EXHIBIT 10.52
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (this "Agreement"), made as of this 24th day
of August, 1998, by and among Xxxxxxx X. Xxxxxx ("Xxxxxx"), T. Xxxxx Xxxxxxx
("Xxxxxxx"), K. Xxxxxx Xxxxxxxx ("Xxxxxxxx"), W. Xxxxxxx Xxxxxx ("Xxxxxx"), and
Xxxxx X. Xxxxxxxx ("Springer"; together with Arnold, Whitney, Xxxxxxxx and
Xxxxxx being collectively referred to hereinafter as the "Managers" and
individually as a "Manager"); HBO & COMPANY OF GEORGIA, a Delaware corporation
(the "Purchaser"; the Purchaser and the Managers being referred to hereinafter
collectively as the "Shareholders"); and WEBMD, INC., a Georgia corporation,
formerly known as Endeavor Technologies, Inc. (the "Company");
W I T N E S S E T H:
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WHEREAS, Xxxxxx currently owns in the aggregate 3,000,000 shares of the
Company's Common Stock, no par value per share, and 900,000 shares of the
Company's Common Stock Series D, no par value per share, and is the Founder of
the Company and currently serves as its Chairman and Chief Executive Officer;
WHEREAS, Whitney, Draughon, Xxxxxx and Xxxxxxxx currently serve in
executive or otherwise key positions with the Company, and the Company has
granted them options for the purchase of an aggregate of 1,165,000 shares of the
Company's Common Stock Series D;
WHEREAS, Xxxxxxxx owns 50,000 shares of the Company's Common Stock Series
D;
WHEREAS, the Purchaser and the Company have entered into a certain
Investment Agreement dated August 24, 1998 (the "Investment Agreement"),
pursuant to which the Purchaser has agreed to purchase a total of 667,000 shares
(the "Purchased Shares") of Series A Preferred Stock, no par value per share, of
the Company ("Preferred Stock");
WHEREAS, it is a condition of the Purchaser's obligation to invest in the
Company under the terms of the Investment Agreement that the parties agree upon
certain matters with respect to the election of a director to be designated by
the Purchaser and certain rights of co-sale regarding any series of common stock
of the Company (hereinafter, "Common Stock") owned by them as of the date
hereof, issuable to them upon exercise of options or otherwise subsequently
acquired by them and addressing certain matters relating to the governance of
the Company;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
to induce the Purchaser to enter into the Investment Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Shareholders do hereby agree as follows:
1. Purchaser Board Nominee.
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1.1 Purchaser Board Nominee. At the meeting of the Board of Directors of
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the Company (the "Board") next succeeding the date hereof, or at a special
meeting of shareholders called for such purpose (which may be among other
purposes), the Board of Directors or the
Shareholders, as the case may be, shall cause Xxx X. Xxxxxxxxxx or, in lieu of
Xx. Xxxxxxxxxx, such other person as may be designated in writing by the
Purchaser to serve as the member of the Board to be elected by the holders of
the Preferred Stock in accordance with the designations thereof until the third
(3rd) anniversary hereof (regardless of any automatic conversion of such
Preferred Stock into Common Stock upon an Initial Public Offering) and to serve
as a member of the Board until the next election of directors of the Company.
During such period, at any time that the shareholders of the Company shall have
the right to vote for directors of the Company, then, and in each such event
each of the Shareholders shall vote the shares of stock held of record or
controlled by such Shareholder to elect Xx. Xxxxxxxxxx or, in lieu of Xx.
Xxxxxxxxxx, such other person as may be designated in writing by the Purchaser,
to the Board. Any vote taken to fill any seat vacated by the resignation of the
director elected pursuant to this Section 1.1 shall be subject to the provisions
of this Section 1.1.
1.2 Not Assignable. Notwithstanding the provisions of Section 4.2 hereof,
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the Purchaser shall have no right to assign its rights pursuant to this Section
1, and no Permitted Transferee (as herein defined) of the Purchaser shall
acquire any right to exercise such rights.
2. Right of Co-Sale.
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2.1 Grant of Right of Co-Sale. If the Purchaser does not elect to
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exercise the right of first refusal (the "Right of First Refusal") provided in
Section 5.3 of the Restated Shareholders Agreement of the Company dated October
18, 1996, as amended from time to time (the "Shareholders Agreement") then the
Purchaser shall have a right of co-sale (as described in Subsection 2.2) with
respect to any shares of Common Stock (the "Subject Shares") of a Manager (the
"Selling Manager") that such Manager proposes to sell, assign, gift or otherwise
transfer (the "Right of Co-Sale").
2.2 Notice of Proposed Transfer. Before effecting any proposed transfer
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of Common Stock subject to Section 2.1 above, the Selling Manager shall give
written notice to the Company and the Purchaser describing fully the proposed
transfer, including the number of shares of Common Stock proposed to be
transferred, the name and address of the proposed transferee(s) and the proposed
transfer price, and the fair market value of any proposed non-cash consideration
as provided in Section 3 hereof, which may be the same notice as is provided in
Section 5.3 of the Restated Shareholders Agreement (the "Transfer Notice"). The
Transfer Notice shall contain an accurate summary of the offer of the proposed
transferee(s), which must be a bona fide offer.
2.3 Exercise of Right of Co-Sale. The Right of Co-Sale shall entitle the
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Purchaser to cause the Selling Manager to include in the proposed transfer
described in the Transfer Notice, in substitution for an equal number of Subject
Shares, a number of shares of Common Stock held by the Purchaser equal to the
Co-Sale Number (as defined below), which shares may include Common Stock of any
series issued to the Purchaser during the Co-Sale Period (as defined below), on
the terms and conditions (including price per share) set forth in the Transfer
Notice (such shares being referred to as the "Co-Sale Shares"). The Purchaser
may exercise the Right of Co-Sale by delivering to the Selling Manager and the
Company notice of such election (the "Election Notice") during the forty (40)-
day period immediately following the delivery of the Transfer Notice described
in Subsection 2.2 (the "Co-Sale Period"). As used herein, the "Co-Sale Number"
with respect to the Purchaser means the number of shares of Common Stock equal
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to the product obtained by multiplying (i) the aggregate number of Subject
Shares by (ii) a fraction, the numerator of which is the number of shares of
Common Stock held by the Purchaser at the time of the sale or transfer plus the
number of shares of Common Stock then issuable to the Purchaser upon conversion
of any Preferred Stock or upon exercise of any warrant held by the Purchaser at
the time of the sale or transfer, and the denominator of which is the total
number of shares of Common Stock owned by the Selling Manager and the Purchaser
(including for such purpose all shares of Common Stock issuable to the Purchaser
upon conversion of any Preferred Stock or upon exercise of any warrant held by
the Purchaser) at the time of the sale or transfer; provided, however, that if
Sirrom Investments, Inc. ("Sirrom") shall exercise the right of co-sale it has
been granted pursuant to that certain Stock Purchase Warrant dated August 29,
1997 issued originally to Sirrom Capital Corp., the assignor to Sirrom (the
"Sirrom Warrant"), then the denominator of the fraction described in (ii) above
shall be the total number of shares of Common Stock owned by the Selling
Manager, the Purchaser and Sirrom (which shall mean in the case of the
Purchaser, all shares of Common Stock then owned by the Purchaser and all shares
of Common Stock into which shares of Preferred Stock may be converted by the
Purchaser and, in the case of Sirrom, all shares of Common Stock either owned by
Sirrom or issuable pursuant to the Sirrom Warrant) at the time of the sale or
transfer. The exercise or non-exercise of the Right of Co-Sale hereunder shall
not adversely affect the right of the Purchaser to participate in subsequent
sales of Subject Shares to which such right is granted under Subsection 2.1
hereof.
2.4 Closing of Sales. The Purchaser, if exercising its Right of Co-Sale,
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may sell its Co-Sale Shares to the proposed transferee(s) (or the Company or the
non-selling Shareholders (the "Remaining Shareholders"), as the case may be,
should the Right of First Refusal be exercised), and the Selling Manager may
sell such portion of the Subject Shares as remains after exercise by the
Purchaser of its Right of Co-Sale, all on the terms and conditions otherwise
described in the Transfer Notice. The closing of such purchase and sale of such
Subject Shares and the Co-Sale Shares to such proposed transferees (or the
Company or the Remaining Shareholders, as the case may be) shall be held
simultaneously at such place and at such date and time as determined pursuant to
the provisions of the Shareholders Agreement should the Right of First Refusal
be exercised, or as agreed upon by the Selling Manager and the proposed
transferee(s) should the Right of First Refusal not be exercised. Such closing
shall take place not more than one hundred twenty (120) days following delivery
of the Transfer Notice. If the Purchaser has exercised its Right of Co-Sale, at
such closing, the Selling Manager shall remit or cause to be remitted to the
Purchaser that portion of the sale proceeds to which the Purchaser is entitled
by reason of the Purchaser's exercise of the Right of Co-Sale. To the extent
that any prospective purchaser, or purchasers, prohibit such assignment or
otherwise refuse to purchase Co-Sale Shares from the Purchaser, the Selling
Manager shall not sell to such prospective purchaser or purchasers any Subject
Shares unless and until, simultaneously with such sale, the Selling Manager
shall purchase such Co-Sale Shares from the Purchaser. Any proposed transfer on
terms or conditions differing materially from those described in the Transfer
Notice, as well as any proposed transfer by the Selling Manager after expiration
of such one hundred twenty (120)-day period, shall again require compliance by
the Selling Manager with the procedures hereof.
3. Non-Cash Consideration for Transfers. In the event the consideration
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proposed to be paid to the Selling Manager as described in the Transfer Notice
referred to in Section 2.2 hereof includes non-cash consideration, the Transfer
Notice shall state the fair market value thereof,
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which valuation shall be conclusive and binding on the Purchaser in the absence
of a timely challenge made in accordance with this Section 3. The Purchaser may,
within ten (10) days after delivery of the Transfer Notice, by written notice to
the Selling Manager, challenge such valuation by specifying the Purchaser's
valuation of such non-cash consideration. In the case of such a challenge, the
value of non-cash consideration shall be determined by averaging the values set
by the Transfer Notice and by the Purchaser, provided that the difference
between the two values is within ten percent (10%) of the higher of such values.
If such difference is not equal to or less than such 10% amount, then the
Selling Manager and the Purchaser shall agree upon one independent appraiser,
who shall determine the fair market value of the non-cash consideration for
these purposes. In the event that such parties are unable to agree upon such an
appraiser, the parties agree that the American Arbitration Association ("AAA")
shall be employed to choose an independent appraiser and shall use their best
efforts to cause AAA to designate an independent appraiser within a maximum of
fourteen (14) days, and such person shall promptly determine the fair market
value of the non-cash consideration for these purposes. In the event the
appraisal process is utilized, (i) the party whose valuation of the shares less
closely approximates the value determined by the appraiser, measured by absolute
dollar amounts and not by percentages, shall pay all costs of the independent
appraiser and (ii) the relevant time periods for the consummation of any
transfer shall be tolled from the time a challenge is made to the Selling
Manager's valuation of the non-cash consideration until the independent
appraiser determines the fair market value thereof.
4. Agreement's Application to Transferees.
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4.1 Permitted Transferees. The Right of Co-Sale described in Section 2
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hereof shall not apply to (i) any pledge of shares of Common Stock made pursuant
to a bona fide loan transaction that creates a mere security interest; (ii) any
transfer of shares of Common Stock by gift or bequest or through inheritance to,
or for the benefit of, any ancestor or descendant, or the spouse or any ancestor
or descendant of the spouse, of a Manager; (iii) any transfer of shares of
Common Stock by a Manager to a trust for the benefit of any person described in
clause (ii), (iv) up to 550,000 shares of Common Stock currently held by Xxxxxx
to Xxxxx X. Xxxxxxxx and (v) the exchange by Xxxxxx of up to an additional
100,000 shares of Common Stock currently held by him for shares of common stock
of xxxxxxxxxxxxxx.xxx, Inc. held by the chief executive officer of that company
(persons to whom or which the transfers described in this Subsection 4.1 are
made being referred to herein as "Permitted Transferees"); provided, however,
that each Permitted Transferee, other than a Permitted Transferee taking through
inheritance or pursuant to clauses (iv) and (v) above, shall be subject to the
terms of Subsection 4.3 below. Such transferred Common Stock shall remain
subject to the terms of this Agreement, and, for purposes of Sections 1, 2 and
3 hereof, such donee or transferee shall be treated as a "Manager."
4.2 Rights and Duties of Transferees. The provisions hereof shall be
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binding upon the successors and permitted assigns of the Shareholders. Except
as limited by this Agreement and by the Investment Agreement, all rights,
remedies and entitlement of the Shareholders hereunder may be assigned in full
or in part to any Permitted Transferee or Permitted Transferees of any shares of
capital stock of the Company together with the securities being assigned.
4.3 Written Agreement. All transferees of any capital stock owned on the
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date hereof by the Managers, or of any capital stock issued upon exercise of any
options or as dividends with respect to any of such capital stock, or of any
interest therein, other than a transferee who is
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already a party hereto, shall be required as a condition of such transfer to
agree in writing that they will receive and hold such shares of capital stock or
interest therein subject to the provisions of this Agreement. For such purposes,
transferees of any Manager shall be subject to the rights and obligations of
such Manager provided for in this Agreement. Any sale or transfer of any such
shares shall be void unless the provisions of this Subsection 4.3 are met.
5. Agreement to Co-Operate. Each Manager agrees that, in the event the
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Purchaser takes any action to exercise or enforce its rights under this
Agreement or the Investment Agreement, such Manager shall take such actions in
his capacity as an officer or shareholder of the Company or any of its
subsidiaries as the Purchaser may reasonably request, subject only to such
obligations as such Manager may have as a matter of law, or pursuant to the
order of any court having jurisdiction over such Manager, to furnish support to
the Purchaser in such exercise or enforcement, to cause the Company to comply
with its obligations in respect thereof, to prevent the Company or any
subsidiary thereof from doing anything to defeat or diminish the Purchaser's
rights and remedies, and not knowingly to become a party to any proceeding
whereby the Company or any such subsidiary does anything to defeat or diminish
such rights or remedies.
6. Miscellaneous.
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6.1 Legends. In addition to any legends required by applicable securities
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laws, all certificates representing any shares, or rights to acquire shares, of
capital stock of the Company subject to the provisions of this Agreement shall
have endorsed thereon legends substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS OF A CERTAIN SHAREHOLDERS' AGREEMENT
DATED AUGUST _24, 1998, TO WHICH THE REGISTERED HOLDER, OR
HIS OR ITS PREDECESSOR IN INTEREST, IS A PARTY, WHICH
AGREEMENT PROVIDES FOR CERTAIN VOTING RIGHTS AND OBLIGATIONS
OF SALE AND PURCHASE. SUCH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF THE ISSUER AND AFFECTS THE
TRANSFERABILITY OF THE SHARES REPRESENTED BY THIS
CERTIFICATE.
6.2 Transfers in Violation of Agreement. The Company shall not (a)
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transfer on its books any shares of capital stock that shall have been sold or
transferred in violation of any of the provisions set forth in this Agreement,
or (b) treat as owner of such shares, or accord the right to vote as such owner,
or pay dividends to, any transferee to whom any such shares shall have been so
transferred.
6.3 Further Instruments. The parties agree to execute such further
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instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement. Each Shareholder agrees upon the
written request of the Company to issue promptly an estoppel certificate to the
Company or entity designated by the Company as to facts reasonably required by
such entity pertaining to the rights and obligations of the respective parties
under this Agreement.
6.4 Termination. Unless provisions of this Agreement are earlier
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terminated pursuant to their terms, this Agreement shall terminate and shall be
of no further force or effect upon the
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soonest to occur of (a) the passage of twenty (20) years; (b) the written
consent of the holders of not less than two-thirds (2/3) of the then outstanding
shares of Preferred Stock and two-thirds (2/3) of the then outstanding shares of
Common Stock, the holders of which are subject to this Agreement; (c) except
with respect to Section 1 hereof, immediately prior to the closing of an Initial
Public Offering as defined in the Company's Articles of Incorporation; and (d)
with respect to Section 1 hereof, the third (3rd) anniversary of the date
hereof.
6.5 Gender. Any pronoun used herein shall be deemed to cover all genders.
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6.6 Titles. The titles of the sections of this Agreement are for
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convenience of reference only and are not to be considered in construing this
Agreement.
6.7 Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.8 Governing Law. This Agreement shall be governed by the provisions of
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the law of the State of Georgia, without reference to its principles of
conflicts of laws.
6.9 Entire Agreement; Amendment. This Agreement constitutes the full and
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entire understanding and agreement among the parties with regard to the subjects
hereof. Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated orally, except by a written instrument signed by all
parties hereto.
6.10 Notices. Except where telephonic notice is expressly permitted
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herein, any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or three (3) business
days after deposit in the United States Postal Service, by certified mail,
return receipt requested, postage prepaid, addressed to the other party hereto
at his or its address hereinafter shown below his or its signature or at such
other address as such party may designate by like notice to all other parties
hereto.
6.11 Stock Dividends. If, from time to time, during the term of this
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Agreement there is any stock dividend, stock split or similar other change in
the character or amount of any of the outstanding capital stock of the Company,
then in such event any and all such new, substituted or additional securities to
which the Shareholders are entitled by reason of their ownership of capital
stock shall be immediately subject or entitled to the terms of this Agreement
with the same force and effect as the shares of capital stock presently subject
to this Agreement.
6.12 Subsequent Issuances and Purchases. All shares of capital stock that
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are issued to or purchased by any Manager after the date hereof, including
without limitation, any obtained by exercise of any stock option or warrant
previously granted or granted hereafter to a Manager, shall become immediately
subject or entitled to the terms of this Agreement without further action by the
parties to this Agreement.
6.13 Additional Parties. Each of the Managers agrees that all shares of
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Common Stock issued to him pursuant to stock options or warrants held by him
currently or granted to him in the future shall be subject to the terms and
conditions of this Agreement. The Company shall not issue, and the Shareholders
shall vote their shares of Common Stock and Preferred Stock in an effort to
prevent the Company from issuing, any shares or grant any options, warrants or
similar
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rights for the purchase of shares of the Company's capital stock hereafter to
any future executive officer of the Company unless, as a condition thereto, such
person is or becomes a party to this Agreement and assumes all the obligations
of a "Manager" hereunder.
6.14 Severability. Any provision hereof that is prohibited or
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unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereto waive
any provision of law that renders any such provision prohibited or unenforceable
in any respect.
[SIGNATURES APPEAR ON IMMEDIATELY FOLLOWING PAGE]
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[SIGNATURES TO SHAREHOLDERS' AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement either
themselves or by their duly authorized representatives as of the day and year
first written above.
/s/ Xxxxxxx X. Xxxxxx
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XXXXXXX X. XXXXXX, individually
Address: 0000 Xxxxxxxxx Xxxx, XX #000
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Xxxxxxx, XX 00000
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__________________________________________
/s/ T. Xxxxx Xxxxxxx
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T. XXXXX XXXXXXX, individually
Address: 0000 Xxxxxxxxx Xxxx, XX #000
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Xxxxxxx, XX 00000
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__________________________________________
/s/ K. Xxxxxx Xxxxxxxx
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K. XXXXXX XXXXXXXX, individually
Address: 0000 Xxxxxxxxx Xxxx, XX #000
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Xxxxxxx, XX 00000
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__________________________________________
/s/ W. Xxxxxxx Xxxxxx
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W. XXXXXXX XXXXXX, individually
Address: 0000 Xxxxxxxxx Xxxx, XX #000
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Xxxxxxx, XX 00000
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__________________________________________
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/s/ Xxxxx X. Xxxxxxxx
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XXXXX X. XXXXXXXX, individually
Address: 0000 Xxxxxxxxx Xxxx, XX #000
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Xxxxxxx, XX 00000
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__________________________________________
HBO & COMPANY OF GEORGIA
By: /s/ Xxxxxxx X. Xxxxxxx
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XXXXXXX X. XXXXXXX
Senior Vice President
Corporate Planning and Business Development
Address: 000 Xxxxxxxxx Xxxxxx Xxxxx.
Xxxxxxx, Xxxxxxx 00000
WEBMD, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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XXXXXXX X. XXXXXX
Chairman and Chief Executive Officer
Address: 400 The Lenox Building
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
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