SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-l(a) AND AMENDMENTS THERETO FILED PURSUANT
TO RULE 13d-2(a)
(Amendment No. )1
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Allscripts Healthcare Solutions, Inc.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
01988P 10 8
(CUSIP Number)
Robert W. Baker, Jr., General Counsel
IDX Systems Corporation,
1400 Shelburne Road, Burlington, VT 05402
(802) 862-3304
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 8, 2001
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box ?.
Note. Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See
Rule 13d-7(b) for other parties to whom copies are to be sent.
(Continued on following pages)
1 The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the Notes).
<PAGE>
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CUSIP NO. 01988P 10 8 13D Page 2 of 8 Pages
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1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
IDX Systems Corporation
03-0222230
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
(b)
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e)
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Vermont
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NUMBER OF SHARES 7. SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH 0
REPORTING PERSON WITH
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8. SHARED VOTING POWER
7,497,838
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9. SOLE DISPOSITIVE POWER
7,497,838
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10. SHARED DISPOSITIVE POWER
0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,497,838
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.9
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14. TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
(Page 2 of 8)
ITEM 1. Security of the Issuer.
The securities to which this statement relates are the common stock , par
value $.01 per share (the "Common Stock"), of Allscripts Healthcare Solutions,
Inc. (formerly known as Allscripts Holding, Inc.), a Delaware corporation (the
"Company"). The principal executive offices of the Company are located at 2401
Commerce Drive, Libertyville, Illinois 60048.
ITEM 2. Identity and Background.
This statement is being filed by IDX Systems Corporation, a Vermont
corporation ("IDX"). IDX is sometimes referred to herein as the "Reporting
Person."
The principal business of IDX is to provide healthcare information
solutions, including software, hardware, and related services to physician
groups, management services organizations, hospitals, and integrated delivery
networks. The address of its principal business and its principal office is 1400
Shelburne Road, South Burlington, Vermont 05403.
During the last five (5) years, the Reporting Person has not been
convicted in any criminal proceeding (excluding traffic violations or similar
misdemeanors). During the last five (5) years, the Reporting Person was not a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as result of which it was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, Federal or State securities laws or finding any violation
with respect to such laws.
Attached hereto as Schedule I is a list of the directors and executive
officers of the Reporting Person which contains the following information with
respect to each such person:
(a) name;
(b) business address; and
(c) present principal occupation or employment and the name,
principal business and address of any corporation or other
organization in which such employment is conducted.
To the knowledge of the Reporting Person, each person identified in
Schedule I hereto is a United States citizen.
ITEM 3. Source and Amount of Funds or Other Consideration.
On January 8, 2001, pursuant to an Agreement and Plan of Merger (the
"Merger Agreement") dated as of July 13, 2000, by and among the Company,
Allscripts, Inc., Bursar Acquisition, Inc., Bursar Acquisition No. 2, Inc.,
Channelhealth Incorporated ("Channelhealth") and IDX (a majority stockholder of
Channelhealth), Bursar Acquisition No. 2, Inc., a wholly owned subsidiary of the
Company, merged with and into Channelhealth (the "Merger"). Channelhealth became
a wholly owned subsidiary of the Company and shares of Channelhealth capital
stock were exchanged for shares of Common Stock of the Company in accordance
with the Merger Agreement.
Page 3 of 8
<PAGE>
ITEM 4. Purpose of Transactions.
Except as set forth in Item 6 with respect to IDX's designee to the
Company's board of directors, the Reporting Person does not have any plans or
proposals concerning the Company with respect to the matters set forth in
subparagraphs (a) through (j) of Item 4 of the Schedule.
ITEM 5. Interest in Securities of the Issuer.
(a) As a result of the Merger, the Reporting Person is the beneficial
owner of 7,497,838 shares of Common Stock of the Company, representing
approximately 19.9% of the outstanding Common Stock of the Company. This
percentage amount is based upon 37,674,015 shares of Common Stock of the Company
issued in connection with the Merger, as disclosed by the Company in its
registration statement on Form S-4 (Commission File No. 333-49568). The
beneficial ownership of the shares of Common Stock of the Company of the other
persons named in Item 2 are set forth in Schedule I. Except as set forth in this
Item 5, to the best knowledge of the Reporting Person, none of the parties named
in Item 2 owns any of the Company's Common Stock.
(b) With respect to the 7,497,838 shares of Common Stock of the Company
beneficially owned by the Reporting Person, the Reporting Person shares the
power to vote all of such shares with the Company pursuant to a Stock Rights and
Restrictions Agreement, as more fully described in Item 6 below, and has the
sole power to dispose of all of such shares. With respect to the shares of
Common Stock of the Company beneficially owned by the other persons named in
Item 2, except as set forth in Schedule I, to the knowledge of the Reporting
Person, each such person has the sole power to vote all of such shares and the
sole power to dispose of all of such shares.
Item 1 sets forth the Company's name and state of incorporation along
with the address of its principal business and principal office. The Company's
principal business is to provide point-of-care medication management solutions
designed to meet the needs of physician practices, their patients and managed
care payers and plans. To the knowledge of the Reporting Person, during the last
five (5) years, the Company (i) has not been convicted in any criminal
proceeding (excluding traffic violations or similar misdemeanors) and (ii) was
not a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as result of which it was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, Federal or State securities laws or finding any
violation with respect to such laws.
(c) Except as described above in this Item 5 and in Item 6, which item
is incorporated herein by reference, neither the Reporting Person nor, to the
knowledge of the Reporting Person, any person named in Schedule I beneficially
has effected any transactions in Common Stock during the past sixty (60) days.
(d) None.
(e) Not applicable.
Page 4 of 8
<PAGE>
ITEM 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Pursuant to a Stock Rights and Restrictions Agreement (the "Stock Rights
and Restrictions Agreement"), dated as of January 8, 2001, between the Company
and the Reporting Person, the Reporting Person has complete discretion to vote
the shares of Common Stock of the Company, unless the matter to be voted on
constitutes a business combination, involves the acquisition of 50% or more of
the outstanding stock of the Company, involves the issuance of Common Stock by
the Company for cash or involves any acquisition by the Company, in which cases
the Reporting Person has agreed to vote the shares of Common Stock in accordance
with the recommendation of the directors of the Company who were directors of
the Company prior to January 8, 2001 (or who were elected by such directors);
provided, however, that the voting restriction will not apply in any event if
the average closing price of the Common Stock for the 90 days prior to the date
of such vote is less than $14.5625 and the Reporting Person is not in default
under the Merger Agreement or any agreement executed in connection therewith.
Also, pursuant to the Stock Rights and Restrictions Agreement, the
Reporting Person has agreed not to transfer any of the shares of Common Stock of
the Company without the prior written consent of a majority of the directors of
the Company who were directors of the Company prior to January 8, 2001 (or who
were elected by such directors), except under certain limited circumstances set
forth in the Stock Rights and Restrictions Agreement.
Pursuant to the Stock Rights and Restrictions Agreement, so long as the
Reporting Person owns 25% of the shares of Common Stock of the Company which it
owned immediately following the Merger, the Reporting Person is entitled to
designate one individual to the Company's board of directors. The Reporting
Person's initial designee to the Company's board is Mr. Richard E. Tarrant. Mr.
Tarrant also executed the Stock Rights and Restrictions Agreement, in his
individual capacity, for the purpose of agreeing not to transfer any shares of
Common Stock of the Company owned by him for a period of six months following
the effectiveness of the Merger.
The foregoing description of the Stock Rights and Restrictions Agreement
is qualified in its entirety by reference to such agreement, which is filed as
Exhibit 99.1 hereto and incorporated by reference herein.
ITEM 7. Material to be Filed as Exhibits.
The following document is filed as an Exhibit to this statement.
Exhibit No. Description
99.1 Stock Rights and Restrictions Agreement, dated as of
January 8, 2001, by and between Allscripts Healthcare
Solutions, Inc. and IDX Systems Corporation.
Page 5 of 8
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 18, 2001
IDX SYSTEMS CORPORATION
By: /s/ ROBERT W. BAKER, JR.
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Name: Robert W. Baker, Jr.
Title: Vice President and
General Counsel
Page 6 of 8
<PAGE>
SCHEDULE I
IDX SYSTEMS CORPORATION
The name, present principal occupation or employment and beneficial
ownership of shares of common stock of Allscripts Healthcare Solutions, Inc.
(the "Company") of each director and executive officer of IDX Systems
Corporation is set forth below.
DIRECTORS
<TABLE>
<CAPTION>
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Beneficial Ownership of
Shares of the Company
Common Stock
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Shares
Name/Present Principal Shares Held Underlying
Occupation or Employment Business Address Outright (#) Options (#)
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<S> <C> <C> <C>
Richard E. Tarrant IDX Systems Corporation 35,416 0
Chief Executive Officer 1400 Shelburne Road
of IDX South Burlington,
Vermont 05403
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Frank T. Sample VitalCom, Inc. 337 675
President and Chief 15222 Del Amo Avenue
Executive Officer of Tustin, California
VitalCom, Inc. 92780
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Allen Martin, Esq. Downs Rachlin & Martin, 7,146 675
An attorney and director PLLC
of Downs Rachlin & 199 Main Street,
Martin PLLC Courthouse Plaza
Burlington, Vermont
05401
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Henry M. Tufo, M.D. Fletcher Allen Health 5,059 0
A physician at Fletcher Care
Allen Health Care Given Health
One South Prospect
Street
Burlington, Vermont
05401
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Steven M. Lash DermTech International 1,686(1) 675
President and Chief 15222 Avenue of Science
Executive Officer of San Diego, California
DermTech International 92128
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Peter W. Van Etten Juvenile Diabetes 0 675
President and Chief Foundation
Executive Officer of 120 Wall Street
Juvenile Diabetes New York, New York
Foundation 10005
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Robert H. Hoehl IDX Systems Corporation 34,218(2) 0
Chairman of the Board 1400 Shelburne Road
of IDX South Burlington,
Vermont 05403
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Stuart H. Altman, Ph.D. Brandeis University, 3,373 675
A Professor of National Heller School
Health Policy, 415 South Street
Heller School at Waltham, Massachusetts
Brandeis University 02254
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Mark F. Wheeler, M.D., IDX Systems Corporation 6,746 5,060
M.P.H. 1001 Fourth Avenue Plaza
Senior Vice President Suite 1500
and Chief Technical Seattle, WA 98154
Architect of the
orporate Research
Organization of IDX
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</TABLE>
(1) Consists of shares held by Mr. Lash and his wife, Cia Colobella Lash,
as trustees of the Lash Family Trust U/A dated 12/15/99, as to which
shares Mr. and Mrs. Lash share voting and dispositive powers as
trustees of the trust.
(2) Includes 2,384 shares held by Mr. Hoehl's wife, Cynthia K. Hoehl, as
trustee of four trusts (596 shares each), the beneficiaries of which
are the Hoehl's children, as to which shares Mr. Hoehl disclaims
beneficial ownership but may be deemed to share voting and dispositive
powers.
Page 7 of 8
<PAGE>
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
No person is a controlling stockholder of IDX.
<TABLE>
<CAPTION>
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Beneficial Ownership of
Shares of the Company
Common Stock
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Name/Present Principal Shares Underlying
Occupation or Employment Business Address Options (#)
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<S> <C> <C>
James H. Crook, Jr. IDX Systems Corporation 35,417
President and Chief 1400 Shelburne Road
Operating Officer South Burlington, Vermont 05403
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Robert F. Galin IDX Systems Corporation 30,357
Vice President of Sales 116 Huntington Avenue
Boston, MA 02116
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John A. Kane IDX Systems Corporation 26,984
Vice President, Finance 1400 Shelburne Road
and Administration, Chief South Burlington, Vermont 05403
Financial Officer
and Treasurer
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Robert W. Baker, Jr. IDX Systems Corporation 26,984
Vice President, General 1400 Shelburne Road
Counsel and Secretary South Burlington, Vermont 05403
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Vicki Blanchard IDX Systems Corporation 10,794
Vice President, Integrated 116 Huntington Avenue
Solutions Division Boston, MA 02116
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Stephen C. Gorman IDX Systems Corporation 10,794
Vice President, Systems 1400 Shelburne Road
Division South Burlington, Vermont 05403
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Walt N. Marti IDX Systems Corporation 10,794
Vice President, Radiology 1400 Shelburne Road
and Imaging South Burlington, Vermont 05403
Solutions Division
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Gene H. Barduson IDX Systems Corporation 6,746
Vice President, EDiX 4250 Executive Drive
Business Unit La Jolla, CA 92037
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</TABLE>
Page 8 of 8
<PAGE>
Exhibit 99.1
STOCK RIGHTS AND RESTRICTIONS AGREEMENT
STOCK RIGHTS AND RESTRICTIONS AGREEMENT (the "Agreement"),
dated as of January 8, 2001, between Allscripts Healthcare Solutions, Inc., a
Delaware corporation ("Allscripts") and IDX Systems Corporation, a Vermont
corporation ("IDX").
RECITALS:
A. After giving effect to the Closing, IDX owns 7,497,838
shares of Allscripts Common Stock (together with any additional Allscripts
Voting Shares that IDX or any Affiliate of IDX may from time to time own, the
"IDX Shares").
B. After giving effect to the Closing, Richard E. Tarrant
("R.E.T."). is the initial IDX Designee.
C. The Boards of Directors of Allscripts and IDX deem it
advisable to establish (i) insofar as concerns IDX, certain rights and
restrictions with respect to Allscripts Business Combination Transactions and
the IDX Shares and (ii) insofar as concerns Allscripts, certain restrictions
with respect to IDX Business Combination Transactions and any securities of IDX
having voting power under ordinary circumstances with respect to the election of
directors of IDX that Allscripts may hold from time to time.
ACCORDINGLY, premises considered, the parties have entered into this
Agreement.
1. DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings indicated:
(a) "Affiliate" shall mean, with respect to any specified Person, any other
Person, directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" (including, with correlative meanings, "controlling,"
"controlled by," and "under common control with") means the power to direct or
cause the direction of the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract, or
otherwise and, with respect to a corporation or partnership, control shall mean
direct or indirect ownership of more than fifty percent (50%) of the voting
stock or general partnership interest or voting interest in any such corporation
or partnership. Notwithstanding anything to the contrary in this definition,
Affiliates of IDX who were stockholders of Channelhealth Incorporated
("Channelhealth") immediately prior to the Closing shall not be considered
"Affiliates" for purposes of Recital A (definition of "IDX Shares") and Sections
2.2, 2.4 (other than Section 2.4(a)), 2.5, 2.6 and 4.2 hereof.
(b) "Acceptance Notice" shall have the meaning set forth in Section 2.6(b).
(c) "Applicable Percentage" shall mean 2%.
<PAGE>
(d) "Allscripts" shall have the meaning set forth in the first paragraph of this
Agreement; and the term "Allscripts" shall include Allscripts and its Affiliates
unless the context otherwise requires.
(e) "Allscripts Business Combination Transaction" shall mean a merger,
consolidation, "business combination" as defined in Section 203 of the DGCL as
in effect on the date hereof, compulsory share exchange, recapitalization or
other transaction in which Allscripts is a constituent corporation or to which
Allscripts is a party and pursuant to which the Allscripts Voting Shares are
exchanged for cash, securities or other property or a sale of all or
substantially all of the assets of Allscripts and its Subsidiaries, taken as a
whole; provided, however, that none of the following shall be deemed an
Allscripts Business Combination Transaction for purposes of this Agreement: (i)
a merger, consolidation, compulsory share exchange, recapitalization or other
transaction in which the Beneficial Ownership of the capital stock of Allscripts
or the surviving corporation of the transaction (or of the ultimate parent of
Allscripts or of such surviving corporation) immediately after the consummation
of such transaction is substantially the same as the ownership of the capital
stock of Allscripts immediately prior to the consummation of the transaction or
(ii) a merger (A) in which Allscripts is the surviving corporation, (B) in which
all Allscripts Voting Shares immediately prior to the consummation of such
merger remain outstanding immediately after the consummation thereof, (C) as a
result of the consummation of which no Person will Beneficially Own a majority
of the Allscripts Fully Diluted Shares and (D) following the consummation of
which the Allscripts Continuing Directors (which, for the purposes of this
clause (e), shall include the IDX Designee) will represent a majority of the
Board of Directors of Allscripts.
(f) "Allscripts Common Stock" shall mean Allscripts' common stock, par value
$0.01 per share, and any shares of common stock or similar securities into which
the common stock of Allscripts are hereafter reclassified into or exchanged for.
(g) "Allscripts Continuing Director" shall mean (i) any member of the Board of
Directors of Allscripts, while such Person is a member of such Board of
Directors, who (A) was a member of the Board of Directors of Allscripts prior to
the date hereof or (B) is recommended or elected to the Board of Directors by a
majority of the Allscripts Continuing Directors to fill a vacancy arising as a
result of an increase in the number of directors of Allscripts occurring after
the date hereof and (ii) any successor of an Allscripts Continuing Director,
while such successor is a member of the Board of Directors of Allscripts, who is
recommended or elected to succeed the Allscripts Continuing Director by a
majority of the Allscripts Continuing Directors. Notwithstanding anything to the
contrary in this definition, for purposes of this Agreement, the IDX Designee
shall not be considered an Allscripts Continuing Director.
(h) "Allscripts Exchangeable Security" shall mean a security of any type,
including but not limited to debt, equity, warrants or other rights, issued by
Allscripts or representing the right to acquire Allscripts Voting Shares from
Allscripts upon exchange, conversion or exercise thereof.
(i) "Allscripts Fully Diluted Shares" shall mean, at any time, the sum of (i)
the Allscripts Voting Shares then outstanding plus (ii) the number of Allscripts
Voting Shares reserved for issuance or issuable in connection with the exercise,
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<PAGE>
exchange or conversion of options, warrants or securities of Allscripts then
outstanding that are at such time exercisable or exchangeable for Allscripts
Voting Shares or are convertible into Allscripts Voting Shares.
(j) "Allscripts Voting Shares" shall mean the Allscripts Common Stock and any
other securities of Allscripts having voting power under ordinary circumstances
with respect to the election of directors of Allscripts.
(k) "Beneficially Own" shall have the meaning assigned to such term in Rule
13d-3 under the Exchange Act in effect on the date hereof. "Beneficial Owner"
and "Beneficial Ownership" shall have correlative meanings.
(l) "Closing" shall have the meaning assigned to such term in the Merger
Agreement.
(m) "Current Price" shall have the meaning set forth in Section 2.4(i).
(n) "DGCL" shall have the meaning set forth in Section 2.1(c).
(o) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor federal statute as in effect from time to time.
(p) "Expenses" shall have the meaning set forth in Section 2.5(j)(v).
(q) "IDX" shall have the meaning set forth in the first paragraph hereof; and
the term "IDX" shall include IDX and its Affiliates unless the context otherwise
requires or as otherwise specified in the definition of "Affiliate."
(r) "IDX Business Combination Transaction" shall mean a merger, consolidation,
"business combination" as defined in Section 203 of the DGCL as in effect on the
date hereof, compulsory share exchange, recapitalization or other transaction in
which IDX is a constituent corporation or to which IDX is a party and pursuant
to which the IDX Voting Shares are exchanged for cash, securities or other
property or a sale of all or substantially all of the assets of IDX and its
Subsidiaries, taken as a whole; provided, however, that none of the following
shall be deemed an IDX Business Combination Transaction for purposes of this
Agreement: (i) a merger, consolidation, compulsory share exchange,
recapitalization or other transaction in which the Beneficial Ownership of the
capital stock of IDX or the surviving corporation of the transaction (or of the
ultimate parent of IDX or of such surviving corporation) immediately after the
consummation of such transaction is substantially the same as the ownership of
the capital stock of IDX immediately prior to the consummation of the
transaction or (ii) a merger (A) in which IDX is the surviving corporation, (B)
in which all IDX Voting Shares immediately prior to the consummation of such
merger remain outstanding immediately after the consummation thereof, (C) as a
result of the consummation of which no Person will Beneficially Own a majority
of the IDX Fully Diluted Shares and (D) following the consummation of which the
IDX Continuing Directors will represent a majority of the Board of Directors of
IDX.
3
<PAGE>
(s) "IDX Common Stock" shall mean IDX's common stock, par value $0.01 per share,
and any shares of common stock or similar securities into which the common stock
of IDX are hereafter reclassified into or exchanged for.
(t) "IDX Continuing Director" shall mean (i) any member of the Board of
Directors of IDX, while such Person is a member of such Board of Directors, who
(A) was a member of the Board of Directors of IDX prior to the date hereof or
(B) is recommended or elected to the Board of Directors by a majority of the IDX
Continuing Directors to fill a vacancy arising as a result of an increase in the
number of directors of IDX occurring after the date hereof and (ii) any
successor of an IDX Continuing Director, while such successor is a member of the
Board of Directors of IDX, who is recommended or elected to succeed the IDX
Continuing Director by a majority of the IDX Continuing Directors.
(u) "IDX Designee" shall have the meaning set forth in Section 2.2(a) hereof.
(v) "IDX Exchangeable Security" shall mean a security of any type, including but
not limited to debt, equity, warrants or other rights, issued by IDX or
representing the right to acquire IDX Voting Shares from IDX upon exchange,
conversion or exercise thereof.
(w) "IDX Fully Diluted Shares" shall mean, at any time, the sum of (i) the IDX
Voting Shares then outstanding plus (ii) the number of IDX Voting Shares
reserved for issuance or issuable in connection with the exercise, exchange or
conversion of options, warrants or securities of IDX then outstanding that are
at such time exercisable or exchangeable for IDX Voting Shares or are
convertible into IDX Voting Shares.
(x) "IDX Shares" shall have the meaning set forth in Recital A.
(y) "IDX Voting Shares" shall mean the IDX Common Stock and any other securities
of IDX having voting power under ordinary circumstances with respect to the
election of directors of IDX.
(z) "Insolvency Laws" shall have the meaning set forth in Section 5.7(a)(ii).
(aa)"Market Price" shall have the meaning set forth in Section 2.4(h).
(bb)"Maximum Number" shall have the meaning set forth in Section 2.4(j)(ii).
(cc)"Merger Agreement" shall mean the Agreement and Plan of Merger, dated as of
July 13, 2000, among Allscripts, Allscripts, Inc., Bursar Acquisition, Inc.,
Bursar Acquisition No. 2, Inc., IDX and Channelhealth.
(dd)"Notice of Arranged Transfer" shall have the meaning set forth in Section
2.4(h)(i).
(ee)"Notice of Block Purchase" shall have the meaning set forth in Section
2.4(i)(i).
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(ff)"Notice of Block Transfer" shall have the meaning set forth in Section
2.4(i)(i).
(gg)"Notice of Proposed Transfer" shall have the meaning set forth in Section
2.4(h)(i).
(hh)"Offer Notice" shall have the meaning set forth in Section 2.6(b).
(ii)"Per Share Market Value" means on any particular date (i) the last sale
price per share of the Allscripts Common Stock on such date on the principal
stock exchange on which the Allscripts Common Stock has been listed or, if there
is no such price on such date, then the last price on such exchange on the date
nearest preceding such date, or (ii) if the Allscripts Common Stock is not
listed on any stock exchange, the final bid price for a share of Allscripts
Common Stock in the over-the-counter market, as reported by The Nasdaq Stock
Market at the close of business on such date, or the last sales price if such
price is reported and final bid prices are not available, or (iii) if the
Allscripts Common Stock is not quoted on The Nasdaq Stock Market, the bid price
for a share of Allscripts Common Stock in the over-the-counter market as
reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding to its functions of reporting prices), or (iv)
if the Allscripts Common Stock is no longer publicly traded, as determined by
one of the investment banking firms listed on Schedule I, as selected by IDX.
(jj)"Person" shall mean any individual, firm, partnership, association, group
(as such term is defined in Section 13(d)(3) of the Exchange Act, as in effect
on the date hereof), corporation, trust, business trust or other entity, and
includes any successor (by merger or otherwise) of any such entity.
(kk)"Piggyback Registration" shall have the meaning set forth in Section
2.4(j)(i).
(ll)"Piggyback Registration Request" shall have the meaning set forth in
Section 2.4(j)(i).
(mm)"Private Placement" shall mean a Transfer of IDX Shares pursuant to a
transaction not involving a Pubic Offering; provided, however, that (i) the sale
of IDX Shares pursuant to a tender or exchange offer is not a Private Placement;
(ii) a Private Placement shall not include a Transfer to any Person who,
directly or indirectly, has as one of its material businesses the provision of
healthcare information and/or point of care clinical applications and devices (a
"Allscripts Competitor") if, as a result of such Transfer, such Allscripts
Competitor would Beneficially Own such number of Allscripts Voting Shares as
would constitute 10% or more of the then outstanding Allscripts Voting Shares,
unless any such Allscripts Competitor acquiring such amount of securities enters
into an agreement with Allscripts limiting the Transfer of such shares on
substantially the same terms as this Agreement, except that the term of such
agreement shall be 10 years from the date of such agreement; and (iii) a Private
Placement shall not include a Transfer of IDX Shares to any Person if following
such Transfer such Person Beneficially Owns more than 10% of the then
outstanding Allscripts Voting Shares unless such Person enters into an agreement
with Allscripts with terms and conditions restricting the Transfer of such
5
<PAGE>
shares substantially similar to those contained herein, except that the term of
such agreement shall be for 10 years from the date of such agreement. IDX shall
be entitled to rely on a representation of the proposed recipient in determining
whether a Transfer to such recipient qualifies as a Private Placement under
clauses (ii) and (iii) of the preceding sentence.
(nn)"Public Offering" shall mean a firm commitment underwritten public offering
pursuant to a registration statement that has been declared effective by the SEC
under the Securities Act.
(oo)"Rule 144" shall mean Rule 144 adopted by the SEC under the Securities Act,
or any successor rule.
(pp)"SEC" shall mean the Securities and Exchange Commission.
(qq)"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor federal statute as in effect from time to time.
(rr)"Specified Price" shall have the meaning set forth in Section 2.4(i).
(ss)"Subsidiary" shall mean, with respect to any Person, any other Person of
which at least a majority of the voting power of the voting equity securities or
voting equity interest is owned, directly or indirectly, by such Person.
(tt)"Target Price" shall have the meaning set froth in Section 2.4(h).
(uu)"Trading Day" means (i) a day on which the Allscripts Common Stock is
traded on the principal stock exchange on which the Allscripts Common Stock has
been listed, or (ii) if the Allscripts Common Stock is not listed on any stock
exchange, a day on which the Allscripts Common Stock is quoted in the
over-the-counter market, as reported by The Nasdaq Stock Market, or (iii) if the
Allscripts Common Stock is not quoted on The Nasdaq Stock Market, a day on which
the Allscripts Common Stock is quoted in the over-the-counter market as reported
by the National Quotation Bureau Incorporated (or any similar organization or
agency succeeding to its functions of reporting prices).
(vv)"Transfer" shall have the meaning set forth in Section 2.4 hereof.
2. SHARE RIGHTS AND RESTRICTIONS.
2.1 LIMITATION ON CERTAIN TRANSACTIONS.
(a) (i) Except as otherwise permitted by this Agreement, IDX agrees that IDX
shall not, during the period from the date of this Agreement until its
termination, (A) engage, or propose to engage, in any Allscripts Business
Combination Transaction with Allscripts, or (B) make any proposal to Allscripts,
the Board of Directors of Allscripts or the stockholders of Allscripts with
respect to a tender offer or exchange offer for Allscripts Voting Shares or a
liquidation of Allscripts, unless either (x) such transaction shall have been
approved by a majority of the Allscripts Continuing Directors or (y) on the date
when such transaction is proposed, no IDX Designee shall be serving on the Board
of Directors of Allscripts and IDX and its Affiliates collectively shall
Beneficially Own less than 5% of the then outstanding Allscripts Voting Shares.
6
<PAGE>
(ii) Except as otherwise permitted by this Agreement, Allscripts agrees that
Allscripts shall not, during the period from the date of this Agreement until
its termination, (A) engage, or propose to engage, in any IDX Business
Combination Transaction with IDX, or (B) make any proposal to IDX, the Board of
Directors of IDX or the stockholders of IDX with respect to a tender offer or
exchange offer for IDX Voting Shares or a liquidation of IDX, unless either (x)
such transaction shall have been approved by a majority of the IDX Continuing
Directors or (y) on the date when such transaction is proposed, Allscripts and
its Affiliates collectively shall Beneficially Own less than 5% of the then
outstanding IDX Voting Shares.
(b) (i) Except as otherwise permitted by this Agreement, IDX agrees that IDX
shall not, during the period from the date of this Agreement until its
termination, (i) request or solicit any Person (A) to make a tender or exchange
offer for Allscripts Voting Shares or (B) to make a proposal for an Allscripts
Business Combination Transaction, unless either (x) a majority of the Allscripts
Continuing Directors shall have approved of IDX taking such action or (y) no IDX
Designee shall be serving on the Board of Directors of Allscripts and IDX and
its Affiliates collectively shall Beneficially Own less than 5% of the then
outstanding Allscripts Voting Shares.
(ii) Except as otherwise permitted by this Agreement, Allscripts agrees that
Allscripts shall not, during the period from the date of this Agreement until
its termination, (i) request or solicit any Person (x) to make a tender or
exchange offer for IDX Voting Shares or (y) to make a proposal for an IDX
Business Combination Transaction, unless either (1) a majority of the IDX
Continuing Directors shall have approved of Allscripts taking such action or (2)
Allscripts and its Affiliates collectively shall Beneficially Own less than 5%
of the then outstanding IDX Voting Shares.
(c) In connection with the Merger Agreement, Allscripts' Board of Directors has
taken all action to assure that (i) no state takeover statute or similar statute
will apply to the Merger Agreement or to any of the transactions contemplated in
the Merger Agreement or the items referenced in subclauses (A) or (B) of Section
2.3 and (ii) Section 203 of the DGCL will not apply to the Merger Agreement or
any of the transactions contemplated in the Merger Agreement or the items
referenced in subclauses (A) or (B) of Section 2.3. Further, Allscripts has no
"poison pill" or takeover defense mechanism other than Article Twelfth of
Allscripts' Certificate of Incorporation. Allscripts shall not amend or modify
any of the foregoing actions nor shall Allscripts implement any new, additional,
amended or modified poison pill or takeover defense mechanism, unless, in each
and every such case, provision shall be made to exclude IDX and its Affiliates
from all effects thereof.
(d) Allscripts and IDX agree that the operative provisions, as presently in
effect, of Section 203 of the DGCL will apply to any Allscripts Business
Combination Transaction and any IDX Business Combination Transaction covered by
Section 203 between IDX and its Affiliates and Allscripts, or Allscripts and its
Affiliates and IDX, for the term of this Agreement, notwithstanding that the
operative provisions of such Section 203 might otherwise be applicable for a
shorter period of time.
7
<PAGE>
2.2 ALLSCRIPTS BOARD OF DIRECTORS.
(a) From and after the date hereof and until the earlier of (i) termination of
this Agreement and (ii) the date that IDX and its Affiliates shall Beneficially
Own fewer than 1,874,459 shares of Allscripts Common Stock (subject to equitable
adjustment in the event of any stock split, stock dividend, reverse stock split
or similar event affecting the Allscripts Common Stock after the date of this
Agreement), then, in connection with each election of directors of Allscripts,
whether at an annual or special meeting, Allscripts will nominate, and, subject
to the fiduciary obligations of the Allscripts directors, solicit proxies for,
in accordance with its procedures for the nomination of, and solicitation of
proxies for, management-slate directors, an individual designated by IDX (such
individual who, at any time, is or was designated by IDX for purposes of this
Agreement is referred to herein as the "IDX Designee"). Upon the earlier of (i)
termination of this Agreement and (ii) the date that IDX and its Affiliates
shall Beneficially Own fewer than 1,874,459 shares of Allscripts Common Stock
(subject to equitable adjustment in the event of any stock split, stock
dividend, reverse stock split or similar event affecting the Allscripts Common
Stock after the date of this Agreement), IDX shall cause any IDX Designee then
serving as a director of Allscripts to resign immediately unless otherwise
requested by Allscripts.
(b) The director initially designated by IDX as the IDX Designee is R.E.T.
Allscripts shall provide IDX with 30 days' prior written notice of any intended
mailing of a notice to stockholders for a meeting at which directors are to be
elected. IDX shall give written notice to Allscripts, no later than 10 days
prior to such mailing, of the Person designated pursuant to Section 2.2(a) as
nominee for election as director. Allscripts agrees to nominate and recommend
for election as director the individual designated, or to be designated,
pursuant to Section 2.2(a). If IDX shall fail to give notice to Allscripts as
provided above, it shall be deemed that the IDX Designee then serving as
director shall be the IDX Designee for election.
(c) Except as otherwise provided herein, at all times (i) when there is an IDX
Designee on Allscripts' Board of Directors and IDX and its Affiliates shall
Beneficially Own 5,623,379 or more shares of Common Stock (subject to equitable
adjustment in the event of any stock split, stock dividend, reverse stock split
or similar event affecting the Allscripts Common Stock after the date of this
Agreement), and (ii) such designee is R.E.T., the IDX Designee shall be elected
as the sole Vice Chairman of the Allscripts Board of Directors, which shall be a
non-executive position.
(d) In the event that any IDX Designee shall cease to serve as a director for
any reason (other than as set forth in Section 2.2(a)), the vacancy resulting
thereby shall be filled by the remaining directors of Allscripts in accordance
with its Certificate of Incorporation, Bylaws and applicable law by a new IDX
Designee and such new IDX Designee shall thereafter serve until the expiration
of the term of the IDX Designee replaced by such new IDX Designee.
(e) Notwithstanding anything to the contrary contained herein, no IDX Designee
may be a Person who previously has been a director of Allscripts and was
properly removed for cause from the Board of Directors of Allscripts or a Person
who has been convicted of a felony or a crime involving moral turpitude.
8
<PAGE>
(f) The IDX Designee will be furnished with all information that is provided to
all other directors of Allscripts (in their capacities as such) at the same time
as such information is furnished to such other directors (in their capacities as
such).
(g) IDX shall cause the IDX Designee serving as a director of Allscripts to
comply with the retirement policies of Allscripts as in effect on the date
hereof (a copy of which is attached as Exhibit A) or as hereafter amended or
modified from time to time by the Board of Directors of Allscripts or its
stockholders; provided, however, that no such amendment or modification to such
policies shall be binding upon IDX or the IDX Designee unless the IDX Designee
shall have voted in favor of such amendment or modification at the meeting, or
in the action in lieu of a meeting, of the Board of Directors of Allscripts at
or in which it is considered.
(h) IDX shall make the initial IDX Designee reasonably available for initial
marketing ("road show") efforts undertaken by Allscripts in connection with the
Merger Agreement and for subsequent meetings with customers of the Channelhealth
business (which shall occur not less frequently than once per month).
2.3 LIMITATION ON ACQUISITION OF ADDITIONAL VOTING SHARES BY IDX.
(a) From and after the date hereof, IDX shall not acquire any Allscripts Voting
Shares, other than the IDX Shares owned by IDX as of the date hereof and after
giving effect to the Closing, (i) without the prior written consent of a
majority of the Allscripts Continuing Directors or (ii) pursuant to Article III
of the Merger Agreement; provided, however, that nothing in this Section 2.3(a)
shall limit IDX's power and right (A) to purchase or acquire shares as a result
of any stock dividend or stock split, reclassification of the Allscripts Common
Stock, or the exercise or conversion of any security received by IDX from
Allscripts in respect of the IDX Shares, or (B) to acquire shares of Allscripts
Common Stock or any Allscripts Exchangeable Security pursuant to Section 2.6 or
to convert, exchange or exercise any such Allscripts Exchangeable Security.
(b) From and after the date hereof, Allscripts shall not acquire any IDX Voting
Shares without the prior written consent of a majority of the IDX Continuing
Directors; provided, however, that nothing in this Section 2.3(b) shall limit
Allscripts' power and right (i) to purchase or acquire shares as a result of any
stock dividend or stock split, reclassification of the IDX Common Stock, or the
exercises or conversion of any security received by Allscripts from IDX in
respect of any IDX securities that Allscripts may hold or (ii) to acquire shares
of IDX Common Stock, or the exercise or conversion of any security received by
Allscripts in respect of any IDX securities that Allscripts may hold or any IDX
Exchangeable Security pursuant to Section 2.6 or to convert, exchange or
exercise any such IDX Exchangeable Security.
(c) Notwithstanding anything to the contrary contained herein, in the event IDX
shall effect a sale of any IDX Shares, IDX shall be entitled to acquire
additional Voting Shares, without the necessity of obtaining prior written
consent, up to an aggregate amount that would cause IDX to hold the same amount
of Voting Shares as IDX held after giving effect to the Closing, and the
obligations of Allscripts set forth in Section 2.2 shall be reinstated, if
applicable; provided, however, that (i) IDX may not undertake to acquire such
additional Voting Shares until the end of the six month period immediately
9
<PAGE>
following any such sale, (ii) in no event will IDX be entitled to reinstate the
obligations of Allscripts set forth in Section 2.2(b) once such obligations are
terminated and (iii) IDX will be restricted from making any further sales of IDX
Shares until the end of the thirty day period immediately following the
acquisition of any additional Voting Shares pursuant to this Section 2.3(c).
2.4 RESTRICTIONS ON TRANSFER. From and after the date hereof until the
termination of this Agreement, IDX and its Affiliates shall not sell, transfer,
write options on or otherwise convey (when used as a verb, "Transfer" and, any
sale, transfer, writing of options on or other conveyance, a "Transfer")
Beneficial Ownership of any Allscripts Voting Shares (including Allscripts
Voting Shares subject to Allscripts Exchangeable Securities), without the prior
written consent of a majority of the Allscripts Continuing Directors, except
that, in any event, any and all of the following Transfers shall be permitted:
(a) One or more Transfers to an Affiliate of IDX; provided, however, that each
such Affiliate agrees in writing with Allscripts to be bound by the same
restrictions as are applicable to IDX hereunder.
(b) One or more Transfers to Allscripts or to a Subsidiary of Allscripts
(pursuant to a tender offer or otherwise).
(c) One or more Transfers pursuant to a merger, consolidation or compulsory
share exchange, in which Allscripts is a constituent corporation.
(d) One or more Transfers made as a pro rata dividend or distribution to the
holders of the common stock of IDX or its Affiliates; provided, however, unless
such dividend or distribution is to the public stockholders of IDX, such holders
agree in writing with Allscripts to be bound by the same restrictions as IDX
hereunder.
(e) One or more Transfers to any Person (other than IDX or any of its
Affiliates) who shall have commenced a tender or exchange offer for shares of
Allscripts Common Stock if, at the time of public announcement of the tender or
exchange offer: (i) IDX and its Affiliates collectively Beneficially Own less
than 5% of the then outstanding Allscripts Voting Shares and no IDX Designee is
serving on the Allscripts Board of Directors, or (ii) IDX and its Affiliates
collectively Beneficially Own more than 5% of the then outstanding Allscripts
Voting Shares and a majority of the Allscripts Continuing Directors recommend to
the holders of the shares of Allscripts Common Stock that such holders accept
such tender or exchange offer.
(f) From and after the following anniversaries of the date of this Agreement,
IDX and its Affiliates may, collectively, Transfer the following percentages of
the IDX Shares in one or more Private Placements and/or transactions described
below in Sections 2.4(g) or 2.4(h):
10
<PAGE>
PERCENTAGE OF
IDX SHARES
<TABLE>
<CAPTION>
ANNIVERSARY OF PERMITTED TO TRANSFER*
THIS AGREEMENT INCREMENTAL* AGGREGATE*
-------------- --------------------- ---------
<S> <C> <C>
First 25% 25%
Second 25% 50%
Third 25% 75%
Fourth 25% 100%
</TABLE>
*These time restrictions and percentages will also apply to
any shares of Allscripts Common Stock acquired by IDX and its
Affiliates pursuant to Article III of the Merger Agreement,
which will result in additional IDX Shares that can be
Transferred based on the percentage limitations being applied
to a greater number of IDX Shares.
In any month, no more than 16.6667% of the IDX Shares eligible to be Transferred
during the then current year may be sold by IDX and its Affiliates pursuant to
this Section 2.4(f). IDX and its Affiliates shall not be permitted to cumulate,
or carry forward for Transfer in subsequent periods, either (i) unsold maximum
monthly eligible share Transfer amounts from month to month during any
particular year or (ii) unsold maximum annual eligible share Transfer amounts
from year to year.
(g) Subject to Section 2.4(f), one or more Transfers in accordance with Rule
144; provided, however, that no Transfers shall be permitted pursuant to Rule
144 except through one of the market makers in Allscripts' Common Stock listed
on Schedule II or as otherwise previously approved in writing by Allscripts.
(h) (i) During each of the periods (A) from and after the first anniversary of
the date hereof through the second anniversary of the date hereof and (B) from
and after the third anniversary of the date hereof through the fourth
anniversary of the date hereof, IDX may deliver a written notice to Allscripts
that IDX desires to Transfer in a single transaction either 50% or 100% of the
maximum aggregate number of its IDX Shares that it would be permitted to
Transfer in that period, which notice (the "Notice of Proposed Transfer") must
set forth (A) the number of IDX Shares that IDX desires to Transfer (which
number must equal either 50% or 100% of the maximum aggregate number of shares
that it would be permitted to Transfer in that period) and (B) the price at
which IDX would be willing to Transfer such shares (the "Target Price"). The
Notice of Proposed Transfer shall constitute an offer by IDX, which shall be
irrevocable for a period of 10 days following receipt of such notice by
Allscripts, to permit Allscripts to arrange for the purchase of such shares by a
purchaser selected by Allscripts in its sole discretion for cash at a price per
share equal to the average of the Per Share Market Value of such shares for the
five Trading Days immediately preceding (and excluding) the date that Allscripts
delivers a written notice to IDX (the "Notice of Arranged Transfer") that
Allscripts has arranged for such purchase at such price per share (the "Market
Price"); provided, however, that IDX shall have no obligation to Transfer any of
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<PAGE>
its IDX Shares to the proposed purchaser if the proposed purchase price per
share does not equal at least 90% of the Target Price.
(ii) The consummation of such purchase shall take place on such date, not later
than 10 days after receipt of the Notice of Arranged Transfer by IDX, as
Allscripts and IDX shall select. Upon the consummation of such purchase, (A) IDX
shall deliver the certificate or certificates evidencing the IDX Shares so
purchased duly endorsed in blank for transfer or accompanied by written
instruments of transfer in form satisfactory to the purchaser duly executed by
IDX, free and clear of any liens, encumbrances and claims and (B) the purchaser
shall simultaneously with the delivery of the certificate or certificates
evidencing the IDX Shares so purchased pay to IDX the aggregate Market Price of
such shares.
(iii) Allscripts shall have no obligation to deliver a Notice of Arranged
Transfer in response to any Notice of Proposed Transfer delivered by IDX, and
the decision as to whether to deliver any Notice of Arranged Transfer shall be
made by Allscripts in the exercise of its sole discretion. In the event that
Allscripts shall have received a Notice of Proposed Transfer from IDX but shall
not have given a Notice of Arranged Transfer to IDX with respect thereto prior
to the expiration of the 10-day period following receipt of such Notice of
Proposed Transfer, nothing in this Section 2.4(h) shall limit the right of IDX
to Transfer any IDX Shares that are not to be purchased pursuant to a Notice of
Arranged Transfer, but otherwise subject to and in accordance with the time,
percentage and other restrictions set forth in Section 2.4(f).
(i) (i) From and after the fifth anniversary of the date hereof, IDX agrees not
to effect any Transfer of IDX Shares in any single transaction involving a
number of such shares representing in excess of 2.5% of the then issued and
outstanding shares of Allscripts Common Stock unless and until IDX delivers a
written notice to Allscripts that IDX intends to effect such Transfer, which
notice (a "Notice of Block Transfer") must set forth (A) the number of IDX
Shares that IDX desires to Transfer, or maximum and minimum number of, such
shares and (B) the price per share at which IDX would be willing to Transfer
such shares (the "Specified Price"). The Notice of Block Transfer shall
constitute an offer by IDX, which shall be irrevocable for a period of 10 days
following receipt of such notice by Allscripts, to permit Allscripts to arrange
for the purchase of the maximum number (but not fewer than the minimum number)
of such shares by a purchaser selected by Allscripts in its sole discretion for
cash at a price per share equal to the average of the Per Share Market Value of
such shares for the five Trading Days immediately preceding (and excluding) the
date that Allscripts delivers a written notice to IDX (the "Notice of Block
Purchase") that Allscripts has arranged for such purchase at such price per
share (the "Current Price"); provided, however, that IDX shall have no
obligation to Transfer any of its IDX Shares to the proposed purchaser if the
Current Price does not equal at least 90% of the Specified Price offered in the
Notice of Block Transfer.
(ii) The consummation of such purchase shall take place on such date, not later
than 10 days after receipt of the Notice of Block Purchase by IDX , as
Allscripts and IDX shall select. Upon the consummation of such purchase, (A) IDX
shall deliver the certificate or certificates evidencing the IDX Shares so
purchased duly endorsed in blank for transfer or accompanied by written
instruments of transfer in form satisfactory to the purchaser duly executed by
IDX, free and clear of any liens, encumbrances and claims and (B) the purchaser
12
<PAGE>
shall simultaneously with the delivery of the certificate or certificates
evidencing the IDX Shares so purchased pay to IDX the aggregate Current Price of
such shares.
(iii) Allscripts shall have no obligation to deliver a Notice of Block Purchase
in response to any Notice of Block Transfer delivered by IDX, and the decision
as to whether to deliver any Notice of Block Purchase shall be made by
Allscripts in the exercise of its sole discretion. In the event that Allscripts
shall have received a Notice of Block Transfer from IDX but shall not have given
a Notice of Block Purchase to IDX with respect thereto prior to the expiration
of the 10-day period following receipt of such Notice of Block Transfer, nothing
in this Section 2.4(i) shall limit the right of IDX to Transfer any IDX Shares
that are not to be purchased pursuant to a Notice of Block Purchase.
(j) (i) During the period from and after the third anniversary of the date
hereof through the fourth anniversary of the date hereof, if Allscripts proposes
to file a registration statement under the Securities Act with respect to a
primary firm commitment underwritten public offering of Allscripts Common Stock
(a "Piggyback Registration"), it shall give written notice of such proposed
filing to IDX as soon as practicable, but in no event fewer than 20 days before
the anticipated filing date. Allscripts shall include in such registration all
IDX Shares with respect to which Allscripts has received a written request for
inclusion within 10 days after the giving of Allscripts' notice (a "Piggyback
Registration Request"); provided, however, that Allscripts may in its sole
discretion restrict the number of IDX Shares so requested for inclusion to the
maximum aggregate number of such shares that IDX would be permitted to sell in
such period after the date that Allscripts gives notice of its intention to
effect a Piggyback Registration.
(ii) If the managing underwriters of the Piggyback Registration advise IDX that,
in their opinion, the number of shares requested to be included in such
registration exceeds the maximum number that can be included in such offering
without adversely affecting the marketability of the offering (the "Maximum
Number"), IDX will limit the number of shares included in such registration to
the Maximum Number, and the shares registered shall be selected in the following
order of priority: (A) first, the shares of Allscripts Common Stock Allscripts
proposes to Transfer, and (B) second, the IDX Shares covered by the Piggyback
Registration Request and other shares requested to be included in such
registration based upon rights under agreements outstanding on the date hereof;
provided, however, that if shares of Common Stock are being offered for the
account of Persons other than IDX, the proportion by which the amount of IDX
Shares intended to be offered for the account of IDX is reduced shall not exceed
the proportion by which the amount of shares of Allscripts Common Stock intended
to be offered for the account of such other Persons is reduced.
(iii) IDX may not participate in any Piggyback Registration unless it (A) agrees
to sell its shares of Allscripts Common Stock on the basis provided in any
underwriting arrangements approved by Allscripts, (B) completes and executes all
questionnaires, powers of attorney, custody arrangements, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and this Agreement, and (C) furnishes in
writing to Allscripts such information regarding IDX and other information as
Allscripts may from time to time request or as may be legally required in
connection with such registration; provided, however, that IDX shall not be
required to make any representations or warranties in connection with any such
13
<PAGE>
registration other than representations and warranties as to (x) its ownership
of its IDX Shares to be Transferred free and clear of all liens, encumbrances
and claims, (y) IDX's power and authority to effect such Transfer, and (z) such
matters pertaining to compliance with securities laws as may be reasonably
requested; provided further, however, that the obligation of IDX to indemnify
pursuant to any such underwriting agreements shall be several, not joint and
several, among such Persons selling securities, and the liability of IDX will be
in proportion to, and provided further that such liability will be limited to,
the net amount received by IDX from the sale of the IDX Shares pursuant to such
registration.
(iv) In connection with any Piggyback Registration, Allscripts will enter into
such agreements (including an underwriting agreement) as are customary in
transactions of the kind contemplated by the intended method or methods of
distribution set forth in the Piggyback Registration Statement and reasonably
acceptable to Allscripts, and take such other actions as are reasonably
necessary in connection therewith in order to expedite or facilitate the
Piggyback Registration; and (A) make such representations and warranties with
respect to the Piggyback Registration Statement or any post-effective amendment
or supplement thereto, prospectus or any amendment or supplement thereto, and
documents incorporated by reference, if any, to IDX and the underwriters of the
Piggyback Registration in form, substance, and scope as are customary in
connection with transactions of such kind; (B) if requested by the managing
underwriters of the Piggyback Registration, obtain an opinion of outside counsel
to Allscripts in customary form and covering matters of the type customarily
covered by such an opinion, addressed to such underwriters named in the
underwriting agreement and dated the date of the closing of the sale of the
shares covered by the Piggyback Registration Statement; (C) if requested by the
managing underwriters of the Piggyback Registration, obtain a "comfort" letter
(or, if a "comfort" letter may not be delivered under applicable accounting
pronouncements or standards, a single "procedures" letter) and a single update
thereof from each of the independent certified public accountants who have
certified the most recent audited financial statements that are incorporated by
reference in the Piggyback Registration Statement, which letters shall be
addressed to the underwriters of the Piggyback Registration, such letter or
letters to be in customary form and covering such matters of the type
customarily covered by "comfort" letters of such type; (D) deliver such
documents and certificates as may be reasonably requested by IDX and the
underwriters of the Piggyback Registration to evidence compliance with any
conditions contained in the underwriting agreement or other agreements entered
into by Allscripts; and (E) undertake such obligations relating to expense
reimbursement as provided in Section 2.4(j)(v) and indemnification and
contribution obligations for the benefit of IDX of the type customarily
undertaken by issuers in connection with "piggyback" registrations.
(v) In connection with any Piggyback Registration, Allscripts agrees to bear and
to pay, or cause to be paid, promptly upon request being made therefor, all
expenses incident to Allscripts' performance of, or compliance with, this
Section 2.4(j), including, without limitation: (A) all SEC and any National
Association of Securities Dealers registration and filing fees and expenses, (B)
all fees and expenses in connection with the qualification of the shares covered
by any Piggyback Registration Statement for offering and sale under state
securities or "blue sky" laws, including reasonable fees and disbursements of
counsel for any underwriter in connection with such qualifications, (C) all
expenses relating to the preparation, printing, distribution and reproduction of
any Piggyback Registration Statement, each prospectus included therein or
14
<PAGE>
prepared for distribution pursuant thereto, each amendment or supplement to the
foregoing, the certificates representing the shares covered by such Piggyback
Registration Statement and all other documents relating hereto, (D) internal
expenses of Allscripts, including, without limitation, all salaries and expenses
of Allscripts' officers and employees performing legal or accounting duties, (E)
fees, disbursements and expenses of Allscripts' counsel and its other advisors
and experts and independent certified public accountants of Allscripts
(including the expenses of any opinions or "comfort" letters required by or
incident to such performance and compliance) and (F) the fees and expenses
incurred in connection with the listing of the shares covered by the Piggyback
Registration Statement on the Nasdaq Stock Market, Inc. or any other stock
exchange or dealer quotation system on which the Allscripts Common Stock shall
at such time be listed or traded (collectively, the "Expenses"). To the extent
that any Expenses are incurred, assumed or paid by IDX or any underwriter of
shares covered by the Piggyback Registration Statement, Allscripts shall
reimburse IDX for the full amount of the Expenses so incurred, assumed or paid
promptly after receipt of a written request therefor, which shall specify in
reasonable detail the nature and amount of the Expenses. Notwithstanding the
foregoing, IDX shall pay, or cause to be paid, as appropriate, (A) all
underwriting discounts and commissions attributable to the sale of the shares
covered by the Piggyback Registration Statement by or on behalf of IDX, (B) the
fees, disbursements and expenses of its counsel in connection with the offering
and sale of such shares and (C) all transfer taxes applicable to the sale of
such shares.
2.5 VOTING OF IDX SHARES. Except as provided below, during the term of this
Agreement, IDX and its Affiliates shall be entitled to vote on all matters all
of its or their IDX Shares in its or their complete discretion. Notwithstanding
the foregoing, IDX and its Affiliates shall vote all such shares in accordance
with the recommendation of the majority of the Allscripts Continuing Directors
on any matter that (i) constitutes an Allscripts Business Combination
Transaction, (ii) would involve a change of control of Allscripts (for purposes
of this section a change in control shall mean the acquisition by a Person other
than IDX or its Affiliates of Beneficial Ownership of more than 50% of the then
outstanding Allscripts Voting Shares), (iii) involves the issuance by Allscripts
of securities for its own account for cash, or (iv) involves any acquisition by
Allscripts, whether through merger, share exchange, purchase of assets or
otherwise unless (A) the average of the Per Share Market Value for Allscripts'
Common Stock for the 90 Trading Days immediately preceding (and excluding) the
date on which the matter is voted upon is less than $14.5625 per share (such
amount to be appropriately adjusted to give effect to stock splits, reverse
splits, stock dividends, reclassifications and share exchanges since the date
hereof) and (B) there shall exist no continuing and uncured default by IDX of
any of its obligations under this Agreement, the Merger Agreement, the Strategic
Alliance Agreement, the Facilities Lease Agreement or the Cross License
Agreement (as such terms are defined in the Merger Agreement), which default
shall have resulted in a material adverse effect on the business, properties,
results of operations, prospects, condition (financial or otherwise) or Per
Share Market Value of Allscripts' Common Stock in which case, if both conditions
described in subclauses (A) and (B) are satisfied, IDX and its Affiliates shall
be entitled to vote on each matter described in the foregoing clauses (i)
through (iv) all of its or their IDX Shares in its or their complete discretion.
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2.6 RIGHT TO PARTICIPATE IN CERTAIN ISSUANCES BY ALLSCRIPTS.
(a) If, when, and for so long as, IDX and its Affiliates Beneficially Own shares
of Allscripts Common Stock that would constitute, after giving effect to the
proposed transaction (but not prior to the proposed transaction), less than the
Applicable Percentage of the then outstanding shares of Allscripts Common Stock,
Allscripts shall not issue any shares of Allscripts Common Stock or any
Allscripts Exchangeable Securities, for any consideration or in any type of
transaction, unless Allscripts shall have first complied with, in the case of an
issuance other than pursuant to a Public Offering, the provisions of Section
2.6(b) or, in the case of a Public Offering, the provisions of Section 2.6(c).
(b) If Allscripts determines to issue any shares of Allscripts Common Stock or
any Allscripts Exchangeable Security, other than in a Public Offering, then
Allscripts shall provide written notice of such determination to IDX, which
notice shall include all the terms of such issuance and shall offer to IDX the
right to purchase, at the same price and on the same terms as Allscripts
proposes to issue such shares of Allscripts Common Stock or Allscripts
Exchangeable Security to others (or, if Allscripts proposes to issue such shares
of Allscripts Common Stock or any Allscripts Exchangeable Security other than
for cash, at a cash price equal to the current market price of the Allscripts
Common Stock or if an Allscripts Exchangeable Security, such value to be
determined by agreement between Allscripts or IDX, or if the parties are unable
to agree, by an investment banking firm or other asset valuation firm of
national reputation selected by IDX from Schedule I attached hereto (as such
Schedule I may be amended in writing from time to time by both Allscripts and
IDX) with the consent of a majority of the Allscripts Continuing Directors,
which consent shall not be unreasonably withheld, the cost of which shall be
borne by Allscripts) a number or amount of the shares of Allscripts Common Stock
or Allscripts Exchangeable Securities proposed to be issued determined by
dividing the aggregate number of outstanding shares of Allscripts Common Stock
then Beneficially Owned by IDX by the total number of shares of Allscripts
Common Stock then outstanding (the "Offer Notice"). If IDX determines to accept
the offer contained in the Offer Notice, IDX shall deliver a written notice to
Allscripts indicating its acceptance within 10 days after its receipt of the
Offer Notice, which notice shall indicate whether IDX has accepted such offer in
whole or in part, and, if accepted in part, the number or amount of shares of
Allscripts Common Stock or Allscripts Exchangeable Securities as to which such
offer has been accepted (an "Acceptance Notice"). Any acceptance of the offer
contained in an Offer Notice by delivery of an Acceptance Notice shall be
irrevocable and shall constitute a commitment by IDX to purchase from
Allscripts, and by Allscripts to sell to IDX, the number or amount of shares of
Allscripts Common Stock or Allscripts Exchangeable Securities covered by such
Acceptance Notice upon the terms contained in the Offer Notice.
1. If at any time and from time to time, (i) Allscripts determines to
issue any Allscripts Voting Shares or any Allscripts Exchangeable Security in a
Public Offering, and (ii) as a result thereof IDX and its Affiliates would
Beneficially Own less than the Applicable Percentage of the then to be
outstanding Allscripts Voting Shares, then (A) Allscripts shall provide written
notice of such determination to IDX, which notice shall include the proposed
size and other terms of such issuance, to the extent then known, the name or
names of any managing underwriter or placement agent(s) and the date when it is
proposed that any such issuance will be made, and (B) Allscripts shall either
sell directly or cause the underwriters or placement agent(s) to offer to IDX
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the right to purchase from Allscripts directly or from the underwriters or
placement agent(s), at the applicable offering price, a number or amount of the
Allscripts Voting Shares, Allscripts Exchangeable Securities or other securities
proposed to be issued that, if purchased by IDX, would permit IDX and its
Affiliates to Beneficially Own a number of Voting Shares determined by dividing
the aggregate number of outstanding shares of Allscripts Common Stock then
Beneficially Owned by IDX by the total number of shares of Allscripts Common
Stock then outstanding.
3. RESTRICTIONS ON TRANSFER. From and after the date of Closing and
until the expiration of the six month period following the Closing, R.E.T. shall
not Transfer any shares of Common Stock Beneficially Owned by R.E.T. in his
individual capacity, unless and until such time as Glen E. Tullman ("G.E.T.")
shall Transfer any shares of Common Stock Beneficially Owned by G.E.T. in his
individual capacity.
4. STOCK CERTIFICATES AND OTHER RESTRICTIONS.
4.1 ENDORSEMENT OF CERTIFICATES.
(a) All certificates representing IDX Shares shall, subject to Section
4.1(c), bear the following legend:
"THIS CERTIFICATE IS SUBJECT TO THE PROVISIONS OF A STOCK
RIGHTS AND RESTRICTIONS AGREEMENT BETWEEN ALLSCRIPTS
HEALTHCARE SOLUTIONS, INC. AND IDX SYSTEMS CORPORATION DATED
AS OF JANUARY 8, 2001. A COPY OF SUCH AGREEMENT IS ON FILE AT
THE PRINCIPAL BUSINESS OFFICE OF ALLSCRIPTS HEALTHCARE
SOLUTIONS, INC."
(b) After such time as the legend set forth in Section 4.1(a) is no longer
required hereunder (including without limitation as a result of the termination
of this Agreement in accordance with its terms) or if the securities represented
by a certificate have been registered under the Securities Act pursuant to an
effective registration statement or are to be sold pursuant to Rule 144, or if
Allscripts shall have been furnished with an opinion of counsel, which opinion
shall be reasonably satisfactory to counsel for Allscripts, that registration
under the Securities Act is not required, as the case may be, then, in any such
event, upon the request of IDX, Allscripts shall cause such certificate or
certificates to be exchanged for a certificate or certificates that do not bear
any legend.
4.2 IMPROPER TRANSFER. Any attempt by IDX or its Affiliates to Transfer any IDX
Shares other than in accordance with this Agreement shall be null and void and
neither Allscripts nor any transfer agent for such securities shall be required
to give any effect to such attempted Transfer in its stock records.
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5. GENERAL PROVISIONS.
5.1 REPRESENTATIONS AND WARRANTIES.
(a) Allscripts represents and warrants to IDX that (i) Allscripts is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder, (ii) the execution
and delivery of this Agreement by Allscripts and the consummation by Allscripts
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Allscripts and no other corporate
proceedings on the part of Allscripts are necessary to authorize this Agreement
or any of the transactions contemplated hereby, and (iii) this Agreement has
been duly executed and delivered by Allscripts and constitutes a valid and
binding obligation of Allscripts, and, assuming this Agreement constitutes a
valid and binding obligation of IDX, is enforceable against Allscripts in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance and similar laws affecting
creditors' rights generally from time to time and to general principles of
equity.
(b) IDX represents and warrants to Allscripts that (i) IDX is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Vermont and has the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder, (ii) the execution and delivery of
this Agreement by IDX and the consummation by IDX of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of IDX and no other corporate proceedings on the part of IDX are
necessary to authorize this Agreement or any of the transactions contemplated
hereby, and (iii) this Agreement has been duly executed and delivered by IDX and
constitutes a valid and binding obligation of IDX, and, assuming this Agreement
constitutes a valid and binding obligation of Allscripts, is enforceable against
IDX in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium, fraudulent conveyance and similar laws
affecting creditors' rights generally from time to time and to general
principles of equity.
5.2 AMENDMENT AND MODIFICATION; WAIVER OF COMPLIANCE. This Agreement may be
amended or waived only by written instrument duly executed by the parties. In
the event of the amendment or modification of this Agreement in accordance with
its terms, the Board of Directors of Allscripts shall adopt any amendment to the
Bylaws of Allscripts that may be required as a result of such amendment or
modification to this Agreement, and, if required, shall propose any amendment to
its Certificate of Incorporation that may be required as a result of such
amendment or modification to this Agreement to the Allscripts stockholders
entitled to vote thereon at a meeting duly called and held for such purpose, and
shall recommend that the Allscripts stockholders vote in favor of such amendment
to the Certificate of Incorporation.
5.3 INJUNCTIVE RELIEF. Each of the parties hereto hereby acknowledges that in
the event of a breach by any of them of any material provision of this
Agreement, the aggrieved party may be without an adequate remedy of law. Each of
the parties therefore agrees that in the event of a breach of any material
provision of this Agreement the aggrieved party may elect to institute and
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prosecute proceedings in any court of competent jurisdiction to enforce specific
performance or to enjoin the continuing breach of such provision, as well as to
obtain damages for breach of this Agreement. By seeking or obtaining any such
relief, the aggrieved party will not be precluded from seeking or obtaining any
other relief to which it may be entitled in equity or at law.
5.4 BYLAWS. At all times while this Agreement shall be in effect, Allscripts
shall cause its Bylaws to conform to the provisions of this Agreement, including
by causing its Bylaws to be amended.
5.5 NO ADOPTION OR AMENDMENT OF RIGHTS PLAN. During the term of this Agreement,
Allscripts' Board of Directors shall not adopt any shareholder rights plan or
amend any rights plan without the approval of the IDX Designee then on the Board
of Directors of Allscripts unless such plan exempts IDX and its Affiliates from
all effects thereof.
5.6 GOVERNING LAW. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to the principles of conflicts of law thereof.
5.7 TERMINATION.
(a) This Agreement may be terminated:
(i) by the mutual written consent of the parties hereto; and
(ii) by IDX if (A) Allscripts shall seek relief under any bankruptcy,
insolvency, receivership, custodianship, trusteeship, liquidation,
reorganization, composition, readjustment, moratorium or similar law (an
"Insolvency Law"); or (B) a proceeding or case shall be commenced under an
Insolvency Law by a third party against Allscripts and such proceeding or case
shall continue undismissed or unstayed for 60 days; or (C) an order for relief
under an Insolvency Law shall be entered against Allscripts.
(b) Unless this Agreement shall have been earlier terminated as provided in
Section 5.7(a), this Agreement shall terminate on the 10th anniversary of the
date of this Agreement.
5.8 NOTICES. All notices, requests, demands or other communications required or
permitted by this Agreement shall be in writing and effective when received, and
delivery shall be made personally or by registered or certified mail, return
receipt requested, postage prepaid, or overnight courier or confirmed facsimile
transmission, addressed as follows:
(a) If to Allscripts:
Allscripts Healthcare Solutions, Inc.
2401 Commerce Drive
Libertyville, IL 60048
Telephone: (847) 680-3515
Facsimile: (847) 680-3573
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Attention: President
with a copy to:
Weil, Gotshal & Manges LLP
700 Louisiana Street, Suite 1600
Houston, Texas 77002
Attention: Steven D. Rubin
Fax: (713) 224-9511
(b) If to IDX:
IDX Systems Incorporated
1400 Shelburne Road
South Burlington, VT 05403
Telephone: (802) 862-1022
Facsimile: (802) 865-3681
Attention: General Counsel
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: Virginia Kapner
Fax: (617) 526-5000
5.9 SEVERABILITY. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law, or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
5.10 ENTIRE AGREEMENT. Except as otherwise expressly stated herein, this
Agreement constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof. Except for the Permitted Transfers to IDX and Affiliates of IDX
and except as otherwise expressly permitted or contemplated herein, the rights
and obligations under this Agreement shall not be assigned by operation of law
or otherwise. Nothing in this Agreement shall be construed as prohibiting
Allscripts from effecting a merger, consolidation or other similar transaction
with another entity, provided that (i) the operative terms of this Agreement
shall be applied in respect of any such transaction and (ii) under the express
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terms of such transaction this Agreement will be continued in effect by
Allscripts or any successor thereto.
5.11 PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely
to the benefit of each party hereto and to IDX and the Affiliates of IDX if they
receive permitted Transfers in accordance with this Agreement. Nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
Person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement, except as expressly otherwise contemplated herein.
5.12 HEADINGS. The descriptive headings contained in this Agreement are included
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
5.13 COUNTERPARTS. This Agreement may be executed in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
By: /s/ Glen E. Tullman
--------------------------------------------
Name: Glen E. Tullman
Title: Chairman of the Board
IDX SYSTEMS CORPORATION
By: /s/ Robert W. Baker
--------------------------------------------
Name: Robert W. Baker
Title: Vice President, General Counsel
and Secretary
/s/ Richard E. Tarrant
---------------------------------------------
Richard E. Tarrant (solely with respect to
Section 3 of this Agreement)
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