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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 19, 1999
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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MEDAPHIS CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 58-1651222
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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2840 MT. WILKINSON PARKWAY, SUITE 300, ATLANTA, GEORGIA 30339-3632
(770) 444-5300
(Address, including zip code, and telephone number,
including area code, of registrant's executive offices)
RANDOLPH L.M. HUTTO, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
MEDAPHIS CORPORATION
2840 MT. WILKINSON PARKWAY, SUITE 300
ATLANTA, GEORGIA 30339-3632
(770) 444-5300
(Name, address, including zip code, and telephone number
including area code, of agent for service)
THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:
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J. VAUGHAN CURTIS, ESQ. J. MATTHEW LYONS, ESQ.
ALSTON & BIRD LLP BROBECK, PHLEGER & HARRISON LLP
ONE ATLANTIC CENTER 301 CONGRESS AVENUE
1201 WEST PEACHTREE STREET SUITE 1200
ATLANTA, GEORGIA 30309-3424 AUSTIN, TEXAS 78701
(404) 881-7000 (512) 477-5495
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the 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. [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. [ ]
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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. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE AGGREGATE OFFERING PRICE MAXIMUM AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE
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Common stock, par value
$.01 per share (with
attached Rights to
purchase Series A Junior
Preferred Stock, no par
value)(2) 5,000,000 shares $3.78125 $18,906,250 $5,255.94
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(1) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(c).
(2) Prior to the occurrence of certain events, the Rights will not be evidenced
or traded separately from the Medaphis common stock. Value, if any, of the
Rights is reflected in the market price of the Medaphis common stock.
Accordingly, no separate fee is paid.
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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.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS 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 THE SELLING STOCKHOLDERS
ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE SUCH
OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MAY 19, 1999
PROSPECTUS
5,000,000 Shares
MEDAPHIS CORPORATION
Common Stock
The following stockholders may offer and sell up to 5,000,000 shares of our
common stock under this prospectus: NFT Ventures, Inc., Mark Rogers and NP
Ventures, Ltd. The selling stockholders acquired these shares from us in
connection with the settlement of various claims against us.
The selling stockholders may sell their shares of common stock through
public or private transactions at prevailing market prices or at privately
negotiated prices. See "Plan of Distribution". We will not receive any of the
proceeds from the sale of shares of common stock by the selling stockholders.
Our common stock is listed on the Nasdaq National Market under the symbol
"MEDA". On May 18, 1999, the last sale price of our common stock as reported by
Nasdaq was $4.50 per share.
Our principal executive offices are located 2840 Mt. Wilkinson Parkway,
Suite 300, Atlanta, Georgia 30339-3632, and our telephone number is (770)
444-5300.
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THIS INVESTMENT INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE 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.
The date of this prospectus is , 1999
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TABLE OF CONTENTS
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PAGE
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Additional Information...................................... 2
Incorporation of Certain Documents by Reference............. 3
Cautionary Notice Regarding Forward-Looking Statements...... 3
Risk Factors................................................ 4
The Company................................................. 8
Use of Proceeds............................................. 8
Selling Stockholders........................................ 9
Plan of Distribution........................................ 10
Legal Matters............................................... 11
Experts..................................................... 11
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ADDITIONAL INFORMATION
We file annual, quarterly, and current reports, proxy statements, and other
documents with the Commission. You may read and copy any document we file at the
following locations of the Commission:
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Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661
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You may call 1-800-SEC-0330 for more information on the Commission's public
reference facilities. You may also obtain copies of this information by mail
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, at prescribed rates. The Commission also
maintains an Internet site at http://www.sec.gov that contains reports, proxy
statements and other information about issuers, like Medaphis, who file
electronically with the Commission. In addition, you can inspect reports, proxy
statements and other information about Medaphis at the offices of The Nasdaq
Stock Market, Inc., Reports Section, 1735 K Street, N.W., Washington, D.C.
20006. Also, you can find more information about Medaphis on our Internet
website at http://www.medaphis.com. However, information contained in or linked
to our website does not constitute part of this prospectus and is not, and shall
not be deemed to be, incorporated into this prospectus by reference.
This prospectus is part of a registration statement that we filed with the
Commission. The registration statement contains more information than this
prospectus regarding Medaphis and our common stock, including certain exhibits.
You can get a copy of the registration statement from the Commission at the
addresses listed above or from its Internet site.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows us to "incorporate" into this prospectus information
we file with the Commission in other documents. This means that we can disclose
important information to you by referring to other documents that contain that
information. The information incorporated by reference is considered to be part
of this prospectus, and information we file later with the Commission will
automatically update and, to some extent, supersede this information. We
incorporate by reference the documents listed below, except to the extent
information in those documents is different from the information contained in
this prospectus, and all future documents filed with the Commission under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
the termination of the offering of these shares:
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1998;
(b) Quarterly Report on Form 10-Q for the quarterly period ended March
31, 1999;
(c) Current Report on Form 8-K filed May 5, 1999 (event date April 20,
1999);
(d) The description of common stock set forth in the registration
statement on Form 8-A/A filed May 22, 1996, and any amendment or report
filed for the purpose of updating such description; and
(e) The description of Rights set forth in the registration statement
on Form 8-A filed February 12, 1999, and any amendment or report filed for
the purpose of updating such description.
We will provide without charge to each person to whom this prospectus is
delivered, upon written or oral request of such person, a copy of any and all of
the documents that have been incorporated by reference in this prospectus (not
including exhibits to such documents unless such exhibits are specifically
incorporated by reference in this prospectus). Requests should be directed to
Medaphis Corporation, 2840 Mt. Wilkinson Parkway, Suite 300, Atlanta, Georgia
30339-3632, Attention: Corporate Secretary; telephone number (770) 444-5300.
You should rely only on the information contained or incorporated by
reference in this document. We have not authorized anyone to provide you with
information that is different from that which is contained or incorporated by
reference in this prospectus. The common stock is not being offered in any state
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
this prospectus.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS INCLUDES STATEMENTS WHICH MAY CONSTITUTE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND THE SECURITIES
EXCHANGE ACT OF 1934. THOSE STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT,
BELIEF OR CURRENT EXPECTATIONS OF MEDAPHIS AND MEMBERS OF MEDAPHIS'S MANAGEMENT
TEAM AS WELL AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED. PROSPECTIVE
INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT
GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND THAT
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH
FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS CURRENTLY KNOWN TO MEDAPHIS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN FORWARD-LOOKING
STATEMENTS ARE SET FORTH IN THE "RISK FACTORS" SECTION OF THIS PROSPECTUS AND
THE SAFE HARBOR COMPLIANCE STATEMENT FOR FORWARD-LOOKING STATEMENTS INCLUDED AS
AN EXHIBIT TO THE REPORTS FILED BY MEDAPHIS WITH THE COMMISSION UNDER THE
SECURITIES EXCHANGE ACT OF 1934 AND INCORPORATED HEREIN BY REFERENCE. MEDAPHIS
UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS TO
REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED EVENTS OR CHANGES
TO FUTURE OPERATING RESULTS OVER TIME.
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RISK FACTORS
Before you invest in our common stock, you should be aware that there are
various risks, including those described below. You should carefully consider
these risk factors, together with all of the other information included in this
prospectus, before you decide whether to purchase shares of our common stock.
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE.
We have a significant amount of indebtedness and, as a result, significant
obligations to make payments on our debt. If we are unable to make the required
debt payments, we could be required to reduce or delay capital expenditures,
sell certain of our assets, restructure or refinance our indebtedness, or seek
additional equity capital. Our ability to make payments on our debt obligations
will depend on our future operating performance, which will be affected by
certain conditions that are beyond our control.
Our substantial indebtedness could have important consequences to our
financial performance. For example:
- our ability to obtain additional financing in the future may be impaired;
- if a substantial portion of our cash flow from operations is dedicated to
the payment of debt, we may have reduced funds available for operations;
- the terms of our existing debt places restrictions on us, including our
ability to incur additional debt or pay dividends; and
- we may be more leveraged than our competitors, which may limit our
flexibility to respond to changes in the marketplace and may place us at
a competitive disadvantage.
WE ARE SUBJECT TO ONGOING LITIGATION AND A GOVERNMENT INVESTIGATION WHICH MAY
ADVERSELY AFFECT OUR BUSINESS.
We are involved in several lawsuits which may expose us to material loss
contingencies. These lawsuits include claims brought by former stockholders of
companies that we acquired. We have also received written demands from customers
and former customers that have not yet resulted in legal action and may receive
demands with respect to the operation of our business and actions we have taken,
including modifications made to a computerized coding system tool to assist in
healthcare reimbursement used by one of our subsidiaries and the transition from
the computerized coding tool to manual coding. We are also subject to a formal,
non-public investigation by the Securities and Exchange Commission into, among
other things, trading and other issues relating to restatements of our financial
statements.
We may not be able successfully to defend any of these lawsuits. In
addition, other lawsuits may be filed and other governmental investigations may
be commenced against us. Existing or new lawsuits or new government
investigations could have a material adverse effect on us. The ongoing
governmental investigation against us may result in significant fines, damages
or other penalties and the Commission could require further restatements of our
financial statements. The investigation could have a material adverse effect on
us. Also, in the event of an adverse outcome with respect to pending lawsuits,
there is the risk that our insurance coverage may not fully cover any damages
assessed against us. The litigation with which we are involved (as well as
future litigation) could have a disruptive effect upon the operations of the
business and consume the time and attention of our senior management.
WE HAVE INCURRED SIGNIFICANT LOSSES IN RECENT YEARS.
We had losses in each of 1995, 1996, 1997 and 1998. Most of these losses
result from restructuring and other charges, litigation settlements, intangible
asset impairment, and acquisition costs. We cannot assure you when or if we will
become profitable in the future.
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WE MAY HAVE TO ADJUST THE CARRYING VALUE OF OUR INTANGIBLE ASSETS.
We may have to incur intangible asset impairment charges in the future, and
the incidence of such charges could adversely affect our results of operations.
We continually monitor results of operations and other developments within our
business and our industry as they relate to our cash flow forecast in order to
determine if an adjustment is necessary to the carrying value of our intangible
assets. For example, during the third quarter of 1998, we believed there were
events and changes in circumstances that warranted a re-assessment as to whether
the carrying amount of the intangible assets for our physician services segment
was still recoverable. As a result, we recorded an intangible asset impairment
charge of $390.6 million to adjust the intangible assets of our physician
services segment to their fair value.
WE HAVE SUFFERED SIGNIFICANT SETBACKS IN RECENT YEARS AND MAY NOT BE ABLE TO
TURNAROUND SUCCESSFULLY.
We have suffered several setbacks in recent years, including:
- government investigations;
- the failure successfully to integrate acquired companies;
- restatements of our 1994, 1995, 1996 and interim 1997 financial
statements;
- the discontinuance of the operations of one of the businesses we
acquired;
- the abandonment of an extensive reengineering program that failed;
- a steep drop in the price of our common stock; and
- the filing of various lawsuits and claims against us.
As a result of these setbacks, we have been operating in what is commonly
described as a "turnaround" situation. In addition to risks associated with
"turnaround" situations, we face certain challenges more specific to our
operations, including:
- successfully integrating acquired companies;
- shifting our strategic focus from acquiring compatible businesses to
running our existing businesses efficiently and profitably;
- managing our customers' perceptions of our continued viability and
focusing on customer service;
- combating employee turnover;
- reducing costs and increasing efficiencies; and
- reevaluating the efficiency of our operations following our abandonment
of the reengineering initiative in 1996.
WE MAY NOT BE ABLE TO KEEP UP WITH CHANGES IN OUR INDUSTRY.
The markets for our software products and services are characterized by
rapidly changing technology, evolving industry standards and frequent new
product introductions. We may not be able to keep pace with changes in our
industry. Our success depends in part upon our ability to:
- enhance our existing products and services;
- introduce new products and services quickly and cost effectively;
- achieve market acceptance for new products and services; and
- respond to emerging industry standards and other technological changes.
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Also, our competitors may develop competitive products that could adversely
affect our operating results. In addition, it is possible that:
- we will be unsuccessful in refining, enhancing and developing our
software and billing systems going forward;
- the costs associated with refining, enhancing and developing our software
and systems may increase significantly in the future; or
- our existing software and technology will become obsolete as a result of
ongoing technological developments in the marketplace.
WE COULD LOSE CERTAIN CUSTOMERS IF WE ARE NOT SUCCESSFUL ON SEVERAL MAJOR CLIENT
PROJECTS.
Our client/server information technology business involves projects
designed to reengineer customer operations through the strategic use of imaging,
client/server and other advanced technologies. Failure to meet our customers'
expectations with respect to a major project could have the following
consequences:
- damage our reputation and standing in this marketplace;
- impairment of our ability to attract new client/server information
technology business;
- the payment of damages to a customer; and
- the inability to collect for services already performed on the project.
WE MAY INCUR ADDITIONAL COSTS BECAUSE OF POTENTIAL "YEAR 2000" PROBLEMS.
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results as we approach or
when we reach the Year 2000.
We have undertaken an assessment of our Year 2000 issues. We have
identified some older computer systems that we will replace with more efficient
processing systems, rather than attempting to make all these older systems Year
2000 compliant. Until we have replaced all these older systems, we cannot be
sure that our efforts to address Year 2000 issues are appropriate, adequate or
complete. In addition, we cannot be sure that we have identified all Year 2000
problems in the computer systems of our customers, vendors or resellers, or that
we will be able to successfully remedy any future problems that are discovered.
As a result of Year 2000 issues and the replacement of older computer
systems, we may suffer the following consequences:
- we may incur a significant amount of additional expenses to remedy Year
2000 issues and we may experience a significant loss of revenues;
- our existing customers may be adversely impacted by Year 2000 problems,
which could cause fluctuations in our revenue; and
- our failure to identify and remedy all Year 2000 problems could put us at
a competitive disadvantage relative to companies that have corrected such
problems.
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH OTHER MANAGEMENT SERVICES
COMPANIES.
The medical management services business is highly competitive. We compete
with national and regional physician and hospital reimbursement organizations
and collection businesses, national information and data processing
organizations, and physician groups and hospitals that provide their own
business management services. We are uncertain whether we can continue to
compete successfully with competitors.
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Potential industry and market changes that could adversely affect our
ability to compete for billing and collection business include:
- an increase in the number of managed care providers compared to
fee-for-service providers; and
- new alliances between healthcare providers and third-party payors in
which healthcare providers are employed by such third-party payors.
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH OTHER INFORMATION TECHNOLOGY
COMPANIES.
The business of providing application software, information technology and
consulting services is also highly competitive. We compete with national and
regional companies in this regard. Certain of our competitors have longer
operating histories and greater financial, technical and marketing resources
than we do. We are uncertain whether we can continue to compete successfully
with these competitors.
OUR REVENUE AND OPERATIONS MAY BE ADVERSELY AFFECTED BY PRICING PRESSURES WHICH
ADVERSELY AFFECT OUR CUSTOMERS.
We believe that the revenue growth rate experienced by our healthcare
clients continues to be adversely affected by increased managed care pricing and
declining government reimbursement levels. At the same time, the process of
submitting healthcare claims for reimbursement to third-party payors in
accordance with applicable industry and regulatory standards grows in complexity
and cost. We believe that these trends have adversely affected and could
continue to adversely affect our customers' revenues and profitability and,
therefore, adversely affect us too.
CHANGES IN THE HEALTHCARE MARKETPLACE MAY DECREASE DEMAND FOR OUR BILLING
SERVICES.
In general, consolidation initiatives in the healthcare marketplace may
result in fewer potential customers for our services. Some of these types of
initiatives include:
- employer initiatives such as creating purchasing cooperatives, like HMOs;
- provider initiatives, such as risk-sharing among healthcare providers and
managed care companies through capitated contracts; and
- integration among hospitals and physicians into comprehensive delivery
systems.
We believe that the continued consolidation of management and billing
services through integrated delivery systems could result in a decrease in
demand for our billing and collection services for particular physician
practices.
FUTURE INVESTIGATIONS OF HEALTHCARE BILLING AND COLLECTION PRACTICES MAY
ADVERSELY AFFECT OUR BUSINESS.
Our medical billing and collection activities are also governed by numerous
federal and state civil and criminal laws. Federal and state regulations
increasingly use these laws to investigate healthcare providers and companies
like us, that provide billing and collection services. In connection with these
laws:
- we may be subjected to federal or state government investigation and
possible civil or criminal fines;
- we may ultimately be required to defend a false claims action;
- we may be sued by private payors; or
- we may be excluded from Medicare, Medicaid and/or other government funded
healthcare programs.
We have been the subject of several federal investigations, and we may
become the subject of false claims litigation or additional investigations
relating to our billing and collection activities. Any such proceeding or
investigation could have a material adverse effect on our business.
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The ownership and operation of hospitals is also subject to comprehensive
regulation by federal and state governments which may adversely affect hospital
reimbursement. This regulation could have an adverse effect on the operations of
hospitals in general, and consequently reduce the amount of our revenues related
to hospital clients. Current or future government regulations or healthcare
reform measures may have a material adverse effect upon our business.
OUR STOCK PRICE HAS BEEN VOLATILE AND COULD CONTINUE TO FLUCTUATE SUBSTANTIALLY.
Our common stock is listed on the Nasdaq National Market. The market price
of our common stock has been volatile and could fluctuate substantially, based
on a variety of factors, including the following:
- announcements relating to governmental investigations;
- our liquidity and financial resources;
- our divestiture of businesses;
- the status of lawsuits or other demands;
- healthcare reform measures;
- quarter-to-quarter and year-to-year variations in financial results; and
- failure to continue to meet Nasdaq National Market listing requirements.
Furthermore, stock prices for many companies fluctuate widely for reasons
that may be unrelated to their operating results. These fluctuations and general
economic, political and market conditions may adversely affect the market price
of our common stock.
THE COMPANY
Medaphis, which was incorporated in 1985 in Delaware, provides healthcare
information products and business management services, together with enabling
technologies in selected industries. Medaphis provides its products and services
through its Healthcare Services Group and Per-Se Technologies, its Information
Technologies Group.
The Healthcare Services Group provides a range of business management
services to physicians and hospitals, including clinical data collection, data
input, medical coding, billing, cash collections and accounts receivable
management. These services are designed to assist customers with the business
management functions associated with the delivery of healthcare services,
allowing physicians and hospital staff to focus on providing quality patient
care. We believe these services also assist physicians and hospitals in
improving cash flows and reducing administrative costs and burdens. Per-Se
Technologies provides application software and a broad range of information
technology and consulting services to healthcare and other service-oriented
markets such as energy, communications and financial services.
Medaphis markets its products and services primarily to integrated
healthcare delivery networks, hospitals, physician practices, long-term care
facilities, home health providers and managed care providers. Medaphis serves
approximately 20,700 physicians and 2,700 hospitals predominantly in North
America. We also sell our software solutions and systems integration services
internationally, both directly and through distribution agreements, in the
United States, Canada, England and Germany.
USE OF PROCEEDS
Medaphis will not receive any proceeds from the sale of the shares of
common stock by the selling stockholders.
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SELLING STOCKHOLDERS
The following table sets forth certain information about the selling
stockholders. The shares covered by this prospectus may be offered from time to
time by the selling stockholders. See "Plan of Distribution."
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PERCENTAGE OF
SHARES BENEFICIALLY SHARES OFFERED SHARES BENEFICIALLY SHARES OWNED
OWNED BEFORE PURSUANT TO OWNED AFTER AFTER THIS
NAME THIS OFFERING THIS OFFERING(1) THIS OFFERING(2) OFFERING(3)
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NFT Ventures, Inc............... 8,086,205 3,650,000 4,436,205 5.28%
NP Ventures, Ltd................ 1,387,325 1,000,000 387,325 *
Mark Rogers..................... 583,484 350,000 233,484 *
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* Less than 1%.
(1) This number represents the maximum number of shares which may be offered and
sold under this prospectus. There is no assurance that the selling
stockholders will sell any or all of the offered shares.
(2) Assumes (i) that all of the shares of Medaphis common stock held by the
selling stockholders and being offered under this prospectus are sold, (ii)
that the selling stockholders acquire no additional shares of Medaphis
common stock prior to the completion of this offering, and (iii) that the
shares of Medaphis common stock held by the selling stockholders which are
not being offered pursuant to this prospectus are not sold.
(3) Based on an aggregate of 84,027,931 shares of Medaphis common stock
outstanding as of May 7, 1999.
CERTAIN RELATIONSHIPS AMONG THE SELLING STOCKHOLDERS AND MEDAPHIS
Medaphis acquired BSG Corporation on May 6, 1996 in a stock-for-stock
merger transaction that resulted in BSG Corporation becoming a wholly owned
subsidiary of Medaphis. Each of the selling stockholders was a stockholder in
BSG Corporation when it was acquired by Medaphis. The shares covered by this
prospectus were issued to the selling stockholders in settlement of various
claims made by the selling stockholders and certain of their affiliates against
Medaphis arising from that merger. In connection with that settlement and the
issuance of the shares covered by this prospectus, Medaphis agreed to take
certain actions necessary to register the resale of those shares, including the
preparation and filing of a registration statement under the Securities Act of
1933 (of which this prospectus forms a part), maintaining the effectiveness of
such registration statement for a period of one year from the date the
registration statement is declared effective, and paying certain expenses
associated with the registration statement or this prospectus.
Prior to Medaphis's acquisition of BSG, Steven G. Papermaster, an affiliate
of NP Ventures, Ltd., served as chairman and chief executive officer of BSG. On
May 6, 1996, Mr. Papermaster entered into an employment agreement with BSG and
Medaphis pursuant to which he served as chairman, president and chief executive
officer of BSG and a group of related Medaphis subsidiaries following Medaphis'
acquisition of BSG. In addition, Mr. Papermaster served as executive vice
president and a director of Medaphis from May 1996 until his formal resignation
in March 1997, although Mr. Papermaster had ceased active involvement with
Medaphis and BSG in December 1996. Mr. Papermaster's employment agreement
expired on May 6, 1998 and he is no longer associated with Medaphis.
Each of Mark Rogers and Raymond J. Noorda, an affiliate of NFT Ventures,
Inc., served as a director of BSG prior to Medaphis' acquisition of BSG.
The merger agreement between Medaphis and BSG provides that until May 6,
2001 Medaphis will nominate a designee of Messrs. Noorda and Papermaster to the
Medaphis board of directors. Messrs. Noorda and Papermaster originally named Mr.
Papermaster as their designee, who served as a Medaphis director from May 1996
until his formal resignation in March 1997. Since Mr. Papermaster's
9
<PAGE> 11
resignation as a director of Medaphis in March 1997, Messrs. Noorda and
Papermaster have not designated a nominee to the Medaphis board.
Mr. Papermaster is presently being indemnified by Medaphis with respect to
certain claims against him in his capacity as a former officer and director of
Medaphis and BSG.
PLAN OF DISTRIBUTION
Medaphis is registering the 5,000,000 shares on behalf of the selling
stockholders. As used herein, "selling stockholders" includes donees and
pledgees selling shares received from a named selling stockholder after the date
of this prospectus. All costs, expenses and fees in connection with the
registration of the shares offered hereby will be borne by Medaphis. Brokerage
commissions and similar selling expenses, if any, attributable to the sale of
shares will be borne by the selling stockholders. Sales of shares may be
effected by selling stockholders from time to time, in one or more types of
transactions (which may include block transactions) in the over-the-counter
market, in negotiated transactions, through put or call options transactions
relating to the shares, through short sales of shares, or a combination of such
methods of sale, at market prices prevailing at the time of sale, or at
negotiated prices. Such transactions may or may not involve brokers or dealers.
The selling stockholders have advised Medaphis that, as of the date of this
prospectus, they have not entered into any agreements, understandings or
arrangements with any underwriters or broker-dealers regarding the sale of their
securities, nor is there an underwriter or coordinating broker acting in
connection with the proposed sale of shares by the selling stockholders. The
selling stockholders may subsequently determine to utilize registered
broker-dealers in connection with the sale of the shares.
The selling stockholders may effect such transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the selling stockholders and/or the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or other (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
The selling stockholders and any broker-dealers that act in connection with
the sale of shares might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, and any commissions received by
such broker-dealers and any profit on the resale of the shares sold by them
while acting as principals might be deemed to be underwriting discounts or
commissions under such Act. Medaphis has agreed to indemnify each selling
stockholder against certain liabilities, including liabilities arising under the
Securities Act of 1933. The selling stockholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the shares against certain liabilities, including liabilities arising under
the Securities Act of 1933.
Because selling stockholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933, the selling stockholders
will be subject to the prospectus delivery requirements of the such Act.
Medaphis has informed the selling stockholders that the anti-manipulative
provisions of Regulation M promulgated under the Securities Exchange Act of 1934
may apply to their sales in the market.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exception from the registration
or qualification requirement is available and is complied with.
Selling stockholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act of 1933,
provided they meet the criteria and conform to the requirements of such Rule.
10
<PAGE> 12
Upon Medaphis being notified by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the Act,
disclosing (i) the name of each such selling stockholder and of the
participating broker-dealer(s), (ii) the number of shares involved, (iii) the
price at which such shares were sold, (iv) the commissions paid or discounts or
concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this prospectus and (vi) other facts
material to the transaction. In addition, upon Medaphis being notified by a
selling stockholder that a donee or pledgee intends to sell more than 500
shares, a supplement to this prospectus will be filed if required.
LEGAL MATTERS
A legal opinion to the effect that the shares offered hereby by the selling
stockholders are validly issued, fully paid and non-assessable has been rendered
by Randolph L.M. Hutto, Esq., Atlanta, Georgia, Executive Vice President and
General Counsel of Medaphis.
EXPERTS
The consolidated financial statements of Medaphis Corporation incorporated
in this prospectus by reference to the Annual Report on Form 10-K of Medaphis
Corporation for the year ended December 31, 1998 have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
11
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Registration fee to Securities and Exchange Commission...... $ 5,256
Accounting fees and expenses................................ 0
Legal fees and expenses..................................... 20,000
Miscellaneous expenses...................................... 2,000
-------
Total............................................. $27,256
=======
</TABLE>
The foregoing items, except for the registration fee to the Securities and
Exchange Commission, are estimated. Medaphis has agreed to bear all expenses in
connection with the registration of the shares being offered by the selling
stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The following summary is qualified in its entirety by reference to the
complete text of the statute, Amended and Restated Certificate of Incorporation,
as amended, Amended and Restated By-Laws and agreement referred to below.
The Registrant's Amended and Restated By-Laws provide that each person who
was or is made a party to, is threatened to be made a party to or is otherwise
involved in any 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 Registrant (or is or was serving at
the request of the Registrant as a director, officer, employee or agent of
another entity), will be indemnified and held harmless by the Registrant to the
fullest extent permitted by the Delaware General Corporation Law as it currently
exists or is later amended.
Under Section 145 of the Delaware General Corporation Law, a corporation
may indemnify a director, officer, employee or agent of the corporation (or
other entity if such person is serving in such capacity at the corporation's
request) against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him 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 the case of an action brought by or in the right of the
corporation, the corporation may indemnify a director, officer, employee or
agent of the corporation (or other entity if such person is serving in such
capacity at the corporation's request) against expenses (including attorneys'
fees) actually and reasonably incurred by him 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, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such persons shall have been adjudged to be
liable to the corporation unless a court determines that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnification for such expenses as
the court shall deem proper. Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation.
The Registrant's Amended and Restated Certificate of Incorporation, as
amended, provides that a director of the Registrant shall not be personally
liable to the Registrant or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Registrant or its stockholders, (ii) for any
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the
II-1
<PAGE> 14
Delaware General Corporation Law or (iv) for any transaction in which the
director derived an improper personal benefit.
In addition, the Registrant and David E. McDowell are parties to an
agreement pursuant to which the Registrant has agreed to indemnify and hold
harmless Mr. McDowell to the fullest extent permitted by the Delaware General
Corporation Law as it presently exists or to such greater extent as such law may
subsequently be amended.
The Registrant maintains directors and officers liability insurance. Such
policies have a deductible of $150,000 and an annual per occurrence and
aggregate cap on coverage of $50 million.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <C> <S>
4.1 -- Amended and Restated Articles of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.1 of the
Registrant's Registration Statement on Form S-1, File No.
33-42216).
4.2 -- Certificate of Amendment of Amended and Restated Certificate
of Incorporation of the Registrant (incorporated by
reference to Exhibit 3 of Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1993).
4.3 -- Certificate of Amendment of Amended and Restated Certificate
of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.3 of Registrant's Registration
Statement on Form 8-A/A filed March 28, 1995).
4.4 -- Certificate of Amendment of Amended and Restated Certificate
of Incorporation of the Registrant (incorporated by
reference to Exhibit 4.4 of Registrant's Registration
Statement on Form S-8, Registration No. 333-03213).
4.5 -- Certificate of Amendment of Amended and Restated Certificate
of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.5 of Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1997).
4.6 -- Amended and Restated By-Laws of the Registrant (incorporated
by reference to Exhibit 3.6 of Registrant's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 1997).
4.7 -- Rights Agreement, dated as of February 11, 1999, between the
Registrant and American Stock Transfer & Trust Company
(incorporated by reference to Exhibit 4 of the Registrant's
Current Report on Form 8-K filed February 12, 1999).
4.8 -- Registration Rights Letter Agreement, dated as of May 3,
1999, by and among NFT Ventures, Inc., Raymond J. Noorda,
Mark Rogers, NP Ventures, Ltd., Steven G. Papermaster and
the Registrant.
5 -- Opinion of Randolph L.M. Hutto, Esq. regarding the legality
of shares being registered.
23 -- Consent of PricewaterhouseCoopers LLP.
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The Undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(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, individu-
II-2
<PAGE> 15
ally 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 the volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and 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 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this
Section do not apply if the Registration Statement is on Form S-3, Form
S-8 or Form F-3 and 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 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be 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, 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 the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
II-3
<PAGE> 16
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 17
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 May 14, 1999.
MEDAPHIS CORPORATION
By: /s/ ALLEN W. RITCHIE
------------------------------------
Allen W. Ritchie
President and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Allen W.
Ritchie and Randolph L.M. Hutto, and each of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
in each of them, for him or her and in his or her name, place and stead, and in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement on Form S-3 of Medaphis Corporation
or a related registration statement filed pursuant to Rule 462(b), 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
connection therewith, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their 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, this
Registration Statement has been signed below by the following persons in the
capacities indicated on May 14, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ DAVID E. MCDOWELL Chairman and Director
- -----------------------------------------------------
David E. McDowell
/s/ ALLEN W. RITCHIE President, Chief Executive Officer and
- ----------------------------------------------------- Director (Principal Executive Officer)
Allen W. Ritchie
/s/ WAYNE A. TANNER Executive Vice President and Chief Financial
- ----------------------------------------------------- Officer (Principal Financial Officer)
Wayne A. Tanner
/s/ MICHAEL SNYDER Vice President and Controller (Principal
- ----------------------------------------------------- Accounting Officer)
Michael Snyder
/s/ RODERICK M. HILLS Director
- -----------------------------------------------------
Roderick M. Hills
/s/ DAVID R. HOLBROOKE, M.D. Director
- -----------------------------------------------------
David R. Holbrooke, M.D.
</TABLE>
II-5
<PAGE> 18
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ KEVIN E. MOLEY Director
- -----------------------------------------------------
Kevin E. Moley
/s/ JOHN C. POPE Director
- -----------------------------------------------------
John C. Pope
/s/ C. CHRISTOPHER TROWER Director
- -----------------------------------------------------
C. Christopher Trower
</TABLE>
II-6
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <C> <S>
4.1 -- Amended and Restated Certificate of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.1 of
Registrant's Registration Statement on Form S-1, File No.
33-42216).
4.2 -- Certificate of Amendment of Amended and Restated Certificate
of Incorporation of the Registrant (incorporated by
reference to Exhibit 3 of Registrant's Quarterly Report on
Form 10-Q of the quarterly period ended March 31, 1993).
4.3 -- Certificate of Amendment of Amended and Restated Certificate
of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.3 of Registrant's Registration
Statement on Form 8-A/A filed March 28, 1995).
4.4 -- Certificate of Amendment of Amended and Restated Certificate
of Incorporation of the Registrant (incorporated by
reference to Exhibit 4.4 of Registrant's Registration
Statement on Form S-8, Registration No. 333-03213).
4.5 -- Certificate of Amendment of Amended and Restated Certificate
of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.5 of Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1997).
4.6 -- Amended and Restated By-Laws of the Registrant (incorporated
by reference to Exhibit 3.6 of Registrant's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 1997).
4.7 -- Rights Agreement, dated as of February 11, 1999, between the
Registrant and American Stock Transfer & Trust Company
(incorporated by reference to Exhibit 4 of Registrant's
Current Report on Form 8-K filed February 12, 1999).
4.8 -- Registration Rights Letter Agreement, dated as of May 3,
1999, by and among NFT Ventures, Inc., Raymond J. Noorda,
Mark Rogers, NP Ventures, Ltd., Steven G. Papermaster and
the Registrant.
5 -- Opinion of Randolph L.M. Hutto, Esq. Regarding the legality
of shares being registered.
23 -- Consent of PricewaterhouseCoopers LLP.
</TABLE>
<PAGE> 1
EXHIBIT 4.8
May 3, 1999
NFT Ventures, Inc.
Raymond Noorda
NP Ventures, LTD.
Steven Papermaster
Mark Rogers
Registration Rights Agreement
Gentlemen:
This letter will confirm that in connection with the settlement of
certain claims as contemplated by that certain Settlement Agreement and
Release, dated January 13, 1999, by and among NFT Ventures, Inc., a Utah
corporation; Raymond J. Noorda; Mark Rogers; NP Ventures, Ltd., a Texas limited
partnership; and Steven G. Papermaster (individually, an "NFT Principal and
collectively, the "NFT Principals"), acting severally and not jointly, on the
one hand, and Medaphis Corporation, a Delaware corporation ("Medaphis") on the
other hand; as amended by Amendment No. 1 thereto dated January 13, 1999 and
Amendment No. 2 thereto dated May 3, 1999 (as so amended, the "Settlement
Agreement"), and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confirmed, the parties hereto
hereby covenant and agree as follows:
1. Certain Definitions. Any capitalized terms used herein
without definition shall have the meaning ascribed to such terms in the
Settlement Agreement.
2. Resale Registration Statement.
(a) Medaphis shall prepare and file with the Commission as soon
as practicable after the date hereof a registration statement (the
"Registration Statement") on Form S-3 or other available form with respect to
resale of the Settlement Shares by the NFT Principals and shall use its
reasonable best efforts to have the Registration Statement declared effective
by the Commission as promptly as practicable thereafter.
(b) Medaphis and each of the NFT Principals will cooperate in
the preparation of the Registration Statement for the Settlement Shares and
will furnish each other with all information concerning themselves, their
subsidiaries, directors, officers, and stockholders and such other matters as
may be reasonably necessary or advisable for the Registration Statement,
filings under the state securities laws, and any other statement or application
made by or on behalf of Medaphis or any of the NFT Principals to any
governmental body in connection with this Settlement Agreement and the
transactions contemplated hereby.
<PAGE> 2
(c) Medaphis shall provide a reasonable opportunity for each of
the NFT Principals (and their respective representatives) to review a draft of
the Registration Statement, and any amendment or supplement thereto, and to
correct any information with respect to such NFT Principal prior to the time
the Registration Statement is filed with the Commission.
3. Effectiveness of Registration Statement. Medaphis agrees to
maintain the effectiveness of the Registration Statement from the date on which
the Commission declares the Registration Statement to be effective through the
first to occur of (i) the first anniversary of the Closing and the
effectiveness of the respective releases provided under Section 2.1; (ii) the
date on which each of the NFT Principals is no longer subject to any
restriction on resale pursuant to Rule 144 under the Securities Act; and (iii)
the date on which each of the NFT Principals shall have sold all of the
Settlement Shares held by such person. Notwithstanding the preceding sentence,
if the Board of Directors of Medaphis determines in good faith that it is in
the best interests of the stockholders of Medaphis not to disclose the
existence of facts surrounding any proposed or pending acquisition,
disposition, strategic alliance, financing transaction or other pending
material event involving Medaphis, Medaphis may, by written notice to the NFT
Principals, suspend the rights of the NFT Principals to make sales pursuant to
the Registration Statement; provided that such period of suspension shall not
exceed forty-five (45) days during the period in which the Registration
Statement is required to remain effective as provided herein. As of the date
hereof, Medaphis is not aware of such a pending material event that would cause
it to declare such a suspension of effectiveness.
4. Medaphis Covenants. In connection with the preparation,
filing and effectiveness of the Registration Statement, Medaphis covenants and
agrees that it will:
a. prepare and file with the Commission such
amendments and supplements to the Registration Statement and the
prospectus used in connection therewith as may be necessary to keep
the Registration Statement effective for such period as may be
required hereunder, and in each case to comply with the provisions of
the Securities Act with respect to the disposition of the Settlement
Shares during such period in accordance with the intended methods of
distribution by the NFT Principals set forth in the Registration
Statement;
b. furnish to each NFT Principal such number of
copies of the Registration Statement, each amendment and supplement
thereto, in each case including all exhibits, the prospectus included
in the Registration Statement and such other documents as such NFT
Principal may reasonable request in order to facilitate the
disposition of the Settlement Shares by such NFT Principal;
c. use its reasonable best efforts to register or
qualify the Settlement Shares under such other securities or blue sky
laws of such jurisdictions within the United States as any NFT
Principal reasonably requests to keep such registration
2
<PAGE> 3
or qualification in effect for as long as the Registration Statement
is in effect and to do any and all other acts and things which may be
reasonably necessary or advisable to enable such NFT Principal to
consummate the disposition in such jurisdictions of the Settlement
Shares then held or owned by such NFT Principal;
d. at any time when a prospectus relating to the
resale of Settlement Shares is required to be delivered under the
Securities Act, to notify each NFT Principal of the happening of any
event as a result of which the prospectus contained in the
Registration Statement contains an untrue statement of material fact
or omits any fact necessary to make the statements therein not
misleading and, promptly prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of
Settlement Shares, such prospectus will not contain an untrue
statement of material fact or omit to state any fact necessary to make
the statements therein, in light of the circumstances under which such
statements were made, not misleading; and
e. if the Registration Statement has been filed on
Form S-3 or any other available form promulgated by the Commission
permitting the incorporation of Medaphis's Commission reports or other
documents by reference, and if such "short form" thereafter becomes
unavailable for use by Medaphis for any reason, Medaphis shall as
promptly as practicable thereafter take such steps as are necessary to
convert the Registration Statement into a registration statement on
Form S-1 or other available "long form," including, but not limited
to, by post-effective amendment, and shall use commercially reasonable
efforts to cause such "long-form" registration statement to become
effective as promptly as practicable thereafter and to otherwise
comply with the provisions of this Section 2.
5. Exchange Act Reports. From and after the date hereof, and
for so long as is necessary in order to permit the NFT Principals to sell the
Settlement Shares pursuant to Rule 144 promulgated under the Securities Act
("Rule 144") and to maintain the availability to Medaphis of Form S-3 or other
available short-form registration statement permitting the incorporation of
Medaphis's Commission reports or other documents by reference, Medaphis will
file on a timely basis all reports and other documents required to be filed by
it pursuant to the Securities Act and the Exchange Act, including Section 13 or
15(d) thereof; and to furnish to any NFT Principal, so long as such NFT
Principal owns any Settlement Shares, forthwith upon request (i) a written
statement by Medaphis that it has complied with reporting requirements of Rule
144, the Securities Act and the Exchange Act, or that it qualifies as a
registrant whose securities may be issued or resold pursuant to Form S-3 (or
any other available short-form registration statement), (ii) a copy of the most
recent annual or quarterly report of Medaphis and such other reports and
documents so filed by Medaphis (including all exhibits), and (iii) such other
information as may be reasonably requested in availing any NFT Principal of any
rule or regulation of the Commission which permits the selling of any such
securities of Medaphis without registration or pursuant to Form S-3 or other
available "short-form" registration statement.
3
<PAGE> 4
6. Acknowledgment of NFT Principals. Each of the NFT
Principals acknowledges that the issuance of the Settlement Shares will not be
registered under the Securities Act, or any applicable state securities laws,
in reliance upon exemptions from registration contained in the Securities Act
and such state laws, and that Medaphis's reliance upon such exemptions is based
in part upon the NFT Principal's representations, warranties and agreements
contained in this Agreement. Each Recipient acknowledges that, prior to the
execution of this Agreement, it has had the opportunity to ask questions of and
receive answers or obtain additional information from a representative of
Medaphis concerning the financial and other affairs of Medaphis and the terms
and conditions of the issuance of the Settlement Shares, and, to the extent
such NFT Principal believes necessary in light of its personal knowledge of
Medaphis' affairs, it has asked such questions and received satisfactory
answers.
7. Representations and Warranties of NFT Principals. Each of
the NFT Principals represents, warrants and agrees as follows:
(a) it shall not make any sale, transfer or other
disposition of the Settlement Shares without registration under the
Securities Act and any applicable state securities laws unless an
exemption from such registration is available and is complied with;
(b) it is familiar with the business in which
Medaphis is engaged, and based upon its knowledge and experience in
financial and business matters, it is familiar with the investments of
the sort which it is undertaking by receiving the Settlement Shares;
it is fully aware of the problems and risks involved in making an
investment of this type; and it is capable of evaluating the merits
and risks of this investment;
(c) that the investment which the NFT Principal is
undertaking by receiving the Settlement Shares is in accord with the
nature and size of such NFT Principal's present investments and net
worth, and such NFT Principal is financially able to bear the economic
risk of this investment;
(d) that all information with respect to such NFT
Principal contained in the Registration Statement and any prospectus
used in connection therewith is true and correct in all material
respects as of the date hereof; and
(e) that such NFT Principal is an "accredited
investor" as such term is defined in rule 501(a) under the Securities
Act.
8. Medaphis Stock Legend. Each of the certificates
representing the Settlement Shares, or any substitutions therefor, shall be
stamped or imprinted with a legend stating in substance as follows:
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<PAGE> 5
"The shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be transferred, nor will any assignee or endorsee
hereof be recognized as an owner hereof by the issuer for any
purpose, unless a registration statement under the Securities
Act of 1933, as amended, with respect to such shares shall
then be in effect or unless the availability of an exemption
from registration with respect to any proposed transfer or
disposition of such shares shall be established to the
satisfaction of counsel for the issuer. In addition, these
securities have not been registered or qualified under the
securities laws of any state and may not be sold or
transferred except in a transaction which is exempt under the
applicable state securities laws or pursuant to an effective
registration or qualification under such laws."
9. Expenses.
(a) All expenses incurred by Medaphis in connection with the
preparation, filing and maintenance of effectiveness of the Registration
Statement, including, without limitation, all registration, filing and
qualification fees, printing expenses, fees and disbursements of counsel and
independent accountants for Medaphis, fees of the National Association of
Securities Dealers, Inc., transfer taxes, fees of transfer agents and
registrars, but excluding any Selling Expenses (as hereinafter defined), are
herein referred to as "Registration Expenses." Any underwriting discounts,
selling commissions and brokerage fees, fees and expenses of each of the NFT
Principals applicable to the sale of the Settlement Shares are herein called
"Selling Expenses."
(b) Medaphis will pay all Registration Expenses in connection
with the Registration Statement, any amendment thereto and any resale
prospectus filed pursuant to this Agreement. All Selling Expenses, to the
extent not covered by the terms of the Settlement Agreement, shall be borne by
the respective NFT Principal incurring such Selling Expense.
(c) If at any time after the one-year period specified in
subsection (d)(1) of Rule 144, and any NFT Principal shall not be an affiliate
of Medaphis, Medaphis agrees (i) to cooperate with such NFT Principal in
connection with the removal of legends placed on certificates representing such
NFT Principal's Settlement Shares pursuant to Section 8 hereof, (ii) not to
require legal opinions with respect to the transfer of such Settlement Shares
after expiration of such one-year holding period (or if it does to issue or
cause to be issued such opinion at its own expense), and (iii) to otherwise
bear all expenses associated with reissuing such shares without legends or in
connection with the issuance of any opinions requested by Medaphis or its
transfer agent with respect to the transfer of such shares; provided, however,
that each NFT Principal hereby agrees that any sale during the one-year period
after the period specified in subsection (d)(1) of Rule 144 shall be made in
accordance with all applicable manner of sale restrictions.
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10. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the state of Georgia, without reference to
Georgia's choice of law rules.
(b) This Agreement and the Settlement Agreement constitute the
entire agreement of the parties with respect to the subject matter hereof.
(c) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
[Signature page follows.]
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Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this letter, whereupon this letter
(hereinsometimes referred to as this "Agreement") shall be a binding agreement
among Medaphis and each of the NFT Principals.
MEDAPHIS CORPORATION
By: /s/ Randolph L.M. Hutto
-------------------------------
Randolph L.M. Hutto
Executive Vice President
NFT PRINCIPALS:
NFT VENTURES, INC.
By: /s/ Raymond J. Noorda
--------------------------------------------------
Raymond J. Noorda, Chairman
/s/ Raymond J. Noorda
- ------------------------------------------------------
Raymond J. Noorda, Individually
/s/ Mark Rogers
- ------------------------------------------------------
Mark Rogers, Individually
NP VENTURES, LTD.
By: Powershift Partners, LLC, its general partner
By: /s/ Steven G. Papermaster
--------------------------------------------------
Steven G. Papermaster, President
/s/ Steven G. Papermaster
- ------------------------------------------------------
Steven G. Papermaster, Individually
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EXHIBIT 5
May 19, 1999
Securities and Exchange Commission
450 Fifth Street
Washington, D.C. 20549
Re: Form S-3 Registration Statement relating to 5,000,000 shares
of common stock, par value $.01 per share, of Medaphis
Corporation
Ladies and Gentlemen:
I am the General Counsel of Medaphis Corporation, a Delaware
corporation ("Medaphis"), and have acted in such capacity in connection with
the preparation of the Registration Statement on Form S-3 filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Registration Statement"), relating to 5,000,000 shares of Medaphis common
stock, par value $.01 per share ("Common Stock"), to be sold by certain
stockholders of Medaphis (the "Selling Stockholders") in accordance with the
Plan of Distribution set forth in the Registration Statement.
As such counsel, I have examined and relied upon such records,
documents, certificates and other instruments as in my judgment are necessary
or appropriate to form the basis for the opinions hereinafter set forth. In all
such examinations, I have assumed the genuineness of signatures on original
documents and the conformity to such original documents of all copies submitted
to me as certified, conformed or photographic copies, and as to certificates of
public officials, I have assumed the same to have been properly given and to be
accurate.
Based on the foregoing, I am on the opinion that:
(i) Medaphis is a corporation incorporated and validly
existing in good standing under the laws of the State of Delaware; and
(ii) The outstanding shares of Common Stock to be sold by
the Selling Stockholders have been duly authorized and are validly
issued, fully paid and nonassessable.
I consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to me under the caption "Legal
Matters" in the Prospectus that forms a part of the Registration Statement.
Very truly yours,
/s/ Randolph L.M. Hutto
Randolph L.M. Hutto
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 10, 1999 relating to the
financial statements, which appears in Medaphis Corporation's Annual Report on
Form 10-K for the year ended December 31, 1998. We also consent to the
incorporation by reference of our report dated February 10, 1999 relating to
the financial statement schedule, which appears in such Annual Report on Form
10-K. We also consent to the reference to us under the heading "Experts" in
such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Atlanta, Georgia
May 19, 1999
