1
Exhibit 2.2
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
among
Eclipsys Corporation
Exercise Acquisition Corp.
and
Transition Systems, Inc.
October 29, 1998
2
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER.......................................................................... 1
Section 1.01 Effective Time of the Merger.......................................... 1
Section 1.02 Closing................................................................2
Section 1.03 Effects of the Merger..................................................2
Section 1.04 Directors of Eclipsys.................................................2
ARTICLE II
CONVERSION OF SECURITIES.............................................................3
Section 2.01 Conversion of Capital Stock............................................3
Section 2.02 Exchange of Certificates...............................................4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TSI...............................................7
Section 3.01 Organization of TSI...................................................7
Section 3.02 TSI Capital Structure..................................................8
Section 3.03 Authority; No Conflict; Required Filings and Consents..................9
Section 3.04 SEC Filings; Financial Statements.................................... 10
Section 3.05 No Undisclosed Liabilities............................................11
Section 3.06 Absence of Certain Changes or Events..................................11
Section 3.07 Taxes.................................................................12
Section 3.08 Properties............................................................13
Section 3.09 Intellectual Property................................................ 13
Section 3.10 Agreements, Contracts and Commitments.................................15
Section 3.11 Litigation............................................................16
Section 3.12 Environmental Matters.................................................16
Section 3.13 Employee Benefit Plans................................................17
Section 3.14 Compliance With Laws..................................................18
Section 3.15 Accounting and Tax Matters............................................18
Section 3.16 Registration Statement; Proxy Statement/Prospectus....................19
Section 3.17 Labor Matters.........................................................19
Section 3.18 Insurance; Risk Management............................................19
Section 3.19 No Existing Discussions...............................................20
Section 3.20 Opinion of Financial Advisor..........................................20
Section 3.21 Anti-Takeover Laws....................................................20
Section 3.22 Xxxxxxx Xxxxxxx Policies and Practices................................20
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ECLIPSYS AND SUB................................ 20
Section 4.01 Organization of Eclipsys and Sub.....................................21
Section 4.02 Eclipsys Capital Structure............................................21
Section 4.03 Authority; No Conflict; Required Filings and Consents................ 22
Section 4.04 SEC Filings; Financial Statements.................................... 23
Section 4.05 No Undisclosed Liabilities............................................24
Section 4.06 Absence of Certain Changes or Events..................................24
Section 4.07 Taxes.................................................................25
Section 4.08 Properties............................................................26
Section 4.09 Intellectual Property.................................................26
Section 4.10 Agreements, Contracts and Commitments.................................27
Section 4.11 Litigation............................................................27
Section 4.12 Environmental Matters.................................................28
Section 4.13 Employee Benefit Plans................................................28
Section 4.14 Compliance With Laws..................................................29
Section 4.15 Accounting and Tax Matters............................................29
Section 4.16 Registration Statement; Proxy Statement/Prospectus....................29
Section 4.17 Labor Matters.........................................................30
Section 4.18 Insurance; Risk Management............................................30
Section 4.19 No Existing Discussions...............................................31
Section 4.20 Opinion of Financial Advisor..........................................31
Section 4.21 Anti-Takeover Laws....................................................31
Section 4.22 Xxxxxxx Xxxxxxx Policies and Practices................................31
Section 4.23 Interim Operations of Sub.............................................31
ARTICLE V
CONDUCT OF BUSINESS.................................................................31
Section 5.01 Covenants of TSI.....................................................31
Section 5.02 Covenants of Eclipsys................................................33
Section 5.03 Cooperation...........................................................35
Section 5.04 HealthVISION Acquisition..............................................35
Section 5.05 Voting Agreements.....................................................35
Section 5.06 Eclipsys Permitted Acquisitions......................................35
ARTICLE VI
ADDITIONAL AGREEMENTS...............................................................36
Section 6.01 No Solicitation.......................................................36
Section 6.02 Proxy Statement/Prospectus; Registration Statement....................37
Section 6.03 Nasdaq Quotation..................................................... 38
Section 6.04 Access to Information................................................ 38
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Section 6.05 Stockholders' Meetings................................................38
Section 6.06 Legal Conditions to Merger............................................38
Section 6.07 Public Disclosure.....................................................40
Section 6.08 Tax-Free Reorganization...............................................40
Section 6.09 Pooling Accounting....................................................40
Section 6.10 Affiliate Agreements..................................................40
Section 6.11 Nasdaq Quotation......................................................41
Section 6.12 Stock Plans and Warrants..............................................41
Section 6.13 Brokers or Finders................................................... 43
Section 6.14 Indemnification...................................................... 43
Section 6.15 Letter of Eclipsys' Accountants..................................... 44
Section 6.16 Letter of TSI's Accountants......................................... 44
Section 6.17 Warburg Registration Rights Agreement................................ 44
ARTICLE VII
CONDITIONS TO MERGER............................................................... 45
Section 7.01 Conditions to Each Party's Obligation To Effect the Merger........... 45
Section 7.02 Additional Conditions to Obligations of Eclipsys and Sub............ 46
Section 7.03 Additional Conditions to Obligations of TSI..........................46
ARTICLE VIII
TERMINATION AND AMENDMENT.......................................................... 47
Section 8.01 Termination.......................................................... 47
Section 8.02 Effect of Termination................................................ 49
Section 8.03 Fees and Expenses.................................................... 49
Section 8.04 Amendment............................................................ 52
Section 8.05 Extension; Waiver.................................................... 52
ARTICLE IX
MISCELLANEOUS...................................................................... 53
Section 9.01 Nonsurvival of Representations, Warranties and Agreements............ 53
Section 9.02 Notices.............................................................. 53
Section 9.03 Interpretation....................................................... 54
Section 9.04 Counterparts......................................................... 54
Section 9.05 Entire Agreement; No Third Party Beneficiaries....................... 54
Section 9.06 Governing Law........................................................ 55
Section 9.07 Assignment........................................................... 55
Exhibit A - Voting Agreements
Exhibit B - Affiliate Agreements
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TABLE OF DEFINED TERMS
Acquisition Proposal..................................... Section 6.01(a)
Affiliate................................................ Section 6.10
Affiliate Agreement...................................... Section 6.10
Agreement................................................ Preamble
Alternative Transaction.................................. Section 8.03(g)
Antitrust Laws........................................... Section 6.06(b)
Articles of Merger....................................... Section 1.01
Bankruptcy and Equity Exception.......................... Section 3.03(a)
Certificates............................................. Section 2.02(b)
Closing.................................................. Section 1.02
Closing Date............................................. Section 1.02
Code..................................................... Preamble
Confidentiality Agreement................................ Section 6.01(a)
Constituent Corporations................................. Section 1.03
Costs.................................................... Section 6.14(a)
Dissenting Shares........................................ Section 2.01(d)
Effective Time........................................... Section 1.01
Environmental Law........................................ Section 3.12(a)
ERISA.................................................... Section 3.13(a)
ERISA Affiliate.......................................... Section 3.13(a)
Exchange Act............................................. Section 3.03(c)
Exchange Agent........................................... Section 2.02(a)
Exchange Fund............................................ Section 2.02(a)
Exchange Ratio........................................... Section 2.01(c)
Eclipsys................................................. Preamble
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Eclipsys Affiliated Group............................... Section 4.07(a)
Eclipsys Affiliated Period.............................. Section 4.07(a)
Eclipsys Balance Sheet.................................. Section 4.04(b)
Eclipsys Common Stock................................... Section 4.02(a)
Eclipsys Disclosure Schedule............................ Article IV
Eclipsys Employee Plans................................. Section 4.13(a)
Eclipsys Intellectual Property Rights................... Section 4.09(a)
Eclipsys Material Adverse Effect........................ Section 4.01
Eclipsys Material Contracts............................. Section 4.10
Eclipsys Material Covenants............................. Section 8.03(d)
Eclipsys Non-Voting Common Stock........................ Section 4.02(a)
Eclipsys Permitted Acquisition.......................... Section 5.02(d)
Eclipsys Possible Acquisition........................... Section 4.19
Eclipsys Preferred Stock................................ Section 4.02(a)
Eclipsys SEC Reports.................................... Section 4.04(a)
Eclipsys Stock Plans.................................... Section 4.02(a)
Eclipsys Stockholders' Meeting.......................... Section 3.16
Eclipsys Termination Fee Event.......................... Section 8.03(c)
Eclipsys Third Party Intellectual Property Rights....... Section 4.09(b)
Eclipsys Voting Common Stock............................ Section 2.01(b)
Eclipsys Voting Proposals............................... Section 6.05(a)
Eclipsys Warrants....................................... Section 4.02(a)
GAAP.................................................... Section 3.04(b)
Governmental Entity..................................... Section 3.03(c)
Hazardous Substance..................................... Section 3.12(c)
HealthVISION............................................ Section 3.19
HealthVISION Acquisition................................ Section 3.19
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HSR ACT.................................................. Section 3.03(a)
Indemnified Parties...................................... Section 6.14(a)
IRS...................................................... Section 3.07(b)
Joint Proxy Statement.................................... Section 3.16
Material Adverse Change.................................. Section 3.06
MBCL..................................................... Section 1.01
Merger................................................... Preamble
Off-the-Shelf Software................................... Section 3.09(a)
Order.................................................... Section 7.01(e)
Outside Date............................................. Section 8.01(b)
Registration Rights Agreement............................ Section 6.17
Registration Statement................................... Section 3.16
Rule 145................................................. Section 6.10
SEC...................................................... Section 3.03(c)
Second Request........................................... Section 6.06(b)
Securities Act........................................... Section 3.04(a)
Stock Purchase Plan...................................... Section 6.12(f)
Sub...................................................... Preamble
Subsidiary............................................... Section 3.01
Superior Proposal........................................ Section 6.01(a)
Surviving Corporation.................................... Section 1.03
Tax...................................................... Section 3.07(a)
Taxes.................................................... Section 3.07(a)
Tax Returns.............................................. Section 3.07(a)
Third Party.............................................. Section 8.03(g)
TSI...................................................... Preamble
TSI Affiliated Group..................................... Section 3.07(b)
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TSI Affiliated Period................................... Section 3.07(b)
TSI Balance Sheet....................................... Section 3.04(b)
TSI Common Stock........................................ Section 2.01(b)
TSI Designees........................................... Section 1.04(a)
TSI Disclosure Schedule................................. Article III
TSI Employee Plans...................................... Section 3.13(a)
TSI Intellectual Property Rights........................ Section 3.09(a)
TSI Material Adverse Effect............................. Section 3.01
TSI Material Contracts.................................. Section 3.10
TSI Material Covenants.................................. Section 8.03(b)
TSI Non-Voting Common Stock............................. Section 2.01(b)
TSI Preferred Stock..................................... Section 3.02(a)
TSI SEC Reports......................................... Section 3.04(a)
TSI Stock Option........................................ Section 6.12(a)
TSI Stock Plans......................................... Section 3.02(a)
TSI Stockholders' Meeting............................... Section 3.16
TSI Termination Fee Event............................... Section 8.03(e)
TSI Third Party Intellectual Property................... Section 3.09(b)
TSI Voting Common Stock................................. Section 2.01(b)
TSI Warrants............................................ Section 3.02(a)
Warburg................................................. Section 5.05
Warburg Registration Rights Agreement................... Section 6.17
Year 2000 Compliant..................................... Section 3.09(d)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of October 29,
1998, by and among Eclipsys Corporation, a Delaware corporation ("Eclipsys"),
Exercise Acquisition Corp., a Massachusetts corporation and a direct,
wholly-owned subsidiary of Eclipsys ("Sub"), and Transition Systems, Inc., a
Massachusetts corporation ("TSI").
WHEREAS, the Boards of Directors of Eclipsys and TSI deem it advisable
and in the best interests of each corporation and its respective stockholders
that Eclipsys and TSI combine in order to advance the long-term business
interests of Eclipsys and TSI;
WHEREAS, the combination of Eclipsys and TSI shall be effected by the
terms of this Agreement through a merger in which the stockholders of TSI will
become stockholders of Eclipsys (the "Merger");
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a pooling of interests;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I
THE MERGER
Section 1.01 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, articles of merger in such form as shall be required by the
relevant provisions of the Massachusetts Business Corporation Law ("MBCL") (the
"Articles of Merger") shall be duly prepared, executed and acknowledged by the
Surviving Corporation (as defined in Section 1.03) and thereafter delivered to
the Secretary of State of the Commonwealth of Massachusetts, for filing, as
provided in the MBCL, as soon as practicable on or after the Closing Date (as
defined in Section 1.02). The Merger shall become effective upon the filing of
the Articles of Merger with the Secretary of State of the Commonwealth of
Massachusetts or at such time thereafter as shall be provided in the Articles of
Merger (the "Effective Time").
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Section 1.02 CLOSING. The closing of the Merger (the "Closing") will
take place at 10:00 a.m., Eastern Time, on a date to be specified by Eclipsys
and TSI, which shall be no later than the second business day after satisfaction
of the latest to occur of the conditions set forth in Sections 7.01, 7.02 and
7.03 (the "Closing Date"), at the offices of Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx, unless another date, place or time is agreed to in
writing by Eclipsys and TSI.
Section 1.03 EFFECTS OF THE MERGER. At the Effective Time (i) the
separate existence of Sub shall cease and Sub shall be merged with and into TSI
(Sub and TSI are sometimes referred to below as the "Constituent Corporations"
and TSI is sometimes referred to herein as the "Surviving Corporation"), (ii)
the Articles of Organization of Sub immediately prior to the Effective Time
shall be the Articles of Organization of the Surviving Corporation, except that
the name of the corporation set forth therein shall be changed to the name of
TSI, (iii) the Bylaws of the Sub as in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation, except that the name of
the corporation set forth therein shall be changed to the name of TSI, and (iv)
the purpose of the Surviving Corporation shall be as set forth in Article II of
the Articles of Organization of Sub immediately prior to the Effective Date.
Section 1.04 DIRECTORS OF ECLIPSYS.
(a) Prior to the Effective Time, Eclipsys shall (i) increase the number
of the members of the Board of Directors of Eclipsys to nine and (ii) take such
action as may be necessary such that Xxxxxx X. Xxxx and Xxxxxxx X. Xxxxxxx (the
"TSI Designees") shall have been elected to the Board of Directors of Eclipsys
as of the Effective Time, Xx. Xxxx to be assigned to Class II and Xx. Xxxxxxx to
be assigned to Class III on the Eclipsys Board of Directors. If, prior to the
Effective Time, any of the TSI Designees shall decline or be unable to serve as
a TSI Designee, TSI shall designate another person to serve in such person's
stead, which person shall be reasonably acceptable to Eclipsys.
(b) The directors of Eclipsys elected pursuant to Section 1.04(a) shall
hold their positions until their resignation or removal or the election or
appointment of their successors in the manner provided by Eclipsys' charter
documents and applicable law.
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ARTICLE II
CONVERSION OF SECURITIES
Section 2.01 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of TSI Common Stock or capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of the
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND ECLIPSYS-OWNED STOCK. All shares
of Common Stock of TSI, $.01 par value ("TSI Voting Common Stock"), and all
shares of NonVoting Common Stock of TSI, $.01 par value ("TSI Non-Voting Common
Stock" and, together with the TSI Voting Common Stock, "TSI Common Stock"), that
are owned by TSI as treasury stock and any shares of TSI Common Stock owned by
Eclipsys, Sub or any other wholly-owned Subsidiary (as defined in Section 3.01)
of Eclipsys shall be cancelled and retired and shall cease to exist and no stock
of Eclipsys or other consideration shall be delivered in exchange therefor. All
shares of Common Stock, $.01 par value per share, of Eclipsys ("Eclipsys Voting
Common Stock") owned by TSI shall be unaffected by the Merger.
(c) EXCHANGE RATIO FOR TSI COMMON STOCK. Subject to Section 2.02, each
issued and outstanding share of TSI Common Stock (other than shares, if any, as
to which dissenters' rights, if any, are perfected and shares to be cancelled in
accordance with Section 2.01(b)) shall be converted into the right to receive
0.525 shares (the "Exchange Ratio") of Eclipsys Voting Common Stock. All such
shares of TSI Common Stock, when so converted, shall no longer be outstanding
and shall automatically be cancelled and retired and shall cease to exist, and
each holder of a certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive the shares of
Eclipsys Voting Common Stock and any cash in lieu of fractional shares of
Eclipsys Voting Common Stock to be issued or paid in consideration therefor upon
the surrender of such certificate in accordance with Section 2.02, without
interest. Notwithstanding the foregoing, if between the date of this Agreement
and the Effective Time the outstanding shares of Eclipsys Voting Common Stock
shall have been changed into a different number of shares or a different class,
by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, then the Exchange
Ratio shall be correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares.
(d) DISSENTING SHARES. For purposes of this Agreement, "Dissenting
Shares" means shares of TSI Common Stock held as of the Effective Time by a
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stockholder of TSI who has not voted such shares in favor of the adoption of
this Agreement and the Merger and with respect to which appraisal shall have
been duly demanded and perfected in accordance with Sections 85 through 98 of
the MBCL and not effectively withdrawn or forfeited prior to the Effective Time.
Dissenting Shares shall not be converted into or represent the right to receive
any shares of Eclipsys Voting Common Stock unless such stockholder's right to
appraisal shall have ceased in accordance with Section 96 of the MBCL. If such
stockholder has so forfeited or withdrawn his right to appraisal of Dissenting
Shares, then (i) as of the occurrence of such event, such holder's Dissenting
Shares shall cease to be Dissenting Shares and shall thereupon be deemed to have
been converted, as of the Effective Time, into and represent shares of Eclipsys
Voting Common Stock, without interest thereon, as provided in Section 2.01(c)
hereof. TSI shall give Eclipsys (x) prompt notice of any written demands for
appraisal of any shares of TSI Common Stock, withdrawals of such demands, and
any other instruments that relate to such demands received by TSI and (y) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the MBCL. TSI shall not, except with the prior written
consent of Eclipsys, make any payment with respect to any demands for appraisal
of shares of TSI Common Stock or offer to settle or settle any such demands.
Section 2.02 EXCHANGE OF CERTIFICATES. The procedures for exchanging
outstanding shares of TSI Common Stock for Eclipsys Voting Common Stock pursuant
to the Merger are as follows:
(a) EXCHANGE AGENT. As of the Effective Time, Eclipsys shall deposit
with a bank or trust company designated by Eclipsys and TSI (the "Exchange
Agent"), for the benefit of the holders of shares of TSI Common Stock, for
exchange in accordance with this Section 2.02, through the Exchange Agent, (i)
certificates representing the shares of Eclipsys Voting Common Stock (such
shares of Eclipsys Voting Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund") issuable pursuant to Section 2.01 in exchange for outstanding
shares of TSI Common Stock and (ii) an amount of cash sufficient to fund all
cash payments in lieu of fractional shares to be paid pursuant to subsection (e)
below.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of TSI Common Stock (the "Certificates") whose
shares were converted pursuant to Section 2.01 into the right to receive shares
of Eclipsys Voting Common Stock (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as Eclipsys and TSI may
reasonably specify) and (ii) instructions for effecting the surrender of the
Certificates in exchange for certificates representing
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shares of Eclipsys Voting Common Stock (plus cash in lieu of fractional shares,
if any, of Eclipsys Voting Common Stock as provided below). Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Eclipsys and TSI, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing that number of whole
shares of Eclipsys Voting Common Stock which such holder has the right to
receive pursuant to the provisions of this Article II, and the Certificate so
surrendered shall immediately be cancelled. In the event of a transfer of
ownership of TSI Common Stock which is not registered in the transfer records of
TSI, a certificate representing the proper number of shares of Eclipsys Voting
Common Stock may be issued to a transferee if the Certificate representing such
TSI Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.02, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the certificate representing shares of Eclipsys Voting Common Stock
and cash in lieu of any fractional shares of Eclipsys Voting Common Stock as
contemplated by this Section 2.02.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made after the Effective Time with respect to
Eclipsys Voting Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Eclipsys Voting Common Stock represented thereby and no cash payment
in lieu of fractional shares shall be paid to any such holder pursuant to
subsection (e) below until the holder of record of such Certificate shall
surrender such Certificate. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the record holder of
the certificates representing whole shares of Eclipsys Voting Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of
Eclipsys Voting Common Stock to which such holder is entitled pursuant to
subsection (e) below and the amount of dividends or other distributions with a
record date after the Effective Time previously paid with respect to such whole
shares of Eclipsys Voting Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Eclipsys Voting Common
Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN TSI COMMON STOCK. All shares of
Eclipsys Voting Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to subsection (c) or (e) of this Section 2.02) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of TSI
Common Stock, subject,
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however, to the Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective Time which may
have been declared or made by TSI on such shares of TSI Common Stock in
accordance with the terms of this Agreement (to the extent permitted under
Section 5.01) prior to the date hereof and which remain unpaid at the Effective
Time, and from and after the Effective Time there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of TSI Common Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be cancelled
and exchanged as provided in this Section 2.02.
(e) NO FRACTIONAL SHARES. No certificate or scrip representing
fractional shares of Eclipsys Voting Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any other rights of a stockholder of
Eclipsys. Notwithstanding any other provision of this Agreement, each holder of
shares of TSI Common Stock exchanged pursuant to the Merger who would otherwise
have been entitled to receive a fraction of a share of Eclipsys Voting Common
Stock (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
such fractional part of a share of Eclipsys Voting Common Stock multiplied by
the average of the last reported sales prices of Eclipsys Voting Common Stock,
as reported on the Nasdaq National Market, on each of the ten trading days
immediately preceding the Closing Date.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the stockholders of TSI for 180 days after the
Effective Time shall be delivered to Eclipsys, upon demand, and any stockholders
of TSI who have not previously complied with this Section 2.02 shall thereafter
look only to Eclipsys for payment of their claim for Eclipsys Voting Common
Stock, any cash in lieu of fractional shares of Eclipsys Voting Common Stock and
any dividends or distributions with respect to Eclipsys Voting Common Stock.
(g) NO LIABILITY. Neither Eclipsys nor TSI shall be liable to any
holder of shares of TSI Common Stock or Eclipsys Voting Common Stock, as the
case may be, for such shares (or dividends or distributions with respect
thereto) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(h) WITHHOLDING RIGHTS. Each of Eclipsys and the Surviving Corporation
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of TSI Common Stock
such amounts as it is required to deduct and withhold with respect to the making
of such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by the Surviving Corporation or
Eclipsys, as the case may be, such withheld amounts shall be treated for all
purposes of this
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Agreement as having been paid to the holder of the shares of TSI Common Stock in
respect of which such deduction and withholding was made by the Surviving
Corporation or Eclipsys, as the case may be.
(i) LOST CERTIFICATES. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Eclipsys Voting Common Stock and any cash in lieu of
fractional shares, and unpaid dividends and distributions on shares of Eclipsys
Voting Common Stock deliverable in respect thereof pursuant to this Agreement.
(j) AFFILIATES. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any Affiliate (as defined in Section
6.10) of TSI shall not be exchanged until Eclipsys has received an Affiliate
Agreement (as defined in Section 6.10) from such Affiliate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TSI
TSI represents and warrants to Eclipsys and Sub that the statements
contained in this Article III are true and correct except as set forth in the
disclosure schedule delivered by TSI to Eclipsys on or before the date of this
Agreement (the "TSI Disclosure Schedule"). The TSI Disclosure Schedule shall be
arranged in sections and paragraphs corresponding to the numbered and lettered
sections and paragraphs contained in this Article III and the disclosure in any
section or paragraph shall qualify other sections and paragraphs in this Article
III only to the extent that it is reasonably apparent from a reading of such
disclosure that it also qualifies or applies to such other sections and
paragraphs.
Section 3.01 ORGANIZATION OF TSI. Each of TSI and its Subsidiaries (as
defined below) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite corporate power to own, lease and operate its property and to carry on
its business as now being conducted and as proposed to be conducted, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the failure to be so qualified would have a TSI
Material Adverse Effect (as defined below). Except as set forth in the TSI SEC
Reports (as defined in Section 3.04) filed prior to the date hereof, neither TSI
nor any of its Subsidiaries directly or indirectly owns any
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equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for, any corporation, partnership, joint venture or other
business association or entity, excluding securities in any publicly traded
company held for investment by TSI and comprising less than five percent (5%) of
the outstanding stock of such company. As used in this Agreement, the word
"Subsidiary" means, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such party or
any other Subsidiary of such party is a general partner (excluding partnerships,
the general partnership interests of which held by such party or any Subsidiary
of such party do not have a majority of the voting interest in such partnership)
or (ii) at least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries. For purposes of this Agreement, the term "TSI Material Adverse
Effect" means any effect that is, or would reasonably be expected to be,
materially adverse to the financial condition, results of operations, cash
flows, business or properties of TSI and its Subsidiaries, taken as a whole.
Section 3.02 TSI CAPITAL STRUCTURE.
(a) The authorized capital stock of TSI consists of 30,000,000 shares
of TSI Voting Common Stock, $.01 par value, 1,000,000 shares of TSI Non-Voting
Common Stock, $.01 par value, and 1,000,000 shares of Preferred Stock, $.01 par
value ("TSI Preferred Stock"). As of September 30, 1998, (i) 18,035,983 shares
of TSI Voting Common Stock and 356,262 shares of TSI Non-Voting Common Stock
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) 297,928 shares of TSI Non-Voting Common Stock were reserved
for issuance upon the exercise of certain warrants (the "TSI Warrants") having
an exercise price of $.01 per share, and (iii) no shares of TSI Common Stock
were held in the treasury of TSI or by Subsidiaries of TSI. Section 3.02 of the
TSI Disclosure Schedule shows the number of shares of TSI Voting Common Stock
reserved for future issuance pursuant to stock options granted and outstanding
as of September 30, 1998 and the plans under which such options were granted
(collectively, the "TSI Stock Plans"). No material change in such capitalization
has occurred between September 30, 1998 and the date of this Agreement. As of
the date of this Agreement, none of the shares of TSI Preferred Stock is issued
and outstanding. All shares of TSI Common Stock subject to issuance as specified
above are duly authorized and, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, shall be
validly issued, fully paid and nonassessable. There are no obligations,
contingent or otherwise, of TSI or any of its Subsidiaries to repurchase, redeem
or otherwise acquire any shares of TSI Common Stock or the capital stock of any
Subsidiary or to provide funds to or make any material investment (in the form
of a loan, capital contribution or otherwise) in any such Subsidiary or any
other
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entity other than guarantees of bank obligations of Subsidiaries entered into in
the ordinary course of business. All of the outstanding shares of capital stock
of each of TSI's Subsidiaries are duly authorized, validly issued, fully paid
and nonassessable and all such shares (other than directors' qualifying shares
in the case of foreign Subsidiaries) are owned by TSI or another Subsidiary free
and clear of all security interests, liens, claims, pledges, agreements,
limitations in TSI's voting rights, charges or other encumbrances of any nature.
(b) Except as set forth in this Section 3.02 or as reserved for future
grants of options under the TSI Stock Plans, the TSI Warrants or the Eclipsys
Stock Option Agreement, there are no equity securities of any class of TSI or
any of its Subsidiaries, or any security exchangeable into or exercisable for
such equity securities, issued, reserved for issuance or outstanding. Except as
set forth in the TSI SEC Reports filed prior to the date hereof, in the Eclipsys
Stock Option Agreement or disclosed in Section 3.02 of the TSI Disclosure
Schedule, there are no options, warrants, equity securities, calls, rights,
commitments or agreements of any character to which TSI or any of its
Subsidiaries is a party or by which it is bound obligating TSI or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of TSI or any of its Subsidiaries or
obligating TSI or any of its Subsidiaries to grant, extend, accelerate the
vesting of or enter into any such option, warrant, equity security, call, right,
commitment or agreement. No consent is required from the holders of TSI Stock
Options (as defined below) in connection with the conversion of the TSI Stock
Options into options to purchase Eclipsys Voting Common Stock as contemplated by
Section 6.12. To the best knowledge of TSI, there are no voting trusts, proxies
or other voting agreements or understandings with respect to the shares of
capital stock of TSI.
Section 3.03 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) TSI has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement by TSI have been duly authorized
by all necessary corporate action on the part of TSI, subject only to the
approval of the Merger by TSI's stockholders under the MBCL. This Agreement has
been duly executed and delivered by TSI and constitutes the valid and binding
obligation of TSI, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles (the "Bankruptcy and Equity Exception").
(b) The execution and delivery of this Agreement by TSI does not, and
the consummation of the transactions contemplated by this Agreement will not,
(i) conflict with, or result in any violation or breach of, any provision of the
Articles
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of Organization or Bylaws of TSI, each as amended to date, (ii) result in any
violation or breach of, or constitute (with or without notice or lapse of time,
or both) a default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any material benefit) under, or
require a consent or waiver under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which TSI or any of its Subsidiaries is a party or
by which any of them or any of their properties or assets may be bound, or (iii)
conflict with or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to TSI or
any of its Subsidiaries or any of its or their properties or assets, except in
the case of clauses (ii) and (iii) for any such conflicts, violations, breaches,
defaults, terminations, cancellations, accelerations or losses which are not,
individually or in the aggregate, reasonably likely to have a TSI Material
Adverse Effect.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity") is
required by or with respect to TSI or any of its Subsidiaries in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) the filing of a pre-merger
notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act") and any other documents or information
requested by the United States Department of Justice or the United States
Federal Trade Commission in connection therewith, (ii) the filing of the
Articles of Merger with the Secretary of State of Massachusetts, (iii) the
filing of the Joint Proxy Statement (as defined in Section 3.16 below) with the
Securities and Exchange Commission (the "SEC") in accordance with the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (iv) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state securities laws and the laws of any
foreign country and (v) such other consents, authorizations, filings, approvals
and registrations which, if not obtained or made, would not be reasonably likely
to have a TSI Material Adverse Effect.
Section 3.04 SEC FILINGS; FINANCIAL STATEMENTS.
(a) TSI has filed and made available to Eclipsys all forms, reports and
documents required to be filed by TSI with the SEC since April 18, 1996 other
than registration statements on Form S-8 (collectively, the "TSI SEC Reports").
The TSI SEC Reports (i) at the time filed, complied in all material respects
with the applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act, as the case may be, and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such TSI SEC Reports or necessary in order to
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make the statements in such TSI SEC Reports, in the light of the circumstances
under which they were made, not misleading. None of TSI's Subsidiaries is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes) contained in the TSI SEC Reports complied as to form in
all material respects with the applicable published rules and regulations of the
SEC with respect thereto, was prepared in accordance with U.S. generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC) and fairly presented the consolidated financial position of TSI and its
Subsidiaries as of the dates and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount. The
unaudited balance sheet of TSI as of June 30, 1998 is referred to herein as the
"TSI Balance Sheet."
Section 3.05 NO UNDISCLOSED LIABILITIES. Except as disclosed in the TSI
SEC Reports filed prior to the date hereof, and except for normal or recurring
liabilities incurred since June 30, 1998 in the ordinary course of business
consistent with past practices, TSI and its Subsidiaries do not have any
liabilities, either accrued, contingent or otherwise (whether or not required to
be reflected in financial statements in accordance with GAAP), and whether due
or to become due, which individually or in the aggregate are reasonably likely
to have a TSI Material Adverse Effect.
Section 3.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the TSI SEC Reports filed prior to the date hereof, from and after the date
of the TSI Balance Sheet, TSI and its Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, during such period, there has not been (i) any material adverse
change in the financial condition, results of operations, cash flows, business
or properties, subject to the last sentence of this Section 3.06 (a "Material
Adverse Change") of TSI and its Subsidiaries, taken as a whole (other than
changes that are the effect or result of economic factors affecting the economy
as a whole or economic or market factors affecting the healthcare information
systems industry generally) or any development or combination of developments of
which the management of TSI is aware that, individually or in the aggregate, has
had, or is reasonably likely to have, a TSI Material Adverse Effect (other than
economic factors affecting the economy as a whole or economic or market factors
affecting the healthcare information systems industry generally); (ii) any
damage, destruction or loss (whether or not covered by insurance) with respect
to TSI or any of its Subsidiaries having a TSI Material Adverse Effect; (iii)
any material change by TSI in its accounting methods, principles or practices to
which Eclipsys has
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not previously consented in writing; (iv) any revaluation by TSI of any of its
assets having a TSI Material Adverse Effect; or (v) any other action or event
that would have required the consent of Eclipsys pursuant to Section 5.01 of
this Agreement had such action or event occurred after the date of this
Agreement and that, in the case of this clause (v), individually or in the
aggregate, has had or is reasonably likely to have a TSI Material Adverse
Effect. Notwithstanding the foregoing, the failure of TSI or Eclipsys to achieve
any level of revenue and earnings at any time shall not of itself constitute a
Material Adverse Change of TSI and its Subsidiaries, taken as a whole, or
Eclipsys and its Subsidiaries, taken as a whole, as the case may be.
Section 3.07 TAXES.
(a) For the purposes of this Agreement, a "Tax" or, collectively,
"Taxes" means any and all material federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities,
including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, gains,
franchise, withholding, payroll, recapture, employment, excise, unemployment
insurance, social security, business license, occupation, business organization,
stamp, environmental and property taxes, together with all interest, penalties
and additions imposed with respect to such amounts. "Tax Returns" means all
reports, returns, declarations, statements or other information required to be
supplied to a taxing authority in connection with Taxes.
(b) Each of TSI and its Subsidiaries has filed all Tax Returns that it
was required to file, and all such Tax Returns were correct and complete. Each
group of corporations with which TSI or any of its Subsidiaries has filed (or
was required to file) consolidated, combined, unitary or similar Tax Returns (a
"TSI Affiliated Group") has filed all such Tax Returns that it was required to
file with respect to any period in which TSI or one of its Subsidiaries was a
member of such TSI Affiliated Group (a "TSI Affiliated Period"), and all such
Tax Returns were correct and complete. Each of TSI and its Subsidiaries has paid
all Taxes (whether or not shown on such Tax Returns) that were due and payable,
and each TSI Affiliated Group has paid all Taxes (whether or not shown on such
Tax Returns) that were due and payable with respect to all TSI Affiliated
Periods and with respect to which TSI or any of its Subsidiaries may be liable
by operation of law or otherwise. The unpaid Taxes of TSI and its Subsidiaries
for tax periods through the date of the TSI Balance Sheet do not exceed the
accruals and reserves for Taxes set forth on the TSI Balance Sheet (exclusive of
any accruals for "deferred taxes" or similar items that reflect timing
differences between Tax and financial accounting principles). The unpaid Taxes
of TSI and its Subsidiaries for tax periods from the date of the TSI Balance
Sheet through the Closing Date are attributable solely to the conduct of their
businesses in the ordinary course and in a manner consistent with past
practices. All Taxes that TSI or any of its Subsidiaries is or was required by
law to withhold or collect have been duly withheld or collected and, to the
extent required, have been paid to the proper
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Governmental Entity. Each of the representations contained in this Section
3.07(b) shall be limited in its application to items which are reasonably
likely, individually or in the aggregate, to have a TSI Material Adverse Effect.
(c) No examination or audit by any Governmental Entity of any Tax
Return of TSI, any of its Subsidiaries or any TSI Affiliated Group with respect
to a TSI Affiliated Period is currently in progress or, to the knowledge of TSI
and its Subsidiaries, threatened or contemplated, in each case, which involve
claims that individually or in the aggregate are reasonably likely to have a TSI
Material Adverse Effect. Neither TSI nor any of its Subsidiaries has been
informed by any jurisdiction that the jurisdiction believes that TSI or any of
its Subsidiaries was required to file any Tax Return that was not filed which
failure or failures individually, or in the aggregate, are reasonably likely to
have a TSI Material Adverse Effect.
(d) Neither TSI nor any of its Subsidiaries is a "consenting
corporation" within the meaning of Section 341(f) of the Code, and none of the
assets of TSI and its Subsidiaries is subject to an election under Section
341(f) of the Code.
(e) Neither TSI nor any of its Subsidiaries has been a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(l)(A)(ii) of the
Code.
(f) None of TSI or any of its Subsidiaries is a party to any Tax
allocation or sharing agreement.
(g) None of TSI or any of its Subsidiaries has any material liability
for Taxes of any person (other than TSI or any of its Subsidiaries (under
Treasury Regulation Section 1.1502-6 or any similar provision of state, local or
foreign law)), as a transferee or successor, by contract, or otherwise.
Section 3.08 PROPERTIES.
(a) TSI does not own of record any real property.
(b) All material real property leases of TSI and its Subsidiaries are
in good standing, valid and effective in accordance with their respective terms,
and neither TSI nor any of its Subsidiaries is in default under any of such
leases, except where the lack of such good standing, validity or effectiveness
or the existence of such default would not be reasonably likely to have a TSI
Material Adverse Effect.
Section 3.09 INTELLECTUAL PROPERTY.
(a) TSI and its Subsidiaries own, or are licensed or otherwise possess
legally enforceable rights to use, all patents, trademarks, trade names, service
marks,
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copyrights and mask works, any applications for and registrations of such
patents, trademarks, trade names, service marks, copyrights and mask works, and
all processes, formulae, methods, schematics, technology, know-how, computer
software programs or applications and tangible or intangible proprietary
information or material that are necessary to conduct the business of TSI and
its Subsidiaries as currently conducted, or planned to be conducted, the absence
of which would be reasonably likely to have a TSI Material Adverse Effect (the
"TSI Intellectual Property Rights"). Section 3.09 of the TSI Disclosure Schedule
sets forth a complete and accurate list of (i) all patents, registered
copyrights, registered trademarks, registered service marks and all software
programs, other than commercial, off-the-shelf software, subject to a perpetual
license, in connection with which no future license fees or royalties are due
("Off-the-Shelf Software"), owned, used or licensed by or to TSI or any of its
Subsidiaries and (ii) all other intellectual property that is licensed by or to
TSI or any of its Subsidiaries that is used in or is necessary for the conduct
of TSI's business. TSI has promulgated and used commercially reasonable efforts
to enforce the trade secret protection program described in Section 3.09 of the
TSI Disclosure Schedule.
(b) Neither TSI nor any of its Subsidiaries is, or will as a result of
the execution and delivery of this Agreement or the performance of TSI's
obligations under this Agreement or otherwise be, in breach of any license,
sublicense or other agreement relating to the TSI Intellectual Property Rights,
or any material licenses, sublicenses and other agreements as to which TSI or
any of its Subsidiaries is a party and pursuant to which TSI or any of its
Subsidiaries is authorized to use any third party patents, trademarks or
copyrights ("TSI Third Party Intellectual Property Rights"), including software
which is used in the manufacture of, incorporated in, or forms a part of any
product sold by or expected to be sold by TSI or any of its Subsidiaries, the
breach of which would be reasonably likely to have a TSI Material Adverse
Effect.
(c) All patents, registered trademarks, registered service marks and
registered copyrights which are held by TSI or any of its Subsidiaries and which
are material to the business of TSI and its Subsidiaries, taken as a whole, are
valid and subsisting. TSI (i) has not been sued in any suit, action or
proceeding, or received in writing any claim or notice, which involves a claim
of infringement of any patents, trademarks, service marks, copyrights or
violation of any trade secret or other proprietary right of any third party; and
(ii) has no knowledge that the manufacturing, marketing, licensing or sale of
its products infringes any patent, trademark, service xxxx, copyright, trade
secret or other proprietary right of any third party, which infringement would
reasonably be expected to have a TSI Material Adverse Effect.
(d) Section 3.09 of the TSI Disclosure Schedule identifies each "year
2000" audit, report or investigation that has been performed by or on behalf of
TSI with
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respect to its business and operations, and TSI has provided to Eclipsys true
and correct copies of all such audits, reports or investigations. Except as set
forth in such audits, reports and investigations, TSI is not aware of any
failure to be Year 2000 Compliant of (i) any software products sold or licensed
by TSI or any of its Subsidiaries to third parties or (ii) any computer software
products used by or licensed to TSI or its Subsidiaries from third parties for
internal use by TSI or its Subsidiaries. For purposes of this Agreement, "Year
2000 Compliant" means, with respect to each software product referred to in the
prior sentence, that such system (i) will accurately receive, record, store,
provide, recognize and process all date and time data from, during, into and
between the twentieth and twenty-first centuries; (ii) will accurately perform
all date-dependent calculations and operations (including, without limitation,
mathematical operations, sorting, comparing and reporting) from, during, into
and between the twentieth and twenty-first centuries; and (iii) will not
malfunction, cease to function or provide invalid or incorrect results as a
result of (x) the change of century, (y) date data, including date data which
represents or references different centuries or more than one century or (z) the
occurrence of any particular date; in each case without human intervention,
other than original data entry; provided, in each case, that all applications,
hardware and other systems used in conjunction with such system which are not
owned or licensed by TSI correctly exchange date data with or provide data to
such system. Except as set forth in Section 3.09(d) of the TSI Disclosure
Statement, TSI has not provided any guarantee or warranty for any product sold
or licensed, or services provided, by TSI to the effect that such product or
service (i) complies with or accounts for the fact of the arrival of the year
2000 or (ii) will not be adversely affected with respect to functionally
interoperability, performance or volume capacity (including without limitation
the processing and reporting of data) by virtue of the arrival of the year 2000.
Section 3.10 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set forth
on Section 3.10 of the TSI Disclosure Schedule, neither TSI nor any of its
Subsidiaries, nor any of their respective assets, businesses, or operations, is
a party to, or is bound or affected by, or receives benefits under (i) any
severance, termination or retirement agreement or any employment or consulting
agreement providing for aggregate payments to any person in any calendar year in
excess of $100,000 or continuing for more than one year, (ii) any agreement
relating to the borrowing of money by TSI or any of its Subsidiaries or the
guarantee by any TSI or any of its Subsidiaries of any such obligation (other
than agreements evidencing trade payables or relating to borrowings or
guarantees made in the ordinary course of business), (iii) any agreement which
prohibits or restricts TSI or any of its Subsidiaries from engaging in any
business activities in any geographic area, line of business or otherwise in
competition with any other person, (iv) any agreement involving TSI Intellectual
Property Rights or TSI Third Party Intellectual Property Rights (other than
Off-the-Shelf Software licenses) which provide for annual payments of $100,000
or more, (v) any agreement relating to the provision of computer software,
computer
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hardware, data processing systems or equipment, network communication,
transactional billing, management information or other technical systems or
services, including maintenance with respect to the foregoing matters, to or by
TSI or any of its Subsidiaries which provides for annual payments of $100,000 or
more, (vi) any agreement relating to the purchase or lease of real property, and
(vii) any other agreement or amendment thereto that would be required to be
filed as an exhibit to a Form 10-K filed by TSI with the SEC as of the date of
this Agreement (collectively, the "TSI Material Contracts"). With respect to
each TSI Material Contract and except as disclosed in Section 3.10 of the TSI
Disclosure Schedule: (i) the TSI Material Contract is in full force and effect;
(ii) neither TSI nor any of its Subsidiaries is in default or breach thereunder
in any material respect; (iii) neither TSI nor any of its Subsidiaries has
repudiated or waived any material provision of any such TSI Material Contract;
(iv) no other party to any such TSI Material Contract is, to the knowledge of
TSI, in default or breach in any material respect or has repudiated or waived
any material provision thereunder; (v) there exists no actual, or, to the
knowledge of TSI, threatened, cancellation, termination, or limitation of, or
any amendment, modification, or change to, any TSI Material Contract; (vi)
neither TSI nor any of its Subsidiaries has received formal notice that any
party to a TSI Material Contract will not renew such contract at the end of its
existing term; and (vii) no TSI Material Contract requires consent or notice in
connection with the transactions contemplated by this Agreement. All of the
indebtedness of TSI or any of its Subsidiaries for money borrowed is prepayable
at any time without penalty or premium.
Section 3.11 LITIGATION. Except as described in the TSI SEC Reports
filed prior to the date hereof, there is no action, suit or proceeding, claim,
arbitration or investigation against TSI or any of its Subsidiaries pending or
as to which TSI or any such Subsidiary has received any written notice of
assertion, which, individually or in the aggregate, is reasonably likely to have
a TSI Material Adverse Effect or a material adverse effect on the ability of TSI
to consummate the transactions contemplated by this Agreement.
Section 3.12 ENVIRONMENTAL MATTERS.
(a) Except as disclosed in the TSI SEC Reports filed prior to the date
hereof and except for such matters that, individually or in the aggregate, are
not reasonably likely to have a TSI Material Adverse Effect: (i) TSI and its
Subsidiaries have complied with all applicable Environmental Laws (as defined in
Section 3.12(b)); (ii) the properties currently owned or operated by TSI and its
Subsidiaries (including soils, groundwater, surface water, buildings or other
structures) are not contaminated with any Hazardous Substances (as defined in
Section 3.12(c)); (iii) the properties formerly owned or operated by TSI or any
of its Subsidiaries were not contaminated with Hazardous Substances during the
period of ownership or operation by TSI or any of its Subsidiaries; (iv) neither
TSI nor any of its Subsidiaries are subject to
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liability for any Hazardous Substance disposal or contamination on any
third-party property; (v) neither TSI nor any of its Subsidiaries has been
associated with any release or threat of release of any Hazardous Substance;
(vi) neither TSI nor any of its Subsidiaries has received any notice, demand,
letter, claim or request for information alleging that TSI or any of its
Subsidiaries may be in violation of or liable under any Environmental Law; (vii)
neither TSI nor any of its Subsidiaries is subject to any orders, decrees,
injunctions or other arrangements with any Governmental Entity or is subject to
any indemnity or other agreement with any third party relating to liability
under any Environmental Law or relating to Hazardous Substances; and (viii)
there are no circumstances or conditions involving TSI or any of its
Subsidiaries that could reasonably be expected to result in any claims,
liabilities, investigations, costs or restrictions on the ownership, use or
transfer of any property of TSI pursuant to any Environmental Law.
(b) As used herein, the term "Environmental Law" means any federal,
state, local or foreign law, regulation, order, decree, permit, authorization,
opinion, common law or agency requirement relating to: (i) the protection,
investigation or restoration of the environment, health and safety, or natural
resources, (ii) the handling, use, presence, disposal, release or threatened
release of any Hazardous Substance or (iii) noise, odor, wetlands, pollution,
contamination or any injury or threat of injury to persons or property.
(c) As used herein, the term "Hazardous Substance" means any substance
that is: (i) listed, classified or regulated pursuant to any Environmental Law;
(ii) any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (iii) any other substance which is the subject of
regulatory action by any Governmental Entity pursuant to any Environmental Law.
Section 3.13 EMPLOYEE BENEFIT PLANS.
(a) TSI has listed in Section 3.13 of the TSI Disclosure Schedule all
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), and all bonus, stock option,
stock purchase, incentive, deferred compensation, supplemental retirement,
severance and other similar employee benefit plans, and all unexpired severance
agreements, written or otherwise, for the benefit of, or relating to, any
current or former employee of TSI or any trade or business (whether or not
incorporated) which is a member or which is under common control) within the
meaning of Section 414 of the Code (an "ERISA Affiliate") with TSI or any
Subsidiary of TSI (collectively, the "TSI Employee Plans").
(b) With respect to each TSI Employee Plan, TSI has made available to
Eclipsys a true and correct copy of (i) the most recent annual report (Form
5500) filed
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with the IRS, (ii) such TSI Employee Plan, (iii) each trust agreement and group
annuity contract, if any, relating to such TSI Employee Plan and (iv) the most
recent actuarial report or valuation relating to a TSI Employee Plan subject to
Title IV of ERISA.
(c) With respect to the TSI Employee Plans, individually and in the
aggregate, no event has occurred and, to the knowledge of TSI, there exists no
condition or set of circumstances in connection with which TSI could be subject
to any liability that is reasonably likely to have a TSI Material Adverse Effect
under ERISA, the Code or any other applicable law.
(d) With respect to the TSI Employee Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
which have not been accounted for by reserves, or otherwise properly footnoted
in accordance with GAAP, on the financial statements of TSI, which obligations
are reasonably likely to have a TSI Material Adverse Effect.
(e) Except as disclosed in TSI SEC Reports filed prior to the date of
this Agreement, and except as provided for in this Agreement, neither TSI nor
any of its Subsidiaries is a party to any oral or written (i) agreement with any
officer or other key employee of TSI or any of its Subsidiaries, the benefits of
which are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving TSI of the nature contemplated by this
Agreement, (ii) agreement with any officer of TSI providing any term of
employment or compensation guarantee extending for a period longer than one year
from the date hereof and for the payment of compensation in excess of $100,000
per annum, or (iii) agreement or plan, including any stock option plan, stock
appreciation right plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
Section 3.14 COMPLIANCE WITH LAWS. TSI and each of its Subsidiaries has
complied with, is not in violation of, and has not received any notices of
violation with respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for failures to comply or violations which,
individually or in the aggregate, have not had and are not reasonably likely to
have a TSI Material Adverse Effect.
Section 3.15 ACCOUNTING AND TAX MATTERS. To its knowledge, after
consulting with its independent auditors, neither TSI nor any of its Affiliates
(as defined in Section 6.10) has taken or agreed to take any action which would
(i) prevent Eclipsys from accounting for the business combination to be effected
by the Merger as a
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pooling of interests or (ii) prevent the Merger from constituting a transaction
qualifying as a reorganization under 368(a) of the Code.
Section 3.16 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information to be supplied by TSI for inclusion in the registration statement on
Form S-4 pursuant to which shares of Eclipsys Voting Common Stock issued in the
Merger will be registered under the Securities Act (the "Registration
Statement") shall not at the time the Registration Statement is declared
effective by the SEC contain any untrue statement of a material fact or omit to
state any material fact required to be stated in the Registration Statement or
necessary in order to make the statements in the Registration Statement, in
light of the circumstances under which they were made, not misleading. The
information supplied by TSI for inclusion in the joint proxy
statement/prospectus to be sent to the stockholders of Eclipsys and TSI in
connection with the meeting of TSI's stockholders (the "TSI Stockholders'
Meeting") to consider this Agreement and the Merger and in connection with the
meeting of Eclipsys' stockholders (the "Eclipsys Stockholders' Meeting") to
consider the issuance of shares of Eclipsys Voting Common Stock pursuant to the
Merger (the "Joint Proxy Statement") shall not, on the date the Joint Proxy
Statement is first mailed to stockholders of TSI or Eclipsys, at the time of the
TSI Stockholders' Meeting and the Eclipsys Stockholders' Meeting and at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made in the Joint Proxy Statement not false or misleading;
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the TSI
Stockholders' Meeting or the Eclipsys Stockholders' Meeting which has become
false or misleading. If at any time prior to the Effective Time any event
relating to TSI or any of its Affiliates, officers or directors should be
discovered by TSI which should be set forth in an amendment to the Registration
Statement or a supplement to the Joint Proxy Statement, TSI shall promptly
inform Eclipsys.
Section 3.17 LABOR MATTERS. Neither TSI nor any of its Subsidiaries is
a party to or otherwise bound by any collective bargaining agreement, contract
or other agreement or understanding with a labor union or labor organization,
nor, as of the date hereof, is TSI or any of its Subsidiaries the subject of any
material proceeding asserting that TSI or any of its Subsidiaries has committed
an unfair labor practice or is seeking to compel it to bargain with any labor
union or labor organization nor, as of the date of this Agreement, is there
pending or, to the knowledge of the executive officers of TSI, threatened, any
material labor strike, dispute, walkout, work stoppage, slow-down or lockout
involving TSI or any of its Subsidiaries.
Section 3.18 INSURANCE; RISK MANAGEMENT. All material fire and
casualty, general liability, business interruption, product liability, and
sprinkler and water damage insurance policies maintained by TSI or any of its
Subsidiaries are with
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reputable insurance carriers, provide full and adequate coverage for all normal
risks incident to the business of TSI and its Subsidiaries and their respective
properties and assets, and are in character and amount at least equivalent to
that carried by persons engaged in similar businesses and subject to the same or
similar perils or hazards, except for any such failures to maintain insurance
policies that, individually or in the aggregate, are not reasonably likely to
have a TSI Material Adverse Effect. The steps taken by TSI to manage the various
risks incident to the business and operations of TSI and its Subsidiaries and
their respective properties and assets are at least equivalent to those taken by
persons engaged in similar businesses, except for any failures to take such
steps that, individually or in the aggregate, are not reasonably likely to have
a TSI Material Adverse Effect.
Section 3.19 NO EXISTING DISCUSSIONS. Except for discussions or
negotiations relating to the acquisition by TSI of the capital stock of
HealthVISION, Inc. ("HealthVISION") not owned, as of the date hereof, by TSI
(the "HealthVISION Acquisition") as of the date hereof, TSI is not engaged,
directly or indirectly, in any discussions or negotiations with any other party
with respect to an Acquisition Proposal (as defined in Section 6.01).
Section 3.20 OPINION OF FINANCIAL ADVISOR. The financial advisor of
TSI, BT Alex. Xxxxx Incorporated, has delivered to the Board Directors of TSI an
opinion dated the date of this Agreement to the effect that, as of the date of
such opinion, the Exchange Ratio is fair, from a financial point of view, to the
holders of TSI Common Stock.
Section 3.21 ANTI-TAKEOVER LAWS. No "fair price", "business
combination", "moratorium", "control share acquisition" or other form of
antitakeover statute or regulation, including, without limitation, Chapter 110C
of the General Laws of the Commonwealth of Massachusetts, is or will be
applicable to the execution, delivery or performance of this Agreement or the
consummation of the Merger or the other transactions contemplated by this
Agreement.
Section 3.22 XXXXXXX XXXXXXX POLICIES AND PRACTICES. Section 3.22 to
the TSI Disclosure Schedule sets forth a copy of TSI's xxxxxxx xxxxxxx policy as
in effect on the date hereof. TSI and each of its directors, officers and
employees who are subject to such policy have complied in all material respects
with the terms of such policy.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ECLIPSYS AND SUB
Eclipsys and Sub represent and warrant to TSI that the statements
contained in this Article IV are true and correct except as set forth in the
disclosure schedule
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delivered by Eclipsys to TSI on or before the date of this Agreement (the
"Eclipsys Disclosure Schedule"). The Eclipsys Disclosure Schedule shall be
arranged in paragraphs and sections corresponding to the numbered and lettered
paragraphs and sections contained in this Article IV and the disclosure in any
paragraph or section shall qualify other paragraphs and sections in this Article
IV only to the extent that it is reasonably apparent from a reading of such
document that it also qualifies or applies to such other paragraphs and
sections.
Section 4.01 ORGANIZATION OF ECLIPSYS AND SUB. Each of Eclipsys and Sub
and Eclipsys' other Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power to own, lease and operate its
property and to carry on its business as now being conducted and as proposed to
be conducted, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the failure to be so qualified
would have an Eclipsys Material Adverse Effect (as defined below). Except as set
forth in the Eclipsys SEC Reports (as defined in Section 4.04) filed prior to
the date hereof, neither Eclipsys nor any of its Subsidiaries directly or
indirectly owns any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any corporation, partnership, joint
venture or other business association or entity, excluding securities in any
publicly traded company held for investment by Eclipsys and comprising less than
five percent (5%) of the outstanding stock of such company. For purposes of this
Agreement, the term "Eclipsys Material Adverse Effect" means any effect that is,
or would reasonably be expected to be, materially adverse to the financial
condition, results of operations, cash flows, business or properties of Eclipsys
and its Subsidiaries, taken as a whole.
Section 4.02 ECLIPSYS CAPITAL STRUCTURE.
(a) The authorized capital stock of Eclipsys consists of 200,000,000
shares of Eclipsys Voting Common Stock, $.01 par value, 5,000,000 shares of
Non-Voting Common Stock, $.01 par value ("Eclipsys Non-Voting Common Stock" and,
together with the Eclipsys Voting Common Stock, "Eclipsys Common Stock"), and
5,000,000 shares of Preferred Stock, $.01 par value ("Eclipsys Preferred
Stock"). As of September 30, 1998, (i) 19,393,241 shares of Eclipsys Voting
Common Stock and 896,431 shares of Eclipsys Non-Voting Common Stock were issued
and outstanding, all of which are validly issued, fully paid and nonassessable,
(ii) 962,833 shares of Eclipsys Non-Voting Common Stock were reserved for
issuance upon the exercise of certain warrants (the "Eclipsys Warrants") having
an exercise price of $.01 per share, and (iii) no shares of Eclipsys Common
Stock were held in the treasury of Eclipsys or by Subsidiaries of Eclipsys.
Section 4.02 of the Eclipsys Disclosure Schedule shows the number of shares of
Eclipsys Voting Common Stock reserved for future issuance pursuant to stock
options granted and outstanding as of September 30, 1998 and the plans under
which such options were granted (collectively, the "Eclipsys Stock
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Plans"). No material change in such capitalization has occurred between
September 30, 1998 and the date of this Agreement. As of the date of this
Agreement, none of the shares of Eclipsys Preferred Stock is issued and
outstanding. All shares of Eclipsys Common Stock subject to issuance as
specified above are duly authorized and, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be validly issued, fully paid and nonassessable. There are no obligations,
contingent or otherwise, of Eclipsys or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of Eclipsys Common Stock or the capital
stock of any Subsidiary or to provide funds to or make any material investment
(in the form of a loan, capital contribution or otherwise) in any such
Subsidiary or any other entity other than guarantees of bank obligations of
Subsidiaries entered into in the ordinary course of business. All of the
outstanding shares of capital stock of each of Eclipsys' Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and all such shares
(other than directors' qualifying shares in the case of foreign Subsidiaries)
are owned by Eclipsys or another Subsidiary free and clear of all security
interests, liens, claims, pledges, agreements, limitations in Eclipsys' voting
rights, charges or other encumbrances of any nature.
(b) Except as set forth in this Section 4.02 or as reserved for future
grants of options under the Eclipsys Stock Plans or the Eclipsys Warrant, there
are no equity securities of any class of Eclipsys or any of its Subsidiaries, or
any security exchangeable into or exercisable for such equity securities,
issued, reserved for issuance or outstanding. Except as set forth in the
Eclipsys SEC Reports (as defined in Section 4.04 below) filed prior to the date
hereof or disclosed in Section 4.02 of the Eclipsys Disclosure Schedule, there
are no options, warrants, equity securities, calls, rights, commitments or
agreements of any character to which Eclipsys or any of its Subsidiaries is a
party or by which it is bound obligating Eclipsys or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of Eclipsys or any of its Subsidiaries or obligating
Eclipsys or any of its Subsidiaries to grant, extend, accelerate the vesting of
or enter into any such option, warrant, equity security, call, right, commitment
or agreement. To the best knowledge of Eclipsys, there are no voting trusts,
proxies or other voting agreements or understandings with respect to the shares
of capital stock of Eclipsys.
Section 4.03 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Each of Eclipsys and the Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement and
the consummation of the transactions contemplated by this Agreement by Eclipsys
have been duly authorized by all necessary corporate action on the part of each
of Eclipsys and Sub (including the approval of the Merger by Eclipsys as the
sole stockholder of Sub), subject only to the approval of the Eclipsys Voting
Proposals (as
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defined in Section 6.05) by Eclipsys' stockholders. This Agreement has been duly
executed and delivered by Eclipsys and the Sub and constitutes the valid and
binding obligation of Eclipsys and the Sub, enforceable in accordance with its
terms, subject to the Bankruptcy and Equity Exception.
(b) The execution and delivery of this Agreement by Eclipsys and the
Sub does not, and the consummation of the transactions contemplated by this
Agreement will not, (i) conflict with, or result in any violation or breach of,
any provision of the Certificate of Incorporation or Bylaws of Eclipsys or Sub,
each as amended to date, (ii) result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of any material benefit) under, or require a consent or waiver under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, contract or other agreement, instrument or obligation to which
Eclipsys or any of its Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound, or (iii) conflict with or violate any
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Eclipsys or any of its Subsidiaries
or any of its or their properties or assets, except in the case of clauses (ii)
and (iii) for any such conflicts, violations, breaches, defaults, terminations,
cancellations, accelerations or losses which are not, individually or in the
aggregate, reasonably likely to have an Eclipsys Material Adverse Effect.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Eclipsys or any of its Subsidiaries in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of a pre-merger notification
report under the HSR Act and any other documents or information requested by the
United States Department of Justice or the United States Federal Trade
Commission in connection herewith, (ii) the filing of the Registration Statement
with the SEC in accordance with the Securities Act, (iii) the filing of the
Articles of Merger with the Secretary of State of Massachusetts, (iv) the filing
of the Joint Proxy Statement with the SEC in accordance with the Exchange Act,
(v) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable state securities
laws and the laws of any foreign country and (vi) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not be reasonably likely to have an Eclipsys Material Adverse
Effect.
Section 4.04 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Eclipsys has filed and made available to TSI all forms, reports and
documents required to be filed by Eclipsys with the SEC since July 29, 1998
other than registration statements on Form S-8 (collectively, the "Eclipsys SEC
Reports").
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The Eclipsys SEC Reports (i) at the time filed, complied in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act, as the case may be, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such Eclipsys SEC Reports or
necessary in order to make the statements in such Eclipsys SEC Reports, in the
light of the circumstances under which they were made, not misleading. None of
Eclipsys' Subsidiaries is required to file any forms, reports or other documents
with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes) contained in the Eclipsys SEC Reports complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly presented
the consolidated financial position of Eclipsys and its Subsidiaries as of the
dates and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount. The unaudited balance sheet of
Eclipsys as of June 30, 1998 is referred to herein as the "Eclipsys Balance
Sheet."
Section 4.05 NO UNDISCLOSED LIABILITIES. Except as disclosed in the
Eclipsys SEC Reports filed prior to the date hereof, and except for normal or
recurring liabilities incurred since June 30, 1998 in the ordinary course of
business consistent with past practices, Eclipsys and its Subsidiaries do not
have any liabilities, either accrued, contingent or otherwise (whether or not
required to be reflected in financial statements in accordance with GAAP), and
whether due or to become due, which individually or in the aggregate, are
reasonably likely to have an Eclipsys Material Adverse Effect.
Section 4.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Eclipsys SEC Reports filed prior to the date hereof, from and after the
date of the Eclipsys Balance Sheet, Eclipsys and its Subsidiaries have conducted
their businesses only in the ordinary course and in a manner consistent with
past practice and, during such period, there has not been (i) any Material
Adverse Change in Eclipsys and its Subsidiaries, taken as a whole (other than
changes that are the effect or result of economic factors affecting the economy
as a whole or economic or market factors affecting the healthcare information
systems industry generally) or any development or combination of developments of
which the management of Eclipsys is aware that, individually or in the
aggregate, has had, or is reasonably likely to have, an Eclipsys Material
Adverse Effect (other than economic factors affecting the economy as a
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whole or economic or market factors affecting the healthcare information systems
industry generally); (ii) any damage, destruction or loss (whether or not
covered by insurance) with respect to Eclipsys or any of its Subsidiaries having
an Eclipsys Material Adverse Effect; (iii) any material change by Eclipsys in
its accounting methods, principles or practices to which TSI has not previously
consented in writing; (iv) any revaluation by Eclipsys of any of its assets
having an Eclipsys Material Adverse Effect; or (v) any other action or event
that would have required the consent of TSI pursuant to Section 5.01 of this
Agreement had such action or event occurred after the date of this Agreement and
that, in the case of this clause (v), individually or in the aggregate, has had
or is reasonably likely to have an Eclipsys Material Adverse Effect.
Section 4.07 TAXES.
(a) Each of Eclipsys and its Subsidiaries has filed all Tax Returns
that it was required to file, and all such Tax Returns were correct and
complete. Each group of corporations with which Eclipsys or any of its
Subsidiaries has filed (or was required to file) consolidated, combined, unitary
or similar Tax Returns (an "Eclipsys Affiliated Group") has filed all such Tax
Returns that it was required to file with respect to any period in which
Eclipsys or one of its Subsidiaries was a member of such Eclipsys Affiliated
Group (an "Eclipsys Affiliated Period"), and all such Tax Returns were correct
and complete. Each of Eclipsys and its Subsidiaries has paid all Taxes (whether
or not shown on such Tax Returns) that were due and payable, and each Eclipsys
Affiliated Group has paid all Taxes (whether or not shown on such Tax Returns)
that were due and payable with respect to all Eclipsys Affiliated Periods and
with respect to which Eclipsys or any of its Subsidiaries may be liable by
operation of law or otherwise. The unpaid Taxes of Eclipsys and its Subsidiaries
for tax periods through the date of the Eclipsys Balance Sheet do not exceed the
accruals and reserves for Taxes set forth on the Eclipsys Balance Sheet
(exclusive of any accruals for "deferred taxes" or similar items that reflect
timing differences between Tax and financial accounting principles). The unpaid
Taxes of Eclipsys and its Subsidiaries for tax periods from the date of the
Eclipsys Balance Sheet through the Closing Date are attributable solely to the
conduct of their businesses in the ordinary course and in a manner consistent
with past practices. All Taxes that Eclipsys or any of its Subsidiaries is or
was required by law to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper Governmental Entity.
Each of the representations contained in this Section 4.07(a) shall be limited
in its application to items which are reasonably likely, individually or in the
aggregate, to have an Eclipsys Material Adverse Effect.
(b) No examination or audit by any Governmental Entity of any Tax
Return of Eclipsys, any of its Subsidiaries or any Eclipsys Affiliated Group
with respect to an Eclipsys Affiliated Period is currently in progress or, to
the knowledge of Eclipsys and its Subsidiaries, threatened or contemplated, in
each case, which involve claims
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that individually or in the aggregate are reasonably likely to have an Eclipsys
Material Adverse Effect. Neither Eclipsys nor any of its Subsidiaries has been
informed by any jurisdiction that the jurisdiction believes that Eclipsys or any
of its Subsidiaries was required to file any Tax Return that was not filed which
failure or failures individually, or in the aggregate, are reasonably likely to
have an Eclipsys Material Adverse Effect.
(c) Neither Eclipsys nor any of its Subsidiaries is a "consenting
corporation" within the meaning of Section 341(f) of the Code, and none of the
assets of Eclipsys and its Subsidiaries is subject to an election under Section
341(f) of the Code.
(d) Neither Eclipsys nor any of its Subsidiaries has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(l)(A)(ii)
of the Code.
(e) None of Eclipsys or any of its Subsidiaries is a party to any Tax
allocation or sharing agreement.
(f) None of Eclipsys or any of its Subsidiaries has any material
liability for Taxes of any person (other than Eclipsys and any of its
Subsidiaries (under Treasury Regulation Section 1.1502-6 or any similar
provision of state, local or foreign law)), as a transferee or successor by
contract, or otherwise.
Section 4.08 PROPERTIES.
(a) Eclipsys does not own of record any real property.
(b) All material real property leases of Eclipsys and its Subsidiaries
are in good standing, valid and effective in accordance with their respective
terms, and neither Eclipsys nor its Subsidiaries is in default under any of such
leases, except where the lack of such good standing, validity or effectiveness
or the existence of such default would not be reasonably likely to have an
Eclipsys Material Adverse Effect.
Section 4.09 INTELLECTUAL PROPERTY.
(a) Eclipsys and its Subsidiaries own, or are licensed or otherwise
possess legally enforceable rights to use, all patents, trademarks, trade names,
service marks, copyrights and mask works, any applications for and registrations
of such patents, trademarks, trade names, service marks, copyrights and mask
works, and all processes, formulae, methods, schematics, technology, know-how,
computer software programs or applications and tangible or intangible
proprietary information or material that are necessary to conduct the business
of Eclipsys and its Subsidiaries as currently conducted, or planned to be
conducted, the absence of which would be
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reasonably likely to have an Eclipsys Material Adverse Effect (the "Eclipsys
Intellectual Property Rights").
(b) Neither Eclipsys nor any of its Subsidiaries is, or will as a
result of the execution and delivery of this Agreement or the performance of
Eclipsys' obligations under this Agreement or otherwise be, in breach of any
license, sublicense or other agreement relating to the Eclipsys Intellectual
Property Rights, or any material licenses, sublicenses and other agreements as
to which Eclipsys or any of its Subsidiaries is a party and pursuant to which
Eclipsys or any of its Subsidiaries is authorized to use any third party
patents, trademarks or copyrights ("Eclipsys Third Party Intellectual Property
Rights"), including software which is used in the manufacture of, incorporated
in, or forms a part of any product sold by or expected to be sold by Eclipsys or
any of its Subsidiaries, the breach of which would be reasonably likely to have
an Eclipsys Material Adverse Effect.
(c) All patents, registered trademarks, registered service marks and
registered copyrights which are held by Eclipsys or any of its Subsidiaries and
which are material to the business of Eclipsys and its Subsidiaries, taken as a
whole, are valid and subsisting. Eclipsys (i) has not been sued in any suit,
action or proceeding, or received in writing any claim or notice, which involves
a claim of infringement of any patents, trademarks, service marks, copyrights or
violation of any trade secret or other proprietary right of any third party; and
(ii) has no knowledge that the manufacturing, marketing, licensing or sale of
its products infringes any patent, trademark, service xxxx, copyright, trade
secret or other proprietary right of any third party, which infringement would
reasonably be expected to have an Eclipsys Material Adverse Effect.
Section 4.10 AGREEMENTS, CONTRACTS AND COMMITMENTS. Eclipsys has not
breached, or received in writing any claim or notice that it has breached, any
of the terms or conditions of any agreement, contract or commitment filed as an
exhibit to the Eclipsys SEC Reports (collectively, "Eclipsys Material
Contracts") in such a manner as, individually or in the aggregate, are
reasonably likely to have an Eclipsys Material Adverse Effect. Each Eclipsys
Material Contract that has not expired by its terms is in full force and effect.
Section 4.11 LITIGATION. Except as described in the Eclipsys SEC
Reports filed prior to the date hereof, there is no action, suit or proceeding,
claim, arbitration or investigation against Eclipsys or any of its Subsidiaries
pending or as to which Eclipsys or any such Subsidiary has received any written
notice of assertion, which, individually or in the aggregate, is reasonably
likely to have an Eclipsys Material Adverse Effect or a material adverse effect
on the ability of Eclipsys to consummate the transactions contemplated by this
Agreement.
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Section 4.12 ENVIRONMENTAL MATTERS. Except as disclosed in the Eclipsys
SEC Reports filed prior to the date hereof and except for such matters that,
individually or in the aggregate, are not reasonably likely to have an Eclipsys
Material Adverse Effect: (i) Eclipsys and its Subsidiaries have complied with
all applicable Environmental Laws; (ii) the properties currently owned or
operated by Eclipsys and its Subsidiaries (including soils, groundwater, surface
water, buildings or other structures) are not contaminated with any Hazardous
Substances; (iii) the properties formerly owned or operated by Eclipsys or any
of its Subsidiaries were not contaminated with Hazardous Substances during the
period of ownership or operation by Eclipsys or any of its Subsidiaries; (iv)
neither Eclipsys nor any of its Subsidiaries are subject to liability for any
Hazardous Substance disposal or contamination on any third-party property; (v)
neither Eclipsys nor any of its Subsidiaries has been associated with any
release or threat of release of any Hazardous Substance; (vi) neither Eclipsys
nor any of its Subsidiaries has received any notice, demand, letter, claim or
request for information alleging that Eclipsys or any of its Subsidiaries may be
in violation of or liable under any Environmental Law; (vii) neither Eclipsys
nor any of its Subsidiaries is subject to any orders, decrees, injunctions or
other arrangements with any Governmental Entity or is subject to any indemnity
or other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (viii) there are no
circumstances or conditions involving Eclipsys or any of its Subsidiaries that
could reasonably be expected to result in any claims, liabilities,
investigations, costs or restrictions on the ownership, use or transfer of any
property of Eclipsys pursuant to any Environmental Law.
Section 4.13 EMPLOYEE BENEFIT PLANS.
(a) Eclipsys has listed in Section 4.13 of the Eclipsys Disclosure
Schedule all employee benefit plans (as defined in Section 3(3) of ERISA) and
all bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar employee benefit plans, and
all material unexpired severance agreements, written or otherwise, for the
benefit of, or relating to, any current or former employee of Eclipsys or any
ERISA Affiliate of Eclipsys, or any Subsidiary of Eclipsys (collectively, the
"Eclipsys Employee Plans").
(b) With respect to each Eclipsys Employee Plan, Eclipsys has made
available to TSI, a true and correct copy of (i) the most recent annual report
(Form 5500) filed with the IRS, (ii) such Eclipsys Employee Plan, (iii) each
trust agreement and group annuity contract, if any, relating to such Eclipsys
Employee Plan and (iv) the most recent actuarial report or valuation relating to
an Eclipsys Employee Plan subject to Title IV of ERISA.
(c) With respect to the Eclipsys Employee Plans, individually and in
the aggregate, no event has occurred and, to the knowledge of Eclipsys, there
exists no
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condition or set of circumstances in connection with which Eclipsys could be
subject to any liability that is reasonably likely to have an Eclipsys Material
Adverse Effect under ERISA, the Code or any other applicable law.
(d) With respect to the Eclipsys Employee Plans, individually and in
the aggregate, there are no funded benefit obligations for which contributions
have not been made or properly accrued and there are no unfunded benefit
obligations which have not been accounted for by reserves, or otherwise properly
footnoted in accordance with GAAP, on the financial statements of Eclipsys,
which obligations are reasonably likely to have an Eclipsys Material Adverse
Effect.
(e) Except as disclosed in Eclipsys SEC Reports filed prior to the date
of this Agreement, and except as provided for in this Agreement, neither
Eclipsys nor any of its Subsidiaries is a party to any oral or written (i)
agreement with any officer or other key employee of Eclipsys or any of its
Subsidiaries, the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Eclipsys of
the nature contemplated by this Agreement, (ii) agreement with any officer of
Eclipsys providing any term of employment or compensation guarantee extending
for a period longer than one year from the date hereof or for the payment of
compensation in excess of $100,000 per annum, or (iii) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted stock
plan or stock purchase plan, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
Section 4.14 COMPLIANCE WITH LAWS. Eclipsys and each of its
Subsidiaries has complied with, is not in violation of, and has not received any
notices of violation with respect to, any federal, state, local or foreign
statute, law or regulation with respect to the conduct of its business, or the
ownership or operation of its business, except for failures to comply or
violations which, individually or in the aggregate, have not had and are not
reasonably likely to have an Eclipsys Material Adverse Effect.
Section 4.15 ACCOUNTING AND TAX MATTERS. To its knowledge, after
consulting with its independent auditors, neither Eclipsys nor any of its
Affiliates has taken or agreed to take any action which would (i) prevent
Eclipsys from accounting for the business combination to be effected by the
Merger as a pooling of interests or (ii) prevent the Merger from constituting a
transaction qualifying as a reorganization under Section 368(a) of the Code.
Section 4.16 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information to be supplied by Eclipsys for inclusion in the Registration
Statement
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shall not at the time the Registration Statement is declared effective by the
SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated in the Registration Statement or necessary
in order to make the statements in the Registration Statement, in light of the
circumstances under which they were made, not misleading. The information
supplied by Eclipsys for inclusion in the Joint Proxy Statement shall not, on
the date the Joint Proxy Statement is first mailed to stockholders of Eclipsys
or TSI, at the time of the Eclipsys Stockholders' Meeting and the TSI
Stockholders' Meeting and at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made in the Joint Proxy
Statement not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Eclipsys Stockholders' Meeting or the TSI
Stockholders' Meetings which has become false or misleading. If at any time
prior to the Effective Time any event relating to Eclipsys or any of its
Affiliates, officers or directors should be discovered by Eclipsys which should
be set forth in an amendment to the Registration Statement or a supplement to
the Joint Proxy Statement, Eclipsys shall promptly inform TSI.
Section 4.17 LABOR MATTERS. Neither Eclipsys nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor, as of the date hereof, is Eclipsys or any of its
Subsidiaries the subject of any material proceeding asserting that Eclipsys or
any of its Subsidiaries has committed an unfair labor practice or is seeking to
compel it to bargain with any labor union or labor organization nor, as of the
date of this Agreement, is there pending or, to the knowledge of the executive
officers of Eclipsys, threatened, any material labor strike, dispute, walkout,
work stoppage, slow-down or lockout involving Eclipsys or any of its
Subsidiaries.
Section 4.18 INSURANCE; RISK MANAGEMENT. All material fire and
casualty, general liability, business interruption, product liability, and
sprinkler and water damage insurance policies maintained by Eclipsys or any of
its Subsidiaries are with reputable insurance carriers, provide full and
adequate coverage for all normal risks incident to the business of Eclipsys and
its Subsidiaries and their respective properties and assets, and are in
character and amount at least equivalent to that carried by persons engaged in
similar businesses and subject to the same or similar perils or hazards, except
for any such failures to maintain insurance policies that, individually or in
the aggregate, are not reasonably likely to have an Eclipsys Material Adverse
Effect. The steps taken by Eclipsys to manage the various risks incident to the
business and operations of Eclipsys and its Subsidiaries and their respective
properties and assets are at least equivalent to those taken by persons engaged
in similar businesses, except for any failures to take such steps that,
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individually or in the aggregate, are not reasonably likely to have an Eclipsys
Material Adverse Effect.
Section 4.19 NO EXISTING DISCUSSIONS. Except for discussions or
negotiations relating to possible acquisitions by Eclipsys of those companies
previously disclosed by Eclipsys to TSI ("Eclipsys Possible Acquisitions"), as
of the date hereof, Eclipsys is not engaged, directly or indirectly, in any
discussions or negotiations with any other party with respect to an Acquisition
Proposal (as defined in Section 6.01).
Section 4.20 OPINION OF FINANCIAL ADVISOR. The financial advisor of
Eclipsys, Xxxxxx Xxxxxxx & Co. Incorporated, has delivered to the Board of
Directors of Eclipsys an opinion dated the date of this Agreement to the effect
that the Exchange Ratio is fair to Eclipsys from a financial point of view.
Section 4.21 ANTI-TAKEOVER LAWS. No "fair price", "business
combination", "moratorium", "control share acquisition" or other form of
antitakeover statute or regulation is or will be applicable to the execution,
delivery or performance of this Agreement or the consummation of the Merger or
the other transactions contemplated by this Agreement.
Section 4.22 XXXXXXX XXXXXXX POLICIES AND PRACTICES. Section 4.22 to
the Eclipsys Disclosure Schedule sets forth a copy of Eclipsys' xxxxxxx xxxxxxx
policy as in effect on the date hereof. Eclipsys and each of its directors,
officers and employees who are subject to such policy have complied in all
material respects with the terms of such policy.
Section 4.23 INTERIM OPERATIONS OF SUB. Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated by this Agreement.
ARTICLE V
CONDUCT OF BUSINESS
Section 5.01 COVENANTS OF TSI. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, TSI agrees as to itself and its Subsidiaries (except to
the extent that Eclipsys shall otherwise consent in writing), to carry on its
business in the usual, regular and ordinary course in substantially the same
manner as previously
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conducted, to pay its debts and Taxes when due subject to good faith disputes
over such debts or Taxes, to pay or perform its other obligations when due, and,
to the extent consistent with such business, use all reasonable efforts
consistent with past practices and policies to preserve intact its present
business organization, keep available the services of its present officers and
key employees and preserve its relationships with customers, suppliers,
distributors and others having business dealings with it. TSI shall promptly
notify Eclipsys of any material event or occurrence not in the ordinary course
of business. Except as expressly contemplated by this Agreement, TSI shall not
(and shall not permit any of its Subsidiaries to), without the written consent
of Eclipsys:
(a) Accelerate, amend or change the period of exercisability of options
or restricted stock granted under any employee stock plan of such party or
authorize cash payments in exchange for any options granted under any of such
plans except as required by the terms of such plans or any related agreements in
effect as of the date of this Agreement;
(b) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock, or
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock except from former employees,
directors and consultants in accordance with agreements providing for the
repurchase of shares in connection with any termination of service to such
party;
(c) Issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or securities convertible
into shares of its capital stock, or subscriptions, rights, warrants or options
to acquire, or other agreements or commitments of any character obligating it to
issue any such shares or other convertible securities, other than the issuance
of shares of TSI Common Stock pursuant to the exercise of options outstanding on
the date of this Agreement or the TSI Warrants;
(d) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership or
other business organization or division, or otherwise acquire or agree to
acquire any assets (other than inventory and other items in the ordinary course
of business), except for (i) any such acquisitions involving aggregate
consideration (including assumed indebtedness) of not more than $1,000,000 or
(ii) subject to Section 5.04, the HealthVISION Acquisition;
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(e) Sell, lease, license or otherwise dispose of any of its material
properties or assets, except for transactions in the ordinary course of
business;
(f) (i) Increase or agree to increase the compensation payable or to
become payable to its officers or employees, except for increases in salary or
wages of employees (other than officers) in accordance with past practices, (ii)
grant any additional severance or termination pay to, or enter into any
employment or severance agreements with, any employees or officers, (iii) enter
into any collective bargaining agreement (other than as required by law or
extensions to existing agreements in the ordinary course of business), (iv)
establish, adopt, enter into or amend any bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, trust, fund,
policy or arrangement for the benefit of any directors, officers or employees;
(g) Amend or propose to amend its charter or bylaws, except as
contemplated by this Agreement;
(h) Incur any indebtedness for borrowed money other than pursuant to
credit agreements in effect as of the date hereof;
(i) Initiate, compromise or settle any material litigation or
arbitration proceeding (other than as a result of a breach of this Agreement);
(j) Except in the ordinary course of business, modify, amend or
terminate any TSI Material Contract or waive, release or assign any material
rights or claims;
(k) Change in any material respect its accounting methods, principles
or practices, except insofar as may be required by a generally applicable change
in GAAP; or
(l) Take, or agree in writing or otherwise to take, any of the actions
described in paragraphs (a) through (k) above.
Section 5.02 COVENANTS OF ECLIPSYS. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Eclipsys agrees as to itself and its
Subsidiaries (except to the extent that TSI shall otherwise consent in writing),
to carry on its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted, to pay its debts and
Taxes when due subject to good faith disputes over such debts or Taxes, to pay
or perform its other obligations when due, and, to the extent consistent with
such business, use all reasonable efforts consistent with past practices and
policies to preserve intact its present business organization, keep available
the services of its present officers and key employees and preserve
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its relationships with customers, suppliers, distributors and others having
business dealings with it. Eclipsys shall promptly notify TSI of any material
event or occurrence not in the ordinary course of business. Except as expressly
contemplated by this Agreement, Eclipsys shall not (and shall not permit any of
its Subsidiaries to), without the written consent of TSI:
(a) Accelerate, amend or change the period of exercisability of options
or restricted stock granted under any employee stock plan of such party or
authorize cash payments in exchange for any options granted under any of such
plans except as required by the terms of such plans or any related agreements in
effect as of the date of this Agreement;
(b) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock, or
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock except from former employees,
directors and consultants in accordance with agreements providing for the
repurchase of shares in connection with any termination of service to such
party;
(c) Issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or securities convertible
into shares of its capital stock, or subscriptions, rights, warrants or options
to acquire, or other agreements or commitments of any character obligating it to
issue any such shares or other convertible securities, other than (i) the grant
of options consistent with past practices to employees, which options represent
in the aggregate the right to acquire no more than 200,000 shares (net of
cancellations) of Eclipsys Common Stock, (ii) the issuance of shares of Eclipsys
Common Stock pursuant to the exercise of options outstanding on the date of this
Agreement or the Eclipsys Warrants or (iii) the issuance of Eclipsys Common
Stock in connection with any Eclipsys Permitted Acquisition (as defined below);
(d) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership or
other business organization or division, or otherwise acquire or agree to
acquire any assets (other than inventory and other items in the ordinary course
of business), except for (i) any Eclipsys Possible Acquisition or (ii) any other
such acquisitions involving aggregate consideration (including assumed
indebtedness) of not more than $100,000,000 (Eclipsys Possible Acquisitions and
such other acquisitions being collectively referred to as "Eclipsys Permitted
Acquisitions");
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(e) Sell, lease, license or otherwise dispose of any of its material
properties or assets, except for transactions in the ordinary course of
business;
(f) (i) Increase or agree to increase the compensation payable or to
become payable to its officers or employees, except for increases in salary or
wages of employees (other than officers) in accordance with past practices, (ii)
grant any additional severance or termination pay to, or enter into any
employment or severance agreements with, any employees or officers, (iii) enter
into any collective bargaining agreement (other than as required by law or
extensions to existing agreements in the ordinary course of business), (iv)
establish, adopt, enter into or amend any bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, trust, fund,
policy or arrangement for the benefit of any directors, officers or employees;
(g) Amend or propose to amend its charter or bylaws, except as
contemplated by this Agreement;
(h) Take, or agree in writing or otherwise to take, any of the actions
described in paragraphs (a) through (f) above.
Section 5.03 COOPERATION. Subject to compliance with applicable law,
from the date hereof until the Effective Time, each of Eclipsys and TSI shall
confer on a regular and frequent basis with one or more representatives of the
other party to report on the general status of ongoing operations and shall
promptly provide the other party or its counsel with copies of all filings made
by such party with any Governmental Entity in connection with this Agreement,
the Merger and the transactions contemplated hereby and thereby.
Section 5.04 HEALTHVISION ACQUISITION. TSI shall use its best efforts
to cause the HealthVISION Acquisition to be closed as promptly as reasonably
practicable following the execution of this Agreement upon terms at least as
favorable to TSI as those set forth in that certain Agreement and Plan of
Reorganization dated October 28, 1998 among HealthVISION, TSI and the other
parties identified therein. TSI shall keep Eclipsys reasonably apprised as to
the status of its progress toward closing the HealthVISION Acquisition.
Section 5.05 VOTING AGREEMENTS. Concurrently with the execution of this
Agreement, and in order to induce Eclipsys and TSI, respectively, to enter into
this Agreement, (i) Eclipsys is entering into Voting Agreements, substantially
in the form attached hereto as EXHIBIT A-1, with Warburg, Xxxxxx Ventures, L.P.
("Warburg"), Xxxxxx Xxxx, Xxxxxxxxx Xxxxxxxxx and Xxxxxx Xxxx, and (ii) TSI is
entering into Voting Agreements, substantially in the form attached hereto as
EXHIBIT A-2, with General Atlantic Partners 28, L.P., General Atlantic Partners
38, L.P., General Atlantic
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Partners 47, L.P., General Atlantic Partners 48, L.P., GAP Coinvestment
Partners, L.P., Partners Healthcare System, Inc., Xxxxxx Xxxxxx and Wilfam Ltd.
Section 5.06 ECLIPSYS PERMITTED ACQUISITIONS. Eclipsys shall notify TSI
at any time that Eclipsys believes it has become reasonably likely that a
definitive agreement will be executed with respect to an Eclipsys Permitted
Acquisition or that an Eclipsys Permitted Acquisition will be completed, and
shall thereafter keep TSI reasonably apprised as to the status of such Eclipsys
Permitted Acquisition.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.01 NO SOLICITATION.
(a) TSI and Eclipsys each shall not, directly or indirectly, through
any officer, director, employee, financial advisor, representative or agent of
such party (i) solicit, initiate or encourage any inquiries or proposals that
constitute, or could reasonably be expected to lead to, a proposal or offer for
a merger, consolidation, business combination, sale of substantial assets, sale
of shares of capital stock (including without limitation by way of a tender
offer) or similar transaction involving such party or any of its Subsidiaries,
other than the transactions contemplated by this Agreement and other than, in
the case of Eclipsys, transactions constituting Eclipsys Permitted Acquisitions
(any of the foregoing inquiries or proposals being referred to in this Agreement
as an "Acquisition Proposal"), (ii) engage in negotiations or discussions
concerning, or provide any non-public information to any person or entity
relating to, any Acquisition Proposal, or (iii) agree to or recommend any
Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent TSI or Eclipsys, or their respective Boards of
Directors, from (A) furnishing non-public information to, or entering into
discussions or negotiations with, any person or entity in connection with an
unsolicited bona fide written Acquisition Proposal by such person or entity or
recommending an unsolicited bona fide written Acquisition Proposal by such
person or entity or recommending an unsolicited bona fide written Acquisition
Proposal to the stockholders of such party, if and only to the extent that (1)
the Board of Directors of such party believes in good faith (after consultation
with its financial advisor) that such Acquisition Proposal is reasonably capable
of being completed on the terms proposed and, after taking into account, among
other relevant factors, the strategic benefits anticipated to be derived from
the Merger and the long-term prospects of TSI and Eclipsys as a combined
company, would, if consummated, result in a transaction more favorable to the
stockholders of such party than the transactions contemplated by this Agreement
(any such more favorable Acquisition Proposal being referred to in this
Agreement as a "Superior Proposal") and the Board of Directors of such party
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determines in good faith after consultation with outside legal counsel that such
action is necessary for such Board of Directors to comply with its fiduciary
duties to stockholders under applicable law and (2) prior to furnishing such
non-public information to, or entering into discussions or negotiations with,
such person or entity, such Board of Directors receives from such person or
entity an executed confidentiality agreement with terms no less favorable to
such party than those contained in that certain letter agreement dated October
2, 1998 between TSI and Eclipsys regarding the confidentiality of certain
materials (the "Confidentiality Agreement"); or (B) complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal.
(b) TSI and Eclipsys shall each notify the other party immediately
after receipt by TSI or Eclipsys (or their advisors) of any Acquisition Proposal
or any request for non-public information in connection with an Acquisition
Proposal or for access to the properties, books or records of such party by any
person or entity that informs such party that it is considering making, or has
made, an Acquisition Proposal. Such notice shall be made orally and in writing
and shall indicate in reasonable detail the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact. Such party shall
continue to keep the other party hereto informed, on a current basis, of the
status of any such discussions or negotiations and the terms being discussed or
negotiated.
Section 6.02 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.
(a) As promptly as practical after the execution of this Agreement,
Eclipsys and TSI shall prepare and file with the SEC the Joint Proxy Statement,
and Eclipsys shall prepare and file with the SEC the Registration Statement, in
which the Joint Proxy Statement will be included as a prospectus, provided that
Eclipsys may delay the filing of the Registration Statement until approval of
the Joint Proxy Statement by the SEC. Eclipsys and TSI shall use all reasonable
efforts to cause the Registration Statement to become effective as soon after
such filing as practical. The Joint Proxy Statement, and any amendment or
supplement thereto, shall include the recommendation of the Board of Directors
of TSI in favor of this Agreement and the Merger and the recommendation of the
Board of Directors of Eclipsys in favor of the issuance of shares of Eclipsys
Voting Common Stock pursuant to the Merger; provided that the Board of Directors
of either party may withdraw such recommendation and refrain from soliciting
proxies if such Board of Directors believes in good faith after consultation
with outside legal counsel that the withdrawal of such recommendation is
necessary for such Board of Directors to comply with its fiduciary duties under
applicable law.
(b) Eclipsys and TSI shall make all necessary filings with respect to
the Merger under the Securities Act, the Exchange Act, applicable state blue sky
laws and the rules and regulations thereunder.
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Section 6.03 NASDAQ QUOTATION. Each of Eclipsys and TSI agrees to
continue the quotation of Eclipsys Voting Common Stock and TSI Voting Common
Stock, as the case may be, on the Nasdaq National Market during the term of this
Agreement.
Section 6.04 ACCESS TO INFORMATION. Upon reasonable notice, TSI and
Eclipsys shall each (and shall cause each of their respective Subsidiaries to)
afford to the officers, employees, accountants, counsel and other
representatives of the other, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of TSI and Eclipsys shall
(and shall cause each of their respective Subsidiaries to) furnish promptly to
the other (a) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of federal securities laws and (b) all other information concerning its
business, properties and personnel as such other party may reasonably request.
Unless otherwise required by law, the parties will hold any such information
which is non-public in confidence in accordance with the Confidentiality
Agreement. No information or knowledge obtained in any investigation pursuant to
this Section 6.04 shall affect or be deemed to modify any representation or
warranty contained in this Agreement or the conditions to the obligations of the
parties to consummate the Merger.
Section 6.05 STOCKHOLDERS' MEETINGS. TSI and Eclipsys shall each call a
meeting of its respective stockholders to be held as promptly as practicable for
the purpose of voting, in the case of TSI, upon this Agreement and the Merger
and, in the case of Eclipsys, upon (i) the issuance of shares of Eclipsys Voting
Common Stock pursuant to the Merger, and (ii) the election of directors of
Eclipsys in accordance with Section 1.04 (collectively, the "Eclipsys Voting
Proposals"). Subject to Sections 6.01 and 6.02, TSI and Eclipsys will, through
their respective Boards of Directors, recommend to their respective stockholders
approval of such matters and will coordinate and cooperate with respect to the
timing of such meetings and shall use their best efforts to hold such meetings
on the same day and as soon as practicable after the date hereof. Subject to
Section 6.02, each party shall use all reasonable efforts to solicit from
stockholders of such party proxies in favor of such matters.
Section 6.06 LEGAL CONDITIONS TO MERGER.
(a) TSI and Eclipsys shall each use their best efforts to (i) take, or
cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary and proper under applicable law to consummate and make
effective the transactions contemplated hereby as promptly as practicable, (ii)
obtain from any Governmental Entity any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made by TSI or
Eclipsys or any of their Subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the
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consummation of the transactions contemplated hereby, including, without
limitation, the Merger, and (iii) as promptly as practicable, make all necessary
filings, and thereafter make any other required submissions, with respect to
this Agreement and the Merger required under (A) the Securities Act and the
Exchange Act, and any other applicable federal or state securities laws, (B) the
HSR Act and any related governmental request thereunder, and (C) any other
applicable law. TSI and Eclipsys shall cooperate with each other in connection
with the making of all such filings, including providing copies of all such
documents to the non-filing party and its advisors prior to filing and, if
requested, to accept all reasonable additions, deletions or changes suggested in
connection therewith. TSI and Eclipsys shall use their best efforts to furnish
to each other all information required for any application or other filing to be
made pursuant to the rules and regulations of any applicable law (including all
information required to be included in the Joint Proxy Statement and the
Registration Statement) in connection with the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, TSI shall use its
best efforts to cause HealthVISION to prepare and deliver for inclusion in the
Joint Proxy Statement and the Registration Statement any financial statements of
HealthVISION and its subsidiaries required by the rules of the SEC to be
included therein.
(b) Eclipsys and TSI agree, and shall cause each of their respective
Subsidiaries, to cooperate and to use their respective best efforts to obtain
any government clearances or approvals required for the Closing under the HSR
Act, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the Federal Trade
Commission Act, as amended, and any other Federal, state or foreign law,
regulation or decree designed to prohibit, restrict or regulate actions for the
purpose or effect of monopolization or restraint of trade (collectively,
"Antitrust Laws"), to respond to any government requests for information under
any Antitrust Law, and to contest and resist any action, including any
legislative, administrative or judicial action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order (whether
temporary, preliminary or permanent) that restricts, prevents or prohibits the
consummation of the Merger or any other transactions contemplated by this
Agreement under any Antitrust Law. The parties hereto will consult and cooperate
with one another, and consider in good faith the views of one another, in
connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to any Antitrust Law. In
the event of a challenge to the transactions contemplated by this Agreement
pursuant to the HSR Act, TSI and Eclipsys shall use their best efforts to defeat
such challenge, including by institution and defense of litigation, or to settle
such challenge on terms that permit the consummation of the Merger; provided,
however, that nothing herein shall require either party to agree to divest or
hold separate any portion of its business or otherwise take action that could
reasonably be expected to have a TSI Material Adverse Effect or an Eclipsys
Material Adverse Effect. Without limiting the foregoing, in the event that
either the Federal Trade Commission or the Antitrust
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Xxxxxxxx xx xxx Xxxxxx Xxxxxx Department of Justice issues a Request for
Additional Information or Documentary Material under 17 C.F.R. ss. 803.20 (a
"Second Request"), then TSI and Eclipsys each agree to use their best efforts to
respond fully to such Second Request within 20 days after its receipt and shall
promptly make any further filings or information submissions and make any
employee available for interview or testimony pursuant to the foregoing (both
before and after any Second Request) that may be necessary, proper or advisable.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement or to vest the Surviving
Corporation with full title to all properties, assets, rights, approvals,
immunities and franchises of either of the Constituent Corporations, the proper
officers and directors of each party to this Agreement shall take all such
necessary or desirable action.
(c) Each of TSI and Eclipsys shall give (and shall cause their
respective Subsidiaries to give) any notices to third parties, and use, and
cause their respective Subsidiaries to use, their best efforts to obtain any
third-party consents related to or required in connection with the Merger that
are (i) necessary to consummate the transactions contemplated hereby, (ii)
disclosed or required to be disclosed in the TSI Disclosure Schedule or the
Eclipsys Disclosure Schedule, as the case may be, or (iii) required to prevent a
TSI Material Adverse Effect or an Eclipsys Material Adverse Effect from
occurring prior to or after the Effective Time.
Section 6.07 PUBLIC DISCLOSURE. Eclipsys and TSI shall consult with
each other before issuing any press release or otherwise making any public
statement with respect to the Merger or this Agreement and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by law or any listing agreement with a national
securities exchange or the Nasdaq National Market, and in any event in
accordance with the terms of the Confidentiality Agreement.
Section 6.08 TAX-FREE REORGANIZATION. Eclipsys and TSI shall each use
its best efforts to cause the Merger to be treated as a reorganization within
the meaning of Section 368(a) of the Code.
Section 6.09 POOLING ACCOUNTING. From and after the date hereof and
until the Effective Time, neither TSI nor Eclipsys, nor any of their respective
Subsidiaries shall knowingly take any action, or knowingly fail to take any
action, that is reasonably likely to jeopardize the treatment of the Merger as a
pooling of interests for accounting purposes.
Section 6.10 AFFILIATE AGREEMENTS. Upon the execution of this
Agreement, Eclipsys and TSI will provide each other with a list of those persons
who are, in Eclipsys' or TSI's respective reasonable judgment, "affiliates" of
Eclipsys or TSI, respectively, within the meaning of Rule 145 promulgated under
the Securities Act
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("Rule 145") (each such person who is an "affiliate" of Eclipsys or TSI within
the meaning of Rule 145 is referred to as an "Affiliate"). Eclipsys and TSI
shall provide each other with such information and documents as TSI or Eclipsys
shall reasonably request for purposes of reviewing such list and shall notify
the other party in writing regarding any change in the identity of its
Affiliates prior to the Closing Date. TSI and Eclipsys shall each use its best
efforts to deliver or cause to be delivered to each other by November 20, 1998
(and in any case prior to the Effective Time) from each of its Affiliates, an
executed Affiliate Agreement, in form attached hereto as EXHIBIT B-1, in the
case of Affiliates of TSI, and in the form attached hereto as EXHIBIT B-2, in
the case of Affiliates of Eclipsys (each, an "Affiliate Agreement"). Eclipsys
shall be entitled to place appropriate legends on the certificates evidencing
any Eclipsys Voting Common Stock to be received by such Affiliates of TSI
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the Eclipsys Voting Common Stock,
consistent with the terms of the Affiliate Agreements (provided that such
legends or stop transfer instructions shall be removed, two years after the
Effective Date, upon the request of any stockholder that is not then an
Affiliate of Eclipsys).
Section 6.11 NASDAQ QUOTATION. Eclipsys shall use its best efforts to
cause the shares of Eclipsys Voting Common Stock to be issued in the Merger to
be approved for quotation on the Nasdaq National Market, subject to official
notice of issuance, prior to the Closing Date.
Section 6.12 STOCK PLANS AND WARRANTS.
(a) At the Effective Time, each outstanding option to purchase shares
of TSI Voting Common Stock (a "TSI Stock Option") under the TSI Stock Plans,
whether vested or unvested, shall be deemed to constitute an option to acquire,
but otherwise on the same terms and conditions as were applicable under such TSI
Stock Option, the same number of shares of Eclipsys Voting Common Stock as the
holder of such TSI Stock Option would have been entitled to receive pursuant to
the Merger had such holder exercised such option in full immediately prior to
the Effective Time (rounded downward to the nearest whole number), at a price
per share (rounded upward to the nearest whole cent) equal to (y) the aggregate
exercise price for the shares of TSI Voting Common Stock purchasable pursuant to
such TSI Stock Option immediately prior to the Effective Time divided by (z) the
number of full shares of Eclipsys Voting Common Stock deemed purchasable
pursuant to such TSI Voting Stock Option in accordance with the foregoing. The
adjustment pursuant to this Section 6.12(a) is intended to comply with Section
424(a) of the Code with respect to any options which are incentive stock options
and shall be construed consistent with Section 424(a) of the Code.
(b) At the Effective Time, each outstanding TSI Warrant shall be deemed
to constitute a warrant to acquire, on the same terms and conditions as were
applicable
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under such TSI Warrant, the number of shares of Eclipsys Voting Common Stock at
the price per share as shall be determined under the existing terms of the
respective TSI Warrant.
(c) As soon as practicable after the Effective Time, Eclipsys shall
deliver to the participants in the TSI Stock Plans appropriate notice setting
forth such participants' rights pursuant thereto and the grants pursuant to the
TSI Stock Plans shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 6.12 after giving effect to
the Merger).
(d) Eclipsys shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Eclipsys Voting Common Stock for
delivery under the TSI Stock Plans assumed in accordance with this Section 6.12
and the TSI Warrants. As soon as practicable after the Effective Time, Eclipsys
shall file a registration statement on Form S-8 (or any successor or other
appropriate forms), or another appropriate form with respect to the shares of
Eclipsys Voting Common Stock subject to such options, and shall use its best
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding.
(e) The Board of Directors of TSI shall, prior to or as of the
Effective Time, take any necessary actions, pursuant to and in accordance with
the terms of the TSI Stock Plans and the instruments evidencing the TSI Stock
Options, to provide for the conversion of the TSI Stock Options into options to
acquire Eclipsys Voting Common Stock in accordance with this Section 6.12.
(f) TSI shall terminate its Employee Stock Purchase Plan (the "Stock
Purchase Plan") as of or prior to the Effective Time; provided, however, that,
in accordance with Section 17 of the Stock Purchase Plan, said termination shall
not affect the rights of participants in the Stock Purchase Plan to purchase
shares pursuant to the current offering under the Stock Purchase Plan which
commenced on October 1, 1998 and which terminates on March 31, 1999. Eclipsys
and TSI acknowledge and agree that, assuming that the Effective Time of the
Merger occurs prior to April 1, 1999, participants in the current offering under
the Stock Purchase Plan shall have the right to purchase a number of shares of
Eclipsys Voting Common Stock determined by applying the Exchange Ratio to the
number of shares of TSI Voting Common Stock that such participants would have
been entitled to purchase had the Merger not been completed at such time and
that such purchase shall occur at an exercise price equal to 85% of the lower of
(x) the market value (determined in accordance with the Stock Purchase Plan) of
TSI Common Stock as of October 1, 1998 or (y) the product of (I) the Exchange
Ratio and (II) the market value (determined in accordance with the Stock
Purchase Plan) of Eclipsys Voting Common Stock as of
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March 31, 1999, all subject to and in accordance with the terms of the Stock
Purchase Plan.
Section 6.13 BROKERS OR FINDERS. Each of Eclipsys and TSI represents,
as to itself, its Subsidiaries and its Affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement except
Xxxxxx Xxxxxxx & Co. Incorporated, whose fees and expenses will be paid by
Eclipsys in accordance with Eclipsys' agreement with such firm (a copy of which
has been delivered by Eclipsys to TSI prior to the date of this Agreement), and
BT Alex. Xxxxx Incorporated whose fees and expenses will be paid by TSI in
accordance with TSI's agreement with such firm (a copy of which has been
delivered by TSI to Eclipsys prior to the date of this Agreement). Each of
Eclipsys and TSI agrees to indemnify and hold the other harmless from and
against any and all claims, liabilities or obligations with respect to any such
fees, commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or any of its Affiliates.
Section 6.14 INDEMNIFICATION.
(a) From and after the Effective Time, Eclipsys agrees that it will,
and will cause the Surviving Corporation to, indemnify and hold harmless each
present and former director and officer of TSI (the "Indemnified Parties"),
against any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages, liabilities or amounts paid in settlement
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or occurring at
or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent that TSI would have been
permitted under Massachusetts law and its articles of organization or bylaws in
effect on the date hereof to indemnify such Indemnified Party (and Eclipsys and
the Surviving Corporation shall also advance expenses as incurred to the fullest
extent permitted under applicable law, provided the Indemnified Party to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such Indemnified Party is not entitled to
indemnification).
(b) For a period of three (3) years after the Effective Time, Eclipsys
shall cause the Surviving Corporation to maintain (to the extent available in
the market) in effect a directors' and officers' liability insurance policy
covering those persons who are currently covered by TSI's directors' and
officers' liability insurance policy (a copy of which has been heretofore
delivered to Eclipsys) with coverage in amount and scope at least as favorable
as TSI's existing coverage; provided, that in no event shall Eclipsys or the
Surviving Corporation be required to expend in excess of 200% of the annual
premium currently paid by TSI for such coverage (currently $203,500),
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52
except to the extent such excess is attributable to Eclipsys' claims history or
price increases in the market for such insurance that is unrelated to TSI
specifically; and if such premium would at any time exceed such limitation, the
Surviving Corporation shall maintain insurance policies that provide the maximum
and best coverage available at an annual premium equal to such limitation; and
provided further that, if any legal action had been pending at any time
subsequent to the second anniversary of the Effective Time against any person
currently covered by TSI's directors' and officers' liability insurance policy
that would be covered in whole or in part by such policy, the Surviving
Corporation shall thereafter continue to maintain such policy in effect (subject
to the foregoing proviso) until the fifth anniversary of the Effective Time.
(c) The provisions of this Section 6.14 are intended to be in addition
to the rights otherwise available to the current officers and directors of TSI
by law, charter, statute, bylaw or agreement, and shall operate for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives.
Section 6.15 LETTER OF ECLIPSYS' ACCOUNTANTS. Eclipsys shall use
reasonable efforts to cause to be delivered to TSI and Eclipsys a letter of
PricewaterhouseCoopers LLP, Eclipsys' independent auditors, dated a date within
two business days before the date on which the Registration Statement shall
become effective and addressed to TSI, in form reasonably satisfactory to TSI
and customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement.
Section 6.16 LETTER OF TSI'S ACCOUNTANTS. TSI shall use reasonable
efforts to cause to be delivered to Eclipsys and TSI letters of
PricewaterhouseCoopers LLP, TSI's independent auditors, and Ernst & Young,
HealthVISION's auditors, each dated a date within two business days before the
date on which the Registration Statement shall become effective and addressed to
Eclipsys, in form reasonably satisfactory to Eclipsys and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
Section 6.17 WARBURG REGISTRATION RIGHTS AGREEMENT. Eclipsys shall use
its reasonable efforts to amend its existing Second Amended and Restated
Registration Rights Agreement, dated January 1998, among Eclipsys and certain of
its stockholders (the "Registration Rights Agreement") (i) to add Warburg as a
"Designated Holder" (as defined in the Registration Rights Agreement) for all
purposes of the Registration Rights Agreement and (ii) to provide Warburg with
one demand registration pursuant to Section 3(a) of the Registration Rights
Agreement, which demands may not be exercised prior to January 1, 2000. In the
event Eclipsys is unable for any reason to amend the Registration Rights
Agreement as provided in the immediately preceding sentence, Eclipsys shall
enter into a registration rights agreement with Warburg, containing the
foregoing terms and otherwise substantially identical to the
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Registration Rights Agreement, except that the only Designated Holder therein
shall be Warburg (such agreement, either as the amendment to the Registration
Rights Agreement or the separate registration rights agreement, the "Warburg
Registration Rights Agreement").
ARTICLE VII
CONDITIONS TO MERGER
Section 7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the satisfaction prior to the Closing Date of the
following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have been
approved and adopted by the affirmative vote of the holders of two-thirds of the
outstanding shares of TSI Voting Common Stock and the Eclipsys Voting Proposals
shall have been approved by the affirmative vote of the holders of a majority of
the shares of Eclipsys Voting Common Stock present or represented at the
Eclipsys Stockholders' Meeting at which a quorum is present.
(b) HSR ACT. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
(c) APPROVALS. Other than the filing provided for by Section 1.01, all
authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations of waiting periods imposed by, any Governmental Entity the
failure of which to file, obtain or occur is reasonably likely to have an
Eclipsys Material Adverse Effect or a TSI Material Adverse Effect shall have
been filed, been obtained or occurred.
(d) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.
(e) NO INJUNCTIONS. No Governmental Entity or federal, state or foreign
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any order, executive order, stay, decree, judgment or
injunction (each an "Order") or statute, rule, regulation which is in effect and
which has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(f) POOLING LETTERS. Eclipsys and TSI shall each have received a letter
from PricewaterhouseCoopers LLP addressed to Eclipsys and TSI, respectively,
regarding
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its concurrence with management's conclusions as to the appropriateness of
pooling-of-interests accounting under Accounting Principles Board Opinion No. 16
for the Merger, as contemplated to be effected as of the date of the letter, it
being agreed that Eclipsys and TSI shall each provide reasonable cooperation to
PricewaterhouseCoopers LLP, to enable them to issue such a letter.
(g) NASDAQ. The shares of Eclipsys Voting Common Stock to be issued in
the Merger shall have been approved for quotation on the Nasdaq National Market.
Section 7.02 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ECLIPSYS AND SUB.
The obligations of Eclipsys and Sub to effect the Merger are subject to the
satisfaction of each of the following conditions, any of which may be waived in
writing exclusively by Eclipsys:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of TSI set forth in this Agreement shall be true and correct as of the date of
this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date, except (i) for changes contemplated by this Agreement and (ii)
in the case of representations and warranties that are not qualified as to
materiality, where the failures to be true and correct, individually or in the
aggregate, have not had and are not reasonably likely to have a TSI Material
Adverse Effect or a material adverse effect upon the consummation of the
transactions contemplated hereby; and Eclipsys shall have received a certificate
signed on behalf of TSI by the chief executive officer and the chief financial
officer of TSI to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF TSI. TSI shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date; and Eclipsys shall have received a
certificate signed on behalf of TSI by the chief executive officer and the chief
financial officer of TSI to such effect.
(c) TAX OPINION. Eclipsys shall have received a written opinion from
Xxxx and Xxxx LLP, counsel to Eclipsys, to the effect that the Merger will be
treated for Federal income tax purposes as a tax-free reorganization within the
meaning of Section 368(a) of the Code.
(d) DISSENTING SHARES. The total number of Dissenting Shares shall not
be greater than 5% of the total number of shares of TSI Common Stock outstanding
immediately prior to the Effective Date.
Section 7.03 ADDITIONAL CONDITIONS TO OBLIGATIONS OF TSI. The
obligation of TSI to effect the Merger is subject to the satisfaction of each of
the following conditions, any of which may be waived in writing exclusively by
TSI:
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(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Eclipsys and Sub set forth in this Agreement shall be true and correct as of
the date of this Agreement and (except to the extent such representations speak
as of an earlier date) as of the Closing Date as though made on and as of the
Closing Date, except (i) for changes contemplated by this Agreement and (ii) in
the case of representations and warranties that are not qualified as to
materiality, where the failures to be true and correct, individually or in the
aggregate, have not had and are not reasonably likely to have an Eclipsys
Material Adverse Effect or a material adverse effect upon the consummation of
the transactions contemplated hereby; and TSI shall have received a certificate
signed on behalf of Eclipsys by the chief executive officer and the chief
financial officer of Eclipsys to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF ECLIPSYS AND SUB. Eclipsys and Sub
shall have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and TSI
shall have received a certificate signed on behalf of Eclipsys by the chief
executive officer and the chief financial officer of Eclipsys to such effect.
(c) TAX OPINION. TSI shall have received the opinion of Xxxxx, Xxxx &
Xxxxx LLP, counsel to TSI, to the effect that the Merger will be treated for
Federal income tax purposes as a tax-free reorganization within the meaning of
Section 368(a) of the Code.
(d) WARBURG REGISTRATION RIGHTS AGREEMENT. Eclipsys shall have executed
and delivered the Warburg Registration Rights Agreement.
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.01 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 8.01(b) through 8.01(g),
by written notice by the terminating party to the other party), whether before
or after approval of the matters presented in connection with the Merger by the
stockholders of TSI or Eclipsys:
(a) by mutual written consent of Eclipsys and TSI; or
(b) by either Eclipsys or TSI if the Merger shall not have been
consummated by April 30, 1999 (the "Outside Date") (provided that the right to
terminate this Agreement under this Section 8.01(b) shall not be available to
any
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party whose failure to fulfill any obligation under this Agreement has been the
cause of or resulted in the failure of the Merger to occur on or before such
date); or
(c) by either Eclipsys or TSI if a court of competent jurisdiction or
other Governmental Entity shall have issued a nonappealable final order, decree
or ruling or taken any other nonappealable final action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger; or
(d) by Eclipsys, if, at the TSI Stockholders' Meeting (including any
adjournment or postponement), the requisite vote of the stockholders of TSI in
favor of this Agreement and the Merger shall not have been obtained; or by TSI
if, at the Eclipsys Stockholders' Meeting (including any adjournment or
postponement), the requisite vote of the stockholders of Eclipsys in favor of
the Eclipsys Voting Proposals shall not have been obtained; or
(e) by Eclipsys, if (i) the Board of Directors of TSI shall have
withdrawn or modified in a manner adverse to Eclipsys its recommendation of this
Agreement or the Merger; (ii) the Board of Directors of TSI shall have
recommended to the stockholders of TSI an Alternative Transaction (as defined in
Section 8.03(h)); (iii) a tender offer or exchange offer for 15% or more of the
outstanding shares of TSI Voting Common Stock is commenced (other than by
Eclipsys or an Affiliate of Eclipsys) and the Board of Directors of TSI
recommends that the stockholders of TSI tender their shares in such tender or
exchange offer; or (iv) for any reason (other than by reason of the Joint Proxy
Statement not having been cleared by the SEC) TSI fails to call and hold the TSI
Stockholders' Meeting by the Outside Date (provided that Eclipsys' right to
terminate this Agreement under such clause (iv) shall not be available if at
such time TSI would be entitled to terminate this Agreement under Section
8.01(h)); or
(f) by TSI, if (i) the Board of Directors of Eclipsys shall have
withdrawn or modified in a manner adverse to TSI its recommendation of this
Agreement, the Merger or the Eclipsys Voting Proposals; (ii) the Board of
Directors of Eclipsys shall have recommended to the stockholders of Eclipsys an
Alternative Transaction; (iii) a tender offer or exchange offer for 15% or more
of the outstanding shares of Eclipsys Voting Common Stock is commenced (other
than by TSI or an Affiliate of TSI) and the Board of Directors of Eclipsys
recommends that the stockholders of Eclipsys tender their shares in such tender
offer or exchange offer; or (iv) for any reason (other than by reason of the
Joint Proxy Statement not having been cleared by the SEC) Eclipsys fails to call
and hold the Eclipsys Stockholders' Meeting by the Outside Date (provided that
TSI's right to terminate this Agreement under such clause (iv) shall not be
available if at such time Eclipsys would be entitled to terminate this Agreement
under Section 8.01(h)); or
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(g) by TSI, if the Board of Directors of TSI accepts or approves a
Superior Proposal, or recommends a Superior Proposal to the stockholders of TSI;
or
(h) by Eclipsys or TSI, if there has been a breach of any
representation, warranty, covenant or agreement on the part of the other party
set forth in this Agreement, any of which breaches (i) causes the conditions set
forth in Section 7.02(a), (b), (e) or (f) (in the case of termination by
Eclipsys) or 7.03(a), (b) or (e) (in the case of termination by TSI) not to be
satisfied, and (ii) shall not have been cured within 20 business days following
receipt by the breaching party of written notice of such breach from the other
party.
Section 8.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 8.01, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of Eclipsys, TSI,
Sub or their respective officers, directors, stockholders or Affiliates, except
as set forth in Section 8.03; provided, that no such termination shall limit or
otherwise relieve the liability of any party for any breach of this Agreement
(except to the extent that liability may be limited by Section 8.03(c) or
Section 8.03(e) below); and provided further, that the provisions of Section
8.03 of this Agreement and the Confidentiality Agreement shall remain in full
force and effect and survive any termination of this Agreement.
Section 8.03 FEES AND EXPENSES.
(a) Except as set forth in this Section 8.03, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated; provided, however, that TSI and Eclipsys shall share
equally all fees and expenses, other than attorneys' fees, incurred in relation
to the printing and filing of the Joint Proxy Statement (including any related
preliminary materials) and the Registration Statement (including financial
statements and exhibits) and any amendments or supplements.
(b) TSI shall pay Eclipsys up to $2,000,000 as reimbursement for
expenses of Eclipsys actually incurred relating to the transactions contemplated
by this Agreement prior to termination (including, but not limited to, fees and
expenses of Eclipsys' counsel, accountants and financial advisors, but excluding
any discretionary fees paid to such financial advisors), upon the termination of
this Agreement by Eclipsys pursuant to Section 8.01(d) as a result of the
failure to receive the requisite vote for approval of this Agreement and the
Merger by the stockholders of TSI at the TSI Stockholders' Meeting, Section
8.01(e), Section 8.01(g) or Section 8.01(h) as a result of a breach by TSI of
any of the covenants set forth in any of Sections 5.01, 5.04, 6.01,
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6.02, 6.03, 6.04, 6.05, 6.06, 6.07, 6.08, 6.09, 6.10, 6.16 or 6.18 of this
Agreement (collectively, the "TSI Material Covenants").
(c) TSI shall pay Eclipsys a termination fee of $9,100,000 upon
the earliest to occur of the following events (each an "Eclipsys Termination Fee
Event"):
(i) the termination of this Agreement by Eclipsys
pursuant to Section 8.01(e); or
(ii) the termination of this Agreement by Eclipsys
pursuant to Section 8.01(h) after a breach by TSI of any of the TSI Material
Covenants; or
(iii) consummation of an Alternative Transaction with
respect to TSI within twelve (12) months following the failure to receive the
requisite vote for approval of this Agreement and the Merger by the stockholders
of TSI at the TSI Stockholders' Meeting if, at the time of such failure, any
Alternative Transaction relating to TSI had been announced and had not been
absolutely and unconditionally withdrawn and abandoned; or
(iv) the termination of this Agreement by TSI pursuant to
Section 8.01(g).
Notwithstanding the foregoing, any amount payable pursuant to this Section
8.03(c) shall be reduced, on a dollar-for-dollar basis, by any amount
theretofore paid to Eclipsys pursuant to Section 8.03(b). TSI agrees that it
will not structure any transaction or agreement for the purpose of avoiding
payment of the termination fee required by this Section 8.03(c). TSI further
acknowledges that the agreements contained in this Section 8.03(c) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Eclipsys would not enter into this Agreement;
accordingly, if TSI fails to promptly pay the amount due pursuant to this
Section 8.03(c), and, in order to obtain such payment, Eclipsys commences a suit
which results in a judgment against TSI for the fee set forth in this Section
8.03(c), TSI shall pay to Eclipsys its costs and expenses (including fees and
disbursements of counsel) in connection with such suit, together with interest
on the amount of the termination fee at the prime rate of Citibank, N.A. on the
date such payment was required to be made. Eclipsys and TSI further acknowledge
and agree that it may be difficult and impractical to measure in money the
damages which will accrue by reason of the occurrence of an Eclipsys Termination
Fee Event. Therefore, Eclipsys and TSI agree that payment of the termination fee
and any other fees, costs or expenses due under this Section 8.03(c) shall
constitute liquidated damages and not a penalty and shall further constitute the
sole and exclusive remedy of Eclipsys for any losses, damages, claims, costs or
expenses arising from the occurrence of any Eclipsys Termination Fee Event.
- 50 -
59
(d) Eclipsys shall pay TSI up to $2,000,000 as reimbursement for
expenses of TSI actually incurred relating to the transactions contemplated by
this Agreement prior to termination (including, but not limited to, fees and
expenses of TSI's counsel, accountants and financial advisors, but excluding any
discretionary fees paid to such financial advisors), upon the termination of
this Agreement by TSI pursuant to Section 8.01(d) as a result of the failure to
receive the requisite vote for approval of the Eclipsys Voting Proposals by the
stockholders of Eclipsys at the Eclipsys Stockholders' Meeting, Section 8.01(f)
or Section 8.01(h) as a result of a breach by Eclipsys of any of the covenants
set forth in Sections 5.02, 6.01, 6.03, 6.04, 6.05, 6.06, 6.07, 6.08, 6.09,
6.10, 6.11, 6.12, 6.15, 6.17 or 6.18 of this Agreement (collectively, the
"Eclipsys Material Covenants").
(e) Eclipsys shall pay TSI a termination fee of $9,100,000 upon
the earliest to occur of the following events (each a "TSI Termination Fee
Event"):
(i) the termination of this Agreement by TSI pursuant to
Section 8.01(f), or
(ii) the termination of this Agreement by TSI pursuant to
Section 8.01(h) after a breach by Eclipsys of any of the Eclipsys Material
Covenants; or
(iii) consummation of an Alternative Transaction with
respect to Eclipsys within twelve (12) months following the failure to receive
the requisite vote for approval of the Eclipsys Voting Proposals by the
stockholders of Eclipsys at the Eclipsys Stockholders' Meeting if, at the time
of such failure, any Alternative Transaction relating to Eclipsys had been
announced and had not been absolutely and unconditionally withdrawn and
abandoned.
Notwithstanding the foregoing, any amount payable pursuant to this Section
8.03(e) shall be reduced, on a dollar-for-dollar basis, by any amount
theretofore paid to TSI pursuant to Section 8.03(d). Eclipsys agrees that it
will not structure any transaction or agreement for the purpose of avoiding
payment of the termination fee required by this Section 8.03(e). Eclipsys
further acknowledges that the agreements contained in this Section 8.03(e) are
an integral part of the transactions contemplated by this Agreement, and that,
without these agreements, TSI would not enter into this Agreement; accordingly,
if Eclipsys fails to promptly pay the amount due pursuant to this Section
8.03(e), and, in order to obtain such payment, TSI commences a suit which
results in a judgment against Eclipsys for the fee set forth in this Section
8.03(e), Eclipsys shall pay to TSI its costs and expenses (including fees and
disbursements of counsel) in connection with such suit, together with interest
on the amount of the termination fee at the prime rate of Citibank, N.A. on the
date such payment was required to be made. Eclipsys and TSI further acknowledge
and agree that it may be difficult and impractical to measure in money the
damages which will accrue by reason of the occurrence of a TSI Termination Fee
Event. Therefore,
- 51 -
60
Eclipsys and TSI agree that payment of the termination fee and any other fees,
costs or expenses due under this Section 8.03(e) shall constitute liquidated
damages and not a penalty and shall further constitute the sole and exclusive
remedy of TSI for any losses, damages, claims, costs or expenses arising from
the occurrence of any TSI Termination Fee Event.
(g) The expenses and fees, if applicable, payable pursuant to Section
8.03(b), 8.03(c), 8.03(d) and 8.03(e) shall be paid within one business day
after the first to occur of the events described in Section 8.03(b), 8.03(c),
8.03(d) or 8.03(e)(i), (ii) or (iii); provided that in no event shall Eclipsys
or TSI, as the case may be, be required to pay the expenses and fees, if
applicable, to the other, if, immediately prior to the termination of this
Agreement, the party to receive the expenses and fees, if applicable, was in
material breach of its obligations under this Agreement.
(h) As used in this Agreement, "Alternative Transaction" means any of
(i) a transaction other than an Eclipsys Permitted Acquisition pursuant to which
any person (or group of persons) other than Eclipsys or TSI or their respective
affiliates (a "Third Party"), acquires more than 15% of the outstanding shares
of TSI Voting Common Stock or Eclipsys Voting Common Stock, as the case may be,
pursuant to a tender offer or exchange offer or otherwise, (ii) a merger or
other business combination involving Eclipsys or TSI other than an Eclipsys
Permitted Acquisition pursuant to which any Third Party acquires more than 15%
of the outstanding equity securities of Eclipsys or TSI or the entity surviving
such merger or business combination, (iii) any other transaction other than an
Eclipsys Permitted Acquisition pursuant to which any Third Party acquires
control of assets (including for this purpose the outstanding equity securities
of Subsidiaries of Eclipsys or TSI, and the entity surviving any merger or
business combination including any of them) of Eclipsys or TSI having a fair
market value (as determined by the Board of Directors of Eclipsys or TSI, as the
case may be, in good faith) equal to more than 15% of the fair market value of
all the assets of Eclipsys or TSI and its Subsidiaries, taken as a whole,
immediately prior to such transaction, or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
Section 8.04 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of TSI or of Eclipsys, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 8.05 EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors,
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61
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
Section 9.01 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Sections 1.04, 2.01, 2.02, 6.12,
6.14, 8.03 and Article IX, and the agreements of the Affiliates delivered
pursuant to Section 6.10. The Confidentiality Agreement shall survive the
execution and delivery of this Agreement.
Section 9.02 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as the party shall specify by like notice):
(a) if to Eclipsys or Sub, to
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attn: Chief Executive Officer
Telecopy:(000) 000-0000
with a copy to:
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
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62
(b) if to TSI, to
Transition Systems, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Chief Executive Officer
Telecopy: (000) 000-0000
with a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Xx., Esq.
Telecopy: (000) 000-0000
Section 9.03 INTERPRETATION. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement," "the date hereof," and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to
October 29, 1998.
Section 9.04 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
Section 9.05 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement (including the documents and the instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 6.14 is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder; provided that the Confidentiality Agreement shall remain in
full force and effect until the Effective Time. Each party hereto agrees that,
except for the representations and warranties
- 54 -
63
contained in this Agreement, neither TSI nor Eclipsys makes any other
representations or warranties, and each hereby disclaims any other
representations and warranties made by itself or any of its officers, directors,
employees, agents, financial and legal advisors or other representatives, with
respect to the execution and delivery of this Agreement or the transactions
contemplated hereby, notwithstanding the delivery or disclosure to the other or
the other's representatives of any documentation or other information with
respect to any one or more of the foregoing.
Section 9.06 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
any applicable principles of conflicts of law.
Section 9.07 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
[Remainder of page intentionally left blank.]
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64
IN WITNESS WHEREOF, Eclipsys, Sub and TSI have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the date
first written above.
Eclipsys Corporation
[seal] By: /s/ Xxxxxx Xxxxxx
-----------------------------------
President
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
Treasurer
Exercise Acquisition Corp.
[seal] By: /s/ Xxxxxx Xxxxxx
-----------------------------------
President
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
Treasurer
Transition Systems, Inc.
[seal] By: /s/ Xxxxxx X. Xxxx
-----------------------------------
President
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Treasurer
- 56 -
65
Exhibit A-1
-----------
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of October 29, 1998,
between __________________________ (the "Stockholder"), who is a stockholder of
Transition Systems, Inc., a Massachusetts corporation (the "Company"), and
Eclipsys Corporation, a Delaware corporation ("Buyer").
WHEREAS, concurrently with the execution of this Agreement, the
Company, Buyer and a wholly-owned subsidiary of Buyer ("Sub") have entered into
an Agreement and Plan of Merger (as the same may be amended from time to time,
the "Merger Agreement"), providing for the merger (the "Merger") of Sub with and
into the Company pursuant to the terms and conditions of the Merger Agreement;
and
WHEREAS, the Stockholder owns of record and beneficially the number of
shares of capital stock of the Company set forth beneath his signature below
(the "Shares") and wishes to enter into this Agreement with respect to all of
such Shares ; and
WHEREAS, in order to induce Buyer to enter into the Merger Agreement,
the Stockholder has agreed, upon the terms and subject to the conditions set
forth herein, to vote the Shares and to deliver an irrevocable proxy to Buyer to
vote the Shares at a meeting of the Company's stockholders, in favor of approval
and adoption of the Merger Agreement and the Merger.
NOW THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Agreement to Vote Shares. The Stockholder agrees during the term of
this Agreement to vote the Stockholder's Shares, in person or by proxy, in favor
of approval and adoption of the Merger Agreement and the Merger at every meeting
of the stockholders of the Company at which such matters are considered and at
every adjournment thereof. The Stockholder agrees to deliver to Buyer upon
request immediately prior to any vote contemplated by clause (a) or (b) above a
proxy substantially in the form attached hereto as Annex A (a "Proxy"), which
Proxy shall be irrevocable during the term of this Agreement to the extent
permitted under Massachusetts law, and Buyer agrees to vote the Shares subject
to each such Proxy in favor of approval and adoption of the Merger Agreement and
the Merger.
2. No Voting Trusts. The Stockholder agrees that the Stockholder will
not, nor will the Stockholder permit any entity under the Stockholder's control
to, deposit
A-1-1
66
any of the Stockholder's Shares in a voting trust or subject any of its Shares
to any arrangement with respect to the voting of the Shares inconsistent with
this Agreement.
3. Limitation on Dispositions and Proxies. During the term of this
Agreement, the Stockholder agrees not to sell, assign, pledge, transfer or
otherwise dispose of, or grant any proxies with respect to (except as
contemplated by this Agreement) any of the Stockholder's Shares.
4. Specific Performance. Each party hereto acknowledges that it will be
impossible to measure in money the damage to the other party if a party hereto
fails to comply with the obligations imposed by this Agreement, and that, in the
event of any such failure, the other party will not have an adequate remedy at
law or in damages. Accordingly, each party hereto agrees that injunctive relief
or other equitable remedy, in addition to remedies at law or damages, is the
appropriate remedy for any such failure and will not oppose the granting of such
relief on the basis that the other party has an adequate remedy at law. Each
party hereto agrees that it will not seek, and agrees to waive any requirement
for, the securing or posting of a bond in connection with any other party's
seeking or obtaining such equitable relief.
5. Term of Agreement; Termination. Subject to Section 9(e), the term of
this Agreement shall commence on the date hereof and such term and this
Agreement shall terminate upon the earliest to occur of (i) the Effective Time
(as defined in the Merger Agreement), and (ii) the date on which the Merger
Agreement is terminated in accordance with its terms. Upon such termination, no
party shall have any further obligations or liabilities hereunder; provided,
that such termination shall not relieve any party from liability for any breach
of this Agreement prior to such termination.
6. Representations and Warranties of the Stockholder. The Stockholder
represents and warrants to Buyer that, as of the date hereof, (a) the
Stockholder has full legal power and authority to execute and deliver this
Agreement and the Proxy, and (b) the Stockholder's Shares are free and clear of
all proxies.
7. Entire Agreement. This Agreement supersedes all prior agreements,
written or oral, among the parties hereto with respect to the subject matter
hereof and contains the entire agreement among the parties with respect to the
subject matter hereof. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an
instrument in writing signed by all parties hereto. No waiver of any provisions
hereof by any party shall be deemed a waiver of any other provisions hereof by
any such party, nor shall any such waiver be deemed a continuing waiver of any
provisions hereof by such party.
8. Notices. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
facsimile or like transmission
A-1-2
67
(with confirmation) and on the next business day when sent by Federal Express,
Express mail or other reputable overnight courier service to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
If to Buyer:
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
If to Stockholder:
With a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Xx., Esq.
Fax: (000) 000-0000
9. Miscellaneous.
(a) This Agreement shall be deemed a contract made under, and for
all purposes shall be construed in accordance with, the laws of The Commonwealth
of Massachusetts, without reference to its conflicts of law principles.
(b) If any provision of this Agreement or the application of such
provision to any person or circumstances shall be held invalid or unenforceable
by a court of
A-1-3
68
competent jurisdiction, such provision or application shall be unenforceable
only to the extent of such invalidity or unenforceability, and the remainder of
the provisions not held invalid or unenforceable and the application of such
provisions to persons or circumstances other than the party as to which it is
held invalid, and the remainder of this Agreement, shall not be affected.
(c) This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
(d) All Section headings herein are for convenience of reference
only and are not part of this Agreement, and no construction or reference shall
be derived therefrom.
(e) The obligations of the Stockholder set forth in this Agreement
shall not be effective or binding upon the Stockholder until after such time as
the Merger Agreement is executed and delivered by the Company, Buyer and Sub,
and the parties agree that there is not and has not been any other agreement,
arrangement or understanding between the parties hereto with respect to the
matters set forth herein.
[Signature page follows]
A-1-4
69
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
Eclipsys Corporation
By:________________________________
Name:
Title:
STOCKHOLDER
-----------------------------------
-----------------------------------
Signature
Shares:____________
------------
A-1-5
70
(ANNEX A)
PROXY
The undersigned, for consideration received, hereby appoints Eclipsys
Corporation, a Delaware corporation ("Buyer"), its proxy to vote all shares of
capital stock owned by the undersigned which the undersigned is entitled to vote
at any meeting of stockholders of Transition Systems, Inc., a Massachusetts
corporation (the "Company"), and at any adjournment thereof, to be held for the
purpose of voting upon a proposal to approve and adopt the Agreement and Plan of
Merger, dated as of October 29, 1998 (the "Merger Agreement"), by and among the
Company, Buyer and a wholly-owned subsidiary of Buyer ("Sub"), providing for the
merger (the "Merger") of Sub with and into the Company, FOR such proposal and
AGAINST any Acquisition Proposal that is not a Superior Proposal (as such terms
are defined in the Merger Agreement). This proxy is subject to the terms of the
Voting Agreement dated as of October 29, 1998 between the undersigned and Buyer,
a copy of such Agreement being attached hereto (the "Voting Agreement"), is
coupled with an interest and revokes all prior proxies granted by the
undersigned with respect to such shares, is irrevocable and shall terminate and
be of no further force or effect automatically at such time as the Voting
Agreement terminates in accordance with its terms.
Dated: October 29, 1998
STOCKHOLDER
----------------------------------
----------------------------------
Signature
A-1-6
71
Exhibit A-2
-----------
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of October 29, 1998,
between __________________________ (the "Stockholder"), who is a stockholder of
Eclipsys Corporation, a Delaware corporation ("Buyer"), and Transition Systems,
Inc., a Massachusetts corporation (the "Company").
WHEREAS, concurrently with the execution of this Agreement, the
Company, Buyer and a wholly-owned subsidiary of Buyer ("Sub") have entered into
an Agreement and Plan of Merger (as the same may be amended from time to time,
the "Merger Agreement"), providing for the merger (the "Merger") of Sub with and
into the Company pursuant to the terms and conditions of the Merger Agreement;
and
WHEREAS, the Stockholder owns of record and beneficially the number of
shares of capital stock of Buyer set forth beneath his signature below (the
"Shares") and wishes to enter into this Agreement with respect to all of such
Shares; and
WHEREAS, in order to induce the Company to enter into the Merger
Agreement, the Stockholder has agreed, upon the terms and subject to the
conditions set forth herein, to vote the Shares and to deliver an irrevocable
proxy to the Company to vote the Shares at a meeting of Buyer's stockholders, in
favor of the Eclipsys Voting Proposals (as defined in the Merger Agreement)
pursuant to the terms of the Merger Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Agreement to Vote Shares. The Stockholder agrees during the term of
this Agreement to vote the Stockholder's Shares, in person or by proxy, in favor
of the Eclipsys Voting Proposals at every meeting of the stockholders of Buyer
at which such matters are considered and at every adjournment thereof. The
Stockholder agrees to deliver to the Company upon request immediately prior to
any vote contemplated by this section a proxy substantially in the form attached
hereto as Annex A (a "Proxy"), which Proxy shall be irrevocable during the term
of this Agreement to the extent permitted under Delaware law, and the Company
agrees to vote the Shares subject to each such Proxy in favor of approval and
adoption of the Merger Agreement and the Merger.
2. No Voting Trusts. The Stockholder agrees that the Stockholder will
not, nor will the Stockholder permit any entity under the Stockholder's control
to, deposit
A-2-1
72
any of the Stockholder's Shares in a voting trust or subject any of its Shares
to any arrangement with respect to the voting of the Shares inconsistent with
this Agreement.
3. Limitation on Dispositions and Proxies. During the term of this
Agreement, the Stockholder agrees not to sell, assign, pledge, transfer or
otherwise dispose of, or grant any proxies with respect to (except as
contemplated by this Agreement) any of the Stockholder's Shares.
4. Specific Performance. Each party hereto acknowledges that it will be
impossible to measure in money the damage to the other party if a party hereto
fails to comply with the obligations imposed by this Agreement, and that, in the
event of any such failure, the other party will not have an adequate remedy at
law or in damages. Accordingly, each party hereto agrees that injunctive relief
or other equitable remedy, in addition to remedies at law or damages, is the
appropriate remedy for any such failure and will not oppose the granting of such
relief on the basis that the other party has an adequate remedy at law. Each
party hereto agrees that it will not seek, and agrees to waive any requirement
for, the securing or posting of a bond in connection with any other party's
seeking or obtaining such equitable relief.
5. Term of Agreement; Termination. Subject to Section 9(e), the term of
this Agreement shall commence on the date hereof and such term and this
Agreement shall terminate upon the earliest to occur of (i) the Effective Time
(as defined in the Merger Agreement), and (ii) the date on which the Merger
Agreement is terminated in accordance with its terms. Upon such termination, no
party shall have any further obligations or liabilities hereunder; provided,
that such termination shall not relieve any party from liability for any breach
of this Agreement prior to such termination.
6. Representations and Warranties of the Stockholder. The Stockholder
represents and warrants to the Company that, as of the date hereof, (a) the
Stockholder has full legal power and authority to execute and deliver this
Agreement and the Proxy, and (b) the Stockholder's Shares are free and clear of
all proxies.
7. Entire Agreement. This Agreement supersedes all prior agreements,
written or oral, among the parties hereto with respect to the subject matter
hereof and contains the entire agreement among the parties with respect to the
subject matter hereof. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an
instrument in writing signed by all parties hereto. No waiver of any provisions
hereof by any party shall be deemed a waiver of any other provisions hereof by
any such party, nor shall any such waiver be deemed a continuing waiver of any
provisions hereof by such party.
8. Notices. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
facsimile or like transmission
A-2-2
73
(with confirmation) and on the next business day when sent by Federal Express,
Express mail or other reputable overnight courier service to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
If to the Company:
Transition Systems, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
If to Stockholder:
With a copy to:
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
A-2-3
74
9. Miscellaneous.
(a) This Agreement shall be deemed a contract made under, and for
all purposes shall be construed in accordance with, the laws of the State of
Delaware, without reference to its conflicts of law principles.
(b) If any provision of this Agreement or the application of such
provision to any person or circumstances shall be held invalid or unenforceable
by a court of competent jurisdiction, such provision or application shall be
unenforceable only to the extent of such invalidity or unenforceability, and the
remainder of the provisions not held invalid or unenforceable and the
application of such provisions to persons or circumstances other than the party
as to which it is held invalid, and the remainder of this Agreement, shall not
be affected.
(c) This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
(d) All Section headings herein are for convenience of reference
only and are not part of this Agreement, and no construction or reference shall
be derived therefrom.
(e) The obligations of the Stockholder set forth in this Agreement
shall not be effective or binding upon the Stockholder until after such time as
the Merger Agreement is executed and delivered by the Company, Buyer and Sub,
and the parties agree that there is not and has not been any other agreement,
arrangement or understanding between the parties hereto with respect to the
matters set forth herein.
[Signature page follows]
A-2-4
75
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
Transition Systems, Inc.
By:________________________________
Name:
Title:
STOCKHOLDER
-----------------------------------
-----------------------------------
Signature
Shares:____________
------------
A-2-5
76
(ANNEX A)
PROXY
The undersigned, for consideration received, hereby appoints Transition
Systems, Inc., a Massachusetts corporation (the "Company"), its proxy to vote
all shares of capital stock owned by the undersigned which the undersigned is
entitled to vote at any meeting of stockholders of Eclipsys Corporation, a
Delaware corporation ("Buyer"), and at any adjournment thereof, to be held for
the purpose of voting upon the Eclipsys Voting Proposals, as such term is
defined in the Agreement and Plan of Merger, dated as of October 29, 1998 (the
"Merger Agreement"), by and among the Company, Buyer and a wholly-owned
subsidiary of Buyer ("Sub"), providing for the merger (the "Merger") of Sub with
and into the Company FOR such proposals. This proxy is subject to the terms of
the Voting Agreement dated as of October 29, 1998 between the undersigned and
the Company, a copy of such Agreement being attached hereto (the "Voting
Agreement"), is coupled with an interest and revokes all prior proxies granted
by the undersigned with respect to such shares, is irrevocable and shall
terminate and be of no further force or effect automatically at such time as the
Voting Agreement terminates in accordance with its terms.
Dated: October 29, 1998
STOCKHOLDER
-----------------------------------
-----------------------------------
Signature
77
EXHIBIT B-1
-----------
TSI Affiliate Agreement
AFFILIATE AGREEMENT
______________, 1998
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Transition Systems, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Ladies and Gentlemen:
An Agreement and Plan of Merger dated as of October 29, 1998 (the
"Agreement") has been entered into by and among Eclipsys Corporation, a Delaware
corporation ("Eclipsys"), Fitness Merger Corp., a Massachusetts corporation and
a wholly-owned subsidiary of Eclipsys (the "Sub"), and Transition Systems, Inc.,
a Massachusetts corporation ("TSI"). The Agreement provides for the merger of
the Sub with and into TSI (the "Merger"). In accordance with the Agreement,
shares of Common Stock, $.01 par value per share, and Non-Voting Common stock,
$.01 par value per share of TSI (collectively the "TSI Common Stock") shall be
converted into shares of Common Stock, $.01 par value per share, of Eclipsys
(the "Eclipsys Voting Common Stock"), as described in the Agreement.
The undersigned has been advised that as of the date of this agreement
the undersigned may be deemed to be an "affiliate" of TSI, as the term
"affiliate" is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
Rules and Regulations of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), and/or as such term is used in, and for purposes of, Accounting Series
Releases Nos. 130 and 135, as amended, of the Commission.
In consideration of the mutual agreements, provisions and covenants set
forth in the Agreement and hereinafter in this agreement, the undersigned
represents and agrees as follows:
X-0-0
00
0. POOLING REQUIREMENTS. The undersigned will not within the 30
day period prior to the Effective Time (as defined in the Agreement), sell,
transfer, pledge, hypothecate or otherwise dispose of, or reduce the
undersigned's interest in or risk relating to, any shares of Eclipsys Common
Stock or TSI Common Stock owned by the undersigned. In addition, the undersigned
will not sell, transfer, pledge, hypothecate or otherwise dispose of, or reduce
the undersigned's interest in or risk relating to, any Eclipsys Voting Common
Stock issued to the undersigned pursuant to the Merger, or any other shares of
Eclipsys capital stock, until after such time as Eclipsys has published (within
the meaning of Accounting Series Release No. 135, as amended, of the Commission)
financial results covering at least 30 days of combined operations of Eclipsys
and TSI.
2. RULE 145. The undersigned will not offer, sell, pledge,
hypothecate, transfer or otherwise dispose of, or reduce its interest in or risk
relating to, any of the shares of Eclipsys Voting Common Stock issued to the
undersigned in the Merger unless at such time either: (i) such transaction is
permitted pursuant to the provisions of Rule 145 under the Securities Act; (ii)
the undersigned shall have furnished to Eclipsys an opinion of counsel,
reasonably satisfactory to Eclipsys, to the effect that such transaction is
otherwise exempt from the registration requirements of the Securities Act; or
(iii) a registration statement under the Securities Act covering the proposed
offer, sale, pledge, hypothecation, transfer or other disposition shall be
effective under the Securities Act.
3. LEGEND.
(a) The undersigned understands that all certificates
representing Eclipsys Voting Common Stock delivered to the undersigned pursuant
to the Merger shall bear a legend in substantially the form set forth below,
until the earlier to occur of (i) one of the events referred to in Section 2
above or (ii) the date on which the undersigned requests removal of such legend,
provided, that such request occurs at least two years from the Effective Date
(as defined in the Merger Agreement) and that the undersigned is not at the time
of such request, and has not been during the three months period preceding to
such request, an affiliate of Eclipsys.
"The shares represented by this certificate were issued in a
transaction to which Rule 145 of the Securities Act of 1933 applies and
may only be transferred in accordance with the provisions of such rule.
In addition, the shares represented by this certificate may only be
transferred in accordance with the terms of an affiliate agreement
dated ____________, 1998 between the initial holder hereof and Eclipsys
Corporation, a copy of which agreement may be inspected by the holder
of this certificate at the principal offices of Eclipsys Corporation,
or furnished by Eclipsys Corporation to the holder of this certificate
upon written request, without charge."
B-1-2
79
(b) Eclipsys in its discretion may cause stop transfer orders
to be placed with its transfer agent with respect to the certificates for the
shares of Eclipsys Voting Common Stock that are required to bear the foregoing
legend.
4. GENERAL PROVISIONS. This agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of laws. This agreement shall be binding on
the undersigned's successors and assigns, including his or her heirs, executors
and administrators.
The undersigned has carefully read this agreement and discussed its
requirements, to the extent the undersigned believed necessary, with its counsel
or counsel for TSI.
Very truly yours,
------------------------------------
Signature
------------------------------------
Print Name
Accepted:
ECLIPSYS CORPORATION
By: ______________________
Name: ____________________
Title: ___________________
Dated: ___________________
TRANSITION SYSTEMS, INC.
By: ______________________
Name: ____________________
Title: ___________________
Dated: ___________________
X-0-0
00
XXXXXXX X-0
-----------
Eclipsys Affiliate Agreement
AFFILIATE AGREEMENT
______________, 1998
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Transition Systems, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Ladies and Gentlemen:
An Agreement and Plan of Merger dated as of October 29, 1998 (the
"Agreement") has been entered into by and among Eclipsys Corporation, a Delaware
corporation ("Eclipsys"), Fitness Merger Corp., a Massachusetts corporation and
a wholly-owned subsidiary of Eclipsys (the "Sub"), and Transition Systems, Inc.,
a Massachusetts corporation ("TSI"). The Agreement provides for the merger of
the Sub with and into TSI (the "Merger"). In accordance with the Agreement,
shares of Common Stock, $.01 par value per share, and Non-Voting Common Stock,
$.01 par value per share, of TSI (collectively the "TSI Common Stock") shall be
converted into shares of Common Stock, $.01 par value per share (the "Eclipsys
Voting Common Stock"), as described in the Agreement.
The undersigned has been advised that as of the date of this agreement
the undersigned may be deemed to be an "affiliate" of Eclipsys, as the term
"affiliate" is defined under the Rules and Regulations of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, and/or as such term is used in, and for purposes of, Accounting Series
Releases Nos. 103 and 135, as amended, of the Commission.
In consideration of the mutual agreements, provisions and covenants set
forth in the Agreement and hereinafter in this agreement, the undersigned
represents and agrees as follows:
1. POOLING REQUIREMENTS. The undersigned will not within the 30 day
period prior to the Effective Time (as defined in the Agreement), sell,
transfer, pledge,
B-2-1
81
hypothecate or otherwise dispose of, or reduce the undersigned's interest in or
risk relating to, any shares of Eclipsys Common Stock or TSI Common Stock owned
by the undersigned. In addition, the undersigned will not sell, transfer,
pledge, hypothecate or otherwise dispose of, or reduce the undersigned's
interest in or risk relating to any shares of Eclipsys capital stock, until
after such time as Eclipsys has published (within the meaning of Accounting
Series Release No. 135, as amended, of the Commission) financial results
covering at least 30 days of combined operations of Eclipsys and TSI.
2. GENERAL PROVISIONS. This agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of laws. This agreement shall be binding on
the undersigned's successors and assigns, including his heirs, executors and
administrators.
B-2-2
82
The undersigned has carefully read this agreement and discussed its
requirements, to the extent the undersigned believed necessary, with its counsel
or counsel for Eclipsys.
Very truly yours,
------------------------------------
Signature
------------------------------------
Print Name
Accepted:
ECLIPSYS CORPORATION
By: ______________________
Name: ____________________
Title: ___________________
Dated: ___________________
TRANSITION SYSTEMS, INC.
By: ______________________
Name: ____________________
Title: ___________________
Dated: ___________________
X-0-0
00
XXXXXXXX MERGER AGREEMENT
OMITTED SCHEDULES
Certain schedules setting forth exceptions to the representations and
warranties of Eclipsys and TSI have been omitted in accordance with Item
601(b)(2) of Regulation S-K.
The Company will furnish supplementally a copy of any omitted schedule
to the Securities and Exchange Commission upon request. The Company may request
confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended, for any schedules so furnished.
