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EXHIBIT 4.4
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT is made as of the
14th day of March, 2000 by and between HealthStream, Inc., a Tennessee
corporation (the "Company") and the shareholders who purchased the Company's
Series A, Series B or Series C Convertible Preferred Stock ("Preferred
Stockholders"); GE Medical Systems, a division of the General Electric Company
("GEMS"); CIS Holdings, Inc., an affiliate of Columbia/HCA Healthcare
Corporation ("Columbia"); and Healtheon/WebMD Corporation ("Healtheon/WebMD"),
each of which is herein referred to as an "Investor" and collectively as the
"Investors."
RECITALS
WHEREAS, the Company, the Preferred Shareholders and GEMS are parties
to the Investor's Rights Agreement , dated April 21, 1999, as amended on August
11, 1999 (the "Original Agreement");
WHEREAS, the Company entered an Online Services Provider Agreement with
Columbia Information Systems, Inc., an affiliate of Columbia ("Services
Agreement") and a warrant agreement with CIS Holdings, Inc. ("Columbia Warrant
Agreement") both dated February 10, 2000;
WHEREAS, the Company entered a Letter of Agreement with Healtheon/WebMD
("Letter Agreement"), dated February 29, 2000;
WHEREAS, it is a condition to the transactions contemplated by the
Services Agreement and the Letter Agreement that CIS Holdings, Inc. and
Healtheon/WebMD, respectively, be added as parties to the Original Agreement;
and
WHEREAS, to reflect the rights and obligations of all of the parties
hereto, the Original Agreement is being amended and restated in its entirety in
this Amended and Restated Investors' Rights Agreement.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. REGISTRATION RIGHTS. The Company covenants and agrees as follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.12 hereof.
(c) The term "1934 Act" shall mean the Securities Exchange Act
of 1934, as amended.
(d) 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 Act, and the
declaration or ordering of effectiveness of such registration
statement or document.
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(e) The term "Registrable Securities" means (i) the Common Stock
issuable or issued upon conversion of the Series A, Series B or
Series C Convertible Preferred Stock; (ii) any Common Stock of the
Company issued or to be issued upon conversion or exercise of the
Warrant Agreement dated June 14, 1999 between the Company and GEMS
(the "GEMS Warrant Agreement") (or upon conversion of any securities
issued upon conversion or exercise of the GEMS Warrant Agreement);
(iii) any Common Stock of the Company issued or to be issued upon
conversion or exercise of the Columbia Warrant Agreement (or upon
conversion of any securities issued upon conversion or exercise of
the Columbia Warrant Agreement); (iv) any Common Stock issued to
Healtheon/WebMD pursuant to the Letter Agreement; and (v) 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 the shares referenced in (i)-(iv) above,
excluding in all cases, however, any Registrable Securities sold by
a person in a transaction in which his rights under this Section 1
are not assigned.
(f) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common
Stock outstanding which are Registrable Securities, and the number
of shares of Common Stock issuable pursuant to then exercisable or
convertible securities which are Registrable Securities.
(g) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2 Demand Registration.
(a) At any time after the Company shall have consummated a firm
commitment underwritten public offering of the Common Stock of the
Company under the Act, the holders of Registrable Securities (i)
constituting at least 30% of the total shares of Registrable
Securities then outstanding and (ii) having a minimum anticipated
offering price of $5,000,000 may request the Company to register
under the Act all or any portion of the shares of Registrable
Securities held by such requesting Holder or Holders for sale on
Form S-1 in the manner specified in such notice. Notwithstanding
anything to the contrary contained herein, the Company shall not be
obligated to effect, or to take any action to effect, any such
registration pursuant to this Section 1.2:
(i) during the period starting with the date sixty (60) days
prior to the Company's good faith estimate of the date of filing
of, and ending on a date one hundred eighty (180) days after the
effective date of, a Company-initiated registration (but in any
event no greater than three hundred sixty (360) days after a
request is made under this Section 1.2); provided that the
Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become
effective;
(ii) if the requesting Holders do not request that such
offering be firmly underwritten by underwriters reasonably
acceptable to the Company;
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(iii) if the Company and the requesting Holders are unable
to obtain the commitment of the underwriter described in clause
(ii) above to firmly underwrite the offering; or
(iv) if in the good faith judgment of the Board of Directors
of the Company, such registration would be seriously detrimental
to the Company and the Board of Directors of the Company
concludes, as a result, that it is essential to defer the filing
of such registration statement at such time, in which case the
Company shall furnish to such 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 for such registration
statement to be filed in the near future and that it is,
therefore, essential to defer the filing of such registration
statement, then the Company shall have the right to defer such
filing for a period of not more than 180 days after receipt of
the request of the requesting holders, and, provided further,
that the Company shall not defer its obligation in this manner
more than once in any eighteen-month period.
(b) Following receipt of any notice under this Section 1.2, the
Company shall immediately notify all holders of Registrable
Securities from whom notice has not been received and shall use its
best efforts to register under the Act, for public sale in
accordance with the method of disposition specified in such notice
from requesting holders, the number of shares of Registrable
Securities specified in such notice (and in all notices received by
the Company from other holders within 15 days after the giving of
such notice by the Company). If such method of disposition shall be
an underwritten public offering, the holders of a majority of the
shares of Registrable Securities to be sold in such offering may
designate the managing underwriter of such offering, subject to the
approval of the Company which approval shall not be unreasonably
withheld or delayed. The Company shall be obligated to register
Registrable Securities pursuant to this Section 1.2 on two occasions
only; provided, however, that such obligation shall be deemed
satisfied only when a registration statement covering all shares of
Registrable Securities specified in notices received and not
rescinded as aforesaid, for sale in accordance with the method of
disposition specified by the requesting Holders, shall have become
effective and, if such method of disposition is a firm commitment
underwritten public offering, all such shares shall have been sold
pursuant thereto.
(c) The Company and any other holders of Common Stock which the
Company shall permit to participate shall be entitled to include in
any registration statement referred to in this Section 1.2, for sale
in accordance with the method of disposition specified by the
requesting Holders, provided the Company and any such holder accept
the terms of any underwriting agreed by the initiating Holders,
shares of Common Stock to be sold by the Company or such other
holders for their own account, except as and to the extent that, in
the sole discretion of the managing underwriter (if such method of
disposition shall be an underwritten public offering), such
inclusion would adversely affect the success of the offering of the
Registrable Securities to be sold. Except for registration
statements on Form X-0, X-0 or any successor thereto, the Company
will not file with the SEC any other registration statement with
respect to its Common Stock, whether for its own account or that of
other stockholders, from the date of receipt of a
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notice from requesting holders pursuant to this Section 1.2, until
the completion of the period of distribution of the registration
contemplated thereby.
1.3 Company Registration. If (but without any obligation to do so)
the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other than the
Holders) any of its stock or other equity securities under the Act in
connection with the public offering of such securities solely for cash
(other than a registration relating solely to the sale of securities to
participants in a Company stock plan, a registration on Form S-4 or any
other form which 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 or a registration in which the
only Common Stock being registered is Common Stock issuable upon
conversion of debt securities which are also being registered), 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 in
accordance with Section 3.5, the Company shall, subject to the
provisions of Section 1.7, 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 under this Section
1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable
efforts to cause such registration statement to become effective,
and upon the request of the Holders of a majority of the Registrable
Securities, keep such registration statement effective for a period
of up to sixty (60) days or, if earlier, until the Holder of Holders
have completed the distribution related thereto.
(b) 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 and as may be necessary to
keep such registration statement effective for a period of up to 60
days.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, 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.
(d) 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.
(e) In the event of any underwritten public offering, 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.
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(f) 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.
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities in each case not later than the
effective date of such registration.
(i) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable
Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that
the registration statement with respect to such securities becomes
effective, (i) an opinion, dated as of such date, of the counsel
representing the Company for the purposes of such registration, in
form and substance as is customarily given to underwriters in an
underwritten public offering and reasonably satisfactory to a
majority in interest of the Holders requesting registration,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated as of
such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an
underwritten public offering and reasonably satisfactory to a
majority in interest of the Holders requesting registration,
addressed to the underwriters, if any, and if permitted by
applicable accounting standards, to the Holders requesting
registration of Registrable Securities.
1.5 Furnish Information. 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.
1.6 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 Sections 1.2, 1.3 or 1.11 for each Holder
(which right may be assigned as provided in Section 1.12), including
(without limitation) all registration, filing, and qualification fees,
printers and accounting fees relating or apportionable thereto and the
fees and disbursements of counsel for the Company and the reasonable
fees and disbursements of one counsel for the selling Holders selected
by them, but excluding underwriting discounts and selling commissions
relating to Registrable Securities.
1.7 Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital 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
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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 underwriters
determine in their sole discretion will not jeopardize the success of
the offering by the Company. If the total amount of securities,
including Registrable Securities, requested by shareholders to be
included in such offering 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 selling shareholders according to the total amount
of securities entitled to be included therein owned by each selling
shareholder or in such other proportions as shall mutually be agreed to
by such selling shareholders) but in no event shall the amount of
securities of the selling Holders included in the offering be reduced
below thirty percent (30%) of the total amount of securities included
in such offering, unless such offering is the initial public offering
of the Company's securities in which case the selling shareholders may
be excluded if the underwriters make the determination described above
and no other shareholder's securities are included. For purposes of the
preceding parenthetical concerning apportionment, for any selling
shareholder which is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and
shareholders of such holder, or the estates and family members of any
such partners and retired partners and any trusts for the benefit of
any of the foregoing persons shall be deemed to be a single "selling
shareholder", and any pro-rata reduction with respect to such "selling
shareholder" shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals
included in such "selling shareholder," as defined in this sentence.
1.8 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.
1.9 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, 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, 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 (collectively a "Violation"): (i) any untrue statement or
alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus 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 law; and the Company will pay
to each such Holder, underwriter or controlling person, as incurred,
any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 1.9(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability, or
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action if such settlement is effected without the 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 which occurs in reliance upon and in
conformity with written information furnished expressly for use in
connection with such registration by any such Holder, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the registration statement, each
person, if any, who controls the Company within the meaning of the
Act, any underwriter, any other Holder selling securities in such
registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, or the 1934 Act, or other federal
or state law, insofar as such losses, claims, damages, or
liabilities (or actions 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 occurs in reliance upon and in
conformity with written information furnished by such Holder under
an instrument duly executed by such Holder and stated to be
specifically for use in connection with such registration; and each
such Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified
pursuant to this subsection 1.9(b), in connection with investigating
or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this
subsection 1.9(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 consent of the Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any
indemnity under this subsection 1.9(b) exceed the proceeds from the
offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.9 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under
this Section 1.9, deliver to the indemnifying party a written notice
of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties which
may be represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the fees and expenses to
be paid by the indemnifying party, if representation of such
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. The failure to
deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under
this Section 1.9, but the omission so to deliver written notice to
the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section
1.9.
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(d) If the indemnification provided for in this Section 1.9 is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim,
damage, or expense 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, liability, claim, damage, or expense 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, liability, claim, damage, or expense 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 untrue
or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission provided that in no
event shall any contribution by a Holder hereunder exceed the
proceeds from the offering received by such Holder.
(e) The obligations of the Company and Holders under this
Section 1.9 shall survive the completion of any offering of
Registrable Securities in a registration statement under this
Section 1, and otherwise. No indemnifying party, in the defense of
any such claim or litigation, shall, except with the consent of each
indemnified party, consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified
party of a release from all liability in respect to such claim or
litigation.
1.10 Reports Under Securities Exchange Act of 1934. 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 to:
(a) make and keep public information available, as those terms
are understood and defined in 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) take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary
to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as
practicable after the end of the fiscal year in which the first
registration statement filed by the Company for the offering of its
securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act;
and
(d) furnish to any Holder, so long as the Holder owns any
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
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requirements), or that it qualifies as a registrant whose securities
may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such
securities without registration or pursuant to such form.
1.11 Form S-3 Registration. In case the Company shall receive from
any Holder or Holders a written request or requests that the Company
effect a registration on Form S-3 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 will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders;
and
(b) as soon as practicable, 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 15
days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance, pursuant to this
section 1.11: (1) if Form S-3 is not available for such offering by
the Holders; (2) if 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 (net of any
underwriters' discounts or commissions) of less than $1,000,000; (3)
if the Company shall furnish 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 shareholders 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 60 days after
receipt of the request of the Holder or Holders under this Section
1.11; provided, however, that the Company shall not utilize this
right more than once in any twelve month period; (4) if the Company
has within the twelve (12) month period preceding the date of such
request, already effected two registrations on Form S-3 for the
Holders pursuant to this Section 1.11; or (5) in any particular
jurisdiction in which 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.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other
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 a registration requested
pursuant to Section 1.11, including (without limitation) all
registration, filing, qualification, printer's and accounting fees
and the reasonable fees and disbursements of counsel for the selling
Holder or Holders and counsel for the Company, but excluding any
underwriters' discounts or commissions associated with Registrable
Securities, shall be borne pro rata by the Holder or Holders
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participating in the Form S-3 Registration. Registrations effected
pursuant to this Section 1.11 shall not be counted as registrations
effected pursuant to Section 1.3.
1.12 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1
may be assigned (but only with all related obligations) by a Holder to
a transferee or assignee of such securities, provided: (a) the Company
is, within a reasonable time after such transfer, furnished with
written notice of the name and address of such transferee or assignee
and the securities with respect to which such registration rights are
being assigned; (b) such transferee or assignee agrees in writing to be
bound by and subject to the terms and conditions of this Agreement,
including without limitation the provisions of Section 1.13 below; and
(c) such assignment shall be effective only if immediately following
such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Act.
1.13 "Market Stand-Off" Agreement. Each Investor hereby agrees that,
during the period of duration specified by the Company and an
underwriter of common stock or other securities of the Company,
following the date of the first sale to the public pursuant to a
registration statement of the Company filed under the Act, it shall
not, to the extent requested by the Company and such underwriter,
directly or indirectly 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 held by it
at any time during such period except common stock included in such
registration; provided, however, that:
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers common stock (or
other securities) to be sold on its behalf to the public in an
underwritten offering;
(b) all officers and directors of the Company and all other
persons with registration rights (whether or not pursuant to this
Agreement) enter into similar agreements; and
(c) such market stand-off time period shall not exceed (180)
days.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable
Securities of each Investor (and the shares or securities of every
other person subject to the foregoing restriction) until the end of
such period.
Notwithstanding the foregoing, the obligations described in this
Section 1.13 shall not apply to a registration relating solely to
employee benefit plans on Form S-8 or similar forms which may be
promulgated in the future, or a registration relating solely to an SEC
Rule 145 transaction on Form S-4 or similar form which may be
promulgated in the future.
1.14 Limitation on Subsequent Registration Rights. After the date of
this Agreement, the Company shall not, without the prior written
consent of the Holders of a majority of the Registrable Securities,
enter into any agreement with any holder or prospective holder of any
securities of the Company that would grant such holder registration
rights senior to those granted to the Holders hereunder.
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1.15 Termination of Registration Rights.
(a) No Holder shall be entitled to exercise any right provided
for in this Section 1 after five (5) years following the
consummation of the sale of securities pursuant to a registration
statement filed by the Company under the Act in connection with the
initial firm commitment underwritten offering of its securities to
the general public (the "Special Termination Date") provided the
Special Termination Date shall be extended as to any Holder or
Holders who have, prior to the Special Termination Date, filed a
request pursuant to Section 1.2(a) or Section 1.11(b) and such
request is being deferred by the Company pursuant to the provisions
of Section 1.2(a)(i), Section 1.2(a)(iv) or Section 1.11(b)(3).
(b) In addition, the right of any Holder to request registration
or inclusion in any registration pursuant to this Section 1 shall
terminate on such date after the closing of the first
Company-initiated registered public offering of Common Stock of the
Company as all shares of Registrable Securities held or entitled to
be held upon conversion by such Holder may immediately be sold under
Rule 144 during any 90-day period.
2. COVENANTS OF THE COMPANY.
2.1 Delivery of Financial Statements. The Company shall deliver to
each Investor:
(a) as soon as practicable, but in any event within one hundred
and twenty (120) days after the end of each fiscal year of the
Company, commencing with the fiscal year ended December 31, 1999
(provided fiscal 1999 financial statements may be delivered
subsequent to April 30, 2000 but shall be delivered no later than
June 30, 2000), an income statement for such fiscal year, a balance
sheet of the Company and statement of shareholder's equity as of the
end of such year, and a schedule as to the sources and applications
of funds for such year, such year-end financial reports to be in
reasonable detail, prepared in accordance with generally accepted
accounting principles consistently applied ("GAAP"), and audited and
certified by independent public accountants of nationally recognized
standing selected by the Company's Board of Directors;
(b) as soon as practicable, but in any event within forty-five
(45) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited profit or loss
statement, schedule as to the sources and application of funds for
such fiscal quarter and a statement showing the number of shares of
each class and series of capital stock and securities convertible
into or exercisable for shares of capital stock outstanding at the
end of the period, the number of common shares issuable upon
conversion or exercise of any outstanding securities convertible or
exercisable for common shares and the exchange ratio or exercise
price applicable thereto, all in sufficient detail as to permit the
Investor to calculate its percentage equity ownership in the
Company;
(c) as soon as practicable, but in any event thirty (30) days
prior to the end of each fiscal year, a budget and business plan for
the next fiscal year, prepared on a monthly basis, including balance
sheets and sources and applications of funds statements for such
months and, as soon as prepared, any other budgets or revised
budgets prepared by the Company;
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(d) with respect to the financial statements called for in
subsections (b) of this Section 2.1, an instrument executed by the
Chief Financial Officer or President of the Company and certifying
that such financials were prepared in accordance with GAAP
consistently applied with prior practice for earlier periods (with
the exception of footnotes that may be required by GAAP) and fairly
present the financial condition of the Company and its results of
operation for the period specified, subject to year-end audit
adjustment; and
(e) such other information relating to the financial condition,
business, prospects or corporate affairs of the Company as the
Investor or any assignee of the Investor may from time to time
request, provided, however, that the Company shall not be obligated
under this subsection (e) or any other subsection of Section 2.1 to
provide information which it deems in good faith to be a trade
secret or similar confidential information.
2.2 Inspection. The Company shall permit each Investor, at such
Investor's expense, to visit and inspect the Company's properties, to
examine its books of account and records and to discuss the Company's
affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by' the Investor; provided,
however, that the Company shall not be obligated pursuant to this
Section 2.2 to provide access to any information which it reasonably
considers to be a trade secret or similar confidential information.
2.3 Proprietary Information Agreement. The Company shall require all
new employees of the Company to continue to execute and deliver a
proprietary information agreement.
2.4 Xxxxx Note. The Company shall not fail to make any monthly
payments of interest due Xxxxxx X. Xxxxx, Xx. as lender under that
certain Promissory Note dated August 23, 1999, in the principal amount
of $1,293,000.00.
2.5 Termination of Covenants. The covenants set forth in Sections
2.1, 2.2 and Section 2.7 shall terminate and be of no further force or
effect when the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the firm
commitment underwritten offering of its securities to the general
public is consummated in which the gross proceeds are at least $30
million and the per share price is at least $9.00.
2.6 IRC Section 305. So long as any shares of Series B Convertible
Preferred Stock remain outstanding, the Company will not, without
approval of holders of a majority of the Series B Convertible Preferred
Stock then outstanding, do any act or thing which would result in
taxation of the holders of shares of the Series B Convertible Preferred
Stock under Section 305 of the Internal Revenue Code of 1986, as
amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
2.7 C Corporation Status. The Company shall remain a C corporation.
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3. MISCELLANEOUS.
3.1 Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the
parties (including transferees of any shares of Registrable
Securities). Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
3.2 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Tennessee applicable to contracts made
and to be performed wholly within such state.
3.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
3.4 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be
deemed effectively given upon personal delivery to the party to be
notified or upon 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 the
signature page hereof, or at such other address as such party may
designate by ten (10) days' advance written notice to the other
parties.
3.6 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, costs and necessary
disbursements in addition to any other relief to which such party may
be entitled.
3.7 Amendments and Waivers. 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 at least 66 2/3% of the Registrable Securities then
outstanding. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any Registrable
Securities then outstanding, each future holder of all such Registrable
Securities, and the Company.
3.8 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.
3.9 Aggregation of Stock. All shares of Registrable Securities held
or acquired by affiliated entities or persons shall be aggregated
together for the purpose of determining the availability of any rights
under this Agreement.
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3.10 Entire Agreement. This Agreement (including the Exhibits
hereto, if any) constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof and
thereof.
[Rest of Page Intentionally Left Blank]
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IN WITNESS WHEREOF the parties have executed this Agreement as of the
date first above written.
HEALTHSTREAM, INC.
By:
-----------------------------------------
President
INVESTORS:
XXXXXX INVESTMENT PARTNERSHIP III
By: THE XXXXXX COMPANIES, INC.
Managing Partner
By:
-----------------------------------------
Xxxxxxx X. Xxxxxx, President
XXXXXXX XXXXXXX XXXXXXX BOOTH IV L.P.
By Its General Partner
CSHB Ventures IV L.P.
By Its General Partner
-----------------------------------
Xxx Xxxxxxx
DAUPHIN CAPITAL PARTNERS I, L.P.
By:
-----------------------------------------
Xxxxx Xxxxxx, Principal
JCB HEALTHSTREAM INVESTORS, L.L.C
By:
-----------------------------------------
Xxxxx Xxxxxx, Chief Manager
XXXXXX CAPITAL PARTNERS III, L.P.
By:
-----------------------------------------
Xxxx X. Xxxxxxxxxx
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X.X. XXXXXXXX & CO., L.L.C
By:
-----------------------------------------
Xxxxx Xxxxxx, Managing Director
FCA VENTURE PARTNERS II, L.P.
By:
-----------------------------------------
Xxxxxx XxXxxxxxx
THE XXXX COMPANY
By:
-----------------------------------------
Xxxxxx Xxxxxx
CUMBERLAND EQUITY PARTNERS
By:
-----------------------------------------
Xxxxxxx Xxxx
SAVVY INVESTMENT PARTNERS
By:
-----------------------------------------
Xxxxxxxx X. Xxxxxxxxx, Xx.
CHANCERY LANE INVESTMENTS, L.P.
By:
-----------------------------------------
H. Xxx Xxxxxxxx, General Partner
By:
-----------------------------------------
Xxxx X. Xxxxxxxx, General Partner
THE SEVEN PARTNERSHIP
By:
-----------------------------------------
Xxxxxxxx Xxxx
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JCB VENTURE PARTNERSHIP IV
By:
-----------------------------------------
Xxxxxx Xxxxxxxxx, Chief Manager
XXXXXX PARTNERS, LTD.
By:
-----------------------------------------
Xxx Xxxxxx
--------------------------------------
Xxxxxx X Xxxxx, Xx.
--------------------------------------
Xxxxxxx Xxxxx
--------------------------------------
Xxxxxx Xxxx
--------------------------------------
Xxxxx and Xxxxx Xxx Xxxxxx
--------------------------------------
Xxxxx Xxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxxx
--------------------------------------
Xxxxx Xxxxx
---------------------------------------
Xxxx Xxxxxx
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--------------------------------------
S. Xxxxxxx Xxxxx
--------------------------------------
Xx. Xxxxx Xxxxxx
--------------------------------------
Xxxxxxx Xxxxxxx
XXXXXX XXXXXXX VENTURE PARTNERS III, L.P.
by: Xxxxxx Xxxxxxx Venture
Partners III, L.L.C
its General Partner
by: Xxxxxx Xxxxxxx Venture Capital III, Inc.
its Institutional Managing Member
By:
-----------------------------------------
XXXXXX XXXXXXX VENTURE INVESTORS III, L.P.
by: Xxxxxx Xxxxxxx Venture
Partners III, L.L.C
its General Partner
by: Xxxxxx Xxxxxxx Venture Capital III, Inc.
its Institutional Managing Member
By:
-----------------------------------------
THE XXXXXX XXXXXXX VENTURE PARTNERS
ENTREPRENUER FUND, L.P.
by: Xxxxxx Xxxxxxx Venture Partners, L.L.C
its General Partner
by: Xxxxxx Xxxxxxx Venture Capital
Fund III, Inc.
its Institutional Managing Member
By:
-----------------------------------------
GE CAPITAL EQUITY INVESTMENTS, INC.
By:
-----------------------------------------
Name and Title
XXXXXX/XXXX ASSOCIATES LLC
By:
-----------------------------------------
Xxxxxxx X. Xxxxxx
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XXXXX FAMILY INTERNET PARTNERS
By:
-----------------------------------------
Xx. Xxxxxx Xxxxx
--------------------------------------
Xxxxx Xxxxx
JCBCF HEALTHSTREAM PARTNERS LLC
By:
-----------------------------------------
--------------------------------------
Xxxxx and Xxxxxx Xxxxxxx
VANDERBILT UNIVERSITY
By:
-----------------------------------------
HEALTHSTREAM PARTNERS
By:
-----------------------------------------
--------------------------------------
Xxxxxxx and Xxxxx Xxxxxx
--------------------------------------
Xxxxxx Xxxxxxxx
--------------------------------------
Xxxx and Xxxxxx XxXxxxx
--------------------------------------
Xxx XxXxxxx
BORNEO PARTNERS
By:
-----------------------------------------
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--------------------------------------
Xxxxxxx Xxxxxxxx
--------------------------------------
Xx. Xxxxx Xxxxxx
SC FUND II, L.P.
By:
-----------------------------------------
CIS HOLDINGS, INC.
By:
-----------------------------------------
HEALTHEON/WEBMD CORPORATION
By:
-----------------------------------------
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