<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 9, 1999.
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ADAM.COM, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
GEORGIA 58-1878070
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)
</TABLE>
--------------------------
1600 RIVEREDGE PARKWAY, SUITE 800
ATLANTA, GEORGIA 30328
TELEPHONE: (770) 980-0888
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
ROBERT S. CRAMER, JR.
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
ADAM.COM, INC.
1600 RIVEREDGE PARKWAY, SUITE 800
ATLANTA, GEORGIA 30328
TELEPHONE: (770) 980-0888
FACSIMILE: (770) 989-4970
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
WILLIAM G. ROCHE, ESQ.
STACEY K. GEER, ESQ.
KING & SPALDING
191 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30303
TELEPHONE: (404) 572-4600
FACSIMILE: (404) 572-5100
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement and from
time to time thereafter.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
AMOUNT TO BE AGGREGATE PRICE PER AGGREGATE OFFERING REGISTRATION
TITLE OF SHARES TO BE REGISTERED REGISTERED UNIT(1) PRICE(1) FEE
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 303,063 shares $14.94 $4,527,003.50 $1,195.13
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(c).
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SUCH SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 9, 1999
PROSPECTUS
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
303,063 SHARES
ADAM.COM, INC.
COMMON STOCK
This prospectus relates to the sale of shares of our common stock which we
have issued to the selling shareholders listed in this prospectus. We will not
receive any of the proceeds from the sale of the shares being offered.
The shares offered are being registered due to our obligations to the
selling shareholders. The selling shareholders may elect to sell all, a portion
or none of the shares described in this prospectus. The selling shareholders
from time to time may offer and sell the shares directly to purchasers or
through agents, underwriters or dealers on terms to be determined at the time of
sale. If required, the names of any agents, underwriters or dealers and any
other required information will be set forth in an accompanying prospectus
supplement. Such sales may be through brokers and may be at the market price
prevailing at the time of such. The selling shareholders will pay regular
commissions to any brokers effecting such sales. The shares also may be offered
by the selling shareholders in block trades, private transactions or otherwise
at prices to be negotiated. All expenses of registration of these shares are
being borne by us, but the selling shareholders will pay any brokerage and other
expenses of a sale incurred by it.
Our common stock is quoted on the Nasdaq National Market under the symbol
"ADAM." On , , the last reported sale price for our common stock
as reported on the Nasdaq National Market was $ per share. We will
apply to have the shares of common stock offered pursuant to this prospectus
approved for trading on the Nasdaq National Market.
------------------------
INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 3 FOR A DISCUSSION OF THESE RISKS.
THE SELLING SHAREHOLDERS AND ANY BROKER EXECUTING SELLING ORDERS ON BEHALF
OF THE SELLING SHAREHOLDERS MAY BE DEEMED TO BE AN "UNDERWRITER." COMMISSIONS
RECEIVED BY ANY BROKER MAY BE DEEMED TO BE UNDERWRITING COMMISSIONS.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , .
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
About This Prospectus....................................... 1
Where You Can Find More Information......................... 2
adam.com.................................................... 3
Risk Factors................................................ 4
Use of Proceeds............................................. 8
Selling Shareholders........................................ 8
Plan of Distribution........................................ 8
Validity of Common Stock.................................... 10
Experts..................................................... 10
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
this shelf process, the selling shareholders may sell up to an aggregate of
shares of common stock in one or more offerings. This prospectus and any
applicable prospectus supplement provided to you should be considered together
with the additional information described under the heading "Where You Can Find
More Information."
The registration statement that contains this prospectus (including the
exhibits to the registration statement) contains additional information about
our company and the securities offered under this prospectus. That registration
statement can be read at the SEC web site or at the SEC offices mentioned under
the heading "Where You Can Find More Information."
1
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. Our SEC filings are also
available to the public from the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and later information filed with the SEC will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until
our offering is completed.
- Our Annual Report on Form 10-K for the year ended March 31, 1999, filed
with the SEC on June 29, 1999;
- Our Quarterly Report on Form 10-Q for the quarter ended June 30, 1999;
- Our Quarterly Report on Form 10-Q for the quarter ended September 30,
1999;
- Our Current Report on Form 8-K dated November 30, 1999; and
- The description of our common stock contained in our registration
statement on Form 8-A filed with the SEC on October 11, 1995, including
any amendments or reports filed for the purpose of updating such
description.
You may request a copy of these filings (other than an exhibit to a filing
unless that exhibit is specifically incorporated by reference into that filing),
at no cost, by writing or telephoning us at the following address:
Michael Fisher
Director of Finance/Administration
adam.com, Inc.
1600 RiverEdge Parkway, Suite 800
Atlanta, GA 30328
(770) 980-0888
You should rely only on the information incorporated by reference or
provided in this prospectus. We have authorized no one to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front of the document.
2
<PAGE>
ADAM.COM
adam.com, Inc. ("adam.com") is a leading developer of health education
content and software technologies, and since January 1999, we have taken steps
to become a leading provider of health, medical and wellness information online.
We have created, published and marketed multimedia software products, content
and Internet-ready applications that provide anatomical, medical and health-
related information for the education, consumer and professional markets. During
the fiscal year ended March 31, 1999 ("fiscal 1999"), adam.com made the
strategic decision to focus the majority of its efforts on the online
dissemination of consumer health information, resulting in the May 1999 launch
of WWW.ADAM.COM, our consumer health destination. In connection with this
redirected strategy, we discontinued further sales and marketing effort, as well
as product update and upgrade support for certain of our historical products.
We are incorporated under the laws of the State of Georgia. Our principal
executive offices are located at 1600 RiverEdge parkway, Suite 800, Atlanta,
Georgia 30328. Our telephone number at that address is (770) 980-0888.
3
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE YOU DECIDE TO
BUY OUR COMMON STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR
BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS WOULD LIKELY SUFFER. IN
SUCH CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU MAY LOSE
ALL OR PART OF YOUR INVESTMENT.
CERTAIN STATEMENTS MADE IN THIS PROSPECTUS, AND OTHER WRITTEN OR ORAL
STATEMENTS MADE BY OR ON BEHALF OF ADAM.COM, MAY CONSTITUTE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE FEDERAL SECURITIES LAWS. WHEN USED IN THIS
REPORT, THE WORDS "BELIEVES," EXPECTS," "ESTIMATES," "INTENDS" AND SIMILAR
EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. STATEMENTS
REGARDING FUTURE EVENTS AND DEVELOPMENTS AND OUR FUTURE PERFORMANCE, AS WELL AS
OUR EXPECTATIONS, BELIEFS, PLANS, INTENTIONS, ESTIMATES OR PROJECTIONS RELATING
TO THE FUTURE, ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THESE LAWS.
EXAMPLES OF SUCH STATEMENTS IN THIS REPORT INCLUDE DESCRIPTIONS OF OUR PLANS AND
STRATEGIES WITH RESPECT TO DEVELOPING OUR WEB SITE, OUR PLANS TO DEVELOP
ADDITIONAL STRATEGIC PARTNERSHIP, OUR INTENTION TO ADD E-COMMERCE TO OUR
BUSINESS STRATEGY, OUR CONTINUING GROWTH AND OUR ABILITY TO ADDRESS YEAR 2000
ISSUES. ALL FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL EVENTS TO DIFFER MATERIALLY FROM THOSE
PROJECTED. WE BELIEVE THAT THESE FORWARD-LOOKING STATEMENTS ARE REASONABLE;
HOWEVER, YOU SHOULD NOT PLACE UNDUE RELIANCE ON SUCH STATEMENTS. THESE
STATEMENTS ARE BASED ON CURRENT EXPECTATIONS AND SPEAK ONLY AS OF THE DATE OF
SUCH STATEMENTS. WE UNDERTAKE NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY
FORWARD-LOOKING STATEMENT, WHETHER AS A RESULT OF FUTURE EVENTS, NEW INFORMATION
OR OTHERWISE.
WE ARE A YOUNG COMPANY THAT HAS INCURRED LOSSES.
We have experienced substantial losses of $5.1 million for the first six
months of fiscal 2000, $2.1 million in fiscal 1999, $5.4 million in fiscal 1997,
$3.9 million in fiscal 1996 and $3.2 million in fiscal 1994. We cannot be
certain that we can obtain profitability in any future period. We operate in a
new and rapidly evolving market and must, among other things:
- respond to competitive developments;
- continue to upgrade and expand our content and healthcare information
services offerings; and
- continue to attract, retain and motivate our employees.
We cannot be certain that we will be successful.
CAPITAL CONSTRAINTS MAY AFFECT OUR RESOURCES.
Since inception we have funded operations with debt and equity capital. Our
ability to operate profitably under our current business plan is largely
contingent upon success in obtaining additional sources of capital. There can be
no assurance that sources of capital will be available on satisfactory terms or
at all. For instance, under the terms of a debenture issuable by us to Fusion
Capital Fund I, LLC and related agreements, we are able to access the funds
provided by Fusion Capital only upon conversions of the debenture into common
stock. Without sufficient capital we may not be able to fully implement our
business, operating and development plans. There can be no assurance that any
such financing, if obtained, will be adequate to meet our ultimate capital
needs. If adequate capital can not be obtained or obtained on satisfactory
terms, our operations could be negatively impacted.
WE FACE INTENSE COMPETITION WITH OTHER ONLINE PROVIDERS OF HEALTHCARE
INFORMATION.
The market for providing healthcare information online is intensely
competitive, and we expect competition to increase in the future. Our business
has low barriers to entry, and we cannot guarantee that we will compete
successfully against our current or potential competitors, especially those with
significantly greater financial resources or brand name recognition. Our current
competitors include
4
<PAGE>
Dr. Koop.com and Healtheon/WebMD. We have yet to derive significant revenues as
an online provider of healthcare information.
Mergers or consolidations among our competitors, or acquisitions of small
competitors by larger companies, would make such combined entities more
formidable competitors to us. Large companies may have advantages over us
because of their longer operating histories, greater name recognition, or
greater financial, technical and marketing resources. As a result, they may be
able to adapt more quickly to new or emerging technologies and changes in
customer requirements. They can also devote greater resources to the promotion
and sale of their products or services than we can.
For the above reasons, we may not be able to compete successfully against
our current and future competitors. Increased competition may result in reduced
gross margins and loss of market share.
WE FACE RAPID TECHNOLOGICAL CHANGE IN OUR INDUSTRY.
Rapid changes in technology pose significant risks to us. To remain
successful, we must continue to change, adapt and improve our content and
delivery mediums in response to changes in technology. Our future success hinges
on our ability to both continue to enhance our current content and to
successfully market this content. We cannot be sure that we will successfully
develop and market new content. Any failure by us to timely develop and
disseminate new or to update and enhance our current content could adversely
affect our business, operating results and financial condition.
WE FACE RISKS REGARDING OUR POTENTIAL FUTURE ACQUISITIONS OR INVESTMENTS.
As part of our growth strategy, we have recently acquired all of the assets
of Informational Medical Systems, Inc. and drgreene.com. We may continue to
acquire or make investments in, companies with products, technologies or
professional services capabilities complementary to ours. In acquiring companies
in the future, we could encounter difficulties in assimilating their personnel
and operations into our company. These difficulties could disrupt our ongoing
business, distract our management and employees, increase our expenses and
adversely affect our results of operations. These difficulties could also
include accounting requirements, such as amortization of goodwill or in-process
research and development expense. We cannot be certain that we will successfully
overcome these risks with respect to any future acquisitions or that we will not
encounter other problems in connection with our prior or any future
acquisitions. In addition, any future acquisitions may require us to incur debt
or issue equity securities. The issuance of equity securities could dilute the
investment of our existing shareholders.
WE DEPEND ON OUR KEY PERSONNEL.
Our future success also depends on our continuing ability to attract and
retain highly qualified personnel. The competition for employees at all levels
of our industry is increasingly intense. Furthermore, in order to promote the
development of our Web Site, we will need to identify, attract and retain
software engineers, web designers and content editors. If we do not succeed in
attracting such new employees and retaining and motivating our current
employees, our business could suffer significantly.
WE ARE SUBJECT TO RISKS RELATING TO THE YEAR 2000.
Many currently installed computer systems and software products accept only
two-digit entries in the date code field. These date code fields will need to
accept four digit entries to distinguish 21st century dates from 20th century
dates. As a result, computer systems and software used by many companies and
governmental agencies may need to be upgraded to comply with such "Year 2000"
requirements. Noncompliant computer systems or software may cause system failure
or result in miscalculations that will cause disruptions of normal business
activities. Although we have designed all of the products that we currently
offer to be Year 2000 compliant, we cannot assure you that our products contain
all necessary date code changes, or that, in the year 2000, our products will be
compatible with
5
<PAGE>
third-party software that may be integrated or used in conjunction with our
products. There can be no assurances that we have identified all Year 2000
issues with respect to our products and products supplied to us by third parties
and the failure to do so could have a material adverse effect on our business.
Furthermore, there can be no assurance that our estimates related to the
Year 2000 issue will prove to be accurate and actual results could differ
materially from those currently anticipated. Specific factors that could cause
such material differences include, but are not limited to, the ability to
identify, assess, and remediate and test all relevant computer codes and
embedded technology, and similar uncertainties. In addition, variability of
definitions of "compliance with Year 2000" and the myriad of different products
and services, and combinations thereof, sold by adam.com may lead to claims
whose impact on adam.com is not currently estimable. No assurance can be given
that the aggregate cost of defending and resolving such claims, if any, will not
materially adversely affect our results of operation. Although some of the our
agreements and contracts with third parties contain provisions requiring such
parties to indemnify us under some circumstances, there can be no assurance that
such indemnification arrangements will cover all of our liabilities and costs
related to claims by third parties related to the Year 2000 issue.
FUTURE SALES OF OUR COMMON STOCK COULD CAUSE OUR STOCK TO DECLINE IN PRICE.
All shares registered in this offering will be freely tradable upon
effectiveness of this registration statement. The sale of a significant amount
of shares registered in this offering at any given time could cause the trading
price of our common stock to decline and to be highly volatile.
THERE HAS BEEN LIMITED PRIOR MARKET FOR OUR COMMON STOCK AND OUR STOCK PRICE IS
EXTREMELY VOLATILE.
Our common stock has only been publicly traded since our initial public
offering on November 15, 1995. Since that date, the closing price of the common
stock has ranged from a low price of $1.875 per share to a high price of $40 per
share, and there has been significant volatility in the price of our common
stock in the past year. There can be no assurance that the market price of our
common stock will be maintained or that the volume of trading in our shares will
not decrease.
The risks detailed in this prospectus may significantly adversely affect the
market price of our common stock after the offering. In particular, the stock
prices for many high technology companies, especially those that base their
businesses on the Internet, recently have experienced wide fluctuations and
extreme volatility which have often been unrelated to the operating performance
of such companies. Such fluctuations have adversely affected and may in the
future adversely affect the market price of our common stock.
Furthermore, following periods of volatility in the market price of a
company's securities, securities class action claims frequently are brought
against the subject company. To the extent that the market price of our shares
falls dramatically in any period of time, shareholders may bring claims, with or
without merit, against us. Such litigation would be expensive to defend and
would divert management attention and resources regardless of outcome.
WE HAVE ADOPTED CERTAIN ANTI-TAKEOVER PROVISIONS THAT MAY DETER A TAKEOVER.
Our articles of incorporation and bylaws contain the following provisions
that may deter a takeover, including a takeover on terms that many of our
shareholders might consider favorable, such as:
- the authority of our board of directors to issue common stock and
preferred stock and to determine the price, rights (including voting
rights), preferences, privileges and restrictions of each series of
preferred stock, without any vote or action by our shareholders;
- the existence of large amounts of authorized but unissued common stock and
preferred stock;
6
<PAGE>
- staggered, three-year terms for our board of directors; and
- advance notice requirements for board of directors nominations and for
shareholder proposals.
The rights and preferences of any series of preferred stock could include a
preference over the common stock on the distribution of our assets upon a
liquidation or sale of our company, preferential dividends, redemption rights,
the right to elect one or more directors and other voting rights. The rights of
the holders of any series of preferred stock that may be issued in the future
may adversely affect the rights of the holders of the common stock. We have no
current plans to issue preferred stock. In addition, certain provisions of
Georgia law and our stock option plan may also discourage, delay or prevent a
change in control of our company or unsolicited acquisition proposals.
MANY OF OUR SHARES ARE ELIGIBLE FOR FUTURE SALE AND ARE SUBJECT TO REGISTRATION
RIGHTS WHICH COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK.
If our shareholders sell substantial additional amounts of common stock
(including shares issued upon the exercise of outstanding stock options) in the
public market following this offering, the market price of our common stock
could fall. Such sales also could make it more difficult for us to sell equity
or equity-related securities in the future at a time and price that we deem
appropriate.
Certain shareholders may have the right, subject to certain conditions, to
include their shares in certain registration statements relating to our
securities. By exercising their registration rights and causing a large number
of shares to be registered and sold in the public market, these holders may
cause the price of our common stock to fall. In addition, any demand by holders
of registration rights to include shares of common stock held by them in a
registration initiated by us could adversely affect our ability to raise needed
capital.
PRINCIPAL SHAREHOLDERS HAVE SUBSTANTIAL INFLUENCE.
As of September 30, 1999, our executive officers, directors and persons who
beneficially more than 10% of our outstanding common stock controlled
approximately 25% of the combined outstanding voting power of our common stock.
As a result, with limited exception, such persons exert substantial influence
with respect to all matters submitted to a vote of holders of common stock,
including election of our directors.
7
<PAGE>
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares of the
common stock offered by the selling shareholders. We are registering the shares
for sale to provide the holder thereof with freely tradable securities, but the
registration of such shares does not necessarily mean that any of such shares
will be offered or sold by the holder thereof.
SELLING SHAREHOLDERS
The following table sets forth the number of shares owned by each of the
selling shareholders. None of the selling shareholders has had a material
relationship with adam.com within the past three years other than as a result of
the ownership of the shares or other securities of adam.com. The shares offered
by this prospectus may be offered from time to time by the selling shareholders
named below.
The individuals listed below acquired the shares being offered hereby in
connection with two transactions we entered into in July 1999. Informational
Management Systems, Inc. acquired the shares listed below in connection with our
July 1999 acquisition of substantially all of the assets of Informational
Medical Systems, Inc. Dr. Greene and Ms. Nash acquired the shares listed below
in connection with our July 1999 acquisition of the assets of drgreene.com.
Dr. Greene and Ms. Nash became our employees following these September 1999
transactions. The remaining persons listed below were issued warrants to
purchase shares of common stock during 1994 and 1995. In some cases, such
warrants have already been exercised and converted into shares of common stock.
<TABLE>
<CAPTION>
PERCENTAGE
OWNERSHIP(2)
----------------------
NUMBER OF SHARES NUMBER OF SHARES BEFORE AFTER
NAME OF SELLING STOCKHOLDER BENEFICIALLY OWNED(1) OFFERED HEREBY OFFERING OFFERING(3)
- --------------------------- --------------------- ---------------- -------- -----------
<S> <C> <C> <C> <C>
William N. Banks.......................... 5,000 5,000 * *
James H. Clutter.......................... 10,000 10,000 * *
Cathy Ann Cramer.......................... 5,000 5,000 * *
Roert S. Cramer, Jr....................... 31,938 31,938 * *
Stephen George............................ 1,000 1,000 * *
Alan Greene............................... 42,000 42,000 * *
HTG Corporation........................... 10,000 10,000 * *
HTG Corporation Profit Sharing Plan....... 20,000 20,000 * *
Hall Family Investments, L.P.............. 25,000 25,000 * *
Penelope C. Hall.......................... 5,000 5,000 * *
Daniel Howe............................... 18,000 18,000 * *
Informational Management Systems.......... 20,000 20,000 * *
Howard Jacobs............................. 5,000 5,000 * *
Cheryl Nash............................... 42,000 42,000 * *
Lee Seidler Defined Contribution Pension
Plan.................................... 5,000 5,000 * *
Rhode Island Securities Corp.............. 15,000 15,000 * *
The Robinson-Humphrey Company, Inc........ 19,375 19,375 * *
Howard E. Sachs........................... 1,250 1,250 * *
Wendy Cramer Sanford...................... 5,000 5,000 * *
Robert L. Stott, Jr....................... 5,000 5,000 * *
Susan H. Tofel............................ 12,500 12,500 * *
</TABLE>
- ------------------------
* Less than 1%
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date of this prospectus upon
the exercise of options. Each beneficial owner's percentage ownership is
determined by assuming that options and warrants that are held by such
person (but not those by any other person) and that are exercisable within
60 days from the date of this prospectus have been exercised.
8
<PAGE>
(2) Based on 4,835,056 shares of Common Stock outstanding as of December 6,
1999.
(3) Assumes the sale of all shares being offered by the selling stockholder in
this prospectus. This registration statement also shall cover any additional
shares of common stock which become issuable in connection with the shares
registered for sale hereby by reason of any stock divided, stock split,
recapitalization or other similar transaction effected without the receipt
of consideration which results in an increase in the number of outstanding
shares of our common stock.
PLAN OF DISTRIBUTION
The common stock offered by this prospectus is being offered by the selling
shareholders. Such common stock may be sold or distributed from time to time by
the selling shareholders, or by donees or transferees of, or other successors in
interests to, the selling shareholders, directly to one or more purchasers or
through brokers, dealers or underwriters who may act solely as agents or may
acquire such common stock as principals, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices, at negotiated
prices, or at fixed prices, which may be changed. The sale of the common stock
offered hereby may be effected in one or more of the following methods:
- ordinary brokers' transactions;
- transactions involving cross or block trades or otherwise on the Nasdaq
National Market;
- purchases by brokers, dealers or underwriters as principal and resale by
such purchasers for their own accounts pursuant to this prospectus;
- "at the market" to or through market makers or into an existing market for
the common stock;
- in other ways not involving market makers or established trading markets,
including direct sales to purchasers or sales effected through agents;
- in privately negotiated transactions; or
- any combination of the foregoing.
In order to comply with the securities laws of certain states, if
applicable, the shares may be sold only through registered or licensed brokers
or dealers. In addition, in certain states, the shares may not be sold unless
they have been registered or qualified for sale in such state or an exemption
from such registration or qualification requirement is available and complied
with.
Brokers, dealers, underwriters or agents participating in the distribution
of the shares as agents may receive compensation in the form of commissions,
discounts or concessions from the selling shareholders and/or purchasers of the
common stock for whom such broker-dealers may act as agent, or to whom they may
sell as principal, or both (which compensation as to a particular broker-dealer
may be less than or in excess of customary commissions).
THE SELLING SHAREHOLDERS AND ANY BROKER-DEALERS WHO ACT IN CONNECTION WITH
THE SALE OF THE SHARES HEREUNDER MAY BE DEEMED TO BE "UNDERWRITERS" WITHIN THE
MEANING OF THE SECURITIES ACT, AND ANY COMMISSIONS THEY RECEIVE AND PROCEEDS OF
ANY SALE OF THE SHARES MAY BE DEEMED TO BE UNDERWRITING DISCOUNTS AND
COMMISSIONS UNDER THE SECURITIES ACT.
Neither adam.com nor the selling shareholders can presently estimate the
amount of such compensation. adam.com knows of no existing arrangements between
any selling shareholders, any other shareholder, broker, dealer, underwriter or
agent relating to the sale or distribution of the shares. At a time particular
offer of shares is made, a prospectus supplement, if required, will be
distributed that will set forth the names of any agents, underwriters or dealers
and any compensation from the selling shareholders and any other required
information.
adam.com will pay all of the expenses incident to the registration, offering
and sale of the shares to the public other than commissions or discounts of
underwriters, broker-dealers or agents. adam.com
9
<PAGE>
has also agreed to indemnify the selling shareholders and certain related
persons against certain liabilities, including liabilities under the Securities
Act.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of adam.com,
adam.com has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is therefore,
unenforceable.
adam.com has advised the selling shareholders that during such time as they
may be engaged in a distribution of the shares included in this prospectus they
are required to comply with Regulation M promulgated under the Securities
Exchange Act of 1934, as amended. With certain exceptions, Regulation M
precludes the selling shareholders, any affiliated purchasers, and any
broker-dealer or other person who participates in such distribution from bidding
for or purchasing, or attempting to induce any person to bid for or purchase any
security which is the subject of the distribution until the entire distribution
is complete. Regulation M also prohibits any bids or purchases made in order to
stabilize the price of a security in connection with the distribution of that
security. All of the foregoing may affect the marketability of the shares
offered hereby.
This offering will terminate on the earlier of (a) the date on which the
shares are eligible for resale without restrictions pursuant to Rule 144(k)
under the Securities Act or (b) the date on which all shares offered by this
prospectus have been sold by the selling shareholders.
VALIDITY OF COMMON STOCK
The validity of the common stock offered hereby will be passed upon for us
by King & Spalding, Atlanta, Georgia.
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K of adam.com, Inc. (formerly, A.D.A.M Software, Inc.)
for the year ended March 31, 1999 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
10
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ADAM.COM, INC.
303,063 SHARES
OF
COMMON STOCK
---------------
PROSPECTUS
------------------
,
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, payable by the
registrant connection with the sale of common stock being registered. All
amounts are estimates, except the SEC registration fee.
<TABLE>
<S> <C>
SEC registration fee........................................ $ 1,195
Nasdaq National Market listing fee.......................... 17,500
Printing expenses........................................... 5,000
Legal fees and expenses..................................... 5,000
Accounting fees and expenses................................ 5,000
Blue sky fees and expenses.................................. 1,000
Miscellaneous............................................... 1,305
-------
Total....................................................... $36,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Georgia Business Corporation Code permits a corporation to eliminate or
limit the personal liability of a director to the corporation or its
shareholders for monetary damages for breach of duty of care or other duty as a
director, provided that no provision shall eliminate or limit the liability of a
director: (A) for any appropriation, in violation of his duties, of any business
opportunity of the corporation; (B) for acts or omissions which involve
intentional misconduct or a knowing violation of law; (C) for unlawful corporate
distributions; or (D) for any transaction from which the director received an
improper personal benefit. This provision pertains only to breaches of duty by
directors in their capacity as directors (and not in any other corporate
capacity, such as officers) and limits liability only for breaches of fiduciary
duties under Georgia corporate law (and not for violation of other laws, such as
the federal securities laws). The Company's Amended and Restated Articles of
Incorporation (the "Restated Articles") exonerate the Company's directors from
monetary liability to the extent permitted by this statutory provision.
The Company's Restated Articles and Amended and Restated Bylaws (the
"Restated Bylaws") also provide that the Company shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (including any action by or in the right of the Company), by
reason of the fact that such person is or was a director or officer of the
Company, or is or was serving at the request of the Company as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including reasonable attorney's fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding, if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Company (and with respect to any criminal
action or proceeding, if such person had no reasonable cause to believe such
person's conduct was unlawful), to the maximum extent permitted by, and in the
manner provided by, the Georgia Business Corporation Code. In addition, the
Restated Bylaws provide that the Company will advance to its directors or
officers reasonable expenses of any such proceeding.
Notwithstanding any provisions of the Company's Restated Articles and
Amended Bylaws to the contrary, the Georgia Business Corporation Code provides
that the Company shall not indemnify a director or officer for any liability
incurred in a proceeding in which the director is adjudged liable to the Company
or is subjected to injunctive relief in favor of the Company: (1) for any
appropriation, in
II-1
<PAGE>
violation of his duties, of any business opportunity of the Company; (2) for
acts or omissions which involve intentional misconduct or a knowing violation of
law; (3) for unlawful corporate distributions; or (4) for any transaction from
which the director or officer received an improper personal benefit.
The Company has purchased insurance with respect to, among other things, any
liabilities that may accrue under the statutory provisions referred to above.
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
4.1 Amended and Restated Articles of Incorporation of the
Registrant (incorporated by reference to the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1999)
4.2 By Laws of the Registrant(incorporated by reference to the
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1999)
5.1 Opinion of King & Spalding
10.1 Registration Rights Agreement dated as of July 27, 1999 by
and among A.D.A.M. Software, Inc., Informational Medical
Systems, Inc., Belle Scott, Robert Scott and Peter Scott
10.2 Asset Purchase Agreement dated as of July 30, 1999 by and
between Alan Greene, Cheryl Nash and A.D.A.M.
Software, Inc.
23.1 Consent of PricewaterhouseCoopers LLP
23.3 Consent of King and Spalding (included in its opinion filed
as exhibit 5.1).
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) to reflect in the Prospectus any facts of events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form
of prospectus filed with the commission pursuant to Rule 424(b) if,
in the aggregate, the charges in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
PROVIDED, HOWEVER, that paragraphs (1) (i) and (1) (ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic
II-2
<PAGE>
reports filed by the Registrant pursuant to section 13 or section 15(d)
of the Exchange Act that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the Georgia Business Corporation Act, the charter or
the bylaws of the registrant, or otherwise, the registrant has been advised
that in the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer, or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered hereunder, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Atlanta,
State of Georgia, on this 9th day of December, 1999.
<TABLE>
<S> <C> <C>
ADAM.COM, INC.
By: /s/ ROBERT S. CRAMER, JR.
-----------------------------------------
Robert S. Cramer, Jr.
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Robert S. Cramer, Jr. and Michael S.
Fisher and each of them, his true and lawful attorney-in-fact and agents, with
full power of substitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to sign any registration
statement for the same offering covered by this Registration Statement that is
to be effective upon filing pursuant to Rule 462(b) promulgated under the
Securities Act of 1933, and all post-effective amendments thereto, and to file
the same, with all exhibits thereto and all documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in fact and
agents, or his or their substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities on December 9, 1999.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S> <C>
Chairman of the Board and
/s/ ROBERT S. CRAMER, JR. Chief Executive Officer
------------------------------------------- (Principal Executive
Robert S. Cramer, Jr. Officer)
Vice President of Finance
/s/ MICHAEL S. FISHER and Administration
------------------------------------------- (Principal Financial and
Michael S. Fisher Accounting Officer)
------------------------------------------- Director
Linda Davis
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S> <C>
/s/ SALLY D. ELLIOTT
------------------------------------------- Director
Sally D. Elliott
/s/ DANIEL S. HOWE
------------------------------------------- Director
Daniel S. Howe
------------------------------------------- Director
Hamilton Jordan
/s/ JOHN W. MCCLAUGHERTY
------------------------------------------- Director
John W. McClaugherty
/s/ GREGORY M. SWAYNE
------------------------------------------- Director
Gregory M. Swayne
------------------------------------------- Director
Francis J. Tedesco, M.D.
</TABLE>
II-5
<PAGE>
EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT"), is entered into as
of July 27, 1999, by and among Informational Medical Systems, Inc., a
Minnesota corporation ("IMS"), Belle Scott, Robert Scott and Peter Scott
representing the holders of all the outstanding shares of Seller (each, a
"SHAREHOLDER," and collectively, the "SHAREHOLDERS"), and A.D.A.M. Software,
Inc. d/b/a adam.com a Georgia corporation (the "COMPANY").
WHEREAS:
A. Pursuant to the terms of the Asset Purchase Agreement, dated as of
July 27, 1999 (the "PURCHASE AGREEMENT"), by and among IMS, the Shareholders
and the Company, the Company is purchasing from IMS substantially all the
assets that have been associated with the business carried out by IMS (the
"PURCHASE") in exchange for shares of Common Stock of the Company (the
"SHARES") upon the terms and subject to the conditions of the Purchase
Agreement.
B. The Purchase Agreement provides for the execution and delivery of
this Agreement at the closing of the transactions contemplated thereby which
grants IMS certain rights to have its Shares registered under the Securities
Act of 1933, as amended (the "SECURITIES ACT").
NOW, THEREFORE, in consideration of the promises and mutual covenants
set forth in this Agreement, IMS, the Shareholders and the Company agree as
follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have the
following meanings:
(i) "REGISTER", "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement or
Registration Statements in compliance with the Securities Act and the
declaration or ordering the effectiveness of such Registration Statement by
the United States Securities and Exchange Commission (the "SEC").
(ii) "REGISTRABLE SECURITIES" means the Shares (including
without limitation any Contingent Shares (as defined in the Purchase
Agreement)) and any shares of capital stock issued or issuable as a dividend
on or in exchange for or otherwise with respect to the Shares, PROVIDED,
HOWEVER, that such securities shall only be treated as Registrable Securities
if and so long as they have not been (i) sold to or through a broker or
dealer or underwriter in a public distribution or a public securities
transaction, or (ii) sold or are, in the opinion of counsel for the Company,
available for sale in a single transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon
the consummation such sale.
<PAGE>
(iii) "REGISTRATION STATEMENT" means a registration statement
of the Company under the Securities Act.
b. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Purchase Agreement.
2. REGISTRATION.
a. Prior to December 31, 1999, the Company shall prepare and file
with the SEC a Registration Statement on Form S-3 (or another appropriate
form in the discretion in the discretion of the Company as is then available
to effect a registration of the Registrable Securities) covering the resale
of the Registrable Securities.
3. OBLIGATIONS OF PARENT.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare and file with the SEC a Registration
Statement with respect to the Registrable Securities as provided in Section
2(a), and thereafter use its reasonable commercial efforts to cause such
Registration Statement relating to Registrable Securities to become effective.
b. The Company shall furnish to IMS (i) promptly after the
Registration Statement is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and
any amendment thereto, each preliminary prospectus and prospectus and each
amendment or supplement thereto and (ii) such number of copies of a
prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as IMS may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by
IMS. The Company will promptly notify IMS by facsimile of the effectiveness
of the Registration Statement or any post-effective amendment.
c. The Company shall use reasonable efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement
under such other securities or "blue sky" laws of such jurisdictions in the
United States as the Shareholders reasonably requests, and (ii) take all other
actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; PROVIDED, HOWEVER, that the
Company shall not be required in connection therewith or as a condition
thereto to (i) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(c),(ii) subject
itself to general taxation in any such jurisdiction, (iii) file a general
consent to service of process in any such jurisdiction, (iv) provide any
undertakings that cause the Company undue expense or burden, or (v) make any
change in its charter or bylaws.
d. The Company shall notify IMS as promptly as practicable of (i) the
issuance by the SEC of a stop order suspending the effectiveness of the
Registration Statement, and (ii) the
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<PAGE>
happening of any event, of which the Company has knowledge, as a result of
which the prospectus included in the Registration Statement, as then in
effect, includes an untrue statement of a material fact or omission to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading. In the case of an event in clause (ii)
above, the Company will use its reasonable efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver such number of copies of such supplement
or amendment to IMS, as IMS may reasonably request.
e. The Company shall use its reasonable efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest possible moment and to notify IMS of
the issuance of such order and the resolution thereof.
f. The sections of the Registration Statement covering information
with respect to IMS, IMS's beneficial ownership of securities of the Company
or IMS's intended method of disposition of Registrable Securities shall
conform to the information provided to the Company by IMS.
g. The Company shall (i) cause all the Registrable Securities covered
by the Registration Statement to be listed on each national securities
exchange on which securities of the same class or series issued by the
Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
the designation and quotation, of all the Registrable Securities covered by
the Registration Statement on the Nasdaq National Market or, if not eligible
for the Nasdaq National Market on the Nasdaq SmallCap.
4. OBLIGATIONS OF IMS.
In connection with the registration of the Registrable Securities, IMS
shall have the following obligations:
a. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities that IMS shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as
shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.
b. IMS, by its acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of the Registration Statement
hereunder, unless IMS has notified the Company in writing of IMS's election
to exclude all of its Registrable Securities from the Registration Statement.
c. IMS agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3(d) or 3(e), IMS
will immediately discontinue disposition of Registrable Securities pursuant
to the Registration Statement covering
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<PAGE>
such Registrable Securities until IMS's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or 3(g) and,
if so directed by the Company, IMS shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate
of destruction) all copies in IMS's possession, of the prospectus covering
such Registrable Securities at the time of receipt of such notice.
d. IMS may not participate in any underwritten registration hereunder
unless it (i) agrees to sell its Registrable Securities on the basis provided
in any underwriting arrangements in usual and customary form entered into by
the Company and (ii) complete and execute all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitations,
all reasonable registration, listing and qualification fees, printers and
accounting fees, the fees and disbursements of counsel for the Company (but
excluding any fees or expenses of counsel to IMS) shall be borne by the
Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extend permitted by law, the Company will indemnify, hold
harmless and defend (i) IMS and (ii) the directors, officers, partners,
employees, agents and each person who controls IMS within the meaning of the
Securities Act or the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), if any, (each, an "INDEMNIFIED PERSON"), against any joint
or several losses, claims, damages, liabilities or expenses (collectively,
together with actions, proceedings or inquiries by any regulatory or
self-regulatory organization, whether commenced or threatened, in respect
thereof, "CLAIMS") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or the
omission or alleged omission to state therein a material fact required to be
stated or necessary to make the statements therein not misleading; (ii) any
untrue statement or alleged untrue statement of a material fact contained in
the final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading; or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
other law, including, without limitation, any state securities law, or any
rule or regulation thereunder relating to the offer or sale of the
Registrable Securities (the matters in the foregoing clauses (i) through
(iii) being, collectively, "VIOLATIONS"). Subject to the restrictions set
forth in Section 6(c) with respect to the number of legal counsel, the
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<PAGE>
Company shall reimburse the Indemnified Person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall not apply
to a Claim arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing to the Company
by any Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof and (ii) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf
of the Indemnified Person.
b. In connection with any Registration Statement in which IMS is
participating, IMS agrees to indemnify, hold harmless and defend, to the same
extent and in the same manner set forth in Section 6(a), the Company, each of
its directors, each of its officers who signs the Registration Statement,
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, any underwriter and any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an "INDEMNIFIED
PARTY"), against any Claim to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such Claim arises
out of or is based upon any Violation by IMS, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by IMS for use
in connection with such Registration Statement. Subject to Section 6(c) IMS
will reimburse any legal or other expenses (promptly as such expenses are
incurred and are due and payable) reasonably incurred by them in connection
with investigating or defending any Claim; PROVIDED, HOWEVER, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior written consent of IMS, which consent shall not be unreasonably
withheld; PROVIDED, FURTHER, HOWEVER, that IMS shall be liable under this
Agreement (including this Section 6(b)) for only that amount as does not
exceed the net proceeds to IMS as result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of such Indemnified Party. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(b)
with respect to any preliminary prospectus shall not inure to the benefit of
any Indemnified Party if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented.
c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made
-5-
<PAGE>
against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; PROVIDED, HOWEVER, that an
Indemnified Person or Indemnified Party shall have the right to retain its
own counsel with the fees and expenses to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party,
the representation by such counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or Indemnified
Party and any other party represented by such counsel in such proceeding. The
indemnifying party shall pay for only one separate legal counsel for the
Indemnified Persons or the Indemnified Parties, as applicable, and such legal
counsel shall be selected by IMS, if IMS is entitled to indemnification
hereunder, or the Company, if the Company is entitled to indemnification
hereunder, as applicable. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is actually prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
7. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived only by the mutual written consent of the Company and IMS, or
if IMS no longer exists, then the Shareholders holding a majority of the
Registrable Securities.
8. MISCELLANEOUS.
a. Any notices required or permitted to be given under the terms
hereof shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five days
after being placed in the mail, if mailed by regular U.S. mail, or upon
receipt, if delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile, in each case addressed to a
party. The addresses for such communications shall be:
If to the Company:
A.D.A.M. Software, Inc., d/b/a adam.com
1600 RiverEdge Parkway, Suite 800
Atlanta, GA 30328
Attention: Chief Executive Officer
Facsimile: 770-989-4953
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With copy to:
Adam.com
90 Tehama Street
San Francisco, CA 94105
Attention: President
Facsimile: 415-541-9499
And a copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Page Mailliard
Facsimile: (650) 496-4088
If to IMS: to the address set forth immediately below IMS's name on the
signature page to this Agreement. Each party shall provide notice to the
other party of any change of its address.
b. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
c. This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements
made and to be performed entirely within such State. In the event that any
provision of this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to
the extent that it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. Any provision hereof which may
prove invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
d. This Agreement supersedes all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof.
e. This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto, PROVIDED, HOWEVER,
that the rights of IMS can only be assigned to the Shareholders.
f. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
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g. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.
h. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the
other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
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IN WITNESS WHEREOF, the Company and IMS have caused this Agreement to be
duly executed as of the date first above written.
A.D.A.M. SOFTWARE, INC., D/B/A ADAM.COM
By: /s/ Robert S. Cramer, Jr.
------------------------------------
INFORMATION MEDICAL SYSTEMS, INC.
By: /s/ Peter Scott
------------------------------------
Name:
Title:
Address:
SHAREHOLDERS
/s/ Belle Scott
- ----------------------------------------
Belle Scott
/s/ Robert Scott
- ----------------------------------------
Robert Scott
/s/ Peter Scott
- ----------------------------------------
Peter Scott
[Signature Page to Registration Rights Agreement]
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EXHIBIT 10.2
ASSET PURCHASE AND SALE AGREEMENT
THIS AGREEMENT (this "Agreement") is dated as of July 30, 1999 (the
"Effective Date"), and is between Alan Greene, M.D., an individual resident
of California ("Greene") and Cheryl Nash, an individual resident of
California ("Nash") (Greene and Nash collectively referred to as "Sellers"),
and A.D.A.M. Software, Inc. ("Purchaser"), a Georgia corporation.
BACKGROUND
Sellers maintain and are the co-owners of a web site on the Internet at
http://www.drgreene.com (the "Site").
Sellers desire to sell, assign, grant, convey, and transfer, and
Purchaser desires to purchase and acquire, the domain name and Internet
protocol address of the Site, and all of Sellers' right, title and interest
in the text, images, ideas, content, trademarks, service marks, trade names
and other copyrightable material of every kind and description found on the
Site, and certain computer hardware, software and other assets, in accordance
with the terms and conditions of this Agreement.
The Parties agree as follows:
SECTION 1
SALE OF ASSETS
1.1 Sellers hereby sell, assign, transfer, grant, convey and relinquish
exclusively to Purchaser, and Purchaser hereby purchases and acquires from
Sellers, the following (collectively, the "Assets"), free and clear of all
mortgages, liens, pledges, security interests, charges, claims, restrictions
and encumbrances of any nature whatsoever:
(a) All of Sellers' worldwide right, title, and interest in the Site
and all tangible and intangible property comprising the Site, including:
(i) The domain name and Internet protocol address of the Site;
(ii) All of Greene's images and pictures displayed at the Site
on and prior to the Effective Date;
(iii) Title to and possession of all media that constitute all
copies and versions of the text and content of the Site, their respective
component parts, and all documentation relating thereto;
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(iv) All copyright interests owned or claimed by either of the
Sellers pertaining to the content of the Site, together with any and all
other copyright interests relating thereto accruing by reason of U.S. or
international copyright conventions (collectively, the "Copyright
Interests");
(v) All right, title, and interest of Sellers in and to the
inventions, discoveries, improvements, ideas, trade secrets, know-how,
confidential information and all other intellectual property owned or
claimed by Sellers pertaining to the Site;
(vi) All interests owned or claimed by Sellers in the
trademarks, service marks and trade names listed on SCHEDULE 1.1(a)(vi),
together with all U.S. and foreign applications and registrations
therefor, accompanied by the goodwill of all business connected with the
use of and symbolized by such marks including the right to sue for,
settle, or release any past, present, or future infringement thereof or
unfair competition involving the same (collectively, the "Trademark
Interests"); and
(vii) All right, title, and interest, and benefit of Sellers
in, to, and under all agreements, contracts, licenses, and leases
entered into by Sellers (all such agreements are listed on SCHEDULE
1.1(a)(vii)), or having Sellers as a beneficiary, pertaining to the Site.
(b) All equipment, business machines, computer hardware and
software, tooling and other fixed assets or personal property identified
on SCHEDULE 1.1(b) (collectively, the "Personal Property").
(c) All inventory of the text and content of the Site owned by
Sellers, any public relations and marketing and promotional items
related to the Site, and any artwork or related materials related to the
Site (collectively, the "Inventory"), including the items listed on
SCHEDULE 1.1(c).
(d) All of Sellers' information, files, correspondence, records,
data, plans and recorded knowledge that relate to the Site, including
customer and supplier lists and data on traffic to the Site
(collectively, the "Books and Records").
(e) All of the goodwill of Sellers relating to the Site.
1.2 Notwithstanding anything to the contrary in this Agreement, the term
"Assets" as used herein shall not include, nor shall any provision of this
Agreement be construed to involve any transfer, sale, assignment or grant of
rights with respect to, any of the items listed in SCHEDULE 1.2
(collectively, the "Excluded Assets"), except that at the time of the Closing
(as defined below) if any content included within the Excluded Assets is in
fact contained on the Site ("Loaned Content"), then, Purchaser is hereby
granted a perpetual, irrevocable, royalty-free license to use such Loaned
Content in Purchaser's business and create derivative works solely for
publication on Purchaser's web site. Each Seller agrees that such Seller
shall not allow, permit, or grant permission or a license to, any other party
whose core business is the publication of health, medical, wellness or any
other health related information distributed via a web site or
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the Internet to use the Loaned Content in any form without the prior writ6ten
consent of Purchaser.
1.3 In consideration for transfer of the Assets, and subject to the
terms and conditions of this Agreement, Purchaser shall issue to each Seller
at the Closing 42,000 shares ("collectively, the ADAM Shares") of the common
stock of Purchaser, $.01 par value ("Common Stock"). Such number of ADAM
Shares shall be adjusted for stock splits, stock dividends, and the like
relating to Purchaser's Common Stock occurring before the Closing Date (as
defined below). The ADAM Shares shall be non-registered shares when delivered
to the Sellers.
1.4 Purchaser does not assume any liability or obligation of Sellers
(whether or not related to the Assets) and shall not be responsible for any
debts, liabilities or obligations of Sellers whether occurred now or
hereafter and whether known, unknown, contingent or otherwise.
1.5 In connection with the sale of the Assets to Purchaser, each Seller
shall become an employee of Purchaser pursuant to Sections 9.1 and 10.1, and
shall receive stock option grants for shares of Common Stock pursuant to
Section 10.2.
SECTION 2
DELIVERY OF INSTRUMENTS, PHYSICAL OBJECTS AND PAYMENT
2.1 Upon the terms and subject to the conditions of this Agreement, the
sale of the Assets and purchase of the ADAM Shares (as defined below) shall
take place at a closing (the "Closing") to be held at the offices of King &
Spalding, 191 Peachtree Street, Atlanta, Georgia 30303, at 1:00 p.m., local
time, on July 9, 1999 or at such other time or such other date or such other
place and before such notary as Sellers and Purchaser shall agree to in
writing (the "Closing Date").
2.2 At the Closing or at a reasonable time thereafter, Sellers will
deliver to Purchaser:
(a) All system and user documentation pertaining to the Site,
including design or development specifications and related
correspondence and memoranda;
(b) All necessary consents to the assignment by Sellers and
assumption by Purchaser of the rights and obligations under any contract
relating to the Site; and
(c) All Inventory, Books and Records and Personal Property.
2.3 At the Closing or at a reasonable time thereafter, Purchaser will
deliver to each Seller a certificate for 42,000 shares of Common Stock (as
adjusted) and each certificate shall bear the legend set forth in Section
4.2(q) below.
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SECTION 3
ADDITIONAL COVENANTS AND AGREEMENTS
OF THE PARTIES
3.1 Prior to December 31, 1999, Purchaser shall file a shelf
registration statement on Form S-3 (or other applicable form) under the
Securities Act of 1933 (the "Securities Act") and such registration statement
shall cover the resale by the Sellers all of the ADAM Shares to be issued to
the Sellers pursuant to Section 2.3 Purchaser will use commercially
reasonable efforts to cause such registration statement to become effective
as soon as reasonably practicable.
3.2 Without limiting the foregoing, if at any time prior to the date
that the shelf registration statement is declared effective by the Securities
and Exchange Commission, ADAM proposes to file a registration statement under
the Securities Act with the Securities and Exchange Commission covering any
of its shares of Common Stock (whether for ADAM or for any other party),
other than a registration statement solely covering shares issuable pursuant
to employment benefit plans of ADAM or solely covering shares to be issued in
connection with a corporate acquisition, then ADAM agrees to include all of
the ADAM Shares to be issued to the Sellers pursuant to Section 2.3 on such
registration statement (the "Piggy Back Registration Right"). In such case,
Sellers agree to cooperate with ADAM and the underwriters with respect to the
offering, including execution of an underwriting agreement.
3.3 ADAM shall pay all costs of the registration statement filed
pursuant to Section 3.1 or Section 3.2, except that Sellers shall pay (i) to
retain counsel to the Sellers and (ii) all underwriting discounts, fees and
commissions applicable to the sale of their ADAM Shares.
3.4 Notwithstanding anything to the contrary set forth in this
Agreement, if ADAM is at any time in possession of material, non-public
information that it deems advisable not to disclose publicly or ADAM
otherwise determines in good faith that an event shall have occurred or a
condition shall exist that results in the applicable registration statement
filed pursuant to Section 3.1 or Section 3.2 containing a material
misstatement or omission and it delivers written notice to each Seller to the
effect that such Seller may not make offers or sales under the registration
statement until further notified by ADAM, Sellers shall refrain from making
offers or sales under the registration statement until the registration
statement has been amended or supplemented and Sellers receive written notice
to such effect from ADAM.
3.5 If Purchaser becomes insolvent or makes an assignment for the
benefit of creditors or ceases to do business in the ordinary course
(excluding any acquisition, merger or business combination involving
Purchaser), then Sellers shall have an option to repurchase the Assets
including domain name and Internet protocol address of the Site from
Purchaser at a mutually agreeable price.
3.6 To effect the transfer of ownership of the Trademark Interests to
Purchaser, including the goodwill of all business connected with the use of
and symbolized by the Trademark Interests, Sellers will:
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(a) Provide Purchaser with information and documentation regarding
the standards and specifications applicable to the Site;
(b) Furnish Purchaser with the files evidencing all proceedings
involving the Trademark Interests;
(c) Execute the Assignment of Intellectual Property substantially in
the form attached hereto as EXHIBIT A; and
(d) Provide all reasonable assistance to Purchaser in preparing
applications for registration of all non-registered trademarks, service
marks and trade names pertaining to the Site and when reasonably
requested by Purchaser, provided that any out of pocket expenses
associated therewith shall be borne by Purchaser.
3.7 Sellers covenant not to use or display the Trademark Interests, or
any mark confusingly similar thereto, anywhere in the world, and further
covenant not to content or challenge the validity of the Trademark Interests,
any applicable registrations thereof or the ownership of the Trademark
Interests by Purchaser.
3.8 To effect the transfer of ownership of the Copyright Interests to
Purchaser, Sellers will execute the Assignment of Intellectual Property
substantially in the form attached hereto as EXHIBIT A.
3.9 Greene covenants to identify himself in all publications and
speaking engagements as an employee or consultant (as applicable) of
Purchaser (whether or not such publication or speaking engagement is related
to Purchaser) so long as Greene is employed by or providing consulting
services to Purchaser.
3.10 Each Seller covenants to use his or her best efforts to provide all
existing documentation relating to the Site or Assets and to do all things
that Purchaser reasonably requests to transfer the Assets.
SECTION 4
REPRESENTATIONS AND WARRANTIES
4.1 Except as set forth on SCHEDULE 4.1, each of the Sellers, jointly
and severally, represents and warrants to Purchaser as follows:
(a) Sellers have good and marketable title to the Assets, free and
clear of any liens, claims, encumbrances, rights or equities whatsoever
of any third party. Purchaser will receive, as of the Closing Date,
complete and exclusive right, title, and interest in and to the Assets.
(b) Sellers have developed the Site entirely through their own
efforts for their own account, and the Site is free and clear of all
liens, claims, encumbrances, rights, or equities whatsoever of any third
party.
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(c) To the best knowledge of Sellers', the text and content of the
Site and the Site itself does not infringe on any copyright, trademark,
service mark, trade name, trade secret or patent of any third party.
(d) No one other than Sellers have contributed to or participated in
the conception and development of the Site or any of the content of the
Site, provided that it is understood that users regularly submit text
that becomes content on the Site (for example, questions submitted and
published in the Q&A portion of the Site) ("User Content"). Sellers make
no representation whatsoever regarding the extent of Sellers right,
title and interest in any User Content, except that it is understood and
agreed that Sellers at the Closing are conveying to Purchaser any and
all right, title and interest of Sellers in any such User Content.
(e) No litigation regarding the Site, the content of the Site, or
the Assets is pending or has been threatened.
(f) Sellers have the full power and authority to execute and deliver
this Agreement and any other certificate, agreement, document or other
instrument in connection with this transaction and to perform their
obligations hereunder and the consummation of the transaction
contemplated hereby. No consent of any third party is required for the
transactions contemplated by this Agreement.
(g) All copyright registrations, or applications therefor, with
respect to the Copyright Interests are listed on SCHEDULE 4.1(g).
(h) The execution, delivery and performance of this Agreement, the
consummation of transactions contemplated by this Agreement and the
fulfillment of and compliance with the terms and conditions of this
Agreement do not or will not (as the case may be), with the passing of
time or the giving of notice or both, violate or conflict with,
constitute a breach of or default under, result in the loss of any
benefit under, or permit the acceleration of any obligation under, (a)
any assumed contracts (which are listed in SCHEDULE 1.1(a)(vii)), (b)
any other contracts of any kind, (c) any judgment decree or order of any
court or governmental authority or agency to which Sellers are a party
or by which Sellers or any of their properties is bound, or (d) any
statute, law, rule or regulation applicable to either Sellers, their
business or the Assets.
(i) All trademark, service mark, trade name or similar
registrations, or applications therefor, with respect to the Trademark
Interests are listed on SCHEDULE 4.1(i).
(j) All agreements, arrangements or understandings in effect with
respect to the Assets are listed on SCHEDULE 4.1(j), and a true and
complete copy of all agreements, arrangements and understandings have
been provided to Purchaser by Sellers.
(k) No representation, warranty or covenant made by Sellers in this
Agreement, the Schedules or the Exhibits attached hereto or any
information provided by Sellers to
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Purchaser in connection with the acquisition described in this Agreement
contains an untrue statement of a material fact or omits to state a
material fact required to be stated herein or therein or necessary to
make the statements contained herein or therein not misleading.
(l) Sellers are not a party to or bound by, any license or other
agreement related to the Site or its content requiring the payment of a
royalty.
(m) Sellers do not use any of the customer information they receive
through the Site in an unlawful manner or in a manner violative of the
rights of privacy of their customers. Seller do not, and have not,
collected personally identifiable information from viewers of the Site
except in a manner disclosed in a privacy statement prominently
displayed on the Site. Sellers have reasonably adequate security
measures in place to protect the customer information they receives
through the Site from illegal use by third parties or use by third
parties in a manner violative of the rights of privacy of their
customers. Sellers do not guarantee security of any information they
receive from their customers from the Site.
(n) Sellers represent to Purchaser that during April 1999 according
to the User Profile report prepared by Webtrends (a copy of which has
been provided to Purchaser), the Site had at least 80,000 "User
Sessions" (as that term is used in the Webtrends report). Sellers have
no reason to believe that the Webtrends report is inaccurate. Sellers
represent to Purchaser that the Site has 8,000 registered users who have
given their email addresses and each receives a periodic electronic
newsletter.
(o) The Assets constitute all of the assets necessary and sufficient
to conduct the operations of the Site in accordance with Seller's past
practices. All assets owned by the Sellers that are used or held for use
in the operation of the Site are included in the Assets. The Sellers
have and will convey to Purchaser at the Closing good and marketable
title to the Assets free and clear of all liens, pledges, security
interests, charges, claims, restrictions and encumbrances of any nature
whatsoever. All equipment and other items of tangible property and
assets included in the Assets have continuously been maintained in the
ordinary course of business.
(p) There are no existing agreements, options, commitments or rights
with, of or to any person to acquire any of the Assets or any interest
in the Site.
(q) Each Seller understands that the ADAM Shares to be issued to
such Seller under this Agreement have not been and will not at the
Closing Date be registered under the Securities Act, in reliance upon
exceptions contained in the Securities Act or interpretations thereof,
and cannot be offered for sale, sold or otherwise transferred unless the
ADAM Shares are so registered or qualify for exemption from registration
under the Securities Act. Each Seller acknowledges and agrees that each
certificate representing ADAM Shares issued pursuant to Section 2.3
shall be imprinted with a legend in substantially the following form:
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"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"FEDERAL ACT"), OR UNDER THE PROVISIONS OF ANY APPLICABLE STATE
SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED HOLDER
HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY
EXEMPTIONS UNDER THE FEDERAL ACT AND UNDER ANY APPLICABLE STATE
SECURITIES LAWS. THE SHARES MAY NOT BE SOLD, PLEDGED, TRANSFERRED
OR ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER
PROVISIONS OF THE FEDERAL ACT AND ANY APPLICABLE STATE SECURITIES
LAWS, OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN A
TRANSACTION OTHERWISE IN COMPLIANCE WITH APPLICABLE STATE AND
FEDERAL SECURITIES LAWS; AND IN THE CASE OF AN EXEMPTION, ONLY IF
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION OF THE
SHARES.
(r) The ADAM Shares being issued to the Sellers pursuant to this
Agreement are being acquired by the Sellers in good faith solely for
their own accounts, for investment and not with a view toward resale or
other distribution within the meaning of the Securities Act. Such shares
will not be offered for sale, sold or otherwise transferred by the
Sellers without either registration or exemption from registration under
the Securities Act.
(s) Each Seller has such knowledge and experience in financial and
business matters that such Seller is capable of evaluating the merits
and risks of the Sellers' investment in the ADAM Shares being acquired
hereunder. Each Seller understands and is able to bear any economic
risks associated with such investment (including, without limitation,
the necessity of holding such shares for an indefinite period of time,
inasmuch as the shares have not been registered under the Securities
Act). Each Seller is an "accredited investor", as that term is defined
in Regulation D promulgated under the Securities Act. Each Seller
confirms that Purchaser has made available to such Seller and his or her
representatives and agents such information that has been reasonably
requested and provided with the opportunity to ask questions of the
officers and management employees of Purchaser about the business and
financial condition of Purchaser as such Seller has requested.
4.2 Purchaser represents and warrants to each Seller as follows:
(a) Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the State of Georgia. Purchaser has
the requisite power and authority to own, lease and operate its assets
and properties, to carry on its business as now being conducted and to
perform the terms of this Agreement and the transactions
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contemplated hereby. Purchaser is duly qualified to conduct its
business, and is in good standing, in each jurisdiction where the
ownership or leasing of its properties or the nature of its activities
in connection with the conduct of its business makes such qualification
necessary.
(b) The execution and delivery of this Agreement by Purchaser and
the consummation by Purchaser of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action
and no other corporate proceedings on the part of Purchaser are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered
by Purchaser and, assuming the due authorization, execution and delivery
by the Sellers, constitutes a legal, valid and binding obligation of
Purchaser, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to
or affecting creditors' rights generally and by the application of
general principles of equity.
(c) The execution and delivery of this Agreement by Purchaser do
not, and the performance by Purchaser of its obligations under this
Agreement, including, without limitation, the issuance of the ADAM
Shares, will not, (i) conflict with or violate the certificate of
incorporation or bylaws of Purchaser, (ii) conflict with or violate any
Law applicable to Purchaser or its assets and properties, or (iii)
result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Purchaser is a
party or by which Purchaser is bound, or to which any of its properties
or assets is subject.
(d) When issued in accordance with the terms of this Agreement the
ADAM Shares shall be duly and validly authorized and issued fully paid
and nonassessable. As of June 25, 1999, Purchaser's authorized capital
stock consisted of 20,000,000 shares of $0.01 par value common stock, of
which 4,612,307 were outstanding, 847,240 were held in Treasury, and
1,400,000 were reserved under Purchaser's stock option plans.
SECTION 5
FURTHER ASSURANCES
Sellers will execute and deliver such further conveyance instruments and
take such further actions as may be necessary or desirable to evidence more
fully the transfer of ownership of all of the Assets to Purchaser. Sellers
therefore agree:
(a) To execute, acknowledge, and deliver any affidavits or documents
of assignment and conveyance regarding the Assets reasonably requested
by Purchaser;
(b) To provide testimony in connection with any proceeding affecting
the right, title, or interest of Purchaser in the Assets; and
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(c) To perform any other acts Purchaser reasonably deems necessary
to carry out the intent of this Agreement.
SECTION 6
NONCOMPETITION
6.1 For the purposes of this Section 6, the following definitions shall
apply:
(a) "Seller Activities" shall mean, with respect to each Seller, the
publication of health, medical, wellness or any other health related
information distributed via a web site or the Internet, including all
activities of the type currently conducted, offered, or provided by the
Site.
(b) "Noncompete Period" or shall mean, with respect to each Seller,
the period beginning on the Closing Date and continuing for a period of
two (2) years from the date of last employment by the Purchaser.
(c) The term "Territory" as used herein shall mean worldwide, such
area being where the Site is operating as of the Closing Date.
6.2 Noncompetition.
(a) Each Seller hereby acknowledges that the Site conducts Seller
Activities throughout the Territory. Each Seller acknowledges that to
protect adequately the interest of Purchaser in the business of the
Site, it is essentially that any noncompete covenant with respect
thereto cover all Seller Activities and the entire Territory.
(b) Each Seller hereby agrees that such Seller shall not, during the
Noncompete Period, in any manner, directly or by assisting others,
engage in, have an equity or profit interest in (other than an equity
interest in any publicly traded enterprise that constitutes less than 5%
of the total equity of such enterprise), render services (of an
executive, marketing, manufacturing, research and development,
administrative, financial or consulting nature) to, or affiliate with,
any business with a core business that conducts, or assist a business in
the development of a core business to conduct, any of the Seller
Activities in the Territory.
6.3 Each Seller hereby agrees that such Seller shall not, during the
Noncompete Period, directly or by assisting others, own, manage, operate,
join, control or participate in the ownership, management, operation or
control of any business (including without limitation any Internet web site)
conducted under any corporate or trade name of the Site or any name similar
enough thereto to give rise to confusion without the prior written consent of
Purchaser which consent shall not be unreasonably withheld.
6.4 If a judicial or arbitral determination is made that any of the
provisions of this Section 6 constitutes an unreasonable or otherwise
unenforceable restriction against any Seller,
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the provisions of the Section 6 shall be rendered void only to the extent
that such judicial or arbitral determination finds such provisions to be
unreasonable or otherwise unenforceable with respect to such Seller. In this
regard, Sellers and Purchaser hereby agree that any judicial or arbitral
authority construing this Agreement shall be empowered to sever any portion
of the Territory, any prohibited business activity or any time period from
the coverage of this Section 6 and to apply the provisions of this Section 6
to the remaining portion of the Territory, the remaining business activities
and the remaining time period not so severed by such judicial or arbitral
authority. Moreover, notwithstanding the fact that any provision of this
Section 6 is determined not be specifically enforceable, Purchaser shall
nevertheless be entitled to recover monetary damages as a result of the
breach of such provision by a Seller.
6.5 Each Seller hereby agrees that any remedy at law for any breach of
the provisions contained in this Section 6 shall be inadequate and that
Purchaser shall be entitled to injunctive relief in addition to any other
remedy Purchaser might have under this Agreement.
SECTION 7
ACKNOWLEDGMENT OF RIGHTS
In furtherance of this Agreement, Sellers hereby acknowledge that, from
and after the Effective Date and provided that Purchaser makes the payment
described in Section 1.2, Purchaser has acceded to all of Sellers' right,
title, and standing to:
(a) Receive all rights and benefits pertaining to the Site and the
Assets;
(b) Institute and prosecute all suits and proceedings and take all
actions that Purchaser, in its sole discretion, may deem necessary or
proper to collect, assert, or enforce any claim, right, or title of any
kind in and to any and all of the Site and the Assets; and
(c) Defend and comprise any and all such action, suits, or
proceedings relating to such transferred and assigned rights, title,
interest, and benefits, and perform all other such acts in relation
thereto as Purchaser, in its sole discretion, deems advisable.
SECTION 8
INDEMNIFICATION
8.1 Each Seller agrees to indemnify and hold harmless Purchaser, its
successors and assigns, including any subsidiary, officer, director,
employee, agent, contractor, licensee or customer, from and against any loss,
liability, claim or damage (including court costs and Attorney fees)
sustained by it or them as a result of (1) a claim or allegation that the
Assets, the Site or any of the text or content, as constituted at the time
the Closing, infringes any copyright, trade secret, trademark, service mark,
trade name or other intellectual property right of any third party (an "IP
Claim"), (2) any liability or obligation relating to the Assets, the Site or
any of the content not expressly assumed by Purchaser (a "Commercial Claim"),
or (3) any breach by either Seller of any of his or her representations,
warranties or covenants under this Agreement (a
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"Misrepresentation Claim") (all of which will survive the Closing of this
Agreement for a period of two (2) years from the Closing Date), provided,
however, absent fraud, that the total maximum financial liability of any
Seller hereunder shall not exceed an amount equal to the value of the
ADAM Shares issued to such Seller at the Closing (with such value being
measured for such purpose at the time of the Closing based on the average
closing trading price for shares of the Common Stock of ADAM on the ten (10)
trading days immediately proceeding, but not including the Closing Date).
8.2 Nothing in this Section 8.2 is intended to limit any legal or
contractual obligation of any Seller in the event of fraud by such Seller.
Otherwise, however, no Seller shall have any indemnification liability under
Section 8.1, unless it has received from ADAM written notice of the alleged
loss, liability, claim or damage within a reasonable time after the loss,
liability, claim or damage arises and, in any event, prior to the two (2)
year anniversary of the Closing Date (the "Claim Notice"). Furthermore, no
Seller shall have any indemnification liability with respect to an IP Claim
or a Commercial Claim, unless the Seller is given a reasonable opportunity
(i) to participate in the defense of such claim, at Seller's expense, and
(ii) to approve any proposed settlement thereof.
SECTION 9
CONDITIONS TO THE OBLIGATION OF
PURCHASER TO CLOSE
The obligation of the Purchaser to close the transaction and to deliver
the ADAM Shares at the Closing and to perform any obligations hereunder shall
be subject to the satisfaction as determined by, or waived by, Purchaser of
the following conditions on or before the Closing Date.
9.1 The representations and warranties made by Sellers in Section 4.1
shall be true and correct in all material respects on the Closing Date.
9.2 Purchaser and Greene shall have duly executed and delivered the
Employment Agreement, substantially in the form attached hereto as EXHIBIT B,
and Purchaser and Nash shall have duly executed and delivered the Employment
Agreement, substantially in the form attached as EXHIBIT C.
9.3 There shall not be on the Closing Date any order of a court of
competent jurisdiction or an ruling of any governmental authority or such
condition imposed under any law, rule or regulation which would, in the
judgment of such Purchaser, (a) prohibit or restrict (i) the receipt of the
ADAM Shares by either Seller or (ii) the consummation of the transactions
contemplated by this Agreement, (b) subject such Purchaser to any penalty or
onerous condition under or pursuant to any law, rule or regulation, or (c)
restrict the operation of the Site as conducted on the date hereof in a
manner that would have a material adverse effect on the condition of the Site
or the Assets.
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9.4 No action, suit, proceeding, claim or dispute shall have been
brought or otherwise arisen at law, in equity, in arbitration or before any
governmental authority against either Seller which would, if adversely
determined, (a) have a material adverse effect on the ability of the Seller
to perform his or her obligations under this Agreement or any of the other
transaction documents.
9.5 Each Seller shall have duly executed and delivered the Bill of Sale,
substantially in the form attached hereto as EXHIBIT D.
9.6 Neither any investigation of Sellers' business, the Site and the
Assets by Purchaser, nor the schedules hereto, nor any other document
delivered to Purchaser as contemplated by this Agreement, shall have revealed
any facts or circumstances that, in the good faith judgment of Purchaser,
reflect in a material adverse way on Sellers' business, the Site, or the
Assets.
SECTION 10
CONDITIONS TO THE OBLIGATION OF
SELLERS TO CLOSE
The obligation of the Sellers to close the transaction and to deliver
the Assets at the Closing and to perform any obligations hereunder shall be
subject to the satisfaction as determined by, or waiver by, Sellers of the
following conditions on or before the Closing Date.
10.1 The representations and warranties made by Purchaser in Section 4.2
shall be true and correct in all material respects on the Closing Date.
10.2 Purchaser and Greene shall have duly executed and delivered the
Employment Agreement, substantially in the form attached hereto as EXHIBIT B,
and Purchaser and Nash shall have duly executed and delivered the Employment
Agreement, substantially in the form attached as EXHIBIT C.
10.3 Purchaser and Greene shall have duly executed and delivered a Stock
Option Grant for 10,000 shares of ADAM Stock, and Purchaser and Nash shall
have duly executed and delivered a Stock Option Grant for 5,000 shares of
Common Stock, each Stock Option Grant substantially in the form attached
hereto as EXHIBIT E.
SECTION 11
TERMINATION
11.1 This Agreement may be terminated at any time prior to the Closing
Date (the "Termination Date"):
(a) in writing by mutual agreement by the Purchaser and Sellers;
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(b) by written notice from Sellers to Purchaser, if between the
date hereof and the Closing Date: (i) there shall have been a breach of
any material representation or warranty of the Purchaser contained in
this Agreement or (ii) the Purchaser shall not have complied with any
material covenant or agreement to be complied with by it and contained
in this Agreement; and
(c) by written notice from Purchaser to Sellers, if between the date
hereof and the Closing Date: (i) there shall been a breach of any
material representation or warranty of the Sellers contained in this
Agreement, or (ii) the Sellers shall not have complied with any material
covenant or agreement to be complied with by it and contained in this
Agreement.
11.2 If this Agreement is terminated pursuant to this Section 11, this
Agreement shall forthwith cease to have effect by and among the parties and
all further obligations of the parties shall terminate without further
liability.
SECTION 12
MISCELLANEOUS
12.1 This Agreement will inure to the benefit of, and be binding upon,
the parties hereto, together with their respective legal representatives,
successors, and assigns.
12.2 This Agreement will be governed by, and construed in accordance
with, the laws of the State of Georgia, excluding its principles of conflicts
of law.
12.3 This Agreement (along with the agreements expressly contemplated
hereby) merges and supersedes all prior and contemporaneous agreements,
assurances, representations, and communications between the parties.
12.4 All notices and other communications to be given by either party to
this Agreement to the other party hereto will be in writing, and will be
given by personal delivery or by depositing such notice in the United States
mail, postage prepaid, certified mail, return receipt requested, addressed as
follows:
If to Sellers: Alan Greene, M.D.
Cheryl Nash
7 West 41st Avenue, #115
San Mateo, CA 94403
Telephone No.: 650/358-8883
Facsimile No.: 650/358-9410
If to Purchaser: A.D.A.M. Software, Inc.
1600 RiverEdge Parkway
Suite 800
Atlanta, Georgia 30328
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Attn: Mr. Robert S. Cramer
Telephone No.: 404/541-5003
Facsimile No.: 404/989-4970
Any party to whom notices are being sent pursuant to this Agreement may, from
time to time, change its address for future communications hereunder by
giving notice in the manner described herein to the other party hereto.
Notices will be deemed given on the date delivered (provided that, in the
case of notice sent by facsimile, sender received a facsimile report
indicating that the facsimile was sent in its entirety to the facsimile
number of the addressee).
12.5 The parties will pay the fees and expenses of their respective
consultants, counsel, accountants and other experts, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement.
12.6 The terms of this Agreement may not be amended, modified or
eliminated, and the observance or performance of any term, covenant,
condition or provision herein may not be waived except by written consent of
the party charged with such amendment, modification or waiver. Failure of any
party to insist upon the strict performance of any provision of this
Agreement or to exercise any right or remedy under this Agreement shall not
be deemed a waiver of any right or remedy with respect to any existing or
subsequent breach or default; the election by any party of any particular
right or remedy shall not be deemed to exclude any other; and all rights and
remedies of all parties shall be cumulative.
12.7 If any provision of this Agreement is contrary to, prohibited by or
deemed invalid under applicable laws or regulations, such provisions will be
inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder of this Agreement will not be invalidated thereby
and will be given effect so far as possible. If any provision of this
Agreement is contrary to, prohibited by or deemed invalid under the laws and
regulations of one jurisdiction, said provision is not thereby rendered
invalid in any other jurisdiction.
12.8 This Agreement may be executed in two or more counterparts, or any
number of duplicate originals, each of which will be deemed an original, but
all of which together will constitute one and the same instruments.
12.9 The following rules of interpretation must be applied in
interpreting this Agreement: (1) the section headings used in this Agreement
are for reference and convenience only, and will not enter into the
interpretation of this Agreement, (2) all references to Sections and Exhibits
are to Sections in this Agreement and Exhibits to this Agreement, as the case
may be, (3) the provisions of the Exhibits are incorporated in this
Agreement, and (4) as used in this Agreement, the term "including" will
always be deemed to mean "including without limitation".
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date shown above.
A.D.A.M. SOFTWARE. INC.
By: /s/ Robert S. Cramer
------------------------------------
Robert S. Cramer
Chairman and CEO
Date: July 30, 1999
ALAN GREENE, M.D.
/s/ Alan Greene, M.D.
------------------------------------
Date: July 30, 1999
CHERYL NASH
/s/ Cheryl Nash
------------------------------------
Date: July 30, 1999
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EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated May 14, 1999 relating to the
financial statements and financial statement schedules, which appears in
adam.com, Inc.'s (formerly A.D.A.M. Software, Inc.) Annual Report on Form 10-K
for the year ended March 31, 1999. We also consent to the reference to us
under the heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
Atlanta, Georgia
December 9, 1999
<PAGE>
EXHIBIT 23.3
December 9, 1999
adam.com, Inc.
1600 Riveredge Parkway
Suite 800
Atlanta, Georgia 30328
Re: adam.com, Inc.
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have acted as counsel for adam.com, Inc., a Georgia corporation (the
"Company"), in connection with the preparation of a Registration Statement on
Form S-3 (the "Registration Statement") to be filed with the Securities and
Exchange Commission relating to the resale of 303,063 shares of the Company's
Common Stock, par value $.01 (the "Shares").
As such counsel, we have examined and relied upon such records,
documents, certificates and other instruments as in our judgment are
necessary or appropriate to form the basis for the opinions hereinafter set
forth. In all such examinations, we have assumed the genuineness of
signatures on original documents and the conformity to such original
documents of all copies submitted to us as certified, conformed or
photographic copies, and as to certificates of public officials, we have
assumed the same to have been properly given and to be accurate.
The opinions expressed herein are limited in all respects to the
corporate law of the State of Georgia, and no opinion is expressed with
respect to the laws of any other jurisdiction or any effect which such laws
may have on the opinions expressed herein. This opinion is limited to the
matters stated herein, and no opinion is implied or may be inferred beyond
the matters expressly stated herein.
Based upon the foregoing, we are of the opinion that the Shares will be
validly issued, fully paid and nonassessable.
This opinion is given as of the date hereof, and we assume no obligation
to advise you after the date hereof of facts or circumstances that come to
our attention or changes in law that occur which could affect the opinions
contained herein. This letter is being rendered solely for the benefit of
adam.com, Inc. in connection with the matters addressed herein. This opinion
may not be furnished to or relied upon by any person or entity for any
purpose without our prior written consent.
<PAGE>
We consent to the filing of this opinion as an Exhibit to the
Registration Statement.
Very truly yours,
King & Spalding
II-2
