Exhibit 2
EXECUTION COPY
EXCHANGE AGREEMENT
This Exchange Agreement (this "Agreement") is made and entered into as
of October 10, 2005, between Global Healthcare Exchange, LLC, a Delaware
limited liability company ("GHX"), and VHA Inc., a Delaware corporation (the
"Stockholder").
WHEREAS, concurrently with the execution and delivery of this
Agreement, Neoforma, Inc., a Delaware corporation (the "Company"), GHX and
Leapfrog Merger Corporation, a Delaware corporation and a wholly owned
subsidiary of GHX ("Merger Sub"), are entering into an Agreement and Plan of
Merger, of even date herewith (the "Merger Agreement"), which provides, among
other things, for the merger of Merger Sub with and into the Company, with the
Company continuing as the surviving corporation (the "Merger"), and GHX and the
members of GHX holding that number of membership interests of GHX as is
necessary to approve the Formation Agreement Amendment and the LLC Agreement
Amendment, as applicable, are entering into the Formation Agreement Amendment
and the LLC Agreement Amendment (as such terms are defined in Section 2(b));
WHEREAS, as of the date hereof, the Stockholder is the beneficial
owner of, and has the sole right to vote with respect to the Merger 8,611,217
shares of common stock, par value $0.001 per share, of the Company ("Company
Common Stock"); and
WHEREAS, subject to the conditions set forth herein, immediately prior
to the Effective Time, (i) the Stockholder desires to exchange 6,607,027 shares
of Company Common Stock ("Shares"), and (ii) GHX desires to issue to the
Stockholder, in exchange (the "Exchange") for the Shares, 42,585,609 Class P
Membership Units of GHX (the "Exchange Units").
Capitalized terms used herein and not otherwise defined shall have the
respective meanings attributed to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties contained herein, GHX and the Stockholder hereby
agree as follows:
1. Exchange.
(a) Immediately prior to the Closing under the Merger
Agreement, the Stockholder shall assign, transfer, convey and
deliver the Shares to GHX and, in exchange for each such Share, GHX
shall issue to the Stockholder 42,585,609 Exchange Units. If,
during the period from the date of this Agreement through the time
that is immediately prior to the Closing under the Merger
Agreement, the outstanding Membership Units (as defined in Annex I
to the Formation Agreement) of GHX are changed into a different
number or class by reason of any split, division or subdivision of
Membership Units, dividend, distribution or capital contribution,
reverse split of Membership Units, consolidation of Membership
Units, reclassification, recapitalization or other similar
transaction, or if a dividend, distribution or additional capital
contribution is declared by GHX during such period, or a record
date with respect to any such event shall occur during such period,
then the foregoing number of Exchange Units shall be adjusted to
the extent appropriate to reflect such change or other modification
of the Membership Units. If any Shares are held in "street name" by
the Stockholder, such Stockholder agrees to arrange for an
appropriate transfer thereof to GHX hereunder.
(b) In the event that the Exchange is consummated but the
Merger Agreement is terminated in accordance with its terms, then
promptly following such termination, the Stockholder shall assign,
transfer, convey and deliver to GHX the number of Exchange Units
received by the Stockholder pursuant to clause (a) above and, in
exchange therefor, GHX shall assign, transfer, convey and deliver
to the Stockholder the Shares exchanged by the Stockholder for such
Exchange Units pursuant to clause (a) above.
2. Exchange Closing.
(a) The closing of the transactions contemplated by this
Agreement (the "Exchange Closing") shall take place at the offices
of Fenwick & West LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx, (or such other location as the parties hereto shall
agree to) immediately prior to the Closing under the Merger
Agreement.
(b) At the Exchange Closing, the Stockholder will deliver to
GHX (i) stock certificates duly endorsed for transfer to GHX,
accompanied by stock powers duly endorsed in blank, representing
the number of Shares subject to the Exchange and (ii) an Accession
Agreement (the "Accession Agreement") in the form attached as
Schedule A hereto to the Third Amended and Restated Formation
Agreement of GHX (the "Formation Agreement"), as amended by
Amendment No. 1 thereto in the form attached as Schedule B hereto
(the "Formation Agreement Amendment" and the Formation Agreement as
amended by the Formation Agreement Amendment, the "Revised
Formation Agreement"), and the Fifth Amended and Restated Limited
Liability Company Agreement of GHX (the "LLC Agreement"), as
amended by Amendment No. 1 thereto in the form attached as Schedule
C hereto (the "LLC Agreement Amendment" and the LLC Agreement as
amended by the LLC Agreement Amendment, the "Revised LLC
Agreement"), duly executed by the Stockholder. At the Exchange
Closing, GHX will (i) issue the Exchange Units to the Stockholder
and (ii) deliver to the Stockholder the Accession Agreement duly
executed by GHX and the Formation Agreement Amendment and the LLC
Agreement Amendment duly executed by GHX and members of GHX holding
that number of membership interests of GHX as is necessary to
approve the Formation Agreement Amendment and the LLC Agreement
Amendment, as applicable.
3. Representations and Warranties of the Stockholder. The Stockholder
represents and warrants as follows:
(a) Corporate Form. The Stockholder is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware.
(b) Corporate Authority, etc. The Stockholder has (and,
immediately prior to the Exchange Closing, will have) all requisite
corporate power and authority to enter into this Agreement, the
Revised Formation Agreement, the Revised LLC Agreement and the
Accession Agreement and to perform all of its obligations hereunder
and thereunder and to carry out the transactions contemplated
hereby and thereby.
(c) Actions Authorized. The Stockholder has taken all
corporate actions necessary to authorize it to enter into and to
perform this Agreement, the Revised Formation Agreement, the
Revised LLC Agreement and the Accession Agreement and to consummate
the transactions contemplated hereby and thereby. This Agreement
has been, and upon the execution thereof, the Accession Agreement
will have been duly executed and delivered by the Stockholder and,
assuming due authorization, execution and delivery hereof and
thereof by GHX, each such agreement constitutes a legal, valid and
binding obligation of the Stockholder enforceable in accordance
with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar
laws affecting creditors' rights generally and by general equitable
principles (regardless of whether enforceability is considered in a
proceeding in equity or at law).
(d) Ownership of Shares. The Stockholder is the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended, which meaning will apply for all purposes of
this Agreement) of, and has the sole power to vote and dispose of,
the number of Shares set forth in the recitals hereto, free and
clear of any security interests, liens, charges, encumbrances,
equities, claims, options or limitations of whatever nature and
free of any other limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose of the
Shares), except as may exist by reason of this Agreement, the
Significant Stockholder Voting Agreement, the First Purchase
Agreement or the Second Purchase Agreement (as such terms are
defined in the Significant Stockholder Voting Agreement) (except as
otherwise permitted by the Waiver, dated as of the date hereof,
among the Stockholder, University HealthSystem Consortium and the
Company (the "Company Waiver")), or pursuant to applicable law.
Except as provided for in this Agreement, the Significant
Stockholder Voting Agreement and the Merger Agreement, there are no
outstanding options or other rights to acquire from the
Stockholder, or obligations of the Stockholder to sell or to
dispose of, any Shares.
(e) No Agreements. Except for this Agreement, the Significant
Stockholder Voting Agreement and the First Purchase Agreement and
the Second Purchase Agreement (subject to the Company Waiver), the
Stockholder has not entered into or agreed to be bound by any other
arrangements or agreements of any kind with any other party with
respect to the Shares, including, but not limited to, arrangements
or agreements with respect to the acquisition or disposition
thereof or any interest therein or the voting of any such shares.
(f) No Conflict. Neither the execution and delivery of this
Agreement, the Formation Agreement Amendment, the LLC Agreement
Amendment or the Accession Agreement, the consummation of the
transactions contemplated hereby or thereby, nor the performance of
the Stockholder's obligations hereunder or thereunder will (i)
result in a violation or breach of in any material respect, or
constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under any material contract, agreement, instrument,
commitment, arrangement or understanding to which the Stockholder
is a party, or result in the creation of a security interest, lien,
charge, encumbrance or claim with respect to the Stockholder's
Shares, (ii) require any material consent, authorization or
approval of any Person or (iii) violate or conflict with any writ,
injunction or decree applicable to the Stockholder, the
Stockholder's Shares or the Exchange Units.
(g) Securities Laws Matters; Investor Awareness. The
Stockholder acknowledges that it has read the Formation Agreement,
the Formation Agreement Amendment, the LLC Agreement and the LLC
Agreement Amendment and understands that such documents contain (a)
substantial restrictions that prohibit transfers of Exchange Units
except in limited circumstances and (b) prohibitions on GHX's
ability to distribute profits or make other distributions or
payments to its members except in limited circumstances. In
addition, the Stockholder acknowledges receipt of advice from GHX
that (i) the Exchange Units have not been registered under the
Securities Act of 1933 (the "Act") or qualified under any state
securities or "blue sky" or non U.S. securities laws, (ii) there is
no public market for the Exchange Units and it is not anticipated
that there will be, (iii) the Exchange Units must be held
indefinitely and the Stockholder must continue to bear the economic
risk of the investment in the Exchange Units unless such Exchange
Units are subsequently registered under the Act and such state or
non U.S. securities laws or an exemption from such registration is
available, (iv) Rule 144 promulgated under the Act ("Rule 144") is
not presently available with respect to sales of any Exchange Units
and GHX has made no covenant to make Rule 144 available and Rule
144 is not anticipated to be available in the foreseeable future,
(v) when and if the Exchange Units may be disposed of without
registration in reliance upon Rule 144, such disposition can be
made only in limited amounts and in accordance with the terms and
conditions of such Rule, and (vi) if the exemption afforded by Rule
144 is not available, public sale of the Exchange Units without
registration will require the availability of an exemption under
the Act.
(h) Accredited Investor. The Stockholder is an "accredited
investor" as such term is defined in Rule 501(a) promulgated under
the Securities Act.
(i) Stockholder's Experience. (i) The Stockholder's financial
situation is such that the Stockholder can afford to bear the
economic risk of holding the Exchange Units for an indefinite
period of time, (ii) the Stockholder can afford to suffer complete
loss of its investment in the Exchange Units, and (iii) the
Stockholder's knowledge and experience in financial and business
matters are such that the Stockholder is capable of evaluating the
merits and risks of the Stockholder's investment in the Exchange
Units.
(j) Investigation. In entering into this Agreement,
Stockholder has relied solely upon its own investigation and
analysis, and Stockholder acknowledges that, except for the
specific representations and warranties of GHX contained in this
Agreement, neither GHX nor any of its Affiliates, Associates,
agents or representatives makes or has made any representation or
warranty, either express or implied, as to the accuracy or
completeness of any of the information provided or otherwise made
available to Stockholder or any of its Affiliates, Associates,
agents or representatives.
(k) Investment Intent. The Stockholder is acquiring the
Exchange Units solely for the Stockholder's own account for
investment and not with a view to or for sale in connection with
any distribution thereof. The Stockholder agrees that the
Stockholder will not, directly or indirectly, offer, transfer,
sell, pledge, hypothecate or otherwise dispose of any of the
Exchange Units (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of any Exchange Units), except in
compliance with (i) the Securities Act and the rules and
regulations of the Securities and Exchange Commission thereunder,
(ii) applicable state and non-U.S. securities or "blue sky" laws
and (iii) the provisions of this Agreement, the Revised LLC
Agreement and the Revised Formation Agreement.
4. Representations and Warranties of GHX. GHX represents and warrants
to the Stockholder as follows, except as set forth in and subject to: (a) the
exceptions and disclosures set forth in the part or subpart of the GHX
Disclosure Schedule corresponding to the particular Section or subsection in
this Section 4 in which such representation and warranty appears; (b) any
exceptions or disclosures cross-referenced to another part or subpart of the
GHX Disclosure Schedule; and (c) any exception or disclosure set forth in any
other part or subpart of the GHX Disclosure Schedule to the extent it is
reasonably apparent that such exception or disclosure qualifies such other
representation or warranty:
(a) Subsidiaries; Due Organization. (i) GHX has no
Subsidiaries other than as set forth in Part 4(a) of the GHX
Disclosure Schedule. All of the capital stock and other equity
interests in such Subsidiaries are owned by GHX, free and clear of
all Encumbrances. GHX has not agreed and is not obligated to make,
nor or is it bound by any Contract under which it may become
obligated to make, any future investment in or capital contribution
to any other Entity.
(ii) GHX is a limited liability company duly
organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite limited
liability company power and authority: (A) to conduct its
business in the manner in which its business is currently
being conducted; (B) to own or lease and use its assets in
the manner in which its assets are currently owned or leased
and used; and (C) to perform its obligations under all
Contracts by which it or any of its Subsidiaries is bound and
which is material to GHX and its Subsidiaries, taken as a
whole. GHX has provided Stockholder with true, correct and
complete copies of the LLC Agreement and the Formation
Agreement.
(iii) GHX (in jurisdictions that recognize the
following concepts) is qualified to do business as a foreign
limited liability company, and is in good standing, under the
laws of such jurisdictions where the nature of its business
requires such qualification, except as would not reasonably
be expected to have a Material Adverse Effect.
(b) Limited Liability Company Authority, etc. GHX has (and,
immediately prior to the Exchange Closing, will have) all requisite
limited liability company right, power and authority to enter into
this Agreement, the Formation Agreement Amendment, the LLC
Agreement Amendment and the Accession Agreement and to perform all
of its obligations hereunder and thereunder and to carry out the
transactions contemplated hereby and thereby and GHX has all
requisite limited liability company right, power and authority to
issue the Exchange Units to the Stockholder as contemplated hereby.
(c) Actions Authorized. GHX has taken all limited liability
company actions necessary to authorize it to enter into and to
perform this Agreement, the Formation Agreement Amendment, the LLC
Agreement Amendment and the Accession Agreement and to consummate
the transactions contemplated hereby and thereby. All requisite
approvals of the owners of the outstanding Membership Units of GHX
necessary under the Formation Agreement and the LLC Agreement (i)
to approve the Exchange, the Formation Agreement Amendment, the LLC
Agreement Amendment and the Accession Agreement and (ii) to admit
the Stockholder as a member of GHX have been obtained. Each of this
Agreement, the Formation Agreement Amendment and the LLC Agreement
Amendment have been, and upon the execution thereof, the Accession
Agreement will have been duly executed and delivered by GHX and,
assuming due authorization, execution and delivery hereof and
thereof by the Stockholder and the other parties thereto, as
applicable, constitutes a legal, valid and binding obligation of
GHX enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights
generally and by general equitable principles (regardless of
whether enforceability is considered in a proceeding in equity or
at law).
(d) Consents. Except: (A) for the filings, registrations or
qualifications (i) that may be required under Regulation D under
the Securities Act or (ii) that may be required under the state
securities laws or "blue sky" laws of any state of the United
States of America that may be required to be made or obtained, all
of which GHX will comply with within the time limits specified
therein; (B) as required under the LLC Agreement and the Formation
Agreement; and (C) as would not reasonably be expected to have a
Material Adverse Effect, GHX is not and will not be required to
make any filing with or give any notice to, or to obtain any
Consent from, any Person in connection with: (1) the execution,
delivery or performance of this Agreement, the Formation Agreement
Amendment, the LLC Agreement Amendment or the Accession Agreement
by GHX; or (2) the consummation of the Exchange.
(e) Non-Contravention. Assuming compliance with the
applicable provisions of the Securities Act, the Exchange Act, the
DGCL and state securities or "blue sky" laws, except as set forth
in Part 4(e) of the GHX Disclosure Schedule, neither (1) the
execution and delivery of this Agreement, the Formation Agreement
Amendment, the LLC Agreement Amendment or the Accession Agreement
by GHX, nor (2) the consummation of the Exchange, will or would
reasonably be expected to, directly or indirectly (with or without
notice or lapse of time):
(i) contravene, conflict with or result in a violation
of any of the provisions of the Certificate of Formation of
GHX, the Formation Agreement or the LLC Agreement;
(ii) contravene, conflict with or result in a violation
of, any Legal Requirement or any Order to which GHX or any of
its material assets is subject;
(iii) contravene, conflict with or result in a
violation, a material breach or a default of, or forfeiture of
any rights under, any of the terms or requirements of any
Governmental Authorization that is held by GHX or that
otherwise relates to the business of GHX as currently
conducted;
(iv) contravene, conflict with or result in a violation
or breach of in any material respect, or result in a default
under, any provision of any GHX Significant Contract (as
defined in Section 4(k)), or give any Person the right to: (i)
declare a default or exercise any remedy under any such GHX
Significant Contract; (ii) a rebate, chargeback, penalty or
change in delivery schedule under any such GHX Significant
Contract; (iii) accelerate the maturity or performance of any
such GHX Significant Contract; or (iv) cancel, terminate or
modify any right, benefit, obligation or other term of such GHX
Significant Contract; or
(v) result in the imposition or creation of any
Encumbrance upon or with respect to any asset owned or used by
GHX,
except, in the case of clauses "(ii)," "(iii)" and "(v)" of this
sentence, as would not reasonably be expected to have a Material
Adverse Effect.
(f) Capitalization. Assuming the consummation of the
transactions contemplated hereby, by the Merger Agreement and by
the exchange agreement entered or to be entered into between GHX
and University HealthSystem Consortium (the "Other Exchange
Agreement"), immediately following the consummation of the
transactions contemplated hereby, by the Merger Agreement and by
the Other Exchange Agreement, the outstanding membership interests
of GHX will be as set forth on Schedule D hereto. Schedule E hereto
reflects the membership interests of GHX on Schedule D, as adjusted
to reflect the exercise of any warrants, options, or other
securities that will be outstanding as of the Effective Time and
the proposed issuance of any Membership Interests during the period
from the date hereof until the Effective Time set forth in Part
4(h) of the GHX Disclosure Schedule. As of the date hereof (i)
there are 313,229,103 Membership Interests (as defined in the LLC
Agreement) outstanding, (ii) pursuant to Section 3.5(b) of the LLC
Agreement, there are and will be issuable, immediately upon the
closing of an IPO (as defined in the LLC Agreement) of (x) GHX or
(y) upon conversion of GHX to corporate form, a successor to GHX
(and under no other circumstance), warrants entitling the holders
to acquire in the aggregate up to 21,720,685 Membership Interests
(subject to adjustment) and (iii) pursuant to that certain Warrant,
dated September 26, 2000, issued by GHX to CMI Warrant Holding
Company, LLC (the "CMI Warrant"), there are and will be issuable,
on the first Business Day (as defined in the CMI Warrant) after the
closing of an IPO (as defined in the CMI Warrant) of (x) GHX or (y)
upon a conversion of GHX to a corporate form, a successor to GHX
(and under no other circumstance), warrants entitling the holders
to acquire in the aggregate up to 28,580,276 Membership Interests
(subject to adjustment). Except as set forth in this Section 4(f)
or in Part 4(f) of the GHX Disclosure Schedule, or as otherwise
contemplated by this Agreement, GHX has not reserved any Membership
Interests for issuance under any option plans and there are no
outstanding subscriptions, options, warrants, calls, rights or
other agreements or commitments obligating GHX to issue, sell,
deliver or transfer any Membership Interests. Other than the LLC
Agreement, the CMI Warrant, the Other Exchange Agreement and this
Agreement, there are no agreements, options, warrants, calls,
rights or commitments of any character relating to the issuance,
sale, purchase or redemption, restricting the transfer of, or the
declaration of payments of distributions on, any Membership
Interests. All of the outstanding Membership Interests have been
duly authorized and validly issued, are fully paid. Except as set
forth in this Section 4(f), in the LLC Agreement or in the
Formation Agreement, (i) none of the outstanding Membership
Interests is entitled or subject to any preemptive right, right of
participation, right of maintenance or any similar right, (ii) none
of the outstanding Membership Interests is subject to any right of
first refusal in favor of GHX and (iii) GHX is under no obligation,
nor is it bound by any Contract to repurchase, redeem or otherwise
acquire any outstanding Membership Interests or other securities of
GHX.
(g) Financial Statements. (i) GHX has provided to the
Stockholder (A) the unaudited consolidated balance sheet of GHX as
of June 30, 2005 (the "GHX Balance Sheet"), and the related
unaudited consolidated statements of income and cash flow for the
six months then ended, and (B) the audited consolidated balance
sheets of GHX as of December 31, 2004 and December 31, 2003 and the
related audited consolidated statements of income, stockholder's
equity and cash flows for the years then ended, and the notes to
such financial statements (collectively, the "GHX Financial
Statements").
(ii) Except as set forth in Part 4(g) of the GHX Disclosure
Schedule, the GHX Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the
periods covered (except as may be indicated in the notes to such
financial statements or, in the case of unaudited financial
statements, as otherwise indicated therein, and except that the
unaudited financial statements may not contain footnotes and are
subject to normal and recurring year-end adjustments) and fairly
present in all material respects the consolidated financial
position of GHX and its Subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows
of GHX and its Subsidiaries for the periods covered thereby.
(iii) Except as set forth in Part 4(g) of the GHX Disclosure
Schedule and for those liabilities that are reflected or reserved
against on the GHX Balance Sheet (including any notes thereto) and
for liabilities incurred in the ordinary course of business
consistent with past practice since June 30, 2005, since such date,
neither GHX nor any of its Subsidiaries has incurred any liability
of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that has had or is
reasonably likely to have, either individually or in the aggregate,
a Material Adverse Effect.
(h) Absence of Changes. Except as set forth in Part 4(h) of
the GHX Disclosure Schedule, since June 30, 2005, GHX and its
Subsidiaries have conducted their respective businesses in all
material respects in the ordinary course of business consistent
with past practice, and, without limiting the generality of the
foregoing:
(i) there has not been any Material Adverse Effect;
(ii) GHX has not declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any
Membership Interests or repurchased, redeemed or otherwise
reacquired any Membership Interests or other securities of GHX;
(iii) except as set forth herein, in the LLC Agreement, in
the Formation Agreement and in the Other Exchange Agreement, GHX
has not sold, issued, granted, pledged or otherwise encumbered or
authorized the sale, issuance, grant, pledge or encumbrance of any
Membership Interest or other security of GHX, any option, call,
warrant or right to acquire any Membership Interests or other
security of GHX, or any instrument convertible into or exercisable
or exchangeable for any Membership Interests or other security of
GHX.
(iv) neither GHX nor any of its Subsidiaries has written off
as uncollectible, or established any extraordinary reserve with
respect to, any material account receivable or other material
indebtedness;
(v) neither GHX nor any of its Subsidiaries has made any
pledge of any of its material assets or permitted any of its
material assets to become subject to any Encumbrances;
(vi) neither GHX nor any of its Subsidiaries has changed any
of its methods of accounting or accounting practices in any
material respect, except as required by concurrent changes in GAAP;
(vii) neither GHX nor any of its Subsidiaries has (1) made or
changed any material Tax election, (2) entered into any settlement
or compromise of any material Tax liability or (3) surrendered any
right to claim a material Tax refund;
(viii) neither GHX nor any of its Subsidiaries has prepared
or filed any material Tax Return materially inconsistent with past
practice or, on any such Tax Return, taken any position, made any
election, or adopted any method that is materially inconsistent
with positions taken, elections made or methods used in preparing
or filing similar material Tax Returns in prior periods;
(ix) neither GHX nor any of its Subsidiaries has settled or
compromised any pending or threatened material suit, action, claim,
arbitration, mediation, inquiry, Legal Proceeding or investigation
of or against GHX or any Subsidiary of GHX, unless in connection
with such settlements or compromises (A) there was no finding or
admission of any violation of any Legal Requirement or the rights
of any Person and (B) the sole relief provided was monetary damages
not in excess of $100,000 in the aggregate;
(x) other than the Financing, neither GHX nor any of its
Subsidiaries has incurred, guaranteed, assumed or otherwise become
responsible for any indebtedness in excess of $100,000 in the
aggregate; and
(xi) neither GHX nor any of its Subsidiaries has agreed or
committed to take any of the actions referred to in clauses "(ii)"
through "(x)" above.
(i) Title to Assets. GHX owns, and has good and valid title
to, all material assets purported to be owned by it, including all
material assets reflected on the GHX Balance Sheet (except for
assets sold or otherwise disposed of since the date of the GHX
Balance Sheet). Except as set forth in Part 4(i) of the GHX
Disclosure Schedule, all of said assets are owned by GHX free and
clear of any Encumbrances. GHX or its Subsidiaries are the lessees
of, and hold valid leasehold interests in, all material assets
purported to have been leased by them, including all material
assets reflected as leased on the GHX Balance Sheet (it being
understood that the representations and warranties contained in
this Section 4(i) do not apply to ownership of, or Encumbrances
with respect to, Intellectual Property Rights, which matters are
addressed solely in the representations and warranties set forth in
Section 4(j)). Except as would not be material to GHX and its
Subsidiaries as a whole, the assets owned, licensed or leased by
GHX or its Subsidiaries constitute all the assets used in the
business of GHX and its Subsidiaries (including all books, records,
computers and computer programs and data processing systems), are
in good condition (subject to normal wear and tear and immaterial
impairments of value and damage) and are generally suitable for the
uses for which they are used in the operation of the business of
GHX and its Subsidiaries.
(j) Intellectual Property. (i) (I) GHX owns and has sole and
exclusive right to use each material item of GHX Owned IP free and
clear of any Encumbrances, except (y) non-exclusive licenses
granted by GHX in connection with the sale or license of GHX
Products in the ordinary course of business and (z) as would not
reasonably be expected to materially interfere with the use of such
GHX Owned IP as used in the ordinary course of business; (II) with
respect to GHX IP that is not GHX Owned IP, GHX and its
Subsidiaries have all necessary rights to use such GHX IP in their
business. Without limiting the generality of the foregoing, to the
knowledge of GHX, GHX owns or otherwise has, and immediately after
the Exchange Closing will continue to have, all Intellectual
Property Rights needed to conduct the business of GHX and its
Subsidiaries as presently conducted in all material respects.
(ii) All GHX Registered IP (except where GHX has elected not
to maintain or continue the prosecution or registration of any GHX
Registered IP) is subsisting and, to the knowledge of GHX, is valid
and enforceable.
(iii) Neither the execution, delivery or performance of this
Agreement nor the consummation of the Exchange would reasonably be
expected to, with or without notice or the lapse of time, and as a
result of any Contract to which any of GHX or any of its
Subsidiaries is a party or otherwise bound, result in or give any
other Person the right or option to cause, create, impose or
declare: (i) a loss of, or Encumbrance on, any GHX IP; or (ii) the
grant, assignment or transfer to any other Person of any license or
other right or interest under, to or in any of the GHX IP, except,
in each case, as would not reasonably be expected to have a
Material Adverse Effect.
(iv) To the knowledge of GHX, no Person has infringed,
misappropriated or otherwise violated, and no Person is infringing,
misappropriating or otherwise violating, any GHX Owned IP except as
would not be material to GHX.
(v) To the knowledge of GHX, neither GHX nor any of its
Subsidiaries has infringed, misappropriated or otherwise violated
in any material respect any Intellectual Property Right of any
other Person, except as would not be material to GHX and its
Subsidiaries as a whole.
(k) Contracts. Part 4(k) of the GHX Disclosure Schedule sets
forth a list of each Contract that constitutes a GHX Significant
Contract as of the date of this Agreement. For purposes hereof,
each of the following shall constitute a "GHX Significant
Contract": (i) each Contract containing any non-compete provision
that restricts GHX or any of its Subsidiaries, (ii) the Formation
Agreement and all amendments thereto, (iii) the LLC Agreement and
all amendments thereto, (iv) each Contract relating to the issuance
of any equity securities of the Company, (v) each Affiliated Party
Contract (as defined below), (vi) each Contract involving payments
of $250,000 or more per annum to or by GHX or any of its
Subsidiaries (other than ordinary course purchase and supply
Contracts) and (vii) each other Contract that is material to GHX
and its Subsidiaries, taken as a whole. The Formation Agreement and
the LLC Agreement are valid and binding obligations of GHX and each
GHX Significant Contract is, to the knowledge of GHX, valid and
binding upon the other parties thereto and is in full force and
effect in all material respects. Except as set forth in Part 4(k)
of the GHX Disclosure Schedule, as of the date of this Agreement:
(i) GHX has not materially violated or materially breached, or
committed any default under, any GHX Significant Contract; (ii) to
the knowledge of GHX, no other Person has materially violated or
materially breached, or committed any default under, any GHX
Significant Contract; (iii) to the knowledge of GHX, no event has
occurred, and no circumstance or condition exists, that (with or
without notice or lapse of time) would reasonably be expected to:
(A) result in a material violation or material breach of any of the
provisions of any GHX Significant Contract; (B) give any Person the
right to declare a default under any GHX Significant Contract; (C)
give any Person the right to receive or require a rebate,
chargeback, penalty or any additional material rights under any GHX
Significant Contract; (D) give any Person the right to accelerate
the maturity or performance of any GHX Significant Contract; or (E)
give any Person the right to cancel, terminate or modify in any
material respect any GHX Significant Contract; and (iv) since
January 1, 2004, GHX has not received any written notice regarding
any actual or possible material violation or material breach of, or
default under, any GHX Significant Contract. For purposes of this
Agreement, each Contract, arrangement or understanding that is
currently in effect to which GHX (or any of GHX's Subsidiaries) and
any member of GHX (or any of such member's Affiliates) is a party
or is otherwise bound is referred to as an "Affiliated Party
Contract".
(l) Taxes. (i) Each of the material Tax Returns required to
be filed by or on behalf of GHX or any Subsidiary of GHX with any
Governmental Body: (w) has been filed on or before the applicable
due date (including any extensions of such due date); (x) has been
prepared in all material respects in compliance with all applicable
Legal Requirements and (y) when filed, was complete and accurate in
all material respects and disclosed all Taxes required to be paid
by GHX or any Subsidiary of GHX for the periods covered thereby;
and (z) to the extent related to income Taxes, has been examined by
the appropriate Governmental Body or the period for assessment of
the Taxes in respect of which each such Tax Return was required to
be filed (taking into account all applicable extensions and
waivers) has expired. All material Taxes (whether or not shown on
any Tax Return) owed by GHX or any Subsidiary of GHX have been
timely paid.
(ii) The GHX Financial Statements accrue all liabilities for
all material Taxes of GHX or any Subsidiary of GHX with respect to
all periods through the date thereof in accordance with GAAP, and
no liabilities for material Taxes have been incurred since the date
of the GHX Financial Statements other than in the operation of the
business of GHX or such Subsidiary in the ordinary course of
business. GHX has established, in the ordinary course of business
and consistent with its past practices, reserves adequate for the
payment of all material Taxes of GHX or any Subsidiary of GHX since
the date of the GHX Financial Statements.
(iii) Except as set forth in Part 4(l) of the GHX Disclosure
Schedule, (A) to the knowledge of GHX, no Tax Return of GHX or any
Subsidiary of GHX is currently subject to an audit by any
Governmental Body, (B) no extension or waiver of the limitation
period applicable to any Tax Return of GHX or any Subsidiary of GHX
has been granted by GHX or any Subsidiary of GHX, and (C) no such
extension or waiver has been requested from GHX or any Subsidiary
of GHX, except, in the case of clauses (A) through (C) of this
sentence, as would not reasonably be expected to have a Material
Adverse Effect.
(iv) There are no material Contracts relating to allocating
or sharing of Taxes to which GHX or any Subsidiary of GHX is a
party. Neither GHX nor any Subsidiary of GHX (y) is currently under
any contractual obligation to indemnify any Person with respect to
Taxes (except for customary agreements to indemnify lenders or
security holders in respect of Taxes) or (z) is a party to any
material Contract providing for payments by GHX or any Subsidiary
of GHX with respect to any amount of Taxes of any other Person.
(v) All material Taxes which GHX or any Subsidiary
of GHX are required by law to withhold or to collect for
payment have been duly withheld and collected and have either
been paid or accrued, reserved against and entered on the
books of GHX.
(vi) Neither GHX nor any Subsidiary of GHX has
participated in any transaction that is the same as or
substantially similar to one of the types of transactions
that the Internal Revenue Service has identified (by notice,
regulation, other form of published guidance or otherwise) as
a "listed transaction" pursuant to Treasury Regulation ss.
1.6011-4(b)(2).
(m) No Violation, Litigation or Regulatory Action. Except as
set forth in Part 4(m) of the GHX Disclosure Schedule or with
respect to matters which would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect, GHX is in compliance
with all applicable Legal Requirements. Since January 1, 2004, GHX
has not received any written notice from any Governmental Body or
other Person regarding any actual or possible violation in any
material respect of, or failure to comply in any material respect
with, any material Legal Requirement.
(n) Legal Proceedings; Orders. Except as set forth in Part
4(n) of the GHX Disclosure Schedule, (i) there is no pending Legal
Proceeding to which GHX or its Subsidiaries is a party or, to the
knowledge of GHX, to which any other Person is a party, and (ii) to
the knowledge of GHX, no Governmental Body or other Person has
threatened in writing to commence any Legal Proceeding to which GHX
or its Subsidiaries is a party or was so threatened to become a
party or, to the knowledge of GHX, to which any other Person is a
party or was so threatened to become a party, in each case, that
would reasonably be expected to have a Material Adverse Effect.
There is no Order to which GHX, or any of the material assets owned
or used by GHX, is subject, except as would not reasonably be
expected to have a Material Adverse Effect.
(o) Valid Shares. The issuance of the Class P Membership
Units in connection herewith has been duly authorized on behalf of
GHX and such units, when issued pursuant to this Agreement, will be
duly and validly issued and outstanding, fully paid, and issued in
accordance with the registration or qualification provisions of any
relevant state securities laws, or pursuant to valid exemptions
therefrom. Such issuance is not subject to preemptive rights or
rights of first refusal or similar rights except as have been
waived.
(p) Certain Business Practices. Neither GHX nor, to the
knowledge of GHX, any Representative of GHX with respect to any
matter relating to GHX or its Subsidiaries, has: (i) used any funds
for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; or (ii) made any unlawful
payment to foreign or domestic government officials or employees or
to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as
amended, or any rules or regulations promulgated thereunder.
(q) Governmental Authorizations. GHX holds all Governmental
Authorizations necessary to enable GHX to conduct its business
substantially in the manner in which its business is currently
being conducted, except for such Governmental Authorizations as to
which the failure to so hold would not, in the aggregate, have a
Material Adverse Effect. All such Governmental Authorizations are
valid and in full force and effect, except as would not, in the
aggregate, have a Material Adverse Effect. Since January 1, 2004,
GHX has not received any written notice from any Governmental Body
regarding: (i) any actual or possible violation of or failure to
comply with any term or requirement of any material Governmental
Authorization; or (ii) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification
of any material Governmental Authorization. To the knowledge of
GHX, no event has occurred or condition or state of facts exists
which constitutes or, after notice or lapse of time or both, would
constitute a breach or default under any such Governmental
Authorization that would affect in any material respect the ability
of GHX to conduct business as currently conducted. GHX is in
compliance in all material respects with all of the terms and
requirements of each grant, incentive or subsidy provided or made
available to or for the benefit of GHX by any U.S. federal, state
or local Governmental Body or any foreign Governmental Body or
otherwise. Neither the execution or delivery of this Agreement, nor
the consummation of the Exchange, with or without notice or lapse
of time, gives any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate or modify any such grant, incentive or
subsidy, the effect of which would reasonably be expected to,
either individually or in the aggregate, have a Material Adverse
Effect.
5. Covenants.
(a) Pre-Closing Period. (i) Between the date hereof and the
date on which the Exchange Closing occurs (the "Pre-Closing
Period"), neither GHX nor any of its Subsidiaries shall (without
the prior written consent of the Stockholder, which consent shall
not be unreasonably withheld or delayed) enter into any Business
Acquisition if such Business Acquisition would be reasonably likely
to (A) result in a material delay of the termination or expiration
of any waiting period applicable to the Merger under the HSR Act or
(B) materially increase the likelihood of the institution of an
injunction of the Merger under any Antitrust Law.
(ii) During the Pre-Closing Period, (A) each of GHX and the
Stockholder shall promptly notify the other in writing after
learning of any event, condition, fact or circumstance that would
make the timely satisfaction of any of the conditions set forth in
Section 6(a) or 6(b), respectively, impossible or unlikely and (B)
GHX shall promptly notify Stockholder in writing after learning of
any event, condition, fact or circumstance that would reasonably be
expected to have a Material Adverse Effect. Without limiting the
generality of the foregoing, each of GHX and the Stockholder shall
promptly advise the other in writing of any material Legal
Proceeding or material claim threatened in writing, commenced or
asserted against or with respect to GHX, the Merger or the
Exchange. No notification given to the Stockholder or GHX pursuant
to this Section 5(a)(ii) shall limit or otherwise affect any of the
representations, warranties, covenants or obligations of GHX or the
Stockholder, respectively, contained in this Agreement.
(b) Access and Investigation. During the Pre-Closing Period,
GHX shall (and shall cause its Subsidiaries to): (a) provide the
Stockholder and the Stockholder's Representatives with reasonable
access during normal business hours, upon reasonable notice to GHX,
to GHX's and its Subsidiaries' personnel and assets and to all
existing books, records, Tax Returns, work papers and other
documents and information relating to GHX or its Subsidiaries; and
(b) provide or make available to the Stockholder and the
Stockholder's Representatives such copies of the existing books,
records, Tax Returns, work papers and other documents and
information relating to GHX or its Subsidiaries as the Stockholder
may reasonably request. Without limiting the generality of any of
the foregoing, during the Pre-Closing Period and subject to
applicable Antitrust Laws, GHX and the Stockholder shall promptly
provide the other party with copies of any notice, report or other
document filed with or sent to any Governmental Body on behalf of
GHX or the Stockholder, as applicable, in connection with the
Merger or any of the other Contemplated Transactions. The foregoing
shall not require GHX to permit any inspection, or to disclose any
information, that in the reasonable judgment of GHX could
reasonably be expected to result in (i) the disclosure of any trade
secrets of third parties or the violation of any obligations of GHX
with respect to confidentiality if GHX shall have used reasonable
efforts to obtain the consent of such third party to such
inspection or disclosure, (ii) the waiver of any applicable
attorney-client privilege so long as GHX has taken reasonable steps
to permit inspection of or to disclose information described in
this clause (ii) on a basis that does not compromise GHX's
privilege with respect thereto or (iii) the violation of any
applicable Legal Requirement. The parties shall seek in good faith
appropriate substitute disclosure arrangements under circumstances
in which the immediately preceding sentence applies. No
investigation by the Stockholder shall limit or otherwise affect
any of the representations, warranties, covenants or obligations of
GHX contained in this Agreement.
(c) Operations Prior to the Exchange Closing. Except as set
forth in Part 5(c) of the GHX Disclosure Schedule or as expressly
contemplated or permitted by this Agreement or the Merger
Agreement, during the Pre-Closing Period, GHX shall, in all
material respects, conduct its business and operations in the
ordinary course and in accordance with past practices and GHX shall
use its commercially reasonable efforts to preserve substantially
intact the business organization of GHX and its Subsidiaries and
maintain its existing relationships and goodwill with material
customers, suppliers, distributors, creditors, lessors, lessees,
employees and business associates. Without limiting the generality
of the foregoing sentence, except as set forth in Part 5(c) of the
GHX Disclosure Schedule or as expressly contemplated or permitted
by this Agreement or the Merger Agreement, during the Pre-Closing
Period, GHX shall not, and shall not permit any of its Subsidiaries
to (without the prior written consent of the Stockholder, which
consent shall not be unreasonably withheld or delayed):
(i) (A) declare, accrue, set aside or pay
any dividend or make any other distribution in respect of any
Membership Units or shares of capital stock, except for
dividends by a wholly-owned Subsidiary of GHX, or (B)
repurchase, redeem or otherwise reacquire any Membership
Units or shares of capital stock or other securities;
(ii) sell, issue, grant, pledge or
otherwise encumber or authorize the sale, issuance, grant,
pledge or encumbrance of: (A) any Membership Units, capital
stock or other security; (B) any option, call, warrant or
right to acquire any Membership Units, capital stock or other
security; or (C) any instrument convertible into or
exercisable or exchangeable for any Membership Units, capital
stock or other security;
(iii) amend or permit the adoption of any
amendment to the Certificate of Formation of GHX, the
Formation Agreement or the LLC Agreement;
(iv) other than in the ordinary course of
business and consistent with past practices or as required by
concurrent changes in GAAP, change any of its methods of
accounting or accounting practices in any material respect;
(v) (A) make or change any material Tax
election, (B) enter into any settlement or compromise of any
material Tax liability or (C) surrender any right to claim a
material Tax refund;
(vi) prepare or file any Tax Return
materially inconsistent with past practice or, on any such
Tax Return, take any position, make any election or adopt any
method that is materially inconsistent with positions taken,
elections made or methods used in preparing or filing similar
Tax Returns in prior periods;
(vii) agree or commit to take any of the
actions described in clauses "(i)" through "(vi)" of this
Section 5(c).
(d) Confidentiality; Disclosure. The parties hereto
acknowledge that they and the other parties thereto have previously
entered into that certain confidentiality agreement, dated as of
June 6, 2005, among GHX, the Stockholder, University HealthSystem
Consortium, Novation, LLC and Healthcare Purchasing Partners
International, LLC (the "Confidentiality Agreement"), which shall
continue in full force and effect in accordance with its terms. The
initial press release issued by the Stockholder and GHX concerning
this Agreement shall be a joint press release and thereafter the
Stockholder and GHX shall consult with each other before issuing
any press release or otherwise making any public statement
regarding this Agreement, except as may be required by applicable
Legal Requirements.
(e) Expenses. Except as set forth in Section 7(j), all fees
and expenses incurred in connection with this Agreement and the
Contemplated Transactions shall be paid (or caused to be paid) by
the party incurring such expenses, whether or not the Merger and
the Exchange are consummated.
(f) Regulatory Approvals and Related Matters. Except where
prohibited by applicable Legal Requirements, and subject to the
Confidentiality Agreement, the Stockholder and GHX shall consult
with the other party prior to taking a position with respect to any
filing required under Section 5.6(a) of the Merger Agreement, shall
permit the other to review and discuss in advance, and consider in
good faith the views of the other in connection with, any analyses,
appearances, presentations, memoranda, briefs, white papers,
arguments, opinions and proposals before making or submitting any
of the foregoing to any Governmental Body by or on behalf of GHX in
connection with any investigations or proceedings in connection
with this Agreement, the Merger Agreement or the Contemplated
Transactions, coordinate with the other in preparing and exchanging
such information and promptly provide the other (and its counsel)
with copies of all filings, presentations or submissions (and a
summary of any oral presentations) made by GHX with any
Governmental Body in connection with this Agreement, the Merger
Agreement or the Contemplated Transactions; provided that with
respect to any such filing, presentation or submission, each of the
Stockholder and GHX need not supply the other (or its counsel) with
copies (or, in case of oral presentations, a summary) to the extent
that any Legal Requirement applicable to such party requires such
party or its Subsidiaries to restrict or prohibit access to any
such properties or information or to the extent required by any
existing confidentiality or non-disclosure agreement. GHX will
notify the Stockholder promptly upon the receipt of: (i) any
comments from any officials of any Governmental Body in connection
with any filings made pursuant hereto or pursuant to the Merger
Agreement, and (ii) any request by any officials of any
Governmental Body for amendments or supplements to any filings made
pursuant to, or information provided to comply in all material
respects with, any applicable Legal Requirements. Whenever any
event occurs that is required to be set forth in an amendment or
supplement to any filing made pursuant to Section 5.6(a) of the
Merger Agreement, GHX will promptly inform the Stockholder of such
occurrence and the Stockholder and GHX will cooperate with respect
to the filing by GHX with the applicable Governmental Body of such
amendment or supplement.
(g) Voting of Shares. GHX agrees that it shall not exercise
the power to vote with respect to any Shares during any period of
time between the Exchange Closing and the Effective Time (as
defined in the Merger Agreement).
6. Conditions Precedent.
(a) The obligations of the Stockholder to consummate the
transactions contemplated hereby are subject to the following
conditions:
(i) The representations and warranties of GHX contained in
Section 4(f) shall be true and correct with respect to those
matters that are qualified by Material Adverse Effect or other
materiality standard and shall be true and correct in all material
respects with respect to those matters that are not so qualified,
in each case on the date hereof and as of the Exchange Closing as
though made on and as of the Exchange Closing (except to the extent
any such representation or warranty expressly speaks as of an
earlier date, in which case such representation and warranty shall
be true and correct or true and correct in all material respects,
as applicable, as of such earlier date). The representations and
warranties of GHX set forth in Section 4 of this Agreement other
than those listed in the immediately preceding sentence shall be
true and correct, without giving effect to any Material Adverse
Effect or other materiality qualifier within such representations
and warranties, on the date hereof and as of the Exchange Closing
as though made on and as of the Exchange Closing (except to the
extent any such representation and warranty expressly speaks as of
an earlier date, in which case such representation and warranty
shall be true and correct as of such earlier date), except where
the failure of such representations and warranties to be so true
and correct, individually or in the aggregate, has not had, and
would not reasonably be expected to have, a Material Adverse
Effect;
(ii) All of the covenants and obligations in this Agreement
that GHX is required to comply with or to perform at or prior to
the Exchange Closing shall have been complied with and performed in
all material respects;
(iii) The Stockholder shall have received a certificate
executed by the Chief Executive Officer and Chief Financial Officer
of GHX, in their capacities as such, confirming that the conditions
set forth in Sections 6(a)(i) and 6(a)(ii) have been satisfied;
(iv) The Company, Parent or Merger Sub shall have received
the proceeds of the Financing on the terms set forth in the
Commitment Letter, or shall have otherwise obtained the financing
required in order for GHX and Merger Sub to fulfill its obligations
under the Merger Agreement;
(v) Each Affiliated Party Contract listed on Part 6(a)(v) of
the GHX Disclosure Schedule shall have been extended for the period
set forth on such part of the GHX Disclosure Schedule and, except
as set forth on such part of the GHX Disclosure Schedule, GHX shall
have provided to the Stockholder accurate and complete copies of
the amendment or other agreement that shall have made such
extension effective; and
(vi) All of the conditions set forth in Sections 6 and 7 of
the Merger Agreement (except for Section 6.8) shall have been
satisfied or waived by the party entitled to waive such condition.
(b) The obligations of GHX to consummate the transactions
contemplated hereby are subject to the following conditions:
(i) The representations and warranties of the Stockholder
contained in Section 3 shall be true and correct in all material
respects, in each case on the date hereof and as of the Exchange
Closing as though made on and as of the Exchange Closing (except to
the extent any such representation or warranty expressly speaks as
of an earlier date, in which case such representation and warranty
shall be true and correct as of such earlier date);
(ii) All of the covenants and obligations in this Agreement
that the Stockholder is required to comply with or to perform at or
prior to the Exchange Closing shall have been complied with and
performed in all material respects;
(iii) GHX shall have received a certificate executed by the
Chief Executive Officer and Chief Financial Officer of the
Stockholder, in their capacities as such, confirming that the
conditions set forth in Sections 6(b)(i) and 6(b)(ii) have been
satisfied; and
(iv) All of the conditions set forth in Section 6 of the
Merger Agreement (except for Section 6.8) shall have been satisfied
or waived by GHX.
7. Miscellaneous.
(a) Binding Effect; Benefits. This Agreement shall be binding
upon, and shall be enforceable by and inure solely to the benefit
of, the parties hereto and their respective successors and
permitted assigns. Except as specifically provided in Section 7(l),
nothing in this Agreement, express or implied, is intended to or
shall confer upon any Person (other than the parties hereto and
their respective successors and permitted assigns) any right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement. Except as set forth in Section 7(j), no party shall
have liability for any breach of any representation or warranty
contained herein, except for any willful or intentional breach
thereof.
(b) Amendments. This Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a
written agreement executed by the Stockholder and GHX.
(c) Definitions. For purposes of this Agreement:
"Encumbrance" shall mean any lien, pledge, charge,
mortgage, easement, encroachment, imperfection of title, title
exception, title defect, right of possession, lease, security
interest, encumbrance, adverse claim, interference or restriction
on transfer (except for restrictions arising under applicable
securities laws) except for: (i) liens or other imperfections of
title that would not be reasonably likely to, individually or in
the aggregate, materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct
of the business of GHX; (ii) liens and encumbrances for Taxes,
assessments or other government charges not yet due or which are
being contested in good faith; (iii) zoning, building or other
similar government restrictions; (iv) easements, covenants, rights
of way or other similar restrictions with respect to real property;
(v) vendor's liens not exceeding the unpaid purchase price of the
encumbered asset; (vi) pledges or deposits to secure obligations
under workers' compensation laws or similar legislation or to
secure public or statutory obligations; (vii) non-exclusive
licenses entered into in the ordinary course of business; (viii)
liens securing indebtedness that are reflected on the GHX Balance
Sheet; and (ix) liens, pledges, charges, mortgages, security
interests or encumbrances arising under the Financing.
"GHX Disclosure Schedule" shall mean the GHX Disclosure
Schedule and exhibits thereto that has been delivered by GHX to the
Stockholder upon the execution of this Agreement.
"GHX Associate" shall mean any current officer, director,
or other employee of GHX.
"GHX IP" shall mean: (a) all Intellectual Property Rights
with respect to which GHX or any of its Subsidiaries has (or
purports to have) an ownership interest, and (b) all Intellectual
Property Rights licensed or sublicensed to GHX or any of its
Subsidiaries by any Person.
"GHX Owned IP" shall mean all GHX IP with respect to
which GHX or any of its Subsidiaries has (or purports to have) an
ownership interest.
"GHX Product" shall mean any product or service
developed, manufactured, marketed, distributed, provided, leased,
licensed or sold, directly or indirectly, by or on behalf of GHX
that is material to the business of GHX as currently conducted, and
accounted for at least 5% of GHX's revenues for the fiscal year
ending December 31, 2004.
"GHX Registered IP" shall mean any GHX Owned IP that is
Registered IP.
"GHX Source Code" shall mean any source code, or any
portion, aspect or segment of any source code, which is material to
any GHX Product.
"Intellectual Property Rights" shall mean all rights of
the following types, which may exist or be created under the laws
of any jurisdiction in the world: (a) rights associated with works
of authorship, including exclusive exploitation rights, copyrights,
moral rights and mask works; (b) trademark, trade name and domain
name rights or other rights with respect to designations of origin
and similar rights and the goodwill of GHX or any of its
Subsidiaries symbolized thereby; (c) trade secret rights; (d)
patent and industrial property rights; (e) other proprietary rights
in Intellectual Property; and (f) rights in or relating to
registrations, renewals, extensions, combinations, divisions and
reissues of, and applications for, any of the rights referred to in
clauses "(a)" through "(e)" above; and (g) all rights and remedies
against infringement, misappropriation or other violation thereof.
"Material Adverse Effect" shall mean any adverse event,
condition, effect, change, event, development or circumstance
(each, an "Effect") that, individually or when considered together
with all other Effects, would reasonably be expected to have a
material adverse effect on: (a) the business, condition (financial
or otherwise) or results of operations of GHX and its Subsidiaries
taken as a whole; provided, however, that, in no event shall any of
the following, alone or in combination, be deemed to constitute,
nor shall any of the following be taken into account in determining
whether there has occurred, a Material Adverse Effect: (i) Effects
resulting from conditions generally affecting the industries in
which GHX or its customers participate or the U.S. or global
economy or capital markets as a whole, to the extent that such
conditions do not have a disproportionate impact on GHX and its
Subsidiaries, taken as a whole; (ii) Effects resulting from the
announcement (or pre-announcement disclosure), or pendency of the
Merger and the Contemplated Transactions (including any
cancellation of or delays in customer orders, any reduction in
sales, any disruption in distributor, reseller, supplier, partner
or similar relationships or any loss of employees); (iii) any
failure by GHX to meet internal projections or forecasts or third
party revenue or earnings predictions for any period ending (or for
which revenues or earnings are released) on or after the date of
this Agreement, in and of themselves (it being understood that the
Effects giving rise or contributing to the failure to meet such
projections, forecasts or predictions may be taken into account in
determining whether there has been, or would reasonably be expected
to be, a Material Adverse Effect), (iv) any action or litigation
against GHX, the Company, the Stockholder or University
HealthSystem Consortium relating to or arising from allegations of
breach of fiduciary duty relating to the Company or GHX entering
into this Agreement or the Merger Agreement or disclosure
violations in the securities filings made in connection with the
Merger; (v) Effects resulting from compliance with the terms of, or
the taking of any action required by, this Agreement or the Merger
Agreement, including actions taken pursuant to Section 5.6 of the
Merger Agreement; (vi) changes in applicable Legal Requirements or
GAAP; or (vii) any Company Material Adverse Effect or (b) other
than an Effect resulting from a Company Material Adverse Effect,
the ability of GHX to consummate the Merger or the Exchange on or
prior to the End Date or the Extended End Date, as applicable.
(d) Assignability. Neither this Agreement nor any party's
rights or obligations hereunder may be assigned or delegated by
such party without the prior written consent of the other party,
and any attempted assignment or delegation of this Agreement or any
of such rights or obligations by any party without the prior
written consent of the other party shall be void and of no effect.
(e) Specific Performance. 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 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 may be entitled at law
or in equity.
(f) Governing Law; Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware (regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws
thereof). In any action between the parties arising out of or
relating to this Agreement or any of the Contemplated Transactions,
each of the parties irrevocably and unconditionally consents and
submits to the exclusive jurisdiction and venue of the Chancery
Court of the State of Delaware. EACH PARTY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH
PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, TO IT THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER,
(iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (iv) EACH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7(f).
(g) Entire Agreement; Counterparts; Exchanges by Facsimile or
Electronic Delivery. This Agreement and the other agreements,
exhibits, schedules and disclosure schedules referred to herein
(including the Revised Formation Agreement, and the Revised LLC
Agreement) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof and thereof;
provided, however, that the Confidentiality Agreement shall not be
superseded and shall remain in full force and effect in accordance
with its terms. This Agreement may be executed by facsimile and in
two counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same
instrument. The exchange of a fully executed Agreement (in
counterparts or otherwise) by facsimile or by electronic delivery
in .pdf format shall be sufficient to bind the parties to the terms
and conditions of this Agreement.
(h) Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions of this Agreement or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If a final judgment of a
court of competent jurisdiction declares that any term or provision
of this Agreement is invalid or unenforceable, the parties hereto
agree that the court making such determination shall have the power
to limit such term or provision, to delete specific words or
phrases or to replace such term or provision with a term or
provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be valid and enforceable as so
modified. In the event such court does not exercise the power
granted to it in the prior sentence, the parties hereto agree to
replace such invalid or unenforceable term or provision with a
valid and enforceable term or provision that will achieve, to the
extent possible, the economic, business and other purposes of such
invalid or unenforceable term or provision.
(i) Waiver. Subject to Sections 7(i)(A) and 7(i)(B), at
any time prior to the Exchange Closing, either party may: (i)
extend the time for the performance of any of the obligations or
other acts of the other party; (ii) waive any inaccuracy in or
breach of any representation, warranty, covenant or obligation of
the other party in this Agreement or in any document delivered
pursuant to this Agreement; and (iii) waive compliance with any
covenant, obligation or condition for the benefit of such party
contained in this Agreement.
(A) No failure on the part of either party
to exercise any power, right, privilege or remedy
under this Agreement, and no delay on the part of
any party in exercising any power, right, privilege
or remedy under this Agreement, shall operate as a
waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power,
right, privilege or remedy shall preclude any other
or further exercise thereof or of any other power,
right, privilege or remedy.
(B) Neither party shall be deemed to have
waived any claim arising out of this Agreement, or
any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power,
right, privilege or remedy is expressly set forth in
a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not
be applicable or have any effect except in the
specific instance in which it is given.
(j) Survival of Representations and Warranties and
Agreements; Indemnification. Except with respect to the
representations and warranties contained in Section 4(f), which
shall survive for a period of eighteen (18) months following the
Exchange Closing, none of the representations and warranties
contained in this Agreement or in any certificate delivered
pursuant to this Agreement shall survive the Exchange Closing. This
Section 7(j) shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the
Exchange Closing. GHX shall indemnify, defend and hold harmless the
Stockholder and each of its Affiliates, officers, directors,
employees, consultants and other Representatives from and against
any and all damages, liabilities, claims, actions, suits,
proceedings, costs, charges and expenses, including reasonable
attorneys' fees, incurred or sustained by any of such persons as a
result of or from any breach of any of the representations and
warranties contained in Section 4(f).
(k) Termination. This Agreement shall terminate upon the
earlier to occur of (i) the date of the termination of the Merger
Agreement in accordance with its terms and (ii) an agreement of GHX
and the Stockholder to terminate this Agreement. All
representations, warranties, covenants and agreements set forth
herein shall terminate and have no further force or effect as of
the termination of this Agreement pursuant to this Section 7(k).
Notwithstanding the foregoing, Sections 5(d), 5(e) and 7 of this
Agreement and the Confidentiality Agreement, and the covenants and
agreements set forth herein and therein, shall survive the
termination of this Agreement and no party shall be relieved from
any liability (y) by reason of such termination, for a breach by
such party of this Agreement prior to such termination or (z) for
any willful or intentional breach of any covenant, obligation,
representation or warranty contained in this Agreement.
(l) Third Party Beneficiary. The Company is a third party
beneficiary of this Agreement with the right to enforce the
provisions hereof.
(m) GHX Disclosure Schedule. The GHX Disclosure Schedule
shall be arranged in separate parts corresponding to the numbered
and lettered sections contained in Section 4.
(n) Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall
be deemed to have been duly given or made as follows: (a) if sent
designated for overnight delivery by nationally recognized
overnight air courier (such as DHL or Federal Express), two
business days after mailing; (b) if sent by facsimile transmission
before 5:00 p.m., when transmitted and receipt is confirmed; (c) if
sent by facsimile transmission after 5:00 p.m. and receipt is
confirmed, on the following business day; and (d) if otherwise
actually personally delivered, when delivered, provided that such
notices, requests, demands and other communications are delivered
to the address set forth below, or to such other address as either
party shall provide by like notice to the other party to this
Agreement:
if to GHX:
Global Healthcare Exchange, LLC
Xxxxx 000
00000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Chief Executive Officer and Chief Financial Officer
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Sidley Xxxxxx Xxxxx & Xxxx LLP
Bank One Plaza
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxx
Facsimile: (000) 000-0000
if to the Stockholder:
VHA Inc.
000 Xxxx Xxx Xxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: Chief Financial Officer
Facsimile: 000-000-0000
with copies (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Facsimile: 000-000-0000
(o) Construction.
(A) For purposes of this Agreement, whenever the
context requires: the singular number shall include the
plural, and vice versa; the masculine gender shall include
the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter
gender shall include masculine and feminine genders.
(B) The parties hereto agree that any rule of
construction to the effect that ambiguities are to be
resolved against the drafting party shall not be applied in
the construction or interpretation of this Agreement.
(C) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to
be terms of limitation, but rather shall be deemed to be
followed by the words "without limitation."
(D) Except as otherwise indicated, all references in
this Agreement to "Sections," "Exhibits" and "Schedules" are
intended to refer to Sections of this Agreement and Exhibits
or Schedules to this Agreement.
(E) The headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a
part of this Agreement and shall not be referred to in
connection with the construction or interpretation of this
Agreement.
* * * * *
IN WITNESS WHEREOF, GHX and the Stockholder have executed this
Agreement as of the date first above written.
GLOBAL HEALTHCARE EXCHANGE, LLC
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
VHA INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
