<PAGE>
As filed with the Securities and Exchange Commission on March 2, 1999
File No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
LHS GROUP INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 58-2224883
<S> <C>
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
</TABLE>
Six Concourse Parkway, Suite 2700
Atlanta, Georgia 30328
(770) 280-3000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Dr. Wolf J. Gaede
Six Concourse Parkway, Suite 2700
Atlanta, Georgia 30328
(770) 280-3000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
M. Hill Jeffries, Esq. Marlene Alva, Esq.
Alston & Bird LLP Davis Polk & Wardwell
One Atlantic Center 450 Lexington Avenue
1201 West Peachtree Street New York, New York 10017
Atlanta, Georgia 30309-3424 (212) 450-4000 (212)
(404) 881-7000 (404) 450-5760 (fax)
881-4777 (fax)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Amount Maximum Aggregate Amount of
Title of Shares to be to be Offering Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee(2)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, $.01 par 3,735,000
value per share........ shares $43.69 $163,182,150 $45,365
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Includes 400,000 shares which the placement agents have the option to
purchase from one of the selling stockholders solely to cover over-allotments,
if any. See "Plan of Distribution."
(2) The shares of common stock being registered hereby are being offered by the
selling stockholders in an international offering outside the United States.
Offers and sales will be made in Euros. Pursuant to Rule 457(c), the proposed
maximum offering price per share and registration fee are based on the average
of the high and low sale prices of the registrant's common stock on February
25, 1999 as reported on the Nasdaq National Market.
----------------
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that 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 said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 2, 1999
LHS GROUP INC.
[LOGO]
3,335,000 Shares
Common Stock
This is a public offering of 3,335,000 shares of common stock of LHS Group
Inc. Selling stockholders identified in this prospectus are offering all of the
shares to be sold in the offering. All of the shares are being offered in an
international offering outside the United States. LHS will not receive any of
the proceeds of the offering.
Our common stock is listed on the Nasdaq National Market under the symbol
"LHSG" and on the Frankfurt Neuer Markt Exchange under the symbol "LHI." On
March 1, 1999, the last reported sale price of the common stock on the Nasdaq
National Market was $43.88 per share. On February 25, 1999, the last reported
sale price of the common stock on the Frankfurt Neuer Markt was (euro)40.00 per
share.
The public offering price is (euro) per share. This is equivalent to a
price of $ per share at an exchange rate of (euro) per $1.00 and a price of per
share at an exchange rate of (euro) per .
<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Public Offering Price.......................................... (euro) (euro)
Agents' Fee.................................................... (euro) (euro)
Proceeds to Selling Stockholders............................... (euro) (euro)
</TABLE>
The selling stockholders and we have retained the investment banking firms
named below as placement agents to offer and sell the shares for the selling
stockholders on a best efforts basis. One of the selling stockholders has
granted the placement agents an option to purchase up to 400,000 additional
shares of common stock to cover over-allotments.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
Deutsche Bank Securities
HypoVereinsbank AG SG Cowen
The date of this prospectus is , 1999.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities, and it is not soliciting an offer to buy +
+these securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
<PAGE>
LHS
LHS provides client/server-based billing and customer care solutions to
providers of telecommunications services in the Americas, Europe and Asia. Our
products enable these carriers to compete more effectively in a rapidly growing
wireless and wireline telecommunications market. Our Business Support and
Control System software is a scaleable, modular billing and customer care
solution that can be implemented quickly and can support innovative marketing
and pricing of telecommunications services. We have licensed BSCS to
approximately 134 carriers in over 70 countries, and BSCS currently supports
approximately 24.8 million subscribers.
Our headquarters are located at Six Concourse Parkway, Suite 2700, Atlanta,
Georgia 30328. Our telephone number at that location is (770) 280-3000.
RECENT DEVELOPMENTS
On February 22, 1999, we announced revenue for the quarter and year ended
December 31, 1998 of $48.3 million and $163.2 million. Our earnings and diluted
earnings per share for the same periods were $7.9 million and $0.15 and $17.3
million and $0.32. These financial results have not been audited by our
independent auditors yet.
Also, on February 22, 1999, we announced the launch of our object-oriented
next generation customer care and billing software "Targys--the millennium
series" for the global telecommunications industry. Targys is based on a multi-
tiered component-based architecture employing Java as its implementation
language. It allows plug-and-play interoperability with other software that
supports CORBA 2, an industry standard introduced by the Object Management
Group. The first application of the Targys series is now in use at Swisscom AG
Mobile, Bern, Switzerland.
RISK FACTORS
For information regarding certain considerations that a prospective
purchaser of the common stock should consider, see "Risk Factors" contained in
our Current Report on Form 8-K dated March 1, 1999 on file with the SEC. The
Form 8-K is incorporated in this prospectus by reference.
USE OF PROCEEDS
The selling stockholders are selling all of the shares of common stock being
offered. LHS will not receive any of the proceeds from the sales by the selling
stockholders.
2
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The common stock began trading on the Nasdaq National Market on May 16, 1997
under the symbol "LHSG." The common stock began trading on the Frankfurt Neuer
Markt Exchange on May 21, 1997 under the symbol "LHI." The high and low
quarterly sales prices of the common stock on the Nasdaq National Market and
the Frankfurt Neuer Markt Exchange since the commencement of trading, as
reported by Nasdaq and the Frankfurt Neuer Markt Exchange, are as follows:
<TABLE>
<CAPTION>
Nasdaq
National Frankfurt Neuer
Market(1) Markt Exchange(2)
------------- -----------------
High Low High Low
------ ------ -------- --------
<S> <C> <C> <C> <C>
1999
First Quarter(3)............................ $59.13 $43.00 (E)50.00 (E)39.20
1998
First Quarter............................... $50.38 $25.50 DM 87.25 DM 48.05
Second Quarter.............................. 73.75 44.50 130.00 84.00
Third Quarter............................... 76.50 43.94 129.90 76.25
Fourth Quarter.............................. 57.38 36.75 90.90 61.00
1997
First Quarter............................... NA NA NA NA
Second Quarter.............................. $22.25 $ 9.38 DM 37.15 DM 19.05
Third Quarter............................... 30.75 21.56 56.75 37.95
Fourth Quarter.............................. 37.88 19.38 56.05 35.50
</TABLE>
- --------
(1) Prices of shares of common stock are in U.S. Dollars.
(2) Prices of shares of common stock are in German Deutsche Mark for periods
prior to January 1, 1999 and in Euros for subsequent periods. On January 1,
1999, the exchange rate of the German Deutsche Mark was fixed against the
Euro at 1.9559 Deutsche Mark per Euro.
(3) Through March 1, 1999.
We have not paid cash dividends on our common stock since 1994. We currently
intend to retain any future earnings to fund the continued development and
growth of our business. We therefore do not anticipate paying cash dividends in
the foreseeable future.
3
<PAGE>
SELLING STOCKHOLDERS
The following table provides information as of February 26, 1999 about the
ownership of our common stock by each of the selling stockholders and the
number of shares being offered for sale by them:
<TABLE>
<CAPTION>
Shares Shares
Beneficially Owned Number of Beneficially Owned
Name Before Offering(1) Shares Being After Offering(1)
---- --------------------- ------------ ------------------
Number Percent Offered(2) Number Percent
---------- ------- ------------ ---------- -------
<S> <C> <C> <C> <C> <C>
General Atlantic Part-
ners, LLC,
William E. Ford and
William O. Grabe........ 8,374,578(3) 15.9% 2,500,000 5,874,578 11.1%
Hartmut Lademacher
Chairman of the Board and
Chief Executive Offi-
cer..................... 19,506,333(4) 36.1% 500,000 16,506,333 30.6%
Dr. Hansjorg Beha
Executive Vice President
of Technology........... 67,500(5) * 60,000 7,500 *
Ulf Bohla
Director................ 19,375(6) * 17,000 2,375 *
Jerry W. Braxton
Executive Vice Presi-
dent,
Chief Financial Officer
and Treasurer .......... 114,113(7) * 80,000 34,113 *
Erik Froberg
Special Advisor to the
Chairman of Board ...... 162,500(8) * 150,000 12,500 *
Jon Limbird
Executive Vice President
of
Corporate Development... 31,875(9) * 28,000 3,875 *
</TABLE>
- --------
*Less than one percent.
(1) The number of shares of common stock beneficially owned by a person or
group includes shares issuable on or before April 30, 1999 pursuant to
convertible securities, warrants and options. Such shares are considered to
be outstanding for the purpose of computing the percentage of the class
beneficially owned by such person or group but are not considered to be
outstanding for the purpose of computing the percentage of the class owned
by any other person or group.
(2) Excludes 400,000 shares as to which General Atlantic Partners, LLC, has
granted the placement agents an over-allotment option. See "Plan of
Distribution."
(3) Includes (a) 4,941,006 shares of common stock held by General Atlantic
Partners 23, L.P. ("GAP 23"), (b) 2,040,931 shares of common stock held by
General Atlantic Partners 31, L.P. ("GAP 31"), (c) 1,179,406 shares of
common stock owned by GAP Coinvestment Partners, L.P. ("GAP Coinvestment"),
(d) 10,000 shares of common stock and options to purchase an additional
100,000 shares of common stock held by Mr. Ford, and (e) 91,235 shares of
common stock held by Mr. Grabe and 6,000 shares of common stock held by
each of Mr. Grabe's two minor children. We refer to GAP 23, GAP 31 and GAP
Coinvestment as the "general atlantic stockholders." The general partner of
GAP 31 and GAP 23 is General Atlantic Partners, LLC ("GAP LLC"). The
managing members of GAP LLC are Steven A. Denning, David C. Hodgson, J.
Michael Cline, William O. Grabe, Peter L. Bloom, William E. Ford and
Franchon M. Smithson. The managing members of GAP LLC are the general
partners of GAP Coinvestment. Messrs. Ford and Grabe, directors of the
Company, are managing members of GAP LLC and general partners of GAP
Coinvestment. Mr. Ford and Mr. Grabe disclaim beneficial ownership of
shares owned by the general atlantic stockholders, except to the extent of
their respective pecuniary interests therein. The general atlantic
stockholders disclaim beneficial ownership of the shares of
4
<PAGE>
common stock and options to purchase common stock held by Mr. Ford and the
shares of common stock held by Mr. Grabe and his minor children. The
address for the general atlantic stockholders, GAP LLC, Mr. Ford and Mr.
Grabe is c/o General Atlantic Service Corporation, 3 Pickwick Plaza,
Greenwich, CT 06830.
(4) Includes (a) options to purchase 68,751 shares of common stock and (b)
14,056,332 shares, the beneficial holders of which have granted to Mr.
Lademacher the right to vote such shares in his discretion. The voting
rights expire on December 31, 1999. Mr. Lademacher's address is LHS Group
Inc., Six Concourse Parkway, Suite 2700, Atlanta, Georgia 30328.
(5) Represents options to purchase shares of common stock.
(6) Represents options to purchase shares of common stock.
(7) Includes options to purchase 110,113 shares of common stock.
(8) Represents options to purchase shares of common stock.
(9) Represents options to purchase shares of common stock.
The nature of any position, office or other material relationship which the
selling stockholders have had within the past three years with LHS or any of
its affiliates is set forth below.
In connection with a reorganization of LHS in December 1995, GAP 23 and GAP
Coinvestment purchased a total of 225,000 shares of Series A convertible
preferred stock from LHS. At the same time, Messrs. Ford and Grabe, as the
designees of GAP LLC, were elected as directors of LHS. In May 1997, the
225,000 shares of Series A convertible preferred stock were converted into a
total of 4,500,000 shares of common stock.
In July 1996, LHS repurchased 1,861,560 shares of common stock from one of
its stockholders at a price of $10,000,000. Simultaneously, LHS sold 1,601,920
shares of common stock to GAP 31 at a price of $8,605,514 and sold 259,640
shares of common stock to GAP Coinvestment at a price of $1,394,786.
Hartmut Lademacher is one of the founders of LHS and has served as Chairman
of the Board and Chief Executive Officer since our inception in October 1990.
On December 12 and 13, 1996, Mr. Lademacher sold 50,000 shares of common stock
to GAP Coinvestment at a price of $837,500.
In connection with the reorganization in December 1995, LHS, the general
atlantic stockholders and the other stockholders of LHS, including Hartmut
Lademacher (the "major stockholders"), entered into a stockholders agreement
and a registration rights agreement. The stockholders agreement terminated
upon the completion of our initial public offering in May 1997. The
registration rights agreement entitles each of the general atlantic
stockholders as a group and the major stockholders as a group to require LHS
on up to two occasions for each group to register all or part of their shares
under the Securities Act of 1933. The registration rights agreement also
allows the general atlantic stockholders and the major stockholders to
participate in any offering of common stock by LHS. The registration rights
agreement remains in effect, and neither the general atlantic stockholders nor
the major stockholders have exercised any of their demand registration rights.
A subsidiary of LHS leases office space in Frankfurt, Germany from a
corporation of which Hartmut Lademacher owns 25%. During the years ended
December 31, 1996, 1997 and 1998, LHS made lease payments totaling $370,000,
$329,000 and $316,000 to this corporation.
In connection with an LHS project in Dusseldorf, Germany, a subsidiary of
LHS leased housing space for its employees in 1996 and 1997. This space is
owned by a partnership in which Hartmut Lademacher holds a one-third interest.
During the years ended December 31, 1996, 1997 and 1998, we made lease
payments of approximately $67,000, $58,000 and $66,000 to the partnership.
Dr. Hansjorg Beha has been our Executive Vice President of Technology since
December 1997. Jerry W. Braxton has served as our Executive Vice President,
Chief Financial Officer and Treasurer since August 1996 and as a director
since September 1996. Erik Froberg has been the Special Advisor to the
Chairman of the Board since February 1999. From August 1996 to February 1999,
he served as Executive Vice President of LHS and President and Chief Executive
Officer of LHS Holding Germany GmbH. Jon Limbird has been our
5
<PAGE>
Executive Vice President of Corporate Development since January 1, 1999. From
April 1996 to January 1, 1999, Mr. Limbird held the positions of Senior Vice
President of Product Development, Vice President of Research and Development,
and Vice President of Operations.
MATERIAL U.S. FEDERAL TAX CONSIDERATIONS
FOR HOLDERS OF COMMON STOCK
The following are U.S. federal income and estate tax consequences of the
ownership and disposition of common stock by a beneficial holder. For purposes
of this discussion, a U.S. holder is a holder that for United States federal
income tax purposes is:
. a citizen or individual resident of the United States;
. a corporation or partnership created or organized in or under the laws of
the United States or of any political subdivision thereof;
. an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
. a trust if both (A) a U.S. court is able to exercise primary supervision
over the administration of the trust and (B) one or more U.S. persons have
the authority to control all substantial decisions of the trust.
A non-U.S. holder is any person or entity that is not a U.S. holder.
This discussion is based on the U.S. Internal Revenue Code of 1986 and
current administrative interpretations. These authorities may change possibly
with a retroactive effect. This discussion does not address all aspects of U.S.
federal income and estate taxation that may be relevant to holders in light of
their particular circumstances. This discussion does not address tax
consequences applicable to persons with special tax status such as financial
institutions, insurance companies, tax-exempt organizations, securities dealers
or pass-through entities. It also does not address any tax consequences to
holders arising under the laws of any state, local or foreign jurisdiction. You
should consult your tax adviser with respect to the particular tax consequences
to you of owning and disposing of common stock, including the consequences
under the laws of any state, local or foreign jurisdiction.
Tax Consequences to LHS
LHS will not have any tax consequences as a result of the sale of the common
stock by the selling stockholders.
Dividends
U.S. Holders
A distribution by LHS on the common stock generally will be a dividend to
the extent the distribution is paid from the current or accumulated earnings
and profits of LHS as determined under U.S. federal income tax principles. If
you are a U.S. holder, such dividends will be includable in your income for tax
purposes. A distribution in excess of our earnings and profits generally will
first be treated as a nontaxable return of capital to the extent of your basis
in the common stock which will reduce your basis, and then as a gain from the
sale or exchange of a capital asset.
Non-U.S. Holders
Subject to the discussion below, dividends paid to you, if you are a non-
U.S. holder of common stock, will be subject to withholding of United States
federal income tax at a 30% rate, or a lower rate as may be provided by an
income tax treaty between the United States and a foreign country if you are
treated as a resident of such foreign country within the meaning of the
applicable treaty, unless the dividends are effectively connected with the
conduct of your trade or business within the United States and you provide the
payor with proper documentation.
Dividends that are effectively connected with the conduct of your trade or
business within the United States, in some cases, will be subject to United
States federal income tax on a net income basis, after allowance for applicable
deductions, at applicable graduated individual or corporate rates. Any such
effectively connected
6
<PAGE>
dividends received by a foreign corporation may be subject to an additional
"branch profits tax" at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty.
Withholding may be reduced if a tax treaty applies. To obtain a reduced rate
of withholding under a treaty, a non-U.S., holder will be required to provide
appropriate certification as to entitlement to treaty benefits. Please see your
tax adviser to determine whether you are entitled to treaty benefits.
Under regulations recently adopted and effective on January 1, 1999,
dividends paid after December 31, 1998, will be subject to United States
withholding tax at a 31% rate under the backup withholding rules described
below, rather than at a 30% rate or a reduced rate under an income tax treaty,
as described above, unless you comply with appropriate U.S. Internal Revenue
Service certification procedures or, in the case of payments made outside the
United States with respect to an offshore account, certain IRS documentary
evidence procedures. In addition, you must comply with certain IRS
certification and disclosure requirements in order to be exempt from
withholding under the effectively connected income exemption. The new
regulations also provide special rules for dividend payments made to:
. foreign intermediaries;
. U.S. or foreign wholly owned entities that are disregarded for U.S.
federal income tax purposes; and
. entities that are treated as fiscally transparent in the United States,
the applicable income tax treaty jurisdiction or both.
You should consult with your tax adviser concerning the effect of the adoption
of these new regulations on an investment in the common stock.
Gain on Disposition of Common Stock
U.S. Holders
If you are a U.S. holder, you will recognize a gain or loss on the taxable
disposition of the common stock in an amount equal to the difference between
your adjusted tax basis in the common stock and the amount realized on its
disposition. Your adjusted tax basis in the common stock will generally be
equal to the cost of the acquired shares reduced, not below zero, by the amount
of any distribution that is treated as a tax-free return of basis. The gain or
loss generally will be capital gain or loss, long-term or short-term, depending
on whether or not you held the common stock for more than one year. The
provisions of the IRS Reform Act of 1998 reduced the maximum capital gains rate
for individuals to 20% for capital assets held for more than 12 months before
disposition; the rate applicable to gain realized on the disposition of common
stock by you will depend upon the holding period of such common stock, your
other taxable income and other factors.
Non-U.S. Holders
If you are a non-U.S. holder, you generally will not be subject to United
States federal income tax with respect to gain recognized on a sale or other
disposition of common stock unless:
. the gain is effectively connected with a trade or business conducted by
you within the United States;
. if you are an individual and hold the common stock as a capital asset, you
are present in the United States for 183 or more days in the taxable year
of the sale or other disposition and other conditions are met;
. you are subject to tax pursuant to specific provisions of the Internal
Revenue Code applicable to United States expatriates; or
. LHS is or has been a U.S. real property holding corporation for United
States federal income tax purposes at any time within the shorter of the
five-year period preceding such disposition or the period you held the
common stock.
A corporation is a U.S. real property holding corporation if the fair market
value of the United States real property interests held by the corporation is
50% or more of the aggregate fair market value of specific assets of the
corporation. LHS is not, and does not anticipate becoming, a U.S. real property
holding corporation.
7
<PAGE>
If you are a non-U.S. holder who is an individual and you fall under the
first bullet point above, you generally will be taxed on the net gain derived
from a sale of common stock under regular graduated United States federal
income tax rates. If you fall under the second bullet point above, you
generally will be subject to a flat 30% tax on the gain derived from a sale,
which may be offset by certain United States capital losses, notwithstanding
the fact that you are not considered a resident alien of the United States.
Individual non-U.S. holders who have spent or expect to spend more than a short
period of time in the United States in the taxable year in which they
contemplate a sale of common stock are urged to consult their tax advisers
prior to the sale of common stock as to the U.S. tax consequences of such sale.
If you are a non-U.S. holder that is a foreign corporation and you fall
under the first bullet point above, you generally will be taxed on your net
gain under regular graduated United States federal income tax rates and will be
subject to the branch profits tax equal to 30% of your "effectively connected
earnings and profits," within the meaning of the Code, for the taxable year, as
adjusted for certain items. The United States federal income tax on gain
recognized by non-U.S. holders may be reduced or eliminated under an applicable
treaty. Please consult your tax adviser to determine whether you are entitled
to treaty benefits.
Information Reporting Requirements and Backup Withholding
Generally, LHS must report to the IRS the amount of dividends paid, the name
and address of the recipient and the amount of any tax withheld. A similar
report is sent to the holder. Pursuant to tax treaties or other agreements, the
IRS may also make its reports available to tax authorities in the recipient's
country of residence.
U.S. Holders
Dividends paid to you, as a U.S. holder, may be subject to backup
withholding at the rate of 31% unless you:
. are a corporation or come within other exempt categories and, when
required, demonstrate this fact, or
. provide a taxpayer identification number, certify as to no loss of
exemption from backup withholding, and otherwise comply with the
applicable requirements of the backup withholding rules.
Non-U.S. Holders
Under United States Treasury regulations, LHS must report annually to the
IRS and to each non-U.S. holder the amount of dividends paid to a non-U.S.
holder and the tax withheld with respect to these dividends. These information
reporting requirements apply even if withholding was not required because the
dividends were effectively connected with your trade or business in the United
States or withholding was reduced or eliminated by an applicable income tax
treaty. Copies of the information returns reporting such dividends and
withholding may also be made available to the tax authorities in the country in
which you are a resident under the provisions of an applicable income tax
treaty or agreement.
United States backup withholding is a withholding tax imposed at the rate of
31% on payments to persons that fail to furnish required information under the
United States information reporting requirements. Backup withholding generally
will not apply to dividends paid to you that are subject to the 30% withholding
discussed above or that are not so subject because a tax treaty applies that
reduces or eliminates such 30% withholding. However, under newly issued
Treasury regulations, in the case of dividends paid after December 31, 1998,
you generally will be subject to backup withholding at a 31% rate, unless you
comply with IRS certification procedures or, in the case of payments made
outside the United States with respect to an offshore account, IRS documentary
evidence procedures.
Backup withholding and information reporting generally will apply to
dividends paid to addresses inside the United States on shares of common stock
to beneficial owners that are not "exempt recipients" and that fail to provide
certain identifying information in the manner required.
8
<PAGE>
Under current United States federal income tax law, information reporting
and backup withholding imposed at a rate of 31% will apply to the proceeds of a
disposition of common stock paid to or through a U.S. office of a broker unless
the disposing holder certifies as to its non-U.S. status or otherwise
establishes an exemption. In general, backup withholding and information
reporting will not apply to a payment of the gross proceeds of a sale of common
stock effected at a foreign office of a broker. After December 31, 1998, under
the newly issued Treasury regulations referred to above, information reporting
and backup withholding may apply to payments of the gross proceeds from the
sale or redemption of common stock effected through foreign offices of brokers
having any of a broader class of connections with the United States unless
certain IRS certification requirements are complied with. You should consult
with your tax adviser regarding these Treasury regulations and, in particular,
with respect to whether the use of a particular broker would subject you to
these rules.
Payment by a United States office of a broker of the proceeds of a sale of
common stock is subject to both backup withholding and information reporting
unless the beneficial owner certifies under penalties of perjury that it is a
non-U.S. holder or otherwise establishes an exemption. Backup withholding is
not an additional tax. Any amounts withheld under the backup withholding rules
will be allowed as a refund or a credit against such holder's United States
federal income tax liability provided the required information is furnished to
the IRS.
Federal Estate Tax Applicable to Non-U.S. Holders
An individual non-U.S. holder who at the time of death is treated as the
owner of, or has made certain lifetime transfers of, an interest in the common
stock will be required to include the value thereof in his gross estate for
U.S. federal estate tax purposes and may be subject to U.S. federal estate tax
unless an applicable estate tax treaty provides otherwise.
PLAN OF DISTRIBUTION
The selling stockholders and LHS have entered into a placement agreement
dated March , 1999 with the placement agents: Deutsche Bank Securities,
Bayerische Hypo-und Vereinsbank AG and SG Cowen International L.P. Pursuant to
the placement agreement, the placement agents have agreed to use their best
efforts in acting as agents for the selling stockholders to place 3,185,000
shares of common stock with third-party purchasers. The placement agents may
also exercise an over-allotment option allowing them to place up to an
additional 400,000 shares. The selling stockholders expect to sell all of the
shares to non-U.S. persons outside of the United States. The selling
stockholders may sell some shares to U.S. persons. Any of the selling
stockholders may withdraw from the placement agreement until March 8, 1999
without penalty.
The selling stockholders are acting as principals for their own accounts.
The placement agents will not underwrite the transaction by purchasing the
shares as principal and then reselling them, although:
. in their role as agents, they may purchase some of the shares for their
own account; and
. they may distribute the shares through block trades in which they attempt
to sell the shares as agents, but they may position and resell a portion
of the block as principal to facilitate the transaction.
The selling stockholders have advised LHS that they may sell the shares,
through the placement agents, in one or more:
. transactions on the Frankfurt Neuer Markt and/or the Nasdaq National
Market;
. sales occurring in the public market off such exchanges;
. negotiated transactions;
. purchases or writing of options on the shares; or
. short sales.
9
<PAGE>
The selling stockholders, through the placement agents, will sell the
shares:
. at prices and on terms then prevailing;
. at prices related to the then-current market price of the shares; or
. at negotiated prices.
LHS will receive no proceeds from the sale of the shares by the selling
stockholders. The selling stockholders will pay all registration expenses in
connection with this offering, as well as all brokerage commissions and other
expenses incurred by the selling stockholders. The selling stockholders and LHS
have agreed to indemnify the placement agents in certain circumstances against
certain liabilities, including liabilities arising under the Securities Act.
The placement agents will receive a flat commission on each share placed for
providing the customary services of placement agents. If the placement agents
succeed in placing any shares at prices above thresholds specified in the
placement agreement, they will receive a bonus payment representing a fixed
percentage of the excess above the threshold price for each such share.
The selling stockholders and the placement agents may be considered
"underwriters" within the meaning of Section 2(11) of the Securities Act. In
such event, any profit on the sale of the shares received by the selling
stockholders and any commissions received by the placement agents may be deemed
to be underwriting discounts and commissions under the Securities Act. The
selling stockholders and the placement agents will deliver a copy of this
prospectus to any U.S. person who purchases any of the shares through them.
LEGAL MATTERS
Certain legal matters with regard to the shares of common stock offered will
be passed upon for LHS by Alston & Bird LLP, Atlanta, Georgia.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included and/or incorporated by reference in
our Annual Report on Form 10-K for the year ended December 31, 1997, as set
forth in their report, which is incorporated in this prospectus by reference.
Our consolidated financial statements are incorporated by reference in reliance
on their authority as experts in accounting and auditing.
Paresky Flitt & Company, independent auditors, have audited the financial
statements of Infocellular, Inc. for the years ended March 31, 1998 and 1997
included in our Current Report on Form 8-K dated July 20, 1998, as set forth in
their report, which is incorporated in this prospectus by reference. The
financial statements of Infocellular, Inc. are incorporated by reference in
reliance on their report, given on their authority as experts in accounting and
auditing.
10
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus, including some statements in
other documents that we incorporate by reference, are forward-looking
statements about what may happen in the future. They include statements
regarding our current beliefs, goals and expectations about matters such as
our expected financial position and operating results, our business strategy
and our financing plans. These statements can sometimes be identified by our
use of forward-looking words such as "anticipate," "estimate," "expect,"
"intend," "may," "should," "will" and similar expressions. Our forward-looking
statements are subject to numerous risks, uncertainties and assumptions,
including those discussed in the reports that we file with the Securities and
Exchange Commission. We cannot guarantee that our forward-looking statements
will turn out to be correct or that our beliefs and goals will not change. Our
actual results could be very different from and worse than our expectations as
expressed in our forward-looking statements.
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 also read and
copy any document we file at the SEC's Public Reference Room in Washington,
D.C. Please call the SEC at 1-800-SEC-0330 for further information on the
Public Reference Room.
Our common stock is listed on the Nasdaq National Market, and you may also
read and copy our SEC filings at The Nasdaq Stock Market, 1735 K Street, N.W.,
Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information that we incorporate by
reference is considered to be part of this prospectus, and information that we
file later with the SEC will automatically update and supersede the
information in this prospectus. We incorporate by reference the documents
listed below and any future filings made with the SEC under Sections 13(a),
13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until the offering
is completed.
(a) Annual Report on Form 10-K for the year ended December 31, 1997;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998, as amended by Quarterly Report
on Form 10-Q/A filed on January 27, 1999;
(c) Current Report on Form 8-K dated June 29, 1998, as amended by Current
Report on Form 8-K/A filed on July 20, 1998, and Current Report on
Form 8-K dated February 26, 1999;
(d) The description of our common stock contained in Form 8-A (Item 1)
dated April 21, 1997.
You may request a copy of these filings at no cost by writing or
telephoning us at the following address:
Corporate Secretary
LHS Group Inc.
Six Concourse Parkway
Suite 2700
Atlanta, Georgia 30328
(770) 280-3000
You should rely only on the information provided or incorporated by
reference in this prospectus. We have authorized no one to provide you with
different information. We are not making an offer of these securities in any
place where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date
on the front of the document.
11
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give any
information or to represent anything not contained in this prospectus. You
must not rely on any unauthorized information or representations. This
prospectus does not offer to sell or buy any shares in any jurisdiction where
it is unlawful to do so. The information contained in this prospectus is
current only as of its date.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
LHS....................................................................... 2
Recent Developments....................................................... 2
Risk Factors.............................................................. 2
Use of Proceeds........................................................... 2
Price Range of Common Stock and Dividends................................. 3
Selling Stockholders...................................................... 4
Material U.S. Federal Tax Considerations for Holders of Common Stock...... 6
Plan of Distribution...................................................... 9
Legal Matters............................................................. 10
Experts................................................................... 10
Special Note Regarding Forward-Looking Statements......................... 11
Where You Can Find More Information....................................... 11
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LHS GROUP INC.
3,335,000 Shares
Common Stock
Deutsche Bank Securities
HypoVereinsbank AG
SG Cowen
Prospectus
, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Set forth below are estimates (except for the SEC registration fee and the
NASD filing fee) of the fees and expenses (other than placement agents'
commissions) payable in connection with the offer and sale of the common stock:
<TABLE>
<S> <C>
SEC registration fee.................................................. $ 45,365
NASD filing fee....................................................... 16,095
Legal fees and expenses............................................... 75,000
Accounting fees and expenses.......................................... 100,000
Transfer agent fees and expenses...................................... 5,000
Printing and engraving expenses....................................... 25,000
Miscellaneous......................................................... 13,540
--------
Total $280,000
========
</TABLE>
- --------
* Payable by the selling stockholders.
Item 15. Indemnification of Directors and Officers.
The By-Laws of LHS, a Delaware corporation, provide for indemnification of
directors and officers of LHS to the full extent permitted by Delaware law.
Section 145 of the General Corporation Law of the State of Delaware provides
generally that a corporation may indemnify any person who was or is a party or
is 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 he is or was a director, officer,
employee or agent of the corporation, or is or was serving at its request in
such capacity in another corporation or business association, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. In addition, pursuant to the authority of
Delaware law, the Certificate of Incorporation of LHS also eliminates the
monetary liability of directors to the fullest extent permitted by Delaware
law.
Item 16. Exhibits.
The following exhibits are filed as a part of this Registration Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
1.1* Form of Placement Agreement between LHS, the selling stockholders and
Deutsche Bank Securities Inc., SG Cowen International L.P. and
Bayerische Hypo-und Vereinsbank AG, as placement agents. (English
translation of German document)
4.1** Specimen common stock certificate.
5.1* Form of opinion of Alston & Bird LLP relating to the legality of the
shares being offered (including consent).
8.1* Opinion of Alston & Bird LLP relating to certain tax matters
(including consent).
23.1* Consent of Alston & Bird LLP (contained in Exhibits 5.1 and 8.1).
23.2* Consent of Ernst & Young LLP.
23.3* Consent of Paresky Flitt & Company.
24.1 Powers of Attorney (contained on signature page).
27.1*** Financial Data Schedule
</TABLE>
II-1
<PAGE>
- --------
* Filed herewith.
** Incorporated by reference to the corresponding numbered exhibit in the
registrant's Registration Statement on Form S-1, No. 333-22195.
*** Incorporated by referenced to Exhibit 27.1 of the registrant's Annual
Report on Form 10-K for the year ended December 31, 1997 and Exhibit 27.1
of the registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998.
Item 17. Undertakings.
1. 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 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.
2. 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 Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than 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 of the registrant 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 is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
3. The undersigned registrant hereby undertakes that:
(a) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this Registration Statement as of
the time it was declared effective.
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 February 24, 1999.
LHS GROUP INC.
/s/ Hartmut Lademacher
By: _________________________________
Hartmut Lademacher
Chairman of the Board of
Directors and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Hartmut Lademacher, Jerry W. Braxton and Dr.
Wolf J. Gaede, and each of them, with the power to act without the other, as
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, to sign any registration
statement to be filed pursuant to Rule 462(b) under the Securities Act of 1933,
as amended, for the purpose of registering additional shares of Common Stock
for the same offering covered by this Registration Statement, and to file any
of 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 said attorneys-in-
fact and agents, or any of them, or his or their substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 24, 1999.
<TABLE>
<CAPTION>
Name Title
---- -----
<S> <C>
/s/ Hartmut Lademacher Chairman of the Board and Chief
___________________________________________ Executive Officer (Principal Executive
Hartmut Lademacher Officer)
/s/ Jerry W. Braxton Executive Vice President, Chief Financial
___________________________________________ Officer, Treasurer and Director
Jerry W. Braxton (Principal Financial and Accounting
Officer)
/s/ Dr. Wolf J. Gaede Executive Vice President, General Counsel
___________________________________________ and Director
Dr. Wolf J. Gaede
/s/ Ulf Bohla Director
___________________________________________
Ulf Bohla
/s/ William E. Ford Director
___________________________________________
William E. Ford
/s/ William O. Grabe Director
___________________________________________
William O. Grabe
/s/ George F. Schmitt Director
___________________________________________
George F. Schmitt
</TABLE>
II-3
<PAGE>
Exhibit 1.1
Form of Placement Agreement
Dr. Wolf Gaede Corporate Finance
c/o LHS Group Inc. Region Mitte
6 Concourse Parkway Robmarkt 18
Suite 2700 60311 Frankfurt
Atlanta, GA 30328
USA
LHS Group Inc. Beate-Ulrike Kohler
6 Concourse Parkway Phone (069) 910-21714
Atlanta, GA 30328 Fax (069) 910-21720
General Atlantic Partners, LLC
William E. Ford
3 Pickwick Plaza
Greenwich, Connecticut 06830
USA
Dear Dr. Gaede:
Ladies and Gentlemen:
Dr. Gaede has informed us, Deutsche Bank Aktiengesellschaft (the "Lead Manager")
that General Atlantic Partners, LLC, and Messrs. Hansjorg Beha, Jerry W. Baxton
Ulf Bohla and Jon Limbird (collectively, the "Selling Shareholders") are or
will be owners of shares of common stock of LHS Group, Inc., Atlanta, Georgia
(the "Company") and that they intend to sell up to 3,335,000 shares of common
stock of the Company with all rights (the "Initial Placement Shares") as well as
up to 400,000 additional shares of the common stock of the Company (the
"Greenshoe Shares," and collectively with the Initial Placement Shares, the
"Placement Shares").
The Selling Shareholders may increase the number of the Placement Shares with
our consent. The term "Placement Shares" includes these additional shares of the
Company. The shares of common stock are admitted for trading in the regulated
market of the Frankfurt Stock Exchange and are traded on the Neuer Markt of the
Deutsche Borse AG (the "Neuer Markt"). The Company's common stock is also traded
on the NASDAQ.
In order to avoid detrimental effects on the market price of the Company's
shares, the Initial Placement Shares are to be placed through a bookbuilding
procedure using roadshows. In addition, the Greenshoe Shares, or part of them,
may also be placed at the Placement Price within 30 calendar days of the
allotment of the Placement Shares, upon an express written declaration by us to
the Agent.
/1/ [Translator's Note: The name Neuer Markt remains in German in English-
language publications.]
<PAGE>
The Placement Shares are to be offered to a limited number of people in Germany
and European countries. To the extent possible, they will be placed long-term
with institutional investors. The Shares are to be allotted at a single price to
be determined on or about March 11, 1999 (the "Placement Price").
The Selling Shareholders intend to entrust Deutsche Bank with the placement of
the Placement Shares. We make you the following offer, in the name of the
members of the bank consortium under our management, which is made up as
follows:
Bank Role Underwriting Share
- ---- ---- ------------------
Deutsche Bank AG Lead Manager
1. Appointment
The Selling Shareholders appoint us to carry out the placement of the
Placement Shares under the following terms and conditions. All steps that
are of material importance for the placement, including but not limited to
the structuring of the placement, the transparency of the book and the
decisions with respect to price, quantity, and distribution from the book,
shall be jointly discussed and decided by the Lead Manager and Dr. Gaede as
the Agent of the Selling Shareholders (the "Agent").
2. Bookbuilding Procedure
(1) To prepare the bookbuilding procedure, we and the Agent will hold
roadshows for selected institutional investors in Germany and abroad
for a maximum period of four days, which is anticipated to begin on
March 8, 1999.
(2) To the extent necessary, we shall inform the Agent of the demand and
the structure of the demand for the book, as well as the identity and
quality of the investors, and discuss these with him.
(3) Upon the closing of the book, we will develop proposals for the
price/quantity decisions and for the allotment from the book. The
decisions will be made jointly with the Agent.
(4) The Placement Price will be determined by us together with the Agent
on the basis of the bookbuilding procedure. All shares will be
allotted at the Placement Price.
<PAGE>
3. Placement of the Placement Shares
(1) The members of the bank consortium individually agree to offer to sell
the Placement Shares in their own names for the account of the Selling
Shareholders to selected institutional investors through a private
placement (as sales commission agents under (S) 383 et seq. of the
------
German Commercial Code). The consortium members will be compensated
for their placement success from the Selling Fee, in accordance with
the orders they receive from Deutsche Bank and the Agent, taking into
consideration any designations
(2) The placement shall be a best efforts underwriting by the consortium
members that the placement will be successful. We will report the
exact number of Placement Shares placed immediately after allotment,
which is anticipated to occur on March 11, 1999. With respect to the
Selling Shareholders, the placement will occur pro rata to the number
of the Placement Shares made available by each Shareholder.
(3) The members of the bank consortium will carry out the placement with
the care of an ordinary businessman. Instructions under (S) 384(1) of
the German Commercial Code may only be given to the extent that they
do not conflict with the terms of this Agreement. We will comply with
our duty under (S) 384(2) of the German Commercial Code to provide
information and account for transactions solely by ensuring that the
Placement Shares that are transferred are settled against simultaneous
payment on the basis of the price and quantity determination arrived
at jointly with the Agent, and by reporting the following information
with respect to purchase orders that are not consummated: the
underwriter who negotiated the purchase order, the name of the non-
performing purchaser, the number of shares, and the amount forgone. We
shall have no liability under (S) 394(1) of the German Commercial Code
for third parties' failure to pay to the extent that (a) we fulfill
our duty to provide information and account for transactions as set
forth above and (b) the demands for performance by non-performing
purchasers can be assigned to the Selling Shareholders at their
request.
(4) The Greenshoe Shares (or part of them) may be placed within 30 days
after the determination of the Placement Price (the "Greenshoe Time
Period"), at the discretion of Deutsche Bank.
4. Share Certificates, Settlement and Delivery
(1) Each of the Selling Shareholders agrees to make available the Shares
that he is offering for sale in a securities account at Deutsche Bank
AG in Frankfurt am Main in his name. To this end, each of the Selling
Shareholders will assign his Placement Shares no later than March 8,
1999
<PAGE>
to Deutsche Bank's account at Deutsche Borse Clearing AG ("Clearing
AG"). We will inform the Agent of the details of the transfer
separately.
(2) The placed Placement Shares will be delivered to the respective
consortium member by Deutsche Bank in favor of the acquiror no later
than the third banking day after allotment, which is anticipated to be
March 16, 1999 (the "Settlement Date") against simultaneous payment of
the Placement Price, to the accounts named by the consortium members,
in a collective custody credit memo. The Placement Price obtained
pursuant to Sentence 1 will be paid by the consortium members
immediately to the Selling Shareholders pro rata, after deducting the
commissions and compensation set forth in Section 6 hereof, by
depositing it to the Selling Shareholders' accounts at Deutsche Bank.
(3) The placed Greenshoe Shares shall be transferred to a Deutsche Bank
account in favor of Deutsche Bank on the second business day after
expiration of the Greenshoe Time Period (the "Greenshoe Settlement
Date") against simultaneous payment of the Placement Price. The
Selling Shareholders hereby grant Deutsche Bank a power of attorney to
make these transfers from their accounts. To the extent that only part
of the Greenshoe Shares are placed, they will be distributed among the
Selling Shareholders in proportion to the number of Greenshoe Shares
that each made available.
5. Warranties and Obligations
(1) Each of the Selling Shareholders warrants to Deutsche Bank at the time
of his accession to this Agreement under Section 11 and as of the
Settlement Date:
(a) The respective Placement Shares are owned by him, have been fully
entitled to dividends since January 1, 1998, and are completely
exchangeable for other shares of the Company's common stock that
are admitted to trading in the regulated market of the Frankfurt
Stock Exchange.
(b) He will make his Placement Shares available to us free of all
liens and other encumbrances and any third-party claims.
(c) He is entitled to assume and perform all the obligations set
forth in this Agreement. Any resolutions by or consent from the
Company, other shareholders of the Company, authorities and any
other third parties that are required for accession to this
Agreement have been obtained at the time of making the shares
available under Section 4(1). The sale and transfer of the
Placement Shares to be sold under
<PAGE>
this Agreement will not breach any contract or agreement to which
he is a party, or any law or regulation to which he is subject.
(d) (d) He agrees not to directly or indirectly take any action or
cause any action to be taken that is either aimed at supporting
or manipulating the price of the Company's securities in order to
promote the sale or resale of the Placement Shares, or that
constitutes price support or manipulation of this type or could
reasonably be expected to have a similar effect.
(e) He agrees that from the time of his accession to this Agreement
pursuant to Section 11 hereof until six months after the
Placement, he shall not, without our consent, directly or
indirectly offer, sell, announce the offering or sale of or take
other action that economically corresponds to a sale of other
Company shares (with the exception of Placement Shares) in a
public offering or private placement or any other manner within
or without the United States of America.
(2) The Company agrees that until September 1, 1999, it shall not, without
our consent, directly or indirectly offer, sell, announce the offering
or sale of or take other action that economically corresponds to a
sale of any other shares, convertibles, or other capital market
instruments that can be converted into shares of the Company within or
without the United States of America, in a public offering or private
placement or in any other manner. This provision shall not apply to
the issuance of shares for purposes of a merger with or acquisition of
another company. The Company shall use its best efforts to ensure that
its affiliates will not directly or indirectly offer or sell, or
announce the offering or sale of, any other Company shares, without
our consent, in a public offering or private placement.
(3) The Company and each of the Selling Shareholders warrant to the
members of the bank consortium that at the time this Agreement is
signed and on the Settlement Date, a registration statement on Form 3-
S [sic], including the documents that are incorporated therein by
reference (said documents including all subsequent amendments thereto
are referred to hereinafter as the "SEC Documents"), has been filed,
the registration statement has been declared effective by the SEC, and
to the best of the knowledge of the Company and the Selling
Shareholders, neither a stop order nor any similar proceeding has been
commenced that could limit the effectiveness of the Form 3-S [sic].
The Company and each of the Selling Shareholders represent and warrant
that the SEC Documents meet the legal requirements of the Securities
and Exchange Commission, that the information contained in the SEC
Documents is complete, true and correct, that only such
<PAGE>
opinions, intentions or statements are made therein as correspond to
the actual estimates of the Company and Selling Shareholders, and that
the SEC Documents do not omit any information the omission of which
would result in misleading or false statements in the SEC Documents.
The Company and each of the Selling Shareholders release the members
of the bank consortium from any and all claims, liability, losses,
damages and costs (including the costs of defending and employing
counsel in any actual or threatened lawsuit) or will reimburse the
members of the bank consortium for such items to the extent that the
warranty set forth above with respect to the SEC Documents is not
complied with or is alleged not to have been complied with.
6. Commissions: Fees, Costs
(1) In consideration of the services performed by the members of the bank
consortium in connection with the Placement, the Selling Shareholders
shall pay the following commission to the members of the consortium:
2.25% of the Placement Price, multiplied by the number of Placement
Shares placed.
(2) If the Placement Price is higher than 95% of the closing price of LHS
on the Neuer Markt (the "LHS Price") on the day the Placement Price is
determined, the consortium members shall receive additional
compensation from the Selling Shareholders in the amount of 50% of the
difference between a 5% markdown from the LHS Price and the actual
markdown from the LHS Price, multiplied by the number of Placement
Shares placed.
(3) The registration costs with the SEC shall be borne by the Selling
Shareholders.
(4) To the extent that the placement is successful, Alston & Bird's fees
will be refunded to the Selling Shareholders by the members of the
bank consortium.
(5) The consortium members shall bear their own costs in connection with
the Placement, including the costs of their participation in
roadshows, including the travel costs of their employees and the
external costs they incur, including their costs for putting on the
roadshow, and the travel and lodging expenses of the Agent and
possibly another employee of the Company, including the costs that the
Agent incurred in making the presentation in London on January 27,
1999. The Selling Shareholders shall bear the costs that they incur
and their Agent's other costs.
<PAGE>
(6) The commissions and compensation to be paid under Paragraphs (1) and
(2) shall be offset against the Placement Price of the Placement
Shares that is to be transmitted or paid to the Selling Shareholders.
(7) The total amount of the commission shall be divided 20:60:20 into an
Underwriting Fee, a Selling Fee, and a Management Fee. Because this is
an international transaction, the individual members of the consortium
shall receive the Underwriting Fee and Management Fee in proportion to
their underwriting share, and shall receive the Selling Fee in
accordance with how much they sell.
7. Force Majeure, Termination for Good Cause
The appointment and placement under Sections 1, 2 and 3 may only be
terminated for good cause. Good cause shall include, but not be limited to,
unforeseeable events of an economic or political nature, that reasonably
weigh against carrying out or continuing the placement altogether, or
carrying it out or continuing it at the anticipated time (March 1999) or in
the anticipated quantity, or the occurrence of a material change in the
relationships on the capital market, that call into question an appropriate
economic result for the Selling Shareholders from the Placement.
8. Appointment and Power of Attorney
By acceding to this Agreement, each of the Selling Shareholders appoints
and empowers Dr. Gaede to make representations to us and receive them from
us in accordance with this Agreement and the performance hereof. Within the
scope of this Agreement, and with effect for and against the Selling
Shareholders, Dr. Gaede is particularly authorized to give us instructions,
to determine the Placement Price in consultation with us, and to give and
receive representations that he deems necessary or advisable in connection
with this Agreement and its performance. Dr. Gaede is exempt from the
provisions of (S) 181 of the German Civil Code.
9. Governing Law and Jurisdiction; Miscellaneous
(1) All aspects of this Agreement shall be governed and interpreted by
German substantive law. The place of performance for all obligations
of the parties under this Agreement shall be Frankfurt am Main.
(2) If any provision of this Agreement should be or become unenforceable
in whole or in part, the remaining provisions shall remain in force.
The unenforceable provisions shall be deemed to be replaced by an
enforceable provision that is as much in keeping as possible with the
economic intent of the unenforceable provision.
<PAGE>
(3) The Selling Shareholders shall be severally entitled to their rights
under this Agreement. They shall be severally liable for their
obligations hereunder. The members of the bank consortium shall not be
jointly entitled to their rights hereunder nor jointly liable for
their obligations hereunder.
10. Effectiveness
(1) This effectiveness of this Agreement shall be subject to the condition
precedent that a minimum of 2,000,000 Placement Shares made available
for placement by the Selling Shareholders.
(2) This Agreement is also subject to the condition precedent that the
Company declare its agreement to Sections 5(2) and 5(3) of this
Agreement, and that a legal opinion and a disclosure opinion from the
Selling Shareholders' attorneys (Alston & Bird) and a comfort letter
from the Company's accountants are delivered to the satisfaction of
Deutsche Bank as the representative of the members of the bank
consortium. Deutsche Bank has the right to waive this condition in its
sole discretion, in the name of the members of the bank consortium.
(3) If a Selling Shareholder fails to state by March 8, 1999, whether he
desires to participate in the Placement or not, this Agreement shall
be effective at the close of business on March 8, 1999, between us and
the Selling Shareholders who have declared their accession hereto by
that date.
We request that you, Dr. Gaede, obtain the consent of the Selling Shareholders
and remain
Sincerely yours,
Deutsche Bank Aktiengesellschaft
(__________) (____________)
We agree to Section 5(2).
[Place], [date]
___________________________
LHS Group, Inc.
I accede to the foregoing Agreement as a Selling Shareholder and state my
consent to the contents of such Agreement.
I am making ______ Placement Shares available for placement.
[Place], [date]
________________________
<PAGE>
Power of Attorney
I hereby empower Dr. Wolf Gaede to represent me in the foregoing placement of my
LHS Group Inc. shares. Dr. Gaede can make and receive declarations on my behalf
vis-a-vis all participants.
______________ ______________________
<PAGE>
[LETTERHEAD OF ALSTON & BIRD APPEARS HERE]
Exhibit 5.1
-----------
March __, 1999
LHS Group Inc.
Six Concourse Parkway, Suite 2700
Atlanta, Georgia 30328
Re: Registration Statement on Form S-3 (No. 333-__________)
Ladies and Gentlemen:
We have acted as legal counsel to LHS Group Inc., a Delaware corporation (the
"Company"), and certain stockholders of the Company named in Schedule I hereto
(the "Selling Stockholders") in connection with the filing of the above-
referenced Registration Statement (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") to register under the
Securities Act of 1933, as amended (the "Act"), 3,735,000 shares of the
Company's Common Stock, par value $.01 per share, including up to 400,000 shares
subject to an over-allotment option (collectively, the "Shares"), for sale by
the Selling Stockholders. Following the effectiveness of the Registration
Statement, the Selling Stockholders intend to sell the Shares to the public
through the agents (the "Placement Agents") named in Schedule II hereto pursuant
to a placement agency agreement (the "Placement Agreement") by and among the
Company, the Selling Stockholders and the Placement Agents. This opinion letter
is rendered pursuant to Item 16 of Form S-3 and Item 601(b)(5) of Regulation
S-K.
We have examined the Certificate of Incorporation of the Company, as amended,
the Bylaws of the Company, as amended, records of proceedings of the Board of
Directors, or committees thereof, and the stockholders of the Company deemed by
us to be relevant to this opinion letter, the Registration Statement and the
proposed form of Placement Agreement. We also have examined originals or
copies, certified or otherwise identified to our satisfaction, of such other
corporate records and documents of the Company, such certificates of officers of
the Company, the Selling Stockholders and/or partners thereof and public
officials, and such other records and documents as we have deemed necessary or
appropriate as a basis for the opinions hereinafter expressed. In such
examination, we have assumed the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity and completeness of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed, photostatic or facsimile
copies, and the authenticity of the originals of such copies, and we have
assumed all certificates of public officials to have been properly given and to
be accurate.
<PAGE>
LHS Group Inc.
March , 1999
Page 2
As to certain factual matters relevant to this opinion letter, we have relied
upon the representations and warranties contained in the above-referenced
certificates of officers of the Company, the Selling Stockholders and/or
partners thereof and public officials. Except to the extent expressly set forth
herein, we have made no independent investigations with regard thereto, and,
accordingly, we do not express any opinion as to matters that might have been
disclosed by independent verification.
Our opinion set forth below is limited to the laws of the State of Delaware,
and we do not express any opinion herein concerning any other laws.
On the basis of the foregoing, and subject to the limitations set forth
herein, we are of the opinion that, upon due execution and delivery of the
Placement Agreement by the parties thereto and upon delivery of the Shares
against payment therefor as provided in the Placement Agreement, the Shares will
be validly issued, fully paid and nonassessable by the Company.
We consent to the filing of this opinion letter as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the Prospectus constituting a part thereof. In giving such consent,
we do not thereby admit that we are within the category of persons whose consent
is required under Section 7 of the Act or the rules and regulations of the
Commission thereunder.
This opinion letter is being furnished by us to the Company and the Commission
solely for the benefit of the Company and the Commission in connection with the
Registration Statement and is not to be used, circulated, quoted or otherwise
relied upon by any other person, or by the Company or the Commission for any
other purpose, without our express written consent. The only opinion rendered
by us consists of those matters set forth in the fifth paragraph hereof, and no
opinion may be implied or inferred beyond those expressly stated. This opinion
letter is rendered as of the date hereof, and we have no obligation to update
this opinion letter.
Sincerely,
ALSTON & BIRD LLP
By:
----------------------------
M. Hill Jeffries, a Partner
<PAGE>
SCHEDULE I
General Atlantic Partners, LLC
Dr. Hansjorg Beha
Jerry W. Braxton
Hartmut Lademacher
Jon Limbird
Ulf Bohla
Erik Froberg
<PAGE>
SCHEDULE II
Deutsche Bank AG
SG Cowen International L.P.
Bayerischo Hypo-und Vereinsbank AG
<PAGE>
EXHIBIT 8.1
OPINION OF ALSTON & BIRD LLP REGARDING CERTAIN TAX MATTERS
Letterhead of Alston & Bird LLP
February 26, 1999
LHS Group Inc.
Six Concourse Parkway
Suite 2700
Atlanta, Georgia 30328
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as legal counsel to LHS Group Inc., a Delaware corporation
(the "Company"), and certain stockholders of the Company (the "Selling
Stockholders") in connection with the above-referenced Registration Statement
(the "Registration Statement") with the Securities and Exchange Commission to
register under the Securities Act of 1933, as amended (the "Act"), 3,735,000
shares of the Company's common stock, par value $.01 per share (the "Common
Stock") for sale by the Selling Stockholders (the "Shares"). In our capacity as
counsel to the Company, our opinion has been requested with respect to certain
of the federal income tax consequences relating to holders of the Shares.
In rendering this opinion, we have examined the Internal Revenue Code of
1986, as amended (the "Code"), the United States Department of the Treasury
Regulations thereunder and rulings and court decisions as of the date hereof.
All capitalized terms used herein without definition shall have the respective
meanings specified in the Registration Statement, and unless otherwise
specified, all section references herein are to the Code. In addition, for
purposes of the opinion set forth below, we have relied, with the consent of the
Company, upon the accuracy and completeness of the Registration Statement.
We have participated in the preparation of the materials under the caption
"Material U.S. Federal Tax Consequences to Holders of the Common Stock"
contained in the Registration Statement, and based solely on the facts and
assumptions set forth in such Registration Statement, and applicable provisions
of governing law, we are of the opinion that the federal tax treatment described
therein is accurate in all material respects.
We confirm that to the extent that it relates to matters of United States
Federal tax law such discussion constitutes our opinion. The opinion expressed
herein is based upon existing U.S. statutory, regulatory, and judicial
authority, any of which may be changed at any time with retroactive effect. In
addition, with respect to factual matters, our opinion is based solely on the
matters set forth in the Registration Statement. We have assumed and you have
confirmed to us that the Registration Statement is complete and accurate on the
date hereof and will be complete and accurate on the date that the Registration
Statement is effective.
Our opinion cannot be relied upon if any of the facts contained in such
documents or if such additional information is, or later becomes, inaccurate.
Finally, our opinion is limited to the tax matters specifically covered thereby,
and we have not been asked to address, nor have we addressed, any other tax
consequences relating to the Shares, including but not limited to, the
<PAGE>
LHS Group Inc.
February 26, 1999
Page 2
particular status or circumstances of holders of the Shares and any foreign,
state or local tax consequences.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references and discussion of this opinion and
the references to the firm contained therein. In giving such consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Securities and Exchange Commission.
This opinion letter is being furnished by us to the Company and the
Commission solely for the benefit of the Company and the Commission in
connection with the Registration Statement and is not to be used, circulated,
quoted or otherwise relied upon by any other person, or by the Company or the
Commission for any other purpose, without our express written consent. The only
opinion rendered by us consists of those matters set forth in the third
paragraph hereof, and no opinion may be implied or inferred beyond those
expressly stated. This opinion letter is rendered as of the date hereof, and we
have no obligation to update this opinion letter.
Very truly yours,
ALSTON & BIRD LLP
By: /s/ Pinney L. Allen
______________________________
Pinney L. Allen, Partner
<PAGE>
Exhibit 23.2
------------
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 for the registration of its common stock and
to the incorporation by reference therein of our reports dated February 6, 1998,
with respect to the consolidated financial statements and schedule of LHS Group
Inc. incorporated by reference or appearing in its Annual Report (Form 10-K) for
the year ended December 31, 1997, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Atlanta, Georgia
March 1, 1999
<PAGE>
Exhibit 23.3
------------
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 for the registration of LHS Group Inc. common
stock and to the incorporation by reference therein of our reports dated May 15,
1998 with respect to the financial statements of Infocellular, Inc. for the
years ended March 31, 1998 and 1997 included in Form 8-K, filed with the
Securities and Exchange Commission on July 20, 1998.
/s/ Paresky Flitt & Company
Boston, Massachusetts
March 1, 1999
