EXHIBIT 3
AMENDMENT TO AMENDED AND RESTATED COMMON STOCK AND WARRANT AGREEMENT
This AMENDMENT, dated as of January 25, 2001 (this "AMENDMENT"), amends
the Amended and Restated Common Stock and Warrant Agreement made and entered
into as of March 30, 2000, and amended and restated as of May 24, 2000 (the
"AGREEMENT"), by and between Xxxxxxxx.xxx, Inc., a Delaware corporation
("PARENT"), and University HealthSystem Consortium, an Illinois corporation
("UHC").
RECITALS
WHEREAS, Parent, Novation, LLC, a Delaware limited liability company
("NOVATION"), VHA Inc., a Delaware corporation ("VHA"), UHC, and Healthcare
Purchasing Partners International, LLC, a Delaware limited liability company
("HPPI"), have entered into that certain Outsourcing and Operating Agreement,
dated as of March 30, 2000, and amended and restated as of May 24, 2000 and
January 25, 2001 (the "OUTSOURCING AGREEMENT"). Capitalized terms in this
Amendment which are not otherwise defined in this Amendment shall have the
meanings assigned to them in the Agreement, or if not defined therein, in the
Outsourcing Agreement.
WHEREAS, in consideration of the services rendered and to be rendered
by UHC pursuant to the Outsourcing Agreement and UHC's fulfillment of its duties
and obligations thereunder, Parent issued to UHC (i) 11,279,150 shares (such
shares, the "SHARES") of Parent common stock, par value $0.001 per share
("COMMON STOCK"), and (ii) a warrant to purchase up to 7,519,436 shares of
Common Stock (the "WARRANT").
WHEREAS, on December 19, 2000, UHC exercised its right to purchase
1,879,859 shares of Common Stock subject to the Warrant, representing all of the
vested and exercisable shares of Common Stock available for purchase pursuant to
Sections 1.1.2 (1) and 1.1.3 (1) of the Warrant, leaving a balance of 5,639,577
shares of Common Stock that remain subject to the Warrant.
WHEREAS, Parent and UHC mutually desire to cancel the Warrant and
substitute for the remaining shares subject to potential vesting under the
Warrant, 5,639,577 shares of restricted Common Stock, which shares shall be
subject to forfeiture by UHC to Parent, in each case, subject to the terms and
conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth in this
Amendment, the Agreement and the Outsourcing Agreement, the parties agree as
follows:
ARTICLE I
SUBSTITUTION OF RESTRICTED SHARES FOR WARRANT
1.1 Authorization; Closing. As of the consummation of the transactions
substituting Restricted Shares (as defined below) for the Warrant (the
"SUBSTITUTION CLOSING"), Parent will have authorized the issuance to UHC of
4,229,682 shares of restricted Common Stock (the "TRANCHE A SHARES") and
1,409,895 shares of restricted Common Stock (the "TRANCHE B SHARES", and
collectively with the Tranche A Shares, the "RESTRICTED SHARES"). The
Substitution Closing will take place at the offices of Fenwick & West LLP, Two
Palo Alto Square, Palo Alto, California, on January 25, 2001, or such other time
and date as mutually agreed upon by the parties.
1.2 Cancellation and Substitution of Warrant and Issuance of Restricted
Shares.
(a) At the Substitution Closing, UHC shall return to Parent
for cancellation, and Parent shall cancel, the Warrant. On and after the
Substitution Closing, the Warrant shall, in all respects, be cancelled,
terminated and of no further force or effect.
(b) At the Substitution Closing, Parent shall issue to UHC
4,229,682 Tranche A Shares and 1,409,895 Tranche B Shares. UHC's right to fully
enjoy beneficial ownership of the Restricted Shares shall be subject to a
substantial risk of forfeiture by UHC to Parent pursuant to the terms and to the
extent set forth in this Article I (the "FORFEITURE RISK"). Restricted Shares
that become vested pursuant to this Article I and are no longer subject to the
Forfeiture Risk are referred to as "VESTED SHARES."
1.3 Definitions.
(a) "CUMULATIVE SIGNED PURCHASING VOLUME" means, as of any
Determination Date (as defined in Sections 1.4(a), (b) and (c) of this
Amendment), the sum of (x) the cumulative dollar volume of purchases by
Healthcare Organizations that are members or patrons of UHC (calculated, for
each such Healthcare Organization, by multiplying (A) the amount of Novation
contract purchases (as reported in the SRIS system maintained for Novation's
benefit) by such Healthcare Organization during the most recent complete
calendar year ending prior to the first Determination Date on or prior to which
such Healthcare Organization Signed-Up with Parent by (B) 2.4 (the "BASE
AMOUNT")) and that Signed-Up with Parent on or prior to such Determination Date,
plus (y) 19.6% of the cumulative dollar volume of purchases by Healthcare
Organizations that are members or patrons of HPPI (using, for each such
Healthcare Organization, its Base Amount) and that Signed-Up with Parent on or
prior to such Determination Date, provided that (i) for purposes of computing
the first Base Amount for each Healthcare Organization, such Base Amount will be
increased by 3.625% and (ii) in addition to the increase in the Base Amount for
any Healthcare Organization pursuant to the preceding clause (i), the Base
Amount for each Healthcare Organization shall also be increased annually by
7.25% when computing Cumulative Signed Purchasing Volume for Determination Dates
which are subsequent to the first Determination Date on or prior to which a
particular Healthcare Organization Signed-Up with Parent. For purposes of
clarity, the parties agree that once a Healthcare Organization is deemed to have
"Signed-Up" with Parent, its Cumulative Signed Purchasing Volume, as computed
and increased under the formula set forth in this definition, shall be included
in the computation of Cumulative Signed Purchasing Volume for all Determination
Dates arising on or after the date such Healthcare Organization Signed-Up with
Parent, whether or not such Healthcare Organization continues to do business
with Parent.
(b) "HEALTHCARE ORGANIZATION" shall mean any facility
providing health care services.
(c) "PREFERRED PROVIDER" means the Healthcare Organization
agrees to use the Parent internet-based system for at least 50% of its
internet-based purchases of Novation contracted products.
(d) "SIGNED-UP" means, with respect to any Healthcare
Organization, that such Healthcare Organization and Parent have entered into a
written agreement, arrangement or understanding for Parent to be the Preferred
Provider of an Internet-based system for the acquisition of Novation contracted
products by such Healthcare Organization.
1.4 Vesting of Tranche A Shares.
(a) 1,409,894 Tranche A Shares shall become Vested Shares on
June 30, 2002 (the "FIRST DETERMINATION DATE") if Cumulative Signed Purchasing
Volume as of the First Determination Date is at least $1,520 million (the "FIRST
TRANCHE A TARGET AMOUNT").
(b) 1,409,894 Tranche A Shares shall become Vested Shares on
June 30, 2003 (the "SECOND DETERMINATION DATE") if Cumulative Signed Purchasing
Volume as of the Second Determination Date is at least $2,347 million (the
"SECOND TRANCHE A TARGET AMOUNT").
(c) 1,409,894 Tranche A Shares shall become Vested Shares on
June 30, 2004 (the "THIRD DETERMINATION DATE") if Cumulative Signed Purchasing
Volume as of the Third Determination Date is at least $3,231 million (the "THIRD
TRANCHE A TARGET AMOUNT").
(d) In the event the Tranche A Target Amount of Cumulative
Signed Purchasing Volume specified in any of Section 1.4 paragraphs (a), (b) or
(c) above is not achieved as of the particular Determination Date specified in
such paragraph (such shortfall below a particular Tranche A Target Amount being
referred to as a "TRANCHE A SHORTFALL AMOUNT"), then the number of Tranche A
Shares which shall become Vested Shares at a particular Determination Date
pursuant to Section 1.4 paragraphs (a), (b), or (c) above shall equal the
product of 1,409,894 and a fraction, the numerator of which is the Cumulative
Signed Purchasing Volume as of the Determination Date in question and the
denominator of which is the Tranche A Target Amount for the Determination Date
in question. By way of example, using the formula in the preceding sentence, if
as of June 30, 2002, Cumulative Signed Purchasing Volume is $1,000 million,
927,562 Tranche A Shares shall become Vested Shares:
1,409,894 x 1,000 = 927,562 Vested Shares
-----
1,520
If there is a Tranche A Shortfall Amount relating to a
particular Determination Date, then the number of Tranche A Shares which will
not vest due to such shortfall shall equal 1,409,894 minus the number of Tranche
A Shares which became Vested Shares on such Determination Date (the "TRANCHE A
SHORTFALL SHARES"). Using the facts set forth in the preceding example, if as of
June 30, 2002, Cumulative Signed Purchasing Volume is $1,000 million, and
927,562 Tranche A Shares become Vested Shares, then 482,332 Tranche A Shares
shall be deemed Tranche A Shortfall Shares as of the First Determination Date:
1,409,894 - 927,562 = 482,332 Tranche A Shortfall Shares
A Determination Date as of which there is a Tranche A
Shortfall Amount is referred to as a "TRANCHE A SHORTFALL DETERMINATION DATE." A
Determination Date which occurs immediately after a Tranche A Shortfall
Determination Date is referred to as a "TRANCHE A CATCH UP DETERMINATION DATE."
If as of a Tranche A Catch Up Determination Date, the applicable Tranche A
Target Amount for such Tranche A Catch Up Determination Date is met or exceeded,
then the Tranche A Shortfall Shares which did not vest on such Tranche A
Shortfall Determination Date shall immediately become Vested Shares on the
Tranche A Catch Up Determination Date, it being agreed that if the Tranche A
Target Amount relating to such Tranche A Catch Up Determination Date is not met,
such Tranche A Shortfall Shares shall never become vested. By way of example, if
the Tranche A Shortfall Amount on the First Determination Date is $520 million
resulting in 482,332 Tranche A Shortfall Shares, and as of the Second
Determination Date (which, in this example, is the Tranche A Catch Up
Determination Date with respect to the First Determination Date) the Second
Tranche A Target Amount of Cumulative Signed Purchasing Volume of $2,347 million
is met, then the 482,332 Tranche A Shortfall Shares relating to the First
Determination Date which had become a Tranche A Shortfall Determination Date
will become Vested Shares on the Second Determination Date, provided however,
that if as of the Second Determination Date Cumulative Signed Purchasing Volume
is less than $2,347 million, the 482,332 Tranche A Shortfall Shares relating to
the First Determination Date shall never become vested, even if as of the Third
Determination Date the relevant Tranche A Target Amount for such Determination
Date is met or exceeded.
(e) If, on the December 15 immediately preceding a
Determination Date, UHC delivers to Parent written evidence establishing that a
number of Tranche A Shares would become Vested Shares on such December 15 if
such December 15 were to be treated as if it were the immediately following
Determination Date (but not any other subsequent Determination Date or December
15), then such Tranche A Shares shall become Vested Shares as of such December
15, and the number of Tranche A Shares eligible to become Vested Shares on the
immediately following Determination Date shall be reduced by a like amount. If
less than all of the Tranche A Shares available to become Vested Shares on a
particular December 15 become Vested Shares on such date, any and all such
Tranche A Shares which did not become Vested Shares on such December 15 may
become Vested Shares on the Determination Date immediately following such
December 15 in accordance with the pro rata provisions of paragraph (d), and if
such Determination Date immediately following such December 15 is a Tranche A
Shortfall Determination Date, each of the December 15 immediately following such
Tranche A Shortfall Determination Date and the Determination Date immediately
following such Tranche A Shortfall Determination Date, but no other December 15
or Determination Date, shall be a Tranche A Catch Up Determination Date for such
Tranche A Shortfall Determination Date. All other provisions and limitations of
paragraph (d) with respect to a Tranche A Catch Up Determination Date shall be
applicable.
1.5 Forfeiture of Tranche A Shares. On and following any date on which
any Tranche A Shares cannot become Vested Shares pursuant to the provisions of
Section 1.4 of this Amendment, all such Tranche A Shares that cannot become
Vested Shares shall, without the payment of any consideration by Parent or any
further action by UHC or Parent, be forfeited by UHC to Parent. Upon any such
forfeiture of Tranche A Shares, UHC shall promptly, but in no event later than
three business days after such forfeiture, return the certificates representing
the shares so forfeited to Parent for cancellation.
1.6 Vesting of Tranche B Shares.
(a) 469,965 Tranche B Shares shall become Vested Shares on the
First Determination Date if Cumulative Signed Purchasing Volume as of the First
Determination Date is at least $2,026 million (the "FIRST TRANCHE B TARGET
AMOUNT").
(b) 469,965 Tranche B Shares shall become Vested Shares on the
Second Determination Date if Cumulative Signed Purchasing Volume as of the
Second Determination Date is at least $3,130 million (the "SECOND TRANCHE B
TARGET AMOUNT").
(c) 469,965 Tranche B Shares shall become Vested Shares on the
Third Determination Date if Cumulative Signed Purchasing Volume as of the Third
Determination Date is at least $4,308 million (the "THIRD TRANCHE B TARGET
AMOUNT").
(d) In the event the Tranche B Target Amount of Cumulative
Signed Purchasing Volume specified in any of Section 1.6 paragraphs (a), (b), or
(c) above is not achieved as of the particular Determination Date specified in
such paragraph (such shortfall below a particular Tranche B Target Amount being
referred to as a "TRANCHE B SHORTFALL AMOUNT"), then the number of Tranche B
Shares which shall become Vested Shares at a particular Determination Date
pursuant to Section 1.6 paragraphs (a), (b), or (c) above shall equal the
product of 469,965 and a fraction, the numerator of which is the Cumulative
Signed Purchasing Volume as of the Determination Date in question minus the
Tranche A Target Amount for the Determination Date in question and the
denominator of which is the Tranche B Target Amount for the Determination Date
in question minus the Tranche A Target Amount for the Determination Date in
question. It is agreed that no Tranche B Shares will become Vested Shares on a
particular Determination Date if the Tranche A Target Amount relating to such
Determination Date is not exceeded. By way of example, if as of June 30, 2002,
Cumulative Signed Purchasing Volume is $2,000 million, 445,817 Tranche B Shares
shall become Vested Shares:
469,965 x (2,000 - 1,520) = 445,817 Vested Shares
---------------
(2,026 - 1,520)
If there is a Tranche B Shortfall Amount relating to a
particular Determination Date, then the number of Tranche B Shares which will
not vest due to such shortfall shall equal 469,965 minus the number of Tranche B
Shares which became Vested Shares on such Determination Date (the "TRANCHE B
SHORTFALL SHARES"). If no Tranche B Shares became Vested Shares on a
Determination Date, then there will be 469,965 Tranche B Shortfall Shares with
respect to the Determination Date in question. Using the facts set forth in the
preceding example, if as of June 30, 2002, Cumulative Signed Purchasing Volume
is $2,000 million, and 445,817 Tranche B Shares become Vested Shares, then
24,148 Tranche B Shares shall be deemed Tranche B Shortfall Shares as of the
First Determination Date:
469,965 - 445,817 = 24,148 Tranche B Shortfall Shares
A Determination Date as of which there is a Tranche B
Shortfall Amount is referred to as a "TRANCHE B SHORTFALL DETERMINATION DATE." A
Determination Date which occurs immediately after a Tranche B Shortfall
Determination Date is referred to as a "TRANCHE B CATCH UP DETERMINATION DATE."
If as of a Tranche B Catch Up Determination Date, the applicable Tranche B
Target Amount for such Tranche B Catch Up Determination Date is met or exceeded,
then the Tranche B Shortfall Shares which did not vest on such Tranche B
Shortfall Determination Date shall immediately become Vested Shares on the
Tranche B Catch Up Determination Date, it being agreed that if the Tranche B
Target Amount relating to such Tranche B Catch Up Determination Date is not met,
such Tranche B Shortfall Shares shall never become vested. By way of example, if
the Tranche B Shortfall Amount on the First Determination Date is $26 million
resulting in 24,148 Tranche B Shortfall Shares, and as of the Second
Determination Date (which, in this example, is the Tranche B Catch Up
Determination Date with respect to the First Determination Date) the Second
Tranche B Target Amount of Cumulative Signed Purchasing Volume of $3,130 million
is met, then the 24,148 Tranche B Shortfall Shares relating to the First
Determination Date which had become a Shortfall Determination Date will become
Vested Shares on the Second Determination Date, provided however, that if as of
the Second Determination Date Cumulative Signed Purchasing Volume is less than
$3,130 million, the 24,148 Tranche B Shortfall Shares relating to the First
Determination Date shall never become vested, even if as of the Third
Determination Date the relevant Tranche B Target Amount for such Determination
Date is met or exceeded.
(e) If, on the December 15 immediately preceding a
Determination Date, UHC delivers to Parent written evidence establishing that a
number of Tranche B Shares would become Vested Shares on such December 15 if
such December 15 were to be treated as if it were the immediately following
Determination Date (but not any other subsequent Determination Date or December
15), then such Tranche B Shares shall become Vested Shares as of such December
15, and the number of Tranche B Shares eligible to become Vested Shares on the
immediately following Determination Date shall be reduced by a like amount. If
less than all of the Tranche B Shares available to become Vested Shares on a
particular December 15 become Vested Shares on such date, any and all such
Tranche B Shares which did not become Vested Shares on such December 15 may
become Vested Shares on the Determination Date immediately following such
December 15 in accordance with the pro rata provisions of paragraph (d), and if
such Determination Date immediately following such December 15 is a Tranche B
Shortfall Determination Date, each of the December 15 immediately following such
Tranche B Shortfall Determination Date and the Determination Date immediately
following such Tranche B Shortfall Determination Date, but no other December 15
or Determination Date, shall be a Tranche B Catch Up Determination Date for such
Tranche B Shortfall Determination Date. All other provisions and limitations of
paragraph (d) with respect to a Tranche B Catch Up Determination Date shall be
applicable.
1.7 Forfeiture of Tranche B Shares. On and following any date on which
any Tranche B Shares cannot become Vested Shares pursuant to the provisions of
Section 1.6 of this Amendment, all such Tranche B Shares that cannot become
Vested Shares shall, without the payment of any consideration by Parent or any
further action by UHC or Parent, be forfeited by UHC to Parent. Upon any such
forfeiture of Tranche B Shares, UHC shall promptly, but in no event later than
three business days after such forfeiture, return the certificates representing
the shares so forfeited to Parent for cancellation.
1.8 Continuation of Vesting Provisions. In the event of a merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Parent pursuant to which shares of Common Stock
are converted into a different number or kind of security or other property
(other than cash), all Restricted Shares that are not Vested Shares shall remain
subject to the vesting provisions and the Forfeiture Risk described in this
Article I, after equitably and proportionately adjusting the provisions of this
Article I to the number and kind of securities or other property into which the
Restricted Shares have been converted pursuant to such corporate transaction. In
the event of a merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Parent pursuant to
which all shares of Common Stock are converted into cash, or a cash tender offer
for all shares of Common Stock is consummated, all Restricted Shares shall
become Vested Shares.
ARTICLE II
REPRESENTATIONS, WARRANTIES
AND CERTAIN AGREEMENTS OF PARENT
Parent hereby represents and warrants to UHC, subject to the exceptions
specifically disclosed in writing in the disclosure letter delivered by Parent
dated as of the date hereof and certified by a duly authorized officer of Parent
(the "PARENT DISCLOSURE LETTER") (which Parent Disclosure Letter shall be deemed
to be representations and warranties to UHC by Parent under this Article II), as
follows:
2.1 Organization of Parent.
(a) Parent and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority, and all requisite qualifications to do business as a foreign
corporation, to conduct its business in the manner in which its business is
currently being conducted, except where the failure to be so organized, existing
or in good standing or to have such power, authority or qualifications would
not, individually or in the aggregate, have a Material Adverse Effect on Parent.
(b) The Restricted Shares, when issued as provided in this
Agreement, will be duly authorized and validly issued, fully paid and
nonassessable.
(c) Based in part on the representations made by UHC in
Article III hereof, the issuance of the Restricted Shares solely to UHC in
accordance with this Agreement (assuming no change in currently applicable law)
is exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (the "1933 ACT").
2.2 Due Authorization.
(a) Parent has all requisite corporate power and authority to
enter into this Amendment and to consummate the transactions contemplated
hereby. The execution and delivery of this Amendment and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent. This Amendment has been duly executed
and delivered by Parent and, assuming the due authorization, execution and
delivery thereof by UHC, constitutes the valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws affecting the
rights of creditors generally and general principles of equity.
(b) The execution and delivery of this Amendment by Parent
does not, and the performance of this Amendment by Parent will not, (i) conflict
with or violate the Parent Charter Documents, (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Parent or by
which any of its properties is bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or impair Parent's rights or alter the
rights or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of an Encumbrance on any of the properties or assets of Parent pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent is a party
or by which Parent or any of its properties are bound or affected, except, in
the case of clauses (ii) and (iii), for such conflicts, violations, breaches,
defaults, impairments, or rights which, individually or in the aggregate, would
not have a Material Adverse Effect on Parent or a material adverse effect on
Parent's ability to perform its obligations hereunder. There are no consents,
waivers or approvals under any of Parent's or any of its subsidiaries'
agreements, contracts, licenses or leases required to be obtained in connection
with the consummation of the transactions contemplated hereby, which, if
individually or in the aggregate not obtained, would have a Material Adverse
Effect on Parent or a material adverse effect on Parent's ability to perform its
obligations hereunder.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency or
commission or other governmental entity or instrumentality, foreign or domestic
("GOVERNMENTAL ENTITY") is required to be obtained or made by Parent in
connection with the execution, delivery and performance of this Amendment or the
consummation of the transactions contemplated hereby, except for (i) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable federal, foreign and state
securities (or related) laws, and (ii) such other consents, authorizations,
filings, approvals and registrations which if not obtained or made would not
have a Material Adverse Effect on Parent or have a material adverse effect on
the ability of the parties hereto to consummate or perform the transactions
contemplated hereby.
2.3 Nasdaq Listing. Parent agrees that it will authorize for listing on
the Nasdaq Stock Market the Restricted Shares issuable in connection with this
Amendment, effective upon official notice of issuance.
2.4 Litigation. There are no claims, suits, actions or proceedings
pending or, to the knowledge of Parent, threatened against, relating to or
affecting Parent or any of its subsidiaries, before any Governmental Entity or
any arbitrator that seeks to restrain or enjoin the consummation of the
transactions contemplated by this Amendment.
2.5 Brokers' and Finders' Fees. Parent has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Amendment.
2.6 Anti-Takeover Protections. The Board of Directors of Parent has
taken all actions so that the restrictions contained in Section 203 of the
General Corporation Law of the State of Delaware applicable to a "business
combination" (as defined in such Section 203) will not apply to the execution,
delivery or performance of this Amendment. To Parent's knowledge, no other
anti-takeover, control share acquisition, fair price, moratorium or other
similar statute or regulation applies or purports to apply to this Amendment or
the transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS, WARRANTIES
AND CERTAIN AGREEMENTS OF UHC
UHC hereby represents and warrants to Parent as follows:
3.1 Organization, Good Standing and Qualification. UHC represents that
it is an entity duly organized, validly existing and in good standing under the
laws of the state of its formation and has all requisite power and authority,
and all requisite qualifications to do business as a foreign entity, to conduct
its business in the manner in which its business is currently being conducted,
except where the failure to be so organized, existing or in good standing or to
have such power, authority or qualifications would not have a Material Adverse
Effect on UHC.
3.2 Authorization.
(a) UHC has all requisite power and authority to enter into
this Amendment and to consummate the transactions contemplated hereby. The
execution and delivery of this Amendment and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of UHC. This Amendment has been duly executed and delivered
by UHC and constitutes the valid and binding obligations of UHC, enforceable
against UHC in accordance with its terms, except as enforceability may be
limited by bankruptcy and other similar laws affecting the rights of creditors
generally and general principles of equity.
(b) The execution and delivery of this Amendment by UHC does
not, and the performance of this Amendment by UHC will not, (i) conflict with or
violate the certificate of incorporation, bylaws, operating agreement or other
organizational documents of UHC, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to UHC or by which any of its
properties are bound or affected, or (iii) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or impair UHC's rights or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of an Encumbrance on
any of the properties or assets of UHC pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which UHC is a party or by which UHC or any of its
properties are bound or affected, except, in the case of clauses (ii) and (iii),
for such conflicts, violations, breaches, defaults, impairments, or rights
which, individually or in the aggregate, would not have a Material Adverse
Effect on UHC or a material adverse effect on UHC's ability to perform its
obligations hereunder. There are no consents, waivers or approvals under any of
UHC's or any of its subsidiaries' agreements, contracts, licenses or leases
which are required to be obtained in connection with the consummation of the
transactions contemplated hereby, which, if individually or in the aggregate not
obtained, would have a Material Adverse Effect on UHC or a material adverse
effect on UHC's ability to perform its obligations hereunder.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required to
be obtained or made by UHC in connection with the execution and delivery of this
Amendment or the consummation of the transactions contemplated hereby, except
for (i) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal, foreign
and state securities (or related) laws, and (ii) such other consents,
authorizations, filings, approvals and registrations which if not obtained or
made would not have a Material Adverse Effect on UHC or have a material adverse
effect on the ability of the parties hereto to consummate or perform the
transactions contemplated hereby.
3.3 Acquisition for Own Account. Except as previously disclosed to
Parent, the Restricted Shares to be delivered to UHC hereunder will be acquired
for UHC's own account, not as a nominee or agent, and not with a view to the
public resale or distribution thereof within the meaning of the 1933 Act, and
UHC represents that it has no present intention or agreement to sell, grant any
participation in, or otherwise distribute any of the Restricted Shares to be
acquired by UHC hereunder in any public resale or distribution within the
meaning of the 1933 Act. UHC also represents that it has not been formed for the
specific purpose of acquiring the Restricted Shares.
3.4 Disclosure of Information. UHC believes it has received or has had
full access to all the information it considers necessary or appropriate to make
an informed ownership decision with respect to the Restricted Shares to be
issued to UHC under this Agreement. UHC further has had an opportunity to ask
questions and receive answers from Parent regarding the terms and conditions of
the offering of the Restricted Shares and to obtain additional information (to
the extent Parent possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify any information furnished to
UHC or to which UHC had access. The foregoing, however, does not in any way
limit or modify the representations and warranties made by Parent in Article II.
3.5 Experience. UHC understands that ownership of the Restricted Shares
involves substantial risk. UHC: (i) has experience as owner of securities of
companies in the development stage and acknowledges that UHC is able to fend for
itself, can bear the economic risk of UHC's ownership of the Restricted Shares
and has such knowledge and experience in financial or business matters that UHC
is capable of evaluating the merits and risks of ownership of the Restricted
Shares and protecting its own interests in connection with this ownership and/or
(ii) has a preexisting personal or business relationship with Parent and certain
of its officers, directors or controlling persons of a nature and duration that
enables UHC to be aware of the character, business acumen and financial
circumstances of such persons.
3.6 Accredited Investor Status. UHC is an "accredited investor" within
the meaning of Regulation D promulgated under the 1933 Act.
3.7 Restricted Securities. UHC understands that the Restricted Shares
will be characterized as "restricted securities" under the 1933 Act inasmuch as
they are being acquired from Parent in a transaction not involving a public
offering and that under the 1933 Act and applicable regulations thereunder such
securities may be resold without registration under the 1933 Act only in certain
limited circumstances. In this connection, UHC represents that UHC is familiar
with Rule 144 of the SEC, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act.
3.8 No Solicitation. At no time was UHC presented with or solicited by
any publicly issued or circulated newspaper, mail, radio, television or other
form of general advertising or solicitation in connection with the issuance or
delivery of the Restricted Shares.
3.9 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, UHC agrees not to make any disposition of all
or any portion of the Vested Shares or of any interest therein to any person or
entity unless:
(a) there is then in effect a registration statement under the
1933 Act covering such proposed disposition of the Vested Shares and
such disposition is made in accordance with such registration statement;
or
(b) UHC shall have notified Parent of the proposed disposition
of the Vested Shares and shall have furnished Parent with a statement of
the circumstances surrounding such proposed disposition, and, at the
expense of UHC or its transferee, with an opinion of counsel, reasonably
satisfactory to Parent, that such disposition will not require
registration of such securities under the 1933 Act.
3.10 Transfer of Restricted Shares. UHC agrees that it will not,
directly or indirectly, in a single transaction or series of related
transactions, without the prior written consent of Parent, sell, pledge,
Encumber, transfer, assign or otherwise dispose (each, a "TRANSFER") of legal or
beneficial ownership of any Restricted Shares to any person prior to such time
as they become Vested Shares pursuant to this Agreement. Any purported Transfer
in violation of the foregoing restriction shall be void and Parent may, and may
instruct the transfer agent of the Common Stock to, refuse to record, whether on
the stock records of Parent or otherwise, any purported transfer of unvested
Restricted Shares or recognize any purported transferee of unvested Restricted
Shares and Parent may issue stop transfer orders with respect to any such
Transfer of unvested Restricted Shares.
3.11 Legends. UHC understands and agrees that the certificates
evidencing the Restricted Shares and the Vested Shares will bear legends
substantially similar to those set forth in paragraphs (a) and (b) below, and
that the certificates evidencing the Restricted Shares will bear a legend
substantially similar to that set forth in paragraph (c) below, in addition to
any other legend that may be required by applicable law, by Parent's Certificate
of Incorporation or Bylaws, or by any agreement between Parent and UHC:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OTHERWISE PERMITTED UNDER CONTRACTUAL RESTRICTIONS ON
RESALE APPLICABLE TO THESE SECURITIES IS IN COMPLIANCE WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.
(b) THE SECURITIES REPRESENTED HEREBY MAY BE SUBJECT TO
CERTAIN RESTRICTIONS ON RESALE AND ON VOTING AND THE HOLDERS HEREOF MAY
BE BOUND BY CERTAIN RESTRICTIONS ON ACQUISITION OF THE ISSUER'S CAPITAL
STOCK PURSUANT TO AN AMENDED AND RESTATED COMMON STOCK AND WARRANT
AGREEMENT BETWEEN THE ORIGINAL HOLDER OF THESE SECURITIES AND THE
ISSUER, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER.
(c) PURSUANT TO THE TERMS OF AN AMENDED AND RESTATED COMMON
STOCK AND WARRANT AGREEMENT BETWEEN THE ORIGINAL HOLDER OF THESE
SECURITIES AND THE ISSUER, A COPY OF WHICH MAY BE OBTAINED FROM THE
ISSUER, THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD, PLEDGED,
ENCUMBERED OR OTHERWISE TRANSFERRED. THE ISSUER WILL NOT RECOGNIZE ON
ITS STOCK TRANSFER RECORDS ANY PURPORTED TRANSFEREE OF THE SECURITIES
REPRESENTED HEREBY.
The legend set forth in (a) above shall be removed by Parent from any
certificate evidencing Restricted Shares or Vested Shares upon delivery to
Parent of an opinion by counsel, reasonably satisfactory to Parent, to the
effect that a registration statement under the 1933 Act is at that time in
effect with respect to the legended security or to the effect that such security
can be freely transferred in a public sale without such a registration statement
being in effect and that such transfer will not jeopardize the exemption or
exemptions from registration pursuant to which Parent issued the Restricted
Shares or the Vested Shares when they were Restricted Shares. The legend set
forth in (b) above shall be removed by Parent from any certificate evidencing
Restricted Shares or Vested Shares upon delivery to Parent of an opinion by
counsel, reasonably satisfactory to Parent, to the effect that the resale,
voting and standstill restrictions contained in this Agreement, as amended
hereby, are no longer applicable to the holder of the securities represented
thereby. The legend set forth in (c) above shall be removed by Parent from any
certificate evidencing Restricted Shares which have become Vested Shares.
3.12 Dividends for Restricted Shares. In the event that Parent declares
a dividend or other distribution to holders of its Common Stock, any such
dividend paid or distribution made in respect of Restricted Shares that have not
become Vested Shares shall be paid or made to an escrow holder selected by
Parent and reasonably satisfactory to UHC and held by such person to be
delivered either to UHC upon the vesting and delivery of the Restricted Shares
in respect of which such dividend or distribution was made or to Parent upon the
forfeiture of the Restricted Shares in respect of which such dividend or
distribution was made.
ARTICLE IV
ADDITIONAL AMENDMENTS
4.1 Amendment of Voting Provisions. Section 6.1 of the Agreement is
hereby amended to read in its entirety as follows:
"6.1 Voting of Common Stock. UHC agrees that from and after
the date of the Closing through the fifth anniversary of the Closing
(the "FIFTH ANNIVERSARY"), and for as long after the Fifth Anniversary
as the outstanding shares of Common Stock (including Restricted Shares
and Vested Shares) beneficially owned by UHC 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 0000 Xxx) of UHC exceeds 9% of the then
outstanding Common Stock of Parent (the entire such period, the
"RESTRICTED PERIOD"), to the extent that the outstanding shares of
Common Stock (including outstanding Shares, Restricted Shares and
Vested Shares) beneficially owned by UHC together with all affiliates
of UHC exceeds 9% of the then outstanding Common Stock of Parent (the
shares (including outstanding Shares, Restricted Shares and Vested
Shares) in excess of such 9% threshold, "EXCESS SHARES"), UHC shall,
and shall cause its controlled 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 or (ii) an amendment of the Certificate of Incorporation of
Parent that would materially and adversely affect UHC 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
clauses (i) and (ii) of the preceding sentence, UHC shall, and shall
cause its controlled 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 (ii) above, elections of
directors to the Board of Directors, or transactions involving
interested or related parties. Notwithstanding the foregoing, all
Restricted Shares that are not Vested Shares shall be voted on all
matters submitted to Parent's stockholders for approval in proportion
to the votes cast by all other stockholders of Parent, including those
matters identified in items (i) and (ii) of the first sentence of this
section. 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. For the avoidance of doubt, for purposes of this Section 6.1,
VHA, Novation and HPPI are not "affiliates" of UHC."
4.2 Other Amendments.
(a) Section 6.2 of the Agreement shall be amended by deleting
the phrase "except pursuant to the Warrant."
(b) Section 6.4(a) of the Agreement shall be amended by
deleting the phrase, in two locations, "on a fully converted basis (taking into
account for VHA, all shares of Common Stock issuable upon the exercise of the
warrant issued to VHA pursuant to the VHA Agreement)."
(c) Section 6.4(b) of the Agreement shall be amended by
deleting the phrase, "on a fully converted basis (taking into account for UHC,
all shares of Common Stock issuable upon the exercise of the Warrant)." Section
6.4(b) of the Agreement shall be further amended by adding the following
sentence at the end of such Section 6.4(b): "Notwithstanding the foregoing, UHC
will not have the right to nominate a person to Parent's Board of Directors
pursuant to this Section 6.4(b) for so long as Xxxxxx X. Xxxxx, or any other
person nominated or appointed by UHC, is a member of Parent's Board of
Directors."
(d) Section 6.4(c) of the Agreement shall be amended by
deleting the phrase, "on a fully converted basis (taking into account for UHC,
all shares of Common Stock issuable upon the exercise of the Warrant)." Section
6.4(c) of the Agreement shall be further amended by adding the following
sentence at the end of such Section 6.4(c): "Notwithstanding the foregoing,
Parent will not be obligated to comply with the foregoing provisions of this
Section 6.4(c) for so long as Xxxxxx X. Xxxxx, or any other person nominated or
appointed by UHC, is a member of Parent's Board of Directors."
(e) Section 10.9 of the Agreement is hereby amended to read in
its entirety as follows:
"10.9 Entire Agreement. The Agreement, as amended by
this Amendment, together with all exhibits and schedules and
any disclosure letters delivered pursuant thereto and hereto,
and the Outsourcing Agreement constitute the entire agreement
and understanding of the parties with respect to the subject
matter thereof and hereof and supersedes any and all prior
negotiations, correspondence, agreements, understandings
duties or obligations between the parties with respect to the
subject matter hereof."
ARTICLE V
GENERAL PROVISIONS
5.1 Reaffirmation. The Agreement, as amended hereby, is in all respects
ratified, reaffirmed and remade, and is in full force and effect.
5.2 Governing Law. This Amendment shall be governed by and construed
under the internal laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within Delaware,
without reference to principles of conflict of laws or choice of laws.
5.3 Counterparts. This Amendment may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized respective officers as of the
date first written above.
XXXXXXXX.XXX, INC.
By:
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Name:
Title:
UNIVERSITY HEALTHSYSTEM CONSORTIUM
By:
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Name:
Title:
