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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): MARCH 30, 2000
NEOFORMA.COM, INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
000-28715 77-0424252
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(Commission (IRS Employer
File Number) Identification No.)
3255-7 SCOTT BLVD., SANTA CLARA, CALIFORNIA 95054
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(Address of principal executive offices) (Zip Code)
(408) 654-5700
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
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ITEM 5: OTHER EVENTS.
On March 30, 2000, Neoforma.com, Inc., a Delaware corporation ("Neoforma"),
Eclipsys Corporation ("Eclipsys"), a Delaware corporation, and NeoIII
Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of
Neoforma ("Merger Sub"), entered into an Agreement and Plan of Merger (the
"Eclipsys Merger Agreement"). Subject to the terms and conditions of the
Eclipsys Merger Agreement, Merger Sub will merge with and into Eclipsys, with
Eclipsys to survive the merger and become a wholly-owned subsidiary of Neoforma
(the "Eclipsys Merger"). In the Eclipsys Merger, each outstanding share of
Eclipsys common stock will be exchanged for 1.344 shares of Neoforma common
stock, and options to purchase Eclipsys common stock will be exchanged for
options to purchase shares of Neoforma common stock according to the exchange
ratio. The transaction will be structured to qualify as a tax-free
reorganization and will be accounted for as a purchase. Eclipsys stockholders
holding approximately 31% of Eclipsys' outstanding common stock, and Neoforma
stockholders holding approximately 35% of Neoforma's outstanding common stock,
have agreed to vote in favor of the Eclipsys Merger and against any proposal
made in opposition to or in competition with the Eclipsys Merger.
On March 30, 2000, Neoforma and HEALTHvision, Inc., a Delaware corporation
("Healthvision"), entered into an Agreement and Plan of Merger (the
"Healthvision Merger Agreement"). Subject to the terms and conditions of the
Healthvision Merger Agreement, immediately following the consummation of the
Eclipsys Merger, Healthvision will merge with and into Eclipsys, which will then
be a wholly-owned subsidiary of Neoforma, with Eclipsys to survive the merger
(the "Healthvision Merger"). In the Healthvision Merger, each outstanding share
of Healthvision Series A Convertible Participating Preferred Stock will be
exchanged for 2.0801825 shares of Neoforma common stock, each outstanding share
of Healthvision Series B Convertible Preferred Stock will be exchanged for 1.776
shares of Neoforma common stock, each outstanding share of Healthvision common
stock will be exchanged for 0.444 shares of Neoforma common stock, and options
to purchase Healthvision common stock will be exchanged for options to purchase
shares of Neoforma common stock according to the common stock exchange ratio.
The transaction will be structured to qualify as a tax-free reorganization and
will be accounted for as a purchase. Healthvision stockholders holding
approximately 88% of Healthvision's outstanding voting stock, and Neoforma
stockholders holding approximately 35% of Neoforma's outstanding common stock,
have agreed to vote in favor of the Healthvision Merger and against any proposal
made in opposition to or in competition with the Healthvision Merger.
On March 30, 2000, Neoforma, Novation LLC, a Delaware limited liability
company ("Novation"), VHA Inc., a Delaware corporation ("VHA"), University
Healthsystem Consortium, an Illinois corporation ("UHC"), and Healthcare
Purchasing Partners International, LLC, a Delaware limited liability company
("HPPI"), entered into an Outsourcing and Operating Agreement (the "Novation
Operating Agreement"), under which, subject to the terms and conditions of the
Novation Operating Agreement, each of Novation, VHA, UHC and HPPI agree to
exclusively use and promote to their member healthcare organizations Neoforma's
internet-based exchange for the purchase and sale of medical equipment, supplies
and other products and services. The term of the Novation Operating Agreement is
ten years, subject to termination or extension in accordance with its terms.
Under the Novation Operating Agreement, Neoforma will appoint Novation as
Neoforma's exclusive agent for soliciting suppliers of such products and
services on Neoforma's behalf. In connection with the Novation Operating
Agreement, Neoforma entered into Common Stock and Warrant Agreements (the "VHA
Stock and Warrant Agreement" and "UHC Stock and Warrant Agreement,"
respectively, and together with the
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Novation Operating Agreement, the "Novation Documents") with each of VHA and
UHC, Novation's member organizations, pursuant to which, and subject to the
terms and conditions of such agreements, Neoforma will issue to VHA 38.3 million
shares and warrants to purchase an additional 14.2 million shares of Neoforma
common stock, and Neoforma will issue to UHC 9.2 million shares and a warrant to
purchase an additional 1.5 million shares of Neoforma common stock.
Upon consummation of the Eclipsys Merger, the Healthvision Merger and the
transactions contemplated by the Novation Documents, Neoforma will take all
action necessary to increase the size of the Neoforma board of directors to
nine, and appoint three directors nominated by Eclipsys, including Harvey J.
Wilson, the Chairman and CEO of Eclipsys, one director nominated by
Healthvision, and one director nominated by VHA to the Neoforma board. Following
consummation of the transactions, Harvey J. Wilson will become Chairman of the
Neoforma board of directors and Robert Zollars will continue as Chief Executive
Officer and President of Neoforma.
Each of the transactions is subject to several conditions, including
approval by the stockholders of Neoforma, Eclipsys and Healthvision, the
expiration of applicable waiting periods under antitrust laws and obtaining
necessary consents. Each of the transactions are also subject to the
consummation of the other transactions, and may be terminated by the parties to
such transaction upon termination of either of the other transactions.
The Eclipsys Merger Agreement, Healthvision Merger Agreement, VHA Stock and
Warrant Agreement and UHC Stock and Warrant Agreement, together with the
exhibits to such agreements, are filed as exhibits to this report. The foregoing
description is qualified in its entirety by reference to the full text of such
exhibits. A press release announcing the transactions is attached as an exhibit
to this report.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated March 30, 2000, among
Neoforma.com, Inc., Neo III Acquisition Corp. and Eclipsys Corporation
(including Voting Agreement Exhibits).
2.2 Agreement and Plan of Merger, dated March 30, 2000, between
Neoforma.com, Inc. and HEALTHvision, Inc. (including Exhibits A and
B).
99.1 Common Stock and Warrant Agreement, dated March 30, 2000, between
Neoforma.com, Inc. and VHA Inc. (including Exhibits).
99.2 Common Stock and Warrant Agreement, dated March 30, 2000, between
Neoforma.com, Inc. and University Healthsystem Consortium (including
Exhibits).
99.3 Press Release dated March 30, 2000 issued by Neoforma.com, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: April 3, 2000 NEOFORMA.COM, INC.
By: /s/ FREDERICK RUEGSEGGER
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Frederick Ruegsegger
Chief Financial Officer
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EXHIBIT INDEX
2.1 Agreement and Plan of Merger, dated March 30, 2000, among
Neoforma.com, Inc., Neo III Acquisition Corp. and Eclipsys Corporation
(including Voting Agreement Exhibits).
2.2 Agreement and Plan of Merger, dated March 30, 2000, between
Neoforma.com, Inc. and HEALTHvision, Inc. (including Exhibits A and
B).
99.1 Common Stock and Warrant Agreement, dated March 30, 2000, between
Neoforma.com, Inc. and VHA Inc. (including Exhibits).
99.2 Common Stock and Warrant Agreement, dated March 30, 2000, between
Neoforma.com, Inc. and University Healthsystem Consortium (including
Exhibits).
99.3 Press Release dated March 30, 2000 issued by Neoforma.com, Inc.
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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NEOFORMA.COM, INC.,
NeoIII ACQUISITION CORP.
AND
ECLIPSYS CORPORATION
MARCH 30, 2000
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TABLE OF CONTENTS
<TABLE>
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Page
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ARTICLE I THE MERGER ............................................................................... 2
1.1 The Merger ......................................................................... 2
1.2 Effective Time; Closing ............................................................ 2
1.3 Effect of the Merger ............................................................... 2
1.4 Certificate of Incorporation; Bylaws ............................................... 2
1.5 Directors and Officers ............................................................. 2
1.6 Effect on Capital Stock ............................................................ 3
1.7 Exchange of Certificates ........................................................... 3
1.8 No Further Ownership Rights in Company Common Stock ................................ 6
1.9 Restricted Stock ................................................................... 7
1.10 Tax Consequences ................................................................... 7
1.11 Taking of Necessary Action; Further Action ......................................... 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY ............................................... 7
2.1 Organization; Subsidiaries ......................................................... 8
2.2 Company Capitalization ............................................................. 8
2.3 Obligations with Respect to Capital Stock .......................................... 9
2.4 Authority; Non-Contravention ....................................................... 10
2.5 SEC Filings; Company Financial Statements .......................................... 11
2.6 Absence of Certain Changes or Events ............................................... 12
2.7 Taxes .............................................................................. 13
2.8 Title to Properties ................................................................ 15
2.9 Intellectual Property .............................................................. 15
2.10 Compliance with Laws ............................................................... 17
2.11 Litigation ......................................................................... 17
2.12 Employee Benefit Plans ............................................................. 18
2.13 Environmental Matters .............................................................. 22
2.14 Certain Agreements ................................................................. 23
2.15 Brokers' and Finders' Fees ......................................................... 23
2.16 Insurance .......................................................................... 24
2.17 Disclosure ......................................................................... 24
2.18 Board Approval ..................................................................... 25
2.19 Opinion of Financial Advisor ....................................................... 25
2.20 Anti-Takeover Protections .......................................................... 25
2.21 Affiliates ......................................................................... 25
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB ................................ 25
3.1 Organization of Parent and Merger Sub .............................................. 26
3.2 Parent and Merger Sub Capitalization ............................................... 26
3.3 Obligations With Respect to Capital Stock .......................................... 27
</TABLE>
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<TABLE>
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3.4 Authority; Non-Contravention ....................................................... 28
3.5 SEC Filings; Parent Financial Statements ........................................... 29
3.6 Absence of Certain Changes or Events ............................................... 30
3.7 Taxes .............................................................................. 30
3.8 Title to Properties ................................................................ 32
3.9 Intellectual Property .............................................................. 32
3.10 Compliance with Laws ............................................................... 34
3.11 Litigation ......................................................................... 34
3.12 Employee Benefit Plans ............................................................. 34
2.13 Environmental Matters .............................................................. 38
3.14 Certain Agreements ................................................................. 39
3.15 Brokers' and Finders' Fees ......................................................... 39
3.16 Insurance .......................................................................... 40
3.17 Disclosure ......................................................................... 40
3.18 Board Approval ..................................................................... 40
3.19 Opinion of Financial Advisor ....................................................... 40
3.20 Anti-Takeover Protections .......................................................... 41
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME ..................................................... 41
4.1 Conduct of Business by Company ..................................................... 41
4.2 Conduct of Business by Parent ...................................................... 44
ARTICLE V ADDITIONAL AGREEMENTS .................................................................... 47
5.1 Proxy Statement/Prospectus; Registration Statement; Antitrust and Other Filings .... 47
5.2 Meeting of Company Stockholders .................................................... 48
5.3 Meeting of Parent Stockholders ..................................................... 50
5.4 No Solicitation .................................................................... 50
5.5 Confidentiality; Access to Information ............................................. 52
5.6 Public Disclosure .................................................................. 52
5.7 Reasonable Efforts; Notification ................................................... 53
5.8 Third Party Consents ............................................................... 54
5.9 Stock Options and ESPP ............................................................. 54
5.10 Form S-8 ........................................................................... 55
5.11 Indemnification .................................................................... 55
5.12 Parent Board of Directors; Executive Officers ...................................... 56
5.13 Nasdaq Listing ..................................................................... 56
5.14 Letters of Accountants ............................................................. 56
5.15 Takeover Statutes .................................................................. 56
5.16 Certain Employee Benefits .......................................................... 56
5.17 Registration Rights ................................................................ 57
5.18 Acquisitions of Company Stock ...................................................... 57
ARTICLE VI CONDITIONS TO THE MERGER ................................................................ 57
6.1 Conditions to Obligations of Each Party to Effect the Merger ....................... 57
6.2 Additional Conditions to Obligations of Company .................................... 58
</TABLE>
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<TABLE>
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6.3 Additional Conditions to the Obligations of Parent and Merger Sub .................. 59
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER ...................................................... 60
7.1 Termination ........................................................................ 60
7.2 Notice of Termination Effect of Termination ........................................ 62
7.3 Fees and Expenses .................................................................. 63
7.4 Amendment .......................................................................... 64
7.5 Extension; Waiver .................................................................. 64
ARTICLE VIII GENERAL PROVISIONS .................................................................... 64
8.1 Non-Survival of Representations and Warranties ..................................... 64
8.2 Notices ............................................................................ 64
8.3 Interpretation; Certain Defined Terms .............................................. 65
8.4 Counterparts ....................................................................... 66
8.5 Entire Agreement; Third Party Beneficiaries ........................................ 66
8.6 Severability ....................................................................... 67
8.7 Other Remedies; Specific Performance ............................................... 67
8.8 Governing Law ...................................................................... 67
8.9 Rules of Construction .............................................................. 67
8.10 Assignment ......................................................................... 67
8.11 Waiver Of Jury Trial ............................................................... 67
</TABLE>
INDEX OF EXHIBITS
Exhibit A Form of Company Voting Agreement
Exhibit B Form of Parent Voting Agreement
Exhibit C Form of Certificate of Incorporation of Surviving Corporation
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and entered
into as of March 30, 2000, among Neoforma.com, Inc., a Delaware corporation
("PARENT"), NeoIII Acquisition Corp., a Delaware corporation and a wholly owned
first-tier subsidiary of Parent ("MERGER SUB"), and Eclipsys Corporation, a
Delaware corporation ("COMPANY").
RECITALS
A. The respective Boards of Directors of Parent, Merger Sub and Company
have approved this Agreement, and declared advisable the merger of Merger Sub
with and into Company (the "MERGER") upon the terms and subject to the
conditions of this Agreement and in accordance with the General Corporation Law
of the State of Delaware ("DELAWARE LAW").
B. For United States federal income tax purposes, the Merger is intended to
qualify as a "reorganization" pursuant to the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "CODE"). For accounting purposes,
the Merger is intended to be accounted for as a purchase under United States
generally accepted accounting principles ("GAAP").
C. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, certain
stockholders of Company are entering into Voting Agreements with Parent in the
form of Exhibit A (the "COMPANY VOTING AGREEMENTS").
D. Concurrently with the execution of this Agreement, and as a condition
and inducement to Company's willingness to enter into this Agreement, certain
stockholders of Parent are entering into Voting Agreements with Company and
HEALTHvision, Inc., a Delaware corporation ("HEALTHVISION") in the form of
Exhibit B (the "PARENT VOTING AGREEMENTS").
E. Concurrently with the execution of this Agreement, Parent is entering
into an Agreement and Plan of Merger (the "HEALTHVISION MERGER AGREEMENT")
between Parent and Healthvision, an Outsourcing and Operating Agreement (the
"NOVATION OPERATING AGREEMENT") among Parent, Novation, LLC, a Delaware limited
liability company ("NOVATION"), VHA Inc., a Delaware corporation ("VHA"),
University Healthsystem Consortium, an Illinois corporation ("UHC"), and
Healthcare Purchasing Partners International, LLC, a Delaware limited liability
company ("HPPI"), and Common Stock and Warrant Agreements between Parent and
VHA, and Parent and UHC, respectively (the "STOCK AND WARRANT AGREEMENTS" and,
together with the Novation Operating Agreement, the "NOVATION DOCUMENTS," and
the Novation Documents together with the Healthvision Merger Agreement, the
"RELATED AGREEMENTS"), copies of each of which and all related documents are
attached to the Parent Disclosure Letter (as defined in the introduction to
Article III).
In consideration of the foregoing and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
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ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions of this
Agreement and the applicable provisions of Delaware Law, at the Effective Time,
Merger Sub shall be merged with and into Company, the separate corporate
existence of Merger Sub shall cease, and Company shall continue as the surviving
corporation of the Merger (the "SURVIVING CORPORATION").
1.2 Effective Time; Closing. Subject to the provisions of this Agreement,
the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger, in such appropriate form as determined by the parties,
with the Secretary of State of the State of Delaware in accordance with the
relevant provisions of Delaware Law (the "CERTIFICATE OF MERGER") (the time of
such filing (or such later time as may be agreed in writing by Company and
Parent and specified in the Certificate of Merger) being the "EFFECTIVE TIME")
as soon as practicable on or after the Closing Date. The closing of the Merger
(the "CLOSING") shall 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 VI, or at such
other time, date and location as the parties hereto agree in writing (the
"CLOSING DATE").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of Delaware
Law. Without limiting the generality of the foregoing, at the Effective Time,
all the property, rights, privileges, powers and franchises of Company and
Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities
and duties of Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of Company,
as in effect immediately prior to the Effective Time, shall be amended to read
in its entirety as set forth in Exhibit C, and thereafter shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended.
(b) At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time, until their
respective successors are duly appointed.
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1.6 Effect on Capital Stock. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of Merger Sub, Company or the holders of any of the following
securities:
(a) Conversion of Company Common Stock. Each share of common stock, par
value $0.01 per share, of Company ("COMPANY COMMON STOCK") issued and
outstanding immediately prior to the Effective Time, other than any shares of
Company Common Stock to be canceled pursuant to Section 1.6(b), will be canceled
and extinguished and automatically converted (subject to Section 1.6(e)) into
the right to receive 1.344 (the "EXCHANGE RATIO") of a share of common stock,
par value $0.001 per share, of Parent ("PARENT COMMON STOCK") upon surrender of
the certificate representing such share of Company Common Stock in the manner
provided in Section 1.7. No fraction of a share of Parent Common Stock will be
issued by virtue of the Merger, but in lieu thereof, a cash payment shall be
made pursuant to Section 1.7(e).
(b) Cancellation of Company-Owned and Parent-Owned Stock. Each share of
Company Common Stock held by Company or owned by Merger Sub, Parent or any
direct or indirect wholly owned subsidiary of Company or of Parent immediately
prior to the Effective Time shall be canceled and extinguished without any
conversion thereof.
(c) Stock Options; Employee Stock Purchase Plan. At the Effective Time,
all options to purchase Company Common Stock then outstanding under Company's
1996 Stock Option Plan, 1998 Stock Incentive Plan and 1999 Stock Incentive Plan
(collectively, the "COMPANY STOCK OPTION PLANS") shall be assumed by Parent in
accordance with Section 5.9 of this Agreement. Rights outstanding under
Company's 1998 Employee Stock Purchase Plan (the "COMPANY ESPP") shall be
treated as set forth in Section 5.9 of this Agreement.
(d) Capital Stock of Merger Sub. Each share of common stock, par value
$0.01 per share, of Merger Sub (the "MERGER SUB COMMON STOCK"), issued and
outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable share of common stock, $0.01 par
value per share, of the Surviving Corporation. Following the Effective Time,
each certificate evidencing ownership of shares of Merger Sub common stock shall
evidence ownership of such shares of capital stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted
to reflect appropriately the effect of any stock split, reverse stock split,
stock dividend (including any dividend or distribution of securities convertible
into Parent Common Stock or Company Common Stock), reorganization,
recapitalization, reclassification or other like change with respect to Parent
Common Stock or Company Common Stock occurring on or after the date hereof and
prior to the Effective Time.
1.7 Exchange of Certificates.
(a) Exchange Agent. Parent shall select an institution reasonably
acceptable to Company to act as the exchange agent (the "EXCHANGE AGENT") in the
Merger.
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(b) Exchange Fund. Promptly after the Effective Time, Parent shall
deposit with the Exchange Agent for exchange in accordance with this Article I,
the shares of Parent Common Stock (such shares of Parent Common Stock, together
with cash in lieu of fractional shares and any dividends or distributions with
respect thereto, are hereinafter referred to as the "EXCHANGE FUND") issuable
pursuant to Section 1.6 in exchange for outstanding shares of Company Common
Stock.
(c) Exchange Procedures. Promptly after the Effective Time, Parent
shall instruct the Exchange Agent to mail to each holder of record of a
certificate or certificates ("CERTIFICATES") which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock whose
shares were converted into shares of Parent Common Stock pursuant to Section
1.6, (i) a letter of transmittal in customary form (that shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent and
shall contain such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common Stock. Upon surrender of
Certificates for cancellation to the Exchange Agent together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holders of such Certificates shall be entitled to
receive in exchange therefor certificates representing the number of whole
shares of Parent Common Stock into which their shares of Company Common Stock
were converted at the Effective Time, payment in lieu of fractional shares that
such holders have the right to receive pursuant to Section 1.7(e) and any
dividends or distributions payable pursuant to Section 1.7(d), and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, for
all corporate purposes, to evidence only the ownership of the number of full
shares of Parent Common Stock into which such shares of Company Common Stock
shall have been so converted and the right to receive an amount in cash in lieu
of the issuance of any fractional shares in accordance with Section 1.7(e) and
any dividends or distributions payable pursuant to Section 1.7(d). No interest
will be paid or accrued on any cash in lieu of fractional shares of Parent
Common Stock or on any unpaid dividends or distributions payable to holders of
Certificates. In the event of a transfer of ownership of shares of Company
Common Stock which is not registered in the transfer records of Company, a
certificate representing the proper number of shares of Parent Common Stock may
be issued to a transferee if the Certificate representing such shares of Company
Common Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid.
(d) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the date of this Agreement with
respect to Parent Common Stock with a record date after the Effective Time will
be paid to the holders of any unsurrendered Certificates with respect to the
shares of Parent Common Stock represented thereby until the holders of record of
such Certificates shall surrender such Certificates. Subject to applicable law,
following surrender of any such Certificates, the Exchange Agent shall deliver
to the holders of certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) promptly, the amount of any
cash payable with respect to a fractional share of Parent Common Stock to which
such holder is entitled pursuant to Section
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1.7(e) and the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares of
Parent Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date occurring after surrender, payable with
respect to such whole shares of Parent Common Stock.
(e) Fractional Shares. (i) As promptly as practicable following the
Effective Time, the Exchange Agent shall determine the excess of (A) the number
of full shares of Parent Common Stock delivered to the Exchange Agent pursuant
to Section 1.7(b), over (B) the aggregate number of full shares of Parent Common
Stock to be distributed to holders of Company Common Stock pursuant to Section
1.7(c) (such excess, the "EXCESS SHARES"). Following the Effective Time, the
Exchange Agent, as agent for the holders of Company Common Stock, shall sell the
Excess Shares at then prevailing prices on the Nasdaq Stock Market in the manner
set forth in paragraph (ii) of this Section 1.7(e).
(ii) The sale of the Excess Shares by the Exchange Agent shall be
executed on the Nasdaq Stock Market and shall be executed in round lots to the
extent practicable. The Exchange Agent shall use all commercially reasonable
efforts to complete the sale of the Excess Shares as promptly following the
Effective Time as, in the Exchange Agent's reasonable judgment, is practicable
consistent with obtaining the best execution of such sales in light of
prevailing market conditions. Until the net proceeds of such sales have been
distributed to the holders of Company Common Stock, the Exchange Agent will hold
such proceeds in trust for the holders of Company Common Stock. The Exchange
Agent will determine the portion of such net proceeds to which each holder of
Company Common Stock shall be entitled, if any, by multiplying the amount of the
aggregate net proceeds by a fraction the numerator of which is the amount of the
fractional share interest to which such holder of Company Common Stock is
entitled (after taking into account all shares of Parent Common Stock to be
issued to such holder) and the denominator of which is the aggregate amount of
fractional share interests to which all holders of Company Common Stock are
entitled. As soon as practicable after the determination of the amount of cash,
if any, to be paid to holders of Company Common Stock with respect to fractional
share interests, the Exchange Agent shall promptly pay such amounts to such
holders of Company Common Stock in accordance with the terms of Section 1.7(c).
(iii) Notwithstanding the provisions of paragraphs (i) and (ii)
of this Section 1.7(e), Parent may decide, at its option, exercised prior to the
Effective Time, in lieu of the issuance and sale of Excess Shares and the making
of the payments contemplated in such paragraphs, that Parent shall pay to the
Exchange Agent an amount sufficient for the Exchange Agent to pay each holder of
Company Common Stock the amount such holder would have received pursuant to
Section 1.7(e)(ii) assuming that the sales of Parent Common Stock were made at a
price equal to the average of the closing prices of the Parent Common Stock on
the Nasdaq Stock Market for the ten consecutive trading days immediately
following the Effective Time and, in such case, all references herein to the
cash proceeds of the sale of the Excess Shares and similar references shall be
deemed to mean and refer to the payments calculated as set forth in this
paragraph (iii). In such event, Excess Shares shall not be issued or otherwise
transferred to the Exchange Agent pursuant to Sections 1.7(b) or (e).
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(f) Required Withholding. Each of the Exchange Agent, Parent and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Company Common Stock such amounts as may be required
to be deducted or withheld therefrom under the Code or under any provision of
state, local or foreign tax law or under any other applicable Legal Requirement
(as defined in Section 2.2(b)). To the extent such amounts are so deducted or
withheld, such amounts shall be treated for all purposes under this Agreement as
having been paid to the person to whom such amounts would otherwise have been
paid.
(g) Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of Company
Common Stock represented by such Certificates were converted pursuant to Section
1.6, cash for fractional shares, if any, as may be required pursuant to Section
1.7(e) and any dividends or distributions payable pursuant to Section 1.7(d);
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance of such certificates representing shares of Parent
Common Stock, cash and other distributions, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
(h) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, neither the Exchange Agent, Parent, the Surviving Corporation nor
any party hereto shall be liable to a holder of shares of Parent Common Stock or
Company Common Stock for any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(i) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Company Common Stock for twelve
months after the Effective Time shall be delivered to Parent, upon demand, and
any holders of Company Common Stock who have not theretofore complied with the
provisions of this Section 1.7 shall thereafter look only to Parent for the
shares of Parent Common Stock, any cash in lieu of fractional shares of Parent
Common Stock to which they are entitled pursuant to Section 1.7(e) and any
dividends or other distributions with respect to Parent Common Stock to which
they are entitled pursuant to Section 1.7(d), in each case, without any interest
thereon.
1.8 No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Section 1.7(d) and (e)) shall be deemed
to have been issued in full satisfaction of all rights pertaining to such shares
of Company Common Stock, and there shall be no further registration of transfers
on the records of the Surviving Corporation of shares of Company Common Stock
that were outstanding immediately prior to the Effective Time. If after the
Effective Time Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article I.
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1.9 Restricted Stock. If any shares of Company Common Stock that are
outstanding immediately prior to the Effective Time are unvested or are subject
to a repurchase option, risk of forfeiture or other condition providing that
such shares ("COMPANY RESTRICTED STOCK") may be forfeited or repurchased by the
Company upon any termination of the stockholders' employment, directorship or
other relationship with the Company (and/or any affiliate of the Company) under
the terms of any restricted stock purchase agreement or other agreement with the
Company that does not by its terms provide that such repurchase option, risk of
forfeiture or other condition lapses upon consummation of the Merger, then the
shares of Parent Common Stock issued upon the conversion of such shares of
Company Common Stock in the Merger will continue to be unvested and subject to
the same repurchase options, risks of forfeiture or other conditions following
the Effective Time, and the certificates representing such shares of Parent
Common Stock may accordingly be marked with appropriate legends noting such
repurchase options, risks of forfeiture or other conditions. Company shall take
all actions that may be necessary to ensure that, from and after the Effective
Time, Parent is entitled to exercise any such repurchase option or other right
set forth in any such restricted stock purchase agreement or other agreement. A
listing of the holders of Company Restricted Stock, together with the number of
shares and the vesting schedule of Company Restricted Stock held by each, is set
forth in Part 1.9 of the Company Disclosure Letter.
1.10 Tax and Accounting Consequences. It is intended by the parties hereto
that the Merger shall constitute a "reorganization" within the meaning of
Section 368 of the Code. The parties hereto adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 354(a) and 361(a) of the Code and
Treas. Reg. Sections 1.368-2(g) and 1.368-3(a). It is intended by the parties
that the Merger shall qualify for accounting treatment as a purchase.
1.11 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Company and Merger Sub, the officers and directors of Company
and Merger Sub will take all such lawful and necessary action. Parent shall
cause Merger Sub to perform all of its obligations relating to this Agreement
and the transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
As of the date of this Agreement and as of the Closing Date, Company
represents and warrants to Parent and Merger Sub, subject to the exceptions
specifically disclosed in writing in the disclosure letter and referencing a
specific representation delivered by Company to Parent dated as of the date
hereof and certified by a duly authorized officer of Company (the "COMPANY
DISCLOSURE LETTER"), as follows:
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2.1 Organization; Subsidiaries.
(a) Company 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 (as
defined in Section 8.3) on Company.
(b) Other than the corporations identified in Part 2.1 of the Company
Disclosure Letter, neither Company nor any of the other corporations identified
in Part 2.1 of the Company 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
2.1 of the Company Disclosure Letter, except for passive investments in equity
interests of public companies as part of the cash management program of Company.
Neither Company nor any of its subsidiaries is obligated to make any material
future investment in or capital contribution to any other entity. Part 2.1 of
the Company Disclosure Letter indicates the jurisdiction of organization of each
entity listed therein and Company's direct or indirect equity interest therein.
(c) Company has delivered or made available to Parent a true and
correct copy of the Certificate of Incorporation (including any Certificates of
Designation) and Bylaws of Company and similar governing instruments of each of
its subsidiaries, each as amended to date (collectively, the "COMPANY CHARTER
DOCUMENTS"), and each such instrument is in full force and effect. Neither
Company nor any of its subsidiaries is in violation of any of the provisions of
the Company Charter Documents.
2.2 Company Capitalization.
(a) The authorized capital stock of Company consists solely of
200,000,000 shares of Company Common Stock, of which there were 36,530,325
shares issued and outstanding as of the close of business on March 14, 2000,
5,000,000 shares of non-voting common stock, par value $0.01 per share, none of
which are issued or outstanding as of the date of this Agreement or as of the
Effective Time, and 5,000,000 shares of preferred stock, par value $0.01 per
share, none of which are issued or outstanding as of the date of this Agreement
or as of the Effective Time. All outstanding shares of Company Common Stock are
duly authorized, validly issued, fully paid and nonassessable and are not
subject to any rights of rescission or preemptive rights created by statute, the
Company Charter Documents or any agreement or document to which Company is a
party or by which it is bound. As of the date of this Agreement, there are no
shares of Company Common Stock held in treasury by Company.
(b) As of the close of business on March 14, 2000, (i) 5,669,130 shares
of Company Common Stock are subject to issuance pursuant to outstanding options
to purchase Company Common Stock under the Company Stock Option Plans ("COMPANY
OPTIONS") for an aggregate exercise price of $99,634,227, and (ii) 150,000
shares of Company Common Stock are
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reserved for future issuance under the Company ESPP. Since March 14, 2000,
Company has granted an additional 1,000,000 Company Options having an aggregate
exercise price of $25,812,500 only to persons who have agreed in writing to
waive acceleration of the vesting of such Company Options and any other Company
Options granted under Company's 1999 Stock Incentive Plan upon consummation of
the Merger and the other transactions contemplated by the Related Agreements
pursuant to a form of waiver acceptable to Parent. Part 2.2(b) of the Company
Disclosure Letter sets forth the following information with respect to each
Company Option outstanding as of the date of this Agreement: (i) the name of the
optionee; (ii) the number of shares of Company Common Stock subject to such
Company Option vested and unvested on the date of this Agreement; (iii) the
exercise price of such Company Option; (iv) the date on which such Company
Option was granted or assumed; (v) the date on which such Company Option expires
and (vi) whether the exercisability of such option will be accelerated in any
way by the transactions contemplated by this Agreement, and indicates the extent
of any such acceleration. Company has made available to Parent an accurate and
complete copy of each of the Company Stock Option Plans and the form of all
stock option agreements evidencing Company Options. There are no options
outstanding to purchase shares of Company Common Stock other than pursuant to
the Company Stock Option Plans. All shares of Company Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Other than as set forth on Part
2.2(b) of the Company Disclosure Letter, there are no commitments or agreements
of any character to which the Company is bound obligating Company to accelerate
the vesting of any Company Option as a result of the Merger.
(c) All outstanding shares of Company Common Stock, all outstanding
Company Options, and all outstanding shares of capital stock of each subsidiary
of Company 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 2.4).
2.3 Obligations with Respect to Capital Stock. Except as set forth in
Section 2.2 or Part 2.3 of the Company Disclosure Letter, there are no equity
securities, partnership interests or similar ownership interests of any class of
Company 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 Company are owned free and clear
of all Encumbrances. 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 use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset)
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<PAGE> 14
(other than (i) liens for Taxes (as defined in Section 2.7) not yet due and
payable; (ii) liens reflected on the Company Balance Sheet or Parent Balance
Sheet (each as defined below), as 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). Except as set forth in Section
2.2, or Part 2.2 or Part 2.3 of the Company 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 Company or any of its
subsidiaries is a party or by which it is bound obligating Company 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 Company or any of its subsidiaries or
obligating Company 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 voting trust, proxy, rights agreement, "poison pill"
anti-takeover plan or other agreement or understanding to which Company is a
party or by which it is bound with respect to any equity security of any class
of Company or with respect to any equity security, partnership interest or
similar ownership interest of any class of any of its subsidiaries. Stockholders
of Company will not be entitled to dissenters' or appraisal rights under
applicable state law in connection with the Merger.
2.4 Authority; Non-Contravention.
(a) Company has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Company, subject only to the approval and
adoption of this Agreement and the approval of the Merger by Company's
stockholders (the "COMPANY STOCKHOLDER APPROVALS") and the filing of the
Certificate of Merger pursuant to Delaware Law. The affirmative vote of the
holders of a majority of the outstanding shares of Company Common Stock is
sufficient for Company's stockholders to approve and adopt this Agreement and
approve the Merger, and no other approval of any holder of any securities of
Company is required in connection with the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Company and, assuming the due execution and delivery by Parent and Merger Sub,
constitutes the valid and binding obligation of Company, enforceable against
Company in accordance with its terms, except as enforceability may be limited by
bankruptcy and other similar laws affecting the rights of creditors generally
and general principles of equity.
(b) The execution and delivery of this Agreement by Company does not,
and the performance of this Agreement by Company will not, (i) conflict with or
violate the Company Charter Documents, (ii) subject to obtaining the Company
Stockholder Approvals and compliance with the requirements set forth in Section
2.4(c), conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Company or any of its subsidiaries or by which Company or
any of its subsidiaries or any of their respective properties is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or
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<PAGE> 15
lapse of time or both would become a default) under, or impair Company'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 Company
or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Company or any of its subsidiaries is a party or by which Company or
any of its subsidiaries or its or any of their respective assets 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 Company. Part 2.4(b)
of the Company Disclosure Letter lists all consents, waivers and approvals under
any of Company's or any of its subsidiaries' agreements, 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 Company, Parent or the Surviving
Corporation as a result of the Merger or would materially and adversely affect
Company's Intellectual Property (as defined below).
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission or
other governmental authority or instrumentality, foreign or domestic
("GOVERNMENTAL ENTITY"), is required to be obtained or made by Company in
connection with the execution and delivery of this Agreement or the consummation
of the Merger, except for (i) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business, (ii) the filing of the Proxy Statement/Prospectus (as defined in
Section 2.17) with the Securities and Exchange Commission ("SEC") in accordance
with the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and a
Schedule 13D with regard to the Parent Voting Agreements in accordance with the
Exchange Act, and the effectiveness of the Registration Statement (as defined in
Section 2.17), (iii) 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
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), and the securities or antitrust laws of any foreign country, and (iv)
such other consents, authorizations, filings, approvals and registrations which
if not obtained or made would not have a Material Adverse Effect on Company,
Parent or the Surviving Corporation or would not have a material adverse effect
on the ability of the parties hereto to consummate the Merger.
2.5 SEC Filings; Company Financial Statements.
(a) Company has filed all forms, reports and documents required to be
filed by Company with the SEC since the effective date of the registration
statement (the "COMPANY INITIAL REGISTRATION STATEMENT") of Company'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 Company may file subsequent to the date hereof)
and the Company Initial Registration Statement are referred to herein as the
"COMPANY SEC REPORTS." As of their respective dates, the Company SEC Reports (i)
were prepared in accordance with the requirements of the Securities Act of 1933,
as amended (the "SECURITIES ACT"), or the Exchange Act, as the case may be, and
the rules and regulations of the SEC
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thereunder applicable to such Company 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 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 Company
SEC Report. None of Company'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 Company SEC Reports (the
"COMPANY FINANCIALS"), including each Company SEC Report 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 10-Q, 8-K or any successor form under the Exchange Act) and (iii) fairly
presented the consolidated financial position of Company and its subsidiaries as
at the respective dates thereof and the consolidated results of Company'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 Company
contained in Company SEC Reports as of December 31, 1999 is hereinafter referred
to as the "COMPANY BALANCE SHEET." Except as disclosed in the Company Financials
filed on or prior to the date hereof, since the date of the Company Balance
Sheet, neither Company 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 Company and its
subsidiaries taken as a whole, except for liabilities incurred since the date of
the Company Balance Sheet in the ordinary course of business consistent with
past practices and liabilities incurred in connection with this Agreement.
2.6 Absence of Certain Changes or Events. Since the date of the Company
Balance Sheet through the date of this Agreement, there has not been: (i) any
Material Adverse Effect with respect to Company, (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 Company's or any of its subsidiaries'
capital stock, or any purchase, redemption or other acquisition by Company of
any of Company's capital stock or any other securities of Company 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 Company's
or any of its subsidiaries' capital stock, (iv) any granting by Company or any
of its subsidiaries of any increase in compensation or fringe benefits to any of
their officers or employees, or any payment by Company or any of its
subsidiaries of any bonus to any of their officers or employees, or any granting
by Company or any of its subsidiaries of any increase in severance or
termination pay or any entry by Company 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
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which are materially altered upon the occurrence of a transaction involving
Company 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 Company 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
Company 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 (as
defined in Section 2.9) 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
Company in its accounting methods, principles or practices, except as required
by concurrent changes in GAAP, or (viii) any material revaluation by Company of
any of its material assets, including writing off notes or accounts receivable
other than in the ordinary course of business.
2.7 Taxes.
(a) Company and each of its subsidiaries have timely filed all material
Returns federal, state, local and foreign returns, estimates, information
statements and reports ("RETURNS") relating to Taxes required to be filed by or
on behalf of Company and each of its subsidiaries with any Tax authority, such
Returns are true, correct and complete in all material respects, and Company and
each of its subsidiaries have paid all Taxes shown to be due on such Returns.
(b) Company 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 Company.
(c) Neither Company 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 Company or any of its subsidiaries,
nor has Company 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 Company or any of
its subsidiaries by any Tax authority is presently in progress, nor has Company
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 Company or any of
its subsidiaries has been proposed in writing formally or informally by any Tax
authority to Company or any of its subsidiaries or any Tax or financial
representative thereof.
(f) Neither Company nor any of its subsidiaries has any liability for
unpaid Taxes which has not been accrued for or reserved on the Company Balance
Sheet in accordance with GAAP, whether asserted or unasserted, contingent or
otherwise, which is material to Company, other than any liability for unpaid
Taxes that may have accrued since the
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<PAGE> 18
date of the Company Balance Sheet in connection with the operation of the
business of Company and its subsidiaries in the ordinary course.
(g) There is no agreement, plan or arrangement to which Company 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 Company 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
Company 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 Company 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 disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by Company.
(i) Neither Company 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 Merger, Company 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 Company's or its subsidiaries' assets are tax exempt use
property within the meaning of Section 168(h) of the Code.
(l) Company has not been distributed in a transaction qualifying under
Section 355 of the Code within the last two years, nor has Company 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.
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2.8 Title to Properties.
(a) All real property leases to which Company 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 Company which could
reasonably be expected to have a Material Adverse Effect on Company.
(b) Company 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 Company
Financials and except where the failure to have valid title or a valid leasehold
interest would not have a Material Adverse Effect on Company.
2.9 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean 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 mark 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.
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual Property that
is owned by, or exclusively licensed to, Company 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.
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, Company or one of its
subsidiaries.
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(a) No material Company Intellectual Property or product or service of
Company is subject to any proceeding, agreement, or stipulation to which Company
is a party, or any outstanding decree, order or judgment, the proceeding arising
out of which Company was either a party or of which Company has knowledge,
restricting in any manner the use, transfer, or licensing thereof by Company, or
which may affect the validity, use or enforceability of such Company
Intellectual Property.
(b) Each material item of Company Registered Intellectual Property is
valid and subsisting, all necessary registration, maintenance and renewal fees
currently due in connection with such Company Registered Intellectual Property
have been made and all necessary documents, recordations and certificates in
connection with such Company 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 Company Registered Intellectual Property, except, in each case,
as would not materially adversely affect such item of Company Registered
Intellectual Property.
(c) Company 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 Company Intellectual Property free and clear
of any Encumbrance (excluding licenses and related restrictions).
(d) Neither Company 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 Company Intellectual Property, to any third
party.
(e) Part 2.9(e) of the Company Disclosure Letter lists all material
contracts, licenses and agreements to which Company is a party (i) pursuant to
which any exclusive rights with respect to any item of Company 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 Company.
(f) The operation of the business of Company as such business currently
is conducted, including Company's design, development, marketing and sale of the
products or services of Company (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) Company has not received written notice from any third party that
the operation of the business of Company or any act, product or service of
Company, 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
Company.
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(h) To the knowledge of Company, no person has or is infringing or
misappropriating any Company Intellectual Property, which infringement or
misappropriation, individually or in the aggregate, would have a Material
Adverse Effect on Company.
(i) Company and its subsidiaries have taken reasonable steps to protect
Company's and its subsidiaries' rights in Company's and such subsidiaries'
confidential information and trade secrets, except where the failure to do so
would not have a Material Adverse Effect on Company.
(j) None of the Company Intellectual Property or product or service of
Company 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 Company.
2.10 Compliance with Laws.
(a) Neither Company 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 Company or any of its subsidiaries or by which Company 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 Company or
any of its subsidiaries is a party or by which Company 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 Company. To Company's
knowledge, no investigation or review by any Governmental Entity is pending or
has been threatened in a writing delivered to Company against Company or any of
its subsidiaries. There is no agreement with any Governmental Entity, judgment,
injunction, order or decree binding upon Company or any of its subsidiaries
which has or could reasonably be expected to have the effect of prohibiting or
materially impairing any material business practice of Company or any of its
subsidiaries, or any acquisition of material property by Company or any of its
subsidiaries.
(b) Company 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 Company as currently
conducted (collectively, the "COMPANY PERMITS"), and are in compliance with the
terms of the Company Permits, except where the failure to hold such Company
Permits, or be in such compliance, would not, individually or in the aggregate,
have a Material Adverse Effect on Company.
2.11 Litigation. There are no claims, suits, actions or proceedings pending
or, to the knowledge of Company, threatened against, relating to or affecting
Company 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 Company or on the Surviving Corporation
following the
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Merger or have a material adverse effect on the ability of the parties hereto to
consummate the Merger.
2.12 Employee Benefit Plans.
(a) Definitions. With the exception of the definition of "Affiliate"
set forth in Section 2.12(a)(i) below (which definition shall apply only to this
Section 2.12), 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 Company within the meaning of Section 414(b), (c), (m) or (o) of
the Code and the regulations issued thereunder;
(ii) "COMPANY 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
Company or any Affiliate for the benefit of any Employee;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the Department of Labor;
(v) "EMPLOYEE" shall mean any current, former, or retired
employee, officer, or director of Company or any Affiliate;
(vi) "EMPLOYEE AGREEMENT" shall mean each management, employment,
severance, consulting, relocation, repatriation, expatriation, visas, work
permit or similar agreement or contract between Company or any Affiliate and any
Employee or consultant (excluding any offer letter or other agreement that does
not subject Company to any potential liability in excess of $200,000);
(vii) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of 1993, as
amended;
(ix) "INTERNATIONAL EMPLOYEE PLAN" shall mean each Company
Employee Plan that has been adopted or maintained by Company, whether informally
or formally, for the benefit of Employees outside the United States;
(x) "IRS" shall mean the Internal Revenue Service;
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(xi) "MULTIEMPLOYER PLAN" shall mean any "PENSION PLAN" (as
defined below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA;
(xii) "PBGC" shall mean the Pension Benefit Guaranty Corporation;
and
(xiii) "PENSION PLAN" shall mean each Company Employee Plan which
is an "employee pension benefit plan," within the meaning of Section 3(2) of
ERISA.
(b) Schedule. Part 2.12 of the Company Disclosure Letter contains an
accurate and complete list of each Company Employee Plan and each Employee
Agreement. Company does not have any plan or commitment to establish any new
Company Employee Plan, to modify any Company Employee Plan or Employee Agreement
(except to the extent required by law or to conform any such Company Employee
Plan or Employee Agreement to the requirements of any applicable law, or as
required by this Agreement), or to enter into any Company Employee Plan or
Employee Agreement, nor does it have any intention or commitment to do any of
the foregoing.
(c) Documents. Company has provided or has made available to Parent:
(i) correct and complete copies of all documents embodying each Company Employee
Plan and each Employee Agreement including all amendments thereto and written
interpretations thereof; (ii) the most recent annual actuarial valuations, if
any, prepared for each Company 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
Company Employee Plan or related trust; (iv) if the Company Employee Plan is
funded, the most recent annual and periodic accounting of Company 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 Company Employee Plan; (vi) all IRS determination, opinion, notification
and advisory letters, and rulings relating to Company Employee Plans and copies
of all applications and correspondence to or from the IRS or the DOL with
respect to any Company Employee Plan; (vii) all material written agreements and
contracts relating to each Company Employee Plan, including, but not limited to,
administrative service agreements, group annuity contracts and group insurance
contracts; (viii) all communications material to any Employee or Employees
relating to any Company Employee Plan and any proposed Company 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
Company; (ix) all COBRA forms and related notices; and (x) all registration
statements and prospectuses prepared in connection with each Company Employee
Plan.
(d) Employee Plan Compliance. Except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect on Company: (i)
Company 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 Company Employee Plan,
and each Company Employee Plan has been established and maintained in all
material respects in accordance with its terms and in compliance with all
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<PAGE> 24
applicable laws, statutes, orders, rules and regulations, including but not
limited to ERISA or the Code; (ii) each Company 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 Company Employee Plan; (iv) there are no actions, suits or
claims pending, or, to the knowledge of Company, threatened or reasonably
anticipated (other than routine claims for benefits) against any Company
Employee Plan or against the assets of any Company Employee Plan; (v) each
Company Employee Plan can be amended, terminated or otherwise discontinued after
the Effective Time in accordance with its terms, without liability to Parent,
Company 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 Company, threatened by the IRS or
DOL with respect to any Company Employee Plan; (vii) neither Company nor any
Affiliate is subject to any material penalty or tax with respect to any Company
Employee Plan under Section 402(i) of ERISA or Sections 4975 through 4980 of the
Code; and (viii) all contributions due from the Company or any Affiliate with
respect to any of the Company Employee Plans have been made as required under
ERISA or have been accrued on the Company Balance Sheet.
(e) Pension Plans. Company 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 Company contributed to or been
required to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Company 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 Company has never
represented, promised or contracted (whether in oral or written form) to any
Employee (either individually or to Employees as a group) or any other person
that such Employee(s) or other person would be provided with retiree life
insurance, retiree health or other retiree employee welfare benefit, except to
the extent required by statute.
(h) COBRA; FMLA. Except as would not have a Material Adverse Effect on
Company, neither Company nor any Affiliate has, prior to the Effective Time
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
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occurrence of any additional or subsequent events) constitute an event under any
Company Employee Plan, 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 Employee. No payment or benefit
which will or may be made by Company or its Affiliates with respect to any
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 Company,
Company 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 Employees; (ii)
has withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to 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 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 Company's knowledge, threatened material claims or actions
against Company under any worker's compensation policy or long-term disability
policy. To Company's knowledge, no Employee of Company has violated in any
material manner any employment contract, nondisclosure agreement or
noncompetition agreement by which such Employee is bound due to such Employee
being employed by Company and disclosing to Company or using trade secrets or
proprietary information of any other person or entity.
(k) Labor. No work stoppage or labor strike against Company is pending,
threatened or reasonably anticipated. Company does not know of any activities or
proceedings of any labor union to organize any Employees. There are no actions,
suits, claims, labor disputes or grievances pending, or, to the knowledge of
Company, threatened relating to any labor, safety or discrimination matters
involving any 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 Company. Neither
Company nor any of its subsidiaries has engaged in any unfair labor practices
within the meaning of the National Labor Relations Act. Company 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 Company.
(l) International Employee Plan. Each International 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 Employee
Plan. Furthermore, no International Employee Plan has unfunded liabilities, that
as of the Effective Time, will not be offset by insurance or fully
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accrued. Except as required by law, no condition exists that would prevent
Company or Parent from terminating or amending any International Employee Plan
at any time for any reason.
2.13 Environmental Matters. During the period that Company 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 Company. Company 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 Company 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 Company. None of the properties or facilities
currently leased or owned by Company or any of its subsidiaries or any
properties or facilities previously leased or owned by Company 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 Effect on Company. During Company's occupancy of any properties
or facilities owned or leased at any time by Company, neither Company, nor to
Company'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
Company. During the time that Company 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 Company or any of its subsidiaries, there
has been no material litigation, proceeding or administrative action brought or
threatened against Company or any of its subsidiaries, or any material
settlement reached by Company 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
2.13, "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.
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2.14 Certain Agreements. Other than the Related Agreements, except as
otherwise set forth in Part 2.14 of the Company Disclosure Letter, neither
Company nor any of its subsidiaries is a party to or is bound by:
(a) other than as disclosed in Part 2.12 of the Company Disclosure
Letter, any employment agreement or commitment with any officer or member of
Company's Board of Directors, other than those that are terminable by Company 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 Company'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 Company's or any of its subsidiaries'
freedom to compete in any line of business or in any geographic area or which
would so limit Company or Surviving Corporation or any of its subsidiaries after
the Effective Time or granting any exclusive distribution or other exclusive
rights;
(d) any agreement or obligation currently in force relating to the
disposition or acquisition by Company 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 Company has any material ownership or
participation interest in any corporation, partnership, joint venture, strategic
alliance or other business enterprise other than Company's subsidiaries;
(e) other than Company's standard source code escrow agreement for the
benefit of Company's customers (in the form provided to Parent), 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 Company; or
(g) any agreement or obligation currently in force requiring annual
capital expenditures by Company or its subsidiaries in excess of $1,000,000.
The agreements required to be disclosed in the Company Disclosure Letter
pursuant to clauses (a) through (g) above or pursuant to Section 2.9 or filed
with any Company SEC Report ("COMPANY CONTRACTS") are valid and in full force
and effect, except to the extent that such invalidity would not have a Material
Adverse Effect on Company. Neither Company nor any of its subsidiaries, nor to
Company's knowledge, any other party thereto, is in breach, violation or default
under, and neither Company nor any of its subsidiaries has received written
notice that it has breached, violated or defaulted, any of the terms or
conditions of any Company Contract in such a manner as would have a Material
Adverse Effect on Company.
2.15 Brokers' and Finders' Fees. Except for fees payable to Warburg Dillon
Read LLC pursuant to an engagement letter, a copy of which has been provided to
Parent, Company
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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.
2.16 Insurance. Company 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 Company 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 Company and its subsidiaries are otherwise
in compliance in all material respects with the terms of such policies and
bonds.
2.17 Disclosure. The information supplied by Company for inclusion in the
Registration Statement on Form S-4 (or any similar successor form thereto) to be
filed by Parent with the SEC in connection with the issuance of Parent Common
Stock in the Merger (the "REGISTRATION STATEMENT") shall not at the time the
Registration Statement is filed with the SEC and at the time it becomes
effective under the Securities Act 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 misleading. The information supplied by Company
for inclusion or incorporation by reference in the proxy statement/prospectus to
be filed with the SEC as part of the Registration Statement (the "PROXY
STATEMENT/PROSPECTUS") shall not (i) on the date the Proxy Statement/Prospectus
is mailed to Company's stockholders or to Parent's stockholders, (ii) at the
time of the meeting of Company's stockholders (the "COMPANY STOCKHOLDERS'
MEETING") to consider the Company Stockholder Approvals, and (iii) at the time
of the meeting of Parent's stockholders (the "PARENT STOCKHOLDERS' MEETING") to
consider the approval of (1) the issuance of shares of Parent Common Stock
pursuant to the Merger and the Related Agreements and (2) an amendment to
Parent's Certificate of Incorporation to increase the authorized number of
shares of Parent Common Stock in order to permit the issuance of shares of
Parent Common Stock pursuant to the Merger and the transactions contemplated by
the Related Agreements (the "PARENT STOCKHOLDER APPROVALS") or as of the
Effective Time, 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 Company Stockholders' Meeting or Parent Stockholders' Meeting
which has become false or misleading. The Proxy Statement/Prospectus will comply
as to form in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the rules and regulations thereunder. If at
any time prior to the Effective Time any event relating to Company or any of its
affiliates, officers or directors should be discovered by Company which is
required to be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement/Prospectus, Company shall promptly inform
Parent. Notwithstanding the foregoing, Company makes no representation or
warranty with respect to any information supplied by Parent or Merger Sub which
is contained in any of the foregoing documents.
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2.18 Board Approval. The Board of Directors of Company has, as of the date
of this Agreement, (i) determined that the Merger is fair to, and in the best
interests of Company and its stockholders, and has approved this Agreement and
(ii) declared the advisability of the Merger and recommends that the
stockholders of Company approve and adopt this Agreement and approve the Merger.
2.19 Opinion of Financial Advisor. Company's Board of Directors has
received an opinion from Warburg Dillon Read LLC, dated as of the date of this
Agreement, to the effect that, as of such date, the Exchange Ratio is fair to
holders of Company's Common Stock from a financial point of view, a copy of the
written opinion of which will be delivered to Parent after receipt thereof by
Company.
2.20 Anti-Takeover Protections. The Board of Directors of Company has taken
all actions so that the restrictions contained in Section 203 of the Delaware
General Corporation 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 to the consummation of the Merger or the other transactions
contemplated by this Agreement. For the three years prior to the date of this
Agreement, none of Company, 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 Company'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, the Merger or the other transactions contemplated hereby.
Company is not a party to, and Company's equity securities will not be affected
by, any rights agreement, "poison pill" or similar plan, agreement or
arrangement which would have an adverse effect on the ability of Parent to
consummate the Merger or the other transactions contemplated hereby.
2.21 Affiliates. Part 2.21 of the Company Disclosure Letter is a complete
list of those persons who may be deemed to be, in Company's reasonable judgment,
affiliates of Company within the meaning of Rule 145 promulgated under the
Securities Act ("COMPANY AFFILIATES"). Except as set forth in the Company SEC
Reports, since the date of the Company's last proxy statement filed with the
SEC, no event has occurred as of the date of this Agreement that would be
required to be reported by the Company pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
As of the date of this Agreement and as of the Closing Date, Parent and
Merger Sub represent and warrant to Company, subject to the exceptions
specifically disclosed in writing in the disclosure letter and referencing a
specific representation delivered by Parent to Company dated as of the date
hereof and certified by a duly authorized officer of Parent (the "PARENT
DISCLOSURE LETTER"), as follows:
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3.1 Organization of Parent and Merger Sub.
(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 Company 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.
(b) Parent has delivered or made available to Company 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 effect. Neither
Parent nor any of its subsidiaries is in violation of any of the provisions of
the Parent Charter Documents.
3.2 Parent and Merger Sub Capitalization.
(a) The authorized capital stock of Parent consists solely of
200,000,000 shares of Parent Common Stock, of which there were 64,773,413 shares
issued and outstanding as of the close of business on March 28, 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 Parent 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 Parent Common Stock held in treasury by Parent.
(b) As of the close of business on March 28, 2000, (i) 7,242,904 shares
of Parent Common Stock are subject to issuance pursuant to outstanding options
("PARENT OPTIONS") to purchase Parent Common Stock under Parent's 1997 Stock
Plan and 1999 Equity Incentive Plan ("PARENT STOCK OPTION PLANS") for an
aggregate exercise price of $45,865,480, (ii) 142,551 shares of Parent 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 $512,704,
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and (iii) 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 Company an accurate and complete copy of each of the
Parent Stock Option Plans and the form of all stock option agreements evidencing
Parent Options. All shares of Parent Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. 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 the Parent is bound obligating Parent to accelerate
the vesting of any Parent Option as a result of the Merger.
(c) The authorized capital stock of Merger Sub consists of 1,000 shares
of common stock, $0.01 par value, 100 of which, as of the date hereof, are
issued and outstanding and are held by Parent. All of the outstanding shares of
Merger Sub's common stock have been duly authorized and validly issued, and are
fully paid and nonassessable. Merger Sub was formed for the purpose of
consummating the Merger and has no material assets or liabilities except as
necessary for such purpose.
(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.
(d) The Parent Common Stock to be issued in the Merger, when issued in
accordance with the provisions of this Agreement, will be validly issued, fully
paid and nonassessable.
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 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
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class of any of its subsidiaries.
3.4 Authority; Non-Contravention.
(a) Each of Parent and Merger Sub has all requisite corporate power and
authority to enter into this Agreement and the Related Agreements and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Related Agreements and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of Parent and Merger Sub, subject
only to the Parent Stockholder Approvals and the filing of the Certificate of
Merger pursuant to Delaware Law. The affirmative vote of the holders of a
majority in interest of the stock present or represented by proxy at the Parent
Stockholders' Meeting is sufficient for Parent's stockholders to approve the
issuance of shares of Parent Common Stock in the Merger and pursuant to the
Related Agreements, and the affirmative vote of the holders of a majority of the
outstanding shares of Parent Common Stock entitled to vote is sufficient for
Parent's stockholders to approve the amendment to Parent's Certificate of
Incorporation, 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 Related Agreements have been duly executed and
delivered by each of Parent and Merger Sub, as applicable, and, assuming the due
authorization, execution and delivery by Company or the other parties thereto,
constitute the valid and binding obligations of Parent and Merger Sub,
respectively, enforceable against Parent and Merger Sub in accordance with their
terms, except as enforceability may be limited by bankruptcy and other similar
laws affecting the rights of creditors generally and general principles of
equity.
(b) The execution and delivery of this Agreement and the Related
Agreements by each of Parent and Merger Sub does not, and the performance of
this Agreement and the Related Agreements by Parent and Merger Sub 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 Merger Sub or by which any of their
respective 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 or
Merger Sub pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or Merger Sub is a party or by which Parent or Merger Sub or any
of their respective 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,
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Company or the Surviving Corporation as a result of the Merger or would
materially and adversely affect Parent's Intellectual Property.
(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 Parent or Merger Sub in connection with the execution and delivery of
this Agreement or the consummation of the Merger, except for (i) the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware,
(ii) the filing of the Proxy Statement/Prospectus and the Registration Statement
with the SEC and a Schedule 13D with regard to the Company Voting Agreements in
accordance with the Securities Act and the Exchange Act, and the effectiveness
of the Registration Statement, (iii) 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 (iv) such
other consents, authorizations, filings, approvals and registrations which if
not obtained or made would not have a Material Adverse Effect on Parent or the
Surviving Corporation or have a material adverse effect on the ability of the
parties hereto to consummate the Merger.
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 (the "PARENT INITIAL REGISTRATION STATEMENT") of Parent's initial
public offering, and has made available to Company 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 Securities Act or the
Exchange 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 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 10-Q, 8-K or any successor form under the Exchange Act) 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
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adjustments. The balance sheet of Parent contained in Parent SEC Reports as of
September 30, 1999 is hereinafter referred to as the "PARENT BALANCE SHEET."
Except as disclosed in the Parent Financials filed on or prior to the date
hereof, 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 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
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.
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(b) Parent and each of its subsidiaries have withheld with respect to
its employees all federal and state income Taxes, Taxes pursuant to FICA, Taxes
pursuant to 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 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 Merger, 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.
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(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:
"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.
(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
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outstanding decree, order or judgment, the proceeding arising out of 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).
(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.
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(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.
(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 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 or on the Surviving
Corporation following the Merger or have a material adverse effect on the
ability of the parties hereto to consummate the Merger.
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:
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(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
(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 Company:
(i) correct and complete copies of all documents embodying each Parent Employee
Plan (substituting for such 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
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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) 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 Effective Time in
accordance with its terms, without liability to Parent, 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.
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(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 benefit, 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 Effective Time
violated any of the health care continuation requirements of COBRA, the
requirements of FMLA or any similar provisions of state law applicable to its
Parent 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 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.
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(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 Parent Employees and no collective bargaining agreement is being negotiated
by Parent.
(l) International Employee Plan. Each International 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 Employee
Plan. Furthermore, no International Employee Plan has unfunded liabilities, that
as of the Effective Time, will not be offset by insurance or fully accrued.
Except as required by law, no condition exists that would prevent Parent or
Parent from terminating or amending any International 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 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.
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3.14 Certain Agreements. Other than the 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 Surviving Corporation or any of its subsidiaries after
the Effective Time or granting any exclusive distribution or other exclusive
rights;
(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 requiring 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 Merrill Lynch &
Co., Parent has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or
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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 supplied by Parent for inclusion in the
Registration Statement shall not at the time the Registration Statement is filed
with the SEC and at the time it becomes effective under the Securities Act
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
misleading. The information supplied by Parent for inclusion or incorporation by
reference in the Proxy Statement/Prospectus shall not, on the date the Proxy
Statement/Prospectus is mailed to Company's stockholders or to Parent's
stockholders, at the time of Company Stockholders' Meeting, at the time of the
Parent Stockholders' Meeting or as of the Effective Time, 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 Company
Stockholders' Meeting or the Parent Stockholders' Meeting which has become false
or misleading. The Registration Statement and Proxy Statement/Prospectus will
comply as to form in all material respects with the provisions of the Securities
Act and the rules and regulations thereunder. If at any time prior to the
Effective Time, 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
an amendment to the Registration Statement or a supplement to the Proxy
Statement/Prospectus, Parent shall promptly inform Company. Notwithstanding the
foregoing, Parent makes no representation or warranty with respect to any
information supplied by Company which is contained in any of the foregoing
documents.
3.18 Board Approval. The Board of Directors of Parent has, as of the date
of this Agreement, (i) determined that the Merger is fair to, and in the best
interests of Parent and its stockholders, and has approved this Agreement and
(ii) recommends that the stockholders of Parent approve the issuance of shares
of Parent Common Stock pursuant to the Merger and the Related Agreements, and
the amendment of Parent's Certificate of Incorporation.
3.19 Opinion of Financial Advisor. Parent's Board of Directors has received
an opinion from Merrill Lynch & Co., dated as of the date of this Agreement, to
the effect that, as of such date, the exchange of consideration in the
Transaction is fair to Parent from a financial point of view, a copy of the
written opinion of which will be delivered to Company after receipt thereof by
Parent. The transactions contemplated by this Agreement and the Related
Agreements are collectively referred to herein as the "TRANSACTION".
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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 Delaware
General Corporation 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 to the consummation of the Merger or the other transactions
contemplated by this Agreement. For the three years prior to the date of this
Agreement, none of Parent, 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 Company. To Parent's knowledge, no other Takeover
Statute applies or purports to apply to this Agreement, the Merger or the other
transactions contemplated hereby.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Company. 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 Effective Time, Company and each of its
subsidiaries shall, except to the extent that Parent shall otherwise consent in
writing, carry on its business in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted and 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, Company will promptly notify Parent
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 the Related Agreements or provided in Part
4.1 of the Company Disclosure Letter, without the prior written consent of
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
Effective Time, Company 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 Parent, or adopt any new
severance plan;
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(c) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Company Intellectual
Property, other than non-exclusive licenses 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;
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Company 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 Company Common Stock pursuant to the
exercise of Company Options outstanding on the date of this Agreement, or
granted in accordance with clause (iii) of this Section 4.1(f), (ii) shares of
Company Common Stock issuable to participants in the Company ESPP consistent
with the terms thereof, (iii) Company Options granted to newly-hired employees
in the ordinary course of business in amounts comparable to similarly situated
Company employees, and in an aggregate amount not to exceed 330,870, none of
which Company Options shall provide for or permit any acceleration of the
exercisability thereof in connection with the Merger or any of the transactions
contemplated by this Agreement, and (iv) shares of Company Common Stock issued
in connection with acquisitions and commercial transactions permitted under
Section 4.1(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);
(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 Company 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 Company; provided,
that Company shall not be prohibited hereunder from making or agreeing to make
acquisitions, or entering into commercial transactions involving the issuance or
potential issuance of Company Common Stock, all of which together do not involve
the issuance or potential issuance of more than 290,000 shares of Company Common
Stock in the aggregate, and none of which acquisitions, agreements or commercial
transactions could reasonably be expected to delay the effectiveness of the
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Registration Statement, the consummation of the Merger or the other transactions
contemplated by this Agreement or the Related Agreements; provided, further,
that Company shall provide written notice to Parent prior to signing any
agreement regarding any such acquisition or transaction;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Company;
(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 Company, 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 or (iii) 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"), 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;
(1) Make any capital expenditures outside of the ordinary course of
business or any capital expenditures in excess of $500,000, individually, or
$4,000,000, in the aggregate;
(m) Materially modify, amend or terminate any Company Contract or other
material contract or agreement to which Company 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) Enter into any licensing or other agreement with regard to the
acquisition, distribution or licensing of any material Company Intellectual
Property (as defined in Section 2.9) other than licenses, distribution
agreements, advertising agreements, or other similar agreements entered into in
the ordinary course of business consistent with past practice;
(o) Materially revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(p) Initiate or settle any material litigation, arbitration, mediation
or other legal proceeding;
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(q) Take or permit any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement,
including the treatment of same for tax purposes as a "reorganization"; or
(r) Agree in writing or otherwise to take any of the actions described
in Section 4.1 (a) through (q) above.
4.2 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 Effective Time, Parent and each of its subsidiaries
shall, except to the extent that Company shall otherwise consent in writing,
carry on its business in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted and 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 Company
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 the Related Agreements or provided in Part
4.2 of the Parent Disclosure Letter, without the prior written consent of
Company, 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
Effective Time, 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 Company, 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 the Parent Intellectual
Property, other than non-exclusive licenses 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;
(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
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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 Parent 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 4.2(f), (ii) shares of Parent
Common Stock issuable to participants in the Parent ESPP consistent with the
terms thereof, (iii) Parent Options granted to newly-hired employees in the
ordinary course of business in amounts comparable to similarly situated Parent
employees, and in an aggregate amount not to exceed 550,000, none of which
Parent Options shall provide for or permit any acceleration of the
exercisability thereof in connection with the Merger or any of the transactions
contemplated by this Agreement, and (iv) shares of Parent Common Stock issued in
connection with acquisitions and commercial transactions permitted under Section
4.2(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
Parent 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 provided to Company)
or (y) making or agreeing to make acquisitions, or entering into commercial
transactions involving the issuance or potential issuance of Parent Common
Stock, all of which together do not involve the issuance or potential issuance
of more than 500,000 shares of Parent Common Stock in the aggregate, and none of
which acquisitions, agreements or commercial transactions could reasonably be
expected to delay the effectiveness of the Registration Statement, the
consummation of the Merger or the other transactions contemplated by this
Agreement or the Related Agreements; provided, further, that Parent shall
provide written notice to Company prior to signing any agreement regarding any
such acquisition or transaction;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Parent;
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(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) equipment leasing
arrangements or (iii) 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 Parent Common Stock reserved for issuance under the Parent
Stock Option Plans or the 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;
(1) 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 Parent Contract or other
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) Enter into any licensing or other agreement with regard to the
acquisition, distribution or licensing of any material Parent Intellectual
Property (as defined in Section 2.9) other than licenses, distribution
agreements, advertising agreements, or other similar agreements entered into in
the ordinary course of business consistent with past practice;
(o) Materially revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(p) Initiate or settle any material litigation, arbitration, mediation
or other legal proceeding;
(q) Take or permit any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement,
including the treatment of same for tax purposes as a "reorganization"; or
(r) Agree in writing or otherwise to take any of the actions described
in Section 4.2 (a) through (q) above.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement; Antitrust and Other
Filings.
(a) As promptly as practicable after the execution of this Agreement,
Company and Parent will prepare and file with the SEC, the Proxy
Statement/Prospectus and Parent will prepare and file with the SEC the
Registration Statement in which the Proxy Statement/Prospectus will be included
as a prospectus. Each of Company and Parent will respond to any comments of the
SEC, will use its respective commercially reasonable efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing and each of Company and Parent will cause the
Proxy Statement/Prospectus to be mailed to its respective stockholders at the
earliest practicable time after the Registration Statement is declared effective
by the SEC. Promptly after the date of this Agreement, each of the Company 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")
and (ii) any other filings required to be filed by it under the Exchange Act,
the Securities Act or any other federal, state or foreign laws relating to the
Merger and the transactions contemplated by this Agreement (the "OTHER
FILINGS"). The Company 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 5.1.
(b) Each of the Company 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 Registration Statement, the Proxy Statement/Prospectus or any
Antitrust Filings or Other 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 Registration
Statement, the Proxy Statement/Prospectus, the Merger or any Antitrust Filing or
Other Filing. Each of the Company and Parent will cause all documents that it is
responsible for filing with the SEC or other regulatory authorities under this
Section 5.1 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 the
Proxy Statement/Prospectus, the Registration Statement or any Antitrust Filing
or Other Filing, the Company 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 the Company
and/or Parent, such amendment or supplement.
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5.2 Meeting of Company Stockholders.
(a) Promptly after the date hereof, Company will take all action
necessary in accordance with the Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Company 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 declaration of effectiveness of the
Registration Statement (provided that Company and Parent will notice the Company
Stockholders' Meeting and the Parent Stockholders' Meeting to be held on the
same day, and if Parent adjourns or postpones the Parent Stockholders' Meeting,
Company may adjourn or postpone the Company Stockholders' Meeting in order that
they be held on the same day), for the purpose of voting upon approval and
adoption of this Agreement and approval of the Merger. Subject to Section
5.2(c), Company will use its commercially reasonable efforts to solicit from its
stockholders proxies in favor of the adoption and approval of this Agreement and
the approval of the Merger 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 or Delaware Law to obtain such approvals. Notwithstanding
anything to the contrary contained in this Agreement, Company may adjourn or
postpone the Company Stockholders' Meeting to the extent necessary to ensure
that any necessary supplement or amendment to the Proxy Statement/Prospectus is
provided to Company's stockholders in advance of a vote on the Merger and this
Agreement or, if as of the time for which Company Stockholders' Meeting is
originally scheduled (as set forth in the Proxy Statement/Prospectus) there are
insufficient shares of Company Common Stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business of the Company
Stockholders' Meeting. Company shall ensure that the Company Stockholders'
Meeting is called, noticed, convened, held and conducted, and that all proxies
solicited by the Company in connection with the Company 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. Company's obligation to call, give notice of,
convene and hold the Company Stockholders' Meeting in accordance with this
Section 5.2(a) shall not be limited to or otherwise affected by the
commencement, disclosure, announcement or submission to Company of any
Acquisition Proposal or Superior Offer, or by any withdrawal, amendment or
modification of the recommendation of the Board of Directors of Company with
respect to this Agreement or the Merger.
(b) Subject to Section 5.2(c), to the fullest extent permitted by
applicable law: (i) the Board of Directors of Company shall recommend that
Company's stockholders vote in favor of and adopt and approve this Agreement and
approve the Merger at the Company Stockholders' Meeting; (ii) the Proxy
Statement/Prospectus shall include a statement to the effect that the Board of
Directors of Company has recommended that Company's stockholders vote in favor
of and adopt and approve this Agreement and the Merger at the Company
Stockholders' Meeting; and (iii) neither the Board of Directors of Company nor
any committee thereof shall withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify in a manner adverse to Parent, the recommendation of
the Board of Directors of Company that Company's stockholders vote in favor of
and adopt and approve this Agreement and the Merger.
(c) Nothing in this Agreement shall prevent the Board of Directors of
the Company from withholding, withdrawing, amending or modifying its
recommendation in favor
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of the Merger if (i) a Superior Offer (as defined below) is made to the Company
and is not withdrawn, (ii) the Company shall have provided written notice to
Parent (a "NOTICE OF SUPERIOR OFFER") advising Parent that the Company 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) Parent shall not have, within three business days of Parent's
receipt of the Notice of Superior Offer, made an offer that the Company'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 Company's stockholders as such Superior Offer (it being agreed that
the Board of Directors of Company shall convene a meeting to consider any such
offer by Parent promptly following the receipt thereof), (iv) the Board of
Directors of Company 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 Company to comply with its fiduciary
obligations to Company's stockholders under applicable law and (v) Company shall
not have violated any of the restrictions set forth in Section 5.4 or this
Section 5.2. Company shall provide Parent with at least one day prior notice (or
such lesser prior notice as provided to the members of the Company's Board of
Directors) of any meeting of the Company's Board of Directors at which Company's
Board of Directors is reasonably expected to consider any Acquisition Proposal
(as defined in Section 5.4) to determine whether such Acquisition Proposal is a
Superior Offer. Nothing contained in this Section 5.2(c) shall limit the
Company's obligation to hold and convene the Company Stockholders' Meeting
(regardless of whether the recommendation of the Board of Directors of Company
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 Company
pursuant to which the stockholders of Company 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 the Company), directly or indirectly, of ownership of 100% of
the then outstanding shares of capital stock of the Company, on terms that the
Board of Directors of the Company determines, in its reasonable judgment (after
consultation with a financial advisor of national standing) to be more favorable
to the Company stockholders than the terms of the Merger; 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 the Company'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 Company 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 Exchange Act, or
otherwise required by applicable law.
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5.3 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 declaration of effectiveness of the
Registration Statement (provided that Company and Parent will notice the Company
Stockholders' Meeting and the Parent Stockholders' Meeting to be held on the
same day, and if Company adjourns or postpones the Company Stockholders'
Meeting, Parent may adjourn or postpone the Parent Stockholders' Meeting in
order that they be held on the same day), for the purpose of voting upon the
Parent Stockholder Approvals. Parent will use its commercially reasonable
efforts to solicit from its stockholders proxies in favor of the approval of the
Parent Stockholder Approvals 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 or Delaware Law to obtain such approvals.
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/Prospectus 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/Prospectus) 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) (i) The Board of Directors of Parent shall recommend that Parent's
stockholders approve the Parent Stockholder Approval at the Parent Stockholders'
Meeting; (ii) the Proxy Statement/Prospectus 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 Company
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 Company, the recommendation of
the Board of Directors of Parent that Parent's stockholders approve the Parent
Stockholder Approval.
(c) 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 Exchange Act, or
otherwise required by applicable law.
5.4 No Solicitation.
(a) From and after the date of this Agreement until the Effective Time
or termination of this Agreement pursuant to Article VII, Company 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,
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directly or indirectly, (i) solicit, initiate, encourage or induce the making,
submission or announcement of any 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
Acquisition Proposal, (iii) engage in discussions with any person with respect
to any Acquisition Proposal, except as to the existence of these provisions,
(iv) approve, endorse or recommend any 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 Acquisition Proposal;
provided, however, that prior to the approval of this Agreement and the Merger
at the Company Stockholders' Meeting, Company may furnish nonpublic information
regarding Company and its subsidiaries to, or entering into discussions or
negotiations with, any person or group who has submitted (and not withdrawn) to
Company an unsolicited, written, bona fide Acquisition Proposal that the Board
of Directors of Company reasonably concludes (after consultation with a
financial advisor of national standing) may constitute a Superior Offer if (1)
neither Company nor any representative of Company and its subsidiaries shall
have violated any of the restrictions set forth in this Section 5.4, (2) the
Board of Directors of Company concludes in good faith, after consultation with
its outside legal counsel, that such action is required in order for the Board
of Directors of Company to comply with its fiduciary obligations to Company'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, Company gives Parent written notice of the identity of such
person or group and all of the material terms and conditions of such Acquisition
Proposal and of Company's intention to furnish nonpublic information to, or
enter into discussions with, such person or group, and Company receives from
such person or group an executed confidentiality agreement containing terms at
least as restrictive with regard to Company's confidential information as the
Confidentiality Agreement (as defined in Section 5.5), and (4) contemporaneously
with furnishing any such nonpublic information to such person or group, Company
furnishes such nonpublic information to Parent (to the extent such nonpublic
information has not been previously furnished by the Company to Parent). Company
and its subsidiaries will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any 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 Company or any of its subsidiaries or
any investment banker, attorney or other advisor or representative of Company or
any of its subsidiaries shall be deemed to be a breach of this Section 5.4 by
Company.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
offer or proposal (other than an offer or proposal by Parent) relating to any
transaction or series of related transactions other than the transactions
contemplated by this Agreement involving: (A) any acquisition or purchase from
the Company by any person or "group" (as defined under Section 13(d) of the
Exchange Act and the rules and regulations thereunder) of more than a 15%
interest in the total outstanding voting securities of the Company or any of its
subsidiaries or any tender offer or exchange offer that if consummated would
result in any person or "group" (as defined under Section 13(d) of the Exchange
Act and the rules and regulations thereunder) beneficially owning 15% or more of
the total outstanding voting securities of the Company or any of its
subsidiaries or any merger, consolidation, business combination or similar
transaction involving
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the Company pursuant to which the stockholders of the Company immediately
preceding such transaction hold less than 85% of the equity interests in the
surviving or resulting entity of such transaction; (B) any sale, lease (other
than in the ordinary course of business), exchange, transfer, license (other
than in the ordinary course of business), acquisition, or disposition of more
than 15% of the assets of the Company; or (C) any liquidation or dissolution of
the Company.
(b) In addition to the obligations of Company set forth in paragraph
(a) of this Section 5.4, Company as promptly as practicable shall advise Parent
orally and in writing of any request for non-public information which Company
reasonably believes would lead to an Acquisition Proposal or of any Acquisition
Proposal, or any inquiry with respect to or which Company reasonably should
believe would lead to any Acquisition Proposal, the material terms and
conditions of such request, Acquisition Proposal or inquiry, and the identity of
the person or group making any such request, Acquisition Proposal or inquiry.
Company 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, Acquisition Proposal or inquiry.
5.5 Confidentiality; Access to Information.
(a) The parties acknowledge that Company and Parent have previously
executed a mutual nondisclosure agreement, dated as of March 5, 2000 (the
"CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will continue in
full force and effect in accordance with its terms; provided, that nothing in
this Agreement or the Confidentiality Agreement will restrict communications
with parties to the Related Agreements.
(b) Access to Information. Company will afford Parent and its
accountants, counsel and other representatives reasonable access during normal
business hours to the properties, books, records and personnel of Company during
the period prior to the Effective Time to obtain all information concerning the
business, including the status of product development efforts, properties,
results of operations and personnel of Company, as Parent may reasonably
request. Parent will afford Company and its accountants, counsel and other
representatives reasonable access during normal business hours to the
properties, books, records and personnel of Parent during the period prior to
the Effective Time to obtain all information concerning the business, including
the status of product development efforts, properties, results of operations and
personnel of Parent, as Company may reasonably request. No information or
knowledge obtained in any investigation pursuant to this Section 5.5 will affect
or be deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Merger.
5.6 Public Disclosure. Parent and Company 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 the Merger, this Agreement or any
Acquisition Proposal 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 joint press release announcing the signing of this
Agreement.
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5.7 Reasonable Efforts; Notification.
(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 parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement and the Related Agreements, including using reasonable efforts to
accomplish the following: (i) the taking of all reasonable acts necessary to
cause the conditions precedent set forth in Article VI 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 material assets or
categories of assets of Parent, any of its affiliates or Company or the holding
separate of the shares of Company Common Stock (or shares of stock of the
Surviving Corporation) or imposing or seeking to impose any material limitation
on the ability of Parent or any of its subsidiaries or affiliates to conduct
their business or own such assets or to acquire, hold or exercise full rights of
ownership of the shares of Company Common Stock (or shares of stock of the
Surviving Corporation).
(b) Each of Company 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 Merger, (ii) any
notice or other communication from any Governmental Entity in connection with
the Merger, (iii) any litigation relating to, involving or otherwise affecting
Company, Parent or their respective subsidiaries that relates to the
consummation of the Merger. Company 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 Company 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 Section 6.3 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 Company of any
representation or warranty made by it or Merger Sub contained in this Agreement
becoming untrue or inaccurate, or any failure of Parent or Merger Sub to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with
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or satisfied by it under this Agreement, in each case, such that the conditions
set forth in Section 6.2 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.
5.8 Third Party Consents. As soon as practicable following the date hereof,
Parent and Company 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. As soon as practicable following the date hereof, Parent will 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 by the Related Agreements.
5.9 Stock Options and ESPP.
(a) At the Effective Time, each outstanding Company Option, whether or
not then exercisable, will be assumed by Parent. Each Company Option so assumed
by Parent under this Agreement will continue to have, and be subject to, the
same terms and conditions set forth in the Company Stock Option Plan pursuant to
which such Company Option was issued immediately prior to the Effective Time
(including, without limitation, any repurchase rights or vesting provisions),
except that (i) each Company Option will be exercisable (or will become
exercisable in accordance with its terms) for that number of whole shares of
Parent Common Stock equal to the product of the number of shares of Company
Common Stock that were issuable upon exercise of such Company Option immediately
prior to the Effective Time multiplied by the Exchange Ratio, rounded down to
the nearest whole number of shares of Parent Common Stock and (ii) the per share
exercise price for the shares of Parent Common Stock issuable upon exercise of
such assumed Company Option will be equal to the quotient determined by dividing
the exercise price per share of Company Common Stock at which such Company
Option was exercisable immediately prior to the Effective Time by the Exchange
Ratio, rounded up to the nearest whole cent. Continuous employment with Company
or its subsidiaries shall be credited to the optionee for purposes of
determining the vesting of all assumed Company Options after the Effective Time.
(b) It is intended that Company Options assumed by Parent shall qualify
following the Effective Time as incentive stock options as defined in Section
422 of the Code to the extent Company Options qualified as incentive stock
options immediately prior to the Effective Time and the provisions of this
Section 5.9 shall be applied consistent with such intent.
(c) Company shall take all actions necessary pursuant to the terms of
the Company ESPP in order to terminate the Company ESPP and each "Option" (as
defined in the Company ESPP) thereunder immediately prior to the Effective Time;
provided, that Company will give advance notice of such termination to each
holder of an Option not less than ten days preceding such termination, and each
holder of an Option shall have the right to exercise such
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Option in full based on such holder's payroll deductions then credited to such
holder's account as of the date determined by the Board of Directors of Company.
(d) Prior to the grant of any Company Options permitted under Section
4.1(f), Company agrees to amend the Company Stock Option Plans to eliminate for
all Company Options granted after the date of this Agreement the acceleration of
the vesting of such Company Options upon consummation of the Merger or the other
transactions contemplated hereby. Company agrees to use its best efforts to
cause the holders of Company Options under the Company's 1999 Stock Incentive
Plan to waive any acceleration of the vesting of such Company Options upon
consummation of the Merger or the transactions contemplated by the Related
Agreements. Parent agrees to use its best efforts to cause the holders of Parent
Options to waive any acceleration of the vesting of such Parent Options upon
consummation of the Merger or the transactions contemplated by the Related
Agreements.
5.10 Form S-8. Parent agrees to file a registration statement on Form S-8
for the shares of Parent Common Stock issuable with respect to assumed Company
Options as soon as is reasonably practicable after the Effective Time and shall
maintain the effectiveness of such registration statement thereafter for so long
as any of such options or other rights remain outstanding.
5.11 Indemnification.
(a) From and after the Effective Time, Parent will cause the Surviving
Corporation to fulfill and honor in all respects the obligations of Company
pursuant to any indemnification agreements between Company and its directors and
officers as of the Effective Time (the "INDEMNIFIED PARTIES") and any
indemnification provisions under Company's Certificate of Incorporation or
Bylaws as in effect on the date hereof. The Certificate of Incorporation and
Bylaws of the Surviving Corporation will contain provisions with respect to
exculpation and indemnification that are at least as favorable to the
Indemnified Parties as those contained in the Certificate of Incorporation and
Bylaws of Company as in effect on the date hereof, which provisions will not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who, immediately prior to the Effective Time, were directors or
officers of Company, unless such modification is required by law.
(b) For a period of six years after the Effective Time, Parent will
cause the Surviving Corporation to use its commercially reasonable efforts to
maintain in effect, if available, directors' and officers' liability insurance
covering those persons who are currently covered by Company's directors' and
officers' liability insurance policy on terms comparable to those applicable to
the current directors and officers of Company; provided, however, that in no
event will Parent or the Surviving Corporation be required to expend in excess
of 200% of the annual premium currently paid by Company for such coverage (or
such coverage as is available for such 200% of such annual premium).
(c) This Section 5.11 shall survive the consummation of the Merger, is
intended to benefit Company, the Surviving Corporation and each Indemnified
Party, shall be
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binding on all successors and assigns of the Surviving Corporation and Parent,
and shall be enforceable by the Indemnified Parties.
5.12 Parent Board of Directors; Executive Officers. The Board of Directors
of Parent will take all actions reasonably necessary such that as soon as
practicable following the Effective Time, (i) the size of Parent's Board of
Directors shall be increased to nine, and the following persons shall be
appointed to Parent's Board of Directors to fill the five vacancies in the
following classes: three persons nominated by Company, one of whom shall be
Harvey J. Wilson, who shall be appointed to Class III, one of whom shall be
affiliated with General Atlantic Partners, LLC, who shall be appointed to Class
I, and the other of whom shall be appointed to Class II, one person shall be
appointed by Healthvision to Class I, and one person shall be appointed by VHA
to Class I, and (ii) Harvey J. Wilson shall be elected Chairperson of the Board
of Directors of Parent, and Robert Zollars shall be elected Chief Executive
Officer and President of Parent. Under the Parent 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, or, if such annual meeting is held following the Effective Time
and such person so elects, following the Effective Time but prior to such annual
meeting. Class I Directors appointed following such annual meeting shall have
terms that end in 2003, subject to such directors' earlier resignation or
removal.
5.13 Nasdaq Listing. Parent agrees to authorize for listing on the Nasdaq
Stock Market the shares of Parent Common Stock issuable, and those required to
be reserved for issuance, in connection with the Merger, effective upon official
notice of issuance.
5.14 Letters of Accountants. Company and Parent shall use their respective
reasonable efforts to cause to be delivered to Parent a letter of Company's and
Parent's independent accountants, respectively, dated no more than two business
days before the date on which the Registration Statement becomes effective (and
satisfactory in form and substance to Company and Parent), that is customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
5.15 Takeover Statutes. If any Takeover Statute is or may become applicable
to the Merger or the other transactions contemplated by this Agreement, each of
Parent and Company 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.
5.16 Certain Employee Benefits. As soon as practicable after the execution
of this Agreement, Parent and Company shall confer and work together in good
faith to agree upon mutually acceptable employee benefit and compensation
arrangements which carry out the agreements set forth in the following two
sentences. Parent will use reasonable efforts to arrange that, as soon as
reasonably practicable after the Effective Time, Parent's benefit arrangements
and employee plans provide similar or comparable benefits to Company's employees
generally
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as is provided to Parent's employees who are similarly situated. Parent's
benefit arrangements and employee plans shall give full credit for each
participant's continuous period of service with Company prior to the Effective
Time for all purposes for which length of service prior to the Effective Time is
recognized under Parent benefit arrangements and employee plans. At Parent's
request, Company agrees that it and its subsidiaries shall terminate any and all
Company Employee Plans, if appropriate (other than contractual agreements
disclosed in the Company Disclosure Letter) immediately prior to the Effective
Time.
5.17 Registration Rights. Parent agrees to use its reasonable efforts to
cause the holders of existing registration rights regarding Parent Common Stock
to surrender their existing registration rights in exchange for the registration
rights provided under the Registration Rights Agreement attached hereto as
Schedule 5.17 (the "NEW PARENT REGISTRATION RIGHTS AGREEMENT"). Company agrees
to use its reasonable efforts to cause the holders of existing registration
rights regarding Company Common Stock to surrender their existing rights in
exchange for the registration rights provided to such party under the New Parent
Registration Rights Agreement. Upon receipt by Parent of a valid termination of
all Company registration rights held by a party, Parent shall grant to such
party the registration rights set forth in the New Parent Registration Rights
Agreement applicable to such party.
5.18 Acquisitions of Company Stock. From the date of this Agreement through
the earlier of the Effective Time or the termination of this Agreement in
accordance with its terms, Parent agrees that it will not purchase shares of
Company Common Stock or otherwise intentionally acquire the right to vote shares
of Company Common Stock, without the Company's consent.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) Company Stockholder Approval. This Agreement shall have been
approved and adopted, and the Merger shall have been approved, by the requisite
vote of the stockholders of Company under applicable law and the Company Charter
Documents.
(b) Parent Stockholder Approval. The issuance of shares of Parent
Common Stock pursuant to the Merger shall have been approved by the requisite
vote of the stockholders of Parent under applicable law and the Parent Charter
Documents.
(c) Registration Statement Effective; Proxy Statement. The SEC shall
have declared the Registration Statement effective. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that
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purpose, and no similar proceeding in respect of the Proxy Statement/Prospectus,
shall have been initiated or threatened in writing by the SEC.
(d) No Order; HSR Act. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby will have expired or been terminated.
(e) Nasdaq Listing. The shares of Parent Common Stock to be issued in
the Merger shall have been approved for listing on the Nasdaq Stock Market,
subject to official notice of issuance.
(f) Consents. (i) All required approvals or consents of any
Governmental Entity or other person in connection with the Merger and the
consummation of the other transactions contemplated hereby and by the Related
Agreements 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, Company and its subsidiaries and Healthvision 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, Company and its subsidiaries and Healthvision and its
subsidiaries, taken as a whole.
(g) No Restraints. There shall not be instituted or pending any action
or proceeding by any Governmental Entity (i) seeking to restrain, prohibit or
otherwise interfere with the ownership or operation by Parent or any of its
subsidiaries of all or any material portion of the business of Company or any of
its subsidiaries or of Parent or any of its subsidiaries or to compel Parent or
any of its subsidiaries to dispose of or hold separate all or any material
portion of the business or assets of Company or any of its subsidiaries or of
Parent or any of its subsidiaries, (ii) seeking to impose or confirm limitations
on the ability of Parent or any of its subsidiaries effectively to exercise full
rights of ownership of the shares of Company Common Stock (or shares of stock of
the Surviving Corporation) including the right to vote any such shares on any
matters properly presented to stockholders or (iii) seeking to require
divestiture by Parent or any of its subsidiaries of any such shares.
6.2 Additional Conditions to Obligations of Company. The obligation of
Company to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Company:
(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub 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 on and as of the Closing Date as if made on
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and as of the Closing Date (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. Company shall have received a
certificate with respect to the foregoing signed on behalf of Parent by the
Chief Executive Officer or Chief Financial Officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Closing Date, and Company shall have received a certificate to such
effect signed on behalf of Parent by the Chief Executive Officer or Chief
Financial Officer of Parent.
(c) Material Adverse Effect. No Material Adverse Effect with respect to
Parent shall have occurred since the date of this Agreement and be continuing.
(d) Tax Opinion. Company shall have received an opinion of Hale and
Dorr LLP, dated as of the Closing Date, in form and substance reasonably
satisfactory to it, on the basis of the facts, representations and assumptions
set forth or referred to in such opinion, that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code and that each of
Parent and Company will be a party to the reorganization within the meaning of
Section 368(a) of the Code. The parties to this Agreement agree to make such
reasonable representations as requested by such counsel for the purpose of
rendering such opinions.
(e) Related Transactions. (i) The Novation Documents shall have become
effective and shall be in full force and effect in accordance with their terms,
and Company shall have a received a certificate to such effect executed by the
Chief Executive Officers of Parent and Novation, and (ii) Company shall have
received a certificate executed by the Chief Executive Officers of each of
Parent and Healthvision, that such parties are ready, willing and able to
consummate the transactions contemplated by the Healthvision Merger Agreement.
6.3 Additional Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate and effect the Merger shall
be subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) Representations and Warranties. The representations and warranties
of Company 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 on and as of
the Closing Date as if made on and as of the Closing Date (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
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Adverse Effect on Company. It is understood that, for purposes of determining
the accuracy of such representations and warranties, any update of or
modification to the Company Disclosure Letter made or purported to have been
made after the execution of this Agreement shall be disregarded. Parent shall
have received a certificate with respect to the foregoing signed on behalf of
Company by the Chief Executive Officer or Chief Financial Officer of Company.
(b) Agreements and Covenants. Company shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of Company by the Chief Executive Officer or Chief Financial Officer of
Company.
(c) Material Adverse Effect. No Material Adverse Effect with respect to
Company shall have occurred since the date of this Agreement and be continuing.
(d) Tax Opinion. Parent shall have received an opinion of Fenwick &
West LLP, dated as of the Closing Date, in form and substance reasonably
satisfactory to it, on the basis of the facts, representations and assumptions
set forth or referred to in such opinion, that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code and that each of
Parent and Company will be a party to the reorganization within the meaning of
Section 368(a) of the Code. The parties to this Agreement agree to make such
reasonable representations as requested by such counsel for the purpose of
rendering such opinions.
(e) Related Transactions. (i) The Novation Documents shall have become
effective and shall be in full force and effect in accordance with their terms,
and Parent shall have a received a certificate to such effect executed by the
Chief Executive Officer of Novation; provided, that the foregoing condition
shall be deemed to have been satisfied if (A) the transactions contemplated by
the Stock and Warrant Agreements have not closed due to the failure to satisfy
the condition set forth in Section 8.4 of such agreements, (B) each other
condition to the obligation of Parent to consummate such transactions in such
agreements shall have been satisfied or waived, and (C) neither Stock and
Warrant Agreement nor the Novation Operating Agreement shall have been
terminated in accordance with its respective terms, and (ii) Parent shall have
received a certificate executed by the Chief Executive Officer of Healthvision
that Healthvision is ready, willing and able to consummate the transactions
contemplated by the Healthvision Merger Agreement.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after the requisite approvals of the
stockholders of Company or Parent:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and Company;
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(b) by either Company or Parent if the Merger shall not have been
consummated by September 30, 2000 for any reason; provided, however, that the
right to terminate this Agreement under this Section 7.1(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 Merger to occur on or before such date and
such action or failure to act constitutes a breach of this Agreement;
(c) by either Company or Parent 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
Merger, which order, decree, ruling or other action is final and nonappealable;
(d) by either Company or Parent, if the approval and adoption of this
Agreement, and the approval of the Merger, by the stockholders of Company shall
not have been obtained by reason of the failure to obtain the required vote at a
meeting of Company stockholders duly convened therefore or at any adjournment
thereof; provided, however, that the right to terminate this Agreement under
this Section 7.1(d) shall not be available to Company where the failure to
obtain the Company stockholder approval shall have been caused by the action or
failure to act of Company and such action or failure to act constitutes a
material breach by Company of this Agreement;
(e) by either Company or Parent, if the approval of the issuance of
shares of Parent Common Stock pursuant to the Merger shall not have been
obtained by reason of the failure to obtain the respective required votes at a
meeting of Parent stockholders duly convened therefore or at any adjournment
thereof; provided, however, that the right to terminate this Agreement under
this Section 7.1(e) shall not be available to Parent where the failure to obtain
the Parent stockholder approvals shall have been caused by the action or failure
to act of Parent and such action or failure to act constitutes a material breach
by Parent of this Agreement;
(f) by Parent (at any time prior to the adoption and approval of this
Agreement and the Merger by the required vote of the stockholders of Company) if
a Triggering Event (as defined below) shall have occurred; provided, however,
that Parent 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 Parent is in material breach of this Agreement which
breach has not been cured as of such time;
(g) by Company, upon a breach of any representation, warranty, covenant
or agreement on the part of Parent set forth in this Agreement, or if any
representation or warranty of Parent shall have become untrue, in either case
such that the conditions set forth in Section 6.2(a) or Section 6.2(b) would not
be satisfied as of the time of such breach or as of the time such representation
or warranty shall have become untrue, provided that if such inaccuracy in
Parent's representations and warranties or breach by Parent is curable by Parent
through the exercise of its commercially reasonable efforts, then Company may
not terminate this Agreement under this Section 7.1(g) for 30 days after
delivery of written notice from Company to Parent of such breach, provided
Parent continues to exercise commercially reasonable efforts to cure such
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breach (it being understood that Company may not terminate this Agreement
pursuant to this paragraph (g) if such breach by Parent is cured during such
30-day period, or if Company shall have materially breached this Agreement);
(h) by Parent, upon a breach of any representation, warranty, covenant
or agreement on the part of Company set forth in this Agreement, or if any
representation or warranty of Company shall have become untrue, in either case
such that the conditions set forth in Section 6.3(a) or Section 6.3(b) would not
be satisfied as of the time of such breach or as of the time such representation
or warranty shall have become untrue, provided that if such inaccuracy in
Company's representations and warranties or breach by Company is curable by
Company through the exercise of its commercially reasonable efforts, then Parent
may not terminate this Agreement under this Section 7.1(h) for 30 days after
delivery of written notice from Parent to Company of such breach, provided
Company continues to exercise commercially reasonable efforts to cure such
breach (it being understood that Parent may not terminate this Agreement
pursuant to this paragraph (h) if such breach by Company is cured during such
30-day period, or if Parent shall have materially breached this Agreement); or
(i) by either Company or Parent, if any of the Related Agreements has
been validly terminated by a party thereto in accordance with its terms.
For the purposes of this Agreement, a "TRIGGERING EVENT" shall be
deemed to have occurred if: (i) the Board of Directors of Company or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Parent its recommendation in favor of the
adoption and approval of the Agreement or the approval of the Merger; (ii)
Company shall have failed to include in the Proxy Statement/Prospectus the
recommendation of the Board of Directors of Company in favor of the adoption and
approval of the Agreement and the approval of the Merger; (iii) the Board of
Directors of Company fails to reaffirm its recommendation in favor of the
adoption and approval of the Agreement and the approval of the Merger within 10
business days after Parent requests in writing that such recommendation be
reaffirmed at any time following the public announcement of an Acquisition
Proposal; (iv) the Board of Directors of Company or any committee thereof shall
have approved or publicly recommended any Acquisition Proposal; (v) Company
shall have entered into any letter of intent of similar document or any
agreement, contract or commitment accepting any Acquisition Proposal; (vi)
Company shall have materially breached any of the provisions of Sections 5.2 or
5.4; or (vii) a tender or exchange offer relating to securities of Company shall
have been commenced by a person unaffiliated with Parent, and Company shall not
have sent to its securityholders pursuant to Rule 14e-2 promulgated under the
Securities Act, within 10 business days after such tender or exchange offer is
first published sent or given, a statement disclosing that Company recommends
rejection of such tender or exchange offer.
7.2 Notice of Termination Effect of Termination. Any proper termination of
this Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 7.2, Section 7.3 and Article 8, each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability
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for any willful breach of this Agreement. No termination of this Agreement shall
affect the obligations of the parties contained in the Confidentiality
Agreement, all of which obligations shall survive termination of this Agreement
in accordance with its terms.
7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, 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 Merger is consummated; provided, however, that Parent, Company and
Healthvision shall share equally all fees and expenses, other than attorneys'
and accountants fees and expenses, incurred in relation to the preparation and
filing with the SEC of the Proxy Statement/Prospectus (including any preliminary
materials related thereto) and the Registration Statement (including financial
statements and exhibits) and any amendments or supplements thereto, provided,
that Parent and Company shall share equally the expenses of printing the
finalized Proxy Statement/Prospectus (including any preliminary materials
related thereto) and any supplements thereto.
(b) Company Payments. In the event that this Agreement is terminated by
Parent or the Company, as applicable, pursuant to Sections 7.1(d), 7.1(f) or
7.1(h), Company shall promptly, but in no event later than two days after the
date of such termination, pay Parent a fee equal to $50 million in immediately
available funds; provided, that in the case of a termination under Sections
7.1(d) or 7.1(h) prior to which no Triggering Event has occurred, (i) such
payment shall be made only if (A) following the date of this Agreement and prior
to the termination of this Agreement, a person has publicly announced a bona
fide Acquisition Proposal and (B) within nine months following the termination
of this Agreement either a Company Acquisition (as defined below) is
consummated, or the Company enters into an agreement providing for a Company
Acquisition and such Company 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 the Company has entered into such an agreement within
such nine-month period) and (ii) such payment shall be made promptly, but in no
event later than two days after the consummation of such Company Acquisition
(regardless of when such consummation occurs if the Company has entered into
such an agreement within such nine-month period). Company acknowledges that the
agreements contained in this Section 7.3(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent would not enter into this Agreement. Accordingly, if the Company fails to
pay in a timely manner the amounts due pursuant to this Section 7.3(b), and, in
order to obtain such payment, Parent makes a claim that results in a judgment
against the Company for the amounts set forth in this Section 7.3(b), Company
shall pay to Parent 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 7.3(b) at the prime rate of
The Chase Manhattan Bank in effect on the date such payment was required to be
made. Payment of the fees described in this Section 7.3(b) shall not be in lieu
of damages incurred in the event of breach of this Agreement.
For the purposes of this Agreement, "COMPANY ACQUISITION" shall mean
any of the following transactions (other than the transactions contemplated by
this Agreement); (i) a
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merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company pursuant to which the
stockholders of the Company immediately preceding such transaction hold less
than 50% of the aggregate equity interests in the surviving or resulting entity
of such transaction, (ii) a sale or other disposition by the Company of assets
representing in excess of 50% of the aggregate fair market value of the
Company's business immediately prior to such sale, or (iii) the acquisition by
any person or group (including by way of a tender offer or an exchange offer or
issuance by Company), directly or indirectly, of beneficial ownership or a right
to acquire beneficial ownership of shares representing in excess of 50% of the
voting power of the then outstanding shares of capital stock of the Company.
7.4 Amendment. 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 each of Parent and Company. Parent will not agree to any amendment
of any Related Agreement without the prior written consent of Company (which
consent shall not be unreasonably withheld or delayed).
7.5 Extension; Waiver. At any time prior to the Effective Time 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 parties 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.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations and
warranties of Company, Parent and Merger Sub contained in this Agreement shall
terminate at the Effective Time, and only the covenants that by their terms
survive the Effective Time shall survive the Effective Time.
8.2 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 numbers for a party as shall be specified by like notice):
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(a) if to Parent or Merger Sub, to:
Neoforma.com, Inc.
3255-7 Scott Boulevard
Santa Clara, California 95054
Attention: Chief Financial Officer
Facsimile No.: 408-549-6211
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
Attention: Gordon K. Davidson
Douglas N. Cogen
Facsimile No.: 650-494-1417
(b) if to Company, to:
Eclipsys Corporation
777 East Atlantic Avenue, Suite 200
Delray Beach, Florida 33483
Attention: Chief Executive Officer
Facsimile No.: 561-243-8850
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: John Burgess
Donald L. Toker
Facsimile No.: 703-654-7100
In the event that Parent shall give or receive a notice relating to a
Material Adverse Effect on either Parent or Healthvision pursuant to the
Healthvision Merger Agreement, Parent shall also deliver a copy of such notice
to Company.
8.3 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 table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in
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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, the term "KNOWLEDGE" means with
respect to a party hereto, with respect to any matter in question, that any of
the officers of such party has actual knowledge of such matter, after reasonable
inquiry of such matter.
(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.
(e) For purposes of this Agreement, "SUBSIDIARY" of a specified entity
will be any corporation, partnership, limited liability company, joint venture
or other legal entity of which the specified entity (either alone or through or
together with any other subsidiary) owns, directly or indirectly, 50% or more of
the stock or other equity or partnership interests the holders of which are
generally entitled to vote for the election of the Board of Directors or other
governing body of such corporation or other legal entity. For the avoidance of
doubt, Healthvision is not a subsidiary of Company.
(f) Disclosure made with regard to a representation or warranty of a
party in a Part of either the Company Disclosure Letter or 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.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement, its
Exhibits and the documents and instruments and other agreements among the
parties hereto as contemplated
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by or referred to herein, including the Company Disclosure Letter and the Parent
Disclosure Letter (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, it being understood that the Confidentiality Agreement
shall continue in full force and effect until the Closing and shall survive any
termination of this Agreement; and (b) are not intended to confer upon any other
person any rights or remedies hereunder, except as specifically provided in
Section 5.11.
8.6 Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
8.7 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. 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.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
8.9 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 ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.10 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 parties 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.
8.11 Waiver Of Jury Trial. EACH OF PARENT, COMPANY AND MERGER SUB HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
-67-
<PAGE> 72
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY
OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
HEREOF.
* * * * *
-68-
<PAGE> 73
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be executed by their duly authorized respective officers as of the
date first written above.
NEOFORMA.COM, INC.
By: ______________________________
Name:
Title:
NEOIII ACQUISITION CORP.
By: ______________________________
Name:
Title:
ECLIPSYS CORPORATION
By: ______________________________
Name:
Title:
-69-
<PAGE> 74
EXHIBIT A
COMPANY VOTING AGREEMENT
This COMPANY VOTING AGREEMENT (the "AGREEMENT") is made and entered into as
of March 30, 2000, between Neoforma.com, Inc., a Delaware corporation
("PARENT"), and the undersigned stockholder ("Stockholder") of Eclipsys
Corporation, a Delaware corporation ("COMPANY").
RECITALS
A. Concurrently with the execution of this Agreement, Parent, Company and
NeoIII Acquisition Corp., a Delaware corporation and a wholly-owned first-tier
subsidiary of Parent ("MERGER SUB"), are entering into an Agreement and Plan of
Merger (the "MERGER AGREEMENT") which provides for the merger of Merger Sub with
and into Company (the "MERGER"). Pursuant to the Merger, shares of capital stock
of Company will be converted into shares of Parent Common Stock on the basis
described in the Merger Agreement. Capitalized terms used but not defined herein
shall have the meanings set forth in the Merger Agreement.
B. Stockholder is the record holder of such number of outstanding shares of
capital stock of Company as is indicated on the final page of this Agreement.
C. As a material inducement to enter into the Merger Agreement, Parent
desires Stockholder to agree, and Stockholder is willing to agree, to vote the
Shares (as defined below), and such other shares of capital stock of Company
over which Stockholder has voting power, so as to facilitate consummation of the
Merger.
In consideration of the foregoing and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
1. AGREEMENT TO VOTE SHARES
1.1 Definitions. For purposes of this Agreement:
(a) Shares. The term "SHARES" shall mean all issued and
outstanding shares of Company Common Stock owned of record or beneficially by
Stockholder or over which Stockholder exercises voting power, in each case, as
of the record date for persons entitled (i) to receive notice of, and to vote at
the meeting of the stockholders of Company called for the purpose of voting on
the matters referred to in Section 1.2, or (ii) to take action by written
consent of the stockholders of Company with respect to the matters referred to
in Section 1.2. Stockholder agrees that any shares of capital stock of Company
that Stockholder purchases or with respect to which Stockholder otherwise
acquires beneficial ownership or over which Stockholder exercises voting power
after the execution of this Agreement and prior to the date of
<PAGE> 75
termination of this Agreement pursuant to Section 3 below shall be subject to
the terms and conditions of this Agreement to the same extent as if they
constituted Shares on the date hereof.
(b) Subject Securities. The term "SUBJECT SECURITIES" shall mean:
(i) all securities of Company (including all shares of Company Common Stock and
all options, warrants and other rights to acquire shares of Company Common Stock
beneficially owned by Stockholder as of the date of this Agreement; and (ii) all
additional securities of Company (including all additional shares of Company
Common Stock and all additional options, warrants and other rights to acquire
shares of Company Common Stock) of which Stockholder acquires ownership during
the period from the date of this Agreement through the earlier of termination of
this Agreement pursuant to Section 3 below or the record date for the meeting at
which stockholders of Company are asked to vote upon approval of the Merger
Agreement and the Merger.
(c) Transfer. Stockholder shall be deemed to have effected a
"TRANSFER" of a security if Stockholder directly or indirectly: (i) sells,
pledges, encumbers, transfers or disposes of, or grants an option with respect
to, such security or any interest in such security; or (ii) enters into an
agreement or commitment providing for the sale, pledge, encumbrance, transfer or
disposition of, or grant of an option with respect to, such security or any
interest therein.
1.2 Agreement to Vote Shares. Stockholder hereby covenants and agrees that,
during the period commencing on the date hereof and continuing until the first
to occur of (i) such date and time as the Merger shall become effective in
accordance with the terms and provisions of the Merger Agreement (THE "EFFECTIVE
TIME") and (ii) termination of this Agreement in accordance with its terms, at
any meeting (whether annual or special and whether or not an adjourned or
postponed meeting) of the stockholders of Company, however called, or in
connection with any written consent of the stockholders of Company, Stockholder
will appear at the meeting or otherwise cause the Shares to be counted as
present thereat for purposes of establishing a quorum and vote or consent (or
cause to be voted or consented) the Shares:
(1) in favor of the approval and adoption of the Merger Agreement in
the form entered into on the date hereof and the approval of the Merger and
the other actions contemplated by the Merger Agreement and any actions
required in furtherance thereof;
(2) against approval of any proposal made in opposition to or in
competition with the consummation of the Merger, including, without
limitation, any Acquisition Proposal or Superior Offer (each as defined in
the Merger Agreement) or any action or agreement that would result in a
breach in any respect of any covenant, representation or warranty or any
other obligation or agreement of Company under the Merger Agreement or of
Stockholder under this Agreement.
Stockholder further agrees not to enter into any agreement or understanding
with any person the effect of which would be inconsistent with or violative of
any provision contained in this Section 1.2.
2
<PAGE> 76
1.3 Transfer and Other Restrictions. (a) Prior to the termination of
this Agreement, Stockholder agrees not to, directly or indirectly:
(i) except pursuant to the terms of the Merger Agreement, offer
for sale, Transfer or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to
or consent to the offer for sale, Transfer or other disposition of any
or all of the Subject Securities or any interest therein except as
provided in Section 1.2 hereof;
(ii) grant any proxy, power of attorney, deposit any of the
Subject Securities into a voting trust or enter into a voting
agreement or arrangement with respect to the Subject Securities except
as provided in this Agreement; or
(iii) take any other action that would make any representation or
warranty of Stockholder contained herein untrue or incorrect or have
the effect of preventing or disabling Stockholder from performing its
obligations under this Agreement.
(b) To the extent Stockholder is, as of the date hereof, party to a
contract or agreement that requires Stockholder to Transfer Subject Securities
to another person or entity (excluding a contract or agreement pledging Subject
Securities to Company), Stockholder will not effect any such Transfer unless and
until the transferee agrees to be bound by and executes an agreement in the form
of this Agreement with respect to the Subject Securities to be Transferred.
Nothing herein shall prohibit Stockholder from exercising (in accordance with
the terms of the option or warrant, as applicable) any option or warrant
Stockholder may hold; provided that the securities acquired upon such exercise
shall be deemed Subject Securities and Shares hereunder.
1.4 Irrevocable Proxy. Concurrently with the execution of this
Agreement, Stockholder agrees to deliver to Parent a proxy in the form attached
hereto as Exhibit I (the "PROXY"), which shall be irrevocable to the extent set
forth therein, with respect to the Shares.
2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
(a) Stockholder is the record and beneficial owner of, or Stockholder
exercises voting power over, the shares of Company capital stock indicated on
the final page of this Agreement, which, on and as of the date hereof, are free
and clear of any Encumbrances that would adversely affect the ability of
Stockholder to carry out the terms of this Agreement. The number of Shares set
forth on the signature pages hereto are the only Shares beneficially owned by
such Stockholder and, except as set forth on such signature pages, the
Stockholder holds no options to purchase or rights to subscribe for or otherwise
acquire any securities of the Company and has no other interest in or voting
rights with respect to any securities of the Company.
(b) Stockholder has the requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by such Stockholder and
the consummation by such Stockholder of
3
<PAGE> 77
the transactions contemplated by this Agreement have been duly authorized by all
necessary action (including any consultation, approval or other action by or
with any other person). This Agreement has been duly executed and delivered by
such Stockholder and constitutes a valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms.
The execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
which would result in the creation of any Encumbrance upon any of the Shares
owned by such Stockholder under, any provision of Stockholder's charter
documents (if applicable), applicable law or regulation or of any agreement,
judgment, injunction, order, decree, or other instrument binding on such
Stockholder or any Shares owned by such Stockholder. No consent, approval, order
or authorization of, or registration, declaration or filing with or exemption by
any Governmental Entity is required by or with respect to such Stockholder in
connection with the execution and delivery of this Agreement by such Stockholder
or the consummation by such Stockholder of the transactions contemplated by this
Agreement, except for applicable requirements, if any, of Sections 13 and 16 of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder. If this Agreement is being executed in a representative or fiduciary
capacity, the person signing this Agreement has full power and authority to
enter into and perform such Agreement.
3. TERMINATION
This Agreement shall terminate and shall have no further force or effect as
of the first to occur of (i) the Effective Time and (ii) such date and time as
the Merger Agreement shall have been validly terminated pursuant to Article VII
thereof. Notwithstanding any other provision hereof, this Agreement shall
terminate in the event that the Merger Agreement is modified in a manner that is
materially adverse to Stockholder without Stockholder's consent.
4. MISCELLANEOUS
4.1 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
4.2 Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without prior written consent of the other. Any purported
assignment in violation of this Section shall be void.
4.3 Amendments and Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
4
<PAGE> 78
4.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Parent will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
Stockholder set forth herein. Therefore, it is agreed that, in addition to any
other remedies that may be available to Parent upon any such violation, Parent
shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to Parent at law
or in equity.
4.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given upon delivery either by commercial
delivery service, or sent via facsimile (receipt confirmed) to the parties at
the following address or facsimile numbers (or at such other address or
facsimile numbers for a party as shall be specified by like notice):
If to Parent:
Neoforma.com, Inc.
3255-7 Scott Boulevard
Santa Clara, California 95054
Attn: Chief Financial Officer
Facsimile: (408) 549-6211
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
Attn: Gordon K. Davidson
Douglas N. Cogen
Facsimile: (650) 494-1417
If to Stockholder, to the address for notice set forth on the last page
hereof.
Any party hereto may by notice so given provide and change its address for
future notices hereunder. Notice shall conclusively be deemed to have been given
when personally delivered or when deposited in the mail in the manner set forth
above.
4.6 Governing Law. This Agreement shall be governed by and construed
exclusively in accordance with the laws of the State of Delaware, excluding that
body of law relating to conflict of laws.
4.7 Entire Agreement. This Agreement and the Merger Agreement
constitute and contains the entire agreement and understanding of the parties
with respect to the subject matter hereof and supersede any and all prior
negotiations, correspondence, agreements, understandings, duties or obligations
between the parties respecting the subject matter hereof.
4.8 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same
5
<PAGE> 79
instrument.
4.9 Captions. The captions to sections of this Agreement have
been inserted for identification and reference purposes only and shall not be
used to construe or interpret this Agreement.
* * * * *
6
<PAGE> 80
IN WITNESS WHEREOF, the parties hereto have caused this Company Voting
Agreement to be executed by their duly authorized respective officers as of the
date first above written.
NEOFORMA.COM, INC.
By: _______________________________
Name:
Title:
STOCKHOLDER:
___________________________________
By: _______________________________
Name:
Title:
Stockholder's Address for Notice:
___________________________________
___________________________________
___________________________________
Outstanding shares
of Company capital
stock beneficially
owned by
Stockholder:
_______________________
7
<PAGE> 81
EXHIBIT I
IRREVOCABLE PROXY
The undersigned stockholder (the "STOCKHOLDER") of Eclipsys Corporation, a
Delaware corporation (the "COMPANY"), hereby irrevocably appoints and
constitutes the members of the Board of Directors of Neoforma.com, Inc., a
Delaware corporation ("PARENT"), and each such Board member (collectively the
"PROXYHOLDERS"), the agents, attorneys and proxies of the undersigned, with full
power of substitution and resubstitution, to the full extent of the
undersigned's rights with respect to the shares of capital stock of Company
which are listed below (the "SHARES"), and any and all other shares or
securities issued or issuable in respect thereof on or after the date hereof and
prior to the date this proxy terminates, to vote the Shares as follows: the
agents and proxies named above are empowered at any time prior to termination of
this proxy to exercise all voting and other rights (including, without
limitation, the power to execute and deliver written consents with respect to
the Shares) of the undersigned at every annual, special or adjourned meeting of
Company stockholders, and in every written consent in lieu of such a meeting, or
otherwise, (i) in favor of adoption of the Agreement and Plan of Merger (the
"MERGER AGREEMENT") among Parent, NeoIII Acquisition Corp. ("MERGER SUB") and
Company in the form entered into on the date hereof, and the approval of the
merger of Merger Sub with and into Company (the "MERGER"), and (ii) against
approval of any proposal made in opposition to or in competition with
consummation of the Merger, including, without limitation, any Acquisition
Proposal or Superior Offer (each as defined in the Merger Agreement) or any
action or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
Company under the Merger Agreement or of the Stockholder under the Company
Voting Agreement between Parent and Stockholder (the "VOTING AGREEMENT").
The Proxyholders may not exercise this proxy on any other matter. The
Stockholder may vote the Shares on all such other matters. The proxy granted by
the Stockholder to the Proxyholders hereby is granted as of the date of this
Irrevocable Proxy in order to secure the obligations of the Stockholder set
forth in Section 1 of the Voting Agreement, and is irrevocable and coupled with
an interest in such obligations and in the interests in Company to be purchased
and sold pursuant to the Merger Agreement.
This proxy will terminate upon the termination of the Voting Agreement in
accordance with its terms. Upon the execution hereof, all prior proxies given by
the undersigned with respect to the Shares and any and all other shares or
securities issued or issuable in respect thereof on or after the date hereof are
hereby revoked and no subsequent proxies will be given until such time as this
proxy shall be terminated in accordance with its terms. Any obligation of the
undersigned hereunder shall be binding upon the successors and assigns of the
undersigned. The undersigned stockholder authorizes the Proxyholders to file
this proxy and any substitution or revocation of substitution with the Secretary
of the Company and with any Inspector of Elections at any meeting of the
stockholders of the Company.
This proxy is irrevocable and shall survive the insolvency, incapacity,
death or liquidation of the undersigned. Dated: March 30, 2000.
Stockholder: ___________________________________
By: __________________________________________
______________________________________________
Name and Title
Shares of Company capital stock beneficially owned: ______________
8
<PAGE> 82
EXHIBIT B
PARENT VOTING AGREEMENT
This PARENT VOTING AGREEMENT (the "AGREEMENT") is made and entered into as
of March 30, 2000, among Eclipsys Corporation, a Delaware corporation
("ECLIPSYS"), HEALTHvision, a Delaware corporation ("HEALTHVISION"), and the
undersigned stockholder ("STOCKHOLDER") of Neoforma.com, Inc., a Delaware
corporation ("PARENT").
RECITALS
A. Concurrently with the execution of this Agreement, Parent, Eclipsys and
NeoIII Acquisition Corp., a Delaware corporation and a wholly-owned first-tier
subsidiary of Parent ("MERGER SUB"), are entering into an Agreement and Plan of
Merger (the "ECLIPSYS MERGER AGREEMENT") which provides for the merger of Merger
Sub with and into Eclipsys (the "ECLIPSYS MERGER"). Pursuant to the Eclipsys
Merger, shares of capital stock of Eclipsys will be converted into shares of
Parent Common Stock on the basis described in the Eclipsys Merger Agreement.
Capitalized terms used but not defined herein shall have the meanings set forth
in the Eclipsys Merger Agreement.
B. Concurrently with the execution of this Agreement, Parent and
Healthvision are entering into an Agreement and Plan of Merger (the
"HEALTHVISION MERGER AGREEMENT") which provides for the merger of Healthvision
with and into Eclipsys (the "HEALTHVISION MERGER"). Pursuant to the Healthvision
Merger, shares of capital stock of Healthvision will be converted into shares of
Parent Common Stock on the basis described in the Healthvision Merger Agreement.
C. Concurrently with the execution of this Agreement, Parent and VHA Inc.,
a Delaware corporation ("VHA"), and Parent and University HealthSystem
Consortium, an Illinois not-for-profit corporation ("UHC") are entering into
respective Common Stock and Warrant Agreements pursuant to which Parent will
issue to VHA and UHC, respectively, shares of Parent Stock and Warrants to
purchase Parent Common Stock (the "STOCK AND WARRANT AGREEMENT"), in partial
consideration for such parties entry into and continued performance under
certain commercial arrangements among such parties, Parent and others. The
Eclipsys Merger, the Healthvision Merger and the security issuances contemplated
by the Stock and Warrant Agreement, collectively, the "TRANSACTIONS").
D. Stockholder is the record holder of such number of outstanding shares of
capital stock of Parent as is indicated on the final page of this Agreement.
E. As a material inducement for Eclipsys to enter into the Eclipsys Merger
Agreement, Eclipsys desires Stockholder to agree, and as a material inducement
for Healthvision to enter into the Healthvision Merger Agreement, Healthvision
desires Stockholder to agree and Stockholder is willing to agree, to vote the
Shares (as defined below), and such other shares of capital stock of Parent over
which Stockholder has voting power, so as to facilitate consummation of the
Transactions.
<PAGE> 83
In consideration of the foregoing and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
1. AGREEMENT TO VOTE SHARES
1.1 Definitions. For purposes of this Agreement:
(a) Shares. The term "SHARES" shall mean all issued and
outstanding shares of Parent Common Stock owned of record or beneficially by
Stockholder or over which Stockholder exercises voting power, in each case, as
of the record date for persons entitled (i) to receive notice of, and to vote at
the meeting of the stockholders of Parent called for the purpose of voting on
the matters referred to in Section 1.2, or (ii) to take action by written
consent of the stockholders of Parent with respect to the matters referred to in
Section 1.2. Stockholder agrees that any shares of capital stock of Parent that
Stockholder purchases or with respect to which Stockholder otherwise acquires
beneficial ownership or over which Stockholder exercises voting power after the
execution of this Agreement and prior to the date of termination of this
Agreement pursuant to Section 3 below shall be subject to the terms and
conditions of this Agreement to the same extent as if they constituted Shares on
the date hereof.
(b) Subject Securities. The term "SUBJECT SECURITIES" shall mean:
(i) all securities of Parent (including all shares of Parent Common Stock and
all options, warrants and other rights to acquire shares of Parent Common Stock
beneficially owned by Stockholder as of the date of this Agreement; and (ii) all
additional securities of Parent (including all additional shares of Parent
Common Stock and all additional options, warrants and other rights to acquire
shares of Parent Common Stock) of which Stockholder acquires ownership during
the period from the date of this Agreement through the earlier of termination of
this Agreement pursuant to Section 3 below or the record date for the meeting at
which stockholders of Parent are asked to vote upon the issuance of shares of
Parent Common Stock in the Transactions.
(c) Transfer. Stockholder shall be deemed to have effected a
"TRANSFER" of a security if Stockholder directly or indirectly: (i) sells,
pledges, encumbers, transfers or disposes of, or grants an option with respect
to, such security or any interest in such security; or (ii) enters into an
agreement or commitment providing for the sale, pledge, encumbrance, transfer or
disposition of, or grant of an option with respect to, such security or any
interest therein.
1.2 Agreement to Vote Shares. Stockholder hereby covenants and agrees
that, during the period commencing on the date hereof and continuing until the
first to occur of (i) such date and time as the Healthvision Merger shall become
effective in accordance with the terms and provisions of the Healthvision Merger
Agreement (the "EFFECTIVE TIME") and (ii) termination of this Agreement in
accordance with its terms, at any meeting (whether annual or special and whether
or not an adjourned or postponed meeting) of the stockholders of Parent, however
called, or in connection with any written consent of the stockholders of Parent,
Stockholder will appear at the meeting or otherwise cause the Shares to be
counted as present thereat for purposes of establishing a quorum and vote or
consent (or cause to be voted or
2
<PAGE> 84
consented) the Shares:
(1) in favor of the issuance of shares of Parent Common Stock in
the Eclipsys Merger and in the Healthvision Merger, and in favor of
the issuance of shares of Parent Common Stock and Warrants to purchase
Parent Common Stock, and the shares of Parent Common Stock issuable
pursuant to the terms of such Warrants pursuant to the Stock and
Warrant Agreements, and the other actions contemplated by the Eclipsys
Merger Agreement, Healthvision Merger Agreement and Stock and Warrant
Agreements and any actions required in furtherance thereof; and
(2) against approval of any action or agreement that would result
in a breach in any respect of any covenant, representation or warranty
or any other obligation or agreement of Parent under the Eclipsys
Merger Agreement, Healthvision Merger Agreement or Stock and Warrant
Agreements, or of Stockholder under this Agreement.
Stockholder further agrees not to enter into any agreement or
understanding with any person the effect of which would be inconsistent with or
violative of any provision contained in this Section 1.2.
1.3. Transfer and Other Restrictions. (a) Prior to the termination of
this Agreement, Stockholder agrees not to, directly or indirectly:
(i) offer for sale, Transfer or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, Transfer or other
disposition of any or all of the Subject Securities or any interest
therein except as provided in Section 1.2 hereof;
(ii) grant any proxy, power of attorney, deposit any of the
Subject Securities into a voting trust or enter into a voting
agreement or arrangement with respect to the Subject Securities except
as provided in this Agreement; or
(iii) take any other action that would make any representation or
warranty of Stockholder contained herein untrue or incorrect or have
the effect of preventing or disabling Stockholder from performing its
obligations under this Agreement.
(b) To the extent Stockholder is, as of the date hereof, party to a
contract or agreement that requires Stockholder to Transfer Subject Securities
to another person or entity (excluding a contract or agreement pledging Subject
Securities to Parent), Stockholder will not effect any such Transfer unless and
until the transferee agrees to be bound by and executes an agreement in the form
of this Agreement with respect to the Subject Securities to be Transferred.
Nothing herein shall prohibit Stockholder from exercising (in accordance with
the terms of the option or warrant, as applicable) any option or warrant
Stockholder may hold; provided that the securities acquired upon such exercise
shall be deemed Subject Securities and Shares hereunder.
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<PAGE> 85
(c) Until July 24, 2000, Stockholder will not, directly or indirectly,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of, or otherwise dispose of or transfer any shares of the
Parent Common Stock or any securities convertible into or exchangeable or
exercisable for Parent Common Stock, or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Parent Common Stock,
whether any such swap or transaction is to be settled by delivery of Parent
Common Stock or other securities, in cash or otherwise. The foregoing sentence
shall not apply to (a) transactions relating to Parent Common Stock acquired by
Stockholder in open market transactions, (b) the transfer, if the undersigned is
an individual, to a member or members of his or her immediate family or to a
trust, the beneficiaries of which are exclusively the undersigned and/or a
member or members of his or her immediate family, either during his or her
lifetime or on death by will or intestacy, provided that the transferee or
transferees thereof agree in writing to be bound by the provisions of this
Agreement, or (c) the transfer, if the undersigned is a partnership, corporation
or trust, to partners (or retired partners who retire after the date hereof),
shareholders, or beneficiaries, as the case may be, of the undersigned as a
distribution, provided that the distributees thereof agree in writing to be
bound by the provisions of this Agreement. For the purposes of this paragraph,
"immediate family" shall mean spouse, lineal descendant, father, mother, brother
or sister of the transferor.
2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
(a) Stockholder is the record and beneficial owner of, or Stockholder
exercises voting power over, the shares of Parent capital stock indicated on the
final page of this Agreement, which, on and as of the date hereof, are free and
clear of any Encumbrances that would adversely affect the ability of Stockholder
to carry out the terms of this Agreement. The number of Shares set forth on the
signature pages hereto are the only Shares beneficially owned by such
Stockholder and, except as set forth on such signature pages, the Stockholder
holds no options to purchase or rights to subscribe for or otherwise acquire any
securities of the Parent and has no other interest in or voting rights with
respect to any securities of Parent.
(b) Stockholder has the requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by such Stockholder and
the consummation by such Stockholder of the transactions contemplated by this
Agreement have been duly authorized by all necessary action (including any
consultation, approval or other action by or with any other person). This
Agreement has been duly executed and delivered by such Stockholder and
constitutes a valid and binding obligation of such Stockholder, enforceable
against such Stockholder in accordance with its terms. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation which would
result in the creation of any Encumbrance upon any of the Shares owned by such
Stockholder under, any provision of Stockholder's charter documents (if
applicable), applicable law or regulation or of any agreement, judgment,
injunction, order, decree, or other instrument binding on such Stockholder or
any Shares owned by such
4
<PAGE> 86
Stockholder. No consent, approval, order or authorization of, or registration,
declaration or filing with or exemption by any Governmental Entity is required
by or with respect to such Stockholder in connection with the execution and
delivery of this Agreement by such Stockholder or the consummation by such
Stockholder of the transactions contemplated by this Agreement, except for
applicable requirements, if any, of Sections 13 and 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder. If
this Agreement is being executed in a representative or fiduciary capacity, the
person signing this Agreement has full power and authority to enter into and
perform such Agreement.
3. TERMINATION
This Agreement shall terminate and shall have no further force or effect as
of the first to occur of (i) the Effective Time and (ii) such date and time as
the Eclipsys Merger Agreement, Healthvision Merger Agreement or the Stock and
Warrant Agreements shall have been validly terminated pursuant to the terms
thereof. Notwithstanding any other provision hereof, this Agreement shall
terminate in the event that either the Eclipsys Merger Agreement or the
Healthvision Merger Agreement is modified in a manner that is materially adverse
to Stockholder without Stockholder's consent.
4. MISCELLANEOUS
4.1 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
4.2 Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without prior written consent of the other. Any purported
assignment in violation of this Section shall be void.
4.3 Amendments and Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
4.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Eclipsys and/or Healthvision will be irreparably harmed and
that there will be no adequate remedy at law for a violation of any of the
covenants or agreements of Stockholder set forth herein. Therefore, it is agreed
that, in addition to any other remedies that may be available to Eclipsys and/or
Healthvision upon any such violation, Eclipsys and/or Healthvision shall have
the right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to Eclipsys and/or
Healthvision at law or in equity.
4.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given upon delivery either by commercial
delivery service, or
5
<PAGE> 87
sent via facsimile (receipt confirmed) to the parties at the following address
or facsimile numbers (or at such other address or facsimile numbers for a party
as shall be specified by like notice):
If to Eclipsys:
Eclipsys Corporation
777 East Atlantic Avenue
Delray Beach, Florida 33483
Attn: Chief Financial Officer
Facsimile: (561) 243-8850
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
Attn: John Burgess
Donald L. Toker
Facsimile: (703) 654-7100
If to Healthvision:
HEALTHvision, Inc.
6330 Commerce Drive, Suite 100
Irving, Texas 75063
Attn: Chief Financial Officer
Facsimile: (972) 819-4701
with a copy to:
Hogan & Hartson, L.L.P.
555 Thirteenth Street, N.W.
Washington, DC 20004
Attn: Christopher J. Hagan
Facsimile: (202) 637-5910
If to Stockholder, to the address for notice set forth on the last page
hereof.
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
Attn: Gordon K. Davidson
Douglas N. Cogen
Facsimile: (650) 494-1417
6
<PAGE> 88
Any party hereto may by notice so given provide and change its address for
future notices hereunder. Notice shall conclusively be deemed to have been given
when personally delivered or when deposited in the mail in the manner set forth
above.
4.6 Governing Law. This Agreement shall be governed by and construed
exclusively in accordance with the laws of the State of Delaware, excluding that
body of law relating to conflict of laws.
4.7 Entire Agreement. This Agreement constitutes and contains 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 respecting
the subject matter hereof.
4.8 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
4.9 Captions. The captions to sections of this Agreement have been
inserted for identification and reference purposes only and shall not be used to
construe or interpret this Agreement.
* * * * *
7
<PAGE> 89
IN WITNESS WHEREOF, the parties hereto have caused this Parent Voting
Agreement to be executed by their duly authorized respective officers as of the
date first above written.
ECLIPSYS CORPORATION
By: ________________________________
Name:
Title:
HEALTHVISION, INC.
By: ________________________________
Name:
Title:
STOCKHOLDER:
____________________________________
By: ________________________________
Name:
Title:
Stockholder's Address for Notice:
____________________________________
____________________________________
____________________________________
Outstanding shares
of Parent capital
stock beneficially
owned by
Stockholder:
____________________________________
8
<PAGE> 1
EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
NEOFORMA.COM, INC.
AND
HEALTHVISION, INC.
MARCH 30, 2000
<PAGE> 2
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I THE MERGER........................................................................................... 2
1.1 The Merger..................................................................................... 2
1.2 Effective Time; Closing........................................................................ 2
1.3 Effect of the Merger........................................................................... 2
1.4 Certificate of Incorporation; Bylaws........................................................... 2
1.5 Directors and Officers......................................................................... 3
1.6 Effect on Capital Stock........................................................................ 3
1.7 Exchange of Certificates....................................................................... 5
1.8 No Further Ownership Rights in Healthvision Stock.............................................. 8
1.9 Restricted Stock............................................................................... 8
1.10 Tax Consequences............................................................................... 8
1.11 Taking of Necessary Action; Further Action..................................................... 9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF HEALTHVISION...................................................... 9
2.1 Organization; Subsidiaries..................................................................... 9
2.2 Healthvision Capitalization.................................................................... 10
2.3 Obligations With Respect to Capital Stock...................................................... 11
2.4 Authority; Non-Contravention................................................................... 12
2.5 Healthvision Financial Statements.............................................................. 14
2.6 Absence of Certain Changes or Events........................................................... 14
2.7 Taxes.......................................................................................... 15
2.8 Title to Properties............................................................................ 16
2.9 Intellectual Property.......................................................................... 17
2.10 Compliance with Laws........................................................................... 19
2.11 Litigation..................................................................................... 19
2.12 Employee Benefit Plans......................................................................... 20
2.13 Environmental Matters.......................................................................... 24
2.14 Certain Agreements............................................................................. 25
2.15 Brokers' and Finders' Fees..................................................................... 26
2.16 Insurance...................................................................................... 26
2.17 Disclosure..................................................................................... 26
2.18 Board Approval................................................................................. 26
2.19 Takeover Statutes Not Applicable............................................................... 27
ARTICLE III REPRESENTATIONS AND WARRANTIES OF NEOFORMA......................................................... 27
3.1 Organization of Neoforma....................................................................... 27
3.2 Neoforma Capitalization........................................................................ 28
3.3 Obligations With Respect to Capital Stock...................................................... 28
3.4 Authority; Non-Contravention................................................................... 29
3.5 SEC Filings; Neoforma Financial Statements..................................................... 30
3.6 Absence of Certain Changes or Events........................................................... 31
3.7 Taxes.......................................................................................... 32
3.8 Title to Properties............................................................................ 33
</TABLE>
-ii-
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
3.9 Intellectual Property.......................................................................... 34
3.10 Compliance with Laws........................................................................... 35
3.11 Litigation..................................................................................... 36
3.12 Employee Benefit Plans......................................................................... 36
3.13 Environmental Matters.......................................................................... 39
3.14 Certain Agreements............................................................................. 40
3.15 Brokers' and Finders' Fees..................................................................... 41
3.16 Insurance...................................................................................... 41
3.17 Disclosure..................................................................................... 41
3.18 Board Approval................................................................................. 42
3.19 Fairness Opinion............................................................................... 42
3.20 Takeover Statutes Not Applicable............................................................... 43
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME................................................................. 42
4.1 Conduct of Business by Healthvision............................................................ 42
4.2 Conduct of Business by Neoforma................................................................ 45
ARTICLE V ADDITIONAL AGREEMENTS................................................................................ 48
5.1 Proxy Statement/Prospectus; Registration Statement; Antitrust and Other Filings................ 48
5.2 Meeting of Healthvision Stockholders........................................................... 49
5.3 Meeting of Neoforma Stockholders............................................................... 50
5.4 No Solicitation................................................................................ 51
5.5 Confidentiality; Access to Information......................................................... 52
5.6 Public Disclosure.............................................................................. 52
5.7 Reasonable Efforts; Notification............................................................... 52
5.8 Third Party Consents........................................................................... 54
5.9 Indemnification................................................................................ 54
5.10 Neoforma Board of Directors; Executive Officers................................................ 55
5.11 Nasdaq Listing................................................................................. 55
5.12 Letters of Accountants......................................................................... 55
5.13 Takeover Statutes.............................................................................. 55
5.14 Certain Employee Benefits...................................................................... 56
5.15 Discontinuance of IPO Efforts.................................................................. 56
5.16 Registration Rights............................................................................ 56
5.17 Section 280G Stockholder Approval.............................................................. 56
5.18 Healthvision Options........................................................................... 56
ARTICLE VI CONDITIONS TO THE MERGER............................................................................ 57
6.1 Conditions to Obligations of Each Party to Effect the Merger................................... 57
6.2 Additional Conditions to Obligations of Healthvision........................................... 58
6.3 Additional Conditions to the Obligations of Neoforma........................................... 59
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.................................................................. 60
7.1 Termination.................................................................................... 60
7.2 Notice of Termination; Effect of Termination................................................... 62
7.3 Fees and Expenses.............................................................................. 62
</TABLE>
-iii-
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
7.4 Amendment...................................................................................... 62
7.5 Extension; Waiver.............................................................................. 62
ARTICLE VIII GENERAL PROVISIONS................................................................................ 63
8.1 Non-Survival of Representations and Warranties................................................. 63
8.2 Notices........................................................................................ 63
8.3 Interpretation; Certain Defined Terms.......................................................... 64
8.4 Counterparts................................................................................... 65
8.5 Entire Agreement; Third Party Beneficiaries.................................................... 65
8.6 Severability................................................................................... 65
8.7 Other Remedies; Specific Performance........................................................... 65
8.8 Governing Law.................................................................................. 66
8.9 Rules of Construction.......................................................................... 66
8.10 Assignment..................................................................................... 66
8.11 Waiver Of Jury Trial........................................................................... 66
</TABLE>
-iv-
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and entered
into as of March 30, 2000, by and between Neoforma.com, Inc., a Delaware
corporation ("NEOFORMA"), and HEALTHvision, Inc., a Delaware corporation
("HEALTHVISION").
RECITALS
A. Immediately prior to the closing of the transaction contemplated hereby,
Neoforma will acquire Eclipsys Corporation, a Delaware corporation ("ECLIPSYS"),
by virtue of a reverse triangular merger ("ECLIPSYS MERGER"), as a result of
which Eclipsys will become a wholly owned subsidiary of Neoforma, pursuant to an
Agreement and Plan of Merger by and among Eclipsys, Neoforma and a subsidiary of
Neoforma ("ECLIPSYS AGREEMENT"). Eclipsys owns, on an as converted basis,
approximately a 34% outstanding equity interest in Healthvision as of the date
of this Agreement ("ECLIPSYS' EQUITY INTEREST IN HEALTHVISION"). Concurrently
with the execution of this Agreement, Neoforma is entering into an Outsourcing
and Operating Agreement (the "NOVATION OPERATING AGREEMENT") among Neoforma,
Novation, LLC, a Delaware limited liability company ("NOVATION"), VHA Inc., a
Delaware corporation ("VHA"), University HealthSystem Consortium, an Illinois
corporation ("UHC"), and Healthcare Purchasing Partners International, LLC, a
Delaware limited liability company ("HPPI"), and Common Stock and Warrant
Agreements between Neoforma and VHA, and Neoforma and UHC, respectively (the
"STOCK AND WARRANT AGREEMENTS" and, together with the Novation Operating
Agreement, the "NOVATION DOCUMENTS," and the Novation Documents together with
the Eclipsys Merger Agreement, the "RELATED AGREEMENTS"), copies of each of
which and all related documents are attached to the Neoforma Disclosure Letter
(as defined in the introduction to Article III). The transactions contemplated
by this Agreement and the Related Agreements are collectively referred to herein
as the "TRANSACTION."
B. The respective Boards of Directors of Neoforma and Healthvision have
approved this Agreement and declared advisable the merger of Healthvision with
and into Eclipsys (the "MERGER") upon the terms and subject to the conditions of
this Agreement and in accordance with the General Corporation Law of the State
of Delaware ("DELAWARE LAW"), and the respective Boards of Directors of
Neoforma, Healthvision and Eclipsys have approved an agreement of merger to be
filed with the Delaware Secretary of State (the "AGREEMENT OF MERGER") in the
form of Exhibit A.
C. For United States federal income tax purposes, the Merger is intended to
qualify as a "reorganization" pursuant to the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "CODE"), by virtue of the
provisions of Section 368(a)(2)(D) of the Code relating to "forward triangular"
mergers. For accounting purposes, the Merger is intended to be accounted for as
a purchase under United States generally accepted accounting principles
("GAAP").
D. Concurrently with the execution of this Agreement, and as a condition
and inducement to Neoforma's willingness to enter into this Agreement, certain
stockholders of
<PAGE> 6
Healthvision are entering into Voting Agreements with Neoforma in the form of
Exhibit B (the "HEALTHVISION VOTING AGREEMENTS").
E. Concurrently with the execution of this Agreement, and as a condition
and inducement to Healthvision's willingness to enter into this Agreement,
certain stockholders of Neoforma are entering into Voting Agreements with
Healthvision and Eclipsys in the form of Exhibit C (the "NEOFORMA VOTING
AGREEMENTS").
In consideration of the foregoing and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions of this
Agreement and the applicable provisions of Delaware Law, at the Effective Time,
Healthvision shall be merged with and into Eclipsys, the separate corporate
existence of Healthvision shall cease, and Eclipsys shall continue as the
surviving corporation of the Merger (the "SURVIVING CORPORATION").
1.2 Effective Time; Closing. Subject to the provisions of this Agreement,
the parties hereto shall cause the Merger to be consummated by filing the
Agreement of Merger with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware Law (the time of such filing
(or such later time as may be agreed in writing by Healthvision and Neoforma and
specified in the Agreement of Merger) being the "EFFECTIVE TIME") as soon as
practicable immediately following the consummation of the Eclipsys Merger on or
after the Closing Date. The closing of the Merger (the "CLOSING") shall 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 VI, or at such other time, date and location as
the parties hereto agree in writing (the "CLOSING DATE").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of Delaware
Law. Without limiting the generality of the foregoing, at the Effective Time,
all the property, rights, privileges, powers and franchises of Healthvision and
Eclipsys shall vest in the Surviving Corporation, and all debts, liabilities and
duties of Healthvision and Eclipsys shall become the debts, liabilities and
duties of the Surviving Corporation and Eclipsys' Equity Interest in
Healthvision shall be cancelled without consideration.
1.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of
Eclipsys, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the
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<PAGE> 7
Surviving Corporation until thereafter amended as provided by law and such
Certificate of Incorporation of the Surviving Corporation.
(b) At the Effective Time, the Bylaws of Eclipsys, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Eclipsys immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Eclipsys immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6 Effect on Capital Stock. Subject to the terms and conditions of this
Agreement, at the Effective Time, capital stock and rights to purchase capital
stock will, by virtue of the Merger, be treated as follows:
1.6.1 Conversion of Healthvision Preferred Stock. At the Effective
Time, the shares of each outstanding series of Preferred Stock of Healthvision,
$0.01 par value per share ("HEALTHVISION PREFERRED STOCK"), shall be converted
into Neoforma Common Stock, $0.001 par value ("NEOFORMA COMMON STOCK"), in the
manner provided for in this Agreement. Accordingly, at the Effective Time each
share of Healthvision Preferred Stock issued and outstanding immediately prior
thereto (other than Dissenting Shares (as defined below)) shall be canceled and
converted as follows:
(a) each share of Healthvision's Series A Convertible
Participating Preferred Stock ("SERIES A STOCK") shall automatically be
converted in the Merger into (i) .3041825 of a share (such fraction representing
$10 divided by $32-7/8ths) of Neoforma Common Stock plus (ii) four shares of
Common Stock of Healthvision, $0.01 par value per share ("HEALTHVISION COMMON
STOCK") (subject to further conversion as provided in Section 1.6.2 below);
(b) each outstanding share of Healthvision's Series B
Convertible Preferred Stock ("SERIES B STOCK"), if any, will be converted in the
Merger into four shares of Healthvision Common Stock (subject to further
conversion as provided in Section 1.6.2 below).
1.6.2 Conversion of Shares of Healthvision Common Stock. Each
share of Healthvision Common Stock (including Healthvision Common Stock issued
or issuable as a result of the automatic conversion of outstanding shares of
Series A Stock in part into Healthvision Common Stock at the Effective Time as
described in Section 1.6.1(a)(ii) above and the conversion of any outstanding
shares of Series B Stock into Healthvision Common Stock at the Effective Time as
described in Section 1.6.1(b) above) that is issued and outstanding immediately
prior to the Effective Time (in each case, other than Dissenting Shares) will,
by virtue of the Merger and at the Effective Time, and without further action on
the part of any holder thereof, be converted into 0.444 (the "EXCHANGE RATIO")
fully paid and nonassessable shares of Neoforma Common Stock. No fraction of a
share of Neoforma Common Stock will be
-3-
<PAGE> 8
issued by virtue of the Merger, but in lieu thereof, a cash payment shall be
made pursuant to Section 1.7(e).
1.6.3 Assumptions of Options. At the Effective Time, Neoforma will
assume all options to purchase Healthvision common stock outstanding at the
Effective Time (the "HEALTHVISION OPTIONS") pursuant to Healthvision's 1999
Stock Incentive Plan ("1999 PLAN"). At the Effective Time, each Healthvision
Option shall be converted into an option (a "NEOFORMA OPTION") to purchase that
number of shares of Neoforma Common Stock that is equal to the number of shares
of Healthvision Common Stock that could be purchased pursuant to such
Healthvision Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, with fractional shares being rounded down to the nearest whole
share. The exercise price per share of Neoforma Common Stock purchasable under
each Healthvision Option assumed and converted into a Neoforma Option shall be
equal to the exercise price per share of Healthvision Common Stock under such
Healthvision Option immediately prior to the Effective Time divided by the
Exchange Ratio, rounded up to the nearest cent. No cash will be paid in lieu of
fractional shares which are rounded down pursuant to this Section. The term,
exercisability, vesting schedule, status as an "incentive stock option" under
Section 422 of the Code, if applicable, and all other terms of Healthvision
Options will otherwise be unchanged. Continuous employment with Healthvision
will be credited to an optionee for purposes of determining the number of shares
subject to exercise after the Effective Time. Neoforma agrees to file with the
Securities and Exchange Commission ("SEC") a registration statement on Form S-8
for the shares of Neoforma Common Stock issuable with respect to assumed
Healthvision Options as soon as is reasonably practicable after the Effective
Time, and maintain the effectiveness of such registration statement thereafter
for so long as any of such options or other rights remain outstanding, and will
reserve a sufficient number of shares of Neoforma Common Stock for issuance upon
exercise thereof.
1.6.4 Assumptions of Healthvision Warrants. At the Effective Time,
Neoforma will assume all outstanding warrants to purchase capital stock of
Healthvision ("HEALTHVISION WARRANTS"). Each Healthvision Warrant shall be
automatically exchanged for a five-year warrant in substantially the form of
Exhibit 1.6.4 (a "NEOFORMA WARRANT"), to purchase that number of shares of
Neoforma Common Stock that is equal to the number of shares of Healthvision
Common Stock (assuming Series B Stock has been previously issued and
automatically converted into Healthvision Common Stock) that could be purchased
pursuant to such Healthvision Warrant immediately prior to the Effective Time
multiplied by the Exchange Ratio, with fractional shares being rounded down to
the nearest whole share. The exercise price per share for each such substituted
Neoforma Warrant shall equal $3.75 divided by the Exchange Ratio, rounded up to
the nearest cent. No cash will be paid in lieu of fractional shares which are
rounded down pursuant to this Section.
1.6.5 Cancellation of Healthvision Owned and Eclipsys Owned Stock.
Each share of Healthvision capital stock held by Healthvision or owned by
Eclipsys or any direct or indirect wholly owned subsidiary of Eclipsys or
Healthvision immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
-4-
<PAGE> 9
1.6.6 Capital Stock of Eclipsys. Each share of common stock, par
value $0.01 per share, of Eclipsys (the "ECLIPSYS COMMON STOCK"), issued and
outstanding after the Eclipsys Merger and immediately prior to the Effective
Time of the Merger shall be converted into one validly issued, fully paid and
nonassessable share of common stock, $0.01 par value per share, of the Surviving
Corporation. Following the Effective Time, each certificate evidencing ownership
of shares of Eclipsys common stock shall evidence ownership of such shares of
common stock of the Surviving Corporation.
1.6.7 Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Neoforma Common Stock or Healthvision Common Stock),
reorganization, recapitalization, reclassification or other like change with
respect to Neoforma Common Stock or Healthvision Common Stock occurring on or
after the date hereof and prior to the Effective Time.
1.7 Exchange of Certificates.
(a) Exchange Agent. Neoforma shall select an institution reasonably
acceptable to Healthvision to act as the exchange agent (the "EXCHANGE AGENT")
in the Merger.
(b) Exchange Fund. Promptly after the Effective Time, Neoforma shall
make available to the Exchange Agent for exchange in accordance with this
Article I, the shares of Neoforma Common Stock (such shares of Neoforma Common
Stock, together with cash in lieu of fractional shares and any dividends or
distributions with respect thereto, are hereinafter referred to as the "EXCHANGE
FUND") issuable pursuant to Section 1.6 in exchange for outstanding shares of
Healthvision Common Stock and/or Healthvision Preferred Stock (collectively,
"HEALTHVISION STOCK").
(c) Exchange Procedures. Promptly after the Effective Time, Neoforma
shall instruct the Exchange Agent to mail to each holder of record of a
certificate or certificates ("CERTIFICATES") which immediately prior to the
Effective Time represented outstanding shares of Healthvision Stock whose shares
were converted into shares of Neoforma Common Stock pursuant to Section 1.6, (i)
a letter of transmittal in customary form (that shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent and shall
contain such other provisions as Neoforma may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Neoforma Common Stock. Upon surrender of
Certificates for cancellation to the Exchange Agent together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holders of such Certificates shall be entitled to
receive in exchange therefor certificates representing the number of whole
shares of Neoforma Common Stock into which their shares of Healthvision Stock
were converted at the Effective Time, payment in lieu of fractional shares that
such holders have the right to receive pursuant to Section 1.7(e) and any
dividends or distributions payable pursuant to Section 1.7(d), and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, for
all corporate purposes, to evidence only the ownership of the
-5-
<PAGE> 10
number of full shares of Neoforma Common Stock into which such shares of
Healthvision Stock shall have been so converted and the right to receive an
amount in cash in lieu of the issuance of any fractional shares in accordance
with Section 1.7(e) and any dividends or distributions payable pursuant to
Section 1.7(d). No interest will be paid or accrued on any cash in lieu of
fractional shares of Neoforma Stock or on any unpaid dividends or distributions
payable to holders of Certificates. In the event of a transfer of ownership of
shares of Healthvision Stock which is not registered in the transfer records of
Healthvision, a certificate representing the proper number of shares of Neoforma
Common Stock may be issued to a transferee if the Certificate representing such
shares of Healthvision Stock is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer and by evidence that
any applicable stock transfer taxes have been paid.
(d) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the date of this Agreement with
respect to Neoforma Stock with a record date after the Effective Time will be
paid to the holders of any unsurrendered Certificates with respect to the shares
of Neoforma Common Stock represented thereby until the holders of record of such
Certificates shall surrender such Certificates. Subject to applicable law,
following surrender of any such Certificates, the Exchange Agent shall deliver
to the holders of certificates representing whole shares of Neoforma Common
Stock issued in exchange therefor, without interest, (i) promptly, the amount of
any cash payable with respect to a fractional share of Neoforma Common Stock to
which such holder is entitled pursuant to Section 1.7(e) and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Neoforma Common Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date occurring after surrender, payable with respect to such whole
shares of Neoforma Common Stock.
(e) Fractional Shares.
(i) As promptly as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (A) the number of full shares of
Neoforma Common Stock delivered to the Exchange Agent pursuant to Section
1.7(b), over (B) the aggregate number of full shares of Neoforma Common Stock to
be distributed to holders of Healthvision Stock pursuant to Section 1.7(c) (such
excess, the "EXCESS SHARES"). Following the Effective Time, the Exchange Agent,
as agent for the holders of Healthvision Stock, shall sell the Excess Shares at
then prevailing prices on the Nasdaq Stock Market in the manner set forth in
paragraph (ii) of this Section 1.7(e).
(ii) The sale of the Excess Shares by the Exchange Agent shall be
executed on the Nasdaq Stock Market and shall be executed in round lots to the
extent practicable. The Exchange Agent shall use all commercially reasonable
efforts to complete the sale of the Excess Shares as promptly following the
Effective Time as, in the Exchange Agent's reasonable judgment, is practicable
consistent with obtaining the best execution of such sales in light of
prevailing market conditions. Until the net proceeds of such sales have been
distributed to the holders of Healthvision Stock, the Exchange Agent will hold
such proceeds in trust for the holders of Healthvision Stock. The Exchange Agent
will determine the portion of such net
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proceeds to which each holder of Healthvision Stock shall be entitled, if any,
by multiplying the amount of the aggregate net proceeds by a fraction the
numerator of which is the amount of the fractional share interest to which such
holder of Healthvision Stock is entitled (after taking into account all shares
of Neoforma Common Stock to be issued to such holder) and the denominator of
which is the aggregate amount of fractional share interests to which all holders
of Healthvision Stock are entitled. As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of
Healthvision Stock with respect to fractional share interests, the Exchange
Agent shall promptly pay such amounts to such holders of Healthvision Stock in
accordance with the terms of Section 1.7(c).
(iii) Notwithstanding the provisions of paragraphs (i) and (ii) of
this Section 1.7(e), Neoforma may decide, at its option, exercised prior to the
Effective Time, in lieu of the issuance and sale of Excess Shares and the making
of the payments contemplated in such paragraphs, that Neoforma shall pay to the
Exchange Agent an amount sufficient for the Exchange Agent to pay each holder of
Healthvision Common Stock the amount such holder would have received pursuant to
Section 1.7(e)(ii) assuming that the sales of Neoforma Common Stock were made at
a price equal to the average of the closing prices of the Neoforma Common Stock
on the Nasdaq Stock Market for the ten consecutive trading days immediately
following the Effective Time and, in such case, all references herein to the
cash proceeds of the sale of the Excess Shares and similar references shall be
deemed to mean and refer to the payments calculated as set forth in this
paragraph (iii). In such event, Excess Shares shall not be issued or otherwise
transferred to the Exchange Agent pursuant to Sections 1.7(b) or (e).
(f) Required Withholding. Each of the Exchange Agent, Neoforma and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Healthvision Common Stock such amounts as may be
required to be deducted or withheld therefrom under the Code or under any
provision of state, local or foreign tax law or under any other applicable Legal
Requirement (as defined in Section 2.2(c)). To the extent such amounts are so
deducted or withheld, such amounts shall be treated for all purposes under this
Agreement as having been paid to the person to whom such amounts would otherwise
have been paid.
(g) Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Neoforma Common Stock into which the shares of
Healthvision Stock represented by such Certificates were converted pursuant to
Section 1.6, cash for fractional shares, if any, as may be required pursuant to
Section 1.7(e) and any dividends or distributions payable pursuant to Section
1.7(d); provided, however, that Neoforma may, in its discretion and as a
condition precedent to the issuance of such certificates representing shares of
Neoforma Common Stock, cash and other distributions, require the owner of such
lost, stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Neoforma, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
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(h) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, neither the Exchange Agent, Neoforma, the Surviving Corporation nor
any party hereto shall be liable to a holder of shares of Neoforma Common Stock
or Healthvision Stock for any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(i) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Healthvision Stock for six months
after the Effective Time shall be delivered to Neoforma, upon demand, and any
holders of Healthvision Stock who have not theretofore complied with the
provisions of this Section 1.7 shall thereafter look only to Neoforma for the
shares of Neoforma Common Stock, any cash in lieu of fractional shares of
Neoforma Common Stock to which they are entitled pursuant to Section 1.7(e) and
any dividends or other distributions with respect to Neoforma Common Stock to
which they are entitled pursuant to Section 1.7(d), in each case, without any
interest thereon.
1.8 No Further Ownership Rights in Healthvision Stock. All shares of
Neoforma Common Stock issued in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Sections 1.7(d) and (e)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Healthvision Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Healthvision
Stock that were outstanding immediately prior to the Effective Time. If after
the Effective Time Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article I.
1.9 Restricted Stock. If any shares of Healthvision Common Stock that are
outstanding immediately prior to the Effective Time are unvested or are subject
to a repurchase option, risk of forfeiture or other condition providing that
such shares ("HEALTHVISION RESTRICTED STOCK") may be forfeited or repurchased by
Healthvision upon any termination of the stockholders' employment, directorship
or other relationship with Healthvision (and/or any affiliate of Healthvision)
under the terms of any restricted stock purchase agreement or other agreement
with Healthvision that does not by its terms provide that such repurchase
option, risk of forfeiture or other condition lapses upon consummation of the
Merger, then the shares of Neoforma Common Stock issued upon the conversion of
such shares of Healthvision Common Stock in the Merger will continue to be
unvested and subject to the same repurchase options, risks of forfeiture or
other conditions following the Effective Time, and the certificates representing
such shares of Neoforma Common Stock may accordingly be marked with appropriate
legends noting such repurchase options, risks of forfeiture or other conditions.
Healthvision shall take all actions that may be necessary to ensure that, from
and after the Effective Time, Neoforma is entitled to exercise any such
repurchase option or other right set forth in any such restricted stock purchase
agreement or other agreement. A listing of the holders of Healthvision
Restricted Stock, together with the number of shares and the vesting schedule of
Healthvision Restricted Stock held by each, is set forth in Part 1.9 of the
Healthvision Disclosure Letter.
1.10 Tax Consequences. It is intended by the parties hereto that the Merger
shall constitute a "reorganization" within the meaning of Section 368 of the
Code. The parties hereto
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adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 354(a) and 361(a) of the Code and Treas. Reg. Sections 1.368-2(g) and
1.368-3(a). It is intended by the parties that the Merger shall qualify for
accounting treatment as a purchase.
1.11 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Healthvision and Eclipsys, the officers and directors of
Healthvision and Eclipsys will take all such lawful and necessary action.
Neoforma shall cause Eclipsys to perform all of its obligations relating to this
Agreement and the transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF HEALTHVISION
As of the date of this Agreement and as of the Closing Date, Healthvision
represents and warrants to Neoforma, subject to the exceptions specifically
disclosed in writing in the disclosure letter and referencing a specific
representation delivered by Healthvision to Neoforma dated as of the date hereof
and certified by a duly authorized officer of Healthvision (the "HEALTHVISION
DISCLOSURE LETTER"), as follows:
2.1 Organization; Subsidiaries.
(a) Healthvision 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 (as
defined in Section 8.3) on Healthvision.
(b) Other than the entities identified in Part 2.1 of the Healthvision
Disclosure Letter, neither Healthvision nor any of the other corporations
identified in Part 2.1 of the Healthvision 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, except for passive
investments in equity interests of public companies as part of the cash
management program of Healthvision. Neither Healthvision nor any of its
subsidiaries is obligated to make any material future investment in or capital
contribution to any other entity. Part 2.1 of the Healthvision Disclosure Letter
indicates the jurisdiction of organization of each entity listed therein and
Healthvision's direct or indirect equity interest therein.
(c) Healthvision has delivered or made available to Neoforma a true and
correct copy of the Certificate of Incorporation (including any Certificates of
Designation) and Bylaws of Healthvision and similar governing instruments of
each of its subsidiaries, each as
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amended to date (collectively, the "HEALTHVISION CHARTER DOCUMENTS"), and each
such instrument is in full force and effect. Neither Healthvision nor any of its
subsidiaries is in violation of any of the provisions of Healthvision Charter
Documents.
2.2 Healthvision Capitalization.
(a) Authorized/Outstanding Capital Stock. As of the date hereof, the
authorized capital stock of Healthvision consists of 90,000,000 shares of Common
Stock, $0.01 par value, of which 31,139,455 shares are issued and outstanding,
and 10,000,000 shares of convertible Preferred Stock, $0.01 par value,
consisting of 4,028,000 authorized shares of Series A Stock, 2,205,000 of which
are outstanding, and which are convertible into 8,820,000 shares of Common
Stock, and 1,102,500 authorized shares of Series B Stock, none of which are
outstanding, and warrants outstanding which are exercisable for 1,102,500 shares
of Series B Stock, which are convertible into 4,410,000 shares of Common Stock.
As of the date hereof, an aggregate of 4,490,000 shares of Healthvision Common
Stock are reserved and authorized for issuance pursuant to the 1999 Plan, of
which options to purchase a total of 4,460,050 shares of Healthvision Common
Stock are outstanding and no shares of Healthvision Stock have been reserved for
issuance outside of the Plan, other than such shares of Healthvision Common
Stock which have been reserved for issuance upon conversion of Healthvision
Preferred Stock. All issued and outstanding shares of Healthvision Stock have
been duly authorized and validly issued, are fully paid and nonassessable and
are not subject to any right of rescission or preemptive rights created by
statute, the Healthvision Charter Documents or any agreement or document to
which Healthvision is a party or by which it is bound. All outstanding
Healthvision Options have been duly authorized and validly issued, and are not
subject to any right of rescission. A list of all holders of Healthvision Stock,
and the number of shares held by each, in each case as of the date hereof, is
included as Part 2.2 of the Healthvision Disclosure Letter. As of the date of
this Agreement, there are no shares of Healthvision Common Stock held in
treasury by Healthvision.
(b) As of the close of business on March 29, 2000, 4,460,050 shares of
Healthvision Common Stock are subject to issuance pursuant to outstanding
Healthvision Options for an aggregate exercise price of $7,405,531. Of the
4,460,050 total shares, 500,000 Healthvision Options were granted since March
14, 2000 to persons who have agreed in writing to waive acceleration of such
Healthvision Options and any other Healthvision Options, resulting in a total of
1,056,650 Healthvision Options which will not accelerate, upon consummation of
the Merger and the other transactions contemplated by the Related Agreements.
Part 2.2 of the Healthvision Disclosure Letter sets forth the following
information with respect to each Healthvision Option outstanding as of the date
of this Agreement: (i) the name of the optionee; (ii) the number of shares of
Healthvision Common Stock subject to such Healthvision Option vested and
unvested on the date of this Agreement; (iii) the exercise price of such
Healthvision Option; (iv) the date on which such Healthvision Option was granted
or assumed; and (v) whether the exercisability of such option would, but for
waivers obtained pursuant to this Agreement, be accelerated in any way by the
transactions contemplated by this Agreement, and the extent of any such
acceleration. Healthvision has made available to Neoforma an accurate and
complete copy of 1999 Plan and the form of all stock option agreements
evidencing Healthvision Options. There are no options outstanding to purchase
shares of Healthvision
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Common Stock other than pursuant to 1999 Plan. All shares of Healthvision 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 2.2 of the Healthvision Disclosure Letter, there are
no commitments or agreements of any character to which Healthvision is bound
obligating Healthvision to accelerate the vesting of any Healthvision Option as
a result of the Merger.
(c) All outstanding shares of Healthvision Stock, all outstanding
Healthvision Options, and all outstanding shares of capital stock of each
subsidiary of Healthvision 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 2.4).
2.3 Obligations With Respect to Capital Stock. Except as set forth in
Section 2.2 or Part 2.2 or Part 2.3 of the Healthvision Disclosure Letter, there
are no equity securities, partnership interests or similar ownership interests
of any class of Healthvision 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
Healthvision are owned free and clear of all Encumbrances. 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 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 Healthvision Latest Balance Sheet (as defined
below), as 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). Except as set forth in Section 2.2, or Part 2.2 or
Part 2.3 of the Healthvision 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 Healthvision or any of its subsidiaries is
a party or by which it is bound obligating Healthvision 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 Healthvision or any of its subsidiaries or
obligating Healthvision 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 voting trust, proxy, rights agreement, "poison pill"
anti-takeover plan or other agreement or understanding to which Healthvision is
a party or by which
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it is bound with respect to any equity security of any class of Healthvision or
with respect to any equity security, partnership interest or similar ownership
interest of any class of any of its subsidiaries.
2.4 Authority; Non-Contravention.
(a) Healthvision has all requisite corporate power and authority to
enter into this Agreement and the Agreement of Merger and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Agreement of Merger and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Healthvision, subject only to the approval and
adoption of this Agreement and the Agreement of Merger and the approval of the
Merger by Healthvision's stockholders (the "HEALTHVISION STOCKHOLDER Approvals")
and the filing of the Agreement of Merger pursuant to Delaware Law. The
affirmative vote of the holders of a majority of the outstanding shares of
Healthvision Common Stock and Healthvision Preferred Stock (on an as converted
basis) voting together as a single class is sufficient for Healthvision's
stockholders to approve and adopt this Agreement and the Agreement of Merger and
approve the Merger, and no other approval of any holder of any securities of
Healthvision is required in connection with the consummation of the transactions
contemplated hereby. This Agreement and the Agreement of Merger have been duly
executed and delivered by Healthvision and, assuming the due execution and
delivery by Neoforma and Eclipsys, as applicable, constitute valid and binding
obligations of Healthvision, enforceable against Healthvision in accordance with
their terms, except as enforceability may be limited by bankruptcy and other
similar laws affecting the rights of creditors generally and general principles
of equity.
(b) The execution and delivery by Healthvision of this Agreement does
not, and the execution and delivery by Healthvision of the Agreement of Merger
will not, and the performance of this Agreement and the Agreement of Merger by
Healthvision will not (i) conflict with or violate the Healthvision Charter
Documents, (ii) subject to obtaining Healthvision Stockholder Approvals and
compliance with the requirements set forth in Section 2.4(c), conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Healthvision or any of its subsidiaries or by which Healthvision or any of its
subsidiaries or any of their respective 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
Healthvision'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 Healthvision or any of its subsidiaries pursuant to, any
note, bond, mortgage, indenture, agreement, lease, license, permit, franchise or
other instrument or obligation to which Healthvision or any of its subsidiaries
is a party or by which Healthvision or any of its subsidiaries or its or any of
their respective assets 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 Healthvision. Part 2.4(b) of the Healthvision Disclosure
Letter lists all consents, waivers and approvals under any of Healthvision's or
any of its subsidiaries' agreements, 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,
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would have a Material Adverse Effect on Healthvision or would materially and
adversely affect Healthvision's Intellectual Property (as defined below).
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission or
other governmental authority or instrumentality, foreign or domestic
("GOVERNMENTAL ENTITY"), is required to be obtained or made by Healthvision in
connection with the execution and delivery of this Agreement or the consummation
of the Merger, except for (i) the filing of the Agreement of Merger with the
Secretary of State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which Healthvision is qualified to do
business, (ii) the filing of the Proxy Statement/Prospectus (as defined in
Section 2.17) with the Securities and Exchange Commission ("SEC") in accordance
with the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and
the effectiveness of the Registration Statement (as defined in Section 2.17),
(iii) 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 Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), and the securities or
antitrust laws of any foreign country; and (iv) such other consents,
authorizations, filings, approvals and registrations which if not obtained or
made would not have a Material Adverse Effect on Healthvision, Neoforma, or the
Surviving Corporation or would not have a material adverse effect on the ability
of the parties hereto to consummate the Merger.
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2.5 Healthvision Financial Statements. Healthvision has delivered to
Neoforma in Part 2.5 of Healthvision's Disclosure Letter Healthvision's
unaudited balance sheet as of December 31, 1999 (respectively, the "HEALTHVISION
BALANCE SHEET" and the "BALANCE SHEET DATE") and Healthvision's unaudited
balance sheet as of February 29, 2000 (respectively, the "HEALTHVISION LATEST
BALANCE SHEET" and the "LATEST BALANCE SHEET DATE") and Healthvision's unaudited
income statements for the period from inception through December 31, 1999 and
unaudited income statement for the two months ended February 29, 2000
(collectively, the "HEALTHVISION FINANCIAL STATEMENTS"). The Healthvision
Financial Statements (a) are in accordance with the books and records of
Healthvision, (b) fairly present the consolidated financial condition of
Healthvision and its subsidiary as of the respective dates thereof and the
consolidated results of Healthvision'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 and (c) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto). Except as disclosed in Part 2.5 of the Healthvision
Disclosure Letter, Healthvision has no debt, liability or obligation of any
nature, whether accrued, absolute, contingent or otherwise, and whether due or
to become due, that would be required under GAAP to be reflected on a balance
sheet, or the notes thereto, prepared as of the date hereof in accordance with
GAAP and is not reflected, reserved against or disclosed in the Healthvision
Financial Statements, except for those (i) that may have been incurred after the
Latest Balance Sheet Date in the ordinary course of business consistent with
past practice, or (ii) that are not, individually or in the aggregate, material
to the business, results of operations or financial condition of Healthvision
and its subsidiaries taken as a whole.
2.6 Absence of Certain Changes or Events. Since the date of Healthvision's
Latest Balance Sheet through the date of this Agreement, there has not been: (i)
any Material Adverse Effect with respect to Healthvision; (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 Healthvision's or any of its
subsidiaries' capital stock, or any purchase, redemption or other acquisition by
Healthvision of any of Healthvision's capital stock or any other securities of
Healthvision 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 Healthvision's or any of its subsidiaries' capital
stock; (iv) any granting by Healthvision or any of its subsidiaries of any
increase in compensation or fringe benefits to any of their officers or
employees, or any payment by Healthvision or any of its subsidiaries of any
bonus to any of their officers or employees, or any granting by Healthvision or
any of its subsidiaries of any increase in severance or termination pay or any
entry by Healthvision 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 Healthvision of the nature contemplated hereby, in each
case other than in the ordinary course of business consistent with past practice
and except as required by express terms of Healthvision's employee benefits
plans; (v) any material change or alteration in the policy of Healthvision
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
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practice; (vi) entry by Healthvision or any of its subsidiaries into, or
material modification, amendment or cancellation of, any licensing agreement
with regard to the licensing by Healthvision of any material Intellectual
Property (as defined in Section 2.9) in each case other than in the ordinary
course of business consistent with past practice; (vii) any material change by
Healthvision in its accounting methods, principles or practices, except as
required by concurrent changes in GAAP; or (viii) any material revaluation by
Healthvision of any of its material assets, including writing off notes or
accounts receivable other than in the ordinary course of business.
2.7 Taxes.
(a) Healthvision 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 Healthvision and each of its subsidiaries with any Tax authority,
such Returns are true, correct and complete in all material respects, and
Healthvision and each of its subsidiaries have paid all Taxes shown to be due on
such Returns.
(b) Healthvision and each of its subsidiaries with respect to its
employees, independent contractors, and others as appropriate, have withheld and
paid all appropriate 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 Healthvision.
(c) Neither Healthvision 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 Healthvision or any of its
subsidiaries, nor has Healthvision 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 Healthvision or any
of its subsidiaries by any Tax authority is presently in progress, nor has
Healthvision 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 Healthvision or any
of its subsidiaries has been proposed in writing formally or informally by any
Tax authority to Healthvision or any of its subsidiaries or any Tax or financial
representative thereof.
(f) Neither Healthvision nor any of its subsidiaries has any liability
for unpaid Taxes which have not been accrued for or reserved on Healthvision
Balance Sheet in accordance with GAAP, whether asserted or unasserted,
contingent or otherwise, which is material to Healthvision, other than any
liability for unpaid Taxes that may have accrued since the date of Healthvision
Balance Sheet in connection with the operation of the business of Healthvision
and its subsidiaries in the ordinary course.
(g) There is no agreement, plan or arrangement to which Healthvision 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 Healthvision or
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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 Healthvision 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 Healthvision 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 disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by Healthvision.
(i) Neither Healthvision 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 Merger, Healthvision
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 Healthvision's or its subsidiaries' assets are tax exempt
use property within the meaning of Section 168(h) of the Code.
(l) Healthvision has not been distributed in a transaction qualifying
under Section 355 of the Code within the last two years, nor has Healthvision
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.
2.8 Title to Properties.
(a) All real property leases to which Healthvision 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 $100,000 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
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a default) that would give rise to a material claim against Healthvision which
could reasonably be expected to have a Material Adverse Effect on Healthvision.
(b) Healthvision 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
Healthvision Financial Statements and except where the failure to have valid
title or a valid leasehold interest would not have a Material Adverse Effect on
Healthvision.
2.9 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean 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 mark 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.
"HEALTHVISION INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or exclusively licensed to, Healthvision 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.
"HEALTHVISION REGISTERED INTELLECTUAL PROPERTY" means all of the
Registered Intellectual Property owned by, or filed in the name of, Healthvision
or one of its subsidiaries.
(a) No material Healthvision Intellectual Property or product or
service of Healthvision is subject to any proceeding, agreement, or stipulation
to which Healthvision is a party, or any outstanding decree, order or judgment,
the proceeding arising out of which Healthvision was either a party or of which
Healthvision has knowledge, restricting in any manner the use, transfer, or
licensing thereof by Healthvision, or which may affect the validity, use or
enforceability of such Healthvision Intellectual Property.
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<PAGE> 22
(b) Each material item of Healthvision Registered Intellectual Property
is valid and subsisting, all necessary registration, maintenance and renewal
fees currently due in connection with such Registered Intellectual Property have
been made and all necessary documents, recordations and certificates in
connection with such 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 Registered Intellectual Property, except, in each case, as would not
materially adversely affect such item of Healthvision Registered Intellectual
Property.
(c) Healthvision or one of its subsidiaries owns and has good and
exclusive title to, or has license to, each material item of Intellectual
Property sufficient for the conduct of its business as currently conducted free
and clear of any Encumbrances (excluding licenses and related restrictions).
(d) Neither Healthvision 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 Healthvision Intellectual Property, to any
third party.
(e) Part 2.9(e) of the Healthvision Disclosure Letter lists all
material contracts, licenses and agreements to which Healthvision is a party (i)
pursuant to which any exclusive rights with respect to any item of Healthvision
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 Healthvision.
(f) The operation of the business of Healthvision as such business
currently is conducted, including Healthvision's design, development, marketing
and sale of the products or services of Healthvision (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) Healthvision has not received written notice from any third party
that the operation of the business of Healthvision or any act, product or
service of Healthvision, 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 Healthvision.
(h) To the knowledge of Healthvision, no person has or is infringing or
misappropriating any Healthvision Intellectual Property, which infringement or
misappropriation, individually or in the aggregate, would have a Material
Adverse Effect on Healthvision.
(i) Healthvision and its subsidiaries have taken reasonable steps to
protect Healthvision's and its subsidiaries' rights in Healthvision's and such
subsidiaries' confidential
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<PAGE> 23
information and trade secrets, except where the failure to do so would not have
a Material Adverse Effect on Healthvision.
(j) None of Healthvision Intellectual Property or product or service of
Healthvision contains any material 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 Healthvision.
2.10 Compliance with Laws.
(a) Neither Healthvision 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 Healthvision or any of its subsidiaries or by
which Healthvision 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 Healthvision or any of its subsidiaries is a party or by which
Healthvision 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 Healthvision. To Healthvision's knowledge, no investigation or review by any
Governmental Entity is pending or, to Healthvision's knowledge, has been
threatened in a writing delivered to Healthvision against Healthvision or any of
its subsidiaries. There is no agreement with any Governmental Entity, judgment,
injunction, order or decree binding upon Healthvision or any of its subsidiaries
which has or could reasonably be expected to have the effect of prohibiting or
materially impairing any material business practice of Healthvision or any of
its subsidiaries, or any acquisition of material property by Healthvision or any
of its subsidiaries.
(b) Healthvision and its subsidiaries hold all permits, licenses,
exemptions, orders and approvals from Governmental Entities that are material to
or required for the operation of the business of Healthvision as currently
conducted (collectively, the "HEALTHVISION PERMITS"), and are in compliance with
the terms of Healthvision Permits, except where the failure to hold such
Healthvision Permits, or be in such compliance, would not, individually or in
the aggregate, have a Material Adverse Effect on Healthvision.
2.11 Litigation. There are no claims, suits, actions or proceedings pending
or, to the knowledge of Healthvision, threatened against, relating to or
affecting Healthvision 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 Healthvision or on the
Surviving Corporation following the Merger or have a material adverse effect on
the ability of the parties hereto to consummate the Merger.
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2.12 Employee Benefit Plans.
(a) Definitions. With the exception of the definition of "Affiliate"
set forth in Section 2.12(a)(i) below (which definition shall apply only to this
Section 2.12), 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 Healthvision within the meaning of Section 414(b), (c), (m) or (o)
of the Code and the regulations issued thereunder;
(ii) "HEALTHVISION 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 Healthvision or any Affiliate for the benefit of any
Employee;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the Department of Labor;
(v) "EMPLOYEE" shall mean any current, former, or retired
employee, officer, or director of Healthvision or any Affiliate;
(vi) "EMPLOYEE AGREEMENT" shall mean each management, employment,
severance, consulting, relocation, repatriation, expatriation, visas, work
permit or similar agreement or contract between Healthvision or any Affiliate
and any Employee or consultant (excluding any offer letter or other agreement
that does not subject Healthvision to any potential liability in excess of
$200,000);
(vii) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of 1993, as
amended;
(ix) "INTERNATIONAL EMPLOYEE PLAN" shall mean each Healthvision
Employee Plan that has been adopted or maintained by Healthvision, whether
informally or formally, for the benefit of Employees outside the United States;
(x) "IRS" shall mean the Internal Revenue Service;
(xi) "MULTIEMPLOYER PLAN" shall mean any "PENSION PLAN" (as
defined below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA;
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<PAGE> 25
(xii) "PBGC" shall mean the Pension Benefit Guaranty Corporation;
and
(xiii) "PENSION PLAN" shall mean each Healthvision Employee Plan
which is an "employee pension benefit plan," within the meaning of Section 3(2)
of ERISA.
(b) Schedule. Part 2.12 of the Healthvision Disclosure Letter contains
an accurate and complete list of each Healthvision Employee Plan and each
Employee Agreement. Healthvision does not have any plan or commitment to
establish any new Healthvision Employee Plan, to modify any Healthvision
Employee Plan or Employee Agreement (except to the extent required by law or to
conform any such Healthvision Employee Plan or Employee Agreement to the
requirements of any applicable law, or as required by this Agreement), or to
enter into any Healthvision Employee Plan or Employee Agreement, nor does it
have any intention or commitment to do any of the foregoing.
(c) Documents. Healthvision has provided or has made available to
Neoforma: (i) correct and complete copies of all documents embodying each
Healthvision Employee Plan and each Employee Agreement including all amendments
thereto and written interpretations thereof; (ii) the most recent annual
actuarial valuations, if any, prepared for each Healthvision 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 Healthvision Employee Plan or related trust; (iv)
if the Healthvision Employee Plan is funded, the most recent annual and periodic
accounting of Healthvision 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 Healthvision Employee Plan; (vi)
all IRS determination, opinion, notification and advisory letters, and rulings
relating to Healthvision Employee Plans and copies of all applications and
correspondence to or from the IRS or the DOL with respect to any Healthvision
Employee Plan; (vii) all material written agreements and contracts relating to
each Healthvision Employee Plan, including, but not limited to, administrative
service agreements, group annuity contracts and group insurance contracts;
(viii) all communications material to any Employee or Employees relating to any
Healthvision Employee Plan and any proposed Healthvision 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 Healthvision; (ix) all
COBRA forms and related notices; and (x) all registration statements and
prospectuses prepared in connection with each Healthvision Employee Plan.
(d) Employee Plan Compliance. Except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect on
Healthvision: (i) Healthvision 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
Healthvision Employee Plan, and each Healthvision 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
Healthvision Employee Plan intended to qualify under
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<PAGE> 26
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
Healthvision Employee Plan; (iv) there are no actions, suits or claims pending,
or, to the knowledge of Healthvision, threatened or reasonably anticipated
(other than routine claims for benefits) against any Healthvision Employee Plan
or against the assets of any Healthvision Employee Plan; (v) each Healthvision
Employee Plan can be amended, terminated or otherwise discontinued after the
Effective Time in accordance with its terms, without liability to Neoforma,
Healthvision 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 Healthvision,
threatened by the IRS or DOL with respect to any Healthvision Employee Plan;
(vii) neither Healthvision nor any Affiliate is subject to any material penalty
or tax with respect to any Healthvision Employee Plan under Section 402(i) of
ERISA or Sections 4975 through 4980 of the Code; and (viii) all contributions
due from Healthvision or any Affiliate with respect to any of the Healthvision
Employee Plans have been made as required under ERISA or have been accrued on
the Healthvision Balance Sheet.
(e) Pension Plans. Healthvision 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 Healthvision contributed to or
been required to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Healthvision 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 Healthvision
has never represented, promised or contracted (whether in oral or written form)
to any Employee (either individually or to Employees as a group) or any other
person that such Employee(s) or other person would be provided with retiree life
insurance, retiree health or other retiree employee welfare benefit, except to
the extent required by statute.
(h) COBRA; FMLA. Except as would not have a Material Adverse Effect on
Healthvision, neither Healthvision nor any Affiliate has, prior to the Effective
Time 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
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<PAGE> 27
occurrence of any additional or subsequent events) constitute an event under any
Healthvision Employee Plan, 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 Employee. No payment or benefit
which will or may be made by Healthvision or its Affiliates with respect to any
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
Healthvision, Healthvision 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
Employees; (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to 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 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 Healthvision's knowledge,
threatened material claims or actions against Healthvision under any worker's
compensation policy or long-term disability policy. To Healthvision's knowledge,
no Employee of Healthvision has violated in any material manner any employment
contract, nondisclosure agreement or noncompetition agreement by which such
Employee is bound due to such Employee being employed by Healthvision and
disclosing to Healthvision or using trade secrets or proprietary information of
any other person or entity.
(k) Labor. No work stoppage or labor strike against Healthvision is
pending, threatened or reasonably anticipated. Healthvision does not know of any
activities or proceedings of any labor union to organize any Employees. There
are no actions, suits, claims, labor disputes or grievances pending, or, to the
knowledge of Healthvision, threatened relating to any labor, safety or
discrimination matters involving any 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
Healthvision. Neither Healthvision nor any of its subsidiaries has engaged in
any unfair labor practices within the meaning of the National Labor Relations
Act. Healthvision 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
Healthvision.
(l) International Employee Plan. Each International 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 Employee
Plan. Furthermore, no International Employee Plan
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<PAGE> 28
has unfunded liabilities, that as of the Effective Time, will not be offset by
insurance or fully accrued. Except as required by law, no condition exists that
would prevent Healthvision or Neoforma from terminating or amending any
International Employee Plan at any time for any reason.
2.13 Environmental Matters.
During the period that Healthvision 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 Healthvision. Healthvision 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
having taken possession of any of such properties or facilities which might
reasonably be expected to have a Material Adverse Effect on Healthvision. None
of the properties or facilities currently leased or owned by Healthvision or any
properties or facilities previously leased or owned by Healthvision 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 Effect on
Healthvision. During Healthvision's occupancy of any properties or facilities
owned or leased at any time by Healthvision, neither Healthvision, nor to
Healthvision'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
Healthvision. During the time that Healthvision has owned or leased the
properties and facilities currently occupied by it or any properties and
facilities previously occupied by Healthvision, there has been no material
litigation, proceeding or administrative action brought or threatened against
Healthvision, or any material settlement reached by Healthvision 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
2.13, "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.
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<PAGE> 29
2.14 Certain Agreements. Other than the Related Agreements, and except as
otherwise set forth in Part 2.14 of the Healthvision Disclosure Letter, neither
Healthvision nor any of its subsidiaries is a party to or is bound by:
(a) other than as disclosed in Part 2.12 of the Healthvision Disclosure
Letter, any employment agreement or commitment with any officer or member of
Healthvision's Board of Directors, other than those that are terminable by
Healthvision 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 Healthvision'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 Healthvision's or any of its subsidiaries' or
any of their respective employee's freedom to compete in any line of business or
in any geographic area or which would so limit Healthvision or Surviving
Corporation or any such employee or any of its subsidiaries after the Effective
Time or granting any exclusive distribution or other exclusive rights;
(d) any agreement or obligation currently in force relating to the
disposition or acquisition by Healthvision 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 Healthvision has any material ownership or
participation interest in any corporation, partnership, joint venture, strategic
alliance or other business enterprise other than Healthvision'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 Healthvision; or
(g) any agreement or obligation currently in force providing for annual
capital expenditures by Healthvision or its subsidiaries in excess of $500,000.
The agreements required to be disclosed in the Healthvision Disclosure
Letter pursuant to clauses (a) through (g) above or pursuant to Section 2.9
(collectively "HEALTHVISION CONTRACTS") are valid and in full force and effect,
except to the extent that such invalidity would not have a Material Adverse
Effect on Healthvision. Neither Healthvision nor any of its subsidiaries, nor to
Healthvision's knowledge, any other party thereto, is in breach, violation or
default under, and neither Healthvision nor any of its subsidiaries has received
notice or is aware that it has breached, violated or defaulted, any of the terms
or conditions of any Healthvision Contract in such a manner as would have a
Material Adverse Effect on Healthvision.
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<PAGE> 30
2.15 Brokers' and Finders' Fees. Healthvision 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.
2.16 Insurance. Healthvision 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 Healthvision 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 Healthvision and its subsidiaries are otherwise
in compliance in all material respects with the terms of such policies and
bonds.
2.17 Disclosure. The information supplied by Healthvision for inclusion in
the Form S-4 (or any similar successor form thereto) Registration Statement to
be filed by Neoforma with the SEC in connection with the issuance of Neoforma
Common Stock in the Merger (the "REGISTRATION STATEMENT") shall not at the time
the Registration Statement is filed with the SEC and at the time it becomes
effective under the Securities Act 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 misleading. The information supplied by
Healthvision for inclusion or incorporation by reference in the proxy
statement/prospectus to be filed with the SEC as part of the Registration
Statement (the "PROXY STATEMENT/PROSPECTUS") shall not, on the date the Proxy
Statement/Prospectus is mailed to Healthvision's stockholders or to Neoforma's
stockholders, at the time of the meeting of Healthvision's stockholders to
consider the approval and adoption of this Agreement and the Agreement of Merger
and the approval of the Merger (the "HEALTHVISION STOCKHOLDERS' MEETING"), at
the time of the meeting of Neoforma's stockholders (the "NEOFORMA STOCKHOLDERS'
MEETING") to consider the approval of (1) the issuance of shares of Neoforma
Common Stock pursuant to the Merger and the Related Agreements and (2) an
amendment of the Neoforma Certificate of Incorporation to increase the
authorized number of shares of Neoforma Common Stock in order to permit the
issuance of shares of Neoforma Common Stock pursuant to the Merger and the
Related Agreements (the "NEOFORMA STOCKHOLDER APPROVALS") or as of the Effective
Time, 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 Healthvision Stockholders' Meeting or the Neoforma Stockholders
Meeting which has become false or misleading. If at any time prior to the
Effective Time any event relating to Healthvision or any of its affiliates,
officers or directors should be discovered by Healthvision which is required to
be set forth in an amendment to the Registration Statement or a supplement to
the Proxy Statement/Prospectus, Healthvision shall promptly inform Neoforma.
Notwithstanding the foregoing, Healthvision makes no representation or warranty
with respect to any information supplied by Neoforma or Eclipsys which is
contained in any of the foregoing documents.
2.18 Board Approval. The Board of Directors of Healthvision has, as of the
date of this Agreement, (i) determined that the Merger is fair to, and in the
best interests of Healthvision
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<PAGE> 31
and its stockholders, and has approved this Agreement and the Agreement of
Merger and (ii) declared the advisability of the Merger and recommends that the
stockholders of Healthvision approve and adopt this Agreement and the Agreement
of Merger and approve the Merger.
2.19 Takeover Statutes Not Applicable. To Healthvision's knowledge, no
anti-takeover, control share acquisition, fair price, moratorium or other
similar statute or regulation ("TAKEOVER STATUTE") applies or purports to apply
to this Agreement, the Merger or the other transactions to which Neoforma and
Healthvision are parties that are contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NEOFORMA
As of the date of this Agreement and as of the Closing Date, Neoforma
represents and warrants to Healthvision, subject to the exceptions specifically
disclosed in writing in the disclosure letter and referencing a specific
representation delivered by Neoforma to Healthvision dated as of the date hereof
and certified by a duly authorized officer of Neoforma (the "NEOFORMA DISCLOSURE
LETTER"), as follows:
3.1 Organization of Neoforma.
(a) Neoforma 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
Neoforma.
(b) Other than the entities identified in Part 3.1 of the Neoforma
Disclosure Letter, neither Neoforma nor any of the other corporations identified
in Part 3.1 of the Neoforma 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, except for passive investments in equity
interests of public companies as part of the cash management program of
Neoforma. Neither Neoforma nor any of its subsidiaries is obligated to make any
future investment in or capital contribution to any other entity. Part 3.1 of
the Neoforma Disclosure Letter indicates the jurisdiction of organization of
each entity listed therein and Neoforma's direct or indirect equity interest
therein.
(c) Neoforma has delivered or made available to Healthvision a true and
correct copy of the Certificate of Incorporation (including any Certificates of
Designation) and Bylaws of Neoforma, each as amended to date (collectively, the
"NEOFORMA CHARTER DOCUMENTS"), and each such instrument is in full force and
effect. Neither Neoforma nor any of its subsidiaries is in violation of any of
the provisions of the Neoforma Charter Documents.
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3.2 Neoforma Capitalization.
(a) The authorized capital stock of Neoforma consists solely of
200,000,000 shares of Neoforma Common Stock, of which there were 64,773,413
shares issued and outstanding as of the close of business on March 28, 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 Neoforma 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 Neoforma Charter Documents or any agreement or document to which Neoforma is
a party or by which it is bound. As of the date of this Agreement, there are no
shares of Neoforma Common Stock held in treasury by Neoforma.
(b) As of the close of business on March 28, 2000, (i) 7,242,904 shares
of Neoforma Common Stock are subject to issuance pursuant to outstanding options
("NEOFORMA OPTIONS") to purchase Neoforma Common Stock under Neoforma's 1997
Stock Plan and 1999 Equity Incentive Plan ("NEOFORMA STOCK OPTION PLANS") for an
aggregate exercise price of $45,865,480, (ii) 142,551 shares of Neoforma Common
Stock are subject to issuance pursuant to Neoforma Options other than pursuant
to the Neoforma Stock Option Plans for an aggregate exercise price of $512,704,
and (iii) 750,000 shares of Neoforma Common Stock are reserved for future
issuance under Neoforma's 1998 Equity Employee Stock Purchase Plan ("NEOFORMA
ESPP"). Neoforma has made available to Healthvision an accurate and complete
copy of each of the Neoforma Stock Option Plans and the form of all stock option
agreements evidencing Neoforma Options. All shares of Neoforma 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 Neoforma Disclosure Letter, there are no commitments
or agreements of any character to which Neoforma is bound obligating Neoforma to
accelerate the vesting of any Neoforma Option as a result of the Merger.
(c) All outstanding shares of Neoforma Common Stock, all outstanding
Neoforma Options, and all outstanding shares of capital stock of each subsidiary
of Neoforma 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.
(d) The Neoforma Common Stock to be issued in the Merger, when issued
in accordance with the provisions of this Agreement, will be validly issued,
fully paid and nonassessable.
3.3 Obligations With Respect to Capital Stock. Except as set forth in
Section 3.2 or Part 3.3 of the Neoforma Disclosure Letter, there are no equity
securities, partnership interests or similar ownership interests of any class of
Neoforma 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 Neoforma is 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 Neoforma Disclosure Letter, there
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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 Neoforma or any of
its subsidiaries is a party or by which it is bound obligating Neoforma 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 Neoforma or any of its subsidiaries or
obligating Neoforma 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 voting trust, proxy, rights agreement, "poison pill"
anti-takeover plan or other agreement or understanding to which Neoforma is a
party or by which it is bound with respect to any equity security of any class
of Neoforma or with respect to any equity security, partnership interest or
similar ownership interest of any class of any of its subsidiaries.
3.4 Authority; Non-Contravention.
(a) Neoforma has all requisite corporate power and authority to enter
into this Agreement and the Related Agreements and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Related Agreements and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Neoforma, subject only to the Neoforma
Stockholder Approvals and the filing of the Agreement of Merger pursuant to
Delaware Law. The affirmative vote of the holders of a majority in interest of
the stock present or represented by proxy at the Neoforma Stockholders' Meeting
is sufficient for Neoforma's stockholders to approve the issuance of shares of
Neoforma Common Stock in the Merger and pursuant to the Related Agreements and
the affirmative vote of the holders of a majority of the outstanding shares of
Neoforma Common Stock entitled to vote is sufficient for Neoforma's stockholders
to approve the amendment to Neoforma's Certificate of Incorporation, and no
other approval of any holder of any securities of Neoforma is required in
connection with the consummation of the transactions contemplated hereby. This
Agreement and the Related Agreements have been duly executed and delivered by
Neoforma, and, assuming the due authorization, execution and delivery by
Healthvision or the other parties thereto, constitute the valid and binding
obligations of Neoforma, enforceable against Neoforma in accordance with their
terms, except as enforceability may be limited by bankruptcy and other similar
laws affecting the rights of creditors generally and general principles of
equity.
(b) The execution and delivery of this Agreement and the Related
Agreements by Neoforma does not, and the performance of this Agreement and the
Related Agreements by Neoforma will not, (i) conflict with or violate the
Neoforma Charter Documents, (ii) subject to obtaining the Neoforma 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 Neoforma or by which any of its respective 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 Neoforma'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
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Neoforma pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Neoforma is a party or by which Neoforma or any of its respective 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
Neoforma. Part 3.4(b) of the Neoforma Disclosure Letter lists all consents,
waivers and approvals under any of Neoforma'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 Neoforma or the Surviving Corporation as a result of the Merger or
would materially and adversely affect Neoforma's Intellectual Property.
(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 Neoforma in connection with the execution and delivery of
this Agreement or the consummation of the Merger, except for (i) the filing of
the Agreement of Merger with the Secretary of State of the State of Delaware,
(ii) the filing of the Proxy Statement/Prospectus and the Registration Statement
with the SEC and a Schedule 13D with regard to the Healthvision Voting
Agreements in accordance with the Securities Act and the Exchange Act, and the
effectiveness of the Registration Statement, (iii) 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 (iv) such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not have a Material Adverse
Effect on Neoforma or the Surviving Corporation or have a material adverse
effect on the ability of the parties hereto to consummate the Merger.
3.5 SEC Filings; Neoforma Financial Statements.
(a) Neoforma has filed all forms, reports and documents required to be
filed by Neoforma with the SEC since the effective date of the registration
statement (the "NEOFORMA INITIAL REGISTRATION STATEMENT") of Neoforma's initial
public offering, and has made available to Healthvision such forms, reports and
documents in the form filed with the SEC. All such required forms, reports and
documents (including those that Neoforma may file subsequent to the date hereof)
and the Neoforma Initial Registration Statement are referred to herein as the
"NEOFORMA SEC REPORTS." As of their respective dates, the Neoforma SEC Reports
(i) were prepared in accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Neoforma 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 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 Neoforma
SEC Report. None of Neoforma's subsidiaries is required to file any forms,
reports or other documents with the SEC.
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(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Neoforma SEC Reports (the
"NEOFORMA FINANCIALS"), including any Neoforma 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 Exchange Act) and (iii) fairly
presented the consolidated financial position of Neoforma and its subsidiaries
as at the respective dates thereof and the consolidated results of Neoforma'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 Neoforma
contained in Neoforma SEC Reports as of December 31, 1999 is hereinafter
referred to as the "NEOFORMA BALANCE SHEET." Except as disclosed in the Neoforma
Financials, since the date of the Neoforma Balance Sheet neither Neoforma 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 Neoforma and its subsidiaries taken as a
whole, except for liabilities incurred since the date of the Neoforma 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 Neoforma
Balance Sheet there has not been (i) any Material Adverse Effect with respect to
Neoforma; (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
Neoforma's or any of its subsidiaries' capital stock, or any purchase,
redemption or other acquisition by Neoforma of any of Neoforma's capital stock
or any other securities of Neoforma 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 Neoforma's or any of its subsidiaries'
capital stock; (iv) any granting by Neoforma or any of its subsidiaries of any
increase in compensation or fringe benefits to any of their officers or
employees, or any payment by Neoforma or any of its subsidiaries of any bonus to
any of their officers or employees, or any granting by Neoforma or any of its
subsidiaries of any increase in severance or termination pay or any entry by
Neoforma 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 Neoforma 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 Neoforma 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 Neoforma 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
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Neoforma in its accounting methods, principles or practices, except as required
by concurrent changes in GAAP; or (viii) any material revaluation by Neoforma 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) Neoforma and each of its subsidiaries have timely filed all
material Returns relating to Taxes required to be filed by or on behalf of
Neoforma and each of its subsidiaries with any Tax authority, such Returns are
true, correct and complete in all material respects, and Neoforma and each of
its subsidiaries have paid all Taxes shown to be due on such Returns.
(b) Neoforma and each of its subsidiaries have withheld with respect to
its employees all federal and state income taxes, Taxes pursuant to FICA, Taxes
pursuant to FUTA and other Taxes required to be withheld, except such Taxes
which are not material to Neoforma.
(c) Neither Neoforma 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 Neoforma or any of its subsidiaries,
nor has Neoforma 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 Neoforma or any of
its subsidiaries by any Tax authority is presently in progress, nor has Neoforma
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 Neoforma or any of
its subsidiaries has been proposed in writing formally or informally by any Tax
authority to Neoforma or any of its subsidiaries or any Tax or financial
representative thereof.
(f) Neither Neoforma nor any of its subsidiaries has any liability for
unpaid Taxes which has not been accrued for or reserved on the Neoforma Balance
Sheet in accordance with GAAP, whether asserted or unasserted, contingent or
otherwise, which is material to Neoforma, other than any liability for unpaid
Taxes that may have accrued since the date of the Neoforma Balance Sheet in
connection with the operation of the business of Neoforma and its subsidiaries
in the ordinary course.
(g) There is no agreement, plan or arrangement to which Neoforma 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 Neoforma 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
Neoforma is a party or by which it is bound to compensate any individual for
excise taxes paid pursuant to Section 4999 of the Code.
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(h) Neither Neoforma 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 disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by Neoforma.
(i) Neither Neoforma 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 Merger, Neoforma 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 Neoforma's or its subsidiaries' assets are tax exempt use
property within the meaning of Section 168(h) of the Code.
(l) Neoforma has not been distributed in a transaction qualifying under
Section 355 of the Code within the last two years, nor has Neoforma 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 Neoforma 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 Neoforma which could
reasonably be expected to have a Material Adverse Effect on Neoforma.
(b) Neoforma 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
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reflected in Neoforma Financials and except where the failure to have valid
title or a valid leasehold interest would not have a Material Adverse Effect on
Neoforma.
3.9 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"NEOFORMA INTELLECTUAL PROPERTY" shall mean any Intellectual Property
that is owned by, or exclusively licensed to, Neoforma or one of its
subsidiaries.
"NEOFORMA REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, Neoforma or one of its
subsidiaries.
(a) No material Neoforma Intellectual Property or product or service of
Neoforma is subject to any proceeding, agreement, or stipulation to which
Neoforma is a party, or any outstanding decree, order or judgment, the
proceeding arising out of which Neoforma was either a party or of which Neoforma
has knowledge, restricting in any manner the use, transfer, or licensing thereof
by Neoforma, or which may affect the validity, use or enforceability of such
Neoforma Intellectual Property.
(b) Each material item of Neoforma Registered Intellectual Property is
valid and subsisting, all necessary registration, maintenance and renewal fees
currently due in connection with such Neoforma Registered Intellectual Property
have been made and all necessary documents, recordations and certificates in
connection with such Neoforma 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 Neoforma Registered Intellectual Property, except, in each
case, as would not materially adversely affect such item of Neoforma Registered
Intellectual Property.
(c) Neoforma or one of its subsidiaries owns and has good and exclusive
title to, or has license to, each material item of Intellectual Property
sufficient for the conduct of its business as currently conducted free and clear
of any Encumbrances (excluding licenses and related restrictions).
(d) Neither Neoforma 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 Neoforma Intellectual Property, to any third
party.
(e) Part 3.9(e) of the Neoforma Disclosure Letter lists all material
contracts, licenses and agreements to which Neoforma is a party (i) pursuant to
which any exclusive rights with respect to Neoforma 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 Neoforma.
(f) The operation of the business of Neoforma as such business
currently is conducted, including Neoforma's design, development, marketing and
sale of the products or services of Neoforma (including with respect to products
currently under development) has not, does not and will not materially infringe
or materially misappropriate the Intellectual Property of
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any third party or, to its knowledge, constitute unfair competition or trade
practices under the laws of any jurisdiction.
(g) Neoforma has not received written notice from any third party that
the operation of the business of Neoforma or any act, product or service of
Neoforma, 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
Neoforma.
(h) To the knowledge of Neoforma, no person has or is infringing or
misappropriating any Neoforma Intellectual Property, which infringement or
misappropriation, individually or in the aggregate, would have a Material
Adverse Effect on Neoforma.
(i) Neoforma and its subsidiaries have taken reasonable steps to
protect Neoforma's and its subsidiaries' rights in Neoforma's and such
subsidiaries' confidential information and trade secrets, except where the
failure to do so would not have a Material Adverse Effect on Neoforma.
(j) None of the Neoforma Intellectual Property or product or service of
Neoforma 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 Neoforma.
3.10 Compliance with Laws.
(a) Neither Neoforma 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 Neoforma or any of its subsidiaries or by which Neoforma
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 Neoforma
or any of its subsidiaries is a party or by which Neoforma 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 Neoforma. To Neoforma's
knowledge, no investigation or review by any Governmental Entity is pending or
has been threatened in a writing delivered to Neoforma against Neoforma or any
of its subsidiaries. There is no agreement with any Governmental Entity,
judgment, injunction, order or decree binding upon Neoforma or any of its
subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any material business practice of Neoforma
or any of its subsidiaries, or any acquisition of material property by Neoforma
or any of its subsidiaries.
(b) Neoforma 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 Neoforma as currently
conducted (collectively, the "NEOFORMA PERMITS"), and are in compliance with the
terms of the Neoforma Permits, except where the
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failure to hold such Neoforma Permits, or be in such compliance, would not,
individually or in the aggregate, have a Material Adverse Effect on Neoforma.
3.11 Litigation. There are no claims, suits, actions or proceedings pending
or, to the knowledge of Neoforma, threatened against, relating to or affecting
Neoforma 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 Neoforma or on the Surviving Corporation
following the Merger or have a material adverse effect on the ability of the
parties hereto to consummate the Merger.
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 Neoforma within the meaning of Section 414(b), (c), (m) or (o) of
the Code and the regulations issued thereunder;
(ii) "NEOFORMA 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 Neoforma or any Affiliate for the benefit of any Neoforma
Employee;
(iii) "NEOFORMA EMPLOYEE" shall mean any current, former, or
retired employee, officer, or director of Neoforma or any Affiliate;
(iv) "NEOFORMA EMPLOYEE AGREEMENT" shall mean each management,
employment, severance, consulting, relocation, repatriation, expatriation,
visas, work permit or similar agreement or contract between Neoforma or any
Affiliate and any Neoforma Employee or consultant (excluding any offer letter or
other agreement that does not subject Neoforma to any potential liability in
excess of $200,000);
(v) "INTERNATIONAL NEOFORMA EMPLOYEE PLAN" shall mean each
NEOFORMA Employee Plan that has been adopted or maintained by Neoforma, whether
informally or formally, for the benefit of Neoforma Employees outside the United
States; and
(vi) "PENSION PLAN" shall mean each Neoforma Employee Plan which
is an "employee pension benefit plan," within the meaning of Section 3(2) of
ERISA.
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(b) Schedule. Part 3.12 of the Neoforma Disclosure Letter contains an
accurate and complete list of each Neoforma Employee Plan. Neoforma does not
have any plan or commitment to establish any new Neoforma Employee Plan, to
modify any Neoforma Employee Plan (except to the extent required by law or to
conform any such Neoforma Employee Plan to the requirements of any applicable
law, or as required by this Agreement), or to enter into any Neoforma Employee
Plan, nor does it have any intention or commitment to do any of the foregoing.
(c) Documents. Neoforma has provided or has made available to
Healthvision: (i) correct and complete copies of all documents embodying each
Neoforma Employee Plan (substituting for such including all amendments thereto
and written interpretations thereof); (ii) the most recent annual actuarial
valuations, if any, prepared for each Neoforma 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 Neoforma Employee Plan or related trust; (iv) if the
Neoforma Employee Plan is funded, the most recent annual and periodic accounting
of Neoforma 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 Neoforma Employee Plan; (vi) all IRS
determination, opinion, notification and advisory letters, and rulings relating
to Neoforma Employee Plans and copies of all applications and correspondence to
or from the IRS or the DOL with respect to any Neoforma Employee Plan; (vii) all
material written agreements and contracts relating to each Neoforma Employee
Plan, including, but not limited to, administrative service agreements, group
annuity contracts and group insurance contracts; (viii) all communications
material to any Neoforma Employee or Neoforma Employees relating to any Neoforma
Employee Plan and any proposed Neoforma 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 Neoforma; (ix) all COBRA forms and
related notices; and (x) all registration statements and prospectuses prepared
in connection with each Neoforma Employee Plan.
(d) Employee Plan Compliance. Except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect on Neoforma (i)
Neoforma 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 Neoforma Employee Plan,
and each Neoforma 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 Neoforma 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
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respect to any Neoforma Employee Plan; (iv) there are no actions, suits or
claims pending, or, to the knowledge of Neoforma, threatened or reasonably
anticipated (other than routine claims for benefits) against any Neoforma
Employee Plan or against the assets of any Neoforma Employee Plan; (v) each
Neoforma Employee Plan can be amended, terminated or otherwise discontinued
after the Effective Time in accordance with its terms, without liability to
Neoforma, Neoforma 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 Neoforma, threatened by
the IRS or DOL with respect to any Neoforma Employee Plan; (vii) neither
Neoforma nor any Affiliate is subject to any material penalty or tax with
respect to any Neoforma Employee Plan under Section 402(i) of ERISA or Sections
4975 through 4980 of the Code; and (viii) all contributions due from the
Neoforma or any Affiliate with respect to any of the Neoforma Employee Plans
have been made as required under ERISA or have been accrued on the Neoforma
Balance Sheet.
(e) Pension Plans. Neoforma 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 Neoforma contributed to or been
required to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Neoforma 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 Neoforma has never
represented, promised or contracted (whether in oral or written form) to any
Neoforma Employee (either individually or to Neoforma Employees as a group) or
any other person that such Neoforma Employee(s) or other person would be
provided with retiree life insurance, retiree health or other retiree employee
welfare benefit, except to the extent required by statute.
(h) COBRA; FMLA. Except as would not have a Material Adverse Effect on
Neoforma, neither Neoforma nor any Affiliate has, prior to the Effective Time
violated any of the health care continuation requirements of COBRA, the
requirements of FMLA or any similar provisions of state law applicable to its
Neoforma 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 Neoforma Employee Plan, Neoforma 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 Neoforma Employee.
No payment or benefit which will or may be made by Neoforma or its Affiliates
with respect to any Neoforma 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.
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(j) Employment Matters. Except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect on Neoforma,
Neoforma 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 Neoforma
Employees; (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to Neoforma 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 Neoforma 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 Neoforma's knowledge,
threatened material claims or actions against Neoforma under any worker's
compensation policy or long-term disability policy. To Neoforma's knowledge, no
Neoforma Employee of Neoforma has violated in any material manner any employment
contract, nondisclosure agreement or noncompetition agreement by which such
Neoforma Employee is bound due to such Neoforma Employee being employed by
Neoforma and disclosing to Neoforma or using trade secrets or proprietary
information of any other person or entity.
(k) Labor. No work stoppage or labor strike against Neoforma is
pending, threatened or reasonably anticipated. Neoforma does not know of any
activities or proceedings of any labor union to organize any Neoforma Employees.
There are no actions, suits, claims, labor disputes or grievances pending, or,
to the knowledge of Neoforma, threatened or reasonably anticipated relating to
any labor, safety or discrimination matters involving any Neoforma 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 Neoforma. Neither Neoforma nor any of its subsidiaries has
engaged in any unfair labor practices within the meaning of the National Labor
Relations Act. Neoforma 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 Neoforma Employees and no collective bargaining agreement is being
negotiated by Neoforma.
(l) International Employee Plan. Each International 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 Employee
Plan. Furthermore, no International Employee Plan has unfunded liabilities, that
as of the Effective Time, will not be offset by insurance or fully accrued.
Except as required by law, no condition exists that would prevent Neoforma or
Neoforma from terminating or amending any International Employee Plan at any
time for any reason.
3.13 Environmental Matters. During the period that Neoforma 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
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properties or facilities that would have a Material Adverse Effect on Neoforma.
Neoforma 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 Neoforma 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 Neoforma. None of
the properties or facilities currently leased or owned by Neoforma or any of its
subsidiaries or any properties or facilities previously leased or owned by
Neoforma 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 Effect on Neoforma. During Neoforma's occupancy of
any properties or facilities owned or leased at any time by Neoforma, neither
Neoforma, nor to Neoforma'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 Neoforma. During the time that Neoforma 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 Neoforma
or any of its subsidiaries, there has been no material litigation, proceeding or
administrative action brought or threatened against Neoforma or any of its
subsidiaries, or any material settlement reached by Neoforma 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.
3.14 Certain Agreements. Other than the Related Agreements, except as
otherwise set forth in Part 3.14 of the Neoforma Disclosure Letter, neither
Neoforma nor any of its subsidiaries is a party to or is bound by:
(a) other than as disclosed in Part 3.12 of the Neoforma Disclosure
Letter, any employment agreement or commitment with any officer or member of
Neoforma's Board of Directors, other than those that are terminable by Neoforma
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 Neoforma'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 Neoforma's or any of its subsidiaries'
freedom to compete in any line of business or in any geographic area or which
would so limit Neoforma or Surviving Corporation or any of its subsidiaries
after the Effective Time or granting any exclusive distribution or other
exclusive rights;
(d) any agreement or obligation currently in force relating to the
disposition or acquisition by Neoforma or any of its subsidiaries after the date
of this Agreement of a material
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amount of assets not in the ordinary course of business, or pursuant to which
Neoforma has any material ownership or participation interest in any
corporation, partnership, joint venture, strategic alliance or other business
enterprise other than Neoforma'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 Neoforma; or
(g) any agreement or commitment currently in force providing for
capital expenditures by Neoforma or its subsidiaries in excess of $1,000,000.
The agreements required to be disclosed in the Neoforma Disclosure Letter
pursuant to clauses (a) through (g) above or pursuant to Section 3.9 or filed
with any Neoforma SEC Report ("NEOFORMA CONTRACTS") are valid and in full force
and effect, except to the extent that such invalidity would not have a Material
Adverse Effect on Neoforma. Neither Neoforma nor any of its subsidiaries, nor to
Neoforma's knowledge, any other party thereto, is in breach, violation or
default under, and neither Neoforma nor any of its subsidiaries has received
written notice that it has breached, violated or defaulted, any of the terms or
conditions of any Neoforma Contract in such a manner as would have a Material
Adverse Effect on Neoforma.
3.15 Brokers' and Finders' Fees. Except for fees payable to Merrill Lynch &
Co., Neoforma 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. Neoforma 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 Neoforma 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 Neoforma and its subsidiaries are otherwise
in compliance in all material respects with the terms of such policies and
bonds.
3.17 Disclosure. The information supplied by Neoforma for inclusion in the
Registration Statement shall not at the time the Registration Statement is filed
with the SEC and at the time it becomes effective under the Securities Act
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
misleading. The information supplied by Neoforma for inclusion or incorporation
by reference in the Proxy Statement/Prospectus shall not, on the date the Proxy
Statement/Prospectus is mailed to Healthvision's stockholders or Neoforma's
stockholders, at the time of Healthvision Stockholders' Meeting, the Neoforma
Stockholders' Meeting or as of the Effective Time, 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
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correct any statement in any earlier communication with respect to the
solicitation of proxies for Healthvision Stockholders' Meeting or the Neoforma
Stockholders' Meeting which has become false or misleading. The Registration
Statement and Proxy Statement/Prospectus will comply as to form in all material
respects with the provisions of the Securities Act and the rules and regulations
thereunder. If at any time prior to the Effective Time, any event relating to
Neoforma or any of its affiliates, officers or directors should be discovered by
Neoforma which is required to be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement/Prospectus, Neoforma shall
promptly inform Healthvision. Notwithstanding the foregoing, Neoforma makes no
representation or warranty with respect to any information supplied by
Healthvision which is contained in any of the foregoing documents.
3.18 Board Approval. The Board of Directors of Neoforma has, as of the date
of this Agreement, (i) determined that the Merger is fair to, and in the best
interests of Neoforma and its stockholders, and has approved this Agreement and
(ii) recommends that the stockholders of Neoforma approve the Neoforma
Stockholder Approvals.
3.19 Fairness Opinion. Neoforma's Board of Directors has received a written
opinion from Merrill Lynch & Co., dated as of the date of this Agreement, to the
effect that, as of such date, the exchange of consideration in the Transaction
is fair to Neoforma from a financial point of view, a copy of the written
opinion of which will be delivered to Healthvision after receipt thereof by
Neoforma.
3.20 Takeover Statutes Not Applicable. To Neoforma's knowledge, no Takeover
Statute applies or purports to apply to this Agreement, the Merger or the other
transactions to which Neoforma and Healthvision are parties that are
contemplated hereby.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Healthvision. 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 Effective Time, Healthvision and each of
its subsidiaries shall, except to the extent that Neoforma shall otherwise
consent in writing, carry on its business in the usual, regular and ordinary
course, in substantially the same manner as heretofore conducted and 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, Healthvision will promptly
notify Neoforma of any material adverse event involving its business or
operations.
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In addition, except as permitted by the terms of this Agreement, and except
as contemplated by this Agreement or the Related Agreements or provided in Part
4.1 of the Healthvision Disclosure Letter, without the prior written consent of
Neoforma, 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
Effective Time, Healthvision 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 Neoforma, 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 the Healthvision
Intellectual Property, other than non-exclusive licenses 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;
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Healthvision 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 Healthvision Common Stock pursuant to the
exercise of Healthvision Options outstanding on the date of this Agreement, or
granted in accordance with clause (ii) of this Section 4.1(f), (ii) Healthvision
Options granted to newly-hired employees in the ordinary course of business in
amounts comparable to similarly situated Healthvision employees, and in an
aggregate amount not to exceed 150,000, none of which Healthvision Options shall
provide for or permit any acceleration of the exercisability thereof in
connection with the Merger or any of the transactions contemplated by this
Agreement, and (iii) shares of Healthvision Common Stock issued in connection
with acquisitions and commercial transactions permitted under Section 4.1(h)
below;
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(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);
(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 Healthvision 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 Healthvision;
provided, that Healthvision shall not be prohibited hereunder from making or
agreeing to make acquisitions, or entering into commercial transactions
involving the issuance or potential issuance of Healthvision Common Stock, all
of which together do not involve the issuance or potential issuance of more than
300,000 shares of Healthvision Common Stock in the aggregate, and none of which
acquisitions, agreements or commercial transactions could reasonably be expected
to delay the effectiveness of the Registration Statement, the consummation of
the Merger or the other transactions contemplated by this Agreement or the
Related Agreements; provided, further, that Healthvision shall provide written
notice to Neoforma prior to signing any agreement regarding any such acquisition
or transaction;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Healthvision;
(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 Healthvision,
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 or (iii) in an aggregate
amount not to exceed $1,000,000 through June 30, 2000, plus, in the event the
Merger does not close by June 30, 2000, an additional amount of up to $3,000,000
per month (it being agreed that if any portion of such $3,000,000 monthly amount
is not borrowed in a given month, such unborrowed portion may be added to the
borrowings permitted to be made in a future month), provided that such debt may
be borrowed only from Eclipsys, a Healthvision stockholder or a third party on
arm's length terms, without issuance of warrants or other equity or debt
securities and without grant of any security interests or liens;
(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"), 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,
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consistent with past practice, or change in any material respect any management
policies or procedures;
(1) Make any capital expenditures outside of the ordinary course of
business or any capital expenditures in excess of $100,000, individually, or
$1,000,000, in the aggregate;
(m) Materially modify, amend or terminate any Healthvision Contract or
other material contract or agreement to which Healthvision 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) Enter into any licensing or other agreement with regard to the
acquisition, distribution or licensing of any material Healthvision Intellectual
Property (as defined in Section 2.9) other than licenses, distribution
agreements, advertising agreements, or other similar agreements entered into in
the ordinary course of business consistent with past practice;
(o) Materially revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(p) Initiate or settle any material litigation, arbitration, mediation
or other legal proceeding;
(q) Take or permit any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement,
including the treatment of same for tax purposes as a "reorganization"; or
(r) Agree in writing or otherwise to take any of the actions described
in Section 4.1 (a) through (q) above.
4.2 Conduct of Business by Neoforma. 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 Effective Time, Neoforma and each of its
subsidiaries shall, except to the extent that Healthvision shall otherwise
consent in writing, carry on its business in the usual, regular and ordinary
course, in substantially the same manner as heretofore conducted and 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, Neoforma will promptly notify
Healthvision 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 the Related Agreements or provided in Part
4.2 of the Neoforma Disclosure Letter, without the prior written consent of
Healthvision, during the period from the date of this Agreement and continuing
until the earlier of the termination of this
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Agreement pursuant to its terms or the Effective Time, Neoforma 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 Healthvision, 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 the Neoforma Intellectual
Property, other than non-exclusive licenses 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;
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Neoforma 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 Neoforma Common Stock pursuant to the
exercise of Neoforma Options outstanding on the date of this Agreement, or
granted in accordance with clause (iii) of this Section 4.2(f), (ii) shares of
Neoforma Common Stock issuable to participants in the Neoforma ESPP consistent
with the terms thereof, (iii) Neoforma Options granted to newly-hired employees
in the ordinary course of business in amounts comparable to similarly situated
Neoforma employees, and in an aggregate amount not to exceed 550,000, none of
which Neoforma Options shall provide for or permit any acceleration of the
exercisability thereof in connection with the Merger or any of the transactions
contemplated by this Agreement, and (iv) shares of Neoforma Common Stock issued
in connection with acquisitions and commercial transactions permitted under
Section 4.2(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
Neoforma Common Stock;
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(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 Neoforma, 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 Neoforma; provided,
that Neoforma shall not be prohibited hereunder from (x) acquiring EquipMD, Inc.
pursuant to the Agreement and Plan of Merger among Neoforma, Augustacorp, Inc.
and EquipMD, Inc. (a true and complete copy of which has been provided to
Healthvision) or (y) making or agreeing to make acquisitions, or entering into
commercial transactions involving the issuance or potential issuance of Neoforma
Common Stock, all of which together do not involve the issuance or potential
issuance of more than 825,000 shares of Neoforma Common Stock in the aggregate,
and none of which acquisitions, agreements or commercial transactions could
reasonably be expected to delay the effectiveness of the Registration Statement,
the consummation of the Merger or the other transactions contemplated by this
Agreement or the Related Agreements; provided, further, that Neoforma shall
provide written notice to Healthvision prior to signing any agreement regarding
any such acquisition or transaction;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Neoforma;
(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 Neoforma,
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 Neoforma Common Stock reserved for issuance under the
Neoforma Stock Option Plans or Neoforma 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;
(1) 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;
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(m) Materially modify, amend or terminate any Neoforma Contract or
other material contract or agreement to which Neoforma 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) Enter into any licensing or other agreement with regard to the
acquisition, distribution or licensing of any material Neoforma Intellectual
Property (as defined in Section 2.9) other than licenses, distribution
agreements, advertising agreements, or other similar agreements entered into in
the ordinary course of business consistent with past practice;
(o) Materially revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(p) Initiate or settle any material litigation, arbitration, mediation
or other legal proceeding;
(q) Take or permit any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement,
including the treatment of same for tax purposes as a "reorganization"; or
(r) Agree in writing or otherwise to take any of the actions described
in Section 4.2 (a) through (q) above.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement; Antitrust and Other
Filings.
(a) As promptly as practicable after the execution of this Agreement,
Healthvision and Neoforma will prepare and file with the SEC, the Proxy
Statement/Prospectus and Neoforma will prepare and file with the SEC the
Registration Statement in which the Proxy Statement/Prospectus will be included
as a prospectus. Each of Healthvision and Neoforma will respond to any comments
of the SEC, will use its respective commercially reasonable efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing and each of Healthvision and Neoforma will
cause the Proxy Statement/Prospectus to be mailed to its respective stockholders
at the earliest practicable time after the Registration Statement is declared
effective by the SEC. Promptly after the date of this Agreement, each of
Healthvision and Neoforma 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") and (ii) any other filings required to be filed by it under
the Exchange Act, the Securities Act or any other federal, state or foreign laws
relating to the Merger and the transactions contemplated by this Agreement (the
"OTHER FILINGS"). Healthvision and Neoforma each shall promptly supply the other
with any information which may be required in
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order to effectuate any filings pursuant to this Section 5.1.
(b) Each of Healthvision and Neoforma 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 Registration Statement, the Proxy
Statement/Prospectus or any Antitrust Filings or Other 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
Registration Statement, the Proxy Statement/Prospectus, the Merger or any
Antitrust Filing or Other Filing. Each of Healthvision and Neoforma will cause
all documents that it is responsible for filing with the SEC or other regulatory
authorities under this Section 5.1 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 the Proxy Statement/Prospectus, the Registration
Statement or any Antitrust Filing or Other Filing, Healthvision or Neoforma, 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 Healthvision and/or Neoforma, such amendment or
supplement.
5.2 Meeting of Healthvision Stockholders.
(a) Promptly after the date hereof, Healthvision will take all action
necessary in accordance with the Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Healthvision 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 declaration of effectiveness of
the Registration Statement, for the purpose of voting upon approval and adoption
of this Agreement and the Agreement of Merger and approval of the Merger.
Healthvision will use its commercially reasonable efforts to solicit from its
stockholders proxies in favor of the adoption and approval of this Agreement and
the Agreement of Merger and the approval of the Merger and will take all other
action necessary or advisable to secure the vote or consent of its stockholders
as required by Delaware Law to obtain such approvals. Notwithstanding anything
to the contrary contained in this Agreement, Healthvision may adjourn or
postpone the Healthvision Stockholders' Meeting to the extent necessary to
ensure that any necessary supplement or amendment to the Proxy
Statement/Prospectus is provided to Healthvision's stockholders in advance of a
vote on the Merger and the Agreement of Merger and this Agreement or, if as of
the time for which Healthvision Stockholders' Meeting is originally scheduled
(as set forth in the Proxy Statement/Prospectus) there are insufficient shares
of Healthvision Common Stock represented (either in person or by proxy) to
constitute a quorum necessary to conduct the business of the Healthvision
Stockholders' Meeting, in which case the Healthvision Stockholders' Meeting will
be rescheduled to a date within 10 business days of the first scheduled date
therefor. Healthvision shall ensure that the Healthvision Stockholders' Meeting
is called, noticed, convened, held and conducted, and that all proxies solicited
by Healthvision in connection with the Healthvision 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. Healthvision's obligation to
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call, give notice of, convene and hold the Healthvision Stockholders' Meeting in
accordance with this Section 5.2(a) shall not be limited to or otherwise
affected by the commencement, disclosure, announcement or submission to
Healthvision of any Acquisition Proposal or Superior Offer, or by any
withdrawal, amendment or modification of the recommendation of the Board of
Directors of Healthvision with respect to this Agreement, the Agreement of
Merger or the Merger.
(b) (i) The Board of Directors of Healthvision shall recommend that
Healthvision's stockholders vote in favor of and adopt and approve this
Agreement and the Agreement of Merger and approve the Merger at the Healthvision
Stockholders' Meeting; (ii) the Proxy Statement/Prospectus shall include a
statement to the effect that the Board of Directors of Healthvision has
recommended that Healthvision's stockholders vote in favor of and adopt and
approve this Agreement and the Agreement of Merger and the Merger at the
Healthvision Stockholders' Meeting; and (iii) neither the Board of Directors of
Healthvision nor any committee thereof shall withdraw, amend or modify, or
propose or resolve to withdraw, amend or modify in a manner adverse to Neoforma,
the recommendation of the Board of Directors of Healthvision that Healthvision's
stockholders vote in favor of and adopt and approve this Agreement, the
Agreement of Merger and the Merger.
5.3 Meeting of Neoforma Stockholders.
(a) Promptly after the date hereof, Neoforma will take all action
necessary in accordance with the Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Neoforma 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 declaration of effectiveness of
the Registration Statement, for the purpose of voting upon the Neoforma
Stockholder Approvals. Neoforma will use its commercially reasonable efforts to
solicit from its stockholders proxies in favor of the approval of the Neoforma
Stockholder Approvals 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 or Delaware Law to obtain such approvals. Notwithstanding
anything to the contrary contained in this Agreement, Neoforma may adjourn or
postpone the Neoforma Stockholders' Meeting to the extent necessary to ensure
that any necessary supplement or amendment to the Proxy Statement/Prospectus is
provided to Neoforma's stockholders in advance of a vote on the Neoforma
Stockholder Approvals or, if as of the time for which Neoforma Stockholders'
Meeting is originally scheduled (as set forth in the Proxy Statement/Prospectus)
there are insufficient shares of Neoforma Common Stock represented (either in
person or by proxy) to constitute a quorum necessary to conduct the business of
the Neoforma Stockholders' Meeting. Neoforma shall ensure that the Neoforma
Stockholders' Meeting is called, noticed, convened, held and conducted, and that
all proxies solicited by Neoforma in connection with the Neoforma 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) (i) The Board of Directors of Neoforma shall recommend that
Neoforma's stockholders approve the Neoforma Stockholder Approvals at the
Neoforma Stockholders' Meeting; (ii) the Proxy Statement/Prospectus shall
include a statement to the effect that the
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Board of Directors of Neoforma has recommended that Neoforma's stockholders
approve the Neoforma Stockholder Approvals at the Healthvision Stockholders'
Meeting; and (iii) neither the Board of Directors of Neoforma nor any committee
thereof shall withdraw, amend or modify, or propose or resolve to withdraw,
amend or modify in a manner adverse to Healthvision, the recommendation of the
Board of Directors of Neoforma that Neoforma's stockholders approve the Neoforma
Stockholder Approvals.
5.4 No Solicitation.
(a) From and after the date of this Agreement until the Effective Time
or termination of this Agreement pursuant to Article VII, Healthvision 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 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
Acquisition Proposal, (iii) engage in discussions with any person with respect
to any Acquisition Proposal, except as to the existence of these provisions,
(iv) approve, endorse or recommend any 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 Acquisition Proposal.
Healthvision and its subsidiaries will immediately cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any 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 Healthvision or any of its
subsidiaries or any investment banker, attorney or other advisor or
representative of Healthvision or any of its subsidiaries shall be deemed to be
a breach of this Section 5.4 by Healthvision.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
offer or proposal (other than an offer or proposal by Neoforma) relating to any
transaction or series of related transactions other than the transactions
contemplated by this Agreement involving: (A) any acquisition or purchase from
Healthvision by any person or "group" (as defined under Section 13(d) of the
Exchange Act and the rules and regulations thereunder) of more than a 15%
interest in the total outstanding voting securities of Healthvision or any of
its subsidiaries or any tender offer or exchange offer that if consummated would
result in any person or "group" (as defined under Section 13(d) of the Exchange
Act and the rules and regulations thereunder) beneficially owning 15% or more of
the total outstanding voting securities of Healthvision or any of its
subsidiaries or any merger, consolidation, business combination or similar
transaction involving Healthvision pursuant to which the stockholders of
Healthvision immediately preceding such transaction hold less than 85% of the
equity interests in the surviving or resulting entity of such transaction; (B)
any sale, lease (other than in the ordinary course of business), exchange,
transfer, license (other than in the ordinary course of business), acquisition,
or disposition of more than 15% of the assets of Healthvision; or (C) any
liquidation or dissolution of Healthvision.
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(b) In addition to the obligations of Healthvision set forth in
paragraph (a) of this Section 5.4, Healthvision as promptly as practicable shall
advise Neoforma orally and in writing of any request for non-public information
which Healthvision reasonably believes would lead to an Acquisition Proposal or
of any Acquisition Proposal, or any inquiry with respect to or which
Healthvision reasonably should believe would lead to any Acquisition Proposal,
the material terms and conditions of such request, Acquisition Proposal or
inquiry, and the identity of the person or group making any such request,
Acquisition Proposal or inquiry. Healthvision will keep Neoforma informed as
promptly as practicable in all material respects of the status and details
(including material amendments or proposed amendments) of any such request,
Acquisition Proposal or inquiry.
5.5 Confidentiality; Access to Information.
(a) The parties acknowledge that Healthvision and Neoforma have
previously executed a mutual nondisclosure agreement, dated as of March 5, 2000
(the "CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will continue
in full force and effect in accordance with its terms; provided, that nothing in
this Agreement or the Confidentiality Agreement will restrict communications
with parties to the Related Agreements.
(b) Access to Information. Healthvision will afford Neoforma and its
accountants, counsel and other representatives reasonable access during normal
business hours to the properties, books, records and personnel of Healthvision
during the period prior to the Effective Time to obtain all information
concerning the business, including the status of product development efforts,
properties, results of operations and personnel of Healthvision, as Neoforma may
reasonably request. Neoforma will afford Healthvision and its accountants,
counsel and other representatives reasonable access during normal business hours
to the properties, books, records and personnel of Neoforma during the period
prior to the Effective Time to obtain all information concerning the business,
including the status of product development efforts, properties, results of
operations and personnel of Neoforma, as Healthvision may reasonably request. No
information or knowledge obtained in any investigation pursuant to this Section
5.5 will affect or be deemed to modify any representation or warranty contained
herein or the conditions to the obligations of the parties to consummate the
Merger.
5.6 Public Disclosure. Neoforma and Healthvision 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 the Merger, this Agreement
or any Acquisition Proposal 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 joint press release announcing the signing of
this Agreement.
5.7 Reasonable Efforts; Notification.
(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,
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and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Merger and the
other transactions contemplated by this Agreement and the Related Agreements,
including using reasonable efforts to accomplish the following: (i) the taking
of all reasonable acts necessary to cause the conditions precedent set forth in
Article VI 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 Neoforma 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 material assets or categories of assets of Neoforma, any of
its affiliates or Healthvision or the holding separate of the shares of
Healthvision Common Stock (or shares of stock of the Surviving Corporation) or
imposing or seeking to impose any material limitation on the ability of Neoforma
or any of its subsidiaries or affiliates to conduct their business or own such
assets or to acquire, hold or exercise full rights of ownership of the shares of
Healthvision Common Stock (or shares of stock of the Surviving Corporation).
(b) Each of Healthvision and Neoforma 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 Merger, (ii)
any notice or other communication from any Governmental Entity in connection
with the Merger, (iii) any litigation relating to, involving or otherwise
affecting Healthvision, Neoforma or their respective subsidiaries that relates
to the consummation of the Merger. Healthvision shall give prompt notice to
Neoforma of any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate, or any failure of Healthvision 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 Section 6.3 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. Neoforma shall give prompt
notice to Healthvision of any representation or warranty made by it contained in
this Agreement becoming untrue or inaccurate, or any failure of Neoforma 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 Section 6.2 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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(c) Healthvision agrees to use reasonable efforts to: (i) cause each
employee listed in Part 2.14 of the Healthvision Disclosure Letter and each new
employee hired after the date hereof until Closing, who has not already done so,
to execute Healthvision's standard Confidentiality Agreement, the form of which
has been previously provided to Neoforma, (ii) execute and deliver and cause
each of Eclipsys and VHA to execute and deliver an Intellectual Property
Assignment, in form and substance reasonably acceptable to Neoforma, (iii)
execute and deliver and cause HealthVision Corporation of British Columbia
("HEALTHVISION CANADA") to execute and deliver an Assignment, in form and
substance reasonably acceptable to Neoforma, of all right, title and interest
worldwide (to the extent that Healthvision Canada has such rights) to the trade
mark "Healthvision", the attendant goodwill and any and all domain names
incorporating the mark Healthvision or variations thereof, and (iv) cause to be
filed with the Secretary of State of the State of Delaware a Certificate of
Correction in form and substance reasonably satisfactory to Neoforma, correcting
the Certificate of Amendment previously filed with the Delaware Secretary of
State on March 10, 2000.
5.8 Third Party Consents. As soon as practicable following the date hereof,
Neoforma and Healthvision 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. As soon as practicable following the date hereof, Neoforma will 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 by the Related Agreements.
5.9 Indemnification.
(a) From and after the Effective Time, Neoforma will cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
Healthvision pursuant to any indemnification agreements between Healthvision and
its directors and officers as of the Effective Time (the "INDEMNIFIED PARTIES")
and any indemnification provisions under Healthvision's Certificate of
Incorporation or Bylaws as in effect on the date hereof. The Certificate of
Incorporation and Bylaws of the Surviving Corporation will contain provisions
with respect to exculpation and indemnification that are at least as favorable
to the Indemnified Parties as those contained in the Certificate of
Incorporation and Bylaws of Healthvision as in effect on the date hereof, which
provisions will not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who, immediately prior to the Effective Time,
were directors or officers of Healthvision, unless such modification is required
by law.
(b) For a period of six years after the Effective Time, Neoforma will
cause the Surviving Corporation to use its commercially reasonable efforts to
maintain in effect, if available, directors' and officers' liability insurance
covering those persons who are currently covered by Healthvision's directors'
and officers' liability insurance policy on terms comparable to those applicable
to the current directors and officers of Healthvision; provided, however, that
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in no event will Neoforma or the Surviving Corporation be required to expend in
excess of 200% of the annual premium currently paid by Healthvision for such
coverage (or such coverage as is available for such 200% of such annual
premium).
(c) This Section 5.9 shall survive the consummation of the Merger, is
intended to benefit Healthvision, the Surviving Corporation and each Indemnified
Party, shall be binding on all successors and assigns of the Surviving
Corporation and Neoforma, and shall be enforceable by the Indemnified Parties.
5.10 Neoforma Board of Directors; Executive Officers. The Board of
Directors of Neoforma will take all actions reasonably necessary such that as
soon as practicable following the Effective Time, (i) the size of Neoforma's
Board of Directors shall be increased to nine, and the following persons shall
be appointed to Neoforma's Board of Directors to fill the five vacancies in the
following classes: three persons nominated by Eclipsys, one of whom shall be
Harvey J. Wilson, who shall be appointed to Class III, one of whom shall be
affiliated with General Atlantic Partners, LLC, who shall be appointed to Class
I, and the other of whom shall be appointed to Class II, one person shall be
appointed by Healthvision to Class I, and one person shall be appointed by VHA
to Class I, and (ii) Harvey J. Wilson shall be elected Chairperson of the Board
of Directors of Neoforma, and Robert Zollars shall be elected Chief Executive
Officer and President of Neoforma. Under the Neoforma 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
Neoforma's annual meeting in 2000, or, if such annual meeting is held following
the Effective Time and such person so elects, following the Effective Time but
prior to such annual meeting. Class I Directors appointed following such annual
meeting shall have terms that end in 2003, subject to such directors' earlier
resignation or removal.
5.11 Nasdaq Listing. Neoforma agrees to authorize for listing on the Nasdaq
Stock Market the shares of Neoforma Common Stock issuable, and those required to
be reserved for issuance, in connection with the Merger, effective upon official
notice of issuance.
5.12 Letters of Accountants. Healthvision and Neoforma shall use their
respective reasonable efforts to cause to be delivered to Neoforma a letter of
Healthvision's and Neoforma's independent accountants, respectively, dated no
more than two business days before the date on which the Registration Statement
becomes effective (and satisfactory in form and substance to Neoforma), that is
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement.
5.13 Takeover Statutes. If any Takeover Statute is or may become applicable
to the Merger or the other transactions contemplated by this Agreement, each of
Neoforma and Healthvision 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
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eliminate or minimize the effects of such Takeover Statute and any regulations
promulgated thereunder on such transactions.
5.14 Certain Employee Benefits. As soon as practicable after the execution
of this Agreement, Neoforma and Healthvision shall confer and work together in
good faith to agree upon mutually acceptable employee benefit and compensation
arrangements which carry out the agreements set forth in the following two
sentences. Neoforma will use reasonable efforts to arrange that, as soon as
reasonably practicable after the Effective Time, Neoforma's benefit arrangements
and employee plans provide similar or comparable benefits to Healthvision's
employees generally as is provided to Neoforma's employees who are similarly
situated. Neoforma's benefit arrangements and employee plans shall give full
credit for each participant's continuous period of service with Healthvision
prior to the Effective Time for all purposes for which length of service prior
to the Effective Time is recognized under Neoforma benefit arrangements and
employee plans. At Neoforma's request, Healthvision agrees that it and its
subsidiaries shall terminate any and all Healthvision Employee Plans, if
appropriate (other than contractual agreements disclosed in the Healthvision
Disclosure Letter) immediately prior to the Effective Time.
5.15 Discontinuance of IPO Efforts. Promptly, but in no event later than
three business days, following the date of this Agreement, Healthvision shall
discontinue its efforts to arrange for an initial public offering.
5.16 Registration Rights. Neoforma agrees to use its reasonable efforts to
cause the holders of existing registration rights regarding Neoforma Common
Stock to surrender their existing registration rights in exchange for the
registration rights provided under the Registration Rights Agreement attached
hereto as Schedule 5.16 (the "NEW NEOFORMA REGISTRATION RIGHTS AGREEMENT").
Healthvision agrees to use its reasonable efforts to cause the holders of
existing registration rights regarding Healthvision Common Stock to surrender
their existing rights in exchange for the registration rights provided to such
party under the New Neoforma Registration Rights Agreement. Upon receipt by
Neoforma of a valid termination of all Healthvision registration rights held by
a party, Neoforma shall grant to such party the registration rights set forth in
the New Neoforma Registration Rights Agreement applicable to such party.
5.17 Section 280G Stockholder Approval. Healthvision shall use its
reasonable best efforts to have this Agreement and the Agreement of Merger
approved by such percentage of Healthvision's outstanding voting securities as
is required by the terms of Section 280G(b)(5)(B) of the Code to avoid the
treatment of any payment or benefit under any contract, agreement or other
arrangement, including those entered into in connection with this Agreement the
Agreement of Merger, the Merger and the transactions contemplated hereby, as a
parachute payment under the federal tax laws, and to cause such stockholder
approval to have been obtained in a manner which satisfies all applicable
requirements of Section 280G(b)(5)(B) of the Code and the proposed Treasury
Regulations thereunder, including Q-7 of Section 1.280G-1 of such proposed
regulations.
5.18 Healthvision Options. Prior to the grant of any Healthvision Options
permitted under Section 4.1(f), Healthvision agrees to amend the Healthvision
Stock Option Plan to
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eliminate for all Healthvision Options granted after the date of this Agreement
the acceleration of the vesting of such Healthvision Options upon consummation
of the Merger or the other transactions contemplated hereby. Healthvision agrees
to use its commercially reasonable efforts to cause the holders of Healthvision
Options to waive any acceleration of the vesting of such Healthvision Options
upon consummation of the Merger or the other transactions contemplated hereby,
and without limiting the foregoing, Healthvision will exercise reasonable best
efforts to seek acceleration waivers from not less than (i) three of the persons
set forth on Schedule 6.3(e)(A) and (ii) nine of the eleven persons named in a
separate letter of even date herewith signed by the parties hereto.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) Healthvision Stockholder Approval. This Agreement and the Agreement
of Merger shall have been approved and adopted, and the Merger shall have been
approved, by the requisite vote of the stockholders of Healthvision under
applicable law and the Healthvision Charter Documents.
(b) Neoforma Stockholder Approvals. The issuance of shares of Neoforma
Common Stock pursuant to the Merger and the Related Transactions shall have been
approved by the requisite vote of the stockholders of Neoforma under applicable
law and the Neoforma Charter Documents.
(c) Registration Statement Effective; Proxy Statement. The SEC shall
have declared the Registration Statement effective. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose, and no similar proceeding in respect
of the Proxy Statement/Prospectus, shall have been initiated or threatened in
writing by the SEC.
(d) No Order; HSR Act. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby will have expired or been terminated.
(e) Nasdaq Listing. The shares of Neoforma Common Stock to be issued in
the Merger shall have been approved for listing on the Nasdaq Stock Market,
subject to official notice of issuance.
(f) Consents. (i) All required approvals or consents of any
Governmental Entity or other person in connection with the Merger and the
consummation of the other transactions contemplated hereby and by the Related
Agreements shall have been obtained (and
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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 Neoforma and its subsidiaries, Eclipsys and its subsidiaries
and Healthvision 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 Neoforma and its subsidiaries, Eclipsys and its subsidiaries and
Healthvision and its subsidiaries, taken as a whole.
(g) No Restraints. There shall not be instituted or pending any action
or proceeding by any Governmental Entity (i) seeking to restrain, prohibit or
otherwise interfere with the ownership or operation by Neoforma or any of its
subsidiaries of all or any material portion of the business of Healthvision or
any of its subsidiaries or of Neoforma or any of its subsidiaries or to compel
Neoforma or any of its subsidiaries to dispose of or hold separate all or any
material portion of the business or assets of Healthvision or any of its
subsidiaries or of Neoforma or any of its subsidiaries, (ii) seeking to impose
or confirm limitations on the ability of Neoforma or any of its subsidiaries
effectively to exercise full rights of ownership of the shares of Healthvision
Common Stock (or shares of stock of the Surviving Corporation) including the
right to vote any such shares on any matters properly presented to stockholders
or (iii) seeking to require divestiture by Neoforma or any of its subsidiaries
of any such shares.
6.2 Additional Conditions to Obligations of Healthvision. The obligation of
Healthvision to consummate and effect the Merger shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Healthvision:
(a) Representations and Warranties. The representations and warranties
of Neoforma 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 on and as of
the Closing Date as if made on and as of the Closing Date (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 Neoforma. It is
understood that, for purposes of determining the accuracy of such
representations and warranties, any update of or modification to the Neoforma
Disclosure Letter made or purported to have been made after the execution of
this Agreement shall be disregarded. Healthvision shall have received a
certificate with respect to the foregoing signed on behalf of Neoforma by the
Chief Executive Officer or Chief Financial Officer of Neoforma.
(b) Agreements and Covenants. Neoforma shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date, and Healthvision shall have received a certificate to such effect signed
on behalf of Neoforma by the Chief Executive Officer or Chief Financial Officer
of Neoforma.
(c) Material Adverse Effect. No Material Adverse Effect with respect to
Neoforma shall have occurred since the date of this Agreement and be continuing.
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(d) Tax Opinion. Healthvision shall have received an opinion of
Healthvision's legal counsel, dated as of the Closing Date, in form and
substance reasonably satisfactory to it, on the basis of the facts,
representations and assumptions set forth or referred to in such opinion, that
the Merger will constitute a reorganization within the meaning of Section 368(a)
of the Code and that each of Neoforma and Healthvision will be a party to the
reorganization within the meaning of Section 368(a) of the Code. The parties to
this Agreement agree to make such reasonable representations as requested by
such counsel for the purpose of rendering such opinions.
(e) Related Transactions. (i) The Novation Documents shall have become
effective and shall be in full force and effect in accordance with their terms,
and Healthvision shall have a received a certificate to such effect executed by
the Chief Executive Officer of Novation, and (ii) Healthvision shall have
received a certificate executed by the Chief Executive Officers of each of
Neoforma and Eclipsys, that such parties are ready, willing and able to
consummate the transactions contemplated by the Eclipsys Agreement.
6.3 Additional Conditions to the Obligations of Neoforma. The obligations
of Neoforma to consummate and effect the Merger shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Neoforma:
(a) Representations and Warranties. The representations and warranties
of Healthvision 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 on and as of
the Closing Date as if made on and as of the Closing Date (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 Healthvision. It
is understood that, for purposes of determining the accuracy of such
representations and warranties, any update of or modification to the
Healthvision Disclosure Letter made or purported to have been made after the
execution of this Agreement shall be disregarded. Neoforma shall have received a
certificate with respect to the foregoing signed on behalf of Healthvision by
the Chief Executive Officer or Chief Financial Officer of Healthvision.
(b) Agreements and Covenants. Healthvision shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date, and Neoforma shall have received a certificate to such effect signed on
behalf of Healthvision by the Chief Executive Officer or Chief Financial Officer
of Healthvision.
(c) Material Adverse Effect. No Material Adverse Effect with respect to
Healthvision shall have occurred since the date of this Agreement and be
continuing.
(d) Tax Opinion. Neoforma shall have received an opinion of Fenwick &
West LLP, dated as of the Closing Date, in form and substance reasonably
satisfactory to it, on
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the basis of the facts, representations and assumptions set forth or referred to
in such opinion, that the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code and that each of Neoforma and Healthvision
will be a party to the reorganization within the meaning of Section 368(a) of
the Code. The parties to this Agreement agree to make such reasonable
representations as requested by such counsel for the purpose of rendering such
opinions.
(e) Limit on Dissenter's Rights. Not more than 5% of the outstanding
shares of Healthvision capital stock (on a Healthvision Common Stock equivalent
basis) shall have elected to exercise dissenters' appraisal rights.
(f) Related Transactions. (i) The Novation Documents shall have become
effective and shall be in full force and effect in accordance with their terms,
and Neoforma shall have a received a certificate to such effect executed by the
Chief Executive Officer of Novation; provided, that the foregoing condition
shall be deemed to have been satisfied if (A) the transactions contemplated by
the Stock and Warrant Agreements have not closed due to the failure to satisfy
the condition set forth in Section 8.4 of such agreements, (B) each other
condition to the obligation of Neoforma to consummate such transactions in such
agreements shall have been satisfied or waived, and (C) neither Stock and
Warrant Agreement nor the Novation Operating Agreement shall have been
terminated in accordance with its respective terms, and (ii) Neoforma shall have
received a certificate executed by the Chief Executive Officer of Eclipsys that
Eclipsys is ready, willing and able to consummate the transactions contemplated
by the Eclipsys Agreement.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after the requisite approvals of the
stockholders of Healthvision or Neoforma:
(a) by mutual written consent duly authorized by the Boards of
Directors of Neoforma and Healthvision;
(b) by either Healthvision or Neoforma if the Merger shall not have
been consummated by September 30, 2000 for any reason; provided, however, that
the right to terminate this Agreement under this Section 7.1(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 Merger to occur on or before such date and
such action or failure to act constitutes a breach of this Agreement;
(c) by either Healthvision or Neoforma 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 Merger, which order, decree, ruling or other action is final and
nonappealable;
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(d) by either Healthvision or Neoforma, if the approval and adoption of
this Agreement and the Agreement of Merger, and the approval of the Merger, by
the stockholders of Healthvision shall not have been obtained by reason of the
failure to obtain the required vote at a meeting of Healthvision stockholders
duly convened therefore or at any adjournment thereof or if the meeting of
Healthvision stockholders shall not have been held and a vote taken on the
Merger within 45 days after effectiveness of the Registration Statement;
provided, however, that the right to terminate this Agreement under this Section
7.1(d) shall not be available to Healthvision where the failure to obtain
Healthvision stockholder approval shall have been caused by (i) the action or
failure to act of Healthvision and such action or failure to act constitutes a
material breach by Healthvision of this Agreement or (ii) a breach of the Voting
Agreement by any party thereto other than Neoforma;
(e) by either Healthvision or Neoforma, if the approval of the issuance
of shares of Neoforma Common Stock pursuant to the Merger shall not have been
obtained by reason of the failure to obtain the respective required votes at a
meeting of Neoforma stockholders duly convened therefore or at any adjournment
thereof, or if the meeting of Neoforma stockholders shall not have been held for
such purpose and a vote taken on the Merger within 45 days after effectiveness
of the Registration Statement; provided, however, that the right to terminate
this Agreement under this Section 7.1(e) shall not be available to Neoforma
where the failure to obtain the Neoforma stockholder approvals shall have been
caused by the action or failure to act of Neoforma and such action or failure to
act constitutes a material breach by Neoforma of this Agreement;
(f) by either Neoforma or Healthvision, if any of the Related
Agreements has been validly terminated by a party thereto in accordance with its
terms;
(g) by Healthvision, upon a breach of any representation, warranty,
covenant or agreement on the part of Neoforma set forth in this Agreement, or if
any representation or warranty of Neoforma shall have become untrue, in either
case such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided that if such
inaccuracy in Neoforma's representations and warranties or breach by Neoforma is
curable by Neoforma through the exercise of its commercially reasonable efforts,
then Healthvision may not terminate this Agreement under this Section 7.1(g) for
30 days after delivery of written notice from Healthvision to Neoforma of such
breach, provided Neoforma continues to exercise commercially reasonable efforts
to cure such breach (it being understood that Healthvision may not terminate
this Agreement pursuant to this paragraph (g) if such breach by Neoforma is
cured during such 30-day period, or if Healthvision shall have materially
breached this Agreement); or
(h) by Neoforma, upon a breach of any representation, warranty,
covenant or agreement on the part of Healthvision set forth in this Agreement,
or if any representation or warranty of Healthvision shall have become untrue,
in either case such that the conditions set forth in Section 6.3(a) or Section
6.3(b) would not be satisfied as of the time of such breach or as of the time
such representation or warranty shall have become untrue, provided that if such
inaccuracy in Healthvision's representations and warranties or breach by
Healthvision is curable by Healthvision through the exercise of its commercially
reasonable efforts, then Neoforma may
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not terminate this Agreement under this Section 7.1(h) for 30 days after
delivery of written notice from Neoforma to Healthvision of such breach,
provided Healthvision continues to exercise commercially reasonable efforts to
cure such breach (it being understood that Neoforma may not terminate this
Agreement pursuant to this paragraph (h) if such breach by Healthvision is cured
during such 30-day period, or if Neoforma shall have materially breached this
Agreement).
7.2 Notice of Termination Effect of Termination. Any proper termination of
this Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 7.2, Section 7.3 and Article 8, each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability for any willful breach of this Agreement. No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement, all of which obligations shall survive termination of
this Agreement in accordance with their terms.
7.3 Fees and Expenses. Except as set forth in this Section 7.3, 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 Merger is consummated; provided, however, that Neoforma, Healthvision
and Eclipsys shall share equally all fees and expenses, other than attorneys'
and accountants fees and expenses, incurred in relation to the preparation and
filing with the SEC of the Proxy Statement/Prospectus (including any preliminary
materials related thereto) and the Registration Statement (including financial
statements and exhibits) and any amendments or supplements thereto, provided,
that Neoforma and Eclipsys shall share equally the expenses of printing the
finalized Proxy Statement/Prospectus (including any preliminary materials
related thereto) and any supplements thereto.
7.4 Amendment. 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 each of Neoforma and Healthvision. Neoforma will not agree to any
amendment of any Related Agreement without the prior written consent of
Healthvision (which consent shall not be unreasonably withheld or delayed).
7.5 Extension; Waiver. At any time prior to the Effective Time 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 parties 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.
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ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations and
warranties of Healthvision and Neoforma contained in this Agreement shall
terminate at the Effective Time, and only the covenants that by their terms
survive the Effective Time shall survive the Effective Time.
8.2 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 numbers for a party as shall be specified by like notice):
(a) if to Neoforma, to:
Neoforma.com, Inc.
3255-7 Scott Boulevard
Santa Clara, California 95054
Attention: Chief Financial Officer
Facsimile No.: 408-549-6211
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
Attention: David W. Healy
Facsimile No.: 650-494-1417
(b) if to Healthvision, to:
HEALTHvision, Inc.
6330 Commerce Dr. Ste. 100
Irving, Texas 75063
Attention: Harvey Wilson
Scott Decker
Christopher Ducanes
Facsimile No.: 972-819-4709
with a copy to:
Hogan & Hartson, LLP
555 13th Street, N.W.
Washington, D.C. 20004
Attention: Christopher J. Hagan
Facsimile No.: 202-637-5910
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(c) with a copy to counsel for VHA:
Skadden Arps, Slate, Meagher & Flom, LLP
Four Times Square
New York, New York 10036
Attention: Nancy A. Lieberman
Facsimile No.: 212-735-2000
In the event that Neoforma shall give or receive a notice relating to a Material
Adverse Effect on either Neoforma or Eclipsys pursuant to the Eclipsys
Agreement, Neoforma shall deliver a copy of such notice to Healthvision (with a
copy to counsel for VHA).
8.3 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 table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. 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, the term "KNOWLEDGE" means with
respect to a party hereto, with respect to any matter in question, that any of
the officers of such party has actual knowledge of such matter, after reasonable
inquiry of such matter including review of relevant files with respect to such
matter.
(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, Healthvision (including any limited liability company or joint
stock company), firm or other enterprise, association, organization, entity or
Governmental Entity.
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(e) For purposes of this Agreement, "SUBSIDIARY" of a specified entity
will be any corporation, partnership, limited liability Healthvision, joint
venture or other legal entity of which the specified entity (either alone or
through or together with any other subsidiary) owns, directly or indirectly, 50%
or more of the stock or other equity or partnership interests the holders of
which are generally entitled to vote for the election of the Board of Directors
or other governing body of such corporation or other legal entity.
(f) Disclosure made with regard to a representation or warranty of a
party in a Part of either the Healthvision Disclosure Letter or Neoforma
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.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement, its
Exhibits and the documents and instruments and other agreements among the
parties hereto as contemplated by or referred to herein, including the
Healthvision Disclosure Letter and the Neoforma Disclosure Letter (a) constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, it being understood
that the Confidentiality Agreement shall continue in full force and effect until
the Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 5.9.
8.6 Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
8.7 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. 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
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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.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
8.9 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 ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.10 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 parties 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.
8.11 Waiver Of Jury Trial. EACH OF NEOFORMA AND HEALTHVISION HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF NEOFORMA OR HEALTHVISION IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of
Merger to be executed by their duly authorized respective officers as of the
date first written above.
NEOFORMA.COM, INC.
By: ________________________________
Name:
Title:
HEALTHVISION, INC.
By: ________________________________
Name:
Title:
<PAGE> 72
EXHIBIT A
AGREEMENT OF MERGER
This Agreement of Merger (this "AGREEMENT") is entered into as of
_________, 2000, among Neoforma.com, Inc., a Delaware corporation ("NEOFORMA"),
Eclipsys Corporation, a Delaware corporation ("ECLIPSYS") and HEALTHvision,
Inc., a Delaware corporation ("HEALTHVISION").
RECITALS
A. Immediately prior to the closing of the transactions contemplated
hereby, Neoforma will acquire Eclipsys, in a reverse triangular merger whereby
NeoIII Acquisition Corp., a Delaware corporation and a wholly owned first-tier
subsidiary of Neoforma ("MERGER SUB") will merge with and into Eclipsys
("ECLIPSYS MERGER") with Eclipsys continuing as the surviving corporation, as a
result of which Eclipsys will become a wholly owned subsidiary of Neoforma,
pursuant to an Agreement and Plan of Merger dated as of March 30, 2000 by and
among Eclipsys, Neoforma and Merger Sub.
B. Neoforma and Healthvision have entered into an Agreement and Plan of
Merger, dated as of March 30, 2000 (the "HEALTHVISION PLAN"), pursuant to which,
immediately after the Eclipsys Merger, Healthvision will merge in a forward
triangular merger with and into Eclipsys, with Eclipsys continuing as the
surviving corporation (the "HEALTHVISION MERGER").
C. The respective Boards of Directors of Neoforma, Merger Sub and
Healthvision have approved this Agreement and declared it to be advisable and in
the respective interest of Neoforma, Merger Sub and Healthvision and their
stockholders, respectively, that Healthvision be merged with and into Eclipsys
upon the terms and subject to the conditions of this Agreement, the Healthvision
Plan and in accordance with the General Corporation Law of the State of Delaware
("DELAWARE LAW").
NOW, THEREFORE, Neoforma, Eclipsys and Healthvision hereby agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions of this
Agreement and the applicable provisions of Delaware Law, at the Effective Time
(as defined below), Healthvision shall be merged with and into Eclipsys, the
separate corporate existence of Healthvision shall cease, and Eclipsys shall
continue as the surviving corporation of the Healthvision Merger (the "SURVIVING
CORPORATION").
1.2 Effective Time; Closing. Subject to the provisions of this Agreement,
the parties hereto shall cause the Healthvision Merger to be consummated by
filing this Agreement with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware Law (the time of such filing
(or such later time as may be agreed in writing by Healthvision and Neoforma)
being the "EFFECTIVE TIME") as soon as practicable following the
<PAGE> 73
consummation of the Eclipsys Merger on or after the Closing Date. The closing of
the Healthvision Merger shall 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 the Healthvision Plan, or
at such other time, date and location as the parties hereto agree in writing
(the "CLOSING DATE").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Healthvision Merger shall be as provided in this Agreement and the applicable
provisions of Delaware Law. Without limiting the generality of the foregoing, at
the Effective Time, all the property, rights, privileges, powers and franchises
of Healthvision and Eclipsys shall vest in the Surviving Corporation, and all
debts, liabilities and duties of Healthvision and Eclipsys shall become the
debts, liabilities and duties of the Surviving Corporation and Eclipsys's
outstanding equity interest in Healthvision shall be cancelled without
consideration.
1.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of
Eclipsys, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation of the
Surviving Corporation.
(b) At the Effective Time, the Bylaws of Eclipsys, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Eclipsys immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Eclipsys immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6 Effect on Capital Stock. Subject to the terms and conditions of this
Agreement, at the Effective Time, capital stock and rights to purchase capital
stock will, by virtue of the Healthvision Merger, be treated as follows:
1.6.1 Conversion of Healthvision Preferred Stock. At the Effective
Time, the shares of each outstanding series of Preferred Stock of Healthvision,
$0.01 par value per share ("HEALTHVISION PREFERRED STOCK") shall be converted
into Neoforma Common Stock, $0.001 par value ("NEOFORMA COMMON STOCK"), in the
manner provided for in this Agreement. Accordingly, at the Effective Time each
share of Healthvision Preferred Stock issued and outstanding immediately prior
thereto (other than shares for which the holder has exercised dissenters' rights
of appraisal) shall be canceled and converted as follows:
(a) each share of Healthvision's Series A Convertible
Participating Preferred Stock ("SERIES A STOCK") shall automatically be
converted in the Healthvision Merger into (i) .3041825 of a share (such fraction
representing $10 divided by $32-7/8ths) of Neoforma Common Stock plus (ii) four
shares of Healthvision Common Stock (subject to further
<PAGE> 74
conversion as provided in Section 1.6.2 below);
(b) each outstanding share of Healthvision's Series B Convertible
Preferred Stock ("SERIES B STOCK"), if any, will be converted in the
Healthvision Merger into four shares of Healthvision Common Stock (subject to
further conversion as provided in Section 1.6.2 below).
1.6.2 Conversion of Shares of Healthvision Common Stock. Each share of
Common Stock of Healthvision, $0.01 par value per share ("HEALTHVISION COMMON
STOCK") (including Healthvision Common Stock issued or issuable as a result of
the automatic conversion of outstanding shares of Series A Stock into
Healthvision Common Stock at the Effective Time as described in Section
1.6.1(a)(ii) above and the conversion of any outstanding shares of Series B
Stock into Healthvision Common Stock at the Effective Time as described in
Section 1.6.1(b) above), that is issued and outstanding immediately prior to the
Effective Time (in each case, other than Dissenting Shares) will, by virtue of
the Healthvision Merger and at the Effective Time, and without further action on
the part of any holder thereof, be converted into 0.454 (the "EXCHANGE RATIO")
fully paid and nonassessable shares of Neoforma Common Stock. No fraction of a
share of Neoforma Common Stock will be issued by virtue of the Healthvision
Merger, but in lieu thereof, a cash payment shall be made pursuant to Section
1.7(e).
1.6.3 Assumptions of Options. At the Effective Time, Neoforma will
assume all options to purchase Healthvision common stock outstanding at the
Effective Time (the "HEALTHVISION OPTIONS") pursuant to Healthvision's 1999
Stock Incentive Plan ("1999 PLAN"). At the Effective Time, each Healthvision
Option shall be converted into an option (a "NEOFORMA OPTION"), to purchase that
number of shares of Neoforma Common Stock that is equal to the number of shares
of Healthvision Common Stock that could be purchased pursuant to such
Healthvision Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, with fractional shares being rounded down to the nearest whole
share. The exercise price per share of Neoforma Common Stock purchasable under
each Healthvision Option assumed and converted into a Neoforma Option shall be
equal to the exercise price per share of Healthvision Common Stock under such
Healthvision Option immediately prior to the Effective Time divided by the
Exchange Ratio, rounded up to the nearest cent. No cash will be paid in lieu of
fractional shares which are rounded down pursuant to this Section. The term,
exercisability, vesting schedule, status as an "incentive stock option" under
Section 422A of the Code, if applicable, and all other terms of Healthvision
Options will otherwise be unchanged. Continuous employment with Healthvision
will be credited to an optionee for purposes of determining the number of shares
subject to exercise after the Effective Time. Neoforma agrees to file with the
Securities and Exchange Commission ("SEC") a registration statement on Form S-8
for the shares of Neoforma Common Stock issuable with respect to assumed
Healthvision Options as soon as is reasonably practicable after the Effective
Time, and maintain the effectiveness of such registration statement thereafter
for so long as any of such options or other rights remain outstanding, and will
reserve a sufficient number of shares of Neoforma Common Stock for issuance upon
exercise thereof.
1.6.4 Assumptions of Healthvision Warrants. At the Effective Time,
Neoforma will assume all outstanding warrants to purchase capital stock of
Healthvision ("HEALTHVISION WARRANTS"). Each Healthvision Warrant shall be
automatically exchanged for a five-year
<PAGE> 75
warrant in substantially the form of Exhibit 1.6.4 (a "NEOFORMA WARRANT"), to
purchase that number of shares of Neoforma Common Stock that is equal to the
number of shares of Healthvision Common Stock (assuming Series B Stock has been
previously issued and automatically converted into Healthvision Common Stock)
that could be purchased pursuant to each such Healthvision Warrant immediately
prior to the Effective Time multiplied by the Exchange Ratio, with fractional
shares being rounded down to the nearest whole share. The exercise price per
share for each such substituted Neoforma Warrant shall equal $3.75 divided by
the Exchange Ratio, rounded up to the nearest cent. No cash will be paid in lieu
of fractional shares which are rounded down pursuant to this Section.
1.6.5 Cancellation of Healthvision Owned and Eclipsys Owned Stock. Each
share of Healthvision capital stock held by Healthvision or owned by Eclipsys or
any direct or indirect wholly owned subsidiary of Eclipsys or Healthvision
immediately prior to the Effective Time shall be canceled and extinguished
without any conversion thereof.
1.6.6 Capital Stock of Eclipsys. Each share of common stock, par value
$0.01 per share, of Eclipsys (the "ECLIPSYS COMMON STOCK"), issued and
outstanding after the Eclipsys Merger and immediately prior to the Effective
Time of the Healthvision Merger shall be converted into one validly issued,
fully paid and nonassessable share of common stock, $0.01 par value per share,
of the Surviving Corporation. Following the Effective Time, each certificate
evidencing ownership of shares of Eclipsys common stock shall evidence ownership
of such shares of common stock of the Surviving Corporation.
1.6.7 Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Neoforma Common Stock or Healthvision Common Stock),
reorganization, recapitalization, reclassification or other like change with
respect to Neoforma Common Stock or Healthvision Common Stock occurring on or
after the date hereof and prior to the Effective Time.
1.7 Exchange of Certificates.
(a) Exchange Agent. Neoforma shall select an institution reasonably
acceptable to Healthvision to act as the exchange agent (the "EXCHANGE AGENT")
in the Healthvision Merger.
(b) Exchange Fund. Promptly after the Effective Time, Neoforma shall
make available to the Exchange Agent for exchange in accordance with this
Article I, the shares of Neoforma Common Stock (such shares of Neoforma Common
Stock, together with cash in lieu of fractional shares and any dividends or
distributions with respect thereto, are hereinafter referred to as the "EXCHANGE
FUND") issuable pursuant to Section 1.6 in exchange for outstanding shares of
Healthvision Common Stock and/or Healthvision Preferred Stock (collectively,
"HEALTHVISION STOCK").
(c) Exchange Procedures. Promptly after the Effective Time, Neoforma
shall instruct the Exchange Agent to mail to each holder of record of a
certificate or certificates ("CERTIFICATES") which immediately prior to the
Effective Time represented outstanding shares of
<PAGE> 76
Healthvision Stock whose shares were converted into shares of Neoforma Common
Stock pursuant to Section 1.6, (i) a letter of transmittal in customary form
(that shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent and shall contain such other provisions as Neoforma may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of Neoforma
Common Stock. Upon surrender of Certificates for cancellation to the Exchange
Agent together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, the holders of such
Certificates shall be entitled to receive in exchange therefor certificates
representing the number of whole shares of Neoforma Common Stock into which
their shares of Healthvision Stock were converted at the Effective Time, payment
in lieu of fractional shares that such holders have the right to receive
pursuant to Section 1.7(e) and any dividends or distributions payable pursuant
to Section 1.7(d), and the Certificates so surrendered shall forthwith be
canceled. Until so surrendered, outstanding Certificates will be deemed from and
after the Effective Time, for all corporate purposes, to evidence only the
ownership of the number of full shares of Neoforma Common Stock into which such
shares of Healthvision Stock shall have been so converted and the right to
receive an amount in cash in lieu of the issuance of any fractional shares in
accordance with Section 1.7(e) and any dividends or distributions payable
pursuant to Section 1.7(d). No interest will be paid or accrued on any cash in
lieu of fractional shares of Neoforma Stock or on any unpaid dividends or
distributions payable to holders of Certificates. In the event of a transfer of
ownership of shares of Healthvision Stock which is not registered in the
transfer records of Healthvision, a certificate representing the proper number
of shares of Neoforma Common Stock may be issued to a transferee if the
Certificate representing such shares of Healthvision Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid.
(d) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the date of this Agreement with
respect to Neoforma Stock with a record date after the Effective Time will be
paid to the holders of any unsurrendered Certificates with respect to the shares
of Neoforma Common Stock represented thereby until the holders of record of such
Certificates shall surrender such Certificates. Subject to applicable law,
following surrender of any such Certificates, the Exchange Agent shall deliver
to the holders of certificates representing whole shares of Neoforma Common
Stock issued in exchange therefor, without interest, (i) promptly, the amount of
any cash payable with respect to a fractional share of Neoforma Common Stock to
which such holder is entitled pursuant to Section 1.7(e) and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Neoforma Common Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date occurring after surrender, payable with respect to such whole
shares of Neoforma Common Stock.
(e) Fractional Shares.
(i) As promptly as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (A) the number of full shares of
Neoforma Common Stock delivered to the Exchange Agent pursuant to Section
1.7(b), over (B) the aggregate number of
<PAGE> 77
full shares of Neoforma Common Stock to be distributed to holders of
Healthvision Stock pursuant to Section 1.7(c) (such excess, the "EXCESS
SHARES"). Following the Effective Time, the Exchange Agent, as agent for the
holders of Healthvision Stock, shall sell the Excess Shares at then prevailing
prices on the Nasdaq Stock Market in the manner set forth in paragraph (ii) of
this Section 1.7(e).
(ii) The sale of the Excess Shares by the Exchange Agent shall be
executed on the Nasdaq Stock Market and shall be executed in round lots to the
extent practicable. The Exchange Agent shall use all commercially reasonable
efforts to complete the sale of the Excess Shares as promptly following the
Effective Time as, in the Exchange Agent's reasonable judgment, is practicable
consistent with obtaining the best execution of such sales in light of
prevailing market conditions. Until the net proceeds of such sales have been
distributed to the holders of Healthvision Stock, the Exchange Agent will hold
such proceeds in trust for the holders of Healthvision Stock. The Exchange Agent
will determine the portion of such net proceeds to which each holder of
Healthvision Stock shall be entitled, if any, by multiplying the amount of the
aggregate net proceeds by a fraction the numerator of which is the amount of the
fractional share interest to which such holder of Healthvision Stock is entitled
(after taking into account all shares of Neoforma Common Stock to be issued to
such holder) and the denominator of which is the aggregate amount of fractional
share interests to which all holders of Healthvision Stock are entitled. As soon
as practicable after the determination of the amount of cash, if any, to be paid
to holders of Healthvision Stock with respect to fractional share interests, the
Exchange Agent shall promptly pay such amounts to such holders of Healthvision
Stock in accordance with the terms of Section 1.7(c).
(iii) Notwithstanding the provisions of paragraphs (i) and (ii) of
this Section 1.7(e), Neoforma may decide, at its option, exercised prior to the
Effective Time, in lieu of the issuance and sale of Excess Shares and the making
of the payments contemplated in such paragraphs, that Neoforma shall pay to the
Exchange Agent an amount sufficient for the Exchange Agent to pay each holder of
Healthvision Common Stock the amount such holder would have received pursuant to
Section 1.7(e)(ii) assuming that the sales of Neoforma Common Stock were made at
a price equal to the average of the closing prices of the Neoforma Common Stock
on the Nasdaq Stock Market for the ten consecutive trading days immediately
following the Effective Time and, in such case, all references herein to the
cash proceeds of the sale of the Excess Shares and similar references shall be
deemed to mean and refer to the payments calculated as set forth in this
paragraph (iii). In such event, Excess Shares shall not be issued or otherwise
transferred to the Exchange Agent pursuant to Sections 1.7(b) or (e).
(f) Required Withholding. Each of the Exchange Agent, Neoforma and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Healthvision Common Stock such amounts as may be
required to be deducted or withheld therefrom under the Code or under any
provision of state, local or foreign tax law or under any other applicable
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 court,
administrative agency or commission or other governmental authority or
instrumentality, foreign or domestic. To the extent such amounts are so deducted
or withheld,
<PAGE> 78
such amounts shall be treated for all purposes under this Agreement as having
been paid to the person to whom such amounts would otherwise have been paid.
(g) Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Neoforma Common Stock into which the shares of
Healthvision Stock represented by such Certificates were converted pursuant to
Section 1.6, cash for fractional shares, if any, as may be required pursuant to
Section 1.7(e) and any dividends or distributions payable pursuant to Section
1.7(d); provided, however, that Neoforma may, in its discretion and as a
condition precedent to the issuance of such certificates representing shares of
Neoforma Common Stock, cash and other distributions, require the owner of such
lost, stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Neoforma, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
(h) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, neither the Exchange Agent, Neoforma, the Surviving Corporation nor
any party hereto shall be liable to a holder of shares of Neoforma Common Stock
or Healthvision Stock for any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(i) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Healthvision Stock for six months
after the Effective Time shall be delivered to Neoforma, upon demand, and any
holders of Healthvision Stock who have not theretofore complied with the
provisions of this Section 1.7 shall thereafter look only to Neoforma for the
shares of Neoforma Common Stock, any cash in lieu of fractional shares of
Neoforma Common Stock to which they are entitled pursuant to Section 1.7(e) and
any dividends or other distributions with respect to Neoforma Common Stock to
which they are entitled pursuant to Section 1.7(d), in each case, without any
interest thereon.
1.8 No Further Ownership Rights in Healthvision Stock. All shares of
Neoforma Common Stock issued in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Sections 1.7(d) and (e)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Healthvision Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Healthvision
Stock that were outstanding immediately prior to the Effective Time. If after
the Effective Time Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article I.
1.9 Restricted Stock. If any shares of Healthvision Common Stock that are
outstanding immediately prior to the Effective Time are unvested or are subject
to a repurchase option, risk of forfeiture or other condition providing that
such shares ("HEALTHVISION RESTRICTED STOCK") may be forfeited or repurchased by
Healthvision upon any termination of the stockholders' employment, directorship
or other relationship with Healthvision (and/or any affiliate of Healthvision)
under the terms of any restricted stock purchase agreement or other agreement
with Healthvision that does not by its terms provide that such repurchase
option, risk
<PAGE> 79
of forfeiture or other condition lapses upon consummation of the Healthvision
Merger, then the shares of Neoforma Common Stock issued upon the conversion of
such shares of Healthvision Common Stock in the Healthvision Merger will
continue to be unvested and subject to the same repurchase options, risks of
forfeiture or other conditions following the Effective Time, and the
certificates representing such shares of Neoforma Common Stock may accordingly
be marked with appropriate legends noting such repurchase options, risks of
forfeiture or other conditions. Healthvision shall take all actions that may be
necessary to ensure that, from and after the Effective Time, Neoforma is
entitled to exercise any such repurchase option or other right set forth in any
such restricted stock purchase agreement or other agreement.
1.10 Tax Consequences. It is intended by the parties hereto that the
Healthvision Merger shall constitute a "reorganization" within the meaning of
Section 368 of the Code. It is intended by the parties that the Healthvision
Merger shall qualify for accounting treatment as a purchase.
1.11 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Healthvision and Eclipsys, the officers and directors of
Healthvision and Eclipsys will take all such lawful and necessary action.
Neoforma shall cause Eclipsys to perform all of its obligations relating to this
Agreement and the transactions contemplated hereby.
ARTICLE II
MISCELLANEOUS
2.1 Amendment. 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 each of the parties hereto.
2.2 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
2.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
2.4 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 parties 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.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE> 80
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.
NEOFORMA.COM, INC.
By:
Name:
Title:
HEALTHVISION, INC.
By:
Name:
Title:
ECLIPSYS CORPORATION
By:
Name:
Title:
[SIGNATURE PAGE TO AGREEMENT OF MERGER]
<PAGE> 81
EXHIBIT B
HEALTHVISION VOTING AGREEMENT
This HEALTHVISION VOTING AGREEMENT (the "AGREEMENT") is made and entered
into as of March 30, 2000, between Neoforma.com, Inc., a Delaware corporation
("NEOFORMA"), and the undersigned stockholder ("STOCKHOLDER") of HEALTHvision,
Inc., a Delaware corporation ("HEALTHVISION").
RECITALS
A. Concurrently with the execution of this Agreement, Neoforma and
Healthvision are entering into an Agreement and Plan of Merger (the "PLAN")
which provides for the merger of Healthvision with and into Eclipsys Corporation
(the "MERGER"), a Delaware corporation ("ECLIPSYS"), that at the time of the
Merger will be a wholly-owned subsidiary of Neoforma. Pursuant to the Merger,
shares of capital stock of Healthvision will be converted into shares of
Neoforma Common Stock on the basis described in the Plan. Capitalized terms used
but not defined herein shall have the meanings set forth in the Plan.
B. Stockholder is the record holder of such number of outstanding shares of
capital stock of Healthvision as is indicated on the final page of this
Agreement.
C. As a material inducement to enter into the Plan, Neoforma desires
Stockholder to agree, and Stockholder is willing to agree, to vote the Shares
(as defined below), and such other shares of capital stock of Healthvision over
which Stockholder has voting power, so as to facilitate consummation of the
Merger.
In consideration of the foregoing and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
1. AGREEMENT TO VOTE SHARES
1.1 Definitions. For purposes of this Agreement:
(a) Shares. The term "SHARES" shall mean all issued and
outstanding shares of Healthvision Common Stock owned of record or beneficially
by Stockholder or over which Stockholder exercises voting power, in each case,
as of the record date for persons entitled (i) to receive notice of, and to vote
at the meeting of the stockholders of Healthvision called for the purpose of
voting on the matters referred to in Section 1.2, or (ii) to take action by
written consent of the stockholders of Healthvision with respect to the matters
referred to in Section 1.2. Stockholder agrees that any shares of capital stock
of Healthvision that Stockholder purchases or with respect to which Stockholder
otherwise acquires beneficial ownership or over which Stockholder exercises
voting power after the execution of this Agreement and prior to the date of
termination of this Agreement pursuant to Section 3 below shall be subject to
the terms and conditions of this Agreement to the same extent as if they
constituted Shares on the date hereof.
(b) Subject Securities. The term "SUBJECT SECURITIES" shall
mean: (i)
<PAGE> 82
all securities of Healthvision (including all shares of Healthvision Common
Stock and all options, warrants and other rights to acquire shares of
Healthvision Common Stock) beneficially owned by Stockholder as of the date of
this Agreement; and (ii) all additional securities of Healthvision (including
all additional shares of Healthvision Common Stock and all additional options,
warrants and other rights to acquire shares of Healthvision Common Stock) of
which Stockholder acquires ownership during the period from the date of this
Agreement through the earlier of termination of this Agreement pursuant to
Section 3 below or the record date for the meeting at which stockholders of
Healthvision are asked to vote upon approval of the Plan and the Merger.
(c) Transfer. Stockholder shall be deemed to have effected a
"TRANSFER" of a security if Stockholder directly or indirectly: (i) sells,
pledges, encumbers, transfers or disposes of, or grants an option with respect
to, such security or any interest in such security; or (ii) enters into an
agreement or commitment providing for the sale, pledge, encumbrance, transfer or
disposition of, or grant of an option with respect to, such security or any
interest therein.
1.2 Agreement to Vote Shares. Stockholder hereby covenants and agrees
that, during the period commencing on the date hereof and continuing until the
first to occur of (i) such date and time as the Merger shall become effective in
accordance with the terms and provisions of the Plan (the "EFFECTIVE TIME") and
(ii) termination of this Agreement in accordance with its terms, at any meeting
(whether annual or special and whether or not an adjourned or postponed meeting)
of the stockholders of Healthvision, however called, or in connection with any
written consent of the stockholders of Healthvision, Stockholder will appear at
the meeting or otherwise cause the Shares to be counted as present thereat for
purposes of establishing a quorum and vote or consent (or cause to be voted or
consented) the Shares:
(1) in favor of the approval and adoption of the Plan in the form
entered into on the date hereof and the agreement of merger to be
filed with the Delaware Secretary of State (the "AGREEMENT OF MERGER")
a form of which is attached as an exhibit to the Plan, and the
approval of the Merger and the other actions contemplated by the Plan
and the Agreement of Merger and any actions required in furtherance
thereof;
(2) against approval of any proposal made in opposition to or in
competition with the consummation of the Merger, including, without
limitation, any Acquisition Proposal or any action or agreement that
would result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement of
Healthvision under the Plan or the Agreement of Merger, or of
Stockholder under this Agreement.
Stockholder further agrees not to enter into any agreement or
understanding with any person the effect of which would be inconsistent with or
violative of any provision contained in this Section 1.2.
1.3. Transfer and Other Restrictions. (a) Prior to the termination of
this Agreement, Stockholder agrees not to, directly or indirectly:
2
<PAGE> 83
(i) except pursuant to the terms of the Plan, offer for
sale, Transfer or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with
respect to or consent to the offer for sale Transfer or other
disposition of any or all of the Subject Securities or any
interest therein except as provided in Section 1.2 hereof;
(ii) grant any proxy, power of attorney, deposit any of the
Subject Securities into a voting trust or enter into a voting
agreement or arrangement with respect to the Subject Securities
except as provided in this Agreement; or
(iii) take any other action that would make any
representation or warranty of Stockholder contained herein untrue
or incorrect or have the effect of preventing or disabling
Stockholder from performing its obligations under this Agreement.
(b) To the extent Stockholder is, as of the date hereof, party to a
contract or agreement that requires Stockholder to Transfer Subject Securities
to another person or entity (excluding a contract or agreement pledging Subject
Securities to Healthvision), Stockholder will not effect any such Transfer
unless and until the transferee agrees to be bound by and executes an agreement
in the form of this Agreement with respect to the Subject Securities to be
Transferred. Nothing herein shall prohibit Stockholder from exercising (in
accordance with the terms of the option or warrant, as applicable) any option or
warrant Stockholder may hold; provided that the securities acquired upon such
exercise shall be deemed Subject Securities and Shares hereunder.
(c) Until July 24, 2000, Stockholder will not, directly or indirectly,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of, or otherwise dispose of or transfer any shares of the
Neoforma Common Stock issued to such Stockholder in the Merger or any securities
received by such Stockholder in the Merger convertible into or exchangeable or
exercisable for Neoforma Common Stock, or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Neoforma Common Stock
issued in the Merger, whether any such swap or transaction is to be settled by
delivery of Neoforma Common Stock or other securities, in cash or otherwise. The
foregoing sentence shall not apply to (a) transactions relating to Neoforma
Common Stock acquired by Stockholder other than pursuant to the Merger, (b) the
transfer, if the undersigned is an individual, to a member or members of his or
her immediate family or to a trust, the beneficiaries of which are exclusively
the undersigned and/or a member or members of his or her immediate family,
either during his or her lifetime or on death by will or intestacy, provided
that the transferee or transferees thereof agree in writing to be bound by the
provisions of this Agreement, or (c) the transfer, if the undersigned is a
partnership, corporation or trust, to partners (or retired partners who retire
after the date hereof), shareholders, or beneficiaries, as the case may be, of
the undersigned as a distribution, provided that the distributees thereof agree
in writing to be bound by the provisions of this Agreement. For the purposes of
this paragraph, "immediate family" shall mean spouse, lineal descendant, father,
mother, brother or sister of the transferor.
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1.4 Irrevocable Proxy. Concurrently with the execution of this
Agreement, Stockholder agrees to deliver to Neoforma a proxy in the form
attached hereto as Exhibit I (the "PROXY"), which shall be irrevocable to the
extent set forth therein, with respect to the Shares.
2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
(a) Stockholder is the record and beneficial owner of, or Stockholder
exercises voting power over, the shares of Healthvision capital stock indicated
on the final page of this Agreement, which, on and as of the date hereof, are
free and clear of any Encumbrances that would adversely affect the ability of
Stockholder to carry out the terms of this Agreement. The number of Shares set
forth on the signature pages hereto are the only Shares beneficially owned by
such Stockholder and, except as set forth on such signature pages, the
Stockholder holds no options to purchase or rights to subscribe for or otherwise
acquire any securities of Healthvision and has no other interest in or voting
rights with respect to any securities of Healthvision.
(b) Stockholder has the requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by such Stockholder and
the consummation by such Stockholder of the transactions contemplated by this
Agreement have been duly authorized by all necessary action (including any
consultation, approval or other action by or with any other person). This
Agreement has been duly executed and delivered by such Stockholder and
constitutes a valid and binding obligation of such Stockholder, enforceable
against such Stockholder in accordance with its terms. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation which would
result in the creation of any Encumbrance upon any of the Shares owned by such
Stockholder under, any provision of Stockholder's charter documents (if
applicable), applicable law or regulation or of any agreement, judgment,
injunction, order, decree, or other instrument binding on such Stockholder or
any Shares owned by such Stockholder. No consent, approval, order or
authorization of, or registration, declaration or filing with or exemption by
any Governmental Entity is required by or with respect to such Stockholder in
connection with the execution and delivery of this Agreement by such Stockholder
or the consummation by such Stockholder of the transactions contemplated by this
Agreement, except for applicable requirements, if any, of Sections 13 and 16 of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder. If this Agreement is being executed in a representative or fiduciary
capacity, the person signing this Agreement has full power and authority to
enter into and perform such Agreement.
3. TERMINATION
This Agreement shall terminate and shall have no further force or effect as
of the first to occur of (i) the Effective Time and (ii) such date and time as
the Plan shall have been validly terminated pursuant to Article VII thereof.
Notwithstanding any other provision hereof, this Agreement shall terminate in
the event that the Plan is modified in a manner that is materially adverse to
Stockholder without Stockholder's consent.
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4. MISCELLANEOUS
4.1 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
4.2 Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without prior written consent of the other. Any purported
assignment in violation of this Section shall be void.
4.3 Amendments and Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
4.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Neoforma will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
Stockholder set forth herein. Therefore, it is agreed that, in addition to any
other remedies that may be available to Neoforma upon any such violation,
Neoforma shall have the right to enforce such covenants and agreements by
specific performance, injunctive relief or by any other means available to
Neoforma at law or in equity.
4.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given upon delivery either by commercial
delivery service, or sent via facsimile (receipt confirmed) to the parties at
the following address or facsimile numbers (or at such other address or
facsimile numbers for a party as shall be specified by like notice):
If to Neoforma:
Neoforma.com, Inc.
3255-7 Scott Boulevard
Santa Clara, California 95054
Attn: Chief Financial Officer
Facsimile: (408) 549-6211
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
Attn: Gordon K. Davidson
Douglas N. Cogen
Facsimile: (650) 494-1417
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If to Stockholder, to the address for notice set forth on the last page
hereof.
Any party hereto may by notice so given provide and change its address for
future notices hereunder. Notice shall conclusively be deemed to have been given
when personally delivered or when deposited in the mail in the manner set forth
above.
4.6 Governing Law. This Agreement shall be governed by and construed
exclusively in accordance with the laws of the State of Delaware, excluding that
body of law relating to conflict of laws.
4.7 Entire Agreement. This Agreement and the Plan constitute and
contains the entire agreement and understanding of the parties with respect to
the subject matter hereof and supersede any and all prior negotiations,
correspondence, agreements, understandings, duties or obligations between the
parties respecting the subject matter hereof.
4.8 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
4.9 Captions. The captions to sections of this Agreement have been
inserted for identification and reference purposes only and shall not be used to
construe or interpret this Agreement.
* * * * *
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<PAGE> 87
IN WITNESS WHEREOF, the parties hereto have caused this Healthvision Voting
Agreement to be executed by their duly authorized respective officers as of the
date first above written.
NEOFORMA.COM, INC.
By: ________________________________
Name:
Title:
STOCKHOLDER:
____________________________________
By: ________________________________
Name:
Title:
Stockholder's Address for Notice:
____________________________________
____________________________________
____________________________________
Outstanding shares
of Healthvision
capital stock
beneficially owned
by Stockholder:
____________________________________
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<PAGE> 88
EXHIBIT I
IRREVOCABLE PROXY
The undersigned stockholder (the "STOCKHOLDER") of HEALTHvision, Inc., a
Delaware corporation ("HEALTHVISION"), hereby irrevocably appoints and
constitutes the members of the Board of Directors of Neoforma.com, Inc., a
Delaware corporation ("NEOFORMA"), and each such Board member (collectively the
"PROXYHOLDERS"), the agents, attorneys and proxies of the undersigned, with full
power of substitution and resubstitution, to the full extent of the
undersigned's rights with respect to the shares of capital stock of Healthvision
which are listed below (the "SHARES"), and any and all other shares or
securities issued or issuable in respect thereof on or after the date hereof and
prior to the date this proxy terminates, to vote the Shares as follows: the
agents and proxies named above are empowered at any time prior to termination of
this proxy to exercise all voting and other rights (including, without
limitation, the power to execute and deliver written consents with respect to
the Shares) of the undersigned at every annual, special or adjourned meeting of
Healthvision stockholders, and in every written consent in lieu of such a
meeting, or otherwise, (i) (A) in favor of the approval and adoption of the
Agreement and Plan of Merger (the "PLAN") between Neoforma and Healthvision in
the form entered into on the date hereof and an agreement of merger to be filed
with the Delaware Secretary of State, a form of which is attached as an exhibit
to the Plan, and (B) the approval of the merger of Healthvision with and into
Eclipsys Corporation (the "MERGER"), and (ii) against approval of any proposal
made in opposition to or in competition with consummation of the Merger,
including, without limitation, any Acquisition Proposal (as defined in the Plan)
or any action or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
Healthvision under the Plan or of the Stockholder under the Healthvision Voting
Agreement between Neoforma and Stockholder (the "VOTING AGREEMENT").
The Proxyholders may not exercise this proxy on any other matter. The
Stockholder may vote the Shares on all such other matters. The proxy granted by
the Stockholder to the Proxyholders hereby is granted as of the date of this
Irrevocable Proxy in order to secure the obligations of the Stockholder set
forth in Section 1 of the Voting Agreement, and is irrevocable and coupled with
an interest in such obligations and in the interests in Healthvision to be
purchased and sold pursuant to the Plan.
This proxy will terminate upon the termination of the Voting Agreement in
accordance with its terms. Upon the execution hereof, all prior proxies given by
the undersigned with respect to the Shares and any and all other shares or
securities issued or issuable in respect thereof on or after the date hereof are
hereby revoked and no subsequent proxies will be given until such time as this
proxy shall be terminated in accordance with its terms. Any obligation of the
undersigned hereunder shall be binding upon the successors and assigns of the
undersigned. The undersigned stockholder authorizes the Proxyholders to file
this proxy and any substitution or revocation of substitution with the Secretary
of Healthvision and with any Inspector of Elections at any meeting of the
stockholders of Healthvision.
This proxy is irrevocable and shall survive the insolvency, incapacity,
death or liquidation of the undersigned. Dated: March 30, 2000.
Stockholder: _______________________
By: ________________________________
____________________________________
Name and Title
Shares of Healthvision capital stock beneficially owned: ____________
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<PAGE> 1
EXHIBIT 99.1
COMMON STOCK AND WARRANT AGREEMENT
This COMMON STOCK AND WARRANT AGREEMENT (this "AGREEMENT") is made and
entered into as of March 30, 2000, by and between Neoforma.com, 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 the date 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 Agreement and Plan of Merger dated as of the date of this Agreement (the
"ECLIPSYS MERGER AGREEMENT") among Parent, a wholly-owned merger subsidiary of
Parent and Eclipsys Corporation ("ECLIPSYS"), or, if not defined herein, 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 provide technical, administrative and
service oriented assistance with respect to the Exchange, 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 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 system related to the acquisition or disposal of
products by acute or non-acute healthcare providers anywhere in the world other
than through 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
38,316,111 shares of Parent's common stock, par value $0.001 per share ("COMMON
STOCK"), and warrant respectively to acquire 6,333,650 and 7,858,127 shares of
Common Stock, exercisable subject to the terms and conditions set forth in this
Agreement and in such warrants; and
WHEREAS, the sole consideration being furnished by VHA in exchange for the
Common Stock (as hereinafter defined) and Warrants (as defined in Section 1.1
hereof) is the services to be provided by VHA pursuant to the Outsourcing
Agreement.
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
<PAGE> 2
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 38,316,111 shares of Common Stock and of Common Stock warrants in
the forms attached hereto as Exhibit A and Exhibit B (the "WARRANTS")
respectively to acquire 6,333,650 and 7,858,127 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, 38,316,111 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 Warrants. Parent will issue to VHA at the
Closing, subject to approval of Parent's stockholders, the Warrants to acquire
up to 6,333,650 and 7,858,127 shares respectively (subject to adjustment as
provided in the Warrant) of Warrant Stock at an exercise price per share of
$30.375 (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 Warrants 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) Twenty 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) Eighty 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, 20% of
the Shares, if during the calendar year ending on December 31 prior to a
Determination Date, the total number of Transactions (as defined below) during
such calendar year is less than the Target Number (as defined below) for such
calendar year as set forth below. A "DETERMINATION DATE" shall be March 1, 2001,
March 1, 2002, March 1, 2003 and March 1, 2004. A "TRANSACTION" shall mean (i)
each VHA shareholder, VHA partner, or an entity controlled by or affiliated with
either a VHA shareholder or VHA partner (collectively, "VHA Entities") that
utilized the Neoforma e-commerce exchange during the calendar year in question
(and (ii) each purchase by a VHA Entity from Neoforma of a software product, a
premium internet service, any internet portal or consulting service or other
information-technology-based product or service (collectively, "PRODUCTS"),
either currently in existence or subsequently
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<PAGE> 3
developed during the calendar year in question. The TARGET NUMBER for 2000 is
350 Transactions; for 2001, 400 Transactions; for 2002, 450 Transactions; and
for 2003, 500 Transactions. In the event that there is a material change in the
number of Products (e.g., due to a combination of two existing Products into a
single Product) available for purchase, Parent and VHA agree that the Target
Number will be equitably adjusted to account for such changes.
(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
90 days following the consummation of such transaction.
ARTICLE II
CLOSING
2.1 Closing. The issuance of the Shares and the Warrants 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 Warrants.
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
3
<PAGE> 4
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 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 64,773,413 shares issued
and outstanding as of the close of business on March 28, 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, 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 March 28, 2000, (i) 7,242,904 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 $45,865,480, (ii) 142,551 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 $512,704, and (iii) 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 Parent Disclosure Letter, there are no
commitments or agreements of any character to which Parent is bound obligating
Parent to accelerate the vesting
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<PAGE> 5
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 Warrants, 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 Warrants, will be duly authorized and validly issued, fully
paid and nonassessable.
(e) Based in part on the representations made by VHA in Section 4
hereof, the offer and sale of the Shares and the Warrants solely to VHA in
accordance with this Agreement and (assuming no change in currently applicable
law or the Warrants, and no transfer of the Warrants by the holder thereof and
no commission or other remuneration paid or given, directly or indirectly, for
soliciting the exercise of the Warrants) the issuance of the Warrant Stock is
exempt from the registration and prospectus delivery requirements of the U.S.
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 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.
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<PAGE> 6
(a) Parent has all requisite corporate power and authority to enter
into this Agreement and the Outsourcing Agreement, to issue the Warrants and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Outsourcing Agreement, the issuance of the
Warrants 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 Warrants. 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") is sufficient for Parent's stockholders to approve the
issuance of Common Stock pursuant to this Agreement and the Warrants, 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 Warrants and, assuming the due
authorization, execution and delivery 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 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 their respective 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 and delivery 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
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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 Securities Act or the Exchange 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 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 10-Q, 8-K or any successor form under the Exchange Act) 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 September 30, 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,
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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 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
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 FICA, Taxes
pursuant to 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,
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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 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.
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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:
"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.
(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).
(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.
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(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.
(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 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.
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(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
(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.
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(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 Parent: (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) 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
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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 benefit, 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 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
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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 or 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 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,
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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.
3.14 Certain Agreements. Other than (i) the Eclipsys Merger Agreement,
(ii) the Agreement and Plan of Merger dated as of the date of this Agreement
(the "HEALTHVISION MERGER AGREEMENT") between Parent and HEALTHvision, Inc.
("HEALTHVISION"), (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;
(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
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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 Merrill
Lynch & 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 supplied by Parent for inclusion in
the Registration Statement shall not at the time the Registration Statement is
filed with the SEC and at the time it becomes effective under the Securities Act
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
misleading. The information supplied by Parent for inclusion or incorporation by
reference in the Proxy Statement/Prospectus shall not, on the date the Proxy
Statement/Prospectus 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 Registration
Statement and Proxy Statement/Prospectus will comply as to form in all material
respects with the provisions of the Securities 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 an amendment to the Registration Statement
or a supplement to the Proxy Statement/Prospectus, Parent shall promptly inform
Novation. Notwithstanding the foregoing, Parent makes no representation or
warranty with respect to any information supplied by Novation which is contained
in any of the foregoing documents.
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 "UHC DISCLOSURE LETTER") (which VHA Disclosure Letter shall be deemed to be
representations and warranties to Parent by VHA under this Section 4), as
follows:
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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 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
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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, Warrants and Warrant Stock
to be delivered to VHA hereunder will be acquired for investment 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, Warrants or Warrant Stock to be acquired
by VHA hereunder. VHA also represents that it has not been formed for the
specific purpose of acquiring the Shares, Warrants 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 investment decision with respect to the the Shares, Warrants 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 the Shares, Warrants and 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 Investment Experience. VHA understands that an investment in the
Shares, Warrants and Warrant Stock involves substantial risk. VHA: (i) has
experience as an investor in 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 investment in the Shares, Warrants 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 investment in the Shares, Warrants and
Warrant Stock and protecting its own interests in connection with this
investment 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
Warrants are, and upon issuance under the Warrants, 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 Warrants.
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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 Warrants are non-transferable to the extent they have
not vested.
4.10 Legends. VHA understands and agrees that the certificates
evidencing the Shares, the Warrants 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 SECURITIES 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.
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4.11 Disclosure. The information supplied by VHA for inclusion in the
Registration Statement shall not at the time the Registration Statement is filed
with the SEC and at the time it becomes effective under the Securities Act
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
misleading. The information supplied by VHA for inclusion or incorporation by
reference in the Proxy Statement/Prospectus shall not (i) on the date the Proxy
Statement/Prospectus is mailed to Parent's stockholders, and (ii) at the time of
the Parent Stockholders' Meeting to consider the Parent Stockholder Approval 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 Effective Time 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 an amendment to the
Registration Statement or a supplement to the Proxy Statement/Prospectus, 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 any of the foregoing documents.
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 the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted and 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;
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(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 Intellectual Property that
is owned by, or exclusively licensed to, Parent or one of its subsidiaries,
other than non-exclusive licenses in the ordinary course of business and
consistent with past practice. "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 mark 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;
(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;
(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 Parent ESPP consistent with the terms thereof, (iii)
Parent Options granted to newly-hired employees in the ordinary course of
business in amounts comparable to similarly situated Parent employees, and in an
aggregate amount not to exceed 550,000, 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 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
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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
Company) or (y) making or agreeing to make acquisitions, 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 825,000 shares of Common Stock in the aggregate, and none of which
acquisitions, agreements or commercial transactions could reasonably be expected
to materially delay the other transactions 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;
(i) Sell, lease, license, encumber 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;
(1) 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;
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(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) Enter into any licensing or other agreement with regard to the
acquisition, distribution or licensing of any material Intellectual Property
owned by, or exclusively licensed to, Parent other than licenses, distribution
agreements, advertising agreements, or other similar agreements entered into in
the ordinary course of business consistent with past practice;
(o) Materially revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(p) Initiate or settle any material litigation, arbitration, mediation
or other legal proceeding;
(q) Take or permit any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement; or
(r) Agree in writing or otherwise to take any of the actions described
in Section 5.1 (a) through (q) above.
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"), to the extent that the outstanding shares of Common Stock
(including outstanding Warrant Stock) beneficially owned by VHA together with
all "affiliates" (which for purposes of this Agreement shall have the meaning
given such term in Rule 144(a)(1) promulgated under the 1933 Act) of VHA exceeds
10% of the outstanding Common Stock of Parent (the shares in excess of such 10%
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 Stockholders' for approval except for (i) a Change of
Control (as defined below) of Parent, (ii) the election of VHA' designated
nominee 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 preceding sentence, VHA shall, and shall cause
its affiliates to, vote all Excess Shares in proportion to the votes cast by all
other stockholders of Parent in connection with each matter submitted to Parent
stockholders' for approval, including, without limitation, on any matters
regarding equity-based or other compensation plans of Parent, the issuance of
capital stock of Parent, amendments to the Certificate of Incorporation of
Parent other than as set forth in clause (iii) above, or transactions involving
interested or related parties. Notwithstanding any voting restrictions set forth
herein, the Board of Directors of Parent may waive any voting restriction set
forth herein with respect to any particular matter. For purposes of this
Agreement, "CHANGE OF CONTROL" means the consummation of any transaction or
series of related transactions, including an acquisition of Parent by another
entity and any reorganization, merger, consolidation or share exchange, that
results in the beneficial owners of Parent's capital stock
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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 of all
or substantially all of the assets of Parent.
6.2 Acquisition of Parent Securities. VHA agrees that from and after
the date of the Closing through the Fifth Anniversary, (i) at any time that VHA
together with all of its affiliates beneficially owns 10% (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 Warrants, and (ii) at any time
that VHA, together with all of its affiliates beneficially owns less than 10% 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 10% of the outstanding Common Stock of
Parent.
6.3 Parent Board of Directors; Executive Officers. The Board of
Directors of Parent will take all actions reasonably necessary such that as soon
as practicable following the Closing, (i) the size of Parent's Board of
Directors shall be increased to nine, and the following persons shall be
appointed to Parent's Board of Directors to fill the five vacancies in the
following classes: three persons nominated by Eclipsys, one of whom shall be
Harvey J. Wilson, who shall be appointed to Class III, one of whom shall be
affiliated with General Atlantic Partners, LLC, who shall be appointed to Class
I, and the other of whom shall be appointed to Class II, one person shall be
appointed by Healthvision to Class I, and one person shall be appointed by VHA
to Class I, and (ii) Harvey J. Wilson shall be elected Chairperson of the Board
of Directors of Parent, and Robert Zollars shall be elected Chief Executive
Officer and President of Parent. Under the Parent 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. For so long as VHA beneficially owns 10% or more of the
outstanding Common Stock of Parent, Parent will take all actions reasonably
necessary to have a person appointed by VHA be a member of Parent's Board of
Directors.
6.4 Amendments to Related Transaction Documents. Prior to the Closing,
Parent will not agree to any amendment of the Eclipsys Merger Agreement or the
Healthvision Merger Agreement, without the prior written consent of VHA (which
consent shall not be unreasonably withheld or delayed).
6.5 Reasonable Efforts. 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 parties 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
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<PAGE> 26
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.
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 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
Warrants 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 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
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<PAGE> 27
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, Eclipsys and its subsidiaries and Healthvision 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, Eclipsys and its subsidiaries and Healthvision and its
subsidiaries, taken as a whole.
7.5 Nasdaq Listing. The shares of Shares and the Warrant Stock shall
have been approved for listing on the Nasdaq Stock Market, subject to official
notice of issuance.
7.6 Related Transactions. VHA shall have received certificates executed
by the Chief Executive Officers or Chief Financial Officers of each of Parent,
Healthvision and Eclipsys that each such party is ready, willing and able to
consummate the transactions contemplated by the Eclipsys Merger Agreement and
the Healthvision Merger Agreement, respectively.
7.7 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 Chief Financial
Officer of Parent.
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
Warrants 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 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
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<PAGE> 28
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 Warrants
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, Eclipsys and its subsidiaries and
Healthvision 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, Eclipsys and its subsidiaries and Healthvision 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 Warrants 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 Warrants 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; or
(e) by either Parent or VHA, if any of the Outsourcing Agreement, the
Eclipsys Merger Agreement or the Healthvision Merger Agreement is validly
terminated according to its terms by a party thereto;
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provided, however, that no party can terminate under clause (b) or (d) above
while either or both of the merger agreements with Eclipsys and Healthvision
remain in effect.
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
parties 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 and Article 10, each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability for any willful breach of this Agreement.
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 Headings. The headings and captions used in this Agreement are
used only for convenience and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
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 numbers for a party as shall be specified by like notice):
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<PAGE> 30
IF TO VHA:
VHA Inc.
220 East Las Colinas Boulevard
Irving, Texas 75039-5500
Facsimile: 972-830-0391
Attn: Chief Financial Officer
WITH A COPY TO:
Skadden, Arps, Slate, Meagher & Flom, LLP
Four Times Square
New York, New York 10036
Facsimile: 212-735-2000
Attn: Nancy A. Lieberman
IF TO PARENT:
Neoforma.com, Inc.
3255-7 Scott Boulevard
Santa Clara, California 95054
Facsimile: 408-549-6211
Attn: Chief Financial Officer
WITH A COPY TO:
Fenwick & West LLP
Two Palo Alto Square, Palo Alto, California 94306
Facsimile: 650-494-1417
Attn: Gordon K. Davidson
Douglas N. Cogen
In the event that Parent shall give or receive a notice relating to a
Material Adverse Effect on any of Parent, Eclipsys or Healthvision pursuant to
the Eclipsys Merger Agreement or the Healthvision Merger Agreement, Parent shall
deliver a copy of such notice to VHA.
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 finders' 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 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 and disclosure letters delineated pursuant 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
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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. 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 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.
NEOFORMA.COM, INC.
By:
Name:
Title:
VHA INC.
By:
Name:
Title:
[SIGNATURE PAGE TO COMMON STOCK AND WARRANT AGREEMENT]
<PAGE> 33
SCHEDULE OF EXHIBITS
Exhibit A: Form of Warrant for 6,333,650 shares
Exhibit B: Form of Warrant for 7,858,127 shares
2
<PAGE> 34
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 SECURITIES AND
THE ISSUER, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER.
WARRANT TO PURCHASE COMMON STOCK
OF
NEOFORMA.COM, INC.
No. V-1 Void after __________, 2010
THIS CERTIFIES THAT VHA Inc, a Delaware corporation (the "HOLDER"), or
its permitted assigns is entitled to purchase under this Warrant up to 6,333,650
shares (the "SHARES") of common stock, par value $0.001 per share ("COMMON
STOCK"), of Neoforma.com, Inc., a Delaware corporation (the "COMPANY") at a per
share price of $30.375 (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 Common Stock and Warrant Agreement dated as of
March 30, 2000 (the "STOCK AND WARRANT AGREEMENT"), by and between the Company
and the Holder.
1. Vesting and Term.
1.1 Vesting. Upon issuance, this Warrant shall not be vested or
exercisable with respect to any Shares. This Warrant shall become exercisable as
to 20% of aggregate number of Shares (Shares for which this Warrant may be
exercised, "VESTED SHARES") on January 1 of each of 2001, 2002, 2003, 2004 and
2005 if, on each such respective date, the Outsourcing
<PAGE> 35
and Operating Agreement, dated as of March 30, 2000 (the "OPERATING AGREEMENT"),
among the Company, the Holder, University HealthSystems Consortium, an Illinois
corporation, Novation, LLC, a Delaware limited liability company, and Healthcare
Purchasing Partners International, LLC, remains in full force and effect in
accordance with its terms (unless terminated or suspended by the Company in
breach of the provisions thereof); provided, however, that Warrant Shares shall
nevertheless continue to vest as contemplated herein if the Holder shall be a
party to an agreement with the Company which provides Company with substantially
the same benefits as the Operating Agreement which, if and as permitted by the
Operating Agreement, has been entered into upon a change in the Holder's
ownership of Novation, LLC and/or Healthcare Purchasing Partners International,
LLC, the Holder is not in material breach or material default under such
agreement, and such agreement is and shall have been since its inception in full
force and effect in accordance with its terms.
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.
2
<PAGE> 36
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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<PAGE> 37
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 Hart-Scott-Rodino
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 subparagraphs 4.1 and 4.2), then the
Exercise Price shall be adjusted, from and after the date of
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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 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
5
<PAGE> 39
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.
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.
6
<PAGE> 40
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.
220 East Las Colinas Boulevard
Irving, Texas 75030-5500
Facsimile: 972-830-0391
Attention: Chief Financial Officer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Facsimile: 212-735-2000
Attention: Nancy A. Lieberman
7
<PAGE> 41
If to the Company:
Neoforma.com, Inc.
3255-7 Scott Boulevard
Santa Clara, California 95054
Facsimile: 408-549-6211
Attention: Chief Financial Officer
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
Facsimile No.: 650-494-1417
Attention: Gordon K. Davidson
Douglas N. Cogen
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]
8
<PAGE> 42
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.
NEOFORMA.COM, INC.
By:
Name:
Title:
9
<PAGE> 43
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 Neoforma.com, 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.
<PAGE> 44
EXHIBIT B
INVESTMENT REPRESENTATION CERTIFICATE
Holder: VHA Inc.
Company: Neoforma.com, 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
<PAGE> 45
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 Common Stock and Warrant
Agreement, dated as of March 30, 2000 by and between the Company and Holder, and
acknowledges that Holder is bound by such restrictions.
Date: ______________________
Holder:
VHA Inc.
By: _____________________
Name:
Title:
<PAGE> 46
EXHIBIT B
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
NEOFORMA.COM, INC.
No. V-2 Void after ________ __, 2010
THIS CERTIFIES THAT VHA Inc, a Delaware corporation (the "HOLDER"), or its
permitted assigns is entitled to purchase under this Warrant up to 7,858,127
shares (the "SHARES") of common stock, par value $0.001 per share ("COMMON
STOCK"), of Neoforma.com, Inc., a Delaware corporation (the "COMPANY") at a per
share price of $30.375 (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 Common Stock and Warrant Agreement dated as of March
30, 2000 (the "STOCK AND WARRANT AGREEMENT"), by and between the Company and the
Holder.
1. Vesting and Term.
1.1 Vesting Date. Upon issuance, this Warrant shall not be vested or
exercisable with respect to any Shares. This Warrant shall become exercisable as
to 20% of aggregate number of Shares (Shares for which this Warrant may be
exercised, "VESTED SHARES") on January 1 of each of 2001, 2002, 2003, 2004 and
2005 if at any time during the one year
<PAGE> 47
period preceding each such respective date, the Holder shall have (a) provided
sales and marketing support for the Company's Internet products and solutions,
(b) set annual performance targets for its member strategy/sales team members
that included goals and annual performance objectives for Internet based
solutions, and (c) allotted exhibit/booth space as it reasonably deemed
appropriate to the Company at the Holder's annual Leadership Conference or other
national meeting at the then best available rates therefore.
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.
2
<PAGE> 48
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.
3
<PAGE> 49
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 Hart-Scott-Rodino
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 subparagraphs 4.1 and
4.2), then the Exercise Price shall be adjusted, from and after the date of
4
<PAGE> 50
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 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
5
<PAGE> 51
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 or any portion thereof so transferred.
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.
6
<PAGE> 52
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.
220 East Las Colinas Boulevard
Irving, Texas 75030-5500
Facsimile: 972-830-0391
Attention: Chief Financial Officer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Facsimile: 212-735-2000
Attention: Nancy A. Lieberman
If to the Company:
Neoforma.com, Inc.
3255-7 Scott Boulevard
Santa Clara, California 95054
Facsimile: 408-549-6211
Attention: Chief Financial Officer
with a copy to:
Fenwick & West LLP Two Palo Alto Square Palo Alto, California 94306
Facsimile No.: 650-494-1417
Attention: Gordon K. Davidson
Douglas N. Cogen
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.
NEOFORMA.COM, INC.
By:
----------------------------------
Name:
Title:
9
<PAGE> 54
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 Neoforma.com, 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.
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<PAGE> 55
EXHIBIT B
INVESTMENT REPRESENTATION CERTIFICATE
Holder: VHA Inc.
Company: Neoforma.com, 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
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<PAGE> 56
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 Common Stock and Warrant
Agreement, dated as of March 30, 2000 by and between the Company and Holder, and
acknowledges that Holder is bound by such restrictions.
Date: ______________________
Holder:
VHA Inc.
By:
-----------------------------------
Name:
Title:
12
<PAGE> 1
EXHIBIT 99.2
COMMON STOCK AND WARRANT AGREEMENT
This COMMON STOCK AND WARRANT AGREEMENT (this "AGREEMENT") is made and
entered into as of March 30, 2000, by and between Neoforma.com, Inc., a Delaware
corporation ("PARENT"), and University HealthSystem Consortium, an Illinois
corporation ("UHC").
RECITALS
A. Parent, UHC, Novation, LLC, a Delaware limited liability company
("NOVATION"), VHA Inc., a Delaware corporation ("VHA"), and Healthcare
Purchasing Partners International, LLC, a Delaware limited liability company
("HPPI") have entered into that certain Outsourcing and Operating Agreement,
dated as of the date 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 Agreement and Plan of
Merger dated as of the date of this Agreement (the "ECLIPSYS MERGER AGREEMENT")
among Parent, a wholly-owned merger subsidiary of Parent and Eclipsys
Corporation ("ECLIPSYS"), or, if not defined herein, in the Outsourcing
Agreement.
B. Pursuant to Section 8 of the Outsourcing Agreement and in partial
consideration for UHC's agreements thereunder, the parties agreed to enter into
this Agreement to provide for the issuance to UHC of 9,222,488 shares of
Parent's common stock, par value $0.001 per share ("COMMON STOCK"), and a
warrant to acquire 1,524,477 shares of Common Stock, exercisable subject to the
continued performance of UHC of the Outsourcing Agreement, and on the terms and
conditions set forth in this Agreement.
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 9,222,488 shares of Common Stock and of a Common Stock
Warrant in the form attached hereto as Exhibit A (the "WARRANT") to acquire up
to 1,524,477 additional shares of Common Stock (the "WARRANT STOCK") subject to
the conditions set forth in this Agreement and the Warrant.
1.2 Agreement to Issue the Shares. Parent agrees to issue to UHC at the
Closing, subject to approval of Parent's stockholders, 9,222,488 shares of
Common Stock (the "SHARES"), in exchange for UHC's execution and delivery of the
Outsourcing Agreement and the performance on and prior to the Closing of UHC's
obligations therein. No cash or other additional consideration is being paid for
the Shares.
1.3 Agreement to Issue the Warrant. Parent agrees to issue to UHC at
the Closing, subject to approval of Parent's stockholders, the Warrant to
acquire up to 1,524,477 shares (subject to adjustment as provided in the
Warrant) of Warrant Stock at an exercise price
<PAGE> 2
per share of $30.375 (subject to adjustment as provided in the Warrant), subject
to vesting as set forth therein, in exchange for UHC's execution and delivery of
the Outsourcing Agreement and undertaking to perform its obligations therein. No
cash or other additional consideration is being paid for the Warrant.
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. The number of shares of Warrant Stock issuable pursuant to
the Warrant shall be subject to adjustment following the issuance of the Warrant
as set forth in the Warrant.
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 UHC mutually agree upon (which time and place
are referred to in this Agreement as the "CLOSING"). At the Closing, Parent will
deliver to UHC a certificate representing the Shares and the Warrant.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to UHC, 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 UHC 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
2
<PAGE> 3
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 UHC 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 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 64,773,413 shares issued
and outstanding as of the close of business on March 28, 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 March 28, 2000, (i) 7,242,904 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 $45,865,480, (ii) 142,551 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 $512,704, and (iii) 750,000
shares of Common Stock are reserved for future issuance under Parent's 1998
Equity Employee Stock Purchase Plan ("PARENT ESPP"). Parent has made available
to UHC 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, the Eclipsys
Merger Agreement or the Healthvision Merger Agreement.
(c) All outstanding shares of 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,
3
<PAGE> 4
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.
(e) Based in part on the representations made by UHC in Section 4
hereof, the offer and sale of the Shares and the Warrant solely to UHC 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 U.S.
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")
is sufficient for Parent's stockholders to approve
4
<PAGE> 5
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 by Novation, HPPI, UHC and VHA, as
applicable, constitute the valid and binding obligations of Parent, enforceable
against Parent in accordance with their terms, except as enforceability may be
limited by bankruptcy and other similar laws affecting the rights of creditors
generally and general principles of equity.
(b) The execution and delivery of this 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 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
5
<PAGE> 6
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
Securities Act or the Exchange 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 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 10-Q, 8-K or any successor form under the Exchange Act) 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 September 30, 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
6
<PAGE> 7
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 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
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 FICA, Taxes
pursuant to 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
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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 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
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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:
"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.
(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).
(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.
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(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.
(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 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
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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
(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 UHC: (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
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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) 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.
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(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 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.
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(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 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.
3.14 Certain Agreements. Other than (i) the Eclipsys Merger Agreement,
(ii) the Agreement and Plan of Merger dated as of the date of this Agreement
(the "HEALTHVISION MERGER AGREEMENT") between Parent and HEALTHvision, Inc.
("HEALTHVISION"), (iii) the Outsourcing Agreement, and other related agreements,
except as otherwise set forth in Part 3.14
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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;
(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 Merrill
Lynch & 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
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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 supplied by Parent for inclusion in
the Registration Statement shall not at the time the Registration Statement is
filed with the SEC and at the time it becomes effective under the Securities Act
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
misleading. The information supplied by Parent for inclusion or incorporation by
reference in the Proxy Statement/Prospectus shall not, on the date the Proxy
Statement/Prospectus 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 Registration
Statement and Proxy Statement/Prospectus will comply as to form in all material
respects with the provisions of the Securities 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 an amendment to the Registration Statement
or a supplement to the Proxy Statement/Prospectus, Parent shall promptly inform
Novation. Notwithstanding the foregoing, Parent makes no representation or
warranty with respect to any information supplied by Novation which is contained
in any of the foregoing documents.
ARTICLE IV
REPRESENTATIONS, WARRANTIES
AND CERTAIN AGREEMENTS OF UHC
UHC hereby represents and warrants to Parent, subject to the exceptions
specifically disclosed in writing in the disclosure letter delivered by UHC
dated as of the date hereof and certified by a duly authorized officer of UHC
(the "UHC DISCLOSURE LETTER") (which UHC Disclosure Letter shall be deemed to be
representations and warranties to Parent by UHC under this Section 4), as
follows:
4.1 Organization, Good Standing and Qualification. UHC 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 UHC.
4.2 Authorization.
(a) UHC has all requisite power and authority to enter into this
Agreement and the Outsourcing Agreement and to consummate the transactions
contemplated hereby and
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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 UHC.
This Agreement and the Outsourcing Agreement have each been duly executed and
delivered by UHC and constitute the valid and binding obligations of UHC,
enforceable against UHC in accordance with their terms, except as enforceability
may be limited by bankruptcy and other similar laws affecting the rights of
creditors generally and general principles of equity.
(b) The execution and delivery of this Agreement and the Outsourcing
Agreement by UHC does not, and the performance of this Agreement and the
Outsourcing Agreement by UHC will not, (i) conflict with or violate the
certificate of incorporation, bylaws, operating agreement or other
organizational documents of UHC, (ii) subject to compliance with the
requirements set forth in Section 4.2(c) with regard to UHC, conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to UHC
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 UHC'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 UHC pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which UHC is a party or
by which UHC 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 UHC. Except as set forth in a letter delivered by UHC
to Parent concurrently with the execution of this Agreement, no consents,
waivers and approvals under any of UHC'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 UHC.
(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 UHC 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 UHC 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 UHC hereunder will be acquired for investment for UHC'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 UHC 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 UHC hereunder in any public resale or distribution within the meaning of the
1933 Act. UHC also represents that it has not been formed for the specific
purpose of acquiring the Shares, Warrant or Warrant Stock under this Agreement.
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4.4 Disclosure of Information. UHC believes it 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, Warrant and Warrant
Stock to be issued to UHC under this Agreement. UHC 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 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 UHC or to which UHC 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 Investment Experience. UHC understands that an investment in the
Shares, Warrant and Warrant Stock involves substantial risk. UHC: (i) has
experience as an investor in securities of companies in the development stage
and acknowledges that UHC is able to fend for itself, can bear the economic risk
of UHC's investment in the Shares, Warrant and Warrant Stock and has such
knowledge and experience in financial or business matters that UHC is capable of
evaluating the merits and risks of this investment in the Shares, Warrant and
Warrant Stock and protecting its own interests in connection with this
investment 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 UHC to be aware of the character, business acumen and
financial circumstances of such persons.
4.6 Accredited Investor Status. UHC is an "accredited investor" within
the meaning of Regulation D promulgated under the 1933 Act.
4.7 Restricted Securities. UHC 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, UHC represents that UHC 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 UHC 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, UHC 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) UHC 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 UHC or its transferee, with
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an opinion of counsel, reasonably satisfactory to Parent, that such
disposition will not require registration of such securities under the 1933
Act.
UHC acknowledges that the Warrant is non-transferable to the extent it has not
vested.
4.10 Legends. UHC 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 UHC:
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.
The legend set forth 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 UHC for inclusion in the
Registration Statement shall not at the time the Registration Statement is filed
with the SEC and at the time it becomes effective under the Securities Act
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
misleading. The information supplied by UHC for inclusion or incorporation by
reference in the Proxy Statement/Prospectus shall not (i) on the date the Proxy
Statement/Prospectus is mailed to Parent's stockholders, and (ii) at the time of
the Parent Stockholders' Meeting to consider the Parent Stockholder Approval 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 Effective Time any event
relating to UHC or any of its affiliates, officers or directors should be
discovered by UHC which is required to be set forth in an amendment to the
Registration Statement or a supplement to the
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Proxy Statement/Prospectus, UHC shall promptly inform Parent. Notwithstanding
the foregoing, UHC makes no representation or warranty with respect to any
information supplied by Parent which is contained in any of the foregoing
documents.
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 UHC shall otherwise consent in
writing, carry on its business in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted and 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 UHC 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 UHC, 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 UHC, 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 Intellectual Property that
is owned by, or exclusively licensed to, Parent or one of its subsidiaries,
other than non-exclusive licenses in the ordinary course of business and
consistent with past practice. "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 mark
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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;
(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;
(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 newly-hired employees in the ordinary course of
business in amounts comparable to similarly situated Parent employees, and in an
aggregate amount not to exceed 550,000, 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 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
Company) or (y) making or agreeing to make acquisitions, 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 825,000 shares of Common Stock in the aggregate, and none of which
acquisitions, agreements or commercial transactions could reasonably be expected
to materially delay the other transactions contemplated
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by this Agreement; provided, further, that Parent shall provide written notice
to UHC prior to signing any agreement regarding any such acquisition or
transaction;
(i) Sell, lease, license, encumber 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;
(1) 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) Enter into any licensing or other agreement with regard to the
acquisition, distribution or licensing of any material Intellectual Property
owned by, or exclusively licensed to, Parent other than licenses, distribution
agreements, advertising agreements, or other similar agreements entered into in
the ordinary course of business consistent with past practice;
(o) Materially revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(p) Initiate or settle any material litigation, arbitration, mediation
or other legal proceeding;
(q) Take or permit any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement; or
(r) Agree in writing or otherwise to take any of the actions described
in Section 5.1 (a) through (q) above.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Reasonable Efforts. 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.
6.2 Amendments to Related Transaction Documents Prior to Closing.
Parent will not agree to any material amendment of the Earth Merger Agreement or
the Heaven Merger Agreement, without the prior written consent of UHC (which
consent shall not be unreasonably withheld or delayed).
ARTICLE VII
CONDITIONS TO UHC'S OBLIGATIONS AT CLOSING
The obligations of UHC 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
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to have been made after the execution of this Agreement shall be disregarded.
UHC shall have received a certificate with respect to the foregoing signed on
behalf of Parent by the Chief Executive Officer or 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 UHC 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 amended ("CALIFORNIA LAW") and the
securities laws of Illinois ("ILLINOIS 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, Eclipsys and its subsidiaries and
Healthvision 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, Eclipsys and its subsidiaries and Healthvision 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 Related Transactions. UHC shall have received certificates executed
by the Chief Executive Officers or Chief Financial Officers of each of Parent,
Healthvision and Eclipsys that each such party is ready, willing and able to
consummate the transactions contemplated by the Eclipsys Merger Agreement and
the Healthvision Merger Agreement, respectively.
7.7 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 UHC
shall have received a certificate with respect to the foregoing clauses (i),
(ii) and (iii) executed by the Chief Executive Officer or Chief Financial
Officer of Parent.
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 UHC contained in Section 4 shall be true and correct in all material respects
on the date
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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. UHC 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 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 UHC pursuant to this Agreement shall be exempt from the registration
requirements of the 1933 Act, the qualifications requirements of California Law
and Illinois 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, Eclipsys and its subsidiaries and
Healthvision 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, Eclipsys and its subsidiaries and Healthvision 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 UHC;
(b) by either Parent or UHC 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
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and such action or failure to act constitutes a breach of this Agreement or the
Outsourcing Agreement;
(c) by either Parent or UHC 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 UHC, 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; or
(e) by either Parent or UHC, if any of the Outsourcing Agreement, the
Eclipsys Merger Agreement or the Healthvision Merger Agreement is validly
terminated according to its terms by a party thereto.
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 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.
ARTICLE X
GENERAL PROVISIONS
10.1 Survival of Warranties. The representations, warranties and
covenants of UHC (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.
26
<PAGE> 27
10.5 Headings. The headings and captions used in this Agreement are
used only for convenience and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
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 UHC:
UHC
2001 Spring Road, Suite 700
Oak Brook, Illinois 60523
Facsimile: 630-954-4730
Attn: Executive Vice President
WITH A COPY TO:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
Facsimile: 312-984-7700
Attn: Virginia H. Holden
IF TO PARENT:
Neoforma.com, Inc.
3255-7 Scott Boulevard
Santa Clara, California 95054
Facsimile: 408-549-6211
Attn: Chief Financial Officer
WITH A COPY TO:
Fenwick & West LLP
Two Palo Alto Square, Palo Alto, California 94306
Facsimile: 650-494-1417
Attn: Gordon K. Davidson
Douglas N. Cogen
In the event that Parent shall give or receive a notice relating to a
Material Adverse Effect on any of Parent, Eclipsys or Healthvision pursuant to
the Eclipsys Merger Agreement or the Healthvision Merger Agreement, Parent shall
deliver a copy of such notice to UHC.
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. UHC
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 UHC or any of its officers, partners, members,
employees, or representatives is responsible. Parent agrees to indemnify and
hold harmless UHC 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 and any disclosure letters delineated pursuant 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.
27
<PAGE> 28
10.10 Further Assurances. From and after the date of this Agreement,
upon the request of UHC or Parent, Parent and UHC 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 UHC. 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. 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 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 UHC 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 UHC IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT HEREOF.
* * * * *
28
<PAGE> 29
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.
NEOFORMA.COM, INC.
By:
Name:
Title:
UNIVERSITY HEALTHSYSTEM CONSORTIUM
By:
Name:
Title:
[SIGNATURE PAGE TO COMMON STOCK AND WARRANT AGREEMENT]
<PAGE> 30
SCHEDULE OF EXHIBITS
Exhibit A: Form of Warrant
2
<PAGE> 31
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 SECURITIES AND
THE ISSUER, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER.
WARRANT TO PURCHASE COMMON STOCK
OF
NEOFORMA.COM, INC.
No. U-1 Void after __________, 2010
THIS CERTIFIES THAT University Healthsystem Consortium, an Illinois
corporation (the "Holder"), or its permitted assigns is entitled to purchase
under this Warrant up to 1,524,477 shares (the "SHARES") of common stock, par
value $0.001 per share ("COMMON STOCK"), of Neoforma.com, Inc., a Delaware
corporation (the "COMPANY") at a per share price of $30.375 (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 Common Stock and Warrant Agreement dated as of
March 30, 2000 (the "STOCK AND WARRANT AGREEMENT"), by and between the Company
and the Holder.
1. Vesting and Term.
1.1 Vesting. Upon issuance, this Warrant shall not be vested or
exercisable with respect to any Shares. This Warrant shall become exercisable as
to 20% of the aggregate number of Shares (Shares for which this Warrant may be
exercised, "VESTED SHARES") on January
<PAGE> 32
1 of each of 2001, 2002, 2003, 2004 and 2005 if on each such respective date,
the Outsourcing and Operating Agreement, dated as of March 30, 2000 (the
"OPERATING AGREEMENT"), among the Company, the Holder, VHA Inc., a Delaware
corporation, Novation, LLC, a Delaware limited liability company, and Healthcare
Purchasing Partners International, LLC, remains in full force and effect in
accordance with its terms (unless terminated or suspended by the Company in
breach of the provisions thereof); provided, however, that Warrant Shares shall
nevertheless continue to vest as contemplated herein if the Holder shall be a
party to an agreement with the Company which provides the Company with
substantially the same benefits as the Operating Agreement which, if and as
permitted by the Operating Agreement, has been entered into upon a change in the
Holder's ownership of Novation, LLC and/or Healthcare Purchasing Partners
International, LLC, the Holder is not in material breach or material default
under such agreement, and such agreement is and shall have been since its
inception in full force and effect in accordance with its terms.
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. 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.
2
<PAGE> 33
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.
3
<PAGE> 34
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 Hart-Scott-Rodino
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 subparagraphs 4.1 and 4.2), then the
Exercise Price shall be adjusted, from and after the date of
4
<PAGE> 35
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 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
5
<PAGE> 36
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.
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.
6
<PAGE> 37
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:
UHC
2001 Spring Road, Suite 700
Oak Brook, Illinois 60523
Facsimile: 630-954-4730
Attention: Executive Vice President
with a copy to:
McDermott, Will & Emery
227 W. Monroe Avenue
Chicago, Illinois 60606
Facsimile: 312-984-7700
Attn: Virginia H. Holden
7
<PAGE> 38
If to the Company:
Neoforma.com, Inc.
3255-7 Scott Boulevard
Santa Clara, California 95054
Facsimile: 408-549-6211
Attention: Chief Financial Officer
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
Facsimile No.: 650-494-1417
Attn: Gordon K. Davidson
Douglas N. Cogen
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]
8
<PAGE> 39
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.
NEOFORMA.COM, INC.
By:
Name:
Title:
9
<PAGE> 40
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 Neoforma.com, 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:
UNIVERSITY HEALTHSYSTEM
CONSORTIUM
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.
<PAGE> 41
EXHIBIT B
INVESTMENT REPRESENTATION CERTIFICATE
Holder: UHC
Company: Neoforma.com, 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
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<PAGE> 42
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 Common Stock and Warrant
Agreement, dated as of March 30, 2000 by and between the Company and Holder, and
acknowledges that Holder is bound by such restrictions.
Date: ______________________
Holder:
UNIVERSITY HEALTHSYSTEM
CONSORTIUM
By:______________________
Name:
Title:
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<PAGE> 1
EXHIBIT 99.3
NEOFORMA.COM, ECLIPSYS AND HEALTHVISION TO MERGE; SIGN EXCLUSIVE
E-COMMERCE AGREEMENT WITH NOVATION FOR 6,500 HEALTHCARE ORGANIZATIONS
SANTA CLARA, CA, DELRAY BEACH, FL AND IRVING, TX -- MARCH 30, 2000 --
Neoforma.com, Inc. (NASDAQ: NEOF), Eclipsys Corporation (NASDAQ: ECLP) and
HEALTHvision, Inc., today announced the signing of definitive agreements to
merge and create a new company serving the e-healthcare business-to-business
(B2B) marketplace. In conjunction with the agreements, Neoforma.com announced
that it has signed an exclusive 10-year strategic agreement to provide
e-commerce services for the 6,500 healthcare organizations participating in the
purchasing programs of Novation, LLC, the world's largest buyer of medical
supplies and the supply company of national healthcare alliances VHA Inc. and
University HealthSystems Consortium (UHC).
Neoforma.com is a leading provider of B2B e-commerce services in the healthcare
industry. Eclipsys is a leading provider of end-to-end healthcare information
solutions that enable balanced and improved clinical, financial and
patient-satisfaction outcomes. HEALTHvision is a privately held Internet
healthcare company affiliated with Eclipsys and VHA that provides Web-based
solutions exclusively to local healthcare organizations to connect them with
their key constituents.
Under the terms of the agreements, Eclipsys shareholders will receive 1.344
shares of Neoforma.com common stock for each share of Eclipsys, and HEALTHvision
shareholders will receive 0.444 shares of Neoforma.com common stock for each
share of HEALTHvision not owned by Eclipsys or VHA. Including warrants, VHA and
UHC will receive 58.6 million and 10.7 million shares, respectively, of
Neoforma.com common stock. Completion of the transactions, which will be
accounted for as purchase transactions, is expected mid-year, subject to
regulatory and shareholder approvals. On a pro forma basis, including shares
issuable upon exercise of options and warrants, the new company will have
approximately 210.0 million fully converted shares outstanding. The new company
will be referred to as "Neoforma.com" until a new name is selected.
"The challenge facing the healthcare industry is improving the quality of care
while reducing the cost of its delivery," said Harvey J. Wilson, Eclipsys
chairman and chief executive officer, who will become chairman of the new
company. "Separately, the three organizations are effectively addressing this
issue with complementary expertise. The most effective solution requires an
integrated approach, featuring aggressive use of the Internet to combine B2B
Internet connectivity and end-to-end information flow. By merging the
organizations, the new company catapults to a leadership position in the
e-health marketplace, enabling us to drive the healthcare revolution with local
focus and an established global presence."
According to Bob Zollars, chairman, president and chief executive officer of
Neoforma.com who will become CEO and president of the new company, "We are
extremely excited to offer an unparalleled array of new e-commerce services to
UHC, VHA and other healthcare customers around the world. From Web-based
clinical solutions to innovative supply-chain initiatives, this new company's
breadth of offering will
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be unsurpassed. In addition, we will combine an ASP model, with net transaction
fee revenues, across a highly recurring revenue base."
NOVATION AGREEMENT
The agreement with Novation creates immediate scale for Neoforma.com's
e-commerce platform, as Novation represents more than 30% of U.S. procurement in
healthcare with a membership that includes many of the nation's largest and most
respected healthcare organizations and physicians. Novation also brings an
existing base of relationships with a wide range of healthcare suppliers,
essential to the success of an e-commerce offering and will be active in
recruiting other suppliers to the Neoforma.com marketplace.
Novation already provides the alliance members with highly regarded and utilized
Web-enabled tools, including an online catalog, Web-based cross referencing and
Web tools for standardization. According to Mark McKenna, Novation president,
"We are already an intermediary in this market, and e-commerce is a logical
extension of Novation's core competency of aggregating purchases to reduce
supply costs. The Neoforma.com agreement makes it possible to streamline this
process and create new value for our stakeholders."
In describing the agreement with Neoforma.com, McKenna indicated, "Outsourcing
e-commerce services with an established e-commerce platform enables us to gain
immediate access to the technology and infrastructure required. This will allow
the alliance members to immediately benefit from the reduced procurement costs
and timely access to aggregated purchasing information made possible by the
Internet."
VHA executive vice president Curt Nonomaque noted, "This agreement also builds
on our existing relationships with Eclipsys and HEALTHvision, which provide our
members with care and revenue-workflow solutions that enable them to connect
with their physicians, patients and communities. The combination of these three
companies will enable connectivity among our members' procurement, workflow and
outreach processes."
OVERVIEW OF NEW VENTURE
As a result of the agreement, the new company will represent:
o An unprecedented alliance that will enable companies to rapidly build and
launch B2B marketplaces. By adding the complementary solutions offered by
Eclipsys and HEALTHvision to that of Neoforma.com, customers can be fully
resourced to dramatically cut costs while improving the quality of and
satisfaction with care.
o An integrated set of information solutions that provide a comprehensive
open marketplace Internet-enabled platform, through which Neoforma.com's
existing base of suppliers can interface with the extensive Novation
procurement system of supply partners and buyers.
o A network of over 40,000 physicians consisting of physician practices
served by VHA, and EquipMD, a physician procurement e-commerce company that
Neoforma.com has agreed to acquire.
o A skilled workforce of over 2,000 employees, including clinicians and other
healthcare professionals worldwide who provide technology development,
systems integration, hosting, marketing, operations and support services.
Wilson said the new company will continue to offer the end-to-end solutions
pioneered by Eclipsys, Neoforma.com and HEALTHvision and will begin
cross-selling the Internet-enabling services of the three companies once the
merger is complete.
In addition to the Neoforma.com platform addressing the healthcare purchasing
lifecycle, the new company will provide Eclipsys' Sunrise line of integrated,
knowledge-based applications; its leading-edge eWebIT systems-integration
capabilities; and its comprehensive information-management services, including
application services provider (ASP), business process reengineering, network
services and full IT
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outsourcing. Also immediately available will be HEALTHvision's fast-growing
range of customized, locally branded Web offerings and other Internet-based
healthcare solutions that connect healthcare organizations with their key
constituents and enable secure, interactive patient care.
Zollars stated that "Because the combined companies bring to the new company a
customer base of thousands of the world's leading healthcare organizations, we
have unparalleled opportunities for growth by providing them a single source for
end-to-end, HCO-centric solutions that will support the care, financial and
supply chains and revolutionize the way they deliver healthcare. Whether
customers choose one or several of our solutions, the ultimate `product' we will
offer is a set of unmatched solutions and resources that will deliver them
greater cost savings, efficiencies and a competitive advantage. This includes
the potential to seamlessly integrate across the B2B value chain."
Braden Kelly, a member of HEALTHvision's Board of Directors and principal at
General Atlantic Partners, a founding investor of Eclipsys and HEALTHvision,
stated that "This transaction creates e-health's equivalent of the `Dream Team.'
The combination of Neoforma, Eclipsys and HEALTHvision -- along with long-term
exclusive partnerships with Novation, VHA, and UHC -- immediately establishes
the company as the preeminent B2B information exchange for the healthcare
market. We are enthusiastic about the company's massive potential and the
management team in place to execute on its unified vision." General Atlantic
Partners is one of the world's largest private equity investment firms focused
exclusively on Internet and information-technology investments on a global
basis.
MANAGEMENT TEAM
In addition to Wilson and Zollars, the senior management team will include Fred
Ruegsegger, Neoforma.com's chief financial officer, who will retain that
responsibility at the new company. Other members of the new entity's
senior-management team will be comprised of executives from the merged
companies, with details to be announced at a later date. "In addition to the
scope of our solutions, what differentiates us is the wealth of healthcare
professionals on our team," Wilson said. "Unlike many other companies trying to
capitalize on the e-health explosion, our team has broad, hands-on experience
providing healthcare-related services. That enables us to better understand and
anticipate the needs of our customers in an ever-changing environment."
ABOUT NEOFORMA.COM, INC.
Neoforma.com is a leading provider of business-to-business e-commerce services
in the large and highly fragmented market for medical equipment and supplies.
Neoforma.com offers three primary services that together address the entire
healthcare purchasing lifecycle, from planning through procurement to
liquidation. Neoforma Shop service provides a unified marketplace where
purchasers can easily locate and buy new medical products, and suppliers can
access new customers and markets. Neoforma Auction service creates an efficient
marketplace for idle assets by enabling users to list, sell and buy used,
refurbished and surplus medical products. Neoforma Plan service provides
interactive content to healthcare facility planners to reduce the complexities
of planning and outfitting facilities. For more information, visit the company's
Web site at www.neoforma.com.
ABOUT ECLIPSYS
Eclipsys Corporation, based in Delray Beach, FL delivers end-to-end information
solutions that enable healthcare enterprises to achieve balanced and improved
clinical, financial and satisfaction outcomes. Solutions include its
comprehensive, knowledge-based Sunrise software line; leading-edge integration
solutions; application services provider (ASP) information-management solutions;
business process reengineering; network design and implementation; and full IT
outsourcing. In conjunction with its HEALTHvision affiliate, Eclipsys provides
customized, branded Web-based solutions to local healthcare delivery systems.
Eclipsys has more than 1,400 customer organizations throughout the U.S. and in
17 other countries. For more information, go to www.eclipsys.com or contact
Investor Relations at [email protected].
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ABOUT HEALTHVISION
HEALTHvision is a leading healthcare Internet company focused exclusively on
providing Web-based solutions that are customized and branded to the local
healthcare organization. With its comprehensive e-healthSOURCE(TM) web
infrastructure, HEALTHvision leverages the Internet to enable the local
healthcare organization to improve relationships with consumers, patients and
physicians. A privately held company based in Irving, TX, HEALTHvision was
formed in July 1999 through the merger of the Internet-based products and
resources of Eclipsys and VHA, resulting in a potential customer base of more
than 2,400 healthcare organizations. HEALTHvision is a member of Health Internet
Ethics (Hi-Ethics), a 22-member coalition of top e-healthcare companies
committed to developing industry standards related to patient privacy. For more
information, visit www.healthvision.com.
ABOUT VHA
VHA is a nationwide network of 1,900 leading community-owned healthcare
organizations and their affiliated physicians. The VHA alliance comprises 27
percent of the nation's community hospitals, including many of the nation's
largest and most respected institutions. VHA offers programs and services to
improve financial and clinical performance, and as a cooperative distributes
income annually to members based on their participation. In December 1999, VHA
was named one of the "100 Best Companies to Work For" by Fortune magazine. For
more information on VHA, go to www.VHA.com.
ABOUT UNIVERSITY HEALTHSYSTEM CONSORTIUM
University HealthSystem Consortium (UHC), based in Oak Brook, IL, is an alliance
of 81 academic medical centers and 73 associate members. UHC represents
approximately 70 percent of the academic medical centers in the United States.
For more information on UHC, go to www.uhc.edu.
ABOUT NOVATION
Novation, the supply company of VHA and UHC, two national healthcare alliances,
is based in Irving, TX. Novation serves the purchasing needs of 6,500 healthcare
organizations nationwide, the members and affiliates of VHA, UHC and HealthCare
Purchasing Partners Intl., LLC (HPPI). The foremost supply cost management
organization in healthcare, Novation manages more than $14 billion in annual
purchases for VHA, UHC and HPPI members. In addition to serving VHA and UHC
members, Novation makes its agreements accessible to 4,500 healthcare
organizations that purchase supplies through HPPI, a company also owned by VHA
and UHC. For more information on HPPI, go to www.hppigpo.com. For more
information on Novation, go to www.novationco.com.
ABOUT GENERAL ATLANTIC PARTNERS
General Atlantic Partners, with more than $5 billion in capital under
management, focuses exclusively on global information-technology and
Internet-enabled businesses. GA Partners has invested in over 80 companies,
including Eclipsys, HEALTHvision, E*Trade Group, Priceline.com, Proxicom,
Tickets.com and Predictive Systems. The firm is unique in its global focus, its
long-term approach to investments, and its commitment to provide sustained
assistance aimed at creating maximum value. GA Partners (www.gapartners.com) has
offices in Greenwich, New York, Reston, London, Singapore, Tokyo and Sao Paulo.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
Such statements are based on the current expectations and beliefs of managements
of Neoforma.com, Inc., Eclipsys Corporation, HEALTHvision, Inc., and Novation,
LLC and are subject to a number of risks and uncertainties that could cause
actual results to differ materially from those described in the forward-looking
statements. In particular, the following risks, among others, could cause actual
results to differ materially from those described in the forward-looking
statements: the risk that the transactions may not be consummated due to the
failure to obtain regulatory or other approvals or the failure of the Neoforma,
Eclipsys, or HEALTHvision, stockholders to approve the
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mergers; the risk that the Neoforma, Eclipsys and HEALTHvision businesses will
not be integrated successfully and that there may be unanticipated costs of such
integration; the ability of the commercial agreement with Novation to generate
substantial revenues for the combined company; the ability of the combined
company to compete effectively with larger competitors or consortiums of
healthcare suppliers that have greater resources; the ability of the combined
company to retain and hire key executives, technical personnel and other
employees; the ability of the combined company to manage its growth and the
difficulty of successfully managing a larger, more geographically dispersed
organization; the ability of the combined company to successfully manage its
changing relationships with customers, suppliers and strategic customers; the
willingness of the combined company's customers to accept the new service
offerings and, in particular, the risk that healthcare providers may not adopt
the Internet for electronic commerce as rapidly as anticipated; the risk that
security breakdowns on the Internet might adversely affect the growth of
electronic commerce; and increasing competition in the various markets serviced
by the combined company.
For a detailed discussion of these and other cautionary statements, please
refer to the joint proxy statement/prospectus to be filed regarding the
business combination transaction as described below, as well as the companies'
filings with the Securities and Exchange Commission, especially in the "Factors
That May Affect Operating Results" section of the Management's Discussion and
Analysis of Financial Condition and Results of Operations section of
Neoforma.com's Form 10-K for 1999 that was filed with the Securities and
Exchange Commission on March 30, 2000, the "Risk Factors" section of
Neoforma.com's S-1 Registration Statement as filed with the Securities and
Exchange Commission on January 21, 2000, the "Certain Factors That May Affect
Future Operating Results/ Risk Factors" section of Eclipsys' Form 10-K for 1999
that was filed with the Securities and Exchange Commission on March 29, 2000
and the "Risk Factors" section of Eclipsys' S-3 Registration Statement filed
with the Securities and Exchange Commission on December 7, 1999 and
subsequently amended.
WHERE YOU WILL BE ABLE TO FIND ADDITIONAL INFORMATION
INVESTORS AND SECURITY HOLDERS OF ALL COMPANIES ARE ADVISED TO READ THE JOINT
PROXY STATEMENT/PROSPECTUS REGARDING THE BUSINESS COMBINATION TRANSACTION
REFERENCED IN THE FOREGOING INFORMATION, WHEN IT BECOMES AVAILABLE, BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION. Neoforma and Eclipsys expect to mail a joint
proxy statement/prospectus describing their merger and the related transactions
to their respective stockholders. Such joint proxy statement/prospectus will be
filed with the Securities and Exchange Commission by both companies. Investors
and security holders may obtain a free copy of the joint proxy
statement/prospectus (when available) and other documents filed by the companies
at the Securities and Exchange Commission's web site at http://www.sec.gov. The
joint proxy statement/prospectus and such other documents may also be obtained
from Neoforma and Eclipsys by directing such requests to the respective contacts
listed above.
Neoforma and its officers and directors may be deemed to be participants in the
solicitation of proxies from Neoforma's stockholders with respect to the
transactions contemplated by the merger agreement. Information regarding such
officers and directors will be included in the joint proxy statement/prospectus
for its 2000 Annual Meeting of Stockholders and in Neoforma's S-4 Registration
Statement to be filed with the Securities and Exchange Commission. This document
will be available free of charge at the Securities and Exchange Commission's Web
site at http://www.sec.gov and from the Neoforma contact listed below.
Eclipsys and its officers and directors may be deemed to be participants in the
solicitation of proxies from stockholders of Eclipsys with respect to the
transactions contemplated by the merger agreement. Information regarding such
officers and directors will be included in the joint proxy statement/prospectus
to be filed with the Securities and Exchange Commission. This document will be
available free of charge at the Securities and Exchange Commission's Web site at
http://www.sec.gov and from the Eclipsys contact listed below.
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Contacts:
Neoforma.com: Shari Annes
(408) 549-1680 o [email protected]
Eclipsys: Kimberly Kriger or Mark Semer
Kekst and Company
(212) 521-4800
Investor Relations (investors)
(561) 266-2324 o [email protected]
HEALTHvision: Stephanie P. Massengill
(561) 243-1457 o [email protected]
