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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INFOCURE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 58-2271614
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
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1765 THE EXCHANGE, SUITE 500
ATLANTA, GEORGIA 30339
(770) 221-9990
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JAMES A. COCHRAN
SENIOR VICE PRESIDENT -- FINANCE
AND CHIEF FINANCIAL OFFICER
1765 THE EXCHANGE, SUITE 500
ATLANTA, GEORGIA 30339
TELEPHONE: (770) 221-9990
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
JOHN J. KELLEY III, ESQ.
KING & SPALDING
191 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30303-1763
TELEPHONE: (404) 572-4600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered in 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 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, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE(1)
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SHARES AMOUNT TO BE AGGREGATE PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(2) PER UNIT(3) OFFERING PRICE REGISTRATION FEE
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Convertible Debt Securities, Preferred Stock,
Common Stock, Depositary Shares............... $100,000,000 $100,000,000 $26,400
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(1) Estimated in accordance with Rule 457(c) under the Securities Act of 1933.
(2) Includes an indeterminate number of shares of Preferred Stock and Common
Stock as may be issued at indeterminate prices, but with an aggregate
initial public offering price not to exceed $ .
(3) Omitted pursuant to General Instruction II.D. of Form S-3.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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Subject to completion, dated June 30, 2000
PROSPECTUS
$100,000,000
INFOCURE CORPORATION
CONVERTIBLE DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
DEPOSITARY SHARES
We may offer from time to time up to $100,000,000 of convertible debt
securities, preferred stock, common stock and depositary shares. We will provide
the specific terms of these securities in supplements to this prospectus. You
should read this prospectus and the accompanying prospectus supplement carefully
before you invest.
Our common stock is listed on the Nasdaq National Market under the symbol
"INCX." Any common stock sold pursuant to a prospectus supplement will be listed
on the Nasdaq National Market.
INVESTING IN OUR SECURITIES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 6 FOR A DISCUSSION OF THESE RISKS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is June 30, 2000.
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TABLE OF CONTENTS
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About this Prospectus....................................... 2
Where You Can Find More Information......................... 2
InfoCure.................................................... 3
Forward-Looking Statements.................................. 5
Risk Factors................................................ 6
Use of Proceeds............................................. 12
Ratio of Earnings to Fixed Charges.......................... 12
Description of Convertible Debt Securities.................. 13
Description of Preferred Stock.............................. 24
Description of Common Stock................................. 25
Description of Depositary Shares............................ 27
Plan of Distribution........................................ 31
Legal Matters............................................... 32
Experts..................................................... 32
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC using a "shelf" registration process. Under this shelf process, we may sell
any combination of the securities described in this prospectus in one or more
offerings up to a total dollar amount of $100,000,000. This prospectus provides
you with a general description of the securities we may sell. Each time we sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement also may
add, update or change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement together with additional
information described under the heading "Where You Can Find More Information."
We may only use this prospectus to sell securities if it is accompanied by a
prospectus supplement.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may read and copy any
document we file with the SEC at its public reference facilities at 450 Fifth
Street, N.W., Washington, D.C. 20549, 7 World Trade Center, Suite 1300, New
York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. You may call the SEC at 1-800-732-0330 for further
information on the operation of such public reference facilities. You can also
obtain copies of these documents at prescribed rates by writing to the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549
or from the offices of the Nasdaq National Market, 9513 Key West Avenue,
Rockville, Maryland 20850.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with them, which means that we can disclose important
information to you by referring to those documents. The information incorporated
by reference is an important
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part of this prospectus and information that we subsequently file with the SEC
will automatically update and supercede information in this prospectus and in
our other filings with the SEC. We incorporate by reference the documents listed
below, which we have already filed with the SEC, and any future filings we make
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 until we sell all the securities offered by this prospectus:
- Annual Report on Form 10-K for the year ended December 31, 1999, as
amended by Annual Report on Form 10-K/A filed on May 1, 2000;
- Quarterly Report on Form 10-Q for the three months ended March 31, 2000;
- The financial statements of The Healthcare Systems Division of The
Reynolds and Reynolds Company included in InfoCure's Prospectus filed
pursuant to Rule 424(b)(4) on April 22, 1999 which constitutes part of
the Registration Statement on Form S-3 (No. 333-71109); and
- Registration Statement on Form 8-A, which includes a description of our
common stock, filed on January 28, 1999.
You may request a copy of these filings, other than an exhibit to a filing
unless that exhibit is specifically incorporated by reference into that filing,
at no cost, by writing or calling us at the following address: 1765 The
Exchange, Suite 500, Atlanta, Georgia 30339, telephone number (770) 221-9990,
Attention: Corporate Secretary.
We have also filed a registration statement with the SEC relating to the
securities. This prospectus is part of the registration statement. You may
obtain from the SEC a copy of the registration statement and exhibits that we
filed with the SEC when we registered the securities. The registration statement
may contain additional information that may be important to you.
You should rely only on the information contained or incorporated by
reference in this prospectus or the applicable prospectus supplement. We have
not authorized anyone else to provide you with additional or different
information. We may only use this prospectus to sell securities if it is
accompanied by a prospectus supplement. We are only offering these securities in
states where the offer is permitted. You should not assume that the information
in this prospectus or the applicable prospectus supplement is accurate as of any
date other than the dates on the front of those documents.
INFOCURE
We are a leading national provider of healthcare practice management
software products and services to targeted healthcare practice specialties. Our
systems are used primarily by small to mid-size medical practices within the
following practice areas:
- anesthesiology,
- dental,
- dermatology and plastic surgery,
- emergency medicine,
- general medical,
- oral and maxillofacial surgery,
- ophthalmology,
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- orthodontics,
- pathology,
- pediatrics,
- podiatry, and
- radiology.
Our systems include software and related hardware, ongoing training and
support and electronic data interchange. These systems are designed to increase
the quality and reduce the cost of providing care by allowing physicians to
manage their practices more efficiently and reduce the administrative burdens
created by an increasingly complex healthcare environment.
We recently reorganized our business to consist of a medical division,
which we have named VitalWorks, and a dental division, which we have named
PracticeWorks. We expect this reorganization to facilitate changes in our
pricing of practice management software products, our delivery of these products
to customers and the scope of our product offerings. We also intend to develop
new practice management software applications that can be delivered through the
application services provider, or ASP, delivery model. In the ASP delivery
model, we would remotely host applications from an offsite central server that
physicians would access over dedicated lines, virtual private networks or the
Internet.
In connection with our strategy to develop ASP-delivered products, we have
also recently converted to subscription-based pricing for substantially all of
our products and services. Under this subscription pricing model, customers pay
a fixed, monthly fee for use of our practice management applications and
Internet solutions and the computer hardware necessary to utilize those
applications and solutions. This represents a change from our historical pricing
model in which we charged customers an initial licensing fee for use of practice
management products and continuing maintenance, support and EDI transaction
fees.
Our principal offices are located at 1765 The Exchange, Suite 500, Atlanta,
Georgia 30339, and our telephone number is (770) 221-9990.
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FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. We may also make
forward-looking statements in reports filed with the SEC that we incorporate by
reference into this prospectus as well as in any accompanying prospectus.
Statements that are not historical facts, including statements about our beliefs
and expectations, are forward-looking statements. Forward-looking statements
include statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," "plans," estimates" or similar
expressions. These statements are based on beliefs and assumptions of our
management and on information currently available to our management.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. We caution you that a number of important
factors could cause actual results to differ materially from those contained in
any forward-looking statement. Many of these factors are beyond our ability to
control or predict. Such factors include, but are not limited to, the following:
- the level of expected net losses in our business;
- fluctuations in our quarterly operating results;
- the level of acceptance of our subscription pricing model;
- our ability to set subscription fees at appropriate levels;
- customer response to our new products;
- our ability to develop Internet solutions or enter into strategic
relationships;
- the continued development of the Internet;
- potential security breaches and viruses experienced by our systems;
- our inability to manage our growth;
- our ability to attract and retain qualified personnel;
- potential misappropriations of our technology;
- our ability to identify and successfully complete and integrate
acquisitions;
- rapid technological changes in our industry;
- adverse changes in governmental regulations;
- high levels of competition in our markets;
- our ability to obtain additional financing as needed; and
- adverse changes in the healthcare industry or U.S. economy generally.
We believe these forward-looking statements are reasonable; however, you
should not unduly rely on any forward-looking statements, which are based on
current expectations. Further, forward-looking statements speak only as of the
date they are made, and we undertake no obligation to update publicly any of
them in light of new information or future events.
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RISK FACTORS
WE HAVE RECENTLY INCURRED LOSSES AND EXPECT TO CONTINUE TO INCUR LOSSES FOR THE
FORESEEABLE FUTURE
We had net losses of $3.8 million for the year ended December 31, 1999 and
$11.2 million for the three months ended March 31, 2000. We expect the
transition to a subscription pricing model to continue to adversely impact our
cash flow until revenue from subscription fees replaces revenue from software
license fees and hardware sales. We also expect to incur increased marketing and
sales expenses in connection with offering our ASP products and Internet
solutions. As a result, based on current estimates, we expect to continue to
incur net losses for the foreseeable future.
OUR QUARTERLY OPERATING RESULTS FLUCTUATE SIGNIFICANTLY
Our operating results may vary significantly from quarter to quarter. In
addition, we have experienced historical losses. Our operating results will be
influenced by such factors as:
- our success in appropriately pricing and transitioning to the
subscription pricing model;
- the rate at which our existing customers convert and new customers
subscribe to our subscription pricing model;
- our release of our ASP-delivered product and Internet solutions and the
rate of adoption of these products and services by new and existing
customers;
- the timing of and charges associated with completed acquisitions or other
events;
- changes in customer purchasing patterns;
- competition;
- the timing of and cost related to development of our new products;
- the length of sales cycles; and
- the levels of advertising and promotional expenditures.
OUR SUBSCRIPTION PRICING MODEL IS UNPROVEN AND OUR SUCCESS DEPENDS ON ACCEPTANCE
OF THIS MODEL AND OUR ABILITY TO SET OUR SUBSCRIPTION FEES AT APPROPRIATE LEVELS
Potential customers may not accept our subscription pricing model. The
success of our subscription pricing model depends on our ability to set
subscription fees at rates that will allow us to achieve profitability. The
markets for practice management applications delivered through subscription
pricing are relatively new and evolving. There are relatively few similar
products whose subscription fees we can evaluate in setting our fees and the
providers of those products have also had to set their fees in the context of an
undeveloped market. As a result, we have limited information from which to
evaluate the appropriate level for our subscription fees and we may fail to set
our subscription fees at levels that enable us to become profitable. In
addition, we will enter into multi-year agreements with subscribers pursuant to
which subscription fees or increases in fees will be locked-in, typically for
three to five years, limiting our ability to increase our subscription fees for
those subscribers. If we fail to appropriately price our subscription fees,
achieving profitability could take longer than expected or we may never achieve
profitability.
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OUR ASP PRODUCT STRATEGY IS UNPROVEN AND CUSTOMERS MAY NOT RESPOND FAVORABLY TO
OUR NEW PRODUCTS
Providing software applications to physicians through the ASP delivery
model is a business that has only recently begun to develop, and this concept
may not achieve acceptance in the market. In order to successfully sell our
ASP-delivered products, we will need to convince new and existing customers that
the features of these products justify their cost, as well as the time and
administrative expense required to convert to these products. If we do not
succeed or if the market for our ASP-delivered products does not grow or grows
slowly, achieving profitability could take longer than expected or may not occur
at all. Achieving market acceptance for these products will require substantial
sales and marketing efforts and expenditure of significant funds to increase
awareness and demand by our target customers. In addition, our potential
customers may have made extensive investment in hardware, software and training
for existing systems. As a result, they may be unwilling to adopt new systems.
Further, our potential customers could perceive that our ASP-delivered products
will not adequately or cost-effectively address their requirements.
THE FAILURE TO SUCCESSFULLY COMPLETE THE DEVELOPMENT OF OUR INTERNET SOLUTIONS
AND ENTER INTO STRATEGIC RELATIONSHIPS COULD HARM OUR BUSINESS AND LIMIT OUR
POTENTIAL GROWTH
Our ability to attract new customers may depend upon our ability to
complete the development of our Internet solutions. In addition, our ability to
offer some Internet solutions depends on our entering into strategic
relationships. If we do not succeed in completing the development of our
Internet solutions or fail to enter into strategic relationships, the offering
of these products may be delayed or these products may never become available.
OUR ASP PRODUCT STRATEGY IS DEPENDENT UPON THE CONTINUED DEVELOPMENT OF THE
INTERNET
Our ability to offer ASP-delivered products that can be accessed over the
Internet and our Internet solutions on a widespread basis depends on our
potential customers having access to Internet connections with the necessary
speed, bandwidth and data capacity. The availability of this Internet access
will depend on others for the ongoing development of the Internet
infrastructure, including the necessary speed, bandwidth, data capacity and
security, as well as timely development of complementary products for providing
reliable Internet access and service. We cannot predict whether the Internet
will evolve to the point where our customers will be able to take full advantage
of the services we offer. If the Internet fails to develop into an efficient
medium for these transactions, our ASP product strategy will fail.
OUR SYSTEMS MAY BE VULNERABLE TO SECURITY BREACHES AND VIRUSES
The success of our strategy to offer ASP-delivered products and Internet
solutions depends on the confidence of our customers in our ability to securely
transmit confidential information. Any failure to provide secure electronic
communication services could harm our business and reputation. Our ASP-delivered
products and Internet solutions will rely on encryption, authentication and
other security technology licensed from third parties to achieve secure
transmission of confidential information. We may not be able to stop
unauthorized attempts to gain access to or disrupt the transmission of
communications by our customers. Anyone who can circumvent our security measures
could misappropriate confidential user information or interrupt our, or our
customers', operations. In addition, our ASP-delivered products may be
vulnerable to viruses, physical or electronic break-ins, and similar
disruptions.
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WE PLAN TO EXPAND RAPIDLY AND IT MAY BE DIFFICULT TO MANAGE OUR GROWTH
We intend to rapidly grow our business. However, we cannot be sure that we
will successfully manage our growth. In order to successfully manage our growth,
we must:
- expand and enhance our administrative infrastructure;
- improve our management, financial and information systems and controls;
and
- expand, train and manage our employees effectively.
Continued growth could place a further strain on our management, operations
and financial resources. The expansion of our product offerings, target markets
and customers will place additional demands on our sales, marketing and
administrative resources. We cannot assure you that our operating and financial
control systems, administrative infrastructure, facilities and personnel will be
adequate to support our future operations. If we cannot manage our growth
effectively, our business may be harmed.
OUR GROWTH COULD BE LIMITED IF WE ARE UNABLE TO ATTRACT AND RETAIN QUALIFIED
PERSONNEL
We believe our success depends largely on our ability to attract and retain
highly skilled technical, managerial and marketing personnel to develop our
products and services. Individuals with the information technology skills we
need to further develop our products and services are in short supply and
competition for qualified personnel is particularly intense. We may not be able
to hire the necessary personnel to implement our business strategy, or we may
need to pay higher compensation for employees than we currently expect. We can
not assure you that we will succeed in attracting and retaining the personnel we
need to continue to grow and to implement our business strategy. In addition, we
depend on the performance of our executive officers and other key employees. The
loss of any member of our senior management team could negatively impact our
ability to execute our new product strategy and subscription pricing model.
IF WE FAIL TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS FROM THIRD PARTY
CHALLENGES, IT MAY SIGNIFICANTLY IMPAIR OUR COMPETITIVE POSITION
We rely on a combination of copyright, trademark and trade secret laws and
restrictions on disclosure to protect the intellectual property rights related
to our software applications. We do not have patents to protect our software
technology and existing copyright laws offer only limited practical protection.
In addition, we have not generally entered into confidentiality agreements with
our employees. We cannot guarantee that the legal protections that we rely on
will be adequate to prevent misappropriation of our technology. Further, these
protections do not prevent independent third-party development of competitive
products or services. Unauthorized parties may attempt to copy or otherwise
obtain and use our products or technology. Monitoring use of our products is
difficult, and we cannot assure you that the steps we have taken will prevent
unauthorized use of our technology, particularly in foreign countries where the
laws may not protect our proprietary rights as fully as in the United States.
INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS AGAINST US COULD BE COSTLY TO DEFEND
AND COULD DIVERT MANAGEMENT'S ATTENTION AWAY FROM OUR BUSINESS
As the number of software products in our target markets increases and as
the functionality of these products overlaps, we may become increasingly subject
to the threat of infringement claims. We cannot guarantee you that third parties
will not assert infringement claims against us in the future. Any infringement
claims alleged against us, even if without merit, could be time-consuming and
expensive to defend. Any infringement
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claims may divert management's attention and resources and could also cause
delays in the delivery of our applications to our customers. Settlement of any
infringement claims could require us to enter into costly royalty or licensing
agreements. If a claim of product infringement against us was successful and we
could no longer license the infringing or similar technology, our business,
financial condition and results of operations could be harmed.
WE MAY UNDERTAKE ACQUISITIONS THAT CAN POSE RISKS TO OUR BUSINESS
We may undertake acquisitions if we identify companies with complementary
applications, services, businesses or technologies. We may be unable to retain
the acquired companies' personnel or integrate them into our company. Our
profitability may suffer because of acquisition-related costs or amortization of
acquired goodwill and other intangible assets. Similarly, the time and expense
associated with finding suitable and compatible companies to enhance our product
offerings could disrupt our ongoing business and divert our management's focus.
WE MAY FACE DIFFICULTIES INTEGRATING ACQUIRED BUSINESSES
Our success depends on our successful integration of the businesses we have
acquired. Integrating the management and operations of acquired businesses is
difficult and time consuming, and we cannot guarantee that we will achieve any
of the anticipated synergies, cost savings and other benefits expected to be
realized from these acquisitions.
TECHNOLOGY SOLUTIONS MAY CHANGE FASTER THAN WE ARE ABLE TO UPDATE OUR TECHNOLOGY
The healthcare software application market in which we compete is
characterized by rapidly changing technology, evolving industry standards,
emerging competition and the frequent introduction of new services, software and
other products. Our success depends partly on our ability to:
- develop new or enhance existing applications, software and services to
meet our customers' changing needs in a timely and cost-effective way;
- respond effectively to technological changes and new product offerings of
our competitors; and
- develop relationships with strategic partners necessary to offer our
ASP-delivered products and Internet solutions.
We cannot assure you that we will accomplish any of these goals. Our
competitors may develop products or technologies that are better or more
attractive than ours or that may render our products or technologies obsolete.
If we do not succeed in adapting our products and technologies, our business
could be harmed.
WE ARE SUBJECT TO GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
Legislation currently being considered at the federal level could impact
the manner in which we conduct our business. The Health Insurance Portability
and Accountability Act of 1996, known as HIPAA, mandates the adoption of
national standards for the transmission of certain types of medical information
and the data elements used in such transmissions and to insure the integrity and
confidentiality of such information. On November 3, 1999, the Secretary of
Health and Human Services promulgated regulations to protect the privacy of
electronically transmitted or maintained, individually identifiable health
information. Although we believe our products will enable compliance with the
proposed regulations, we cannot assure you that we can comply with those
proposed regulations in a timely manner or at all. Moreover, until the proposed
regulations become
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final, they could change, which could require us to expend additional resources
to comply with the revised standards and we may not be able to comply with the
revised standards in a timely manner or at all. In addition, the success of our
compliance efforts may also depend on the success of healthcare participants in
dealing with the standards. If we fail to comply with regulations implementing
HIPAA in a timely manner or at all, the sale of our products and our business
could be harmed.
The United States Food and Drug Administration, or FDA, is responsible for
assuring the safety and effectiveness of medical devices under the Federal Food,
Drug and Cosmetic Act. Computer applications and software are considered medical
devices and are subject to regulation by the FDA when they are indicated,
labeled or intended to be used in the diagnosis of disease or other conditions,
or in the cure, mitigation, treatment or prevention of disease, or are intended
to affect the structure or function of the body. We do not believe any of our
current products or services are subject to FDA regulation as medical devices;
however, we plan to expand our product and service offerings into areas that may
be subject to FDA regulation. We have no experience in complying with FDA
regulations. Our compliance with such FDA regulations could prove to be time
consuming, burdensome and expensive, which could adversely affect our ability to
introduce new applications or services in a timely manner.
In addition, we may become subject to additional government regulations in
connection with our changing product strategy. Laws and regulations directly
applicable to communications or commerce over the Internet are becoming more
prevalent. Laws and regulations may be adopted with respect to the Internet or
other online services covering issues such as user privacy, pricing, content,
copyrights, distribution and characteristics, and quality of products and
services. Because of the increasing use of the Internet as a communication and
commercial medium, the government has adopted and may adopt additional laws and
regulations with respect to the Internet covering such areas as user privacy,
pricing, content, taxation, copyright protection, distribution and
characteristics and quality of production and services. These laws and
regulations may adversely affect our business.
CHANGES IN STATE AND FEDERAL LAWS RELATING TO CONFIDENTIALITY OF PATIENT MEDICAL
RECORDS COULD LIMIT OUR CUSTOMERS' ABILITY TO USE OUR SERVICES
We cannot assure you that changes to state or federal laws will not
materially restrict the ability of healthcare providers to submit information
from patient records using our applications. Such restrictions would decrease
the value of our applications to our customers, which could materially harm our
business. The confidentiality of patient records and the circumstances under
which records may be released for inclusion in our databases are subject to
substantial regulation by state governments. These state 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 healthcare 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 level. This legislation may require holders of this
information to implement security measures. Such legislation might require us to
make substantial expenditures to implement such measures.
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CHANGES IN THE REGULATORY AND ECONOMIC ENVIRONMENT IN THE HEALTHCARE INDUSTRY
COULD ADVERSELY AFFECT OUR BUSINESS
The healthcare industry is highly regulated and is subject to changing
political, economic and regulatory influences. These factors affect the
purchasing practices and operation of healthcare organizations. Changes in
current healthcare financing and reimbursement systems could require us to make
unplanned enhancements of applications or services, or result in delays or
cancellations of orders or in the revocation of endorsement of our services by
our strategic partners and others. Federal and state legislatures have
periodically considered programs to reform or amend the U.S. healthcare system
at both the federal and state level. These programs may contain proposals to
increase governmental involvement in healthcare, lower reimbursement rates or
otherwise change the environment in which healthcare industry participants
operate. Healthcare industry participants may respond by reducing their
investments or postponing investment decisions, including investments in our
applications and services.
COMPETITION COULD REDUCE REVENUE FROM OUR PRODUCTS AND SERVICES
Our principal competitors include both national and regional practice
management systems vendors. Currently, the practice management systems industry
in the United States is characterized by a large number of relatively small,
regionally-focused companies, comprising a highly fragmented industry with only
a few national vendors. Smaller, regionally-focused companies typically market
their products to a single practice specialty. Until recently, larger, national
vendors have targeted primarily large healthcare providers. We believe that the
larger, national vendors may broaden their markets to include both small and
large healthcare providers. The healthcare information technology industry is
consolidating, which has resulted in large, well-capitalized companies that have
not historically been providers of practice management systems entering into the
practice management systems market. In addition, we compete with national and
regional providers of computerized billing, insurance processing and record
management services to healthcare practices. We believe that the primary
competitive factors in our markets are:
- product features and functionality;
- customer service, support and satisfaction;
- price;
- ongoing product enhancements; and
- the reputation and stability of the vendor.
Some national competitors have greater financial, development, technical,
marketing and sales resources than we do. If competition in the practice
management systems industry intensifies, or we fail to compete successfully, our
results of operations and financial condition may suffer.
OUR NEW PRODUCT STRATEGY AND SUBSCRIPTION PRICING MODEL WILL REQUIRE ADDITIONAL
FINANCING WHICH MAY NOT BE AVAILABLE
Our transition to the subscription pricing model will initially adversely
impact our cash flow until subscription fees replace the decline in one-time
revenue from license fees and hardware sales. In addition, we expect to incur
increased marketing and sales expense in connection with the rollout of our
ASP-delivered products and Internet solutions. We may not be able to obtain
adequate financing for these needs.
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USE OF PROCEEDS
Unless the applicable prospectus supplement states otherwise, we will use
the net proceeds from the sale of any of the securities for general corporate
purposes.
RATIO OF EARNINGS TO FIXED CHARGES
The following table shows the ratio of earnings to fixed charges of our
company, which includes our subsidiaries, on a consolidated basis. The ratio of
earnings to fixed charges has been computed by dividing:
- net income (loss) before taxes by
- fixed charges.
Fixed charges consist of interest expense, amortization of deferred debt
issuance costs and the estimated interest component of rental expense.
<TABLE>
<CAPTION>
THREE
MONTHS ELEVEN MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
MARCH 31, DECEMBER 31, DECEMBER 31, JANUARY 31,
----------- ------------- ------------- -----------
2000 1999 1999 1998 1997 1997 1996
---- ---- ----- ----- ------------- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges(1)(2).................. * 3.6x 4.6x 3.2x * * *
</TABLE>
-------------------------
(1) Earnings exclude restructuring and other non-recurring charges.
(2) The Company's earnings were insufficient to cover fixed charges by $15.4
million, $12.8 million, $8.4 million and $5.0 million for the three months
ended March 31, 2000, the eleven months ended December 31, 1997, and the
years ended January 31, 1997 and 1996.
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DESCRIPTION OF CONVERTIBLE DEBT SECURITIES
The convertible debt securities will be issued under an Indenture between
us and a trustee. The name of the trustee will be set forth in the applicable
prospectus supplement. We have summarized selected provisions of the Indenture
below. The summary is not complete. The form of the Indenture has been filed as
an exhibit to the registration statement and you should read the Indenture for
provisions that may be important to you. In the summary below, we have included
references to section numbers of the Indenture so that you can easily locate
these provisions. Capitalized terms used in the summary have the meaning
specified in the Indenture. You can obtain copies of the Indenture by following
the directions described under the caption "Where You Can Find More
Information."
GENERAL
The Indenture does not limit the aggregate principal amount of convertible
debt securities that we may issue and provides that we may issue convertible
debt securities from time to time in one or more series, in each case with the
same or various maturities, at par or at a discount. We may issue additional
convertible debt securities of a particular series without the consent of the
holders of the convertible debt securities of such series outstanding at the
time of the issuance. Any such additional convertible debt securities, together
with all other outstanding convertible debt securities of that series, will
constitute a single series of convertible debt securities under the Indenture.
The Indenture also does not limit our ability to incur other debt and does not
contain financial or similar restrictive covenants. The convertible debt
securities will be subordinated in right of payment to all of our Senior Debt as
described below.
A prospectus supplement relating to a series of convertible debt securities
being offered will include specific terms relating to the offering. These terms
will include some or all of the following:
- the title of the convertible debt securities;
- any limit on the total principal amount of the convertible debt
securities;
- the maturity date or dates of the convertible debt securities;
- the rate or rates of interest, which may be fixed or variable, per annum
at which the convertible debt securities will bear interest, or the
method of determining such rate or rates, if any;
- the date or dates from which interest, if any, will accrue;
- the dates on which interest will be payable and the related record dates;
- whether payments of principal or interest will be determined by any
index, formula or other method and the manner of determining the amount
of such payments;
- the place or places where the principal of, premium, if any, and interest
on the convertible debt securities will be payable if other than the
location specified in this prospectus;
- any redemption dates, prices, rights, obligations and restrictions on the
convertible debt securities;
- any mandatory or optional sinking fund, purchase fund or analogous
provisions;
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<PAGE> 15
- the denominations in which the convertible debt securities will be
issuable if other than denominations of $1,000 and integral multiples
thereof;
- the portion of the principal amount of the convertible debt securities
payable upon the acceleration of the maturity of the convertible debt
securities if other than the principal amount;
- the currency or currency unit in which principal and interest will be
paid if other than U.S. dollars;
- whether we will issue the convertible debt securities in permanent global
form and the circumstances under which such permanent global debt
security may be exchanged;
- whether the subordination provisions summarized below or different
subordination provisions will apply to the convertible debt securities;
- any special tax implications of the convertible debt securities;
- any deletions from, changes in or additions to the events of default or
the covenants specified in the Indenture; and
- any other material terms of the convertible debt securities not specified
in this prospectus (Section 301).
We may issue convertible debt securities at a substantial discount below
their stated principal amount. We refer to these securities as Original Issue
Discount Securities, which means any security that provides for an amount less
than its principal amount to be due and payable upon the acceleration of its
maturity. We will describe the federal income tax consequences and other special
considerations applicable to any Original Issue Discount Securities in the
applicable prospectus supplement.
Unless the applicable prospectus supplement states otherwise, the
convertible debt securities will be issued only in fully registered form,
without coupons, in denominations of $1,000 and any integral multiples thereof.
Holders of convertible debt securities will not pay any service charge for any
registration of transfer or exchange of the convertible debt securities, but we
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection with such registration or transfer.
PAYMENT; TRANSFER
Unless the applicable prospectus supplement states otherwise, principal of,
premium, if any, and interest, if any, on the convertible debt securities will
be payable, and the convertible debt securities will be transferable, at the
corporate trust office of the trustee. However, interest may be paid at our
option by check mailed to the address of the holder entitled thereto as it
appears on the security register. We will have the right to require a holder of
any convertible debt security, in connection with any payment on the convertible
debt security, to certify information to us or, in the absence of such
certification, we may rely on any legal presumption to enable us to determine
our obligation, if any, to deduct or withhold taxes, assessments or governmental
charges from such payment.
CONVERSION RIGHTS
Unless the applicable prospectus supplement states otherwise, the holder of
any convertible debt security of any series will have the right, at the holder's
option, to convert
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<PAGE> 16
any portion of the principal amount of such security that is an integral
multiple of $1,000 into shares of our common stock at any time following the
last original issue date of the convertible debt securities of such series and
prior to the close of business on the maturity date at the conversion rate per
$1,000 principal amount of such convertible debt security set forth in the
applicable prospectus supplement. Unless the applicable prospectus supplement
states otherwise, the conversion rate will be subject to adjustment as described
below. The right to convert a convertible debt security called for redemption or
delivered for repurchase will terminate at the close of business on the
redemption date or repurchase date for such convertible debt security (Sections
203 and 1301).
Unless the applicable prospectus supplement states otherwise, the holder of
any convertible debt security can exercise its right of conversion by delivering
the convertible debt security at the specified office of the conversion agent,
accompanied by a duly signed and completed notice of conversion. You can obtain
a copy of the form of conversion notice from the trustee. The conversion date
will be the date on which the convertible debt security and the duly signed and
completed notice of conversion are so delivered. As promptly as practicable on
or after the conversion date, we will issue and deliver to the trustee a
certificate for the number of full shares of common stock issuable upon
conversion. The trustee will send this certificate to the conversion agent, if
other than the trustee, for delivery to the holder. Shares of common stock
issued upon conversion of the convertible debt securities will be fully paid and
nonassessable and will rank pari passu with the other shares of our common stock
outstanding from time to time.
Unless the applicable prospectus supplement states otherwise, any
convertible debt security surrendered for conversion during the period from the
close of business on any regular record date to the opening of business on the
next interest payment date (except convertible debt securities called for
redemption or to be repurchased during such period) must be accompanied by
payment of an amount equal to the interest payable on the next interest payment
date with respect to such convertible debt security being surrendered for
conversion. The interest payable on the next interest payment date in respect of
such convertible debt security surrendered for conversion shall then be paid to
the holder of such convertible debt security as of the regular record date. The
interest payable on the next interest payment date with respect to any
convertible debt security surrendered for conversion that has also been called
for redemption or is repurchaseable during the period referred to above will be
paid to the holder of such convertible debt security as if such security had
been converted as of the close of business on such interest payment date. We
will pay interest in respect of any convertible debt security surrendered for
conversion on or after an interest payment date to the holder of such
convertible debt security as of the next preceding regular record date,
notwithstanding the exercise of the conversion right.
As a result of the foregoing provisions, holders that surrender convertible
debt securities for conversion on a date that is not an interest payment date
will not receive any interest for the period from the interest payment date next
preceding the date of conversion to the date of conversion or for any later
period, even if the convertible debt securities are surrendered after a notice
of redemption (except for the payment of interest on convertible debt securities
called for redemption on a redemption date or to be repurchased on a repurchase
date between a regular record date and the interest payment date to which it
relates). We will not make any other payment or adjustment for interest, or for
any dividends in respect of common stock, upon conversion. Holders of common
stock issued upon conversion will not receive any dividends payable to holders
of common stock as of any record time before the close of business on the
conversion date. We will not issue any fractional shares upon conversion and
instead will pay fractional shares in
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<PAGE> 17
cash or, at our option, we will round up the shares issued to the next whole
number of shares.
A holder delivering a convertible debt security for conversion need not pay
any taxes or duties in respect of the issue or delivery of common stock on
conversion but must pay any tax or duty payable in respect of any transfer
involved in the issue of the common stock. We will not deliver certificates
representing shares of common stock unless the person requesting delivery has
paid to us the amount of any such tax or duty or has established to our
satisfaction that such tax or duty has been paid (Sections 1302 and 1308).
Unless the applicable prospectus supplement states otherwise, we will
adjust the conversion rate in certain events, including, without duplication:
(1) dividends and other distributions payable in common stock on
shares of our capital stock;
(2) the issuance to all holders of common stock of rights, options or
warrants to subscribe for or purchase common stock at less than the then
current market price (determined as provided in the Indenture) as of the
record date for stockholders entitled to receive such rights, options or
warrants;
(3) subdivisions, combinations and reclassifications of our common
stock;
(4) distributions to all holders of common stock of evidences of our
indebtedness, shares of capital stock, cash or assets (including
securities, but excluding those dividends, rights, options, warrants and
distributions referred to above in clauses (1) and (2) above, dividends and
distributions paid exclusively in cash and in mergers and consolidations to
which the third succeeding paragraph applies);
(5) cash distributions (excluding any cash portion of distributions
referred to in clause (4) above or cash distributed upon a merger or
consolidation to which the third succeeding paragraph applies) to all
holders of common stock in an aggregate amount that, together with:
- other cash distributions made within the preceding 12 months in
respect of which no adjustment has been made, and
- any cash and the fair market value of other consideration payable in
respect of any tender offer by us or any of our subsidiaries for
common stock concluded within the preceding 12 months in respect of
which no adjustment has been made,
exceeds 10% of our market capitalization on the record date for such
distribution; and
(6) the successful completion of a tender offer by us or any of our
subsidiaries for common stock that involves an aggregate consideration
that, together with:
- any cash and other consideration payable in a tender offer by us or
any of our subsidiaries for common stock expiring within the 12 months
preceding the expiration of such tender offer in respect of which no
adjustment has been made, and
- the aggregate amount of any such cash distributions referred to in
clause (5) above to all holders of common stock within the 12 months
preceding the expiration of such tender offer in respect of which no
adjustments have been made,
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<PAGE> 18
exceeds 10% of our market capitalization on the expiration of such tender
offer.
In addition, we reserve the right to make increases in the conversion rate
that we consider advisable so that any event treated for federal income tax
purposes as a dividend or distribution of stock or issuance of rights or
warrants to purchase or subscribe for stock will not be taxable to the
recipients.
We will not adjust the conversion rate until the cumulative adjustments
amount to 1.0% or more of the conversion rate (Section 1304). We will compute
any adjustments to the conversion rate pursuant to this paragraph and will give
notice to the holders of the convertible debt securities of any adjustments
(Section 1305).
In case of:
(1) our consolidation or merger with or into another person, or
(2) any merger of another person into us, other than a merger which
does not result in any reclassification, conversion, exchange or
cancellation of the common stock, or
(3) any sale or transfer of all or substantially all of our assets,
each convertible debt security then outstanding will become convertible only
into the securities, cash and other property receivable upon such consolidation,
merger, sale or transfer by a holder of the number of shares of common stock
underlying such convertible debt security, assuming:
- such holder of common stock failed to exercise any rights of election,
and
- that such convertible debt security was then convertible (Section 1311).
Unless the applicable prospectus supplement states otherwise, from time to
time we may increase the conversion rate relating to any series of convertible
debt securities by any amount for any period of at least 20 days if our board of
directors determinates that the increase would be in our best interests. This
determination will be conclusive. We will give holders at least 15 days' notice
of any such increase.
If at any time we make a distribution of property to our stockholders that
would be taxable to such stockholders as a dividend for federal income tax
purposes and, pursuant to the anti-dilution provisions of the Indenture, the
number of shares into which convertible debt securities of any series are
convertible is increased, such increase may be deemed for federal income tax
purposes to be the payment of a taxable dividend to holders of convertible debt
securities.
SUBORDINATION
The convertible debt securities will be subordinate and junior in right of
payment to all of our Senior Debt. The convertible debt securities will also be
effectively subordinated in right of payment to all indebtedness and other
liabilities of our subsidiaries. As of May 31, 2000, we had $56.2 million of
Senior Debt outstanding, and our subsidiaries had an aggregate of $61.5 million
of indebtedness and other liabilities outstanding (which includes the $56.2
million of Senior Debt).
Under the Indenture, Senior Debt means:
(1) our indebtedness for money borrowed or evidenced by credit or loan
agreements, bonds, debentures, notes or similar instruments,
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(2) all our obligations evidenced by a note or similar instrument or
written agreement given in connection with the acquisition of any
businesses, properties or assets, including securities,
(3) our obligations as lessee under leases capitalized on the balance
sheet of the lessee under generally accepted accounting principles,
(4) our obligations under interest rate and currency swaps, caps,
floors, collars, hedge agreements, forward contracts, or similar agreements
or arrangements intended to protect us against fluctuations in interest or
currency exchange rates or commodity prices,
(5) all our reimbursement obligations with respect to letters of
credit, bankers' acceptances or similar facilities issued for our account,
(6) indebtedness of others of the kinds described in the preceding
clauses (1), (2), (3), (4) and (5) that we have assumed, guaranteed or
otherwise assured the payment of, directly or indirectly, and/or
(7) deferrals, renewals, extensions and refundings of, or bonds,
debentures, notes or other evidences of indebtedness issued in exchange
for, or amendments, modifications or supplements to, or covenants and our
other obligations in connection with, the indebtedness described in the
preceding clauses (1) through (6) whether or not there is any notice to or
consent of the holders of convertible debt securities; except:
- indebtedness and advances among us and our direct and indirect
subsidiaries; and
- any particular indebtedness that expressly provides that it is not
Senior Debt (Sections 101, 1401 and 1402).
As a result of these subordination provisions, no payment on account of the
principal of, premium, if any, or interest on the convertible debt securities
may be made if:
- a payment default with respect to any Senior Debt exists or,
- any other event of default has occurred with respect to any Senior Debt
that permits the holders to accelerate the maturity of the Senior Debt
and is continuing after written notice to us and the trustee.
Upon the acceleration of the principal due on the convertible debt
securities or payment or distribution of our assets to creditors upon any
dissolution, winding up, liquidation or reorganization, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other proceedings,
all principal, premium, if any, and interest due on all Senior Debt must be paid
in full before the holders of the convertible debt securities may receive any
payment. As a result of these subordination provisions, in the event of our
insolvency, our creditors who hold Senior Debt may recover more, ratably, than
the holders of the convertible debt securities, and such subordination may
reduce or limit payments to the holders of the convertible debt securities
(Section 1402).
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EVENTS OF DEFAULT
Definition. The Indenture defines an Event of Default with respect to
convertible debt securities of any series as any one of the following events:
(1) failure to pay any interest on any convertible debt security of
that series when due and payable, continued for 30 days;
(2) failure to pay principal of or any premium on any convertible debt
security of that series when due;
(3) failure to deposit any sinking fund payment, when due, in respect
of any convertible debt security of that series;
(4) failure to perform any other covenant in the Indenture (other than
a covenant included in such Indenture solely for the benefit of a series of
convertible debt securities other than that series), continued for 90 days
after written notice as provided in the Indenture;
(5) any indebtedness for money borrowed by us in an aggregate
principal amount in excess of $20 million is not paid at final maturity or
the maturity of which is accelerated and such payment default or
acceleration is not cured or rescinded within 90 days after written notice;
(6) the entry of a decree or order for relief in respect of our
company by a court having jurisdiction in the premises in an involuntary
case under federal or state bankruptcy laws and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days;
(7) the commencement by us of a voluntary case under federal or state
bankruptcy laws or the consent by us to the entry of a decree or order for
relief in an involuntary case under any such law; and
(8) any other Event of Default provided with respect to convertible
debt securities of that series (Section 501).
Remedies. If an Event of Default with respect to convertible debt
securities of any series occurs and is continuing, then either the trustee or
the holders of at least 25% in aggregate principal amount of the outstanding
convertible debt securities of that series may declare by notice in writing to
us the principal amount (or, if the convertible debt securities of that series
are Original Issue Discount Securities, such portion of the principal amount as
may be specified in the terms of that series) of all the convertible debt
securities of that series to be due and payable immediately. Notwithstanding the
foregoing, if an Event of Default described in clauses (6) or (7) with respect
to convertible debt securities of any series occurs and is continuing, then all
of the convertible debt securities of that series shall become immediately due
and payable without any further act by us, any holder or the trustee. At any
time after a judgment or decree based on acceleration has been obtained, the
holders of a majority in aggregate principal amount of outstanding convertible
debt securities of that series may, under certain circumstances, rescind and
annul such acceleration (Section 502).
In the event of a payment or covenant default with respect to convertible
debt securities, the trustee, subject to certain limitations and conditions, may
institute judicial proceedings to enforce the payment of any amount due or the
performance of such covenant or any other proper remedy (Section 503). Under
certain circumstances, the
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trustee may withhold notice to the holders of the subordinated convertible debt
securities of a default if the trustee in good faith determines that withholding
notice is in the best interest of such holders, and the trustee shall withhold
such notice for certain defaults for a period of 30 days (Section 602).
Obligations of Trustee. The Indenture provides that, subject to the duty
of the trustee during default to act with the required standard of care, the
trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the holders, unless
such holders shall have offered to such trustee reasonable security or indemnity
(Section 603). Subject to such provisions for the indemnification of the trustee
and to certain other conditions, the holders of a majority in aggregate
principal amount of the outstanding convertible debt securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee, or exercising any trust or
power conferred on such trustee, with respect to the convertible debt securities
of that series. However, the trustee may decline to act if the holders'
direction violates any law or the Indenture, would unduly prejudice the right of
other holders or would involve such trustee in personal liability (Section 512).
No holder of any convertible debt security of any series will have any
right to institute any proceeding with respect to the Indenture, or for the
appointment of a receiver or trustee or for any remedy, unless:
- the holder has given the trustee written notice of a continuing Event of
Default with respect to the convertible debt securities of that series;
- the holders of not less than 25% in aggregate principal amount of the
outstanding convertible debt securities of that series have made written
request, and offered reasonable indemnity, to the trustee to institute
such proceeding as trustee;
- the trustee has not received an inconsistent direction from the holders
of a majority in principal amount of the outstanding convertible debt
securities of that series; and
- the trustee has failed to institute the requested proceeding within 60
days (Section 507).
However, the holder of any convertible debt security will have an absolute right
to receive payment of the principal of, premium, if any, and interest on such
convertible debt security on the due dates expressed in such convertible debt
security and to institute suit for the enforcement of any such payment (Section
508).
Under the Indenture we must furnish to the trustee annually a statement
regarding our performance of certain of our obligations under the Indenture and
as to any default in such performance (Section 1005).
DEFEASANCE AND COVENANT DEFEASANCE
Unless the applicable prospectus supplement states otherwise, the Indenture
provides that we may choose to deposit in trust with the trustee cash and/or
government securities in an amount sufficient, without reinvestment, to pay all
sums due on any series of convertible debt securities. If we make this deposit,
then, at our option, we:
(1) will be deemed to have satisfied and paid all of our obligations
in respect of the convertible debt securities of a particular series; or
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<PAGE> 22
(2) will not need to comply with certain restrictive covenants
contained in the Indenture and the occurrence of a covenant default will no
longer be an Event of Default with respect to such series of convertible
debt securities, which we refer to as covenant defeasance.
Such a trust may only be established if, among other things,
- no Event of Default exists or occurs as a result of such deposit; and
- we deliver an opinion of counsel to the effect that the holders will not
recognize income, gain or loss for federal income tax purposes as a
result of such deposit.
If we exercise our covenant defeasance option with respect to any series of
convertible debt securities and the maturity of that series is accelerated upon
an Event of Default, the amount of cash and government securities on deposit
with the trustee may not be sufficient to pay amounts due on such convertible
debt securities at the time of the acceleration. However, we will remain liable
with respect to such payments (Article 13).
MODIFICATION AND WAIVER
We and the trustee may modify and amend the Indenture with the consent of
the holders of a majority in aggregate principal amount of the outstanding
convertible debt securities of each series affected by such modification or
amendment. Unless the applicable prospectus supplement states otherwise,
however, we may not, without the consent of the holder of each convertible debt
security affected:
- change the maturity date of the principal of, or interest on, any
convertible debt security,
- reduce the principal amount of, or any premium or rate of interest on,
any convertible debt security,
- reduce the amount of principal of an Original Issue Discount Security
payable upon acceleration of the maturity thereof,
- change the place or currency of payment of principal of, premium, if any,
or interest on, any convertible debt security,
- modify the subordination provisions in a manner adverse to the holders of
any convertible debt security,
- modify the conversion privilege with respect to any convertible debt
security in a manner adverse to the holder thereof,
- impair the right to institute suit for the enforcement of any payment on
or with respect to any convertible debt security, or
- reduce the percentage in principal amount of outstanding convertible debt
securities of any series required to modify or amend either Indenture or
to waive compliance with certain provisions of, or defaults under, the
Indenture (Section 902).
The holders of at least a majority in aggregate principal amount of the
outstanding convertible debt securities of each series may, on behalf of all
holders of convertible debt securities of that series, waive, insofar as that
series is concerned, our compliance with certain restrictive provisions of the
Indenture (Section 1006).
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The holders of at least a majority in aggregate principal amount of the
outstanding convertible debt securities of any series may, on behalf of all
holders of convertible debt securities of that series, waive any past default
under the Indenture, except:
- a default in the payment of principal of, premium, if any, or interest
on, any convertible debt security of that series; or
- a default in respect of a covenant or provision which under such
Indenture cannot be modified or amended without the consent of the holder
of each convertible debt security of the series affected (Section 513).
CONSOLIDATION, MERGER AND TRANSFER OF ASSETS
We may consolidate with or merge into, or transfer our assets substantially
as an entirety to, any corporation organized under the laws of the U.S., any
state thereof or the District of Columbia, provided that:
- the successor corporation assumes our obligations on the convertible debt
securities and under the Indenture;
- after giving effect to the transaction no Event of Default, and no event
which, after notice or lapse of time, would become an Event of Default,
shall have occurred and be continuing; and
- certain other conditions are met (Section 801).
TRUSTEE
The trustee may resign or be removed with respect to one or more series of
convertible debt securities and a successor trustee may be appointed to act with
respect to such series (Section 610). In the event that two or more persons are
acting as trustee with respect to different series of convertible debt
securities, each such trustee shall be a trustee of a trust under the Indenture
separate and apart from the trust administered by any other such trustee, and
any action described herein to be taken by the "trustee" may then be taken by
each such trustee with respect to, and only with respect to, the one or more
series of convertible debt securities for which it is trustee (Section 611).
BOOK-ENTRY SECURITIES
The convertible debt securities of a series may be issued in the form of
one or more book-entry securities that will be deposited with a depositary or
its nominee identified in the applicable prospectus supplement (Section 301). In
such a case, one or more book-entry securities will be issued in a denomination
or aggregate denominations equal to the portion of the aggregate principal
amount of convertible debt securities of the series to be represented by such
book-entry security or securities. Unless and until it is exchanged in whole or
in part for convertible debt securities in definitive registered form, a
book-entry security may not be transferred except as a whole by the depositary
for such book-entry security to a nominee of such depositary or by a nominee of
the depositary to the depositary or another nominee of the depositary or by the
depositary or any such nominee to a successor of the depositary or a nominee of
such successor (Section 305).
The specific terms of the depositary arrangement with respect to any
portion of a series of convertible debt securities to be represented by a
book-entry security will be described in the applicable prospectus supplement.
We anticipate that the following provisions will apply to all depositary
arrangements.
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Upon the issuance of a book-entry security, the depositary for such
book-entry security or its nominee will credit, on its book-entry registration
and transfer system, the respective principal amounts of the convertible debt
securities represented by such book-entry security to the accounts of persons
that have accounts with such depositary, or participants. Such accounts shall be
designated by the underwriters or agents with respect to such convertible debt
securities or by us if such convertible debt securities are offered and sold
directly by us. Participants include securities brokers and dealers, banks and
trust companies, clearing corporations and certain other organizations. Access
to the depositary's system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly, which we refer
to as indirect participants. Persons who are not participants may beneficially
own book-entry securities held by the depositary only through participants or
indirect participants.
Ownership of beneficial interests in any book-entry security will be shown
on, and the transfer of that ownership will be effected only through, records
maintained by the depositary or its nominee with respect to interests of
participants for such book-entry security and on the records of participants
with respect to interests of indirect participants. The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such laws, as well as the limits on participation
in the depositary's book-entry system, may impair the ability to transfer
beneficial interests in a book-entry security.
So long as the depositary or its nominee is the registered owner of a
book-entry security, such depositary or such nominee will be considered the sole
owner or holder of the convertible debt securities represented by such
book-entry security for all purposes under the Indenture. Except as provided
below, owners of beneficial interests in convertible debt securities represented
by book-entry securities will not be entitled to have convertible debt
securities of the series represented by such book-entry security registered in
their names, will not receive or be entitled to receive physical delivery of
such convertible debt securities in definitive form, and will not be considered
the owners or holders thereof under the Indenture.
Payments of principal of, premium, if any, and interest on convertible debt
securities registered in the name of the depositary or its nominee will be made
to the depositary or its nominee, as the case may be, as the registered owner of
the book-entry security representing such convertible debt securities. We expect
that the depositary for a series of convertible debt securities or its nominee,
upon receipt of any payment of principal, premium or interest, will immediately
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the book-entry
security for such convertible debt securities, as shown on the records of such
depositary or its nominee. We also expect that payments by participants and
indirect participants to owners of beneficial interests in such book-entry
security held through such persons will be governed by standing instructions and
customary practices, as is now the case with securities registered in "street
name", and will be the responsibility of such participants and indirect
participants. Neither us, the trustee, any authenticating agent, any paying
agent, nor the security registrar for such convertible debt securities will have
any responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the book-entry
security for such convertible debt securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests (Section
311).
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<PAGE> 25
If the depositary for convertible debt securities of a series notifies us
that it is unwilling or unable to continue as depositary or if at any time the
depositary ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, we have agreed to appoint a successor depositary. If such
a successor is not appointed by us within 90 days, we will issue convertible
debt securities of such series in definitive registered form in exchange for the
book-entry security representing such series of convertible debt securities. In
addition, we may at any time and in our sole discretion determine that the
convertible debt securities of any series issued in the form of one or more
book-entry securities shall no longer be represented by such book-entry security
or convertible debt securities and, in such event, will issue convertible debt
securities of such series in definitive registered form in exchange for such
book-entry security or securities representing such series of convertible debt
securities. Further, if we so specify with respect to the convertible debt
securities of a series, or if an Event of Default, or an event which with
notice, lapse of time or both would be an Event of Default with respect to the
convertible debt securities of such series has occurred and is continuing, an
owner of a beneficial interest in a book-entry security representing convertible
debt securities of such series may receive convertible debt securities of such
series in definitive registered form. In any such instance, an owner of a
beneficial interest in a book-entry security will be entitled to physical
delivery in definitive registered form of convertible debt securities of the
series represented by such book-entry security equal in principal amount to such
beneficial interest and to have such convertible debt securities registered in
its name (Section 305).
DESCRIPTION OF PREFERRED STOCK
Pursuant to our certificate of incorporation, our board of directors has
the authority, without further stockholder approval, to issue a maximum of
2,000,000 shares of preferred stock, including shares issued or reserved for
issuance. As of June 15, 2000, we had no shares of preferred stock outstanding.
The board of directors has the authority to determine or fix the powers,
designations, preferences and relative participating, optional or other special
rights of, and any limitations or restrictions on, any series of preferred
stock, which we will describe in the applicable prospectus supplement. These
powers, designations, preferences and rights may include the following:
- designation or title of the series;
- the number of shares in the series;
- the dividend rate or rates (or method of calculation), which may be fixed
or variable, the dividend periods, the dates on which dividends will be
payable and whether the dividends will be cumulative or noncumulative;
- the date or dates, if any, from which the dividends will cumulate;
- any redemption dates, prices, rights, obligations and restrictions on the
preferred stock;
- any mandatory or optional sinking fund, purchase fund or analogous
provisions;
- the rights of the holders upon our liquidation or dissolution or upon the
distribution of our assets including any liquidation preference;
- any conversion provisions;
- voting rights, if any;
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<PAGE> 26
- the initial public offering price at which we will issue the preferred
stock;
- whether we have elected to offer depositary shares as described under
"Description of Depositary Shares" below; and
- any other powers, designations, preferences, rights, limitations or
restrictions of the series.
DESCRIPTION OF COMMON STOCK
We have summarized certain terms and provisions of the common stock in this
section. The summary is not complete. The prospectus supplement will describe
the specific terms of the common stock offered through that prospectus
supplement and any general terms outlined in this section that will not apply to
that common stock. We have filed our certificate of incorporation and our bylaws
as exhibits to the registration statement and you should read our certificate of
incorporation and our bylaws for information that may be important to you. You
can obtain copies of our certificate of incorporation and bylaws by following
the directions described under the caption "Where You Can Find More
Information."
GENERAL
Authorized and Issued Shares. Under our certificate of incorporation, we
can issue an aggregate of 200,000,000 million shares of common stock, par value
$.001 per share. As of June 15, 2000, we had 33,102,868 shares of common stock
outstanding.
Dividends. Holders of common stock may receive dividends when declared by
our board of directors out of our funds that we can legally use to pay
dividends. We may pay dividends in cash, stock or other property. In certain
cases, holders of common stock may not receive dividends until we have satisfied
our obligations to holders of any outstanding preferred stock.
Voting Rights. Holders of common stock have the exclusive power to vote on
all matters presented to our stockholders unless Delaware law or the certificate
of designation for an outstanding series of preferred stock gives the holders of
that preferred stock the right to vote on certain matters. Each holder of common
stock is entitled to one vote per share. Holders of common stock may not
cumulate their votes when voting for directors.
Other Rights. If we voluntarily or involuntarily liquidate, dissolve or
wind up our business, holders of common stock will receive any remaining assets
on a pro rata basis after we have provided for any liquidation preference for
outstanding shares of preferred stock. When we issue securities in the future,
holders of common stock will not have preemptive rights to buy any portion of
those issued securities.
Listing. Our outstanding shares of common stock are listed on the Nasdaq
National Market under the symbol "INCX." American Stock Transfer & Trust Co.
serves as the transfer agent for the common stock.
Fully Paid. All of our outstanding shares of common stock are fully paid
and nonassessable, which means that the full purchase price for the outstanding
shares of common stock has been paid and the holders of such shares will not be
assessed any additional monies for such shares. Any additional common stock that
we may issue in the future pursuant to an offering under this prospectus or upon
the conversion or exercise of other securities offered under this prospectus
will also be fully paid and nonassessable.
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<PAGE> 27
ANTI-TAKEOVER PROVISIONS
General. Certain provisions of our certificate of incorporation, bylaws
and applicable law may make it less likely that our management would be changed
or someone would acquire our company without the consent of our board of
directors. These provisions may delay, deter or prevent tender offers or
takeover attempts that stockholders may believe are in their best interests,
including tender offers or takeover attempts that might allow stockholders to
receive premiums over the market price of their common stock.
Preferred Stock. Under our certificate of incorporation our board of
directors can at any time, and without stockholder approval, issue one or more
new series of preferred stock. In some cases, the issuance of preferred stock
without stockholder approval could discourage or make more difficult attempts to
take control of our company through a merger, tender offer, proxy contest or
otherwise. Preferred stock with special voting rights or other features issued
to persons favoring our management could stop a takeover by preventing the
person trying to take control of our company from acquiring enough voting shares
necessary to take control.
Nomination Procedures. In addition to our board of directors, stockholders
can nominate candidates for our board of directors. However, a stockholder must
follow the advance notice procedures described in Article II of our certificate
of incorporation. In general, a stockholder must submit a written notice of the
nomination to our corporate secretary at least 60 days before a scheduled
meeting of our stockholders.
Proposal Procedures. Stockholders can propose that business other than
nominations to our board of directors be considered at an annual meeting of
stockholders only if a stockholder follows the advance notice procedures
described in our bylaws. In general, a stockholder must submit a written notice
of the proposal and the stockholder's interest in the proposal to our corporate
secretary at least 60 days before the date set for the annual meeting of our
stockholders.
Amendment of Bylaws. Under our bylaws, our board of directors can adopt,
amend or repeal the bylaws, subject to limitations under the Delaware General
Corporation Law. Our stockholders also have the power to adopt, amend or repeal
our bylaws. Any stockholder who intends to propose that a provision of our
bylaws be amended by the stockholders must submit a written notice to our
corporate secretary at least 180 days prior to a request by such stockholder to
call a special meeting for such purpose or, if the proposal is intended to be
made at an annual meeting of our stockholders, no later than the latest date
permitted for submission of stockholder proposals under Rule 14a-8 of the
Securities Exchange Act of 1934.
Business Combination Statute. We are subject to the provisions of Section
203 of the Delaware General Corporation Law. Section 203 prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. A "business
combination" includes a merger, asset sale or other transaction involving the
interested stockholder. Subject to certain exceptions, an "interested
stockholder" is a person who, together with affiliates and associates, owns or
within three years prior to the proposed business combination has owned 15% or
more of the corporation's voting stock.
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<PAGE> 28
DESCRIPTION OF DEPOSITARY SHARES
We have summarized certain terms and provisions of the Deposit Agreement,
the depositary shares and the depositary receipts in this section. The summary
is not complete. The prospectus supplement will describe the specific terms of
the depositary shares offered through that prospectus supplement and any general
terms outlined in this section that will not apply to those depositary shares.
We have filed the form of Deposit Agreement, including the form of depositary
receipt, as an exhibit to the registration statement and you should read the
forms of Deposit Agreement and depositary receipt relating to a series of
preferred stock for information that may be important to you. You can obtain
copies of the Deposit Agreement by following the directions described under the
caption "Where You Can Find More Information."
GENERAL
We may offer fractional interests in shares of preferred stock, rather than
full shares. If we do, we will provide for the issuance by a Depositary (as
defined below) to the public of receipts for depositary shares, each of which
will represent a fractional interest in a share of a particular series of
preferred stock.
The shares of any series of preferred stock underlying the depositary
shares will be deposited under a separate deposit agreement, which we refer to
as the Deposit Agreement, between us and a bank or trust company, which we refer
to as the Depositary, having its principal office in the United States and
having a combined capital and surplus of at least $50 million. We will name the
Depositary in the applicable prospectus supplement. Subject to the terms of the
Deposit Agreement, each owner of a depositary share will have a fractional
interest in all the rights and preferences of the share of preferred stock
underlying such depositary share. Those rights include any dividend, voting,
redemption, conversion and liquidation rights.
The depositary shares will be evidenced by depositary receipts issued under
the Deposit Agreement. If you purchase fractional interests in shares of the
related series of preferred stock, you will receive depositary receipts as
described in the applicable prospectus supplement. While the final depositary
receipts are being prepared, we may order the Depositary to issue temporary
depositary receipts substantially identical to the final depositary receipts
although not in final form. The holders of the temporary depositary receipts
will be entitled to the same rights as if they held the depositary receipts in
final form. Holders of the temporary depositary receipts can exchange them for
the final depositary receipts at our expense.
If you surrender depositary receipts at the principal office of the
Depositary (unless the related depositary shares have previously been called for
redemption), you are entitled to receive at such office the number of shares of
preferred stock and any money or other property represented by such depositary
shares. We will not issue partial shares of preferred stock. If you deliver
depositary receipts evidencing a number of depositary shares that represent more
than a whole number of preferred shares, the Depositary will issue you a new
depositay receipt evidencing such excess number of depositary shares at the same
time that the preferred stock is withdrawn. Holders of preferred stock received
in exchange for depositary shares will no longer be entitled to deposit such
shares under the Deposit Agreement or to receive depositary shares in exchange
for such preferred stock.
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<PAGE> 29
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received with respect to the preferred stock to the record holders
of depositary shares representing the preferred stock in proportion to the
numbers of depositary shares owned by the holders on the relevant record date.
The Depositary will distribute only the amount that can be distributed without
attributing to any holder of depositary shares a fraction of one cent. The
balance not distributed will be added to and treated as part of the next sum
received by the Depositary for distribution to record holders of depositary
shares.
If there is a distribution other than in cash, the Depositary will
distribute property to the holders of depositary shares, unless the Depositary
determines that it is not feasible to make such distribution. If this occurs,
the Depositary may, with our approval, sell the property and distribute the net
proceeds from the sale to the holders of depositary shares.
The Deposit Agreement will also contain provisions relating to how any
subscription or similar rights offered by us to holders of preferred stock will
be made available to the holders of depositary shares.
CONVERSION AND EXCHANGE
If any series of preferred stock underlying the depositary shares is
subject to conversion or exchange, the applicable prospectus supplement will
describe the rights or obligations of each record holder of depositary receipts
to convert or exchange the depositary shares.
REDEMPTION OF DEPOSITARY SHARES
If the series of preferred stock underlying the depositary shares is
subject to redemption, the depositary shares will be redeemed from the
redemption proceeds, in whole or in part, of such series of the preferred stock
held by the Depositary. The Depositary will mail notice of redemption between 30
to 60 days prior to the date fixed for redemption to the record holders of the
depositary shares to be redeemed at their addresses appearing in the
Depositary's records. The redemption price per depositary share will bear the
same relationship to the redemption price per preferred share that the
depositary share bears to the underlying preferred share. Whenever we redeem
preferred stock held by the Depositary, the Depositary will redeem, as of the
same redemption date, the number of depositary shares representing the preferred
stock redeemed. If less than all the depositary shares are to be redeemed, the
depositary shares to be redeemed will be selected by lot or pro rata as
determined by the Depositary.
After the date fixed for redemption, the depositary shares called for
redemption will no longer be outstanding. When the depositary shares are no
longer outstanding, all rights of the holders will cease, except the right to
receive money or other property that the holders of the depositary shares were
entitled to receive upon such redemption. Such payments will be made when
holders surrender their depositary receipts to the Depositary.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of preferred
stock are entitled to vote, the Depositary will mail information about the
meeting contained in the notice to the record holders of the depositary shares
relating to such preferred stock. Each record holder of such depositary shares
on the record date (which will be the same date as
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the record date for the preferred stock) will be entitled to instruct the
Depositary as to how the preferred stock underlying the holder's depositary
shares should be voted.
The Depositary will try, if practical, to vote the number of shares of
preferred stock underlying the depositary shares according to the instructions
received. We will agree to take all action requested by and deemed necessary by
the Depositary in order to enable the Depositary to vote the preferred stock in
that manner. The Depositary will not vote any preferred stock for which it does
not receive specific instructions from the holders of the depositary shares
relating to such preferred stock.
TAXATION
Owners of depositary shares will be treated for federal income tax purposes
as if they were owners of the preferred stock represented by the depositary
shares. Accordingly, for federal income tax purposes they will have the income
and deductions to which they would be entitled if they were holders of the
preferred stock. In addition:
- no gain or loss will be recognized for federal income tax purposes upon
the withdrawal of preferred stock in exchange for depositary shares as
provided in the Deposit Agreement;
- the tax basis of each share of preferred stock to an exchanging owner of
depositary shares will, upon the exchange, be the same as the aggregate
tax basis of the depositary shares exchanged for such preferred share;
and
- the holding period for the preferred stock, in the hands of an exchanging
owner of depositary shares who held the depositary shares as a capital
asset at the time of the exchange, will include the period that the owner
held such depositary shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the Deposit Agreement may be amended by agreement between us and
the Depositary at any time. However, any amendment that materially and adversely
alters the rights of the existing holders of depositary shares will not be
effective unless approved by the record holders of at least a majority of the
depositary shares then outstanding. A Deposit Agreement may be terminated by us
or the Depositary only if:
- all outstanding depositary shares relating to the Deposit Agreement have
been redeemed; or
- there has been a final distribution of the preferred stock of the
relevant series in connection with the liquidation, dissolution or
winding up of our business and the distribution has been distributed to
the holders of the related depositary shares.
CHARGES OF THE DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay associated
charges of the Depositary for the initial deposit of preferred stock and any
redemption of preferred stock. Holders of depositary shares will pay transfer
and other taxes and governmental charges and any other charges that are stated
to be their responsibility in the Deposit Agreement.
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MISCELLANEOUS
We will forward to the holders of depositary shares all reports and
communications that we must furnish to the holders of preferred stock.
Neither the Depositary nor we will be liable if the Depositary is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. Our obligations and the Depositary's
obligations under the Deposit Agreement will be limited to performance in good
faith of duties set forth in the Deposit Agreement. Neither the Depositary nor
we will be obligated to prosecute or defend any legal proceeding connected with
any depositary shares or preferred stock unless satisfactory indemnity is
furnished to us and/or the Depositary. We and the Depositary may rely upon
written advice of counsel or accountants, or information provided by persons
presenting preferred stock for deposit, holders of depositary shares or other
persons believed to be competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering notice to us. We may
also remove the Depositary at any time. Resignations or removals will take
effect upon the appointment of a successor depositary and its acceptance of the
appointment. The successor depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the U.S. and having a combined capital
and surplus of at least $50 million.
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PLAN OF DISTRIBUTION
We may sell any securities:
- through underwriters or dealers;
- through agents; or
- directly to one or more purchasers.
The distribution of the securities may be effected from time to time in one
or more transactions:
- at a fixed price or prices, which may be changed from time to time;
- at market prices prevailing at the time of sale;
- at prices related to such prevailing market prices; or
- at negotiated prices.
For each series of securities, the applicable prospectus supplement will
set forth the terms of the offering including:
- the initial public offering price;
- the names of any underwriters, dealers or agents;
- the purchase price of the securities;
- our proceeds from the sale of the securities;
- any underwriting discounts, agency fees, or other compensation payable to
underwriters or agents;
- any discounts or concessions allowed or reallowed or repaid to dealers;
and
- the securities exchanges on which the securities will be listed, if any.
If we use underwriters in the sale, they will buy the securities for their
own account. The underwriters may then resell the securities in one or more
transactions at a fixed public offering price or at varying prices determined at
the time of sale or thereafter. The obligations of the underwriters to purchase
the securities will be subject to certain conditions. The underwriters will be
obligated to purchase all the securities offered if they purchase any
securities. Any initial public offering price and any discounts or concessions
allowed or re-allowed or paid to dealers may be changed from time to time. In
connection with an offering, underwriters and selling group members and their
affiliates may engage in transactions to stabilize, maintain or otherwise affect
the market price of the securities in accordance with applicable law.
If we use dealers in the sale, we will sell securities to such dealers as
principals. The dealers may then resell the securities to the public at varying
prices to be determined by such dealers at the time of resale. If we use agents
in the sale, they will use their reasonable best efforts to solicit purchases
for the period of their appointment. If we sell directly, no underwriters or
agents would be involved. We are not making an offer of securities in any state
that does not permit such an offer.
Underwriters, dealers and agents that participate in the securities
distribution may be deemed to be underwriters as defined in the Securities Act
of 1933. Any discounts, commissions, or profit they receive when they resell the
securities may be treated as underwriting discounts and commissions under that
Act. We may have agreements with
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underwriters, dealers and agents to indemnify them against certain civil
liabilities, including certain liabilities under the Securities Act of 1933, or
to contribute with respect to payments that they may be required to make.
We may authorize underwriters, dealers or agents to solicit offers from
certain institutions whereby the institution contractually agrees to purchase
the securities from us on a future date at a specific price. This type of
contract may be made only with institutions that we specifically approve. Such
institutions could include banks, insurance companies, pension funds, investment
companies and educational and charitable institutions. The underwriters, dealers
or agents will not be responsible for the validity or performance of these
contracts.
The securities, other than any common stock, will be new issues of
securities with no established trading market and unless otherwise specified in
the applicable prospectus supplement, we will not list any series of the
securities on any exchange. It has not presently been established whether the
underwriters, if any, of the securities will make a market in the securities. If
the underwriters make a market in the securities, such market making may be
discontinued at any time without notice. No assurance can be given as to the
liquidity of the trading market for the securities.
LEGAL MATTERS
The validity of the convertible debt securities, preferred stock, common
stock and depositary shares will be passed upon for us by King & Spalding.
EXPERTS
The consolidated financial statements and schedule of InfoCure Corporation
and its subsidiaries incorporated by reference in this prospectus have been
audited by BDO Seidman, LLP, independent certified public accountants, to the
extent and for the periods as set forth in their reports incorporated herein by
reference, and are incorporated herein in reliance upon such reports given upon
the authority of said firm as experts in accounting and auditing.
The financial statements of The Healthcare Systems Division of The Reynolds
and Reynolds Company as of September 30, 1998 and 1997 and for the years ended
September 30, 1998, 1997 and 1996 incorporated by reference in this prospectus
from InfoCure Corporation's Prospectus filed pursuant to Rule 424(b)(4) on April
22, 1999 which constitutes part of the Registration Statement on Form S-3 (with
respect to a public offering of 3,759,000 common shares), effective April 21,
1999, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated financial statements of Datamedic Holding Corp. and
subsidiaries as of March 31, 1999 and 1998, and for each of the years in the
three-year period ended March 31, 1999, have been incorporated by reference
herein in reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN THIS PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC registration fee........................................ $ 26,400
Nasdaq National Market Listing Fee.......................... 17,500
Printing and engraving expenses............................. 25,000
Accounting fees and expenses................................ 20,000
Legal fees and expenses..................................... 50,000
Miscellaneous expenses...................................... 5,000
--------
Total Expenses......................................... $143,900
========
</TABLE>
All fees other than the SEC registration fee are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a Delaware
corporation to indemnify officers, directors, employees and agents for actions
taken in good faith and in a manner they reasonably believed to be in, or not
opposed to, the best interests of the corporation, and with respect to any
criminal action, which they had no reasonable cause to believe was unlawful. The
Delaware General Corporation Law provides that a corporation may pay expenses
(including attorney's fees) incurred by an officer or director in defending any
civil, criminal, administrative or investigative action, and must reimburse a
successful defendant for expenses, including attorney's fees, actually and
reasonably incurred, and permits a corporation to purchase and maintain
liability insurance for its directors and officers. The Delaware General
Corporation Law provides that indemnification may not be made for any claim,
issue or matter as to which a person has been adjudged by a court of competent
jurisdiction to be liable to the corporation, unless and only to the extent a
court determines that the person is entitled to indemnity for such expenses as
the court deems proper.
InfoCure's bylaws provide that InfoCure shall, to the full extent permitted
by Section 145, indemnify any person, made or threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is, was or is about to become an officer, director, employee or agent of
InfoCure. InfoCure shall pay the expenses (including attorney's fees) incurred
by a person in defending any proceeding in advance of its final disposition,
provided, however, that, to the extent required by law, such payment of expenses
in advance of the final disposition of the proceeding shall be made by InfoCure
only upon receipt of an undertaking by the person to repay all amounts advanced
if it should be ultimately determined that the person is not entitled to be
indemnified.
In addition, InfoCure's certificate of incorporation eliminates or limits
personal liability of its directors to the full extent permitted by Section
102(b)(7) of the Delaware General Corporation Law.
Section 102(b)(7) provides that a corporation may eliminate or limit the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the
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<PAGE> 35
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
willful or negligent conduct in paying dividends or repurchasing stock out of
other than lawfully available funds or (iv) for any transaction from which the
director derived an improper personal benefit. No such provision shall eliminate
or limit the liability of a director for any act or omission occurring prior to
the date when such provision becomes effective.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
1.1* Form of Underwriting Agreement.
3.1 Certificate of Incorporation of InfoCure, as amended
(incorporated by reference to Exhibit 3.1 filed with
InfoCure's Annual Report on Form 10-K for the Year Ended
December 31, 1999).
3.2 Second Amended and Restated Bylaws of InfoCure (incorporated
by reference to Exhibit 3.2 filed with InfoCure's Annual
Report on Form 10-K for the Year Ended December 31, 1999).
4.1* Form of Indenture for Convertible Subordinated Debt
Securities.
4.2* Form of Convertible Subordinated Debt Security (included in
Exhibit 4.1).
4.3* Form of Deposit Agreement.
4.4 Specimen Certificate of shares of common stock (incorporated
by reference to Exhibit 4.1 filed with InfoCure's
Registration Statement on Form SB-2/A (Registration File No.
333-18923)).
5.1* Opinion of King & Spalding.
12.1 Ratio of Earnings to Fixed Charges.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of KPMG LLP.
23.4* Consent of King & Spalding (included in Exhibit 5.1).
25.1* Statement of Eligibility of the Trustee under the Trust
Indenture Act of 1939.
</TABLE>
-------------------------
* To be filed by amendment or incorporation by reference.
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 of 1933;
(ii) to reflect in the 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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
II-2
<PAGE> 36
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) 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 of 1933 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 of
1933 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 of 1933 and will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
II-3
<PAGE> 37
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 the 30th day of
June, 2000.
INFOCURE CORPORATION
/s/ FREDERICK L. FINE
--------------------------------------
By: Frederick L. Fine
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Frederick L. Fine, Richard E. Perlman and James
K. Price, and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and any
subsequent registration statements pursuant to Rule 462 of the Securities Act
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ FREDERICK L. FINE President, Chief Executive Officer June 30, 2000
--------------------------------------------------- and Director (Principal Executive
Frederick L. Fine Officer)
/s/ JAMES K. PRICE Executive Vice President, Secretary June 30, 2000
--------------------------------------------------- and Director
James K. Price
/s/ RICHARD E. PERLMAN Chairman, Treasurer and Director June 30, 2000
---------------------------------------------------
Richard E. Perlman
/s/ JAMES A. COCHRAN Senior Vice President of Finance June 30, 2000
--------------------------------------------------- and Chief Financial Officer
James A. Cochran (Principal Financial Officer and
Principal Accounting Officer)
</TABLE>
II-4
<PAGE> 38
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JAMES D. ELLIOT Director June 30, 2000
---------------------------------------------------
James D. Elliot
/s/ RAYMOND H. WELSH Director June 30, 2000
---------------------------------------------------
Raymond H. Welsh
</TABLE>
II-5
