<PAGE> 1
As filed with the Securities and Exchange Commission on November 7,1996
Registration No. 333-______
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------
ENVOY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
TENNESSEE 62-1575729
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation Identification Number)
or Organization)
15 CENTURY BOULEVARD, SUITE 600, NASHVILLE, TENNESSEE 37214
(615) 885-3700
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
----------------
JIM D. KEVER
15 CENTURY BOULEVARD, SUITE 600
NASHVILLE, TENNESSEE 37214
(615) 885-3700
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
COPY TO:
BOB F. THOMPSON
BASS, BERRY & SIMS PLC
FIRST AMERICAN CENTER
NASHVILLE, TENNESSEE 37238
(615) 742-6200
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [ x ]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ] ________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
======================================================================================================================
Proposed Maximum Amount of
Title of Shares to be Amount to be Proposed Maximum Aggregate Offering Registration
Registered Registered Offering Price Per Share (1) Price (1) Fee
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value
per share . . . . . . . . 321,289 $37.50 $12,048,337 $3,652
======================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) based upon the average of the high and low reported
prices of the Common Stock on the Nasdaq National Market on November 1, 1996.
---------------
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 7, 1996
321,289 SHARES
ENVOY CORPORATION
COMMON STOCK
______________________________
All of the 321,289 shares (the "Shares") of Common Stock, no par value
per share (the "Common Stock"), of ENVOY Corporation ("ENVOY" or the "Company")
offered hereby are being offered by certain shareholders of the Company (the
"Selling Shareholders"). See "Selling Shareholders." The Company will not
receive any proceeds from the sale of the Common Stock offered hereby. The
Common Stock of the Company is traded on The Nasdaq Stock Market's National
Market ("The Nasdaq Stock Market") under the symbol "ENVY." On November 5,
1996, the last reported sale price of the Common Stock on The Nasdaq Stock
Market was $38.88 per share.
___________________
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 4.
The Shares may be sold from time to time in brokerage transactions at
or near prevailing market prices through J.C. Bradford & Co. or others, or in
privately negotiated transactions for the account of each of the Selling
Shareholders. See "Plan of Distribution."
The Company has agreed to bear all expenses (other than selling
commissions and stock transfer taxes relating to the Shares) in connection with
the registration and sale of the Shares being registered hereby. The Company
has agreed to indemnify the Selling Shareholders against certain liabilities
and the Selling Shareholders have agreed to indemnify the Company against
certain liabilities in connection with this offering, including liabilities
under the Securities Act of 1933, as amended (the "Securities Act"). See "Plan
of Distribution."
______________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus and, if given or made, such information and representations
must not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any
securities other than the Common Stock to which it relates. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy such
securities in any circumstances in which such offer or solicitation is
unlawful.
THE DATE OF THIS PROSPECTUS IS NOVEMBER ___, 1996.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy and information statements and other information filed by the Company may
be inspected and copied at the office of the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 or at its Regional Offices located in the
Citicorp Center, Suite 1400, 500 West Madison Street, Chicago, Illinois
60661-2511 and Seven World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material also may be obtained from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a web site that contains reports,
proxy and information statements and other information regarding registrants,
including the Company, that file such information electronically with the
Commission. The address of the Commission's web site is http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on
Form S-3, including amendments thereto (if any), under the Securities Act
relating to the Common Stock offered hereby (the "Registration Statement").
This Prospectus, which is part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement and the exhibits
and schedules thereto. For further information with respect to the Company and
the Common Stock offered hereby, reference is hereby made to the Registration
Statement and such exhibits and schedules, which may be inspected and copied in
the manner and at the locations described above. Statements contained in this
Prospectus as to the contents of any contract or other document referred to are
not necessarily complete and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement or as previously filed with the Commission and incorporated herein by
reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents or portions of documents filed by the Company
with the Commission are incorporated herein by reference:
(1) Annual Report on Form 10-K for the year ended December 31,
1995.
(2) Quarterly Report on Form 10-Q for the quarters ended March 31,
1996, as amended by the Form 10-Q/A filed on May 24, 1996, and
June 30, 1996.
(3) Current Reports on Form 8-K filed on March 18, 1996 and March
21, 1996 (each as amended by Form 8-K/A, filed on May 17, 1996
and May 20, 1996, respectively) and on July 23, 1996.
(4) The description of the Common Stock contained in the Company's
Registration Statement under the Exchange Act on Form 10 filed
on November 1, 1994, as amended through Post-Effective
Amendment No. 4, filed on May 4, 1995.
All reports and other documents filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and prior to the termination of the offering
of Common Stock hereunder shall be deemed to be incorporated by reference in
this Prospectus and to be part hereof from the filing date of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein, or in any
other subsequently filed document that also is incorporated or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. Subject to
the foregoing, all information appearing in this Prospectus is qualified in its
entirety by the information appearing in the documents incorporated by
reference.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. These documents are available upon
written or oral request, at no charge, from the Company. Requests should be
directed to the Company, 15 Century Boulevard, Suite 600, Nashville, Tennessee
37214, Attention: Stephen C. Duggan, Vice President & Corporate Controller.
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THE COMPANY
The following discussion is not intended to be complete and is
qualified in its entirety by reference to, and should be read in conjunction
with, the detailed information appearing elsewhere or incorporated by reference
in this Prospectus. Except as otherwise specified herein, all references
herein to "ENVOY" and "the Company" shall include the Company and its
wholly-owned subsidiaries.
ENVOY is a leading provider of electronic data interchange ("EDI")
services to participants in the health care market, including pharmacies,
physicians, hospitals, dentists, billing services, commercial insurance
companies, managed care organizations, state and federal governmental agencies
and others. The Company provides health care EDI services on a real-time and
batch-processing basis by utilizing proprietary computer and telecommunications
software and microprocessor technology. ENVOY is one of the largest processors
of electronic real-time pharmacy and commercial third-party payor batch
transactions in the United States based upon annual transaction volume. As of
September 30, 1996, ENVOY's transaction network was directly or indirectly
connected to approximately 183,000 physicians, 30,000 pharmacies, 23,000
dentists, 3,300 hospitals and 550 payors.
Real-time Transaction Processing. The Company provides real-time
transaction processing for pharmacy claims adjudication and managed care
transactions for health care providers and payors. A standard pharmacy
transaction is the inquiry by the pharmacy, through its point-of-service
terminal or personal computer terminal, to determine whether the patient is
covered by a benefit program. After eligibility is confirmed, the claim is
settled and the payor transmits to the pharmacy the amount and timing of the
pending payment. As of September 30, 1996, ENVOY's EDI network was linked to
approximately 30,000 of the estimated 56,000 retail pharmacies in the United
States, including 33 of the top 50 retail pharmacy chains.
ENVOY's real-time managed care transactions include (i) verification
of the patient's enrollment in a program; (ii) verification that the provider
is eligible to treat the patient; (iii) verification that the patient is
eligible for a particular treatment; (iv) filing of encounter data; (v)
referral to a specialist; and (vi) other ancillary transactions. These
transactions are enabled by the Company's network connections to various
databases. The Company has access to managed care and commercial insurer
databases for Prudential, CIGNA, Aetna, Oxford Health Plans, MetraHealth, U.S.
Healthcare, Pacificare, Blue Cross of California, Empire Blue Cross and Blue
Shield, Blue Cross and Blue Shield for the National Capital Area and Qual Med,
and is a sponsored participant to the Blue Cross and Blue Shield BluesNet
network. For Medicaid eligibility verification and related transactions, the
Company has access to state databases in California, Florida, Georgia,
Missouri, New Jersey, New York, Ohio, Tennessee, Texas and Washington. In
addition, if a patient wishes to pay the deductible or co-payment amounts by
credit card, ENVOY provides payment authorization and verification processing
service through the point-of-service terminals in provider offices.
Batch Transaction Processing. Batch transactions are predominately
used to process reimbursement claims in traditional fee-for-service commercial
or government payor systems, to process encounter data in capitated
environments and for distribution of remittance payment information. These
transactions are neither time-sensitive nor easily processed on a real-time
basis and, as a result are processed on a collective and delayed basis. To
submit claims, providers collect data throughout the day and then
electronically forward these claims in bulk to a clearinghouse. ENVOY's
clearinghouse electronically collects and verifies receipt of these claims,
performs payor specific reformatting required to conform to a particular
payor's specifications and editing, aggregates daily transactions by payor and
transmits claims to payors based upon each payor's chosen communications
protocols. National Electric Information Corporation ("NEIC"), which was
acquired by ENVOY in March 1996, and ENVOY processed an aggregate of
approximately 92.0 million commercial third-party payor claims in 1995. As of
September 30, 1996, ENVOY's transaction network was connected with 550 of the
approximate 1,500 commercial third-party payors, including all of the top 20
commercial payors (based upon the number of members covered by such third-party
payors).
The Company was incorporated in Tennessee in August 1994. The
Company's executive offices are located at 15 Century Boulevard, Suite 600,
Nashville, Tennessee 37214, and its telephone number is (615) 885-3700.
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<PAGE> 5
RECENT DEVELOPMENTS
Results of Operations. The Company recently announced results for the
third quarter and nine months ended September 30, 1996. Revenues for the third
quarter were $21.5 million compared with $6.3 million for the same quarter in
the prior year, primarily as a result of the completion of two acquisitions
during the first quarter of 1996, NEIC and Teleclaims, Inc. ("Teleclaims") .
For the nine month period ended September 30, 1996, revenues were $51.4 million
compared with $19.4 million in the prior year period. Loss from continuing
operations before income taxes for the third quarter was $1.7 million compared
with a loss of $329,000 in the prior year period. Third quarter results
include $1.4 million in merger and facility integration costs and $4.3 million
in amortization of intangibles related to the NEIC and Teleclaims acquisitions.
Loss from continuing operations before income taxes for the nine-month period
was $37.0 million compared with a loss of $766,000 in the prior year period.
Nine months results include $34.3 million in merger and facility integration
costs (including the $30.7 million charge for the write-off of acquired
in-process technology) and $9.6 million in amortization of intangibles related
to the NEIC and Teleclaims acquisitions.
Acquisitions. On October 31, 1996, ENVOY acquired all of the capital
stock of Professional Office Systems, Inc., the wholly-owned EDI clearinghouse
for Blue Cross and Blue Shield of the National Capital Area, for approximately
$6.4 million in cash and the assumption of certain liabilities. In connection
with the acquisition, the parties entered into an exclusive three-year
outsourcing services agreement for the processing of health care EDI
transactions.
In October 1996, ENVOY acquired the remaining 82.5% interest in EMC*
Express, Inc. ("EMC"), a Phoenix, Arizona based company that transmits billing
information from hospitals and doctors to third party payors, for approximately
$2.0 million in cash. In connection with this acquisition, the Company
settled a related lawsuit between ENVOY and the former shareholders of EMC.
In September 1996, the Company completed the acquisition of certain
assets and liabilities of National Verification Systems, L.P., an Atlanta based
company whose principal business is the licensing of software for use in
hospitals and clinics to verify patient eligibility, for $2.5 million in cash.
RISK FACTORS
In addition to the other information included or incorporated by
reference in this Prospectus, the following factors should be considered
carefully in evaluating an investment in the Common Stock offered hereby. This
discussion also identifies important cautionary factors that could cause the
Company's actual results to differ materially from those projected in forward
looking statements of the Company made by, or on behalf of, the Company.
Limited Operating History; Substantial Net Loss. The electronic
health care transaction processing industry is relatively new, and the
Company's operating history is relatively limited. ENVOY has experienced
substantial net losses, including net losses of approximately $2.0 million and
$37.3 million in the fiscal quarter and for the nine moths ended September 30,
1996, respectively, and has an accumulated deficit of approximately $40.4
million as of September 30, 1996. Historically, operating losses incurred in
the Company's health care transaction processing business were funded by
earnings from the Company's financial processing business, which was sold in
1995. In order to achieve profitability, the Company must successfully
implement its business strategy and increase its revenues, while controlling
expenses. There can be no assurance as to when or if the Company will achieve
profitability.
Recent Acquisitions. In March 1996, ENVOY completed the acquisition
of NEIC, a commercial clearinghouse for batch processing of health care claims.
The Company acquired NEIC for $94.3 million, including fees, expenses and other
costs associated with the acquisition. In connection with the acquisition, the
Company recognized a one-time write off of acquired in-process technology of
approximately $30.0 million. As a result of the NEIC acquisition, the Company
is amortizing $35.3 million of goodwill associated with the NEIC acquisition
over
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<PAGE> 6
a three year period, and such amortization will adversely affect the Company's
results of operations for the balance of 1996 and the following 2.25 years.
The acquisition of NEIC, which had 1995 revenues of $37.4 million, created a
significant expansion of ENVOY's overall business. In addition, the Company
recently completed three other smaller acquisitions. See "Recent
Developments." The Company is in the process of integrating the operations of
NEIC and the other acquisitions into its business. There can be no assurance
that the Company will be able to operate the acquired businesses on a
profitable basis, integrate the acquisitions with its existing business or
achieve operating synergies necessary to make the acquisitions successful.
Development of Electronic Processing in the Health Care Industry.
ENVOY's strategy anticipates that electronic processing of health care
transactions, including transactions involving clinical as well as financial
information, will win market acceptance and that providers and third-party
payors increasingly will use electronic processing networks for the processing
and transmission of data. Electronic transmission of health care transactions
is still developing, and complexities in the nature and types of transactions
which must be processed has hindered to some degree the development and
acceptance of electronic processing in this market. In addition, while the
multiplicity of claims forms and formats used by the many different third-party
payors has fostered the development of electronic clearinghouses, the
standardization of these claims formats, whether due to consolidation in the
industry or otherwise, could reduce the use of clearinghouses, including
electronic clearinghouses. There can be no assurance that continued conversion
from paper-based transaction processing to electronic transaction processing
in the health care market will occur or that, to the extent it does occur,
health care providers and payors will use independent networks such as those
being developed by the Company.
Acquisition Strategy; Impact on Operating Results; Need for Capital.
The Company's strategy includes acquisitions of related health care information
businesses and other companies complementary to its business. The success of
any such acquisition will depend on many factors, including the Company's
ability to identify suitable acquisition candidates, the purchase price, the
availability and terms of financing, and management's ability to effectively
integrate the acquired services, technologies or businesses into the Company's
operations. Significant competition for acquisition opportunities exists in
the health care industry, which may significantly increase the costs of and
decrease the opportunities for acquisitions. Although ENVOY is actively
pursuing potential acquisitions, there can be no assurance that any acquisition
will be consummated. Further, to the extent that the Company is able to
consummate an acquisition, no assurance can be given that the Company will be
able to operate any acquired business profitably or otherwise successfully
implement its expansion strategy. ENVOY may finance future acquisitions
through borrowings or the issuance of debt or equity securities. Although the
Company historically has obtained financing on reasonable terms, there can be
no assurances that future lenders will extend credit, or extend credit on
favorable terms. Further, any issuance of equity securities could have a
dilutive effect on the holders of Common Stock. Such acquisitions may result
in the recognition by the Company of significant goodwill and increases in the
amount of depreciation and amortization expense which could adversely affect
the Company's operating results in future periods.
Competition. ENVOY faces significant competition in the health care
sector of the electronic transaction processing market from companies that are
similarly specialized and also from companies that are involved in other, more
highly developed sectors of the electronic transaction processing market. The
Company also faces competition from other companies, such as vendors of
provider information management systems, which have added or may add their own
proprietary transaction processing systems to existing or future products. As a
result of such competition the Company may be pressured to reduce per
transaction prices or eliminate per transaction prices altogether. If
electronic transaction processing becomes the standard for claims and
information processing, a number of larger and better capitalized entities may
elect to enter the industry and further increase competitive pricing pressures.
Many of the Company's existing and potential competitors are larger and have
significantly greater financial, marketing, technological and other resources
than the Company.
Availability of Direct Links. Certain third-party payors provide
electronic data transmission systems to health care providers that establish a
direct link between the provider and the payor, bypassing third-party
processors such as the Company. Any significant increase in the utilization of
direct links between health care providers and payors would have a material
adverse effect on the Company's business, operating results and financial
condition.
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<PAGE> 7
Uncertainty and Consolidation in the Health Care Industry. The health
care industry is subject to changing political, economic and regulatory
influences that may affect the procurement practices and operations of health
care industry participants. Federal and state legislatures periodically
consider programs to modify or amend the United States health care system at
both the federal and state level. These programs may contain proposals to
increase governmental involvement in health care, lower reimbursement rates or
otherwise change the environment in which health care industry participants
operate. Health care industry participants may react to these proposals and
the uncertainty surrounding such proposals by curtailing or deferring
investments, including investments in the Company's services and products. In
addition, many health care providers are consolidating to create larger health
care delivery organizations. This consolidation reduces the number of
potential customers for the Company's services, and the increased bargaining
power of these organizations could lead to reductions in the amounts paid for
the Company's services. Industry developments are increasing the amount of
capitation-based health care and reducing the need for providers to make claims
for reimbursement for products or services. Other health care information
companies, such as billing services and practice management vendors, which
currently utilize the Company's services, have developed or acquired
transaction processing and networking capabilities and may cease utilizing the
Company's services in the future. The impact of these developments in the
health care industry is difficult to predict and could have a material adverse
effect on the Company's business, operating results or financial condition.
Customer Concentration. No customer accounted for more than 10% of
ENVOY's revenues during 1995 or the first nine months of 1996. However, on a
pro forma basis, after giving effect to the acquisitions of NEIC and Teleclaims
as of January 1, 1995, the Company's ten largest customers accounted for
approximately 35% of the Company's revenues in 1995. Further consolidation in
the health care industry is likely to increase customer concentration and may
increase the Company's dependency on a limited number of customers. In
addition, a significant portion of NEIC's revenues has been generated by five
major insurance company payors who were shareholders of NEIC before its
acquisition by ENVOY. Although each of these carriers has continued to use the
Company's services after the acquisition of NEIC, they have no minimum
transaction commitment to the Company in the future and there can be no
assurance that the volume of business generated by these payors will not
decline or terminate. The loss of one or more significant customers could have
a material adverse effect on the Company's business, operating results or
financial condition.
Evolving Industry Standards and Rapid Technological Changes. The
market for the Company's services is characterized by rapidly changing
technology, evolving industry standards and frequent introduction of new and
enhanced services. ENVOY's success will depend upon its continued ability to
enhance its existing services, to introduce new services on a timely and
cost-effective basis to meet evolving customer requirements, to achieve market
acceptance for new services and to respond to emerging industry standards and
other technological changes. There can be no assurance that the Company will
be able to respond effectively to technological changes or new industry
standards. Moreover, there can be no assurance that competitive services will
not be developed, or that any such competitive services will not have an
adverse effect upon the Company's operating results.
Dependence on Technology; Risk of Infringement. ENVOY's ability to
compete effectively depends to a significant extent on its ability to protect
its proprietary information. The Company relies primarily on copyright and
trade secret laws, confidentiality procedures and licensing arrangements to
protect its intellectual property rights. ENVOY has not filed any patent
applications with respect to its intellectual property. The Company generally
enters into confidentiality agreements with its consultants and employees and
generally limits access to and distribution of its technology, software and
other proprietary information. Although the Company intends to defend its
intellectual property, there can be no assurance that the steps taken by ENVOY
to protect its proprietary information will be adequate to prevent
misappropriation of its technology or that the Company's competitors will not
independently develop technologies that are substantially equivalent or
superior to the Company's technology. ENVOY is also subject to the risk of
alleged infringement by ENVOY of the intellectual property rights of others.
Although the Company is not currently aware of any pending or threatening
infringement claims with respect to the Company's current or future products,
there can be no assurance that third parties will not assert such claims. Any
such claims could require the Company to enter into license arrangements or
could result in protracted and costly litigation, regardless of the merits of
such claims. No assurance can be given that any necessary licenses will be
available or that, if available, such licenses can be obtained on commercially
reasonable terms. Furthermore, litigation may be
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<PAGE> 8
necessary to enforce ENVOY's intellectual property rights, to protect the
Company's trade secrets, to determine the validity and scope of the proprietary
rights of others or to defend against claims of infringement. Such litigation
could result in substantial costs and diversion of resources and could have a
material adverse effect on the Company's business, operating results or
financial condition.
Reliance on Data Centers. ENVOY's real-time electronic transaction
processing services depend on its host computer system which is contained in a
single data center facility. In addition, the Company's primary batch claims
processing capacity is outsourced to one vendor that processes claims through a
single computer center. The Company also operates a batch claims processing
center which is contained in a single data center facility in Oklahoma City,
Oklahoma for the processing of Blue Shield, Medicare and Medicaid claims.
Although ENVOY is currently evaluating certain disaster recovery alternatives,
neither the real-time host computer system nor the Oklahoma City batch claims
center have a remote backup data center. There can be no assurance that fire
or other disaster affecting such data centers would not disable the Company's
respective systems or otherwise have a material adverse effect on the Company's
business, financial condition or results of operations. In addition, a
disruption in service from the vendor providing batch claims processing
services to the Company could have a material adverse effect on the Company's
business, operating results or financial condition.
Proposed Health Care Data Confidentiality Legislation. Legislation
which imposes restrictions on the ability of third-party processors to transmit
certain patient data without specific patient consent has been introduced in
the U.S. Congress. Such legislation, if adopted, could adversely affect the
ability of third-party processors to transmit certain data, including treatment
and clinical data, and could materially adversely affect the Company's future
results.
Indemnification Obligations. First Data Corporation ("First Data")
has asserted certain indemnification claims against ENVOY in connection with
the sale to First Data of the Company's financial transaction processing
business, which was completed in June 1995. In connection therewith, First
Data has withheld certain payments due ENVOY pursuant to a management services
agreement. ENVOY is currently evaluating the validity of such claims. In the
event First Data is entitled to indemnification under its contractual rights,
the payment of such amounts could have a material adverse effect on the
Company's operating results and financial condition.
Dependence on Key Executives. ENVOY's success depends upon the
continued contributions of its senior management. The Company believes that
its continued future success will also depend upon its ability to attract,
motivate and retain highly-skilled technical, managerial and marketing
personnel. The loss of the services of certain of the Company's executives or
technical personnel, particularly the Co-Chief Executive Officers of the
Company, or the inability to hire and retain qualified personnel could have an
adverse effect upon the Company's business. There can be no assurance that
ENVOY will continue to be successful in attracting and retaining the personnel
it requires to successfully develop new and enhanced services and to continue
to grow and operate profitably. The Company has no key man life insurance on
the lives of any of its executive officers or technical personnel.
Certain Anti-takeover Provisions. The Amended and Restated Charter,
Amended and Restated Bylaws, Shareholders' Rights Plan of the Company, and
Tennessee law each contain certain provisions that may have the effect of
inhibiting a non-negotiated merger or other business combination involving the
Company. Such provisions are intended to encourage any person interested in
acquiring the Company to negotiate and obtain the approval of the Board of
Directors in connection with any such transaction. These provisions include a
staggered Board of Directors, blank check preferred stock, super majority
voting provisions, the issuance of stock purchase rights, and the application
of Tennessee law provisions on business combinations. Certain of these
provisions may discourage a future acquisition of ENVOY not approved by the
Board of Directors in which shareholders might receive a premium value for
their shares. As a result, shareholders who might desire to participate in
such a transaction may not have the opportunity to do so. In addition, the
rights and preferences for any series or class of preferred stock may be set by
the Board of Directors, in its sole discretion and without approval of the
holders of the Common Stock, and the rights and preferences of any such
preferred stock may be superior to those of the Common Stock, thus adversely
affecting the rights of the holders of Common Stock. There are currently
authorized and outstanding 3,730,233 shares of Series B Convertible Preferred
Stock, no par value (the "Series B Preferred Stock"). The Series B Preferred
Stock has a liquidation preference to the Common Stock and has a class vote
with respect to actions adverse to any rights
7
<PAGE> 9
of the Series B Preferred Stock and the creation of any other class or series
of preferred stock senior to or pari passu with the Series B Preferred Stock.
Volatility of Stock Price; Absence of Dividends. From time to time,
there may be significant volatility in the market price for the Common Stock.
Quarterly operating results of the Company, changes in earnings estimated by
analysts, changes in general conditions in the Company's industry or the
economy or the financial markets or other developments affecting the Company
could cause the market price of the Common Stock to fluctuate substantially.
In addition, in recent years the stock market has experienced significant price
and volume fluctuations. This volatility has had a significant effect on the
market prices of securities issued by many companies for reasons unrelated to
their operating performance. For the foreseeable future, it is expected that
earnings, if any, generated from ENVOY's operations will be used to finance the
growth of its business, and that no dividends will be paid to holders of the
Common Stock.
SELLING SHAREHOLDERS
The table below sets forth certain information provided to the Company
by the Selling Shareholders regarding the beneficial ownership of Common Stock
(as of November 6, 1996) of the Selling Shareholders. The table assumes that
all Shares offered hereby will be sold and, unless otherwise noted, the Company
has been advised that the persons named in the table have sole voting and
investment power with respect to the Common Stock indicated.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned prior to Shares Owned following
Selling Shareholders the Offering (1) Offered the Offering (1)
- --------------------------------------- ---------------------------- --------- ------------------------
NUMBER PERCENT (2) NUMBER PERCENT (2)
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Save & Prosper American Smaller
Companies Fund 188,022 1.17%/* 92,965 95,057 */*
Fleming American Fledgling Fund 244,676 1.52%/1.23% 73,384 171,292 */*
Fleming American Investment Trust 88,688 */* 26,615 62,073 */*
Fleming Fledgling Investment Trust 19,961 */* 5,988 13,973 */*
Fleming Overseas Investment Trust 44,866 */* 13,498 31,368 */*
Fleming Select American Smaller
Companies Fund 20,437 */* 7,129 13,308 */*
Fleming U.S. Discovery Fund 200,285 1.24%/1.01% 60,076 140,209 */*
Fleming U.S. Discovery Fund II 138,878 */* 41,634 97,244 */*
</TABLE>
- ------------------
*Represents less than one percent.
(1) Assumes conversion of all of the $10.0 million principal amount of the 9%
Convertible Subordinated Notes held by each of the Selling Shareholders,
rounded downward to the nearest whole share. (2) The second percentage assumes
the conversion of all outstanding shares of Series B Preferred Stock into
Common Stock.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time in brokerage transactions at
or near prevailing market prices through J.C. Bradford & Co. or others, or in
privately negotiated transactions for the account of each of the Selling
Shareholders. Ordinary brokerage commissions will be paid in connection with
brokerage transactions.
The Selling Shareholders received the right to demand the registration
of the Shares offered hereby pursuant to a Registration Rights Agreement dated
June 6, 1995. The Company has agreed to pay the expenses of this offering
except that the Selling Shareholders will be responsible for all brokerage
commissions, any other selling commissions
8
<PAGE> 10
and stock transfer taxes. Expenses to be paid by the Company are estimated to
be $17,000. The Company has agreed to maintain the effectiveness of the
Registration Statement covering the Shares for a period of time necessary to
effect the sale of the Shares, such period not to exceed 180 days following the
date hereof.
The Company has agreed to indemnify the Selling Shareholders, and the
Selling Shareholders have agreed to indemnify the Company, against certain
liabilities in connection with this offering, including liabilities under the
Securities Act.
The Selling Shareholders and any brokers or other persons who
participate in the sale of the Shares may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, and any commissions
received by such brokers or other persons, and any profits on the resale of the
Shares, may be deemed to be underwriting commissions or discounts.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Bass, Berry & Sims PLC, Nashville, Tennessee.
EXPERTS
The financial statements and schedule of ENVOY appearing in the
Company's Annual Report (Form 10-K) for the year ended December 31, 1995, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
financial statements and schedule are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The financial statements of ENVOY at December 31, 1994, and for the
two years in the period ended December 31, 1994, incorporated by reference in
this Prospectus and the related financial statement schedule incorporated by
reference in the Registration Statement from the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The financial statements of NEIC, at December 31, 1995 and 1994, and
for each of the three years in the period ended December 31, 1995, incorporated
by reference in this Prospectus from Form 8-K/A dated May 20, 1996, of ENVOY
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and has been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The financial statements of Teleclaims at December 31, 1995 and 1994,
and for each of the two years in the period ended December 31, 1995,
incorporated herein by reference in this Prospectus and Registration Statement
have been audited by Hardman Guess Frost & Cummings, P.C., independent
auditors, as set forth in their report thereon incorporated herein, and are
incorporated herein by reference in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
9
<PAGE> 11
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,652
*Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,500
*Blue Sky Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000
*Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . $3,000
*Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,848
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $17,000
=======
</TABLE>
----------
*Estimated
All of the above-mentioned expenses will be borne by the Registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Tennessee Business Corporation Act ("TBCA") provides that a
corporation may indemnify any of its directors and officers against liability
incurred in connection with a proceeding if (i) the director or officer acted
in good faith, (ii) in the case of conduct in an official capacity with the
corporation, the director or officer reasonably believed such conduct was in
the corporation's best interests, (iii) in all other cases, the director or
officer reasonably believed that his or her conduct was not opposed to the best
interests of the corporation, and (iv) in connection with any criminal
proceeding, the director or officer had no reasonable cause to believe that his
or her conduct was unlawful. In actions brought by or in the right of the
corporation, however, the TBCA provides that no indemnification may be made if
the director or officer was adjudged to be liable to the corporation. In cases
where the director or officer is wholly successful, on the merits or otherwise,
in defense of any proceeding instigated because of his or her status as an
officer or director of a corporation, the TBCA mandates that the Corporation
indemnify the director or officer against reasonable expenses incurred in the
proceeding. The TBCA also provides that in connection with any proceeding
charging improper personal benefit to an officer or director, no
indemnification may be made if such officer or director is adjudged liable on
the basis that such personal benefit was improperly received. Notwithstanding
the foregoing, the TBCA provides that a court of competent jurisdiction, upon
application, may order that an officer or director be indemnified for
reasonable expenses if, in consideration of all relevant circumstances, the
court determines that such individual is fairly and reasonably entitled to
indemnification, whether or not the standard of conduct set forth above was
met.
Article 8 of the Amended and Restated Charter (the "Charter") of the
Company and its Amended and Restated Bylaws (the "Bylaws") provide that the
Company shall indemnify against liability, and advance expenses to, any present
or former director or officer of the Company to the fullest extent allowed by
the TBCA as amended from time to time, or any subsequent law, rule or
regulation adopted in lieu thereof. Additionally, the Charter provides that no
director of the Company shall be personally liable to the Company or any of its
shareholders for monetary damages for breach of any fiduciary duty except for
liability arising from (i) any breach of a director's duty of loyalty to the
Company or its shareholders, (ii) acts or omissions not in good faith or which
involved intentional misconduct or a knowing violation of law, (iii) any
unlawful distributions, or (iv) receiving any improper personal benefit. The
Company has entered into indemnification agreements with each of the Company's
directors and executive officers.
The Company currently has in effect an executive liability policy
which provides coverage for its directors and officers in amounts of $15.0
million per claim and $15.0 million for annual aggregate claims. The policy
covers
II-1
<PAGE> 12
any error, misstatement, act or omission, or breach of duty committed by a
director or officer, subject to certain specified exclusions.
ITEM 16. EXHIBITS
See Index to Exhibits on page II-6.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities offered hereby, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or
the most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the information
set forth in this Registration Statement. Notwithstanding the
foregoing, any increase or decrease in 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
a 20 percent 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 this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that the undertakings in subparagraphs (i) and (ii) above do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporated by reference in this
Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered hereby which remain unsold at
the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this 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.
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 provisions described in Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer
II-2
<PAGE> 13
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.
II-3
<PAGE> 14
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 Nashville, State of Tennessee, on the 6th day
of November, 1996.
ENVOY CORPORATION
By:/s/ Fred C. Goad, Jr.
----------------------------------------------
Fred C. Goad, Jr.
Chairman, Co-Chief Executive Officer and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Fred C. Goad, Jr. and Jim D.
Kever, jointly and severally, his true and lawful attorney-in-fact and agent,
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 to
this Registration Statement, and to file the same with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agents 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 attorney-in-fact and agent, 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 by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Fred C. Goad, Jr. Chairman of the Board, Co-Chief Executive November 6, 1996
----------------------------------- Officer and Director
Fred C. Goad, Jr.
/s/ Jim D. Kever Co-Chief Executive Officer, President and November 6, 1996
----------------------------------- Director
Jim D. Kever
/s/ Kevin M. McNamara Chief Financial Officer (Principal Financial November 6, 1996
----------------------------------- and Accounting Officer)
Kevin M. McNamara
/s/ William E. Ford Director November 6, 1996
-----------------------------------
William E. Ford
/s/ W. Marvin Gresham Director November 6, 1996
-----------------------------------
W. Marvin Gresham
/s/ Laurence E. Hirsch Director November 6, 1996
-----------------------------------
Laurence E. Hirsch
/s/ G. Walter Loewenbaum II Director November 6, 1996
-----------------------------------
G. Walter Loewenbaum II
</TABLE>
II-4
<PAGE> 15
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard A. McStay Director November 6, 1996
- -----------------------------------
Richard A. McStay
/s/ Harlan F. Seymour Director November 6, 1996
-----------------------------------
Harlan F. Seymour
</TABLE>
II-5
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
*2.1 Agreement and Plan of Distribution dated September 2, 1994, as
amended through December 16, 1994
**2.2 Agreement and Plan of Merger dated November 30, 1995 by and
among the Registrant, Envoy Acquisition Corporation and
National Electronic Information Corporation
***4.1 Article 5 of the Registrant's Amended and Restated Charter, as
amended
*4.2 Shareholder Rights Plan
**4.3 Series B Convertible Preferred Stock Purchase Agreement among
the Registrant, General Atlantic Partners 25, L.P., GAP
Coinvestment Partners, L.P. and First Union Capital Partners,
Inc.
****4.5 Securities Purchase Agreement dated March 6, 1996 by and among
the Registrant and the Purchasers set forth on the signature
pages thereto
****4.6 Registration Rights Agreement dated March 6, 1996 by and among
the Registrant and the Purchasers set forth on the signature
pages thereto
***4.7 Note Purchase Agreement dated June 6, 1995
4.8 Registration Rights Agreement dated June 6, 1995
*4.9 Specimen Common Stock certificate
5 Opinion of Bass, Berry & Sims PLC
23.1 Consent of Ernst & Young LLP
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Deloitte & Touche LLP
23.4 Consent of Hardman Guess Frost & Cummings, P.C.
23.5 Consent of Bass, Berry & Sims PLC (included in Exhibit 5)
24 Power of Attorney (included on page II-4)
</TABLE>
-------------
* Incorporated by reference to the Registrant's Form 10, as
amended, No. 0-25062.
** Incorporated by reference to the Registrant's Current Report on
Form 8-K filed December 7, 1995
*** Incorporated by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1995 filed April 1,
1996
**** Incorporated by reference to the Registrant's Current Report on
Form 8-K filed March 21, 1996
II-6
<PAGE> 1
EXHIBIT 4.8
EXECUTION COPY
-------------------------------------
REGISTRATION RIGHTS AGREEMENT
BETWEEN
NEW ENVOY, INC.
(TO BE RENAMED ENVOY CORPORATION)
AND
FIRST DATA CORPORATION
DATED AS OF JUNE 6, 1995
-------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 1. Definitions and Usage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2. Demand Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1. Demands for Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2. Procedures for Demand Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3. Limitations on Number of Demand Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4. Form of Demand Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5. Selection of Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6. Cutback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3. Piggyback Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1. Right to Include Registrable Securities in Registration . . . . . . . . . . . . . . . . . . . . . . 7
3.2. Cutback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3. Number of Piggyback Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1. Preparation and Filing of Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2. Filing of Amendment and Supplements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3. Furnishing Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.4. Blue Sky Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.5. Underwriting or Agency Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.6. Notice of Stop Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.7. Periodic Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.8. Inspection of Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.9. Comfort Letter; Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.10. Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.11. Listing of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.12. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.13. Actions to Expedite Disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5. Selling Holders' Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1. Information Relating to Selling Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2. Agreement with Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6. Expenses of Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.1. Expenses of Demand Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.2. Piggyback Registration Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.3. Failure to Pay Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 7. Indemnification; Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.1. Indemnification by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.2. Indemnification by Selling Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.3. Notice of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.4. Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.5. Full Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.6. Survival of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8. Transfer of Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9. Holdback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 10. Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10.1. Exchange Act Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10.2. Holdbacks; Future Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10.3. Merger, Consolidation, Reorganization, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10.4. Limitation on Grant of Registration Rights to Others . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 11. Amendment; Modification and Waivers; Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 12. Assignment; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 13. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
13.1. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
13.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
13.3. Entire Agreement; Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
13.4. Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.5. Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.6. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.7. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.8. Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.9. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.10. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.11. No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
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<PAGE> 4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of June 6,
1995 among NEW ENVOY, INC., a Tennessee corporation to be renamed Envoy
Corporation (the "Company"), and FIRST DATA CORPORATION, a Delaware corporation
("FDC").
RECITALS
WHEREAS, pursuant to that certain Note Purchase Agreement dated as of
June 6, 1995 between the Company and FDC (the "Note Purchase Agreement"), FDC
has agreed to purchase (or to cause one or more of its Affiliates to purchase)
from the Company, subject to certain conditions, up to $10,000,000 in aggregate
principal amount of the 9% Convertible Subordinated Notes Due 2000 of the
Company (the "Notes"), which Notes are to be convertible at the option of the
holder thereof into shares (the "Shares") of the Company's Common Stock (as
defined below);
WHEREAS, pursuant to the Note Purchase Agreement, as a condition to
FDC's agreement to purchase the Notes, the Company has agreed to provide
certain holders of the Notes and/or the Shares with certain rights as set forth
in this Agreement to cause the Notes and/or the Shares to be registered
pursuant to the Securities Act (as defined below); and
WHEREAS, the parties hereto hereby desire to set forth such holders'
rights and the Company's obligations to cause the registration of the
Registrable Securities (as defined below) pursuant to the Securities Act (as
defined below);
NOW, THEREFORE, in consideration of the transactions contemplated by
the Note Purchase Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Definitions and Usage.
As used in this Agreement:
1.1. Definitions.
"Agent" means the principal placement agent on an agented placement of
Registrable Securities.
"Board" means the Board of Directors of the Company.
"Commission" means the Securities and Exchange Commission.
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<PAGE> 5
"Common Stock'' means (i) the common stock, without par value, of the
Company and (ii) shares of capital stock of the Company issued by the Company in
respect of or in exchange for shares of such common stock in connection with any
stock dividend or distribution, stock split-up, recapitalization, recombination
or exchange by the Company generally of shares of such common stock.
"Company" has the meaning set forth in the preamble hereof.
"Continuously Effective", with respect to a specified registration
statement, means that it shall not cease to be effective or available for
Transfers of Registrable Securities thereunder for longer than either (i) any
ten (10) consecutive business days, or (ii) an aggregate of fifteen (15)
business days during the period specified in the relevant provision of this
Agreement; provided that in the case of a registration statement on Form S-1,
such registration shall be deemed to be Continuously Effective even if it does
not meet the foregoing criteria so long as (A) the Company uses its reasonable
best efforts to cause such registration statement to be effective and available
for Transfers of the applicable Registrable Securities throughout the
applicable period and (B) the aggregate amount of time during which such
registration statement is not effective or is otherwise not available for such
Transfers does not exceed 30 days during any calendar quarter.
"Demand Registration" has the meaning set forth in Section 2.1(i).
"Demanding Holders" has the meaning set forth in Section 2.1(i).
"Exchange Act" means the Securities Exchange Act of 1934.
"FDC" has the meaning set forth in the preamble hereof.
"Holders" means any Original Purchaser and any Transferees of
Registrable Securities with respect to the rights that such Transferees shall
have acquired in accordance with Section 8, at such times as such Persons shall
own Registrable Securities.
"Majority Selling Holders" means those Selling Holders whose
Registrable Securities included in such registration represent a majority of
the Registrable Securities of all Selling Holders included therein.
"Note Purchase Agreement" has the meaning set forth in the first
recital hereof.
"Notes" has the meaning set forth in the first recital hereof.
"Original Purchaser" means FDC and/or such Affiliates thereof as shall
purchase Notes pursuant to the Note Purchase Agreement.
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<PAGE> 6
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"Piggyback Registration" has the meaning set forth in Section 3.1.
"Register", "registered", and "registration" refer to a registration
effected by preparing and filing a registration statement or similar document
in compliance with the Securities Act, and the declaration or ordering by the
Commission of effectiveness of such registration statement or document.
"Registrable Securities" means, subject to Section 8 and Section 10.3:
(i) the Notes issued to the Original Purchasers pursuant to the Note Purchase
Agreement, and owned by a Holder on the date of determination, (ii) any Shares
issued upon conversion of the Notes and owned by a Holder on the date of
determination, (iii) any shares of Common Stock or other securities issued as
(or issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange by the Company generally for, or in replacement by the Company
generally of, any such Notes or Shares; and (iv) any securities issued in
exchange for any Notes or Shares in any merger or reorganization of the
Company; provided, however, that any such securities described in the foregoing
clauses (i) through (iv) shall be deemed to be Registrable Securities for the
purposes hereof only so long as they have not been (x) Transferred to or
through a broker or dealer or underwriter in a public distribution or offering
or (y) Transferred in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act pursuant to Section 4(1) thereof so
that all transfer restrictions and restrictive legends with respect to such
securities are removed upon the consummation of such Transfer. For purposes of
this Agreement, a Person will be deemed to be a Holder of Registrable
Securities whenever such Person has the then-existing right to acquire such
Registrable Securities (by conversion, purchase or otherwise), whether or not
such acquisition has actually been effected. For the purpose of determining the
Holders of a stated percentage of the Registrable Securities under this
Agreement, each Note shall be deemed to represent the number of Shares into
which it is then convertible.
"Registrable Securities then outstanding" means, with respect to a
specified determination date, the Registrable Securities owned by all Holders
on such date.
"Registration Expenses" has the meaning set forth in Section 6.1.
"Securities Act" means the Securities Act of 1933.
"Selling Holders" means, with respect to a specified registration
pursuant to this Agreement, Holders whose Registrable Securities are included
in such registration.
"Shares" has the meaning set forth in the first recital hereof.
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<PAGE> 7
"Transfer" means and includes the act of selling, giving,
transferring, creating a trust (voting or otherwise), assigning or otherwise
disposing of (other than pledging, hypothecating or otherwise transferring as
security) (and correlative words shall have correlative meanings); provided,
however, that any transfer or other disposition upon foreclosure or other
exercise of remedies of a secured creditor after an event of default under or
with respect to a pledge, hypothecation or other transfer as security shall
constitute a "Transfer."
"Transferee" means any transferee of Registrable Securities or other
assets in a Transfer.
"Transferor" means any transferor of Registrable Securities or other
assets in a Transfer.
"Underwriters' Representative" means the managing underwriter, or, in
the case of a co-managed underwriting, the managing underwriter designated as
the Underwriters' Representative by the co-managers.
"Violation" has the meaning set forth in Section 7.1.
1.2. Usage.
(i) References to a Person are also references to its assigns
and successors in interest (by means of merger, consolidation or sale of all or
substantially all the assets of such Person or otherwise, as the case may be).
(ii) References to Registrable Securities "owned" by a Holder
shall include Registrable Securities beneficially owned by such Person but
which are held of record in the name of a nominee, trustee, custodian, or other
agent, but shall exclude shares of Common Stock held by a Holder in a fiduciary
capacity for customers of such Person.
(iii) References to a document are to it as amended, waived and
otherwise modified from time to time and references to a statute or other
governmental rule are to it as amended and otherwise modified from time to time
(and references to any provision thereof shall include references to any
successor provision).
(iv) References to Sections or to Schedules or Exhibits are to
sections hereof or schedules or exhibits hereto, unless the context otherwise
requires.
(v) The definitions set forth herein are equally applicable
both to the singular and plural forms and the feminine, masculine and neuter
forms of the terms defined.
(vi) The term "including" and correlative terms shall be deemed
to be followed by "without limitation" whether or not followed by such words or
words of like import.
(vii) The term "hereof" and similar terms refer to this Agreement
as a whole.
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<PAGE> 8
(viii) The "date of" any notice or request given pursuant to this
Agreement shall be determined in accordance with Section 13.2.
Section 2. Demand Registration.
2.1. Demands for Registration.
(i) At any time on or after the issuance of the Notes pursuant
to the Note Purchase Agreement, if one or more Holders that own in the
aggregate a majority of the Registrable Securities then outstanding shall make
a written demand to the Company (the "Demanding Holders"), the Company shall
cause there to be filed with the Commission a registration statement meeting
the requirements of the Securities Act (a "Demand Registration"), and each
Demanding Holder shall be entitled to have included therein (subject to Section
2.6) all or such amount of such Demanding Holder's Registrable Securities, as
the Demanding Holder shall request in writing; provided, however, that no
request may be made pursuant to this Section 2.1 if within six months prior to
the date of such request a Demand Registration pursuant to this Section 2.1
shall have been declared effective by the Commission. Any request made pursuant
to this Section 2.1 shall be addressed to the attention of the Secretary of the
Company, and shall specify the amount of Registrable Securities to be
registered, the intended methods of disposition thereof and that the request is
for a Demand Registration pursuant to this Section 2.1(i).
(ii) The Company shall be entitled to postpone for up to 90 days
the filing of any Demand Registration statement otherwise required to be
prepared and filed pursuant to this Section 2.1, if the Board determines, in
its good faith judgment, that such registration and the Transfer of Registrable
Securities contemplated thereby would materially interfere with, or require
premature disclosure of, any financing, acquisition, reorganization or other
material transaction involving the Company or any of its wholly-owned
subsidiaries and the Company promptly gives the Demanding Holders notice of
such determination.
(iii) Whenever the Company shall have received a demand pursuant
to Section 2.1(i) to effect the registration of any Registrable Securities, the
Company shall promptly give written notice of such proposed registration to all
Holders. Any such Holder may, within 20 days after receipt of such notice,
request in writing that all of such Holder's Registrable Securities, or any
portion thereof designated by such Holder, be included in the registration. If,
at the end of such 20-day period, the total amount of Registrable Securities
requested to be included in such registration by the Holders as a group
(including the Demanding Holders) represents less than 25% of the amount of
Registrable Securities then outstanding, the Company may within 10 days
thereafter elect not to proceed with the requested registration by giving
notice of such election to each Holder that has requested the inclusion of
Registrable Securities therein, in which event the requested registration shall
not be deemed to constitute a Demand Registration for the purposes hereof.
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<PAGE> 9
(iv) At the request of the Majority Selling Holders, the method
of disposition of all Registrable Securities included in a Demand Registration
shall be an underwritten offering.
2.2. Procedures for Demand Registration. Following receipt of a
request for a Demand Registration, the Company shall:
(i) File the registration statement with the Commission as
promptly as practicable, and shall use the Company's best efforts to have the
registration declared effective under the Securities Act as soon as reasonably
practicable, in each instance giving due regard to the need to prepare current
financial statements, conduct due diligence and complete other actions that are
reasonably necessary to effect a registered public offering.
(ii) Use the Company's best efforts to keep the relevant
registration statement Continuously Effective if a Demand Registration, for up
to 180 days or until such earlier date as of which all the Registerable
Securities under the Demand Registration Statement shall have been disposed of
in the manner described in the registration statement. Notwithstanding the
foregoing, if for any reason the effectiveness of a Demand Registration is
suspended or postponed as permitted by Section 2.1(ii), the foregoing period
shall be extended by the aggregate number of days of such suspension or
postponement.
2.3. Limitations on Number of Demand Registrations. The Company
shall be obligated to effect no more than two Demand Registrations. For
purposes of the preceding sentence, registration shall not be deemed to have
been effected (i) unless a registration statement with respect thereto has
become effective, (ii) if after such registration statement has become
effective, such registration or the related offer, sale or distribution of
Registrable Securities thereunder is interfered with by any stop order,
injunction or other order or requirement of the Commission or other
governmental agency or court for any reason not attributable to the Selling
Holders and such interference is not thereafter eliminated or (iii) if the
conditions to closing specified in the underwriting agreement, if any, entered
into in connection with such registration are not satisfied or waived, other
than by reason of a failure on the part of the Selling Holders. If the Company
shall have complied with its obligations under this Agreement, a right to
demand a registration pursuant to this Section 2 shall be deemed to have been
satisfied upon the earlier of (x) the date as of which all of the Registrable
Securities included therein shall have been disposed of pursuant to the
registration statement and (y) the date as of which such Demand Registration
shall have been Continuously Effective for a period of 180 days.
Notwithstanding the foregoing, (A) if an underwritten offering pursuant to a
Demand Registration is terminated prior to closing for reasons beyond the
reasonable control of the Selling Holders, such registration shall not be
deemed to have been effected for the purposes hereof and (B) if the Selling
Holders otherwise request that the Company withdraw any Demand Registration,
such registration shall not be deemed to have been effected for the purposes
hereof (and the Selling Holders shall be required to reimburse the Company for
all related Registration Expenses as provided in Section 6.1) unless Holders
whose Registrable Securities constitute a majority of the
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<PAGE> 10
Registrable Securities then outstanding agree that such withdrawn registration
shall constitute one of the Demand Registrations permitted under Section 2.1.
2.4. Form of Demand Registration. A registration pursuant to
this Section 2 shall be on such appropriate registration form of the Commission
as shall (i) be selected by the Company and be reasonably acceptable to the
Majority Selling Holders and (ii) permit the disposition of the Registrable
Securities in accordance with the intended method or methods of disposition
specified in the request pursuant to Section 2.1(i).
2.5. Selection of Underwriters. If any registration pursuant to
Section 2 involves an underwritten offering (whether on a "firm", "best
efforts" or "all reasonable efforts" basis or otherwise), or an agented
offering, the Majority Selling Holders shall have the right to select the
underwriter or underwriters and manager or managers to administer such
underwritten offering or the placement agent or agents for such agented
offering; provided, however, that each Person so selected shall be reasonably
acceptable to the Company.
2.6. Cutback. Whenever the Company shall effect a registration
pursuant to this Section 2 in connection with an underwritten offering by one
or more Selling Holders of Registrable Securities: (i) if such Selling Holders
have requested the inclusion therein of more than one class of Registrable
Securities, and the Underwriters' Representative or Agent advises each such
Selling Holder in writing that, in its opinion, the inclusion of more than one
class of Registrable Securities would adversely affect such offering, the
Demanding Holders holding at least a majority of the Registrable Securities
proposed to be sold therein by them, shall decide which class of Registrable
Securities shall be included therein in such offering and the related
registration, and the other class shall be excluded; and (ii) if the
Underwriters' Representative or Agent advises each such Selling Holder in
writing that, in its opinion, the amount of securities requested to be included
in such offering (whether by Selling Holders or others) exceeds the amount
which can be sold in such offering within a price range acceptable to the
Majority Selling Holders, securities shall be included in such offering and the
related registration, to the extent of the amount which can be sold within such
price range, first, on a pro rata basis among all Selling Holders and second,
on a pro rata basis among all others requesting securities to be included in
such registration.
Section 3. Piggyback Registration.
3.1. Right to Include Registrable Securities in Registration. If
at any time the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders of the Company other than
the Holders) shares of Common Stock under the Securities Act in connection with
the public offering solely for cash on Form S-1, S-2 or S-3 (or any replacement
or successor forms), the Company shall promptly give each Holder of Registrable
Securities written notice of such registration (a "Piggyback Registration").
Upon the written request of each Holder given within 20 days following the date
of such notice, the Company shall cause to be included in such registration
statement and use its best efforts to
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<PAGE> 11
cause to be registered under the Securities Act all the Registrable Securities
consisting of Common Stock that each such Holder shall have requested to be
registered. The Company shall have the absolute right to withdraw or cease to
prepare or file any registration statement for any offering referred to in this
Section 3 without any obligation or liability to any Holder.
3.2. Cutback. If the Underwriters' Representative or Agent shall
advise the Company in writing (with a copy to each Selling Holder) that, in its
opinion, the amount of Registrable Securities requested to be included in such
registration would materially adversely affect such offering, or the timing
thereof, then the Company will include in such registration, to the extent of
the amount and class which the Company is so advised can be sold without such
material adverse effect in such offering: First, all securities proposed to be
sold by the Company for its own account; second, the Registrable Securities
requested to be included in such registration by Holders pursuant to this
Section 3, and all other securities being registered pursuant to the exercise
of contractual rights comparable to the rights granted in this Section 3, pro
rata based on the estimated gross proceeds from the sale thereof; and third any
other securities requested to be included in such registration.
3.3. Number of Piggyback Registrations. Each Holder shall be
entitled to have its Registrable Securities included in an unlimited number of
Piggyback Registrations pursuant to this Section 3.
Section 4. Registration Procedures. Whenever required under Section 2
or Section 3 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as practicable:
4.1. Preparation and Filing of Registration Statement. Prepare
and file with the Commission a registration statement with respect to such
Registrable Securities and use the Company's best efforts to cause such
registration statement to become effective; provided, however, that before
filing a registration statement or prospectus or any amendments or supplements
thereto, including documents incorporated by reference after the initial filing
of the registration statement and prior to effectiveness thereof, the Company
shall furnish to one legal counsel for the Selling Holders (selected by the
Majority Selling Holders) copies of all such documents in the form
substantially as proposed to be filed with the Commission at least four
business days prior to filing for review and comment by such counsel.
4.2. Filing of Amendment and Supplements. Prepare and file with
the Commission such amendments and supplements to such registration statement
and the prospectus used in connection with such registration statement as may
be necessary to comply with the provisions of the Securities Act and rules
thereunder with respect to the disposition of all securities covered by such
registration statement. If the registration is for an underwritten offering,
the Company shall amend the registration statement or supplement the prospectus
whenever required by the terms of the underwriting agreement entered into
pursuant to Section 5.2. Pending such amendment or supplement each such Holder
shall cease making offers or Transfers of
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<PAGE> 12
Registrable Securities pursuant to the prior prospectus. In the event that any
Registrable Securities included in a registration statement subject to, or
required by, this Agreement remain unsold at the end of the period during which
the Company is obligated to use its best efforts to maintain the effectiveness
of such registration statement, the Company may file a post-effective amendment
to the registration statement for the purpose of removing such Registrable
Securities from registered status.
4.3. Furnishing Copies. Furnish to each Selling Holder of
Registerable Securities, without charge, such numbers of copies of the
registration statement, any pre-effective or post-effective amendment thereto,
the prospectus, including each preliminary prospectus and any amendments or
supplements thereto, in each case in conformity with the requirements of the
Securities Act and the rules thereunder, and such other related documents as
any such Selling Holder may reasonably request in order to facilitate the
disposition of Registrable Securities owned by such Selling Holder.
4.4. Blue Sky Laws. Use the Company's best efforts (i) to
register and qualify the securities covered by such registration statement
under such other securities or Blue Sky laws of such states or jurisdictions as
shall be reasonably requested by the Underwriters' Representative or Agent (as
applicable, or if inapplicable, the Majority Selling Holders), and (ii) to
obtain the withdrawal of any order suspending the effectiveness of a
registration statement, or the lifting of any suspension of the qualification
(or exemption from qualification) of the offer and Transfer of any of the
Registrable Securities in any jurisdiction, at the earliest possible moment;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions or to
take any other action that would subject it in any such states or jurisdictions
to taxation or to service of process in suits other than those arising out of
the offer and sale of the securities covered by the registration statement.
4.5. Underwriting or Agency Agreement. In the event of any
underwritten or agented offering, enter into and perform the Company's
obligations under an underwriting or agency agreement (including
indemnification and contribution obligations of underwriters or agents), in
usual and customary form, with the managing underwriter or underwriters of or
agents for such offering. The Company shall also cooperate with the Majority
Selling Holders and the Underwriters' Representative or Agent for such offering
in the marketing of the Registrable Securities, including making available the
Company's officers, accountants, counsel, premises, books and records for such
purpose.
4.6. Notice of Stop Order. Promptly notify each Selling Holder
of any stop order issued or threatened to be issued by the Commission in
connection therewith (and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered).
4.7. Periodic Reports. Make generally available to the Company's
security holders copies of all periodic reports, proxy statements, and other
information referred to in Section 10.1
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<PAGE> 13
and an earnings statement satisfying the provisions of Section ll(a) of the
Securities Act no later than 90 days following the end of the 12-month period
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of each registration statement filed pursuant to this
Agreement.
4.8. Inspection of Financial Information. Make available for
inspection by any Selling Holder, any underwriter participating in such
offering and the representatives of such Selling Holder and underwriter (but
not more than one firm of counsel to such Selling Holders), all financial and
other information as shall be reasonably requested by them, and provide the
Selling Holder, any underwriter participating in such offering and the
representatives of such Selling Holder and underwriter the opportunity to
discuss the business affairs of the Company with its principal executives and
independent public accountants who have certified the audited financial
statements included in such registration statement, in each case all as
necessary to enable them to exercise their due diligence responsibilities under
the Securities Act; provided, however, that information that the Company
determines, in good faith, to be confidential and which the Company advises
such Person in writing, is confidential shall not be disclosed unless such
Person signs a confidentiality agreement reasonably satisfactory to the Company
or the related Selling Holder of Registrable Securities agrees to be
responsible for such Person's breach of confidentiality on terms reasonably
satisfactory to the Company.
4.9. Comfort Letter; Legal Opinion. Obtain a so-called "comfort
letter" from its independent public accountants, and legal opinions of counsel
to the Company addressed to the Selling Holders, in customary form and covering
such matters of the type customarily covered by such letters and opinions, and
in a form that shall be reasonably satisfactory to Majority Selling Holders.
The Company shall furnish to each Selling Holder a signed counterpart of any
such comfort letter or legal opinion. Delivery of any such opinion or comfort
letter shall be subject to the recipient furnishing such written
representations or acknowledgments as are customarily provided by selling
shareholders who receive such comfort letters or opinions.
4.10. Transfer Agent. Provide and cause to be maintained a
transfer agent and registrar for all Registrable Securities covered by such
registration statement from and after a date not later than the effective date
of such registration statement.
4.11. Listing of Shares. Cause any shares of Common Stock
covered by such registration statement (i) if the Common Stock is then listed
on a securities exchange or included for quotation in a recognized trading
market, to be listed on such exchange or included in such market for a
reasonable period of time after the offering and (ii) to be registered with or
approved by such other United States or state governmental agencies or
authorities as may be necessary by virtue of the business and operations of the
Company to enable the Selling Holders of Registrable Securities to consummate
the disposition of such Registrable Securities.
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<PAGE> 14
4.12. CUSIP Numbers. Provide a CUSIP number for each class of
Registrable Securities prior to the effective date of the first registration
statement including such class of Registrable Securities.
4.13. Actions to Expedite Disposition. Take such other actions as
are reasonably required in order to expedite or facilitate the disposition of
Registrable Securities included in each such registration.
Section 5. Selling Holders' Obligations. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Agreement with respect to the Registrable Securities of any Selling Holder of
Registrable Securities that such Selling Holder shall:
5.1. Information Relating to Selling Holders. Furnish to the
Company such information regarding such Selling Holder, the number of the
Registrable Securities owned by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Selling
Holder's Registrable Securities and requested by the Company, and to cooperate
with the Company in preparing such registration.
5.2. Agreement with Underwriters. Agree to sell its Registrable
Securities to the underwriters at the same price and on substantially the same
terms and conditions as the Company or the other Persons on whose behalf the
registration statement was being filed have agreed to sell their securities of
the same class, and to execute the underwriting agreement agreed to by the
Majority Selling Holders (in the case of a registration under Section 2) or the
Company and the Majority Selling Holders (in the case of a registration under
Section 3).
Section 6. Expenses of Registration. Expenses in connection with
registrations pursuant to this Agreement shall be allocated and paid as follows:
6.1. Expenses of Demand Registration. With respect to each
Demand Registration, the Company shall bear and pay all expenses incurred in
connection with any registration, filing, or qualification of Registrable
Securities with respect to such Demand Registration for each Selling Holder
(which right shall be assigned to any Person to whom Registrable Securities are
Transferred as permitted by Section 8), including all registration, filing and
National Association of Securities Dealers, Inc. fees, all fees and expenses of
complying with securities or Blue Sky laws, all word processing, duplicating
and printing expenses, messenger and delivery expenses, the reasonable fees and
disbursements of counsel for the Company, and of the Company's independent
public accountants, including the expenses of "cold comfort" letters required
by or incident to such performance and compliance, and the reasonable fees and
disbursements of one firm of counsel for the Selling Holders of Registrable
Securities (selected by Demanding Holders owning a majority of the Registrable
Securities owned by Demanding Holders to be included in a Demand Registration)
(the "Registration Expenses"), but excluding transfer taxes and underwriting
discounts and commissions relating to Registrable Securities; provided,
however,
11
<PAGE> 15
that the Company shall not be required to pay for any expenses of any
registration proceeding (in which case all Selling Holders shall bear such
expenses pro rata) that is begun pursuant to Section 2 if the registration is
subsequently withdrawn at the request of the Majority Selling Holders unless
either (i) Holders whose Registrable Securities constitute a majority of the
Registrable Securities then outstanding agree that such withdrawn registration
shall constitute one of the demand registrations under Section 2 hereof or (ii)
the offering pursuant to such Demand Registration is terminated prior to
closing for reasons not within the reasonable control of the Selling
Shareholders.
6.2. Piggyback Registration Expenses. The Company shall bear and
pay all Registration Expenses incurred in connection with any Piggyback
Registrations pursuant to Section 3 for each Selling Holder (which right shall
be Transferred to any Person to whom Registrable Securities are Transferred as
permitted by Section 8), but excluding transfer taxes and underwriting
discounts and commissions relating to Registrable Securities.
6.3. Failure to Pay Expenses. Any failure of the Company to pay
any Registration Expenses as required by this Section 6 shall not relieve the
Company of its obligations under this Agreement.
Section 7. Indemnification; Contribution. If any Registrable
Securities are included in a registration statement under this Agreement:
7.1. Indemnification by the Company. To the extent permitted by
applicable law, the Company shall indemnify and hold harmless each Selling
Holder, each Person, if any, who controls such Selling Holder within the
meaning of the Securities Act, and each officer, director, partner, and
employee of such Selling Holder and such controlling Person, against any and
all losses, claims, damages, liabilities and expenses (joint or several),
including attorneys' fees and disbursements and expenses of investigation,
incurred by such party pursuant to any actual or threatened action, suit,
proceeding or investigation, or to which any of the foregoing Persons may
become subject under the Securities Act, the Exchange Act or other federal or
state laws, insofar as such losses, claims, damages, liabilities and expenses
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"):
(i) Any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein, or any amendments
or supplements thereto;
(ii) The omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein not misleading; or
(iii) Any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any applicable state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or
any applicable state securities law; provided, however, that
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<PAGE> 16
the indemnification required by this Section 7.1 shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or expense if
such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability or expense to the extent
that it arises out of or is based upon a Violation which occurs in reliance
upon and in conformity with written information furnished to the Company by the
indemnified party expressly for use in connection with such registration;
provided, further, that the indemnity agreement contained in this Section 7.1
shall not apply to any underwriter to the extent that any such loss is based on
or arises out of an untrue statement or alleged untrue statement of a material
fact, or an omission or alleged omission to state a material fact, contained in
or omitted from any preliminary prospectus if the final prospectus shall
correct such untrue statement or alleged untrue statement, or such omission or
alleged omission, and a copy of the final prospectus has not been sent or given
to such person at or prior to the confirmation of sale to such person if such
underwriter was under an obligation to deliver such final prospectus and failed
to do so. The Company shall also indemnify underwriters, selling brokers,
dealer managers and similar securities industry professionals participating in
the distribution, their officers, directors, agents and employees and each
person who controls such persons (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the same extent as
provided above with respect to the indemnification of the Selling Holders.
7.2. Indemnification by Selling Holders. To the extent permitted
by applicable law, each Selling Holder shall indemnify and hold harmless the
Company, each of its directors, each of its officers who shall have signed the
registration statement, each Person, if any, who controls the Company within
the meaning of the Securities Act, each other Selling Holder, any controlling
Person of such other Selling Holder and each officer, director, Partner, and
employee of such other Selling Holder and such controlling Person, against any
and all losses, claims, damages, liabilities and expenses (joint and several),
including attorneys' fees and disbursements and expenses of investigation,
incurred by such party pursuant to any actual or threatened action, suit,
proceeding or investigation, or to which any of the foregoing Persons may
otherwise become subject under the Securities Act, the Exchange Act or other
federal or state laws, insofar as such losses, claims, damages, liabilities and
expenses arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Selling Holder
expressly for use in connection with such registration; provided, however, that
(x) the indemnification required by this Section 7.2 shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or expense if
settlement is effected without the consent of the relevant Selling Holder of
Registrable Securities, which consent shall not be unreasonably withheld, and
(y) in no event shall the amount of any indemnity under this Section 7.2 exceed
the gross proceeds from the applicable offering received by such Selling
Holder.
7.3. Notice of Claims. Promptly after receipt by an indemnified
party under this Section 7 of notice of the commencement of any action, suit,
proceeding, investigation or threat thereof made in writing for which such
indemnified party may make a claim under this Section 7,
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<PAGE> 17
such indemnified party shall deliver to the indemnifying party a written notice
of the commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel, with
the fees and disbursements and expenses to be paid by the indemnifying party,
if representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by
such counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time following the commencement of any
such action, if prejudicial to its ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under this
Section 7 but shall not relieve the indemnifying party of any liability that it
may have to any indemnified party otherwise than pursuant to this Section 7.
Any fees and expenses incurred by the indemnified party (including any fees and
expenses incurred in connection with investigating or preparing to defend such
action or proceeding) shall be paid to the indemnified party, as incurred,
within 30 days of written notice thereof to the indemnifying party, subject to
repayment in the event that it is ultimately determined that the indemnified
party is not entitled to indemnification hereunder. Any such indemnified party
shall have the right to employ separate counsel in any such action, claim or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be the expenses of such indemnified party unless (i) the
indemnifying party has agreed to pay such fees and expenses or (ii) the
indemnifying party shall have failed to promptly assume the defense of such
action, claim or proceeding or (iii) the named parties to any such action,
claim or proceeding (including any impleaded parties) include both such
indemnified party and the indemnifying party, and such indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it which are different from or in addition to those available to
the indemnifying party and that the assertion of such defenses would create a
conflict of interest such that counsel employed by the indemnifying party could
not faithfully represent the indemnified party (in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such
action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
in the reasonable judgment of such indemnified party a conflict of interest may
exist between such indemnified party and any other of such indemnified parties
with respect to such action, claim or proceeding, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels). No indemnifying party shall be liable to an
indemnified party for any settlement of any action, proceeding or claim without
the written consent of the indemnifying party, which consent shall not be
unreasonably withheld.
14
<PAGE> 18
7.4. Contributions. If the indemnification required by this
Section 7 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to in this Section 7:
(i) The indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any Violation has been committed by, or relates to
information supplied by, such indemnifying party or indemnified parties, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such Violation. The amount paid or payable by a party as
a result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 7.1 and Section 7.2, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.4 were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in Section 7.4(i). No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f ) of
the Securities Act), shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
7.5. Full Indemnification. If indemnification is available under
this Section 7, the indemnifying parties shall indemnify each indemnified party
to the full extent provided in this Section 7 without regard to the relative
fault of such indemnifying party or indemnified party or any other equitable
consideration referred to in Section 7.4.
7.6. Survival of Indemnification. The obligations of the Company
and the Selling Holders of Registrable Securities under this Section 7 shall
survive the completion of any offering of Registrable Securities pursuant to a
registration statement under this Agreement, and otherwise.
Section 8. Transfer of Registration Rights. All rights of a Holder
with respect to Registrable Securities pursuant to this Agreement may be
Transferred by such Holder to any Person in connection with the Transfer of
Registrable Securities to such Person, in all cases, if (x) any such Transferee
that is not a party to this Agreement shall have executed and delivered to the
Secretary of the Company a properly completed agreement substantially in the
form of Exhibit A, and (y) the Transferor shall have delivered to the Secretary
of the Company written notification of such Transfer setting forth the name of
the Transferor, name and address of the Transferee, and the number of
Registrable Securities which shall have been so Transferred.
15
<PAGE> 19
Section 9. Holdback. Each Holder entitled pursuant to this Agreement
to have Registrable Securities included in a registration statement prepared
pursuant to this Agreement, if so requested by the Underwriters' Representative
or Agent in connection with an offering of any Registrable Securities, shall not
effect any public sale or distribution of shares of Common Stock or any
securities convertible into or exchangeable or exercisable for shares of Common
Stock, including a sale pursuant to Rule 144 or Rule 144A under the Securities
Act (except as part of such underwritten or agented registration), during the
five day period prior to, and during the 90- day period beginning on, the date
such registration statement is declared effective under the Securities Act by
the Commission, provided that such Holder is timely notified of such effective
date in writing by the Company or such Underwriter's Representative or Agent. In
order to enforce the foregoing covenant, the Company shall be entitled to impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder until the end of such period.
Section 10. Covenants Of the Company. The Company hereby agrees and
covenants as follows:
10.1. Exchange Act Reports. The Company shall file as and when
applicable, on a timely basis, all reports required to be filed by it under the
Exchange Act. If the Company is not required to file reports Pursuant to the
Exchange Act, upon the request of any Holder of Registrable Securities, the
Company shall make publicly available the information specified in subparagraph
(c)(2) of Rule 144 of the Securities Act, and take such further action as may
be reasonably required from time to time and as may be within the reasonable
control of the Company, to enable the Holders to Transfer Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 under the Securities Act or any similar
rule or regulation hereafter adopted by the Commission.
10.2. Holdbacks; Future Agreements. (i) The Company shall not,
and shall not permit its majority-owned subsidiaries to, effect any public sale
or distribution of any shares of Common Stock or any securities convertible
into or exchangeable or exercisable for shares of Common Stock, during the five
business days prior to, and during the 90-day period beginning on, the
commencement of a public distribution of the Registrable Securities pursuant to
any registration statement prepared pursuant to this Agreement (other than by
the Company pursuant to such registration if the registration is pursuant to
Section 3). The Company shall not effect any registration of its securities
(other than on Form S-4, Form S-8, or any successor forms to such forms or
pursuant to such other registration rights agreements as may be approved in
writing by the Majority Selling Holders), or effect any public or private sale
or distribution of any of its securities, including a sale pursuant to
Regulation D under the Securities Act, whether on its own behalf or at the
request of any holder or holders of such securities, from the date of a request
for a Demand Registration pursuant to Section 2.1 until the earlier of (x) 90
days following the date as of which all securities covered by such Demand
Registration statement shall have been Transferred and (y) 180 days following
the effective date of such Demand Registration statement, unless the Company
shall have previously notified in writing all Selling Holders of
16
<PAGE> 20
the Company's desire to do so, and Selling Holders owning a majority of the
Registrable Securities or the Underwriters' Representative, if any, shall have
consented thereto in writing.
(ii) Any agreement entered into after the date of this Agreement
pursuant to which the Company or any of its majority-owned subsidiaries issues
or agrees to issue any privately placed securities similar to any issue of the
Registrable Securities (other than (x) shares of Common Stock pursuant to a
stock incentive, stock option, stock bonus, stock purchase or other employee
benefit plan of the Company approved by its Board and (y) securities issued to
Persons in exchange for ownership interests in any Person in connection with a
business combination in which the Company or any of its majority-owned
subsidiaries is a party) and pursuant to which the holders of such securities
are granted registration rights shall contain a provision whereby such holders
agree not to effect any public sale or distribution of any such securities
during the periods described in the first sentence of Section 10.2(i), in each
case including a sale pursuant to Rule 144 or Rule 144A under the Securities
Act (unless such Person is prevented by applicable statute or regulation from
entering into such an agreement).
10.3. Merger, Consolidation, Reorganization, Etc. The Company
shall not, directly or indirectly, (x) enter into any merger, consolidation or
reorganization in which the Company shall not be the surviving corporation or
(y) Transfer or agree to Transfer all or substantially all the Company's
assets, unless prior to such merger, consolidation, reorganization or asset
Transfer, the surviving corporation or the Transferee, respectively, shall have
agreed in writing to assume the obligations of the Company under this
Agreement, and for that purpose references hereunder to "Registrable
Securities" shall be deemed to include any securities which the Holders of
Registrable Securities would be entitled to receive in exchange for Registrable
Securities pursuant to any such merger, consolidation or reorganization.
10.4. Limitation on Grant of Registration Rights to Others. The
Company shall not grant to any Person (other than a Holder of Registrable
Securities) any registration rights with respect to securities of the Company,
or enter into any agreement, that would entitle the holders thereof to have
securities owned by them included in a Demand Registration under this Agreement
unless such registration rights provide that the Majority Selling Holders or
the Underwriters' Representative may exclude such securities from such Demand
Registration or limit the amount of such securities to be included therein if
such Majority Selling Holders or Underwriters' Representative determine in good
faith that the inclusion of such securities in such Demand Registration would
adversely affect in any way the intended disposition of the Registrable
Securities to be included therein (including, without limitation, the price or
timing of such disposition).
Section 11. Amendment, Modification and Waivers; Further Assurances.
(i) This Agreement may be amended with the consent of the
Company and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company
shall have obtained the written consent to such
17
<PAGE> 21
amendment, action or omission to act of Holders of a majority of the
Registrable Securities then outstanding.
(ii) No waiver of any terms or conditions of this Agreement
shall operate as a waiver of any other breach of such terms and conditions or
any other term or condition, nor shall any failure to enforce any provision
hereof operate as a waiver of such provision or of any other provision hereof.
No written waiver hereunder, unless it by its own terms explicitly provides to
the contrary, shall be construed to effect a continuing waiver of the
provisions being waived and no such waiver in any instance shall constitute a
waiver in any other instance or for any other purpose or impair the right of
the party against whom such waiver is claimed in all other instances or for all
other purposes to require full compliance with such provision.
(iii) Each of the parties hereto shall execute all such further
instruments and documents and take all such further action as any other party
hereto may reasonably require in order to effectuate the terms and purposes of
this Agreement.
12. Assignment; Benefit. This Agreement and all of the provisions
hereof shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, assigns, executors, administrators or
successors; provided, however, that except as specifically provided herein with
respect to certain matters, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated by the
Company without the prior written consent of Holders of a majority of the
Registrable Securities outstanding on the date as of which such delegation or
assignment is to become effective. A Holder may Transfer its rights hereunder
to a successor in interest to the Registrable Securities owned by such assignor
only as permitted by Section 8.
Section 13. Miscellaneous.
13.1. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
13.2. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
when delivered personally or when sent by registered or certified mail or by
private courier addressed as follows:
If to the Company, to:
New Envoy, Inc.
Two Lakeview Place
15 Century Boulevard, Suite 600
Nashville, Tennessee 37214
18
<PAGE> 22
Attention: Fred C. Goad, Jr.
With a copy to:
Bass, Berry & Sims
2700 First American Center
Nashville, Tennessee 37238
Attention: Bob F. Thompson
If to FDC, to:
First Data Corporation
2121 North 117th Avenue
Omaha, Nebraska 68164
Attention: David P. Bailis, Esq.
General Counsel
or to such other address as such party may indicate by a notice delivered to
the other party hereto. With respect to Transferees, all notices or other
communications shall be delivered to the address specified in the relevant
agreement in the form of Exhibit A whereby the Transferee became bound by the
provisions of this Agreement.
13.3. Entire Agreement; Integration. This Agreement supersedes
all prior agreements between or among any of the parties hereto with respect to
the subject matter contained herein and therein, and such agreements embody the
entire understanding among the parties relating to such subject matter.
13.4. Injunctive Relief. Each of the parties hereto acknowledges
that in the event of a breach by any of them of any material provision of this
Agreement, the aggrieved party may be without an adequate remedy at law. Each
of the parties therefore agrees that in the event of such a breach hereof the
aggrieved party may elect to institute and prosecute proceedings in any court
of competent jurisdiction to enforce specific performance or to enjoin the
continuing breach hereof. By seeking or obtaining any such relief, the
aggrieved party shall not be precluded from seeking or obtaining any other
relief to which it may be entitled.
13.5. Section Headings. Section headings are for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.
13.6. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, and all of which shall
together constitute one and the same instrument. All signatures need not be on
the same counterpart.
13.7. Severability. If any provision of this Agreement shall be
invalid or unenforceable, such invalidity or unenforceability shall not affect
the validity and enforceability of the remaining provisions of this Agreement,
unless the result thereof would be unreasonable, in which case the parties
hereto shall negotiate in good faith as to appropriate amendments hereto.
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<PAGE> 23
13.8. Filing. A copy of this Agreement and of all amendments
hereto shall be filed at the principal executive office of the Company with the
corporate recorder of the Company.
13.9. Termination. This Agreement may be terminated at any time
by a written instrument signed by the parties hereto. Unless sooner terminated
in accordance with the preceding sentence, this Agreement (other than Section 7
hereof) shall terminate in its entirety on such date as there shall be no
Registrable Securities outstanding.
13.10. Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to
recover reasonable attorneys' fees (including any fees incurred in any appeal)
in addition to its costs and expenses and any other available remedy.
13.11. No Third Party Beneficiaries. Nothing herein expressed or
implied is intended to confer upon any person, other than the parties hereto or
their respective permitted assigns, successors, heirs and legal
representatives, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
NEW ENVOY, INC.
By: /s/ Fred C. Goad, Jr.
----------------------------------------
Name: Fred C. Goad, Jr.
--------------------------------------
Title: President
--------------------------------------
FIRST DATA CORPORATION
By: /s/ John S. Zieser
----------------------------------------
Name: John S. Zieser
--------------------------------------
Title: Assistant Secretary
-------------------------------------
20
<PAGE> 1
EXHIBIT 5
B A S S, B E R R Y & S I M S P L C
A PROFESSIONAL LIMITED LIABILITY COMPANY
ATTORNEYS AT LAW
<TABLE>
<S> <C> <C>
KNOXVILLE OFFICE:
TEL: (615) 742-6200 2700 FIRST AMERICAN CENTER 1700 RIVERVIEW TOWER
FAX: (615) 742-6298 NASHVILLE, TENNESSEE 37238-2700 KNOXVILLE, TN 37901-1509
(615) 742-6200 (423) 521-6200
</TABLE>
November 6, 1996
ENVOY Corporation
15 Century Boulevard, Suite 600
Nashville, Tennessee 37214
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as your counsel in connection with your preparation of a
Registration Statement on Form S-3 to be filed by you with the Securities and
Exchange Commission on November 6, 1996 (the "Registration Statement"),
covering 321,289 shares of common stock, no par value per share (the "Common
Stock"), of ENVOY Corporation (the "Company") to be sold by certain selling
shareholders of the Company (the "Selling Shareholders") on the terms set forth
in the Registration Statement.
In connection with this opinion, we have examined and relied upon such
records, documents, certificates and other instruments as in our judgment are
necessary or appropriate in order to express the opinions hereinafter set forth
and have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and the conformity to original
documents of all documents submitted to us as certified or photostatic copies.
Based upon the foregoing and such other matters as we have deemed
relevant, we are of the opinion that the shares of Common Stock to be sold by
the Selling Shareholders, when issued and delivered in the manner and on the
terms described in the Registration Statement (after the same is declared
effective), will be validly issued, fully paid, and nonassessable.
We hereby consent to the reference to our law firm in the Registration
Statement under the caption "Legal Matters" and to the use of this opinion as
an exhibit to the Registration Statement.
Very truly yours,
Bass, Berry & Sims PLC
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of ENVOY Corporation
for the registration of 321,289 shares of its common stock and to the
incorporation by reference therein of our report dated February 12, 1996
(except as to Note 14, as to which the date is March 6, 1996), with respect to
the financial statements and schedule of ENVOY Corporation included in its
Annual Report (Form 10-K) for the year ended December 31, 1995, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Nashville, Tennessee
October 31, 1996
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
ENVOY Corporation on Form S-3 of our report dated February 10, 1995 (June 6,
1995 as to Note 3) and of our report date February 10, 1995 relating to the
financial statement schedule, appearing in the Annual Report on Form 10-K of
ENVOY Corporation for the year ended December 31, 1995 and to the reference to
us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
DELOITTE & TOUCHE LLP
Nashville, Tennessee
October 31, 1996
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
ENVOY Corporation on Form S-3 of our report dated April 19, 1996 relating to
the financial statements of National Electronic Information Corporation in Form
8 K/A of ENVOY Corporation dated May 20, 1996, and to the reference to us under
the heading "Experts" in such Prospectus.
DELOITTE & TOUCHE LLP
New York, New York
October 31, 1996
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
ENVOY Corporation
Nashville, Tennessee
With respect to our report dated February 28, 1996, relating to the financial
statements of Teleclaims, Inc., as of and for the years ended December 31, 1995
and December 31, 1994, we hereby consent to the inclusion and use of our
report in the Registration Statement on Form S-3 of ENVOY Corporation ("ENVOY")
to be filed with the Securities and Exchange Commission on or about
November 6, 1996.
We also consent to the reference to us under the heading "Experts" in the
Registration Statement on Form S-3 of ENVOY.
HARDMAN GUESS FROST & CUMMINGS, P.C.
Birmingham, Alabama
November 5, 1996
