UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
AMENDMENT NO. 1 TO
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
DAOU SYSTEMS, INC.
------------------
(Name of Issuer)
COMMON STOCK, $.001 PAR VALUE PER SHARE
---------------------------------------
(Title of Class of Securities)
237015102
-----------------
(CUSIP Number)
Bruce F. Wesson
Senior Managing Member
Claudius, L.L.C.
610 Fifth Avenue, 5th Floor
New York, NY 10020
(212) 218-4990
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(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
November 9, 2000
------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
Schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934, as amended (the "Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all provisions of the Act (however,
see the Notes).
Page 1 of 15 Pages
<PAGE>
SCHEDULE 13D
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CUSIP 237015102 PAGE 2 OF 15 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Galen Partners III, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
5,227,256 (see Item 5(a))
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY -----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
5,227,256
REPORTING -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,227,256
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.3%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
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<PAGE>
SCHEDULE 13D
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CUSIP 237015102 PAGE 3 OF 15 PAGES
------------- --- ---
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Galen Partners International III, L.P.
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
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3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF
473,157 (see Item 5(a))
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY -----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
473,157
REPORTING -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
473,157
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.0%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
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<PAGE>
SCHEDULE 13D
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CUSIP 237015102 PAGE 4 OF 15 PAGES
------------- --- ---
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Galen Employee Fund III, L.P.
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
21,405 (see Item 5(a))
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY -----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
21,405
REPORTING -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,405
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
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<PAGE>
SCHEDULE 13D
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CUSIP 237015102 PAGE 5 OF 15 PAGES
------------- --- ---
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
William R. Grant
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY -----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
0
REPORTING -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
-------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
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CUSIP 237015102 PAGE 6 OF 15 PAGES
------------- --- ---
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Bruce F. Wesson
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
PF
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
22,389 (see Item 5(a))
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY -----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
22,389
REPORTING -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
22,389
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
-------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
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CUSIP 237015102 PAGE 7 OF 15 PAGES
------------- --- ---
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
L. John Wilkerson
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
PF
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
7,010 (see Item 5(a))
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY -----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
7,010
REPORTING -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,010
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
-------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
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CUSIP 237015102 PAGE 8 OF 15 PAGES
------------- --- ---
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Srini Conjeevaram
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
PF
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
India (See Item 2)
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
1,000 (see Item 5(a))
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY -----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
1,000
REPORTING -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
-------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
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CUSIP 237015102 PAGE 9 OF 15 PAGES
------------- --- ---
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
David Jahns
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
PF
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
21,045 (see Item 5(a))
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY -----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
21,045
REPORTING -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,045
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
-------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
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CUSIP 237015102 PAGE 10 OF 15 PAGES
------------- --- ---
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Zubeen Shroff
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
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3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
PF
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
2,000 (see Item 5(a))
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY -----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
2,000
REPORTING -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,000
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
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<PAGE>
ITEM 1. SECURITY AND ISSUER.
The first paragraph of Item 1 of the Initial Schedule 13D is hereby
amended to read in its entirety as follows:
This statement covers a total of 5,775,262 fully diluted shares of
Common Stock, $.001 par value per share (the "Common Stock"), of Daou Systems,
Inc., a Delaware corporation (the "Issuer"). The Reporting Persons (as defined
in Item 2 hereof) as of the date hereof hold an aggregate of (i) 32,399 shares
of Common Stock (the "Common Shares"), (ii) 2,181,818 shares of Series A
Convertible Preferred Stock, $.001 par value per share, of the Issuer (the
"Preferred Shares"), which as of the date hereof are convertible into an
aggregate of 2,181,818 shares of Common Stock, (iii) options for the purchase of
21,045 shares of Common Stock (the "Options"), which as of the date hereof may
be exercised for an aggregate of 21,045 shares of Common Stock, and (iv)
Warrants for the purchase of 3,540,000 shares of Common Stock (the "Warrants").
The Common Shares, Preferred Shares, Options and Warrants are referred to
herein, collectively, as the "Securities".
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 of the Initial Schedule 13D is hereby amended to read in its
entirety as follows:
The funds for the acquisition of the Securities were allocated from
the working capital or personal funds of the Reporting Persons and were not
obtained by means of a loan or other borrowing arrangement.
The Common Shares were acquired by certain of the Reporting Persons in
open market purchases from time to time, as well as by means of partner
distributions made by private investment funds that formerly held Common Shares
of the Issuer. Such distributions were made at various times on a pro rata basis
and without consideration. The Preferred Shares were acquired by certain of the
Reporting Persons from the Issuer in a transaction completed on July 26, 1999 at
a purchase price of $5.50 per share for an aggregate amount of $12,000,000 in
cash. Each such Reporting Person paid its pro rata share of the acquisition
price of the Preferred Shares it received. The Options were granted to a
Reporting Person who is a Director of the Issuer at various times under the
terms of a stock option plan for the benefit of the Directors of the Issuer. The
Warrants were issued to Galen, Galen Intl and GEF in consideration of their
agreement to waive their right to cause the Issuer to redeem the Preferred
Shares held by them.
11
<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5, subpart (a) of the Initial Schedule 13D is hereby amended to
read in its entirety as follows:
(a) Each Reporting Person owns or has the right to acquire the
number of securities shown opposite its name:
-------------------------------------------------------------------------------
(1) (2) (3) (4) (5) (6)
Number of
Number of Shares of
Shares of Common
Common Stock which
Stock into may be Percentage of
Number of which acquired Outstanding
Shares of Owned pursuant to Total of Shares of
Common Preferred exercise of Columns Common
Reporting Stock Stock is Options and (2), (3) and Stock (see
Person Owned Convertible Warrants (4) Note below)
-------------------------------------------------------------------------------
Galen 0 1,993,234 3,234,022 5,227,256 22.3%
-------------------------------------------------------------------------------
Galen Intl 0 180,422 292,735 473,157 2.0%
-------------------------------------------------------------------------------
GEF 0 8,162 13,243 21,405 0.1%
-------------------------------------------------------------------------------
Wesson 22,389 0 0 22,389 0.1%
-------------------------------------------------------------------------------
Wilkerson 7,010 0 0 7,010 0.1%
-------------------------------------------------------------------------------
Jahns 0 0 21,045 21,045 0.1%
-------------------------------------------------------------------------------
Conjeevaram 1,000 0 0 1,000 0.1%
-------------------------------------------------------------------------------
Shroff 2,000 0 0 2,000 0.1%
-------------------------------------------------------------------------------
Total 32,299 2,181,818 3,561,045 5,775,162 24.9%
-------------------------------------------------------------------------------
Note: The percentages shown in each row of column (6) were calculated,
for each respective row, by (i) adding the totals in the bottom row of columns
(3) and (4) to 17,712,768 (the number of shares of Common Stock outstanding as
of August 11, 2000, as reported by the Issuer in its Form 10-Q for the period
ended June 30, 2000) (the "Total Adjusted Outstanding Shares"), then (ii)
dividing the amount in column (5) by the Total Adjusted Outstanding Shares, and
then (iii) expressing such quotient in terms of a percentage.
12
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in the statement is true, complete and
correct.
Date: November 15, 2000 GALEN PARTNERS III, L.P.
By: Claudius, L.L.C.
By: /s/ Bruce F. Wesson
------------------------------------
Managing Member
GALEN PARTNERS
INTERNATIONAL III, L.P.
By: Claudius, L.L.C.
By: /s/ Bruce F. Wesson
------------------------------------
Managing Member
GALEN EMPLOYEE FUND III, L.P.
By: Wesson Enterprises, Inc.
By: /s/ Bruce F. Wesson
------------------------------------
President
[Signatures continued on next page.]
13
<PAGE>
CLAUDIUS, L.L.C.
By: /s/ Bruce F. Wesson
------------------------------------
Managing Member
WESSON ENTERPRISES, INC.
By: /s/ Bruce F. Wesson
------------------------------------
Managing Member
WILLIAM R. GRANT
By: /s/ Bruce F. Wesson
------------------------------------
Bruce F. Wesson
Attorney-in-Fact
/s/ Bruce F. Wesson
---------------------------------------
BRUCE F. WESSON
L. JOHN WILKERSON
By: /s/ Bruce F. Wesson
------------------------------------
Bruce F. Wesson
Attorney-in-Fact
DAVID JAHNS
By: /s/ Bruce F. Wesson
------------------------------------
Bruce F. Wesson
Attorney-in-Fact
SRINI CONJEEVARAM
By: /s/ Bruce F. Wesson
------------------------------------
Bruce F. Wesson
Attorney-in-Fact
14
<PAGE>
ZUBEEN SHROFF
By: /s/ Bruce F. Wesson
------------------------------------
Bruce F. Wesson
Attorney-in-Fact
15
