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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULES 13d-1(a) AND AMENDMENTS THERETO FILED
PURSUANT TO RULE 13d-2(a)
HealthGrades.com, Inc.
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(Name of Issuer)
Common Stock, par value $.001 per share
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(Title of Class of Securities)
42222R 10 4
(CUSIP Number)
March 17, 2000
(Date of Event Which Requires Filing of this Statement)
Alan Singer, Esq.
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103-2921
(215) 963-5224
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
If the filing person has previously filed a statement on schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this Schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box [ ]
Note: Schedules filed in paper format shall include a signed original and
two copies of the Schedule including all exhibits. See Rule 13d-7
for other parties to whom copies are to be sent.
(Page 1 of 7 pages)
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The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would
alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act
(however, see the Notes).
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SCHEDULE 13D PAGE 2 OF 7 PAGES
<TABLE>
<S> <C> <C>
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1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Patrick M. Jaeckle
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION United States of America
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7. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH SOLE VOTING
POWER 1,998,644 shares*
*Includes 958,520 shares underlying options and warrants.
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8. SHARED VOTING POWER 0
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9. SOLE DISPOSITIVE POWER 1,998,644
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10. SHARED DISPOSITIVE POWER 0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,998,644 shares*
*Includes 958,520 shares underlying options and warrants.
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN
SHARES* [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
8.9%
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14. TYPE OF REPORTING PERSON* IN
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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SCHEDULE 13D PAGE 3 OF 7 PAGES
ITEM 1. SECURITY OF THE ISSUER.
This statement relates to the common stock, $.001 par value (the
"Common Stock") of HealthGrades.com, Inc., a Delaware corporation (the
"Issuer"). The principal executive offices of the Issuer are located at 44 Union
Boulevard, Suite 600, Lakewood, Colorado, 80228-1808.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is being filed by Patrick M. Jaeckle (the "Filing
Person").
(b) The principal business address of the Filing Person is 44 Union
Boulevard, Suite 600, Lakewood, Colorado, 80228-1808.
(c) The present principal occupation of the Filing Person is President
of the Issuer.
(d) During the last five years, the Filing Person has not been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, the Filing Person has not been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which he was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, Federal or State securities laws or finding any violation
with respect to such laws.
(f) The Filing Person is a citizen of the United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The Filing Person obtained the shares of Common Stock described in Item
5 through the exchange of a promissory note in the principal amount of $1
million issued by the Issuer to the Filing Person in December 1999. The note was
issued to evidence a loan made by the Filing Person to the Company.
ITEM 4. PURPOSE OF TRANSACTION.
The Filing Person was President and a director of the Issuer prior to
the purchase of the Common Stock described in Item 5, and continues to serve in
those capacities. The shares of
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SCHEDULE 13D PAGE 4 OF 7 PAGES
Common Stock were purchased for investment purposes. The Filing Person may
acquire additional securities of the Issuer or dispose of such securities in the
future. In addition, under an agreement described in Item 6, the Filing Person
has agreed to take certain actions in respect of the election of certain persons
to the Board of Directors and Board committees and to provide co-sale rights.
Except as set forth above, the Filing Person has no plans or proposals that
relate to or would result in any of the actions specified in clauses (a) through
(j) of this Item 4.
ITEM 5. INTEREST IN THE SECURITIES OF THE ISSUER.
(a) The Filing Person beneficially owns 1,998,644 shares of the Common
Stock, including 783,520 shares underlying stock options and 175,000 shares
underlying warrants, which constitute 8.9% of the outstanding shares of Common
Stock, calculated in accordance with Rule 13d-3(d)(i)(D). The 1,040,124 shares
of outstanding Common Stock owned by the Filing Person constitutes 4.8% of the
shares of classes of Common Stock actually outstanding.
(b) The Filing Person has sole power to vote or direct the vote, and
sole power to dispose or direct the disposition, of the reported shares.
(c) On March 17, 2000, the filing person acquired 500,000 shares of
Common Stock and warrants to purchase 175,000 shares of Common Stock. The
warrants are exercisable for five years, expiring in March 2005, and provide for
an exercise price of $4.00 per share. The Filing Person exchanged a promissory
note previously issued to him in the principal amount of $1,000,000 to purchase
the Common Stock and warrants.
ITEM 6. CONTRACT, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
The Filing Person has entered into a Cosale and Voting Agreement with
Essex Woodlands Health Ventures Fund IV, L.P., an Illinois partnership
("Essex"), PaineWebber, as custodian for William J. Punk, I.R.A., Punk, Ziegal &
Company Investors, L.L.C., and Chancellor V, L.P. ("Chancellor") (collectively,
the "Investors"), Kerry Hicks, Paul Davis and David Hicks (collectively with the
Filing Person, the "Founders") and the Issuer (the "Cosale Agreement"). The
agreement provides that if any Founder proposes to sell shares of Common Stock
in response to a bona fide offer from a party or parties other than the Founders
or the Investors and such sale is a private transaction, then the Investors will
be entitled to sell a "pro rata portion" of their shares in the sale. For the
purposes of the Cosale Agreement, the "pro rata portion" for an Investor is
equal to a fraction of the total number of shares of Common Stock to be sold,
the numerator of which is the aggregate of the shares of Common Stock and the
shares of Common Stock underlying the warrants purchased by the Investor under a
Common Stock Purchase Agreement with the Company, dated March 3, 2000 (the
"Purchase Agreement"), and the denominator of which is all such securities
purchased by all of the Investors under the Purchase Agreement who elect to
exercise their rights of co-sale plus all Common Stock then
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SCHEDULE 13D PAGE 5 OF 7 PAGES
held by the selling Founder. The Cosale Agreement is subject to certain
exceptions, including the right of a Founder to sell shares of Common Stock in
the open market in amounts not to exceed the volume limitations permitted under
Rule 144 under the Securities Act of 1933, as amended.
In addition, under the Cosale Agreement, the Filing Person has agreed
to vote all securities of the Issuer over which he has voting control, and to
take other necessary or desirable actions within his control so that:
(a) The Issuer will have a Board of Directors comprised of no more
than eight members;
(b) At the option of Essex, one designee of Essex and, at the option
of Chancellor, one designee of Chancellor, shall be elected to the
Board of Directors of the Issuer; and
(c) In the event that a director designated by Essex or Chancellor
ceases to serve as a member of the Issuer's Board of Directors
during his or her term of office, the resulting vacancy on the
Board of Directors will be filled by a designee of Essex or
Chancellor, as applicable.
In addition, the Cosale Agreement provides that at the option of Essex
or Chancellor, as applicable, the directors designated by Essex or Chancellor
will serve as members of the Audit Committee and the Compensation Committee of
the Issuer's Board of Directors.
The Cosale Agreement terminates with respect to the co-sale provisions
on the earlier of (i) the date on which the Investors cease to own five percent
or more (in the aggregate) of the issued and outstanding shares of Common Stock,
and (ii) March 17, 2003.
The obligations of the Filing Person pertaining to designees of Essex
and Chancellor for the Board of Directors and Board committees terminate on the
later of (i) March 17, 2005; and (ii) with respect to the Essex designee, the
date on which Essex fails to own more than five percent (in the aggregate) of
the issued and outstanding Common Stock or with respect to the Chancellor
designee, the date on which Chancellor fails to own more than five percent (in
the aggregate) of the issued and outstanding Common Stock.
In addition, all of the obligations under the Cosale Agreement
terminate upon a "Change of Control Transaction" as defined in the Cosale
Agreement.
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SCHEDULE 13D PAGE 6 OF 7 PAGES
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Cosale and Voting Agreement, dated as of March 17, 2000.
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SCHEDULE 13D PAGE 7 OF 7 PAGES
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
March 27, 2000
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(Date)
/s/ PATRICK M. JAECKLE
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(Signature)
Patrick M. Jaeckle, President
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(Name / Title)
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INDEX TO EXHIBIT
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
1 CoSale and Voting Agreement
</TABLE>
<PAGE> 1
EXHIBIT 1
COSALE AND VOTING AGREEMENT
This CoSale and Voting Agreement (this "Agreement") is made as of
March __, 2000 among HealthGrades.com, Inc., a Delaware corporation (the
"Company"), Essex Woodlands Health Ventures Fund IV, L.P., an Illinois
partnership ("Essex"), PaineWebber, as custodian for William J. Punk, I.R.A.
("PW"), Punk, Ziegal & Company Investors, L.L.C. ("Punk"), and Chancellor V, L.
P. ("Invesco" and with Punk, PW and Essex collectively the "Investors"), Kerry
Hicks ("Hicks"), Paul Davis ("Davis"), David Hicks ("D. Hicks") and Patrick
Jaeckle ("Jaeckle" and with Hicks, Davis and D. Hicks collectively, the
"Founders") (the Investors and the Founders are sometimes referred to herein as
the "Shareholders").
RECITALS
A. The Founders own certain outstanding shares of Common Stock, par
value $0.001 per share ("Common Stock"), of the Company.
B. The Investors have purchased shares of Common Stock and warrants
(the "Warrants") to purchase Common Stock (the "Equity Securities") pursuant to
a Amended and Restated Stock Purchase Agreement dated March 3, 2000.
C. In order to induce the Investors to purchase the Common Stock, the
Shareholders have agreed to provide certain co-sale and voting rights with
respect to their holdings of the Company's Common Stock.
NOW, THEREFORE, in consideration of the mutual promises and other
consideration hereinafter set forth, the adequacy and receipt of which is hereby
acknowledged by the parties hereto, the parties agree as follows:
1. Right of Co-Sale.
1.1. The Right. If at any time any Founder (a "Selling Founder")
proposes to sell shares of Common Stock pursuant to a bona fide offer from a
party or parties other than other Founders or any of the Investors and such sale
is a private transaction, then the Selling Founder shall provide notice of such
proposed sale to the Investors, such notice containing (i) notice that the
Selling Founder intends on selling his shares, (ii) the material terms and
conditions of such sale, (iii) any written materials or agreements setting forth
the agreement between the Selling Founder and the purchaser, and (iv) each
Investor's "pro rata portion" (as defined below) in the sale (assuming all
Investors elect to be Co-Sellers). The Investors shall be entitled to sell their
pro rata portion on the same terms and conditions as the Selling Founder. If any
of the Investors notifies the Selling Founder in writing within 10 days after
receipt of the notification of such proposed sale from the Selling Founder, such
Investor or Investors (the "Co-Seller") shall have the right to sell up to its
pro rata portion of Common Stock which the Selling Founder proposes to sell to
such third party; whereupon the Selling Founder shall assign so much of his
interest in the agreement of sale as is proportionate to each Co-Seller's pro
rata portion in the sale of Common Stock (or such lesser amount if so elected by
such Co-Seller) and each Co-Seller shall assume its respective part of the
obligations of the Selling Founder under such agreement, provided, however, no
Co-Seller shall be required to give any covenants, representations or
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warranties other than with respect to title to its Equity Securities. For the
purposes of this Section 1.1 the "pro rata portion" which each Co-Seller shall
be entitled to sell shall be an amount of Equity Securities (assuming the
issuance of all shares of Common Stock, issuable upon exercise of the Warrants)
equal to a fraction of the total amount of Common Stock proposed to be sold, the
numerator of which is the aggregate of all Equity Securities (assuming the
conversion of all such securities to Common Stock) which are then held by such
Co-Seller and the denominator is the aggregate of all Common Stock then held by
the Selling Founder and all Equity Securities (assuming the conversion of all
such securities to Common Stock) then held by all Co-Sellers who have elected to
exercise their co-sale rights. Each of the Investors shall notify the Selling
Founder whether it elects to sell an amount equal to or less than its pro rata
portion of the Common Stock so offered
1.2. Failure to Notify. If within 10 days after the Selling Founder
gives the aforesaid notice to Investors, none of the Investors notifies the
Selling Founder that it desires to sell any or all of its pro rata portion of
the Common Stock described in such notice at the price and on the terms and
conditions set forth therein, then the Selling Founder may sell during the
120-day period immediately following the expiration of such 10-day period such
Common Stock as to which the Investors did not indicate a desire to sell to
other persons at the same price and upon the same terms and conditions as those
set forth in the notice. In the event the Selling Founder has not sold the
Common Stock on the same terms and conditions as those set forth in the notice
within such 120-day period, the Selling Founder shall not thereafter sell any
Common Stock without first notifying the Investors in the manner provided above.
1.3. Limitations to Right of Co-Sale. Without regard and not subject to
the provisions of this Agreement:
(a) a Founder may sell or otherwise assign for consideration or
gift Common Stock to any or all of his ancestors, descendants, spouse,
employees of the Company or to a custodian, trustee (including a
trustee of a voting trust), executor, or other fiduciary for the
account of or a trust for the benefit of his ancestors, descendants or
spouse, provided that each such transferee or assignee, prior to the
completion of the sale, transfer, gift or assignment, shall have
executed documents assuming the obligations of a Founder under this
Agreement with respect to the transferred securities;
(b) a Founder may sell shares of Common Stock, the proceeds of
which are used to exercise stock options issued under the Company's
stock option plan;
(c) a Founder may pledge and/or sell shares of Common Stock to the
Company; and
(d) a Founder may sell shares of Common Stock in the open market
in amounts not to exceed the limitations permitted under Rule 144.
2. Voting.
2.1. Designees to Board of Directors. The Shareholders agree to vote
all securities of the Company over which they have voting control and to take
all other necessary or desirable actions
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within their control (whether as shareholders, directors or officers of the
Company or otherwise, and including without limitation attendance at meetings in
person or by proxy for purposes of obtaining a quorum and execution of written
consents in lieu of meetings), and the Company shall take all necessary and
desirable actions within its control (including, without limitation, calling
special board and shareholder meetings), so that:
(a) The Company shall have a Board of Directors comprising of no
more than eight (8) members;
(b) At the option of Essex, one designee of Essex and, at the
option of Invesco, one designee of Invesco shall be elected to the
Board of Directors; and
(c) In the event that a director designated by Essex or Invesco
for any reason ceases to serve as a member of the Board of Directors
during his or her term of office, at the option of Essex or Invesco, as
applicable, the resulting vacancy on the Board of Directors shall be
filled by a designee of Essex or Invesco, as applicable.
3. Committees.
3.1. Audit Committee. At the option of Essex and Invesco, as
applicable, the directors designated by Essex and Invesco shall serve as members
of the Audit Committee of the Company.
3.2. Compensation Committee. At the option of Essex and Invesco, as
applicable, the directors designated by Essex and Invesco shall serve as members
of the Compensation Committee.
4. Miscellaneous.
4.1. Legends. All instruments evidencing Equity Securities held by
Shareholders shall be legended, describing the obligations of Shareholders under
this Agreement.
4.2. Effectiveness and Termination. This Agreement, and the respective
rights and obligations of the Shareholders hereto, shall become effective on the
date hereof, and shall terminate:
(a) with respect to Section 1 above, upon the earlier of: (i) when
the Investors cease to own in the aggregate five percent (5%) or more
of the issued and outstanding shares of Common Stock of the Company,
and (ii) on the third anniversary of the date hereof;
(b) with respect to Sections 2 and 3 above and the obligation to
elect Essex to the Board of Directors and the Audit and Compensation
Committee, upon the later of (i) the fifth anniversary of the date
hereof, and (ii) the date on which Essex fails to own in the aggregate
more than 5% of the issued and outstanding Common Stock;
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(c) with respect to Sections 2 and 3 above and the obligation to
elect Invesco to the Board of Directors and the Audit and Compensation
Committee, upon the later of (i) the fifth anniversary of the date
hereof, and (ii) the date on which Invesco fails to own in the
aggregate more than 5% of the issued and outstanding Common Stock; and
(d) notwithstanding anything contained herein to the contrary,
this Agreement will terminate upon a Change of Control Transaction. A
"Change of Control Transaction" shall mean (i) a transaction in which
all of the shares of Common Stock are exchanged for cash or other
securities of a third party and such transaction results in the holders
of Common Stock holding less than fifty percent (50%) of the voting
power of the surviving entity, or (ii) the sale or transfer of all or
substantially all of the Company's assets.
4.3. Notices. All communications (other than those sent to shareholders
generally) provided for hereunder shall be in writing and delivered or mailed by
registered or certified mail, or by reputable overnight delivery, to the notice
addresses set forth in that Stock Purchase Agreement or, with respect to the
Founders, to the then current address set forth on the books and records of the
Company.
4.4. Successors and Assigns. This Agreement shall be binding upon the
Company, the Shareholders and their successors and assigns and shall inure to
the Investors' benefit and to the benefit of the Investors' respective
successors and assigns.
4.5. Complete Agreement; Amendments. This Agreement constitutes the
full and complete agreement of the parties hereto with respect to the subject
matter hereof. This Agreement supersedes and takes the place of all prior
agreements relating to its subject matter. No amendment, modification or
termination of any provisions of this Agreement shall be valid unless in writing
and signed by the Company and each of the Shareholders.
4.6. Severability. Should any part of this Agreement for any reason be
declared invalid, such decision shall not affect the validity of any remaining
portion, which remaining portion shall remain in force and effect as if this
Agreement had been executed with the invalid portion thereof eliminated and it
is hereby declared the intention of the parties hereto that they would have
executed the remaining portion of this Agreement without including therein any
such part, parts, or portion which may, for any reason, be hereafter declared
invalid.
4.7. Specific Performance. In addition to any and all other remedies
that may be available at law, in the event of any breach of this Agreement, each
party hereto shall be entitled to specific performance of the agreements and
obligations of the Company and the other parties hereto hereunder and to such
other injunctive or other equitable relief as may be granted by a court of
competent jurisdiction.
4.8. Governing Law. This Agreement and securities issued and sold
hereunder shall be governed by and construed in accordance with the internal
laws of the State of Delaware.
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4.9. Captions. The descriptive headings of the various paragraphs or
parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
4.10. Number and Gender. Where required by the context, singular words
or pronouns shall be construed as plural, plural words and pronouns shall be
construed as singular and the gender of personal pronouns shall be construed as
either masculine, feminine or neuter.
4.11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one Agreement binding on all the
parties hereto.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY:
HEALTHGRADES.COM, INC.
By:
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Name:
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Its:
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FOUNDERS:
/s/ KERRY HICKS
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/s/ PATRICK JAECKLE
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/s/ DAVID HICKS
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/s/ PAUL DAVIS
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INVESTORS:
ESSEX WOODLANDS HEALTH VENTURES
FUND, IV. L.P.
By its general partner:
ESSEX WOODLANDS HEALTH VENTURES,
IV. L.L.C.
By:
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Name:
-------------------------------------
Managing Director
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