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EXHIBIT 10.12
We have omitted certain portions of this document and filed them separately
with the Commission. These portions are marked with an asterisk(*).
December 31, 1998 [CHALLENGER CORPORATION logo]
Xxx Xxxxxxx
Challenger Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
RE: Terms for Strategic Alliance
Dear Bob:
HealthStream, Inc. ("HealthStream") and Challenger Corporation ("Challenger")
desire to enter into a Strategic Alliance ("Agreement") whereby the parties
will:
1) enter into good faith negotiations to merge or otherwise consolidate the
corporations between now and April 30, 1999; and
2) enter into a distribution and marketing arrangement whereby Challenger
grants HealthStream an exclusive worldwide license to all Challenger
products for deployment through HealthStream's Web based (Internet or
Intranet) distribution channels.
In accordance with the exclusive worldwide license granted by Challenger to
HealthStream, Challenger will provide HealthStream with all of its existing
products and any new products developed or marketed by Challenger during the
license term, including but not limited to:
- Med-Challenger EM for Emergency Physicians (7 modules; 200 CME hours)
- Med-Challenger FP for Family Physicians (7 modules; 192 CME hours)
- Med-Challenger Peds for Pediatricians (6 modules; 159 CME hours)
- Med-Challenger IM for Internists (5 modules; 143 CME hours)
- ECG-Challenger (31.25 CME hours)
- Derm-Challenger (25.5 CME hours)
- Rad-Challenger (10.25 CME hours)
In consideration for the exclusive worldwide license granted by Challenger to
HealthStream, HealthStream shall pay to Challenger * in 3 installments. The
first installment of * shall be due and payable to Challenger on January 4,
1999. The second installment of * shall be due and payable to Challenger on
February 5, 1999. The third installment of * shall be due and payable to
Challenger on March 5, 1999. These amounts shall be non-refundable advances to
Challenger on the royalties outlined below. In the event that the terms of a
merger or other consolidation between the parties are definitively determined by
April 30, 1999, this amount shall be credited toward the purchase price in the
event of an acquisition of Challenger by HealthStream or any amounts payable by
HealthStream to Challenger in the event of a merger.
Challenger and HealthStream will share the revenue ("Revenue") from this
strategic alliance according to the following royalty rates:
- Individual Transactions - HealthStream shall pay Challenger * of the net
Revenue received for each individual transaction paid for by the end user.
In any case, the royalty paid shall be
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at least * of Challenger's most favored per unit pricing structure on
the effective date of this Agreement for its products regardless of the
prices HealthStream charges for these products;
- Sponsorships - HealthStream shall pay Challenger * of the net Revenue
received from transactions paid for by a third party and purchased in
bulk. In any case, the royalty paid shall be at least * of Challenger's
most favored per unit pricing structure on the effective date of this
Agreement for its products regardless of the prices HealthStream
charges for these products; and
- Notwithstanding the above, HealthStream may allow users to view
portions of any Challenger products* through January 31, 1999. No
continuing medical education (CME) credits, however, will be given * .
In the event that a merger or other consolidation between the firms is not
consummated by April 30, 1999, the term of this exclusive worldwide license
shall be two (2) years with a second-year licensing fee of * paid in twelve (12)
equal monthly installments. The first installment of * shall be due and payable
to Challenger on January 4, 2000, with subsequent payments due upon the fourth
of each month thereafter. Any amounts paid to Challenger under the second year
license shall be a non-refundable advance to Challenger on the royalties as
outlined above. If the accrued royalties due to Challenger are less than *
through November 15, 1999, then HealthStream shall have the unilateral right to
cancel the second year license by providing a written notice of intent not to
renew prior to December 1, 1999.
This Agreement shall supercede and replace the Joint Marketing Agreement signed
between the parties dated October 16, 1998.
Notwithstanding this Agreement, nothing shall interfere with Challenger's
agreement with Medical Directions of Tucson, Arizona for Med-Challenger for
Internists. Challenger, however, shall not extend this agreement beyond its
initial term or otherwise expand the rights granted under this agreement.
If the terms and conditions of this letter are acceptable, please sign and
return a copy of this letter so that we can move forward with our discussions.
Sincerely,
HEALTHSTREAM, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Title: Chief Executive
Acknowledged and agreed to this 31st day of December, 1998.
CHALLENGER CORPORATION
/s/ Xxxxxx Xxxxxxx
------------------
Xxxxxx Xxxxxxx
Contracts Officer
Secretary to the Board of Directors
Chief Operating Officer and Executive Vice-President
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