Exhibit 2.1
AMENDED AND RESTATED COMMON STOCK AND WARRANT AGREEMENT
This AMENDED AND RESTATED COMMON STOCK AND WARRANT AGREEMENT (this
"AGREEMENT") made and entered into as of March 30, 2000, and amended and
restated as of May 24, 2000, by and between 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 March 30, 2000,
and amended and restated as of the date of the amendment and restatement of
this Agreement (the "OUTSOURCING AGREEMENT"). Capitalized terms in this
Agreement which are not otherwise defined in this Agreement shall have the
meanings assigned to them in the Outsourcing Agreement.
WHEREAS, the actions to be undertaken by VHA and UHC pursuant to
the Outsourcing Agreement (including, without limitation, the agreement to
promote and market the Exchange among Members, to develop new initiatives
targeted toward increasing Members' participation on the Exchange, to
promote use of the asset management and recovery services and related
activities of Neoforma Auction and Neoforma Plan, and to not directly or
indirectly develop, promote, contract for the development of, assist others
to develop, or enter into any agreement with any other person to provide to
any of them, or promote to their members, any Internet-based exchange
related to Supply Chain Management Services by acute or non-acute
healthcare providers anywhere in the world other than the Exchange) are
important to the success of Parent and the Exchange operated by Parent.
WHEREAS, Parent wishes to compensate VHA for the services it will
render pursuant to the Outsourcing Agreement and thereby better secure
VHA's fulfillment of its duties and obligations thereunder by issuing to
VHA 46,267,530 shares of Parent's common stock, par value $0.001 per share
("COMMON STOCK"), and a warrant to acquire 30,845,020 shares of Common
Stock, exercisable subject to the terms and conditions set forth in this
Agreement and in such warrant.
WHEREAS, the sole consideration being furnished by VHA in exchange
for the Shares (as defined in Section 1.2 hereof) and Warrant (as defined
in Section 1.1 hereof) is the services to be provided by VHA pursuant to
the Outsourcing Agreement.
WHEREAS, VHA and UHC are organizations whose patrons are hospitals
and health care providers, who view e-commerce as an essential part of
their cooperative purchasing programs on behalf of their patrons for the
future, and who desire to more fully develop the services they render to
their patrons through this Agreement and the Outsourcing Agreement (the
term "patron" is defined in the Outsourcing Agreement).
WHEREAS, based on the foregoing recitals, the parties hereto
entered into the Common Stock and Warrant Agreement, dated as of March 30,
2000 (the "PRIOR AGREEMENT"), and desire to amend and restate their
agreement as set forth in this Agreement and to supersede the terms of the
Prior Agreement with the terms of this Agreement in all respects.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth in this
Agreement and the Outsourcing Agreement, the parties agree as follows:
ARTICLE I
AGREEMENT TO ISSUE STOCK
1.1 Authorization. As of the Closing (as defined below),
Parent will have authorized the issuance, pursuant to the terms and
conditions of this Agreement, of a total of 46,267,530 shares of Common
Stock and of a Common Stock warrant in the form attached hereto as Exhibit
A (the "WARRANT") to acquire 30,845,020 shares of Common Stock
(collectively, the "WARRANT STOCK") subject to the conditions set forth in
this Agreement and the Warrant.
1.2 Agreement to Issue the Shares. Parent will issue to
VHA at the Closing, subject to approval of Parent's stockholders,
46,267,530 shares of Common Stock (the "SHARES"). VHA's right to fully
enjoy beneficial ownership of certain of the Shares shall be subject to a
substantial risk of forfeiture to the extent, and in the manner, described
in Section 1.5 of this Agreement.
1.3 Agreement to Issue the Warrant. Parent will issue to
VHA at the Closing, subject to approval of Parent's stockholders, the
Warrant to acquire up to 30,845,020 shares (subject to adjustment as
provided in the Warrant) of Warrant Stock at an exercise price per share of
$0.01 (subject to adjustment as provided in the Warrant), subject to
vesting as set forth therein.
1.4 Anti-Dilution Adjustments. The number of shares of
Common Stock represented by the Shares and the number of shares of Common
Stock issuable upon exercise of the Warrant shall be equitably adjusted to
reflect appropriately the effect of any stock split, reverse stock split,
stock dividend (including any dividend or distribution of securities
convertible into Common Stock), reorganization, spin-off, recapitalization,
reclassification or other like change with respect to Common Stock
occurring on or after the date hereof and prior to the Closing.
1.5 Forfeiture of Shares.
(a)(i) Thirty-three percent of the aggregate
number of Shares issued to VHA pursuant to Section 1.2 shall be fully
vested, and shall not be subject to any risk of forfeiture, upon their
issuance.
(ii) Sixty-seven percent of the aggregate number
of Shares issued to VHA pursuant to Section 1.2 shall be subject to
forfeiture by VHA to Parent pursuant to the terms of this Section
1.5(a)(ii). On each Determination Date (as defined below), VHA shall
forfeit and return to Parent, without the payment of any consideration by
Parent to VHA or the taking of any action by Parent, 16.75% of the
aggregate number of Shares issued to VHA pursuant to Section 1.2 , if both
(i) on the January 31 immediately prior to such Determination Date (a
"MEASURING DATE"), the number of Healthcare Organizations (as defined in
the Warrant) that are members or patrons of VHA ("VHA HCOS"), that
Signed-Up (as defined in the Warrant) with Parent on or prior to such
Measuring Date and did not terminate their Contract (as defined below) on
or prior to such Measuring Date is less than the Target Number (as defined
below) of VHA HCOs for such Measuring Date, and (ii) the Cumulative Signed
Purchasing Volume (as defined below) as of such Determination Date is less
than the Target Purchasing Volume (as defined below) for the one year
period ending on the Measuring Date which is immediately prior to such
Determination Date. A "DETERMINATION DATE" shall be each of April 1, 2001,
April 1, 2002, April 1, 2003 and April 1, 2004. The "TARGET Number" of VHA
HCOs for the Measuring Date January 31, 2001, is 6 VHA HCOs; for the
Measuring Date January 31, 2002, is 31 VHA HCOs; for the Measuring Date
January 31, 2003, is 49 VHA HCOs; and for the Measuring Date January 31,
2004, is 67 VHA HCOs. The "TARGET PURCHASING VOLUME" for the one year
period ending on the Measuring Date January 31, 2001, is $216 million; for
the one year period ending on the Measuring Date January 31, 2002, is $966
million; for the one year period ending on the Measuring Date January 31,
2003, is $1.567 billion; and for the one year period ending on the
Measuring Date January 31, 2004, is $2.21 billion. "CUMULATIVE SIGNED
PURCHASING VOLUME" means, as of any Determination Date, the aggregate
dollar volume of purchases during the one year period ending on the
Measuring Date immediately preceding such Determination Date by VHA HCOs
that Signed-Up with Parent on or prior to such Determination Date
(calculated, for each such VHA HCO, by multiplying (A) the amount of
Novation LLC contract purchases (as reported in the SRIS system maintained
for Novation LLC's benefit) by such VHA HCO during such one year period by
(B) 2.4); provided, that if any VHA HCO terminated its Contract on or prior
to the Determination Date in question, its purchasing volume for the one
year period ending on the Measuring Date in question shall not be included
in the determination of the Cumulative Signed Purchasing Volume being
calculated. "CONTRACT" shall mean a written agreement, arrangement or
understanding between a VHA HCO and Parent providing for Parent to be the
Preferred Provider (as defined in the Warrant) of an Internet-based system
for the acquisition of Novation LLC contracted products by such VHA HCO.
(b) VHA shall require any proposed transferee of
Shares that are subject to forfeiture under Section 1.5 (a)(ii) to agree
that such transferred Shares will remain subject to forfeiture to the
extent provided in such Section.
(c) In the event that a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Parent occurs in which all shares of Common Stock are
converted into cash, or a cash tender offer for any or all shares of Common
Stock is consummated, the provisions of this Section regarding forfeiture
of Shares shall terminate. In the event that a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Parent occurs in which any shares of Common Stock are
reclassified, or converted into securities of a person other than Parent,
or an exchange offer for any or all shares of Common Stock into securities
of a person other than Parent is consummated, the provisions of this
Section regarding forfeiture of Shares shall terminate, unless VHA elects
to waive the provisions of this Section 1.5(c) no later than 30 days before
the consummation of such transaction.
1.6 Tax Reporting. Parent and VHA agree that the Shares
and Warrant to be issued to VHA pursuant to Sections 1.2 and 1.3,
respectively, constitute consideration for the services to be provided by
VHA pursuant to the Outsourcing Agreement. Parent and VHA agree to report
the vesting of the Shares and Warrant as compensation for services rendered
for all income tax purposes and shall not make any inconsistent statement
or adjustment on any tax return or during the course of any tax audit.
ARTICLE II
CLOSING
2.1 Closing. The issuance of the Shares and the Warrant
will take place at the offices of Fenwick & West LLP, Two Palo Alto Square,
Palo Alto, California, at a time and date to be specified by the parties,
which shall be no later than the second business day after the satisfaction
or waiver of the conditions set forth in Article VII and Article VIII, or
at such other date, time and location as Parent and VHA mutually agree upon
(which time and place are referred to in this Agreement as the "CLOSING").
At the Closing, Parent will deliver to VHA certificates representing the
Shares and the Warrant.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to VHA, subject to the
exceptions specifically disclosed in writing in the disclosure letter
delivered by Parent dated as of the date hereof and certified by a duly
authorized officer of Parent (the "PARENT DISCLOSURE LETTER") (which Parent
Disclosure Letter shall be deemed to be representations and warranties to
VHA by Parent under this Section 3), as follows:
3.1 Organization of Parent.
(a) Parent and each of its subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority, and all requisite qualifications to do business as a foreign
corporation, to conduct its business in the manner in which its business is
currently being conducted, except where the failure to be so organized,
existing or in good standing or to have such power, authority or
qualifications would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
(b) Other than the corporations identified in Part 3.1 of
the Parent Disclosure Letter, neither Parent nor any of the other
corporations identified in Part 3.1 of the Parent Disclosure Letter owns
any capital stock of, or any equity interest of any nature in, any
corporation, partnership, joint venture arrangement or other business
entity, other than the entities identified in Part 3.1 of the Parent
Disclosure Letter, except for passive investments in equity interests of
public companies as part of the cash management program of Parent. Neither
Parent nor any of its subsidiaries is obligated to make any material future
investment in or capital contribution to any other entity. Part 3.1 of the
Parent Disclosure Letter indicates the jurisdiction of organization of each
entity listed therein and Parent's direct or indirect equity interest
therein.
(c) Parent has delivered or made available to Novation a
true and correct copy of the Certificate of Incorporation (including any
Certificates of Designation) and Bylaws of Parent and similar governing
instruments of each of its subsidiaries, each as amended to date
(collectively, the "PARENT CHARTER DOCUMENTS"), and each such instrument is
in full force and effect. Neither Parent nor any of its subsidiaries is in
violation of any of the provisions of the Parent Charter Documents.
3.2 Capitalization.
(a) The authorized capital stock of Parent consists
solely of 200,000,000 shares of Common Stock, of which there were
69,092,732 shares issued and outstanding as of the close of business on May
16, 2000, and 5,000,000 shares of Preferred Stock, par value $0.001 per
share, of which no shares are issued or outstanding. All outstanding shares
of Common Stock are duly authorized, validly issued, fully paid and
nonassessable and are not subject to any right of rescission or preemptive
rights created by statute, the Parent Charter Documents or any agreement or
document to which Parent is a party or by which it is bound. As of the date
of this Agreement, there are no shares of Common Stock held in treasury by
Parent.
(b) As of the close of business on May 16, 2000, (i)
7,315,539 shares of Common Stock are subject to issuance pursuant to
outstanding options ("PARENT OPTIONS") to purchase Common Stock under
Parent's 1997 Stock Plan and 1999 Equity Incentive Plan ("PARENT STOCK
OPTION PLANS") for an aggregate exercise price of $45,840,941, (ii) 135,000
shares of Common Stock are subject to issuance pursuant to Parent Options
other than pursuant to the Parent Stock Option Plans for an aggregate
exercise price of $1,345,938, (iii) 1,081,792 shares of Common Stock are
subject to issuance pursuant to Parent Options other than pursuant to the
Parent Stock Option Plans from the Pharos and EquipMD acquisitions for an
aggregate exercise price of $3,384,412, and (iv) 750,000 shares of Parent
Common Stock are reserved for future issuance under Parent's 1998 Equity
Employee Stock Purchase Plan ("PARENT ESPP"). Parent has made available to
VHA an accurate and complete copy of each of Parent Stock Option Plans and
the form of all stock option agreements evidencing Parent Options. All
shares of Common Stock subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instruments pursuant to which
they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. Other than as set forth on Part 3.2(b) of the Parent
Disclosure Letter, there are no commitments or agreements of any character
to which Parent is bound obligating Parent to accelerate the vesting of any
Parent Option as a result of the consummation of the transactions
contemplated by this Agreement.
(c) All outstanding shares of Parent Common Stock, all
outstanding Parent Options, and all outstanding shares of capital stock of
each subsidiary of Parent have been issued and granted in material
compliance with (i) all applicable securities laws and other applicable
material Legal Requirements and (ii) all material requirements set forth in
applicable agreements or instruments. For the purposes of this Agreement,
"LEGAL REQUIREMENTS" means any federal, state, local, municipal, foreign or
other law, statute, constitution, principle of common law, resolution,
ordinance, code, edict, decree, rule, regulation, ruling or requirement
issued, enacted, adopted, promulgated, implemented or otherwise put into
effect by or under the authority of any Governmental Entity (as defined in
Section 3.4).
(d) The Shares and Warrant, when issued and paid for as
provided in this Agreement, will be duly authorized and validly issued,
fully paid and nonassessable. The Warrant Stock, when issued and paid for
as provided in this Agreement and the Warrant, will be duly authorized and
validly issued, fully paid and nonassessable.
(e) Based in part on the representations made by VHA in
Section 4 hereof, the offer and sale of the Shares and the Warrant solely
to VHA in accordance with this Agreement and (assuming no change in
currently applicable law or the Warrant, and no transfer of the Warrant by
the holder thereof and no commission or other remuneration is paid or
given, directly or indirectly, for soliciting the exercise of the Warrant)
the issuance of the Warrant Stock is exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended
(the "1933 ACT").
3.3 Obligations With Respect to Capital Stock. Except as
set forth in Section 3.2 or Part 3.3 of the Parent Disclosure Letter, there
are no equity securities, partnership interests or similar ownership
interests of any class of Parent equity security, or any securities
exchangeable or convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests, issued, reserved for
issuance or outstanding. All stock and rights to purchase stock of any
subsidiary of Parent are owned free and clear of all Encumbrances. Except
as set forth in Section 3.2 or Part 3.2 or Part 3.3 of the Parent
Disclosure Letter, there are no subscriptions, options, warrants, equity
securities, partnership interests or similar ownership interests, calls,
rights (including preemptive rights), commitments or agreements of any
character to which Parent or any of its subsidiaries is a party or by which
it is bound obligating Parent or any of its subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, or repurchase, redeem or
otherwise acquire, or cause the repurchase, redemption or acquisition of,
any shares of capital stock, partnership interests or similar ownership
interests of Parent or any of its subsidiaries or obligating Parent or any
of its subsidiaries to grant, extend, accelerate the vesting of or enter
into any such subscription, option, warrant, equity security, call, right,
commitment or agreement. There are no registration rights, and there is no
shareholder agreement, investor agreement, voting trust, proxy, rights
agreement, "poison pill" anti-takeover plan or other agreement or
understanding to which Parent is a party or by which it is bound with
respect to any equity security of any class of Parent or with respect to
any equity security, partnership interest or similar ownership interest of
any class of any of its subsidiaries.
3.4 Due Authorization.
(a) Parent has all requisite corporate power and
authority to enter into this Agreement and the Outsourcing Agreement, to
issue the Warrant and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the
Outsourcing Agreement, the issuance of the Warrant and the consummation of
the transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of Parent, subject only to
the approval by Parent's stockholders of the issuance of Common Stock
pursuant to this Agreement and the Warrant. The affirmative vote of the
holders of a majority in interest of the stock present or represented by
proxy at the Parent stockholders' meeting (the "PARENT STOCKHOLDERS'
MEETING") called to consider approval of the issuance of the Common Stock
pursuant to this Agreement and the Warrant (the "PARENT STOCKHOLDER
APPROVAL") is sufficient for Parent's stockholders to approve the issuance
of Common Stock pursuant to this Agreement and the Warrant, and no other
approval of any holder of any securities of Parent is required in
connection with the consummation of the transactions contemplated hereby.
This Agreement and the Outsourcing Agreement have each been duly executed
and delivered by Parent and, subject to approval of Parent stockholders in
the case of this Agreement and the issuance of the Warrant and, assuming
the due authorization, execution and delivery thereof by Novation, HPPI,
VHA and UHC, as applicable, constitute the valid and binding obligations of
Parent, enforceable against Parent in accordance with their terms, except
as enforceability may be limited by bankruptcy and other similar laws
affecting the rights of creditors generally and general principles of
equity.
(b) The execution and delivery of this Agreement and the
Outsourcing Agreement by Parent does not, and the performance of this
Agreement and the Outsourcing Agreement by Parent will not, (i) conflict
with or violate the Parent Charter Documents, (ii) subject to obtaining the
Parent Stockholder Approvals and compliance with the requirements set forth
in Section 3.4(c), conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent or by which any of its
properties is bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair Parent's rights or alter the
rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of; or
result in the creation of an Encumbrance on any of the properties or assets
of Parent pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent is a party or by which Parent or any of its
properties are bound or affected, except, in the case of clauses (ii) and
(iii), for such conflicts, violations, breaches, defaults, impairments, or
rights which, individually or in the aggregate, would not have a Material
Adverse Effect on Parent. Part 3.4(b) of the Parent Disclosure Letter lists
all consents, waivers and approvals under any of Parent's or any of its
subsidiaries' agreements, contracts, licenses or leases required to be
obtained in connection with the consummation of the transactions
contemplated hereby, which, if individually or in the aggregate not
obtained, would have a Material Adverse Effect on Parent.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency
or commission or other governmental entity or instrumentality, foreign or
domestic ("GOVERNMENTAL ENTITY") is required to be obtained or made by
Parent in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby,
except for (i) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal, foreign and state securities (or related) laws and the HSR Act and
the securities or antitrust laws of any foreign country, and (ii) such
other consents, authorizations, filings, approvals and registrations which
if not obtained or made would not have a Material Adverse Effect on Parent
or have a material adverse effect on the ability of the parties hereto to
consummate the transactions contemplated hereby.
3.5 SEC Filings; Parent Financial Statements.
(a) Parent has filed all forms, reports and documents
required to be filed by Parent with the SEC since the effective date of the
Registration Statement of Parent's initial public offering, and has made
available to Parent such forms, reports and documents in the form filed
with the SEC. All such required forms, reports and documents (including
those that Parent may file subsequent to the date hereof) and the Parent
Initial Registration Statement are referred to herein as the "PARENT SEC
REPORTS." As of their respective dates, the Parent SEC Reports (i) were
prepared in accordance with the requirements of the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934 ACT"), as the case
may be, and the rules and regulations of the SEC thereunder applicable to
such Parent SEC Reports, and (ii) did not at the time they were filed (or
if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except to the
extent corrected prior to the date of this Agreement by a subsequently
filed Parent SEC Report. None of Parent's subsidiaries is required to file
any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the
Parent SEC Reports (the "PARENT FINANCIALS"), including any Parent SEC
Reports filed after the date hereof until the Closing, (i) complied as to
form in all material respects with the published rules and regulations of
the SEC with respect thereto, (ii) was prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes thereto or, in the case of unaudited interim
financial statements, as may be permitted by the SEC on Form 1O-Q, 8-K or
any successor form under the 1934 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 December 31, 1999 is
hereinafter referred to as the "PARENT BALANCE SHEET." Except as disclosed
in the Parent Financials, since the date of the Parent Balance Sheet
neither Parent nor any of its subsidiaries has any liabilities required
under GAAP to be set forth on a balance sheet (absolute, accrued,
contingent or otherwise) which are, individually or in the aggregate,
material to the business, results of operations or financial condition of
Parent and its subsidiaries taken as a whole, except for liabilities
incurred since the date of the Parent Balance Sheet in the ordinary course
of business consistent with past practices and liabilities incurred in
connection with this Agreement.
3.6 Absence of Certain Changes or Events. Since the date
of the Parent Balance Sheet there has not been (i) any Material Adverse
Effect with respect to Parent, (ii) any declaration, setting aside or
payment of any dividend on, or other distribution (whether in cash, stock
or property) in respect of, any of Parent's or any of its subsidiaries'
capital stock, or any purchase, redemption or other acquisition by Parent
of any of Parent's capital stock or any other securities of Parent or its
subsidiaries or any options, warrants, calls or rights to acquire any such
shares or other securities except for repurchases from employees following
their termination pursuant to the terms of their pre-existing stock option
or purchase agreements, (iii) any split, combination or reclassification of
any of Parent's or any of its subsidiaries' capital stock, (iv) any
granting by Parent or any of its subsidiaries of any increase in
compensation or fringe benefits to any of their officers or employees, or
any payment by Parent or any of its subsidiaries of any bonus to any of
their officers or employees, or any granting by Parent or any of its
subsidiaries of any increase in severance or termination pay or any entry
by Parent or any of its subsidiaries into, or material modification or
amendment of, any currently effective employment, severance, termination or
indemnification agreement or any agreement the benefits of which are
contingent or the terms of which are materially altered upon the occurrence
of a transaction involving Parent of the nature contemplated hereby, in
each case, other than in the ordinary course of business consistent with
past practice, (v) any material change or alteration in the policy of
Parent relating to the granting of stock options or other equity
compensation to its employees and consultants other than in the ordinary
course of business consistent with past practice, (vi) entry by Parent or
any of its subsidiaries into, or material modification, amendment or
cancellation of, any licensing or other agreement with regard to the
acquisition, distribution or licensing of any material Intellectual
Property other than licenses, distribution agreements, advertising
agreements, or other similar agreements entered into in the ordinary course
of business consistent with past practice, (vii) any material change by
Parent in its accounting methods, principles or practices, except as
required by concurrent changes in GAAP, or (viii) any material revaluation
by Parent of any of its material assets, including writing off notes or
accounts receivable other than in the ordinary course of business.
3.7 Taxes.
(a) Parent and each of its subsidiaries have timely filed
all material federal, state, local and foreign returns, estimates,
information statements and reports ("Returns") relating to Taxes required
to be filed by or on behalf of Parent and each of its subsidiaries with any
Tax authority, such Returns are true, correct and complete in all material
respects, and Parent and each of its subsidiaries have paid all Taxes shown
to be due on such Returns.
(b) Parent and each of its subsidiaries have withheld
with respect to its employees all federal and state income taxes, Taxes
pursuant to the Federal Insurance Contribution Act ("FICA"), Taxes pursuant
to the Federal Unemployment Tax Act ("FUTA") and other Taxes required to be
withheld, except such Taxes which are not material to Parent.
(c) Neither Parent nor any of its subsidiaries has been
delinquent in the payment of any material Tax nor is there any material Tax
deficiency outstanding, proposed or assessed against Parent or any of its
subsidiaries, nor has Parent or any of its subsidiaries executed any
unexpired waiver of any statute of limitations on or extending the period
for the assessment or collection of any Tax.
(d) No audit or other examination of any Return of Parent
or any of its subsidiaries by any Tax authority is presently in progress,
nor has Parent or any of its subsidiaries been notified of any request for
such an audit or other examination.
(e) No adjustment relating to any Returns filed by Parent
or any of its subsidiaries has been proposed in writing formally or
informally by any Tax authority to Parent or any of its subsidiaries or any
Tax or financial representative thereof.
(f) Neither Parent nor any of its subsidiaries has any
liability for unpaid Taxes which has not been accrued for or reserved on
the Parent Balance Sheet in accordance with GAAP, whether asserted or
unasserted, contingent or otherwise, which is material to Parent, other
than any liability for unpaid Taxes that may have accrued since the date of
the Parent Balance Sheet in connection with the operation of the business
of Parent and its subsidiaries in the ordinary course.
(g) There is no agreement, plan or arrangement to which
Parent or any of its subsidiaries is a party, including this Agreement and
the agreements entered into in connection with this Agreement, covering any
employee or former employee of Parent or any of its subsidiaries that,
individually or collectively, would be reasonably likely to give rise to
the payment of any amount that would not be deductible pursuant to Sections
280G, 404 or 162(m) of the Code. There is no contract, agreement, plan or
arrangement to which the Parent is a party or by which it is bound to
compensate any individual for excise taxes paid pursuant to Section 4999 of
the Code.
(h) Neither Parent nor any of its subsidiaries has filed
any consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f)
asset (as defined in Section 341(f)(4) of the Code) owned by Parent.
(i) Neither Parent nor any of its subsidiaries is party
to or has any obligation under any tax-sharing, tax indemnity or tax
allocation agreement or arrangement.
(j) Except as may be required as a result of the
transactions contemplated hereby, Parent and its subsidiaries have not been
and will not be required to include any adjustment in Taxable income for
any Tax period (or portion thereof) pursuant to Section 481 of the Code or
any comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Closing.
(k) None of Parent's or its subsidiaries' assets are tax
exempt use property within the meaning of Section 168(h) of the Code.
(l) Parent has not been distributed in a transaction
qualifying under Section 355 of the Code within the last two years, nor has
Parent distributed any corporation in a transaction qualifying under
Section 355 of the Code within the last two years.
For the purposes of this Agreement, "TAX" or "TAXES"
refers to (i) any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and
liabilities relating to taxes, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value
added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, together with all interest,
penalties and additions imposed with respect to such amounts, (ii) any
liability for payment of any amounts of the type described in clause (i) as
a result of being a member of an affiliated consolidated, combined or
unitary group, and (iii) any liability for amounts of the type described in
clauses (i) and (ii) as a result of any express or implied obligation to
indemnify another person or as a result of any obligations under any
agreements or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity.
3.8 Title to Properties.
(a) All real property leases to which Parent is a party
and each amendment thereto that is in effect as of the date of this
Agreement that provide for annual payments in excess of $250,000 are in
full force and effect and are valid and enforceable in accordance with
their respective terms, and there is not, under any of such leases, any
existing default or event of default (or event which with notice or lapse
of time, or both, would constitute a default) that would give rise to a
material claim against Parent which could reasonably be expected to have a
Material Adverse Effect on Parent.
(b) Parent has good and valid title to, or, in the case
of leased properties and assets, valid leasehold interests in, all of its
tangible properties and assets, real, personal and mixed, used or held for
use in its business, free and clear of any Encumbrances, except as
reflected in Parent Financials and except where the failure to have valid
title or a valid leasehold interest would not have a Material Adverse
Effect on Parent.
3.9 Intellectual Property. For the purposes of this
Agreement, the following terms have the following definitions:
"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.
"PARENT INTELLECTUAL PROPERTY" shall mean any
Intellectual Property that is owned by, or exclusively licensed to, Parent
or one of its subsidiaries.
"PARENT REGISTERED INTELLECTUAL PROPERTY" means all of
the Registered Intellectual Property owned by, or filed in the name of,
Parent or one of its subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" means all United
States, international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications, or other
registrations or applications related to trademarks; (iii) registered
copyrights and applications for copyright registration; and (iv) any other
Intellectual Property that is the subject of an application, certificate,
filing, registration or other document issued, filed with, or recorded by
any Governmental Entity.
(a) No material Parent Intellectual Property or product
or service of Parent is subject to any proceeding, agreement, or
stipulation to which Parent is a party, or any outstanding decree, order or
judgment, which arose out of any proceeding to which Parent was either a
party or of which Parent has knowledge, restricting in any manner the use,
transfer, or licensing thereof by Parent, or which may affect the validity,
use or enforceability of such Parent Intellectual Property.
(b) Each material item of Parent Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance
and renewal fees currently due in connection with such Parent Registered
Intellectual Property have been made and all necessary documents,
recordations and certificates in connection with such Parent Registered
Intellectual Property have been filed with the relevant patent, copyright,
trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such
Parent Registered Intellectual Property, except, in each case, as would not
materially adversely affect such item of Parent Registered Intellectual
Property.
(c) Parent or one of its subsidiaries owns and has good
and exclusive title to, or has license sufficient for the conduct of its
business as currently conducted to, each material item of Parent
Intellectual Property free and clear of any Encumbrance (excluding licenses
and related restrictions).
(d) Neither Parent nor any of its subsidiaries has
transferred ownership of, or granted any exclusive license with respect to,
any Intellectual Property that is or was material Parent Intellectual
Property, to any third party.
(e) Part 3.9(e) of the Parent Disclosure Letter lists all
material contracts, licenses and agreements to which Parent is a party (i)
pursuant to which any exclusive rights with respect to Parent Intellectual
Property are licensed, granted or transferred to any third party; or (ii)
pursuant to which a third party has licensed, transferred, sold or
distributed any material Intellectual Property to Parent.
(f) The operation of the business of Parent as such
business currently is conducted, including Parent's design, development,
marketing and sale of the products or services of Parent (including with
respect to products currently under development) has not, does not and will
not materially infringe or materially misappropriate the Intellectual
Property of any third party or, to its knowledge, constitute unfair
competition or trade practices under the laws of any jurisdiction.
(g) Parent has not received written notice from any third
party that the operation of the business of Parent or any act, product or
service of Parent, infringes or misappropriates the Intellectual Property
of any third party or constitutes unfair competition or trade practices
under the laws of any jurisdiction, which allegation, if true, would have a
Material Adverse Effect on Parent.
(h) To the knowledge of Parent, no person has or is
infringing or misappropriating any Parent Intellectual Property, which
infringement or misappropriation, individually or in the aggregate, would
have a Material Adverse Effect on Parent.
(i) Parent and its subsidiaries have taken reasonable
steps to protect Parent's and its subsidiaries' rights in Parent's and such
subsidiaries' confidential information and trade secrets, except where the
failure to do so would not have a Material Adverse Effect on Parent.
(j) None of the Parent Intellectual Property or product
or service of Parent contains any defect in connection with processing data
containing dates in leap years or in the year 2000 or any preceding or
following years, which defects, individually or in the aggregate, would
have a Material Adverse Effect on Parent.
3.10 Compliance with Laws; Certain Agreements.
(a) Neither Parent nor any of its subsidiaries is in
conflict with, or in default or in violation of (i) any law, rule,
regulation, order, judgment or decree applicable to Parent or any of its
subsidiaries or by which Parent or any of its subsidiaries or any of their
respective properties is bound or affected, or (ii) any note, bond,
mortgage, indenture, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or any of its subsidiaries is a
party or by which Parent or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for conflicts,
violations and defaults that, individually or in the aggregate, would not
have a Material Adverse Effect on Parent. To Parent's knowledge, no
investigation or review by any Governmental Entity is pending or has been
threatened in a writing delivered to Parent against Parent or any of its
subsidiaries. There is no agreement with any Governmental Entity, judgment,
injunction, order or decree binding upon Parent or any of its subsidiaries
which has or could reasonably be expected to have the effect of prohibiting
or materially impairing any material business practice of Parent or any of
its subsidiaries, or any acquisition of material property by Parent or any
of its subsidiaries.
(b) Parent and its subsidiaries hold all permits,
licenses, exemptions, orders and approvals from governmental authorities
that are material to or required for the operation of the business of
Parent as currently conducted (collectively, the "PARENT PERMITS"), and are
in compliance with the terms of the Parent Permits, except where the
failure to hold such Parent Permits, or be in such compliance, would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
3.11 Litigation. There are no claims, suits, actions or
proceedings pending or, to the knowledge of Parent, threatened against,
relating to or affecting Parent or any of its subsidiaries, before any
Governmental Entity or any arbitrator that seeks to restrain or enjoin the
consummation of the transactions contemplated by this Agreement or which
could reasonably be expected, either singularly or in the aggregate with
all such claims, actions or proceedings, to have a Material Adverse Effect
on Parent following the transactions contemplated hereby or have a material
adverse effect on the ability of the parties hereto to consummate the
transactions contemplated hereby.
3.12 Employee Benefit Plans.
(a) Definitions. With the exception of the definition of
"Affiliate" set forth in Section 3.12(a)(i) below (which definition shall
apply only to this Section 3.12), for purposes of this Agreement, the
following terms shall have the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity
under common control with Parent within the meaning of Section 414(b), (c),
(m) or (o) of the Code and the regulations issued thereunder;
(ii) "PARENT EMPLOYEE PLAN" shall mean any plan,
program, policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay, performance awards,
stock or stock-related awards, fringe benefits or other employee benefits
or remuneration of any kind, whether written or unwritten or otherwise,
funded or unfunded, including without limitation, each "EMPLOYEE BENEFIT
PLAN," within the meaning of Section 3(3) of ERISA which is maintained,
contributed to, or required to be contributed to, by Parent or any
Affiliate for the benefit of any Parent Employee;
(iii) "PARENT EMPLOYEE" shall mean any current,
former, or retired employee, officer, or director of Parent or any
Affiliate;
(iv) "PARENT EMPLOYEE AGREEMENT" shall mean each
management, employment, severance, consulting, relocation, repatriation,
expatriation, visas, work permit or similar agreement or contract between
Parent or any Affiliate and any Parent Employee or consultant (excluding
any offer letter or other agreement that does not subject Parent to any
potential liability in excess of $200,000);
(v) "INTERNATIONAL PARENT EMPLOYEE PLAN" shall mean
each Parent Employee Plan that has been adopted or maintained by Parent,
whether informally or formally, for the benefit of Parent Employees outside
the United States; and
(vi) "PENSION PLAN" shall mean each Parent Employee
Plan which is an "employee pension benefit plan," within the meaning of
Section 3(2) of ERISA.
(b) Schedule. Part 3.12 of the Parent Disclosure Letter
contains an accurate and complete list of each Parent Employee Plan. Parent
does not have any plan or commitment to establish any new Parent Employee
Plan, to modify any Parent Employee Plan (except to the extent required by
law or to conform any such Parent Employee Plan to the requirements of any
applicable law, or as required by this Agreement), or to enter into any
Parent Employee Plan, nor does it have any intention or commitment to do
any of the foregoing.
(c) Documents. Parent has provided or has made available
to VHA: (i) correct and complete copies of all documents embodying each
Parent Employee Plan (including all amendments thereto and written
interpretations thereof); (ii) the most recent annual actuarial valuations,
if any, prepared for each Parent Employee Plan; (iii) the three most recent
annual reports (Form Series 5500 and all schedules and financial statements
attached thereto), if any, required under ERISA or the Code in connection
with each Parent Employee Plan or related trust; (iv) if the Parent
Employee Plan is funded, the most recent annual and periodic accounting of
Parent Employee Plan assets; (v) the most recent summary plan description
together with the summary of material modifications thereto, if any,
required under ERISA with respect to each Parent Employee Plan; (vi) all
IRS determination, opinion, notification and advisory letters, and rulings
relating to Parent Employee Plans and copies of all applications and
correspondence to or from the IRS or the DOL with respect to any Parent
Employee Plan; (vii) all material written agreements and contracts relating
to each Parent Employee Plan, including, but not limited to, administrative
service agreements, group annuity contracts and group insurance contracts;
(viii) all communications material to any Parent Employee or Parent
Employees relating to any Parent Employee Plan and any proposed Parent
Employee Plans, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of
payments or vesting schedules or other events which would result in any
material liability to Parent; (ix) all COBRA forms and related notices; and
(x) all registration statements and prospectuses prepared in connection
with each Parent Employee Plan.
(d) Employee Plan Compliance. Except, in each case, as
would not, individually or in the aggregate, have a Material Adverse Effect
on Parent (i) Parent has performed in all material respects all obligations
required to be performed by it under, is not in default or violation of,
and has no knowledge of any default or violation by any other party to,
each Parent Employee Plan, and each Parent Employee Plan has been
established and maintained in all material respects in accordance with its
terms and in compliance with all applicable laws, statutes, orders, rules
and regulations, including but not limited to ERISA or the Code; (ii) each
Parent Employee Plan intended to qualify under Section 401(a) of the Code
and each trust intended to qualify under Section 501(a) of the Code has
either received a favorable determination letter from the IRS with respect
to each such Plan as to its qualified status under the Code or has
remaining a period of time under applicable Treasury regulations or IRS
pronouncements in which to apply for such a determination letter and make
any amendments necessary to obtain a favorable determination and no event
has occurred which would adversely affect the status of such determination
letter or the qualified status of such Plan; (iii) no "prohibited
transaction," within the meaning of Section 4975 of the Code or Sections
406 and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA,
has occurred with respect to any Parent Employee Plan; (iv) there are no
actions, suits or claims pending, or, to the knowledge of Parent,
threatened or reasonably anticipated (other than routine claims for
benefits) against any Parent Employee Plan or against the assets of any
Parent Employee Plan; (v) each Parent Employee Plan can be amended,
terminated or otherwise discontinued after the Closing in accordance with
its terms, without liability to Parent or any of its Affiliates (other than
ordinary administration expenses typically incurred in a termination
event); (vi) there are no audits, inquiries or proceedings pending or, to
the knowledge of Parent, threatened by the IRS or DOL with respect to any
Parent Employee Plan; (vii) neither Parent nor any Affiliate is subject to
any material penalty or tax with respect to any Parent Employee Plan under
Section 402(i) of ERISA or Sections 4975 through 4980 of the Code; and
(viii) all contributions due from the Parent or any Affiliate with respect
to any of the Parent Employee Plans have been made as required under ERISA
or have been accrued on the Parent Balance Sheet.
(e) Pension Plans. Parent does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Title IV of ERISA or Section 412 of the
Code.
(f) Multiemployer Plans. At no time has Parent
contributed to or been required to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Parent Employee
Plan provides, or has any liability to provide, retiree life insurance,
retiree health or other retiree employee welfare benefits to any person for
any reason, except as may be required by COBRA or other applicable statute,
and Parent has never represented, promised or contracted (whether in oral
or written form) to any Parent Employee (either individually or to Parent
Employees as a group) or any other person that such Parent Employee(s) or
other person would be provided with retiree life insurance, retiree health
or other retiree employee welfare benefits, except to the extent required
by statute.
(h) COBRA; FMLA. Except as would not have a Material
Adverse Effect on Parent, neither Parent nor any Affiliate has, prior to
the Closing violated any of the health care continuation requirements of
COBRA, the requirements of FMLA or any similar provisions of state law
applicable to its Employees.
(i) Effect of Transaction. The execution of this
Agreement and the consummation of the transactions contemplated hereby will
not (either alone or upon the occurrence of any additional or subsequent
events) constitute an event under any Parent Employee Plan, Parent Employee
Agreement, trust or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits
with respect to any Parent Employee. No payment or benefit which will or
may be made by Parent or its Affiliates with respect to any Parent Employee
as a result of the transactions contemplated by this Agreement will be
characterized as an "excess parachute payment," within the meaning of
Section 280G(b)(1) of the Code or will be treated as a nondeductible
expense within the meaning of Section 162 of the Code.
(j) Employment Matters. Except, in each case, as would
not, individually or in the aggregate, have a Material Adverse Effect on
Parent, Parent and each of its subsidiaries: (i) is in compliance in all
material respects with all applicable foreign, federal, state and local
laws, rules and regulations respecting employment, employment practices,
terms and conditions of employment and wages and hours, in each case, with
respect to Parent Employees; (ii) has withheld all amounts required by law
or by agreement to be withheld from the wages, salaries and other payments
to Parent Employees; (iii) has properly classified independent contractors
for purposes of federal and applicable state tax laws, laws applicable to
employee benefits and other applicable laws; (iv) is not liable for any
arrears of wages or any taxes or any penalty for failure to comply with any
of the foregoing; and (v) is not liable for any material payment to any
trust or other fund or to any governmental or administrative authority,
with respect to unemployment compensation benefits, social security or
other benefits or obligations for Parent Employees (other than routine
payments to be made in the normal course of business and consistent with
past practice). There are no pending, or, to Parent's knowledge, threatened
material claims or actions against Parent under any worker's compensation
policy or long-term disability policy. To Parent's knowledge, no Parent
Employee has violated in any material manner any employment contract,
nondisclosure agreement or noncompetition agreement by which such Parent
Employee is bound due to such Parent Employee being employed by Parent and
disclosing to Parent or using trade secrets or proprietary information of
any other person or entity.
(k) Labor. No work stoppage or labor strike against
Parent is pending, threatened or reasonably anticipated. Parent does not
know of any activities or proceedings of any labor union to organize any
Parent Employees. There are no actions, suits, claims, labor disputes or
grievances pending, or, to the knowledge of Parent, threatened or
reasonably anticipated relating to any labor, safety or discrimination
matters involving any Parent Employee, including charges of unfair labor
practices or discrimination complaints, which, if adversely determined,
would, individually or in the aggregate, result in any material liability
to Parent. Neither Parent nor any of its subsidiaries has engaged in any
unfair labor practices within the meaning of the National Labor Relations
Act. Parent is not presently, nor has it been in the past, a party to, or
bound by, any collective bargaining agreement or union contract with
respect to Employees and no collective bargaining agreement is being
negotiated by Parent.
(l) International Employee Plan. Each International
Parent Employee Plan has been established, maintained and administered in
material compliance with its terms and conditions and with the requirements
prescribed by any and all statutory or regulatory laws that are applicable
to such International Parent Employee Plan. Furthermore, no International
Parent Employee Plan has unfunded liabilities, that as of the Closing, will
not be offset by insurance or fully accrued. Except as required by law, no
condition exists that would prevent Parent from terminating or amending any
International Parent Employee Plan at any time for any reason.
3.13 Environmental Matters. During the period that Parent
has leased or owned its properties or leased, owned or operated any
facilities, there have been no disposals, releases or threatened releases
of Hazardous Materials (as defined below) on, from or under any such
properties or facilities that would have a Material Adverse Effect on
Parent. Parent has no knowledge of any presence, disposals, releases or
threatened releases of Hazardous Materials on, from or under any of such
properties or facilities, which may have occurred prior to Parent or any of
its subsidiaries having taken possession of any of such properties or
facilities which might reasonably be expected to have a Material Adverse
Effect on Parent. None of the properties or facilities currently leased or
owned by Parent or any of its subsidiaries or any properties or facilities
previously leased or owned by Parent or any of its subsidiaries is in
violation of any federal, state or local law, ordinance, regulation or
order relating to industrial hygiene or to the environmental conditions on,
under or about such properties or facilities, including, but not limited
to, soil and ground water condition which violation would have a Material
Adverse Effect on Parent. During Parent's occupancy of any properties or
facilities owned or leased at any time by Parent, neither Parent, nor to
Parent's knowledge, any third party, has used, generated, manufactured,
released or stored on, under or about such properties and facilities or
transported to or from such properties and facilities any Hazardous
Materials that would have or is reasonably likely to have a Material
Adverse Effect on Parent. During the time that Parent or any of its
subsidiaries has owned or leased the properties and facilities currently
occupied by it or any properties and facilities previously occupied by
Parent or any of its subsidiaries, there has been no material litigation,
proceeding or administrative action brought or threatened against Parent or
any of its subsidiaries, or any material settlement reached by Parent or
any of its subsidiaries with, any party or parties alleging the presence,
disposal, release or threatened release of any Hazardous Materials on, from
or under any of such properties or facilities.
For purposes of this Agreement, the terms "DISPOSAL,"
"RELEASE," and "THREATENED RELEASE" have the definitions assigned thereto
by the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. ss. 9601 et seq., as amended ("CERCLA"). For the
purposes of this Section 3.13, "HAZARDOUS MATERIALS" mean any hazardous or
toxic substance, material or waste which is or becomes prior to the Closing
Date, regulated under, or defined as a "hazardous substance," "pollutant,"
"contaminant," "toxic chemical," "hazardous material," "toxic substance" or
"hazardous chemical" under (i) CERCLA; (ii) the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. Section 11001 et seq.; (iii) the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.;
(iv) the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; (v)
the Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 et
seq.; (vi) regulations promulgated under any of the above statutes; or
(vii) any other applicable federal, state or local statute, ordinance, rule
or regulation that has a scope or purpose similar to those identified
above.
3.14 Certain Agreements. Other than (i) this Agreement,
(ii) the Amended and Restated Common Stock and Warrant Agreement, dated as
of the date of this Agreement, between Parent and UHC (the "UHC
AGREEMENT"), (iii) the Outsourcing Agreement, and other related agreements,
except as otherwise set forth in Part 3.14 of the Parent Disclosure Letter,
neither Parent nor any of its subsidiaries is a party to or is bound by:
(a) other than as disclosed in Part 3.12 of the Parent
Disclosure Letter, any employment agreement or commitment with any officer
or member of Parent's Board of Directors, other than those that are
terminable by Parent or any of its subsidiaries on no more than thirty days
notice without liability or financial obligation, except to the extent
general principles of wrongful termination law may limit Parent's or any of
its subsidiaries' ability to terminate employees at will, or any consulting
agreement;
(b) any material agreement of indemnification, any
material guaranty or any material instrument evidencing indebtedness for
borrowed money by way of direct loan, sale of debt securities or purchase
money obligation;
(c) any agreement or obligation containing covenants
purporting to limit or which effectively limit the Parent's or any of its
subsidiaries' freedom to compete in any line of business or in any
geographic area or which would so limit Parent or any of its subsidiaries
after the Closing or granting any exclusive distribution or other exclusive
rights;
(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 pending under
any of such policies or bonds as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or bonds. All
premiums due and payable under all such policies have been paid and the
Parent and its subsidiaries are otherwise in compliance in all material
respects with the terms of such policies and bonds.
3.17 Disclosure. The information included or
incorporation by reference in the proxy statement (the "PROXY STATEMENT")
to be mailed to Parent's stockholders soliciting the Parent Stockholder
Approval shall not, on the date the Proxy Statement is mailed to Parent's
stockholders, at the time of the Parent Stockholders' Meeting or as of the
Closing, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not false or misleading, or omit to state any material fact
necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for the Parent Stockholders' Meeting
which has become false or misleading. The Proxy Statement will comply as to
form in all material respects with the provisions of the 1934 Act and the
rules and regulations thereunder. If at any time prior to the Closing, any
event relating to Parent or any of its affiliates, officers or directors
should be discovered by Parent which is required to be set forth in a
supplement to the Proxy Statement, Parent shall promptly inform VHA.
Notwithstanding the foregoing, Parent makes no representation or warranty
with respect to any information supplied by Novation, HPPI, UHC or VHA
which is contained in the Proxy Statement.
3.18 Board Approval. As of the date of this Agreement,
the Board of Directors of Parent has approved this Agreement and recommends
that the stockholders of Parent approve the Parent Stockholder Approval.
3.19 Opinion of Financial Advisor. Parent's Board of
Directors has received an opinion from Merrill Lynch & Co., dated as of the
date of this Agreement, to the effect that, as of such date, the
Transaction is fair to Parent from a financial point of view, a copy of the
written opinion of which will be delivered to VHA after receipt thereof by
Parent. The transactions contemplated by this Agreement, the UHC Agreement
and the Outsourcing Agreement are collectively referred to herein as the
"TRANSACTION".
3.20 Anti-Takeover Protections. The Board of Directors of
Parent has taken all actions so that the restrictions contained in Section
203 of the General Corporation Law of the State of Delaware ("DELAWARE
LAW") applicable to a "business combination" (as defined in such Section
203) will not apply to the execution, delivery or performance of this
Agreement or the transactions contemplated by this Agreement. To Parent's
knowledge, no other anti-takeover, control share acquisition, fair price,
moratorium or other similar statute or regulation ("TAKEOVER STATUTE")
applies or purports to apply to this Agreement or the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS, WARRANTIES
AND CERTAIN AGREEMENTS OF VHA
VHA hereby represents and warrants to Parent, subject to the
exceptions specifically disclosed in writing in the disclosure letter
delivered by VHA dated as of the date hereof and certified by a duly
authorized officer of VHA (the "VHA DISCLOSURE LETTER") (which VHA
Disclosure Letter shall be deemed to be representations and warranties to
Parent by VHA under this Section 4), as follows:
4.1 Organization, Good Standing and Qualification. VHA
represents that it is an entity duly organized, validly existing and in
good standing under the laws of the state of its formation and has all
requisite power and authority, and all requisite qualifications to do
business as a foreign entity, to conduct its business in the manner in
which its business is currently being conducted, except where the failure
to be so organized, existing or in good standing or to have such power,
authority or qualifications would not have a Material Adverse Effect on
VHA.
4.2 Authorization.
(a) VHA has all requisite power and authority to enter
into this Agreement and the Outsourcing Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Outsourcing Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by
all necessary action on the part of VHA. This Agreement and the Outsourcing
Agreement have each been duly executed and delivered by VHA and constitute
the valid and binding obligations of VHA, enforceable against VHA in
accordance with their terms, except as enforceability may be limited by
bankruptcy and other similar laws affecting the rights of creditors
generally and general principles of equity.
(b) The execution and delivery of this Agreement and the
Outsourcing Agreement by VHA does not, and the performance of this
Agreement and the Outsourcing Agreement by VHA will not, (i) conflict with
or violate the certificate of incorporation, bylaws, operating agreement or
other organizational documents of VHA, (ii) subject to compliance with the
requirements set forth in Section 4.2(c) with regard to VHA, conflict with
or violate any law, rule, regulation, order, judgment or decree applicable
to VHA or by which any of its properties are bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or impair
VHA's rights or alter the rights or obligations of any third party under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of an Encumbrance on any of the
properties or assets of VHA pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which VHA is a party or by which VHA or any of
its properties are bound or affected, except, in the case of clauses (ii)
and (iii), for such conflicts, violations, breaches, defaults, impairments,
or rights which, individually or in the aggregate, would not have a
Material Adverse Effect on VHA. Except as set forth in a letter delivered
by VHA to Parent concurrently with the execution of this Agreement, no
consents, waivers and approvals under any of VHA's or any of its
subsidiaries' agreements, contracts, licenses or leases are required to be
obtained in connection with the consummation of the transactions
contemplated hereby, which, if individually or in the aggregate not
obtained, would have a Material Adverse Effect on VHA.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is
required to be obtained or made by VHA in connection with the execution and
delivery of this Agreement or the Outsourcing Agreement or the consummation
of the transactions contemplated hereby or thereby, except for (i) such
consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under applicable federal, foreign and state
securities (or related) laws and the HSR Act and the securities or
antitrust laws of any foreign country, and (ii) such other consents,
authorizations, filings, approvals and registrations which if not obtained
or made would not have a Material Adverse Effect on VHA or have a material
adverse effect on the ability of the parties hereto to consummate the
transactions contemplated hereby.
4.3 Acquisition for Own Account. The Shares, Warrant and
Warrant Stock to be delivered to VHA hereunder will be acquired for VHA's
own account, not as a nominee or agent, and not with a view to the public
resale or distribution thereof within the meaning of the 1933 Act, and VHA
represents that it has no present intention or agreement to sell, grant any
participation in, or otherwise distribute any of the Shares, Warrant or
Warrant Stock to be acquired by VHA hereunder in any public resale or
distribution within the meaning of the 1933 Act. VHA also represents that
it has not been formed for the specific purpose of acquiring the Shares,
Warrant or Warrant Stock under this Agreement.
4.4 Disclosure of Information. VHA believes it has
received or has had full access to all the information it considers
necessary or appropriate to make an informed ownership decision with
respect to the Shares, Warrant and Warrant Stock to be issued to VHA under
this Agreement. VHA further has had an opportunity to ask questions and
receive answers from Parent regarding the terms and conditions of the
offering of the Shares, Warrant and Warrant Stock and to obtain additional
information (to the extent Parent possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify any
information furnished to VHA or to which VHA had access. The foregoing,
however, does not in any way limit or modify the representations and
warranties made by Parent in Section 3.
4.5 Experience. VHA understands that ownership of the
Shares, Warrant and Warrant Stock involves substantial risk. VHA: (i) has
experience as owner of securities of companies in the development stage and
acknowledges that VHA is able to fend for itself, can bear the economic
risk of VHA's ownership of the Shares, Warrant and Warrant Stock and has
such knowledge and experience in financial or business matters that VHA is
capable of evaluating the merits and risks of this ownership of the Shares,
Warrant and Warrant Stock and protecting its own interests in connection
with this ownership and/or (ii) has a preexisting personal or business
relationship with Parent and certain of its officers, directors or
controlling persons of a nature and duration that enables VHA to be aware
of the character, business acumen and financial circumstances of such
persons.
4.6 Accredited Investor Status. VHA is an "accredited
investor" within the meaning of Regulation D promulgated under the 1933
Act.
4.7 Restricted Securities. VHA understands that the
Shares and the Warrant are, and upon issuance under the Warrant, the
Warrant Stock will be characterized as "restricted securities" under the
1933 Act inasmuch as they are being acquired from Parent in a transaction
not involving a public offering and that under the 1933 Act and applicable
regulations thereunder such securities may be resold without registration
under the 1933 Act only in certain limited circumstances. In this
connection, VHA represents that VHA is familiar with Rule 144 of the SEC,
as presently in effect, and understands the resale limitations imposed
thereby and by the 1933 Act.
4.8 No Solicitation. At no time was VHA presented with or
solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in
connection with the issuance or delivery of the Shares or the Warrant.
4.9 Further Limitations on Disposition. Without in any
way limiting the representations set forth above, VHA further agrees not to
make any disposition of all or any portion of the Shares or Warrant Stock
or of any interest therein to any person or entity unless:
(a) there is then in effect a registration statement
under the 1933 Act covering such proposed disposition of Shares or
Warrant Stock and such disposition is made in accordance with such
registration statement; or
(b) VHA shall have notified Parent of the proposed
disposition of the Shares or the Warrant Stock and shall have
furnished Parent with a statement of the circumstances surrounding
such proposed disposition, and, at the expense of VHA or its
transferee, with an opinion of counsel, reasonably satisfactory to
Parent, that such disposition will not require registration of such
securities under the 1933 Act.
VHA acknowledges that the Warrant is non-transferable to the extent it has
not vested.
4.10 Legends. VHA understands and agrees that the
certificates evidencing the Shares, the Warrant and the Warrant Stock will
bear legends substantially similar to those set forth below, as applicable,
in addition to any other legend that may be required by applicable law, by
Parent's Certificate of Incorporation or Bylaws, or by any agreement
between Parent and VHA:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED
UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE
THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OTHERWISE PERMITTED UNDER CONTRACTUAL RESTRICTIONS ON
RESALE APPLICABLE TO THESE SECURITIES IS IN COMPLIANCE WITH THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
(b) THE SECURITIES REPRESENTED HEREBY MAY BE SUBJECT TO
CERTAIN RESTRICTIONS ON RESALE AND ON VOTING AND THE HOLDERS
HEREOF MAY BE BOUND BY CERTAIN RESTRICTIONS ON ACQUISITION OF THE
ISSUER'S CAPITAL STOCK PURSUANT TO A COMMON STOCK AND WARRANT
AGREEMENT BETWEEN THE ORIGINAL HOLDERS OF THESE SECURITES AND THE
ISSUER, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER.
The legend set forth in (a) above shall be removed by Parent from any
certificate evidencing Shares or Warrant Stock upon delivery to Parent of
an opinion by counsel, reasonably satisfactory to Parent, to the effect
that a registration statement under the 1933 Act is at that time in effect
with respect to the legended security or to the effect that such security
can be freely transferred in a public sale without such a registration
statement being in effect and that such transfer will not jeopardize the
exemption or exemptions from registration pursuant to which Parent issued
the Shares or Warrant Stock.
4.11 Disclosure. The information supplied by VHA for
inclusion or incorporation by reference in the Proxy Statement shall not on
the date the Proxy Statement is mailed to Parent's stockholders, at the
time of the Parent Stockholders' Meeting or as of the Closing, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not false
or misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Parent Stockholders' Meeting which has become false or
misleading. If at any time prior to the Closing any event relating to VHA
or any of its affiliates, officers or directors should be discovered by VHA
which is required to be set forth in a supplement to the Proxy Statement,
VHA shall promptly inform Parent. Notwithstanding the foregoing, VHA makes
no representation or warranty with respect to any information supplied by
Parent which is contained in the Proxy Statement.
4.12 Anti-Takeover Protections. For the three years prior
to the date of this Agreement, none of VHA, its "affiliates" nor
"associates" (as such terms are defined in Section 203 of the Delaware Law)
were the owner of 15% or more of the outstanding voting stock of Parent. To
VHA's knowledge, no other Takeover Statute applies or purports to apply to
this Agreement or the transactions contemplated hereby.
ARTICLE V
CONDUCT PRIOR TO THE CLOSING
5.1 Conduct of Business by Parent. During the period from
the date of this Agreement and continuing until the earlier of the
termination of this Agreement pursuant to its terms or the Closing, Parent
and each of its subsidiaries shall, except to the extent that VHA shall
otherwise consent in writing, carry on its business in compliance in all
material respects with all applicable material laws and regulations, pay
its debts and taxes when due subject to good faith disputes over such debts
or taxes, pay or perform other material obligations when due, and use its
commercially reasonable efforts consistent with past practices and policies
to (i) preserve intact its present business organization, (ii) keep
available the services of its present officers and employees and (iii)
preserve its relationships with customers, suppliers, licensors, licensees,
and others with which it has business dealings. In addition, Parent will
promptly notify VHA of any material adverse event involving its business or
operations.
In addition, except as permitted by the terms of this
Agreement, and except as contemplated by this Agreement or provided in the
Parent Disclosure Letter, without the prior written consent of VHA, during
the period from the date of this Agreement and continuing until the earlier
of the termination of this Agreement pursuant to its terms or the Closing,
Parent shall not do any of the following and shall not permit its
subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend
or change the period of exercisability of options or restricted stock, or
reprice options granted under any employee, consultant, director or other
stock plans or authorize cash payments in exchange for any options granted
under any of such plans;
(b) Grant any severance or termination pay to any officer
or employee except pursuant to written agreements in effect, or policies
existing, on the date hereof and as previously disclosed in writing to VHA,
or adopt any new severance plan;
(c) Transfer or license to any person or entity or
otherwise extend, amend or modify in any material respect any rights to any
Intellectual Property material to the business of Parent that is owned by,
or exclusively licensed to, Parent or one of its subsidiaries, other than
non-exclusive licenses, distribution agreements, advertising agreements, or
other similar agreements in the ordinary course of business and consistent
with past practice;
(d) Declare, set aside or pay any dividends on or make
any other distributions (whether in cash, stock, equity securities or
property) in respect of any capital stock or split, combine or reclassify
any capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for any capital
stock;
(e) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Parent or its subsidiaries,
except repurchases of unvested shares at cost in connection with the
termination of the employment relationship with any employee pursuant to
stock option or purchase agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise
encumber any shares of capital stock or any securities convertible into
shares of capital stock, or subscriptions, rights, warrants or options to
acquire any shares of capital stock or any securities convertible into
shares of capital stock, or enter into other agreements or commitments of
any character obligating it to issue any such shares or convertible
securities, other than the grant, issuance, delivery and/or sale of (i)
shares of Common Stock pursuant to the exercise of Parent Options
outstanding on the date of this Agreement, or granted in accordance with
clause (iii) of this Section 5.1(f), (ii) shares of Common Stock issuable
to participants in the Parent ESPP consistent with the terms thereof, (iii)
Parent Options granted to existing employees and newly-hired employees in
an aggregate amount not to exceed 2,000,000, none of which Parent Options
shall provide for or permit any acceleration of the exercisability thereof
in connection with any of the transactions contemplated by this Agreement,
and (iv) shares of Common Stock issued in connection with acquisitions,
joint ventures, strategic relationships or alliances, and commercial
transactions permitted under Section 5.1(h) below;
(g) Cause, permit or propose any amendments to its
Certificate of Incorporation, Bylaws or other charter documents (or similar
governing instruments of any of its subsidiaries), other than an amendment
to its Certificate of Incorporation to increase the authorized number of
shares of Common Stock;
(h) Acquire or agree to acquire by merging or
consolidating with, or by purchasing any equity interest in or a portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof; or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to the business of Parent, or
enter into any material joint ventures, strategic relationships or
alliances, or enter into any commercial transaction involving the issuance
or potential issuance of equity securities of Parent; provided, that Parent
shall not be prohibited hereunder from (x) acquiring EquipMD, Inc. pursuant
to the Agreement and Plan of Merger among Parent, Augustacorp, Inc. and
EquipMD, Inc. (a true and complete copy of which has been made available to
VHA) or (y) making or agreeing to make acquisitions, entering into joint
ventures, strategic relationships or alliances, or entering into commercial
transactions involving the issuance or potential issuance of Common Stock,
all of which together do not involve the issuance or potential issuance of
more than 5,000,000 shares of Common Stock in the aggregate, and none of
which acquisitions, joint ventures, strategic relationships, alliances,
agreements or commercial transactions could reasonably be expected to
materially delay the issuances of Common Stock and Warrant contemplated by
this Agreement (Parent and VHA acknowledge that the fact that an
acquisition would be deemed "significant" under Item 2 of Form 8-K under
the 1934 Act does not necessarily mean that such acquisition could
reasonably be expected to materially delay the issuances of Common Stock
and the Warrant contemplated by this Agreement); provided, further, that
Parent shall provide written notice to VHA prior to signing any agreement
regarding any such acquisition or transaction;
(i) Sell, lease, license, encumber (except in connection
with actions permitted under Section 5.1(j)) or otherwise dispose of any
properties or assets which are material, individually or in the aggregate,
to the business of Parent;
(j) Incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or options, warrants, calls or other rights to acquire any debt
securities of Parent, enter into any "keep well" or other agreement to
maintain any financial statement condition or enter into any arrangement
having the economic effect of any of the foregoing other than (i) in
connection with the financing of ordinary course trade payables consistent
with past practice, (ii) pursuant to existing credit facilities in the
ordinary course of business, (iii) equipment leasing arrangements or (iv)
in aggregate amount not to exceed $1,000,000;
(k) (i) Adopt or amend any employee benefit plan or
employee stock purchase or employee stock option plan, or enter into any
employment contract or collective bargaining agreement (other than offer
letters and letter agreements entered into in the ordinary course of
business consistent with past practice with employees who are terminable
"at will") other than an increase in the number of shares of Common Stock
reserved for issuance under Parent Stock Option Plans or Parent ESPP, or
(ii) pay any special bonus or special remuneration to any director or
employee, or increase the salaries or wage rates or fringe benefits
(including rights to severance or indemnification) of its directors,
officers, employees or consultants other than in the ordinary course of
business, consistent with past practice, or change in any material respect
any management policies or procedures;
(l) Make any capital expenditures outside of the ordinary
course of business or any capital expenditures in excess of $1,000,000,
individually, or $10,000,000, in the aggregate;
(m) Materially modify, amend or terminate any material
contract or agreement to which Parent or any subsidiary thereof is a party,
or waive, release or assign any material rights or claims thereunder,
except in the ordinary course of business;
(n) Materially revalue any of its assets or, except as
required by GAAP, make any change in accounting methods, principles or
practices;
(o) Initiate or settle any material litigation,
arbitration, mediation or other legal proceeding;
(p) Take or permit any action with the intent to directly
or indirectly adversely impact any of the transactions contemplated by this
Agreement; or
(q) Agree in writing or otherwise to take any of the
actions described in Section 5.1 (a) through (p) above.
5.2 Meeting of Parent Stockholders.
(a) Promptly after the date hereof, Parent will take all
action necessary in accordance with the Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Parent Stockholders' Meeting to be
held as promptly as practicable and in any event (to the extent permissible
under applicable law) within 45 days after the completion of the SEC's
review of the Proxy Statement for the purpose of voting upon the Parent
Stockholder Approval. Subject to Section 5.2(c), Parent will use its
commercially reasonable efforts to solicit from its stockholders proxies in
favor of the approval of the Parent Stockholder Approval and will take all
other action necessary or advisable to secure the vote or consent of its
stockholders required by the rules of the Nasdaq Stock Market, Delaware
Law, its Certificate of Incorporation and Bylaws to obtain such approval.
Notwithstanding anything to the contrary contained in this Agreement,
Parent may adjourn or postpone the Parent Stockholders' Meeting to the
extent necessary to ensure that any necessary supplement or amendment to
the Proxy Statement is provided to Parent's stockholders in advance of a
vote on the Parent Stockholder Approval or, if as of the time for which
Parent Stockholders' Meeting is originally scheduled (as set forth in the
Proxy Statement) there are insufficient shares of Parent Common Stock
represented (either in person or by proxy) to constitute a quorum necessary
to conduct the business of the Parent Stockholders' Meeting. Parent shall
ensure that the Parent Stockholders' Meeting is called, noticed, convened,
held and conducted, and that all proxies solicited by Parent in connection
with the Parent Stockholders' Meeting are solicited, in compliance with the
Delaware Law, its Certificate of Incorporation and Bylaws, the rules of the
Nasdaq Stock Market and all other applicable legal requirements.
(b) Subject to Section 5.2(c), the Board of Directors of
Parent shall recommend that Parent's stockholders approve the Parent
Stockholder Approval at the Parent Stockholders' Meeting; and the Proxy
Statement shall include a statement to the effect that the Board of
Directors of Parent has recommended that Parent's stockholders approve the
Parent Stockholder Approval at the Parent Stockholders' Meeting; and (iii)
neither the Board of Directors of Parent nor any committee thereof shall
withdraw, amend or modify, or propose or resolve to withdraw, amend or
modify in a manner adverse to VHA, the recommendation of the Board of
Directors of Parent that Parent's stockholders approve the Parent
Stockholder Approval.
(c) Nothing in this Agreement shall prevent the Board of
Directors of Parent from withholding, withdrawing, amending or modifying
its recommendation in favor of the Parent Stockholder Approval if (i) a
Superior Offer (as defined below) is made to Parent and is not withdrawn,
(ii) Parent shall have provided written notice to VHA and UHC (a "NOTICE OF
SUPERIOR OFFER") advising them that Parent has received a Superior Offer,
specifying all of the material terms and conditions of such Superior Offer
and identifying the person or entity making such Superior Offer, (iii) VHA
and/or UHC shall not have, within three business days of Parent's receipt
of the Notice of Superior Offer, made an offer that Parent's Board of
Directors by a majority vote determines in its good faith judgment (after
consultation with a financial advisor of national standing) to be at least
as favorable to Parent's stockholders as such Superior Offer (it being
agreed that the Board of Directors of Parent shall convene a meeting to
consider any such offer by VHA and/or UHC promptly following the receipt
thereof), (iv) the Board of Directors of Parent concludes in good faith,
after consultation with its outside counsel, that, in light of such
Superior Offer, the withholding, withdrawal, amendment or modification of
such recommendation is required in order for the Board of Directors of
Parent to comply with its fiduciary obligations to Parent's stockholders
under applicable law and (v) Parent shall not have violated any of the
restrictions set forth in Section 5.4(a) or (b) or this Section 5.2. Parent
shall provide VHA with at least one day prior notice (or such lesser prior
notice as provided to the members of the Parent's Board of Directors) of
any meeting of the Parent's Board of Directors at which Parent's Board of
Directors is reasonably expected to consider any Parent Acquisition
Proposal (as defined in Section 5.4) to determine whether such Parent
Acquisition Proposal is a Superior Offer. Nothing contained in this Section
5.2(c) shall limit Parent's obligation to hold and convene the Parent
Stockholders' Meeting (regardless of whether the recommendation of the
Board of Directors of Parent shall have been withdrawn, amended or
modified).
For purposes of this Agreement, "SUPERIOR OFFER" shall
mean an unsolicited, bona fide written offer made by a third party to
consummate any of the following transactions: (i) a merger or consolidation
involving Parent pursuant to which the stockholders of Parent immediately
preceding such transaction hold less than 50% of the equity interest in the
surviving or resulting entity of such transaction or (ii) the acquisition
by any person or group (including by way of a tender offer or an exchange
offer or a two step transaction involving a tender offer followed with
reasonable promptness by a merger involving Parent), directly or
indirectly, of ownership of 100% of the then outstanding shares of capital
stock of Parent, on terms that the Board of Directors of Parent determines,
in its reasonable judgment (after consultation with a financial advisor of
national standing) to be more favorable to Parent stockholders than the
terms of this Agreement and the UHC Agreement; provided, however, that any
such offer shall not be deemed to be a "Superior Offer" if any financing
required to consummate the transaction contemplated by such offer is not
committed and is not likely in the reasonable judgment of Parent's Board of
Directors (after consultation with its financial advisor) to be obtained by
such third party on a timely basis.
(d) Nothing contained in this Agreement shall prohibit
Parent or its Board of Directors from taking and disclosing to its
stockholders a position contemplated by Rules 14d-9 and 14e-2(a)
promulgated under the 1934 Act, or otherwise required by applicable law.
5.3 Proxy Statement; Antitrust Filings.
(a) As promptly as practicable after the execution of
this Agreement, Parent will prepare and file with the SEC, the Proxy
Statement. Parent will respond to any comments of the SEC, and will cause
the Proxy Statement to be mailed to its stockholders, as promptly as
practicable in compliance with applicable law. Promptly after the date of
this Agreement, each of VHA and Parent will prepare and file (i) with the
United States Federal Trade Commission and the Antitrust Division of the
United States Department of Justice Notification and Report Forms relating
to the transactions contemplated herein as required by the HSR Act, as well
as comparable pre-merger notification forms required by the merger
notification or control laws and regulations of any applicable
jurisdiction, as agreed to by the parties (the "ANTITRUST FILINGS"). VHA
and Parent each shall promptly supply the other with any information which
may be required in order to effectuate any filings pursuant to this Section
5.3.
(b) Each of VHA and Parent will notify the other promptly
upon the receipt of any comments from the SEC or its staff or any other
government officials in connection with any filing made pursuant hereto and
of any request by the SEC or its staff or any other government officials
for amendments or supplements to the Proxy Statement or any Antitrust
Filings or for additional information, and will supply the other with
copies of all correspondence between such party or any of its
representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Proxy
Statement or any Antitrust Filing. Each of VHA and Parent will cause all
documents that it is responsible for filing with the SEC or other
regulatory authorities under this Section 5.3 to comply in all material
respects with all applicable requirements of law and the rules and
regulations promulgated thereunder. Whenever any event occurs which is
required to be set forth in an amendment or supplement to the Proxy
Statement or any Antitrust Filing, VHA or Parent, as the case may be, will
promptly inform the other of such occurrence and cooperate in filing with
the SEC or its staff or any other government officials, and/or mailing to
stockholders of Parent, such amendment or supplement.
5.4 No Solicitation.
(a) From and after the date of this Agreement until the
Closing or termination of this Agreement pursuant to Article IX, Parent and
its subsidiaries will not, nor will they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them
to, directly or indirectly, (i) solicit, initiate, encourage or induce the
making, submission or announcement of any Parent Acquisition Proposal (as
hereinafter defined), (ii) participate in any discussions or negotiations
regarding, or furnish to any person any non-public information with respect
to, or take any other action to facilitate any inquiries or the making of
any proposal that constitutes an Parent Acquisition Proposal, (iii) engage
in discussions with any person with respect to any Parent Acquisition
Proposal, except as to the existence of these provisions, (iv) except as
set forth in Section 5.2(c), approve, endorse or recommend any Parent
Acquisition Proposal or (v) enter into any letter of intent or similar
document or any contract, agreement or commitment contemplating or
otherwise relating to any Parent Acquisition Proposal; provided, however,
that prior to the approval of the Parent Stockholder Approval at the Parent
Stockholders' Meeting, Parent may furnish nonpublic information regarding
Parent and its subsidiaries to, or enter into discussions or negotiations
with, any person or group who has submitted (and not withdrawn) to Parent
an unsolicited, written, bona fide Parent Acquisition Proposal that the
Board of Directors of Parent reasonably concludes (after consultation with
a financial advisor of national standing) may constitute a Superior Offer
if (1) neither Parent nor any representative of Parent and its subsidiaries
shall have violated any of the restrictions set forth in this Section 5.4,
(2) the Board of Directors of Parent concludes in good faith, after
consultation with its outside legal counsel, that such action is required
in order for the Board of Directors of Parent to comply with its fiduciary
obligations to Parent's stockholders under applicable law, (3) 36 hours
prior to furnishing any such nonpublic information to, or entering into any
such discussions with, such person or group, Parent gives VHA and UHC
written notice of the identity of such person or group and all of the
material terms and conditions of such Parent Acquisition Proposal and of
Parent's intention to furnish nonpublic information to, or enter into
discussions with, such person or group, and Parent receives from such
person or group an executed confidentiality agreement containing customary
terms. Parent and its subsidiaries will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Parent Acquisition Proposal. Without
limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding two sentences by any officer,
director or employee of Parent or any of its subsidiaries or any investment
banker, attorney or other advisor or representative of Parent or any of its
subsidiaries shall be deemed to be a breach of this Section 5.4(a) by
Parent.
For purposes of this Agreement, "PARENT ACQUISITION
PROPOSAL" shall mean any offer or proposal relating to any transaction or
series of related transactions, other than the transactions contemplated by
this Agreement (any such transaction or series of related transactions, a
"PARENT ACQUISITION"), involving: (A) any acquisition or purchase from
Parent by any person or "group" (as defined under Section 13(d) of the 1934
Act and the rules and regulations thereunder) of more than 50% of the
outstanding voting securities of Parent or any of its subsidiaries, or any
tender offer or exchange offer that if consummated would result in any
person or "group" beneficially owning more than 50% of the outstanding
voting securities of Parent or any of its subsidiaries, or any merger,
consolidation, business combination or similar transaction involving Parent
pursuant to which the stockholders of Parent immediately preceding such
transaction hold less than 50% of the equity interests in the surviving or
resulting entity of such transaction; or (B) any sale, exchange, transfer,
acquisition, or disposition of more than 50% of the assets of Parent.
(b) In addition to the obligations of Parent set forth in
paragraph (a) of this Section 5.4, Parent as promptly as practicable shall
advise VHA and UHC orally and in writing of any request for non-public
information or inquiry which Parent reasonably believes would lead to a
Parent Acquisition Proposal or of any Parent Acquisition Proposal, the
material terms and conditions of such request, Parent Acquisition Proposal
or inquiry, and the identity of the person or group making any such
request, Parent Acquisition Proposal or inquiry. Parent will keep VHA and
UHC informed as promptly as practicable in all material respects of the
status and details (including material amendments or proposed amendments)
of any such request, Parent Acquisition Proposal or inquiry.
(c) From and after the date of this Agreement until the
Closing or termination of this Agreement pursuant to Article IX, VHA and
its affiliates will not, nor will they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them
to, directly or indirectly, (i) solicit, initiate, encourage or induce the
making, submission or announcement of any VHA Proposal (as hereinafter
defined), (ii) participate in any discussions or negotiations regarding, or
furnish to any person any non-public information with respect to, or take
any other action to facilitate any inquiries or the making of any proposal
that constitutes a VHA Proposal, (iii) engage in discussions with any
person with respect to any VHA Proposal, except as to the existence of
these provisions, (iv) approve, endorse or recommend any VHA Proposal or
(v) enter into any letter of intent or similar document or any contract,
agreement or commitment contemplating or otherwise relating to any VHA
Proposal. VHA and its affiliates will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any VHA Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set
forth in the preceding two sentences by any officer, director or employee
of VHA or any of its affiliates or any investment banker, attorney or other
advisor or representative of VHA or any of its affiliates shall be deemed
to be a breach of this Section 5.4(c) by VHA. For purposes of this
Agreement, "VHA PROPOSAL" shall mean any offer or proposal relating to any
transaction or series of related transactions that would constitute a
breach or violation of, the obligations (including exclusivity obligations)
of VHA, UHC, Novation and/or HPPI under the Outsourcing Agreement.
(d) In addition to the obligations of VHA set forth in
paragraph (c) of this Section 5.4, VHA as promptly as practicable shall
advise Parent orally and in writing of any request for non-public
information or inquiry which VHA reasonably believes would lead to a VHA
Proposal or of any VHA Proposal, the material terms and conditions of such
request, VHA Proposal or inquiry, and the identity of the person or group
making any such request, VHA Proposal or inquiry. VHA will keep Parent
informed as promptly as practicable in all material respects of the status
and details (including material amendments or proposed amendments) of any
such request, VHA Proposal or inquiry.
5.5 Third Party Consents. As soon as practicable
following the date hereof, Parent and VHA will each use its commercially
reasonable efforts to obtain any material consents, waivers and approvals
under any of its or its subsidiaries' respective agreements, contracts,
licenses or leases required to be obtained in connection with the
consummation of the transactions contemplated hereby.
5.6 Nasdaq Listing. Parent agrees to authorize for
listing on the Nasdaq Stock Market the Shares and Warrant Stock issuable in
connection with this Agreement, effective upon official notice of issuance.
5.7 Takeover Statutes. If any Takeover Statute is or may
become applicable to the transactions contemplated by this Agreement, each
of Parent and VHA and their respective Boards of Directors shall grant such
approvals and take such lawful actions as are necessary to ensure that such
transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise act to eliminate or minimize
the effects of such Takeover Statute and any regulations promulgated
thereunder on such transactions.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Voting of Common Stock. VHA agrees that from and
after the date of the Closing through the fifth anniversary of the Closing
(the "FIFTH ANNIVERSARY"), and for as long after the Fifth Anniversary as
the outstanding shares of Common Stock (including outstanding Common Stock
that has been issued pursuant to the Warrant) beneficially owned by VHA
together with all "affiliates" (which for purposes of this Agreement (other
than Section 3.12) shall have the meaning given such term in Rule 144(a)(1)
promulgated under the 1933 Act) of VHA exceeds 35% of the then outstanding
Common Stock of Parent (the entire such period, the "RESTRICTED PERIOD"),
to the extent that the outstanding shares of Common Stock (including
outstanding Common Stock that has been issued pursuant to the Warrant)
beneficially owned by VHA together with all affiliates of VHA exceeds 19.9%
of the then outstanding Common Stock of Parent (the shares in excess of
such 19.9% threshold, "EXCESS SHARES"), VHA shall, and shall cause its
affiliates to, vote all Excess Shares it holds or is entitled to vote in
proportion to the votes cast by all other stockholders of Parent in
connection with each matter submitted to Parent's stockholders for approval
except for (i) a proposed Change of Control, (ii) the election of VHA's
designated nominees to the Board of Directors of Parent, or (iii) an
amendment of the Certificate of Incorporation of Parent that would
materially and adversely affect VHA as a Parent stockholder in a manner
different from the effect such amendment would have on other Parent
stockholders generally. On all matters submitted to Parent stockholders for
approval other than those identified in items (i), (ii) and (iii) of the
first sentence of this section, VHA shall, and shall cause its affiliates
to, vote all Excess Shares in proportion to the votes cast by all other
stockholders of Parent in connection with each matter submitted to Parent
stockholders' for approval, including, without limitation, on any matters
regarding equity-based or other compensation plans of Parent, the issuance
of capital stock of Parent, amendments to the Certificate of Incorporation
of Parent other than as set forth in clause (iii) above, elections of
directors other than VHA's designated nominees to the Board of Directors,
or transactions involving interested or related parties. Notwithstanding
any voting restrictions set forth herein, the Board of Directors of Parent
may waive any voting restriction set forth herein with respect to any
particular matter. For purposes of this Agreement, "CHANGE OF CONTROL"
means the consummation of any transaction or series of related
transactions, including an acquisition of Parent by another entity and any
reorganization, merger, consolidation or share exchange, that results in
the beneficial owners of Parent's capital stock immediately prior to the
transaction or transactions holding less than 50% of the voting power of
Parent immediately after the transaction or transactions, or a transaction
or series of related transactions which result in the sale, exchange,
transfer, acquisition or disposition of more than 50% of the assets of
Parent.
6.2 Acquisition of Parent Securities. VHA agrees that
during the Restricted Period, (i) at any time that VHA together with all of
its affiliates beneficially owns 24% (on a Common Stock-equivalent basis)
or more of the outstanding shares of Common Stock or other capital stock of
Parent or of any option, warrant or right to acquire capital stock of
Parent (such shares, options, warrants and other rights, collectively,
"RIGHTS IN PARENT STOCK"), VHA will not, without the prior written consent
of Parent, acquire legal or beneficial ownership of any additional Rights
in Parent Stock, except pursuant to the Warrant, and (ii) at any time that
VHA, together with all of its affiliates beneficially owns less than 24% of
the outstanding Rights in Parent Stock, VHA may acquire such number of
Rights in Parent Stock so that after the acquisition of such Rights in
Parent Stock the aggregate number of Rights in Parent Stock, on a Common
Stock-equivalent basis, legally or beneficially owned by VHA and all
affiliates of VHA, assuming issuance of all shares of Parent Common Stock
issuable pursuant to such Rights in Parent Stock, equals not more than 24%
of the outstanding Common Stock of Parent.
6.3 Transfer of Parent Securities. VHA agrees that it
will not, directly or indirectly, in a single transaction or series of
related transactions, without the prior written consent of Parent, sell,
transfer or otherwise dispose of legal or beneficial ownership of Rights in
Parent Stock to any person if such person together with its affiliates
would, to the knowledge of VHA, after reasonable inquiry, beneficially own
15% or more of the then outstanding Rights in Parent Stock, unless prior to
such sale, transfer or disposal, such transferee agrees in writing to be
bound by VHA's agreements set forth in Section 6.1, 6.2 (with "19.9%" in
Section 6.1 and "24%" in Section 6.2 each read as "15%") and this Section
6.3.
6.4 Parent Board of Directors. The Board of Directors of
Parent will take all actions reasonably necessary such that as soon as
practicable following the Closing, the size of Parent's Board of Directors
shall be seven members, and two persons shall be appointed by VHA to
Parent's Board of Directors to fill vacancies in Class I. Under the
Parent's Charter Documents, the terms of Class I Directors expire in 2000,
the terms of Class II Directors expire in 2001 and the terms of Class III
Directors expire in 2002. The Class I Directors appointed pursuant to this
Section shall be appointed following Parent's annual meeting in 2000 to
terms expiring in 2003. For so long as VHA beneficially owns 10% or more of
the outstanding Common Stock of Parent on a fully converted basis (taking
into account for VHA, all shares of Common Stock issuable upon the exercise
of the Warrant), Parent will take all actions reasonably necessary to have
one person appointed by VHA be a member of Parent's Board of Directors. For
so long as VHA beneficially owns 20% or more of the Common Stock of Parent
on a fully converted basis (taking into account for VHA, all shares of
Common Stock issuable upon the exercise of the Warrant), Parent will take
all actions reasonably necessary to have two persons appointed by VHA be
members of Parent's Board of Directors. If Parent's Board of Directors
establishes an executive committee or another committee of less than all
directors having general authority similar to that customarily delegated to
an executive committee, one member of such committee shall be a director
nominated by VHA.
6.5 Reasonable Efforts.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other party in doing, all
things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by
this Agreement, including using reasonable efforts to accomplish the
following: (i) the taking of all reasonable acts necessary to cause the
conditions precedent set forth in Articles VII and VIII to be satisfied,
(ii) the obtaining of all necessary actions or nonactions, waivers,
consents, approvals, orders and authorizations from Governmental Entities
and the making of all necessary registrations, declarations and filings
(including registrations, declarations and filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by
any Governmental Entity, (iii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iv) the defending of any suits,
claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental
Entity vacated or reversed and (v) the execution or delivery of any
additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement.
Notwithstanding anything in this Agreement to the contrary, neither Parent
nor any of its affiliates shall be under any obligation to make proposals,
execute or carry out agreements or submit to orders providing for the sale
or other disposition or holding separate (through the establishment of a
trust or otherwise) of any assets or categories of assets of Parent or any
of its affiliates or imposing or seeking to impose any limitation on the
ability of Parent or any of its subsidiaries or affiliates to conduct their
business or own such assets.
(b) Each of VHA and Parent will give prompt notice to the
other of (i) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection with
the consummation of transactions contemplated by this Agreement, (ii) any
notice or other communication from any Governmental Entity in connection
with the transactions contemplated by this Agreement or the Outsourcing
Agreement, (iii) any litigation relating to, involving or otherwise
affecting VHA, Novation, HPPI, Parent or their respective subsidiaries that
relates to the consummation of the transactions contemplated by this
Agreement or the Outsourcing Agreement. VHA shall give prompt notice to
Parent of any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate, or any failure of VHA to comply
with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement, in
each case, such that the conditions set forth in Article VIII would not be
satisfied, provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement. Parent
shall give prompt notice to VHA of any representation or warranty made by
it contained in this Agreement becoming untrue or inaccurate, or any
failure of Parent to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it
under this Agreement, in each case, such that the conditions set forth in
Article VII would not be satisfied, provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the
parties under this Agreement.
6.6 Registration Rights. Parent shall use its reasonable
best efforts to cause the requisite holders of registration rights under
the Second Amended and Restated Registration Rights Agreement among Parent
and certain of its investors dated October 14, 1999 (the "EXISTING
REGISTRATION RIGHTS AGREEMENT") to amend and substitute for such agreement
the Amended and Restated Registration Rights Agreement in substantially the
form attached hereto as Exhibit B (the "NEW REGISTRATION RIGHTS AGREEMENT")
effective as of the Closing. If as of the Closing, the requisite holders of
registration rights under the Existing Registration Rights Agreement shall
not have agreed to amend and substitute for such agreement the New
Registration Rights Agreement, then Parent and VHA shall enter into, and
Parent shall use its reasonable best efforts to cause the holders of
registration rights under the Existing Registration Rights Agreement to
enter into, effective as of the Closing, a registration rights agreement
(the "ALTERNATIVE REGISTRATION RIGHTS AGREEMENT") modeled upon the New
Registration Rights Agreement and only differing from the New Registration
Rights Agreement to the extent necessary so that the Alternative
Registration Rights Agreement does not conflict with or violate the
Existing Registration Rights Agreement.
6.7 Public Disclosure. Parent and VHA will consult with
each other, and to the extent practicable, agree, before issuing any press
release or otherwise making any public statement with respect to this
Agreement and will not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or
any listing agreement with a national securities exchange. The parties have
agreed to the text of the press release announcing the signing of this
Agreement.
ARTICLE VII
CONDITIONS TO VHA'S OBLIGATIONS AT CLOSING
The obligations of VHA under Sections 1 and 2 of this Agreement
are subject to the fulfillment or waiver, on or before the Closing, of each
of the following conditions:
7.1 Representations and Warranties. The representations
and warranties of Parent contained in this Agreement, disregarding all
qualifications and exceptions contained therein relating to materiality or
Material Adverse Effect or any similar standard or qualification, shall be
true and correct at and as of the Closing as if made at and as of the
Closing (other than representations and warranties that address matters
only as of a particular date, which shall be true and correct as of such
date), except where the failure of such representations or warranties to be
true or correct would not have, individually or in the aggregate, a
Material Adverse Effect on Parent. It is understood that, for purposes of
determining the accuracy of such representations and warranties, any update
of or modification to the Parent Disclosure Letter made or purported to
have been made after the execution of this Agreement shall be disregarded.
VHA shall have received a certificate with respect to the foregoing signed
on behalf of Parent by the Chief Executive Officer or the Chief Financial
Officer of Parent.
7.2 Performance. Parent shall have performed and complied
in all material respects with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied
with by it on or before the Closing.
7.3 Securities Exemptions. The offer and sale of the
Shares and the Warrant to VHA pursuant to this Agreement shall be exempt
from the registration requirements of the 1933 Act, the qualification
requirements of the California Corporate Securities Law of 1968, as amended
("CALIFORNIA LAW") and the registration and/or qualification requirements
of all other applicable state securities laws.
7.4 Consents. (i) All required approvals or consents of
any Governmental Entity or other person in connection with the consummation
of the transactions contemplated hereby shall have been obtained (and all
relevant statutory, regulatory or other governmental waiting periods, shall
have expired) unless the failure to receive any such approval or consent
would not be reasonably likely, directly or indirectly, to result in a
Material Adverse Effect on Parent and its subsidiaries, taken as a whole,
and (ii) all such approvals and consents which have been obtained shall be
on terms that are not reasonably likely, directly or indirectly, to result
in a Material Adverse Effect on Parent and its subsidiaries, taken as a
whole.
7.5 Nasdaq Listing. The Shares and the Warrant Stock
shall have been approved for listing on the Nasdaq Stock Market, subject to
official notice of issuance.
7.6 Outsourcing Agreement. (i) Parent shall have executed
and delivered the Outsourcing Agreement, (ii) the Outsourcing Agreement
shall be fully effective in accordance with its terms, and (iii) Parent
shall be in compliance in all material respects with the terms of the
Outsourcing Agreement, and VHA shall have received a certificate with
respect to the foregoing clauses (i), (ii) and (iii) executed by the Chief
Executive Officer or the Chief Financial Officer of Parent.
7.7 Parent Stockholder Approval. The issuance of the
Shares, the Warrant and the Warrant Stock shall have been approved by the
requisite vote of the stockholders of Parent under applicable law and the
Parent Charter Documents.
ARTICLE VIII
CONDITIONS TO PARENT'S OBLIGATIONS AT CLOSING
The obligations of Parent under this Agreement are subject to the
fulfillment or waiver on or before the Closing of each of the following
conditions:
8.1 Representations and Warranties. The representations
and warranties of VHA contained in Section 4 shall be true and correct in
all material respects on the date of the Closing with the same effect as
though such representations and warranties had been made on and as of the
Closing.
8.2 Performance. VHA shall have performed and complied in
all material respects with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied
with by it on or before the Closing.
8.3 Parent Stockholder Approval. The issuance of the
Shares, the Warrant and the Warrant Stock shall have been approved by the
requisite vote of the stockholders of Parent under applicable law and the
Parent Charter Documents.
8.4 Outsourcing Agreement. (i) Each party to the
Outsourcing Agreement (other than Parent) shall have executed and delivered
the Outsourcing Agreement, (ii) the Outsourcing Agreement shall be fully
effective in accordance with its terms, and (iii) each of the parties
thereto (other than Parent) shall be in compliance in all material respects
with the terms of the Outsourcing Agreement, and Parent shall have received
a certificate with respect to the foregoing clauses (i), (ii) and (iii)
executed by the Chief Executive Officers or Chief Financial Officers of
each of Novation, VHA, UHC and HPPI.
8.5 Securities Exemptions. The issuance of the Shares and
the Warrant to VHA pursuant to this Agreement shall be exempt from the
registration requirements of the 1933 Act, the qualifications requirements
of California Law and the registration and/or qualification requirements of
all other applicable state securities laws.
8.6 Consents. (i) All required approvals or consents of
any Governmental Entity or other person in connection with the consummation
of the transactions contemplated hereby shall have been obtained (and all
relevant statutory, regulatory or other governmental waiting periods, shall
have expired) unless the failure to receive any such approval or consent
would not be reasonably likely, directly or indirectly, to result in a
Material Adverse Effect on Parent and its subsidiaries, taken as a whole,
and (ii) all such approvals and consents which have been obtained shall be
on terms that are not reasonably likely, directly or indirectly, to result
in a Material Adverse Effect on Parent and its subsidiaries, taken as a
whole.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated prior
to the Closing, whether before or after the requisite approval of the
issuance of the Shares, the Warrant and the Warrant Stock by Parent's
stockholders:
(a) by mutual written consent duly authorized by the
Boards of Directors of Parent and VHA;
(b) by either Parent or VHA if the Closing shall not have
occurred by September 30, 2000 for any reason; provided, however, that the
right to terminate this Agreement under this Section 9.1(b) shall not be
available to any party whose action or failure to act has been a principal
cause of or resulted in the failure of the Closing to occur on or before
such date and such action or failure to act constitutes a breach of this
Agreement or the Outsourcing Agreement;
(c) by either Parent or VHA if a Governmental Entity
shall have issued an order, decree or ruling or taken any other action, in
any case having the effect of permanently restraining, enjoining or
otherwise prohibiting the Closing, which order, decree, ruling or other
action is final and nonappealable;
(d) by either Parent or VHA, if the approval of the
issuance of the Shares, the Warrant and the Warrant Stock by the
stockholders of Parent shall not have been obtained by reason of the
failure to obtain the required vote at a meeting of Parent stockholders
duly convened therefor or at any adjournment thereof;
(e) by either Parent or VHA, if the Outsourcing Agreement
is validly terminated according to its terms by a party thereto; or
(f) by VHA, at any time prior to the Parent Stockholders'
Meeting, if a Triggering Event (as defined below) shall have occurred;
provided, however, that VHA shall not have the right to terminate this
Agreement under this Section 7.1(f) in response to the occurrence of the
Triggering Event set forth in clause (iii) of the definition thereof if at
the time the event set forth in such clause (iii) occurs VHA is in material
breach of this Agreement, or VHA, Novation or HPPI is in material breach of
the Outsourcing Agreement, which breach has not been cured as of such time.
For the purposes of this Agreement, a "TRIGGERING EVENT"
shall be deemed to have occurred if: (i) the Board of Directors of Parent
or any committee thereof shall for any reason have withdrawn or shall have
amended or modified in a manner adverse to VHA its recommendation in favor
of the approval of the Parent Stockholder Approval; (ii) Parent shall have
failed to include in the Proxy Statement the recommendation of the Board of
Directors of Parent in favor of the approval of the Parent Stockholder
Approval; (iii) the Board of Directors of Parent fails to reaffirm its
recommendation in favor of the approval of the Parent Stockholder Approval
within 10 business days after VHA requests in writing that such
recommendation be reaffirmed at any time following the public announcement
of a Parent Acquisition Proposal; (iv) the Board of Directors of Parent or
any committee thereof shall have approved or publicly recommended any
Parent Acquisition Proposal; (v) Parent shall have entered into any letter
of intent of similar document or any agreement, contract or commitment
accepting any Parent Acquisition Proposal; or (vi) Parent shall have
materially breached any of the provisions of Sections 5.2 or 5.4(a) or (b).
9.2 Notice of Termination; Effect of Termination. Any
proper termination of this Agreement under Section 9.1 will be effective
immediately upon the delivery of written notice of the terminating party to
the other party hereto. In the event of the termination of this Agreement
as provided in Section 9.1, this Agreement shall be of no further force or
effect, except (i) as set forth in this Section 9.2, Section 9.3 and
Article X, each of which shall survive the termination of this Agreement,
and (ii) nothing herein shall relieve either party from liability for any
willful breach of this Agreement.
9.3 Parent Payment. In the event that this Agreement is
terminated by VHA pursuant to Section 9.1(f), Parent shall promptly, but in
no event later than two days after the date of such termination, pay VHA a
fee equal to $12 million in immediately available funds. In the event that
(A) following the date of this Agreement and prior to the Parent
Stockholders' Meeting, a person has publicly announced a bona fide Parent
Acquisition Proposal, (B) this Agreement is terminated by Parent or VHA
pursuant to Section 9.1(d), and (C) within nine months following the
termination of this Agreement pursuant to Section 9.1(d), either the Parent
Acquisition contemplated by such Parent Acquisition Proposal is
consummated, or Parent enters into an agreement providing for a Parent
Acquisition and such Parent Acquisition is later consummated with the
person (or another person controlling, controlled by or under common
control with, such person) with whom such agreement was entered into
(regardless of when such consummation occurs if Parent has entered into
such an agreement within such nine-month period), Parent shall promptly,
but in no event later than two days after the consummation of such Parent
Acquisition, pay VHA a fee equal to $12 million in immediately available
funds. Parent acknowledges that the agreements contained in this Section
9.3 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, VHA would not enter into
this Agreement. Accordingly, if Parent fails to pay in a timely manner the
amounts due pursuant to this Section 9.3, and, in order to obtain such
payment, VHA makes a claim that results in a judgment against Parent for
the amounts set forth in this Section 9.3, Parent shall pay to VHA its
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) in connection with such suit, together with interest on the
amounts set forth in this Section 9.3 at the prime rate of The Chase
Manhattan Bank in effect on the date such payment was required to be made.
ARTICLE X
GENERAL PROVISIONS
10.1 Survival of Warranties. The representations,
warranties and covenants of VHA (except for any covenant that by its
express terms survives the Closing, and for the representations, warranties
and covenants set forth in Sections 4.3 through 4.10 inclusive, which shall
survive the execution and delivery of this Agreement and the Closing)
contained in or made pursuant to this Agreement shall terminate at the
Closing. The representations, warranties and covenants of Parent (except
for any covenant that by its express terms survives the Closing) contained
in or made pursuant to this Agreement shall terminate at the Closing.
10.2 Assignment. No party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without
the prior written consent of the other party hereto. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and
permitted assigns. Any purported assignment in violation of this Section
shall be void.
10.3 Governing Law. This Agreement shall be governed by
and construed under the internal laws of the State of Delaware as applied
to agreements among Delaware residents entered into and to be performed
entirely within Delaware, without reference to principles of conflict of
laws or choice of laws.
10.4 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
10.5 Interpretation; Certain Defined Terms.
(a) When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The words "INCLUDE," "INCLUDES" and "INCLUDING" when
used herein shall be deemed in each case to be followed by the words
"WITHOUT LIMITATION." The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. When reference is made herein to "THE
BUSINESS OF" an entity, such reference shall be deemed to include the
business of all direct and indirect subsidiaries of such entity. Reference
to the subsidiaries of an entity shall be deemed to include all direct and
indirect subsidiaries of such entity.
(b) For purposes of this Agreement, "ENCUMBRANCES" means
any lien, pledge, hypothecation, charge, mortgage, security interest,
encumbrance, claim, option, right of first refusal, preemptive right,
community property interest or restriction of any nature (including any
restriction on the voting of any security, any restriction on the transfer
of any security or other asset, any restriction on the receipt of any
income derived from any asset, any restriction on the use of any asset and
any restriction on the possession, exercise or transfer of any other
attribute of ownership of any asset) (other than (i) liens for taxes not
yet due and payable; (ii) liens reflected on the Parent Balance Sheet, if
applicable; (iii) liens which are not material in character, amount or
extent, and which do not materially detract from the value or materially
interfere with the use of the property subject thereto or affected thereby;
and (iv) contractor's liens).
(c) For purposes of this Agreement, the term "MATERIAL
ADVERSE EFFECT" when used in connection with an entity means any change,
event, violation, inaccuracy, circumstance or effect that is or is
reasonably likely to be materially adverse to the business, assets
(including intangible assets), capitalization, financial condition,
operations or results of operations of such entity taken as a whole with
its subsidiaries, except to the extent that any such change, event,
violation, inaccuracy, circumstance or effect directly and primarily
results from (i) changes in general economic conditions or changes
affecting the industry generally in which such entity operates (provided
that such changes do not affect such entity in a substantially
disproportionate manner) or (ii) changes in the trading prices for such
entity's capital stock.
(d) For purposes of this Agreement, the term "PERSON"
shall mean any individual, corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization, entity or Governmental Entity.
10.6 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon delivery
either personally or by commercial delivery service, or sent via facsimile
(receipt confirmed) to the parties at the following addresses or facsimile
numbers (or at such other address or facsimile number for a party as shall
be specified by like notice):
<TABLE>
<CAPTION>
IF TO VHA: WITH A COPY TO:
<S> <C>
VHA Inc. Skadden, Arps, Slate, Meagher & Flom, LLP
220 East Las Colinas Boulevard Four Times Square
Irving, Texas 75039-5500 New York, New York 10036
Facsimile: 972-830-0391 Facsimile: 212-735-2000
Attn: Chief Financial Officer Attn: Nancy A. Lieberman
IF TO PARENT: WITH A COPY TO:
Neoforma.com, Inc. Fenwick & West LLP
3255-7 Scott Boulevard Two Palo Alto Square, Palo Alto, California 94306
Santa Clara, California 95054 Facsimile: 650-494-1417
Facsimile: 408-549-6211 Attn: Gordon K. Davidson
Attn: Chief Financial Officer Douglas N. Cogen
</TABLE>
10.7 Expenses; Finder's Fees. All fees and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses
whether or not the Closing occurs. VHA agrees to indemnify and to hold
harmless Parent from any liability for any commission or compensation in
the nature of a finder's or broker's fee (and any asserted liability) for
which VHA or any of its officers, partners, members, employees, or
representatives is responsible. Parent agrees to indemnify and hold
harmless VHA from any liability for any commission or compensation in the
nature of a finder's or broker's fee (and any asserted liability) for which
Parent or any of its officers, employees or representatives is responsible.
10.8 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such
provision(s) shall be excluded from this Agreement and the balance of the
Agreement shall be interpreted as if such provision(s) were so excluded and
shall be enforceable in accordance with its terms.
10.9 Entire Agreement. This Agreement, together with all
exhibits and schedules hereto, and the Outsourcing Agreement constitute the
entire agreement and understanding of the parties with respect to the
subject matter hereof and supersedes any and all prior negotiations,
correspondence, agreements, understandings duties or obligations between
the parties with respect to the subject matter hereof.
10.10 Further Assurances. From and after the date of this
Agreement, upon the request of VHA or Parent, Parent and VHA shall execute
and deliver such instruments, documents or other writings as may be
reasonably necessary or desirable to confirm and carry out and to
effectuate fully the intent and purposes of this Agreement.
10.11 Amendment; Extension; Waiver. Subject to applicable
law, this Agreement may be amended by the parties hereto at any time by
execution of an instrument in writing signed on behalf of Parent and VHA.
At any time prior to the Closing any party hereto may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. Delay in exercising
any right under this Agreement shall not constitute a waiver of such right.
10.12 Other Remedies; Specific Performance. Except as
otherwise provided herein, any and all remedies herein expressly conferred
upon a party will be deemed cumulative with and not exclusive of any other
remedy conferred hereby, or by law or equity upon such party, and the
exercise by a party of any one remedy will not preclude the exercise of any
other remedy; provided, that payment by Parent of the amount provided for
under Section 9.3 shall constitute full and liquidated damages for any
alleged breach of this Agreement by Parent in connection with such
termination. The parties hereto agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to
seek an injunction or injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to
any other remedy to which they are entitled at law or in equity.
10.13 Rules of Construction. The parties hereto agree
that they have been represented by counsel during the negotiation and
execution of this Agreement and, therefore, waive the application of any
law, regulation, holding or rule of construction providing that 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.
* * * * *
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 AMENDED AND RESTATED COMMON STOCK AND WARRANT AGREEMENT]
SCHEDULE OF EXHIBITS
Exhibit A: Form of Warrant (see Exhibit 4.1 to Schedule 13D)
Exhibit B: Form of New Registration Rights Agreement (see
Exhibit 4.2 to Schedule 13D)
