1
EXHIBIT 2.2
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
among
ECLIPSYS CORPORATION,
SDK MEDICAL COMPUTER SERVICES CORPORATION
and
the Selling Stockholders, as defined herein
June 26, 1997
2
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS 1
ARTICLE 2 STOCK PURCHASE CLOSING 1
2.1 Sale and Purchase of SDK Stock 1
2.2 The Closing 2
2.3 Consideration 2
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF ECLIPSYS 3
3.1 Organization of Eclipsys 3
3.2 Authorization of Transaction 3
3.3 Noncontravention 4
3.4 Brokers' Fees 4
3.5 Capitalization 4
3.6 Financial Statements 5
3.7 Litigation 5
3.8 Alltel Transaction 6
3.9 Events Subsequent to Most Recent Fiscal Quarter End 6
3.10 Undisclosed Liabilities 7
3.11 Intellectual Property 7
3.12 Contracts 8
3.13 Certain Business Relationships with Eclipsys 8
3.14 Disclosure 8
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SDK 8
4.1 Organization, Qualification, Corporate Power, Competence, Etc. 9
4.2 Capitalization 9
4.3 Noncontravention 10
4.4 Title to Assets 11
4.5 Subsidiaries 11
4.6 Financial Statements 11
4.7 Events Subsequent to Most Recent Fiscal Year End 11
4.8 Undisclosed Liabilities 12
4.9 Legal Compliance 13
4.10 Tax Matters 13
4.11 Real Property 14
4.12 Intellectual Property 14
(ii)
3
4.13 Distributions to Shareholders 16
4.14 Contracts, Etc. 16
4.15 Notes and Accounts Receivable 16
4.16 Powers of Attorney 16
4.17 Insurance 17
4.18 Litigation 17
4.19 Product Liability 17
4.20 Employees 18
4.21 Employee Benefits 18
4.22 Brokers 19
4.23 Guaranties 19
4.24 Certain Business Relationships with SDK 20
4.25 Environmental Liabilities 20
4.26 Investment Representations and Warranties 20
4.27 Disclosure 21
ARTICLE 5 COVENANTS: CONDITIONS PRECEDENT TO CLOSING:
CLOSING DELIVERIES 21
5.1 Conduct of Business 21
5.2 Efforts 22
5.3 Discussion with Others 22
5.4 Conditions Precedent to Closing by Eclipsys 22
5.5 Conditions Precedent to Closing by SDK and the
Selling Stockholders 23
5.6 Deliveries at Closing 23
5.7 Waiver of Condition Precedent 26
5.8 Termination Prior to Closing 26
5.9 Material Adverse Change in SMS Litigation 27
ARTICLE 6 COVENANTS 27
6.1 General 27
6.2 Transition 28
6.3 Confidentiality 28
6.4 Eclipsys Common Shares 28
6.5 Announcement 29
6.6 Repurchase by Eclipsys of Eclipsys Common Shares 30
6.7 Payment of Professional Fees 31
6.8 Subordination 31
(iii)
4
ARTICLE 7 INDEMNIFICATION 32
7.1 Indemnity Obligations of the Selling Stockholders 32
7.2 Indemnity Obligations of Eclipsys 33
7.3 Decisions by the Selling Stockholders 33
7.4 Survival of Representations and Warranties 34
7.5 Limitations 34
7.6 Procedures for Claims; Setoff 38
7.7 Subrogation Rights 38
7.8 Release of SDK After Closing 38
ARTICLE 8 MISCELLANEOUS 38
8.1 Nature of Certain Obligations 38
8.2 No Third Party Beneficiaries 38
8.3 Entire Agreement 38
8.4 Succession and Assignment 39
8.5 Counterparts 39
8.6 Headings 39
8.7 Notices 39
8.8 Governing Law 40
8.9 Amendments and Waivers 40
8.10 Severability 41
8.11 Expenses 41
8.12 Construction 41
8.13 Incorporation of Exhibits, Annexes, and Schedules 41
8.14 Submission to Jurisdiction 41
8.15 No Personal Liability of Xxxxxxx X. Xxxxx 41
8.16 Special Provisions Regarding Trusts 43
Annex A Definitions
Exhibit A Instrument of Adherence
Exhibit B Form of Buyer Notes
Exhibit C Form of Allocation Certificate
Exhibit D-l Form of Employment Agreement among Eclipsys, SDK and Xxxxxxx X.
Xxxxxxx
Exhibit D-2 Form of Incentive Stock Option Agreement between Eclipsys and
Xxxxxxx X. Xxxxxxx
Exhibit D-3 Form of Non-Qualified Stock Option Agreement between Eclipsys and
Xxxxxxx X. Xxxxxxx
Exhibit E Form of Amendment No. 1 to Stockholders Agreement
Exhibit F Form of Amendment No. 1 to Registration Rights Agreement
Exhibit G Memorandum of Terms for Lease
(iv)
5
Exhibit H Form of Tax Agreement
Exhibit I Form of Xxxxxxx Reimbursement Agreement
Exhibit J Form of Release
Exhibit K Form of Eclipsys Share Repurchase Notes
Eclipsys Disclosure Schedule - Exceptions to Representations and Warranties
Concerning Eclipsys
SDK Disclosure Schedule - Exceptions to Representations and Warranties
Concerning the Selling Stockholders and SDK
(v)
6
ECLIPSYS
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
This Amended and Restated Stock Purchase Agreement (the "Agreement")
is entered into as of this __ day of June, 1997, and amends and restates that
certain Stock Purchase Agreement, dated May 23, 1997, by and among Eclipsys
Corporation, a Delaware Corporation ("Eclypsis"), SDK Medical Computer Services
Corporation, a Massachusetts corporation ("SDK") and the stockholders of SDK who
had executed the signature pages thereto (the "Signing Stockholders"). This
Amended and Restated Stock Purchase Agreement is made among the foregoing
parties and the other stockholders of SDK (the "Other Stockholders" and,
together with the Signing Stockholders, the "Selling Stockholders"). Eclipsys,
SDK and each of the Selling Stockholders are referred to collectively herein as
the "Parties" and individually as a "Party."
RECITALS:
WHEREAS, Eclipsys desires to purchase, and the Selling Stockholders
desire to sell, all of the issued and outstanding capital stock of SDK upon the
terms and subject to the conditions of this Agreement (the "Acquisition"); and
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
Agreement:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings set
forth on Annex A to this Agreement.
ARTICLE 2
STOCK PURCHASE CLOSING
2.1 Sale and Purchase of SDK Stock. Subject to the terms and conditions
of this Agreement, Eclipsys agrees to purchase, and the Selling Stockholders
agree to sell, the SDK Shares, constituting all of the outstanding capital stock
of SDK. At the Closing, each of the
7
Signing Stockholders covenants and agrees to sell to Eclipsys all of the SDK
Shares owned by such Signing Stockholder on the terms and conditions set forth
in this Agreement, and, if at the Closing the Signing Stockholders do not own
all of the SDK Shares, Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx and Xxxxx Xxxxxxx shall
use diligent efforts to cause the Other Stockholders to become Party to this
Agreement at or prior to the Closing by signing an Instrument of Adherence to
this Agreement, which shall be in the form of Exhibit A hereto. Eclipsys shall
not have any obligation to purchase any SDK Shares pursuant to this Agreement
unless all stockholders of SDK (other than the Signing Stockholders) have
executed and delivered an Instrument of Adherence and all shares of the capital
stock of SDK are tendered at the Closing by the Selling Stockholders.
2.2 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Goulston & Storrs,
000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000, commencing at 9:00 a.m. local time on
June 13, 1997, or such other date as the parties may mutually determine (the
"Closing Date").
2.3 Consideration. The aggregate purchase price payable by Eclipsys
for all the SDK Shares shall be (a) $10,232,000 of cash consideration (the "Cash
Consideration"), and (b) 750,000 Eclipsys Common Shares (the "Share
Consideration") (the number of Eclipsys Common Shares constituting the Share
Consideration having already been adjusted for purposes of this Agreement to
reflect the three-for-two stock split by way of dividend declared by the Board
of Directors on May 19, 1997). Subject to the following paragraph, the Cash
Consideration shall be paid to each Selling Stockholder as follows: (i) one
quarter ($2,558.000) of the Cash Consideration shall be payable in immediately
available funds at the Closing (the "First Installment"), and (ii) three
quarters ($7,674,000) of the Cash Consideration shall be paid with several
subordinated, two-year promissory notes (the "Later Installments"),
substantially in the form of Exhibit B hereto, made by Eclipsys to the Selling
Stockholders, the principal of which notes shall be payable in two equal
installments on April 1, 1998 and April 1, 1999, respectively, with interest
thereon payable quarterly in arrears at the fixed rate of Prime as in effect at
the time of the Closing plus 1.0% (the "Buyer Notes").
Notwithstanding any provisions to the contrary in the immediately
preceding paragraph, the amount of the First Installment payable to the
Specified Employee Stockholders shall be increased, and the amount of the Later
Installments payable to the Specified Employee Stockholders decreased, by such
amount as may be necessary so that, at the Closing, the Specified Employee
Stockholders shall receive a First Installment equal to forty-five percent (45%)
of the total Cash Consideration payable to them.
Eclipsys shall allocate at Closing the Cash Consideration and the
Share Consideration among the Selling Stockholders in such manner as the Selling
Stockholders shall jointly instruct Eclipsys, by delivery to Eclipsys at Closing
of an Allocation Certificate in the form of Exhibit C, executed by all Selling
Stockholders, provided that only Selling Stockholders who are employees of SDK
(and trusts for the benefit of themselves, their spouses and/or their children)
shall be entitled to receive any Share Consideration. The Selling Stockholders
acknowledge and agree.
-2-
8
that the allocation set forth in the Allocation Certificate is and shall be
solely the responsibility of the Selling Stockholders and Eclipsys shall have
no, liability to any of the Selling Stockholders on account thereof.
ARTICLE 3
REPRESENTATIONS AND
WARRANTIES OF ECLIPSYS
Eclipsys represents and warrants to each of the Selling Stockholders
and SDK that the statements contained in this Article 3 are correct and complete
as of the date hereof except as set forth in the disclosure schedule delivered
by Eclipsys to the Selling Stockholders on the date hereof (the "Eclipsys
Disclosure Schedule"):
3.1 Organization of Eclipsys. Eclipsys is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware. Eclipsys is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required, except where the failure to so qualify or obtain authorization would
not have a Material Adverse Effect on Eclipsys. Eclipsys has full corporate
power and authority and all licenses, permits, and authorizations necessary to
carry on the businesses in which it is engaged and to own and use the properties
owned and used by it.
3.2 Authorization of Transaction. Eclipsys has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and each of the other Acquisition Documents, the Employment and
the Option Agreements and to perform its obligations hereunder and thereunder.
This Agreement and the other Acquisition Documents. the Employment and the
Option Agreements, have been duly executed and delivered by Eclipsys, and
constitute, and will at Closing constitute, the legal, valid and binding
obligations of Eclipsys, enforceable against it in accordance with their
respective term. Eclipsys does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by this
Agreement, except in connection with the federal securities laws and any
applicable "Blue Sky" or state securities laws.
3.3 Noncontravention. Neither the execution and the delivery of this
Agreement and the other Acquisition Documents, nor the consummation of the
transactions contemplated hereby or thereby, will (a) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
Eclipsys is subject or, except as disclosed on Schedule 3.3 hereto, any
provision of its charter or bylaws or (b) except as otherwise disclosed on
Schedule 3.3 hereto, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
-3-
9
lease, license, instrument, or other arrangement to which Eclipsys is a party or
by which it is bound or to which any of its assets is subject.
3.4. Brokers' Fees. Eclipsys has no obligation to pay any fees or
commissions to any broker, finder, or similar agent with respect to the
transactions contemplated by this Agreement.
3.5 Capitalization. The entire authorized capital stock of Eclipsys
(after giving effect to the three-for-two stock dividend to holders of its
Common Stock authorized by its Board of Directors May 19, 1997) consists of (a)
50,000,000 shares of Common Stock, of which 5,440,000 shares are issued and
outstanding, (b) 3,000,000 shares of Non-Voting Common Stock, no shares of which
are issued and outstanding, (c) 30,000 shares of Series B 8.5% Cumulative
Redeemable Preferred Stock, of which 30,000 shares are issued and outstanding,
(d) 25,000 shares of Series C 8.5% Cumulative Redeemable Preferred Stock, of
which 20,000 shares are issued and outstanding, (e) 7,200,000 shares of Series D
Convertible Preferred Stock, of which 7,058,786 shares (convertible into
10,588,179 shares of voting Common Stock) are issued and outstanding, (f)
920,000 shares of Series E Convertible Preferred Stock, of which 896,431 shares
(convertible into 1,344,646 shares of non-voting Common Stock) are issued and
outstanding, (g) 1,530,000 shares of Series F Convertible Preferred Stock, of
which 1,478,097 shares (convertible into 2,21 7,145 shares of voting Common
Stock) are issued and outstanding, and (h) 2,000,000 shares of undesignated
Preferred Stock, no shares of which are issued and outstanding. The numbers set
forth above for the issued and outstanding shares of Common Stock and the common
stock equivalents of the Series D, E and F Convertible Preferred Stock are
subject to minor adjustment to avoid issuance of fractional shares in the stock
dividend noted above, and the adjustments to conversion ratios of the series of
convertible preferred stock necessitated thereby. All of the outstanding shares
of capital stock of Eclipsys are validly issued, fully paid and nonassessable.
The designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class and series of authorized capital stock of
Eclipsys are as set forth in the Amended and Restated Certificate of
Incorporation of Eclipsys, a copy of which has been furnished to SDK, and all
such designations, powers, preferences, rights, qualifications, limitations and
restrictions are valid, binding and enforceable and in accordance with all
applicable laws. Except as set forth in the Amended and Restated Certificate of
Incorporation of Eclipsys, the Stockholders Agreement and the Registration
Rights Agreement, or as otherwise disclosed on Section 3.5 of the Eclipsys
Disclosure Schedule, (i) no subscription, warrant, option, convertible security,
or other right (contingent or other) to purchase or otherwise acquire from
Eclipsys equity securities of Eclipsys is authorized or outstanding, (ii) there
is no commitment by Eclipsys to issue shares, subscriptions, warrants, options,
convertible securities, or other such rights or to distribute to holders of any
of its equity securities any evidence of indebtedness or asset, (iii) Eclipsys
has no obligation (contingent or other) to purchase, redeem or otherwise acquire
any of its equity securities or any interest therein or to pay any dividend or
make any other distribution in respect thereof, and (iv) to the Knowledge of
Eclipsys there are no voting trusts or agreements, stockholders agreements,
pledge agreements, rights of first refusal, preemptive rights or proxies
relating to any securities of Eclipsys (whether or not Eclipsys is a party
thereto). Sufficient shares of Common Stock have been, or will be prior to
Closing, reserved for issuance upon exercise of options granted pursuant to the
Option Agreements, and
-4-
10
upon exercise of options in accordance with the terms of the Option Agreements,
the shares issued thereby will be validly issued, fully paid and nonassessable.
3.6 Financial Statements. Eclipsys has delivered separately to SDK and
the Selling Stockholders the following Eclipsys financial statements
(collectively the "Eclipsys Financial Statements"): (i) balance sheets and
statements of income, changes in stockholders' equity, and cash flow as of and
for the fiscal years ended December 31, 1995 and December 31, 1996 certified as
to accuracy by the chief financial officer of Eclipsys; and (ii) unaudited
consolidated balance sheets and statements of income, statements of
stockholders' equity, and cash flow as of and for the quarter ended March 31,
1997. The Eclipsys Financial Statements (including the notes thereto) have been
prepared on a consistent cash basis throughout the periods covered thereby,
present fairly the financial condition of Eclipsys as of such dates and the
results of operations of Eclipsys for such periods, and are consistent with the
books and records of Eclipsys (which books and records are correct and complete
in all material respects).
3.7 Litigation. Section 3.7 to the Eclipsys Disclosure Schedule sets
forth each instance in which Eclipsys (a) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (b) is a party or is
threatened to be made a party to any material action, suit, proceeding, hearing,
or investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in Schedule 3.7 could result in any Material Adverse
Effect or seeks to restrain or prevent the transactions contemplated by this
Agreement. Eclipsys has no Knowledge of any reason that any such action, suit,
proceeding, hearing, or investigation may be brought or threatened against
Eclipsys that would result in any Material Adverse Effect.
3.8 Alltel Transaction. Eclipsys has not notified Alltel of any claims
for breaches of representations, warranties or covenants of Alltel in connection
with the Alltel Merger and has not otherwise asserted a claim for
indemnification against Alltel in connection with the Alltel Merger although no
representation or warranty is herein made as to whether there is a Basis for any
such claim.
3.9 Events Subsequent to Most Recent Fiscal Quarter End. Except with
regard to the Alltel Merger, the transactions and financings in connection with
the Alltel Merger and the business of Alltel Healthcare acquired pursuant to the
Alltel Merger (with respect to which no representation or warranty is hereby
given), since March 31, 1997 there has not been any Material Adverse Effect in
the business, financial condition, operations, results of operations, or future
prospects of Eclipsys and Eclipsys has not engaged in or been party to any
agreement or occurrence outside the Ordinary Course of Business, and without
limiting the generality of the foregoing, since that date:
(a) No Person (including Eclipsys) has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) to which Eclipsys
is a Party or by which it is bound;
-5-
11
(b) Eclipsys has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary Course of Business;
(c) Eclipsys has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims) outside the
Ordinary Course of Business;
(d) Except for the three-for-two stock split by way of
dividend adopted by the Board of Directors on May 19, 1997, Eclipsys has not (i)
issued, sold, or otherwise disposed of any of its capital stock, or (ii) granted
any options, warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock, or (iii) declared,
set aside, or paid any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or (iv) redeemed, purchased, or
otherwise acquired any of its capital stock;
(e) Eclipsys has not made any loan to or agreement with any of
its directors, officers, or employees and it has not entered into any other
transaction with any of its directors, officers or employees outside the
Ordinary Course of Business;
(f) Except for stock options granted in the Ordinary Course of
Business pursuant to its stock option plan, and the adoption by the Board of
Directors on May 19, 1997 of the 1997 Management Incentive Compensation Plan,
Eclipsys has not granted any increase in the base compensation of, or bonuses
out of the Ordinary Course of Business to, or made any other changes in the
employment or consulting terms of any of its directors or officers;
(g) Eclipsys has not made or pledged to make any charitable or
other capital contribution;
(h) Eclipsys has performed in all material respects all of its
obligations under agreements, contracts, leases, licenses and instruments
relating to or affecting its properties, assets and business and has not changed
materially the prices or offer terms of sale or license of any of its products;
(i) Eclipsys has maintained its books of account and records
in the usual, regular and ordinary manner; and
(j) Eclipsys is not under any legal obligation, whether
written or oral, to do any of the foregoing.
3.10 Undisclosed Liabilities. Except with regard to the Alltel Merger,
the transactions and financings in connection with the Alltel Merger and the
business of Alltel Healthcare acquired pursuant to the Alltel Merger (with
respect to which no representation or warranty is hereby given), and except as
disclosed on Section 3.7 to the Eclipsys Disclosure Schedule, Eclipsys does not
have any Liability (and to the Knowledge of Eclipsys, there is no Basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against it giving rise to any Liability), except for
(i) Liabilities set forth on the face of the
-6-
12
most recent balance sheet included in the Eclipsys Financial Statements and (ii)
Liabilities which have arisen after March 31, 1997 in the Ordinary Course of
Business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law).
3.11 Intellectual Properly. Except for the software acquired pursuant
to the Alltel Merger, Eclipsys' software products consist principally of
software licensed to Eclipsys pursuant to a certain Information Systems
Technology License, dated May 3, 1996, by and among Partners HealthCare System,
inc., a Massachusetts not for profit corporation, Xxxxxxx and Women's Hospital,
Inc., a not for profit Massachusetts corporation and Eclipsys (f/k/a Integrated
Healthcare Solutions, inc.) (the "Partners' License"), Eclipsys has the
continuing valid and legal right to use pursuant to the Partners License the
software licensed thereby for the operation of its businesses as presently
conducted and as proposed to be conducted. No action, suit, proceeding, hearing,
investigation, charge, complaint or demand is pending or, to the Knowledge of
Eclipsys, threatened which challenges the legality, validity, or enforceability
of the Partners' License. Neither Eclipsys nor, to the Knowledge of Eclipsys,
the licensors under the Partners' License, are in any material respect in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification or
acceleration, thereunder.
3.12 Contracts. With respect to each contract, agreement and
instrument of Eclipsys which involves on the part of any Person provision of
goods or services or payment of money in excess of $20,000, excluding any and
all contracts, agreements and instruments acquired in connection with the Alltel
Merger, each such contract, agreement and instruments (A) is legal, valid,
binding, enforceable, and in full force and effect, (B) neither Eclipsys, nor to
Eclipsys' Knowledge any other Party thereto, is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or acceleration, under such
contract and agreement, and (C) no Party has repudiated any provision of such
contract or agreement.
3.13 Certain Business Relationships with Eclipsys. None of the
stockholders, employees, officers or directors of Eclipsys have been involved in
any business arrangement or relationship with Eclipsys within the past 12 months
with regard to the business of Eclipsys (other than the business acquired
pursuant to the Alltel Merger), and none of such Persons owns any asset,
tangible or intangible, which is used in the business (other than the business
acquired pursuant to the Alltel Merger) of Eclipsys, except for the Partners'
License and a certain Technical Services Agreement, and a certain Partners'
Affiliates Assistance Agreement, both dated May 3, 1996, by and among the
parties to the Partners License, and certain affiliates.
3.14 Disclosure. The representations and warranties contained in this
Article 3 do not, in light of the other information regarding Eclipsys made
available to SDK and the Selling Stockholders, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make a
statement or information contained in this Article 3 not misleading.
-7-
13
ARTICLE 4
REPRESENTATIONS AND
WARRANTIES OF SDK
SDK, Xxxxxxx X. Xxxxxxx and Xxxxxxx Xxxxxxx each jointly and severally
represents, and each of the other Selling Stockholders, together with SDK,
Xxxxxxx X. Xxxxxxx and Xxxxxxx, jointly and severally warrants, to Eclipsys that
the statements contained in this Article 4 are correct and complete as of the
date hereof, except as set forth in the disclosure schedule delivered by the
Selling Stockholders and SDK to Eclipsys on the date hereof (the "SDK Disclosure
Schedule"). In addition, subject to Section 8.15 below, each Selling Stockholder
other than Xxxxxxx X. Xxxxxxx and Xxxxxxx Xxxxxxx represents that, as applied to
such Selling Stockholder, the statements made in Sections 4.1(a), 4.1(b), 4.2,
4.3, 4.9, 4.10(e), 4.18, 4.24 and 4.26 with respect to "Selling Stockholders" or
any "Selling Stockholder," are complete and correct. Nothing in the Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein unless the Disclosure Schedule identifies the exception
with particularity. The Disclosure Schedule will be arranged in paragraphs
corresponding to the numbered paragraphs contained in this Article 4.
4.1 Organization. Qualification. Corporate Power. Competence. Etc.
(a) SDK is a corporation duly organized, validly existing, and
in good standing under the laws of The Commonwealth of Massachusetts. SDK is
duly authorized to conduct business and is in good standing under the laws of
each jurisdiction where such qualification is required, except where the failure
to so qualify or obtain authorization would not have a Material Adverse Effect
on SDK. SDK has full corporate power and authority and all licenses, permits,
and authorizations necessary to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it and to execute, deliver
and perform this Agreement and each of the other Acquisition Documents to which
it is a Party. Each of the Selling Stockholders that is a natural person has the
requisite legal and mental capacity to execute, deliver and perform this
Agreement and each of the other Acquisition Documents to which it is a Party.
Each of the Selling Stockholders that is a trust has full power and authority,
acting through the trustee or trustees who have executed this Agreement on its
behalf, to execute, deliver and perform this Agreement and each of the other
Acquisition Documents to which it is a Party.
(b) This Agreement and the other Acquisition Documents have
been duly executed and delivered by SDK and each of the Selling Stockholders,
and constitute the legal, valid and binding obligations of SDK and the Selling
Stockholders, enforceable against each of them in accordance with their
respective terms.
(c) Section 4.1 of the Disclosure Schedule lists the directors
and officers of SDK. SDK has delivered to Eclipsys correct and complete copies
of the Articles of Organization, by-laws of SDK (each as amended to date),
minute books, stock certificate books and stock
-8-
14
record books of SDK. The minute books (containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors) are, to the Knowledge of the Selling Stockholders, correct and
complete, and the stock certificate books and the stock record books of SDK are
correct and complete. SDK is not in default under or in violation of any
provision of its Articles of Organization or bylaws.
4.2 Capitalization. The entire authorized capital stock of SDK
consists of (a) 5,000 SDK Voting Common Shares, of which 5,000 shares are issued
and outstanding, (b) 700,000 SDK Non-Voting Common Shares, of which 505,500
shares are issued and outstanding, and (c) 2,500 SDK Preferred Shares, of which
2,500 shares are issued and outstanding. Section 4.2 of the Disclosure Schedule
lists each stockholder of SDK and the number of shares of each class or series
of stock owned by each stockholder. All of the SDK Voting Common Shares, SDK
Non-Voting Common Shares and SDK Preferred Shares (collectively, the "SDK
Shares") have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record and officially and lawfully by the
respective Selling Stockholders as set forth in Section 4.2 of the Disclosure
Schedule, free and clear of all pledges, liens, encumbrances, charges or other
security interests. The designations, powers, preferences, rights,
qualifications, limitations and restrictions in respect of each class and series
of authorized capital stock of SDK are as set forth in SDK's Articles of
Organization, a copy of which has been furnished to Eclipsys, and all such
designations, powers, preferences, rights, qualifications, limitations and
restrictions are valid, binding and enforceable and in accordance with all
applicable laws. Except as set forth in Section 4.2 of the Disclosure Schedule,
(i) no person owns of record or is known to SDK or the Selling Stockholders to
own beneficially any shares of capital stock of SDK, (ii) no subscription,
warrant, option, convertible security, or other right (contingent or other) to
purchase or otherwise acquire equity securities of SDK is authorized or
outstanding, (iii) there is no commitment by SDK to issue shares, subscriptions,
warrants, options, convertible securities, or other such rights or to distribute
to holders of any of its equity securities any evidence of indebtedness or
asset, and (iv) there is no written or oral agreement by any Selling Stockholder
to sell or transfer any SDK Shares to any third Person. SDK has no obligation
(contingent or other) to purchase, redeem or otherwise acquire any of its equity
securities or any interest therein or to pay any dividend or make any other
distribution in respect thereof. To the Knowledge of SDK and the Selling
Stockholders, there are no voting trusts or agreements, stockholders,
agreements, pledge agreements, buy-sell agreements, rights of first refusal,
preemptive rights or proxies relating to any securities of SDK (whether or not
SDK is a party thereto). All of the outstanding securities of SDK were issued in
compliance with all applicable Federal and state securities laws.
4.3 Noncontravention. Neither the execution and the delivery of this
Agreement or the other Acquisition Documents, nor the consummation of the
transactions contemplated hereby or thereby, will (a) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
SDK or any Selling Stockholder is subject or any provision of the charter or
bylaws of SDK or trust instrument of any Selling Stockholder that is a trust (b)
result in a breach of, constitute a default under, result in the acceleration
of, create in any Person the right to accelerate, terminate, modify, or cancel,
or require any notice or consent under any agreement,
-9-
15
contract, lease, license, instrument, or other arrangement to which SDK or any
Selling Stockholder is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Security Interest upon any
of its assets). Neither SDK nor any Selling Stockholder is required to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
4.4 Title to Assets. SDK has good title to, or a valid leasehold
interest in or license to, all properties and assets (a) used by it on the
operations of its business, (b) located on its premises (except personal items
not material to the operations of the business), (c) shown on the Most Recent
Balance Sheet or (d) acquired after the date thereof, free and clear of all
Security Interests, except for properties and assets disposed of in the Ordinary
Course of Business since the date of the Most Recent Balance Sheet.
4.5 Subsidiaries. SDK does not have any Subsidiaries, operating or
otherwise, and does not own any capital stock or other equity interest in any
Person, and is not a partner, joint venturer or member in any joint venture,
partnership or other enterprise.
4.6 Financial Statements. SDK has delivered separately to Eclipsys the
following SDK financial statements (collectively the "SDK Financial
Statements"): (i) audited balance sheets and statements of operations and
retained earnings, and cash flow as of and for the fiscal years ended April 30,
1995 and April 30, 1996 (the last being the "Most Recent Audited Fiscal Year
End"); and (ii) unaudited balance sheets and statements of operations and
retained earnings, and cash flow (the "Most Recent Financial Statements") as of
and for the fiscal year ended April 30, 1997 (the "Most Recent Fiscal Year
End"). The SDK Financial Statements (including the notes thereto) have been
prepared in accordance with generally accepted accounting principles (except, in
the case of the Most Recent Financial Statements, for the lack of footnotes and
normal audit adjustments) applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of SDK as of such dates
and the results of operations of SDK for such periods.
4.7 Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any Material Adverse Effect in the
business, financial condition, operations, results of operations, or future
prospects of SDK and SDK has not engaged in or been party to any agreement or
occurrence outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, since that date:
(a) No Person (including SDK) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) to which SDK is a Party or
by which it is bound;
(b) SDK has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of Business;
-10-
16
(c) SDK has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) outside the Ordinary
Course of Business;
(d) Except for profit sharing distributions and bonuses not in
excess of $425,000 in the aggregate, SDK has not (i) issued, sold, or otherwise
disposed of any of its capital stock, or (ii) granted any options, warrants, or
other rights to purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock, or (iii) declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock (whether in
cash or in kind) or (iv) redeemed, purchased, or otherwise acquired any of its
capital stock;
(e) SDK has not made any loan to or agreement with any of its
directors, officers, or employees and it has not entered into any other
transaction with any of its directors, officers or employees outside the
Ordinary Course of Business;
(f) Except for profit sharing distributions and bonuses not in
excess of $425,000 in the aggregate, SDK has not granted any increase in the
base compensation of, or bonuses out of the Ordinary Course of Business to, or
made any other changes in the employment or consulting terms of any of its
directors, officers, employees or independent contractors;
(g) SDK has not made or pledged to make any charitable or
other capital contribution;
(h) SDK has performed in all material respects all of its
obligations under agreements, contracts, leases, licenses and instruments
relating to or affecting its properties, assets and business and has not changed
materially the prices or offer terms of sale or license of any of its products;
(i) SDK has maintained its books of account and records in the
usual, regular and ordinary manner; and
(j) SDK is not under any legal obligation, whether written or
oral, to do any of the foregoing.
4.8 Undisclosed Liabilities. SDK does not have any Liability (and to
the Knowledge of SDK and the Selling Stockholders there is no Basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against it giving rise to any Liability), except for
(i) Liabilities set forth on the face of the Most Recent Balance Sheet and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).
4.9 Legal Compliance. SDK has complied (including without limitation
in its capacity as a tenant), with all applicable laws (including rules,
regulations, codes, plans,. injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state, local,
-11-
17
and foreign governments, (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against it alleging any failure so to comply. Except
as set forth on Section 4.9 of the Disclosure Schedule, no consent, approval or
authorization of, or registration, qualification or filing with, any
governmental agency or authority is required for the execution and delivery of
this Agreement by SDK or any Selling Stockholder or for the consummation by SDK
of the transactions contemplated hereby or thereby. All of SDK's rights under
all of its permits, approvals and licenses, both governmental and private,
related to the operation of its business will continue unimpaired by the merger
contemplated hereby, except as set forth in Section 4.9 of the Disclosure
Schedule.
4.10 Tax Matters.
(a) SDK has filed all Tax Returns that it was required to
file, including, without limitation, any Tax Returns required to be filed with
any state. All such Tax Returns were correct and complete in all respects. All
Taxes owed by SDK (whether or not shown on any Tax Return) have been paid. SDK
currently is not the beneficiary of any extension of time within which to file
any Tax Return. No claim has ever been made by an authority in a jurisdiction
where SDK does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction. There are no Security Interests on any of the assets of SDK
that arose in connection with any failure (or alleged failure) to pay any Tax.
(b) SDK has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other Third Party.
(c) Neither SDK nor any Selling Stockholder expects or has
reason to believe that any authority may assess any additional Taxes for any
period for which Tax Returns have been filed. There is no dispute or claim
concerning any Tax Liability of SDK either (i) claimed or raised by any
authority in writing or (ii) as to which SDK or any of the Selling Stockholders
has Knowledge. Section 4.10 of the Disclosure Schedule lists all federal, state,
local, and foreign income Tax Returns filed with respect to SDK for taxable
periods ended on or after April 30, 1991, indicates those Tax Returns that have
been audited, and indicates those Tax Returns that currently are the subject of
audit SDK has delivered to Eclipsys correct and complete copies of all federal
income Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by SDK since April 30, 1991.
(d) SDK has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.
(e) None of the Selling Stockholders is a person other than a
United States person within the meaning of the Code and the transactions
contemplated hereby are not subject to the withholding provisions of Section
3406 or Subchapter A of Chapter 3 of the Code.
-12-
18
4.11 Real Property. Except for the leases described in Section 4.14 of
the Disclosure Schedule and the Lease, SDK does not own or lease any real
property.
4.12 Intellectual Property.
(a) List of Intellectual Property. Section 4.12(a) of the
Disclosure Schedule lists or describes the following Intellectual Property owned
or used by SDK and material to the operations of its business: (i) all Patents;
(ii) all Trademarks; (iii) all copyrightable works, all copyrights, rights and
interests in copyrights and all applications, registrations, recordings and
renewals in connection therewith; (iv) all mask works and all applications,
registrations, recordings and renewals in connection therewith; (v) all computer
software and applications, including all versions, new releases and/or
enhancements thereof, and all user documentation and manuals in connection
therewith except "off-the-shelf' software products sold by third parties; (vi)
each license, agreement or other permission which SDK has granted to or received
from any third Person with respect to any of its Intellectual Property; and
(vii) each agreement or arrangement under which SDK uses Intellectual Property
of another Person pursuant to license, sublicense, distribution agreement or
permission.
(b) Sufficiency and Ownership of Intellectual Property. SDK
owns or has the continuing valid and legal right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property used in the
operation of its business. Except as set forth in Section 4.12(b) of the
Disclosure Schedule, with respect to each item of Intellectual Property: (i) SDK
either possesses all right, title, and interest in and to the item, free and
clear of any encumbrance, license or other restriction or otherwise has
sufficient rights to use such items pursuant to license or permission as may be
necessary in connection with the operation of SDK's business; (ii) the item is
not subject to any outstanding injunction, judgment, order, decree, ruling or
charge; (iii) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or is, to the Knowledge of SDK or any
Selling Stockholder, threatened which challenges the legality, validity,
enforceability, use or ownership of the item; (iv) SDK has not agreed to
indemnify any Person for or against any interference, infringement,
misappropriation or other conflict with respect to the item; and (v) SDK has not
granted any exclusive license of any kind in and to such item of Intellectual
Property to any Third Person. Each Trademark application and registration and
each Patent application and issued patent is being diligently prosecuted or
exists in good standing.
(c) Non-infringement of intellectual Property. SDK has not in
the conduct of its business and its Intellectual Property has not interfered
with, infringed upon, or misappropriated any patent, copyright, trade secret or
other intellectual property rights of third persons, and SDK has never received
any claim, demand or notice alleging any such interference, infringement,
misappropriation or violation (including any claim that it must license or
refrain from using any such rights of any third party). Except as set forth in
Section 4.12(c) of the Disclosure Schedule, to the Knowledge of SDK and the
Selling Stockholder, no Third Person has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
or
-13-
19
license and distribution rights of SDK with respect to or in connection with
the business of SDK as currently or previously conducted.
(d) Copyrightable Materials. All persons who have worked on
copyrightable material developed by or for SDK, including without limitation
software programs which are used in or are material to the conduct of the
business of SDK, have either (i) been employees of SDK at the time such
materials were conceived, authored, designed, created or reduced to practice,
(ii) duly assigned to SDK all right, title and interest in such materials, or
(iii) duly executed work-for-hire agreements vesting in SDK title to such
materials under applicable provisions of U.S.
copyright law.
(e) Enforceability of Licenses. Etc. With respect to each item
of Intellectual Property that is the subject of any license, sublicense,
agreement or permission: (i) each such license, sublicense, agreement or
permission covering the item is legal, valid, binding, enforceable, and in full
force and effect against SDK and, to the knowledge of SDK and the Selling
Stockholders, any other parties thereto; (ii) no breach, default, termination or
loss or change of rights or benefits shall occur with respect to such license,
sublicense, agreement or permission as a result of the consummation of the
transactions contemplated by this Agreement; (iii) neither SDK nor, to the
knowledge of SDK and the Selling Stockholders, any other party to the license,
sublicense, agreement or permission is in any material respect in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification or
acceleration thereunder; (iv) SDK has not received any notice that a party to
the license, sublicense, agreement or permission has repudiated any provision
thereof; (v) with respect to each sublicense, the representations and warranties
set forth in clauses (i) through (iv) above are true and correct with respect to
the underlying license; (vi) SDK has not received any notice that the underlying
item of intellectual Property is subject to any outstanding injunction,
judgment, order, decree, ruling or charge; (vii) SDK has not received any notice
that any action, suit' proceeding, hearing, investigation, charge, complaint,
claim or demand is pending or is threatened which challenges the legality,
validity or enforceability of the underlying item of intellectual Property; and
(viii) SDK has not granted any sublicense or similar right with respect to the
license, sublicense, agreement or permission.
4.13 Distributions to Shareholders. Section 4.13 of the Disclosure
Schedule sets forth the amount of the distributions made by SDK to shareholders
(including any bonuses paid or accrued to Selling Stockholders who are employees
or SDK) for the fiscal years ended April 30, 1997, April 30, 1996 and April 30,
1995 and for the period from April 30, 1997 through the Closing.
4.14 Contracts, Etc. Section 4.14 of the Disclosure Schedule lists and
briefly describes all contracts, agreements and instruments, written and oral,
to which SDK is a Party and which involve on the part of any Person provision of
goods or services or payment of money in excess of $20,000 or which, if
breached, could result in damages or loss of benefits to SDK in excess of
$20,000 (the "SDK Contracts"), and sets forth, as to each contract, agreement or
instrument, whether consummation of the transactions contemplated hereby will
require consent of any
-14-
20
Third Person to avoid the occurrence of a breach or default of, or termination
or change of rights or benefits under such contract, agreement or instrument.
SDK has delivered to Eclipsys a correct and complete copy of each written
agreement listed in Section 4.14 of the Disclosure Schedule (as amended to date)
and a written summary setting forth the terms and conditions of each oral
agreement referred to in Section 4.14 of the Disclosure Schedule. With respect
to each SDK Contract: (A) the SDK Contract is legal, valid, binding,
enforceable, and in full force and effect; (B) no breach, default, termination
or loss or change of rights or benefits shall occur with respect to such SDK
Contract as a result of the consummation of the transactions contemplated
hereby; (C) SDK is not, and to SDK and the Selling Stockholder's Knowledge, no
other Party is in breach or default, and no event has occurred which with notice
or lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the SDK Contract; (D) no Party has
repudiated any provision of the SDK Contract; and (E) SDK does not owe (and to
the Knowledge or SDK and the Selling Stockholders there is no Basis for) any
penalty or similar changes for delays in delivery of any product or service or
any indemnification obligations under such SDK Contract.
4.15 Notes and Accounts Receivable. All notes and accounts receivable
of SDK are reflected properly on its books and records, are valid receivables
subject to no setoffs or counterclaims, and are current and collectible in
accordance with their terms at their recorded amounts, subject only to the
reserve for bad debts set forth on the face of the Most Recent Balance Sheet as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of SDK.
4.16 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of SDK.
4.17 Insurance. SDK has delivered to Eclipsys each insurance policy
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which SDK has been a
party, a named insured, or otherwise the beneficiary of coverage at any time
within the past two years. With respect to each such insurance policy: (i) the
policy is legal, valid, binding, enforceable, and in full force and effect; (ii)
the policy will not be in default or breach, and no loss or change of benefits
or rights shall occur with respect to such policy as a result of the
consummation of the transactions contemplated hereby; (iii) neither SDK nor any
other party to the policy is in breach or default (including with respect to the
payment of premiums or the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration, under the policy; and (iv) no
party to the policy has repudiated any provision thereof. SDK has been covered
during the past five years by insurance in the amounts set forth in Section A.17
of the Disclosure Schedules. Section 4.17 of the Disclosure Schedule describes
any self-insurance arrangements affecting SDK.
4.18 Litigation. Section 4.18 of the Disclosure Schedule sets forth
each instance in which SDK (a) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (b) is a party or is threatened in
writing (or to the Knowledge of SDK or the Selling
-15-
21
Stockholders, threatened orally) to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings, and investigations set forth in Section 4.20 of the Disclosure
Schedule could result in any Material Adverse Effect or attempts to restrain or
prevent or could interfere with the transactions contemplated by this Agreement
None of the Selling Stockholders has any Knowledge of any reason that any such
action, suit, proceeding, hearing, or investigation may be brought or threatened
against SDK, and no Selling Stockholder (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party or is
threatened in writing (or to the Knowledge of such Selling Stockholder,
threatened orally) to be made a party to any action, suit, proceeding, hearing,
or investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator, that attempts to restrain or prevent or could interfere with the
transactions contemplated by this Agreement.
4.19 Product Liability. SDK does not have any Liability (and there is
no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to any
Liability) arising out of any injury to individuals or property as a result of
the ownership, possession, or use of any product manufactured, sold, leased,
licensed or delivered by SDK.
4.20 Employees. SDK is not a party to or bound by any collective
bargaining agreement, nor has it experienced during the last five years any
strikes, grievances, claims of unfair labor practices, or other collective
bargaining disputes. SDK has not during the last five years committed any unfair
labor practice. Neither SDK nor the Selling Stockholders has any Knowledge of
any organizational effort presently being made or threatened by or on behalf of
any labor union with respect to employees of SDK. During the last five years, no
former employee of SDK has asserted any claims against either the Selling
Stockholders or SDK arising from his or her termination of employment, and none
of the Selling Stockholders or SDK has any Knowledge of facts that would give
rise to or reason to believe of the existence of any such claims that might be
asserted in the future.
4.21 Employee Benefits.
(a) Section 4.21 of the Disclosure Schedule lists each
Employee Benefit Plan that SDK maintains or to which SDK contributes. (i) Each
such Employee Benefit Plan (and each related trust, insurance contract, or fund)
complies in form and in operation in all respects with the applicable
requirements of ERISA, the Code, and other applicable laws. (ii) All required
reports and descriptions (including Form 5500 Annual Reports, Summary Annual
Reports, PBGC-1s, and Summary Plan Descriptions) have been filed or distributed
appropriately with respect to each such Employee Benefit Plan. The requirements
of Part 6. of Subtitle B of Title 1 of ERISA and of Code ss.4980B have been met
with respect to each such Employee Benefit Plan which is an Employee Welfare
Benefit Plan. (iii) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to
-16-
22
each such Employee Benefit Plan which is an Employee Pension Benefit Plan and
all contributions for any period ending on or before the Closing Date which are
not yet due have been paid to each such Employee Pension Benefit Plan or accrued
in accordance with the past custom and practice of SDK. All premiums or other
payments for all periods ending on or before the Closing Date have been paid
with respect to each such Employee Benefit Plan which is an Employee Welfare
Benefit Plan. (iv) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan meets the requirements of a "qualified plan" under Code ss.401(a)
and has received a favorable determination letter from the Internal Revenue
Service applicable to such Plan in its current form and no events have occurred
since issuance of such letter which would cause it to no longer remain in full
force and effect (v) The market value of assets under each such Employee Benefit
Plan which is an Employee Pension Benefit Plan (other than any Multi-employer
Plan) equals or exceeds the present value of all vested and nonvested
Liabilities thereunder determined in accordance with PBGC methods, factors, and
assumptions applicable to an Employee Pension Benefit Plan terminating on the
date for determination. (vi) SDK has delivered to Eclipsys correct and complete
copies of the plan documents and summary plan descriptions, the most recent
determination letter received from the internal Revenue Service, the most recent
Form 5500 Annual Report, and all related trust agreements, insurance contracts,
and other funding agreements which implement each such Employee Benefit Plan.
(b) With respect to each Employee Benefit Plan that SDK
maintains or ever has maintained or to which it contributes, ever has
contributed, or ever has been required to contribute: (i) No such Employee
Benefit Plan which is an Employee Pension Benefit Plan (other than any
Multi-employer Plan) has been completely or partially terminated or been the
subject of a Reportable Event as to which notices would be required to be filed
with the PBGC. No proceeding by the PBGC to terminate any such Employee Pension
Benefit Plan (other than any Multi-employer Plan) has been instituted or
threatened. (ii) To the best of SDK's Knowledge, after diligent inquiry, there
have been no Prohibited Transactions with respect to any such Employee Benefit
Plan. No Fiduciary has any Liability for breach of fiduciary duty or any other
failure to act or comply in connection with the administration or investment of
the assets of any such Employee Benefit Plan. No action, suit, proceeding,
hearing, or investigation with respect to the administration or the investment
of the assets of any such Employee Benefit Plan (other than routine claims for
benefits) is pending or threatened. Neither SDK nor any of the Selling
Stockholders has any Knowledge of any Basis for any such action, suit,
proceeding, hearing, or investigation. (iii) SDK has not incurred, and none of
the Selling Stockholders and the directors or officers (or employees with
responsibility for employee benefits matters) of SDK has no Basis to expect that
SDK will incur, any Liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal Liability) or under
the Code with respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
(c) SDK does not contribute to, ever has contributed to, or
ever has been required to contribute to any Multi-employer Plan or has any
Liability (including withdrawal Liability) under any Xxxxx-xxxxxxxx Xxxx.
-00-
00
(x) XXX does not maintain or ever has maintained or
contributes, ever has contributed, or ever has been required to contribute to
any Employee Welfare Benefit Plan providing medical, health, or life insurance
or other welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in accordance with
Code ss.4980B).
4.22 Brokers. SDK has not retained, utilized or been represented by
any broker or finder in connection with the transactions contemplated by this
Agreement
4.23 Guaranties. SDK is not a guarantor or otherwise is liable for any
Liability or obligation (including indebtedness) of any other Person.
4.24 Certain business Relationships with SDK. Except for employment
arrangements and the lease of its premises, none of the Selling Stockholders or
any of their Affiliates has been involved in any business arrangement or
relationship with SDK within the past 12 months, and none of the Selling
Stockholders or any of their Affiliates owns any asset, tangible or intangible,
which is used in the business of SDK.
4.25 Environmental Liabilities.
(a) Except as set forth in Section 4.25 to the Disclosure
Schedule, SDK has not used, stored, treated, transported, manufactured, refined,
handled, produced or disposed of any Hazardous Materials or Petroleum Products,
as hereinafter defined, on, under, at, from or in any way affecting real
property owned or leased by SDK or otherwise, in any manner which at the time of
the action in question violated any Environmental Law, as defined hereinafter,
governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Materials or Petroleum Products,
or created a condition of contamination on such real property, and, to the
Knowledge of SDK and the Selling Stockholders, no prior owner of such real
estate or any tenant, subtenant, prior tenant, prior subtenant, abutter or prior
abutter thereof has used Hazardous Materials or Petroleum Products on, under,
at, from or in any way affecting such real estate, in any manner which at the
time of the action in question violated any Environmental Law governing the use,
storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials or Petroleum Products, or created
a condition of contamination on such real estate.
(b) Neither SDK nor any Selling Stockholder has any Knowledge
of any obligations or liabilities of SDK, matured or not matured, absolute or
contingent, assessed or unassessed, arising from or relating to any
Environmental Laws, which could now reasonably be expected to have a Material
Adverse Effect upon its business, and there are no pending claims against SDK,
and no currently outstanding citations, notices or orders including, without
limitation, notice letters, administrative orders, information requests or
notices of potential responsibility, have been issued against SDK, which, in the
case of any of the foregoing, have been or are imposed by reason of or based
upon any provision of any Environmental Laws.
-18-
24
(c) SDK has complied with all requirements of the
Environmental Laws; including, without limitation, any notification requirements
under such laws; SDK has obtained all necessary permits and licenses with
respect to the operation of its business that are required by such Environmental
Laws; and such permits and licenses are in full force and effect.
4.26 Investment Representations and Warranties. Each Selling
Stockholder who will be receiving any Share Consideration in connection with the
transactions contemplated hereby represents, warrants, acknowledges and
covenants as follows:
(a) he, she or it has sufficient knowledge and experience so
as to be able to evaluate the risks and merits of its investment in Eclipsys,
and he, she or it is able financially to bear the risks thereof;
(b) he, she or it has had an opportunity to discuss Eclipsys'
business, management and financial affairs with its management, and to ask such
questions of Eclipsys as he, she or it deems necessary or appropriate;
(c) the Eclipsys Common Shares being purchased by him, her or
it are being acquired for his, her or its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof;
(d) he, she or it understands that (i) the Eclipsys Common
Shares have not been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) or other exemption therefrom, (ii) the
Eclipsys Common Shares must be held indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from such
registration, (iii) the stock certificates evidencing the Eclipsys Common Shares
will bear a legend to such effect and (iv) Eclipsys will make a notation on its
transfer books to such effect; and
(e) he, she or it is a resident of or domiciled in
Massachusetts and received the offer constituted by this Agreement, and
negotiated this Agreement, in Massachusetts.
4.27 Disclosure. The representations and warranties contained in this
Article 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Article 4 not misleading.
ARTICLE 5
COVENANTS: CONDITIONS PRECEDENT TO CLOSING: CLOSING DELIVERIES
5.1 Conduct of Business. From the date hereof until the earlier of the
Closing or the termination of this Agreement pursuant to Section 5.8 below, and
except as otherwise consented to or approved by Eclipsys in writing, which
consent shall not be unreasonably withheld or
-19-
25
delayed, SDK shall not engage in any practice, take an action, embark on any
course of action, or enter into any transaction outside the Ordinary Course of
Business, except that it may pay a bonus to Xxxxxxx X. Xxxxxxx and
profit-sharing payments to its employees in aggregate amounts not to exceed
$425,000.
5.2 Efforts: Access. Without limiting the specific obligations of any
Party hereto under any agreement or covenant hereunder, each of the Parties
hereto shall use its respective reasonable efforts to take all action and do
such acts and things necessary in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the conditions to Closing set forth in Sections 5.4 and 5.5 below).
Until the Closing or termination of this Agreement, each of Eclipsys and SDK
agrees to provide to the other such access and information with regard to its
business and affairs, and books and records, as the other may reasonably request
from time to time.
5.3 Discussion with Others. From the date hereof until the earlier of
June 30, 1997 or the termination of this Agreement pursuant to Section 5.8
below, neither SDK nor any of the Selling Stockholders shall: (a) discuss,
solicit, initiate, or encourage the submission of any proposal or offer from any
third Person concerning the sale or acquisition of any capital stock or other
voting securities, or any significant assets of, SDK (including any acquisition
structured as a merger, consolidation, or share exchange); or (b) engage or
participate in any discussions or negotiations regarding, enter into any
agreement with respect to, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
third Person to do or seek any of the foregoing. SDK shall immediately notify
Eclipsys if any third Person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing.
5.4 Conditions Precedent to Closing by Eclipsys. The obligation of
Eclipsys to consummate the transactions contemplated hereby is subject to the
satisfaction of each of the following conditions prior to or at the Closing: (a)
The representations and warranties of SDK and the Selling Stockholders made
hereunder (including the Disclosure Schedule and all other Schedules hereto)
shall be true in all material respects at and as of the Closing Date, with the
same force and effect as though made at and as of the Closing Date, except for
updates or changes agreed to in writing by Eclipsys; (b) No injunction,
restraining order or decree of any nature of any court or governmental or
regulatory authority, or any claim, controversy or allegation of any third
Person shall exist against Eclipsys, SDK or any Selling Stockholder that
restrains, prevents, challenges or materially adversely changes any of the
transactions contemplated hereby; (c) The consummation of the transactions
contemplated hereunder shall not be in violation of (i) any applicable
agreement, law, statute, rule or regulation for which a waiver or consent has
not been obtained by Eclipsys or SDK if such violation would make illegal or
otherwise impair or prevent the consummation of the Acquisition or have a
Material Adverse Effect on the business, prospects, operations or financial
condition of Eclipsys or SDK (including without limitation, as to Eclipsys, the
consent and waiver of the holders of the Series B and Series C 8.5% Cumulative
Redeemable Preferred Stock under its corporate charter, the consent and waiver
of First Union National Bank, and the consent of the requisite parties to the
Stockholders Agreement and Registration Rights Agreement necessary
for the effectiveness of the amendments
-20-
26
thereto contemplated by Section 5.6(j) and (k) below) or (ii) its corporate
charter unless such violation has been waived; (d) SDK and the Selling
Stockholders shall have executed and/or delivered all of the agreements,
instruments and other documents, and other deliveries, required of each of them
under Section 5.6 below or elsewhere expressly required of any of them under
this Agreement, and such other agreements, instruments and documents as Eclipsys
may reasonably request in order to fulfill the intents and purposes of this
Agreement; and (e) Eclipsys shall have received such comfort from its auditors
as it shall have deemed reasonably necessary to the effect that the
non-qualified stock options to be granted to Xxxxxxx X. Xxxxxxx pursuant to his
employment agreement shall not cause Eclipsys to incur a charge to earnings.
5.5 Conditions Precedent to Closing by SDK and the Selling
Stockholders. The obligation of SDK and the Selling Stockholders to consummate
the transactions contemplated hereby is subject to the satisfaction of each of
the following conditions prior to or at the Closing: (a) The representations and
warranties of Eclipsys made hereunder (including all Schedules hereto) shall be
true in all material respects at and as of the Closing Date, with the same force
and effect as though made at and as of the Closing Date, except for updates or
changes agreed to in writing by SDK and the Stockholder Representative; (b) No
injunction, restraining order or decree of any nature of any court or
governmental or regulatory authority, or any claim, controversy or allegation of
any third Person, shall exist against Eclipsys, SDK or any Selling Stockholder
that restrains, prevents, challenges or materially adversely changes any of the
transactions contemplated hereby; (c) The consummation of the transactions
contemplated hereunder shall not be in material violation of any applicable
agreement, law, statute, rule or regulation for which a waiver has not been
obtained if such violation would make illegal or otherwise impair or prevent the
consummation of the Acquisition or have a Material Adverse Effect on the
business, prospects, operations or financial condition of Eclipsys or SDK; (d)
Eclipsys shall have executed and/or delivered all of the agreements, instruments
and other documents, and other deliveries, required of it under Section 5.6
below or elsewhere expressly required of it under this Agreement; (e) Xxxxxxx X.
Xxxxxxx shall have obtained the execution by the other Selling Stockholders of
an SDK Selling Stockholders Agreement substantially in the form made available
to Eclipsys on or about the date hereof, and (f) the documents required by
Section 5.6(e)(r) and (s) shall have been delivered.
5.6 Deliveries at Closing. The following executed agreements,
instruments and other documents, and other deliveries, shall be made or
delivered, as the case may be, at or prior to the Closing, delivery of which by
the Party or Parties required to deliver such shall be a condition precedent to
the other Party's obligation to close the transactions contemplated hereby.
-21-
27
(a) Performance Certificates. Eclipsys and the Selling
Stockholders shall deliver a certificate of a proper officer of Eclipsys and
SDK, as the case may be, each dated as of the Closing Date, each certifying to
the effect that the respective Parties' representations and warranties,
conditions and covenants contained in Articles 3 and 4 hereof are true and
correct as of the Closing Date;
(b) Allocation Certificate. The Selling Stockholders shall
deliver the Allocation Certificate executed by each Selling Stockholder;
(c) Opinion of Counsel for Eclipsys. Eclipsys shall deliver an
opinion of Goulston & Storrs, counsel for Eclipsys, dated as of the Closing
Date, addressed to SDK and the Selling Stockholders, in a form reasonably
satisfactory to the Selling Stockholders;
(d) Opinions of Counsel for the Xxxxxxx Xxxxxxx Group. The
Selling Stockholders shall deliver an opinion of Xxxxxxxxx & Manello, P.C.,
special counsel to the Xxxxxxx Xxxxxxx Group, dated as of the Closing Date and
addressed to Eclipsys, in a form reasonably satisfactory to Eclipsys but
including without limitation a satisfactory opinion as to the enforceability of
the Xxxxxxx Reimbursement Agreement;
(e) Opinion of Counsel for other Selling Stockholders. ln the
case of each Selling Stockholder that is a trust (a "Selling Stockholder
Trust"), the Selling Stockholders shall cause such trust to deliver an opinion
of counsel to the trust, dated as of the Closing Date and addressed to Eclipsys,
and opining, among other things, that the transaction will not violate the terms
of the governing trust instrument or any provisions of law applicable to the
trust, which opinion shall be satisfactory in form and substance to Eclipsys and
shall be from counsel acceptable to Eclipsys;
(f) Cash Consideration. Eclipsys shall deliver (i) immediately
available funds in the amount of $2,558.000 payable as set forth on the
Allocation Certificate (or, in the absence of an Allocation Certificate, pro
rata); and (ii) the Buyer Notes;
(g) Share Consideration. Eclipsys shall deliver stock
certificates of Eclipsys evidencing the Share Consideration, in the respective
names and amounts as are set forth on the Allocation Certificate;
(h) Employment and Options Agreements. Eclipsys and Xxxxxxx X.
Xxxxxxx shall execute and deliver an Employment Agreement in the form of Exhibit
D-1 hereto (the "Employment Agreement"), and an Incentive Stock Option Agreement
and Non-Qualified Stock Option Agreement between Eclipsys and Xxxxxxx X. Xxxxxxx
in the form of Exhibits D-2 and D-3, respectively (collectively the "Option
Agreements");
(i) Noncompete, Confidentiality and Non-Disclosure Agreements.
The Selling Stockholders shall deliver Noncompete, Confidentiality and
Non-Disclosure Agreements
-22-
28
between SDK and each of its employees who is a Selling Stockholder, m a form
satisfactory to Eclipsys;
(j) Amendment No 1 to Stockholders Agreement. Eclipsys and the
Xxxxxxx Xxxxxxx Group shall execute and deliver Amendment No. 1 to the
Stockholders Agreement in substantially the form attached as Exhibit E hereto,
and Eclipsys shall have obtained the consent thereto of the other parties to the
Stockholders Agreement necessary for the effectiveness of such amendment;
(k) Amendment No. 1 to Registration Rights Agreement. Eclipsys
and the Xxxxxxx Xxxxxxx Group shall execute and deliver Amendment No. 1 to the
Registration Rights Agreement in substantially the form attached as Exhibit F
hereto, and Eclipsys shall have obtained the consent thereto of the other
parties to the Stockholders Agreement necessary for the effectiveness of such
amendment;
(l) Lease or Lease Guaranty. Eclipsys shall execute and deliver,
and the Selling Stockholders shall cause to be executed and delivered, a lease
agreement in substantially the form of the current lease agreement between SDK
and New Realty Trust, as amended to incorporate the terms set forth in the
memorandum attached as Exhibit G hereto (as so amended, the "Lease");
(m) Tax Agreement. Eclipsys and those Selling Stockholders
receiving Share Consideration shall deliver a Tax Agreement in the form of
Exhibit H hereto;
(n) Xxxxxxx Reimbursement Agreement. The Xxxxxxx Group shall have
delivered the Xxxxxxx Reimbursement Agreement in the form of Exhibit I hereto;
(o) Subordination Agreement. Eclipsys and the Selling
Stockholders shall deliver a Subordination Agreement (the "Subordination
Agreement"), if any, satisfactory in form and substance to Eclipsys' senior
lenders (such Subordination Agreements shall permit payment of installments
under the Buyer Notes as long as there is no Event of Default under Eclipsys'
credit agreement with its senior lenders);
(p) Stock Certificates. The Selling Stockholders shall deliver
stock certificates evidencing the SDK Shares, which shall constitute all of the
outstanding capital stock of SDK, together with duly executed stock powers
therefor;
(q) Release. Each of the Selling Stockholders shall execute and
deliver a Release in the form of Exhibit J hereto;
(r) Consent of Settlors of Trusts. With respect to each Selling
Stockholder Trust, the Selling Stockholders shall deliver the written consent of
the settlor of each such trust to the transactions contemplated hereby and by
the other Acquisition Documents and an affidavit by
-23-
29
such settlor that such transactions are consistent with his or her intention in
establishing such trust;
(s) Consent of Trust Beneficiaries. With respect to each Selling
Stockholder Trust, the Selling Stockholders shall deliver the written consents
of the current beneficiary (or beneficiaries) of such trust who are of legal
capacity; and
(t) Miscellaneous Closing Deliveries. Each Party shall deliver
such evidence as each other Party may reasonably request in order to establish:
(i) the power and authority of each Party to consummate the transactions
contemplated by this Agreement; (ii) compliance with the conditions of Closing
set forth herein; and (iii) satisfactory completion of all corporate and
stockholder proceedings to be taken in connection with the transactions
contemplated by this Agreement.
5.7 Waiver of Condition Precedent.. Either Party may waive any
condition specified in Section 5.4 or 5.5, as applicable, if it executes a
writing so stating at or prior to the Closing or agrees to proceed with the
Closing.
5.8 Termination Prior to Closing. Notwithstanding any other provision
to the contrary herein, this Agreement may be terminated at any time:
(a) without liability on the part of any Party hereto (unless
occasioned by reason of failure of one of the Parties hereto to perform its
obligations hereunder), by mutual consent of all Parties to this Agreement;
(b) without liability on the part of any Party hereto (unless
occasioned by reason of failure of one of the parties hereto to perform its
obligations hereunder), by either Eclipsys or SDK, if the transactions
contemplated hereby are not consummated on or before June 15, 1997, or such
later date as may be agreed upon in writing by the Parties hereto (the
"Termination Date");
(c) by Eclipsys if: (i) SDK and/or any of the Selling Stockholders
shall breach in any material respect any of their respective representations,
warranties, covenants or other obligations hereunder; (ii) Eclipsys shall have
notified SDK and the Selling Stockholders in writing of such breach; (iii) such
breach shall not have been cured in all material respects or waived by Eclipsys;
and (iv) SDK or the Selling Stockholders, as the case may be, shall not have
provided reasonable assurance that such breach shall be cured in all material
respects on or before the Closing Date; or
(d) by SDK or the Selling Stockholders if: (i) Eclipsys shall
breach in any material respect any of its representations, warranties or
obligations hereunder; (ii) SDK shall have notified Eclipsys in writing of such
breach; (iii) such breach shall not have been cured in all material respects or
waived; and (iv) Eclipsys shall not have provided reasonable assurance that such
breach shall be cured in all material respects on or before the Closing Date.
-24-
30
Notwithstanding anything herein to the contrary, if this Agreement
shall be terminated prior to the Closing, no Party hereto shall have any
liability to any other Party unless such termination results from a material
breach of the representations and warranties contained in Articles 3 or 4 or of
the covenants in this Article 5. In the event any Party fails to consummate the
transactions contemplated hereby in accordance with the terms of this Agreement,
or breaches any representations, warranty, covenant or other obligation
contained herein which is a condition precedent to the other Party's obligation
to close, the damaged Party shall have the right to pursue all available
remedies at law or in equity, including specific performance. Each Party
acknowledges that, in light of the unique benefit to it of its rights under this
Agreement, such remedies shall be available in respect of any such breach or
violation by it in any proceeding properly instituted in a court of competent
jurisdiction.
5.9 Material Adverse Change in SMS Litigation. Notwithstanding
anything in this Agreement to the contrary, if prior to the Closing there is a
material adverse development (other than as disclosed in the Eclipsys Disclosure
Schedule hereto) in the dispute between Shared Medical Systems and Eclipsys
which would, as mutually agreed by Xxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxxx,
materially interfere with Eclipsys' ability to sell its products generally, then
SDK may elect to delay the Closing until such development no longer results in
such material interference provided, however, that if such material interference
continues for sixty (60) days, then SDK and the Selling Stockholders shall be
entitled to terminate and abandon this Agreement.
ARTICLE 6
COVENANTS
The Parties agree as follows with respect to the period following the
Closing.-
6.1 General. In the event that at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
Article 7 below). In furtherance and not in limitation of the foregoing, (a)
each of the Parties hereto shall furnish to the other Parties hereto, such
reasonably necessary information and reasonable assistance as such other Party
or Parties may reasonably request in connection with its or their preparation of
necessary filings or submissions to any governmental agency. The Selling
Stockholders shall each give any notices to third Persons, and shall use their
respective best efforts to obtain any third Person consents, modifications or
amendments of agreements, or other approvals, that Eclipsys may request.
6.2 Transition. None of the Selling Stockholders will take any action
that is designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other
-25-
31
business associate of SDK from maintaining the same business relationships with
SDK after the Closing as it maintained with SDK prior to the Closing.
6.3 Confidentiality. The Selling Stockholders agree that they will
treat and hold. as such all of the Confidential Information (including
Confidential Information of SDK), refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
the Eclipsys or destroy, at the request and option of Eclipsys, all tangible
embodiments (and all copies) of the Confidential Information which are in their
possession. Notwithstanding the foregoing, the Selling Stockholders may disclose
Confidential Information (i) to attorneys and accountants involved in this
transaction, (ii) as may by required by law, governmental regulation or court or
administrative order, (iii) to the extent use of such Confidential Information
is reasonably required in connection with litigation involving such Selling
Stockholder, or (iv) if such Confidential Information is readily ascertainable
from public or published information or trade sources provided, however, that in
the event that any Selling Stockholder is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, such Selling Stockholder will notify the
other Selling Stockholder promptly of the request or requirement so that the
other Selling Stockholder may seek an appropriate protective order or waive
compliance with the provisions of this Section 6.3. If, in the absence of a
protective order or the receipt of a waiver hereunder, any Selling Stockholder
is, on the advice of counsel, compelled to disclose any Confidential Information
to any tribunal or else stand liable for contempt, then such Selling Stockholder
may disclose the Confidential Information to such tribunal; provided, however,
that such Selling Stockholder shall use reasonable best efforts to obtain, at
the request and expense of Eclipsys, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Eclipsys shall designate. The foregoing
provisions shall not apply to any Confidential Information which is generally
available to the public immediately prior to the time of disclosure. All
obligations contained in this Section 6.3 shall survive for a period of five
years termination of this Agreement.
6.4 Eclipsys Common Shares. Each certificate issued to the Selling
Stockholders representing the Eclipsys Common Shares will be imprinted with a
legend substantially in the following form, as well as the legend required by
the Stockholders Agreement:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), IN
RELIANCE UPON THE EXEMPTION FROM REGISTRATION CONTAINED IN SECTION
4(2) OF THE 1933 ACT OR REGULATION D OF THE RULES AND REGULATIONS
PROMULGATED UNDER THE 1933 ACT, AND IN RELIANCE UPON THE
REPRESENTATION BY THE HOLDER THAT THEY HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW
-26-
32
TO RESALE OR FURTHER DISTRIBUTION. SUCH SHARES MAY NOT BE OFFERED FOR
SALE, SOLD, DELIVERED AFTER SALE, HYPOTHECATED, NOR WILL ANY ASSIGNEE
OR ENDORSEE HEREOF BE RECOGNIZED AS AN OWNER HEREOF BY THE ISSUER FOR
ANY PURPOSE, UNLESS A REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION WITH RESPECT TO SUCH SHARES SHALL THEN BE IN
EFFECT OR UNLESS THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION
SHALL BE ESTABLISHED TO THE REASONABLE SATISFACTION OF COUNSEL OF THE
ISSUE.
Each Stockholder desiring to transfer any of the Eclipsys Common Shares received
as part of the Share Consideration, other than in a registered offering or
pursuant to a sale which counsel for Eclipsys confirms is in compliance with
Rule 144 of the Securities Act of 1933, must first furnish Eclipsys with a
written opinion satisfactory to Eclipsys in form and substance from counsel
reasonably satisfactory to Eclipsys to the effect that such Stockholder may
transfer the Eclipsys Common Shares as desired without registration under the
Securities Act
6.5 Announcement. Upon or after the Closing, the Parties shall issue a
press release regarding the transactions contemplated hereby which shall be
mutually satisfactory in form and substance. Except for the foregoing, in no
event will any Party hereto make any public announcement of the existence or
contents of this Agreement or any of he other documents or transactions
contemplated hereby except with the prior written consent of the other Parties,
except as may be required under applicable law or regulation.
6.6 Repurchase by Eclipsys of Eclipsys Common Shares.
(a) If Eclipsys (or a successor-in-interest to Eclipsys) has
not effected a Qualified IPO on or before the third anniversary of the Closing
Date, then during the six-month period following the third anniversary of the
Closing Date (the "Repurchase Period") Eclipsys shall have the obligation to
purchase, at a cash purchase price equal to the "fair market value" (as
hereinafter defined), all or any portion of the Eclipsys Common Shares (a
"Repurchase"), provided that Eclipsys receives during the Repurchase Period a
written notice of Selling Stockholders holding a majority of the Eclipsys Common
Shares requesting such a repurchase (the "Repurchase Notice") specifying the
number of shares each such Selling Stockholder desires Eclipsys to repurchase.
(b) The fair market value of the Eclipsys Common Shares shall
be equal to the highest purchase price paid for shares of the same class as the
Eclipsys Common Shares in any bona fide, arms-length transaction by unaffiliated
third parties which is closed within 90 days prior to the date of the notice of
the Selling Stockholders specified in Section 6.7(a) above. If such transaction
has not taken place during the requisite time period, then Eclipsys and the
-27-
33
Stockholder Representative shall, for a period of 30 days, negotiate the fair
market value of the Eclipsys Common Shares. If the Parties are unable to reach
agreement on such fair market value during such 30 day period, then they shall
jointly designate one of the so-called "big six" national accounting firms to
make such determination, with the costs of such determination to be borne
equally by Eclipsys and the Selling Stockholders requesting a repurchase. If the
Parties cannot agree on which accounting firm to select the for the foregoing
determination, each will select a "big six" national accounting firm, and the
two accounting firms will jointly select one of the "big six" national
accounting firms to make such determination. Each of Eclipsys and the
Stockholder Representative shall be required to provide to the accounting firm
such Party's final offer as to an acceptable fair market value of the Eclipsys
Common Shares. The designated accounting firm will be instructed to select,
within 45 days, which of the two final offers it believes closest to the fair
market value of the Eclipsys Common Shares, and such selected offer will be
deemed the fair market value of the Eclipsys Common Shares for purposes of this
Section 6.6 and will be a final and binding determination upon the Parties.
(c) A closing of the repurchase shall occur within 30 days of
such final determination, at a time and place reasonably mutually acceptable to
the Parties. At the closing, (i) the Selling Stockholders shall tender the stock
certificates and signed stock powers with respect to the shares designated in
the Repurchase Notice, and (ii) Eclipsys (or its nominee) shall tender the
consideration therefor, either in immediately available fluids or certified or
cashiers' checks, or, at Eclipsys' option, promissory notes maturing in six
months or less and in the form of Exhibit K hereto (the "Repurchase Notes"),
provided, however, that if such promissory notes are made by A nominee, Eclipsys
shall guaranty them in A guaranty, the form and substance of which shall be
reasonably acceptable to the Stockholder Representative. Such promissory notes
shall be secured by a pledge of the shares of Common Stock being purchased.
(d) Notwithstanding the provisions of subsection (c) above,
Eclipsys and the Specified Employee Stockholders agree that (i) the closing of a
Repurchase, as among themselves, will occur within 90 days of the final
determination described above, and (ii) Eclipsys (or its nominee) shall tender
the consideration due the Specified Employee Stockholders only in immediately
available funds or certified or cashiers' checks. Such repurchase shall be
subject to the same subordination provisions as are applicable to repurchases
made pursuant to Section 6.6(c), which subordination provisions are referenced
in the form of promissory note attached as Exhibit K hereto. In addition, and
notwithstanding anything to the contrary contained in the proviso of Subsection
(a) above and the provisions of subsection (b) above, (i) each Specified
Employee Stockholder shall have the right, individually, to tender a Repurchase
Notice to Eclipsys and cause Eclipsys to repurchase such Specified Employee
Stockholder's shares, and (ii) in the event one or more Specified Employee
Stockholders elects to cause a Repurchase and a Repurchase Notice has not been
given in accordance with the proviso of Subsection (a) above, Eclipsys shall
negotiate and otherwise deal with such Specified Employee Stockholder(s)
directly in lieu of negotiating or dealing with the Stockholder Representative.
6.7 Payment of Professional Fees. Eclipsys agrees that,
notwithstanding the representations and warranties of SDK contained in Sections
4.7 and 4.8 hereof, the legitimate
-28-
34
legal and accounting fees of SDK incurred in connection with the transactions
contemplated hereby and by the other Acquisition Documents, not to exceed in the
aggregate $ 100,000, shall be for the account of SDK.
6.8 Subordination. Each Selling Stockholder acknowledges that the
Buyer Notes, the Repurchase Notes and the obligations of Eclipsys to the
Specified Employee Stockholders arising under Section 6.6(d) above
(collectively, the "Subordinate Obligations", are subordinate to Eclipsys'
obligations to its existing bank lenders pursuant to the Subordination
Agreement, and shall be subordinate to any of Eclipsys' obligations to any
future bank or institutional lenders on the same terms as are contained in the
Subordination Agreement. Each Selling Stockholder covenants and agrees that upon
the request of Eclipsys from time to time in the future, he, she or it, as the
case may be, will execute and deliver a subordination agreement or agreements
with any of Eclipsys' banks or other institutional lenders with respect to the
Subordinate Obligations, provided, however, that any such future subordination
agreement shall be on substantially the same terms and conditions as the
Subordination Agreement. Eclipsys agrees that if, under the Subordination
Agreement or any future subordination agreement, it-is allowed to make only a
partial payment (i) that is otherwise due and payable under the Buyer Notes or
the Repurchase Notes, or (ii) required under Section 6.6(d) of this Agreement,
then it shall make any partial payments as to any such obligations on a pro rata
basis among all Selling Stockholders. The obligations of this Section 6.8 shall
survive the periods set forth in Section 7.5.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnity Obligations of the Selling Stockholders. Subject to
Section 8.15 below, each of the Selling Stockholders hereby jointly and
severally agrees to indemnify and hold Eclipsys and SDK (after the closing)
harmless from, and to reimburse Eclipsys and SDK (after the closing) for, any
and all losses, damages, deficiencies, claims, liabilities, obligations, suits,
actions, fees, costs, penalties charges and expenses (including without
limitation all reasonable legal and accounting fees) of any nature whatsoever
suffered or incurred by Eclipsys or any of its Affiliates or to which any of
them become subject, resulting from or in connection with:
(i) any breach of any representation and warranty of the
Selling Stockholders or SDK which is contained in this Agreement or
the other Acquisition Documents or any Schedule, Disclosure Schedule,
Exhibit or certificate delivered pursuant hereto or thereto;
(ii) any breach or non-fulfillment of, or any failure to
perform, any of the covenants, agreements or undertakings of the
Selling Stockholders or SDK which are contained in or made pursuant to
this Agreement or the other Acquisition Documents;
-29-
35
(iii) breach, default, termination or loss or change of rights
or benefits under any of the SDK Contracts which arises from or in
connection with the consummation of the transactions contemplated by
this Agreement;
(iv) claims arising from the operation of SDK prior to the
Closing Date for exposure to, or the use or release of, Hazardous
Materials or Petroleum Products or any violation of any Environmental
Laws; and
(v) all legal, accounting and other expenses incurred by the
Selling Stockholders in connection with the negotiation, approval and
making and performance of this Agreement and the other Acquisition
Documents and the transactions contemplated hereby and thereby.
Any claim for indemnification on account of any of the foregoing is referred to
herein as an "Eclipsys Indemnity Claim."
7.2 Indemnity Obligations of Eclipsys. Eclipsys hereby agrees to
indemnify and hold each of the Selling Stockholders harmless from, and to
reimburse each of the Selling Stockholders for, any and all losses, damages,
deficiencies, claims, liabilities, suits, actions, fees, costs, penalty charges
and or expense (including without limitation all reasonable legal and accounting
fees) of any nature whatsoever suffered or incurred by the Selling Stockholders
resulting from (a) any breach of any representation and warranty of Eclipsys
which is contained in this Agreement or the other Acquisition Documents or any
Schedule, Exhibit or certificate delivered pursuant hereto or thereto; and (b)
any breach or nonfulfillment of, or failure to perform, any of the covenants,
agreements or undertakings of Eclipsys which are contained in or made pursuant
to the terms and conditions of this Agreement or the other Acquisition Documents
(any claim for indemnification on account of any of the foregoing, a
"Stockholder indemnity Claim").
7.3 Decisions by the Selling Stockholders.
(a) Subject to the following subsections (a) and (b), any
Selling Stockholder may make a Stockholder Indemnity Claim, whether or not any
other Selling Stockholder joins in such claim, provided, however, that no
Stockholder Indemnity Claim may be made unless it is made by a Selling
Stockholder or Selling Stockholders who in the aggregate would, if such claim
were successful, receive an amount equal to at least 15% of the amount that
would be received by all Selling Stockholders if all Selling Stockholders had
joined in such claim.
(b) In the event a Stockholder Indemnity Claim is made or
asserted by or on behalf of fewer than all of the Selling Stockholders, then
Eclipsys may at any time prior to resolution of such claim notify in writing the
Selling Stockholders (either directly or through the Stockholder Representative)
who have not made or asserted such Claim of Eclipsys' desire to join such
Selling Stockholders in such Stockholder Indemnity Claim, and in any
arbitration, court proceedings or other proceeding or resolution process
pursuant to which such Stockholder
-30-
36
indemnity Claim is being, or is to be, resolved or adjudicated. Each such
Selling Stockholder shall have ten (10) business days from the date of such
notification by Eclipsys to elect to join in such Claim, in which event it shall
be joined with the other Selling Stockholders in such arbitration, court
proceeding or other proceeding or resolution process, and shall take all
actions, including filing all documents, as may be necessary to join such
Selling Stockholder in such arbitration, court proceeding or resolution process.
in the event a Selling Stockholder fails to elect to join in a Stockholder
indemnity Claim within such ten (10) business day period, such Selling
Stockholder shall thereafter be barred from asserting, and agrees that it shall
not assert or institute suit on account of, such Stockholder Indemnity Claim in
any manner, including without limitation in any arbitration, court proceeding or
other proceeding or resolution process.
(c) The decisions of the Selling Stockholders with respect to
defending all Eclipsys Indemnity Claims, consenting to, prosecuting,
compromising or settling all Stockholder Indemnity Claims as to which joinder
has occurred under Section 7.3(b), compromising or settling all Eclipsys
Indemnity Claims, conducting negotiations with Eclipsys and its representatives
regarding such claims, taking any and all other actions specified in or
contemplated by this Agreement and engaging counsel, accountants or other
representatives in connection with the foregoing shall be determined by the
Stockholder Representative. The decisions, actions and omissions of the
Stockholder Representative shall be binding on all of the Selling Stockholders,
as if the Stockholder Representative was acting on behalf of each such Selling
Stockholder. Eclipsys shall have the right to rely upon all actions taken or
omitted as a result of the decisions of the Stockholder Representative pursuant
to this Agreement, all of which actions or omissions shall be legally binding
upon each of the Selling Stockholders, and shall be entitled to make all claims
against and deliver all notices to the Selling Stockholders by making such
claims and delivering such notices to the Stockholder Representative.
(d) Each Selling Stockholder hereby irrevocably constitutes
and appoints the Stockholder Representative and any agent thereof, with full
power of substitution, as his, her or its (as the case may be) true and lawful
attorneys-in-fact with full irrevocable power and authority in the place and
stead of such Selling Stockholder's own name, for the purpose of carrying out
the terms of Section 7.3(c). To the extent permitted by law, each Selling
Stockholder hereby ratifies all that said attorney or attorneys shall lawfully
do or cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
7.4 Survival of Representations and Warranties.
(a) All representations and warranties, and, except as
otherwise provided in this Agreement, all covenants and agreements of the
parties contained in or made pursuant to this Agreement, and the rights of the
parties to seek indemnification with respect thereto, shall survive the Closing
and shall, subject to subparagraph (b) below, expire on the last day pursuant to
Section 7.5 below when a Party may make an indemnification claim for a breach of
such representation and warranty, provided, however, that any representation and
warranty that is the subject of an outstanding written indemnification claim on
such date shall survive beyond such date for purposes of such claim until the
resolution of such claim.
-31-
37
(b) The representations and warranties contained in Section
4.2 above shall survive the Closing indefinitely.
7.5 Limitations. The provisions of Sections 7.1 through 7.3 are
subject to the limitations set forth in this Section 7.5.
(a) Neither Party shall be liable to the other under Article 7
unless the claim is asserted in writing by the Party or Parties seeking
indemnification (the "Indemnified Party") to the Party or Parties against whom
indemnification is sought (the "Indemnifying Party"), stating the nature of the
losses and the basis for indemnification therefor, and (i) in - the case of any
claim related to the representations and warranties in Section 4.10 (a "Tax
Claim"), no later than three months after the expiration of the applicable tax
statute of limitations with respect to the tax matter to which the Tax Claim
relates, as such limitation period may be extended from time to time, (ii) with
respect to any claim relating to a breach of a representation or warranty in
Section 4.25, within six years after the Closing Date, (iii) with respect to a
claim relating to a breach of a representation or warranty in Section 4.2,
within the applicable statute of limitations, and (iv) in the case of any claim
other than any claims referred to in (i), (ii) and (iii) above, within two years
after the Closing Date.
(b) Eclipsys shall not be liable to the Selling Stockholders,
and the Selling Stockholders shall not be liable to Eclipsys, unless the
aggregate of all net losses, costs, expenses and liabilities (collectively,
"Losses") suffered by either such Party exceed $500,000, upon which, the
Indemnifying Party shall be liable to the Indemnified Party for all Losses
suffered by the indemnified Party (including those Losses which were previously
below the foregoing threshold of $500,000). in no event shall the aggregate
liability of' either the Selling Stockholders or Eclipsys under this Article 7
exceed the aggregate amount of $3,000,000; provided, however, that such amount
shall not be deemed to limit Eclipsys' obligation to make the payments specified
in the following instruments and agreements: the Buyer Notes (except in
accordance with Section 7.6), the Employment Agreement, the Option Agreements,
the Lease or the Tax indemnity Agreement.
(c) In the event that, on or after the second anniversary of
the date of this Agreement, Eclipsys asserts an Eclipsys Indemnity Claim arising
out of or relating to a breach of Section 4.2 above, (i) Xxxxxxx X. Xxxxxxx
agrees that he shall be solely liable for, and hereby assumes sole liability
for, any such Eclipsys indemnity Claim, whether it arises out of or relates to a
breach by himself, SDK or any other Selling Stockholder, and (ii) in
consideration for such agreement and assumption by Xxxxxxx X. Xxxxxxx, Eclipsys
agrees that it shall only pursue such claim against Xxxxxxx X. Xxxxxxx and not
against any other Selling Stockholder.
7.6 Procedure for Claims; Setoff.
(a) Procedure for Claims. The indemnified Party shall deliver
to the indemnified Party a certificate (a "Claim Certificate") stating that the
Indemnified Party has a claim for indemnification pursuant to this Article 7 and
setting forth the basis for such claim. If the
-32-
38
indemnified Party does not receive, within thirty (30) days after delivery of a
Claim Certificate to the indemnifying Party, a notice of objection (a "Notice of
Objection") from the lndemnifying Party objecting to the indemnified Party's
claim for indemnification and setting forth the basis for such objection, the
indemnified Party shall have the absolute and unconditional right to
reimbursement of such claim. if the indemnified Party receives a Notice of
Objection within such thirty (30) day period, the indemnified and indemnifying
Parties shall use their best efforts to reach mutual agreement as to the amount
which the Indemnified Party is entitled to reimbursement under this Article 7.
If the Parties fail to reach agreement within such thirty (30) day period, the
dispute shall be submitted to arbitration in Boston, Massachusetts, in
accordance with the then existing Commercial Arbitration Rules of the American
Arbitration Association, before a single arbitrator selected by mutual agreement
of the Parties. If the Parties cannot agree on the selection of an arbitrator,
the arbitrator shall be selected by the President of the Boston Bar Association.
(b) Payment of Claims. The reimbursement due an lndemnified
Party with respect to any Claim shall become due and payable by the Indemnifying
Party immediately upon mutual agreement by the Parties as the amount of
reimbursement due the Indemnified Party or upon decision of an arbitrator
pursuant to Section 7.6(a) above.
(c) Setoff. To satisfy the obligations of the Selling
Stockholders arising under this Article 7, but without limiting the right of
Eclipsys to seek any other remedy or recourse which may be available to it' each
of the Selling Stockholders hereby consents that Eclipsys shall have the right,
exercisable in its sole discretion as provided below, to set-off against any and
all payment obligations of Eclipsys under the Buyer Notes amounts that become
payable by any of the Selling Stockholders to Eclipsys under this Article 7.
Eclipsys' right to set-off pursuant to the preceding sentence shall become
immediately exercisable in its sole discretion upon any mutual agreement by the
Parties as to a reimbursement amount owed to Eclipsys under this Article 7, or
upon a decision by an arbitrator awarding reimbursement to Eclipsys pursuant to
Section 7.6(a) above. Eclipsys agrees that to the extent the unpaid balance of
the Buyer Notes against which no set-offs (or suspensions of payment pursuant to
the following subsection (d)) have been previously made do not exceed the
aggregate amount for which Eclipsys is entitled to set-off hereunder, it shall
first exercise its set-off rights prior to instituting any other claims or
procedures for payment or collection of such amount, and such set-offs shall be
asserted by Eclipsys against all of the Buyer Notes (except as otherwise
provided in the last sentence of this subsection (c)) on a Pro Rata (as
hereinafter defined) basis, and may be made, at Eclipsys' discretion, against
principal or interest due thereunder, and against any installment thereof, in
such priorities as Eclipsys may elect, provided however, that at such time as
all remaining principal and interest under any Buyer Note has been set-off or
suspended, Eclipsys shall not be limited to set-off against the Buyer Notes on a
Pro Rata basis and may at its sole discretion institute any claims or procedures
for payment or collection against any of the Selling Stockholders. "Pro Rata,"
as used in this Section, shall mean, as to any Selling Stockholder, such Selling
Stockholder's pro rata share of the total Consideration. Set-offs with regard to
Eclipsys Indemnification Claims arising from a breach of the Xxxxxxx
Reimbursement Agreement shall be made against the Buyer Notes of the
-33-
39
Parties who are party to the Xxxxxxx Reimbursement Agreement pro rata in
proportion to the unpaid principal against which no set-off or suspension has
previously been made.
(d) Suspension of Payment. Until any such claims of Eclipsys
for indemnity shall have been fully discharged by payment to Eclipsys or by
set-off allowed pursuant to Section 7.6(c) above, Eclipsys may withhold payment
of principal and interest under the Buyer Notes to the extent such claim for
indemnity remains outstanding and not resolved by payment, permitted set-off or
arbitration, as aforesaid, with interest thereon at the applicable legal rate.
(e) Third Party Claims. In the event that Eclipsys or SDK
receives notice of the filing of a claim, suit, action or proceeding by a third
person or taxing authority or commencement of an examination by a taxing
authority which may give rise to a claim for indemnity pursuant to Section 7.1
hereof, it shall give the Stockholder Representative reasonable notice thereof
and shall permit the Stockholder Representative to have reasonable access to
relevant information in its possession or control. The Stockholder
Representative shall have the right to take all reasonable action, at his own
expense, as he deems desirable in order to minimize or eliminate such third
person or taxing authority claim, provided that such action shall not have any
adverse effect upon, nor result in any liability to Eclipsys or SDK greater than
such claim. In the event of a claim by a third person or a taxing authority
against Eclipsys or SDK which requests solely monetary amounts or damages with
respect to which Eclipsys claims to be entitled to the benefits of Section 7.1,
and if the payment of any pan or all of the amount claimed (whether by
compromise, settlement, judgment or otherwise) will have no other adverse effect
upon nor result in any liability to Eclipsys greater than or apart from such
claim, and the Selling Stockholders acknowledge in writing their joint and
several liability for such claim as between the parties hereto, the Selling
Stockholders shall have the right, at their own expense, acting through the
Stockholder Representative to appoint counsel to handle the defense of such
matter, and the Selling Stockholders shall have the exclusive right to
prosecute, defend, compromise, settle or pay such third party or taxing
authority claim, subject to their obligation to act in good faith. Eclipsys may
appoint, at its own expense, associate counsel to participate in the joint
defense of such matter, subject to the foregoing rights of the Selling
Stockholders. Except as aforesaid, Eclipsys reserves the right to control,
defend and settle any and all claims, subject only to its obligation to act in
good faith; provided, however, that Eclipsys shall not so settle any such claim
for an amount exceeding $10,000 without the prior approval of the Stockholder
Representative, which shall not be unreasonably withheld or delayed. If the
Stockholder Representative shall fail so to approve any such settlement proposed
by Eclipsys then. notwithstanding anything in this Agreement to the contrary,
the indemnity of the Selling Stockholders shall be fully applicable to that
portion of such claim in excess of the amount of such proposed settlement and
the indemnity of the Selling Stockholders for such excess shall not be subject
to any of the limitations on such indemnity which may be provided in this
Article 7 and shall be in addition thereto.
7.7 Subrogation Rights. Subject to Section 8.15 below, any
indemnifying Party which indemnifies any Indemnified Party for any matter
pursuant to this Article 7 shall, upon payment in full of the amount owed with
respect to such matter pursuant to this Article 7, be
-34-
40
subrogated to the rights of such Indemnified Party against all other Persons
with respect to the matter for which indemnification was provided and, in its
own name or in the name of the Indemnified Party, may assert any claim against
any such Person which the Indemnified Party may have with respect thereto.
7.8 Release of SDK After Closing. The Selling Stockholders agree that
after the closing the Selling Stockholders alone, and not SDK, shall be
responsible for all of the obligations contained in this Article 7 to indemnify
and hold Eclipsys harmless for Eclipsys Indemnity Claims. In furtherance and not
in limitation of the foregoing, each Selling Stockholder hereby (a) waives any
and all rights of contribution such Selling Stockholder might otherwise have
against SDK in connection with any indemnification obligations paid. or
otherwise satisfied by such Selling Stockholder, and (b) agrees that if SDK
makes any payment on account of any matter that provides the basis for an
Eclipsys Indemnity Claim, such payment shall not relieve the Selling
Stockholders to any extent from their indemnification obligations to Eclipsys
under this Article 7.
ARTICLE 8
MISCELLANEOUS
8.1 Nature of Certain Obligations. The representations and warranties
of each of the Selling Stockholders in this Agreement are joint and several
obligations.
8.2 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
8.3 Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
8.4 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or her rights, interests, or obligations hereunder without the prior
written approval of Eclipsys and the Stockholder Representative; provided,
however ,that Eclipsys may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates and (ii) designate one or more of its
Affiliates to perform its obligations hereunder (in any or all of which cases
Eclipsys nonetheless shall remain responsible for the performance of all of its
obligations hereunder).
-35-
41
8.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same agreement.
8.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.7 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given upon transmission if
sent by telecopy to the telecopy number set forth below or if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Selling Stockholders:
Xxxxxxx X. Xxxxxxx
Stockholder Representative
000 Xxxxxx Xxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
With copy to:
Xxxxxxx X. Xxxxx, Esq.
Xxxxxxxxx & Manello, P.C.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Fax: (000) 000-0000
If to Eclipsys:
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Fax: (000)000-0000
Attn: Xxxxxx X. Xxxxxx and Xxxx Xxxxxxxxxxx, Esq.
With copies to:
Xxxxxx X. Xxxxx, Esq.
Goulston & Storrs
-36-
42
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telex, ordinary mail, or electronic mail), but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
8.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW, PROVISION OR RULE
(WHETHER OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY OTHER JURISDICTION) THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
COMMONWEALTH OF MASSACHUSETTS.
8.9 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Eclipsys and the Stockholder Representative. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
8.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
8.11 Expenses. Except as otherwise set forth in this Agreement, each
of the Parties will bear his, her or its own costs and expenses (including legal
fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby. The Selling Stockholders agree that SDK has
not borne or will bear any of the Selling Stockholders' costs and expenses
(including any of their legal fees and expenses) in connection with this
Agreement or any of the transactions contemplated hereby.
8.12 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. in the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or
-37-
43
law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
8.13 Incorporation of Exhibits. Annexes and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
8.14 Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in The Commonwealth of
Massachusetts, in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court.
8.15 No Personal Liability of Xxxxxxx X. Xxxxx.
(a) Notwithstanding any other provision of this Agreement or
the Acquisition Documents to the contrary, each Party acknowledges that Xxxxxxx
X. Xxxxx is a party to this Agreement or to such other Acquisition Documents
solely in the capacity as a trustee of The Xxxxxxx X. Xxxxxxx Family Trust u/t/a
dated 9/3/93 (the "Family Trust") and not personally, that Xx. Xxxxx makes no
representation, warranty, covenant or agreement of any kind, other than in his
capacity as such trustee, and that no Party hereto shall make or assert any
claim of any kind against Xx. Xxxxx relating to, arising out of or in connection
with this Agreement or such other Acquisition Documents in any capacity other
than as trustee of the Family Trust (other than a claim of his conscious and
intentional fraud). All Parties to this Agreement, other than Xx. Xxxxx, agree
that if they have any claims against the Family Trust or the trustees of the
Family Trust or otherwise for any misrepresentation, breach of warranty or
covenant or of any other kind arising under or relating to this Agreement or the
other Acquisition Documents (including without limitation any Eclipsys Indemnity
Claim):
(i) such claim shall be asserted only against, and shall be
limited to, the assets of the Family Trust (other than claims that Xx.
Xxxxx in his capacity as trustee of the Family Trust has willfully
failed pursuant to this Agreement to deliver and properly endorse to
Eclipsys the SDK Shares listed as owned by the Family Trust in Section
4.2 of the SDK Disclosure Schedule);
(ii) Xx. Xxxxx shall have no personal obligations or liability
for any such claim (other than for his conscious and intentional
fraud); and
-38-
44
(iii) Xx. Xxxxx shall be entitled to have the defense against
any such claim conducted by the Family Trust and to have the expenses
of such defense (including without limitation the fees and
disbursements of counsel) defrayed out of the assets of the Family
Trust, in priority to the satisfaction of any such claim, and if the
Family Trust shall fail, neglect or refuse, in whole or in part, to
conduct such defense and defray the expenses thereof (including
without limitation the fees and disbursements of counsel) the Signing
Stockholders shall assume and pursue the conduct of such defense, and
shall indemnify and hold harmless Xx. Xxxxx in respect of such
expenses thereof; provided, however, that all Parties to this
Agreement, to the extent any such Party is a beneficiary or contingent
beneficiary of the Family Trust, agree that Eclipsys' rights with
respect to any Eclipsys Indemnity Claim shall follow any assets of the
Family Trust that may be distributed from time to time after the date
of this Agreement, and that, subject to the other limitations
contained in this Agreement, Eclipsys may pursue an Eclipsys Indemnity
Claim against, any beneficiary or contingent beneficiary of the Family
Trust up to the amount of any such future distributions.
(b) The Selling Stockholders other than Xxxxxxx X. Xxxxx as
Trustee of the Family Trust acknowledge and agree, and each of them by signing
this Agreement or an Instrument of Adherence hereto, shall be conclusively
deemed to have acknowledged and agreed, that any claim for subrogation that he,
she, it or they may have against Xx. Xxxxx or the Family Trust under Section 7.7
of this Agreement shall be limited to, and shall be asserted only against, the
assets of the Family Trust (subject to the proviso in paragraph (a)(ii) above),
and that Xx. Xxxxx shall have no personal obligation or liability to them, or
any of them, in respect of this Agreement or the subject matter hereof or the
other Acquisition Documents, whether under Section 7.7 or otherwise, other than
for his conscious and intentional fraud or willful misconduct.
8.16 Special Provisions Regarding Trusts. In the event that any
Selling Stockholder that is a trust dissolves or otherwise distributes to its
beneficiaries or other parties Buyer Notes, Share Consideration or other
Consideration payable hereunder, the parties hereto agree that Eclipsys may
require as a condition to transferring the Buyer Notes, Share Consideration or
other Consideration to any such beneficiary or other party, that such
beneficiary or other party agree in a writing satisfactory to Eclipsys to the
terms of this Agreement is if he or she were a Selling Stockholder hereunder,
and, thereupon, such beneficiary or other party shall have all of the rights and
obligations of a Selling Stockholder hereunder.
IN WITNESS WHEREOF, the Parties hereto have executed this Amended and
Restated Stock Purchase Agreement as of the date first above written.
ECLIPSYS:
ECLIPSYS CORPORATION
-39-
45
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Its: President
-----------------------------------
SDK:
SDK MEDICAL COMPUTER
SERVICES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
-40-
46
SIGNING STOCKHOLDERS:
/s/Xxxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxx Xxxxxxx
------------------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxx X. Xxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx as Trustee of The Xxxxxxx
X. Xxxxxxx Trust pursuant to a Trust
Agreement dated June 30, 1976
/s/ Xxxxx X. Xxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxx, Trustee
-41-
47
Annex A
Definitions
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Acquisition" has the meaning set forth in the Recitals hereof.
"Acquisition Documents" means this Agreement, the Buyer Notes, the
Stockholders' Agreement, the Registration Rights Agreement, the Lease, the
Xxxxxxx Reimbursement Agreement, the Tax Agreement and any other agreement or
instrument delivered by any of the Parties hereto at or in connection with the
Closing.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code ss.1504, or any similar group defined under a similar provision of state,
local or foreign law.
"Agreement" means the Stock Purchase Agreement, dated May 23, 1997,
among Eclipsys, SDK and the Selling Stockholders.
"Allocation Certificate" shall mean a certificate to be executed by
all Selling Stockholders and delivered at the Closing which shall set forth the
amount of Cash Consideration and Share Consideration to be allocated to each
Selling Stockholder. "Alltel" means Alltel Information Services, Inc., an
Arkansas Corporation.
"Alltel Healthcare" means Alltel Healthcare lnformation Systems, Inc.,
a Delaware Corporation, which merged into Eclipsys Solutions Corp. a Delaware
corporation, in connection with the Alltel Merger.
"Alltel Merger" means the merger of Alltel Healthcare into Eclipsys
Solutions Corp. pursuant to the Agreement of Merger, dated as of January 24,
1997, by and among Alltel, Alltel Healthcare, Eclipsys and Eclipsys Solutions
Corp.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms the basis for any specified
consequence.
"Buyer Notes" has the meaning set forth in Section 2.3 of the
Agreement.
"Cash Consideration" has the meaning set forth in Section 2.3 of the
Agreement.
-42-
48
"Claim Certificate" has the meaning set forth in Section 7.6(a) of the
Agreement.
"Closing" has the meaning set forth in Section 2.2 of the Agreement.
"Closing Date" has the meaning set forth in Section 2.2 of the
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of SDK or Eclipsys, as the case may be, including without
limitation each such Party's trade secrets, know-how, processes, systems,
formulae, data, functional specifications, computer programs, blue prints,
discoveries, improvements, developments, designs, inventions, techniques,
marketing plans, strategies, forecasts, new products, business plans, financial
data, budgets, projections, licenses, prices, costs and customer and supplier
lists.
"Consideration" means the Share Consideration and the Cash
Consideration, together.
"Disclosure Schedule" has the meaning set forth in Article 4 of the
Agreement.
"Eclipsys" has the meaning set forth in the preface of the Agreement
but shall not be deemed to include any direct or indirect subsidiary of Eclipsys
Corporation.
"Eclipsys Common Shares" shall mean the shares of the Common Stock,
par value $.01 per share, of Eclipsys (which is the voting common stock of
Eclipsys) received by the Selling Stockholders as Share Consideration.
"Eclipsys Financial Statements" has the meaning set forth in Section
3.6 of the Agreement.
"Eclipsys Indemnity Claim" has the meaning set forth in Section 7.1 of
the Agreement.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
ss.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
ss.3(1).
"Employment Agreement" has the meaning set forth in Section 5.6(h).
-43-
49
"Environmental Laws" shall mean any and all federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
administrative orders, decrees or requirements of any federal, state, municipal,
or other governmental department, commission, board, bureau, agency or
instrumentality, or court or arbitrator, in each case whether of the United
States or foreign, now in effect and applicable to any of the Sellers and
regulating, relating to, or imposing liability or standards of conduct
concerning any Hazardous Materials or Petroleum Products or environmental
protection, as are now in effect, including without limitation, the Clean Water
Act, also known as the Federal Water Pollution Control Act, 33 U.S.C. ss. 1251
et seq., the Clean Air Act, 42 U.S.C. ss. 7401 et seq., the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. ss. 300F et seq., the Surface Mining
Control and Reclamation Act ss. 1201 et seq., 30 U.S.C. ss. 1291 et seq., the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
ss. 9601 et seq., the Superfund Amendment and Reauthorization Act of 1986,
Public Law 99-499, 100 Stat. 1613, the Emergency Planning and Community Right to
Know Act, 42 U.S.C. 1101 et seq., the Resource Conservation and Recovery Act, 42
U.S.C. 6901 et seq., and the regulations adopted and publications promulgated
thereunder and all substitutions thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Fiduciary" has the meaning set forth in ERISA ss.3(21).
"First Installment" has the meaning set forth in Section 2.3 of the
Agreement.
"Hazardous Materials" shall mean any hazardous materials, hazardous
wastes, infectious medical wastes, hazardous or toxic substances, asbestos,
asbestos fibers, friable asbestos, PCB'S, waste or used oil, cleaning solvents,
or constituents of any of the foregoing, defined or regulated as such in or
under any Environmental Law, including, without limitation, materials exhibiting
the characteristics of ignitability, corrosiveness, reactivity or leaching
procedure toxicity, as such terms are defined in connection with hazardous
materials or hazardous wastes or hazardous or toxic substances in any
Environmental Law.
"Indemnified Party" has the meaning set forth in Section 7.5(a) of the
Agreement.
"Indemnifying Party" has the meaning set forth in Section 7.5(a) of
the Agreement.
"Intellectual Property" means (i) All Patents, (ii) all Trademarks,
(iii) all copyrightable works, all copyrights, rights and interests in
copyrights and all applications, registrations, recordings and renewals in
connection therewith; (iv) all mask works and all applications, registrations,
recordings and renewals in connection therewith; (v) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulae, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals); (vi) all computer software including all computer programming
codes, object codes, source codes, associated procedural codes and designs
directly
-44-
50
or indirectly associated therewith; all manuals, books, documents and
specifications directly or indirectly related thereto; all versions,
modifications, changes, improvements, updates, new releases and/or enhancements
thereof; all applications thereof, existing, currently under development or
conceived of; all algorithms, formulae and protectable concepts embodied therein
as well as all cards, tapes, disks, other media, documentation, specifications
or other physical embodiments, or modifications, improvements and enhancements
embodying, relating to or containing any of the foregoing; (vii) all other
proprietary rights; (viii) all copies and tangible embodiments thereof (in
whatever form or medium); (ix) all income, royalties, damages or payments now
and hereafter due and/or payable under any of the foregoing with respect to any
of the foregoing and the right to xxx for past, present or future infringements
of any of the foregoing; (x) all licenses, agreements and permissions with
respect to any of the foregoing; (xi) all rights corresponding to any of the
foregoing throughout the world; and (xii) all of the foregoing items provided or
licensed by third parties to SDK pursuant to any agreement or arrangement,
including without limitation any VAR, OEM, development, distribution, license or
sublicense agreement or arrangement.
"IRS" means the Internal Revenue Service.
"Knowledge" means knowledge after reasonable investigation. For the
purposes of this Agreement, the knowledge of one Selling Stockholder shall be
attributed to the other Selling Stockholders. The Selling Stockholders shall be
deemed to have "Knowledge" of any matter which can be traced to the books,
records, files, contracts or other documents of SDK.
"Later Installments" has the meaning set forth in Section 2.3 of the
Agreement.
"Lease" has the meaning set forth in Section 5.6(m) of the Agreement.
"Liability" means any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or to
become due), including any liability or obligation for Taxes.
"Losses" has the meaning set forth in Section 7.5(b) of the Agreement.
"Material Adverse Effect" means any and all action, suit, proceeding,
hearing, investigations charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses, which requires Eclipsys or SDK to expend $50,000 or more or impairs
the business, financial condition, operations, results of operations, or future
prospects of Eclipsys or SDK by $50,000 or more.
"Xxxxxxx Xxxxxxx Group" means: (i) Xxxxxxx X. Xxxxxxx; (ii) Xxxxxxx
Xxxxxxx; (iii) Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxxx as Trustees of the
Xxxxxxx X. Xxxxxxx Family
-45-
51
Trust u/t/a dated September 3, 1993; (iv) Xxxxxxx X. Xxxxxxx as Trustee of the
Xxx X. Xxxxxxx 1990 Trust u/t/a dated December 28, 1990; (v) Xxxxxxx X. Xxxxxxx
as Trustee of the Xxx X. Xxxxxxxx 1990 Trust u/t/a dated December 28, 1990; and
(vi) Xxxxx X. Xxxxxxx as Trustee of the Xxxxxxx X. Xxxxxxx Trust pursuant to a
Trust Agreement dated June 30, 1976.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in
Section 4.6 of the Agreement.
"Most Recent Fiscal Month End" has the meaning set forth in Section
4.6 of the Agreement.
"Most Recent Fiscal Year End" has the meaning set forth in Section 4.6
of the Agreement.
"Multiemployer Plan" has the meaning set forth in ERISA ss.3(37).
"New Realty Trust" means New Realty Trust, a Massachusetts trust, and
the owner of the premises currently leased by SDK.
"Notice of Objection" has the meaning set forth in Section 7.6(a) of
the Agreement.
"Option Agreements" has the meaning set forth in Section 5.1 (g) of
the Agreement.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Other Stockholders" has the meaning set forth in the introductory
paragraph to this Agreement.
"Party" or "Parties" has the meaning set forth in the preface of the
Agreement.
"Patents" means all patents, patent applications and patent disclosures
of SDK, together with all reissuances, decisions, continuations, renewals,
continuations-in-part, revisions, extensions, and reexaminations of any of the
Patents.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
-46-
52
"Petroleum Products" shall mean gasoline, diesel fuel, motor oil,
heating oil, kerosene and any other petroleum products.
"Prime Rate" means the prime rate published as such by The Wall Street
Journal.
"Prohibited Transaction" has the meaning set forth in ERISA ss.406 and
Code ss.4975.
"Proprietary Information" has the meaning set forth in Section 4.12(f)
of the Agreement.
"Qualified IPO" means the closing of an initial public offering
pursuant to an effective registration statement on Form S-1 or a successor form
under the Securities Act covering the offer and sale by Eclipsys and/or any
selling stockholders of Eclipsys capital stock to the public which results in
aggregate gross proceeds to Eclipsys and/or the selling stockholders of at least
$ 10,000,000.
"Registration Rights Agreement" means that certain Amended and
Restated Registration Rights Agreement, dated January 24, 1997, by and among
Eclipsys and certain of its stockholders, as amended in accordance with Section
5.1(i).
"Reportable Event" has the meaning set forth in ERISA ss.4043.
"Repurchase" has the meaning set forth in Section 6.6(e).
"Repurchase Notice" has the meaning set forth in Section 6.6(a) of the
Agreement.
"Repurchase Period" has the meaning set forth in Section 6.6(a) of the
Agreement.
"SDK" has the meaning set forth in the first paragraph of the
Recitals.
"SDK Contracts" has the meaning set forth in Section 4.16 of the
Agreement.
"SDK Financial Statements" has the meaning set forth in Section 4.6 of
the Agreement.
"SDK Non-Voting Common Shares" means the shares of the Non-Voting
Common Stock, $.01 par value, of SDK.
"SDK Per Share Consideration" has the meaning set forth in Section
4(a) of the Agreement.
"SDK Preferred Shares" means the shares of the Preferred Stock, $.01
par value, of SDK.
"SDK Shares" has the meaning set forth in Section 4.2 of the
Agreement.
-47-
53
"SDK Voting Common Shares" means the shares of the Voting Common
Stock, $.01 par value, of SDK.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Selling Stockholders" has the meaning set forth in the preface of the
Agreement.
"Share Consideration" has the meaning set forth in Section 2.3 of the
Agreement.
"Share Consideration Taxes" has the meaning set forth in Section 6.6
of the Agreement.
"Signing Stockholders" has the meaning set forth in the introductory
paragraph to this Agreement
"Specified Employee Stockholders" means Xxxxxxx Xxxx, Xxxxxxx Xxxxx
and J. Xxxx Xxxxxxx.
"Stockholder Agreement" means the Amended and Restated Stockholders
Agreement, dated January 24, 1997, among Eclipsys and certain of its
stockholders, as amended in accordance with Section 5.1(i).
"Stockholder Indemnity Claim" has the meaning set forth in Section 7.2
of the Agreement. "Stockholder Representative" means Xxxxxxx X. Xxxxxxx.
"Subordination Agreement" has the meaning set forth in Section 5.6(b)
of the Agreement.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use,
-48-
54
transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Claim" has the meaning set forth in Section 7.5(a) of the
Agreement.
"Tax Loans" has the meaning set forth in Section 6.6 of the Agreement.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Termination Date" has the meaning set forth in Section 5.8 of the
Agreement.
"Trademarks" means all trademarks, trade names, service marks, trade
dress, trade style, logos, company names and corporate names of SDK, and SDK's
corporate names, and all rights and goodwill associated with the foregoing, and
all applications, registrations, recordings and renewals in connection
therewith.
-49-
55
Exhibits to Exhibit 2.2, the Amended and Restated Stock Purchase Agreement
among the Registrant, SDK Medical Computer Services Corporation and the Selling
Stockholders defined therein dated June 26, 1997, have been omitted pursuant to
Item 601(b)(2) of Commission Regulation S-K. The following is a list of omitted
Exhibits and Schedules which the Registrant agrees to furnish supplementally to
the Commission upon request:
Exhibits:
A Instrument of Adherence
B Form of Buyer Notes
C Form of Allocation Certificate
D-1 Form of Employment Agreement among Eclipsys, SDK and Xxxxxxx X. Xxxxxxx
D-2 Form of Incentive Stock Option Agreement between Eclipsys and Xxxxxxx X.
Xxxxxxx
D-3 Form of Non-Qualified Stock Option Agreement between Eclipsys and Xxxxxxx
X. Xxxxxxx
E Form of Amendment No. 1 to Stockholders Agreement
F Form of Amendment No. 1 to Registration Rights Agreement
G Memorandum of Terms for Lease
Schedules:
Eclipsys Disclosure Schedule - Exception to Representations and Warranties
Concerning Eclipsys
SDK Disclosure Schedule - Exceptions to Representations and Warranties
Concerning the Selling Stockholders and SDK
