-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PO1tOY85vclSCXISBRG+j4UMRsNLygZdgRJv5bPFy22SwSP1qhojX7FxvSBvHtEQ bnpzXgyJj3Vn97pTQUGNhw== 0000950144-00-006827.txt : 20040405 0000950144-00-006827.hdr.sgml : 20040405 20000515163000 ACCESSION NUMBER: 0000950144-00-006827 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 DATE AS OF CHANGE: 20020325 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTHEON CORP CENTRAL INDEX KEY: 0001009575 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 943236644 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24975 FILM NUMBER: 00635414 BUSINESS ADDRESS: STREET 1: RIVER DRIVE CENTER 2 STREET 2: 669 RIVER DR CITY: ELMWOOD PARK STATE: NJ ZIP: 07407 BUSINESS PHONE: 4088765000 MAIL ADDRESS: STREET 1: RIVER DRIVE CENTER 2 STREET 2: 669 RIVER DR CITY: ELMWOOD PARK STATE: NJ ZIP: 07407 FORMER COMPANY: FORMER CONFORMED NAME: HEALTHEON CORP DATE OF NAME CHANGE: 19980729 FORMER COMPANY: FORMER CONFORMED NAME: HEALTHSCAPE CORP DATE OF NAME CHANGE: 19970404 10-Q 1 HEALTHEON/WEBMD CORPORATION 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to __________ Commission file number 333-70553 -------------------------- HEALTHEON/WEBMD CORPORATION (Exact name of Registrant as specified in its charter) DELAWARE 94-3236644 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 400 THE LENOX BUILDING 3399 PEACHTREE ROAD, NE ATLANTA, GEORGIA 30326 (Address of principal executive offices) (404) 495-7600 (Registrant's telephone number, including area code) -------------------------- Check whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] As of April 28, 2000, there were 182,104,643 shares of the Registrant's Common Stock outstanding. ================================================================================ 2 HEALTHEON/WEBMD CORPORATION QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2000 INDEX
PAGE PART I FINANCIAL INFORMATION NUMBER ITEM 1. Financial Statements: Condensed Consolidated Balance Sheets as of March 31, 2000 (Unaudited) and December 31, 1999............................................................... 3 Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2000 and 1999................................................... 4 Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2000 and 1999................................................... 5 Notes to Condensed Consolidated Financial Statements............................... 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................... 10 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk......................... 26 PART II OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K................................................... 27 Signatures......................................................................... 28
2 3 PART I: FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HEALTHEON/WEBMD CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
MARCH 31, DECEMBER 31, 2000 1999 ----------- ------------ (unaudited) ASSETS Current assets: Cash and cash equivalents .................. $ 1,160,682 $ 291,286 Accounts receivable, net ................... 71,925 51,511 Other current assets ....................... 15,564 20,808 ----------- ----------- Total current assets ................ 1,248,171 363,605 Property and equipment, net ....................... 65,103 48,384 Prepaid content and services ...................... 616,875 273,038 Intangible assets, net ............................ 3,763,748 3,547,559 Other assets ...................................... 54,370 9,876 ----------- ----------- $ 5,748,267 $ 4,242,462 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ........................... $ 45,186 $ 77,288 Accrued liabilities ........................ 81,770 62,841 Deferred revenue ........................... 10,532 4,891 Current portion of capital lease obligations 2,204 2,281 ----------- ----------- Total current liabilities ........... 139,692 147,301 Long-term liabilities ............................. 121,409 121,489 Stockholders' equity: Convertible preferred stock ................ 629,000 -- Common stock ............................... 18 16 Additional paid-in capital ................. 5,684,964 4,370,165 Deferred stock compensation ................ (3,931) (5,089) Accumulated deficit ........................ (822,885) (391,420) ----------- ----------- Total stockholders' equity .......... 5,487,166 3,973,672 ----------- ----------- $ 5,748,267 $ 4,242,462 =========== ===========
See notes to condensed consolidated financial statements. 3 4 HEALTHEON/WEBMD CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data, unaudited)
THREE MONTHS ENDED MARCH 31, ---------------------------- 2000 1999 --------- -------- Revenue (1) ......................................... $ 65,881 $ 17,555 Operating costs and expenses: Cost of operations ............................. 59,365 15,518 Development and engineering .................... 11,574 7,041 Sales and marketing ............................ 86,715 4,652 General and administrative ..................... 13,811 4,249 Depreciation and amortization .................. 338,710 5,225 --------- -------- Total operating costs and expenses ......... 510,175 36,685 --------- -------- Loss from operations ................................ (444,294) (19,130) Interest income, net ................................ 12,829 561 --------- -------- Net loss ............................................ $(431,465) $(18,569) ========= ======== Basic and diluted net loss per common share ......... $ (2.47) $ (0.30) ========= ======== Weighted average shares outstanding used in computing basic and diluted net loss per common share ........ 175,041 62,665 ========= ========
(1) Includes revenue to related parties of $12,777 and $9,521 for the three months ended March 31, 2000 and 1999, respectively. See note 2. See notes to condensed consolidated financial statements. 4 5 HEALTHEON/WEBMD CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited)
THREE MONTHS ENDED MARCH 31, ------------------------------ 2000 1999 ---------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ..................................................................... $ (431,465) $(18,569) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization of intangible assets ...................... 338,710 5,946 Amortization of deferred compensation related to options granted ........ 1,158 2,084 Amortization of non-cash prepaid content and services ................... 18,554 -- Changes in operating assets and liabilities: Accounts receivable ................................................. (12,294) (2,470) Other assets ........................................................ 16,061 (3,069) Accounts payable .................................................... (28,163) (1,161) Accrued liabilities ................................................. (22,575) 4,175 Deferred revenue .................................................... (294) 1,723 ---------- -------- Net cash used in operating activities ........................ (120,308) (11,341) ---------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of short-term investments .......................................... -- (15,148) Maturities of short-term investments ......................................... -- 7,790 Decrease in restricted cash .................................................. -- 867 Purchases of long-term investments ........................................... (42,500) -- Purchases of property and equipment .......................................... (5,666) (4,048) Cash acquired in business combinations, net of cash paid ..................... 101,662 -- ---------- -------- Net cash provided by (used in) investing activities .......... 53,496 (10,539) ---------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments of notes payable .................................................... -- (159) Proceeds from issuance of common stock, net of repurchases ................... 936,951 41,755 Principal payments of capital lease obligations .............................. (743) (716) ---------- -------- Net cash provided by financing activities .................... 936,208 40,880 ---------- -------- Net increase in cash and cash equivalents ........................................... 869,396 19,000 Cash and cash equivalents at beginning of period .................................... 291,286 19,389 ---------- -------- Cash and cash equivalents at end of period .......................................... $1,160,682 $ 38,389 ========== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid ................................................................ $ 148 $ 139 ========== ======== SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Equipment acquired under capital leases ...................................... $ 215 $ 983 ========== ======== Issuance of common stock for asset purchases ................................. $ 372,737 $ 11,000 ========== ======== Issuance of preferred stock for asset purchases .............................. $ 629,000 $ -- ========== ======== Deferred compensation related to options granted ............................. $ -- $ 6,261 ========== ======== Conversion of convertible preferred stock to common stock .................... $ -- $ 46,101 ========== ========
See notes to condensed consolidated financial statements. 5 6 HEALTHEON/WEBMD CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The unaudited condensed consolidated financial statements have been prepared by Healtheon/WebMD's management and reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. The results of operations for the three months ended March 31, 2000 are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2000. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted under the Securities and Exchange Commission's rules and regulations. A condensed consolidated statement of comprehensive loss has not been presented because the components of comprehensive loss are not material. Healtheon/WebMD operates within a single operating segment and to date has derived nearly all of its revenue from within the United States. These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with Healtheon/WebMD's audited consolidated financial statements and notes for the year ended December 31, 1999 which were included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission. Revenue Recognition Revenue recognized from arrangements deemed to be nonmonetary exchanges of Healtheon/WebMD's products and services for customer products and services totaled approximately $3,080 during the three months ended March 31, 2000, with no revenue of this type recognized during the three months ended March 31, 1999. Revenues from these exchanges are recorded at the fair value of the products and services provided or received, whichever is more clearly evident. Concentration of Revenue and Credit Risk One customer represented 11% of consolidated revenue for the three months ended March 31, 2000. Two customers, one of which is a related party, comprised 32% of the total accounts receivable at March 31, 2000. We believe that the concentration of credit risk in our trade receivables, with respect to our limited customer base, is substantially mitigated by our credit evaluation process. We do not require collateral. To date, our bad debt write-offs have not been significant. Net Loss Per Common Share The following table presents the calculation of basic and diluted net loss per common share: 6 7
THREE MONTHS ENDED MARCH 31, ------------------------------------ 2000 1999 ------------- ------------ Net loss ................................................................................. $ (431,465) $ (18,569) ============= ============ Basic and diluted: Weighted-average shares of common stock outstanding ................................. 175,572 63,789 Less: Weighted-average common shares subject to repurchase .......................... (531) (1,124) ------------- ------------ Weighted-average shares used in computing basic and diluted net loss per common share ........................................................................ 175,041 62,665 ============= ============ Basic and diluted net loss per common share .............................................. $ (2.47) $ (0.30) ============= ============
We have excluded all convertible redeemable preferred stock, convertible preferred stock, warrants, outstanding stock options and shares subject to repurchase by Healtheon/WebMD from the calculation of diluted net loss per common share because all such securities are anti-dilutive for the periods presented. The total number of shares on an "as converted" basis excluded from the calculation of diluted loss per shares was approximately 81.5 million shares at March 31, 2000 and 18.2 million shares at March 31, 1999. Reclassifications Certain reclassifications have been made to the financial statements to conform with the current year presentation. These reclassifications had no effect on previously reported financial position or results of operations. 2. RELATED PARTY TRANSACTIONS Revenue from related parties for the three months ended March 31, 2000 includes advertising revenue, content license and carriage fees, subscription and e-commerce revenue pursuant to revenue-sharing and fixed-fee agreements with related parties as discussed below. Two of the following arrangements were originally entered into by and between WebMD and Microsoft Corporation in March 1999 and WebMD and At Home Corporation, or Excite@Home, in May 1999. As a result of WebMD's merger in November 1999 with Healtheon, we assumed these agreements and Microsoft Corporation and Excite@Home became related parties to Healtheon/WebMD. In January 2000, we completed the transactions contemplated by our strategic alliance with News Corporation at which time News Corporation became a related party. 7 8 Microsoft For the three months ended March 31, 2000, we recognized $7,250 in carriage fees as sales and marketing expense under the terms of our five-year strategic alliance with Microsoft. For the three month period ended March 31, 2000, we recognized $964 of advertising revenue for advertising placed on Microsoft's health channels and no revenue related to advertising placed by Microsoft on our web site. For the three month period ended March 31, 2000, we recorded revenue of $3,753 related to subscriptions to WebMD's physician web site which were sponsored by Microsoft. This amount has been recorded net of commissions. For the three month period ended March 31, 2000, we recognized $9,000 as sales and marketing expense for amortization of the $180,000 value assigned to the Microsoft strategic agreement. At March 31, 2000 and December 31, 1999, accounts receivable from Microsoft was $15,741 and $9,030, respectively. News Corporation Pursuant to our strategic alliance entered into with News Corporation in January 2000, Healtheon/WebMD will provide daily, health-related content to News Corporation for an aggregate of $60,000 in licensing fees over a five-year term. Revenue recognized from this agreement and from other services provided to News Corporation totaled $4,500 for the three months ended March 31, 2000. There was no accounts receivable from News Corporation at either March 31, 2000 or December 31, 1999. Excite@Home Under a three-year services agreement with Excite@Home, Healtheon/WebMD will create a co-branded health channel and online health-related communities for Excite@Home. Excite@Home has guaranteed a minimum level of impressions throughout the Excite@Home network, and we have agreed to pay carriage fees over the term of the agreement. For the three month period ended March 31, 2000, we recorded $2,500 as sales and marketing expense related to carriage fees based on impressions delivered. Excite@Home and Healtheon/WebMD will share the advertising revenue generated by the co-branded web site. At March 31, 2000 and December 31, 1999, accounts receivable from Excite@Home was $1,837 and $1,158, respectively. Revenue from related parties includes revenue attributable to UnitedHealth Group of $1,300 and $3,400 for the three months ended March 31, 2000 and 1999, respectively. In January 2000, the Chairman and Chief Executive Officer of UnitedHealth Group resigned from our Board of Directors, and at this date, UnitedHealth Group ceased to be a related party. Revenue from related parties for the three months ended March 31, 1999 includes revenue attributable to SmithKline Labs of $6,100. In August 1999, SmithKline Labs was sold to a company which is not a significant stockholder of Healtheon/WebMD, and at this date, SmithKline Labs ceased to be a related party. 3. STOCKHOLDERS' EQUITY From January 1, 1999 through February 10, 1999, the date of our initial public offering, Healtheon/WebMD granted to employees options to purchase common stock equal to a total of 4,107,625 shares with exercise prices ranging from $3.55 to $5.85 per share. Deferred stock compensation of $6,261 was recorded for the three month period March 31, 1999 and is being amortized over the vesting period of these options. On February 10, 1999, Healtheon completed its initial public offering. We sold 5,750,000 shares of common stock to the public and realized net proceeds of approximately $41,398. On January 27, 2000, Janus Capital Corporation, through its managed mutual funds, invested $930,000 in exchange for 15,000,000 shares of Healtheon/WebMD common stock at $62.00 per share in a private transaction. On January 26, 2000, as part of our strategic alliance with News Corporation, we issued convertible preferred stock that is convertible into 21,282,645 shares of common stock and sold 2,000,000 shares of common stock to affiliates of News Corporation. See Note 4. 4. BUSINESS COMBINATIONS The 1999 Mergers Effective November 12, 1999, Healtheon merged with WebMD, a provider of web-based solutions for the administrative, communications and information needs of healthcare professionals and the healthcare informational needs of consumers. Healtheon exchanged 1.796 shares of its common stock for each share of WebMD stock. The total purchase consideration was approximately $3,659,921. The acquisition was accounted for using the purchase method and, accordingly, the purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed on the basis of their respective fair values on the acquisition date. The total goodwill recorded in connection with the purchase was $2,944,804 and is being amortized over three years. The values, totaling approximately $196,307, assigned to WebMD's acquired technology, customer lists, trademarks, and other intangibles, were determined through independent appraisal. Effective November 12, 1999, Healtheon acquired MedE America, a provider of healthcare transaction services for hospitals, pharmacies, physicians, dentists, payers and pharmacy benefit managers. Healtheon exchanged 0.7494 shares of its common stock for each share of MedE America stock. The total purchase consideration was approximately $417,292. The acquisition was accounted for using the purchase method and, accordingly, the purchase price was allocated to the tangible and intangible assets acquired and 8 9 the liabilities assumed on the basis of their respective fair values on the acquisition date. The total goodwill recorded in connection with the purchase was $324,983 and is being amortized over four years. The values, totaling approximately $105,545, assigned to MedE America's customer lists, trademarks and acquired technology, were determined through independent appraisal. Effective November 12, 1999, Healtheon acquired Medcast, an Internet-based medical news and information service. Healtheon exchanged 2,692,501 shares or options to purchase shares of its common stock and approximately $2,336 in cash for all Medcast outstanding stock. The total purchase consideration was approximately $112,953. The acquisition was accounted for using the purchase method and, accordingly, the purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed on the basis of their respective fair values on the acquisition date. The total goodwill recorded in connection with the purchase was approximately $109,755 and is being amortized over three years. The values, totaling $17,700, assigned to Medcast's customer lists, trademarks and acquired technology, were determined through independent appraisal. The fair value per share of Healtheon's common stock was based on the closing price of Healtheon's common stock on the five days prior and subsequent to the days the mergers were announced, or, if applicable, the days the merger agreements were amended, which were September 7, 1999 for WebMD, October 6, 1999 for Medcast and November 9, 1999 for MedE America. 2000 Acquisitions and Strategic Partnerships On January 26, 2000, Healtheon/WebMD completed the transactions contemplated by its strategic alliance agreement with The News Corporation Limited, Fox Entertainment Group and certain of their affiliates (collectively, "News Corporation"). Under this strategic partnership, News Corporation became a minority stockholder in Healtheon/WebMD. The financial terms of the strategic partnership include $400.0 million in media branding services to be provided by News Corporation and its affiliates to Healtheon/WebMD domestically over 10 years; a $100.0 million cash investment commitment by News Corporation in an international joint venture; a $60.0 million five-year licensing agreement for syndication of WebMD daily broadcast content; the transfer to Healtheon/WebMD of a 50% interest in The Health Network, a health-focused cable network, and 50% ownership of thehealthnetwork.com. Healtheon/WebMD issued an aggregate of 155,951 shares of Series A Preferred Stock, which shares vote on an as-if-converted basis with Healtheon/WebMD's common stock, in consideration for its 50% interest in thehealthnetwork.com. Assuming conversion of all of the shares of Series A Preferred Stock, the holders of these shares will receive 21,282,645 shares of the Healtheon/WebMD's common stock. These shares are subject to restrictions on their sale for three years. In addition, affiliates of Fox Entertainment purchased 2,000,000 shares of the Healtheon/WebMD's common stock at $50.00 per share for an aggregate purchase price of $100.0 million in cash. On January 31, 2000, Healtheon/WebMD completed its acquisition of Kinetra LLC, a joint venture between Electronic Data Systems Corporation and Eli Lilly and Company, which was accounted for under the purchase method of accounting. Kinetra is a provider of health information networks and healthcare e-commerce services that enhance decision-critical information flow within the healthcare field. The total purchase consideration was approximately $291,538, comprising the issuance of 7,437,248 shares of Healtheon/WebMD's common stock with an aggregate fair value of $286,288, $5,250 of acquisition costs and a nominal amount of cash in exchange for all of the membership interests of Kinetra. Proposed Mergers On January 22, 2000, Healtheon/WebMD entered into a definitive agreement with Quintiles Transnational Corp. and its subsidiary, QFinance, Inc. (collectively, "Quintiles"), to acquire Quintiles' electronic data interchange subsidiary ("EDI"), Envoy Corporation, a provider of healthcare EDI transactions in the United States. Under the terms of the agreement, Quintiles will receive 35,000,000 shares of Healtheon/WebMD stock and $400,000 in cash, for a total consideration of approximately $2,500,000. Quintiles will issue Healtheon/WebMD a warrant to purchase up to 10,000,000 shares of Quintiles common stock at $40.00 per share, exercisable for four years. Stock received by Quintiles in the transaction will be subject to restrictions on sale for one to two years. Completion of the agreement, which will be accounted for as a purchase transaction, is expected in the second quarter of 2000, subject to regulatory approval and certain other customary closing conditions. We have received and responded to a request from the Department of Justice for additional information in connection with our pre-merger notification filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with respect to our announced acquisition of Envoy. This acquisition may not be completed until 20 days after the DOJ determines that we have substantially complied with the request for additional information, unless this waiting period is terminated earlier by the DOJ. 9 10 On February 13, 2000, Healtheon/WebMD entered into definitive agreements to acquire Medical Manager Corporation, a provider of physician practice management systems in the United States, and its publicly traded subsidiary, CareInsite, Inc., a developer of an Internet-based healthcare e-commerce network that links physicians, suppliers and patients. Under the terms of the agreements, Healtheon/WebMD will exchange 1.65 shares of its common stock for each share of Medical Manager and 1.3 shares for each share of CareInsite not owned directly or indirectly by Medical Manager. Completion of the acquisitions, which will be accounted for under the purchase method of accounting, is expected in mid-year 2000, subject to regulatory and stockholder approvals and certain other customary closing conditions. The completion of the Medical Manager and CareInsite acquisitions are conditioned on each other. On February 15, 2000, Healtheon/WebMD entered into a definitive agreement to acquire OnHealth Network Company, a leading source of consumer-oriented health and wellness information, products and services on the web. Under the terms of the agreement, stockholders of OnHealth stock are to receive 0.189435 shares of Healtheon/WebMD common stock for each share of OnHealth stock. Closing of the transaction, which will be accounted for under the purchase method of accounting, is expected in mid-year 2000, subject to regulatory and OnHealth stockholder approval and other customary closing conditions. In connection with the agreement, Healtheon/WebMD advanced $15,000 to OnHealth for working capital needs and has agreed to provide an additional $15,000 as needed prior to the date of closing. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD LOOKING STATEMENTS Except for historical information, this quarterly report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our pending acquisitions, anticipated costs and expenses, revenue mix, product and service development and relationships with strategic partners. These forward-looking statements include declarations regarding our belief or current expectations of management, such as statements indicating that "we expect," "we anticipate," "we intend," "we believe" and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section "Management's discussion and analysis of financial condition and, results of operations -- Factors that may affect future results of operations." You should carefully review the risks described in our reports and registration statements that we file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this quarterly report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document. The following discussion also should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 1999 included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission. OVERVIEW We provide web-based healthcare information and services to facilitate connectivity and transactions among physicians, patients, payers and other healthcare industry participants. Our Internet-based information and transaction platform allows for the secure exchange of information among the disparate information systems used by healthcare industry participants and supports our administrative transaction services, including patient enrollment, eligibility determination, referrals and authorizations, laboratory and diagnostic test orders and results, clinical data retrieval and claims processing. 10 11 Our web site, WebMD.com, offers a single destination for the exchange of healthcare information and supports a broad range of healthcare transactions delivered over our secure, Internet-based platform. We design our service offerings to help integrate and manage administrative, clinical, research and information needs of healthcare industry participants. We believe that our web-based solution has the potential to create significant improvements in the way that information is used by the healthcare system, enabling improved workflows, better decision making and, ultimately, higher quality patient care at a lower cost. Through WebMD.com, physician subscribers can access WebMD Practice, our provider destination, and consumers can access WebMD Health, our free consumer destination. WebMD Practice provides physicians with administrative transaction services, medical news and research, continuing medical education credits, customized web sites and e-mail accounts, among other services. WebMD Health provides consumers with health and wellness news and information, support communities, interactive tools and opportunities to purchase health-related products and services. Our communities allow consumers to participate in real-time discussion and support networks over the Internet. We currently provide services to over 250,000 physicians and approximately 11,000 dentists, 4,500 hospitals, 46,000 pharmacies, 650 payers and 8 laboratory companies. In addition, nearly 100,000 physicians have subscriptions to WebMD Practice, and over 1,100,000 consumers are enrolled in our support communities on WebMD Health. In March 2000, WebMD.com attracted approximately 2.9 million unique users, according to Media Metrix, and page views exceeded approximately 44.8 million, according to commercial software that we utilize. We were incorporated in December 1995 and commenced operations in January 1996. In November 1999, we merged with WebMD, Inc., MedE America Corporation and Greenberg News Networks, Inc., which is referred to as Medcast, and changed our name to Healtheon/WebMD Corporation. We launched our integrated web site in November 1999 following the closing of these mergers. In January 2000, we completed the acquisition of Kinetra LLC and the transactions contemplated by our strategic alliance with News Corporation. Also in the first quarter of 2000, we entered into definitive agreements to acquire Envoy Corporation, Medical Manager Corporation, CareInsite, Inc. and OnHealth Network Company. These acquisitions are subject to regulatory approvals and customary closing conditions. These acquisitions will be acccounted for as purchase transactions and are expected to be completed in mid-year 2000. For a more complete description of these transactions, see Note 4 to the Condensed Consolidated Financial Statements in this quarterly report and "Business - Recent events" in our 1999 annual report. RESULTS OF OPERATIONS Revenue We recognize revenue as our services are performed or our products are delivered. We earn revenue on our network-based fees from fixed fee subscription arrangements, which are recognized ratably over the term of the applicable agreement, and from our administrative services, which are priced on a per-transaction or per-user basis and recognized as the services are performed. Revenue from our development, consulting and information technology management services is recognized as these services are performed. We recognize revenue related to software license fees when a customer enters into a non-cancelable license agreement, the software product covered by the license agreement has been delivered, there are no uncertainties surrounding product acceptance, there are no significant future performance obligations, the license fees are fixed or determinable and collection of the license fees is considered probable. Revenue from advertising is recognized as advertisements are run on our web site or on co-branded web sites. Our subscription revenue, including subscription revenue from sponsorship arrangements, is recognized ratably over the subscription term as subscriptions are placed with physicians. We do not allocate subscription revenue among our various service offerings included as part of the base subscription fee. Revenue from fixed fee content license or carriage fees is recognized ratably over the term of the applicable agreement. We recognize e-commerce revenue when a subscriber or consumer utilizes our Internet-based services or purchases goods or services through our web site or a co-branded web site with one of our strategic partners. We recognize revenue from our optional services when we provide one or more of these services for fees in addition to the base subscription fees for WebMD Practice. 11 12 For the three months ended March 31, 2000, total revenue increased to $65.9 million from $17.6 million for the three months ended March 31, 1999. This increase is due primarily to the growth of our transaction- and network-based services and to the additional revenue sources that were acquired upon the closing of our mergers with WebMD and MedE America. Transaction revenue, advertising revenue and subscription revenue comprise 43.8%, 29.4% and 10.3% of total revenue for the three months ended March 31, 2000 and 54.5%, 0% and 0% of total revenue for the three months ended March 31, 1999, respectively. For the three months ended March 31, 2000, revenue from related parties, which consists principally of services provided to UnitedHealth Group, Microsoft and News Corporation, increased to $12.8 million from $9.5 million for the three months ended March 31, 1999. The increase was primarily due to increases in transaction-based services to UnitedHealth Group, from subscriptions and third party advertising through our Microsoft strategic alliance and from health-related content licensed to News Corporation. Revenue from SmithKline Labs ceased being related party revenue in August 1999 when SmithKline Labs was sold to Quest Diagnostics, and revenue from UnitedHealth Group ceased being related party revenue in January 2000 when the Chairman and Chief Executive Officer of UnitedHealth Group resigned from our board of directors. Cost of Operations Cost of operations, which consists principally of costs to operate and maintain our networks and costs related to providing services, increased from $15.5 million for the three months ended March 31, 1999 to $59.4 million for the three months ended March 31, 2000. The increase resulted primarily from increased personnel and network operations costs, costs to acquire exclusive arrangements to provide consumer healthcare-related content to other web sites and other costs required to support the increased service revenues. Of the increase in cost of operations, $33.1 million relates to expenses incurred by the companies acquired in the 1999 Mergers and the 2000 Acquisitions and Strategic Partnerships. Development and Engineering Development and engineering expense consists primarily of expenses associated with development of services and applications and excludes development expenses that are included in cost of operations. These expenses, which are comprised of salaries paid to engineering personnel, fees paid to outside contractors and consultants, a portion of facilities expenses and maintenance of capital equipment used in the development process, increased from $7.0 million for the three months ended March 31, 1999 to $11.6 for the three months ended March 31, 2000. The increase was the result of a significant increase in the number of engineers engaged in the development of our applications and services. Of the increase, $2.7 million relates to expenses incurred by the companies acquired in the 1999 Mergers and the 2000 Acquisitions and Strategic Partnerships. Sales and Marketing Sales and marketing expense, which consists principally of salaries and related expenses for sales, account management and marketing personnel, commissions, and expenses for marketing programs and trade shows, increased from $4.6 million for the three months ended March 31, 1999 to $86.7 million for the three months ended March 31, 2000. The increase primarily related to the salaries and related costs of added sales and marketing personnel and to advertising and promotion costs incurred to increase awareness of our WebMD brand. Of the increase, $79.0 million relates to expenses incurred by the companies acquired in the 1999 Mergers and the 2000 Acquisitions and Strategic Partnerships. General and Administrative General and administrative expense which consists primarily of salaries and related expenses for administrative, finance, legal, human resources and executive personnel, fees for professional services, costs of general insurance and other internal control systems costs, increased to $13.8 million for the three months ended March 31, 2000 from $4.2 million for the three months ended March 31, 1999. The increase primarily related to increased personnel costs and facilities expenses incurred as we added administrative personnel and executive management. General and administrative expenses include the amortization of deferred stock compensation which increased to $1.2 million for the three months ended March 31, 2000 from $2.1 million for the three months ended March 31, 1999. The remainder of the increase resulted from salaries and related costs of office space and facilities as we added administrative personnel and executive management. Of the increase, $12.2 million is a result of expenses incurred by the companies acquired in the 1999 Mergers and the 2000 Acquisitions and Strategic Partnerships. 12 13 Depreciation and Amortization Depreciation and amortization was $338.7 million for the three months ended March 31, 2000 and $5.2 million for the three months ended March 31, 1999. The increase was due primarily to the amortization of intangible assets acquired in the 1999 Mergers and the 2000 Acquisitions and Strategic Partnerships, the amounts of which are being amortized over expected lives of one to five years. The consummation of the pending proposed purchase transactions announced in the first quarter of 2000 will add significant additional charges in future periods. Interest Income and Expense Interest income has been derived primarily from cash investments. Interest expense results primarily from our borrowings and from capitalized lease obligations for equipment purchases. Net interest income was $12.8 million for the three months ended March 31, 2000 and $0.6 million for the three months ended March 31, 1999. The increase was primarily due to higher average cash balances resulting from the $41.4 million in net proceeds from our initial public offering in February 1999, the $930.0 million in net proceeds received from the sale of our common stock to Janus Capital in February 2000 and from cash balances that were acquired in the 1999 Mergers and the 2000 Acquisitions and Strategic Partnerships. 13 14 LIQUIDITY AND CAPITAL RESOURCES In February 1999, we completed the initial public offering of our common stock and realized net proceeds from the offering of approximately $41.4 million. Prior to this offering, we had funded our operations since inception primarily through the private placement of equity securities. We had also financed our operations through equipment lease financing and bank borrowings. In January 2000, we raised an additional $1.03 billion from our sale of 15.0 million shares of our common stock to Janus Capital Corporation, through its managed mutual funds, for $930.0 million, as well as our sale of 2.0 million shares of our common stock to affiliates of News Corporation for $100.0 million in connection with our News Corporation strategic alliance. As of March 31, 2000, we had outstanding equipment lease liabilities of $4.4 million. As of March 31, 2000, we had approximately $1.16 billion in cash and cash equivalents and working capital of $1.11 billion. Cash used in operating activities was $120.3 million for the three months ended March 31, 2000 compared to $11.3 million for the first quarter of 1999. The cash used during these periods was primarily attributable to net operating losses, offset in part by depreciation and amortization. Our losses were principally related to increased sales and marketing expenses to promote the WebMD brand and development and engineering expenses to improve our product offerings and develop new applications and content. Cash provided by investing activities was $53.5 million for the three months ended March 31, 2000 compared to cash used in investing activities of $10.5 million for the first quarter of 1999. Purchases of long-term investments, consisting primarily of investments in technology or service partners, were $42.5 million for the first quarter of 2000 compared with no long-term investment purchases during the same period of 1999. Investments in property and equipment, excluding equipment acquired under capital leases, were $5.7 million for the first quarter of 2000 compared to $4.0 million for the same period in 1999. In the first quarter of 1999, we purchased $15.1 million of short-term investments and realized $7.8 million in cash from maturities of our short-term investments. We invest our excess cash in short-term, interest-bearing securities and will continue to do so in the future. We are not assured of having excess cash balances in the future, so purchases of short-term investments cannot be assured. Cash provided by financing activities was $936.2 million for the three months ended March 31, 2000, primarily related to the net proceeds received from our sale of common stock to Janus. We intend to use proceeds from these financing activities to pay the $400.0 million cash portion of our acquisition of Envoy, to fund additional advances, if any, to OnHealth of up to $15.0 million pursuant to their line of credit, to provide working capital and for general corporate purposes. For the first quarter of 1999, cash provided by financing activities of $40.9 million related primarily to the net proceeds of our initial public offering of $41.4 million. As of March 31, 2000, we did not have any material commitments for capital expenditures. Our principal commitments at March 31, 2000 consisted of obligations under operating and capital leases and guaranteed payments under our strategic agreements. We estimate that we will make the following aggregate guaranteed payments under our current relationships with our strategic partners in each calendar year noted:
Year Ended December 31, Amount ------------------------ ------------- 2000................................................... $78.3 million 2001................................................... 82.6 million 2002................................................... 51.4 million 2003................................................... 34.4 million 2004................................................... 8.8 million
Most of our current strategic relationships contain revenue sharing arrangements which generally provide for us to share advertising, sponsorship or transaction net revenues, ranging from 15% to as much as 100%, with strategic partners. In addition, some strategic partner agreements and promotional arrangements require payments on a per-subscriber basis. We may enter into additional promotional arrangements with current and future strategic partners that may require us to pay consideration in amounts that significantly exceed the 14 15 amounts we are required to pay under our current arrangements. These guaranteed payments and promotional and other arrangements may require us to incur significant expenses. We cannot guarantee that we will generate sufficient revenues to offset these expenses. We may need to raise additional funds to support expansion, develop new or enhanced applications and services, respond to competitive pressures, acquire complementary businesses or technologies or take advantage of unanticipated opportunities. However, with the investments by Janus and affiliates of News Corporation, we believe that we will have sufficient cash resources to meet our presently anticipated working capital and capital expenditure requirements for at least the next 12 months. In addition, we expect to incur operating losses for at least the next 12 months. We believe that our future liquidity and capital requirements will depend upon numerous factors, including the success of our existing and new application and service offerings and competing technological and market developments. We may be required to raise additional funds through public or private financing, strategic relationships or other arrangements. 15 16 FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS We have incurred and will continue to incur substantial losses We began operations in January 1996 and have incurred net losses from operations in each fiscal period since our inception. As of March 31, 2000, we had accumulated losses of approximately $822.9 million. In addition, we currently intend to invest heavily in pending acquisitions, infrastructure development, applications development and sales and marketing in order to deploy our services to a growing number of potential customers and strategic partners. The purchase price of acquisitions we have recently completed will be, and the purchase price of acquisitions which we may undertake in the future may be, amortized over the useful life of the tangible and intangible assets. As of March 31, 2000, we had approximately $3.8 billion of unamortized goodwill and other intangible assets reflected on our financial statements as a result of acquisitions. We currently anticipate that this amortization will cause us to incur significant net losses for the next several years. We expect that we will incur increasing net operating losses and negative cash flows for the foreseeable future and may never be profitable. The business of providing services over the Internet is difficult to evaluate and our business model is unproven Because we recently began operations, it is difficult to evaluate our businesses and prospects. Our revenue and income potential is unproven and our business model is evolving. We derive a substantial portion of our revenue from non-Internet network services, from development and consulting services and from managing and operating our customers' information technology infrastructures. We may never achieve favorable operating results or profitability. Our quarterly operating results may vary, which could affect the market price of our common stock Our operating results have varied on a quarterly basis during our limited operating history, and we expect to experience significant fluctuations in future quarterly operating results. These fluctuations have been and may in the future be caused by numerous factors, many of which are outside of our control, including, but not limited to: - market acceptance of and demand for our products and services - our ability to attract and retain customers and subscribers - expenses relating to acquisitions and strategic partnerships 16 17 - usage of the Internet and our ability to maintain and increase traffic on our web site - our ability to continue to develop and extend our brand - our ability to effectively integrate the operations and technologies of acquired businesses with our operations - introduction and timing of new products and services or enhancements by us or our competitors - capacity constraints and dependencies on computer infrastructure - economic conditions affecting the Internet or healthcare industries - general economic conditions Fluctuations in our quarterly results could adversely affect the market price of our common stock in a manner unrelated to our long-term operating performance. We expect to increase activities and spending in substantially all operational areas and will base our expense levels in part upon our expectations concerning future revenue, and these expense levels will be relatively fixed in the short term. If we have lower revenue, we may not be able to reduce spending in the short term in response. Any shortfall in revenue would have a direct impact on our results of operations. As a result, we believe that period-to-period comparisons of our results of operations will not necessarily be meaningful and should not be relied upon as an indicator of future performance. For these and other reasons, it is likely that in some future quarter or quarters we may not meet the earnings estimates of securities analysts or investors, which would materially and adversely affect our stock price. Our business will suffer if we fail to successfully integrate any acquired businesses and technologies in the future We have in the past acquired, and may in the future acquire, businesses, technologies, services, product lines or content databases. We are in the process of completing the integration and consolidation of the operations, products and services, technologies and personnel of our November 1999 acquisitions of WebMD, MedE America and Medcast, as well as our January 2000 acquisition of Kinetra and strategic partnership with News Corporation, and we will need to integrate and consolidate the operations, products and services, technologies and personnel of Envoy, Medical Manager, CareInsite and OnHealth upon our completion of these pending mergers. We cannot guarantee that any acquired businesses will be successfully integrated with our operations in a timely manner, or at all. The successful integration of the acquired businesses into our operations is critical to our future performance. Failure to successfully integrate acquired businesses or to achieve operating synergies would have a material adverse effect on our business, financial condition and results of operation. Integrating any newly acquired organizations and technologies in the future could be expensive, time consuming and may strain our resources. Our pending and any future acquisitions could divert management's attention from other business concerns and expose us to unforeseen liabilities or risks associated with entering new markets. In addition, we may lose key employees while integrating these new companies. We may also lose our current strategic partners and customers if any acquired companies have relationships with competitors of our strategic partners or customers. Challenges to the successful integration of acquired businesses include, but are not limited to: - centralization and consolidation of financial, operational and administrative functions - integration of platforms, networks and service centers - ability to cross-sell products and services to our existing customer base and customer bases of acquired companies - integration and retention of personnel - potential conflicts in customer, strategic, sponsor or advertising relationships 17 18 - need to coordinate geographically diverse organizations - compliance with regulatory requirements Consequently, we may not be successful in integrating acquired businesses or technologies and may not achieve anticipated revenue and cost benefits. We also cannot guarantee that these acquisitions will result in sufficient revenues or earnings to justify our investment in, or expenses related to, these acquisitions or that any synergies will develop. If we fail to execute our acquisition strategy successfully for any reason, our business will suffer significantly. Managing our growth through acquisitions may strain our administrative, technical and financial resources We have rapidly and significantly expanded our operations recently and expect to continue to do so. Our growth has been accomplished primarily through acquisitions, including our mergers with WebMD, MedE America, Medcast and Kinetra. This growth has placed a significant strain on our managerial, operational, financial and other resources and is expected to continue to strain our resources. If we are unable to respond to and manage this expected growth, then the quality of our services and our results of operations could be materially adversely affected. Our current platforms, information systems, procedures and controls may not continue to support our operations, and may hinder our ability to exploit the market for healthcare applications and services. We are in the process of completing the integration of our accounting and management information systems following the mergers of WebMD, MedE America an Medcast in November 1999 and Kinetra in January 2000. We could experience interruptions to our business while we transition to new systems. We cannot guarantee that our systems, procedures and controls will be adequate to support expansion of our operations. Our business and stock price could suffer if we fail to complete our pending acquisitions In the first quarter of 2000, we entered into merger agreements providing for our acquisition of Envoy, Medical Manager, CareInsite and OnHealth. The completion of each is subject to regulatory approval, including approval from state and federal antitrust agencies, and other customary closing conditions. The Medical Manager and CareInsite mergers are subject to the approval of our stockholders, Medical Manager's stockholders and CareInsite's stockholders and the OnHealth merger is subject to approval by OnHealth's stockholders. In addition, the closing of the Medical Manager and CareInsite mergers are conditioned on each other. We cannot guarantee that regulatory approvals will be received, or that we will not be required to make changes in our business in order to receive regulatory approvals, or that other closing conditions of any of our pending mergers will be satisfied in a timely manner, or at all. Failure to complete these mergers in a timely manner would have a material effect on our business, results of operations and stock price. Future stock issuances will dilute our stockholders and could result in adverse accounting consequences We intend to pay for some of our acquisitions and branding and advertising services by issuing additional common stock which would dilute our stockholders. We may also use cash to acquire companies or technologies and may need to incur debt to pay for these acquisitions. Acquisition financing may not be available on favorable terms, or at all. In addition, we may be required to amortize significant amounts of goodwill and other intangible assets in connection with future acquisitions, which could materially increase our operating expenses. Our ability to generate revenues will suffer if we do not quickly expand our suite of applications and service offerings We currently offer a limited number of applications on our Internet-based platform and some of our service offerings are not fully developed or launched. We must quickly introduce new applications and services, improve the functionality of our existing services and successfully launch these services in a timely manner in order to attract and retain subscribers. We expect that our advertising and sponsorship revenues will be dependent on the level of usage of our services by subscribers and consumers, and believe that levels of usage will not increase unless we improve functionality. We rely on a combination of internal development, 18 19 strategic relationships, licensing and acquisitions to develop these applications and services. Each of our applications, regardless of how it was developed, must be integrated and customized to operate with existing customer legacy computer systems and our platform. We are currently in the process of migrating many of our acquired applications and products and services to our Internet-based platform. Developing, integrating and customizing these applications and services will be time consuming, and these applications and services may never achieve market acceptance, which could also cause our business to suffer. We are dependent on strategic relationships to generate some of our revenue Our ability to generate revenue will suffer if we cannot establish and maintain strategic relationships. We must establish and maintain strategic relationships with leaders in a number of healthcare and Internet industry segments. For a more complete description of our strategic relationships, see the section entitled "Business -- Strategic relationships," in our 1999 annual report and for a description of our revenue resulting from these relationships, see "--Our revenue will be concentrated in a few customers and our ability to generate revenue would suffer if we lost any of these customers." Our strategic relationships are critical to our success because we believe that these relationships will provide additional subscribers and consumers to our web site and will generate acceptance of our platform, applications and services. We may not be able to establish commercial acceptance of our platform, applications and services unless we maintain our existing strategic relationships and establish and maintain additional strategic relationships in the future. We may compete with potential strategic partners. Some of our current and future strategic partners may compete with us and some strategic relationships or acquisitions may put us in competition with existing strategic partners or customers. For example, Medical Manager, which we have agreed to acquire, competes with some of our strategic partners in the physician practice management software business. In addition, we may not be able to maintain or establish relationships with key participants in the healthcare and Internet industries if we have already established relationships with competitors of these key participants. We have granted exclusive rights to strategic partners. We have agreed that some of our strategic partners will be our exclusive providers of some of our applications and content. For example, we have entered into strategic agreements with exclusive online pharmacy and medical supplies and equipment e-commerce partners and providers of various categories of content and services. These agreements may limit our access to other applications and content we might otherwise be able to make available to our customers. Our inability to offer such applications and content could cause our business to suffer. Our revenue will be concentrated in a few customers, and our ability to generate revenue would suffer if we lost any of these customers We received a significant amount of our 1999 revenue from three customers. Quest Diagnostics, which recently acquired SmithKline Labs, Beech Street and UnitedHealth Group, each accounted for more than 10% of our revenue for the year ended December 31, 1999, and together accounted for approximately 57.9% of our revenue for the same period. In addition, Quest Diagnostics accounted for 11% of our revenue for the three months ended March 31, 2000. We expect that these three customers, together with Microsoft, may account for a significant amount of our revenue for 2000. Microsoft will have the right to terminate its strategic alliance with us if we acquire Medical Manager and CareInsite and within 60 days thereafter we cannot resolve with Microsoft any conflicts that may be created by our ownership of those companies. For details regarding our relationship with Microsoft, see the section entitled "Business - Strategic relationships -- Microsoft" in our 1999 annual report. If we do not generate as much revenue from these customers as we expect, or if we lose any of these customers, our revenue will be significantly reduced which would harm our business and results of operations. Our ability to generate revenue will suffer if we cannot attract and retain subscribers We must attract and retain subscribers to WebMD Practice in order to generate subscription revenue. In addition, our ability to generate advertising and sponsorship revenue and transaction revenue will be dependent on the number of subscribers and level of usage by those subscribers. We cannot guarantee that we will be able to attract new or retain existing subscribers. In particular, we cannot guarantee that we will retain 19 20 subscribers whose subscriptions are initially paid for by our strategic partners once those subscribers are required to pay for their subscriptions themselves or that these subscribers will actually use our services. Our business will suffer if healthcare participants do not accept Internet solutions Our business model depends on the adoption of Internet solutions by healthcare participants. Our ability to generate revenue could suffer dramatically if Internet solutions are not accepted or not perceived to be effective. The Internet infrastructure may be unable to support the demands placed on it by continued growth and use of the Internet. The adoption of Internet solutions by healthcare participants will require the acceptance of a new way of conducting business and exchanging information. To maximize the benefits of our platform, healthcare participants must be willing to allow sensitive information to be stored in our databases and to conduct healthcare transactions over the Internet. Performance problems with our systems could damage our business Our customer satisfaction and our business could be harmed if we or our customers experience system delays, failures or loss of data. We currently process substantially all our customer transactions and data at our facilities. Although we have a contingency plan for emergencies, we have limited backup facilities to process information if these facilities are not functioning. The occurrence of a major catastrophic event or other system failure at any of our facilities could interrupt data processing or result in the loss of stored data. While we have general liability insurance that we believe is adequate, including coverage for errors and omissions, we may not be able to maintain this insurance on reasonable terms in the future. In addition, our insurance may not be sufficient to cover large claims and our insurer could deny coverage on claims. If we are liable for an uninsured or underinsured claim or if our premiums increase significantly, our financial condition could be materially harmed. Performance problems with the systems of our service and content providers could harm our business We depend on service and content providers to provide information and data feeds on a timely basis. Our web site could experience disruptions or interruptions in service due to the failure or delay in the transmission or receipt of this information. In addition, our customers depend on Internet service providers, online service providers and other web site operators for access to our web site. All of these providers have experienced significant outages in the past and could experience outages, delays and other difficulties in the future due to system failures unrelated to our systems. Any significant interruptions in our services or increases in response time could result in a loss of potential or existing customers, strategic partners, advertisers or sponsors and, if sustained or repeated, could reduce the attractiveness of our services. If our systems experience security breaches or are otherwise perceived to be insecure, our reputation will suffer A material security breach could damage our reputation or result in liability. We retain confidential customer and patient information in our processing centers. We may be required to spend significant capital and other resources to protect against security breaches or to alleviate problems caused by breaches. Any well-publicized compromise of Internet security could deter people from using the Internet or from conducting transactions that involve transmitting confidential information, including confidential healthcare information. Therefore, it is critical that these facilities and infrastructure remain secure and are perceived by the marketplace to be secure. Despite the implementation of security measures, this infrastructure may be vulnerable to physical break-ins, computer viruses, programming errors, attacks by third parties or similar disruptive problems. Our business will be harmed if we are unsuccessful in responding to rapid technology changes in our markets Healthcare information exchange and transaction processing is a relatively new and evolving market. The pace of change in our markets is rapid and there are frequent new product introductions and evolving industry standards. We may be unsuccessful in responding to technological developments and changing customer 20 21 needs. In addition, our applications and services offerings may become obsolete due to the adoption of new technologies or standards. Our platform infrastructure and scalability are not proven and we may fail to respond to new growth To date, we have processed a limited number and variety of transactions over our platforms. Similarly, a limited number of healthcare participants use these platforms. Our systems may not accommodate increased use while maintaining acceptable overall performance. We must continue to expand and adapt our network infrastructure to accommodate additional users, increased transaction volumes and changing customer requirements. This expansion and adaptation will be expensive and could divert our attention from other activities. If we are unable to generate significant advertising revenues, our future results of operations could be materially adversely affected We derive a portion of our revenues from advertising on our web site. We may not be able to continue to generate significant advertising revenues. No standards have been widely accepted to measure the effectiveness of web advertising. If no standards develop, existing advertisers may not continue their current level of web advertising, and advertisers that have traditionally relied on other advertising media may be reluctant to advertise on the web. Advertisers that already have invested substantial resources in other advertising methods may be reluctant to adopt a new strategy. Our business would be adversely affected if the market for web advertising fails to develop or develops more slowly than expected. Different pricing models are used to sell advertising on the web. It is difficult to predict which, if any, will emerge as the industry standard. This makes it difficult to project future advertising revenues. The level of subscriber and consumer usage for our services is likely to be a factor in determining advertising rates, and we cannot predict whether those subscribers whose subscriptions are paid for by our strategic partners will actually use our services. Moreover, filter software programs that limit or prevent advertising from being delivered to a web user's computer are available. Widespread adoption of this software could adversely affect the commercial viability of web advertising. If we are unable to generate significant revenue from e-commerce transactions, our future results of operations could be materially adversely affected We cannot guarantee that we will be able to generate significant transaction revenues in the future. We have developed relationships with service providers to offer healthcare products and services through direct links from our web site to their web sites. However, there is no established business model for the sale of healthcare products or services over the Internet. Accordingly, we have no significant experience in the sale of products or services online and the development of relationships with providers of these products and services, nor can we predict the rate at which our customers will elect to engage in this form of commerce or the compensation that we will receive for enabling these transactions. Lengthy sales and implementation cycles for our solutions could adversely affect our revenue growth A key element of our strategy is to market our solutions directly to large healthcare organizations. We will be unable to control many of the factors that will influence our customers' buying decisions. We expect that the sales and implementation process will be lengthy and will involve a significant technical evaluation and commitment of capital and other resources by our customers. The sale and implementation of our solutions are subject to delays due to our customers' internal budgets and procedures for approving large capital expenditures and deploying new technologies within their networks. We will need to expend substantial resources to integrate our applications with the existing legacy and client-server architectures of large healthcare organizations. We have limited experience in integrating our applications with large, complex architectures, and we may experience delays in the integration process. These delays would, in turn, delay our ability to generate revenue from these applications and could adversely affect our results of operations. 21 22 We will face significant competition The market for healthcare information services is intensely competitive, rapidly evolving and subject to rapid technological change. Many of our competitors have greater financial, technical, product development, marketing and other resources than we have. These organizations may be better known and have more customers than we have. Many of our competitors have also announced or introduced Internet strategies that will compete with our applications and services. We may be unable to compete successfully against these organizations. We have many competitors, including: - healthcare information software vendors - healthcare electronic data interchange companies - large information technology consulting service providers - online services or web sites targeted to the healthcare industry, physicians and healthcare consumers generally - publishers and distributors of traditional offline media, including those targeted to healthcare professionals, many of which have established or may establish web sites - general purpose consumer online services and portals and other high-traffic web sites which provide access to healthcare-related content and services - public sector and non-profit web sites that provide healthcare information without advertising or commercial sponsorships - vendors of healthcare information, products and services distributed through other means, including direct sales, mail and fax messaging We expect that major software information systems companies and others specializing in the healthcare industry will offer competitive applications or services. In addition, some of our existing and potential customers and strategic partners may also compete with us. For example, in April 2000, it was reported that a consortium of six health insurance companies may join together to develop an online project which links insurers, doctors and patients. If this consortium decides to proceed with its plans to allow patients to enroll in health plans and choose doctors online, while also taking care of administrative tasks such as processing payment claims, it could compete with our services. Our business could be adversely affected as a result of political, regulatory, economic or other changes in the healthcare industry The healthcare industry is highly regulated and is subject to changing political, economic and regulatory influences. These factors affect the purchasing practices and operation of healthcare organizations. Changes in current healthcare financing and reimbursement systems could cause us to make unplanned modifications of applications or services, or result in delays or cancellations of orders or in the revocation of endorsement of our applications and services by healthcare participants. Federal and state legislatures have periodically considered programs to reform or amend the U.S. healthcare system at both the federal and state level. These programs may contain proposals to increase governmental involvement in healthcare, lower reimbursement rates or otherwise change the environment in which healthcare industry participants operate. Healthcare industry participants may respond by reducing their investments or postponing investment decisions, including investments in our applications and services. We do not know what effect any proposals would have on our business. 22 23 Government regulation could adversely affect our business Our business is and will continue to be subject to government regulation. Existing and new laws and regulations could adversely affect our business. Laws and regulations may be adopted with respect to the Internet or other online services covering issues such as: - user privacy and patient confidentiality - pricing - content - copyrights and patents - distribution - characteristic and quality of products and services We cannot predict whether these laws will be adopted and how they will affect our business. Regulation regarding privacy and patient confidentiality. Internet user privacy has become an issue both in the U.S. and abroad. Whether and how existing privacy or consumer protection laws in various jurisdictions apply to the Internet is uncertain and may take years to resolve. Any legislation or regulations of this nature could affect the way we conduct our business, particularly in our collection or use of personal information, and could harm our business. Further, activities on or using the Internet have come under increased scrutiny, including increased investigation in the healthcare arena by the Federal Trade Commission and heightened media attention. Similar to many other Internet healthcare companies, we have recently received a request for information from the FTC concerning our web site privacy policies and practices. While we believe we are in compliance with all applicable laws, all third party contractual commitments and our published privacy commitments, government inquiries such as this inquiry can divert management's attention from other matters and create unfavorable publicity. Numerous state and federal laws govern the collection, dissemination, use, access to and confidentiality of patient health information. Many states have laws and regulations that protect the confidentiality of medical records or medical information. In addition, the federal Department of Health and Human Services has proposed regulations implementing the Health Insurance Portability and Accountability Act of 1996, or HIPAA, concerning standards for electronic transactions, security and electronic signatures and privacy of individually identifiable health information. The proposed regulations, among other things, would require companies to develop security standards for all health information that is used electronically. The proposed regulations would impose significant obligations on companies that send or receive electronic health information. The application of these laws to the personal information we collect could create potential liability under these laws. We have designed our services to comply with these proposed regulations. However, we cannot predict when these proposed regulations will be finalized and whether they will be changed before they are finalized. Any changes could cause us to use additional resources to revise our platform and services. Additional legislation governing the distribution of medical records exists and has been proposed at both the state and federal levels. We will be subject to extensive regulation relating to the confidentiality and release of patient records, and it may be expensive to implement security or other measures to comply with new legislation and final regulations. Further, we may be restricted or prevented from maintaining or delivering patient records electronically. Such a restriction may have an adverse effect on our business. Federal and state regulation of healthcare relationships. There are federal and state laws that govern patient referrals, physician financial relationships and inducements to beneficiaries of federal healthcare programs. The federal Anti-Kickback Law prohibits any person or entity from offering, paying, soliciting or receiving anything of value, directly or indirectly, for the referral of patients covered by Medicare, Medicaid and other federal healthcare programs or the leasing, purchasing, ordering or arranging for or recommending 23 24 the lease, purchase or order of any item, good, facility or service covered by these programs. The Anti-Kickback Law is broad and may apply to some of our activities. Penalties for violating the Anti-Kickback Law include imprisonment, fines and exclusion from participating, directly or indirectly, in Medicare, Medicaid and other federal healthcare programs. Many states also have similar anti-kickback laws that are not necessarily limited to items or services for which payment is made by a federal healthcare program. We carefully review our practices with regulatory experts to ensure that we comply with all applicable laws. However, the laws in this area are both broad and vague and it is often difficult or impossible to determine precisely how the laws will be applied, particularly to new services such as ours. Any determination by a state or federal regulatory agency that any of our practices violate any of these laws could subject us to civil or criminal penalties and require us to change or terminate certain portions of our business. We currently provide billing services and intend to provide repricing services to providers and, therefore, may be subject to state and federal laws that govern the submission of claims for medical expense reimbursement. These laws generally prohibit an individual or entity from knowingly presenting or causing to be presented a claim for payment from Medicare, Medicaid or other third party payers that is false or fraudulent, or is for an item or service that was not provided as claimed. These laws also provide civil and criminal penalties for noncompliance. We have designed our current transaction services and will design any future services to place the responsibility for compliance with these laws on our customers. However, we cannot guarantee that state and federal agencies will regard billing errors processed by us as inadvertent and not in violation of these laws. Regulation by the Food and Drug Administration. Some computer applications and software are considered medical devices and are subject to regulation by the United States Food and Drug Administration, or the FDA. FDA regulations are broadly worded and its guidance in these areas is outdated, leaving uncertainty in how these regulations apply. We have attempted to design our services so that our computer applications and software are not considered to be medical devices. However, the FDA may take the position that our services are subject to FDA regulation. In addition, we may expand our services in the future to areas that subject us to FDA regulation. We have no experience in complying with FDA regulations. We believe that complying with FDA regulations may be time-consuming, burdensome and expensive and could delay our introduction of new applications or services. Regulation of transaction services. State and federal statutes and regulations governing transmission of claims may affect our operations. For example, Medicaid rules require certain processing services and eligibility verification to be maintained as separate and distinct operations. We believe that our practices are in compliance with applicable state and federal laws. These laws, though, are complex and changing, and the government may take positions that are inconsistent with our practices. Professional regulation. The practice of most healthcare professions requires licensing under applicable state law. In addition, the laws in some states prohibit business entities from practicing medicine, which is referred to as the prohibition against the corporate practice of medicine. We have attempted to structure our web site, strategic relationships and other operations to avoid violating these state licensing and professional practice laws. A state, however, may determine that some portion of our business violates these laws and may seek to have us discontinue those portions or subject us to penalties or licensure requirements. We employ and contract with physicians who provide only medical information to consumers, and we have no intent to provide medical care or advice. We do not maintain professional liability insurance because we believe we are not a healthcare provider. Any determination that we are a healthcare provider and acted improperly as a healthcare provider may result in liability for which we are not insured. Complying with antitrust regulations may delay completion of our pending acquisitions The FTC, Department of Justice or other federal or state regulatory agencies charged with enforcement of the antitrust laws may review our future acquisitions or business activities. We believe that our business activities, contractual relationships and pending acquisitions comply with all applicable antitrust laws. 24 25 In the course of reviewing our pending acquisitions and strategic relationships, it is possible that governmental agencies may seek to require us to modify our pending acquisitions or business activities. If governmental agencies seek modifications, it could delay our completion of these transactions. If the governmental agencies were successful in requiring modifications, it could have an adverse effect on our operations. We have received and responded to a request from the DOJ for additional information in connection with our pre-merger notification filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with respect to our announced acquisition of Envoy. This acquisition may not be completed until 20 days after the DOJ determines that we have substantially complied with the request for additional information, unless this waiting period is terminated earlier by the DOJ. Third parties may bring claims against us as a result of content provided on our web site, which may be expensive and time consuming to defend We could be subject to third party claims based on the nature and content of information supplied on our web site by us or third parties, including content providers, medical advisors or users. We could also be subject to liability for content that may be accessible through our web site or third party web sites linked from our web sites or through content and information that may be posted by users in chat rooms or bulletin boards. Even if these claims do not result in liability to us, investigating and defending against these claims could be expensive and time consuming and could divert management's attention away from operating the business. Our intellectual property may be subjected to infringement claims or may be infringed upon Our intellectual property is important to our business. We could be subject to intellectual property infringement claims as the number of our competitors grows and the functionality of our applications overlaps with competitive offerings. These claims, even if not meritorious, could be expensive and divert management's attention from our operations. If we become liable to third parties for infringing their intellectual property rights, we could be required to pay a substantial damage award and to develop non-infringing technology, obtain a license or cease selling the applications that contain the infringing intellectual property. We may be unable to develop non-infringing technology or obtain a license on commercially reasonable terms, or at all. In addition, we may not be able to protect against misappropriation of our intellectual property. Third parties may infringe upon our intellectual property rights. If we do not detect any unauthorized use, we may be unable to enforce our rights. Our business will be adversely affected if we cannot attract and retain key personnel Our future operating results will substantially depend on the ability of our officers and key employees to manage changing business conditions and to implement and improve our technical, administrative, financial control and reporting systems. We need to attract, integrate, motivate and retain highly skilled technical people. In particular, we need to attract experienced professionals capable of developing, selling and installing complex healthcare information systems. We face intense competition for these people. Our executive management team, including Jeffrey T. Arnold, our Chief Executive Officer, and W. Michael Long, our Chairman, are critical to our success. Our business could be adversely affected as a result of our international expansion One element of our strategic alliance with News Corporation is the formation of WebMD International as a joint venture with News Corporation to launch our services worldwide, other than in the U.S. and Japan. In addition, we have entered into an agreement with one of our strategic partners to form an international joint venture in Japan. We have extremely limited experience in developing localized versions of our products and services. WebMD International and any future international ventures may not be successful in launching our services into foreign markets. 25 26 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK INTEREST RATE SENSITIVITY The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive from our investments without significantly increasing risk. Some of the securities that we have invested in may be subject to market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. For example, if we hold a security that was issued with a fixed interest rate at the then-prevailing rate and the prevailing interest rate later rises, the principal amount of our investment will probably decline. To minimize this risk, we maintain our portfolio of cash equivalents and short-term investments in a variety of securities, including commercial paper, other non-government debt securities and money market funds. In general, money market funds are not subject to market risk because the interest paid on such funds fluctuates with the prevailing interest rate. In addition, we invest in relatively short-term securities. As of March 31, 2000, all of our investments mature in less than three months. The following table presents the amounts of our cash equivalents that are subject to market risk and weighted-average interest rates as of March 31, 2000. This table does not include money market funds because those funds are not subject to market risk.
MATURING IN -------------------------------------- THREE MONTHS FAIR OR LESS VALUE ------------ ---------- (DOLLARS IN THOUSANDS) Included in cash and cash equivalents....................... $1,097,969 $1,097,969 Weighted-average interest rate......................... 6.11%
EXCHANGE RATE SENSITIVITY Currently the majority of Healtheon/WebMD's sales and expenses are denominated in U.S. dollars and as a result we have experienced no significant foreign exchange gains and losses to date. We conduct only limited transactions in foreign currencies, and we do not anticipate that foreign exchange gains or losses will be significant in the foreseeable future. We have not engaged in foreign currency hedging activities to date. 26 27 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. The exhibits listed in the accompanying Exhibit Index on page 29 are filed as part of this quarterly report. (b) The following reports on Form 8-K were filed during the quarter ended March 31, 2000: - Report on Form 8-K filed on January 27, 2000 pursuant to which the Registrant announced entering into a definitive merger agreement to acquire Envoy from Quintiles. - Report on Form 8-K filed on January 28, 2000 pursuant to which the Registrant announced the completion of the investment by Janus. - Report on Form 8-K filed on February 8, 2000 pursuant to which the Registrant announced the completion of the transactions contemplated by its strategic alliance with News Corporation. - Report on Form 8-K filed on February 10, 2000 pursuant to which the Registrant announced the completion of the acquisition of Kinetra. - Report on Form 8-K filed on February 14, 2000 pursuant to which the Registrant announced entering into definitive merger agreements to acquire Medical Manager and CareInsite. - Report on Form 8-K filed on February 16, 2000 pursuant to which the Registrant announced entering into a definitive merger agreement to acquire OnHealth. - Report on Form 8-K/A filed on February 22, 2000 pursuant to which the Registrant filed the merger agreement and voting agreement as exhibits in connection with its previously announced acquisition of OnHealth. - Report on Form 8-K/A filed on February 24, 2000 pursuant to which the Registrant filed the merger agreements and voting agreements as exhibits in connection with its previously announced acquisitions of Medical Manager and CareInsite. - Report on Form 8-K/A filed on March 23, 2000 pursuant to which the Registrant filed a voting agreement as an exhibit in connection with its previously announced acquisitions of Medical Manager and CareInsite. 27 28 SIGNATURES In accordance with the requirements of the Securities Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HEALTHEON/WEBMD CORPORATION Date: May 15, 2000 By: /s/ John L. Westermann III ----------------------------------------------------- John L. Westermann III Executive Vice President, Chief Financial Officer, Secretary and Treasurer 28 29 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION ----------- ----------- 10.1 Amended and Restated Operating Agreement of The Health Network LLC dated January 26, 2000, between Registrant and AHN/FIT Cable, LLC 10.2 Amended and Restated Operating Agreement of The H/W Health & Fitness LLC dated January 26, 2000, between Healtheon/WebMD Cable Corporation and AHN/FIT Internet, LLC 10.3 Content License Agreement dated January 26, 2000, between Fox Entertainment Group, Inc. and Registrant 10.4 Healtheon/WebMD Corporation Registration Rights Agreement dated January 26, 2000, between Registrant, Eastrise Profits Limited, AHN/FIT Cable, LLC, AHN/FIT Internet, LLC, News America Incorporated, and Fox Broadcasting Company 10.5 Healtheon/WebMD Media Services Agreement dated January 26, 2000, between Registrant, Eastrise Profits Limited and Fox Entertainment Group, Inc. 10.6 Content License Agreement dated January 26, 2000, between The News Corporation Limited and Registrant 10.7 Operating Agreement of WebMD International LLC dated January 26, 2000, between HW International Holdings, Inc. and IJV Holdings Inc. 10.8 WebMD International Media Services Agreement dated January 26, 2000, between WebMD International LLC and Eastrise Profits Limited
29 30 10.9 Assignment and Assumption Agreement dated January 26, 2000, between AHN/FIT Internet, and H/W Health & Fitness, LLC 10.10 Stock Purchase Agreement dated January 26, 2000 between Registrant and Janus Capital Corporation. 10.11 Healtheon/WebMD Corporation Registration Rights Agreement dated January 26, 2000 between Registrant and Janus Capital Corporation 27.1 Financial data schedule (EDGAR only)
30 EX-10.1 2 AMENDED AND RESTATED OPERATING AGREEMENT 1 EXHIBIT 10.1 AMENDED AND RESTATED OPERATING AGREEMENT OF THE HEALTH NETWORK LLC JANUARY 26, 2000 THE OWNERSHIP INTERESTS IN THIS LIMITED LIABILITY COMPANY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR STATE SECURITIES AUTHORITIES AND MAY NOT BE SOLD OR REGISTERED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED. THE SALE OR OTHER TRANSFER OF THE OWNERSHIP INTERESTS IS ALSO RESTRICTED BY PROVISIONS OF THIS AGREEMENT AND RELATED AGREEMENTS. 2 TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS...................................................................................1 ARTICLE II FORMATION.....................................................................................8 2.1 Formation.....................................................................................8 2.2 Name..........................................................................................8 2.3 Office and Agent..............................................................................8 2.4 Purposes......................................................................................9 2.5 Powers........................................................................................9 2.6 Ownership of Property.........................................................................9 2.7 Qualification in Other Jurisdictions..........................................................9 ARTICLE III CAPITAL.......................................................................................9 3.1 Initial Capital Contributions by Members; Initial Capital Accounts; Initial Tax Basis in Assets.................................................................. 9 3.2 Percentage Interests.........................................................................10 3.3 Additional Capital...........................................................................10 3.4 Capital Accounts.............................................................................11 3.5 Allocation of Items of Company Income, Gain, Loss, Deduction and Credit......................12 3.6 Distributions................................................................................16 3.7 Withholding..................................................................................16 3.8 Distribution Limitation......................................................................16 3.9 Company Funds................................................................................16 3.10 Capital Contribution.........................................................................16 ARTICLE IV MANAGEMENT...................................................................................16 4.1 Management of the Company's Business.........................................................16 4.2 Board........................................................................................17 4.3 Budget Approval..............................................................................18 4.4 Actions by Members...........................................................................19 4.5 Managing Member's Services and Expenses......................................................21 4.6 Indemnification..............................................................................21 4.7 Officers.....................................................................................22 ARTICLE V LIABILITY OF A MEMBER........................................................................23 5.1 Limited Liability............................................................................23 5.2 Capital Contribution.........................................................................23 5.3 Reliance.....................................................................................23 ARTICLE VI REPRESENTATIONS AND WARRANTIES...............................................................23 6.1 Due Incorporation; Authorization.............................................................24 6.2 No Conflict..................................................................................24
-i- 3 6.3 No Conflict; No Default......................................................................24 6.4 Unregistered Interests.......................................................................24 ARTICLE VII BOOKS AND RECORDS; REPORTS TO MEMBERS........................................................25 7.1 Books and Records............................................................................25 7.2 Financial Reports; Subscriber Reports........................................................25 7.3 Tax Returns and Information..................................................................26 ARTICLE VIII COMPANY INTERESTS; RESTRICTIONS ON TRANSFER..................................................26 8.1 Transfer.....................................................................................26 8.2 Admission as a Member........................................................................27 8.3 No Right to Withdraw.........................................................................27 8.4 Corporate Conversion.........................................................................27 8.5 Put/Call.....................................................................................28 ARTICLE IX DISSOLUTION AND LIQUIDATION..................................................................29 9.1 Dissolution..................................................................................29 9.2 Exclusive Means of Dissolution...............................................................29 9.3 Liquidation..................................................................................29 9.4 Priority of Payment..........................................................................29 9.5 Liquidating Distributions....................................................................30 9.6 No Restoration Obligation....................................................................30 9.7 Timing.......................................................................................30 9.8 Liquidating Reports..........................................................................30 9.9 Certificate of Cancellation..................................................................30 ARTICLE X ADDITIONAL AGREEMENTS........................................................................31 10.1 Licenses.....................................................................................31 ARTICLE XI MISCELLANEOUS................................................................................31 11.1 Waiver of Partition..........................................................................31 11.2 Modification; Waivers........................................................................31 11.3 Entire Agreement.............................................................................31 11.4 Severability.................................................................................31 11.5 Notices......................................................................................31 11.6 Successors and Assigns.......................................................................32 11.7 Counterparts.................................................................................33 11.8 Headings; Cross-references...................................................................33 11.9 Construction.................................................................................33 11.10 Property Rights; Confidentiality.............................................................33 11.11 Further Actions..............................................................................33 11.12 Governing Law; Forum.........................................................................33 11.13 Expenses of the Parties......................................................................34
-ii- 4 AMENDED AND RESTATED OPERATING AGREEMENT OF THE HEALTH NETWORK LLC THIS AMENDED AND RESTATED OPERATING AGREEMENT is made as of the 26th day of January, 2000, by and between Healtheon Web/MD Cable Corporation, a Delaware corporation and wholly-owned subsidiary of Healtheon/WebMD Corporation ("Healtheon/WebMD"), (together with any of its Affiliate Transferees (as hereinafter defined), the "Healtheon Member"), and AHN/FIT Cable, LLC, a Delaware limited liability company (together with any of its Affiliate Transferees (as hereinafter defined), the "Fox Member," and together with the Healtheon Member, the "Members"). W I T N E S S E T H : The Fox Member entered into an Operating Agreement on the 10th day of January 2000 (the "Original Agreement"). The Fox Member desires to amend and restate the Original Agreement in its entirety as set forth herein. In consideration of the mutual promises and covenants contained in this Agreement, and intending to be legally bound, the Members hereby agree as follows: ARTICLE I DEFINITIONS As used in this Agreement, the following terms have the meanings assigned to them in this Article I (except as otherwise expressly provided) and include the plural as well as the singular and vice versa. All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP. "Act" shall mean the Delaware Limited Liability Company Act, as amended. "Additional Capital Contribution" shall have the meaning set forth in Section 3.3(a) hereof. "Additional Capital Notice" shall have the meaning set forth in Section 3.3(a) hereof. 5 "Adjusted Capital Account Deficit" shall mean the deficit balance (if any) in such Member's Capital Account as of the end of any Fiscal Year, after (a) crediting to such Capital Account any amount which such Member is obligated to restore pursuant to this Agreement or is deemed obligated to restore pursuant to the minimum gain chargeback provisions of the Section 704(b) of the Treasury Regulations, and (b) charging to such Capital Account any adjustments, allocations or distributions described in the qualified income offset provisions of the Section 704(b) of the Treasury Regulations which are required to be charged to such Capital Account pursuant to this Agreement. "Affiliate" shall mean, with respect to any Person, any Person that directly or indirectly Controls, is Controlled by, or is under common Control with such Person. "Aggregate Capital Commitment" shall mean $150,000,000. "Agreement" shall mean this Amended and Restated Operating Agreement, also known as a "limited liability company agreement" under the Act, as amended from time to time. "Annual Budget" shall mean, as at any time, the Company's then effective annual operating and capital budget approved in the manner contemplated by Section 4.3(h) hereof or in effect pursuant to Section 4.3(c) hereof. "Available Cash" shall mean for any Fiscal Year or other period, the positive amount, if any, obtained by calculating net income (or loss) of the Company determined in accordance with GAAP for such period, adjusted, without duplication, by adding (x) depreciation, amortization and other non-cash charges to the extent deducted in determining net income and deducting (y) (i) the current portion of indebtedness of the Company, (ii) prepaid expenses and other cash expenditures to the extent not deducted in determining net income or loss and (iii) reasonable reserves for working capital and contingent liabilities as determined by the Managing Member. "Board" shall have the meaning set forth in Section 4.2 hereof. "Business" shall mean the business of the Company as set forth in Section 2.4 hereof. "Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday or Friday which is not a day on which banking institutions in New York City are authorized or obligated by law to close. "Business Plan" shall mean the business plan most recently approved by the Board pursuant to Section 4.3 hereof. "Call" shall have the meaning set forth in Section 8.5(a) hereof. "Capital Account" shall have the meaning set forth in Section 3.4(a) hereof. "Capital Call" shall have the meaning set forth in Section 3.3(a) hereof. -2- 6 "Capital Contribution" shall mean the amount which a Member shall contribute to the capital of the Company as provided in Article III hereof. "Certificate" shall mean the certificate of formation of the Company, as amended from time to time. "Code" shall mean the United States Internal Revenue Code of 1986, as amended from time to time, or any successor statute or statutes. "Common Stock" shall mean the common stock, par value $0.0001 per share, of Healtheon/WebMD and any and all shares of capital stock or other equity securities of: (i) Healtheon/WebMD which are added to or exchanged or substituted for the Common Stock by reason of the declaration of any stock dividend or stock split, the issuance of any distribution or the reclassification, readjustment, recapitalization or other such modification of the capital structure of Healtheon/WebMD; and (ii) any other corporation, now or hereafter organized under the laws of any state or other governmental authority, with which Healtheon/WebMD is merged, which results from any consolidation or reorganization to which Healtheon/WebMD is a party, or to which is sold all or substantially all of the shares or assets of Healtheon/WebMD, if immediately after such merger, consolidation, reorganization or sale, Healtheon/WebMD or any Stockholders of Healtheon/WebMD own equity securities having in the aggregate more than fifty percent (50%) of the total voting power of such other corporation. "Company" shall mean the limited liability company formed pursuant to the Certificate and governed by this Agreement and the Act. "Company Minimum Gain" shall mean the amount determined in accordance with the principles of Treasury Regulations Section 1.704-2(d). "Company Property" shall have the meaning set forth in Section 2.6 hereof. "Contribution Date" shall have the meaning set forth in Section 3.3(a) hereof. "Control" shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Corporate Conversion" shall mean any merger, consolidation, conversion by filing, assignment of assets, or similar transaction or series of transactions resulting in a corporation substantially all of the assets of which consist of substantially all of the assets that were held directly or indirectly by the Company immediately prior to such transaction and substantially all the capital stock of which corporation is held by Persons who were either (i) Members immediately prior to such transaction or (ii) the owners of a Member the sole or principal asset of which Member was an Interest in the Company. "CPI-U" shall have the meaning set forth in Section 4.3(c) hereof. -3- 7 "Current Market Price" shall mean, per share of Common Stock on any date specified, the average of the daily market prices of such Common Stock for the 20 consecutive Business Days ending on the second Business Day prior to such date. The daily market price of Common Stock on any Business Day will be (a) the last sale price on such day on the principal stock exchange on which such share of Common Stock is then listed or admitted to trading (including the Nasdaq National Market System if such Common Stock is admitted to trading thereon), or (b) if no sale takes place on such date on any exchange on which such share of Common Stock is listed or admitted to trading, the average of the reported closing bid and asked prices on such day as officially noted on any exchange. "Damages" shall have the meaning set forth in Section 4.6(a) hereof. "Default Loan" shall have the meaning set forth in Section 3.3(b) hereof. "Defaulting Member" shall have the meaning set forth in Section 3.3(b) hereof. "Depreciation" shall mean, for each Fiscal Year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable for federal income tax purposes with respect to an asset for such year or other period, except that if the Gross Asset Value of any asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization, or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Tax Matters Member. "Dissolution" shall mean the happening of any of the events described in Section 9.1 hereof. "Economic Risk of Loss" shall have the meaning set forth in Sections 1.704-2(b)(4) and 1.752-2 of the Treasury Regulations. "Effective Date" shall mean the date hereof, unless the parties otherwise mutually agree in writing that some other date shall be the Effective Date. "Fair Market Value" shall mean, for purposes of this Agreement, the cash price at which a willing seller would sell, and a willing buyer would buy, the property in question, both having full knowledge of the relevant facts and being under no compulsion to buy or sell, in an arm's length transaction without time constraints. Fair Market Value may be determined by mutual agreement of the Members. If the Members are unable to agree on a Fair Market Value within 15 days of the date on which a determination of Fair Market Value is required, or if they determine that an appraisal should be used to determine Fair Market Value. then each of the Members will cause the Fair Market Value as of the most recent month end (or as of such other date as may be expressly provided herein) to be determined by a qualified appraiser in accordance with the following procedure. The Members shall, within 10 days of the date that an appraiser is required, seek to select a mutually agreeable -4- 8 appraiser. If the Members are unable to agree on a single qualified appraiser within 10 days, each Member will have 10 additional days to select one appraiser internationally recognized in valuing items of the kind required to be valued. Any Member not appointing an appraiser pursuant to the preceding sentence within the allotted time shall have no right to select an appraiser thereafter but shall be bound by the procedure set forth herein using values determined by appraisers selected by the other Member or Members, as applicable. The appointed appraiser, or appraisers, as the case may be, will determine the Fair Market Value. The Members will use their reasonable best efforts to cause such appraiser or appraisers to submit to them written reports indicating the determination of Fair Market Value within 30 days after the date such appraiser is selected. If there is more than one appointed appraiser, and the highest of the appraisals is not more than 110% of the lowest appraisal, the average of the two will be the Fair Market Value. If the highest of the appraisals is more than 110% of the lowest appraisal, the Members will immediately notify the appraisers and cause them to appoint another similarly qualified appraiser within 10 days after such notice. The Members will use their reasonable best efforts to cause such appraiser (who will not be apprised of the determination of the other appraisers) to submit a written report to each of them indicating such appraiser's determination of Fair Market Value within 30 days after the date such appraiser is selected. If three appraisals are necessary, then the average, of the two appraisals in which the determinations of Fair Market Value are closest together will be the Fair Market Value or, if the highest and lowest are equidistant from the middle determination, then the middle determination will be the Fair Market Value. A determination of Fair Market Value as provided herein will be final, binding and nonappealable. Each Member will pay one half of the fees and costs of any appraiser involved in a determination of Fair Market Value required by this Agreement. "Fiscal Year" shall mean the twelve-month period ending June 30 of each year, or such other fiscal year as the Members may designate. "Fox Member" shall have the meaning set forth in the preamble to this Agreement. "Fox Representatives" shall have the meaning set forth in Section 4.2(a) hereof. "GAAP" shall mean generally accepted accounting principles as in effect in the United States from time to time and consistently applied, with such exceptions thereto or deviations therefrom, if any, as the Managing Member may approve. "Gross Asset Value" shall mean, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (a) the initial Gross Asset Value of any asset contributed by a Member to the Company shall be the Fair Market Value of such asset; (b) the Gross Asset Value of all Company assets shall be adjusted to equal their respective Fair Market Value (taking Section 7701(g) of the Code into account), as of the following times: (i) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis capital contribution; (ii) the distribution by the Company to a Member of more than a de minimis amount of Company Property as consideration for an -5- 9 interest in the Company, in the case of either (i) or (ii), if the Members reasonably determine that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company and (iii) the liquidation of a Member's interest in the Company or the Company within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations; (c) the Gross Asset Value of any Company asset distributed to any Member shall be the Fair Market Value (taking Section 7701(g) of the Code into account) of such asset on the date of distribution; (d) the Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Section 732(d), Section 734(b) or Section 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations and Section 3.5 hereof, provided, however, that Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the extent that the Members determine that an adjustment pursuant to subsection (b) of this definition is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection (d); and (e) if the Gross Asset Value of any asset has been determined or adjusted pursuant to subsection (a), (b) or (c) hereof, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing gains or losses from the disposition of such asset. "Healtheon Member" shall have the meaning set forth in the preamble to this Agreement. "Healtheon Representatives" shall have the meaning set forth in Section 4.2(a) hereof. "HSR" shall have the meaning set forth in Section 8.5(b) hereof. "Indemnitee" shall have the meaning set forth in Section 4.6(a) hereof. "Interest" shall mean, as to each Member, such Member's rights to participate in the income, gains, losses, deductions and credits of the Company, together with all other rights and obligations of such Member in the capital of the Company under this Agreement. "Internet" shall mean a decentralized worldwide network of computer networks. "Lien" shall mean a mortgage, lien, pledge, security interest or other encumbrance. "Liquidation" shall mean the process of winding up and terminating the Company after its Dissolution. "Losses" shall have the meaning set forth in Section 3.5(a) hereof. "Management Fee" shall have the meaning set forth in Section 4.5(a) hereof. -6- 10 "Management Services" shall have the meaning set forth in Section 4.5(a) hereof. "Managing Member" shall mean the Fox Member, and any Person who may after the date hereof become a successor to the Fox Member, as provided herein. "Member" shall mean the Fox Member, the Healtheon Member and any permitted transferee of an Interest or portion thereof who becomes a Member in accordance with Article VIII. The Fox Member and the Healtheon Member (together with such transferees) may be collectively referred to herein as the "Members." "Member Nonrecourse Debt" shall mean liabilities of the Company treated as "partner nonrecourse debt" under Section 1.704-2(b)(4) of the Treasury Regulations. "Member Nonrecourse Deductions" shall mean any losses, deductions or Code Section 705(a)(2)(b) expenditures characterized as "partner nonrecourse deductions under Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Treasury Regulations. "Member Nonrecourse Debt Minimum Gain" shall mean an amount of gain characterized as "partner nonrecourse debt minimum gain" under Treasury Regulations Sections 1.704-2(i)(2) and 1.704-2(i)(3). "Non-Defaulting Member" shall have the meaning set forth in Section 3.3(b) hereof. "Non-Standard Television Services" shall mean audiovisual programming delivered by any means of transmission, whether now existing or developed in the future (including all forms of fixed-line or wireless, narrowband or broadband, transmission), other than (a) audio visual programming which is made available to viewers free-of-charge (e.g., free-to-air UHF or VHF television), even if retransmitted via cable or any other means of retransmission for which a facilities fee is charged, and (b) home-video distribution. "Nonrecourse Deductions" in any year shall mean the Company deductions that are characterized as "nonrecourse deductions" under Sections 1.704-2(b)(1) and 1.704-2(c) of the Treasury Regulations. "Percentage Interest" shall mean, with respect to each Member, such Member's proportionate share of the total Interests in the Company expressed as a percentage, as set forth in Section 3.2 hereof and as may be adjusted from time to time pursuant to this Agreement. "Person" shall mean an individual or a corporation, limited liability company, joint venture, partnership, trust, unincorporated association, governmental authority or other entity. "Prime Rate" shall mean a rate of interest equal to the rate per annum announced from time to time by Citibank, N.A. at its principal office as its prime rate (which rate shall change when and as such announced prime rate changes) but in no event more than the maximum rate of interest permitted to be collected from time to time under applicable usury laws. -7- 11 "Prime Time" shall mean between the hours of 6:00 p.m. and 12 a.m. "Profits" shall have the meaning set forth in Section 3.5(a) hereof. "Proposed Annual Budget" shall have the meaning set forth in Section 4.3(a) hereof. "Proposed Business Plan" shall have the meaning set forth in Section 4.3(a) hereof. "Purchase Agreement" shall mean the Purchase Agreement, dated the date hereof, by and among Affiliates of the Members. "Put" shall have the meaning set forth in Section 8.5(a) hereof. "Regulatory Allocations" shall have the meaning set forth in subparagraph 3.5(c)(viii) hereof. "Representatives" shall have the meaning set forth in Section 4.2(a) hereof. "Subscriber" shall have the meaning set forth in Section 8.5(a) hereof. "Section 704(c) Property" shall have the meaning set forth in Section 1.704-3(a)(3) of the Treasury Regulations and shall include assets treated as Section 704(c) Property by virtue of Section 704-1(b)(2)(iv)(f) of the Treasury Regulations. "Tax Matters Member" shall mean the "tax matters partner," as that term is defined in Section 6231(a)(7) of the Code. "Transfer" shall mean a sale, exchange, assignment, transfer, pledge or other disposition of all or any part of an Interest (whether voluntary, involuntary or by operation of law). "Transferee" shall mean a Person to whom an Interest is Transferred in compliance with this Agreement. "Transferor" shall mean a Person who Transfers all or any part of an Interest in compliance with this Agreement. "Treasury Regulations" shall mean the income tax regulations (including temporary and proposed) promulgated under the Code. -8- 12 ARTICLE II FORMATION 2.1 Formation. The Company was formed as a limited liability company pursuant to the Act by the filing, on January 10, 2000, the Certificate with the Secretary of State of the State of Delaware. 2.2 Name. The business of the Company shall be conducted under the name THE HEALTH NETWORK LLC or such other or additional name or names and variations thereof as the Managing Member may from time to time determine. The Managing Member shall file, or cause to be filed, any fictitious name certificate and similar filings, and any amendments thereto, as may be directed by the Board from time to time, 2.3 Office and Agent. (a) The initial registered office of the Company in Delaware will be at 1013 Centre Road, Wilmington, Delaware 19805-1297, and its initial registered agent will be Corporation Service Company. The Company may, upon compliance with the applicable provisions of the Act, change its registered office or registered agent in Delaware. (b) The initial principal office of the Company will be at 1300 North Market Street, Suite 404, Wilmington, Delaware 19801. The Company may maintain any other offices at any other places that the Managing Member deems advisable. 2.4 Purposes. The purposes of the Company shall be (a) to own and operate one or more Non-Standard Television Services substantially all of the programming of which shall consist of health and fitness content consisting of audio-visual programming (the "Business"), (b) to acquire, own, hold, sell or otherwise dispose of interests in the assets used to conduct the Business, (c) to make and perform all contracts and engage in all activities and transactions and to do any and all things necessary or advisable to carry out the foregoing purpose, and (d) to otherwise engage in any lawful activity incidental thereto for which limited liability companies may be organized under the Act. 2.5 Powers. The Company shall have all the powers granted to a limited liability company under the Act, as well as all powers necessary or convenient to achieve its purposes and to further its business. 2.6 Ownership of Property. Legal title to all assets, rights and property, whether real, personal or mixed, owned by the Company (collectively, the "Company Property") shall be acquired, held and conveyed only in the name of the Company. 2.7 Qualification in Other Jurisdiction. The Managing Member shall cause the Company to be qualified or registered under applicable laws of any jurisdiction in which the Company transacts business and shall be authorized to execute, deliver and file any certificates and -9- 13 documents necessary to effect such qualifications or registrations including, without limitation, the appointment of agents or service of process in such jurisdictions. ARTICLE III CAPITAL 3.1 Initial Capital Contributions by Members; Initial Capital Accounts; Initial Tax Basis in Assets. The Company was formed on January 10, 2000 and on the date hereof the Fox Member contributed to the capital of the Company assets, subject to liabilities, which constituted all of its assets, other than the Galaxy Assets, as defined in the Purchase Agreement, and cash on hand, and all of its liabilities, other than liabilities in respect of member loans. The Healtheon Member then purchased a 50% Interest from the Fox Member pursuant to a purchase agreement dated as of the date hereof. It is agreed that (i) the Healtheon Member is admitted to the Company as a Member, (ii) this Agreement shall govern the management, business and affairs of the Company, (iii) the purchase of its Interest by the Healtheon Member shall be treated under the Code as a purchase of an undivided one-half interest in each of the Company's assets, subject to its liabilities, on the date hereof, followed by the contribution of such assets subject to such liabilities to the capital of the Company by the Healtheon Member and the contribution of the remaining one-half undivided interest in such assets subject to the remaining liabilities by the Fox Member to the capital of the Company, (iv) the initial Capital Account of the Healtheon Member and the Fox Member shall each equal $1,250,000, (v) the aggregate adjusted tax basis under the Code of the Healtheon Member's share of the assets of the Company on the date hereof shall equal the Healtheon Member's Capital Account plus one-half of the Company's liabilities on the date hereof, (vi) the aggregate adjusted tax basis under the Code of the Fox Member's share of the assets of the Company on the date hereof shall equal one-half of the basis of such assets in the hands of the Company immediately prior to the purchase by the Healtheon Member of its Interest, plus one-half of the Company's liabilities at such time and (vii) the difference between amount described in clauses (v) and (vi) above shall be treated as Section 704(c) Property with respect to the Fox Member. 3.2 Percentage Interests. Subject to adjustment pursuant to Section 3.3 hereof, the Percentage Interest of each Member shall initially be as follows: Healtheon Member: 50% Fox Member: 50% The Percentage Interest of a Member may be adjusted from time to time pursuant to Section 3.3 hereof. 3.3 Additional Capital. (a) If, at any time, prior to the fifth anniversary of the Effective Date, the Managing Member determines that the Company requires additional funds for its continued -10- 14 operation or growth in accordance with the previously approved Annual Budget, the Managing Member may cause the Company to request (a "Capital Call") that the Members contribute to the Company such amounts as the Managing Member may direct on no less than five Business Days' prior notice to the Members. Each such notice (an "Additional Capital Notice") shall specify the amount of funds to be provided by each Member (each, an "Additional Capital Contribution"), the date on which funds are to be provided (the "Contribution Date"), and the account of the Company to which such funds are to be transmitted; provided, that the aggregate sum of all Additional Capital Contributions requested by the Company pursuant to this Section 3.3(a) shall not exceed an aggregate of $50,000,000 in any Fiscal Year or the Aggregate Capital Commitment in total. All Additional Capital Contributions to be made by the Members shall be in amounts that are in proportion to their respective Percentage Interests, determined, in each case, as of the date of the Capital Call. Unless otherwise agreed by the Members, all Additional Capital Contributions shall be in cash or immediately available funds. No Additional Capital Contribution shall be required to be paid by the Members unless (i) the need for additional capital is specifically provided for in the then currently approved Annual Budget or (ii) the Members approve the payment of such Additional Capital Contribution in accordance with Section 4.4 hereof. (b) Within five days after receipt of an Additional Capital Notice issued pursuant to Section 3.3(a), each Member shall notify the Company whether it intends to contribute its respective Additional Capital Contribution referred to in the Additional Capital Notice. If any Member (a "Defaulting Member") fails to contribute timely all or any portion of any Additional Capital Contribution, the other Member (the "Non-Defaulting Member") may, at its option, at any time following the date of default, and prior to the date such default is cured, exercise, or cause the Company to exercise, on five days notice to the Defaulting Member any one of the following remedies and the Defaulting Member shall not be permitted to vote with respect to the election of any of the following remedies by the Non-Defaulting Member: (i) take such action, including court proceedings, as the Non-Defaulting Member may deem appropriate to obtain payment by the Defaulting Member of the Defaulting Member's Additional Capital Contribution that is in default, together with interest thereon, at the rate of 12% per annum, from the date that the Additional Capital Contribution was due until the date that is it made, all at the cost and expense of the Defaulting Member; or (ii) make a payment to the Company in an amount equal to the Additional Capital Contribution that is in default with the effect that such payment shall constitute a loan (a "Default Loan") to the Defaulting Member from the Non-Defaulting Member, any such loan to bear interest, compounded quarterly, at the rate of 5% over the Prime Rate on the date nearest the date of the advance, which rate shall be adjusted annually, based on changes to the Prime Rate on the anniversary of such Default Loan. For so long as any Default Loan remains unpaid, all distributions from the Company that otherwise would be made to the Defaulting Member (whether before or after the Dissolution of the Company) instead shall be paid to the Non-Defaulting Member until the Default Loan and all interest accrued thereon have been paid in full to the Non-Defaulting Member. Payments in respect of any Default Loan will be applied in the order that such loans were made, and all payments will be applied first to accrued but unpaid interest and then to reduce the outstanding principal amount of the loan. A Default Loan shall become automatically and immediately due and -11- 15 payable by the Defaulting Member, and shall constitute a general obligation of the Defaulting Member, upon the earlier of. (A) the sale of the Fox Member's Interest pursuant to Section 8.6 hereof or (B) the Dissolution of the Company. Any Default Loan shall be prepayable in whole or in part at any time without penalty. (c) Except as set forth in this Section 3.3, no Member shall have any obligation to make Additional Capital Contributions to the Company. 3.4 Capital Accounts. (a) A separate capital account (each a "Capital Account") shall be maintained for each Member. Such Member's initial Capital Account shall be as described in Section 3.1 above. Subject to the provisions of subsections (b), (c) and (d) of this Section 3.4, the Capital Account of each Member shall be (i) increased by (A) the amount of cash and the Gross Asset Value of any property contributed to the Company by such Member (net of liabilities secured by the property or to which the property is subject), and (B) Profits and any other items of income and gain allocated to such Member pursuant to Section 3.5 hereof and (ii) decreased by (A) the amount of cash and the Gross Asset Value of any property distributed to such Member (net of liabilities secured by the property or to which the property is subject) and (B) the Losses and any other items of deduction and loss allocated to such Member pursuant to Section 3.5, and otherwise maintained in accordance with Treasury Regulations in order for the allocation of Profits and Losses pursuant to Section 3.5. (b) For purposes of this Section 3.4, an assumption of a Member's unsecured liability by the Company shall be treated as a distribution of money to that Member. An assumption of the Company's unsecured liability by a Member shall be treated as a cash contribution to the Company by that Member. (c) In the event a contribution of money or other property is made to the Company other than a contribution made ratably by all existing Members, then the Capital Accounts for the Members shall be adjusted for the hypothetical "book" gain or loss that would have been realized by the Company if all Company assets had been sold for their Gross Asset Values in a cash sale, and shall be in proportion to the Percentage Interests of the Members. If a determination of the Fair Market Value of the Company is made pursuant to Section 3.3 in connection with any Additional Capital Contribution which would also be subject to this Section 3.4(c), the Gross Asset Value of the Company's assets shall be deemed to be equal to the Fair Market Value of the Company plus its liabilities as determined pursuant to Section 3.3 hereof. (d) In the event that assets of the Company other than money are distributed to a Member in liquidation of the Company, or in the event that assets of the Company other than money are distributed to a Member in kind, in order to reflect unrealized gain or loss, Capital accounts for the Members shall be adjusted for the hypothetical "book" gain or loss that would have been realized by the Company if the distributed assets had been sold for their Gross Asset Values in a cash sale. In the event of the liquidation of a Member's interest in the Company, in order to reflect unrealized gain or loss, Capital Accounts for the Members shall be adjusted for the hypothetical "book" gain or loss that would have been realized by the Company if all Company assets had been sold for their Gross Asset Values in a cash sale. -12- 16 (e) The foregoing provisions of this Section 3.4 and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Section 704(b) of the Treasury Regulations and will be interpreted and applied in a manner consistent with such Treasury Regulations and any amendment or successor provision thereto. The Members will cause appropriate modifications to be made if unanticipated events might otherwise cause this Agreement not to comply with Section 704(b) of the Treasury Regulations, so long as such modifications do not cause a material change in the relative economic benefits of the Members under this Agreement. (f) If all or any part of an Interest is transferred in accordance with this Agreement, the Capital Account of the Transferor that is attributable to the transferred Interest will carry over to the Transferee. 3.5 Allocation of Items of Company Income, Gain, Loss, Deduction and Credit. (a) For purposes of this Agreement, the terms "Profits" and "Losses" shall mean, for each Fiscal Year or other period, an amount equal to the Company's taxable income or loss, as the case may be for such year or period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss and deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments: (i) any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this paragraph shall be added to such taxable income or loss; (ii) any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations, and not otherwise taken into account in computing Profits or Losses pursuant to this Section shall be subtracted from such taxable income or loss; (iii) in the event the Gross Asset Value of any Company asset is adjusted pursuant to subsection (b) or (c) of the definition thereof, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses; (iv) gain or loss resulting from the disposition of any Company asset with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the asset disposed of, notwithstanding that the adjusted tax basis of such asset differs from its Gross Asset Value; (v) in lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing, such taxable income or loss, there shall be taken into -13- 17 account Depreciation for such Fiscal Year or other period, computed in accordance with the definition thereof; (vi) to the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) of the Code is required, pursuant to Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations, to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member's Interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) from the disposition of such asset and shall be taken into account for purposes of computing Profits or Losses; and (vii) notwithstanding any other provision of this Section, any items which are specially allocated pursuant to Section 3.5(c) hereof shall not be taken into account in computing Profits and Losses. (b) After giving effect to the special allocations set forth in Section 3.5(c): (i) All Company Profits shall be allocated to the Members as follows: (A) first, pro rata to the Members in proportion to and to the extent of Losses previously allocated to each Member pursuant to Section 3.5(b)(ii)(B) hereof and not previously recouped pursuant to this Section 3.5(b)(i)(A); and (B) thereafter, to the Members in accordance with their respective Percentage Interests. (ii) All Company Losses shall be allocated to the Members as follows: (A) first, pro rata to the Members in proportion to and to the extent of Profits previously allocated to such Members pursuant to Section 3.5(b)(i)(B) hereof and not previously recouped pursuant to this Section 3.5(b)(ii)(A); and (B) thereafter, to the Members in accordance with their respective Percentage Interests. (c) Special Allocations. The following special allocations shall be made in the following order: (i) Minimum Gain Chargeback. Subject to the exceptions set forth in Section 1.704-2(f) of the Treasury Regulations, if there is a net decrease in Company Minimum Gain during a Fiscal Year, each Member shall be specially allocated items of income and gain for Capital Account purposes for such year (and, if necessary, for subsequent years) in an amount equal to such Member's share of the net decrease in Company Minimum Gain during such year (which share of -14- 18 such net decrease shall be determined under Section 1.704-2(g)(2)) of the Treasury Regulations. It is intended that this Section 3.5(c)(i) shall constitute a "minimum gain chargeback" as provided by Section 1.704-2(f) of the Treasury Regulations and shall be interpreted consistently therewith. (ii) Member Nonrecourse Debt Minimum Gain Chargeback. Subject to the exceptions contained in Section 1.704-2(i)(4) of the Treasury Regulations, if there is a net decrease in Member Nonrecourse Debt Minimum Gain during a Fiscal Year, any Member with a hare of such Member Non-recourse Debt Minimum Gain (determined in accordance with Section 1.704-2(i)(5)) of the Treasury Regulations as of the beginning of such year shall be specially allocated items of income and gain for Capital Account purposes for such year (and, if necessary, for subsequent years) in an amount equal to such Member's share of the net decrease in Member Nonrecourse Debt Minimum Gain (which share of such net decrease shall be determined under Sections 1.704-2(i)(4) and 1.704-(j)(2)) of the Treasury Regulations. It is intended that this Section 3.5(c)(ii) shall constitute a "partner nonrecourse debt minimum gain chargeback" as provided by Section 1.704-2(i)(4) of the Treasury Regulations and shall be interpreted consistently therewith. (iii) Nonrecourse Deductions. Any Nonrecourse deductions shall be located to the Members in the same manner as Net Losses are allocated pursuant to Section 3.5(b)(ii) hereof. (iv) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions shall be allocated to the Member that bears the Economic Risk of Loss for the Member Nonrecourse Debt to which such deductions relate as provided in Section 1.704-2(i)(l) of the Treasury Regulations. If more than one Member bears the Economic Risk of Loss, such deduction shall be allocated between or among such Members in accordance with the ratios in which such Members share such risk of loss. (v) Qualified Income Offset. In the event any Member unexpectedly receives any adjustments, allocations, or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations (modified as appropriate, by Sections 1.704-2(g)(1) and 1.704-2(i)(5)) of the Treasury Regulations, items of Company income and gain for Capital Account purposes for such Fiscal Year shall be specially allocated to the Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, any Adjusted Capital Account Deficit of the Member as quickly as possible, provided that an allocation pursuant to this Section 3.5(c)(v) shall be made if and only to the extent that the Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article III have been tentatively made as if this Section 3.5(c)(v) were not in the Agreement. (vi) Certain Section 754 Adjustment. To the extent any adjustment to the adjusted tax basis of any Company asset pursuant to Section 732(d), Section 734(b) or Section 743(b) of the Code is required, pursuant to Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations, to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of its Interest in the Company, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment decreases such basis) and -15- 19 such gain or loss shall be specially allocated to the Members in accordance with their interests in the Company as determined under Section 1.704-1(b)(3) of the Treasury Regulations in the event Section 1.704-1(b)(2)(iv)(m)(2) of the Treasury Regulations applies, or to the Member to whom such distribution was made in the event Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations applies. (vii) Limit on Loss Allocations. Notwithstanding the provisions of Section 3.5(b)(ii) hereof or any other provision of this Agreement to the contrary, Net Losses (or items thereof) will not be allocated to a Member if such allocation would cause or increase a Member's Adjusted Capital Account Deficit and will be reallocated to the other Members in proportion to their Percentage Interests, subject to the limitations of this Section 3.5(c)(vii). (viii) Curative Allocations. The allocations under Section 3.5(c)(i) through (c)(vii) (such allocations, the "Regulatory Allocations") are intended to comply with certain requirements of the Treasury Regulations. It is the intent of the Members that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of income, gain, loss or deduction pursuant to this Agreement. Therefore, notwithstanding any other provision of this Agreement (other than the Regulatory Allocations), the Company shall make such offsetting special allocations of income, gain, loss or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each Member's Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not part of the Agreement and all items were allocated pursuant to Section 3.5(b), as the case may be. In exercising its discretion under this Section 3.5(c)(viii), the Company shall take into account future Regulatory Allocations under Section 3.5(c)(i) through (c)(vii) that are likely to offset other Regulatory Allocations previously made. 3.6 Distributions. (a) No Member shall have the right to withdraw any amount from its Capital Account. No Member shall have the right to demand or, to receive any distribution other than distributions of Available Cash pursuant to Section 3.6(b) hereof. No Member shall have the right receive a distribution of property other than cash from the Company, unless otherwise agreed by all the Members. (b) The Company shall, from time to time, but not less often than quarterly, distribute Available Cash to the Members. Any such distributions shall be made in accordance with the Members' Percentage Interests. Nothing set forth in this Section 3.6 shall impair the right or relieve the duty of the Managing Member, or if there is no Managing Member the Board, as provided this Agreement to establish reasonable cash reserves. 3.7 Withholding. If required by the Code or by state or local law, the Company will withhold any required amount from distribution to a Member for payment to the appropriate taxing authority. Any amount so withheld from a Member will be treated as a distribution by the Company to such Member. Each Member will timely file any agreement that is required by any taxing -16- 20 authority in order to avoid any withholding obligation that would otherwise be imposed on the Company. 3.8 Distribution Limitation. Notwithstanding any other provision of this Agreement, the Company will not make any distribution to the Members if, after the distribution, the liabilities of the Company (other than liabilities to Members on account of their Percentage Interests) would exceed the Fair Market Value of the Company's assets. With respect to any property subject to a liability for which the recourse of creditors is limited to the specific property, such property will be included in assets only to the extent the property's Fair Market Value exceeds its associated liability, and such liability will be excluded from the Company's liabilities. 3.9 Company Funds. The funds of the Company shall be deposited in such bank accounts or invested in investments as shall be determined by the Managing Member, or if there is no Managing Member, the Board. The Company's funds shall not be commingled with funds not belonging to the Company and shall be used only for the affairs or business of the Company. It shall be the responsibility of the Managing Member to establish a cash management plan pursuant to which the funds of the Company will be managed. 3.10 Capital Contribution. Each Member is liable to the Company for any Capital Contribution or distribution that has been wrongfully or erroneously returned or made to such Person in violation of the Act or this Agreement. ARTICLE IV MANAGEMENT 4.1 Management of the Company's Business. (a) The management of the Company shall be vested in the Managing Member. Except as provided in Section 4.4 hereof, or for actions and determinations which pursuant to this Agreement can be taken or made only with the consent of all of the Members or the Board, the Managing Member shall manage the affairs and business of the Company, and the Managing Member shall possess all powers necessary, convenient or appropriate to carrying out the purposes and business of the Company, including, without limitation, doing all things and taking all actions necessary to carry out the terms and provisions of this Agreement. The business and affairs of the Company shall be directed and controlled by the Managing Member in a manner consistent with the Business Plan and the Annual Budget. (b) Nothing contained in this Article IV shall impose any obligation on any Person doing business or dealing with the Company to inquire as to whether the Managing Member has exceeded its authority in executing any contract, lease, mortgage, note, deed or other instrument on behalf of the Company, and any such Person shall be fully protected in relying upon the plenary authority of the Managing Member. (c) Except as otherwise provided in Section 4.5 hereof, the Managing Member -17- 21 shall serve without compensation for its services. The Managing Member may delegate such of its respective powers and authority to officers, employees and agents of the Company as the Managing Member shall deem necessary or appropriate for the conduct of the Business. (d) Other than the Managing Member, no Member shall have any authority to act for, or to assume any obligation or responsibility on behalf of, the Company, except as expressly provided herein or as expressly approved by written consent of all the Members. 4.2 Board. (a) The Members hereby form a supervisory board (the "Board"), which shall be responsible for taking all action required under this Agreement to be taken by the Board. The Board shall consist of four representatives (the "Representatives"), two of whom shall be appointed by the Healtheon Member (the "Healtheon Representatives"), and two of whom shall be appointed by the Fox Member (the "Fox Representatives"). Each Member agrees to notify the other of the initial Representatives appointed by it. (b) Each Member may at any time remove its Representative(s) and appoint substitute Representative(s) in their stead, by delivering written notice of such substitution to the other Member. Each Representative shall have the authority to act on behalf of and bind the Member which appointed such Representative with regard to matters relating to the Company. The presence or participation of at least two of the four Representatives shall constitute a quorum for the taking of any action; provided, however, that at least one Representative appointed by each Member shall be present; and provided further that all Members have received prior written notice of such meeting in accordance with the notice requirements adopted by the Board as provided in Section 4.2(c). If at any meeting of the Board one Member has more Representatives present than the other, then at the beginning of the meeting the Representatives of the Member having two Representatives present shall select between themselves one of them to vote at the meeting such that neither Member shall have fewer voting Representatives at any Board meeting. Each Member shall have the right to bring additional representatives to any meeting of the Board; provided, however, a Member shall vote only through its appointed Representatives in connection with any matter discussed and voted on at any such meeting of the Board. No Representative shall be entitled to compensation from the Company for serving in such capacity. (c) The Board shall meet no less often than quarterly and shall establish meeting times, dates and places and requisite notice requirements and adopt rules or procedures consistent with the terms of this Agreement, which shall include rules and procedures for the dissemination of written information to the Members concerning the items to be acted upon at any regular or special meeting of the Board. Any Member may call a special meeting of the Board for any purpose by giving the other Member at least five (5) Business Days' notice thereof, except in the case of an emergency, in which case, such notice as is practicable shall be sufficient. The Board may meet by means of conference telephone call, and any Representative or non-voting representative may participate in any Board meeting by conference telephone call. Any action that may be taken at a meeting of the Board may be taken without a meeting by written consent of the number of Members -18- 22 needed to authorize the action; provided, that all Members, are given notice of such written consent at least 15 Business Days prior to its effective date. (d) The Managing Member shall keep the Board informed with respect to all matters of material interest to the Members and shall in any event report to the Board not less frequently than once each quarter with respect to material matters relating to the business and affairs of the Company. 4.3 Budget Approval. (a) The Managing Member shall submit annually to the Board at least sixty days prior to the start of each Fiscal Year, beginning with the Fiscal Year commencing January 1, 2000, (i) a proposed annual budget (the "Proposed Annual Budget") for the forthcoming Fiscal Year, including an income statement prepared on an accrual basis which shall show in reasonable detail the revenues and expenses projected for the Company's operations for the forthcoming Fiscal Year and a cash flow statement which shall show in reasonable detail the receipts and disbursements projected for the Company's operations for the forthcoming Fiscal Year, the amount of any corresponding cash deficiency or surplus, contemplated borrowings under credit facilities and the required Additional Capital Contributions, if any, and (ii) a proposed revised five-year business plan (the "Proposed Business Plan") for the Fiscal Year covered by the Proposed Annual Budget and the succeeding four Fiscal Years. Such Proposed Annual Budget and Proposed Business Plan shall be prepared on a basis consistent with the Company's audited financial statements and GAAP. (b) Within thirty days after the submission of such Proposed Annual Budget and Proposed Business Plan, the Board shall advise the Managing Member in writing whether the Board has approved the total expenditures set forth in the Proposed Annual Budget and Proposed Business Plan. Each Annual Budget and Business Plan shall be at least as detailed as the Annual Budget and Business Plan annexed hereto as Exhibit A. If the total annual expenditures set forth in the Proposed Annual Budget and Proposed Business Plan are approved by the Board, then such Proposed Annual Budget and such Proposed Business Plan as approved shall constitute the Annual Budget or the Business Plan, as the case may be, for all purposes of this Agreement and shall supersede any previously approved Annual Budget and Business Plan. (c) If the Board fails to approve an Annual Budget for the Company, then, until a new Annual Budget is approved, the budget for the Company for the immediately preceding Fiscal Year will remain in effect, adjusted (without duplication) to reflect the following increases or decreases: (i) the operation of escalation or de-escalation provisions in contracts in effect at the time of approval of the Annual Budget solely as a result of the passage of time or due to operations or undertakings approved in the Annual Budget or the occurrence of events beyond the control of the Company, to the extent such contracts are still in effect; (ii) elections made in any prior year under contracts contemplated by the budget for the prior year regardless of which party to such contracts makes such election; (iii) the effect of the existence of any multi-year contract entered into in accordance with a previous budget to the extent not fully reflected in the prior year's budget; (iv) increases or decreases in expenses attributable to the annualized effect of employee additions or reductions during the prior year contemplated by the budget for the prior year; (v) interest expense -19- 23 attributable to any loans; (vi) increases or decreases in overhead expenses in an amount equal to the total of overhead expenses reflected in the budget for the prior year (excluding non-recurring items) multiplied by the percentage increase or decrease in the U.S. Department of Labor Bureau of Labor Statistics Consumer Price Index for all Urban Consumers ("CPI-U") or a successor index for the prior Fiscal Year (but in no event will such change be more than 10% of the corresponding items in the prior budget); and (vii) decreases in expenses attributable to non-recurring items reflected in the prior year's budget. 4.4 Actions by Members. Neither the Company nor the Managing Member shall take any of the following actions without the prior approval of all the Board: (a) entry into areas of business other than the Business; (b) any amendment of this Agreement, including changing the Company's name, or any other organizational document of the Company; (c) any action relating to the merger, sale, consolidation, reorganization, dissolution, winding up, Liquidation or similar transaction involving all or substantially all of the Company or all or substantially all of its assets; (d) incurrence of any debt exceeding US$1,000,000 in the aggregate (excluding normal trade debt), or the issuance of any guarantee, or the creation of any Lien unless provided for in the Annual Budget under which the Company is then operating; (e) any transaction involving the Company, on the one hand, and a Member or Affiliate of a Member, on the other, other than transactions involving less than US$500,000 in the aggregate, which are entered into in the ordinary course of business on an arms-length basis; (f) any decision to acquire any interest or participation in, or to acquire all or substantially all the assets of, any other Person for an acquisition price of more than US$1,000,000; (g) appointment or removal of auditors of the Company, approval or adoption of accounting or tax principles applicable to the Company, and any change in the Fiscal Year of the Company; (h) any decision to require Additional Capital Contributions to the Company, other than as provided in Section 3.3 hereof; (i) any decision to distribute cash or other assets of the Company, except any distribution made pursuant to Section 3.7 hereof; (j) the admission of additional Members (except as provided in Section 8.1) or the grant by the Company of any right to acquire any interest in the Company or any stock or equity appreciation or similar right; -20- 24 (k) cause the Company (i) to enter into any contract or agreement or series of related contracts or agreements (including any programming rights or content rights acquisition agreements), whether oral or written, obligating the Company to expend money or provide goods or services other than in the ordinary course of business; (ii) to obligate the Company in any other manner, unless in each case the amount involved is less than US$100,000 or provided for in the Annual Budget; or (iii) to enter into any affiliation agreement with a distribution platform unless the terms of such affiliation agreement are at least as favorable to the Company as (x) those prevailing in the market for Non-Standard Television affiliation agreements for comparable programming services at such time or (y) those contained in affiliation agreements entered into by the Company and its predecessors in the past (excluding for purposes of such comparison (A) the affiliation agreement dated November 20, 1995 between Cablevision Systems Corporation, et al., and America's Health Network (the "Cablevision Agreement"), which was assigned to the Company on the date hereof, and (B) any other affiliation agreement with terms equally unfavorable or less favorable to the Company than those contained in the Cablevision Agreement); (l) cause the Company to sell, transfer, lease, or otherwise dispose of, or mortgage or pledge, either in a single transaction or a series of related transactions, any assets of the Company with an aggregate fair market value greater than US$1,000,000 except as reflected in an Annual Budget and except for the sale of inventory or the grant of programming rights in the ordinary course of Business; (m) settle any dispute or litigation or other proceeding, whether administrative or otherwise, which would have a material adverse affect on the Company or any Member, or waive any claim in excess of US$100,000 which the Company may have against another Person; (n) amend or modify the previously approved Annual Budget or Business Plan; (o) Subject to Section 8.1 hereof, approve the Transfer of any Interest including a repurchase of an Interest by the Company; (p) appointment or removal of the Tax Matters Member; or (q) any agreement by the Company to take any of the foregoing actions. 4.5 Managing Member's Services and Expenses. (a) Without limiting the generality of Section 4.1 in connection with the authority of the Managing Member, the Managing Member shall provide or cause to be provided to the Company national advertising sales and the administration thereof, commercial trafficking and broadcast operations (including program delivery to affiliates of the Company), administrative support in the areas of research, promotion, business affairs, legal affairs and accounting (collectively, the "Management Services") pursuant to the terms of a Management Services Agreement substantially in the form attached hereto as Exhibit B. During each of the first two years following the Effective Date, the Healtheon Member shall pay the Fox Member an annual fee of -21- 25 $15,000,000 (the "Management Fee") for procuring the Management Services. The Management Fee shall be paid quarterly in advance in four equal installments. In addition to the Management Fee, all reasonable and necessary expenses (including, but not limited to, human resources, insurance, out-of-pocket, salary, rent, utility costs and similar expenses, but excluding general overhead expenses and salaries, bonuses and benefits of executives serving on the Board or monitoring the Fox Member's investment) incurred in accordance with the Annual Budget by the Managing Member and by and from its Affiliates in furtherance of the Business shall be paid or reimbursed by the Company. (b) Except as otherwise contemplated by this Section 4.5 or in connection with a transaction or arrangement approved in accordance with Section 4.4 hereof, no Member shall be reimbursed for any of its overhead or general or administrative expenses attributable to the Company, nor shall salaries, fees, commissions or other compensation be paid by the Company to any Member or to any Affiliates of a Member for services rendered to the Company. 4.6 Indemnification. (a) No Member, Managing Manager or Representative (including the Tax Matters Member) (each, an "Indemnitee") shall be liable, in damages or otherwise, to the Company or any Member for any act or omission performed or omitted to be performed by it or him pursuant to the authority granted by this Agreement, except if such act or omission results from such Person's own bad faith, fraud, gross negligence, willful breach of this Agreement or willful or wanton misconduct. To the fullest extent permitted by law, the Company shall indemnify and hold harmless each Indemnitee from and against any and all losses, claims, demands, costs, damages, liabilities (joint or several), expenses of any nature (including reasonable attorneys' fees and disbursements), judgments, fines, settlements, and other amounts ("Damages") arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which an Indemnitee may be involved, or threatened to be involved, as a party or otherwise, arising out of or incidental to the business of the Company, regardless of whether an Indemnitee continues to be a Member, Managing Manager or Representative, or an officer, director, shareholder, member or partner of such Member, Managing Manager or Representative, at the time any such liability or expense is paid or incurred, if (i) the Indemnitee acted in good faith and in a manner it or be reasonably believed to be in, or not opposed to, the interests of the Company, and, with respect to any criminal proceeding, had no reason to believe this conduct was unlawful, and (ii) the Indemnitee's conduct did not constitute bad faith, fraud, gross negligence, willful breach of this Agreement, or willful or wanton misconduct. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere, or its equivalent, shall not, in and of itself, create a presumption or otherwise constitute evidence that the Indemnitee acted in a manner contrary to that specified in (i) or (ii) above. (b) Notwithstanding anything contained in this Section 4.6, the Company shall not indemnify and hold harmless any Indemnitee if a judgment or other final adjudication adverse to such Indemnitee establishes: (i) that such Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated or (ii) that such Indemnitee personally gained financial profit or other advantage to which he was -22- 26 not legally entitled. (c) Expenses (including reasonable attorneys' fees and disbursements) incurred in defending any claim, demand, action, suit or proceeding, whether civil, criminal, administrative or investigative, hereof, shall be paid by the Company in advance of the final disposition of such claim, demand, action, suit or proceeding upon receipt of an undertaking by or on behalf of the Indemnitee to repay such amount if it shall ultimately be determined, by a court of competent jurisdiction from which no further appeal may be taken or the time for any appeal has lapsed (or otherwise, as the case may be) that the Indemnitee is not entitled to be indemnified by the Company as authorized hereunder. (d) The indemnification provided by this Section 4.6 shall be in addition to any other rights to which each Indemnitee may be entitled under any agreement or vote of the Members, as a matter of law or otherwise, both (i) as to action in the Indemnitee's capacity as a Member, Managing Manager or Representative or as an officer, director, shareholder, member or partner of a Member, Managing Manager or Representative, and (ii) as to action in another capacity, and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns, administrators and personal representatives of the Indemnitee. (e) The Company may purchase and maintain insurance on behalf of one or more Indemnitees and other Persons against any liability which may be asserted against, or expense which may be incurred by, any such Person in connection with the Company's activities, whether or not the Company would have the power to indemnify such Person against such liability under the provisions of this Agreement. (f) Any indemnification hereunder shall be satisfied only out of the assets of the Company, and the Members and the Representatives shall not be subject to personal liability by reason of these indemnification provisions. (g) An Indemnitee shall not be denied indemnification in whole or in part under his Section 4.6 because the Indemnitee had an interest in the transaction with respect to which the Indemnification applies if the transaction was otherwise permitted by the terms of this Agreement. (h) To the same extent that the Company will indemnify and advance expenses to a Member or Representative, the Company may indemnify and advance expenses to any officer, employee or agent of the Company. 4.7 Officers. (a) Subject to the Healtheon Member's approval, which approval shall not be unreasonably withheld or delayed, the Managing Member shall appoint a chief executive officer ("CEO") of the Company. The CEO shall appoint a chief financial officer ("CFO") and a chief operating officer ("COO"). The CEO shall have the authority to select such other officers (other than a CFO and a COO) as may be necessary or desirable to carry out the day-to-day management of the business and the Company. -23- 27 (b) Each of the Fox Member and the Healtheon Member shall have the right, in its sole discretion, to cause the Company to terminate the employment of any officer of the Company including the CEO, the CFO or the COO. In case of any such termination, the terminated officer will be required to leave his or her position within 24 hours after receiving a notice of termination. (c) The appointment of any Person as an officer or agent of the Company will not, in and of itself, create any contractual rights between such Person and the Company. The officers of the Company, acting in their capacities as such, will be agents acting on behalf of the Company as principal. ARTICLE V LIABILITY OF A MEMBER 5.1 Limited Liability. Except as otherwise provided in the Act, the debts, obligations and liabilities of the Company (whether arising in contract, tort or otherwise) will be solely the debts, obligations and liabilities of the Company, and no Member of the Company (including any Person who formerly held such status) is liable or will be obligated personally for any such debt, obligation or liability of the Company solely by reason of such status. No individual trustee, officer, director, employee or agent of any Member will have any personal liability for the performance of any obligation of such Member under this Agreement. 5.2 Capital Contribution. Each Member is liable to the Company for any Capital Contribution or distribution that has been wrongfully or erroneously returned or made to such Person in violation of the Act, the Certificate or this Agreement. 5.3 Reliance. Any Member will be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements by (a) any of the Company's other Members, employees or committees or (b) any other Person who has been selected with reasonable care as to matters such Member reasonably believes are within such other Person's professional or expert competence. Matters as to which such reliance may be made include the value and amount of assets, liabilities, Profits and Losses of the Company, as well as other facts pertinent to the existence and amount of assets from which distributions to Members might properly be made. ARTICLE VI REPRESENTATIONS AND WARRANTIES As of the date hereof, each of the Members hereby makes to the other Member each of the representations and warranties set forth in this Article VI, and such warranties and representations shall survive the execution of this Agreement. 6.1 Due Incorporation; Authorization. Such Member is duly organized, validly existing -24- 28 and in good standing under the laws of the jurisdiction of its incorporation or formation and has the requisite power and authority to own its property and carry on its business as owned and carried on at the date hereof and as contemplated hereby. Such Member is duly licensed or qualified to do business and in good standing in each of the jurisdictions in which the failure to be so licensed or qualified would have a material adverse effect on its financial condition or its ability to perform its obligations hereunder. Such Member has the requisite power and authority to execute and deliver this Agreement and each other agreement to which it is to be a party as contemplated hereby and to perform its obligations hereunder and thereunder and the execution, delivery and performance of this Agreement and each such other agreement has been duly authorized by all necessary corporate or limited liability company action. This Agreement constitutes the legal, valid and binding obligation of such Member. 6.2 No Conflict. Neither the execution, delivery and performance of this Agreement nor the consummation by such Member of the transactions contemplated hereby will (a) conflict with, violate or result in a breach of any of the terms, conditions or provisions of any law, regulation, order, writ, injunction, decree, determination or award of any court, governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator, applicable to such Member, (b) conflict with, violate, result in a breach of or constitute a default under any of the terms, conditions or provisions of the articles of incorporation or bylaws or similar constituent documents of such Member or of any material agreement or instrument to which such Member is a party or by which such Member is or may be bound or to which any of its material properties or assets is subject, (c) conflict with, violate, result in a breach of, constitute a default under (whether with notice or lapse of time or both), accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under any indenture, mortgage, lease agreement or instrument to which such Member is a party or by which such Member is or may be bound, or (d) result in the creation or imposition of any lien upon any of the material properties or assets of such Member., the effect of which could reasonably be expected to materially impair such Member's ability to perform its obligations under this Agreement. 6.3 No Conflict; No Default. There are no actions, suits, proceedings or investigations pending or to the knowledge of such Member, threatened against or affecting such Member or any of its properties, assets or businesses in any court or before or by any governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator which could, if adversely determined (or, in the case of an investigation could lead to any action, suit, or proceeding, which if adversely determined could) reasonably be expected to materially impair such Member's ability to perform its obligations under this Agreement. 6.4 Unregistered Interests. Such Member (a) acknowledges that the Interests are being acquired without registration under the Securities Act of 1933, as amended, or under similar provisions of state law, (b) represents and warrants to the Company and the other Member that it is acquiring the Interest for its own account, for investment and with no view to the distribution of the Interest, and (c) agrees not to transfer or attempt to transfer such Interest in the absence of registration under that Act and any applicable state securities laws or an available exemption from such registration. -25- 29 ARTICLE VII BOOKS AND RECORDS; REPORTS TO MEMBERS 7.1 Books and Records. (a) The following books and records of the Company shall be kept at its principal office: (i) a current list of the full name and last known business, residence or mailing address of each Member; (ii) originals of the Certificate and of this Agreement, and any amendments thereto (and any signed powers of attorney pursuant to which any such document was executed); (iii) a copy of the Company's federal, state and local income tax returns and reports and annual financial statements of the Company, for the five most recent years; and (iv) minutes, or minutes of action or written consent, of every meeting of the Board. At the Company's expense, there will also be kept at the Company's principal office separate books of accounts for the Business, which will be a true and accurate record of all costs and expenses incurred, all credits made and received and all income derived in connection with the operation of the Business in accordance with GAAP. (b) Each of the Members or its duly authorized representatives shall have the right, upon reasonable notice, at its own expense, to examine and inspect, during normal business hours and for any lawful purpose related to the affairs of the Company or the investment in the Company by such Member, any of the books of account, and business records of the Company, and to copy any such books of account and business records of the Company. The Company's books of account and business records shall be filed and preserved for a period of at least five years or such longer period as required by law. 7.2 Financial Reports; Subscriber Reports. The Managing Member shall deliver or cause to be delivered to each Member, no later than forty-five (45) days after the close of each of the first three quarters of the Company's Fiscal Year, and sixty (60) days after the end of each such Fiscal Year, a financial report of the business and operations of the Company prepared in accordance with GAAP, relating to such period, which report shall include a balance sheet as of the end of such period, a statement of income (loss) and members' Capital Accounts and cash flows (including sources and uses of funds) for the period then ended, and in each case a comparison of the period then ended with the corresponding period in the Fiscal Year immediately preceding such periods, which, in the case of the report furnished after the close of the Fiscal Year, shall be audited by the Company's independent certified public accountants. In addition, the quarterly financial statements shall be accompanied by an analysis, in reasonable detail, of the variance between the Company's -26- 30 operating results and the corresponding amounts in the then current Annual Budget. The quarterly financial reports may in each case be subject to normal year-end adjustments. In addition to the foregoing financial statements, the financial report furnished after the close of each Fiscal Year shall also include a statement of cash flows, and allocations to the Members of the Company's taxable income, gains, losses, deductions and credits. The Company will initially engage Arthur Andersen LLP as its independent certified public accountants and thereafter such other accounting firm as the Members shall determine. The Company shall bear the cost of each annual audit and the cost of any other services furnished to the Company by its independent certified public accountants as provided herein. The Managing Member shall report to the Members on a monthly basis prior to the 20th day of the following month the number of subscribers to the Company's Non-Standard Television Services broken down on the basis of operators and showing the number of adds and drops for each such period. 7.3 Tax Returns and Information. (a) The Managing Member is hereby designated "Tax Matters Member" for the Company and shall be so designated in each Federal information return filed on behalf of the Company. The Tax Matters Member shall not be liable to the Company or any Member for any act or omission taken or suffered by it in such capacity in good faith and in the belief that such act or omission is in or is not opposed to the best interests of the Company; provided, however that such act or omission is not in violation of this Agreement and does not constitute gross negligence, fraud or a willful violation of law. Within five Business Days of receipt, each Member shall give to each other Member written notice of receipt from any taxing authority of any notification of an audit or investigation of the Company. (b) The Tax Matters Member shall cause income and other required Federal, state and local tax returns for the Company to be prepared. The Tax Matters Member shall make or maintain in effect an election under Section 754 of the Code to adjust the basis of Company Property under Sections 734 and 743 of the Code for taxable years ending subsequent to the Effective Date upon the request of any Member. The Tax Matters Member shall make such other elections as it shall deem to be in the best interests of the Company and the Members. The cost of preparation of such returns by outside preparers, if any, shall be borne by the Company. (c) The Tax Matters Member shall cause to be provided to each Member no later than June 30 of each year information concerning the Company's projected taxable income or loss and each class of income, gain, loss, deduction or credit which is relevant to reporting a Member's share of Company income, gain, loss, deduction or credit for purposes of Federal or state income tax. Information required for the preparation of a Member's income tax returns shall be furnished to the Members as soon as possible after the close of the Company's Fiscal Year. -27- 31 ARTICLE VIII COMPANY INTERESTS; RESTRICTIONS ON TRANSFER 8.1 Transfer. No Member shall Transfer any Interest owned by it except for (a) Transfers to an Affiliate of the Transferor at the time, provided that the Transferee remains an Affiliate of the Transferor immediately after the Transfer; (b) pledges or grants of a security interest to secure loans to the Company; or (c) Transfers made in compliance with Section 8.5 hereof, if applicable. Any Transfer of an Interest other than as specifically permitted by this Section 8.1 shall be void and of no effect. It is agreed that if the Fair Market Value of any Member's Interest equals 25% or more of the Fair Market Value of such Member's total assets determined on the date any proposed Transfer of any equity interest in such Member is to be consummated, any Transfer of any equity interest in such Member shall constitute a Transfer hereunder. The Members shall be responsible to cause the owners of their respective equity interests to enter into agreements as may be necessary to enable such Member to ensure compliance with this provision. 8.2 Admission as a Member. No Transferee of any Interests from a Member shall be admitted to the Company as a Member unless the Transfer shall have been made in accordance with this Agreement and the Transferee shall have executed an instrument satisfactory to the non-Transferring Member, whereby such Transferee agrees to abide by the terms and conditions of this Agreement and become a Member of the Company. 8.3 No Right to Withdraw. No Member shall have any right to resign or otherwise withdraw from the Company prior to the dissolution and winding up of the Company, without the express written consent of the other Member. 8.4 Corporate Conversion. (a) Upon the execution of this Agreement, it is the express intention and understanding of the existing Members and those Persons who became Members at the time of the execution of this Agreement that upon the occurrence of certain events the Company shall be converted into a corporation in the manner set forth herein by the action of the Board and without the necessity of any action or any investment decision on the part of any Member. (b) Upon the determination by the Board, the Managing Member shall cause a Corporate Conversion by merger into another corporation or otherwise, and in connection therewith cause the conversion of the Interests into the capital stock of any resulting corporation having relative rights, limitations, preferences and other terms consistent with the Interests so converted. (c) The Members shall have no appraisal rights pursuant to the Act, applicable law or otherwise in connection with a Corporate Conversion or any other transaction authorized under this Agreement. (d) In connection with the consummation of a Corporate Conversion, the Board shall have the authority to merge, consolidate or reorganize one or more of the subsidiaries with one -28- 32 or more other subsidiaries or other entities wholly-owned directly or indirectly by the Company or the surviving corporation in the Corporate Conversion. (e) The board is specifically authorized to take any and all further action, and to execute, deliver and file any and all additional agreements, documents or instruments, as it may determine to be necessary or appropriate in order to effectuate the provisions of this Section 8.4, and each Member hereby agrees to execute, deliver and file any such agreements, documents or instruments or to take such action as may be reasonably requested by the Board for the purpose of effectuating the provisions of this Section 8.4. 8.5 Put/Call. (a) At any time within the 45 day period commencing on the fifth anniversary of the Effective Date, the Fox Member shall have the right to require the Healtheon Member to purchase (the "Put") from the Fox Member, and the Healtheon Member shall have the right to require the Fox Member to sell to the Healtheon Member (the "Call"), all (but not less than all) of the Fox Member's Interests in the Company. The parties shall structure the Transfer of Interests pursuant to the Section as a transaction which qualifies as a tax-free reorganization under Section 368 of the Code. The consideration due upon consummation of the Put or the Call, as the case may be, shall be shares of Common Stock of Healtheon/WebMD, such shares of Common Stock shall be issuable to the Fox Member or its designee and shad be based on the number of Subscribers to the Non-Standard Television Services operated by the Company as of the fifth anniversary of the Effective Date, to be determined as follows: (i) if the number of Subscribers is less than 20 million, no shares of Common Stock will be issuable, and the consideration shall be $1.00; (ii) if the number of subscribers is 50 million or greater, the consideration shall be the issuance 8,291,939 shares of Common Stock; and (iii) if the number of Subscribers is 20 million or more, but less than 50 million, the consideration shall be, the issuance of a prorated number of shares of Common Stock between 1 and 8,291,939, based on the actual number of Subscribers between 20 million and 50 million. For the purposes hereof, "Subscriber" shall mean as of any date a subscriber to the Non-Standard Television Services operated by the Company as of such date who (a) is no more than 60 days past due in payment (measured from the date the relevant bill is issued), (b) has received and paid for in full the programming service operated by the Company for at least one month following the later of the date of activation and the conclusion of any promotional or "free" months, if any, (c) became a subscriber as a result of ordinary marketing practices in the normal course of business and (d) is capable of receiving at least 24 hours per day, 7 days per week (subject to system failure) of the Non-Standard Television Services operated by the Company. -29- 33 (b) The closing of the purchase and sale pursuant to this Section 8.5 shall be held at the principal place of business of the Company or at such other mutually acceptable place on a mutually acceptable date no later than the later of (i) 30 days after the final determination of the number of Subscribers as set forth in Section 8.5(a) hereof or (ii) 10 days after the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR") or the completion of other applicable regulatory proceedings. The parties agree to cooperate with each other in filing all necessary notices and related materials to comply with the provisions of HSR or other regulatory requirements, if applicable. At such closing, the Fox Member shall assign to the Healtheon Member, or its designees, the Company Interest of the Fox Member, and shall execute such documents and instruments as may be necessary to effectuate the sale of the Interest free and clear of all Liens. The Fox Member shall represent and warrant in writing that it is the owner and holder of the Interest which it is selling, free and clear of all Liens (other than pledges or security interests that secure indebtedness of the Company), that the Fox Member is the record and beneficial owner of the such Interest, and that it has the full right, power and authority to convey such Interest to the Healtheon Member. ARTICLE IX DISSOLUTION AND LIQUIDATION 9.1 Dissolution. Dissolution of the Company will occur upon the happening of any of the following events: (a) the sale or other disposition of all or substantially all of the Company's assets; (b) the affirmative vote of all of the Members; or (c) the entry of a decree of Judicial dissolution under the Act. 9.2 Exclusive Means of Dissolution. The exclusive means by which the Company may be dissolved are set forth in 9.1. The Company will not be dissolved upon the death, retirement, resignation, expulsion, bankruptcy or dissolution of any Member or upon the occurrence of any other event which terminates the continued membership of any Member in the Company. 9.3 Liquidation. Upon Dissolution of the Company, the Company will immediately proceed to wind up its affairs and liquidate pursuant to this 9.3. Following Dissolution, the Board shall appoint a person to serve as the liquidating trustee and thus be charged with the duty to wind up the affairs of the Company and distribute its assets as provided herein. A reasonable time will be allowed for the orderly Liquidation of the Company and the discharge of liabilities to creditors so as to enable the Company to minimize any losses attendant upon Liquidation. Any gain or loss on disposition of any Company assets in Liquidation will be allocated to Members in accordance with the provisions of Section 3.6. Any liquidating trustee is entitled to reasonable compensation for services actually performed, as approved by the Board, and may contract for such assistance in the liquidating process as such Person deems necessary or desirable. Until the filing of a certificate of cancellation under 9.9, and without affecting the liability of the Members and without imposing -30- 34 liability on the liquidating trustee, the liquidating trustee may settle and close the Company's business, prosecute and defend suits, dispose of its property, discharge or make provision for its liabilities, and make Distributions in accordance with the priorities set forth in this Article. 9.4 Priority of Payment. If the Company is dissolved the assets of the Company will be distributed in Liquidation in the following order: (a) First, to creditors by the payment or provision for payment of the debts and liabilities of the Company (other than any loans or advances that may have been made by any Member or Affiliate) and the expenses of Liquidation; (b) Second, to the setting up of any reserves that are reasonably necessary for any contingent, conditional or unmatured liabilities or obligations of the Company; (c) Third, to the repayment of any loans or advances to the Company that may have been made by any Member or any Affiliate of a Member (according to the relative priority of repayment of such loans or advances and proportionally among loans or advances of equal priority if the amount available for repayment is insufficient for payment in full); and (d) Fourth, to the Members in proportion to the positive balances in their respective Capital Accounts after such Capital Accounts have been adjusted for all allocations of Profits and Losses and items thereof for the Fiscal Year during which such liquidation occurs. 9.5 Liquidating Distributions. If the Company is dissolved, the liquidating distributions due to the Members will be made by selling the assets of the Company and distributing the net proceeds. Notwithstanding the preceding sentence, but only upon the affirmative vote of all Members, the liquidating distributions may be made by distributing the assets of the Company in kind to the Members in proportion to the amounts distributable to them pursuant to Section 9.4, valuing such assets at their Fair Market Value (net of liabilities secured by such property that the Member takes subject to or assumes) on the date of distribution. Each Member agrees to save and hold harmless the other Members from such Member's proportionate share of any and all such liabilities which are taken subject to or assumed. Appropriate and customary prorations and adjustments will be made incident to any distribution in kind. The Members will look solely to the assets of the Company for the return of their Capital Contributions, and if the assets of the Company remaining after the payment or discharge of the debts and liabilities of the Company are insufficient to return such contributions, they will have no recourse against any other Member. The Members acknowledge that Section 9.4 may establish distribution priorities different from those set forth in the provisions of the Act applicable to distributions upon Liquidation, and the Members agree that they intend, to that extent, to vary those provisions by this Agreement. 9.6 No Restoration Obligation. Nothing contained in this Agreement imposes on any Member an obligation to make an Additional Capital Contribution in order to restore a deficit Capital Account upon Liquidation of the Company. -31- 35 9.7 Timing. Final distributions in Liquidation will be made by the end of the Company's Fiscal Year in which such actual Liquidation occurs (or, if later, within 90 days after such event) in the manner required to comply with the Section 704(b) of the Treasury Regulations. Payments or distributions in Liquidation may be made to a liquidating trust established by the Company for the benefit of those entitled to payments under Section 9.4, in any manner consistent with this Agreement and the Section 704(b) of the Treasury Regulations. 9.8 Liquidating Reports. A report will be submitted with each liquidating distribution to Members made pursuant to 9.5, showing the collections, disbursements and distributions during the period which is subsequent to any previous report. A final report, showing cumulative collections, disbursements and distributions, will be submitted upon completion of the Liquidation. 9.9 Certificate of Cancellation. Upon Dissolution of the Company and the completion of the winding up of its business, the Company will file a certificate of cancellation (to cancel the Certificate of Formation) with the Delaware Secretary of State pursuant to the Act. At such time, the Company will also file an application for withdrawal of its certificate of authority in any jurisdiction where it is then qualified to do business. A certificate of cancellation will also be filed at any time when there are no Members. ARTICLE X ADDITIONAL AGREEMENTS 10.1 Licenses. In connection with the formation of the Company, the Healtheon Member shall procure a trademark license agreement, substantially in the form annexed hereto as Exhibit C and a content license agreement, substantially in the form annexed hereto as Exhibit D. ARTICLE XI MISCELLANEOUS 11.1 Waiver of Partition. Except as may be otherwise provided by law in connection with the winding-up, liquidation and dissolution of the Company, each Member hereby irrevocably waives any and all rights that it may have to maintain an action for partition of any of the Company Property. 11.2 Modification; Waivers. This Agreement may be modified or amended only with the written consent of each Member. Except as otherwise specifically provided herein, no Member shall be released from its obligations hereunder without the written consent of the other Member. The observance of any terms of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) by the party or parties entitled to enforce such term, but any such waiver shall be effective only if in a writing signed by the party or parties against which such waiver is to be asserted. Except as otherwise specifically provided herein, no delay on the part of any party hereto in exercising any right, power or privilege hereunder shall operate as a -32- 36 waiver thereof, nor shall any waiver on the part of any party hereto of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. 11.3 Entire Agreement. This Agreement, and the documents expressly referred to herein, and all related documents, each as amended, constitute the entire agreement among the Members with respect to the subject matter hereof and supersede any prior agreement or understanding between or among the Members with respect to such subject matter. 11.4 Severability. If any provision of this Agreement, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Agreement or the application of such provision to other Persons or circumstances shall not be affected thereby; provided, however that the parties shall negotiate in good faith with respect to an equitable modification of the provision or application thereof held to be invalid. 11.5 Notices. All notices, requests, demands, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given on the date delivered by hand or on the third Business Day after such notice is mailed by registered or certified mail, postage prepaid, and, pending the designation by written notice of another address, addressed as follows: If to the Fox Member: Fox Member c/o News America Incorporated 1211 Avenue of the Americas New York, New York 10036 Telecopier: (212) 768-2029 Attn: Arthur M. Siskind, Esq. With a copy to: Squadron, Ellenoff, Plesent & Sheinfeld, LLP 551 Fifth Avenue New York, New York 10176 Attention: Joel I. Papernik, Esq. Telecopier: (212) 697-6686 -33- 37 If to the Healtheon Member: c/o Healtheon/WebMD Corporation 400 The Lenox Building Atlanta, Georgia 30326, USA Telephone: (404) 479-7600 Telecopier: (404) 479-7651 Attention: Jeffrey T. Arnold Chief Executive Officer With a copy to: Nelson Mullins Riley & Scarborough, L.L.P. Bank of America Corporate Center Suite 2600, 100 Tryon Street Charlotte, North Carolina 28202 Telecopier: __________ Attention: H. Bryan Ives III, Esq. C. Mark Kelly, Esq. 11.6 Successors and Assigns. Except as otherwise specifically provided herein, this Agreement shall be binding upon and inure to the benefit of the Members and their legal representatives, successors and permitted assigns. 11.7 Counterparts. This Agreement may be executed in one or more counterparts, all of which together shall constitute one and the same instrument. 11.8 Headings, Cross-references. The Article and Section headings in this Agreement are for convenience of reference only, and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof. 11.9 Construction. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company. No one, including but not limited to the Members or any creditor of the Company or any of its Members, shall have any rights under this Agreement against any Affiliate of any Member. 11.10 Property Rights, Confidentiality. All books, records and accounts maintained exclusively for the Company (including, without limitation, marketing reports and all other data whether stored on paper or in electronic or other form), and any contracts or agreements (including, without limitation, agreements for the purchase, lease or license of programming) entered into by or exclusively on behalf of the Company, shall at all times be the exclusive property of the Company. All property (real or personal or mixed) purchased with Company funds, and all moneys held or collected for or on behalf of the Company shall at all times be the exclusive property of the Company. Except as expressly agreed to by the Members, no Member shall, during the period such -34- 38 Member is a Member and for a period ending two (2) years after such Member has ceased to be a Member, disclose any confidential or proprietary information with respect to the Company to any Person, except (a) with the prior written consent of the other Member; (b) to the extent necessary to comply with law or the valid order of a court of competent jurisdiction, in which event the party making such disclosure shall so notify the other Member as promptly as practicable (and, if possible, prior to making such disclosure) and shall seek confidential treatment of such information; (c) as part of its normal reporting or review procedure to its parent company, its auditors and its attorneys; provided, however, that such Member shall be liable for any breach by such parent company, auditors or attorneys of any provision of this Section 11.10; (d) in connection with the enforcement of such Member's rights hereunder; (e) disclosures to an Affiliate of, or professional advisor to, such Member in connection with the performance by such Member of its obligations hereunder; provided, however that such Member shall be liable for any breach by such Affiliate or professional advisor of any provision of this Section; and (f) to a prospective purchaser of all or a portion of such Member's Interest in connection with a sale in accordance with the terms of this Agreement; provided, however, that such Member shall be liable for any breach by such prospective purchaser of any provision of this Section. Except as provided in the preceding sentence, no Member, nor any of its Affiliates, shall, during the periods referred to in such sentence, use any confidential or proprietary information with respect to the Company other than for the benefit of the Company. This Section 11.10 hereof shall survive the termination of this Agreement, the Dissolution of the Company, the withdrawal of any Member and the Transfer of the Interest of any Member. 11.11 Further Actions. Each Member shall execute and deliver such other certificates, agreements and documents, and take such other actions, as may reasonably be required in connection with the formation and continuation of the Company and the achievement of its purposes. 11.12 Governing Law; Forum. This Agreement will be governed by, and construed in accordance with the laws of the State of Delaware without regard to any conflicts of laws rules. Any conflict or apparent conflict between this Agreement and the Act will be resolved in favor of this Agreement, except as otherwise required by the Act. 11.13 Expenses of the Parties. All expenses incurred by or on behalf of the parties hereto in connection with the authorization, preparation and consummation of this Agreement, including, without limitation, all fees and expenses of agents, representatives, counsel and accountants employed by the parties hereto in connection with the authorization, preparation, execution and consummation of this Agreement shall be borne solely by the party who shall have incurred the same. -35- 39 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers or members hereunto duly authorized as of the date first written above. HEALTHEON WEB/MD CABLE CORPORATION By: /s/ -------------------------------- Name: W. Michael Heekin Title: Vice President AHN/FIT CABLE, LLC By: /s/ -------------------------------- Name: Daniel Fawcett Title: Exec. Vice President The undersigned, by executing this Agreement, hereby unconditionally guarantees the full and prompt payment and performance of all obligations of the Healtheon Member set forth in this Agreement. This is a guaranty of payment and not of collection. HEALTHEON/WEBMD CORPORATION By: /s/ -------------------------------- Name: W. Michael Heekin Title: Exec. Vice President The undersigned, by executing this Agreement, hereby unconditionally guarantees the full and prompt payment and performance of all obligations of the News Member set forth in this Agreement. This is a guaranty of payment and not of collection. THE NEWS CORPORATION LIMITED By: /s/ -------------------------------- Name: Arthur Siskind Title: Director EX-10.2 3 AMENDED AND RESTATED OPERATING AGREEMENT 1 EXHIBIT 10.2 AMENDED AND RESTATED OPERATING AGREEMENT OF THE H/W HEALTH & FITNESS LLC JANUARY 26, 2000 THE OWNERSHIP INTERESTS IN THIS LIMITED LIABILITY COMPANY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR STATE SECURITIES AUTHORITIES AND MAY NOT BE SOLD OR REGISTERED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED. THE SALE OR OTHER TRANSFER OF THE OWNERSHIP INTERESTS IS ALSO RESTRICTED BY PROVISIONS OF THIS AGREEMENT AND RELATED AGREEMENTS. 2 TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS..............................................................................1 ARTICLE II FORMATION ...............................................................................7 2.1 Formation ...............................................................................7 2.2 Name ....................................................................................7 2.3 Office and Agent ........................................................................8 2.4 Purposes ................................................................................8 2.5 Powers ..................................................................................8 2.6 Ownership of Property....................................................................8 2.7 Qualification in Other Jurisdictions ....................................................8 ARTICLE III CAPITAL .................................................................................8 3.1 Initial Capital Contributions by Members; Initial Capital Accounts; Initial Tax Basis in Assets ...................................8 3.2 Percentage Interests ....................................................................9 3.3 Additional Capital ......................................................................9 3.4 Capital Accounts .......................................................................10 3.5 Allocation of Items of Company Income, Gain, Loss, Deduction and Credit .............................................................11 3.6 Distributions ..........................................................................14 3.7 Withholding ............................................................................14 3.8 Distribution Limitation ................................................................15 3.9 Company Funds ..........................................................................15 3.10 Capital Contribution ...................................................................15 ARTICLE IV MANAGEMENT .............................................................................15 4.1 Management of the Company's Business ...................................................15 4.2 Board ..................................................................................16 4.3 Extraordinary Actions ..................................................................16 4.4 Indemnification ........................................................................17 ARTICLE V LIABILITY OF A MEMBER...................................................................19 5.1 Limited Liability ......................................................................19 5.2 Capital Contribution ...................................................................19 5.3 Reliance ...............................................................................19 ARTICLE VI REPRESENTATIONS AND WARRANTIES .........................................................19 6.1 Due Incorporation; Authorization .......................................................20 6.2 No Conflict ............................................................................20 6.3 No Conflict; No Default ................................................................20 6.4 Unregistered Interests .................................................................20
3 ARTICLE VII BOOKS AND RECORDS; REPORTS TO MEMBERS...........................................................21 7.1 Books and Records......................................................................21 7.2 Financial Reports; Subscriber Reports..................................................21 7.3 Tax Returns and Information............................................................22 ARTICLE VIII COMPANY INTERESTS; RESTRICTIONS ON TRANSFER.....................................................23 8.1 Transfer...............................................................................23 8.2 Admission as a Member..................................................................23 8.3 No Right to Withdraw...................................................................23 8.4 Corporate Conversion...................................................................23 8.5 Put/Call...............................................................................24 ARTICLE IX DISSOLUTION AND LIQUIDATION.....................................................................24 9.1 Dissolution............................................................................24 9.2 Exclusive Means of Dissolution.........................................................25 9.3 Liquidation............................................................................25 9.4 Priority of Payment....................................................................25 9.5 Liquidating Distributions..............................................................26 9.6 No Restoration Obligation..............................................................26 9.7 Timing.................................................................................26 9.8 Liquidating Reports....................................................................26 9.9 Certificate of Cancellation............................................................26 ARTICLE X ADDITIONAL AGREEMENTS...........................................................................26 10.1 Indemnification........................................................................26 10.2 Galaxy Asset License...................................................................27 ARTICLE XI MISCELLANEOUS...................................................................................27 11.1 Waiver of Partition....................................................................27 11.2 Modification; Waivers..................................................................27 11.3 Entire Agreement.......................................................................28 11.4 Severability...........................................................................28 11.5 Notices................................................................................28 11.6 Successors and Assigns.................................................................29 11.7 Counterparts...........................................................................29 11.8 Headings; Cross-references.............................................................29 11.9 Construction...........................................................................29 11.10 Property Rights; Confidentiality.......................................................29 11.11 Further Actions........................................................................30 11.12 Governing Law; Forum...................................................................30 11.13 Expenses of the Parties................................................................30
4 AMENDED AND RESTATED OPERATING AGREEMENT OF THE H/W HEALTH & FITNESS LLC THIS AMENDED AND RESTATED OPERATING AGREEMENT is made as of the 26th day of January 2000, by and between Healtheon/WebMD Cable Corporation, a Delaware corporation and wholly-owned subsidiary of Healtheon/WebMD Corporation ("Healtheon/WebMD"), (together with any of its Affiliate Transferees (as hereinafter defined), the "Healtheon Member"), and AHN/FIT Internet, LLC, a Delaware limited liability company (together with any of its Affiliate Transferees (as hereinafter defined), the "Fox Member," and together with the Healtheon Member, the "Members"). W I T N E S S E T H: The Fox Member entered into an Operating Agreement on the 10th day of January, 2000 (the "Original Agreement"). The Fox Member desires to amend and restate the Original Agreement in its entirety as set forth herein. In consideration of the mutual promises and covenants contained in this Agreement, and intending to be legally bound, the Members hereby agree as follows: ARTICLE I DEFINITIONS As used in this Agreement, the following terms have the meanings assigned to them in this Article I (except as otherwise expressly provided) and include the plural as well as the singular and vice versa. All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP. "Act" shall mean the Delaware Limited Liability Company Act, as amended. "Adjusted Capital Account Deficit" shall mean the deficit balance (if any) in such Member's Capital Account as of the end of any Fiscal Year, after (a) crediting to such Capital Account any amount which such Member is obligated to restore pursuant to this Agreement or is deemed obligated to restore pursuant to the minimum gain chargeback provisions of the Section 704(b) of 5 the Treasury Regulations, and (b) charging to such Capital Account any adjustments, allocations or distributions described in the qualified income offset provisions of the Section 704(b) of the Treasury Regulations which are required to be charged to such Capital Account pursuant to this Agreement. "Affiliate" shall mean, with respect to any Person, any Person that directly or indirectly Controls, is Controlled by, or is under common Control with such Person. "Agreement" shall mean this Amended and Restated Operating Agreement, also known as a "limited liability company agreement" under the Act, as amended from time to time. "Available Cash" shall mean for any Fiscal Year or other period, the positive amount, if any, obtained by calculating net income (or loss) of the Company determined in accordance with GAAP for such period, adjusted, without duplication, by adding (x) depreciation, amortization and other non-cash charges to the extent deducted in determining net income and deducting (y) (i) the current portion of indebtedness of the Company, (11) prepaid expenses and other cash expenditures to the extent not deducted in determining net income or loss and (iii) reasonable reserves for working capital and contingent liabilities as determined by the Managing Member. "Board" shall have the meaning set forth in Section 4.2 hereof. "Business" shall mean the business of the Company as set forth in Section 2.4 hereof. "Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday or Friday which is not a day on which banking institutions in New York City are authorized or obligated by law to close. "Call" shall have the meaning set forth in Section 8.5(a) hereof. "Capital Account" shall have the meaning set forth in Section 3.4(a) hereof. "Capital Contribution" shall mean the amount which a Member shall contribute to the capital of the Company as provided in Article III hereof. "Certificate" shall mean the certificate of formation of the Company, as amended from time to time. "Code" shall mean the United States Internal Revenue Code of 1986, as amended from time to time, or any successor statute or statutes. "Common Stock" shall mean the common stock, par value $0.0001 per share, of Healtheon/WebMD and any and all shares of capital stock or other equity securities of: (i) Healtheon/WebMD which are added to or exchanged or substituted for the Common Stock by reason of the declaration of any stock dividend or stock split, the issuance of any distribution or the reclassification, readjustment, recapitalization or other such modification of the capital structure of 6 Healtheon/WebMD; and (ii) any other corporation, now or hereafter organized under the laws of any state or other governmental authority, with which Healtheon/WebMD is merged, which results from any consolidation or reorganization to which Healtheon/WebMD is a party, or to which is sold all or substantially all of the shares or assets of Healtheon/WebMD, if immediately after such merger, consolidation, reorganization or sale, Healtheon/WebMD or any Stockholders of Healtheon/WebMD own equity securities having in the aggregate more than fifty percent (50%) of the total voting power of such other corporation. "Company" shall mean the limited liability company formed pursuant to the Certificate and governed by this Agreement and the Act. "Company Minimum Gain" shall mean the amount determined in accordance with the principles of Treasury Regulations Section 1.704-2(d). "Company Property" shall have the meaning set forth in Section 2.6 hereof. "Control" shall mean the possession, direct or indirect of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Corporate Conversion" shall mean any merger, consolidation, conversion by filing, assignment of assets, or similar transaction or series of transactions resulting in a corporation substantially all of the assets of which consist of substantially all of the assets that were held directly or indirectly by the Company immediately prior to such transaction and substantially all the capital stock of which corporation is held by Persons who were either (i) Members immediately prior to such transaction or (ii) the owners of a Member the sole or principal asset of which Member was an Interest in the Company. "Current Market Price" shall mean, per share of Common Stock on any date specified, the average of the daily market prices of such Common Stock for the 20 consecutive Business Days ending on the second Business Day prior to such date. The daily market price of Common Stock on any Business Day will be (a) the last sale price on such day on the principal stock exchange on which such share of Common Stock is then listed or admitted to trading (including the Nasdaq National Market System if such Common Stock is admitted to trading thereon), or (b) if no sale takes place on such date on any exchange on which such share of Common Stock is listed or admitted to trading, the average of the reported closing bid and asked prices on such day as officially noted on any exchange. "Damages" shall have the meaning set forth in Section 4.4(a) hereof. "Depreciation" shall mean, for each Fiscal Year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable for federal income tax purposes with respect to an asset for such year or other period, except that if the Gross Asset Value of any asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning 7 Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization, or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Tax Matters Member. "Dissolution" shall mean the happening of any of the events described in Section 9.1 hereof. "Economic Risk of Loss" shall have the meaning set forth in Sections 1.704-2(b)(4) and 1.752-2 of the Treasury Regulations. "Effective Date" shall mean the date hereof, unless the parties otherwise mutually agree in writing that some other date shall be the Effective Date. "Fair Market Value" shall mean, for purposes of this Agreement, the cash price at which a willing seller would sell, and a willing buyer would buy, the property in question, both having full knowledge of, the relevant facts and being under no compulsion to buy or sell, in an arm's length transaction without time constraints. Fair Market Value may be determined by mutual agreement of the Members. If the Members are unable to agree on a Fair Market Value within 15 days of the date on which a determination of Fair Market Value is required, or if they determine that an appraisal should be used to determine Fair Market Value, then each of the Members will cause the Fair Market Value as of the most recent month end (or as of such other date as may be expressly provided herein) to be determined by a qualified appraiser in accordance with the following procedure. The Members shall, within 10 days of the date that an appraiser is required, seek to select a mutually agreeable appraiser. If the Members are unable to agree on a single qualified appraiser within 10 days, each Member will have 10 additional days to select one appraiser internationally recognized in valuing items of the kind required to be valued. Any Member not appointing an appraiser pursuant to the preceding sentence within the allotted time shall have no right to select an appraiser thereafter but shall be bound by the procedure set forth herein using values determined by appraisers selected by the other Member or Members, as applicable. The appointed appraiser, or appraisers, as the case may be, will determine the Fair Market Value. The Members will use their reasonable best efforts to cause such appraiser or appraisers to submit to them written reports indicating the determination of Fair Market Value within 30 days after the date such appraiser is selected. If there is more than one appointed appraiser, and the highest of the appraisals is not more than 110% of the lowest appraisal, the average of the two will be the Fair Market Value. If the highest of the appraisals is more than 110% of the lowest appraisal, the Members will immediately notify the appraisers and cause them to appoint another similarly qualified appraiser within 10 days after such notice. The Members will use their reasonable best efforts to cause such appraiser (who will not be apprised of the determination of the other appraisers) to submit a written report to each of them indicating such appraiser's determination of Fair Market Value within 30 days after the date such appraiser is selected. If three appraisals are necessary, then the average of the two appraisals in which the determinations of Fair Market Value are closest together will be the Fair Market Value or, if the highest and lowest are equidistant from the middle determination, then the middle determination will be the Fair Market Value. A determination of Fair Market Value as provided herein will be final, binding and nonappealable. Each Member will pay one half of the fees and costs of any appraiser 8 involved in a determination of Fair Market Value required by this Agreement. "Fiscal Year" shall mean the twelve-month period ending December 31 of each year, or such other fiscal year as the Members may designate. "Fox Member" shall have the meaning set forth in the preamble to this Agreement. "GAAP" shall mean generally accepted accounting principles as in effect in the United States from time to time and consistently applied, with such exceptions thereto or deviations therefrom, if any, as the Managing Member may approve. "Gross Asset Value" shall mean, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (a) the initial Gross Asset Value of any asset contributed by a Member to the Company shall be the Fair Market Value of such asset; (b) the Gross Asset Value of all Company assets shall be adjusted to equal their respective Fair Market Value (taking Section 7701 (g) of the Code into account), as of the following times: (i) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis capital contribution; (ii) the distribution by the Company to a Member of more than a de minimis amount of Company Property as consideration for an interest in the Company, in the case of either (i) or (ii), if the Members reasonably determine that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company and (iii) the liquidation of a Member's interest in the Company or the Company within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations; (c) the Gross Asset Value of any Company asset distributed to any Member shall be the Fair Market Value (taking Section 7701(g) of the Code into account) of such asset on the date of distribution; (d) the Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Section 732(d), Section 734(b) or Section 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations and Section 3.5 hereof, provided, however, that Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the extent that the Members determine that an adjustment pursuant to subsection (b) of this definition is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection (d); and (e) if the Gross Asset Value of any asset has been determined or adjusted pursuant to subsection (a), (b) or (c) hereof, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing gains or losses from the disposition of such asset. 9 "Healtheon Member" shall have the meaning set forth in the preamble to this Agreement. "HSR" shall have the meaning set forth in Section 8.5(b) hereof. "Indemnitee" shall have the meaning set forth in Section 4.4(a) hereof. "Interest" shall mean, as to each Member, such Member's rights to participate in the income, gains, losses, deductions and credits of the Company, together with all other rights and obligations of such Member in the capital of the Company under this Agreement. "Internet" shall mean a decentralized worldwide network of computer networks. "Lien" shall mean a mortgage, lien, pledge, security interest or other encumbrance. "Liquidation" shall mean the process of winding up and terminating the Company after its Dissolution. "Losses" shall have the meaning set forth in Section 3.5(a) hereof. "Managing Member" shall mean the Healtheon Member, and any Person who may after the date hereof become a successor to the Healtheon Member, as provided herein. "Member" shall mean the Fox Member, the Healtheon Member and any permitted transferee of an Interest or portion thereof who becomes a Member in accordance with Article VIII. The Fox Member and the Healtheon Member (together with such transferees) may be collectively referred to herein as the "Members." "Member Nonrecourse Debt" shall mean liabilities of the Company treated as "partner nonrecourse debt" under Section 1.704-2(b)(4) of the Treasury Regulations. "Member Nonrecourse Deductions" shall mean any losses, deductions or Code Section 705(a)(2)(b) expenditures characterized as "partner nonrecourse deductions" under Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Treasury Regulations. "Member Nonrecourse Debt Minimum Gain" shall mean an amount of gain characterized as "partner nonrecourse debt minimum gain" under Treasury Regulations Sections 1.704-2(i)(2) and 1.704-2(i)(3). "Nonrecourse Deductions" in any year shall mean the Company deductions that are characterized as "nonrecourse deductions" under Sections 1.704-2(b)(1) and 1.704-2(c) of the Treasury Regulations. 10 "Percentage Interest" shall mean, with respect to each Member, such Member's proportionate share of the total Interests in the Company expressed as a percentage, as set forth in Section 3.2 hereof and as may be adjusted from time to time pursuant to this Agreement. "Person" shall mean an individual or a corporation, limited liability company, joint venture, partnership, trust, unincorporated association, governmental authority or other entity. "Prime Rate" shall mean a rate of interest equal to the rate per annum announced from time to time by Citibank, N.A. at its principal office as its prime rate (which rate shall change when and as such announced prime rate changes) but in no event more than the maximum rate of interest permitted to be collected from time to time under applicable usury laws. "Prime Time" shall mean between the hours of 6:00 p.m. and 12 a.m. "Profits" shall have the meaning set forth in Section 3.5(a) hereof. "Put" shall have the meaning set forth in Section 8.5(a) hereof. "Regulatory Allocations" shall have the meaning set forth in subparagraph 3.5(c)(viii) hereof. "Representatives" shall have the meaning set forth in Section 4.2(a) hereof. "Super Majority Vote" shall mean a vote of 100% of the Percentage Interests. "Section 704(c) Property" shall have the meaning set forth in Section 1.704-3(a)(3) of the Treasury Regulations and shall include assets treated as Section 704(c) Property by virtue of Section 1.704-1(b)(2)(iv)(f) of the Treasury Regulations. "Tax Matters Member" shall mean the "tax matters partner," as that term is defined in Section 6231(a)(7) of the Code. "Transfer" shall mean a sale, exchange, assignment, transfer, pledge or other disposition of all or any part of an Interest (whether voluntary, involuntary or by operation of law). "Transferee" shall mean a Person to whom an Interest is Transferred in compliance with this Agreement. "Transferor" shall mean a Person who Transfers all or any part of an Interest in compliance with this Agreement. "Treasury Regulations" shall mean the income tax regulations (including temporary and proposed) promulgated under the Code. 11 ARTICLE II FORMATION 2.1 Formation. The Company was formed as a limited liability company pursuant to the Act by the filing on January 10, 2000 of the Certificate with the Secretary of State of the State of Delaware. 2.2 Name. The business of the Company shall be conducted under the name The H/W Health & Fitness LLC or such other or additional name or names and variations thereof as the Managing Member may from time to time determine. The Managing Member shall file, or cause to be filed, any fictitious name certificate and similar filings, and any amendments thereto, as may be directed by the Board from time to time. 2.3 Office and Agent. (a) The initial registered office of the Company in Delaware will be at 1013 Centre Road, Wilmington, Delaware 19805-1297, and its initial registered agent will be Corporation Service Company. The Company may, upon compliance with the applicable provisions of the Act, change its registered office or registered agent in Delaware. (b) The initial principal office of the Company will be at 1300 North Market Street, Suite 404, Wilmington, Delaware 19801. The Company may maintain any other offices at any other places that the Managing Member deems advisable. 2.4 Purposes. The purposes of the Company shall be (a) to own and operate Internet services devoted exclusively to health and fitness content, consisting of audio-visual data and information, and a transaction platform that facilitates and streamlines interactions among participants in the healthcare industry (the "Business"), (b) to acquire, own, hold, sell or otherwise dispose of interests in the assets used to conduct the Business, (c) to make and perform all contracts and engage in all activities and transactions and to do any and all things necessary or advisable to carry out the foregoing purpose, and (d) to otherwise engage in any lawful activity incidental thereto for which limited liability companies may be organized under the Act. 2.5 Powers. The Company shall have all the powers granted to a limited liability company under the Act, as well as all powers necessary or convenient to achieve its purposes and to further its business. 2.6 Ownership of Property. Legal title to all assets, rights and property, whether real, personal or mixed, owned by the Company (collectively, the "Company Property") shall be acquired, held and conveyed only in the name of the Company. 2.7 Qualification in Other Jurisdictions. The Managing Member shall cause the Company to be qualified or registered under applicable laws of any jurisdiction in which the Company transacts business and shall be authorized to execute, deliver and file any certificates and documents necessary to effect such qualifications or registrations including, without limitation, the 12 appointment of agents or service of process in such jurisdictions. ARTICLE III CAPITAL 3.1 Initial Capital Contributions by Members; Initial Capital Accounts; Initial Tax Basis in Assets. The Company was formed on January 10, 2000 and on the date hereof the Fox Member contributed to the capital of the Company the assets, subject to the liabilities, which constituted all of its assets, other than the Galaxy Assets, as defined in the Purchase Agreement, and cash on hand, and all of its liabilities, other than liabilities in respect of member loans. The Healtheon Member then purchased a 50% Interest from the Fox Member pursuant to a purchase agreement dated as of the date hereof. It is agreed that (i) the Healtheon Member is admitted to the Company as a Member, (ii) this Agreement shall govern the management, business and affairs of the Company, (iii) the purchase of its Interest by the Healtheon Member shall be treated under the Code as a purchase of an undivided one-half interest in each of the Company's assets, subject to its liabilities, on the date hereof, followed by the contribution of such assets subject to such liabilities to the capital of the Company by the Healtheon Member and the contribution of the remaining one-half undivided interest in such assets subject to the remaining liabilities by the Fox Member to the capital of the Company, (iv) the initial Capital Account of the Healtheon Member and the Fox Member shall each equal (S750,000), (v) the aggregate adjusted tax basis under the Code of the Healtheon Member's share of the assets of the Company on the date hereof shall equal the Healtheon Member's Capital Account plus one-half of the Company's liabilities on the date hereof, (vi) the aggregate adjusted tax basis under the Code of the Fox Member's share of the assets of the Company on the date hereof shall equal one-half of the basis of such assets in the hands of the Company immediately prior to the purchase by the Healtheon Member of its Interest, plus one-half of the Company's liabilities at such time and (vii) the difference between amount described in clauses (v) and (vi) above shall be treated as Section 704(c) Property with respect to the Fox Member. 3.2 Percentage Interests. Subject to adjustment pursuant to Section 3.3 hereof, the Percentage Interest of each Member shall initially be as follows: Healtheon Member: 50% Fox Member: 50% The Percentage Interest of a Member may be adjusted from time to time pursuant to Section 3.3 hereof. 3.3 Additional Capital. (a) If, at any time, the Managing Member determines that the Company requires additional funds for its continued operation or growth, the Managing Member may make a loan (a "Member Loan") to the Company in an amount equal to the funds so required, any such loan to bear 13 interest, at the Prime Rate plus two percent on the date nearest the date of the advance, which rate shall be adjusted annually, based on changes to the Prime Rate on the anniversary of such Member Loan. For so long as any Member Loan remains unpaid, no distributions shall be made by the Company to the Members (whether before or after the Dissolution of the Company) in respect of their Percentage Interests. Instead all of the Company's Available Cash shall be paid to the Managing Member until each Member Loan and all interest accrued thereon has been paid in full to the Managing Member. Payments in respect of any Member Loan will be applied in the order that such loans were made, and all payments will be applied first to accrued but unpaid interest and then to reduce the outstanding principal amount of the loan. A Member Loan shall not become due and payable until the earlier of: (A) the sale of the Fox Member's Interest pursuant to Section 8.5 hereof or (B) the Dissolution of the Company. Any Member Loan shall be prepayable in whole or in part at any time without penalty. (b) Except as set forth in this Section 3.3, no Member shall have any obligation to make additional capital contributions to the Company. 3.4 Capital Accounts. (a) A separate capital account (each a "Capital Account") shall be maintained for each Member. Such Member's initial Capital Account shall be as described in Section 3.1 above. Subject to the provisions of subsections (b), (c) and (d) of this Section 3.4, the Capital Account of each Member shall be (i) increased by (A) the amount of cash and the Gross Asset Value of any property contributed to the Company by such Member (net of liabilities secured by the property or to which the property is subject), and (B) Profits and any other items of income and gain allocated to such Member pursuant to Section 3.5 hereof and (ii) decreased by (A) the amount of cash and the Gross Asset Value of any property distributed to such Member (net of liabilities secured by the property or to which the property is subject) and (B) the Losses and any other items of deduction and loss allocated to such Member pursuant to Section 3.5, and otherwise maintained in accordance with Treasury Regulations in order for the allocation of Profits and Losses pursuant to Section 3.5. (b) For purposes of this Section 3.4, an assumption of a Member's unsecured liability by the Company shall be treated as a distribution of money to that Member. An assumption of the Company's unsecured liability by a Member shall be treated as a cash contribution to the Company by that Member. (c) In the event a contribution of money or other property is made to the Company other than a contribution made ratably by all existing Members, then the Capital Accounts for the Members shall be adjusted for the hypothetical "book" gain or loss that would have been realized by the Company if all Company assets had been sold for their Gross Asset Values in a cash sale, and shall be in proportion to the Percentage Interests of the Members. If a determination of the Fair Market Value of the Company is made pursuant to Section 3.3 in connection with any Additional Capital Contribution which would also be subject to this Section 3.4(c), the Gross Asset Value of the Company's assets shall be deemed to be equal to the Fair Market Value of the Company plus its liabilities as determined pursuant to Section 3.3 hereof. 14 (d) In the event that assets of the Company other than money are distributed to a Member in liquidation of the Company, or in the event that assets of the Company other than money are distributed to a Member in kind, in order to reflect unrealized gain or loss, Capital Accounts for the Members shall be adjusted for the hypothetical "book" gain or loss that would have been realized by the Company if the distributed assets had been sold for their Gross Asset Values in a cash sale. In the event of the liquidation of a Member's interest in the Company, in order to reflect unrealized gain or loss, Capital Accounts for the Members shall be adjusted for the hypothetical "book" gain or loss that would have been realized by the Company if all Company assets had been sold for their Gross Asset Values in a cash sale. (e) The foregoing provisions of this Section 3.4 and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Section 704(b) of the Treasury Regulations and will be interpreted and applied in a manner consistent with such Treasury Regulations and any amendment or successor provision thereto. The Members will cause appropriate modifications to be made if unanticipated events might otherwise cause this Agreement not to comply with Section 704(b) of the Treasury Regulations, so long as such modifications do not cause a material change in the relative economic benefits of the Members under this Agreement. (f) If all or any part of an Interest is transferred in accordance with this Agreement, the Capital Account of the Transferor that is attributable to the transferred Interest will carry over to the Transferee. 3.5 Allocation of Items of Company Income, Gain, Loss, Deduction and Credit. (a) For purposes of this Agreement, the terms "Profits" and "Losses" shall mean, for each Fiscal Year or other period, an amount equal to the Company's taxable income or loss, as the case may be for such year or period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss and deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments: (i) any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this paragraph shall be added to such taxable income or loss; (ii) any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations, and not otherwise taken into account in computing Profits or Losses pursuant to this Section shall be subtracted from such taxable income or loss; (iii) in the event the Gross Asset Value of any Company asset is adjusted pursuant to subsection (b) or (c) of the definition thereof, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses; 15 (iv) gain or loss resulting from the disposition of any Company asset with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the asset disposed of, notwithstanding that the adjusted tax basis of such asset differs from its Gross Asset Value; (v) in lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year or other period, computed in accordance with the definition thereof, (vi) to the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) of the Code is required, pursuant to Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations, to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member's Interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) from the disposition of such asset and shall be taken into account for purposes of computing Profits or Losses; and (vii) notwithstanding any other provision of this Section, any items which are specially allocated pursuant to Section 3.5(c) hereof shall not be taken into account in computing Profits and Losses. (b) After giving effect to the special allocations set forth in Section 3.5(c): (i) All Company Profits shall be allocated to the Members as follows: (A) first, pro rata to the Members in proportion to and to the extent of Losses previously allocated to each Member pursuant to Section 3.5(b)(ii)(B) hereof and not previously recouped pursuant to this Section 3.5(b)(i)(A); and (B) thereafter, to the Members in accordance with their respective Percentage Interests. (ii) All Company Losses shall be allocated to the Members as follows: (A) first, pro rata to the Members in proportion to and to the extent of Profits previously allocated to such Members pursuant to Section 3.5(b)(i)(B) hereof and not previously recouped pursuant to this Section 3.5(b)(ii)(A); and (B) thereafter, to the Members in accordance with their respective Percentage Interests. 16 (c) Special Allocations. The following special allocations shall be made in the following order: (i) Minimum Gain Chargeback. Subject to the exceptions set forth in Section 1.704-2(f) of the Treasury Regulations, if there is a net decrease in Company Minimum Gain during a Fiscal Year, each Member shall be specially allocated items of income and gain for Capital Account purposes for such year (and, if necessary, for subsequent years) in an amount equal to such Member's share of the net decrease in Company Minimum Gain during such year (which share of such net decrease shall be determined under Section 1.704-2(g)(2)) of the Treasury Regulations. It is intended that this Section 3.5(c)(i) shall constitute a "minimum gain chargeback" as provided by Section 1.704-2(f) of the Treasury Regulations and shall be interpreted consistently therewith. (ii) Member Nonrecourse Debt Minimum Gain Chargeback. Subject to the exceptions contained in Section 1.704-2(i)(4) of the Treasury Regulations, if there is a net decrease in Member Nonrecourse Debt Minimum Gain during a Fiscal Year, any Member with a share of such Member Nonrecourse Debt Minimum Gain (determined in accordance with Section 1.704-2(i)(5)) of the Treasury Regulations as of the beginning of such year shall be specially allocated items of income and gain for Capital Account purposes for such year (and, if necessary, for subsequent years) in an amount equal to such Member's share of the net decrease in Member Nonrecourse Debt Minimum Gain (which share of such net decrease shall be determined under Sections 1.704-2(i)(4) and 1.704-2(j)(2)) of the Treasury Regulations. It is intended that this Section 3.5(c)(ii) shall constitute a "partner nonrecourse debt minimum gain chargeback" as provided by Section 1.704-2(i)(4) of the Treasury Regulations and shall be interpreted consistently therewith. (iii) Nonrecourse Deductions. Any Nonrecourse Deductions shall be allocated to the Members in the same manner as Net Losses are allocated pursuant to Section 3.5(b)(ii) hereof (iv) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions shall be allocated to the Member that bears the Economic Risk of Loss for the Member Nonrecourse Debt to which such deductions relate as provided in Section 1.704-2(i)(1) of the Treasury Regulations. If more than one Member bears the Economic Risk of Loss, such deduction shall be allocated between or among such Members in accordance with the ratios in which such Members share such risk of loss. (v) Qualified Income Offset. In the event any Member unexpectedly receives any adjustments, allocations, or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations (modified as appropriate, by Sections 1.704-2(g)(1) and 1.704-2(i)(5)) of the Treasury Regulations, items of Company income and gain for Capital Account purposes for such Fiscal Year shall be specially allocated to the Member in an amount and manner sufficient to eliminate, to the extent required by he Treasury Regulations, any Adjusted Capital Account Deficit of the Member as quickly as possible, provided that an allocation pursuant to this Section 3.5(c)(v) shall be made if and only to the extent that the Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article III have been tentatively made as if this Section 3.5(c)(v) were 17 not in the Agreement. (vi) Certain Section 754 Adjustment. To the extent any adjustment to the adjusted tax basis of any Company asset pursuant to Section 732(d), Section 734(b) or Section 743(b) of the Code is required, pursuant to Section 1.704-1 (b)(2)(iv)(m) of the Treasury Regulations, to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of its Interest in the Company, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in accordance with their interests in the Company as determined under Section 1.704-1(b)(3) of the Treasury Regulations in the event Section 1. 704-1(b)(2)(iv)(m)(2) of the Treasury Regulations applies, or to the Member to whom such distribution was made in the event Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations applies. (vii) Limit on Loss Allocations. Notwithstanding the provisions of Section 3.5(b)(11) hereof or any other provision of this Agreement to the contrary, Net Losses (or items thereof) will not be allocated to a Member if such allocation would cause or increase a Member's Adjusted Capital Account Deficit and will be reallocated to the other Members in proportion to their Percentage Interests, subject to the limitations of this Section 3.5(c)(vii). (viii) Curative Allocations. The allocations under Section 3.5(c)(1) through (c)(vii) (such allocations, the "Regulatory Allocations") are intended to comply with certain requirements of the Treasury Regulations. It is the intent of the Members that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of income, gain, loss or deduction pursuant to this Agreement. Therefore, notwithstanding any other provision of this Agreement (other than the Regulatory Allocations), the Company shall make such offsetting special allocations of income, gain, loss or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each Member's Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not part of the Agreement and all items were allocated pursuant to Section 3.5(b), as the case may be. In exercising its discretion under this Section 3.5(c)(viii), the Company shall take into account future Regulatory Allocations under Section 3.5(c)(i) through (c)(vii) that are likely to offset other Regulatory Allocations previously made. 3.6 Distributions. (a) The Company shall repay all principal and accrued interest on Member Loans (in the order of payment contemplated by Section 3.3(b) hereof) prior to making any cash distributions to the Members from Available Cash. (b) No Member shall have the right to withdraw any amount from its Capital Account. No Member shall have the right to demand or, to receive any distribution other than distributions of Available Cash pursuant to Section 3.6(c) hereof, without the unanimous approval of the Members. No Member shall have the right to receive a distribution of property other than cash 18 from the Company, unless otherwise agreed by all the Members. (c) The Company shall, from time to time, but not without consent of the Board, distribute Available Cash to the Members. Any such distributions shall be made in accordance with the Members' Percentage Interests. Nothing set forth in this Section 3.6 shall impair the right or relieve the duty of the Managing Member, or if there is no Managing Member the Board, as provided in this Agreement to establish reasonable cash reserves, 3.7 Withholding. If required by the Code or by state or local law, the Company will withhold any required amount from distribution to a Member for payment to the appropriate taxing authority. Any amount so withheld from a Member will be treated as a distribution by the Company to such Member. Each Member will timely file any agreement that is required by any taxing authority in order to avoid any withholding obligation that would otherwise be imposed on the Company. 3.8 Distribution Limitation. Notwithstanding any other provision of this Agreement, the Company will not make any distribution to the Members if, after the distribution, the liabilities of the Company (other than liabilities to Members on account of their Percentage Interests) would exceed the Fair Market Value of the Company's assets. With respect to any property subject to a liability for which the recourse of creditors is limited to the specific property, such property will be included in assets only to the extent the property's Fair Market Value exceeds its associated liability, and such liability will be excluded from the Company's liabilities. 3.9 Company Funds. The funds of the Company shall be deposited in such bank accounts or invested in investments as shall be determined by the Managing Member, or if there is no Managing Member, the Board. The Company's funds shall not be commingled with funds not belonging to the Company and shall be used only for the affairs or business of the Company. It shall be the responsibility of the Managing Member to establish a cash management plan pursuant to which the funds of the Company will be managed. 3.10 Capital Contribution. Each Member is liable to the Company for any Capital Contribution or distribution that has been wrongfully or erroneously returned or made to such Person in violation of the Act or this Agreement. ARTICLE IV MANAGEMENT 4.1 Management of the Company's Business. (a) The management of the Company shall be vested in the Managing Member. Except as provided in Section 4.3 hereof, or for actions and determinations which pursuant to this Agreement can be taken or made only with the consent of all of the Members, the Managing Member shall manage the affairs and business of the Company, and the Managing Member shall possess all powers necessary, convenient or appropriate to carrying out the purposes and business of the Company, including, without limitation. doing all things and taking all actions necessary to 19 carry out the terms and provisions of this Agreement. (b) Nothing contained in this Article IV shall impose any obligation on any Person doing business or dealing with the Company to inquire as to whether the Managing Member has exceeded its authority in executing any contract, lease, mortgage, note, deed or other instrument on behalf of the Company, and any such Person shall be fully protected in relying upon the plenary authority of the Managing Member. (c) The Managing Member shall serve without compensation for its services. The Managing Member may delegate such of its respective powers and authority to officers, employees and agents of the Company as the Managing Member shall deem necessary or appropriate for the conduct of the Business. (d) Other than the Managing Member, no Member shall have any authority to act for, or to assume any obligation or responsibility on behalf of, the Company, except as expressly provided herein or as expressly approved by written consent of all the Members. 4.2 Board. (a) The Members hereby form a supervisory board (the "Board"), which shall be responsible for taking all action required under this Agreement to be taken by the Board. The Board shall consist of three representatives (the "Representatives"), all of whom shall be appointed by the Healtheon Member The Healtheon Member agrees to notify the Fox Member of the initial Representatives appointed by it. (b) The Healtheon Member may at any time remove the Representative(s) and appoint substitute Representative(s) in their stead, by delivering written notice of such substitution to the Fox Member. The presence or participation of at least two of the three Representatives shall constitute a quorum for the taking of any action. Except as otherwise provided in Section 4.3 or as otherwise provided in this Agreement, all actions required or permitted to be taken by the Board must be by the affirmative vote, at a meeting at which a quorum is present, of a majority of Representatives. The Fox Member shall have the right to bring non-voting representatives to any meeting of the Board. No Representative shall be entitled to compensation from the Company for serving in such capacity. (c) The Board shall meet no less often than quarterly and shall establish meeting times, dates and places and requisite notice requirements and adopt rules or procedures consistent with the terms of this Agreement, which shall include rules and procedures for the dissemination of written information to the Members concerning the items to be acted upon at any regular or special meeting of the Board. Any Member may call a special meeting of the Board for any purpose by giving the other Member at least five (5) Business Days' notice thereof, except in the case of an emergency, in which case, such notice as is practicable shall be sufficient. The Board may meet by means of conference telephone call, and any Representative or non-voting representative may participate in any Board meeting by conference telephone call. Any action that may be taken at a meeting of the Board may be taken without a meeting by written consent of the number of 20 Representatives needed to authorize the action; provided, that all Members, are given notice of such written consent at least 15 Business Days prior to its effective date. (d) The Managing Member shall keep the Board informed with respect to all matters of material interest to the Members and shall in any event report to the Board not less frequently than once each quarter with respect to material matters relating to the business and affairs of the Company. 4.3 Extraordinary Actions. Neither the Company nor the Managing Member nor the Board shall take any of the following actions without the prior approval of the Fox Member. (a) entry into areas of business other than the Business; (b) any amendment of this Agreement, including changing the Company's name, or any other organizational document of the Company; (c) any action relating to the merger, sale, consolidation, reorganization, Dissolution, winding up, Liquidation or similar transaction involving all or substantially all of the Company or all or substantially all of its assets; (d) approval or adoption of accounting or tax principles applicable to the Company; (e) any decision to distribute cash or other assets of the Company, except any distribution made pursuant to Section 3.6 hereof; (f) the admission of additional Members (except as provided in Section 8.1) or the issuance of any additional Interests to the Members; (g) Subject to Section 8.1 hereof, approve the Transfer of any Interest including a repurchase of an Interest by the Company; or (h) any agreement by the Company to take any of the foregoing actions. 4.4 Indemnification. (a) No Member, Managing Member or Representative (including the Tax Matters Member) (each, an "Indemnitee") shall be liable, in damages or otherwise, to the Company or any Member for any act or omission performed or omitted to be performed by it or him pursuant to the authority granted by this Agreement, except if such act or omission results from such Person's own bad faith, fraud, gross negligence, willful breach of this Agreement or willful or wanton misconduct. To the fullest extent permitted by law, the Company shall indemnify and hold harmless each Indemnitee from and against any and all losses, claims, demands, costs, damages, liabilities (joint or several), expenses of any nature (including reasonable attorneys' fees and disbursements), judgments, fines, settlements, and other amounts ("Damages") arising from any and all claims, 21 demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which an Indemnitee may be involved, or threatened to be involved, as a party or otherwise, arising out of or incidental to the business of the Company, regardless of whether an Indemnitee continues to be a Member, Managing Member or Representative, or an officer, director, shareholder, member or partner of such Member, Managing Member or Representative, at the time any such liability or expense is paid or incurred, if (i) the Indemnitee acted in good faith and in a manner it or he reasonably believed to be in, or not opposed to, the interests of the Company, and, with respect to any criminal proceeding, had no reason to believe this conduct was unlawful, and (ii) the Indemnitee's conduct did not constitute bad faith, fraud, gross negligence, willful breach of this Agreement, or willful or wanton misconduct. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere, or its equivalent, shall not, in and of itself, create a presumption or otherwise constitute evidence that the Indemnitee acted in a manner contrary to that specified in (i) or (ii) above. (b) Notwithstanding anything contained in this Section 4.4, the Company shall not indemnify and hold harmless any Indemnitee if a judgment or other final adjudication adverse to such Indemnitee establishes: (i) that such Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated or (ii) that such Indemnitee personally gained financial profit or other advantage to which he was not legally entitled. (c) Expenses (including reasonable attorneys' fees and disbursements) incurred in defending any claim, demand, action, suit or proceeding, whether civil, criminal, administrative or investigative, hereof, shall be paid by the Company in advance of the final disposition of such claim, demand, action, suit or proceeding upon receipt of an undertaking by or on behalf of the Indemnitee to repay such amount if it shall ultimately be determined, by a court of competent jurisdiction from which no further appeal may be taken or the time for any appeal has lapsed (or otherwise, as the case may be) that the Indemnitee is not entitled to be indemnified by the Company as authorized hereunder. (d) The indemnification provided by this Section 4.4 shall be in addition to any other rights to which each Indemnitee may be entitled under any agreement or vote of the Members, as a matter of law or otherwise, both (i) as to action in the Indemnitee's capacity as a Member, Managing Member or Representative or as an officer, director, shareholder, member or partner of Member, Managing Member or Representative and (ii) as to action in another capacity, and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns, administrators and personal representatives of the Indemnitee. (e) The Company may purchase and maintain insurance on behalf of one or more Indemnitees and other Persons against any liability which may be asserted against, or expense which may be incurred by, any such Person in connection with the Company's activities, whether or not the Company would have the power to indemnify such Person against such liability under the provisions of this Agreement. 22 (f) Any indemnification hereunder shall be satisfied only out of the assets of the Company, and the Members and the Representatives shall not be subject to personal liability by reason of these indemnification provisions. (g) An Indemnitee shall not be denied indemnification in whole or in part under this Section 4.4 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement. (h) To the same extent that the Company will indemnify and advance expenses to a Member, the Company may indemnify and advance expenses to any officer, employee or agent of the Company. 4.5 Officers. (a) The Managing Member shall appoint a chief executive officer ("CEO") of the Company. The CEO shall appoint a chief financial officer ("CFO") and a chief operating officer ("COO"). The CEO shall have the authority to select such other officers (other than a CFO and a COO) as may be necessary or desirable to carry out the day-to-day management of the business and the Company. (b) The appointment of any Person as an officer or agent of the Company will not, in and of itself, create any contractual rights between such Person and the Company. The officers of the Company, acting in their capacities as such, will be agents acting on behalf of the Company as principal. ARTICLE V LIABILITY OF A MEMBER 5.1 Limited Liability. Except as otherwise provided in the Act, the debts, obligations and liabilities of the Company (whether arising in contract, tort or otherwise) will be solely the debts, obligations and liabilities of the Company, and no Member of the Company (including any Person who formerly held such status) is liable or will be obligated personally for any such debt, obligation or liability of the Company solely by reason of such status. No individual trustee, officer, director, employee or agent of any Member will have any personal liability for the performance of any obligation of such Member under this Agreement. 5.2 Capital Contribution. Each Member is liable to the Company for any Capital Contribution or distribution that has been wrongfully or erroneously returned or made to such Person in violation of the Act, the Certificate or this Agreement. 5.3 Reliance. Any Member will be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements by (a) any of the Company's other Members, employees or committees or (b) any other Person who has been selected with reasonable care as to matters such Member reasonably believes are within such other Person's professional or expert competence. Matters as to which such reliance may be made include the value 23 and amount of assets, liabilities, Profits and Losses of the Company, as well as other facts pertinent to the existence and amount of assets from which distributions to Members might properly be made. ARTICLE VI REPRESENTATIONS AND WARRANTIES As of the date hereof, each of the Members hereby makes to the other Member each of the representations and warranties set forth in this Article V1, and such warranties and representations shall survive the execution of this Agreement. 6.1 Due Incorporation, Authorization. Such Member is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation and has the requisite power and authority to own its property and carry on its business as owned and carried on at the date hereof and as contemplated hereby. Such Member is duly licensed or qualified to do business and in good standing in each of the jurisdictions in which the failure to be so licensed or qualified would have a material adverse effect on its financial condition or its ability to perform its obligations hereunder. Such Member has the requisite power and authority to execute and deliver this Agreement and each other agreement to which it is to be a party as contemplated hereby and to perform its obligations hereunder and thereunder and the execution, delivery and performance of this Agreement and each such other agreement has been duly authorized by all necessary corporate or limited liability company action. This Agreement constitutes the legal, valid and binding obligation of such Member. 6.2 No Conflict. Neither the execution, delivery and performance of this Agreement nor the consummation by such Member of the transactions contemplated hereby will (a) conflict with, violate or result in a breach of any of the terms, conditions or provisions of any law, regulation, order, writ, injunction, decree, determination or award of any court, governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator, applicable to such Member, (b) conflict with, violate, result in a breach of or constitute a default under any of the terms, conditions or provisions of the articles of incorporation or bylaws or similar constituent documents of such Member or of any material agreement or instrument to which such Member is a party or by which such Member is or may be bound or to which any of its material properties or assets is subject, (c) conflict with, violate, result in a breach of, constitute a default under (whether with notice or lapse of time or both), accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under any indenture, mortgage, lease agreement or instrument to which such Member is a party or by which such Member is or may be bound, or (d) result in the creation or imposition of any lien upon any of the material properties or assets of such Member, the effect of which could reasonably be expected to materially impair such Member's ability to perform its obligations under this Agreement. 6.3 No Conflict, No Default. There are no actions, suits, proceedings or investigations pending or to the knowledge of such Member, threatened against or affecting such Member or any of its properties, assets or businesses in any court or before or by any governmental department, 24 board, agency or instrumentality, domestic or foreign, or any arbitrator which could, if adversely determined (or, in the case of an investigation could lead to any action, suit, or proceeding, which if adversely determined could) reasonably be expected to materially impair such Member's ability to perform its obligations under this Agreement. 6.4 Unregistered Interests. Such Member (a) acknowledges that the Interests are being acquired without registration under the Securities Act of 1933, as amended, or under similar provisions of state law, (b) represents and warrants to the Company and the other Member that it is acquiring the Interest for its own account, for investment and with no view to the distribution of the Interest, and (c) agrees not to transfer or attempt to transfer such Interest in the absence of registration under that Act and any applicable state securities laws or an available exemption from such registration. ARTICLE VII BOOKS AND RECORDS; REPORTS TO MEMBERS 7.1 Books and Records. (a) The following books and records of the Company shall be kept at its principal office: (i) a current list of the full name and last known business, residence or mailing address of each Member; (ii) originals of the Certificate and of this Agreement, and any amendments thereto (and any signed powers of attorney pursuant to which any such document was executed); (iii) a copy of the Company's federal, state and local income tax returns and reports and annual financial statements of the Company, for the five most recent years; and (iv) minutes, or minutes of action or written consent, of every meeting of the Board. At the Company's expense, there will also be kept at the Company's principal office separate books of accounts for the Business, which will be a true and accurate record of all costs and expenses incurred, all credits made and received and all income derived in connection with the operation of the Business in accordance with GAAP. (b) Each of the Members or its duly authorized representatives shall have the right, upon reasonable notice, at its own expense, to examine and inspect, during normal business hours and for any lawful purpose related to the affairs of the Company or the investment in the Company by such Member, any of the books of account, and business records of the Company, and to copy any such books of account and business records of the Company. The Company's books of account and business records shall be filed and preserved for a period of at least five years or such 25 longer period as required by law. 7.2 Financial Reports; Subscriber Reports. The Managing Member shall deliver or cause to be delivered to each Member, no later than forty-five (45) days after the close of each of the first three quarters of the Company's Fiscal Year, and sixty (60) days after the end of each such Fiscal Year, a financial report of the business and operations of the Company prepared in accordance with GAAP, relating to such period, which report shall include a balance sheet as of the end of such period, a statement of income (loss) and members' Capital Accounts and cash flows (including sources and uses of funds) for the period then ended, and in each case a comparison of the period then ended with the corresponding period in the Fiscal Year immediately preceding such periods, which, in the case of the report furnished after the close of the Fiscal Year, shall be audited by the Company's independent certified public accountants. The quarterly financial reports may in each case be subject to normal year-end adjustments. In addition to the foregoing financial statements, the financial report furnished after the close of each Fiscal Year shall also include a statement of cash flows, and allocations to the Members of the Company's taxable income, gains, losses, deductions and credits. The Company will initially engage Arthur Andersen LLP as its independent certified public accountants and thereafter such other accounting firm as the Members shall determine. The Company shall bear the cost of each annual audit and the cost of any other services furnished to the Company by its independent certified public accountants as provided herein. 7.3 Tax Returns and Information. (a) The Managing Member is hereby designated "Tax Matters Member" for the Company and shall be so designated in each Federal information return filed on behalf of the Company. The Tax Matters Member shall not be liable to the Company or any Member for any act or omission taken or suffered by it in such capacity in good faith and in the belief that such act or mission is in or is not opposed to the best interests of the Company; provided, however that such act or omission is not in violation of this Agreement and does not constitute gross negligence, fraud or a willful violation of law. Within five Business Days of receipt, each Member shall give to each other Member written notice of receipt from any taxing authority of any notification of an audit or investigation of the Company. (b) The Tax Matters Member shall cause income and other required Federal, state and local tax returns for the Company to be prepared. The Tax Matters Member shall make or maintain in effect an election under Section 754 of the Code to adjust the basis of Company Property under Sections 734 and 743 of the Code for taxable years ending subsequent to the Effective Date upon the request of any Member. The Tax Matters Member shall make such other elections as it shall deem to be in the best interests of the Company and the Members. The cost of preparation of such returns by outside preparers, if any, shall become by the Company. (c) The Tax Matters Member shall cause to be provided to each Member no later than December 31 of each year information concerning the Company's projected taxable income or loss and each class of income, gain, loss, deduction or credit which is relevant to reporting a Member's share of Company income, gain, loss, deduction or credit for purposes of Federal or state income tax. Information required for the preparation of a Member's income tax returns shall be 26 furnished to the Members as soon as possible after the close of the Company's Fiscal Year. ARTICLE VIII COMPANY INTERESTS; RESTRICTIONS ON TRANSFER 8.1 Transfer. No Member shall Transfer any Interest owned by it except for (a) Transfers to an Affiliate of the Transferor at the time, provided that the Transferee remains an Affiliate of the Transferor immediately after the Transfer; (b) pledges or grants of a security interest to secure loans to the Company; or (c) Transfers made in compliance with Section 8.5 hereof, if applicable. Any Transfer of an Interest other than as specifically permitted by this Section 8.1 shall be void and of no effect. It is agreed that if the Fair Market Value of any Member's Interest equals 25% or more of the Fair Market Value of such Member's total assets determined on the date any proposed Transfer of any equity interest in such Member is to be consummated, any Transfer of any equity interest in such Member shall constitute a Transfer hereunder. The Members shall be responsible to cause the owners of their respective equity interests to enter into agreements as may be necessary to enable such Member to ensure compliance with this provision. 8.2 Admission as a Member. No Transferee of any Interests from a Member shall be admitted to the Company as a Member unless the Transfer shall have been made in accordance with this Agreement and the Transferee shall have executed an instrument satisfactory to the non-Transferring Member, whereby such Transferee agrees to abide by the terms and conditions of this Agreement and become a Member of the Company. 8.3 No Right to Withdraw. No Member shall have any right to resign or otherwise withdraw from the Company prior to the dissolution and winding up of the Company, without the express written consent of the other Member. 8.4 Corporate Conversion (a) Upon the execution of this Agreement, it is the express intention and understanding of the existing Members and those Persons who became Members at the time of the execution of this Agreement that upon the occurrence of certain events the Company shall be converted into a corporation in the manner set forth herein by the action of the Board and without the necessity of any action or any investment decision on the part of any Member. (b) Upon the determination by the Board, the Managing Member shall cause a Corporate Conversion by merger into another corporation or otherwise, and in connection therewith cause the conversion of the Interests into the capital stock of any resulting corporation having relative rights, limitations, preferences and other terms consistent with the Interests so converted. (c) The Members shall have no appraisal rights pursuant to the Act, applicable law or otherwise in connection with a Corporate Conversion or any other transaction authorized under this Agreement. 27 (d) In connection with the consummation of a Corporate Conversion, the Board shall have the authority to merge, consolidate or reorganize one or more of the subsidiaries with one or more other subsidiaries or other entities wholly-owned directly or indirectly by the Company or the surviving corporation in the Corporate Conversion. (e) The Board is specifically authorized to take any and all further action, and to execute, deliver and file any and all additional agreements, documents or instruments, as it may determine to be necessary or appropriate in order to effectuate the provisions of this Section 8.4, and each Member hereby agrees to execute, deliver and File any such agreements, documents or instruments or to take such action as may be reasonably requested by the Board for the purpose of effectuating the provisions of this Section 8.4. 8.5 Put/Call. (a) At any time within the 45 day period commencing on the fifth anniversary of the Effective Date, the Fox Member shall have the right to require the Healtheon Member to purchase (the "Put") from the Fox Member, and the Healtheon Member shall have the right to require the Fox Member to sell to the Healtheon Member (the "Call"), all (but not less than all) of he Fox Member's Interests in the Company; provided, however, that if the Fox Entertainment Group, Inc. or any of its Affiliates acquire all of the member interests in the Fox Member, the Fox Member shall notify the Healtheon Member of such acquisition and the Put/Call shall be exercisable within the 45-day period commencing on the date of such notice. The parties shall structure the Transfer of Interests pursuant to the Section as a transaction which qualifies as a tax-free reorganization under Section 368 of the Code. The consideration due upon consummation of the Put or the Call, as the case may be, shall be $1.00. (b) The closing of the purchase and sale pursuant to this Section 8.5 shall be held t the principal place of business of the Company or at such other mutually acceptable place on a mutually acceptable date no later than 10 days after the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR") or the completion of other applicable regulatory proceedings. The parties agree to cooperate with each other in filing all necessary notices and related materials to comply with the provisions of HSR or other regulatory requirements, if applicable. At such closing, the Fox Member shall assign to the Healtheon Member, or its designees, the Company Interest of the Fox Member, and shall execute such documents and instruments as may be necessary to effectuate the sale of the Interest free and clear of all Liens. The Fox Member shall represent and warrant in writing that it is the owner and older of the Interest which it is selling, free and clear of all Liens (other than pledges or security interests that secure indebtedness of the Company), that the Fox Member is the record and beneficial owner of the such Interest, and that it has the full right, power and authority to convey such Interest of the Healtheon Member. 28 ARTICLE IX DISSOLUTION AND LIQUIDATION 9.1 Dissolution. Dissolution of the Company will occur upon the happening of any of the following events: (a) the sale or other disposition of all or substantially all of the Company's assets; (b) the affirmative vote of all of the Members; or (c) the entry of a decree of judicial dissolution under the Act. 9.2 Exclusive Means of Dissolution. The exclusive means by which the Company may be dissolved are set forth in 9.1. The Company will not be dissolved upon the death, retirement, resignation, expulsion, bankruptcy or dissolution of any Member or upon the occurrence of any other event which terminates the continued membership of any Member in the Company. 9.3 Liquidation. Upon Dissolution of the Company, the Company will immediately proceed to wind up its affairs and liquidate pursuant to this 9.3. Following Dissolution, the Members shall appoint a person to serve as the liquidating trustee and thus be charged with the duty to wind up the affairs of the Company and distribute its assets as provided herein. A reasonable time will be allowed for the orderly Liquidation of the Company and the discharge of liabilities to creditors so as to enable the Company to minimize any losses attendant upon Liquidation. Any gain or loss on disposition of any Company assets in Liquidation will be allocated to Members in accordance with the provisions of Section 3.6. Any liquidating trustee is entitled to reasonable compensation or services actually performed, as approved by the Board; and may contract for such assistance in the liquidating process as such Person deems necessary or desirable. Until the filing of a certificate of cancellation under 9.9, and without affecting the liability of the Members and without imposing liability on the liquidating trustee, the liquidating trustee may settle and close the Company's business, prosecute and defend suits, dispose of its property, discharge or make provision for its liabilities, and make Distributions in accordance with the priorities set forth in this Article. 9.4 Priority of Payment. If the Company is dissolved the assets of the Company will be distributed in Liquidation in the following order: (a) First, to creditors by the payment or provision for payment of the debts and liabilities of the Company (other than any loans or advances that may have been made by any member or Affiliate) and the expenses of Liquidation; (b) Second, to the setting up of any reserves that are reasonably necessary for any contingent, conditional or unmatured liabilities or obligations of the Company; (c) Third, to the repayment of any loans or advances to the Company that may have been made by any Member or any Affiliate of a Member (according to the relative priority of repayment of such loans or advances and proportionally among loans or advances of equal priority if the amount available for repayment is insufficient for payment in full); and 29 (d) Fourth, to the Members in proportion to the positive balances in their respective Capital Accounts after such Capital Accounts have been adjusted for all allocations of Profits and Losses and items thereof for the Fiscal Year during which such liquidation occurs. 9.5 Liquidating Distributions. If the Company is dissolved, the liquidating distributions due to the Members will be made by selling the assets of the Company and distributing the net proceeds. Notwithstanding the preceding sentence, but only upon the affirmative vote of all Members, the liquidating distributions may be made by distributing the assets of the Company in kind to the Members in proportion to the amounts distributable to them pursuant to Section 9.4, valuing such assets at their Fair Market Value (net of liabilities secured by such property that the Member takes subject to or assumes) on the date of distribution. Each Member agrees to save and hold harmless the other Members from such Member's proportionate share of any and all such liabilities which are taken subject to or assumed. Appropriate and customary prorations and adjustments will be made incident to any distribution in kind. The Members will look solely to the assets of the Company for the return of their Capital Contributions, and if the assets of the Company remaining after the payment or discharge of the debts and liabilities of the Company are insufficient to return such contributions, they will have no recourse against any other Member. The Members acknowledge that Section 9.4 may establish distribution priorities different from those set forth in the provisions of the Act applicable to distributions upon Liquidation, and the Members agree that they intend, to that extent, to vary those provisions by this Agreement. 9.6 No Restoration Obligation. Nothing contained in this Agreement imposes on any Member an obligation to make an Additional Capital Contribution in order to restore a deficit Capital Account upon Liquidation of the Company. 9.7 Timing. Final distributions in Liquidation will be made by the end of the Company's Fiscal Year in which such actual Liquidation occurs (or, if later, within 90 days after such event) in the manner required to comply with the Section 704(b) of the Treasury Regulations. Payments or distributions in Liquidation may be made to a liquidating trust established by the Company for the benefit of those entitled to payments under Section 9.4, in any manner consistent with this agreement and the Section 704(b) of the Treasury Regulations. 9.8 Liquidating Reports. A report will be submitted with each liquidating distribution to Members made pursuant to 9.5, showing the collections, disbursements and distributions during he period which is subsequent to any previous report. A final report, showing cumulative collections, disbursements and distributions, will be submitted upon completion of the Liquidation. 9.9 Certificate of Cancellation. Upon Dissolution of the Company and the completion of the winding up of its business, the Company will file a certificate of cancellation (to cancel the Certificate of Formation) with the Delaware Secretary of State pursuant to the Act. At such time, the Company will also file an application for withdrawal of its certificate of authority in any jurisdiction where it is then qualified to do business. A certificate of cancellation will also be filed at any time when there are no Members. 30 ARTICLE X ADDITIONAL AGREEMENTS 10.1 Indemnification. (a) To the fullest extent permitted by law, the Fox Member shall indemnify and hold harmless the Healtheon Member and the Company from and against any and all Damages arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, brought or threatened to be brought by any member or former member of the Fox Member against the Company or the Healtheon Member, as a party or otherwise, arising out of the Healtheon Member's acquisition of its Membership Interest or any transaction contemplated pursuant to this Agreement. (b) Expenses (including reasonable attorneys' fees and disbursements) incurred in defending any claim, demand, action, suit or proceeding, whether civil, criminal, administrative or investigative, hereof, shall be paid by the Fox Member in advance of the final disposition of such claim, demand, action, suit or proceeding upon receipt of an undertaking by or on behalf of the Company or Healtheon Member to repay such amount if it shall ultimately be determined, by a court of competent jurisdiction from which no further appeal may be taken or the time for any appeal has lapsed (or otherwise, as the case may be) that the Company or Healtheon Member is not entitled to be indemnified by the Fox Member as authorized under 10.1 (a) hereof. 10.2 Galaxy Asset License. The Fox Member shall grant to the Company and to the Healtheon Member a non-exclusive, worldwide, royalty-free, perpetual licenses to use the Galaxy Asset in forms and substance to be mutually agreed upon by the parties. ARTICLE XI MISCELLANEOUS 11.1 Waiver of Partition. Except as may be otherwise provided by law in connection with the winding-up, liquidation and dissolution of the Company, each Member hereby irrevocably waives any and all rights that it may have to maintain an action for partition of any of the Company Property. 11.2 Modification, Waivers. This Agreement may be modified or amended only with the written consent of each Member. Except as otherwise specifically provided herein, no Member shall be released from its obligations hereunder without the written consent of the other Member. The observance of any terms of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) by the party or parties entitled to enforce such term, but any such waiver shall be effective only if in a writing signed by the party or parties against which such waiver is to be asserted. Except as otherwise specifically provided herein, no delay on the part of any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party hereto of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder nor shall any single 31 or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. 11.3 Entire Agreement. This Agreement, and the documents expressly referred to herein, and all related documents, each as amended, constitute the entire agreement among the Members with respect to the subject matter hereof and supersede any prior agreement or understanding between or among the Members with respect to such subject matter. 11.4 Severability. If any provision of this Agreement, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Agreement or the application of such provision to other Persons or circumstances shall not be affected thereby; provided, however, that the parties shall negotiate in good faith with respect to an equitable modification of the provision or application thereof held to be invalid. 11.5 Notices. All notices, requests, demands, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given on the date delivered by hand or on the third Business Day after such notice is mailed by registered or certified mail, postage prepaid, and, pending the designation by written notice of another address, addressed as follows: If to the Fox Member: c/o News America Incorporated 1211 Avenue of the Americas New York, New York 10036 Telecopier: (212) 768-2029 Attn: Arthur M. Siskind, Esq. With a copy to: Squadron, Ellenoff, Plesent & Sheinfeld, LLP 551 Fifth Avenue New York, New York 10 176 Attention: Joel I. Papernik, Esq. Telecopier: (212) 697-6686 If to the Healtheon Member: c/c, Healtheon/WebMD Corporation 400 The Lenox Building Atlanta, Georgia 30326 Telephone: (404) 479-7600 Telecopier: (404) 479-7651 Attention: Jeffrey T. Arnold Chief Executive Officer 32 With a copy to: Nelson Mullins Riley & Scarborough, L.L.P. Bank of America Corporate Center 100 N. Tryon Street, Suite 2600 Charlotte, North Carolina 28202 Telecopier: (704) 377-4814 Attention: H. Bryan Ives 111, Esq. C. Mark Kelly, Esq. 11.6 Successors and Assigns. Except as otherwise specifically provided herein, this Agreement shall be binding upon and inure to the benefit of the Members and their legal representatives, successors and permitted assigns. 11.7 Counterparts. This Agreement may be executed in one or more counterparts, all of which together shall constitute one and the same instrument. 11.8 Heading; Cross-references. The Article and Section headings in. this Agreement are for convenience of reference only, and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof. 11.9 Construction. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company. No one, including but not limited to the Members or any creditor of the Company or any of its Members, shall have any rights under this Agreement against any Affiliate of any Member. 11.10 Property Rights; Confidentiality. All books, records and accounts maintained exclusively for the Company (including, without limitation, marketing reports and all other data whether stored on paper or in electronic or other form), and any contracts or agreements (including, without limitation, agreements for the purchase, lease or license of programming) entered into by or exclusively on behalf of the Company, shall at all times be the exclusive property of the Company. All property (real or personal or mixed) purchased with Company funds, and all moneys held or collected for or on behalf of the Company shall at all times be the exclusive property of the Company. Except as expressly agreed to by the Members, no Member shall, during the period such Member is a Member and for a period ending on the later of two (2) years after such Member has ceased to be a Member, disclose any confidential or proprietary information with respect to the Company to any Person, except (a) with the prior written consent of the other Member; (b) to the extent necessary to comply with law or the valid order of a court of competent jurisdiction, in which event the party making such disclosure shall so notify the other Member as promptly as practicable (and, if possible, prior to making such disclosure) and shall seek confidential treatment of such information; (c) as part of its normal reporting or review procedure to its parent company, its auditors and its attorneys; provided, however. that such Member shall be liable for any breach by such parent company, auditors or attorneys of any provision of this Section 11.10; (d) in connection with the enforcement of such Member's rights hereunder; (e) disclosures to an Affiliate of, or 33 professional advisor to, such Member in connection with the performance by such Member of its obligations hereunder; provided, however, that such Member shall be liable for any breach by such Affiliate or professional advisor of any provision of this Section; and (f) to a prospective purchaser of all or a portion of such Member's Interest in connection with a sale in accordance with the terms of this Agreement; provided, however, that such Member shall be liable for any breach by such prospective purchaser of any provision of this Section. Except as provided in the preceding sentence, no Member, nor any of its Affiliates, shall, during the periods referred to in such sentence, use any confidential or proprietary information with respect to the Company other than for the benefit of the Company. This Section 11.10 hereof shall survive the termination of this Agreement, the Dissolution of the Company, the withdrawal of any Member and the Transfer of the Interest of any Member. 11.11 Further Actions. Each Member shall execute and deliver such other certificates, agreements and documents, and take such other actions, as may reasonably be required in connection with the formation and continuation of the Company and the achievement of its purposes. 11.12 Governing Law; Forum. This Agreement will be governed by, and construed in accordance with the laws of the State of Delaware without regard to any conflicts of laws rules. Any conflict or apparent conflict between this Agreement and the Act will be resolved in favor of this Agreement, except as otherwise required by the Act. 11.13 Expenses of the Parties. All expenses incurred by or on behalf of the parties hereto in connection with the authorization, preparation and consummation of this Agreement, including, without limitation, all fees and expenses of agents, representatives, counsel and accountants employed by the parties hereto in connection with the authorization, preparation, execution and consummation of this Agreement shall be borne solely by the party who shall have incurred the same. [SIGNATURE PAGE FOLLOWS] 34 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers or members hereunto duly authorized as of the date first written above. HEALTHEON/WEBMD INTERNET CORPORATION By: /s/ ------------------------ Name: W. Michael Heekin Title: Vice President AHN/FIT INTERNET, LLC By: /s/ ----------------------- Name: Daniel Fawcett Title: Vice President The undersigned, by executing this Agreement, hereby unconditionally guarantees the full and prompt payment and performance of all obligations of the Healtheon Member set forth in this Agreement. This is a guaranty of payment and not of collection. HEALTHEON/WEBMD CORPORATION By: /s/ ------------------------ Name: W. Michael Heekin Title: Exec. Vice President The undersigned, by executing this Agreement, hereby unconditionally guarantees the full and prompt payment and performance of all obligations of the Fox Member set forth in this Agreement. This is a guaranty of payment and not of collection. THE NEWS CORPORATION LIMITED By: /s/ ------------------------ Name: Arthur Siskind Title: Director 35 EX-10.3 4 CONTENT LICENSE AGREEMENT 1 EXHIBIT 10.3 CONTENT LICENSE AGREEMENT Dated as of January 26, 2000 Between FOX ENTERTAINMENT GROUP, INC. and HEALTHEON/WEBMD CORPORATION 2 TABLE OF CONTENTS
PAGE ---- ARTICLE 1 ................................................................................................ 1 DEFINITIONS ................................................................................................ 1 ARTICLE 2 ................................................................................................ 2 CREATION OF LICENSE RELATIONSHIP............................................................................. 2 2.1 GRANT OF LICENSE................................................................................ 2 2.2 SCOPE OF LICENSE; RESTRICTIONS ON USE OF FOX CONTENT............................................ 2 2.3 GRANT OF RIGHT IN FOX LOGO............................................................................... 3 2.4 NO OTHER RIGHTS GRANTED......................................................................... 4 2.5 ROYALTY......................................................................................... 5 ARTICLE 3 ................................................................................................ 5 FOX CONTENT 5 3.1 Selection, Format, Design and Updating.......................................................... 5 3.2 REMOVAL OF FOX CONTENT.......................................................................... 5 3.4 OWNERSHIP OF FOX CONTENT........................................................................ 5 3.5 OTHER AGREEMENTS................................................................................ 5 3.5 OTHER AGREEMENTS................................................................................ 5 ARTICLE ................................................................................................ 6 REPRESENTATIONS AND WARRANTIES............................................................................... 6 4.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY........................................ 6 ARTICLE 5 ................................................................................................ 7 TERM; TERMINATION............................................................................................ 7 5.1 TERM ................................................................................................ 7 5.2 RIGHT TO TERMINATE BY FAX....................................................................... 7 5.3 RIGHT TO TERMINATE BY THE COMPANY............................................................... 7 5.4 EFFECT OF TERMINATION........................................................................... 7 5.5 CONTINUING OBLIGATIONS.......................................................................... 7 ARTICLE 6 ................................................................................................ 7 INDEMNIFICATION.............................................................................................. 7 6.1 AGREEMENT OF FOX TO INDEMNIFY................................................................... 7 6.2 AGREEMENT OF THE COMPANY TO INDEMNIFY \F C \L................................................................ 8 6.3 THIRD PARTY CLAIMS....................................................................................... 8 6.4 SPECIAL DAMAGES AND LIMITATION OF LIABILITY.............................................................. 9 ARTICLE 7 ................................................................................................ 9 ADDITIONAL AGREEMENTS........................................................................................ 9 7.1 CONFIDENTIALITY AND USE OF PROPRIETARY INFORMATION....................................................... 9 7.2 DEFINITION OF PROPRIETARY INFORMATION.................................................................... 9 7.3 CONTENTS OF THIS AGREEMENT.............................................................................. 10 7.4 COMMUNICATIONS.......................................................................................... 10 7.5 PRESS RELEASES.......................................................................................... 11 7.6 GOVERNING LAW; CONSENT TO JURISDICTION.................................................................. 11 7.7 BINDING EFFECT; SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT................................................ 12 7.8 AMENDMENTS AND WAIVERS.................................................................................. 12 7.9 HEADINGS ............................................................................................... 12
3 7.10 NO IMPLIED WAIVERS..................................................................................... 12 7.11 COUNTERPARTS........................................................................................... 12 7.12 FURTHER ASSURANCE...................................................................................... 12 7.13 SEVERABILITY........................................................................................... 13 7.14 SEVERABILITY........................................................................................... 13 7.14 INJUNCTIVE RELIEF...................................................................................... 13 7.15 NO PARTNERSHIP, ETC................................................................................... 13 7.16 CONSTRUCTION........................................................................................... 13 7.17 DISCLAIMER OF WARRANTIES............................................................................... 13 7.18 PLURALS ............................................................................................... 13 7.19 EFFECTIVENESS.......................................................................................... 13
4 CONTENT LICENSE AGREEMENT THIS CONTENT LICENSE AGREEMENT (THE "AGREEMENT"), dated as of January 26, 2000 (the "Effective Date"), by and between FOX ENTERTAINMENT GROUP, INC., a Delaware corporation ("Fox"), THE NEWS CORPORATION LIMITED ("News Corp" and collectively with Fox, the "Fox Parties" and together with their respective subsidiaries and controlled and non-controlled affiliates, the "Fox Group") and HEALTHEON/WEBMD CORPORATION, a Delaware corporation (the "Company"). W I T N E S S E T H: WHEREAS, the members of the Fox Group own and operate networks, television broadcast stations, Non-Standard Television Services and other content creation and distribution businesses worldwide (the "Fox Distribution Channels"); and WHEREAS, the members of the Fox Group own or license the Fox Content which they use in connection with the development and 'operation of the Fox Distribution Channels; and WHEREAS, pursuant to a Master Strategic Alliance Agreement dated December 6, 1999, by and between The News Corporation Limited, a South Australia, Australia corporation ("News Corp"), Fox and the Company (the "Strategic Alliance Agreement"), the Fox Parties desire to license, and cause other members of the Fox Group to license, to the Company the right to use the Fox Content for the purpose of adapting the Fox Content for use on the WebMD Sites. NOW, THEREFORE, in consideration of the foregoing premises and the agreements and covenants herein set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows: ARTICLE I DEFINITIONS All capitalized terms used in this Agreement without definition shall have the meanings ascribed to such terms in Exhibit A. 5 ARTICLE 2 CREATION OF LICENSE RELATIONSHIP 2.1 GRANT OF LICENSE. Except as may be prohibited or otherwise limited by the terms of any other obligations binding upon the Fox Parties, any member of the Fox Group or any of the Fox Distribution Channels, other than obligations that were incurred with the prior primary intent to frustrate the purpose of this Agreement, and subject to the terms and conditions of this Agreement, the Fox Parties agree to provide, to cause Controlled Affiliates to provide, and to use commercially reasonable efforts to cause Non-Controlled Affiliates to provide, to the Company a non-exclusive license (the "License") during the term hereof throughout the Territory to: (a) use, copy, translate, display, publish and transmit the Fox Content solely for the purpose of developing and operating the WebMD Sites; and (b) subject at all times to the obligations and duties of the Company contained herein, sublicense only to Operating Companies the rights granted hereunder; provided, however, that the Company shall (i) obtain Fox's prior written consent to each such sublicense (other than with respect to Operating Companies which are directly or indirectly majority owned and Controlled by the Company); (ii) obtain from such Operating Companies a written instrument approved as to form and substance by Fox, pursuant to which each such Operating Company shall agree to be bound and comply with the terms of this Agreement and (iii) at all times remain fully liable for the actions of its Operating Companies. Operating Companies with respect to which the foregoing conditions have been satisfied shall hereinafter be referred to as "Sublicensees." The Sublicensees shall be prohibited from granting any further sublicenses of the rights granted hereunder to any other Person without the express prior written approval of Fox. Fox agrees that any consent or approval required by it under this Section 2.1(b) will not be unreasonably denied or delayed and that Fox will cooperate with the Company in completing any approval process required hereunder in a reasonably expeditious manner given the facts and circumstances pertaining to such approval. As used herein, "Controlled Affiliates" means any corporation or other entity more than 50% of whose outstanding voting securities or other equity interests are directly or indirectly owned by News Corp; "Non-Controlled Affiliates" means any corporation or other entity in which News Corp directly or indirectly has a greater than 20% but no more than 50% equity interest. 2.2 SCOPE OF LICENSE; RESTRICTIONS ON USE OF FOX CONTENT. (a) The License granted hereunder is non-exclusive and the Company agrees to use the Fox Content in accordance with the terms hereof and solely for the purpose of engaging in the Licensed Activities. The Company acknowledges that the grant of rights hereunder excludes the right to use the Fox Content other than in connection with the development or operation of the WebMD Sites. The parties hereto agree that the covenants and agreements set forth in this Section 2.2(a) are in addition to the restrictive covenants set forth in Section 10.5 of the Strategic Alliance Agreement. The Company 6 acknowledges that any sublicense of the rights granted hereunder shall be strictly limited in accordance with the terms hereof. (b) The Company acknowledges and agrees that the scope of the License granted hereunder is limited by and is subject to any and all other obligations of Fox, any member of the Fox Group or any of the Fox Distribution Channels. Accordingly, the Company agrees to conduct the activities hereunder in accordance with all such limitations or restrictions which may exist of which the Company has received notice. (c) Notwithstanding anything to the contrary contained in this Agreement, Fox shall have no obligation whatsoever to license to the Company, or to authorize the Company to sublicense any of the rights granted hereunder with respect to any particular country unless and until Fox shall determine, in the exercise of its reasonable discretion, that (i) such country's laws afford adequate protection of the Fox's interests in or ownership of Fox Content, the Fox Property and the Fox Logos (collectively the "Fox Intellectual Property"), and (ii) the use of the Fox Intellectual Property (or any part thereof) in such country will not violate any Requirement of Law or expose Fox or any of its Affiliates to any unreasonable risk or liability which might anise as a result of the use or display of any of the Fox Intellectual Property in such country. In its exercise of its reasonable discretion under this Section 2.2(c), Fox shall have the night to request from the Company or a Sublicensee an opinion of counsel or such other information to Fox's reasonable satisfaction opining about or providing such other information on a Requirement of Law or such other matters relating to the protection of Fox's interests as Fox may request, such opinion or information to be obtained at the Company's or such Sublicensee's expense. Fox agrees to exercise its rights in the preceding sentence in a reasonable manner so as to avoid unnecessary delays or interruptions in the business of the Company and the Sublicensees. 2.3 GRANT OF RIGHT IN FOX LOGO (a) Fox Logo. Fox hereby grants the Company a limited, non-exclusive, royalty-free license to such trademarks, tradenames, service marks logotypes, or brand identifiers of members of the Fox Group as Fox may provide to the Company from time to time (collectively, the "Fox Logos") during the Term of this Agreement. Such license is granted solely in connection with the Company's rights and obligations under this Agreement. All such uses will be in compliance with Fox's written trademark guidelines as provided by Fox to the Company from time to time. The Company will also be allowed to use and reproduce the Fox Logos for the promotion of the Fox Content, although to the extent such promotions involve media placements outside of the WebMD Sites, then the Company will only be allowed to make such uses and reproductions as Fox may approve in writing in advance of such promotion or promotions. (b) Limitations. The Company agrees that it will not in any way suggest or imply by the use of the Fox Logos that the WebMD Sites or any of the products or services affiliated with it, are endorsed or sponsored by or created in association with Fox except as agreed by Fox. The Company acknowledges that Fox owns all right, title and interest and to the Fox Logos and retains all rights with respect thereto. The Company 7 agrees not to do anything inconsistent with such ownership and all uses of the Fox Logos will inure to the benefit of and on behalf of Fox. The Company further agrees that it will not attack or assist others in attacking the title of the Fox Logos. (c) No Violation. The Company acknowledges and agrees that: (i) it will not register any Fox Logo; (ii) it will not knowingly permit any third party to use any Fox Logo unless authorized to do so in writing by Fox in this Agreement or otherwise; (iii) it will not knowingly use or permit the use of any mark, name, or image likely to cause confusion with any Fox Logo other than the Fox Logos themselves unless authorized to do so in writing by Fox; and (iv) all goodwill associated with the Company's use of the Fox Logos will inure to Fox. (d) Prior Approval. The manner and form of use of the Fox Logos will be subject to Fox's prior written approval, which approval will not be unreasonably withheld or delayed following its receipt of a sample, mock-up or other suitable example which provides a fair representation of the proposed use of the Fox Logos concerned and indicates the context in which the Fox Logos are to be used. Once a use of a Fox Logo is approved for use under certain circumstances, then it is agreed that the Company may subsequently make substantially similar uses of such Fox Logo under similar circumstances, but only until Fox revokes or limits its approval which it may do at its sole discretion. The Company will conform to any alteration or revocation of the approval as soon as is commercially reasonable. The license granted pursuant to this Section 2.3 may be terminated by Fox upon a material breach by WebMD, or any Affiliate of WebMD or any Sublicensee, of any material agreement, covenant or obligation under this Section 2.3, which breach, if curable, remains uncured for a period of sixty (60) days following WebMD's receipt of written notice from Fox of the existence of such breach. 2.4 NO OTHER RIGHTS GRANTED. Apart from the rights licensed under Sections 2.1 and 2.3 above, this Agreement does not grant to the Company any right to engage in any activity other than the Licensed Activities, nor any ownership right, title, or interest, nor any security interest or other interest, in any of the Fox Intellectual Property or any proprietary rights relating to or created from such Fox Intellectual Property or any developments or enhancements with respect thereto. 8 ARTICLE 3 THE FOX CONTENT 3.1 SELECTION, FORMAT, DESIGN AND UPDATING. (a) Fox may from time to time, modify and update the Fox Content as such modifications and/or updates are deemed necessary or desirable by Fox and the Company shall (to the extent that particular Fox Content is used by the Company) use such Fox Content as modified or updated. (b) With respect to any content Fox obtains for use on the Fox Distribution Channels, Fox shall, at the Company's request, use reasonable commercial efforts to secure the approval of third parties for the use by the Company of such content in accordance herewith. Fox shall not be required to incur any additional cost in securing such approval; provided, however, that in the event approval to use such content may only be obtained by payment of any fee by Fox, Fox shall incur such cost only at the Company's request and the Company shall have the obligation to reimburse Fox for such cost. (c) With respect to the Fox Content licensed hereunder, the Company shall have the right to determine, in its reasonable discretion, the Fox Content it selects to adapt for use on the WebMD Sites at any time, and from time to time subject to the other provisions hereof; provided, however, that the Company shall clearly attribute all Fox Content used on the WebMD Sites to Fox, or a member of the Fox Group, as applicable. Except as may be authorized in advance in writing by Fox, or for the purpose of adapting the Fox Content for use on the WebMD Sites and/or localizing the Fox Content, the Company shall have no right to substantively modify in any manner whatsoever, any of the Fox Content licensed hereunder. The Fox Content which is owned or controlled by a third party shall incorporate such credit designated by such third party or Fox and the Company and Sublicensees shall preserve all such attributional rights. 3.2 REMOVAL OF FOX CONTENT. Fox may, for good reason, from time to time require removal of any Fox Content from the WebMD Sites. If Fox requests removal of certain Fox content from the WebMD Sites, the Company shall complete such removal on the earlier of (i) the first commercially practicable date on which the Company could remove such content or (ii) five business days following receipt of Fox's request for such removal. 3.3 OWNERSHIP OF FOX CONTENT; FOX PROPERTY. The members of the Fox Group shall at all times remain the owner of all right, title and interest in and to the Fox Content or any parts or derivatives thereof or any variations thereon. The members of the Fox Group shall own all right, title and interest in all aspects of the look and feel, images and all other content, regardless of whether it is capable of trademark, patent, copyright or other intellectual property law protection, furnished by or on behalf of Fox to the Company or the Sublicensees and displayed on the WebMD Sites or any parts or derivatives thereof or any variations thereon collectively, the "Fox Property"). 9 3.4 OTHER AGREEMENTS. The Company: (a) agrees to comply with all Requirements of Law in connection with the use of the Fox Content; (b) agrees that all rights in and to any of the Fox Content not expressly licensed hereunder are reserved to the appropriate member of the Fox Group; (c) agrees not to sublicense, assign, transfer, pledge, offer as security, or otherwise encumber the Fox Content or any of the rights granted hereunder in any way other than as expressly provided in the Agreement; (d) agrees not to use any of the Fox Content in any manner or for any purpose whatsoever in violation of the terms of this Agreement; (e) acknowledges and agrees that it shall not at any time during the Term or thereafter (i) challenge the title or any other rights of members of the Fox Group or their respective licensors in or to the Fox Content or any of the other Fox Intellectual Property or any parts or derivatives thereof or any variations thereon, (ii) contest the validity of the copyrights or other proprietary interests in and to the Fox Content or any other Fox Intellectual Property held by Fox or any third party or (iii) claim any right, title or interest in or to the Fox Content or any other Fox Intellectual Property or any parts or derivatives thereof or any variation thereon; and (f) agrees to use its best efforts to cause the Sublicensees to comply with the terms of this Section 3.4 to the extent this Section creates obligations for the Company. ARTICLE 4 REPRESENTATIONS AND WARRANTIES 4.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY AND FOX. (a) Authority of the Company. The Company agrees and represents that the Company has the authority to execute, deliver and perform its obligations under this Agreement, having obtained all required consents, and is duly organized or formed and validly existing in good standing under the laws of the state of its incorporation or formation. (b) Conflict. The Company acknowledges that members of the Fox Group have licensed, and may license, the Fox Content to other parties to promote and enhance the goodwill of the Fox Content. The Company agrees that in the event Fox determines that the Company's activities taken pursuant to this Agreement come into conflict with the interests or rights of other licensees, the Company shall in good faith cooperate with Fox in order to resolve the conflict and, in the event the conflict cannot be resolved, shall take the action requested by Fox as long as it is commercially practical to do so. (c) Authority of the Fox Parties. The Fox Parties represent and warrant that the Fox Parties have (i) the authority to execute, deliver and perform its obligations under this Agreement, having obtained all required Board of Directors or other consents, (ii) are 10 duly organized or formed and validly existing in good standing under the laws of the state of its incorporation or formation and (iii) own all right, title and interest in and to the Fox Content authored by the Fox Parties and have all rights necessary to license the third party content provided to the Company hereunder. The parties agree that the Company's or any Sublicense's remedy with respect to a breach of the Fox Parties' representation set forth in Section 4.1(c) above shall be as set forth in Section 6.1(b) herein. (d) EXCEPT FOR THE EXPRESS WARRANTIES STATED HEREIN, THE FOX PARTIES DO NOT MAKE ANY WARRANTY AS TO THE ACCURACY OF ANY FOX CONTENT LICENSED HEREUNDER OR THE RESULTS TO BE OBTAINED FROM ANY WEBMD SITE USING THE FOX CONTENT. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH ABOVE, THE FOX CONTENT IS USED ON AN "AS-IS" BASIS WITHOUT WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NONINFRINGEMENT. ARTICLE 5 TERM; TERMINATION 5.1 TERM. This Agreement will be effective as of the date hereof and will continue for a period of five (5) years, unless earlier terminated in accordance with this agreement (the "Initial Term"). The term of this Agreement may be extended for a period of five (5) years from and after the Initial Term (the "Renewal Term"), at the Company's option; provided that the Operating Agreement has not been terminated or the joint venture created by the Operating Agreement has been dissolved prior such date; and provided, further, that the Company agrees to extend the term of that certain Content License Agreement of even date herewith by and between the Company and News Corp pursuant to which the Company has agreed to license certain content to News Corp. Together, the Initial Term and the Renewal Term are collectively referred to as the "Term." 5.2 CONTINUING OBLIGATIONS. Except as expressly provided in this Agreement, the expiration of the Term shall not release any party from the obligations set forth in Articles 3, 4, 6 and 7 and this Section 5.2, and each party hereto shall be, and shall continue to be and remain liable to the other parties for any and all damages which such party has or may sustain by reason of such first party's default or breach of such provisions of this Agreement. ARTICLE 6 INDEMNIFICATION 6.1 AGREEMENT OF FOX TO INDEMNIFY. (a) Except as set forth in Section 6.1(b) below and subject to the limitation of liability set forth in Section 6.4 hereof, Fox hereby agrees to 11 indemnify, defend and hold harmless the Company and its directors, officers, employees and agents and their respective successors and assigns (collectively the "Company Indemnitees") from and against any loss, costs, expenses (including reasonable attorneys' fees and expenses), claims, demands, liabilities, causes of action or damages incurred by any Company Indemnitee in connection with or relating to any material breach of a representation, warranty, covenant or agreement of Fox contained in this Agreement. (b) The parties hereto agree that with respect to any claim that the Company or any Sublicensee infringes any copyright or trademark or other intellectual property right as a result of the Company's (or a Sublicensee's) use or display of the Fox Content, Fox will only be responsible for the payment of any judgment, fine and/or penalty finally awarded against the Company or such Sublicensee as a result of such claim and any settlements agreed to with respect to such claim. 6.2 AGREEMENT OF THE COMPANY TO INDEMNIFY. Subject to the limitation of liability set forth in Section 6.4 hereof, the Company hereby agrees to indemnify, defend and hold harmless Fox and its officers, directors, shareholders, employees, agents and Affiliates and their respective successors and assigns (collectively the "Fox Indemnitees") from and against any loss, costs, expenses (including reasonable attorneys' fees and expenses), claims, demands, liabilities, causes of action or damages incurred by any Fox Indemnitee in connection with or relating to any material breach of a representation, warranty, covenant or agreement contained in this Agreement by the Company, its Affiliates, the Sublicensees or any of their respective officers, directors, employees or agents. 6.3 THIRD PARTY CLAIMS. A Person entitled to indemnification for a Claim hereunder (the "Indemnified Party") shall give the indemnifying party with respect to such Claim (the "Indemnifying Party") reasonably prompt notice of such Claim brought by a third party. Such notice shall describe the Claim in reasonable detail. The failure of the Indemnified Party to give such notice to the Indemnifying Party shall not impair any of the Indemnified Party's rights or benefits under this Article 6 except to the extent such failure adversely affects the Indemnifying Party's ability to defend such Claim. The Indemnifying Party, within a reasonable time after receiving knowledge of a Claim by a third party against the Indemnified Party, shall (a) notify the Indemnified Party in writing of the preference of the Indemnifying Party to assume the defense thereof, and (b) retain legal counsel reasonably acceptable to the Indemnifying Party to conduct the defense of such Claim. The Indemnified Party shall cooperate with the Indemnifying Party in any manner reasonably requested in connection with the defense, compromise or settlement of any Claim. In any such Claim which the Indemnifying Party chooses to defend, the Indemnified Party shall have the right to engage separate counsel and to participate in the prosecution, defense, compromise, or settlement thereof or to conduct its own defense of such claim. The fees and expenses of such counsel engaged by the Indemnified Party the Indemnifying Party is conducting its defense) shall be at the expense of the Indemnified Party unless the named parties to any such Claim (including any impleaded parties) include the Indemnified Party and the Indemnifying Party, and the Indemnified Party shall have been advised by its counsel that there is a conflict of interest between the Indemnified Party and the Indemnifying Party in the conduct of the defense thereof. In such case, the reasonable fees and expenses of such separate counsel to the Indemnified Party shall be borne by the Indemnifying Party. The Indemnifying Party shall not, without written consent of the Indemnified Party, 12 compromise, settle or consent to entry of any order or judgment with respect to any Claim (i) which involves any relief other than the payment of money damages against the Indemnified Party or (ii) which does not include as an unconditional term thereof, the giving by the defendant or Person conducting such investigation or initiating such hearing, to the Indemnified Party, of a release from all liability with respect to such Claim and all other Claims or causes of action (known or unknown) arising or which might arise out of the same facts. 6.4 SPECIAL DAMAGES, LIMITATION OF LIABILITY. EXCEPT FOR (i) A BREACH OF SECTION 7.1, (ii) USE OF THE FOX INTELLECTUAL PROPERTY (OR ANY OTHER PROPRIETARY INFORMATION) IN VIOLATION OF THIS AGREEMENT, (iii) ANY ELEMENTS OF A FINAL AWARD OR SETTLEMENT PURSUANT TO THE PARTIES' OBLIGATIONS UNDER SECTION 6.1(a) AND 6.2(a) HEREOF, AND (iv) FRAUD OR WILLFUL, INTENTIONAL OR GROSSLY NEGLIGENT CONDUCT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION AND THE LIKE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. ARTICLE 7 ADDITIONAL AGREEMENTS 7.1 CONFIDENTIALITY AND USE OF PROPRIETARY INFORMATION. Before, at the time of or following the execution and delivery of this Agreement, the Company shall not disclose any Proprietary Information to any Person, except (a) with the prior written consent of Fox; (b) to the extent necessary to comply with law or the valid order of a court of competent jurisdiction, in which event the Company shall so notify Fox as promptly as practicable (and, if possible, prior to making such disclosure) and shall seek confidential treatment of such information; (c) as part of its normal reporting or review procedure to its auditors and its attorneys; provided, however, that the Company shall be liable for any breach by such auditors or attorneys of any provision of this Section 7.1; (d) in connection with the enforcement of the Company's rights hereunder; and (e) disclosures to an Affiliate or Sublicensee of, or professional advisor to, the Company in connection with the performance by the Company of its obligations hereunder; provided, however, that the Company shall be liable for any breach by such Affiliate, Sublicensee or professional advisor of any provision of this Section 7.1. This Section 7.1 shall survive the termination of this Agreement. 7.2 DEFINITION OF PROPRIETARY INFORMATION. "Proprietary Information," as used herein, shall mean the Fox Intellectual Property, and any other proprietary ideas, plans and information, including information of a technological or business nature, trade secrets, trade names, slogans, copyrights, computer software, source code, object code, technology, know-how, intellectual property, data, marketing plans, summaries, reports, or mailing lists, in each case whether in tangible or intangible form. The parties agree that the term "Proprietary 13 Information" shall also include the contents of this Agreement. Information will not be deemed to be Proprietary Information, and the Company shall have no obligation with respect thereto, or to any part thereof, to the extent such information: (i) is already known to the Company at the time of receipt or disclosure, free of any obligation to keep it confidential, as evidenced by written records made prior to such receipt or disclosure, and did not become known to the Company through disclosure by a third party known to the Company to be subject to an obligation to maintain the confidentiality thereof, or (ii) is already publicly available prior to receipt or disclosure or subsequently becomes publicly available without any fault of the Company or any of its Agents. 7.3 CONTENTS OF THIS AGREEMENT. The parties acknowledge however that, notwithstanding Section 7.2 above, this Agreement, or portions hereof, may be required under applicable law to be disclosed as part of or an exhibit to a party's required public disclosure documents. If either party is advised by its legal counsel that such disclosure is required, it will notify the other party in writing and the parties will jointly seek confidential treatment of this Agreement to the maximum extent reasonably possible in documents filed with the applicable governmental or regulatory authorities. 7.4 COMMUNICATIONS. Unless otherwise provided therein, all notices and other communications or designations required or permitted by this Agreement shall be in writing, and, If to the Fox Parties to: Fox Entertainment Group, Inc. 1211 Avenue of the Americas New York, New York 10036 Attention: Arthur M. Siskind, Esq. Telecopier: (212) 768-2029 with a copy to: Squadron, Ellenoff, Plesent & Sheinfeld, LLP 551 Fifth Avenue New York, New York 10176 Attention: Joel I. Papernik, Esq. Telecopier: (212) 697-6686 or at such other address as the Fox Parties may designate in a written notice to the Company. If to the Company, to: Healtheon/WebMD Corporation 400 The Lenox Building 3399 Peachtree Road NE Atlanta, GA 30326 14 Attention: W. Michael Heekin, Esq. Telecopier: (404) 479-7603 With a copy to: Alston & Bird LLP One Atlantic Center 1201 West Peachtree Street Atlanta, Georgia 30309-3424 Attention: Christopher D. Mangum, Esq. Telecopier: (404) 881-4777 or to such other address as the Company may designate in a written notice to Fox. All notices and other communications required or permitted by this Agreement shall be deemed to have been duly given if personally delivered to the intended recipient at the proper address determined pursuant to this Section 7.4 or sent to such recipient at such address by air courier, facsimile transmission, followed by delivery by overnight, courier, or by hand and will be deemed given, unless earlier received: (a) if sent by air courier when recorded on the records of the air courier as received by the receiving party; (b) if sent by facsimile followed by delivery of overnight courier transmission upon transmission if on a Business Day and during business hours i the country of receipt, otherwise, at 9:00 a.m. on the next Business Day in the country of receipt, subject to receipt of a facsimile machine generated confirmation, and (c) if delivered by and, on the date of receipt. 7.5 PRESS RELEASES. Neither party will issue any press release or make a public announcement relating in any way whatsoever to this Agreement or the relationship established by this Agreement without the written consent of the other party (which consent shall not be unreasonably withheld or delayed), unless required by law or the rules of an applicable stock exchange or over-the-counter market. If a press release or announcement of this Agreement or the transactions contemplated hereby is required as aforesaid, the parties will consult with each other in advance as to the contents and timing hereof. 7.6 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement will be governed by, and construed in accordance with, the laws of the State of Delaware without regard to any conflicts of law rules. Any controversy or claim arising out of or relating to this Agreement, or breach thereof, shall be settled by arbitration in accordance with the Arbitration Rules of the American Arbitration Association. The Arbitration Tribunal shall consist of three arbitrators, of whom one shall be nominated by Fox, one by the Company, and the third, who shall serve as chairman, shall be chosen by the two party-nominated arbitrators or, in the event the party-oriented arbitrators are unable to designate the third arbitrator, by the American Arbitration Association. The situs of the arbitration shall be Washington, D.C. The language of the arbitration shall be English. The award of the arbitrator shall be final and binding. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The Parties waive any right to appeal the arbitral award, to the extent a right to appeal may be lawfully waived. Each Party retains the right to seek judicial assistance: (a) to compel arbitration; (b) to obtain interim measures of protection pending arbitration; and (c) to enforce 15 any decision of the arbitrators, including the final arbitral award. The prevailing Party in the arbitration shall be entitled to receive reimbursement of its reasonable expenses incurred in connection therewith. 7.7 BINDING EFFECT, SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT Except as expressly provided in this Agreement, nothing in this Agreement, express or implied, is intended or shall be construed to confer upon or give any Person (including creditors and Affiliates of any party) other than the parties hereto any remedy or claim under or by reason of this Agreement or any term, covenant or condition hereof, all of which shall be for the sole and exclusive benefit of the parties. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties and their respective successors, legal representatives and permitted assigns; provided, however, that, except as otherwise specifically permitted by this Agreement, neither this Agreement nor any of the rights, interests or obligations of the Company or Fox hereunder shall be assigned or delegated without the prior written consent of the other party. This Agreement sets forth the entire agreement and understanding among the parties hereto as to the subject matter hereof. 7.8 AMENDMENTS AND WAIVERS. This Agreement may not be amended, modified or supplemented unless approved in writing by each party to this Agreement. No waiver of any right or remedy or of compliance with any provisions hereof, and no consent provided for herein, shall be effective unless evidenced by an instrument in writing executed by the party sought to be charged with such waiver or consent. The rights and remedies herein expressly provided are cumulative and not exclusive of any other rights or remedies which any party hereto would otherwise have at law, in equity, by statute or otherwise. 7.9 HEADINGS. The headings of the Sections contained in this Agreement are solely for convenience of reference, are not part of the agreement of the parties and shall not affect the meaning or interpretation of this Agreement. 7.10 NO IMPLIED WAIVERS. No action taken pursuant to this Agreement, including, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, agreements, covenants, obligations or commitments contained herein or made pursuant hereto. The waiver by any party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by any party to exercise any right, privilege or remedy hereunder shall be deemed a waiver of such party's rights, privileges or remedies hereunder or shall be deemed a waiver of such party's rights to exercise the same at any subsequent time or times hereunder. 7.11 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original of the party or parties executing the same and all of which together shall be deemed to constitute one and the same agreement. 7.12 FURTHER ASSURANCE. Each party shall cooperate and take such actions as may be reasonably requested by another party in order to carry out the provisions and purposes of this Agreement and the transactions contemplated hereby. 16 7.13 SEVERABILITY. If any provision of this Agreement or the application thereof to any Person or circumstance is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby; provided that, if any provision hereof or the application thereof shall be so held to be invalid, void or unenforceable by a final Judgment of a court of competent jurisdiction, then such court may substitute therefor a suitable and equitable provision in order to carry out, so far as may be valid and enforceable, the intent and purpose of the invalid, void or unenforceable provision and if such court shall fail or decline to do so, the parties shall negotiate in good faith a suitable and equitable substitute provision. To the extent that any provision shall be judicially unenforceable in any one or more states of the United States or in any foreign jurisdiction, such provision shall not be affected with respect to any other state within the United States or any other foreign jurisdiction, each provision with respect to each state of the United States or foreign jurisdiction being construed as several and independent. 7.14 INJUNCTIVE RELIEF. Each party acknowledges that a breach or threatened breach by it or any Sublicensee or Affiliate of this Agreement will result in immediate and irremediable damage to the other party and that money damages alone would be inadequate to compensate such other party. Therefore, in the event of a breach or threatened breach of this Agreement by either of the parties (or any Sublicensee or Affiliate), the other party may, in addition to other remedies, immediately obtain and enforce injunctive relief prohibiting the breach or threatened breach or compelling specific performance. 7.15 NO PARTNERSHIP, ETC. Nothing contained herein shall be construed as creating a joint venture, Company, agency, employment relationship or other enterprise between the parties. 7.16 CONSTRUCTION. The Company and Fox have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Company and Fox and no presumption or burden of proof shall anise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. 7.17 DISCLAIMER OF WARRANTIES. The Company hereby acknowledges and agrees that Fox has made no promises, representations, guarantees or warranties, of any nature, other than those which may be made expressly in this Agreement. 7.18 PLURAL. When necessary for appropriate meaning, a plural shall be deemed to be the singular and singular shall be deemed to be the plural. 7.19 EFFECTIVENESS. The submission of this Agreement does not constitute an offer to license and this Agreement shall become effective only upon execution thereof by the Company and Fox. 17 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. FOX ENTERTAINMENT GROUP, INC. By: /s/ ---------------------------------- Name: Title: Lawrence A. Jacobs Secretary HEALTHEON/WEBMD CORPORATION By: /s/ ---------------------------------- Name: W. Michael Heekin Title: Exec. Vice President 18 EXHIBIT A DEFINITIONS DEFINED TERMS. As used in this Agreement, the following terms have the meanings indicated: Affiliate: With respect to any Person, any other Person that, directly or indirectly through or with one or more intermediaries, controls, is controlled by or is under common control with such Person. The term "affiliated" (whether or not capitalized) shall have a correlative meaning. For the purposes of this definition, "control", as used with respect to any Person, shall mean the possession, directly or indirectly through or with one or more intermediaries, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise. The terms "controlled by" and "under common control with" shall have correlative meanings. Agreement: This Agreement and any Exhibits hereto, as the same may be amended, supplemented or modified in accordance with the terms hereof. Business Day: Any day other than a Saturday, a Sunday or a day on which national banking institutions in the United States are not open for business. Claims: Claims, suits, proceedings, actions, demands, investigations or causes of action. The Company: Defined in the introductory paragraph of this Agreement Company Indemnitees: Defined in Section 6.1. Control: The possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Effective Date: The date of execution and delivery of this Agreement by all of the parties hereto. Entity or collectively Entities: Corporations, Limited Liability Companies, Partnerships, Joint Ventures or other forms of legal entity. Fox Content: All Health Related Materials owned or licensed by or on behalf of Fox or the Fox Group for inclusion on the Fox Distribution Channels (excluding any Distribution Channel that is a Web Site). The parties acknowledge that the Fox Content shall include only those portions of content available from time to time on the Fox Distribution Channels that are (i) owned exclusively by members of the Fox Group, (ii) are licensed to members of the Fox Group under an arrangement pursuant to which members of the Fox Group are legally permitted to license same to the Company at no additional cost to members of the Fox Group or at additional cost to the Company as provided in Section 3.1(b) for the purposes contemplated by 19 this Agreement, and (iii) is content the exploitation and distribution of which by the Company or Sublicensees will in all respects comport with all Requirements of Law. Fox Distribution Channel: Defined in the recitals to this Agreement; provided, however, that for purposes of this Agreement, the Fox Distribution Channels shall exclude Web Sites. Fox Group: Defined in the introductory paragraph of this Agreement Fox Indemnitees: Defined in Section 6.2. Fox Intellectual Property: Defined in Section 2.2 (d). Fox Logos: Defined in Section 2.3. Fox Property: Defined in Section 3.3. Governmental Authority: Any nation or government, any state or other political subdivision thereof and any court, panel, judge, board, bureau, commission, agency or other entity, body or other Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. Health Related Material: Any written, photographic or audiovisual work, as defined in the United States Copyright Act, that consists predominantly of coverage of topics related to health, fitness, disease, medicine (including holistic medicine and other non-western medicine), pharmaceuticals or natural health products, including coverage of related news, commentary and analysis. Indemnified Party: Defined in Section 6.3. Indemnifying Party: Defined in Section 6.3. Initial Term: Defined in Section 5.1. Judgment: Any order, judgment, writ, decree, award or other determination, decision or ruling of any Governmental Authority or any arbitrator. Licensed Activities: The activities described in Sections 2.1(a), 2.1(b), and 2.3. Non-Standard Television Service: Audiovisual programming delivered by any means of transmission, whether now existing or developed in the future (including all forms of fixed-line or wireless, narrow band or broadband, transmission) other than (a) audiovisual programming which is made available to viewers free-of-charge (e.g., free-to-air UHF or VHF television), even if retransmitted via cable or any other means of retransmission for which a facilities fee is charged, and (b) home video distribution. Operating Agreement: That certain Operating Agreement of even date herewith by and among News Corp, the Company and WebMD International LLC. 20 Operating Company: The Company's subsidiaries or operating divisions, formed either wholly by the Company (or by members in or Affiliates thereof) or with third parties or entities that are not subsidiaries of the Company. Person: Any natural person, Entity, Governmental Authority, or other entity, whether acting in an individual, fiduciary or other capacity. Proprietary Information: Defined in Section 7.2 Renewal Term: Defined in Section 5.1. Requirement of Law: As to any Person, all rules, regulations, Judgments, injunctions, standards, codes, limitations, restrictions, conditions, prohibitions, notices, demands or other requirements or determinations of a Governmental Authority or an arbitrator, applicable to or binding upon such Person, any of its property or any business conducted by it or to which such Person, any of its property or any business conducted by it is subject. Term: Defined in Section 5.1. Territory: The entire world. Web Site: Any network of Internet Web pages accessible electronically by a computer or other device and located in a single Internet domain. WebMD Site: Any Web Site which is owned and operated by the Company and/or its Operating Companies and which displays health and medical content intended for consumers and healthcare professionals and provides, promotes and sells healthcare related information, services and products to consumers and healthcare professionals, currently accessible through the URL www.webmd.com. EX-10.4 5 REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 10.4 HEALTHEON/WEBMD CORPORATION REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "AGREEMENT") is made and entered into as of the 26th day of January, 2000, among Healtheon/WebMD Corporation, a Delaware corporation (the "COMPANY"), and the parties set forth on signature pages hereto (each a "PURCHASER" and collectively, the "PURCHASERS"). RECITALS: A. The Purchasers have purchased 2 million shares of the Company's Common Stock, par value $0.0001 per share (the "COMMON STOCK") and 155,951 shares of the Company's Series A Preferred Stock, par value $0.0001 per share (the "SERIES A STOCK") pursuant to a Purchase Agreement dated as of the 26th day of January, 2000, (the "PURCHASE AGREEMENT") between the Company, the Purchasers and the other parties thereto. B. The Company may issue to the Purchasers up to an additional 10,291,939 shares of Common Stock upon the occurrence of certain events set forth in the Amended and Restated Limited Liability Company Agreement of Health Network LLC dated as of the 26th day of January, 2000, and in the Limited Liability Company Agreement of WebMD International LLC dated as of the 26th day of January, 2000. C. The Company and the Purchasers desire to set forth the registration rights to be granted by the Company to the Purchasers. NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants, and conditions set forth herein and in the other Transaction Documents (as defined below), the parties mutually agree as follows: AGREEMENT: 1. Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings: "Certificate of Incorporation" means the Amended and Restated Certificate of Incorporation of the Company as filed with the Secretary of State of the State of Delaware, as amended from time to time. "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "Common Stock" shall mean the common stock, par value $0.0001 per share, of the Company and any and all shares of capital stock or other equity securities of: (i) the Company which are added to or exchanged or substituted for the Common Stock by reason of the declaration of any stock dividend or stock split, the issuance of any distribution or the reclassification, readjustment, recapitalization or other such modification of the capital structure of the Company; and (ii) any other corporation, now or hereafter organized under the laws of any state or other governmental authority, with which the 2 Company is merged, which results from any consolidation or reorganization to which the Company is a party, or to which is sold all or substantially all of the shares or assets of the Company, if immediately after such merger, consolidation, reorganization or sale, the Company or any Stockholders of the Company own equity securities having in the aggregate more than fifty percent (50%) of the total voting power of such other corporation. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Family Member" shall mean (a) with respect to any individual, such individual's spouse, any descendants (whether natural, adopted or in the process of adoption), any trust all of the beneficial interests of which are owned by any of such individuals or by any of such individuals together with any organization described in Code Section 501(c)(3), the estate of any such individual, and any corporation, association, partnership or limited liability company all of the equity interests of which are owned by those above described individuals, trusts or organizations and (b) with respect to any trust, the owners of the beneficial interests of such trust. "Form S-3" means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the Commission which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the Commission. "HCNLLC LLC Agreement" means the Amended and Restated Limited Liability Company Agreement of Health Network LLC as of the 26th day of January, 2000. "Holder" shall mean each of the Purchasers or any of such Holder's respective successors and assigns who acquire rights in accordance with this Agreement with respect to the Registrable Securities directly or indirectly from such Holder. "Initiating Holders" shall mean any Holder or Holders of not less than 50% of the then outstanding Registrable Securities. "News Corp" means The News Corporation Limited, a South Australia, Australia corporation. The terms "register", "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. "Registrable Securities" means shares of Common Stock issued pursuant to the Purchase Agreement, the HCNLLC LLC Agreement and the WebMD International LLC Agreement and the shares of Common Stock into which the shares of Preferred Stock issued pursuant to the Purchase Agreement are convertible pursuant to the Certificate of Incorporation, excluding in all cases, however (including exclusion from the calculation of the number of outstanding Registrable Securities), any Registrable Securities sold by a person in a transaction (i) pursuant to a registration statement under Section 2, 3 or 4 hereof or (ii) pursuant to Rule 144 (or any successor provision) of the Securities Act. "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute promulgated in replacement thereof, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. 2 3 "Transaction Documents" shall have the meaning set forth in the Master Strategic Alliance Agreement dated December 6, 1999 among the Company, News Corp and Fox Entertainment Group, Inc., a Delaware corporation which is controlled by News Corp. "WebMD International LLC Agreement" means the Limited Liability Company Agreement of WebMD International Limited dated as of the 26th day of January, 2000. 2. Demand Registration. In case the Company shall receive from Initiating Holders a written request that the Company effect a registration with respect to at least 2,000,000 shares of Common Stock that constitute Registrable Securities (as adjusted for stock splits, stock dividends, recapitalizations and similar events) the Company will: (a) promptly give written notice of the proposed registration to all other Holders so they may have an opportunity to consider joining in such registration, which they may do (subject to the terms and provisions of this Agreement) at their election within ten (10) days after receipt of the notice of the proposed registration by the Company; and (b) as soon as practicable, use its reasonable best efforts to effect such registration (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request given within ten (10) days after receipt of notice from the Company pursuant to Section 2(a); provided that the Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 2: (i) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act; (ii) Prior to June 30, 2000; (iii) Within the one hundred twenty (120) day period immediately following the effective date of a registration statement pertaining to a firm commitment underwritten public offering of Common Stock for the account of a shareholder (including Purchaser) of the Company who has exercised a demand right to register shares of Common Stock (other than a registration relating solely to a Commission Rule 145 transaction, a registration relating solely to employee benefit plans, or a registration statement on Form S-3 (or any similar short-form registration statement)); (iv) Within the sixty (60) day period immediately following the effective date of a registration statement on Form S-3 (or any similar short-form registration statement) pertaining to a firm commitment underwritten public offering of Common Stock for the account of another shareholder of the Company who has exercised a demand right to register shares of Common Stock (other than a 3 4 registration relating solely to a Commission Rule 145 transaction or a registration relating solely to employee benefit plans); or (v) After the Company has effected three (3) registrations pursuant to this Section 2 and such registrations have been declared or ordered effective and have remained effective for a period of at least ninety (90) consecutive days. Subject to the foregoing clauses (i) through (v), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request of the Initiating Holders. The Initiating Holders may, at any time prior to the effective date of the registration statement relating to such registration, revoke such request, without liability (except as set forth in Section 6 hereof) to the Initiating Holders or any other Holders of Registrable Securities requested to be registered pursuant to Section 2(a) hereof, by providing a written notice to the Company revoking such request. Notwithstanding the above, the Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to this Section 2 during the period starting with the date ninety (90) days prior to the Company's good faith estimate of the date of filing of (or in the case of any registration on Form S-3, forty-five (45) days prior), and ending on a date one hundred twenty(120) days after the effective date of (or in the case of any registration on Form S-3, ninety (90) days after), a Company-initiated registration statement in connection with a bona fide firm commitment underwritten registration for securities to be offered for the Company's own account (the "Intended Registration"); provided that the Company is actively employing in good faith all reasonable efforts to cause the Intended Registration to become effective and provided further that the Company gives notice to all Holders upon commencement of such period. The Holders shall be entitled to exercise their rights pursuant to Section 4 hereof with respect to an Intended Registration. An Intended Registration shall not be deemed to be a demand registration of the Holders pursuant to this Section 2. (c) Underwriting. If the Holders propose an underwritten offering, the sale of Registrable Securities pursuant to this Section 2 must be made by means of a firm commitment underwriting through underwriters who are reasonably acceptable to the Company and the holders of a majority of the Registrable Securities that are proposed to be distributed through such underwriting. The right of any Holder to registration pursuant to this Section 2 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent requested by such Holder (unless mutually otherwise agreed by a majority in interest of the Holders and such Holder) to the extent provided herein. The Company and all Holders proposing to distribute Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this Section 2(c), if the underwriter determines that in its good faith view marketing factors require a limitation of the number of shares to be underwritten and so advises the Initiating Holders in writing, then the Initiating Holders shall so advise the Company and all Holders (except those Holders who have indicated to the Company their decision not to distribute any of their Registrable Securities through such underwriting) and the number of Registrable Securities that may be included in the registration and underwriting shall be allocated first to the Holders on a pro rata basis according to the number of Registrable Securities requested to be included by the Holders; second to the Company; and third to other shareholders of the Company who have requested to sell in the registration. No Registrable Securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. 4 5 If at least eighty percent (80%) of the Registrable Securities requested to be registered by the Initiating Holders are not included in such registration, then the Initiating Holders may request that the Company effect an additional registration under the Securities Act of all or part of the Initiating Holders' Registrable Securities in accordance with the provisions of this Section 2, and the Company shall effect such additional registration. If any Holder disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the underwriter and the Initiating Holders. The Registrable Securities and/or other securities so withdrawn from such underwriting shall also be withdrawn from such registration; provided, however, that, if by the withdrawal of such Registrable Securities a greater number of Registrable Securities held by other Holders may be included in such registration (up to the maximum of any limitation imposed by the underwriters), then the Company shall offer to all Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities in the same proportion used above in determining the underwriter limitation. If the underwriter has not limited the number of Registrable Securities to be underwritten, the Company may include securities for its own account or the account of others in such registration if the underwriter so agrees and if the number of Registrable Securities which would otherwise have been included in such registration and underwriting will not thereby be limited. (d) If the Company shall furnish to the Initiating Holders a certificate signed by the President of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would (because of the existence of, or in anticipation of, any acquisition, financing activity, or other transaction involving the Company, or the unavailability for reasons beyond the Company's control of any required financial statements, disclosure of information which is in its best interest not to publicly disclose, or any other event or condition of similar significance to the Company) be seriously detrimental to the Company and its shareholders for such registration statement to be filed on or before the date filing would be required and it is therefore essential to defer the filing of such registration statement, then the Company may direct that such request for registration be delayed for a period not in excess of ninety (90) days, such right to delay a request to be exercised by the Company not more than twice in any twelve (12) month period. (e) Effective Registration Statement. A demand registration requested pursuant to this Section 2 shall not be deemed to have been effected unless the registration statement relating thereto (i) has become effective under the Securities Act and any of the Registrable Securities of the Initiating Holders included in such registration have actually been sold thereunder, and (ii) has remained effective for a period of at least ninety (90) days (or such shorter period in which all Registrable Securities included in such registration have actually been sold thereunder). 3. S-3 Registration. In case the Company shall receive from any Holder or Holders a written request or requests that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, the Company will: (a) promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders; and 5 6 (b) as soon as practicable, and in any event within 30 days of the receipt of such notice, file a registration statement on Form S-3 and effect all other qualifications and compliances as may be so requested and as would permit or facilitate the sale, distribution, transfer or hedging (through market transactions using brokers, in a firm commitment underwriting, in negotiated transactions or otherwise) of all or such portion of such Holder's or Holders' Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within 15 days after receipt of such written notice from the Company; provided, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 3: (i) if Form S-3 is not available for such offering by the Holders; (ii) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to register Registrable Securities and such other securities (if any) at an aggregate price to the public (net of any underwriters' discounts or commissions) of less than $20 million; (iii) if the Company has, within the twelve (12) month period preceding the date of such request, already effected three (3) registrations for the Holders pursuant to this Section 1.3; or (iv) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance. (c) Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders and shall keep it continuously effective until such Registrable Securities have been sold pursuant thereto. (d) Notwithstanding the other provisions of this Section 3, the Company shall have the right to delay the filing of any registration statement on Form S-3 (an "S-3 Registration") otherwise required to be prepared and filed by the Company pursuant to this Section 3, or to suspend the use of any S-3 Registration, for a period not in excess of 60 days (a "S-3 BLACKOUT PERIOD") if the Company, in the good faith judgment of its Board of Directors, determines (because of the existence of, or in anticipation of, any acquisition, financing activity, or other transaction involving the Company, or the unavailability for reasons beyond the Company's control of any required financial statements, disclosure of information which is in its best interest not to publicly disclose, or any other event or condition of similar significance to the Company) that the registration and distribution of the Registrable Securities to be covered by such S-3 Registration would be seriously detrimental to the Company and its shareholders, provided that the S-3 Blackout Period shall earlier terminate on the second business day following the completion or abandonment of the relevant financing, acquisition or other transaction or upon public disclosure by the Company or public admission by the Company of such material nonpublic information or such time as such material nonpublic information shall be publicly disclosed; and provided, further, that the Company shall furnish to the Holders a certificate of an executive officer of the Company to the effect that an event permitting a S-3 Blackout Period has occurred (and no other reason need be given). The Company will promptly give the Holders written notice of such determination and an approximation of the period of the anticipated delay; provided, however, that the aggregate number of days included in all S-3 Blackout Periods during any consecutive 12 months shall not exceed 180 days. Each Holder agrees to cease all disposition efforts under such S- 6 7 3 Registration with respect to Registrable Securities held by such Holder immediately upon receipt of notice of the beginning of any S-3 Blackout Period. The Company shall provide written notice to the Holders of the end of each S-3 Blackout Period. 4. Piggyback Registration. (a) If the Company shall determine to register for sale for cash any of its Common Stock, for its own account or for the account of others (other than the Holders), other than a registration relating solely to employee benefit plans or securities issued or issuable to employees, consultants (to the extent the securities owned or to be owned by such consultants could be registered on Form S-8) or any of their Family Members (including a registration on Form S-8), or a registration relating solely to a Commission Rule 145 transaction, a registration on Form S-4 in connection with a merger, acquisition, divestiture, reorganization or similar event, the Company promptly will give to each Holder written notice thereof and shall use its reasonable best efforts to include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within ten (10) days after receipt of such written notice from the Company, by any Holder or Holders. However, the Company may, without the consent of the Holders, withdraw such registration statement prior to its becoming effective if the Company has abandoned its proposal to register the securities proposed to be registered thereby. (b) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 4(a). In such event the right of any Holder to registration pursuant to Section 4(a) shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and any other shareholders of the Company distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Section 4(b), if the underwriter or the Company determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may exclude some or all Registrable Securities from such registration and underwriting. The Company shall so advise all Holders (except those Holders who have indicated to the Company their decision not to distribute any of their Registrable Securities through such underwriting), and the number of shares of Registrable Securities that may be included in the registration and underwriting, if any, shall be allocated among such Holders as follows: (i) In the event of a piggyback registration pursuant to Section 4(a) that is initiated by the Company, then the number of shares that may be included in the registration and underwriting shall be allocated first to the Company and then to all selling shareholders, including the Holders, who have requested to sell in the registration on a pro rata basis according to the number of shares requested to be included; provided, however, that no allocation pursuant to this Section 4(b) shall have the effect of reducing the Shares sold by Holders to less than 20% of the proposed offering; and (ii) In the event of a piggyback registration pursuant to Section 4(a) that is initiated by the exercise of demand registration rights by a shareholder or shareholders of the Company (other than the Holders), then the number of shares that may be included in the registration and underwriting shall be allocated first to such selling shareholders who exercised such demand and then to all selling 7 8 shareholders, including the Holders, who have requested to sell in the registration, on a pro rata basis according to the number of shares requested to be included. (c) No Registrable Securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. If any Holder disapproves of the terms of any such underwriting, such person may elect to withdraw therefrom by written notice to the Company and the underwriter. The Registrable Securities and/or other securities so withdrawn from such underwriting shall also be withdrawn from such registration; provided, however, that, if by the withdrawal of such Registrable Securities a greater number of Registrable Securities held by other Holders may be included in such registration (up to the maximum of any limitation imposed by the underwriters), then the Company shall offer to all Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities pursuant to the terms and limitations set forth herein in the same proportion used above in determining the underwriter limitation. 5. Registration Procedures. In the case of each registration, qualification or compliance effected by the Company pursuant to Section 2, 3 or 4 hereof, the Company will keep each Holder advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof. At its expense, the Company will use its reasonable best efforts to: (a) prepare and file with the Commission within ninety (90) days (or in the case of any registration on Form S-3, thirty (30) days) after receipt of a request for registration with respect to such Registrable Securities, a registration statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate, subject to Section 2 hereof, and which form shall be available for the sale of the Registrable Securities in accordance with the intended method(s) of distribution thereof, and use its best efforts to cause such registration statement to become and remain effective; provided that before filing with the Commission a registration statement or prospectus or any amendments or supplements thereto, including documents incorporated by reference after the initial filing of any registration statement, the Company shall (i) furnish to the underwriters, if any, and to one (1) counsel selected by the Holders of a majority of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents shall be subject to the review of the underwriters and such counsel, and (ii) notify each Holder of Registrable Securities covered by such registration statement of any stop order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered; (b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than ninety (90) days or such shorter period which shall terminate when all Registrable Securities covered by such registration statement have been sold (but not before the expiration of the 90-day period referred to in Section 4(3) of the Securities Act and Rule 174, or any successor thereto, thereunder, if applicable), and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended method(s) of disposition by the sellers thereof set forth in such registration statement; (c) furnish, without charge, to each Holder and each underwriter, if any, of Registrable Securities covered by such registration statement one (1) signed copy of such registration statement, each amendment and supplement thereto (including one (1) conformed copy to each Holder and one (1) 8 9 signed copy to each managing underwriter and in each case including all exhibits thereto), and such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any other prospectus filed under Rule 424 under the Securities Act) as such Holders may request, in conformity with the requirements of the Securities Act, and such other documents as such Holder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder, but only while the Company shall be required under the provisions hereof to cause the registration statement to remain effective; (d) use its best efforts to register or qualify such Registrable Securities under such other applicable securities or blue sky laws of such jurisdictions as any Holder, and underwriter, if any, of Registrable Securities covered by such registration statement reasonably requests as may be necessary for the marketability of the Registrable Securities (such request to be made by the time the applicable registration statement is deemed effective by the Commission) and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder and each underwriter, if any, to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder; provided that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (d), (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction; (e) use its best efforts to cause the Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the Holder or Holders thereof to consummate the disposition of such Registrable Securities; (f) immediately notify the managing underwriter, if any, and each Holder of such Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event which comes to the Company's attention if as a result of such event the prospectus included in such registration statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading and the Company shall promptly prepare and furnish to such Holder a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, unless suspension of the use of such prospectus otherwise is authorized herein or in the event of a S-3 Blackout Period, in which case no supplement or amendment need be furnished; (g) use its best efforts to cause all such Registrable Securities covered by the registration statement to be listed on the Nasdaq Stock Market or the national securities exchange on which similar securities issued by the Company are then listed, and enter into such customary agreements including a listing application and indemnification agreement in customary form (provided that the applicable listing requirements are satisfied), and to provide a transfer agent and registrar for such Registrable Securities covered by such registration statement no later than the effective date of such registration statement; (h) enter into such customary agreements (including an underwriting agreement in customary form) and take all such other actions as the Initiating Holders or the underwriters retained by such Holders, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities, including customary indemnification; 9 10 (i) make available for inspection during normal business hours by any Holder of Registrable Securities covered by such registration statement, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or other agent retained by any such Holder or underwriter (collectively, the "Inspectors"), all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries (collectively, "Records"), if any, as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's and its subsidiaries' officers, directors and employees to supply all information and respond to all inquiries reasonably requested by any such Inspector in connection with such registration statement. Notwithstanding the foregoing, the Company shall have no obligation to disclose any Records to the Inspectors in the event the Company determines that such disclosure is reasonably likely to have an adverse effect on the Company's ability to assert the existence of an attorney-client privilege with respect thereto; (j) in the event that any contemplated public offering is underwritten, use its best efforts to obtain a "comfort" letter from the Company's independent public accountants in customary form and covering such matters of the type customarily covered by "comfort" letters as the Holders of a majority (by number of shares) of the Registrable Securities being sold reasonably request, and provided that such request is reasonable in the underwriter's point of view; (k) use its best efforts to obtain an obtain an opinion of counsel from the Company's counsel in customary form and covering such matters of the type customarily covered in opinions of counsel in connection with such transactions; (l) comply, and continue to comply during the period that such registration statement is effective under the Securities Act, in all material respects with the Securities Act and the Securities Exchange Act of 1934 and with all applicable rules and regulations of the Commission with respect to the disposition of all securities covered by such registration statement, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months, but not more than eighteen (18) months, beginning with the first full calendar month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act, and not file any amendment or supplement to such registration statement or prospectus to which Holder shall have reasonably objected on the grounds that such amendment or supplement does not comply in all material respects with the requirements of the Securities Act, having been furnished with a copy thereof at least five (5) business days prior to the filing thereof; and (m) in the event the offering is underwritten, develop a presentation reasonably acceptable to the underwriters to facilitate the offering and to make its chief executive officer and chief financial officer available for participation in such meetings and presentations (e.g., road show for the offering) at such locations (including Europe) as the underwriter reasonably requests. Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 5(f) hereof, such Holder shall discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 5(f) hereof, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company's expense) all copies (including, without limitation, any and all drafts), other than permanent file copies, then in such Holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company shall give 10 11 any such notice, the period mentioned in Section 5(b) hereof shall be extended by the greater of (i) ten (10) business days or (ii) the number of days during the period from and including the date of the giving of such notice pursuant to Section 5(f) hereof to and including the date when each Holder of Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 5(f) hereof. 6. Rule 144. Notwithstanding anything to the contrary contained herein, no Holder shall have rights to a registration under Section 2, 3 or 4 hereof after the time that such Holder could sell, within ninety (90) days, all of its Registrable Securities pursuant to Rule 144(e) promulgated under the Securities Act or any successor rule thereto; provided that the Company hereby agrees to take the following actions to ensure the availability of Rule 144 to each such Holder (or such similar actions as shall be required under any successor rule thereto): (a) make and keep public information available as those terms are understood and defined in Rule 144; (b) use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (c) so long as any Holder owns any Registrable Securities, furnish to a Holder upon request, a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time from and after ninety (90) days following the effective date of the registration statement relating to an Initial Public Offering), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed as the Holder may reasonably request. 7. Registration Expenses. The Company shall pay all expenses in connection with any registration, including, without limitation, all registration, filing and NASD fees, printing expenses, all fees and expenses of complying with securities or blue sky laws, the fees and disbursements of one counsel for the Holders and the fees and disbursements of counsel for the Company and of its independent accountants; provided that, in any registration, each party shall pay for its own underwriting discounts and commissions and transfer taxes. The Company shall not, however, be required to pay for expenses of any registration proceeding begun pursuant to Section 2, 3 or 4 hereof, the request of which has been subsequently withdrawn by the Initiating Holders (unless the withdrawal is based upon material adverse information concerning the Company of which the Initiating Holders were unaware at the time of such request), in which case such expenses shall be borne by the Holders whose securities were to be included in the registration in proportion to the number of shares for which such registration was requested. 8. Assignment of Rights. Any Holder may assign its rights under this Agreement to any party acquiring 2,400,000 shares or more of Registrable Securities; provided, however, that a Holder may assign its rights under this Agreement without such restrictions to a transferee or assignee that controls, is controlled by or is under common control with such Holder. 9. Information by Holder. The Holder or Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders and the distribution proposed by such Holder or Holders as the Company may request in writing. 11 12 10. "Market Stand-off" Agreement. Each Holder agrees not to sell or otherwise transfer or dispose of any Common Stock (or other securities) of the Company held by it during such period of time following the effective date of an underwritten public offering of the Company's securities as the underwriters in such underwritten offering deem appropriate; provided, however, that no such market stand off agreement shall be required of any Holder (i) who is not identified as a selling shareholder on the registration statement for such underwritten offering or any other registration statement filed by the Company pursuant to Sections 2, 3 or 4 hereof and (ii) unless the executive officers, directors and greater than 10% stockholders of the Company enter into similar agreements; provided, however, that in no event shall such period be more than 90 days. The Company may impose stop-transfer instructions with respect to the shares (or securities) subject to the foregoing restriction until the end of such period. 11. Indemnification. (a) In the event of the offer and sale of Registrable Securities held by Holders under the 1933 Act, the Company shall, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, its directors, officers, partners, each other person who participates as an underwriter in the offering or sale of such securities, and each other Person, if any, who controls or is under common control with such Holder or any such underwriter within the meaning of Section 15 of the 1933 Act, against any losses, claims, damages or liabilities, joint or several, and expenses to which the Holder or any such director, officer, partner or underwriter or controlling person may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such shares were registered under the 1933 Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading or any violation by the Company of any federal, state or common law rule or regulation applicable to the Company and relating to action required of or inaction by the Company in connection with any such registration, and the Company shall reimburse the Holder, and each such director, officer, partner, underwriter and controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, damage, liability, action or proceeding; provided that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by or on behalf of such Holder specifically stating that it is for use in the preparation thereof. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holders, or any such director, officer, partner, underwriter or controlling person and shall survive the transfer of such shares by the Holder. (b) The Company may require, as a condition to including any Registrable Securities to be offered by a Holder in any registration statement filed pursuant to this Agreement, that the Company shall have received an agreement from such Holder to be bound by the terms of this Section 11, including an undertaking reasonably satisfactory to it from such Holder, to indemnify and hold the 12 13 Company, its directors and officers and each other Person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director or officer or controlling person may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement in or omission or alleged omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information about such Holder as a Holder of the Company furnished to the Company through an instrument duly executed by such Holder specifically stating that it is for use in the preparation of such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement; provided, however, that such indemnity agreement found in this Section 11(b) shall in no event exceed the gross proceeds from the offering received by such Holder. Such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling person and shall survive the transfer by any Holder of such shares. (c) Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in Section 11(a) or (b) hereof (including any governmental action), such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the indemnifying party of the commencement of such action; provided that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under Section 11(a) or (b) hereof, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist or the indemnified party may have defenses not available to the indemnifying party in respect of such claim, the indemnifying party shall be entitled to participate in and to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties arises in respect of such claim after the assumption of the defenses thereof, other than reasonable costs of investigation. Neither an indemnified nor an indemnifying party shall be liable for any settlement of any action or proceeding effected without its consent. No indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. Notwithstanding anything to the contrary set forth herein, and without limiting any of the rights set forth above, in any event any party shall have the right to retain, at its own expense, counsel with respect to the defense of a claim. (d) The indemnification required by Section 11(a) and (b) hereof shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expenses, losses, damages or liabilities are incurred. (e) If the indemnification provided for in this Section 11 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party 13 14 hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense as is appropriate to reflect the proportionate relative fault of the indemnifying party on the one hand and the indemnified party on the other (determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission relates to information supplied by the indemnifying party or the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission), or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, not only the proportionate relative fault of the indemnifying party and the indemnified party, but also the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, as well as any other relevant equitable considerations. No indemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any indemnifying party who was not guilty of such fraudulent misrepresentation. (f) Other Indemnification. Indemnification similar to that specified in the preceding subsections of this Section 11 (with appropriate modifications) shall be given by the Company and each Holder of Registrable Securities with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act. 12. Miscellaneous (a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. (b) Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, executors and administrators of the parties hereto. In the event the Company merges with, or is otherwise acquired by, a direct or indirect subsidiary of a publicly-traded company, the Company shall condition the merger or acquisition on the assumption by such parent company of the Company's obligations under this Agreement. (c) Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof. (d) Notices, etc. All notices or other communications which are required or permitted under the Transaction Documents shall be in writing and sufficient if delivered by hand, by facsimile transmission, by registered or certified mail, postage pre-paid, or by courier or overnight carrier, to the persons at the addresses set forth below (or at such other address as may be provided hereunder), and shall be deemed to have been delivered as of the date so delivered: 14 15 If to the Company: Healtheon/WebMD Corporation 400 The Lenox Building 3399 Peachtree Road Atlanta, Georgia 30326 Attention: W. Michael Heekin, Esq. Healtheon/WebMD Corporation 4600 Patrick Henry Road Santa Clara CA 95054 Attention: Jack Dennison, Esq. With a copy to: Nelson Mullins Riley & Scarborough, L.L.P. Bank of America Corporate Center Suite 2600 100 North Tryon Street Charlotte, North Carolina 28202 Attention: H. Bryan Ives III, Esq. C. Mark Kelly, Esq. If to Purchaser: The News Corporation Limited 1211 Avenue of the Americas New York, New York 10036 Attention: Arthur M. Siskind, Esq. With a copy to: Squadron, Ellenoff, Plesent & Sheinfeld, LLP 551 Fifth Avenue New York, New York 10176 Attention: Joel I. Papernik, Esq. or at such other address as any party shall have furnished to the other parties in writing. (e) Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Holder of any Registrable Securities, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of such Holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereunder occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Holder of any breach or default under this Agreement, or any waiver on the part of any Holder of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, or by law or otherwise afforded to any holder, shall be cumulative and not alternative. (f) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument. 15 16 (g) Severability. In the case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. (h) Amendments. The provisions of this Agreement may be amended at any time and from time to time, and particular provisions of this Agreement may be waived, with and only with an agreement or consent in writing signed by the Company and by the holders of a majority of the number of shares of Registrable Securities outstanding as of the date of such amendment or waiver. The Purchaser acknowledges that by the operation of this Section 12(h), the holders of a majority of the outstanding Registrable Securities may have the right and power to diminish or eliminate all rights of the Purchaser under this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 16 17 This Registration Rights Agreement is hereby executed as of the date first above written. COMPANY: HEALTHEON/WEBMD CORPORATION By: /s/ ------------------------------------------- Its: W. Michael Heekin Exec. Vice President PURCHASERS: EASTRISE PROFITS LIMITED By: /s/ ------------------------------------------- Its: Lawrence A. Jacobs Director AHN/FIT CABLE, LLC By: /s/ ------------------------------------------- Its: Daniel Fawcett Exec. Vice President AHN/FIT INTERNET, LLC By: /s/ ------------------------------------------- Its: Daniel Fawcett Exec. Vice President NEWS AMERICA INCORPORATED By: /s/ ------------------------------------------- Its: Lawrence A. Jacobs Sr. Vice President FOX BROADCASTING COMPANY By: /s/ ------------------------------------------- Its: Paul Haggerty Exec. Vice President 17 EX-10.5 6 MEDIA SERVICES AGREEMENT 1 EXHIBIT 10.5 HEALTHEON/WEBMD MEDIA SERVICES AGREEMENT THIS AGREEMENT ("Agreement"), dated as of the 26th day of January, 2000, is made by and between Healtheon/WebMD Corporation, a Delaware corporation (the "Company"), and Eastrise Profits Limited, an international business company incorporated under the laws of the British Virgin Islands corporation ("Star") which is controlled by The News Corporation Limited ("News Corp"), and Fox Entertainment Group, Inc., a Delaware corporation ("FEG" and collectively with Star and News Corp, the "News Parties") (each referred to herein as a "Party", and collectively referred to as the "Parties"). WHEREAS, the Company has developed and has expertise in the development of Internet-related services and programming of interest to the health and medical industries and owns or otherwise has the rights in and to certain branded data, text, images, software, audio files, video files, graphic or other similar materials related thereto ("Health Related Content"); and WHEREAS, the News Parties through their respective subsidiaries and affiliates have controlling and non-controlling interests in programs, networks and other media properties of various kinds (the "Media Properties"); and WHEREAS, the Company, the News Parties and affiliates of the News Parties have entered into agreements and arrangements (together, the "Related Agreements") as a result of which the News Parties and their affiliates are obligated to provide media services of various kinds as hereinafter provided; and WHEREAS, it is a condition of the Related Agreements that the Parties enter into this Agreement. NOW, THEREFORE, in consideration of the mutual promises set forth herein, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: ARTICLE I MEDIA SERVICES/ACCOUNTING 1.1 MEDIA SERVICES. In response to requests by the Company made in consultation with the News Parties from time to time, the News Parties agree to provide, to cause Controlled Affiliates to provide, and to use commercially reasonable efforts to cause Non-Controlled Affiliates to provide, to the Company (i) advertising and marketing services (the "Advertising Services") and (ii) promotion, programming and distribution services (the "Promotional Services" and together with the Advertising Services, the "Media Services") in the Territory during the period commencing on the date hereof and ending on August 31, 2010 (the "Effective Period"). As used herein, "Controlled Affiliates" means any corporation or other entity more than 50% of whose outstanding voting securities or other equity interests are directly or indirectly owned by News Corp.; "Non-Controlled Affiliates" means any corporation or other entity in which News Corp. directly or indirectly has a greater than 20% but no more than 50% equity interest; and "Territory" means the world. 1.2 ACCOUNTING AND REPORTING STATEMENTS. The News Parties shall accurately account for the rendition of the Media Services to the Company unless otherwise agreed upon in connection with particular Media Services. The News Parties shall prepare and deliver to the Company at the beginning and the end of each television broadcast season a statement (the "Services Statements") indicating in 2 reasonable detail the value (determined as provided herein) of the Media Services to be furnished and furnished under this Agreement during such television broadcast season computed in good faith in accordance with Sections 2.2 and 3.5 of this Agreement. All such Services Statements, and the information contained therein, shall constitute confidential "Information" of the News Parties, which shall be subject to Article 8 hereof. Disputes with respect to any valuations of Media Services shall be resolved in accordance with Article 7. ARTICLE 2 ADVERTISING AND MARKETING 2.1 ADVERTISING MEDIA. During the Effective Period, the News Parties agree to provide, to cause Controlled Affiliates to provide and to use commercially reasonable efforts to cause Non-Controlled Affiliates to provide, an aggregate of $240 million of Advertising Services on television and cable properties, film properties, print advertising media and News America Digital Publishing's Internet sites owned by the News Parties, the Controlled Affiliates and the Non-Controlled Affiliates ("Advertising Space"). The dollar amount of Advertising Services to be provided to the Company during each television broadcast season is set forth opposite the respective season on Schedule 1 attached hereto. Attached as Schedule 2 is a representative allocation of the Advertising Space to be provided to the Company during a television broadcast season (the "Representative Allocation"). The Parties shall use the Representative Allocation as a benchmark for their determination of the amount, placement and pricing of Advertising Space to be provided to the Company each season. The Parties shall meet during the upfront selling period for each television broadcast season (the "Upfront Period") to determine the Advertising Space to be allocated to the Company for the season beginning in September of such year. The Parties intend that all of such Advertising Space for that season will be allocated at that time, subject to reasonable flexibility as required for changes in unforeseen circumstances. After the allocation of Advertising Services is decided upon during the Upfront Period, the Company shall coordinate directly with the particular Controlled Affiliate or Non-Controlled Affiliate with which the Company has chosen to advertise. The News Parties shall use commercially reasonable efforts to satisfy, and to cause the Controlled Affiliates and Non-Controlled Affiliates to satisfy, all requests made by the Company in connection with the placement and scheduling of all advertisements. The Parties also agree that they will pro rate, to the extent practicable, Advertising Space based on the Representative Allocation during the period commencing on the date hereof and ending on August 31, 2000 (the "Short Season"), subject to the understanding that a majority of the Short Season has been previously sold. Any amounts attributable to Advertising Space provided to the Company during the Short Season shall reduce the amount of Advertising Space to be provided to the Company in the tenth (10th) television broadcast season. 2.2 DETERMINATION OF DOLLAR AMOUNT OF ADVERTISING SERVICES. The News Parties agree that the dollar amount of Advertising Services to be provided to the Company pursuant to this Agreement shall be based upon advertising prices which are charged by the News Parties to similarly situated parties based upon similar volume, placement, amount and other factors relevant to the pricing of advertising services, but in no event shall the dollar amount charged for Advertising Services to be provided to the Company pursuant to this Agreement be greater than the prices charged, on average, to the top twenty advertisers on the Advertising Space platform in question. 2.3 APPROVAL OVER CONTENT. The News Parties shall have final approval over all content exhibited under this Agreement to insure that such content meets the News Parties' editorial standards, which approval shall not be unreasonably withheld. 2 3 ARTICLE 3 PROMOTION, PROGRAMMING AND DISTRIBUTION 3.1 PROMOTIONAL SERVICES. During the Effective Period, the News Parties agree to provide, to cause Controlled Affiliates to provide and to use commercially reasonable efforts to cause Non-Controlled Affiliates to provide, at least $160 million (valued pursuant to Section 3.5) of Promotional Services (as more fully described in Section 3.2, 3.3 and 3.4) on television and cable properties, film properties, print media and News America Digital Publishing's Internet sites owned by the News Parties, the Controlled Affiliates and the Non-Controlled Affiliates (the "Promotional Channels"). The minimum inherent market value of Promotional Services to be provided to the Company during each television broadcast season is set forth opposite the respective season on Schedule 3 attached hereto. 3.2 PROMOTIONS. Attached as Schedule 4 is a list of various forms of Promotional Service that may be provided to the Company during a television broadcast season (the "Promotional List"). The Parties shall use the Promotional List as a benchmark for their determination of the nature, volume and placement of the Promotional Services (in addition to Promotional Services that may be provided pursuant to Section 3.3 and 3.4) to be provided to the Company each season. The Parties shall meet during the Upfront Period to determine the Promotional Services to be allocated to the Company on which Promotional Channels for the season beginning in September of such year. The Parties intend that all of such Promotional Services for that season will be allocated at that time, subject to reasonable flexibility as required for changes in unforeseen circumstances. After the allocation of Promotional Services is decided upon during the Upfront Period, the Company shall coordinate directly with the particular Controlled Affiliate or Non-Controlled Affiliate with which the Company has chosen to place such Promotional Services. The News Parties shall use commercially reasonable efforts to satisfy, and to cause the Controlled Affiliates and Non-Controlled Affiliates to satisfy, all requests made by the Company in connection with the placement of all Promotional Services. The Parties agree that they will pro rate, to the extent practicable, Promotional Services during the Short Season, subject to the understanding that a majority of the Short Season has been previously produced. Any amounts attributable to Promotional Services provided to the Company during the Short Season shall reduce the amount of Promotional Services to be provided to the Company in the tenth (10th) television broadcast season. 3.3 PROGRAMMING - TIMING, PRODUCTION AND CONTENT. The Company and the News Parties shall use commercially reasonable efforts to enter into co-production agreements covering the timing, budgeting, production, intellectual property rights, talent utilized, scheduling, locations, exhibition, distribution and content of the following production services and any additional production services: (a) one half-hour weekly program on the Fox News Channel (or its successor) at such time or times as the Parties mutually agree. The Company will control 50% of the advertising inventory (and be entitled to the revenues therefrom) and pay 50% of the production cost thereof, all as more fully set forth in a co-production agreement to be negotiated in good faith, containing customary or otherwise agreed upon terms and conditions with respect to such weekly show. (b) one half-hour weekly program on Fox Sports Net (or its successor) at such time or times as the Parties mutually agree, which show, among other things, may contain local components furnished by the Company. The Company will control 50% of the advertising inventory (and be entitled to file revenues therefrom) and pay 50% of the production cost thereof, all as more fully set forth in a co-production agreement to be negotiated in good faith containing customary or otherwise agreed upon terms and conditions with respect to such weekly show. 3 4 (c) one nightly segment on the Fox News Channel (or its successors) which will be sponsored by the Company and with respect to which the Company shall receive one 30 second advertising spot which spot may be sold by the Company for the Company's own account, subject to the News Parties' approval as to the terms of such sale (which approval shall not be unreasonably withheld), all as more fully set forth in an agreement to be negotiated in good faith containing customary or otherwise agreed upon terms and conditions with respect to such segment. (d) one weekly segment on the evening news program and one weekly segment on a morning news program on Fox's owned and operated stations, in each case sponsored by the Company all as more fully set forth in an agreement to be negotiated in good faith containing customary or otherwise agreed upon terms and conditions with respect to such segments. 3.4 DISTRIBUTION. The News Parties agree to cause Controlled Affiliates to obtain or provide (as and when available, subject to existing obligations and business plans) and to use commercially reasonable efforts to cause Non-Controlled Affiliates to obtain or provide distribution for Health Related Content. 3.5 DETERMINATION OF INHERENT MARKET VALUE OF PROMOTIONAL SERVICES. The News Parties agree that they will provide at least the Inherent Market Value of Promotional Services to the Company during each broadcast season as set forth opposite such season on Schedule 3. As used herein, "Inherent Market Value" means a value determined after taking into consideration (i) the prices which are charged by the News Parties to similarly situated parties (to the extent the News Parties shall sell such services), the opportunity costs of the News Parties and its out of pocket costs and expenses, (ii) the value derived by the Company from such Promotional Services and (iii) similar pricing structures employed in comparable relationships, including the relationship among CBS and Medscape, Sportsline and MarketWatch. The Company shall have the right to audit the Inherent Market Value of Promotional Services provided to the Company each broadcast season pursuant to Article 7 hereof. 3.6 PAYMENT OF EXPENSES FOR PROMOTIONAL SERVICES. The News Parties shall invoice the Company on a monthly basis during each broadcast season for the Company's share of production costs associated with the Promotional Services provided during the previous month. The Company shall remit such production costs to the News Parties within 30 days of the Company's receipt of the invoice. ARTICLE 4 MAINTENANCE OF RECORDS 4.1 RECORDS. Each Party shall maintain books and records directly related to the subject matter of this Agreement that are sufficient to verify any amounts deemed paid, payable or credited pursuant to this Agreement. Not more than once during any twelve month period, each Party may conduct an inspection of the other's books and records for the sole purpose of verifying such amounts and/or statistics. Such inspections shall be conducted upon reasonable prior notice, at the Parties' normal places of business, during normal business hours and in a manner so as to minimize disruptions to the Parties' normal course of business. No Party shall be permitted to copy or duplicate any of the books and records of the other Party during the course of such inspection. The Parties acknowledge that the books and records of the other Party, including the information contained therein are of a confidential nature and, accordingly, shall be included in the "Information" that is subject to the provisions of Article 8 hereof. 4 5 ARTICLE 5 REPRESENTATIONS, WARRANTIES AND COVENANTS 5.1 MUTUAL REPRESENTATIONS AND WARRANTIES. Each of the News Parties represents and warrants to the Company and the Company represents and warrants to the News Parties that: (a) it is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has the full power and authority to carry out its business as now conducted and to own its assets, property and business; (b) all corporate and other proceedings required to be taken by it or on its behalf to authorize its entry into this Agreement have been duly and validly taken, and this Agreement has been duly and validly executed and delivered by it and constitutes a valid and binding agreement in accordance with its terms; and (c) the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not result in a default under or violate any material agreement to which it is a party or by which it is bound, or violate any provisions of its organizational documents. 5.2 NEWS PARTIES COVENANTS. Each of the News Parties covenants and agrees that News Corp shall be able to procure from the News Parties, their Controlled Affiliates, Non-Controlled Affiliates or others during the Effective Period promotional channels and advertising space comparable to the Promotional Channels and Advertising Space owned or available to them as of the date hereof, to the extent necessary to provide the Media Services. ARTICLE 6 INDEMNIFICATION 6.1 The further agreements entered into pursuant to this Agreement shall contain customary indemnification provisions with respect to content and other matters. ARTICLE 7 DISPUTE RESOLUTION REVALUATION 7.1 DISPUTE RESOLUTION. If the Company shall dispute the News Parties valuation of any Media Services provided by the News Parties hereunder, the Company shall (no later than 60 days after receipt of the Services Statement after the end of the applicable broadcast season) send a notice to the News Parties detailing the claimed error and the amount and nature of the error and naming an independent nationally recognized accounting firm (the "Dispute Notice"). If the News Parties do not agree with the Dispute Notice or the Parties fail to resolve all matters set forth in the Dispute Notice within 30 days after receipt of the Dispute Notice, the News Parties shall forward a copy of the Dispute Notice along with a statement of the News Parties' position to the Media Valuation Expert (defined below), which shall resolve the valuation dispute within 90 days of receipt of such Dispute Notice in accordance with valuation standards set forth in Sections 2.2 and 3.5 hereof. If the agreed upon value of the Media Services as determined pursuant to this Section 7.1 is less than the value of Media Services to be provided to the Company in the applicable television broadcast season as set forth on Schedules 1 and 3 hereof, the difference between such values shall be added to the amount of Advertising Services and Promotional Services, as applicable, to be provided to the Company during the next broadcast season. If the agreed upon value of the Media Services as determined pursuant to this Section 7.1 is more than the 5 6 value of Media Services to be provided to the Company in the applicable television broadcast season as set forth on Schedules 1 and 3 hereof, the difference between such values shall be subtracted from the amount of Advertising Services and Promotional Services, as applicable, to be provided to the Company during the next broadcast season. 7.2 FEES AND EXPENSES. The fees and expenses of the Media Valuation Expert shall be borne by the News Parties, unless the Media Valuation Expert determines that the valuation set forth in the Services Statement is correct or the value of the Media Services is greater than that set forth in the Services Statement, in which event the fees and expenses of the Media Valuation Expert shall be borne by the Company. The determination of value pursuant to this Article 7 shall be final and binding on the Parties. As used herein, the term "Media Valuation Expert" means an independent nationally recognized accounting firm mutually selected by the accounting firm set forth in the Dispute Notice and an independent nationally recognized accounting firm selected by the News Parties. The Parties shall cause the Media Valuation Expert to enter into a confidentiality agreement in form and substance acceptable to the Parties and the Media Valuation Expert. ARTICLE 8 CONFIDENTIALITY 8.1 NONDISCLOSURE. Each Party acknowledges that it will have access to certain information and materials concerning the other Party's business, plans, customers, technology and products that are confidential and of substantial value to such Party (referred to in this Agreement as "Information"), which value would be impaired if such Information were disclosed to third persons. Except as otherwise expressly provided herein, each Party agrees to maintain all Information received from the other (the "Disclosing Party"), including the terms and conditions of this Agreement, in confidence and agrees not to disclose or otherwise make such Information available to any third Person without the prior written consent of the Disclosing Party. Subject to the use restrictions set forth in this Section 8.1, the News Parties may disclose Information provided by the Company hereunder to Controlled Affiliates and Non-Controlled Affiliates and their Authorized Representatives to the extent such disclosure is necessary for the News Parties to perform their obligations under this Agreement. Subject to the use restrictions set forth in this Section 8.1, the Company may disclose Information provided by News Parties hereunder to Affiliates of the Company and its Authorized Representatives to the extent such disclosure is necessary for the Company to purchase Media Services pursuant to this Agreement. As used herein, the term "Affiliate" means, with respect to any Person, any other Person that controls, through the ability to exercise 50% or more of the voting power of such Person, or is so controlled by or is under such common control with such Person; the term "Authorized Representative" means, with respect to any Person, only those employees and agents of such Person that have been appraised of the obligations contained in this Article 8 and have agreed to adhere thereto; provided that under no circumstances shall Authorized Representatives include any Person that has an affiliation of any nature with any Competitor of the Disclosing Party, including without limitation, any advertising agency which has, or may, do business with the Disclosing Party; and the term "Person" means any individual person, corporation, partnership, limited liability company, trust, unincorporated organization, association or other entity. 8.2 EXCLUSIONS. The foregoing shall not apply to Information which: (a) is or becomes a matter of public knowledge through no fault of or action by the receiving Party; 6 7 (b) was rightfully in the receiving Party's possession prior to disclosure by the Disclosing Party; (c) subsequent to disclosure, is rightfully obtained by the receiving Party from a third Person who is lawfully in possession of such Information without restriction; (d) is independently developed by the receiving Party without resort to Information which is confidential under this Agreement; or (e) is required by law, regulation, governmental agency, or judicial order to be disclosed. 8.3 RETURN OF INFORMATION. Whenever reasonably requested by a Disclosing Party, a receiving Party shall immediately return to the Disclosing Party all Information or, at the Disclosing Party's option, shall destroy all such Information as the Disclosing Party may designate and provide to the Disclosing Party written certification of destruction. 8.4 PUBLICITY. The timing and content of any press release regarding any aspect of this Agreement or the Related Agreements (whether in electronic, print or other media) shall be subject to the prior written approval of both Parties, which approval shall not be unreasonably withheld. 8.5 SURVIVAL. Each receiving Party's obligation of confidentiality pursuant to this Article 10 shall survive any termination or expiration of this Agreement or of a period of two years from the date of any such expiration or termination, and thereafter shall terminate and be of no further force or effect. ARTICLE 9 GENERAL PROVISIONS 9.1 GOVERNING LAW. This Agreement will be interpreted and governed by the laws of the State of Delaware. 9.2 INDEPENDENT CONTRACTORS. The relationship of the Company and the News Parties established by this Agreement is that of independent contractors, and nothing contained in this Agreement shall be construed to constitute the Parties as partners, joint venturers, co-owners or otherwise as participants in a joint or common undertaking. 9.3 SUBCONTRACTORS. Each Party shall have the right to appoint third person subcontractors and to otherwise delegate its obligations hereunder, it being understood and agreed that each Party shall remain in all respects fully responsible for all of such Party's obligations hereunder and any Party's appointment of a subcontractor or delegation of its obligations otherwise shall not relieve such Party of any of its obligations hereunder. 9.4 MODIFICATION. No amendment or modification to this Agreement shall be effective unless agreed to by the Parties in writing, and no waiver of any rights hereunder shall be effective unless assented to in writing by the Party waiving such right. 9.5 FORCE MAJEURE. Neither Party will be liable for any failure or delay in its performance under this Agreement, except for payment obligations, due to acts of God, acts of civil or military authority, fire, electrical shortages, failure of telecommunication lines (including, without limitation, 7 8 Internet access equipment or lines), epidemic, flood, earthquake, riot, war, sabotage, governmental action or any other event beyond the reasonable control of such Party, and its Affiliates (collectively, "Events of Force Majeure"). A delayed party shall nevertheless give the other Party written notice of such Event of Force Majeure promptly and shall use its reasonable efforts to correct such failure or delay in performance. Notwithstanding the foregoing, an Event of Force Majeure shall not relieve the News Parties from providing at a later date the Media Services which were not provided as a result of the Force Majeure. 9.6 HEADINGS. The headings and captions used in this Agreement are for convenience of reference only , and shall not in any way affect the interpretation of the provisions of this Agreement. 9.7 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. 9.8 ASSIGNMENT. Neither Party may assign its rights under this Agreement, whether by operation of law or otherwise, without the prior written consent of the other Party, except that either Party may assign its rights under this Agreement to (a) an Affiliate, for so long as such entity remains an Affiliate of the assigning Party during the term of the assignment, (b) any entity into which the Party has merged or which has otherwise succeeded to all or substantially all of its business and assets to which this Agreement pertains, by merger, reorganization or otherwise, and which has assumed in writing or by operation of law the assigning Party's obligations under this Agreement; provided further that the assigning Party shall remain liable for all obligations under this Agreement. Subject to the previous sentences, the rights and liabilities of the Parties hereto will bind and inure to the benefit of their respective permitted successors, executors and administrators, as the case may be. 9.9 SEVERABILITY. If any provision of this Agreement is held to be invalid by a court of competent jurisdiction, then the remaining provisions will nevertheless remain in full force and effect. The Parties agree to renegotiate in good faith any term held invalid and to be bound by the mutually agreed substitute provision. 9.10 NOTICES. All notices required or permitted under this Agreement will be in writing and will be deemed given: (a) when delivered personally; (b) when received, if sent by confirmed facsimile transmission, or by registered or certified mail, return receipt requested, postage prepaid; or (c) one day after deposit with a commercial overnight carrier specifying next day delivery, with written verification of receipt. All communications will be sent to the following respective addresses or to such other address as may be designated by a Party by giving written notice to the other Party pursuant to this Section. 8 9 If to the Company: c/o Healtheon/WebMD Corporation 400 The Lenox Building Atlanta, Georgia 30326, USA Telephone: (404) 479-7600 Telecopier:(404) 479-7651 Attention: Jeffrey T. Arnold Chief Executive Officer With a copy to. Nelson Mullins Riley & Scarborough, L.L.P. Bank of America Corporate Center Suite 2600 100 Tryon Street Charlotte, North Carolina 28202 Telecopier: (704) 377-4814 Attention: H. Bryan Ives III, Esq. C. Mark Kelly, Esq. If to the News Parties: c/o The News Corporation Limited 1211 Avenue of the Americas New York, New York 10036 Phone: (212) 852-7007 Fax: (212) 768-2029 Attention: Arthur M. Siskind, Esq. Senior Executive Vice President and Group General Counsel With a copy to: Squadron, Ellenoff, Plesent & Sheinfeld, LLP 551 Fifth Avenue New York, New York 10176 Telecopier: (212) 697-6686 Attention: Joel I. Papernik, Esq. 9.11 JOINT VENTURE PROMOTION. In order to promote the global partnership evidenced by the Related Agreements, Healtheon/WebMD agrees to provide to the News Corp Parties and its Controlled Affiliates and Non-Controlled Affiliates with added value across the WebMD Consumer and Professional Portals. The following outlines ways in which Healtheon/WebMD can drive traffic and reinforce branding for the Media Properties of the News Corp Parties, their Controlled Affiliates and their Non-Controlled Affiliates. WebMD will integrate Fox news updates, feeds and articles into content targeting physicians and consumers. Additionally, Fox sports news can be integrated throughout the WedMD Sports and Fitness Channel through Fox sports tips, updates and articles. Healtheon/WedMD agrees to provide online traffic drivers to the Media Properties through banners, buttons, text links, and text paragraphs through the WebMD Consumer and Professional Portal 9 10 (Carriage plan to be finalized. Content integration applies to areas without current conflicting contracts.) 9.12 NO WAIVER. The failure of either Party to enforce any term or condition of this Agreement will not constitute a waiver of such Parry's rights to enforce subsequent breaches of any term or condition under this Agreement. 9.13 INJUNCTIVE RELIEF. Each Party agrees that there may be no adequate remedy at law available to the other Party in the event of certain breaches of this Agreement and that the other Party, in addition to any other rights which may be available to it, shall have the right to seek specific performance or relief, as applicable, in the event of any breach or threatened breach of such provisions. 10 11 Each Party has read, understands and agrees to the terms and conditions of this Agreement and the undersigned are duly authorized to sign this Agreement. EASTRISE PROFITS LIMITED By: /s/ ----------------------------------------------- Name: Lawrence A. Jacobs Title: Director FOX ENTERTAINMENT GROUP, INC. By: /s/ ----------------------------------------------- Name: Lawrence A. Jacobs Title: Secretary HEALTHEON/WEBMD CORPORATION By: /s/ ----------------------------------------------- Name: W. Michael Heekin Title: Exec. Vice President The undersigned, by its signature below, hereby unconditionally guarantees the full and prompt payment and performance of all obligations of the News Parties, their Controlled Affiliates and Non-Controlled Affiliates set forth in this Agreement. This is a guaranty of payment and not of collection. News Corp hereby waives the right to require the Company to proceed against the News Parties or any other person or to require the Company to pursue any other remedy or enforce any other right. THE NEWS CORPORATION LIMITED By: /s/ ----------------------------------------------- Its: Arthur Siskind Director EX-10.6 7 CONTENT LICENSE AGREEMENT 1 EXHIBIT 10.6 CONTENT LICENSE AGREEMENT Dated as of January 26, 2000 Between THE NEWS CORPORATION LIMITED and HEALTHEON/WEBMD CORPORATION 2 TABLE OF CONTENTS
PAGE ---- ARTICLE 1.........................................................................................................1 DEFINITIONS....................................................................................................1 ARTICLE 2.........................................................................................................2 CREATION OF LICENSE RELATIONSHIP...............................................................................2 2.1 GRANT OF LICENSE......................................................................................2 2.2 SCOPE OF LICENSE; RESTRICTIONS ON USE OF WEBMD CONTENT................................................2 2.3 GRANT OF RIGHT IN WEBMD LOGO................................................................................3 2.4 NO OTHER RIGHTS GRANTED...............................................................................5 2.5 ROYALTY...............................................................................................5 ARTICLE 3.........................................................................................................5 WEBMD CONTENT..................................................................................................5 3.1 Selection, Format, Design and Updating................................................................5 3.2 REMOVAL OF WEBMD CONTENT..............................................................................5 3.4 OWNERSHIP OF WEBMD CONTENT............................................................................6 3.5 OTHER AGREEMENTS......................................................................................6 3.5 OTHER AGREEMENTS......................................................................................6 ARTICLE 4.........................................................................................................6 REPRESENTATIONS AND WARRANTIES.................................................................................6 4.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY..............................................7 ARTICLE 5.........................................................................................................6 TERM; TERMINATION..............................................................................................7 5.1 TERM....................................................................................................7 5.2 RIGHT TO TERMINATE BY WEBMD...........................................................................8 5.3 RIGHT TO TERMINATE BY THE COMPANY.....................................................................8 5.4 EFFECT OF TERMINATION.................................................................................8 5.5 CONTINUING OBLIGATIONS................................................................................9 ARTICLE 6........................................................................................................ 9 INDEMNIFICATION............................................................................................... 9 6.1 AGREEMENT OF WEBMD TO INDEMNIFY...................................................................... 9 6.2 AGREEMENT OF THE COMPANY TO INDEMNIFY\F C\L................................................................10 6.3 THIRD PARTY CLAIMS...................................................................................10 6.4 SPECIAL DAMAGES AND LIMITATION OF LIABILITY..........................................................11 ARTICLE 7........................................................................................................11 ADDITIONAL AGREEMENTS.........................................................................................11 7.1 CONFIDENTIALITY AND USE OF PROPRIETARY INFORMATION...................................................11 7.2 DEFINITION OF PROPRIETARY INFORMATION................................................................11 7.3 CONTENTS OF THIS AGREEMENT...........................................................................12 7.4 COMMUNICATIONS.......................................................................................12 7.5 PRESS RELEASES.......................................................................................13 7.6 GOVERNING LAW; CONSENT TO JURISDICTION...............................................................13 7.7 BINDING EFFECT; SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT.............................................13 7.8 AMENDMENTS AND WAIVERS...............................................................................14 7.9 HEADINGS.............................................................................................14
i 3 7.10 NO IMPLIED WAIVERS...................................................................................14 7.11 COUNTERPARTS.........................................................................................14 7.12 FURTHER ASSURANCES...................................................................................14 7.13 SEVERABILITY.........................................................................................14 7.14 SEVERABILITY.........................................................................................14 7.14 INJUNCTIVE RELIEF....................................................................................15 7.15 NO PARTNERSHIP, ETC..................................................................................15 7.16 CONSTRUCTION.........................................................................................15 7.17 DISCLAIMER OF WARRANTIES.............................................................................15 7.18 PLURALS..............................................................................................15 7.19 EFFECTIVENESS........................................................................................15
ii 4 CONTENT LICENSE AGREEMENT THIS CONTENT LICENSE AGREEMENT (THE "AGREEMENT"), dated as of 26, 2000 (the "Effective Date"), by and between HEALTHEON/WEBMD CORPORATION, a Delaware corporation ("WebMD"), and THE NEWS CORPORATION LIMITED a South Australia, Australia corporation (the "Company"). W I T N E S S E T H: WHEREAS, WebMD owns and operates a Web Site on the World Wide Web currently accessible through the URL www.webmd.com which displays health and medical content intended for consumers and healthcare professionals and provides, promotes and sells healthcare related information, services and products to consumers and healthcare professionals (the "WebMD Site"); and WHEREAS, WebMD owns or licenses the WebMD Content which WebMD uses in connection with the development and operation of the WebMD Site; and WHEREAS, pursuant to a Master Strategic Alliance Agreement dated December 6, 1999, by and between WebMD and the Company (the "Strategic Alliance Agreement") WebMD desires to license to the Company the right to use the WebMD Content for the purpose of using, displaying and publishing the WebMD Content in any television, print, electronic or other medium now know or hereinafter developed, owned or operated by the Company and/or its Operating Companies (other than a Web Site) (individually a "News Channel" and collectively the "News Channels"). NOW, THEREFORE, in consideration of the foregoing premises and the agreements and covenants herein set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows: ARTICLE 1 DEFINITIONS All capitalized terms used in this Agreement without definition shall have the meanings ascribed to such terms in Exhibit A. 5 ARTICLE 2 CREATION OF LICENSE RELATIONSHIP 2.1 GRANT OF LICENSE. Except as may be prohibited or otherwise limited by the terms of any other obligations binding on the WebMD Group, other than obligations that were incurred with the primary intent to frustrate the purpose of this Agreement, and subject to terms and conditions of this Agreement, WebMD for itself and on behalf of the other members of the WebMD Group hereby agrees to provide, to cause Controlled Affiliates to provide, and to use commercially reasonable efforts to cause Non-Controlled Affiliates to provide, to the Company a non-exclusive license (the "License") during the term hereof throughout the Territory to: (a) use, copy, translate, display, publish and transmit the WebMD Content solely for the purpose of developing and operating the News Channels; and (b) subject at all times to the obligations and duties of the Company contained herein, sublicense only to Operating Companies the rights granted hereunder; provided, however, that the Company shall (i) obtain WebMD's prior written consent to each such sublicense (other than with respect to Operating Companies directly or indirectly wholly owned by the Company); (ii) obtain from such Operating Companies a written instrument approved as to form and substance by WebMD, pursuant to which each such Operating Company shall agree to be bound and comply with the terms of this Agreement and (iii) at all times remain fully liable for the actions of its Operating Companies. Operating Companies with respect to which the foregoing conditions have been satisfied shall hereinafter be referred to as "Sublicensees." The Sublicensees shall be prohibited from granting any further sublicenses of the rights granted hereunder to any other Person without the express prior written approval of WebMD. WebMD agrees that any consent or approval required by it under this Section 2.1(b) will not be unreasonably denied or delayed and that WebMD will cooperate with the Company in completing any approval process required hereunder in a reasonably expeditious manner given the facts and circumstances pertaining to such approval. As used herein, "Controlled Affiliates" means any corporation or other entity more than 50% of whose outstanding voting securities or other equity interest are directly or indirectly owned by WebMD; "Non-Controlled Affiliates" means any corporation or other entity in which WebMD directly or indirectly has a greater than 20% but no more than 50% equity interest. 2.2 SCOPE OF LICENSE; RESTRICTIONS ON USE OF WEBMD CONTENT. (a) The License granted hereunder is non-exclusive and the Company agrees to use the WebMD Content in accordance with the terms hereof and solely for the purpose of engaging in the Licensed Activities. The Company acknowledges that the grant of rights hereunder excludes the right to use the WebMD Content in connection with (i) the development or operation of any Web Site similar to the WebMD Site or the development or operation of any Web Site which is otherwise targeted or marketed primarily to health professionals anywhere in the world; or (ii) the development or 6 operation of any Web Site which is intended to display directly or indirectly (through links or otherwise) health or medical content as a distinct feature, section or subject matter anywhere in the world or (iii) use the WebMD Content in connection with any Web Site described (i) or (ii) above. The parties hereto agree that the covenants and agreements set forth in this Section 2.2(a) are in addition to the restrictive covenants set forth in Section 10.1 of the Strategic Alliance Agreement. Additionally, the Company acknowledges that any sublicense of the rights granted hereunder shall be strictly limited in accordance with the terms hereof. (b) The Company acknowledges and agrees that the scope of the License granted hereunder is limited by and is subject to any and all of WebMD's preexisting obligations, other than obligations that were incurred with the primary intent to frustrate the purpose of this Agreement. Accordingly, the Company agrees to conduct the activities hereunder in accordance with all such limitations or restrictions which may exist of which the Company has received written notice. (c) Notwithstanding anything to the contrary contained in this Agreement, WebMD shall have no obligation whatsoever to license to the Company, or to authorize the Company to sublicense any of the rights granted hereunder with respect to any particular country unless and until WebMD shall determine, in the exercise of its reasonable discretion, that (i) such country's laws afford adequate protection of WebMD's interests in or ownership of the WebMD Content, WebMD Property and WebMD Logos (collectively the "WebMD Intellectual Property"), and (ii) the use of the WebMD Intellectual Property (or any part thereof) in such country will not violate any Requirement of Law or expose WebMD or any of its Affiliates to any unreasonable risk or liability which might arise as a result of the use or display of any of the WebMD Intellectual Property in such country. In its exercise of its reasonable discretion under this Section 2.2(c), WebMD shall have the right to request from the Company or a Sublicensee an opinion of counsel or such other information to WebMD's reasonable satisfaction opining about or providing such other information on a Requirement of Law or such other matters relating to the protection of WebMD's interests as WebMD may request, such opinion or information to be obtained at the Company's or such Sublicensee's expense. WebMD agrees to exercise its rights in the preceding sentence in a reasonable manner so as to avoid unnecessary delays or interruptions in the business of the Company and the Sublicensees. 2.3 GRANT OF RIGHT IN WEBMD LOGO (a) WebMD Logo. WebMD hereby grants the Company a limited non-exclusive license to use the WebMD logo in the form appearing in Exhibit B attached hereto and any other WebMD marks, logotypes, or brand identifiers as WebMD may provide to the Company from time to time (collectively, the "WebMD Logo") during the Term of this Agreement. Such license is granted solely in connection with the Company's rights and obligations under this Agreement. All such uses will be in compliance with WebMD's written trademark guidelines as provided by WebMD to the Company from time to time. The Company will also be allowed to use and reproduce the WebMD Logo for the promotion of the WebMD Content, although to the extent such 7 promotions involve media placements outside of the News Channels, then the Company will only be allowed to make such uses and reproductions as WebMD may approve in writing in advance of such promotion or promotions. (b) Limitations. The Company agrees that it will not in any way suggest or imply by the use of the WebMD Logo that the News Channels or any of their respective products or services are affiliated with, endorsed or sponsored by or created in association with WebMD except as agreed by WebMD. The Company acknowledges that WebMD owns all right, title and interest and to the WebMD Logo and retains all rights with respect thereto. The Company agrees not to do anything inconsistent with such ownership and all uses of the WebMD Logo will inure to the benefit of and on behalf of WebMD. The Company further agrees that it will not attack or assist others in attacking the title of the WebMD Logo. (c) No Violation. The Company acknowledges and agrees that: (i) it will not register any WebMD Logo; (ii) it will not knowingly permit any third party to use any WebMD Logo unless authorized to do so in writing by WebMD in this Agreement or otherwise; (iii) it will not knowingly use or permit the use of any mark, name, or image likely to cause confusion with any WebMD Logo other than the WebMD Logo itself unless authorized to do so in writing by WebMD; and (iv) all goodwill associated with the Company's use of the WebMD Logos will inure to WebMD. (d) Prior Approval. The manner and form of use of the WebMD Logos will be subject to WebMD's prior written approval, which approval will not be unreasonably withheld or delayed following its receipt of a sample, mock-up or other suitable example which provides a fair representation of the proposed use of the WebMD Logo concerned and indicates the context in which the WebMD Logo is to be used. Once a use of a WebMD Logo is approved for use under certain circumstances, then it is agreed that the Company may subsequently make substantially similar uses of the WebMD Logo under similar circumstances, but only until WebMD revokes or limits its approval which it may do at its sole discretion. The Company will conform to any alteration or revocation of the approval as soon as is commercially reasonable. The license granted pursuant to this Section 2.3 may be terminated by WebMD upon a material breach by the Company, or any Affiliate of the Company or any Sublicensee, of any material agreement, covenant or obligation under this Section 2.3, which breach, if curable, remains uncured for a period of sixty (60) days following the Company's receipt of written notice from WebMD of the existence of such breach. 8 2.4 NO OTHER RIGHTS GRANTED. Apart from the rights licensed under Sections 2.1 and 2.3 above, this Agreement does not grant to the Company any right to engage in any activity other than the Licensed Activities, nor any ownership right, title, or interest, nor any security interest or other interest, in any of the WebMD Intellectual Property or any proprietary rights relating to or created from such WebMD Intellectual Property or any developments or enhancements with respect thereto. 2.5 ROYALTY. In consideration of WebMD's commitments set forth herein, the Company will, in addition to its other commitments hereunder, pay to WebMD during the Initial Term an annual royalty of twelve million U.S. dollars ($12,000,000), which amount shall be payable annually in advance in four equal quarterly installments, which shall be paid at the commencement of each quarterly period beginning on the date hereof and on each April 1, July 1, October 1 and January 1 thereafter. ARTICLE 3 WEBMD CONTENT 3.1 SELECTION, FORMAT, DESIGN AND UPDATING. (a) WebMD may from time to time, modify and update the WebMD Content as such modifications and/or updates are deemed necessary or desirable by WebMD and the Company shall (to the extent that particular WebMD Content is used by the Company) use such WebMD content as modified or updated. (b) With respect to any content WebMD obtains for use on the WebMD Site, WebMD shall use reasonable commercial efforts to secure the approval of third parties for the use by the Company of such content. WebMD shall not be required to incur any additional cost in securing such approval; provided, however, that in the event approval to use such content may only be obtained by payment of any fee by WebMD, WebMD, WebMD shall incur such cost only at the Company's request and the Company shall have the obligation to reimburse WebMD for such cost. (c) With respect to the WebMD Content licensed hereunder, the Company shall have the right to determine, in its reasonable discretion, the WebMD Content it selects to display and/or publish on the News Channels at any time, and from time to time subject to the other provisions hereof; provided, however, that the Company shall clearly attribute all WebMD Content used on a News Channel to WebMD. Except as may be authorized in advance in writing by WebMD, or for the purpose of localizing the WebMD Content, the Company shall have no right to substantively modify in any manner whatsoever, any of the WebMD Content licensed hereunder. WebMD Content which is owned or controlled by a third party shall incorporate such credit designated by such third party or WebMD and the Company and Sublicensees shall preserve all such attributional rights. 3.2 REMOVAL OF WEBMD CONTENT. WebMD may, for good reason, from time to time require the removal of any WebMD Content from any News Channel. If WebMD requests removal of certain WebMD Content from a News Channel, the Company shall complete such 9 removal on the earlier of (i) the first commercially practicable date on which the Company could terminate distribution of such programming or (ii) five business days following receipt of WebMD's request for such removal. 3.3 OWNERSHIP OF WEBMD CONTENT; WEBMD PROPERTY. WebMD shall at all times remain the owner of all right, title and interest in and to the WebMD Content or any parts or derivatives thereof or any variations thereon. WebMD shall own all right, title and interest in all aspects of the Look and Feel, images and all other content, regardless of whether it is capable of trademark, patent or other intellectual property law protection, furnished by or on behalf of WebMD to the Company or the Sublicensees and displayed on the News Channels or any parts or derivatives thereof or any variations thereon (collectively, the "WebMD Property"). 3.4 USER INFORMATION. All data regarding any user of the WebMD Site, their personal information, or information regarding their use of or interaction with the WebMD Site shall at all times be and remain the sole and exclusive property of WebMD ("WebMD User Information"). 3.5 OTHER AGREEMENTS. The Company: (a) agrees to comply with all Requirements of Law in connection with the use of the WebMD Content; (b) agrees that all rights in and to any of the WebMD Content not expressly licensed hereunder are reserved to WebMD; (c) agrees not to sublicense, assign, transfer, pledge, offer as security, or otherwise encumber the WebMD Content or any of the rights granted hereunder in any way other than as expressly provided in the Agreement; (d) agrees not to use any of the WebMD Content in any manner or for any purpose whatsoever in violation of the terms of this Agreement; (e) acknowledges and agrees that it shall not at any time during the Term or thereafter (i) challenge the title or any other rights of WebMD or its licensors in or to the WebMD Content or any of the other WebMD Intellectual Property or any parts or derivatives thereof or any variations thereon, (ii) contest the validity of the copyrights or other proprietary interests in and to the WebMD Content or any other WebMD Intellectual Property held by WebMD or any third party or (iii) claim any right, title or interest in or to the WebMD Content or any other WebMD Intellectual Property or any parts or derivatives thereof or any variation thereon; and (f) agrees to use its best efforts to cause the Sublicensees to comply with the terms of this Section 3.5 to the extent this Section creates obligations for the Company. 10 ARTICLE 4 REPRESENTATIONS AND WARRANTIES 4.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY AND WEBMD. (a) Authority of the Company. The Company agrees and represents that the Company has the authority to execute, deliver and perform its obligations under this Agreement, having obtained all required consents, and is duly organized or formed and validly existing in good standing under the laws of the state of its incorporation or formation. (b) Conflicts. The Company acknowledges that WebMD has licensed the WebMD Content to other parties to promote and enhance the goodwill of the WebMD Content. The Company agrees that in the event WebMD determines that the Company's activities taken pursuant to this Agreement come into conflict with the interests or rights of other licensees, the Company shall in good faith cooperate with WebMD in order to resolve the conflict and, in the event the conflict cannot be resolved, shall take the action requested by WebMD as long as it is commercially practical to do so; provided, however, that WebMD represents and warrants that there are no such licenses which might reasonably be expected to have a material adverse effect on the Company. (c) Authority of WebMD. WebMD represents and warrants that WebMD has (i) the authority to execute, deliver and perform its obligations under this Agreement, having obtained all required Board of Directors or other consents, (ii) is duly organized or formed and validly existing in good standing under the laws of the state of its incorporation or formation and (iii) owns all right, title and interest in and to the WebMD Content authored by WebMD and has all rights necessary to license the third party content provided to the Company hereunder. The parties agree that the Company's or any Sublicensee's remedy with respect to a breach of WebMD's representation set forth in Section 4.1(c) above shall be as set forth in Section 6.1(b) herein. (d) EXCEPT FOR THE EXPRESS WARRANTIES STATED HEREIN, WEBMD DOES NOT MAKE ANY WARRANTY AS TO THE ACCURACY OF ANY WEBMD CONTENT LICENSED HEREUNDER OR THE RESULTS TO BE OBTAINED FROM ANY NEWS CHANNEL USING THE WEBMD CONTENT. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH ABOVE, THE WEBMD CONTENT IS USED ON AN "AS-IS" BASIS WITHOUT WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. ARTICLE 5 TERM; TERMINATION 5.1 TERM. This Agreement will be effective as of the date hereof and will continue for a period of five (5) years, unless earlier terminated in accordance with this agreement (the "Initial Term"). The term of this Agreement may be extended for a period of five (5) years from and after the Initial Term (the "Renewal Term"), at the Company's option; provided, however, that 11 the Company agrees to extend the term of that certain Content License Agreement of even date herewith by and between the Company and WebMD pursuant to which the Company has agreed to license certain content to WebMD. The parties agree that no royalty payment will be due or owing by the Company to WebMD during the Renewal Term. Together, the Initial Term and the Renewal Term are collectively referred to as the "Term." 5.2 RIGHT TO TERMINATE BY WEBMD. This Agreement may be terminated upon the written consent of the parties or by WebMD upon any of the following events: (a) Upon the dissolution of WebMD International as provided in Article 8 of the Operating Agreement. (b) Upon termination or expiration of the Operating Agreement. (c) Upon a material breach by the Company or any Affiliate of the Company or any Sublicensee of any material agreement, covenant or obligation hereunder, which breach, if curable, remains uncured for a period of sixty (60) days following the Company's receipt of written notice from WebMD of the existence of such breach. (d) Upon the exercise by the News Member (as defined in the Operating Agreement) of its put rights as set for in the Operating Agreement. 5.3 RIGHT TO TERMINATE BY THE COMPANY This Agreement may be terminated upon the written consent of the parties or by the Company upon any of the following events: (a) Upon the dissolution of WebMD International as provided in Article 8 of the Operating Agreement; (b) Upon termination or expiration of the Operating Agreement; (c) Upon a material breach by WebMD or any Affiliate of WebMD or any Sublicensee of any material agreement, covenant or obligation hereunder, which breach, if curable, remains uncured for a period of sixty (60) days following the WebMD's receipt of written notice from the Company of the existence of such breach; and (d) Upon the exercise by the News Member (as defined in the Operating Agreement) of its put rights as set for in the Operating Agreement. 5.4 EFFECT OF TERMINATION. Upon the expiration or termination of the Term: (a) the License will automatically terminate; (b) the Company shall and shall cause all Sublicensees to immediately cease to use, display, reproduce, sublicense, transmit and/or distribute in any manner and for any purpose, directly or indirectly, the WebMD Content, any other WebMD Intellectual Property or any other material supplied by or on behalf of WebMD to the Company or Sublicensees; 12 (c) the Company shall and shall cause all Sublicensees to immediately return to WebMD the WebMD Content and any other WebMD Intellectual Property in its or their possession and/or destroy any and all embodiments of any portion of any of the foregoing together with any copies made from the same which are then under the possession or control of the Company or sublicensees; (d) in the event of termination by the Company pursuant to 5.3(c) (material breach by WebMD), WebMD shall promptly pay the Company a pro rata portion of the royalty for that quarter paid by the Company for the portion of the quarter remaining after termination; (e) in the event of termination by WebMD pursuant to Section 5.2 hereof or termination by the Company pursuant to Sections 5.3(a), (b) or (d) hereof, the Company shall pay within fifteen (15) days from the date of termination in immediately available funds, the [present value of the] aggregate unpaid royalties which would otherwise become due and payable to WebMD through the end of the Initial Term as set forth in Section 2.5 hereof; and (f) except as otherwise provided in Sections 5.4(d) and (e) above, the Company shall promptly pay to WebMD any royalty or other amounts which are due and owing to WebMD pursuant to the terms hereof, and except as provided in Section 5.5 below, no further payments shall be due by the Company. 5.5 CONTINUING OBLIGATIONS. Except as expressly provided in this Agreement, the termination of this Agreement or expiration of the Term for any reason shall not release any party from the obligations set forth in Articles 3, 4, 6 and 7, Section 2.5 and 5.4(d), and this Section 5.5, and each party hereto shall be, and shall continue to be and remain liable to the other parties for any and all damages which such party has or may sustain by reason of such first party's default or breach of such provisions of this Agreement. ARTICLE 6 INDEMNIFICATION 6.1 AGREEMENT OF WEBMD TO INDEMNIFY. (a) Except as set forth in Section 6.1(b) below and subject to the limitation of liability set forth in Section 6.4 hereof, WebMD hereby agrees to indemnify, defend and hold harmless the Company and its directors, officers, employees and agents and their respective successors and assigns (collectively the "Company Indemnitees") from and against any loss, costs, expenses (including reasonable attorneys' fees and expenses), claims, demands, liabilities, causes of action or damages incurred by any Company Indemnitee in connection with or relating to any material breach of a representation, warranty, covenant or agreement of WebMD contained in this Agreement. (b) The parties hereto agree that with respect to any claim that the Company or any Sublicensee infringes any copyright or trademark or other intellectual property 13 right as a result of the Company's (or a Sublicensee's) use or display of the WebMD Content, WebMD will only be responsible for the payment of any judgment, fine and/or penalty finally awarded against the Company or such Sublicensee as a result of such claim and any settlements agreed to with respect to such claim. 6.2 AGREEMENT OF THE COMPANY TO INDEMNIFY. Subject to the limitation of liability set forth in Section 6.4 hereof, the Company hereby agrees to indemnify, defend and hold harmless WebMD and its officers, directors, shareholders, employees, agents and Affiliates and their respective successors and assigns (collectively the "WebMD Indemnitees") from and against any loss, costs, expenses (including reasonable attorneys' fees and expenses), claims, demands, liabilities, causes of action or damages incurred by any WebMD Indemnitee in connection with or relating to any material breach of a representation, warranty, covenant or agreement contained in this Agreement by the Company, its Affiliates, the Sublicensees or any of their respective officers, directors, employees or agents. 6.3 THIRD PARTY CLAIMS. A Person entitled to indemnification for a Claim hereunder (the "Indemnified Party") shall give the indemnifying party with respect to such Claim (the "Indemnifying Party") reasonably prompt notice of such Claim brought by a third party. Such notice shall describe the Claim in reasonable detail. The failure of the Indemnified Party to give such notice to the Indemnifying Party shall not impair any of the Indemnified Party's rights or benefits under this Article 6 except to the extent such failure adversely affects the Indemnifying Party's ability to defend such Claim. The Indemnifying Party, within a reasonable time after receiving knowledge of a Claim by a third party against the Indemnified Party, shall (a) notify the Indemnified Party in writing of the preference of the Indemnifying Party to assume the defense thereof, and (b) retain legal counsel reasonably acceptable to the Indemnifying Party to conduct the defense of such Claim. The Indemnified Party shall cooperate with the Indemnifying Party in any manner reasonably requested in connection with the defense, compromise or settlement of any Claim. In any such Claim which the Indemnifying Party chooses to defend, the Indemnified Party shall have the right to engage separate counsel and to participate in the prosecution, defense, compromise, or settlement thereof or to conduct its own defense of such claim. The fees and expenses of such counsel engaged by the Indemnified Party (if the Indemnifying Party is conducting its defense) shall be at the expense of the Indemnified Party unless the named parties to any such Claim (including any impleaded parties) include the Indemnified Party and the Indemnifying Party, and the Indemnified Party shall have been advised by its counsel that there is a conflict of interest between the Indemnified Party and the Indemnifying Party in the conduct of the defense thereof. In such case, the reasonable fees and expenses of such separate counsel to the Indemnified Party shall be borne by the Indemnifying Party. The Indemnifying Party shall not, without written consent of the Indemnified Party, compromise, settle or consent to entry of any order or judgment with respect to any Claim (i) which involves any relief other than the payment of money damages against the Indemnified Party or (ii) which does not include as an unconditional term thereof, the giving by the defendant or Person conducting such investigation or initiating such hearing, to the Indemnified Party, of a release from all liability with respect to such Claim and all other Claims or causes of action (known or unknown) arising or which might arise out of the same facts. 14 6.4 SPECIAL DAMAGES; LIMITATION OF LIABILITY. EXCEPT FOR (i) A BREACH OF SECTION 7.1, (ii) USE OF THE WEBMD INTELLECTUAL PROPERTY (OR ANY OTHER PROPRIETARY INFORMATION) IN VIOLATION OF THIS AGREEMENT, (iii) ANY ELEMENTS OF A FINAL AWARD OR SETTLEMENT PURSUANT TO THE PARTIES' OBLIGATIONS UNDER SECTION 6.1(a) AND 6.2(a) HEREOF, AND (iv) FRAUD OR WILLFUL, INTENTIONAL OR GROSSLY NEGLIGENT CONDUCT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION AND THE LIKE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. ARTICLE 7 ADDITIONAL AGREEMENTS 7.1 CONFIDENTIALITY AND USE OF PROPRIETARY INFORMATION. Before, at the time of or following the execution and delivery of this Agreement, the Company shall not disclose any Proprietary Information to any Person, except (a) with the prior written consent of WebMD; (b) to the extent necessary to comply with law or the valid order of a court of competent jurisdiction, in which event the Company shall so notify WebMD as promptly as practicable (and, if possible, prior to making such disclosure) and shall seek confidential treatment of such information; (c) as part of its normal reporting or review procedure to its auditors and its attorneys; provided, however, that the Company shall be liable for any breach by such auditors or attorneys of any provision of this Section 7.1; (d) in connection with the enforcement of the Company's rights hereunder; and (e) disclosures to an Affiliate or Sublicensee of, or professional advisor to, the Company in connection with the performance by the Company of its obligations hereunder; provided, however, that the Company shall be liable for any breach by such Affiliate, Sublicensee or professional advisor of any provision of this Section 7.1. This Section 7.1 shall survive the termination of this Agreement. 7.2 DEFINITION OF PROPRIETARY INFORMATION. "Proprietary Information," as used herein, shall mean the WebMD Intellectual Property, and any other proprietary ideas, plans and information, including information of a technological or business nature, trade secrets, trade names, slogans, copyrights, computer software, source code, object code, technology, know-how, intellectual property, data, marketing plans, summaries, reports, or mailing lists, in each case whether in tangible or intangible form. The parties agree that the term "Proprietary Information" shall also include the contents of this Agreement. Information will not be deemed to be Proprietary Information, and the Company shall have no obligation with respect thereto, or to any part thereof, to the extent such information: (i) is already known to the Company at the time of receipt or disclosure, free of any obligation to keep it confidential, as evidenced by written records made prior to such receipt or disclosure, and did not become known to the Company through disclosure by a third party known to the Company to be subject to an obligation to maintain the confidentiality thereof; or (ii) is already publicly available prior to 15 receipt or disclosure or subsequently becomes publicly available without any fault of the Company or any of its Agents. 7.3 CONTENTS OF THIS AGREEMENT. The parties acknowledge however that, notwithstanding Section 7.2 above, this Agreement, or portions hereof, may be required under applicable law to be disclosed as part of or an exhibit to a party's required public disclosure documents. If either party is advised by its legal counsel that such disclosure is required, it will notify the other party in writing and the parties will jointly seek confidential treatment of this Agreement to the maximum extent reasonably possible in documents filed with the applicable governmental or regulatory authorities. 7.4 COMMUNICATIONS. Unless otherwise provided therein, all notices and other communications or designations required or permitted by this Agreement shall be in writing, and, If to the Company to: The News Corporation Limited 1211 Avenue of the Americas New York, New York 10036 Attention: Arthur M. Siskind, Esq. Telecopier: (212) 768-2029 with a copy to: Squadron, Ellenoff, Plesent & Sheinfeld, LLP 551 Fifth Avenue New York, New York 10176 Attention: Joel I. Papernik, Esq. Telecopier: (212) 697-6686 or at such other address as the Company may designate in a written notice to WebMD. If to WebMD, to: Healtheon/WebMD Corporation 400 The Lenox Building 3399 Peachtree Road NE Atlanta, GA 30326 Attention: W. Michael Heekin, Esq. Telecopier: (404) 479-7603 With a copy to: Alston & Bird LLP One Atlantic Center 1201 West Peachtree Street Atlanta, Georgia 30309-3424 Attention: Christopher D. Mangum, Esq. Telecopier: (404) 881-4777 16 or to such other address as WebMD may designate in a written notice to the Company. All notices and other communications required or permitted by this Agreement shall be deemed to have been duly given if personally delivered to the intended recipient at the proper address determined pursuant to this Section 7.4 or sent to such recipient at such address by air courier, facsimile transmission, followed by delivery by overnight courier, or by hand and will be deemed given, unless earlier received: (a) if sent by air courier when recorded on the records of the air courier as received by the receiving party; (b) if sent by facsimile followed by delivery of overnight courier transmission upon transmission if on a Business Day and during business hours in the country of receipt, otherwise, at 9:00 a.m. on the next Business Day in the country of receipt, subject to receipt of a facsimile machine generated confirmation, and (c) if delivered by hand, on the date of receipt. 7.5 PRESS RELEASES. Neither party will issue any press release or make a public announcement relating in any way whatsoever to this Agreement or the relationship established by this Agreement without the written consent of the other party (which consent shall not be unreasonably withheld or delayed), unless required by law or the rules of an applicable stock exchange or over-the-counter market. If a press release or announcement of this Agreement or the transactions contemplated hereby is required as aforesaid, the parties will consult with each other in advance as to the contents and timing hereof. 7.6 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement will be governed by, and construed in accordance with, the laws of the State of Delaware without regard to any conflicts of law rules. Any controversy or claim arising out of or relating to this Agreement, or breach thereof, shall be settled by arbitration in accordance with the Arbitration Rules of the American Arbitration Association. The Arbitration Tribunal shall consist of three arbitrators, of whom one shall be nominated by WebMD, one by the Company, and the third, who shall serve as Chairman, shall be chosen by the two party-nominated arbitrators or, in the event the party-nominated arbitrators are unable to designate the third arbitrator, by the American Arbitration Association. The situs of the arbitration shall be Washington, D.C. The language of the arbitration shall be English. The award of the arbitrator shall be final and binding. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The Parties waive any right to appeal the arbitral award, to the extent a right to appeal may be lawfully waived. Each Party retains the right to seek judicial assistance: (a) to compel arbitration; (b) to obtain interim measures of protection pending arbitration; and (c) to enforce any decision of the arbitrators, including the final arbitral award. The prevailing Party in the arbitration shall be entitled to receive reimbursement of its reasonable expenses incurred in connection therewith. 7.7 BINDING EFFECT; SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. Except as expressly provided in this Agreement, nothing in this Agreement, express or implied, is intended or shall be construed to confer upon or give any Person (including creditors and Affiliates of any party) other than the parties hereto any remedy or claim under or by reason of this Agreement or 17 any term, covenant or condition hereof, all of which shall be for the sole and exclusive benefit of the parties. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties and their respective successors, legal representatives and permitted assigns; provided, however, that, except as otherwise specifically permitted by this Agreement, neither this Agreement nor any of the rights, interests or obligations of the Company or WebMD hereunder shall be assigned or delegated without the prior written consent of the other party. This Agreement sets forth the entire agreement and understanding among the parties hereto as to the subject matter hereof. 7.8 AMENDMENTS AND WAIVERS. This Agreement may not be amended, modified or supplemented unless approved in writing by each party to this Agreement. No waiver of any right or remedy or of compliance with any provisions hereof, and no consent provided for herein, shall be effective unless evidenced by an instrument in writing executed by the party sought to be charged with such waiver or consent. The rights and remedies herein expressly provided are cumulative and not exclusive of any other rights or remedies which any party hereto would otherwise have at law, in equity, by statute or otherwise. 7.9 HEADINGS. The headings of the Sections contained in this Agreement are solely for convenience of reference, are not part of the agreement of the parties and shall not affect the meaning or interpretation of this Agreement. 7.10 NO IMPLIED WAIVERS. No action taken pursuant to this Agreement, including, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, agreements, covenants, obligations or commitments contained herein or made pursuant hereto. The waiver by any party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by any party to exercise any right, privilege or remedy hereunder shall be deemed a waiver of such party's rights, privileges or remedies hereunder or shall be deemed a waiver of such party's rights to exercise the same at any subsequent time or times hereunder. 7.11 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original of the party or parties executing the same and all of which together shall be deemed to constitute one and the same agreement. 7.12 FURTHER ASSURANCES. Each party shall cooperate and take such actions as may be reasonably requested by another party in order to carry out the provisions and purposes of this Agreement and the transactions contemplated hereby. 7.13 SEVERABILITY. If any provision of this Agreement or the application thereof to any Person or circumstance is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby; provided that, if any provision hereof or the application thereof shall be so held to be invalid, void or unenforceable by a final Judgment of a court of competent jurisdiction, then such court may substitute therefor a suitable and equitable provision in order to carry out, so far as may be 18 valid and enforceable, the intent and purpose of the invalid, void or unenforceable provision and if such court shall fail or decline to do so, the parties shall negotiate in good faith a suitable and equitable substitute provision. To the extent that any provision shall be judicially unenforceable in any one or more states of the United States or in any foreign jurisdiction, such provision shall not be affected with respect to any other state within the United States or any other foreign jurisdiction, each provision with respect to each state of the United States or foreign jurisdiction being construed as several and independent. 7.14 INJUNCTIVE RELIEF. Each party acknowledges that a breach or threatened breach by it or any Sublicensee or Affiliate of this Agreement will result in immediate and irremediable damage to the other party and that money damages alone would be inadequate to compensate such other party. Therefore, in the event of a breach or threatened breach of this Agreement by either of the parties (or any Sublicensee or Affiliate), the other party may, in addition to other remedies, immediately obtain and enforce injunctive relief prohibiting the breach or threatened breach or compelling specific performance. 7.15 NO PARTNERSHIP, ETC. Nothing contained herein shall be construed as creating a joint venture, Company, agency, employment relationship or other enterprise between the parties. 7.16 CONSTRUCTION. The Company and WebMD have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Company and WebMD and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. 7.17 DISCLAIMER OF WARRANTIES. The Company hereby acknowledges and agrees that WebMD has made no promises, representations, guarantees or warranties, of any nature, other than those which may be made expressly in this Agreement. 7.18 PLURALS. When necessary for appropriate meaning, a plural shall be deemed to be the singular and singular shall be deemed to be the plural. 7.19 EFFECTIVENESS. The submission of this Agreement does not constitute an offer to license and this Agreement shall become effective only upon execution thereof by the Company and WebMD. 19 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. THE NEWS CORPORATION LIMITED By: /s/ ------------------------------------------------ Name: Arthur Siskind Title: Director HEALTHEON/WEBMD CORPORATION By: /s/ ------------------------------------------------ Name: W. Michael Heekin Title: Exec. Vice President 20 EXHIBIT A DEFINITIONS DEFINED TERMS. As used in this Agreement, the following terms have the meanings indicated: Affiliate: With respect to any Person, any other Person that, directly or indirectly through or with one or more intermediaries, controls, is controlled by or is under common control with such Person. The term "affiliated" (whether or not capitalized) shall have a correlative meaning. For the purposes of this definition, "control", as used with respect to any Person, shall mean the possession, directly or indirectly through or with one or more intermediaries, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise. The terms "controlled by" and "under common control with" shall have correlative meanings. Agreement: This Agreement and any Exhibits hereto, as the same may be amended, supplemented or modified in accordance with the terms hereof. Business Day: Any day other than a Saturday, a Sunday or a day on which national banking institutions in the United States are not open for business. Claim: Claims, suits, proceedings, actions, demands, investigations or causes of action. The Company: Defined in the introductory paragraph of this Agreement. Company Indemnitees: Defined in Section 6.1. Effective Date: The date of execution and delivery of this Agreement by all of the parties hereto. Entity or collectively Entities means corporations, limited liability companies, partnerships, joint ventures or other forms of legal entity. Governmental Authority: Any nation or government, any state or other political subdivision thereof and any court, panel, judge, board, bureau, commission, agency or other entity, body or other Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. Graphical User Interface: the graphical user interface, text, images, navigational devices, icons, menus, menu instructions, help and other operational instructions and other Content which is directly visible to Users viewing a Web Site. Indemnified Party: Defined in Section 6.3. Indemnifying Party: Defined in Section 6.3. 21 PAGES(S) Initial Term: Defined in Section 5.1. Judgment: Any order, judgment, writ, decree, award or other determination, decision or ruling of any Governmental Authority or any arbitrator. Licensed Activities: The activities described in Sections 2.1(a),2.1(b), and 2.3. Look and Feel: With respect to a Web Site, those elements of the Graphical User Interface of such Web Site comprising the visible features, characteristics and style of such Web Site which are unique to such Web Site and are consistent from page to page and which indicate the common identity of the various pages and identify such pages as forming a part of a single Web Site operated by a specific Entity. The News Corporation Limited: Defined in the recitals to this Agreement. Operating Agreement: That certain Operating Agreement of even date herewith by and among WebMD, the Company and WebMD International LLC. Operating Company: The Company's subsidiaries or operating divisions, formed either wholly by the Company (or by members in or Affiliates thereof) or with third parties or entities that are not subsidiaries of the Company. Person: Any natural person, Entity, Governmental Authority, or other entity, whether acting in an individual, fiduciary or other capacity. Proprietary Information: Defined in Section 7.2 Renewal Term: Defined in Section 5.1. Requirement of Law: As to any Person, all rules, regulations, Judgments, injunctions, standards, codes, limitations, restrictions, conditions, prohibitions, notices, demands or other requirements or determinations of a Governmental Authority or an arbitrator, applicable to or binding upon such Person, any of its property or any business conducted by it or to which such Person, any of its property or any business conducted by it is subject. Term: Defined in Section 5.1. Territory: The entire world. User: Any Person who accesses a Web Site. WebMD Content: All materials developed or owned by or on behalf of WebMD or the WebMD Group for inclusion on the WebMD Site. The parties acknowledge that the WebMD Content shall include only those portions of content available from time to time on the WebMD Site that are (i) owned exclusively by WebMD, (ii) are licensed to WebMD under an arrangement pursuant to which WebMD is legally permitted to license same to the Company at 2 22 PAGES(S) no additional cost to WebMD or at additional cost to the Company as provided in Section 3.1(b) for the purposes contemplated by this Agreement, and (iii) is content the exploitation and distribution of which by the Company or Sublicensees will in all respects comport with all Requirements of Law. WebMD Group: WebMD and its subsidiaries and Affiliates. WebMD Indemnitees: Defined in Section 6.2. WebMD Intellectual Property: Defined in Section 2.2(d). WebMDLogo: Defined in Section 2.3. WebMD Property: Defined in Section 3.4. WebMD Site: Defined in the recitals to this Agreement. Web Sites: Any network of Internet Web pages accessible electronically by a computer or other device and located in a single Internet domain. WebMD User Information: Defined in Section 3.4. 3 EX-10.7 8 OPERATING AGREEMENT 1 EXHIBIT 10.7 OPERATING AGREEMENT OF WEBMD INTERNATIONAL LLC January 26, 2000 THE OWNERSHIP INTERESTS IN THIS LIMITED LIABILITY COMPANY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR STATE SECURITIES AUTHORITIES AND MAY NOT BE SOLD OR REGISTERED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED. THE SALE OR OTHER TRANSFER OF THE OWNERSHIP INTERESTS IS ALSO RESTRICTED BY PROVISIONS OF THIS AGREEMENT AND RELATED AGREEMENTS. 2 TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS..............................................................................1 ARTICLE II FORMATION...............................................................................8 2.1 Formation...........................................................................8 2.2 Name................................................................................8 2.3 Office and Agent....................................................................8 2.4 Purposes............................................................................8 2.5 Powers..............................................................................9 2.6 Ownership of Property...............................................................9 2.7 Qualification in Other Jurisdictions................................................9 ARTICLE III CAPITAL................................................................................9 3.1 Initial Capital Contributions.......................................................9 3.2 Percentage Interests...............................................................10 3.3 Additional Capital Contributions...................................................10 3.4 Dilution...........................................................................11 3.5 Capital Accounts...................................................................12 3.6 Allocation of Items of Company Income, Gain, Loss, Deduction and Credit............13 3.7 Distributions......................................................................16 3.8 Withholding........................................................................16 3.9 Distribution Limitation............................................................16 3.10 Company Funds......................................................................17 3.11 Capital Contribution...............................................................17 ARTICLE IV MANAGEMENT.............................................................................17 4.1 Management of the Company's Business...............................................17 4.2 Board..............................................................................17 4.3 Officers...........................................................................18 4.4 Actions Requiring a Super Majority Vote............................................18 4.5 Budgets and Business Plan..........................................................21 4.6 Indemnification....................................................................21 ARTICLE V LIABILITY OF A MEMBER...................................................................23 5.1 Limited Liability..................................................................23 5.2 Capital Contribution...............................................................23 5.3 Reliance...........................................................................23 ARTICLE VI REPRESENTATIONS AND WARRANTIES.........................................................23 6.1 Due Incorporation; Authorization...................................................23 6.2 No Conflict........................................................................23 6.3 No Conflict; No Default............................................................24 6.4 Unregistered Interests.............................................................24 ARTICLE VII BOOKS AND RECORDS; REPORTS TO MEMBERS.................................................24
3 7.1 Books and Records..................................................................24 7.2 Financial Reports..................................................................25 7.3 Tax Returns and Information........................................................26 ARTICLE VIII TRANSFERS, ADMISSIONS, WITHDRAWALS...................................................26 8.1 Transfer...........................................................................26 8.2 Corporate Conversion...............................................................27 8.4 Issuance of Additional Interests...................................................28 8.5 Admission as a Member..............................................................29 8.6 No Right to Withdraw...............................................................29 ARTICLE IX DISSOLUTION AND LIQUIDATION............................................................29 9.1 Dissolution........................................................................29 9.2 Exclusive Means of Dissolution.....................................................29 9.3 Liquidation........................................................................29 9.4 Priority of Payment................................................................29 9.5 Liquidating Distributions..........................................................30 9.6 No Restoration Obligation..........................................................30 9.7 Timing.............................................................................30 9.8 Liquidating Reports................................................................31 9.9 Certificate of Cancellation........................................................31 ARTICLE X ADDITIONAL AGREEMENTS...................................................................31 10.1 Provision of Services..............................................................31 ARTICLE XI MISCELLANEOUS..........................................................................33 11.1 Waiver of Partition................................................................33 11.2 Modification; Waivers..............................................................33 11.3 Entire Agreement...................................................................33 11.4 Severability.......................................................................33 11.5 Notices............................................................................33 11.6 Successors and Assigns.............................................................34 11.7 Counterparts.......................................................................35 11.8 Headings; Cross-references.........................................................35 11.9 Construction.......................................................................35 11.10 Property Rights; Confidentiality...................................................35 11.11 Further Actions....................................................................36 11.12 Governing Law; Forum...............................................................36 11.13 Expenses of the Parties............................................................36
-ii- 4 OPERATING AGREEMENT OF WEBMD INTERNATIONAL LLC THIS OPERATING AGREEMENT is made as of the 26th day of January 2000, by and between HW International Holdings, Inc., a Delaware corporation and wholly-owned subsidiary of Healtheon/WebMD Corporation ("Healtheon/Web MD") (together with any of its Affiliate Transferees as hereinafter defined, the "Healtheon Member"), IJV Holdings Inc., a Delaware corporation and wholly-owned subsidiary of Fox Entertainment Group, Inc., a Delaware corporation (together with any of its Affiliate Transferees as hereinafter defined, the "News Member," and together with the Healtheon Member, the "Members"). WITNESSETH: In consideration of the mutual promises and covenants contained in this Agreement, and intending to be legally bound, the Members hereby agree as follows: ARTICLE I DEFINITIONS As used in this Agreement, the following terms have the meanings assigned to them in this Article I (except as otherwise expressly provided) and include the plural as well as the singular (and vice versa). All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP. "Act" shall mean the Delaware Limited Liability Company Act, as amended. "Additional Capital Contribution" shall have the meaning set forth in Section 3.3(a) hereof. "Additional Capital Notice" shall have the meaning set forth in Section 3.3(a) hereof. "Adjusted Capital Account Deficit" shall mean the deficit balance (if any) in such Member's Capital Account as of the end of any Fiscal Year, after (a) crediting to such Capital Account any amount which such Member is obligated to restore pursuant to this Agreement or is deemed obligated to restore pursuant to the minimum gain chargeback provisions of the Section 704(b) Treasury Regulations, and (b) charging to such Capital Account any adjustments, allocations or 5 distributions described in the qualified income offset provisions of the Section 704(b) Treasury Regulations which are required to be charged to such Capital Account pursuant to this Agreement. "Affiliate" shall mean with respect to any Person, any Person that directly or indirectly Controls, is Controlled by, or is under common Control with such Person. "Agreement" shall mean this Operating Agreement, also known as a "limited liability company agreement" under the Act, as amended from time to time. "Annual Budget" shall mean, as at any time, the Company's then effective annual operating and capital budget approved or in effect pursuant to Section 4.4(p) hereof. "Available Cash" shall mean for any Fiscal Year or other period, the positive amount, if any, obtained by calculating net income (or loss) of the Company determined in accordance with GAAP for such period, adjusted, without duplication, by (x) adding depreciation, amortization and other non-cash charges to the extent deducted in determining net income and (y) deducting (i) the current portion of indebtedness of the Company, (ii) prepaid expenses and other cash expenditures to the extent not deducted in determining net income or loss and (iii) reasonable reserves for working capital and contingent liabilities as determined by the Members. "Board" shall have the meaning set forth in Section 4.2 hereof. "Business" shall mean the business of the Company as set forth in Section 2.4 hereof. "Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday or Friday which is not a day on which banking institutions in New York City are authorized or obligated by law to close. "Business Plan" shall mean the business plan most recently approved by the Members pursuant to Section 4.4 hereof. "Capital Account" shall have the meaning set forth in Section 3.5(a) hereof. "Capital Call" shall have the meaning set forth in Section 3.3(a) hereof. "Capital Contribution" shall mean the amount which a Member shall contribute to the capital of the Company as provided in Article III hereof. "Certificate" shall mean the certificate of formation of the Company, as amended from time to time. "Code" shall mean the United States Internal Revenue Code of 1986, as amended from time to time, or any successor statute or statutes. "Common Stock" shall mean the common stock, par value $0.0001 per share, of Healtheon/WebMD and any and all shares of capital stock or other equity securities of: (i) -2- 6 Healtheon/WebMD which are added to or exchanged or substituted for the Common Stock by reason of the declaration of any stock dividend or stock split, the issuance of any distribution or the reclassification, readjustment, recapitalization or other such modification of the capital structure of Healtheon/WebMD; and (ii) any other corporation, now or hereafter organized under the laws of any state or other governmental authority, with which Healtheon/WebMD is merged, which results from any consolidation or reorganization to which Healtheon/WebMD is a party, or to which is sold all or substantially all of the shares or assets of Healtheon/WebMD, if immediately after such merger, consolidation, reorganization or sale, Healtheon/WebMD or any stockholders of Healtheon/WebMD own equity securities having in the aggregate more than fifty percent (50%) of the total voting power of such other corporation. "Company" shall mean the limited liability company formed pursuant to the Certificate and governed by this Agreement and the Act. "Company Minimum Gain" shall mean the amount determined in accordance with the principles of Treasury Regulations Section 1.704-2(d). "Company Property" shall have the meaning set forth in Section 2.6 hereof. "Contribution Date" shall have the meaning set forth in Section 3.3(a) hereof. "Control" shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Corporate Conversion" shall mean any merger, consolidation, conversion by filing, assignment of assets, or similar transaction or series of transactions resulting in a corporation substantially all of the assets of which consist of substantially all of the assets that were held directly or indirectly by the Company immediately prior to such transaction and substantially all the capital stock of which corporation is held by Persons who were either (i) Members immediately prior to such transaction or (ii) the owners of a Member the sole or principal asset of which Member was an Interest in the Company. "Damages" shall have the meaning set forth in Section 4.6(a) hereof. "Default Loan" shall have the meaning set forth in Section 3.3(b) hereof. "Defaulting Member" shall have the meaning set forth in Section 3.3(b) hereof. "Depreciation" shall mean, for each Fiscal Year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable for federal income tax purposes with respect to an asset for such year or other period, except that if the Gross Asset Value of any asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, -3- 7 however, that if the federal income tax depreciation, amortization, or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Tax Matters Member. "Dissolution" shall mean the happening of any of the events described in 9.1. "Economic Risk of Loss" shall have the meaning set forth in Sections 1.704-2(b)(4) and 1.752-2 of the Treasury Regulations. "Effective Date" shall mean the date hereof, unless the parties otherwise mutually agree in writing that some other date shall be the Effective Date. "Fair Market Value" shall mean, for purposes of this Agreement, the cash price at which a willing seller would sell, and a willing buyer would buy, the property in question, both having full knowledge of the relevant facts and being under no compulsion to buy or sell, in an arm's length transaction without time constraints. Fair Market Value may be determined by mutual agreement of the Members. If the Members are unable to agree on a Fair Market Value within 15 days of the date on which a determination of Fair Market Value is required, or if they determine that an appraisal should be used to determine Fair Market Value, then each of the Members will cause the Fair Market Value as of the most recent month end (or as of such other date as may be expressly provided herein) to be determined by a qualified appraiser in accordance with the following procedure. The Members shall, within 10 days of the date that an appraiser is required, seek to select a mutually agreeable appraiser. If the Members are unable to agree on a single qualified appraiser within 10 days, each Member will have 10 additional days to select one appraiser internationally recognized in valuing items of the kind required to be valued. Any Member not appointing an appraiser pursuant to the preceding sentence within the allotted time shall have no right to select an appraiser thereafter but shall be bound by the procedure set forth herein using values determined by appraisers selected by the other Member or Members, as applicable. The appointed appraiser, or appraisers, as the case may be, will determine the Fair Market Value. The Members will use their reasonable best efforts to cause such appraiser or appraisers to submit to them written reports indicating the determination of Fair Market Value within 30 days after the date such appraiser is selected. If there is more than one appointed appraiser, and the highest of the appraisals is not more than 110% of the lowest appraisal, the average of the two will be the Fair Market Value. If the highest of the appraisals is more than 110% of the lowest appraisal, the Members will immediately notify the appraisers and cause them to appoint another similarly qualified appraiser within 10 days after such notice. The Members will use their reasonable best efforts to cause such appraiser (who will not be apprised of the determination of the other appraisers) to submit a written report to each of them indicating such appraiser's determination of Fair Market Value within 30 days after the date such appraiser is selected. If three appraisals are necessary, then the average of the two appraisals in which the determinations of Fair Market Value are closest together will be the Fair Market Value or, if the highest and lowest are equidistant from the middle determination, then the middle determination will be the Fair Market Value. A determination of Fair Market Value as provided herein will be final, binding and nonappealable. Each Member will pay one half of the fees and costs of any appraiser involved in a determination of Fair Market Value required by this Agreement. -4- 8 "Fiscal Year" shall mean the twelve-month period ending December 31 of each year, or such other fiscal year as the Members may designate. "GAAP" shall mean generally accepted accounting principles as in effect in the United States from time to time and consistently applied, with such exceptions thereto or deviations therefrom, if any, as the Members may approve. "Gross Asset Value" shall mean, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (a) the initial Gross Asset Value of any asset contributed by a Member to the Company shall be the Fair Market Value of such asset; (b) the Gross Asset Value of all Company assets shall be adjusted to equal their respective Fair Market Value (taking Section 7701(g) of the Code into account), as of the following times: (i) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis capital contribution; (ii) the distribution by the Company to a Member of more than a de minimis amount of Company Property as consideration for an interest in the Company, in the case of either (i) or (ii), if the Members reasonably determine that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company and (iii) the liquidation of a Member's interest in the Company or the Company within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations; (c) the Gross Asset Value of any Company asset distributed to any Member shall be the Fair Market Value (taking Section 7701(g) of the Code into account) of such asset on the date of distribution; (d) the Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Section 732(d), 734(b) or 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Section 1.704-l(b)(2)(iv)(m) of the Treasury Regulations and Section 3.6 hereof, provided, however, that Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the extent that the Members determine that an adjustment pursuant to subsection (b) of this definition is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection (d); and (e) if the Gross Asset Value of any asset has been determined or adjusted pursuant to subsection (a), (b) or (c) hereof, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing gains or losses from the disposition of such asset. "Healtheon Member" shall have the meaning set forth in the preamble to this Agreement. "Healtheon Representatives" shall have the meaning set forth in Section 4.2(a) hereof. "Healtheon/WebMD" shall mean Healtheon/WebMD Corporation, a Delaware corporation. -5- 9 "Indemnitee" shall have the meaning set forth in Section 4.6(a) hereof. "Initial Capital Contribution" shall have the meaning set forth in Section 3.1(a) hereof. "Interest" shall mean, as to each Member, such Member's rights to participate in the income, gains, losses, deductions and credits of the Company, together with all other rights and obligations of such Member in the capital of the Company under this Agreement. "International Territory" shall mean the entire world, excluding the United States of America and Japan. "Internet" shall mean a decentralized worldwide network of computer networks. "Lien" shall mean a mortgage, lien, pledge, security interest or other encumbrance. "Liquidation" shall mean the process of winding up and terminating the Company after its Dissolution. "Losses" shall have the meaning set forth in Section 3.6(a) hereof. "Master Strategic Alliance Agreement" shall mean the Master Strategic Alliance Agreement dated as of December 6, 1999, by and among Affiliates of the Members. "Member" shall mean the News Member, the Healtheon Member and any permitted transferee of an Interest or portion thereof who becomes a Member in accordance with Article VIII. The News Member and the Healtheon Member (together with such transferees) may be collectively referred to herein as the "Members." "Member Nonrecourse Debt" shall mean liabilities of the Company treated as "partner nonrecourse debt" under Section 1.704-2(b)(4) of the Treasury Regulations. "Member Nonrecourse Deductions" shall mean any losses, deductions or Code Section 705(a)(2)(b) expenditures characterized as "partner nonrecourse deductions under Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Treasury Regulations. "Member Nonrecourse Debt Minimum Gain" shall mean an amount of gain characterized as "partner nonrecourse debt minimum gain" under Treasury Regulations Sections 1.704-2(i)(2) and 1.704-2(i)(3). "News Corporation" shall mean The News Corporation Limited, a South Australia corporation. "News Member" shall have the meaning set forth in the preamble to this Agreement. "News Representatives" shall have the meaning set forth in Section 4.2(a) hereof. -6- 10 "Non-Defaulting Member " shall have the meaning set forth in Section 3.3(b) hereof. "Nonrecourse Deductions" in any year shall mean the Company deductions that are characterized as "nonrecourse deductions" under Sections 1.704-2(b)(1) and 1.704-2(c) of the Treasury Regulations. "Non-Standard Television Services" shall mean audiovisual programming delivered by any means of transmission, whether now existing or developed in the future (including all forms of fixed-line or wireless, narrowband or broadband, transmission), other than (a) audio visual programming which is made available to viewers free-of-charge (e.g. free-to-air UHF or VHF television), even if retransmitted via cable or any other means of retransmission for which a facilities fee is charged, and (b) home-video distribution. "Operating Company" shall have the meaning set forth in Section 2.4 hereof. "Percentage Interest" shall mean, with respect to each Member, such Member's proportionate share of the total Interests in the Company, expressed as a percentage, as set forth in Section 3.2 hereof and as may be adjusted from time to time pursuant to this Agreement. "Person" shall mean an individual or a corporation, limited liability company, joint venture, partnership, trust, unincorporated association, governmental authority or other entity. "Prime Rate" shall mean a rate of interest equal to the rate per annum announced from time to time by Citibank, N.A. at its principal office as its prime rate (which rate shall change when and as such announced prime rate changes) but in no event more than the maximum rate of interest permitted to be collected from time to time under applicable usury laws. "Prime Time" shall mean between the hours of 6:00 p.m. and 12 a.m. "Profits" shall have the meaning set forth in Section 3.6(a) hereof. "Regulatory Allocations" shall have the meaning set forth in subparagraph 3.6(c)(viii) hereof. "Representatives" shall have the meaning set forth in Section 4.2(a) hereof. "Scheduled Contracts" shall mean the contracts set forth on Schedule 10.2 hereto. "Softbank" shall mean Softbank Corp., a Japanese corporation. "Star" shall mean Eastrise Profits Limited, an international business company incorporated under the laws of the British Virgin Islands. "Super Majority Vote" shall mean a vote of the Representatives of 100% of the Percentage Interests; provided, however, that if one or more additional Members is admitted to the Company pursuant to Section 8.4, "Super Majority Vote" shall mean a vote of 66 2/3% of the Percentage Interests. -7- 11 "Tax Matters Member" shall mean the "tax matters partner," as that term is defined in Section 6231(a)(7) of the Code. "Transfer" shall mean a sale, exchange, assignment, transfer or other disposition of all or any part of an Interest (whether voluntary, involuntary or by operation of law). "Transferee" shall mean a Person to whom an Interest is Transferred in compliance with this Agreement. "Transferor" shall mean a Person who Transfers all or part of an Interest in compliance with this Agreement. "Treasury Regulations" shall mean the income tax regulations (including temporary and proposed) promulgated under the Code. ARTICLE II FORMATION 2.1 Formation. The Company was formed as a limited liability company pursuant to the Act by the filing on January 14, 2000 of the Certificate with the Secretary of State of the State of Delaware. 2.2 Name. The business of the Company shall be conducted under the name WEBMD INTERNATIONAL LLC or such other or additional name or names and variations thereof as the Members may from time to time determine. The Chief Executive Officer of the Company ("the CEO") shall file, or cause to be filed, any fictitious name certificate and similar filings, and any amendments thereto, as may be directed by the Board from time to time. 2.3 Office and Agent. (a) The initial registered office of the Company in Delaware will be at 1013 Centre Road, Wilmington, Delaware 19805-1297, and its initial registered agent will be Corporation Service Company. The Company may, upon compliance with the applicable provisions of the Act, change its registered office or registered agent in Delaware. (b) The initial principal office of the Company will be at 1300 North Market Street, Suite 404, Wilmington, DE 19801. The Company may maintain any other offices at any other places that the Members deem advisable. 2.4 Purposes. The purposes of the Company shall be (a) to own and operate Non-Standard Television Services and Internet services in the International Territory devoted exclusively to health and fitness content, consisting of audio-visual programming, data and information (the "Business") through either one or more subsidiaries or operating divisions of the Company, formed either wholly by the Company (or Members or Affiliates thereof) or with third parties or entities that are not subsidiaries of the Company, (each an "Operating Company"), (b) to -8- 12 acquire, own, hold, sell or otherwise dispose of interests in the assets used to conduct the Business, (c) to make and perform all contracts and engage in all activities and transactions and to do any and all things necessary or advisable to carry out the foregoing purposes, and (d) to otherwise engage in any lawful activity incidental thereto for which limited liability companies may be organized under the Act. The Members acknowledge that for regulatory, tax or other reasons it may be necessary or advisable to form Operating Companies with the same ownership structure and, where applicable, governing documents as the Company to conduct the Business in various portions of the International Territory. The Members may cause the Company to immediately form two wholly-owned Delaware limited liability companies which shall serve as holding companies for the Operating Companies engaged in Non-Standard Television Services and Internet services respectively. 2.5 Powers. The Company shall have all the powers granted to a limited liability company under the Act, as well as all powers necessary or convenient to achieve its purposes and to further its business. 2.6 Ownership of Property. Legal title to all assets, rights and property, whether real, personal or mixed, owned by the Company (collectively, the "Company Property") shall be acquired, held and conveyed only in the name of the Company. 2.7 Qualification in Other Jurisdictions. The Members shall cause the Company to be qualified or registered under applicable laws of any jurisdiction in which the Company transacts business and shall be authorized to execute, deliver and file any certificates and documents necessary to effect such qualifications or registrations including, without limitation, the appointment of agents or service of process in such jurisdictions. ARTICLE III CAPITAL 3.1 Initial Capital Contributions. (a) Contemporaneously with the execution of this Agreement, each Member will contribute or cause to be contributed to the Company (an "Initial Capital Contribution") the assets set forth opposite its name in Schedule 3.1. The Healtheon Member shall procure and contribute to the Company a trademark license agreement, substantially in the form annexed as Exhibit C to the Master Strategic Alliance Agreement. The amount of any contribution as specified in Schedule 3.1 will be credited to the applicable Member's Capital Account and such amount will be deemed to be the amount of such Member's Initial Capital Contribution. (b) If, at any time prior to the payment in full by the News Member of the amount set forth on Schedule 3.1 hereto (the "News Funding Commitment"), the CEO determines based on the then-Current Annual Budget and Business Plan that the Company requires funds for the continued operation or growth of the Company, the CEO shall cause the Company to request (a "News Capital Call") that the News Member contribute to the Company such amounts as the Company may direct on no less than five Business Days Notice to the News Member, and the News -9- 13 Member shall be obligated to timely comply with such request. In no event shall the News Member be required to contribute more than the News Funding Commitment pursuant to this Section 3.1 (b). (c) The initial Capital Accounts of the Members shall be equal to the value of their initial Capital Contributions as set forth on Schedule 3.1. At the time the News Member satisfies the News Funding Commitment, the Capital Accounts of the Members shall reflect the equality of the Members' Capital Contributions. 3.2 Percentage Interests. Subject to adjustment pursuant to Section 3.3 hereof, the Percentage Interest of each Member shall initially be as follows: Healtheon Member: 50% News Member: 50%
The Percentage Interest of a Member may be adjusted from time to time pursuant to Section 3.3 hereof. 3.3 Additional Capital Contributions. (a) If, at any time after the News Member has fully satisfied the News Funding Commitment, the CEO determines based on the then-current Annual Budget and Business Plan that the Company requires funds for the continued operation or growth of the Company, the CEO shall cause the Company to request (a "Capital Call") that the Members contribute to the Company such amounts as the Company may direct on no less than five Business Days' prior notice to the Members. The notice (the "Additional Capital Notice") shall specify the amount of funds to be provided by each Member (each, an "Additional Capital Contribution"), the date on which funds are to be provided (the "Contribution Date"), and the account of the Company to which such funds are to be transmitted. All Additional Capital Contributions to be made by the Members shall be in amounts that are in proportion to their respective Percentage Interests, determined, in each case, as of the date of the Capital Call. Unless otherwise agreed by the Members, all Additional Capital Contributions shall be in cash or immediately available funds. No Additional Capital Contribution shall be required to be paid by the Members unless (i) the need for additional capital is specifically provided for in the then currently approved Annual Budget or (ii) the Members approve the payment of such Additional Capital Contribution in accordance with Section 4.4 hereof. (b) Within five (5) days after receipt of an Additional Capital Notice, each Member shall notify the Company whether it intends to contribute its respective share of the Additional Capital Contribution referred to in the Additional Capital Notice. If any Member (the "Defaulting Member") fails to contribute timely all or any portion of any Additional Capital Contribution that it is obligated to make pursuant to Section 3.3(a), the other Member (the "Non-Defaulting Member") may, at its option, at any time following the date of default, and prior to the date such default is cured, exercise on five (5) days notice to the Defaulting Member any on of the following remedies and the Defaulting Member shall not be permitted to vote with respect to the election of any of the following remedies by the Non-Defaulting Member: -10- 14 (i) take such action, including court proceedings, as the Non-Defaulting Member may deem appropriate to obtain payment by the Defaulting Member of the Defaulting Member's Additional Capital Contribution that is in default, together with interest thereon from the date that the Additional Capital Contribution was due until the date that is it made, all at the cost and expense of the Defaulting Member; and (ii) advance all or any portion of the Additional Capital Contribution required of the Defaulting Member as an Additional Contribution of the Non-Defaulting Member and cause the Percentage Interests to be recalculated in accordance with Section 3.4 of this Agreement; (iii) make a payment to the Company in an amount equal to the Additional Capital Contribution that is in default with the effect that such payment shall constitute a loan (a "Default Loan") to the Defaulting Member by the Non-Defaulting Member, any such Default Loan to bear interest at the rate of 5% over the Prime Rate on the date nearest the date of the advance, which rate shall be adjusted annually based on changes to the Prime Rate on the anniversary of such Default Loan if such advance remains outstanding. For so long as any Default Loan remains unpaid, all distributions from the Company that otherwise would be made to the Defaulting Member (whether before or after the Dissolution of the Company) instead shall be paid to the Non-Defaulting Member until the Default Loan and all interest accrued thereon have been paid in full to the Non-Defaulting Member. Payments in respect of any Default Loan will be applied in the order that such Default Loan was made, and all payments will be applied first to accrued but unpaid interest and then to reduce the outstanding principal amount of such Default Loan. A Default Loan shall become automatically immediately due and payable by the Defaulting Member, and shall constitute a general obligation of the Defaulting Member upon the Dissolution of the Company or a Put of the News Member's Interest to Healtheon/WebMD. Any Default Loan shall be prepayable in whole or in part at any time without penalty. (c) Except as set forth in this Section 3.3, no Member shall have any obligation to make Additional Capital Contributions to the Company. 3.4 Dilution. If a Non-Defaulting Member (i) pays all or any portion of the Additional Capital Contribution due from a Defaulting Member and (ii) properly elects the remedy set forth in Section 3.3(b)(ii), then as of the Contribution Date the interest of the Non-Defaulting Member will be increased such that the Percentage Interest of the Non-Defaulting Member equals the percentage obtained by dividing (i) the sum of (x) the aggregate Additional Capital Contribution (including the Contribution paid in respect of the amount due from the Defaulting Partner) made by the Non-Defaulting Member, plus (y) the product of the pre-dilution Fair Market Value of the Company and the Percentage Interest of the Non-Defaulting Member (prior to adjustments under this sentence), by (ii) the sum of (x) the aggregate Additional Capital Contribution paid by the Non-Defaulting Member, including the Contribution paid in respect of the amount due from the Defaulting Partner, and the Defaulting Member, plus (y) the pre-dilution Fair Market Value of the Company. The Percentage Interest of the Defaulting Member will be reduced by the amount of the increase in the Percentage Interest of the Non-Defaulting Member. -11- 15 3.5 Capital Accounts. (a) A separate capital account (each, a "Capital Account") shall be maintained for each Member. Such Member's initial Capital Account shall be as set forth in Sections 3.1(a) and 3.1(b) hereof. Subject to the provisions of subsections (b), (c) and (d) of this Section 3.5, the Capital Account of each Member shall be (i) increased by (A) the amount of cash and the Gross Asset Value of any property contributed to the Company by such Member (net of liabilities secured by the property or to which the property is subject), and (B) Profits and any other items of income and gain allocated to such Member pursuant to Section 3.6 hereof, and (ii) decreased by (A) the amount of cash and the Gross Asset Value of any property distributed to such Member (net of liabilities secured by the property or to which the property is subject) and (B) the Losses and any other items of deduction and loss allocated to such Member pursuant to Section 3.6, and otherwise maintained in accordance with Treasury Regulations in order for the allocation of Profits and Losses pursuant to Section 3.6., and (b) For purposes of this Section 3.5, an assumption of a Member's unsecured liability by the Company shall be treated as a distribution of money to that Member. An assumption of the Company's unsecured liability by a Member shall be treated as a cash contribution to the Company by that Member. (c) In the event a contribution of money or other property is made to the Company other than a contribution made ratably by all existing Members, then the Capital Accounts for the Members shall be adjusted for the hypothetical "book" gain or loss that would have been realized by the Company if all Company assets had been sold for their Gross Asset Values in a cash sale, and shall be in proportion to the Percentage Interests of the Members. If a determination of the Fair Market Value of the Company is made pursuant to Section 3.4 in connection with any Additional Capital Contribution which would also be subject to this Section 3.5(c), the Gross Asset Value of the Company's assets shall be deemed to be equal to the Fair Market Value of the Company plus its liabilities as determined pursuant to Section 3.4 hereof. (d) In the event that assets of the Company other than money are distributed to a Member in liquidation of the Company, or in the event that assets of the Company other than money are distributed to a Member in kind, in order to reflect unrealized gain or loss, Capital Accounts for the Members shall be adjusted for the hypothetical "book" gain or loss that would have been realized by the Company if the distributed assets had been sold for their Gross Asset Values in a cash sale. In the event of the liquidation of a Member's interest in the Company, in order to reflect unrealized gain or loss, Capital Accounts for the Members shall be adjusted for the hypothetical "book" gain or loss that would have been realized by the Company if all Company assets had been sold for their Gross Asset Values in a cash sale. (e) The foregoing provisions of this Section 3.5 and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Section 704(b) of the Treasury Regulations and will be interpreted and applied in a manner consistent with such Treasury Regulations and any amendment or successor provision thereto. The Members will cause appropriate modifications to be made if unanticipated events might otherwise cause this -12- 16 Agreement not to comply with Section 704(b) of the Treasury Regulations, so long as such modifications do not cause a material change in the relative economic benefits of the Members under this Agreement. (f) If all or any part of an Interest is transferred in accordance with this Agreement, the Capital Account of the transferor that is attributable to the transferred Interest will carry over to the transferee. 3.6 Allocation of Items of Company Income, Gain, Loss, Deduction and Credit. (a) For purposes of this Agreement, the terms "Profits" and "Losses" shall mean, for each Fiscal Year or other period, an amount equal to the Company's taxable income or loss, as the case may be for such year or period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss and deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments: (i) any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this paragraph shall be added to such taxable income or loss; (ii) any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code expenditures pursuant to Section 1.704-l(b)(2)(iv)(i) of the Treasury Regulations, and not otherwise taken into account in computing Profits or Losses pursuant to this Section shall be subtracted from such taxable income or loss; (iii) in the event the Gross Asset Value of any Company asset is adjusted pursuant to subsection (b) or (c) of the definition thereof, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses; (iv) gain or loss resulting from the disposition of any Company asset with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the asset disposed of, notwithstanding that the adjusted tax basis of such asset differs from its Gross Asset Value; (v) in lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year or other period, computed in accordance with the definition thereof; (vi) to the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) of the Code is required, pursuant to Section 1.704-l(b)(2)(iv)(m)(4) of the Treasury Regulations, to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member's Interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or -13- 17 loss (if the adjustment decreases such basis) from the disposition of such asset and shall be taken into account for purposes of computing Profits or Losses; and (vii) notwithstanding any other provision of this Section, any items which are specially allocated pursuant to Section 3.6(c) hereof shall not be taken into account in computing Profits and Losses. (b) After giving effect to the special allocations set forth in Section 3.6(c): (i) All Company Profits shall be allocated to the Members as follows: (A) first, pro rata to the Members in proportion to and to the extent of Losses previously allocated to each Member pursuant to Section 3.6(b)(ii)(B) hereof and not previously recouped pursuant to this Section 3.6(b)(i)(A); and (B) thereafter, to the Members in accordance with their respective Percentage Interests. (ii) All Company Losses shall be allocated to the Members as follows: (A) first, pro rata to the Members in proportion to and to the extent of Profits previously allocated to such Members pursuant to Section 3.6(b)(i)(B) hereof and not previously recouped pursuant to this Section 3.6(b)(ii)(A); and (B) thereafter, to the Members in accordance with their respective Percentage Interests. (c) Special Allocations. The following special allocations shall be made in the following order: (i) Minimum Gain Chargeback. Subject to the exceptions set forth in Section 1.704-2(f) of the Treasury Regulations, if there is a net decrease in Company Minimum Gain during a Fiscal Year, each Member shall be specially allocated items of income and gain for Capital Account purposes for such year (and, if necessary, for subsequent years) in an amount equal to such Member's share of the net decrease in Company Minimum Gain during such year (which share of such net decrease shall be determined under Section 1.704-2(g)(2) of the Treasury Regulations). It is intended that this Section 3.6(c)(i) shall constitute a "minimum gain chargeback" as provided by Section 1.704-2(f) of the Treasury Regulations and shall be interpreted consistently therewith. (ii) Member Nonrecourse Debt Minimum Gain Chargeback. Subject to the exceptions contained in Section 1.704-2(i)(4) of the Treasury Regulations, if there is a net decrease in Member Nonrecourse Debt Minimum Gain during a Fiscal Year, any Member with a share of such Member Nonrecourse Debt Minimum Gain (determined in accordance with Section 1.704-2(i)(5) of the Treasury Regulations) as of the beginning of such year shall be specially -14- 18 allocated items of income and gain for Capital Account purposes for such year (and, if necessary, for subsequent years) in an amount equal to such Member's share of the net decrease in Member Nonrecourse Debt Minimum Gain (which share of such net decrease shall be determined under Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the Treasury Regulations). It is intended that this Section 3.6(c)(ii) shall constitute a "partner nonrecourse debt minimum gain chargeback" as provided by Section 1.704-2(i)(4) of the Treasury Regulations and shall be interpreted consistently therewith. (iii) Nonrecourse Deductions. Any Nonrecourse Deductions shall be allocated to the Members in the same manner as Net Losses are allocated pursuant to Section 3.6(b)(ii) hereof. (iv) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions shall be allocated to the Member that bears the Economic Risk of Loss for the Member Nonrecourse Debt to which such deductions relate as provided in Section 1.704-2(i)(1) of the Treasury Regulations. If more than one Member bears the Economic Risk of Loss, such deduction shall be allocated between or among such Members in accordance with the ratios in which such Members share such risk of loss. (v) Qualified Income Offset. In the event any Member unexpectedly receives any adjustments, allocations, or distributions described in Sections 1.704-l(b)(2)(ii)(d)(4) of the Treasury Regulations, 1.704-l(b)(2)(ii)(d)(5), or 1.704-l(b)(2)(ii)(d)(6) (modified as appropriate, by Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5)), items of Company income and gain for Capital Account purposes for such Fiscal Year shall be specially allocated to the Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, any Adjusted Capital Account Deficit of the Member as quickly as possible, provided that an allocation pursuant to this Section 3.6(c)(v) shall be made if and only to the extent that the Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article III have been tentatively made as if this Section 3.6(c)(v) were not in the Agreement. (vi) Certain Section 754 Adjustment. To the extent any adjustment to the adjusted tax basis of any Company asset pursuant to Section 732(d), Section 734(b) or Section 743(b) of the Code is required, pursuant to Section 1.704-1 (b)(2)(iv)(m) of the Treasury Regulations, to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of its Interest in the Company, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in accordance with their interests in the Company as determined under Section 1.704-1(b)(3) of the Treasury Regulations in the event Section 1.704-1(b)(2)(iv)(m)(2) of the Treasury Regulations applies, or to the Member to whom such distribution was made in the event Section 1.704-l(b)(2)(iv)(m)(4) of the Treasury Regulations applies. (vii) Limit on Loss Allocations. Notwithstanding the provisions of Section 3.6(b)(ii) hereof or any other provision of this Agreement to the contrary, net Losses (or items thereof) will not be allocated to a Member if such allocation would cause or increase a Member's Adjusted Capital Account Deficit and will be reallocated to the other Members in proportion to their Percentage Interests, subject to the limitations of this Section 3.6(c)(vii). -15- 19 (viii) Curative Allocations. The allocations under Section 3.6(c)(i) through (c)(vii) (such allocations, the "Regulatory Allocations") are intended to comply with certain requirements of the Treasury Regulations. It is the intent of the Members that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of income, gain, loss or deduction pursuant to this Agreement. Therefore, notwithstanding any other provision of this Agreement (other than the Regulatory Allocations), the Company shall make such offsetting special allocations of income, gain, loss or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each Member's Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not part of the Agreement and all items were allocated pursuant to Section 3.6(b), as the case may be. In exercising its discretion under this Section 3.6(c)(viii), the Company shall take into account future Regulatory Allocations under Section 3.6(c)(i) through (c)(vii) that are likely to offset other Regulatory Allocations previously made. 3.7 Distributions. (a) No Member shall have the right to withdraw any amount from its Capital Account. No Member shall have the right to demand or to receive any distribution other than distributions of Available Cash pursuant to Section 3.7(b) hereof, without the approval of the Members. No Member shall have the right to receive a distribution of property other than cash from the Company, unless otherwise agreed by all the Members. (b) The Company shall, from time to time, but not less often than quarterly, distribute Available Cash to the Members. Any such distributions shall be made in accordance with the Members' Percentage Interests. The Company shall repay principal and accrued interest on Default Loans (in the order of payment contemplated by Section 3.3(b)(iii) hereof) prior to making any cash distributions to the Members from Available Cash. Nothing set forth in this Section 3.7 paragraph shall impair the right of the Company, as provided in this Agreement, to establish reasonable cash reserves. 3.8 Withholding. If required by the Code or by state or local law, the Company will withhold any required amount from distribution to a Member for payment to the appropriate taxing authority. Any amount so withheld from a Member will be treated as a distribution by the Company to such Member. Each Member will timely file any agreement that is required by any taxing authority in order to avoid any withholding obligation that would otherwise be imposed on the Company. 3.9 Distribution Limitation. Notwithstanding any other provision of this Agreement, the Company will not make any distribution to the Members if, after such distribution, the liabilities of the Company (other than liabilities to Members on account of their Percentage Interests) would exceed the Fair Market Value of the Company's assets. With respect to any property subject to a liability for which the recourse of creditors is limited to the specific property, such property will be included in assets only to the extent the property's Fair Market Value exceeds its associated liability, and such liability will be excluded from the Company's liabilities. -16- 20 3.10 Company Funds. The funds of the Company shall be deposited in such bank accounts or invested in investments as shall be determined by the CEO. The Company's funds shall not be commingled with funds not belonging to the Company and shall be used only for the affairs or business of the Company. The CEO shall establish a cash management plan pursuant to which the funds of the Company will be managed. 3.11 Capital Contribution. Each Member is liable to the Company for any Capital Contribution or distribution that has been wrongfully or erroneously returned or made to such Person in violation of the Act or this Agreement. ARTICLE IV MANAGEMENT 4.1 Management of the Company's Business. Management of the business and affairs of the Company is reserved to, and vested in, the Members and no manager (as defined in the Act) will be elected by the Members unless this Agreement is appropriately amended. Each Member will cause the Company to be managed and operated with the intent to maximize the cash flow and long-term asset value of the Company. The Members will exercise their management control by vote. No Member has the authority to act on behalf of the Company unless authorized by a vote. Notwithstanding the foregoing, Persons dealing with the Company are entitled to rely conclusively on the power and authority of any Member. From time to time, on the request of a Member authorized to act in accordance with this Agreement, the Company will confirm to third parties that Persons dealing with the Company may rely on powers and authorities of such Member as set forth in this Agreement. 4.2 Board. (a) The Members hereby form a supervisory board (the "Board"), which shall be responsible for taking all action required under this Agreement to be taken by the Board. The Board shall consist of four representatives (the "Representatives"), two of whom shall be appointed by the Healtheon Member (the "Healtheon Representatives"), and two of whom shall be appointed by the News Member (the "News Representatives"). Each Member agrees to notify the other of the initial Representatives appointed by it. (b) Each Member may at any time remove its Representative(s) and appoint substitute Representative(s) in their stead, by delivering written notice of such substitution to the other Member. Each Representative shall have the authority to act on behalf of and bind the Member which appointed such Representative with regard to matters relating to the Company. The presence or participation of Representatives representing Members owning a majority of the Percentage Interest then owned by all Members shall constitute a quorum for the taking of any action; provided, however, that at least one Representative appointed by each Member shall be present; and provided further, that all Members have received prior written notice of such meeting in accordance with the notice requirements adopted by the Board as provided in Section 4.2(c). If at any meeting of the Board one Member has more Representatives present than the other, then at the beginning of the -17- 21 meeting the Representatives of the Member having two Representatives present shall select between themselves one of them to vote at the meeting such that neither Member shall have fewer voting Representatives at any Board Meeting. Except as otherwise provided in Section 4.4 or as otherwise provided in this Agreement, all actions required or permitted to be taken by the Board must be by the affirmative vote, at a meeting at which a quorum is present, of Representatives representing a majority of Percentage Interests then owned by all Members. Each Member shall have the right to bring additional representatives to any meeting of the Board; provided, however, a Member shall vote only through its appointed Representatives in connection with any matter discussed and voted on at any such meeting of the Board and shall vote its entire Percentage Interest together as a unit in connection with any matter discussed and voted on at any meeting of the Board. No Representative shall be entitled to compensation from the Company for serving in such capacity. (c) The Board shall meet no less often than quarterly and shall establish meeting times, dates and places and requisite notice requirements and adopt rules or procedures consistent with the terms of this Agreement, which shall include rules and procedures for the dissemination of written information to the Members concerning the items to be acted upon at any regular or special meeting of the Board. Any Member may call a special meeting of the Board for any purpose by giving the other Member at least five (5) Business Days' notice thereof, except in the case of an emergency, in which case, such notice as is practicable shall be sufficient. The Board may meet by means of conference telephone call, and any Representative or non-voting representative may participate in any Board meeting by conference telephone call. Any action that may be taken at a meeting of the Board may be taken without a meeting by written consent of the number of Members needed to authorize the action; provided, that all Members are given notice of such written consent at least 15 Business Days prior to its effective date. 4.3 Officers. (a) The Board shall appoint the CEO, chief financial officer ("CFO"), and chief operating officer ("COO") each of whom shall have such duties and responsibilities as the Board may determine from time to time. The CEO will have the authority to select such other officers (other than a CFO and COO) as may be necessary or desirable to carry out the day-to-day management of the Company Business, such day-to-day management to be subject to the approval of the Members. (b) Each of the News Member and the Healtheon Member will have the right, in its sole discretion, to cause the Company to terminate the employment of any officer of the Company including the CEO, the CFO or the COO. In case of any such termination, the terminated officer will be required to leave his or her position within 24 hours after receiving a notice of termination. (c) Appointment of a Person as an officer or agent of the Company will not, in itself, create any contract rights. The officers of the Company, acting in their capacities as such, will be agents acting on behalf of the Company as principal. 4.4 Actions Requiring a Super Majority Vote. In addition to those actions described elsewhere in this Agreement as requiring a Super Majority Vote of the Members, the following -18- 22 actions or decisions by the Company or any Operating Company may be made only following a Super Majority Vote of the Members: (a) entry into areas of business other than the Business; (b) any amendment of this Agreement, including changing the Company's name, or any other organizational document of the Company or any Person directly or indirectly Controlled by the Company or in which the Company has an interest directly or indirectly entitling it to vote on such amendment; (c) any action relating to the merger, sale, consolidation, reorganization, Dissolution, winding up, Liquidation or similar transaction involving all or substantially all of the Company or all or substantially all of its assets.; (d) incurrence of any debt exceeding US $1,000,000 in the aggregate (excluding normal trade debt), or the issuance of any guarantee, or the creation of any Lien) unless provided for in the Annual Budget under which the Company is then operating; (e) any transaction involving the Company, on the one hand, and a Member or an Affiliate of a Member, on the other, other than transactions involving less than US$500,000 in the aggregate which are entered into in the ordinary course of business on an arms-length basis and excluding the, Trademark Licence Agreements and Content Licence Agreements set forth in Section 3.1; (f) any decision to acquire an interest or participation in, or to acquire all or substantially all of the assets of, any other Person; (g) appointment or removal of auditors of the Company, approval or adoption of accounting or tax principles applicable to the Company, and any change in the Fiscal Year of the Company; (h) any decision to require Additional Capital Contributions to the Company, except Capital Calls made pursuant to Section 3.3 hereof; (i) any decision to distribute cash or other assets of the Company, except any distribution made pursuant to Section 3.7 hereof; (j) the admission of additional Members (except as provided in Section 8.1 or Section 8.4) or the grant by the Company of any right to acquire any interest in the Company or any stock or equity appreciation or similar right; (k) cause the Company (i) to enter into any contract or agreement or series of related contracts or agreements (including any programming rights or content rights acquisition agreements), whether oral or written, obligating the Company to expend money or provide goods or services other than in the ordinary course of business or (ii) to obligate the Company in any other -19- 23 manner, unless in each case the amount involved is less than $100,000 or provided for in the Annual Budget; (l) cause the Company to sell, transfer, lease or otherwise dispose of, or mortgage or pledge, either in a single transaction or a series of related transactions, any assets of the Company with a fair market value greater than $500,000 except as reflected in an Annual Budget and except for the sale of inventory or the grant of programming rights in the ordinary course of Business; (m) settle any dispute or litigation or other proceeding, whether administrative or otherwise, which would have material adverse affect on the Company or any Member, or waive any claim in excess of $100,000 which the Company may have against another Person; (n) appointment or removal of the Tax Matters Member; (o) any employment agreement providing for compensation of more than US$150,000 per annum or compensation on termination of employment other than in accordance with severance policies generally applicable to employees of the Company; (p) the approval of each (or any-amendment to any previously approved) Business Plan and Annual Budget for the Company; if the Members are unable to approve an Annual Budget for the Company, then , until a new Annual Budget is approved, the budget for the Company for the immediately preceding Fiscal Year will remain in effect, adjusted (without duplication) to reflect the following increases or decreases: (i) the operation of escalation or de-escalation provisions in contracts in effect at the time of approval of the Annual Budget solely as a result of the passage of the time or due to operations or undertaking approved in the Annual Budget or the occurrence of events beyond the control of the Company, to the extent such contracts are still in effect; (ii) elections made in any prior year under contracts contemplated by the budget for the prior year regardless of which party to such contracts makes such election; (iii) the effect of the existence of any multi-year contract entered into in accordance with a previous budget to the extent not fully reflected in the prior year's budget; (iv) increases or decreases in expenses attributable to the annualized effect of employee additions or reductions during the prior year contemplated by the budget for the prior year; (v) interest expense attributable to any loans; (vi) increase or decrease in overhead expenses in an amount equal to the total of overhead expenses reflected in the budget for the prior year (excluding non-recurring items) multiplied by the percentage increase or decrease in the U.S. Department of Labor Bureau of Labor Statistics Consumer Price Index for all Urban Consumers ("CPI-U") or a successor index for the prior Fiscal Year (but in no event will such change be more than 10% of the corresponding items in the prior budget); and (vii) decreases in expenses attributable to non-recurring items reflecting in the prior year's budget; (q) subject to Section 8.1 hereof, approve the Transfer of any Interest including a repurchase of any Interest by the Company; (r) engaging in any non-budgeted transaction which, when added to all other non-budgeted transactions during the same Fiscal Year, would cause the aggregate amount of non-budgeted transactions for such Fiscal Year to exceed US$1,000,000; or -20- 24 (s) any agreement by the Company to take any of the foregoing actions. 4.5 Budgets and Business Plan. The Board will require the appropriate officers and employees of the Company to prepare and present to the Members an Annual Budget and Business Plan for the Company at least 90 days in advance of the beginning of the applicable Fiscal Year. Each Annual Budget shall include an income statement prepared on an accrual basis which shall show in reasonable detail the revenues and expenses projected for the Company's operations for the forthcoming Fiscal Year and a cash flow statement which shall show in reasonable detail the receipts and disbursements projected for the Company's operations for the forthcoming Fiscal Year, the amount of any corresponding cash deficiency or surplus, contemplated borrowings under credit facilities and the required Additional Capital Contributions, if any. Each Business Plan shall cover a two year period commencing with the Fiscal Year covered by the Annual Budget and the succeeding Fiscal Years. The business plan shall set forth in reasonable detail (i) the Company's capital needs, goals, and procedures for personnel, technical, financial, administrative and marketing activities for the Company's next two (2) succeeding Fiscal Years, (ii) certain financial performance goals, including, without limitation, with respect to revenues, profits, return on net assets, and return on equity and (iii) the Company's priorities with regard to country specific implementation of the Company's expansion goals. Such Annual Budget and Business Plan shall be prepared on a basis consistent with the Companies audited financial statements and GAAP. Each successor Annual Budget and Business Plan shall be at least as detailed as such initial Annual Budget and Business Plan. If the total annual expenditures set forth in the proposed Annual Budget and proposed Business Plan are approved by the Board pursuant to Section 4.4 hereof, then such Annual Budget or Business Plan, as the case maybe, shall for all purposes of this Agreement constitute the Annual Budget or Business Plan and shall supersede any previously approved Annual Budget or Business Plan. 4.6 Indemnification. (a) No Member or Representative (including the Tax Matters Member) (each an "Indemnitee") shall be liable, in damages or otherwise, to the Company or any Member for any act or omission performed or omitted to be performed by it or him pursuant to the authority granted by this Agreement, except if such act or omission results from such Person's own bad faith, fraud, gross negligence, willful breach of this Agreement, or willful or wanton misconduct. To the fullest extent permitted by law, the Company shall indemnify and hold harmless each Indemnitee from and against any and all losses, claims, demands, costs, damages, liabilities (joint or several), expenses of any nature (including reasonable attorneys' fees and disbursements), judgments, fines, settlements, and other amounts ("Damages") arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which an Indemnitee may be involved, or threatened to be involved, as a party or otherwise, arising out of or incidental to the business of the Company, regardless of whether an Indemnitee continues to be a Member, or a Representative or an officer, director, shareholder, member or partner of such Member or Representative, at the time any such liability or expense is paid or incurred, if (i) the Indemnitee acted in good faith and in a manner it or he reasonably believed to be in, or not opposed to, the interests of the Company, and, with respect to any criminal proceeding, had no reason to believe this conduct was unlawful, and (ii) the Indemnitee's conduct did not constitute bad faith, fraud, gross negligence, willful breach of this Agreement or wilful or wanton misconduct. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere, or its equivalent, shall -21- 25 not, in and of itself, create a presumption or otherwise constitute evidence that the Indemnitee acted in a manner contrary to that specified in (i) or (ii) above. (b) Notwithstanding anything contained in this Section 4.6, the Company shall not indemnify and hold harmless any Indemnitee if a judgment or other final adjudication adverse to such Indemnitee establishes: (i) that such Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated or (ii) that such Indemnitee personally gained financial profit or other advantage to which he was not legally entitled. (c) Expenses (including reasonable attorneys' fees and disbursements) incurred in defending any claim, demand, action, suit or proceeding, whether civil, criminal, administrative or investigative, hereof, shall be paid by the Company in advance of the final disposition of such claim, demand, action, suit or proceeding upon receipt of an undertaking by or on behalf of the Indemnitee to repay such amount if it shall ultimately be determined, by a court of competent jurisdiction from which no further appeal may be taken or the time for any appeal has lapsed (or otherwise, as the case may be) that the Indemnitee is not entitled to be indemnified by the Company as authorized hereunder. (d) The indemnification provided by this Section 4.6 shall be in addition to any other rights to which each Indemnitee may be entitled under any agreement or vote of the Members, as a matter of law or otherwise, both (i) as to action in the Indemnitee's capacity as a Member or Representative, or as an officer, director, shareholder, member, or partner of a Member or Representative, and (ii) as to action in another capacity, and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns, administrators and personal representatives of the Indemnitee. (e) The Company may purchase and maintain insurance on behalf of one or more Indemnitees and other Persons against any liability which may be asserted against, or expense which may be incurred by, any such Person in connection with the Company's activities, whether or not the Company would have the power to indemnify such Person against such liability under the provisions of this Agreement. (f) Any indemnification hereunder shall be satisfied only out of the assets of the Company, and the Members and the Representatives shall not be subject to personal liability by reason of these indemnification provisions. (g) An Indemnitee shall not be denied indemnification in whole or in part under this Section 4.6 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement. (h) To the same extent that the Company will indemnify and advance expenses to a Member or Representative, the Company may indemnify and advance expenses to any officer, employee or agent of the Company. -22- 26 ARTICLE V LIABILITY OF A MEMBER 5.1 Limited Liability. Except as otherwise provided in the Act, the debts, obligations and liabilities of the Company (whether arising in contract, tort or otherwise) will be solely the debts, obligations and liabilities of the Company, and no Member of the Company (including any Person who formerly held such status) is liable or will be obligated personally for any such debt, obligation or liability of the Company solely by reason of such status. No individual trustee, officer, director, employee or agent of any Member will have any personal liability for the performance of any obligation of such Member under this Agreement. 5.2 Capital Contribution. Each Member is liable to the Company for any Capital Contribution or distribution that has been wrongfully or erroneously returned or made to such Person in violation of the Act, the Certificate or this Agreement. 5.3 Reliance. Any Member will be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements by (a) any of the Company's other Members, employees or committees or (b) any other Person who has been selected with reasonable care as to matters such Member reasonably believes are within such other Person's professional or expert competence. Matters as to which such reliance may be made include the value and amount of assets, liabilities, Profits and Losses of the Company, as well as other facts pertinent to the existence and amount of assets from which distributions to Members might properly be made. ARTICLE VI REPRESENTATIONS AND WARRANTIES As of the date hereof, each of the Members hereby makes to the other Member each of the representations and warranties set forth in this Article VI, and such warranties and representations shall survive the execution of this Agreement. 6.1 Due Incorporation; Authorization. Such Member is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation and has the requisite power and authority to own its property and carry on its business as owned and carried on at the date hereof and as contemplated hereby. Such Member is duly licensed or qualified to do business and in good standing in each of the jurisdictions in which the failure to be so licensed or qualified would have a material adverse effect on its financial condition or its ability to perform its obligations hereunder. Such Member has the requisite power and authority to execute and deliver this Agreement and each other agreement to which it is to be a party as contemplated hereby and to perform its obligations hereunder and thereunder and the execution, delivery and performance of this Agreement and each such other agreement has been duly authorized by all necessary corporate or limited liability company action. This Agreement constitutes the legal, valid and binding obligation of such Member. 6.2 No Conflict. Neither the execution, delivery and performance of this Agreement nor the consummation by such Member of the transactions contemplated hereby will (a) conflict with, -23- 27 violate or result in a breach of any of the terms, conditions or provisions of any law, regulation, order, writ, injunction, decree, determination or award of any court, governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator, applicable to such Member, (b) conflict with, violate, result in a breach of or constitute a default under any of the terms, conditions or provisions of the articles of incorporation or bylaws or similar constituent documents of such Member or of any material agreement or instrument to which such Member is a party or by which such Member is or may be bound or to which any of its material properties or assets is subject, (c) conflict with, violate, result in a breach of, constitute a default under (whether with notice or lapse of time or both), accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under any indenture, mortgage, lease agreement or instrument to which such Member is a party or by which such Member is or may be bound, or (d) result in the creation or imposition of any lien upon any of the material properties or assets of such Member, the effect of which could reasonably be expected to materially impair such Members' ability to perform its obligations under this Agreement. 6.3 No Conflict; No Default. There are no actions, suits, proceedings or investigations pending or to the knowledge of such Member, threatened against or affecting such Member or any of its properties, assets or businesses in any court or before or by any governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator which could, if adversely determined (or, in the case of an investigation could lead to any action, suit, or proceeding, which if adversely determined could) reasonably be expected to materially impair such Member's ability to perform its obligations under this Agreement. 6.4 Unregistered Interests. Such Member (a) acknowledges that the Interests are being acquired without registration under the Securities Act of 1933, as amended, or under similar provisions of state law, (b) represents and warrants to the Company and the other Member that it is acquiring the Interest for its own account, for investment and with no view to the distribution of the Interest, and (c) agrees not to transfer or attempt to transfer such Interest in the absence of registration under that Act and any applicable state securities laws or an available exemption from such registration. ARTICLE VII BOOKS AND RECORDS; REPORTS TO MEMBERS 7.1 Books and Records. (a) The following books and records of the Company shall be kept at its principal office: (i) a current list of the full name and last known business, residence or mailing address of each Member; (ii) originals of the Certificate, of this Agreement, and any amendments thereto (and any signed powers of attorney pursuant to which any such document was executed); -24- 28 (iii) a copy of the Company's federal, state and local income tax returns and reports and annual financial statements of the Company, for the five most recent years; and (iv) minutes, or minutes of action or written consent, of every meeting of the Members and the Board. At the Company's expense, there will also be kept at the Company's principal office separate books of accounts for the Business, which will be a true and accurate record of all costs and expenses incurred, all credits made and received and all income derived in connection with the operation of the Business in accordance with GAAP. (b) Each of the Members or its duly authorized representatives shall have the right, upon reasonable notice, at its own expense, to examine and inspect, during normal business hours and for any lawful purpose related to the affairs of the Company or the investment in the Company by such Member, any of the books of account, and business records of the Company, and to copy any such books of account and business records of the Company. The Company's books of account and business records shall be filed and preserved for a period of at least five years or such longer period as required by law. 7.2 Financial Reports. The Members will require the appropriate officers and employees of the Company to prepare and deliver or cause to be delivered to each Member, no later than forty-five (45) days after the close of each of the first three quarters of the Company's Fiscal Year, and sixty (60) days after the end of each such Fiscal Year, an audited financial report of the business and operations of the Company prepared in accordance with GAAP, relating to such period, which report shall include a balance sheet as of the end of such period, a statement of income (loss) and Members' Capital Account and cash flows (including sources and uses of funds) for the period then ended, and in each case a comparison of the period then ended with the corresponding period in the Fiscal Year immediately preceding such periods, which, in the case of the report furnished after the close of the Fiscal Year, shall be audited by the Company's independent certified public accountants. In addition, the quarterly financial statements shall be accompanied by an analysis, in reasonable detail, of the variance between the Company's operating results and the corresponding amounts in the then current Annual Budget. The quarterly financial reports may in each case be subject to normal year-end adjustments. In addition to the foregoing financial statements, the financial report furnished after the close of each Fiscal Year shall also include a statement of cash flows, and allocations to the Members of the Company's taxable income, gains, losses, deductions and credits. The Company will initially engage Ernst & Young LLP as its independent certified public accountants and thereafter such other accounting firm as the Members shall determine. The Company shall bear the cost of each annual audit and the cost of any other services furnished to the Company by its independent certified public accountants as provided herein. -25- 29 7.3 Tax Returns and Information. (a) The Healtheon Member is hereby designated "Tax Matters Member" for the Company and shall be so designated in each Federal information return filed on behalf of the Company. The Tax Matters Member shall not be liable to the Company or any Member for any act or omission taken or suffered by it in such capacity in good faith and in the belief that such act or omission is in or is not opposed to the best interests of the Company; provided, however, that such act or omission is not in violation of this Agreement and does not constitute gross negligence, fraud or a willful violation of law. Within five Business Days of receipt, each Member shall give to each other Member written notice of receipt from any taxing authority of any notification of an audit or investigation of the Company. (b) The Tax Matters Member shall cause income and other required Federal, state and local tax returns for the Company to be prepared. The Tax Matters Member shall make or maintain in effect an election under Section 754 of the Code to adjust the basis of Company Property under Sections 734 and 743 of the Code for taxable years ending subsequent to the Effective Date upon the request of any Member. The Tax Matters Member shall make such other elections as it shall deem to be in the best interests of the Company and the Members. The cost of preparation of such returns by outside preparers, if any, shall be borne by the Company. (c) The Tax Matters Member shall cause to be provided to each Member no later than December 31 of each year information concerning the Company's projected taxable income or loss and each class of income, gain, loss, deduction or credit which is relevant to reporting a Member's share of Company income, gain, loss, deduction or credit for purposes of Federal or state income tax. Information required for the preparation of a Member's income tax returns shall be furnished to the Members as soon as possible after the close of the Company's Fiscal Year. ARTICLE VIII TRANSFERS, ADMISSIONS, WITHDRAWALS 8.1 Transfer. No Member shall Transfer any Interest owned by it except for (a) Transfers to an Affiliate of the Transferor at the time, provided that the Transferee remains an Affiliate of the Transferor immediately after the Transfer; (b) pledges or grants of a security interest to secure loans to the Company; or (c) Transfers made in compliance with Section 8.3 hereof, if applicable. Any Transfer of an Interest other than as specifically permitted by this Section 8.1 shall be void and of no effect. It is agreed that if the Fair Market Value of any Partner's Interest equals twenty-five percent (25%) or more of the Fair Market Value of such Partner's total assets determined on the date any proposed Transfer of any equity interest in such Partner is to be consummated, any Transfer of any equity interest in such Member shall constitute a Transfer hereunder. The Partners shall be responsible to cause the owners of their respective equity interests to enter into agreements as may be necessary to enable such Partner to ensure compliance with this provision. -26- 30 8.2 Corporate Conversion. (a) Upon the execution of this Agreement, it is the express intention and understanding of the existing Members and those Persons who became Members at the time of the execution of this Agreement that upon the occurrence of certain events the Company shall be converted into a corporation in the manner set forth herein by the action of the Board and without the necessity of any action or any investment decision on the part of any Member. (b) Upon the determination by the Super Majority Vote of the Board, the Board shall cause a Corporate Conversion, and in connection therewith cause the conversion of the Interests into the capital stock of any resulting corporation having relative rights, limitations, preferences and other terms consistent with the Interests so converted. (c) The Members shall have no appraisal rights pursuant to the Act or applicable law or otherwise in connection with a Corporate Conversion or any other transaction authorized under this Agreement. (d) In connection with the consummation of a Corporate Conversion, the Board shall have the authority to merge, consolidate or reorganize one or more of the subsidiaries with one or more other subsidiaries or other entities wholly-owned directly or indirectly by the Company or the surviving corporation in the Corporate Conversion. (e) The Board is specifically authorized to take any and all further action, and to execute, deliver and file any and all additional agreements, documents or instruments, as it may determine to be necessary or appropriate in order to effectuate the provisions of this Section 8.2 and each Member hereby agrees to execute, deliver and file any such agreements, documents or instruments or to take such action as may be reasonably requested by the Board for the purpose of effectuating the provisions of this Section 8.2. 8.3 Put Right. (a) Put Effective Date. In the event that as of the fifth (5th) anniversary of the Effective Date, neither the Company nor any subsidiary of the Company has initiated a public offering of its securities in the United States or within any other foreign jurisdiction (the "Put Effective Date"), the News Member shall have the right to exchange its Interest in the Company for shares of Common Stock of Healtheon/WebMD Corporation upon the terms set forth herein. (b) Put Right. On or within ninety (90) days of the Put Effective Date, the News Member shall have the right to require the Healtheon Member to purchase from the News Member all, but not less than all, of the News Member's Interests in the Company for two million shares of Common Stock (the "Put Right"). The parties shall structure the Transfer of Interests pursuant to this Section as a transaction which qualifies as a tax-free reorganization under Section 368 of the Code. (c) Exercise of Put Right. The exercise of the Put Right shall be effected by written notice from the News Member to the Healtheon Member in accordance with the notice -27- 31 provisions set forth herein (the "Put Right Notice"), which Put Right Notice must be received by the Healtheon Member on or prior to the ninetieth (90th) day after the Put Effective Date (the "Put Right Termination Date"). In the event that the Healtheon Member does not receive a Put Right Notice on or prior to the Put Right Termination Date, the Put Right granted hereunder shall immediately terminate and be of no further force or effect. (d) Exchange of Securities. The closing of the purchase and sale pursuant to this Section 8.3 shall be held at the principal place of business of the Company or at such other mutually acceptable place on a mutually acceptable date no later than ten (10) days after the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR") or the completion of any other applicable regulatory proceedings (the "Put Right Closing Date"). The News Member and the Healtheon Member agree to cooperate with each other in filing all necessary notices and related materials to comply with the provisions of HSR or other regulatory requirements, if applicable. On the Put Right Closing Date, the News Member shall assign to the Healtheon Member, or its designees, the Interests of the News Member in the Company, and shall execute such documents and instruments as may be necessary to effectuate the sale of the Interests free and clear of all Liens. The News Member shall represent and warrant in writing that it is the record and beneficial owner and holder of the Interests which it is selling, free and clear of all Liens (other than pledges or security interests that secure indebtedness of the Company), and that it has full right, power and authority to convey such Interests to the Healtheon Member. 8.4 Issuance of Additional Interests. (a) Following the date of this Agreement, the Healtheon Member shall have the right to cause the Company to issue additional Interests, to up to a maximum of three (3) Persons, not to exceed thirty-three and one-third percent (33 1/3%) of the Percentage Interests in the aggregate, if (and only if) (i) each such proposed issuance is pursuant to a bona fide written offer from a prospective purchaser that is not an Affiliate of the Healtheon Member (ii) each such prospective purchaser and the terms of its investment is reasonably acceptable to the News Member and (iii) each such prospective purchaser agrees to purchase at least ten percent (10%) of the Percentage Interests. Under no circumstances shall the News Member be under any obligation to consent to the issuance of additional Interests to any Person that News Corporation considers to be one of its competitors; provided, however, that the News Member hereby acknowledges and agrees that Softbank is an acceptable prospective purchaser in the event the Company elects to issue additional Interests to Softbank. (b) Upon the admission of a new Member pursuant to this Section 8.4, the Members agree to amend to this Agreement to allow for such admission and to provide the new Member with Voting rights proportionate to its Percentage Interest. (c) Upon the admission of a new Member pursuant to this Section 8.4, the Healtheon Member and the News Member shall enter into a separate agreement whereby they shall agree to vote together on all matters to come before the Members pursuant to Sections 4.4 and 9.3 hereof, and to mutually vote against any matter on which they cannot agree to so vote. -28- 32 8.5 Admission as a Member. No Transferee of any Interests from a Member shall be admitted to the Company as a Member unless the Transfer shall have been made in accordance with this Agreement and the Transferee shall have executed an instrument satisfactory to the non-Transferring Member, whereby such Transferee agrees to abide by the terms and conditions of this Agreement and become a Member of the Company. 8.6 No Right to Withdraw. No Member shall have any right to resign or otherwise withdraw from the Company prior to the dissolution and winding up of the Company, without the express written consent of the other Member. ARTICLE IX DISSOLUTION AND LIQUIDATION 9.1 Dissolution. Dissolution of the Company will occur upon the happening of any of the following events: (a) the sale or other disposition of all or substantially all of the Company's assets; (b) the affirmative Super Majority Vote of the Members; or (c) the entry of a decree of judicial dissolution under the Act. 9.2 Exclusive Means of Dissolution. The exclusive means by which the Company may be dissolved are set forth in Section 9.1. The Company will not be dissolved upon the death, retirement, resignation, expulsion, bankruptcy or dissolution of any Member or upon the occurrence of any other event which terminates the continued membership of any Member in the Company. 9.3 Liquidation. Upon Dissolution of the Company, the Company will immediately proceed to wind up its affairs and liquidate pursuant to this Section 9.3. Following dissolution, the Board shall appoint a Person to serve as liquidating trustee and thus be charged with the duty to wind up the affairs of the Company and distribute its assets as provided herein. A reasonable time will be allowed for the orderly Liquidation of the Company and the discharge of liabilities to creditors so as to enable the Company to minimize any losses attendant upon Liquidation. Any gain or loss on disposition of any Company assets in Liquidation will be allocated to Members in accordance with the provisions of Section 3.6. Any liquidating trustee is entitled to reasonable compensation for services actually performed, as approved by the Board, and may contract for such assistance in the liquidating process as such Person deems necessary or desirable. Until the filing of a certificate of cancellation under Section 9.9, and without affecting the liability of the Members and without imposing liability on the liquidating trustee, the liquidating trustee may settle and close the Company's business, prosecute and defend suits, dispose of its property, discharge or make provision for its liabilities, and make distributions in accordance with the priorities set forth in this Article. 9.4 Priority of Payment. If the Company is dissolved the assets of the Company will be distributed in Liquidation in the following order: -29- 33 (a) First, to creditors by the payment or provision for payment of the debts and liabilities of the Company (other than any loans or advances that may have been made by any Member or Affiliate) and the expenses of Liquidation; (b) Second, to the setting up of any reserves that are reasonably necessary for any contingent, conditional or unmatured liabilities or obligations of the Company; (c) Third, to the repayment of any loans or advances to the Company that may have been made by any Member or any Affiliate of a Member (according to the relative priority of repayment of such loans or advances and proportionally among loans or advances of equal priority if the amount available for repayment is insufficient for payment in full); and (d) Fourth, to the Members in proportion to the positive balances in their respective Capital Accounts after such Capital Accounts have been adjusted for all allocations of Profits and Losses and items thereof for the Fiscal Year during which such liquidation occurs. 9.5 Liquidating Distributions. If the Company is dissolved, the liquidating distributions due to the Members will be made by selling the assets of the Company and distributing the net proceeds. Notwithstanding the preceding sentence, but only upon the affirmative Super Majority Vote of the Members, the liquidating distributions may be made by distributing the assets of the Company in kind to the Members in proportion to the amounts distributable to them pursuant to Section 9.4, valuing such assets at their Fair Market Value (net of liabilities secured by such property that the Member takes subject to or assumes) on the date of distribution. Each Member agrees to save and hold harmless the other Members from such Member's proportionate share of any and all such liabilities which are taken subject to or assumed. Appropriate and customary prorations and adjustments will be made incident to any distribution in kind. The Members will look solely to the assets of the Company for the return of their Capital Contributions, and if the assets of the Company remaining after the payment or discharge of the debts and liabilities of the Company are insufficient to return such contributions, they will have no recourse against any other Member. The Members acknowledge that Section 9.4 may establish distribution priorities different from those set forth in the provisions of the Act applicable to distributions upon Liquidation, and the Members agree that they intend, to that extent, to vary those provisions by this Agreement. 9.6 No Restoration Obligation. Nothing contained in this Agreement imposes on any Member an obligation to make an Additional Capital Contribution in order to restore a deficit Capital Account upon Liquidation of the Company; provided, however, that if, at any time the Company is Liquidated pursuant to this Article 9, any portion of the News Funding Commitment remains unpaid, such unpaid portion shall, at the time of such Liquidation, become immediately due and payable by the News Member. 9.7 Timing. Final distributions in Liquidation will be made by the end of the Company's Fiscal Year in which such actual Liquidation occurs (or, if later, within 90 days after such event) in the manner required to comply with the Section 704(b) of the Treasury Regulations. Payments or distributions in Liquidation may be made to a liquidating trust established by the Company for the benefit of those entitled to payments under Section 9.4, in any manner consistent with this Agreement and Section 704(b) of the Treasury Regulations. -30- 34 9.8 Liquidating Reports. A report will be submitted with each liquidating distribution to Members made pursuant to Section 9.5, showing the collections, disbursements and distributions during the period which is subsequent to any previous report. A final report, showing cumulative collections, disbursements and distributions, will be submitted upon completion of the Liquidation. 9.9 Certificate of Cancellation. Upon Dissolution of the Company and the completion of the winding up of its business, the Company will file a certificate of cancellation (to cancel the Certificate of Formation) with the Delaware Secretary of State pursuant to the Act. At such time, the Company will also file an application for withdrawal of its certificate of authority in any jurisdiction where it is then qualified to do business. A certificate of cancellation will also be filed at any time when there are no Members. ARTICLE X ADDITIONAL AGREEMENTS 10.1 Provision of Services. In connection with the formation of the Company, (i) each of the News Member and the Healtheon Member shall enter into a Management Services Agreement substantially in the forms annexed hereto as Exhibits A and B, respectively, (ii) Star and the News Member shall enter into a Media Services Agreement substantially in the form annexed as Exhibit G to the Master Strategic Alliance Agreement, and (iii) the News Member shall procure a trademark license agreement, substantially in the form annexed hereto as Exhibit C and a content license agreement, substantially in the form annexed hereto as Exhibit D. 10.2 SCHEDULED CONTRACTS. The parties hereto agree to the following with respect to the Scheduled Contracts: (a) The Healtheon Member agrees to use its commercially reasonable efforts to obtain all of the necessary approvals to assign all of the rights, benefits and obligations of the Healtheon/WebMD Corporation and its Affiliates in and to the Scheduled Contracts with respect to the Territory to the Company as soon as practicable following the date hereof. Any cost or expenses associated with assigning such rights, benefits and obligations under the Scheduled Contracts to the Company shall be paid by the Company. In the event that the Healtheon Member obtains such approvals, the Healtheon Member and the Company hereby agree to execute and deliver such documents as may be necessary or desirable to effect the assignment by the Healtheon Member all of such rights, benefits and obligations in and to the Scheduled Contracts (except as provided herein) to the Company and for the Company to assume all of such rights, benefits and obligations. (b) In the event that the Healtheon Member is prohibited from assigning any Scheduled Contract to the Company or is otherwise unable to effectuate such assignment in a commercially reasonable manner, the parties agree as follows: (i) Within the time period specified in the Scheduled Contracts which is applicable to the exercise of the Healtheon Member's rights pertaining to a Development Opportunity (or if no time period is specified, within the thirty (30) day period following the -31- 35 Healtheon Member's notice to the Company hereunder) the Healtheon Member and the Company agree to engage in good faith discussions and negotiations to determine whether the Company wants to bear the cost of and receive the benefits from such Development Opportunity (the "Company Election"). (ii) In the event that the Company does not make the Company Election, the parties agree that the Healtheon Member shall have the right exploit the Development Opportunity and to receive all the benefits therefrom. (iii) At any time thereafter, the Company shall have the right to make the Company Election; provided, however, that prior to receiving any benefit or payments relating to such Development Opportunity, the Company shall be required to pay to the Healtheon Member an amount equal to (A) the Healtheon Member's (or its Affiliate's as the case may be) net operating losses arising from its exploitation of such Development Opportunity, after deducting from any benefits or payments derived from the exploitation thereof, all of the development, personnel and related costs and expenses associated with the exploitation of such Development Opportunity incurred by the Healtheon Member or its Affiliates prior to the date the Company Election is made (the "Prior Development Period") plus interest accrued thereon at an annual rate equal to the prime rate as published in the Wall Street Journal on the date of such Company Election and (B) all of the development, personnel and related costs and expenses associated with the exploitation of such Development Opportunity incurred by the Healtheon Member or its Affiliates from and after the Prior Development Period. (c) In the event that the Healtheon Member has completed the assignment of a Scheduled Contract to the Company the parties agree as follows: (i) The Company agrees to notify the Healtheon Member with respect to any Development Opportunity that the Company decides not to exploit, at which time the Healtheon Member shall have the right to exploit such Development Opportunity. The Company agrees to provide the notice to the Healtheon Member as soon as possible following its decision not to exploit a Development Opportunity and such notice shall be provided prior to the expiration of any applicable time period specified in the relevant Scheduled Contract to preserve the Healtheon Member" ability to exploit such Development Opportunity and to exercise its rights hereunder. (ii) With respect to each Development Opportunity rejected by the Company, the Healtheon Member shall have the right to exploit at its cost such Development Opportunity and to receive all the benefits therefrom unless and until such time that the Company makes a Company Election, at which time the provisions of Section 10.2(b)(iv) above shall govern. (iii) The parties hereto agree that to the extent the Healtheon Member engages in the exploitation of a Development Opportunity pursuant to this Section 10.2(c), that with respect to such Development Opportunity, the Company shall grant to the Healtheon Member and its Affiliates all of the rights necessary to exploit such Development Opportunity and the Healtheon Member agrees to assume the corresponding obligations under such Scheduled Contract unless and until such time that the Company makes a Company Election, at which time, the Healtheon Member -32- 36 shall have no further rights or obligations under such Scheduled Contract with respect to such Development Opportunity. (d) For purposes of his Section 10.2, the term "Development Opportunity" shall mean any right or opportunity available to the Healtheon Member (or the Company or its Affiliates if such Scheduled Contract is assigned to the Company) under the Scheduled Contract to develop Web Sites, portal channels or otherwise exploit or derive the economic or business opportunities set forth therein within the Territory. ARTICLE XI MISCELLANEOUS 11.1 Waiver of Partition. Except as may be otherwise provided by law in connection with the winding-up, Liquidation and Dissolution of the Company, each Member hereby irrevocably waives any and all rights that it may have to maintain an action for partition of any of the Company Property. 11.2 Modification; Waivers. This Agreement may be modified or amended only with the written consent of each Member. Except as otherwise specifically provided herein, no Member shall be released from its obligations hereunder without the written consent of the other Member. The observance of any terms of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) by the party or parties entitled to enforce such term, but any such waiver shall be effective only if in a writing signed by the party or parties against which such waiver is to be asserted. Except as otherwise specifically provided herein, no delay on the part of any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party hereto of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. 11.3 Entire Agreement. This Agreement and the documents expressly referred to herein, and all related documents, each as amended, constitute the entire agreement among the Members with respect to the subject matter hereof and supersede any prior agreement or understanding between or among the Members with respect to such subject matter. 11.4 Severability. If any provision of this Agreement, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Agreement or the application of such provision to other Persons or circumstances shall not be affected thereby; provided, however, that the parties shall negotiate in good faith with respect to an equitable modification of the provision or application thereof held to be invalid. 11.5 Notices. All notices, requests, demands, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given on the date delivered by hand or on the third Business Day after such notice is mailed by registered -33- 37 or certified mail, postage prepaid, and, pending the designation by written notice of another address, addressed as follows: If to the News Member: c/o News America Incorporated 1211 Avenue of the Americas New York, New York 10036 Attention: Arthur M. Siskind. Esq. Telephone: (212) 852-7007 Telecopier: (212) 768-2029 With a copy to: Squadron, Ellenoff, Plesent & Sheinfeld, LLP 551 Fifth Avenue New York, New York 10176 Attention: Joel I. Papernik, Esq. Telephone: (212) 476-8364 Telecopier: (212) 697-6686 If to the Healtheon Member: Healtheon/WebMd Corporation 400 The Lenox Building Atlanta, Georgia 30326, USA Attention: Jeffrey T. Arnold Chief Executive Officer Telephone: (404) 479-7600 Telecopier: (404) 479-7651 With a copy to: Alston & Bird LLP One Atlantic Center 1201 West Peachtree Street Atlanta, Georgia 30309-3424 Attention: Christopher D. Mangum, Esq. Telephone: (404) 881-7000 Telecopier: (404) 881-7777 11.6 Successors and Assigns. Except as otherwise specifically provided herein, this Agreement shall be binding upon and inure to the benefit of the Members and their legal representatives, successors and permitted assigns. -34- 38 11.7 Counterparts. This Agreement may be executed in one or more counterparts, all of which together shall constitute one and the same instrument. 11.8 Headings; Cross-references. The Article and Section headings in this Agreement are for convenience of reference only, and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof. 11.9 Construction. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company. No one, including but not limited to the Members or any creditor of the Company or any of its Members, shall have any rights under this Agreement against any Affiliate of any Member. 11.10 Property Rights; Confidentiality. All books, records and accounts maintained exclusively for the Company (including, without limitation, marketing reports and all other data whether stored on paper or in electronic or other form), and any contracts or agreements (including, without limitation, agreements for the purchase, lease or license of programming) entered into by or exclusively on behalf of the Company, shall at all times be the exclusive property of the Company. All property (real or personal or mixed) purchased with Company funds, and all moneys held or collected for or on behalf of the Company shall at all times be the exclusive property of the Company. Except as expressly agreed to by the Members, no Member shall, during the period such Member is a Member and for a period ending on the later of two (2) years after such Member has ceased to be a Member, disclose any confidential or proprietary information with respect to the Company to any Person, except (a) with the prior written consent of the other Member; (b) to the extent necessary to comply with law or the valid order of a court of competent jurisdiction, in which event the party making such disclosure shall so notify the other Member as promptly as practicable (and, if possible, prior to making such disclosure) and shall seek confidential treatment of such information; (c) as part of its normal reporting or review procedure to its parent company, its auditors and its attorneys; provided, however, that such Member shall be liable for any breach by such parent company, auditors or attorneys of any provision of this Section 11.10; (d) in connection with the enforcement of such Member's rights hereunder; (e) disclosures to an Affiliate of, or professional advisor to, such Member in connection with the performance by such Member of its obligations hereunder; provided, however, that such Member shall be liable for any breach by such Affiliate or professional advisor of any provision of this Section; and (f) to a prospective purchaser of all or a portion of such Member's Interest in connection with a sale in accordance with the terms of this Agreement; provided, however, that such Member shall be liable for any breach by such prospective purchaser of any provision of this Section; and (g) with respect to the Healtheon Partner, upon a Dissolution or Liquidation of the Partnership, to the extent necessary for the continued ongoing operation of the business of the Healtheon Partner and its Affiliates. Except as provided in the preceding sentence, no Member, nor any of its Affiliates, shall, during the periods referred to in such sentence, use any confidential or proprietary information with respect to the Company other than for the benefit of the Company. This Section 11.10 hereof shall survive the termination of this Agreement, the Dissolution of the Company, the withdrawal of any Member and the transfer of the Interest of any Member. -35- 39 11.11 Further Actions. Each Member shall execute and deliver such other certificates, agreements and documents, and take such other actions, as may reasonably be required in connection with the formation and continuation of the Company and the achievement of its purposes. 11.12 Governing Law; Forum. This Agreement will be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to any conflicts of laws rules. Any controversy or claim arising out of or relating to this Agreement, or breach thereof, shall be settled by arbitration in accordance with the Arbitration Rules of the American Arbitration Association. The Arbitration Tribunal shall consist of three arbitrators, of whom one shall be nominated by Healtheon Partner, one by News Partner, and the third, who shall serve as Chairman, shall be chosen by the two party-nominated arbitrators or, in the event that party-nominated arbitrators are unable to designate the third arbitrator, by the American Arbitration Association. The situs of the arbitration shall be Washington, D.C. The language of the arbitration shall be English. The award of the arbitrator shall be final and binding. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The Parties waive any right to appeal the arbitral award, to the extent a right to appeal may be lawfully waived. Each Party retains the right to seek judicial assistance: (a) to compel arbitration; (b) to obtain interim measures of protection pending arbitration; and (c) to enforce any decision of the arbitrators, including the final arbitral award. The prevailing Party in the arbitration shall be entitled to receive reimbursement of its reasonable expenses incurred in connection therewith. 11.13 Expenses of the Parties. All expenses incurred by or on behalf of the parties hereto in connection with the authorization, preparation and consummation of this Agreement, including, without limitation, all fees and expenses of agents, representatives, counsel and accountants employed by the parties hereto in connection with the authorization, preparation, execution and consummation of this Agreement shall be borne solely by the party who shall have incurred the same. -36- 40 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers or members hereunto duly authorized as of the date first written above. HW INTERNATIONAL HOLDINGS, INC. By: /s/ -------------------------------- Name: W. Michael Heekin Title: Vice President IJV HOLDINGS, INC. By: -------------------------------- Name: Lawrence A. Jacobs Title: Sr. Vice President The undersigned, by executing this Agreement, hereby unconditionally guarantees the full and prompt payment and performance of all obligations of the Healtheon Member and their subsidiary set forth in this Agreement. This is a guaranty of payment and not of collection. HEALTHEON/WEBMD CORPORATION By: /s/ -------------------------------- Name: W. Michael Heekin Title: Exec. Vice President The undersigned, by executing this Agreement, hereby unconditionally guarantees the full and prompt payment and performance of all obligations of the News Member and their subsidiary set forth in this Agreement. This is a guaranty of payment and not of collection. THE NEWS CORPORATION LIMITED By: /s/ -------------------------------- Name: Arthur Siskind Title: Director 41 LIST OF SCHEDULES Schedule Schedule 3.1 Initial Capital Contributions Schedule 10.2 Scheduled Contracts -2- 42 SCHEDULE 3.1 INITIAL CAPITAL CONTRIBUTIONS Healtheon Member Healtheon Trademark License. The beginning capital account for the Healtheon Member shall be $100,000,000. News Member (i) cash of $3,000,000 and (ii) an obligation to contribute an additional $97,000,000. The sum of (i) and (ii) shall equal $100,000,000. The beginning capital account for the News Member shall be $3,000,000.
-3- 43 SCHEDULE 10.2 SCHEDULED CONTRACTS AGREEMENT DATED AS OF MAY 19, 1999 BY AND AMONG HEALTHEON CORPORATION, WEBMD, INC. AND MICROSOFT CORPORATION. DISTRIBUTION AND CROSS PROMOTION AGREEMENT DATED AS OF MAY 6, 1999, BY AND AMONG MICROSOFT CORPORATION, WEBTV NETWORKS, INC., MSNBC INTERACTIVE NEWS, LLC AND WEBMD, INC. AGREEMENT DATED AS OF AUGUST 10, 1999 BY AND BETWEEN CNN INTERACTIVE, A DIVISION OF CABLE NEWS NETWORK LP, LLP AND WEBMD, INC. AGREEMENT DATED AS OF MARCH 5, 1999 BY AND BETWEEN LYCOS, INC. AND WEBMD, INC. CONTENT LICENSE AND CO-BRANDED AREA AGREEMENT DATED AS OF MAY 13, 1999 BY AND BETWEEN EXCITE, INC. AND WEBMD, INC. -4- 44 EXHIBIT A FORM OF NEWS MANAGEMENT AGREEMENT 45 EXHIBIT B FORM OF HEALTHEON MANAGEMENT AGREEMENT 46 EXHIBIT C FORM OF HEALTH NETWORK TRADEMARK LICENSE 47 EXHIBIT D FORM OF HEALTH NETWORK CONTENT LICENSE EX-10.8 9 MEDIA SERVICES AGREEMENT 1 EXHIBIT 10.8 WEBMD INTERNATIONAL MEDIA SERVICES AGREEMENT THIS AGREEMENT ("Agreement") dated as of the 26th day of January, 2000, is made by and between WebMD International LLC, a Delaware limited liability company (the "Company"), and Eastrise Profits Limited, an international business company incorporated under the laws of the British Virgin Islands ("Star") which is controlled by The News Corporation Limited ("News Corp" and together with Star, the "News Parties") (each referred to herein as a "Party", and collectively referred to as the "Parties"). WHEREAS, the Company owns and operates Non-Standard Television Services and Internet Services throughout the world (other than the United States and Japan) devoted predominantly to health and fitness content ("Health Related Content") consisting of audio-visual programming, data and information through one or more subsidiaries; and WHEREAS, the News Parties through their respective subsidiaries and affiliates have controlling and non-controlling interests in programs, networks and other media properties of various kinds (the "Media Properties"); and WHEREAS, the Company, the News Parties and affiliates of the News Parties have entered into agreements and arrangements (together, the "Related Agreements") as a result of which the News Parties and their affiliates are obligated to provide media services of various kinds as hereinafter provided; and WHEREAS, it is a condition of the Related Agreements that the Parties enter into this Agreement. NOW, THEREFORE, in consideration of the mutual promises set forth herein, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: ARTICLE I MEDIA SERVICES/ACCOUNTING 1.1 Media Services. In response to requests by the Company made in consultation with the News Parties from time to time, the News Parties agree to provide, to cause Controlled Affiliates to provide, and to use commercially reasonable efforts to cause Non-Controlled Affiliates to provide, to the Company (i) advertising and marketing services (the "Advertising Services") and (ii) promotion, programming and distribution services (the "Promotional Services" and together with the Advertising Services, the "Media Services") in the Territory during the period commencing on the date hereof and ending on August 31, 2010 (the "Effective Period"). As used herein, "Controlled Affiliates" means any corporation or other entity more than 50% of whose outstanding voting securities or other equity interests are directly or indirectly owned by News Corp; "Non-Controlled Affiliates" means any corporation or other entity in which News Corp directly or indirectly has a greater than 20% but no more than 50% equity interest; and "Territory" means the world (other than the United States and Japan). 1.2 Accounting and Reporting Statements. The News Parties shall accurately account for the rendition of the Media Services to the Company unless otherwise agreed upon in connection with particular Media Services. The News Parties shall prepare and deliver to the Company at the beginning and the end of each television broadcast season a statement (the "Services Statements") indicating in 2 reasonable detail the value (determined as provided herein) of the Media Services to be furnished and furnished under this Agreement during such television broadcast season computed in good faith in accordance with Section 2.2 and 3.5 of this Agreement. All such Services Statements, and the information contained therein, shall constitute confidential "Information" of the News Parties, which shall be subject to Article 8 hereof. Disputes with respect to any valuations of Media Services shall be resolved in accordance with Article 7. ARTICLE 2 ADVERTISING AND MARKETING 2.1 Advertising Media. During the Effective Period, the News Parties agree to provide, to cause Controlled Affiliates to provide and to use commercially reasonable efforts to cause Non-Controlled Affiliates to provide, an aggregate of $180 million of Advertising Services in the Territory on television and cable properties, film properties, print advertising media and News America Digital Publishing's Internet sites owned by the News Parties, the Controlled Affiliates and the Non-Controlled Affiliates "Advertising Space"). The dollar amount of Advertising Services to be provided to the Company during each television broadcast season is set forth opposite the respective season on Schedule 1 attached hereto. Attached as Schedule 2 is a representative allocation of the Advertising Space to be provided to the Company during a television broadcast season with respect to Media Services that will be provided by the News Parties in the United States pursuant to the Related Agreements (the "Representative Allocation"). The Parties shall use the Representative Allocation as a benchmark for the nature, placement and pricing of Advertising Space to be provided to the Company in the Territory each season. The Parties recognize that the Representative Allocation is a media buy with respect to Advertising Services in the United States and that the Advertising Services to be provided to the Company in the Territory will differ, but the Parties also acknowledge and agree that, to the extent practicable, the Advertising Services in the Territory will be based upon a similar nature, volume, placement, amount and other factors that were relevant to the creation of the Representative Allocation, subject to the understanding that the News Parties' international assets differ significantly from their domestic assets, and that the allocation of Advertising Services must be adjusted accordingly. The Parties shall meet during the upfront selling period for each television broadcast season (the "Upfront Period") to determine the Advertising Space to be allocated to the Company for the season beginning in September of such year. The Parties intend that all of such Advertising Space for that season will be allocated at that time, subject to reasonable flexibility as required for changes in unforeseen circumstances. After the allocation of Advertising Services is decided upon during the Upfront Period, the Company shall coordinate directly with the particular Controlled Affiliate or Non-Controlled Affiliate with which the Company has chosen to advertise. The News Parties shall use commercially reasonable efforts to satisfy, and to cause the Controlled Affiliates and Non-Controlled Affiliates to satisfy, all requests made by the Company in connection with the placement and scheduling of all advertisements. The Parties also agree that they will pro rate, to the extent practicable, Advertising Space based on the Representative Allocation during the period commencing on the date hereof and ending on August 31, 2000 (the "Short Season"), subject to the understanding that a majority of the Short Season has been previously sold. Any amounts attributable to Advertising Space provided to the Company during the Short Season shall reduce the amount of Advertising Space to be provided to the Company in the tenth (10") television broadcast season. 2.2 Determination of Dollar Amount of Advertising Services. The News Parties agree that the dollar amount of Advertising Services to be provided to the Company pursuant to this Agreement shall be based upon advertising prices which are charged by the News Parties to similarly situated parties based upon similar volume placement, amount and other factors relevant to the pricing of advertising services, but in no event shall the dollar amount charged for Advertising Services to be provided to the Company 2 3 pursuant to this Agreement be greater than the prices charged, on average, to the top twenty advertisers on the Advertising Space platform in question. 2.3 Approval Over Content. The News Parties shall have final approval over all content exhibited under this Agreement to insure that such content meets the News Parties' editorial standards, which approval shall not be unreasonably withheld. ARTICLE 3 PROMOTION, PROGRAMMING AND DISTRIBUTION 3.1 Promotional Services. During the Effective Period. the News Parties agree to provide, to cause Controlled Affiliates to provide and to use commercially reasonable efforts to cause Non-Controlled Affiliates to provide, at least $120 million (valued pursuant to Section 3.5) of Promotional Services (as more fully described in Section 3.2, 3.3 and 3.4) in the Territory on television and cable properties, film properties, print media and News America Digital Publishing's Internet sites owned by the News Parties, (the Controlled Affiliates and the Non-Controlled Affiliates (the "Promotional Channels"). The minimum inherent market value of Promotional Services to be provided to the Company during each television broadcast season is set forth opposite the respective season on Schedule 3 attached hereto. 3.2 Promotions. Attached as Schedule 4 is a list of various forms of Promotional Services to be provided to the Company during a television broadcast season that will be provided by the News Parties in the United States pursuant to the Related Agreements (the "Promotional List"). The Parties shall use the Promotional List as a benchmark for their determination of the nature, volume and placement of the Promotional Services (in addition to Promotional Services that may be provided pursuant to Section 3.3 and 3.4) to be provided to the Company each season. The Parties recognize that the Promotional List is a list with respect to Promotional Services in the United States and that the Promotional Services to be provided to the Company in the Territory will differ, but the Parties also acknowledge and agree, to the extent practicable, that the Promotional Services in the Territory will be based upon a similar nature, volume, placement, amount and other factors that were relevant to the creation of the Promotional List subject to the understanding that the News Parties' international assets differ significantly from their domestic assets and that the allocation of Promotional Services must be adjusted accordingly. The Parties shall meet during the Upfront Period to determine the Promotional Services to be allocated to the Company on which Promotional Channels for the season beginning in September of such year. The Parties intend that all of such Promotional Services for that season will be allocated at that time, subject to reasonable flexibility as required for changes in unforeseen circumstances. After the allocation of Promotional Services is decided upon during the Upfront Period, the Company shall coordinate directly with the particular Controlled Affiliate or Non-Controlled Affiliate with which the Company has chosen to place such Promotional Services. The News Parties shall use commercially reasonable efforts to satisfy, and to cause the Controlled Affiliates and Non-Controlled Affiliates to satisfy, all requests made by the Company in connection with the placement of ail Promotional Services. The Parties agree that they will pro rate, to the extent practicable, Promotional Services during the Short Season, subject to the understanding that a majority of the Short Season has been previously produced. Any amounts attributable to Promotional Services provided to the Company during the Short Season shall reduce the amount of Promotional Services to be provided to the Company in the tenth (10th) television broadcast season. 3.3 Programming - Timing, Production and Content. The Company and the News Parties shall use commercially reasonable efforts to enter into co-production agreements covering the timing, budgeting, production, intellectual property rights, talent utilized, scheduling, locations, exhibition, 3 4 distribution and content of production services similar, to the extent practicable, to the production services to be provided by the News Parties in the United States pursuant to the Related Agreements subject to the understanding that News Parties' international assets differ significantly from their domestic assets, and that the allocation of production services must be distributed accordingly: 3.4 Distribution. The News Parties agree to cause Controlled Affiliates to obtain or provide (as and when available, subject to existing obligations and business plans) and to use commercially reasonable efforts to cause Non-Controlled Affiliates to obtain or provide distribution for Health Related Content in the Territory. 3.5 Determination of' Inherent Market Value of Promotional Services. The News Parties agree that they will provide at least the Inherent Market Value of Promotional Services to the Company during each broadcast season as set forth opposite such season on Schedule 3. As used herein, "Inherent Market Value" means a value determined after taking into consideration (i) the prices which are charged by the News Parties to similarly situated parties (to the extent the News Parties shall sell such services), the opportunity costs of the News Parties and its out of pocket costs and expenses, (ii) the value derived by the Company from such Promotional Services and (iii) similar pricing structures employed in comparable relationships, including the relationship among CBS and Medscape, Sportsline and MarketWatch. The Company shall have the right to audit the Inherent Market Value of Promotional Services provided to the Company each broadcast season pursuant to Article 7 hereof. 3.6 Payment of Expenses for Promotional Services. The News Parties shall invoice the Company on a monthly basis during each broadcast season for the Company's share of production costs associated with the Promotional Services provided during the previous month. The Company shall remit such production costs to the News Parties within 30 days of the Company's receipt of the invoice. ARTICLE 4 MAINTENANCE OF RECORDS 4.1 Records. Each Party shall maintain books and records directly related to the subject matter of this Agreement that are sufficient to verify any amounts deemed paid, payable or credited pursuant to this Agreement. Not more than once during any twelve month period, each Party may conduct an inspection of the other's books and records for the sole purpose of verifying such amounts and/or statistics. Such inspections shall be conducted upon reasonable prior notice, at the Parties' normal places of business, during normal business hours and in a manner so as to minimize disruptions to the Parties' normal course of business. No Party shall be permitted to copy or duplicate any of the books and records of the other Party during the course of any such inspection. The Parties acknowledge that the books and records of the other Party, including the information contained therein are of a confidential nature and, accordingly, shall be included in the "Information" that is subject to the provisions of Article 8 hereof. ARTICLE 5 REPRESENTATIONS, WARRANTIES AND COVENANTS 5.1 Mutual Representations and Warranties. Each of the News Parties represents and warrants to the Company and the Company represents and warrants to the News Parties that: 4 5 (a) it is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has the full power and authority to carry out its business as now conducted and to own its assets property and business: (b) all corporate and other proceedings required to be taken by it or on its behalf to authorize its entry into this Agreement have been duly and validly taken, and this Agreement has been duly and validly executed and delivered by it and constitutes a valid and binding agreement in accordance with its terms; and (c) the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not result in a default under or violate any material agreement to which it is a party or by which it is bound, or violate any provisions of its organizational documents. 5.2 News Parties Covenants. Each of the News Parties covenants and agrees that News Corp shall he able to procure from the News Parties, their Controlled Affiliates, Non-Controlled Affiliates or others during the Effective Period promotional channels and advertising space comparable to the Promotional Channels and Advertising Space owned or available to them as of the date hereof, to the extent necessary to provide the Media Services. ARTICLE 6 INDEMNIFICATION 6.1 The further agreements entered into pursuant to this Agreement shall contain customary indemnification provisions with respect to content and other matters. ARTICLE 7 DISPUTE RESOLUTION RE VALUATION 7.1 Dispute Resolution. If the Company shall dispute the News Parties valuation of any Media Services provided by the News Parties hereunder, the Company shall (no later than 60 days after receipt of the Services Statement after the end of the applicable broadcast season) send a notice to the News Parties detailing the claimed error and the amount and nature of the error and naming an independent nationally recognized accounting firm (the "Dispute Notice"). If the News Parties do not agree with the Dispute Notice or the Parties fail to resolve all matters set forth in the Dispute Notice within 30 days after receipt of the Dispute Notice, the News Parties shall forward a copy of the Dispute Notice along with a statement of the News Parties' position to the Media Valuation Expert (defined below), which shall resolve the valuation dispute within 90 days of receipt of such Dispute Notice in accordance with valuation standards set forth in Sections 2.2 and 3.5 hereof. If the agreed upon value of the Media Services as determined pursuant to this Section 7.1 is less than the value of Media Services to be provided to the Company in the applicable television broadcast season as set forth on Schedules 1 and 3 hereof, the difference between such values shall be added to the amount of Advertising Services and Promotional Services, as applicable, to be provided to the Company during the next broadcast season. If the agreed upon value of the Media Services as determined pursuant to this Section 7.1 is more than the value of Media Services to be provided to the Company in the applicable television broadcast season as set forth on Schedules 1 and 3 hereof, the difference between such values shall be subtracted from the amount of Advertising Services and Promotional Services, as applicable, to be provided to the Company during the next broadcast season. 5 6 7.2 Fees and Expenses. The fees and expenses of the Media Valuation Expert shall be borne by the News Parties, unless the Media Valuation Expert determines that the valuation set forth in the Services Statement is correct or the value of the Media Services is greater than that set forth in the Services Statement, in which event the fees and expenses of the Media Valuation Expert shall be borne by the Company. The determination of value pursuant to this Article 7 shall be final and binding on the Parties. As used herein, the term "Media Valuation Expert" means an independent nationally recognized accounting firm mutually selected by the accounting firm set forth in the Dispute Notice and an independent nationally recognized accounting firm selected by the News Parties. The Parties shall cause the Media Valuation Expert to enter into a confidentiality agreement in form and substance acceptable to the Parties and the Media Valuation Expert. ARTICLE 8 CONFIDENTIALITY 8.1 Nondisclosure. Each Party acknowledges that it will have access to certain information and materials concerning the other Party's business, plans, customers, technology and products that are confidential and of substantial value to such Party (referred to in this Agreement as "Information"), which value would be impaired if such Information were disclosed to third persons. Except as otherwise expressly provided herein, each Party agrees to maintain all Information received from the other (the "Disclosing Party"), including the terms and conditions of this Agreement, in confidence and agrees not to disclose or otherwise make such Information available to any third Person without the prior written consent of the Disclosing Party. Subject to the use restrictions set forth in this Section 8.1, the News Parties may disclose Information provided by the Company hereunder to Controlled Affiliates and Non-Controlled Affiliates and their Authorized Representatives to the extent such disclosure is necessary for the News Parties to perform their obligations under this Agreement. Subject to the use restrictions set forth in this Section 8.1, the Company may disclose Information provided by the News Parties hereunder to Affiliates of the Company and its Authorized Representatives to the extent such disclosure is necessary for the Company to purchase Media Services pursuant to this Agreement. As used herein, the term "Affiliate" means, with respect to any Person, any other Person that controls, through the ability to exercise 50% or more of the voting power of such Person, or is so controlled by or is under such common control with such Person; the term "Authorized Representative" means, with respect to any Person, only those employees and agents of such Person that have been appraised of the obligations contained in this Article 8 and have agreed to adhere thereto; provided that under no circumstances shall Authorized Representatives include any Person that has an affiliation of any nature with any Competitor of the Disclosing Party, including without limitation, any advertising agency which has, or may, do business with the Disclosing Party; and the term "Person" means any individual person, corporation, partnership, limited liability company, trust, unincorporated organization, association or other entity. 8.2 Exclusions. The foregoing shall not apply to Information which: (a) is or becomes a matter of public knowledge through no fault of or action by the receiving Party; (b) was rightfully in the receiving Party's possession prior to disclosure by the Disclosing Party; (c) subsequent to disclosure, is rightfully obtained by the receiving Party from a third Person who is lawfully in possession of such Information without restriction; 6 7 (d) is independently developed by the receiving Party without resort to Information which is confidential under this Agreement; or (e) is required by law, regulation, governmental agency or judicial order to be disclosed. 8.3 Return of Information. Whenever reasonably requested by a Disclosing Party, a receiving Party shall immediately return to the Disclosing Party, all Information or, at the Disclosing Party's option, shall destroy all such Information as the Disclosing Party may designate and provide to the Disclosing Party written certification of destruction. 8.4 Publicity. The timing and content of any press release regarding any aspect of this Agreement or the Related Agreements (whether in electronic, print or other media) shall be subject to the prior written approval of both Parties, which approval shall not be unreasonably withheld. 8.5 Survival. Each receiving Party' s obligation of confidentiality pursuant to this Article 10 shall survive any termination or expiration of this Agreement for of a period of two years from the date of any such expiration or termination, and thereafter shall terminate and be of no further force or effect. ARTICLE 9 GENERAL PROVISION'S 9.1 Governing Law. This Agreement will be interpreted and governed by the laws of the State of Delaware. 9.2 Independent Contractors. The relationship of the Company and the News Parties established by this Agreement is that of independent contractors, and nothing contained in this Agreement will be construed to constitute the Parties as partners, joint venturers, co-owners or otherwise as participants in a joint or common undertaking. 9.3 Subcontractors. Each Party shall have the right to appoint third person subcontractors and to otherwise delegate its obligations hereunder, it being understood and agreed that each Party shall remain in all respects fully responsible for all of such Party's obligations hereunder and any Party's appointment of a subcontractor or delegation of its obligations otherwise shall not relieve such Party of any of its obligations hereunder. 9.4 Modification. No amendment or modification to this Agreement shall be effective unless agreed to by the Parties in writing, and no waiver of any rights hereunder shall be effective unless assented to in writing by the Party waiving such right. 9.5 Force Majeure. Neither Party will be liable for any failure or delay in its performance under this Agreement, except for payment obligations, due to acts of God, acts of civil or military authority, fire, electrical shortages, failure of telecommunication lines (including, without limitation, Internet access equipment or lines), epidemic, flood, earthquake, riot, war, sabotage, governmental action or any other event beyond the reasonable control of such Party and its Affiliates (collectively, "Events of Force Majeure"). A delayed party shall nevertheless give the other Party written notice of such Event of Force Majeure promptly and shall use its reasonable efforts to correct such failure or delay in performance. Notwithstanding the foregoing, an Event of Force Majeure shall not relieve the News 7 8 Parties from providing at a later date the Media Services which were not provided as a result of the Force Majeure. 9.6 Headings. The headings and captions used in this Agreement are for convenience of reference only, and shall not in any way affect the interpretation of the provisions of this Agreement. 9.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. 9.8 Assignment. Neither Party may assign its rights under this Agreement, whether by operation of law or otherwise, without the prior written consent of the other Party, except that either Party may assign its rights under this Agreement to (a) an Affiliate, for so long as such entity remains an Affiliate of the assigning Party during the term of the assignment, (b) any entity into which the Party has merged or which has otherwise succeeded to all or substantially all of its business and assets to which this Agreement pertains, by merger, reorganization or otherwise, and which has assumed in writing or by operation of law the assigning Party's obligations under this Agreement; provided further that the assigning Party shall remain liable for all obligations under this Agreement. Subject to the previous sentences, (the rights and liabilities of the Parties hereto will bind and inure to the benefit of their respective permitted successors, executors and administrators, as the case may be. 9.9 Severability. If any provision of this Agreement is held to be invalid by a court of Competent jurisdiction, then the remaining provisions will nevertheless remain in full force and effect. The Parties agree to renegotiate in good faith any term held invalid and to be bound by the mutually agreed substitute provision. 9.10 Notices. All notices required or permitted under this Agreement will be in writing and will be deemed given: (a) when delivered personally (b) when received, if sent by confirmed facsimile transmission, or by registered or certified mail, return receipt requested, postage prepaid; or (c) one day after deposit with a commercial overnight carrier specifying next day delivery, with written verification of receipt. All communications will be sent to the following respective addresses or to such other address as may be designated by a Party by giving written notice to the other Party pursuant to this Section. 8 9 If to the Company: c/o Healtheon/WebMD Corporation 400 The Lenox Building Atlanta, Georgia 30326, USA Telephone: (404) 479-7600 Telecopier: (404) 479-7651 Attention: Jeffrey T. Arnold Chief Executive Officer and c/o The News Corporation Limited 1211 Avenue of the Americas New York, New York 10036 Phone: (212) 852-7007 Fax: (212) 768-2029 Attention: Arthur M. Siskind, Esq. Senior Executive Vice President and Group General Counsel With a copy to: Nelson Mullins Riley & Scarborough, L.L.P. Bank of America Corporate Center Suite 2600 100 Tryon Street Charlotte, North Carolina 28202 Telecopier: (704) 377-4814 Attention: H. Bryan Ives III, Esq. C. Mark Kelly, Esq. If to the News Parties: c/o The News Corporation Limited 1211 Avenue of the Americas New York, New York 10036 Phone: (212) 852-7007 Fax: (212) 768-2029 Attention: Arthur M. Siskind, Esq. Senior Executive Vice President and Group General Counsel With a copy to: Squadron, Ellenoff, Plesent & Sheinfeld, LLP 551 Fifth Avenue New York, New York 10176 Telecopier: (212) 697-6686 Attention: Joel I. Papernik, Esq. 9 10 9.11 No Waiver. The failure of either Party to enforce any term or condition of this Agreement will not constitute a waiver of such Party's rights to enforce subsequent breaches of any term or condition under this Agreement. 9.12 Injunctive Relief. Each Party agrees that there may be no adequate remedy at law available to the other Party in the event of certain breaches of this Agreement and that the other Party, in addition to any other rights which may be available to it, shall have the right to seek specific performance or relief as applicable. In the event of any breach or threatened breach of such provisions. 10 11 Each Party has read, understands and agrees to the terms and conditions of this Agreement and the undersigned are duly authorized to sign this Agreement. EASTRISE PROFITS LIMITED By: /s/ --------------------------------------------------- Name: Lawrence A. Jacobs Title: Director WEBMD INTERNATIONAL LLC By: IJV Holdings, Inc., as Member /s/ --------------------------------------------------- Name: Lawrence A. Jacobs Title: Sr. Vice President By: HW International Holdings, Inc., as Member /s/ --------------------------------------------------- Name: W. Michael Heekin Title: Vice President The undersigned, by its signature below, hereby unconditionally guarantees the full and prompt payment and performance of all obligations of the News Parties, their Controlled Affiliates and Non-Controlled Affiliates set forth in this Agreement. This is a guaranty of payment and not of collection. News Corp hereby waives the right to require the Company to proceed against the News Parties or any other person or to require the Company to pursue any other remedy or enforce any other right. THE NEWS CORPORATION LIMITED By: /s/ ------------------------------------------------ Its: Arthur Siskind Director EX-10.9 10 ASSIGNMENT AND ASSUMPTION AGREEMENT 1 EXHIBIT 10.9 ASSIGNMENT AND ASSUMPTION AGREEMENT THIS ASSIGNMENT AND ASSUMPTION AGREEMENT(the "Agreement") is dated as of January 26, 2000, by and between AHN/FIT INTERNET, LLC, a Delaware limited liability company ("Internet LLC"), and H/W HEALTH & FITNESS, LLC, a Delaware limited liability company ("H/W"), Internet LLC is hereinafter sometimes referred to as "Assignor." H/W is hereinafter sometimes referred to as "Assignee." RECITALS: A. Pursuant to that certain Master Strategic Alliance Agreement dated as of December 6, 1999, by and among Healtheon/WebMD Corporation, The News Corporation Limited and Fox Entertainment Group, Inc. (the "Alliance Agreement"). Assignor has agreed to assign to Assignee all of Assignor's right, title and interest under, in and to all of its assets (other than cash and the assets associated with the Galaxy search engine), as more particularly described in the Alliance Agreement (the "Assets"). Any capitalized terms not otherwise defined in this Agreement shall have the meaning ascribed to such terms in the Alliance Agreement. B. Pursuant to the Alliance Agreement, the parties thereto have agreed to cause Assignee to assume and to fully perform and satisfy and be liable for all of the liabilities and obligations of Assignor (other than loans from its members), as more particularly described in the Alliance Agreement (the "Assumed Liabilities"). AGREEMENT: NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. ASSIGNMENT. Assignor hereby grants, sells, assigns, transfers, conveys and delivers to Assignee, its successors and assigns, all of Assignor's rights, title and interest under, in and to the Assets. 2. ASSUMPTION OF ASSUMED LIABILITIES. Assignee hereby expressly assumes and agrees to pay, perform and/or discharge in accordance with their terms the Assumed Liabilities. 3. FURTHER ASSURANCES. Each of Assignor and Assignee agree to execute such other documents and take such other actions as may be reasonably necessary or desirable to confirm or effectuate the assumption contemplated hereby. 4. BINDING EFFECT. This Agreement and the covenants and agreements herein contained shall be binding upon and inure to the benefit of Assignee and its successors and assigns and shall inure to the benefit of Assignor and its successors and assigns. 2 5. NO MODIFICATION OF ALLIANCE AGREEMENT. This Agreement is delivered pursuant to the Alliance Agreement and is subject in all respects to the provisions thereof and is not meant to alter, enlarge or otherwise modify the provisions of the Alliance Agreement. 6. MODIFICATION. This Agreement may be modified or supplemented only by written agreement of the parties hereto. [SIGNATURE PAGE FOLLOWS] -2- 3 IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first written above. AHN/FIT INTERNET, LLC By: FIT TV Holdings, LLC, its Managing Member /s/ ------------------------------------------- By: Its: H/W HEALTH & FITNESS, LLC By: AHN/FIT Internet, LLC, its Sole Member /s/ ------------------------------------------- By: Its: -3- EX-10.10 11 STOCK PURCHASE AGREEMENT 1 EXHIBIT 10.10 STOCK PURCHASE AGREEMENT This STOCK PURCHASE AGREEMENT is dated as of the 26th day of January, 2000 by and among Healtheon/WebMD Corporation, a Delaware corporation with its principal office at 400 The Lenox Building, 3399 Peachtree Road NE, Atlanta, Georgia 30326 (the "Company"), and Janus Capital Corporation ("Janus"). WHEREAS, the Company desires to issue and sell to Janus pursuant to this Agreement shares (the "Shares") of the authorized but unissued shares of common stock, $.0001 par value per share, of the Company (the "Common Stock"); and WHEREAS, Janus, wishes to purchase the Shares on the terms and subject to the conditions set forth in this Agreement. NOW THEREFORE, in consideration of the mutual agreements, representations, warranties and covenants herein contained, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following respective meanings: (a) "Affiliate" of a party means any corporation or other business entity controlled by, controlling or under common control with such party. For this purpose "control" shall mean direct or indirect beneficial ownership of fifty percent (50%) or more of the voting interest in such corporation or other business entity. (b) "Assets" of a Person shall mean all of the assets, properties, businesses and rights of such Person of every kind, nature, character and description, whether real, personal or mixed, tangible or intangible, accrued or contingent, or otherwise relating to or utilized in such Person's business, directly or indirectly, in whole or in part, whether or not carried on the books and records of such Person, and whether or not owned in the name of such Person or any Affiliate of such Person and wherever located. (c) "Closing Date" means the date of the Closing. (d) "Consent" shall mean any consent, approval, authorization, clearance, exemption, waiver, or similar affirmation by any Person pursuant to any Contract, Law, Order, or Permit. (e) "Contract" shall mean any written or oral agreement, arrangement, commitment, contract, indenture, instrument, lease, obligation, plan, restriction, understanding or undertaking of any kind or character, or other document to which any Person is a party or by which such Person is bound or affecting such Person's capital stock, Assets or business. 2 (f) "Exchange Act" means the Securities Exchange Act of 1934, as amended, and all of the rules and regulations promulgated thereunder. (g) "Governmental Entity" shall mean any government or any agency, bureau, board, directorate, commission, court, department, official, political subdivision, tribunal, or other instrumentality of any government, whether federal, state or local, domestic or foreign. (h) "HSR Act" shall mean Section 7A of the Clayton Act, as added by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder. (i) "Knowledge" shall mean with respect to any Party, with respect to any matter in question, that any of the Chief Executive Officer, Chief Financial Officer, General Counsel or Controller of such Party, has actual knowledge of such matter. (j) "Law" shall mean any code, law, ordinance, regulation, reporting or licensing requirement, rule, or statute applicable to a Person or its Assets, Liabilities or business, including those promulgated, interpreted or enforced by any Regulatory Authority. (k) "Litigation" shall mean any action, suit, arbitration, filed cause of action, filed claim, filed complaint, criminal prosecution, demand letter, governmental or other examination or investigation, hearing, inquiry, administrative or other proceeding, or notice (written or oral) by any Person alleging potential Liability or requesting information relating to or affecting a Party, its business, its Assets (including Contracts related to it), or the transactions contemplated by this Agreement. (l) "Material" for purposes of this Agreement shall be determined in light of the facts and circumstances of the matter in question; provided that any specific monetary amount stated in this Agreement shall determine materiality in that instance. (m) "Material Adverse Effect" on a Party shall mean an event, change or occurrence which, individually or together with any other event, change or occurrence, has a Material adverse impact on (i) the financial position, business, or results of operations of such Party and its Subsidiaries, taken as a whole, or (ii) the ability of such Party to perform its obligations under this Agreement or to consummate the other transactions contemplated by this Agreement; provided that "Material Adverse Effect" shall not be deemed to include events, changes or occurrences (x) generally affecting the healthcare information technology industry, or (y) generally affecting the overall U.S. economy. (n) "Order" shall mean any administrative decision or award, decree, injunction, judgment, order, quasi-judicial decision or award, ruling, or writ of 2 3 any federal, state, local or foreign or other court, arbitrator, mediator, tribunal, administrative agency or Regulatory Authority. (o) "Permit" shall mean any federal, state, local, and foreign governmental approval, authorization, certificate, consent, easement, filing, franchise, letter of good standing, license, notice, permit, qualification, registration or right of or from any Governmental Entity (or any extension, modification, amendment or waiver of any of these) to which any Person is a party or that is or may be binding upon or inure to the benefit of any Person or its securities, Assets or business, or any notice, statement, filing or other communication to be filed with or delivered to any Governmental Entity. (p) "Person" shall mean a natural person or any legal, commercial or Governmental Entity, such as, but not limited to, a corporation, general partnership, joint venture, limited partnership, limited liability company, trust, business association, group acting in concert, or any person acting in a representative capacity. (q) "Registration Rights Agreement" shall mean that certain Registration Rights Agreement, dated as of the date hereof, among the Company and the Janus. (r) "Regulatory Authorities" shall mean, collectively, the Federal Trade Commission, the United States Department of Justice, and all foreign, federal, state and local regulatory agencies and other Governmental Entities or bodies having jurisdiction over the Parties and their respective Assets, employees, businesses and/or Subsidiaries, including the NASD and the SEC. (s) "SEC" shall mean the Securities and Exchange Commission. (t) "Securities Act" shall mean the Securities Act of 1933, as amended, and all of the rules and regulations promulgated thereunder. (u) "Subsidiaries" shall mean all those corporations, partnerships, associations, or other entities of which the entity in question owns or controls 50% or more of the outstanding equity securities either directly or through an unbroken chain of entities as to each of which 50% or more of the outstanding equity securities is owned directly or indirectly by its parent; provided, there shall not be included any such entity acquired through foreclosure or any such entity the equity securities of which are owned or controlled in a fiduciary capacity. 3 4 2. Purchase and Sale of Shares. 2.1 Purchase and Sale. Subject to and upon the terms and conditions set forth in this Agreement, the Company agrees to issue and sell to Janus, and Janus, hereby agrees to purchase from the Company, at the Closing, 15,000,000 shares of Common Stock at a purchase price of $62.00 per share. The total purchase price payable by Janus for the shares of Common Stock that Janus is hereby agreeing to purchase is 930,000,000. 2.2 Closing. The closing of the transactions contemplated under this Agreement (the "Closing") shall take place on the second business day after the execution of this Agreement by the Company and Janus. Upon Closing, the Company shall deliver the Common Stock purchased by Janus to Janus's custodian via electronic delivery, registered in the name of Janus (or in such nominee or custodial name as shall be specified by Janus), against payment of the purchase price therefor by wire transfer of immediately available funds to such account or accounts as the Company shall designate in writing. 3. Representations and Warranties of the Company The Company represents and warrants to Janus as follows: 3.1 Organization, Standing, and Power. The Company is a corporation duly organized, validly existing, and in good standing under the Laws of the State of Delaware, and has the power and authority to carry on its business as it has been and is now being conducted. The Company and each of its Subsidiaries is duly qualified or licensed to transact business as a foreign corporation and is in good standing in all jurisdictions where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed, except for such jurisdictions in which the failure to be so qualified or licensed would not have, individually or in the aggregate, a Material Adverse Effect on the Company. Copies of the Certificate of Incorporation and all amendments thereto of the Company and the bylaws, as amended, of the Company and copies of all resolutions adopted and action taken by the stockholders or Board of Directors and all committees thereof of the Company, which have been made available to Janus for review, are true and complete in all Material respects and accurately reflect all proceedings of the stockholders and Board of Directors (and all committees thereof) of the Company. 3.2 Authorization of Agreement; No Breach. The execution, delivery and performance of this Agreement and the Registration Rights Agreement has been duly authorized by all necessary corporate action of the Company. This Agreement constitutes, and all agreements and other instruments and documents to be executed and delivered by the Company pursuant to this Agreement, including the Registration Rights Agreement, will constitute, legal, valid and binding obligations of the Company enforceable against it in accordance with their respective terms, except to the extent such enforceability is subject to (i) laws of general application relating to bankruptcy, insolvency, moratorium and the relief of debtors and (ii) the availability of specific 4 5 performance, injunctive relief or other equitable remedies. Except in such case, individually or in the aggregate, that will not result in a Material Adverse Effect on the Company, the execution, delivery and performance of this Agreement and the agreements and other documents and instruments to be executed and delivered by the Company pursuant to this Agreement and the consummation of the transactions contemplated hereby and thereby will not (i) violate or result in a breach of or default under the certificate of incorporation or bylaws of the Company or any of its Subsidiaries or any other Material Contract to which the Company or any of its Subsidiaries is a party or is bound; (ii) to the Knowledge of the Company and its Subsidiaries, violate any Law, Order, administrative decision or award of any court, arbitrator, mediator, tribunal or Regulatory Authority applicable to or binding upon the Company or its Subsidiaries or upon their respective securities, Assets or business; or (iii) create a Material lien upon the securities, Assets or business of the Company or any of its Subsidiaries. 3.3 Capital Stock. (a) As of November 11, 1999, the authorized capital stock of the Company consists of: (i) 600,000,000 shares of the Common Stock, of which 146,204,261 shares (plus any shares issued upon exercise of the Company's Options and Warrants (as defined in Section 3.3(b) since November 11, 1999) are issued and outstanding and (ii) 5,000,000 shares of Preferred Stock, $0.0001 par value per share, none of which shares are issued and outstanding. All of the outstanding shares of the Common Stock have been duly authorized and validly issued, and are fully paid and nonassessable, and were issued in Material compliance with the Securities Act and applicable state securities Laws, except to the extent that non-compliance would not have a Material Adverse Effect on the Company. (b) As of November 11, 1999, an aggregate of 63,595,222 shares of the Common Stock (less any shares of Common Stock subject to the Company's Options and Warrants that have been exercised since November 11, 1999) are subject to issuance pursuant to outstanding options to purchase the Common Stock under the Company's stock option plans and outstanding warrants to purchase the Company's Common Stock. (Stock options granted by the Company pursuant to its stock option plans and warrants are referred to in this Agreement as the "Company Options and Warrants".) All Company Options and Warrants were issued or granted in Material compliance with the Securities Act and applicable state securities Laws pursuant to a valid exemption from registration under the Securities Act and all applicable state securities Laws. (c) Except as set forth above, in the Company's SEC Documents and in Section 3.3(c) of the Company Disclosure Letter, as of the date of this Agreement, there are no subscriptions, options, warrants, equity securities, partnership interests or similar ownership interests, calls, rights (including preemptive rights), commitments or agreements of any character to which the Company or any of its Subsidiaries is a party or by which it is bound obligating the Company or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or acquisition of, any shares of capital stock, partnership interests or similar ownership interests of the Company or any of its Subsidiaries or obligating the Company or any of its Subsidiaries to grant, extend, 5 6 accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right, commitment or agreement. 3.4 The Company SEC Filings; Financial Statements. The Company has filed various reports, schedules, forms, statements and other documents (which are publicly available) with the SEC pursuant to applicable Securities Laws from January 1, 1999 to the date of this Agreement (the "Company SEC Documents"), and the Company SEC Documents constitute all of the documents required to have been filed by the Company pursuant to such Laws for such period. As of their respective dates, or if amended, as of the date of the last such amendment, the Company SEC Documents complied in all Material respects, with the requirements of the Securities Act or the Exchange Act, as the case may be, and none of the Company SEC Documents contained when filed any untrue statement of a Material fact or omitted, or will omit, to state any Material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, or are to be made, not misleading. Except to the extent information contained in any the Company SEC Document has been revised or superseded by a later filed the Company SEC Document, none of the Company SEC Documents (including any and all financial statements included therein) contains any untrue statement of a Material fact or omits to state a Material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The consolidated financial statements of the Company included in the Company SEC Documents when filed fairly presented the consolidated financial position of the Company and its consolidated Subsidiaries as at the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the respective periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein) and have been prepared in conformity with GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto). 3.5 Absence of Undisclosed Liabilities. Except as disclosed on the Company SEC Documents, the Company does not have any Material (individually or in the aggregate) Liabilities, other than Liabilities incurred in the ordinary course of business since September 30, 1999 or Liabilities arising under this Agreement. 3.6 Absence of Certain Changes or Events. Since September 30, 1999, there has not occurred (i) any events, changes or occurrences (other than events or condition affecting the economy generally) which have had, or are reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company, (ii) any declaration, setting aside or payment of any dividend or distribution of any kind by the Company on any class of its capital stock or (iii) any change in the Company's accounting methods, principles or practices utilized by or affecting the Company except as required by concurrent changes in GAAP. 3.7 Compliance with Laws. The business of the Company has been and is being conducted in compliance with all applicable Laws, except for violations or failures to so comply that could not reasonably be expected, individually or in the aggregate, to 6 7 have Material Adverse Effect on the Company; and no investigation or review by any Governmental Entity with respect to the Company is pending or, to the Knowledge of the Company, threatened in writing, other than, in each case, those which could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on the Company. 3.8 Governmental Approvals; Required Consents. No filing or registration with, or Consent of, any Governmental Entity or any other third party is required by or with respect to the Company in connection with the execution and delivery of this Agreement or is necessary for the consummation of the transactions contemplated hereby except such other Consents, registrations and filings the failure of which to obtain or make could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on the Company. 3.9 The Company Common Stock. The Company's Common Stock to be issued in accordance with the terms and provisions of this Agreement will, when so issued, be duly authorized, validly issued, fully paid and non-assessable. 3.10 Orders and Litigation. Except as set forth in the Company SEC Documents, there are no outstanding Orders against the Company or any of its Subsidiaries, any of their Assets or business, or, to the Knowledge of the Company, any of the Company's or its Subsidiaries' current or former directors or officers (during the period served as such) or any other person whom the Company or any of its Subsidiaries has agreed to indemnify, as such. Except as set forth in the Company SEC Documents, there is no Material Litigation pending or, to the Knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries, any of their Assets or business, or, to the Knowledge of the Company, any of the Company's or its Subsidiaries' current or former directors or officers or any other person whom the Company or any of its Subsidiaries has agreed to indemnify, as such; nor is there any reasonable basis for any such Litigation that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on the Company. 4. Representations and Warranties of the Janus. Janus represents and warrants to the Company as follows: 4.1 Authorization. All action on the part of Janus and, if applicable, its officers, directors and shareholders necessary for the authorization, execution, delivery and performance of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated herein and therein has been taken. Each of this Agreement and the Registration Rights Agreement constitutes the legal, valid and binding obligation of Janus, enforceable against Janus in accordance with its terms, except as such may be limited by bankruptcy, insolvency, reorganization or other laws affecting creditors' rights generally. Janus has all requisite power to enter into each of this Agreement and the Registration Rights Agreement and to carry out and perform its obligations under the terms of this Agreement and the Registration Rights Agreement. 4.2 Purchase Entirely for Own Account, Etc. Janus is acquiring the 7 8 Shares for its own account, and not with a view to, or for sale in connection with, any distribution of the Shares in violation of the Securities Act. Except as contemplated by this Agreement, Janus has no present agreement, undertaking, arrangement, obligation or commitment providing for the disposition of the Shares. Janus represents that is has not been organized, reorganized or recapitalized specifically for the purpose of investing in the Shares. Janus agrees not to assign, sell, pledge, transfer or otherwise dispose of or transfer any Shares unless registered under the Securities Act and applicable state securities laws, or an opinion is given by counsel satisfactory to the Company that such registration is not required. The Company may affix a legend to any certificates representing the Shares to the foregoing effect. 4.3 Investor Status; Etc. Janus certifies and represents to the Company that at the time Janus acquires any of the Shares, Janus will be an "accredited investor" as defined in Rule 501 of Regulation D promulgated under the Securities Act and an "institutional investor" within the meaning of Section 802.64(a) of the regulations adopted under of the HSR Act. Janus's financial condition is such that it is able to bear the risk of holding the Shares for an indefinite period of time and the risk of loss of its entire investment. Janus has been afforded the opportunity to ask questions of and receive answers from the management of the Company concerning this investment and has sufficient knowledge and experience in investing in companies similar to the Company in terms of the Company's stage of development so as to be able to evaluate the risks and merits of its investment in the Company. The purchase of the Common Stock by Janus is being made directly by it in the ordinary course of business within the meaning of Section 802.64(b) of the regulations promulgated under of the HSR Act. 4.4 Shares Not Registered. Janus understands that the Shares have not been registered under the Securities Act, by reason of their issuance by the Company in a transaction exempt from the registration requirements of the Securities Act, and that the Shares must continue to be held by Janus unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration. Janus understands that the exemptions from registration afforded by Rule 144 (the provisions of which are known to it) promulgated under the Securities Act depend on the satisfaction of various conditions, and that, if applicable, Rule 144 may afford the basis for sales only in limited amounts. 4.5 No Conflict. The execution and delivery of this Agreement and the Registration Rights Agreement by Janus and the consummation of the transactions contemplated hereby and thereby will not conflict with or result in any violation of or default by Janus (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under (i) any provision of the organizational documents of Janus or (ii) any agreement or instrument, permit, franchise, license, judgment, order, statute, law, ordinance, rule or regulations, applicable to Janus or its respective properties or assets. 4.6 Brokers. Janus has not retained, utilized or been represented by any broker or finder in connection with the transactions contemplated by this Agreement. 8 9 4.7 Consents. All consents, approvals, orders and authorizations required on the part of Janus in connection with the execution, delivery or performance of this Agreement and the consummation of the transactions contemplated herein have been obtained and are effective as of the Closing Date. 5. Conditions Precedent. 5.1. Conditions to the Obligation of Janus to Consummate the Closing. The obligation of Janus to consummate the Closing and to purchase and pay for the Shares being purchased by it pursuant to this Agreement is subject to the satisfaction of the following conditions precedent: (a) The representations and warranties contained herein of the Company shall be true and correct on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date (it being understood and agreed by Janus that, in the case of any representation and warranty of the Company contained herein (i) which is not hereinabove qualified by application thereto of a materiality standard, such representation and warranty need be true and correct only in all Material respects in order to satisfy as to such representation or warranty the condition precedent set forth in the foregoing provisions of this Section 5.1 (a) or (ii) which is made as of a specific date, such representation and warranty need be true and correct only as of such specific date in order to satisfy as to such representation and warranty the condition precedent set forth in the foregoing provisions of this Section 5.1(a)). (b) The Registration Rights Agreement shall have been executed and delivered by the Company. (c) The Company shall have performed in all material respects all obligations and conditions herein required to be performed or observed by the Company on or prior to the Closing Date. (d) No proceeding challenging this Agreement or the transactions contemplated hereby, or seeking to prohibit, alter, prevent or materially delay the Closing, shall have been instituted before any court, arbitrator or governmental body, agency or official and shall be pending. (e) The purchase of and payment for the Shares by Janus shall not be prohibited by any Law or Order. (f) All instruments and corporate proceedings in connection with the transactions contemplated by this Agreement to be consummated at the Closing shall be satisfactory in form and substance to Janus, and Janus shall have received copies (executed or certified, as may be appropriate) of all documents which Janus may have reasonably requested in connection with such transactions. 5.2. Conditions to the Obligation of the Company to Consummate the Closing. 9 10 The obligation of the Company to consummate the Closing and to issue and sell to Janus the Shares to be purchased by it at the Closing is subject to the satisfaction of the following conditions precedent: (a) The representations and warranties contained herein of Janus shall be true and correct on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date (it being understood and agreed by the Company that, in the case of any representation and warranty of Janus contained herein which is not hereinabove qualified by application thereto of a materiality standard, such representation and warranty need be true and correct only in all Material respects in order to satisfy as to such representation or warranty the condition precedent set forth in the foregoing provisions of this Section 5.2(a)). (b) The Registration Rights Agreement shall have been executed and delivered by Janus. (c) Janus shall have performed in all material respects all obligations and conditions herein required to be performed or observed by the Janus on or prior to the Closing Date. (d) No proceeding challenging this Agreement or the transactions contemplated hereby, or seeking to prohibit, alter, prevent or materially delay the Closing, shall have been instituted before any court, arbitrator or governmental body, agency or official and shall be pending. (e) The sale of the Shares by the Company shall not be prohibited by any Law or Order. (f) Janus shall have executed and delivered to the Company confirmation of Janus's status as an "accredited investor" (as such term is defined in Rule 501 promulgated under the Securities Act) and an "institutional investor" (as such term is defined under 15 C.F.R. ss.802.64(a) of the HSR Act). (g) Janus shall have purchased, in accordance with this Agreement, 15,000,000 shares of the Common Stock." (h) All instruments and corporate proceedings in connection with the transactions contemplated by this Agreement to be consummated at the Closing shall be satisfactory in form and substance to the Company, and the Company shall have received counterpart originals, or certified or other copies of all documents, including without limitation records of corporate or other proceedings, which it may have reasonably requested in connection therewith. 6. Shelf Registrations, Transfer, Legends 6.1. Shelf Registration. Subject to the Registration Rights Agreement, the Company shall use its reasonable best efforts: (i) to file prior to June 11, 2000 with the SEC a registration statement for a non-underwritten offering to be made on a continuous 10 11 basis pursuant to Rule 415 of the Securities Act relating to the Common Shares underlying Janus's Shares (a "Shelf Registration") and (ii) to have the Shelf Registration declared effective as soon as possible after July 26, 2000. 6.2. Securities Law Transfer Restrictions. Janus shall not sell, assign, pledge, transfer or otherwise dispose or encumber any of the Shares being purchased by it hereunder, except (i) pursuant to an effective registration statement under the Securities Act or (ii) pursuant to an available exemption from registration under the Securities Act and applicable state securities laws and, if requested by the Company, upon delivery by Janus of an opinion of counsel reasonably satisfactory to the Company to the effect that the proposed transfer is exempt from registration under the Securities Act and applicable state securities laws. Any transfer or purported transfer of the Shares in violation of this Section 6.1 shall be voidable by the Company. The Company shall not register any transfer of the Shares in violation of this Section 6.1. The Company may, and may instruct any transfer agent for the Company, to place such stop transfer orders as may be required on the transfer books of the Company in order to ensure compliance with the provisions of this Section 6.1. 6.3. Legends. Each certificate requesting any of the Shares shall be endorsed with the legends set forth below, and Janus covenants that, except to the extent such restrictions are waived by the Company, it shall not transfer the shares represented by any such certificate without complying with the restrictions on transfer described in this Agreement and the legends endorsed on such certificate: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SAID ACT AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS EXEMPT FROM SAID ACT." 6.4. Restrictions on Transfer. In addition, Janus hereby expressly covenants and agrees that it shall not (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any of the Shares issued pursuant to this Agreement (the "Subject Stock") or any securities convertible into or exercisable or exchangeable for the Subject Stock (including, without limitation, shares of the Subject Stock or securities convertible into or exercisable or exchangeable for the Subject Stock which may be deemed to be beneficially owned by such holder in accordance with the rules and regulations of the SEC) or (ii) enter into any swap or other arrangement that transfers all or a portion of the economic consequences associated with the ownership of any Subject Stock (regardless of whether any of the transactions described in clause (i) or clause (ii) is to be settled by the delivery of Subject Stock, or such other securities, in cash or otherwise (each action described herein is referred to as a "Transfer"). Notwithstanding any provision of this Section 6.4 to the 11 12 contrary and subject to compliance with the Securities Laws, Janus may Transfer such Subject Stock to any Affiliate of Janus. 7. Miscellaneous Provisions. 7.1 Public Statements or Releases. Janus shall not make, issue, or release any announcement, whether to the public generally, or to any of its suppliers or customers, with respect to this Agreement or the transactions provided for herein, or make any statement or acknowledgment of the existence of, or reveal the status of, this Agreement or the transactions provided for herein, without the prior consent of the Company, which shall not be unreasonably withheld or delayed, provided that nothing in this Section 7.1 shall prevent any of the parties hereto from making such public announcements as it may consider necessary in order to satisfy its legal obligations, but to the extent not inconsistent with such obligations, it shall provide the other parties with an opportunity to review and comment on any proposed public announcement before it is made. 7.2 Further Assurances. Each party agrees to cooperate fully with the other party and to execute such further instruments, documents and agreements and to give such further written assurances, as may be reasonably requested by the other party to better evidence and reflect the transactions described herein and contemplated hereby, and to carry into effect the intents and purposes of this Agreement. 7.3 Rights Cumulative. Each and all of the various rights, powers and remedies of the parties shall be considered to be cumulative with and in addition to any other rights, powers and remedies which such parties may have at law or in equity in the event of the breach of any of the terms of this Agreement. The exercise or partial exercise of any right, power or remedy shall neither constitute the exclusive election thereof nor the waiver of any other right, power or remedy available to such party. 7.4 Pronouns. All pronouns or any variation thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person, persons, entity or entities may require. 12 13 7.5 Notices. (a) Any notices, reports or other correspondence (hereinafter collectively referred to as "correspondence") required or permitted to be given hereunder shall be sent by postage prepaid first class mail, courier or fax or delivered by hand to the party to whom such correspondence is required or permitted to be given hereunder. The date of giving any notice shall be the date of its actual receipt. (b) All correspondence to the Company shall be addressed as follows: Healtheon/WebMD Corporation 400 the Lenox Building 3399 Peachtree Road NE, Atlanta, Georgia 30326 Attention: Jack Dennison Copy to Counsel: Nelson Mullins Riley & Scarborough, L.L.P. Bank of America Corporate Center 100 N. Tryon Street Charlotte, North Carolina 28202 Telecopy Number: (704) 377-4814 Attention: H. Bryan Ives III (c) All correspondence to Janus shall be addressed as follows: Janus 100 Fillmore Street Denver, Co 80206 Attention: Heidi J. Walter, Vice President and Assistant General Counsel (d) Any entity may change the address to which correspondence to it is to be addressed by notification as provided for herein. 7.6 Captions. The captions and paragraph headings of this Agreement are solely for the convenience of reference and shall not affect its interpretation. 7.7 Severability. Should any part or provision of this Agreement be held unenforceable or in conflict with the applicable laws or regulations of any jurisdiction, the invalid or unenforceable part or provisions shall be replaced with a provision which accomplishes, to the extent possible, the original business purpose of such part or provision in a valid and enforceable manner, and the remainder of this Agreement shall remain binding upon the parties hereto. 7.8 Governing Law; Injunctive Relief. 13 14 (a) This Agreement shall be governed by and construed in accordance with the internal and substantive laws of Delaware and without regard to any conflicts of laws concepts which would apply the substantive law of some other jurisdiction. (b) Each of the parties hereto acknowledges and agrees that damages will not be an adequate remedy for any material breach or violation of this Agreement if such material breach or violation would cause immediate and irreparable harm (an "Irreparable Breach"). Accordingly, in the event of a threatened or ongoing Irreparable Breach, each party hereto shall be entitled to seek, in any state or federal court in Delaware, equitable relief of a kind appropriate in light of the nature of the ongoing or threatened Irreparable Breach, which relief may include, without limitation, specific performance or injunctive relief; provided, however, that if the party bringing such action is unsuccessful in obtaining the relief sought, the moving party shall pay the non-moving party's reasonable costs, including attorney's fees, incurred in connection with defending such action. Such remedies shall not be the parties' exclusive remedies, but shall be in addition to all other remedies provided in this Agreement. 7.9 Waiver. No waiver of any term, provision or condition of this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or be construed as, a further or continuing waiver of any such term, provision or condition or as a waiver of any other term, provision or condition of this Agreement. 7.10 Expenses. Each party will bear its own costs and expenses in connection with this Agreement. 7.11 Assignment. The rights and obligations of the parties hereto shall inure to the benefit of and shall be binding upon the authorized successors and permitted assigns of each party. Neither party may assign its rights or obligations under this Agreement or designate another person (i) to perform all or part of its obligations under this Agreement or (ii) to have all or part of its rights and benefits under this Agreement, in each case without the prior written consent of the other party. In the event of any assignment in accordance with the terms of this Agreement, the assignee shall specifically assume and be bound by the provisions of the Agreement by executing and agreeing to an assumption agreement reasonably acceptable to the other party. 7.12 Survival. The respective representations and warranties given by the parties hereto, and the other covenants and agreements contained herein, shall survive the Closing Date and the consummation of the transactions contemplated herein for a period of 90 days, without regard to any investigation made by any party. 7.13 Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto respecting the subject matter hereof and supersedes all prior agreements, negotiations, understandings, representations and statements respecting the subject matter hereof, whether written or oral. No modification, alteration, waiver or change in any of the terms of this Agreement shall be valid or binding upon the parties hereto unless made in writing and duly executed by parties. 14 15 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 15 16 This Stock Purchase Agreement is hereby executed as of the date first above written. COMPANY: HEALTHEON/WEBMD CORPORATION By: /s/ --------------------------------- Its: --------------------------- JANUS CAPITAL CORPORATION By: /s/ --------------------------------- Its: --------------------------- 16 EX-10.11 12 REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 10.11 HEALTHEON/WEBMD CORPORATION REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "AGREEMENT") is made and entered into as of the 26th day of January, 2000 among Healtheon/WebMD Corporation, a Delaware corporation (the "COMPANY"), and the party set forth on signature pages hereto (the "PURCHASER"). R E C I T A L S: A. The Purchaser has purchased 15,000,000 shares of the Company's Common Stock, par value $0.0001 per share (the "COMMON STOCK") pursuant to a Stock Purchase Agreement dated as of the date hereof, (the "PURCHASE AGREEMENT") between the Company and the Purchaser. B. The Company and the Purchaser desire to set forth the registration rights to be granted by the Company to the Purchaser. NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants, and conditions set forth herein and in the Purchase Agreement, the parties mutually agree as follows: A G R E E M E N T: 1. Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings: "Certificate of Incorporation" means the Amended and Restated Certificate of Incorporation of the Company as filed with the Secretary of State of the State of Delaware, as amended from time to time. "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "Common Stock" shall mean the common stock, par value $0.0001 per share, of the Company and any and all shares of capital stock or other equity securities of: (i) the Company which are added to or exchanged or substituted for the Common Stock by reason of the declaration of any stock dividend or stock split, the issuance of any distribution or the reclassification, readjustment, recapitalization or other such modification of the capital structure of the Company; and (ii) any other corporation, now or hereafter organized under the laws of any state or other governmental authority, with which the Company is merged, which results from any consolidation or reorganization to which the Company is a party, or to which is sold all or substantially all of the shares or assets of the Company, if immediately after such merger, consolidation, reorganization or sale, the Company or any Stockholders of the Company own equity securities having in the aggregate more than fifty percent (50%) of the total voting power of such other corporation. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Family Member" shall mean (a) with respect to any individual, such individual's spouse, any descendants (whether natural, adopted or in the process of adoption), any trust all of the beneficial interests of which are owned by any of such individuals or by any of such individuals together with any 2 organization described in Code Section 501(c)(3), the estate of any such individual, and any corporation, association, partnership or limited liability company all of the equity interests of which are owned by those above described individuals, trusts or organizations and (b) with respect to any trust, the owners of the beneficial interests of such trust. "Form S-3" means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the Commission which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the Commission. "Holder" shall mean the Purchaser or any of such Holder's respective successors and assigns who acquire rights in accordance with this Agreement with respect to the Registrable Securities directly or indirectly from such Holder. "Initiating Holders" shall mean any Holder or Holders of not less than 50% of the then outstanding Registrable Securities. The terms "register", "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. "Registrable Securities" means shares of Common Stock issued pursuant to the Purchase Agreement, excluding in all cases, however (including exclusion from the calculation of the number of outstanding Registrable Securities), any Registrable Securities sold by a person in a transaction (i) pursuant to a registration statement under Section 2, 3 or 4 hereof or (ii) pursuant to Rule 144 (or any successor provision) of the Securities Act. "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute promulgated in replacement thereof, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. 2. Demand Registration. In case the Company shall receive from Initiating Holders a written request that the Company effect a registration with respect to at least 2,000,000 shares of Common Stock that constitute Registrable Securities (as adjusted for stock splits, stock dividends, recapitalizations and similar events) the Company will: (a) promptly give written notice of the proposed registration to all other Holders so they may have an opportunity to consider joining in such registration, which they may do (subject to the terms and provisions of this Agreement) at their election within ten (10) days after receipt of the notice of the proposed registration by the Company; and (b) as soon as practicable, use its reasonable best efforts to effect such registration (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any 2 3 Holder or Holders joining in such request as are specified in a written request given within ten (10) days after receipt of notice from the Company pursuant to Section 2(a); provided that the Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 2: (i) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act; (ii) Prior to July 26, 2000; (iii) Within the one hundred twenty (120) day period immediately following the effective date of a registration statement pertaining to a firm commitment underwritten public offering of Common Stock for the account of a shareholder (including Purchaser) of the Company who has exercised a demand right to register shares of Common Stock (other than a registration relating solely to a Commission Rule 145 transaction, a registration relating solely to employee benefit plans, or a registration statement on Form S-3 (or any similar short-form registration statement)); (iv) Within the sixty (60) day period immediately following the effective date of a registration statement on Form S-3 (or any similar short-form registration statement) pertaining to a firm commitment underwritten public offering of Common Stock for the account of another shareholder of the Company who has exercised a demand right to register shares of Common Stock (other than a registration relating solely to a Commission Rule 145 transaction or a registration relating solely to employee benefit plans); or (v) After the Company has effected three (3) registrations pursuant to this Section 2 and such registrations have been declared or ordered effective and have remained effective for a period of at least ninety (90) consecutive days. Subject to the foregoing clauses (i) through (v), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request of the Initiating Holders. The Initiating Holders may, at any time prior to the effective date of the registration statement relating to such registration, revoke such request, without liability (except as set forth in Section 6 hereof) to the Initiating Holders or any other Holders of Registrable Securities requested to be registered pursuant to Section 2(a) hereof, by providing a written notice to the Company revoking such request. Notwithstanding the above, the Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to this Section 2 during the period starting with the date ninety (90) days prior to the Company's good faith estimate of the date of filing of (or in the case of any registration on Form S-3, forty-five (45) days prior), and ending on a date one hundred twenty (120) days after the effective date of (or in the case of any registration on Form S-3, ninety (90) days after), a Company-initiated registration statement in connection with a bona fide firm commitment underwritten registration for securities to be offered for the Company's own account (the "Intended Registration"); provided that the Company is actively employing in good faith all reasonable efforts to cause the Intended Registration to become effective and provided further that the Company gives notice to all Holders upon commencement of such period. The Holders shall be entitled to exercise their rights pursuant to Section 4 hereof with respect to an Intended Registration. An Intended Registration shall not be deemed to be a demand registration of the Holders pursuant to this Section 2. 3 4 (c) Underwriting. If the Holders propose an underwritten offering, the sale of Registrable Securities pursuant to this Section 2 must be made by means of a firm commitment underwriting through nationally recognized underwriters who are acceptable to the Company and the holders of a majority of the Registrable Securities that are proposed to be distributed through such underwriting. The right of any Holder to registration pursuant to this Section 2 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent requested by such Holder (unless mutually otherwise agreed by a majority in interest of the Holders and such Holder) to the extent provided herein. The Company and all Holders proposing to distribute Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this Section 2(c), if the underwriter determines that in its good faith view marketing factors require a limitation of the number of shares to be underwritten and so advises the Initiating Holders in writing, then the Initiating Holders shall so advise the Company and all Holders (except those Holders who have indicated to the Company their decision not to distribute any of their Registrable Securities through such underwriting) and the number of Registrable Securities that may be included in the registration and underwriting shall be allocated first to the Holders on a pro rata basis according to the number of Registrable Securities requested to be included by the Holders; second to the Company; and third to other shareholders of the Company who have requested to sell in the registration. No Registrable Securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. If at least eighty percent (80%) of the Registrable Securities requested to be registered by the Initiating Holders are not included in such registration, then the Initiating Holders may request that the Company effect an additional registration under the Securities Act of all or part of the Initiating Holders' Registrable Securities in accordance with the provisions of this Section 2, and the Company shall effect such additional registration. If any Holder disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the underwriter and the Initiating Holders. The Registrable Securities and/or other securities so withdrawn from such underwriting shall also be withdrawn from such registration; provided, however, that, if by the withdrawal of such Registrable Securities a greater number of Registrable Securities held by other Holders may be included in such registration (up to the maximum of any limitation imposed by the underwriters), then the Company shall offer to all Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities in the same proportion used above in determining the underwriter limitation. If the underwriter has not limited the number of Registrable Securities to be underwritten, the Company may include securities for its own account or the account of others in such registration if the underwriter so agrees and if the number of Registrable Securities which would otherwise have been included in such registration and underwriting will not thereby be limited. 4 5 (d) If the Company shall furnish to the Initiating Holders a certificate signed by the President of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would (because of the existence of, or in anticipation of, any acquisition, financing activity, or other transaction involving the Company, or the unavailability for reasons beyond the Company's control of any required financial statements, disclosure of information which is in its best interest not to publicly disclose, or any other event or condition of similar significance to the Company) be seriously detrimental to the Company and its shareholders for such registration statement to be filed on or before the date filing would be required and it is therefore essential to defer the filing of such registration statement, then the Company may direct that such request for registration be delayed for a period not in excess of ninety (90) days, such right to delay a request to be exercised by the Company not more than twice in any twelve (12) month period. (e) Effective Registration Statement. A demand registration requested pursuant to this Section 2 shall not be deemed to have been effected unless the registration statement relating thereto (i) has become effective under the Securities Act and any of the Registrable Securities of the Initiating Holders included in such registration have actually been sold thereunder, and (ii) has remained effective for a period of at least ninety (90) days (or such shorter period in which all Registrable Securities included in such registration have actually been sold thereunder). 3. S-3 Registration. In case the Company shall receive from any Holder or Holders a written request or requests that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, the Company will: (a) promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders; and (b) as soon as practicable, and in any event within 30 days of the receipt of such notice, file a registration statement on Form S-3 and effect all other qualifications and compliances as may be so requested and as would permit or facilitate the sale, distribution, transfer or hedging (through market transactions using brokers, in a firm commitment underwriting, in negotiated transactions or otherwise) of all or such portion of such Holder's or Holders' Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within 15 days after receipt of such written notice from the Company; provided, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 3: (i) if Form S-3 is not available for such offering by the Holders; (ii) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to register Registrable Securities and such other securities (if any) at an aggregate price to the public (net of any underwriters' discounts or commissions) of less than $10 million; (iii) if the Company has, within the twelve (12) month period preceding the date of such request, already effected three (3) registrations for the Holders pursuant to this Section 1.3; or 5 6 (iv) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance; or (v) Prior to July 26, 2000. (c) Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders and shall keep it continuously effective until such Registrable Securities have been sold pursuant thereto. (d) Notwithstanding the other provisions of this Section 3, the Company shall have the right to delay the filing of any registration statement on Form S-3 (an "S-3 Registration") otherwise required to be prepared and filed by the Company pursuant to this Section 3, or to suspend the use of any S-3 Registration, for a period not in excess of 60 days (a "S-3 BLACKOUT PERIOD") if the Company, in the good faith judgment of its Board of Directors, determines (because of the existence of, or in anticipation of, any acquisition, financing activity, or other transaction involving the Company, or the unavailability for reasons beyond the Company's control of any required financial statements, disclosure of information which is in its best interest not to publicly disclose, or any other event or condition of similar significance to the Company) that the registration and distribution of the Registrable Securities to be covered by such S-3 Registration would be seriously detrimental to the Company and its shareholders, provided that the S-3 Blackout Period shall earlier terminate on the second business day following the completion or abandonment of the relevant financing, acquisition or other transaction or upon public disclosure by the Company or public admission by the Company of such material nonpublic information or such time as such material nonpublic information shall be publicly disclosed; and provided, further, that the Company shall furnish to the Holders a certificate of an executive officer of the Company to the effect that an event permitting a S-3 Blackout Period has occurred (and no other reason need be given). The Company will promptly give the Holders written notice of such determination and an approximation of the period of the anticipated delay; provided, however, that the aggregate number of days included in all S-3 Blackout Periods during any consecutive 12 months shall not exceed 180 days. Each Holder agrees to cease all disposition efforts under such S-3 Registration with respect to Registrable Securities held by such Holder immediately upon receipt of notice of the beginning of any S-3 Blackout Period. The Company shall provide written notice to the Holders of the end of each S-3 Blackout Period. 4. Piggyback Registration. (a) If the Company shall determine to register for sale for cash any of its Common Stock, for its own account or for the account of others (other than the Holders), other than a registration relating solely to employee benefit plans or securities issued or issuable to employees, consultants (to the extent the securities owned or to be owned by such consultants could be registered on Form S-8) or any of their Family Members (including a registration on Form S-8), or a registration relating solely to a Commission Rule 145 transaction, a registration on Form S-4 in connection with a merger, acquisition, divestiture, reorganization or similar event, the Company promptly will give to each Holder written notice thereof and shall use its reasonable best efforts to include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within ten (10) days after receipt of such written notice from the Company, by any Holder or Holders. However, the Company may, without the consent of the Holders, withdraw such registration statement prior to its 6 7 becoming effective if the Company has abandoned its proposal to register the securities proposed to be registered thereby. (b) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 4(a). In such event the right of any Holder to registration pursuant to Section 4(a) shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and any other shareholders of the Company distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Section 4(b), if the underwriter or the Company determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may exclude some or all Registrable Securities from such registration and underwriting. The Company shall so advise all Holders (except those Holders who have indicated to the Company their decision not to distribute any of their Registrable Securities through such underwriting), and the number of shares of Registrable Securities that may be included in the registration and underwriting, if any, shall be allocated among such Holders as follows: (i) In the event of a piggyback registration pursuant to Section 4(a) that is initiated by the Company, then the number of shares that may be included in the registration and underwriting shall be allocated first to the Company and then to all selling shareholders, including the Holders, who have requested to sell in the registration on a pro rata basis according to the number of shares requested to be included; provided, however, that no allocation pursuant to this Section 4(b) shall have the effect of reducing the Shares sold by Holders to less than 20% of the proposed offering; and (ii) In the event of a piggyback registration pursuant to Section 4(a) that is initiated by the exercise of demand registration rights by a shareholder or shareholders of the Company (other than the Holders), then the number of shares that may be included in the registration and underwriting shall be allocated first to such selling shareholders who exercised such demand and then to all selling shareholders, including the Holders, who have requested to sell in the registration, on a pro rata basis according to the number of shares requested to be included. (c) No Registrable Securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. If any Holder disapproves of the terms of any such underwriting, such person may elect to withdraw therefrom by written notice to the Company and the underwriter. The Registrable Securities and/or other securities so withdrawn from such underwriting shall also be withdrawn from such registration; provided, however, that, if by the withdrawal of such Registrable Securities a greater number of Registrable Securities held by other Holders may be included in such registration (up to the maximum of any limitation imposed by the underwriters), then the Company shall offer to all Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities pursuant to the terms and limitations set forth herein in the same proportion used above in determining the underwriter limitation. 5. Registration Procedures. In the case of each registration, qualification or compliance effected by the Company pursuant to Section 2, 3 or 4 hereof, the Company will keep each Holder advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof. At its expense, the Company will use its reasonable best efforts to: 7 8 (a) prepare and file with the Commission within ninety (90) days (or in the case of any registration on Form S-3, thirty (30) days) after receipt of a request for registration with respect to such Registrable Securities, a registration statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate, subject to Section 2 hereof, and which form shall be available for the sale of the Registrable Securities in accordance with the intended method(s) of distribution thereof, and use its best efforts to cause such registration statement to become and remain effective; provided that before filing with the Commission a registration statement or prospectus or any amendments or supplements thereto, including documents incorporated by reference after the initial filing of any registration statement, the Company shall (i) furnish to the underwriters, if any, and to one (1) counsel selected by the Holders of a majority of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents shall be subject to the review of the underwriters and such counsel, and (ii) notify each Holder of Registrable Securities covered by such registration statement of any stop order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered; (b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than ninety (90) days or such shorter period which shall terminate when all Registrable Securities covered by such registration statement have been sold (but not before the expiration of the 90-day period referred to in Section 4(3) of the Securities Act and Rule 174, or any successor thereto, thereunder, if applicable), and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended method(s) of disposition by the sellers thereof set forth in such registration statement; (c) furnish, without charge, to each Holder and each underwriter, if any, of Registrable Securities covered by such registration statement one (1) signed copy of such registration statement, each amendment and supplement thereto (including one (1) conformed copy to each Holder and one (1) signed copy to each managing underwriter and in each case including all exhibits thereto), and such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any other prospectus filed under Rule 424 under the Securities Act) as such Holders may request, in conformity with the requirements of the Securities Act, and such other documents as such Holder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder, but only while the Company shall be required under the provisions hereof to cause the registration statement to remain effective; (d) use its best efforts to register or qualify such Registrable Securities under such other applicable securities or blue sky laws of such jurisdictions as any Holder, and underwriter, if any, of Registrable Securities covered by such registration statement reasonably requests as may be necessary for the marketability of the Registrable Securities (such request to be made by the time the applicable registration statement is deemed effective by the Commission) and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder and each underwriter, if any, to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder; provided that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (d), (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction; 8 9 (e) use its best efforts to cause the Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the Holder or Holders thereof to consummate the disposition of such Registrable Securities; (f) immediately notify the managing underwriter, if any, and each Holder of such Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event which comes to the Company's attention if as a result of such event the prospectus included in such registration statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading and the Company shall promptly prepare and furnish to such Holder a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, unless suspension of the use of such prospectus otherwise is authorized herein or in the event of a S-3 Blackout Period, in which case no supplement or amendment need be furnished; (g) use its best efforts to cause all such Registrable Securities covered by the registration statement to be listed on the Nasdaq Stock Market or the national securities exchange on which similar securities issued by the Company are then listed, and enter into such customary agreements including a listing application and indemnification agreement in customary form (provided that the applicable listing requirements are satisfied), and to provide a transfer agent and registrar for such Registrable Securities covered by such registration statement no later than the effective date of such registration statement; (h) enter into such customary agreements (including an underwriting agreement in customary form) and take all such other actions as the Initiating Holders or the underwriters retained by such Holders, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities, including customary indemnification; (i) make available for inspection during normal business hours by any Holder of Registrable Securities covered by such registration statement, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or other agent retained by any such Holder or underwriter (collectively, the "Inspectors"), all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries (collectively, "Records"), if any, as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's and its subsidiaries' officers, directors and employees to supply all information and respond to all inquiries reasonably requested by any such Inspector in connection with such registration statement. Notwithstanding the foregoing, the Company shall have no obligation to disclose any Records to the Inspectors in the event the Company determines that such disclosure is reasonably likely to have an adverse effect on the Company's ability to assert the existence of an attorney-client privilege with respect thereto; (j) in the event that any contemplated public offering is underwritten, use its best efforts to obtain a "comfort" letter from the Company's independent public accountants in customary form and covering such matters of the type customarily covered by "comfort" letters as the Holders of a majority (by number of shares) of the Registrable Securities being sold reasonably request, and provided that such request is reasonable in the underwriter's point of view; 9 10 (k) use its best efforts to obtain an obtain an opinion of counsel from the Company's counsel in customary form and covering such matters of the type customarily covered in opinions of counsel in connection with such transactions; (l) comply, and continue to comply during the period that such registration statement is effective under the Securities Act, in all material respects with the Securities Act and the Securities Exchange Act of 1934 and with all applicable rules and regulations of the Commission with respect to the disposition of all securities covered by such registration statement, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months, but not more than eighteen (18) months, beginning with the first full calendar month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act, and not file any amendment or supplement to such registration statement or prospectus to which Holder shall have reasonably objected on the grounds that such amendment or supplement does not comply in all material respects with the requirements of the Securities Act, having been furnished with a copy thereof at least five (5) business days prior to the filing thereof; and (m) in the event the offering is underwritten, develop a presentation reasonably acceptable to the underwriters to facilitate the offering and to make its chief executive officer and chief financial officer available for participation in such meetings and presentations (e.g., road show for the offering) at such locations (including Europe) as the underwriter reasonably requests. Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 5(f) hereof or of the commencement of an S-3 Blackout Period, such Holder shall discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 5(f) hereof or notice of the end of the S-3 Blackout Period, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company's expense) all copies (including, without limitation, any and all drafts), other than permanent file copies, then in such Holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company shall give any such notice, the period mentioned in Section 5(b) hereof shall be extended by the greater of (i) ten (10) business days or (ii) the number of days during the period from and including the date of the giving of such notice pursuant to Section 5(f) hereof to and including the date when each Holder of Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 5(f) hereof. 6. Rule 144. Notwithstanding anything to the contrary contained herein, no Holder shall have rights to a registration under Section 2, 3 or 4 hereof after the time that such Holder could sell, within ninety (90) days, all of its Registrable Securities pursuant to Rule 144(e) promulgated under the Securities Act or any successor rule thereto; provided that the Company hereby agrees to take the following actions to ensure the availability of Rule 144 to each such Holder (or such similar actions as shall be required under any successor rule thereto): (a) make and keep public information available as those terms are understood and defined in Rule 144; (b) use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and 10 11 (c) so long as any Holder owns any Registrable Securities, furnish to a Holder upon request, a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time from and after ninety (90) days following the effective date of the registration statement relating to an Initial Public Offering), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed as the Holder may reasonably request. 7. Registration Expenses. The Company shall pay all expenses in connection with any registration, including, without limitation, all registration, filing and NASD fees, printing expenses, all fees and expenses of complying with securities or blue sky laws, the fees and disbursements of one counsel for the Holders and the fees and disbursements of counsel for the Company and of its independent accountants; provided that, in any registration, each party shall pay for its own underwriting discounts and commissions and transfer taxes. The Company shall not, however, be required to pay for expenses of any registration proceeding begun pursuant to Section 2, 3 or 4 hereof, the request of which has been subsequently withdrawn by the Initiating Holders (unless the withdrawal is based upon material adverse information concerning the Company of which the Initiating Holders were unaware at the time of such request), in which case such expenses shall be borne by the Holders whose securities were to be included in the registration in proportion to the number of shares for which such registration was requested. 8. Assignment of Rights. Any Holder may assign its rights under this Agreement to any party acquiring 2,400,000 shares or more of Registrable Securities; provided, however, that a Holder may assign its rights under this Agreement without such restrictions to a transferee or assignee that controls, is controlled by or is under common control with such Holder. 9. Information by Holder. The Holder or Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders and the distribution proposed by such Holder or Holders as the Company may request in writing. 10. "Market Stand-off" Agreement. Each Holder agrees not to sell or otherwise transfer or dispose of any Common Stock (or other securities) of the Company held by it until July 26, 2000, or during such period of time following the effective date of an underwritten public offering of the Company's securities as the underwriters in such underwritten offering deem appropriate; provided, however, that no such market stand off agreement shall be required of any Holder unless the executive officers, directors and greater than 10% stockholders of the Company enter into similar agreements; provided, however, that in no event shall such period be more than 90 days. The Company may impose stop-transfer instructions with respect to the shares (or securities) subject to the foregoing restriction until the end of such period. 11. Indemnification. (a) In the event of the offer and sale of Registrable Securities held by Holders under the 1933 Act, the Company shall, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, its directors, officers, partners, each other person who participates as an underwriter in the offering or sale of such securities, and each other Person, if any, who controls or is under common control with such Holder or any such underwriter within the meaning of Section 15 of the 1933 Act, against any losses, claims, damages or liabilities, joint or several, and expenses to which the Holder or any such director, officer, partner or underwriter or controlling person may become 11 12 subject under the 1933 Act or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such shares were registered under the 1933 Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading or any violation by the Company of any federal, state or common law rule or regulation applicable to the Company and relating to action required of or inaction by the Company in connection with any such registration, and the Company shall reimburse the Holder, and each such director, officer, partner, underwriter and controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, damage, liability, action or proceeding; provided that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by or on behalf of such Holder specifically stating that it is for use in the preparation thereof. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holders, or any such director, officer, partner, underwriter or controlling person and shall survive the transfer of such shares by the Holder. (b) The Company may require, as a condition to including any Registrable Securities to be offered by a Holder in any registration statement filed pursuant to this Agreement, that the Company shall have received an agreement from such Holder to be bound by the terms of this Section 11, including an undertaking reasonably satisfactory to it from such Holder, to indemnify and hold the Company, its directors and officers and each other Person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director or officer or controlling person may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement in or omission or alleged omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information about such Holder as a Holder of the Company furnished to the Company through an instrument duly executed by such Holder specifically stating that it is for use in the preparation of such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement; provided, however, that such indemnity agreement found in this Section 11(b) shall in no event exceed the gross proceeds from the offering received by such Holder. Such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling person and shall survive the transfer by any Holder of such shares. (c) Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in Section 11(a) or (b) hereof (including any governmental action), such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the indemnifying party of the commencement of such action; provided that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under Section 11(a) or (b) hereof, except to the extent 12 13 that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist or the indemnified party may have defenses not available to the indemnifying party in respect of such claim, the indemnifying party shall be entitled to participate in and to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties arises in respect of such claim after the assumption of the defenses thereof, other than reasonable costs of investigation. Neither an indemnified nor an indemnifying party shall be liable for any settlement of any action or proceeding effected without its consent. No indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. Notwithstanding anything to the contrary set forth herein, and without limiting any of the rights set forth above, in any event any party shall have the right to retain, at its own expense, counsel with respect to the defense of a claim. (d) The indemnification required by Section 11(a) and (b) hereof shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expenses, losses, damages or liabilities are incurred. (e) If the indemnification provided for in this Section 11 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense as is appropriate to reflect the proportionate relative fault of the indemnifying party on the one hand and the indemnified party on the other (determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission relates to information supplied by the indemnifying party or the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission), or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, not only the proportionate relative fault of the indemnifying party and the indemnified party, but also the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, as well as any other relevant equitable considerations. No indemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any indemnifying party who was not guilty of such fraudulent misrepresentation. (f) Other Indemnification. Indemnification similar to that specified in the preceding subsections of this Section 11 (with appropriate modifications) shall be given by the Company and each Holder of Registrable Securities with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act. 12. Miscellaneous (a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. 13 14 (b) Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, executors and administrators of the parties hereto. In the event the Company merges with, or is otherwise acquired by, a direct or indirect subsidiary of a publicly-traded company, the Company shall condition the merger or acquisition on the assumption by such parent company of the Company's obligations under this Agreement. (c) Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof. (d) Notices, etc. All notices or other communications which are required or permitted under the Transaction Documents shall be in writing and sufficient if delivered by hand, by facsimile transmission, by registered or certified mail, postage pre-paid, or by courier or overnight carrier, to the persons at the addresses set forth below (or at such other address as may be provided hereunder), and shall be deemed to have been delivered as of the date so delivered: If to the Company: Healtheon/WebMD Corporation 400 The Lenox Building 3399 Peachtree Road Atlanta, Georgia 30326 Attention: Jack Dennison, Esq. With a copy to: Nelson Mullins Riley & Scarborough, L.L.P. Bank of America Corporate Center Suite 2600 100 North Tryon Street Charlotte, North Carolina 28202 Attention: H. Bryan Ives III, Esq. C. Mark Kelly, Esq. All correspondence to the Purchaser shall be addressed as follows: Janus 100 Fillmore Street Denver, Co 80206 Attention: Heidi J. Walter, Vice President and Assistant General Counsel or at such other address as any party shall have furnished to the other parties in writing. (e) Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Holder of any Registrable Securities, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of such Holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereunder occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Holder of any breach or default under this Agreement, or any waiver on the part of any Holder of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All 14 15 remedies, either under this Agreement, or by law or otherwise afforded to any holder, shall be cumulative and not alternative. (f) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument. (g) Severability. In the case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. (h) Amendments. The provisions of this Agreement may be amended at any time and from time to time, and particular provisions of this Agreement may be waived, with and only with an agreement or consent in writing signed by the Company and by the holders of a majority of the number of shares of Registrable Securities outstanding as of the date of such amendment or waiver. The Purchaser acknowledges that by the operation of this Section 12(h), the holders of a majority of the outstanding Registrable Securities may have the right and power to diminish or eliminate all rights of the Purchaser under this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 15 16 This Registration Rights Agreement is hereby executed as of the date first above written. COMPANY: HEALTHEON/WEBMD CORPORATION By: /s/ ----------------------------------------- Its: ------------------------------------- PURCHASER: JANUS CAPITAL CORPORATION: By: /s/ ----------------------------------------- Its: ------------------------------------- 16 EX-27.1 13 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM HEALTHEON/WEBMD'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 1 1,160,682 0 71,925 0 0 1,248,171 98,369 33,266 5,748,267 139,692 0 0 629,000 18 4,858,148 5,748,267 0 65,881 0 59,365 450,810 0 (12,829) (431,465) 0 (431,465) 0 0 0 (431,465) (2.47) (2.47)
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