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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): DECEMBER 31, 1997
HEALTHDYNE INFORMATION ENTERPRISES, INC.
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(Exact name of registrant as specified in its charter)
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Georgia 0-270576 58-2112366
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<S> <C> <C>
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
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1850 Parkway Place, Suite 1100, Marietta, Georgia 30067
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 423-8450
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N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
(a) On December 31, 1997, Healthdyne Information Enterprises, Inc.
("HIE" or the "Company") exercised its option (the "Option") to acquire the 50%
equity ownership interest in Criterion Health Strategies, Inc. ("CHS") held by
The Southern Venture Fund II, L.P. ("SVFII") in exchange for 416,666 shares of
HIE common stock, par value $.01 per share, together with associated preferred
stock purchase rights (the "Common Stock"). As a result of the Option exercise,
CHS became a wholly-owned subsidiary of HIE. In connection with the Option
exercise, HIE amended the warrant to purchase 50,000 shares of the Company's
Common Stock which HIE had previously issued to SVFII to change the per share
warrant exercise price from $4.5625 to the average of the closing prices of the
Common Stock as quoted on the Nasdaq National Market for the five trading days
prior to December 31, 1997, or approximately $1.59. In addition, the Company
entered into agreements with SVFII, Brenton L. Teveit ("Teveit") and J. Edward
Pearson, Jr. ("Pearson") to terminate and/or otherwise amend the various
agreements and arrangements between such parties relative to their respective
investments in CHS in order to effectuate the acquisition by HIE of a 100%
equity interest in CHS pursuant to HIE's exercise of the Option.
(b) Effective December 31, 1995, HIE increased its ownership interest in
Healthcare Communications, Inc. ("HCI") to 100% by purchasing the remaining 43%
equity interest held by certain other shareholders (the "HCI Shareholders") for
approximately $6.2 million in deferred payments financed by two promissory
notes. The first promissory note was paid in full by the Company in April 1996.
The second promissory note (the "Note"), a convertible debenture in the original
principal amount of $5,061,824.82, bearing interest at 6.4% per annum and
secured by a portion of HCI common stock, was due on January 2, 1998. After a
series of prepayments on, and amendments to, the Note, the amount owing
thereunder in respect of principal and interest had been reduced to
$3,897,900.76 as of January 2, 1998. In connection with the acquisition of 100%
of HCI, the Company entered into a Settlement Agreement (the "Settlement
Agreement") dated December 31, 1995 with the HCI Shareholders. In connection
with certain transactions contemplated under the Settlement Agreement, Jerry D.
Scott, one of the HCI Shareholders, executed a promissory note (the "Scott
Note") payable to HCI in the principal amount of $300,000 and maturing on June
30, 1998.
HIE subsequently asserted that it had certain claims against certain or
all of the HCI Shareholders related to breaches of the representations and
warranties of such shareholders contained in the Settlement Agreement. In order
to settle such outstanding issues, the HCI Shareholders agreed to reduce the
amount due under the Note by $250,000 on a pro rata basis in exchange for a
release by HIE of all such claims. In addition, the Company and Mr. Scott agreed
to offset against the amount owing to Mr. Scott under the Note by an amount
equal to the indebtedness owing by Mr. Scott to HCI under the Scott Note
(including accrued interest thereon), in exchange for which the Scott Note would
be canceled. On January 2, 1998, the Note as so modified was paid in full by the
Company for approximately $3.3 million in cash, and the Scott Note was canceled.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
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Exhibit
Number Description
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2.1 First Amendment to Option Agreement dated December 31, 1997
between HIE and SVFII.
2.2 Amended and Restated Stock Purchase Warrant dated December 31,
1997 between HIE and SVFII.
2.3 Agreement dated December 31, 1997 relative to termination or
amendment of the ancillary agreements between HIE, SVFII
and CHS.
2.4 Termination of Incorporation Agreement dated December 31, 1997
between HIE, SVFII, CHS, Teveit and Pearson.
10.1 Estoppel Agreement January 2, 1998 between HIE and the HCI
Shareholders.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
HEALTHDYNE INFORMATION ENTERPRISES, INC.
By: /s/ Joseph G. Bleser
---------------------------------------
Name: Joseph G. Bleser
Title: Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary
Date: January 28, 1998
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EXHIBIT INDEX
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Exhibit
Number Description
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<S> <C>
2.1 First Amendment to Option Agreement dated December 31, 1997 between
Healthdyne Information Enterprises, Inc. ("HIE") and The
Southern Venture Fund II, L.P. ("SVFII").
2.2 Amended and Restated Stock Purchase Warrant dated December 31, 1997
between HIE and SVFII.
2.3 Agreement dated December 31, 1997 relative to termination or amendment
of the ancillary agreements between HIE, SVFII and Criterion
Health Strategies, Inc. ("CHS").
2.4 Termination of Incorporation Agreement dated December 31, 1997
between HIE, SVFII, CHS, Brenton L. Teveit and J. Edward
Pearson, Jr.
10.1 Estoppel Agreement January 2, 1998 between HIE and Jerry Scott,
Walter Carozza, George Schwend, Keith Voigts, Larry
Streepy, Steve Fraser, JMS Charitable Trust, ESS
Charitable Trust, ESS Inheritance Trust, MLS Charitable
Trust, MLS Inheritance Trust and CBS Charitable Trust.
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EXHIBIT 2.1
FIRST AMENDMENT TO OPTION AGREEMENT
This FIRST AMENDMENT dated December 31, 1997 (the "Amendment") to the
Option Agreement dated December 18, 1996 (the "Option Agreement"), by and
between Healthdyne Information Enterprises, Inc., a Georgia corporation ("HIE"),
and The Southern Venture Fund II, L.P., a Delaware limited partnership
("SVFII").
WITNESSETH:
WHEREAS, pursuant to the Option Agreement, SVFII has granted to HIE an
option (the "Option") to purchase SVFII's entire interest in Criterion Health
Strategies, Inc. (f/k/a Alpha Development Corp.), a Tennessee corporation
("CHS"), for 416,666 shares of HIE common stock, par value $.01 per share ("HIE
Common Stock"), subject to adjustment if the HIE Common Stock is less than $4.80
per share on the date of the notice of exercise of the Option; and
WHEREAS, HIE and SVFII have agreed to amend the Option Agreement and
that certain Stock Purchase Warrant dated December 18, 1996 between HIE and
SVFII (the "Warrant") in order to (i) fix the exercise price of the Option at a
set number of shares of HIE Common Stock and (ii) adjust the per share exercise
price of the Warrant from $4.5625 to the fair market value of the HIE Common
Stock as of the closing date for the Option exercise;
NOW, THEREFORE, in consideration of the premises hereof and the mutual
benefits to be derived hereunder and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, HIE and SVFII agree to
amend the Option Agreement as follows:
1. At or prior to the Option Closing, SVFII shall deliver the Warrant
to HIE for cancellation, and HIE shall issue and deliver a Restated and Amended
Stock Purchase Warrant, in the form of Exhibit A hereto, to SVFII. References in
the Option Agreement to the "Warrant" shall thereafter refer to such Restated
and Amended Stock Purchase Warrant.
2. Section 3 of the Option Agreement is hereby amended to provide that
the exercise price of the Option will not be subject to adjustment. In order to
effectuate this change, Section 3(a) is hereby deleted in its entirety and the
following is substituted in lieu thereof:
(a) Number of HIE Shares. The number of HIE Shares to be
delivered to SVFII upon exercise of the Option shall be 416,666 shares
of HIE Common Stock.
3. Section 6(d) of the Option Agreement is hereby amended to provide
that any notice or other communication by any party hereto to the other parties
shall be in writing and shall be given, and be deemed to have been given, if
delivered by facsimile in addition to the other methods set forth in Section
6(d) of the Option Agreement.
4. Counterparts. For the convenience of the parties, any number of
counterparts of this Agreement may be executed and all such counterparts or
facsimile copy thereof shall be deemed to be an original instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
HEALTHDYNE INFORMATION ENTERPRISES, INC.
By: /s/ Joseph G. Bleser
----------------------------------------
Name: Joseph G. Bleser
Title: Executive Vice President and
Chief Financial Officer
THE SOUTHERN VENTURE FUND II, L.P.
By: Its General Partner
SV Partners II, L.P.
By: /s/ J. Donald McLemore, Jr.
----------------------------------------
Name: J. Donald McLemore, Jr.
Title: Partner
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EXHIBIT 2.2
Warrant No. S-1
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED, SOLD, OR TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) IN THE OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY, REGISTRATION UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED OFFER, SALE OR
TRANSFER.
HEALTHDYNE INFORMATION ENTERPRISES, INC.
AMENDED AND RESTATED
STOCK PURCHASE WARRANT
THIS AMENDED AND RESTATED STOCK PURCHASE WARRANT (the "Warrant") is
issued this 31st day of December, 1997, by HEALTHDYNE INFORMATION ENTERPRISES,
INC., a Georgia corporation ("HIE" or the "Company"), to THE SOUTHERN VENTURE
FUND II, L.P., a Delaware limited partnership ("SVFII," which, together with any
assignee or transferee hereinafter referred to collectively as "Holder" or
"Holders").
WITNESSETH:
WHEREAS, HIE and SVFII are parties to that certain Option Agreement
dated as of December 18, 1996 (the "Option Agreement"), pursuant to which SVFII
granted to HIE an option (the "Option") to purchase SVFII's entire interest in
Criterion Health Strategies, Inc., a Tennessee corporation ("CHS"); and
WHEREAS, in consideration of the Option grant, HIE granted to SVFII a
warrant to purchase 50,000 shares of the common stock of HIE, par value $.01 per
share (the "Common Stock"), on the terms set forth in that certain Stock
Purchase Warrant issued on December 18, 1996 (the "Initial Warrant"); and
WHEREAS, HIE and SVFII desire to enter into an amendment to the Option
Agreement (the "Amendment") with respect to the number of shares of Common Stock
issuable by HIE to SVFII upon exercise of the Option (the Option Agreement, as
amended by the Amendment, hereinafter the "Amended Option Agreement"); and
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WHEREAS, in conjunction with the Amendment, HIE and SVFII have agreed
to amend the Initial Warrant in order to modify the exercise price thereof, and
to issue this Warrant (which reflects such amendment) in substitution of the
Initial Warrant;
NOW, THEREFORE, the parties hereto agree as follows:
1. Issuance of Warrant. For and in consideration of the grant by SVFII
to the Company of an option to purchase all of the securities of CHS held by
SVFII pursuant to the terms and conditions of the Amended Option Agreement, the
Company hereby grants to Holder the right to purchase 50,000 shares of the
Company's common stock, $.01 par value per share (the "Common Stock"), at the
purchase price per share (the "Exercise Price") set forth herein. The shares of
Common Stock issuable upon exercise of this Warrant are hereinafter referred to
as the "Warrant Shares." The number of Warrant Shares and the Exercise Price are
subject to adjustment as provided in Section 9 below. This Warrant is in
replacement of the Initial Warrant, which Initial Warrant is hereby canceled.
2. Term. Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable in whole or in part at any time and from time to
time from the date hereof until 5:00 p.m. Atlanta, Georgia time on December 18,
2003 (the "Expiration Date") and shall be void thereafter.
3. Price. The Exercise Price per share for which the Warrant Shares may
be purchased pursuant to the terms of this Warrant shall be the Current Market
Value per share of the Common Stock on the exercise date of the Option under the
Amended Option Agreement. For purposes of this Agreement, "Current Market Value"
per share of the Common Stock shall mean (i) if a public market for the Common
Stock exists at the time of such exercise, the average of the closing bid and
asked prices of the Common Stock quoted in the Over-The-Counter Market Summary
or the last reported sale price of the Common Stock or the closing price quoted
on the Nasdaq National Market or on any exchange on which the Common Stock is
listed, whichever is applicable, as published in The Wall Street Journal for the
five (5) trading days prior to the date of determination of Current Market
Value; or (ii) if there is no public market for the Common Stock, determined by
HIE's Board of Directors in good faith. The exercise price shall be subject to
adjustment from time to time pursuant to Section 9 hereof.
4. Exercise.
(a) This Warrant may be exercised by the Holder hereof (but only on
the conditions hereinafter set forth) as to part or all of the Warrant Shares by
surrender of this Warrant and the Notice of Exercise attached hereto as Exhibit
A, duly completed and executed on behalf of the Holder, at the office of the
Company, 1850 Parkway Place, 11th Floor, Marietta, Georgia 30067, or at such
other address as the Company shall designate in a written notice to the Holder
hereof, together with a check acceptable and payable to the Company in the
amount of the Exercise Price times the number of Warrant Shares being purchased.
(b) In lieu of exercising the Warrant by payment of the Exercise
Price in cash pursuant to Section 4(a) above, the Holder shall have the right to
require the Company to convert
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the Warrant, in whole or in part and at any time or times (the "Conversion
Right"), into Warrant Shares, by surrender to the Company of this Warrant and
the Notice of Exercise attached hereto, duly completed and executed by the
Holder to evidence the exercise of the Conversion Right. Upon exercise of the
Conversion Right, the Company shall deliver to the Holder a certificate(s)
representing that number of Warrant Shares which is equal to the quotient
obtained by dividing (x) the value of the number of Warrants being converted at
the date the Conversion Right is exercised (determined by subtracting (A) the
aggregate Exercise Price for all such Warrants immediately prior to the exercise
of the Conversion Right from (B) the aggregate Fair Market Value (determined on
the basis of the Fair Market Value per share of Common Stock multiplied by that
number of Warrant Shares purchasable upon exercise of such Warrants immediately
prior to the exercise of the Conversion Right)), by (y) the Fair Market Value
per share of Common Stock on the date of exercise of the Conversion Right. For
purposes of this calculation, the Fair Market Value per share of Common Stock
shall be (i) if a public market for the Company's Common Stock exists at the
time of such exercise, the average of the closing bid and asked prices of the
Common Stock quoted in the Over-The-Counter Market Summary or the last reported
sales price of the Common Stock or the closing price quoted on the Nasdaq
National Market or on any exchange on which the Common Stock is listed,
whichever is applicable, as published in The Wall Street Journal for the five
(5) trading days prior to the date of determination of Fair Market Value; or
(ii) if there is no public market for the Company's Common Stock, determined by
the Company's Board of Directors in good faith. Any references in this Warrant
to the "exercise" of any Warrants, and the use of the term "exercise" herein,
shall be deemed to include (without limitation) any exercise of the Conversion
Right.
(c) Upon exercise of this Warrant as aforesaid, the person
entitled to receive the Warrant Shares issuable upon such exercise shall be
treated for all purposes as the holder of record of such shares as of the close
of business on the date of exercise. As promptly as practicable on or after such
date, and in any event within ten (10) days thereafter, the Company shall
execute and deliver to the Holder of this Warrant a certificate or certificates
for the total number of whole Warrant Shares for which this Warrant is being
exercised (net of any Warrant Shares applied upon exercise of the Conversion
Right), in such names and denominations as are requested by such Holder. If this
Warrant shall be exercised with respect to less than all of the Warrant Shares,
the Company, at its expense, will issue to the Holder a new Warrant covering the
number of Warrant Shares with respect to which this Warrant shall not have been
exercised, which new Warrant shall be identical to this Warrant except for the
number of shares remaining subject to the Warrant. If, upon exercise of this
Warrant, the Holder would be entitled to acquire a fractional share of the
Company's Common Stock, such fractional share shall be disregarded and the
number of shares subject to this Warrant shall be rounded down to the next lower
number of shares and the Holder shall be entitled to receive from the Company a
cash payment equal to the product of the per share Exercise Price multiplied by
such fraction rounded to the nearest penny.
(d) The Company will pay all documentary stamp taxes
attributable to the initial issuance of Warrant Shares upon the exercise of this
Warrant, provided that such certificates for such Warrant Shares are issued in
the name of SVFII or in the name of any partner of SVFII. The Company shall not
be required to pay any tax or taxes which may be payable in respect of any other
transfer involved in the issue of any certificates for Warrant Shares and the
Company shall not be required to issue or deliver such certificates for Warrant
Shares unless or until the person or persons
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requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
5. Covenants and Conditions. The above provisions are subject to
the following:
(a) The Holder of this Warrant and any transferee hereof or of
the Warrant Shares issuable upon exercise of this Warrant, by their acceptance
hereof or thereof, hereby (i) acknowledge that this Warrant has been, and any
Warrant Shares issuable upon exercise hereof will be, acquired for investment
purposes and not with a view to distribution or resale and (ii) understand and
agree that this Warrant and the Warrant Shares issuable upon the exercise
hereof, have not been registered under the Securities Act or any applicable
state securities laws ("Blue Sky Laws"), and may not be sold, pledged,
hypothecated or otherwise transferred without (i) an effective registration
statement for such Warrant under the Securities Act and such applicable Blue Sky
Laws, or (ii) an opinion of counsel reasonably satisfactory to the Company that
registration is not required under the Securities Act or under any applicable
Blue Sky Laws. Transfer of the Warrant Shares issued upon the exercise of this
Warrant shall be restricted in the same manner and to the same extent as the
Warrant. Each Warrant and each certificate representing such Warrant Shares
shall bear substantially the following legend (with such changes therein as may
be appropriate to reflect whether such legend refers to a Warrant or Warrant
Shares):
THE WARRANT AND SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE
STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (i) A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE
WITH REGARD THERETO, OR (ii) IN THE OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE SECURITIES
ACT OR SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED
IN CONNECTION WITH SUCH PROPOSED TRANSFER.
(b) The Holder and the Company agree to execute such documents
and instruments as counsel for the Company reasonably deems necessary to effect
the compliance of the issuance of the Warrant and any Warrant Shares with
applicable federal and state securities laws, including compliance with
applicable exemptions from the registration requirements of such laws.
(c) The Company covenants and agrees that all Warrant Shares
which may be issued upon exercise of this Warrant will, upon issuance and
payment therefor, be legally and validly issued and outstanding, fully paid and
nonassessable. The Company shall at all times reserve and keep available for
issuance upon the exercise of this Warrant such number of authorized shares of
Common Stock as will be sufficient to permit the exercise in full of this
Warrant.
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6. Registration Rights.
(a) Demand Rights.
(i) The Company agrees that if it receives from
the Holder a written request that the Company effect any registration with
respect to Warrant Shares on a shelf registration pursuant to Rule 415 of the
Securities and Exchange Commission (the "Commission"), the Company will as soon
as practicable use its best efforts to effect such registration (including,
without limitation, filing post-effective amendments, appropriate qualifications
under applicable Blue Sky Laws, and appropriate compliance with the Securities
Act) as would permit or facilitate the sale and distribution of all or such
portion of such Warrant Shares as are specified in such request. Such shelf
registration shall not be deemed to provide for an underwritten offering of the
Warrant Shares pursuant to such registration statement.
(ii) The Company shall only be required to effect
one (1) registration of Warrant Shares pursuant to this Section 6(a), and the
provisions of Section 6(c) below shall apply.
(iii) The Company, upon receipt of such request
for registration pursuant to Section 6(a)(i), will as promptly as practicable
prepare and file with the Commission a registration statement on Form S-3 or on
such other form as the Company determines in its sole discretion to be available
and appropriate for the registration under the Securities Act of a secondary
public offering. The Company shall use reasonable efforts to keep such
registration statement current and continuously effective until the earlier of
(A) the date when all Warrant Shares covered by the registration statement have
been sold or (B) one year from the effective date of the registration statement
with respect to a shelf registration or (C) such time as to which all of the
Warrant Shares may be sold immediately by the Holder under Rule 144 or any
successor rule or regulation under the Securities Act.
(iv) Upon written notice to the Holder stating
the reasons therefor, the Company shall be entitled to postpone, for a
reasonable period of time not to exceed ninety (90) days, the filing of a
registration statement pursuant to this Section 6(a) if (A) such filing would
occur prior to ninety (90) days following the effective date of a registration
statement relating to an underwritten public offering of securities of the
Company for its own account, or (B) the Company would be required to undergo a
special interim audit in order to comply with such request, unless the Holder
agrees to bear the costs of such special interim audit, or (C) the Company
determines, in the good faith exercise of its reasonable business judgment, that
such registration and offering would materially interfere with bona fide
financing, acquisition or other plans of the Company or would require disclosure
of information, the premature disclosure of which would materially adversely
affect or otherwise be materially detrimental to the Company. If the Company
postpones the filing of the registration statement, it shall promptly notify the
Holder in writing when the events or circumstances permitting such postponement
have ended.
(b) Piggyback Registration.
(i) If the Company shall propose the
registration under the Securities Act of an offering of any of its capital stock
to be sold for cash, whether or not for its own account,
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pursuant to a firm commitment underwritten offering (other than a registration
relating to either (A) a dividend reinvestment, employee stock option, stock
purchase or similar plan, (B) a transaction pursuant to Rule 145 under the
Securities Act, or (C) a merger, consolidation or reorganization), the Company,
on each such occasion, shall as promptly as practicable but in no event later
than ten (10) days prior to the proposed filing date of the registration
statement give written notice (the "Notice") to the Holder of its intention to
effect such registration, and the Holder shall be entitled, on each such
occasion, to request to have all or a portion of the Warrant Shares included in
such registration statement. Upon the written request of the Holder that the
Company include any Warrant Shares in such registration statement (which request
shall state the number of Warrant Shares for which registration is sought),
given within ten (10) days after the giving of the Company's Notice, the Company
shall use its reasonable efforts to cause such Warrant Shares to be so included
in the offering covered by such registration statement, subject to the
limitations hereinafter set forth.
(ii) The registration of some or all of such
Warrant Shares pursuant to this Section 6(b)(i) may be conditioned or restricted
if, in the case of a registration statement which also includes shares to be
sold for the account of the Company in an underwritten offering, in the good
faith exercise of the reasonable business judgment of the managing underwriter
of such proposed offering, inclusion thereof in such registration statement will
have an adverse impact on the marketing of the securities to be offered by the
Company (provided that such conditions or restrictions apply on a proportional
basis not only to the Warrant Shares but also to all other securities to be
included other than those to be offered for the Company's own account). If such
managing underwriter shall require that the number of Warrant Shares to be
offered by the Holder be reduced or eliminated, the Holder shall have the right
to withdraw its request for registration pursuant to this Section 6(b)(i).
(iii) The Company may, for any reason and without
the consent of the Holder determine at any time not to proceed with the
registration which is the subject of the Company's Notice and abandon the
proposed offering, whereupon the Company shall be relieved of any further
obligations hereunder to proceed with such registration or offering.
(c) Limitation of Registration Rights. The Company shall
not be obligated to honor any request by a Holder under Section 6(a) or 6(b) if,
in the opinion of counsel for the Company in form and substance reasonably
satisfactory to such Holder, such Holder could then sell under Rule 144
promulgated under the Securities Act, the number of Warrant Shares it proposes
to have registered in compliance with this Agreement.
(d) Registration Procedures. If and whenever the Company
is obligated by the provisions of this Section 6 to effect the registration of
any Warrant Shares under the Securities Act, the Company shall:
(i) Prepare and file with the Commission a
registration statement with respect to such securities on such form as the
Company deems appropriate and is permitted or qualified to use and shall use all
reasonable efforts to cause such registration statement to become and remain
effective as provided herein; provided, that in the case of any registration
pursuant to
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Section 6(b), such preparation and filing may be delayed in the sole discretion
of the Company, without prejudice to the rights of the Holder pursuant to
Section 6(a).
(ii) Prepare and file with the Commission such
amendments and post-effective amendments to any such registration statement
filed pursuant to Section 6(a) as may be necessary to keep such registration
statement effective during the period referred to in Section 6(a)(iii) and to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement, and cause the
prospectus to be supplemented by any required prospectus supplement, and as so
supplemented to be filed with the Commission pursuant to Rule 424 under the
Securities Act.
(iii) Furnish to the selling Holder at a
reasonable time prior to the filing thereof with the Commission a copy of the
registration statement in the form in which the Company proposes to file the
same; not later than one day prior to the filing thereof, a copy of any
amendment (including any post-effective amendment) to such registration
statement; and promptly following the effectiveness thereof, a conformed copy of
the registration statement as declared effective by the Commission and of each
post-effective amendment thereto, including financial statements and all
exhibits and reports incorporated therein by reference.
(iv) Furnish to the selling Holder of Warrant
Shares such number of copies of such registration statement, each amendment
thereto, the prospectus included in such registration statement (including each
preliminary prospectus), each supplement thereto and such other documents as
they may reasonably request in order to facilitate the disposition of the
Warrant Shares owned by them.
(v) Use all reasonable efforts to register and
qualify the Warrant Shares covered by the registration statement under such
other securities laws of such jurisdictions as shall be reasonably requested by
the selling Holder of Warrant Shares and do any and all other acts and things
which may be reasonably necessary or advisable to enable the selling Holder to
consummate the disposition of the Warrant Shares owned by such Holder in such
jurisdictions; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to transact business
or to file a general consent to service of process in any such states or
jurisdictions, or to maintain the effectiveness of any such registration or
qualification for any period during which it is not required to maintain the
effectiveness of the related registration statement under the Securities Act as
set forth in Section 6(a)(iii).
(vi) Promptly notify each selling Holder of
Warrant Shares of the happening of any event as a result of which the prospectus
included in such registration statement contains an untrue statement of a
material fact or omits any fact necessary to make the statements therein not
misleading and, at the request of any such Holder, and subject to the further
provisions of Section 6(f)(ii), the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Warrant Shares, such prospectus will not contain an untrue statement of
a material fact or omit to state any fact necessary to make the statements
therein not misleading.
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<PAGE> 8
(vii) Enter into such customary agreements in form
and substance reasonably satisfactory to the Company and take such other
customary actions as may be reasonably requested in order to expedite or
facilitate the disposition of such Warrant Shares.
(viii) Make reasonably available for inspection by
any selling Holder of Warrant Shares pursuant to such registration statement and
any attorney or accountant retained by such selling Holder, all financial and
other records, pertinent corporate documents and properties of the Company, and
use all reasonable efforts to cause the officers, directors, employees and
independent accountants of the Company to supply all information reasonably
requested by any such seller, attorney or accountant in connection with such
registration statement, in each case as and to the extent necessary to permit
the selling Holder to conduct a reasonable investigation within the meaning of
the Securities Act. To minimize disruption and expense to the Company during the
course of the registration process, all prospective selling Holders shall, to
the extent practicable, coordinate their investigation and due diligence efforts
hereunder and, to the extent practicable, will act through a single set of
counsel and a single set of accountants and will enter into confidentiality
agreements with the Company in form and substance reasonably satisfactory to the
Company and such Holders prior to receiving any confidential or proprietary
information of the Company.
(ix) Promptly notify the selling Holder of
Warrant Shares of the following events and (if requested by any such person)
confirm such notification in writing: (A) the filing of the prospectus or any
prospectus supplement and the registration statement and any amendment or
post-effective amendment thereto and, with respect to the registration statement
or any post-effective amendment thereto, the declaration of the effectiveness of
such documents, (B) any requests by the Commission for amendments or supplements
to the registration statement or the prospectus or for additional information,
(C) the issuance or threat of issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the initiation of
any proceedings for that purpose, and (D) the receipt by the Company of any
notification with respect to the suspension of the qualification of the Warrant
Shares for sale in any jurisdiction or the initiation or threat of initiation of
any proceeding for such purpose.
(x) Cooperate with the selling Holder of Warrant
Shares to facilitate the timely preparation and delivery of certificates
representing the Warrant Shares to be sold and not bearing any restrictive
legends, and enable such Warrant Shares to be in such lots and registered in
such names as the selling Holder may request at least two (2) business days
prior to any delivery of the Warrant Shares to the purchaser.
(xi) Prior to the effectiveness of the
registration statement and any post-effective amendment thereto and at each
closing of an underwritten offering pursuant to Section 6(b) hereof, (A) make
such representations and warranties to the selling Holder of Warrant Shares and
the underwriters, if any, with respect to the Warrant Shares and the
registration statement as are customarily made by issuers in similar
underwritten offerings; (B) use its best efforts to obtain "cold comfort"
letters and updates thereof from the Company's independent certified public
accountants addressed to the selling Holder of Warrant Shares and the
underwriters, if any, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters by underwriters in
connection with similar underwritten offerings; (C) deliver such documents and
certificates as may be reasonably requested (1) by the Holders of a
8
<PAGE> 9
majority of the Warrant Shares being sold, and (2) by the underwriters, if any,
to evidence compliance with clause (A) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Company; and (D) obtain opinions of counsel to the Company (which counsel and
which opinions shall be reasonably satisfactory to the underwriters, if any),
covering the matters customarily covered in opinions requested in underwritten
offerings. Such counsel shall also state that no facts have come to the
attention of such counsel which cause them to believe that such registration
statement, the prospectus contained therein, or any amendment or supplement
thereto, as of their respective effective or issue dates, contains any untrue
statement of any material fact or omits to state any material fact necessary to
make the statements therein not misleading (except that no statement need be
made with respect to any financial statements, notes thereto or other financial
data or other expertized material contained therein or as to any information
furnished by or on behalf of the selling Holder or underwriters, if any, for
inclusion in such registration statement).
(xii) Otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make generally
available to its security holders an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act, no later than forty-five (45)
days after the end of any twelve-month period (or ninety (90) days, if such
period is a fiscal year) beginning with the first month of the fiscal quarter of
the Company commencing after the effective date of the registration statement,
which statements shall cover such twelve-month periods.
(e) The Company's obligations with this Section 6 shall
be expressly conditioned upon Holder's compliance with the following:
(i) The selling Holder shall cooperate with the
Company in connection with the preparation of a registration statement with
respect to or including any Warrant Shares, and for so long as the Company is
obligated to keep the registration statement effective, shall provide to the
Company, in writing, for use in the registration statement, all such information
regarding the Holder and its plan of distribution of the Warrant Shares as may
be necessary to enable the Company to prepare the registration statement and
prospectus covering the Warrant Shares, to maintain the currency and
effectiveness thereof and otherwise to comply with all applicable requirements
of law in connection therewith.
(ii) During such time as the selling Holder may
be engaged in a distribution of the Warrant Shares, the Holder shall comply with
Rules 10b-6 and 10b-7 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and pursuant thereto, shall, among other things:
(w) not engage in any stabilization activity in connection with the securities
of the Company in contravention of such Rules; (x) distribute the Warrant Shares
solely in the manner described in the registration statement; (y) cause to be
furnished to each broker through whom the Warrant Shares may be offered, or to
the offeree if an offer is not made through a broker, such copies of the
prospectus and any amendment or supplement thereto and documents incorporated by
reference therein as may be required by law; and (z) not bid for or purchase any
securities of the Company or attempt to induce any person to purchase any
securities of the Company other than as permitted under the Exchange Act.
9
<PAGE> 10
(f) Holdback Agreements.
(i) Notwithstanding any provision of this
Agreement to the contrary, in the event the Company notifies the Holder, in
writing and no later than 10 days prior to the proposed filing date, that the
Company intends to file a registration statement in connection with an
underwritten offering of any of its capital stock, the Holder shall refrain from
selling or otherwise distributing, except in accordance with the provisions of
Section 6(b) hereof, any Warrant Shares within the period beginning up to seven
days prior to the effective date of such registration statement (or on such
later date that the Company notifies the Holder, in writing, that such period
has begun) and ending up to 90 days after such effective date (or on such
earlier date that the Company notifies the Holder that such period has ended)
(the "Offering Restricted Period"). In the event the Holder's Warrant Shares are
not included in such a registered underwritten offering pursuant to Section 6(b)
hereof, the Company's obligation under Section 6(a)(iii) to keep the
registration statement filed pursuant to Section 6(a) current and effective
shall be extended for a number of days equal to the Offering Restricted Period,
or, if earlier, until the date on which all of the Warrant Shares have been
disposed of.
(ii) Notwithstanding anything set forth herein to
the contrary, the Holder agrees that it will give the Company prior oral notice,
directed to its Chief Executive Officer or its Chief Financial Officer,
confirmed immediately in writing by facsimile transmission, of its intention to
sell any Warrant Shares under the shelf registration statement, which notice
shall be given not less than two (2) days in advance of any such proposed sale.
In the event that the Company thereafter informs the Holder, within one (1) day
of its receipt of such notice, that, in the good faith exercise of its
reasonable business judgment, there exist bona fide financing, acquisition or
other plans of the Company or other matters which could require disclosure by
the Company of information, the premature disclosure of any of which would
materially adversely affect or otherwise be materially detrimental to the
Company, the Holder shall refrain from selling the Warrant Shares until the
earlier to occur of the date (x) the Company notifies the Holder that it has
filed with the Commission an amendment or supplement to the prospectus included
in the shelf registration statement, (y) the Company notifies the Holder that
the potentially disclosable event no longer exists and that the prospectus
included in the shelf registration statement does not contain an untrue
statement of material fact or omit to state any fact necessary to make the
statements therein not misleading, or (z) which is 90 days after the date that
the Holder orally notified the Company of its intention to sell any Warrant
Shares (each of which is a "Disclosure Restricted Period"). The Company's
obligation under Section 6(a)(iii) to keep the registration statement filed
pursuant to Section 6(a) current and effective shall be extended for a number of
days equal to the Disclosure Restricted period, or, if earlier, until the date
on which all of the Warrant Shares have been disposed of.
(g) Expenses. The Company shall bear the expenses of
registration pursuant to this Section 6; provided, however, that the selling
Holder shall be responsible for (x) the fees and expenses of its own counsel,
its own accountants and other experts retained by it with respect to such
registration and resales and (y) all underwriting discounts or brokerage fees or
commissions relating to the sale of the Warrant Shares pursuant to Section 6(b)
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<PAGE> 11
(h) Indemnification.
(i) The Company shall indemnify and hold
harmless the selling Holder, its general partner, each underwriter (as defined
in the Securities Act), each other selling agent who may be deemed to be an
underwriter, and each controlling person of the selling Holder, any underwriter
or other selling agent, if any (within the meaning of the Securities Act),
against any losses, claims, damages or liabilities, joint or several (or actions
in respect thereof) ("Losses"), to which such indemnified party may be subject
under the Securities Act, under any other statute or at common law, but only to
the extent such Losses arise out of or are based upon (i) any untrue statement
(or alleged untrue statement) of any material fact contained in (x) the
registration statement under which the Warrant Shares held by the Holder were
registered under the Securities Act or offered for sale, (y) any preliminary
prospectus (if used prior to the effective date of such registration statement),
or (z) any final prospectus or any post-effective amendment or supplement
thereto (if used during the period the Company is required to keep the
registration statement effective), in each case, on the effective date of such
registration statement or post-effective amendment, or the date of such
prospectus, including any preliminary prospectus, or supplement (the "Disclosure
Documents"), (ii) any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements made
therein not misleading or (iii) any violation by the Company of the Securities
Act or any Blue Sky Law, or any rule or regulation promulgated under the
Securities Act or any Blue Sky Law, or any other law, applicable to the Company
in connection with the sale, registration or qualification of the Warrant Shares
held by the Holder; and the Company shall reimburse each such indemnified party
for any legal or other expenses reasonably incurred by such party in connection
with investigating or defending any such loss, claim, damage, liability or
action, whether or not resulting in any liability, or in connection with any
investigation or proceeding by any governmental agency or instrumentality
relating to any such claims with respect to any offering of securities pursuant
to this Section 6, but excluding any amounts paid in settlement of any action,
suit, arbitration, proceeding, litigation, or investigation (collectively
"Litigation"), commenced or threatened, if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld; provided, however, that the Company shall not be liable
to the Holder, its general partner, any underwriter, other selling agent or
controlling person in any such case to the extent that any such Losses arise out
of or are based upon (i) an untrue statement or omission or alleged omission (y)
made in any such Disclosure Documents in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such indemnified
party expressly for use in the preparation thereof and so designated by such
indemnified party, or (z) made in any preliminary prospectus if a copy of the
final prospectus was not delivered to the person alleging any loss, claim,
damage or liability for which Losses arise at or prior to the written
confirmation of the sale of such Warrant Shares to such person and the untrue
statement or omission concerned had been corrected in such final prospectus and
copies thereof had timely been delivered by the Company to such indemnified
party; or (ii) the use of any prospectus after such time as the Company has
advised such indemnified party that the filing of a post-effective amendment or
supplement thereto is required, except the prospectus as so amended or
supplemented, or the use of any prospectus after such time as the obligation of
the Company to keep the same current and effective has expired.
(ii) In connection with the registration or sale
of Warrant Shares pursuant to this Section 6, the Holder shall indemnify and
hold harmless the Company, each of its
11
<PAGE> 12
directors, each of its officers who have signed such registration statement and
each controlling person of the Company (within the meaning of the Securities
Act), against any Losses, joint or several, to which such indemnified party may
become subject under the Securities Act, under any other statute or at common
law, but only to the extent such Losses arise out of or are based upon (i) any
untrue statement (or alleged untrue statement) of any material fact contained in
any of the Disclosure Documents or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, if the statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such indemnifying party expressly for use in the
preparation thereof and so designated by such indemnifying party; (ii) the use
by such indemnifying party of any prospectus after such time as the Company has
advised such indemnifying party that the filing of a post-effective amendment or
supplement thereto is required, except the prospectus as so amended or
supplemented, or after such time as the obligation of the Company to keep the
registration statement effective and current has expired, or (iii) any
information given or representation made by such indemnifying party in
connection with the sale of Warrant Shares which is not contained in and not in
conformity with the prospectus (as amended or supplemented at the time of the
giving of such information or making of such representation); and such
indemnifying party shall reimburse each such indemnified party for any legal and
other expenses reasonably incurred by such party in investigating or defending
any such loss, claim, damage, liability or action, whether or not resulting in
any liability, or in connection with any investigation or proceeding by any
governmental agency or instrumentality relating to any such claims with respect
to any offering of securities pursuant to this Section 6, but excluding any
amounts paid in settlement of any Litigation, commenced or threatened, if such
settlement is effected without the prior written consent of such indemnifying
party, which consent shall not be unreasonably withheld.
7. Transfer of Warrants. Subject to the provisions of Section 5, this
Warrant may be transferred, in whole or in part, to any partner in SVFII, by
presentation of the Warrant to the Company with written instructions for such
transfer and by the execution by such transferee of an investment letter in a
form reasonably satisfactory to the Company. Upon such presentations for
transfer and receipt of such investment letter, the Company shall promptly
execute and deliver a new Warrant or Warrants in the form hereof in the name of
the assignee or assignees and in the denominations specified in such
instructions. The Company shall pay all expenses in connection with the
preparation, issuance and delivery of Warrants under this Section 7.
8. Warrant Holder Not Shareholder. This Warrant does not confer upon
the Holder, as such, any right whatsoever as a shareholder of the Company.
9. Adjustment Upon Changes in Company Common Stock. The number of
shares of Common Stock subject to this Warrant and the Exercise Price per share
of such shares shall be adjusted by the Company proportionately to reflect
changes in the capitalization of the Company as a result of any
recapitalization, reclassification, stock dividend, stock split, combination of
shares, exchange of shares or any other change in the Company's capital
structure which affects holders of Common Stock generally. All adjustments
described herein shall be reflected on the Company's stock warrant ledger and
the Holder shall receive written notice thereof.
12
<PAGE> 13
10. Merger, Sale of Assets, etc. If at any time while this
Warrant, or any portion thereof, is outstanding and unexpired, there shall be
(a) a reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for in Section 9 hereof), (b) a merger
or consolidation of the Company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which the
Company is the surviving entity but the shares of the Company's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, or (c) a sale or transfer of the Company's properties and assets as,
or substantially as, an entirety to any other person, then, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision shall
be made so that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon exercise of this Warrant would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if this
Warrant had been exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment for other
future events as provided in Section 9. The foregoing provision of this Section
10 shall similarly apply to successive reorganizations, consolidations, mergers,
sales and transfers and to the stock or securities of any other corporation that
are at the time receivable upon the exercise of this Warrant. If the per share
consideration payable to the holder hereof for shares in connection with any
such transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the Company's
Board of Directors. In all events, appropriate adjustments (as determined in
good faith by the Company's Board of Directors) shall be made in the application
of the provisions of this Warrant with respect to the rights and interests of
the Holder after the transaction, to the end that the provisions of this Warrant
shall be applied after that event, as nearly as reasonably may be, in relation
to any shares or other property deliverable after that event upon exercise of
this Warrant.
11. Notice of Certain Events. In case:
(a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of capital
stock of any class, or to receive any other rights; or
(b) of any capital reorganization, any reclassification of
shares of capital stock of the Company (other than a subdivision or combination
of outstanding shares of Common Stock to which Section 9 applies), or any
consolidation or merger of the Company or the sale or transfer of all or
substantially all of the assets of the Company; or
(c) of any voluntary dissolution, liquidation, or winding up
of the Company;
then the Company shall mail (at least ten (10) days prior to the applicable date
referred to in subclause (x) or in subclause (y) below, as the case may be), to
the Holder at the address set forth in the Company's stock records, a notice
stating that (x) the date on which a record is to be taken for the purpose of
such dividend, distribution or rights or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled to such
dividend, distribution or rights
13
<PAGE> 14
are to be determined, or (y) the date on which such reclassification, capital
reorganization, consolidation, merger, sale, transfer, dissolution, liquidation
or winding up is expected to become effective, and, if applicable, the date as
of which it is expected that holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, capital reorganization, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up.
14
<PAGE> 15
IN WITNESS WHEREOF, Healthdyne Information Enterprises, Inc. has caused
this Warrant to be executed by its duly authorized officer on the date first
above written.
HEALTHDYNE INFORMATION ENTERPRISES, INC.
By: /s/ Joseph G. Bleser
-----------------------------------------
Name: Joseph G. Bleser
Title: Executive Vice President and
Chief Financial Officer
Accepted:
THE SOUTHERN VENTURE FUND II, L.P.
By: Its General Partner
SV Partners II, L.P.
By: /s/ J. Donald McLemore, Jr.
---------------------------------------
Name: J. Donald McLemore, Jr.
Title: Partner
15
<PAGE> 16
EXHIBIT A
NOTICE OF EXERCISE
To: HEALTHDYNE INFORMATION ENTERPRISES, INC.
The undersigned, the holder of the foregoing Warrant No. S-1, and
pursuant to the terms hereof, hereby elects to exercise rights represented by
said Warrant for, and to purchase thereunder, _________ shares of the Company's
Common Stock covered by said Warrant, and tenders herewith payment of the
purchase price in full for such shares of $__________ by:
_____ (a) cash, through the delivery of a certified or official bank
check; or
_____ (b) exercising the Conversion Right provided under Section 4(b)
of the
Warrant by the surrender of said Warrant.
The undersigned hereby requests that certificates for such shares (or
any other securities or other property issuable upon such exercise) be issued in
the name of and delivered to the undersigned at the address set forth below.
----------------------------------------
Name
Date:
------------ ----------------------------------------
Signature
Address:
----------------------------------------
----------------------------------------
----------------------------------------
<PAGE> 1
EXHIBIT 2.3
AGREEMENT
This AGREEMENT dated December 31, 1997 (the "Agreement"), by and
between Criterion Health Strategies, Inc. (f/k/a Alpha Development Corp.), a
Tennessee corporation ("CHS"), Healthdyne Information Enterprises, Inc., a
Georgia corporation ("HIE"), and The Southern Venture Fund II, L.P., a Delaware
limited partnership ("SVFII").
WITNESSETH:
WHEREAS, on October 21, 1994, CHS, Healthdyne, Inc. ("Healthdyne"),
Brenton L. Teveit ("Teveit") and J. Edward Pearson, Jr. ("Pearson") (Teveit and
Pearson, collectively, the "Former Investors" and, individually, a "Former
Investor") entered into an Incorporation Agreement (as hereinafter defined) to
incorporate CHS and sell to Healthdyne 10 shares of the common stock, no par
value, of CHS ("CHS Common Stock") and a debenture due June 30, 2004 in the
principal amount of $4,000,000 and convertible into 639,990 shares of CHS Common
Stock; and
WHEREAS, on December 4, 1995, CHS, Healthdyne, HIE, SVFII and the
Former Investors entered into an Investment Agreement (as hereinafter defined)
which amended the Incorporation Agreement to acknowledge transfer of
Healthdyne's interest in CHS to HIE and to transfer half of such interest to
SVFII such that each of HIE and SVFII owned 5 shares of CHS Common Stock and a
debenture due June 30, 2004 in the principal amount of $2,000,000 and
convertible into 319,995 shares of CHS Common Stock; and
WHEREAS, on November 1, 1996, the Board of Directors of CHS approved a
5-for-1 split (the "Stock Split") of the CHS Common Stock, which was effected in
the form of a 500% stock dividend paid to shareholders of record on November 1,
1996; and
WHEREAS, each of HIE and SVFII currently has a 50% equity ownership
interest in CHS, with the following respective interests in CHS after the Stock
Split: each of HIE and SVFII owns 25 shares of CHS Common Stock, and a debenture
due June 30, 2004 in the principal amount of $2,000,000 and convertible into
1,599,975 shares of CHS Common Stock; and
WHEREAS, each of HIE and SVFII has fully funded its $2,000,000
commitment to CHS under the Amended Loan Agreement (as hereinafter defined)
entered into in connection with the convertible debentures; and
WHEREAS, pursuant to the Option Agreement (as hereinafter defined),
SVFII granted to HIE an option (the "Option") to purchase SVFII's entire
interest in CHS for 416,666 shares of HIE common stock, par value $.01 per share
("HIE Common Stock"), subject to adjustment if the HIE Common Stock is less than
$4.80 per share on the date of the notice of exercise; and
WHEREAS, in connection with the Option, HIE granted SVFII the Warrant
(as hereinafter defined) to purchase 50,000 shares of HIE Common Stock with a
per share exercise price of $4.5625; and
<PAGE> 2
WHEREAS, in connection with the Option Agreement, CHS, HIE, SVFII and
the Former Investors entered into a Consent (as hereinafter defined), pursuant
to which the parties consented to the execution and entry by HIE and SVFII into
the Option Agreement and the Warrant and the consummation of the transactions
contemplated thereby, subject, in the case of the Former Investors and CHS, to
the execution and consummation of definitive agreements between HIE and the
Former Investors as contemplated by the AIP (as hereinafter defined); and
WHEREAS, CHS, HIE, SVFII and each of the Former Investors entered into
agreements on June 13, 1997 to effectuate the transactions contemplated by the
AIP as set forth in the Restructuring Agreements (as hereinafter defined) which
provided for, among other things, (i) the acquisition by CHS of the interests of
the Former Investors in CHS and (ii) the conversion of all of the employee
options to purchase CHS Common Stock into options to purchase HIE Common Stock;
and
WHEREAS, in connection with the Restructuring Agreements, CHS, HIE,
SVFII and the Former Investors amended the Incorporation Agreement on June 13,
1997 as appropriate in order to effectuate the acquisition by CHS of the
interests of the Former Investors in CHS; and
WHEREAS, HIE and SVFII have agreed to amend the Option Agreement and
the Warrant to provide that (i) the exercise price of the Option will not be
subject to adjustment and (ii) the per share exercise price of the Warrant will
be adjusted from $4.5625 to the fair market value of the HIE Common Stock as of
the closing date for the Option exercise; and
WHEREAS, the parties hereto desire to terminate and/or otherwise amend
the various agreements and arrangements between such parties relative to their
respective investments in CHS (as herein described, the "Ancillary Agreements")
in order to effectuate the acquisition by HIE of a 100% equity interest in CHS
pursuant to HIE's exercise of the Option;
NOW, THEREFORE, in consideration of the premises hereof and the mutual
benefits to be derived hereunder and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, CHS, HIE and SVFII
agree as follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the respective meanings indicated below:
"AIP" -- Agreement in principle dated November 6, 1996 among
HIE and the Former Investors.
"Amended Loan Agreement" -- the Loan Agreement dated October
21, 1994 between Healthdyne and CHS, as amended by the First Amendment thereto
dated December 4, 1995 between Healthdyne, HIE, SVFII and CHS.
"Amended Security Agreement" -- the Security Agreement dated
October 21, 1994 between Healthdyne and CHS, as amended by the First Amendment
thereto dated December 4, 1995 between Healthdyne, HIE, SVFII and CHS.
2
<PAGE> 3
"Amended Shareholders' Agreement" -- the Shareholders'
Agreement dated October 21, 1994 between Healthdyne, CHS and the Former
Investors, as amended by the Waiver and Second Amendment to Shareholders'
Agreement dated December 4, 1995 between Healthdyne, CHS, HIE, SVFII and the
Former Investors.
"Consent"-- the Consent dated December 18, 1996 between CHS,
HIE, SVFII and the Former Investors.
"Incorporation Agreement -- the Incorporation Agreement dated
October 21, 1994, as amended by the Investment Agreement and First Amendment to
Incorporation Agreement dated December 4, 1995, as further amended by the Second
Amendment to Incorporation Agreement and Termination of Pledge Agreement dated
as of June 13, 1997.
"Intercreditor Agreement" -- the Intercreditor Agreement dated
December 4, 1995 between HIE and SVFII.
"Investment Agreement" -- the Investment Agreement and First
Amendment to Incorporation Agreement dated December 4, 1995 among Healthdyne,
CHS, HIE, SVFII and the Former Investors.
"Letter Agreement" -- the Letter Agreement dated December 4,
1995 between CHS, HIE, SVFII and the Former Investors.
"Option Agreement" -- Option Agreement dated December 18, 1996
between the HIE and SVFII, as amended by that certain letter agreement between
HIE and SVFII dated May 16, 1997 and as further amended as of December 31, 1997.
"Restructuring Agreements" -- the Agreement dated June 13,
1997 between CHS, HIE and Teveit and the Agreement dated June 13, 1997 between
CHS, HIE and Pearson.
"Warrant" -- Stock Purchase Warrant dated December 18, 1996
between HIE and SVFII.
2. Amendment or Termination of Ancillary Agreements.
Subject to the exercise by HIE of its Option to acquire SVFII's entire
investment in CHS pursuant to the Option Agreement, the Ancillary Agreements
shall be deemed amended or terminated, as the case may be, as follows (all such
amendments or terminations to be effective simultaneously with the Option
closing):
(a) Termination of the Incorporation Agreement. The Incorporation
Agreement shall be terminated, and each of HIE and SVFII hereby waive any
registration right pursuant to Section 7 of the Incorporation Agreement.
(b) Termination of the Investment Agreement. The Investment
Agreement shall be terminated and any obligation of CHS to issue warrants
pursuant to Section VI of the Investment Agreement which provides for the
issuance of warrants by CHS in event of the closing of the
3
<PAGE> 4
first firm commitment underwritten sale of CHS Common Stock to the general
public eliminated, and each of HIE and SVFII hereby waive any such warrant
right.
(c) Termination of Shareholders' Agreement and Intercreditor
Agreement. CHS, HIE and SVFII hereby acknowledge that, upon consummation of the
transactions contemplated by the Option Agreement, (i) the Amended Shareholders'
Agreement will automatically terminate in accordance with Section 6.3(a)(2)
thereof and (ii) the Intercreditor Agreement shall terminate.
(d) Amendment to Amended Loan Agreement and Amended Security
Agreement.
SVFII shall not be deemed a party to the Amended Loan Agreement or the Amended
Security Agreement and the security interests granted to SVFII under the Amended
Security Agreement are hereby assigned to HIE.
(e) Amendment of Letter Agreement. SVFII shall not be deemed a
party to the Letter Agreement, and all references to SVFII shall be deleted, so
that SVFII shall no longer have rights or obligations thereto.
3. Consents to Transfers. Each of CHS, HIE and SVFII hereby (i)
consents to and approves the consummation of the transactions contemplated by
the Investment Agreement, the Restructuring Agreements and the Option Agreement
(and each amendment thereto), and (ii) waives its/his right of first refusal
under the Amended Shareholders' Agreement and any requirements under the
Investment Agreement and the Incorporation Agreement which may be applicable
with respect to any transfer of interests in CHS pursuant to the Investment
Agreement, the Restructuring Agreements and the Option Agreement (and each
amendment thereto).
4. Miscellaneous.
(a) Governing Law; Severability. This Agreement shall be governed
by and construed in accordance with the laws of the State of Georgia. Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
(b) Successor and Assigns. This Agreement shall inure to the
benefit of and shall be binding upon the parties, their legal representatives
and permitted assigns, subject to the limitations otherwise set forth in this
Agreement.
(c) Counterparts. For the convenience of the parties, any number
of counterparts of this Agreement may be executed and all such counterparts or
facsimile copy thereof shall be deemed to be an original instrument.
(d) Notices. Any notice or other communication by any party
hereto to the other parties shall be in writing and shall be given, and be
deemed to have been given, if either delivered personally, by overnight
delivery service or mail, postage prepaid, registered or certified mail,
return receipt requested, addressed as follows:
4
<PAGE> 5
(i) to CHS: Criterion Health Strategies, Inc.
215 Second Avenue North, Suite 200
Nashville, Tennessee 37201
Telephone: (615) 259-3363
Facsimile: (615) 259-2877
Attention: President
(ii) to HIE: Healthdyne Information Enterprises, Inc.
1850 Parkway Place, 11th Floor
Marietta, Georgia 30067
Telephone: (770) 423-8450
Facsimile: (770) 423-8440
Attention: President and CEO
(iii) to SVFII: The Southern Venture Fund II, L.P.
310 25th Avenue North, Suite 103
Nashville, Tennessee 37203
Attention; General Partner
Telephone: (615) 329-9448
Facsimile: (615) 329-9237
Any party may change the address for notice by notifying the other
parties in writing of the new address.
(e) Specific Performance. The parties hereto acknowledge and
agree that the benefits to them under this Agreement are unique, that they are
willing to enter into this Agreement only upon performance by each other of all
of their obligations hereunder and that they will not have an adequate remedy
at law if the other fails to perform any of its obligations hereunder.
Accordingly, the parties hereby agree that each shall have the right, in
addition to any other rights or remedies it may have at law or in equity, to
specific performance or equitable relief by way of injunction if the other
party fails to perform any of its obligations hereunder.
(f) Modification or Waiver. No change, modification or waiver of
any term of this Agreement shall be valid or binding upon the parties hereto
unless such change, modification or waiver shall be in writing signed by all
parties hereto.
(g) Headings. The headings and captions used in this Agreement
are used for convenience of reference only and shall not be considered in
construing or interpreting this Agreement. All references in this Agreement to
sections, paragraphs and exhibits shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits attached hereto, all of which are
incorporated herein by this reference.
(h) Entire Agreement. This Agreement and the other instruments
specified herein constitute the entire understanding and agreement of the
parties hereto with respect to the subject matter hereof and supersede all prior
discussions, understandings and agreements with respect thereto.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
CRITERION HEALTH STRATEGIES, INC.
By: /s/ Joseph G. Bleser
-------------------------------------
Name: Joseph G. Bleser
Title: Assistant Secretary
HEALTHDYNE INFORMATION ENTERPRISES, INC.
By: /s/ Joseph G. Bleser
-------------------------------------
Name: Joseph G. Bleser
Title: Executive Vice President and
Chief Financial Officer
THE SOUTHERN VENTURE FUND II, L.P.
By: Its General Partner
SV Partners II, L.P.
By: /s/ J. Donald McLemore, Jr.
-------------------------------------
Name: J. Donald McLemore, Jr.
Title: Partner
6
<PAGE> 1
EXHIBIT 2.4
TERMINATION OF INCORPORATION AGREEMENT
This TERMINATION OF INCORPORATION AGREEMENT (the "Agreement") dated as
of December 31, 1997 (the "Agreement"), by and between Criterion Health
Strategies, Inc. (f/k/a Alpha Development Corp.), a Tennessee corporation
("CHS"), Healthdyne Information Enterprises, Inc., a Georgia corporation
("HIE"), The Southern Venture Fund II, L.P., a Delaware limited partnership
("SVFII"), Brenton L. Teveit ("Teveit") and J. Edward Pearson, Jr. ("Pearson")
(Teveit and Pearson, collectively, the "Former Investors" and, individually, a
"Former Investor").
WITNESSETH:
WHEREAS, HIE has an option (the "Option") to acquire the entire
interest of SVFII in CHS pursuant to the terms of an Option Agreement dated
December 18, 1996, as last amended as of the date hereof (the "Option
Agreement"); and
WHEREAS, pursuant to that certain Consent dated December 18, 1996, each
of CHS, HIE, SVFII and the Former Investors have previously agreed to approve
the consummation of the transactions contemplated by the SVFII Agreements (as
defined therein) and
WHEREAS, in connection with HIE's exercise of its option, certain
agreements among the parties relative to their previous interests in CHS will no
longer be operative or necessary;
NOW, THEREFORE, the parties hereto agree as follows:
Subject to the exercise by HIE of the Option pursuant to the Option
Agreement, the Incorporation Agreement dated October 21, 1994, as amended by the
Investment Agreement and First Amendment to Incorporation Agreement dated
December 4, 1995, as further amended by the Second Amendment to Incorporation
Agreement and Termination of Pledge Agreement dated as of June 13, 1997, be and
hereby is terminated in its entirety, such termination to be effective
simultaneously with the Option closing.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 31st day of December, 1997.
CRITERION HEALTH STRATEGIES, INC.
By: /s/ Joseph G. Bleser
--------------------------------------
Name: Joseph G. Bleser
Title: Assistant Secretary
HEALTHDYNE INFORMATION ENTERPRISES, INC.
By: /s/ Joseph G. Bleser
--------------------------------------
Name: Joseph G. Bleser
Title: Executive Vice President and
Chief Financial Officer
THE SOUTHERN VENTURE FUND II, L.P.
By: Its General Partner
SV Partners II, L.P.
By: /s/ J. Donald McLemore, Jr.
--------------------------------------
Name: J. Donald McLemore, Jr.
Title: Partner
"TEVEIT"
/s/ Brenton L. Teveit
------------------------------------------
Brenton L. Teveit
"PEARSON"
/s/ J. Edward Pearson, Jr.
------------------------------------------
J. Edward Pearson, Jr.
<PAGE> 1
EXHIBIT 10.1
ESTOPPEL AGREEMENT
THIS ESTOPPEL AGREEMENT (this "Agreement") is made and entered into as
of the 2nd day of January, 1998, by and among HEALTHDYNE INFORMATION
ENTERPRISES, INC. ("HIE"), a Georgia corporation, Jerry Scott, a resident of
Texas ("Scott"), George Schwend, a resident of Texas ("Schwend"), Keith Voigts,
a resident of Mississippi ("Voigts"), Larry Streepy, a resident of Colorado
("Streepy"), Steve Fraser, a resident of Texas ("Fraser"), JMS Charitable Trust,
JMS Inheritance Trust; ESS Charitable Trust, ESS Inheritance Trust, MLS
Charitable Trust, MLS Inheritance Trust, and CBS Charitable Trust (collectively,
the "Trusts"; Scott, Schwend, Voigts, Streepy, Fraser and the Trusts may be
hereinafter collectively referred to as the "Shareholders"), and Scott, in his
separate capacity as agent for the Shareholders (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, Matria Healthcare, Inc., a Delaware corporation and successor
by merger to Healthdyne, Inc., a Georgia corporation ("Matria"), HIE, Healthcare
Communications, Inc., a Texas corporation ("HCI"), the Shareholders, the Agent
and certain other shareholders of HCI entered into that certain Settlement
Agreement dated as of December 31, 1995 (the "Settlement Agreement"); and
WHEREAS, in connection with the Settlement Agreement, HIE executed that
certain Non-Negotiable Convertible Promissory Note dated as of December 31, 1995
(the "Original Note") and payable to the Agent in the original principal amount
of $5,061,824.82; and
WHEREAS, also in connection with the transactions contemplated by the
Settlement Agreement, Scott executed that certain Promissory Note dated as of
December 31, 1995 (the "Scott Note") and payable to HCI in the original
principal amount of $300,000; and
WHEREAS, to secure HIE's performance under the Original Note, HIE and
the Agent entered into that certain Pledge Agreement dated as of December 31,
1995 (the "Pledge Agreement"), pursuant to which HIE pledged to the Agent the
"Pledged Stock" and the other "Collateral", each as more fully described in the
Pledge Agreement; and
WHEREAS, HIE, the Shareholders and the Agent entered into that certain
Agreement Concerning Prepayment and Agency Agreement dated as of November 15,
1996 (the "Initial Agreement Concerning Prepayment"), pursuant to which, among
other things, HIE prepaid a portion of the indebtedness to Scott, Schwend and
Streepy evidenced by the Original Note; and
WHEREAS, in connection therewith, the Agent delivered the Original Note
to HIE, and in exchange therefore, HIE delivered to the Agent that certain
Non-Negotiable Amended and
<PAGE> 2
Restated Convertible Promissory Note dated as of November 15, 1996, in the
original principal amount of $4,335,843.43 (the "First Amended Note"); and
WHEREAS, HIE, Scott and the Agent entered into that certain Agreement
Concerning Prepayment dated as of April 30, 1997, pursuant to which HIE prepaid
a portion of the indebtedness owed to Scott evidenced by the First Amended Note;
and
WHEREAS, in connection therewith, the Agent delivered the First Amended
Note to HIE, and in exchange therefore, HIE delivered to the Agent that certain
Non-Negotiable Second Amended and Restated Convertible Promissory Note dated as
of April 30, 1997, in the original principal amount of $3,960,462.39 (the
"Second Amended Note"); and
WHEREAS, HIE, Scott and the Agent entered into that certain Third
Agreement Concerning Prepayment dated as of September 15, 1997, pursuant to
which HIE prepaid a portion of the indebtedness owed to Scott evidenced by the
Second Amended Note; and
WHEREAS, in connection therewith, the Agent delivered the Second
Amended Note to HIE, and in exchange therefore, HIE delivered to the Agent that
certain Non-Negotiable Third Amended and Restated Convertible Promissory Note
dated as of September 15, 1997, in the original principal amount of
$3,830,598.20 (the "Third Amended Note"); and
WHEREAS, the indebtedness owing under the Third Amended Note is due and
payable on January 2, 1998; and
WHEREAS, HIE has asserted that it has claims against the Shareholders
related to breaches of the representations and warranties of the Shareholders
contained in the Settlement Agreement (the "HIE Claims"), which HIE Claims are
disputed by the Shareholders; and
WHEREAS, subject to the terms and conditions hereof, HIE and the
Shareholders have agreed that HIE will waive the HIE Claims in exchange for a
reduction of the remaining obligations owing by HIE to the Shareholders under
the Settlement Agreement and the Third Amended Note;
NOW, THEREFORE, for and in consideration of the premises, the terms and
conditions set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. DEFINED TERMS. Defined terms used herein, as indicated by the
initial capitalization thereof, shall have the same respective meanings ascribed
to such terms in the Settlement Agreement unless otherwise specifically defined
herein.
2. REDUCTIONS OF AMOUNTS OWING UNDER SETTLEMENT AGREEMENT AND THIRD
AMENDED NOTE.
(a) HIE and Scott hereby agree that the indebtedness and other
obligations owing to Scott under the Settlement Agreement and the Third Amended
Note shall be reduced by an
2
<PAGE> 3
amount equal to the indebtedness owing by Scott to HCI under the Scott Note, in
exchange for which HCI shall cancel such promissory note and deliver the same to
Scott on or promptly after the date hereof.
(b) Each of the Shareholders hereby (i) represents and warrants that
the total amount of indebtedness and other obligations owing to such Shareholder
under the Settlement Agreement, whether for principal, interest or otherwise,
and before giving effect to any reduction as contemplated hereby (but after
giving effect to the reduction in the obligations owing to Scott as set forth in
paragraph (a) above), is properly set forth opposite such Shareholder's name in
the column labeled "Note Balances at 1/2/98" on the table attached hereto as
Exhibit A attached hereto and incorporated herein by reference, and (ii) agrees
that such amount shall be and is hereby reduced in the corresponding amount as
set forth on such Exhibit A, such reduced amount reflecting the aggregate amount
of all remaining indebtedness and other obligations owing to such Shareholder by
HIE under the Third Amended Note and the Settlement Agreement (such reduced
amount, as it relates to any such Shareholder, is hereinafter referred to as
such Shareholder's "Payoff Amount").
3. INSTRUCTIONS FOR PAYMENT. Each of the Shareholders hereby
authorizes and directs that HIE pay the applicable Payoff Amount by wire
transfer in accordance with the applicable instructions set forth on Exhibit B
attached hereto.
4. MUTUAL RELEASES.
(i) (a) Effective upon its receipt of the Third Amended Note and the
Pledged Stock, HIE hereby waives the HIE Claims, and each of HIE, HCI and Matria
hereby waives any and all other claims it has or may have against the
Shareholders, or any of them, arising out of any breach of the representations,
warranties and covenants contained in the Settlement Agreement and the
agreements, documents and instruments executed in connection therewith, other
than any claims arising out of a breach by any Shareholder of any of its
obligations under Section 9 and the employment agreements executed thereunder,
and/or Section 10 of the Settlement Agreement and the Scott Distributor
Agreement (as defined in Section 10 of the Settlement Agreement), and (b)
effective upon receipt of the applicable Payoff Amount in accordance with the
terms hereof, each of the Shareholders and the Agent hereby waives any and all
claims it may have against HIE, HCI and/or Matria arising out of the breach of
representations, warranties and covenants contained in the Settlement Agreement
and each of the agreements, documents and instruments executed in connection
therewith.
(ii) Each of the Shareholders and the Agent hereby agrees that,
immediately upon his or its receipt of the applicable Payoff Amount in
immediately available funds in accordance with the payment instructions set
forth above:
(a) the HIE shall have no remaining obligations to such
Shareholder; and
(b) the Agent's security interest in the assets of the HIE,
including, without limitation, the Pledged Stock and the Collateral,
shall automatically terminate.
3
<PAGE> 4
The Shareholders hereby authorize the Agent to, and the Agent agrees
that it shall, deliver the Third Amended Note and the Pledged Stock to Troutman
Sanders LLP ("Troutman"), to be held in escrow prior to the delivery of the
Payoff Amounts. HIE hereby agrees that it shall deliver to Troutman the Scott
Note, to be held in escrow prior to the delivery of the Payoff Amounts. The
Shareholders and the Agent hereby authorize and direct Troutman to release the
Third Amended Note and such Collateral to HIE, and HIE hereby authorizes and
directs Troutman to release the Scott Note to Scott, in each case following
Troutman's receipt of confirmation reasonably satisfactory to it that the Payoff
Amount owing to each Shareholder has been delivered pursuant to the instructions
set forth on Exhibit B. Each of the parties hereto agrees that Troutman shall
have no liability to any party hereto arising under this escrow arrangement.
5. FURTHER ASSURANCES. The Agent agrees to return any additional
Collateral pledged to it and, at HIE's expense, to provide termination
statements or other appropriate documentation, if any, as may be reasonably
necessary or appropriate to terminate of record all liens and security interests
held by the Agent in the assets of HIE, HCI and/or Matria, and, at HIE's
expense, to take any other actions reasonably necessary or desirable to
terminate its security interest in the assets of HIE, HCI and/or Matria.
6. LIMITATION OF AGREEMENT. Except as expressly set forth herein, this
Agreement shall not be deemed to waive, amend or modify any term or condition of
the Settlement Agreement, which is hereby ratified and reaffirmed, and which
shall remain in full force and effect without modification except as herein
provided.
7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute the same Agreement. Any signature page of any such
counterpart, or any electronic facsimile thereof, may be attached or appended to
any other counterpart to complete a fully executed counterpart of this
Agreement, and any telecopy or other facsimile transmission of any signature
shall be deemed an original and shall bind such party.
8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and
shall inure to the benefit of, the respective successors and assigns of the
Shareholders, the Agent and HIE.
9. SECTION REFERENCES. Section titles and references used in this
Agreement shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreements among the parties hereto evidenced hereby.
10. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Texas.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first written above.
HEALTHDYNE INFORMATION
ENTERPRISES, INC.
By: /s/ Joseph G. Bleser
---------------------------------------
Name: Joseph G. Bleser
Title: Chief Financial Officer
/s/ Jerry Scott
-------------------------------------------
Jerry Scott, as Agent and individually
/s/ George Schwend
-------------------------------------------
George Schwend
/s/ Keith Voights
-------------------------------------------
Keith Voigts
/s/ Larry Streepy
-------------------------------------------
Larry Streepy
/s/ Steve Fraser
-------------------------------------------
Steve Fraser
JMS CHARITABLE TRUST
By: /s/ Michael E. Kovarsky
---------------------------------------
Trustee
5
<PAGE> 6
JMS INHERITANCE TRUST
By: /s/ Michael E. Kovarsky
---------------------------------------
Trustee
ESS CHARITABLE TRUST
By: /s/ Michael E. Kovarsky
---------------------------------------
Trustee
ESS INHERITANCE TRUST
By: /s/ Michael E. Kovarsky
---------------------------------------
Trustee
MLS CHARITABLE TRUST
By: /s/ Michael E. Kovarsky
---------------------------------------
Trustee
MLS INHERITANCE TRUST
By: /s/ Michael E. Kovarsky
---------------------------------------
Trustee
CBS CHARITABLE TRUST
By: /s/ Michael E. Kovarsky
---------------------------------------
Trustee
6
