AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
This Amended and Restated Investors' Rights Agreement (the
"Agreement") is entered into as of May 19, 1998, by and between Healtheon
Corporation, a Delaware corporation (the "Company") and the persons and
entities listed on Schedules A and B hereto.
WHEREAS, the Company and certain of the persons and entities listed on
Schedules A and B hereto entered into certain Securities Purchase Agreements
during the period from January 26, 1996 through December __, 1997 (the
"Securities Purchase Agreements") pursuant to which the Company sold and
issued to such persons and entities (the "Healtheon Investors") shares of its
Common Stock and Series A, Series B, Series C and Series D Preferred Stock
and issued certain warrants with respect thereto; and
WHEREAS, in order to induce the Healtheon Investors to invest funds in
the Company pursuant to the Securities Purchase Agreements, the Company and
the Healtheon Investors entered into certain Investors' Rights Agreements
pursuant to which the Company granted certain rights to the Healtheon
Investors; and
WHEREAS, the Company entered into an Agreement and Plan of
Reorganization (the "Merger Agreement") with ActaMed Corporation ("ActaMed")
dated February 24, 1998, in connection with the acquisition of ActaMed by the
Company (the "Merger"), pursuant to which the Company will issue and exchange
0.6272 shares of Company Common Stock for each share of ActaMed Capital Stock
outstanding at the time the Merger is consummated; and
WHEREAS, as a condition to closing of the Merger, the Healtheon
Investors have agreed to convert all of their shares of Original Preferred
Stock and warrants to acquire Original Preferred Stock into Common Stock and
warrants to acquire Common Stock; and
WHEREAS, certain shareholders of ActaMed Capital Stock listed on
Schedules A and B hereto possess certain registration and other rights with
respect to their shares of ActaMed Capital Stock, and desire to maintain
certain rights following the Merger with respect to their shares of Company
Common Stock (the "ActaMed Holders"); and
WHEREAS, pursuant to the Merger Agreement, in order to induce the
ActaMed Holders to approve the Merger, the Company and the ActaMed Holders
have entered into this Agreement.
NOW, THEREFORE, in consideration of the premises, covenants, and
conditions set forth herein, the parties agree as follows:
1. REGISTRATION RIGHTS. The parties covenant and agree as follows:
1.1 DEFINITIONS. For purposes of this Agreement:
(a) The term "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933,
as amended (the "Act"), and the declaration or ordering of effectiveness of
such registration statement or document.
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(b) The term "Registrable Securities" means (i) the
Company's Common Stock issued pursuant to the Securities Purchase Agreements,
(ii) the Company's Common Stock issued upon conversion of the Original
Preferred Stock and issued upon the exercise of the warrants issued in
substitution for the Series B Preferred Stock Warrants (together, the
"Conversion Stock"), (iii) the Company's Common Stock issued to the ActaMed
Holders pursuant to the Merger Agreement (the "Merger Stock"), and (iv) any
Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in
replacement of, such Common Stock, Conversion Stock and Merger Stock
described in (i), (ii) and (iii), excluding in all cases, however, (A) any
Registrable Securities sold by a person in a transaction in which such
person's rights under this Section 1 are not assigned or (B) shares of any
Registrable Securities that have been sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction.
(c) The number of shares of "Registrable Securities then
outstanding" shall be equal to the sum of (i) the number of shares of Common
Stock outstanding that are Registrable Securities and (ii) the number of
shares of Common Stock issuable pursuant to then exercisable or convertible
securities that are exercisable or convertible into Registrable Securities.
(d) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any transferee or assignee thereof
in accordance with Section 1.14 hereof.
(e) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the Securities and Exchange Commission ("SEC") that permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
(f) The term "Initial Public Offering" means the first sale
of Common Stock of the Company to the public effected pursuant to a
registration statement (other than a registration statement relating either
to the sale of securities to employees of the Company pursuant to a stock
plan, stock purchase or similar plan or a SEC Rule 145 transaction) filed
with, and declared effective by, the SEC under the Act on Form S-1 (or any
subsequently adopted similar form).
(g) The term "Original Preferred Stock" shall mean the
Series A Preferred Stock and the Series A-1 Preferred Stock (including Series
A-2, Series A-3, etc.); the Series B Preferred Stock and the Series B-1
Preferred Stock (including Series B-2, Series B-3, etc.); the Series C
Preferred Stock and the Series C-1 Preferred Stock (including Series C-2,
Series C-3, etc.), and the Series D Preferred Stock and the Series D-1
Preferred Stock (including Series D-2, Series D-3, etc.) of the Company
issued and sold to pursuant to the Securities Purchase Agreements or upon the
exercise of the Series B Preferred Stock Warrants.
(h) The term "Principal Holder" shall mean each Holder
which, together with its affiliated entities, holds at least two hundred and
fifty thousand (250,000) shares of Registrable Securities.
1.2 REQUEST FOR REGISTRATION.
(a) If the Company shall receive at any time after the
earlier of (i) January 26, 2001, or (ii) twelve (12) months after
consummation of the Company's Initial Public Offering, a written request from
the Holders of forty percent (40%) of the Registrable Securities then
outstanding that the Company file a registration statement under the Act
covering the registration of Registrable Securities with an aggregate gross
offering price of at least ten million dollars ($10,000,000), then the
Company shall, within ten (10) days of the receipt thereof, give written
notice of such request to all Holders and shall, subject to the limitations
of subsection 1.2(b), effect as soon as practicable, and in any event shall
use its best efforts to effect within one hundred twenty (120) days of the
receipt of such request, the registration under the Act of all Registrable
Securities that the Holders request
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to be registered within twenty (20) days of the mailing of such notice by the
Company.
(b) If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall
so advise the Company as a part of their request made pursuant to this
Section 1.2 and the Company shall include such information in the written
notice referred to in subsection 1.2(a). The underwriter or underwriters will
be selected by the Company and shall be reasonably acceptable to a majority
in interest of the Initiating Holders. In such event, the right of any Holder
to include his Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with
the Company as provided in subsection 1.4(e)) enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting. Notwithstanding any other provision of this Section 1.2,
if the managing underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Holders of Registrable
Securities requesting to be included in the underwriting, and the number of
shares of Registrable Securities that may be included in the underwriting
shall be allocated among all Holders requesting to be included in the
underwriting, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder at the time of
filing the registration statement; provided, however, that the number of
shares of Registrable Securities to be included in such underwriting shall
not be reduced unless all other securities, including, without limitation,
any shares offered by the Company, are first entirely excluded from the
underwriting. No Registrable Securities excluded from the underwriting by
reason of the managing underwriters' marketing limitation shall be included
in such registration. To facilitate the allocation of Shares in accordance
with the above provisions, the Company or the underwriters may round the
number of shares allocated to any Holder to the nearest one hundred (100)
Shares.
(c) The Company is obligated to effect only one (1)
registration pursuant to this Section 1.2 (counting for this purpose only
registrations that have been declared or ordered effective and pursuant to
which Registrable Securities have been sold).
(d) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this
Section 1.2, a certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its stockholders for such
registration statement to be filed and that it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer such filing for a period of not more than one hundred twenty
(120) days after receipt of the request of the Initiating Holders; provided,
however, that the Company may defer its obligations for this reason only once
in any twelve (12) month period.
(e) Notwithstanding anything to the contrary in this Section
1.2, the Company shall not be obligated to take an action to effect such
registration pursuant to this Section 1.2 for a period of six (6) months
following the effective date of a registration statement previously filed by
the Company (other than a registration of securities in a SEC Rule 145
transaction or with respect to an employee benefit plan).
(f) If any registration statement prepared pursuant to this
Section 1.2 is not filed or does not become effective or fails to close as a
result of the decision of the Initiating Holders or any underwriter
designated by them, the obligation of the Company to prepare and file a
registration statement at the request of such Initiating Holders shall
nevertheless have been satisfied unless such Initiating Holders shall
reimburse the Company for its registration expenses set forth in Section 1.6
herein incurred in connection with the preparation and filing of such
registration statement. If the registration statement otherwise fails to
become effective or fails to close, the registration rights of the Holders
provided in Section 1.2 shall remain fully available as if the registration
had not been requested by the Initiating Holders.
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1.3 COMPANY REGISTRATION. If (but without any obligation to do so)
(i) the Company proposes to register any of its Common Stock or other
securities under the Act in connection with a public offering of such
securities solely for cash (including a registration effected by the Company
for stockholders other than the Holders, but not including a registration
relating solely to the Company's employee benefit plans, or a registration on
any form that does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities), and (ii) the Company has consummated its Initial
Public Offering, the Company shall, at such time, promptly give each Holder
written notice of such registration. Upon the written request of each Holder
given within twenty (20) days after mailing of such notice by the Company,
the Company shall, subject to the provisions of Section 1.8, cause to be
registered under the Act all of the Registrable Securities that each such
Holder has requested to be registered.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required pursuant to this
Section 1 to effect the registration of any Registrable Securities, the
Company shall perform the following obligations as expeditiously as
reasonably possible:
(a) The Company shall prepare and file with the SEC a
registration statement with respect to such Registrable Securities and use
its best efforts to cause such registration statement to become effective
and, upon the request of the Holders of a majority of the Registrable
Securities registered thereunder, to keep such registration statement
effective for up to one hundred twenty (120) days.
(b) The Company shall prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.
(c) If requested by a selling Holder which holds at least
five percent (5%) of the Registrable Securities then outstanding, the Company
shall provide the underwriters (which term, for purposes of this Agreement,
shall include a person deemed to be an underwriter within the meaning of
Section 2(11) of the Securities Act), if any, of the shares being sold and
counsel for such underwriters and not more than one counsel for all of such
selling Holders (which counsel shall be subject to approval by the Company,
such approval not to be unreasonably withheld) the opportunity to participate
in the preparation of the registration statement, each prospectus included
therein or filed with the Commission, and each amendment or supplement
thereto; and make available for inspection by such underwriters and the
applicable counsel such financial and other information, books and records of
the Company and cause the officers, directors and employees of the Company
and counsel and independent certified public accountants of the Company to
respond to such inquiries as shall be reasonably necessary, in the opinion of
respective counsel to such selling Holders and such underwriters, to conduct
a reasonable investigation within the meaning of the Securities Act.
(d) The Company shall promptly notify (in writing, if so
requested) the selling Holders and the underwriters, if any, (i) when the
registration statement, the prospectus or any prospectus supplement or
post-effective amendment has been filed, and with respect to the registration
statement or any post-effective amendment, when the same has become
effective, (ii) request by the Commission for amendments or supplements to
the registration statement or the prospectus, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that purpose, (iv) of the
receipt of the Company of any notification with respect to the suspension of
the qualification of the Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose.
(e) The Company shall, if requested by the managing
underwriter or underwriters or by selling Holders, promptly incorporate in a
prospectus, prospectus supplement or post-effective amendment such
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information or such managing underwriter or underwriters as such selling
Holders specify should be included therein relating to the sale of the
Registrable Securities, including, without limitation, information with
respect to the number or amount of Registrable Securities being sold to such
underwriters, the purchase price being paid therefor by such underwriters and
with respect to any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in such
offering; and make all required filings of such prospectus, prospectus
supplement or post-effective amendment promptly after notification of the
matters to be incorporated in such prospectus, prospectus supplement or
post-effective amendment, provided that the Company and its counsel are
reasonably satisfied that such additional information does not constitute an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing.
(f) The Company shall furnish to the Holders such numbers of
copies of the prospectus, including a prospectus subject to completion, in
conformity with the requirements of the Act, and such other documents as they
may reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(g) The Company shall use its best efforts to register and
qualify the securities covered by such registration statement under such
other securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the Holders, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such
states or jurisdictions.
(h) The Company shall prepare and file with the applicable
exchange or securities market an appropriate listing application with respect
to the Registered Securities.
(i) In the event of any underwritten public offering, the
Company shall enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also enter
into and perform its obligations under such an agreement.
(j) The Company shall notify each Holder of Registrable
Securities covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under the Act of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of
the circumstances then existing.
(k) Notwithstanding the foregoing, the Company shall have no
obligation with respect to any registration requested pursuant to Sections
1.2 or 1.13 if the number of shares or the anticipated aggregate offering
price of the Registrable Securities to be included in the registration does
not equal or exceed the number of shares or the anticipated aggregate
offering price required to trigger the Company's obligation to initiate such
registration as specified in subsection 1.2(a) or subsection 1.13(b)(ii), as
applicable.
1.5 OBLIGATIONS OF THE HOLDERS.
(a) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of such securities as
shall be required to effect the registration of such Holder's Registrable
Securities.
(b) In the event of any underwritten public offering, each
Holder participating in such
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underwriting shall enter into and perform its obligations under an
underwriting agreement in customary form with the managing underwriter of
such offering.
1.6 EXPENSES OF DEMAND REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the
Company and the reasonable fees and disbursements of one counsel for the
selling Holders not to exceed twenty five thousand dollars ($25,000), shall
be borne by the Company. Notwithstanding the foregoing, the Company shall not
be required to pay for expenses of any registration proceeding begun under
Section 1.2, the request for which has been subsequently withdrawn by the
Holders of a majority of the Registrable Securities or is not completed due
to failure to meet the gross offering price requirement set forth in such
section unless Holders representing a majority of Registrable Securities
agree to forfeit their right to a registration under Section 1.2, provided
however, that if at the time of such withdrawal by the Holders of a majority
of the Registrable Securities, the Holders have learned of a material adverse
change in the operating results, financial condition or business of the
Company from that known to the Holders at the time of the request and have
withdrawn the request with promptness following disclosure by the Company of
such material adverse change.
1.7 EXPENSES OF COMPANY REGISTRATION. The Company shall bear and
pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as
provided in Section 1.14), including (without limitation) all registration,
filing, and qualification fees, fees and disbursements of Company counsel,
printers' and accounting fees relating or apportionable thereto and the
reasonable fees and disbursements of one counsel for the selling Holders not
to exceed twenty five thousand dollars ($25,000), but excluding underwriting
discounts and commissions relating to Registrable Securities.
1.8 UNDERWRITING REQUIREMENTS.
(a) In connection with any offering involving an
underwriting of shares of the Company's Common Stock, the Company shall not
be required under Section 1.3 to include any of the Holders' securities in
such underwriting unless they accept the terms of the underwriting as agreed
upon between the Company and the underwriters selected by it (or by other
persons entitled to select the underwriters), and then only in such quantity
as the managing underwriter determines in its sole discretion will not, due
to marketing factors, jeopardize the success of the offering by the Company.
(b) If the total amount of securities, including Registrable
Securities, requested by stockholders to be included in such offering
(excluding an offering effected pursuant to Section 1.2) exceeds the amount
of securities sold other than by the Company that the underwriters determine
in their sole discretion is compatible with the success of the offering, then
the Company shall be required to include in the offering only that number of
such securities, including Registrable Securities, which the underwriters
determine in their sole discretion will not jeopardize the success of the
offering (the securities so included to be apportioned pro rata among the
Holders requesting inclusion in such registration according to the total
amount of securities entitled to be included therein owned by each such
Holder on a pro rata basis); provided, however, that any such limitation or
"cut-back" shall be first applied to all shares proposed to be sold in such
offering, other than for the account of the Company, which are not
Registrable Securities. In no event shall any securities of the Company be
excluded from such registration prior to the cut back of all shares proposed
to be sold in such offering by the stockholders of the Company.
1.9 WITHDRAWAL RIGHTS AND REALLOCATION. If any Holder disapproves
of the terms of any such underwriting, such Holder may elect to withdraw
therefrom by written notice to the Company and the underwriters. If such
Holder's shares are withdrawn from registration, or if the number of shares
of Registrable
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Securities was previously reduced due to marketing factors, the Company shall
offer to all Holders retaining the right to include securities in the
registration the right to include additional Registrable Securities in the
registration, with such shares being allocated on a pro rata basis among the
Holders of Registrable Securities.
1.10 DELAY OF REGISTRATION. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect
to the interpretation or implementation of this Section 1.
1.11 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the officers, directors and general
partners of each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the 1934 Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Act, the 1934 Act or other federal or state law, including any of
the foregoing incurred in settlement of any litigation, commenced or
threatened, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (each of which is referred to
herein as a "Violation"):
(i) any untrue statement or alleged untrue statement
of a material fact contained in such registration statement, including any
prospectus subject to completion or final prospectus contained therein or any
amendments or supplements thereto;
(ii) the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary to make the
statements therein not misleading; or
(iii) any violation or alleged violation by the Company
of the Act, the 1934 Act, any state securities law or any rule or regulation
promulgated under the Act, the 1934 Act or any state securities laws. In
addition, the Company will promptly reimburse each such Holder, officer,
director or general partner, underwriter or controlling person for any legal
or other expenses reasonably incurred by them, on an as-incurred basis, in
connection with investigating or defending any such loss, claim, damage,
liability, or action.
Notwithstanding the foregoing, the indemnity provisions contained in
this Section 1.11(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the written consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case for
any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation that results from reliance upon
written information furnished expressly for use in connection with such
registration by any such Holder, officer, director, general partner,
underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder
shall indemnify and hold harmless the Company, each of its directors, each of
its officers who have signed the registration statement, each person, if any,
who controls the Company within the meaning of the Act, any underwriter and
any Holder selling securities in such registration statement or any of its
directors, officers or general partners or each person, if any, who controls
such Holder, against any losses, claims, damages, or liabilities (joint or
several) to which the Company (or any director, officer, controlling person),
or underwriter (or controlling person), or Holder (or director, officer,
general partner or controlling person thereof) may become subject, under the
Act, the 1934 Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or action in respect thereto) arise out of
or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation results from reliance upon written information
furnished by such Holder expressly for use in connection with such
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registration.
Each such Holder will promptly reimburse any legal or other expenses
reasonably incurred, on an as-incurred basis, by the Company (or any
director, officer, controlling person), underwriter (or controlling person),
Holder (or any director, officer, general partner, or controlling person
thereof) in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this Section 1.11(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the written consent of the Holder, which
consent shall not be unreasonably withheld.
Notwithstanding the foregoing, the liability of each Holder under this
Section 1.11(b) shall be limited to an amount equal to the aggregate proceeds
of the shares sold by such Holder in the offering pursuant to which the
Violation is claimed to have occurred, unless such liability arises out of or
is based on willful misconduct of such Holder.
(c) Within a reasonable time after receipt by an indemnified
party of notice of the commencement of any action (including any governmental
action) under this Section 1.11, such indemnified party shall, if a claim in
respect thereof is to be made against any indemnifying party under this
Section 1.11, deliver to the indemnifying party a written notice of the
commencement thereof. Such indemnifying party shall have the right to
participate in and subject to the consent of the indemnified party, which
consent shall not be unreasonably withheld, the indemnifying party shall have
the right to enter into settlement of such action, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense of such action with counsel approved
by the indemnified party (whose approval shall not be unreasonably withheld);
provided, however, that the indemnified party shall cooperate with the
indemnifying party, and that if representation of an indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding, such
indemnified party shall have the right to retain its own counsel, with the
reasonable fees and reasonable expenses to be paid by the indemnifying party.
The failure of an indemnified party to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if such failure is prejudicial to the indemnifying party, shall
relieve such indemnifying party of any liability to the indemnified party
under this Section 1.11 to the extent such party is prejudiced. However, the
omission of the indemnified party to deliver such written notice to the
indemnifying party will not relieve such indemnifying party of any liability
that it may have to any indemnified party otherwise than under this Section
1.11.
(d) If the indemnification provided for in this Section 1.11
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, claim, damage, liability, or
action referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage, liability or action in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
that resulted in such loss, claim, damage, liability or action as well as any
other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the violation of law or the untrue
or alleged untrue statement of a material fact or the omission to state a
material fact relates to acts of or information supplied by the indemnifying
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 1.11(d) were determined by
pro rata allocation (even if the selling Holders or any underwriters or all
of them were treated as one entity for such purpose) or by any other method
of allocation which does not take
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account of the equitable considerations referred to in the immediately
preceding paragraph. In no event shall the contribution obligations of each
selling Holder exceed the amount of proceeds received by such selling Holder
from the date of his, her or its Registrable Securities covered by the
registration statement. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering
are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) The obligations of the Company and of the Holders under
this Section 1.11 shall survive the conversion, if any, of the Series A
Preferred and the completion of any offering of Registrable Securities in a
registration statement under this Section 1 or otherwise.
1.12 REPORTS UNDER THE 1934 ACT. With a view to making available to
the Holders the benefits of Rule 144 promulgated under the Act and any other
rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration, the Company
agrees:
(a) to make and keep public information available, as those
terms are defined under SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) use its best efforts to file with the SEC all reports
and other documents required of the Company under the Act and the 1934 Act
(at any time after it has become subject to such reporting requirements) in a
timely manner; and
(c) to furnish to any Holder, so long as such Holder owns
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at
any time after it has become subject to such reporting requirements), (ii) a
copy of the Company's most recent annual or quarterly report and (iii) such
other information as may be reasonably requested by such Holder in order to
avail itself of any rule or regulation of the SEC that permits the selling of
any such securities without registration.
1.13 FORM S-3 REGISTRATION. At any time following the second
anniversary of the Company's Initial Public Offering, in case the Company
shall receive from any Holder or Holders holding a written request that the
Company effect a registration on Form S-3 or any successor form and any
related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company shall
comply with the following obligations:
(a) The Company shall promptly give written notice of the
proposed registration, and any related qualification or compliance, to all
other Holders. In the event the registration is proposed to be part of a
firm commitment underwritten public offering, the substantive provisions of
paragraph (b) of Section 1.2 hereof shall be applicable to each such
registration initiated under this Section 1.13.
(b) As soon as practicable, the Company shall effect such
registration and all such qualifications and compliances as may be so
requested and as would permit or facilitate the sale and distribution of all
or such portion of such Holder's or Holders' Registrable Securities as are
specified in such request, together with all or such portion of the
Registrable Securities of any other Holder or Holders joining in such request
as are specified in a written request given within fifteen (15) days after
receipt of such written notice from the Company. Notwithstanding the
foregoing, the Company shall not be obligated to effect any such
registration, qualification
9
or compliance, pursuant to this Section 1.13 if: (i) the Company has
previously effected three (3) registrations pursuant to this Section 1.13,
(ii) Form S-3 is not available for such offering by the Holders; (iii) the
Holders, together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public of less than one million dollars ($1,000,000); (iv) the Company
furnishes to the Holders a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its
stockholders for such Form S-3 registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form
S-3 registration statement for a period of not more than one hundred twenty
(120) days after receipt of the request of the Holder or Holders under this
Section 1.13, notwithstanding the foregoing, the Company shall not have the
right to exercise this right more than twice in any twelve (12) month period;
(v) the Company has, within the twelve (12) month period preceding the date
of such request, already effected a registration on Form S-3 for the Holders
pursuant to this Section 1.13; (vi) the Company would be required to qualify
to do business or to execute a general consent to service of process in
effecting such registration, qualification or compliance in a particular
jurisdiction; or (vii) a registration statement respecting securities of the
Company has been declared effective within one hundred eighty (180) days of
such request.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Holders. All expenses incurred in connection with the registrations
requested pursuant to this Section 1.13, including (without limitation) all
registration, filing, qualification, printers' and accounting fees, fees and
disbursements of counsel for the selling Holder or Holders and any
underwriters' discounts or commissions associated with Registrable
Securities, shall be borne by the selling Holder or Holders. Registrations
effected pursuant to this Section 1.13 shall not be counted as demands for
registration effected pursuant to Section 1.2.
1.14 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities granted under this Section 1 may
be assigned by a Holder to a transferee or assignee who acquires two hundred
fifty thousand (250,000) shares (as adjusted for stock splits, combinations,
dividends and the like) of the Registrable Securities held by such Holder,
provided the Company is, within a reasonable time prior to such transfer,
furnished with written notice of the name and address of such proposed
transferee or assignee and the securities with respect to which such
registration rights are being assigned; provided further that such assignment
shall be effective only if the transferee enters into a written agreement
providing that such transferee shall be bound by the provisions of Section 1
of this Agreement. Notwithstanding the foregoing or any other provision
contained herein to the contrary, the right to cause the Company to register
Registrable Securities may be assigned by a Holder to any constituent partner
of a partnership Holder and any affiliate, subsidiary or parent of a
corporate Holder provided that such transferee agrees in writing to be bound
by the terms and conditions of this Agreement.
1.15 "MARKET STAND-OFF" AGREEMENT.
Each Holder hereby agrees that it shall not, to the extent specified
by the Company and an underwriter of Common Stock (or other securities) of
the Company, sell, offer to sell, contract to sell (including without
limitation any short sale), grant any option to purchase or otherwise
transfer or dispose of (other than to donees who agree to be similarly bound)
any securities of the Company (other than securities already registered)
during a reasonable and customary period of time not to exceed one hundred
and eighty (180) days, as agreed to by the Company and the underwriters,
following the effective date of the Company's Initial Public Offering;
provided, however, that all officers and directors of the Company enter into
similar agreements.
In order to enforce the foregoing covenant, the Company may impose
stop transfer instructions with respect to the securities of each Holder (and
the shares or securities of every other person subject to the foregoing
restriction) until the end of such one hundred and eighty (180) day period.
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1.16 TERMINATION OF THE COMPANY'S OBLIGATIONS. The rights to cause
the Company to register securities granted to Holders pursuant to Sections
1.2 and 1.3 shall terminate as to any Holder at such time as the Holder has
the ability to sell all of the Registrable Securities owned by such
stockholder under SEC Rule 144 within a three (3) month period.
1.17 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of a majority of Registrable Securities then
outstanding, enter into any agreement with any holder or prospective holder
of any securities of the Company which would grant rights to have securities
other than Registrable Securities registered under the Act that are PARI
PASSU or senior to the registration rights granted herein.
2. COVENANTS.
2.1 DELIVERY OF FINANCIAL STATEMENTS. The Company shall, as soon
as practicable, but in any event within ninety (90) days after the end of
each fiscal year of the Company, furnish to each Principal Holder a
consolidated profit and loss statement for such fiscal year, a consolidated
balance sheet of the Company and a consolidated statement of stockholders'
equity as of the end of such year, and a consolidated statement of cash flows
for such year, such year-end financial reports to be prepared in accordance
with generally accepted accounting principles and audited and certified by
independent public accountants of nationally recognized standing selected by
the Company. In the event that the Company is involved in a material
corporate transaction which is likely to have an effect on the Company's
financial reports, the Company shall have an additional thirty (30) days in
order to fulfill its obligations hereunder.
2.2 DELIVERY OF QUARTERLY FINANCIAL STATEMENTS. The Company shall,
as soon as practicable, but in no event within forty-five (45) days after the
end of each fiscal quarter of the Company (except for the fiscal quarter
ending December 31 of each year) furnish to each Principal Holder a
consolidated profit and loss statement for such quarter and year-to-date, a
consolidated balance sheet of the Company and a consolidated statement of
cash flows for such quarter and year-to-date prepared in accordance with
generally accepted accounting principles consistently applied. In the event
that the Company is involved in a material corporate transaction which is
likely to have an effect on the Company's financial reports, the Company
shall have an additional thirty (30) days in order to fulfill its obligations
hereunder.
2.3 DELIVERY OF MONTHLY FINANCIAL STATEMENTS. The Company shall
furnish each Principal Holder upon request (commencing with the month ending
July 31, 1998), within thirty (30) days of the end of each month, an
unaudited consolidated profit and loss statement, consolidated statement of
cash flows and consolidated balance sheet for and as of the end of such
month, and comparison to year-end results (if any). In the event that the
Company is involved in a material corporate transaction which is likely to
have an effect on the Company's financial reports, the Company shall have an
additional thirty (30) days in order to fulfill its obligations hereunder.
2.4 LIMITATION ON INFORMATION RIGHTS. The rights to receive
financial information set forth in Sections 2.1, 2.2 and 2.3 above may be
assigned by each Principal Holder to a subsequent transferee or assignee of
at least two hundred fifty thousand (250,000) shares (as adjusted for stock
splits, combinations, dividends and the like) of such Principal Holder's
Registrable Securities, provided that the transferee or assignee of such
rights is not deemed by the Board of Directors, in its reasonable judgment,
to be a current or potential competitor of the Company. Notwithstanding the
foregoing or any other provision contained herein to the contrary, the
information rights contained in Section 2.1, 2.2 and 2.3 above may be
assigned by a Holder to any constituent partner of a partnership Holder or
any affiliate, subsidiary or parent of a corporate Holder provided that such
transferee agrees in writing to be bound by the terms and conditions of this
Agreement.
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2.5 RIGHT OF FIRST REFUSAL. The Company hereby grants to each
Principal Holder, the right of first refusal to purchase a pro rata share of
New Securities (as defined in this Section 2.5) which the Company may, from
time to time, propose to sell and issue after the date hereof. A Principal
Holder's pro rata share, for purposes of this right of first refusal, is the
ratio of (i) the number of shares of Registrable Securities held by such
Principal Holder; and (ii) the total number of shares of Registrable
Securities then outstanding. This right of first refusal shall be subject to
the following provisions:
(a) "New Securities" shall mean any capital stock (including
Common Stock and/or preferred stock) of the Company whether now authorized or
not, and rights, options or warrants to purchase such capital stock, and
securities of any type whatsoever that are, or may become, convertible into
capital stock; provided that the term "New Securities" does not include (i)
securities issued upon conversion of the any preferred stock; (ii) securities
issued pursuant to the acquisition of another business entity or business
segment of any such entity by the Company by merger, purchase of
substantially all the assets or other reorganization whereby the Company will
own not less than fifty-one percent (51%) of the voting power of such
business entity or business segment of any such entity; (iii) any borrowing,
direct or indirect, from financial institutions or other persons by the
Company, whether or not presently authorized, including any type of loan or
payment evidenced by any type of debt instrument, provided that such
borrowing does not have any equity features including warrants, options or
other rights to purchase capital stock and are not convertible into capital
stock of the Company; (iv) securities issued to employees, consultants,
officers or directors of the Company pursuant to any stock option, stock
purchase or stock bonus plan, agreement or arrangement approved by the Board
of Directors; (v) securities issued in connection with obtaining lease
financing, whether issued to a lessor, guarantor or other person and is for
purposes other than equity financing of the Company; (vi) securities issued
in connection with one or more strategic development, licensing or technology
transactions, up to an aggregate of three million (3,000,000) shares of
Company capital stock or rights to purchase Company capital stock pursuant to
all transactions pursuant to this subsection (vi); (vii) up to one million
three hundred thirty-six thousand four hundred twenty-two (1,336,422) shares
of Company common stock to be issued to SmithKline Beechham Clinical
Laboratories, Inc.(SBLC), issued pursuant to the First Amendment to the Asset
Purchase Agreement dated December 31, 1997 between SBLC and ActaMed; (viii)
securities issued in a firm commitment underwritten public offering pursuant
to a registration under the Act; (ix) securities issued in connection with
any stock split, stock dividend or recapitalization of the Company so long as
such issuance results in adjustments to the conversion rate under the
Restated Certificate of Incorporation of the Company with respect to any
preferred stock; and (x) any right, option or warrant to acquire any security
convertible into the securities excluded from the definition of New
Securities pursuant to subsections (i) through (ix) above.
(b) In the event the Company proposes to undertake an
issuance of New Securities, it shall give each Principal Holder written
notice of its intention, describing the type of New Securities, and their
price and the general terms upon which the Company proposes to issue the
same. Each Principal Holder shall have fifteen (15) days after any such
notice is effective to agree to purchase up to such Principal Holder's pro
rata share, as the case may be, of such New Securities for the price and upon
the terms specified in the notice by giving written notice to the Company and
stating therein the quantity of New Securities to be purchased.
(c) In the event the Principal Holders fail to exercise the
right of first refusal, in full or in part, within said fifteen (15)-day
period, the Company shall have sixty (60) days thereafter to sell or enter
into an agreement (pursuant to which the sale of New Securities covered
thereby shall be closed, if at all, within sixty (60) days from the date of
said agreement) to sell the New Securities respecting which the Principal
Holders' right of first refusal option set forth in this Section 2.4 was not
exercised, at a price and upon terms no more favorable to the purchasers
thereof than specified in the Company's notice to Principal Holders pursuant
to Section 2.5(b). In the event the Company has not sold within said 60-day
period or entered into an agreement to sell the New Securities within said
60-day period (or sold and issued New Securities in accordance with the
foregoing within sixty (60) days from the date of said agreement), the
Company shall not thereafter issue or sell any New Securities, without first
again offering such securities to the Principal Holders in the manner
provided in
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Section 2.5(b) above.
(d) The right of first refusal set forth in this Section 2.5
may be assigned by a Principal Holder to a transferee or assignee who
acquires two hundred and fifty thousand (250,000) shares (as adjusted for
stock splits, combinations, dividends and the like) of such Principal
Holder's Conversion Stock or such Principal Holder's Merger Stock, as the
case may be, provided, the Company is, within a reasonable time prior to such
transfer, furnished with written notice of the name and address of such
proposed transferee or assignee and the securities with respect to which such
rights of first refusal are being assigned; provided further that such
assignment shall be effective only if the transferee enters into a written
agreement providing that such transferee shall be bound by the provisions of
Section 2.5 of this Agreement. Notwithstanding the foregoing or any other
provision contained herein to the contrary, the right of first refusal may be
assigned by a Principal Holder to any constituent partner of a partnership
Principal Holder and any affiliate, subsidiary or parent of a corporate
Principal Holder provided that such transferee agrees in writing to be bound
by the terms and conditions of this Agreement.
2.6 TERMINATION OF COVENANTS. Unless terminated earlier, the
covenants set forth in these Sections 2.1, 2.2, 2.3 and 2.5 shall terminate
and be of no further force or effect upon the consummation of the Company's
Initial Public Offering.
3. MISCELLANEOUS.
3.1 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents, made and to be performed entirely within the
State of California.
3.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto (including transferees of any shares of Registrable Securities
sold under their respective stock purchase agreements).
3.3 ENTIRE AGREEMENT. This Agreement constitutes the full and
entire understanding and agreement among the parties with regard to the
subject matter hereof, and no party shall be liable or bound to any other
party in any manner by any representations, warranties, covenants, or
agreements except as specifically set forth herein. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other
than the parties hereto and their respective successors and assigns, any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided herein.
3.4 SEVERABILITY. Any invalidity, illegality, or limitation of the
enforceability with respect to any Holder of any one or more of the
provisions of this Agreement, or any part thereof, whether arising by reason
of the law of any such Holder's domicile or otherwise, shall in no way affect
or impair the validity, legality, or enforceability of this Agreement with
respect to any other Holder. In case any provision of this Agreement shall
be invalid, illegal, or unenforceable, it shall, to the extent practicable,
be modified so as to make it valid, legal and enforceable and to retain as
nearly as practicable the intent of the parties, and the validity, legality,
and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
3.5 AMENDMENT AND WAIVER. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and the Holders
of a majority of the Registrable Securities then outstanding, provided that
the effect of such amendment or waiver is to treat all Holders equally. Any
amendment or waiver effected in accordance with this paragraph shall be
binding upon each Holder of Registrable Securities at the time outstanding
(including securities exercisable for or convertible into Registrable
13
Securities), each future holder of all such securities, and the Company.
3.6 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power, or remedy accruing to any Holder or any permitted transferee
upon any breach, default or noncompliance of the Company under this Agreement
shall impair any such right, power, or remedy, nor shall it be construed to
be a waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of any similar breach, default or noncompliance thereafter
occurring. It is further agreed that any waiver, permit, consent, or
approval of any kind or character on the Holders' part of any breach, default
or noncompliance of this Agreement or any waiver on the Holders' part of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing, and that
all remedies, either under this Agreement, by law, or otherwise afforded to
each Holder, shall be cumulative and not alternative.
3.7 NOTICES, ETC. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given to the party to be so
notified in writing and shall be deemed effective upon personal delivery,
upon delivery by confirmed facsimile or electronic transmission (with
duplicate original sent by United States mail), or three business days after
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on Schedule A hereto (or, if to the Company, at the
address of its principal executive offices), or at such other address as such
party may designate by ten (10) days' advance written notice to the other
parties.
3.8 TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
3.9 EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, expenses and necessary
disbursements in addition to any other relief to which such party may be
entitled.
3.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
3.11 AGGREGATION OF STOCK. All shares of Registrable Securities
held or acquired by affiliated entities or persons shall be aggregated
together for the purposes of determining the availability of any right under
this Agreement.
3.12 SPECIFIC PERFORMANCE. The parties hereto agree that
limitations on the purchase and sale of the Registrable Securities of the
Company exist and that, for that reasons, among others, the Holders of the
Registrable Securities may be irreparably damaged in the event of a breach or
prospective breach of the terms and provisions of this Agreement and,
therefore, the parties hereto consent to the application of equitable
remedies, including, without limitation, specific performance, to enforce the
terms and provisions of this Agreement. The rights granted in this Section
3.12 shall be cumulative and not exclusive, and shall be in addition to any
and all other rights which the parties hereto may have hereunder, at law or
in equity.
IN WITNESS WHEREOF, the parties have executed this Amended and
Restated Investors' Rights Agreement as of the date first above written.
HEALTHEON CORPORATION
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By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇
President and Chief Executive Officer
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
HEALTHEON CORPORATION
SIGNATURE PAGE
TO
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
The undersigned amends the Amended and Restated Investors' Rights
Agreement dated October 13, 1997 and hereby executes and delivers this
Amended and Restated Investors' Rights Agreement dated May ___, 1998 (the
"Agreement") to which this Signature Page is attached, effective as of the
date of the Agreement, which Agreement and Signature Page, together with all
counterparts of said Agreement and Signature Pages of the other parties named
in said Agreement, shall constitute one and the same document in accordance
with the terms of said Agreement.
_____________________________________________________
Name of Stockholder
By:__________________________________________________
Print Name:__________________________________________
Title:_______________________________________________
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