<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 1, 1998.
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------
HEALTHDYNE INFORMATION ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-2112366
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1850 PARKWAY PLACE, SUITE 1100
MARIETTA, GEORGIA 30067
(770) 423-8450
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------
ROBERT I. MURRIE
1850 PARKWAY PLACE, SUITE 1100
MARIETTA, GEORGIA 30067
(770) 423-8450
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
----------
With a copy to:
PATRICIA A. WILSON, ESQ.
TROUTMAN SANDERS LLP
NATIONSBANK PLAZA, SUITE 5200
600 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30308-2216
(404) 885-3000
----------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
----------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
----------
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================
AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SHARES TO BE BE AGGREGATE PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER SHARE+ OFFERING PRICE+ FEE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01
per share (together with 3,342,802 $3.4375 $11,490,882 $3,390
associated preferred stock shares
purchase rights)
=================================================================================================
</TABLE>
+ Estimated solely for the purpose of determining the registration fee and
calculated in accordance with Rule 457(c) under the Securities Act on the
basis of the average of the high and low prices of the Company's Common Stock
on May 27, 1998 as quoted on the Nasdaq National Market.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 3
SUBJECT TO COMPLETION, DATED JUNE 1, 1998
3,342,802 SHARES
HEALTHDYNE INFORMATION ENTERPRISES, INC.
COMMON STOCK
The 3,342,802 shares (the "Shares") of common stock, par value $.01 per
share (together with associated preferred stock purchase rights) (the "Common
Stock"), of Healthdyne Information Enterprises, Inc. ("HIE" or the "Company")
offered hereby are being offered for the account of certain selling shareholders
of the Company identified herein (the "Selling Shareholders"). The Shares
offered hereby were issued by the Company in connection with (i) the Company's
acquisition on December 31, 1997 of the remaining 50% interest in Criterion
Health Strategies, Inc. ("CHS") that the Company did not previously own and (ii)
the Company's merger of a wholly-owned subsidiary of the Company with HUBLink,
Inc. ("HUBLink") on May 12, 1998. The Company will not receive any of the
proceeds from the sale of the Shares by the Selling Shareholders. See "The
Selling Shareholders."
The Selling Shareholders, directly, or through agents or broker-dealers
designated from time to time, may sell the Shares from time to time on terms to
be determined at the time of sale. To the extent required, the number of Shares
to be sold, the names of any agent or broker-dealer and any applicable
commission or discount with respect to any particular offer will be set forth in
an accompanying Prospectus Supplement. The Selling Shareholders reserve the sole
right to accept or reject, in whole or in part, any proposed purchase of the
Shares to be made directly or through agents. The Company has agreed to bear all
of the expenses (other than commissions, underwriting discounts and fees of any
counsel of the Selling Shareholders) in connection with the registration and
sale of the Shares being offered by the Selling Shareholders. See "Plan of
Distribution."
The Common Stock is listed on the Nasdaq National Market under the
symbol "HDIE." On May 28, 1998, the last reported sales price of the Common
Stock on the Nasdaq National Market was $3.50 per share.
FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE SHARES OF
COMMON STOCK OFFERED HEREBY, SEE "RISK FACTORS" ON PAGES 5 THROUGH 12.
The Selling Shareholders and any agents or broker-dealers that
participate with the Selling Shareholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), and any commissions received by them and any
profit on their resale of the Shares may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Plan of Distribution"
herein for indemnification arrangements among the Company and the Selling
Shareholders.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------
The date of this Prospectus is ___, 1998
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, information statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements, information statements and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities of the Commission maintained at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at its regional offices
located at 7 World Trade Center, 13th Floor, New York, New York 10048, and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials can be obtained at prescribed rates from the Public Reference Section
of the Commission, at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
reports, proxy statements, information statements and other information can also
be obtained from the Web Site that the Commission maintains at
http://www.sec.gov.
This Prospectus constitutes a part of a Registration Statement on Form
S-3 (the "Registration Statement") filed by the Company with the Commission
under the Securities Act with respect to the shares of Common Stock offered
hereby. This Prospectus omits certain of the information contained in the
Registration Statement as permitted by the rules and regulations of the
Commission, and reference is hereby made to the Registration Statement and
related exhibits for further information with respect to the Company, the
Selling Shareholders and the securities offered hereby. Any statements contained
herein concerning the provisions of any document are not necessarily complete,
and in each instance reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been previously filed by the Company with
the Commission and are hereby incorporated by reference in this Prospectus as of
their respective dates:
(a) Annual Report on Form 10-K for the year ended December 31, 1997;
(b) Current Report on Form 8-K dated December 31, 1997;
(c) Quarterly Report on Form 10-Q for the quarter ended March 31,
1998;
(d) Current Report on Form 8-K dated May 7, 1998;
(e) Current Report on Form 8-K dated May 12, 1998;
(f) Current Report on Form 8-K dated June 1, 1998; and
(g) the description of the Common Stock contained in the Company's
Registration Statement on Form 8-A registering the Company's Common Stock under
the Exchange Act.
2
<PAGE> 5
Additionally, all documents filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of the offering of the
securities made hereby shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statements contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide, upon request, without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, on the
written or oral request of such person, a copy of any or all of the documents
incorporated herein by reference (other than certain exhibits to such documents
which are not specifically incorporated by reference in such documents).
Requests for such copies should be directed to: Healthdyne Information
Enterprises, Inc., 1850 Parkway Place, Suite 1100, Marietta, Georgia 30067,
Attention: Secretary, telephone (770) 423-8540.
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus or a supplement to this Prospectus
in connection with the offer made hereby, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or the Selling Shareholders. This Prospectus does not constitute
an offer to sell, or a solicitation of an offer to buy, the securities offered
hereby to any person in any state or other jurisdiction in which such offer or
solicitation is unlawful. The delivery of this Prospectus at any time does not
imply that information contained herein is correct as of any time subsequent to
its date.
THE COMPANY
The Company is a provider of integration software tools and services to
enterprises. HIE's target customer, the "enterprise," is a large company with
multiple departments or multiple entities joined together to fulfill a common
mission. Enterprises generally need information to operate, survive and prosper,
but their information systems may consist of disparate hardware and software
systems. Using a best-of-breed approach, an enterprise may custom build its own
information system from disparate hardware and software systems to take
advantage of the particular strengths of systems provided by different vendors.
Or, an enterprise may unexpectedly inherit disparate legacy systems (e.g. as the
result of a consolidation or a paradigm shift), replacement of which would be
prohibitively expensive. In any case, the Company's software tools and services
enable enterprises to integrate disparate hardware and software systems.
The Company was incorporated as a Georgia corporation on June 15, 1994
and was a wholly-owned subsidiary of Healthdyne, Inc. ("Healthdyne") until
November 6, 1995, when
3
<PAGE> 6
Healthdyne distributed to its shareholders all the outstanding shares of the
Common Stock (the "Spin-off"). Subsequent to the Spin-off, Healthdyne and Tokos
Medical Corporation merged with and into Matria Healthcare, Inc. The principal
executive offices of the Company are located at 1850 Parkway Place, Suite 1100,
Marietta, Georgia 30067.
4
<PAGE> 7
RISK FACTORS
Prospective purchasers of the Common Stock should carefully consider the
factors set forth below, as well as the other information contained in this
Prospectus, in evaluating an investment in the Common Stock offered hereby.
Financial information included in this Registration Statement has been restated
to include the effect of the Company's May 12, 1998 acquisition of HUBLink
accounted for as a pooling of interests.
Lack of Profitability and Accumulated Deficit. With the exception of
1996, the Company has generally sustained operating losses since its
incorporation. The Company reported net earnings of $107,000 in 1996, but
incurred net losses of $8.6 million and $11.0 million in 1997 and 1995,
respectively. As of December 31, 1997, the Company had an accumulated deficit of
$22.8 million. No assurance can be given that the Company will ever generate
significant revenue or sustain or again achieve profitability. Certain of the
Company's integration software tools are in the early stages of market
acceptance. To sustain profitable operations, the Company must successfully
market its current and prospective integration software tools and expand sales
of its integration software tools and integration services in healthcare and
other industries, such as banking and financial services. No assurance can be
given that such efforts will be successful.
Dependence on Single Integration Software Tool. Approximately 31% of the
Company's revenue in 1997 (approximately 76% of the Company's software revenue
in 1997) was derived from a single type of integration software tool, an
integration engine. For at least the near-term, the Company will continue to be
largely dependent on the sales of this integration software tool. A downturn in
the market for the integration engine would likely have a material adverse
effect on the Company's revenue and results of operations. The success of the
Company will continue to depend in part on its ability to diversify its revenue
base. There can be no assurance that the Company will be successful in its
diversification efforts.
Fluctuations in Quarterly Operating Results and Seasonality. Results of
operations have fluctuated and may continue to fluctuate significantly from
quarter to quarter as a result of a number of factors, including, among others
(i) contract terms and the volume and timing of system sales and customer
acceptance; (ii) customer purchasing patterns, order cancellations and
rescheduling of system installations; (iii) the mix of direct and indirect
sales; (iv) the mix of higher-margin software revenue and lower-margin services
revenue; (v) the actions of competitors; and (vi) the timing of acquisitions and
divestitures. Accordingly, the Company's future operating results are likely to
be subject to significant variability from quarter to quarter and could be
adversely affected in any particular quarter. The Company's total revenue and
results of operations may also be affected by seasonal trends including the
possibility of higher revenue in the Company's fourth quarter and lower revenue
in the first three quarters, in particular the first quarter, as a result of
many customers' annual purchasing and budgetary practices and the Company's
sales commission practices which rely in part on annual quotas. As a result, the
Company believes that period-to-period comparisons of its revenue and results of
operations are not necessarily meaningful and should not be relied upon as
indicators of future performance. Due to the foregoing factors, it is possible
that the Company's operating results will be below the expectations of public
market analysts and investors.
5
<PAGE> 8
Uncertainty of Market Acceptance. The Company's success will depend in
large part on the acceptance of the Company's integration software tools and
integration services as partial or complete solutions to an enterprise's system
integration problems by the chief information executive and technical users
within an enterprise. There can be no assurance that the Company's integration
software tools and integration services will achieve the market acceptance
necessary for profitable operations.
New Products and Technological Changes. The market for the Company's
integration software tools and integration services is characterized by
continued and rapid technological advances in software development requiring
ongoing expenditures for research and development and the timely introduction of
new integration software tools and integration services. In addition,
compatibility with existing and emerging industry standards is essential to the
Company's marketing strategy and research and development efforts. The
establishment of standards is largely a function of user acceptance, and
standards are therefore subject to change. The Company's integration software
tools are dependent upon a number of advanced technologies, including those
relating to computer hardware and software, storage devices and other peripheral
components, all of which are subject to rapid change. Accordingly, the Company's
future success will depend upon its ability on a timely basis to develop and
introduce new integration software tools and enhance its existing integration
software tools in order to keep pace with competitive offerings, adapt to
technological developments and changing industry standards and provide
additional functionality to address the increasingly sophisticated needs of its
customers. To the extent the Company determines that new technologies and
equipment are required to remain competitive, the acquisition and implementation
of such technologies and equipment are likely to require investment of
significant time and capital. Depending on the complexity of a given integration
software tool, the Company's development and introduction cycle could last
months or years. There can be no assurance that the Company will be successful
in developing, introducing on a timely basis, and marketing such integration
software tools or enhancements thereof or that they will be accepted by the
market. Research and development expense totaled $3.0 million, $2.5 million and
$2.7 million in 1997, 1996 and 1995, respectively. There can be no assurance
that the necessary capital will be available in the future or that the
integration software tools will become or remain commercially viable. In
addition, there can be no assurance that the Company's future development
efforts will be successful or that the emergence of new technologies, industry
standards or customer requirements will not render the Company's technology,
equipment or processes obsolete or uncompetitive. Further, there can be no
assurance that the Company will be able to acquire or license the needed new
technology at a price or on terms acceptable to the Company. Finally, without
the timely development and successful introduction of market-driven integration
software tools, there can be no assurance that the Company can either achieve
and sustain profitable operations or continue operations.
Proprietary Technology and Dependence on Third-Party Technology. The
Company's success is dependent to a significant extent on its ability to
maintain the proprietary and confidential software incorporated in its
integration software tools as they are released. Although the Company currently
relies on a combination of copyright and trade secret and contractual
protections to establish and protect its proprietary rights, the Company does
have patent applications pending for some of its integration software tools and
plans to pursue patents on the software tools that qualify for such protection
as the Company deems necessary to protect its
6
<PAGE> 9
intellectual property. However, without patent protection, there can be no
assurance that the legal protections and the precautions taken by the Company
will be adequate to prevent misappropriation of the Company's technology or
trade secrets, or that these protections and precautions will prevent
independent third-party development of competitive technology and integration
software tools. In addition, the laws of some foreign countries do not protect
the Company's proprietary rights to the same extent as do the laws of the United
States.
The Company is dependent upon third-party suppliers to license to it
necessary technology that is incorporated into certain of the Company's
integration software tools. The Company has less control over the scheduling and
quality of work of third-party suppliers than its own employees. Furthermore,
the Company's agreements to license certain third-party technology will
terminate after specified dates unless renewed. To the extent possible, the
Company has determined that the third-party intellectual property used in its
integration software tools is in the public domain or used in accordance with
licensed terms, including the license terms of freeware used in its integration
software tools. However, while HIE believes that it has all rights necessary to
market and sell its solutions without infringement of intellectual proprietary
rights held by others, the Company typically uses freeware and shareware as is
and has not conducted a formal infringement search. Accordingly, there can be no
assurance that such conflicting rights do not exist. There can be no assurance
that such use is in compliance with such licenses or that the Company will not
become the subject of infringement claims or legal proceedings by third parties
with respect to current or future software tools and that such claims or
proceedings will not have a material adverse effect on the Company's business,
financial condition or results of operations. An adverse outcome in litigation
or similar adversarial proceedings could subject the Company to significant
liabilities to third parties, require expenditure of significant resources to
develop non-infringing technology, require disputed rights to be licensed from
others or require the Company to cease the marketing or use of certain software
tools, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations. As the number of
integration software tools in the industry increases and the functionality of
these integration software tools further overlaps, the Company believes that
software developers may become increasingly subject to infringement claims. To
the extent that the Company wishes or is required to obtain licenses to patents
or proprietary rights of others, there can be no assurance that any such
licenses will be made available on terms acceptable to the Company, or at all.
Reliance on Distributors and Customer Concentration. Approximately 18%,
16% and 19% of the Company's total revenue in 1997, 1996 and 1995, respectively,
were generated by third-party distributors of the Company's integration software
tools. No single distributor provided customers to the Company that accounted
for more than 10% of the Company's revenue in either 1997 or 1996, but one
distributor provided customers to the Company that accounted for approximately
14% of the Company's total revenue in 1995. The loss of a significant
distributor could have a material adverse effect on the Company's business,
financial condition and results of operations. No single customer accounted for
more than 10% of the Company's revenue in either 1997 or 1995, but one customer
accounted for approximately 20% of the Company's revenue in 1996. The loss of a
significant customer could have a material adverse effect on the Company's
business, financial condition and results of operations.
7
<PAGE> 10
Risks Associated with International Sales. While approximately 90% of
HIE's revenue in 1997 was generated within the United States, HIE has customers
in 18 countries and five continents. International sales in certain foreign
markets are subject to a variety of risks, including difficulties in
establishing and managing international distribution channels, localizing
software tools for sales in foreign markets and enforcing intellectual property
rights, as well as fluctuations in the value of foreign currencies, changes in
duties and quotas, introduction of tariff or non-tariff barriers and economic,
political and regulatory changes. In addition, to the extent profit is generated
or losses are incurred in foreign countries, the Company's effective income tax
rate may be materially adversely affected. The Company currently does not engage
in hedging transactions, but may do so in the future. There can be no assurance
that any of the factors described above will not have a material adverse effect
on the Company's business, operating results and financial condition.
Risks Associated with the Year 2000. The Year 2000 issue refers
generally to the data structure problem that will prevent systems from properly
recognizing dates after the year 1999. For example, computer programs and
various types of electronic equipment that process date information by reference
to two digits rather than four to define the applicable year may recognize a
date using "00" as the year 1900 rather than the year 2000. The Year 2000
problem could result in system failures or miscalculations causing disruptions
of operations. The Year 2000 problem may occur in computer software programs,
computer hardware systems and any device that relies on a computer chip if that
chip relies on date information. Based on a preliminary study, the Company does
not anticipate either a significant amount of incremental expense or a
disruption in service associated with the Year 2000 and its impact on the
Company's tools and systems. However, there can be no assurance that the
Company's tools and systems, nor the systems of other companies with whom the
Company conducts business, will be Year 2000 compliant prior to December 31,
1999 or that the failure of any such system will not have a material adverse
effect on the Company's business, operating results and financial condition.
Liability for Errors and Omissions. The Company's integration software
tools are used to provide information that relates to healthcare enterprise
operations and other critical applications. In addition, use of the Company's
integration software tools could also potentially jeopardize the security and
privacy of confidential patient and other information and data stored in the
Company's integration software tools and in the computer systems of the
Company's customers. Any failure by the Company's integration software tools to
provide accurate and timely information or to protect the security and privacy
of confidential patient and other information could result in claims against the
Company. Moreover, although the Company believes that none of the releases of
its software contain a Year 2000 problem, there can be no assurance that its
tools will not present users with a Year 2000 problem, or that any such problem
will not result in a product liability claim. The Company maintains errors and
omissions insurance to protect against claims associated with the use of its
integration software tools, but there can be no assurance that its insurance
coverage would adequately cover any claims asserted against the Company. A
successful claim brought against the Company could have a material adverse
effect on the Company. Even unsuccessful claims could result in the Company's
expenditure of funds in litigation and management time and resources. There can
be no assurance that the Company will not be subject to claims alleging errors
and omissions in integration software tool development and operation, that such
claims will not result in liability in excess of its insurance coverage, that
the Company's insurance will cover such claims or that appropriate or adequate
insurance will continue to be available to the Company in the future at
commercially reasonable rates.
Competition. The Company faces competition from a variety of sources
depending on the types of integration software tools and/or integration services
being offered as the integration solution to a particular customer's problem.
The Company competes with, among others, (i) integration engine companies, such
as Software Technologies Corporation ("STC") and Century Analysis Incorporated
("CAI"); (ii) companies offering enterprise master person index solutions, such
as ActaMed, Oacis Healthcare, Cerner Corporation, STC and CAI; (iii) middleware
software tool companies, such as New Era of Networks, Inc., TSI International
Software, Ltd., STC and CAI; (iv) consulting firms, such as Superior Consultant
Holdings Corporation, First Consulting and Ernst & Young LLP; (v) systems
integration firms, such as Science Applications International Corporation and
Daou Systems, Inc.; (vi) original equipment manufacturers, such as International
Business Machines Corporation; and (vii) internal MIS departments of the
enterprise. A competitor of the Company with respect to one aspect of the
Company's business may serve as a distributor for the Company with respect to
other integration software tools or integration services.
8
<PAGE> 11
In general, the Company's competitors have greater financial, technical,
research and development and marketing resources and more extensive business
experience than the Company. Although the Company believes that its solutions
have advantages over competing tools and services currently being marketed,
there can be no assurance that the Company will be able to continue to compete
effectively in the marketplace if its present and potential competitors are able
to duplicate or improve upon its tools, services or marketing strategy.
Uncertain Ability to Manage Growth. The Company has experienced periods
of rapid growth in 1995 and 1996 that placed, and could continue to place, a
significant strain on the Company's financial, management and other resources.
The Company's future performance will depend in part on its ability to manage
change in its operations, including integration of any acquired businesses and
any internally developed businesses. In addition, the Company's ability to
manage its growth effectively will require it to continue to improve its
operational and financial control systems and infrastructure, and to attract,
train, motivate, manage and retain key employees. If the Company's management
were to become unable to manage growth effectively, the Company's business,
financial condition and results of operations could be materially adversely
affected.
Risks Associated with Possible Acquisitions. The Company intends to
continue to pursue acquisitions as part of its growth strategy. While the
Company has no present commitments or agreements with respect to any additional
acquisitions, the Company anticipates that one or more potential acquisition
opportunities may become available in the future. Acquisitions would require
investment of operational and financial resources and could require integration
of dissimilar operations, assimilation of new employees, diversion of management
resources, increases in administrative costs and additional costs associated
with debt or equity financing. If attractive acquisition opportunities become
available, the Company intends to pursue them actively. There can be no
assurance that the Company will complete any additional acquisitions or that a
future acquisition will not have a material adverse effect on the Company.
Consolidation and Uncertainty in the Healthcare Industry. Many
healthcare providers are consolidating to create larger healthcare enterprises
with greater regional market power. Such consolidation could erode the Company's
existing customer base and reduce the size of the Company's target market. In
addition, the resulting enterprises could have a greater bargaining power, which
may lead to price erosion of the Company's integration software tools and
integration services. The reduction in the size of the Company's target market
or the failure of the Company to maintain adequate price levels could have a
material adverse effect on the Company. The healthcare industry also is subject
to changing political, economic and regulatory influences that may affect the
procurement practices and operation of healthcare industry participants. During
the past several years, the U.S. healthcare industry has been subject to
increased governmental regulation and reform proposals. These reforms may
increase governmental involvement in healthcare, lower reimbursement rates and
otherwise change the operating environment for the Company's customers.
Healthcare industry participants may react to these proposals and the
uncertainty surrounding such proposals by curtailing or deferring investments,
including those for the Company's integration software tools and integration
services. The failure of the Company to maintain adequate price levels or sales
as a result of legislative or market-driven reforms could have a material
adverse effect on the Company's business, results of operations and financial
condition.
9
<PAGE> 12
Dependence on Key Personnel. The loss of the services of Robert I.
Murrie, the Company's President and Chief Executive Officer, or certain other
key personnel could have a material adverse effect on the Company. In addition,
the Company believes that its future success will be dependent in part on its
continued ability to recruit, motivate and retain qualified personnel. The
Company faces competition for such personnel from other companies and
organizations. The Company's anticipated growth and expansion into areas and
activities requiring additional expertise will require the addition of new
management personnel and the development of additional expertise by existing
management personnel. The failure to attract and retain such personnel or to
develop such expertise could adversely affect the Company's business.
Possible Adverse Effects of Government Regulation. The United States
Food and Drug Administration (the "FDA") has issued a draft guidance document
addressing the regulation of certain computer products as medical devices under
the Federal Food, Drug and Cosmetic Act (the "FDC Act"). To the extent that
computer software is a medical device under the policy, the manufacturers of
such products could be required, depending on the product, to: (i) register and
list their products with the FDA; (ii) notify the FDA and demonstrate
substantial equivalence to other products on the market before marketing such
products; or (iii) obtain FDA approval by filing a pre-market application that
establishes the safety and effectiveness of the product. The Company expects
that the FDA is likely to become increasingly active in regulating computer
software that is intended for use in healthcare settings. The FDA, if it chooses
to regulate such software, can impose extensive requirements governing pre- and
post-market conditions such as device investigation, approval, labeling and
manufacturing. In addition, such products would be subject to the FDC Act's
general controls, including those relating to good manufacturing practices and
adverse experience reporting.
The confidentiality of patient records and the circumstances under which
such records may be released for inclusion in the Company's databases are
subject to substantial regulation by state and federal governments. These laws
and regulations govern both the disclosure and the use of confidential patient
medical record information. Although compliance with these laws and regulations
is at present principally the responsibility of the hospital, physician or other
health care provider, regulations governing patient confidentiality rights are
evolving rapidly. Additional legislation governing the dissemination of medical
record information has been proposed at both the state and federal levels. This
legislation may require holders of such information to implement security
measures that may require substantial expenditures by the Company. There can be
no assurance that changes to state or federal laws will not materially restrict
the ability of health care providers to submit information from patient records
using the Company's software tools.
Future Capital Needs and Uncertainty of Additional Funding. The Company
financed its operations from inception through the November 1995 Spin-Off
primarily through equity investments totaling $22.0 million by Healthdyne.
Following the Spin-Off, Healthdyne had no obligation or intention to make
additional advances or equity infusions in the Company. Accordingly, during
November 1996, the Company sold 2.75 million shares of its Common Stock in a
secondary public offering (the "Secondary Offering") and received proceeds of
$10.3 million, after deducting all offering-related expenses. In addition, the
Company received proceeds of $3.0 million, after deducting all offering-related
expenses, from various private placements of Common Stock and from employee
stock option and purchase plans during 1995, 1996 and 1997. The Company
generally uses capital leases to finance additions of computer equipment. The
Company also periodically borrows under established lines of credit for working
capital purposes.
Prior to the completion of the Secondary Offering, the Company used its
available cash and cash flow from operating activities to pay acquired debt and
acquisition financing-related debt, as those obligations matured. Subsequent to
the Secondary Offering, the Company used $800,000, $400,000 and $200,000 of cash
during November 1996, April 1997 and September 1997, respectively, to prepay a
portion of long-term debt at a discount. The Company also invested $995,000
during 1997 to satisfy its funding commitment to CHS. The Company is using the
remainder of the net proceeds from the equity sources referred to above to pay
debt as it matures and for working capital and general corporate purposes.
10
<PAGE> 13
The Company believes that current available cash and anticipated cash
flow from operating activities and short-term borrowings under existing or
future lines of credit will be sufficient to meet the Company's capital
requirements for at least the next twelve months. In the future, the Company
may require additional financing to fund its operations. The Company's future
capital requirements will depend on many factors, including the progress of the
Company's research and development, the market acceptance of any of the
Company's integration software tools, competitive products and the establishment
of third-party licensing arrangements. Any additional equity financing may
result in dilution to the Company's shareholders and debt financing is likely to
subject the Company to financial and other covenants. There can be no assurance
that funds will be available on favorable terms, if at all. The absence of such
financing would have a material adverse effect on the Company's business,
including a possible reduction or cessation of operations.
Possible Volatility of Stock Price. The stock market has from time to
time experienced significant price and volume fluctuations that are unrelated to
the operating performance of particular companies. In addition, factors such as
announcements of technological innovations or the introduction of new products
by the Company or its competitors, market conditions in the healthcare and other
industries and general economic conditions may have a significant effect on the
market price of the Company's Common Stock.
Certain Anti-Takeover Considerations. Certain provisions of the
Company's Articles of Incorporation and By-laws, as well as the Company's
Shareholder Rights Plan, could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from attempting to
acquire, control of the Company. Such provisions could limit the price that
certain investors might be willing to pay in the future for shares of HIE Common
Stock. Certain of such provisions will allow the Company to issue preferred
stock with rights senior to those of HIE Common Stock and to impose various
procedural and other requirements which could make it more difficult for
shareholders to effect certain corporate actions.
11
<PAGE> 14
Risks Associated with Forward-Looking Statements. This Prospectus,
including the information incorporated by reference herein, contains various
forward-looking statements and information that are based on the Company's
beliefs and assumptions, as well as information currently available to the
Company. From time to time, the Company and its officers, directors or employees
may make other oral or written statements (including statements in press
releases or other announcements) which contain forward-looking statements and
information. Without limiting the generality of the foregoing, the words
"believe," "anticipate," "estimate," "expect," "intend," "plan," "seek" and
similar expressions, when used in this Prospectus and in such other statements,
are intended to identify forward-looking statements. All forward-looking
statements and information in this Prospectus are forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act and are intended to be covered by the safe harbors created thereby.
Such forward-looking statements are not guarantees of future performance and are
subject to risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company to differ materially from
historical results or from any results expressed or implied by such
forward-looking statements. Such factors include, without limitation, those
discussed above. Many of such factors are beyond the Company's ability to
control or predict, and readers are cautioned not to put undue reliance on such
forward-looking statements. The Company disclaims any obligation to update or
review any forward-looking statements contained in this Prospectus or in any
statement referencing the factors affecting future performance and other
cautionary statements set forth in this Prospectus, whether as a result of new
information, future events or otherwise.
12
<PAGE> 15
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares offered hereby. All of the proceeds from the sale of the Shares offered
hereby will be received by the Selling Shareholders.
THE SELLING SHAREHOLDERS
All of the Shares offered hereby are beneficially owned by the persons
and entities listed under the heading "Selling Shareholders" in the following
table (individually, a "Selling Shareholder" and collectively the "Selling
Shareholders"). Since the Selling Shareholders may sell all, or some or none of
the Shares, no estimate can be made of the aggregate number of Shares that are
to be offered hereby or that will be beneficially owned by the Selling
Shareholders upon completion of the offering contemplated by this Prospectus.
The following table sets forth the name of each Selling Shareholder, the
number of shares of the Company's Common Stock held by each such person as of
May 26, 1998, the number of shares which may be offered for the account of each
such person, and the number of shares of Common Stock to be owned by each such
person if all the Shares offered hereby are sold. Parties holding shares as
joint tenants with a right of survivorship are indicated by "JT."
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES
SHARES NUMBER OF SHARES TO BE OWNED IF ALL
SELLING HELD AT WHICH MAY SHARES OFFERED ARE
SHAREHOLDERS MAY 26, 1998 BE OFFERED SOLD IN THIS OFFERING
------------ ------------ ----------------- ---------------------
<S> <C> <C> <C>
The Southern Venture Fund II, L.P. 466,666 (1) 416,666 50,000
Douglas T. And Kerrii B. Anderson 9,903 9,903 0
(JT)
Larry W. Anderson 3,961 3,961 0
Molly M. Anderson 3,961 3,961 0
Chris T. Anton 1,584 1,584 0
John L. Babitt (2) 151,672 151,672 0
Robert S. Barklay, Jr. 792 792 0
Richard J. Candela 112,848 112,848 0
James J. Chester (3) 3,169 3,169 0
John J. Chester 15,846 15,846 0
Richard T. Day 3,169 3,169 0
Donald W. and Richard E. Dick (JT) 7,923 7,923 0
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES
SHARES NUMBER OF SHARES TO BE OWNED IF ALL
SELLING HELD AT WHICH MAY SHARES OFFERED ARE
SHAREHOLDERS MAY 26, 1998 BE OFFERED SOLD IN THIS OFFERING
------------ ------------ ----------------- ---------------------
<S> <C> <C> <C>
Richard W. Gambs 5,625 5,625 0
Steven Jefferis 2,376 2,376 0
Scott A. Jones 572,130 572,130 0
Gary L. Jordan 185,289 185,289 0
Gary L. and Annette J. Jordan (JT) 27,731 27,731 0
John P. Kennedy (AmeriTrade, Inc. 22,501 22,501 0
Cust. FBO John P. Kennedy, SEP IRA)
Ernest F. Kreutzer (Midwest 1,584 1,584 0
Physician Anesthesia Services, Inc.
Profit Sharing, Ernest Kreutzer,
M.D. Directed)
Scott T. Mallory 792 792 0
John William Martin 1,980 1,980 0
Monoghan Reinsurance Co. Ltd. 15,846 15,846 0
John B. Patton (2) 524,911 524,911 0
Michael Perrini (2) 244,430 244,430 0
John J. Perrini 5,625 5,625 0
David J. Richards (AmeriTrade, Inc. 22,501 22,501 0
Cust. FBO David J. Richards, IRA)
Diane M. and Lawrence M. Rose (JT) 792 792 0
Mark D. Shary (2)(4) 844,612 844,612 0
Mark F. and Suzanne C. Taggart (JT) 2,376 2,376 0
Gordon and Jean G. Taylor (JT) 23,769 23,769 0
James R. and Kelley K. Thorson (JT) 6,338 6,338 0
Volpe, Brown, Whelan & Company, LLC (5) 100,000 100,000 0
</TABLE>
- ---------------
(1) Includes 50,000 shares subject to purchase upon exercise of a warrant.
(2) Former director of HUBLink.
(3) Former Secretary of HUBLink.
14
<PAGE> 17
(4) Former Chairman of the Board of Directors, President and Chief Executive
Officer of HUBLink. Mr. Shary is now the Senior Vice President--Product
Planning, Chief Financial Officer, Treasurer and Secretary of the
Company.
(5) Financial advisor to HUBLink.
SHARES ISSUED IN CONNECTION WITH CRITERION HEALTH STRATEGIES, INC.
On December 31, 1997, the Company exercised its option (the "Option") to
acquire the 50% equity ownership interest in CHS held by The Southern Venture
Fund II, L.P. ("SVFII") in exchange for 416,666 shares of the Common Stock
pursuant to the Option Agreement dated December 18, 1996 between the Company and
SVFII, as amended on December 31, 1997 (the "Option Agreement"). 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 for the purchase of 50,000
shares of HIE Common Stock which HIE had previously issued to SVFII to change
the per share warrant exercise price from $4.5625 to approximately $1.59. In
addition, the Company entered into agreements with SVFII, Brenton L. Teveit and
J. Edward Pearson, Jr. 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.
Pursuant to the Option Agreement, the Company has filed the Registration
Statement of which this Prospectus forms a part covering the sale of the Shares
by SVFII. The Company is obligated to use its best efforts to have the
Registration Statement become effective, and to keep the Registration Statement
continuously effective until the earlier of (i) the time when all the Shares
have been sold by the Selling Shareholder, and (ii) the earlier of December 31,
1998 or such earlier time, if any, as to which Rule 144 shall be available for
resales of the Shares. The Company has agreed to pay all expenses incurred in
connection with the registration and sale of the Shares pursuant to the Option
Agreement, other than brokerage fees or commissions, underwriting discounts and
fees of any counsel for SVFII. Any of the Shares sold pursuant to this
Prospectus will no longer be entitled to the benefits of the Option Agreement.
SHARES ISSUED IN CONNECTION WITH HUBLINK MERGER
On May 12, 1998, the Company completed a stock-for-stock merger (the
"Merger") through a wholly-owned subsidiary with HUBLink, a privately-held
integration software tool company. In connection with the Merger, the Company
issued an aggregate of 2,926,136 shares of its Common Stock to a total of thirty
persons and entities (collectively, the "HUBLink Parties").
In 1997, HUBLink engaged Volpe, Brown, Whelan, & Company, LLC ("Volpe")
as its financial advisor in connection with a possible business combination
involving HUBLink. Volpe, HUBLink and HIE entered into an agreement dated May
12, 1998 providing for the issuance of 100,000 shares of HIE Common Stock and
the payment of $10,000 cash in payment of out-of-pocket expenses to Volpe at the
closing of the Merger in full payment and satisfaction of all amounts payable to
Volpe in connection with its engagement by HUBLink.
15
<PAGE> 18
The Shares issued to the HUBLink Parties in connection with the Merger
were issued in accordance with and are subject to the terms and conditions of a
Private Placement and Registration Rights Agreement dated as of May 12, 1998
between the Company and each of the HUBLink Parties (the "Registration Rights
Agreement"). Pursuant to the Registration Rights Agreement, the Company has
filed the Registration Statement of which this Prospectus forms a part covering
the sale of the Shares by the HUBLink Parties.
The Company is obligated to use its best efforts to have the
Registration Statement become effective, and to keep the Registration Statement
continuously effective until the earlier of (i) the time when all the Shares
have been sold by the HUBLink Parties, and (ii) May 12, 1999. The Company has
agreed to pay all expenses incurred in connection with the registration and sale
of the Shares pursuant to the Registration Rights Agreement, other than
brokerage fees or commissions, underwriting discounts and fees of any counsel
for the HUBLink Parties. Any of the Shares sold pursuant to this Prospectus will
no longer be entitled to the benefits of the Registration Rights Agreement.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Shareholders, or
by pledgees, donees, transferees or other successors in interest, if any, who
acquire the Shares in transactions permitted under the Option Agreement or the
Registration Rights Agreement, as the case may be. Such sales may be made on one
or more exchanges or in the over-the-counter market, or otherwise at prices and
at terms then prevailing or at prices related to the then current market price,
or in negotiated transactions. The Shares may be sold by one or more of the
following: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the Shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account pursuant
to this Prospectus; (c) an exchange distribution in accordance with the rules of
such exchange; and (d) ordinary brokerage transactions and transactions in which
the broker solicits purchasers. In effecting sales, brokers or dealers engaged
by the Selling Shareholders may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions or discounts from the
Selling Shareholders in amounts to be negotiated immediately prior to the sale.
Such brokers or dealers and any other participating brokers or dealers may be
deemed to be "underwriters" within the meaning of the Securities Act in
connection with such sales. In addition, any securities covered by this
Prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule
144 rather than pursuant to this Prospectus.
Upon the Company being notified by the Selling Shareholders that any
material arrangement has been entered into with a broker-dealer for the sale of
Shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplemented
prospectus will be filed, if required, pursuant to Rule 424(c) under the
Securities Act, disclosing (i) the name of the Selling Shareholders and of the
participating broker-dealer(s), (ii) the number of shares involved, (iii) the
price at which such shares were sold, (iv) the commissions paid or discounts or
concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the
16
<PAGE> 19
information set out or incorporated by reference in this Prospectus, and (vi)
other facts material to the transaction.
The Selling Shareholders have agreed to pay any brokerage fees or
commissions, underwriting discounts and fees of any counsel for the Selling
Shareholders in connection with the registration and sale of the Shares. All
other expenses in connection with the registration and sale of the Shares
hereunder will be paid by the Company.
The securities laws of a particular state might require that the Shares
be sold in that state only through registered or licensed brokers or dealers. In
addition, in certain states, the Shares may not be sold unless they have been
registered or qualified for sale in such states or an exemption from such
registration or qualification requirement is available and is complied with.
Pursuant to the terms of the Option Agreement and the Registration
Rights Agreement, the Company and the Selling Shareholders have agreed to
indemnify each other and certain other parties, including underwriters, if any,
for certain liabilities, including liabilities under the Securities Act, in
connection with the registration of the Shares.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby and certain
other legal matters in connection with this Offering is being passed upon for
the Company by Troutman Sanders LLP, Atlanta, Georgia. Carl E. Sanders, a
partner in Troutman Sanders LLP, is a director of the Company and at May 26,
1998 was the beneficial owner of 97,850 shares of Common Stock.
EXPERTS
The consolidated financial statements and schedule of the Company and
its subsidiaries as of December 31, 1997 and 1996, and for each of the years in
the three-year period ended December 31, 1997, have been incorporated by
reference herein and in the registration statement in reliance upon the reports
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
The financial statements of HUBLink, Inc. as of December 31, 1997 and
1996, and for each of the years in the two-year period then ended, and the
financial statements as of December 31, 1996 and 1995, and for each of the years
in the two-year period then ended, have been incorporated by reference herein
and in the registration statement in reliance upon the reports of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
17
<PAGE> 20
PART II. INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses to be paid in connection with the issuance and distribution
of the securities being registered, other than underwriting discounts and
commissions, are as follows:
<TABLE>
<S> <C>
SEC registration fee........................... $ 3,390
Nasdaq National Market listing fee............. $ 17,500
Legal and Accounting fees and expenses......... $150,000
Miscellaneous.................................. $ 4,110
Total.......................................... $175,000
</TABLE>
All of the above items are estimates except the SEC registration fee and the
Nasdaq National Market listing fee. All of such estimated expenses will be borne
by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 14-2-202(b)(4) of the Georgia Business Corporation Code (the
"Georgia Code") provides that a corporation's Articles of Incorporation may
include a provision that eliminates or limits the personal liability of
directors for monetary damages to the corporation or its shareholders for breach
of their duty of care and other duties as directors; provided, however, that the
Section does not permit a corporation to eliminate or limit the liability of a
director for appropriating, in violation of his duties, any business opportunity
of the corporation, engaging in intentional misconduct or a knowing violation of
law, obtaining an improper personal benefit, or voting for or assenting to an
unlawful distribution (whether as a dividend, stock repurchase or redemption or
otherwise) as provided in Section 14-2-832 of the Georgia Code. Section
14-2-202(b)(4) also does not eliminate or limit the rights of a corporation or
any shareholder to seek an injunction or other non-monetary relief in the event
of a breach of a director's fiduciary duty. In addition, Section 14-2-202(b)(4)
applies only to claims against a director arising out of his role as a director
and does not relieve a director from liability arising from his role as an
officer or in any other capacity. The provisions of the Company's Articles of
Incorporation, as amended, are similar in all substantive respects to those
contained in Section 14-2-202(b)(4) of the Georgia Code outlined above, and
provide that the liability of directors of the Company shall be limited to the
fullest extent permitted by Georgia law, as the same may from time to time be
amended.
Sections 14-2-850 to 14-2-859, inclusive, of the Georgia Code govern the
indemnification of directors, officers, employees and agents. Section 14-2-851
of the Georgia Code provides for indemnification of a director of the Company
for liability incurred by him in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including civil actions brought as derivative actions by or in
the right of the Company) in which he may become involved by reason of being a
director of the Company. Section 14-2-851 also provides such indemnity for
directors who, at the request of the Company, act as directors, officers,
partners, trustees, employees or agents of another
II-1
<PAGE> 21
foreign or domestic corporation, partnership, joint venture, trust, employee
benefit plan or another enterprise. The Section permits indemnification if the
director acted in a manner he believed in good faith to be in or not opposed to
the best interest of the Company and, in addition, in criminal proceedings, if
he had no reasonable cause to believe his conduct was unlawful. If the required
standard of conduct is met, indemnification may include judgments, settlements,
penalties, fines or reasonable expenses (including attorneys' fees) incurred
with respect to a proceeding. However, if the director is adjudged liable to the
Company in a derivative action or on the basis that personal benefit was
improperly received by him, the director will only be entitled to such
indemnification for reasonable expenses as a court finds to be proper in
accordance with the provisions of Section 14-2-854.
Section 14-2-852 of the Georgia Code provides that directors who are
successful with respect to any claim brought against them, which claim is
brought because they are or were directors of the Company, are entitled to
indemnification against reasonable expenses as of right. Conversely, if the
charges made in any action are sustained, the determination of whether the
required standard of conduct has been met will be made, in accordance with the
provisions of Section 14-2-855 of the Georgia Code, as follows: (i) by the
majority vote of a quorum of the disinterested members of the board of
directors, (ii) if a quorum cannot be obtained, by a committee thereof duly
designated by the board of directors, consisting of two or more disinterested
directors, (iii) by special legal counsel, or (iv) by the shareholders, but, in
such event, the shares owned by or voted under the control of directors seeking
indemnification may not be voted.
Section 14-2-857 of the Georgia Code provides that an officer of the
Company (but not an employee or agent generally) who is not a director has the
mandatory right of indemnification granted to directors under Section 14-2-852,
as described above. In addition, the Company may, as provided by its Articles,
By-laws, general or specific actions by its Board of Directors, or by contract,
indemnify and advance expenses to an officer, employee or agent who is not a
director to the extent that such indemnification is consistent with public
policy.
The Company's By-laws provide that the Company will indemnify its
directors and officers to the fullest extent permitted by the foregoing
provisions of the Georgia Code outlined above.
Reference is hereby made to Section 3(c)(vii) of the Option Agreement,
which is filed as Exhibit 2.1 hereto, in which SVF II agrees to indemnify the
directors and officers of the Company and certain other persons against certain
civil liabilities.
Reference is hereby made to Section 3.7 of the Registration Rights
Agreements, the form of which is filed as Exhibit 2.5 hereto, in which the
HUBLink Shareholders (as defined therein) agree to indemnify the directors and
officers of the Company and certain other persons against certain civil
liabilities.
Officers and directors of the Company are presently covered by insurance
which (with certain exceptions and within certain limitations) indemnifies them
against any losses or liabilities arising from any alleged "wrongful act"
including any alleged breach of duty, neglect, error, misstatement, misleading
statement, omissions or other act done or wrongfully attempted. The cost of such
insurance is borne by the Company as permitted by the By-laws of the Company and
the laws of the State of Georgia. At present, there is no pending litigation or
II-2
<PAGE> 22
proceeding involving a director or officer of the Company as to which
indemnification is being sought nor is the Company aware of any threatened
litigation that may result in claims for indemnification by any officer or
director.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
2.1 Option Agreement dated December 18, 1996 between HIE and SVFII (filed as
Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, and incorporated herein by reference).
2.2 First Amendment to Option Agreement dated December 31, 1997 between HIE
and SVFII (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K
dated December 31, 1997, and incorporated herein by reference).
2.3 Amended and Restated Stock Purchase Warrant dated December 31, 1997
between HIE and SVFII (filed as Exhibit 2.2 to the Company's Current Report on
Form 8-K dated December 31, 1997, and incorporated herein by reference).
2.4 Agreement and Plan of Merger dated May 12, 1998 by and among HIE, HIE
Acquisition Corporation, HUBLink and Mark D. Shary (filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K dated May 12, 1998, and incorporated
herein by reference).
2.5 Private Placement and Registration Rights Agreement dated as of May 12, 1998
among HIE and each of the HUBLink Parties (filed as Exhibit 2.2 to the
Company's Current Report on Form 8-K dated May 12, 1998, and incorporated
herein by reference).
5 Opinion of Troutman Sanders LLP.
23.1 Consent of Troutman Sanders LLP (contained in Exhibit 5).
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of KPMG Peat Marwick LLP.
24 Powers of Attorney (included in the signature page to the Registration Statement).
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the Securities Act; (ii) to reflect in the
II-3
<PAGE> 23
prospectus any facts or events arising after the effective date of the
Registration Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change in such
information in the Registration Statement; provided, however, that the
Registrant need not file a post-effective amendment to include the information
required to be included by subsection (i) or (ii) if such information is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in the
Registration Statement; (2) that, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and (3) to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on June 1, 1998.
HEALTHDYNE INFORMATION ENTERPRISES, INC.
By: /s/ Robert I. Murrie
------------------------------------------------
Name: Robert I. Murrie
Title: President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of Healthdyne Information
Enterprises, Inc., hereby severally constitute and appoint Robert I. Murrie and
Joseph G. Bleser, and each of them singly, our true and lawful attorneys with
full power to them, and each of them singly, to sign for us and in our names in
the capacities indicated below, the Registration Statement on Form S-3 filed
herewith and any and all pre-effective and post-effective amendments to said
Registration Statement, and generally to do all such things in our names and on
our behalf in our capacities as officers and directors to enable Healthdyne
Information Enterprises, Inc. to comply with the provisions of the Securities
Act, and all requirements of the Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys or any of them, to said
Registration Statement and any and all amendments thereto.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
below and as of the date indicated above.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------- -----
<S> <C>
/s/ Parker H. Petit Chairman of the Board of Directors
- ---------------------------------
Parker H. Petit
/s/ Robert I. Murrie Director, President and Chief Executive
- --------------------------------- Officer (Principal Executive Officer)
Robert I. Murrie
/s/ Mark D. Shary Senior Vice President-Product Planning,
- --------------------------------- Chief Financial Officer, Treasurer and
Mark D. Shary Secretary (Principal Financial Officer)
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------- -----
<S> <C>
/s/ Cheryl N. Blanco Vice President - Controller, Chief
- --------------------------------- Accounting Officer, Assistant Treasurer
Cheryl N. Blanco and Assistant Secretary (Principal
Accounting Officer)
/s/ Joseph G. Bleser Director
- ---------------------------------
Joseph G. Bleser
/s/ J. Terry Dewberry Director
- ---------------------------------
J. Terry Dewberry
/s/ William J. Gresham, Jr. Director
- ---------------------------------
William J. Gresham, Jr.
/s/ Charles R. Hatcher, Jr. Director
- ---------------------------------
Charles R. Hatcher, Jr.
/s/ John W. Lawless Director
- ---------------------------------
John W. Lawless
/s/ Carl E. Sanders Director
- ---------------------------------
Carl E. Sanders
/s/ Donald W. Weber Director
- ---------------------------------
Donald W. Weber
</TABLE>
<PAGE> 26
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
2.1 Option Agreement dated December 18, 1996 between HIE and SVFII (filed as
Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, and incorporated herein by reference).
2.2 First Amendment to Option Agreement dated December 31, 1997 between HIE
and SVFII (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K
dated December 31, 1997, and incorporated herein by reference).
2.3 Amended and Restated Stock Purchase Warrant dated December 31, 1997
between HIE and SVFII (filed as Exhibit 2.2 to the Company's Current Report on
Form 8-K dated December 31, 1997, and incorporated herein by reference).
2.4 Agreement and Plan of Merger dated May 12, 1998 by and among HIE, HIE
Acquisition Corporation, HUBLink and Mark D. Shary (filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K dated May 12, 1998, and incorporated
herein by reference).
2.5 Private Placement and Registration Rights Agreement dated as of May 12, 1998
among HIE and each of the HUBLink Parties (filed as Exhibit 2.2 to the
Company's Current Report on Form 8-K dated May 12, 1998, and incorporated
herein by reference).
5 Opinion of Troutman Sanders LLP.
23.1 Consent of Troutman Sanders LLP (contained in Exhibit 5).
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of KPMG Peat Marwick LLP.
24 Powers of Attorney (included in the signature page to the Registration Statement).
</TABLE>
<PAGE> 1
TROUTMAN SANDERS LLP
ATTORNEYS AT LAW
A LIMITED LIABILITY PARTNERSHIP
NATIONSBANK PLAZA
600 PEACHTREE STREET, N.E. - SUITE 5200
ATLANTA, GEORGIA 30308-2216
TELEPHONE: 404-885-3000
FACSIMILE: 404-885-3995
June 1, 1998
EXHIBIT 5
Healthdyne Information Enterprises, Inc.
1850 Parkway Place, Suite 1100
Marietta, Georgia 30067
Re: Healthdyne Information Enterprises, Inc.
Gentlemen:
We have acted as counsel to Healthdyne Information Enterprises, Inc., a
Georgia corporation (the "Company"), in connection with the proposed offering
and sale by certain shareholders of the Company (the "Selling Shareholders") of
3,342,802 shares (the "Shares") of the Company's Common Stock, par value $.01
per share, including associated preferred stock purchase rights (the "Common
Stock").
In the capacity described above, we have examined originals (or copies
certified or otherwise identified to our satisfaction) of the Company's
Registration Statement on Form S-3 (the "Registration Statement"), with respect
to the secondary public offering of the Shares, the form of Common Stock
certificate, the Articles of Incorporation and Bylaws of the Company as in
effect on the date hereof, the Option Agreement dated December 16, 1996 between
the Company and the Southern Venture Fund II, L.P., as amended by the First
Amendment thereto dated December 31, 1997, the Agreement and Plan of Merger
dated May 12, 1998 by and among the Company, HIE Acquisition Corporation,
HUBLink, Inc. and Mark D. Shary, the form of Private Placement and Registration
Rights Agreement dated as of May 12, 1998 among the Company and the Shareholders
(as defined therein), corporate and other documents, records and papers and
certificates of officers of the Company and public officials. In such
examination, we have also assumed the genuineness of all signatures, the
authenticity of all documents submitted to us and the genuineness and conformity
to original documents of documents submitted to us as certified or photostatic
copies.
On the basis of such examination, it is our opinion that the Shares are
duly and validly issued and outstanding, fully paid and non-assessable shares of
Common Stock of the Company.
<PAGE> 2
We are members of the Bar of Georgia. In expressing the opinions set
forth above, we are not passing on the laws of any jurisdiction other than the
laws of the State of Georgia and the Federal law of the United States of
America.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the related prospectus.
Very truly yours,
/s/ Troutman Sanders LLP
Troutman Sanders LLP
<PAGE> 1
EXHIBIT 23.2
ACCOUNTANTS' CONSENT
The Board of Directors
Healthdyne Information Enterprises, Inc.
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
Atlanta, Georgia
May 26, 1998
<PAGE> 1
EXHIBIT 23.3
We consent to the incorporation by reference in this registration statement on
Form S-3 of Healthdyne Information Enterprises, Inc. filed on June 1, 1998 of
our report dated March 27, 1998, except for Note 12, as to which the date is
April 28, 1998, with respect to the balance sheets of HUBLink, Inc. as of
December 31, 1997 and 1996, and the related statements of operations,
stockholders' equity (deficit), and cash flows for each of the years in the
two-year period then ended, which report appears in the Form 8-K of Healthdyne
Information Enterprises, Inc. filed on May 27, 1998.
We consent to the incorporation by reference in this registration statement on
Form S-3 of Healthdyne Information Enterprises, Inc. filed on June 1, 1998 of
our report dated September 10, 1997, with respect to the balance sheets of
HUBLink, Inc., as of December 31, 1996 and 1995, and the related statements of
operations, stockholders' equity (deficit), and cash flows for each of the years
in the two-year period then ended, which report appears in the Form 8-K of
Healthdyne Information Enterprises, Inc. filed on May 27, 1998.
In addition, we consent to the reference to our firm under the heading "Experts"
in this registration statement on Form S-3 of Healthdyne Information
Enterprises, Inc. filed on June 1, 1998.
KPMG Peat Marwick LLP
Columbus, Ohio
June 1, 1998
