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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
JANUARY 26, 2000
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Date of Report (Date of earliest event reported)
HEALTHEON/WEBMD CORPORATION
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(Exact name of registrant as specified in its charter)
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DELAWARE 0-24975 94-3236644
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation)
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400 THE LENOX BUILDING
3399 PEACHTREE ROAD NE
ATLANTA, GEORGIA 30326
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(Address of principal executive offices, including zip code)
(404) 495-7600
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(Registrant's telephone number, including area code)
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(Former name or address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 26, 2000, Registrant consummated the transactions
contemplated by the Master Strategic Alliance Agreement (the "Master Strategic
Alliance Agreement") with The News Corporation Limited, a South Australia,
Australia corporation ("News Corp"), and Fox Entertainment Group, Inc., a
Delaware corporation ("Fox") which is controlled through certain intermediaries
by News Corp.
The Registrant, through its wholly owned subsidiary Healtheon/WebMD
Cable Corporation, a Delaware corporation ("H/W Cable Sub"), acquired a 50%
member interest in The Health Network LLC, a Delaware limited liability company
("Health Network") from AHN/FIT Cable, LLC, a Delaware limited liability company
("AHN/FIT Cable") 50% owned and managed through certain intermediaries by Fox.
Prior to the acquisition by H/W Cable Sub of a 50% interest in the Health
Network, AHN/FIT Cable, which is principally engaged in the development,
production and distribution of The Health Network cable television channel,
contributed all of its assets (other than cash), subject to all of its
liabilities (other than loans from its members), to Health Network.
The Registrant, through its wholly owned subsidiary Healtheon/WebMD
Internet Corporation, a Delaware corporation ("H/W Internet Sub"), acquired a
50% member interest in H/W Health & Fitness LLC, a Delaware limited liability
company ("H/W Health & Fitness"), and an option to purchase the remaining 50%
member interest for $1.00, from AHN/FIT Internet, LLC, a Delaware limited
liability company ("AHN/FIT Internet") 50% owned and managed through certain
intermediaries by Fox. Prior to the acquisition by H/W Internet Sub of a 50%
interest in H/W Health & Fitness, AHN/FIT Internet, which has developed an
Internet site devoted exclusively to health and fitness programming, contributed
all of its assets (other than cash and an Internet search engine), subject to
all of its liabilities (other than loans from its members), to H/W Health &
Fitness.
Registrant acquired $400 million of media services (the "Media
Services") across the various media owned by News Corp and its affiliates
throughout the world, which Registrant intends to utilize in the United States.
The Media Services will be provided to the Registrant over a ten year period.
News Corp granted Registrant a royalty-free license for use throughout
the world of its health-related content, including news feeds (the "News Corp
License"), the initial term of which is five years.
Registrant issued an aggregate of 155,951 shares of its Series A
Preferred Stock with a face amount of $5,000 per share (the "Series A Preferred
Stock") in consideration for (i) the acquisition of the 50% member interest in
Health Network, (ii) the acquisition of the 50% member interest in H/W Health &
Fitness and option to acquire the balance for $1.00, (iii) the Media Services,
and (iv) the News Corp License. In addition, certain affiliates of Fox purchased
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2,000,000 shares of Registrant's common stock for an aggregate purchase price of
$100 million in cash.
The Series A Preferred Stock is entitled to a quarterly dividend at a
per annum rate of 10.5% of the face amount payable in additional shares of
Series A Preferred Stock. The Series A Preferred Stock (including the shares
issued in payment of the dividend) will be automatically converted on the third
anniversary of its issuance (or earlier upon the occurrence of certain events)
into common stock at the rate of 100 shares of common stock for each share of
Series A Preferred Stock. Assuming conversion on the third anniversary of all of
the shares of Series A Preferred Stock (including all shares issuable as
dividends), the holders will receive 21,282,645 shares of the Registrant's
common stock.
Registrant has granted News Corp a license for use throughout the world
of its health-related content, including news feeds (the "H/W License"), the
initial term of which is five years. During the initial five year term of the
H/W License, News Corp will pay Registrant royalties of $12 million per year.
News Corp may elect to extend the H/W License for an additional five year term
if News Corp also agrees to extend the News Corp License for an additional five
year term; Registrant may elect to extend the News Corp License for an
additional five year term if Registrant also agrees to extend the H/W License
for an additional five year term. If both the H/W License and the News Corp
License are extended for an additional five year term, neither Registrant nor
News Corp will pay royalties with respect thereto.
Registrant and News Corp have formed WebMD International LLC, a
Delaware limited liability company ("WebMD International"). WebMD International
will provide all services necessary or appropriate to providing online
healthcare and medical information services and health and fitness programming
throughout the world (other than in the United States and Japan). A wholly owned
subsidiary of Registrant contributed to WebMD International a royalty-free
perpetual license to use Registrant's trademark rights in exchange for a 50%
member interest in WebMD International. A wholly owned subsidiary of News Corp
contributed $3 million in cash and has an obligation to contribute an additional
$97 million in cash to WebMD International in exchange for a 50% member interest
in WebMD International. Satellite Television Asian Region Ltd., an international
business company incorporated under the laws of the British Virgin Islands which
is controlled through certain intermediaries by News Corp and which offers
television services reaching viewers across Asia, India and the Middle East
through its STAR TV Network, will provide to or procure for WebMD International
$300 million of media services across the various media owned by News Corp and
its affiliates throughout the world (other than in the United States and Japan).
Such media services will be provided over a ten year period. Registrant will
also provide to WebMD International a royalty-free perpetual license to use its
content.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
The following exhibits are filed herewith:
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3.1 Tenth Amended and Restated Certificate of
Incorporation of the Registrant, including
Certificate of Designations of the Series A
Payment-in-Kind Preferred Stock of the Registrant.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Healtheon/WebMD Corporation has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
HEALTHEON/WEBMD CORPORATION
Dated: February 8, 2000 By /s/ Jack Dennison
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Jack Dennison, Vice President and
General Counsel
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EXHIBIT INDEX
3.1 Tenth Amended and Restated Certificate of Incorporation of the
Registrant, including Certificate of Designations of the Series A
Payment-in-Kind Preferred Stock of the Registrant
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EXHIBIT 3.1
HEALTHEON CORPORATION
a Delaware corporation
TENTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
(PURSUANT TO SECTIONS 242 AND 245 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE)
Healtheon Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "General Corporation Law")
DOES HEREBY CERTIFY:
FIRST: That this corporation was originally incorporated on December 26,
1995 under the name Healthscape Corporation, pursuant to the General Corporation
Law. The corporation changed its name to "Healtheon Corporation" on June 17,
1996.
SECOND: The Tenth Amended and Restated Certificate of Incorporation of
Healtheon Corporation, in the form set forth below, has been duly adopted in
accordance with the provisions of Sections 228, 242, and 245 of the General
Corporation Law by the directors and the stockholders of the corporation.
THIRD: The Tenth Amended and Restated Certificate of Incorporation, as
so adopted, reads in full as set forth below:
ARTICLE I
The name of this corporation is Healtheon/WebMD Corporation.
ARTICLE II
The address of the registered office of this corporation in the State of
Delaware is 15 East North Street, Dover, County of Kent, Delaware 19901. The
name of its registered agent at such address is Incorporating Services, Ltd.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
This corporation is authorized to issue one class of stock to be
designated "Common Stock" and another class of stock to be designated "Preferred
Stock," the rights, preferences and privileges of which may from time to time be
determined by the Board of Directors. The total number of shares of Common Stock
that this corporation is authorized to issue is 600,000,000 with a par value of
$0.0001 per share. The total number of shares of Preferred Stock that this
corporation is authorized to issue is 5,000,000 with a par value of $0.0001 per
share.
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ARTICLE V
To the fullest extent permitted by the General Corporation Law as the
same exists or as may hereafter be amended, a director of the corporation shall
not be personally liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director.
The corporation shall indemnify to the fullest extent permitted by law
any person made or threatened to be made a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he, his testator or intestate is or was a director or officer of the
corporation or any predecessor or the corporation or serves or served at any
other enterprise as a director, officer or employee at the request of the
corporation or any predecessor to the corporation.
Neither any amendment nor repeal of this Article V, nor the adoption of
any provision of this Amended and Restated Certificate of Incorporation
inconsistent with this Article V, shall eliminate or reduce the effect of this
Article V, in respect of any matter occurring, or any cause of action, suit,
claim or proceeding that, but for this Article V, would accrue or arise, prior
to such amendment, repeal or adoption of an inconsistent provision.
ARTICLE VI
This corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation, in the
manner now or hereafter prescribed by statute or this Restated Certificate of
Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.
ARTICLE VII
In furtherance and not in limitation of powers conferred by statute, the
Board of Directors is expressly authorized to make, alter, amend or repeal the
Bylaws of the corporation.
ARTICLE VIII
Section 1. At any time following the closing of the first sale of Common
Stock of the Corporation pursuant to a registration statement declared effective
by the Securities and Exchange Corporation under the Securities Act of 1933, as
amended, stockholders of the Corporation may not take any action by written
consent in lieu of a meeting and any action contemplated by stockholders after
such time must be taken at a duly called annual or special meeting of
stockholders.
Section 2. The number of directors which constitute the whole Board of
Directors of the Corporation shall be fixed exclusively by one or more
resolution adopted from time to time by the Board of Directors. The Board of
Directors shall be divided into three classes designated as Class I, Class II,
and Class III, respectively. Directors shall be assigned to each class in
accordance with a resolution or resolutions adopted by the Board of Directors.
At the first annual meeting of stockholders following the date hereof, the term
of office of the Class I directors shall expire and Class I directors shall be
elected for a full term of three years. At the second annual meeting of
stockholders following the date hereof, the term of office of the Class II
directors shall expire and Class II directors shall be elected for a full term
of three years. At the third annual meeting of stockholders following the date
hereof, the term of office of the Class III directors shall expire and Class III
directors shall be elected for a full term of three years. At each succeeding
annual meeting of stockholders, directors shall be elected for a full term of
three years to succeed the directors of the class whose terms expire at such
annual meeting.
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Section 3. Advance notice of new business and stockholder nominations
for the election of directors shall be given in the manner and to the extent
provided in the Bylaws of the Corporation.
ARTICLE IX
Elections of directors need not be by written ballot unless the Bylaws
of this corporation shall so provide.
ARTICLE X
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of this corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of this corporation.
ARTICLE XI
This corporation is to have perpetual existence.
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FOURTH: That said amendments were duly adopted in accordance with the
provisions of Sections 242 and 245 of the General Corporation Law.
I hereby further declare and certify under penalty of perjury under the
laws of the State of Delaware that the facts set forth in the foregoing
certificate are true and correct of my own knowledge and that this certificate
is my act and deed.
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IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation has been signed by the Vice President, Chief Financial Officer,
Secretary and Treasurer of this corporation this 12th day of November, 1999.
Healtheon Corporation
By: /s/ John L. Westermann III
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John L. Westermann III
Vice President, Chief Financial Officer,
Secretary and Treasurer
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CERTIFICATE OF DESIGNATIONS
OF
SERIES A PAYMENT-IN-KIND PREFERRED STOCK
OF
HEALTHEON/WEBMD CORPORATION
(Pursuant to Section 151 of the General
Corporation Law of the State of Delaware)
Healtheon/WebMD Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "CORPORATION"), hereby
certifies that the following resolution was adopted by the Board of Directors of
the Corporation (the "BOARD OF DIRECTORS"):
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors by the Tenth Amended and Restated Certificate
of Incorporation of the Corporation (as amended from time to time, the
"CERTIFICATE OF INCORPORATION"), there hereby is created, out of the 5,000,000
shares of preferred stock, par value $.0001 per share, of the Corporation
authorized in Article IV of the Certificate of Incorporation (the "PREFERRED
STOCK"), a series of Preferred Stock consisting of 213,000 shares, which series
shall have the following powers, designations, preferences and relative,
participating, optional and other rights, and the following qualifications,
limitations and restrictions (in addition to the powers, designations,
preferences and relative, participating, optional and other rights, and the
qualifications, limitations and restrictions, stated in the Certificate of
Incorporation as applicable to the Preferred Stock):
"1. DESIGNATION. The shares of such series created hereby shall be
designated as the "Series A Payment-in-Kind Preferred Stock" (referred to herein
as the "SERIES A PREFERRED STOCK"), and the authorized number of shares
constituting such series shall be 213,000. The par value of the Series A
Preferred Stock shall be $.0001 per share. The face amount of each share of
Series A Preferred Stock shall be $5,000.00 (the "FACE AMOUNT"). The Series A
Preferred Stock shall not be subject to any sinking fund or mandatory redemption
provision.
2. PRIORITY. The Series A Preferred Stock, whether now or hereafter
issued, shall, with respect to dividend rights (other than the right to receive
additional shares of Series A Preferred Stock pursuant to Section 3) and rights
on liquidation, winding up or dissolution, whether voluntary or involuntary,
rank (i) on a parity with the common stock, par value $.0001 per share (the
"COMMON STOCK"), of the Corporation and with any other series of Preferred Stock
established hereafter by the Board of Directors the terms of which shall
specifically provide that such series shall rank on a parity with the Series A
Preferred Stock with respect to dividend rights and rights on liquidation,
winding up or dissolution, (ii) junior to any series of Preferred Stock
established hereafter by the Board of Directors the terms of which shall
specifically provide that such series shall rank senior to the Series A
Preferred Stock with respect to dividend rights and rights on liquidation,
winding up or dissolution and (iii) senior to any series of Preferred Stock
established hereafter by the Board of Directors the terms of which shall
specifically provide that such series shall rank junior to the Series A
Preferred Stock with respect to dividend rights and rights on liquidation,
winding up or dissolution.
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3. DIVIDENDS.
3.1 GENERAL OBLIGATION. When, as and if declared by the Board
of Directors and to the extent permitted by the General Corporation Law of the
State of Delaware, the Corporation shall pay preferential dividends to the
holders of the shares of Series A Preferred Stock in the form of additional
shares of Series A Preferred Stock as provided in this Section 3. Regardless of
whether dividends are paid, dividends on each share of the Series A Preferred
Stock outstanding from time to time shall accrue on a daily basis at the rate of
10.5% per annum computed on an amount with respect to each share equal to the
Face Amount plus the amount of any accrued and unpaid dividends calculated from
the date of initial issuance of such share through the most recently preceding
Quarterly Dividend Reference Date. The "QUARTERLY DIVIDEND REFERENCE DATES" are
each May 1, August 1, November 1 and February 1 occurring after the initial
issuance of the first share of Series A Preferred Stock and on or prior to the
Conversion Date (as defined below). Dividends shall be paid only by the issuance
of additional shares of Series A Preferred Stock in an amount equal to (i) the
accrued and unpaid dividend on any Quarterly Dividend Reference Date or on the
Conversion Date (if the Conversion Date is not a Quarterly Dividend Reference
Date) divided by (ii) the Face Amount of a share of Series A Preferred Stock.
Dividends shall be paid only as and when declared by the Board of Directors to
holders of record at the close of the Dividend Reference Dates with respect to
which the dividend has been declared and certificates for such dividend shall be
distributed to such holders on such distribution date within ten (10) days after
such record date as the Board of Directors may establish. Dividends shall begin
to accrue on shares of Series A Preferred Stock issued as dividends as of the
day following the record date for their issuance regardless of the actual
distribution of a certificate. All dividends that have been accrued but not
declared shall continue to accrue and accumulate as provided herein. All
dividends that have been accrued and declared shall be paid as provided herein
and dividends on such shares shall begin to accrue as provided herein. Dividends
under this Section 3 shall cease to accrue on the Conversion Date. The number of
shares to be paid as a dividend pursuant to this Section 3 shall be rounded to
the nearest 1/100,000th of a share. All shares of Series A Preferred Stock
issued in payment of dividends hereunder shall be deemed issued and outstanding
on the applicable record date, and will thereupon be duly authorized, validly
issued, fully paid and nonassessable and free and clear of all liens and
charges. The Corporation shall at all times reserve for issuance sufficient
shares of Series A Preferred Stock to enable it to satisfy all dividends that
may accrue hereunder.
3.2 PARTICIPATION IN DIVIDEND PAYMENTS ON COMMON STOCK. In
addition to all other amounts payable to the holders of the shares of Series A
Preferred Stock under this Section 3, in the event the Corporation shall declare
and pay a dividend upon the Common Stock (whether payable in cash, securities of
other Persons, evidences of indebtedness issued by the Corporation or other
Persons, assets, or options or rights to purchase any such securities or
evidences of indebtedness) other than in shares of Common Stock, the holders of
the shares of Series A Preferred Stock shall be entitled to participate with the
holders of Common Stock in any such dividend payment (as if a Conversion had
occurred on the date immediately prior to the record date for such dividend
payment).
4. VOTING. In addition to any voting rights provided for elsewhere
herein, in the Certificate of Incorporation and by law, the following provisions
shall apply with regard to voting by the holders of Series A Preferred Stock:
4.1. IN GENERAL. Each share of Series A Preferred Stock shall
be entitled to a number of votes equal to the number of shares of Common Stock
that would be owned by the holder of such share of Series A Preferred Stock if
the Conversion Date had occurred on the date immediately prior to the record
date for such vote. Except as otherwise provided for herein, in the Certificate
of
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Incorporation or by law, each share of Series A Preferred Stock shall be
entitled to vote together with the holders of the Common Stock, on each matter
as to which the holders of the Common Stock are entitled to vote, as if the
Series A Preferred Stock and the Common Stock were one class of capital stock
and a Conversion had occurred.
4.2. WHEN CLASS VOTE REQUIRED. The Corporation shall not
without first obtaining the affirmative vote or consent of the holders of a
least 90% of the shares of Series A Preferred Stock at the time outstanding,
voting as a class, (i) alter or change the rights, preferences or privileges of
the Series A Preferred Stock, (ii) take any action that would result in an
adverse effect on the rights, preferences or privileges of the Series A
Preferred Stock (other than an action which affects all capital stock of the
Corporation in a similar manner), or (iii) authorize any additional Series A
Preferred Stock.
5. CONVERSION INTO COMMON STOCK.
5.1. AUTOMATIC CONVERSION. Upon the earlier to occur of (i)
the liquidation, dissolution or winding up, whether voluntary or involuntary, of
the Corporation, (ii) immediately prior to the consummation of any transaction
resulting in a Change of Control of the Corporation, (iii) the first Business
Day following written notice by the Corporation to the holders of the Series A
Preferred Stock that the Board of Directors has resolved to cause a Conversion
of the Series A Preferred Stock, or (iv) January 26, 2003 (the "THIRD
ANNIVERSARY") (the date on which the earliest of such events occurs is referred
to herein as the "CONVERSION DATE"), each share of Series A Preferred Stock
outstanding shall be converted automatically (a "CONVERSION"), without any
requirement of notice or any other action on the part of the Corporation, any
holder of Series A Preferred Stock or any other Person, into (a) 100 shares of
Common Stock (100 is referred to herein as the "CONVERSION RATE," as may be
adjusted from time to time), plus (b) that number of shares of Common Stock
equal to the dollar amount of any accrued and declared dividends with respect to
such share pursuant to Section 3 above computed through the Conversion Date
divided by the Face Amount and multiplied by the Conversion Rate, plus, if the
Conversion Date is not the Third Anniversary, (c) the Early Conversion Premium
Amount divided by the Face Amount and multiplied by the Conversion Rate. The
"EARLY CONVERSION PREMIUM AMOUNT" shall equal interest on the Face Amount at
10.5% per annum compounded on each Dividend Reference Date from the day
following the Conversion Date through the Third Anniversary. The number of
shares of Common Stock into which the Series A Preferred Stock is convertible
shall be subject to adjustment as described in Section 5.5. The Corporation
shall not issue fractions of shares of Common Stock upon conversion of the
Series A Preferred Stock. If any fraction of a share of Common Stock would be
issuable upon conversion of the Series A Preferred Stock, then the Corporation
shall, in lieu thereof, pay to the Person entitled thereto an amount in cash
equal to the current market price of such fraction of a share of Common Stock,
calculated to the nearest 1/100,000th of a share, to be computed on the
Conversion Date.
5.2. PROCEDURES. Upon the conversion of the Series A Preferred
Stock, the holders of the Series A Preferred Stock shall deliver the certificate
or certificates therefor to the principal office of the Corporation or to a
conversion agent designated by the Corporation accompanied by instruments of
transfer in form reasonably satisfactory to the Corporation or to such
conversion agent, duly executed by the registered holder or his duly authorized
attorney, as well as transfer taxes, stamps or funds therefor, or evidence of
payment thereof, if required by Section 5.3. The automatic conversion of any
outstanding shares of Series A Preferred Stock into Common Stock shall be deemed
to have occurred upon the Conversion Date regardless of the delivery of
certificates or other instruments and the Persons entitled to receive shares of
Common Stock issuable upon conversion shall be treated for all
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purposes as the record holders of such shares at and from the Conversion Date;
PROVIDED, HOWEVER, that the Corporation may defer the payment of any dividend or
other distribution with respect to such Common Stock until such deliveries have
been made.
5.3. TAXES. Upon the conversion of the Series A Preferred
Stock, the Corporation shall pay any documentary, stamp or similar issue or
transfer tax due on the issuance of the Common Stock upon conversion, but the
holder shall pay to the Corporation the amount of any tax that is due (or shall
establish to the satisfaction of the Corporation payment thereof) if the shares
are to be issued in a name other than the name of such holder.
5.4. RESERVATION OF SHARES. The Corporation shall at all times
reserve and keep available, out of its authorized but unissued shares of Common
Stock, enough shares of Common Stock to issue all shares of Common Stock
issuable upon conversion of the Series A Preferred Stock and shall at all times
maintain any legally required capital or surplus to effectuate the foregoing.
All shares of Common Stock that may be issued upon conversion of shares of
Series A Preferred Stock shall be, when so issued, validly issued, fully paid
and nonassessable. In order that the Corporation may issue shares of Common
Stock upon conversion of shares of Series A Preferred Stock, the Corporation
shall comply with all applicable federal and state securities laws.
5.5. ADJUSTMENTS TO CONVERSION RATE. The conversion rate in
effect at any time shall be subject to adjustment from time to time as follows:
5.5.1. ADJUSTMENTS FOR STOCK SPLITS, STOCK DIVIDENDS,
ETC. If the Corporation (1) pays a dividend in shares of the Common Stock to
holders of the Common Stock, (2) makes distributions in shares of Common Stock
to holders of the Common Stock, (3) subdivides the outstanding shares of Common
Stock into a greater number of shares of Common Stock, (4) combines the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, or (5) takes action resulting in a similar effect upon the Common Stock,
then, and in every such case, the Conversion Rate in effect immediately prior to
such action shall be adjusted to equal the Conversion Rate in effect immediately
prior to such action multiplied by a fraction, the numerator of which is the
number of issued and outstanding shares of Common Stock immediately following
such action and the denominator of which is the number of issued and outstanding
shares of Common Stock immediately prior to such action. An adjustment made
pursuant to this Section 5.5.1 shall become effective on the record date in the
case of a dividend or distribution and on the effective date in the case of a
subdivision or combination.
5.5.2. ADJUSTMENTS FOR OTHER DISTRIBUTIONS. If the
Corporation distributes PRO RATA to all holders of the Common Stock shares of
any class of capital stock (excluding the Common Stock), or options, rights or
warrants to acquire any class of capital stock (including the Common Stock), or
cash or other assets of the Corporation (excluding capital stock of the
Corporation held in its treasury), then, and in any such case, the holder of
each share of Series A Preferred Stock shall be entitled to receive, at the time
such distribution is made, the capital stock, options, rights, warrants, cash or
other assets so distributed as if such holder had owned the number of shares of
Common Stock that such holder would have owned at the time of such distribution
if the Conversion Date had occurred immediately prior to the record date for
such distribution. Such adjustment shall become effective on the record date for
determination of the holders of Common Stock entitled to receive the
distribution.
5.6. COMPUTATIONS. All calculations under this Section 5 shall
be made to the nearest 1/100,000th of a share.
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5.7. SHARES OTHER THAN COMMON SHARES. If, as result of any
adjustment made pursuant to Section 5.5, the holder of any share of Series A
Preferred Stock thereafter surrendered for conversion shall become entitled to
receive any shares of capital stock of the Corporation other than shares of
Common Stock, then the number of such other shares so receivable upon conversion
of any shares of the Series A Preferred Stock shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Common Stock contained in this Section 5.
5.8. NOTICE OF CONVERSION RATE CHANGE. Whenever the conversion
rate is adjusted, the Corporation shall promptly mail to all holders of record
of shares of the Series A Preferred Stock a notice of the adjustment.
5.9. EQUIVALENT CONVERSION. If any of the following occurs,
namely: (i) any reclassification of, or change in, outstanding shares of capital
stock of the class issuable upon conversion of the Series A Preferred Stock
(other than a change in name, or par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination), or (ii) any consolidation, merger, share exchange or similar
transaction (other than events that would constitute a liquidation for purposes
of Section 5.1 or a Change of Control) to which the Corporation is a party and
which does not result in any reclassification of, or change in (other than a
change in name, or par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), outstanding
shares of such capital stock, then the Corporation or the successor corporation,
as the case may be, shall, as a condition precedent to such reclassification,
change, consolidation, merger, share exchange or other transaction, provide in
its certificate of incorporation or other charter document that each share of
the Series A Preferred Stock shall be convertible into the number and class of
shares of capital stock that would have been issuable upon conversion of such
share of Series A Preferred Stock if the Conversion Date had occurred
immediately prior to such reclassification, change, consolidation, merger, share
exchange or other transaction. Such certificate of incorporation or other
charter document shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
5. If this Section 5.9 applies, then Section 5.5.1 shall not apply. If, in the
case of any such reclassification, change, consolidation, merger, share exchange
or other transaction, the stock or other securities and property (including
cash) receivable thereupon by a holder of the capital stock issuable upon
conversion of the Series A Preferred Stock includes shares of capital stock or
other securities and property of an entity other than the Corporation or the
successor corporation in such reclassification, change, consolidation, merger,
share exchange or other transaction, then the certificate of incorporation or
other charter document of such other entity shall contain such additional
provisions to protect the interests of the holders of shares of the Series A
Preferred Stock as the Board of Directions shall reasonably consider necessary
by reason of the foregoing, which provisions shall be subject to approval by the
affirmative vote or consent of holders of at least 90% of the shares of the
then-outstanding Series A Preferred Stock, which approval shall not be
unreasonably withheld. The provisions of this Section 5.9 shall similarly apply
to successive reclassifications, changes, consolidations, mergers, share
exchanges or other transactions.
6. RESTRICTIONS ON TRANSFER. Each holder of shares of Series A
Preferred Stock or shares of Common Stock issued upon conversion of the Series A
Preferred Stock (the shares of Series A Preferred Stock and the shares of Common
Stock issued upon conversion of the Series A Preferred Stock are referred to
collectively as the "SUBJECT STOCK") hereby expressly covenants and agrees as
follows:
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6.1. IN GENERAL. Until the termination provided for in Section
6.5 below, such holder shall not (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or dispose
of, directly or indirectly, any shares of Subject Stock or any securities
convertible into or exercisable or exchangeable for Subject Stock (including,
without limitation, shares of Subject Stock or securities convertible into or
exercisable or exchangeable for Subject Stock which may be deemed to be
beneficially owned by such holder in accordance with the rules and regulations
of the Securities and Exchange Commission) or (ii) enter into any swap or other
hedging arrangement that transfers all or a portion of the economic consequences
associated with the ownership of any Subject Stock (regardless of whether any of
the transactions described in clause (i) or clause (ii) is to be settled by the
delivery of Subject Stock, or such other securities, in cash or otherwise (each
action described herein is referred to as a "TRANSFER"). Notwithstanding any
provision of this Section 6 to the contrary, a holder of Subject Stock may
Transfer such Subject Stock to The News Corporation Limited or to any Affiliate
of The News Corporation Limited.
6.2. EFFECT OF ATTEMPTED TRANSFER. Any attempt to Transfer in
violation of this Section 6 shall be null and void and shall be deemed to be in
violation hereof, and neither the Corporation nor the Corporation's transfer
agent shall give any effect in the share transfer records of the Corporation to
any such attempt to Transfer.
6.3. LEGENDS. In addition to any other legends required by law
or in the opinion of counsel to the Corporation, the certificates evidencing
shares of Subject Stock shall bear a legend in substantially the following form:
"THE SALE, PLEDGE, HYPOTHECATION OR OTHER TRANSFER OF THE SECURITIES
EVIDENCED BY THIS CERTIFICATE IS FURTHER RESTRICTED BY PROVISIONS OF
THE CERTFICIATE OF DESIGNATIONS OF THE SERIES A PAYMENT-IN-KIND
PREFERRED STOCK CONTAINED IN THE AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF THE CORPORATION, A COPY OF WHICH WILL BE FURNISHED TO
THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE BY THE CORPORATION UPON
WRITTEN REQUEST TO THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS."
6.4. "STOP TRANSFER" INSTRUCTIONS. A notation will be made in
the share transfer records of the Corporation and "stop transfer" instructions
will be issued with respect to the shares of Subject Stock so as to restrict the
resale, pledge, hypothecation or other transfer thereof, subject to the terms
hereof.
6.5. TERMINATION OF TRANSFER RESTRICTIONS. The provisions of
this Section 6 shall continue in full force and effect until the earlier to
occur of (i) one year after the consummation of a Change of Control of the
Corporation, (ii) the liquidation, dissolution or winding up, whether voluntary
or involuntary, of the Corporation or (iii) the Third Anniversary.
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7. OTHER DEFINITIONS.
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly or indirectly controls, or is under common control with, or
is owned or controlled by, the specified Person. For purposes of this
definition, (i) "control" means, with respect to any specified Person, either
(x) the beneficial ownership of 20% or more of any class of equity securities
issued by such Person or (y) the power to direct the management and policies of
the specified Person through the ownership of voting securities or other equity
interests, by contract or otherwise, and (ii) the terms "controlling," "control
with" and "controlled by," etc., shall have meanings correlative to the
foregoing.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day
on which banks are authorized or required to close by law or executive order in
Atlanta, Georgia.
"CHANGE OF CONTROL" means (i) the merger, consolidation or other
business combination of the Corporation with or into another corporation or the
merger of another corporation (other than the Corporation or a wholly-owned
direct or indirect subsidiary of the Corporation) with or into the Corporation
with the effect that, immediately after such transaction, the stockholders of
the Corporation immediately prior to such transaction or series of transactions
hold less than a majority of the total voting power entitled to vote in the
election of directors, managers or trustees of the Person surviving such
transaction or series of transactions or (ii) the acquisition by any Person or
group of related Persons by way of merger, sale, transfer, consolidation or
other business combination or acquisition, of (x) all or substantially all of
the assets, property or business of the Corporation or (y) more than 35% of the
total voting power entitled to vote in the election of directors, managers or
trustees of the Corporation or such other Person as survives the transaction,
unless in each case the stockholders of the Corporation immediately prior to
such transaction hold immediately after such transaction 65% or more of the
total voting power entitled to vote in the election of directors, managers or
trustees of such Person.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
[SIGNATURES FOLLOW ON THE NEXT PAGE]
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be signed by its authorized officers, this 25th day of January,
2000.
HEALTHEON/WEBMD CORPORATION
By: /s/ W. Michael Heekin
----------------------------------------
Name: W. Michael Heekin
Title: Executive Vice President
Attest:
By: /s/ Jack Dennison
-------------------------------------
Name: Jack Dennison
Title: Executive Vice President
8
