorporation
and Bylaws to obtain such approval. Notwithstanding anything to the contrary
contained in this Agreement, Parent may adjourn or postpone the Parent
Stockholders' Meeting to the extent necessary to ensure that any necessary
supplement or amendment to the Proxy Statement is provided to Parent's
stockholders in advance of a vote on the Parent Stockholder Approval or, if as
of the time for which Parent Stockholders' Meeting is originally scheduled (as
set forth in the Proxy Statement) there are insufficient shares of Parent Common
Stock represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of the Parent Stockholders' Meeting. Parent
shall ensure that the Parent Stockholders' Meeting is called, noticed, convened,
held and conducted, and that all proxies solicited by Parent in connection with
the Parent Stockholders' Meeting are solicited, in compliance with the Delaware
Law, its Certificate of Incorporation and Bylaws, the rules of the Nasdaq Stock
Market and all other applicable legal requirements.
(b) Subject to Section 5.2(c), the Board of Directors of Parent
shall recommend that Parent's stockholders approve the Parent Stockholder
Approval at the Parent Stockholders' Meeting; and the Proxy Statement shall
include a statement to the effect that the Board of Directors of Parent has
recommended that Parent's stockholders approve the Parent Stockholder Approval
at the Parent Stockholders' Meeting; and (iii) neither the Board of Directors of
Parent nor any committee thereof shall withdraw, amend or modify, or propose or
resolve to withdraw, amend or modify in a manner adverse to VHA, the
recommendation of the Board of Directors of Parent that Parent's stockholders
approve the Parent Stockholder Approval.
(c) Nothing in this Agreement shall prevent the Board of
Directors of Parent from withholding, withdrawing, amending or modifying its
recommendation in favor of the Parent Stockholder Approval if (i) a Superior
Offer (as defined below) is made to Parent and is not withdrawn, (ii) Parent
shall have provided written notice to VHA and UHC (a "NOTICE OF SUPERIOR OFFER")
advising them that Parent has received a Superior Offer, specifying all of the
material terms and conditions of such Superior Offer and identifying the person
or entity making such Superior Offer, (iii) VHA and/or UHC shall not have,
within three business days of Parent's receipt of the Notice of Superior Offer,
made an offer that Parent's Board of Directors by a majority vote determines in
its good faith judgment (after consultation with a financial advisor of national
standing) to be at least as favorable to Parent's stockholders as such Superior
Offer (it being agreed that the Board of Directors of Parent shall convene a
meeting to consider any such offer by VHA and/or UHC promptly following the
receipt thereof), (iv) the Board of Directors of Parent concludes in good faith,
after consultation with its outside counsel, that, in light of such Superior
Offer, the withholding, withdrawal, amendment or modification of such
recommendation is required in order for the Board of Directors of Parent to
comply with its fiduciary obligations to Parent's stockholders under applicable
law and (v) Parent shall not have violated any of the restrictions set forth in
Section 5.4(a) or (b) or this Section 5.2. Parent shall provide VHA with at
least one day prior notice (or such lesser prior notice as provided to the
members of the Parent's Board of Directors) of any meeting of the Parent's Board
of Directors at which Parent's Board of Directors is reasonably expected to
consider any Parent Acquisition Proposal (as defined in Section 5.4) to
determine whether such Parent Acquisition Proposal is a
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Superior Offer. Nothing contained in this Section 5.2(c) shall limit Parent's
obligation to hold and convene the Parent Stockholders' Meeting (regardless of
whether the recommendation of the Board of Directors of Parent shall have been
withdrawn, amended or modified).
For purposes of this Agreement, "SUPERIOR OFFER" shall mean an
unsolicited, bona fide written offer made by a third party to consummate any of
the following transactions: (i) a merger or consolidation involving Parent
pursuant to which the stockholders of Parent immediately preceding such
transaction hold less than 50% of the equity interest in the surviving or
resulting entity of such transaction or (ii) the acquisition by any person or
group (including by way of a tender offer or an exchange offer or a two step
transaction involving a tender offer followed with reasonable promptness by a
merger involving Parent), directly or indirectly, of ownership of 100% of the
then outstanding shares of capital stock of Parent, on terms that the Board of
Directors of Parent determines, in its reasonable judgment (after consultation
with a financial advisor of national standing) to be more favorable to Parent
stockholders than the terms of this Agreement and the UHC Agreement; provided,
however, that any such offer shall not be deemed to be a "Superior Offer" if any
financing required to consummate the transaction contemplated by such offer is
not committed and is not likely in the reasonable judgment of Parent's Board of
Directors (after consultation with its financial advisor) to be obtained by such
third party on a timely basis.
(d) Nothing contained in this Agreement shall prohibit Parent or
its Board of Directors from taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the 1934 Act, or
otherwise required by applicable law.
5.3 Proxy Statement; Antitrust Filings.
(a) As promptly as practicable after the execution of this
Agreement, Parent will prepare and file with the SEC, the Proxy Statement.
Parent will respond to any comments of the SEC, and will cause the Proxy
Statement to be mailed to its stockholders, as promptly as practicable in
compliance with applicable law. Promptly after the date of this Agreement, each
of VHA and Parent will prepare and file (i) with the United States Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
Notification and Report Forms relating to the transactions contemplated herein
as required by the HSR Act, as well as comparable pre-merger notification forms
required by the merger notification or control laws and regulations of any
applicable jurisdiction, as agreed to by the parties (the "ANTITRUST FILINGS").
VHA and Parent each shall promptly supply the other with any information which
may be required in order to effectuate any filings pursuant to this Section 5.3.
(b) Each of VHA and Parent will notify the other promptly upon
the receipt of any comments from the SEC or its staff or any other government
officials in connection with any filing made pursuant hereto and of any request
by the SEC or its staff or any other government officials for amendments or
supplements to the Proxy Statement or any Antitrust Filings or for additional
information, and will supply the other with copies of all correspondence between
such party or any of its representatives, on the one hand, and the SEC, or its
staff or any other government officials, on the other hand, with respect to the
Proxy Statement or any Antitrust Filing. Each of VHA and Parent will cause all
documents that it is responsible for filing with the SEC or other regulatory
authorities under this Section 5.3 to comply in all material respects with all
applicable requirements of law and the rules and regulations promulgated
thereunder. Whenever any event occurs which is required to be set forth in an
amendment or supplement to
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the Proxy Statement or any Antitrust Filing, VHA or Parent, as the case may be,
will promptly inform the other of such occurrence and cooperate in filing with
the SEC or its staff or any other government officials, and/or mailing to
stockholders of Parent, such amendment or supplement.
5.4 No Solicitation.
(a) From and after the date of this Agreement until the Closing
or termination of this Agreement pursuant to Article IX, Parent and its
subsidiaries will not, nor will they authorize or permit any of their respective
officers, directors, affiliates or employees or any investment banker, attorney
or other advisor or representative retained by any of them to, directly or
indirectly, (i) solicit, initiate, encourage or induce the making, submission or
announcement of any Parent Acquisition Proposal (as hereinafter defined), (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes an
Parent Acquisition Proposal, (iii) engage in discussions with any person with
respect to any Parent Acquisition Proposal, except as to the existence of these
provisions, (iv) except as set forth in Section 5.2(c), approve, endorse or
recommend any Parent Acquisition Proposal or (v) enter into any letter of intent
or similar document or any contract, agreement or commitment contemplating or
otherwise relating to any Parent Acquisition Proposal; provided, however, that
prior to the approval of the Parent Stockholder Approval at the Parent
Stockholders' Meeting, Parent may furnish nonpublic information regarding Parent
and its subsidiaries to, or enter into discussions or negotiations with, any
person or group who has submitted (and not withdrawn) to Parent an unsolicited,
written, bona fide Parent Acquisition Proposal that the Board of Directors of
Parent reasonably concludes (after consultation with a financial advisor of
national standing) may constitute a Superior Offer if (1) neither Parent nor any
representative of Parent and its subsidiaries shall have violated any of the
restrictions set forth in this Section 5.4, (2) the Board of Directors of Parent
concludes in good faith, after consultation with its outside legal counsel, that
such action is required in order for the Board of Directors of Parent to comply
with its fiduciary obligations to Parent's stockholders under applicable law,
(3) 36 hours prior to furnishing any such nonpublic information to, or entering
into any such discussions with, such person or group, Parent gives VHA and UHC
written notice of the identity of such person or group and all of the material
terms and conditions of such Parent Acquisition Proposal and of Parent's
intention to furnish nonpublic information to, or enter into discussions with,
such person or group, and Parent receives from such person or group an executed
confidentiality agreement containing customary terms. Parent and its
subsidiaries will immediately cease any and all existing activities, discussions
or negotiations with any parties conducted heretofore with respect to any Parent
Acquisition Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding two sentences by any
officer, director or employee of Parent or any of its subsidiaries or any
investment banker, attorney or other advisor or representative of Parent or any
of its subsidiaries shall be deemed to be a breach of this Section 5.4(a) by
Parent.
For purposes of this Agreement, "PARENT ACQUISITION PROPOSAL"
shall mean any offer or proposal relating to any transaction or series of
related transactions, other than the transactions contemplated by this Agreement
(any such transaction or series of related transactions, a "PARENT
ACQUISITION"), involving: (A) any acquisition or purchase from Parent by any
person or "group" (as defined under Section 13(d) of the 1934 Act and the rules
and regulations thereunder) of more than 50% of the outstanding voting
securities of Parent or any of its subsidiaries, or any tender offer or exchange
offer that if consummated would result in any
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person or "group" beneficially owning more than 50% of the outstanding voting
securities of Parent or any of its subsidiaries, or any merger, consolidation,
business combination or similar transaction involving Parent pursuant to which
the stockholders of Parent immediately preceding such transaction hold less than
50% of the equity interests in the surviving or resulting entity of such
transaction; or (B) any sale, exchange, transfer, acquisition, or disposition of
more than 50% of the assets of Parent.
(b) In addition to the obligations of Parent set forth in
paragraph (a) of this Section 5.4, Parent as promptly as practicable shall
advise VHA and UHC orally and in writing of any request for non-public
information or inquiry which Parent reasonably believes would lead to a Parent
Acquisition Proposal or of any Parent Acquisition Proposal, the material terms
and conditions of such request, Parent Acquisition Proposal or inquiry, and the
identity of the person or group making any such request, Parent Acquisition
Proposal or inquiry. Parent will keep VHA and UHC informed as promptly as
practicable in all material respects of the status and details (including
material amendments or proposed amendments) of any such request, Parent
Acquisition Proposal or inquiry.
(c) From and after the date of this Agreement until the Closing
or termination of this Agreement pursuant to Article IX, VHA and its affiliates
will not, nor will they authorize or permit any of their respective officers,
directors, affiliates or employees or any investment banker, attorney or other
advisor or representative retained by any of them to, directly or indirectly,
(i) solicit, initiate, encourage or induce the making, submission or
announcement of any VHA Proposal (as hereinafter defined), (ii) participate in
any discussions or negotiations regarding, or furnish to any person any
non-public information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes a VHA Proposal,
(iii) engage in discussions with any person with respect to any VHA Proposal,
except as to the existence of these provisions, (iv) approve, endorse or
recommend any VHA Proposal or (v) enter into any letter of intent or similar
document or any contract, agreement or commitment contemplating or otherwise
relating to any VHA Proposal. VHA and its affiliates will immediately cease any
and all existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any VHA Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
the preceding two sentences by any officer, director or employee of VHA or any
of its affiliates or any investment banker, attorney or other advisor or
representative of VHA or any of its affiliates shall be deemed to be a breach of
this Section 5.4(c) by VHA. For purposes of this Agreement, "VHA PROPOSAL" shall
mean any offer or proposal relating to any transaction or series of related
transactions that would constitute a breach or violation of, the obligations
(including exclusivity obligations) of VHA, UHC, Novation and/or HPPI under the
Outsourcing Agreement.
(d) In addition to the obligations of VHA set forth in paragraph
(c) of this Section 5.4, VHA as promptly as practicable shall advise Parent
orally and in writing of any request for non-public information or inquiry which
VHA reasonably believes would lead to a VHA Proposal or of any VHA Proposal, the
material terms and conditions of such request, VHA Proposal or inquiry, and the
identity of the person or group making any such request, VHA Proposal or
inquiry. VHA will keep Parent informed as promptly as practicable in all
material respects of the status and details (including material amendments or
proposed amendments) of any such request, VHA Proposal or inquiry.
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5.5 Third Party Consents. As soon as practicable following the date
hereof, Parent and VHA will each use its commercially reasonable efforts to
obtain any material consents, waivers and approvals under any of its or its
subsidiaries' respective agreements, contracts, licenses or leases required to
be obtained in connection with the consummation of the transactions contemplated
hereby.
5.6 Nasdaq Listing. Parent agrees to authorize for listing on the Nasdaq
Stock Market the Shares and Warrant Stock issuable in connection with this
Agreement, effective upon official notice of issuance.
5.7 Takeover Statutes. If any Takeover Statute is or may become
applicable to the transactions contemplated by this Agreement, each of Parent
and VHA and their respective Boards of Directors shall grant such approvals and
take such lawful actions as are necessary to ensure that such transactions may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise act to eliminate or minimize the effects of such
Takeover Statute and any regulations promulgated thereunder on such
transactions.
ARTICLE VI
ADDITIONAL AGREEMENTS
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 outstanding Common Stock that has been issued
pursuant to the Warrant) beneficially owned by VHA together with all
"affiliates" (which for purposes of this Agreement (other than Section 3.12)
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 Common Stock that has been issued
pursuant to the Warrant) beneficially owned by VHA together with all affiliates
of VHA exceeds 19.9% of the then outstanding Common Stock of Parent (the 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 for (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. On all matters submitted to Parent
stockholders for approval other than those identified in items (i), (ii) and
(iii) of the first sentence of this section, 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
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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.
6.2 Acquisition of Parent Securities. VHA agrees that during the
Restricted Period, (i) at any time that VHA together with all of its affiliates
beneficially owns 24% (on a Common Stock-equivalent basis) or more of the
outstanding shares of Common Stock or other capital stock of Parent or of any
option, warrant or right to acquire capital stock of Parent (such shares,
options, warrants and other rights, collectively, "RIGHTS IN PARENT STOCK"), VHA
will not, without the prior written consent of Parent, acquire legal or
beneficial ownership of any additional Rights in Parent Stock, except pursuant
to the Warrant, and (ii) at any time that VHA, together with all of its
affiliates beneficially owns less than 24% of the outstanding Rights in Parent
Stock, VHA may acquire such number of Rights in Parent Stock so that after the
acquisition of such Rights in Parent Stock the aggregate number of Rights in
Parent Stock, on a Common Stock-equivalent basis, legally or beneficially owned
by VHA and all affiliates of VHA, assuming issuance of all shares of Parent
Common Stock issuable pursuant to such Rights in Parent Stock, equals not more
than 24% of the outstanding Common Stock of Parent.
6.3 Transfer of Parent Securities. 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, transfer or otherwise dispose
of legal or beneficial ownership of Rights in Parent Stock to any person if such
person together with its affiliates would, to the knowledge of VHA, after
reasonable inquiry, beneficially own 15% or more of the then outstanding Rights
in Parent Stock, unless prior to such sale, transfer or disposal, such
transferee agrees in writing to be bound by VHA's agreements set forth in
Section 6.1, 6.2 (with "19.9%" in Section 6.1 and "24%" in Section 6.2 each read
as "15%") and this Section 6.3.
6.4 Parent Board of Directors. The Board of Directors of Parent will
take all actions reasonably necessary such that as soon as practicable following
the Closing, the size of Parent's Board of Directors shall be seven members, and
two persons shall be appointed by VHA to Parent's Board of Directors to fill
vacancies in Class I. Under the Parent's Charter Documents, the terms of Class I
Directors expire in 2000, the terms of Class II Directors expire in 2001 and the
terms of Class III Directors expire in 2002. The Class I Directors appointed
pursuant to this Section shall be appointed following Parent's annual meeting in
2000 to terms expiring in 2003. For so long as VHA beneficially owns 10% or more
of the outstanding Common Stock of Parent on a fully converted basis (taking
into account for VHA, all shares of Common Stock issuable upon the exercise of
the Warrant), Parent will take all actions reasonably necessary to have one
person appointed by VHA be a member of Parent's Board of Directors. For so long
as VHA beneficially owns 20% or more of the Common Stock of Parent on a fully
converted basis (taking into account for VHA, all shares of Common Stock
issuable upon the exercise of the Warrant), Parent will take all actions
reasonably necessary to have two persons appointed by VHA be members of Parent's
Board of Directors. If Parent's Board of Directors establishes an executive
committee or another committee of less than all directors having general
authority similar to that customarily delegated to an executive committee, one
member of such committee shall be a director nominated by VHA.
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6.5 Reasonable Efforts.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other party in doing, all things necessary, proper
or advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement, including using
reasonable efforts to accomplish the following: (i) the taking of all reasonable
acts necessary to cause the conditions precedent set forth in Articles VII and
VIII to be satisfied, (ii) the obtaining of all necessary actions or nonactions,
waivers, consents, approvals, orders and authorizations from Governmental
Entities and the making of all necessary registrations, declarations and filings
(including registrations, declarations and filings with Governmental Entities,
if any) and the taking of all reasonable steps as may be necessary to avoid any
suit, claim, action, investigation or proceeding by any Governmental Entity,
(iii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iv) the defending of any suits, claims, actions, investigations or
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (v) the execution or delivery of any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement. Notwithstanding anything
in this Agreement to the contrary, neither Parent nor any of its affiliates
shall be under any obligation to make proposals, execute or carry out agreements
or submit to orders providing for the sale or other disposition or holding
separate (through the establishment of a trust or otherwise) of any assets or
categories of assets of Parent or any of its affiliates or imposing or seeking
to impose any limitation on the ability of Parent or any of its subsidiaries or
affiliates to conduct their business or own such assets.
(b) Each of VHA and Parent will give prompt notice to the other
of (i) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the consummation
of transactions contemplated by this Agreement, (ii) any notice or other
communication from any Governmental Entity in connection with the transactions
contemplated by this Agreement or the Outsourcing Agreement, (iii) any
litigation relating to, involving or otherwise affecting VHA, Novation, HPPI,
Parent or their respective subsidiaries that relates to the consummation of the
transactions contemplated by this Agreement or the Outsourcing Agreement. VHA
shall give prompt notice to Parent of any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate, or any failure of VHA
to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement, in each
case, such that the conditions set forth in Article VIII would not be satisfied,
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement. Parent shall give prompt notice
to VHA of any representation or warranty made by it contained in this Agreement
becoming untrue or inaccurate, or any failure of Parent to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement, in each case, such that
the conditions set forth in Article VII would not be satisfied, provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
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6.6 Registration Rights. Parent shall use its reasonable best
efforts to cause the requisite holders of registration rights under the Second
Amended and Restated Registration Rights Agreement among Parent and certain of
its investors dated October 14, 1999 (the "EXISTING REGISTRATION RIGHTS
AGREEMENT") to amend and substitute for such agreement the Amended and Restated
Registration Rights Agreement in substantially the form attached hereto as
Exhibit B (the "NEW REGISTRATION RIGHTS AGREEMENT") effective as of the Closing.
If as of the Closing, the requisite holders of registration rights under the
Existing Registration Rights Agreement shall not have agreed to amend and
substitute for such agreement the New Registration Rights Agreement, then Parent
and VHA shall enter into, and Parent shall use its reasonable best efforts to
cause the holders of registration rights under the Existing Registration Rights
Agreement to enter into, effective as of the Closing, a registration rights
agreement (the "ALTERNATIVE REGISTRATION RIGHTS AGREEMENT") modeled upon the New
Registration Rights Agreement and only differing from the New Registration
Rights Agreement to the extent necessary so that the Alternative Registration
Rights Agreement does not conflict with or violate the Existing Registration
Rights Agreement.
6.7 Public Disclosure. Parent and VHA will consult with each
other, and to the extent practicable, agree, before issuing any press release or
otherwise making any public statement with respect to this Agreement and will
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with a
national securities exchange. The parties have agreed to the text of the press
release announcing the signing of this Agreement.
ARTICLE VII
CONDITIONS TO VHA'S OBLIGATIONS AT CLOSING
The obligations of VHA under Sections 1 and 2 of this Agreement are
subject to the fulfillment or waiver, on or before the Closing, of each of the
following conditions:
7.1 Representations and Warranties. The representations and
warranties of Parent contained in this Agreement, disregarding all
qualifications and exceptions contained therein relating to materiality or
Material Adverse Effect or any similar standard or qualification, shall be true
and correct at and as of the Closing as if made at and as of the Closing (other
than representations and warranties that address matters only as of a particular
date, which shall be true and correct as of such date), except where the failure
of such representations or warranties to be true or correct would not have,
individually or in the aggregate, a Material Adverse Effect on Parent. It is
understood that, for purposes of determining the accuracy of such
representations and warranties, any update of or modification to the Parent
Disclosure Letter made or purported to have been made after the execution of
this Agreement shall be disregarded. VHA shall have received a certificate with
respect to the foregoing signed on behalf of Parent by the Chief Executive
Officer or the Chief Financial Officer of Parent.
7.2 Performance. Parent shall have performed and complied in all
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the Closing.
7.3 Securities Exemptions. The offer and sale of the Shares and
the Warrant to VHA pursuant to this Agreement shall be exempt from the
registration requirements of the 1933 Act, the qualification requirements of the
California Corporate Securities Law of 1968, as
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amended ("CALIFORNIA LAW") and the registration and/or qualification
requirements of all other applicable state securities laws.
7.4 Consents. (i) All required approvals or consents of any
Governmental Entity or other person in connection with the consummation of the
transactions contemplated hereby shall have been obtained (and all relevant
statutory, regulatory or other governmental waiting periods, shall have expired)
unless the failure to receive any such approval or consent would not be
reasonably likely, directly or indirectly, to result in a Material Adverse
Effect on Parent and its subsidiaries, taken as a whole, and (ii) all such
approvals and consents which have been obtained shall be on terms that are not
reasonably likely, directly or indirectly, to result in a Material Adverse
Effect on Parent and its subsidiaries, taken as a whole.
7.5 Nasdaq Listing. The Shares and the Warrant Stock shall have
been approved for listing on the Nasdaq Stock Market, subject to official notice
of issuance.
7.6 Outsourcing Agreement. (i) Parent shall have executed and
delivered the Outsourcing Agreement, (ii) the Outsourcing Agreement shall be
fully effective in accordance with its terms, and (iii) Parent shall be in
compliance in all material respects with the terms of the Outsourcing Agreement,
and VHA shall have received a certificate with respect to the foregoing clauses
(i), (ii) and (iii) executed by the Chief Executive Officer or the Chief
Financial Officer of Parent.
7.7 Parent Stockholder Approval. The issuance of the Shares, the
Warrant and the Warrant Stock shall have been approved by the requisite vote of
the stockholders of Parent under applicable law and the Parent Charter
Documents.
ARTICLE VIII
CONDITIONS TO PARENT'S OBLIGATIONS AT CLOSING
The obligations of Parent under this Agreement are subject to the
fulfillment or waiver on or before the Closing of each of the following
conditions:
8.1 Representations and Warranties. The representations and
warranties of VHA contained in Section 4 shall be true and correct in all
material respects on the date of the Closing with the same effect as though such
representations and warranties had been made on and as of the Closing.
8.2 Performance. VHA shall have performed and complied in all
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the Closing.
8.3 Parent Stockholder Approval. The issuance of the Shares, the
Warrant and the Warrant Stock shall have been approved by the requisite vote of
the stockholders of Parent under applicable law and the Parent Charter
Documents.
8.4 Outsourcing Agreement. (i) Each party to the Outsourcing
Agreement (other than Parent) shall have executed and delivered the Outsourcing
Agreement, (ii) the Outsourcing Agreement shall be fully effective in accordance
with its terms, and (iii) each of the
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parties thereto (other than Parent) shall be in compliance in all material
respects with the terms of the Outsourcing Agreement, and Parent shall have
received a certificate with respect to the foregoing clauses (i), (ii) and (iii)
executed by the Chief Executive Officers or Chief Financial Officers of each of
Novation, VHA, UHC and HPPI.
8.5 Securities Exemptions. The issuance of the Shares and the
Warrant to VHA pursuant to this Agreement shall be exempt from the registration
requirements of the 1933 Act, the qualifications requirements of California Law
and the registration and/or qualification requirements of all other applicable
state securities laws.
8.6 Consents. (i) All required approvals or consents of any
Governmental Entity or other person in connection with the consummation of the
transactions contemplated hereby shall have been obtained (and all relevant
statutory, regulatory or other governmental waiting periods, shall have expired)
unless the failure to receive any such approval or consent would not be
reasonably likely, directly or indirectly, to result in a Material Adverse
Effect on Parent and its subsidiaries, taken as a whole, and (ii) all such
approvals and consents which have been obtained shall be on terms that are not
reasonably likely, directly or indirectly, to result in a Material Adverse
Effect on Parent and its subsidiaries, taken as a whole.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated prior to the
Closing, whether before or after the requisite approval of the issuance of the
Shares, the Warrant and the Warrant Stock by Parent's stockholders:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and VHA;
(b) by either Parent or VHA if the Closing shall not have
occurred by September 30, 2000 for any reason; provided, however, that the right
to terminate this Agreement under this Section 9.1(b) shall not be available to
any party whose action or failure to act has been a principal cause of or
resulted in the failure of the Closing to occur on or before such date and such
action or failure to act constitutes a breach of this Agreement or the
Outsourcing Agreement;
(c) by either Parent or VHA if a Governmental Entity shall have
issued an order, decree or ruling or taken any other action, in any case having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Closing, which order, decree, ruling or other action is final and nonappealable;
(d) by either Parent or VHA, if the approval of the issuance of
the Shares, the Warrant and the Warrant Stock by the stockholders of Parent
shall not have been obtained by reason of the failure to obtain the required
vote at a meeting of Parent stockholders duly convened therefor or at any
adjournment thereof;
(e) by either Parent or VHA, if the Outsourcing Agreement is
validly terminated according to its terms by a party thereto; or
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(f) by VHA, at any time prior to the Parent Stockholders'
Meeting, if a Triggering Event (as defined below) shall have occurred; provided,
however, that VHA shall not have the right to terminate this Agreement under
this Section 7.1(f) in response to the occurrence of the Triggering Event set
forth in clause (iii) of the definition thereof if at the time the event set
forth in such clause (iii) occurs VHA is in material breach of this Agreement,
or VHA, Novation or HPPI is in material breach of the Outsourcing Agreement,
which breach has not been cured as of such time.
For the purposes of this Agreement, a "TRIGGERING EVENT" shall
be deemed to have occurred if: (i) the Board of Directors of Parent or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to VHA its recommendation in favor of the approval
of the Parent Stockholder Approval; (ii) Parent shall have failed to include in
the Proxy Statement the recommendation of the Board of Directors of Parent in
favor of the approval of the Parent Stockholder Approval; (iii) the Board of
Directors of Parent fails to reaffirm its recommendation in favor of the
approval of the Parent Stockholder Approval within 10 business days after VHA
requests in writing that such recommendation be reaffirmed at any time following
the public announcement of a Parent Acquisition Proposal; (iv) the Board of
Directors of Parent or any committee thereof shall have approved or publicly
recommended any Parent Acquisition Proposal; (v) Parent shall have entered into
any letter of intent of similar document or any agreement, contract or
commitment accepting any Parent Acquisition Proposal; or (vi) Parent shall have
materially breached any of the provisions of Sections 5.2 or 5.4(a) or (b).
9.2 Notice of Termination; Effect of Termination. Any proper termination
of this Agreement under Section 9.1 will be effective immediately upon the
delivery of written notice of the terminating party to the other party hereto.
In the event of the termination of this Agreement as provided in Section 9.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 9.2, Section 9.3 and Article X, each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve either
party from liability for any willful breach of this Agreement.
9.3 Parent Payment. In the event that this Agreement is terminated by
VHA pursuant to Section 9.1(f), Parent shall promptly, but in no event later
than two days after the date of such termination, pay VHA a fee equal to $12
million in immediately available funds. In the event that (A) following the date
of this Agreement and prior to the Parent Stockholders' Meeting, a person has
publicly announced a bona fide Parent Acquisition Proposal, (B) this Agreement
is terminated by Parent or VHA pursuant to Section 9.1(d), and (C) within nine
months following the termination of this Agreement pursuant to Section 9.1(d),
either the Parent Acquisition contemplated by such Parent Acquisition Proposal
is consummated, or Parent enters into an agreement providing for a Parent
Acquisition and such Parent Acquisition is later consummated with the person (or
another person controlling, controlled by or under common control with, such
person) with whom such agreement was entered into (regardless of when such
consummation occurs if Parent has entered into such an agreement within such
nine-month period), Parent shall promptly, but in no event later than two days
after the consummation of such Parent Acquisition, pay VHA a fee equal to $12
million in immediately available funds. Parent acknowledges that the agreements
contained in this Section 9.3 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, VHA would
not enter into this Agreement. Accordingly, if Parent fails to pay in a timely
manner the amounts due pursuant to this Section 9.3, and, in order to obtain
such payment, VHA makes a claim that results in a
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judgment against Parent for the amounts set forth in this Section 9.3, Parent
shall pay to VHA its reasonable costs and expenses (including reasonable
attorneys' fees and expenses) in connection with such suit, together with
interest on the amounts set forth in this Section 9.3 at the prime rate of The
Chase Manhattan Bank in effect on the date such payment was required to be made.
ARTICLE X
GENERAL PROVISIONS
10.1 Survival of Warranties. The representations, warranties and
covenants of VHA (except for any covenant that by its express terms survives the
Closing, and for the representations, warranties and covenants set forth in
Sections 4.3 through 4.10 inclusive, which shall survive the execution and
delivery of this Agreement and the Closing) contained in or made pursuant to
this Agreement shall terminate at the Closing. The representations, warranties
and covenants of Parent (except for any covenant that by its express terms
survives the Closing) contained in or made pursuant to this Agreement shall
terminate at the Closing.
10.2 Assignment. No party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
consent of the other party hereto. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Any purported
assignment in violation of this Section shall be void.
10.3 Governing Law. This Agreement 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.
10.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
10.5 Interpretation; Certain Defined Terms.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement unless otherwise indicated. The words "INCLUDE,"
"INCLUDES" and "INCLUDING" when used herein shall be deemed in each case to be
followed by the words "WITHOUT LIMITATION." The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When reference is made herein to
"THE BUSINESS OF" an entity, such reference shall be deemed to include the
business of all direct and indirect subsidiaries of such entity. Reference to
the subsidiaries of an entity shall be deemed to include all direct and indirect
subsidiaries of such entity.
(b) For purposes of this Agreement, "ENCUMBRANCES" means any
lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance,
claim, option, right of first refusal, preemptive right, community property
interest or restriction of any nature (including any restriction on the voting
of any security, any restriction on the transfer of any security or other asset,
any restriction on the receipt of any income derived from any asset, any
restriction on the
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use of any asset and any restriction on the possession, exercise or transfer of
any other attribute of ownership of any asset) (other than (i) liens for taxes
not yet due and payable; (ii) liens reflected on the Parent Balance Sheet, if
applicable; (iii) liens which are not material in character, amount or extent,
and which do not materially detract from the value or materially interfere with
the use of the property subject thereto or affected thereby; and (iv)
contractor's liens).
(c) For purposes of this Agreement, the term "MATERIAL ADVERSE
EFFECT" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect that is or is reasonably likely to
be materially adverse to the business, assets (including intangible assets),
capitalization, financial condition, operations or results of operations of such
entity taken as a whole with its subsidiaries, except to the extent that any
such change, event, violation, inaccuracy, circumstance or effect directly and
primarily results from (i) changes in general economic conditions or changes
affecting the industry generally in which such entity operates (provided that
such changes do not affect such entity in a substantially disproportionate
manner) or (ii) changes in the trading prices for such entity's capital stock.
(d) For purposes of this Agreement, the term "PERSON" shall mean
any individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
10.6 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon delivery either personally or
by commercial delivery service, or sent via facsimile (receipt confirmed) to the
parties at the following addresses or facsimile numbers (or at such other
address or facsimile number for a party as shall be specified by like notice):
IF TO VHA: WITH A COPY TO:
VHA Inc. Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Four Times Square
Irving, Texas 75039-5500 ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Chief Financial Officer Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
IF TO PARENT: WITH A COPY TO:
▇▇▇▇▇▇▇▇.▇▇▇, Inc. Fenwick & West LLP
▇▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Two Palo Alto Square, Palo Alto, California
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 94306
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Chief Financial Officer Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
10.7 Expenses; Finder's Fees. All fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses whether or not the Closing occurs. VHA
agrees to indemnify and to hold harmless Parent from any liability for any
commission or compensation in the nature of a finder's or broker's fee (and any
asserted liability) for which VHA or any of its officers, partners, members,
employees, or representatives is responsible. Parent agrees to indemnify and
hold
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39
harmless VHA from any liability for any commission or compensation in the nature
of a finder's or broker's fee (and any asserted liability) for which Parent or
any of its officers, employees or representatives is responsible.
10.8 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision(s) shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
10.9 Entire Agreement. This Agreement, together with all
exhibits and schedules hereto, and the Outsourcing Agreement constitute the
entire agreement and understanding of the parties with respect to the subject
matter hereof and supersedes any and all prior negotiations, correspondence,
agreements, understandings duties or obligations between the parties with
respect to the subject matter hereof.
10.10 Further Assurances. From and after the date of this
Agreement, upon the request of VHA or Parent, Parent and VHA shall execute and
deliver such instruments, documents or other writings as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.
10.11 Amendment; Extension; Waiver. Subject to applicable law,
this Agreement may be amended by the parties hereto at any time by execution of
an instrument in writing signed on behalf of Parent and VHA. At any time prior
to the Closing any party hereto may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations or other acts of the
other party hereto, (ii) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party. Delay in
exercising any right under this Agreement shall not constitute a waiver of such
right.
10.12 Other Remedies; Specific Performance. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy; provided, that
payment by Parent of the amount provided for under Section 9.3 shall constitute
full and liquidated damages for any alleged breach of this Agreement by Parent
in connection with such termination. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to seek an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
10.13 Rules of Construction. The parties hereto agree that they
have been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that
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40
ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.
10.14 Parent Disclosure Letter. Disclosure made with regard to a
representation or warranty of Parent in the Parent Disclosure Letter shall also
be deemed to qualify other representations and warranties of the party making
such disclosure if it is readily apparent from the language contained in such
disclosure that such disclosure is applicable to such other representation or
warranty.
10.15 Waiver Of Jury Trial. EACH OF PARENT AND VHA HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS PARENT OR VHA IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized respective officers as of the
date first written above.
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: CFO
VHA INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name:
Title:
[SIGNATURE PAGE TO AMENDED AND RESTATED COMMON STOCK AND WARRANT AGREEMENT]
42
SCHEDULE OF EXHIBITS
Exhibit A: Form of Warrant
Exhibit B: Form of New Registration Rights Agreement
2
43
EXHIBIT A
FORM OF WARRANT
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE ON EXERCISE HEREOF HAVE 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 ANY CONTRACTUAL RESTRICTIONS ON
RESALE APPLICABLE TO THESE SECURITIES IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
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 A COMMON STOCK AND
WARRANT PURCHASE AGREEMENT BETWEEN THE ORIGINAL HOLDERS OF THESE SECURITES AND
THE ISSUER, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER.
WARRANT TO PURCHASE COMMON STOCK
OF
▇▇▇▇▇▇▇▇.▇▇▇, INC.
No. V-1 Void after ________ __, 2010
THIS CERTIFIES THAT VHA Inc., a Delaware corporation ("VHA" or
the "HOLDER"), or its permitted assigns is entitled to purchase under this
Warrant up to 30,845,020 shares (the "SHARES") of common stock, par value $0.001
per share ("COMMON STOCK"), of ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation
("NEOFORMA" or the "COMPANY") at a per share price of $0.01 (the "EXERCISE
PRICE") subject to the provisions and upon the terms and conditions hereinafter
set forth.
This Warrant is issued this ___ day of __________, 2000 (the
"ISSUE DATE") pursuant to that certain Amended and Restated Common Stock and
Warrant Agreement amended and restated as of May 24, 2000 (the "STOCK AND
WARRANT AGREEMENT"), by and between the Company and the Holder.
44
1. Vesting and Term.
1.1 Vesting. Upon issuance, this Warrant shall not be exercisable
or vested with respect to any Shares. A total of 23,133,764 Shares shall be
eligible for vesting in accordance with Section 1.1.2 below ("TRANCHE A SHARES")
and a total of 7,711,256 Shares shall be eligible for vesting in accordance with
Section 1.1.3 below ("TRANCHE B SHARES"). Shares with respect to which this
Warrant becomes vested and exercisable are referred to as "VESTED SHARES."
1.1.1. Definitions.
"CUMULATIVE SIGNED PURCHASING VOLUME" means, as of any
Determination Date, 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.
"HEALTHCARE ORGANIZATION" shall mean any facility providing
health care services.
"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.
"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.
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1.1.2. Vesting Requirements for Tranche A Shares.
1. 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").
2. 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").
3. 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").
4. 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").
5. In the event the Tranche A Target Amount of Cumulative Signed
Purchasing Volume specified in any of Section 1.1.2 paragraphs 1, 2, 3 or 4
above 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 1.1.2 paragraphs 1, 2, 3 or 4 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
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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.
1.1.3 Vesting Requirements for Tranche B Shares.
1. 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").
2. 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").
3. 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").
4. 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").
5. In the event the Tranche B Target Amount of Cumulative Signed
Purchasing Volume specified in any of Section 1.1.3 paragraphs 1, 2, 3, or 4
above 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
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47
particular Determination Date pursuant to Section 1.1.3 paragraphs 1, 2, 3 or 4
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
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Fourth Determination Date the relevant Tranche B Target Amount for such
Determination Date is met or exceeded.
1.2 Acceleration of Vesting. In the event of a merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company in which all shares of Common Stock
of the Company are converted into cash, or a cash tender offer for all shares of
Common Stock is consummated, this Warrant will become fully exercisable as to
all of the Shares effective upon consummation of such transaction, and this
Warrant will expire on the later of the date of such consummation or twenty days
after written notice of such transaction, provided that the Holder may exercise
this Warrant contingent on the consummation of such transaction.
1.3 Termination Date. Unless this Warrant expires pursuant to
Section 1.2, this Warrant shall remain exercisable with respect to Vested
Shares, if any, until 5:00 p.m. California time on the tenth anniversary of the
Issue Date at which time the Warrant shall expire and be of no further force and
effect.
2. Exercise or Conversion.
2.1 Method of Exercise; Payment; Issuance of New Warrant. This
Warrant may be exercised by the Holder, in whole or in part and from time to
time as to Vested Shares, by the surrender of this Warrant (with a notice of
exercise in the form attached as Exhibit A and the investment representation
certificate in the form attached as Exhibit B, each duly executed) at the
principal office of the Company and by the payment to the Company by check or
wire transfer of an amount equal to the then current Exercise Price per share
multiplied by the number of Vested Shares then being purchased (the "AGGREGATE
EXERCISE PRICE"). The Holder shall be deemed to have become the holder of record
of, and shall be treated for all purposes as the record holder of the Vested
Shares represented thereby, and such Vested Shares shall be deemed to have been
issued, immediately prior to the close of business on the date or dates upon
which this Warrant is exercised. In the event of any exercise of this Warrant,
certificates for the Vested Shares so purchased shall be delivered to the Holder
as soon as possible and in any event within ten business days of receipt of such
notice by the Company and, unless this Warrant has been fully exercised or
expired, a new Warrant representing the portion of the Shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
issued to the Holder as soon as possible and in any event within such ten
business day period.
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2.2 Right to Convert Warrant into Stock; Net Issuance. In
addition to and without limiting the rights of the Holder under the terms of
this Warrant, the Holder may elect to exercise this Warrant with respect to then
Vested Shares (the "CONVERSION RIGHT"), the aggregate value of which Vested
Shares shall be equal to the "in-the-money" value of this Warrant or the portion
thereof being converted as set forth below. The Conversion Right may be
exercised by the Holder by surrender of this Warrant at the principal office of
the Company together with notice of the Holder's intention to exercise the
Conversion Right, in which event the Company shall issue to the Holder a number
of Vested Shares computed using the following formula:
X= Y (A-B)
-------
A
Where:
X The number of Vested Shares to be issued to the Holder.
Y The number of Vested Shares representing the portion of
this Warrant that is being converted.
A The fair market value of one Share.
B The Exercise Price (as adjusted to the date of such
calculations).
For purposes of this Section 2.2, the "fair market value" per Share shall mean
the market price of one share of Common Stock on the last business day before
the effective date of exercise of the Conversion Right. If the Common Stock is
then traded on a national securities exchange or admitted to unlisted trading
privileges on such an exchange, or is listed on the Nasdaq Stock Market (the
"NASDAQ MARKET"), the market price as of a specified day shall be the last
reported sale price of one share of Common Stock on such exchange or on the
Nasdaq Market on such date or if no such sale is made on such day, the mean of
the closing bid and asked prices for such day on such exchange or on the Nasdaq
Market. If the Common Stock is not so listed or admitted to unlisted trading
privileges, the market price as of a specified day shall be the mean of the last
bid and asked prices for one share of Common Stock reported on such date (x) by
the NASD or (y) if reports are unavailable under clause (x) above by the
National Quotation Bureau Incorporated. If the Common Stock is not so listed or
admitted to unlisted trading privileges and bid and asked prices are not
reported, the market price of one share of Common Stock as of a specified day
shall be determined in good faith by written resolution of the Board of
Directors of the Company.
2.3 Automatic Conversion. In the event of termination of this
Warrant pursuant to Section 1 above, to the extent that this Warrant is then
exercisable and such exercise would result in the issuance of Shares to the
Holder, this Warrant shall be deemed automatically exercised in full under
Section 2.2 above immediately prior to the time at which it would otherwise
expire.
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2.4 HSR Compliance. Exercise or conversion of this Warrant is
subject to compliance by the Holder with all applicable filing requirements, and
expiration of all applicable waiting periods, under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"). The Company will
cooperate with the Holder in making all applicable filings under the HSR Act,
provided, however, that the Holder shall pay all applicable filing fees.
3. Securities Fully Paid; Reservation of Shares. All Shares that may be
issued upon the exercise of the rights represented by this Warrant, upon
issuance, will be fully paid and nonassessable, and free from all taxes, liens
and charges with respect to the issue thereof. During the period within which
the rights represented by the Warrant may be exercised, the Company will at all
times have authorized and reserved for the purpose of issuance upon exercise of
the purchase rights evidenced by this Warrant, a sufficient number of shares of
Common Stock to provide for the exercise of the rights represented by this
Warrant. The Shares to be issued upon exercise or conversion of this Warrant
shall be approved for listing on the Nasdaq Market, subject to official notice
of issuance.
4. Adjustment of Exercise Price and Number of Shares. The Exercise Price
and the number and kind of securities or other property purchasable upon the
exercise of the Warrant shall be subject to adjustment from time to time upon
the occurrence of certain events, as follows:
4.1 Reclassification or Merger. In case of any reclassification,
change or conversion of securities in the class issuable upon exercise of this
Warrant (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or combination),
or in case of any merger of the Company with or into another corporation (other
than a merger with another corporation in which the Company is a continuing
corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of this Warrant), unless this
Warrant shall have been exercised or terminated in accordance with its terms,
this Warrant shall thereafter be exercisable solely for the kind and amount of
consideration, including but not limited to shares of stock, other securities,
money and property, that the Holder would have received upon such
reclassification, change, conversion or merger if the Holder had exercised this
Warrant in full prior to such reclassification, change, conversion or merger.
The provisions of this subparagraph shall similarly apply to successive
reclassifications, changes, conversions or mergers. The Company agrees to make
appropriate provision in any definitive agreements providing for such a
transaction in order to carry out the terms of this Section.
4.2 Subdivisions or Combination of Shares. If at any time while
this Warrant remains outstanding and unexpired the Company shall subdivide or
combine the securities of the class issuable upon exercise of this Warrant, the
Exercise Price and the number of Shares issuable upon exercise hereof shall be
proportionately adjusted.
4.3 Stock Dividends. If, at any time while this Warrant is
outstanding and unexpired, the Company shall pay a dividend payable in
securities of the class issuable upon exercise of this Warrant (except any
distribution specifically provided for in the foregoing
8
51
subparagraphs 4.1 and 4.2), then the Exercise Price shall be adjusted, from and
after the date of determination of stockholders entitled to receive such
dividend or distribution, to that price determined by multiplying the Exercise
Price in effect immediately prior to such date of determination by a fraction,
the numerator of which shall be the total number of shares of such class of
securities outstanding immediately prior to such dividend or distribution, and
the denominator of which shall be the total number of shares of such class of
securities outstanding immediately after such dividend or distribution, and the
number of Shares subject to this Warrant shall be proportionately adjusted.
4.4 Common Stock Rights. If, at any time while this Warrant is
outstanding and unexpired, the Company shall pay a dividend or other
distribution on all Common Stock consisting of, or shall otherwise issue to all
holders of Common Stock, rights, warrants or options (not being available on an
equivalent basis to the Holders of this Warrant upon exercise) entitling the
holders of Common Stock to subscribe for or purchase Common Stock at a price per
share less than the current market price (determined as provided in Section 2.2)
of a share of Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights, warrants or options (other than
pursuant to a dividend reinvestment plan), the Exercise Price shall be decreased
by multiplying the then current Exercise Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock which the aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or purchase would purchase at
such current market price, and the denominator of which shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock so offered for
subscription or purchase, such decrease to become effective immediately after
the opening of business on the day following the date fixed for such
determination. In the event that such rights or warrants are not so issued, the
Exercise Price shall again be adjusted to be the Exercise Price which would then
be in effect if such date fixed for the determination of stockholders entitled
to receive such rights, warrants or options had not been fixed. Upon adjustment
of the Exercise Price pursuant to this Section 4.4, the number of shares subject
to issuance upon exercise of this Warrant shall be adjusted by multiplying such
number of shares prior to such adjustment by a fraction, the numerator of which
is the Exercise Price in effect immediately prior to such adjustment and the
denominator of which is the Exercise Price in effect immediately after giving
effect to such adjustment. In making any determinations under this Section 4.4,
there shall be taken into account any consideration received for such rights,
warrants or options, the value of which consideration, if other than cash, shall
be fixed in good faith by the Board of Directors of the Company, whose
determination shall be final.
4.5 Distributions of Property. If, at any time while this Warrant
is outstanding and unexpired, the Company shall pay a dividend or other
distribution on all Common Stock consisting of evidences of its indebtedness or
assets (excluding any dividend or distribution paid in cash, or any dividend or
distribution described in Sections 4.2, 4.3 or 4.4 of this Warrant), the
Exercise Price shall be decreased by multiplying the then current Exercise Price
by a fraction, the numerator of which shall be the current market price
(determined as provided in Section 2.2) of a share of Common Stock on the date
fixed for the determination of stockholders entitled to
9
52
receive such dividend or distribution less the fair market value (as determined
by the Board of Directors of Company, whose determination shall be final) of the
portion of indebtedness or assets so distributed applicable to one share of
Common Stock and the denominator of which shall be such current market price of
a share of Common Stock, such decrease to become effective immediately after the
opening of business on the day following the date fixed for such determination.
In the event that such dividend or distribution is not so made, the Exercise
Price shall again be adjusted to be the Exercise Price which would then be in
effect if such date fixed for the determination of stockholders entitled to
receive such dividend or distribution had not been fixed. Upon adjustment of the
Exercise Price pursuant to this Section 4.5, the number of shares subject to
issuance upon exercise of this Warrant shall be adjusted by multiplying such
number of shares prior to such adjustment by a fraction, the numerator of which
is the Exercise Price in effect immediately prior to such adjustment and the
denominator of which is the Exercise Price in effect immediately after giving
effect to such adjustment.
4.6 Notice of Adjustments. Whenever the Exercise Price shall be
adjusted pursuant to the provisions hereof, the Company shall within thirty days
of such adjustment deliver a certificate to the Holder signed by its chief
financial officer setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the number of Shares subject to this Warrant and the
Exercise Price therefor, as applicable, after giving effect to such adjustment.
5. Compliance with Securities Laws; Restrictions on Transfer.
5.1 Accredited Investor. This issuance of this Warrant is
conditioned upon, and by its acceptance hereof the Holder hereby confirms, that
the Holder is an "accredited investor" as that term is defined under Regulation
D under the Securities Act of 1933, as amended.
5.2 Legend. Upon issuance, certificates evidencing the Shares
shall bear legends in substantially the form set forth in the Purchase
Agreement.
5.3 Transfer Restrictions; Compliance with Securities Laws on
Transfer. This Warrant may not be transferred in whole or in part without the
prior written consent of the Company, except that such consent shall not be
required for the transfer of all or any part of this Warrant covering Vested
Shares. Any purported transfer of this Warrant in violation of the foregoing
restriction shall be void, and the Company shall not recognize any such
purported transfer on the securities ledger of the Company. In addition, no
permitted transfer of this Warrant or the Shares may be made without compliance
with applicable federal and state securities laws by the transferor and the
transferee (including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company). The Company will reasonably cooperate with the Holder in connection
with any permitted transfer of this Warrant, including by issuing new
certificates representing the Warrant and any portion thereof so transferred.
10
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6. Fractional Shares. No fractional Shares will be issued in
connection with any exercise hereunder, but in lieu of such fractional Shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
7. Modification and Waiver. This Warrant and any provision hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
8. Notices.
8.1 Notice of Certain Events. The Company shall provide the
Holder with at least twenty days notice (or such greater amount of notice as
Delaware law requires to be given to stockholders having the right to vote at a
meeting on any Sale Event, as defined herein) prior to (i) a merger of the
Company with or into, the consolidation of the Company with, or the sale by the
Company of all or substantially all of its assets to, another person or entity
(other than such a transaction wherein the stockholders of the Company prior to
such transaction retain or obtain a majority of the voting capital stock of the
surviving, resulting or purchasing entity) (a "SALE EVENT"), (ii) any
liquidation, dissolution or winding up of the Company or (iii) the record date
for any cash or other dividend or distribution declared on the Shares (each, a
"NOTICE EVENT"). If a notice is provided pursuant to subsection (i) or (ii) of
the previous sentence, the notice will indicate the expected date of the Notice
Event.
8.2 Notice Procedure. All notices and other communications
hereunder shall be in writing and shall be deemed given upon delivery either
personally or by commercial delivery service, or sent via facsimile (receipt
confirmed) to the parties at the following addresses or facsimile numbers (or at
such other address or facsimile numbers for a party as shall be specified by
like notice):
If to the Holder:
VHA Inc.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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If to the Company:
▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with a copy to:
Fenwick & West LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
9. Lost Warrants or Stock Certificates. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant or any stock certificate for Shares and, in the case
of any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant or stock certificate, the Company
will make and deliver a new Warrant or stock certificate, of like tenor, in lieu
of the lost, stolen, destroyed or mutilated Warrant or stock certificate.
10. No Impairment. The Company will not, through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution,
issuance or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all the provisions of this Warrant and in the taking of
all such action as may be necessary or appropriate in order to protect the
rights of the holder of this Warrant against impairment.
11. Assignment. Neither the Company nor the Holder may assign either
this Warrant or any of its rights, interests, or obligations hereunder without
the prior written consent of the other, except that the Company's consent shall
not be required for the Holder to assign all or any portion of this Warrant
covering Vested Shares. Subject to the preceding sentence and the restrictions
on transfer of this Warrant set forth in Section 5.3, this Warrant shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Any purported assignment in
violation of this Section shall be void.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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12. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Delaware, without regard to the conflict of laws provisions
thereof.
IN WITNESS WHEREOF, this Warrant has been executed as of the Issue Date.
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:
---------------------------------
Name:
Title:
13
56
EXHIBIT A
NOTICE OF EXERCISE FORM
(To be executed only upon partial or full
exercise of the within Warrant)
The undersigned registered Holder of the within Warrant hereby
irrevocably exercises the within Warrant for and purchases _________ shares of
Common Stock of ▇▇▇▇▇▇▇▇.▇▇▇, Inc. and herewith makes payment therefor in the
amount of $______, all at the price and on the terms and conditions specified in
the within Warrant and requests that a certificate (or ____________ certificates
in denominations of shares each) for the shares hereby purchased be issued in
the name of and delivered to ___________________________________ whose address
is ____________________________________________________ and, if such shares
shall not include all the Shares issuable as provided in the within Warrant,
that a new Warrant of like tenor for the number of shares not being purchased
hereunder be issued in the name of and delivered to the undersigned, whose
address is
_________________________________________________________________________.
Date: ______________________
Holder:
VHA Inc.
By:
---------------------------------
Name:
Title:
NOTICE: The signature to this Notice of Exercise must correspond with the
name as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatever.
57
EXHIBIT B
INVESTMENT REPRESENTATION CERTIFICATE
Holder: VHA Inc.
Company: ▇▇▇▇▇▇▇▇.▇▇▇, Inc.
Security: Common Stock
Amount:
Date:
In connection with the purchase of the above-listed securities (the
"SHARES"), the undersigned (the "HOLDER") represents to the Company as follows:
The Shares to be purchased by or delivered to the Holder hereunder will
be acquired for investment for such Holder'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 Securities Act of 1933, as amended ("1933 ACT"), and Holder
represents that it has no present intention or agreement to sell, grant any
participation in, or otherwise distribute any of the Shares to be acquired
hereunder in any public resale or distribution within the meaning of the 1933
Act. Holder also represents that it has not been formed for the specific purpose
of acquiring Securities under this Agreement.
Holder has received or has had full access to all the information it
considers necessary or appropriate to make an informed investment decision with
respect to the Shares to be purchased under this Agreement. Holder further has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Shares and to obtain
additional information (to the extent the Company possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify any
information furnished to Holder or to which Holder had access.
Holder understands that the purchase of the Shares involves substantial
risk. Holder: (i) has experience as an investor in securities of companies in
the development stage and acknowledges that Holder is able to fend for itself,
can bear the economic risk of Holder's investment in the Shares and has such
knowledge and experience in financial or business matters that Holder is capable
of evaluating the merits and risks of this investment in the Shares and
protecting its own interests in connection with this investment and/or (ii) has
a preexisting personal or business relationship with the Company and certain of
its officers, directors or controlling persons of a nature and duration that
enables Holder to be aware of the character, business acumen and financial
circumstances of such persons. Holder is an "accredited investor" within the
meaning of Regulation D promulgated under the 1933 Act.
Holder understands that the Shares are characterized as "restricted
securities" under the 1933 Act inasmuch as they are being acquired from the
Company 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, such Holder represents that Holder is familiar with Rule 144 of the
Securities
58
and Exchange Commission, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act.
At no time was Holder 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 offer, sale and purchase of
the Shares.
Without in any way limiting the representations set forth above, Holder
further acknowledges that the Shares are subject to limitations on disposition
thereof set forth in the Warrant and in that certain Amended and Restated Common
Stock and Warrant Agreement, dated as of May 24, 2000 by and between the Company
and Holder, and acknowledges that Holder is bound by such restrictions.
Date: ______________________
Holder:
VHA Inc.
By:
---------------------------------
Name:
Title:
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59
EXHIBIT B
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This Amended and Restated Registration Rights Agreement ("THIS
AGREEMENT") is entered into as of ________, 2000 by and between ▇▇▇▇▇▇▇▇.▇▇▇,
Inc., a Delaware corporation (the "COMPANY"), the investors listed on Exhibit A
(the "ORIGINAL INVESTORS"), the purchasers of shares of the Company's Series E
Preferred Stock and Series E-1 Preferred Stock listed on Exhibit A as the
"SERIES E INVESTORS" (the "SERIES E INVESTORS") and the recipients of shares of
the Company's Common Stock listed on Exhibit B (the "NEW INVESTORS") (the
Original Investors, the Series E Investors and the New Investors are referred to
herein collectively as the "INVESTORS") and all shares of Common Stock held by
the Investors are referred to herein as the "SHARES."
A. Pursuant to the Amended and Restated Investors' Rights Agreement,
dated as of February 19, 1999, by and between the Company and the Original
Investors, the Original Investors were granted certain information, registration
and first refusal rights (the "FIRST RIGHTS AGREEMENT").
B. The Series E Investors and the Company entered into a Preferred Stock
Purchase Agreement dated October 14, 1999, pursuant to which the Series E
Investors agreed to purchase the Series E and E-1 Preferred Stock, and a Second
Amended and Restated Registration Rights Agreement dated October 14, 1999
providing the Original Investors and the Series E Investors certain information,
registration and first refusal rights (the "SECOND RIGHTS AGREEMENT"), which
amended and superseded the First Rights Agreement.
C. The Company, the Original Investors, the Series E Investors and the
New Investors desire to enter into this Agreement in order to amend, restate and
replace their rights and obligations under the Second Rights Agreement with the
rights and obligations set forth in this Agreement. Section 7.1 of the Second
Rights Agreement provides that the Second Rights Agreement may be amended by the
written consent of the Company, the holders of a majority of the "Registrable
Securities" (as defined in Section 1.6 of the Second Rights Agreement) and the
holders of a majority of the "Series E Registrable Securities" (as defined in
Section 1.12 of the Second Rights Agreement), and the undersigned parties to
this Agreement hold a majority of such Registrable Securities and a majority of
such Series E Registrable Securities.
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
1.1 "AFFILIATE" means with regard to a particular person or
entity, another person or entity which controls, is controlled by or is under
common control with such person or entity, including in the case of an Investor,
persons and entities under common management with such Investor.
60
1.2 "COMMISSION" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
1.3 "HOLDER" shall mean each Investor holding Registrable
Securities or securities convertible into Registrable Securities and any person
holding such securities to whom the rights under this Agreement have been
transferred in accordance with Section 4.9 hereof.
1.4 "INITIATING HOLDERS" shall mean (a) any Holder or Holders
who in the aggregate hold at least 75% of the Registrable Securities, (b) any
Holder or Holders who in the aggregate hold at least 60% of the Series E
Registrable Securities, or (c) any Holder or Holders who in the aggregate hold
Novation Registrable Securities having a current market value of at least $30
million.
1.5 "PREFERRED STOCK" shall mean all previously issued and
outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series
E-1 Preferred Stock that were converted to Common Stock upon the Company's
initial public offering.
1.6 The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
1.7 "REGISTRABLE SECURITIES" means shares of Common Stock of the
Company (i) issued or issuable upon conversion of the Preferred Stock (the
"CONVERSION STOCK") and (ii) issued or issuable with respect to, or in exchange
for or in replacement of the Conversion Stock or other Registrable Securities,
(iii) issued or issuable with respect to, or in exchange for or in replacement
of other securities convertible into or exercisable for Preferred Stock upon any
stock split, stock dividend, recapitalization, or similar event, (iv) issued to
the former stockholders of Pharos Technologies, Inc., (the "PHAROS INVESTORS")
in connection with its acquisition by the Company, (v) issued to the former
stockholders of U.S. LifeLine, Inc. (the "USL INVESTORS") in connection with its
acquisition by the Company, (vi) issued to the former stockholders of EquipMD,
Inc., (the "EMI INVESTORS") in connection with its acquisition by the Company,
and (vii) issued to, or issuable upon exercise of warrants issued to, VHA, Inc.,
a Delaware corporation ("VHA") or University Healthsystem Consortium, an
Illinois corporation ("UHC") in connection with the commercial agreement among
Neoforma, Novation, LLC, a Delaware limited liability company ("NOVATION"),
Healthcare Purchasing Partners International, LLC, a Delaware limited liability
company, VHA and UHC (the "NOVATION REGISTRABLE SECURITIES"), excluding: (A) any
shares of Common Stock that have been sold to or through a broker, dealer,
market maker or underwriter in a public distribution or a public securities
transaction or redeemed by the Company in accordance with its Certificate of
Incorporation, (B) any shares of Common Stock of the Company (or Preferred Stock
or other securities convertible or exercisable therefor) that have been sold in
violation of this Agreement, and (C) all shares of Common Stock of the Company
(or Preferred Stock or other securities
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61
convertible or exchangeable therefor) described in clause (i), (ii), (iii),
(iv), (v), (vi) or (vii) of this Section 1.6 held by a Holder that can, in the
opinion of counsel to the Company, be sold by such Holder in a three-month
period without registration under the Securities Act pursuant to Rule 144.
1.8 "REGISTRATION EXPENSES" shall mean all expenses, except as
otherwise stated below, incurred by the Company in complying with Sections 4.1,
4.2 and 4.3 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, fees and disbursement of one counsel
to the Holders, blue sky fees and expenses, the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
1.9 "RESTRICTED SECURITIES" shall mean Registrable Securities
held by the Original Investors, the Series E Investors, the Pharos Investors and
the USL Investors. For the avoidance of doubt, "Restricted Securities" does not
include the Novation Registrable Securities.
1.10 "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
1.11 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect at the time.
1.12 "SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer taxes, if any, applicable to the
securities registered by the Holders.
1.13 "SERIES E REGISTRABLE SECURITIES" means the shares of
Common Stock (i) issued or issuable upon conversion of the Series E Preferred
Stock or Series E-1 Preferred Stock (ii) issued or issuable with respect to, or
in exchange for or in replacement of such Common Stock or (iii) issued or
issuable with respect to, or in exchange for or in replacement of other
securities convertible into or exercisable for such Preferred Stock upon any
stock split, stock dividend, recapitalization, or similar event.
2. Transferability.
2.1 Restrictions on Transferability. The Restricted Securities
shall not be sold, assigned, transferred or pledged (except those existing or
proposed pledges disclosed to the Company prior to the date of this Agreement)
except upon the conditions specified in this Section 2, which conditions are
intended to ensure compliance with the provisions of the Securities Act.
Investors proposing to transfer Restricted Securities will cause any proposed
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62
purchaser, assignee, transferee, or pledgee of Restricted Securities held by
such Investors to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Section 2.
2.2 Restrictive Legend. Each certificate representing (i) the
Restricted Securities and (ii) any other securities issued in respect of the
Restricted Securities upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall (unless otherwise permitted by the
provisions of Section 2.3 below) be stamped or otherwise imprinted with a legend
in the following form (in addition to any legend required under applicable state
securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SHARES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE
TRANSFER IS IN ACCORDANCE WITH RULE 144 OR SIMILAR RULE.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS, INCLUDING TRANSFERABILITY AND VOTING, AS
SET FORTH IN THE REGISTRATION RIGHTS AGREEMENT, A COPY OF WHICH
MAY BE OBTAINED FROM THE COMPANY.
The Investors and Holders of Restricted Securities consent to
the Company making a notation on its records and giving instructions to any
transfer agent regarding the Restricted Securities in order to implement the
restrictions on transfer established in this Section 2.
2.3 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 2.3. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than (i) a
transfer not involving a change in beneficial ownership, or (ii) in transactions
involving the distribution without consideration of Restricted Securities by an
Investor which is a partnership to any of its partners, or retired partners, or
to the estate of any of its partners or retired partners, (iii) a transfer to an
Affiliate, an affiliated fund, partnership or Company, which is not a competitor
of the Company, subject to compliance with applicable securities laws, or (iv)
transfers in compliance with Rule 144, so long as the Company is furnished with
satisfactory evidence of compliance with such Rule), unless there is in effect a
registration statement under the Securities Act covering the proposed transfer,
the holder thereof shall give written notice to the Company of such holder's
intention to effect such transfer, sale, assignment or pledge. Each such notice
shall describe the manner and circumstances of the proposed transfer, sale,
assignment or pledge in sufficient detail, and shall be accompanied by either of
the following, at such holder's expense: (i) a written opinion of legal counsel
who shall, and whose legal opinion shall, be reasonably satisfactory to the
Company addressed to the Company, to the effect that the proposed transfer of
the Restricted Securities may be effected
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63
without registration under the Securities Act, or (ii) a "no action" letter from
the Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. Each certificate evidencing the Restricted Securities transferred as
above provided shall bear, except if such transfer is made pursuant to Rule 144,
the appropriate restrictive legend set forth in Section 2.2 above, except that
such certificate shall not bear such restrictive legend if in the opinion of
counsel for such holder and in the reasonable opinion of the Company such legend
is not required in order to establish compliance with any provision of the
Securities Act.
2.4 Removal of Restrictions on Transfer of Restricted
Securities. Any legend referred to in Section 2.2 hereof stamped on a
certificate evidencing (i) the Restricted Securities or (ii) any other
securities issued in respect of the Restricted Securities upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event and the
stock transfer instructions and record notations with respect to such security
shall be removed and the Company shall issue a certificate without such legend
to the holder of such security if such security is registered under the
Securities Act, or if such holder provides the Company with an opinion of
counsel (which may be counsel for the Company) reasonably acceptable to the
Company to the effect that a public sale or transfer of such security may be
made without registration under the Securities Act or (iii) such holder provides
the Company with reasonable assurances, which may, at the option of the Company,
include an opinion of counsel satisfactory to the Company, that such security
can be sold pursuant to Section (k) of Rule 144 under the Securities Act.
3. [Intentionally Omitted].
4. Registration Rights.
4.1 Requested Registration.
(a) Requested Registration. If the Company shall receive
from the Initiating Holders a written request that the Company file a
registration statement for (i) at least 75% of the Registrable Securities, (ii)
at least 60% of the Series E Registrable Securities, or (iii) Novation
Registrable Securities having a current market value of at least $30 million,
and in the case of clause (i) or (ii) the aggregate gross proceeds of which
registration would equal or exceed $20,000,000 (any such notice, an "INITIATION
NOTICE"), then the Company will:
(A) within ten days of the receipt by the
Company of the Initiation Notice, give written notice of the proposed
registration, qualification or compliance to all other Holders (the notice in
this Section 4.1(a)(i) and in Section 4.2(a)(i), each called the "REGISTRATION
NOTICE"); and
(B) use its best efforts to effect, as soon as
practicable and in any event within ninety (90) days after receipt of the
Initiation Notice, such registration,
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qualification or compliance (including, without limitation, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within 20 days after receipt of the Registration Notice from the
Company;
Provided, however, that the Company shall not be obligated to take any
action to effect any such registration, qualification or compliance pursuant to
this Section 4.1:
(1) Prior to January 24, 2001.
(2) In any particular jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance;
(3) During the period starting with the
date sixty (60) days prior to the Company's estimated date of filing of any
registration statement for the securities of the Company, and ending (except as
provided below) on the date six (6) months immediately following the effective
date of any registration statement pertaining to securities of the Company,
provided that the Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become effective, and, provided,
further, that the standstill period in this clause (3) shall not apply to a
registration regarding a transaction described in subsection (a) of Rule 145 as
promulgated under the Securities Act ("RULE 145") or with respect to securities
issued or issuable under an employee benefit plan or other similar plan or
agreement;
(4) After the Company has effected two
(2) such registrations requested by holders of at least 60% of the Series E
Initiating Holders, three (3) such registrations requested by holders of the
Novation Registrable Securities, and two (2) additional registrations pursuant
to this Section 4.1(a), and such registrations have been declared or ordered
effective. The Company shall not be obligated to effect more than one such
registration requested by the holders of the Novation Registrable Securities in
any twelve month period.
(5) If the Company shall furnish to such
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors it would be seriously detrimental
to the Company or its stockholders for a registration statement to be filed in
the near future, then the Company's obligation to use its best efforts to
register, qualify or comply under this Section 4.1 shall be deferred for a
period not to exceed ninety (90) days from the date of receipt of written
request from the Initiating Holders; provided, however, that the Company shall
not exercise such right more than once in any twelve (12) month period.
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(b) Underwriting. The Company shall have the right to
select one or more underwriters to manage a registration under Section 4.1,
subject to the approval of the holders of a majority of the Registrable
Securities requesting registration, which will not be unreasonably withheld,
conditioned or delayed. If the registration described in the Registration Notice
is a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the Registration Notice. In such event, the
right of any Holder to registration pursuant to Section 4.1 shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company. The Company will not include in any registration under Section 4.1 any
securities other than Registrable Securities and securities to be registered for
offering and sale on behalf of the Company without the prior written consent of
the holders of a majority of the Registrable Securities requesting registration.
If the managing underwriter(s) advise the Company in writing that in their
opinion the number of Registrable Securities and, if permitted hereunder, other
securities in such offering, exceeds the number of Registrable Securities and
other securities, if any, that can be sold in an orderly manner in such offering
within a price range acceptable to the holders of a majority of the Registrable
Securities initially requesting registration, the Company will include in such
registration, prior to the inclusion of any securities that are not Registrable
Securities, the number of Registrable Securities requested to be included that
in the opinion of such underwriters can be sold in an orderly manner within the
price range of such offering, pro rata among the respective holders thereof on
the basis of the number of Registrable Securities that each such holder has
requested the Company to include in such registration.
If any Holder of Registrable Securities disapproves of the terms
of the underwriting, such Holder may elect to withdraw therefrom by written
notice to the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to one hundred eighty (180) days
after the effective date of such registration, or such other shorter period of
time as the underwriters may require.
4.2 Company Registration.
(a) Notice of Registration. If at any time or from time
to time the Company shall determine to register any of its securities, either
for its own account or the account of a security holder or holders, other than
(i) a registration with respect to securities issued or to be issued in an
employee benefit plan or other similar plan or agreement, (ii) a registration
relating solely to a transaction described in Rule 145, (iii) a registration on
any form which does not permit registration of securities of the Company for
secondary sales or (iv) a registration pursuant to Section 4.1 hereof, the
Company will:
(i) promptly give to each Holder the
Registration Notice; and
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(ii) include in such registration (and any
related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within ten (10) days after receipt of the
Registration Notice from the Company, by any Holder.
(b) Underwriting. If the registration described in the
Registration Notice is a registered public offering involving an underwriting,
the Company shall so advise the Holders as a part of the Registration Notice. In
such event, the right of any Holder to registration pursuant to Section 4.2
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of Registrable Securities in the underwriting to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company) enter into an underwriting
agreement in customary form with the managing underwriter selected for such
underwriting by the Company. Notwithstanding any other provision of this Section
4.2, if the managing underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten and all shares of any
other selling stockholders (other than Holders of Registrable Securities) have
first been excluded from such registration, the managing underwriter may limit
the Registrable Securities and other securities to be distributed through such
underwriting; provided, however, that (i) no such reduction shall reduce the
number of Registrable Securities (other than Series E Registrable Securities and
Novation Registrable Securities) included in the registration below fifteen
percent (15%) of the total amount of securities included in such registration
("AVAILABLE 15% SHARES"); (ii) no such reduction shall reduce the number of
shares of Series E Registrable Securities included in the registration below
twelve percent (12%) of the total amount of securities included in such
registration ("AVAILABLE SERIES E SHARES"); and (iii) no such reduction shall
reduce the number of shares of Novation Registrable Securities held by VHA and
UHC, respectively, included in such registration below fifteen percent (15%) (in
the case of VHA) and five percent (5%) (in the case of UHC) of the total amount
of securities included in such registration in the case of the first and second
such underwritten offerings after the issuance of the Novation Registrable
Securities or reduce the number of shares of Novation Registrable Securities
below nine and one-half percent (9.5%) (in the case of VHA) and three and
one-half percent (3.5%) (in the case of UHC) of the total number of securities
included in any subsequent registration ("AVAILABLE NOVATION SHARES"), provided,
further that for purposes of allocating the number of Registrable Securities
(other than Series E Registrable Securities and Novation Registrable Securities)
that may be included in the aggregate number of Registrable Securities (other
than Series E Registrable Securities and Novation Registrable Securities)
constituting the Available 15% Shares, the registration and underwriting shall
be allocated such that each Holder is allowed to include in the registration and
underwriting the portion of the Available 15% Shares as is equal to (x) the
number of Registrable Securities (other than Series E Registrable Securities and
Novation Registrable Securities) which such Holder timely proposed to include in
such registration divided by (y) the number of Registrable Securities (other
than Series E Registrable Securities and Novation Registrable Securities) which
all Holders thereof timely proposed to include in such registration; provided,
further that for purposes of allocating the number of shares of Series E
Registrable Securities that may be included in the aggregate number of shares of
Series E Registrable Securities constituting the Available Series E Shares, the
registration and underwriting shall be allocated such that each Holder is
allowed to include in the registration and
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underwriting the portion of the Available Series E Shares that is equal to (x)
the number of shares of Series E Registrable Securities which such Holder timely
proposed to include in such registration divided by (y) the number of Series E
Registrable Securities which all Holders thereof timely proposed to include in
such registration; provided, further that for purposes of allocating the number
of Novation Registrable Securities that may be included in the aggregate number
of shares of Novation Registrable Securities constituting the Available Novation
Shares, the registration and the underwriting shall be allocated such that each
Holder is allowed to include the portion of Available Novation Shares that is
equal to (x) the number of shares of Novation Registrable Securities which such
Holder timely proposed to include in such registration divided by (y) the number
of Novation Registrable Securities which all Holders thereof timely proposed to
include in such registration. The Company shall so advise all Holders
distributing their securities through such underwriting of such limitation and
the number of Registrable Securities that may be included in the registration
and underwriting shall be allocated to individual Holders timely requesting
participation in such registration under Section 4.2(a), (i) so that, as nearly
as practicable, the participation of each such Holder in the number of shares
made available to the Holders by the underwriters is, subject to the preceding
sentence, in proportion to (x) the number of Registrable Securities which such
Holder timely proposed to include in such registration to (y) the number of
Registrable Securities which all Holders timely proposed to include in such
registration, or (ii) in such other manner as shall be agreed to by the Company
and such Holders of the Registrable Securities proposed to be included in such
registration; provided, however, that the number of Registrable Securities to be
included in such underwriting shall not be reduced unless all other securities
subject to registration rights are first entirely excluded from such
underwriting. No Registrable Securities excluded from the underwriting by reason
of the underwriter's marketing limitation shall be included in such
registration. To facilitate the allocation of shares in accordance with the
above provisions, the Company or the underwriters may round the number of shares
allocated to any Holder to the nearest 100 shares.
If any Holder disapproves of the terms of any such underwriting, such
Holder may elect to withdraw therefrom by written notice to the Company and the
managing underwriter. Any Registrable Securities and/or other securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration, and shall not be transferred in a public distribution prior to
one-hundred (180) days after the effective date of such registration, or such
other shorter period of time as the underwriters may require.
(c) Right to Terminate Registration. The Company shall
have the right to terminate or withdraw any registration initiated by it under
this Section 4.2 prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration. The
Registration Expenses of such withdrawn registration shall be borne by the
Company in accordance with Section 4.4 hereof.
4.3 Registration on Form S-3.
(a) If the holders of at least one percent (1%) of the
Registrable Securities then outstanding or any holder of Series E Registrable
Securities or any holder of
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Novation Registrable Securities shall request that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3 or any
similar short form registration statement), for a public offering of Registrable
Securities, the reasonably anticipated aggregate price to the public of which
would equal or exceed $1,000,000 and the Company is a registrant entitled to use
Form S-3 to register the Registrable Securities for such an offering (or such
successor or similar form), the Company shall use its best efforts to cause such
Registrable Securities to be registered on such form for the offering and to
cause such Registrable Securities to be qualified in such jurisdictions as the
Holder or Holders may reasonably request; provided, however, that the Company
shall not be required to effect more than one (1) registration (which has been
declared effective) pursuant to this Section 4.3 in any twelve (12) month period
for each of the Holders of the Registrable Securities, the Series E Registrable
Securities, and the Novation Registrable Securities held by UHC, respectively,
and the Company shall not be required to effect more than two (2) registrations
(which have been declared effective) pursuant to this Section 4.3 in any twelve
(12) month period for the Holders of the Novation Registrable Securities held by
VHA. The provisions of Section 4.1(b) shall be applicable to each registration
initiated under this Section 4.3.
(b) Notwithstanding the foregoing, the Company shall not
be obligated to take any action pursuant to this Section 4.3: (i) in any
particular jurisdiction in which the Company would be required to qualify to do
business or execute a general consent to service of process in effecting such
registration, qualification or compliance; (ii) if the Company, within ten (10)
days of the receipt of the request of the initiating Holders, gives notice of
its bona fide intention to effect the filing of a registration statement with
the Commission within ninety (90) days of receipt of such request (other than
with respect to a registration statement relating to a Rule 145 transaction, or
an offering with respect to securities issue are issuable under an employee
benefit plan or other similar plan or agreement); (iii) during the period
starting with the date ninety (90) days prior to the Company's estimated date of
filing of, and ending on the date six (6) months immediately following, the
effective date of any registration statement pertaining to securities of the
Company (other than a registration of securities in a Rule 145 transaction or
with respect to securities issued or issuable with respect to an employee
benefit plan or similar plan or arrangement), provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or (iv) if the Company shall furnish
to such Holder a certificate signed by the President of the Company stating that
in the good faith judgment of the Board of Directors it would be seriously
detrimental to the Company or its stockholders for registration statements to be
filed in the near future, then the Company's obligation to use its best efforts
to file a registration statement shall be deferred for a period not to exceed
ninety (90) days from the receipt of the request to file such registration by
such Holder; provided, however, that the Company shall not exercise such right
more than once in any twelve (12) month period.
4.4 Expenses of Registration. All Registration Expenses incurred
in connection with all registrations pursuant to Section 4.2, in connection with
all demand registrations under Section 4.1, and in connection with the first
three (3) S-3 registrations under Section 4.3 by each of the Series E
Registrable Securities and the Novation Registrable Securities, respectively,
shall be borne by the Company. All Selling Expenses relating to
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securities registered on behalf of the Holders shall be borne by the holders of
securities included in such registration pro rata with the Company and among
each other on the basis of the number of shares so registered. Notwithstanding
the foregoing sentence, if a registration proceeding begun pursuant to Section
4.1 or 4.3 is subsequently withdrawn by the Holders, either (a) if Holders of
all of the Registrable Securities to have been registered agree, then the
Holders of the Registrable Securities to have been registered shall bear all
such Registration Expenses pro rata on the basis of the number of shares to have
been registered, or (b) if all such Holders do not agree, then the Initiating
Holders will forfeit their right to one registration pursuant to such section,
and the Company shall bear such Registration Expenses. Notwithstanding the
foregoing, however, if at the time of the withdrawal, the Holders have learned
of a material adverse change in the condition, business or prospects of the
Company from that known to the Initiating Holders at the time of their request,
of which the Company had received notice prior to the time of the request, then
the Holders shall not be required to pay any of said Registration Expenses or to
forfeit the right to one demand registration or S-3 registration, as the case
may be, and the Company shall pay the same.
4.5 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 4,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (180) days or until the earlier time that the distribution described in
the Registration Statement has been completed, provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will furnish to the counsel selected by the holders of a majority of
the Registrable Securities covered by such registration statement copies of all
such documents proposed to be filed, which documents will be subject to the
review of such counsel;
(b) Prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders participating in such
registration and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities.
(d) Furnish, at the request of any Holder requesting
registration of Registrable Securities on the date such Registrable Securities
are delivered to the underwriters for sale in connection with a registration
pursuant to this Section 4, (i) an opinion, dated such date, of counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to
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the underwriters, if any, and to the Holders requesting registration of
Registrable Securities and (ii) a letter dated such date, from the independent
accountants of the Company, in form and substance as is customarily given by
independent accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
(e) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such U.S. jurisdiction as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therein
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(f) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering.
(g) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(h) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed and to be qualified for trading
on each system on which similar securities issued by the Company are from time
to time qualified.
(i) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
(j) make available for inspection by any underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
underwriter, attorney, accountant or agent in connection with such registration
statement;
(k) otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and Exchange Commission, and
make available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
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(l) permit any holder of Registrable Securities that
might be deemed, in the sole and exclusive judgment of such holder, to be an
underwriter or a controlling person of the Company, to participate in the
preparation of such registration or comparable statement and to require the
insertion therein of material, furnished to the Company in writing, that in the
reasonable judgment of such holder and its counsel and the Company's counsel
should be included; and
(m) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any Registrable Securities included in such registration
statement for sale in any jurisdiction, the Company will use its reasonable
efforts promptly to obtain the withdrawal of such order.
If any such registration or comparable statement refers to any holder by name or
otherwise as the holder of any securities of the Company and if, in the sole and
exclusive judgment of such holder, such holder is or might be deemed to be a
controlling person of the Company, such holder shall have the right to require
(a) the inclusion in such registration statement of language, in form and
substance reasonably satisfactory to such holder, to the effect that the holding
of such securities by such holder is not to be construed as a recommendation by
such holder of the investment quality of the Company's securities covered
thereby and that such holding does not imply that such holder will assist in
meeting any future financial requirements of the Company, or (b) in the event
that such reference to such holder by name or otherwise is not required by the
Securities Act or any similar federal statute then in force, the deletion of the
reference to such holder.
4.6 Indemnification.
(a) The Company will indemnify each Holder, each of its
officers, directors, partners and legal counsel, and each person controlling
such Holder within the meaning of Section 15 of the Securities Act and each
underwriter, if any, and each person who controls any underwriter within the
meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any of the following (each a "VIOLATION"):
(i) any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or
supplement thereto, incident to any such registration, qualification or
compliance, or
(ii) any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they
were made, not misleading, or
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(iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any federal or state
law applicable to the Company in connection with any such registration,
qualification or compliance;
and the Company will reimburse each such Holder, each of its officers,
directors, partners, and legal counsel and each person controlling such Holder,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such expense claim, loss, damage,
liability or action, provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability or action arises
out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder, controlling person or underwriter and stated to be specifically for use
therein, and provided further, that the indemnity agreement contained in this
Section 4.6(a) shall not apply to amounts paid in settlement of any such
expense, claim, loss, damage, liability or action if such settlement is effected
without the consent of the Company, which consent shall not be unreasonably
withheld.
(b) Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors, officers, and legal counsel, each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company within the meaning of Section 15 of the Securities Act, and
each other Holder, each of its officers, directors, partners and legal counsel
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any Violation that is
contained in written information furnished to the Company by an instrument duly
executed by such Holder and stated to be specifically for use in such
registration, and will reimburse the Company, such Holders, such directors,
officers, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such expense, claim, loss, damage, liability or action. Notwithstanding the
foregoing, the liability of each Holder under this Section 4.6(b) shall be
limited in an amount equal to the net proceeds received by such Holder of
Registrable Securities sold as contemplated herein, provided, however, that the
indemnity agreement contained in this Section 4.6(b) shall not apply to amounts
paid in settlement of any such expense loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld.
(c) Each party entitled to indemnification under this
Section 4.6 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the
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Indemnified Party may participate in such defense at such party's expense, and
provided, further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 4 unless the failure to give such notice is materially
prejudicial to an Indemnifying Party's ability to defend such action, and
provided, further, that the Indemnifying Party shall not assume the defense for
matters as to which there is a conflict of interest or as to which such parties
assert separate and different defenses but shall bear the expense of such
defense nevertheless.
(d) If the indemnification provided for in this Section
4.6 is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any expense, loss, liability, claim, damage,
or action referred to therein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such expense, loss,
liability, claim, damage, or action in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one hand and of the
Indemnified Party on the other in connection with the statements or omissions
that resulted in such expense, loss, liability, claim, damage, or action as well
as any other relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge and access to information. Notwithstanding the
foregoing, in no event shall the contribution by a Holder under this Section
4.6(d) exceed the net proceeds from the offering received by such Holder, unless
such Holder's liability resulted from willful misconduct by such Holder and no
person guilty of fraudulent misrepresentation under Section 11(f) of the
Securities Act shall be entitled to contribution from a person who was not
guilty of such fraudulent misrepresentation.
(e) The obligations of the Company and Holders under
this Section 4.6 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 4, and otherwise.
4.7 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as shall be
required in connection with any registration, qualification or compliance
referred to in this Section 4.
4.8 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities, and the Novation Registrable
Securities, to the public without registration, the Company agrees to use its
best efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act.
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(b) File with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act;
(c) Furnish to the Investor, so long as such Investor
owns any Restricted Securities or Novation Registrable Securities, forthwith
upon request a written statement by the Company as to its compliance with the
reporting requirements of said Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company and other
information in the possession of or reasonably obtainable by the Company as an
Investor may reasonably request in availing itself of any rule or regulation of
the Commission allowing an Investor to sell any such securities without
registration.
(d) Take such actions as are necessary to enable the
Holders to utilize Form S-3 pursuant to Section 4.3 for the sale of Registrable
Securities.
4.9 Transfer of Registration Rights. The rights to cause the
Company to register securities granted Holders under Sections 4.1, 4.2 and 4.3
may be assigned by a Holder to (i) a transferee or assignee who acquires at
least (or after such transfer will hold an aggregate of) 250,000 Registrable
Securities (or 215,000 shares of Series E Registrable Securities or Novation
Registrable Securities), (ii) another Holder of Registrable Securities who
already possesses registration rights, (iii) a transferee or assignee of
Registrable Securities acquiring 10% or more of the outstanding stock of the
Company, (iv) a transferee of Registrable Securities which is a subsidiary,
parent, partner, limited partner, retired partner, shareholder or Affiliate of a
Holder; (v) to a transferee of Registrable Securities who is a Holder's family
member or which is a trust for the benefit of such Holder or (vi) in the case of
Novation Registrable Securities, patrons, affiliates, members, shareholders,
partners or controlled facilities of a shareholder, partner or member, of VHA or
UHC; provided, however, the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act.
4.10 [Intentionally Omitted]
4.11 Termination of Registration Rights. No Holder shall be
entitled to exercise any right provided for in this Section 4 after the earlier
of (i) September 30, 2005; or (ii) the time when all Registrable Securities held
by such Holder can, in the opinion of counsel to the Company, be sold by a
Holder in a three-month period without registration under the Securities Act
pursuant to Rule 144.
4.12 No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities that grants registration
rights that are inconsistent with or violate the rights granted to the holders
of Registrable Securities in this Agreement. Notwithstanding anything to the
contrary herein, the Company may grant registration rights in
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connection with bank financings, lease lines, corporate partnering transactions,
business acquisitions of or by the Company or to entities with which the Company
has a business relationship, provided (a) such grant is not motivated primarily
by equity financing needs and (b) such grant is approved by the Board of
Directors (with the director appointed by the Series E Registrable Securities
concurring in the case of any change to the rights that are specific to the
Series E Registrable Securities, and with the director appointed from either
Novation or VHA concurring in the case of any change to the rights that are
specific to the Novation Registrable Securities). Persons granted registration
rights pursuant to the preceding sentence may become parties to part 4 of this
Agreement with the consent of the Company.
4.13 Adjustments Affecting Registrable Securities. The Company
will not take any action, or permit any change to occur, with respect to its
securities for the purpose of materially and adversely affecting the ability of
the holders of Registrable Securities to include such Registrable Securities in
a registration undertaken pursuant to this Agreement, provided that this Section
4.13 shall not apply to actions or changes with respect to the Company's
business, balance sheet, earnings or revenue or with respect to equity, debt or
acquisition transactions involving the Company.
5. [Intentionally Omitted]
6. [Intentionally Omitted]
7. General Provisions.
7.1 Amendment and Waiver. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), but only with the written consent of the Company and the holders
of a majority of the shares of the Registrable Securities and (i) in the case of
any change to the rights granted specifically to the Holders of Series E
Registrable Securities, the Holders of a majority in interest of Series E
Registrable Securities; and (ii) in the case of any change to the rights granted
specifically to the Holders of Novation Registrable Securities, the Holders of a
majority of the Novation Registrable Securities held by VHA and a majority of
the Novation Registrable Securities held by UHC; provided, however, that no
amendment may adversely affect an individual Holder differently than other
similarly situated Holders without the consent of such Holder, and provided,
further, that no retroactive amendments may be made without the approval of all
parties hereto. Any amendment or waiver effected in accordance with this Section
7.1 shall be binding upon each holder of any Registrable Securities at the time
outstanding, each future holder of all such securities and the Company.
7.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware without reference to choice of
law provisions thereof. In connection with any litigation under this Agreement,
the parties hereto waive any right they may otherwise have to request trial by
jury.
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7.3 Successors and Assigns. Except as otherwise expressly
provided, the provisions of this Agreement shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties.
7.4 Severability. In case any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be unenforceable,
this Agreement shall continue in full force and effect without said provision;
provided, however, that no such severability shall be effective if it materially
changes the economic benefit of this Agreement to any party.
7.5 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon (a) personal delivery or (b) one business day after transmission by
facsimile to the other party to be notified with confirmation of receipt or
deposit with a nationally recognized overnight courier, or (c) three business
days after deposit with the United States Post Office, by first class mail,
postage prepaid, addressed: (i) if to the Investors, at the Investors' address
as set forth on Exhibit A or Exhibit B hereto, or at such other address as the
Investors shall have furnished to the Company in writing, or (ii) if to the
Company, at its current address or at such other address as the Company shall
have furnished to the Investors in writing.
7.6 Counterparts. This Agreement may be executed in any number
of counterparts, each of which is an original, and all of which together shall
constitute one instrument.
7.7 Reorganization. The provisions of this Agreement shall apply
to any shares or other securities resulting from any stock split or reverse
split, stock dividend, reclassification, subdivision, consolidation or
reorganization of any shares or other equity securities of the Company and to
any shares or other securities of the Company or of any successor company that
may be received by any of the parties hereto by virtue of their respective
ownership of any shares of Common Stock of the Company.
7.8 Remedies. Any Person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically and to
recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. The parties hereto
agree and acknowledge that money damages may not be an adequate remedy for any
breach of the provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) for specific performance and for
other injunctive relief in order to enforce or prevent violation of the
provisions of this Agreement.
7.9 Further Assurances. Each party to this Agreement hereby
covenants and agrees, without the necessity of any further consideration, to
execute and deliver any and all such further documents and take any and all such
other actions as may be reasonably necessary or appropriate to carry out the
intent and purposes of this Agreement and to consummate the transactions
contemplated hereby.
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7.10 Entire Agreement. This Agreement constitutes the entire
agreement of the parties concerning the subject matter hereof and supersedes the
Second Rights Agreement and the registration rights previously granted by the
Company to the Pharos Investors and the USL Investors, each of which is hereby
terminated as of the date of this Agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY BEEN LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
COMPANY: INVESTORS (Entity):
▇▇▇▇▇▇▇▇.▇▇▇, INC.
----------------------------------------
(Printed Entity Name Here)
By:
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▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ By:
Chief Financial Officer and -------------------------------------
Secretary
Name:
-----------------------------------
Title:
----------------------------------
INVESTORS (Individual):
----------------------------------------
Signature Here
----------------------------------------
Printed Name Here
[SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]