1
ANNEX A
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
ECLIPSYS CORPORATION
EXERCISE ACQUISITION CORP.
AND
TRANSITION SYSTEMS, INC.
October 29, 1998
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER................................................ A-1
Section 1.01 Effective Time of the Merger................. A-1
Section 1.02 Closing...................................... A-1
Section 1.03 Effects of the Merger........................ A-1
Section 1.04 Directors of Eclipsys........................ A-1
ARTICLE II
CONVERSION OF SECURITIES.................................. A-2
Section 2.01 Conversion of Capital Stock.................. A-2
Section 2.02 Exchange of Certificates..................... A-3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TSI..................... A-5
Section 3.01 Organization of TSI.......................... A-5
Section 3.02 TSI Capital Structure........................ A-5
Section 3.03 Authority; No Conflict; Required Filings and
Consents............................................... A-6
Section 3.04 SEC Filings; Financial Statements............ A-7
Section 3.05 No Undisclosed Liabilities................... A-7
Section 3.06 Absence of Certain Changes or Events......... A-7
Section 3.07 Taxes........................................ A-8
Section 3.08 Properties................................... A-9
Section 3.09 Intellectual Property........................ A-9
Section 3.10 Agreements, Contracts and Commitments........ A-10
Section 3.11 Litigation................................... A-11
Section 3.12 Environmental Matters........................ A-11
Section 3.13 Employee Benefit Plans....................... A-11
Section 3.14 Compliance With Laws......................... A-12
Section 3.15 Accounting and Tax Matters................... A-12
Section 3.16 Registration Statement; Proxy
Statement/Prospectus................................... A-12
Section 3.17 Labor Matters................................ A-13
Section 3.18 Insurance; Risk Management................... A-13
Section 3.19 No Existing Discussions...................... A-13
Section 3.20 Opinion of Financial Advisor................. A-13
Section 3.21 Anti-Takeover Laws........................... A-13
Section 3.22 Xxxxxxx Xxxxxxx Policies and Practices....... A-13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ECLIPSYS AND SUB........ A-14
Section 4.01 Organization of Eclipsys and Sub............. A-14
Section 4.02 Eclipsys Capital Structure................... A-14
Section 4.03 Authority; No Conflict; Required Filings and
Consents............................................... A-15
Section 4.04 SEC Filings; Financial Statements............ A-16
Section 4.05 No Undisclosed Liabilities................... A-16
Section 4.06 Absence of Certain Changes or Events......... A-16
Section 4.07 Taxes........................................ A-16
Section 4.08 Properties................................... A-17
Section 4.09 Intellectual Property........................ X-00
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Section 4.10 Agreements, Contracts and Commitments........ A-18
Section 4.11 Litigation................................... A-18
Section 4.12 Environmental Matters........................ A-18
Section 4.13 Employee Benefit Plans....................... A-19
Section 4.14 Compliance With Laws......................... A-19
Section 4.15 Accounting and Tax Matters................... A-19
Section 4.16 Registration Statement; Proxy
Statement/Prospectus................................... A-19
Section 4.17 Labor Matters................................ A-20
Section 4.18 Insurance; Risk Management................... A-20
Section 4.19 No Existing Discussions...................... A-20
Section 4.20 Opinion of Financial Advisor................. A-20
Section 4.21 Anti-Takeover Laws........................... A-20
Section 4.22 Xxxxxxx Xxxxxxx Policies and Practices....... A-20
Section 4.23 Interim Operations of Sub.................... A-20
ARTICLE V
CONDUCT OF BUSINESS....................................... A-21
Section 5.01 Covenants of TSI............................. A-21
Section 5.02 Covenants of Eclipsys........................ A-22
Section 5.03 Cooperation.................................. A-23
Section 5.04 HealthVISION Acquisition..................... A-23
Section 5.05 Voting Agreements............................ A-23
Section 5.06 Eclipsys Permitted Acquisitions.............. A-23
ARTICLE VI
ADDITIONAL AGREEMENTS..................................... A-24
Section 6.01 No Solicitation.............................. A-24
Section 6.02 Proxy Statement/Prospectus; Registration
Statement.............................................. A-24
Section 6.03 Nasdaq Quotation............................. A-25
Section 6.04 Access to Information........................ A-25
Section 6.05 Stockholders' Meetings....................... A-25
Section 6.06 Legal Conditions to Merger................... A-25
Section 6.07 Public Disclosure............................ A-26
Section 6.08 Tax-Free Reorganization...................... A-26
Section 6.09 Pooling Accounting........................... A-26
Section 6.10 Affiliate Agreements......................... A-27
Section 6.11 Nasdaq Quotation............................. A-27
Section 6.12 Stock Plans and Warrants..................... A-27
Section 6.13 Brokers or Finders........................... A-28
Section 6.14 Indemnification.............................. A-28
Section 6.15 Letter of Eclipsys' Accountants.............. A-29
Section 6.16 Letter of TSI's Accountants.................. X-00
Xxxxxxx 0.00 Xxxxxxx Registration Rights Agreement........ A-29
ARTICLE VII
CONDITIONS TO MERGER...................................... A-29
Section 7.01 Conditions to Each Party's Obligation To
Effect the Merger...................................... A-29
Section 7.02 Additional Conditions to Obligations of
Eclipsys and Sub....................................... A-30
Section 7.03 Additional Conditions to Obligations of
TSI.................................................... A-31
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ARTICLE VIII
TERMINATION AND AMENDMENT................................. A-31
Section 8.01 Termination.................................. A-31
Section 8.02 Effect of Termination........................ A-32
Section 8.03 Fees and Expenses............................ A-32
Section 8.04 Amendment.................................... A-34
Section 8.05 Extension; Waiver............................ A-34
ARTICLE IX
MISCELLANEOUS............................................... A-35
Section 9.01 Nonsurvival of Representations, Warranties
and Agreements......................................... A-35
Section 9.02 Notices...................................... A-35
Section 9.03 Interpretation............................... A-35
Section 9.04 Counterparts................................. A-36
Section 9.05 Entire Agreement; No Third Party
Beneficiaries.......................................... A-36
Section 9.06 Governing Law................................ A-36
Section 9.07 Assignment................................... A-36
Exhibit A -- Voting Agreement............................... A-38
Exhibit B -- Affiliate Agreement............................ A-48
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TABLE OF DEFINED TERMS
Acquisition Proposal........................................ Section 6.01(a)
Affiliate................................................... Section 6.10
Affiliate Agreement......................................... Section 6.10
Agreement................................................... Preamble
Alternative Transaction..................................... Section 8.03(g)
Antitrust Laws.............................................. Section 6.06(b)
Articles of Merger.......................................... Section 1.01
Bankruptcy and Equity Exception............................. Section 3.03(a)
Certificates................................................ Section 2.02(b)
Closing..................................................... Section 1.02
Closing Date................................................ Section 1.02
Code........................................................ Preamble
Confidentiality Agreement................................... Section 6.01(a)
Constituent Corporations.................................... Section 1.03
Costs....................................................... Section 6.14(a)
Dissenting Shares........................................... Section 2.01(d)
Effective Time.............................................. Section 1.01
Environmental Law........................................... Section 3.12(a)
ERISA....................................................... Section 3.13(a)
ERISA Affiliate............................................. Section 3.13(a)
Exchange Act................................................ Section 3.03(c)
Exchange Agent.............................................. Section 2.02(a)
Exchange Fund............................................... Section 2.02(a)
Exchange Ratio.............................................. Section 2.01(c)
Eclipsys.................................................... Preamble
Eclipsys Affiliated Group................................... Section 4.07(a)
Eclipsys Affiliated Period.................................. Section 4.07(a)
Eclipsys Balance Sheet...................................... Section 4.04(b)
Eclipsys Common Stock....................................... Section 4.02(a)
Eclipsys Disclosure Schedule................................ Article IV
Eclipsys Employee Plans..................................... Section 4.13(a)
Eclipsys Intellectual Property Rights....................... Section 4.09(a)
Eclipsys Material Adverse Effect............................ Section 4.01
Eclipsys Material Contracts................................. Section 4.10
Eclipsys Material Covenants................................. Section 8.03(d)
Eclipsys Non-Voting Common Stock............................ Section 4.02(a)
Eclipsys Permitted Acquisition.............................. Section 5.02(d)
Eclipsys Possible Acquisition............................... Section 4.19
Eclipsys Preferred Stock.................................... Section 4.02(a)
Eclipsys SEC Reports........................................ Section 4.04(a)
Eclipsys Stock Plans........................................ Section 4.02(a)
Eclipsys Stockholders' Meeting.............................. Section 3.16
Eclipsys Termination Fee Event.............................. Section 8.03(c)
Eclipsys Third Party Intellectual Property Rights........... Section 4.09(b)
Eclipsys Voting Common Stock................................ Section 2.01(b)
Eclipsys Voting Proposals................................... Section 6.05(a)
Eclipsys Warrants........................................... Section 4.02(a)
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GAAP........................................................ Section 3.04(b)
Governmental Entity......................................... Section 3.03(c)
Hazardous Substance......................................... Section 3.12(c)
HealthVISION................................................ Section 3.19
HealthVISION Acquisition.................................... Section 3.19
IISR ACT.................................................... Section 3.03(a)
Indemnified Parties......................................... Section 6.14(a)
IRS......................................................... Section 3.07(b)
Joint Proxy Statement....................................... Section 3.16
Material Adverse Change..................................... Section 3.06
MBCL........................................................ Section 1.01
Merger...................................................... Preamble
Off-the-Shelf Software...................................... Section 3.09(a)
Order....................................................... Section 7.01(e)
Outside Date................................................ Section 8.01(b)
Registration Rights Agreement............................... Section 6.17
Registration Statement...................................... Section 3.16
Rule 145.................................................... Section 6.10
SEC......................................................... Section 3.03(c)
Second Request.............................................. Section 6.06(b)
Securities Act.............................................. Section 3.04(a)
Stock Purchase Plan......................................... Section 6.12(f)
Sub......................................................... Preamble
Subsidiary.................................................. Section 3.01
Superior Proposal........................................... Section 6.01(a)
Surviving Corporation....................................... Section 1.03
Tax......................................................... Section 3.07(a)
Taxes....................................................... Section 3.07(a)
Tax Returns................................................. Section 3.07(a)
Third Party................................................. Section 8.03(g)
TSI......................................................... Preamble
TSI Affiliated Group........................................ Section 3.07(b)
TSI Affiliated Period....................................... Section 3.07(b)
TSI Balance Sheet........................................... Section 3.04(b)
TSI Common Stock............................................ Section 2.01(b)
TSI Designees............................................... Section 1.04(a)
TSI Disclosure Schedule..................................... Article III
TSI Employee Plans.......................................... Section 3.13(a)
TSI Intellectual Property Rights............................ Section 3.09(a)
TSI Material Adverse Effect................................. Section 3.01
TSI Material Contracts...................................... Section 3.10
TSI Material Covenants...................................... Section 8.03(b)
TSI Non-Voting Common Stock................................. Section 2.01(b)
TSI Preferred Stock......................................... Section 3.02(a)
TSI SEC Reports............................................. Section 3.04(a)
TSI Stock Option............................................ Section 6.12(a)
TSI Stock Plans............................................. Section 3.02(a)
TSI Stockholders' Meeting................................... Section 3.16
TSI Termination Fee Event................................... Section 8.03(e)
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TSI Third Party Intellectual Property....................... Section 3.09(b)
TSI Voting Common Stock..................................... Section 2.01(b)
TSI Warrants................................................ Section 3.02(a)
Warburg..................................................... Section 5.05
Warburg Registration Rights Agreement....................... Section 6.17
Year 2000 Compliant......................................... Section 3.09(d)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of October 29,
1998, by and among Eclipsys Corporation, a Delaware corporation ("Eclipsys"),
Exercise Acquisition Corp., a Massachusetts corporation and a direct,
wholly-owned subsidiary of Eclipsys ("Sub"), and Transition Systems, Inc., a
Massachusetts corporation ("TSI").
WHEREAS, the Boards of Directors of Eclipsys and TSI deem it advisable and
in the best interests of each corporation and its respective stockholders that
Eclipsys and TSI combine in order to advance the long-term business interests of
Eclipsys and TSI;
WHEREAS, the combination of Eclipsys and TSI shall be effected by the terms
of this Agreement through a merger in which the stockholders of TSI will become
stockholders of Eclipsys (the "Merger");
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a pooling of interests;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 Effective Time of the Merger. Subject to the provisions of
this Agreement, articles of merger in such form as shall be required by the
relevant provisions of the Massachusetts Business Corporation Law ("MBCL") (the
"Articles of Merger") shall be duly prepared, executed and acknowledged by the
Surviving Corporation (as defined in Section 1.03) and thereafter delivered to
the Secretary of State of the Commonwealth of Massachusetts, for filing, as
provided in the MBCL, as soon as practicable on or after the Closing Date (as
defined in Section 1.02). The Merger shall become effective upon the filing of
the Articles of Merger with the Secretary of State of the Commonwealth of
Massachusetts or at such time thereafter as shall be provided in the Articles of
Merger (the "Effective Time").
SECTION 1.02 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., Eastern Time, on a date to be specified by Eclipsys and
TSI, which shall be no later than the second business day after satisfaction of
the latest to occur of the conditions set forth in Sections 7.01, 7.02 and 7.03
(the "Closing Date"), at the offices of Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx, unless another date, place or time is agreed to in
writing by Eclipsys and TSI.
SECTION 1.03 Effects of the Merger. At the Effective Time (i) the separate
existence of Sub shall cease and Sub shall be merged with and into TSI (Sub and
TSI are sometimes referred to below as the "Constituent Corporations" and TSI is
sometimes referred to herein as the "Surviving Corporation"), (ii) the Articles
of Organization of Sub immediately prior to the Effective Time shall be the
Articles of Organization of the Surviving Corporation, except that the name of
the corporation set forth therein shall be changed to the name of TSI, (iii) the
Bylaws of the Sub as in effect immediately prior to the Effective Time shall be
the Bylaws of the Surviving Corporation, except that the name of the corporation
set forth therein shall be changed to the name of TSI, and (iv) the purpose of
the Surviving Corporation shall be as set forth in Article II of the Articles of
Organization of Sub immediately prior to the Effective Date.
SECTION 1.04 Directors of Eclipsys.
(a) Prior to the Effective Time, Eclipsys shall (i) increase the number of
the members of the Board of Directors of Eclipsys to nine and (ii) take such
action as may be necessary such that Xxxxxx X. Xxxx
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and Xxxxxxx X. Xxxxxxx (the "TSI Designees") shall have been elected to the
Board of Directors of Eclipsys as of the Effective Time, Xx. Xxxx to be assigned
to Class II and Xx. Xxxxxxx to be assigned to Class III on the Eclipsys Board of
Directors. If, prior to the Effective Time, any of the TSI Designees shall
decline or be unable to serve as a TSI Designee, TSI shall designate another
person to serve in such person's stead, which person shall be reasonably
acceptable to Eclipsys.
(b) The directors of Eclipsys elected pursuant to Section 1.04(a) shall
hold their positions until their resignation or removal or the election or
appointment of their successors in the manner provided by Eclipsys' charter
documents and applicable law.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of TSI Common Stock or capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of the
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Eclipsys-Owned Stock. All
shares of Common Stock of TSI, $.01 par value ("TSI Voting Common Stock"),
and all shares of Non-Voting Common Stock of TSI, $.01 par value ("TSI
Non-Voting Common Stock" and, together with the TSI Voting Common Stock,
"TSI Common Stock"), that are owned by TSI as treasury stock and any shares
of TSI Common Stock owned by Eclipsys, Sub or any other wholly-owned
Subsidiary (as defined in Section 3.01) of Eclipsys shall be cancelled and
retired and shall cease to exist and no stock of Eclipsys or other
consideration shall be delivered in exchange therefor. All shares of Common
Stock, $.01 par value per share, of Eclipsys ("Eclipsys Voting Common
Stock") owned by TSI shall be unaffected by the Merger.
(c) Exchange Ratio for TSI Common Stock. Subject to Section 2.02,
each issued and outstanding share of TSI Common Stock (other than shares,
if any, as to which dissenters' rights, if any, are perfected and shares to
be cancelled in accordance with Section 2.01(b)) shall be converted into
the right to receive 0.525 shares (the "Exchange Ratio") of Eclipsys Voting
Common Stock. All such shares of TSI Common Stock, when so converted, shall
no longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each holder of a certificate representing any
such shares shall cease to have any rights with respect thereto, except the
right to receive the shares of Eclipsys Voting Common Stock and any cash in
lieu of fractional shares of Eclipsys Voting Common Stock to be issued or
paid in consideration therefor upon the surrender of such certificate in
accordance with Section 2.02, without interest. Notwithstanding the
foregoing, if between the date of this Agreement and the Effective Time the
outstanding shares of Eclipsys Voting Common Stock shall have been changed
into a different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, then the Exchange Ratio shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares.
(d) Dissenting Shares. For purposes of this Agreement, "Dissenting
Shares" means shares of TSI Common Stock held as of the Effective Time by a
stockholder of TSI who has not voted such shares in favor of the adoption
of this Agreement and the Merger and with respect to which appraisal shall
have been duly demanded and perfected in accordance with Sections 85
through 98 of the MBCL and not effectively withdrawn or forfeited prior to
the Effective Time. Dissenting Shares shall not be converted into or
represent the right to receive any shares of Eclipsys Voting Common Stock
unless such stockholder's right to appraisal shall have ceased in
accordance with Section 96 of the MBCL. If such stockholder has so
forfeited or withdrawn his right to appraisal of Dissenting Shares, then
(i) as of the occurrence of such event, such holder's Dissenting Shares
shall cease to be
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Dissenting Shares and shall thereupon be deemed to have been converted, as of
the Effective Time, into and represent shares of Eclipsys Voting Common Stock,
without interest thereon, as provided in Section 2.01(c) hereof. TSI shall give
Eclipsys (x) prompt notice of any written demands for appraisal of any shares of
TSI Common Stock, withdrawals of such demands, and any other instruments that
relate to such demands received by TSI and (y) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
MBCL. TSI shall not, except with the prior written consent of Eclipsys, make any
payment with respect to any demands for appraisal of shares of TSI Common Stock
or offer to settle or settle any such demands.
SECTION 2.02 Exchange of Certificates. The procedures for exchanging
outstanding shares of TSI Common Stock for Eclipsys Voting Common Stock pursuant
to the Merger are as follows:
(a) Exchange Agent. As of the Effective Time, Eclipsys shall deposit
with a bank or trust company designated by Eclipsys and TSI (the "Exchange
Agent"), for the benefit of the holders of shares of TSI Common Stock, for
exchange in accordance with this Section 2.02, through the Exchange Agent,
(i) certificates representing the shares of Eclipsys Voting Common Stock
(such shares of Eclipsys Voting Common Stock, together with any dividends
or distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund") issuable pursuant to Section 2.01 in exchange for
outstanding shares of TSI Common Stock and (ii) an amount of cash
sufficient to fund all cash payments in lieu of fractional shares to be
paid pursuant to subsection (e) below.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of TSI Common Stock (the "Certificates")
whose shares were converted pursuant to Section 2.01 into the right to
receive shares of Eclipsys Voting Common Stock (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as Eclipsys and TSI may reasonably specify) and (ii)
instructions for effecting the surrender of the Certificates in exchange
for certificates representing shares of Eclipsys Voting Common Stock (plus
cash in lieu of fractional shares, if any, of Eclipsys Voting Common Stock
as provided below). Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by
Eclipsys and TSI, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of Eclipsys
Voting Common Stock which such holder has the right to receive pursuant to
the provisions of this Article II, and the Certificate so surrendered shall
immediately be cancelled. In the event of a transfer of ownership of TSI
Common Stock which is not registered in the transfer records of TSI, a
certificate representing the proper number of shares of Eclipsys Voting
Common Stock may be issued to a transferee if the Certificate representing
such TSI Common Stock is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer and by evidence
that any applicable stock transfer taxes have been paid. Until surrendered
as contemplated by this Section 2.02, each Certificate shall be deemed at
any time after the Effective Time to represent only the right to receive
upon such surrender the certificate representing shares of Eclipsys Voting
Common Stock and cash in lieu of any fractional shares of Eclipsys Voting
Common Stock as contemplated by this Section 2.02.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect
to Eclipsys Voting Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Eclipsys Voting Common Stock represented thereby and no
cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to subsection (e) below until the holder of record of such
Certificate shall surrender such Certificate. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall
be paid to the record holder of the certificates representing whole shares
of Eclipsys Voting Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of any cash payable
in lieu of a
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fractional share of Eclipsys Voting Common Stock to which such holder is
entitled pursuant to subsection (e) below and the amount of dividends or
other distributions with a record date after the Effective Time previously
paid with respect to such whole shares of Eclipsys Voting Common Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect
to such whole shares of Eclipsys Voting Common Stock.
(d) No Further Ownership Rights in TSI Common Stock. All shares of
Eclipsys Voting Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to subsection (c) or (e) of this Section 2.02) shall be deemed to
have been issued in full satisfaction of all rights pertaining to such
shares of TSI Common Stock, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been declared or made by TSI on such shares of TSI Common Stock in
accordance with the terms of this Agreement (to the extent permitted under
Section 5.01) prior to the date hereof and which remain unpaid at the
Effective Time, and from and after the Effective Time there shall be no
further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of TSI Common Stock which were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled and exchanged as provided in this
Section 2.02.
(e) No Fractional Shares. No certificate or scrip representing
fractional shares of Eclipsys Voting Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests
will not entitle the owner thereof to vote or to any other rights of a
stockholder of Eclipsys. Notwithstanding any other provision of this
Agreement, each holder of shares of TSI Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of
a share of Eclipsys Voting Common Stock (after taking into account all
Certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of
Eclipsys Voting Common Stock multiplied by the average of the last reported
sales prices of Eclipsys Voting Common Stock, as reported on the Nasdaq
National Market, on each of the ten trading days immediately preceding the
Closing Date.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the stockholders of TSI for 180 days after
the Effective Time shall be delivered to Eclipsys, upon demand, and any
stockholders of TSI who have not previously complied with this Section 2.02
shall thereafter look only to Eclipsys for payment of their claim for
Eclipsys Voting Common Stock, any cash in lieu of fractional shares of
Eclipsys Voting Common Stock and any dividends or distributions with
respect to Eclipsys Voting Common Stock.
(g) No Liability. Neither Eclipsys nor TSI shall be liable to any
holder of shares of TSI Common Stock or Eclipsys Voting Common Stock, as
the case may be, for such shares (or dividends or distributions with
respect thereto) delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) Withholding Rights. Each of Eclipsys and the Surviving
Corporation shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of TSI
Common Stock such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld
by the Surviving Corporation or Eclipsys, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of the shares of TSI Common Stock in respect of which
such deduction and withholding was made by the Surviving Corporation or
Eclipsys, as the case may be.
(i) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond
in such
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reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of Eclipsys Voting Common Stock
and any cash in lieu of fractional shares, and unpaid dividends and
distributions on shares of Eclipsys Voting Common Stock deliverable in
respect thereof pursuant to this Agreement.
(j) Affiliates. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any Affiliate (as defined in
Section 6.10) of TSI shall not be exchanged until Eclipsys has received an
Affiliate Agreement (as defined in Section 6.10) from such Affiliate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TSI
TSI represents and warrants to Eclipsys and Sub that the statements
contained in this Article III are true and correct except as set forth in the
disclosure schedule delivered by TSI to Eclipsys on or before the date of this
Agreement (the "TSI Disclosure Schedule"). The TSI Disclosure Schedule shall be
arranged in sections and paragraphs corresponding to the numbered and lettered
sections and paragraphs contained in this Article III and the disclosure in any
section or paragraph shall qualify other sections and paragraphs in this Article
III only to the extent that it is reasonably apparent from a reading of such
disclosure that it also qualifies or applies to such other sections and
paragraphs.
SECTION 3.01 Organization of TSI. Each of TSI and its Subsidiaries (as
defined below) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite corporate power to own, lease and operate its property and to carry on
its business as now being conducted and as proposed to be conducted, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the failure to be so qualified would have a TSI
Material Adverse Effect (as defined below). Except as set forth in the TSI SEC
Reports (as defined in Section 3.04) filed prior to the date hereof, neither TSI
nor any of its Subsidiaries directly or indirectly owns any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any corporation, partnership, joint venture or other business association
or entity, excluding securities in any publicly traded company held for
investment by TSI and comprising less than five percent (5%) of the outstanding
stock of such company. As used in this Agreement, the word "Subsidiary" means,
with respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (i) such party or any other Subsidiary
of such party is a general partner (excluding partnerships, the general
partnership interests of which held by such party or any Subsidiary of such
party do not have a majority of the voting interest in such partnership) or (ii)
at least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries. For purposes of this Agreement, the term "TSI Material Adverse
Effect" means any effect that is, or would reasonably be expected to be,
materially adverse to the financial condition, results of operations, cash
flows, business or properties of TSI and its Subsidiaries, taken as a whole.
SECTION 3.02 TSI Capital Structure.
(a) The authorized capital stock of TSI consists of 30,000,000 shares of
TSI Voting Common Stock, $.01 par value, 1,000,000 shares of TSI Non-Voting
Common Stock, $.01 par value, and 1,000,000 shares of Preferred Stock, $.01 par
value ("TSI Preferred Stock"). As of September 30, 1998, (i) 18,035,983 shares
of TSI Voting Common Stock and 356,262 shares of TSI Non-Voting Common Stock
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) 297,928 shares of TSI Non-Voting Common Stock were reserved
for issuance upon the exercise of certain warrants (the "TSI Warrants") having
an exercise price of $.01 per share, and (iii) no shares of TSI Common Stock
were held in the treasury of TSI or by Subsidiaries of TSI. Section 3.02 of the
TSI Disclosure Schedule
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shows the number of shares of TSI Voting Common Stock reserved for future
issuance pursuant to stock options granted and outstanding as of September 30,
1998 and the plans under which such options were granted (collectively, the "TSI
Stock Plans"). No material change in such capitalization has occurred between
September 30, 1998 and the date of this Agreement. As of the date of this
Agreement, none of the shares of TSI Preferred Stock is issued and outstanding.
All shares of TSI Common Stock subject to issuance as specified above are duly
authorized and, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be validly issued, fully
paid and nonassessable. There are no obligations, contingent or otherwise, of
TSI or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of TSI Common Stock or the capital stock of any Subsidiary or to provide
funds to or make any material investment (in the form of a loan, capital
contribution or otherwise) in any such Subsidiary or any other entity other than
guarantees of bank obligations of Subsidiaries entered into in the ordinary
course of business. All of the outstanding shares of capital stock of each of
TSI's Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and all such shares (other than directors' qualifying shares in
the case of foreign Subsidiaries) are owned by TSI or another Subsidiary free
and clear of all security interests, liens, claims, pledges, agreements,
limitations in TSI's voting rights, charges or other encumbrances of any nature.
(b) Except as set forth in this Section 3.02 or as reserved for future
grants of options under the TSI Stock Plans, the TSI Warrants or the Eclipsys
Stock Option Agreement, there are no equity securities of any class of TSI or
any of its Subsidiaries, or any security exchangeable into or exercisable for
such equity securities, issued, reserved for issuance or outstanding. Except as
set forth in the TSI SEC Reports filed prior to the date hereof, in the Eclipsys
Stock Option Agreement or disclosed in Section 3.02 of the TSI Disclosure
Schedule, there are no options, warrants, equity securities, calls, rights,
commitments or agreements of any character to which TSI or any of its
Subsidiaries is a party or by which it is bound obligating TSI or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of TSI or any of its Subsidiaries or
obligating TSI or any of its Subsidiaries to grant, extend, accelerate the
vesting of or enter into any such option, warrant, equity security, call, right,
commitment or agreement. No consent is required from the holders of TSI Stock
Options (as defined below) in connection with the conversion of the TSI Stock
Options into options to purchase Eclipsys Voting Common Stock as contemplated by
Section 6.12. To the best knowledge of TSI, there are no voting trusts, proxies
or other voting agreements or understandings with respect to the shares of
capital stock of TSI.
SECTION 3.03 Authority; No Conflict; Required Filings and Consents.
(a) TSI has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement by TSI have been duly authorized by
all necessary corporate action on the part of TSI, subject only to the approval
of the Merger by TSI's stockholders under the MBCL. This Agreement has been duly
executed and delivered by TSI and constitutes the valid and binding obligation
of TSI, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles (the "Bankruptcy and Equity Exception").
(b) The execution and delivery of this Agreement by TSI does not, and the
consummation of the transactions contemplated by this Agreement will not, (i)
conflict with, or result in any violation or breach of, any provision of the
Articles of Organization or Bylaws of TSI, each as amended to date, (ii) result
in any violation or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of any material benefit) under, or
require a consent or waiver under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which TSI or any of its Subsidiaries is a party or
by which any of them or any of their properties or assets may be bound, or (iii)
conflict with or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to TSI or
any of its Subsidiaries or any of its or their
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properties or assets, except in the case of clauses (ii) and (iii) for any such
conflicts, violations, breaches, defaults, terminations, cancellations,
accelerations or losses which are not, individually or in the aggregate,
reasonably likely to have a TSI Material Adverse Effect.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity") is
required by or with respect to TSI or any of its Subsidiaries in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) the filing of a pre-merger
notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act") and any other documents or information
requested by the United States Department of Justice or the United States
Federal Trade Commission in connection therewith, (ii) the filing of the
Articles of Merger with the Secretary of State of Massachusetts, (iii) the
filing of the Joint Proxy Statement (as defined in Section 3.16 below) with the
Securities and Exchange Commission (the "SEC") in accordance with the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (iv) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state securities laws and the laws of any
foreign country and (v) such other consents, authorizations, filings, approvals
and registrations which, if not obtained or made, would not be reasonably likely
to have a TSI Material Adverse Effect.
SECTION 3.04 SEC Filings; Financial Statements.
(a) TSI has filed and made available to Eclipsys all forms, reports and
documents required to be filed by TSI with the SEC since April 18, 1996 other
than registration statements on Form S-8 (collectively, the "TSI SEC Reports").
The TSI SEC Reports (i) at the time filed, complied in all material respects
with the applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act, as the case may be, and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such TSI SEC Reports or necessary in order to make the statements in
such TSI SEC Reports, in the light of the circumstances under which they were
made, not misleading. None of TSI's Subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes) contained in the TSI SEC Reports complied as to form in all
material respects with the applicable published rules and regulations of the SEC
with respect thereto, was prepared in accordance with U.S. generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC) and fairly presented the consolidated financial position of TSI and its
Subsidiaries as of the dates and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount. The
unaudited balance sheet of TSI as of June 30, 1998 is referred to herein as the
"TSI Balance Sheet."
SECTION 3.05 No Undisclosed Liabilities. Except as disclosed in the TSI
SEC Reports filed prior to the date hereof, and except for normal or recurring
liabilities incurred since June 30, 1998 in the ordinary course of business
consistent with past practices, TSI and its Subsidiaries do not have any
liabilities, either accrued, contingent or otherwise (whether or not required to
be reflected in financial statements in accordance with GAAP), and whether due
or to become due, which individually or in the aggregate are reasonably likely
to have a TSI Material Adverse Effect.
SECTION 3.06 Absence of Certain Changes or Events. Except as disclosed in
the TSI SEC Reports filed prior to the date hereof, from and after the date of
the TSI Balance Sheet, TSI and its Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice and,
during such period, there has not been (i) any material adverse change in the
financial condition, results of operations, cash flows, business or properties,
subject to the last sentence of this
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Section 3.06 (a "Material Adverse Change") of TSI and its Subsidiaries, taken as
a whole (other than changes that are the effect or result of economic factors
affecting the economy as a whole or economic or market factors affecting the
healthcare information systems industry generally) or any development or
combination of developments of which the management of TSI is aware that,
individually or in the aggregate, has had, or is reasonably likely to have, a
TSI Material Adverse Effect (other than economic factors affecting the economy
as a whole or economic or market factors affecting the healthcare information
systems industry generally); (ii) any damage, destruction or loss (whether or
not covered by insurance) with respect to TSI or any of its Subsidiaries having
a TSI Material Adverse Effect; (iii) any material change by TSI in its
accounting methods, principles or practices to which Eclipsys has not previously
consented in writing; (iv) any revaluation by TSI of any of its assets having a
TSI Material Adverse Effect; or (v) any other action or event that would have
required the consent of Eclipsys pursuant to Section 5.01 of this Agreement had
such action or event occurred after the date of this Agreement and that, in the
case of this clause (v), individually or in the aggregate, has had or is
reasonably likely to have a TSI Material Adverse Effect. Notwithstanding the
foregoing, the failure of TSI or Eclipsys to achieve any level of revenue and
earnings at any time shall not of itself constitute a Material Adverse Change of
TSI and its Subsidiaries, taken as a whole, or Eclipsys and its Subsidiaries,
taken as a whole, as the case may be.
SECTION 3.07 Taxes.
(a) For the purposes of this Agreement, a "Tax" or, collectively, "Taxes"
means any and all material federal, state, local and foreign taxes, assessments
and other governmental charges, duties, impositions and liabilities, including
taxes based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, gains, franchise,
withholding, payroll, recapture, employment, excise, unemployment insurance,
social security, business license, occupation, business organization, stamp,
environmental and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts. "Tax Returns" means all reports,
returns, declarations, statements or other information required to be supplied
to a taxing authority in connection with Taxes.
(b) Each of TSI and its Subsidiaries has filed all Tax Returns that it was
required to file, and all such Tax Returns were correct and complete. Each group
of corporations with which TSI or any of its Subsidiaries has filed (or was
required to file) consolidated, combined, unitary or similar Tax Returns (a "TSI
Affiliated Group") has filed all such Tax Returns that it was required to file
with respect to any period in which TSI or one of its Subsidiaries was a member
of such TSI Affiliated Group (a "TSI Affiliated Period"), and all such Tax
Returns were correct and complete. Each of TSI and its Subsidiaries has paid all
Taxes (whether or not shown on such Tax Returns) that were due and payable, and
each TSI Affiliated Group has paid all Taxes (whether or not shown on such Tax
Returns) that were due and payable with respect to all TSI Affiliated Periods
and with respect to which TSI or any of its Subsidiaries may be liable by
operation of law or otherwise. The unpaid Taxes of TSI and its Subsidiaries for
tax periods through the date of the TSI Balance Sheet do not exceed the accruals
and reserves for Taxes set forth on the TSI Balance Sheet (exclusive of any
accruals for "deferred taxes" or similar items that reflect timing differences
between Tax and financial accounting principles). The unpaid Taxes of TSI and
its Subsidiaries for tax periods from the date of the TSI Balance Sheet through
the Closing Date are attributable solely to the conduct of their businesses in
the ordinary course and in a manner consistent with past practices. All Taxes
that TSI or any of its Subsidiaries is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Entity. Each of the representations
contained in this Section 3.07(b) shall be limited in its application to items
which are reasonably likely, individually or in the aggregate, to have a TSI
Material Adverse Effect.
(c) No examination or audit by any Governmental Entity of any Tax Return of
TSI, any of its Subsidiaries or any TSI Affiliated Group with respect to a TSI
Affiliated Period is currently in progress or, to the knowledge of TSI and its
Subsidiaries, threatened or contemplated, in each case, which involve claims
that individually or in the aggregate are reasonably likely to have a TSI
Material Adverse Effect. Neither TSI nor any of its Subsidiaries has been
informed by any jurisdiction that the jurisdiction believes
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that TSI or any of its Subsidiaries was required to file any Tax Return that was
not filed which failure or failures individually, or in the aggregate, are
reasonably likely to have a TSI Material Adverse Effect.
(d) Neither TSI nor any of its Subsidiaries is a "consenting corporation"
within the meaning of Section 341(f) of the Code, and none of the assets of TSI
and its Subsidiaries is subject to an election under Section 341(f) of the Code.
(e) Neither TSI nor any of its Subsidiaries has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(l)(A)(ii) of the Code.
(f) None of TSI or any of its Subsidiaries is a party to any Tax allocation
or sharing agreement.
(g) None of TSI or any of its Subsidiaries has any material liability for
Taxes of any person (other than TSI or any of its Subsidiaries (under Treasury
Regulation Section 1.1502-6 or any similar provision of state, local or foreign
law)), as a transferee or successor, by contract, or otherwise.
SECTION 3.08 Properties.
(a) TSI does not own of record any real property.
(b) All material real property leases of TSI and its Subsidiaries are in
good standing, valid and effective in accordance with their respective terms,
and neither TSI nor any of its Subsidiaries is in default under any of such
leases, except where the lack of such good standing, validity or effectiveness
or the existence of such default would not be reasonably likely to have a TSI
Material Adverse Effect.
SECTION 3.09 Intellectual Property.
(a) TSI and its Subsidiaries own, or are licensed or otherwise possess
legally enforceable rights to use, all patents, trademarks, trade names, service
marks, copyrights and mask works, any applications for and registrations of such
patents, trademarks, trade names, service marks, copyrights and mask works, and
all processes, formulae, methods, schematics, technology, know-how, computer
software programs or applications and tangible or intangible proprietary
information or material that are necessary to conduct the business of TSI and
its Subsidiaries as currently conducted, or planned to be conducted, the absence
of which would be reasonably likely to have a TSI Material Adverse Effect (the
"TSI Intellectual Property Rights"). Section 3.09 of the TSI Disclosure Schedule
sets forth a complete and accurate list of (i) all patents, registered
copyrights, registered trademarks, registered service marks and all software
programs, other than commercial, off-the-shelf software, subject to a perpetual
license, in connection with which no future license fees or royalties are due
("Off-the-Shelf Software"), owned, used or licensed by or to TSI or any of its
Subsidiaries and (ii) all other intellectual property that is licensed by or to
TSI or any of its Subsidiaries that is used in or is necessary for the conduct
of TSI's business. TSI has promulgated and used commercially reasonable efforts
to enforce the trade secret protection program described in Section 3.09 of the
TSI Disclosure Schedule.
(b) Neither TSI nor any of its Subsidiaries is, or will as a result of the
execution and delivery of this Agreement or the performance of TSI's obligations
under this Agreement or otherwise be, in breach of any license, sublicense or
other agreement relating to the TSI Intellectual Property Rights, or any
material licenses, sublicenses and other agreements as to which TSI or any of
its Subsidiaries is a party and pursuant to which TSI or any of its Subsidiaries
is authorized to use any third party patents, trademarks or copyrights ("TSI
Third Party Intellectual Property Rights"), including software which is used in
the manufacture of, incorporated in, or forms a part of any product sold by or
expected to be sold by TSI or any of its Subsidiaries, the breach of which would
be reasonably likely to have a TSI Material Adverse Effect.
(c) All patents, registered trademarks, registered service marks and
registered copyrights which are held by TSI or any of its Subsidiaries and which
are material to the business of TSI and its Subsidiaries, taken as a whole, are
valid and subsisting. TSI (i) has not been sued in any suit, action or
proceeding, or received in writing any claim or notice, which involves a claim
of infringement of any patents, trademarks,
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service marks, copyrights or violation of any trade secret or other proprietary
right of any third party; and (ii) has no knowledge that the manufacturing,
marketing, licensing or sale of its products infringes any patent, trademark,
service xxxx, copyright, trade secret or other proprietary right of any third
party, which infringement would reasonably be expected to have a TSI Material
Adverse Effect.
(d) Section 3.09 of the TSI Disclosure Schedule identifies each "year 2000"
audit, report or investigation that has been performed by or on behalf of TSI
with respect to its business and operations, and TSI has provided to Eclipsys
true and correct copies of all such audits, reports or investigations. Except as
set forth in such audits, reports and investigations, TSI is not aware of any
failure to be Year 2000 Compliant of (i) any software products sold or licensed
by TSI or any of its Subsidiaries to third parties or (ii) any computer software
products used by or licensed to TSI or its Subsidiaries from third parties for
internal use by TSI or its Subsidiaries. For purposes of this Agreement, "Year
2000 Compliant" means, with respect to each software product referred to in the
prior sentence, that such system (i) will accurately receive, record, store,
provide, recognize and process all date and time data from, during, into and
between the twentieth and twenty-first centuries; (ii) will accurately perform
all date-dependent calculations and operations (including, without limitation,
mathematical operations, sorting, comparing and reporting) from, during, into
and between the twentieth and twenty-first centuries; and (iii) will not
malfunction, cease to function or provide invalid or incorrect results as a
result of (x) the change of century, (y) date data, including date data which
represents or references different centuries or more than one century or (z) the
occurrence of any particular date; in each case without human intervention,
other than original data entry; provided, in each case, that all applications,
hardware and other systems used in conjunction with such system which are not
owned or licensed by TSI correctly exchange date data with or provide data to
such system. Except as set forth in Section 3.09(d) of the TSI Disclosure
Statement, TSI has not provided any guarantee or warranty for any product sold
or licensed, or services provided, by TSI to the effect that such product or
service (i) complies with or accounts for the fact of the arrival of the year
2000 or (ii) will not be adversely affected with respect to functionally
interoperability, performance or volume capacity (including without limitation
the processing and reporting of data) by virtue of the arrival of the year 2000.
SECTION 3.10 Agreements, Contracts and Commitments. Except as set forth on
Section 3.10 of the TSI Disclosure Schedule, neither TSI nor any of its
Subsidiaries, nor any of their respective assets, businesses, or operations, is
a party to, or is bound or affected by, or receives benefits under (i) any
severance, termination or retirement agreement or any employment or consulting
agreement providing for aggregate payments to any person in any calendar year in
excess of $100,000 or continuing for more than one year, (ii) any agreement
relating to the borrowing of money by TSI or any of its Subsidiaries or the
guarantee by any TSI or any of its Subsidiaries of any such obligation (other
than agreements evidencing trade payables or relating to borrowings or
guarantees made in the ordinary course of business), (iii) any agreement which
prohibits or restricts TSI or any of its Subsidiaries from engaging in any
business activities in any geographic area, line of business or otherwise in
competition with any other person, (iv) any agreement involving TSI Intellectual
Property Rights or TSI Third Party Intellectual Property Rights (other than
Off-the-Shelf Software licenses) which provide for annual payments of $100,000
or more, (v) any agreement relating to the provision of computer software,
computer hardware, data processing systems or equipment, network communication,
transactional billing, management information or other technical systems or
services, including maintenance with respect to the foregoing matters, to or by
TSI or any of its Subsidiaries which provides for annual payments of $100,000 or
more, (vi) any agreement relating to the purchase or lease of real property, and
(vii) any other agreement or amendment thereto that would be required to be
filed as an exhibit to a Form 10-K filed by TSI with the SEC as of the date of
this Agreement (collectively, the "TSI Material Contracts"). With respect to
each TSI Material Contract and except as disclosed in Section 3.10 of the TSI
Disclosure Schedule: (i) the TSI Material Contract is in full force and effect;
(ii) neither TSI nor any of its Subsidiaries is in default or breach thereunder
in any material respect; (iii) neither TSI nor any of its Subsidiaries has
repudiated or waived any material provision of any such TSI Material Contract;
(iv) no other party to any such TSI Material Contract is, to the knowledge of
TSI, in default or breach in any material respect or has repudiated or waived
any material provision thereunder; (v) there exists no actual, or, to the
knowledge of
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TSI, threatened, cancellation, termination, or limitation of, or any amendment,
modification, or change to, any TSI Material Contract; (vi) neither TSI nor any
of its Subsidiaries has received formal notice that any party to a TSI Material
Contract will not renew such contract at the end of its existing term; and (vii)
no TSI Material Contract requires consent or notice in connection with the
transactions contemplated by this Agreement. All of the indebtedness of TSI or
any of its Subsidiaries for money borrowed is prepayable at any time without
penalty or premium.
SECTION 3.11 Litigation. Except as described in the TSI SEC Reports filed
prior to the date hereof, there is no action, suit or proceeding, claim,
arbitration or investigation against TSI or any of its Subsidiaries pending or
as to which TSI or any such Subsidiary has received any written notice of
assertion, which, individually or in the aggregate, is reasonably likely to have
a TSI Material Adverse Effect or a material adverse effect on the ability of TSI
to consummate the transactions contemplated by this Agreement.
SECTION 3.12 Environmental Matters.
(a) Except as disclosed in the TSI SEC Reports filed prior to the date
hereof and except for such matters that, individually or in the aggregate, are
not reasonably likely to have a TSI Material Adverse Effect: (i) TSI and its
Subsidiaries have complied with all applicable Environmental Laws (as defined in
Section 3.12(b)); (ii) the properties currently owned or operated by TSI and its
Subsidiaries (including soils, groundwater, surface water, buildings or other
structures) are not contaminated with any Hazardous Substances (as defined in
Section 3.12(c)); (iii) the properties formerly owned or operated by TSI or any
of its Subsidiaries were not contaminated with Hazardous Substances during the
period of ownership or operation by TSI or any of its Subsidiaries; (iv) neither
TSI nor any of its Subsidiaries are subject to liability for any Hazardous
Substance disposal or contamination on any third-party property; (v) neither TSI
nor any of its Subsidiaries has been associated with any release or threat of
release of any Hazardous Substance; (vi) neither TSI nor any of its Subsidiaries
has received any notice, demand, letter, claim or request for information
alleging that TSI or any of its Subsidiaries may be in violation of or liable
under any Environmental Law; (vii) neither TSI nor any of its Subsidiaries is
subject to any orders, decrees, injunctions or other arrangements with any
Governmental Entity or is subject to any indemnity or other agreement with any
third party relating to liability under any Environmental Law or relating to
Hazardous Substances; and (viii) there are no circumstances or conditions
involving TSI or any of its Subsidiaries that could reasonably be expected to
result in any claims, liabilities, investigations, costs or restrictions on the
ownership, use or transfer of any property of TSI pursuant to any Environmental
Law.
(b) As used herein, the term "Environmental Law" means any federal, state,
local or foreign law, regulation, order, decree, permit, authorization, opinion,
common law or agency requirement relating to: (i) the protection, investigation
or restoration of the environment, health and safety, or natural resources, (ii)
the handling, use, presence, disposal, release or threatened release of any
Hazardous Substance or (iii) noise, odor, wetlands, pollution, contamination or
any injury or threat of injury to persons or property.
(c) As used herein, the term "Hazardous Substance" means any substance that
is: (i) listed, classified or regulated pursuant to any Environmental Law; (ii)
any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (iii) any other substance which is the subject of
regulatory action by any Governmental Entity pursuant to any Environmental Law.
SECTION 3.13 Employee Benefit Plans.
(a) TSI has listed in Section 3.13 of the TSI Disclosure Schedule all
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), and all bonus, stock option,
stock purchase, incentive, deferred compensation, supplemental retirement,
severance and other similar employee benefit plans, and all unexpired severance
agreements, written or otherwise, for the benefit of, or relating to, any
current or former employee of TSI or any trade or business (whether or not
incorporated) which is a member or which is under common control) within
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the meaning of Section 414 of the Code (an "ERISA Affiliate") with TSI or any
Subsidiary of TSI (collectively, the "TSI Employee Plans").
(b) With respect to each TSI Employee Plan, TSI has made available to
Eclipsys a true and correct copy of (i) the most recent annual report (Form
5500) filed with the IRS, (ii) such TSI Employee Plan, (iii) each trust
agreement and group annuity contract, if any, relating to such TSI Employee Plan
and (iv) the most recent actuarial report or valuation relating to a TSI
Employee Plan subject to Title IV of ERISA.
(c) With respect to the TSI Employee Plans, individually and in the
aggregate, no event has occurred and, to the knowledge of TSI, there exists no
condition or set of circumstances in connection with which TSI could be subject
to any liability that is reasonably likely to have a TSI Material Adverse Effect
under ERISA, the Code or any other applicable law.
(d) With respect to the TSI Employee Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
which have not been accounted for by reserves, or otherwise properly footnoted
in accordance with GAAP, on the financial statements of TSI, which obligations
are reasonably likely to have a TSI Material Adverse Effect.
(e) Except as disclosed in TSI SEC Reports filed prior to the date of this
Agreement, and except as provided for in this Agreement, neither TSI nor any of
its Subsidiaries is a party to any oral or written (i) agreement with any
officer or other key employee of TSI or any of its Subsidiaries, the benefits of
which are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving TSI of the nature contemplated by this
Agreement, (ii) agreement with any officer of TSI providing any term of
employment or compensation guarantee extending for a period longer than one year
from the date hereof and for the payment of compensation in excess of $100,000
per annum, or (iii) agreement or plan, including any stock option plan, stock
appreciation right plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
SECTION 3.14 Compliance With Laws. TSI and each of its Subsidiaries has
complied with, is not in violation of, and has not received any notices of
violation with respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for failures to comply or violations which,
individually or in the aggregate, have not had and are not reasonably likely to
have a TSI Material Adverse Effect.
SECTION 3.15 Accounting and Tax Matters. To its knowledge, after
consulting with its independent auditors, neither TSI nor any of its Affiliates
(as defined in Section 6.10) has taken or agreed to take any action which would
(i) prevent Eclipsys from accounting for the business combination to be effected
by the Merger as a pooling of interests or (ii) prevent the Merger from
constituting a transaction qualifying as a reorganization under 368(a) of the
Code.
SECTION 3.16 Registration Statement; Proxy Statement/Prospectus. The
information to be supplied by TSI for inclusion in the registration statement on
Form S-4 pursuant to which shares of Eclipsys Voting Common Stock issued in the
Merger will be registered under the Securities Act (the "Registration
Statement") shall not at the time the Registration Statement is declared
effective by the SEC contain any untrue statement of a material fact or omit to
state any material fact required to be stated in the Registration Statement or
necessary in order to make the statements in the Registration Statement, in
light of the circumstances under which they were made, not misleading. The
information supplied by TSI for inclusion in the joint proxy
statement/prospectus to be sent to the stockholders of Eclipsys and TSI in
connection with the meeting of TSI's stockholders (the "TSI Stockholders'
Meeting") to consider this Agreement and the Merger and in connection with the
meeting of Eclipsys' stockholders (the "Eclipsys Stockholders' Meeting") to
consider the issuance of shares of Eclipsys Voting
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Common Stock pursuant to the Merger (the "Joint Proxy Statement") shall not, on
the date the Joint Proxy Statement is first mailed to stockholders of TSI or
Eclipsys, at the time of the TSI Stockholders' Meeting and the Eclipsys
Stockholders' Meeting and at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made in the Joint Proxy
Statement not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the TSI Stockholders' Meeting or the Eclipsys
Stockholders' Meeting which has become false or misleading. If at any time prior
to the Effective Time any event relating to TSI or any of its Affiliates,
officers or directors should be discovered by TSI which should be set forth in
an amendment to the Registration Statement or a supplement to the Joint Proxy
Statement, TSI shall promptly inform Eclipsys.
SECTION 3.17 Labor Matters. Neither TSI nor any of its Subsidiaries is a
party to or otherwise bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor,
as of the date hereof, is TSI or any of its Subsidiaries the subject of any
material proceeding asserting that TSI or any of its Subsidiaries has committed
an unfair labor practice or is seeking to compel it to bargain with any labor
union or labor organization nor, as of the date of this Agreement, is there
pending or, to the knowledge of the executive officers of TSI, threatened, any
material labor strike, dispute, walkout, work stoppage, slow-down or lockout
involving TSI or any of its Subsidiaries.
SECTION 3.18 Insurance; Risk Management. All material fire and casualty,
general liability, business interruption, product liability, and sprinkler and
water damage insurance policies maintained by TSI or any of its Subsidiaries are
with reputable insurance carriers, provide full and adequate coverage for all
normal risks incident to the business of TSI and its Subsidiaries and their
respective properties and assets, and are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and subject
to the same or similar perils or hazards, except for any such failures to
maintain insurance policies that, individually or in the aggregate, are not
reasonably likely to have a TSI Material Adverse Effect. The steps taken by TSI
to manage the various risks incident to the business and operations of TSI and
its Subsidiaries and their respective properties and assets are at least
equivalent to those taken by persons engaged in similar businesses, except for
any failures to take such steps that, individually or in the aggregate, are not
reasonably likely to have a TSI Material Adverse Effect.
SECTION 3.19 No Existing Discussions. Except for discussions or
negotiations relating to the acquisition by TSI of the capital stock of
HealthVISION, Inc. ("HealthVISION") not owned, as of the date hereof, by TSI
(the "HealthVISION Acquisition") as of the date hereof, TSI is not engaged,
directly or indirectly, in any discussions or negotiations with any other party
with respect to an Acquisition Proposal (as defined in Section 6.01).
SECTION 3.20 Opinion of Financial Advisor. The financial advisor of TSI,
BT Alex. Xxxxx Incorporated, has delivered to the Board Directors of TSI an
opinion dated the date of this Agreement to the effect that, as of the date of
such opinion, the Exchange Ratio is fair, from a financial point of view, to the
holders of TSI Common Stock.
SECTION 3.21 Anti-Takeover Laws. No "fair price", "business combination",
"moratorium", "control share acquisition" or other form of antitakeover statute
or regulation, including, without limitation, Chapter 110C of the General Laws
of the Commonwealth of Massachusetts, is or will be applicable to the execution,
delivery or performance of this Agreement or the consummation of the Merger or
the other transactions contemplated by this Agreement.
SECTION 3.22 Xxxxxxx Xxxxxxx Policies and Practices. Section 3.22 to the
TSI Disclosure Schedule sets forth a copy of TSI's xxxxxxx xxxxxxx policy as in
effect on the date hereof. TSI and each of its directors, officers and employees
who are subject to such policy have complied in all material respects with the
terms of such policy.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ECLIPSYS AND SUB
Eclipsys and Sub represent and warrant to TSI that the statements contained
in this Article IV are true and correct except as set forth in the disclosure
schedule delivered by Eclipsys to TSI on or before the date of this Agreement
(the "Eclipsys Disclosure Schedule"). The Eclipsys Disclosure Schedule shall be
arranged in paragraphs and sections corresponding to the numbered and lettered
paragraphs and sections contained in this Article IV and the disclosure in any
paragraph or section shall qualify other paragraphs and sections in this Article
IV only to the extent that it is reasonably apparent from a reading of such
document that it also qualifies or applies to such other paragraphs and
sections.
SECTION 4.01 Organization of Eclipsys and Sub. Each of Eclipsys and Sub
and Eclipsys' other Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power to own, lease and operate its
property and to carry on its business as now being conducted and as proposed to
be conducted, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the failure to be so qualified
would have an Eclipsys Material Adverse Effect (as defined below). Except as set
forth in the Eclipsys SEC Reports (as defined in Section 4.04) filed prior to
the date hereof, neither Eclipsys nor any of its Subsidiaries directly or
indirectly owns any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any corporation, partnership, joint
venture or other business association or entity, excluding securities in any
publicly traded company held for investment by Eclipsys and comprising less than
five percent (5%) of the outstanding stock of such company. For purposes of this
Agreement, the term "Eclipsys Material Adverse Effect" means any effect that is,
or would reasonably be expected to be, materially adverse to the financial
condition, results of operations, cash flows, business or properties of Eclipsys
and its Subsidiaries, taken as a whole.
SECTION 4.02 Eclipsys Capital Structure.
(a) The authorized capital stock of Eclipsys consists of 200,000,000 shares
of Eclipsys Voting Common Stock, $.01 par value, 5,000,000 shares of Non-Voting
Common Stock, $.01 par value ("Eclipsys Non-Voting Common Stock" and, together
with the Eclipsys Voting Common Stock, "Eclipsys Common Stock"), and 5,000,000
shares of Preferred Stock, $.01 par value ("Eclipsys Preferred Stock"). As of
September 30, 1998, (i) 19,393,241 shares of Eclipsys Voting Common Stock and
896,431 shares of Eclipsys Non-Voting Common Stock were issued and outstanding,
all of which are validly issued, fully paid and nonassessable, (ii) 962,833
shares of Eclipsys Non-Voting Common Stock were reserved for issuance upon the
exercise of certain warrants (the "Eclipsys Warrants") having an exercise price
of $.01 per share, and (iii) no shares of Eclipsys Common Stock were held in the
treasury of Eclipsys or by Subsidiaries of Eclipsys. Section 4.02 of the
Eclipsys Disclosure Schedule shows the number of shares of Eclipsys Voting
Common Stock reserved for future issuance pursuant to stock options granted and
outstanding as of September 30, 1998 and the plans under which such options were
granted (collectively, the "Eclipsys Stock Plans"). No material change in such
capitalization has occurred between September 30, 1998 and the date of this
Agreement. As of the date of this Agreement, none of the shares of Eclipsys
Preferred Stock is issued and outstanding. All shares of Eclipsys Common Stock
subject to issuance as specified above are duly authorized and, upon issuance on
the terms and conditions specified in the instruments pursuant to which they are
issuable, shall be validly issued, fully paid and nonassessable. There are no
obligations, contingent or otherwise, of Eclipsys or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of Eclipsys Common Stock or
the capital stock of any Subsidiary or to provide funds to or make any material
investment (in the form of a loan, capital contribution or otherwise) in any
such Subsidiary or any other entity other than guarantees of bank obligations of
Subsidiaries entered into in the ordinary course of business. All of the
outstanding shares of capital stock of each of Eclipsys' Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and all such shares
(other than directors' qualifying shares in the case of foreign Subsidiaries)
are owned by Eclipsys or another Subsidiary free and clear of all security
interests, liens, claims, pledges, agreements, limitations in Eclipsys' voting
rights, charges or other encumbrances of any nature.
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(b) Except as set forth in this Section 4.02 or as reserved for future
grants of options under the Eclipsys Stock Plans or the Eclipsys Warrant, there
are no equity securities of any class of Eclipsys or any of its Subsidiaries, or
any security exchangeable into or exercisable for such equity securities,
issued, reserved for issuance or outstanding. Except as set forth in the
Eclipsys SEC Reports (as defined in Section 4.04 below) filed prior to the date
hereof or disclosed in Section 4.02 of the Eclipsys Disclosure Schedule, there
are no options, warrants, equity securities, calls, rights, commitments or
agreements of any character to which Eclipsys or any of its Subsidiaries is a
party or by which it is bound obligating Eclipsys or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of Eclipsys or any of its Subsidiaries or obligating
Eclipsys or any of its Subsidiaries to grant, extend, accelerate the vesting of
or enter into any such option, warrant, equity security, call, right, commitment
or agreement. To the best knowledge of Eclipsys, there are no voting trusts,
proxies or other voting agreements or understandings with respect to the shares
of capital stock of Eclipsys.
SECTION 4.03 Authority; No Conflict; Required Filings and Consents.
(a) Each of Eclipsys and the Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement and
the consummation of the transactions contemplated by this Agreement by Eclipsys
have been duly authorized by all necessary corporate action on the part of each
of Eclipsys and Sub (including the approval of the Merger by Eclipsys as the
sole stockholder of Sub), subject only to the approval of the Eclipsys Voting
Proposals (as defined in Section 6.05) by Eclipsys' stockholders. This
Agreement has been duly executed and delivered by Eclipsys and the Sub and
constitutes the valid and binding obligation of Eclipsys and the Sub,
enforceable in accordance with its terms, subject to the Bankruptcy and Equity
Exception.
(b) The execution and delivery of this Agreement by Eclipsys and the Sub
does not, and the consummation of the transactions contemplated by this
Agreement will not, (i) conflict with, or result in any violation or breach of,
any provision of the Certificate of Incorporation or Bylaws of Eclipsys or Sub,
each as amended to date, (ii) result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of any material benefit) under, or require a consent or waiver under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, contract or other agreement, instrument or obligation to which
Eclipsys or any of its Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound, or (iii) conflict with or violate any
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Eclipsys or any of its Subsidiaries
or any of its or their properties or assets, except in the case of clauses (ii)
and (iii) for any such conflicts, violations, breaches, defaults, terminations,
cancellations, accelerations or losses which are not, individually or in the
aggregate, reasonably likely to have an Eclipsys Material Adverse Effect.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Eclipsys or any of its Subsidiaries in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of a pre-merger notification
report under the HSR Act and any other documents or information requested by the
United States Department of Justice or the United States Federal Trade
Commission in connection herewith, (ii) the filing of the Registration Statement
with the SEC in accordance with the Securities Act, (iii) the filing of the
Articles of Merger with the Secretary of State of Massachusetts, (iv) the filing
of the Joint Proxy Statement with the SEC in accordance with the Exchange Act,
(v) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable state securities
laws and the laws of any foreign country and (vi) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not be reasonably likely to have an Eclipsys Material Adverse
Effect.
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SECTION 4.04 SEC Filings; Financial Statements.
(a) Eclipsys has filed and made available to TSI all forms, reports and
documents required to be filed by Eclipsys with the SEC since July 29, 1998
other than registration statements on Form S-8 (collectively, the "Eclipsys SEC
Reports"). The Eclipsys SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated in such Eclipsys SEC
Reports or necessary in order to make the statements in such Eclipsys SEC
Reports, in the light of the circumstances under which they were made, not
misleading. None of Eclipsys' Subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes) contained in the Eclipsys SEC Reports complied as to form in
all material respects with the applicable published rules and regulations of the
SEC with respect thereto, was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes to such financial statements or, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC) and fairly presented the consolidated
financial position of Eclipsys and its Subsidiaries as of the dates and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount. The unaudited balance sheet of Eclipsys as of June 30,
1998 is referred to herein as the "Eclipsys Balance Sheet."
SECTION 4.05 No Undisclosed Liabilities. Except as disclosed in the
Eclipsys SEC Reports filed prior to the date hereof, and except for normal or
recurring liabilities incurred since June 30, 1998 in the ordinary course of
business consistent with past practices, Eclipsys and its Subsidiaries do not
have any liabilities, either accrued, contingent or otherwise (whether or not
required to be reflected in financial statements in accordance with GAAP), and
whether due or to become due, which individually or in the aggregate, are
reasonably likely to have an Eclipsys Material Adverse Effect.
SECTION 4.06 Absence of Certain Changes or Events. Except as disclosed in
the Eclipsys SEC Reports filed prior to the date hereof, from and after the date
of the Eclipsys Balance Sheet, Eclipsys and its Subsidiaries have conducted
their businesses only in the ordinary course and in a manner consistent with
past practice and, during such period, there has not been (i) any Material
Adverse Change in Eclipsys and its Subsidiaries, taken as a whole (other than
changes that are the effect or result of economic factors affecting the economy
as a whole or economic or market factors affecting the healthcare information
systems industry generally) or any development or combination of developments of
which the management of Eclipsys is aware that, individually or in the
aggregate, has had, or is reasonably likely to have, an Eclipsys Material
Adverse Effect (other than economic factors affecting the economy as a whole or
economic or market factors affecting the healthcare information systems industry
generally); (ii) any damage, destruction or loss (whether or not covered by
insurance) with respect to Eclipsys or any of its Subsidiaries having an
Eclipsys Material Adverse Effect; (iii) any material change by Eclipsys in its
accounting methods, principles or practices to which TSI has not previously
consented in writing; (iv) any revaluation by Eclipsys of any of its assets
having an Eclipsys Material Adverse Effect; or (v) any other action or event
that would have required the consent of TSI pursuant to Section 5.01 of this
Agreement had such action or event occurred after the date of this Agreement and
that, in the case of this clause (v), individually or in the aggregate, has had
or is reasonably likely to have an Eclipsys Material Adverse Effect.
SECTION 4.07 Taxes.
(a) Each of Eclipsys and its Subsidiaries has filed all Tax Returns that it
was required to file, and all such Tax Returns were correct and complete. Each
group of corporations with which Eclipsys or any of its Subsidiaries has filed
(or was required to file) consolidated, combined, unitary or similar Tax Returns
(an "Eclipsys Affiliated Group") has filed all such Tax Returns that it was
required to file with respect to any
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period in which Eclipsys or one of its Subsidiaries was a member of such
Eclipsys Affiliated Group (an "Eclipsys Affiliated Period"), and all such Tax
Returns were correct and complete. Each of Eclipsys and its Subsidiaries has
paid all Taxes (whether or not shown on such Tax Returns) that were due and
payable, and each Eclipsys Affiliated Group has paid all Taxes (whether or not
shown on such Tax Returns) that were due and payable with respect to all
Eclipsys Affiliated Periods and with respect to which Eclipsys or any of its
Subsidiaries may be liable by operation of law or otherwise. The unpaid Taxes of
Eclipsys and its Subsidiaries for tax periods through the date of the Eclipsys
Balance Sheet do not exceed the accruals and reserves for Taxes set forth on the
Eclipsys Balance Sheet (exclusive of any accruals for "deferred taxes" or
similar items that reflect timing differences between Tax and financial
accounting principles). The unpaid Taxes of Eclipsys and its Subsidiaries for
tax periods from the date of the Eclipsys Balance Sheet through the Closing Date
are attributable solely to the conduct of their businesses in the ordinary
course and in a manner consistent with past practices. All Taxes that Eclipsys
or any of its Subsidiaries is or was required by law to withhold or collect have
been duly withheld or collected and, to the extent required, have been paid to
the proper Governmental Entity. Each of the representations contained in this
Section 4.07(a) shall be limited in its application to items which are
reasonably likely, individually or in the aggregate, to have an Eclipsys
Material Adverse Effect.
(b) No examination or audit by any Governmental Entity of any Tax Return of
Eclipsys, any of its Subsidiaries or any Eclipsys Affiliated Group with respect
to an Eclipsys Affiliated Period is currently in progress or, to the knowledge
of Eclipsys and its Subsidiaries, threatened or contemplated, in each case,
which involve claims that individually or in the aggregate are reasonably likely
to have an Eclipsys Material Adverse Effect. Neither Eclipsys nor any of its
Subsidiaries has been informed by any jurisdiction that the jurisdiction
believes that Eclipsys or any of its Subsidiaries was required to file any Tax
Return that was not filed which failure or failures individually, or in the
aggregate, are reasonably likely to have an Eclipsys Material Adverse Effect.
(c) Neither Eclipsys nor any of its Subsidiaries is a "consenting
corporation" within the meaning of Section 341(f) of the Code, and none of the
assets of Eclipsys and its Subsidiaries is subject to an election under Section
341(f) of the Code.
(d) Neither Eclipsys nor any of its Subsidiaries has been a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(l)(A)(ii) of the
Code.
(e) None of Eclipsys or any of its Subsidiaries is a party to any Tax
allocation or sharing agreement.
(f) None of Eclipsys or any of its Subsidiaries has any material liability
for Taxes of any person (other than Eclipsys and any of its Subsidiaries (under
Treasury Regulation Section 1.1502-6 or any similar provision of state, local or
foreign law)), as a transferee or successor by contract, or otherwise.
SECTION 4.08 Properties.
(a) Eclipsys does not own of record any real property.
(b) All material real property leases of Eclipsys and its Subsidiaries are
in good standing, valid and effective in accordance with their respective terms,
and neither Eclipsys nor its Subsidiaries is in default under any of such
leases, except where the lack of such good standing, validity or effectiveness
or the existence of such default would not be reasonably likely to have an
Eclipsys Material Adverse Effect.
SECTION 4.09 Intellectual Property.
(a) Eclipsys and its Subsidiaries own, or are licensed or otherwise possess
legally enforceable rights to use, all patents, trademarks, trade names, service
marks, copyrights and mask works, any applications for and registrations of such
patents, trademarks, trade names, service marks, copyrights and mask works, and
all processes, formulae, methods, schematics, technology, know-how, computer
software programs or applications and tangible or intangible proprietary
information or material that are necessary to conduct the business of Eclipsys
and its Subsidiaries as currently conducted, or planned to be conducted, the
absence of which would be reasonably likely to have an Eclipsys Material Adverse
Effect (the "Eclipsys Intellectual Property Rights").
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(b) Neither Eclipsys nor any of its Subsidiaries is, or will as a result of
the execution and delivery of this Agreement or the performance of Eclipsys'
obligations under this Agreement or otherwise be, in breach of any license,
sublicense or other agreement relating to the Eclipsys Intellectual Property
Rights, or any material licenses, sublicenses and other agreements as to which
Eclipsys or any of its Subsidiaries is a party and pursuant to which Eclipsys or
any of its Subsidiaries is authorized to use any third party patents, trademarks
or copyrights ("Eclipsys Third Party Intellectual Property Rights"), including
software which is used in the manufacture of, incorporated in, or forms a part
of any product sold by or expected to be sold by Eclipsys or any of its
Subsidiaries, the breach of which would be reasonably likely to have an Eclipsys
Material Adverse Effect.
(c) All patents, registered trademarks, registered service marks and
registered copyrights which are held by Eclipsys or any of its Subsidiaries and
which are material to the business of Eclipsys and its Subsidiaries, taken as a
whole, are valid and subsisting. Eclipsys (i) has not been sued in any suit,
action or proceeding, or received in writing any claim or notice, which involves
a claim of infringement of any patents, trademarks, service marks, copyrights or
violation of any trade secret or other proprietary right of any third party; and
(ii) has no knowledge that the manufacturing, marketing, licensing or sale of
its products infringes any patent, trademark, service xxxx, copyright, trade
secret or other proprietary right of any third party, which infringement would
reasonably be expected to have an Eclipsys Material Adverse Effect.
SECTION 4.10 Agreements, Contracts and Commitments. Eclipsys has not
breached, or received in writing any claim or notice that it has breached, any
of the terms or conditions of any agreement, contract or commitment filed as an
exhibit to the Eclipsys SEC Reports (collectively, "Eclipsys Material
Contracts") in such a manner as, individually or in the aggregate, are
reasonably likely to have an Eclipsys Material Adverse Effect. Each Eclipsys
Material Contract that has not expired by its terms is in full force and effect.
SECTION 4.11 Litigation. Except as described in the Eclipsys SEC Reports
filed prior to the date hereof, there is no action, suit or proceeding, claim,
arbitration or investigation against Eclipsys or any of its Subsidiaries pending
or as to which Eclipsys or any such Subsidiary has received any written notice
of assertion, which, individually or in the aggregate, is reasonably likely to
have an Eclipsys Material Adverse Effect or a material adverse effect on the
ability of Eclipsys to consummate the transactions contemplated by this
Agreement.
SECTION 4.12 Environmental Matters. Except as disclosed in the Eclipsys
SEC Reports filed prior to the date hereof and except for such matters that,
individually or in the aggregate, are not reasonably likely to have an Eclipsys
Material Adverse Effect: (i) Eclipsys and its Subsidiaries have complied with
all applicable Environmental Laws; (ii) the properties currently owned or
operated by Eclipsys and its Subsidiaries (including soils, groundwater, surface
water, buildings or other structures) are not contaminated with any Hazardous
Substances; (iii) the properties formerly owned or operated by Eclipsys or any
of its Subsidiaries were not contaminated with Hazardous Substances during the
period of ownership or operation by Eclipsys or any of its Subsidiaries; (iv)
neither Eclipsys nor any of its Subsidiaries are subject to liability for any
Hazardous Substance disposal or contamination on any third-party property; (v)
neither Eclipsys nor any of its Subsidiaries has been associated with any
release or threat of release of any Hazardous Substance; (vi) neither Eclipsys
nor any of its Subsidiaries has received any notice, demand, letter, claim or
request for information alleging that Eclipsys or any of its Subsidiaries may be
in violation of or liable under any Environmental Law; (vii) neither Eclipsys
nor any of its Subsidiaries is subject to any orders, decrees, injunctions or
other arrangements with any Governmental Entity or is subject to any indemnity
or other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (viii) there are no
circumstances or conditions involving Eclipsys or any of its Subsidiaries that
could reasonably be expected to result in any claims, liabilities,
investigations, costs or restrictions on the ownership, use or transfer of any
property of Eclipsys pursuant to any Environmental Law.
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SECTION 4.13 Employee Benefit Plans.
(a) Eclipsys has listed in Section 4.13 of the Eclipsys Disclosure Schedule
all employee benefit plans (as defined in Section 3(3) of ERISA) and all bonus,
stock option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar employee benefit plans, and all material
unexpired severance agreements, written or otherwise, for the benefit of, or
relating to, any current or former employee of Eclipsys or any ERISA Affiliate
of Eclipsys, or any Subsidiary of Eclipsys (collectively, the "Eclipsys Employee
Plans").
(b) With respect to each Eclipsys Employee Plan, Eclipsys has made
available to TSI, a true and correct copy of (i) the most recent annual report
(Form 5500) filed with the IRS, (ii) such Eclipsys Employee Plan, (iii) each
trust agreement and group annuity contract, if any, relating to such Eclipsys
Employee Plan and (iv) the most recent actuarial report or valuation relating to
an Eclipsys Employee Plan subject to Title IV of ERISA.
(c) With respect to the Eclipsys Employee Plans, individually and in the
aggregate, no event has occurred and, to the knowledge of Eclipsys, there exists
no condition or set of circumstances in connection with which Eclipsys could be
subject to any liability that is reasonably likely to have an Eclipsys Material
Adverse Effect under ERISA, the Code or any other applicable law.
(d) With respect to the Eclipsys Employee Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
which have not been accounted for by reserves, or otherwise properly footnoted
in accordance with GAAP, on the financial statements of Eclipsys, which
obligations are reasonably likely to have an Eclipsys Material Adverse Effect.
(e) Except as disclosed in Eclipsys SEC Reports filed prior to the date of
this Agreement, and except as provided for in this Agreement, neither Eclipsys
nor any of its Subsidiaries is a party to any oral or written (i) agreement with
any officer or other key employee of Eclipsys or any of its Subsidiaries, the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving Eclipsys of the nature
contemplated by this Agreement, (ii) agreement with any officer of Eclipsys
providing any term of employment or compensation guarantee extending for a
period longer than one year from the date hereof or for the payment of
compensation in excess of $100,000 per annum, or (iii) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted stock
plan or stock purchase plan, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
SECTION 4.14 Compliance With Laws. Eclipsys and each of its Subsidiaries
has complied with, is not in violation of, and has not received any notices of
violation with respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for failures to comply or violations which,
individually or in the aggregate, have not had and are not reasonably likely to
have an Eclipsys Material Adverse Effect.
SECTION 4.15 Accounting and Tax Matters. To its knowledge, after
consulting with its independent auditors, neither Eclipsys nor any of its
Affiliates has taken or agreed to take any action which would (i) prevent
Eclipsys from accounting for the business combination to be effected by the
Merger as a pooling of interests or (ii) prevent the Merger from constituting a
transaction qualifying as a reorganization under Section 368(a) of the Code.
SECTION 4.16 Registration Statement; Proxy Statement/Prospectus. The
information to be supplied by Eclipsys for inclusion in the Registration
Statement shall not at the time the Registration Statement is declared effective
by the SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated in the Registration Statement or necessary
in order to make the statements in the Registration Statement, in light of the
circumstances under which they were made, not misleading. The information
supplied by Eclipsys for inclusion in the Joint Proxy Statement shall not, on
the date the Joint Proxy Statement is first mailed to stockholders of Eclipsys
or TSI, at the time of the
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Eclipsys Stockholders' Meeting and the TSI Stockholders' Meeting and at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made in the Joint Proxy Statement not false or misleading;
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Eclipsys Stockholders' Meeting or the TSI Stockholders' Meetings which has
become false or misleading. If at any time prior to the Effective Time any event
relating to Eclipsys or any of its Affiliates, officers or directors should be
discovered by Eclipsys which should be set forth in an amendment to the
Registration Statement or a supplement to the Joint Proxy Statement, Eclipsys
shall promptly inform TSI.
SECTION 4.17 Labor Matters. Neither Eclipsys nor any of its Subsidiaries
is a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor, as of the date hereof, is Eclipsys or any of its Subsidiaries
the subject of any material proceeding asserting that Eclipsys or any of its
Subsidiaries has committed an unfair labor practice or is seeking to compel it
to bargain with any labor union or labor organization nor, as of the date of
this Agreement, is there pending or, to the knowledge of the executive officers
of Eclipsys, threatened, any material labor strike, dispute, walkout, work
stoppage, slow-down or lockout involving Eclipsys or any of its Subsidiaries.
SECTION 4.18 Insurance; Risk Management. All material fire and casualty,
general liability, business interruption, product liability, and sprinkler and
water damage insurance policies maintained by Eclipsys or any of its
Subsidiaries are with reputable insurance carriers, provide full and adequate
coverage for all normal risks incident to the business of Eclipsys and its
Subsidiaries and their respective properties and assets, and are in character
and amount at least equivalent to that carried by persons engaged in similar
businesses and subject to the same or similar perils or hazards, except for any
such failures to maintain insurance policies that, individually or in the
aggregate, are not reasonably likely to have an Eclipsys Material Adverse
Effect. The steps taken by Eclipsys to manage the various risks incident to the
business and operations of Eclipsys and its Subsidiaries and their respective
properties and assets are at least equivalent to those taken by persons engaged
in similar businesses, except for any failures to take such steps that,
individually or in the aggregate, are not reasonably likely to have an Eclipsys
Material Adverse Effect.
SECTION 4.19 No Existing Discussions. Except for discussions or
negotiations relating to possible acquisitions by Eclipsys of those companies
previously disclosed by Eclipsys to TSI ("Eclipsys Possible Acquisitions"), as
of the date hereof, Eclipsys is not engaged, directly or indirectly, in any
discussions or negotiations with any other party with respect to an Acquisition
Proposal (as defined in Section 6.01).
SECTION 4.20 Opinion of Financial Advisor. The financial advisor of
Eclipsys, Xxxxxx Xxxxxxx & Co. Incorporated, has delivered to the Board of
Directors of Eclipsys an opinion dated the date of this Agreement to the effect
that the Exchange Ratio is fair to Eclipsys from a financial point of view.
SECTION 4.21 Anti-Takeover Laws. No "fair price", "business combination",
"moratorium", "control share acquisition" or other form of antitakeover statute
or regulation is or will be applicable to the execution, delivery or performance
of this Agreement or the consummation of the Merger or the other transactions
contemplated by this Agreement.
SECTION 4.22 Xxxxxxx Xxxxxxx Policies and Practices. Section 4.22 to the
Eclipsys Disclosure Schedule sets forth a copy of Eclipsys' xxxxxxx xxxxxxx
policy as in effect on the date hereof. Eclipsys and each of its directors,
officers and employees who are subject to such policy have complied in all
material respects with the terms of such policy.
SECTION 4.23 Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated by this Agreement.
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ARTICLE V
CONDUCT OF BUSINESS
SECTION 5.01 Covenants of TSI. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, TSI agrees as to itself and its Subsidiaries (except to
the extent that Eclipsys shall otherwise consent in writing), to carry on its
business in the usual, regular and ordinary course in substantially the same
manner as previously conducted, to pay its debts and Taxes when due subject to
good faith disputes over such debts or Taxes, to pay or perform its other
obligations when due, and, to the extent consistent with such business, use all
reasonable efforts consistent with past practices and policies to preserve
intact its present business organization, keep available the services of its
present officers and key employees and preserve its relationships with
customers, suppliers, distributors and others having business dealings with it.
TSI shall promptly notify Eclipsys of any material event or occurrence not in
the ordinary course of business. Except as expressly contemplated by this
Agreement, TSI shall not (and shall not permit any of its Subsidiaries to),
without the written consent of Eclipsys:
(a) Accelerate, amend or change the period of exercisability of
options or restricted stock granted under any employee stock plan of such
party or authorize cash payments in exchange for any options granted under
any of such plans except as required by the terms of such plans or any
related agreements in effect as of the date of this Agreement;
(b) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital
stock, or split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or purchase or otherwise
acquire, directly or indirectly, any shares of its capital stock except
from former employees, directors and consultants in accordance with
agreements providing for the repurchase of shares in connection with any
termination of service to such party;
(c) Issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or securities
convertible into shares of its capital stock, or subscriptions, rights,
warrants or options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other convertible
securities, other than the issuance of shares of TSI Common Stock pursuant
to the exercise of options outstanding on the date of this Agreement or the
TSI Warrants;
(d) Acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial equity interest in or substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership or other business organization or division, or otherwise
acquire or agree to acquire any assets (other than inventory and other
items in the ordinary course of business), except for (i) any such
acquisitions involving aggregate consideration (including assumed
indebtedness) of not more than $1,000,000 or (ii) subject to Section 5.04,
the HealthVISION Acquisition;
(e) Sell, lease, license or otherwise dispose of any of its material
properties or assets, except for transactions in the ordinary course of
business;
(f) (i) Increase or agree to increase the compensation payable or to
become payable to its officers or employees, except for increases in salary
or wages of employees (other than officers) in accordance with past
practices, (ii) grant any additional severance or termination pay to, or
enter into any employment or severance agreements with, any employees or
officers, (iii) enter into any collective bargaining agreement (other than
as required by law or extensions to existing agreements in the ordinary
course of business), (iv) establish, adopt, enter into or amend any bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, trust, fund, policy or arrangement for the benefit
of any directors, officers or employees;
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(g) Amend or propose to amend its charter or bylaws, except as
contemplated by this Agreement;
(h) Incur any indebtedness for borrowed money other than pursuant to
credit agreements in effect as of the date hereof;
(i) Initiate, compromise or settle any material litigation or
arbitration proceeding (other than as a result of a breach of this
Agreement);
(j) Except in the ordinary course of business, modify, amend or
terminate any TSI Material Contract or waive, release or assign any
material rights or claims;
(k) Change in any material respect its accounting methods, principles
or practices, except insofar as may be required by a generally applicable
change in GAAP; or
(l) Take, or agree in writing or otherwise to take, any of the actions
described in paragraphs (a) through (k) above.
SECTION 5.02 Covenants of Eclipsys. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Eclipsys agrees as to itself and its
Subsidiaries (except to the extent that TSI shall otherwise consent in writing),
to carry on its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted, to pay its debts and
Taxes when due subject to good faith disputes over such debts or Taxes, to pay
or perform its other obligations when due, and, to the extent consistent with
such business, use all reasonable efforts consistent with past practices and
policies to preserve intact its present business organization, keep available
the services of its present officers and key employees and preserve its
relationships with customers, suppliers, distributors and others having business
dealings with it. Eclipsys shall promptly notify TSI of any material event or
occurrence not in the ordinary course of business. Except as expressly
contemplated by this Agreement, Eclipsys shall not (and shall not permit any of
its Subsidiaries to), without the written consent of TSI:
(a) Accelerate, amend or change the period of exercisability of
options or restricted stock granted under any employee stock plan of such
party or authorize cash payments in exchange for any options granted under
any of such plans except as required by the terms of such plans or any
related agreements in effect as of the date of this Agreement;
(b) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital
stock, or split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or purchase or otherwise
acquire, directly or indirectly, any shares of its capital stock except
from former employees, directors and consultants in accordance with
agreements providing for the repurchase of shares in connection with any
termination of service to such party;
(c) Issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or securities
convertible into shares of its capital stock, or subscriptions, rights,
warrants or options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other convertible
securities, other than (i) the grant of options consistent with past
practices to employees, which options represent in the aggregate the right
to acquire no more than 200,000 shares (net of cancellations) of Eclipsys
Common Stock, (ii) the issuance of shares of Eclipsys Common Stock pursuant
to the exercise of options outstanding on the date of this Agreement or the
Eclipsys Warrants or (iii) the issuance of Eclipsys Common Stock in
connection with any Eclipsys Permitted Acquisition (as defined below);
(d) Acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial equity interest in or substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership or other business organization or division, or otherwise
acquire or agree to acquire any assets (other than inventory and other
items in the ordinary course of business), except for (i) any Eclipsys
Possible Acquisition or (ii) any other such acquisitions involving
aggregate
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consideration (including assumed indebtedness) of not more than
$100,000,000 (Eclipsys Possible Acquisitions and such other acquisitions
being collectively referred to as "Eclipsys Permitted Acquisitions");
(e) Sell, lease, license or otherwise dispose of any of its material
properties or assets, except for transactions in the ordinary course of
business;
(f) (i) Increase or agree to increase the compensation payable or to
become payable to its officers or employees, except for increases in salary
or wages of employees (other than officers) in accordance with past
practices, (ii) grant any additional severance or termination pay to, or
enter into any employment or severance agreements with, any employees or
officers, (iii) enter into any collective bargaining agreement (other than
as required by law or extensions to existing agreements in the ordinary
course of business), (iv) establish, adopt, enter into or amend any bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, trust, fund, policy or arrangement for the benefit
of any directors, officers or employees;
(g) Amend or propose to amend its charter or bylaws, except as
contemplated by this Agreement;
(h) Take, or agree in writing or otherwise to take, any of the actions
described in paragraphs (a) through (f) above.
SECTION 5.03 Cooperation. Subject to compliance with applicable law, from
the date hereof until the Effective Time, each of Eclipsys and TSI shall confer
on a regular and frequent basis with one or more representatives of the other
party to report on the general status of ongoing operations and shall promptly
provide the other party or its counsel with copies of all filings made by such
party with any Governmental Entity in connection with this Agreement, the Merger
and the transactions contemplated hereby and thereby.
SECTION 5.04 HealthVISION Acquisition. TSI shall use its best efforts to
cause the HealthVISION Acquisition to be closed as promptly as reasonably
practicable following the execution of this Agreement upon terms at least as
favorable to TSI as those set forth in that certain Agreement and Plan of
Reorganization dated October 28, 1998 among HealthVISION, TSI and the other
parties identified therein. TSI shall keep Eclipsys reasonably apprised as to
the status of its progress toward closing the HealthVISION Acquisition.
SECTION 5.05 Voting Agreements. Concurrently with the execution of this
Agreement, and in order to induce Eclipsys and TSI, respectively, to enter into
this Agreement, (i) Eclipsys is entering into Voting Agreements, substantially
in the form attached hereto as Exhibit A-1, with Warburg, Xxxxxx Ventures, L.P.
("Warburg"), Xxxxxx Xxxx, Xxxxxxxxx Xxxxxxxxx and Xxxxxx Xxxx, and (ii) TSI is
entering into Voting Agreements, substantially in the form attached hereto as
Exhibit A-2, with General Atlantic Partners 28, L.P., General Atlantic Partners
38, L.P., General Atlantic Partners 47, L.P., General Atlantic Partners 48,
L.P., GAP Coinvestment Partners, L.P., Partners HealthCare System, Inc., Xxxxxx
Xxxxxx and Wilfam Ltd.
SECTION 5.06 Eclipsys Permitted Acquisitions. Eclipsys shall notify TSI at
any time that Eclipsys believes it has become reasonably likely that a
definitive agreement will be executed with respect to an Eclipsys Permitted
Acquisition or that an Eclipsys Permitted Acquisition will be completed, and
shall thereafter keep TSI reasonably apprised as to the status of such Eclipsys
Permitted Acquisition.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 No Solicitation.
(a) TSI and Eclipsys each shall not, directly or indirectly, through any
officer, director, employee, financial advisor, representative or agent of such
party (i) solicit, initiate or encourage any inquiries or proposals that
constitute, or could reasonably be expected to lead to, a proposal or offer for
a merger, consolidation, business combination, sale of substantial assets, sale
of shares of capital stock (including without limitation by way of a tender
offer) or similar transaction involving such party or any of its Subsidiaries,
other than the transactions contemplated by this Agreement and other than, in
the case of Eclipsys, transactions constituting Eclipsys Permitted Acquisitions
(any of the foregoing inquiries or proposals being referred to in this Agreement
as an "Acquisition Proposal"), (ii) engage in negotiations or discussions
concerning, or provide any non-public information to any person or entity
relating to, any Acquisition Proposal, or (iii) agree to or recommend any
Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent TSI or Eclipsys, or their respective Boards of
Directors, from (A) furnishing non-public information to, or entering into
discussions or negotiations with, any person or entity in connection with an
unsolicited bona fide written Acquisition Proposal by such person or entity or
recommending an unsolicited bona fide written Acquisition Proposal by such
person or entity or recommending an unsolicited bona fide written Acquisition
Proposal to the stockholders of such party, if and only to the extent that (1)
the Board of Directors of such party believes in good faith (after consultation
with its financial advisor) that such Acquisition Proposal is reasonably capable
of being completed on the terms proposed and, after taking into account, among
other relevant factors, the strategic benefits anticipated to be derived from
the Merger and the long-term prospects of TSI and Eclipsys as a combined
company, would, if consummated, result in a transaction more favorable to the
stockholders of such party than the transactions contemplated by this Agreement
(any such more favorable Acquisition Proposal being referred to in this
Agreement as a "Superior Proposal") and the Board of Directors of such party
determines in good faith after consultation with outside legal counsel that such
action is necessary for such Board of Directors to comply with its fiduciary
duties to stockholders under applicable law and (2) prior to furnishing such
non-public information to, or entering into discussions or negotiations with,
such person or entity, such Board of Directors receives from such person or
entity an executed confidentiality agreement with terms no less favorable to
such party than those contained in that certain letter agreement dated October
2, 1998 between TSI and Eclipsys regarding the confidentiality of certain
materials (the "Confidentiality Agreement"); or (B) complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal.
(b) TSI and Eclipsys shall each notify the other party immediately after
receipt by TSI or Eclipsys (or their advisors) of any Acquisition Proposal or
any request for non-public information in connection with an Acquisition
Proposal or for access to the properties, books or records of such party by any
person or entity that informs such party that it is considering making, or has
made, an Acquisition Proposal. Such notice shall be made orally and in writing
and shall indicate in reasonable detail the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact. Such party shall
continue to keep the other party hereto informed, on a current basis, of the
status of any such discussions or negotiations and the terms being discussed or
negotiated.
SECTION 6.02 Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as practical after the execution of this Agreement,
Eclipsys and TSI shall prepare and file with the SEC the Joint Proxy Statement,
and Eclipsys shall prepare and file with the SEC the Registration Statement, in
which the Joint Proxy Statement will be included as a prospectus, provided that
Eclipsys may delay the filing of the Registration Statement until approval of
the Joint Proxy Statement by the SEC. Eclipsys and TSI shall use all reasonable
efforts to cause the Registration Statement to become effective as soon after
such filing as practical. The Joint Proxy Statement, and any amendment or
supplement thereto, shall include the recommendation of the Board of Directors
of TSI in favor of this Agreement and the Merger and the recommendation of the
Board of Directors of Eclipsys in favor of the
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issuance of shares of Eclipsys Voting Common Stock pursuant to the Merger;
provided that the Board of Directors of either party may withdraw such
recommendation and refrain from soliciting proxies if such Board of Directors
believes in good faith after consultation with outside legal counsel that the
withdrawal of such recommendation is necessary for such Board of Directors to
comply with its fiduciary duties under applicable law.
(b) Eclipsys and TSI shall make all necessary filings with respect to the
Merger under the Securities Act, the Exchange Act, applicable state blue sky
laws and the rules and regulations thereunder.
SECTION 6.03 Nasdaq Quotation. Each of Eclipsys and TSI agrees to continue
the quotation of Eclipsys Voting Common Stock and TSI Voting Common Stock, as
the case may be, on the Nasdaq National Market during the term of this
Agreement.
SECTION 6.04 Access to Information. Upon reasonable notice, TSI and
Eclipsys shall each (and shall cause each of their respective Subsidiaries to)
afford to the officers, employees, accountants, counsel and other
representatives of the other, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of TSI and Eclipsys shall
(and shall cause each of their respective Subsidiaries to) furnish promptly to
the other (a) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of federal securities laws and (b) all other information concerning its
business, properties and personnel as such other party may reasonably request.
Unless otherwise required by law, the parties will hold any such information
which is non-public in confidence in accordance with the Confidentiality
Agreement. No information or knowledge obtained in any investigation pursuant to
this Section 6.04 shall affect or be deemed to modify any representation or
warranty contained in this Agreement or the conditions to the obligations of the
parties to consummate the Merger.
SECTION 6.05 Stockholders' Meetings. TSI and Eclipsys shall each call a
meeting of its respective stockholders to be held as promptly as practicable for
the purpose of voting, in the case of TSI, upon this Agreement and the Merger
and, in the case of Eclipsys, upon (i) the issuance of shares of Eclipsys Voting
Common Stock pursuant to the Merger, and (ii) the election of directors of
Eclipsys in accordance with Section 1.04 (collectively, the "Eclipsys Voting
Proposals"). Subject to Sections 6.01 and 6.02, TSI and Eclipsys will, through
their respective Boards of Directors, recommend to their respective stockholders
approval of such matters and will coordinate and cooperate with respect to the
timing of such meetings and shall use their best efforts to hold such meetings
on the same day and as soon as practicable after the date hereof. Subject to
Section 6.02, each party shall use all reasonable efforts to solicit from
stockholders of such party proxies in favor of such matters.
SECTION 6.06 Legal Conditions to Merger.
(a) TSI and Eclipsys shall each use their best efforts to (i) take, or
cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary and proper under applicable law to consummate and make
effective the transactions contemplated hereby as promptly as practicable, (ii)
obtain from any Governmental Entity any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made by TSI or
Eclipsys or any of their Subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, the Merger, and
(iii) as promptly as practicable, make all necessary filings, and thereafter
make any other required submissions, with respect to this Agreement and the
Merger required under (A) the Securities Act and the Exchange Act, and any other
applicable federal or state securities laws, (B) the HSR Act and any related
governmental request thereunder, and (C) any other applicable law. TSI and
Eclipsys shall cooperate with each other in connection with the making of all
such filings, including providing copies of all such documents to the non-filing
party and its advisors prior to filing and, if requested, to accept all
reasonable additions, deletions or changes suggested in connection therewith.
TSI and Eclipsys shall use their best efforts to furnish to each other all
information required for any application or other filing to be made pursuant to
the rules and regulations of any applicable law (including all information
required to be included in the Joint Proxy Statement and the
X-00
00
Xxxxxxxxxxxx Xxxxxxxxx) in connection with the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, TSI shall use its
best efforts to cause HealthVISION to prepare and deliver for inclusion in the
Joint Proxy Statement and the Registration Statement any financial statements of
HealthVISION and its subsidiaries required by the rules of the SEC to be
included therein.
(b) Eclipsys and TSI agree, and shall cause each of their respective
Subsidiaries, to cooperate and to use their respective best efforts to obtain
any government clearances or approvals required for the Closing under the HSR
Act, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the Federal Trade
Commission Act, as amended, and any other Federal, state or foreign law,
regulation or decree designed to prohibit, restrict or regulate actions for the
purpose or effect of monopolization or restraint of trade (collectively,
"Antitrust Laws"), to respond to any government requests for information under
any Antitrust Law, and to contest and resist any action, including any
legislative, administrative or judicial action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order (whether
temporary, preliminary or permanent) that restricts, prevents or prohibits the
consummation of the Merger or any other transactions contemplated by this
Agreement under any Antitrust Law. The parties hereto will consult and cooperate
with one another, and consider in good faith the views of one another, in
connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to any Antitrust Law. In
the event of a challenge to the transactions contemplated by this Agreement
pursuant to the HSR Act, TSI and Eclipsys shall use their best efforts to defeat
such challenge, including by institution and defense of litigation, or to settle
such challenge on terms that permit the consummation of the Merger; provided,
however, that nothing herein shall require either party to agree to divest or
hold separate any portion of its business or otherwise take action that could
reasonably be expected to have a TSI Material Adverse Effect or an Eclipsys
Material Adverse Effect. Without limiting the foregoing, in the event that
either the Federal Trade Commission or the Antitrust Division of the United
States Department of Justice issues a Request for Additional Information or
Documentary Material under 17 C.F.R. sec. 803.20 (a "Second Request"), then TSI
and Eclipsys each agree to use their best efforts to respond fully to such
Second Request within 20 days after its receipt and shall promptly make any
further filings or information submissions and make any employee available for
interview or testimony pursuant to the foregoing (both before and after any
Second Request) that may be necessary, proper or advisable. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation with
full title to all properties, assets, rights, approvals, immunities and
franchises of either of the Constituent Corporations, the proper officers and
directors of each party to this Agreement shall take all such necessary or
desirable action.
(c) Each of TSI and Eclipsys shall give (and shall cause their respective
Subsidiaries to give) any notices to third parties, and use, and cause their
respective Subsidiaries to use, their best efforts to obtain any third-party
consents related to or required in connection with the Merger that are (i)
necessary to consummate the transactions contemplated hereby, (ii) disclosed or
required to be disclosed in the TSI Disclosure Schedule or the Eclipsys
Disclosure Schedule, as the case may be, or (iii) required to prevent a TSI
Material Adverse Effect or an Eclipsys Material Adverse Effect from occurring
prior to or after the Effective Time.
SECTION 6.07 Public Disclosure. Eclipsys and TSI shall consult with each
other before issuing any press release or otherwise making any public statement
with respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or any listing agreement with a national securities
exchange or the Nasdaq National Market, and in any event in accordance with the
terms of the Confidentiality Agreement.
SECTION 6.08 Tax-Free Reorganization. Eclipsys and TSI shall each use its
best efforts to cause the Merger to be treated as a reorganization within the
meaning of Section 368(a) of the Code.
SECTION 6.09 Pooling Accounting. From and after the date hereof and until
the Effective Time, neither TSI nor Eclipsys, nor any of their respective
Subsidiaries shall knowingly take any action, or
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knowingly fail to take any action, that is reasonably likely to jeopardize the
treatment of the Merger as a pooling of interests for accounting purposes.
SECTION 6.10 Affiliate Agreements. Upon the execution of this Agreement,
Eclipsys and TSI will provide each other with a list of those persons who are,
in Eclipsys' or TSI's respective reasonable judgment, "affiliates" of Eclipsys
or TSI, respectively, within the meaning of Rule 145 promulgated under the
Securities Act ("Rule 145") (each such person who is an "affiliate" of Eclipsys
or TSI within the meaning of Rule 145 is referred to as an "Affiliate").
Eclipsys and TSI shall provide each other with such information and documents as
TSI or Eclipsys shall reasonably request for purposes of reviewing such list and
shall notify the other party in writing regarding any change in the identity of
its Affiliates prior to the Closing Date. TSI and Eclipsys shall each use its
best efforts to deliver or cause to be delivered to each other by November 20,
1998 (and in any case prior to the Effective Time) from each of its Affiliates,
an executed Affiliate Agreement, in form attached hereto as Exhibit B-1, in the
case of Affiliates of TSI, and in the form attached hereto as Exhibit B-2, in
the case of Affiliates of Eclipsys (each, an "Affiliate Agreement"). Eclipsys
shall be entitled to place appropriate legends on the certificates evidencing
any Eclipsys Voting Common Stock to be received by such Affiliates of TSI
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the Eclipsys Voting Common Stock,
consistent with the terms of the Affiliate Agreements (provided that such
legends or stop transfer instructions shall be removed, two years after the
Effective Date, upon the request of any stockholder that is not then an
Affiliate of Eclipsys).
SECTION 6.11 Nasdaq Quotation. Eclipsys shall use its best efforts to
cause the shares of Eclipsys Voting Common Stock to be issued in the Merger to
be approved for quotation on the Nasdaq National Market, subject to official
notice of issuance, prior to the Closing Date.
SECTION 6.12 Stock Plans and Warrants.
(a) At the Effective Time, each outstanding option to purchase shares of
TSI Voting Common Stock (a "TSI Stock Option") under the TSI Stock Plans,
whether vested or unvested, shall be deemed to constitute an option to acquire,
but otherwise on the same terms and conditions as were applicable under such TSI
Stock Option, the same number of shares of Eclipsys Voting Common Stock as the
holder of such TSI Stock Option would have been entitled to receive pursuant to
the Merger had such holder exercised such option in full immediately prior to
the Effective Time (rounded downward to the nearest whole number), at a price
per share (rounded upward to the nearest whole cent) equal to (y) the aggregate
exercise price for the shares of TSI Voting Common Stock purchasable pursuant to
such TSI Stock Option immediately prior to the Effective Time divided by (z) the
number of full shares of Eclipsys Voting Common Stock deemed purchasable
pursuant to such TSI Voting Stock Option in accordance with the foregoing. The
adjustment pursuant to this Section 6.12(a) is intended to comply with Section
424(a) of the Code with respect to any options which are incentive stock options
and shall be construed consistent with Section 424(a) of the Code.
(b) At the Effective Time, each outstanding TSI Warrant shall be deemed to
constitute a warrant to acquire, on the same terms and conditions as were
applicable under such TSI Warrant, the number of shares of Eclipsys Voting
Common Stock at the price per share as shall be determined under the existing
terms of the respective TSI Warrant.
(c) As soon as practicable after the Effective Time, Eclipsys shall deliver
to the participants in the TSI Stock Plans appropriate notice setting forth such
participants' rights pursuant thereto and the grants pursuant to the TSI Stock
Plans shall continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 6.12 after giving effect to the Merger).
(d) Eclipsys shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Eclipsys Voting Common Stock for
delivery under the TSI Stock Plans assumed in accordance with this Section 6.12
and the TSI Warrants. As soon as practicable after the Effective Time, Eclipsys
shall file a registration statement on Form S-8 (or any successor or other
appropriate forms), or another appropriate form with respect to the shares of
Eclipsys Voting Common Stock subject to such options, and
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shall use its best efforts to maintain the effectiveness of such registration
statement or registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such options remain
outstanding.
(e) The Board of Directors of TSI shall, prior to or as of the Effective
Time, take any necessary actions, pursuant to and in accordance with the terms
of the TSI Stock Plans and the instruments evidencing the TSI Stock Options, to
provide for the conversion of the TSI Stock Options into options to acquire
Eclipsys Voting Common Stock in accordance with this Section 6.12.
(f) TSI shall terminate its Employee Stock Purchase Plan (the "Stock
Purchase Plan") as of or prior to the Effective Time; provided, however, that,
in accordance with Section 17 of the Stock Purchase Plan, said termination shall
not affect the rights of participants in the Stock Purchase Plan to purchase
shares pursuant to the current offering under the Stock Purchase Plan which
commenced on October 1, 1998 and which terminates on March 31, 1999. Eclipsys
and TSI acknowledge and agree that, assuming that the Effective Time of the
Merger occurs prior to April 1, 1999, participants in the current offering under
the Stock Purchase Plan shall have the right to purchase a number of shares of
Eclipsys Voting Common Stock determined by applying the Exchange Ratio to the
number of shares of TSI Voting Common Stock that such participants would have
been entitled to purchase had the Merger not been completed at such time and
that such purchase shall occur at an exercise price equal to 85% of the lower of
(x) the market value (determined in accordance with the Stock Purchase Plan) of
TSI Common Stock as of October 1, 1998 or (y) the product of (I) the Exchange
Ratio and (II) the market value (determined in accordance with the Stock
Purchase Plan) of Eclipsys Voting Common Stock as of March 31, 1999, all subject
to and in accordance with the terms of the Stock Purchase Plan.
SECTION 6.13 Brokers or Finders. Each of Eclipsys and TSI represents, as
to itself, its Subsidiaries and its Affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement except
Xxxxxx Xxxxxxx & Co. Incorporated, whose fees and expenses will be paid by
Eclipsys in accordance with Eclipsys' agreement with such firm (a copy of which
has been delivered by Eclipsys to TSI prior to the date of this Agreement), and
BT Alex. Xxxxx Incorporated whose fees and expenses will be paid by TSI in
accordance with TSI's agreement with such firm (a copy of which has been
delivered by TSI to Eclipsys prior to the date of this Agreement). Each of
Eclipsys and TSI agrees to indemnify and hold the other harmless from and
against any and all claims, liabilities or obligations with respect to any such
fees, commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or any of its Affiliates.
SECTION 6.14 Indemnification.
(a) From and after the Effective Time, Eclipsys agrees that it will, and
will cause the Surviving Corporation to, indemnify and hold harmless each
present and former director and officer of TSI (the "Indemnified Parties"),
against any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages, liabilities or amounts paid in settlement
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or occurring at
or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent that TSI would have been
permitted under Massachusetts law and its articles of organization or bylaws in
effect on the date hereof to indemnify such Indemnified Party (and Eclipsys and
the Surviving Corporation shall also advance expenses as incurred to the fullest
extent permitted under applicable law, provided the Indemnified Party to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such Indemnified Party is not entitled to
indemnification).
(b) For a period of three (3) years after the Effective Time, Eclipsys
shall cause the Surviving Corporation to maintain (to the extent available in
the market) in effect a directors' and officers' liability insurance policy
covering those persons who are currently covered by TSI's directors' and
officers' liability insurance policy (a copy of which has been heretofore
delivered to Eclipsys) with coverage in amount and
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scope at least as favorable as TSI's existing coverage; provided, that in no
event shall Eclipsys or the Surviving Corporation be required to expend in
excess of 200% of the annual premium currently paid by TSI for such coverage
(currently $203,500), except to the extent such excess is attributable to
Eclipsys' claims history or price increases in the market for such insurance
that is unrelated to TSI specifically; and if such premium would at any time
exceed such limitation, the Surviving Corporation shall maintain insurance
policies that provide the maximum and best coverage available at an annual
premium equal to such limitation; and provided further that, if any legal action
had been pending at any time subsequent to the second anniversary of the
Effective Time against any person currently covered by TSI's directors' and
officers' liability insurance policy that would be covered in whole or in part
by such policy, the Surviving Corporation shall thereafter continue to maintain
such policy in effect (subject to the foregoing proviso) until the fifth
anniversary of the Effective Time.
(c) The provisions of this Section 6.14 are intended to be in addition to
the rights otherwise available to the current officers and directors of TSI by
law, charter, statute, bylaw or agreement, and shall operate for the benefit of,
and shall be enforceable by, each of the Indemnified Parties, their heirs and
their representatives.
SECTION 6.15 Letter of Eclipsys' Accountants. Eclipsys shall use
reasonable efforts to cause to be delivered to TSI and Eclipsys a letter of
PricewaterhouseCoopers LLP, Eclipsys' independent auditors, dated a date within
two business days before the date on which the Registration Statement shall
become effective and addressed to TSI, in form reasonably satisfactory to TSI
and customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement.
SECTION 6.16 Letter of TSI's Accountants. TSI shall use reasonable efforts
to cause to be delivered to Eclipsys and TSI letters of PricewaterhouseCoopers
LLP, TSI's independent auditors, and Ernst & Young LLP, HealthVISION's auditors,
each dated a date within two business days before the date on which the
Registration Statement shall become effective and addressed to Eclipsys, in form
reasonably satisfactory to Eclipsys and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement.
SECTION 6.17 Warburg Registration Rights Agreement. Eclipsys shall use its
reasonable efforts to amend its existing Second Amended and Restated
Registration Rights Agreement, dated January 1998, among Eclipsys and certain of
its stockholders (the "Registration Rights Agreement") (i) to add Warburg as a
"Designated Holder" (as defined in the Registration Rights Agreement) for all
purposes of the Registration Rights Agreement and (ii) to provide Warburg with
one demand registration pursuant to Section 3(a) of the Registration Rights
Agreement, which demand may not be exercised prior to January 1, 2000. In the
event Eclipsys is unable for any reason to amend the Registration Rights
Agreement as provided in the immediately preceding sentence, Eclipsys shall
enter into a registration rights agreement with Warburg, containing the
foregoing terms and otherwise substantially identical to the Registration Rights
Agreement, except that the only Designated Holder therein shall be Warburg (such
agreement, either as the amendment to the Registration Rights Agreement or the
separate registration rights agreement, the "Warburg Registration Rights
Agreement").
ARTICLE VII
CONDITIONS TO MERGER
SECTION 7.01 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligations of each party to this Agreement to effect
the Merger shall be subject to the satisfaction prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the affirmative vote of the holders of
two-thirds of the outstanding shares of TSI Voting Common Stock and the
Eclipsys Voting Proposals shall have been approved by the affirmative vote
of
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the holders of a majority of the shares of Eclipsys Voting Common Stock present
or represented at the Eclipsys Stockholders' Meeting at which a quorum is
present.
(b) HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
(c) Approvals. Other than the filing provided for by Section 1.01,
all authorizations, consents, orders or approvals of, or declarations or
filings with, or expirations of waiting periods imposed by, any
Governmental Entity the failure of which to file, obtain or occur is
reasonably likely to have an Eclipsys Material Adverse Effect or a TSI
Material Adverse Effect shall have been filed, been obtained or occurred.
(d) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and shall not be the subject of
any stop order or proceedings seeking a stop order.
(e) No Injunctions. No Governmental Entity or federal, state or
foreign court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction (each an "Order") or statute, rule, regulation which
is in effect and which has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger.
(f) Pooling Letters. Eclipsys and TSI shall each have received a
letter from PricewaterhouseCoopers LLP addressed to Eclipsys and TSI,
respectively, regarding its concurrence with management's conclusions as to
the appropriateness of pooling-of-interests accounting under Accounting
Principles Board Opinion No. 16 for the Merger, as contemplated to be
effected as of the date of the letter, it being agreed that Eclipsys and
TSI shall each provide reasonable cooperation to PricewaterhouseCoopers
LLP, to enable them to issue such a letter.
(g) Nasdaq. The shares of Eclipsys Voting Common Stock to be issued
in the Merger shall have been approved for quotation on the Nasdaq National
Market.
SECTION 7.02 Additional Conditions to Obligations of Eclipsys and Sub. The
obligations of Eclipsys and Sub to effect the Merger are subject to the
satisfaction of each of the following conditions, any of which may be waived in
writing exclusively by Eclipsys:
(a) Representations and Warranties. The representations and
warranties of TSI set forth in this Agreement shall be true and correct as
of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, except (i) for
changes contemplated by this Agreement and (ii) in the case of
representations and warranties that are not qualified as to materiality,
where the failures to be true and correct, individually or in the
aggregate, have not had and are not reasonably likely to have a TSI
Material Adverse Effect or a material adverse effect upon the consummation
of the transactions contemplated hereby; and Eclipsys shall have received a
certificate signed on behalf of TSI by the chief executive officer and the
chief financial officer of TSI to such effect.
(b) Performance of Obligations of TSI. TSI shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date; and Eclipsys shall have
received a certificate signed on behalf of TSI by the chief executive
officer and the chief financial officer of TSI to such effect.
(c) Tax Opinion. Eclipsys shall have received a written opinion from
Xxxx and Xxxx LLP, counsel to Eclipsys, to the effect that the Merger will
be treated for Federal income tax purposes as a tax-free reorganization
within the meaning of Section 368(a) of the Code.
(d) Dissenting Shares. The total number of Dissenting Shares shall
not be greater than 5% of the total number of shares of TSI Common Stock
outstanding immediately prior to the Effective Date.
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SECTION 7.03 Additional Conditions to Obligations of TSI. The obligation
of TSI to effect the Merger is subject to the satisfaction of each of the
following conditions, any of which may be waived in writing exclusively by TSI:
(a) Representations and Warranties. The representations and
warranties of Eclipsys and Sub set forth in this Agreement shall be true
and correct as of the date of this Agreement and (except to the extent such
representations speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date, except (i) for changes
contemplated by this Agreement and (ii) in the case of representations and
warranties that are not qualified as to materiality, where the failures to
be true and correct, individually or in the aggregate, have not had and are
not reasonably likely to have an Eclipsys Material Adverse Effect or a
material adverse effect upon the consummation of the transactions
contemplated hereby; and TSI shall have received a certificate signed on
behalf of Eclipsys by the chief executive officer and the chief financial
officer of Eclipsys to such effect.
(b) Performance of Obligations of Eclipsys and Sub. Eclipsys and Sub
shall have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing Date,
and TSI shall have received a certificate signed on behalf of Eclipsys by
the chief executive officer and the chief financial officer of Eclipsys to
such effect.
(c) Tax Opinion. TSI shall have received the opinion of Xxxxx, Xxxx &
Eliot LLP, counsel to TSI, to the effect that the Merger will be treated
for Federal income tax purposes as a tax-free reorganization within the
meaning of Section 368(a) of the Code.
(d) Warburg Registration Rights Agreement. Eclipsys shall have
executed and delivered the Warburg Registration Rights Agreement.
ARTICLE VIII
TERMINATION AND AMENDMENT
SECTION 8.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 8.01(b) through 8.01(g),
by written notice by the terminating party to the other party), whether before
or after approval of the matters presented in connection with the Merger by the
stockholders of TSI or Eclipsys:
(a) by mutual written consent of Eclipsys and TSI; or
(b) by either Eclipsys or TSI if the Merger shall not have been
consummated by April 30, 1999 (the "Outside Date") (provided that the right
to terminate this Agreement under this Section 8.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of the Merger to
occur on or before such date); or
(c) by either Eclipsys or TSI if a court of competent jurisdiction or
other Governmental Entity shall have issued a nonappealable final order,
decree or ruling or taken any other nonappealable final action, in each
case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger; or
(d) by Eclipsys, if, at the TSI Stockholders' Meeting (including any
adjournment or postponement), the requisite vote of the stockholders of TSI
in favor of this Agreement and the Merger shall not have been obtained; or
by TSI if, at the Eclipsys Stockholders' Meeting (including any adjournment
or postponement), the requisite vote of the stockholders of Eclipsys in
favor of the Eclipsys Voting Proposals shall not have been obtained; or
(e) by Eclipsys, if (i) the Board of Directors of TSI shall have
withdrawn or modified in a manner adverse to Eclipsys its recommendation of
this Agreement or the Merger; (ii) the Board of Directors of TSI shall have
recommended to the stockholders of TSI an Alternative Transaction (as
defined in Section 8.03(h)); (iii) a tender offer or exchange offer for 15%
or more of the outstanding
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shares of TSI Voting Common Stock is commenced (other than by Eclipsys or an
Affiliate of Eclipsys) and the Board of Directors of TSI recommends that the
stockholders of TSI tender their shares in such tender or exchange offer; or
(iv) for any reason (other than by reason of the Joint Proxy Statement not
having been cleared by the SEC) TSI fails to call and hold the TSI Stockholders'
Meeting by the Outside Date (provided that Eclipsys' right to terminate this
Agreement under such clause (iv) shall not be available if at such time TSI
would be entitled to terminate this Agreement under Section 8.01(h)); or
(f) by TSI, if (i) the Board of Directors of Eclipsys shall have
withdrawn or modified in a manner adverse to TSI its recommendation of this
Agreement, the Merger or the Eclipsys Voting Proposals; (ii) the Board of
Directors of Eclipsys shall have recommended to the stockholders of
Eclipsys an Alternative Transaction; (iii) a tender offer or exchange offer
for 15% or more of the outstanding shares of Eclipsys Voting Common Stock
is commenced (other than by TSI or an Affiliate of TSI) and the Board of
Directors of Eclipsys recommends that the stockholders of Eclipsys tender
their shares in such tender offer or exchange offer; or (iv) for any reason
(other than by reason of the Joint Proxy Statement not having been cleared
by the SEC) Eclipsys fails to call and hold the Eclipsys Stockholders'
Meeting by the Outside Date (provided that TSI's right to terminate this
Agreement under such clause (iv) shall not be available if at such time
Eclipsys would be entitled to terminate this Agreement under Section
8.01(h)); or
(g) by TSI, if the Board of Directors of TSI accepts or approves a
Superior Proposal, or recommends a Superior Proposal to the stockholders of
TSI; or
(h) by Eclipsys or TSI, if there has been a breach of any
representation, warranty, covenant or agreement on the part of the other
party set forth in this Agreement, or a breach of the covenants of Warburg
set forth in Section 5.04 (in the case of termination by Eclipsys), any of
which breaches (i) causes the conditions set forth in Section 7.02(a), (b),
(e) or (f) (in the case of termination by Eclipsys) or 7.03(a), (b) or (e)
(in the case of termination by TSI) not to be satisfied, and (ii) shall not
have been cured within 20 business days following receipt by the breaching
party of written notice of such breach from the other party.
SECTION 8.02 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.01, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of Eclipsys, TSI,
Sub or their respective officers, directors, stockholders or Affiliates, except
as set forth in Section 8.03; provided, that no such termination shall limit or
otherwise relieve the liability of any party for any breach of this Agreement
(except to the extent that liability may be limited by Section 8.03(c) or
Section 8.03(e) below); and provided further, that the provisions of Section
8.03 of this Agreement and the Confidentiality Agreement shall remain in full
force and effect and survive any termination of this Agreement.
SECTION 8.03 Fees and Expenses.
(a) Except as set forth in this Section 8.03, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated; provided, however, that TSI and Eclipsys shall share
equally all fees and expenses, other than attorneys' fees, incurred in relation
to the printing and filing of the Joint Proxy Statement (including any related
preliminary materials) and the Registration Statement (including financial
statements and exhibits) and any amendments or supplements.
(b) TSI shall pay Eclipsys up to $2,000,000 as reimbursement for expenses
of Eclipsys actually incurred relating to the transactions contemplated by this
Agreement prior to termination (including, but not limited to, fees and expenses
of Eclipsys' counsel, accountants and financial advisors, but excluding any
discretionary fees paid to such financial advisors), upon the termination of
this Agreement by Eclipsys pursuant to Section 8.01(d) as a result of the
failure to receive the requisite vote for approval of this Agreement and the
Merger by the stockholders of TSI at the TSI Stockholders' Meeting, Section
8.01(e), Section 8.01(g) or Section 8.01(h) as a result of a breach by TSI of
any of the covenants set forth in any
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of Sections 5.01, 5.04, 6.01, 6.02, 6.03, 6.04, 6.05, 6.06, 6.07, 6.08, 6.09,
6.10, 6.16 or 6.18 of this Agreement (collectively, the "TSI Material
Covenants").
(c) TSI shall pay Eclipsys a termination fee of $9,100,000 upon the
earliest to occur of the following events (each an "Eclipsys Termination Fee
Event"):
(i) the termination of this Agreement by Eclipsys pursuant to Section
8.01(e); or
(ii) the termination of this Agreement by Eclipsys pursuant to Section
8.01(h) after a breach by TSI of any of the TSI Material Covenants; or
(iii) consummation of an Alternative Transaction with respect to TSI
within twelve (12) months following the failure to receive the requisite
vote for approval of this Agreement and the Merger by the stockholders of
TSI at the TSI Stockholders' Meeting if, at the time of such failure, any
Alternative Transaction relating to TSI had been announced and had not been
absolutely and unconditionally withdrawn and abandoned; or
(iv) the termination of this Agreement by TSI pursuant to Section
8.01(g).
Notwithstanding the foregoing, any amount payable pursuant to this Section
8.03(c) shall be reduced, on a dollar-for-dollar basis, by any amount
theretofore paid to Eclipsys pursuant to Section 8.03(b). TSI agrees that it
will not structure any transaction or agreement for the purpose of avoiding
payment of the termination fee required by this Section 8.03(c). TSI further
acknowledges that the agreements contained in this Section 8.03(c) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Eclipsys would not enter into this Agreement;
accordingly, if TSI fails to promptly pay the amount due pursuant to this
Section 8.03(c), and, in order to obtain such payment, Eclipsys commences a suit
which results in a judgment against TSI for the fee set forth in this Section
8.03(c), TSI shall pay to Eclipsys its costs and expenses (including fees and
disbursements of counsel) in connection with such suit, together with interest
on the amount of the termination fee at the prime rate of Citibank, N.A. on the
date such payment was required to be made. Eclipsys and TSI further acknowledge
and agree that it may be difficult and impractical to measure in money the
damages which will accrue by reason of the occurrence of an Eclipsys Termination
Fee Event. Therefore, Eclipsys and TSI agree that payment of the termination fee
and any other fees, costs or expenses due under this Section 8.03(c) shall
constitute liquidated damages and not a penalty and shall further constitute the
sole and exclusive remedy of Eclipsys for any losses, damages, claims, costs or
expenses arising from the occurrence of any Eclipsys Termination Fee Event.
(d) Eclipsys shall pay TSI up to $2,000,000 as reimbursement for expenses
of TSI actually incurred relating to the transactions contemplated by this
Agreement prior to termination (including, but not limited to, fees and expenses
of TSI's counsel, accountants and financial advisors, but excluding any
discretionary fees paid to such financial advisors), upon the termination of
this Agreement by TSI pursuant to Section 8.01(d) as a result of the failure to
receive the requisite vote for approval of the Eclipsys Voting Proposals by the
stockholders of Eclipsys at the Eclipsys Stockholders' Meeting, Section 8.01(f)
or Section 8.01(h) as a result of a breach by Eclipsys of any of the covenants
set forth in Sections 5.02, 6.01, 6.03, 6.04, 6.05, 6.06, 6.07, 6.08, 6.09,
6.10, 6.11, 6.12, 6.15, 6.17 or 6.18 of this Agreement (collectively, the
"Eclipsys Material Covenants").
(e) Eclipsys shall pay TSI a termination fee of $9,100,000 upon the
earliest to occur of the following events (each a "TSI Termination Fee Event"):
(i) the termination of this Agreement by TSI pursuant to Section
8.01(f), or
(ii) the termination of this Agreement by TSI pursuant to Section
8.01(g) after a breach by Eclipsys of any of the Eclipsys Material
Covenants; or
(iii) consummation of an Alternative Transaction with respect to
Eclipsys within twelve (12) months following the failure to receive the
requisite vote for approval of the Eclipsys Voting Proposals by the
stockholders of Eclipsys at the Eclipsys Stockholders' Meeting if, at the
time of such
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41
failure, any Alternative Transaction relating to Eclipsys had been
announced and had not been absolutely and unconditionally withdrawn and
abandoned.
Notwithstanding the foregoing, any amount payable pursuant to this Section
8.03(e) shall be reduced, on a dollar-for-dollar basis, by any amount
theretofore paid to TSI pursuant to Section 8.03(d). Eclipsys agrees that it
will not structure any transaction or agreement for the purpose of avoiding
payment of the termination fee required by this Section 8.03(e). Eclipsys
further acknowledges that the agreements contained in this Section 8.03(e) are
an integral part of the transactions contemplated by this Agreement, and that,
without these agreements, TSI would not enter into this Agreement; accordingly,
if Eclipsys fails to promptly pay the amount due pursuant to this Section
8.03(e), and, in order to obtain such payment, TSI commences a suit which
results in a judgment against Eclipsys for the fee set forth in this Section
8.03(e), Eclipsys shall pay to TSI its costs and expenses (including fees and
disbursements of counsel) in connection with such suit, together with interest
on the amount of the termination fee at the prime rate of Citibank, N.A. on the
date such payment was required to be made. Eclipsys and TSI further acknowledge
and agree that it may be difficult and impractical to measure in money the
damages which will accrue by reason of the occurrence of a TSI Termination Fee
Event. Therefore, Eclipsys and TSI agree that payment of the termination fee and
any other fees, costs or expenses due under this Section 8.03(e) shall
constitute liquidated damages and not a penalty and shall further constitute the
sole and exclusive remedy of TSI for any losses, damages, claims, costs or
expenses arising from the occurrence of any TSI Termination Fee Event.
(g) The expenses and fees, if applicable, payable pursuant to Section
8.03(b), 8.03(c), 8.03(d) and 8.03(e) shall be paid within one business day
after the first to occur of the events described in Section 8.03(b), 8.03(c),
8.03(d) or 8.03(e)(i), (ii) or (iii); provided that in no event shall Eclipsys
or TSI, as the case may be, be required to pay the expenses and fees, if
applicable, to the other, if, immediately prior to the termination of this
Agreement, the party to receive the expenses and fees, if applicable, was in
material breach of its obligations under this Agreement.
(h) As used in this Agreement, "Alternative Transaction" means any of (i) a
transaction other than an Eclipsys Permitted Acquisition pursuant to which any
person (or group of persons) other than Eclipsys or TSI or their respective
affiliates (a "Third Party"), acquires more than 15% of the outstanding shares
of TSI Voting Common Stock or Eclipsys Voting Common Stock, as the case may be,
pursuant to a tender offer or exchange offer or otherwise, (ii) a merger or
other business combination involving Eclipsys or TSI other than an Eclipsys
Permitted Acquisition pursuant to which any Third Party acquires more than 15%
of the outstanding equity securities of Eclipsys or TSI or the entity surviving
such merger or business combination, (iii) any other transaction other than an
Eclipsys Permitted Acquisition pursuant to which any Third Party acquires
control of assets (including for this purpose the outstanding equity securities
of Subsidiaries of Eclipsys or TSI, and the entity surviving any merger or
business combination including any of them) of Eclipsys or TSI having a fair
market value (as determined by the Board of Directors of Eclipsys or TSI, as the
case may be, in good faith) equal to more than 15% of the fair market value of
all the assets of Eclipsys or TSI and its Subsidiaries, taken as a whole,
immediately prior to such transaction, or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
SECTION 8.04 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of TSI or of Eclipsys, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
SECTION 8.05 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document
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42
delivered pursuant hereto and (iii) waive compliance with any of the agreements
or conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for the agreements contained in Sections
1.04, 2.01, 2.02, 6.12, 6.14, 8.03 and Article IX, and the agreements of the
Affiliates delivered pursuant to Section 6.10. The Confidentiality Agreement
shall survive the execution and delivery of this Agreement.
SECTION 9.02 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as the party shall specify by like notice):
(a) if to Eclipsys or Sub, to
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attn: Chief Executive Officer
Telecopy: (000) 000-0000
with a copy to:
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
(b) if to TSI, to
Transition Systems, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Chief Executive Officer
Telecopy: (000) 000-0000
with a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Xx., Esq.
Telecopy: (000) 000-0000
SECTION 9.03 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase
A-35
43
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the party to whom such information is to
be made available. The phrases "the date of this Agreement," "the date hereof,"
and terms of similar import, unless the context otherwise requires, shall be
deemed to refer to October 29, 1998.
SECTION 9.04 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 9.05 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 6.14 is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder; provided that the Confidentiality Agreement shall remain in
full force and effect until the Effective Time. Each party hereto agrees that,
except for the representations and warranties contained in this Agreement,
neither TSI nor Eclipsys makes any other representations or warranties, and each
hereby disclaims any other representations and warranties made by itself or any
of its officers, directors, employees, agents, financial and legal advisors or
other representatives, with respect to the execution and delivery of this
Agreement or the transactions contemplated hereby, notwithstanding the delivery
or disclosure to the other or the other's representatives of any documentation
or other information with respect to any one or more of the foregoing.
SECTION 9.06 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
any applicable principles of conflicts of law.
SECTION 9.07 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
[Remainder of page intentionally left blank.]
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44
IN WITNESS WHEREOF, Eclipsys, Sub and TSI have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
Eclipsys Corporation
By: /s/ XXXXXX X. XXXXXX
[seal] ----------------------------------------------------
President
By: /s/ XXXXXX X. XXXXXXX
----------------------------------------------------
Treasurer
Eclipsys Acquisition Corp.
[seal] By: /s/ XXXXXX X. XXXXXX
----------------------------------------------------
President
By: /s/ XXXXXX X. XXXXXXX
----------------------------------------------------
Treasurer
Transition Systems, Inc.
[seal] By: /s/ XXXXXX X. XXXX
----------------------------------------------------
President
By: /s/ XXXXX X. XXXXXXX
----------------------------------------------------
Treasurer
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45
EXHIBIT A-1
TSI STOCKHOLDERS' VOTING AGREEMENT
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of October 29, 1998, between
(the "Stockholder"), who is a stockholder of Transition Systems,
Inc., a Massachusetts corporation (the "Company"), and Eclipsys Corporation, a
Delaware corporation ("Buyer").
WHEREAS, concurrently with the execution of this Agreement, the Company,
Buyer and a wholly-owned subsidiary of Buyer ("Sub") have entered into an
Agreement and Plan of Merger (as the same may be amended from time to time, the
"Merger Agreement"), providing for the merger (the "Merger") of Sub with and
into the Company pursuant to the terms and conditions of the Merger Agreement;
and
WHEREAS, the Stockholder owns of record and beneficially the number of
shares of capital stock of the Company set forth beneath his signature below
(the "Shares") and wishes to enter into this Agreement with respect to all of
such Shares; and
WHEREAS, in order to induce Buyer to enter into the Merger Agreement, the
Stockholder has agreed, upon the terms and subject to the conditions set forth
herein, to vote the Shares and to deliver an irrevocable proxy to Buyer to vote
the Shares at a meeting of the Company's stockholders, in favor of approval and
adoption of the Merger Agreement and the Merger.
NOW THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Agreement to Vote Shares. The Stockholder agrees during the term
of this Agreement to vote the Stockholder's Shares, in person or by proxy,
in favor of approval and adoption of the Merger Agreement and the Merger at
every meeting of the stockholders of the Company at which such matters are
considered and at every adjournment thereof. The Stockholder agrees to
deliver to Buyer upon request immediately prior to any vote contemplated by
clause (a) or (b) above a proxy substantially in the form attached hereto
as Annex A (a "Proxy"), which Proxy shall be irrevocable during the term of
this Agreement to the extent permitted under Massachusetts law, and Buyer
agrees to vote the Shares subject to each such Proxy in favor of approval
and adoption of the Merger Agreement and the Merger.
2. No Voting Trusts. The Stockholder agrees that the Stockholder will
not, nor will the Stockholder permit any entity under the Stockholder's
control to, deposit any of the Stockholder's Shares in a voting trust or
subject any of its Shares to any arrangement with respect to the voting of
the Shares inconsistent with this Agreement.
3. Limitation on Dispositions and Proxies. During the term of this
Agreement, the Stockholder agrees not to sell, assign, pledge, transfer or
otherwise dispose of, or grant any proxies with respect to (except as
contemplated by this Agreement) any of the Stockholder's Shares.
4. Specific Performance. Each party hereto acknowledges that it will
be impossible to measure in money the damage to the other party if a party
hereto fails to comply with the obligations imposed by this Agreement, and
that, in the event of any such failure, the other party will not have an
adequate remedy at law or in damages. Accordingly, each party hereto agrees
that injunctive relief or other equitable remedy, in addition to remedies
at law or damages, is the appropriate remedy for any such failure and will
not oppose the granting of such relief on the basis that the other party
has an adequate remedy at law. Each party hereto agrees that it will not
seek, and agrees to waive any requirement for, the securing or posting of a
bond in connection with any other party's seeking or obtaining such
equitable relief.
5. Term of Agreement; Termination. Subject to Section 9(e), the term
of this Agreement shall commence on the date hereof and such term and this
Agreement shall terminate upon the earliest to
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46
occur of (i) the Effective Time (as defined in the Merger Agreement), and
(ii) the date on which the Merger Agreement is terminated in accordance
with its terms. Upon such termination, no party shall have any further
obligations or liabilities hereunder; provided, that such termination shall
not relieve any party from liability for any breach of this Agreement prior
to such termination.
6. Representations and Warranties of the Stockholder. The Stockholder
represents and warrants to Buyer that, as of the date hereof, (a) the
Stockholder has full legal power and authority to execute and deliver this
Agreement and the Proxy, and (b) the Stockholder's Shares are free and
clear of all proxies.
7. Entire Agreement. This Agreement supersedes all prior agreements,
written or oral, among the parties hereto with respect to the subject
matter hereof and contains the entire agreement among the parties with
respect to the subject matter hereof. This Agreement may not be amended,
supplemented or modified, and no provisions hereof may be modified or
waived, except by an instrument in writing signed by all parties hereto. No
waiver of any provisions hereof by any party shall be deemed a waiver of
any other provisions hereof by any such party, nor shall any such waiver be
deemed a continuing waiver of any provisions hereof by such party.
8. Notices. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent
by facsimile or like transmission (with confirmation) and on the next
business day when sent by Federal Express, Express mail or other reputable
overnight courier service to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
If to Buyer:
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
If to Stockholder:
With a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Xx., Esq.
Fax: (000) 000-0000
X-00
00
0. Miscellaneous.
(a) This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of The
Commonwealth of Massachusetts, without reference to its conflicts of law
principles.
(b) If any provision of this Agreement or the application of such
provision to any person or circumstances shall be held invalid or
unenforceable by a court of competent jurisdiction, such provision or
application shall be unenforceable only to the extent of such invalidity or
unenforceability, and the remainder of the provisions not held invalid or
unenforceable and the application of such provisions to persons or
circumstances other than the party as to which it is held invalid, and the
remainder of this Agreement, shall not be affected.
(c) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
(d) All Section headings herein are for convenience of reference only
and are not part of this Agreement, and no construction or reference shall
be derived therefrom.
(e) The obligations of the Stockholder set forth in this Agreement
shall not be effective or binding upon the Stockholder until after such
time as the Merger Agreement is executed and delivered by the Company,
Buyer and Sub, and the parties agree that there is not and has not been any
other agreement, arrangement or understanding between the parties hereto
with respect to the matters set forth herein.
[Signature page follows]
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48
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
Eclipsys Corporation
By:
------------------------------------
Name:
Title:
STOCKHOLDER
--------------------------------------
--------------------------------------
Signature
Shares:
----------------------------------
----------------------------------
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49
(ANNEX A)
PROXY
The undersigned, for consideration received, hereby appoints Eclipsys
Corporation, a Delaware corporation ("Buyer"), its proxy to vote all shares of
capital stock owned by the undersigned which the undersigned is entitled to vote
at any meeting of stockholders of Transition Systems, Inc., a Massachusetts
corporation (the "Company"), and at any adjournment thereof, to be held for the
purpose of voting upon a proposal to approve and adopt the Agreement and Plan of
Merger, dated as of October 29, 1998 (the "Merger Agreement"), by and among the
Company, Buyer and a wholly-owned subsidiary of Buyer ("Sub"), providing for the
merger (the "Merger") of Sub with and into the Company, FOR such proposal and
AGAINST any Acquisition Proposal that is not a Superior Proposal (as such terms
are defined in the Merger Agreement). This proxy is subject to the terms of the
Voting Agreement dated as of October 29, 1998 between the undersigned and Buyer,
a copy of such Agreement being attached hereto (the "Voting Agreement"), is
coupled with an interest and revokes all prior proxies granted by the
undersigned with respect to such shares, is irrevocable and shall terminate and
be of no further force or effect automatically at such time as the Voting
Agreement terminates in accordance with its terms.
Dated: October 29, 1998
STOCKHOLDER
--------------------------------------
--------------------------------------
Signature
X-00
00
XXXXXXX X-0
XXXXXXXX STOCKHOLDERS' VOTING AGREEMENT
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of October 29, 1998, between
(the "Stockholder"), who is a stockholder of Eclipsys
Corporation, a Delaware corporation ("Buyer"), and Transition Systems, Inc., a
Massachusetts corporation (the "Company").
WHEREAS, concurrently with the execution of this Agreement, the Company,
Buyer and a wholly-owned subsidiary of Buyer ("Sub") have entered into an
Agreement and Plan of Merger (as the same may be amended from time to time, the
"Merger Agreement"), providing for the merger (the "Merger") of Sub with and
into the Company pursuant to the terms and conditions of the Merger Agreement;
and
WHEREAS, the Stockholder owns of record and beneficially the number of
shares of capital stock of Buyer set forth beneath his signature below (the
"Shares") and wishes to enter into this Agreement with respect to all of such
Shares; and
WHEREAS, in order to induce the Company to enter into the Merger Agreement,
the Stockholder has agreed, upon the terms and subject to the conditions set
forth herein, to vote the Shares and to deliver an irrevocable proxy to the
Company to vote the Shares at a meeting of Buyer's stockholders, in favor of the
Eclipsys Voting Proposals (as defined in the Merger Agreement) pursuant to the
terms of the Merger Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Agreement to Vote Shares. The Stockholder agrees during the term
of this Agreement to vote the Stockholder's Shares, in person or by proxy,
in favor of the Eclipsys Voting Proposals at every meeting of the
stockholders of Buyer at which such matters are considered and at every
adjournment thereof. The Stockholder agrees to deliver to the Company upon
request immediately prior to any vote contemplated by this section a proxy
substantially in the form attached hereto as Annex A (a "Proxy"), which
Proxy shall be irrevocable during the term of this Agreement to the extent
permitted under Delaware law, and the Company agrees to vote the Shares
subject to each such Proxy in favor of approval and adoption of the Merger
Agreement and the Merger.
2. No Voting Trusts. The Stockholder agrees that the Stockholder will
not, nor will the Stockholder permit any entity under the Stockholder's
control to, deposit any of the Stockholder's Shares in a voting trust or
subject any of its Shares to any arrangement with respect to the voting of
the Shares inconsistent with this Agreement.
3. Limitation on Dispositions and Proxies. During the term of this
Agreement, the Stockholder agrees not to sell, assign, pledge, transfer or
otherwise dispose of, or grant any proxies with respect to (except as
contemplated by this Agreement) any of the Stockholder's Shares.
4. Specific Performance. Each party hereto acknowledges that it will
be impossible to measure in money the damage to the other party if a party
hereto fails to comply with the obligations imposed by this Agreement, and
that, in the event of any such failure, the other party will not have an
adequate remedy at law or in damages. Accordingly, each party hereto agrees
that injunctive relief or other equitable remedy, in addition to remedies
at law or damages, is the appropriate remedy for any such failure and will
not oppose the granting of such relief on the basis that the other party
has an adequate remedy at law. Each party hereto agrees that it will not
seek, and agrees to waive any requirement for, the securing or posting of a
bond in connection with any other party's seeking or obtaining such
equitable relief.
5. Term of Agreement; Termination. Subject to Section 9(e), the term
of this Agreement shall commence on the date hereof and such term and this
Agreement shall terminate upon the earliest to
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51
occur of (i) the Effective Time (as defined in the Merger Agreement), and
(ii) the date on which the Merger Agreement is terminated in accordance
with its terms. Upon such termination, no party shall have any further
obligations or liabilities hereunder; provided, that such termination shall
not relieve any party from liability for any breach of this Agreement prior
to such termination.
6. Representations and Warranties of the Stockholder. The Stockholder
represents and warrants to the Company that, as of the date hereof, (a) the
Stockholder has full legal power and authority to execute and deliver this
Agreement and the Proxy, and (b) the Stockholder's Shares are free and
clear of all proxies.
7. Entire Agreement. This Agreement supersedes all prior agreements,
written or oral, among the parties hereto with respect to the subject
matter hereof and contains the entire agreement among the parties with
respect to the subject matter hereof. This Agreement may not be amended,
supplemented or modified, and no provisions hereof may be modified or
waived, except by an instrument in writing signed by all parties hereto. No
waiver of any provisions hereof by any party shall be deemed a waiver of
any other provisions hereof by any such party, nor shall any such waiver be
deemed a continuing waiver of any provisions hereof by such party.
8. Notices. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent
by facsimile or like transmission (with confirmation) and on the next
business day when sent by Federal Express, Express mail or other reputable
overnight courier service to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
If to the Company:
Transition Systems, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
If to Stockholder:
With a copy to:
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
X-00
00
0. Miscellaneous.
(a) This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of
Delaware, without reference to its conflicts of law principles.
(b) If any provision of this Agreement or the application of such
provision to any person or circumstances shall be held invalid or
unenforceable by a court of competent jurisdiction, such provision or
application shall be unenforceable only to the extent of such invalidity or
unenforceability, and the remainder of the provisions not held invalid or
unenforceable and the application of such provisions to persons or
circumstances other than the party as to which it is held invalid, and the
remainder of this Agreement, shall not be affected.
(c) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
(d) All Section headings herein are for convenience of reference only
and are not part of this Agreement, and no construction or reference shall
be derived therefrom.
(e) The obligations of the Stockholder set forth in this Agreement
shall not be effective or binding upon the Stockholder until after such
time as the Merger Agreement is executed and delivered by the Company,
Buyer and Sub, and the parties agree that there is not and has not been any
other agreement, arrangement or understanding between the parties hereto
with respect to the matters set forth herein.
[Signature page follows]
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53
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
Transition Systems, Inc.
By:
------------------------------------
Name:
Title:
STOCKHOLDER
--------------------------------------
--------------------------------------
Signature
Shares:
--------------------------------------
----------------------------------
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54
(ANNEX A)
PROXY
The undersigned, for consideration received, hereby appoints Transition
Systems, Inc., a Massachusetts corporation (the "Company"), its proxy to vote
all shares of capital stock owned by the undersigned which the undersigned is
entitled to vote at any meeting of stockholders of Eclipsys Corporation, a
Delaware corporation ("Buyer"), and at any adjournment thereof, to be held for
the purpose of voting upon the Eclipsys Voting Proposals, as such term is
defined in the Agreement and Plan of Merger, dated as of October 29, 1998 (the
"Merger Agreement"), by and among the Company, Buyer and a wholly-owned
subsidiary of Buyer ("Sub"), providing for the merger (the "Merger") of Sub with
and into the Company FOR such proposals. This proxy is subject to the terms of
the Voting Agreement dated as of October 29, 1998 between the undersigned and
the Company, a copy of such Agreement being attached hereto (the "Voting
Agreement"), is coupled with an interest and revokes all prior proxies granted
by the undersigned with respect to such shares, is irrevocable and shall
terminate and be of no further force or effect automatically at such time as the
Voting Agreement terminates in accordance with its terms.
Dated: October 29, 1998
STOCKHOLDER
--------------------------------------
--------------------------------------
Signature
X-00
00
XXXXXXX X-0
TSI AFFILIATE AGREEMENT
AFFILIATE AGREEMENT
, 1998
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Transition Systems, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Ladies and Gentlemen:
An Agreement and Plan of Merger dated as of October 29, 1998 (the
"Agreement") has been entered into by and among Eclipsys Corporation, a Delaware
corporation ("Eclipsys"), Fitness Merger Corp., a Massachusetts corporation and
a wholly-owned subsidiary of Eclipsys (the "Sub"), and Transition Systems, Inc.,
a Massachusetts corporation ("TSI"). The Agreement provides for the merger of
the Sub with and into TSI (the "Merger"). In accordance with the Agreement,
shares of Common Stock, $.01 par value per share, and Non-Voting Common stock,
$.01 par value per share of TSI (collectively the "TSI Common Stock") shall be
converted into shares of Common Stock, $.01 par value per share, of Eclipsys
(the "Eclipsys Voting Common Stock"), as described in the Agreement.
The undersigned has been advised that as of the date of this agreement the
undersigned may be deemed to be an "affiliate" of TSI, as the term "affiliate"
is defined for purposes of paragraphs (c) and (d) of Rule 145 of the Rules and
Regulations of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Securities Act"), and/or as such
term is used in, and for purposes of, Accounting Series Releases Nos. 130 and
135, as amended, of the Commission.
In consideration of the mutual agreements, provisions and covenants set
forth in the Agreement and hereinafter in this agreement, the undersigned
represents and agrees as follows:
1. Pooling Requirements. The undersigned will not within the 30 day
period prior to the Effective Time (as defined in the Agreement), sell,
transfer, pledge, hypothecate or otherwise dispose of, or reduce the
undersigned's interest in or risk relating to, any shares of Eclipsys
Common Stock or TSI Common Stock owned by the undersigned. In addition, the
undersigned will not sell, transfer, pledge, hypothecate or otherwise
dispose of, or reduce the undersigned's interest in or risk relating to,
any Eclipsys Voting Common Stock issued to the undersigned pursuant to the
Merger, or any other shares of Eclipsys capital stock, until after such
time as Eclipsys has published (within the meaning of Accounting Series
Release No. 135, as amended, of the Commission) financial results covering
at least 30 days of combined operations of Eclipsys and TSI.
2. Rule 145. The undersigned will not offer, sell, pledge,
hypothecate, transfer or otherwise dispose of, or reduce its interest in or
risk relating to, any of the shares of Eclipsys Voting Common Stock issued
to the undersigned in the Merger unless at such time either: (i) such
transaction is permitted pursuant to the provisions of Rule 145 under the
Securities Act; (ii) the undersigned shall have furnished to Eclipsys an
opinion of counsel, reasonably satisfactory to Eclipsys, to the effect that
such transaction is otherwise exempt from the registration requirements of
the Securities Act; or (iii) a registration statement under the Securities
Act covering the proposed offer, sale, pledge, hypothecation, transfer or
other disposition shall be effective under the Securities Act.
X-00
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0. Legend.
(a) The undersigned understands that all certificates representing
Eclipsys Voting Common Stock delivered to the undersigned pursuant to the
Merger shall bear a legend in substantially the form set forth below, until
the earlier to occur of (i) one of the events referred to in Section 2
above or (ii) the date on which the undersigned requests removal of such
legend, provided, that such request occurs at least two years from the
Effective Date (as defined in the Merger Agreement) and that the
undersigned is not at the time of such request, and has not been during the
three months period preceding to such request, an affiliate of Eclipsys.
"The shares represented by this certificate were issued in a transaction
to which Rule 145 of the Securities Act of 1933 applies and may only be
transferred in accordance with the provisions of such rule. In addition,
the shares represented by this certificate may only be transferred in
accordance with the terms of an affiliate agreement dated
, 1998 between the initial holder hereof and
Eclipsys Corporation, a copy of which agreement may be inspected by the
holder of this certificate at the principal offices of Eclipsys
Corporation, or furnished by Eclipsys Corporation to the holder of this
certificate upon written request, without charge."
(b) Eclipsys in its discretion may cause stop transfer orders to be
placed with its transfer agent with respect to the certificates for the
shares of Eclipsys Voting Common Stock that are required to bear the
foregoing legend.
4. General Provisions. This agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
giving effect to principles of conflicts of laws. This agreement shall be
binding on the undersigned's successors and assigns, including his or her
heirs, executors and administrators.
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57
The undersigned has carefully read this agreement and discussed its
requirements, to the extent the undersigned believed necessary, with its counsel
or counsel for TSI.
Very truly yours,
--------------------------------------
Signature
--------------------------------------
Print Name
Accepted:
ECLIPSYS CORPORATION
By:
----------------------------------------------------
Name:
-------------------------------------------------
Title:
--------------------------------------------------
Dated:
-------------------------------------------------
TRANSITION SYSTEMS, INC.
By:
----------------------------------------------------
Name:
-------------------------------------------------
Title:
--------------------------------------------------
Dated:
-------------------------------------------------
X-00
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XXXXXXX X-0
ECLIPSYS AFFILIATE AGREEMENT
AFFILIATE AGREEMENT
, 1998
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Transition Systems, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Ladies and Gentlemen:
An Agreement and Plan of Merger dated as of October 29, 1998 (the
"Agreement") has been entered into by and among Eclipsys Corporation, a Delaware
corporation ("Eclipsys"), Fitness Merger Corp., a Massachusetts corporation and
a wholly-owned subsidiary of Eclipsys (the "Sub"), and Transition Systems, Inc.,
a Massachusetts corporation ("TSI"). The Agreement provides for the merger of
the Sub with and into TSI (the "Merger"). In accordance with the Agreement,
shares of Common Stock, $.01 par value per share, and Non-Voting Common Stock,
$.01 par value per share, of TSI (collectively the "TSI Common Stock") shall be
converted into shares of Common Stock, $.01 par value per share (the "Eclipsys
Voting Common Stock"), as described in the Agreement.
The undersigned has been advised that as of the date of this agreement the
undersigned may be deemed to be an "affiliate" of Eclipsys, as the term
"affiliate" is defined under the Rules and Regulations of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, and/or as such term is used in, and for purposes of, Accounting Series
Releases Nos. 103 and 135, as amended, of the Commission.
In consideration of the mutual agreements, provisions and covenants set
forth in the Agreement and hereinafter in this agreement, the undersigned
represents and agrees as follows:
1. Pooling Requirements. The undersigned will not within the 30 day
period prior to the Effective Time (as defined in the Agreement), sell,
transfer, pledge, hypothecate or otherwise dispose of, or reduce the
undersigned's interest in or risk relating to, any shares of Eclipsys
Common Stock or TSI Common Stock owned by the undersigned. In addition, the
undersigned will not sell, transfer, pledge, hypothecate or otherwise
dispose of, or reduce the undersigned's interest in or risk relating to any
shares of Eclipsys capital stock, until after such time as Eclipsys has
published (within the meaning of Accounting Series Release No. 135, as
amended, of the Commission) financial results covering at least 30 days of
combined operations of Eclipsys and TSI.
2. General Provisions. This agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
giving effect to principles of conflicts of laws. This agreement shall be
binding on the undersigned's successors and assigns, including his heirs,
executors and administrators.
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59
The undersigned has carefully read this agreement and discussed its
requirements, to the extent the undersigned believed necessary, with its counsel
or counsel for Eclipsys.
Very truly yours,
--------------------------------------
Signature
--------------------------------------
Print Name
Accepted:
ECLIPSYS CORPORATION
By:
--------------------------------------------------------
Name:
-------------------------------------------------------
Title:
-------------------------------------------------------
Dated:
-------------------------------------------------------
TRANSITION SYSTEMS, INC.
By:
--------------------------------------------------------
Name:
-------------------------------------------------------
Title:
-------------------------------------------------------
Dated:
-------------------------------------------------------
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00
XXXXX B
October 28, 1998
Board of Directors
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxx 00000
Members of the Board:
We understand that Transition Systems Inc. ("TSI"), Eclipsys Corporation
("Eclipsys" or the "Company"), and Exercise Acquisition Corp. ("Merger Sub"), a
wholly owned subsidiary of Eclipsys, propose to enter into an Agreement and Plan
of Merger, substantially in the form of the draft dated October 28, 1998 (the
"Merger Agreement"), which provides, among other things, for the merger (the
"Merger") of Merger Sub with and into TSI. Pursuant to the Merger, TSI will
become a wholly-owned subsidiary of the Company and each outstanding share of
common stock, par value of $0.01 per share (the "TSI Common Stock"), of TSI,
other than shares held in treasury or by Eclipsys or any subsidiary of TSI or
Eclipsys, shall be converted into the right to receive 0.525 shares (the
"Exchange Ratio") of common stock, par value $0.01 per share, of Eclipsys (the
"Eclipsys Common Stock"). The terms and conditions of the Merger are more fully
set forth in the Merger Agreement and certain related documents.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to the Company.
For purposes of the opinion set forth herein, we have:
(a) reviewed certain publicly available financial statements and other
information of TSI and Eclipsys, respectively;
(b) reviewed certain internal financial statements and other financial
and operating data concerning TSI and Eclipsys prepared by the managements
of TSI and Eclipsys, respectively;
(c) discussed the past and current operations and financial condition
and the prospects of TSI with senior executives of TSI;
(d) discussed the past and current operations and financial condition
and the prospects of Eclipsys, including information relating to certain
strategic, financial and operational benefits anticipated from the Merger,
with senior executives of Eclipsys;
(e) discussed with the senior managements of TSI and Eclipsys certain
research analyst projections for TSI and Eclipsys, respectively;
(f) reviewed the pro forma impact of the Merger on Eclipsys' earnings
per share and other financial ratios;
(g) reviewed the reported prices and trading activity for the TSI
Common Stock and the Eclipsys Common Stock;
(h) compared the financial performance of TSI and Eclipsys and the
prices and trading activity of the TSI Common Stock and the Eclipsys Common
Stock with that of certain other comparable publicly-traded companies and
their securities;
(i) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(j) participated in discussions among representatives of TSI and
Eclipsys and their financial and legal advisors;
B-1
61
(k) reviewed the draft Merger Agreement dated October 21, 1998 and
certain related documents; and
(l) performed such other analyses as we have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, including information
relating to certain strategic, financial and operational benefits anticipated
from the Merger, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
future financial performance of Eclipsys and TSI, respectively. In addition, we
have assumed that the Merger will be consummated in accordance with the terms
set forth in the Merger Agreement, including, among other things, that the
Merger will be accounted for as a "pooling-of-interests" business combination in
accordance with U.S. Generally Accepted Accounting Principles and the Merger
will be treated as a tax-free reorganization and/or exchange, each pursuant to
the Internal Revenue Code of 1986. We have not made any independent valuation or
appraisal of the assets or liabilities of TSI, nor have we been furnished with
any such appraisals. Our opinion is necessarily based on economic, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof.
We have been retained to render a financial opinion to the Board of
Directors of Eclipsys in connection with this transaction and will receive a fee
for our services. In the past, Xxxxxx Xxxxxxx & Co. Incorporated and its
affiliates have provided financial advisory and financing services for the
Company and their affiliates and have received fees for the rendering of these
services.
It is understood that this letter is for the information of the Board of
Directors of the Company, except that this opinion may be included in its
entirety in any filing made by the Company in respect of the transaction with
the Securities and Exchange Commission. In addition, this opinion does not in
any manner address the prices at which Eclipsys Common Stock will trade
following consummation of the Merger, and Xxxxxx Xxxxxxx expresses no opinion or
recommendation as to how the shareholders of the Company and TSI should vote at
the shareholders' meeting held in connection with the Merger.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the Exchange Ratio pursuant to the Merger Agreement is fair from a
financial point of view to the Company.
Very truly yours,
XXXXXX XXXXXXX & CO. INCORPORATED
By: /s/ XXXXX X. XXXXXXXXX
------------------------------------
Xxxxx X. Xxxxxxxxx
Managing Director
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62
ANNEX C
October 29, 1998
Board of Directors
Transition Systems, Inc.
Xxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Members of the Board:
BT Alex. Xxxxx Incorporated ("BT Alex. Xxxxx") has acted as financial
advisor to Transition Systems, Inc. ("TSI") in connection with the proposed
merger transaction involving TSI and Eclipsys Corporation ("Eclipsys") pursuant
to the Agreement and Plan of Merger, dated as of October 29, 1998 (the "Merger
Agreement"), among Eclipsys, Exercise Acquisition Corp., a wholly owned
subsidiary of Eclipsys ("Sub"), and TSI. The Merger Agreement provides, among
other things, for the merger of Sub with and into TSI (the "Merger") pursuant to
which TSI will become a wholly owned subsidiary of Eclipsys. As set forth more
fully in the Merger Agreement, as a result of the Merger, each outstanding share
of the common stock, par value $0.01 per share, of TSI ("TSI Voting Common
Stock") and each outstanding share of the non-voting common stock, par value
$0.01 per share, of TSI ("TSI Non-Voting Common Stock" and, together with the
TSI Voting Common Stock, "TSI Common Stock") will be converted into the right to
receive 0.525 of a share (the "Exchange Ratio") of the common stock, par value
$0.01 per share, of Eclipsys ("Eclipsys Voting Common Stock").
You have requested BT Alex. Xxxxx'x opinion as to the fairness, from a
financial point of view, of the Exchange Ratio to the holders of TSI Common
Stock.
In connection with BT Alex. Xxxxx'x role as financial advisor to TSI, and
in arriving at its opinion, BT Alex. Xxxxx has reviewed certain publicly
available financial and other information concerning TSI and Eclipsys and
certain internal analyses and other information furnished to or discussed with
it by TSI, Eclipsys and their respective advisors. BT Alex. Xxxxx has also held
discussions with members of the senior management of TSI and Eclipsys regarding
the business and prospects of their respective companies and the joint prospects
of a combined company. In addition, BT Alex. Xxxxx has (i) reviewed the reported
prices and trading activity for TSI Common Stock and Eclipsys Common Stock, (ii)
compared certain financial and stock market information for TSI and Eclipsys
with similar information for certain other companies whose securities are
publicly traded, (iii) reviewed the financial terms of certain recent business
combinations which it deemed comparable in whole or in part, (iv) reviewed the
terms of the Merger Agreement, and (v) performed such other studies and analysis
and considered such other factors as it deemed appropriate. In connection with
its engagement, BT Alex. Xxxxx was authorized to approach, and held discussions
with, certain third parties to solicit indications of interest with respect to
the acquisition of TSI.
BT Alex. Xxxxx has not assumed responsibility for independent verification
of, and has not independently verified, any information, whether publicly
available or furnished to it, concerning TSI, Eclipsys and the combined company,
including, without limitation, any financial information, forecasts or
projections considered in connection with the rendering of its opinion.
Accordingly, for purposes of its opinion, BT Alex. Xxxxx has assumed and relied
upon the accuracy and completeness of all such information and BT Alex. Xxxxx
has not conducted a physical inspection of any of the properties or assets, and
has not prepared or obtained any independent evaluation or appraisal of any of
the assets or liabilities, of TSI or Eclipsys. With respect to the financial
forecasts and projections made available to BT Alex. Xxxxx and used in its
analyses, BT Alex. Xxxxx has assumed that they have been prepared on bases
reflecting reasonable estimates and judgments as to the matters covered thereby.
In rendering its opinion, BT Alex. Xxxxx expresses no view as to the
reasonableness of such forecasts and projections or the assumptions on which
they are based. BT Alex. Xxxxx'x opinion is necessarily based upon economic,
market and other conditions as in effect on, and the information made available
to it as of, the date hereof.
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63
Board of Directors
Transition Systems, Inc.
October 29, 1998
Page 2
For purposes of rendering its opinion, BT Alex. Xxxxx has assumed that, in
all respects material to its analysis, the representations and warranties of
TSI, Eclipsys and Sub contained in the Merger Agreement are true and correct,
TSI, Eclipsys and Sub will each perform all of the covenants and agreements to
be performed by it under the Merger Agreement and all conditions to the
obligations of each of TSI, Eclipsys and Sub to consummate the Merger will be
satisfied without any waiver thereof. BT Alex. Xxxxx has also assumed that all
material governmental, regulatory or other approvals and consents required in
connection with the consummation of the Merger will be obtained and that in
connection with obtaining any necessary governmental, regulatory or other
approvals and consents, or any amendments, modifications or waivers to any
agreements, instruments or orders to which either TSI or Eclipsys is a party or
is subject or by which it is bound, no limitations, restrictions or conditions
will be imposed or amendments, modifications or waivers made that would have a
material adverse effect on TSI or Eclipsys or materially reduce the contemplated
benefits of the Merger to TSI. In addition, you have informed BT Alex. Xxxxx,
and accordingly for purposes of rendering its opinion BT Alex. Xxxxx has
assumed, that the Merger will qualify as a tax-free reorganization for federal
income tax purposes and will be accounted for as a pooling of interests. BT
Alex. Xxxxx is expressing no opinion as to the price at which the Eclipsys
Voting Common Stock will trade at any time.
This opinion is addressed to, and for the use and benefit of, the Board of
Directors of TSI and is not a recommendation to any shareholder as to how such
shareholder should vote with respect to matters relating to the proposed Merger.
This opinion is limited to the fairness, from a financial point of view, of the
Exchange Ratio to the holders of TSI Common Stock, and BT Alex. Xxxxx expresses
no opinion as to the merits of the underlying decision by TSI to engage in the
Merger.
BT Alex. Xxxxx, as a customary part of its investment baking business, is
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, private placements and
valuations for estate, corporate and other purposes. We have acted as financial
advisor to TSI in connection with the Merger and will receive a fee for our
services, a significant position of which is contingent upon the consummation of
the Merger and portion of which is payable upon delivery of this opinion BT
Alex. Xxxxx and its affiliates have in the past provided financial services to
TSI unrelated to the proposed Merger, for which services BT Alex. Xxxxx and its
affiliates have received compensation. BT Alex. Xxxxx maintains a market in TSI
Common Stock and regularly publishes research reports regarding the businesses
and securities of TSI and other publicly traded companies in the health care
information technology industry. In the ordinary course of business, BT Alex.
Xxxxx and its affiliates may actively trade or hold the securities and other
instruments and obligations of TSI and Eclipsys for their own account and for
the accounts of customers and, accordingly, may at any time hold a long or short
position in such securities, instruments or obligations.
Based upon and subject to the foregoing, it is BT Alex. Xxxxx'x opinion
that, as of the date of this letter, the Exchange Ratio is fair, from a
financial point of view, to the holders of TSI Common Stock.
Very truly yours,
/s/ BT ALEX. XXXXX INCORPORATED
BT ALEX. XXXXX INCORPORATED
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